I would agree with actively managed mutual funds. I think index funds are ok though. No better way to get a diverse set of equity than the market mix itself.
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Housing Market
- Thread starter Ducati911
- Start date
I would agree with actively managed mutual funds. I think index funds are ok though. No better way to get a diverse set of equity than the market mix itself.
Dresden
Well-known member
This is not a balanced view. Few points:
Higher interest rates affect the demand side. Vancouver and Toronto both have their struggles on the supply side as well. The permit process for both cities make it difficult for developers to put together projects, hence its cheaper for them to go out of town and deal with better council's - so we see pockets of new developments outside the GTA on a mass scale (Niagara/Stoney Creek/Brantford/North GTA etc.)
Currently we are seeing the perfect storm with ultra-low interest rates and short supply. When interest rates rise, and they will in small increments, the markets will stabilize. I.e. You're $1,000,000 run of the mill house is not going to appreciate, but it may not lose it's value. Problem is, you can't trade up as you're not making money on your sale either.
Geographically, Vancouver is a mini Manhattan - it is a stunning view, warmer climate and close to the best green spaces/winter sports in the world. Tight supply, space constraints, have all choked supply and with the money fleeing China/Middle East instability, it's balooned out of control there.
Toronto is similar yet different. Most buyers in Toronto are local and are trading up. Banks are lending, credit is low, employment is good. As per my previous article, those getting into the market today are putting all of their eggs in one (RE) basket. This will not end well for them long term.
You are witnessing the birth of a global city.. whether you like it or not is a matter of personal opinion. I'm the LAST person who wants prices to go to the moon, but short of a global market collapse, nothing is going to happen to the real estate in the GTA.
Lastly, markets collapse across multiple asset classes. You are never going to see houses correct by 30% and the stock market say fine. To say houses are going to collapse is to say that the entire free market system is going to collapse. Otherwise you're as crazy as the guy who stands at the Dundas Square screaming "Jesus saves".
Riceburner
Well-known member
He's at NW Dundas and Yonge and makes people jump all the time.
-D-
Banned
I tend to agree with your overall views.
They have been saying since 2002 that the housing market is overpriced and going to crash or prices drop...14 years later and that 300k house in 2002 is worth what now?
Condos I think is the real problem, especially the ones downtown you know 450sqft starting at $500k.
Dresden
Well-known member
For what it's worth, I've been looking for a good investment property downtown Toronto. 1 bedrooms are between 400k - 500k in a half decent neighborhood. With 80% of it as a mortgage you're looking at a monthly mortgage payment of nearly $1,700 depending on how you structure it. Then you add property taxes and maintenance fees and you're coming close to $2,000 just own the property.
One bedrooms rent for about $1800-$2000 if you're lucky. As they say in the stock markets, the low interest rate advantage has already been "priced in".
It really is very frustrating for the first time buyer or young buyer to get in when everything is so hot. But this is the new world we live in. Our kids are going to have it even worse and their kids are going to have it worse than them. Capitalism at its finest if there's a buck to be made someone's going to make it
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Condos are a decent investment vehicle if your expectations are right.
Buying pre-construction could net big gains. But even buying a 1-5 year old condo in a decent (accessible!) neighbourhood can be a good financial move. Growth will be 2.5-3% it's not much and it won't keep up with the rest of the housing market but its good money regardless. Buying with 5% down, renting an investment condo means your tenant is covering the entire interest portion of your mortgage payment, as well as your taxes and maintenance fees. They're also pitching a few bucks towards your equity. Your monthly top-up payments are purely going towards paying down your principal amount. At 2.5% annual growth in value, after 5 years you can cash out $100k on the average 1+1 sub-$370k deal. There are many investors out there playing the condo market in this manner.
Buying pre-construction could net big gains. But even buying a 1-5 year old condo in a decent (accessible!) neighbourhood can be a good financial move. Growth will be 2.5-3% it's not much and it won't keep up with the rest of the housing market but its good money regardless. Buying with 5% down, renting an investment condo means your tenant is covering the entire interest portion of your mortgage payment, as well as your taxes and maintenance fees. They're also pitching a few bucks towards your equity. Your monthly top-up payments are purely going towards paying down your principal amount. At 2.5% annual growth in value, after 5 years you can cash out $100k on the average 1+1 sub-$370k deal. There are many investors out there playing the condo market in this manner.
My landlord's investment has remained basically flat in the 7 years he's owned it. 600 sq ft 1br + den CityPlace condo that he paid 320 for. It's worth around 340 today.
Every year he tries to raise the rent by $100 and I counter with the Ontario guideline rate. I was paying $1550 in 2012 and I pay $1600 today.
He's building equity but he's not making any money.
I'm stashing gobs of money in index funds and CGC.V. Go Justin.
Every year he tries to raise the rent by $100 and I counter with the Ontario guideline rate. I was paying $1550 in 2012 and I pay $1600 today.
He's building equity but he's not making any money.
I'm stashing gobs of money in index funds and CGC.V. Go Justin.
Agreed. It would have taken us longer to buy a house without the modest gains from 5 years of condo ownership. And that wasn't even buying pre-construction. Note even sure we could afford to buy our house right now given the appreciation in our area. It's a crazy market for first time buyers.
We have a condo and rent it out. Not making a profit each month, but at least having all carrying costs covered.
If he did his research on CityPlace he should've known the investment wouldn't be a big earner. The development has 7500+ residential units. Any time he tries to sell he'll be competing against the developer putting up a fresh tower 100 yards away.
That whole thing is gonna be a ghetto in 20 years.
If Matt's CityPlace condo is in the first tower, iirc people camped out for like 3 weeks to buy there and it sold out in 5 hours.
I know some people that love renting out condos. Others that hate it. Some that love residential and one who will only purchase commercial going forward. Takes some research, some balls and a little luck imo.
I'm thinking townhouse up north for a rental investment. And then leave it to the kids.
But when there are a few new condos with prices that start with a 2....
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I know some people that love renting out condos. Others that hate it. Some that love residential and one who will only purchase commercial going forward. Takes some research, some balls and a little luck imo.
I'm thinking townhouse up north for a rental investment. And then leave it to the kids.
But when there are a few new condos with prices that start with a 2....
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I'm in Drake's old building, the one he mentions in a song (?)
I really don't see CityPlace turning into a ghetto, it's too well located. We will probably buy a 2+1 here once we go ahead with baby #2. Not with the mindset that it's primarily an investment. We just like it here.
I really don't see CityPlace turning into a ghetto, it's too well located. We will probably buy a 2+1 here once we go ahead with baby #2. Not with the mindset that it's primarily an investment. We just like it here.
Why don't you people just move out of the GTA? I bought a detached house in Innisfil recently and my mortgage payments are less than I was paying to rent a 1 bedroom apartment when I was living in Toronto. And best of all I'm closer to all the great riding roads of the north. Regret not doing it sooner.
No reason to stay in the GTA unless you work in a field that only has jobs in Toronto (investment banker, etc) but in that case you're probably making a very high income so you can afford to buy in Toronto.
No reason to stay in the GTA unless you work in a field that only has jobs in Toronto (investment banker, etc) but in that case you're probably making a very high income so you can afford to buy in Toronto.
I was gonna ask - what does one do in Innisfil?
My wife's family is from the Owen Sound area, and the classic arrangement there is that the woman has some type of public sector job (nurse, teacher) while the man bums around between construction gigs. No thanks.
My wife's family is from the Owen Sound area, and the classic arrangement there is that the woman has some type of public sector job (nurse, teacher) while the man bums around between construction gigs. No thanks.
Go to Barrie
Madhatter
Member
+1 , Not sure why you would want to live in Toronto even if you have lots of money. All cement and black top.
I still work in the GTA but my company lets me work from home most days so I only have to do the commute a few times a month.
Or you could find a job in the northern part of the gta (Newmarket, etc) and that would be a 20 minute drive. But even if you have to commute to downtown toronto daily it's still worth it. Lots of people take the go train from barrie to toronto every day.
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