COVID and the housing market

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nobbie48 said:
If you borrow from Peter to pay Paul you still owe Peter. Borrowing from family is touchy.

I know someone who was moving from a house to a seniors apartment, expecting to cash out and buy a new car with the proceeds. They wrecked their car during the move-out and the settlement was minimal, only giving them about six months rental.

A friend loaned them the money to buy a new vehicle $40K?? to be repaid upon sale of the house. The house has been sitting for ten months with little interest. Tax, insurance and heat for the house is ~$1,000 a month. Price has been dropped 20% and no action.

If I was the lender I would be extremely annoyed, expecting a faster return.

What if you lent someone $100K as a bail out and things got worse?

Using the Parliament condo as an example, If a person was using the pre-build buy to move up and got caught in this melt down what if it unfolds again further down the line.

1) Write off the $100K deposit

2) Sell the condo at a $200K loss

3) Borrow $200K from dad to avoid bankruptcy and losing the existing home.

Surprise

A year later the market is still in chaos and the mortgage on the original home comes due. Values are down and rates up. Dad, can I borrow another $100K? The bank won't talk to me. I you don't I'll never be able to pay you back the $100K.

The family is out $400K with no rescue in sight.

Dad had to take the $300K out of his RRSPs so owes CRA $300K.

Dad decides to sell the cottage in a down market to refinance the mess and gets hit with cap gains.

Other siblings are Pi***d over the decline in the estate.

Sometimes bankruptcy isn't all bad.
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If dad pulled from rrsp, the family is already screwed as they act without knowledge. It's hard to give up more to cra than an rrsp pull while employed. There are far more tax efficient ways of accessing money.

In your example, tax bill would be 150k max but that still a big issue if you have nothing left to pull from. A spiral of rrsp withdrawals to pay cra who then want more so you need to withdraw again. Rinse and repeat until cra is rich and you are poor.
 
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You'd need to be an idiot to pull RRSP money to finance a family F up , if you didnt have access to cash , or even a LOC on a temp basis , but the probelm with the LOC, its not your money either so it needs to be repaid. Our family process has always been , if you want to play Baller, you better have a game. Dont put money into an investment that you cannot afford to loose. And that would include speculation on real estate.
Hope is not a business plan.
 
410001661 said:
I am downtown and houses are still moving - I have 4 houses being built on my street right now. Bungalows being sold for $1M - $1.2M and being town down for new builds. Once you get into North Burlington (Milcroft and Alton Village) it looks more like Milton South than Burlington North. Traffic (lots of traffic), ubiquitous strip malls and utter lack of character.

People are willing to pay a premium to live downtown Burlington and Oakville - one can walk to all the festivals, restaurants, pubs and all events without having to worry about parking.
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There will always be neighborhoods that buck the trend. Downtown in many areas, like Burlington, have no room for new builds and high demand so prices have held better. Same goes for single-family places in the core of places like Thornhill, Pickering, and Toronto, Sis has a cute little place in LaSalle -- local realtors just pegged the place <$1M, that's $100K less than 2022.
 
410001661 said:
Pulling an RRSP is not the way to go.......total last resort. he is going to be split roasted between the Bank and the CRA
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Agreed. If you need access to RRSP equity, borrow against it. You might still lose in the log run if you don't get repaid-- but you don't eat a guaranteed loss today.
 
Mad Mike said:
There will always be neighborhoods that buck the trend. Downtown in many areas, like Burlington, have no room for new builds and high demand so prices have held better. Same goes for single-family places in the core of places like Thornhill, Pickering, and Toronto, Sis has a cute little place in LaSalle -- local realtors just pegged the place <$1M, that's $100K less than 2022.
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LaSalle Ontario or LaSalle Quebec?
 
410001661 said:
I am downtown and houses are still moving - I have 4 houses being built on my street right now. Bungalows being sold for $1M - $1.2M and being town down for new builds. Once you get into North Burlington (Milcroft and Alton Village) it looks more like Milton South than Burlington North. Traffic (lots of traffic), ubiquitous strip malls and utter lack of character.

People are willing to pay a premium to live downtown Burlington and Oakville - one can walk to all the festivals, restaurants, pubs and all events without having to worry about parking.
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This surprised me, and having a look at HouseSigma, the numbers are interesting. On a simple median price level, YOY numbers for November in downtown Burlington are down -8.9% to a median of $1,179,500. On the surface, this compares well with a nicer lower city neighbourhood in Hamilton that's down -11.6% from 2024 to $693,750. Where it gets interesting is comparing the 5-yr change, with Hamilton area sitting at +61% vs the Burlington hood at +15%. The 10-yr numbers are a little closer, with Hamilton at +123% and Burlington at +81%, which says to me that Burlington didn't see anywhere near the Covid bump that Hamilton did. Both went up steadily pre-Covid, but during Covid, Hamilton went off like a rocket while (downtown and downtown adjacent) Burlington stayed relatively flat.

Like most real estate data, it can be spun multiple ways and can be hard to draw any clear-cut conclusions. Just thought it made for an interesting comparison to two very different but nearby destinations for refugees from Toronto proper. I think St Catharines is still ahead of both for 10-yr gains...
 
Priller said:
This surprised me, and having a look at HouseSigma, the numbers are interesting. On a simple median price level, YOY numbers for November in downtown Burlington are down -8.9% to a median of $1,179,500. On the surface, this compares well with a nicer lower city neighbourhood in Hamilton that's down -11.6% from 2024 to $693,750. Where it gets interesting is comparing the 5-yr change, with Hamilton area sitting at +61% vs the Burlington hood at +15%. The 10-yr numbers are a little closer, with Hamilton at +123% and Burlington at +81%, which says to me that Burlington didn't see anywhere near the Covid bump that Hamilton did. Both went up steadily pre-Covid, but during Covid, Hamilton went off like a rocket while (downtown and downtown adjacent) Burlington stayed relatively flat.

Like most real estate data, it can be spun multiple ways and can be hard to draw any clear-cut conclusions. Just thought it made for an interesting comparison to two very different but nearby destinations for refugees from Toronto proper. I think St Catharines is still ahead of both for 10-yr gains...
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I think the bump in a lot of rougher centers comes from the impact of gentrification.

When you take a community of older homes that havent been well maintained for decades, refurbing a house can double it's value. Say a direlect house off sells for $250K in 2020, then $500K a year later after being reno'd. That $250K home disappears from the market forever which dramatically raises the price for the local neighbourhood. That happened a lot in older Hamilton, and a lot less in more affluent Burlington where homes weren't neglected for decades.

Another thing that happens when a community is gentrified is demand increases because the fresh renos are usually still a relative bargain. As demand increases, supply drops and prices rise further. If demand persists, as it has in Hamilton, prices dont stop rising until they reach the price of a new build, which today runs about $300/sq' + land.
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