Midtown Urbanist
Superstar
I feel like you are correct on the different hydro rates. I would like to see some data to confirm it though.
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ponyboy
Active Member
from a recent interview with Robert Shiller
http://business.financialpost.com/i...arket-distractions-like-trump-and-new-bmo-etf
I don't know how accurate his view is of Toronto not being boxed in, since the Greenbelt may be a part of rising land prices, but it isn't as geographically boxed in as some other expensive cities.
Quote from the interview --
"What are your views on the Canadian housing market?
Existing real estate in established cities like Toronto and Vancouver looks bubbly to me, and I would be concerned. I wouldn’t advise someone to buy two or three houses in Toronto.
I don’t know what exactly is driving it, and I know it’s not just Canada — it’s also New Zealand, Australia, Hong Kong and Shanghai.
History doesn’t show this as a good investing strategy, as even great cities don’t appreciate very much over time. It’s very slow compared to other investments and in the long run, it hasn’t worked out. If you look at major U.S. cities over 100 years, they do not appreciated that much. That’s because cities are spreading out, and office centres move further away. A recent study showed home prices are higher in boxed in areas. That’s logical, but Toronto isn’t boxed in.
Home prices in New York, particularly Manhattan, are several times higher than they once were, but they acquired that status over hundreds of years, so it’s not that dramatic of an investment performer over the long haul.
"
http://business.financialpost.com/i...arket-distractions-like-trump-and-new-bmo-etf
I don't know how accurate his view is of Toronto not being boxed in, since the Greenbelt may be a part of rising land prices, but it isn't as geographically boxed in as some other expensive cities.
Quote from the interview --
"What are your views on the Canadian housing market?
Existing real estate in established cities like Toronto and Vancouver looks bubbly to me, and I would be concerned. I wouldn’t advise someone to buy two or three houses in Toronto.
I don’t know what exactly is driving it, and I know it’s not just Canada — it’s also New Zealand, Australia, Hong Kong and Shanghai.
History doesn’t show this as a good investing strategy, as even great cities don’t appreciate very much over time. It’s very slow compared to other investments and in the long run, it hasn’t worked out. If you look at major U.S. cities over 100 years, they do not appreciated that much. That’s because cities are spreading out, and office centres move further away. A recent study showed home prices are higher in boxed in areas. That’s logical, but Toronto isn’t boxed in.
Home prices in New York, particularly Manhattan, are several times higher than they once were, but they acquired that status over hundreds of years, so it’s not that dramatic of an investment performer over the long haul.
"
Eug
Senior Member
"Bubble" or not, because of these uber low rates, when my current term is up I will be mortgage free. 
I'm currently paying just 2.29%, for my final 2 year term. I wouldn't have been able to pay this mortgage down so quickly if I had to pay 5%+ 5-year rates like over a decade ago when I bought this house (which was an upgrade from a condo townhouse).
Since then the prices according to Teranet have more than doubled. IOW, even after the last couple of month-over-month declines, I'd basically be back to where I started price-wise even with a 50% real estate price crash. Either way though, I'm likely going to stay in this place for the long haul. At least another 15 years, but if my wife gets her way, it could be a lot longer.
On the flip side though, if the prices were like this when I was looking to buy over ten years ago, I wouldn't have been able to afford this house.
I'm currently paying just 2.29%, for my final 2 year term. I wouldn't have been able to pay this mortgage down so quickly if I had to pay 5%+ 5-year rates like over a decade ago when I bought this house (which was an upgrade from a condo townhouse).Since then the prices according to Teranet have more than doubled. IOW, even after the last couple of month-over-month declines, I'd basically be back to where I started price-wise even with a 50% real estate price crash. Either way though, I'm likely going to stay in this place for the long haul. At least another 15 years, but if my wife gets her way, it could be a lot longer.
On the flip side though, if the prices were like this when I was looking to buy over ten years ago, I wouldn't have been able to afford this house.
TheKingEast
Senior Member
"Bubble" or not, because of these uber low rates, when my current term is up I will be mortgage free.
Since then the prices according to Teranet have more than doubled. IOW, even after the last couple of month-over-month declines, I'd basically be back to where I started price-wise even with a 50% real estate price crash. Either way though, I'm likely going to stay in this place for the long haul. At least another 15 years, but if my wife gets her way, it could be a lot longer.
On the flip side though, if the prices were like this when I was looking to buy over ten years ago, I wouldn't have been able to afford this house.
I can't afford the home I bought just 3 years ago with the new rules and ridiculous appreciation. I bought my 1st property for $200K in my mid 20's. There is no way in hell I'd be able to buy that same property at that age today. No chance. So with these new rules and such, I don't think they really do anything for first time home buyers. Home ownership is still a pipe dream for them unless they have some wealthy parents to lend them money.
Eug
Senior Member
Yeah, I hear ya. I make a good income, but one big reason I am living where I am today is because I moved into my well-paying jobs right at the turn of the century, as the real estate market was ramping up.
In other words, I was very lucky to be a Generation X'er. No, not quite as lucky as a Baby Boomer in terms of being able to afford a home, but way luckier than a Millenial. My nephew and niece may not ever be able to afford a detached home in the 416, unless they marry rich.
TheKingEast
Senior Member
blixtex
Active Member
It might be sad, but a sign of Toronto being a victim of its own success. Also, the Millennials are the largest demographic ever. With that comes much more competition and inflation. Especially today when borders don't exist anymore (free flowing of migrants). Offset by the very same parents (Baby Boomer) also benefiting off the asset inflation.
In other words, as a millennial, hopefully our parents are property owners and intend to share/pass along that wealth. Millennials will just get it later in life. Gen X'er is actually one of the lowest/smallest demographics meaning there was very little competition for property or limited resources (I would argue jobs as well).
They benefited hugely off the corporate infrastructure set up by the Baby Boomers, and more recently, the biggest consumer market in history of the Millennials. I technically fall in-between a Gen-X (Classically until 1975 or so.. yes, growing up as a kid in the 80s, that's about where it was )and millennial (83-1999). Meaning we are the last generation to get in the property market before it went crazy around 2014. The degree of it being the earlier you got in, the more Gen-X like benefit. The later, the more Gen-Y angst.
Eug
Senior Member
Another problem is that the City of Toronto is getting too used to the revenue generated from the land transfer tax.
https://www.thestar.com/opinion/sta...e-day-torontos-real-estate-luck-runs-out.html
Thing is, despite the city manager’s frequent warnings, the potential consequences of a crash have gotten worse and worse for the city over this term of council. Not only have revenues from land transfer taxes nearly doubled since 2014, but the share of the city’s revenue they account for has also almost doubled (from 3.8 per cent in 2014 to a projected 7 per cent in 2018).
https://www.thestar.com/opinion/sta...e-day-torontos-real-estate-luck-runs-out.html
Thing is, despite the city manager’s frequent warnings, the potential consequences of a crash have gotten worse and worse for the city over this term of council. Not only have revenues from land transfer taxes nearly doubled since 2014, but the share of the city’s revenue they account for has also almost doubled (from 3.8 per cent in 2014 to a projected 7 per cent in 2018).
blixtex
Active Member
Yupp.. and of course it would never be given back or cut back (the goal post should be moved since that 400K figure was based on the average at the time) since the market has been far more successful than imagined. Now with the slowdown, it will definitely decrease when compared to previous years (lower prices, far less transactions on the higher end).
canarob
Senior Member
I really worry about the affect this will have on income inequality. Folks whose parents don't own in the GTA (or Vancouver) often don't have the means to help their kids with a down payment or a massive inheritance. Obviously inequality isn't a new issue, but it feels like lately it has less to do with how much your parents earn(ed) and more to do with whether they lived and owned in the GTA. I know so many people (mostly gen-x and millennials) with similar household incomes but vastly different housing situations for this reason.
Gen Xers graduated into some of the worst job markets ever (mid-late 90s) and were, as a group, chronically underemployed for years. I'm not sure they/we had it much better in employment. For housing though, absolutely.
blixtex
Active Member
For sure it is more now "what decision did your parents make at that time" as a huge cause of 'imbalance' in today's societal housing dynamics. Even the poorer people having bought in places like Scarborough are now an extremely envied class (who would have thunketh).
Interesting you've brought up the GenX demographic as it's not often brought up here. Usually it's Baby Boomer vs Millennial. I'm of the view that Gen X did 'end' around 1975 and Millennials started around 83 (My wife and I are right about in the middle of that so we identify and get along well with both groups). The ones that define it as a hard stop and start between X and Y isn't accurate for me. I remember as a kid in the 80s, I was not considered GenX. But would be considered now after this definition revision.
I've had this discussion with my wife alot lately based on close
So GenX was a generation of population that declined drastically from the baby boomer generation. Makes sense since the parents of Gen X would have generally been born around WW2 (+- a few years) so a much lower population during this catastrophic time of poverty, death and post-war adjustment of the later 40s. In the US, there are technically 9 million GenX'ers that are 'missing'. So GenX'ers did have some of the worst job markets, but because of the severe shortage of their demographic, any sort of salary job presented ample opportunities for housing opportunities. That's why you see GenX having simple jobs like 'Manager', 'Sales' living in places that new Drs today would struggle to.
I've also noticed GenXs were able to get promoted faster from lower positions than their millennial counterparts with less or same degrees/designations. This makes sense since the Babyboomers would have been their managers, and there would have been more BabyBoomers in Sr. Positions while comparatively far fewer GenXers to fill economically expanding roles, especially in the 2000s = more opportunity with less competition. Of course career focus is different with Millennials generally refusing to work much overtime and yolo but I believe that also factors into this disparity with GenX being significantly advantaged over Millennials in the housing game. My co-hort (75-82 )in between, generally have the Gen-X benefits. More so the older you are and earlier you acted in housing and career. But if you're later and acted late, than you'd be more in the millennial area of competitiveness.
Admiral Beez
Superstar
I'm glad I was born a Gen Xer, born 1971. Benefited from OSAP grants before they were canceled and replaced by pricey loans. Had no problem landing a job when I graduated university in 1995 in my chosen field (international sales). Houses weren't too pricey, in 1998 our semi in Cabbagetown was under $300K, or about 4X our family pre-tax income of the time.
I can't imagine trying to buy a CT house today, assuming two good jobs paying $70K or thereabouts, a house even like my old semi (no parking, no insulation, etc...) would be >7X ones' family pre-tax income. Maybe that's where the bubble will begin, but I don't see my house dropping to anything near its pre-2000 value. As for my kids, they'll be fine, though I wish I'd bought them both a condo as rental years ago.
TheKingEast
Senior Member
Cabbagetown houses took off. There was a time they were attainable, still pricey for me but attainable. Now? For the type of house I want? Not a chance...and that's with 2 high paying incomes. I'm not one of those people who feels I'm owed a house, but $800K budget doesn't get you very far.
Admiral Beez
Superstar
If I was a young person I'd be leaving this city, and I mean the entire GTA. When I moved to Fredericton, NB in 2004 I was amazed at how cheap houses were. Even today, right downtown on the walking trails and walkable to cafes and shops is this for under $320K https://www.realtor.ca/Residential/...AINT-JOHN-ST-FREDERICTON-New-Brunswick-E3B4B3
No, rural or small town life isn't for everyone (I came back to Cabbagetown after 3 years in Freddie, for example), but I think too many millennials envision the only life is working for a start-up software firm and living in a condo box. There's a lot of country out there.
I lived in a small town for a lot of years. My children left because there simply weren't career opportunities. There were jobs, but not careers.