[Undead]

I doubt existing renters will fare well when a bunch of owners foreclose and are forced to rent on top of existing demand.

Fundamentally, we need to get away from a consumption, endless growth economic model which creates perverse incentives to create bubbles like this.

 

[Admiral Beez]

I doubt existing renters will fare well when a bunch of owners foreclose and are forced to rent on top of existing demand.

Good tenants, those who can afford $3k or more a month, who pay on time, cause no fuss and care for the property will always have a place. These are the golden, cherished tenants that every landlord covets.

 

[Undead]

Not wrong, but now you're just playing into DN's "eff the masses" point lol.

 

[DirectionNorth]

I doubt existing renters will fare well when a bunch of owners foreclose and are forced to rent on top of existing demand.

Fundamentally, we need to get away from a consumption, endless growth economic model which creates perverse incentives to create bubbles like this.

You’re missing the point - the correction will be painful, and it will be more painful the longer we hold it off.

A bit like an addiction.

A correction would not have been a big deal in 2010, and not a big deal outside Vancouver in 2014, but we’ve made unbridled housing growth semi-official government policy.

The crash is going to come, and it’s not going to come when we want. We should have burst the bubble and eaten the loss while the economy was good and we had some control over its direction of impact, but the longer we wait, the less control we’ll have.

Not wrong, but now you're just playing into DN's "eff the masses" point lol.

Everything wrong with housing in one sentence, and we still wonder why people are mad.

Nobody’s going to work in the morning planning evil schemes to screw the worker, but through willful ignorance, this is the effect of the policy they’ve coordinated. Or not coordinated.

Hence my statement.

 

[Undead]

You’re missing the point - the correction will be painful, and it will be more painful the longer we hold it off.

I'm missing nothing. I've been well aware of this for years.

I think the point is that this issue has become a lot messier and harder to resolve because we've let it fester too long, as you mentioned. But that's water under the bridge. Today, it's no longer as simple as letting it all crash which may cause many people to lose their homes and jobs.

That's all I'm saying--it's no longer as simple as "just let it all crash/burn."

A correction would not have been a big deal in 2010, and not a big deal outside Vancouver in 2014, but we’ve made unbridled housing growth semi-official government policy.

If you check my post history, you'll see that I've made this exact point multiple times.

 

[Admiral Beez]

‘Nothing is moving’: GTA sales of newly built homes plummet in May

'We're quite concerned' as low sales could mean developments put the brakes on projects, further tightening supply, says the head of the Building Industry and Land Development Association.

www.thestar.com

Or, how about you make a product the market both wants and can afford?

 

[evandyk]

At the size people want if they're going to live way out there, construction costs make that very difficult. And obviously what people "can afford" is a lot different when you're getting a mortgage at 6% vs 3.5% That $5,000 monthly mortgage they mention gets you $1M two years ago vs $800K today.

 

[toaster29]

People are doing the math, and realizing they come out ahead with renting. On average, the difference in Toronto/GTA seems to be about 1500-1800 per month (comparing renting vs mortgage for the same unit). As long as you are putting your down payment and that difference away in an average ETF or S&P indexed fund, after 25 years you come out ahead, and that doesn't even take into account condo fees, taxes, lawyers, land transfers, replacing appliances. I don't think there is any reason for anyone to buy right now. If you look at the last 3 days sold you'll see we're back down to the low 400s for 1beds in the GTA, and some listings even going below that.

 

[evandyk]

Whether or not you come out ahead depends almost entirely on the rate of return on the house/apartment you buy. And, of course, your returns on the index fund are taxed, while your returns on a primary residence are tax-free.

Anyways, I hope the returns on houses are crap for the next decade, making your post completely true.

 

[Admiral Beez]

Toronto condo sales plummet 28% in June as sales crash across all property types

Despite Bank of Canada rate cut, prices and sales were down across the board in June over this time last year, according to the Toronto Regional Real Estate Board.

www.thestar.com

These developers have failed in their one job. Make what the market wants and can afford and you'll be fine.

 

[evandyk]

As long as those condos are still being rented out while they fail to sell, they're still contributing to housing.

What people can afford has changed considerably over the last two years, which is shorter than the timeframe most developers operate on.

 

[Admiral Beez]

As long as those condos are still being rented out while they fail to sell, they're still contributing to housing.

What people can afford has changed considerably over the last two years, which is shorter than the timeframe most developers operate on.

Developers were rarely building for housing, but for investors whose primary goal was to purchase low, wait for appreciation and then flip for a profit, often times while leaving the units empty. That's why so many units are tiny, with sh#te layouts and views. Just look at these below, clearly not made to live in, but just to maximise the space for investors.

What's With The Shape Of New Condo Floor Plans?

For those condo enthusiasts who appreciate a "square plan," you won't believe what the "future" of condo floor plans has in store for us...

torontorealtyblog.com

 

[evandyk]

Oh, I'm aware of the problems, but those units are still being rented out, the landlords are just grumpy that the rents aren't paying both their equity and interest payments on their mortgage at current interest rates. Prices will correct. Sadly, it will cause a bunch of pain in the number of new units coming in the next few years.

 

[Admiral Beez]

Oh, I'm aware of the problems, but those units are still being rented out, the landlords are just grumpy that the rents aren't paying both their equity and interest payments on their mortgage at current interest rates. Prices will correct. Sadly, it will cause a bunch of pain in the number of new units coming in the next few years.

I would not be surprised if in the next two decades we increasingly see retrofits of these investor-focused buildings where several shoebox units are combined into two or three bedroom units that are more suitable for owner occupancy, especially families.

http://www.twindo.ca/uploads/7/4/8/0/7480311/3200675_orig.jpg

This fellow from ten years ago, see below is trying to talk people out of the idea.

Combining Multiple Condo Units | Toronto Realty Blog

I’ve seen this done countless times, but I have never seen it done effectively. I’m sure there’s an old adage, or a saying, that explains something to the effect of, “It’s best use is for that which it was intended.”...

torontorealtyblog.com

 

[Bloor West Villager]

I would not be surprised if in the next two decades we increasingly see retrofits of these investor-focused buildings where several shoebox units are combined into two or three bedroom units that are more suitable for owner occupancy, especially families.

While I would love to see this happen so families have better urban housing options, I just can't see a market where this is viable, unless there's a severe downturn. The terrible investor units of today are just priced too high to add construction costs on top.

The other issue is that it's not just the unit layouts that aren't conducive for family living, but many buildings don't have amenities for families or poor elevators ratios, etc. So combining smaller units only solves part of the problem.