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It's real estate, you win some, you lose some.

My condo went up 100% in 5-6yrs and then gracefully declined, it happens.

He bought in a 'up and coming' neighbourhood at likely one of the peaks and so it is.

Any investment is inherently a risk and while the condo market is abysmal right now, it will come back as the delta grows between it and SFH/duplexs etc. and as we make central areas more livable and safe again.

Condos will be a good option for some when avg. housing becomes unreachable and rents are $3.50 a foot.
 
Offworld said:
Not to call BS on part of a key part of this story, but in what world would a balanced TFSA earn enough to buy a house unless somebody won a day-trading lottery?
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The simple answer: it doesn't, even with maxed out contributions at a fairly exceptional 10% avg return. Moreover, the problem with 'opportunity cost' buy vs rent what-if scenarios is that TFSA maximums aside, he wasn't going to be investing the dollar difference between owning vs renting a comparable space. It's really just a nice thought experiment.

The real opportunity cost is if you're dissuaded from pursuing opportunities/experiences/education elsewhere due to being anchored by your mortgaged home. Which I guess is still sort of his point.
 
IanO said:
It's real estate, you win some, you lose some.

My condo went up 100% in 5-6yrs and then gracefully declined, it happens.

He bought in a 'up and coming' neighbourhood at likely one of the peaks and so it is.

Any investment is inherently a risk and while the condo market is abysmal right now, it will come back as the delta grows between it and SFH/duplexs etc. and as we make central areas more livable and safe again.

Condos will be a good option for some when avg. housing becomes unreachable and rents are $3.50 a foot.
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I paid 140k for a condo a couple months back. Great location, super old building.

I currently pay less for my mortgage + condo fees + utilities than I did while renting. I invest the surplus primarily in XEQT for broad market exposure. I have no expectation of selling the unit for more than I paid, since condos are depreciating assets.

I think the issue I take with this guy's perspective is that he doesn't present it as "I overpaid for a condo and was surprised when it went down in value", but rather that renting is more financially sensible than buying. The math shakes out differently for everyone, and there is no "best" way to pay for the place you live.
 
Our condo fees are pretty damn high but I absolutely love the location (literally across two streets from the river valley), the views (Walterdale bridge and the Leg), the incredible (1970s) layout with an actual window in the giant kitchen, and the neighbours (our building hosts a weekly friday happy hour that's fabulous). We briefly considered getting a house but for a similar location it would have been a whole series of pretty big compromises and between the high property taxes and utility costs we'd have ended up with a monthly amount substantially higher than we pay now. I know, I made a spreadsheet haha.

We didn't buy this as an investment but as a home, and maybe that's the problem. We continue to think of real estate as an investment and it used to be, but isn't as much anymore. And it's also more than that. I have moved so many times in the last two decades, this is where I want to grow old, so I honestly don't care all that much if it won't make me rich in the end.
 
policyenthusiast said:
I paid 140k for a condo a couple months back. Great location, super old building.

I currently pay less for my mortgage + condo fees + utilities than I did while renting. I invest the surplus primarily in XEQT for broad market exposure. I have no expectation of selling the unit for more than I paid, since condos are depreciating assets.

I think the issue I take with this guy's perspective is that he doesn't present it as "I overpaid for a condo and was surprised when it went down in value", but rather that renting is more financially sensible than buying. The math shakes out differently for everyone, and there is no "best" way to pay for the place you live.
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In the long run real estate values generally go up even here, although the last decade or so in Edmonton has not been very kind, particularly to condos.

However, lest we forget there were also decades when investing in the market did not produce great returns either. With anything, if you buy at the peak, it will take longer for the value to recover or go up.

Although I do agree we shouldn't look at real estate so much for price appreciation, but what works personally and cost wise. If you can pay less to own than rent, then that is clearly a good deal.
 
thommyjo said:
We need to aggressively tax secondary homes, plus remove the capital gains exemption for primary residences.
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The capital gains exemption on principal residences can be a stabilizing factor in home prices. If someone buys at 400k, sells at 410k and then loses 50k of that amount to taxes, the financially prudent measure would be to increase the price to 460k.

Agreed on secondary homes though. Higher property taxes for part-time residents makes sense.
 
policyenthusiast said:
The capital gains exemption on principal residences can be a stabilizing factor in home prices. If someone buys at 400k, sells at 410k and then loses 50k of that amount to taxes, the financially prudent measure would be to increase the price to 460k.

Agreed on secondary homes though. Higher property taxes for part-time residents makes sense.
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There can be a whack of tax on selling a secondary property, even more so when it is a rental property that has been depreciated, and that has been the case for decades.

I'm not sure if all the various restrictions on foreign ownership and vacant properties has really helped lower prices in those parts of the country that have them, they generally remain far more expensive than here.

I feel some well of people just regard them as a nuisance, they can also be hard to police and enforce compliance. We also have had higher taxes for property flippers in Canada several years now.
 
David A said:
There can be a whack of tax on selling a secondary property, even more so when it is a rental property that has been depreciated, and that has been the case for decades.

I'm not sure if all the various restrictions on foreign ownership and vacant properties has really helped lower prices in those parts of the country that have them, they generally remain far more expensive than here.

I feel some well of people just regard them as a nuisance, they can also be hard to police and enforce compliance. We also have had higher taxes for property flippers in Canada several years now.
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Those that "flip" properties have always paid more tax than those who invest in properties. Investment properties will be taxed based on the increase in value being treated as capital gains. Properties that have either not been held long enough to be considered investment will be taxed based on the increase in value being treated as income (either corporate or personal). In both cases, any depreciation that has been claimed will be have been used to lower the acquisition or book cost and that reduction therefor be increase the taxable amount on sale.

I don't think the various restrictions on foreign ownership have reduced demand substantially although it has perhaps kept some syndicators from securing enough investors. Those that can actually afford to buy here with cash will still do so as long as Canada and the Canadian dollar are considered a safe haven for that capital. There will always be legally defensible work-arounds for initial acquisitions and the taxes payable on an ongoing basis are insulting but affordable. The real restrictions are probably imposed on Canadian purchasers for whom the vacancy taxes can be a deterrent on purchasing or holding vacant properties as vacation or second homes (those being purchased or held for investment/income purposes have no real negative impact other than the sometimes confusing reporting criteria to three levels of government).
 
The tax rules on flipping were before somewhat grey. So I suspect a lot of people reported capital gains taxed more favourably rather than as business income in the past. I suspect some even claimed multiple principal residence exemptions in the past. The rules have been clarified and more more specific/restrictive now.

There is some intersection between places where people purchase vacation properties and housing is very expensive and limited for locals (ex. Whistler BC), but I suspect this situation does not apply to many places where people own vacation properties in Canada.

Also, the vacant property rules can still be catch me if you can. Who is going to monitor how many days a property is vacant? Is some civil servant going to knock on the door daily?
 
1749495068858

 
From Better Dwelling:

Canadian Real Estate Development Plans Fell Sharply​

Canadian building intentions hit a roadblock last month. The total value of building permits fell to just $11.7 billion in April, down 14% from last year. The real (inflation-adjusted) value is 16.4% lower, down to the weakest level in nearly a year. It marked the third-largest annual drop for any month since 2020.

Here are Edmonton's stats.

That's a 40% increase here, compared to a 14% drop nationally. Goes to show that Toronto/Vancouver's loss is our gain.
 
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