Author Topic: Garth Turner - Real Estate in Canada  (Read 510803 times)

Jurgis

  • Hero Member
  • *****
  • Posts: 4630
    • Porfolio
Re: Garth Turner - Real Estate in Canada
« Reply #630 on: March 07, 2016, 02:52:05 PM »
I'm just happy that I live in a "global city" Boston and can buy an OK house in OK burbs for $400-500K or so.

Not sure what I would do if I was forced to live in the "global city" of Silly Valley or some other multi-million $ place. Of course, part of my choice was not to live in Silly Valley.

Price ranges differ for different people. For me, the RE is not worth it when you have to pay an amount of money that you could just retire on in cheaper but still OK location. Somewhere in the range of US$1M-2M and up.

Just for fun in OKish exurbs of "global city" of Chicago, you can buy places for $200K or so... Climate not much different from Toronto. ;)
"Before you can be rich, you must be poor." - Nef Anyo
--------------------------------------------------------------------
"American History X", "Milk", "The Insider", "Dirty Money", "LBJ"


augustabound

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 991
Re: Garth Turner - Real Estate in Canada
« Reply #631 on: March 07, 2016, 03:18:14 PM »
I'm just happy that I live in a "global city" Boston and can buy an OK house in OK burbs for $400-500K or so.

We're in an OK suburb (45 minutes) of Toronto and paid $350 4 years ago. Same model of home is currently selling for $500K.

Toronto's not a global city until they can get their pathetic transit issues fixed. We need the Ford brothers back in office to build subways to everywhere. :D
"Serenity now, insanity later." - Lloyd Braun

scorpioncapital

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1785
    • scorpion capital
Re: Garth Turner - Real Estate in Canada
« Reply #632 on: March 07, 2016, 03:35:31 PM »
Apparently Toronto did have a bubble in the past - http://www.torontocondobubble.com/2013/02/toronto-housing-bubble-in-1980s.html

A few notes

- Rise of interest rates were one way it got pricked - hitting 12.7%.
- There is a difference between inflation-adjusted and nominal house prices.

"If you bought a condo in downtown Toronto in 1989 and you were to sold it today, you would likely still end up selling your house at a lose and that's not counting the closing costs of a sale. "



KCLarkin

  • Hero Member
  • *****
  • Posts: 1679
Re: Garth Turner - Real Estate in Canada
« Reply #633 on: March 07, 2016, 04:57:32 PM »
Apparently Toronto did have a bubble in the past - http://www.torontocondobubble.com/2013/02/toronto-housing-bubble-in-1980s.html

A few notes

- Rise of interest rates were one way it got pricked - hitting 12.7%.
- There is a difference between inflation-adjusted and nominal house prices.

"If you bought a condo in downtown Toronto in 1989 and you were to sold it today, you would likely still end up selling your house at a lose and that's not counting the closing costs of a sale. "

The Toronto bubble did not self-implode. Rather a combination of astronomical mortgage rates, a massive increase in unemployment, and a major recession popped the bubble. Even then, house prices only dropped 28%.

And what happened to the lenders? Mortgage arrears in Ontario skyrocketed to 0.72%. Wells Fargo had 0.52% arrears in 2006? Canada's worst housing crash resulted in delinquencies only slightly higher than America's best bank in a boom year?
« Last Edit: March 07, 2016, 05:35:37 PM by KCLarkin »

JBTC

  • Sr. Member
  • ****
  • Posts: 255
Re: Garth Turner - Real Estate in Canada
« Reply #634 on: March 07, 2016, 05:25:06 PM »
I just don't believe that Canada is some Shangri-la that isn't bound by the RE logic of the rest of the world, where families making $50k/year can carry mortgages of over half a million and live in ugly old bungalows from the 1970s selling for $800k+, etc.

The RE logic of the rest of the world? What is it?

The more I look at real estate across the globe, the more I see the differences. I wish there were a universal ratio on housing valuation. There isn't.

Within Canada, the price difference between cities is huge and likely widening. Within a city, prices can change a lot between neighborhoods.

Not saying property prices cannot go out of whack and correct. It's a fact that property prices go down less often and less dramatically than stock markets.

I'd love it if someone can present a cogent case on why Canadian housing prices will fall significantly in the near-term. I am all ears.

wisdom

  • Hero Member
  • *****
  • Posts: 744
Re: Garth Turner - Real Estate in Canada
« Reply #635 on: March 07, 2016, 06:27:30 PM »
Let me try inverting? Vancouver and Toronto are cheap - what reasons could there be?
« Last Edit: March 07, 2016, 08:46:00 PM by wisdom »

beerbaron

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1404
Re: Garth Turner - Real Estate in Canada
« Reply #636 on: March 07, 2016, 06:41:40 PM »
I just don't believe that Canada is some Shangri-la that isn't bound by the RE logic of the rest of the world, where families making $50k/year can carry mortgages of over half a million and live in ugly old bungalows from the 1970s selling for $800k+, etc.

The RE logic of the rest of the world? What is it?

The more I look at real estate across the globe, the more I see the differences. I wish there were a universal ratio on housing valuation. There isn't.

Within Canada, the price difference between cities is huge and likely widening. Within a city, prices can change a lot between neighborhoods.

Not saying property prices cannot go out of whack and correct. It's a fact that property prices go down less often and less dramatically than stock markets.

I'd love it if someone can present a cogent case on why Canadian housing prices will fall significantly in the near-term. I am all ears.

Among reasons for corrections in any sectors but applies especially well for canadian real estate are:
Debt serviceability
Increase Competition (in case of real estate, other cities or rents)
Subpar return on capital
Interest rate increase

BeerBaron


Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 11510
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: Garth Turner - Real Estate in Canada
« Reply #637 on: March 07, 2016, 07:40:24 PM »
I just don't believe that Canada is some Shangri-la that isn't bound by the RE logic of the rest of the world, where families making $50k/year can carry mortgages of over half a million and live in ugly old bungalows from the 1970s selling for $800k+, etc.

The RE logic of the rest of the world? What is it?

Over the long-term, housing tends to follow inflation and incomes. When it diverges from that for too long, it tends to come back to it.

Let's look at the alternative. Let's say what's going on right now in Canada is normal and will keep going on. So in 10-15 years, regular Canadians will have 1-2 million dollar houses while americans are in their 350k houses? First time buyers will get mortgages over half a million to get a crappy starter house, something that would cost more than $2k/month just to service the interests at a more normalized 5% (don't believe interest rates will normalize within 10-15 years?). How high will debt levels be by then? They're already at very elevated levels right now, above where Americans where in 2007...  The rate cut by the BoC stirred the pot, but that can't go on forever either.

I believe that when something can't go on, at a certain point it must stop. Who knows when... But I'd rather buy after that happens than before.
"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen

JBTC

  • Sr. Member
  • ****
  • Posts: 255
Re: Garth Turner - Real Estate in Canada
« Reply #638 on: March 07, 2016, 07:57:33 PM »
Let me try inverting? Vancouver and Toronto are cheap - war reasons could there be?

I personally don't think they are cheap. But I appreciate the fact that they are perennially ranked among the most livable cities on the planet and  they attract people to move there.

And for the many thousands moving from HK, Beijing, and Shanghai to Canada every year, there can be no doubt the prices in V/T are very reasonable when compared to their home markets.

wisdom

  • Hero Member
  • *****
  • Posts: 744
Re: Garth Turner - Real Estate in Canada
« Reply #639 on: March 07, 2016, 08:52:52 PM »
Was the US attracting thousands of immigrants before 2008?

Is HK attracting thousands of immigrants? What about Singapore?

I believe Delhi attracts more people than Vancouver, yet the prices there are dropping? To the people moving to Delhi, it is a more attractive option than where they lived prior to moving there? According to the logic that thousands of people moving to a city for a better life - prices should keep going up. Why isn't it working in HK, Singapore or Delhi. Please don't tell me because everyone wants to move to TO or Vancouver. For most of the rich in the world a city like Vancouver doesn't even register.

It is great to sit in Canada and imagine that everyone in world wants to live in Canada. The reality is we only take in 250,000 people a year.
« Last Edit: March 07, 2016, 08:59:57 PM by wisdom »