I found this an interesting read with some neat parallels.

http://canadahousingcrash.blogspot.c...goes-bust.html

 

It's written as much as an opposition MP as it is to sell his book. In either case he embellishes the downside as much as possible,
but offers no suggestions to the people he's trying so hard to scare the crap out of.
The borderline, poorly informed homeowners he's directing this at won't know whether to **** or go blind or steal third base after reading it.
"What should I do? Should I sell? Should I buy? Should I hold? Should I refinance? Should I pay it down? Should I rent? Should I flip? Should I do nothing?"

His real intent is simply to go on record stating the obvious about a housing bubble so that he can say "I told you so" in the future.
And if he can take credit for helping the correction along, so much the better for him.

 

^ I haven't even taken a moment to read the link but I agree with what you've written. Garth Turner has been touting this burst (amongst other investment topics he has been wrong on) for so long he has no credibility.

 

Not really sure what the fuss is about. He harps on the people who are living beyond their means. 1.5% down payment and 40 year mortgages?!? I have friends and family members who work at some of the big 5 banks and constantly hear stories of these banks approving these mortgages to every joe smith who walks through the door. Funny stuff if you ask me.

Reminds me of some of those 20 y/o members on the forum who put every penny made into their coupe, yet have their parents pay the insurance.

 

people often ask why i'm still renting. i generally point to the fact that even a 3-1/2 condo would cost more per month than both my 4-1/2 and my car and insurance combined.

as for getting the parent's to cover insurance, having been a 20yr-old male fairly recently, i can say that the insurance rates for that demographic are insane, especially in urban areas. even in quebec where we have some of the cheapest insurance in north america, it's tough, if i used an urban address i would have been paying 2500$/ year on a 2000$ car. tell me that makes sense. so go easy on 'em, it's a lot smarter to put the car under the mother's name in those circumstances. (i always paid my own, under my own name, but it was only 1 way the first few cars, and i used my rural address).

but back on topic, i can't see housing prices not dropping, if they keep going up no one will be able to afford a house.

There's an interesting trend developing around here: many young families are returning to rural communities because of the real estate prices, reversing a long standing drain of educated youth from rural areas to the city.

 

I've heard plenty from associates and clients dealing with financing for cars. It's amazing.

 

I don't know who the guy is but you probably have to buy the book to see the advice he gives to fix the problem... I just found it interesting the comparisons between the 40yr mortgage and the US sub prime loans and the average household earnings increase vs housing prices increase. Tbh I never saw those stats before reading that. I guess it was an eye opener for ME anyway and not obvious. Call me a poorly informed non-homeowner. lol

 

I'm a real estate agent (side job).

I rent. People always ask me why. As an agent, it would be contradicting to tell them why so the best rebuttal I can come up with to make them feel better than me is: "I can't afford it". This is NOT the case for me.

A decline is already evident as houses are sitting WAY longer on the market and people can't sell as quick as they'd like to. I just did a showing with a client on a house in prime Etobicoke central that sat for over 4 months and has been price dropped and still can't even bring in an offer. Etobicoke is supposedly "recession-proof" but decline is evident.

Prices are coming down drastically in certain areas, not even following a 2% inflation. The fact that the common citizen, buying his first home, making fukk all is maxing out his mortgage term for 40 years tells you it hit its limits.

I am however not a believer in the almighty crash where people will be starving and all hell breaks loose. The experts and I project a major value correction (prices corrected to true value) 3 years from now.

Until then, I advise this for your own security, take it or leave it, I don't care:
1. Do not participate in bidding wars. This is going to be your demise. Be patient, you will find it.
2. DO NOT DO A 40 year mortgage.
3. Buy with a decent downpayment. the 0 down policy will bite you in the ***. Allow room for fluctuating prices as your mortgage may potentially be more than the value of your house one day. The downpayment will offset this.
4. Buy in 'better' areas if possible(ie; Etobicoke, east mississauga), where your neighbours dont frequently sell and you wont be screwed by having their sales drop your value (ie: Brampton). Sacrifice a bedroom or a a double garage for a single to move closer to the core. The closer you are to Toronto core, the better off you will be.

I'm not nostradamus here giving predictions but anyone who can analyze basic stats will tell you the same.

 

^good advice in general for all re financing/downpayments and for those that choose to live in/near GTA.

Price declines/increases vary by region/city across the country.

 

In what ways am I better off? You had me all the way until this comment.

In my opinion houses closer to core are smaller (as you have said). Meaning singles or first time buyers are more likely to buy these homes. As they acquire more wealth and additions to the family they would probably want to upsize to a bigger home to live in. Meaning, these (closer to core) would then have a bigger propensity of changing owners, than say the 700k home in burlington. I think you contradicted yourself.

 

not at all contradicted, you misunderstood.

There are many reasons for wanting to own near the core:
-it is important for people who work in the city. executives do not want to drive downtown from burlington. executives are the ones that are less affected by recession and declining economy. you want these people as your neighbours.

-quantity is a major issue in etobicoke as the older aged seniors population still own majority of the homes in etobicoke and finding a home in that area involves waiting for someone to die in many cases. Lower quantity of homes means better value stability or increase.

- it attracts builders who will pay top dollars for your highly valuable shiitbox.


Generally, the point is that to live closer to the core means that you will have to pay more for less features, thus the 'sacrifice'. Your land is worth alot more and will hold its form, regardless of age of your home. Does it mean you will have more changing owners? not necessarily. Beacause of the lack of features, smaller space, less bedrooms, etc, first time buyers are scared off as these smaller places cost substantially more than something alot newer and larger in an outskirt city.

If you have 2 kids, 2 cars and a dog, I would professionally suggest a 3 bedroom bungalow in etobicoke over a 4 bedroom, double car garage, 2 story 3000sqft. new home in lets say brampton, milton, or cambridge. If you cant handle the lack of space do whatever suits you. If money is your game and you want end value, coming closer to the core is your answer.

 

How can you even define a burst? Sure, housing prices might level off or even decline a bit; but there isn't going to be a burst for a long, long time.

Of course most of it comes down to area, and here in the GTA "areas" can be as small as 5 blocks by 5 blocks. There are still massive bidding wars going on in Parkdale, Roncesvalles, High Park, Beaches, Danforth, etc...

 

An article from today's T-dot Star you guys may be interested in. Like I said, be patient.

GTA house sales drop 22%
"'Miserable' data blamed on near-record snowfall, land-transfer tax, but economic impact also seen"

The article:
http://www.thestar.com/Business/article/410042


A GTA map w/districts showing growth(or loss) in the districts relative to last year's to this year's average house prices. note: a 5% minimum increase in a year should be seen to say the district is showing growth (owners breaking even after 5% realtor commissions if they owned for only a year, my rule of thumb, not everyone's):
http://www3.thestar.com/static/PDF/0...ale-April3.pdf

 

Homes are currently way overpriced. Over the past 5-7 years house prices have doubled, historically real estate appreciates slightly more than the rate of inflation/wages. Currently we are in a bubble. A 10-25% correction could easily happen and is needed to bring values back in line. This could happen rather quickly or you could see home prices flaten out for 5-15 years while inflation eats away at the value (that would be less painfull).

 

My daughter is considering a move back to Canada, and she is checking out her options for a 4 bedroom home in downtown Toronto.
It doesn't look real good.