Is there a housing Bubble in the GTA!!!

[MYSITEONLY]

Prices of houses just keep climbing up and up!! Where does it stop, I m already a homeowner looking to buy something as a investment but the prices are just crazy, then six months later your kicking yourself in the but. Where will it stop?

[wrong hole]

Pop!!!!

[oldjones]

Never gonna stop, but the rising curve may dip for a bit—say a few years to a decade like last time—and by a few tens of thousands. That may be the "pop" for you. It takes skill and cunning to buy and sell real estate for profit, or we'd all be doing it. But as the man said, they aren't making it any more, and we are making people. So bend close, I'm gonna whisper: Buy cheap, hold long, sell high My ex is still in the 2 bedroom house we bought for 40K in '76, and she has agents offer ten times that weekly. But there was a time in the nineties she would have been hardpressed to even get her equity out. Somewhere on that roller-coaster there's money to be made. You do the math.

Meantime—say six months ago you bought that house you mention—are you the really kinda guy who would have it back on the market now? And would the two closing costs, the carrying costs, shot-term insurance and the capital gains taxes (gotta live there or it's a business and you pay) still leave you with better than say $20 an hour for your time?

[SilentLeviathan]

Housing bubble in the GTA? Maybe. New York and LA? Yes.

The real question is when is it going to pop. Probably not any time soon. Interest rates are going up too slowly.

[SilentLeviathan]

Buy cheap, hold long, sell highAh yes, buy low, sell high. How could something so simple be so complicated? :)

[red]

Prices of houses just keep climbing up and up!! Where does it stop, I m already a homeowner looking to buy something as a investment but the prices are just crazy, then six months later your kicking yourself in the but. Where will it stop?
it will peak on May 3rd sometime just before lunch.

[jimmyt]

I was telling my accountant that we were looking for an investment property (condo/house/duplex etc) in the months to come as we just finished paying off our house.

He told us to wait, said that he had a bunch of clients that were big into investment properties (8 - 10 houses condos per client) that were selling now, taking equity, and they would buy on the way back up.

Remember the "7 year" rule in real estate....... we are at just over 7 years since the last low cycle.......if you wait it out, you can buy when it is in the trough and really maximize.

BUT, nowadays real estate is never really a gamble.

[MYSITEONLY]

I m looking at a townhouse approx. 1740 sq ft. for $325,900, but I m thinking maybe I should buy a semi for $350,000 about the same size. When I think about it it seems like a lot of money for what I m getting. Any input????

[burlboy]

The only bubble that you might have to worry about is the power bubble. with all the extra power consumption from the new units in Toronto there is going to be a power crunch. The prices will adjust downward when the rolling blackouts start. Who wants to live in the dark?

[jimmyt]

I m looking at a townhouse approx. 1740 sq ft. for $325,900, but I m thinking maybe I should buy a semi for $350,000 about the same size. When I think about it it seems like a lot of money for what I m getting. Any input????


Depends on where.... that sounds about right to me, for either a t/h or a semi.........what location are you thinking?

We had a t/h 1 block from the Lake in Oakville downtown area before we had our most recent place, and sold it for $360,000 2 1/2 years ago. It was 1700 sq ft.

Right now we live in West end Toronto and our place which was purchased for $417,000 in late 2003 would sell for the low $600,000's........

[benito]

I lived there for the first housing boom. Bought a 4 bedroom house in Etobicoke for $81,000 in 1980. All of a sudden people were standing in line overnight for a chance to by houses that weren't even built. Moved in 1986 and sold the house for $239,000. Seems like the bubble never burst, just leaks a little air now and then.
Move down to Western New York. The $120,000 house I bought in 1988 is worth about $120,000 today.

[MYSITEONLY]

I think I may take a shot and buy the townhome!! for 325K it won't be built till next year!! Its in Woodbride just off Hwy 7 any suggestions?

[james t kirk]

You never know.

Over the loooonnnnngggggg term, real estate is nothing but up.

Looking back at 92, interest rates were much higher, as was unemployment, inflation, etc.

Nothing goes up forever though.

I really really doubt you will ever see prices back to their 94 / 95 levels though. Missed the boat there.

The other thing to consider is that Toronto is growing in leaps and bounds with the population projected to double in the next 20 some odd years.

As that growth continues, housing IN THE CITY will do nothing but appreciate over time.

You might see the curve level off, even drop, but it' s not going to crash unless there is something catastrophic coming our way in the economy (terrorism, US currency crisis, etc.)

I have a good friend who has been waiting to buy now for 6 or 7 years. He keeps waiting for it to pop and keeps shaking his head when it doesn't.

[nip]

my 2 cents worth..

Not as bad as '92 since other factors are a bit better...but interest rates WILL rise for various reasons(a too strong loonie etc) and this can not keep going forever...and has ofcourse slowed down abit(fraction) already...

If you're in it for a long term investment..like 25-30 years or so..then don't worry about it ...your investment is safe and will do well over time...

A few investor friends of mine who have good liquid sold last year and am waiting for it to dip to get back in...their opinion matches mine: it will 'correct' modestly and the market will cool for a few years...whether this starts this year or next, who knows?...they're waiting for the 'correction' and there are just too many stupid prices out there now...ie, my buddy sold his VERY nice lake front condo a about 16 months ago for $445k and infereior and crappy ones are asking for almost $600k now! and about 18 months ago those were on for around $400k...yes, the market has gone up but not that much especially for 'no frill' units...I have also noticed these units asking for ridiculous prices are on the market still after a long time...

As for Condo's...haven't heard it for a while...but I remember some people saying that if/when a correction happens...because of the vast numbers of new condo's flooding the market(downtown), the correction will be slightly greater for the condo market than family homes.....also I read somewhere(?) that more people were realising the cost of commutting an extra hour per day and living somewhere out of downtown save them alot of money..an argument for downtown condo prices would be that immigrants always head for the GTA (maybe that includes Etobicoke etc?)

My advice to anyone looking to invest...hold off for a while, be patient(wish I had been in the late 80's and I would be richer now..and if the ex-wife didn't take half of everything!) and wait for the correction(5-10% who knows? but don't expect a major correction/crash)...advice to first time buyers ...don't pay the over priced values for some 'average' appartment...hold off, save some more cash and wait for the 'correction'...ofcourse I am no expert etc and am just offering my opinion.

[james t kirk]

my 2 cents worth..

Not as bad as '92 since other factors are a bit better...but interest rates WILL rise for various reasons(a too strong loonie etc) and this can not keep going forever...and has ofcourse slowed down abit(fraction) already...



Actually, rising interest rates stock the fire to the loonie and cause it to rise.

If the BOC wants to drop the value of the loonie, they must lower interest rates.

Hence the catch 22 right now. The bank wants to RAISE rates, but the more they raise the higher the loonie goes (being propelled by high commodity prices, a balanced gov't budget, a safe investment, etc. etc.)

The higher the loonie, the more the impact on the manufacturing sector which for years has been relying on the low dollar as a means to compete with the Americans rather than increasing productivity to decrease costs.

[tboy]

350 K sounds high for woodbridge and is it a free hold or condominium? Condos typically haven't realized the growth that individual homes have and (whoever said it) there are a ton on the market. You also have to consider the maintenance cost. Some condos maintenance costs equate to the same as your mortgage payment therefore to rent it, you have to charge way too much just to break even. You also have to consider that the maintenance costs WILL go up over the years as electricity and other utility costs go up.

Just remember the golden rule for real estate: location location location. The best bet would be to buy the cheapest house in the best neighbourhood.

Also lofts are the next big thing although they too (like condos) are cooling their heels a bit. Finally I did something at the right time and 7 yrs ago paid $75,000.00 for my loft and it was recently appraised at $240,000.00.

[tightfit]

Sometimes I wonder if people really realize how much 350,000 dollars really is.
When you convert that to house building money, you would be suprised how much of a house you could actually build for that kinda money. The average subdivision house is framed for between 3500 and 4 grand. Now how much money do you think bricks, wood, concrete and windows are for that house...
if your thinking...holy...shi...then your right. Builders make allot of the money
on the land cost alone..but what if you were to find yourself a nice property
and build..just imagine..

[tboy]

Sometimes I wonder if people really realize how much 350,000 dollars really is.
When you convert that to house building money, you would be suprised how much of a house you could actually build for that kinda money. The average subdivision house is framed for between 3500 and 4 grand. Now how much money do you think bricks, wood, concrete and windows are for that house...
if your thinking...holy...shi...then your right. Builders make allot of the money
on the land cost alone..but what if you were to find yourself a nice property
and build..just imagine..

Dude, you don't know what the hell you're talking about....it costs about $150.00 per square foot to build a house and that doesn't include the cost of the property, utility feeds, lot development, etc.

Windows on an average house: $8000.00
Flooring (hardwood): $4,000.00
Appliances: $2000.00
Kitchen Cabinets: $25 - 3000.00
Furnace: $2 - $3000.00
A/C: $3000.00
Roof: $4000.00

What about the roads? Who do you think pays for them? The sidewalks? all the grass? the sewers?

As for a building lot ANYWHERE in southern Ontario is cheap? You're whacked. A half decent sized lot out in BF nowhere will run you about $60 - $100 K. and that is just a building lot that you have to clear, level, provide access. Did you know it costs about $1200.00 a pole just to run power to the building?

You think builders make a ton of money on a house? You DON'T have any idea. I worked as a trim carpenter up in O'ville and that builder, after all expenses, made about $5000.00 per house which equates to a profit margin of about 1% and that isn't ALL profit as they have all the legal fees/levys associated with turning a field into a subdivision. How do I know this? We were talking about building ME a house there and he showed me a spreasheet he had on the model I wanted. Now this wasn't one of those promo pieces you see at the sales office. This was directly off his accounting program and it wasn't Bullshit as we were looking at areas that I could do myself to cut the price down.

BTW: have you priced out a sheet of exterior grade plywood recently? It has gone from $20.00 a sheet to about $45.00 and ALL materials have gone up due to the demand.

How about copper pipe? Copper is at an all time high....

I just love how people not involved in the industry make BS statements like that.....

[MYSITEONLY]

Thanks for the input, I may just hold off for a bit.

[tightfit]

"You think builders make a ton of money on a house? You DON'T have any idea. I worked as a trim carpenter up in O'ville and that builder, after all expenses, made about $5000.00 per house which equates to a profit margin of about 1% and that isn't ALL profit as they have all the legal fees/levys associated with turning a field into a subdivision. How do I know this? We were talking about building ME a house there and he showed me a spreasheet he had on the model I wanted. Now this wasn't one of those promo pieces you see at the sales office. This was directly off his accounting program and it wasn't Bullshit as we were looking at areas that I could do myself to cut the price down.

BTW: have you priced out a sheet of exterior grade plywood recently? It has gone from $20.00 a sheet to about $45.00 and ALL materials have gone up due to the demand.

How about copper pipe? Copper is at an all time high....

I just love how people not involved in the industry make BS statements like that.....
"




geez.. I hate it when you get some smartass who thinks he knows everything
and states he is the authority..when in fact it is he that really knows shit...
listen up my trim carpenter buddy..if your builder buddy has told you that he only makes $5000.00 a house (and I know a few of these builder buddies) and you believe that, then I suggest you keep doing whatever it is that you are doing.. and I would ask him why he would go through all the risk of building a house only to make 5 grand..there are easier ways to make money with allot less risk. As for my experience.. not that i need to justify anything to any fellow terbs but I am finishing building my 8th house (second over 6000 sq/ft, still a novice at the game). Now if you want to talk about adding development charges and planning/engineering fees to the equation then I agree that building a few houses (lets say 20 for example) from one piece of land can be very costly and if you build off of a model like that, then yes your profit could be 5 grand a house. But lets get back to reality for a sec. You as an individual are not going to live in 10 houses are you? No..so we're talking about building one house...yes one house. And if you think that you can't build a house for 350 grand then you never will be able to build a house period. And any builder that tells you that he can't build a pretty damn nice
house for 350 grand is BS'ING you and himself.
Building a house takes more than throwing a figure of $150.00 a sq/ft around. It calls for you to take a risk. If you don't have the balls to risk then you can't build. If you think that 350 grand is not going to allow you to build a house then it probably won't..but what if it was enough? If you are really interested in seeing what can be built for that kind of money, I'll let you in on a few secrets your builder buddy didn't show you. As for your figures, I can assure you that if a builder is making 5 grand on a house then he better be Greenpark or the like where 600 house subdivisions are built, because the only guys that can build this way are the guys building in big numbers. Anyone risking 345,000 to make 5 grand, either is a fool, or has cut the risk down by building many multiple houses.

oh..maybe your right about the copper pipe pricing as well..as I build with the new pvc pipe I rarely have had to purchase more than a few lengths of the copper..
I don't follow the copper market.

[james t kirk]

Actually, I was involved with a townhouse development in Etobicoke.

They were building 200 units.

They claimed their profit was $10,000 per unit.

Not alot for the amount of risk.

Mind you, that was profit, pure unadulterated profit.

The developers worked their salaries into the costs of the units as well.

I don't know who thinks you can frame a house for 4 grand though. That's pretty cheap.

[tboy]

James:

Lots of people THINK you can frame a house for 4 grand, but they are living in fantasy land where framers work for 10 bucks an hour and lumber is dirt cheap.....

I can see the 10K profit/unit situation. With Townhouses you have 2 less exterior walls to build, less brickwork, incorporated 1 car garage, common roof, etc. Still only about a 5% profit though, not a lot considering the risk factor.

[james t kirk]

James:

Lots of people THINK you can frame a house for 4 grand, but they are living in fantasy land where framers work for 10 bucks an hour and lumber is dirt cheap.....



I agree.

You can't get a basement strapped for 4 grand.

A good framing crew is around 4 guys, perhaps 3 at the least in my eyes.

Usually, you have 2 very good guys, one guy who is learning, and one slave.

The guys who KNOW what they are doing are being charged out at 50 to 75 an hour.

[Mr. Downtown]

Lets see....

interest rates (albeit rising) are still low and are predicted in some corners as falling off by mid summer (long term yields are beginning).

banks are still lending construction financing. these are anal retentive organizations yet they consider investing in this type of product as being ok, so as long as the pre-sale count is high.

people (owner occupants) are still buying. the "investor" catagory (re: condos) is still relatively low.

there is no (perhaps scant) speculation occuring.

there are approx 100,000 people landing on Toronto's doorstep each year. They need rooves over their heads.

unemployment stats are at or near all time low despite the occasional catchy newpaper headliner of a plant closing.

bubble.....what bubble. People, please, go chew some gum instead.

[Questor]

You never know.

Over the loooonnnnngggggg term, real estate is nothing but up.

You might see the curve level off, even drop, but it' s not going to crash unless there is something catastrophic coming our way in the economy (terrorism, US currency crisis, etc.)

Well, we don't have to worry about that do we? Dubya has everything under control in Iraq and besides, Canada wouldn't be a target for terrorism because...oh, that's right, we are front and centre in the War Without End Against Terror in Afganistan. Still, we can keep our fingers crossed that terrorism does not strike Canada. But anyway, the US$ has never been so strong. It couldn't possibly crash....oh, wait, they are running up trillion dollar deficits and their economy is based on an ever growing supply of cheap oil? Well, anyway we should all believe in blind faith because God is on our side! Right? LOL

[Papi Chulo]

I am hoping the prime rate soon returns to a fair level of 8-9%

[james t kirk]

I am hoping the prime rate soon returns to a fair level of 8-9%

Not currently in the market right.

[MYSITEONLY]

Thanks for all the input, most of you are very confident that the market is stable, and home prices are for the most part okay in the gta area.

[MYSITEONLY]

I thought I would bring this back out of the archive to see what everyone thinks months later. I have since sold my home of 10years and purchased another home. Just curious as to what your thought are?

[lickrolaine]

I thought I would bring this back out of the archive to see what everyone thinks months later. I have since sold my home of 10years and purchased another home. Just curious as to what your thought are?

chances are a lot of the money you made from the sale went into the new home to cover the increases on it.The more expensive the home the more it has gone up.So if you bought for 200,000 10 yrs ago and sold for 400,000 now,the house you bought for (1) 600,000 would have been 300,000 grand 10 yrs ago,(2) 300,000 would have been 100,000 grand 10 yrs ago.The deal is ok if you end up with more equity or the house you want to be in,location you want to live in.The housing wave moved outwards from Toronto starting in the 60's,all through the 70' to 90's it was booming and still is.There is an increase in the reverse wave,with people wanting to move back into the city,thus the hot condo market.
This market is going to be a lot like the game musical chairs,when the music stops you want to be seated.Who will buy all the monster homes for 2 million,when all the boomers want to retire?What new immigrant will be able to pay the taxes and utilities of around 1500 per month,plus the mortgage payment.

How many people's kids here can afford a new home now and say in 5yrs.The bubble will burst when ownership costs cripple the average buyer.Imagine a starter home going for 375,000 dollars,in Barrie.Oh man are we headed down a sorted path.

[tboy]

Lick, "how can people's kids here..."? the same as I, my parents and my parents parents did....just grin and jump....I never thought in my lifetime I'd be able to afford a place within the core but I did make the jump and am glad I did. Put it this way, I paid 7 times for my 800 sq ft loft what my parents did for their house in '71 but while their place is worth $250,000.00 now mine is worth about the same in 8 yrs.

As you have seen around town, builders are putting up condos, townhouses and anything else they can fit onto any postage stamp sized lot.

For many of us, $180K for a condo may seem like a lot but that will carry for what a decent sized apartment will so anyone just entering the market, this will be their start.

[fuji]

Canadians only have 1.6 kids per woman. The population is going to peak, and then start falling. House prices go up partly because we have more and more people, but the same amount of land. When we have less and less people, but the same amount of land, prices will start falling.

[Serpent]

Based on what happened to people in California, housing was (and largely still is) out of the reach of the first time buyer. Aggressive mortgages like ARMs and interest-onlys were offered, folks didn't have to put down the significant downpayments and the whole..bubble.. was sustained by this madness.

Over a trillion dollars worth of ARMs are going to re-adjust in the US in 2007. It's going to be scary -- sales, foreclosures or re-financing are going to be the options available to the folks who won't be able to meet their new payments.

If your underlying principles are solid here in the GTA - downpayments required, people buying because mortgage is more or less equal to their rent....then you don't have a bubble.

[Powershot]

Canadians only have 1.6 kids per woman. The population is going to peak, and then start falling. House prices go up partly because we have more and more people, but the same amount of land. When we have less and less people, but the same amount of land, prices will start falling.
?? Immigration more than makes up for the < 2 children per woman stat.

[orkut]

...
If your underlying principles are solid here in the GTA - downpayments required, people buying because mortgage is more or less equal to their rent....then you don't have a bubble.

Scotia Bank is offering a mortgage without a downpayment:

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20061006/mortgage_deal_061006/20061006?hub=TopStories (http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20061006/mortgage_deal_061006/20061006?hub=TopStories)

[MYSITEONLY]

I think in Canada our prices are okay at the current levels, they may seem high to some but based on pricing of some homes in the US I think were still ok here!!

[hapkido]

I think you need to assess the following general guidelines:

1) Quality of Investment
2) Investment Horizon
3) Investment Risk and Margin of Safety- under the worst case scenario can you manage it?
4) Tenant management and maintenance head aches
5) Are there better options relative to real estate?

I personally wouldn't invest in real estate now. But if it was during 1995 at the start of the housing bull cycle hell ya! hindsight is 20/20.

I analyze and invest in stocks now. And please spare me the comments that stocks are risky and realestate is better in the long run. What alot of people tend to forget when calculating their BIG price increase is all the other expenses in purchasing that house (property tax, agent fees, maintenance, insurance, carrying cost, switching costetc etc)

[MYSITEONLY]

Now that its two years later since this thread was posted, just wondering what the consensus is now, with our housing market. I have since bought a larger home and moved up. Hopefully my investment was a good one.

[21pro]

generally speaking, the closer you are to the Toronto core, the better your real estate has performed over the last 2 years. (with fluctuations from neighbourhood to neighbourhood). and apparently, the best areas were the formerly unsightly neighbourhoods such as regent park, etc...

generally, most of the urban suburbs have performed well, though, the outlining perimeter is seeing a correction in the last 6 months. Caledon, King west of 400, Erin, though are beautiful areas, are in the middle of experiencing the highest recorded 'days on market' DOM in the last 16 years. My belief is that the manufacturing and transportation centres in Brampton in Mississauga is going through hard times- that and commuting expenses and times have increased dramatically in those areas as traffic increases, but without any real upgrade to infrastructure along those routes... Still, no real deal in those areas, though...

Everywhere else in the gta still seems reasonably healthy.

[3Tees]

generally speaking, the closer you are to the Toronto core, the better your real estate has performed over the last 2 years. (with fluctuations from neighbourhood to neighbourhood). and apparently, the best areas were the formerly unsightly neighbourhoods such as regent park, etc...

generally, most of the urban suburbs have performed well, though, the outlining perimeter is seeing a correction in the last 6 months. Caledon, King west of 400, Erin, though are beautiful areas, are in the middle of experiencing the highest recorded 'days on market' DOM in the last 16 years. My belief is that the manufacturing and transportation centres in Brampton in Mississauga is going through hard times- that and commuting expenses and times have increased dramatically in those areas as traffic increases, but without any real upgrade to infrastructure along those routes... Still, no real deal in those areas, though...

Everywhere else in the gta still seems reasonably healthy.

Couldn't agree more. I live in one of those downtown urban areas you refer to and have seen my real estate values increase a fair bit over the last two and a half years.

I'm also doing some desperate selling investing in those exact outlying areas, and the DOM in some areas of Oshawa, Ajax and Courtice is as high as six months!! I budget 3 months DOM for my deals and working with my Real Estate Agent will not go near areas higher than that. Brampton on average has a 3 month DOM.

[21pro]

The slumping U.S. economy has already hit Canada's manufacturing sector hard since demand has been squeezed for Canadian shipments of everything from cement and auto parts to lumber, industrial products and roofing supplies, which come mainly from the industrial provinces of Ontario and Quebec. But an even greater drop in economic activity south of the border will eventually spread to all provinces and cut growth projections for all parts of Canada.



yes, Brampton's DOM aren't bad right now, but the DOM in Caledon have jumped from 60 days to an average of 18 months!!

If you take a look at the quote above, you'll notice that the 'sensitive' industries are also, unfortunately a core deal of what is comprised of in some 905 areas and outside, main industries.... ie, Brampton, Oshawa, Ajax, St. Catharines, London, Cambridge, Brantford, etc...

and the cities are taking action... this is a recent economic publishing from the city of Brampton that shows a 92% decrease in building permits issued from 1 year ago!!!!
http://www.brampton.ca/economic-development/links_publications/MonitoringBramptonEconomyJan08.pdf

also note in the article that the average house only increased in value of 1.6% in one year in Brampton- a far cry from the recent 2001-06 increases of between 6% and 16%. ... and this is PRE-recession. in fact, job growth was staggering at over 146% during that same period... that spells something simple... housing is NO LONGER AFFORDABLE in this area. It would be interesting to compile similar data for other gta areas... vaughan anyone?, or what about certain toronto areas?... both still appear to be booming... i wonder what the stats show, though...

[3Tees]

Good analysis 21pro. I'm curious though about where you go the DOM for Caledon. TREB shows approx 97 days as of their most recent Market Watch. Are you using something else? Would love to know what it is.

[21pro]

Caledon Chambre of Commerce & Brampton Board of Trade have a RE program that compiles TREB data with other stats such as with the Land Registry, etc...

there could be a few reasons why the data differs.
1. could be the reduction in buiding permits issued- this alongside the restricted development allowed in Caledon signifies harsh economic conditions... one would think that by restricting development would increase market activity, but not in a climate where the average home price is above $500k and the drive to the city center is still above 45minutes...
2. the average caledon home is a detached bungalow on a
+1 acre lot, so it sways the data a little bit to a longer DOM than what the TREB data might show... just a guess.

i am most certain if i used Bolton stats, which is what TREB uses as the majority weighting in what represents Caledon... IMO, Bolton is it's own town... but, if it included their figures, it would show closer to the TREB's data of around 100 days.

either way, the days of 4 DOM aren't common in either territory.

[Meister]

Large parts of Caledon are part of the Oak Ridges Moraine, which has a building freeze on new sub-divisions. It therefore is a highly sought after area actually. The problem is that in the last 2-3 years it has gotten out of control. There were quite a few nice 3000 sqft houses that were listed for 1.2 to 1.8 million. They just don't sell anymore like they did last year. Prices are coming back down to earth in Caledon.

[3Tees]

Good to know. There was another thread on here where some guy said "time to do bargain shopping" because he thought POS's would go up, and I sort of roasted him on it. What you are saying is an extension of that really - if you are going to invest in these conditions, there is still a lot of money to be made, but you have to be so careful in what you do. Investing in, or buying ANY house, is no longer a sure bet - so let him go bargain shopping anywhere, he'll lose his shirt.

While I don't know Caledon that well, I would never invest in it based on what you are saying. Forget the commute to the city aspect (which I agree with), it's the fact that its a 1 acre lot and an average price of $500k. No wonder they would be on the market for so long. The houses there are tailored to such a small and specific market of people.

The best investment houses will always be 25-year old houses, three bedrooms, two baths, working-class areas (both white and blue collar), in self-contained city-centres (i.e. have malls, good schools, civic facilities and the occasional MP for the hobbyist of course). There are two reasons. First, in a market frenzy these don't go up as much because they are not as glamourous as the newer developments, so when things crash, they don't have as far to go. Second, and more important, there is more likely to be a market for these houses in most any economy. I'm not saying that the market for this type of house will not soften, but it will not soften as much as those specialized one-acres in Caledon. Also, if purchased at the right time (at the lower-end of a correction) they would make very good rentals. I, however, would never be able to claim to know when to time purchases like this.

Ultimately what your analysis shows is that certain areas remain viable and others are in the toilet already. Moreover, when looking at TREB data, it is important to remember that they produce AVERAGES. I have already instructed my broker to focus on micro-areas, as opposed to entire sections of the market.

[Pro007]

Its a possibility that bubble is building up in GTA, but when it may burst it is not exactly known, it all depends on the interest rate and cost of borrowing and required Down payments etc. recently the Government of harper was concerned about this since the report came up latley that Real estate prices was up almost 19% in the last quarter of 2009 in GTA. That is definitly a big news for the economy that still strugling to get unemployment under control. The government answer to this is, increasing the interst rate and cost of borrwoing my send the wrong signal to the market and it may effect the sale of all real estate new and exitsting across the country and send the housing cost through the roof when people strugling from pay cheque to pay chaeque and hardly holding to their jobs due to the general slow in the economy. Instead the government suggested that an increase in the down payment requirement and the reduction of amortization of mortgare, I.E. 5% down may not be good enough any more and 40 years amortization will be gone and reduced to lower leverl. I think such action will slow the buying activity but will not effect the prices and existing mortgage holders payments in the long run. If the bubble may bursts signs will show up in the economy where more FOR SALES, FOR RENT, FOR LEASE shows up on every corner. According to a chart in my hand foreclosures is on the rise, it doubled in 2009 over 2008 and its projected tol continue to rise in 2010 but at slwoer pase from 2009 and it may increase by 25% over 2009 levels. So far these are not serious signs of a bubble but its a concern and the situation should not be taken for granted and it should be watched very closley by those who are interested in owning properties or selling them. On other hand there are lot of liquidity in the system and there are many lenders ready to finance real estate deals up to 100% for qualifying clients, which shows that the confidence still strong on real estate investments due to a sustanable lower interest rate and there are signs that it will not go higher in a short time.

Pro007

[21pro]

to be honest with you, I have found many price reductions in various areas between July 2008 and September 2009.

In my area of knowledge, i was able to buy a century home in georgetown for under $200k and just recently another home in Caledon East for under $250k on a 1acre lot... my neighbours houses are all over $1mil. yeah, it's a piece of shit, but will only take $400k to bring it up and ahead of anything my neighbours have... though, I am electing to renovate conservatively and bring it up to about a $600k appraisal value by investing only $130k... should be done by June.

[SoulPancake]

in my area, a townhouse goes for over $400K. its really inflated. looking to buy my first place by the end of this year or in 2011. probably will need to leave my area.

[21pro]

would that mean you are needing to leave 'Happy Place'?

[canucklehead]

Compared to most "World Class" cities Toronto's real estate is a deal... London, San Fran.... Beijing or Shanghai ....

[shakenbake]

I m looking at a townhouse approx. 1740 sq ft. for $325,900, but I m thinking maybe I should buy a semi for $350,000 about the same size. When I think about it it seems like a lot of money for what I m getting. Any input????

Location, Location, Location.

http://www.theatlantic.com/images/issues/200607u/realestate3sm.gif

[21pro]

Regardless of whether you think that there is a housing bubble or not, the Government of Ontario and GOC is going to DEVALUE the price of your home!!

http://www.theglobeandmail.com/report-on-business/canadians-playing-it-safe-with-mortgages-report-finds/article1430801/

[shakenbake]

Regardless of whether you think that there is a housing bubble or not, the Government of Ontario and GOC is going to DEVALUE the price of your home!!

http://www.theglobeandmail.com/report-on-business/canadians-playing-it-safe-with-mortgages-report-finds/article1430801/

"Canada's Finance Minister Jim Flaherty has said that an overheating housing market poses a threat to the economic recovery, with resale prices up 20 per cent in the last year as low interest rates fuel a boom.

He said the government may consider raising the minimum down payment from 5 per cent to “something higher” and shorten the amount of time a mortgage can be amortized. "

And how, pray tell, does this devalue the prices of our houses? I think that canada woudl be protecting the ineterests of the borrowers in not biting off more than they can chew. That was one reason for the economic crisis, wasn't it, the greed of bankers and investors who pushed the limits too far?

Also, I did not see any reference to the Province on that site.