Canada's 'housing bubble' deemed close to bursting

[rbt]

Originally Posted by p_xavier

I paid nearly 700$ in condo fees per month. The insurance part of that was about 300$ (insurance is a big issue in a condo building). Insurance for the house is 115$ a month.

That's much much higher than typical for condo insurance in Toronto.

For example, a 10 year old 450 unit building near Yorkville was $104k in 2019; ~$20/month per unit. IIRC the deductible is around $50k.

Utilities were $720k; ~$130/month per unit.

Staff (security, cleaning, super, plumbing, elevator, administration contracts) were $1,150k; ~$210/month per unit.

Most newer buildings in that neighbourhood have expenses in the same range; insurance is negligible. Of course, units are expected to insure the contents of their unit separately which is another $30/month for $60000 in assets (furniture, contents, and flooring).

[p_xavier]

Originally Posted by rbt

That's much much higher than typical for condo insurance in Toronto.

For example, a 10 year old 450 unit building near Yorkville was $104k in 2019; ~$20/month per unit. IIRC the deductible is around $50k.

Utilities were $720k; ~$130/month per unit.

Staff (security, cleaning, super, plumbing, elevator, administration contracts) were $1,150k; ~$210/month per unit.

Most newer buildings in that neighbourhood have expenses in the same range; insurance is negligible. Of course, units are expected to insure the contents of their unit separately which is another $30/month for $60000 in assets (furniture, contents, and flooring).

Insurance was 175k$ for a 52 unit building. That was in Montréal and quite standard in the price range.

[rofina]

Originally Posted by p_xavier

Insurance was 175k$ for a 52 unit building. That was in Montréal and quite standard in the price range.

That's crazy!

Last building I owned in was dealing with the Strata Insurance debacle like most BC Strata's are.

The building was about same size 50 or 55 units.

The insurance first year I was on council was $28,000. Three years latter lowest quote was $75,000.

But that's still a $100,000 below your building in Montreal.

That's terrifying - people were already livid paying over $300 a month for a 1 bedroom strata fee without receiving any amenities; pools, gyms, hot tubs, etc.

[rofina]

Anyone looking to buy anything this year?

I'm having a hard time reading the tea leaves. We just had the biggest run up ever. Is it time to hold off?

Even if one can buy something that pays for itself?

Not sure what to do. Part of me wants to sit on more cash. Part of me thinks that's dumb considering the inflation numbers.

Where is everyone else head at for the moment?

[MolsonExport]

I sold a 72 storey office skyscraper in downtown Toronto this past year. Took a capital loss, alas, given the tepid demand for office space due to covid. But the loss was offset by my profitable sale of 12 luxury condo towers in Vancouver and Toronto, where demand has held up despite the pandemic.

[rofina]

Originally Posted by MolsonExport

I sold a 72 storey office skyscraper in downtown Toronto this past year. Took a capital loss, alas, given the tepid demand for office space due to covid. But the loss was offset by my profitable sale of 12 luxury condo towers in Vancouver and Toronto, where demand has held up despite the pandemic.

Do you run a pension fund?

And if so, what are your inflation projections like for the next 12 months?

[Innsertnamehere]

I sold my holdings in Schitts Creek this year - the media attention shot it’s value artificially high so I cashed in. Thank god too, my fledgling hotel chain I started a year or two ago was bleeding money so the sale backstopped that before I could vend it.

Planning on buying some more smaller towns or maybe a mid-sized city instead. Looking at 🞵🞵🞵🞵🞵, Newfoundland, or maybe Maple Creek. I might even buy a space station if the value proposition is right.

[Architype]

I think purchase of strata parking spots or storage lockers would be a good investment, especially in anticipation of conversion of these to residential units. I mean we have micro suites & laneway housing, so next it should be parking stall & storage locker housing.

Heck you can even rent a 160 sq. ft. bathroom with a mattress in it in Vancouver for $680 per mo.

This bathroom with a bed was listed as a 'micro studio' for $680/mo in Vancouver (PHOTOS)

https://www.vancouverisawesome.com/real-...-vancouver-photos-3927000#body-container

Seriously, nobody knows what the trend will be but I would bet on up for now.

[lio45]

Originally Posted by rofina

Anyone looking to buy anything this year?

I'm having a hard time reading the tea leaves. We just had the biggest run up ever. Is it time to hold off?

Even if one can buy something that pays for itself?

Not sure what to do. Part of me wants to sit on more cash. Part of me thinks that's dumb considering the inflation numbers.

Where is everyone else head at for the moment?

I have almost no leverage anymore (everything's nearly paid off) so I'm currently working on refinancing several key properties and the goal is to buy a bunch of buildings. Ideally at yesteryear's prices but the math still works in my hometown. I have several new acquisition projects at the moment. Also looks like I'm among the few who answered you without sarcasm...

If I were you I wouldn't invest in Vancouver-area real estate though. Cap rates there are a joke. It's basically a Bitcoin-esque Ponzi scheme. Find some other market, ideally an area you enjoy living in or visiting.

[rofina]

Originally Posted by lio45

I have almost no leverage anymore (everything's nearly paid off) so I'm currently working on refinancing several key properties and the goal is to buy a bunch of buildings. Ideally at yesteryear's prices but the math still works in my hometown. I have several new acquisition projects at the moment. Also looks like I'm among the few who answered you without sarcasm...

If I were you I wouldn't invest in Vancouver-area real estate though. Cap rates there are a joke. It's basically a Bitcoin-esque Ponzi scheme. Find some other market, ideally an area you enjoy living in or visiting.

Thanks for the reply.

Point taken - I sold all I had in the Lower Mainland in 2020. I been buying elsewhere BC for much better value. Secondary markets in BC are very appealing and have become even more so thanks to the pandemic relocators. I agree Vancouver is overbought right now, I don't want exposure here.

Markets seem shaky as heck with the amount of stimulus pumping through the system, but that should also mean continued and sustained inflation, in which case I want more RE.

I was thinking of acquiring a multi unit, but might just tone down and buy an SFH and split into 2 suites, at least that limits my exposure somewhat, while providing upside should this gravy train continue.

[someone123]

Originally Posted by rofina

Point taken - I sold all I had in the Lower Mainland in 2020. I been buying elsewhere BC for much better value. Secondary markets in BC are very appealing and have become even more so thanks to the pandemic relocators. I agree Vancouver is overbought right now, I don't want exposure here.

Investment wise aren't average people naturally overexposed to their own local real estate market anyway, at least indirectly? For example let's say you're a real estate agent participating in the 80% of the local economy here that's RE based. If the housing market tanks you'll lose income from your job and the value of any local properties you bought will go down. It's like people who hold tons of shares of their employer.

I have a condo and it's hard to imagine even buying a bigger property here unless there is some significant shift. You have to pay so much more to upgrade even very modestly from a 2 BR. You could instead buy a whole house in another market. I think it would be far better to live for part of the year in say Mexico (which AFAICT allows remote work without authorization, unlike the US)) than to own a slightly bigger place in Vancouver. And of course this is just a healthy result of a market being super expensive, although I think it is bubbly around here.

I've considered other parts of BC too but all of BC is expensive for what it offers. The southeast of BC is nice and super expensive, and some rural areas are OK and still semi-expensive.

[rofina]

Originally Posted by someone123

Investment wise aren't average people naturally overexposed to their own local real estate market anyway, at least indirectly? For example let's say you're a real estate agent participating in the 80% of the local economy here that's RE based. If the housing market tanks you'll lose income from your job and the value of any local properties you bought will go down. It's like people who hold tons of shares of their employer.

I have a condo and it's hard to imagine even buying a bigger property here unless there is some significant shift. You have to pay so much more to upgrade even very modestly from a 2 BR. You could instead buy a whole house in another market. I think it would be far better to live for part of the year in say Mexico (which AFAICT allows remote work without authorization, unlike the US)) than to own a slightly bigger place in Vancouver. And of course this is just a healthy result of a market being super expensive, although I think it is bubbly around here.

I've considered other parts of BC too but all of BC is expensive for what it offers. The southeast of BC is nice and super expensive, and some rural areas are OK and still semi-expensive.

BC RE is very expensive in general, definitely agree. Dying logging towns are trading houses for $300,000. Its completely illogical.

It also has a rental market skewed way too far in direction of tenants.
I say this as both a landlord in BC, and renter in Vancouver.

Lastly, absolutely the property ladder in Vancouver is broken.
I had made a lot of equity from my first purchase in 2009. But its useless; the next step up to a SFH or townhouse is life changing expensive.

Best decision I ever made was making my equity liquid by selling out of Vancouver, renting here, and using that money to invest elsewhere.

As they always say, to each their own, but the idea behind spending every penny on housing just to own seems ridiculous to me. That's not living life.

[Al Ski]

Oh ffs! When this blows it's not just the RE market that's going to implode it will be everything.

Our entire (stock market) economy is completely detached from reality not just the RE market.

Expect a 2008 level disaster, only worse.

[Innsertnamehere]

Originally Posted by Al Ski

Oh ffs! When this blows it's not just the RE market that's going to implode it will be everything.

Our entire (stock market) economy is completely detached from reality not just the RE market.

Expect a 2008 level disaster, only worse.

May I remind you that the first post in this thread, calling out a housing bubble, is from 2011.

[rousseau]

Nothing new to add to this thread, save for my feeling of unease about two bedroom apartments in Stratford going for $1,700+. That's more than my wife and I pay for our mortgage on a house that is ostensibly valued in the high six figures.

This isn't good.

[giallo]

Yeah. It's terrible.

I have a friend that is currently living in a tent in Kelowna because there's not a single place to rent within his price range. He's got another couple of months before it gets cold, so I'm not sure what he's going to do.

[whatnext]

Originally Posted by Innsertnamehere

May I remind you that the first post in this thread, calling out a housing bubble, is from 2011.

Just goes to show how desperate Canadian governments are to keep the Ponzi scheme going, they’ll pull any lever. Does anybody really believe Canada’s official inflation numbers? If you’ve been inside any grocery store you’ll know they’re BS.

[milomilo]

Or, more likely, just the obvious result of less supply being built than fills demand.

[josh_cat_eyes]

Originally Posted by whatnext

Just goes to show how desperate Canadian governments are to keep the Ponzi scheme going, they’ll pull any lever. Does anybody really believe Canada’s official inflation numbers? If you’ve been inside any grocery store you’ll know they’re BS.

This reminds me of a YouTuber I follow named Jeremiah Babe. He had been saying the economy is all propped up and that the Federal Reserve has been manipulating the stock market to prevent a crash. I see no reason to think that the same thing couldn’t be happening in Canada.

[niwell]

Originally Posted by rousseau

Nothing new to add to this thread, save for my feeling of unease about two bedroom apartments in Stratford going for $1,700+. That's more than my wife and I pay for our mortgage on a house that is ostensibly valued in the high six figures.

This isn't good.

That’s insane, and only a bit less than my wife and I pay in central Toronto. The main reason we aren’t looking at buying here is because anything we’d want (and would probably qualify for!) would result in a $4,000+ mortgage. That’s just too much IMO.