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  #11301  
Old Posted May 28, 2020, 8:55 PM
lio45 lio45 is offline
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Originally Posted by p_xavier View Post
It's not a short term issue. Employers now see teleworking as a viable option. No need to stay in the city in a cramped condo anymore.
I did forecast that trend 10-15 years ago (that for the first time in history of humanity, there'd eventually be (likely) less need to be physically in the very heart of a big city anymore in order to access all the things one needs (jobs, entertainment) thanks to new tech like teleworking, self-driving cars, online retail, etc.)

Consequently, my two portfolios are both in areas that are urban enough to have what people need (>200k) and ~45 min to ~1.5 h away from cities of several million people. That's where I estimated was the potential sweet spot of a mix of decent long-term future value and current cap rates. (The latter are usually awful in most large cities' downtowns.)
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  #11302  
Old Posted May 28, 2020, 9:01 PM
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I am ok with predictions too as long as it is made in good faith. Lots of data out there that can be used to interpret things and sometimes that can be a glass half full or half empty. Look at this thread... started on Jun 30, 2011. If you had bought a place in one of those hot Canadian markets (Vancouver and Toronto) on that date. You'd be laughing all the way to the bank now.
Vancouver was really bubbly in 2011 already. I'm not sure that a random stock market investment didn't beat a random Vancouver property for the timeframe 2011-2019 (pre-covid crash). (Haven't checked, but it's plausible to me.)

A good friend of mine finally liquidated his real estate portfolio last year as his very diversified stock portfolio had returned a proven average of 17% over the last several years in a row and the brick and mortar was starting to be just too annoying to manage in comparison (relative to the ROI).
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  #11303  
Old Posted May 28, 2020, 9:13 PM
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Originally Posted by lio45 View Post
Vancouver was really bubbly in 2011 already. I'm not sure that a random stock market investment didn't beat a random Vancouver property for the timeframe 2011-2019 (pre-covid crash). (Haven't checked, but it's plausible to me.)

A good friend of mine finally liquidated his real estate portfolio last year as his very diversified stock portfolio had returned a proven average of 17% over the last several years in a row and the brick and mortar was starting to be just too annoying to manage in comparison (relative to the ROI).
Here's our pre-covid trend in Vancouver:


Source


It's generally going to be true that if you have magical powers and buy and sell at the exact right time you will make money (e.g. buy Jan 2015, sell Jul 2016, huge ROI). But pre-covid we were still a bit below 2016 in 2020. And I am not sure that accounts for inflation.

Of course on top of this most people own one house they live in, so it's not really a liquid asset, and it's unclear how much bubbly expensive housing is actually helpful to them (I'm in this camp; my property value went up a lot but if I wanted to upgrade to a nicer place the spread has increased too, so it's unclear if my standard of living was actually helped, and I am more or less "stuck" where I am). If you don't want to move and you want to treat your house like an ATM with a HELOC you need to factor in interest payments to figure out if you're getting ahead even with an increase in real estate prices.
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  #11304  
Old Posted May 28, 2020, 10:18 PM
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Do they? The future will tell us, but I wouldn't make any huge life decisions (like buying and selling RE) at this time.
If you are thinking of selling a condo there is something to be said before getting out now before more units flood the market. Governments have done their best to put the economy in a coma but that can't last for ever. At some point mortgages won't be able to be deferred anymore and CERB will run out. You don't want to be selling into a flood of product then. If the OP knows he wants a house and is OK with the value of it flatlining for quite a while, why not?
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  #11305  
Old Posted May 28, 2020, 10:19 PM
WarrenC12 WarrenC12 is offline
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Originally Posted by whatnext View Post
If you are thinking of selling a condo there is something to be said before getting out now before more units flood the market. Governments have done their best to put the economy in a coma but that can't last for ever. At some point mortgages won't be able to be deferred anymore and CERB will run out. You don't want to be selling into a flood of product then. If the OP knows he wants a house and is OK with the value of it flatlining for quite a while, why not?
Hey other people can do as they wish. But I think predicting the future is tough, and I would caution against making long term moves.

In 12-18 months we could see life go back to normal, albeit under a recessionary economy.
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  #11306  
Old Posted May 28, 2020, 11:15 PM
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Originally Posted by WarrenC12 View Post
In 12-18 months we could see life go back to normal, albeit under a recessionary economy.
It is clear that the pandemic has caused economic damage but how it goes from here is unclear.

2 plausible yet completely different scenarios:

1) We enter a gentle downward spiral from the post-pandemic shock and a long depression. So many people have lost their jobs that less money circulates and that in turn brings down demand around the world. Governments can't do enough to stop it; they have too much debt and have lost too much revenue. We see many quarters of negative GDP growth. Lots of people have trouble paying their mortgage or rent, tourism is completely dead. The real per capita GDP of 2025 is below 2005.

2) We see a rebound. We're still below pre-pandemic economic activity levels for 1.5 years, but there's a lot of hiring, growth, and optimism during that recovery. The disruption to the economy was short lived so programs like CERB were enough to keep just about everybody in their housing. The real per capita GDP of 2022 hits 2019 levels, with 2021 being a freakish above-average growth year (but not quite enough to make up for 2020), and then typical annual growth resumes.
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  #11307  
Old Posted May 28, 2020, 11:17 PM
Truenorth00 Truenorth00 is offline
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Originally Posted by WarrenC12 View Post
Do they? The future will tell us, but I wouldn't make any huge life decisions (like buying and selling RE) at this time.
Commercial real estate was already struggling pre-covid. It's going to fall off a cliff now. Employers who weren't ready to telework are now learning that the redundancy of enabling such a practice and dispersing the workforece is valuable. Many also figuring out that productivity hit isn't big enough to justify maintaining extra (and expensive) real estate. Employers who had figured all this out are accelerating their plans.

That said, I don't buy the idea that they will allow people to work from anywhere. There will still be some time in the office. But that office can now be smaller and mostly function as a collaborative space.

My brother's aerospace manufacturing company is a good example. They've transitioned all the white collar staff to working from home. Setup a large computer lab for those who need more horsepower occasionally so they can come in. They are selling off some of the office space and laid off a lot of the cafeteria staff, cleaners, some admin. They still have most of their technical and manufacturing capabilities. Less overhead.

Real estate prices will be impacted by this long term. Those who can work completely remotely can move to much cheaper cities. Those who only have the occasional commute can move much further out and put up with a much longer commute. We already some of this in Southern Ontario. There's people who commute occasionally from Belleville, Niagara and London to the GTA. Housing dollars just go much further. If VIA HFR actually happens, I could Peterborough's growth skyrocketing.
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  #11308  
Old Posted May 29, 2020, 12:02 AM
Truenorth00 Truenorth00 is offline
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Two tweets from the CEO of CMHC:

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Here’s more on our house price outlook. Some vocal real estate advisors have labelled us “panic-inducing and irresponsible,’ saying essentially that house prices don’t go down. They’re whistling past the graveyard and offering no analysis. Here’s ours. You decide.
https://twitter.com/ewsiddall/status...379185152?s=20

Quote:
Please question the motivation of anyone who wants you to believe prices will go up (yes, up) with our economy in slow motion, oil being given away, millions of Canadians on income support and a greater % of mortgages not being paid than we’ve seen since the Great Depression.
https://twitter.com/ewsiddall/status...518243329?s=20
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  #11309  
Old Posted May 29, 2020, 2:04 AM
WarrenC12 WarrenC12 is offline
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Originally Posted by someone123 View Post
It is clear that the pandemic has caused economic damage but how it goes from here is unclear.

2) We see a rebound. We're still below pre-pandemic economic activity levels for 1.5 years, but there's a lot of hiring, growth, and optimism during that recovery. The disruption to the economy was short lived so programs like CERB were enough to keep just about everybody in their housing. The real per capita GDP of 2022 hits 2019 levels, with 2021 being a freakish above-average growth year (but not quite enough to make up for 2020), and then typical annual growth resumes.
I see this as more likely. I'm not sure rebound is the right word, but governments and central banks have figured out how to address the worst parts of these economic shocks.

What I see as the problem, like 08-09, is further wealth inequity. I just don't know what the answer is.
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  #11310  
Old Posted May 29, 2020, 3:57 AM
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Originally Posted by WarrenC12 View Post
I see this as more likely. I'm not sure rebound is the right word, but governments and central banks have figured out how to address the worst parts of these economic shocks.

What I see as the problem, like 08-09, is further wealth inequity. I just don't know what the answer is.
I agree. I think CERB is already a better program than any Canada had in 2008 though, and is along the lines of what is needed to help average people.

It also seems like, so far, Canada is not getting hit as hard as most other countries (many of the developing countries are obviously not detecting or reporting a high proportion of true cases or maybe deaths), so I am not sure why we'd be at a competitive disadvantage after. I think our political system is weathering this pretty well too.
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  #11311  
Old Posted May 29, 2020, 8:12 AM
p_xavier p_xavier is offline
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Some actual data of the feeling I had about people wanting to move. https://montrealgazette.com/opinion/...-22d3cc4ff61f/
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If only "common sense" people had any.
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  #11312  
Old Posted May 29, 2020, 3:48 PM
WarrenC12 WarrenC12 is offline
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Originally Posted by someone123 View Post
I agree. I think CERB is already a better program than any Canada had in 2008 though, and is along the lines of what is needed to help average people.

It also seems like, so far, Canada is not getting hit as hard as most other countries (many of the developing countries are obviously not detecting or reporting a high proportion of true cases or maybe deaths), so I am not sure why we'd be at a competitive disadvantage after. I think our political system is weathering this pretty well too.
Worth noting Canada had the fiscal capacity to make this all happen, which we owe to good financial management (since the 90s at least). They gave out the money where it was needed, and made the amount reasonable.

If we gave out a single $1200 check like the US, we'd have a lot more protest to open up, I think, and might look similar to them in terms of getting a handle on the outbreak.

And yes I agree a strong public health system is key. As much as people bitch about our system being stressed to the max, long waiting lists, etc., it can certainly act quickly when needed and resourced.
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  #11313  
Old Posted May 29, 2020, 3:59 PM
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Originally Posted by WarrenC12 View Post
And yes I agree a strong public health system is key. As much as people bitch about our system being stressed to the max, long waiting lists, etc., it can certainly act quickly when needed and resourced.
The problem with the health system isn't that it is incapable, it's that it is a dumping ground for all the other problems during ordinary times. We allocate resources poorly IMO.

Mental health cases? In the hospital.
Alternate level of care patient? Long-term care is jammed full, so, stick them in a hospital bed.
No family physician? Emergency department is a glorified 24-hour clinic.

A hospital does have some overlap with these areas, but it shouldn't be the primary resource for them. However, since we can't turn people away, it gets tasked with the problem regardless.
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  #11314  
Old Posted May 29, 2020, 4:01 PM
WarrenC12 WarrenC12 is offline
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Originally Posted by wave46 View Post
The problem with the health system isn't that it is incapable, it's that it is a dumping ground for all the other problems during ordinary times. We allocate resources poorly IMO.

Mental health cases? In the hospital.
Alternate level of care patient? Long-term care is jammed full, so, stick them in a hospital bed.
No family physician? Emergency department is a glorified 24-hour clinic.

A hospital does have some overlap with these areas, but it shouldn't be the primary resource for them. However, since we can't turn people away, it gets tasked with the problem regardless.
Well those all do come down to money. I think we'll see a change in long term care now, but that will take a long time.

Misuse of ER resources is really bad. In BC we've finally started opening up "Urgent Primary Care Centres" which are the perfect balance one step above a walk-in clinic and below an ER.
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  #11315  
Old Posted May 29, 2020, 4:17 PM
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If we gave out a single $1200 check like the US, we'd have a lot more protest to open up, I think, and might look similar to them in terms of getting a handle on the outbreak.
I wonder how many celebrities made Twitter posts about donating their $1,200 cheque.

Maybe Warren Buffett bought himself an Xbox!
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  #11316  
Old Posted May 29, 2020, 4:28 PM
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Originally Posted by wave46 View Post
Mental health cases? In the hospital.
Alternate level of care patient? Long-term care is jammed full, so, stick them in a hospital bed.
No family physician? Emergency department is a glorified 24-hour clinic.

A hospital does have some overlap with these areas, but it shouldn't be the primary resource for them. However, since we can't turn people away, it gets tasked with the problem regardless.
Another problem we have is that Canadian public healthcare covers life-threatening or serious illness or health problems treated in a hospital, yet often will not cover the prevention or earlier interventions.

For example if you need pills you normally pay for them yourself, unless you're sick enough to be in a hospital, where the costs may be 100-1000x+. And then a lot of dentistry or mental health stuff isn't covered unless it's bad. Flu shot might or might not be covered, PrEP (HIV prevention) was not covered until recently but BC spends hundreds of thousands to millions of dollars per HIV case.
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  #11317  
Old Posted May 29, 2020, 6:57 PM
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Another problem we have is that Canadian public healthcare covers life-threatening or serious illness or health problems treated in a hospital, yet often will not cover the prevention or earlier interventions.

For example if you need pills you normally pay for them yourself, unless you're sick enough to be in a hospital, where the costs may be 100-1000x+. And then a lot of dentistry or mental health stuff isn't covered unless it's bad. Flu shot might or might not be covered, PrEP (HIV prevention) was not covered until recently but BC spends hundreds of thousands to millions of dollars per HIV case.
Hopefully one good out of this will be that the flu shot becomes free for everyone who wants one.
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  #11318  
Old Posted May 29, 2020, 7:21 PM
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Hopefully one good out of this will be that the flu shot becomes free for everyone who wants one.
You have to pay for a flu shot in B.C.?
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  #11319  
Old Posted May 29, 2020, 8:04 PM
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CMHC has some very negative predictions from their corporate offices. Take it from someone in the trenches, out doing this business everyday. Prices are stable and still up over 2019 in every market in the GTA (from London to Kitchener to Toronto to Oshawa to Barrie and everywhere in between). Some markets have dropped from earlier this year but only certain neighbourhoods and usually the higher priced ($1 million+ category) homes.

Bidding wars are still present in the market, I've been involved in several myself in downtown Toronto as well as Oshawa and Barrie. Demand is very high right now, and most listings under 800k are selling within a week and with multiple offers.

I have no crystal ball for what the future holds as we head into the fall market and into 2021. All I can speak for is right now... and the market is extremely healthy. Buyers are out there, and they are showing no fear in purchasing. We've had literally dozens of people approach our team in the last two weeks wanting to buy, as well as sell.

With that said, this virus has brought us into unchartered territory. So it's hard to say what will happen. There are some concerns for people applying for delays in their mortgage. Housing starts are down as construction came to a halt nationwide so Im not surprised. How will this all play out? Your guess is as good as mine. If GTA home prices tumble 18% it will be the largest drop since the late 80's. Im skeptical of that personally.

Either way, good Realtors make money in all markets. A bad real estate market may mean a 20% drop in prices, but it also means a 20% cut in real estate agents as it weeds out all the lazy/coasters who have limited skillsets. Meaning less competition. It all evens out.

Last edited by travis3000; May 29, 2020 at 8:16 PM.
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  #11320  
Old Posted May 29, 2020, 8:05 PM
whatnext whatnext is offline
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You have to pay for a flu shot in B.C.?
Yes, unless you're in a high risk group.
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