[andi*pandi]

dammit, 4%~!!!

we just re-fi for 4.5% and thought that was good!

[ShortcutToMoncton]

That sounds pretty reasonable for a house in San Fran. Our condo near downtown Toronto was about that much - and we're talking less than 900 sq feet!

greg

[Eug]

I took a 3 year for 3.3% (plus cash back) in the spring. We'll see where interest rates are in 2013. I will either go for a variable then, or else maybe a 1 to 2 year or something. My wild guess is that variable is going to be around prime - 0.8% or so then.

And yeah, I wish decent sized modern detached homes close to downtown Toronto were that cheap. 2-bedroom condos go for $400000 these days.

[Phileas]

There are two traditional new built family homes for sale just around the corner from my house, in addition they built four modern town houses.

The town houses are actually very beautiful, modern design, huge windows and really quite spacious with three bedrooms, three bathrooms. They're on the market for $849,000.

The family homes look great on the outside, but the way the interior layout works is just awful. Weird stairs, boxy room, no yard, just a terrace above the garage. They're asking close to a million bucks.

By their logic our house should be worth about a million and a half - whereas the real market price is about half that. I am waiting to see for how long they'll be holding out before dropping the price.

[olePigeon]

There're some brand new town houses around the corner from me for $750,000. Just down the street, you can buy a detached house for $400,000. I'm trying to figure out the advantage to a glorified apartment over a house.

[turtle777]

Meanwhile in Canada...



http://www.zerohedge.com/article/gue...-see-graph-day

-t

[Kerrigan]

65%+ share of GDP? Queue the Sad Trombone, eh!

[turtle777]

But, but, but, BUT, Canuckistan has no real estate bubble. It's unpossible.

-t

[besson3c]

Originally Posted by turtle777 

But, but, but, BUT, Canuckistan has no real estate bubble. It's unpossible.

-t

Care to run by your definition of trolling again?

[turtle777]

Nah, you're doing just fine. Nice derail though.

-t

[besson3c]

Originally Posted by turtle777 

Nah, you're doing just fine. Nice derail though.

-t

I just hope you'll make a mental note of this the next time you want to play the trolling card. I'm not trying to pick a fight with you about this, I'm just wondering whether we have different ideas as to what trolling actually is.

[Phileas]

Originally Posted by turtle777 

But, but, but, BUT, Canuckistan has no real estate bubble. It's unpossible.

-t

Canada, as a country, doesn't. What is happening is that a bunch of outliers are pushing the average. Vancouver is particularly to blame here, but bizarrely places like Yellowknife are also experiencing sky-high prices - resource
prices are responsible there, next time they'll crash they will bring real estate prices out there back down again. Toronto is growing steadily with no let up in sight, but if anything house prices here are still below the global average for comparable cities.

But if you leave the urban, and sometimes not so urban, centers where these spikes are occurring then you'll find that prices are way lower than the average on your graph.

[Eug]

Personally I think Toronto is overpriced, even if it's nowhere near as overpriced as Vancouver.

However, as to why Canada is overpriced, I don't think the US makes for a good parallel.

[turtle777]

Originally Posted by Eug 

However, as to why Canada is overpriced, I don't think the US makes for a good parallel.

What do you mean by that ?

-t

[Eug]

Originally Posted by turtle777 

What do you mean by that ?

A very large part of the reason for the huge and fast runup in the US was due to extremely sketchy mortgage approval practices, with the end result being that the subprime market in the US was an order of magnitude higher than in Canada.

I suspect one of the reasons of this is because in Canada the vast majority of the mortgages are actually held by the original lending institutions until the mortgage contract is terminated, which probably means the lenders are more inclined to do their due diligence (even if it doesn't always work). Canadian banks are traditionally more conservative than American banks anyway, partially because of government oversight but also because it was just the it is. The banking cultures were just traditionally different.

In Toronto, prices have been stoked along by record low interest rates, and by the introduction of longer amortization periods. In the past it was 25 years, and then it was increased to 40 years, but the government got nervous and reduced it to 35 years and then 30 years in 2011. Furthermore, qualification rules have been further tightened up, requiring approval at the 5-year fixed rate or else for shorter terms, the 5-year posted fixed rate (which is higher than the usual 5-year discounted rate). IOW, if you want a 3-year variable rate mortgage, you have to qualify at the 5-year posted fixed rate, which is a much, much higher rate, or else you won't get your mortgage. This is to ensure that there is some level of cushion in the system, should interest rates rise.

So, Toronto's prices have shifted beyond the long term price trend curve, which IMO may suggest that prices are too high by as much as 10-15%, but there is downward pressure on those prices because of the mortgage rate and amortization restrictions imposed by the federal government. Their goal is to put a cap on price increases, and I suspect that once interest rates rise, price increases will slow significantly.

Will prices drop? Quite possibly, but the drop would likely be more gradual, since what's missing from the equation here is ginormous sub-prime market.

What about Vancouver? The situation there is quite a bit worse. A much larger proportion of the market seems to be from foreign (Chinese) investors. A lot of people have been parking their money in Vancouver - there is rampant speculation in Vancouver. This also exists in Toronto, but the numbers and anecdotal evidence from the mortgage industry suggests that it's less severe than in Vancouver. This is not surprising since while prices may have gone up say 25-30% since 2005 in Toronto (or 4-5% per year since 2005), they've gone up much, much more than that in Vancouver.

The question is if and how, and when, Toronto pricing will normalize to the traditional price curve. The intent of the government's intervention is to create a soft landing. That is a possibility if employment remains strong, but there is no guarantee of this. I said above that I think Toronto price may be around 10-15% too high. It is quite possible a drop could come quickly, but unfortunately for Toronto, a drop can often overshoot the trend. Nonetheless, the downward pressures in Canada, although present, aren't the same types of downward pressures that existed in the US.

I had gone through some of the numbers and I'm guessing if variable and fixed rates go up by >4 percentage points in the next 3 years, it will be a disaster for the Canadian market with significant price drops. If variable and fixed rates go up by <2 percentage points in the next 3 years, it will be business as usual. However, if it's between 2 and 4 then this would mean either flatlining of prices with possible drops in real prices after correcting for inflation, or else some outright price drops in nominal dollars.

[Eug]

These are the most recent numbers from Teranet, which only considers homes that are resold during a time period, so it's a very good apples vs. apples comparison. The drawback is that since it only considers resold homes, the sales counts considered is an order of magnetude lower than the overall market. June 2005 is arbitrarily set as the index, at 100.

Canada
June 2005: 100.00
April 2010: 134.55
April 2011: 140.47 (+4.40% yoy)

Vancouver
June 2005: 100.00
April 2010: 153.40
April 2011: 162.26 (+5.78% yoy)

Toronto
June 2005: 100.00
April 2010: 121.64
April 2011: 126.62 (+4.09% yoy)

These numbers illustrate one reason why I'm a lot more worried about the Vancouver market imploding than I am for the Toronto market. BTW, the index of ~127 for 2011 means that Toronto pricing is roughly 14% more than what it was when I bought my house almost 4 years ago, and roughly 80% more than it was when I bought my condo 12 years ago.

[Kerrigan]

Interesting...what is Eug Wanker's take on this?

[Phileas]

As of today, interest rates are slightly up. Bank profits are sharply down, mainly because Canadians seem to have switched from spending to saving - no link, just listened to the CBC.

[turtle777]

It just always fascinated me how countries with HUGE landmass (like the US and Canada) could have property prices going up so much. It's not that there isn't enough land, it's government regulation and redtape that contributes to higher prices.

It's also the reason why I stay clear of real estate. 95% of the prices are directly influenced by the government, either through regulation on building codes and zoning laws, influencing bank policies (up to outright nationalizing the mortgage market like in the US), and last but not least, directly fiddling with interest rates with the sole purpose to keep prices up. There is almost NOTHING in the real estate market that's really related to a honest, free market.

-t

[Phileas]

People go and live where people want to go and live. Many of us are attracted to the bright lights of the big cities, which is when the laws of supply and demand kick in. Not sure how the government would be able to influence that.

[turtle777]

Originally Posted by Phileas 

People go and live where people want to go and live. Many of us are attracted to the bright lights of the big cities, which is when the laws of supply and demand kick in. Not sure how the government would be able to influence that.

Uhm, yeah, I gave plenty of examples:

Building codes and zoning can be used to stifle supply, hence driving up prices.
Liberal zoning will create a lot of new homes to be built, driving prices down.

Also, interest rates for mortgages directly influence the value of homes.
Interest goes up, homes prices go down.

-t

[el chupacabra]

… .

[Shaddim]

Going to bump this for a quiz.

This property is for sale near the Smoky Mountains area; 5 bedrooms, 4 baths, huge furnished professional-style kitchen, large formal dining room, furnished home theater, 6 car garage, in-ground pool, tennis/basketball court, >9000 sq/ft of living space, on 7 acres, and only 1 mile from a popular recreational lake.

5470/width/350/height/700[/IMG]

Guess what it can be purchased for right now. Oh, I'll help a little, after it was built (not too long ago) it sold for almost $3M.

[Wiskedjak]

Originally Posted by Shaddim 

Guess what it can be purchased for right now. Oh, I'll help a little, after it was built (not too long ago) it sold for almost $3M.

$1.5M

But, I don't see anywhere in the sales history for that property that it ever sold for anything near $3M.
07/01/2005 Sold $134,900
2005-2010 Improvements $1,299,700
07/24/2010 Listed for sale $1,895,000
09/03/2010 Price change $1,699,000
01/16/2011 Listed for sale $1,599,900
08/14/2011 Listed for sale $1,599,900
01/15/2012 Listed for sale $1,499,999
07/12/2012 Listing removed

[Shaddim]

Actually, I heard it was almost $3M right after construction, not sure when that was, but likely some time after 2005, since at the time it was just property.

Thanks for cheating and ruining the game, though. You see where I asked people to guess, not look up the thing on Tineye? Much appreciated.

My point was, it's shocking that you can get that much for $1.3M, which is what it was offered to me for. I don't think there is anywhere else in the country where you can get so much for so little.

[sek929]

That house is garish and ugly, like the person who designed it fell asleep watching Dracula movies.

[besson3c]

Originally Posted by sek929 

That house is garish and ugly, like the person who designed it fell asleep watching Dracula movies.

I was kind of thinking the same thing, and why is it that everybody's idea of a dream home seems to be something crazy big? For generations we have been building castles and actually living in a fraction of that space. I think part of this sort of thing is just done because the buyer can.

[LegendaryPinkOx]

Originally Posted by sek929 

That house is garish and ugly, like the person who designed it fell asleep watching Dracula movies.

The stonework is especially weird. I'd pass.

[Shaddim]

It's brick with stonework. I think it's okay, but they should have just stuck with stone for the whole thing.

[Eug]

Well, if you don't know the area, it's pretty hard to guess.

Anyways, if you like the place, then buy it. In a nice neighbourhood around here, $1.3 million gets you a nice two storey 2500 square foot home.

[Wiskedjak]

Originally Posted by Shaddim 

Thanks for cheating and ruining the game, though. You see where I asked people to guess, not look up the thing on Tineye? Much appreciated. .

Sorry for ruining your game, but you ruined it from the start when you incorrectly said that it sold for $3M not long after it was build.

[sek929]

Originally Posted by Shaddim 

It's brick with stonework. I think it's okay, but they should have just stuck with stone for the whole thing.

It's just an orgy of different architectural styles, the mismatched stonework being one of those. I'm sure it's very nice inside, but it ain't my cup of tea, that's for sure.

[Shaddim]

Originally Posted by Wiskedjak 

Sorry for ruining your game, but you ruined it from the start when you incorrectly said that it sold for $3M not long after it was build.

I'm looking at the actual report for that property right now and it was priced at 2.8M. That's beside the fact, however. I was wanting to look at opinions from other areas to see how much others would guess, based on what they've seen. Much appreciated.

[Shaddim]

Originally Posted by Eug 

Well, if you don't know the area, it's pretty hard to guess.
Anyways, if you like the place, then buy it. In a nice neighbourhood around here, $1.3 million gets you a nice two storey 2500 square foot home.

See? That's actually somewhat interesting.

No, I'm not considering the property. Relatively speaking, however, it is a very good value. Nice neighborhood, too.

[Wiskedjak]

Originally Posted by Shaddim 

I'm looking at the actual report for that property right now and it was priced at 2.8M.

Value estimate or actual sale price?

Originally Posted by Shaddim 

I was wanting to look at opinions from other areas to see how much others would guess, based on what they've seen. Much appreciated.

That's somewhat difficult, since, as you know, property value can vary *significantly* by area.

[Shaddim]

Originally Posted by Wiskedjak 

Value estimate or actual sale price?

Pre-sale valuation.

That's somewhat difficult, since, as you know, property value can vary *significantly* by area.

That's the point.

[Waragainstsleep]

Property markets are weird. Where I live you can get say a 5 bedroom place with a modest 'back yard' and probably a driveway and double garage for about £300K-400K depending on how old/nice the building is and which village its in. There was one I spotted for sale a few months back which was a lovely old place big enough to house 3 average sized families, in a nice village, had workshops and other outbuildings and stood in 27 acres or so and it was only about £650K. You could chop three acres off and build three houses on them and sell those off and easily pay for the whole property. Assuming you could get planning permission.

[Wiskedjak]

Originally Posted by Shaddim 

Pre-sale valuation.

And, you don't see a difference between "pre-sale valuation" and "after it was built (not too long ago) it sold for almost $3M"
To me, one is based entirely on speculation of what someone *might* pay for the property while the other is conclusive proof of what someone *did* pay for the property.

[Wiskedjak]

The house next door at 313 is also for sale.
http://www.zillow.com/homedetails/313-Morning-Mist-Ln-Franklin-TN-37064/66945369_zpid/

What's interesting about this house?

• It's currently listed at $1.25M (the last listing for 315 was $1.5M)
• Unlike 315, the owners of 313 tried to sell the house in July, 2008 (before the real-estate crash)
• In July, 2008, they tried (unsuccessfully) to sell the house for $1.67M, meaning that they've dropped their asking price by 25% since before the crash. Unlike the house at 315, which you claim has dropped in value by 50% since it's pre-sale valuation.

What does this tell me? Either you were misled when told that it was worth $3M, or it was unrealistically over-valued at that time. Either way, I don't believe that house was *ever* worth $3M.

[Eug]

And here (in Toronto), that house that Shaddim posted, in an exclusive neighbourhood would be $5-10 million.

BTW, in one expensive neighbourhood near I work, I stopped looking when one 1-storey house I looked at had a teardown price of $1.5 million. And that was 5 years ago, with prices 30% higher now. Ouch. I looked elsewhere, where the lots were bigger and actually the view was better, but the commute was much further. Still within 30 mins of my workplace though.

And yep, someone bought that $1.5 million place, and tore it down to build built a huge modern home. It's now worth many millions, but I'm not sure how much because I don't think it was ever put on the market after that. My guess is the build cost alone (including builder's profit) was north of $1.5 million though.

They've been predicting that the Canadian real estate bust is imminent for years now, but those uber low mortgage rates have keep sales decent and prices up. And over the course of the last 5 years they've tightened up lending rules even more than they were in the past so a humungous crash is less likely, although a pullback is a definite possibility.

[turtle777]

Originally Posted by Wiskedjak 

[*] In July, 2008, they tried (unsuccessfully) to sell the house for $1.67M, meaning that they've dropped their asking price by 25% since before the crash.

That's still a lot, given that real estate does never go down.

-t

[Shaddim]

Originally Posted by Wiskedjak 

And, you don't see a difference between "pre-sale valuation" and "after it was built (not too long ago) it sold for almost $3M"
To me, one is based entirely on speculation of what someone *might* pay for the property while the other is conclusive proof of what someone *did* pay for the property.

Impossible to know the exact price, it wasn't recorded because it was a private sale. Likely it was fairly close.

[Eug]

BTW, I think I mentioned it before but... I think the prior sale price on the home I eventually bought was the lowest ever recorded in recent times. It was just a couple of bux... cuz it was a gift. It made price evaluation for the home when I was looking at the place that much harder.

[Wiskedjak]

Originally Posted by turtle777 

That's still a lot, given that real estate does never go down.
-t

Absolutely. But it's not nearly as dramatic as $3M down to $1.5M.

[Wiskedjak]

Originally Posted by Shaddim 

Impossible to know the exact price, it wasn't recorded because it was a private sale. Likely it was fairly close.

In which case, I believe the private sale buyers got taken for a ride, given the pre-crash, unsold, listed price of the only-slightly-smaller-and-slightly-less-ostentatious house next door. I can't see the house at 315 being worth $3M when the house at 313 couldn't even sell for $1.67.

[Shaddim]

Originally Posted by Wiskedjak 

The house next door at 313 is also for sale.
http://www.zillow.com/homedetails/313-Morning-Mist-Ln-Franklin-TN-37064/66945369_zpid/
What's interesting about this house?

• It's currently listed at $1.25M (the last listing for 315 was $1.5M)
• Unlike 315, the owners of 313 tried to sell the house in July, 2008 (before the real-estate crash)
• In July, 2008, they tried (unsuccessfully) to sell the house for $1.67M, meaning that they've dropped their asking price by 25% since before the crash. Unlike the house at 315, which you claim has dropped in value by 50% since it's pre-sale valuation.

What does this tell me? Either you were misled when told that it was worth $3M, or it was unrealistically over-valued at that time. Either way, I don't believe that house was *ever* worth $3M.

Because both houses are identical, right? I'll admit that I don't know for a fact that the price was that high, being a private sale, and you can admit you were a horse-apple and **** on the discussion I was trying to start.

[Wiskedjak]

Originally Posted by Shaddim 

Because both houses are identical, right? I'll admit that I don't know for a fact that the price was that high, being a private sale

They're fairly similar; same lot size, almost as many bedrooms, almost equally lavish inside (if the photos are to be believed), 315 is 1,400 sq ft (18%) larger. If you know anything about real-estate (which I believe you do), you know that the value of a house is based largely on similar houses around it. 313 is quite similar to 315. Unless 315 has a solid gold staircase, I don't believe it's 18% greater size makes it worth 100% more in July, 2008 than 313.

313 Morning Mist Ln
http://www.zillow.com/homedetails/313-Morning-Mist-Ln-Franklin-TN-37064/66945369_zpid/
Beds: 6
Baths: 9
Sqft: 7,782
Lot: 15,681 sq ft / 0.36 acres
Type: Single Family
Year built: 2007

315 Morning Mist Ln
http://www.zillow.com/homedetails/315-Morning-Mist-Ln-Franklin-TN-37064/66945368_zpid/
Beds: 7
Baths: 7
Sqft: 9,180
Lot: 15,000 sq ft / 0.34 acres
Year built: 2006

Originally Posted by Shaddim 

and you can admit you were a horse-apple and **** on the discussion I was trying to start.

The conversation you were trying to start seemed to be "OMG! The 1%ers have also been hurt pretty hard by the real-estate crash! Look at how much value this $3M home has lost!". I'm simply trying to point out that I don't believe this house was ever truly worth $3M and that, while it has indeed lost value, the loss isn't nearly as dramatic as you wanted your discussion to make it out to be.

Don't get upset just because the conversation didn't go the way you wanted it to, once facts were brought into it.

[Shaddim]

Originally Posted by Wiskedjak 

The conversation you were trying to start seemed to be "OMG! The 1%ers have also been hurt pretty hard by the real-estate crash! Look at how much value this $3M home has lost!"

You know what, GET THE **** OVER IT!

You can take your sensitivity over wealth, and adding stupid shit that I wasn't even thinking at the time, and stick it right up your ass. I brought this up to show how "hey, there are some good values out there", you know, just have a friendly conversation. But you just decide to manipulate the hell out of everything, drag your stupid ass politics and bias into it, and use it as a way to irritate me. Well, good show, it worked. Wanker.

[ShortcutToMoncton]

In all fairness, you apparently started out your (factual) discussion by supplying completely incorrect facts. So.....someone has called you on it, and now you're getting pissy with them?

Does TN have anything as modern as a public housing registry? If so it'd be easy enough to figure out the selling prices, private sale or no. If you're actually looking at buying this property, you must have that information on hand, right? Scan it in for us to show the $3 million sale price, then....


Where I live, that house would be worth a couple million, if that. 4 hours drive away, it would probably be worth much less than it is in a Nashville 'burb - but no one would build it or buy it, of course. Everything's relative.

Not my cup of tea, though - houses squashed together, looks just like a regular suburb except everything is 60% bigger and 60% finer, but apparently only 40% more expensive. So I guess there's that.

[Wiskedjak]

Originally Posted by Shaddim 

You know what, GET THE **** OVER IT!
You can take your sensitivity over wealth, and adding stupid shit that I wasn't even thinking at the time, and stick it right up your ass. I brought this up to show how "hey, there are some good values out there", you know, just have a friendly conversation. But you just decide to manipulate the hell out of everything, drag your stupid ass politics and bias into it, and use it as a way to irritate me. Well, good show, it worked. Wanker.

In a thread discussing how people are losing their shirts as a result of the real estate crash, you want to discuss "hey, there are some good values out there"? In that case, I would have been clear about that from the start ... or started up a completely different thread.