Wait until interest rates hit 10% plus like they should be even now. The truth is RE only "appreciates" because the currency unit it's measured in is being depreciated. It could be argued that RE becomes more valuable as general productivity goes up. unfortunately, productivity is going the other way in Canada.
I remember in 2007 when I was working in real estate seeing people buy homes new from builders with the intention of selling before close of escrow to a new buyer for profit. The crash was so brutal and fast that I remember seeing a lot of these units foreclosed on with the builder plastic still on the carpet.
Most people find it difficult to handle a fall since they are used to bull markets, but if you know where to look and how to maneuver, you can make a size-able profit. Depending on how you intend to enter and exit, yes.
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I predict a housing crash due to people buying homes over asking price, lacking equity if prices decline further. Foreclosure becomes likely if they can't afford the house, and selling won't yield profits. With anticipated layoffs and rising living costs, many individuals may face this situation.
I suggest you offset your real estate and get into stocks, A recession as bad as it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too.
You are right! I’ve diversified my portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
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You are right! I’ve diversified my portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.
Consider reallocating from real estate to other reliable investments like stock, crypto or precious metals . Severe recessions offer market buying opportunities with caution, as volatility can yield short-term trading prospects. Not financial advice, but it may be wise to invest, as cash isn't ideal in this period.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
Well, there are a few out there who know what they are doing. I tried a few in the past years, but I’ve been with Margaret Johnson Arndt for the last five years or so, and her returns have been pretty much amazing.
I just looked her up on the internet and found her webpage with her credentials. I wrote her a outlining my financial objectives and planned a call with her.
All buildings are worth nothing over time. The land is worth more. Owning a condo, especially a high-rise condo, has almost no skin in the land value.@@archimedes2261
You can read numerous articles about housing unaffordability in the state, where they talk about the outrageous price of 800K condo in NY or the Bay area. - where, yes, everyone makes two or three times after taxes more than people working in TO.. Toronto condo investors are living in a dream. After all, sorry Canadians but Canadia is one of the least desirable places in the world to live in.
Even the condo maintenance fees resemble a form of monthly robbery. What, are they really paying the lawn care company 500 per month per unit to mow a tiny amount of grass? Where does such mafia spend all that money? Such high fees are not justified. Its a industry wide scam.
Its so the brother-in-law of the condo association chairman can make $125 an hour riding around on a lawn mower. Happens all the time. Hey, these people are professionals.
just came back from Tokyo, a metropolitan that has 39 million of population. Imaging put all Canadian population just in one city. They also have the highest GDP among all cities across the whole world with the best infrastructure including their train system, their school. Each of their train station serves as a "downtown" area that has all kinds of convenient business like restaurants, shopping mall, etc. And yet, their property price is much lower than GTA, their housing is totally affordable, and people have no problem of choosing rent or buy without having to worry about missing out or getting left behind. the same price that you can buy in Tokyo can only afford you a property that is 1.5 hours away from GTA without any good public transit system for commuting. How did they do it in Tokyo? there are a lot of reasons behind, such as their zoning system. But one thing that is really important is, they experienced one of the worst housing crash in human history which took them 30 years to just recover the NOMINAL price. Do not speculate housing is in Japanese blood now. Maybe Canadian needs to learn that as well
Very well said 👍🏻👍🏻 I remember back in the day I use to hear Japan so expensive not sure how much of that was true but now it seems the complete opposite. Vancouver it's so expensive now they make it seem like its a world class city but its nowher near world class cities like New York London Tokyo. Public transportation it's far better in Asian cities then Canada and the list goes on. What they hell do we pay so much tax for thers non stop construction on the roads which take forever to complete our healthcare is a disaster now. The liberal gov jus ruined Canada in a quick 8years. Back in the 2000s it was great gas was cheap housing was affordable rent was less than half of what it is now and ther was so much to choose from and ppl weren't over bidding $50k-$100k on homes lol when rich foriegners mostly from mainland China started buying up properties in the west is when housing prices started to rise quick
Good video! Landlords aren't subsidizing their renters they are taking a loss on their business. Despite common perspective land-lording is a business not just an investment. I wish more people would take your advice and just sell when you can't afford it. But I guess that just hit the larger issue of what we believe housing is in Canada, a non-productive money-sink asset that "always goes up".
Not all of us thought that way. Some of us are aware of the fact that real estate is not really an investment. It's a place to live. It's an investment for those that can afford a dozen units or more. But the trend of people buying a new unit to use as a source of passive income was flawed from the very beginning. It's only now that people are figuring it out.
Correct. There is no subsidy nor alturism here. The landlord cannot find someone to pay off their mortgage for them. I mean the landlord would like their renters to pay their mortgage for them, but the market has shown they cannot bare it. In fact people are choosing to leave for other provinces and countries.
You're 100% correct - this is not landlords subsidizing their renters, and language like that is divisive. The property owner took on the mortgage and the terms of that contract. They're choosing to take on that risk, and they're nominally rewarded through the equity they build up and any potential gains on the property. The renters are subsidizing the carrying costs of the landlord - even if they aren't paying the entirety of the carrying costs (which is a business-side problem, not a customer-side one) they are still contributing to the landlord's equity. But I'm not surprised to hear this reality being ignored in this country. We have a culture which looks down on renters, and we don't stop think about what forces are contributing to that. Could it possibly be that the Federal government via CMHC has a direct incentive to prefer owners over renters? Maybe, just maybe it's the fact that we have a banking cartel who depend on mortgage products to generate their profits? The banks still own a lot of these homes - you just own the debt for them.
Astronomical when considering most of these investment properties are also leveraged … so the true loss could be greater than the actual money invested
Great job pointing out the data so easily laid out; 1-While I never like seeing people lose money, I’m not too unhappy seeing the free market burn overzealous condo investors and developers, who are driving up prices for average folk needing housing, although I’m not against investing in principal. 2-Stop trashing all our old buildings (heritage) and annoying people with construction, to build your crappy condos. 3-Interesting times, condos are always the most vulnerable to market forces. (Edit, I forgot to mention as others have immigration numbers are too high, obviously, not good for locals or immigrants who become basically slaves with no opportunities because cost of living is too high)
Great update and totally agree and on top of the investors negative cash flow condo fees are Low when you close on the unit but once turned over from builder to homeowner can almost double ! I bought a new condo fees were 305.00 per month less then a year later when up to 530.00 per month and another increase coming next month personally no more condos for me !
Entire mafia theme that says just pay em, like its the reason why they got into real estate just to be a overpriced manipulator with disingenuous smiles. The manipulation is causing people to eat like garbage, and the pandemic seems to have allowed even basic needs food to be treated like a investment. Vote for an atheist, if and when allowed.
Developers are scammers. Opened a tower for one. Builder no better and i twosted their balls hard on deficiencies they tried to escape. All furniture in common areas leased and passe don to unsuspecting owners. Even the enterphone system was a lease.
It's disgusting the way we talk about housing. "Cash flow", "appreciation", "income". The only people who should make a profit on housing is developers and construction companies who build the homes. All the crypto bros became real estate speculators. I hope everything crashes to the ground. Need a reset to end this madness.
The only way the housing market will crash is through an invasion of Canada or a communist revolution that leads USA to embargo Canada. Other than that GTA will not have a housing crash and if it does then that is because the economy is so bad nobody can afford to buy which also means no one can afford to rent. Ur literally here wishing the worse on us. If you want to make a wish then wish for the government to invest in manufacturing in Canada
People who bought to live there won't care what the fluctuating price is. The increased interest rates are doing their job kicking speculators out of the market and people complaining about higher interest rates because of high price of homes don't get it.
@@as-is89 you're describing speculation not investments. Speculative assets are worth what people are willing to pay for it. Businesses that produce earnings, dividends, royalties have an intrinsic value can be evaluated and there are ways to do so.
@@HepCatJack It's all speculation there's no guarantees on any investment. People lose money on investments all the time. All that matters is timing when you buy and when you sell. It's a zero sum game, there needs to be a buyer for every seller.
Keep interest rates high, drive the condo prices to the bottom; eventually developers will stop building condos and realize that they can only make money over the long term through building rentals and holding onto those buildings themselves and profiting from the rent, not the project capitalization.
I disagree, I think weeding out all the foreign investors would make housing costs more realistic to what people can afford. Average salaried 25-35 year olds right now need two incomes to pull just the rent and some additional expenses and then they are wondering why birth rate is going down and immigration is going up. Fix the system drop immigration and ban corporations from owning freehold. When prices equalize to 1 salary covering the cost of living we can expect to see a rise in birthrate.
That would never happen. Affordable housing doesn’t make any money. I feel sorry for those who think that will ever happen. Let’s just wait and see. I want to come back to your comment in 2025
The bank will keep rates hopefully high enough to drive inflation below their 2% target before easing on them as otherwise they risk a repeat of the 70s. There is no incentive to build anything other than luxury condos as they sell for the highest premiums and make the most profit. If you want affordable housing built must have the government incentivize the transaction.
@@Lifeisapartydresslikeit : I disagree, affordable housing makes lots of money, FOR THE DEVELOPERS. No level of government should be in the housing business, whether it to be to provide housing directly or to be a landlord. This should be left to the charities and non-profits. The governments need to create a new class of charity that solely is responsible for affordable housing development.That donation should be anywhere from 75% to 125% tax write-off for the contributor. It is not the government's mandate to provide subsidized housing, that is a charitable endeavour
Its pretty crazy how someone in their right minds would think of paying 740k for a 1bhk shoebox up in the sky. Almost seems like the tulips which were so much in demand once..
Yeah but you can sell it for 900k when it's finished being built 😂 This mentality is what drove the bubble. That, plus people in Toronto with more money then sense. Alberta didn't experience a property bubble because we don't have helicopter money raining down on alberta coming from the financial sector and the government. Easy money created too many rich people concentrated in Toronto.
Unless 740k can give them a better return than the stock market. Stock market you can get over 10% return so with 740k you should get at least 80k a year. If landlord cannot get 80K profit a year from rental with a 740k condo then they are stupid to invest in a condo. The people who bought over 20 years ago who are renting are the only ones making a good profit. Now it's not the time to invest in properties. Landlord are not getting their returns from their investments.
I'm from Portugal and I knew Canada was having a huge housing crisis, but 2M for a 3 bedroom?????? That's batsh*t crazy! I think a condo going up to 700k here would need to be a very luxurious place with gym, pool and golden faucets omg! In fact I know one in a relatively central area that only costs up to 400k, but I guess it's not in the capital!
Or you could put that $120,000 down payment money into enbridge or Bell stock and make $770/mo positive cashflow instantly from dividends and not have to be a landlord or have massive transaction costs. There are much better options out there
Bit of a brazen statement as investors are usually buying to diversify their already invested 120K in stocks. Not quite as black and white. Not to mention your dividends are taxable as well yada yada yada.
I have been losing a huge amount on a few condos in downtown since 2017. This year I started selling call options and basically collecting rent on the top 10 US companies and so far this year earnings 10k per month.
Houses should not be speculated and taken as "investment" if you are not using it yourself in the first place. It's ruining the housing market and the government should do more about it.
Yes but that initial monet injection that only investors can provide is just too valuable. I agree with your sentiment but I can't see an alternative...other than some kind of government effort to provide housing for all
@@JudgeyJudgeyable REITs is an alternative. House speculation or "investment" is also not a thing few decades ago. At least one retail house owner should not be able to own 3 properties.
Handling money requires being fair and smart, not just feeling things. I worry that more people will have problems when they retire because it's hard to save money. Low pay, things costing more, and high rent make it tough. Owning a home is too expensive for many, so they might not have a home when they retire.
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Yeah. 'Evelyn Infurna' is my advsor; I was introduced to her by my partner. She has her contact information, but you could look into her background and get in touch with her directly. She is well-known and grounded, so it shouldn't be difficult to locate her page.
It's not enough. This needs to be a wash out of all of these "so called" investors. The price appreciation during the last 10 yrs has been beyond stupid. Wages haven't even come close to covering this action. And that's the biggest issue. These "investors" should pay commercial taxes on every unit forcing them out of the market. And the province and city need to ditch land transfer taxes to slow the inflationary effects it has on prices.
Absolutely!! The gov was in on it they let it happen GREED!! yep about 10 years ago is when I noticed mostly rich foreigners from mainland China buying up properties in the west in Vancouver and that's when the prices gradually started rising quick. Then the gov steps in when it's become such a big problem to "show" hey we are doing something about it but its way to late. Thers no such thing as affordable housing anymore those days are gone
5:00 Your estimates don't even take into account that condo fees rise enormously in the first few years of a new build after the developer hands it over to owners.
Many homeowners, especially first time buyers are between 5-10x levered. Take someone who put 20% down to buy a $750,000 property. That's $150,000 equity. Now with a 10% drop in property price, the property loses $75,000 of its value. However, for the homeowner its a 50% loss as their 150k investment is now worth only 75k. This is the negatives of leverage.
…and this is only the beginning. This still has a couple of years to play out. The bottom is typically 5-7 years from when interest rates were hiked. In the early 90’s prices corrected 40%. Considering the parabolic movement upwards over recent years, I’d say a 40% correction is a minimum we’ll see. Much, much better prices to come.
Wait until interest rates hit 10% plus like they should be even now. The truth is RE only "appreciates" because the currency unit it's measured in is being depreciated. It could be argued that RE becomes more valuable as general productivity goes up. unfortunately, productivity is going the other way in Canada, because excess investing in RE and government employees are a net lost to productivity.
Great video! I can’t understand what is happening here. Driving around Toronto this weekend and I can name at least 20 locations in the GTA where strip plazas or parking lots are being torn down for what? MORE CONDOMINIUMS!!! How? If it doesn’t cash flow or isn’t affordable- why are all these projects going to start?
The bottom line is still demand and you are betting on infinite amount of immigrate. People move here hoping for a better life and if prices and cost don't go down people won't come just because you allow them to come. Like China is allowing 3 children now but nobody wants to have kids. I heard a lot of students are leaving after finding out how unaffordable it is here. If the gov can't solve this problem of job and housing cost then your assumption on demand won't materialize
Thank goodness they aren't procreating no one should have more than 2 kids population growth is exponential, just replace yourself if u must give birth to humans, which by the way, aren't that great as a species humans suck
His projection fails to realize Canada has a backward, non-innovative economy and really can't employ an extra 500000 more people a year, The fact that the government paid subsidizes of 1.5 million a job to VW to "win" a Lithium battery factory says it all. The country only needs so many security guards, fast food and new government employees a year. The rest will realize their mistake and move on,
Demand becomes a nonissue when it flips to a buyers market. Buyers can and will wait if they believe property will be cheaper in 6 months or a year. Next phase of this crash is buyers drying up, and properties flooding the market. Autumn 24, I expect we will see this.
Condo owners are starting to charge, recertification FEE'S to condo owners with amounts in the $100,000's siting upkeep and codes, forcing owners to have to sell. They are going to start doing more in Canada, it's already happening in Vancouver, Montreal, Toronto. GET READY!
3:18 specifically about this segment you mentioned the negative cash flow, but correct me if I’m wrong but a lot of these investors would use that rent to pay down the mortgage which would lower their carrying cost? I think a lot of people are still in positive positions but they are no longer seeing the upside for long term holding with the shaky market and would rather get out now and move that capital into other prospective regions that are positioned for explosive growth once we get over this slump. At least this is what 5 different property investors told me. Some started buying land and properties in Panama, Dominican, Spain, Portugal, Arizona and Texas. Freeholds are next on the chopping block but the reaction of freehold losing value and being listed at the same rate as condominiums would be a less than ideal exit financially. So they just need to time the sales of condos first and then once the inventory is liquidated, they will move to the freehold inventory. At that point all hell will break loose on the small investors who have just 2-5 properties sitting on a high LTV. Again please correct me if you see any fallacy in my comments. I by no means am a fortune teller.
I am loving this. As a fact, nothing can stay on top without failing once. Canadian housing market has been worst and been consistently on top of most expensive houses in the world. So next, it has to fall. And this is just beginning. Hopefully 🤞
great video, just one quick fact, the loss in rental properties could be used to deduct any other income, depends on your tax bracket, me personally could get more than half back as tax return. Plus one thing we are certain about is the rate will go down eventually, rent will probably stay high even not gonna be higher down the road. Developer just simply can’t build a building based on the cost 5-10 years ago, so the slow market now will turn into short of supply 5-6 years down the road. This has happened before in 2011, when developer gave out free parking and interest free mortgage to try to attract buyers, we all know what happened in 2016-17. This market just can’t stay healthy anymore, it always shift between the two extremities.
So my question these people who bought these properties as investments are they allowed to then just write off the remaining debt? Because they shouldn't be allowed to. They screwed up our housing market and should have to deal with the consequences
You can read numerous articles about housing unaffordability in the states, where they talk about the outrageous price of 800K condo in NY or the Bay area. - where, yes, everyone makes two or three times after taxes more than people working in TO.. Toronto condo investors are living in a dream. After all, sorry Canadians but Canada is one of the least desirable places in the world to live in.
@@TheTruth-cg8vj I think when people say they want to live in Canada...they are talking about living in 1. Toronto/GTA , 2. Vancouver area. 3. Montreal area.
I think your example is at 123 Portland. Great numbers but thats crazzzyyyyyy. A buyer would have to pay even more today for that unit and it would carry even worse. Conversely Condo prices are extremely likely to go up after 1 yr when int rates drop a bit. So is it worth it to struggle through the year is what you need to ask yourself?
I paid $200,000 for my 2,000 square foot house. I have a big yard. I bought 20 years ago because I knew, with inflation at 5% per year, the housing market would be unaffordable very soon.
Very true. speculators buy for price appreciation; investors buy a bond like asset that gives a return. Sine there are none of those in TO RE, anyone holding RE as a so-called investor is a speculator.
Ok that was the best and funniest video I have seen all week. Most realtors tip toe around the massive negative carry on a shoebox condo but you come out and celebrate it. Your premise works on the fact that this is the worst it will be. What happens if the condo isn’t 1k negative but in a couple of years 2 k negative? What happens if the condo collapses in price from 500k to 350k? Man oh man a realtor that can sell that with a straight face is something awe inspiring it really is.
You think a brand new townhouse or house is any better? Considering you might get another 500/m in rent and it costs twice as much as a condo lol. Negative cashflow =/= losing money.....how many times does this have to be explained to you....hundreds of times obviously because after 10 years you were wrong then and wrong now..... and it's hilarious the bears come out after a few months downturn (much like Toronto Maple Leafs fans parading around with a cup after a 5 game win streak when they always fold in the playoffs)... real estate is a long term game nobody cares what happens in 6 months, 1 year, 2 years etc. In the long term, construction costs (and taxes) keep going up, so prices will go up. Canada already #1 in lowest housing stock per 100k people and that number is only getting worse as interest costs make everything more expensive....new supply going to 0 quickly meanwhile people are still flooding into the country.
@@XRP999 I am not angry. I just find it amusing when realtors know they can’t make a real good argument that a condo is a good investment they fall back on the usual immigration to the moon and Toronto real estate always goes up because there never is enough supply. It must be really rough out there to try and suck in the last remaining suckers humanly possible to take the bait. Ya sure it sounds like a great idea being a landlord in a depreciating asset that you have to pull 2k a month out of your income to support. That sounds like so much fun. Only in Toronto. Suckers everywhere.
Well, at least their govt says that if they die from homelessness frostbite or starvation trying to avoid homelessness, then the victims get to respawn like in videogames at a fancy condo project in the sky. Disingenuous manipulation? You decide.
Bleeding $4k a month, and you don’t see a problem… silly earthlings. It’s interesting that in 2006 in Florida that thought they didn’t have enough housing and prices would go up forever. 20 months later the market was drastically different. The cliff is closer then we think.
bleeding monthly because of interim occupancy fees - thats not the actual cash flow position on the unit once we close it out 4-6months later. Regardless, if we need to pay it down/off we can
@@Bias_Eh-State_Chroniclesprices have risen over 300% in parts of TO over the past 15 years, why do you think it’s only going to retrace 24 months? Bottom could be where prices were in 2012.
Low resale values mean lower property taxes. If an investor is holding on to the condo for 10 years does he prefer that the condo resale value be high so he can pay higher property taxes even though he's not selling. Or would low condo value meaning lower property taxes be preferable? I used to work with a guy that just bought a residence and moved in. He was so happy that the property value was increasing. And I asked him how long he planed to hold on to it for he said minimum 10 or 15 years. I asked him if he was okay with property values going up causing the government ask for more property tax. He gave me a puzzled look. He had no idea how property taxes were calculated and they even tell you in the tax bill they send you. So he's all happy that he's going to be paying $400 a year because property values are going up on property he has no intention of selling. According to interest rate news for Canadian rates there will be a rate drop of at least a quarter or maybe half a percent in April that's 5 months from December 2023. If there is another half a percent drop 6 months after that one that's at least a 1% drop maybe even a 2% drop before the beginning of 2025. I think that these guys have not allowed themselves enough of a reserve if they're panicking about selling. They should have a Reserve like the banks are required to do. The banks have a reserve because they're told to because their Deposit Insurance demands that they do and the shareholders expect them to. A lot of shareholders in Banks calculate what they will be paid dividend wise 5 years in advance. If you look at big Bank dividend rates for Canadian Banks they don't go down. They may hold but they don't go down. I've invested in Banks and I've also done the rental thing. The rental thing means you have to deal with people that are at the very politest I can say are tricky. A person is crying that they can't afford this much for a parking spot. And I look at them and I said I have your number I'll keep you in mind I'll get back to you and I start to walk away then they shout out that they'll take it at that price. I asked them to particulars about their car and I estimated its value out over $100,000 and they're crying about an extra $5 for renting a parking spot. And this is a good parking spot because it has a lot of walls around it. Less chance of their car being hit. Negotiate with car insurance company don't negotiate with me.
Got lucky myself. For 19 years I only have had to only pay a mere $140 per month for my nicely carpeted one bedroom apartment. This was quite a switch from when I previously lived at the downtown Manulife Center. But granted the kitchen here is not huge, but there is still enough room for a 54" x 30" kitchen table, plus the chairs, and it has had two brand new fridges. One died after 14 years, and thus was immediately replaced. On this last new fridge, the door was swinging open in the wrong direction, so as usual I thought I would fix that myself, as I have done before on other fridges. Holy smokes though, this one was doozy. It required brute force to remove some of the screws. I had to throw together my own home made screwdriver torque amplifier.
Aren't mortgage rates on 'commercial property' typically higher then on one's primary residence? Don't banks ask if a condo is the borrower's residence or will it be a rental?
Speculation is Not Good ! Sorry for the Investors .. The Price must go down to the level where "Normal" people with current salary or income can afford to buy a house or apartment etc!
So will end user owners step in? Their options are 1) not able to afford a freehold, 2) keep paying ever increasing rent, 3) buying a condo to get on the property ladder. I know what option I would choose but I guess we'll see what others do.
Condos never made sense to me at all. People are really buying an apartment they will own, pay a monthly fees, be responsible for paying for high maintenance require in some cases, pay for a right and spot to park etc. Get an apartment, pay the rental payment monthly only and a lot of rentals have a parking spot or two included. Call the landlord if any issues occurs or superintendent. I look at the China ghost cities and all those unfinished ghost cities with no one living there really, decrepit apartments etc. Well in the future Canada will be like that, investors playing with condos, houses, to borrow more money on empty buildings LOL I have seen how the Asian and Indian communities in the last 40 years, have bought most Dépanneurs, convenient stores, gas stations. Working 80+hours a week to feed their families, house them etc. People should stop living through social medias, the news etc, and realize they have to work hard, they might have to work 60 or 70 hours a week and it's ok. My dad used to work 6 or 7 days a week, so me and my sister could have a roof over our heads, food on the table and electricity!!! I understood this as i got children's of my own. As i told them, when i die you all get the house, my tings, tools, car. Which are all paid for and you'll know what to do with them, as i did with my father, grandfather tools, that i work with for 40 years, and served them 40 years before that, and will serve you as well ;-)
I don't know how aware people are of the fact that if you own a rental property you must come up with a minimum 25% down for a second one. Deep pockets only need apply.
Doesn't it make sense to see inventory constantly hitting a peak since it is measured in units? Condos get continuously get built, population continuously increases. Looking at a measure of units on market is useless. Better to look at number of units per capita or population density.
Hi, great informative videos! That said, you mentioned a really great project (that you were biased towards) - silo/industrial repurposing with a restaurant/lounge at an upper floor? I've been trying to find it...
I believe Radiohead's song 'Just' is the appropriate soundtrack for this hilariously ironic eventuality. With just a little bit of 'Forest Fire' by the The Dead Kennedys. Maybe whatever Nero was fiddling out whist Rome found out. Looks good on ya...
2 million apartment had 140,000 in interest and will rent for what maybe 3-4k max they will drop to 500,000 pretty soon if the interest rates do not drop as no one will invest their money in a loss for a very long time and we are 1 year in so far and I would guess in the next 2 years it goes up more then down. They might drop it .25-.5% for a short term to juice the housing market but rates are probably not going down for 3-5 years if they even go down.
I think in this generation its not worth the hassel to be a landlord for todays return. Its eaiser to buy a good quality stock and get dividends. Now you can get a good stock with 5% dividend.
Ya, but atheists dont seem to get elected, at least yet. People behaving with stockholm syndrome compliance, pretending to have a backup plan at a fancy housing arrangement in the sky. This must be why they vote for manipulative liars like they pretend its the way to be.
Prices started falling in fort mcmurray AB in 2014 and it hasn't stopped. Once the bubble blows the bottom falls out as investors, speculators, and flippers are nowhere to be found.
Mortgage rates are 6% now. In a year's time they will be at 7% (rates are rising). At that rate, the average person can ony afford to buy a house at 5 times their income, and the average income is $60,000 in Toronto. So 2 people x $60k x 5 times = $600,000 MAX. Any condo over $600,000 is unsellable, no one can afford to buy it.
subsidizing their renter? or is the renter subsidizing their mortgage..? the problem is that these investors are using other peoples money to turn a profit and thats called being a bad landlord. Landlords who own their properties arent raising rents or even stressing about interest rates.
People in Toronto pay 1 million dollars for a small, square, concrete box. They claim the job market is better in Toronto, but if that were true, they would be able to buy a house that's better than in the suburbs. If you make lots of money but can only afford a condo in Toronto, the job market isn't what you think it is. Your job only pays as much as your money can buy. If you can't buy much with your salary, then you aren't getting paid enough, no matter what the number is.
We need stabilization, rent caps, lower interest rates, more stable utilities going into the future of better healthier fuels and electricity. Get rid all the extra taxes and taxes that are build on top of taxes. We need to change that ourselves. Take a hard look and do homework what is behind all the rising costs make the changes and make your vote really be towards a better future not based on that you always vote for that and not change. Don't be afraid of change if it is to better your life.
$3500 cash flow negative is pretty bad, even if you can afford it. Would hate to be closing on a condo these days. In terms of long term outlook, 4-5% rates for an extended period of time…what will prices look like? Many ppl thought rates would sit around 1-2%. Hoe many borrowed at their limit? I imagine many.
Wait until interest rates hit 10% plus like they should be even now. The truth is RE only "appreciates" because the currency unit it's measured in is being depreciated. It could be argued that RE becomes more valuable as general productivity goes up. unfortunately, productivity is going the other way in Canada, because excess investing in RE and government employees are a net lost to productivity.
I am perennially distrustful of Toronto condos. My friend is a unionized electrician who's been working downtown since the early 2010s and he said all the projects are all rushed so buyer beware of condos!
when you add the cdn dollar losses, the % is bigger which is important to remember. In cases where the dollar goes down, the price should actually go up.
That’s only true for commodities such as silver, gold etc where pricing is based on US dollars. Canadian housing is based on the Canadian dollar so doesn’t really matter what the US dollar does.
@thebigpicture2032 I disagree, we live in a global system and the cost of materials are purchased in cdn dollars against the USD. The cost of building is absolutely associated to the cost of buying a house and the dollar. The more it costs to build, the more it costs to buy.
@thebigpicture2032 I'd even go a step further directly linked to condos.. condo fees are associated to cost of repairs, which as you see in Jane and Finch area, condo fees for a year can cost more than the entire unit. The higher cost of goods, higher the fees= lower the cost of unit.
@@BCSimonYT I concede the debate. I’m thinking my position was based more on wishful thinking (that we supply our own material) than logic. Not to mention a bong hit 😃
Usually they start selling for when the home or Apartment is old and junk no renos included, yet somehow equity is built definitely not with the overvalued buyer 😄
What percentage of the down payment did you assume in your example? Because the investors in these condos have different proportions of equity, of course, highly leveraged investors will get squeezed, but equity investors are less sensitive to rates and focus more on rent income appreciation.
Would be Interresting to bring in a tax expert on how these losses could improve your tax position? I dunno...just thinking out loud. I can afford the losses for now bit it Def hurts
Toronto housing price is so inflated, the condo market in particular, It deserves at least a 30, 40 % decrease. The household income does not support that kind of housing price in Ontario. 1300 dollar per sf, can you believe it? People who cashed out at peak in 2021, 2022, and moved to Calgary or Halifax are laughing, not only have they bought a much bigger house else where, they put a big chunk of cash in the bank.
These losses are understated too as they don’t include transaction costs or taxes, which are massive in real estate!
and insurance and a monthly maintenance reserve
Yup. Now add in both inflation and the lost opportunity of investing in assets that have actually gone up
No taxes ,
and principal recap is lost due to renos and repairs needed to bring the property back up to sellable condition.
Wait until interest rates hit 10% plus like they should be even now. The truth is RE only "appreciates" because the currency unit it's measured in is being depreciated.
It could be argued that RE becomes more valuable as general productivity goes up. unfortunately, productivity is going the other way in Canada.
I remember in 2007 when I was working in real estate seeing people buy homes new from builders with the intention of selling before close of escrow to a new buyer for profit. The crash was so brutal and fast that I remember seeing a lot of these units foreclosed on with the builder plastic still on the carpet.
Most people find it difficult to handle a fall since they are used to bull markets, but if you know where to look and how to maneuver, you can make a size-able profit. Depending on how you intend to enter and exit, yes.
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I predict a housing crash due to people buying homes over asking price, lacking equity if prices decline further. Foreclosure becomes likely if they can't afford the house, and selling won't yield profits. With anticipated layoffs and rising living costs, many individuals may face this situation.
I suggest you offset your real estate and get into stocks, A recession as bad as it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too.
You are right! I’ve diversified my portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
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Do you mind sharing info on the adviser who assisted you?
fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.
Consider reallocating from real estate to other reliable investments like stock, crypto or precious metals . Severe recessions offer market buying opportunities with caution, as volatility can yield short-term trading prospects. Not financial advice, but it may be wise to invest, as cash isn't ideal in this period.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
nice! once you hit a big milestone, the next comes easier.. who is your advisor please, if you don't mind me asking?
Well, there are a few out there who know what they are doing. I tried a few in the past years, but I’ve been with Margaret Johnson Arndt for the last five years or so, and her returns have been pretty much amazing.
I just looked her up on the internet and found her webpage with her credentials. I wrote her a outlining my financial objectives and planned a call with her.
740k for a 586sqft unit is insane..
It's even more insaner for an old decaying sidings and cheap sodor wood framed average 3 bedrooms.
@archimedes2261 yeah but a property can be developed, a condo will never change.
All buildings are worth nothing over time. The land is worth more. Owning a condo, especially a high-rise condo, has almost no skin in the land value.@@archimedes2261
You can read numerous articles about housing unaffordability in the state, where they talk about the outrageous price of 800K condo in NY or the Bay area. - where, yes, everyone makes two or three times after taxes more than people working in TO.. Toronto condo investors are living in a dream. After all, sorry Canadians but Canadia is one of the least desirable places in the world to live in.
Even the condo maintenance fees resemble a form of monthly robbery. What, are they really paying the lawn care company 500 per month per unit to mow a tiny amount of grass? Where does such mafia spend all that money? Such high fees are not justified. Its a industry wide scam.
Just like dentist and veterinarians . Same kind of scammers.
Its so the brother-in-law of the condo association chairman can make $125 an hour riding around on a lawn mower. Happens all the time. Hey, these people are professionals.
At least in our condo they have staff who literally sit in a lift and touch the buttons for you. How ridiculous is this? 😭😭
500$ is still cheap, you can easily find some that charge more than 1000$
@@ericromagna870$1300 at my place 🧍♂️
just came back from Tokyo, a metropolitan that has 39 million of population. Imaging put all Canadian population just in one city. They also have the highest GDP among all cities across the whole world with the best infrastructure including their train system, their school. Each of their train station serves as a "downtown" area that has all kinds of convenient business like restaurants, shopping mall, etc. And yet, their property price is much lower than GTA, their housing is totally affordable, and people have no problem of choosing rent or buy without having to worry about missing out or getting left behind. the same price that you can buy in Tokyo can only afford you a property that is 1.5 hours away from GTA without any good public transit system for commuting. How did they do it in Tokyo? there are a lot of reasons behind, such as their zoning system. But one thing that is really important is, they experienced one of the worst housing crash in human history which took them 30 years to just recover the NOMINAL price. Do not speculate housing is in Japanese blood now. Maybe Canadian needs to learn that as well
THIS*** Perfectly said
Canada (Toronto/ Vancouver), and much of the world is about to learn this painful lesson.
In the late 40's early 50s GM, Firestone, and an oil company conspired to eliminate light rail and other mass transit systems. They succeeded.
Very low immigration in Japan no insane increases destabilizing housing markets.
Very well said 👍🏻👍🏻 I remember back in the day I use to hear Japan so expensive not sure how much of that was true but now it seems the complete opposite. Vancouver it's so expensive now they make it seem like its a world class city but its nowher near world class cities like New York London Tokyo. Public transportation it's far better in Asian cities then Canada and the list goes on. What they hell do we pay so much tax for thers non stop construction on the roads which take forever to complete our healthcare is a disaster now. The liberal gov jus ruined Canada in a quick 8years. Back in the 2000s it was great gas was cheap housing was affordable rent was less than half of what it is now and ther was so much to choose from and ppl weren't over bidding $50k-$100k on homes lol when rich foriegners mostly from mainland China started buying up properties in the west is when housing prices started to rise quick
Good video! Landlords aren't subsidizing their renters they are taking a loss on their business. Despite common perspective land-lording is a business not just an investment. I wish more people would take your advice and just sell when you can't afford it. But I guess that just hit the larger issue of what we believe housing is in Canada, a non-productive money-sink asset that "always goes up".
Not all of us thought that way. Some of us are aware of the fact that real estate is not really an investment. It's a place to live. It's an investment for those that can afford a dozen units or more. But the trend of people buying a new unit to use as a source of passive income was flawed from the very beginning. It's only now that people are figuring it out.
Correct. There is no subsidy nor alturism here. The landlord cannot find someone to pay off their mortgage for them. I mean the landlord would like their renters to pay their mortgage for them, but the market has shown they cannot bare it. In fact people are choosing to leave for other provinces and countries.
You're 100% correct - this is not landlords subsidizing their renters, and language like that is divisive. The property owner took on the mortgage and the terms of that contract. They're choosing to take on that risk, and they're nominally rewarded through the equity they build up and any potential gains on the property. The renters are subsidizing the carrying costs of the landlord - even if they aren't paying the entirety of the carrying costs (which is a business-side problem, not a customer-side one) they are still contributing to the landlord's equity.
But I'm not surprised to hear this reality being ignored in this country. We have a culture which looks down on renters, and we don't stop think about what forces are contributing to that. Could it possibly be that the Federal government via CMHC has a direct incentive to prefer owners over renters? Maybe, just maybe it's the fact that we have a banking cartel who depend on mortgage products to generate their profits? The banks still own a lot of these homes - you just own the debt for them.
Astronomical when considering most of these investment properties are also leveraged … so the true loss could be greater than the actual money invested
Stop buying up property as investments then. They are places for people to live.
Great job pointing out the data so easily laid out;
1-While I never like seeing people lose money, I’m not too unhappy seeing the free market burn overzealous condo investors and developers, who are driving up prices for average folk needing housing, although I’m not against investing in principal.
2-Stop trashing all our old buildings (heritage) and annoying people with construction, to build your crappy condos.
3-Interesting times, condos are always the most vulnerable to market forces.
(Edit, I forgot to mention as others have immigration numbers are too high, obviously, not good for locals or immigrants who become basically slaves with no opportunities because cost of living is too high)
Great update and totally agree and on top of the investors negative cash flow condo fees are Low when you close on the unit but once turned over from builder to homeowner can almost double ! I bought a new condo fees were 305.00 per month less then a year later when up to 530.00 per month and another increase coming next month personally no more condos for me !
Entire mafia theme that says just pay em, like its the reason why they got into real estate just to be a overpriced manipulator with disingenuous smiles. The manipulation is causing people to eat like garbage, and the pandemic seems to have allowed even basic needs food to be treated like a investment.
Vote for an atheist, if and when allowed.
Developers are scammers. Opened a tower for one. Builder no better and i twosted their balls hard on deficiencies they tried to escape. All furniture in common areas leased and passe don to unsuspecting owners. Even the enterphone system was a lease.
It's disgusting the way we talk about housing. "Cash flow", "appreciation", "income". The only people who should make a profit on housing is developers and construction companies who build the homes.
All the crypto bros became real estate speculators. I hope everything crashes to the ground. Need a reset to end this madness.
The only way the housing market will crash is through an invasion of Canada or a communist revolution that leads USA to embargo Canada. Other than that GTA will not have a housing crash and if it does then that is because the economy is so bad nobody can afford to buy which also means no one can afford to rent. Ur literally here wishing the worse on us. If you want to make a wish then wish for the government to invest in manufacturing in Canada
People who bought to live there won't care what the fluctuating price is. The increased interest rates are doing their job kicking speculators out of the market and people complaining about higher interest rates because of high price of homes don't get it.
100%
@@as-is89 you're describing speculation not investments. Speculative assets are worth what people are willing to pay for it. Businesses that produce earnings, dividends, royalties have an intrinsic value can be evaluated and there are ways to do so.
@@HepCatJack It's all speculation there's no guarantees on any investment. People lose money on investments all the time. All that matters is timing when you buy and when you sell. It's a zero sum game, there needs to be a buyer for every seller.
Keep interest rates high, drive the condo prices to the bottom; eventually developers will stop building condos and realize that they can only make money over the long term through building rentals and holding onto those buildings themselves and profiting from the rent, not the project capitalization.
I disagree, I think weeding out all the foreign investors would make housing costs more realistic to what people can afford. Average salaried 25-35 year olds right now need two incomes to pull just the rent and some additional expenses and then they are wondering why birth rate is going down and immigration is going up. Fix the system drop immigration and ban corporations from owning freehold. When prices equalize to 1 salary covering the cost of living we can expect to see a rise in birthrate.
That would never happen. Affordable housing doesn’t make any money. I feel sorry for those who think that will ever happen. Let’s just wait and see. I want to come back to your comment in 2025
The bank will keep rates hopefully high enough to drive inflation below their 2% target before easing on them as otherwise they risk a repeat of the 70s. There is no incentive to build anything other than luxury condos as they sell for the highest premiums and make the most profit. If you want affordable housing built must have the government incentivize the transaction.
If a new government gets in there's 100 x possibility the bco independence will be gone and interest will go down for political reasons
@@Lifeisapartydresslikeit : I disagree, affordable housing makes lots of money, FOR THE DEVELOPERS. No level of government should be in the housing business, whether it to be to provide housing directly or to be a landlord. This should be left to the charities and non-profits. The governments need to create a new class of charity that solely is responsible for affordable housing development.That donation should be anywhere from 75% to 125% tax write-off for the contributor. It is not the government's mandate to provide subsidized housing, that is a charitable endeavour
Its pretty crazy how someone in their right minds would think of paying 740k for a 1bhk shoebox up in the sky.
Almost seems like the tulips which were so much in demand once..
exactly my thoughts. I walk by that building all the time. Absolutely nothing justifies that price for a one bedroom.
Yeah but you can sell it for 900k when it's finished being built 😂
This mentality is what drove the bubble. That, plus people in Toronto with more money then sense.
Alberta didn't experience a property bubble because we don't have helicopter money raining down on alberta coming from the financial sector and the government. Easy money created too many rich people concentrated in Toronto.
Unless 740k can give them a better return than the stock market. Stock market you can get over 10% return so with 740k you should get at least 80k a year. If landlord cannot get 80K profit a year from rental with a 740k condo then they are stupid to invest in a condo. The people who bought over 20 years ago who are renting are the only ones making a good profit. Now it's not the time to invest in properties. Landlord are not getting their returns from their investments.
8:57 "stabilize immigration levels at $500,000 a year"
Great vid, thanks Jordon
crazy eh
@@Precondo500,000 dollars??
@@krs218 I talk too fast and say dumb stuff
Um ah 500k a year is flooding the Country, locals can't even get good jobs or homes most immigrants want to get the heck out.
@@Precondo all good. Loved your video!
I'm from Portugal and I knew Canada was having a huge housing crisis, but 2M for a 3 bedroom?????? That's batsh*t crazy! I think a condo going up to 700k here would need to be a very luxurious place with gym, pool and golden faucets omg! In fact I know one in a relatively central area that only costs up to 400k, but I guess it's not in the capital!
Everyone thinks their shit is worth a grand in Canada.
Or you could put that $120,000 down payment money into enbridge or Bell stock and make $770/mo positive cashflow instantly from dividends and not have to be a landlord or have massive transaction costs. There are much better options out there
Bit of a brazen statement as investors are usually buying to diversify their already invested 120K in stocks. Not quite as black and white. Not to mention your dividends are taxable as well yada yada yada.
I have been losing a huge amount on a few condos in downtown since 2017. This year I started selling call options and basically collecting rent on the top 10 US companies and so far this year earnings 10k per month.
Houses should not be speculated and taken as "investment" if you are not using it yourself in the first place. It's ruining the housing market and the government should do more about it.
The Government don't care .. it's their biggest revenue !
Yes but that initial monet injection that only investors can provide is just too valuable. I agree with your sentiment but I can't see an alternative...other than some kind of government effort to provide housing for all
@@JudgeyJudgeyable REITs is an alternative. House speculation or "investment" is also not a thing few decades ago. At least one retail house owner should not be able to own 3 properties.
Handling money requires being fair and smart, not just feeling things. I worry that more people will have problems when they retire because it's hard to save money. Low pay, things costing more, and high rent make it tough. Owning a home is too expensive for many, so they might not have a home when they retire.
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Yeah. 'Evelyn Infurna' is my advsor; I was introduced to her by my partner. She has her contact information, but you could look into her background and get in touch with her directly. She is well-known and grounded, so it shouldn't be difficult to locate her page.
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It's not enough. This needs to be a wash out of all of these "so called" investors. The price appreciation during the last 10 yrs has been beyond stupid. Wages haven't even come close to covering this action. And that's the biggest issue. These "investors" should pay commercial taxes on every unit forcing them out of the market. And the province and city need to ditch land transfer taxes to slow the inflationary effects it has on prices.
Absolutely!! The gov was in on it they let it happen GREED!! yep about 10 years ago is when I noticed mostly rich foreigners from mainland China buying up properties in the west in Vancouver and that's when the prices gradually started rising quick. Then the gov steps in when it's become such a big problem to "show" hey we are doing something about it but its way to late. Thers no such thing as affordable housing anymore those days are gone
5:00 Your estimates don't even take into account that condo fees rise enormously in the first few years of a new build after the developer hands it over to owners.
Many homeowners, especially first time buyers are between 5-10x levered. Take someone who put 20% down to buy a $750,000 property. That's $150,000 equity. Now with a 10% drop in property price, the property loses $75,000 of its value. However, for the homeowner its a 50% loss as their 150k investment is now worth only 75k. This is the negatives of leverage.
Great video. Next time would be great to hypothesize how much the sellers would lose on 20% down.
…and this is only the beginning. This still has a couple of years to play out. The bottom is typically 5-7 years from when interest rates were hiked. In the early 90’s prices corrected 40%. Considering the parabolic movement upwards over recent years, I’d say a 40% correction is a minimum we’ll see. Much, much better prices to come.
Wait until interest rates hit 10% plus like they should be even now. The truth is RE only "appreciates" because the currency unit it's measured in is being depreciated.
It could be argued that RE becomes more valuable as general productivity goes up. unfortunately, productivity is going the other way in Canada, because excess investing in RE and government employees are a net lost to productivity.
A much needed correction. Prices were and still are rediculous.
Absolutely true.
Great video! I can’t understand what is happening here. Driving around Toronto this weekend and I can name at least 20 locations in the GTA where strip plazas or parking lots are being torn down for what? MORE CONDOMINIUMS!!! How? If it doesn’t cash flow or isn’t affordable- why are all these projects going to start?
I think there’s a good possibility that many won’t start.
The bottom line is still demand and you are betting on infinite amount of immigrate. People move here hoping for a better life and if prices and cost don't go down people won't come just because you allow them to come. Like China is allowing 3 children now but nobody wants to have kids. I heard a lot of students are leaving after finding out how unaffordable it is here. If the gov can't solve this problem of job and housing cost then your assumption on demand won't materialize
Thank goodness they aren't procreating no one should have more than 2 kids population growth is exponential, just replace yourself if u must give birth to humans, which by the way, aren't that great as a species humans suck
His projection fails to realize Canada has a backward, non-innovative economy and really can't employ an extra 500000 more people a year, The fact that the government paid subsidizes of 1.5 million a job to VW to "win" a Lithium battery factory says it all. The country only needs so many security guards, fast food and new government employees a year. The rest will realize their mistake and move on,
Demand becomes a nonissue when it flips to a buyers market. Buyers can and will wait if they believe property will be cheaper in 6 months or a year. Next phase of this crash is buyers drying up, and properties flooding the market. Autumn 24, I expect we will see this.
Condo owners are starting to charge, recertification FEE'S to condo owners with amounts in the $100,000's siting upkeep and codes, forcing owners to have to sell. They are going to start doing more in Canada, it's already happening in Vancouver, Montreal, Toronto. GET READY!
3:18 specifically about this segment you mentioned the negative cash flow, but correct me if I’m wrong but a lot of these investors would use that rent to pay down the mortgage which would lower their carrying cost?
I think a lot of people are still in positive positions but they are no longer seeing the upside for long term holding with the shaky market and would rather get out now and move that capital into other prospective regions that are positioned for explosive growth once we get over this slump. At least this is what 5 different property investors told me. Some started buying land and properties in Panama, Dominican, Spain, Portugal, Arizona and Texas.
Freeholds are next on the chopping block but the reaction of freehold losing value and being listed at the same rate as condominiums would be a less than ideal exit financially. So they just need to time the sales of condos first and then once the inventory is liquidated, they will move to the freehold inventory.
At that point all hell will break loose on the small investors who have just 2-5 properties sitting on a high LTV.
Again please correct me if you see any fallacy in my comments. I by no means am a fortune teller.
I am loving this. As a fact, nothing can stay on top without failing once. Canadian housing market has been worst and been consistently on top of most expensive houses in the world. So next, it has to fall. And this is just beginning. Hopefully 🤞
great video, just one quick fact, the loss in rental properties could be used to deduct any other income, depends on your tax bracket, me personally could get more than half back as tax return. Plus one thing we are certain about is the rate will go down eventually, rent will probably stay high even not gonna be higher down the road. Developer just simply can’t build a building based on the cost 5-10 years ago, so the slow market now will turn into short of supply 5-6 years down the road. This has happened before in 2011, when developer gave out free parking and interest free mortgage to try to attract buyers, we all know what happened in 2016-17. This market just can’t stay healthy anymore, it always shift between the two extremities.
So my question these people who bought these properties as investments are they allowed to then just write off the remaining debt? Because they shouldn't be allowed to. They screwed up our housing market and should have to deal with the consequences
I’m still scratch my head how stupid people’s willing pay $800000. for 500sq in those high density condos plus thousands of dollars condo fees!
who does that? i bought acres for cheap 33 years ago held onto it hehe
Not from Canada and or speculative investors
You can read numerous articles about housing unaffordability in the states, where they talk about the outrageous price of 800K condo in NY or the Bay area. - where, yes, everyone makes two or three times after taxes more than people working in TO.. Toronto condo investors are living in a dream. After all, sorry Canadians but Canada is one of the least desirable places in the world to live in.
@@TheTruth-cg8vj I think when people say they want to live in Canada...they are talking about living in 1. Toronto/GTA , 2. Vancouver area. 3. Montreal area.
Yup, condos suck unless they are cheap, or cheaper than renting.
I think your example is at 123 Portland. Great numbers but thats crazzzyyyyyy. A buyer would have to pay even more today for that unit and it would carry even worse. Conversely Condo prices are extremely likely to go up after 1 yr when int rates drop a bit. So is it worth it to struggle through the year is what you need to ask yourself?
Nice job on simplifying a complex situation! Problem is not short supply but excess demand.
You make very informative videos, very easy to digest and I know little about the markets. Thank you!!
I paid $200,000 for my 2,000 square foot house. I have a big yard.
I bought 20 years ago because I knew, with inflation at 5% per year, the housing market would be unaffordable very soon.
Did you mean "speculators are panic selling"? 😂
Very true. speculators buy for price appreciation; investors buy a bond like asset that gives a return. Sine there are none of those in TO RE, anyone holding RE as a so-called investor is a speculator.
Ok that was the best and funniest video I have seen all week. Most realtors tip toe around the massive negative carry on a shoebox condo but you come out and celebrate it. Your premise works on the fact that this is the worst it will be. What happens if the condo isn’t 1k negative but in a couple of years 2 k negative? What happens if the condo collapses in price from 500k to 350k? Man oh man a realtor that can sell that with a straight face is something awe inspiring it really is.
You think a brand new townhouse or house is any better? Considering you might get another 500/m in rent and it costs twice as much as a condo lol.
Negative cashflow =/= losing money.....how many times does this have to be explained to you....hundreds of times obviously because after 10 years you were wrong then and wrong now..... and it's hilarious the bears come out after a few months downturn (much like Toronto Maple Leafs fans parading around with a cup after a 5 game win streak when they always fold in the playoffs)... real estate is a long term game nobody cares what happens in 6 months, 1 year, 2 years etc.
In the long term, construction costs (and taxes) keep going up, so prices will go up. Canada already #1 in lowest housing stock per 100k people and that number is only getting worse as interest costs make everything more expensive....new supply going to 0 quickly meanwhile people are still flooding into the country.
I’m not selling or celebrating anything in this vid Jeff, just presenting the current market
Jeff sounds angry , I wonder why
@@XRP999 I am not angry. I just find it amusing when realtors know they can’t make a real good argument that a condo is a good investment they fall back on the usual immigration to the moon and Toronto real estate always goes up because there never is enough supply. It must be really rough out there to try and suck in the last remaining suckers humanly possible to take the bait.
Ya sure it sounds like a great idea being a landlord in a depreciating asset that you have to pull 2k a month out of your income to support. That sounds like so much fun. Only in Toronto. Suckers everywhere.
Thank you, helpful. What website do you this information of current and previous transactions in a unit please?
Paying 1.2mil for air space is crazy
Well, at least their govt says that if they die from homelessness frostbite or starvation trying to avoid homelessness, then the victims get to respawn like in videogames at a fancy condo project in the sky. Disingenuous manipulation? You decide.
But there are stupid rich people who luv that shit let me live there I wont
$800,000 - 1 Million + how is this a buyer market? With fewer than 1 in 100 or less being millionaires🤣🤣🤣🤣😂😂😂
Brampton mortgages... over extending yourself to keep up with the Patal's
Bleeding $4k a month, and you don’t see a problem… silly earthlings.
It’s interesting that in 2006 in Florida that thought they didn’t have enough housing and prices would go up forever. 20 months later the market was drastically different.
The cliff is closer then we think.
bleeding monthly because of interim occupancy fees - thats not the actual cash flow position on the unit once we close it out 4-6months later. Regardless, if we need to pay it down/off we can
@@Precondo
Anyone who closes on anything in the last 24 months and going forward will loose their shirt.
@@Bias_Eh-State_Chroniclesprices have risen over 300% in parts of TO over the past 15 years, why do you think it’s only going to retrace 24 months? Bottom could be where prices were in 2012.
Low resale values mean lower property taxes. If an investor is holding on to the condo for 10 years does he prefer that the condo resale value be high so he can pay higher property taxes even though he's not selling. Or would low condo value meaning lower property taxes be preferable?
I used to work with a guy that just bought a residence and moved in. He was so happy that the property value was increasing. And I asked him how long he planed to hold on to it for he said minimum 10 or 15 years. I asked him if he was okay with property values going up causing the government ask for more property tax. He gave me a puzzled look. He had no idea how property taxes were calculated and they even tell you in the tax bill they send you. So he's all happy that he's going to be paying $400 a year because property values are going up on property he has no intention of selling. According to interest rate news for Canadian rates there will be a rate drop of at least a quarter or maybe half a percent in April that's 5 months from December 2023. If there is another half a percent drop 6 months after that one that's at least a 1% drop maybe even a 2% drop before the beginning of 2025. I think that these guys have not allowed themselves enough of a reserve if they're panicking about selling. They should have a Reserve like the banks are required to do. The banks have a reserve because they're told to because their Deposit Insurance demands that they do and the shareholders expect them to. A lot of shareholders in Banks calculate what they will be paid dividend wise 5 years in advance. If you look at big Bank dividend rates for Canadian Banks they don't go down. They may hold but they don't go down. I've invested in Banks and I've also done the rental thing. The rental thing means you have to deal with people that are at the very politest I can say are tricky. A person is crying that they can't afford this much for a parking spot. And I look at them and I said I have your number I'll keep you in mind I'll get back to you and I start to walk away then they shout out that they'll take it at that price. I asked them to particulars about their car and I estimated its value out over $100,000 and they're crying about an extra $5 for renting a parking spot. And this is a good parking spot because it has a lot of walls around it. Less chance of their car being hit. Negotiate with car insurance company don't negotiate with me.
Got lucky myself. For 19 years I only have had to only pay a mere $140 per month for my nicely carpeted one bedroom apartment. This was quite a switch from when I previously lived at the downtown Manulife Center. But granted the kitchen here is not huge, but there is still enough room for a 54" x 30" kitchen table, plus the chairs, and it has had two brand new fridges. One died after 14 years, and thus was immediately replaced. On this last new fridge, the door was swinging open in the wrong direction, so as usual I thought I would fix that myself, as I have done before on other fridges. Holy smokes though, this one was doozy. It required brute force to remove some of the screws. I had to throw together my own home made screwdriver torque amplifier.
What I am surprised is the market took sooo long to rolling over.
Based on history this may take another 18 months to hit bottom.
Aren't mortgage rates on 'commercial property' typically higher then on one's primary residence? Don't banks ask if a condo is the borrower's residence or will it be a rental?
Always - but fraud is rampant in RE lending.
Speculation is Not Good ! Sorry for the Investors .. The Price must go down to the level where "Normal" people with current salary or income can afford to buy a house or apartment etc!
what about the rule change of air b & b ????? that to is having an effect on higher condo sales, not just 8% interest rates.
So will end user owners step in? Their options are 1) not able to afford a freehold, 2) keep paying ever increasing rent, 3) buying a condo to get on the property ladder. I know what option I would choose but I guess we'll see what others do.
You miss a factor that worsens the condo investment cash flow - ever increasing strata fee
I saw you in this investment group, you also invest in this platform.
Hi, can you share the website where you look at the listing history of the condos. thanks 🙂
Condos never made sense to me at all. People are really buying an apartment they will own, pay a monthly fees, be responsible for paying for high maintenance require in some cases, pay for a right and spot to park etc. Get an apartment, pay the rental payment monthly only and a lot of rentals have a parking spot or two included. Call the landlord if any issues occurs or superintendent. I look at the China ghost cities and all those unfinished ghost cities with no one living there really, decrepit apartments etc. Well in the future Canada will be like that, investors playing with condos, houses, to borrow more money on empty buildings LOL I have seen how the Asian and Indian communities in the last 40 years, have bought most Dépanneurs, convenient stores, gas stations. Working 80+hours a week to feed their families, house them etc. People should stop living through social medias, the news etc, and realize they have to work hard, they might have to work 60 or 70 hours a week and it's ok. My dad used to work 6 or 7 days a week, so me and my sister could have a roof over our heads, food on the table and electricity!!! I understood this as i got children's of my own. As i told them, when i die you all get the house, my tings, tools, car. Which are all paid for and you'll know what to do with them, as i did with my father, grandfather tools, that i work with for 40 years, and served them 40 years before that, and will serve you as well ;-)
Toronto condo investors are saints for subsidizing the Canadian housing market.
Subsidizing the Canadian economy*
I don't know how aware people are of the fact that if you own a rental property you must come up with a minimum 25% down for a second one. Deep pockets only need apply.
You guys have deep pockets
What about pre con town homes outside the GTA? Does this trend continue out as far as, say Owen Sound?
Have u seen collingwood lately!?
Doesn't it make sense to see inventory constantly hitting a peak since it is measured in units? Condos get continuously get built, population continuously increases. Looking at a measure of units on market is useless. Better to look at number of units per capita or population density.
Hi, great informative videos! That said, you mentioned a really great project (that you were biased towards) - silo/industrial repurposing with a restaurant/lounge at an upper floor?
I've been trying to find it...
Collingwood grain silo redevelopment by dream and streetcar
Thanks for the super quick reply!@@Precondo
I believe Radiohead's song 'Just' is the appropriate soundtrack for this hilariously ironic eventuality. With just a little bit of 'Forest Fire' by the The Dead Kennedys. Maybe whatever Nero was fiddling out whist Rome found out. Looks good on ya...
I rent, so i have to subsidize 100% an investor?
2 million apartment had 140,000 in interest and will rent for what maybe 3-4k max they will drop to 500,000 pretty soon if the interest rates do not drop as no one will invest their money in a loss for a very long time and we are 1 year in so far and I would guess in the next 2 years it goes up more then down. They might drop it .25-.5% for a short term to juice the housing market but rates are probably not going down for 3-5 years if they even go down.
Not should they go down much interest rates never should have been that low for mortgages should stay at 4-6%
Rents are very cheap in Argentia for obvious reasons and Canada is heading closer to resembling Argentia than the US as time moves on.
I think in this generation its not worth the hassel to be a landlord for todays return. Its eaiser to buy a good quality stock and get dividends. Now you can get a good stock with 5% dividend.
If you want to own a tiny cube in the air in Canada's worst city so bad that you are willing to pay $2.1 million maybe you need a $251k wakeup call.
No, panic selling in the condo market is them taking a 75% loss. Condo's have been overpriced for ten to fifteen years.
What is the website that you use to see these price sale history?
They are way over priced any way , they should drop below 400k to be real
Ya, but atheists dont seem to get elected, at least yet.
People behaving with stockholm syndrome compliance, pretending to have a backup plan at a fancy housing arrangement in the sky. This must be why they vote for manipulative liars like they pretend its the way to be.
The condo development by Yong and Bloor is currently under receivership.
Prices started falling in fort mcmurray AB in 2014 and it hasn't stopped.
Once the bubble blows the bottom falls out as investors, speculators, and flippers are nowhere to be found.
Thank you for the easy understanding analysis. Good information and analysis.
People have to know that the price of a house/unit is determined by the amount of credit a household is able to get and can afford to have.
What sites do you use for condo/housing info in Toronto
trreb mostly for data. housesigma for sold examples
Thanks!
Nah everyone selling because of fear of professional tenants and the governments leniency on these crimes.
For sure. Just not worth it now. Just put money in a s and p index and be able to sleep at night. That index is returning 10% for 70 years.
Mortgage rates are 6% now. In a year's time they will be at 7% (rates are rising). At that rate, the average person can ony afford to buy a house at 5 times their income, and the average income is $60,000 in Toronto. So 2 people x $60k x 5 times = $600,000 MAX. Any condo over $600,000 is unsellable, no one can afford to buy it.
Can you also get into the housing market not just condos
subsidizing their renter? or is the renter subsidizing their mortgage..? the problem is that these investors are using other peoples money to turn a profit and thats called being a bad landlord. Landlords who own their properties arent raising rents or even stressing about interest rates.
if you think large landlords with low LTVs aren't raising rents you have literally zero idea what you're talking about
Most condos are freeholds. Your chart of condo vs freehold is confusing. Did you mean freehold vs. leasehold?
People in Toronto pay 1 million dollars for a small, square, concrete box. They claim the job market is better in Toronto, but if that were true, they would be able to buy a house that's better than in the suburbs. If you make lots of money but can only afford a condo in Toronto, the job market isn't what you think it is. Your job only pays as much as your money can buy. If you can't buy much with your salary, then you aren't getting paid enough, no matter what the number is.
We need stabilization, rent caps, lower interest rates, more stable utilities going into the future of better healthier fuels and electricity. Get rid all the extra taxes and taxes that are build on top of taxes. We need to change that ourselves. Take a hard look and do homework what is behind all the rising costs make the changes and make your vote really be towards a better future not based on that you always vote for that and not change. Don't be afraid of change if it is to better your life.
Never hang your hat where your hand can't reach.
- My mother. ❤
They probably saw the zoolander vid of condo glory days and acted immediately!
$3500 cash flow negative is pretty bad, even if you can afford it. Would hate to be closing on a condo these days. In terms of long term outlook, 4-5% rates for an extended period of time…what will prices look like? Many ppl thought rates would sit around 1-2%. Hoe many borrowed at their limit? I imagine many.
Wait until interest rates hit 10% plus like they should be even now. The truth is RE only "appreciates" because the currency unit it's measured in is being depreciated.
It could be argued that RE becomes more valuable as general productivity goes up. unfortunately, productivity is going the other way in Canada, because excess investing in RE and government employees are a net lost to productivity.
only a short term bleed due to interim occupancy fees
it's because mortgage rates are so high. But it's still a good time to buy because when mortgage rates will go down prices go up again
I am perennially distrustful of Toronto condos. My friend is a unionized electrician who's been working downtown since the early 2010s and he said all the projects are all rushed so buyer beware of condos!
Good news for the new buyer
when you add the cdn dollar losses, the % is bigger which is important to remember. In cases where the dollar goes down, the price should actually go up.
That’s only true for commodities such as silver, gold etc where pricing is based on US dollars. Canadian housing is based on the Canadian dollar so doesn’t really matter what the US dollar does.
@thebigpicture2032 I disagree, we live in a global system and the cost of materials are purchased in cdn dollars against the USD. The cost of building is absolutely associated to the cost of buying a house and the dollar. The more it costs to build, the more it costs to buy.
@thebigpicture2032 I'd even go a step further directly linked to condos.. condo fees are associated to cost of repairs, which as you see in Jane and Finch area, condo fees for a year can cost more than the entire unit. The higher cost of goods, higher the fees= lower the cost of unit.
@@BCSimonYT I concede the debate. I’m thinking my position was based more on wishful thinking (that we supply our own material) than logic. Not to mention a bong hit 😃
Also the vehicle bubble has popped also. 😊
Usually they start selling for when the home or Apartment is old and junk no renos included, yet somehow equity is built definitely not with the overvalued buyer 😄
What percentage of the down payment did you assume in your example? Because the investors in these condos have different proportions of equity, of course, highly leveraged investors will get squeezed, but equity investors are less sensitive to rates and focus more on rent income appreciation.
I thought I heard him say 20%
20% and you're right a fair amount of investors have more down (or all cash)
Unless wages go up substantially their is no way the prices will go up!
The sentiment of "Subsidizing the renter" is what's wrong with the real estate market
You're leaving out the opportunity cost of investing that money elsewhere!
GOOD! them prices need to go down another 50-75%
Would be Interresting to bring in a tax expert on how these losses could improve your tax position? I dunno...just thinking out loud. I can afford the losses for now bit it Def hurts
Nothing is ever guaranteed!
Atleast now there will be more homes for people that want them !
I don’t understand why anyone would want to live in Toronto.
Thanks for this analysis - are you also able to make a video for the Ottawa market? Thanks!
Subscribed!
DROP REAL ESTATE AGENT FEES. ❤
Toronto housing price is so inflated, the condo market in particular, It deserves at least a 30, 40 % decrease. The household income does not support that kind of housing price in Ontario. 1300 dollar per sf, can you believe it? People who cashed out at peak in 2021, 2022, and moved to Calgary or Halifax are laughing, not only have they bought a much bigger house else where, they put a big chunk of cash in the bank.