Condo Buyers Facing No Win Situation (GTA Condo Real Estate Market Update)
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- เผยแพร่เมื่อ 25 มิ.ย. 2024
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In this episode we take a look at the current GTA Condo Markets - Toronto, York Region & Peel Region for week ending June 19, 2024. We also discuss the current state of the condo market and how difficult it's become for many involved.
This video will focus specifically on GTA Condo Markets - Toronto, York Region & Peel Region but be sure to SUBSCRIBE for more reports on other areas!
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Santo Sessa & Daniel Sessa
Re/Max Premier
(647)560-7778
santo@teamsessa.ca
*This video, nor any of the other videos on the Team Sessa Real Estate TH-cam channel, does not constitute legal or financial advice. This is strictly intended for educational and entertainment purposes only.
😂😂😂😂😂50 % reductions coming y'all, line of credit only goes so far LOL
It's gonna get even worse before it gets better. Nobody wants to pay 800k for 350 sq ft.
few people want to live in 350 sq ft
@@TehPwnerer you're not going to have a choice soon.
@@user-fu8yr9ne2b The choice will look something like this.... have your own 350 square foot bachelor condo or live in a 700 square foot one bedroom - with a roommate... OR live in a 2 bedroom 900 square foot condo with 2 or more roommates.... The trouble is of course.. many landlords will NOT sign leases with groups of people intending to share the cost of rent. Tenant relationships and financial, social arrangements of such tenancies are far too unstable.
This is cool for grown-ups to learn a lesson in finance.
Yes it is. My father lost 220k in early 90s in the world trade center at Younge and lake front when houses and condos crashed. The lesson I learned was to NEVER, EVER...buy a condo or over invest into realestate. Some of my friends have made bundles, others lost their whole life savings. I just work and go as far as my hard earned $ takes me. Easy sleeping. 😅
@@Triggerman2505and that’s why you’ll work til your 75
@@adamnarbeaux5898 well, maybe you misunderstood my story. My home has been paid of for 8 years now. However, I did not go out and start investing into 2nd and 3rd properties. Decided to just keep saving for my kids so they won't have to live through what I did with my parents. BTW, I will keep working till I am dead...thats just me. Cheers.
Worst paragraph ive ever read. @Triggerman2505
@@adamnarbeaux5898 I will work till I die, thats just me. I paid off my house 8 years ago so I have put quite a bit away for my kids since. I did not take the money saved to put down on another house as an investment, even though it crossed my mind. I remember the hardship my parents went through, and that always kept me afraid. Its not for me. Cheers.
It's interesting, for YEARS pre-con buyers were super in the black, they could sell the condo on the day of possession and make a pretty penny. But now it's the other way around and we should feel bad for some reason?
Imagine those 1000s of condos providing housing for 1000s families with reasonable rent. It's gonna stay vacant when they are asking for 3500 rent while the average salary is not even double of that.
The average NET income after income tax and other income deductions in Toronto is $3500/mo. (58K/year salary)
Great show keeping everyone informed..
You might be right but the truth is, many of those who purchased these properties are now under water, and your idea is to have these people further subsidize renters and continue to bleed month-to-month until perhaps they too go bankrupt and then maybe their family is out on the streets?
@@amrikshergill1621 That's the problem right there. When someone buys as an investment it's subject to risk and could end up in profit or loss and you cannot expect someone else to carry the loss for you.
I don't think there is any expectation of having renters carry the load. Owners are simply asking for what the market demands. To suggest that they do otherwise is foolish. Someone asking for $3500 on a unit when 5 others are asking for $3000 will naturally be dismissed by the market. Moreover, many are still paying out-of-pocket. Your argument that they charge 'reasonable' rates doesn't make much sense to me. They are operating in a free market and are asking for market rent. If the aggregate cost comes down, so will their ask price.
Went to visit family in the GTA recently and heard multiple word of mouth stories of friends who bought multiple small condos in satelite cities around Toronto in the last 5 years. All of them are losing gobs of money and hoping to be able to sell and still make a profit. In the wise words of Steve Carrel: 'Hey there's a bubble!'
Don't feel bad at all for any of those "investors" 😂😂😂
let 'em burn cash....
Keep and rent. Over time the value will go up. Real estate goes up and down. Just weather the storm. I’ve made millions. Been thru this a few times
When Grand Ma was lining up for Pre - Sales in 2019, 2020, and 2021. It reminded me of Joe Kennedy (JFK's Father) in 1929. He was getting his shoes shinned by a kid on Wall Street. The youngster was giving Joe stock tips. Kennedy went into the exchange and sold everything.
Love this lol
When everyone is talking about something, it's no longer as viable
Pre conn condo buyers....LETS BE REAL 99% OF THESE ARE LINKED DIRECTLY TO THE EQUITY IN THEIR PRIMARY "RESIDENTIAL " HOME....THEY BORROWED $$ FROM HELOC TO BUY THESE NOW IN THE MONTHS AND YEARS TO COME YOU WILL SEE HOW THIS WILL EFFECT EVERTHING HOUSING RELATED.
exactly, the debt overhang will long outlast the failed closures and fire sales of RE..... time to turn the speculators into the new basement rental dwellers !!! or, back to mommy and daddy.
The only way real estate will start moving again is if prices drop at least 50% ! That’s a fact
Not going to happen
@@eddobond76
Well, SOMETHING needs to happen, right? This impasse can only go on for so long. Everything has a time limit.
And if people just more-less STOP buying, while all the mom & pop investors keep hemorrhaging money to the point of unsustainability, then who do you think blinks first? It's not the matter of "if", but only of "when".
I don't wish a misfortune to anyone, but if you're just too light-minded to overpay something 3-4 times, and honestly believe that the life (the economy in this case) is nothing by an upward trend, then you just have no choice but to learn the lesson the hard way. No end users really suffer these days, because it's their HOME. It's the wannabe investors who thought they were ALL measured up to the big boys' game.
BTW, what ever happened to the golden rule of investing: you win some, and you LOSE some! You think you can win nonstop? Is your bum big enough to take the blow? Of course not, all those "investors" have no real money. They BORROW to buy things. And when it's the time to lose some, of course you can't believe it's happening. Greed (at least an uneducated one) is a nasty habit, my friend.
@@Nemija I am with you , but single family home prices won't drop that much .
So for example $750k home won't go down to $375k , so that price was in 2008-2010, we can't roll time back and I am not sure what Chris Temple thinks.
@@eddobond76
I can agree with this. Nobody really knows WHAT exactly will happen, and by how much. But, if anything is certain, it is that SOMETHING will happen to the displeasure of the "investors".
It doesn't mean that in some 10-20 years tables won't turn again. But, in a foreseeable future, they need to brace for major losses one way or another.
Condos are likely to drop another 10-15% I think... single detached homes will not. They are only building high density now. Single detached homes are becoming increasingly rare (as a percentage of the total housing stock) which will put a floor under their value.
Just can't believe these people actually brought pre construction condos as an investment property. 😮
hindsight is 20/20...
In order for the prices to really start dropping you will need to see consistent 6 months of inventory for at least 3 months straight. Days on Market creates pressure. So far, the prices are relatively unchanged.
Absolutely sad state of affairs,. I feel for all those who worked hard saved, made down payments on their condos only to be faced with such a tragic state of affairs based on politics, snow balling BS, and trends, simply ridiculous . Yet the ball park and arenas are full, people get away with not paying rent, no accountability, absolutely shameful.
Banks also allowing homeowners with mortgages to allow interest to accumulate and borrow more from heloc
Eventually banks will tighten credit and homeowners that are still spending heloc money for fun will get forced to sell
I don’t approve of renters not paying their rent but there’s corruption on both sides
I don't. No empathy for investors who lose money
Santos these pre con condos were sold at very high price. Why because there was so much demand- why so much demand because it's so easy to buy pre con in Canada. Anyone can borrow money, fake pre approval letters easily available. This created demand and honestly people who are genuine buyers whether they are first time buyers or investors are struggling as well because of these speculators. BTW before you close a condo unit there is occupancy fees which seems to be very high thses days since prime is @ 6.95. Buyers should know what else they need or perhaps may have to pay on top of the purchase. price. Things like development charges, hst rebate, lawyer fees land transfer tax etc. To be honest a lot of people should NOT have been sold the condos because of fake pre approval. They were not qualified at first place . This is pure speculation . I love your videos Santos you give good insights on real estate
Home prices need to come down 20-30%. That’s the only way rent will go down.
When some one buys a property for cheap, rent will reflect that
I've began to take issue with the term "Mom & Pop". I think it paints the type of people who drove up these prices, condos in particular, in too positive a light. Call them what they are, speculators. They provide no value to the real estate equation and they all share one common trait, greed. In my experience your typical condo buyer in the last 3 years is not made up of people buying a 2nd property just looking for some additional income. There are so many people out there who don't want to work a typical 9-5 job and have instead chose to over-extend themselves and accumulate residential units as an entrepreneurial business venture. They accumulate units as quickly as the banks (or their parents) allow them and consider it their career. A career where you don't need to wake up before noon and can take vacations on a whim. These speculators think residential real estate is passive with no-risk. They are slowing learning it's neither of those things. There is nothing passive about managing properties, it is only a constant stream of issues I assure you that. The condo market seems to me to be the canary in the coal mine of Canadian Real Estate. Watch out.
You just described Canada's economy in its entirety.
Lets not forget the Gov fees that add up to 125k per condo. That also drives the costs up.
It's semi-passive. You can have a full time job and manage rental units if you want to
All news - are good news. Many thanks!👍
No sympathy for even the mom and pop investor trying to make a buck off people who actually wanted to buy it to live in it
This
Pre covid was already insanly overpriced for average worker in Canada, average incomes should equal average home prices directly in relation, that's how it used to be before Trudolf.
now finally the last TORONTO RE bubble bursts and we see who is swimming naked ! YU are all in for a very rude AWAKENING LOLOLOLOL . IT'S ABOUT F-ING TIME !!!!!!!!!
Hasn't burst yet, and might not, due to declining interest rates.
IT'S COMING NOW !
@@propheteyebert7063 YOU FOOL WAKE UP ALREADY !
Santo, can you please overlay your video with slow playing violin.
🎻 Titanic theme OK?
There is no way in h**l that you can dump a 750 pre-con for 600. LOL. All those units will be under 350 soon (pre-covid price). Even that is a joke for that crap. Really disgusting trash.
350 is crazy low, it won't happen
I’ll probably start buying, or at least putting in offers when nice 2-3 beds come to the $550-$750 range. No hurry. I can wait. If it happens, great, if not, whatever.
@@SlavaFurnishedRentals please explain why not. 350 is pre-covid price. I rate is triple and economy is worse than then. Wages r same. More unemployed now then at that time. China has crashed.
Population growth alone isna reason why that won't happened also inflation @xyz1663
@xyz1663 Lots of investors, as well as end users, will see value when the prices are well over 350, which will create a floor at some point way over 350.
I think right now is a great time to get in for people to buy at a discount (i am not getting in thou). Preconstruction is not gonna get cheaper ither, building materials/fees are only going up etc
Ultimately, when I see comments like yours, saying it's going all the way down/it's all screwed - it is kind of a signal for me that it's time to look for a motivated seller and get a good deal because it shows that sooner than later there will be an uptrend.
Alternatively, when I see comments everything is going to the 🌙- it is time to wait or get out.
Oh well, these 'investors' should have done the math...
One of the things that I have observed in the condo market in Toronto is that most of the condos are built for investors, and not for tenants to have a place to raise their family/build family.
If we just look at the basic principles of generating real estate value would be just people, if they cant see themselves living there then its just room of walls. And empty spaces will don't have any value.
One thing that developers should develop and market their properties as livable spaces where people have opportunity to build out their world. One of the reasons that is keeping me away from condo market is that. I can't see myself starting a family in those matchboxes, let alone spend 100s of thousands on downpayment.
The dilemma of whether to sell at a loss or hold on and hope for a rebound is truly puzzling. That's just the unpredictable nature of investments. Wishing strength to all affected buyers out there!
Thank you 🙏 for this factual information! 💕👍🏿
Negative Net Worth Individuals
yep
So many of the latest condos were never really meant to be lived in by the buyers, so tiny with horrible floor plans. The condos were designed for the flip or rental.
This guy is smart, articulate, and knows his stuff. I cant believe I subscribed to a channel about a housing market. Sir, branch out into other educational videos 🙂
No need to feel sorry for these investors. In the good times, they made tons of money by flipping these condos. They should have known investing (or speculating) in anything can get you profits, and losses.
To purchase a pre-built property, whether at $700,000 or $200,000, hoping to flip it before closing is always a risk. This is no different than buying a stock hoping to sell at a higher price. There's no sure win in life.
Mintenance Fee,Hydro, tax, Internet are around $$$ 1000,1200 monthly for a condo of 600 SQF which is quite high already and then you have your mortgage,insurance etc…
I think the following will happen. The market will continue to hover around a baseline and seem to be on the verge of cracking, prompting owners to sell before it does. Then the equity firms will step in and buy to prevent it happening. And they'll just sit on it, or if it comes it, keep buying and selling to each other artificially. This will go on until a sufficient number of organic owners will have opted out, expecting a better opportunity on a market correction, at which point the upward trend is decisively resumed, effectively pricing them out. I know, it's completely ludicrous. But that's one way of achieving their stated goal, "You will own nothing and you'll be happy."
Prices to the moon! buy buy buy!
Don't buy in Toronto.. prices headed much lower...
I m facing this now. Bought a condo in Mississauga square one for 650$ 2 bed 1 tiny den 2 full bath 680 sqft. I’m on occupancy closing at the Moment. Trying to rent but seems impossible .occupancy fee is $4200.00 but rental market around $2600 .
It’s crazy
What makes you think the pre-con condo buyers saved the downpayment???? The assumption on this channel is that down payments are saved over years. That is not how it works anymore. Prices are too high. Condo investors BORROW the downpayment. So when they sell the condo at a loss... the debt overhang of the downpayment remains. Even the mom and pop investors or parents of young buyers that want to help out with downpayments are NOT putting cash on the table.. .they are borrowing against their HELOC... So when you are looking at a tenancy as a buy and hold option, you need to include the interest portion of your HELOC in the break even calculation. Often missed in these videos.
Good post as usual
Hang on isn't it even worse for presale buyers... The bank surely won't advance a mortgage based on a $750k purchase price when the market value today is $600k, a presale buyer only technically owns the condo once formally closing at the occupying date, right?? In that case if the buyer chooses to close on the purchase, that would mean in addition to their $150,000 deposit having evaporated already, the buyer would ALSO need to come up with an additional payment at closing of $120,000 so that the equity ratio on the mortgage is 80/20 as mandated by lending standards... Is this not how the system works?
How many presale buyers have another $120k kicking around in this economy, plus how motivated will the buyer be to pony up more cash to close when their first $150k has already gone bye bye.
Shouldn’t have played the real estate scam. Womp Womp.
You have average sold price, but do they specify average selling price for studio, 1 bedroom, 2 bedroom, etc or average price per sqft?
Matthew is happy months of inventory are going up. He wants to buy a condo downtown
Canada has a govt induced systemic bubble in real estate. Min 50% correction is ideal for the economy in the long run
wait, so the impossible to get into market cause everything is expensive is actually reverse and condos are cheap, just screwing ppl over who bought precons a few years ago?
You are calling "speculation" an investment. It was very speculative for buyers to plan to profit from assigning their pre-construction contract. Not wise.
Also consider that if you sell and IF you get out alive w profit you face the music of CG inclusion… Hold and you’ve already folded and lost your downpayment.
You really gotta hate yourself to even consider “investing” in RE or being a landlord these days.
Well Team Sessa, this begs the question, con artist, drugs or simply delusional? that's one more option than what you offered...
Good Time to Buy Resale Condos... Tons of Supply, Fear and the Media is Pounding the Condo Market Negatively. Condos are not going anywhere... buy now keep for the next 5 years min you will be fine
We won’t stop you… buy as much as you want 😂. Would be nice if you stopped begging other people to buy.
The best time to buy a condo is 5 years from now. The best time to sell a condo is 10 years from now.
This issue was addressed by Koran 14000 years ago Borrowing money at interest rate and taking advance payment for your crop before its grown assuming my crop would be same as past years. BOTH RECIPE OF DISASTER IT MIGHT WORK THIS YEAR BUT NOT NECESSARILY NEXT YEAR. Holy Koran "If you borrowing money or giving money doing RIBAH (interest) you are not fighting INTEREST RATES you are fighting me i.e. FIGHTING THE NATURAL LAWS OF CREATOR.
These Precon investors were genius last 5-8 years. You buy lottery ticket dont have to deal with tenant and gauranteed huge return on investment. If you look around youtube that is what many were pumping couple of years ago. When tide is gone you will figure out who was swimming naked. This is strategy is like picking penny on free way. For many years you will be successfully getting left over penny on free way for free and look like genius. One fateful when you are struck by huge truck on freeway you wont be there to enjoy those penny.
Says the wiseman :)
How to find condos that close soon?
Go on the assignment sales blogs
To bad. The greed!!!
Negative cashflow =/= losing money...... buying a gold coin (or bitcoin) is negative cashflow, putting money into your RRSP is negative cashflow..... buying land is negative cashflow.... buying a bond is negative cashflow.... that is not actually a negative.
What you are crying about is leverage (which can go badly in stocks just as easy if not easier)......
ps not all condos are dropping, in fact most are still going up.... only the high priced ones are having trouble....... if less high priced units sells that makes the average price drop, but did the low end ever really go down?? nope
Real estate is pain
He who panics first, panics best.
Those who panicked fast enough got out. Those who panic late get wiped out. Too late to dump now… no buyers 😂
TL;DR investment decision backfires, cry me a river
To buy
A lot of people are about to get rinsed
We need 1 extra million immigrants asap for the condos to maintain their value, or face losing our retirement money!
U should have worked and invested wisely instead of gambling
Waiting for bad things happen
Another flawed video they will not only lose down payment but they also need to pay the difference.
those who think condo prices will drop are hallucinating especially during election year this (US) and next (Canada) year. price will stay stagnant at most. the money printer never stop, if not stock market money has to go to real estate.
Keep telling yourself that
Sure thing
Money printing is uncontrollable inflation that will surly be tempered by higher interest rates. Higher rates equals 🟰 lower Condo prices. Simple math don’t get mesmerized by what these vendors are selling for…..the prices are grossly inflated! 🤔
Between government increasing taxes incl. Capital gains and banks raising mortgage rates. Why bother buy anything. Salary taxed, buy necessities and get taxed, save money or invest then get screwed with capital gains. Why bother. I'd rather live in a tent under the Gardner
What is the max pain point for all these folks 30/50/70% drop .. that needs to be reached and this mess will get cleaned up real quick imo .. till then sit back and watch the paint dry lol lucky to have got a sucker at the last blow off top in '21 !!
Prices go back up? hahaha.. really? delusioal no longer...howabout delirious...