Sunday, November 9, 2014

What real estate bubble?

From time to time me and the Farm Manager get to missing our children, who are, all five of them, living along the Toronto-Guelph axis. That's a two-three hour trip each way from our 100 acres of paradise here at Falling Downs.

A typical trip to visit with any of the children inevitably becomes a matter of five or six hours of driving for a two or three hour visit, so we don't visit as much as we'd like. And that's if there's no traffic complications, which, the closer you get to Toronto, are pretty much guaranteed to happen.

Then you can easily get into eight hours of driving for a two hour visit.

So from time to time we get to thinking about cashing in Falling Downs and moving a little closer.


You're lucky to find a modest starter in Guelph for $300k.

In Toronto, you can pretty much double that for a modest starter.

Either way, that's a non-starter.

I remember humble bungalows put up by TT Skov in the early sixties that sold for 10 thousands when built. They're trading in the range of $400 thousand now. When Mr. Skov put those up, the average factory hand in Guelph could afford them. Needless to say, that doesn't happen any more.

A lot of this is driven by idiotically low interest rates. There's tons of folks being approved for half-million dollar mortgages who would be well and truly up a stump if interest rates went back to normal. Every other house on every street would be up for sale overnight.

You know what that would mean. All sellers and no buyers?...

A total collapse of the real estate market.

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