All the Very Wise People who have been promoting Toronto as a go-to destination both for tech businesses and their attendant employees forgot one little detail.
Yes, Mr. Florida, I'm calling you out.
They're not gonna come to Toronto if they can't afford to live there.
And I truly believe we have achieved that critical mass.
The big dogs in global business are busy as can be grinding wages down.
Meanwhile, their ideological cousins who control the local real estate markets are busy as can be bidding up local prices to international levels.
That's why a 450 square foot condo in downtown Toronto is worth half a million bucks, which is pretty much what my 100 acre farm three hours away is worth.
Who do you think has a better quality of life? The guy on the farm or the guy in that condo?
Showing posts with label Toronto real estate bubble. Show all posts
Showing posts with label Toronto real estate bubble. Show all posts
Wednesday, June 21, 2017
Wednesday, June 14, 2017
The real reason housing is so expensive
Supply and demand!
Canada is a nation of immigrants. That's cool; I'm an immigrant myself. Current immigration policy is aiming to bring a further 300-350 thousand immigrants per year into the country going forward. On top of that you have TFWs and International Mobility permit holders adding a further 250-300 thousand per year. Presumably they need to live somewhere too.
All told, we've got somewhere around 600,000 new folks looking for a roof every year. That doesn't mean we need 600,000 new homes of course. Average household size is about 2.5 persons. Do the math and you'll find that Canada needs at least 240,000 new housing units per year just to keep up with immigration.
The latest numbers I can find show housing starts at an annualised rate of 194,000 as of May 2017. In other words, the housing stock is falling behind at the rate of roughly 50,000 units per year compared to the growth of the population.
That tells me we're in a national housing crisis that's only going to get worse. And where is our federal government on the matter? Missing in action, that's where.
There is no federal housing policy whatsoever.
Mind you, they've got policy initiatives galore when it comes to boosting immigration. After all, more workers means downward pressure on wages. Employers are hunky-dory with that. Employers tend to have a louder voice in Ottawa than do employees.
And you don't hear a lot of uproar about over-priced housing from the big developers and homebuilders and landlords. Like the employers, they've got loads of schlep at every level of government too, whereas you don't.
That needs to change.
Canada is a nation of immigrants. That's cool; I'm an immigrant myself. Current immigration policy is aiming to bring a further 300-350 thousand immigrants per year into the country going forward. On top of that you have TFWs and International Mobility permit holders adding a further 250-300 thousand per year. Presumably they need to live somewhere too.
All told, we've got somewhere around 600,000 new folks looking for a roof every year. That doesn't mean we need 600,000 new homes of course. Average household size is about 2.5 persons. Do the math and you'll find that Canada needs at least 240,000 new housing units per year just to keep up with immigration.
The latest numbers I can find show housing starts at an annualised rate of 194,000 as of May 2017. In other words, the housing stock is falling behind at the rate of roughly 50,000 units per year compared to the growth of the population.
That tells me we're in a national housing crisis that's only going to get worse. And where is our federal government on the matter? Missing in action, that's where.
There is no federal housing policy whatsoever.
Mind you, they've got policy initiatives galore when it comes to boosting immigration. After all, more workers means downward pressure on wages. Employers are hunky-dory with that. Employers tend to have a louder voice in Ottawa than do employees.
And you don't hear a lot of uproar about over-priced housing from the big developers and homebuilders and landlords. Like the employers, they've got loads of schlep at every level of government too, whereas you don't.
That needs to change.
Thursday, June 1, 2017
Real estate anxiety
Apparently "anxiety" is a bona fide mental disorder. Google it. Yup, if your doctor is worth her salt she'll figure out what pill will fix you up.
From what I read on my Google search, up to 25 million Americans may suffer from anxiety disorder.
That's nothing!
Here in Canada, with approximately one tenth of America's population, at least 25 million people are suffering from real estate anxiety.
The millennials are anxious because they'll never own their own home.
Their parents are anxious because their kids will never own their own home.
Pretty much the only folks not suffering real estate anxiety are the ones already sitting on multiple properties.
There are more of those than you might think, and they're not all shady Chinese investors.
I was at a wedding last summer and there was lots of boasting around the room about how clever people were to own two, three, four or even more Toronto houses.
And they are clever!
Toronto has had year after year of double digit residential real estate inflation. Let's say you picked up a little Downsview bungalow for 500k a few years ago. You got in with a 25k down payment. A year later that bungalow is worth 600k.
You just made a 400% return on your investment!
You're a genius!
Unfortunately, the Toronto real estate market is today infested with thousands of such geniuses. Many of them are "professional realtors." Apparently there is no sanction against self-dealing in the realtor's code of ethics.
Those are the folks enthusiastically blowing more air into the balloon.
The correction is long overdue.
Maybe some day our kids will be able to get off those pills and into homes of their own.
From what I read on my Google search, up to 25 million Americans may suffer from anxiety disorder.
That's nothing!
Here in Canada, with approximately one tenth of America's population, at least 25 million people are suffering from real estate anxiety.
The millennials are anxious because they'll never own their own home.
Their parents are anxious because their kids will never own their own home.
Pretty much the only folks not suffering real estate anxiety are the ones already sitting on multiple properties.
There are more of those than you might think, and they're not all shady Chinese investors.
I was at a wedding last summer and there was lots of boasting around the room about how clever people were to own two, three, four or even more Toronto houses.
And they are clever!
Toronto has had year after year of double digit residential real estate inflation. Let's say you picked up a little Downsview bungalow for 500k a few years ago. You got in with a 25k down payment. A year later that bungalow is worth 600k.
You just made a 400% return on your investment!
You're a genius!
Unfortunately, the Toronto real estate market is today infested with thousands of such geniuses. Many of them are "professional realtors." Apparently there is no sanction against self-dealing in the realtor's code of ethics.
Those are the folks enthusiastically blowing more air into the balloon.
The correction is long overdue.
Maybe some day our kids will be able to get off those pills and into homes of their own.
Sunday, April 23, 2017
Would you like fries with your liver and onions?
No I wouldn't.
I'm not a big fan of the long drive to the city and back. Promised myself a good feed of liver and onions at the Steeles Deli, where they've long claimed to have the best liver and onions in town, as compensation for the aggravation.
So we get Junior out of res at Margaret Addison Hall on Charles in the heart of downtown, up to his summer place at Younge and Steeles, and we pop over to the Steeles Deli, me and the Farm Manager and four of our five juniors and a couple of add-ons.
I know what I want, and I'm literally drooling in anticipation. When it's my turn to order I say liver and onions.
She says, how do you want it?
I say, on the light side.
She says, and what kind of potatoes?
Totally redundant question. There's only one kind of potatoes you have with liver 'n onion, and if you're reading this blog you already know.
Mashed potatoes.
She says, we're out of mashed, would you like fries with that?
Huh?
What the hell goes on here?
Best liver 'n onions in town but you're outta mashed potatoes?
Sorry, but that simply does not compute.
Fries? With liver and onions?
NO!
A thousand times no!
I'm the kinda guy who took decades coming to grips with the fact that pineapple on pizza is socially acceptable... but fries with your liver and onion?
No way Jose.
So I had a Reuben instead. Mediocre at best. I swear the sauerkraut came out of a jar.
By then my tablemates were gushing over their matzah-ball soup, and I didn't want to ruin the mood, so I made do.
Meanwhile, I've got the cell-phone addicts at the table furiously googling election results from France. Seems almost seven million voters opted for communism and a strategic alliance with Venezuela. Good showing but not quite enough.
France is going into the run-off with a choice between a rabid racist and a guy who met his wife when he was fifteen years old... and she was his teacher!
Not that there's anything wrong with that... although I do imagine it would raise eyebrows at the College of Teachers were such an outrage to unfold here. In France it's never even qualified as a scandal.
Go figure.
But the highlight of our lunch date was when one of the add-ons, a guy who is just wrapping a Doctor Phil in Chem at U of T, googled the listing for the place he's been renting a basement apartment in for years. His landlady done put the place on the market just this week.
Even though it's a little threadbare, he figured a million and a half.
I figured, threadbare or not, if it's within a comfy bicycle ride of UT, it's probably over two millions.
They found the listing.
His landlady is asking 3.49 million for a tear-down that might have fetched 500 thou ten years ago.
Wynne and Tory have no clue.
I'm not a big fan of the long drive to the city and back. Promised myself a good feed of liver and onions at the Steeles Deli, where they've long claimed to have the best liver and onions in town, as compensation for the aggravation.
So we get Junior out of res at Margaret Addison Hall on Charles in the heart of downtown, up to his summer place at Younge and Steeles, and we pop over to the Steeles Deli, me and the Farm Manager and four of our five juniors and a couple of add-ons.
I know what I want, and I'm literally drooling in anticipation. When it's my turn to order I say liver and onions.
She says, how do you want it?
I say, on the light side.
She says, and what kind of potatoes?
Totally redundant question. There's only one kind of potatoes you have with liver 'n onion, and if you're reading this blog you already know.
Mashed potatoes.
She says, we're out of mashed, would you like fries with that?
Huh?
What the hell goes on here?
Best liver 'n onions in town but you're outta mashed potatoes?
Sorry, but that simply does not compute.
Fries? With liver and onions?
NO!
A thousand times no!
I'm the kinda guy who took decades coming to grips with the fact that pineapple on pizza is socially acceptable... but fries with your liver and onion?
No way Jose.
So I had a Reuben instead. Mediocre at best. I swear the sauerkraut came out of a jar.
By then my tablemates were gushing over their matzah-ball soup, and I didn't want to ruin the mood, so I made do.
Meanwhile, I've got the cell-phone addicts at the table furiously googling election results from France. Seems almost seven million voters opted for communism and a strategic alliance with Venezuela. Good showing but not quite enough.
France is going into the run-off with a choice between a rabid racist and a guy who met his wife when he was fifteen years old... and she was his teacher!
Not that there's anything wrong with that... although I do imagine it would raise eyebrows at the College of Teachers were such an outrage to unfold here. In France it's never even qualified as a scandal.
Go figure.
But the highlight of our lunch date was when one of the add-ons, a guy who is just wrapping a Doctor Phil in Chem at U of T, googled the listing for the place he's been renting a basement apartment in for years. His landlady done put the place on the market just this week.
Even though it's a little threadbare, he figured a million and a half.
I figured, threadbare or not, if it's within a comfy bicycle ride of UT, it's probably over two millions.
They found the listing.
His landlady is asking 3.49 million for a tear-down that might have fetched 500 thou ten years ago.
Wynne and Tory have no clue.
Friday, April 21, 2017
Wynne and Tory discover Toronto housing bubble
And by golly, they're taking some serious steps to lance that beastly bubble!
What a pair of imbeciles!
Seems the Mayor of Toronto and the Premier of Ontario were pretty much the last two people in Canada to notice. It's been topic number one around office water-coolers and company picnics and at cocktail parties from Thornhill to The Beaches for the better part of the last decade. Hilliard Macbeth wrote a book about it three years ago. Alas, the market has ballooned at least another 50% since then.
Thank God our political masters are finally on top of this housing crisis!
Good things will surely follow...
Or not.
What a pair of imbeciles!
Seems the Mayor of Toronto and the Premier of Ontario were pretty much the last two people in Canada to notice. It's been topic number one around office water-coolers and company picnics and at cocktail parties from Thornhill to The Beaches for the better part of the last decade. Hilliard Macbeth wrote a book about it three years ago. Alas, the market has ballooned at least another 50% since then.
Thank God our political masters are finally on top of this housing crisis!
Good things will surely follow...
Or not.
Friday, March 28, 2014
Time to dump your Toronto real estate
Canadian media are filled with soothing stories about why the vastly over-heated Toronto real estate market is not in fact vastly over-heated.
In the long run, a stable market means that the average income can buy the average house.
Toronto's real estate market has made a lie of that since at least ten years ago.
So if we don't see a stable market, what exactly are we looking at?
A bubble.
A bubble nobody wants to call because all concerned have a vested interest in keeping the bubble bubbling.
I've been around long enough to see a few bubbles come and go, and believe me, this one's about ready to pop.
I recall a brief period about ten years ago, the pre Farm Manager era, when I was involved with a Toronto gal and we were semi-seriously looking at Toronto real estate.
Looked at a place on the perhiphery of Forest Hill that was available for a mere $300k. Thought it was extravagantly overpriced. That little cottage would go for well over a million in today's market.
Another place we looked at was a fixer-upper on Baby Point Road that was on offer for a mere $800k. That would get 3 millions today.
If that shit was overpriced ten years ago, what is it now?
I remember going to a family do at a place near mid-town, where my friend's dad had bought the two-story red brick home on the strength of his salesman's salary back in the '50s. Ten years ago it would have brought close to a million. Clearly outside the range of what a typical salesman could afford. Today it would trade for 3 and a half or four millions. The only salesmen buying in that neighbourhood today are guys at the bond desk at Goldman Sachs.
And there's not enough of them to keep these wacky prices where they are.
What goes up is gonna come down.
Get out before you get hurt.
In the long run, a stable market means that the average income can buy the average house.
Toronto's real estate market has made a lie of that since at least ten years ago.
So if we don't see a stable market, what exactly are we looking at?
A bubble.
A bubble nobody wants to call because all concerned have a vested interest in keeping the bubble bubbling.
I've been around long enough to see a few bubbles come and go, and believe me, this one's about ready to pop.
I recall a brief period about ten years ago, the pre Farm Manager era, when I was involved with a Toronto gal and we were semi-seriously looking at Toronto real estate.
Looked at a place on the perhiphery of Forest Hill that was available for a mere $300k. Thought it was extravagantly overpriced. That little cottage would go for well over a million in today's market.
Another place we looked at was a fixer-upper on Baby Point Road that was on offer for a mere $800k. That would get 3 millions today.
If that shit was overpriced ten years ago, what is it now?
I remember going to a family do at a place near mid-town, where my friend's dad had bought the two-story red brick home on the strength of his salesman's salary back in the '50s. Ten years ago it would have brought close to a million. Clearly outside the range of what a typical salesman could afford. Today it would trade for 3 and a half or four millions. The only salesmen buying in that neighbourhood today are guys at the bond desk at Goldman Sachs.
And there's not enough of them to keep these wacky prices where they are.
What goes up is gonna come down.
Get out before you get hurt.
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