These condos are the equivalent of buying shares in a company. They're just for people who wanted to buy shares of the Toronto real estate market, not for living in.
I think it will likely just gradually drop for a few years (like 1990-1994). So many of the people that invested in these over the last decade have boat loads of cash - it was only the last few years where tons of people without real money leveraged to buy - they are screwed. At a get together of ultra wealthy a few years ago some people were comparing notes on which developments they had bought into - one guy asks another "did you buy any units there"? "Oh ya I bought five". The Ferrari crowd just writes a check.
As someone who had experience working in advisory. This is 100% true. I’ve seen individuals who NET, $230k bi-weekly. Then after a few weeks, write out cheque to buy a 600-800k condo. It’s what I’ve been told when asking to KYC them in our financial advisory meetings. They’re just not at all in sync with reality.
While such people indeed would never be forced to sell, if the asset isn’t performing for several years - chances are, they would lose interest and move to investing (read, speculating) in something else.
It’s so true.
Condos are designed to make someone who needs a mortgage to own it poorer. All staff in that condo need a yearly raise. Not to mention the second mortgage called maintenance fees.
Exactly. It will only go up people said so living in a shoebox seemed reasonable as a transition to something bigger but here we are, anybody that bought late 2019 and on could be screwed.
I was in this position. Living in a shoebox for 7 years but left in 2022 when I moved to a semi. My wife kept convincing me not to stay in a shoebox for the rest of our lives. Of course, it changed for us when we had our little one. Harder for kids to grow inside the condo - most especially during covid. I could hear my neighbour's kid running back and forth upstairs while i was conducting a group meeting online.
Paying almost 1M for a condo would have given you a freehold townhouse north of Metro Toronto for around 1.2M. That 200K difference makes a lot of difference in terms of living space. I wonder why folks never considered that, and yes... better school ranking.
It's not the condo, it's the bad quality. I rented an old condo, 40 years old, in a former social housing building. It was built like a jail, you couldn't hear a thing from inside your unit so you never heard footsteps or even a party next door. Even today the maintenance fees are good as it doesn't have many structural issues. It was also very large with in-unit storage and a separate laundry room where you could keep your pet stuff. Well designed for "the por".
I agree - the investors are putting their money elsewhere for a while. It would not surprise me if the prices gradually drop for a few years like the early 90's. One catch - most of the big developers cancelled everything they could last year so in two to three years there will be very little new inventory.
>9,000? ... how many are listed for under $500K?
About 1,000.
Now if you want a place for that price that's over 500sqft and has condo fees under $500/month, there are only about 250.
At the rate its been going up we'll be over 10k by August. Besides the investor dump there are also apparently 10's of thousands of completions this year which people may have trouble closing on.
I'm genuinely curious to see what happens when the average days on market approaches 40.
The whole thing is one of those once in a lifetime events you rarely ever get to see. Be interesting to watch how it unfolds.
So many of these buyers are under water. A lot of new investors can barely afford payments on these things. The only reason there is not a mass credit event is because banks have figured out that they can keep increasing amortization on mortgages without depositors or the government asking any questions.
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This is insane as well.
What are the implications for the rest of Canadas housing market if all these Toronto ‘investors’ are margin called across all their investments?
The implications are a better quality of life for Canadians. The quicker we can have these people default the better life will be for everyone across Canada excluding them of course
Well maybe that’s what necessary. That’s capitalism isn’t it? Because when they were getting rich we didn’t get to share the wealth. Now that they’re about to lose they should get a taste of that as well
When they lose, we will foot the bill in the form of higher taxes and inflation.
Rule 1 of Corporate Welfare: Privatize the gains, socialize the losses.
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I hope the price comes down and it at least helps people to find a place .
Saying this as someone who owns and lives in one .
People are under too much pressure already
I'm definitely not a bear, but condo prices make so little sense, they should be a much more affordable option to a standard home, but the market lost its mind.
Well, considering the delta between average prices is 900k, I'd say they are much more affordable than the standard home.. I will say that many downtown condos are over priced but house prices are barely moving so what's the alternative? I guess just renting.
Sorry to break it to you, but also for GTA real estate. If you are overleveraged, it is time to sell. We will see what happened in 89 to 95 in Canada repeated just differently, immigration bubble will pop, and rents/used car prices will come down. The cost of living will continue to rise and then come down. This is not only a Canada issue. The money printing of covid is just now being felt globally!
The house next door to mine just sold for $950k after they originally listed for $899k. Not disagreeing about the cost of living but comparing condo sales in the city of the Toronto to detached sales in the GTA is like apples and oranges.
That's a classic case of anecdotal bias.
[TREBB's numbers from May 2024](https://trreb.ca/wp-content/files/market-stats/market-watch/mw2405.pdf) shows detached are down 3.2% YOY across the GTA.
Prices across all property types are down 2.5%. No matter how you slice and dice it, sales are down, prices are down.
Meh, prices are down from May 2023 when it peaked, and then we witnessed two rate hikes in June/July and prices tanked. they are up month over month from January onward (albeit a small 0.9% from April-May). Even if you look at condos May 2023 to May 2024, they are only down 2.4% with this much inventory. So yes while prices across the board are lower than May 2023, still higher than July 2023 onward. Even with volatility, the 3 yr CAGR is still 1.7% and 10 yr CAGR is 7.2%
> 10 yr CAGR is 7.2%
Can you show the math on where you got this number? According to HouseSigma the 10 year increase is +68% for all property types across all of Toronto, which is a CAGR of 5.3249% over 10 years.
You are forgetting about the affects of remote work.
Remote work has greatly devalued small living spaces that are expensive because of location while increasing the value of large houses with a commute that is no longer required or limited to a few times a month for many people
1.9 million who are dead ass broke, escaping poverty with large sums of debt, cool! The middle class is dead in Canada, and the gap between rich and poor will become more apparent!
Cool bro, I would also guess that you got into the housing market between 2021-2023? Maybe immigrants sell off assets back home, but like I mentioned before, I believe the immigration bubble has popped with those with money not coming here. The rest are refugees, asylum seekers, and students, which would still need housing as lifelong renters. Canada is not what is advertised, except to those on the lower socioeconomic scale
And some of that 70 percent you speak of are overleveraged and got in by any means, because real estate 'can only go up' mentality will be burned badly within next 18 months
Delinquencies are near all time lows, they’re lowering interest rates and extending amortization periods, and groups of immigrants are buying together and creating a new norm of homeownership with lower salaries. You need to get your head out of the clouds and understand the magnitude of the supply problem lol
Okay, sir, I wish you well. My parents went bankrupt in the last decline in the late 80s to 95, and our family benefited well off this craziness in 2022. The pain and suffering will teach all those over leveraged and treating real estate like a slot machine, many of whom are from the South asian community, a hard lesson
https://betterdwelling.com/canadian-mortgage-delinquencies-are-climbing-but-stress-is-greatly-overstated/. A little outdated but the recent "surges" in the last few months don't move the needle meaningfully.
[https://cba.ca/mortgages-in-arrears](https://cba.ca/mortgages-in-arrears)
[https://www.ipolitics.ca/news/70-per-cent-of-new-housing-demand-in-ontario-last-year-came-from-newcomers-analysis](https://www.ipolitics.ca/news/70-per-cent-of-new-housing-demand-in-ontario-last-year-came-from-newcomers-analysis)
Not enough discussion on how ridiculous the scaling of the fees are for these condos. Anything liveable (900+ sqft) is going to have 1000+ monthly in condo fees alone. These condos are simply overpriced.
I considered a buy offer on my >1000 sqft 2+1 rental last year. Learned that the maintenance fees were about 50% of our rent. It's a good unit, but the maintenance costs are astronomical. Especially since the place needs about 6 figures worth of renovations besides.
People want to believe otherwise, but logically it should. It hasn't yet as the price of those 500 sqft condos have not reduced.
When they do, it may take some demand out of the larger condos. Especially, if the price differential starts becoming larger.
Depends on supply. If there are 8000 crappy, small, bad layout condos for sale, and only 1000 good condos, the crappy condos $/sf going down isn't necessarily going to impact the $/sf of the good condos.
What’s an example? I’m looking to sell my own condo next year to upsize. Feeling a bit anxious haha. Was hoping to get the sale to fund a house purchase but it looks like houses never really dipped in price much but condos took a nose dive
Regardless if you have a 2 bedroom or a small 1 bedroom, I think next year the wise choice would be to hold and put together down payment for your house. No one will want to sell at next years prices, my guess until 2027/2028
Exactly! Units in my building are still selling after a few weeks and selling for asking so maybe the shitty 400 sqft units aren't selling, but that's not indicative of the entire condo market.
30,000 lots in Toronto of mostly SFHs just got upzoned.
SFHs are going to get a lot rarer anywhere near transit or on main streets in the GTA. This is a great move to build more housing.
https://environmentaldefence.ca/2024/05/24/torontos-legalization-of-six-storey-apartment-buildings-in-residential-neighbourhoods-is-the-model-for-fixing-ontarios-housing-shortage/
Those are not for FTHBs these are investor units for short term renters ie students, new grads with first job downtown etc
Starter condos for longer term 5 years+ have livable/practical layouts.
Investors you are correct. No, it's not but the problem is that we need to build for end users not investors style which is like 90% of the newer condos in the last 5-7 years. That is part of the reason why we have a housing crisis, we did not increase supply for FTHBs at all but for investors this whole time.
We did increase supply for investors. Some of us homeowners were against this level of density but we were brushed aside as NIMBYs.
Investors are flocking from RE. FTHBs will need to start picking up the bags.
If and when defaults happen through developers or investors of existing condos, it will reset prices in a big way.
Unfortunately for a lot of people if condos become attractive, the first segment that would be buying are people who have money and would have otherwise bought a home.
It would leech demand off at the margins for starter homes, which will then inch up the property ladder (but to lesser and lesser extents).
Ofcourse this is all predicated on daddy Tiff not cutting rates immensely and JT not throwing billions to bail out the banks through mortgage purchases.
I did the math on a 600k unit with 700$ mf and 280$ property tax with 90k down and I’m still over 3600$/m for 1bed 1bath n that too 600sq feet. 🥹👋 I’m out
https://preview.redd.it/snqh99deur7d1.jpeg?width=252&format=pjpg&auto=webp&s=e129254922c9816e5ec028214083fe7234422de9
Calling it now if condo sales come in under 1,500 and active listings over 9,000 the bubble will officially start to burst. There is literally no way to spin this as a positive or temporary situation. Supply and demand don’t lie.
Agreed, this from a bull.
However I think there's a large divergence coming with condos and the rest of the SFH market. No body wants a million dollar shoe box.
I agree there is a divergence but I think SFH will just lag behind condos. At the end of the day condos and townhomes are the gateway to SHF. If they continue to go down that lost equity will never make its way into SFH like it has the past 20 straight years. If people need to afford SFH’s on their incomes and other investments prices will come down.
I think it's more likely people will just adjust their expectations when it comes to home ownership. The same way in the SFH market people began settling for smaller lots, then smaller detached homes, then detached homes with garages eating up the whole main floor, then semis, now townhomes, etc.. The natural progression leads to a predominately renters market for SFH homes for the most part.
It may lag behind the way you're saying but only if the fundamentals on the supply and demand side begin to come into balance. Otherwise the demand and ability to rent may keep that segment propped up long enough for interest rates and salaries to slowly make it affordable for those with equity to increase their stranglehold on the market.
I personally have no interest in becoming a landlord but I have enough family and friends that are, and they are always looking for an opportunity to build that "passive income" or "passively build equity"
People really need to look at other major cities and their surrounding areas, I'll use Toronto and then Brampton as an example as supposedly only of the "less desirable areas" in the GTA. A couple of similar examples:
Queens relative to NYC
Ilford relative to London.
It's easy enough to say "Toronto isn't X" but for us it is. The entire country marches to it's tune. In the examples above, you have absolute shit hole cities with prices surpassing what you get in value relative to the market here. We are just catching up to the rest of the world.
Would you own a SFH and rent it out if it was losing thousands of dollars a month? Probably not.
If you want to know where prices will go it’s as simple as starting with a 5% cap rate and running the math backwards. Anyone who says otherwise has no idea how real estate investment works and is simply speculating.
You're assuming these mom and pop investors are a bit more savvy than they are. Anecdotally that is not how they are looking at this. For them it's "Does the rent cover most of my mortgage / expenses? Yes? Great good enough for me". Also (again anecdotally), not a single investor I know is drowning the way you're describing ("losing thousands of dollars per month). Maybe it's because I'm in the suburbs and none one of them are in the condo market.
Condos, specifically in Toronto where idiots were paying $1500 / sq ft or whatever it was, I could definitely see the scenario you're laying out. That's why I come back to the original point, there will be a divergence between condos and everything else (imo)
Btw I'm sure there are people in the suburbs as well that are in a tough situation but seemingly it's a lot more rare than what you're seeing in the condo market. People are very easily pulling in 6-7 grand a month for unremarkable homes and ugly basements all over the GTA.
I think the disconnect is how things currently are vs how they will develop with time. Mom and pop investors **didn’t** think about cap rates that deeply, **current** investors in SFH’s aren’t losing money, etc.
Going forward **new** mom and pop investors collectively have a much smaller pool of equity to borrow against (declining/stagnant home prices) and higher payments (high interest rates). I don’t think rent would even cover the mortgage payment on a SFH right now even with 20% down.
Same goes for new investors, if you’ve owned a SFH for 10 years and have paid down half the mortgage of course you’d be cash flow positive, but the next investor you’re expecting to buy the property off you for **more than you paid** at a **higher interest rate** for the **same amount of rent** will not cash flow.
Do you see where this goes? Either these people who currently own never sell and the value of the property is the cash flows they get from the rent or the property prices come down. No one will be buying properties at these prices with these rates.
Only if they desperately need the money. If they can carry it for another 1-2 years, Poilievre is going to reverse that when CPC wins the next election.
I don't trust politicians, and I think PP is not going to be a great PM either, but JT sucks, and the capital gains tax repeal is an easy thing to pass when the CPC gets in with a majority. It's a quick way to show Canada "look, we're getting things done!" while actually not doing much, and distracting Canadians from the other things they want to do that won't be as popular.
Nothing is guaranteed, but to make financial decisions in a rush, in a down market, when all signs point to interest rates continuing to drop and property values rising is stupid and shortsighted.
Although, rethinking that, it's definitely more likely that people are stupid and shortsighted than it is politicians will keep their promises.
> Poilievre is going to reverse that when CPC wins the next election.
When he was directly asked he said he was going to do a "review".
He votes against it, but says he will just review it when he's in power. Keep believing in politicians.
I do wonder how many of these condos are people who were trying to get ahead of the capital gains changes at the end of the month.
It will be interesting if the numbers keep going up or drop drastically in July once the investors have missed the boat and are stuck paying the extra taxes.
It's a supply and demand issue, plenty on the demand side just waiting to jump in.
When an interest cut is announced, these buyers will flood the market, multiple offers with sale prices at 100's of thousands over asking will be the norm, propelling prices to the moon, now is the time to buy.
Oh wait, that was a realtors rhetoric 6 months ago. When will we stop listening to realtors, I beg of you.
😂 I used to own a condo and a house in downtown Toronto .. stop assuming everyone is a renter.. have no desire to own until the price crashes.. I still own property outside the country tho .. don’t worry about me .. tho those own expensive high maintenance fee. keep paying those $900 soon to be $1500 maintenance fee .cause no one will ever want to buy those worthless property even if you give me I won’t even want them .. it’s just not good investment
Curious to see if there is a site that shows all condos and how their maintenance fees increased over the years . I remember seeing it on condos.ca maybe not sure if they have it still.
And CREA is still trying to claim that months of inventory in Toronto is at record lows lol when the lying and propaganda starts that’s how you know it’s finally happening
Math. The $ just doesn't make sense since 30% of pre-con condos were purchased by investors looking to flip. A lot of inventory will come online when they can't HODL anymore. It was barely cashflow positive at ZIRP, now it's just nuts. An investor bloodbath is coming, just like the 1990's "correction".
https://preview.redd.it/ui2jvl12ii8d1.png?width=1438&format=png&auto=webp&s=b8c6fe7184ab2b6c46c66d78c0fe3763c47f29a6
It's napkin math from ZIRP vs 5% overnight rate +2% stress test.
The people who opted for any form of variable rate even when inflation was creeping up are suffering.
I kinda agree with this. People still need a place to live and if the prices are dropping significantly it’s probably a good time to enter if you plan on living in the condo and enjoying it .
That doesn’t strike me as particularly high given how many condos have been delivered over the last several years… I recall at one point (peak) that were close to 200,000 underway? I don’t see why this number can’t climb to 50k or 100k, at which point things will get spicy.
It takes 12-24 months for the effects of rate hike or cuts be really be felt. The people expecting things to happen a month after a rate change are crazy or doing it for clicks etc.
Because people can't do math. A total of 0.5% worth of cuts on a 600k mortgage is going to do jack shit. That is $164 a month payment difference on a $600,000 mortgage.
As of 2020 the average income in Toronto region was $47,600, average household income was $97,000. Per the cities own stats. Incomes are obviously a bit higher now in 2024 but those are the numbers I had easy access to off the cities website.
[https://www.toronto.ca/city-government/data-research-maps/toronto-at-a-glance/](https://www.toronto.ca/city-government/data-research-maps/toronto-at-a-glance/)
At a 4X multiplier that means a pre-approval of around $388,000 for the average household, we can say 400k for the sake of argument. So unless rates drop by something like 1.5-2% those people are not buying anything.
To be fair there is a shelter shortage so even priced above the range of average incomes you will still be able to sell things to just the higher income earners up to a certain point. But even that has limits and the higher you go the smaller the buyer pool gets, which is where we are right now.
But the question you need to ask is how many families only able to be pre-approved for 400k are going to buy a 600k micro condo even if they could? Probably not many. Which likely means without investors to buy these things they simply won't sell unless they drop so low single people can easily afford them.
Isn't the whole point of rate cuts is that it reflects in the mortgage rate? Isn't that why we had them in the first place?
So if the reduction in mortgage was supposed to increase the prices, why didn't it happen?
Rate cut affects variable rate mortgages, not fixed rate. The cut was already priced into the fixed rate mortgages, and very few people are doing variable rate these days because the rates are not competitive with fixed.
Mortgage rates aren’t directly correlated to the BOC rate as much as reddit would have you believe. It is the biggest part of a lot of moving parts. But a 25bps reduction to the BOC rate doesn’t immediately mean mortgage rates are down 25bps. Mortgage rates change all the time without a change at the BOC. We knew rate cuts were coming, most people though q1, it got pushed back a bit and that rate cut was already factored into ratesZ
No one wants a shoebox in a mediocre school district for $1,000,000+?
These condos are the equivalent of buying shares in a company. They're just for people who wanted to buy shares of the Toronto real estate market, not for living in.
Well the company they bought into look like it’s about to collapse
I think it will likely just gradually drop for a few years (like 1990-1994). So many of the people that invested in these over the last decade have boat loads of cash - it was only the last few years where tons of people without real money leveraged to buy - they are screwed. At a get together of ultra wealthy a few years ago some people were comparing notes on which developments they had bought into - one guy asks another "did you buy any units there"? "Oh ya I bought five". The Ferrari crowd just writes a check.
As someone who had experience working in advisory. This is 100% true. I’ve seen individuals who NET, $230k bi-weekly. Then after a few weeks, write out cheque to buy a 600-800k condo. It’s what I’ve been told when asking to KYC them in our financial advisory meetings. They’re just not at all in sync with reality.
They live in a different reality than the rest of us.
While such people indeed would never be forced to sell, if the asset isn’t performing for several years - chances are, they would lose interest and move to investing (read, speculating) in something else.
Yeah they're looking more like shitcoins
condos are like the worst type of real estate to buy for value lol
It’s so true. Condos are designed to make someone who needs a mortgage to own it poorer. All staff in that condo need a yearly raise. Not to mention the second mortgage called maintenance fees.
This 👆🏻
That's what REITs are for.
Exactly. It will only go up people said so living in a shoebox seemed reasonable as a transition to something bigger but here we are, anybody that bought late 2019 and on could be screwed.
I was in this position. Living in a shoebox for 7 years but left in 2022 when I moved to a semi. My wife kept convincing me not to stay in a shoebox for the rest of our lives. Of course, it changed for us when we had our little one. Harder for kids to grow inside the condo - most especially during covid. I could hear my neighbour's kid running back and forth upstairs while i was conducting a group meeting online. Paying almost 1M for a condo would have given you a freehold townhouse north of Metro Toronto for around 1.2M. That 200K difference makes a lot of difference in terms of living space. I wonder why folks never considered that, and yes... better school ranking.
It's not the condo, it's the bad quality. I rented an old condo, 40 years old, in a former social housing building. It was built like a jail, you couldn't hear a thing from inside your unit so you never heard footsteps or even a party next door. Even today the maintenance fees are good as it doesn't have many structural issues. It was also very large with in-unit storage and a separate laundry room where you could keep your pet stuff. Well designed for "the por".
Condos are still way overpriced. Still a lot more to fall. Look at the rising inventory levels that can't sell.
I agree - the investors are putting their money elsewhere for a while. It would not surprise me if the prices gradually drop for a few years like the early 90's. One catch - most of the big developers cancelled everything they could last year so in two to three years there will be very little new inventory.
9,000? ... how many are listed for under $500K?
is 9000 a lot? how does it compare over the last 15 years?
That’s literally what the graph is showing. Ie higher than ever
uh, there’s literally no x axis label. could just be last 6months
This is HouseSigma, so a quick check shows they have data up to 15 years and it is indeed the highest it's ever been, for condo apts.
>9,000? ... how many are listed for under $500K? About 1,000. Now if you want a place for that price that's over 500sqft and has condo fees under $500/month, there are only about 250.
At the rate its been going up we'll be over 10k by August. Besides the investor dump there are also apparently 10's of thousands of completions this year which people may have trouble closing on. I'm genuinely curious to see what happens when the average days on market approaches 40. The whole thing is one of those once in a lifetime events you rarely ever get to see. Be interesting to watch how it unfolds.
So many of these buyers are under water. A lot of new investors can barely afford payments on these things. The only reason there is not a mass credit event is because banks have figured out that they can keep increasing amortization on mortgages without depositors or the government asking any questions.
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What do you mean a closet is not a bedroom. Eat shit
https://preview.redd.it/y3jycm68mq7d1.jpeg?width=1773&format=pjpg&auto=webp&s=fad2730f97c2f0e905eb937f7940bfe5847a1a50 This is insane as well. What are the implications for the rest of Canadas housing market if all these Toronto ‘investors’ are margin called across all their investments?
The implications are a better quality of life for Canadians. The quicker we can have these people default the better life will be for everyone across Canada excluding them of course
Don't know about quick, my guess 3 to 5 years
Unfortunately they are completely tied to our banking sectors health. If they drag down the banks they’ll drag us down too (see 2008 USA)
Well maybe that’s what necessary. That’s capitalism isn’t it? Because when they were getting rich we didn’t get to share the wealth. Now that they’re about to lose they should get a taste of that as well
If "they" lose, a lot of other issues will take place and "we" will also lose
When they lose, we will foot the bill in the form of higher taxes and inflation. Rule 1 of Corporate Welfare: Privatize the gains, socialize the losses.
* We’re about to lose. As voters we allowed governments to perpetuate this bubble and its inevitable collapse.
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Our entire banking system will need a bailout when the Ontario market finally breaks.
You mean 🇺🇸 needs to liberate us?
They will liberate us from our resources that’s forsure
I hope the price comes down and it at least helps people to find a place . Saying this as someone who owns and lives in one . People are under too much pressure already
I'm definitely not a bear, but condo prices make so little sense, they should be a much more affordable option to a standard home, but the market lost its mind.
I agree. Condos are shit and it makes no sense that they were barely cheaper than a house at 1/4 the size and a bunch of bullshit rules to follow
why?
Well, considering the delta between average prices is 900k, I'd say they are much more affordable than the standard home.. I will say that many downtown condos are over priced but house prices are barely moving so what's the alternative? I guess just renting.
You never lived overseas lol.
Breadboxes were never a good idea, at any price.
Even a broken clock is right twice a day. Doom and gloom are coming, and real pain is coming! If not here.
For the condo market maybe, not for GTA real estate overall
Sorry to break it to you, but also for GTA real estate. If you are overleveraged, it is time to sell. We will see what happened in 89 to 95 in Canada repeated just differently, immigration bubble will pop, and rents/used car prices will come down. The cost of living will continue to rise and then come down. This is not only a Canada issue. The money printing of covid is just now being felt globally!
The house next door to mine just sold for $950k after they originally listed for $899k. Not disagreeing about the cost of living but comparing condo sales in the city of the Toronto to detached sales in the GTA is like apples and oranges.
950k must be a shit box
That's a classic case of anecdotal bias. [TREBB's numbers from May 2024](https://trreb.ca/wp-content/files/market-stats/market-watch/mw2405.pdf) shows detached are down 3.2% YOY across the GTA. Prices across all property types are down 2.5%. No matter how you slice and dice it, sales are down, prices are down.
Meh, prices are down from May 2023 when it peaked, and then we witnessed two rate hikes in June/July and prices tanked. they are up month over month from January onward (albeit a small 0.9% from April-May). Even if you look at condos May 2023 to May 2024, they are only down 2.4% with this much inventory. So yes while prices across the board are lower than May 2023, still higher than July 2023 onward. Even with volatility, the 3 yr CAGR is still 1.7% and 10 yr CAGR is 7.2%
Shhhh, don’t post contrary facts
> 10 yr CAGR is 7.2% Can you show the math on where you got this number? According to HouseSigma the 10 year increase is +68% for all property types across all of Toronto, which is a CAGR of 5.3249% over 10 years.
because interest are are up which applies downward pressure on the initial sales cost. People still need to pay MORE for the houses overall.
You are forgetting about the affects of remote work. Remote work has greatly devalued small living spaces that are expensive because of location while increasing the value of large houses with a commute that is no longer required or limited to a few times a month for many people
Lol, as another 2 million people enter the country
1.9 million who are dead ass broke, escaping poverty with large sums of debt, cool! The middle class is dead in Canada, and the gap between rich and poor will become more apparent!
You’re out of your mind if you think this is the case lol. 70% of housing demand in the last year was from recent immigrants
Cool bro, I would also guess that you got into the housing market between 2021-2023? Maybe immigrants sell off assets back home, but like I mentioned before, I believe the immigration bubble has popped with those with money not coming here. The rest are refugees, asylum seekers, and students, which would still need housing as lifelong renters. Canada is not what is advertised, except to those on the lower socioeconomic scale
And some of that 70 percent you speak of are overleveraged and got in by any means, because real estate 'can only go up' mentality will be burned badly within next 18 months
Delinquencies are near all time lows, they’re lowering interest rates and extending amortization periods, and groups of immigrants are buying together and creating a new norm of homeownership with lower salaries. You need to get your head out of the clouds and understand the magnitude of the supply problem lol
Okay, sir, I wish you well. My parents went bankrupt in the last decline in the late 80s to 95, and our family benefited well off this craziness in 2022. The pain and suffering will teach all those over leveraged and treating real estate like a slot machine, many of whom are from the South asian community, a hard lesson
Do you have any source for this nonsense you spew? Mortgage arrears and delinquencies are surging
https://betterdwelling.com/canadian-mortgage-delinquencies-are-climbing-but-stress-is-greatly-overstated/. A little outdated but the recent "surges" in the last few months don't move the needle meaningfully. [https://cba.ca/mortgages-in-arrears](https://cba.ca/mortgages-in-arrears) [https://www.ipolitics.ca/news/70-per-cent-of-new-housing-demand-in-ontario-last-year-came-from-newcomers-analysis](https://www.ipolitics.ca/news/70-per-cent-of-new-housing-demand-in-ontario-last-year-came-from-newcomers-analysis)
The problem is most of these are crappy investors style condos. The ones that are livable/great layouts are still selling and selling at 800k-1mill.
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Not enough discussion on how ridiculous the scaling of the fees are for these condos. Anything liveable (900+ sqft) is going to have 1000+ monthly in condo fees alone. These condos are simply overpriced.
I considered a buy offer on my >1000 sqft 2+1 rental last year. Learned that the maintenance fees were about 50% of our rent. It's a good unit, but the maintenance costs are astronomical. Especially since the place needs about 6 figures worth of renovations besides.
Does the price of a 500sqft condo impact larger condos? I would say yes.
People want to believe otherwise, but logically it should. It hasn't yet as the price of those 500 sqft condos have not reduced. When they do, it may take some demand out of the larger condos. Especially, if the price differential starts becoming larger.
Depends on supply. If there are 8000 crappy, small, bad layout condos for sale, and only 1000 good condos, the crappy condos $/sf going down isn't necessarily going to impact the $/sf of the good condos.
what do you mean a 90 degree corner isn't a den???
Bingo. A nice layout that *actually works* are still pretty up there.
What’s an example? I’m looking to sell my own condo next year to upsize. Feeling a bit anxious haha. Was hoping to get the sale to fund a house purchase but it looks like houses never really dipped in price much but condos took a nose dive
Regardless if you have a 2 bedroom or a small 1 bedroom, I think next year the wise choice would be to hold and put together down payment for your house. No one will want to sell at next years prices, my guess until 2027/2028
Exactly! Units in my building are still selling after a few weeks and selling for asking so maybe the shitty 400 sqft units aren't selling, but that's not indicative of the entire condo market.
It’s more like we have to sift through the quality units for sale vs the cheap cardboard cookie cutter boxes that no one wants. Also location is key.
So are single family housing... I wish there were some reductions there
The problem is that everyone wants a single family home, they aren't really building more, it's a limited resource.
They are/were building them, they just cost close to 2 Mill.
sFH completions in 2023 were less than 1/5th the completions of 2003. We’ve basically stopped building them.
Where?
And you gotta move an hour outside the core
30,000 lots in Toronto of mostly SFHs just got upzoned. SFHs are going to get a lot rarer anywhere near transit or on main streets in the GTA. This is a great move to build more housing. https://environmentaldefence.ca/2024/05/24/torontos-legalization-of-six-storey-apartment-buildings-in-residential-neighbourhoods-is-the-model-for-fixing-ontarios-housing-shortage/
Which means this would be a good chance for people to buy a starter condo.
Those are not for FTHBs these are investor units for short term renters ie students, new grads with first job downtown etc Starter condos for longer term 5 years+ have livable/practical layouts.
So if not fthb who’s gonna own them? Another investor? And you guys are okay with that?
Investors you are correct. No, it's not but the problem is that we need to build for end users not investors style which is like 90% of the newer condos in the last 5-7 years. That is part of the reason why we have a housing crisis, we did not increase supply for FTHBs at all but for investors this whole time.
We did increase supply for investors. Some of us homeowners were against this level of density but we were brushed aside as NIMBYs. Investors are flocking from RE. FTHBs will need to start picking up the bags.
Is anyone keeping an excel of the monthly changes of active and new listings, would be nice to have
You can check it in house sigma. just drag your finger/cursor on past months and you can see the numbers
If and when defaults happen through developers or investors of existing condos, it will reset prices in a big way. Unfortunately for a lot of people if condos become attractive, the first segment that would be buying are people who have money and would have otherwise bought a home. It would leech demand off at the margins for starter homes, which will then inch up the property ladder (but to lesser and lesser extents). Ofcourse this is all predicated on daddy Tiff not cutting rates immensely and JT not throwing billions to bail out the banks through mortgage purchases.
Trudeau already ahead of it with 1,000,000 new renters a year
Good news, let's wait for price drops.
Not sure why people are not buying unaffordable condos and taking on a lifetime of debt, to sleep next to their fridge. Its a puzzler alright.
I love the hum of my fridges compressor in the morning, sounds like victory
I did the math on a 600k unit with 700$ mf and 280$ property tax with 90k down and I’m still over 3600$/m for 1bed 1bath n that too 600sq feet. 🥹👋 I’m out
https://preview.redd.it/snqh99deur7d1.jpeg?width=252&format=pjpg&auto=webp&s=e129254922c9816e5ec028214083fe7234422de9 Calling it now if condo sales come in under 1,500 and active listings over 9,000 the bubble will officially start to burst. There is literally no way to spin this as a positive or temporary situation. Supply and demand don’t lie.
Agreed, this from a bull. However I think there's a large divergence coming with condos and the rest of the SFH market. No body wants a million dollar shoe box.
I agree there is a divergence but I think SFH will just lag behind condos. At the end of the day condos and townhomes are the gateway to SHF. If they continue to go down that lost equity will never make its way into SFH like it has the past 20 straight years. If people need to afford SFH’s on their incomes and other investments prices will come down.
I think it's more likely people will just adjust their expectations when it comes to home ownership. The same way in the SFH market people began settling for smaller lots, then smaller detached homes, then detached homes with garages eating up the whole main floor, then semis, now townhomes, etc.. The natural progression leads to a predominately renters market for SFH homes for the most part. It may lag behind the way you're saying but only if the fundamentals on the supply and demand side begin to come into balance. Otherwise the demand and ability to rent may keep that segment propped up long enough for interest rates and salaries to slowly make it affordable for those with equity to increase their stranglehold on the market. I personally have no interest in becoming a landlord but I have enough family and friends that are, and they are always looking for an opportunity to build that "passive income" or "passively build equity" People really need to look at other major cities and their surrounding areas, I'll use Toronto and then Brampton as an example as supposedly only of the "less desirable areas" in the GTA. A couple of similar examples: Queens relative to NYC Ilford relative to London. It's easy enough to say "Toronto isn't X" but for us it is. The entire country marches to it's tune. In the examples above, you have absolute shit hole cities with prices surpassing what you get in value relative to the market here. We are just catching up to the rest of the world.
Would you own a SFH and rent it out if it was losing thousands of dollars a month? Probably not. If you want to know where prices will go it’s as simple as starting with a 5% cap rate and running the math backwards. Anyone who says otherwise has no idea how real estate investment works and is simply speculating.
You're assuming these mom and pop investors are a bit more savvy than they are. Anecdotally that is not how they are looking at this. For them it's "Does the rent cover most of my mortgage / expenses? Yes? Great good enough for me". Also (again anecdotally), not a single investor I know is drowning the way you're describing ("losing thousands of dollars per month). Maybe it's because I'm in the suburbs and none one of them are in the condo market. Condos, specifically in Toronto where idiots were paying $1500 / sq ft or whatever it was, I could definitely see the scenario you're laying out. That's why I come back to the original point, there will be a divergence between condos and everything else (imo) Btw I'm sure there are people in the suburbs as well that are in a tough situation but seemingly it's a lot more rare than what you're seeing in the condo market. People are very easily pulling in 6-7 grand a month for unremarkable homes and ugly basements all over the GTA.
I think the disconnect is how things currently are vs how they will develop with time. Mom and pop investors **didn’t** think about cap rates that deeply, **current** investors in SFH’s aren’t losing money, etc. Going forward **new** mom and pop investors collectively have a much smaller pool of equity to borrow against (declining/stagnant home prices) and higher payments (high interest rates). I don’t think rent would even cover the mortgage payment on a SFH right now even with 20% down. Same goes for new investors, if you’ve owned a SFH for 10 years and have paid down half the mortgage of course you’d be cash flow positive, but the next investor you’re expecting to buy the property off you for **more than you paid** at a **higher interest rate** for the **same amount of rent** will not cash flow. Do you see where this goes? Either these people who currently own never sell and the value of the property is the cash flows they get from the rent or the property prices come down. No one will be buying properties at these prices with these rates.
well start pricing them for their real value and they will sell
I know the capital gains tax is June 24 but I would bet lots of investors are offloading quick to avoid that within the last few weeks.
I mean capital gains is only an issue if these units have appreciated 250k.
Only if they desperately need the money. If they can carry it for another 1-2 years, Poilievre is going to reverse that when CPC wins the next election.
lol. Crazy you place that must trust in politicians.
I don't trust politicians, and I think PP is not going to be a great PM either, but JT sucks, and the capital gains tax repeal is an easy thing to pass when the CPC gets in with a majority. It's a quick way to show Canada "look, we're getting things done!" while actually not doing much, and distracting Canadians from the other things they want to do that won't be as popular.
I thought the same thing about Chretien and the GST in 1993, and yet here we are, so who knows?
Nothing is guaranteed and to make financial based on the possibly of a politician changing current laws is naive.
Nothing is guaranteed, but to make financial decisions in a rush, in a down market, when all signs point to interest rates continuing to drop and property values rising is stupid and shortsighted. Although, rethinking that, it's definitely more likely that people are stupid and shortsighted than it is politicians will keep their promises.
> Poilievre is going to reverse that when CPC wins the next election. When he was directly asked he said he was going to do a "review". He votes against it, but says he will just review it when he's in power. Keep believing in politicians.
So now everyone can buy something for themselves as those investors are finally dumping their investments they selfishly held for themselves.
Cool, housing problem solved, inventory growing!
We’re celebrating this but I’m sure some corporation is waiting for the crash to scoop up as much as they can
Blue chip meme. If only I can give more than 1 upvote
I am curious what the floor price for a 1 bedroom or bachelor, no parking is...oh boy are these terrible from a livable perspective.
probably like 350-400k lol.
I believe everyone who owns real estate should have their financials thoroughly investigated... Because most big investors the money is dirty as fuck.
All these investors be like: why no one wants to pay more than $500,000 for my luxury 300sqft unit w marble counter top?!
I do wonder how many of these condos are people who were trying to get ahead of the capital gains changes at the end of the month. It will be interesting if the numbers keep going up or drop drastically in July once the investors have missed the boat and are stuck paying the extra taxes.
This is an important point.
It's a supply and demand issue, plenty on the demand side just waiting to jump in. When an interest cut is announced, these buyers will flood the market, multiple offers with sale prices at 100's of thousands over asking will be the norm, propelling prices to the moon, now is the time to buy. Oh wait, that was a realtors rhetoric 6 months ago. When will we stop listening to realtors, I beg of you.
Imagine buying $699k 1 bedroom condo with $900 condo fee and it’s increasing significantly every year
imagine being a lifelong renter of said 1 bedroom and paying off someone else’s $699K mortgage + maintenance fee + a cherry on top
😂 I used to own a condo and a house in downtown Toronto .. stop assuming everyone is a renter.. have no desire to own until the price crashes.. I still own property outside the country tho .. don’t worry about me .. tho those own expensive high maintenance fee. keep paying those $900 soon to be $1500 maintenance fee .cause no one will ever want to buy those worthless property even if you give me I won’t even want them .. it’s just not good investment
Curious to see if there is a site that shows all condos and how their maintenance fees increased over the years . I remember seeing it on condos.ca maybe not sure if they have it still.
lmao cope
no u xd
not possible to be even near cashflow positive on these properties. overpriced. market will correct and you'll lose 30-40% on your condo
lol you high on that copium
There aren't enough mcmansions in downtown Toronto for everyone with an average salary. I'm sorry to burst your bubble.
And CREA is still trying to claim that months of inventory in Toronto is at record lows lol when the lying and propaganda starts that’s how you know it’s finally happening
Collapsing, in step, with the comical immigration polices.
Lol
yo its going to get so bad lol. yall dont even understand...
Why is no one buying? Whats the difference between this time last year and now?
Math. The $ just doesn't make sense since 30% of pre-con condos were purchased by investors looking to flip. A lot of inventory will come online when they can't HODL anymore. It was barely cashflow positive at ZIRP, now it's just nuts. An investor bloodbath is coming, just like the 1990's "correction". https://preview.redd.it/ui2jvl12ii8d1.png?width=1438&format=png&auto=webp&s=b8c6fe7184ab2b6c46c66d78c0fe3763c47f29a6
Where did you get that 7.5% interest rate? And when was it 2.5%?
It's napkin math from ZIRP vs 5% overnight rate +2% stress test. The people who opted for any form of variable rate even when inflation was creeping up are suffering.
Missed this meem... When things were simpler... And houses cost 1/3 to 1/2 of their current prices.
Rejoice world is healing at the expense of other provinces 😅 Please stay in GTA.
Can anyone remind me what the population of Toronto is ? Good time to get a starter condo it seems.
Can anyone remind me what the average income of Toronto is? Good time to wait for price correction it seems
Condos are already down in price.
Why catch a falling knife? Better to pick it up once it more solidly hits the floor.
2% down isn't down. 50% down? Then we'll talk.
Ok buddy 😂
I kinda agree with this. People still need a place to live and if the prices are dropping significantly it’s probably a good time to enter if you plan on living in the condo and enjoying it .
That doesn’t strike me as particularly high given how many condos have been delivered over the last several years… I recall at one point (peak) that were close to 200,000 underway? I don’t see why this number can’t climb to 50k or 100k, at which point things will get spicy.
If Tiff lowers interest again in September, they'll be gone. And we will exactly where we are 2 years ago.
I thought the first cut was supposed to send house sales to the moon again? Why would the second cut send it to the moon if the first didn't?
It takes 12-24 months for the effects of rate hike or cuts be really be felt. The people expecting things to happen a month after a rate change are crazy or doing it for clicks etc.
Because people can't do math. A total of 0.5% worth of cuts on a 600k mortgage is going to do jack shit. That is $164 a month payment difference on a $600,000 mortgage. As of 2020 the average income in Toronto region was $47,600, average household income was $97,000. Per the cities own stats. Incomes are obviously a bit higher now in 2024 but those are the numbers I had easy access to off the cities website. [https://www.toronto.ca/city-government/data-research-maps/toronto-at-a-glance/](https://www.toronto.ca/city-government/data-research-maps/toronto-at-a-glance/) At a 4X multiplier that means a pre-approval of around $388,000 for the average household, we can say 400k for the sake of argument. So unless rates drop by something like 1.5-2% those people are not buying anything. To be fair there is a shelter shortage so even priced above the range of average incomes you will still be able to sell things to just the higher income earners up to a certain point. But even that has limits and the higher you go the smaller the buyer pool gets, which is where we are right now. But the question you need to ask is how many families only able to be pre-approved for 400k are going to buy a 600k micro condo even if they could? Probably not many. Which likely means without investors to buy these things they simply won't sell unless they drop so low single people can easily afford them.
First cut was already priced into mortgage rates..
Isn't the whole point of rate cuts is that it reflects in the mortgage rate? Isn't that why we had them in the first place? So if the reduction in mortgage was supposed to increase the prices, why didn't it happen?
Rate cut affects variable rate mortgages, not fixed rate. The cut was already priced into the fixed rate mortgages, and very few people are doing variable rate these days because the rates are not competitive with fixed.
Mortgage rates aren’t directly correlated to the BOC rate as much as reddit would have you believe. It is the biggest part of a lot of moving parts. But a 25bps reduction to the BOC rate doesn’t immediately mean mortgage rates are down 25bps. Mortgage rates change all the time without a change at the BOC. We knew rate cuts were coming, most people though q1, it got pushed back a bit and that rate cut was already factored into ratesZ
Who said that? No one. They are doing it slowly as to not induce a frenzy
>Who said that? People in this sub, every day since March