Comments on: The Weekend That Was… http://www.torontorealtyblog.com/2010/01/11/the-weekend-that-was/ Tue, 07 Sep 2010 04:49:19 +0000 http://wordpress.org/?v=2.2.1 By: Meh http://www.torontorealtyblog.com/2010/01/11/the-weekend-that-was/#comment-3105 Meh Tue, 12 Jan 2010 23:37:54 +0000 http://www.torontorealtyblog.com/2010/01/11/the-weekend-that-was/#comment-3105 Being able to justify the price doesn't matter though. The price of a Porsche may be justified, but that doesn't mean people will go out buy it. People buy what they can afford, not what the justified price of a product dictates. Real estate bulls always forget how abundant rentals are in Toronto. People need shelter, but they don't' need to own that shelter. In the long run housing prices can only match wage increases. Until high paying jobs start increasing (or general wages increase), housing prices will hit a ceiling. On the topic of down payment. People will Being able to justify the price doesn’t matter though. The price of a Porsche may be justified, but that doesn’t mean people will go out buy it. People buy what they can afford, not what the justified price of a product dictates.

Real estate bulls always forget how abundant rentals are in Toronto. People need shelter, but they don’t’ need to own that shelter.

In the long run housing prices can only match wage increases. Until high paying jobs start increasing (or general wages increase), housing prices will hit a ceiling.

On the topic of down payment. People will

]]> By: LM http://www.torontorealtyblog.com/2010/01/11/the-weekend-that-was/#comment-3104 LM Tue, 12 Jan 2010 22:36:53 +0000 http://www.torontorealtyblog.com/2010/01/11/the-weekend-that-was/#comment-3104 Mark Carney fuelling the fire... BOC saying house prices/ rates are at an appropriate level... party on :-) Mark Carney fuelling the fire… BOC saying house prices/ rates are at an appropriate level… party on :-)

]]> By: WEB http://www.torontorealtyblog.com/2010/01/11/the-weekend-that-was/#comment-3097 WEB Tue, 12 Jan 2010 04:51:47 +0000 http://www.torontorealtyblog.com/2010/01/11/the-weekend-that-was/#comment-3097 The macro factors and sentiments are worrying: - ratio of property values to incomes is 5X vs. historical average of 3X - people are looking at real estate as an investment instead of a place to live AND everyone thinks real estate is a good investment and can never fall (usually the sign of a top in any market.) But, what bears don't consider is the many very positive micro factors relating to Toronto real estate: - The GTA is the second fastest growing metropolitan area in North America - The GTA is land-locked by Lake Ontario to the south and increasing restrictions on development to the north. Positive micro factors relating to downtown Toronto: - gridlock is getting worse every year - hours worked continues to increase which makes time away from work more valuable and thus the value of a short communte rises - downtown Toronto is fast becoming an amazing place to live- neighbourhoods are rapidly gentrifying, new neighbourhoods are being created (Distillery, West Donlands, East Bayfront), the waterfront is being revitalized, new attractions are being added (aquarium, ROM and AGO renovations, etc.), 5-star hotels and condos are being built, neighbourhoods are being connected (St. Lawrence market connected to Distillery, connected to West Don Lands, connected to Corktown, connected to Riveside, connected to Leslieville, connected to the Beaches- the same is happening in the west), trails and parks expanded (Lake Ontario Park, waterfront trails), new retail is being built (supermarkets, etc.), more and better restaurants being opened, etc, etc. How do the macro negatives and micro positives play out? Real estate in Toronto is expensive and appears and feels overvalued but I feel that prices may be somewhat justified due to the positive micro factors I mentioned. The macro factors and sentiments are worrying:

- ratio of property values to incomes is 5X vs. historical average of 3X
- people are looking at real estate as an investment instead of a place to live AND everyone thinks real estate is a good investment and can never fall (usually the sign of a top in any market.)

But, what bears don’t consider is the many very positive micro factors relating to Toronto real estate:

- The GTA is the second fastest growing metropolitan area in North America
- The GTA is land-locked by Lake Ontario to the south and increasing restrictions on development to the north.

Positive micro factors relating to downtown Toronto:
- gridlock is getting worse every year
- hours worked continues to increase which makes time away from work more valuable and thus the value of a short communte rises
- downtown Toronto is fast becoming an amazing place to live- neighbourhoods are rapidly gentrifying, new neighbourhoods are being created (Distillery, West Donlands, East Bayfront), the waterfront is being revitalized, new attractions are being added (aquarium, ROM and AGO renovations, etc.), 5-star hotels and condos are being built, neighbourhoods are being connected (St. Lawrence market connected to Distillery, connected to West Don Lands, connected to Corktown, connected to Riveside, connected to Leslieville, connected to the Beaches- the same is happening in the west), trails and parks expanded (Lake Ontario Park, waterfront trails), new retail is being built (supermarkets, etc.), more and better restaurants being opened, etc, etc.

How do the macro negatives and micro positives play out? Real estate in Toronto is expensive and appears and feels overvalued but I feel that prices may be somewhat justified due to the positive micro factors I mentioned.

]]> By: LC http://www.torontorealtyblog.com/2010/01/11/the-weekend-that-was/#comment-3096 LC Mon, 11 Jan 2010 19:33:19 +0000 http://www.torontorealtyblog.com/2010/01/11/the-weekend-that-was/#comment-3096 I used to be bearish on the downtown market, but I was proven wrong every year. It will be interesting to see how high the first quarter of '10 goes in price per SF before the implemetation of the HST and whatever interest rate increases the government decides to throw at us. But I don't believe either factors will have a crippling impact on demand, as long as supply remains relatively short. I used to be bearish on the downtown market, but I was proven wrong every year. It will be interesting to see how high the first quarter of ‘10 goes in price per SF before the implemetation of the HST and whatever interest rate increases the government decides to throw at us. But I don’t believe either factors will have a crippling impact on demand, as long as supply remains relatively short.

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