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I bought a condo in Toronto in 2015 for $592,000 CAD. I live here and quite like it. It's been my home for eight years. Similar units in the same building now

• enraged_camel 3y ago
  >> If it continues for another decade, we can presume no young person today will ever be able to afford a home. I mean, the US isn’t as bad as Canada (as the article states), and this is already the case here. Most young people who manage to buy a house either get substantial help from parents, or buy in the middle of nowhere because they are able to capitalize on having a WFH job. Everyone else is stuck renting, at least until their parents die (if they have homeowner parents that is).
• tempsy 3y ago
  Canada’s housing market is much more vulnerable to “popping” than the US because everyone’s mortgage rate resets every 5 years. Let me know what happens to prices when everyone has to pay 8% soon.
  • aquaticsunset 3y ago
    Unless legislation changes, investors will just scoop up the sales and keep property values high. It's a pessimistic take but I don't see any deviation from this path (in Canada and the US).
    • tempsy 3y ago
      Investors paying 8% can’t make the math work either.
      • aquaticsunset 3y ago
        They're not getting mortgages. All cash purchases are extremely high right now (roughly 30% of all home sales in the US). They can fleece us for "modest" rent increases every year, conveniently just less than 8%, while property values stay high because these investors are able to gobble up the housing stock. Without legislation dissuading this behavior, home ownership will continue to be increasingly difficult for working people.
        • kevin_nisbet 3y ago
          I think the only good news I heard in this area in the US, is one of the big companies doing this was going bust because they screwed up their calculations for how much to offer when buying homes. So if the companies just can't make the math work and go bust that would also be a good outcome here.
        • ddorian43 3y ago
          Pretty sure investors buying have dropped by 50% according to /r/rebubble
        • HWR_14 3y ago
          "All cash" just means "no contingency on financing". It rarely means "will not be financed".
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        • xhkkffbf 3y ago
          IT just differently mortgaged. It's not a direct mortgage, but the company that's buying these had to raise the capital one way or another. And if the company didn't buy a house, they have the choice in investing it in something else. If the bonds are paying 8%, the company must believe that the house will return even more which is pretty hard.
        • wil421 3y ago
          Why would they use cash when they could buy 5x the amount of houses by spreading the cash buy into 5 down payments? It’s likely less than 5 if you’re putting 30% down for investment properties.
    • nonethewiser 3y ago
      Who are they going to sell to for more at 8% rates?
    • refurb 3y ago
      No, investors won't scoop them up, just like in 2008 in the US, where there were screaming deals to be had for years yet housing was regarded as radioactive for years after the crash.
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  • blindriver 3y ago
    I've lived through 2 housing crashes in 20 years in the US, and personally suffered both times, while there's been 0 in Canada. Maybe this time it's different? Maybe, but probably not.
    • tempsy 3y ago
      we've been in ZIRP for nearly 20 years so yes it's quite different right now
  • 01100011 3y ago
    Losses will be socialized like they always are. Homeowners are too politically powerful. No government will let them bear the costs of their decisions.
    • jjav 3y ago
      > Homeowners are too politically powerful. Could you be more specific, in what ways does one homeowner have more votes than one renter? Or if there are special elections where only homeowners can vote, could you give some citations to those? AFAIK everyone gets one vote, regardless of home ownership status. Am I wrong?
      • pcthrowaway 3y ago
        For whatever reason, homeowners in Canada are much better at mobilizing to vote than non-homeowners. Probably because non-homeowners are busy working 60+ hours a week to pay the rent seeking homeowners
      • Tiktaalik 3y ago
        Those wealthy enough to own homes are more likely to have the time (especially if retired!) to be able to organize, communicate with their representatives and assuredly to vote in an election. In contrast the poorest working class people (renters) that are struggling just to survive, are more likely to be so busy working multiple jobs, commuting etc, that they literally do not have the time to vote in an election. Additionally because of this, the two parties that have traditionally formed government, rarely even acknowledge the issues of the working poor, which means that the working poor are even more dissuaded from participating in the process, because regardless of who wins they can be assured that neither party is interested in policy change that would help them.
        • jjav 3y ago
          The picture you paint is that homeowners are the independently wealthy rich people with tons of idle free time, while renters are all very poor working multiple jobs. In reality the vast majority of homeowners are regular working professionals, working those 50-70 hour weeks to pay the mortgage.
• parthdesai 3y ago
  >This means that my family's wealth has increased by $75,000 per year just from owning our home. That's more than the median income in Canada! I live in Toronto as well, and did penny pinch from the time I graduated (2016) to buy to buy my 1st condo here in 2020. I keep hearing statements like these, but if we're being honest unless this was an investment property, a 2nd home or you were moving away to a different city altogether, money is only made on paper. While the condo price has gone up, so has the prices of all the other houses. If you were to sell your condo to realize your gains, the next property you buy has gone up proportionally as well.
  • epups 3y ago
    Ok, but people who did not buy a home ten years ago still have to compete in the same housing market, and they didn't earn an additional $75,000 every year from their labor.
    • parthdesai 3y ago
      First, I know it fully well how bad the housing market here is. Second, that's my point, unless it's an investment property or if you're selling and leaving the city altogether, you haven't actually earned $75,000/year.
      • epups 3y ago
        > Second, that's my point, unless it's an investment property or if you're selling and leaving the city altogether, you haven't actually earned $75,000/year. Yes, you have. You can take loans against your property value, for example. But even if you sell and put the money right back into another inflated asset, you still actually earned it.
        • parthdesai 3y ago
          Sure, you can take out HELOC against it, and but you're playing a very dangerous game when interests do rise. That has literally been happening right now.
• epups 3y ago
  > This means that my family's wealth has increased by $75,000 per year just from owning our home. That's more than the median income in Canada! This is a pattern we also see in Europe. Homeowners, largely older, get richer and richer by just standing still, while at the same time controlling politics so that fiscal policy supports this and new construction is made expensive by regulations. It surprises me that Canada, with a relatively younger population, has similar issues.
  • guidedlight 3y ago
    Is the same issue in Australia. However it increasing has become a supply and demand issue, where housing supply has not kept up with immigration policy.
    • hylaride 3y ago
      The same is in New Zealand as well. Canada, NZ, and AU all have a points-based immigration system, which awards points to education and skills in white-collar areas. Over 40 years these systems have grown the population, but has kept trades out. The result is it's now more expensive than ever to build. It's not the only reason, but it sure contributes. All three of these countries have insane housing prices.
      • dukeyukey 3y ago
        Uh, Australia imports loads of blue-collar labour under their points system.
  • bawolff 3y ago
    Its kind of true of capitalism in general that its easier to get ahead by owning valuable things rather than being an employee. I think that would be true of any economy that is growing, which is most of them.
    • tmnvix 3y ago
      Earned vs unearned income. Taxes on unearned income (i.e. income from simply owning something) have eased over time relative to taxes on earned income (i.e. income from actual productive activity). Those that argue against wealth taxes on the basis that they discourage hard work and productive activity are often hypocrites in my opinion. They are usually more interested in maintaining a system that has a tendency towards concentration of wealth instead of promoting a system that encourages positive contribution to overall wealth (i.e. societal progress). Property markets are a glaring example of this.
• wizerdrobe 3y ago
  I don’t wish to pry in asking this but… How do you afford something that high? Were you coming into this with a trust fund or are you one of those 300k+ per year engineers? I make 130k and feel my 220k mortgage (7.5% interest sadly) is scary. Every time I watch one of those House Hunter type shows in Canada or just look at the home prices in my old home in Charleston I’m boggled by purchases.
  • rconti 3y ago
    if you plug those numbers into an affordability calculator, you'll see that 18k/130k is very very very sane. I mean, I've paid that much in rent on less income.
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  • mabbo 3y ago
    No, this was all our money. But we're a double STEM couple with no kids (at the time). We're also the most boring people you'll ever meet, so our expenses are low. We saved up a 20% down payment after a few years together. And interest rates were 2.5% at the time, so the payments were manageable. The long and short is "make lots of money and live like you don't". (That said, a year ago I was a 300+ developer, which is part of how we paid off the rest of the mortgage in 7 years.)
    • brailsafe 3y ago
      I didn't even think it was realistic to get above 200k CAD in Canada, but now it's not even realistic to land a job. Strange time in this country. Beautiful summer here in BC though :)
      • mabbo 3y ago
        There's a few companies offering good money, when hiring starts again. There's the typical Amazon, Google, Uber who pay decently (though Google is only in Waterloo and no remote). Shopify was paying well because they wanted to grow quickly and outbid on top talent elsewhere, but that blew up in their face (I was in the 20% laid off in May). 2 years ago Instacart offered me a ridiculous total comp for remote Canada, but it was mostly paper money- pre-IPO stock that will be worth something, someday, maybe.
• Waterluvian 3y ago
  I bought a home in Woodstock, Ontario for about 525k in 2019. Last year comparables sold for almost $1M. And now they’re back down to about $600k. Family wealth going up is somewhat written in fake money. Especially if you’re paying a mortgage with a rate that might renew at double. Toronto is still super desirable but I think there’s real risk, versus it being a guaranteed good investment the way the boomer generation has been hammering into us about real estate. Can you imagine buying a home at $900k, only for it to fall 33% in value and your mortgage interest payments double?
  • mabbo 3y ago
    Huh, that low in Woodstock, eh? We're considering moving to London (ON) to be near family and friends, since we're both remote workers anyway. Interesting to hear the prices down there are falling.
    • Waterluvian 3y ago
      Woodstock is an incredible city to raise a family. And it’s literally on the 401 and 403. Highly recommend you investigate a bit and consider it. If you aren’t raising a family you’ll find Woodstock to be devoid of stuff to do for adults unless you hate people.
      • Fervicus 3y ago
        Can you list some reasons that make Woodstock an incredible city to raise a family? I am curious
        • Waterluvian 3y ago
          It’s smaller so it’s generally just lower stress. You can comfortably walk to Southside park from most neighbourhoods. Amazing splash park and family pool and playgrounds. Good schools. Less traffic means less anxiety with letting kids be independent. I love being able to drive literally anywhere in 7 mins and making unprotected left turns during “rush hour” without waiting an eternity. A lot of good programs, especially at the library. There’s a great robotics program at the highschool level. Lots of sports leagues… it’s kinda wild how many quality ball parks there are here (with fences and clay infields and lighting). Good hockey arena. Good curling program for adults and kids. Both my partner and I volunteer at schools and they’re generally great. Filled with teachers who care quite a lot. It feels like what Waterloo was when I grew up there in the 90s. I love seeing roving bands of kids on bikes without parents in tow. Of course a lot of it is subjective. Everyone has to make their own decisions.
• stouset 3y ago
  > This means that my family's wealth has increased by $75,000 per year just from owning our home. Sort of, but in practice not really (particularly when interest rates are higher, like now). The only meaningful way to realize that extra wealth is to sell. But then you’ve got to live somewhere, but everywhere else has (on average) gotten proportionally more expensive too. The only way to really capture that wealth is to downgrade or to go to an area that has underperformed, neither of which are typically appealing options, nor are they generally aligned with our notions of “increased personal wealth”. What’s really happened is that non-homeowners have effectively gotten effectively poorer since their only options are to pay increasingly-large rents or buy at inflated prices.
  • throw_nbvc1234 3y ago
    Except when interest rates are near 0%, you can take a loan against the house and use as leverage to buy more stocks (or property).
  • mabbo 3y ago
    > The only meaningful way to realize that extra wealth is to sell. But then you’ve got to live somewhere Which is one of many reasons we're considering leaving Toronto
  • epistasis 3y ago
    No, this is purely wealth, it's not a "sort of" it's the actual real wealth just like a bag of diamonds in a safe. Indeed, homes are some of the most liquid form of wealth, easily leveraged with loans to buy even more property. And home values are one thing that governments are most likely to protect through drastic policy changes. Sure, you can take out a loan backed by your diamonds, but it won't be on terms as good as that of your home. Home wealth really is one of the strongest forms of wealth there is, and people trying to pretend it is not have no concept of how lucky they are, or even what wealth really means. People without this wealth are forced to pay their rent to others, who accept both the rent and then the real estate gains.
    • twic 3y ago
• boringg 3y ago
  I think whats important to note is that increase in value is on paper. Market is already dropping a fair bit and is in a situation where prices could descend another step down in the short term as everyone has to refi their 5 yr mortgage and make some financial adjustments
• nonethewiser 3y ago
  Toronto’s change in COL is high, but the absolute COL just isnt that high compared to other major cities. Your home price doubled in 8 years which is high but not crazy for a strong housing market. Thats a 9% annual growth rate. On par with the historical SP 500 rate. Also for reference, everone should know 592k CAD is 433k USD and 1.2M CAD is 880 USD. By all means it’s expensive and has changed relatively fast. But Toronto isnt even top 25 for most expensive cities. Most rankings ive seen dont even have it in the top 50. I think people are surprised by this because its changed fast and feels expensive but in reality its cheaper than the major metros in the US, mich of Western Europe, China, Japan, SK. > If it continues for another decade, we can presume no young person today will ever be able to afford a home. In Toronto. Welcome to having a large, growing city. Generally speaking young people dont buy homes in NYC, Tokyo, London, Hong Kong, SF, and about 50 other places. Probably 2/3rds of the world population are living in metros like this.
  • kjkjadksj 3y ago
    Part of the issue is wages have lagged behind the market, so hearing that housing merely has followed the market is like a wet blanket when the issue is a lack of wage growth to match asset growth.
  • kahnclusions 3y ago
    It’s not just Toronto, housing prices and overall CoL are soaring all over Canada, and wages are stagnant. The major issue isn’t that the absolute cost of living is high, it’s that the difference between cost of living and wages is increasing too fast. A median wage earner literally can’t save a down payment for a house because the amount they need is too growing too fast. But you’re right that other major world cities even worse... in Taipei where I’m living now, home ownership is simply out of the question for most people unless they have family support to get a mortgage. It’s a global problem.
• jmyeet 3y ago
  Thing is, your wealth actually hasn't increased. You still only have 1 condo unit of wealth regardless of its nominal currency value and you have to live somewhere. So if you sold it you'd just have to buy another unit or house somewhere anyway. But this collective delusion that the house prices of homeowners has gone up is a huge part of the problem, in part because if house prices halved, it would be a huge problem but probably not as large as people think, mainly because people can largely just walk away from underwater mortgages (in Canada AFAIK). The only people who benefit are those hoarding real estate, not individual homeowners. This is the core problem with neoliberal private property.
  • PeterisP 3y ago
    There's no inherent need to have a condo in Toronto; you always have an option to cash out and rent, or cash out and buy at a cheaper location - and in both of these cases the absolute value of the increase matters a lot.
    • jmyeet 3y ago
      And where is that cheap place to live in Canada exactly? Toronto (or the GTA more specifically) was the cheaper version of Vancouver. Now the average house price is north of C$1m in a country where average wages are a fraction of that. People live in cities often because that's where the owrk is. A lot of people like it too. Some jobs can be remote. Many can't. You can't be a nurse or a mechanic or an EMT or a firefighter remotely. Toronto needs all those so-called "essential workers" too. Where are they supposed to live? The general pattern has been in Canada (and the US and other places) is that you have starter homes like condos and then you buy a house when you want or need more space (eg you have children). The commenter I replied to buy a condo for just shy of C$600k. At that time maybe a house they might move up to was $900k. $300k is a lot but probably doable. Now their condo is $1.2m that house is probably $1.5-2m. It's actually more relatively unaffordable than at the time they bought their condo. You see what I mean when rising prices for a basic necessity you cannot live without actually don't increase wealth?
      • 3y ago
• smsm42 3y ago
  Or, they'd do 60-year mortgages. US already has 30-year more or less universally, and those are actually backed by the state. I don't see why they can't move to 60 years. Let the next generation deal with the fallout, this is the tried and true recipe, has been working for nearly a hundred years by now.
• holoduke 3y ago
  Same here. Bought a house for 700.000 euros in the Netherlands. 4 years later got valued at 1.100.000. I guess its a global issue we have. Housing either renting or buying is extremely difficult for starters. Once you are in the game its relatively easy to move arround. But as a starter impossible.
• rewmie 3y ago
  > I don't say this to gloat. I say this as an example of how badly wrong things are. I think it's a global phenomenon. I own an apartment in an European country and I also saw my neighbors selling theirs for 2 or 3 times what I paid for mine. The same trend can be observed in basically all European capitals. I don't think this is a Canadian problem. I think it's dangerous to jump straight to witch hunts. First the scapegoat was golden visas, then it was Airbnb's, then "the rich" whatever that means, and now the Canadian government too? Which one is it?
• xyzelement 3y ago
  An interesting thing to understand is that your apartment is "worth" 1.2 only because someone is willing to buy it for that much. Sounds like you are s young family, who are your new neighbors? Are they folks like you or are they the proverbial foreign investor? Because the way I play this out... imagine you list your apartment for 1.2 but nobody can afford it so it stays unsold. Your neighbor lists for 1.1 and it doesn't sell either because nobody can afford that. Eventually you go oh shit it's never going to sell, lower it to 1.0. You play that game until it's low enough for somebody to afford it. It's kinda crazy to think about it but the reason homes are so unaffordable is precisely because enough people CAN afford them at this price. So yeah I am curious, who are your new neighbors?
• Ccecil 3y ago
  Not only that...but compare the increase to the "median renter's income" and the divide is even wider.
• gassiss 3y ago
  if it continues for another decade? It's already unaffordable now
• rekabis 3y ago
  > If it continues for another decade, we can presume no young person today will ever be able to afford a home. You want to lay blame? 30% of all homes in the last year have been bought by speculators and rental investors. That’s right… one in three homes were bought by someone who will never live in it, but who has hoarded it in order to ransom it back to the community for more than it’s worth, thereby denying another working-class family the ability to exit the rental market and contributing directly to our housing problem. No wonder shit is so out of whack here.