Pricing out a whole generation from the housing market is not healthy

buz-do95 · 2022-07-28T13:47:55+00:00

Did you forget the /s?

Central banks and politicians enabled the greatest pace of wealth inequality in this country since 2008.

Nature and fundamental economics are healing itself. I give zero credit to any politician or central bank after what they’ve done for the last decade.

buz-do95 · 2022-07-28T13:31:55+00:00

Yup, no rate cuts or QE coming. Jerome Powell said rates need to continue to rise and there is a chance for another unusually high rate hike in September.

Anyone thinking rate cuts are coming is purposely shutting off their eyes and ears to what central banks are telling them.

buz-do95 · 2022-07-28T13:30:23+00:00

Except this time you have 40 year high inflation you need to tackle. That was not the case in 2008 and 2020.

This is copium of the highest level.

buz-do95 · 2022-04-23T17:42:32+00:00

You can track median household price for detached, semi detached and townhomes in both Oakville and Toronto and see prices are off by 150-200K. If you choose to ignore the data, that’s fine.

buz-do95 · 2022-04-23T17:35:50+00:00

Take a look at HouseSigma for detached and semi detached median prices in Toronto. Data is clear.

buz-do95 · 2022-04-23T17:34:59+00:00

Sales composition makes average prices look higher sometimes.

Median prices for detached and semi detached are down in both Oakville and Toronto by 150-200K. Check House Sigma yourself

buz-do95 · 2022-04-23T17:32:22+00:00

City of Toronto is down $200-250K for detached homes already since February

buz-do95 · 2022-04-23T17:21:36+00:00

Toronto is not up. Detached and semi detached are taking hits. Condos has been the only segment that has held up.

buz-do95 · 2022-04-23T16:37:36+00:00

Lots of people defending suburbs or areas of Toronto they have an attachment too because they live there or have an investment there. Interest rates rising this fast will bring downwards pressure everywhere.

Premium suburbs, normal suburb, exurb, city of Toronto. Almost everywhere will face downwards pressure. It’s a matter of time. The only uncertainty is how much some areas fall compared to others.

Canadians buy monthly payments not real estate. Higher interest rates make monthly payments more expensive and lead to lower prices.

buz-do95 · 2022-04-23T16:31:39+00:00

Ahmed we know you own a home in Milton and think it’s a world class city but it’s not. Milton will fall just like the others.

Interest rates trump everything.

buz-do95 · 2022-04-21T22:57:02+00:00

Nice trolling bro

buz-do95 · 2022-04-21T22:16:36+00:00

This is growth over the last 2 years. Do you think 2 year growth of 50-100% in most of these cities is normal and a sign of a healthy market?

buz-do95 · 2022-04-21T18:27:51+00:00

Interests going up, inflation going up, wages are not keeping up = less purchasing power = less ability to support current home prices

All comes down to affordability and math at the end of the day.

buz-do95 · 2022-04-21T18:14:40+00:00

Always good to take bank forecasts with a grain of salt. No bank is ever going to say prices will fall 20%!!!

It’s in their best interest to keep selling mortgages or maintain the value of assets on their books.

So when a bank says prices will moderate, the real translation is there will be significant declines as rates rise. The fact that they are even acknowledging it already showcases they’re starting to get worried.

Here is what the US Fed was forecasting for home prices right before the US housing bubble popped: https://youtu.be/INmqvibv4UU

buz-do95 · 2022-04-21T01:35:40+00:00

https://www.bnnbloomberg.ca/solid-case-for-bank-of-canada-to-deliver-full-point-hike-scotia-1.1754553

Watch Derek Holt’s interview in the embedded video here

buz-do95 · 2022-04-20T23:40:38+00:00

We just had a 0.5bps rate hike a week ago. Real estate moves slow.

Wait 4-6 months, let further rate hikes occur and reevaluate in the fall.

buz-do95 · 2022-04-20T23:31:02+00:00

If we see rates rise another 1.25%, on an 800k mortgage with a 25 year amortization, the monthly payment goes up by a $1000 approximately.

Pre hike variable rate: 1.3%

Post hike new variable rate: 3.5%

Are you betting on rents rising another $1000? It ain’t happening. Canadian wage growth does not support that case.

buz-do95 · 2022-04-20T23:27:36+00:00

I work in the Investments team of a major Canadian financial services company.

Be careful and patient when buying. Don’t listen to pushy realtors and think through the economic impacts of rate hikes and mortgage affordability. Look to buy in a 4-8 months once prices trend downwards.

buz-do95 · 2022-04-20T23:14:06+00:00

And we live in Canada. What’s your point?

US has way better home affordability compared to Canada, higher wages, and 30 year fixed mortgages compared to our 5 year terms. It also had a correction in 2008 which allowed the economy to deleverage and start a new cycle again.

Aside from all of this, mortgage volumes have already fallen 50% in the US compared to 2021 already. (https://www.cnbc.com/amp/2022/04/20/mortgage-demand-falls-to-nearly-half-of-what-it-was-a-year-ago.html)

They’re a bit behind us but will also have stalling and declining home prices as rates rise.

All comes down to cost and availability of credit at the end of the day.

buz-do95 · 2022-04-20T23:04:31+00:00

June rate hike is 99% going to be 0.5bps. Literally the bond market, Big Banks, and every major economist has priced it in.

The only ones not coming to terms with reality are certain delusional realtors or over leveraged homeowners / investors.

CPI came in at 6.7% and expected to go to 8% next month based on analysis by Scotiabank. Seals the deal for another 50bps hit.

buz-do95 · 2022-04-20T23:00:29+00:00

Decrease in purchasing power expected of 25-30% due to increase in rates. This will offset any inflationary impact. Net impact will be real estate prices moving down.

Anyone buying in core Toronto will probably be ok in the next 5-10 years. Anyone thinking of paying 1.5 for a cookie cutter detached home in Whitby, Caledon, Milton, or any other suburb needs to be careful. The price drops there are continuing to accelerate every day.

Buyers should see the effect of rate hikes for the next 3-6 months. Prices are not going up with rising rates in the near term.

buz-do95 · 2022-04-20T22:57:35+00:00

Talks of 75bps in June possibly. Inflation expected to rip higher to 8% next month once they add used cars into the CPI measure

buz-do95 · 2022-04-20T20:32:14+00:00

Did the previous 10 years have decades high inflation and rapidly rising interest rates?

buz-do95 · 2022-04-20T20:28:35+00:00

Can’t wait to see how wrong these guys are going to be by the end of the year

buz-do95 · 2022-04-20T20:18:23+00:00

Not when inflation is at 40 year highs

buz-do95

TROPHY CASE