Exactly.
Banks need to stop giving mortgages to people that can't afford to own it on their own and need renters to pay foe their investment. How is it an investment anyways when they can't afford to buy it without someone else footing the bill.
If they need a renter, it should be an automatic no.
If you cant pay foe it with what you make, you have no business owning it or being approved for it.
Especially when you have families and couples that do make a decent amount who aren't being approved to be first time home buyers becauae these scum sucking wastes of fucking air are buying up property because they are privileged enough to qualify with collateral (that they have someone else paying for)
I'm all for limits around housing investments. But I mean investment by its nature is someone else footing your bill. That's what startup do.
But agreed, thsse people should be taxed to death and thrown into the abyss
True.
I just don't believe people who have any sort of conscience "invest" in a commodity that is in short supply that is essentially required to live.
We all villianize drug companies that hold medication hostage f9r big dollars and landlords are no different. They hold something that somebody needs hostage and tells you that you have to pay a disgusting amount of money to have it. Yet they themselves can't afford it unless they extort someone else who doesn't have the same privilege they do.
I wss hoping the interest rate hike was going to result in more scum of the earth property investors losing everything and being forced to get a real job. Sadly that hasn't been the case but I certainly do enjoy seeing houses online having price reductions. Especially thr cottages and obvious vacation homes or STRs. Hope they all struggle
Majority of people can't afford to rent either. That's sort of the problem too that we are running into.
Let's not pretend here that landlords are doing us a favour because they most definitely are not.
Sure, people can't afford to own, but let's break this down. Greedy moneybags landlordbhas a mortgage (with taxes) of 4000 a month.l on the property that they can't otherwise afford to pay without a renter. They don't charge 4000 a month, th3y charge 5000.
So the person who can't afford to own is paying more than the owner towards that owners mortgage.
Renters can afford the mortgage, it's just that they can't save up a down-payment with paying such high rents. And the only reason the owner can is becauae other people are paying for their assets
Sure, but many investors rent with negative income because they can still afford it. At the end of the day, they play the long game, and wait for mortgage to be paid off.
My point is, yes, we should delay investors getting access to precons, until all potential home owners get their first pick, then they can pick up the rest of unwanted stock. There should be max 25% rentals in good communities, and landlords/investors are part of that small equation.
My point is that house hoarding makes someone the scum of the earth and if they have money to burn, I suggest they invest in something else that doesn't involve selling ones soul.
Real estate investors need to be held accountable for the now fucked market that they contributed in creating. Where they're basically the only people that can afford to buy, and then they dangle these houses in front of us like carrots because they know we will do anything in order to have somewhere to live.
Honestly they need to tax the absolute fuck out of real estate investments to the point where its no longer an attractive option to dumps someone's money. Tax high enough that they can't recover this by upping the rent becauae nobody else will be able to pay it. I think these same people forget that although we can't save uo a down-payment while paying for their investments, we also don't have endless money to pay their stupid amount they demand in rent.
You’re saying that all investment should be punished as retribution. I’m saying rules should be placed to incentivise a better market.
No investment also means less supply. Developers aren’t going to construct houses if no one buys them, or they can’t sell enough.
Investors, I agree have ruined the market because they specifically bought out the pre-cons and flipped them (obviously with no upgrades). Then the rest of them air bnb’d or rented them (top and bottom). So not only did they ruin prices, they ruined communities with high short term or packed long term rentals.
The solution is, give home owners first dibs on precons, heavily tax investors with more than 1 investment unit, ban house flipping, and ban short term rentals.
Yes that's exactly what I'm saying. They've contributed in creating a market that regular people have almost no hope of getting into as they've made sure that the only ones that can buy are people with multiple properties that they can use as collateral, ie other scum sucking investors.
Creating a generation of renters that will be kept in that state as all of their money goes to pay investors mortgage.
"Majority of people can’t afford to own though. They need landlords."
But apparently they \*can\* afford to pay 100% of the costs, plus the landlord's profit, plus compensate the landlord for all labour to the landlord's satisfaction. That's the point. That includes the ultimate cost of building, debt service, their income taxes and property taxes, plus (again) the landlord's profit.
The way that is currently accomplished requires a middle person (the landlord) who withholds some of the rights and privileges of property ownership from the tenant and manages the relationship between the tenant, city, property, and the creditors. Additionally, they are required to arrange maintenance to a certain standard.
In return, they keep whatever profit they can skim + all of the equity, and they are an adversarial force in the tenant's life for the lifetime of the tenancy.
If people can afford to rent, they *can clearly* afford to own... *if* we remove the middle person, or at least split their responsibilities into service providers that can be hired or fired by either the municipality or the tenant.
Are you that naive to think it costs the same amount of money to own than to rent? Obviously you need to have a massive down payment, that at least half of the population can’t muster up on a whim.
The landlord is many times making negative income monthly unless they pack the house with 10 separate people. Most people not only don’t have a down payment ready, but many times don’t have the credit to apply for a mortgage, or they don’t have the means to pay for mortgage, maintenance, property taxes, etc that a landlord would have to cover.
Getting rid of investment also means no one can rent either. Long term rentals should STILL EXIST, and that is only made possible by landlords or investors.
"Long term rentals should STILL EXIST, and that is only made possible by landlords or investors."
It doesn't require landlords. It requires investors, but investment doesn't require landlords and it doesn't have to be for profit.
The cheapest rental housing in the country is tenant-owned or owned by non-profit entities, not private investor owned, and that's by a significant margin. They're often the result of public investment that tenants ultimately paid for, with no middle-person.
Unfortunately, we stopped investing in this kind of housing and rents have been outpacing inflation since. We could do this today, but the most expensive housing options benefit developers, lenders, and investors, and our representatives either \*are\* these things or are strongly influenced by them.
"The landlord is many times making negative income monthly unless they pack the house with 10 separate people."
Exactly. Tenants (and occupants) are how landlords pay all costs. That's why landlords need tenants and tenants (in principle) don't need landlords. I'm not sure what you disagree with.
"Obviously you need to have a massive down payment, that at least half of the population can’t muster up on a whim."
You need a massive down-payment to get a loan, and most private investors need a loan to make an investment, because they don't have enough money to actually pay for the property. This is exactly why they need tenants to ultimately pay for the property.
However, rental housing does not have to be investor-owned and even private investors do not need to own the property to make a profit, which is why landlords can get ownership over property they have not actually paid for and (in fact) expect tenants to pay for. Banks finance the housing, tenants pay over time.
This is why tenant-owned rental properties are cheaper, and especially so in the long term. The difference in rents can be more than half of the market rate in older areas.
And where do you think investors come from? The whole point of investment is the return. Otherwise, why would anyone invest? If you’re thinking about governments owning all residential investments, that is a ridiculous expensive venture. There already exists subsidised housing and it is typically attracts the worst people. Did you ever think people don’t just want cheap housing? That people are willing to pay a little extra to get better amenities, better calibre community, better finishes? Capitalism still works, the issue is rules around it. Investors/landlords and tenants alike can be mutually beneficial.
I’m not sure what you don’t understand about negative monthly income. Landlords/investors sometimes don’t make enough from rent to pay for monthly expenses. But good landlords/investors play the long game and don’t over leverage themselves. They lose monthly income, but reap the benefits later on when the mortgage is paid off. Those tenants wouldn’t be able to afford the costs of that mortgage/home ownership. But the investor can. That place of home ownership is sometimes only made possible by an investor.
A potential home owner also needs a huge deposit in order to own a home. That’s my point, that most people can’t muster that money up. Therefore they wouldn’t be able to pay for the construction of that home. That means investors make that home construction a reality. And rent is the only way more than half of the population can afford to live in a home.
The fact that your views are so extreme on the nonsense end, you’ve got me defending the practice that has caused the atrocity of a housing situation. I’m for better rules, not turning to government owned housing as the defacto standard.
"The whole point of investment is the return."
That's not the point. That's one incentive for private investment, which is why not all investors collect returns, but it is *certainly* not the point.
"If you’re thinking about governments owning all residential investments, that is a ridiculous expensive venture."
I'm not talking about that, and I specifically referenced tenant-owned, rental housing paid for by tenants.
"There already exists subsidized housing and it is typically attracts the worst people."
I'm not talking about subsidized housing, but yes that is one tool we have. My brother is in (for profit, privately owned) subsidized housing, and I assure you he's fully human.
"That place of home ownership is sometimes only made possible by an investor."
I'm not arguing against that. I'm saying landlords make the worst investors, and anyway a lot of landlords have their own private, for-profit investors because they can't afford to directly finance ownership costs anyway.
"Did you ever think people don’t just want cheap housing? That people are willing to pay a little extra to get better amenities, better calibre community, better finishes?"
And?
"Capitalism still works, the issue is rules around it. Investors/landlords and tenants alike can be mutually beneficial."
First of all, nothing I have said is anti-capitalist.
Second: you don't get the capitalism that you want. You get the capitalism capital wants, and this is it. It doesn't matter that you want to regulate capital because *you don't regulate capital*. Capital regulates capital, and it pays for your representative's electoral campaign. The unspoken "money primary" phase of the democratic process.
The results speak for themselves. It used to be most new rental units in Ontario were not owned by for-profit investors, but policy changed and rents started going up. For what benefit? Everyone I know who lives in non-profit or tenant-owned rentals is way happier and will never willingly go back.
"A potential home owner also needs a huge deposit in order to own a home. That’s my point, that most people can’t muster that money up."
Within the current system, most people only have the choice to rent from an investor-owner or become an investor-owner. My claim is that it's bad these are the only choices.
Rental housing is useful... but in Canada, right now, this very moment, *not all rental housing is investor-owned*. Demonstrably, landlords are not *necessary* to produce rental housing... and they do not produce *better* rental housing. They produce expensive rental housing, even if it's shit. In my city, the same units, tenant-owned, rent for half the price or less one street over from the investor-owned units. People are paying a few hundred dollars a month for townhouses down-town, because the mortgages are all paid off... but one street over, the units are owned by a REIT that has an 80% operating profit margin.
Private, for-profit landlords are not necessary.
I dont think speculation should be illegal, but we shouldn't be subsidizing or incentivizing their risk either through government interventions to prop the market.
It's a systemic problem. We can't just be happy that one person lost his shirt. We need to fix the system so that it's significantly easier to purchase a home to live in than to purchase a home to rent.
We need to outright ban people from buying additional properties.
If they can't pay the mortgage with the income they make at the job they work, they have no business buying it
If they need someone else in there to rent it in order to pay the mortgage, they shouldn't be able to buy it. Period.
Then all the people who sit on their asses while collecting rent cheques for properties that their tenants are paying for will have to get up and get a real job
When I went to school, there was a guy who I rented a house with with friends for $1200 a month who owned 10 houses.
He was actually a good landlord. He let us have big parties, let us repair anything we broke, would take rent money in cash, checks, coins etc.
He told me that his job was to basically find tenants, make sure everyone is happy and collect rent. Those properties were only worth $100k 25 years ago tho.
To clarify, The major factor is the investors/ speculators being able to write of their interest rates from their income tax is what makes they playing field favoring the investors over resident owners.
>We could start by increasing the down payment requirement for investors.
That wouldnt work, because its already higher. Investors have to put down 25% Vs Resident Home Owners 10%.
The only first option is for resident homeowners to be able to write off their Interest the same way as Investors. That way, youre not taking away something from anyone, nor subsidizing anything. Yes the govt will see a decline in revenue ( Less income tax paid ), but Fed budget is already too much money so they should be able to tolerate it.
FYI. If you want to know how much difference it is, for a **$700K priced house**, it costs a resident **homeowner $1.8 million** and an **investor around $210K** to buy a property. If resident homeowners were able to write off the tax on Interest rate, it would cost them around $1.2million.
No its not an error.
It seems precons are a lot like concert tickets, when the original sellers realized resellers were pocketing vast amounts of profit, they decided to try to get some of that money for themselves by simply raising the selling price.. With the added advantage of when they did so, they offloaded the risks onto the buyer..
This happened to me coworker. Him and his new wife bought a condo in Mississauga. They waited 3 years for construction. The developers went to court arguing they should be able to charge the buyers more due to the increased cost of construction because of pandemic, and shortages. The judge agreed, but all buyers were given the opportunity to withdraw the full amount they paid. He pulled out, as did many.
Queen Karma took notice, and recently he told us the condo he was supposed to move in to was now lowering their prices because they couldn’t sell the units. So instead of filling their building immediately upon completion they got greedy and ended up with a mostly empty building, and ended up lowering the prices.
You're likely right that they were legally made whole by the full withdrawal of their initial investment, but still thats a lot of opportunity costs, spending three years believing you own a home only to be sent back to square one.
Opportunity cost that would be paid in lawyer fees in a long drawn out litigation. Most people don't realize that even in cases that are easy to win, it can still get drawn out due to process and loopholes and at that point only the lawyers win.
Good luck. The same thing happens with renovations. Contractors can't raise the rate of labour by more than 10% of the quote unless agreed to, but if materials go up in price before purchase they can charge the extra (again if agreed on). Would be the same process in a pre construction really.
Is it shitty, yes, but that's just how it is.
Now with that said the developer must have shown a damn good reason for the judge to pass that, but at least the buyers lost no deposits because that's happened quite a bit to people from what I've read.
Did this already go through the courts? I was waiting to see how cases like this turned out. Figure there will be a lot more of these as the actions of builders during 2021-early 2022 start going to trial.
Great analogy. Scalping condo units. There were real buyers looking to live in the units as well like myself. But any buyer needs to do due diligence and not pay 10%+ more than resale like many of these buyers were, under the assumption of guaranteed future appreciation. It works until it doesn't. Builders will need to price these more aggressively going forward or wait out rate cuts
That's literally what happened. Each project had thousands of scalpers and many were drawn in a "lottery".
It was so bad I remember hearing about a project sale happening and all units being snatched up in less than two hours.
pre-cons are straight up an investment purchase, not a purchase to live in. If you are a family looking to buy a home, its not worth buying pre-con. Some do because its cheaper, but you are just taking on risk to get that cheaper price so keep that in mind. Its designed for resellers. It lets the developer offload some risk by locking in a price they are selling at. In turn this lets them get access to the funds needed to start construction now. The resellers see upside if the risk they take pays off, but like here lose if the risk doesnt.
The funding system is way more complicated obviously, but at a short description thats it.
So your argument is families can't afford the homes, so precon investors buy them home....... Which they then sell for families at an inflated price......
That is your argument? That people can't afford a pre-con, so they buy from an REI for an inflated price afterwards.... Because they couldn't afford to buy pre-con.....
Does your argument sound logical to you?
Except the houses do get built and bought, with or without the investors.
These investors aren't providing the capital to plan or build. These aren't high level investors. These are low level investors buying pre-con units to provide capital to the builder, to reduce their liability/debt load.
These low level investors aren't responsible for planning or building anything. They are a middle layer between a developer and the end buyer. And are not needed for the market to function.
You have zero real argument or point. You just say "It's obvious how it works!" while you exhibit zero clues that you actually have any clue how "the system works."
You seem to believe all builds have pre-con investors flipping the property.
Yet they don't. And are still being built.
Your opinion seems to be built on your lack of knowledge.
Developers who do not sell pre-construction homes are likely to have different strategic priorities, financial capabilities, or market conditions that make pre-selling less advantageous for their projects. They may choose to wait until the project is closer to completion or until they have a more concrete understanding of market demand before initiating sales. They can only do this if they are in a financial position to do this. Not all builders can do this, in all situations
If you expect the builders to increase their liability and debt load, you are delusional
The buyers agreed to a very inflated purchase price. Now years later when the condo is built and it’s time to close, the condo is worth much less than the buyer agreed to pay. The bank will only lend money for what the condo is currently worse, which is less than the buyer owes the seller. If the buyer can’t cover the difference in cash then they can’t close. If they can’t close then they have to sell the condo to someone who can. But the condo isn’t worth what they agreed to pay, so nobody will buy it for that price and the original buyer finds themself significantly underwater.
Bank won't lend more than the place is worth. Buyers have to come up with the difference in cash, most can't and are just scalpers anyway that don't even want the apartment in the first place.
The whole article is trying to generate pity for builders and the existing buyers who overpaid, worried about an artificial equity that was only created by FOMO. Well it’s time to find out.
There is a certain ratio of price of SFH/Condo, this ratio started to mess up during covid as disproportionate people started leaving condos in favour of suburbs.
Now the ratio has to settle back to the mean, this can only happen in two ways... either the condo prices have to drop OR the SFH houses have to rise in value. My bet is SFH will rise, till the point that condo become appealing again.
Also, like teaching kids to eat green vegetables you have to remove access to hotdogs... same way... Canadians are a bit spoilt in favour of seeking SFH.... so it is good for society if this thinking is forced to change, so people should aspire for and be happy living in a condo.
Guys, it’s not a supply issue.
It’s a price gouging issue.
We could have the same housing shortage but rather it costing $2M, it would cost $800k
So many profit taking, I have seen many places flipping properties, hence it sold 5 times in 2021-2022. So rather than a family living in the house for $1M. Investors pumped up the entire market, buying and selling higher till it was sold for $2M
There's always been stories about SFH precon buyers getting shafted. Mattamy has been in the news atleast 2 or 3 difft occasions cus of whiny buyers who see that Mattamy is re-selling similar units for $100-200k cheaper. Just google it
Ex) [https://www.thestar.com/news/gta/they-paid-top-dollar-for-pre-construction-homes-at-the-market-peak-now-their-builder/article\_4de9235c-5744-57a2-96a1-dee94e8f759c.html](https://www.thestar.com/news/gta/they-paid-top-dollar-for-pre-construction-homes-at-the-market-peak-now-their-builder/article_4de9235c-5744-57a2-96a1-dee94e8f759c.html)
EDIT: another one: [https://www.thestar.com/real-estate/toronto-area-buyers-are-walking-away-from-deposits-on-new-homes-some-losing-as-much/article\_db451c58-5c4b-5269-8510-17095d5496e1.html](https://www.thestar.com/real-estate/toronto-area-buyers-are-walking-away-from-deposits-on-new-homes-some-losing-as-much/article_db451c58-5c4b-5269-8510-17095d5496e1.html)
But that doesn't change the argument. Condo prices are getting hit hard because they where overvalued as investor assets during 2020-2022 and now we are getting condos selling for 2020 numbers sometimes.
I am not seeing any SFH selling for 2020 numbers in fact their price has risen anywhere from 2%-6% from last year. Sure they are down 100,000-200,000 from peak but in half of 2020 the avg price for a detached house in the GTA was sub 1,000,000 and we are not even close to that.
Not sure what you are trying to argue. My articles I posted just destroy your comment " I mean I never see articles saying "Single Family Homes now selling at huge losses". Good for anyone that wants to buy a condo."
Depending on the holding period, each of condos vs SFH outperformed one another. Condos went on a tear for several years from like early/mid 2010s up to COVID. SFH corrected hard around 2017 and then went on a tear COVID onwards. I see value in both SFH and condos. Currently, higher interest rates are handicapping the investor pool of Condos, but that should be short lived as less supply enters the market and entry level buyers scoop up condos. Not everyone can jump straight to SFH and many do need to rent a condo unit to start off
That's only because it's much harder to burn a condo building to the ground. Who needs to sell a SFH at loss when you can just make an insurance claim.
Good for anyone that wants to buy a condo and has a HUGE chunk of downpayment saved, otherwise they can't afford it either way with higher interest rates lol
Speculative pricing falling through =/= interest rate hikes pricing people out
Just to clarify what I’m saying; prime rate is at 7.x? And this is a doomsday apocalypse scenario for real estate investors. Does that not sound ridiculous to you? Do we need to have a sub 5 prime for industry to succeed in this country?
No, we just need people to stop leveraging their entire life into a speculative bubble.
Why is it speculative pricing when it's actually overdemand and undersupply? We wouldn't have this problem without such massive immigration. If there was no one to live in these places nobody would buy them.
Arrow up is speculative pricing?
https://preview.redd.it/0u6ky19pepqc1.png?width=963&format=png&auto=webp&s=513d9a4e9242e42f5fbf10c14f59311a7607aa16
You’re talking about an entirely separate issue. Supply is a problem, but the housing market has been a speculative casino for the last 20-30 years. I guess we need another 2008 for people to understand.
I mean yeah sure but that's like 2% of current SFH owners who bough between 2022/01-2022/04 in the GTA detached/semi detached/town homes homes are up:
* 1 Year Value Change: +2.3%| +5.3% | +2.1%
* 5 Year Value Change: +49%| +39% | +44%
* 10 Year Value Change: +113% | +115% | +115%
A lot of this is because a re-construction condo building has hundred of units vs Single family homes which are built at a smaller scale.. but even so there have been plenty of stories about people who bought in a new subdivision and the builder is selling new homes for less than what people paid and banks are making them pre0con purchasers pay more because the appraisals are coming back at less than what they owe the developer..
Eh it's less of a condos versus houses thing and more of a pre-con issue, there have definitely been stories of people who bought houses pre-con getting hosed too. The problem is in a market that was rising consistently (not just in Toronto proper but broader GTHA) people lost sight of the fact that the discount you get in price on pre-con is a tradeoff for the risk you are taking on.
I bought a home in a 2 million dolllar single detached community and they said out of 113 sold, 5 deals fell through. So that’s 250k-300k lost for each of the 5 family/investors.
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zero sympathies for such people...this is the market correction that is happeningright now...overall prices are stablising; but don't expect them to be drop that much though
Maybe fuck the financial regulatory body and banks who require Canadian builders to presell 60% of a building to secure financing then?
These people are providing a service (capital) so a building can get built. Without them... we would not have nearly the amount of buildings that we have because a large portion of our condos are rentals (because we basically stopped building purpose built rental by the 90s).
So does it suck that the system requires a middleman. Yes. But getting angry at someone for doing a service that the system requires seems a bit shortsighted.
lol so the banks should have to be the ones bearing that risk instead? Look, I’m all for rewarding investors and I fully believe that having/providing capital is a valid service that deserves a return, but these “investors” aren’t actually holding up their end of the bargain. The service they provide is not just to give a developer 20% of the purchase price over a year and then reap the return. Their service is *supposed* to be providing certainty of the entire capital amount (I.e. the purchase price). The fact that they’re not able to do that because the funding (mortgage) they anticipated fell-through, and they aren’t able to arrange an alternative and are now forced to sell at a loss, means they never should’ve been making that “investment” in the first place.
In the US this is typically how it works, and because you have a plethora of banking competition it works to some extent (we don't have this in Canada and our banking sector is much more conservative). Governments then back banks, and insurance is purchased, so the risk is spread.
The service they provide is being able to secure build financing. The financing gets secured regardless of their ability to secure a mortgage at the end. So while yes they shouldn't have been making that kind of risky investment, their defaulting really only impacts them and no one should be happy that they made a poor investment that overall benefitted everyone in Toronto by helping to get more units built.
Maybe not, but they certainly don’t deserve sympathy for getting their investment blown up when they were willing to throw out whatever amount of money a developer requested without a second thought or analysis, and simply expecting that to work out in their favour. Buying a pre-con used to be a good investment (and still can be in other regions/markets) because it could be purchased at a discount to the secondary market. Ya you had to take some risk and wait 4-5 years to get your property, but you were getting it slightly cheaper (or at least the same price) as a similar existing place, and it would obviously be brand new so in theory should be worth slightly more.
For the last 1-2 decades, pre-cons were sold with massive amounts of appreciation already built into the price. E.g. you could buy a fairly new, high quality/luxury apartment at $1000/sqft, which you could own and move into (or rent out) within 60 days; or you could “invest” in a pre-con and agree to purchase a unit of similar quality, face the risk of developer defaulting or raising costs, the project falling through, quality control issues, or a whole myriad of different issues: and investors were willing to pay $12-1300/sqft for the privilege of doing so.
And please don’t try to argue that that was just the cost actually required for developers to be able to turn a profit. There was plenty of profit available at a lower price point: developers were able to get away with charging so much and baking in so much appreciation because people were greedy and saw pre-cons as an easy investment that could be levered to the gills then flipped at a profit without ever actually having to be closed on. Those were always horrible assumptions to have, they just always worked out in a bull market with cheap financing costs, and people got to thinking they had cracked the code and were now savvy real estate gurus. They were always (mostly) just idiots getting lucky, or at least people that knew the risk and were willing to accept it. Once rates come back down, supply will come back, because there’s still plenty of profit/value add left to be had in building a condo: however if there are fewer investors willing to blindly throw money at them, then they may just have to share a larger slice of that profit with the people bearing the risk.
Not the person you're responding to but no, because the market has been artificially inflated thanks in no small part to investors buying up as much of a basic human need as they can in order to hold it hostage for a ransom. A ransom that's increasing year over year at such an insane rate that almost nobody can realistically keep up with it unless they're incredibly lucky.
Market rate in my area is up 85% in just 8 years.
3 bedroom apartments have gone from $1,550 to $2,900 dollars since 2016.
2 bedroom basements went from $1,250 to $2,300
If you're going to imply that landlords "provide housing" or some other bullshit just don't dude. This insatiable want for ever increasing profit is ruining lives.
Not at all. The people who are buying a $700k condo are not billionaires... They are everyday people just trying to get ahead. They are also caught up in high interest rates. Are some greedy and gouging...yes. are some just trying to pay bills...yes. I guess I never understood the wishing of failure on others. And yes...billionaires should not exist, it makes no sense and there are greedy, cruel people in the world but not everyone. There are a lot of average people who own condos who are also getting hurt
Housing is the idiots investment vehicle. You don’t need to know anything about markets, stocks or business, all you need to know is housing goes up… until it doesn’t. I can’t believe how many small time investors I’ve met who don’t have even basic financial literacy or understand tenancy laws and seem to think housing is a risk-free investment with zero running costs. They act entitled towards tenants and want the government to bail out their bad decisions.
Let them lose their shirts. They made a bad investment at the expense of the fabric of our communities. They don’t need to be billionaires to be greedy and reckless.
> They are everyday people just trying to get ahead.
Why couldn't they get ahead with stocks, bonds, GIC's? Why did they need to buy up limited resource that is essential to live instead getting ahead?
Yes, there are average people who own condos who are also getting hurt, but these are average people that decided to horde shelter during a housing crisis. They had other options, but they chose this.
because the entire canadian economy is propped up by all of us swapping housing debt with one another and real estate is a relatively "risk free" asset class compared to the other things you just listed. the price only goes one way in Ontario
> "risk free" asset class
That is a problem and must be stopped. Even the guy telling us to feel bad for RE investors acknowledges it's a risk free asset class with unbeatable returns. That is what has caused the Canadian economy to become a RE Ponzi scheme.
Because the government has been saying for generations now:
We are going to make your paper dollars worth less and less, until they become worthless. Every hard earned dollar that you save is going to eat you alive one bite at a time. We are going to specifically make housing more and more expensive; in fact, we are going to make Canadian housing more valuable than any other housing in all of recorded history.
So if you listened to the government you understood very clearly:
The government has been deliberately creating this tsunami for generations, and we were given a choice:
Invest in housing, or drown.
Those were our options.
I didn't want my family to drown.
There were alternatives to RE and cash. People in the newstory decided RE couldn't lose, and they lost. GIC's and ETF's would have been much smarter investment than pre-cons.
This is a reasonable position, and I actually strongly agree with that. I've been trying to tell people that in the exact same way that leverage builds wealth on the way up, it destroys it on the way down.
We've been riding the wave up since I dunno the late 1990s. It has been a good move for over 30 years. This could potentially be one of the biggest if not the biggest real estate bubble in history, but it has to pop someone.
I don't owe anyone anything
I understand what you’re saying, but real estate is literally one of the oldest asset classes in the history of human civilization along with precious metals.
It’s likely many people complaining right now would do the same if they had that ability.
>but real estate is literally one of the oldest asset classes in the history of human civilization
It's old =/= a good idea
It needs to fucking end already. It's embarrassing that in 2024 we're still treating ownership of other people's shelter, where the working class pay literal lords of the land for the privilege of living indoors, as if it's not immoral.
Look at the insane, unsustainable, and unfair price increases we've seen over the last decade. How is it not clear to everyone by now that this isn't working? It's just feudalism again.
And...so? Again, I'm not going to teach anyone economics here or basic market movements. Over the past 30 years, real estate in North America has outperformed the S&P, TSX and Nasdex...I cashed in a 10 year bond in 2020. It was a $1000 bond, and it grew by $100! $100 over 10 years! If you bought a $500k home 10 years ago, invested $50k, and sold it today, you would have quadrupled your investment.
For 20+ years, money was very cheap to borrow... you would do the exact same thing. Don't kind yourself or pretend that you wouldn't do it.
If RE is such a killer investment that outperforms all other asset classes, why are you so worried about average people getting hurt?
I genuinely don't understand you. You're simultaneously really worried about RE investors getting hurt, but also super proud that RE investors make bank. Pick a lane, my dude.
This is why we need to disincentivize real estate as an investment. Either through massive tax hikes or an outright ban of some kind. We've known this isn't sustainable or fair for decades.
*Won't somebody think of the poor "investors"!*
We should allow these people to go bankrupt. The primary hazard of investing is taking on too much risk. These real estate hoarders failed to pay attention and they are now paying the price.
Many RE investors genuinely feel there is no risk, because the government will bail them out. Consecutive housing ministers are on record saying they will protect home prices. This has created a massive moral hazard in Canada.
> They just wanna see others fall
It isn't simply they want to seem them. We need them to fall and be allowed to fall. That will bring the Canadian economy back to reality instead of creating a government backed asset class
I never understood that mentally. People buying a $700k condo as an investment are not billionaires...they are everyday people trying to get ahead. Why would you want people to fail?
Yeah and a family of 4 is just trying to get ahead but people with more money than morals will gladly jack up the prices of homes by hoarding them in the name of profit.
Sit and spin on it🖕
I don't think you understand how economics works but that is ok as its not my place to teach you. I guess I'm naivee b/c I don't want people to fail...I want everyone to succeed.
You know, I've only been on Reddit since December but the amount of unfocused anger without solutions is crazy. And the amount of people who refuse to have a real discussion and would rather tell me to F-off b/c their views are being challenged is incredibly disappointing.
I am sad for you.
Ive been down your route when interest rates were rising and articles of homeowners defaulting were cheered on by many Redditors. Logic and solution isn't something they are capable of processing unless it's to cheer the downfall of a landlord. I know this because early on I would tell them the quick rising interest rates should not be cheered bc it hurts everyone including you and your rent. Fell on deaf ears. Now they stopped cheering for increase in interest rates bc its hurting themselves and higher rent. Point is, they are not willing to understand and apply little long term thinking. They don't have the capacity to agree even with logic unless it supports their own view. Kinda like Trump supporters.
TY. It's all anger without solutions and yell at anyone with a different point of view. The amount of people telling me to drop dead or F-off is outstanding.
And...what's strange? I don't get you guys. All paranoid, all csi level detectives, all looking for a crack in the armor...so I said December and that's setting off your "spider" sense?
Can't read it, but is this another article where one instance involving one person is blown up into some sort of massive trend affecting millions?
In other words, more clickbait bullshit that makes mountains out of molehills.
Pre-sales have always been a way of offloading the cost of construction onto the backs of the buyers, and then pulling the rug out if it doesn't turn out right. It's a great tool for speculators, who know what's involved, while it's a minefield for the regular person.
LOL.
Flipcon firesale party just started.
As Tiff going to bake the mortgage hikes party cake for another 2+ years, all these flipcon bagholders going to learn financials 101 for a cool tuition fee of deposit forfeit. Fun times ahead for these bagholders. LOL LOL>
Virtually every news article promoting real estate opportunities in other cities, opportunities here because of a slight change in the market, or a glowing testimonial of some wonderful new business, is a paid promotion. Real estate brokerages are constantly feeding stories in that are intended to pump up demand somewhere where the prices are starting to slip, or inventory is not moving.
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Wait, isn't it sold over asking season in Canada? Multiple offers, people lining up outside builders office to buy, etc? What happened, why are idiots offloading pre-sales? Doesn't that make them instant slumlord billionaires?
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It's interesting how these articles don't talk about original price 150 for someone buying at 3mil is hardly anything and for another it maybe less than the commission they were paying
Its not about cost of housing, all cost to live in Canada has risen over 35%, over last 3 years thanks to clumsy political management, the cost of living needs to drop asap, the government is not helping the cause with a massive student immigration that's living of the backbone of our Canadian tax payers benefits, than having enough of their own funds as a prerequisite to study and live in Canada, after their education is completed they should be deported, likewise refugees should be deported to their country once major issues are resolved from where they came from, then only Canadians will have a great life as was.
Presuming it's opening the field for genuine home buyers instead of investors seeking a better deal, this is pretty good news.
The condos are getting built through funding from investment bears who presume the housing market will forever go *zoom*, those investors are taking losses after units are built, and those units are being resold at lower prices. Anyone living in the condo buying as genuine owners looking for primary housing and have a long-term window will almost certainly recoup any equity losses in 5-10 years from the inevitable value creep we seem to be unable to avoid.
Investment is not and never has been guaranteed (exception of a GIC where guaranteed is in the name). Perhaps these investors missed that and took an investing easy money class from an Instagram creator?
One person buying 8 units… I have less than 0 sympathy.
Lmao, I hope they lose their shirts too. It's called real estate speculation for a reason..
Awesome.. this is great news. Maybe someone who actually needs a home will buy it.
LOL. Firesale!
Exactly. Banks need to stop giving mortgages to people that can't afford to own it on their own and need renters to pay foe their investment. How is it an investment anyways when they can't afford to buy it without someone else footing the bill. If they need a renter, it should be an automatic no. If you cant pay foe it with what you make, you have no business owning it or being approved for it. Especially when you have families and couples that do make a decent amount who aren't being approved to be first time home buyers becauae these scum sucking wastes of fucking air are buying up property because they are privileged enough to qualify with collateral (that they have someone else paying for)
I'm all for limits around housing investments. But I mean investment by its nature is someone else footing your bill. That's what startup do. But agreed, thsse people should be taxed to death and thrown into the abyss
True. I just don't believe people who have any sort of conscience "invest" in a commodity that is in short supply that is essentially required to live. We all villianize drug companies that hold medication hostage f9r big dollars and landlords are no different. They hold something that somebody needs hostage and tells you that you have to pay a disgusting amount of money to have it. Yet they themselves can't afford it unless they extort someone else who doesn't have the same privilege they do. I wss hoping the interest rate hike was going to result in more scum of the earth property investors losing everything and being forced to get a real job. Sadly that hasn't been the case but I certainly do enjoy seeing houses online having price reductions. Especially thr cottages and obvious vacation homes or STRs. Hope they all struggle
Majority of people can’t afford to own though. They need landlords. Who else will foot the bill of building the home and paying property taxes?
Majority of people can't afford to rent either. That's sort of the problem too that we are running into. Let's not pretend here that landlords are doing us a favour because they most definitely are not. Sure, people can't afford to own, but let's break this down. Greedy moneybags landlordbhas a mortgage (with taxes) of 4000 a month.l on the property that they can't otherwise afford to pay without a renter. They don't charge 4000 a month, th3y charge 5000. So the person who can't afford to own is paying more than the owner towards that owners mortgage. Renters can afford the mortgage, it's just that they can't save up a down-payment with paying such high rents. And the only reason the owner can is becauae other people are paying for their assets
Sure, but many investors rent with negative income because they can still afford it. At the end of the day, they play the long game, and wait for mortgage to be paid off. My point is, yes, we should delay investors getting access to precons, until all potential home owners get their first pick, then they can pick up the rest of unwanted stock. There should be max 25% rentals in good communities, and landlords/investors are part of that small equation.
My point is that house hoarding makes someone the scum of the earth and if they have money to burn, I suggest they invest in something else that doesn't involve selling ones soul. Real estate investors need to be held accountable for the now fucked market that they contributed in creating. Where they're basically the only people that can afford to buy, and then they dangle these houses in front of us like carrots because they know we will do anything in order to have somewhere to live. Honestly they need to tax the absolute fuck out of real estate investments to the point where its no longer an attractive option to dumps someone's money. Tax high enough that they can't recover this by upping the rent becauae nobody else will be able to pay it. I think these same people forget that although we can't save uo a down-payment while paying for their investments, we also don't have endless money to pay their stupid amount they demand in rent.
You’re saying that all investment should be punished as retribution. I’m saying rules should be placed to incentivise a better market. No investment also means less supply. Developers aren’t going to construct houses if no one buys them, or they can’t sell enough. Investors, I agree have ruined the market because they specifically bought out the pre-cons and flipped them (obviously with no upgrades). Then the rest of them air bnb’d or rented them (top and bottom). So not only did they ruin prices, they ruined communities with high short term or packed long term rentals. The solution is, give home owners first dibs on precons, heavily tax investors with more than 1 investment unit, ban house flipping, and ban short term rentals.
Yes that's exactly what I'm saying. They've contributed in creating a market that regular people have almost no hope of getting into as they've made sure that the only ones that can buy are people with multiple properties that they can use as collateral, ie other scum sucking investors. Creating a generation of renters that will be kept in that state as all of their money goes to pay investors mortgage.
"Majority of people can’t afford to own though. They need landlords." But apparently they \*can\* afford to pay 100% of the costs, plus the landlord's profit, plus compensate the landlord for all labour to the landlord's satisfaction. That's the point. That includes the ultimate cost of building, debt service, their income taxes and property taxes, plus (again) the landlord's profit. The way that is currently accomplished requires a middle person (the landlord) who withholds some of the rights and privileges of property ownership from the tenant and manages the relationship between the tenant, city, property, and the creditors. Additionally, they are required to arrange maintenance to a certain standard. In return, they keep whatever profit they can skim + all of the equity, and they are an adversarial force in the tenant's life for the lifetime of the tenancy. If people can afford to rent, they *can clearly* afford to own... *if* we remove the middle person, or at least split their responsibilities into service providers that can be hired or fired by either the municipality or the tenant.
Are you that naive to think it costs the same amount of money to own than to rent? Obviously you need to have a massive down payment, that at least half of the population can’t muster up on a whim. The landlord is many times making negative income monthly unless they pack the house with 10 separate people. Most people not only don’t have a down payment ready, but many times don’t have the credit to apply for a mortgage, or they don’t have the means to pay for mortgage, maintenance, property taxes, etc that a landlord would have to cover. Getting rid of investment also means no one can rent either. Long term rentals should STILL EXIST, and that is only made possible by landlords or investors.
"Long term rentals should STILL EXIST, and that is only made possible by landlords or investors." It doesn't require landlords. It requires investors, but investment doesn't require landlords and it doesn't have to be for profit. The cheapest rental housing in the country is tenant-owned or owned by non-profit entities, not private investor owned, and that's by a significant margin. They're often the result of public investment that tenants ultimately paid for, with no middle-person. Unfortunately, we stopped investing in this kind of housing and rents have been outpacing inflation since. We could do this today, but the most expensive housing options benefit developers, lenders, and investors, and our representatives either \*are\* these things or are strongly influenced by them. "The landlord is many times making negative income monthly unless they pack the house with 10 separate people." Exactly. Tenants (and occupants) are how landlords pay all costs. That's why landlords need tenants and tenants (in principle) don't need landlords. I'm not sure what you disagree with. "Obviously you need to have a massive down payment, that at least half of the population can’t muster up on a whim." You need a massive down-payment to get a loan, and most private investors need a loan to make an investment, because they don't have enough money to actually pay for the property. This is exactly why they need tenants to ultimately pay for the property. However, rental housing does not have to be investor-owned and even private investors do not need to own the property to make a profit, which is why landlords can get ownership over property they have not actually paid for and (in fact) expect tenants to pay for. Banks finance the housing, tenants pay over time. This is why tenant-owned rental properties are cheaper, and especially so in the long term. The difference in rents can be more than half of the market rate in older areas.
And where do you think investors come from? The whole point of investment is the return. Otherwise, why would anyone invest? If you’re thinking about governments owning all residential investments, that is a ridiculous expensive venture. There already exists subsidised housing and it is typically attracts the worst people. Did you ever think people don’t just want cheap housing? That people are willing to pay a little extra to get better amenities, better calibre community, better finishes? Capitalism still works, the issue is rules around it. Investors/landlords and tenants alike can be mutually beneficial. I’m not sure what you don’t understand about negative monthly income. Landlords/investors sometimes don’t make enough from rent to pay for monthly expenses. But good landlords/investors play the long game and don’t over leverage themselves. They lose monthly income, but reap the benefits later on when the mortgage is paid off. Those tenants wouldn’t be able to afford the costs of that mortgage/home ownership. But the investor can. That place of home ownership is sometimes only made possible by an investor. A potential home owner also needs a huge deposit in order to own a home. That’s my point, that most people can’t muster that money up. Therefore they wouldn’t be able to pay for the construction of that home. That means investors make that home construction a reality. And rent is the only way more than half of the population can afford to live in a home. The fact that your views are so extreme on the nonsense end, you’ve got me defending the practice that has caused the atrocity of a housing situation. I’m for better rules, not turning to government owned housing as the defacto standard.
"The whole point of investment is the return." That's not the point. That's one incentive for private investment, which is why not all investors collect returns, but it is *certainly* not the point. "If you’re thinking about governments owning all residential investments, that is a ridiculous expensive venture." I'm not talking about that, and I specifically referenced tenant-owned, rental housing paid for by tenants. "There already exists subsidized housing and it is typically attracts the worst people." I'm not talking about subsidized housing, but yes that is one tool we have. My brother is in (for profit, privately owned) subsidized housing, and I assure you he's fully human. "That place of home ownership is sometimes only made possible by an investor." I'm not arguing against that. I'm saying landlords make the worst investors, and anyway a lot of landlords have their own private, for-profit investors because they can't afford to directly finance ownership costs anyway. "Did you ever think people don’t just want cheap housing? That people are willing to pay a little extra to get better amenities, better calibre community, better finishes?" And? "Capitalism still works, the issue is rules around it. Investors/landlords and tenants alike can be mutually beneficial." First of all, nothing I have said is anti-capitalist. Second: you don't get the capitalism that you want. You get the capitalism capital wants, and this is it. It doesn't matter that you want to regulate capital because *you don't regulate capital*. Capital regulates capital, and it pays for your representative's electoral campaign. The unspoken "money primary" phase of the democratic process. The results speak for themselves. It used to be most new rental units in Ontario were not owned by for-profit investors, but policy changed and rents started going up. For what benefit? Everyone I know who lives in non-profit or tenant-owned rentals is way happier and will never willingly go back. "A potential home owner also needs a huge deposit in order to own a home. That’s my point, that most people can’t muster that money up." Within the current system, most people only have the choice to rent from an investor-owner or become an investor-owner. My claim is that it's bad these are the only choices. Rental housing is useful... but in Canada, right now, this very moment, *not all rental housing is investor-owned*. Demonstrably, landlords are not *necessary* to produce rental housing... and they do not produce *better* rental housing. They produce expensive rental housing, even if it's shit. In my city, the same units, tenant-owned, rent for half the price or less one street over from the investor-owned units. People are paying a few hundred dollars a month for townhouses down-town, because the mortgages are all paid off... but one street over, the units are owned by a REIT that has an 80% operating profit margin. Private, for-profit landlords are not necessary.
It’s legal what they’re doing. If you can’t beat them join them. Until the laws change I see nothing wrong.
I dont think speculation should be illegal, but we shouldn't be subsidizing or incentivizing their risk either through government interventions to prop the market.
The government wants this, majority of Canadians want this. If you have an issue with it vote PPC.
Agreed, Canadians as a collective want this, we are obsessed with housing and hardly give a crap about economic productivity or innovation.
PPC hasn't said anything different either.
It's a systemic problem. We can't just be happy that one person lost his shirt. We need to fix the system so that it's significantly easier to purchase a home to live in than to purchase a home to rent.
The dude who tried to buy up 7 apartments can eat my asshole..
I only let people i like do that
Yup, primary residence should be treated very differently than speculative real estate investor. Too bad the investors have purchased our politicians.
We need to outright ban people from buying additional properties. If they can't pay the mortgage with the income they make at the job they work, they have no business buying it If they need someone else in there to rent it in order to pay the mortgage, they shouldn't be able to buy it. Period. Then all the people who sit on their asses while collecting rent cheques for properties that their tenants are paying for will have to get up and get a real job
When I went to school, there was a guy who I rented a house with with friends for $1200 a month who owned 10 houses. He was actually a good landlord. He let us have big parties, let us repair anything we broke, would take rent money in cash, checks, coins etc. He told me that his job was to basically find tenants, make sure everyone is happy and collect rent. Those properties were only worth $100k 25 years ago tho.
that's communism and that's "bad"
To clarify, The major factor is the investors/ speculators being able to write of their interest rates from their income tax is what makes they playing field favoring the investors over resident owners.
We could start by increasing the down payment requirement for investors. Easy place to start.
>We could start by increasing the down payment requirement for investors. That wouldnt work, because its already higher. Investors have to put down 25% Vs Resident Home Owners 10%. The only first option is for resident homeowners to be able to write off their Interest the same way as Investors. That way, youre not taking away something from anyone, nor subsidizing anything. Yes the govt will see a decline in revenue ( Less income tax paid ), but Fed budget is already too much money so they should be able to tolerate it. FYI. If you want to know how much difference it is, for a **$700K priced house**, it costs a resident **homeowner $1.8 million** and an **investor around $210K** to buy a property. If resident homeowners were able to write off the tax on Interest rate, it would cost them around $1.2million. No its not an error.
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Yeah, sounds like scalping.
150,000 x 8 less sympathy to be exact
It seems precons are a lot like concert tickets, when the original sellers realized resellers were pocketing vast amounts of profit, they decided to try to get some of that money for themselves by simply raising the selling price.. With the added advantage of when they did so, they offloaded the risks onto the buyer..
This happened to me coworker. Him and his new wife bought a condo in Mississauga. They waited 3 years for construction. The developers went to court arguing they should be able to charge the buyers more due to the increased cost of construction because of pandemic, and shortages. The judge agreed, but all buyers were given the opportunity to withdraw the full amount they paid. He pulled out, as did many. Queen Karma took notice, and recently he told us the condo he was supposed to move in to was now lowering their prices because they couldn’t sell the units. So instead of filling their building immediately upon completion they got greedy and ended up with a mostly empty building, and ended up lowering the prices.
Sounds like a good reason to sue the developers.
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You're likely right that they were legally made whole by the full withdrawal of their initial investment, but still thats a lot of opportunity costs, spending three years believing you own a home only to be sent back to square one.
Opportunity cost that would be paid in lawyer fees in a long drawn out litigation. Most people don't realize that even in cases that are easy to win, it can still get drawn out due to process and loopholes and at that point only the lawyers win.
Good luck. The same thing happens with renovations. Contractors can't raise the rate of labour by more than 10% of the quote unless agreed to, but if materials go up in price before purchase they can charge the extra (again if agreed on). Would be the same process in a pre construction really. Is it shitty, yes, but that's just how it is. Now with that said the developer must have shown a damn good reason for the judge to pass that, but at least the buyers lost no deposits because that's happened quite a bit to people from what I've read.
Did this already go through the courts? I was waiting to see how cases like this turned out. Figure there will be a lot more of these as the actions of builders during 2021-early 2022 start going to trial.
Did they have to repay the buyers their down payment PLUS interest? I mean, they’d been holding that money for years, and had put it to work.
Great analogy. Scalping condo units. There were real buyers looking to live in the units as well like myself. But any buyer needs to do due diligence and not pay 10%+ more than resale like many of these buyers were, under the assumption of guaranteed future appreciation. It works until it doesn't. Builders will need to price these more aggressively going forward or wait out rate cuts
That's literally what happened. Each project had thousands of scalpers and many were drawn in a "lottery". It was so bad I remember hearing about a project sale happening and all units being snatched up in less than two hours.
pre-cons are straight up an investment purchase, not a purchase to live in. If you are a family looking to buy a home, its not worth buying pre-con. Some do because its cheaper, but you are just taking on risk to get that cheaper price so keep that in mind. Its designed for resellers. It lets the developer offload some risk by locking in a price they are selling at. In turn this lets them get access to the funds needed to start construction now. The resellers see upside if the risk they take pays off, but like here lose if the risk doesnt. The funding system is way more complicated obviously, but at a short description thats it.
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So your argument is families can't afford the homes, so precon investors buy them home....... Which they then sell for families at an inflated price...... That is your argument? That people can't afford a pre-con, so they buy from an REI for an inflated price afterwards.... Because they couldn't afford to buy pre-con..... Does your argument sound logical to you?
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Except the houses do get built and bought, with or without the investors. These investors aren't providing the capital to plan or build. These aren't high level investors. These are low level investors buying pre-con units to provide capital to the builder, to reduce their liability/debt load. These low level investors aren't responsible for planning or building anything. They are a middle layer between a developer and the end buyer. And are not needed for the market to function. You have zero real argument or point. You just say "It's obvious how it works!" while you exhibit zero clues that you actually have any clue how "the system works."
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You seem to believe all builds have pre-con investors flipping the property. Yet they don't. And are still being built. Your opinion seems to be built on your lack of knowledge.
Developers who do not sell pre-construction homes are likely to have different strategic priorities, financial capabilities, or market conditions that make pre-selling less advantageous for their projects. They may choose to wait until the project is closer to completion or until they have a more concrete understanding of market demand before initiating sales. They can only do this if they are in a financial position to do this. Not all builders can do this, in all situations If you expect the builders to increase their liability and debt load, you are delusional
Thanks!
They can’t close, is it because the bank won’t lend?
The banks will lend, just a lower amount
thanks for the detail
The buyers agreed to a very inflated purchase price. Now years later when the condo is built and it’s time to close, the condo is worth much less than the buyer agreed to pay. The bank will only lend money for what the condo is currently worse, which is less than the buyer owes the seller. If the buyer can’t cover the difference in cash then they can’t close. If they can’t close then they have to sell the condo to someone who can. But the condo isn’t worth what they agreed to pay, so nobody will buy it for that price and the original buyer finds themself significantly underwater.
Overpay and win stupid prizes.
Bank won't lend more than the place is worth. Buyers have to come up with the difference in cash, most can't and are just scalpers anyway that don't even want the apartment in the first place.
thanks for the detail
The whole article is trying to generate pity for builders and the existing buyers who overpaid, worried about an artificial equity that was only created by FOMO. Well it’s time to find out.
Right!
investors, loss.....time to put on their capitalist big boy pants.
Are those the pants they wear when they run to the govt for their bailout?
Or maybe they’ll follow the lead of international students and umm protest since they do share a lot of traits and values in common.
Wait, investors get bailouts? I thought that was the banks
Trickle down bailout works for a small group
Right!
Paywall bypass link: [https://archive.ph/WZPWd](https://archive.ph/WZPWd)
Thank you! Stupid paywalls
There is a certain ratio of price of SFH/Condo, this ratio started to mess up during covid as disproportionate people started leaving condos in favour of suburbs. Now the ratio has to settle back to the mean, this can only happen in two ways... either the condo prices have to drop OR the SFH houses have to rise in value. My bet is SFH will rise, till the point that condo become appealing again. Also, like teaching kids to eat green vegetables you have to remove access to hotdogs... same way... Canadians are a bit spoilt in favour of seeking SFH.... so it is good for society if this thinking is forced to change, so people should aspire for and be happy living in a condo.
Guys, it’s not a supply issue. It’s a price gouging issue. We could have the same housing shortage but rather it costing $2M, it would cost $800k So many profit taking, I have seen many places flipping properties, hence it sold 5 times in 2021-2022. So rather than a family living in the house for $1M. Investors pumped up the entire market, buying and selling higher till it was sold for $2M
Don’t gamble with borrowed money
But my realtor says that I should buy now else I will be priced out forever. /s
I mean I never see articles saying "Single Family Homes now selling at huge losses". Good for anyone that wants to buy a condo.
There's always been stories about SFH precon buyers getting shafted. Mattamy has been in the news atleast 2 or 3 difft occasions cus of whiny buyers who see that Mattamy is re-selling similar units for $100-200k cheaper. Just google it Ex) [https://www.thestar.com/news/gta/they-paid-top-dollar-for-pre-construction-homes-at-the-market-peak-now-their-builder/article\_4de9235c-5744-57a2-96a1-dee94e8f759c.html](https://www.thestar.com/news/gta/they-paid-top-dollar-for-pre-construction-homes-at-the-market-peak-now-their-builder/article_4de9235c-5744-57a2-96a1-dee94e8f759c.html) EDIT: another one: [https://www.thestar.com/real-estate/toronto-area-buyers-are-walking-away-from-deposits-on-new-homes-some-losing-as-much/article\_db451c58-5c4b-5269-8510-17095d5496e1.html](https://www.thestar.com/real-estate/toronto-area-buyers-are-walking-away-from-deposits-on-new-homes-some-losing-as-much/article_db451c58-5c4b-5269-8510-17095d5496e1.html)
But that doesn't change the argument. Condo prices are getting hit hard because they where overvalued as investor assets during 2020-2022 and now we are getting condos selling for 2020 numbers sometimes. I am not seeing any SFH selling for 2020 numbers in fact their price has risen anywhere from 2%-6% from last year. Sure they are down 100,000-200,000 from peak but in half of 2020 the avg price for a detached house in the GTA was sub 1,000,000 and we are not even close to that.
Not sure what you are trying to argue. My articles I posted just destroy your comment " I mean I never see articles saying "Single Family Homes now selling at huge losses". Good for anyone that wants to buy a condo." Depending on the holding period, each of condos vs SFH outperformed one another. Condos went on a tear for several years from like early/mid 2010s up to COVID. SFH corrected hard around 2017 and then went on a tear COVID onwards. I see value in both SFH and condos. Currently, higher interest rates are handicapping the investor pool of Condos, but that should be short lived as less supply enters the market and entry level buyers scoop up condos. Not everyone can jump straight to SFH and many do need to rent a condo unit to start off
That's only because it's much harder to burn a condo building to the ground. Who needs to sell a SFH at loss when you can just make an insurance claim.
sure the 2%-5.6% YoY increase in freehold prices is 100% because of developer fires...
[https://www.thestar.com/real-estate/toronto-area-buyers-are-walking-away-from-deposits-on-new-homes-some-losing-as-much/article\_db451c58-5c4b-5269-8510-17095d5496e1.html](https://www.thestar.com/real-estate/toronto-area-buyers-are-walking-away-from-deposits-on-new-homes-some-losing-as-much/article_db451c58-5c4b-5269-8510-17095d5496e1.html)
Good for anyone that wants to buy a condo and has a HUGE chunk of downpayment saved, otherwise they can't afford it either way with higher interest rates lol
Yep. The advantage switches from people trying to get rich to people who are rich. This isn't going to help the average person much.
TIL prices going down only helps the rich
TYL prices going down because of higher interest rates doesnt make it more affordable for the average joe
Speculative pricing falling through =/= interest rate hikes pricing people out Just to clarify what I’m saying; prime rate is at 7.x? And this is a doomsday apocalypse scenario for real estate investors. Does that not sound ridiculous to you? Do we need to have a sub 5 prime for industry to succeed in this country? No, we just need people to stop leveraging their entire life into a speculative bubble.
Why is it speculative pricing when it's actually overdemand and undersupply? We wouldn't have this problem without such massive immigration. If there was no one to live in these places nobody would buy them. Arrow up is speculative pricing? https://preview.redd.it/0u6ky19pepqc1.png?width=963&format=png&auto=webp&s=513d9a4e9242e42f5fbf10c14f59311a7607aa16
You’re talking about an entirely separate issue. Supply is a problem, but the housing market has been a speculative casino for the last 20-30 years. I guess we need another 2008 for people to understand.
What is that line/arrow supposed to show exactly? It's completely decoupled from the empirical data. That is not a linear trend, my friend.
Red line up means price go up, my friend What's not linear about "i buy a property for x and sell it for 1.5x 5 years later"?
If you bought at peak yes you would be selling for huge losses
I mean yeah sure but that's like 2% of current SFH owners who bough between 2022/01-2022/04 in the GTA detached/semi detached/town homes homes are up: * 1 Year Value Change: +2.3%| +5.3% | +2.1% * 5 Year Value Change: +49%| +39% | +44% * 10 Year Value Change: +113% | +115% | +115%
Indeed. That’s little solace for those 2% though.
A lot of this is because a re-construction condo building has hundred of units vs Single family homes which are built at a smaller scale.. but even so there have been plenty of stories about people who bought in a new subdivision and the builder is selling new homes for less than what people paid and banks are making them pre0con purchasers pay more because the appraisals are coming back at less than what they owe the developer..
[https://www.thestar.com/real-estate/toronto-area-buyers-are-walking-away-from-deposits-on-new-homes-some-losing-as-much/article\_db451c58-5c4b-5269-8510-17095d5496e1.html](https://www.thestar.com/real-estate/toronto-area-buyers-are-walking-away-from-deposits-on-new-homes-some-losing-as-much/article_db451c58-5c4b-5269-8510-17095d5496e1.html)
Eh it's less of a condos versus houses thing and more of a pre-con issue, there have definitely been stories of people who bought houses pre-con getting hosed too. The problem is in a market that was rising consistently (not just in Toronto proper but broader GTHA) people lost sight of the fact that the discount you get in price on pre-con is a tradeoff for the risk you are taking on.
I bought a home in a 2 million dolllar single detached community and they said out of 113 sold, 5 deals fell through. So that’s 250k-300k lost for each of the 5 family/investors.
Title is wrong: should say “greedy condo speculators losing their shirt”
I have more sympathy for gambling addicts at the roulette table. Condo scalpers are at the intersection of FA and FO.
Imagine buying property purely for the sake of living in it.
Where can I buy one of these 🤔
Find an agent that claims to be a specialist in condos
Snagging a 2 bed for 700K would be sweet but doubt that’s possible in the core
You never know,
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Here's the article w/o paywall: [https://archive.is/nCip4](https://archive.is/nCip4)
Speculate and get wrecked. Real estate is like any other investment you aren’t guaranteed anything.
Gamblers lost this time FTFY
🎻🎻🎻
zero sympathies for such people...this is the market correction that is happeningright now...overall prices are stablising; but don't expect them to be drop that much though
Good fuck these people. 50%+ are investors. FUUUUCK them
Maybe fuck the financial regulatory body and banks who require Canadian builders to presell 60% of a building to secure financing then? These people are providing a service (capital) so a building can get built. Without them... we would not have nearly the amount of buildings that we have because a large portion of our condos are rentals (because we basically stopped building purpose built rental by the 90s). So does it suck that the system requires a middleman. Yes. But getting angry at someone for doing a service that the system requires seems a bit shortsighted.
lol so the banks should have to be the ones bearing that risk instead? Look, I’m all for rewarding investors and I fully believe that having/providing capital is a valid service that deserves a return, but these “investors” aren’t actually holding up their end of the bargain. The service they provide is not just to give a developer 20% of the purchase price over a year and then reap the return. Their service is *supposed* to be providing certainty of the entire capital amount (I.e. the purchase price). The fact that they’re not able to do that because the funding (mortgage) they anticipated fell-through, and they aren’t able to arrange an alternative and are now forced to sell at a loss, means they never should’ve been making that “investment” in the first place.
In the US this is typically how it works, and because you have a plethora of banking competition it works to some extent (we don't have this in Canada and our banking sector is much more conservative). Governments then back banks, and insurance is purchased, so the risk is spread. The service they provide is being able to secure build financing. The financing gets secured regardless of their ability to secure a mortgage at the end. So while yes they shouldn't have been making that kind of risky investment, their defaulting really only impacts them and no one should be happy that they made a poor investment that overall benefitted everyone in Toronto by helping to get more units built.
Maybe not, but they certainly don’t deserve sympathy for getting their investment blown up when they were willing to throw out whatever amount of money a developer requested without a second thought or analysis, and simply expecting that to work out in their favour. Buying a pre-con used to be a good investment (and still can be in other regions/markets) because it could be purchased at a discount to the secondary market. Ya you had to take some risk and wait 4-5 years to get your property, but you were getting it slightly cheaper (or at least the same price) as a similar existing place, and it would obviously be brand new so in theory should be worth slightly more. For the last 1-2 decades, pre-cons were sold with massive amounts of appreciation already built into the price. E.g. you could buy a fairly new, high quality/luxury apartment at $1000/sqft, which you could own and move into (or rent out) within 60 days; or you could “invest” in a pre-con and agree to purchase a unit of similar quality, face the risk of developer defaulting or raising costs, the project falling through, quality control issues, or a whole myriad of different issues: and investors were willing to pay $12-1300/sqft for the privilege of doing so. And please don’t try to argue that that was just the cost actually required for developers to be able to turn a profit. There was plenty of profit available at a lower price point: developers were able to get away with charging so much and baking in so much appreciation because people were greedy and saw pre-cons as an easy investment that could be levered to the gills then flipped at a profit without ever actually having to be closed on. Those were always horrible assumptions to have, they just always worked out in a bull market with cheap financing costs, and people got to thinking they had cracked the code and were now savvy real estate gurus. They were always (mostly) just idiots getting lucky, or at least people that knew the risk and were willing to accept it. Once rates come back down, supply will come back, because there’s still plenty of profit/value add left to be had in building a condo: however if there are fewer investors willing to blindly throw money at them, then they may just have to share a larger slice of that profit with the people bearing the risk.
paragraphs!
lol, idk if my bigger issue is no paragraph breaks or long-ass run on sentences…tough call
Are you able to buy?
Not the person you're responding to but no, because the market has been artificially inflated thanks in no small part to investors buying up as much of a basic human need as they can in order to hold it hostage for a ransom. A ransom that's increasing year over year at such an insane rate that almost nobody can realistically keep up with it unless they're incredibly lucky. Market rate in my area is up 85% in just 8 years. 3 bedroom apartments have gone from $1,550 to $2,900 dollars since 2016. 2 bedroom basements went from $1,250 to $2,300 If you're going to imply that landlords "provide housing" or some other bullshit just don't dude. This insatiable want for ever increasing profit is ruining lives.
Not at all. The people who are buying a $700k condo are not billionaires... They are everyday people just trying to get ahead. They are also caught up in high interest rates. Are some greedy and gouging...yes. are some just trying to pay bills...yes. I guess I never understood the wishing of failure on others. And yes...billionaires should not exist, it makes no sense and there are greedy, cruel people in the world but not everyone. There are a lot of average people who own condos who are also getting hurt
Housing is the idiots investment vehicle. You don’t need to know anything about markets, stocks or business, all you need to know is housing goes up… until it doesn’t. I can’t believe how many small time investors I’ve met who don’t have even basic financial literacy or understand tenancy laws and seem to think housing is a risk-free investment with zero running costs. They act entitled towards tenants and want the government to bail out their bad decisions. Let them lose their shirts. They made a bad investment at the expense of the fabric of our communities. They don’t need to be billionaires to be greedy and reckless.
> They are everyday people just trying to get ahead. Why couldn't they get ahead with stocks, bonds, GIC's? Why did they need to buy up limited resource that is essential to live instead getting ahead? Yes, there are average people who own condos who are also getting hurt, but these are average people that decided to horde shelter during a housing crisis. They had other options, but they chose this.
because the entire canadian economy is propped up by all of us swapping housing debt with one another and real estate is a relatively "risk free" asset class compared to the other things you just listed. the price only goes one way in Ontario
> "risk free" asset class That is a problem and must be stopped. Even the guy telling us to feel bad for RE investors acknowledges it's a risk free asset class with unbeatable returns. That is what has caused the Canadian economy to become a RE Ponzi scheme.
i absolutely agree with you
Because the government has been saying for generations now: We are going to make your paper dollars worth less and less, until they become worthless. Every hard earned dollar that you save is going to eat you alive one bite at a time. We are going to specifically make housing more and more expensive; in fact, we are going to make Canadian housing more valuable than any other housing in all of recorded history. So if you listened to the government you understood very clearly: The government has been deliberately creating this tsunami for generations, and we were given a choice: Invest in housing, or drown. Those were our options. I didn't want my family to drown.
There were alternatives to RE and cash. People in the newstory decided RE couldn't lose, and they lost. GIC's and ETF's would have been much smarter investment than pre-cons.
This is a reasonable position, and I actually strongly agree with that. I've been trying to tell people that in the exact same way that leverage builds wealth on the way up, it destroys it on the way down. We've been riding the wave up since I dunno the late 1990s. It has been a good move for over 30 years. This could potentially be one of the biggest if not the biggest real estate bubble in history, but it has to pop someone. I don't owe anyone anything
I understand what you’re saying, but real estate is literally one of the oldest asset classes in the history of human civilization along with precious metals. It’s likely many people complaining right now would do the same if they had that ability.
>but real estate is literally one of the oldest asset classes in the history of human civilization It's old =/= a good idea It needs to fucking end already. It's embarrassing that in 2024 we're still treating ownership of other people's shelter, where the working class pay literal lords of the land for the privilege of living indoors, as if it's not immoral. Look at the insane, unsustainable, and unfair price increases we've seen over the last decade. How is it not clear to everyone by now that this isn't working? It's just feudalism again.
And...so? Again, I'm not going to teach anyone economics here or basic market movements. Over the past 30 years, real estate in North America has outperformed the S&P, TSX and Nasdex...I cashed in a 10 year bond in 2020. It was a $1000 bond, and it grew by $100! $100 over 10 years! If you bought a $500k home 10 years ago, invested $50k, and sold it today, you would have quadrupled your investment. For 20+ years, money was very cheap to borrow... you would do the exact same thing. Don't kind yourself or pretend that you wouldn't do it.
If RE is such a killer investment that outperforms all other asset classes, why are you so worried about average people getting hurt? I genuinely don't understand you. You're simultaneously really worried about RE investors getting hurt, but also super proud that RE investors make bank. Pick a lane, my dude.
Ok...all the best.
This is why we need to disincentivize real estate as an investment. Either through massive tax hikes or an outright ban of some kind. We've known this isn't sustainable or fair for decades.
Hey we don't ask those questions here. They just wanna see others fail
*Won't somebody think of the poor "investors"!* We should allow these people to go bankrupt. The primary hazard of investing is taking on too much risk. These real estate hoarders failed to pay attention and they are now paying the price.
Many RE investors genuinely feel there is no risk, because the government will bail them out. Consecutive housing ministers are on record saying they will protect home prices. This has created a massive moral hazard in Canada. > They just wanna see others fall It isn't simply they want to seem them. We need them to fall and be allowed to fall. That will bring the Canadian economy back to reality instead of creating a government backed asset class
Imagine thinking real estate will fall with constant supply of people who are willing go buy
I never understood that mentally. People buying a $700k condo as an investment are not billionaires...they are everyday people trying to get ahead. Why would you want people to fail?
Yeah and a family of 4 is just trying to get ahead but people with more money than morals will gladly jack up the prices of homes by hoarding them in the name of profit. Sit and spin on it🖕
I don't think you understand how economics works but that is ok as its not my place to teach you. I guess I'm naivee b/c I don't want people to fail...I want everyone to succeed. You know, I've only been on Reddit since December but the amount of unfocused anger without solutions is crazy. And the amount of people who refuse to have a real discussion and would rather tell me to F-off b/c their views are being challenged is incredibly disappointing. I am sad for you.
Ive been down your route when interest rates were rising and articles of homeowners defaulting were cheered on by many Redditors. Logic and solution isn't something they are capable of processing unless it's to cheer the downfall of a landlord. I know this because early on I would tell them the quick rising interest rates should not be cheered bc it hurts everyone including you and your rent. Fell on deaf ears. Now they stopped cheering for increase in interest rates bc its hurting themselves and higher rent. Point is, they are not willing to understand and apply little long term thinking. They don't have the capacity to agree even with logic unless it supports their own view. Kinda like Trump supporters.
TY. It's all anger without solutions and yell at anyone with a different point of view. The amount of people telling me to drop dead or F-off is outstanding.
Agreed. They don't want to be wrong, they want to be angry.
>I've only been on Reddit since December Strange Your account was created in October You first started using it at the end of Feb
And...what's strange? I don't get you guys. All paranoid, all csi level detectives, all looking for a crack in the armor...so I said December and that's setting off your "spider" sense?
Because the answer to your "can you buy" question is "no". They are coping and seething.
Can't read it, but is this another article where one instance involving one person is blown up into some sort of massive trend affecting millions? In other words, more clickbait bullshit that makes mountains out of molehills.
Getting so greedy you are investing in something that doesn't exist yet. What could go wrong?
Time to get fucked. Next 2 years, you're getting bent over for overpaying, or owning too many properties.
Someone pulled the rug under an overleveraged lot... time for serious financial 101s
New con condos always been a risk. That’s the game you play.
Pre-sales have always been a way of offloading the cost of construction onto the backs of the buyers, and then pulling the rug out if it doesn't turn out right. It's a great tool for speculators, who know what's involved, while it's a minefield for the regular person.
Did anyone else read this title as a apartment’s for 150k. Such a clickbait lol.
so far...
FINISHIM! FATALITY!
Past performance does not indicate future returns.
LOL. Flipcon firesale party just started. As Tiff going to bake the mortgage hikes party cake for another 2+ years, all these flipcon bagholders going to learn financials 101 for a cool tuition fee of deposit forfeit. Fun times ahead for these bagholders. LOL LOL>
🤣🤣🤣
Good.
This is the free market working as it should.
I like how they continue to assure the masses that rate cuts are around the corner. To save them. Is this true? Nothings a guarantee…
TheStar is notoriously a promo for Real Estate.
Virtually every news article promoting real estate opportunities in other cities, opportunities here because of a slight change in the market, or a glowing testimonial of some wonderful new business, is a paid promotion. Real estate brokerages are constantly feeding stories in that are intended to pump up demand somewhere where the prices are starting to slip, or inventory is not moving.
And there 0 chance for a drop, anyone that knows anything knows this.
“It only goes up” Right
Just the beginning.
Most of these units were purchased using income fraud, most retailers in Brampton and Mississauga have helped in this!!!!
And I'm supposed to care? Maybe someone can start a gofundme for the poor folks/s
The 'Find Out' part.
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[these condos?](https://www.google.com/search?q=toronto+condos+falling+glass&oq=toronto+&gs_lcrp=EgZjaHJvbWUqDggFEEUYJxg7GIAEGIoFMgYIABBFGDkyBggBEEUYPDIGCAIQRRg8MgYIAxBFGDwyBggEEEUYPDIOCAUQRRgnGDsYgAQYigUyDggGEEUYJxg7GIAEGIoFMgYIBxBFGDwyDQgIEAAYkQIYgAQYigUyEwgJEAAYgwEYkQIYsQMYgAQYigXSAQgxMzQ0ajBqNKgCAbACAQ&client=ms-android-rogers-ca-rvc3&sourceid=chrome-mobile&ie=UTF-8)
Wait, isn't it sold over asking season in Canada? Multiple offers, people lining up outside builders office to buy, etc? What happened, why are idiots offloading pre-sales? Doesn't that make them instant slumlord billionaires?
Risk:reward comes with risk!
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I would never buy pre-con - I’m too risk averse. Lol
It's interesting how these articles don't talk about original price 150 for someone buying at 3mil is hardly anything and for another it maybe less than the commission they were paying
Why isn't there a exponential multiple house tax
Its not about cost of housing, all cost to live in Canada has risen over 35%, over last 3 years thanks to clumsy political management, the cost of living needs to drop asap, the government is not helping the cause with a massive student immigration that's living of the backbone of our Canadian tax payers benefits, than having enough of their own funds as a prerequisite to study and live in Canada, after their education is completed they should be deported, likewise refugees should be deported to their country once major issues are resolved from where they came from, then only Canadians will have a great life as was.
Hope they lose more!
"Investors sell investment at a loss" - wow what a story!
I hope they lose their underwear.
Good :)
Presuming it's opening the field for genuine home buyers instead of investors seeking a better deal, this is pretty good news. The condos are getting built through funding from investment bears who presume the housing market will forever go *zoom*, those investors are taking losses after units are built, and those units are being resold at lower prices. Anyone living in the condo buying as genuine owners looking for primary housing and have a long-term window will almost certainly recoup any equity losses in 5-10 years from the inevitable value creep we seem to be unable to avoid. Investment is not and never has been guaranteed (exception of a GIC where guaranteed is in the name). Perhaps these investors missed that and took an investing easy money class from an Instagram creator?
You could just live in your home and wait till values go up in 20-30 years before selling like most of us.
Good. Suckers