That's only going to help the landlords. lol. I just found a new tenant and I raised the rental price by $500 a month from the previous tenant, because of so many desperate people who are looking to rent. The new tenant is paying $30,000 a year in rent. None of that is building equity. All of it goes into the landlord's pocket.
Prices might go up with all this scarcity. Better buy!... every 4th house in my subdivision has grass uncut for months (new subdivision) empty homes owned by super intelligent investors. Lets see how long they can hold on.
So in summary: Sellers don't want to sell , buyers are low balling and banks are getting tougher on appraisal values. This equation supports the theory of lots more room to drop.
Good analysis. With respect to panic sellers, part of the other side of the equation is panic buyers (those that had mortgage rate holds that are/were expiring and bought to keep their rate). What I believe this means, is that the next "wave" of pricing, may decline significantly, since mortgages at the new / higher rate will bring down affordability. The reality - the BOC overnight rate is really not that "high". It's just not buried at almost zero (which was mainly done to stimulate the economy during the pandemic - via 3 rate drops in March of 2020). I'm no economist, but I believe this is just the beginning.
Sessa, I understand what you are talking about, 2 months ago in my area we had 114 listings and today we have 73 and from there you have condos, towns, semi's that don't interest me so that eliminates 60 properties and then you look at layout, rooms, open concept basement finished and you are left with maybe 2 and most buyers are thinking the same thing
The average income for a family in the GTA is roughly $76,000 a year. We work on that people can afford around 4 x income. That’s the model that has been around in Canada for the past century. Anything below 4 x income is considered under valued anything above its over valued or deviates from traditional metrics. Everything above trend is fluff, exuberance use any term you want. So in the GTA the average house using traditional affordability metrics should be around 300k. So when houses are on average over 800k. We have 500k of fluff or above trend prices. To say that the GTA is over valued is an understatement. Why do houses that look like mansions sell for 125k in Mexico? That’s because the people from that area can only afford to pay 125k. Income to price ratios never lie. Reversion to the long term trend and price metrics ALWAYS occurs!!!! 100% of the time. When this reversion happens is anyone’s guess. I thought it was crazy 10 years ago. Canadians are extremely resourceful in leveraging themselves into property they really can not afford. If we put as much effort into leveraging as we did creating new businesses and products and services we would all be that much better off. Remember when we have extreme fluff we will have extreme reversion. Folks across the planet this happens 100% of the time. Is this Canada’s time? Anyone’s guess. I think it is but I have been wrong for the better part of a decade so don’t ask me. The question remains. You feeling lucky Punk!!!
@@markz1013 every area is different. You have to look at the specific region for the average incomes for that area. New York will differ from borough to borough. 4x income is pretty universal through out North America. In Canada we have had so much extreme speculative demand the real fundamentals have been suppressed for almost an eternity. Bubbles do not act to fundamentals that’s why they are bubbles. Something always comes along as pops them. At 300k that would be about trend. If you can actually imagine it but as bubbles pop the market more than likely will go past trend. I know it would be absolutely crazy to think average houses in the GTA could go below 300k but this can and will happen. People will have no idea.
I was in the process of selling my condo.. and I got a low ball offer of 10% off my listed price. I decided to turn down the offer and list it for rent. Guess what? The unit rented out within 3 days for 2100. Much more than I expected. So owners if you have problem selling your units now, just put it out for rent . Rental income is super high now.. take advantage of it. Don't sell into the low-ball buyers.
I don’t think this is an accurate take on the market. You are not taking into consideration the distress sales that are inevitably coming as people who took variable..or 2-3 year mortgages are starting to come in for renewals. If you remember, the guidance from Bank of Canada only 3 years ago, was that there was no foreseeable pressure for mortgages to go up. We are already starting to see a softening in the job market..even in the tech sector…and no foreign investment is coming. You seem to feel that sellers will have a choice to sit on the sidelines…but how does that work when their 2.1% mortgage payments of $2200/month go to $3800 / month under the latest new rates? How long will they be able to afford to sit..while paying $1600 more per month??
The real estate industry lobbied hard to give themselves sole discretion over real estate sales data, because screw an efficient market that supports fairness for both buyers and sellers.
I noticed a concerted effort of various real estate related You tubes suggesting that the price drop this round is done. The fact the matter is that there is no way a 3%ish bank rate can arrest an 8+% runaway inflation. Rates will keep on climbing. With disappearing pre-approved low rate, potential buyers will disappear faster than those listing cancellations. Real estate transaction number will fall further taking the price along with it. I belive that this will be a much more severe correction than 1989, simply because the debt level is that much higher.
This message is for potential buyers. If you don't panic, and not putting any offer for 3 months, all those people will bring back theirs home to sell it for even less. They enjoyed during the last 2 years, this is our time to enjoy and we will. I will buy nothing if I don't see a minimum 40% off in my city.
Tell me something! this guy that got 8 offers, first were any of the offers at or above asking price? and if so can he refuse to sell and change his mind? is this legal?
Hi Rick, Some were under ask and some were over ask. However, none were enough for the seller to want to accept. And yes, this is legal. The list price is 'a guide' and 'invitation' for offers, not a 'I have to sell if I get this price'. If a buyer may negotiate down, why can't a seller negotiate up? This drives everyone crazy but it's how it is.
Prices only coming down for cash buyer, for people purchasing on mortgages will pay almost same amount in interest and principal what they were paying 4 Months ago after 25 years on current mortgage rates so virtually there is no price reduction for them if they look on eventually how much they will pay in the end , so there is a very big room for price to go down further
@@richardli5530 I would not go for any mortgage, I am a cash buyer not going to waste even a single penny on interest and help banking cartel to grow more and becoming a bigger monster then what they are now
Yes and with the rentals being so great why would you sell a property for cheap, it is a no brainer, a property is one of the best ways to make a profit. I do short-term rentals and furnished rentals and it is booming.
Hey Santo, same critique as last video - we have incurred a 400k drop from March to July, another 400k from this point will bring us to 2018 prices. Not too crazy when you think about it
I somewhat agree Alessandro. My reservations stem from us have a different mix of sellers and buyers now vs Mar, Apr & May. And the market conditions are also different now.
It does not make sense to me to look at such noisy graphs when the samples are so small. It would be better to look at samples for last 4 weeks to remove all the noise from outliers.
Mentioning 8 offers isn't enough. Ask if those 8 offers would be low (actually correct price) and that's why the seller choose not to get it and those sellers are wasting their time and others. They wish they get a certain price, I wish it rains gold doesn't means everyone's wishes get fulfilled. And if someone does give that seller close to what he wanted doesn't mean other jump off the cliff too. That buyers may very well be someone who seller knows and they're doing this to affect market. Sellers needs to stick with what they want at what price. Don't downgrade your house choice but get that kind of house at low price.
so what you are saying is that house price appreciation should not happen and screw the people in the last 2 years, I would like to have the same price as my dad bought but those prices are never coming back.
@@sukhjitsingh8269 so with stocks I wish they never go down but can it happen? housing isn't an immuned, invincible and a guaranteed asset like many falsely believe and they will see it this time.
My friend said I was crazy to buy in 2015 because he wanted 2007 prices and he continued to rent waited too long and is now priced out of the market wishing now that he bought in 2015 and helping someone else pay off the mortgage.
@@sukhjitsingh8269 I agree with you. I have Owned 3 homes so I know about that. That scenario is entirely different from this. Right now it's better to wait as prices are going down. You don't want ro be shot on money and loose your deposits. If the banks appraise and it does not hold you are screwed
Volume drop of 75%. Price drop of 25%.. Lot of realtors going to feel the squeeze in the pocketbook.Going to be a lot of people leaving the industry. Hope you're doing well Sannto
Hi Eastern, Yes, lots of Realtors and any industry directly connected to buying & selling real estate is going to feel it. Many will leave the industry.
Current home prices with inflationary pressure is simply not sustainable and does not make sense to invest even from long term perspective. Market needs to correct at least 20% more.
As usual great presentation. One thing that isn’t mentioned is housing % of GDP. If housing activity does actually slow down for any reason. Sellers taking houses off the market so houses become scarcer with too many buyers chasing to few homes worked to increase prices during the pandemic simply for no other reason than interest rates dropped to zero and governments giving out free money. That’s all over now. Rates are back up and headed higher and if you don’t work you have no income, things back to normal. Back to GDP, housing contributed about 10% of GDP during the pandemic which was over 50% greater than the percentage before the Pandemic at 7%. That’s a huge number which is almost double that of the US at the peak of their housing in 2006. The only time that housing as a percentage of GDP in Canada was 1989 just before the 1990 housing crash that lasted almost 10 years even though rates were dropped 5% in that period. Rates today aren’t even 3% and we all know what happens when rates are dropped to zero. Inflation. Many of these subscribers have never experienced a recession which is technically 2 concurrent drops in GDP. With housing such a large percentage of GDP any slowdown will have serious repercussions for GDP. If you can’t afford to buy a house you can’t afford to buy a house and it does not matter how few are available. Frankly at these mortgage rates few can afford to. Well I guess if you get a 50 year mortgage you might be able to. These are called multigenerational mortgages in Japan which simply means your kids will be paying off the mortgage. These are historical facts. And no this time is not different.
I think sellers are hoping someone from China comes in and saves them. Maybe immigration will keep propping up the market, or maybe this is finally the correction and everyone refusing to sell is about to become a massive bag holder for years to come.
Thanks for the update
No problem 👍
FOR ALL BUYERS, Do Not buy now your house, let the prices drop more!!
That's only going to help the landlords. lol. I just found a new tenant and I raised the rental price by $500 a month from the previous tenant, because of so many desperate people who are looking to rent. The new tenant is paying $30,000 a year in rent. None of that is building equity. All of it goes into the landlord's pocket.
Silly rabbit. Tricks are for kids. Buy if u can afford to.. thats all folkes
Prices go up= Problem(s)
Prices go down= Problem(s)
Solution: Power off laptop and close lid
🙏
I got my pop corn ready to watch the effect of the upcoming trigger rate tsunami.
@@richardli5530 😘
Investors need to kicked out of the market
How do we do that George?
Hey, there is definitely room to come down to pre pandemic levels, at least I hope so :)
Thank you for all the hard work that you do.
Prices might go up with all this scarcity. Better buy!... every 4th house in my subdivision has grass uncut for months (new subdivision) empty homes owned by super intelligent investors. Lets see how long they can hold on.
where is that?
@@sukhjitsingh8269 halton region
I don't see in the current rising interest rate climate how scarcity would change anything in terms of how much a Buyer is qualified to purchase?
House prices are way to high Rates need to go up more and house prices need to come down
So in summary: Sellers don't want to sell , buyers are low balling and banks are getting tougher on appraisal values. This equation supports the theory of lots more room to drop.
Hi Aaron, sounds like you just described the perfect storm.
Good analysis. With respect to panic sellers, part of the other side of the equation is panic buyers (those that had mortgage rate holds that are/were expiring and bought to keep their rate). What I believe this means, is that the next "wave" of pricing, may decline significantly, since mortgages at the new / higher rate will bring down affordability. The reality - the BOC overnight rate is really not that "high". It's just not buried at almost zero (which was mainly done to stimulate the economy during the pandemic - via 3 rate drops in March of 2020). I'm no economist, but I believe this is just the beginning.
Sessa, I understand what you are talking about, 2 months ago in my area we had 114 listings and today we have 73 and from there you have condos, towns, semi's that don't interest me so that eliminates 60 properties and then you look at layout, rooms, open concept basement finished and you are left with maybe 2 and most buyers are thinking the same thing
Yup, that's how it is in many parts of the GTA.
Thanks for your comment Sukhjit.
The average income for a family in the GTA is roughly $76,000 a year. We work on that people can afford around 4 x income. That’s the model that has been around in Canada for the past century. Anything below 4 x income is considered under valued anything above its over valued or deviates from traditional metrics. Everything above trend is fluff, exuberance use any term you want. So in the GTA the average house using traditional affordability metrics should be around 300k. So when houses are on average over 800k. We have 500k of fluff or above trend prices. To say that the GTA is over valued is an understatement.
Why do houses that look like mansions sell for 125k in Mexico? That’s because the people from that area can only afford to pay 125k. Income to price ratios never lie. Reversion to the long term trend and price metrics ALWAYS occurs!!!! 100% of the time.
When this reversion happens is anyone’s guess. I thought it was crazy 10 years ago. Canadians are extremely resourceful in leveraging themselves into property they really can not afford. If we put as much effort into leveraging as we did creating new businesses and products and services we would all be that much better off.
Remember when we have extreme fluff we will have extreme reversion.
Folks across the planet this happens 100% of the time. Is this Canada’s time? Anyone’s guess. I think it is but I have been wrong for the better part of a decade so don’t ask me. The question remains.
You feeling lucky Punk!!!
Good info. Would you know the US income to price ratio?
@@markz1013 every area is different. You have to look at the specific region for the average incomes for that area. New York will differ from borough to borough. 4x income is pretty universal through out North America. In Canada we have had so much extreme speculative demand the real fundamentals have been suppressed for almost an eternity. Bubbles do not act to fundamentals that’s why they are bubbles. Something always comes along as pops them. At 300k that would be about trend. If you can actually imagine it but as bubbles pop the market more than likely will go past trend. I know it would be absolutely crazy to think average houses in the GTA could go below 300k but this can and will happen. People will have no idea.
Well put 👍🏼
Have u shared ur analysis with Blackstone and/or BlackRock?😂
@@buggeroo22 that might be a good idea.
I was in the process of selling my condo.. and I got a low ball offer of 10% off my listed price. I decided to turn down the offer and list it for rent. Guess what? The unit rented out within 3 days for 2100. Much more than I expected. So owners if you have problem selling your units now, just put it out for rent . Rental income is super high now.. take advantage of it. Don't sell into the low-ball buyers.
Glad it worked out for you Ph Pi. Thanks for sharing.
I don’t think this is an accurate take on the market. You are not taking into consideration the distress sales that are inevitably coming as people who took variable..or 2-3 year mortgages are starting to come in for renewals. If you remember, the guidance from Bank of Canada only 3 years ago, was that there was no foreseeable pressure for mortgages to go up. We are already starting to see a softening in the job market..even in the tech sector…and no foreign investment is coming. You seem to feel that sellers will have a choice to sit on the sidelines…but how does that work when their 2.1% mortgage payments of $2200/month go to $3800 / month under the latest new rates? How long will they be able to afford to sit..while paying $1600 more per month??
$2.6 million 2500 sq ft condo ?? why they hiding the price & tax history on all real estate websites ?
The real estate industry lobbied hard to give themselves sole discretion over real estate sales data, because screw an efficient market that supports fairness for both buyers and sellers.
@@alessandroc47 That is totally unfair and non transparent market in Canada. May be one day it will be changed similar to Zillow in USA.
I noticed a concerted effort of various real estate related You tubes suggesting that the price drop this round is done. The fact the matter is that there is no way a 3%ish bank rate can arrest an 8+% runaway inflation. Rates will keep on climbing. With disappearing pre-approved low rate, potential buyers will disappear faster than those listing cancellations. Real estate transaction number will fall further taking the price along with it. I belive that this will be a much more severe correction than 1989, simply because the debt level is that much higher.
This message is for potential buyers. If you don't panic, and not putting any offer for 3 months, all those people will bring back theirs home to sell it for even less. They enjoyed during the last 2 years, this is our time to enjoy and we will. I will buy nothing if I don't see a minimum 40% off in my city.
good luck buddy. Get ready to pay 20% higher prices next year!
@@jamilhussain7850 No one know what is going to happen. I bet you don't!
Tell me something! this guy that got 8 offers, first were any of the offers at or above asking price? and if so can he refuse to sell and change his mind? is this legal?
Hi Rick,
Some were under ask and some were over ask. However, none were enough for the seller to want to accept.
And yes, this is legal. The list price is 'a guide' and 'invitation' for offers, not a 'I have to sell if I get this price'.
If a buyer may negotiate down, why can't a seller negotiate up?
This drives everyone crazy but it's how it is.
Prices only coming down for cash buyer, for people purchasing on mortgages will pay almost same amount in interest and principal what they were paying 4
Months ago after 25 years on current mortgage rates so virtually there is no price reduction for them if they look on eventually how much they will pay in the end , so there is a very big room for price to go down further
Would you rather have a 1 million dollar mortgage at 2% or 200k mortgage at 10%? I would take a 200k mortgage even at 12%.
@@richardli5530 I would not go for any mortgage, I am a cash buyer not going to waste even a single penny on interest and help banking cartel to grow more and becoming a bigger monster then what they are now
@@richardli5530 I would take both as long as I can make money on them
@@richardli5530 10-12% you are in the 90's
Yes and with the rentals being so great why would you sell a property for cheap, it is a no brainer, a property is one of the best ways to make a profit. I do short-term rentals and furnished rentals and it is booming.
Hey Santo, same critique as last video - we have incurred a 400k drop from March to July, another 400k from this point will bring us to 2018 prices. Not too crazy when you think about it
I somewhat agree Alessandro. My reservations stem from us have a different mix of sellers and buyers now vs Mar, Apr & May. And the market conditions are also different now.
In the US 71% of all households make 40k total income per yr
In canada house prices are insane!
Hey, just wanted to say you guys do an excellent job in these videos. Really appreciate the insights into the market. Great job.
Thank you so much. We really appreciate your comment and you watching!
It does not make sense to me to look at such noisy graphs when the samples are so small. It would be better to look at samples for last 4 weeks to remove all the noise from outliers.
Mentioning 8 offers isn't enough. Ask if those 8 offers would be low (actually correct price) and that's why the seller choose not to get it and those sellers are wasting their time and others.
They wish they get a certain price, I wish it rains gold doesn't means everyone's wishes get fulfilled. And if someone does give that seller close to what he wanted doesn't mean other jump off the cliff too. That buyers may very well be someone who seller knows and they're doing this to affect market. Sellers needs to stick with what they want at what price. Don't downgrade your house choice but get that kind of house at low price.
so what you are saying is that house price appreciation should not happen and screw the people in the last 2 years, I would like to have the same price as my dad bought but those prices are never coming back.
@@sukhjitsingh8269 so with stocks I wish they never go down but can it happen? housing isn't an immuned, invincible and a guaranteed asset like many falsely believe and they will see it this time.
How do you know lots of the panic buyers are out of the way? I think this is just the beginning
My friend said I was crazy to buy in 2015 because he wanted 2007 prices and he continued to rent waited too long and is now priced out of the market wishing now that he bought in 2015 and helping someone else pay off the mortgage.
@@sukhjitsingh8269 I agree with you. I have Owned 3 homes so I know about that. That scenario is entirely different from this. Right now it's better to wait as prices are going down. You don't want ro be shot on money and loose your deposits. If the banks appraise and it does not hold you are screwed
@@EA-xd1jr yeah, you are right!
41% of properties is in investor hands, they are holding the heaviest bag. They don't want to be a situation where they have to buy high and sell low!
PPL better listen when D. Trent speaks, he ate many more cookies than most of you have.
Indiana has the best rentals in 🇺🇸. I’m averaging >$2K rent per $100K.
Problems have been brewing in these places for over a decade now 😂. We’re just finally experiencing the reality of the situation 😂.
Volume drop of 75%. Price drop of 25%.. Lot of realtors going to feel the squeeze in the pocketbook.Going to be a lot of people leaving the industry. Hope you're doing well Sannto
Hi Eastern, Yes, lots of Realtors and any industry directly connected to buying & selling real estate is going to feel it. Many will leave the industry.
I was afraid of this...They want us to be stuck in our homes and pay the increasing interest rates , no flipping and moving every few years
Current home prices with inflationary pressure is simply not sustainable and does not make sense to invest even from long term perspective. Market needs to correct at least 20% more.
lol I like your confidence. Its only going to go up. Keep that confidence though!!
Come on..who are we kidding? Prices just need to stabilize for a 2-3 weeks and buyers will pile back into the market again
8 offers and not happy? Home listings should include what auto listings had all this time - "no low Ballers"
As usual great presentation. One thing that isn’t mentioned is housing % of GDP. If housing activity does actually slow down for any reason. Sellers taking houses off the market so houses become scarcer with too many buyers chasing to few homes worked to increase prices during the pandemic simply for no other reason than interest rates dropped to zero and governments giving out free money. That’s all over now. Rates are back up and headed higher and if you don’t work you have no income, things back to normal. Back to GDP, housing contributed about 10% of GDP during the pandemic which was over 50% greater than the percentage before the Pandemic at 7%. That’s a huge number which is almost double that of the US at the peak of their housing in 2006. The only time that housing as a percentage of GDP in Canada was 1989 just before the 1990 housing crash that lasted almost 10 years even though rates were dropped 5% in that period. Rates today aren’t even 3% and we all know what happens when rates are dropped to zero. Inflation. Many of these subscribers have never experienced a recession which is technically 2 concurrent drops in GDP. With housing such a large percentage of GDP any slowdown will have serious repercussions for GDP. If you can’t afford to buy a house you can’t afford to buy a house and it does not matter how few are available. Frankly at these mortgage rates few can afford to. Well I guess if you get a 50 year mortgage you might be able to. These are called multigenerational mortgages in Japan which simply means your kids will be paying off the mortgage. These are historical facts. And no this time is not different.
I think sellers are hoping someone from China comes in and saves them.
Maybe immigration will keep propping up the market, or maybe this is finally the correction and everyone refusing to sell is about to become a massive bag holder for years to come.
Most of the sellers are in a good position to 'hold the bag' and have no problem waiting out the market.