Toronto Housing Prices Collapse - Down 15% from Last Year

Paraphrasing Warren Buffet: sell greed and buy fear.

if this is really true, then I am ready to buy a few for investment purposes.. but the reality is a one bedroom at college park is still going for 400k and has multiple offers..

Seriously...for 375K you can expect something small, outside of downtown and most likely a "charming fixer-upper." I'd love to know what the house in the photo above would go for...I'm guessing 500,000-600,000K.

nice guess jen, it's listed at $549k on their website...3br at pape & dundas

i hope this + the oversupply of condos makes it easier to get a place in a few years

i hope people realize these numbers are meaningless.. when was the last time you heard somebody told you they bought a place 15% lower than the listed price or 15% lower than what they were planning to spend? If the property is heavily discounted, there is always something wrong with it..i am prepared to buy ten 1 bedroom for under 200k in college park, if u can find me some

Hey 'jack', keep drinking the cool-aid. Me, I'll wait a year or two to enter the market. It's not like we haven't seen this movie before.

actually, i have not seen this before.... the morrans running the banks created this recession, and we bailed them out with our tax money, and they screw us more with higher mortgage rate, even the prime rate is going down

F Warren Buffett. Easy to make money when him and other asset managers in on countless IPOs/startups not available to the public in which they are already in the black from the getgo.

@jack

My brother just bought a spectacular place below asking price. Having seen this happen makes me a believer.

@jerrold
how do you define spectacular?

It's a beautifu; place, and it was scooped at several thousand below asking. Probably 10-15%.

I had $110,000 for a 2 bedroom condo, fix for 6 years with 4.75%. (about 900 square feet)

I got 2 overall. If it falls for about 20 to 35% around GTA, I'll get another one. I'm preparing for a downpayment of 20% for a $350,000.

I'm in a 'Expansion mode' in 2009. Stocks is a good buy too! A lot of them are bargain.

Actually jack, we HAVE seen this before. It was called the 90s. That's pretty much why people who actually knew what they were doing, were discussing the dangers of a housing bubble in 2005.

The big problem in the US wasn't caused by Bankers. It was rather the mortgage brokers. And unless you're from outside of Canada "we" haven't bailed out anyone. Trotskyists who never have and never will understand anything financial need to go back to the Big Carrot and stop interrupting the adults.

Jack, I don't think YOUR tax money was used to bail out US banks. Was it?

This recession -- if we can call it that yet, was not created by the "morrans running the banks", it was ultimately created by the morons running the central banks, who were too agressive with cheapening money, as well as the regulators in the US (and elsewhere) who allowed financial esoterica to hit the mainstream unchecked.

Real estate bubble? Not really. It was a credit bubble, and you can't deny that it's bursting. Housing will just return to more of a long-term norm of 3x earnings.

Any way you slice it prices are falling here in Toronto as they should due to the massive world recession brought on my excess speculation and easy credit. Before the crisis has passed we will surely see 30% drops from the highs set in the Spring of 2008 and a frozen market for transactions. They are already down 20% or more and inventory is the highest ever recorded. In short, houses and condos in Toronto are sitting, at every price level, and nothing will sell until the sellers accept their property is worth what it was around the beginning of this decade.

New condo projects will fold, many existing condo projects will turn into stumps, and many, many retail stores will close amidst all the job losses.

The only solution to this crisis is to rent for the next 3-4 years until the market finds a bottom.

Condo prices, particularly in my area, have remained consistently high and have really only hit a plateau with the recent market issues.

I think I sense a little wishful thinking on the part of some renters/hopeful-owners. Housing transactions have slowed down, and in many areas, bidding wars have become a less frequent occurence. However, don't expect to get a bargain for even a modest semi anywhere in the core or any established/sought-after nabe. Sellers can just hold on until the market picks up again. Remember - other than with condos, land is limited and always going to increase in value in good neighbourhoods. I bought a house a year ago in Hillcrest - are you going to suggest my house is worth 15% less now?

opensource, your optimism in the face of a global real estate bust is impressive!

Ratpick: oh, yeah - here comes the fire sale.

*Cough* Told you so.

http://www.greaterfool.ca/2008/10/18/sol-in-the-gta/

"I bought a house a year ago in Hillcrest - are you going to suggest my house is worth 15% less now?"

In the words of that sexy (but scary) MILF- 'You betcha!'

Deal with it friend! Things could be worse than a paper loss. The reality is lower home prices.

Average house prices mean nothing. Reality is that condo prices are falling faster than houses. (We built the most condos per year for the last 5 years in North America). Transactions are lower than last year but still on pace for the second best volume in TO ever. Prices are down for houses by 5% and property is sitting longer if it is not in great shape. Number of places available was down 3% this month and inventory looks to have peaked.

We will see a softening of prices but it won't be as bad as the US for several reasons (i) we did not see the run up the rest of the world did...Toronto increased by about 70%, USA on average 150%, UK 350%, (ii) financing was less available than in other countries (thanks to our oligopolistic banks) and (iii) yield on most properties are in line with risk (most places can be rented out for 6% yield...which is in line with historical premiums to amount earned on deposits)...

So if you see that place you want try to low ball it but don't wait for a 40% decline this time.....

There's a lot of renters in Toronto who have probably been on the fence about buying at some point. I found a chart that shows when it might be better to rent than buy. It's in $US but it still works the same: http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?ref=patrick.net#

please don't ignore location location location - housing in prime areas with top amenities has only leveled off. If you bought intelligently (ie: good area, good builder, reasonable bid) then you're probably as happy as I am right now with the markets.

@ O. Terry, dunno about the US but anyone who thinks it's cheaper to rent than own right now should line up with my tenants to help pay my mortgage off in rental income, thank you :)

@Corina

Cut the broker crap babe! You are full of s**t! Drive through the Annex, Forest Hill, Rosedale, Lawrence Park, Hoggs Hollow, etc. and all you see are FOR SALE signs!

Nothing is selling- particularly the high end stuff. I've seen the same Annex listings going on 3 months now. Probably worth 30% less than the sellers are asking. Maybe if straw brained agents like you thought less and ignored your natural proclivity to lie then transactions might speed up a bit.

Don't give me your elitist landlord crap either sunshine- I am 100% positive than I own more property than you do but I advise anyone who listens of the financially superior benefits of renting in this sinking market. I've been telling people that for years and they have clearly saved a bundle.

This is just the beginning. By Spring you'll see 30% declines- condos even more.

I think 30% is conservative. Once the nice weather returns people will not want to live in houses and condos anymore--the entire market will collapse and never recover.

"It's a beautifu; place, and it was scooped at several thousand below asking. Probably 10-15%."

urgh.. could you explain to me your maths... this must not be a very high demand location.. or the seller inflated the price to make you feel better

it is never cheaper to rent than to own..when you rent, you don't build equity, period.. when you sell your primary residence, you don't pay any tax.. whereas the same money you keep in the bank, you have to pay tax on interest.. when you have built up enough equity, you get a line of credit at prime + rate, not 24% like your credit card...then the interest you pay when you leverage your line of credit to invest is tax deductible.. use that to reduce your taxable income

jack, you're not thinking straight.

"When you've built up enough equity" is a very presumtuous statement at at time when so many are headed underwater.

Also, don't forget the tax-free savings accounts that are about to become available. Or RRSPs.

Renting is NOT throwing money away. Not by any stretch. It just looked like it during the past 8 years of housing hyperinflation.

I rent a condo for $1200.

If I am to buy that same place(270K)

I will be spending more than $2500 in mortgage, maint, taxes, not to forget I would yank about 70k out of my savings for a downpayment and other RE transaction expenses.

I prefer to throw the $1300+ difference in the bank.