Covid doesn't seem to be slowing down the real estate market, good or bad?

jmont64 · Canadian Poncho Superstar!

Covid doesn't seem to be slowing down the real estate market, good or bad?

4SPEED427 · A Poncho Legend!

So far around here we are seeing the same. I'm not sure about Winnipeg but just outside of the city where we are it's business as usual, certainly no sign of the market slumping at all.

Northwest Ontario, cottage country? My friend in Kenora who does just recreational property says prices are up 10% - 20% this year. We actually were thinking of selling ours (long story, wife's health) and had an interested party. We ended up being less than 1% apart between our bottom line price and their highest offer and we ended up keeping it. I was surprised what it was worth compared to what I always had thought it would fetch on the market. My friend was right in his estimate about the increase in cottage value. Apparently people are thinking a local cottage is a better investment than buying a house in let's say California, Arizona, Texas or Florida and they are spending their travel money close to home on cottages.

What's happening with prices in Palm Springs? Has anything changed there? I would wonder if it would be a buyers market right now?

jmont64 · Canadian Poncho Superstar!

4SPEED427 wrote:
So far around here we are seeing the same. I'm not sure about Winnipeg but just outside of the city where we are it's business as usual, certainly no sign of the market slumping at all.

Northwest Ontario, cottage country? My friend in Kenora who does just recreational property says prices are up 10% - 20% this year. We actually were thinking of selling ours (long story, wife's health) and had an interested party. We ended up being less than 1% apart between our bottom line price and their highest offer and we ended up keeping it. I was surprised what it was worth compared to what I always had thought it would fetch on the market. My friend was right in his estimate about the increase in cottage value. Apparently people are thinking a local cottage is a better investment than buying a house in let's say California, Arizona, Texas or Florida and they are spending their travel money close to home on cottages.

What's happening with prices in Palm Springs? Has anything changed there? I would wonder if it would be a buyers market right now?

Palm Springs has gone up a little each of the last couple of years but nothing stupid going on like these bidding wars. I would never want to be buying under those conditions. Hard to make a good decision with such a short time line. Key to good real estate value has always been anything that touches water is gold. That can be true but everything here is hopping.

DonSSDD · Canadian Poncho Superstar!

Real estate around here has gone crazy too, almost no listings left and property has been selling to CFAs who are buying without seeing the property themselves. Most property is selling in a day or 2, prices are up but still not as crazy as BC or southern Ontario by a long shot.

Building supplies are still way up too and good contractors are still booked for many months.

COVID seems to be motivating people to buy outside the cities.

Canadian Poncho · A Poncho Legend!

Real estate is hot here in PEI. For the first time I'm hearing about bidding wars. With our low Covid rates (so far) and somewhat slower living pace it's become quite desirable to live here. Many houses are being sold sight unseen from people out of province and even from the US.

mike667 · Poncho Master!

Im in a busy city in Ontario and sold a month ago. The markets are crazy high everywhere in Canada I think. I sold high in the busy city to try to move to a smaller city for peace and quiet. However, just to find out that those bidding wars are going for even higher In those small cities. The houses in the smaller city in were looking at were around 380k, now those houses are going for 550 plus. Im sorry, but I dont believe in overpaying and Im sure some will argue against me, but Im renting for now until prices come down to normal a bit. Ive looked at Smaller cities that were 2-3 hours away as well and houses were selling crazy. I even put in an offer for a funeral home (closed down) and lost the bid. I told my realtor after that one dont call me back until pandemic is over or prices are lower. Not interested. Ill rent for now.
I invest in the stock market, and I have not seen anything shoot straight up in pricing without having dips in between... I also dont like the fact that banks are screwing some over now. But if someone or something happens for example and are forced to sell. I and many people have paid a 30k penalty just to break the mortgage we were in to sell. Plus realtor fees is crazy amounts out the window. To sell a stock =$6.95

It cost me 30k and some other were on the news as well. Just to break the mortgage. Gone out the window. Gyash. That could have bought me a Pontiac IA crate

Its supply and demand and fomo.

-- Edited by mike667 on Monday 23rd of November 2020 07:28:51 AM

-- Edited by mike667 on Monday 23rd of November 2020 07:30:59 AM

Prefectca · Poncho Master!

House buyers have been crazy here. With people working from home, people are leaving the Toronto area. A house down from my mother in law was listed at $399,000 which I thought was a bit high for a slab on grade home (no basement) got into a bidding war and sold for $500,000!

Paul

Taylor55 · Poncho Master!

Low interest rates controlled by the federal government ( Bank of Canada ) are what is driving the housing market. With all the money the feds are spending to help the economy with the covid crisis is putting us Canadians in a very dangerous financial crisis as a country. That covid money the government is spending will have to be paid back at some point. When the interest rates start to rise because our credit rating as a country is lowered because of massive debt anyone with a large house payment will see their payments increase dramatically. When that happens housing prices will fall.

I built my first home in 1976 when interest rates were in the 12-14 % range. Within a couple of years interest rates went up to 18-20%. People were just turning their house keys into the banks and walking away and going bankrupt. it took a few years and interest rates fell to 10-12% around 1984. Todays interest rates to buy a home are only 3-4%. If rates rise only a couple of % points thousands of people will not be able to meet their payment increases. Loan money will tighten up and the banks will start foreclosing.

This is my opinion and when the crash happens more middle class become lower class and the super rich become even richer.

Al

Yukon man · Addicted!

Even up here in whitehorse real estate is through the roof. Places worth 300 are going for five, and a lot of times a bidding war. My wife and I moved into town for the kids five year's ago. We are kinda thinking about moving back out of town, there was a place that came up over priced at 529, we put a offer in at 540. The place went for 645 with 19 plus offers.

Lemans64 · Poncho Master!

Yup same out here, just up from Victoria. My friend at work listed his small house, small property. Had 1 bully bid the first day on market.

Had 10 showings the second day, and was sold in 4 day. Lower price house, build in 50's 900 sq ft. 400G, 35 over asking.

Also had a house down the road from me 2000 sq. ft on 3/4 acre sold in 1 week. 800 range.

-- Edited by Lemans64 on Monday 23rd of November 2020 09:46:42 AM

Prefectca · Poncho Master!

Taylor55 wrote:
Low interest rates controlled by the federal government ( Bank of Canada ) are what is driving the housing market. With all the money the feds are spending to help the economy with the covid crisis is putting us Canadians in a very dangerous financial crisis as a country. That covid money the government is spending will have to be paid back at some point. When the interest rates start to rise because our credit rating as a country is lowered because of massive debt anyone with a large house payment will see their payments increase dramatically. When that happens housing prices will fall.

I built my first home in 1976 when interest rates were in the 12-14 % range. Within a couple of years interest rates went up to 18-20%. People were just turning their house keys into the banks and walking away and going bankrupt. it took a few years and interest rates fell to 10-12% around 1984. Todays interest rates to buy a home are only 3-4%. If rates rise only a couple of % points thousands of people will not be able to meet their payment increases. Loan money will tighten up and the banks will start foreclosing.

This is my opinion and when the crash happens more middle class become lower class and the super rich become even richer.

Al

I remember those times. Lots of people walking away from mortgages when the interest rate doubled and their mortgage payments more than doubled. The one thing worse was a business mortgage. A friend had a business in the 70s and his business mortgage jumped from 9% to 22%. He toughed it out for a year and it went down on renewal to 18%. His business survived but his life would have been a lot easier with a lower bank payment.

Paul

Howmac · Guru

Taylor55 wrote:
Low interest rates controlled by the federal government ( Bank of Canada ) are what is driving the housing market. With all the money the feds are spending to help the economy with the covid crisis is putting us Canadians in a very dangerous financial crisis as a country. That covid money the government is spending will have to be paid back at some point. When the interest rates start to rise because our credit rating as a country is lowered because of massive debt anyone with a large house payment will see their payments increase dramatically. When that happens housing prices will fall.

I built my first home in 1976 when interest rates were in the 12-14 % range. Within a couple of years interest rates went up to 18-20%. People were just turning their house keys into the banks and walking away and going bankrupt. it took a few years and interest rates fell to 10-12% around 1984. Todays interest rates to buy a home are only 3-4%. If rates rise only a couple of % points thousands of people will not be able to meet their payment increases. Loan money will tighten up and the banks will start foreclosing.

This is my opinion and when the crash happens more middle class become lower class and the super rich become even richer.

Al

I remember those years too . In 80-81 , Canada Savings bonds were 19.5%... Mortgages higher than that . I bought my first house in 82 and got a mortgage rate of 12.5% .... I thought I won a lottery !!!! , as coworkers were paying 20% , and many were turning their keys into the bank, and walking away. I see high borrowing costs coming very soon , and many losing their homes when it is time to renew these mortgages .

1965CS · Guru

Around here, the retail stores aren't slowing down either.... it seems fewer people working translates to more people shopping, especially Costco

r66sd · Addicted!

Historically rates will go up and people will lose their houses, but I wonder if the government will allow this to happen this time around. There are so many young people hat are in debt way over their heads now.

73SC · A Poncho Legend!

I'm in Toronto but been looking to buy another recreational property about 160 to 200 Km north. I have a lot of first hand accounts but will sum it up. I've been really behind the 8 ball because people are buying within minutes of listings being made. I was out bid $29,000 on one place that never even had a sign hammered in the lot and I bid sight unseen and $20,000 over listing price. Most places sell before I can drive up to see them. Next was a real beautiful place which was listed at $360,000 and just sold in 2018 for $310,000. I asked my agent what was wrong with it. Oh the wife passed away and it was being used as a B & B so have to sell. I drove up and it was awesome, I went outside and the lot was very wet and in fact there was standing water all around and a sump pump running constantly from basement. Georgian Bay was just 50 yards in front of it. I called the Town engineer and he told me the elevation was below the water table and he knew the property very well. I passed but it sold to someone from Toronto for $120,000 over asking at $480,000 with zero conditions. It's crazy out there. So here in Ontario, City dwellers are looking to buy property north of Toronto since the Toronto market is out of sight and reach for most people. Add in money is next to free to borrow and there you have it.

jmont64 · Canadian Poncho Superstar!

Personally I can see rates going up some but I don't think they will ever ever do like in the 80s with the double digit rates. I was lucky through that as I had a 5 year mortgage term that basically ran through the highest rates and I think the highest I paid was 12%. I'm hoping that they learned from that it did no good for anyone except the conservative investors who were getting 19% on their Canada Savings bonds. For people to loose their homes and their businesses just so banks and the conservative investors to make huge money doesn't make any sense. Play around with a percent here or there but nothing crazy like 8-10 percent. I noticed a post above where the choice is made to drop out of the market and count on the stock market. I like dirt and buildings. Stock market has done alright for me but most of my investments have been in real estate and even when things drop some I can still have something to look at and touch and work with plus a rental house is just like leverage investing without the risk in my opinion. People always will need a place to live.

65Camino · Uber Guru

Yes, people will always need a place to live. That contributes to the demand side. In bigger cities the population growth is fueling the demand. Rates are contributing but very little. But with a temporary halt of new Canadians there may be a small freeze in prices. Don't ever see a bubble bursting happening. In fact one has been about to pop for maybe the last 10 years. I'm not holding my breath.
If you want a deal look into places with a declining population. Less demand.

mike667 · Poncho Master!

I still think its overvalued. And these are the questions that I think to myself...

why did they reduce the stress test on individuals and first time buyers? Meaning most will probably max out that amount and want more house. Then if and when rates rise. Time to pay more.

How are people spending more if there are lots of job Lay offs and places closing during this time?

how many deferred their mortgage payments for the 3-6 months? Whether or not COVID has affected their jobs,life, etc.

How many have took advantage of cerb?

How many work from home, and decided to move from the big city to a smaller city because they could work from home? what happens when they get called back to workplace? Im sure lots will love the drive.

if the prices remained the same or dropped a little and someone newer is forced to sell? How many will be upside down on that mortgage?

I agree with what Taylor55 wrote In his post.
Also, how does something (investment) shoot straight up with no dip or pullback? In the longer term, yes, sure Im bullish on real estate. But short to mid term, just makes me wonder.

(just a chart I found online awhile back)

-- Edited by mike667 on Monday 23rd of November 2020 03:29:43 PM

HK1837 · Addicted!

In Australia right now in some areas not too far from the major cities (Melbourne, Sydney, Brisbane, Adelaide and Perth) if you sign up to a 3 year fixed interest loan (1.xx%) on a unit you will save a huge amount over the cost of renting. People are buying right now, and it is taking rental stock off the market. Like in Canada properties are being snapped up quickly. On top of this we have the same phenomena of cashed up city dwellers getting out to regional areas pushing up prices in those regional areas. This whole Covid-19 thing has really pushed us 20 years into the future where people can now work from home. I'd sure hate to own a multi-story office building in a big city, many are empty and may never fill again.

65Camino · Uber Guru

Im curious what you think this bubble will do ?

DonSSDD · Canadian Poncho Superstar!

I figured wed have a big recession with the Covid shutdown and layoffs but the market drop in March lasted a week or 2. I also have never heard of anything going up without a pause or drop at some point. All these government programs have worked to keep the economy going, so far, but will it keep going enough to last until Covid is behind us?

I dont worry so much about our government debt, I think its commercial and consumer debt thats going to eventually back up. Right now, the free government money has worked in the short term, but it has to run out. Lots of people are living off debt and the taxes were not deducted from the government assistance , that bill comes due in April. When true unemployment happens, things will change quick. Most of the lenders and borrowers today have not lived through the bad times of 1981, 1991, the tech bubble in the late 90s, and the 2008 crash. And Canada was not much affected by 2008, not like the real estate crash in the USA and with bank failures and humongous bailouts.

Like today, all of those people who were anti paying taxes were the first with their hands out when their businesses failed in 2008. If we have another recession, itll be a big one.

-- Edited by DonSSDD on Monday 23rd of November 2020 09:26:58 PM

mike667 · Poncho Master!

DonSSDD wrote:
I figured wed have a big recession with the Covid shutdown and layoffs but the market drop in March lasted a week or 2. I also have never heard of anything going up without a pause or drop at some point. All these government programs have worked to keep the economy going, so far, but will it keep going enough to last until Covid is behind us?

I dont worry so much about our government debt, I think its commercial and consumer debt thats going to eventually back up. Right now, the free government money has worked in the short term, but it has to run out. Lots of people are living off debt and the taxes were not deducted from the government assistance , that bill comes due in April. When true unemployment happens, things will change quick. Most of the lenders and borrowers today have not lived through the bad times of 1981, 1991, the tech bubble in the late 90s, and the 2008 crash. And Canada was not much affected by 2008, not like the real estate crash in the USA and with bank failures and humongous bailouts.

Like today, all of those people who were anti paying taxes were the first with their hands out when their businesses failed in 2008. If we have another recession, itll be a big one.

-- Edited by DonSSDD on Monday 23rd of November 2020 09:26:58 PM

Well said and thats what Im thinking too.

Pontiacanada · A Poncho Legend!

Canadian Poncho wrote:
Real estate is hot here in PEI. For the first time I'm hearing about bidding wars. With our low Covid rates (so far) and somewhat slower living pace it's become quite desirable to live here. Many houses are being sold sight unseen from people out of province and even from the US.

Yep. Prices and demand/competition have easily doubled since I've moved here (14 years ago).

Pontiacanada · A Poncho Legend!

Also, there is a lot of new homes going up or being renoed just in my village and the price of building materials has doubled; if you can get certain building materials in a timely manner.

see2xu · Addicted!

Just sold our place in Florida for a good buck. Folks seem to be fleeing the densely populated urban centres, for places where it's easier to self-isolate. We're gonna buy back the home my grandparents occupied from 1920-1968 in Goderich, ON, and prices there are inflating like crazy. Meanwhile, rental condos in the Big Smoke are going begging for tenants.

Asset inflation - real estate, the stock markets, art, collector cars, precious metals - are an inevitable consequence of excessive liquidity in the system. Stay tuned to the Toronto Star for more updates on how this widens the gap between those who have investible assets, and those who don't.