# Is Canadian Real Estate Seriously Over-valued? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [December 14, 2013, 7:40pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320 "2013-12-14T19:40:13Z")\ **Posts on this page:** 16\ **Page:** 3
**Author:** ![Sparky812](https://avatars.discourse-cdn.com/v4/letter/s/eb9ed0/32.png) [@Sparky812](https://boards.straightdope.com/u/Sparky812)\ **Post date:** [December 17, 2013, 4:03am UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/41 "2013-12-17T04:03:38Z")
> [@Ulf\_the\_Unwashed](#): > > Obviously this is all very good news for you, and for your sake I certainly hope there isn’t a bubble. > > But what you describe is not what I would call “stable.” Why? I have a small mortgage on a house in a very desireable neighbourhood, it unlikely to lose much equity at all in a housing bubble burst, even if one were to exist. The Ottawa housing market is propped up by the federal government and several other government agencies. High tech is flourishing again and tourism traditionally brings millions to the local economy. ---
**Author:** ![Cat\_Whisperer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cat_whisperer/32/4839_2.png) [@Cat\_Whisperer](https://boards.straightdope.com/u/Cat_Whisperer)\ **Post date:** [December 17, 2013, 4:34am UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/42 "2013-12-17T04:34:02Z")
> [@Implicit](#): > > \ > More relevant might be interest rates, since the high housing prices are relatively affordable due to the current very low interest rates. If those interest rates spike, then you might see downward pressure on prices. The interest rates have been very low for a very long time - I’m curious why they haven’t started going up yet. It seems like we should be really overdue for them to go up. ---
**Author:** ![kushiel](https://avatars.discourse-cdn.com/v4/letter/k/bbce88/32.png) [@kushiel](https://boards.straightdope.com/u/kushiel)\ **Post date:** [December 17, 2013, 4:11pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/43 "2013-12-17T16:11:19Z")
It’s fucking insane. As a single Saskie, I’m never going to own property unless the bubble bursts. I got the short end of the stick by graduating in 2004 and finishing post-secondary in 2007. Of course I didn’t expect to buy anything on entry level salary, but if I had entered the job market even 3 years earlier, I could have purchased a condo or starter home that would sell now for double (or more) than what I paid for it. It’s hard not to be bitter. My family has been here for generations, we’ve loved it here even when Sask was the bastard stepchild of Canada and the butt of all the jokes. But suddenly people discover minerals in the ground and housing prices go up over 130%. None of these people who come actually want to live here, they want to make their shitloads of cash and GTFO to wherever they came from. I’m hearing about all these young guys making fortunes out here and blowing it all without thinking about the future - I’m waiting for the resources market to collapse so I can get something when all these people who didn’t think about the future can’t pay their mortgages anymore. One of the mines outside Saskatoon just announced massive layoffs this month and everyone is losing their shit over it. I picked a reliable industry and have found a skilled niche in it. I learned from my parents, who gave up farming after several generations because they couldn’t support a family on it. It’s like the story of the ugly duckling, but no one in the province is thinking about what will happen when the oil ain’t gonna pay for the beautiful swan’s plastic surgery anymore and she goes back to being ugly. ---
**Author:** ![Cognoscant](https://avatars.discourse-cdn.com/v4/letter/c/bbe5ce/32.png) [@Cognoscant](https://boards.straightdope.com/u/Cognoscant)\ **Post date:** [December 17, 2013, 4:48pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/44 "2013-12-17T16:48:09Z")
Every time I read threads like this I shake my head about two things: 1. Who the hell is ever allowed to emigrate to Canada? I’ve even been headhunted for jobs there only for the agency to say, “whoops, we can’t secure your visa, shame you were such a good candidate.” I work in a small industry and I have applied for jobs where they’ve asked for more experience in the field than any Canadian would logically have (I was working in this job when they finally got enough people in the field to have a Canadian branch of the professional organization) and all I get is a letter saying in effect, “Sorry, a Canadian applied, we can’t hire you.” If I can’t get in in a very understaffed field, I have no idea how anyone gets in for any other reason. I realize that’s off-subject a bit, but it’s relevant to the real-estate market because I have no idea how Immigration Canada even allows the population to grow by 100,000 a year. 2. I visited Toronto a while back and was absolutely floored by the cost of new-build condos downtown. We’re talking high-rise condos that _start_ at $2 million, and it’s not just a few places going up, the entire downtown looks a bit like a Lego construction set. Are there really that many folks in TO who want to plunk down millions for a high-rise that, judging by the drawings on the construction hoardings, are going to look dated in 10 years, or are these things being bought by investors or foreign interests? ---
**Author:** ![elbows](https://avatars.discourse-cdn.com/v4/letter/e/b3f665/32.png) [@elbows](https://boards.straightdope.com/u/elbows)\ **Post date:** [December 17, 2013, 5:01pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/45 "2013-12-17T17:01:25Z")
Hey, it ain’t quite as bad as all that, truly. It’s like anywhere, gradations of prices are there. I know a young couple, twenty something’s, ones carrying some serious student debt, the other works with bands. Young professionals just starting out. And while on a promising career arc, still at entry level or one step up from. Just bought a 1 bedroom plus, condo, new build, downtown (Lesliville), for under 350,000. So it can be done. I also know two couples, each starting a family, somewhat later, late thirties/early forties, well along in good careers, not top of their fields but well situated, that bought 3 story victorian semis, in the same area. It is doable. Don’t believe ALL of the hype you read. That said, there does seem to be much more, ‘over a million properties’ than the city ever held before! How can anyone afford NYC, or Tokyo? Because there are always gradations. Always. ---
**Author:** ![Cognoscant](https://avatars.discourse-cdn.com/v4/letter/c/bbe5ce/32.png) [@Cognoscant](https://boards.straightdope.com/u/Cognoscant)\ **Post date:** [December 17, 2013, 5:17pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/46 "2013-12-17T17:17:02Z")
It’s not that I don’t believe there’s no cheap (or moderately-priced) housing in Toronto; it’s that there seems to be an awful glut of mega-million dollar housing there, and I can’t figure out what or where the market is for it. Sure, Toronto is a big city, but it’s nowhere near the size of NYC or Tokyo. ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [December 17, 2013, 5:33pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/47 "2013-12-17T17:33:53Z")
> [@Cognoscant](#): > > Every time I read threads like this I shake my head about two things: > > 1. Who the hell is ever allowed to emigrate to Canada? I’ve even been headhunted for jobs there only for the agency to say, “whoops, we can’t secure your visa, shame you were such a good candidate.” I work in a small industry and I have applied for jobs where they’ve asked for more experience in the field than any Canadian would logically have (I was working in this job when they finally got enough people in the field to have a Canadian branch of the professional organization) and all I get is a letter saying in effect, “Sorry, a Canadian applied, we can’t hire you.” If I can’t get in in a very understaffed field, I have no idea how anyone gets in for any other reason. I realize that’s off-subject a bit, but it’s relevant to the real-estate market because I have no idea how Immigration Canada even allows the population to grow by 100,000 a year. > > 2. I visited Toronto a while back and was absolutely floored by the cost of new-build condos downtown. We’re talking high-rise condos that _start_ at $2 million, and it’s not just a few places going up, the entire downtown looks a bit like a Lego construction set. Are there really that many folks in TO who want to plunk down millions for a high-rise that, judging by the drawings on the construction hoardings, are going to look dated in 10 years, or are these things being bought by investors or foreign interests? It is true that there are condos springing up like mushrooms everywhere in Toronto, and I too have my doubts about how that can be sustainable. Lots of speculation that the whole thing is being funded by wealthy Chinese people finding a place to park their cash: [http://www.financialpost.com/personal-finance/mortgages/Speculators+foreign+investors+betting+Toronto+condo+market/4817203/story.html](http://www.financialpost.com/personal-finance/mortgages/Speculators+foreign+investors+betting+Toronto+condo+market/4817203/story.html) No idea if this is true or not. ---
**Author:** ![PunditLisa](https://avatars.discourse-cdn.com/v4/letter/p/4af34b/32.png) [@PunditLisa](https://boards.straightdope.com/u/PunditLisa)\ **Post date:** [December 17, 2013, 6:58pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/48 "2013-12-17T18:58:48Z")
So just last night I was watching “Love it or List It” which I believe is set in Toronto. A couple had bought what appeared to be an attached wing of a larger house. Strange, strange. Anyway, it was really tiny (1100 sq ft?) but set in a “hot” area near shops and restaurants, so it appraised at $550k before the basement reno. Wow! After all was said and done, they ended up moving to a house that was priced $600k+. And once again we wondered how people with “normal” incomes - a dancer and a teacher who moonlighted as an artist IIRC – could afford a $620k house. I mean, what qualifications does a bank require in order to underwrite a mortgage in Toronto? A pulse? ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [December 17, 2013, 7:24pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/49 "2013-12-17T19:24:38Z")
> [@PunditLisa](#): > > So just last night I was watching “Love it or List It” which I believe is set in Toronto. A couple had bought what appeared to be an attached wing of a larger house. Strange, strange. Anyway, it was really tiny (1100 sq ft?) but set in a “hot” area near shops and restaurants, so it appraised at $550k before the basement reno. Wow! > > After all was said and done, they ended up moving to a house that was priced $600k+. And once again we wondered how people with “normal” incomes - a dancer and a teacher who moonlighted as an artist IIRC – could afford a $620k house. I mean, what qualifications does a bank require in order to underwrite a mortgage in Toronto? A pulse? The mortgage rules in Canada are not noticably loose. The couple must have money from somewhere. A first time average middle class or lower buyer could not afford a $620 K house without an infusion of cash from somewhere. ---
**Author:** ![Cat\_Whisperer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cat_whisperer/32/4839_2.png) [@Cat\_Whisperer](https://boards.straightdope.com/u/Cat_Whisperer)\ **Post date:** [December 17, 2013, 7:29pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/50 "2013-12-17T19:29:11Z")
> [@PunditLisa](#): > > \ > After all was said and done, they ended up moving to a house that was priced $600k+. And once again we wondered how people with “normal” incomes - a dancer and a teacher who moonlighted as an artist IIRC – could afford a $620k house. I mean, what qualifications does a bank require in order to underwrite a mortgage in Toronto? A pulse? As far as I know, Canadian mortgaging laws are still fairly strict and always have been; you need to be well-qualified to get a mortgage, and will be turned down if your income doesn’t cut it\*. Last time we applied for a mortgage (4 1/2 years ago), we had to supply proof of income, proof of employment, a list of all of our debts, our credit rating was taken into account, etc. What _might_ be happening on these shows is a combination of things; people who are selling a house they bought some time ago and have tons of equity in it, people who do indeed have very nice, large salaries, people who have rich parents who can contribute significantly to their house purchase, etc. You can make yourself “house poor,” too - buying the absolute maximum that the bank will lend you, and leaving yourself very little wiggle room in your income. \*We also have the [Canada Mortgage and Housing Corporation](http://www.cmhc-schl.gc.ca/en/co/buho/) to supply mortgage insurance for all mortgages between 5 and 20% (you are required to purchase this insurance if your down payment is in that range). A percentage of the mortgage will be calculated and charged (added to the mortgage) as the insurance premium. ---
**Author:** ![Spoons](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spoons/32/3141_2.png) [@Spoons](https://boards.straightdope.com/u/Spoons)\ **Post date:** [December 17, 2013, 8:38pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/51 "2013-12-17T20:38:36Z")
> [@Cat\_Whisperer](#): > > What _might_ be happening on these shows is a combination of things … people who have rich parents who can contribute significantly to their house purchase, etc. Recently, in the Financial Post, there was [an interesting item](http://business.financialpost.com/2013/12/14/should-you-help-buy-your-kids-a-house/) on parents helping out in this way. Parents helping their adult children with home purchases seems to be becoming more common, though it is still far from widespread. From the link: > [@](#): > > One of the interesting factors supporting real estate growth is the role of financial support of parents and grandparents on some home purchases. The rationale for this growing practice is simple. Parents want their children to be able to get into the real estate market – and live remotely close to the type of neighbourhood they grew up in. > > With the average price of a detached house at $635,000 in greater Toronto, and $925,000 in greater Vancouver, it is easy to see a challenge for both first and second-time homebuyers. ---
**Author:** ![PunditLisa](https://avatars.discourse-cdn.com/v4/letter/p/4af34b/32.png) [@PunditLisa](https://boards.straightdope.com/u/PunditLisa)\ **Post date:** [December 17, 2013, 8:38pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/52 "2013-12-17T20:38:58Z")
> [@Malthus](#): > > The mortgage rules in Canada are not noticably loose. The couple must have money from somewhere. A first time average middle class or lower buyer could not afford a $620 K house without an infusion of cash from somewhere. Good to know. I guess this is what I get for using a reality show to gauge normalcy. ---
**Author:** ![Spoons](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spoons/32/3141_2.png) [@Spoons](https://boards.straightdope.com/u/Spoons)\ **Post date:** [December 17, 2013, 9:16pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/53 "2013-12-17T21:16:35Z")
> [@PunditLisa](#): > > Good to know. I guess this is what I get for using a reality show to gauge normalcy. Probably. I’ve seen a few of those real estate shows that are set in Toronto and two things stand out: the Toronto neighbourhoods are (as you alluded to), “hot, hip, and happenin’”; and the people aren’t your average people. You’ll see, as you did, a dancer and a teacher who moonlights as an artist, negotiate the purchase of a cool place to live in a nice part of Toronto. You won’t see a truck driver and his wife (who works on the line in a factory) struggle to afford a down payment on a small place in a less-than-desirable part of Scarborough. In short, there are many, many people in Toronto who aren’t dancers, teachers, and artists; and there are plenty of neighbourhoods unlike the ones you see on these TV shows. Perhaps what you’re seeing on these shows is more “out-of-the-ordinary” than “normal”; because “normal” doesn’t make for good TV. ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [December 17, 2013, 9:23pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/54 "2013-12-17T21:23:46Z")
> [@Spoons](#): > > Probably. I’ve seen a few of those real estate shows that are set in Toronto and two things stand out: the Toronto neighbourhoods are (as you alluded to), “hot, hip, and happenin’”; and the people aren’t your average people. You’ll see, as you did, a dancer and a teacher who moonlights as an artist, negotiate the purchase of a cool place to live in a nice part of Toronto. You won’t see a truck driver and his wife (who works on the line in a factory) struggle to afford a down payment on a small place in a less-than-desirable part of Scarborough. > > In short, there are many, many people in Toronto who aren’t dancers, teachers, and artists; and there are plenty of neighbourhoods unlike the ones you see on these TV shows. Perhaps what you’re seeing on these shows is more “out-of-the-ordinary” than “normal”; because “normal” doesn’t make for good TV. More to the point, though, is no matter how hip the couple is, a teacher and a dancer are unlikely (without parental help) to be able to afford that cool place to live in a hot neighbourhood. I was, but then, I’m a lawyer who works at a big downtown law firm. For me, buying a house (which cost arond the same amout as mentioned by **PunditLisa** - albeit nearly a decade ago - namely, $660 K) was financially difficult but doable. OTOH, my wife and I saved cash for a downpayment for a decade of renting. I simply have difficulty in believing that a teacher and a dancer make anything like enough money for that. ---
**Author:** ![Spoons](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spoons/32/3141_2.png) [@Spoons](https://boards.straightdope.com/u/Spoons)\ **Post date:** [December 17, 2013, 9:29pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/55 "2013-12-17T21:29:47Z")
> [@Malthus](#): > > More to the point, though, is no matter how hip the couple is, a teacher and a dancer are unlikely (without parental help) to be able to afford that cool place to live in a hot neighbourhood. Oh, I fully agree. They must have had help from parents or other relatives. I guess the point I was trying to make was that you cannot get an idea of what is “normal” in Torontonians or Toronto neighbourhoods from these reality TV shows. ---
**Author:** ![Daffyd](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/daffyd/32/8923_2.png) [@Daffyd](https://boards.straightdope.com/u/Daffyd)\ **Post date:** [December 17, 2013, 10:01pm UTC](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320/56 "2013-12-17T22:01:42Z")
We bought a house in downtown Toronto about 5 years ago for $500,000, put about $30,000 into it and sold it a year and a half later for over $700,000… From what I can see, if we’d kept it, comparable homes are selling for close to a million dollars… 3 years later… so in 5 years, the price has basically doubled… If that isn’t a bubble, I don’t know what is… [Previous page](https://boards.straightdope.com/t/is-canadian-real-estate-seriously-over-valued/676320.md?page=2)