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TREB stats for May
Toronto real estate market continues downward trend:
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June 1, 2008 in Toronto Real Estate Update | Permalink
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Posted by: ClearlyPro | Jul 7, 2009 6:11:10 PM
Toronto Bear, I made my "wow" statement about averages after your numbers that threw me, which is my point.
There are many decent one bedroom apartments in downtown Toronto within $25k of $260k, so it's hardly hand picked. My sample search was for condominiums in the core between $225 and $275k, and there are 144 matches, the majority of which are one bedroom. Any of these units would rent for between $1250 - $1600.
Yes, I would expect once every ten or 15 years repairs or required updates up to $6000, but only hit the high end if someone goes for a high end kitchen or flooring. But anything outside the walls is the building's responsibility, and that's taken care of with monthly fees and the reserve fund. Your girlfriend's building sounds unusual. A cabinet door that nearly fell off, well, what's that going to cost? ;)
Discussing the ROI of upgrades is another matter altogether. My girlfriend tried to talk me into some, but I suspect it had to do more with her enjoyment of the upgrades (and owning you can decide exactly what you want) than any potential value increases.
You're not biased but you have a vested interest? Interesting. ;) I'll tell you what I'm hoping though, I'm hoping that quality of life continues to rise in the city and everyone finds a way to enjoy it. But it all seems to have a price.
Posted by: davidm | Jun 4, 2008 5:34:42 PM
Actually, From your post: 1:16:08 pm today.
"WOW! Toronto Bear, tsk tsk.
The AVERAGE PRICE for a decent one bedroom in downtown Toronto is around $260k. You can get cheaper by the waterfront or in iffier neighbourhoods (which many people don't mind)."
Anyway, hand picked arguments are irrelevant on the whole and that is why we choose to look at statistics. Yes there are "hidden gems" and better deals for the person who is willing to look hard for them, but that is not the point of any of my arguments. I am not trying to argue whether the own/rent ratio of a single hand-picked condo is reasonable. I am trying to use statistics (medians/averages, etc) to point out that, on the whole, the cost to own is ridiculously high when compared to the cost to rent. I don't understand the point of debating the issue over one property at a time.
I have never lived in a condo so I don't have a good idea of the expenses involved although my ex-girlfriend rented in a condo at yonge/bloor and thankfully she was renting b/c the landlord had to arrange for a lot of repairs including the aforementioned bad plumbing, a cabinet door that nearly fell off, tears in the carpet beside the sliding closet door, etc.
Renos are a different subject altogether. For example (and I am using totally random numbers here don't quote me) if one does decide to put in granite countertops, say at a cost of $5000, and they recover $2500 (50% is a typical ROI for a home-reno) of that when the place is eventually sold, then the loss of $2500 is absorbed and it's impact on monthly expenditures is simple: ($2500/number of months the condo is owned). (at 2 years, that works out to $100 a month, at 5 years which is probably normal it's only $42 a month).
You say that I am biased but I don't see how this is possible (perhaps due to bias, LOL) so perhaps you can enlighten me. I have no skin in the game. Naturally I require a roof over my head so I pay the going rate (ie, I rent) instead of paying a much inflated rent (ie, owning), and I will wait until the gap between those two narrows. Then I will become an owner and no doubt at that point I'll be biased and naturally only want RE prices to go up up up! This is not to say I don't have a vested interest....of course I WANT prices to come down. But a vested interest is something far different than self-fulfulling bias. This is simply because if prices do not come down, I am quite happy to rent and bank the considerable monthly-savings, as long as the fundamentals dictate that is the wise choice.
Pleasure debating with you. As I said, you are obviously not the "norm" and it's those sheeple who are getting us into this mess, along with the speculators, of course.
Posted by: Toronto Bear | Jun 4, 2008 5:12:12 PM
Toronto Bear, you are right about the statistics, but with your new numbers you threw me; check my postings and not once did I mention the average price, I was referring to available purchase prices of one bedroom condos in downtown, of which there are clearly many. The article statistics refer to all condos and houses, not one bedroom condos, so the values will be much different. Finally, we are referring to a hand picked case here, not a statistical one, so my numbers around the cost of owning vs renting a one bedroom condo (the point of my postings), in this case, stand.
And I don't want to belabour the point, but if someone needs to spend $100 to fix a problem, it's one thing, but if they want to spend $100 to install granite counters, it's another. Clearly $100 - $200 a month for personal condo upkeep is not normal, there's not a heck of a lot to go wrong in a condo (compared to a house, for example).
And you're just as biased as I am, and we're both subject to unpredictable market conditions. I'm glad we can both believe in our actions. ;)
Good day!
Posted by: davidm | Jun 4, 2008 4:52:19 PM
DavidM,
I don't want this to turn into a shouting match but perhaps you should take a course on statistics. Look at my post...I explicitly stated I was using the MEDIAN price. In fact, the AVERAGE price of homes (or condos) is significantly higher than the median. This is true for all housing markets. Look at the original post we are responding to....for all homes sold in Toronto for the month of May, the average price was $398k, and the median price was $339k, a difference of 17%!!!!!! The median condo price on the MLS area C1 is currently around $295k. Go look yourself if you don't believe me. It's very simple to do. Working out the average price would be harder, but let's use the above posted TREB's statistics which shows us that the average price of toronto homes are 17% higher than median. Thus, in our example the average price of a condo in area C1 is likely to be around $295k x 1.17 (17%) = $345,000! If you cannot grasp this concept, you should seriously consider getting a friend to help you understand.
By the way, Toronto is not an anomaly....you can go to www.findcalgary.ca or www.nvhomes.ca/aPage.jsp?aPageId=9, and clearly see that the average price of homes (and condos) in Calgary or Vancouver are also 10-20% HIGHER than the median price.
Furthermore, the most widely respect index of home prices, the Case Shiller Index, also uses MEDIAN as a guage because there tend to be small numbers of extraordinarily high-priced homes/condos for the super-rich that skew the average. This is why most people prefer to look at median price!!!
Yes you are correct that there are "plenty" in the 260k range but that is hand-picking and not statistically valid. Statistics dictate we need to compare apples-to-apples. In this case, the apples-to-apples comparison being median rent to median home price. Similarly, the affordability index is a measure of median income to median home price.
No I don't expect my landlords to put in granite counter tops (although they might as i am expecting a kitchen remodel within the next year), but you are missing the point. Home owners commonly spend a fortune on home-renovations despite data that shows home renos typically get only 50-80% as a return on investment. Given all those things plus normal "repairs" (leaky sink, overflowed toilet, clogged plumbing, painting, etc) I don't think it's unreasonable to estimate $100-$200 a month over the long term. Anyway, it's a minor point, whether it works out to be $50/$100/$200 a month. It's not enough to warrant a big discussion.
The difference between you and I "liking our numbers" is that you are already in the game and thus have a biased opinion. Psychologists refer to this as a self-fulfilling prophecy.
I, on the other hand, am not planning on being a lifelong renter. At some point, when the fundamentals dictate, I will enter the market. But until that point, I will continue to do the financially prudent thing and put my monthly savings into a fund that will eventually be used for a downpayment to acquire a fairly-priced home with a conventional mortgage.
Posted by: Toronto Bear | Jun 4, 2008 4:18:13 PM
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