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Mortgage Broker News | 06 Aug 2014, 09:01 AM Agree 0
Investors are being fooled by big promises of price appreciation and not looking at where the buying value and cash-flow is. And it’s not going to end well, says one experienced landlord.
  • GoodDay | 06 Aug 2014, 12:39 PM Agree 0
    He believes the market is not as hot as it used to be, pointing to the fact that of the 52 offers he has made in recent months, over 50 per cent of those properties were at a reduced price.


    Don't fool around by the listing price, listing price only reflects the price that the Seller wants to have, normally it is higher than market.

    Reduce the price to make a deal doesn't mean that the market is not as hot as it used to be.

    Keep selling over asking won't last for long.
  • Ron Butler | 06 Aug 2014, 01:01 PM Agree 0
    There was a great quote from a real estate hedge fund manager last week: "in the GTA, Lower Mainland and greater Calgary the trends for future price increases for the next one or two years are very strong but from a VALUE perspective there is no value what so ever"
  • Good Day | 06 Aug 2014, 01:14 PM Agree 0
    Thought out my life (it is quite long), I never heard people said the price of the property is very good and they should jump into the market.

    It is because the listed price always reflects the market situation.

    Many economists got the same point of view for the past decade, all the time they said the property value is way to high, people cannot afford ......bla bla bla bla bla....bla bla bla bla bla.......many many reasons and figures to support their conclusion....

    the market keeps going up up up up and up.
  • Ron Butler | 06 Aug 2014, 01:21 PM Agree 0
    @ Good Day............. I can only assume you are very old based on your comment but I can introduce you to 10,000 people who bought houses and condos in the GTA in 1988 and by 1991 discovered that property values could go down down down down ......... and then down some more: 26% down for detached and 38% for condos. You are entitled to your own opinion but you are not entitled to your own facts.
  • Good Day | 06 Aug 2014, 01:23 PM Agree 0
    other than 1988 and 1991, any other years like that ?

    what is the situation of those 10,000 people now? bankrupt or still holding the properties ?
  • Ron Butler | 06 Aug 2014, 01:31 PM Agree 0
    This is approaching silliness, the 10,000 people sold and lost money or held and recovered. There have been other down turns in the 70s and 50s certainly the 100 year trend has been up. but there were peaks and valleys. What I am trying to express is that suggesting there is no reason to assume anything but straight up forever is simply wrong, there will be ups and downs, heck in 2008 values went down for 6 months, they just recovered so quickly it did virtually no damage. My point is that suggesting everybody should assume infinite upward trend is not wise.
  • Good Day | 06 Aug 2014, 01:50 PM Agree 0
    I do not assume infinite upward trend.

    My life is full of failure, big and small,don't waste time to listen to me.
  • Paul Therien - CENTUM | 06 Aug 2014, 02:09 PM Agree 0
    From my read of the article I am more interested in the fact that what he is saying is that investors need to look beyond simple value increase for a good return. If that is all they consider then they are participating in speculation, and while that may prove to be effective, it also bears greater risk.

    Vacant condos that are simply there for a value increase, and false purchases. These properties are not being consumed for housing. Thus they do not reflect accurate housing demand, nor do they satisfy that demand. They also play a large role in the escalating values of properties in major markets, particularly Vancouver and Toronto. People using these properties as a safe haven for their wealth are artificially inflating values.

    At some point rates will increase, and if the property is not revenue generating those that purchased may feel that it is time to cash out. The rate of return (value increase) has to outpace the cost to own.

    If even a portion of the speculators in Toronto and Vancouver rush to market to dump their "investments" then we will see a downward adjustment in values. After all, for both the GTA and GVRD it is estimated that in some areas the speculators own as much as 40% of the stock.

    Investors who purchase properties based on cash flow and income are much less likely to "dump" a property with rate increases. Especially since most will 'price' their rents at a level which gives them strong cash flow today, to cover the potential of rate increases, unexpected costs, etc.
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