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It's a cycle... one of the main reasons developable land IS as expensive as it is right now is simply due to the profits that developers made over the last 10 years of the up cycle here in town specifically. If I had a piece of such land in the area, I'd be crazy to price it for under market if I was thinking of selling.

To answer your question, I'd say "Not Really" looking at subdivision to subdivision. Some builders choose to ram in more houses on smaller lots, some specialize in keeping larger slices for custom homes... but over the long term,big picture, I'd say yes.
We've seen standard lot sizes decrease over time due to many factors (population growth, lifestyle changes, affordability, supply).. We went from Acreages to smaller subdivision lots. Then we went to the 70x200 range, then 50x150, and over the past 7-10 years we started to see the 36x80 become palatable, when in the past, 80 feet would be the length of a driveway, not an entire lot.

It depends on what people are buying, and what can be sold to them. Milton is a no brainer, people keep coming here. Now it's up to the Town / Region to make sure it is planned well and that DCs aren't out of control, and for land owners to want to continue selling. Don't forget, the land owners need to want to sell to make this all happen... If the DCs are jacked up faster than house prices, the only way development will happen is by seeing a drop in land prices.

So many factors at play here, I'm doing it an injustice by even trying to comment in such a small space

Also, dtc - well said!

I still don't see where you are seeing statistics on lower demand.

Houses in Toronto are still going for over asking with multiple offers in short number of days. This doesn't smell like a drop off of demand by any means.

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If you were out house hunting for a new construction in the GTA this spring (last month and this month) you would see, builders are definitely NOT having any issue selling finished product for WAY over what they expect.

Like I said earlier, the model I purchased and have yet to occupy went up $40,000 this spring. That's NOT the sign of a market in collapse where demand has "dried up" and builders are "not seling the finished product for what they thought"

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Exactly. More and more developments will be townhouses (or executive townhouses), row houses, low-mid rise etc. I'm already seeing that in North York.

They can then offer the houses at a lower price.

But to think that a fully detached home on a 50'x120' lot will be worth less if that happens is crazy. If anything, the lack of supply of detached homes will mean those looking for detached vs. the newer "condensed" housing will be paying higher prices.

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All of this is small potatoes compared to the fact that 100's of thousands of people are moving into the GTA every couple of years. If we were living in a dome, the prices would go down. But we're not. Housing prices will continue to go up within a 100km ring of downtown Toronto for the next 100 years.

As ive stated, demand will keep prices at current level, if not higher which seems to be whats happening, i believe this to be in single family dwelling which is in much demand. correct me if im wrong Fred, but is Milton the cut off point to where most people will live if they work in mississauga, Brampton or toronto? It al depends where you are in life as well, i had my kids young, right now im 42 and they are off to universty in a year. i already downsized my house last year in anticipation of this. i went from 3900st ft to 2100 sqft. i made money and bought in town for 405k. sold for much higher than i bought. others my age are just starting to have kids and their demands for housing are different. Honestly i may even go for a high end townhouse in a year or 2. less maintanence. other option would be to go into Cambridge area and save 150k over Milton. just not convinced right now. Unless something catastrophic happens with our economy, which would be a negative for everyone, i dont see a steep price decrese taking place. the worry right now is fuel as it is affecting many major markets.

You have to look historic, not simply basing your "demand tracking" on vs. 2010. That's like a company who averages 100mi in income year over year then having a great year 200mi, then going back to 190mi a year and saying "the sky is falling". The stats for 2011 are the second best ever. That means in 2007/2008 just before the economic meltdown when most would say was the 'strongest economy' ever, still wasn't as good a year for real estate as 2011 is shaping up to be.



"Last year, Canada admitted the highest number of immigrants in over 50 years. 280,636 immigrants became permanent residents of Canada in 2010, more than 6% of what was originally expected. Most of the newcomers were skilled workers. "

It's no secret, majority end up in Toronto, Vancouver, Calgary and Montreal. More than a 1/4 of a million people a year isn't small change -- they need to live somewhere -- either rent or own. Even if they rent, someone needs to own the property they are renting. That's a sale.



They aren't supposed to. that's the answer. That's a 300k house at best. Someone in that situation should be buying a condo or a small townhouse (if anything) with a decent commute to work. Once their salaries increase and/or they build equity, they can then buy something larger or closer.

Basically what people are saying is that the days of living close to Toronto on a 80k salary are over. If you bought 10 years ago (like everyone else who didn't believe in the next great crash coming) they COULD live close to Toronto on that salary. Not anymore, prices are too high.

In 10 years, the population of the GTA has increased by more than 10%.. that means that there is 10% more people fighting for that land that is close to work.. if you have a lower salary, you won't get it.

http://spacingtoronto.ca/2007/03/14/gta ... ince-2001/



The US was a victim of subprime lending. It can't be compared.

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Here is the way I see it...

In the 1960s, first time home buyers with a lower income could buy a detached house in the subburbs of Toronto (anywhere but downtown).

In the 1970s, the same group had to buy further out - North York, Etobicoke, Rexdale, Scarborough, etc.

In the 1980s, it was Brampton, Mississauga, Pickering, Richmond Hill, Markham

In the 1990s, it was Maple, Newmarket, Aurora, Brampton West, Mississauga West, Hamilton

In the 2000s, it was Milton, Ajax, Oshawa, Barrie

Now as we are in the 2010s, it is places like Newcastle, Oshawa, Cambridge, Stoney Creek, Bradford, Alliston, etc.

As the population grows, the affordability close to the CN tower declines(simply due to the demand and the sheer number of people wanting to buy closer to the core). Those without the means to compete with the prices closer, need to move further. This will continue as year over year the population of the GTA is increasing (not decreasing). This population growth needs a place to live -- either rent or own -- regardless, someone is buying the house that they are living in which will keep demand high, and prices rising.

It's that old addage -- the sooner you get into the market, the better. Just like my aunts & uncles who bought cottages in Muskoka for $20k and $30k during the 60s. My uncle just sold his renovated cottage for over $600k. If there is demand for an area, you will always do well.

If the financial epicentre of Ontario moves to Timmins, that is where the prices will rise astronomically.

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The cut off point moves.
For Toronto, at one point, it was the 427. Then it was Hwy 10.

Create decent transit options, (including GO train service to downtown) and municipal services like hydro, water, gas, etc, and the sky's the limit. These days a lot of people are moving from here to KW / Cambridge / Guelph, JUST like they did from mississauga to milton a few years ago. Exact same thing happened from north toronto to Richmond Hill, then Richmond hill to Aurora/Newmarket or Stouffville, and beyond (wwops, I just noticed DTC already said that...) . Every time people decide that 15-20 minutes further is worth the savings in home cost, and the cut off point moves again... THEN jobs follow at some point, bringing more people...

If you want to treat your home as temporary investments, then it is good to move every 3-5 years to the new 'place to be', before everybody else gets there. That's when you should TRULY care about the exact dollars and cents of your home's worth.

Otherwise, if you want to live in a place you are comfortable staying mid-long term, possibly raising a family, with a decent commute to work, a selection of amenities, mature trees and little construction, the ups and down of house value month to month doesn't mean a thing unless you're extremely high ration and your renewal is approaching. Other types of investments don't have nasty Land Transfer Taxes, realtor fees, legal fees, and the stress that comes with packing and moving

My thoughts? Do what's right for you, your own personal lifestyle goals, and personal investment goals.

there doesn't need to be a decline in order for this to happen.
RE stabilization and more modest growth numbers might allow salaries to catch up in the long term - you don't need a decline for the ratio to correct itself.
Will some markets decline slightly? maybe, but I firmly believe Milton will be in better shape than other areas of the GTA.

I like a lot of what you say, but to me, this 'historical' 3:1 holds no clout because of how much society and the economy has changed in the past 25 years alone. 50 yrs of historic 20 yr cycles does not guarantee anything repeating. That's really only 2 or 3 cycles, and each had their own pressure points and reasons for occurring. As I said, even if things DO move closer to 3:1 again, we don't necessarily need a drop for that to happen.

Math rules. Fractions are your friends.

Are these cycles good lessons for planning properly and the importance for fiscal responsibility? Absolutely.
Are they a crystal ball view into exactly what will happen? I'd say no.

Unfortunately, yes. That is correct. Although I think in 22 years, there will be much more opportunities to work outside of the cities we see today. Unfortunately, right now all the big business and high paying jobs are in Toronto, Vancouver, Montreal, Calgary. I personally don't think this is sustainable and eventually you will see new economic centres created throughout Canada. Business knows that salaries need to match the cost of living in the area. They won't attract employees if they don't pay them enough to live in the area. Remember, we've only had a truly useable network/broadband infrastructure in Canada for 10 years. This technology will enable businesses to scatter which will reduce some of the need to be close to a centre.

Adding more people to the country will increase demand for the space in the country. That is a fact. And yes, some are priced out of the market (if they insist on living in the same region as everyone else wants to live in).

The 3:1 average is history. Have you ever considered that times change and maybe what worked in the past wont work any more?

Do you consider the fact interest rates may never go back up to historic norms as Canada experiences a cooling off in growth vs. some of the new emerging markets like China, India and Brazil?

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this

As I post this, I've checked and my model has gone up in price again -- it's now officially $51,000 higher than what I paid 14 months ago. All of the semis, and most of the smaller lots are sold out. Very few remaining.

Of course, I bought in a "new" and "emerging" area so that is to be expected.

Anyways, the point is as a City matures and it's population increases, the costs of being in that cities region will increase. Toronto is a very young city when compared to other places like New York. It's growing. It's growing fast. Those that got in years ago are laughing, those that are getting in now are crying and those that think they will get in 10 years from now will be disappointed.

The reality is if you look at other major areas cities such as New York and London, not very many people own homes. They rent. They pay rent to the wealthy landloads who either owned the properties from years and years back or who had the financial means to pay top dollar.

In 22 years, the Toronto area will be for the weathy, for renters, or for those that were lucky enough to get in early and still live there. That's the reality.

There is a reason for the condo explosion right now -- because it's the only semi-affordable housing in the core. You will see more and more of that -- to own a detached home in Toronto will mean you are an executive or highly paid professional.

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Definitely a potential trigger. But they wouldn't be selling to 35 year olds -- they'd be selling to the 40+ crowd with university educations, 6 figure salaries and executive positions who don't like the hustle and bustle of downtown living.

There is no denying that several triggers can influence housing. BIG TIME! Any economist will say that. The fundamentals are supply & demand. The catalysts are triggers.

One trigger is the baby boomers. One is higher interest rates. One is mass job loss (due to economic slow down/down turn).

In the US the trigger to the collapse was sub prime mortgage lending practices combined with NINJA loans. This created a collapse of the financial institutions which created a credit collapse which created economic collapse which created massive job losses.

I don't personally see interest rate rises as a big trigger to a housing collapse. Big deal, you re-finance your mortgage for another 5-10 years (banks would rather keep you as a debt ridden customer than foreclose) or you jump on a variable rate (which historically peaks around 5% tops) and pay less of your principal down. Non-issue for most Canadians. Couple that with the fact most Canadians are reserved and stick to those 5-year fixed options vs. the United States where most people were variable. The added mortgage rules added over the past 2 years also will help prevent this trigger. A high interest rate = a great economy. People don't usually lose their homes in a high economy and statistically, high interest rates = low foreclosures.

Another trigger is rising Oil prices which will make commuting from the further distances more expensive. Places that don't offer GO services will suffer the most as *demand* dries up quickly for those areas. At the same time, *demand* will increase (and prices will follow) for housing closer to the cores. This is where prices would increase in Etobicoke and decrease in say Milton.

The *biggest* trigger I see (with potential to do some serious damage) is massive job loss. It's the one thing that affects both *supply* and *demand* equally. This could be caused by a major economic collapse (or even by an ever increasing Canadian dollar value) because as people lose their jobs, they need to put their houses up for sale. Massive inventory of houses for sale means people can bargain for the lowest prices. To add insult to injury, if there are massive job losses, the buyers won't be as abundant either meaning further price decline. If this continues, foreclosures will rise and then we are in serious trouble.. US style trouble. This is the very thing the government is worried about -- high debt loads, low equity, expensive prices etc. only work out when everyone has jobs. Right now, unemployment in Canada is very low when compared to the rest of the world.. 7.something percent. This is a non-issue. If the unemployment rate went to 10-11%, watch out.

The reality is, the risk of an unemployment downturn ALWAYS exists. It's a risk everyone of us takes just by living. If we all didn't purchase houses fearing a mass unemployment, nobody would ever own a home -- for there are thousands of triggers for that.

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Another interesting article:

https://www.placestogrow.ca/index.php?o ... &Itemid=14

Basically, the government has realized that due to immigration, supply is a big problem. Not too much supply (like the US is experiencing right now) but not enough supply. They are concerned about urban sprawl to meet these demands are are dictating that the density of new development be much more compressed (as discussed earlier regarding townhouses, row hours, mid-rises etc) to use as little precious land (land in the GTA) as possible.

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