[KaeJS]

‘Bizarre’ housing market: 1,500 people sign up to buy 10 new townhomes in Cambridge

Activa Homes is building 138 stacked townhouses and street-fronting townhouses in a patch of land along Isherwood Avenue

www.therecord.com

 

[fireseeker]

The headline is grossly misleading.
No, 1,500 people did not sign up to "buy" 10 new townhomes. This is what they actually did:

“Townhomes we just launched this week, for 10 units we had 1,500 people sign up showing interest,” said Geoff McMurdo, chief administrative officer at Activa.

They "showed interest."
The next paragraph says: "By the time the list had been whittled down to serious buyers, it still had a whopping 750 names on it."
But there is no explanation of how they measured "serious buyers." Did they put money down? Did they agree to meet with a salesperson? Did they simply confirm that their email contact address was valid?

The reporter and editor needed to do more work.

 

[james4beach]

If this housing bubble ever crashes, I wonder how many people will be left "holding the bag" of nonexistent homes... with those pre-purchases.

This may not be the case for this story, but I wonder in general. People in Toronto certainly do buy condos before they are built.

Developers are notoriously shady characters, and if the market implodes, they will disappear and be bankrupt. They certainly won't be returning any money.

 

[m3s]

The reporter and editor needed to do more work.

The "reporter" got us all to click

That's their job. 4 years in school to write clickbait

 

[Fisherman30]

If this housing bubble ever crashes, I wonder how many people will be left "holding the bag" of nonexistent homes... with those pre-purchases.

This may not be the case for this story, but I wonder in general. People in Toronto certainly do buy condos before they are built.

Developers are notoriously shady characters, and if the market implodes, they will disappear and be bankrupt. They certainly won't be returning any money.

5 or 6 years ago in Winnipeg, people were buying condos before they were built. We're talking condos in huge condo apartment complexes. The developers were promising people it would be done in a year or less from the time they made their downpayment and signed all of the paperwork. It ended up taking sometimes 3 years or more before people were getting the keys, after they had already forked over all that money.

 

[Money172375]

If this housing bubble ever crashes, I wonder how many people will be left "holding the bag" of nonexistent homes... with those pre-purchases.

This may not be the case for this story, but I wonder in general. People in Toronto certainly do buy condos before they are built.

Developers are notoriously shady characters, and if the market implodes, they will disappear and be bankrupt. They certainly won't be returning any money.

Isn’t the money held in trust as it would be with a deposit on a resale home?

 

[Spudd]

Isn’t the money held in trust as it would be with a deposit on a resale home?

Yes, but things can happen. I remember this case as it was near where I lived at the time:

https://www.cbc.ca/news/canada/toronto/lawyer-sentenced-condo-fraud-1.3996547

 

[sags]

On the flip side, around the GTA speculators were standing in lines to put deposits on a number of pre-builts, then flipped them for a profit to people in the lineups who didn't get one.

So the people paid the speculator a tidy markup and then if the developer cancelled, or raised the price........tough luck.

It has been a feeding frenzy in real estate for years. Ridiculous price increases of 25-40% a year.

Will it crash or when.......nobody really knows, but it is a long ways from the "normal" we were used to.

I remember when people got excited their home had gone up 3% in value in a year.

 

[sags]

Most young buyers acquired a home because their parents mortgaged their own homes and gave them a big down payment.

Otherwise the buyers wouldn't have qualified on their own.

If home prices crash, it won't just be the young owners who suffer. Their parents will end up owing a HELOC or mortgage on their own homes.

 

[KaeJS]

If home prices crash, methinks we will have a 2008/9 problem.

 

[Eder]

That 2008 problem was why I was able to retire the following year 13 years ahead of schedule. We can only hope.

 

[james4beach]

House price index up 27% in 2021, the most on record.

This leads to an important question for the real estate investors on this forum. Why on earth would you stop now? Clearly this is the way to get rich beyond your wildest fantasies. Maybe it's time to get as many mortgages and other loans as possible, and buy more houses.

If it went up 27% last year imagine how much it will go up this year. Maybe 30%? Maybe 40%?

Million dollar mortgage, or two million in mortgages... why not? Just think about how much the home price will appreciate, plus the renters will pay your mortgage bills.

 

[MrBlackhill]

If it went up 27% last year imagine how much it will go up this year. Maybe 30%? Maybe 40%?

I've just read this:

Record shortage of residential properties for sale across the country.

The ratio of sales to new listings was nearly 80 percent in December. The historical average is 54.9 percent.

Yup, I guess we're not done yet with these crazy prices, even when interest rates will go up.

 

[m3s]

If it went up 27% last year imagine how much it will go up this year. Maybe 30%? Maybe 40%?

Million dollar mortgage, or two million in mortgages... why not? Just think about how much the home price will appreciate, plus the renters will pay your mortgage bills.

We have the perfect conditions for RE investing

Inflation, low rates and easy monetary policy. The cost of debt is debased by the expansion of the money supply. RE is probably the best/safest way to leverage some depreciating fiat into a hard asset during these conditions

It's simple math. It has been amazing to watch how much people misunderstand it the past few years