CanadianREguy

Homeowner, Investor, Educator, Believer of market cycles.
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[CanadianREguy @CanadianREguy]

Seems like the #OttawaRE market is already in hibernation...

[CanadianREguy @CanadianREguy]

Here's a Halloween Spooky for you...

Almost C$180k loss after closing cpst in suburbs of #Ottawa , the winter is coming...

#ONRE #TORE #OttawaRE

[CanadianREguy @CanadianREguy]

I second the diamond hands part, #OttawaRE has held up quite well!
But until when...!? 🤔

[Tablesalt 🇨🇦🇺🇸 @Tablesalt13]

Until now, Ottawans have had diamond hands

No big losses

But they're starting to capitulate

$200,000 loss in 7 months.

[CanadianREguy @CanadianREguy]

Ottawa RE market is seeing very little activity and seeing inventory boom, its only a matter of time until we start seeing real price action...

#ONRE #OttawaRE

[CanadianREguy @CanadianREguy]

A welcome #pause from BoC today, do you think it continues in Dec?

[CanadianREguy @CanadianREguy]

This just feels line a ticking time bomb...

[Hanif Bayat @HanifBayat]

Negative amortization stats from banks' Q3 2023 reports, where mortgage payments < interest:

BMO: $32.2 B; 22% Total Mortgage Portfolio
(up from $28.4 B in Q2 2023)

TD: $45.7 B; 18%
(up from $39.6 B in Q4 2022)

CIBC: $49.8 B; 19%
(up from $44.2 B in Q2 2023)

RBC & Scotia≈0

[CanadianREguy @CanadianREguy]

I second this opinion, a good realtor can prevent you from hitting many mines in your home buying journey but unfortunately they are tough to come by on this sales oriented business...

[Tablesalt 🇨🇦🇺🇸 @Tablesalt13]

I personally know realtors who are MASTERS in their field...

They could guide you through foreign ownership tax implications, contract law, municipal bylaws, condo status packages and rules, zoning regs, right-of-way obligations, land surveys..... and all of the other landmines....

all the while being expert negotiators / strategists....

I know other realtors who cant upload a photo properly to MLS.

They charge the same fee.

Caveat emptor.

[CanadianREguy @CanadianREguy]

@ManyBeenRinsed You can feel the pressure building and sooner than later somethings gonna give... the cost of living in this country is just too high!

[CanadianREguy @CanadianREguy]

What does the saying go like... When you ask a barber if you need a haircut, the answer is always...!?! 🤔

#CanRE #ONRE #TORE #OttawaRE

[BNN Bloomberg @BNNBloomberg]

Royal LePage downgrades Q4 housing price forecast; expecting 7% increase. Click on the image below to read more ↓ https://t.co/ek1bLCQskI

[CanadianREguy @CanadianREguy]

Finally someone posting real financial methodology rather than the usual hopes and dreams story...
But hey, no one really like math, eh!?!

[Tablesalt 🇨🇦🇺🇸 @Tablesalt13]

MORE ADVANCED REAL-ESTATE STUFF:

In theory, real-estate prices should trade in a manner that is 100% correlated to bonds...and be easy to calculate!

The price should be the "discounted value of all future potential rental cashflows"

(yes, this even applies to a principal residence because you are an equity owner who is forfeiting market rent)

Since there is no end to rental payments (cashflows).... we would call this a perpetuity. (like a pension)

Real-estate can be perpetuity because land doesn't depreciate or disappear.

Since rent increases every year, we would then call this a growing perpetuity.

Luckily, the formula for a growing perpetuity is one of the easiest in all of finance!

PV = P / (r - g)

4 numbers, thats!

PV = Present Value

P = cashflow received

r = Discount Rate / 100

g = Payment Growth Rate / 100

The discount rate (the amount of profit you demand to do the deal) in the formula could be the 10 year bond yield + risk premium AFTER COSTS. (this is called the cap rate)

So...lets try it!

Lets assume:

the rental growth rate (g) = 2.5% per year

and, you demand a 4% risk premium vs bonds for the hassle of dealing with tenants.

And lets use a home which CASHFLOWS $12,000 per year after costs, as our example.

(we ignore mortgages because this is a totally separate deal which you MAY have with a bank. Some investors dont have this cost, so its not a REAL expense)

Home price in 2021 with 0.5% 10 year bond yields:

Our demanded return is now 4.5%/yr or we would just buy bonds.... so:

PV = $12,000/yr / (4.5% - 2.5%)

PV = $600,000

Your home is worth 600k!

Home price in 2023 at 4.2% 10 year bond yields:

PV = $12,000/yr / (8.2% - 2.5%)

PV = $210,526.32

YOUR HOME PRICE GOT CHOPPED BY 66%

...when bond rates rose from 0.5% to 4.2% because the asset you own STILL cashflows the SAME AMOUNT as before...

but the market can get what you're cashflowing by putting out 66% LESS money than would have been required in 2021.

In reality, real-estate is more complicated because emotion gets involved.

But in business, its just 4 numbers!

🧂

[CanadianREguy @CanadianREguy]

@ManyBeenRinsed Still too high for current interest rates...

[CanadianREguy @CanadianREguy]

Is the jobs report really that good when most of the employment is either government or part time?

No wonder CAD is down against USD...

[CanadianREguy @CanadianREguy]

A good snapshot of what the real price action is in #GTARE, if you're planning to buy soon, tread carefully...

[S Atwal @MisterAtwal]

Once again, decided to compare September GTA detached median prices to the approximate point in time prior to when we saw a sentiment change (BoC rate hike in June). Beginning to see a lot of the bigger markets with double digit declines: Toronto, Richmond Hill, Peel (1/n)

[CanadianREguy @CanadianREguy]

@steve_joco Its all a House of cards , lot of excessive leverage which needs to be flushed...

[CanadianREguy @CanadianREguy]

1 year and 2 year mortgage rates over 7% and marching towards 8%...
Do we see an 8 handle this month!? 🤔

[CanadianREguy @CanadianREguy]

US and Canadian yields continue to rise , next fixed mortgage rates; tell me how does this sustain the current prices...!? 🤔

#ONRE #TORE #OttawaRE

[CanadianREguy @CanadianREguy]

@ManyBeenRinsed You can only squeeze the lemon so much until nothing is left to squeeze...

[CanadianREguy @CanadianREguy]

Seeing so many new listings hit the market, its only a matter of time that price reductions start gaining steam...the market has to balance supply with demand as there isn't much demand at current prices...

#ONRE #TORE #OttawaRE

[CanadianREguy @CanadianREguy]

@Behindthe_Blow @ManyBeenRinsed Its all sales!

If you ask a barber if you need a haircut, he'll always find a way to say yes...

[CanadianREguy @CanadianREguy]

@ManyBeenRinsed When in comes to predictions, no one really knows anything...

It's never a good idea to blindly "trust" the so called experts...