As asset prices rise thanks to zero percent interest rates, this was inevitable. Unless pandemic-induced isolation leads to higher incomes for some reason I’m unaware of, these buyers will eventually find themselves owning assets that they actually can’t afford.
Sales in Muskoka increased 267 per cent in April from a year earlier, according to the Canadian Real Estate Association. The median price for waterfront properties, at the same time, rose more than 70 per cent to $890,000, although Harding said listings tend to begin above the $1-million mark.
The desire for waterfront properties grew among Canada’s wealthy as pandemic-induced isolation measures kicked in. Both Harding and Richard Scully, the agent selling the $24-million lakefront property, said it’s normal to have anywhere from five to 25 offers on a property. Cottages tend now to stay on the market for no more than 10 days, when it used to take 40 to 50 days to close a sale, Harding said.
If those are cottages, I wonder what the doghouses must be like.
My buddy has a place in the Muskokas …. his grandfather bot an island around 1910 I think and he eventually inherited it.
Last I asked (4 years ago) taxes were 1500 a month / $18,000 a year for an island with no services!!!!
Nice place but bring lots of $$$$
Real estate bubble, wave two, coming right up.
I don’t think people realize how many wealthy people there are in Canada, never mind the horde of well paid higher level government workers set for life, there’s the vast network of politically connected corporatists who thrive on government contracts, thousands of expensive lawyers living off the taxpayer, go for a drive around the Ottawa area and see all the mansions and estates out in the country, if those people want a cottage they’re buying it now.
Life Follows Art dept.
Running Scared – Orbison
https://www.youtube.com/watch?v=WBAqXtaPZgQ
Government induced inflation. Insanity. A neighbor of mine in our new subdivision just listed his house after nine months, these are brand new homes, nine months apparently requires a $100,000 increase in the price.
Exactly. Government induced. And the Liberals’ Great Reset plan calls for debt relief in the form of asset forfeiture. All that has to happen is for interest rates to go up by a few percent thanks to sovereign debt and all this prime real estate will shift into government/foreign goverment hands.
They aren’t buying a second home.
When the decision came down to work remotely the only show stopper was “do they have internet in this area?”.
Most if not all of those buyers sold their primary residence in the GTA for well over asking and have relocated to the cottage country.
There has been a mass exodus out of the MTV for the duration of the “crisis” to anywhere not in the MTV.
If you can get 2 million for your bungalow in Toronto why wouldn’t you move to something twice the size on a full sized lot for under 800k?
Gov worker, union price inflation is going to require new contract. Taxes. Also your house will be assessed, upwards, again.
Those tax free tents on the sidewalk, RV on a side street are looking like the new, affordable housing.
It’s not the $24 million one that’s the issue cause the people buying that are wealthy. The problem is all the $900,000 cottages being bought by people who already have $900,000 mortgages and are now loading up on another $800,000 one despite making the exact same amount of money who also likely have little to no savings. And they’re 50. Know a bunch of them out here in Calgary.
slaw, maybe they are fatalists and figure if it all goes down, I will enjoy what I can while I can. Who cares about the debt that you can’t pay when you are dead.
I know some of the posters here like to talk about how smart they are because they noticed the “zero percent miracle”, but the whole system will collapse when they begin to raise interest rates. Corporate and personal debt are too high. They have to keep interest rates low. A smart person would realize that, we’re on the road to decline, and there really is no politically viable way out.
George, “we’re on the road to decline,” well at least it’s all downhill, so we’ll be coasting most of the way.
My house is paid for, but I bet inflation will get so bad, that I might be forced to sell it just to buy groceries!
I’m thinking I should buy a tent and a wheelbarrow real soon.
I don’t think central banks will raise interest rates either. They are very fearful of triggering a wave of defaults in the banking system. But the steep rise in prices for a whole host of inputs will do what rising interest rates would do in a free and open capital market: they will convince the marginal consumer, entrepreneur and potential home buyer to stop buying. This will trigger defaults in industries like housing once inventories of unsold products start to stack up. Central banks can influence the rate of interest, but they can’t force tapped out consumers to buy things they can’t afford.
I’ve tried to comment here several times and it doesn’t pass moderation. Not sure why. I’m not stating anything controversial and my comments are appearing under other threads. ???
One more time…
In January 2020, I had an appraisal of my late mother’s cottage for estate valuation (probate). Recently, I reached out to the same agent for an up-to-date appraisal as some beneficiaries wish to purchase the cottage. (I’m not one of them.)
At first, the agent said they are seeing record sales and numbers of buyer inquiries. It’s great for sellers and challenging for buyers. She said the market is much less predictable these days with the presence of multiple offers driving prices to levels that they are all left scratching their heads about. If the purpose of the valuation was to know within a few dollars what the cottage would sell for, it would be very difficult to say. Lately the selling strategy is to list lower and sell higher and a cottage such as ours, in this market, would fetch a pretty penny.
As soon as she found out the re-evaluation was for beneficiaries to purchase the cottage, and therefore no sales commission, all of a sudden the market conditions were starting to level out. Funny that.
When homes changed from “a place to bring up your family” to “an investment”, the speculators rushed in and wrecked everything. I’ve given up on ever owning a home, I’ll settle for some cheap land and a yurt.
My gal and I have a similar mindset; we will never own a home unless we win a lottery so we’re considering the RV lifestyle. Travel the continent, see the sights, enjoy the warmth of Arizona during the winter and tour Canada during the summer.