Wednesday, September 1, 2021

Our New House - Renting Vs Buying during a Housing Bubble

 Back in April of this year my wife, my son and I moved into a new house. It isn't our dream home, but it has a great backyard, a large front yard, lots of space, great amenities nearby, conveniently close to work...

I gotta admit I love this house.

However there is 1 big problem. It is a rental.

We are renting a house for almost $4000 per month, and while that is a good chunk of change, we see it as a transition between where we are now and buying a house later on.

It would be nice to buy a house (in Toronto), but let's face it the housing prices right now are ridiculous (in Toronto), and I really don't want to buy a house (in Toronto) because I am worried the housing market (in Toronto) will implode any moment.

See the problem?

Toronto's housing prices have become so overheated and ballooned into a giant housing bubble where even if we can afford to buy a house, I wouldn't want to because what if the housing bubble implodes?

We could end up buying a house, it implodes, and we lose the house and every dollar put into it through no fault of our own.

And mark my words, a housing bubble implosion is coming. It even has a name:

THE BABYBOOMER SELLING SPREE!

Or something like that. Something Babyboomer in the name. The Great Babyboomer Bubble?

Yeah. I like that. Let's use that. The Great Babyboomer Bubble.

So here's what is going to happen.

During the next 10-20 years a lot of babyboomers are going to start dying off due to old age (or possibly COVID because 10% of them didn't get vaccinated) or moving into elderly homes and selling their old homes, and this in turn will cause a surplus of houses being put on the market.

At some point this surplus of houses will reach a tipping point, at which point the housing bubble will implode. Housing prices will drop significantly within months.

This will then trigger a second wave of sell offs... from foreign investors. And from domestic investors too, but most of the housing investments is from foreigners.

Toronto, Vancouver and Montreal have seen huge ballooning in housing prices thanks to foreign investors who buy houses, rent them out, and then watch the housing prices skyrocket - so they're making money two ways: Money from the rental, money from their investment going up in value.

But what happens when the market goes in the opposite direction?

Buying a house suddenly gets cheaper, which means people renting can finally afford to buy a house, but they're going to wait until the market bottoms out before doing so.

The investors meanwhile are trying to sell their houses in a hurry before the market bottoms out, which means they need to SELL NOW. Right away. So they drop their prices in hopes of getting a faster sale.

But when many investors (and babyboomers) sell their houses all at once it results in too many houses becoming available at the same time. The babyboomers will be the catelyst, but the foreign investors dumping their properties back on the market is what will cause a downward spiral in housing prices.

When it finally bottoms out... That is when my wife and I will finally decide to buy a house (in Toronto).

Or the other alternative is that we buy a house outside of Toronto, somewhere that the prices are more reasonable.

You would have to be really dumb to buy a house in Toronto right now.

Hence why my wife and I are renting. When the housing prices finally collapse (and they will, just look at the chart below to see how big the Toronto housing bubble has become in the last 15 years) we can expect the average house price in Toronto to drop to approx. $400,000, give or take a few.


So remember when the Great Babyboomer Bubble bursts and you own a house, please think of me... And how I warned you not to buy right now.

And for all of you homeowners who are thinking of selling... Yes, you should sell NOW while the prices are still high.

Tuesday, August 31, 2021

Hurricane Resistant Houses

Imagine building a house in a region that gets frequent hurricanes, usually once every year or two.

Shouldn't you be building the house in a manner that it is resistant to hurricanes? Thus saving you money in the long term on costly home insurance premiums?

Or...

Imagine your house gets destroyed by a hurricane in 2022. Okay, you rebuild using the insurance money, but you basically just rebuild the same house. Two years later in 2024 your house gets destroyed again. Did you not learn from the first time that the design obviously wasn't working???

Using smarter architectural design we can actually fix this problem. If all houses in the hurricane prone Gulf Coast were built to a new standard the people living there wouldn't have this problem.

You start by designing the house to have round corners, so that the wind bends and moves around the house, instead of ripping pieces off of it.

You attach the roof in a more durable way, so the roof doesn't just rip off during the first windstorm.

You anchor the entire structure into the ground, so that a really strong wind cannot just lift your whole house off the foundations and throw it.

We have the technology to make houses in the Gulf Coast hurricane resistant. Why aren't more people building such houses? Yes, it is more expensive, but you ultimately save money from insurance premiums and from not having all your belongings destroyed/lost again and again.

How many times does your house have to be destroyed before you learn from your mistakes?

 



Friday, May 7, 2021

How to Invest in French Alps Properties

Let's pretend for a moment you have a lot of money that you want to invest in real estate. Well, you could invest it in Canada - specifically cities like Toronto and Vancouver where real estate prices are skyrocketing at breakneck speed, but are also dangerously into bubble territory. It is basically a high risk, high reward situation when you invest in real estate in Toronto or Vancouver. Prices are going up quickly, but when that bubble bursts a lot of investors are going to lose most of their investment. And do you really want to be doing that during a pandemic when the economic future of Canada is uncertain?

What you need is an alternative that is a safer bet - more stable - with guaranteed year over year higher valuations, but with less risk involved.

So what you want to be thinking about is luxury properties in places that are desirable.

Enter the French Alps. Or any of the Alps for that matter. The French, the Swiss, the Italian. That whole region is ripe for investment, and because the types of properties that are available there are ski resorts and chalets, you can basically guarantee that they will continue to be desirable for many decades to come.

You can invest in properties near lakes, near mountains, ski resorts, prestige chalets, hotels, older properties and newer properties that are being built right now. New constructions are an excellent opportunity for investment, provided the construction company is reputable and has a solid plan for how to make a profit from the chalet or ski resort or whatever it is they are building.

You can even buy a home in the French Alps and use it for vacationing in France, and sell it ten years from now for a tidy profit. And when you're not using it yourself, you can rent it out so that you're earning money on the property even when you're not vacationing.

Want to invest in a French Alps property / vacation in France / rent out your property? What are you waiting for?

Or even if you're not interested in vacationing in France there are lots of other locations to consider. Any place that is a tourist location is a hot commodity these days for rentals and a smart investment as their prices only ever go up.

With the exception of Florida.

Do NOT invest in Florida.

Any place like Florida which will be flooded in the next 30 years due to rising sea levels is a bad investment. Don't invest in any location that is in a flood plain unless you're willing to get flood insurance for the entire time.

But the good news is that the Alps and various mountain resort regions don't really have flood issues. What they need to worry about is avalanches, mud slides, etc. So when doing your research you should also check how many avalanches were in the area during the past 100 years and how much property damage there was. (And what the price of avalanche insurance is.)

Remember! Always get insurance to protect your investment!








Thursday, February 25, 2021

200 Posts on My Search for a Home

Apparently I just surpassed 200 posts on My Search for a Home.

What started as blog for fun and later morphed into a real estate website which makes me some extra income just keeps growing thanks to people wanting to advertise their real estate websites, home insurance, etc. (This is a habit I have... Everything I touch turns into money somehow.)

It also led to me creating a sister blog ProjectGridless.ca which is all about off grid real estate, solar panels and wind turbines, etc.

People looking for advertising on either website should email me via charlesmoffat@charlesmoffat.com.

I am curious what this website will look like in 9 years (2030) as I should own a home by then. I suspect it might include more topics related home insurance, home repairs, gardening, etc. So I have a feeling the website will morph over time.

If we later sell that house and get a different house that could lead to another series of blog posts about that whole process too.

Toronto Home Rentals - Finding what you want is Difficult

So my wife and I have been very happy living in Leaside for the past many years, but we're now looking for a new place for us, our son, and my mother-in-law.

There is a big catch however. We ideally want to rent a house that has a bedroom on the first floor so that my mother-in-law won't have to climb the stairs.

This also means we need a full bathroom on the first floor so that my mother-in-law doesn't need to climb the stairs to reach the bathroom.

However finding a house that is for rent... In the area we are looking for... With a minimum of 3 bedrooms... With at least 1 bedroom + 1 full bathroom on the ground floor... With room for 2 cars in the driveway or garage...

Well, it is proving to be difficult.

Plus coupled with the fact that landlords are sometimes, unfortunately, racist. We have encountered this particular problem twice already where landlords are coming up with excuses not to rent to us. Not because of money reasons, my wife is a lawyer, I am gainfully employed as a personal trainer whenever COVID is not interfering with my work, and my mother-in-law is retired and has a hefty pension plan from the Hospitals of Ontario Pension Plan (HOOPP). So we definitely have the money, but landlords are a sketchy bunch when it comes to renting to African-Canadians.

As a Caucasian I admit this is my first time encountering this problem. I am admittedly used to just asking to rent a place and people just automatically saying "Yes, sure you can rent it!" Most of the places I have rented in the past didn't even ask for a credit check. (Yes, you read that correctly. White people are not used to having credit checks when we ask to rent an apartment or a house. People just usually take us on our word that we can afford the place. I fully recognize that I have been benefiting from white privilege for decades.)

There also seems to be a lack of availability in the East York region of Toronto that we are looking in, so we don't really have a lot of options.

We can...

  1. Look elsewhere. We might have more luck in a different neighbourhood.
  2. Wait and keep looking for new places to come on the market in the desired neighbourhood.
  3. Do both 1 and 2.

Really those are our only options right now.

I have to assume that somewhere out there is a landlord who isn't racist with a house that fits our needs.

The parking issue alone is annoying. Not every home even comes with a lane way or garage and some streets just use "on street parking", which unfortunately gets into legalities of where homeowners can actually park their cars without fear of being towed.


The other big issue happening right now is...

COVID.

Which makes viewing homes a little bit trickier, but COVID has also thrown a wrench into the works with respect to house prices and also home rental prices.

What we have noticed is that the prices for renting a house keep coming down, which should really make landlords eager to find a renter - regardless of the colour of their skin! But apparently racist landlords would rather earn less money than rent to someone who is African-Canadian or to an interracial couple.

Popular Posts