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Ron Butler Profile picture
@ronmortgageguy
Dec 2, 2024 • 6 tweets • 2 min read • Read on X
The Great Toronto Condo Crash Gathers Momentum

The stories of losses on Pre-construction sub 500 sqft Dog Crate Condos & even on slightly larger 600+ sqft units just keep on coming

The same themes but different problems & really bad outcomes

More details are emerging

2/
A new twist is the difficulty in securing normal mortgages to close on these wildly overpriced units

In a great G&M piece this morning #rachelleyounglai describes an 8.3% mortgage rate on a $410K mortgage producing a $4200 payment including mortgage, condo fees & taxes

3/
The Buyers were turned down by their bank and were forced to take a huge mortgage rate

Rent on the unit is $2400 they lose $1800 every month

Or they could sell for a $75K loss, this Pre-Con unit was bought in 2018 & closed last January

A true financial disaster

4/
To make matters worse another Pre-Con unit closed in May & they lose $3050 per month on that one

Absolutely devastating losses that are hard to escape

@JohnPasalis had a great post this weekend

Toronto Pre-Con Condos became wildly miss priced 6 years ago

And no one cared

5/
People just kept on buying with a ridiculously false belief rents would increase massively & mortgage rates would be 2.49% forever

Buyers would snap up Pre-Con Condos at $1250 per sqft when Re-Sale Condos across the street were offered at $825 per sqft

WTF? It made no sense

6/
But here's a common feature: most of them minted money on previous transactions

The couple taking nearly $6K a month losses made a $500K profit on a 2013 unit they sold in 2022

They were Rental Condo Investors who really BELIEVED

Not anymore

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More from @ronmortgageguy

Ron Butler Profile picture
Jun 19
AI Will Destroy Jobs: It's Coming Faster Than I Thought

As an old guy I am wrong person to comment on AI but I just encountered it in Mortgage Brokerage role that knocked me over

In the mortgage business we talk to people

Pure Digital Mortgages are just 4% of originations

2/
Only Licensed Mortgage Brokers can discuss rates, terms & mortgage products with the public but others can schedule calls, request documents, & deal with service calls

For the last year our company has been shown AI models to address these functions

They were OK but clumsy

3/
But this week BOOM: an AI Voice Assistant that's BETTER than people

- Perfect speaking voice
- Answers any question
- No lag on responding
- Gets a joke
- Funny when it should be
- Sounds confident & upbeat

I was blown away, its such a massive leap forward over the past

4/
Read 6 tweets
Ron Butler Profile picture
Jun 16
Single Family Real Estate: Heartbreak & Losses Or Will It Snap Back Quickly?

In Ontario & BC we understand the Condo Crash but what's happening with Detached, Semi's & Towns?

In some regions very bad news but what's the final outcome?

Let's be clear: other places are fine

2/
Quebec Real Estate good: sales up prices up, Alberta steady, some slight cracks on pricing emerging but nothing serious

Atlantic fine, Saskatchewan busy, Manitoba fine

But Ontario & BC: Ultra-Slow Sales volume & prices starting to sag

Old sins are coming to the surface

3/
The regions where home prices took a 25%, 30% or 40% price surge in 2021 & 2022 are clearly feeling the pressure today

The Fraser Valley in BC, the distant 905 at far reaches of the GTA, small cities in Ontario, Cottage Country

All of these increases were just nuts

4/
Read 6 tweets
Ron Butler Profile picture
Jun 10
First Time Home Buyers Getting Older & Guess What: Need Parents Help!

CMHC Reports confirm something we knew: in BC & Ontario, even older, higher income FTHBs often need Parental Help

The Feudal System is COMING BACK

The Medieval System of land rich families is reborn

2/
People talk about Boomer wealth transfer, it's happening before our eyes, even Gen X parents helping their kids with Down Payment Gifts

Or in a more dangerous move: Co-signers on Mortgages

Does Canada want to return to this Feudal System?

Doesn't matter, it's happening

3/
Some might say: No Big Deal Ron, parents should be able to help there kids buy a house

Okay, but consider this:

- 30 years ago gifts were a rare occurrence with no big money involved

- 30 years ago saving 5% down payment & qualifying for a mortgage was very achievable

4/
Read 6 tweets
Ron Butler Profile picture
Jun 9
Blow-Ups Happen! We Enter The Phase Where Homeowners Are Forced To Sell

Don't get me wrong: its not a wave

But our company would typically speak to borrowers who HAD to sell their homes based on inability to pay 3 or 4 times a year

There were of these 4 just in May

2/
It's strictly anecdotal but it's factual 4 homes that have to be sold

First or Second Mortgage in 30, 60 & in one case 90 day default

One not in arrears but scared enough of it happening soon, list the house now

Is there a common thread with these situations?

Employment

3/
One is a Real Estate Agent who hasn't done a house deal in 16 months

Another a small business owner who has seem his small import business evaporate

One Retired Couple who had done 2 separate Lines of Credit to provide down payment for kids

Their part time jobs are gone

4/
Read 5 tweets
Ron Butler Profile picture
May 30
Homeowners Filing For Bankruptcy: Something That Never Happened For 14 Years Is Now Normal

Since 2008 Homeowners represented less than 5% of Bankruptcies in Ontario, some years less than 2%

Homeowners did have financial problems but they solved them without a Trustee

2/
Homeowners didn't need assistance from an Insolvency Trustee due to the endless increase in the values of their homes

Getting behind on Credit Cards? - Get a Heloc
Big Debt Problems? - Refinance your House
Job Losses, Can't pay the Mortgage? Sell the house & have $350K cash

3/
Being a Homeowner in a decade of rapidly rising Real Estate Value was a solution for most personal financial problems, even when a Homeowner visited an Insolvency Trustee they were often told to refinance the house

That has all totally changed

Because Real Estate changed

4/
Read 6 tweets
Ron Butler Profile picture
May 28
Ontario Unemployment Problem Eminent Danger For The Canadian Economy

I know most Canadians hate to hear about problems in Ontario, people in other provinces are so tired of the Ontario as the center of the Universe theme

But 38.5% of all Canadians live in Ontario

2/
It's as if Texas or California had populations of 155M

And the wheels are starting to come off Ontario's economy

Things we covered before & a few new things

The collapse of the new home industry in Ontario has become big news

Sales of brand new construction SFD homes

3/
Fell well below 1000 last month, a number not seen in decades

Although some Purpose Built Rentals starts this year & some Commercial & Government Builds

Virtually No Hi-Rise Condo Projects for 15 months

The Construction Industry is on its knees

No signs of improvement

4/
Read 6 tweets

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