Sky-high home prices are a vote of confidence in Toronto’s future ?

Maybe not.

Check this out … Hong Kong people are dying to leave the island – Home of the #1 Bubbly Real Estate in the world

Recent report by WSJ: Cost of Living Push Hong Kong Residents Overseas

Prior to 1997, a flood of residents left Hong Kong’s shores, worried about what would happen when the former British colony returned to Chinese control. Now, more than 15 years after the handover, the number of people emigrating from the city has started to tick up again.

Recent developments in Hong Kong’s property market are another factor prompting the middle class to leave, said Mary Chan of immigration-consultant group Rothe International Canada. The cost of housing has more than doubled since 2008, and the government has enacted an aggressive round of cooling measures in the past year, causing prices to stall. Many analysts believe the market will begin to tumble in the coming year.

A recent survey by Citibank found that the high cost of living is also deterring Hong Kong residents from having children. An apartment of just 650 square feet apartment on Hong Kong Island, for example, costs about US$1 million, according to government statistics.

“Housing prices have increased to such an extent that they think it’s time for them to materialize that gain,” Ms. Chan said of her clients. “If they sell their flat in Hong Kong—even if it’s a small one—they can live in a house, a sizable house, in a great neighborhood in another country.”

Sounds like Canada ?

Anyway, just take a look at mainland China – real estate in Beijing is even more expensive than New York. So, why do you think Beijingers (and Chinese from elsewhere for that matter) are seeking passport in other countries (eg. Canada) in drove ? Because sky-high home prices are a vote of confidence in (Communist) China’s future ?

I am therefore a little skeptical that sky-high home prices are a vote of confidence in Toronto’s future.

Back in Toronto – Home of Millions of Millionaires …

Sky-high home prices are a vote of confidence in Toronto’s future

At a downtown dinner party the other night, the talk turned to that favourite Toronto topic: real-estate prices. All three couples at the table bought their houses about 20 years back. Since then, prices in our gentrifying west-end neighbourhood have soared. Semi-detached Victorians that went for $200,000 or so in the early 1990s now fetch four or five times that. “We’re all millionaires!” one neighbour said. On paper, anyway.

The ongoing, seemingly endless run-up in Toronto real-estate prices continues to amaze. A tiny two-storey row house down the alley from us was gutted, renovated to within an inch of its life and put on the market for $800,000 plus. A silver Mercedes now sits on the backyard parking pad.

Down the street, a cramped semi-detached that the real estate blurb calls full of original character – a complete fixer-upper, in other words – is listed in the $800,000s, too. Whoever buys it will probably have to spend at least another couple of hundred thousand to bring it up to standard.

This sort of thing is happening all over town. A converted garage in the east end known to some locals as “the shack” recently went to an investor for $165,000. At 210 square feet, it looks like a children’s playhouse. It has a sitting room and bedroom but no kitchen, bathroom or, for that matter, running water.

Or consider the case of the “murder house.” A man was killed in the detached Ossington Avenue property in 2011. His body was found in the entryway. This spring, the place sold for $900,000 regardless.

It can all seem a little crazy. My grandmother’s old house in the Beach, a lovely but smallish place at the top of Neville Park Boulevard, sold this spring for more than $860,000. When she moved out in 1995, she got just $260,000 for it, but then, family lore has it that when the family moved in after the Second World War, they paid $2,500.

My own parents bought their first house in Moore Park for $17,000 in about 1960. It was a semi-detached overlooking Mount Pleasant Cemetery. It must be worth more than a million now. They moved up to a bigger, detached house next to the park around 10 years later and still paid only $35,000.

The experts have been warning for years that a crash is coming, and perhaps it is, but the real-estate boom rolls on and on. People say there is no way young couples can afford a downtown house any more, but young couples keep buying them, even if means being mortgaged to the hilt.

“I think it’s always been hard to buy a first house,” says Dianne Chaput, a real-estate agent in the Beach. “Think about what people did to get a house back in the day.”

To look on the bright side, it says good things about the city that house prices keeping going up and up. It means people want to live here and are willing to pay a premium. It takes faith to pay so much for bricks and mortar. Buyers are investing not just in the house, but in the future of the city, and the future of Toronto seems bright.

From Leslieville to the Junction, once down-at-heel neighbourhoods are profiting from the hunger to live in the city. Thousands of run-down houses are being returned to their former glory, and better. Tens of thousands of older residents are cashing out, funding their retirement with the proceeds of a house sale.

If it seems cruel to the young that house prices are so high, it is worse in some other places. Prices have sailed through the roof in cities around the world from Hong Kong to New York to London. A British friend bought his big house in North London for £32,000 ($52,000 at today’s exchange rate) in 1977, about four times his salary at that time. It is worth £1.2-million today – by his reckoning, about 25 times the average annual British salary.

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