# How much is your house worth now?



## Lawrence (Mar 11, 2003)

We just got our property accessment in the mail yesterday,
We bought our house 4 years ago for $140,000., They are
saying that our house (A 2 bedroom row house that is 12.5
feet by 100 feet) is now worth $179,000.

When we bought our house it was accessed as $100,000. 

This is so crazy!...How can a 2 bedroom be worth so much?

Dave


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## (( p g )) (Aug 17, 2002)

Because you live in one of those most sought-after areas of Toronto. You can appeal your assessment if you wish, but just be advised that it takes forever to do.


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## MacDoc (Nov 3, 2001)

See numerous rants by me about the ills caused by high land values.  
It's structurally deadly to the social fabric.


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## Dr.G. (Aug 4, 2001)

I live in the Churchill Park area of St.John's, and speculators have been moving in and buying up the older homes that have not been rennovated since they were built in the early 50's. These homes are bulldozed and a new 4000+ square foot home is built. Thus, our land prices have gone sky high. I bought our home for $165,000 seven years ago. It has now been valued at $265,000!!! My reassessment has doubled in the years since we moved in to this house. The only thing that saved us was that the house we lived in previously, and bought for $50,000, was sold for $115,000. 

I am told that it is not the house but the land the house is sitting on that is rising in value so much. My lot is only 60 X 135 feet, but it is centrally located. I am able to walk to work, walk to a local upscale mini-mall and supermarket, walk 30 meters at the end of a cul-du-sac with the doxies to a small park, etc. Still, if I wanted to move in to my house now I could not afford the move. Strange/sad.


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## MrVermin (Jul 26, 2002)

We live in the Thornhill area (actually a block north of Steeles) and when we bought into this area we paid $265k for a 2700Sqft 4 bedroom house on a deep lot that has a Dual CPRail line along the back fence. That was about 7 years ago.

Now the house two doors down from me (same style and Square Footage) sold a few weeks ago for $385k. Our property value has increased by over $100k in less than 7 years, and we have frieght trains running past our back yard on a constant basis...









Now I know why people are moving out of the city to Newmarket and such....  

MrVermin
(P.S. follow the GPS coordinates in the SIG to see where I live)


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## MacDoc (Nov 3, 2001)

Ahh Laissez-faire is alive even on the edges.  
In France they killed this kind of nonsense by forcing speculators to wait 10 years to get their money out - flip it in a year and you get taxed 90% of the gain.

There is a fine balance between free market forces and designed communities that is hard to keep. The social impact of this kind of "bubble" is devastating, even a well established University Professor could not afford his own neighborhood and sure as hell I wouldn't be in this one if I had to pay current prices.

It's ruinous all around when you track the impact over time of this speculative activity.


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## Sonal (Oct 2, 2003)

I live in a 3-bedroom house in Don Mills -- our assessment went up similarly. But it's also a high-demand neighbourhood. But coming from a family of real estate investors, it's understandable.

It may seem bizarre that a 2-bedroom house in the Beaches goes up so much, but remember: you're not being assessed on the house. You're being assessed on the property, and the value of the property is based on how much someone else wants to live there. 

That's why (as a friend of mine keeps pointing out), I could own a mansion in Whitby for what I paid for my modest house, but then I'd have to live in Whitby....


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## MACSPECTRUM (Oct 31, 2002)

real estate property values are a false economy since the property is valued at what the market is willing to pay - and of course the value goes up each time someone else buys/sells a property

client: what is our house worth?
agent: well, the one down the street sold for X dollars last week, so your house must be worth X + Y (ed. note Y > 0)
that's like saying i sold a mac last week for $1,000 so the mac i sell today is worth $1100








of course the pundits will say "free market economy" and "what? you want soclialism?"
there has to be some sort of check and balance so that families can afford housing without having to move 50 km away from the city - but wait that helps sell cars and fuel.... (cue conspiratorial panaoia)


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## Pamela (Feb 20, 2003)

We have a new one bedroom and den apartment in the Point Grey area of Vancouver....when we started the deal it was $239,000. Now it's assessed at $262,000. That's just pure craziness...and it'll only get worse with the Olympics.


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## Moscool (Jun 8, 2003)

Leverage man, leverage...

The price increases reported above are not that spectacular when you compare them to other investments (rule of thumb something that goes up 10% a year will double every 7 years). Houses bought and sold for profit are inherently risky assets so a 10% return is not much of a premium. I think that there are three things that make houses different:

1) Taxation

Most countries are fairly benign on main homes and tend to fully tax only commercial operators (who of course can offset costs as in any other business). So you have an incentive to cash in this tax-free capital gain regularly, either by upgrading or remortgaging. Some countries impose high tax both at the entry (purchase tax) and the exit (capital gains tax), but generally the market remains pretty liquid over, say, a 3-5 year period.

2) Cash flow spend

Here in the UK people definitely go by what they can afford monthly, not the intrinsic value of the property. This means that lower interest rates will immediately translate into higher house prices

3) Leverage

Because the vast majority of individuals and companies borrow heavily to finance houses, any gain (once interest costs are taken into account) will be massively leveraged. 99% of home owners would never dream to buy stock on margin, but that is precisely what they do with their houses. During a long boom it is a one way bet, so everybody feels both rich and clever. Where else can you x10 your deposit money in 2 or 3 years? As long as people keep behaving using 1,2 and 3 above, prices will go up...

Now when interest rates finally go up, what will happen? Well, it depends on things like fixed versus variable rate mortgage stock for example, but the consensus is that a 10-20% correction is likely in the next 18-24 months. So if your house has nearly doubled in the current boom, don't expect to see it drop back to the original price, but a drop is definitely on. The smart money is on renting now and buying in 2-3 years, but do you have the guts for it...


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## (( p g )) (Aug 17, 2002)

I vividly recall a time back in the 80s when the housing market crashed and people (mainly Toronto folks) were stuck with mortgages and assessed property tax rates that were greater than the resale price they could get on the market. 

Scary, hunh?

That said, I'll gladly pay my property tax bill. It sure beats paying rent, where your return on investment is a big fat 0.


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## Ohenri (Nov 7, 2002)

the frenzy is starting to level off that I have seen in GTA on a whole... feels like it - though I could be totally wrong. Anyhow, I have been spoiled and live in the downtown GTA. But I will say that I need/want it as it affords me to walk to work. I have never lived more than a 12 min walk from my employer  .

Now looking to own some property and if I keep looking for this 2 bdrm that want - I'm looking @ $200k!  But that mostly b/c I'm insistant on staying in the d/t area. Oh well...

h!


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## Lawrence (Mar 11, 2003)

> So if your house has nearly doubled in the current boom, don't expect to see it drop back to the original price


I've seen this happen in the 80's where houses got over
inflated in price and then a recession came...Boom...The
prices started dropping like rocks and everyone started
selling their homes. (A lot of homes dropped below what
they were worth)

Before anyone knew what had happened the unemployment
rate jumped and rental housing became scarce.
If the Canadian dollar keeps getting stronger then it's
possible that another recession isn't that far down the road.

The governments have historically always raised the taxes
just before a recession and home owners have cried foul
when a recession hits.

I just hope that a recession isn't looming close at hand, Not
that it matters...We have no desire to sell...Even though our
neighbours two doors down have just sold their two
bedroom row house for an unprecedented price of
$201,500.







(Bidding wars...Love em when you're
selling...Hate em when you're buying)

Dave


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## Sonal (Oct 2, 2003)

One of the key differences in the real estate boom now and the real estate boom in the 80s is that a lot of the increase in demand was from investors and speculators who were buying places to hold and sell for more money (and not live in). The increase in demand now is driven by former renters taking advantage of low interest rates -- that is, people buying homes to live in. 

Because demand now is driven by something more tangible, the fall (there's always a fall) is likely to be less severe. (Real Estate in the 80s is not unlike the recent dot-com boom and bust.)

Or so my folks tell me -- they're brokers who were hit hard in the 80s.


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## ErnstNL (Apr 12, 2003)

I will never forget the 80's:
interest rate on loans at banks: 24%
mortgage: 18%

No wonder there were so many default loans.


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## Kosh (May 27, 2002)

> I just hope that a recession isn't looming close at hand, Not
> that it matters...We have no desire to sell...


Hey, as long as the recession doesn't happen in 4-5 years, or last 4 years, I'm fine... my mortgage is fixed for 5 years.

As for house prices, it's just as bad, if not worse in Ottawa. I bought my 3 bedroom condo a little over five years ago for $137,000, I ended up selling it this year for $195,000. I probably could have got over $200,000 if I was patient, but I had already bought my new house and didn't want to hold onto the condo too long.


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## MacNutt (Jan 16, 2002)

Believe it or not, when I first moved to Salt Spring Island from Victoria...it was because the rent was cheaper!









I kid you not. 

Back then, I rented a whole Lindall cedar home on a steep hillside overlooking a lake (with a hot tub) for only 250$ per month. Some of my friends were actually being _paid_ to live in very fancy homes that were owned by people who didn't live here full time.

Nowadays, every rich guy in North America seems to want to be on Salt Spring....and they've been bidding land prices into the stratosphere for the last several years. Perhaps its the mild climate or the scenery or the rural atmosphere, or the fact that it has all of these things plus practically every imaginable amenity of modern society. I don't know.

I do know that loads of people have decided that this is where they want to live, and with our strict zoning laws there are only so many houses allowed into the green spaces.

End result? A very cheap fixer-upper on the smallest parcel of land is going for well over two hundred grand. And usually sells as soon as it is listed. A decent home on a nice piece of land is 300 to 500 thousand. Waterfront is in the millions.

I have a rather large acreage with two nice homes on it and a section of mountain as a part of the package. It is heavily forested and there are no other houses for as far as the eye can see. No traffic sounds, just birds and deer and mountains. It cost just under 400 thousand way before the boom started. My house (the main dwelling) was designed by Frank lloyd Wright's brightest student and the second home is a beautiful log house that me old mum lives in. Plus there are farm buildings and the like.

I'm not sure what it's worth right now, but I wouldn't trade it for anything.  

[ November 14, 2003, 02:22 PM: Message edited by: macnutt ]


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## MaxPower (Jan 30, 2003)

macnutt,

Sounds like a really nice place.

I bought my house on a 3/4 acre lot a year and a half ago for just over $300K (quite reasonable for my area, considering what other smaller homes are going for in my area). I am in a similar situation where the only sounds I hear are the birds chirping (I get the occasional jet flying overhead to Hamilton, and the faint whistle of the trains, but the trains sound nice to me).

There have been rumors about a mid-penninsula highway coming in close to my place, so if that becomes a reality, I figure my property value will definitly increase. That combined with the abundance of golf courses in the area. My guess is at least a $100K increase.


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## anal-log (Feb 22, 2003)

The amount of property I tax pay ($2200) is based on the assessed value. No wonder it seem to go up in value every year.


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## SINC (Feb 16, 2001)

We bought our 1,200 square foot bi-level home, built in 1973, for $97,000 in 1988. Since them we have spent $40,000 on upgrades like new windows, furnace, insulation, shingles, two new baths, hardwood floors, counter tops, all appliances, wooden railings and banisters. Also new sidewalks and rear deck. A friend in the appraisal game reappraised it for me last year and it came in at $212,500. I guess if we ever decide to sell, we will realize a profit, but who knows when that might be. We intend to live here until advanced age precludes us from doing so, as in not being able to navigate the 14 steps from top to bottom.


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## groovetube (Jan 2, 2003)

Just got our 2004 assessment yesterday. When we bought here in TO a few years ago, we paid 179,000 , and assessment was 127,000. Now the assessent a couple years later is 259,000. Crazy.


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## Moscool (Jun 8, 2003)

What sounds crazy is this assessement business: looks pretty arbitrary and not always in tune with the price cycle... 

The way it works here (not necessarily better, but different), is that some guy drew a line in the sand and categorised all houses in 8 price bands. You were sent your assessment and had a way to appeal if you were on the margin of a band. This is now fixed and a new tax price comes out every year, with a multiplier for each band. Simple, no rivalry between neighbours and a focus on getting the 'headline price' down from the voters...


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## K_OS (Dec 13, 2002)

The whole Toronto market is crazy, my family bought a bungalow in the Dufferin and Eglinton area back in '97 for 135,000.00 last year our assesment came in at a whopping 230,000.00  almost 100g's. My brother bought a triplex a block north from us last December for 190,000.00 2 months later a similar house in worse shape sold for 220,000.00. It's just nuts, I'm getting married next year and keep looking at house prices to level off but I don't see it happening it just might be that I have to move out of TO to live


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## Lawrence (Mar 11, 2003)

> We just got our property accessment in the mail yesterday,
> We bought our house 4 years ago for $140,000., They are
> saying that our house (A 2 bedroom row house that is 12.5
> feet by 100 feet) is now worth $179,000.


Correction...FWIW...Our house was actually not accessed as
$179,000., It was $187,000. my mistake...I misheard my
girlfriend. (That's a 1250 s.f. house that is on a 12.5x100 ft.)

The thing that ticks me off is...Our next door neighbours
told me that their house has been accessed as
$180,000. (We have an addition that is built attached to
their addition) and they have the same amount of square
feet as us, This just doesn't make sense.

While our neighbours that are next door to us on the other
side had their house accessed as $171,000., Same lot size
but smaller house...We have a first floor addition and they
don't. (But they have a second bathroom)

This is getting very confusing...I thought the taxes were
accessed on lot size...Not house size and upgrades, If it's
based on upgrades...Then why the heck am I renovating
this thing?
Ideally...I was hoping to renovate this house over a 5 year
period and live cheaper than rent.

Dave


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## hmto (Jul 4, 2003)

What's the old saying, "location, location, location". End of story. Doesn't matter what you have or don't have when comparing homes on your street. Comes down to who is willing to pay for what at any given instance and who is actually selling in a particular neighbourhood. I have had homes sell for 440 down my street whereas another neighbour can't get a nibble for a larger house but lower asking price. There is no "real" guage as it is a market driven by an intangible that is only relevant to each individual buyer. An agent friend of ours said we could sell our home easily for 425. We paid 270 five years ago. Insane!! So what? Where can I actually afford to move to afterward?


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