大起大落: 我家小区的房价
My home price has been on a roller coaster ride


Toronto has enjoyed a decade-long real estate boom, as the house price surge continues to cross into jaw dropping territories. The seemingly perpetual growth has led many people believe that property investments are both lucrative and safe, and as a result, investors have jumped on the bandwagon in droves. 


The buying frenzy has also swept through my neighbourhood – where most homeowners are Asians. Quite a few of neighbours have bought several homes on the street, with one resident purchasing three properties within a mile’s distance. 


Almost all of the multiple property purchasers are newcomers from China, who came to Canada within the last ten years. I understand the psychology behind this homeownership mania. China’s decades-long housing market boom has created properties bonanza, and turned almost every citizen into a property investor, with many owning multiple properties. 


“The more properties you grab the more fortune you make,” a Chinese friend told me, “but buy and hold is the key… if you sell them too early, you will end up losing badly.”


He then told me a sad story of one of his friends, who bought a two-bedroom apartment unit in a second tier city of China in the early 2000s. The price of the property surged by hundreds of thousands RMB amid a sharp market rally, and he decided to cash in the profit by selling it. But the joy of seeing his bank account surge was short lived as he found just a few months later that the price of his unit went up another notch: by then, all the proceeds in his bank account could afford only ¾ size of the unit he had sold. 


“Basically, he lost a bedroom by doing that!” said the friend.  


But the belief that the housing market will be in perpetual growth is a misguided perception, and a property bonanza will not last forever. In fact, housing markets in Canada, despite its safe haven status, are not immune to volatility and are prone to bubbles.

我在1990年代初来到加国时所了解到的第一大新闻就是 1980年代末的房市泡沫破灭。在房市泡沫高峰期前,五年期固定房贷利率升至12.7%,借贷成本也随之大幅飙升。失业率猛增,加之移民流入量下降最终引爆房市泡沫破裂,导致大多伦多地区房价一泻千里。其中多伦多市中心受创最为严重,房价暴跌近50%。在利率上调后,许多家庭投资者因为不堪债务重负而被迫止赎房屋。

When I arrived in Canada in the early 1990’s, the first thing I learned was the housing bubble burst in the late 1980’s. During the peak of the bubble, the borrowing costs soared as 5 year fixed mortgage rates reached 12.7%. A spike of unemployment and a drop in the inflow of immigrants triggered the burst of bubble, leaving home prices in GTA collapsed. Prices in downtown Toronto, the area that was hit the worst, suffered a 50% loss in prices. When interest rates skyrocketed, many home investors burdened by the heavy debt load were forced to have their homes foreclosed.


Most of the homes in my neighbourhood were built in the 1970’s, where the first buyers paid around $40-50,000. Today, those same homes are worth more than $1 million. Mrs. Chow, the previous owners of my house, bought it for $400,000 in the early 1980s. Since then the house price embarked on a journey that has been on a roller coaster ride. It dropped to only $200,000 during the housing crash in the late 1980’s, and then slowly climbed up to over $300,000. I still remember the delight and joy that she and her agent expressed as we offered a price that was much higher than the bottom, but still lower than the price at which she purchased.


Ms. Chow, a middle aged couple from Hong Kong came to visit their old home once several years after we moved in. Knowing that the price had gone up exorbitantly, she seemed quite emotional as tears welled up in her eyes. Nostalgic or regret? I can’t say. But the only thing I know was that if she wanted to buy back the home, she would have lost several bedrooms now with the proceeds she got from us. 

这是不是给过热房市敲响警钟,显示跌宕起伏的房市步入衰退期? 根据多伦多房市以往的波动规律,只有傻子才会相信房价上升会永远持续下去。

But could it be a red flag for an overheated market, or a sign that we are heading for the downhill side of the roller coaster? Given the turbulent history of Toronto housing market, only a fool would believe that the price surge will go on forever. 

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