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David Batori, the broker of record of Re/Max Hallmark Batori Group Inc. in Toronto, said he has clients making this bet.

One couple who paid $500,000 for their Toronto home a few years ago ago recently bought a move-up house, but decided to keep what was their principal residence and turn it into a investment property. It was worth $1 million and paid off, when they made the decision.

“They were able to get 70 per cent loan to value, so they pulled out $700,000,” Batori said.

With that equity, the couple was able to buy another house, which became their principal residence, for $1.5 million. (They do have to pay capital gains taxes on any profits made from the investment property, at the point it ceased to be their principal residence.)

“Everybody thinks prices will go up for eternity until it blows up and they lose everything, like the early 1990s,” said Batori, who got his start in the industry back then. “It was a very painful decline. I told them, ‘Why hang onto to your house, it’s worth a $1 million.’ That was two years ago. Now it’s worth $1.5 million.”

The former principal residences are now income property, but they might better be referred to as speculative property. In Greater Vancouver, detached home prices were still up on average about 36 per cent in August from a year ago, even as a sharp decline in price last month might give people some pause. Greater Toronto detached home prices are up about 21.5 per cent from a year ago — more than enough to make a profit on fairly quick flip even after costs like real estate commission.