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Thread: Baby, we got a bubble!?

  1. #7156
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    Quote Originally Posted by marsh View Post
    i thought those who had taken out 40 year mortgages were still a fairly small proportion of total mortgage holders. Does anyone know?
    I can't cite a source but I remember reading a report that during that time period a majority of first-time home buyers were opting for the 40-year amortization.


  2. #7157
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    Quote Originally Posted by Mindset View Post
    I think its safe to say that in Canada we at a saturation point in terms of home ownership. I believe we are at 70%, which historically is near or a new high.

    Best case scenario for the housing market in Canada, is a slow re-adjustment in prices.

    For the first time in a long time, Canada needs a lower dollar, and as the international community awakens to our fiscal situation, our dollar will drop. This will help save jobs in Alberta and in Ontario.
    While your first two points make sense, your third point makes no sense at all. What's wrong with Canada's fiscal situation, relative to the OECD? How will a lower dollar 'save jobs' in Alberta, where the issue is pipeline capacity and therefore a buyers' discount? Given, at this point, years of near-parity for Ontario manufacturers, who is left to adjust to the current exchange rates?

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    Quote Originally Posted by Riverdale Rink Rat View Post
    While your first two points make sense, your third point makes no sense at all. What's wrong with Canada's fiscal situation, relative to the OECD? How will a lower dollar 'save jobs' in Alberta, where the issue is pipeline capacity and therefore a buyers' discount? Given, at this point, years of near-parity for Ontario manufacturers, who is left to adjust to the current exchange rates?
    Most tar sands crude is trading selling for $50/barrel. Wages are paid in CDN $. These wages are similar in the US. Difference is, Bakken Oil is better quality and getting higher price. NG is going for under $3/mcf CDN. Alberta is running deficits.

    Ontario: Running massive deficits. Manufacturing costs, ie.wages are higher than US. US manufacturers are moving production back to home. Its cheaper. Hence the announcement by GM to move some lines back to Michigan in 3 yrs. That coupled with legislative changes.

    Our productivity, and efficiency pales to the US. Therefore in order to compete we must reduce our dollar.

    Next, gov't no longer wishes for CDNs to increase their debt. Hence lower loan growth, leading to muted earnings from our banks, then a slower economy. Witness downgrades of the banks today.

    Add an overheated housing market, and you need to stimulate growth by manipulating the currency, just as every other central bank around the world is doing... Japan is the new kid on the block.

    I dont expect the bottom to fall out, but a slow steady trend lower for the CDN dollar over time. Low 90s, high 80s.

    Our biggest concerns should be consumer debt levels, provincial deficits, housing market. I believe provincial debt will be the first to be re-priced by the market as our financial warts become apparent. Again nothing dramatic, but a definite increase in rates.

    The other alternative is that US economy grows faster than expected and demand exceeds capacity, forcing an overflow into Canada for a short-time.

    Still increasing oil production, and lack of pipeline capacity will keep a lid on oil prices domestically. Energy is a third of manufacturing costs, so dont expect the US to be in any rush to fix this problem.

    Anyways im running on. Basically we need a cheaper dollar to compete against the US and assist our "soft" landing. If the housing market implodes it will not be pretty here.

  4. #7159
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    Quote Originally Posted by Mindset View Post
    Our productivity, and efficiency pales to the US. Therefore in order to compete we must reduce our dollar. Add an overheated housing market, and you need to stimulate growth by manipulating the currency, just as every other central bank around the world is doing... Japan is the new kid on the block. (...) Basically we need a cheaper dollar to compete against the US and assist our "soft" landing. If the housing market implodes it will not be pretty here.
    IMHO, you're advocating a strategy which didn't work for Canada in the '90s and doesn't work for anyone else, either. Debasing your currency obscures the things you actually need to do, be that become more productive or figure out how to deliver oil to where it needs to go. It's an old standby for Ontarians in particular -- a lower CAD will help us not change a thing! Please, manipulate the currency so we don't have to change!

  5. #7160

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    To RRR:

    No country ever got ahead in the long term debasing its currency. Canada did that as pointed out actually in the 80's and 90's and this was an excuse for business not to modernize and become competitive. That said, given the US is actually the biggest currency manipulator with QE; China by pegging its currency to the USD or allowing it to slowly escalate but below the rate the market would dictate, Japan joining the club, and the Euro which recently has excalated but that got slammed and devalued from $1.60 USD to about $1.20 before climbing back to $1.35 to Switzerland that insisted its Swiss Franc could not go beyond 1.20 Euro. So every country pretty well is "racing to the bottom" in its attempt to make its economy more competitive.

    To Mindset's comments.

    I agree with most but just a couple of comments:

    "Our productivity, and efficiency pales to the US. Therefore in order to compete we must reduce our dollar."....In fact there were articles recently suggesting that the productivity gap over the past decade has not in fact been as bad as initially thought. This was a review/study by some economists I don't recall where exactly but in either the National Post or the Globe and Mail in the last month or so.

    "Our biggest concerns should be consumer debt levels, provincial deficits, housing market. I believe provincial debt will be the first to be re-priced by the market as our financial warts become apparent. Again nothing dramatic, but a definite increase in rates." In fact Ontario debt has been repriced already by the market and the rating agencies and yields have gone up in the past few months. So this is happening. However, you have Carney who just stated with the BOC report that there is less pressure and that rates will not go up in 2013 and probably not until 2014 at the earliest. Of course ultimately it will depend on the US and whether or not it continues it present momentum and if the housing in the US picks up enough steam to accelerate the tepid rate of recovery. The US economy in turn will dictate to a great degree Canadian interest rates.

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    Quote Originally Posted by interested View Post

    I agree with most but just a couple of comments:

    "Our productivity, and efficiency pales to the US. Therefore in order to compete we must reduce our dollar."....In fact there were articles recently suggesting that the productivity gap over the past decade has not in fact been as bad as initially thought. This was a review/study by some economists I don't recall where exactly but in either the National Post or the Globe and Mail in the last month or so.

    "Our biggest concerns should be consumer debt levels, provincial deficits, housing market. I believe provincial debt will be the first to be re-priced by the market as our financial warts become apparent. Again nothing dramatic, but a definite increase in rates." In fact Ontario debt has been repriced already by the market and the rating agencies and yields have gone up in the past few months. So this is happening. However, you have Carney who just stated with the BOC report that there is less pressure and that rates will not go up in 2013 and probably not until 2014 at the earliest. Of course ultimately it will depend on the US and whether or not it continues it present momentum and if the housing in the US picks up enough steam to accelerate the tepid rate of recovery. The US economy in turn will dictate to a great degree Canadian interest rates.
    With your first counterpoint I would agree that it is possible that our productivity may have improved and closer to that of the US, but I do not believe that will be sustainable. Simply do the sheer size of US companies and their markets, their efficiences cannot be matched, as they are able to simplify and narrow their product offerings. US manufacturing is at a level now that it can compete with China, thats impressive.

    Carney statement is a dire reflection on the reality our nation is facing. We have a very tough haul in front of us. I wont even get into the impending health care crisis that will force massive change. The numbers are simply shocking. Higher taxes are on the way.

  7. #7162

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    Quote Originally Posted by Mindset View Post
    With your first counterpoint I would agree that it is possible that our productivity may have improved and closer to that of the US, but I do not believe that will be sustainable. Simply do the sheer size of US companies and their markets, their efficiences cannot be matched, as they are able to simplify and narrow their product offerings. US manufacturing is at a level now that it can compete with China, thats impressive.

    Carney statement is a dire reflection on the reality our nation is facing. We have a very tough haul in front of us. I wont even get into the impending health care crisis that will force massive change. The numbers are simply shocking. Higher taxes are on the way.


    I believe this is the case for most of the OECD countries and certainly is already happening in the US, though the US has the lowest tax rate of all OECD countires.

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    Just received this from Urbanation about Q4 2012.


    RecORD HIGH LEVEL OF CONDOMINUM APARTMENT CONSTRUCTION STARTS IN 2012
    Toronto developers commence building 24,388 units in 104 projects


    TORONTO – January 31, 2013: Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, today released its Q4-2012 market overview.


    In the Toronto Census Metropolitan Area (CMA) there were 3,841 new condominium apartment sales in Q4-2012, an increase of 16% over the third quarter. Overall, 17,997 new units sold in 2012, between the five-year CMA average of 20,119 annual sales (2007 to 2011) and the ten-year average of 17,139 annual sales (2002 to 2011), but down from the record breaking pace set in 2011.


    The Toronto CMA condominium market set several records in 2012 including: construction starts (24,388), active developments (355), total active units (89,251), and total units under construction (56,866).


    The average sold index price in the Toronto CMA was $536 psf in Q4-2012 (up 5.2% annually), while unsold suites were being offered at $568 psf on average in the fourth quarter.


    Overall the active Toronto CMA new condominium market is 79% sold overall, down from 80% sold in Q3-2012 and 82% sold in Q4-2011, but above the ten-year average of 78%.


    “Despite concerns over the level of unsold supply in the new condominium market, the ratio of sold to unsold units has consistently been above the long-run average in recent years” says Ben Myers, Urbanation Executive Vice President. “There remains confusion over unsold supply and standing inventory, to clarify, at the end of Q4-2012 there were just 613 completed and unsold new condominium apartment suites in the Toronto CMA - some would be rented out by the developer, some used for construction offices, and others used as model suites for subsequent phases, effectively lowering this standing inventory figure even farther”.


    Overbuilding was a term cited quite often in relation to the Toronto condominium market in the second half of 2012, however, a survey of developers, lenders and brokers conducted by Urbanation in December indicated that just 11% of respondents indicated that over supply in the new condominium market was their top concern going into 2013.


    The resale condominium market suffered from a lack of supply in Q4-2012, as just 3.2% of the 227,700 units (1,285 buildings) tracked by Urbanation were listed for sale in the fourth quarter, the lowest quarterly level in over 10 years. Resale activity declined 14% quarterly in the Toronto CMA to 2,941 transactions. Despite the decline in resale units traded, the Sales-to-Listings ratio increased quarterly to 40.2%, indicative of relatively balanced market conditions.


    “Many investors chose to hold and rent their units in 2012 rather than sell them into uncertain market conditions” adds Myers. “This is contrary to the theory that condominium unit holders will panic and sell their suites at significant discounts during a softening market”.


    Of the 2,941 resale condominium apartment transactions in Q4-2012, just 0.9% of these suites were sold for less than 90% of the list price. These 27 units sold at an average price of $641,000 ($282,000 over the average Q4-2012 resale price of $359,000), indicating that most of these luxury suites were owned by individuals with unrealistic value expectations, not investors looking to ‘cut their losses’.


    Myers adds “We do not subscribe to the theory that a major correction in resale condominium pricing is forthcoming, the lack of recessionary conditions, the nearly non-existent foreclosure market, and the unwillingness of condominium sellers to accept low-ball offers will keep prices from falling to any significant extent in 2013.”


    Overall, 15,292 resale condominium apartments traded in 2012, down from the five-year average of 15,609, but above the ten-year average of 13,486.


    Urbanation is forecasting 14,500 resale condominium transactions in 2013 and 17,000 new condominium sales in the Toronto CMA. 53% of respondents to Urbanation’s industry questionnaire expected between 17,500 to 20,000 new condominium sales in 2013, while 42% expected sales between 14,000 and 17,500.

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    Median Toronto resale condo prices now falling on a year/year basis. Some charts and commentary here:

    http://theeconomicanalyst.com/conten...housing-market

  10. #7165
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    I posted this in another thread yesterday, but is perhaps more relevant here considering the urbanation report posted above:

    Another look at the building boom, using population projections and units built (emphasis mine):

    "Housing Growth is On Track with the Forecasts: The 2005 forecast anticipates that 322,000 housing units will be required to accommodate the forecasted population growth between 2001 and 2031. The Canada Mortgage and Housing Corporation (CMHC) reported that 127,500 units were built between 2001 and 2011. This is 40% of the required units and leaves a balance of 194,500 units to achieve that forecast. In the five years from 2007 to 2011 inclusive, the City received 1,871 development proposals representing 151,900 units. Of these, about 80,100 units are approved or have building permits issued. This represents a further 25% of the required units.

    Together, this is almost two-thirds of the units required to accommodate the forecasted population by 2031 with 18 years remaining in that forecast period.

    Of the balance of 194,000 units anticipated to be required after 2011, over forty percent of the units are either already approved or have building permits issued. Toronto is well on its way to housing the population forecasted by the Growth Plan to 2031. The revised forecast anticipates that the average number of persons per household will be higher than previously expected, so that despite the higher population forecast, the number of dwelling units required to accommodate that population by 2031 will be slightly lower than the current forecast."

    via http://app.toronto.ca/tmmis/viewAgen...em=2013.PG20.8

    Further info: https://www.placestogrow.ca/index.ph...=318&Itemid=14
    Last edited by greenleaf; 2013-Feb-01 at 12:46. Reason: fixed links

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    Early indications are January TREB sales numbers are much higher than 2012.
    I think we are in for a run these next few months. Need to change the name of this thread soon or just let it die. Unless the boys waiting for a bubble want to talk about it for another few years.

    Good to be back.. some things never change
    Last edited by TorontoMike$$; 2013-Feb-01 at 23:02.

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    Price-Fixing in Real Estate? No way!

    Source http://torontorealestateboy.ca/blog/

    The Competition Bureau of Canada launched an investigation into allegations of price-fixing amongst several companies in the concrete industry. According to the Toronto Star, at least three GTA companies are under investigation for colluding to fix the price of concrete forming which is used in building the foundation of a home. If the allegations are true, extra costs have been incurred on building houses for the past decade and these costs were likely passed on to the end users (like you and I).

    Could this be why house prices are so high in Canada?

    It’s good to see how our tax dollars are being spent on yet another meaningless project. Seriously, would house prices be any lower if the cost of building a house for a builder was any less? I highly doubt it!

    Let’s face it, we are Canadians and being competitive is simply not in our nature. If the Competition Bureau’s lawsuit against Rogers, Telus and Bell is any indication, consumers may win the battle, but the big corporate guys will always win the war! You can fine Rogers, Telus and Bell all you want, but at the end, you are simply biting the hand that feeds you.
    Toronto Real Estate Boy
    www.torontorealestateboy.ca

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    Quote Originally Posted by torontorealestateboy View Post
    Price-Fixing in Real Estate? No way!

    Source http://torontorealestateboy.ca/blog/

    The Competition Bureau of Canada launched an investigation into allegations of price-fixing amongst several companies in the concrete industry. According to the Toronto Star, at least three GTA companies are under investigation for colluding to fix the price of concrete forming which is used in building the foundation of a home. If the allegations are true, extra costs have been incurred on building houses for the past decade and these costs were likely passed on to the end users (like you and I).

    Could this be why house prices are so high in Canada?

    It’s good to see how our tax dollars are being spent on yet another meaningless project. Seriously, would house prices be any lower if the cost of building a house for a builder was any less? I highly doubt it!

    Let’s face it, we are Canadians and being competitive is simply not in our nature. If the Competition Bureau’s lawsuit against Rogers, Telus and Bell is any indication, consumers may win the battle, but the big corporate guys will always win the war! You can fine Rogers, Telus and Bell all you want, but at the end, you are simply biting the hand that feeds you.
    So, your first post is one to your own blog (instead of the actual Toronto Star article), accompanied by some half put together commentary about big corporations and the futility of consumers sticking up for themselves?

    Fail.

  14. #7169

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    From the Toronto STar:

    Rental vacancies drop despite GTA condo boom: Report
    The rental market remains tight across the GTA despite a surge of new condos over the last five years.
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    It's getting harder to find a rental apartment or condo across the Greater Toronto Area

    Keith Beaty / Toronto Star

    It's getting harder to find a rental apartment or condo across the Greater Toronto Area
    By: Susan Pigg Business Reporter, Published on Thu Dec 13 2012
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    The rental market remains tight across the GTA — and especially in the highly-coveted downtown core — despite a surge of new condos over the last five years that now account for 16 per cent of all the rental units in the region, according to the Canada Mortgage and Housing Corporation.

    While the vacancy rate for rental apartments bumped up slightly in October over a year earlier, it still remains at one of its lowest levels in a decade, 1.7 per cent, compared to an even lower vacancy rate of 1.2 per cent for rental condos, the federal housing authority said Thursday.

    That slip year-over-year in condo vacancy rates occurred despite the fact there was a six per cent increase in the number of condo units up for rent in the GTA in October over a year earlier.

    Condo rents continue to run about 40 per cent higher than apartment rents, especially older apartments, notes the report.

    A one-bedroom unit in the GTA now rents for an average $1,003 a month, compared to $1,430 for a rental condo while two-bedroom apartments average $1,170 compared to $1,586 for a rental condo.

    Rents are higher in the City of Toronto: $1,010 for a one-bedroom apartment compared to $1,456 for a condo. Two bedrooms average $1,194 and $1,602 respectively, says the report.

    An estimated 33 per cent of all new condos coming on the market across the GTA are now being rented out rather than lived in by owners, but competition remains especially fierce in the coveted downtown core and, increasingly, North York and Peel Region, according to CMHC.

    Yet all those new investor-owned glass-and-granite rental condos did little to ease demand and drive up vacancy rates in older, purpose-built apartments, which stood at just 1.4 per cent in October of 2011, according to the annual rental market review.

    “While vacancy rates increased slightly this year, the overall average rate remained relatively low as job opportunities improved, first-time (home) buying slowed and supply growth remained muted.

    “The increase in vacancy rates can partly be attributed to fewer young adults and immigrants entering the market, as well as more people leaving the GTA or choosing to rent in the condo market,” said Shaun Hildebrand, CMHC’s senior market analyst for the GTA.

    Average rents increased by 2.8 per cent across the GTA, but by 4 per cent in the City of Toronto where the vacancy rate has slipped below one per cent.

    click here
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    Drop in net migration to GTA contributing to softening housing market: CMHC
    Drop in net migration to GTA adding to softening of housing market: CMHC
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    By: Susan Pigg Business Reporter, Published on Thu Jan 31 2013
    A significant decrease in the number of people migrating to Ontario from other countries — and leaving the province in search of jobs — is contributing to the softening of the GTA housing market, says a new report from the Canada Mortgage and Housing Corporation.
    As of last September, net migration in Ontario had fallen by 20 per cent year-over-year to below 60,000 new residents, says a CMHC review of GTA housing activity released Thursday.
    That’s the lowest levels of net migration since the late 1990s and about 40 per cent less than the 110,000 or so people who migrated to the province annually, most of them to the Toronto region, about a decade ago, says Shaun Hildebrand, CMHC’s housing analyst for Toronto.
    “Over time, that can have a drag on home sales activity as fewer people move into the region, impacting the pool of potential buyers,” says Hildebrand.
    The GTA housing market has been softening since last spring, with sales down 16 per cent by year end over the fourth quarter of 2011.
    While prices declined almost one per cent in the fourth quarter of 2012 — the biggest decline in four years, according to CMHC — house prices were up seven per cent overall in 2011, thanks to the strength of the market earlier in the year, the report says.
    On the up side of downward migration was a close to a 50 per cent increase last year in the number of “non-permanent residents” coming to the GTA, most of them foreign students who have been helping drive the demand for rental accommodation, and condo purchases, close to schools in downtown Toronto, the report notes.
    While Hildebrand expects some uptick in net migration this year given strong employment growth in the GTA, it’s unlikely to return to levels anywhere near 110,000, he says.
    That could be a wake-up call for residential developers who have been pressing the province and suburban municipalities to open up more GTA land for development, citing what would appear to be an outdated notion that the region gets about 100,000 new residents a year.

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