Also, interest rates are even lower than 5 years ago...who'd have thunk?
And they have more equity if they bought 5 years ago.
So assuming they left the equity and did not take out home equity loans etc...those people from 5 years ago right now are fine.
i thought those who had taken out 40 year mortgages were still a fairly small proportion of total mortgage holders. Does anyone know?
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.
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.
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.
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.
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."
Further info: https://www.placestogrow.ca/index.ph...=318&Itemid=14
Last edited by greenleaf; 2013-Feb-01 at 12:46. Reason: fixed links
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.
Price-Fixing in Real Estate? No way!
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