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No, you're just making a common mistake in your arithmetic. 78% over-valued means that a 44% drop is required to reach fair value. If the current price was $1.78M, then a drop of $780K would reach the fair value of $1M. $780K / $1.78M = 44%.

I would guess that bridge loans would be a pretty good indicator of how many people are taking a buy-first approach. Perhaps this is a good proxy for the level of speculation in the market? Does anyone have any statistics on bridge loans?

That's an interesting point. It also shows how quickly things can change. As the sell-first approach spreads to other levels and other participants of the RE market, the feedback loop of falling prices will only increase.

I'm curious to know when this transaction actually happened and when the valuation was done. 80% of the value then may be 90% of value now.

Minus the 2% or more for the CMHC premium. You describe the up-side of leverage. The downside is that a small drop in prices will wipe out any equity and put them underwater. At 41%, it looks like more than a few may get a hard lesson in this soon.

Insured Buyers are the Majority http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/10/insured-buyers-are-the-majority.html 41% had less than a 10% down-payment. Yikes!

Wow, even the spambots are only predicting a plateau. Things must be getting bad in the condo market.

Only when the tide goes out do you discover who's been swimming naked. ;)

There do seem to be an awful lot of dark apartments at night. It's a shame that statistics aren't kept on vacancy rates. Like daveto points out, the CMHC stats don't reliably say much about the actual vacancy rates. I think the original article spooked a lot of people. It would be a...

http://business.financialpost.com/2012/05/08/torontos-condo-market-not-so-ghostly/ Toronto’s condo market not so ghostly? This morning, media outlets, including the Financial Post, picked up and ran with a research note from Scotia Capital citing statistics that said up to 25% of condos in...

Look at Toronto 23 years ago, to understand what is going to happen to Toronto's condo/apartment prices in the next 5 to 10 years

You only need a 33% drop to cancel out a 50% rise. A 50% drop would cancel out an entire 100% rise; we'd be back at pre-2000 prices.

Greedy speculator angry at low-life developer. (Boo-hoo) http://www.thestar.com/business/article/1108666--star-exclusive-angry-trump-condo-buyer-wants-out Angry Trump condo buyer wants out Alice Batista readily admits she was blinded by dollar signs and slick advertising when she...

There was an interesting debate this Monday on The Agenda on TVO ... The Case Against Home Ownership http://www.tvo.org/cfmx/tvoorg/theagenda/ (See show for Monday July 11)

Count me out. Any vibe you think you're picking up is purely in your head. Prices may well increase in the short term, but that just means a harder crash later on. I'm sure the other bears feel the same. I thought you were an old-timer KA1. You're meant to be the one warning off naive...

Your real rate of return is only 2%. A better way to look at it, is that your house has kept up with inflation (i.e. 0% real increase), but your debt has not (i.e. 2% real decrease). I disagree that your investment is as safe as a GIC. First, even a 100% owned apartment is more risky than a...

So, when I grow up, I'll learn the lesson that house prices always go up? Tell me 'wise old man', what were the incomes of your characters back in oldey-time?

Gravity will assert itself eventually, one way or another. The bigger the bubble, the bigger the bust.

These stories are always anecdotal. Does anyone have any hard numbers on how many Chinese investors there really are? Or, even foreign investors?

It sounds almost the same as johnpeter123 and jasikazensis' posts above. I wonder if they're spambots too.