Baby, we got a bubble!?

[interested]

So when the 50/200 weekly crossover on the $INDU happens sometime next Spring (target 14500 area), will Bay St fat cats etc feel like buying real estate?

Spring 2011 is gonna be CRAZY.

(Why am I turning so bullish? Everyone is joining in on the bear bandwagon here, which means they're wrong!)

UD and CG are now in the bullish camp.

Hey guys, does this mean things are just going to go up indefinately.

I think I will go out and leverage myself to buy the S and P and lots of R/E on margin so I can take advantage of the bullish outlook.

Where is Paperchopper when you need him???

 

[Eug]

So when the 50/200 weekly crossover on the $INDU happens sometime next Spring (target 14500 area), will Bay St fat cats etc feel like buying real estate?

Spring 2011 is gonna be CRAZY.

(Why am I turning so bullish? Everyone is joining in on the bear bandwagon here, which means they're wrong!)

Well, to be clear, I'm not a bear here. I'm of the belief that spring 2011 will enjoy reasonable sales, but I'm not counting on a hyperactive real estate market in 2011.

 

[interested]

(Why am I turning so bullish? Everyone is joining in on the bear bandwagon here, which means they're wrong!)

I have heard this alot that the crowd gets it wrong. However UD, apparently in the paper yesterday people (little investors) were piling into the stock market last month and the bond market was "officially over". By the above logic, does that mean they are all wrong and the S&P should change direction shortly?

It would seem to me that if the first argument holds, then the second should as well.

 

[Eug]

I have heard this alot that the crowd gets it wrong. However UD, apparently in the paper yesterday people (little investors) were piling into the stock market last month and the bond market was "officially over". By the above logic, does that mean they are all wrong and the S&P should change direction shortly?

It would seem to me that if the first argument holds, then the second should as well.

In truth, I've used that metric before in my investment strategies.

If everyone is piling into the stock market, I start to get really nervous, and sometimes cash out somewhat.
If everyone is getting out of the stock market, I start to get an itchy trigger finger, to buy back into the market.

My problem is that I'm usually premature. I get out too early, and I buy back too early. However, it did serve me well for the last downturn. Most of it was luck and happenstance of course, I but I heavily divested myself from the market in 2007. That was a year too early, but fairly lucky nonetheless.

At over 13000 for the TSX, I'm starting to get nervous again.

 

[KA1]

http://www.theglobeandmail.com/real-estate/condo-sales-leap-ahead/article1822138/

 

[Ric]

So when the 50/200 weekly crossover on the $INDU happens sometime next Spring (target 14500 area), will Bay St fat cats etc feel like buying real estate?

Spring 2011 is gonna be CRAZY.

(Why am I turning so bullish? Everyone is joining in on the bear bandwagon here, which means they're wrong!)

Wouldn't the increase in the stock market also cause bond yields to increase as investors shun bonds for the stock market? Wouldn't higher interest rates push marginal buyers out of the RE market? And with everyone holding off until the spring of 2011 to list their property (as evident by the low inventory now), I'm going out on a limb to say I thing next spring will see record listings and fewer qualified buyers. Which implies..........

 

[interested]

Words of wisdom: No one ever went wrong taking a profit.

I was fully vested with the downturn for me (which was 15% of my worth at the maximum). Went back to 8% and now again around13%. I should say I hardly bought anything the past 5 years. Just happy to sit by the side.

The smart thing you state is that you took some money off the table. Put some back. I think those who go all in to quote the poker term one way or the other, or very heavily bet one way or the other, make alot or lose alot. That simple.

By the way, I was just trying to have some fun with UD by putting in that post.

 

[interested]

Wouldn't the increase in the stock market also cause bond yields to increase as investors shun bonds for the stock market? Wouldn't higher interest rates push marginal buyers out of the RE market? And with everyone holding off until the spring of 2011 to list their property (as evident by the low inventory now), I'm going out on a limb to say I thing next spring will see record listings and fewer qualified buyers. Which implies..........

A logical premise and conclusion. However, I am guessing and I am sure UD will qualify but I believe his thinking is that if the S&P is up, people feel wealthier, better about the economy, and are willing to invest in R/E as they have more money from the Stock Market. Now of course, if bond prices really go down,m and interest rates go really up significantly, then mortgages should be affected as you say and these 2 opposing features will combat each other: bigger wealth effect vs. more expensive to buy real estate as less affordable.

 

[interested]

http://www.theglobeandmail.com/real-estate/condo-sales-leap-ahead/article1822138/

In particular, I think this is most relevant to the downtown core condos.

" New condo prices dropped 10 per cent in September and regained only about half of that in October. Mind you, how they did it was by shrinking the size of suites and not the price per square foot."

So, as predicted, builders are doing everything not to drop price/sq.ft. Next I expect again upgrades and finally price decreases as a last resort. I would not have guessed that people would have agreed to 300+ sq. ft. for a bachelor (essentially a large hotel room) but then it would appear the builders called it right. However, I think they are kind of running out of room to shrink condos when 1 bedrooms are getting below 500 sq.ft. and they are now in the low 300's as relates to square footage for bachelors.

 

[cdr108]

http://www.theglobeandmail.com/real-estate/condo-sales-leap-ahead/article1822138/

two varying opinions in the article regarding the increase in sales ...

Sam Crignano, a partner in Cityzen Developments:
says it was an anomaly for which there is no simple explanation.


Eve Lewis of MarketVision Realty Corp., a leading new condo marketing and sales agency:
says the boom months are easily understandable given four factors.
The first is a large base of both foreign and domestic investors.
The second ... Last summer was probably the best in memory for great weather, They (buyers) didn’t want to spend it trooping though presentation centres.”
Number three was a build-up of demand. People were deferring looking for new homes and builders were putting off launches of new product.
Finally come prices ... lower prices to make suites more affordable by reducing their size

 

[simuls]

It seems to me that the most important part of this article with regards to downtown new condos is being ignored on this thread and that is:

"According to RealNet, 79 per cent of all high-rise sales in October traded hands below the GTA index price of $424,337."

So 4/5 condos sold were below the average price. Does this not seem like a statistic that suggests a massively investor driven market? October is typically a slow time for sales and first time buyers are not buying 300 sq foot bachelors to live in and people are not downsizing from 2500 to 300 - these are the types of units that only make sense from an investment standpoint - especially given the recent rise to 20% dp for investment properties and the stagnation of rents. This type of investor interest in a market is nothing but bad news for the market as a whole and while it might keep prices stable longer than I thought they would be, it's just another false bubble that will artificially prop up the market (like Carney dropping the rates to .25 in May of 2009) and make the final correction that much more pronounced. Am I completely nuts in thinking this? If I'm not nuts and this is the case, I'm selling spring 2012!

 

[Eug]

November stats are out:

Greater Toronto REALTORS reported 6,510 existing home sales in November – down 13 per cent from 7,446 sales in November 2009. New listings were also down 13 per cent annually to 8,642.

The average selling price for November transactions was $438,030 - up five per cent compared to November 2009.

In November, the median price was $366,000, from the $353,800 recorded during November of 2009.

---

These numbers are similar to October's.

 

[KA1]

November stats are out:

Greater Toronto REALTORS reported 6,510 existing home sales in November – down 13 per cent from 7,446 sales in November 2009. New listings were also down 13 per cent annually to 8,642.

The average selling price for November transactions was $438,030 - up five per cent compared to November 2009.

---

Can any one on this thread tell me as to how this 'average selling price' is arrived at? Coud it be that a few 'high end' unit sales have skewed the average upwards?

Txs in advance to anybody and everybody who cares to enlighten me.

 

[Eug]

Can any one on this thread tell me as to how this 'average selling price' is arrived at? Coud it be that a few 'high end' unit sales have skewed the average upwards?

Txs in advance to everybody who cares to enlighten me.

Yes. Average price is just that, the average.

The median price may be more interesting to you as it better reflects the lower end of the market (where most sales are made). The $366000 median price represents a 3% rise since last year, but a 3% drop since the peak in the spring 6 months ago. It was $376750 in May.

At that time, the average price was $446593, or 2% higher than November's average.

 

[KA1]

Thanks for the quick response, Eug.