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Baby, we got a bubble!?

CREA hikes forecast for home prices

The national trade association said the average national resale price will gain four per cent by the end of the year because of high prices in Vancouver. In its last forecast – made in early February – CREA said the price would advance 1.3 per cent.

Prices in Vancouver have gained almost 30 per cent in the last year, causing concern among many in the industry who are concerned about the sustainability of such gains. Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said while sales have softened across the country the risk of a sharp correction is “highly concentrated in geographical terms.”

He said while sales have softened across the country, the risk of a sharp correction is “highly concentrated in geographical terms.”

In March, CREA said the national average resale price was an all-time high of $366,000. But if Vancouver is stripped from the figure, the average price would be $327,000. Twenty two of the 25 cities surveyed posted price gains in March, with Calgary, Edmonton and Victoria the only exceptions.
Crea is changing its forecast every 2-4 months over the past year. Clearly they know no more or less than the rest of us. I do note that they put out good news quickly and are slow to recognize (for obvious reasons) when the trend is going the other way.
That said, everything will be rosey going forward.....until it won't.

To Dave's analysis of London, It appears to have held up reasonably well the past year compared to other areas of England. Your point about the margin dictating what happens is very correct. However, if the margin truly is only a small fraction of the market, and the rest is reasonably stable, the melt may not be as bad as anticipated. That said, I along with the majority on this thread, believe that fundamentals and a trend back to the normal historical rates of growth is inevitable.
Read a pretty good summary in the comments section of this article:

We know mortgage rates will be rising, since they can’t fall any further, removing 1st time homebuyers, thus crushing the real estate market. We know that already 70% of Canadians own real estate, so there is no big pent-up demand. We know taxes will only increase in a country with an historic deficit and an exploding debt. We know idiot 0/40 then 5/35 down- payment/ amortization rules have allowed armies of people without money to buy houses. We know household and mortgage debt is extreme. We know the cost of living is rising and salaries aren’t. We know no data exists to support the argument of rich Asian immigration saving the housing industry, otherwise CREA would definitely publish it, and therefore it’s a myth. We know according to the IMF Canada has the highest housing prices in the world! We know the Boomers are house-rich, in need of retirement cash, and will soon dump.

And now we know more about Canadian lending standards from Business News Network (BNN) speaking with Neil Mohindra, Director, Centre for Financial Policy Studies, Fraser Institute concerning the CMHC Moral Hazard.

This is what really matters. The Bank of Canada and our Finance Minister has been telling the Canadian public that the housing party is over. The CMHC has almost a half trillion of debt on its books; CMHC is leveraged 10 to 1; that scares the living hell out of the Finance Minister and the BoC. You can't fight the BoC!

Finally in Kelowna, BC right now, panicking real estate developers are giving, to people who can’t afford a down payment, grants of $45,000 to buy houses. Now Canadian taxpayers are on the hook for these sub-prime mortgages as well. This is INSANE!

All this points to a declining housing market.

Buy low, sell high….now is the time to sell.
From Urbanation.

The new condominium market continues to show no signs of slowing down with 5,201 sales in Q1-2011, just shy of the highest first quarter sales volume recorded a year prior in Q1-2010. Resale activity followed its new sale counterpart with 3,952 resales, a decline of just 338 units from Q1-2010’s 4,290 resales, representing the second strongest first quarter performance for the Toronto CMA resale market.

Pricing appreciated across all market sectors in Q1-2011. The average sold price for new condominium apartments has risen from $443 psf in Q1-2010 to $480 psf, an increase of 8.4%. Unsold index pricing is up 6.7% annually to $543 psf in the Toronto CMA. Meanwhile, resale pricing rose by its largest quarterly margin since Q4-2009 to $382 psf, up 2.2% from Q4-2010.
New Urbanation Q1 Report out:

(Sorry about the parsing - don't know how to get it from my email to this forum- Cate)


Q1 – 2011 also marks a significant 7,550 construction starts with record
37,706 suites under construction in Toronto CMA
TORONTO – May 9, 2011: Urbanation Inc., the leading source of information and
analysis on the Toronto condominium market since 1981, today released its Q1-2011
market overview.

The Toronto CMA new condominium market kicked off 2011with a bang, with 5,201
sales. That was just 214 sales shy of the record first quarter result from 2010. The resale
market also showed a strong start in Q1, with 3,952 units sold, just 338 fewer than last
year’s first quarter record of 4,290.

“These near record sales in the first quarter of 2011 mark a prelude to an even more
vibrant second quarter,” says Ben Myers, Urbanation Executive Vice President and

The most noteworthy result in the market was the 7,550 construction starts in the first
quarter, while there are now a record number of suites under construction in the Toronto
CMA at 37,706. At the end of Q1-2011, over half of the 284 new condominium
apartment projects and 73,643 units were under construction. Just 17 percent of the new
condominium suites in the CMA were unsold (12,272 units) matching the record low set
in the first quarters of 2010 and 1986.

“This momentum will continue into the second quarter, when an estimated 45 new
condominium projects, representing 9,500 units, will launch,” says Myers. “That’s a
healthy increase over the just 23 new condominium towers launched in the second
quarter of 2010.”

Meanwhile, the 17 new projects that opened in Q1 sold 63 percent of their 3,768 total
units. That number far surpasses the average absorption rate for new projects in their
opening quarters between 2006 and 2010 (49 percent).

Prices also climbed. The average price per square foot of unsold product in the Toronto
CMA new condominium market in the first quarter increased 3 percent from Q4-2010,
and 7 percent annually, to $543 psf. Unsold index pricing was also up in the former City
of Toronto to $650 psf and the Downtown Core to $739 psf.

Prices in the resale market also edged up by 2 percent over Q4-2010 to $382 psf,
increasing the average resale index price in the Toronto CMA by the largest quarterly
margin since the fourth quarter of 2009. Resale index pricing in the former City of
Toronto was $509 psf with Downtown Core prices at $513 psf in Q1-2011.
Resale supply also declined, dropping far lower than the record 10,997 listings from one
year ago to 7,490 resale listings in Q1-2011.

“The major infusion of new units in the second quarter of this year should moderate
pricing increases, but Urbanation expects near record quarterly sales in Q2-2011” Myers
added, “and an elevated level of project registrations, will also keep resale pricing
increases temperate”.
Old news to many: was watching the CBC the other night.

Video implied that Chinese buying behaviour is changing. More younger folks in China (Beijing in particular) looking to buy a (smaller and smaller) place to call home (vs. as an investment) , as prices there continue to skyrocket despite the govt's clamp down on IRs and the number of properties each family can buy.

Meanwhile rich Chinese (who have already bought the mainland "quota"), and the emerging middle class who find themselves with money to invest, continue to park their cash in Canadian assets like BC and ON real estate - in turn driving up prices.

Didn't Australia recently put limits on the number of properties that foreigners can buy, exactly to compensate for this phenomenon? While I am neither anti -trade nor -investment, I wonder what, if anything, our country/citizens will do to limit the increasingly unaffordable cost of housing its own residents?
KA1, does that meant that you think prices outside of downtown Toronto will decrease?

Daveto, the answer to your questions is: decrease in some areas, yes. But that might not be in absolute dollars either. And that too only for a little while.

A client of my has been dithering for about 18 months -- mainly, on the advice of her lawyer son -- to buy a condo unit to live in the area of Islington & Queensway, once prices decline by the anticipated amount of 15%. Not only prices have not declined there, but have gone up by about 5%. On the other hand, prices in Scarborough are steady in a few areas and have declined in a few neighbourhoods. Even if prices in Scrabrorough remain steady, they have, in effect, declined as compared to increase in prices in Etobicoke. Somewhere down the road, individuals, who are being priced out of downtown/ core downtown, will graviate towards 'urbs. That means a further increase in prices in Etobicoke -- 'urb that is on a slow roll -- and will not decline in Scarborough.

Yesterday, I read a news/opinion item that in July, Bank of Canada will have to increase its prime rate, with steady increases down the road. This will effect highly/moderately leveraged individuals. And that could steady or even slightly decrease prices all over.

I would like to repeat what I have said a few times before on this thread.

GTA R/E market is a fragmented market. Upscale/high end market -- for example, Shangri La -- are and will remain on a steady 5 to 8% increase. Most of the rest of the market will move sideways with some decline in specific areas --Scarborough, City Place etc.

There will be no across the board decline of around 15% -- or to the lows of 2008 prices -- as repeatedly posted on this thread by an individual or two. Down the road, prices will increase -- at a steady rate all over and about 5 to 8% in the high end of the market.

Foreign money will prevent prices declining sharply.

As I was writing this post, I heard, on the internet, an advertisement on an ethnic radio station in Vancouver by one 'Toronto Investment Group' about investment opportunities in the 'cheap' Toronto real estate market. This move to investment in 'cheap' Toronto market could gain momentum.

A note for Cat who has made a later post. How can you stop the flow, to Toronto, of money from a 'foreign' land situated in Canada-- otherwise known as Vancouver?

For those, who aready own a piece of Toronto -- downtown or otherwise --, count your blessings and say your prayers. For the others not that fortunate, reconcile yourself to living in the outer 'urbs, making a day trip to 'visit' downtown Toronto and pointing out to your children to the buildings that, you, once, had lived in.

Thoughts of a bean counter.
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Just out of curiosity: does anybody know what happened with the prices in Yorkville in 2008/2009? Did they continue increasing with no interruption, did they stay level, or decreased by 12-15% like everything else?
Cat: We get our sales and pricing figures directly from the developers and brokers that represent the projects. We check the index prices (PSF) figures by creating a 'suite grid' for the entire project based off floorplans and developer price lists. Our resale index pricing is tabulating using our database of unit sizes of over 200,000 resale suites.

I might be biased, but our data is the most reliable you will find.
Not really relative to this thread but I'll post this article anyways.

Torontonians are willing to pay the price for condo lifestyle

- 2011 TD Canada Trust Condo Poll reveals Torontonians want a place that is close to transit and entertainment to call home sweet home…for now -

TORONTO, May 10 /CNW/ - Torontonians enjoy the perks of condo life and say it is important for them to have attractive interior design, be close to public transit and entertainment and have amenities like a gym, pool or party room. According to the 2011 TD Canada Trust Condo Poll, which surveyed Canadians who are thinking of buying, or recently bought a condo, Torontonians are willing to pay the highest condo fees for these perks. In fact, nearly half of Torontonians are willing to pay more than $400 per month in condo fees (46% versus only 22% across other cities surveyed).

While they are willing to pay for the perks of the condo lifestyle, condo fees could hold Torontonians back in their plans to eventually own a house. The majority of Toronto condo buyers plan to move within the next six years (54%); in fact, 15% plan to move in the next three years. Four-in-ten say if they had more money, they would buy a house rather than a condo (42%).

"Before making the decision to buy a condo and own it for only a few short years, calculate the costs that you will incur, such as condo fees, parking fees and moving expenses and work this into your budget," says Farhaneh Haque, Regional Manager, Mobile Mortgage Specialists, TD Canada Trust. "Depending on how soon you plan to move, these costs could outweigh the equity you'll build and receive from the eventual sale of your condo." Nationally, the number planning for a short stay in their condo is highest amongst respondents under 35. Nearly one-quarter (22%) of respondents in this age group said they don't plan to spend more than three years in their condo and another 45% plan to move after four to six years.

Has the tightening of mortgage rules affected the condo market?

As the TD Canada Trust Condo Poll found younger respondents to be concerned about affordability, it is not surprising that for many in this age group (63%) the amortization change to 30 years for new mortgages had a significant impact on their decision to choose a condo over other types of homes. Lending law changes didn't influence Canadians over 50; three-quarters say the changes to lending rules had no impact on their decision to consider a condo.

Somewhat alarmingly, the poll found that more than one-quarter (29%) of those intending to buy a condo in Toronto were not even aware of the recent changes to lending rules. Nationally, this number was even higher (39%) among those under 35.

"If you plan to buy a home, it's crucial that you understand mortgage rules and options in order to make informed decisions about the mortgage you choose and the size of your down payment, possibly saving yourself a lot of money in the long run," says Haque. "Familiarize yourself with different mortgage options, so you can weigh the pros and cons of each before making a decision. There are experts at the bank who can walk you through different mortgage options and help you find the right solution for you, including different flexible mortgage payment features, which is something you may need in the future."

Most important features in a condo

Despite being willing to pay higher condo fees than respondents in other cities, Torontonians named low condo fees as an important feature to look for in a condo (95%) - second only to attractive interior design (97%). Torontonians also look for good building security (94%), an energy-efficient building (92%), a balcony (91%) and parking (90%).

Of all cities surveyed, it was most important to respondents in Toronto to be close to public transit (91%), close to entertainment (87%) and have amenities like a gym, pool or party room (83%).

Condos popular with downsizing pre-retirees

Nationally, those over 50 are attracted to condos because they fit into their plans to downsize their home. Not surprisingly, when those over 50 move into a condo, 31% don't plan to move again. Since they plan to stay put, many over 50 are making their condos as comfortable as possible, with 53% planning to spend more than $10,000 on upgrades (compared to only 15% of those under 35).

"For many pre-retirees, moving to a smaller, less expensive home is 'right-sizing' and allows them to afford a bit more luxury in their new space," says Haque. "I recommend that homeowners make a budget for any upgrades and stick to it. This is especially important for those who are selling their home and downsizing as part of their retirement strategy. You don't want to get carried away and spend all the extra money you earned with the sale of your previous home."

Torontonians are the most likely of respondents to plan to make upgrades to their condo right away (57% versus 43% across other cities). More than one-quarter of Torontonians say they will spend less than $5,000 on these upgrades, 40% will spend between $5,000-$10,000, 20% will spend $10,001-$15,000 and 13% will spend more than $15,000.

About the 2011 TD Canada Trust Condo Poll

From March 25 to April 11, results were collected from 806 people in Vancouver, Toronto, Calgary and Montreal, through a custom online survey by Environics Research Group. 200 respondents were surveyed in Toronto. Respondents had either bought a condo in the past 24 months, intend to buy a condo in the next 24 months, or considered a condo when shopping for a home.
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GTA R/E market is a fragmented market. Upscale/high end market -- for example, Shangri La -- are and will remain on a steady 5 to 8% increase. Most of the rest of the market will move sideways with some decline in specific areas --Scarborough, City Place etc.

You really seem to have a bias towards CP although you've never lived in the area. I don't know how you can compare Scarborough and CP under the same breath. I've lived in both places. Let me tell you Scarborough isn't even close to CP value.
I lived in a condo near STC, purchase price was around 175k at pre-construction and living there for a few years after it completed, the place only sold for under 220k. Even to this day, I doubt it has appreciated much. Compared to when I bought in CP, the place cost low 200's at pre-construction but now selling at mid 300's.

Unless you're comparing apples and oranges with houses and condos, it might be a different matter. I don't know the housing prices for Scarborough and how high it's gone up.
For those, who aready own a piece of Toronto -- downtown or otherwise --, count your blessings and say your prayers. For the others not that fortunate, reconcile yourself to living in the outer 'urbs, making a day trip to 'visit' downtown Toronto and pointing out to your children to the buildings that, you, once, had lived in.

My, my my. Someone's feeling perky:cool:

You should have appended your post with:
"This week's thoughts, brought to you by
Shadenfreude Coffee!!".

ps. No worries. But I hope you can take the heat, when the shoe is on the other foot and us bears get to drop a few "I told you so's".
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