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Baby, we got a bubble!?

CN Tower said:
The outrage over the story
? I am not expressing outrage at the teardown at all. Teardowns happen all the time. This one's just much bigger, which is why I posted it.
 
http://ca.sports.yahoo.com/blogs/go...d-tiger-woods-ex-wife-level-12-171330450.html

Last week, we brought you the story of Elin Nordegren's curious-at-the-time decision to knock down a $12 million mansion. It seemed, at first glance, a rather conspicuous display of wealth -- I've got so much money I can demolish a mansion and build a new one! A divorce from Tiger Woods, it seemed, was the gift that kept on giving.

Well, turns out that there was a pretty good reason for razing the estate: termites. A report in People magazine indicated that the 1920s-era mansion fell short of current hurricane safety codes, and combined with a termite infestation, that was enough to warrant blasting it down to the sand.

Also of note: Nordegren offered a local Habitat for Humanity chapter a month to take whatever it could from the mansion before demolition. (No, don't go all, "Oh, so generous, donating termite-infested wood!" on Elin. It was a nice gesture.)
 
Thanks Kenny for shedding more light on this matter.
Seems to me that Elin exhibited total class. Living in the spotlight with everything she will do, I would say she hit a home run. She did not exhibit a conspicuous display of wealth. Rather, she made a sensible decision, will rebuild, and offered a local Habitat for Humanity the chance to take whatever was salvageable. Given her $100 Million dollar settlement (rumoured), it seems to me that she can well afford to live in North Palm Beach. I am sure that she is there to give access to the children to Tiger so they can grow up knowing both their parents. She could have stayed in Scandinavia but I am guessing it was probably part of the seperation/divorce agreement that she live in Florida or the continental USA for a certain amount of time of the year.
 
Ouch. Termites are terrible. I wonder if she got a bit of a deal on the place then.

Not so much Around here, but one issue is carpenter ants.
 
From Remaxcondsplus: Jamie Johnson's report:

2011 IN REVIEW:

At this time last year, we were predicting that Toronto would experience the same sales volumes as 2010 with price increases averaging 5%. We were wrong! Sales increased by 5% and prices were up by 7%. We also forecast that rental rates would increase by $100 per month and we were right. Everyone else, from the Bank of Canada to The Economist Magazine, was forecasting lower sales and lower prices. Those who heeded the experts, in an attempt to ‘time the market’ were the big losers once again. Timing the market is the absolute worst strategy! If you sit on the sidelines and the market keeps rising, you lose significantly. If you are in the market and prices go flat or fall, then all real estate declines (more expensive properties tend to fall further in absolute terms), and it becomes even cheaper for those people in the market who want to upgrade to a more expensive property over time. Too many experts – read economists – try to make residential real estate far more complicated than it needs to be. Residential real estate is all about having a roof over one’s head. You either own the roof or someone else owns the roof and you are a renter. The challenge with this year’s Forecast is to look at both the Pre-construction and Resale Condo Markets and to understand their interdependency.

2012 FACTORS TO CONSIDER:

Interest rates are not going anywhere. Fear mongers keep talking about a rise in interest rates which could lead to problems. What you need to know is that if rates rise, it means the economy is stronger and we have higher inflation. That translates into higher personal income too, which will act as an offset. For those old enough to remember, inflation has always been a friend to real estate.
While the so-called experts worry about the supply of new condos coming to market, they seem unwilling to forecast future demand. For condos, the impact of ‘baby boomers’ moving to condos is still just a trickle. In five years, it will be significant. The next biggest demographic group is the ‘echo’ generation – the children of baby boomers. They are just now entering the real estate market and this segment is focused on condos. Finally immigration to Toronto is not going to slow (80,000 per year) and many of these people will be living down town too.
For the Pre-Construction Market, almost 100% of sales are to investors. No one buys a property to live in that won’t be ready for four or five years. Investors buy condo units either to rent them out (about 40% of the units) or to sell them as ‘Assignments’ (during the occupancy phase and before the units are registered) to end users to live in. So investors look at rental rates and try to anticipate future price appreciation. Currently our market is dominated by investors from Asia, the Middle East, and East Asia looking for capital preservation. American and European investors who are rate of return driven show less interest in our market. Canada will remain a safe haven for the foreseeable future.
There are no new apartment buildings in Toronto. The rental market is being served through new condo construction. The `echo’ generation or Gen X and Y are also the primary renters in this market, and again, they only will rent new – read hardwood floors, granite counters, stainless steel appliances found in condos.

2012 FORECAST BY THE NUMBERS:

For the Toronto resale market we expect sales to remain at the 90,000 level (unlike most other forecasters). Remember that the all time sales record was achieved in 2007 and Toronto is a much bigger market, in terms of people and incomes than five years ago. So why would sales drop? With a lack of new detached housing, prices in this sector – particularly in Central Toronto will continue to appreciate.
For the Resale Condo Market, sales will be 10% higher than for 2011. We have 18,000 condo units that were completed in 2011 and half of them will be added to the resale market. This extra supply will mean that prices will be flat in 2012, staying in the $500-550 per sf range.
For the Pre-Construction Market, we expect a number of projects that were announced will not be built. By the end of 2011, pre-construction sales downtown were averaging $800 per sf which we believe is unsustainable. The price gap between the resale and pre-construction markets is too big and fewer investors believe that resale prices will rise that fast over the next four years to overcome this difference. Look for prices to fall by $50-75 per sf over the year. Projects selling at over $1,000 per sf (with the exception of Yorkville) will run into severe price problems in 2012.
Bigger sized condo units in the pre-construction market now sell for more per sf than smaller units. This trend will spill over into the resale market. We previously predicted that this would happen. This price differential will only increase as our market matures – just like New York.
Rental rates will increase by another $75 per month. That means the basic one bedroom without parking will increase to $1600 per month. Vacancy rates will remain below 1%.


I think the predictions are interesting and would love to hear others opinion.
I think personally he is right and there will be a drop in prices of new. I am not as sure about resale. It will stagnate more.
I think a number of projects may not sell that well and builders will start offering incentives first, followed by special VIP incentives or equivalents to everyone: anything to not call a price drop a price drop.
I agree as well the very High end will drop. However, as that happens, so will the mid-high luxury as people with money to spend now decide to buy the very high end as the cost to get there will be more marginal (I.E. High end drops more). I believe the middle range $600-800 will be the area squeezed the most. I think there will be reintroduction of units with $500/sq.ft. in the core and investors will start again.
the other comment really that caught my eye is his statement that 100% essentially of new condos is investors. 30 % or even 50% has always been quoted. If he is right, then it may really adjust down quickly. And I believe it will be more in the mid range of $600-800 as the high end I believe will have less speculators and deeper pockets to ride it out. The entry and middle will be harder hit and while high will come down more, it will recover quicker as well. Just my thoughts.
 
From Remaxcondsplus: Jamie Johnson's report: 2011 IN REVIEW...

I think the predictions are interesting and would love to hear others opinion.

There ultimately is some bias in realtor's Mr. Johnson's report, and his guestimate on what's going to happen with the market is just as good as anyone elses guess. What caught my eye was his comment on "so-called experts"... he's basically saying their are no experts and he's kinda labelling himself as one too.

Following Bob Farrell Number 9 Rule for Investing is: when all the experts and forecasts agree -- something else is going to happen.

If all those Toronto developer's, who gather around the Toronto Star's boardroom table see a great 2012... ask yourself is that wishful/magical thinking? It the city of Toronto is willing to pay high executive bonus incentive to Build Toronto... it that not a classic sign of a potential future case of hubris?

Plus, if all these financial experts are calling for higher interest... ask yourself is that wishful/magical thinking. Or when inflation picks up, if it does... is the central banker actually going to raise interest rates to stop it even if it gets pass the 2% target rate... and by how much will the central banker increase the interest rate... without crashing the national economy... (but maybe higher interest might not cause a crash... because a reallocation of capital might occur???) and even if inflation takes off... won't that mean or translate into higher house prices that have-to kinda increase due to inflation pressures/wage increases???... Or will incomes lag????.... making housing really unaffordable? Which might translate in rent controls in Toronto?.. making owning that investment condo a little less attractive with negative cashflow?.. given your cost increase without rent increases? It's all unexpected... and no one really knows.

And if the economy starts to take off again will investors continue to park their money into safe places like property???... And... the real question is there renters out there for 37,000 new condos downtown? How many more investors are out there to purchase more new condos downtown, and will they continue to pay higher prices for those smaller units?.. Because if there is 2012 will continue to be a great year... and liking the same for 2013.

All this talk of downward price pressure... makes one have to consider the contrarian approach... which make one consider maybe it's the right time to buy???... I'm kinda sitting on the fence... I'm content renting, and earning 1% in my high saving account on my future downpayment... would be okay paying 300 psf... in a few years when prices eventually retreat... but... if that doesn't happen... oh well... it'll be time to move somewhere else... and live the more simplier life.

Those 65-70% in downtown Toronto that are renters now... going to become homeowners anytime soon???... If the market does the downward slide?... slowing the slide?
 
http://ca.sports.yahoo.com/blogs/go...d-tiger-woods-ex-wife-level-12-171330450.html

Also of note: Nordegren offered a local Habitat for Humanity chapter a month to take whatever it could from the mansion before demolition. (No, don't go all, "Oh, so generous, donating termite-infested wood!" on Elin. It was a nice gesture.)

Not everything is unsalvageable. There's still the washrooms (toilets, sinks, mirrors, tubs, faucets, etc) and kitchen appliances, granite counters tops. I'm not sure if maybe marble tiles are salvageable. The wood could be used for fireplaces or burning in a metal container to keep warm during the winter.

All this talk of downward price pressure... makes one have to consider the contrarian approach... which make one consider maybe it's the right time to buy???... I'm kinda sitting on the fence... I'm content renting, and earning 1% in my high saving account on my future downpayment... would be okay paying 300 psf... in a few years when prices eventually retreat... but... if that doesn't happen... oh well... it'll be time to move somewhere else... and live the more simplier life.

I really doubt we will ever see 300 psf for downtown again.
 
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I was in Scarborough/Markham in that north Chinatown on the weekend and was driving along Steeles for several blocks. I noticed some condo developments on the north side of Steeles, but mostly retail on the south side.

Maybe it's just coincidence, or maybe it's just due to zoning, but it made me wonder if the residential construction there might be influenced by Toronto's land transfer tax, which doesn't exist in Markham.
 
I'm content renting, and earning 1% in my high saving account on my future downpayment...


Earning 1% in a savings account? omg:confused: You dislike money so much that you want to give free investment income to your bank instead of keeping it for yourself???
 
Earning 1% in a savings account? omg:confused: You dislike money so much that you want to give free investment income to your bank instead of keeping it for yourself???
I wish I had done what he did. Instead I invested it in the stock market, and got -11% on the TSX in 2011.

Actually, putting it in a savings account may be the smart thing to do if you're planning to buy a home sooner rather than later. I started divesting myself from my stock market investments in 2006 and 2007, planning to buy in 2007 to 2008. I bought in 2007, but had I waited too long into 2008 I might just have lost half of my downpayment.

Indeed, that happened to a colleague of mine, who wanted to buy a cottage but waited until the money was needed before actually selling investments, and by that time those investments had dropped hugely in value. A bird in the hand, as it were. Actually IIRC, the market dropped something like 10% or so just days before the money was due. Luckily that person could stomach the loss, but with other people it could have been a disaster.
 
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Earning 1% in a savings account? omg:confused: You dislike money so much that you want to give free investment income to your bank instead of keeping it for yourself???


With both Canada and Ontario going to produce austerity budgets in 2012... means less aggregate spending. Canadian customers aren't heavily in debt, and our exports to Europe and especially to our neighbour to the south isn't improving... and we have just had another fabulous year of rising housing prices. Yeah... just the recipe... for being in the market... at the moment... I'm content watching the dominos fall yet again... earning 1% is better than losing about 20%.
 
dont you mean we ARE heavily in debt ???

I probably should have typed ARE, but after thinking because I'm on the fence about everything and maybe AREN't was more appropriate... some Canadian's ARE really heavy in debt... 150% average household debt over average household income. That's like $145,000-ish per average household.. average income per household in Canada is approx. $90,000 x 1.5. But we... ARE talking average... so there's a probably a few million households that ARE really skewing the national average... that ARE really heavily in debt... but we aren't given that data. So the majority of Canada's have debt that is likely manageable, even with other average expenses... and there are probably Canadians without debt... but... austerity is coming... and what kinda effect is that going to have on the markets. Are we really too far in debt???... and where is the tipping point???... And are Canadians going to be able to continue to gouge on debt to pay for more things and stuff. I'm willing to be proven wrong... but I need clear data to tell me to change and alter my opinion... so I'm okay with inflation eating my investment, and letting some bank earn money off my money... rather than losing it... same with I'm okay with watching the price of houses and condos take off... because eventually.. that price will fall. Some random event is going to hit the Toronto downtown condo market. Whether it's something like SARS, or just a lack of demand from investors worldwide... because maybe Mr. (no-Gravy) Ford implements a non-resident foreign property tax rate, or worse rent controls. Or interest rate knock the wind out of the sales... or some other event has some unintended consequence which cluskerfucks everything... and we all eat humble pie.
 

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