Baby, we got a bubble!?

[cdr108]

frankly, alot of residential rentals are not listed on MLS because brokers don't think it's worth their time for the money, and owners don't think it's worth their money for the time.

most of the rental listings on mls are probably favours for investors who bought a condo from the agent/broker in the first place.

additionally, some of the older apt buildings are owned by REITS who have their own marketing .... again, not on mls

 

[macookie]

Brad brings some good points, but as interested said, he is a developer/realtor (essentially a salesman) and will not paint a bleak picture and cause consumer fear to hurt his business.
Also, the rental listings he mentions are MLS. A good share of the rentals are not on MLS, but rather advertised privately by owner. It will be interesting, albeit hard, to factor in these figures.

2012 will still be a good year, possibly 2013 too, but I think there will be a good number of new large condos developments that will be completed starting fall of 2013 onwards which will bring lots of inventory to the city. The kind of inventory will be mostly similar small 1-bedroom units which investors prefer, but we will see if renters will really adapt to especially with rising values (and end result rents) of new construction condos.

Brad is a gambler at the condo table; he is betting black for the 20th time in a row on condos, given that all his previous bets on black condos have paid off. Brad can be more confident on his choice on betting black again... and he's so confident that he's willing to tell every person to bet with him.

Will Brad 100% guarantee renters, and positive (black) cashflows for all of these condo's for investors that he builds??? Would be willing to (bet and) let investors walk from agreements if condo prices were to fall?... I doubt it... so there really is no risk for Brad not to bet BLACK again... and again... and to tell others to do the same.

 

[cdr108]

Toronto house prices dip slightly in December

up and down, up and down

http://www.moneyville.ca/article/1116247--toronto-house-prices-dip-slightly-in-december

By Susan Pigg | Mon Jan 16 2012

House sales — and doom-defying price increases — are slowing, easing concerns that the lowest interest rates in history could cause the Canadian housing market to overheat.

Buyers are becoming “increasingly cautious,†but house sales are expected to continue making a “significant contribution to Canadian economic activity†this year, says the Canadian Real Estate Association.

A total of 456,749 houses changed hands via Canada’s MLS system in 2011, up 2.2 per cent from 2010, CREA reported in its monthly assessment of the market released Monday.

While Toronto house prices were actually down in December over November when adjusted for seasonal fluctuations — they dipped about 2.4 per cent putting the average house at $466,540 — prices were up overall some four per cent from Dec. 0f 2010.

The average Canadian house price was $358,480 when adjusted for seasonal fluctuations, up less than one per cent from a year ago.

 

[cdr108]

china-housing-market-to-hit-wider-economy-socgen

would this be good or bad for TO (and Canada) ???

http://www.marketwatch.com/story/china-housing-market-to-hit-wider-economy-socgen-2012-01-18

By Chris Oliver

HONG KONG (MarketWatch) -- Societe Generale analysts cautioned Wednesday of "shockwaves" in the Chinese economy stemming from the unfolding correction in nation's housing market, where weakening home prices are gaining breadth and accelerating to the downside. SocGen economist Yao Wei said nationwide housing-price data released by the National Bureau of Statistics on Wednesday were consistent with other recent statistics on sales, construction starts and investments that point to "unambiguously deteriorating trends." Data released by the NBS Wednesday morning showed average housing prices fell in December in 53 of 70 cities tracked, while only two cities showed a small increase. "The data just turned from bad to worse," Yao said in the note. "The economy as a whole has not felt much chill yet, but the first half of 2012 is going to be difficult for not just property developers." She said that weaker housing sales and falling investment in new real-estate projects will "send shockwaves along the industry chain" that supplies the housing sector.

 

[js97]

It's all cyclical... December and Jan are the lowest in price/inventory/sales...

Real tell tale will be March- July...

The U.S. buble bursted when buyers hit the 160. mark for debt to household income ratio...
Considering we are at 150.8 the buble may burst at any time... (keep in mind Americans can write off their mortgage interest like we write off our RRSPs, in effect, giving them more purchasing power)

Maybe extending the capital gains tax exemption on primary residence from 6 months to 3 or 5 years would help reduce 'flippers' (that's probably a small percentage). Also, reducing the amortization rate back to 25 years (now, instead of 'after-the-fact' July) would be a good move to cool off the market.

A home in the Leslie and Shepperd listed this weekend for 619k (well under price) just sold for 850k) over 60 agents viewed the property (insight into demand) in the first 2 days.

Despite the inflated prices, there is still rediculous amount of demand in Toronto, still one of the key drivers.

If you take a look at the U.S. - interest rates are historically low, but still no buyers... Toronto is still a hot buy...

 

[radioheadmike]

Here is a link to a list of the most expensive cities in the U.S:
http://www.cnbc.com/id/43484111/The_Most_Expensive_States_To_Live_In_2011?slide=1

If you look at the housing prices, they range between 400,000k to 600,000k for cities that are comparable to Toronto.
Even with their Real Estate crash, some cities within the U.S still exceed (or similar) to our Toronto average housing prices.

Immigrants (either wealthy, middle class, or poor) that heading to the U.S have many cities to choose from.
This is not an exception in Canada. They most likely want to choose either Montreal , Toronto, or Vancouver (and Calgary depending on their tolerance to extreme weather). Toronto is usually considered as the best pick for Immigrants.

As long as our city's population continues to increase, we continue to produce jobs, and house the big financial corporations and big fortune 500 companies, I wouldn't be too concerned with a GTA housing crash.

 

[klb86]

GTA REALTORS® Report Mid-Month Resale Housing Market Figures

TORONTO, January 17, 2012 – Greater Toronto REALTORS® reported 1,506 sales through the TorontoMLS® system during the first two weeks of January 2012. This result represented a six per cent increase compared to the first 14 days of January 2011. New listings were also up on a year-over-year basis, but by a lesser 3.7 per cent.

“The market didn’t miss a beat after the holiday season, with robust sales growth continuing and sellers’ market conditions remaining in place. Strong competition between buyers continued to push the average selling price higher in the Greater Toronto Area relative to a year ago,” said Toronto Real Estate Board (TREB) President Richard Silver.

The average selling price during the first two weeks of 2012 was $444,473 – up by more than 8.5 per cent compared to the same period in 2011.

“Prices were up for most major home categories in the GTA in comparison to last year. The strongest price growth was for single-detached homes in the City of Toronto. The average price of singles in the 416 area code was up by 22 per cent year-over-year, pointing to a greater weighting of higher end detached homes changing hands compared to the same time last year,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

http://www.torontorealestateboard.c...market_updates/news2012/nr_mid_month_0112.htm

Average price in the 416 proper up 12% y/y.

 

[Eug]

That's a pretty large delta y-o-y, but it should be noted that there is a lot more volatility in the mid-month stats because (obviously) they only cover a half month period.

 

[macookie]

Here is a link to a list of the most expensive cities in the U.S:
http://www.cnbc.com/id/43484111/The_Most_Expensive_States_To_Live_In_2011?slide=1

If you look at the housing prices, they range between 400,000k to 600,000k for cities that are comparable to Toronto.
Even with their Real Estate crash, some cities within the U.S still exceed (or similar) to our Toronto average housing prices.

Immigrants (either wealthy, middle class, or poor) that heading to the U.S have many cities to choose from.
This is not an exception in Canada. They most likely want to choose either Montreal , Toronto, or Vancouver (and Calgary depending on their tolerance to extreme weather). Toronto is usually considered as the best pick for Immigrants.

As long as our city's population continues to increase, we continue to produce jobs, and house the big financial corporations and big fortune 500 companies, I wouldn't be too concerned with a GTA housing crash.

Toronto is “so” different and what happened in Florida, can’t happen here because we Canadians are special, we have for the moment a positive inflow of immigrants and thus we are unique and so different from our southern “debtors”.

As this article points out Miami's condo overhang...
http://www.thefiscaltimes.com/Artic...t-Recession-Ghost-Towns-in-America.aspx#page1
“In South Florida, high-rise ghostly towers filled with empty condos speckle the skyline. Miami alone produced 23,000 new condo units from 2003 to 2007 and is now experiencing one of the worst condo busts of any city in the country.”

How many new condo units have been built in Toronto from 2003 to 2012? And how leveraged are Canadians these days? And… if we let in a large number immigrants… what is stopping them from leaving?... or moving from Toronto to say Western Canada where employment prospects are better?

Because when we look at the best Canadian example of unemployment in Windsor, Ontario which was around 15% in 2007... what happened… people moved… house prices have dropped; you can purchase average 3-bedroom home for around $150K. There are some houses in the ghetto area listed at $30K... Yeah... that won't and can't happen to Fortess Toronto... because it's different, and unique and home to big banks... (Did that saved London, UK, and Iceland???).

 

[cdr108]

Here is a link to a list of the most expensive cities in the U.S:
http://www.cnbc.com/id/43484111/The_Most_Expensive_States_To_Live_In_2011?slide=1

If you look at the housing prices, they range between 400,000k to 600,000k for cities that are comparable to Toronto.
Even with their Real Estate crash, some cities within the U.S still exceed (or similar) to our Toronto average housing prices.

Immigrants (either wealthy, middle class, or poor) that heading to the U.S have many cities to choose from.
This is not an exception in Canada. They most likely want to choose either Montreal , Toronto, or Vancouver (and Calgary depending on their tolerance to extreme weather). Toronto is usually considered as the best pick for Immigrants.

As long as our city's population continues to increase, we continue to produce jobs, and house the big financial corporations and big fortune 500 companies, I wouldn't be too concerned with a GTA housing crash.

you do know that the average size US house is 50% larger than the average size CDN house:

http://www.npr.org/templates/story/story.php?storyId=5525283

The average American house size has more than doubled since the 1950s; it now stands at 2,349 square feet. Whether it's a McMansion in a wealthy neighborhood, or a bigger, cheaper house in the exurbs, the move toward ever large homes has been accelerating for years.

http://www.conwayfunghomes.com/blog.php?postid=2827

On the other hand, the Canada Mortgage and Housing Corporation (CMHC) did at least consider the issue in Canada. In their Canadian Housing Observer 2004 report, the CMHC notes that single homes built in 1990 “were on average almost 50 per cent larger than those built between 1946 and 1960, and up to twice the size of homes built before 1945. Even in the decade from 1990 to 2000, the average square footage of Canadian homes increased by four per cent”.


Other data, gathered and assessed by Conway Fung Homes, indicates that the average size of a Canadian house in 1945 was just over 800 square feet. In 1975, it was 1075 square feet. Today, it is about 1800-2000 square feet. In the United States, the average home size is about 2400 square feet reflecting the different cultural, real estate market and financing characteristics in that country.

 

[radioheadmike]

1. I am not comparing Toronto to Miami. Miami's economy is mostly based on Tourism industry. Although Miami has many international & local bank branches throughout its city, it doesn't house any major bank head offices.

2. Miami does not play a Major role in the United State's economy. Toronto plays a very important role in Canada's economy. The Big banks in Canada are highly invested in Canada's major exports. If Western Canada is thriving due to its trade in Natural Resources, it means that the banks that are housed here in Toronto are reaping the benefits as well.

3. In regards to Immigration, Toronto is competing against three other major cities. Miami is competing against 30 or more major cities in the U.S.

4. Toronto is playing catch up with the condo development. We cannot stretch horizontally anymore, so we are stretching vertically. Between the 80s and the 90s (and mid 2000s) Toronto stagnated in terms of housing development, while other cities around the world were thriving.

5. Immigrants are not leaving the city; they are multiplying and starting families. As long as we have great schools and jobs, no one is going to leave.

6. There are no jobs in Windsor. Cities need to adapt and shed old industries for new industries. Hamilton is a great example. It's shedding its old industries for newer ones. It's investing in the medical and Technology Industry. The house prices in Hamilton are catching up with Toronto.

 

[Wooba]

Maybe extending the capital gains tax exemption on primary residence from 6 months to 3 or 5 years would help reduce 'flippers' (that's probably a small percentage).

According to my lawyer, the 6 month primary residence thing is a myth. He told me that you could buy a place just intending for it to by your primary residence but if your circumstances change and you have to sell it you don't get to worry about capital gains. He did note however that if you did it more than once then perhaps CRA would take a look at you.

 

[redfirm]

1. I am not comparing Toronto to Miami. Miami's economy is mostly based on Tourism industry. Although Miami has many international & local bank branches throughout its city, it doesn't house any major bank head offices.

2. Miami does not play a Major role in the United State's economy. Toronto plays a very important role in Canada's economy. The Big banks in Canada are highly invested in Canada's major exports. If Western Canada is thriving due to its trade in Natural Resources, it means that the banks that are housed here in Toronto are reaping the benefits as well.

3. In regards to Immigration, Toronto is competing against three other major cities. Miami is competing against 30 or more major cities in the U.S.

4. Toronto is playing catch up with the condo development. We cannot stretch horizontally anymore, so we are stretching vertically. Between the 80s and the 90s (and mid 2000s) Toronto stagnated in terms of housing development, while other cities around the world were thriving.

5. Immigrants are not leaving the city; they are multiplying and starting families. As long as we have great schools and jobs, no one is going to leave.

6. There are no jobs in Windsor. Cities need to adapt and shed old industries for new industries. Hamilton is a great example. It's shedding its old industries for newer ones. It's investing in the medical and Technology Industry. The house prices in Hamilton are catching up with Toronto.

Ok, all valid points and yet .... how do you explain sharp down adj of almost 15% within a 6-7 month period 3 years ago? Or the bubble in early 90s? Wasn't TO major Canadian city, played a big economic role, big banks were here, immigration magnet, etc in the 90s as well?

 

[drewp]

Ok, all valid points and yet .... how do you explain sharp down adj of almost 15% within a 6-7 month period 3 years ago? Or the bubble in early 90s? Wasn't TO major Canadian city, played a big economic role, big banks were here, immigration magnet, etc in the 90s as well?

In the 90's the interests rates were well above 10%.

The six month drop coincided with the exact same increase by years end.

 

[kondoz]

According to my lawyer, the 6 month primary residence thing is a myth. He told me that you could buy a place just intending for it to by your primary residence but if your circumstances change and you have to sell it you don't get to worry about capital gains. He did note however that if you did it more than once then perhaps CRA would take a look at you.

That is correct. There is no steadfast number with regard to primary residence. However that grey area gives the CRA plenty of flexibility to look into your situation (audit?) if they do not think you are being genuine.