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Baby, we got a bubble!?

I believe that well located family homes in the City are in demand. That said, I believe that what is being said more and more about TO is that there may be a condo bubble. While there may be a single family home bubble as well, I don't think anyone has expressed nearly as much concern as they have about the condo market; perhaps because I am quite sure other than some buying and selling to make a profit on single family homes, the majority are I imagine end users. Certainly it is not the anywhere from 30-100% that seems to be quoted for at least some of the condo projects on Precon sites.
 
TREB: Strong Sales/Price Growth Continue in 2012

Greater Toronto REALTORS® reported 4,567 sales through the TorontoMLS® system in January 2012. This number was 8.8 per cent higher than the 4,199 sales reported in January 2011. Sales growth was strongest for low-rise home types in the regions surrounding the City of Toronto.

The average selling price for January 2012 transactions was $463,534 – up by almost nine per cent compared to January 2011.


416 detached: $743993 (+15%)
905 detached: $530129 (+5%)
GTA detached: $586098 (+8%)

416 condo: $343835 (+5%)
905 condo: $272103 (+7%)
GTA condo: $321475 (+5%)

Yes folks, it's nearly 3/4 of a million bux for an average detached home in the 416 now.

The highlighted statistic is still the one that astonishes me. In one year, that's an increase of almost $100,000. To put that in perspective, say you see a number of houses that'd sell in January 2011 for $650,000. Those similar houses, in January 2012, will go for $750,000? $100,000 net is a lot of money to bank away in one year to make up for the difference.
 
The highlighted statistic is still the one that astonishes me. In one year, that's an increase of almost $100,000. To put that in perspective, say you see a number of houses that'd sell in January 2011 for $650,000. Those similar houses, in January 2012, will go for $750,000? $100,000 net is a lot of money to bank away in one year to make up for the difference.
The better statistic here is median price if you're really looking at middle class affordability. In cities such as Toronto, average price gets really skewed upwards with sales of million dollar homes. Unfortunately, I don't know what the number is in the Toronto 416.

However, I do know that the vast majority of detached homes sold in the GTA were in the $200000 to $900000 range.
 
The better statistic here is median price if you're really looking at middle class affordability. In cities such as Toronto, average price gets really skewed upwards with sales of million dollar homes. Unfortunately, I don't know what the number is in the Toronto 416.

However, I do know that the vast majority of detached homes sold in the GTA were in the $200000 to $900000 range.

It is 580K according to January TREB report, p8, market_watch/2012
 
From Monday's Star:

A record 28,190 condos were sold across the GTA last year, up 24 per cent from the previous high set in 2007, says condo research firm Urbanation.

While sales remained sky-high in the final quarter of 2011, at a record 7,226 units, the inventory of unsold suites has been creeping up. As of the end of last year, it stood at just under 15,000 units — about 18 per cent of existing condos — up from 12,272 in the first quarter of 2011, Urbanation notes in its second annual report on the state of the GTA condo industry.

That’s still below the five-year 21 per cent average for unsold suites.

“The more successful the condominium market is in Toronto, the more reports surface warning of oversupply or a correction in prices,” said Ben Myers, executive vice-president of the condo tracking company.

Myers points to speculative buying, over-leveraging and “herd behaviour” as three risk factors that are hard to assess but could lead to a correction in Toronto condo prices.

But he notes that so far there seems to have been very little “dumping” — or flipping — of units for a quick profit before move-in day, which suggests most purchasers are likely “long-term, hold-and-rent investors” who are boosting the much-needed supply of rental accommodation in the GTA.

Urbanation predicts the market will remain strong this year, although it will revert to more normal sales levels of 20,000 or so units.
 
Dear Real Estate Agent: What happens if immigrants don't settle in Toronto????....

The following article highlights something to consider...

"After 20 years of attracting nearly 60 per cent of all newcomers to Canada, Ontario’s share of immigration is in steep decline and threatens to intensify the province’s economic struggles."
http://www.theglobeandmail.com/news/politics/immigrant-drop-imperils-ontario-economy/article2328862/

Would we have an oversupply of homes, if immigrants stop coming to Toronto? And... I repeat, my mantra about Windsor, Ontario people left to find work elsewhere and you can now buy an average 3 bedroom home for 150K. And you can buy "fixer-up" property in the ghetto areas for $30K... I doubt prices will drop that low in Toronto... but Windsor is a canary, for the whole province of Ontario. Windsor was a car manufacturing city that is dying a slow death... Toronto does have a great fun, booming vibe, diverse ecomomy currently... but deep down Toronto's economy is based on province that is based on manufacturing... and Ontario is losing those good paying jobs to other countries... and once those jobs go... they ain't coming back. eg.... Caterpiller just locked out employees in London, Ontario... it was a plant with 700 employees.. and hired workers at half the price, to do the same work in Indiana US.

With little or no chance for jobs for skilled or unskilled immigrants... they aren't going to settle in Ontario... and if the don't move to Ontario (aka Toronto)... they ain't going to move up the property latter. And if they don't move up the property latter... who is going to buy or rent all the condos in the 190-some-odd new highrises being constructed in Toronto.
 
Daveto,
We all know it just goes up. LOL

I agree the seeking Alpha article is interesting.

The similarities are eerily striking. I still don't think barring a very major event that we will see the 20-30% declines eluded to
but I can see problems. One thing about the banks here. There are 5 (or 6) major banks only. I do not believe the government can let any of them frankly fail. So expect to see continued support via CMHC or other means to prop them up. Essentially too big to fail just like the biggies in the US.

Shorting the Canadian banks... might as well just remove oneself from the stock market in its entirety if one believes that and get out of C$ in my view. That would not have worked out well to present. Not sure going forward and yet the calls are for appreciation of the C$. So as bad as we are, either others are worse off or alternatively one needs to get out of R/E and all paper currencies (US, Euro and now C$) and buy what? I know; gold and become a hermit.

So the reality in my view is that the Canadian banks will chug along, we will have a mild deflation in Toronto of our real estate, perhaps 15% and the savers (bondholders)will continue to be punished for the excesses of the borrowers. Just my view however, and I am wrong as often as I am right, so.....
 
Quote from a today's post in the thread "1 Thousand Bay Street".

"... the lineups on Saturday went from 8.00am to 5.00 pm and includes valet parking and three police officers to direct hordes and cars. All buying at $ 800 sq/ft./.."

In Friday's Real Estate section of The Globe and Mail there were ads about 6/7 developments opening up to the public. In Saturday's The Star, there were ads about additional developments opening up to the public. Then, there is a post above about 1 Thousand Bay.

Hordes of (crazy) people on one side. Then, there are perinial bubble-busters on the other side.

Only time will tell who is right.
 
With little or no chance for jobs for skilled or unskilled immigrants... they aren't going to settle in Ontario... and if the don't move to Ontario (aka Toronto)... they ain't going to move up the property latter. And if they don't move up the property latter... who is going to buy or rent all the condos in the 190-some-odd new highrises being constructed in Toronto.

I have a distinct feeling that downtown Toronto, especially core downtown Toronto, is turning into "Elliott Lake" for financially well off living in developments like Shangri-La, AURA, ROCP and the like and Karma and Pace condos for the individuals working in the support industries for the rich -- restaurant, banks, stores in Eaton Centre, financial sector.

Prices in down and core downtown Toronto will remain stable or slightly higher.
 
I have a distinct feeling that downtown Toronto, especially core downtown Toronto, is turning into "Elliott Lake" for financially well off living in developments like Shangri-La, AURA, ROCP and the like and Karma and Pace condos for the individuals working in the support industries for the rich -- restaurant, banks, stores in Eaton Centre, financial sector.

Prices in down and core downtown Toronto will remain stable or slightly higher.

In other words, it may become what New York City was decades ago. The number of renters to home owners will rise as will the income gap of the dwellers in the downtown core. If Toronto maintains the diversity that it currently has within the downtown core, its future might certainly be a younger version of NYC.
 

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