interested
Senior Member
^^^
Life was and always will be good.
In any event, it definitely beats the alternative.
Life was and always will be good.
In any event, it definitely beats the alternative.
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Baby, we got a bubble!?
- Thread starter simuls
- Start date
It's only when you forget if you did or did not eat breakfast that you have to worry 
klb86
Active Member
Yet another article on bloomberg:
Canada Housing Heads for Severe Correction on Investment: Chart of the Day
Canada Housing Heads for Severe Correction on Investment: Chart of the Day
Eug
Senior Member
I think you answered your own question. Sounds coincidental.
Meanwhile the uber expensive newly built cliff-front home in my neighbourhood went up for sale last year... at what I thought was at least 15% too high. Not surprisingly, it sat... and sat... and sat... so they dropped the price significantly... and now it's still probably 5% or more too high IMO. And it's still sitting.
I betcha if they had simply priced it correctly 6 months ago when it was still relatively warm out, it might have sold back then, esp. if they had been willing to drop a few % below what I think would have been a fair market price... which is about 5% below what it is now.
Eug
Senior Member
I predict a huge drop won't happen in 2012, because rates will remain über low. In fact, I'm now starting to think it won't happen in 2013 either.
It just keeps getting pushed back further and further. It might even be a full 10 years or more after I really started worrying about a drop (in the early to mid 2000s).
ILuvTO
Active Member
Quote from the article:
“We have experienced bubbles and busts before in Canada, it’s nothing new,†Athanassakos said. “I don’t know why this time would be different.â€
But apparently this time it is different according to the bulls. Funny how bears use stats and real numbers to support their argument while bulls say things like "it is different this time", "Canada is a safe haven", "foreign investors love Canada", etc, etc, with no real numbers to back up their claims.
Eug
Senior Member
I personally think both sides pull stuff out of their assets in support of their arguments. Remember, a lot of bears have been making similar arguments for the past 5 to 10 years. If they had really put their money where there mouths are, they'd would have lost out big on gains since the mid 2000s.
That is not to say it's wrong to think the market is frothy, but I do think it's wrong to be so adamant that the world is coming to an end just because they happen to have some pet theories.
As far as I'm concerned, if a prediction still doesn't come true 3 years after the predicted period, we can effectively declare that person wrong.
Otherwise I could simply say "The market is going to crash soon", and if that happens 10 years from now, I'd go ahead and declare myself a real estate prophet even though I was off by an entire decade.
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jeff316
Active Member
I cringe every time I read someone use the term "it's different this time" in a sarcastic manner.
So much has changed in our economy, our demographics, our preferences, our policies, our province that the market today is very different than markets past. Toronto of 2012 is not Toronto of 1989.
Now, don't get me wrong - I'm not suggesting that these differences are going to power a never-ending, always increasing real estate market. The market will eventually fall.
But our province, our economy, our city have all changed drastically over the last twenty years. A lot is different. Assuming that these differences don't matter or don't change market response/cycles is just as loopy as assuming that prices are going to go up forever.
James
Senior Member
If there is indeed a correction happening this year I'm certainly not seeing it yet. Properties are still selling for well over asking and in a matter of a week or so. The more sought-after the neighborhood, the more inflated the final sale prices are. I've anticipated a slowdown this year but so far it's looking like the opposite. Even if the slowdown does occur later this year, the first half of the year would've already experienced a rapid inflation of property value so much so that the slowdown would actually be offset.
ILuvTO
Active Member
All fair points Eug. Agreed that both sides pull some interesting arguments out of the sky. With that said, most rational bears use a historical comparison of metrics like price to income, price to rent, etc to support their theory. I've never heard a bull use a logical argument like this to make their point. Their argument always seems to be based on a fairy tale about how Toronto is a special place that will have forever rising property values.
I am definitely in the camp of people who were wrong about the crash. I thought it would have happened by now, but the market has been quite resilient. Will it still happen? Who knows? Based on historical metrics I still believe that property is overvalued in this city.
ILuvTO
Active Member
Agreed that much has changed. If you heard the news about the Drummond report, much has changed for the worse in Ontario. Economic growth is expected to be meagre over the next few years. Ontario now has to find a way to reinvent itself. We can no longer rely on manufacturing and the growth associated with it and a low dollar to save us.
And I agree that this is not 1989. But just because the conditions are different now does not preclude this time from ending the same way, or in a similar fashion (somewhat declining property values).
jeff316
Active Member
Yes, and is it possible that those changes may be making the historical metrics and their resulting benchmarks less accurate when analyzing the property market? Particularly in reference to Toronto, which is vastly different than the rest of the province and is becoming increasingly anomalous as the economy evolves...?
Is it possible that historical metrics or their benchmarks that were relevant to analyzing a more solidly middle-class, post-WWII manufacturing economy may not immediately apply to today's more income disparate, post-NAFTA service and "knowledge" economy without any reconsideration...?
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AKS
Senior Member
Looking at the chart analysis, there seems to be a housing dip once every decade. So between 2010 - 2020 there will be a dip. When? Who knows.
CN Tower
Banned
Let's leave Toronto alone for a while. Indulge me in a change of pace for a moment-
If the writing is on the wall that Canada's housing market has peaked and is likely poised for weak performance in the near term what are the best ways to profit?
I look at subprime mortgage lenders thst don't rely on CMHC's balance sheet to vacuum up their mess as prime short candidates but i lack the means to stress test these public companies properly. Home Capital comes immediately to mind particularly with their meagre dividend yet all i read on them is praise.
Wouldn't companies that are so highly leveraged and dependent on borrower's with poor credit just get decimated if Canada's housing market corrected?
If the writing is on the wall that Canada's housing market has peaked and is likely poised for weak performance in the near term what are the best ways to profit?
I look at subprime mortgage lenders thst don't rely on CMHC's balance sheet to vacuum up their mess as prime short candidates but i lack the means to stress test these public companies properly. Home Capital comes immediately to mind particularly with their meagre dividend yet all i read on them is praise.
Wouldn't companies that are so highly leveraged and dependent on borrower's with poor credit just get decimated if Canada's housing market corrected?
ILuvTO
Active Member
That's fair. This is entirely possible.
The make-up of the economy has definitely changed, and the metrics that were relevant years ago may not apply today. I give you that.
But even in Toronto, the metrics used to determine if house prices are overvalued still apply today, and they are telling us that prices are not in line with rents and wages.