Baby, we got a bubble!?

[daveto]

Yes I do. One king west is doing very well. Amazing architecture, good management. All the legacy problems are solved but the only reason why its cheaper than market is that all banks are told not to lend to condo / hotels. So all your buyers have to buy with cash. If you want to buy, check your financing first.

Im not in the hotel pool, but Im making a sizable profit. Not 24K a year, but net rental income close to $20K, definitely a positive cash flow.

Your unit has a sale price under $200k?

 

[azureray]

Yes.

Your unit has a sale price under $200k?

 

[recharts]

Your interpretation of data is flawed.

1. Your analysis does not consider normal seasonal variances
2. Your analysis does not consider current data in the context of historical data.
3. Your analysis does not consider "bracket creep" (in this case above/below $1m)

Finally, contrary to your conclusions, a review of TREB data in the Market Watch reports indicates that the 2013 sales activity in the excess $1m bracket has been statistically consistent with sales activity in the below $1m bracket. The various differing gov't actions have affected $1m+ properties, but also entry level properties.

I beg to differ!
My target is not to compare with the year before
My target is to see the MOI which is a sort of on the spot indicator.
By this indicator North York is in big trouble. This season and now.
So 1 and 2 are covered by this.

I do not really understand the "bracket creep" term , can you be more explicit?

The very reason why I am collecting my own stats is because I do not trust TREB.
During the last months they repeatedly either adjusted the numbers for the year before for the current month to fit the "vibe" and the hype they wanted to put on their monthly release.
In one instance they either made appear or disappear like 1000 listings (new listigns for that month or something like that) That is crap, incompetence and more than anything it means that nobody can use their data for a reliable analysis. So don't even mention TREB to me.

I never said that the government measures did not affect the entry level properties.
That is being shown in my maps and there you can clearly see that they are consistently getting less than the asking price.
I think that since I have enough data I can make my maps finer to go in 50K increments for price levels so I can show clearer the price decline in these areas (I am referring to the blue areas on my maps).

We are witnessing a decreasing in prices at the extremities of the price ranges and an increasing in the median segment (500k-1mil)
Like it or not they will have to do something about it, I am seeing more and more comments about CMHC in the media and it seems that the things are moving or changing in this institution. There must be a reason for that don't you think ?

 

[daveto]

MLS is showing units listed at $180k-$200k, condo fees at $570/month ($6840 yr), renting at approx $1500/month.
Net of property taxes, translates to a yield of approx 4.5%, excluding vacancy costs/maintenance.

Clearly cashflow positive, but I'm not sure I view that sort of yield as very attractive for an illiquid investment with high transaction costs.

 

[Hank]

What is your data source for sub-$200k units generating average net income of $24k/yrly? (ie net to you, after cleaning, management fee, etc) If I were you I would closely assess whether that is legitimate, or marketing/anecdotal.

Suffice it to say that I am confident in those numbers.

 

[Hank]

MLS is showing units listed at $180k-$200k, condo fees at $570/month ($6840 yr), renting at approx $1500/month.
Net of property taxes, translates to a yield of approx 4.5%, excluding vacancy costs/maintenance.

Clearly cashflow positive, but I'm not sure I view that sort of yield as very attractive for an illiquid investment with high transaction costs.

$1500/month would be if you're renting the unit out yourself, outside of the hotel pool. Depending on the unit it's closer to $2,000/month in the pool (although taxes are also higher, since you have to pay commercial property taxes as opposed to residential). That makes me wonder: are you making more out of the hotel pool than you would in it, azureray?

 

[azureray]

$570 includes all utilities and cable TV / Internet so actual rent is close to $1700. Depending on the actual units of course. Tax is lower than $2000 residential rate.

It is a liquid investment, but it is also positive cash flow if you have the money and will to hold onto it.

MLS is showing units listed at $180k-$200k, condo fees at $570/month ($6840 yr), renting at approx $1500/month.
Net of property taxes, translates to a yield of approx 4.5%, excluding vacancy costs/maintenance.

Clearly cashflow positive, but I'm not sure I view that sort of yield as very attractive for an illiquid investment with high transaction costs.

 

[azureray]

Hotel is doing very well. Better and better YOY.

However there's an upfront cost to convert your unit to be a 'standard hotel suite', a few thousand dollars. Also you would have no access to your unit unless you book it. Rent yourself on the other hand you have more control.

Hotel Pool: Base on over 70% occupancy rate of the hotel, and $250 per night rate, $2000 / month net profit is pretty conservative.

$1500/month would be if you're renting the unit out yourself, outside of the hotel pool. Depending on the unit it's closer to $2,000/month in the pool (although taxes are also higher, since you have to pay commercial property taxes as opposed to residential).
That makes me wonder: are you making more out of the hotel pool than you would in it, azureray?

 

[daveto]

I beg to differ!
My target is not to compare with the year before
My target is to see the MOI which is a sort of on the spot indicator....

You don't understand the proper analysis of data and management of statistics in order to separate signal from noise. You can "beg to differ" all you want. It doesn't change the fact that your current analysis willfully ignores sources of statistical noise that render your conclusions about signal as not credible.

My guess is you don't know what "signal" and "noise" mean. In that, I can only direct you to the internet or a statistics textbook.

 

[azureray]

Has anyone taken a look at the National Bank of Canada Housing Price Index?

http://www.housepriceindex.ca/Default.aspx

http://www.housepriceindex.ca/Default.aspx

 

[azureray]

We are seeing a consistent periodical seasonal correction based on historical data. The one we are seeing this spring does not seem to be that different. Am I wrong?

 

[daveto]

We are seeing a consistent periodical seasonal correction based on historical data. The one we are seeing this spring does not seem to be that different. Am I wrong?

View attachment 12992

Yes, you are wrong. The data this spring is very different. But the graph you've viewed does not provide the proper context and scale to make the difference clear.

There is no disagreement that the data this spring (and for the past year) is different. The only differences of opinion is whether it is a plateau (the bulls) or a peak (the bears).

 

[azureray]

Can you explain the major difference? The dip is flattening out as of March. You can see we still have a 4.75% change YOY.

Change month / month -0.4 % in Feb, but + 0.2 % in April. The head of tail is tilting upwards.

Yes, you are wrong. The data this spring is very different. But the graph you've viewed does not provide the proper context and scale to make the difference clear.

There is no disagreement that the data this spring (and for the past year) is different. The only differences of opinion is whether it is a plateau (the bulls) or a peak (the bears).

 

[daveto]

Can you explain the major difference? The dip is flattening out as of March. You can see we still have a 4.75% change YOY.

Change month / month -0.4 % in Feb, but + 0.2 % in April. The head of tail is tilting upwards.

View attachment 12994View attachment 12995

View attachment 12993

Why bother. You've clearly made up your mind.

You asked about normal seasonal variances, and then above you make no comparison to prior years to compare the seasonal change to the prior avg changes.

A while back you said you would conclude there was a bubble if a particular pre-sale property wasn't cashflow positive. After that was demonstrated by various posters (myself included) you nonetheless concluded that it was "close enough" and therefore wasn't a bubble.

My advice? Take a read back over the relevant posts in the thread (start from page # 400). Everything you've been saying has been addressed a multiple times.

 

[azureray]

I will certainly take your advice. Thanks very much Dave. Hope my humble opinion makes this forum a balanced one.

Just a correction, I didn't state that a macro trend conclusion could be made through the assessment of 'a particular pre-sale property'. All properties are different. We are talking about macro trends here. In any climate, there will be winners and losers.

Why bother. You've clearly made up your mind.

A while back you said you would conclude there was a bubble if a particular pre-sale property wasn't cashflow positive. After that was demonstrated by various posters (myself included) you nonetheless concluded that it was "close enough" and therefore wasn't a bubble.

My advice? Take a read back over the relevant posts in the thread (start from page # 400). Everything you've been saying has been addressed a multiple times.