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Baby, we got a bubble!?
- Thread starter simuls
- Start date
interested
Senior Member
TOphotog;
While I respect what you are saying about average selling price and the information published does not tell you as an agent that much the Treb and other real estate organization puts out the data for consumption of the public. Otherwise this data would not be reported in press releases and spun. I believe it is done to keep real estate in the news (for obvious reasons as if not there people will not think of it as much and hence be less likely to think about transacting...as the expression goes....publicity, any publicity....is good) and if the news can be made to look better than it is all the better.
We also know that most people just read the headline. I was just watching a show on CNBC in which they were talking about retirement and the effect of 2% fees for mutual funds over 50 years would cut out 65% of the returns based on 7% / year vs. 5%/year returns. They then interviewed heads of wealth management for large US banks/funds who said on camera that they were NOT aware of the data. Reminded me of when we saw the presidents of the Tobacco industry in front of congress stating they did not believe despite mounds of data that smoking and Lung Cancer were related.
I feel that the same tactic is being used by TREB and that they are best disengenuous at best when they compare apples and oranges in the form of adjusted to non adjusted data.
As I suggested before, if the pocket listings numbers have not changed significantly year on year then this should make no difference as far as I can see to the numbers. Hence, this should not alter that the year on year prices are dropping more or are not increasing as much as is reported to the public.
I don't think that your job as a realtor is to not depend on the data and if you think it is I would ask you why is it being published at all?
Can you offer an alternate explanation as to why one should not believe that
While I respect what you are saying about average selling price and the information published does not tell you as an agent that much the Treb and other real estate organization puts out the data for consumption of the public. Otherwise this data would not be reported in press releases and spun. I believe it is done to keep real estate in the news (for obvious reasons as if not there people will not think of it as much and hence be less likely to think about transacting...as the expression goes....publicity, any publicity....is good) and if the news can be made to look better than it is all the better.
We also know that most people just read the headline. I was just watching a show on CNBC in which they were talking about retirement and the effect of 2% fees for mutual funds over 50 years would cut out 65% of the returns based on 7% / year vs. 5%/year returns. They then interviewed heads of wealth management for large US banks/funds who said on camera that they were NOT aware of the data. Reminded me of when we saw the presidents of the Tobacco industry in front of congress stating they did not believe despite mounds of data that smoking and Lung Cancer were related.
I feel that the same tactic is being used by TREB and that they are best disengenuous at best when they compare apples and oranges in the form of adjusted to non adjusted data.
As I suggested before, if the pocket listings numbers have not changed significantly year on year then this should make no difference as far as I can see to the numbers. Hence, this should not alter that the year on year prices are dropping more or are not increasing as much as is reported to the public.
I don't think that your job as a realtor is to not depend on the data and if you think it is I would ask you why is it being published at all?
Can you offer an alternate explanation as to why one should not believe that
TOphotog
New Member
Interested:
I agree that the numbers should not be available to the media until they have been adjusted, however, since real estate is the topic de jour, the media want the numbers immediately. Any article about real estate sells newspapers and magazines. TREB has been producing MarketWatch since the mid 1960's (under different names for the report), but the media has only been picking up on that since the 1980's when interest in real estate took off like a rocket. TREB is not affected by how the numbers are perceived by the public. Their income is generated from dues paid by agents, and they still exist even in a recession. When real estate was a ho-hum subject, you'd find these numbers on page 20 of The Star in a tiny map / spreadsheet format with no comments or editorial columns written about the stats. It's the media which is driving the stories, making these numbers more important than they actually are. As agents, we actually find it humorous when the media reports in July that sales are falling. Of course they are, it's the summer - sales always decline during the summer. The media treats it like doom and gloom have descended upon us.
Like all information, statistics need to be analyzed before being considered relevant. Example: CMHC keeps releasing bulletins on how Canadians have never been in so much debt and they even report the average debt of the average Canadian. They make it sound like the sky is falling about personal debt! The indicator for the health of personal wealth: the number of Powers of Sale properties listed. Presently, these are extremely low compared to 1990-92 when real estate hit the skids. Where is CMHC getting their data from? The banks. Why are the banks stating that Canadians are in so much debt? Because the bank is now including all the HELOCs (home equity lines of credit) registered against properties. I've grilled CMHC reps on this. I have a $480,000 HELOC with a zero balance outstanding - it's cheaper than buying title insurance against mortgage fraud *grin*. They include that as a debt because it is registered against the property, therefore CMHC is led to believe that I'm in debt for $480K That makes about as much sense as saying I have a $15K credit limit on my Visa card, therefore my debt to Visa is $15K. CMHC's response to me: "we can't help what the banks report". Well then, stop acting like the sky is falling with this personal debt issue and stop saying that debt has never been so high.
TREB is reporting the numbers as they arrive at the end of the month, they are adjusting the numbers as new information is received, and re-publishing the adjusted numbers.
As far as the number of pocket listings, this has increased drastically for my business personally in the past five years (been selling for 27 years). Some years, they account for 20-25% of my income. Quite a chunk of real estate sales which aren't reported!
I agree that the numbers should not be available to the media until they have been adjusted, however, since real estate is the topic de jour, the media want the numbers immediately. Any article about real estate sells newspapers and magazines. TREB has been producing MarketWatch since the mid 1960's (under different names for the report), but the media has only been picking up on that since the 1980's when interest in real estate took off like a rocket. TREB is not affected by how the numbers are perceived by the public. Their income is generated from dues paid by agents, and they still exist even in a recession. When real estate was a ho-hum subject, you'd find these numbers on page 20 of The Star in a tiny map / spreadsheet format with no comments or editorial columns written about the stats. It's the media which is driving the stories, making these numbers more important than they actually are. As agents, we actually find it humorous when the media reports in July that sales are falling. Of course they are, it's the summer - sales always decline during the summer. The media treats it like doom and gloom have descended upon us.
Like all information, statistics need to be analyzed before being considered relevant. Example: CMHC keeps releasing bulletins on how Canadians have never been in so much debt and they even report the average debt of the average Canadian. They make it sound like the sky is falling about personal debt! The indicator for the health of personal wealth: the number of Powers of Sale properties listed. Presently, these are extremely low compared to 1990-92 when real estate hit the skids. Where is CMHC getting their data from? The banks. Why are the banks stating that Canadians are in so much debt? Because the bank is now including all the HELOCs (home equity lines of credit) registered against properties. I've grilled CMHC reps on this. I have a $480,000 HELOC with a zero balance outstanding - it's cheaper than buying title insurance against mortgage fraud *grin*. They include that as a debt because it is registered against the property, therefore CMHC is led to believe that I'm in debt for $480K That makes about as much sense as saying I have a $15K credit limit on my Visa card, therefore my debt to Visa is $15K. CMHC's response to me: "we can't help what the banks report". Well then, stop acting like the sky is falling with this personal debt issue and stop saying that debt has never been so high.
TREB is reporting the numbers as they arrive at the end of the month, they are adjusting the numbers as new information is received, and re-publishing the adjusted numbers.
As far as the number of pocket listings, this has increased drastically for my business personally in the past five years (been selling for 27 years). Some years, they account for 20-25% of my income. Quite a chunk of real estate sales which aren't reported!
Last edited:
Eug
Senior Member
Prices up again, in October.
http://torontorealestateboard.com/market_news/market_watch/index.htm
November 6, 2013 -- Greater Toronto Area REALTORS® reported 8,000 home sales through the TorontoMLS system in October 2013 – up from 6,713 transactions reported in October 2012. Over the same period, new listings on the TorontoMLS system were down.
“The GTA home ownership market has been broadly characterized by a rebound in sales since the summer. Market conditions have been tighter in some market segments more so than others. Ground-oriented homes listed for below one million dollars in some areas of the GTA have been especially popular with buyers, while listings for these home types have been constrained,” said Toronto Real Estate Board President Dianne Usher.
“The supply of listings for many home types and price points has either been down yearover- year or at least not up by the same annual rate as sales. The additional Land Transfer Tax in the City of Toronto and the removal of the government guarantee on high ratio mortgages for home purchases over one million dollars have arguably led many homeowners not to list,” continued Ms. Usher.
The average selling price for TorontoMLS sales in October 2013 was $539,058– up by more than seven per cent in comparison to the average price of $502,127 in October 2012. The MLS® Home Price Index (MLS® HPI) Composite Benchmark was up by 4.5 per cent year-overyear.
“Growth in the average selling price and the MLS® HPI Composite Benchmark will continue through 2014. Inventory levels for ground-oriented home types will be low from a historic perspective and home ownership demand will stay strong as affordability remains in check due to the continuation of accommodative borrowing costs,” said Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis.
Full report:
http://torontorealestateboard.com/market_news/market_watch/2013/mw1310.pdf
Average 416 prices (yoy change):
$873509 - detached (+12.4%)
$642112 - semi-detached (+11.7%)
$473240 - townhouse (+4.0%)
$384441 - condo (+7.2%)
http://torontorealestateboard.com/market_news/market_watch/index.htm
November 6, 2013 -- Greater Toronto Area REALTORS® reported 8,000 home sales through the TorontoMLS system in October 2013 – up from 6,713 transactions reported in October 2012. Over the same period, new listings on the TorontoMLS system were down.
“The GTA home ownership market has been broadly characterized by a rebound in sales since the summer. Market conditions have been tighter in some market segments more so than others. Ground-oriented homes listed for below one million dollars in some areas of the GTA have been especially popular with buyers, while listings for these home types have been constrained,” said Toronto Real Estate Board President Dianne Usher.
“The supply of listings for many home types and price points has either been down yearover- year or at least not up by the same annual rate as sales. The additional Land Transfer Tax in the City of Toronto and the removal of the government guarantee on high ratio mortgages for home purchases over one million dollars have arguably led many homeowners not to list,” continued Ms. Usher.
The average selling price for TorontoMLS sales in October 2013 was $539,058– up by more than seven per cent in comparison to the average price of $502,127 in October 2012. The MLS® Home Price Index (MLS® HPI) Composite Benchmark was up by 4.5 per cent year-overyear.
“Growth in the average selling price and the MLS® HPI Composite Benchmark will continue through 2014. Inventory levels for ground-oriented home types will be low from a historic perspective and home ownership demand will stay strong as affordability remains in check due to the continuation of accommodative borrowing costs,” said Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis.
Full report:
http://torontorealestateboard.com/market_news/market_watch/2013/mw1310.pdf
Average 416 prices (yoy change):
$873509 - detached (+12.4%)
$642112 - semi-detached (+11.7%)
$473240 - townhouse (+4.0%)
$384441 - condo (+7.2%)
rbt
Senior Member
http://www.cbc.ca/news/business/toronto-condo-sales-decline-8-1.2416898
It appears Toronto will sell roughly 13,000 new condo units this year.
"Given the current sales trend and the expected number of launches for the fourth quarter, new condominium apartment sales will likely total approximately 13,000 units this year. That's down from 17,997 in 2012 and 28,190 sales in 2011."
While this is lower than our recent normal; 13,000 units is still a high number for a North American city.
It appears Toronto will sell roughly 13,000 new condo units this year.
"Given the current sales trend and the expected number of launches for the fourth quarter, new condominium apartment sales will likely total approximately 13,000 units this year. That's down from 17,997 in 2012 and 28,190 sales in 2011."
While this is lower than our recent normal; 13,000 units is still a high number for a North American city.
CN Tower
Banned
interested
Senior Member
I am not sure the last part in bold is correct. The construction industry turns out 15000 condos/year. Even when they oversold the previous 2 years, there will be delays as they simply cannot build more than 15000/year so perhaps not the loss of industry jobs...at least not for a few more years.
However, I suspect we may see a bit of a repeat of 2008 at which time in 2009 trades were looking for work and construction costs actually came down a bit.
If there are very expensive units left in projects that have been started or "dog suites" I suspect they may have to be quite discounted which means the developers profits will get squeezed.
ISYM
New Member
My understanding is that construction workers long ago started to divert into other such industries, which makes sense.
Wooba
Active Member
Such as?
I work in construction and I can't think of anyone that has skills for other careers, other than working at home Depot.
ribbyeye
New Member
Has anyone noticed that some condos are offering some pretty extreme discounts on their pre-construction projects? For example, Minto30 Roe is offering free maintenance fees and property taxes for 2 years currently. If you take maintenance fees for a small 1-bedroom as ~$300/month and property taxes for $2,000/year that comes out to be ~$11,000. Not very insignificant anymore.
I'm also not a real estate agent. I just found it fairly interesting that these developers are trying to maintain the price of their units artificially by offering these free incentives. The Globe and Mail even wrote an article about it: "Amid condo glut, Toronto developers luring buyers with fat discounts"
I'm also not a real estate agent. I just found it fairly interesting that these developers are trying to maintain the price of their units artificially by offering these free incentives. The Globe and Mail even wrote an article about it: "Amid condo glut, Toronto developers luring buyers with fat discounts"
That's been going on for years
ribbyeye
New Member
Well sure, offering incentives for a condo building so that people buy into them -- that's been going on for years. But a couple of years ago, the best that I saw was a couple months free maintenance, which only amounts to a couple thousand dollars. That was during 2011-2012, which as noted above was when condo sales were really booming.
I've seen trips, a year's free maintenance, free parking, lots of freebies over the years.
interested
Senior Member
Developers do not want to anger their previous buyers and furthermore, they do not want to discount the price "officially". It is a bit like a bonus on a salary. You can give it one year but not the next year if the performance is not as good. A salary increase the employer has to give to the employee going forward or state that "I am lowering your salary".
View property the same way. The developer says the property is $350K but I will give you back $20K in incentives...essentially a 5.7% discount. Alternatively he sells it for $330K. The previous buyer who bought at $350 is upset "as the developer lowered the value of his condo". By selling at $350 with $20K discount however, the sale shows up everywhere as $350K. The incentive is paid back to the buyer often at the time of closing or alternatively which does not show up.
If next year the price increases back to $350 and requires no incentives, that can easily be removed and the price still looks like $350K and we did not go through a price of $350K 2 years ago, $330K last year, and $350K this year. Future buyers will be less scared off as they would be fearful that the developer who did slash prices would do it again.
Forgive the long winded explanation but I hope this helps to illustrate the rationale of why it is done as it is.
interested
Senior Member
The most extreme that I have heard of include: 6% commission to the real estate agent and a Mercedes(I am not clear if the Mercedes went to the buyer or the agent but I believe it was to the agent.)
4% further savings to the buyer.
This was on condos over $2 million.
Fast math would indicate that the $2 million dollars charged is in fact netting the develper 10% less + the cost of the car ($60K) or $260K less.
The buyer was only getting a discount of $80K. The agent was to get double the usual 3% commission or an additional $60K for having his buyer purchase this investment. As I said, one or the other also got the $60K car (which the developer because he was buying a few probably got at a sizeable discount).