Baby, we got a bubble!?

[rbt]

What you're describing is another symptom of the current bubble economy. It does not happen in a bear market. In fact, the opposite happens as lenders look to limit their exposure and risk.

It definitely will never happen if the market value of a property declines at all and is worth less than the mortgage.

Sigh. So you have zero personal or professional experience with the alternative mortgage departments at banks. That's fine but you might investigate what they do and why they are relatively new departments.

Canadian banks have been allowed to enter into a large number of markets that they were previously restricted from and this gives them significantly more ability to help a customer who is a a serious financial pickle but still potentially profitable (both today and in the future). This is especially true if it is a Canada only real-estate crash.

If US and Europe drop another 50% to 75% in the next 5 years then all bets on just about everything are off.

 

[Eug]

so what you're trying to tell me is that monthly affordability isn't/wasn't being used as a marketing tool ?!?
geez, wonder why there was such huge uproar by the real estate industry when amortizations were reduced from 40 to 35 and back down to 25 years ?




all that's happened above is extended your mortgage, and hence over time, paying thousands more interest to the bank so it's okay to rent from a financial institution but not a landlord ...

oh btw, you just provided a perfect example of how affordability/monthly serviceability would be marketed to the buyer/consumer.
guess there wasn't really a need for reduction and return to 25 year amortization.

if prices can't be covered by the traditional 25 year amortization at a higher interest rate which would be marginally higher than today's ultra-low emergency rates, something is really wrong !

The debatable claim isn't that banks push affordability. The debatable claim is that home prices are 30% overvalued.

And yes, extending one's amortization means paying more interest. That should be totally obvious.

However, the point here is the math you quoted is misleading because it assumes that the amortization cannot change, and implies that one would be forced to pay significantly higher monthly payments when interest rates rise. That is simply wrong because the option of increasing the amortization exists. There's nothing stopping a customer from getting a mortgage with another 25 year amortization after the first 5-year term is up.

 

[TheKingEast]

How are home prices 30% overvalued? Where does this figure come from?

 

[nrb]

How are home prices 30% overvalued? Where does this figure come from?

There's an awful lot of data out there indicating this. One only has to google it. http://www.oecd.org/eco/outlook/focusonhouseprices.htm

 

[nrb]

Sigh. So you have zero personal or professional experience with the alternative mortgage departments at banks. That's fine but you might investigate what they do and why they are relatively new departments.

Canadian banks have been allowed to enter into a large number of markets that they were previously restricted from and this gives them significantly more ability to help a customer who is a a serious financial pickle but still potentially profitable (both today and in the future). This is especially true if it is a Canada only real-estate crash.

If US and Europe drop another 50% to 75% in the next 5 years then all bets on just about everything are off.

I have nothing to prove, you are the one trying to claim that a mortgage lender is going to refinance someone's mortgage when they can't afford their rate increase in the potential environment of a real-estate crash. Of all the dumb things I've read in this thread, this ranks right up there.

 

[Condo George]

House and condo sale surge defies summer slowdown

Average price jumps 7.4 per cent in a year, Toronto Real Estate Board says, and sales leap 15.4 per cent.

House and condo sales in the GTA kept rising in June, ignoring the traditional summer slowdown.



House and condo sales in the GTA kept rising in June, ignoring the traditional summer slowdown.



By: Susan Pigg Business Reporter, Published on Fri Jul 04 2014


GTA house prices – and sales – continued to soar in June, traditionally the beginning of the summer slowdown, as the average sale price of a house hit $568,953, up 7.4 per cent over a year ago, according to figures released by the Toronto Real Estate Board Friday.


Sales were up 15.4 per cent during the same period as buyers continued to jockey and bully bid their way to purchases that grew somewhat less frantic thanks to an 8.3 per cent increase in the number of new listings.


Overall inventory for sale, however, was still down by almost 7 per cent over a year ago as homeowners just opt to stay put where they are.


Condos have seen a surge in sales this spring as first-time buyers, in particular, turn to the form of housing that remains most affordable, and in highest supply, in the face of house prices that just continue to climb out of sight.


Condo were in top demand across the GTA, with sales up 20 per cent, far outstripping detached and semi-detached houses. across the GTA – 21.4 per cent in the City of Toronto and 16.7 per cent in the 905 regions – with prices up an average of 6.8 per cent across the GTA.


The average price of a resale condo in June in the 416 region was $390,569, up 6.3 per cent year over year, compared to $309,719 in the 905 regions where the average sale price was up 7.5 per cent.


Semi-detached homes were also in top demand – in large part a reflection of how far detached homes have skyrocketed out of reach in recent years – with the average sale price up almost 16.1 per cent, year over year, to an average of $672,725 in the 416 region and $448,531 in the 905 regions.


Detached homes, which had edged perilously close to $1 million in the 416 back in the spring when higher-end new infill homes saw a spike in sales, slipped again in June, to an average sale price of $921,127 in the City of Toronto and $641,972 in the suburban regions.


Townhouses and row houses saw sales climb 14.5 per cent across the GTA, with average prices up 10.9 per cent to $485,273 in the City of Toronto and up 7 per cent, to $402,261 in the 905 regions, according to TREB.


But the lack of enough houses to meet demand remains a persistent problem, even with the uptick in new listings in June, notes TREB.


There were just two months of inventory left in June – a key indicator that the GTA remains a strong sellers’ market. Six months of inventory is considered a balanced market.

 

[Condo George]

Canadian home prices will rise 5 to 6 per cent for remainder of 2014: TD report
By Linda Nguyen, The Canadian Press

TORONTO - Canada's housing market will continue to stay hot for the rest of the year, with home prices expected to rise on low interest rates and increased demand, says a report by TD Economics.

The bank upgraded its forecast for the real estate sector Thursday, predicting that home prices will gain an average of five to six per cent by the end of 2014.

"More strength may be bubbling under the surface," said TD economist Diana Petramala, author of the report.

In February, the bank had expected Canadian home sales to flatten out, and called the market overvalued by about 10 per cent. It did not give an estimate on how much it thought prices would rise or drop. That earlier forecast was based on the belief that mortgage rates would creep up in the spring, but rates still sit near record lows and continue to prop up demand.

Low interest rates have helped with the affordability of condos, where prices are at their "most favourable." First-time buyers who may have been pushed out of the market earlier may also be returning back due to the rates, which have in part driven the demand for single-family homes.

In May, the national average resale home price grew 7.1 per cent year over year — surpassing its 10-year average growth rate.

But looking past the short- to medium-term forecasts, Petramala said the Canadian real estate market is still expected to cool when interest rates rise and the number of available homes increase.

Those factors should be enough to "tip the market" back into one that favours buyers.

"Softer housing demand, combined with rising listings, will likely push the Canadian housing market towards a buyer’s market over the next year and a half," said Petramala. "As home buyers have more choice, they will also have more bargaining power and price pressure will ease. These features would be consistent with the makings of a soft landing in Canada’s housing market."

The report said the "soft landing" has already come to certain regions, like areas east of Toronto, while expensive cities "with more froth" like Toronto, Vancouver and Victoria will soon be seeing more weakness.

The Real Estate Board of Greater Vancouver reported Thursday that home sales rose 28.9 per cent to 3,406 in June. The total compared with 2,642 sales recorded in June 2013 on the Multiple Listing Service. Last month's sales were 0.6 per cent above the 10-year sales average for June.

Meanwhile, the TD report said home prices in Edmonton and Calgary were expected to post the biggest growth rate over the next two years, as those cities continue to see population and employment gains.

TD also noted that it expects condo prices to fall by about two per cent next year, as an estimated 135,000 units currently under construction become available. This in turn will help boost the rental vacancy rates, keep rents flat, and make buying condos for investment purchases less attractive.

It'll also make single-family homes — which are priced on average about $200,000 more than a condo — less viable for those looking to upgrade.

"As such, move-up buyers who would like to upgrade their condos to a single-family home may find it difficult," said Petramala, noting that prices for single-family homes have rose an estimated eight per cent this year, and were expected to go up by another two per cent in 2015.

 

[TheKingEast]

Condo George.

2014/2015 there will be an unprecedented amount of new condos on the market as many projects will take occupancy during that time. Where do you see prices going? I feel that at that point? I feel there will be an over supply of condos and hence prices my dip a little bit. What do you think?

Also, what do you think of Regent Park and Liberty Village? There appears to still be some good value there and an opportunity to make some money in the future.

 

[nrb]

Condo george is the classic pump and dump forum poster, trying to spread favourable publicity in his own self-interest.

 

[urbandreamer]

It does remind me of my days wasted on stock bullboards. I eventually learned to tune out and trust my instinct (and technical knowledge.)

 

[Condo George]

Say whatever you want but this is reality.

http://www.thestar.com/business/201..._to_be_hottest_in_canada_for_2014_report.html

 

[CN Tower]

Say whatever you want but this is reality.

http://www.thestar.com/business/201..._to_be_hottest_in_canada_for_2014_report.html

Yes, the GTA housing market is strong. I am pleased to see it!

However, George Condo, explain this to me:

How is it that I can buy unit 1001 in 832 Bay Street (another Lanterra building)TODAY for $665 per sq ft or less (asking $408,000 for 613 sq ft) but you and your friends at Lanterra want me to pay $800+ per sq ft for a comparable building that won't be finished for 5 yrs? Do you and your friends take me for a fool?

 

[DearSummer]

Say whatever you want but this is reality.

http://www.thestar.com/business/201..._to_be_hottest_in_canada_for_2014_report.html

If real estate agents are saying it, it must be true! After all, they have a high school education and took a few month training course on real estate.

Funny how real estate agents are always simutaneously saying it's both the time to buy and the time to sell. I wonder why that is?

 

[Condo George]

Yes, the GTA housing market is strong. I am pleased to see it!

However, George Condo, explain this to me:

How is it that I can buy unit 1001 in 832 Bay Street (another Lanterra building)TODAY for $665 per sq ft or less (asking $408,000 for 613 sq ft) but you and your friends at Lanterra want me to pay $800+ per sq ft for a comparable building that won't be finished for 5 yrs? Do you and your friends take me for a fool?

CN this again displays your in need my help and I will tell you why professionally. You are comparing a 10th floor unit to the top 60th floor at 11 Wellesley, all seasoned investors know about price per floor premium, so on the 10th floor at 11 Wellesley the site launched at $650 a ft but you come the 10 th floor to the 60th.

Why don't you compare the 445 sq ft one beds on the 45th floor at Bay asking $389,900

You are a smart man, don't make yourself look like an amateur.

 

[CN Tower]

CN this again displays your in need my help and I will tell you why professionally. You are comparing a 10th floor unit to the top 60th floor at 11 Wellesley, all seasoned investors know about price per floor premium, so on the 10th floor at 11 Wellesley the site launched at $650 a ft but you come the 10 th floor to the 60th.

Why don't you compare the 445 sq ft one beds on the 45th floor at Bay asking $389,900

You are a smart man, don't make yourself look like an amateur.

4001 asking $780 per sq ft. Likely sell for less.

So you want a buyer to pay $800+ per sq ft + HST + exposure to higher development charges and market risk. And wait 5 years.

Ask anyone outside Toronto they will think you're smoking crack.