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Baby, we got a bubble!?

Migos

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Vancouver on par with London?

Hahahahha sorry that's funny. London is a global financial and commerce powerhouse. Vancouver may be a great place to live, but come on.
 

WislaHD

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Yah if anything, Toronto is the Canadian equivalent of London what with our financial and business base. There is a reason why all of Canada's financial institutions, stockbrokers, international headquarters, major accounting and legal firms, etc. are based here in our Financial District. In the North American financial context, Toronto is a powerhouse and paralleled only by New York City itself.

I don't understand that comparison for Vancouver. The only city they should be compared to is San Fransisco.
 

Migos

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Housing market risk 'high' in Toronto, Winnipeg and Regina, CMHC says

http://www.cbc.ca/news/business/hou...ronto-winnipeg-and-regina-cmhc-says-1.3189981

The reasons for concern are not the same in each city. In Toronto, the main concern is that "the rise in house prices has not been matched by growth in personal disposable incomes" the CMHC said, adding there is evidence of overbuilding in the market, with a historically high level of unsold units.

Toronto's conditions have gotten worse since April, when the city was deemed to be at "moderate risk" of a slowdown.

Get more hands in the cookie jar before you are priced out forever!
 

KA1

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If you were to go back to the beginning of this thread, you will read plenty of warnings, from the pulpit, about impending 'armageddon'.

Nothing ever happened. And nothing will happen. A little bit of slowdown, perhaps.Take it from this 'old pro' who was there then.

The 'End' is not here or near, not yet.

Relax and rejoice.

Ameen
 
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Migos

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Equitable Group combing through mortgage loans for possible fraud link
http://www.theglobeandmail.com/repo...oans-for-possible-fraud-link/article25968903/

His comments come in the wake of an admission by alternative mortgage lender Home Capital Group Inc. that it had cut ties with brokers and fired two underwriters after it uncovered evidence that some borrowers had been approved for insured mortgages with fake employment letters that overstated their incomes. Company officials said they are confident none of their employees was complicit in any fraud.

Like Home Trust, Toronto-based Equitable, which operates as Equitable Bank, uses mortgage brokers to target high-risk borrowers including self-employed workers and new immigrants, largely through uninsured mortgages offered at higher interest rates to compensate for the added risk.

It has been working to expand its reach into the business of insured mortgages to prime borrowers and said it originated $380-million worth of prime, insured mortgages in the second quarter, up from $191-million in the first quarter and nearly double the same period last year.

Liar loans, NINJA, subprime, yup...
 

Wooba

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nothing will happen. A little bit of slowdown, perhaps.Take it from this 'old pro' who was there then.

Where were you from 89 to 2005/6?

You might be correct, but what wisdom have you learned as an "old pro" that says Canada is immune from anything other than a bit of a slowdown?
 

interested

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Equitable Group combing through mortgage loans for possible fraud link
http://www.theglobeandmail.com/repo...oans-for-possible-fraud-link/article25968903/



Liar loans, NINJA, subprime, yup...

Equitable would be irresponsible if they had the same 45 mortgage brokers feeding them as well as Home Capital not to investigate.
I am sure there are more than 45...but given the size of the portfolios, I hardly think one can extrapolate that to conclude that the situation is rampant.
Migos, while I share your concern that prices have become stretched and I have no doubt there will be some reckoning, I do not anticipate a US style
correction. Of course the higher R/E goes, the more prices can fall.

I do believe one thing has happened though. Rightly or wrongly, it is my belief that with all the money that has been printed going into every asset class...
a lot has found its way into real estate and in Toronto and Vancouver. When the money is withdrawn from the system at some point...it will get ugly.
What I am not as sure of however, is will it come down more in Toronto and Vancouver, or will they survive better than other areas in the country because
foreigners and maybe locals believe the safest real estate market is Toronto (the financial center of the country) and Vancouver (proximity to Asia). In other words,
more of the "hot money" has been invested in TO and Vancouver to make money but as it slows will it come out in the same fashion?
I am not sure of the answer to this question. Thoughts anyone?
 

interested

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Where were you from 89 to 2005/6?

You might be correct, but what wisdom have you learned as an "old pro" that says Canada is immune from anything other than a bit of a slowdown?

Along these lines, I recall buying in 2001 on paper a condo to be built for 2004 which in fact was closer to 2006 when ready. I thought it was fairly fully valued in 2001.
David Madani of Capital Economics was recently quoted as saying houses will come down 25-30% I believe as I recall. It has been 5 years since he called for 25% reduction.

25-30% reduction would bring us back to 5 years ago prices withoutht eh 25% reduction called at that time. I am not saying this to belittle Mr. Madani. I only point out that at
some point there will be a correction....but if it corrects 20% from present prices, that only brings us back to perhaps 2012 prices.

I do not believe for 1 minute though that we are immune from anything other than a bit of a slowdown. I just personally do not believe we are going to see a major "crash" unless
we see the US totally falter along with China and oil staying at $40 or less range for a few years and of course our Ontario Government continuing to spend our children's inheritances.
 

Migos

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Equitable would be irresponsible if they had the same 45 mortgage brokers feeding them as well as Home Capital not to investigate.
I am sure there are more than 45...but given the size of the portfolios, I hardly think one can extrapolate that to conclude that the situation is rampant.
Migos, while I share your concern that prices have become stretched and I have no doubt there will be some reckoning, I do not anticipate a US style
correction. Of course the higher R/E goes, the more prices can fall.

I do believe one thing has happened though. Rightly or wrongly, it is my belief that with all the money that has been printed going into every asset class...
a lot has found its way into real estate and in Toronto and Vancouver. When the money is withdrawn from the system at some point...it will get ugly.
What I am not as sure of however, is will it come down more in Toronto and Vancouver, or will they survive better than other areas in the country because
foreigners and maybe locals believe the safest real estate market is Toronto (the financial center of the country) and Vancouver (proximity to Asia). In other words,
more of the "hot money" has been invested in TO and Vancouver to make money but as it slows will it come out in the same fashion?
I am not sure of the answer to this question. Thoughts anyone?

It's an interesting question. Foreign investors have already taken a 25% bath vs. if they held USD assets. The blood is already in the water. If anything, I could see further investing in Vancouver and Toronto condos as "hot money" flees the mess that is China and looks for safe haven elsewhere. Chinese seem to have an attitude around real estate that defies all basic investment fundamentals so I could see the bubble getting worse before it gets better.

Ultimately I think the downfall will be rising interest rates and overbuilding. Nobody is talking about the fact that all these condos that are "sold" are unoccupied. Once people actually move in, we will see if there are enough renters/buyers to gobble up the historic level of supply. Canada doesn't have much experience with the 5+ year cycle of condo construction vs. less than a year typically for low-rise.
 

interested

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It's an interesting question. Foreign investors have already taken a 25% bath vs. if they held USD assets. The blood is already in the water. If anything, I could see further investing in Vancouver and Toronto condos as "hot money" flees the mess that is China and looks for safe haven elsewhere. Chinese seem to have an attitude around real estate that defies all basic investment fundamentals so I could see the bubble getting worse before it gets better.

Ultimately I think the downfall will be rising interest rates and overbuilding. Nobody is talking about the fact that all these condos that are "sold" are unoccupied. Once people actually move in, we will see if there are enough renters/buyers to gobble up the historic level of supply. Canada doesn't have much experience with the 5+ year cycle of condo construction vs. less than a year typically for low-rise.

The bolded comments depends on where they are from. Given the Yuan is pegged to the USD probably to a degree. Most other currencies have not fared well against the USD...e.g. the Euro, the Japanese Yen etc. The CAD until recently did relatively well compared to most other currencies and better than the Aussie and New Zealand dollars. However, given that most the foreign investment talked about is from China...I guess the comment is true.

The other way to look at this of course is that if the currency is down significantly it makes present purchases cheaper when translated into Yuan so while their current holdings in the past few years may have dropped present ones may do better if the foreigner believes the CAD will increase in value.
 

KA1

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A few comments from this 'old pro' on Mortgage fraud -- Brokers falsifying borrower's income. A sentence which has been overlooked is: Credit scores on these applications were correct and there was never a default on these mortgages loans

Measuring by establish standards, it seems to be a open and shut case of 'fraud'. However, if someone were to look a bit deep into the situation, you will notice that most of these borrowers were from various ethnic communities for whom owning a house is a sign of having 'arrived' in their respective communities. Loosing a house is a 'humiliation'. As a such, a few generations get together to make sure mortgage payments are current. I, personally, know a situation where an individual bought a townhouse. Extended family-- including a grown up sister -- lived in the townhouse and help with mortgage payments. A few years down the road, when this individual was comfortable making mortgage payments on his own, he helped his sister towards down payment on a townhouse of her own. He rented his place, moved in with his sister and helped her with mortgage payments. Another couple of years later, when his sister was comfortable with making mortgage payments on her own, he moved back to his own townhouse. It seems that various ethnic communities have more close-knit family ties.
 

ehomz Realty

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Are we experiencing a real estate bubble ? Not really! If there is a bubble, it is thick enough not to burst in next couple of years. It is too soon for home owners to panic and sell their property to avoid price adjustment in an unforeseen future. Actually, the market trend does not show a buyer market, we are still in seller's market in Greater Toronto areas.
Reasonings:

1- Bubble will burst when interest rate goes up significantly or financial institutions apply more restrictions on lending mortgage. When these institutions are lending money with ~%3 interest rate for 5 years, it simply shows that the experts do not predict a huge fluctuation in interest rate in next few years.

2- Market watchers usually and wrongfully compare the real estate fast growth in Canada with US. However, we should consider that there are significant differences in economical models between these two countries. The financial model in US is more susceptible than Canada and it is not strictly regulated. Canadian economy depends on resources whereas in US it is more divers and mainly based on production and investment. It is less likely the case that the same fluctuation is waiting to hit Canadian real estate during a great recession.

3- Canada is already experiencing a minor recession though the federal government (Conservatives) cut the interest rate to boost economy. Housing is one of the main foundations of Canadian economy. We believe that if Conservative government ( in comparison with Liberals, NDP and Green parties) are more cautious toward the momentary decisions and financial investments and plan to keep the overnight rate constant during the next 2 years then other parties are more moderate. Some experts anticipated an increase in interest rate before it is cut by Bank of Canada.

4- If the price of oil risesand Canada safely passes the recession then upon the increase in interest rate the buying power will also be increasing which will balance the market.

Summary: Too soon to be afraid, the safest pace is to invest on investment properties before the bubble gets bigger (There has been %11 increase in price ). Take advantage of low interest rate, the bottom line is to make money out of renting.
 
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James

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It'd be interesting to take a poll to see where sentiment lies when it comes to the Toronto real estate market, to see how/if it has changed over the years of this thread's existence.

Talking to many people, it seems that despite the back-and-forth between the boom vs. bust camps, most people are still fairly interested in owning a home despite acknowledging that the reality of buying a single family house in the city is quickly getting away from them.

I know numerous young families moving to the suburbs, simply for more house, or a newer house, although looking at housing prices even in the suburbs, it's certainly not what I would call 'cheap.'

Even though there are lots of news articles about the impending correction or the increased risk of a correction, I get the impression that most people complain about it but then carry on status quo. Thoughts?
 

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