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Baby, we got a bubble!?

If you're looking for a comprehensive analysis of Canada's new residential housing market, check out The Market Manuscript by Ben Myers:

LOL nice try Ben Myers.

How are all those ponzi-scheme developments going? Oh right, they're not:

Not surprising considering the lot of cons running Fortress.
Clearly you must be mistaken, Migos! This isn't Ben Myers, I'm sure you can read my name, it's on the left side of your screen.

I've had the pleasure of working with Ben at Fortress Real Developments for a while now, and based on his housing market forecasts, he seems to be one of the most accurate housing analysts in the country!

I don't appreciate the false claims about Fortress either! I'm not sure if your issue is with Fortress or Ben personally. The purpose of this thread is to discuss in fact if there is a housing bubble or not. So lets just stick to that!

If you have any comments or concerns regarding Ben's report, you can state them here.

Have a great day!
Vancouver, Toronto home prices continue to show ‘bubble behaviour’

“Overall, while most markets are responding logically to softening domestic economic conditions, Vancouver and Toronto continue to exhibit bubble behaviour,” David Madani, economist at Capital Economics said in a research note this week.

“Over the longer-term, we still believe that these housing markets will experience major price reversals.”

I agree, but he also says:

“While foreign investors are no doubt playing some role, we think this explanation is overblown,” the economist said. “Low interest rates and self-fulfilling expectations of higher prices continue to inflate actual prices independently of fundamentals,” he said.

I think foreign investors are more of a factor than they are admitting. Many projects are being flagrantly marketed to the Chinese demographic (both foreign and domestic), and developers are now going directly to China to woo potential investors.

How many GTA condo projects currently in development will not have any floors or suites ending in a "4"? This alone indicates where developers are sniffing out the money.

I'm not even sure they can easily track such data, as many foreign investors might be using local contacts or businesses as fronts, and I don't think anyone benefitting from the windfall (banks, real estate agents, developers, government, etc) is ready to pull the plug by taking too hard of a look.

Once the horses get spooked, either through restrictions, audits, or any other form of scrutiny or intervention, the prices will correct and everyday average people might be able to afford everyday average housing in this city. It will never be cheap, but we might at least see pricing that more accurately reflects the true fundamentals.
I have now been in my current house in Toronto for 8 years, as I moved in August 2007. According to the latest August 2015 Teranet numbers, home prices are up just over 60% since then. That's crazy.
That has to be the most biased panel I've ever seen.

Well, I can understand your sentiment due to the presence of the real estate agents. I can sort of understand your position on Sherry Cooper being part of the banking sector. What would Karen Stintz's bias be though? Usually they have Garth Turner on the panel too, which always livens things up!
I just came across this eyebrow-raising article from Rob Carrick in the Globe and Mail today. I was quite frankly surprised his stance would be one of reducing a down payment to buy in to the market in this current climate. This strategy would only have merit if you're guaranteed real estate values continue rising at the same historical rates.

It's time for many Canadians to abandon the 20% down-payment rule

Full article:
"This strategy would only have merit if you're guaranteed real estate values continue rising at the same historical rates."

From the article:
"If you’re primed to buy anyway, then listen up. Stop trying to save a 20-per-cent down payment and get into the market now.

A popular and sensible bit of financial advice is that you should ideally wait to buy a house until you have a down payment of at least 20 per cent and thus are excused from buying mortgage default insurance. But if it takes a few years to save that much, you may find that soaring prices more than offset the savings on mortgage insurance."

I believe that was the point of his article....if you believe that house prices will continue to increase, then you are better off not waiting to buy now as the time you lose waiting to get to 20% downpayment will be more than offset by the increase in the price. Trouble is...that is a big assumption.

This of course is a very dangerous strategy as if(/when) prices adjust, those late people coming in with smaller down payments, especially if in a rising interest rate environment, will be in all sorts of trouble.

Despite the average price of detached homes sold in Toronto was $1,053,871 for September, the median was $800,000 so it's not quite as severe as some articles make it out to be. Breaking it down further by west, central and east, one can see that 1/3 of the sales is skewing the average figure much, much higher. The remaining 2/3 of the sales are still averaging less than $800k with a median sale price of less than $700k.

Detached homes sold in September 2015:

Toronto West
Average $766,889
Median $700,000

Toronto Central
Average $1,688,581
Median $1,480,400

Toronto East
Average $750,589
Median $660,000