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Baby, we got a bubble!?

nrb said:
Excuse me while I puke. You can take your "indicators of wealth" and stick them where the sun don't shine. Because they mean jack shit.
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Don't worry, Trump is coming for Canada. Ontario manufacturing has benefited immensley from NAFTA relative to that of the US. US companies get a currency discount AND a health care cost discount if the choice was between keeping a plant in the US or moving it to Canada . I don't know a single town in Ontario that is suffering. Now take a drive down to Ohio, New York, Pennsylvania, Indiana etc... and you will see a completely different picture. Billions in wealth have been created in Ontario, especially Southern Ontario (which benefits from trade with US), while states in relative close proximity to the Canadian border have been decimated.

Trump is coming... people can continue partying like its 1920s all they want. In the end, the pundits will change their tunes to "it was clearly a bubble economy".
 
algotr8der said:
Don't worry, Trump is coming for Canada. Ontario manufacturing has benefited immensley from NAFTA relative to that of the US.
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Kinda. You can rip up NAFTA and Canada/US relations won't change at all as we fall-back on FTA (Free Trade Agreement) of '88; basically the same thing but without Mexico. NAFTA, did almost nothing for Canada as we still have very little trade with Mexico.

FTA did a lot for Canada/US trade in both directions; but that's not NAFTA.

Even if Trump kills both NAFTA and FTA, there are a half-dozen other agreements like the 1960's Auto Pact (effectively free trade for auto related manufacturing) that would still be in effect.
 
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For the record, at Wishpad we don't believe the Toronto housing market is in a bubble. The supply and demand fundamentals are really strong and we're seeing a massive market correction that brings Toronto home prices more in line with it's peer cities.

Having said that, bidding wars are frustrating and the tactic of encouraging them is becoming more widespread. We're at the point in this city where listing prices are pretty much meaningless. Some listing prices are more likely to be meaningless than others. We did some analysis to identify the listing prices that are most likely to produce a sold price well above list. you can see it here: http://www.wishpad.ca/?page=featured&title=b-s-list-prices

enjoy. and, let me know what you think
 
I don't know and don't care what "wishpad" is but how about you stop astroturfing for yourself.

As for the "supply and demand fundamentals" they are not strong. There is a massive decline in listings because people can't afford to move in the city so they don't want to list their homes. That's the only thing propping up sales. That is not the basis of a healthy housing market. That is a market that is fundamentally sick.
 
nrb said:
As for the "supply and demand fundamentals" they are not strong. There is a massive decline in listings because people can't afford to move in the city so they don't want to list their homes. That's the only thing propping up sales. That is not the basis of a healthy housing market. That is a market that is fundamentally sick.
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I feel sorry for agents. So few listings, so many bidding wars. When those post-war bungalows all over Toronto (e.g. Old East York, Etobicoke) are listed for $699, sell for $800+ or even $900+ and then end up getting gutted or torn down and rebuit, it proves nrb's point IMO. The only thing really booming is the renovation and construction business.

One thing that I believe is happening in some established neighbourhoods, those with good schools and transit, is that those older condos with larger units are going up in value. Families that can't afford starter homes in all the usual desirable locations are starting to consider condo living. In my building in the past 6 months, (our rarely available and very spacious) two- and three-bedroom units went in bidding wars, with prices up 25% year-over-year. Last week, one went $129K over asking. We are all gobsmacked.
 
All those anti-Toronto comments in the article are indicative of people who have never lived here or understand the market. The prices are insane here and there is a bubble, but Vancouver should not be compared to Toronto. Also hoping for 30-40% price drops is just stupid. That would crater our economy and those who are hoping for that drop will be impacted (ie: unemployment).
 
TheKingEast said:
Also hoping for 30-40% price drops is just stupid. That would crater our economy and those who are hoping for that drop will be impacted (ie: unemployment).
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Why is it stupid? Our economy is fake. We don't make anything, our productivity is subpar and much much lower than that in the US and the only thing that bailed out Canada from the inevitable was Chinese credit creation (money printing) since 2009, which if you look at it carefully has quadrupled and is in the process of going through a mal-investment crisis. Unfortunately, the truth has not gone away. Our economy is a one trick pony and we all know how this is going to end.

I agree with a comment made earlier about how divorce lawyers are going to make a killing.

Not all of us are connected with this one trick pony of an economy. If housing declined by 50% it wouldn't impact me or my family. Vast majority would do just fine in a deflationary environment. Its one of the biggest misleading and outright lies throw out there that deflation is a bad thing. No its not a bad thing when the cost of things one needs to sustain life declines. Only those with significant financial assets toss out those lies, well because they have a vested interest in talking their *book*. Vast majority are just scraping by because the cost of everything one needs to survive has been rising exponentially while the cost of stupid shit that one does not need like flat screen tvs declines.

Canadians are mentally sick with the entitlement that they deserve a forever upward sloping housing price environment and they rationalize it every which way that its healthy. Get real. Cycles come and go, booms are followed by epic busts, fortunes are made and squandered, people jump off buildings in financial ruin while others pop bottles of champaign as they make fortunes as inflated assets get decimated, governments come and collapse, nations rise and fall and blah blah. This has been the case in all of mans time on this planet. Will be so again.
 
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shal1n said:
Why is it stupid? Our economy is fake. We don't make anything, our productivity is subpar and much much lower than that in the US and the only thing that bailed out Canada from the inevitable was Chinese credit creation (money printing) since 2009, which if you look at it carefully has quadrupled and is in the process of going through a mal-investment crisis. Unfortunately, the truth has not gone away. Our economy is a one trick pony and we all know how this is going to end.

I agree with a comment made earlier about how divorce lawyers are going to make a killing.

Not all of us are connected with this one trick pony of an economy. If housing declined by 50% it wouldn't impact me or my family. Vast majority would do just fine in a deflationary environment. Its one of the biggest misleading and outright lies throw out there that deflation is a bad thing. No its not a bad thing when the cost of things one needs to sustain life declines. Only those with significant financial assets toss out those lies, well because they have a vested interest in talking their *book*. Vast majority are just scraping by because the cost of everything one needs to survive has been rising exponentially while the cost of stupid shit that one does not need like flat screen tvs declines.

Canadians are mentally sick with the entitlement that they deserve a forever upward sloping housing price environment and they rationalize it every which way that its healthy. Get real. Cycles come and go, booms are followed by epic busts, fortunes are made and squandered, people jump off buildings in financial ruin while others pop bottles of champaign as they make fortunes as inflated assets get decimated, governments come and collapse, nations rise and fall and blah blah. This has been the case in all of mans time on this planet. Will be so again.
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And that's the problem. You don't give a shit because it doesn't affect you or your family (I do find that hard to believe). A 40% drop would affect everyone directly or indirectly. I don't even need to explain how.

There's so much wrong with this post I won't even bother going further. Yes, a bunch of blah blah blah.
 
IMO, it is more about how overextended people are becoming. Bubble or no bubble, when almost every cent you have (and don't have) is being put into housing, it makes things very precarious.

Gone are the days when housing costs were in a comfortable pocket where you could still afford your utilities, some savings, and a few luxuries. Yes, there were always a few people who stretched, but now everybody has to stretch, even if you are buying the dumpiest house in the worst neighbourhood, in a location no one would have even considered only a few short years ago.

When parents need to remortgage their overinflated home to help junior buy his overinflated home...well, it almost sounds like another "wealth swindle" being set up. If the music suddenly stops -- goodbye retirement funds, goodbye equity, goodbye cushion of financial comfort. Hello, lifetime of crushing debt. Leverage can be a great tool, but it shouldn't be the only tool. It can reach down into your pants and gently pleasure you, or suddenly spin you around and bite you right in the ass.

It doesn't take much to upset an apple cart, and there are far too many wobbly ones out there. We've been convinced that debt = wealth. We are like the rats following the pied piper, the frog in a pot of water that is being slowly heated to a boil. This concerns me more than whether or not we are in a bubble or if a crash/correction is coming. I think we already know the answers to those questions., and the eventual hindsight will make it painfully obvious.
 
TheKingEast said:
And that's the problem. You don't give a shit because it doesn't affect you or your family (I do find that hard to believe). A 40% drop would affect everyone directly or indirectly. I don't even need to explain how.

There's so much wrong with this post I won't even bother going further. Yes, a bunch of blah blah blah.
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You don't get it. Ask this one very simple question: WHY are Canadians in a position where their economic livelihood is dependent on propping up a mal-investment driven housing boom? Do Canadians not have anything else going for them other than a perpetually rising housing price environment driven by glut of Chinese money? Given your comments, clearly the answer to my question is YES - we do have a one trick pony of an economy.

Yes, a 50% drop in housing would leave me and many just fine. Lets see now, given the current exponential rise, a 50% drop takes us back to levels to 2007? Lets say it did. Well, lets see now. The last I remember, in 2007 - barbers still woke up every morning to come to work to cut hair, bakers still baked bread, baristas still made coffee, tim hortons still sold donuts, bagels and coffee, the food courts in all of the downtown where busy at lunch with patrons purchasing food, the leafs and raptors still came to ACC to play their games, and on and on. The world still functioned before your sick housing boom. You talk as if the world did not exist prior to 2007 (or whatever year a 50% drop takes us to). Will a 40-50% drop cause pain? Sure it will - especially for those who over extended themselves and some who will indirectly be impacted via unemployment -but how is that any different than the pain felt in every boom-bust cycle in all of mans history? That is the price that will be paid after a mal-investment boom. Make no mistake about it - it was the case before you were born and before your great great grand parents where born.

It is a mentally sick narcissistic idea that because there was a mal-investment driven boom in housing (or whatever sector) that we must at all costs argue in favour of it and keep it going as if we are somehow entitled to it because well we got nothing else going for ourselves. When you are in that kind of position you know you have a basket case of a economy and corrupt incompetent politicians at the helm.

http://business.financialpost.com/n...e-worlds-most-indebted-sub-sovereign-borrower
 
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NorthYorkEd said:
IMO, it is more about how overextended people are becoming. Bubble or no bubble, when almost every cent you have (and don't have) is being put into housing, it makes things very precarious.

Gone are the days when housing costs were in a comfortable pocket where you could still afford your utilities, some savings, and a few luxuries. Yes, there were always a few people who stretched, but now everybody has to stretch, even if you are buying the dumpiest house in the worst neighbourhood, in a location no one would have even considered only a few short years ago.

When parents need to remortgage their overinflated home to help junior buy his overinflated home...well, it almost sounds like another "wealth swindle" being set up. If the music suddenly stops -- goodbye retirement funds, goodbye equity, goodbye cushion of financial comfort. Hello, lifetime of crushing debt. Leverage can be a great tool, but it shouldn't be the only tool. It can reach down into your pants and gently pleasure you, or suddenly spin you around and bite you right in the ass.

It doesn't take much to upset an apple cart, and there are far too many wobbly ones out there. We've been convinced that debt = wealth. We are like the rats following the pied piper, the frog in a pot of water that is being slowly heated to a boil. This concerns me more than whether or not we are in a bubble or if a crash/correction is coming. I think we already know the answers to those questions., and the eventual hindsight will make it painfully obvious.
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Agreed. Problem is this is happening everywhere. We are in very uncertain times.
 
Actually, we are in a two-trick pony economy, the other being resources and, in particular, oil -- i.e. tarsands.

We have always been hewers of wood and drawers of water plus we killed a lot of beavers and fished a lot of cod. Exploiting Canada's incredible natural wealth is how this country was built and it's basically how it will continue. This is far from a perfect world but it endures.

I am not entirely sure we had all that much of a solid "manufacturing base" for very long. We built cars and auto parts thanks to treaties with the US. Montreal ran to a large extent on the garment trade which has evaporated to China and other points east. We can't keep Challenger or Bombardier or any other such business going. Anybody else remember the disastrous Bell Helicopter?

I'm no economist and my financial expertise is limited but I think we need to examine our other strengths because I agree that the music will stop. I look at the houses selling around us and cannot believe that there are that many couples pulling down so much money that they can carry the mortgages that I imagine that they are carrying. Demographic-wise, many of them are in their thirties and experience tells me that, when they hit their 40s, many of their marriages will crater. Then what? Will there be a fire sale on their houses or will one of the parents move into basements? You know what I'd like to see? People getting over the fact that they need a whole house and creating more rental stock in those basements. That will help them with their bank payments and ease up some of the rental crunch in Toronto while dispersing the density to more neighbourhoods.

Meanwhile downsizing baby boomers will also be selling because they will no longer be able to manage their households. That's why we bought this condo when we did. To beat the rush. Of course, those downsizing parents may have plans to move into the basements of the houses they helped their kids finance. I have a feeling that that may end up being problematic all around.

One the positive side:

Canada has had major success in the communications sector. Didn't we invent telephone and radio? Did we not have cable before any other country? What about the Blackberry? Here's an advantage we should be exploiting because, so far anyway, our education system(s) are far superior to most other countries in the world. Certainly more so than south of the border. We need to ensure that our kids are getting the required science/math/engineering-based education. And while it's true that many innovators were high school dropouts, the people who work for them are not.

Also, alternative energy. Sooner or later that music will stop as well, no matter how many fracking wells the US digs. It can only poison so much of its water and destabilize so much of its territory.

Bottom line: We need to stop depending on oil and single family homes.

End of rant.
 
shal1n said:
Not all of us are connected with this one trick pony of an economy. If housing declined by 50% it wouldn't impact me or my family. Vast majority would do just fine in a deflationary environment. Its one of the biggest misleading and outright lies throw out there that deflation is a bad thing.
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You do realise that deflation negatively affects wages, right? It's not some sort of magic Boxing Week Sale kill switch.
 
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