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Baby, we got a bubble!?

cdr108 said:
i have an old price list from Radio City when they first came onto the market in 2000.
i use it as reference b/c it's a modern design by aA in the d/t core built by Context.
the pre-construction price was ~$250 PSF not including parking or locker.
so if prices increased at inflation+ over 10 years, that should put it @ $375 PSF.
on MLS they are currently asking ~$500 PSF.
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CDR: Thank you for this. It is always good to apply real figures to a real project as then one can see what happens.
I would add that one should allow for slightly more than $375/sq. ft just because new projects vs. 10 year old ones should have less maintenance at least initially though I realize there is a "reserve fund". Also, people simply "like new".
I think it is interesting that you came up with $375 and in fact last quarter in the City of Toronto I believe I read in one of the articles resale was $369 average.
I would allow $400-425/sq. ft for new product and since we have HST now (over $400K) even up to say $450/sq. ft. This is still much lower than the $550-700/sq. ft mid to upper mid range products which we currently have for alot of new projects. That said, I am still not saying prices will come down fully to this extent.

It will, in my view, depend on what proportion are long term investors (well capitalized) and end users (well capitalized end users) vs. how many are in a weaker position as end users/investors(less well capitalized)/ and how risky the "specuvestors" have become. If the latter group forms say more than 20-25% of the market, then there will be a significant downturn as this group unloads and in the process by driving prices down brings along with it other investors who previously had 20-30% equity to now levels of say 5-15% and they get carried along in untenable situations when renewing their mortgage if/when interest rates rise and given the new mortgage rules or if there are life circumstance changes.
I believe as previous posted by others on the forum "that the market will likely overshoot on the down side" just as it has done in my view on the rise up, especially the last rise since 2008.
Despite my most recent posts all arguing for this, I still do not consider myself in the doom/gloom camp and 15% reductions will cause mainly problems for those entering the past 2 or 3 years who were "late to the party as it were". I think even those who bought in 2007, possibly in 2008 will be OK but as I have posted previously, I am simply not that smart to know. I generally feel I can spot trends in certain things but I have felt that this market was fully priced in 2007 and have watched frankly bewildered at just how it has come even further up since then.
 
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As printed in My Realty Report sent out to local and international investors which represents 90% of my business.

Vancouver update.......

2972 property sales in the Greater Vancouver market
1139 detached benchmark price of $795,025
1258 apartment properties price of $391,528
575 attached properties price of $492,861

Calgary update...........

avg price of single family home - $481,964 up from $447,142 june 2009 or 8% higher
avg price of condo $292,238

Calgary s market is heavily tied to resource as Oshawa is to GM


Toronto market avg price is $420,000
 
Condo George said:
As printed in My Realty Report sent out to local and international investors which represents 90% of my business.

Vancouver update.......

2972 property sales in the Greater Vancouver market
1139 detached benchmark price of $795,025
1258 apartment properties price of $391,528
575 attached properties price of $492,861

Calgary update...........

avg price of single family home - $481,964 up from $447,142 june 2009 or 8% higher
avg price of condo $292,238

Calgary s market is heavily tied to resource as Oshawa is to GM


Toronto market avg price is $420,000
Click to expand...

thank you George for being a good sport about all this. We agree to disagree and that is what civilized people having discussions do.

I believe this is just a shortened form of your report but if it is not, do you think it is really fair to put just 1 percent comparison in Calgary showing an 8% increase when in fact prices have just dropped in Calgary I understand in the past month and therefore this is out of date and essentially misleading. It is factually correct but just as my bias is for a correction, I believe it shows yours by implication that everything is still just going up.
Would a fairer report not at least address the latest figures and at least state that "this is only one month and you do not believe that it is a trend" rather than just leaving the data in a form that suggests "all is well".
 
cdr108 said:
i have an old price list from Radio City when they first came onto the market in 2000.
i use it as reference b/c it's a modern design by aA in the d/t core built by Context.
the pre-construction price was ~$250 PSF not including parking or locker.
so if prices increased at inflation+ over 10 years, that should put it @ $375 PSF.
on MLS they are currently asking ~$500 PSF.
Click to expand...

I have a price list from April 2002, PSF in the south tower range from $251 (lowest) to $400 (PH). We paid $323 PSF for a 26th floor S/W corner "K" unit. Add upgrades, locker and a parking spot in Dec. 2001 for a total of $361 PSF.
 
dt_toronto_geek said:
I have a price list from April 2002, PSF in the south tower range from $251 (lowest) to $400 (PH). We paid $323 PSF for a 26th floor S/W corner "K" unit. Add upgrades, locker and a parking spot in Dec. 2001 for a total of $361 PSF.
Click to expand...


hi dt ... could you clairify the date ... was it Dec 2001, April 2002 or Dec 2002 ?

perhaps i have the date wrong for the price list ...maybe it was 2001 and not 2000.
 
cdr108 said:
hi dt ... could you clairify the date ... was it Dec 2001, April 2002 or Dec 2002 ?

perhaps i have the date wrong for the price list ...maybe it was 2001 and not 2000.
Click to expand...

The price sheet I have is dated April 15, 2002. If memory serves we bought about 3 or 4 months after tower 2 went on sale, tower 1 went on sale much earlier.
 
Not really much new in this article Ka. This debate has been raging between those who believe we need more vs. those who say withdraw the stimulus. Either way, with uncertainty, should cause most thinking individuals to hesitate on major purchases (read house/condo) unless for personal use.
Just does not seem to be the environment to encourage continued "upward climbs in prices" and investors to keep investing in real estate.

Incidently, there is another thread in which guava data was posted. Very good objective data on the real estate market. I hope the poster (I can't remember if it was daveto or cdr but I believe one of them posted it) will put it to this thread.

I think the conclusions I draw (at least trend) certainly become very clear and failing a correction in trend, price escalation will be over year on year by Sept and negative thereafter(on a year on year basis). Just 3 months ago, there was a $40000 increase on average prices from 1 year ago. By July, it was down to $20000. Sales are going down and there is a rather large steep upward trend in the total listings chart which within a few months should start reaching towards the highest levels in the past few years. Of course trends may reverse, but if the trend just continues as it has the past 3-4 months, declines will be here in price year on year compared to even average of last year. (Remember last year is skewed downward in the first part quite significantly and then got skewed upward in the latter 1/2 of the year (an overshoot in my view).

The thread was posted by daveto and it is under TREB July mid month sales. Excellent data. Thanks again Dave for posting. Please put it up if you can the next 2 months when available. It will be interesting to see if my conclusions (extrapolation of the trends as I see them) comes to fruition. I hope not but fear it will be the case.
 
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interested said:
Incidently, there is another thread in which guava data was posted. Very good objective data on the real estate market. I hope the poster (I can't remember if it was daveto or cdr but I believe one of them posted it) will put it to this thread.
Click to expand...

TREB July Midmonth sales

http://www.torontorealestateboard.co...H_JUL_2010.pdf

2,790 sales. Avg price is at $428k.

Lowest July full month sales since 2004 have been 7,082 in 2006, and have averaged at 8200 for 2004-2009. So at 5,600, we're on track for a significant decrease in monthly sales compared to prior July's.
http://guava.ca/

However, the July price drop seems consistent with prior July price drops (as compared to May/June of the same year)
 
TREB July Full Month sales

6,564 sales at a $420k average
http://www.torontorealestateboard.co...watch_0710.pdf
http://www.torontorealestateboard.co...pdf/mw1007.pdf

Lowest July full month sales since 2004 have been 7,082 in 2006, and have averaged at 8200 for 2004-2009. So at 6,600, sales are 20% below the 5 year average.
http://guava.ca/

Since Oct of 2009, here are the yoy changes by month from 2 years prior (I go 2 years back to avoid the distortion from the dramatic Oct 2008 drop)

+7% Oct 2009
+6% Nov 2009
+4% Dec 2009
+9% Jan 2010
+13% Feb 2010
+14% Mar 2010
+10% April 2010
+12% May 2010
+10% Jun 2010
+13% July 2010

As can be seen, despite the lower demand in July, prices and price changes are comparable to earlier in the year. The question will be whether July 2010 was a low sales anomaly, or whether the lower demand is the new normal ( in which case price drops will follow.) Likely the jury on this will remain out until we start to see late fall figures.
 
CN Tower said:
Lowest Toronto July sales since 2004. Enough said.

http://tinyurl.com/3a3zqom
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Hey Dave, welcome to August 5th! ;)

Condo George- I'm curious what it will take to get you to admit that the Toronto condo and overall housing market is weakening and on a declining trend. I am firmly in the camp that prices wil correct to about $400,000 on average. Why? Because in the blistering market of 2007 they did not breach that level and few would argue that the economy anywhere in Canada is stronger now than it was then. That's my very rudimentary estimate of where average prices are heading. Clearly sales are plummeting. Not a good sign for housing industry players.
 
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dt_toronto_geek said:
The price sheet I have is dated April 15, 2002. If memory serves we bought about 3 or 4 months after tower 2 went on sale, tower 1 went on sale much earlier.
Click to expand...

okay, that makes sense now ... tower 1(north) probably went on sale in 2000 then ... it's hard for me to make out the date on the price sheet since it's smudged.

it's interesting that even in April 2002, the lowest PSF in the south tower was still $251.


CN Tower said:
Hey Dave, welcome to August 5th! ;)

Condo George- I'm curious what it will take to get you to admit that the Toronto condo and overall housing market is weakening and on a declining trend. I am firmly in the camp that prices wil correct to about $400,000 on average. Why? Because in the blistering market of 2007 they did not breach that level and few would argue that the economy anywhere in Canada is stronger now than it was then. That's my very rudimentary estimate of where average prices are heading. Clearly sales are plummeting. Not a good sign for housing industry players.
Click to expand...

when do you expect $400,000 b/c that's only ~ 5% decrease from the current average.

personally, i believe in 5 years, prices will be 25-30% lower than today, which isn't unreasonable IMO.
when that happens, i'm getting back in.
 
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