Kenny
Active Member
Amongst all of us, he is the only one who has his ears to the ground
Sometimes your ears get so close to the ground that you hear nothing else.
Amongst all of us, he is the only one who has his ears to the ground
Interested, you gonna regret that you challenged the wisdom of CG. Amongst all of us, he is the only one who has his ears to the ground -- direct knowledge of what's going on in the market, especially core downtown C1 area.
I've been gung ho on the housing and especially the condo market in Toronto for about the last 6 years, but in the past few months I've seen some alarming trends that seriously suggest a massive bubble is being created that'll explode as soon as interest rates increase and/or the supply of condos goes through the roof in the next 17 months. The article below deals with some of the problem, but the 8% increase in home debt during a recession is also worrisome. What's your take?
http://www.movesmartly.com/2009/11/toronto-real-estate-prices-up-94-in-4-months.html#more
If you follow RealNet Reports on GTA condo data you would see there isn't any possibility of a bubble, with over 80,000 new people moving to the GTA every year even accounting for those that leave we are well under housed in this market..[/url]
Sure, they probably move into an apartment block in Scarborough, but they displace a more established immigrant family which just bought a house in North York, displacing a mature family where kids moved out (to condos) and parents downsized (also to condos).
The issue of in-migration is interesting but is is marginally important compared to the fundamentals (prices relative to rents and income). Also, there is a lot of unobserved/unmeasured "doubling up" that has occurred in this recession. There is a lot of flex in the system, and consumers in doubt (and with bad credit) will seek out more affordable rentals.
Doesn't the price to income ratio today compared to historical averages (and stagnant rents) mean a lot more than in-migration? Whenever this ratio has been relatively high, prices (not incomes) have (eventually) corrected to bring it in line with the historical average. Why should it be any different in the (near) future. It may take a few years because there is so much political interference in the housing market, which is effectively what has propped up the economy over the past few years. The govt is able to prolong the housing boom, but not forever. The last year or so has been an opportunity for smart money to leave the dance.
If you follow RealNet Reports on GTA condo data you would see there isn't any possibility of a bubble, with over 80,000 new people moving to the GTA every year even accounting for those that leave we are well under housed in this market, we can only build about 15,-18,000 new each year, and our very disciplined builders read and understand the monthly report that RealNet generates.
If you are unsure of how RealNet is so sure of the fact that there won't /Can't be a bubble check out the stats at www.realnet.ca
""It's difficult to get a man to understand something if his salary depends upon his not understanding it."
Upton Sinclair
Atlanta grows by 100,000+ people per year as well. In fact I believe it has more growth than any city in America. Check out their house prices since 2005:
http://www.heerybrothers.com/?tag=heery-brothers
Great bit of information and a reality check. To me the most striking thing is the note below the graph which says it is back to 2001 prices.
However, that is a still only a 25% decrease from the peak. I believe it may be somewhat unfair to compare Atlanta to Toronto but the data is still pertinent. A 25% decrease in our prices would only bring us back to about 2007prices and not all the way back to 2000. Let's hope that we don't go back to 2000 prices as prices are up more like 60% + over the 10 years in Toronto so going down the other way would mean a drop of around 40%: That would be a very significant drop. Without going into details, Atlanta being a hub in the South is being very affected by the drastic downturn in Florida and other Southern States. I think an adjustment back to 2000 prices would be an over correction for Toronto but it illustrates how even in a market that did not have massive increases (25% over 10 years) can correct all the way back.
thank you for that "food for thought" CN Tower.