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Baby, we got a bubble!?

GTA REALTORS® Report Mid-Month Resale Housing Market Figures

TORONTO, October 18, 2010 -- Greater Toronto REALTORS® reported 3,012
sales through the Multiple Listing Service® (MLS®) during the first two
weeks of October 2010.
This represented a 17 per cent decrease compared to the 3,631 sales
recorded during the same period in 2009. Year-to-date sales amounted to
71,988, representing a three per cent increase compared to 2009.

The average price for October mid-month transactions was $444,644 – up
seven per cent compared to the average of $414,479 recorded during the
first 14 days of October 2009.

http://www.torontorealestateboard.com/consumer_info/market_news/news2010/pdf/nr_mid_month_1010.pdf
 
agree with UD. Sweet spot in the condo market now is $600-950. More sales have occured at the higher end.
Again the need to look for "median price" or repeat sales on same property.

As well, news letter from Brad Lamb which arrived in the mail today.

His forecasts: remember he is a developer and a realtor and therefore has a very vested interest in the outcome but none the less: like him or hate him he is extremely knowlegeable. With those caveats:

He feels if I can paraphrase: low interest rates, population growth, and "international money for which TO has become a magnet" will continue the market. Opportunity for new development and resale (of course he is an agent/owns a brokerage). He says buying a home should be a long term commitment and not to be measured by return on equity. (I disagree. The largest investment one makes must be evaluated and therefore this comment I feel is self serving and attempting to get people to throw away rationality).
He does not expect the same price increases we have seen recently but expects 1-5% annual increases over 2011 to 2015. (a very bold prediction I would say). As well, he states we are in the long cycle of economic expansion the will likely last years. ( I personally would categorically dismiss this statement. He is not an economist and I would not view this as his expertise so it may or may not be correct, the point is it is self serving and from a non expert source).
 
Anything that guy says is purely out of self-interest and should be deeply discounted or ignored. I wouldn't trust him for the correct time. He is as slippery as an eel.
 
CN Tower said:
To Realtor Ric:

A friend of mine bought a home around 2003 with a then 5 year fixed mortgage rate of about 3.30%. I recall it vividly. Since then housing prices have probably increased 40%-50%. Inflation cannot explain the rise nor can lower interest rates obviously. Although he never rented his home I can assure you that rents have barely budged in that time. How you would characterize the jump in prices sir?
Click to expand...

"Irrational Exuberance" - from my friend Alan Greenspan
 
the scariest part is the families that are buying up condos on spec like crazy because rates are cheap now. once these start to rise its going to wipe out all these people. everyone has short term memories and Forgets that just 2 years ago the world was coming to an end and every country was about to go bankrupt. we are connected to the usa by the hip and if they have problems we will have problems too. brad doesn't care about you he only cares about selling condos and collecting his commission.
 
It’s everyone’s responsibility to take what they read and apply it in their lives. For instance, the 1.85 times the cost of buying vs renting – if people neglect that, they deserve to get pummeled. The countless statistics like 70% ownership, 5 times household income to purchase instead of the average 3.5, way above 100 times rent price, double digit years of gains and last year having huge price gains. These are all red flags. If you’re turning your back on that information and joining the line – up to buy, you deserve what’s coming to you.
 
Shtopor said:
It’s everyone’s responsibility to take what they read and apply it in their lives. For instance, the 1.85 times the cost of buying vs renting – if people neglect that, they deserve to get pummeled. The countless statistics like 70% ownership, 5 times household income to purchase instead of the average 3.5, way above 100 times rent price, double digit years of gains and last year having huge price gains. These are all red flags. If you’re turning your back on that information and joining the line – up to buy, you deserve what’s coming to you.
Click to expand...


yes they do but the BofC and gov't don't want the people to feel the pain, hence responsibility, because their (BofC and gov't) policies enabled speculation.
 
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I agree with BJL--$INDU target is 20,000+ within this decade.

1-5% appreciation over the next five years? Yes, he's right there as well. That could be +5% by eoy 2015, a realistic target. That still allows for a few crappy years, possibly 2010 and 2011.

Here's what I see happening: Toronto becomes affordable to only middle class and rich ppl; increasingly working class jobs and immigrants move to (I'm not crazy here but am just listening to what real working class immigrants are telling me today) Hamilton!
 
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Unfortunately, governments like many companies are looking at the short term goals: Get re elected, make the voters "happy", don't do anything tht will cause people to face reality. Companies reward short term performance. Interesting article I was reading was saying that N.A. needs to concentrate on the longer term good if America is to survive, not short term dividend hikes but in this era of instant information, everyone wants immediate gratification.

You don't get elected if you say: the economy is bad, everyone has to work more, expect lower wages and sacrifice. Nor do you keep your CEO job if you state I will not grow dividends and spend alot of money to set up the company so it is stronger 10 years from now.

Shtopor's comments about responsibility are unfortunately a reflection of the wider "nanny state" where no one is responsible for their actions anymore. When things tanked in the US (and I am not forgiving the Banks role in this in the US nor their Robosigning of foreclosures) but really what intelligent rational analysis allows a person with no or minimal income, minimal or no job security, no assets to buy a 1/2 million dollar property "because it can only go up" and then cries foul when they are caught out on the wrong side of this equation. Wall street should be taken out to the back shed and given a good old fashion shellacking for what they did but the people must bear some responsibility for absolutely throwing caution to the wind and acting in a totally greedy and unthought out fashion.

I however still do not think we will see the meltdown seen in the US (at least not to the same degree) or maybe it is just wishful thinking but if people are truly investors and not speculators, then they should be applying reasonable mathematical equations to the decision and coming up with an answer as to whether purchasing at todays prices makes sense.
 
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urbandreamer said:
I agree with BJL--$INDU target is 20,000+ within this decade.

1-5% appreciation over the next five years? Yes, he's right there as well. That could be +5% by eoy 2015, a realistic target. That still allows for a few crappy years, possibly 2010 and 2011.

Here's what I see happening: Toronto becomes affordable to only middle class and rich ppl; increasingly working class jobs and immigrants move to (I'm not crazy here but am just listening to what real working class immigrants are telling me today) Hamilton!
Click to expand...


UD, as pointed out by others, I seem to recall that you were firmly in the opposite camp about 1 year ago. Then this summer, you changed your tune or am I misinterpreting. You are prediciting a 60% increase over the decade for the DI. Could you provide why you think R/E will go up up to 5%/year given historic numbers (beyond the last 15 years). I am curious as to your reasoning. Not disagreeing though I don't think it will happen. However, because so many are worried, that probably leaves more upside potential as people over react on the downside and if sentiment changes it may overshoot the other way.

I believe that the middle class would disappear from TO as well (due to affordability unless wages and productivity change markedly over their rather poor performances the past decade). I think only the rich and the poor on social assistance will be left with very little middle class. This has been the trend the last 10 years with a hollowing out of the middle class at least in the core. Now, if oil/transport gets truly unaffordable, perhaps the economics will change and the migration of the middle class will cease or reverse.

I am not sure that Hamilton "steel town" has alot of increase in their industry to support all these immigrants you talk of but I admit I am not familiar enough with their local economy but I was under the impression it has been hurting quite badly so I don't see people going there unless they are there solely for the cheaper accommodation. I.E. could you elaborate on whether there are increased jobs in the Hamilton market.
Thanks
 
^Suburban Hamilton-Brantford-Cambridge is where the job growth will occur over the next 30 years imo. Think huge pad warehouse/manufacturing lots. Affordable home ownership + affordable (well compared to the GTA) commercial/industrial land means HBC is where it's at. I predict Hamilton hits the Jackpot.

I'm a contrarian--while I think Toronto's real estate market will decrease over the next 1-2 years, by 2015 those who bought on this bottom shall be very happy with their returns. I see developers slashing pre-con prices to under $400/SF in some areas of the city, under $500/SF DT.
 
urbandreamer said:
^Suburban Hamilton-Brantford-Cambridge is where the job growth will occur over the next 30 years imo. Think huge pad warehouse/manufacturing lots. Affordable home ownership + affordable (well compared to the GTA) commercial/industrial land means HBC is where it's at. I predict Hamilton hits the Jackpot.

I'm a contrarian--while I think Toronto's real estate market will decrease over the next 1-2 years, by 2015 those who bought on this bottom shall be very happy with their returns. I see developers slashing pre-con prices to under $400/SF in some areas of the city, under $500/SF DT.
Click to expand...

Hamilton is a dump and sinking fast. It is a rotting corpse of a city with no future. I predict it will more closely resemble Detroit in 2015 than experience any kind of economic turnaround. Whatever fate befalls the GTA Hamilton will suffer twofold.
 
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