News   May 06, 2024
News Roundup for May 6, 2024
 407     0 
News   May 06, 2024
Looks All-But Finished, Isn't
 1.1K     1 
News   May 03, 2024
Assembly's Blueprint for Sustainable Urban Living in the GTHA
 1.4K     1 

Baby, we got a bubble!?

That's on average per market

There's tons of foreclosures that are going for $10k, $5k, hell even $1.

Like I said there must only be one reason to signing onto a 35 year mortgage, and that's to flip it, and those people are going to get their anal orifices pillaged like no tomorrow

Sales are way down because nobody is buying, you can ask well below listing price and you have a pretty good chance of getting it, even right now before panic sets in.
 
More overheated markets tend to crash harder, and when bubbles burst it's always violent.

Vancouver, Toronto and Montreal will get rocked hard. Based on the average Toronto income of about 45k there is no way that a home should cost more than $200k, historical average is 3-4x.

I know the Brampton RE board hasn't released #'s in nearly 4 months now. Word on the street is sales are down 70-80%, nothing is selling, and price cuts are usually drastic, like a 400k house going for 250-275k. And tons of power for sales.......................................... A sign of things to come?
 
an old story but it's data to support some of the comments.

http://www.cbc.ca/canada/toronto/story/2008/05/01/tto-census.html

Average Toronto family has less in its wallets than 5 years ago: census

Read more: http://www.cbc.ca/canada/toronto/story/2008/05/01/tto-census.html#ixzz187PHqFxq

Last Updated: Thursday, May 1, 2008 | 12:08 PM ET
The Canadian Press

The latest census data suggests the average family in the Toronto region has a little less in its wallets than it did the last time Statistics Canada asked people about how much money they make.

New information from the 2006 census released Thursday indicates the median income for families in and around Toronto was $75,829 — a decrease from the 2001 census, when it was $77,693 when adjusted for inflation.

The 2.4 per cent decrease compares to a national increase in income of 3.7 per cent and a provincial increase of 1.4 per cent.

Individuals in the metropolitan Toronto area had a median income of $26,754. Five years earlier, the median income was $28,700.

The census data also indicates the gender wage gap decreased.

Men in the Toronto region typically earned $51,235 compared to $41,284 for women — meaning women made on average only 81 per cent of what men earned. Five years earlier, the gap was 78 per cent in favour of men.

People aged 25 to 34 — generally the age range when younger people are getting established in the workforce — had a median income of $29,961. Senior citizens in and around Toronto had a median income of $20,724.

Statistics Canada also looked at how people in the lowest and highest earnings brackets fared over the five-year period.

The median earnings for lower-income workers — those in the bottom 20 per cent of earners in the region — decreased by 10.1 per cent to $17,071. Those at the high end — in the top 20 per cent — saw their income increase by 3.9 per cent to $98,358.
Education impacts earnings

Statistics Canada does not have a standard definition for the term "poverty line."

Instead, it uses a formula that looks at families who need to spend a high proportion of their income on basic necessities like food, shelter and clothing. In the Toronto region, Statistics Canada says, 15.7 per cent of families fell into this low-income category.

Not surprisingly, the level of education has a direct impact on earnings. Among people in the Toronto area:

* University-educated people earned a median wage of $58,245.
* College grads made $45,513.
* Trade or apprentice school grads made $43,279.
* People with only a high school diploma made $39,963.
* Those with no secondary school diploma made $34,893.

Immigrants living in the Toronto region typically had a median wage of 10.8 per cent less than the median wage of all those in Toronto. Across the country, the census shows that immigrants made less on the job than the average Canadian — $39,523 compared to a national median wage of $41,401.

The earnings information released by Statistics Canada is for what's known as the census metropolitan area of Toronto, which represents the city's core boundary as well as outlying suburban areas.

The data is based on information gathered in the 2006 census where respondents were asked for their total income during 2005. Income can include earnings from a job, investments and government programs.

While Statistics Canada regularly reports on economic factors at the national and provincial level, the census is the only vehicle that provides a detailed look at income and earnings at the community level.

The data published Thursday is the final release of material from the 2006 census.

Previously, Statistics Canada revealed information about the population of Toronto in a wide range of areas, including age and sex breakdowns, education, immigration and language.

The next census is scheduled to be conducted in May 2011.
 
People aged 25 to 34 — generally the age range when younger people are getting established in the workforce — had a median income of $29,961

Also the prime pool of buyers for $300-400K condos, at 10-13x income (y)


Also love how income has DECREASED, yet housing has nearly TRIPLED ROFL!!!
 
paperchopper said:
I don't think I've ever heard a central banker use such apocalyptic terms such as 'brutal reckoning', laced in with a catchy idiom.
Click to expand...

Irrational Exuberance.

You sound rather young paperchop. Often youth in wasted on the young. My thoughts echo yours minus the 'hubris'.

Happy hunting all!
 
As we have seen CN Tower,
irrational exuberance can go on for a very long time however. Let's hope it stops sooner rather than later as the damage will only be accentuated the longer it goes.
While I believe paperchopper is correct in expecting a correction and agree with you as well that a correction must be had, I do not share the enthusiasm that Paperchopper has to see a crash and will certainly not rejoice at the ability to say that "I told you so" to those devastated by its effects should it unfold as Paperchopper forsees.
CN Tower, you sound similar to me, in that we have become old enough/seeb enough to appreciate that one is often humbled when all common sense said that we should have been right in predicting an event only to see the opposite unfold.
 
The following article provides a different view toward the debt-to-income ratio:
http://www.cbc.ca/money/story/2010/12/14/f-debt-analysis.html

Debt picture not so bleak: BMO
The cacophony of concern over rising Canadian debt levels is overshadowing other encouraging personal finance data, a prominent economist says.

Statistics Canada released data Monday showing that Canadian household debt has risen to 148 per cent of disposable income. The eye-popping figure is all the more alarming considering its the first time Canada's ratio has been higher than that of the U.S. since the 1990s.

Alarm bells rang everywhere from the Bank of Canada to the Finance Department on Monday, and Canadians were urged to tighten their belts and prepare for a time of austerity.

But a closer look at the numbers indicates the picture might not be so bleak.

"The continued laser-like focus on debt overshadows the other half of the balance sheet," BMO chief economist Doug Porter said Monday.

Namely, Canadians are borrowing. But they're also saving, and they're worth more than they used to be.

The savings rate has averaged four per cent over the past year and is now below the U.S rate of 5.8 per cent. But Canada's rate is now more than double the level it was at during its all-time low in 2005.

And as Porter notes, Statistics Canada's rate of personal savings as a percentage of disposable income doesn't give the full picture of how much Canadians are actually saving.

The current rate narrowly looks at how much households are saving from current income but ignores unrealized capital gains as well as returns in tax-sheltered vehicles like RRSPs and tax-free savings accounts, Porter said.

A better measure might be to track the change in household financial assets as a share of income. It's much more volatile (prone to 50 per cent swings in both directions within the same year), but for the last five years, it has hovered at roughly double the published savings rate. And it's never gone below the conventional "savings rate" in the last 15 years.
Increasing assets

A closer inspection of the numbers Statistics Canada released Monday shows more reason for optimism.

Yes, the debt-to-income level has gone from around 100 per cent in 1990 to almost 150 per cent today (the orange line on the chart above). But assets — the green line (showing net worth as a percentage of income) — have gone up too: from 417 per cent to 610 per cent over that same period.

In layman's terms, "assets are again growing faster than debt in absolute terms," says Porter.

That suggests that the assets Canadians are buying are padding their net worth more than enough to offset the debt load they take on to buy some of them. And debt as a percentage of net worth (the blue line on the chart above) has remained relatively flat.

"While debt has risen to record heights, so, too, have financial assets due to a rebound in equities and an underlying rise in savings," Porter said.

The sum total of all stocks, bonds, cash, GICs, life insurance and pension assets, minus household debt, is a fairer picture of real savings, Porter says. That figure has recovered from recessionary lows to $2.7 trillion so far this year — which works out to $80,000 per Canadian, or 167 per cent of per capita GDP.

"Taking these factors into account … leads to the conclusion that household finances are not nearly as weakened as the dire headlines would suggest," said Porter.
 
Last edited:
classic is the glass 1/2 full or 1/2 empty.
The concern I have with this analysis by Mr. Porter is as he says, it is prone to much greater volatility. Remember the stock market was in the 7000's 2 years ago and 1/2 its value eroded. This will clearly have a major effect that it is back at 13000. Who is to say it won't drop 30% again especially when all this capital looking for womewhere to go is going everywhere and raising all asset values and when it is removed the reverse should be expected to happen at least to a degree.
I still believe it is worrisome, though perhaps it is useful to look at the numbers in as slightly different light
 
I don't think the housing will crash as much as everyone is predicting. Our market has not sky rojeted as much as markets in other cities. The government has tightened the borrowin rules an our mortgage default rate is very low. The Stats Canada numbers are not that accurate. Just look at the types of jobs that are prevalent and growing in our region: high paying financial and professional services. People in these jobs are the ones buying condos and houses at such high prices because they can afford it. The average salary for two professionals working in these jobs combined are around $100k (based on 50k each). That means these folks can afford to buy units up to 400k, and that is what we see happening. The recession ha pushed some folks out of the market but there are still plenty of people buying and while the market is slowing down to a more rational level, I doubt very much we will see any large corrections here unless the rates go up by 3-4% on 5 year mortgage rates. The worst case I see is more flat growth in prices until salaries catch up.
 
lead82 said:
... Just look at the types of jobs that are prevalent and growing in our region: high paying financial and professional services. People in these jobs are the ones buying condos and houses at such high prices because they can afford it. The average salary for two professionals working in these jobs combined are around $100k (based on 50k each). That means these folks can afford to buy units up to 400k, and that is what we see happening. The recession ha pushed some folks out of the market but there are still plenty of people buying and while the market is slowing down to a more rational level, I doubt very much we will see any large corrections here unless the rates go up by 3-4% on 5 year mortgage rates. The worst case I see is more flat growth in prices until salaries catch up.
Click to expand...


so what you're saying is that professional couples earning $100K are willing to live in 700 SF $400K condos.

while in 2000, that similar type of professional couple would have been also earning $100K but that 700 SF condo was valued at $175K, or alternatively they could have gotten 1,500 SF for their $400K.

based on historical RE price appreciation, that 700 SF condo would be worth $265K now, so you see that professional couple's salary going up 50% (even though salaries have been pretty flat over the past decade) while prices stagnate for the next xxx years ?
 
Last edited:
cdr108 said:
while in 2000, that similar type of professional couple would have been also earning $100K but that 700 SF condo was valued at $175K, or alternatively they could have gotten 1,500 SF for their $400K.
Click to expand...
Bingo. I know in my field (software development) average salaries are about equal now to what they were in the late 90s. Real estate in the GTA on the other hand, different story. If I had graduated about 15 years ago, I would have easily been able to buy my own condo right away upon graduation, and that was exactly what many people did. Forget that now.
 
You must log in or register to post here.

Back
Top