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Baby, we got a bubble!?

Very well said Drew, being a Realtor we must teach people as there is alot of ignorance from certain forum members claiming that the condo market is dead, or dieing. Well wake up people and smell the coffee its still is a great time to buy. Intrest rates are super low also helps.

Im never too busy for refferals!
 
^^^
I don't think Cityplaceguy the market is dead or dieing. That said, I am not a cheer leader who blindly leads those who rely on advise into investments on sheer hope with no analysis. Interest rates are super low. So since that is helpful and propelling the market, that would just dictate caution, not full speed ahead since I think we probably would both agree that there is not much room for interest rates to go down from present levels. Perhaps you could provide some insightful thoughts as to why it will just keep going up and maybe answer the question: is there ever a bad time to buy according to you. I would point out that in the US the Realtor association said the same thing in 2006 (just as you are saying now....great time to buy... and then again in 2007, 2008, 2009, 2010, 2011) and were in denial every year thereafter stating that the down shift was temporary and would turn the corner momentarily. Well, we are now almost 6 years post the bust and they only now acknowledge that things have been terrible but now is the time to buy. I get that you sell real estate but gratuitous comments with no facts to back them up from an interested party is exactly the reason that the real estate "profession" is not highly regarded. The US Realtor association may well be right that the market is turning but a fair balanced approach can't say things are not going to go downhill indefinitely and in the next breath when they go downhill say it is turning around shortly and is temporary. Some balanced analysis is required.
 
cityplaceguy said:
Very well said Drew, being a Realtor we must teach people as there is alot of ignorance from certain forum members claiming that the condo market is dead, or dieing. Well wake up people and smell the coffee its still is a great time to buy. Intrest rates are super low also helps.

Im never too busy for refferals!
Click to expand...


but you are too busy for spell-check ?!?
 
interested said:
^^^
I don't think Cityplaceguy the market is dead or dieing. That said, I am not a cheer leader who blindly leads those who rely on advise into investments on sheer hope with no analysis. Interest rates are super low. So since that is helpful and propelling the market, that would just dictate caution, not full speed ahead since I think we probably would both agree that there is not much room for interest rates to go down from present levels. Perhaps you could provide some insightful thoughts as to why it will just keep going up and maybe answer the question: is there ever a bad time to buy according to you. I would point out that in the US the Realtor association said the same thing in 2006 (just as you are saying now....great time to buy... and then again in 2007, 2008, 2009, 2010, 2011) and were in denial every year thereafter stating that the down shift was temporary and would turn the corner momentarily. Well, we are now almost 6 years post the bust and they only now acknowledge that things have been terrible but now is the time to buy. I get that you sell real estate but gratuitous comments with no facts to back them up from an interested party is exactly the reason that the real estate "profession" is not highly regarded. The US Realtor association may well be right that the market is turning but a fair balanced approach can't say things are not going to go downhill indefinitely and in the next breath when they go downhill say it is turning around shortly and is temporary. Some balanced analysis is required.
Click to expand...


at least buying now in the US market has 2 things going for it better than CDN market:

1) most markets have lost 30-50% from market peaks.
if one is interested (no pun intended), they could still offer a lower price of 10% to buffer any further downturn.

2) mortgage rates in the US can be locked for the ENTIRE amortization period of 25-, 30-, 35-, 40-years at current historical lows vs. the typical 5-year term in Canada that must be renegotiated throughout the amortization and have no where to go but UP from historical lows.

so in Toronto, if one buys now at higher prices, you can be saddled with a larger debt load and look forward to guaranteed higher interest rates
 
Agree cdr.
I can comment about the Florida market along the SE coast. Prices actually bottomed and have started to rise with inventory disappearing along the coast. That said, there will be a another wave of foreclosures so it may reverse again.
I definitely agree that buying at these prices one guarantees a large debt load. If we are correct and interest rates do eventually go up, and presumably prices come down, it will not be a happy story.
But as Cityplaceguy says: Its a great time to buy.
 
Oh Cityplaceguy, why oh why do you continue to damage any last ounce of respect that Agents receive.

How do you expect to receive referrals (note the spelling) if you don't tell us who you are??
 
Last edited:
cityplaceguy said:
Very well said Drew, being a Realtor we must teach people as there is alot of ignorance from certain forum members claiming that the condo market is dead, or dieing. Well wake up people and smell the coffee its still is a great time to buy. Intrest rates are super low also helps.

Im never too busy for refferals!
Click to expand...



Buyers are now being courted with: $3,000 discount on a one-bedroom unit; $5,000 discount on a one-bedroom-plus-den; and $10,000 off on a two-bedroom or two-bedroom plus den for units at the Carlaw in Leslieville...

So would 2 weeks ago been a better day??? And... what's with discounts at Carlaw, can someone tell me why that is happening?... I know one building offering discounts isn't a sign of anything... but what if it is???
 
From Jamie Johnson at Remaxcondos+
February March report

SALES COMMENTARY:

January is in the books – TREB sales are up 8.8% over January of 2011. For February, sales are running about 9% higher than the same month in 2011. So where does that put those people calling for a market correction in 2012? It certainly won’t be the spring and summer markets, so guess we will have to wait until the fall to prove the bears wrong! On the other hand, the condo market has been the slowest segment of the market. Overall condo sales were down by 1%. The supposed red hot condo market downtown produced a drop in sales in January of 10% compared to 2011. At the same time, ‘active listings’ were 22% lower! There is the problem with the condo market. Last spring we had almost 1500 listings downtown and the bears were saying that the condo market cannot absorb all these listings. Today we have just over 800 active listings.

However, our biggest concern is that there is a growing disconnect between the resale condo market and the pre-construction market. The resale market is populated by end users who have real jobs and mortgages. The pre-construction market is investor based. Investors are betting that prices will keep on rising. When we suggested in our 2012 Forecast that $800/sf was not sustainable and that the real market is in the $500 to $600/sf range, we received some criticism from the development industry. In January we are starting to see developers offering more incentives, including some price reductions, to sell these new projects.

To prove our point, we looked at resale prices in one of the more popular buildings on the Toronto Waterfront – the Waterclub at 8 York St. This 8 year old building with great views and amenities is very popular with first time buyers. The first unit we tracked was a one bedroom, one bath, with parking. On a high floor but with a city view (no water), it sold first in 2004 for $206,000. It sold again in 2011 for $330,000! Over seven years, the property has appreciated by 60% or 7% per annum. At 555 sf, this calculates at just under $600/sf. (If you remove the parking spot, the price would be $535/sf). The second unit we examined was a two bedroom, two bath with den and parking. It sold in 2004 for $383,000. The same unit sold again at the end of 2010 for $587,000. Again the rate of appreciation was 7% per year. At 1092 sf, the unit sold for $537/sf and it possessed great water views. When prices are rising at 7% (and salaries are not keeping pace), there must eventually be a levelling off of prices. Historically, real estate prices tend to increase in the 3-5% range.

RENTAL COMMENTARY:

January, usually one of the slowest rental months, was extremely active. Fifteen studios were leased along with 268 one bedroom units, and 136 two bedroom units in the downtown market. While rental numbers were slightly higher than a year ago, we see a significant increase in rental rates. Today, studios rent for just under $1400 versus $1250 a year ago. The average rent a year ago for a one bedroom unit without parking to a one plus one with parking was $1450-$1650. Today the range is $1550 -$1750. For two bedroom units, the range last year was $1850 -$2200. Today one can expect to pay from $2100 without parking to $2500 for a unit including den and parking. We are already seeing the type of increases we predicted in our 2012 Market Forecast. Note that most condo units built after 1997 are excluded from rent controls.


I realize as always he is a broker and probably concentrating more on resale. I realize he can pick and choose his examples to prove a point but still the facts as presented are interesting....especially regarding rental rates having increased. However, I believe they actually had decreased a bit last year from the year before so if that is correct the increases are not quite as robust as they appear on first blush.
 
interested said:
From Jamie Johnson at Remaxcondos+
February March report

SALES COMMENTARY:

January is in the books – TREB sales are up 8.8% over January of 2011. For February, sales are running about 9% higher than the same month in 2011. So where does that put those people calling for a market correction in 2012? It certainly won’t be the spring and summer markets, so guess we will have to wait until the fall to prove the bears wrong! On the other hand, the condo market has been the slowest segment of the market. Overall condo sales were down by 1%. The supposed red hot condo market downtown produced a drop in sales in January of 10% compared to 2011. At the same time, ‘active listings’ were 22% lower! There is the problem with the condo market. Last spring we had almost 1500 listings downtown and the bears were saying that the condo market cannot absorb all these listings. Today we have just over 800 active listings.

However, our biggest concern is that there is a growing disconnect between the resale condo market and the pre-construction market. The resale market is populated by end users who have real jobs and mortgages. The pre-construction market is investor based. Investors are betting that prices will keep on rising. When we suggested in our 2012 Forecast that $800/sf was not sustainable and that the real market is in the $500 to $600/sf range, we received some criticism from the development industry. In January we are starting to see developers offering more incentives, including some price reductions, to sell these new projects.

To prove our point, we looked at resale prices in one of the more popular buildings on the Toronto Waterfront – the Waterclub at 8 York St. This 8 year old building with great views and amenities is very popular with first time buyers. The first unit we tracked was a one bedroom, one bath, with parking. On a high floor but with a city view (no water), it sold first in 2004 for $206,000. It sold again in 2011 for $330,000! Over seven years, the property has appreciated by 60% or 7% per annum. At 555 sf, this calculates at just under $600/sf. (If you remove the parking spot, the price would be $535/sf). The second unit we examined was a two bedroom, two bath with den and parking. It sold in 2004 for $383,000. The same unit sold again at the end of 2010 for $587,000. Again the rate of appreciation was 7% per year. At 1092 sf, the unit sold for $537/sf and it possessed great water views. When prices are rising at 7% (and salaries are not keeping pace), there must eventually be a levelling off of prices. Historically, real estate prices tend to increase in the 3-5% range.
Click to expand...


several things i found interesting from JJ's comments:

* he seems to be still bullish from his first remark about proving the bears wrong with the strong Jan/Feb number for 2012 so far
* he believes pre-con is overpriced vs. resales, yet in his analysis of 8 York Street, he states appreciation was 7% cpa at least since 2004 and salaries have not kept pace, so there must eventually be a levelling off of prices.
Even JJ acknowledges, historically, real estate prices tend to increase in the 3-5% range.
 
realist: The US has huge problems as well. That said, it is difficult to know who has the bigger problems. Even if Canada does have a housing market "realignment" while devastating it does not improve the US problems.

That said, if ones lives in Canada, the bulk of one's assets should be in Canada. I have always maintained that a percentage of ones worth if one has more than the value of what is tied up in their home (a difficult thing for a lot of the population I appreciate) should be diversified out of Country and probably vested in the US in particular. That said, unless the C$ really falls dramatically, that has been exactly the wrong strategy for the past 10 years since in C$ terms once corrected the returns in most countries have paled compared to staying in C$ assets by virtue of currency losses (unless one had the foresight to hedge to C$ equivalent which would have partially offset the whole reason for diversifying.)
 
Teranet's final 2011 numbers are now out.

As of the end of December 2011, the Toronto index level is 138.15, which represents a 9.94% increase from the end of 2010. It's a 0.29% decrease month over month however.

Looking at the general trend curve, I'd say 2011 was an anomaly. Prices shot up too much last year. A more reasonable index level for Dec. 2011 would be something like 131.5, which would mean that Dec. 2011 prices are about 5% too high.

The index at the end of 2001 was 79.82. This means a 73.1% increase over the decade, or 5.64% per year. If we were to use my projected 131.5 number, that would mean a 64.7% increase over the decade, or 5.12% per year.

If we were to use an extremely conservative 4% increase per annum since 2001, the projected index would be 118.15. That's That would suggest that our 138.15 currently is 16.9% too high, or to put it another way, a 20 point drop would mean a 14.5% drop from December 2011 price levels.

---

In summary, personally I think that home price valuations in Toronto should be about 5-15% lower than where they are currently. However, although I wouldn't count on it, I still think a soft landing is plausible if interest rates rise slowly in the coming years.

BTW, a house nearby that I had been watching that was listed at $2.25 million and then dropped to $1.99 million has recently sold. I had told my neighbours that my guesstimate for a reasonable price on that home would have been closer to about $1.9 million. I wonder if I was in the right ballpark, based on purely a guess on the location and seeing only the exterior of the home and pictures of the interior.
 
Today, Mr. Ben Bernanke has stated that low rates will stay till late 2014.

That means, rates in Canada will also stay low. That, in turn, means investors will keep on investing at these 'crazy' prices and that means there will be no bubble burst till at least 2014 end.

Time to relax:)
 
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