CN Tower
Banned
Perhaps this applies to some of the inexperienced, non-brand name developers but not to the big guys who have been bringing buildings to market for decades. They will pick up any slack in the market if things do moderate.
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Baby, we got a bubble!?
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Perhaps this applies to some of the inexperienced, non-brand name developers but not to the big guys who have been bringing buildings to market for decades. They will pick up any slack in the market if things do moderate.
interested
Senior Member
I don't think these 2 points are mutually exclusive.
If you could sell at $700/sq.ft. today expecting it to be $600/sq.ft. tomorrow would you not try and do it?
I appreciate if there is a slowdown constructions costs will come down (as occurred with cancellations of projects in the wake of 2008-2009 slowdown.)
I agree the brand name developers will be around after the correction to build whereas the less experienced less well funded ones will disappear.
ILuvTO
Active Member
Thank you Interested. Nailed my sentiments perfectly.
brockm, as Interested mentioned, we have no idea what the actual number of foreign investors is. What if the number is far higher than we think (especially for buildings in the core - as the FP article was alluding to). Who really knows?
macookie
Active Member
... and a bridge or tunnel and a 10 minute drive to the suburbs of Detroit for great shopping and dining.... cheaper flights from Metro Detroit Airport, art galleries (Detroit Institute of Art), major league team sporting events... Wings will likely win before the Leafs... and that 25% correction that might happen will only knock off $50K on your already reduced $200K house... http://www.realtor.ca/redirect.aspx...r-sale-windsor-ontario-326484?from=realtor.ca ...where as the 25% correction on your $1M home in Toronto will set you back $250K. As someone said recently... here with the $8M Beach house... do you want be the big fish in a small pond or just a big fish in bigger pond filled with bigger fish?
Not to mention there's plenty of stuff to keep you busy in Windsor... and/or there's the excuse to just relax, go boating or golfing.
macookie
Active Member
While a good long track record might help grease deals, and financial arrangements for projects, it doesn't necessary mean that a biggie-name won't fail... if the going gets real rough. (ie. Olympia and York) But, let's just hope that everyone that purchased a unit, can close, and can continue to afford to carry their mortgage and other obligations that come from owning, and that every builder that promised something can deliver.
klb86
Active Member
Furthermore info:
TORONTO – May 07, 2012: Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, today released its Q1-2012 market overview.
The new condominium apartment market in the Toronto CMA saw 6,070 sales in Q1-2012, the highest of any first quarter on record. The 338 active projects and 84,698 active units were also record highs. The average of 18.0 sales per project, however, was lower than in Q1-2011 (18.3) and Q1-2010 (20.4)
“Despite the record sales in Q1-2012, Toronto CMA brokers and developers still report anxiety about the future health of the condo market,†says Ben Myers, Urbanation Executive Vice President and Editor. “The probability of a market crash or major price correction is very small, but the prevalence of media coverage for this outcome remains high.â€
Despite this, investors and end-users continue to buy. The average sold price index increased to $519 psf in the Toronto CMA, an increase of 2.0 per cent quarterly and 8.1 per cent annually. The average unsold unit is being offered at $566 psf in the CMA. Urbanation estimates that the average price in the new market is $393,000 with an average size of 757 sf.
The resale market was weaker, with resale index pricing decreasing quarterly for the first time since the recession-impacted Q1-2009, falling from $400 psf in Q4-2011, to $396 psf in Q1-2012. That drop represents a 1.0 per cent quarterly decline, although annual growth remained positive at 3.7 per cent. The average resale price also dropped 1.0 per cent quarterly, from $361,000 to $358,000, although it rose 3.8 per cent year over year.
While resale pricing data seems to indicate the market is slowing, there were, in fact, just 64 fewer re-sales in the first quarter, compared to a year earlier (3,888 vs. 3,952), while the average days on the market remained unchanged at 30. In addition, fewer units have sold in newly registered buildings; these new units typically pull the resale average up. Less resale listings in newly registered buildings suggests a larger share of long-term investors, as opposed to speculative ‘flippers’.
In its Q4-2011 release, Urbanation identified unsold supply as one of several potential factors that could potentially derail the Toronto condominium market. There were 15,554 unsold units at the end of Q1-2012, an increase of 4 per cent quarterly and 27 per cent annually.
But as financial institutions, especially those that are Canadian based, move to tighten lending, resulting project cancellations may mitigate the level of unsold inventory.
The market will be further tested in Q2-2012, however, with the potential for as many as 40 new project launches with more than 11,000 new units that could come to market. If the absorption rates for new and existing projects remain constant at 55 per cent and 20 per cent in the second quarter, unsold inventory in the market will still rise to over 17,000 units, nearing the market high of 17,600 from Q4-2008.
“With the market being much larger now, the question is: Is this higher level of unsold inventory the new reality?†asks Myers. “Or is it a sign that the market has reached its peak? We’ll have to see.â€
http://urbanationinc.blogspot.ca/2012/05/record-quarter-for-toronto-condo-sales.html?spref=tw
kEiThZ
Superstar
+1
Some people have no understanding of macroeconomics. Either that or are they are willing to accept a depression to see housing prices come down. How else to explain the insistence on a 250 bps increase. 5 cents? That's a ridiculously low estimate. If there was that much of a spread between Canada and the US, our dollar would rise 20 cents higher at least (I'd say 25-40 cents). Given the US Fed's intention to keep rates low till 2014, just imagine what that kind of a spread would do to our fragile economic recovery. Whatever manufacturing is left in Ontario would surely be done.
People who keep blaming Carney are truly ignorant. The job of a central banker is to use monetary levers to promote stable and sustainable growth in the entire economy. It's not his job to contain housing prices. Ideally, cheap capital should now be used to bolster business. But it's inflating housing. You can thank the government's mortgage policies for that. Carney has nothing to do with it. And he's kept on warning Canadians about borrowing too much. Too bad, Canadians won't listen.
All that said, our economy is far too-dependent on real estate. When 25-30% of all jobs are tied to construction or the FIRE sectors, something is really wrong. This country is not really manufacturing or selling services overseas. All we're doing is trading houses to each other.
rbt
Senior Member
I suppose. I guess I assummed they were renting the property out when they weren't using it, so they would have some incoming US funds.
interested
Senior Member
I believe this is a great problem for a lot of the developed economies. The US experience with the Bankers and everyone jumping on the Mortgage backed securities to generate sales that should have never happened and delude the public with wealth that never really existed other than for the quantitative easing and allowing the purchase of homes at ever increasing prices has been very painful.
Also given that the financial industry now represents almost 20% (if I recall correctly) of the US economy; a doubling from a decade ago, and that the financial industry does not create anything other than repackage "existing services for profit"
the long term outlook is worrisome.
The same thing is being played out in Spain, and has occurred in Ireland and other vacation spots.
So something has to change.
cdr108
Senior Member
i can't say it seems any different here in Canada currently (moreso the last 5+ years).
CN Tower
Banned
How condo boom threatens a ‘ghost city phenomenon’
SINCE WHEN?? We have never heard this before from CMHC as far as I'm aware.
This must be the smoking gun that Carney has been so worried about. I smell a conspiracy to conceal information.
http://www.theglobeandmail.com/repo...atens-a-ghost-city-phenomenon/article2426038/
SINCE WHEN?? We have never heard this before from CMHC as far as I'm aware.
This must be the smoking gun that Carney has been so worried about. I smell a conspiracy to conceal information.
http://www.theglobeandmail.com/repo...atens-a-ghost-city-phenomenon/article2426038/
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cdr108
Senior Member
thought you didn't think TO has a bubble or prices were overheated?
CN Tower
Banned
cdr,
Until now when have you ever read, from CMHC of all places, that 25% of condos are empty? Aren't theres somewhere north of 200,000 condos in the GTA? So CMHC is now suggesting that 50,000 apartments are simply vacant? Not pied a tiers, not 2nd or 3rd homes, not reserved for family members/students? This is quite unexpected you must admit.
Im not sure it implies an impending collapse necessarily however. Unlike Miami these units are purportedly not for sale whereas in contrast there was and probably remains enormous unsold inventory in Miami and most of South Florida from 2006-present.
Until now when have you ever read, from CMHC of all places, that 25% of condos are empty? Aren't theres somewhere north of 200,000 condos in the GTA? So CMHC is now suggesting that 50,000 apartments are simply vacant? Not pied a tiers, not 2nd or 3rd homes, not reserved for family members/students? This is quite unexpected you must admit.
Im not sure it implies an impending collapse necessarily however. Unlike Miami these units are purportedly not for sale whereas in contrast there was and probably remains enormous unsold inventory in Miami and most of South Florida from 2006-present.
interested
Senior Member
^^^Guys, I think you need to go back and reread the article. It does not say they are vacant. It says they are rented out or am I misunderstanding.
"Mr. Holt, citing a recent CMHC survey of condo owners, said nearly a quarter of condos in the Greater Toronto area are rented out and not occupied by their owners.
“This is the ghost city phenomenon,” Mr. Holt said."
As well from the article:
"Condo developers in Eastern cities such as Toronto, Montreal and Ottawa, appear to be rushing to sell and build units before interest rates start to climb, and the market crashes.
“There’s little question now that Canada’s residential construction sector is heated, with the big-city condo market boasting the highest temperature,” said Bank of Montreal economist Robert Kavcic.
Finance Minister Jim Flaherty warned recently that developers appear to be willing to build new units until sales dry up, which could lead to a crash. And the last buyers in could get burned, he warned in a meeting with the Globe and Mail’s editorial board last month.
“I do worry about the last person buying a condo in Toronto, and people getting caught,” Mr. Flaherty said. He characterized the pace of condo construction as “remarkable.”
This echoes exactly what I said that I thought: that the person who bought in the past 2 years will be under water when these are ready. The above statements suggest that builders despite comments in the past by others that they are smart and won't get caught out are exactly setting up that scenario. Of course with larger deposits and our laws, they can go after the last purchasers for the difference between sale price and agreed to price if the buyer fails to close.
"Mr. Holt, citing a recent CMHC survey of condo owners, said nearly a quarter of condos in the Greater Toronto area are rented out and not occupied by their owners.
“This is the ghost city phenomenon,” Mr. Holt said."
As well from the article:
"Condo developers in Eastern cities such as Toronto, Montreal and Ottawa, appear to be rushing to sell and build units before interest rates start to climb, and the market crashes.
“There’s little question now that Canada’s residential construction sector is heated, with the big-city condo market boasting the highest temperature,” said Bank of Montreal economist Robert Kavcic.
Finance Minister Jim Flaherty warned recently that developers appear to be willing to build new units until sales dry up, which could lead to a crash. And the last buyers in could get burned, he warned in a meeting with the Globe and Mail’s editorial board last month.
“I do worry about the last person buying a condo in Toronto, and people getting caught,” Mr. Flaherty said. He characterized the pace of condo construction as “remarkable.”
This echoes exactly what I said that I thought: that the person who bought in the past 2 years will be under water when these are ready. The above statements suggest that builders despite comments in the past by others that they are smart and won't get caught out are exactly setting up that scenario. Of course with larger deposits and our laws, they can go after the last purchasers for the difference between sale price and agreed to price if the buyer fails to close.
CN Tower
Banned
They must have edited the article. I cut/pasted that section.
Incredible! That's poor quality journalism.