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The Star: Toronto's condo boom is heading for a bust

I'm a little surprised, but that's a good thing ....
Our system was pretty harsh in Canada compared to America *I use the word harsh as a comparison only*. In other words getting a mortgages was never the easiest thing.

You need a lot of capital and some income or a lot of income.

Still I think it was always a mistake to offer 0% mortgages, which they did even in Canada. It's likely those that will not be approved or even revoked seeing how job stability is a thing of the past now a days.
 
"If this bust last for 1 year from today ... next year you'll see sales sky rise again because everyone will jump at the really really low prices in areas like downtown."

We'll see what we see I guess but I find that timeline aggressive. Sales may be stronger then the most dire predictions but they may be weaker as well. The next 2007 like banner year is likely 10 or more years away. In the interm I would not be surprised if there are many years where cranes will be an endangered species in this city.
 
Oh that much I agree with ... I think my exact term was "mini boom" :D

We likely won't see 2007 again for a long long time ... don't forget a couple other things factored into that.

There was the Miller Tax has it's become to be known now. That really increased sales a bit toward the end of the year. Also I'd say that was the peek.

So you're correct - we will not likely see 2007 again until ... TBA.
 
Boy, you guys are optimistic. Here are the numbers of buildings of 12 storeys or higher that were completed in Toronto, by year, as reflected in the last significant recession we had.

1989 - 27
1990 - 33
1991 - 30
1992 - 18
1993 - 17
1994 - 4
1995 - 7
1996 - 11
1997 - 6
1998 - 17
1999 - 21
2000 - 14
2001 - 10
2002 - 31

What you'll note there is the lag between when the recession was at its most severe (1990-1991) and when things were simply not being built (1994 at its worst). Some of the same things that some of you cite as bringing people into the market were no less prevalent at that time (people wanting to live downtown, people feeling they could get into the market, etc.) - so I don't see those as being realistic indicators that we won't have a real slowdown in new construction activity this time.

From appearances to date, this recession is likely to be more severe than that of the 1990's, so we could be in for some truly slow years of new building construction, which if they happen will most likely be in the range of 2011-2014 or so.

Not to be a downer, but some of the discussion here seems heavily disconnected from what is looking like a serious and prolonged downturn. Things are not looking good out there. On the other hand, if we have infrastructure funding and spending, perhaps it is all to the better if in conjunction with our condo/office breather, we get an affordable housing/transportation infrastructure boost, which is sorely needed.
 
Vultur back again? He really doesn't give up, does he? What is this, the 30th alias?
 
Personally I don't feel what we have is a boom at all. These few paragraphs on page 64 from the Condo Guide from the Nov.24 issue says it well:

Although other Canadian housing markets such as Calgary and Vancouver are facing a market correction from inflated prices, "Toronto is not like those hot cities, where prices would double overnight," according to Jeahny Shim of ThinkBuild Consulting. "We've never had a bubble. Our price increases have been slow and steady."

And as the Toronto condo market continues to climb, history shows that it has a lot further to grow before it hits its maximum potential.

In lieu of the financial turmoil experienced south of the border, the Toronto condo market continues to grow and stay strong with affordable pricing, responsible financial institutions and low interest rates that are expected to drop even lower.

What does this mean for prospective purchasers? Now is a good time to buy. The bottom line is that Toronto real estate remains a sound financial investment with opportunities for investors and purchasers to take advantage of as the market continues to grow.
 
First of all your taking a quote from the condo guide which is pretty much the same as someone robbing you and telling you the gun isn't loaded.

Prices have increased far beyond the rate of inflation and incomes.
 
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Jayomatic is right. Eventually property prices will ALWAYS revert to the inflation adjusted price. Market sentiment is NEGATIVE. People with jobs will not be asking for raises. Condo inventories are EXTREMELY HIGH. Houses are not selling, listings are going up. Lending is getting tighter, even with money supply increasing. Need proof??? look at any recently completed condo building, and see how many condo's are for sale and rent. We are in a deflationary environment.
 
Jayomatic, although found in Condo Guide, this isn't a "puff piece" (thinly disguised advertorial). Jeanhy Shim was editor of Urbanation until recently, and it would be hard to find someone more knowledgeable about the Toronto condo market. I think her points are well taken.

Toronto certainly had a crazy 2007, and right from New Years Day 2008 sensible people realized that it would not be repeated. The news is ceertainly getting worse, over the past three months. We will be in for a slowdown over the next 2 - 3 years, with fewer cranes on the horizon. But I don't foresee panic or blood in the streets. The market is still orderly, for both new sales and resales.

As for investors, most of them have already withdrawn from the market for new units. But they would be foolish to sell the units they already own into a downward moving market, with reduced demand and sharply increased supply. Are they foolish? A few, no doubt, but not that many.
 
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Yes. Thanks to recourse mortgages, the problems start when people are forced to sell.
 
Archivist,

Your post is exactly the message I have tried to consistently emphasize. Construction and development and real estate prices lag the general economy in the economic cycle. There may be some residual strength in the sectors as we go through 2009 and into 2010 but you can bet that activity will be dead for years after the next recovery. A recovery that is still itself likely to be some years away. Just because we are fascinated by buildings and development it doesn't mean we should dismiss the entire process of how it comes about, a process that includes bust as well as boom.
 
From appearances to date, this recession is likely to be more severe than that of the 1990's, so we could be in for some truly slow years of new building construction, which if they happen will most likely be in the range of 2011-2014 or so.
Click to expand...

I doubt we'll have the NDP to prop up the numbers either
 
Well, there`s obviously a recession, and there will obviously be a slump in the market. It`s not the end of the world, it happened before. people keep on saying how this is the worst recession since the great dpression, yet they go on to say that the unemployment rate is at its lowest since 1982, and that the economy is at its slowest since the Ontario recession in the 80s
 
The unemployment rate was 6.7% in Canada prior to the difficult downturn of the early 90's. This is pretty well what Ontario is sitting at right now so don't believe the hype about "things are different this time around". It jumped up to 11.6% after the downturn in the 90's , a rise of 5%. Can we predict how high it will go this time? No. But my guess is this will hit hard and everyone here will have a family member or friend who will lose their job.
 
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