cdr108
Senior Member
Add to that, there are financial related jobs being lost too ... though they aren't published here as much as US/NYC.
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Toronto house sales off 54% and the average price down 12%
- Thread starter billy corgan
- Start date
Add to that, there are financial related jobs being lost too ... though they aren't published here as much as US/NYC.
jetsme
New Member
Power of Sale Listings Inching Up
For those interested, there are some nice charts about power of sales and various metrics in Toronto here: http://thenumberstheydontpublish.blogspot.com
Toronto is not in a good shape in the next couple of years.
For those interested, there are some nice charts about power of sales and various metrics in Toronto here: http://thenumberstheydontpublish.blogspot.com
Toronto is not in a good shape in the next couple of years.
Adam
New Member
Thanks jetsme... fantastic site and I agree with you- Toronto is facing trouble. I think most are still in denial though...
Urban Shocker
Doyenne
... and that's only the first of the five Kubler-Ross stages!
Up next:
Anger: "How DARE thay not pay what I'm asking! Grrrr!!!!"
Bargaining: "Pleeease ... please ... buy my place. I'll throw in my brand new car for free! Have a nice day!"
Depression: " Oh Gawd, I'll never unload this friggin' dump ..."
and finally ...
Acceptance: " I'm totally screwed. But that's fine. I didn't really want to sell the place anyway."
Up next:
Anger: "How DARE thay not pay what I'm asking! Grrrr!!!!"
Bargaining: "Pleeease ... please ... buy my place. I'll throw in my brand new car for free! Have a nice day!"
Depression: " Oh Gawd, I'll never unload this friggin' dump ..."
and finally ...
Acceptance: " I'm totally screwed. But that's fine. I didn't really want to sell the place anyway."
jetsme
New Member
Thanks Adam... yes, definitely a lot of denial out there!
Felino
Banned
Homes have not dropped in value in comparison to how much many doubled in value in the past 10 years.
Hopefully real estates agents will be out of jobs soon and people will be able to afford homes without them manipulating home values with crooked tricks and killing affordability.
I'm still waiting for another 20% drop before I buy. I love this recession.
Hopefully real estates agents will be out of jobs soon and people will be able to afford homes without them manipulating home values with crooked tricks and killing affordability.
I'm still waiting for another 20% drop before I buy. I love this recession.
simuls
Senior Member
Depending on what type of property, where, and how much it's currently valued at Felino, I think you're going to be in for a looooooooooong wait. There is simply nothing to back up that type of wishful thinking. If I were you, I'd be happy with getting another 5-10% and that will only happen in the absolute worst hit, overdeveloped areas on the outskirts of Toronto.
cdr108
Senior Member
Why would you say only 5-10%?
By all measures I've seen, TO properties have at least doubled in value from 1996 to 2008 at its peak. Historical data reveals RE appreciates ~4% annually in the long term (100 year trendline). So prices would drop 35% from the peak value to bring it back to trendline and it tends to undershoot first.
Also, affordability according to average household income to property values is beyond the 3.0 - 3.5x used by many economists. Again 30% overvalued.
T
terrafirma
Guest
^ I agree. What makes you (simuls) believe there is support for current prices, aside from wishful thinking?
Look at this graph:
http://www.mississauga4sale.com/TREBprice.htm
We are in the midst of a very significant pullback in house prices! What leads anyone to believe that prices couldn't float back down to an average of $300,000 as we saw in 2003? With the job losses that we are experiencing it will be nearly impossible to avoid further distress in the Toronto housing market in my opinion.
Look at this graph:
http://www.mississauga4sale.com/TREBprice.htm
We are in the midst of a very significant pullback in house prices! What leads anyone to believe that prices couldn't float back down to an average of $300,000 as we saw in 2003? With the job losses that we are experiencing it will be nearly impossible to avoid further distress in the Toronto housing market in my opinion.
northstar
New Member
The support for current prices comes from the fact that mortgage rates have dropped to 3% and 4%.
Falling mortgage rates significantly decrease the cost of home ownership.
Realize one thing: It's not the cost of the house, rather it's the "cost of carrying" the house.
Mortgage rates having fallen to historic lows is a factor that many people overlook in their lustful wish for falling home prices.
Please do NOT misinterpret this post as somehow suggesting that house prices are going to increase.
I'm simply suggesting that house prices may not nosedive like some posters seem to believe.
simuls
Senior Member
Northstar makes a good point, but there are others.
1) Terrafirma, that graph is absolutely useless as it is not an inflation adjusted graph. If you adjust for inflation cdr108, the average increase in price is approximately 40% from 1996 to 2009. This is under the 4%/year curve (which is inaccurate as RE shows closer to a 2% rate of return after inflation) and shows that an average price of around $360-370000 is about right. If you'd like to read a much better prepared and sound summation of the current real estate situation I would suggest this link: http://www.torontohomes-for-sale.com/4a_custpage_2578.html .
2) We experienced no price "spikes" in this current real estate cycle (unlike 1974 and 1989), but a gradual gain - unlike many other cities in the world and in Canada (think Vancouver and Calgary).
3) Adjusted for inflation to 2009, the average price in 2003 is closer to $320000. So a historically and inflation adjusted rate for 2009 would be approx. $375 000.
4) According to the article you requested me to read, Terrafirma,
"It should be noted that the GTA housing market has followed the broader economic slowdown, but was not a cause of the downturn. Home prices remained affordable throughout the new millennium. The average family can still qualify for a mortgage on the average priced home. This remains the case today. Given that we are not facing an early-1990s-style affordability crisis, the rebound in the housing market will likely be quick once economic recovery takes hold."
5) While Toronto will feel the recession and have some job loss, the serious job losses will be occurring elsewhere in the province in the manufacturing centres. Our financial core is solid and the types of jobs necessary in order to afford a home in Toronto will be minimally affected.
I don't have a crystal ball and I'm not saying that no homes will fall another 20%. My guess is that most homes valued at 600 000 and up will fall at least that much from their peak, if not further (and thus, if using a non-weighted average and not a weighted median will skew the statistics to show a larger overall average loss), but the homes in the 300 000 - 600 000 range will, at most, and with a weighted median as our guide, drop an additional 5-10% on top of the 6% drop they already have experienced. This will correct rather quickly though as that would be a fire-sale price. This skewing of averages also happened during the last correction as many lower priced properties stayed out of the market (because people wanted to live in them), and the higher priced ones languished, constantly dropping their price and thus pulling the average down.
1) Terrafirma, that graph is absolutely useless as it is not an inflation adjusted graph. If you adjust for inflation cdr108, the average increase in price is approximately 40% from 1996 to 2009. This is under the 4%/year curve (which is inaccurate as RE shows closer to a 2% rate of return after inflation) and shows that an average price of around $360-370000 is about right. If you'd like to read a much better prepared and sound summation of the current real estate situation I would suggest this link: http://www.torontohomes-for-sale.com/4a_custpage_2578.html .
2) We experienced no price "spikes" in this current real estate cycle (unlike 1974 and 1989), but a gradual gain - unlike many other cities in the world and in Canada (think Vancouver and Calgary).
3) Adjusted for inflation to 2009, the average price in 2003 is closer to $320000. So a historically and inflation adjusted rate for 2009 would be approx. $375 000.
4) According to the article you requested me to read, Terrafirma,
"It should be noted that the GTA housing market has followed the broader economic slowdown, but was not a cause of the downturn. Home prices remained affordable throughout the new millennium. The average family can still qualify for a mortgage on the average priced home. This remains the case today. Given that we are not facing an early-1990s-style affordability crisis, the rebound in the housing market will likely be quick once economic recovery takes hold."
5) While Toronto will feel the recession and have some job loss, the serious job losses will be occurring elsewhere in the province in the manufacturing centres. Our financial core is solid and the types of jobs necessary in order to afford a home in Toronto will be minimally affected.
I don't have a crystal ball and I'm not saying that no homes will fall another 20%. My guess is that most homes valued at 600 000 and up will fall at least that much from their peak, if not further (and thus, if using a non-weighted average and not a weighted median will skew the statistics to show a larger overall average loss), but the homes in the 300 000 - 600 000 range will, at most, and with a weighted median as our guide, drop an additional 5-10% on top of the 6% drop they already have experienced. This will correct rather quickly though as that would be a fire-sale price. This skewing of averages also happened during the last correction as many lower priced properties stayed out of the market (because people wanted to live in them), and the higher priced ones languished, constantly dropping their price and thus pulling the average down.
cdr108
Senior Member
The "cost of carrying" the house explanation by the RE industry and financial institutions is what helped perpetuate the bubble during this low interest rate environment.
It's also the same 'reasoning' the above groups advocated mortgage terms longer than 25 years to make ownership 'affordable'. They've taken the inverse relationship of interest rates to values to their benefits.
Instead, the GENERAL PUBLIC should have received the benefits of low interest rates AND property values to make it that much easier to own and paydown quicker.
Perhaps I'm too altruistic but more people would have had access to affordable living; and the RE industry and FIs would have made more money on volumes (with lower margins).
daveto
Active Member
I would like to offer the following even money wager to anyone who is interested.
I bet $1,000 that the TREB 416 average price will have dropped 12%+ in real terms in two years time (from the Feb 2009 data).
Cash to be held by a mutually agreed 3rd party in a mutually agreed investment. Any bets taken to be noted in this thread.
I anticipate that no-one will accept my offer.
I bet $1,000 that the TREB 416 average price will have dropped 12%+ in real terms in two years time (from the Feb 2009 data).
Cash to be held by a mutually agreed 3rd party in a mutually agreed investment. Any bets taken to be noted in this thread.
I anticipate that no-one will accept my offer.
simuls
Senior Member
While I applaud the idea of putting your money where your mouth is, it would be stupid for anyone to take that bet, not the least of which would be the illegality of it...and in a public forum no less...with notation.
Yossi Kaplan MBA
Realtor
Manipulating the market is not possible
Felino, open & free markets by definition and sheer size dictate that no individual, buyer, seller or in-between broker can manipulate them.
It's a true basket of supply and demand, just like the stock market or any other "free & open" markets. Buyers and sellers have the say and the power to decide on buying or selling of any good or commodity.
It'd make no difference on values if homes (or any other commodity) will be traded directly through an electronic interface, market square or brokers - the only thing that sets value is what ppl are willing to pay for it, no matter what the marketing is.
i.e. 1 Bloor - developer raised prices and people were willing to pay more. Why? they could have gone next door and buy something else for less, but they opted for a more expensive product.
If we all stopped buying (gas, condos, bread, stocks, whatever) - the price will go down until it hits a level of support - and then rise again if demand exceeds supply.
Nonetheless, if you believe anyone was able to manipulate the market please share your experience.
All the best,
Felino, open & free markets by definition and sheer size dictate that no individual, buyer, seller or in-between broker can manipulate them.
It's a true basket of supply and demand, just like the stock market or any other "free & open" markets. Buyers and sellers have the say and the power to decide on buying or selling of any good or commodity.
It'd make no difference on values if homes (or any other commodity) will be traded directly through an electronic interface, market square or brokers - the only thing that sets value is what ppl are willing to pay for it, no matter what the marketing is.
i.e. 1 Bloor - developer raised prices and people were willing to pay more. Why? they could have gone next door and buy something else for less, but they opted for a more expensive product.
If we all stopped buying (gas, condos, bread, stocks, whatever) - the price will go down until it hits a level of support - and then rise again if demand exceeds supply.
Nonetheless, if you believe anyone was able to manipulate the market please share your experience.
All the best,