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Toronto's condo market booms

ducati0000 said:
Wrong,when things go bad those carrying the huge mortgages on the houses will lose it before the more affordable condos.Where do you think those people are going to live?...rental condos or apartments.The sales maybe slowing but they will appreciate still in the mid single figures or lower double figures.
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That exact same situation happened in Miami where foreclosures in houses and condos went up a huge amount, but because of the huge supply in condos, they suffered much worse. Not to say that something so bad will happen in Toronto, but if it gets to the point where there are many house foreclosures, it would without a doubt be much worse in the condo market.
 
caveatemptor said:
Of course it will due to the simple fact that people will beg, cheat and steal to save the house they live in and not uproot their family from its primary residence, while spec condo buyers will more easily dump non-profitable or out-of-the-money units on the market without a second thought to raise cash for other purchases or just to minimize losses.

This is just common sense to me. To the extent that the new sales market over the past several years has been dominated by specuvestors, the greatest weakness in any downturn will be felt the strongest in that sector.
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Well yea, I don't think you have any proof of the condo market being dominated by speculators, but if that's the case than yeah... I don't think it's anything as bad as Miami, just that the sheer amount of construction of condos alone should make one cautious.
 
yes, well I'm not fully inclined to believe those number and even less inclined to believe it from this Linda Leatherdale. Also you missed out the next two lines of the quote which are kind of important.

Meanwhile, more investors are flocking to Toronto's new condo developments, with investors accounting for 60% to 85% of sales, compared to only 30% to 50% a year ago.

Toronto real estate lawyer Alan Silverstein asks are they investors or speculators?

"A speculator is in it for the quick flip. A true investor is in for the long haul," he said.
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Not sure how your second quote really bolsters the speculator dominance... yes there may be foreign buyers but they could be buying to keep.

Anyway caveatemptor, vulture, or whatever other aliases you've had or will have, that stuff isn't greatly convincing, although you could actually be partly right.
 
caveatemptor said:
Thief,

Your success does not equate to my failure. Just remember that. I have no vested interest in whether you make or lose money.

I wish success on everyone here. I just personally can't rationalize certain aspects of the market today. That doesn't mean I don't want you and gei to profit from it. So instead of laughing at people like me you should be more concerned with savoring your financial success, should it re-occur.
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You wish success on everyone here? Quite frankly, I don't believe it. You'd no doubt take a certain kind of pleasure if we were to take a large loss in the future.

But it hasn't happened, and until then i'll take a certain pleasure of my own at laughing at you and others like you i've encountered in the past who have been adamant about great declines in real estate that have not materialized. I mean, laughing at you and savoring my financial success doesn't have to be exclusive to each other right? ;)
 
stop comparing US markets to Canadian markets..Canada borrowing is much tighter than the US,the fact that banks takes in consideration on credit value of the buyer indicated those who bought could afford it.Why do you think a investor would dump a property because of a weak real estate period?..why would they sell in a downturn market if the unit is rented out and all expense is taking care of?.Canada market is driven on job growth and resources.All indicators point to a very soft landing with lower interest rates to soften any downturn.Last time I seen west is booming,the oil patch in the east is going full tilt,the employment rate is strong and the confidence of Canadians are high.Yes USA markets drives the Canadian economy to a point but with our huge resources and our low inflation Canada will not go into a real estate tailspin like the US of A.
 
Caveatemptor,

I couldn't agree more with everything you are saying in your posts- your warnings of buying real estate as an investment right now, your philosophy of buying it to live in (and how even doing that today is OK), etc.

Here's a few tidbits I'd like to add: I currently work with some institutional investors who have an excellent long term track record (who's record would make it one of the best investment shops in Canada.) These folks have recently made north of $1 billion betting that the real estate markets in the U.S. would fall apart. Furthermore, these same people bought commercial real estate in Toronto after the late 80s, early 90s bust. They bought buildings below replacement cost. So they did very well- they have a great track record with real estate. (By the way, they do even better in the securities markets- that is their main focus.) Anyhow, these guys now believe that real estate in Canada is about to drop significantly. Now, they could be wrong about real estate in Canada today (they are not always right) but I can assure you that based on their net worths, they tend to be more right that wrong.

Second, as part of my job, I met one of the smartest and wealthiest real estate families a few years ago. This family's company would be well known to pretty much everyone on this board- they are a big builder of condos and single family homes in the GTA. They told me then that they felt that Toronto real estate was getting overheated and predicted an eventual bust. They did not know when it was going to happen, but they thought it was coming. My guess is that with prices even higher today than a few years back that they'd be more concerned than ever.

One last thing: I have kept stats on the condo market in downtown Toronto- I record every two weeks (using the public MLS site) how many condos are for rent and sale in C1. As of today, there are 1,042 condos listed for sale or rent. That has increased from 627 in Sep 8/07. Anyhow, I know listings are seasonal. But did you know that there are now more listings (for rent and sale) in C1 than there has been since Dec/03? Now perhaps the listings will drop from here and all will be well. But the short-term trend is a bit worrisome.

As Caveatemptor says, I don't wish anyone bad luck in their real estate investments and will not take pleasure in seeing them get hurt and I will very happy to see them do well. And I currently rent my place. But I am renting now because I want to be able to buy my dream place and do it in a very conservative manner. When I am at that point, I will buy a place regardless of the market. If I was at that point today, I would buy now. I will do this because it will be my primary residence.

But, I would not buy now for investment purposes. The time to buy for investment purposes is when almost every single person you know or meet says that real estate is a crappy investment. The time to not buy is when everyone and their sister's cousin is buying real estate (and they are buying because real estate is gone up for the last X years in a row and therefore, by extrapolation, will continue to go up year after year.) This is true for real estate and every other asset class.
 
^Well here's my anecdote: Every flipping bar I go to, cafe, coffee shop etc all the kids are bragging about are their condo purchases, saying what an "amazing investment" and how excited they are.

On the flipside, everytime I mention I'm buying Hamilton real estate, everyone--from caveatemptor to the corner store clerk to the kids bragging about their new condos--says I'm a lunatic!

So thanks for confirming that I am on the right track towards real estate investment success!:)
 
Bigchew said:
Caveatemptor,

"One last thing: I have kept stats on the condo market in downtown Toronto- I record every two weeks (using the public MLS site) how many condos are for rent and sale in C1. As of today, there are 1,042 condos listed for sale or rent. That has increased from 627 in Sep 8/07. Anyhow, I know listings are seasonal. But did you know that there are now more listings (for rent and sale) in C1 than there has been since Dec/03? Now perhaps the listings will drop from here and all will be well. But the short-term trend is a bit worrisome."

Yet I am showing tomorrow on Queens Quay, and there are no rentals available that are 2 bed 2 bath, I missed one at 2700 per month.

Alternate choice now is Blue Jays Way, same kind of money.
There is a strong rental market at $ 2,500 per month that even surprises me, but Companies want a condo for their employees relocation so ....
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Another compounding influence in price stability is the effect of high(er) ratios mortgages. A 20% reduction in prices will lead to a number of people needing to come up with cash quickly in order to renew their mortgages. If the condo market has a higher percentage of these type of mortgages it will face a larger correction.
 
Caveat; I will try to keep my comments to myself. the only comments I can make are based on 19 years of observing the real estate market. Up or down good or bad, it is a fluid, changing marketplace.

Glen; High ratio mortgages where a premium was paid, will not be asked by the lender to pay down any balance that no longer meets the lending guidelines.
Those who borrowed below the original 75% (now 80 % guideline) may indeed be asked for principal reductions, as occured in 90 - 92 on many MURB projects.
 
dpylyp said:
Yet I am showing tomorrow on Queens Quay, and there are no rentals available that are 2 bed 2 bath, I missed one at 2700 per month.

Alternate choice now is Blue Jays Way, same kind of money.
There is a strong rental market at $ 2,500 per month that even surprises me, but Companies want a condo for their employees relocation so ....
Click to expand...



David, since you are a realtor, could you tell us the particulars of the 2 condos you quoted (i.e. sq ft, what would be the price of those 2 units if they were for sale on the market, maintenance fees for said units, realty taxes, etc - yes, i understand renters would not pay the last 2 things but i am inquiring as FYI)?

thanks
 
Inventories continue to rise, especially in houses. Inventory is rising rapidly in the Beach, the area around the Cricket Club and in other areas where friends live.

Condo inventory continues to build in C1, but it does not appear to be rising as fast as the areas mentioned above.

I went to some open houses in the Beach last Saturday and activity was clearly down from last year. My gut says that the second half of April will continue to show declines in home sales.

I was speaking to the President of my company today and he told me that he met someone the other day that bought 14 houses in Durham and put no money down on all 14 houses. The lender was one of those outfits that advertises on the radio but he believed that the Bank of Montreal was financing this company. Interesting.
 
I have a service that allows me to search for articles in all the major news publications so I thought I'd do a search on real estate in Canada in 1989 (when the market last went bust.)

What I found the most interesting is how fast the market turned down. It seems that in just a 2-4 week period, all the buyers went away and sellers flooded the market. It just happened so darn quickly.

What was funny was the Toronto Real Estate Board's reaction and comments when the market started to crack in March/April 1989. They were quite positive and bullish on the market!

If we are in for a repeat of 1989 (or something similar) what we need to see are inventories constantly building and sales declining. I'm keeping track day-to-day and although inventories edge higher, the increases are slowing. It is too soon to call but the next month or two will be very interesting indeed.

For interesting reading, check out torontorealtyblog.com. This fellow's blogs are quite interesting and entertaining. In his last blog, he spoke of an open house where only 1 person showed up!
 
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