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Toronto's condo market booms

urbandreamer said:
They are indeed! The guys behind Neptune/Murano/22 etc have a huge ad screaming $10,000 cash back. Hilarious.

Meanwhile, I've noticed the Globe's resale housing classified section has ballooned from 1 page to 2.5 in recent weeks--a sign that market is building with inventory?
Click to expand...

The deals are coming! The deals are coming!
One bad thing about condos. Take an empty gas station lot and you can build 3 or 4 townhouses...or ...build a condo high rise and build 300 units or more. Get past City Hall's planning dept. and the local outraged neighbourhood association and your off to the races. The sky truly is the limit. Once again the highrise condo's dirty little secret is about to expose itself. Maybe history does not repeat but it sure does rhyme.
Can you spell "Glut",? Ah! I thought you could! Have a cookie!
 
APM said:
listings are now falling at a rapid rate, as are rentals. Beach listings are now starting to fall.....Looks like the "weather" exuse was perhaps more accurate than some of us thought (including me!)

So...still too early to call.
Click to expand...

Does that mean for a person that is looking to buy a condo at C1 it would be smart to wait?
Thanks[/QUOTE]

I have been following this thread for a bit, including, if I may say so, quite dubious statistics of unknown origin.

TREB published the monthly stats today for April, and I took the opportunity to compile the following figures for resale condo. apartments in the C01 region which seems to be under discussion here.

(C01 is from Yonge St. to Dufferin St., south of Bloor St.)

Month / Active Listings (end of mo.) / Sales volume / Median price

Nov. 07 443 283 $307,500
Dec. 07 378 180 $300,200
Jan. 08 418 194 $310,500
Feb. 08 480 192 $302,750
Mar. 08 503 239 $325,000
Apr. 08 585 271 $312,000

Looks like a perfectly normal spring market under way, with normal rising inventory of listings and volume of sales.

I can't comment much on the new construction market. It tends to swing more widely, at any time, and statistics are harder to come by. Anecdotal evidence which I am hearing indicates possibly some slowdown, but that will have to come sooner or later anyway. It will almost certainlyaffect less desirable locations first, and the downtown little or not at all.
 
GTA resale housing market moderate in April, but prices up

TORONTO, May 5, 2008 -- With 8,762 houses sold in the Greater Toronto Area, April’s resale housing activity was down seven per cent from the record 9,452 transactions from the same timeframe a year ago, Toronto Real Estate Board President Maureen O’Neill announced today.


“The market is showing signs for a healthy 2008 compared to the diminished activity we saw in the first quarter of the year,†said Ms. O’Neill. “We continue to experience a supply and demand situation and to-date, it remains a sellers market."


Sales activity however, was markedly different in the 416 and 905 regions. With 3,467
transactions in the City of Toronto, sales were down 10 per cent from a year ago. The 905
region was down five per cent from April 2007 sales, with 5,295 homes changing hands.


April’s GTA average price was $398,687, up eight per cent from the same period a year ago. In the City of Toronto, the average price was $446,781, up six per cent from last April. In the 905 region the average price increased five per cent compared to a year ago, to $367,196.


Several neighbourhoods experienced strong sales in April.


Scarborough East (E08) saw an eight per cent overall sales increase compared to April 2007, driven by robust detached home sales.


Caledon (W28) experienced a 15 per cent increase compared to the same timeframe a year ago as a result of strong condominium sales.


Condominium sales also drove Willowdale (C07) to a 32 per cent increase from a year ago.
In Thornhill sales increased eight per cent from last April due to strong detached home sales.


“The number of listings on the Toronto Real Estate Board’s Multiple Listing Service has increased to 24,539, up seven per cent from a year ago, which is good for homebuyers, who will find a greater range of options in the market,†said Ms. O’Neill. “With prices continuing to appreciate and increased listing inventory there are favourable factors in today’s mrket for consumers.â€
 
[


“The number of listings on the Toronto Real Estate Board’s Multiple Listing Service has increased to 24,539, up seven per cent from a year ago, which is good for homebuyers, who will find a greater range of options in the market,†said Ms. O’Neill. “With prices continuing to appreciate and increased listing inventory there are favourable factors in today’s market for consumers.â€[/QUOTE]

I Love it!! Ya..Right.
What a lovely spin on commenting on a market rapidly heading south.
Run for Toronto Mayor, Ms. O'Neill. I'll vote for you! (mind you at this point, I would vote for a smiling chimp)
 
Granted that the press releases from TREB always contain a certain amount of "spin". I have smiled at the occasional statement from them, including, in this most recent release, a statement that Caledon has shown strong performance because of an increase in condo sales. There are very few condos in Caledon, and not one sale of a condo took place in Caledon during April! Whoever wrote that was a bit confused to put it mildly. :rolleyes:

That said, I also smile, or alternatively grind my teeth, at the "doom and gloom" preached by an increasing number of people, including some on this forum, with no real basis of support. Sales volumes are declining this year, as compared to last year. Last year was a record, by far. To step back and give a bit of perspective: if last year's total sales volume (93,193) were to decline by 10%, this year, the resulting total would still represent the second-best year on record.

On top of that, there has not been a decline in prices. We are simply seeing a slowing in the rate of increase. This result in ... increased affordability. Surely that's a good thing???

Folks, the "overheated" market that everyone was discussing two or three years ago appears to be finally slowing down to a more "normal" situation. That's not bad. Not a reason at all for the doom and gloom bandwagon that very strangely seems to be gathering speed among some.
 
Is there a rocky road ahead?
TheStar.com - YourHome - Is there a rocky road ahead?

Slowing economy starts to take toll as mortgage defaults rise in regions of Ontario and Quebec

May 07, 2008
Ellen Roseman

Canada's slowing economy is starting to take a toll on homeowners.

"Defaults are rising in certain parts of the country," said Peter Vukanovich, president of Genworth Financial Canada, which insures mortgages against default.

Which parts of the country?

"Here in Ontario and in Quebec," he replied.

The Canadian real estate market is healthier than in the United States, where prices are falling and many homeowners are facing foreclosure.

Still, there's a concern that some homeowners in Canada may not keep up their mortgage payments if they lose their jobs.

"We're monitoring losses and making sure the lending is responsible," Vukanovich said.

Homebuyers are required to buy mortgage insurance if their down payment is less than 20 per cent of the purchase price.

Mortgage insurance protects lenders when borrowers fall behind and properties have to be sold at a loss.

Canada Mortgage and Housing Corp., a federally owned Crown corporation, is the largest provider.

Genworth, owned by General Electric Co., is the largest private-sector mortgage insurer.

In its 2006 budget, the federal government opened the mortgage insurance market to more competition.

With competition came innovation. Mortgage insurance providers started underwriting loans with no down payments and with amortizations of up to 40 years.

"The longer amortizations and the 100 per cent loan-to-value products have been relatively popular," Vukanovich said.

But what if Canada's economy flattens out? How will this affect highly leveraged buyers?

It's not only CMHC, Genworth and other mortgage insurers on the hook if there's a rash of defaults.

Taxpayers will also be liable for losses.

Few people know that Ottawa guarantees 100 per cent of CMHC-insured mortgages and 90 per cent of privately insured mortgages (up to $200 billion).

Because of the federal guarantee, mortgage insurers don't have to carry capital on their books to match their potential risks.

In recent months, the finance department has been holding secret talks with mortgage industry players.

"We consult on a regular basis on a wide variety of issues," said a finance spokesperson.

While Ottawa won't confirm the discussions, mortgage lenders know they're going on.

"The degree of risk that's involved with 40-year mortgages and no down payments is certainly of some concern to the finance department," said Don Drummond, chief economist with TD Bank Financial Group.

"It definitely creates a riskier environment."

Here's how the risk could play out.

Suppose you bought a home in the Toronto area last year, borrowing the whole purchase price and opting for a 40-year payback. Your mortgage insurance premium added another 3.5 per cent to the loan amount.

Suddenly, you lose your job or have your hours cut back. Or this happens to your spouse.

Within a few months, you can no longer cover mortgage payments.

You think about selling. But you can't make money because you have no equity and 99.9 per cent of your payments are interest, not mortgage principal.

So, you wait for the lender to take over your house under a power of sale.

Our mortgage lenders are strict about checking credit scores and making sure borrowers don't take on too much debt.

But there's a sky-high bill to shoulder if a slowing economy results in mortgage defaults.

It's time for Ottawa to talk openly about cutting back its mortgage insurance guarantee to adapt to a climate of looser lending.

Ellen Roseman's column appears Wednesday, Saturday and Sunday
 
Anyone wanna give me a 1000 year mortgage? I'll put .01 down.

Waiting for the Toronto real estate market to crash is like waiting for google to crash: you know it'll happen eventually, but how many fools will lose their butts making dumb calls before it happens?
 
Flaherty Says Long-Term Mortgages May Become Concern (Update1)

By Theophilos Argitis

May 7 (Bloomberg) -- Canadian Finance Minister Jim Flaherty said he's ``monitoring'' a growing tendency by homeowners to take on longer-term mortgages and use smaller down payments, and indicated the trend may become a concern.

The government has discussed the issue with mortgage insurers as part of the normal monitoring of the industry, Flaherty said in an interview today in Ottawa. So far, the country's housing market remains ``sound,'' he said.

``We have noticed of course there is a tendency now, and recently, to longer amortizations and smaller down payments,'' Flaherty said. ``It's something we're watching. It could become a concern over time.''

GE Money, a unit of General Electric Co., began offering 40-year mortgages in the country in 2006 and other lenders have followed suit. Mortgages in Canada have traditionally been limited to 25 years. Homebuyers with a 40-year mortgage make lower monthly payments, yet pay more interest over the term of the loan.

The Canadian subprime-mortgage market remains small, accounting for about 5 percent of the country's residential mortgages, compared with more than 30 percent in the U.S., Toronto-Dominion Bank said in a report last month.

In an interview April 23, Flaherty said he's monitoring the market to ensure Canada doesn't experience the same problems as the U.S.

``We don't want to go down the subprime path so we have to watch our housing market carefully,'' Flaherty said in New York.

Avoid U.S. Problems

Canadian home prices have largely escaped the slump that's hurt the U.S. because of income growth stemming from strong employment and rising commodity prices, the Bank of Canada said in an April 24 report. While price growth will moderate, there are few signs of excess housing supply, it said.

Canada is among the world's largest exporters of natural gas, oil, nickel, fertilizer and wheat, helping offset a manufacturing slump. U.S. housing starts declined 25 percent last year, while starts in Canada increased 0.4 percent.

While Canadian existing home sales will tumble 12 percent this year after touching a record in 2007, the Canadian Real Estate Association said yesterday average home prices will continue to rise 5.3 percent in 2008 and 4.2 percent in 2009.

``Certainly our housing market is quite different than the American housing market,'' Flaherty said today. ``Subprime mortgages are a relatively quite small part of the Canadian market.''

Flaherty said monitoring the mortgage insurance business is ``contemporaneous'' with a broader review of the country's financial industry.

Canada is increasing oversight of financial services after banks posted combined investment losses and writedowns of C$7.5 billion ($7.43 billion), and C$32 billion in the commercial paper market froze up.
 
Hey Guys,
I have heard that historically, when there is a slow down in local real estate markets, condos hold their value a while longer than homes. This could be due to the fact that as people rush to sell their homes they need downsize to something smaller/ less expensive (ie a condo) helping hold the condo market up longer than the single family market. However, only time will tell as we have never had such a high ratio of condos to homes in Toronto. What do you think?
Best-
David.
 
condos hold their value a while longer than homes.
Click to expand...

I would think it is just the opposite....condos are inherently more speculative than freehold homes...

btw, everywhere I look the last week or so, the market seems pretty active, at least in Mississauga...houses get listed, and seem to sell within a few days...there may be some life left in the market yet...:)
 
Square foot Values

I'm convinced that condo values are topping out. But to be totally honest I have predicted that for the last 3 years running. This time there are too many ominous signs. Wait a minute.. I said that last year too..
Really the best advise I was ever given was to forget to time the market and buy in the best location possible (even if it means downsizing your expectations). If its an area you have always dreamed of living in, you can be sure there will always be many others with the same dream.

And speaking of desirable places to live..

Has anybody seen any stats lately on average square square foot value comparisons in major centres compared to ours.
..Places such as Vancouver, Montreal, New York, Kamloops?
I am getting the impression lately that we seem to be running around the 550 to 565 per squre foot average. Nothing much lower than these valuations from what I'm seeing.
 
Granny said:
Has anybody seen any stats lately on average square square foot value comparisons in major centres compared to ours.
..Places such as Vancouver, Montreal, New York, Kamloops?
I am getting the impression lately that we seem to be running around the 550 to 565 per squre foot average. Nothing much lower than these valuations from what I'm seeing.
Click to expand...

550-560 per sqft?! for a new sale/upper-class project in downtown maybe.

But average resale for an average building in downtown still hovers around 430-450 per sqft
 
Price adjustments: Keep in mind that prior the the drop in prices around 1989 prices had risen 168% over the 5 years previous whereas current prices are 90% higher over an 11 year period. Any adjustment shouldn't be as bad as the previous one.
 
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