cabbagetowner
Active Member
maybe close low to mid teens... wasn't anywhere close to 20% in the 80's.
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Why the housing market is not set to melt down
- Thread starter MADEinHK
- Start date
condoboy
Banned
Guys, from the front lines. Our lender has just projected a 50% decrease in mortgage volume year or year with the elimination of the 0down/40am mtgs combined with the recent economic downturn. With falling demand in every possible sector, people are expected to be let go left and right within the next 3 months in all servicing, tech, financial, manufacturing, and retail sectors but mostly in January after the christmas holidays. I'll really be surprised if real estate doesn't fall 30% by late 2009 in the GTA. Yikes to those who bought a condo recently.... Developers have already started lowering prices and will probably continue to do so next year until they find an equilibrium b/w supply and demand.
haha....this is almost comical...
So all the people waiting in line to get a chance to buy at Emeral recently in North York - we're those people lining up for food stamps...give me a break!
TKTKTK
Senior Member
Careful dude. Just because there are still droves of people willing to buy at the height of the market, doesn't mean there isn't a correction coming. If anything, this kind of sustained hysteria, even in the face of obvious uncertainty, is worrying.
TrickyRicky
Senior Member
Checking my Andex chart the unemployment rate was 6.7% on average in 1989. It peaked out at 11.6% in 1992. Oil was at $10.43 a barrel and peaked out in 1990 at $40.65 before dropping back into the 10-11 dollar range. The recession officially lasted for 6 quarters starting in quarter 2 of 1990. Olympia and York went bankrupt in the 2nd quarter of 1992. In fall 1993 the Mulroney Conservatives who where in power went from 169 seats to 2.
Every downturn has it's unique details and circumstances but it is likely that we are in the same boat as people were in the 3rd or 4th quarter of 1989. The details change but the general patterns are the same. I'm not stating these as predictions but use them as guidelines for what did happen and therefore could happen to us again. Keep in mind that the markets are dropping faster and harder than in 1989, signaling that for many conditions will be worst this time around:
-Official recession starts 2nd quarter 2009, lasts into 2010
-unemployment exceeds 10 percent by 2011
-Complete construction freeze with major developers going under by 2011
-Oil drops to $40 a barrel, does not recover for a decade
-Liberal government sweeps to power in 2012
Perhaps none of these things will come to pass. However, the one thing to note is how long it takes for the general economic malaise to occur. The resilience and "fundamentals" of the economy get erroded away. For mainstreet the real pain is still more than a year away.
Every downturn has it's unique details and circumstances but it is likely that we are in the same boat as people were in the 3rd or 4th quarter of 1989. The details change but the general patterns are the same. I'm not stating these as predictions but use them as guidelines for what did happen and therefore could happen to us again. Keep in mind that the markets are dropping faster and harder than in 1989, signaling that for many conditions will be worst this time around:
-Official recession starts 2nd quarter 2009, lasts into 2010
-unemployment exceeds 10 percent by 2011
-Complete construction freeze with major developers going under by 2011
-Oil drops to $40 a barrel, does not recover for a decade
-Liberal government sweeps to power in 2012
Perhaps none of these things will come to pass. However, the one thing to note is how long it takes for the general economic malaise to occur. The resilience and "fundamentals" of the economy get erroded away. For mainstreet the real pain is still more than a year away.
MBS-Guru
Active Member
you don't know what you don't know ...... wait until you see the sales stats for October/November. Lender pipeline volume has dwindled down to almost 4/10ths of last years apps in the past month. I've had RE agents putting a positive spin on how strong sales are, yet i have trustworthy brokers who are crying and complaining that the market has fallen off the cliff. Someone is lying through their teeth and you know who that is ...... when you have hundreds of thousands of money riding on something, you're beliefs and judgement becomes distorted. I remember going down to Florida two years ago in early 2007 and meeting some investors who were still adamant that the market was only softening by 6-7% and will pick up again. You tell them some fundamental problems with the market and they'll go on and on about how there are so many international investors and the demand for their locations that it will never go down ........ now we know.
Roy G Biv
Senior Member
Again, compare recent growth in Florida to Toronto.
My house's value was appreciating, on average, 4%/year since the mid 90's.
My house's value was appreciating, on average, 4%/year since the mid 90's.
condoboy
Banned
Please Guru...compare apples to apples not apples to zuchinis....take a look at the appreciation rate in Florida over the last 5 or 6 years up until last years and then compare Toronto's appreciation rate over the same time period. We don't even come close! I'm not saying that we're totally immune, and there will be some depreciation but come on - Florida??? Get real!
cdr108
Senior Member
Yes, compare apples to apples - so why do you compare Toronto RE prices to NYC, Paris, London, Rome. Dubai, Singapore, Hong Kong, etc.
Quanttrader
Banned
Florida v. Toronto
Lots of flippers in both markets. Way more supply in Toronto, but cheaper prices at the peak so we'll only fall 20%-30% vs. 50%-60% in Florida. As it should be- our weather stinks, we're not a vacation spot, and we're not on the ocean.
Lots of flippers in both markets. Way more supply in Toronto, but cheaper prices at the peak so we'll only fall 20%-30% vs. 50%-60% in Florida. As it should be- our weather stinks, we're not a vacation spot, and we're not on the ocean.
lowesthangingfruit
Active Member
No, but maybe they're the same ppl that were lining up to buy oil at $150/bbl when everyone else is saying how $200 was only a few weeks off.
The point is, a condo is just another commodity. The market doesn't care what you paid for it. It'll simply rise and fall just like any other commodity based on supply and demand fundamentals and speculative money moving in and out.
I am really curious condo boy, what set of circumstances would have to occur for you personally to think that perhaps a 20-30% downturn is possible ??
cabbagetowner
Active Member
reinstate 0 down mortgages, lending standards loosen up, sub prime mort. goes through the roof, 1 in 6 houses goes into foreclosure...
that's a start. it's not going to happen.
Dichotomy
Banned
None of that matters if the money pipeline is drying up - and it is drying up. Lenders who would turn a blind eye to a couple R9s on a credit report a year ago won't touch that person today.
What if, say, 10% (and yes, I am pulling this number out of my ass) of the people who had plunked down their $40k deposit didn't have gold credit a year ago when they plunked down that deposit? What if they can't get financing upon closing because of that? Then throw in another 5% who are about to lose their jobs over the next year and we will see what kind of a melt down we end up with.
I personally know of several people who have lost a lot of money in their mutual funds over the past few months - these 'cash rich' buyers are not in the market for anything today. That's going to have serious consequences for the retail sector on down.
I am not predicting doomsday yet, but if the Malls don't start to fill up next month, 2nd quarter of '09 is going to be nasty.
casaguy
Senior Member
I pray this doesn't happen here. These buildings in Vancouver look to be about halfway complete.
----------------
Cash crunch halts B.C. condo project
LORI MCLEOD
REAL ESTATE REPORTER
October 17, 2008
The Globe and Mail
The U.S. financial crisis has put the squeeze on another Canadian condominium development whose financing has run out following the collapse of investment bank Lehman Brothers Inc. This time a five-tower development in Surrey, B.C., is searching for new funds one month after its major financier, Lehman, filed for bankruptcy protection.
Construction is halted at the project, The Infinity at Central City, which applied for protection from its creditors this week.
The development gained widespread attention in 2005 when the relatively low-priced units in its first tower, now completed and occupied, sold out in seven hours.
Now, it's a much different market for South Korean businessman Hee Yong Yang, who took over as developer last year. He's trying to woo new partners to complete the two buildings currently under construction.
"Unfortunately, along with many other reputable developers, Mr. Yang has been adversely impacted by ... worldwide tightening in the credit and financial markets," said lawyer Robert Millar of Fasken Martineau DuMoulin LLP, who is helping lead the refinancing effort.
The most likely scenarios are that a developer will fill Lehman's shoes with some kind of premiums paid or discount offered, or the project will be subject to a full-out sale process, Mr. Millar said.
Earlier in the month, developer Bazis International Inc., which also counted Lehman as a partner, said it had managed to secure a new financing arrangement for its $450-million luxury condo project in downtown Toronto.
While Kazakhstan-based Bazis found its new partners in Europe, the Surrey project has apparently garnered some interest from unnamed local developers.
Unlike some other projects that have run into trouble in Vancouver, Infinity is on time, on budget, and has a large number of reported pre-sales, which could help it find new funding, Mr. Millar said.
If Infinity isn't as fortunate, buyers' deposits are protected and will be returned to them, Mr. Millar said.
While Mr. Millar hasn't heard of any other development projects in Vancouver hitting the financing wall at this time, it wouldn't be surprising, he said.
Things will be even tougher for coming developments, whose funding options were becoming scarce well before Lehman's collapse, he said.
Mr. Millar added that a number of his clients have pulled projects in recent months.
----------------
Cash crunch halts B.C. condo project
LORI MCLEOD
REAL ESTATE REPORTER
October 17, 2008
The Globe and Mail
The U.S. financial crisis has put the squeeze on another Canadian condominium development whose financing has run out following the collapse of investment bank Lehman Brothers Inc. This time a five-tower development in Surrey, B.C., is searching for new funds one month after its major financier, Lehman, filed for bankruptcy protection.
Construction is halted at the project, The Infinity at Central City, which applied for protection from its creditors this week.
The development gained widespread attention in 2005 when the relatively low-priced units in its first tower, now completed and occupied, sold out in seven hours.
Now, it's a much different market for South Korean businessman Hee Yong Yang, who took over as developer last year. He's trying to woo new partners to complete the two buildings currently under construction.
"Unfortunately, along with many other reputable developers, Mr. Yang has been adversely impacted by ... worldwide tightening in the credit and financial markets," said lawyer Robert Millar of Fasken Martineau DuMoulin LLP, who is helping lead the refinancing effort.
The most likely scenarios are that a developer will fill Lehman's shoes with some kind of premiums paid or discount offered, or the project will be subject to a full-out sale process, Mr. Millar said.
Earlier in the month, developer Bazis International Inc., which also counted Lehman as a partner, said it had managed to secure a new financing arrangement for its $450-million luxury condo project in downtown Toronto.
While Kazakhstan-based Bazis found its new partners in Europe, the Surrey project has apparently garnered some interest from unnamed local developers.
Unlike some other projects that have run into trouble in Vancouver, Infinity is on time, on budget, and has a large number of reported pre-sales, which could help it find new funding, Mr. Millar said.
If Infinity isn't as fortunate, buyers' deposits are protected and will be returned to them, Mr. Millar said.
While Mr. Millar hasn't heard of any other development projects in Vancouver hitting the financing wall at this time, it wouldn't be surprising, he said.
Things will be even tougher for coming developments, whose funding options were becoming scarce well before Lehman's collapse, he said.
Mr. Millar added that a number of his clients have pulled projects in recent months.
condoboy
Banned
Well I'm not an expert or anything but 3 or more consecutive years of double digit apprecitation is what is needed for a correction. However we are talking about a province that just had an increase of 106,000 jobs last month. If we see people losing their jobs (of which I don't know any yet), paycuts, energy sector tanking, hyper-inflation, governments refusal to support manufacturing, immigration/population (either government policy or willingness) decreases, major consumer indebtedness (as in the U.S.), then we can talk about a major correction! However, all of these factors (of which I'm not an economist) and more need to happen in order for the "Perfect Storm"...the one that is currently plaguing the U.S. I'm not saying it's not possible buy highly unlikely. For every article predicting the same U.S. doomsday scenario in Canada, I can find you another one that says that our economy is much stronger. I predict that one day, not long from now...people (economists and governments) will be looking to Canada as an example of how to sustain an economy in worldwide economic downturn. However many factors contribute to our situation such as our conservative spending approach, and diversification in the markets such as Mutual Funds, our strong financial sector especially in Toronto, and our banking system (which has been rated tops in the world) recently. Basically all I am saying is that yes there will be some tough times ahead, but our fundamentals is what is keeping our economy strong and shielding us from the disaster that is taking place down south. Positive thoughts = positive outcomes. I wish everyone in this country only the best!
TKTKTK
Senior Member
According to what? Do you mean 3 more years of double-digit appreciation to come? Are you really suggesting that Toronto real estate prices are that low?
Yes, but only 10,000 of those were full-time. Most people have correctly attributed the giant uptick to temporary election-related part-time positions.
No one is suggesting that what's happening in the states is going to happen here. But that doesn't mean we won't have our own, more modest, correction.
Really? Because it keeps sounding as if you think we're still heading up.