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Will GTA house prices go down?

urbandreamer said:
The average sale price for a home in the City of Toronto last month increased by just $298 over the same period last year.
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Now that is really close to 0 to negative percentage territory.

““This may be due to that fact that there is now more choice available to homebuyers; there are currently 26,543 active listings, a 28 per cent increase from a year ago.â€
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From 25% increase in inventory to 28% in 2 weeks, that is quick.
When the many large condo developments are completed, inventory will rise even faster.
 
Still if 14,000-18,000 condos are being sold yearly, it means the market is very stable.
 
Thanks John for posting the link to your blog. It's interesting to note the huge decline in Forest Hill, which is what I was expecting. Many of the flipper's are getting burned there, sitting on properties that simply aren't selling. About time, as most of the homes they're trying to flip are truly fugly!
 
rampant unsustainable double digit growth year after year is not a sign of a healthy real estate market. better to have a soft market for a while instead of a crash. in the end, some speculators may take a hair cut and affordability will increase... all good news in the long term.
 
Things are definitely slowing down. Two homes in my 'hood, that would have been snapped up even a few months ago, have been on the market for over a month now. And, one of them even has off-street parking, a rarity here in Swansea.
 
urbandreamer said:
Thanks John for posting the link to your blog. It's interesting to note the huge decline in Forest Hill, which is what I was expecting. Many of the flipper's are getting burned there, sitting on properties that simply aren't selling. About time, as most of the homes they're trying to flip are truly fugly!
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You can't read too much into those area by area declines because of the limited number of transactions in each. In my experience there aren't a lot of flippers in Forest Hill at all. It's virtually all people looking for permanent residences and perhaps a few spec builders. Maybe it's the spec builders (not uncommon in high end neighborhoods like Forest Hill) who are feeling the pinch. I wouldn't characterize a reputable builder who holds out until completion to sell as a 'flipper' if that's the case. They probably should have hedged their bets by forward-selling but sometimes it's tough to do when you can't completely control your costs.

I think the great weakness in the south-of-401 central corridor will be felt in new condo sales. The speculative buyers have just evaporated from what I'm told.
 
What's with the saggy old west end? Frisky Riverdale continues to roar ahead at a 12% increase - woo-hoo! Our poverty taxes will go through the roof next year, unfortunately.
 
cabbagetowner, I think your post generates an interesting question, is it actually better for there to be a soft protracted landing or a hard crash in the long term? I'm actually uncertain either way.

As for house prices, the bust cycle seems to be progressing in clockwork textbook fashion. It is amazing how difficult it is to determine where we stand from the perspective of the now. I think that is why there are still so many willing to deny or rationalize away what will seem to be the obvious in retrospect 5 years from now.
 
My prediction - 35% off today's prices within 5 years, if not sooner.

History is a good teacher, if you're willing to learn.
 
Housing market rebounds, Ontario leads way

Click on this link to Reuters Canada:

Housing market rebounds, Ontario leads way
Tue Sep 9, 2008 1:01pm EDT

By Frank Pingue

TORONTO (Reuters) - Housing starts rebounded in August, beating expectations, but some economists cautioned against reading too much into the number since it followed a weak reading in July.

Housing starts rose 13 percent in August to a seasonally adjusted annualized rate of 211,000 units from 186,500 units in July, Canada Mortgage and Housing Corp said on Tuesday.

The bulk of the overall gain, which topped the consensus analysts' expectation for 195,000 starts, was in Ontario, where there was an 81 percent jump.

Government-owned CMHC attributed the surge to multiple-unit starts, which shot up 25.2 percent to 114,700 units following a 20.2 percent slide in July.

Starts on urban single-family residences rose 2 percent to an annual rate of 71,200 units, while rural starts in August were estimated at an annual rate of 25,100 units, unchanged from July.

"After a brief pause in July, the volatile multiple segment bounced back to a level of activity that is more consistent with our forecast for this year," Bob Dugan, chief economist at CMHC, said in a statement.

The data contrasts with the state of the housing market in the United States, which has been hit by a crisis that began in the subprime mortgage sector and spread across other sectors of the market and the broader economy.

But some experts were quick to suggest that since the bounce back in housing starts followed weakness, it does not mean that housing activity in Canada is buoyant.

"It should be taken for what it is - a snapback from a previously large decline," Charmaine Buskas, senior economics strategist at TD Securities, wrote in a note.

"The Canadian housing market does have some headwinds that will bring down activity in the next couple quarters, which suggests a softer trend in the housing market and a smaller contribution to growth."

The Canadian dollar showed little reaction to the data but eventually relinquished gains recorded earlier and headed lower along with oil prices.

The rise in housing starts is in keeping with data released earlier this week that showed the value of Canadian building permits rose unexpectedly in July from June, led by a rise in projects to build multifamily housing.

"MORE DOWNWARD PRESSURE"

Housing starts in Ontario, Canada's most populous province, shot up to 86,500 in August.

But starts fell in all other regions, including a 8 percent slide in British Columbia to 30,400, and a 22.5 percent drop in the Prairie region to 23,700.

Starts fell by 8.7 percent to 37,600 in Quebec and by 11.5 percent in the Prairies to 23,700.

"Canadian residential construction activity has held steady since 2003 thanks to strong multiple-unit starts and strength in Western Canada," Robert Kavcic, an economic analyst at BMO Capital Markets wrote in a note.

"However, with that region slowing and other factors - job losses, declining confidence - pointing to further housing market weakness, expect more downward pressure on housing in the coming quarters."
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