Is there a housing Bubble in the GTA!!!
- Thread starter MYSITEONLY
- Start date
Caledon Chambre of Commerce & Brampton Board of Trade have a RE program that compiles TREB data with other stats such as with the Land Registry, etc...
there could be a few reasons why the data differs.
1. could be the reduction in buiding permits issued- this alongside the restricted development allowed in Caledon signifies harsh economic conditions... one would think that by restricting development would increase market activity, but not in a climate where the average home price is above $500k and the drive to the city center is still above 45minutes...
2. the average caledon home is a detached bungalow on a
+1 acre lot, so it sways the data a little bit to a longer DOM than what the TREB data might show... just a guess.
i am most certain if i used Bolton stats, which is what TREB uses as the majority weighting in what represents Caledon... IMO, Bolton is it's own town... but, if it included their figures, it would show closer to the TREB's data of around 100 days.
either way, the days of 4 DOM aren't common in either territory.
there could be a few reasons why the data differs.
1. could be the reduction in buiding permits issued- this alongside the restricted development allowed in Caledon signifies harsh economic conditions... one would think that by restricting development would increase market activity, but not in a climate where the average home price is above $500k and the drive to the city center is still above 45minutes...
2. the average caledon home is a detached bungalow on a
+1 acre lot, so it sways the data a little bit to a longer DOM than what the TREB data might show... just a guess.
i am most certain if i used Bolton stats, which is what TREB uses as the majority weighting in what represents Caledon... IMO, Bolton is it's own town... but, if it included their figures, it would show closer to the TREB's data of around 100 days.
either way, the days of 4 DOM aren't common in either territory.
Large parts of Caledon are part of the Oak Ridges Moraine, which has a building freeze on new sub-divisions. It therefore is a highly sought after area actually. The problem is that in the last 2-3 years it has gotten out of control. There were quite a few nice 3000 sqft houses that were listed for 1.2 to 1.8 million. They just don't sell anymore like they did last year. Prices are coming back down to earth in Caledon.
Good to know. There was another thread on here where some guy said "time to do bargain shopping" because he thought POS's would go up, and I sort of roasted him on it. What you are saying is an extension of that really - if you are going to invest in these conditions, there is still a lot of money to be made, but you have to be so careful in what you do. Investing in, or buying ANY house, is no longer a sure bet - so let him go bargain shopping anywhere, he'll lose his shirt.
While I don't know Caledon that well, I would never invest in it based on what you are saying. Forget the commute to the city aspect (which I agree with), it's the fact that its a 1 acre lot and an average price of $500k. No wonder they would be on the market for so long. The houses there are tailored to such a small and specific market of people.
The best investment houses will always be 25-year old houses, three bedrooms, two baths, working-class areas (both white and blue collar), in self-contained city-centres (i.e. have malls, good schools, civic facilities and the occasional MP for the hobbyist of course). There are two reasons. First, in a market frenzy these don't go up as much because they are not as glamourous as the newer developments, so when things crash, they don't have as far to go. Second, and more important, there is more likely to be a market for these houses in most any economy. I'm not saying that the market for this type of house will not soften, but it will not soften as much as those specialized one-acres in Caledon. Also, if purchased at the right time (at the lower-end of a correction) they would make very good rentals. I, however, would never be able to claim to know when to time purchases like this.
Ultimately what your analysis shows is that certain areas remain viable and others are in the toilet already. Moreover, when looking at TREB data, it is important to remember that they produce AVERAGES. I have already instructed my broker to focus on micro-areas, as opposed to entire sections of the market.
While I don't know Caledon that well, I would never invest in it based on what you are saying. Forget the commute to the city aspect (which I agree with), it's the fact that its a 1 acre lot and an average price of $500k. No wonder they would be on the market for so long. The houses there are tailored to such a small and specific market of people.
The best investment houses will always be 25-year old houses, three bedrooms, two baths, working-class areas (both white and blue collar), in self-contained city-centres (i.e. have malls, good schools, civic facilities and the occasional MP for the hobbyist of course). There are two reasons. First, in a market frenzy these don't go up as much because they are not as glamourous as the newer developments, so when things crash, they don't have as far to go. Second, and more important, there is more likely to be a market for these houses in most any economy. I'm not saying that the market for this type of house will not soften, but it will not soften as much as those specialized one-acres in Caledon. Also, if purchased at the right time (at the lower-end of a correction) they would make very good rentals. I, however, would never be able to claim to know when to time purchases like this.
Ultimately what your analysis shows is that certain areas remain viable and others are in the toilet already. Moreover, when looking at TREB data, it is important to remember that they produce AVERAGES. I have already instructed my broker to focus on micro-areas, as opposed to entire sections of the market.
Its a possibility that bubble is building up in GTA, but when it may burst it is not exactly known, it all depends on the interest rate and cost of borrowing and required Down payments etc. recently the Government of harper was concerned about this since the report came up latley that Real estate prices was up almost 19% in the last quarter of 2009 in GTA. That is definitly a big news for the economy that still strugling to get unemployment under control. The government answer to this is, increasing the interst rate and cost of borrwoing my send the wrong signal to the market and it may effect the sale of all real estate new and exitsting across the country and send the housing cost through the roof when people strugling from pay cheque to pay chaeque and hardly holding to their jobs due to the general slow in the economy. Instead the government suggested that an increase in the down payment requirement and the reduction of amortization of mortgare, I.E. 5% down may not be good enough any more and 40 years amortization will be gone and reduced to lower leverl. I think such action will slow the buying activity but will not effect the prices and existing mortgage holders payments in the long run. If the bubble may bursts signs will show up in the economy where more FOR SALES, FOR RENT, FOR LEASE shows up on every corner. According to a chart in my hand foreclosures is on the rise, it doubled in 2009 over 2008 and its projected tol continue to rise in 2010 but at slwoer pase from 2009 and it may increase by 25% over 2009 levels. So far these are not serious signs of a bubble but its a concern and the situation should not be taken for granted and it should be watched very closley by those who are interested in owning properties or selling them. On other hand there are lot of liquidity in the system and there are many lenders ready to finance real estate deals up to 100% for qualifying clients, which shows that the confidence still strong on real estate investments due to a sustanable lower interest rate and there are signs that it will not go higher in a short time.
Pro007
Pro007
to be honest with you, I have found many price reductions in various areas between July 2008 and September 2009.
In my area of knowledge, i was able to buy a century home in georgetown for under $200k and just recently another home in Caledon East for under $250k on a 1acre lot... my neighbours houses are all over $1mil. yeah, it's a piece of shit, but will only take $400k to bring it up and ahead of anything my neighbours have... though, I am electing to renovate conservatively and bring it up to about a $600k appraisal value by investing only $130k... should be done by June.
In my area of knowledge, i was able to buy a century home in georgetown for under $200k and just recently another home in Caledon East for under $250k on a 1acre lot... my neighbours houses are all over $1mil. yeah, it's a piece of shit, but will only take $400k to bring it up and ahead of anything my neighbours have... though, I am electing to renovate conservatively and bring it up to about a $600k appraisal value by investing only $130k... should be done by June.
in my area, a townhouse goes for over $400K. its really inflated. looking to buy my first place by the end of this year or in 2011. probably will need to leave my area.
Compared to most "World Class" cities Toronto's real estate is a deal... London, San Fran.... Beijing or Shanghai ....
Regardless of whether you think that there is a housing bubble or not, the Government of Ontario and GOC is going to DEVALUE the price of your home!!
http://www.theglobeandmail.com/repo...e-with-mortgages-report-finds/article1430801/
http://www.theglobeandmail.com/repo...e-with-mortgages-report-finds/article1430801/
"Canada's Finance Minister Jim Flaherty has said that an overheating housing market poses a threat to the economic recovery, with resale prices up 20 per cent in the last year as low interest rates fuel a boom.
He said the government may consider raising the minimum down payment from 5 per cent to “something higher” and shorten the amount of time a mortgage can be amortized. "
And how, pray tell, does this devalue the prices of our houses? I think that canada woudl be protecting the ineterests of the borrowers in not biting off more than they can chew. That was one reason for the economic crisis, wasn't it, the greed of bankers and investors who pushed the limits too far?
Also, I did not see any reference to the Province on that site.
