Real Estate Bubble?

[Keebler Elf]

Hopefully there are people with some professional real estate knowledge on TERB.

Is there a bubble and is it going to burst anytime soon? Yeah, yeah, crystal balls and all that stuff. But is the talk just something for the media to report about or is it real?

Is it worth buying a condo now, or is it better to wait say 2-5 years?

 

[red]

the real estate bubble will burst next week. it was decided by HH

 

[n_v]

Bubble has started to burst

 

[Shades]

Probably not really bursting as much as shifting:
From large homes to condos, from suburbs to downtown, from Toronto to places like Grey County or Prince Edward County.

 

[LateComer]

I don't forsee a bubble like the late 80's/early 90's. Believe it or not, housing is still more affordable now than it was back then. Interest rates would have to go up 5% or more to duplicate the late 80's scenario. There is also less speculation now.

Furthermore, by world standards, Toronto condo prices are still quite low. Downtown condos average $330 sq/ft. Try finding something (anything) for that price in Boston, San Fran or Chicago. This does not mean that Toronto condo prices will go up to match, say, Boston prices anytime soon. A large number of condos are coming on stream and prices will probably remain relatively stable until this supply is exhausted. One must also look at the purchasing power of the condo buyers in each city.

My prediction (for what its worth): A price correction is possible but I don't think we are looking at a bubble ready to burst.

My recommendation (again for what its worth): If you do buy a condo, buy one downtown. Suburban condo prices will only go as high as the local market will bear whereas downtown condos are also sought after by international purchasers.

 

[red]

well- I think the condo market is already soft. too much supply and with vacancy rates at 5% in toronto it is likely to stay soft as all those new condos are coming on the market.

a jump in interest rates of 5% is not likely to happen overnight, but over a year or two its quite possible especially given the inflationary pressures like the price of oil. also remember that interest rates are at historic lows, and will stay there until at least after the US election. the fed won't make a change during an election.

I think there will be a price correction, in 1989 it was about 20%.

 

[james t kirk]

I don't see a bubble per-say (sic).

By international standards Toronto's real estate prices are very cheap. (As long as interest rates don't spike by 5%).

You may see a levelling off, but only for a moment. This city is growing in leaps and bounds. The population is expected to double I believe in the next 25 years. When I moved to Toronto 8 or so years ago, the population was just over 2 million. Now, 2.5 or even 2.6. Last year, Toronto grew by 100,000.

The condo market however is a bit of a different animal. I would not be so keen to buy a condo, instead try to find an "up and coming neighbourhood" like leslieville, parkdale, Toronto West Junction, etc. Face it, single family homes and semis are always in demand and there will never be a glut on the market like the condo market. Monster homes being the exception to that rule.

The other thing to think about (believe it or not) is Hamilton. Real estate prices in the Hammer are very cheap compared to Toronto. Prices there have only moderately increased in the last 6 or 7 years while Toronto has doubled in some select neighbourhoods. There was an article in the Globe and Mail about Hamilton Real Estate and it was very positive on not just the prices, but the outlook.

Here's a link to an article in MacLeans.....

http://www.macleans.ca/topstories/business/article.jsp?content=20040510_80137_80137

 

[KBear]

The prices have levelled out, and in some areas there has been some price decline with the price peek being at the beginning of last year. The vacancy rates for rentals has definitely increased, and the rental rates have dropped to the point where it does not make sense, from an investment point, to buy a condo at their current sale prices. You will see lots of deals and incentives on the rental side. All that said, the sales market seems to be moving along really well, and the prices continue to be stable. Who knows what the future will bring.

Wishing I bought Nortel at $.50/share. If only I could predict the future, even just a few minutes in advance and i'd be rich...

 

[freakshow]

Dont expect price of house's or condo's to go down anytime soon at least not for the next 6 years. They will go up next summer expect new development to go up 10% by mid next summer. Most builders have already raised their prices. As far as intrest rates go at the most half a point as we get close to the U.S election then it will drop again in the spring. Condo's i think will take a jump when the start building this Trump Tower cost at the Trump Tower is around 500sf, compared to our average now of 350sf.

 

[gypsy]

The cost of building homes and condos is increasing as well for many factors including rising commodity prices like lumber and copper and rising oil prices.

Everything is more expensive so the builders will raise prices for new homes and condos which strengthens the resale market and should counter any potential downward price movement based on speculation.

 

[prelations]

hot market

the Bank of Canada will make their decision to increase rates on October 19th.

I don't think it will affect sales at all.

the only thing that will slow down the real estate market will be the weather, as most people buy and sell homes in the summer. Other than that minute and irrelevant point, the real estate market will continue to be hot.

 

[strange1]

The info I've seen says that townhomes are now the hottest sector. Condos are pretty level right now, but as capt. Kirk said, there are still areas where prices are climbing. A loft conversion or fixer-upper in the right areas such as those mentioned could be a good investment. If you plan to live there for 5 or so years, you will probably do fine, unless you're looking at a condo in one of the brand new high density areas which are small and flooded with units.

 

[canucklehead]

With a condo plan on living there for 10 years before you sell or investigate future plans for the area.
Without a drastic change in interest rates we will not see a downturn in pricing like we did in the 80's early 90's.
If you are looking for an investment i would look at generational properties rather then a condo. if you re looking for you then buy something that will grow with your needs not something that suits them now.
I bought two condos at the century on bay/wellsley in the 80s at the sametime i bought two townhouses in the warehouse district all around the sametime and i have made back alot more with the townhouses then with the condos. Both have made money but more return on the townhouses.
if i were to sell.