real estate..... is it true??

[Smallcock]

^^^
I don't think it's telling us much. They cut ties with lots of their brokers in Ontario, their largest market. A drop in the interim would be expected.

On a different note, I believe that one of the big threats to housing and the economy in general is the high number of people employed in construction in Canada. Once the housing boom levels off, there will be tons of construction workers out of a job, and tons of construction related jobs. Manufacturing jobs continue to decline. Construction jobs have taken up some of that slack but record level condo projects won't last forever.

 

[Barca]

^^^
I don't think it's telling us much. They cut ties with lots of their brokers in Ontario, their largest market. A drop in the interim would be expected.

On a different note, I believe that one of the big threats to housing and the economy in general is the high number of people employed in construction in Canada. Once the housing boom levels off, there will be tons of construction workers out of a job, and tons of construction related jobs. Manufacturing jobs continue to decline. Construction jobs have taken up some of that slack but record level condo projects won't last forever.

You're focused on the secondary point of the article dude.

By the way, the BoC cut rates today despite being reticent to encourage the housing bubble more by making mortgages cheaper, this literally tells us they had no choice. Basically the economy is sputtering, but it makes sense for housing prices to continue to rise in this environment? When do fundamentals and a return to the median apply?

 

[Smallcock]

I agree. In fact, this summer may be the peak of the real estate boom we've had. It's hard to imagine a year or two more of double digit increases in property values.

I've never been a naysayer about the market. When people were screaming that it was on the verge of a bust at various times over the past 10 years, I disregarded the noise. Fundamentals and affordability were still sound. But it is reaching a breaking point - considering debt levels (mortgage and credit), questionable quality of new loans, unpredictable job market (and more jobs tied to real estate than ever before), and the current/coming recession. Can investors and immigrants pouring into the city offset those shaky fundamentals? I don't think so. At least not forever.

Some people cite the success of real estate over such a long period of time as support that the market will keep on moving forward unscathed. But in reality, the longer the success, the closer we get to a day of reckoning. It's inevitable. The point of debate is how soft or hard that day of reckoning will be when it hits.

 

[Smallcock]

More records broken in February.

http://business.financialpost.com/p...t-is-still-soaring-despite-new-mortgage-rules

In the detached category in the city Toronto which soared past a $1 million average price in 2015, the average home is now selling for $1,211,459. Detached home prices in Toronto were up 16.3 per cent from a year ago.

Also, it seems it could be some time before any bubble bursts.

Here's how bubbles work:
http://www.movesmartly.com/2016/02/how-to-avoid-buying-at-the-peak-of-a-real-estate-bubble-.html

Step 1 – Demand Drops

Declines in the real estate market typically start with a drop in the demand for homes.

Step 2- Inventory Rises

With fewer buyers in the market the inventory of homes available for sale gradually begins to rise.

Step 3 – Prices Stick

Despite the falling demand and rising inventory house prices don’t decline right away, they stick very close to where they were before demand dropped. The short answer for why prices stick in a down market is that sellers are stubborn. Sellers see what similar neighbouring houses sold for (during the peak of the market) and they want to hold out for a similar price even if it means they have to wait a bit longer to get it. Economists Karl Case and Robert Shiller found evidence of this stickiness in prices in their research that looked at how buyers and sellers act in boom and post-boom markets.

Demand is at insane levels so step 1 hasn't started. Inventory is still at all time lows, so step 2 hasn't started. Prices keep jumping double digits each year.

The process of bubbles bursting can take years. Looks like single detached homes are on their way to being luxury items in Toronto. With median household wages in the city a paltry $77,000 buying a single detached home is nothing but an unattainable dream for most now.

If you're an owner, you've struck the lotto. Your kids, however, will be slaves for life. hahaha!

 

[Barca]

I'm hoping for a soft landing for the sake of the Canadian economy because when the bubble does burst (and spare me whoever doesn't think this isn't a bubble) it will be very painful.

It appears to me that the real driver here is lack of supply. Demand is consistent but nothing exceptional. What is exceptional is the drought of listings creating multiple bids for each property.

What will change the market conditions? I have no idea. But if we have learned anything from the markets it's that they happen when you least expect it and for reasons that appear out of left field.

 

[Smallcock]

Beyond Toronto and Vancouver the "Canadian" housing bubble has already burst. Even in Alberta where tens of thousands of jobs have been lost, real estate has taken a soft landing thus far.

So I think a soft landing in these two cities is highly likely. Wealth and jobs are concentrated in Toronto and Vancouver, and as you said, demand (as well as some foreign ownership - usually on high priced residences) are pushing prices up.

Single detached homes are practically out of reach of most people (who don't already own to essentially trade their current home to buy another), but this may mean there will be more buyers for the many condos going up especially in the core where many revitalization projects are underway.

 

[Barca]

Beyond Toronto and Vancouver the "Canadian" housing bubble has already burst. Even in Alberta where tens of thousands of jobs have been lost, real estate has taken a soft landing thus far.

So I think a soft landing in these two cities is highly likely. Wealth and jobs are concentrated in Toronto and Vancouver, and as you said, demand (as well as some foreign ownership - usually on high priced residences) are pushing prices up.

Single detached homes are practically out of reach of most people (who don't already own to essentially trade their current home to buy another), but this may mean there will be more buyers for the many condos going up especially in the core where many revitalization projects are underway.

The other shoe has not fallen. Let's see how real estate holds up anywhere in Canada when interest rates go up. A study that came out a few weeks ago came out that said many Canadians are $200/month away from being insolvent.

http://www.ipsos-na.com/news-polls/pressrelease.aspx?id=7148

A 2% increase in interest rates for a $400k mortgage works out to roughly a $500/month increase on the mortgage. If many Canadians are $200 away from not covering their bills, what do you think a 4,5 or 600 increase in their monthly costs will do?

If you want to see a glut of inventory come on the market, just wait. What you are seeing in Alberta would just be a taste of what can happen. It's no coincidence that the current housing bull market coincides with low interest rates. Unless you are willing to bet that we will see low interest rates for the rest of our lives and they will not increase significantly at all, then anyone watching Canadian real estate has to take this factor into consideration.

 

[eldoguy]

In the province of Alberta, my understanding if you walk away from your mortgage. Mortgage is backed by Alberta heritage fund. All efforts to sell the property, example 6 months. Financial institutions sell at loss . Then they sue former purchasers for the loss...... In you don't pay up your subject to bankruptcy.

Ontario if you walk from your mortgage. This does not happen!

 

[SkyRider]

I fear we are in a real estate bubble right here in Dodge City. The house down the street sold in 3 days for $220,000 above asking. Insane!

 

[mojak]

Buy the worst house you can tolerate on the best street you can afford, and plan on investing sweat equity while you live there. You may have to wait out a market correction, but you'll do OK in the end.

Exactly!!!
Stayed at B&B in Niagara on the Lake about 15 yrs ago. Owner was the adult daughter a of a man who she claimed owned 3 sky scraper office buildings in the US ...she really liked me and the SO. Told her we have a condo. She advised us to buy the shittiest house in the best area. We didn't heed her advise till years later. Bought a house 7 years ago this May and it has already gone up 4 times what I paid. All the existing houses are being bought up and turned into $2MIL to $4MIL monsters. Mine is not on the market but get asked to sell. Number 1 seller in this area was just here yesterday with an offer for $1.2MIL for my 1150 sq ft house. Thinking to counter offer cause I'm afraid of how long this can keep going on. Sooooooooooooooooooooooon many owners in this area telling me to hold on because, down the road is all sold up. Nothing but $4MIL and up new homes there. A few older homes like mine still left where I am. They believe it will go up because the buyers can buy ours for $2MIL or more and still have money to build custom to their liking.
I dunno...

 

[SkyRider]

Chinese company offering $13billion for Starwood.
http://www.reuters.com/article/us-starwood-hotels-m-a-consortium-idUSKCN0WG14D
Reminds me of the Japanese invasion of the later 1980's when they bough Rockefeller Center, golf course and other U.S. properties.

 

[Mencken]

In the province of Alberta, my understanding if you walk away from your mortgage. Mortgage is backed by Alberta heritage fund. All efforts to sell the property, example 6 months. Financial institutions sell at loss . Then they sue former purchasers for the loss...... In you don't pay up your subject to bankruptcy.

Ontario if you walk from your mortgage. This does not happen!

Hmm... certainly was never true in Alberta when I lived there - nothing from government or heritage fund for anything like that. But there are differences in mortgage foreclosure rules...in Alberta they do not/cannot sell under a Power of Sale process. In Ontario most mortgage defaults are handled through POS... in Alberta the foreclosure route is the only option. So if you are under POS in Ontario you get any surplus if the property sells for more than is owing... and it happens relatively quickly. Under a foreclosure you would not get any surplus, but it takes sometimes years. I think in both you can end up on the hook for a deficiency after a full foreclosure is done... but not totally sure about that under a POS process. For residential properties in Canada you cannot just walk away from your mortgage. You are liable for the deficiency. In theory.

 

[fmahovalich]

that "correction" in 89 cost my buddys father his dream cottage and his retirement plans. Bought a condo at Palace Pier just when Bramalie Construction went out of business and well, you know the rest

Remember in 89 mortgages were over 12%.

Today's money is under 3% on a mortgage

Until interest rates go up... Prices ain't fluctuating much.

id watch interest rates in your shoes.

 

[SkyRider]

Little house in Little Portugal recently went on the market. Asking $999,000. It sold for $1.6 million. Insane.

 

[jeffango1]

In 1984 new houses in Unionville were 800000 in 1996 you buy any you want for 300000 there no answers any more

 

[Smallcock]

I think Toronto is a lot healthier than Vancouver.


Vancouver real estate costs mean it's easier to hire CEOs than entry-level workers
http://www.vancourier.com/news/vanc...-hire-ceos-than-entry-level-workers-1.2233555


"high costs are driving families out of Metro Vancouver altogether...

... housing costs have reached a “crisis point” that have made it “exceptionally hard to grow a business in Vancouver...

...Qualified job candidates are deterred from moving to the city, he said, and “great” employees are leaving because they cannot afford to live in the city..."

 

[Smallcock]

It should be noted that many major cities of the world are contending with affordability issues in one form or another. Prices are either hitting record levels and/or there are calls that a bubble is on the horizon. The role of domestic and foreign investment capital has also been a contentious issue in some of these markets.

Hong Kong:
http://www.scmp.com/property/hong-k...ate-bubble-burst-hong-kong-flat-prices-return

London:
http://www.theguardian.com/cities/2016/apr/20/london-housing-crisis-sub-prime-problem-super-prime
http://www.ibtimes.co.uk/house-pric...tandstill-2016-says-capital-economics-1555876

Sydney:
http://www.huffingtonpost.com.au/2016/04/21/sydney-housing-affordabil_n_9743720.html

Manhattan/NYC:
http://www.cnbc.com/2016/03/31/manhattan-real-estate-breaks-new-price-records.html
http://www.cnbc.com/2016/03/28/this-real-estate-market-is-about-to-crash-commentary.html
http://ny.curbed.com/2016/4/7/11381852/manhattan-market-reports-rental-prices-drop
http://ny.curbed.com/2016/3/13/11209156/supply-of-condos-for-rent-driving-down-prices

 

[Smallcock]

The abuses of foreign investors in Vancouver needs to stop. These stats are shocking. Those multimillion dollar houses have the highest welfare rates - 30% of those households claim welfare even though they're wealthy! Dad is in China earning millions but the wife and kids here don't work so they can claim welfare.

http://www.torontosun.com/2016/04/20/canadas-subsidizing-foreign-millionaires

 

[Smallcock]

April was another record breaking month.

http://www.trebhome.com/market_news/release_market_updates/news2016/nr_market_watch_0416.htm

Average Toronto detached home in April sold for $1,257,958

However, this month (May) is when house prices sell at their peak every year.

This is peanuts though to the onslaught going on in Vancouver where Chinese real estate agents, Chinese construction companies, and Chinese investors/buyers are pushing prices sky high. Chinese account for over 33% of real estate transactions in Vancouver.

There are apparently 1 million Chinese people in China who have a net worth of $10 million or more. That's like ever 3rd person in this city having $10 million in the bank.

Good documentary podcast to listen to http://www.cbc.ca/radio/thesundayed...-syndrome-a-karin-wells-documentary-1.3555860

 

[Smallcock]

Toronto house prices are rising $550 per day
Http://www.huffingtonpost.ca/2016/05/04/house-prices-toronto_n_9841878.html