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Baby, we got a bubble!?

Real estate in New Zealand is almost as bad as it's neighbor from across 'The Ditch'. Auctions are certainly a noteworthy part of the problem, but so are things like the Residential Land Release Program in AUS (NZ has a similar program setup). Severely restricting the number of lots made available to build on (and only given to a select few govt-approved developers) makes things much worse.
 
urbandreamer said:
Where'd all the bears go? Right, they're hibernating.

New $INDU p+f target: 13250 http://stockcharts.com/def/servlet/SC.pnf?c=$INDU,P&listNum=

Hmm, gonna be an amazing Spring 2011 for real estate developers and agents.:D
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8000 posts, and each more inane than the last.
 
Noticed yesterday in some MLS listings that RE brokers are starting their old tricks again. Saw some listings underpriced with the usual "Offers accepted on date XX".
And it hasn't even snowed yet!
 
cat said:
Noticed yesterday in some MLS listings that RE brokers are starting their old tricks again. Saw some listings underpriced with the usual "Offers accepted on date XX".
And it hasn't even snowed yet!
Click to expand...


anything to try to drum up interest
 
I too read this with intrigue.

While I realize Jamie Johnson who writes this has a vested interest, it is worthy to note that he is not totally a schill for the real estate industry despite his obvious vested interests. He did say that prices would drop last year and there would be 2 markets despite it not being in his interest to say so. So I think it is at least fair to accept and analyze his findings.

Note the following: he is saying rental real estate for investment purposes will stall and that investors will sell. I am not sure if this happens that prices will maintain themselves. It is worrisome as well that he says that new condo purchases are virtually solely investor driven. I am also not sure that if there is a correction that the $50-$100 premium for new vs. resale won't shrink or disappear.

That said to respond to UD comment about where have all the bears gone, I still think that rationally there should be a correction.

Recall the wise words of Allen Greenspan about "irrational exhuberance". Unfortunately, the corollory to this has been also pointed out: "that markets can remain irrational for protracted periods of time, and often outlast investor's ability to await the correction, whether up or down".

I believe it is becoming quite clear that the US real estate market will stay depressed for at least another 1 if not 2-3 more years for the most part. I realize there will be pockets where this will not hold and there may in fact be price increases. That said, if it continues to deteriorate, I can't help but believe that there will be more concern going forward if bad news keeps coming from the US and this logically might impact the psyche of making further investments in Canada as the price discrepcy grows, thereby stalling at least price appreciation here for those who believe that real estate will go up and possibly supporting the notion of decreasing prices for those who expect the opposite.
 
just read the same thing.

I am starting to have to admit that the market may not correct in the next few months or even this year.

It still does not change my view that it is just blowing more air into an overpriced real estate market. However, irrational trends can continue for protracted periods.

I wonder how much of this and the fact that there are more articles of "surveys" is the Real Estate industry trying to talk up the market and reassure everyone. It may have the desired effect and postpone the correction but I still think it will happen.

I still hope for a measured decline as opposed to PaperChopper's US style predictions. I wonder if he will bother to comment on this latest "report/survey" but if he does I am sure it will be to simply say that is "the lemmings marching towards the slaughter".

In the mean time, for those of us who own, it is helpful. For those trying to get in, more disconcerting.

Ka1, what are your feelings. I would love to here from Condo George later on in January to hear how the market is progressing from what he is seeing. We can discount the information if we deem it appropriate to do so.
 
interested said:
just read the same thing.

I am starting to have to admit that the market may not correct in the next few months or even this year.

Ka1, what are your feelings. I would love to here from Condo George later on in January to hear how the market is progressing from what he is seeing. We can discount the information if we deem it appropriate to do so.
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To start with, for a change, it is something of a strange to see you admit that you have been wrong about the decline in R/E prices. You have been predicting 15/20% decline to the levels of 2008.

My personal view has been consistent and it is more in line with the latest report from remaxcondosplus -- that is, R/E market is a fragmented market.

Prices in the core downtown will be either steady or will increase slightly. Prices for the upscale developments -- Shangri La etc.- will keep on increasing, prerhaps, at rates higher than average increase. Individuals who buy units in these projects purchase the unit because they want to buy. Never mind the market. Prices in the suburbs and where too many condo buildings are concentrated -- City Place and MLS -- will go down considerably simply because most of the units here have been purchased by the investors. And they will bail out at the 1st available opportunity. -- even if it means taking a loss.

I am sitting in a Director's chair and watching the universe unfold as it should.
 
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I hope you are right.

I was wrong about the Florida market too when I sold a unit in 2003 because I thought it was unsustainable only to see prices more than double over the next 3 years. Incidently, it is now lower than what I sold for in 2003.

I may have the timing wrong and do admit that I was wrong about the decline to 2008 levels to date. I still believe this will happen though it may not happen this year. We shall see. This is one bet I sincerely hope I am wrong about because it only helps me that property remain high. However, that said, I am concerned for my kids and their ability to get shelter (not investment property), a whole different animal. That said, I have long believed that City Place is not desirable. Too early for me to comment about MLS. I know CG felt that MLS was good value and up and coming. I personally don't share the enthusiasm for this area.

I have heard anectdotally that Ritz is not selling their last units that well. It may be unique to Ritz, or the information may not be accurate. But if it is, it would suggest perhaps the very high end has hit resistance points.

Anyhow, Mr. Director, we shall both watch the universe unfold as it should and see longer term if your or my vision is correct. In the mean time, let me ask one more question, would you be a buyer of further real estate in this present market? I have already told you I would not and continue to advise young people to very carefully consider this decision at this time.

Happy New Year Ka1. I believe it is the year of the Rabbit which is supposed to be a good luck year but I readily admit my ignorance. Perhaps you or others more informed on the forum could enlighten me?
 
December TREB figures are out.
Sales about 10% below typical December figures, prices show a typical seasonal drop of in average prices of about 1% from November.
Median prices dropped 3% from November, somewhat higher than the typical 1.5% drop.

http://www.torontorealestateboard.c...et_news/news2011/pdf/nr_market_watch_1210.pdf
http://www.torontorealestateboard.com/consumer_info/market_news/mw2010/pdf/mw1012.pdf

The bulls will point the lack of price drops as evidence that everything is ok. Although the median drop from November was actually quite substantial. Median prices for Dec were actually lower than Dec 2009 (adjusted for inflation)

It is of note that sales for the past 7 months have come in at 15% below typical June-Dec figures over the prior 6 years (excluding the exception of Sept -Dec 2008).

This represents 7 consecutive months with sales 10% or more below normal. Usually, one would see the unrealized demand from the prior months build up and eventually sales would spike up higher than normal for a month or more.

On the flip side, supply remains abnormally low. This is very curious. I can understand why demand would be low - a lot of demand was "brought forward" as rates dropped and people could suddenly afford more. But I don't see why supply would be low. My best guess is that a lot of people can't afford to sell (transaction costs,etc), which doesn't bode well. But if others have any insight into this?
 
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So the price of a detached home in the 905 is now over 1/2 a million at $503841.
For the 416 it's well over 2/3rds of a million at $679631.
Those are both up 6% over December 2009.

For averages for all types of housing:

December 2010 416: $463416
December 2009 416: $441607
December 2008 416: $387482
December 2007 416: $425842
December 2006 416: $350139

December 2010 905: $412403
December 2009 905: $389205
December 2008 905: $341847
December 2007 905: $360307
December 2006 905: $326509

Overall 2010: $431463
Overall 2009: $395460
Overall 2008: $379347
Overall 2007: $376236
Overall 2006: $351941

So, no real evidence yet of a looming crash. Can't exclude it, but if anything at most one could wonder about the beginnings of a plateau given the numbers above and the numbers dave mentioned. Or, prices could simply continue to march on, but with less proportional increases than before.

Also, the comment about price increases being less than inflation is probably not that relevant to that many people, at least over the short term. Over a couple of years, nobody really cares if the house pricing only increases 1.5% or whatever if inflation is say 2%. What the homeowners just don't want to see is those house prices drop 5% per year.
 
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Eug, don't the sales figures concern you? What about the attached graph from Teranet's October numbers.
View attachment 6225

Also, as a general question to the board - how do you distinguish between a "drop" and a "crash"? How would you quantify them?

For me, I think a cumulative decrease of 5-10% over 5 years is a drop, and a cumulative decrease of 20%+ is a crash. Recently I've noticed a lot of people conceding a probably drop, but scoffing at a "crash". But even in the US, they've seen, what, a 25% nationwide drop over 4 years? (I go from memory)

The sales figures we've seen recently are 100% consistent with how a 20%+ crash over 5 years would play out. First, the sales numbers drop and price increases plateau, then as supply builds up owners dig in their heels waiting for demand to return, then if the demand doesn't return the price increases crest the hill and begin the downward cycle.
 
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