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Baby, we got a bubble!?

Greenleaf, your point is well taken.

There has been alot of medling: first in the US with the quant. easing and again now with the 2nd round. Interest rates rising won't help anyone either going forward.

In Canada, they are trying very hard with the shortening of mortgage periods and the 5 year qualifying periods to smooth out the market more.

But I agree with you; those who ignore history are doomed to repeat its failures.

I think one is already seeing a dichotomy in the market. Well priced desirable properties are fetching top dollar. But previously, when everything sold, even the dogs would get picked up. I think we are seeing dropping of prices first in the less desirable properties. I believe this will be followed with a general decline.

Even in new construction, you see projects coming to market with incentives. These were always there in one form or another, but the fact that developers are advertising them to me suggests they are having to be more aggressive to get buyers in and I believe people will realize that buying ready product or assignments if appropriately priced is a the way to go forward
 
Actually, my impression was that the most desirable (and most expensive) neighbourhoods had the biggest drop in sales back in 2008/2009.
 
^^^
Actually Eug, you may be right. The "wannabee" areas had bigger drops I think but could be wrong. By this I mean areas that were $1.5-2million came down as a percentage more I believe than the say 3-5 million dollar homes. I believe this happened because more people in the $1.5-2 million range I believe were there carrying mortgages than say the people in $5 million homes. This is conjecture on my part and perhaps someone in real estate can enlighten or correct me if I am wrong.

I think I have a postulate as to why 2008 was a bit different than other recessions.

2008 was somewhat different because alot of very smart people with alot of money thought the financial system was teetering on collapse. In an absolute doomsday scenario, the most desirable areas (most expensive areas) came down the most because people with the most were fretting they could lose almost everything and were looking to become liquid.(at least more liquid).

It is also true that the higher areas came down the most in the 1989-1992 recession. However, what I believe may have changed is that unless faced with a doomsday scenario again and rather facing a normal slowdown, there has been so much money made by a small segment of society (bankers, lawyers, accountants, entrepreneurs etc. that they are in a position to buy up bargains if they start to occur in Rosedale, Forest Hill and the Bridle Path) and will do so. I think the other areas which are very desirable have alot of people in them who are still making alot of money but do not have the financial fortitude of those in the above mentioned area.

As well, we do have alot of international investment which is talked about and while it can all withdraw and create a huge glut, it is here to a degree because of the stability of the country.
I could be very wrong of course Eug. Of course, if it is again a catastrophic event, then I agree the highest end will come down the most.

Let's just hope we see an orderly downward descent (in which case the high end too comes down but it seems like it is coming down more because it goes up more in good times).

Finally, again the area most of interest to me is the downtown core and there I do believe the downtown condo market could get really hit but I think it willbe the $650-900/sq.ft. new condos that gets hit the most. I think the very high end will come down as well but again those people living in these megaluxury units (the $2mill+ I would bet on average have other assets which they would elliminate before their homes). However, those who have 2nd residences like this will take the loss so depending on the proportions, I could see 2 different scenarios playing out. Sorry for the long winded answer.
 
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Prices did come down, but the common sentiment amongst comments from agents was that the high end luxury market basically died volume-wise in 2008-2009. I didn't follow it closely, but people selling in the neighbourhoods with $2 - 3 million homes were unhappy, and the few even higher priced homes were getting significant listing price discounts and still not selling, and many were just taken off the market. Meanwhile $700000 homes were still selling, albeit with mild price drops and significant decreases in sales volume.

I'll have to go back and check some of the articles one of these days, but that was the impression I got from casually reading the news reports and comments during that period.

I will point out though that even most bankers usually can't buy multiple Rosedale homes. Most well off people I know still worry about finances. If they lived like students maybe they could buy a couple of homes, but most buy their two luxury cars, send their kids off to private school, go on expensive vacations, get maid service every week, and eat out regularly at expensive restaurants, which means they still can only realistically afford that one expensive house.

Also, I don't think expensive areas necessarily go up more in good times either, on a price percentage basis. They go up more in actual dollar value but that's because they're more to begin with. The areas that go up the most are the up-and-coming areas, not the ones that are already there. My point above was just that in the most expensive areas, sales volume plummeted during the downturn.

BTW, CMHC is getting rather testy.
 
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Good points Eug.

I was going by memory and postulating but I could be wrong.

Yes, CMHC is getting a bit upset but in fairness if I were them and all the play in the paper was about severe problems and I disagreed, I'd probably react as well.

I assume you are referring to the response they came up with the the articles suggesting they should have more oversight, respond to OFSI, and the US situation with Fannie May and Fannie Mac.
 
From the Globe and Mail today:

http://www.theglobeandmail.com/repo...ions-ottawa-on-mortgage-rules/article1907692/

REA cautions Ottawa on mortgage rules
STEVE LADURANTAYE
Globe and Mail Update
Published Tuesday, Feb. 15, 2011 9:41AM EST
Last updated Tuesday, Feb. 15, 2011 10:36AM EST


The Canadian Real Estate Association cautioned the federal government to stay out of the mortgage market until the effects of recent changes can be gauged, as it suggested buyers raced to secure 35-year mortgages in January before they are banned in late March.

The federal government recently announced the end of insurable 35-year mortgages, leaving new buyers to take on 30-year-or-fewer amortization periods. The move was made to help Canadians lower their household debt, and makes it more expensive on a monthly basis to own a home.

The changes have yet to come into effect, with the government giving the industry 60 days to adapt after making the announcement in mid-January. It has given buyers a chance to secure longer mortgages ahead of the changes, CREA suggested, as it said January sales increased by 4.5 over December but were down 6.6 per cent compared to January 2010.

“It will take some time before the longer term impact of the latest mortgage regulations on the housing market can be known,” CREA president George Pahud said. “For that reason, further action shouldn't be taken until the impact can be measured. In the meantime, if last year can be used as any guide sales activity may heat up further as we get closer to the date on which mortgage regulations come into effect.”

Market watchers have expressed varying degrees of concern over the amortization changes, with some suggesting it will have a minimal effect even as it pushes some first time buyers out of the market, and others suggesting price drops of up to 10 per cent as the markets adjust.

Finance Minister Jim Flaherty acknowledged the changes - which also included a reduction in the amount of equity homeowners could access when refinancing to 85 per cent of a property's value - will be difficult to gauge.

“This is not arithmetically predictable, precisely,” he said when he made the changes. “We expect some moderation in the market. We’re taking these steps in any event now because of our concern about higher interest rates down the road.”

Rising interest rates are a deeper threat to the market, according to economists, because it would make monthly mortgage payments more expensive and push some Canadians who took on too much cheap debt out of their homes.

Still, CREA and Royal Bank have both raised their forecasts for the next two years suggesting that a balance between new listings and demand will temper any big moves in the broader market in either direction and an improving economy will Canadians service their loans.

“Going forward, we see nearly perfectly offsetting forces driving Canada’s housing market,” RBC economist Robert Hogue said. “On the upside, the economic recovery will gather strength in 2011, continuing to boost employment and family incomes. On the downside, interest rates are expected to rise.”

Not everyone sees such a rosy picture. Capital Economics recently issued a cautious report suggesting higher interest rates could drive prices down as much as 25 per cent over the next three because of higher rates.

CREA said Tuesday the national average price in January was $343,675, little changed from the previous three months (the average price in December was $344,551). Listings more than doubled from December, however, and on a seasonally adjusted basis new listings rose 3.9 per cent for the largest monthly gain since March 2010.

There are still relatively few houses for sale, however, with the seasonally adjusted months of inventory - the amount of time it would take to sell all of the homes at the current rate of sales - at 5.5 months. That's the lowest level since March.

“Because sales activity and new supply rose in tandem in January, the national resale housing market remained balanced. The national sales-to-new listings ratio, a measure of market balance, stood at 55.7 per cent in January 2011, which is little changed from the previous two months,” CREA stated.

Toronto-Dominion Bank economist Diana Petramala noted that a pick-up in sales had been expected as buyers rush to beat new insurance rules that come into effect next month.

"The growth spurt will likely be short-lived, and come at the expense of future sales," Ms. Petramala said. "As was the case the last time the federal government made mortgage insurance rules more restrictive, the strength in sales will likely be followed by a short period of weak housing data."

Overall, she added, the housing market is still in a "well balanced position with little price pressures on the horizon."
 
Hi Folks,

Here's an opportunity to continue this discussion with Hunter Milborne and Brad Lamb

*******
Picture%2B13.png


Live in Studio: Brad Lamb and Hunter Milborne

Condo prices for new construction are approaching $700 per square foot. Can they possibly be a good investment?

Get this question answered and more as we have Brad Lamb and Hunter Milborne.

Brad and Hunter are two of the most successful sales people in pre-construction condos in this country (these competitors will be making their first Television Appearance Together).

Tune in and call 416.446.7090 and ask host Brian Persaud all your real estate questions. Inside Toronto Real Estate airs Wednesdays at 7:00 PM only on Rogers TV.

Repeats
Thursday 12:00p

For video and more info check out our web Page http://www.rogerstv.com/itre
 
Here in the old city of Toronto for detached and semi-detached houses we are still experiencing crazy prices, multiple offers, bidding wars and sale prices over list on the ground. However this could largely be location specific. Money is pouring into the central city at the moment and every condo unit built buoys the market for low-rise housing.
 
Hi Folks,

Here's an opportunity to continue this discussion with Hunter Milborne and Brad Lamb

*******
Picture%2B13.png


Live in Studio: Brad Lamb and Hunter Milborne

Condo prices for new construction are approaching $700 per square foot. Can they possibly be a good investment?

Get this question answered and more as we have Brad Lamb and Hunter Milborne.

Brad and Hunter are two of the most successful sales people in pre-construction condos in this country (these competitors will be making their first Television Appearance Together).

Tune in and call 416.446.7090 and ask host Brian Persaud all your real estate questions. Inside Toronto Real Estate airs Wednesdays at 7:00 PM only on Rogers TV.

Repeats
Thursday 12:00p

For video and more info check out our web Page http://www.rogerstv.com/itre

Good episode. LOL @ Lamb crapping on Urbancorp.
 
Good episode. LOL @ Lamb crapping on Urbancorp.


i missed it ... what happened?

Urbancorp does crap projects ...
IIRC, alot of the KW townhouses from the 1990s were built by them and aren't they the developer that did West Gallery Lofts ... another poorly executed and cheapened product.

Lamb's projects look better with some nicer finishes, but execution isn't the best either.
from the outside, his buildings look impressive but the units are small with mediocre floorplans ...
made to maximize his profit ... all bling, no substance
 
i missed it ... what happened?

Urbancorp does crap projects ...
IIRC, alot of the KW townhouses from the 1990s were built by them and aren't they the developer that did West Gallery Lofts ... another poorly executed and cheapened product.

Lamb's projects look better with some nicer finishes, but execution isn't the best either.
from the outside, his buildings look impressive but the units are small with mediocre floorplans ...
made to maximize his profit ... all bling, no substance

Eh, I wouldn't put Lamb and UrbanCorp in the same category. I know a couple people that live at Glas and one at East Lofts. They love their units. I didn't notice anything out of the ordinary with the floorplans. I will say that Theater Park and the townhouses he's building have some poor layouts, though. Glas has great layouts. I don't think the units are any smaller than any of the other builings out. Actually, like Freed, he has some large one bedrooms in a number of his projects that are over 700sqft. Which is pretty rare today.

Anyways, I'm sounding like a schill here, which I am not... Brad is obviously in the business to make money, I just wouldn't put him in the same category as Urbancorp.

As for what he said about Urbancorp (Westside Gallery Lofts). The host said there had been rumblings about their poor quality. Brad said Urbancorp has been doing this for years. If buyers did their due dilligence and researched the builder, they would know what they were getting into. He said the low price means cheaper finishes, cheaper quality, etc. You get what you pay for. Said some other stuff that I can't remember. On the flipside he had some good things to say about Context and Market Wharf and of course Freed and fashion house.

Funny how the real estate agent on the panel always referred every caller to purchase at Cityplace. The callers all shared one thing in common. They were investors.
 
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canada should have/be doing the same thing:


http://www.marketwatch.com/story/beijing-property-rules-send-developer-shares-down-2011-02-16


Beijing property rules send developer shares down

By Michael Kitchen

LOS ANGELES (MarketWatch) -- Beijing's municipal government unveiled its latest restrictions to property purchases Wednesday, seeking to curb real-estate speculation by setting residency requirements for home buyers, reports from the region said. Under the new rules, people not registered as Beijing residents will have to prove they've lived in the city for at least five year in order to buy any property there, the reports said. Chinese citizens are each registered with an official residence under the nation's "hukou" (household registration) system, but many live and work elsewhere. The news sent many property-developer shares lower in Shanghai, with Gemdale Corp. /quotes/comstock/28c!e:600383 (CN:600383 6.83, -0.16, -2.29%) falling 2.9%, and Poly Real Estate Group Co. Ltd. /quotes/comstock/28c!e:600048 (CN:600048 12.96, -0.35, -2.63%) diving 3.2%.
 
As a homeowner, if that happened, I'd be pleased.

Realistically, I think that's possible, but I also think that is a bit on the optimistic side. If CMHC is saying it will follow inflation, and the uber-negative ones are saying it will drop 25%, then maybe the truth may turn out to be somewhere in between: A drop of 10-15%... like I've been incorrectly predicting for years.
 
canada should have/be doing the same thing:


http://www.marketwatch.com/story/beijing-property-rules-send-developer-shares-down-2011-02-16


Beijing property rules send developer shares down




By Michael Kitchen

LOS ANGELES (MarketWatch) -- Beijing's municipal government unveiled its latest restrictions to property purchases Wednesday, seeking to curb real-estate speculation by setting residency requirements for home buyers, reports from the region said. Under the new rules, people not registered as Beijing residents will have to prove they've lived in the city for at least five year in order to buy any property there, the reports said. Chinese citizens are each registered with an official residence under the nation's "hukou" (household registration) system, but many live and work elsewhere. The news sent many property-developer shares lower in Shanghai, with Gemdale Corp. /quotes/comstock/28c!e:600383 (CN:600383 6.83, -0.16, -2.29%) falling 2.9%, and Poly Real Estate Group Co. Ltd. /quotes/comstock/28c!e:600048 (CN:600048 12.96, -0.35, -2.63%) diving 3.2%.


I have an interesting thought.
Does this mean even more money flows to Vancouver and Toronto core because they can no longer invest in Beijing?

Eventually one would think that would have to happen here but given that Vancouver already is beyond the scope of affordability for all but the most wealthy and it has not, I would predict that our timid Canadian Governments would never embark on such a procedure. At most, I could see introduction perhaps of a speculator tax (eg. if you own for less than say 1 year or if you flip your contract you will be subject to a tax (beyond the normal capital gain assuming you make one). That would cool the speculation quite considerably (provided the tax was of a reasonable degree to make for a deterence).

As for house prices. Despite those of us here who feel it should correct, don't expect it any time soon now. With record money flowing into the stock market and the markets flirting with prices that approach the 2008 downturn, those with money are feeling pretty good. I was at a party and people were all talking about the money they were all making. It seems risk doesn't seem to worry them and we are shifting to the greed part of the cycle. As long as people are feeling wealthier, I would not expect a market correction in real estate.

Don't misunderstand me. I have not changed my stance that I think a correction should be coming (my own believe in the 10-15% neighbourhood) but it will not happen as long as people are feeling wealthier and the individual is not feeling worried about his job and people are feeling richer on paper. What is it that BNS says: "You're richer than you think". Maybe people are buying into this.
 

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