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Baby, we got a bubble!?

newbi said:
from the article above, does that mean bubble already burst in China? Or is it just normal seasonal month-month average?

something to think about: if bubble burst in China, will there be a selling wave for investors who bought TO/VAN properties, and try to buy low again in China?
Click to expand...

Newbi, I would not think your last hypothesis will hold. There may or may not be a selling wave in TO/VAN, but I doubt people will try to buy low in China. Generally when bubbles burst there is a few years in which people are scared off. I am not saying they would not buy low again, but just that it will not happen for quite a few years. Buying in a falling market is a bit like trying to catch a falling knife, very difficult.

Your first question about seasonal variation I don't know the answer but I would guess that since properties were escalating so much there was no seasonal drops, just perhaps slowdowns and pick ups until now so I would think you are hearing the deflationary bubble losing air.
 
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TORONTO, APRIL 18, 2011 ‐‐ Greater Toronto REALTORS® reported 4,444 sales during the first two
weeks of April 2011 – a three per cent decrease compared to the first two weeks of April 2010. The
number of new listings was down by 21 per cent compared to the same period last year.
“Sales activity was quite strong during the first two weeks of April. If this level of activity is sustained for
the remainder of the month, we could see April transactions close to last year’s record result. Positive
economic news has kept households confident in their ability to purchase and pay for a home over the
long term,” said TREB President Bill Johnston.
The average selling price for firm deals reported through the first two weeks of April was $483,165,
representing a 12 per cent increase over the average price of $430,271 reported during the same period
last year.
Click to expand...

http://www.torontorealestateboard.com/consumer_info/market_news/news2011/pdf/nr_mid_month_0411.pdf
 
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I am suprised by this data. The weather was not particularly good this April and that tends to slow down sales. Of course, with the mortgage rules changing but people often having a guaranteed rate for 90 days, we need to see by July what happens. So far, clearly if the data is true (there is a bit of a flap in the US that the NAR has been "massaging" the data to present it in better light) this remains good news for the moment. I do know that there remains a paucity of listings in the city for single family dwellings. However since a number of us follow the condo market and the C01 district in particular, I do not know if the averages quoted here apply in this district and for condos.
 
Wow.:confused:

I tend to not read too much into figures from a single month (or part thereof). But that YOY price increase is an eye popping figure.

Is it possible that there was a flurry of last minute sales aggreements back in mid march to beat the March 18 changes, and they have only gotten processed into the stats now? Or that perhaps there were a small number of large dollar properties sold which have substantially skew the figures?

If not, its difficult for me to not be in shock and awe at that sort of YOY price increase. I'm very curious to see what sort of full month data April produces.
 
daveto said:
Wow.:confused:

I tend to not read too much into figures from a single month (or part thereof). But that YOY price increase is an eye popping figure.

Is it possible that there was a flurry of last minute sales aggreements back in mid march to beat the March 18 changes, and they have only gotten processed into the stats now? Or that perhaps there were a small number of large dollar properties sold which have substantially skew the figures?
Click to expand...

I'm guessing it's that + people trying to lock in a mortgage before rates increase.
 
daveto said:
Is it possible that there was a flurry of last minute sales aggreements back in mid march to beat the March 18 changes, and they have only gotten processed into the stats now? Or that perhaps there were a small number of large dollar properties sold which have substantially skew the figures?

If not, its difficult for me to not be in shock and awe at that sort of YOY price increase. I'm very curious to see what sort of full month data April produces.
Click to expand...
I had thought the data was based on closing dates. However, I may be wrong.

"The average selling price for firm deals reported through the first two weeks of April was $483,165, representing a 12 per cent increase over the average price of $430,271 reported during the same period last year."

What does "firm deals" mean?

However, I agree we cannot read too much into single-month sales, and we should read even less into half-month sales.

TCW said:
I'm guessing it's that + people trying to lock in a mortgage before rates increase.
Click to expand...
I agree. It does suggest that the 35-year amortization, although not unimportant, is not the primary driver of price increases here. It's the low rates, along with an improving economy.

One might argue if "firm deals" just means tentative deal, maybe there is in fact a peak because of lots of people are trying to lock into 35-year amortizations. I don't think that's the case however, since we didn't see anywhere near these prices in March.

---

BTW, in the 416, prices are up 14.8% yoy, or $70000.
 
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any figures for the median price ?
as we all know, averages can be skewed one way or other with a few really expensive or cheap sales.

as the articles stated, the number of listings is 21% lower vs. same period last year so supply/demand will have an affect.

also, the majority of the increases came from semi and detached properties.
 
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I hope this figure is not correct or at least is due to many high priced properties skewing it because 12% to me would be a huge warning sign. Usually one gets absolute acceleration in the price rises just before the bubble bursts. I understand that average prices in Vancouver are up a whopping 30%. How can anyone argue that any of this is sustainable?

Ka1 will laugh at me but I now believe if the 12% holds through for the next 3-4 months or accelerates, especially if this figure is confirmed with median numbers, that we are now finally approaching the "popping point of what I believe is unsustainable growth entering the final accelerated phase".
 
Yes. I have a theory. I think what happens is people watching increasing prices continuously finally get to the point where they assume things can only go up and it does not matter at what price one buys. Of course, the more the increase, the more the distortion of the fundamentals. Finally, when the last "greater fool" to quote Garth Turner gets in, the Ponzi scheme unravels when there is no one to purchase and drive up the price further.
 
The spike can be partially attributed to the skewed market as well. Quite simply, the mid-range simply stops, and more or less drops out of the market statistics.

You are left with a sort of sandwich. You have the low end market, driven by "value" investors buying in up and coming areas (which tend to have pretty solid YoY gains) and you have the top end of the market, which keeps going for a while yet. Both tend to show very high gains, as well as skewing averages simply by the shifting balance of property types.

http://www.theglobeandmail.com/life...k-our-interactive-toronto-map/article1982074/

The G&M has a map that seems to bear this out (though I cannot currently view it, probably an artefact of the computer I'm currently using). The high end markets, and the low end markets, have shown dramatic appreciation, while the middle class areas are already showing mild losses.

At least that's my theory. At any rate, things are NOT normal out there right now and things are behaving unpredictably. What's next is anybody's guess.
 
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The map comes up for me. Interestingly, Rosedale is down 42% from $1.65 Mill to 950K. But Bridle Path is up 182% from $1.8 mill to $5.3 mill. So it kind of tough looking at the graph to understand without knowing how many homes were actually sold in each area. None the less, I agree with you that likely there has been more high priced sales. That is why cdr's question about median data would be a lot more helpful.
 
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