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Baby, we got a bubble!?
- Thread starter simuls
- Start date
KA1
Senior Member
You can say that again.
ILuvTO
Active Member
Great post, CDR. Thank you.
When looking at pure raw numbers, it's quite evident that things just don't add up.
I wonder how much rent the same condo would get? Probably not enough to carry itself. Another strike against buying now.
interested
Senior Member
In the core: If it is a 1 bedroom without parking: about $1550. Add parking and a den: possibly $1700.
Would not carry based on the numbers as CDR points out.
Would not carry based on the numbers as CDR points out.
daveto
Active Member
May 2011 TREB numbers are out...
Sales up 6%, average price up 8%, median price up 6%.
New listings down 15%, active listings down 27%, days on market up 5%.
http://www.torontorealestateboard.c...et_news/news2011/pdf/nr_market_watch_0511.pdf
http://www.torontorealestateboard.com/consumer_info/market_news/mw2011/mw1105.pdf
The increase in price is not surprising considering the lack of listings, but the continued price increase is surprising.
The bulls will be dancing a jig, but for me, I just say that the higher it goes, the harder it will fall.
Sales up 6%, average price up 8%, median price up 6%.
New listings down 15%, active listings down 27%, days on market up 5%.
http://www.torontorealestateboard.c...et_news/news2011/pdf/nr_market_watch_0511.pdf
http://www.torontorealestateboard.com/consumer_info/market_news/mw2011/mw1105.pdf
The increase in price is not surprising considering the lack of listings, but the continued price increase is surprising.
The bulls will be dancing a jig, but for me, I just say that the higher it goes, the harder it will fall.
Kenny
Active Member
The continued price increase might be attributed to continued lower YOY supply.
What is interesting to me is that the difference between average price and median price increased from $75K in April to $86K in May, indicating a slight shift toward higher priced properties. I'm not a statistics guru, so I don't know the significance of $11K. It's probably not that significant for now, but might be if the trend continues. Rich people get priced out later than poor people.
KA1
Senior Member
I am sitting under the tree and waiting for the apple to fall.
By the way, any idea as to why a decline in the listings? Is it that 'flippers' are waiting for the prices to go even higher?
Eug
Senior Member
"The strongest rate of price growth was experienced for single-detached homes sold in the City of Toronto."
Hmmmm... Is $400000 is the new normal for median price? April was $400000+ too.
Some more details. The second best bid was only $820something. So, a $40000 difference (5%) between bids. I'm thinking I like the Australian method of sort of public auctions where everyone knows what everyone else bid. And it's not a teardown. It was bought by a family and will be heavily reno'd but not with a complete teardown.
interested
Senior Member
I have an idea. Times are more uncertain. Perhaps people are not making major moves until the economy, US QE3 questions, Euro and Greek crisis, slowdown in China improve. This to me suggests perhaps people holding off on trading up or down, hence a decrease in listings. Also, perhaps if we believe what we read, a lot of people are tapped out financially and moving is expensive (R/E commissions, LTT, moving costs etc.) so people stay put.
Clearly more people want to buy the residual so far as prices are being bid up. I am not so sure the "flippers" are waiting. Rather, I think there may be a number of projects that are now being moved into but not registered so not being sold.
Remember the 2008 slowdown resulted in a number of projects being delayed or cancelled and many of these would have been what would have come to market now.
I don't know but I would wonder if there are also a number of people who may have made some gains back in the stock market after the last 2 years and now are choosing real estate as a more stable cash flow and to make up part of their "investment portfolio".
KA1
Senior Member
http://www.ctvbc.ctv.ca/servlet/an/...tate_110602/20110602/?hub=BritishColumbiaHome
Perhaps, a sign of things to come in Toronto?
Perhaps, a sign of things to come in Toronto?
interested
Senior Member
Toronto territorially is much larger than Vancouver. So that may ultimately apply to the core; Rosedale and Forest Hill, maybe the Bridle Path but I think there will be less appreciation here than has occurred historically in Vancouver.
Unless Toronto which is a much larger city decouples totally from local purchasing power based on incomes as Vancouver essentially has in its expensive neighbourhoods, Toronto should not show this type of growth. However, the core I suppose could become like other cores in the world. Only affordable to the very rich or the very poor with the "middle class" frozen essentially out.
Unless Toronto which is a much larger city decouples totally from local purchasing power based on incomes as Vancouver essentially has in its expensive neighbourhoods, Toronto should not show this type of growth. However, the core I suppose could become like other cores in the world. Only affordable to the very rich or the very poor with the "middle class" frozen essentially out.
CN Tower
Banned
KA my friend, I disagree.
Here's a blog discussing how outrageous things have gotten in Vancouver/Canada in general.
http://www.zerohedge.com/article/vancouver-real-estate-market-rollercoaster
[video=vimeo;11211712]http://vimeo.com/11211712[/video]
daveto
Active Member
Sure, a good question. At the heart of it would be "why do people sell"?
I guess it is
1. to sell an investment property for profit
2. to move to a larger place
3. to move a more convenient location
4. to move to a small place (or to exit the market)
Looking at those four reasons
1. why sell when prices continue to rise?
2. it is now too expensive to afford a larger place (including the transaction costs)
3. transaction costs are now on a larger property value, and the LTT's might be disincentive? perhaps prohibitive costs in breaking a mortgage due to lower fixed mortgages from 3 or 4 years ago?
4. likely an increase in this sector due to profits that can be locked in
So in looking at those 4 sectors, it seems that the first three are all less likely to sell, and only the 4th is unchanged or more likely to sell?
Whatever the reason, the lack of supply is unprecedented.
jeff316
Active Member
I’ve always appreciated the appeal of the Australian system but I’m not sure how it prevents “over-bidding†in the long-term
Sure, sometimes not knowing what your competitors are offering can lead you to offering much more than your next highest competitor.
On the other hand, not knowing your competitor’s bid sort of forces you to pick a number you’re comfortable with and stick with it.
Knowing that you only another 6000$ or 10 000$ or 12 000$ will make your bid the highest could make it very easy to see prices on desirable properties escalate even further.
That being said, I’ve never fully understood how the bidding stops in the Australian system. Does it just keep going until there is only a single bid remaining that is acceptable to the seller?
Anyone know?
cdr108
Senior Member
the TO economy is still borderline except the housing market.
even then, it's still touchy when it comes to renovators ... at least that's what I was told by several contractors.
when people are uncertain about the state of the economy, they tend not to move upwards as the transaction costs to buy/sell are very prohibitive (i'd say a good $50-75K of one's asset is lost [10% of the price ]when R/E commissions, LTT, lawyers, movers, etc) and the added costs for additional mortgage.
at the same time, would the theoretical R/E gains cover the costs above?
if not, then what's the point of moving? hence, lack of supply.
it appears the lack of supply is mostly with single-family homes (SFH) and not condos.
The strongest rate of price growth was experienced for single-detached homes (12%) and semi-detached (10%) sold in the City of Toronto, while condos (4%) and THs (3%) in the 416 experienced the lowest appreciation.
even then, it's still touchy when it comes to renovators ... at least that's what I was told by several contractors.
when people are uncertain about the state of the economy, they tend not to move upwards as the transaction costs to buy/sell are very prohibitive (i'd say a good $50-75K of one's asset is lost [10% of the price ]when R/E commissions, LTT, lawyers, movers, etc) and the added costs for additional mortgage.
at the same time, would the theoretical R/E gains cover the costs above?
if not, then what's the point of moving? hence, lack of supply.
it appears the lack of supply is mostly with single-family homes (SFH) and not condos.
The strongest rate of price growth was experienced for single-detached homes (12%) and semi-detached (10%) sold in the City of Toronto, while condos (4%) and THs (3%) in the 416 experienced the lowest appreciation.