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Baby, we got a bubble!?

redfirm said:
Oh, ok. Thanks for clarifying.

btw, what happened to Interested? Long time no see ...
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It seems that Interested is licking his wounds. Just like you, he had been forecasting a 'bubble burst' -- in his case March/April 2011. If the bubble has indeed burst, then, I must have been sleeping at the switch.

I am sure, sooner or later, he will come back with another forecast.
 
KA1 said:
It seems that Interested is licking his wounds. Just like you, he had been forecasting a 'bubble burst' -- in his case March/April 2011. If the bubble has indeed burst, then, I must have been sleeping at the switch.

I am sure, sooner or later, he will come back with another forecast.
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you seem overly confident ...

what were the famous words by Warren Buffet ?!?!?
" Be fearful when others are greedy, and be greedy when others are fearful "

even though Canadian and TO r/e are bubbly, the majority of the masses still think it's a good investment and that we're 'cheap' compared to cities like NYC, London, Paris, HK, Toyko, etc even though TO is not anywhere near in comparison without the density and plenty of developable land.

the top 10 world cities:

Alpha++ world cities:
London, New York

Alpha+ world cities:
Chicago, Dubai, Hong Kong, Paris, Shanghai, Singapore, Sydney and Tokyo
 
Hi Guys,
Thanks for noticing I haven't been posting. I have actually been away for almost a month and simply did not have the time nor inclination to post.

Contrary to Ka1's comment, meant to get me to post, I am not licking my wounds. I simply do not have a lot to add. Waiting for the drop if/when it happens as I said previously is like waiting and watching paint dry. It will not be clear until 6 months to a year after it has happened and retrospectively everyone will claim success at having "predicted" the demise.

Interest rates are being kept artificially low hence propping up real estate. The overall problems in the World economy are forcing Mark Carney not to raise interest rates despite inflation pushing against the bank's targets. In a normal environment, interest rates would be rising. They are not due to all the problems. The stock market melted over the last 1/4 but has gained 8%(TSX) and 12% (DOW) since the beginning of October.

Real Estate is a shelter as pointed out by lots on the forum for people who are looking where to place the assets they have in a world awash in money. I still maintain at some point the governments will have to delever. When it happens, R/E and a lot of other asset classes will suffer.

But to those of you who suggested I am licking my wounds....hardly. And just remember todays hero is tomorrow's goat. I recall an article in the Globe talking about Bill Gross (the largest bond fund manager acknowledging he totally blew it) and I believe it was Hank Paulson (the hedge fund manager who made the most money ever in a year (I believe it was about 6 Billion dollars) who just bet big on Sino Forest.

My point, make calls and you will be proven both right and wrong.

Now that I am back (though leaving again for a week in a couple of days) I shall try and rejoin the conversation.
 
ponyboy said:
These kind of articles are irritating because the author isn't really talking about fundamentals in dismissing the housing bubble, despite claiming to

http://www.thestar.com/opinion/editorialopinion/article/1075255--no-housing-bubble-in-toronto

I support requiring declarations of conflict of interest (real or perceived) for such opinion pieces as we do in other arenas of public influence. Maybe conflict of interest is too narrowly defined?
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Ok, Robin says there's no bubble, everything is balanced and great ... I feel safe now. But Carney has to keep rate at 1%. That fact alone tells me nothing is ok.

All I know, 99% of Lehman Bros and Bear Sterns employees, including some of the top executives showed up for work one day - expecting it will be just another great day on Wall Street - and found the doors locked ..... damn leverage ....
 
Although I've been one of the few 'agents" to caution about people (mainly speculators) getting in over their head in this market; I will have to admit that although the fundamentals clearly show an overheated market, their will be no real estate crash anytime soon. As long as interest rates continue to be this low (and all indications are that they will be for some time), the market will continue to throttle along. There will be no US style bust as the Canadian government will not allow it to happen. Intervention and manupulation will be the norm for some time to come; and since "the market can remain irrational longer than I can remain solvent", I have no choice but to ride the trend.
 
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I've said it before and I'll say it again. The interest rate control isn't about the real estate market. It's about other aspects of the economy. The side effect of such low interest rates is continued decent business for realtors, even when other economic indicators aren't great.

However, the point here is that interest rates will rise when other aspects of the economy improve. An improving economy will also serve to support the real estate market. That support might not be enough to prop up prices when interest rates rise, but based on the information available to us, there isn't really good justification to say that prices will drop like a rock when rates rise.

So again as I've said before, if prices do drop they should drop modestly, unless there is some severe event that we cannot foresee at this time.
 
Ric said:
Although I've been one of the few 'agents" to caution about people (mainly speculators) getting in over their head in this market; I will have to admit that although the fundamentals clearly show an overheated market, their will be no real estate crash anytime soon. As long as interest rates continue to be this low (and all indications are that they will be for some time), the market will continue to throttle along. There will be no US style bust as the Canadian government will not allow it to happen. Intervention and manupulation will be the norm for some time to come; and since "the market can remain irrational longer than I can remain solvent", I have no choice but to ride the trend.
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The problem (or flaw as it were) with the 'as long as interest rates' argument that I see is that it merely sustains existing values and, all things being equal, would not permit further increases.

If Mr. Market has only $15,000 available for debt service then he can only afford to pay $500,000 for a property if mortgage rates are 3%. If mortgage rates do not change, and let's assume that property tax, maintenance and insurance don't change either (impossible), how can Mr. Market afford to pay $525,000 in Year 2? Did his wage increase by 5% year to year? Unlikely if we are still seeing 'emergency' rates in effect at the BOC.

So while I can almost be convinced that prices can remain where they are I find it hard to believe that they will increase at all when virtually all the appreciation seen has been the result of this: (and this is only to January btw)

2yr-3yr-5yr-Canadian-Bond-yield-10-Year-Chart.png
 
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A condo at 45 Carlton Street (The Lexington). 1300 square feet, two bedrooms, two bathrooms, two solariums. 16th floor. North and West exposure. View of the Police Headquarters. New bathrooms and kitchen. Valued at $500,000. What do you think is the true value right now, as many of you say that condos are over-valued. I guess the older condominiums aren't as overvalued though. Still, estimate the value to you.
 
yin_yang said:
A condo at 45 Carlton Street (The Lexington). 1300 square feet, two bedrooms, two bathrooms, two solariums. 16th floor. North and West exposure. View of the Police Headquarters. New bathrooms and kitchen. Valued at $500,000. What do you think is the true value right now, as many of you say that condos are over-valued. I guess the older condominiums aren't as overvalued though. Still, estimate the value to you.
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a search on mls.ca shows 3 units for sale with identical maintenance fees, but completely different sizes ranging from 1,200 -1,400 sq ft, so i'm thinking someone is mistaken with the square footage. the prices ranged from $469.9K to $495K.

what do these 'new' baths and kitchen look like in the unit you're referring to?
- ie. quality of materials, style, how new, etc?

in the units listed above, one "reno'd" kitchen looked like it was from the 1980's, another had laminate countertops for the baths and kitchens, some had carpeting while another had laminate floors, etc, etc.

personally, i wouldn't pay more than $400K for any of them.
use the $70-100K to do a proper updated reno.
 
Some buildings have fees based on size categories not actual specific size. Dunno about that building though.

I agree the places look dated but if one truly is 1400 sq ft then $469000 isn't too bad at $335 per sq ft, esp. considering it includes a parking spot. I think it's worth more than $400000, but it's also worth less than $500000.
 
Eug said:
Some buildings have fees based on size categories not actual specific size. Dunno about that building though.

I agree the places look dated but if one truly is 1400 sq ft then $469000 isn't too bad at $335 per sq ft, esp. considering it includes a parking spot. I think it's worth more than $400000, but it's also worth less than $500000.
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It's going to cost around 100k or more to fix it up to luxury standards that builders offer. If one bought at 470k + 100k to fix up; it might be better just to get a new one with everything completed? Unless you want to select the finishes yourself and prefer old buildings.
 
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And that's why we bought new. Cost ended up being about the same, plus we didn't have to go through the headache of renovating.
 
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