Baby, we got a bubble!?

[CN Tower]

http://www.theglobeandmail.com/glob...-still-sees-2012-us-recession/article2390898/

Over time I've observed, ascertained and experienced that market pundits, whether stocks, bonds, real estate, commodities or tulips, act virtually entirely out of self-interest and rarely with an objective eye. It's rare to find a media voice capable of rising above it all and loudly voicing a position with true conviction. Sprott seemed to believe that commodities were going to run and he made himself a billionaire in the process. Had they not I've sure he would have profited as fees but not to same extent. These pundit lack accountability in their opinions and I find myself increasingly ignoring their 24 hr news cycle musings.

Another exception might be Robert Shiller who I recall absolutely screaming about the US housing market back in 2006 or Michael Burry whose ideas about shorting mortgage bonds through opaque crdit default swaps were well documented in The Big Short by Michael Lewis.

 

[urbandreamer]

^On that point I agree. I find the MSM is behind on the news or has a hidden agenda--likely to make their buddies money. Thus I just read the British Press--much more interesting anyway.

But I do wonder why you have such a hatred for Brad Lamb?

Finally, any idea how well precon sales went in March?

 

[Eug]

These bare bones "condos" are going for $2160 - $3300 per square foot.

The 3-inch condo is here

Parallax Investment Corporation has purchased a lot in Markham, Ont., to construct its 16,000 sq. ft. ultra high-tech security project comprised of safety deposit boxes that range in size. About half the project will be devoted to client parking, and 2,000 sq. ft. of it will be vault space. There will be around-the-clock security, client reception areas, and small private suites.

But instead of operating as a rental, SafeBox Condominium Vaults will operate as a condo, with presales launching March 31. It will have a completion date some time in spring 2013. Although there won't be anyone living in the building, it will operate like a condo development, says Parallax's Nigel Lawson.

Owners will run the building collectively by a condo board, and residents will cover repair bills, pay condo fees and property taxes.

The price of the three-inch high, 10-inch wide, 24-inch deep gold box is $3,600, with an annual fee of $109, and taxes of $64. The platinum box, which is the same length and width, but eight inches high, has a price tag of $5,500, with an annual fee of $273 and taxes of $97.

BTW, my bank account includes a safety deposit box rental for free. Plus I could get one within a 5 minute drive from my house, instead of all the way in Markham. I haven't bothered to get one yet though, and I've had this account for a decade or something.

 

[KA1]

http://www.moneyville.ca/article/1156500--gta-housing-prices-nudge-over-500-000

GTA housing prices nudge over $ 500,000.

 

[Eug]

TREB data:

http://torontorealestateboard.com/market_news/market_watch/index.htm
http://torontorealestateboard.com/market_news/market_watch/2012/mw1203.pdf
http://torontorealestateboard.com/m...storic_stats/pdf/TREB_historic_statistics.pdf

 

[CN Tower]

^On that point I agree. I find the MSM is behind on the news or has a hidden agenda--likely to make their buddies money. Thus I just read the British Press--much more interesting anyway.

But I do wonder why you have such a hatred for Brad Lamb?

Finally, any idea how well precon sales went in March?

http://www.cbc.ca/news/canada/story/2012/03/14/real-estate-overseas-investors.html

Lamb- part of the problem:

Toronto real estate mogul Brad Lamb said Canadians' home-buying expectations have to change, but he doesn't believe that overseas investors are to blame.

The scarcity of the product — in this case, single detached homes — is key, he said. And as the Toronto population grows and land available for new houses becomes scarce, the competition for these homes will become even more intense.

Condos are the alternative. Already, they're the norm for families wanting to live in the central cores of cities such as New York and Chicago, said Lamb, who is a condo developer.

"It's an illusion for people to think they can live in downtown Toronto in a detached home and not be wealthy," Lamb said. "Ordinary people can't live in central London or central Paris or central New York.

"If you want to live in central Toronto, you're going to have to live in a condo or be a millionaire. That's the reality. ... It's not a bad thing. It's the way cities evolve."

The correct answer is 'sure overseas buyers are here. Thank god for that! Without their money we would all be screwed! I don't know how long this crazy ride is going to last but I will be milking every last drop of it!'

 

[Eug]

Actually, even though I'm not a big Lamb fan, I'd have to agree with Lamb here. People are moving into smaller dwellings in central Toronto, especially condos, because they can't afford semis, townhouses, and detached homes. To a large extent, it really is as simple as that.

 

[TheKingEast]

CNTower's hatred for Lamb runs pretty deep and I'm not quite sure why. Lamb is just like every other developer in this city cashing in on the development craze. However, I think he at least makes an attempt at building some nicely designed buildings. There has to be some history there because I've seen him criticize Lamb many, many times... Not an attack, just something I've noticed from him. But he's not alone as many others seem to dislike Lamb...throw Freed in there too.

 

[cdr108]

Actually, even though I'm not a big Lamb fan, I'd have to agree with Lamb here. People are moving into smaller dwellings in central Toronto, especially condos, because they can't afford semis, townhouses, and detached homes. To a large extent, it really is as simple as that.

ppl can't afford it because valuations are inflated due to ultra low interest rates pure and simple.

 

[Eug]

ppl can't afford it because valuations are inflated due to ultra low interest rates pure and simple.

People can't afford it partially because valuations are inflated due to ultra low interest rates.

The question though is how much inflation there actually is. If prices did drop 15% next year, would that mean everyone in a 600 square foot one bedroom unit would suddenly be able to afford that 1100 square foot 2-bedroom townhouse in King West. No, of course not.

Prices have gone up for a number of reasons. Saying that it's just because of interest rates is far too simplistic.

BTW, I think it's more enticing to live downtown now in 2012 than it was when I bought pre-con back in the 90s. It was quite inconvenient back then, because every-day life type of shopping often sucked. Now you have a grocery store on every second corner it seems, etc.

 

[interested]

http://www.cbc.ca/news/canada/story/2012/03/14/real-estate-overseas-investors.html
The correct answer is 'sure overseas buyers are here. Thank god for that! Without their money we would all be screwed! I don't know how long this crazy ride is going to last but I will be milking every last drop of it!'

I have a couple of questions about this comment CN Tower.
Are you suggesting by "milking it" we should be selling now into the upward trend of prices as you think we are at/near the top?
Are you suggesting we should be buying more to go along for the "crazy ride" as it will continue for a while yet?
And either way, picking the top (or bottom for that matter) is exceedingly difficult. If you believe we are not at the top yet, when do you think this will happen now?
I ask because as you know a lot on this forum have been expecting the correction for years...proven wrong so far. That said, all one can reasonably do is make a prediction at this point in time going forward.

 

[interested]

Actually, even though I'm not a big Lamb fan, I'd have to agree with Lamb here. People are moving into smaller dwellings in central Toronto, especially condos, because they can't afford semis, townhouses, and detached homes. To a large extent, it really is as simple as that.

I concur that one cannot blame Lamb and further more, I believe his comment about more expensive homes in the core unless it melts significantly which would mean TO would have to lose it's status as the premiere city of business in Canada is in fact correct.

I don't know if Lamb was misquoted or taken out of context but the part that offended me was a few years ago when he was more of a realtor than developer he was purported to have said that realtors "loved divorces" as there would be 1 home to sell and 2 other homes to buy. It was this apparent callousness towards individuals that was offensive to me. I point out however that it may have been the reporter taking a comment made out of context or even misquoted/misrepresented.
Even a divorce lawyer would know not to be quoted like this even though his livelihood would be totally dependent on a "robust divorce business".

All that said, the reality is that Lamb for all the "love/hate" people may have for him was probably the best most informed realtor I ever met. He knew the City like the back of his hand. What buildings to buy and not buy. What units to purchase and not. Realtors as a rule do not impress me. Lamb clearly does. I always appreciate competent people at that job.

As for being a developer, of course he says things with a slant at times that perhaps are not objective and are more self serving however that does not make him part of the problem any more than realtors, real estate lawyers, marketers, main stream media, architects, etc.: all of whom rely on a vibrant real estate market for their livelihood. Also, individuals who buy at these prices can make a decision to rent if they feel everything is overvalued and eventually if supply outstrips demand, there will be a correction...so end users also are also part of the problem.

 

[marsh]

Story from the Globe today

Despite low rates, many Canadians holding off home purchases: survey
Jon Cook
Toronto— Reuters
Published Thursday, Apr. 05, 2012 6:09AM EDT
Last updated Thursday, Apr. 05, 2012 6:44AM EDT
A growing majority of Canadians do not intend to buy a house in the next two years, even with mortgage rates near record lows, according to a Royal Bank of Canada (RY-T57.190.090.16%) survey released on Thursday.
In RBC’s annual poll of Canadian homeowners, 73 per cent of respondents said they are unlikely to buy within the next two years, an increase of 2 per cent over the previous year’s survey.
However, 46 per cent of those polled expected mortgage rates to stay at ultra-low levels next year, up sharply from 30 per cent in 2011. The poll also found that nearly 60 per cent felt this year was a good time to buy a house, compared to 41 per cent that felt 2013 would be better.
“Canadians still feel confident about real estate but are a little uncertain about where the market is heading and when it makes sense to buy,” said Marcia Moffat, head of home equity financing at RBC.
Ms. Moffat added that considerations such as affordability may be keeping potential home buyers on the sidelines.
Canadian policymakers and economists have fretted about rising housing prices as household debt levels have soared. The ratio of debt to personal disposable income hit a record 151.9 per cent last year.
The market has been sustained by ultra-low interest rates since the financial crisis began in 2008. The Bank of Canada is widely expected to keep its main policy rate at the current 1 per cent until the third quarter of 2013 as global economic growth remains subdued.
Earlier this week, Bank of Canada Governor Mark Carney warned that household spending relies too much on low borrowing rates and the high value of homes, which prompted traders to increase bets on a rate hike in late 2012.
Recent industry data showed overall home prices rose just 0.1 per cent in January from December, but were up 6.5 per cent from a year earlier.
In the RBC poll, 68 per cent of homeowners said the value of their home had increased in the last two years, but only 47 per cent expected prices to be higher a year from now.
The poll was conducted by Ipsos Reid between January 24 and 30.

 

[interested]

Story from the Globe today

Despite low rates, many Canadians holding off home purchases: survey
Jon Cook
Toronto— Reuters
Published Thursday, Apr. 05, 2012 6:09AM EDT
Last updated Thursday, Apr. 05, 2012 6:44AM EDT
A growing majority of Canadians do not intend to buy a house in the next two years, even with mortgage rates near record lows, according to a Royal Bank of Canada (RY-T57.190.090.16%) survey released on Thursday.
In RBC’s annual poll of Canadian homeowners, 73 per cent of respondents said they are unlikely to buy within the next two years, an increase of 2 per cent over the previous year’s survey.
However, 46 per cent of those polled expected mortgage rates to stay at ultra-low levels next year, up sharply from 30 per cent in 2011. The poll also found that nearly 60 per cent felt this year was a good time to buy a house, compared to 41 per cent that felt 2013 would be better.
“Canadians still feel confident about real estate but are a little uncertain about where the market is heading and when it makes sense to buy,” said Marcia Moffat, head of home equity financing at RBC.
Ms. Moffat added that considerations such as affordability may be keeping potential home buyers on the sidelines.
Canadian policymakers and economists have fretted about rising housing prices as household debt levels have soared. The ratio of debt to personal disposable income hit a record 151.9 per cent last year.
The market has been sustained by ultra-low interest rates since the financial crisis began in 2008. The Bank of Canada is widely expected to keep its main policy rate at the current 1 per cent until the third quarter of 2013 as global economic growth remains subdued.
Earlier this week, Bank of Canada Governor Mark Carney warned that household spending relies too much on low borrowing rates and the high value of homes, which prompted traders to increase bets on a rate hike in late 2012.
Recent industry data showed overall home prices rose just 0.1 per cent in January from December, but were up 6.5 per cent from a year earlier.
In the RBC poll, 68 per cent of homeowners said the value of their home had increased in the last two years, but only 47 per cent expected prices to be higher a year from now.
The poll was conducted by Ipsos Reid between January 24 and 30.

If the bolded statement is true and this truly represents the thinking going forward, then demand should ease going forward.

Of course, for every statement like this, I can find another opposite opinion or article proposing that prices will continue to go up.

 

[CN Tower]

I have a couple of questions about this comment CN Tower.
Are you suggesting by "milking it" we should be selling now into the upward trend of prices as you think we are at/near the top?
Are you suggesting we should be buying more to go along for the "crazy ride" as it will continue for a while yet?
And either way, picking the top (or bottom for that matter) is exceedingly difficult. If you believe we are not at the top yet, when do you think this will happen now?
I ask because as you know a lot on this forum have been expecting the correction for years...proven wrong so far. That said, all one can reasonably do is make a prediction at this point in time going forward.

I personally believe prices are headed higher but only in really good established areas.