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Baby, we got a bubble!?
- Thread starter simuls
- Start date
interested
Senior Member
Specifically, what is your view of downtown Toronto condos in the C01 area (the core)?
interested
Senior Member
Thesb
Active Member
Counterpoint:
Toronto’s condo boom continues after record 2011
“I don’t see the bubble everyone is talking about. We’ve seen no slowdown from investors,” says realtor Roy Bhandari, part of a four-person Sotheby’s International team that focuses largely on preconstruction condo sales and sold 45 units in INDX within days of the project being announced.
“If anything, people are more eager right now. They still see (the Toronto condo market) as a great place to put their money, especially when you weigh it against other investments like stocks and bonds.”
Most of the investors Sotheby’s sees are immigrants now living in Canada, looking to hold onto units for at least two years and rent them out, even if the escalating costs and shrinking size of condos is making it harder to break even on rents.
As what Hoffman calls the “live hard, play hard” crowd looks increasingly for downtown addresses within walking or subway distance of work, demand for condos, to rent or buy, is actually close to outstripping supply, despite the condo boom, says Bhandari.
Downtown realtor Mark Savel says he’s seeing more bidding wars for prime downtown rental condos, even at $1,900 a month.
Linky
Toronto’s condo boom continues after record 2011
“I don’t see the bubble everyone is talking about. We’ve seen no slowdown from investors,” says realtor Roy Bhandari, part of a four-person Sotheby’s International team that focuses largely on preconstruction condo sales and sold 45 units in INDX within days of the project being announced.
“If anything, people are more eager right now. They still see (the Toronto condo market) as a great place to put their money, especially when you weigh it against other investments like stocks and bonds.”
Most of the investors Sotheby’s sees are immigrants now living in Canada, looking to hold onto units for at least two years and rent them out, even if the escalating costs and shrinking size of condos is making it harder to break even on rents.
As what Hoffman calls the “live hard, play hard” crowd looks increasingly for downtown addresses within walking or subway distance of work, demand for condos, to rent or buy, is actually close to outstripping supply, despite the condo boom, says Bhandari.
Downtown realtor Mark Savel says he’s seeing more bidding wars for prime downtown rental condos, even at $1,900 a month.
Linky
Last edited:
Eug
Senior Member
This thread is almost 3 years old.
Some of the the initial predictions were that the crash was going to happen within 1 to 1.5 years. And of course, this is ignoring the predictions in other posts that preceded this thread.
CN Tower
Banned
Not a liable source.
When Urbanation releases their Q1 summary to public then we'll know the truth.
Wooba
Active Member
History has proven time and time again that you're right overall, just wrong on timing.
KA1
Senior Member
This post is part of an article from the Moneyville section of today's The Star. It talks about 600 realtors showing up on INDX VIP day event last week and that 70% of 798 units are sold out.
Earlier there have been posts on various threads that during the VIP days of 1 Thousand Bay and CASA2, police had to be called in to handle the overflowing crowd.
Last week, Minto sent emails offering 4% commissions on its latest 30 Roe. This week, Minto has added free $ 2000 bonus upgrades on 1+1 bedroom units and free $ 4,000 upgrades on 2 bedroom units.
It's all confusing.
Any thoughts from anybody?
Last edited:
KA1
Senior Member
macookie
Active Member
http://www.ritholtz.com/blog/2012/04/foreclosures-a-decade-long-overhang-part-4-of-5/
Barry Ritholtz, noted his 5-part piece on American Foreclosures that it's... "Funny how rising prices can drive supply higher." Which is exactly what is happening in Toronto. Housing sector, moves forward until one part starts to unravel it all, and then you roll down the mountain you just climbed. Mr. Ritholtz pretty much says that America isn't going to get out of their foreclosure mess anytime soon... and mentions in his post today, that it's about 5 inning in, and no one should see price increase for a few more years. He mentions, affordability being the key. He notes that young college students... have to be able to afford the entry-level homes... and then there's the expectation of lower prices to content with as a result of many foreclosures.
Is Toronto housing affordable??... and do price increases make it anymore affordable? Without income gains?.. (which are unlikely to happen) So is it not in our collective vested Canadian interests for affordable housing for everyone.. today? Because as we gain more unaffordable housing, and the greater the inequality... what we get is the greater the chance of a larger economic disruption as a result of falling housing prices. So.. yeah... let's all cheer on higher prices in downtown, and across Canada... because the bigger the bubble... the more pent up demand now... will result in more housing being built and a longer period of really lower prices for everyone.
Barry Ritholtz, noted his 5-part piece on American Foreclosures that it's... "Funny how rising prices can drive supply higher." Which is exactly what is happening in Toronto. Housing sector, moves forward until one part starts to unravel it all, and then you roll down the mountain you just climbed. Mr. Ritholtz pretty much says that America isn't going to get out of their foreclosure mess anytime soon... and mentions in his post today, that it's about 5 inning in, and no one should see price increase for a few more years. He mentions, affordability being the key. He notes that young college students... have to be able to afford the entry-level homes... and then there's the expectation of lower prices to content with as a result of many foreclosures.
Is Toronto housing affordable??... and do price increases make it anymore affordable? Without income gains?.. (which are unlikely to happen) So is it not in our collective vested Canadian interests for affordable housing for everyone.. today? Because as we gain more unaffordable housing, and the greater the inequality... what we get is the greater the chance of a larger economic disruption as a result of falling housing prices. So.. yeah... let's all cheer on higher prices in downtown, and across Canada... because the bigger the bubble... the more pent up demand now... will result in more housing being built and a longer period of really lower prices for everyone.
interested
Senior Member
There are a very large number of projects and they are all competing for the same buyer pool. Clearly enough end investors (since they make up a large part of the pool of buyers) are buying into the notion that there is money to be made.
With present PRECON prices; growth will need to be in the order of 8-9%/year. Even with what has happened the past few years which I believe we will agree has been much beyond historic, this %-age increase is even greater. This figure is based on $525/sq.ft. resale price and $700-800/sq.ft. and let alone that many projects do not include the parking in this/sq.ft. price.
There is likely no money to be made in the hope of flipping at today's prices when the projects are ready. At some point given that investors who look at cap rates are gone....read the Europeans and Developed World investors.... this would suggest to me that all that is left are those looking for capital preservation. I do not pretend to know how many of those there are left but in the process of capital preservation if this is what is justifying ongoing price increases then I cannot personally fathom what/who will buy from these buyers when they decide to unload for whatever reason.
In the mean time, as McCookie points out, new buyers cannot afford these prices and so the pool left to drive the market is getting smaller. My concern is I am getting more fearful that as I hear 70% sold out (let's see how much gets given back in the 10 day rescission period since much may be agents who take a lot of units and need their clients to buy in) in a week this is eerily similar to the line ups in 1988-1989 before the crash in TO and what was happening in developments released in Florida in 2005 when people camped outside to buy "everything".
I am not saying we will have a crash for all the reasons that Toronto has going for it. However when the only reason to buy is a) you are an end user planning very far ahead or b) you are a speculator (not an investor) counting solely on price appreciation
or c) you are in the group of investors who are looking to place money and are prepared to rent for the longer term at no money return or even a loss to carry the investment I personally find it hard to understand the rationale for buying today.
The reason Ka1 for the discounts and offers is that prices are high and to distinguish projects and to try and get buyers in (as I personally believe we are seeing some point that even the developers believe we are near the end as prices continue to rise) they are looking to get enough sales to be among the projects that get built and that a number will not get enough interest. It suggests to me at least that despite the press, developers believe we are near the end.
The fear I have is that when we reach the mountain peak which will inevitably happen is that I hope we have gentle road down the other side and not a huge cliff from which we all fall. The taller the mountain peak gets, the more the risk that the fall will be greater and more rapid. Just my view.
Now Ka1 and others can laugh at my "predictions".
Also this is one of my longer jumbled posts I am sure so Ka1 please don't bother to remind me about posting in "English". LOL
interested
Senior Member
The following is an article from condo vultures in SE Florida.
I appreciate we are not Florida. However, I would point out what is happening in Florida and new developments now.
Up to 80% financing being requested before completion. Before the bust, it was 20%.
I believe most projects are asking 20-25% financing here now.
Foreclosure Action Filed Against Proposed Condo Tower Site In Miami
Published on 4/3/2012 3:54:09 PM
Bookmark and Share
As the South Florida condo market shows signs of a rebirth, one of the first post-crash projects to be revived from the last boom - the proposed 369-unit Sky Palace at Mary Brickell Village tower in the Brickell Avenue Area of Greater Downtown Miami - is faced with a potential setback.
A foreclosure lawsuit has been filed by the lender of record - MBV Investment Holdings LLC with authorized representative James W. Shindell - against the proposed project's developer - Skypalace Development LLC with Evangeline Gouletas as managing member - seeking repayment of a $7.4 million mortgage provided in April 2011, according to the South Florida Business Journal and Florida Secretary of State records.
The foreclosure action also names a second lender - LNR-LYND MBV LLC with a Southern California mailing address of LNR Property's Commercial Property Group - that provided a $1.5 million loan just weeks earlier in February 2012 to Skypalace Development LLC, according to the South Florida Business Journal and Miami-Dade County records.
It is unclear what impact if any the foreclosure action will have the proposed 35-story tower that is slated to stand atop the Publix Super Market at the Shops At Mary Brickell Village open-air retail center on Southwest 1st Avenue in the Brickell Avenue Area, industry watchers said.
As of April 4, 2012, developers are proposing 29 new condo towers - including the Sky Palace At Mary Brickell Village - with more than 5,500 units near the coast in the tricounty South Florida region of Miami-Dade, Broward, and Palm Beach, according to the CondoVultures.com Preconstruction Condo Projects list.
A majority of the newly proposed condo units are not expected to be completed until 2014 when the unsold developer inventory from South Florida's last real estate boom and bust is projected to be sold.
Fueled by investors primarily from overseas, less than 4,300 new condo units remain unsold from a supply of nearly 49,000 units created since 2003 in South Florida’s seven largest coastal markets of Greater Downtown Miami, South Beach, Sunny Isles Beach, Hollywood / Hallandale Beach, Downtown Fort Lauderdale and the Beach, Boca Raton / Deerfield Beach, and Downtown West Palm Beach and Palm Beach Island as of Dec. 31, 2011, according to a recent CondoVultures.com report.
Greater Downtown Miami has the distinction of being the single coastal neighborhood with the greatest number of new condos created during the boom with nearly 22,250 units. At the end of 2011, less than 1,750 units remained under the control of the original developers, according to a recent report from CondoVultures.com.
Condo Vultures® relied on public records and private research to complete this study over the course of the last three years.
The results of this exhaustive researching of deeds, condominium documents, and government files is the basis for a series of seven ebooks titled the Official Condo Buyers Guide™. The guides for Greater Downtown Miami, South Beach, and Sunny Isles Beach are already on available for purchase on Amazon.com.
This information is also the foundation for a new Condo Ratings Agency™ service designed to provide guidance on the financial stability of nearly 1,000 condo projects - old and new - with 125,000 units east of Interstate 95 in Miami-Dade, Broward, and Palm Beach counties.
For the proposed Sky Palace At Mary Brickell Village project, the foreclosure action filed on March 21, 2012 comes less than 11 months after Skypalace Development paid $9 million - with a $7.4 million "purchase money mortgage" from the seller Brickell Main Street LLLP - for the air rights to construct the condo tower at the Brickell Avenue Area site, according to government records.
Brickell Main Street LLLP - in its role as the original lender - subsequently entered into an "assignment of mortgage" in March 2012 with MBV Investment Holdings just prior to the filing of the foreclosure action, according to government records.
As of April 4, 2012, at least five condo towers - Hollywood's Apogee Beach; Miami's 23 Biscayne Bay and MyBrickell towers; Sunny Isles Beach's Regalia; and Aventura's Bellini At Williams Island - are under construction, according to a recent CondoVultures.com report.
Construction on a a pair of 40-story condo towers at the proposed six-tower Brickell Citicentre complex in Greater Downtown Miami is scheduled to begin in the upcoming weeks, according to a recent report from CondoVultures.com.
Other than the Brickell Citicentre and Bellini At Williams Island projects, none of the other developers with proposed condo towers have announced financing.
It is unclear how many of the other proposed towers could get developed in the short term as construction financing is challenging - and expensive - to secure, industry watchers said.
To overcome the obvious financing hurdle, most of the newly proposed projects are requiring prospective buyers to commit to deposits - to be paid in phases - of as much as 80 percent of the preconstruction contract price, industry watchers said.
During the most recent South Florida condo boom, preconstruction buyers were generally asked for deposits of about 20 percent, industry watchers said.
It is important to note there are various stages to a residential real estate transaction in South Florida.
A transaction begins when a property is made available for sale and ends when a title is conveyed from one party to another party as a result of the recording of a deed with the local government.
As part of the process, a property typically goes under contract and into a due diligence phase by which a deal can be canceled.
The CondoVultures.com new condo sales report is based on completed transactions where a deed is recorded and taxes paid as a result of the sale.
Condo Vultures® LLC is a real estate consultancy and marketing company based at 1005 Kane Concourse, Suite 205, Bal Harbour, Florida, 33154. You can reach Condo Vultures® LLC at 800-750-0517.
Don't forget to sign up for our weekly Market Intelligence Report™ for detailed condo reports to stay informed on the latest market trends and to find out about our various Condo Vultures® Seminars. Looking for a property at a deep discount? Take a peek at the Vultures Database™ or view our Video Library. Looking for bulk projects direct from developers or lenders? Visit the Condo Vultures® Bulk Deals Database™. Our new books, the Official Condo Buyers Guide to Miami™, Official Condo Buyers Guide To South Beach™, Official Condo Buyers Guide to Sunny Isles Beach™, Official Condo Buyers Guide to Downtown Fort Lauderdale and the Beach™, Official Condo Buyers Guide to Hollywood / Hallandale Beach™, Official Condo Buyers Guide to Downtown West Palm Beach™, and Official Condo Buyers Guide to Boca Raton / Deerfield Beach™, are now available. Want to see every foreclosure filed in South Florida since 2007? Check out our Foreclosure Database™.
© Copyright 2012. Condo Vultures® LLC. All Rights Reserved.
I appreciate we are not Florida. However, I would point out what is happening in Florida and new developments now.
Up to 80% financing being requested before completion. Before the bust, it was 20%.
I believe most projects are asking 20-25% financing here now.
Foreclosure Action Filed Against Proposed Condo Tower Site In Miami
Published on 4/3/2012 3:54:09 PM
Bookmark and Share
As the South Florida condo market shows signs of a rebirth, one of the first post-crash projects to be revived from the last boom - the proposed 369-unit Sky Palace at Mary Brickell Village tower in the Brickell Avenue Area of Greater Downtown Miami - is faced with a potential setback.
A foreclosure lawsuit has been filed by the lender of record - MBV Investment Holdings LLC with authorized representative James W. Shindell - against the proposed project's developer - Skypalace Development LLC with Evangeline Gouletas as managing member - seeking repayment of a $7.4 million mortgage provided in April 2011, according to the South Florida Business Journal and Florida Secretary of State records.
The foreclosure action also names a second lender - LNR-LYND MBV LLC with a Southern California mailing address of LNR Property's Commercial Property Group - that provided a $1.5 million loan just weeks earlier in February 2012 to Skypalace Development LLC, according to the South Florida Business Journal and Miami-Dade County records.
It is unclear what impact if any the foreclosure action will have the proposed 35-story tower that is slated to stand atop the Publix Super Market at the Shops At Mary Brickell Village open-air retail center on Southwest 1st Avenue in the Brickell Avenue Area, industry watchers said.
As of April 4, 2012, developers are proposing 29 new condo towers - including the Sky Palace At Mary Brickell Village - with more than 5,500 units near the coast in the tricounty South Florida region of Miami-Dade, Broward, and Palm Beach, according to the CondoVultures.com Preconstruction Condo Projects list.
A majority of the newly proposed condo units are not expected to be completed until 2014 when the unsold developer inventory from South Florida's last real estate boom and bust is projected to be sold.
Fueled by investors primarily from overseas, less than 4,300 new condo units remain unsold from a supply of nearly 49,000 units created since 2003 in South Florida’s seven largest coastal markets of Greater Downtown Miami, South Beach, Sunny Isles Beach, Hollywood / Hallandale Beach, Downtown Fort Lauderdale and the Beach, Boca Raton / Deerfield Beach, and Downtown West Palm Beach and Palm Beach Island as of Dec. 31, 2011, according to a recent CondoVultures.com report.
Greater Downtown Miami has the distinction of being the single coastal neighborhood with the greatest number of new condos created during the boom with nearly 22,250 units. At the end of 2011, less than 1,750 units remained under the control of the original developers, according to a recent report from CondoVultures.com.
Condo Vultures® relied on public records and private research to complete this study over the course of the last three years.
The results of this exhaustive researching of deeds, condominium documents, and government files is the basis for a series of seven ebooks titled the Official Condo Buyers Guide™. The guides for Greater Downtown Miami, South Beach, and Sunny Isles Beach are already on available for purchase on Amazon.com.
This information is also the foundation for a new Condo Ratings Agency™ service designed to provide guidance on the financial stability of nearly 1,000 condo projects - old and new - with 125,000 units east of Interstate 95 in Miami-Dade, Broward, and Palm Beach counties.
For the proposed Sky Palace At Mary Brickell Village project, the foreclosure action filed on March 21, 2012 comes less than 11 months after Skypalace Development paid $9 million - with a $7.4 million "purchase money mortgage" from the seller Brickell Main Street LLLP - for the air rights to construct the condo tower at the Brickell Avenue Area site, according to government records.
Brickell Main Street LLLP - in its role as the original lender - subsequently entered into an "assignment of mortgage" in March 2012 with MBV Investment Holdings just prior to the filing of the foreclosure action, according to government records.
As of April 4, 2012, at least five condo towers - Hollywood's Apogee Beach; Miami's 23 Biscayne Bay and MyBrickell towers; Sunny Isles Beach's Regalia; and Aventura's Bellini At Williams Island - are under construction, according to a recent CondoVultures.com report.
Construction on a a pair of 40-story condo towers at the proposed six-tower Brickell Citicentre complex in Greater Downtown Miami is scheduled to begin in the upcoming weeks, according to a recent report from CondoVultures.com.
Other than the Brickell Citicentre and Bellini At Williams Island projects, none of the other developers with proposed condo towers have announced financing.
It is unclear how many of the other proposed towers could get developed in the short term as construction financing is challenging - and expensive - to secure, industry watchers said.
To overcome the obvious financing hurdle, most of the newly proposed projects are requiring prospective buyers to commit to deposits - to be paid in phases - of as much as 80 percent of the preconstruction contract price, industry watchers said.
During the most recent South Florida condo boom, preconstruction buyers were generally asked for deposits of about 20 percent, industry watchers said.
It is important to note there are various stages to a residential real estate transaction in South Florida.
A transaction begins when a property is made available for sale and ends when a title is conveyed from one party to another party as a result of the recording of a deed with the local government.
As part of the process, a property typically goes under contract and into a due diligence phase by which a deal can be canceled.
The CondoVultures.com new condo sales report is based on completed transactions where a deed is recorded and taxes paid as a result of the sale.
Condo Vultures® LLC is a real estate consultancy and marketing company based at 1005 Kane Concourse, Suite 205, Bal Harbour, Florida, 33154. You can reach Condo Vultures® LLC at 800-750-0517.
Don't forget to sign up for our weekly Market Intelligence Report™ for detailed condo reports to stay informed on the latest market trends and to find out about our various Condo Vultures® Seminars. Looking for a property at a deep discount? Take a peek at the Vultures Database™ or view our Video Library. Looking for bulk projects direct from developers or lenders? Visit the Condo Vultures® Bulk Deals Database™. Our new books, the Official Condo Buyers Guide to Miami™, Official Condo Buyers Guide To South Beach™, Official Condo Buyers Guide to Sunny Isles Beach™, Official Condo Buyers Guide to Downtown Fort Lauderdale and the Beach™, Official Condo Buyers Guide to Hollywood / Hallandale Beach™, Official Condo Buyers Guide to Downtown West Palm Beach™, and Official Condo Buyers Guide to Boca Raton / Deerfield Beach™, are now available. Want to see every foreclosure filed in South Florida since 2007? Check out our Foreclosure Database™.
© Copyright 2012. Condo Vultures® LLC. All Rights Reserved.
interested
Senior Member
From the Globe and Mail:
http://www.theglobeandmail.com/life...ighbours-real-estate-meltdown/article2392923/
Toronto, spectator to a neighbour’s real estate meltdown
carolyn ireland
Toronto— From Friday's Globe and Mail
Published Thursday, Apr. 05, 2012 10:37AM EDT
Last updated Thursday, Apr. 05, 2012 10:41AM EDT
2 comments
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2
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Sherry Cooper was reminded of just how devastating the U.S. housing crisis has been for families and the overall economy in that country after speaking recently with a friend who is having trouble selling his house in New Jersey.
Ms. Cooper, the chief economist at Bank of Montreal, is starting to worry about Canada’s housing market after refuting the arguments of the extreme bears in the past.
More related to this story
In Toronto, eager buyers prowl for pods in the driveway
In Toronto, buying homes at break-neck speed
But now Ms. Cooper is looking at the debacle in the United States and the blistering pace of the market here and warning people to tread carefully .
Anybody with friends and relatives south of the border likely knows the pain they are experiencing. I can add a story to the mix: I have a family member who paid about $750,000 for a house in Indiana in the late 1990s. She doesn’t think she could get $350,000 for it today.
She also knows that, if she were to list it, her house would be competing with swathes of newer houses built on the surrounding farmland during the boom.
Meanwhile, her husband’s job has been re-located about three hours away in Chicago. They’re stuck with a house they can’t sell without taking a huge loss. How many years will they have to wait for it to recover its value, if it ever does?
The market downturn’s impact on the most leveraged buyers has been severe but this tale shows how even two-income families with no mortgage have had their lives altered significantly.
Ms. Cooper notes that real estate prices in the United States have not stabilized even this far into the debacle which was triggered by the financial crisis of 2008. Mortgage delinquency rates peaked at more than five per cent in early 2010 and have only come down less than two percentage points. And still there is an overhang of foreclosed homes yet to arrive on the market.
The news down there just seems to get more grim. Banks have been tackling a backlog of delinquent mortgages that remained in limbo due to foreclosure-abuse claims. As the legal wrangling gets sorted out, the pace of foreclosures has accelerated.
At the same time, about one-quarter of all homeowners with mortgages are underwater – meaning they owe more than their homes are worth.
Ms. Cooper notes that Canada has weathered the storm well so far and Canadians rarely default on their mortgages, but she cautions that an over-heated housing market could cause major problems in the future.
Canadians have never been so indebted and some may land in trouble when rates eventually rise. She recommends locking in a rate on a long-term mortgage.
She also points to potential shocks: Developers could become over-leveraged as condo-building continues apace in Toronto and Vancouver. Delays in construction caused by supply problems, the threat of strikes by city workers or really just about any event out of the blue could cause developers to abandon projects or look around for deep pockets to help with financing. The banks will be reluctant to increase their exposure to the building industry, Ms. Cooper reckons.
She hopes the condo boom gradually slows and that real estate buyers are careful not to load up on too much debt – especially in the frenzied bidding wars in Toronto.
“I’m not forecasting a crash landing but it would be foolish to ignore the lessons learned south of the border,” she says.
2 comments
I have 2 thoughts with regard to this: The first bolded area shows what really worries me. Well capitalized individuals who are not leveraged are being harmed by the meltdown. If speculators want to bet the farm and understand they can lose it, I have no sympathy. However, the fact that by this irresponsible behaviour they in turn wreak havoc upon those who act responsibly, that is a different matter.
The 2nd point relates to developers: She states that banks may not lend if projects get delayed or other events happen.
I think the point is that a lot of things can go on to derail the present "in my view inflated" property values in condos.
http://www.theglobeandmail.com/life...ighbours-real-estate-meltdown/article2392923/
Toronto, spectator to a neighbour’s real estate meltdown
carolyn ireland
Toronto— From Friday's Globe and Mail
Published Thursday, Apr. 05, 2012 10:37AM EDT
Last updated Thursday, Apr. 05, 2012 10:41AM EDT
2 comments
2
Print/License
Decrease text size Increase text size
Click Here
Sherry Cooper was reminded of just how devastating the U.S. housing crisis has been for families and the overall economy in that country after speaking recently with a friend who is having trouble selling his house in New Jersey.
Ms. Cooper, the chief economist at Bank of Montreal, is starting to worry about Canada’s housing market after refuting the arguments of the extreme bears in the past.
More related to this story
In Toronto, eager buyers prowl for pods in the driveway
In Toronto, buying homes at break-neck speed
But now Ms. Cooper is looking at the debacle in the United States and the blistering pace of the market here and warning people to tread carefully .
Anybody with friends and relatives south of the border likely knows the pain they are experiencing. I can add a story to the mix: I have a family member who paid about $750,000 for a house in Indiana in the late 1990s. She doesn’t think she could get $350,000 for it today.
She also knows that, if she were to list it, her house would be competing with swathes of newer houses built on the surrounding farmland during the boom.
Meanwhile, her husband’s job has been re-located about three hours away in Chicago. They’re stuck with a house they can’t sell without taking a huge loss. How many years will they have to wait for it to recover its value, if it ever does?
The market downturn’s impact on the most leveraged buyers has been severe but this tale shows how even two-income families with no mortgage have had their lives altered significantly.
Ms. Cooper notes that real estate prices in the United States have not stabilized even this far into the debacle which was triggered by the financial crisis of 2008. Mortgage delinquency rates peaked at more than five per cent in early 2010 and have only come down less than two percentage points. And still there is an overhang of foreclosed homes yet to arrive on the market.
The news down there just seems to get more grim. Banks have been tackling a backlog of delinquent mortgages that remained in limbo due to foreclosure-abuse claims. As the legal wrangling gets sorted out, the pace of foreclosures has accelerated.
At the same time, about one-quarter of all homeowners with mortgages are underwater – meaning they owe more than their homes are worth.
Ms. Cooper notes that Canada has weathered the storm well so far and Canadians rarely default on their mortgages, but she cautions that an over-heated housing market could cause major problems in the future.
Canadians have never been so indebted and some may land in trouble when rates eventually rise. She recommends locking in a rate on a long-term mortgage.
She also points to potential shocks: Developers could become over-leveraged as condo-building continues apace in Toronto and Vancouver. Delays in construction caused by supply problems, the threat of strikes by city workers or really just about any event out of the blue could cause developers to abandon projects or look around for deep pockets to help with financing. The banks will be reluctant to increase their exposure to the building industry, Ms. Cooper reckons.
She hopes the condo boom gradually slows and that real estate buyers are careful not to load up on too much debt – especially in the frenzied bidding wars in Toronto.
“I’m not forecasting a crash landing but it would be foolish to ignore the lessons learned south of the border,” she says.
2 comments
I have 2 thoughts with regard to this: The first bolded area shows what really worries me. Well capitalized individuals who are not leveraged are being harmed by the meltdown. If speculators want to bet the farm and understand they can lose it, I have no sympathy. However, the fact that by this irresponsible behaviour they in turn wreak havoc upon those who act responsibly, that is a different matter.
The 2nd point relates to developers: She states that banks may not lend if projects get delayed or other events happen.
I think the point is that a lot of things can go on to derail the present "in my view inflated" property values in condos.
macookie
Active Member
My (bleeding) heart goes out to Doom and Gloom sayers who stayed on the sidelines during this period and lost golden opportunities to make bundle of money.
Well, as they say, there will be another day and another opportunity somewhere over the rainbow.
Yeap... right now is the perfect time to go consume a pre-construction condo. Go donate to your local TO Real Estate Agent a 4% commission on a 800psf box... the more they sell the bigger the rainbow. But also the bigger the flood, from the crash. Condos in Toronto are the "new" tulips of investment... get them before they run out.
Last edited:
daveto
Active Member
My (bleeding) heart goes out to Doom and Gloom sayers who stayed on the sidelines during this period and lost golden opportunities to make bundle of money.
Well, as they say, there will be another day and another opportunity somewhere over the rainbow.
Ah yes, nothing like the sweet satisfaction at the (perceived) misfortune of others.
And tell me, you odious troll, where was the money of those "on the sidelines" over the past three years? Equities? Bonds? Gold? Oil.
Yes, they sure have missed out. Such an idiot.