Baby, we got a bubble!?

[daveto]

Can anyone clearly state (or point to an article that describes) what exactly is causing the low inventory in Toronto?

It is still very low: courtesy of guava.com

Good question. I don't know. But a filter on MLS shows tha iin the two weeks since the mortgage rules changed there have been approx 3000 new listings. (approx twice the sales for the period) The number of new listings for the two weeks prior to the rules changes was half that at 1500. Whether that is a blip from the rule changes or the beginning of a trend, I don't know.

 

[cdr108]

Good question. I don't know. But a filter on MLS shows tha iin the two weeks since the mortgage rules changed there have been approx 3000 new listings. (approx twice the sales for the period) The number of new listings for the two weeks prior to the rules changes was half that at 1500. Whether that is a blip from the rule changes or the beginning of a trend, I don't know.

i think several factors are at play ...
new mortgage rules, typical trend of more inventory being listed from December-January lows, completion/registration of new construction coming online.

i expect more listings in the future months but nothing too dramatic until the end of 2010 / early 2011.

 

[light play]

thanks to all for the responses!

 

[urbandreamer]

Sell. Then move to Hamilton and rent a house for $500/month. Wait for the double bottom coming in Toronto's market. Buy.

 

[Eug]

According to TREB:

Average price in Toronto in February was $431509 (+19% yoy).
Median price in Toronto in February was $366300 (+17% yoy).


According to Teranet:

The housing price index in Toronto for December 2009 is 119.65, if June 2005 is considered 100. Interestingly, this is the lowest increase of all the cities they report (Vancouver, Calgary, Toronto, Ottawa, Montreal, Halifax). National average is 132.15.

 

[daveto]

According to TREB:

Average price in Toronto in February was $431509 (+19% yoy).
Median price in Toronto in February was $366300 (+17% yoy).

Sales of 7,291 are a new record for February. The previous high was 6,866 in February 2002. From 2003-2008 sales were in the 6,000-6700 range.

 

[Eug]

This wasn't in the press release, but I heard on the radio that the 905 hit $402000 average this month.

I'm not sure, but I think that may be the first month the 905 has ever been above $400000 average.

If new builds are anything like the rest of the market, more than half of homes built would get hit with significant new taxes that didn't exist before.

 

[daveto]

Yes, $402k. It is here http://www.torontorealestateboard.c...et_news/news2010/pdf/nr_market_watch_0210.pdf

 

[Eug]

Thanks. I missed that other press release.

The other eye opener is that in the 416, the average price is now almost $476000. It's only another 5% before it hits the big half-mil. I too lean to the view that there may be a mild to possibly moderate pullback in the coming years (as interest rates rise, especially in 2011 and beyond), but I could also easily see the 416 hitting that psychological milestone of half-a-million-$ average sooner rather than later.

And to think, back in 2005 I was already starting to worry about a pullback. We're already 20% higher than 2005 levels now.

 

[cabbagetowner]

i've always trusted the teranet hpi numbers as the most honest indicator of the re market. recently however i've read that they exclude certain data that may skew the results. i've briefly looked over the methodology link and it's a bunch of mumbo jumbo to me. anyone have any idea how much data is excluded?

I've always thought the numbers were a little conservative in terms of toronto.

 

[daveto]

i've always trusted the teranet hpi numbers as the most honest indicator of the re market. recently however i've read that they exclude certain data that may skew the results. i've briefly looked over the methodology link and it's a bunch of mumbo jumbo to me. anyone have any idea how much data is excluded?

I've always thought the numbers were a little conservative in terms of toronto.

Their methodology is predicated on comparing apples to apples.

First, they only use data from houses that have two sales on record. This way they can compare the true change in price of the same unit. Thus, their data doesn't reflect new houses and new condos, etc.

Also, if a house is reno'd, rezoned and sold as two separate units they don't include that.

It is important to note that they make no warranty about the average price of houses. They are simply tracking the changes.

Of note is that they don't allow a expensive properties to skew the figures. ie if two properies sell, one a million dollar property with a 10% increase, and the other a $100k property with no increase, then their methodology says the avg increase for the market was 5% (ie 10%/2). Whereas the actual $s in the market would suggest a 9% increase (ie $1.2m/$1.1m)

 

[Eug]

To avoid the luxury mansion skewing effect, without having to resort to the very restrictive method that Teranet uses, one might just use TREB's median price.

 

[daveto]

I wouldn't characterize Teranet's approach as restrictive. It provides a far more accurate picture of the change in the asset price of RE than the TREB data. The one thing that it misses (as does the TREB data) is the cost of renovations/improvements betwen sales.

 

[interested]

I wouldn't characterize Teranet's approach as restrictive. It provides a far more accurate picture of the change in the asset price of RE than the TREB data. The one thing that it misses (as does the TREB data) is the cost of renovations/improvements betwen sales.

All this just confirms that a purchaser (given a non crazy market where you multiple bid against an artificial deadline) has to do his homework and ensure that in the neighbourhood he/she purchases, the price of comparables allows for renovations/improvements so that apples are compared to apples. In other words, data is only as good as the input information and the assumptions made. Then it behooves the purchaser to look critically and ask themselves is the result realistic or is it being skewed. Granted much easier said than done. I agree i think Teranet is more accurate but i think one has to look at data at as many sources as possible and then try and merge the data into an informed decision, realizing the potential shortcomings of the data from different sources. In the end, one will still be estimating what has/is happening to market prices but at least it will be a more "informed" guess.

 

[cabbagetowner]

Their methodology is predicated on comparing apples to apples.

First, they only use data from houses that have two sales on record. This way they can compare the true change in price of the same unit. Thus, their data doesn't reflect new houses and new condos, etc.

Also, if a house is reno'd, rezoned and sold as two separate units they don't include that.

It is important to note that they make no warranty about the average price of houses. They are simply tracking the changes.

Of note is that they don't allow a expensive properties to skew the figures. ie if two properies sell, one a million dollar property with a 10% increase, and the other a $100k property with no increase, then their methodology says the avg increase for the market was 5% (ie 10%/2). Whereas the actual $s in the market would suggest a 9% increase (ie $1.2m/$1.1m)

thanks!