Baby, we got a bubble!?

[drewp]

I take the TREB stats with a grain of salt. They like to spin every story making it look as the market is on fire. To be honest there could be many reasons for the 5.9% increase, but it is such a small sample that I think the market will be at best by the end of the month be flat compared to the year prior. What I like to do to come up with the current value, look at the exact same layouts that sold last year to this year. So if for example I will take a bachelor, 1 bedroom, 1 bedroom plus den, and 2 bedroom from a building last year, and look at the exact same building/layout this year and the numbers are 1-2% north or south. The numbers suggest a flat yoy. Some buildings defy this logic, but for the most part I am seeing prices pretty flat. Now for example I had a client buy a condo for $432,000 (parking and locker) in August which was an ugly time for condo market. The exact same unit a couple floors higher just sold for $427,000 (no parking and no locker). I let them know of this, and told them their condo was probably worth $450,000-460,000. The exact same unit sold in April 2012 (peak) for $460,000. Now I know that this is just a small sample, but it gives me an idea what is currently happening in this neighbourhood.

I think there might be another reason for the price increase--investors are renting out their garbage units instead of selling them knowing there is still a lot of competition, plus the rental market is still performing well. Although, I am noticing that I am not seeing the same sharp increase like last year, which could indicate that more buyers are back in the market. Expect a better second half, and by years end condo sales will increase from last year. But as I said before 2012, was a bi-polar year, that is why the TREB numbers are meaningless unless you decipher the whole market to understand its current state.

 

[Kenny]

New teranet numbers are out for March: http://www.housepriceindex.ca/Default.aspx

Looks like we're seeing the first uptick in seven months. Could signal a mild thaw.

 

[daveto]

New teranet numbers are out for March: http://www.housepriceindex.ca/Default.aspx

Looks like we're seeing the first uptick in seven months. Could signal a mild thaw.

+0.17% month-over-month?

Statistically speaking, I wouldn't place too much weight on that. (regardless of whether it was up or down).

 

[RocketAppliances]

Toronto posts record sales drop of land for residential development

Tara Perkins
The Globe and Mail
Published Monday, Apr. 22 2013, 6:10 PM EDT


The Greater Toronto Area has just posted a record decline in sales of land for future residential developments, suggesting that home and condo builders are reacting to the decrease in housing sales by tempering their appetite for new construction.

Investments in such land fell 45 per cent from the fourth quarter of last year to the first quarter of this year, according to new data from RealNet Canada Inc.

“This is the largest quarter-to-quarter decline we’ve ever seen in residential land, even through the financial crisis,†said George Carras, president of RealNet. “It’s the biggest hit-the-brakes we’ve seen in land investment.â€

The drop follows a downturn in sales of new houses and condos. New home sales came in at 2,030 for the Greater Toronto Area in February, down from 2,609 in February of 2012 and 3,688 in February of 2011, according to RealNet data.

While house sales have been falling for some time now, land sales kept up their momentum until this year, Mr. Carras said.

Home builders have also been talking about a lack of available land for new detached homes, largely due to government actions aimed at curbing urban sprawl.

The gap between the price of newly constructed low-rise homes and condos widened to a record in the first quarter, according to RealNet. Its high-rise price index rose 2.6 per cent from a year ago to $432,631, while its low-rise price index rose 10.9 per cent to $639,321. The gap, which has been widening each month since the end of 2010, now sits at $206,690. The average price gap prior to December, 2010, was $75,806.

 

[Kenny]

+0.17% month-over-month?

Statistically speaking, I wouldn't place too much weight on that. (regardless of whether it was up or down).

Ah, you're looking at Toronto, and I'm looking at the overall count (which is 0.5% higher m/m).

What's interesting is that the sales pair count is way down (9046 to 6857 YOY). I'm not sure if that's indicative of just less data as a proportion of sales, or if there really is that big a drop in sales.

BC-Victoria went down quite a bit (139.480 to 135.040 YOY, which means they're back to Jul 2009 prices) but the numbers are lower so less statistically strong. BC-Victoria's sales pair down from 266 to 166 YOY. Are there many reports coming from BC-Victoria which suggest correlation with these numbers? Is it some kind of canary/coal mine situation?

e.g. http://www.timescolonist.com/busine...and-vancouver-bucking-national-trend-1.104497

 

[recharts]

Hi all

My name is ...recharts ..and I am the author of the recharts.blogspot.ca

I wanted to introduce myself in a separate thread but for some reasons I could not find the "Start a new thread button" so here I am.
Maybe it is disabled for the first time posters.

Anyway...I would like to hear your opinion about this page

http://recharts.blogspot.ro/2013/04/to-bidding-wars-debunked.html

and about my site it general
recharts.blogspot.ca

This is still work in progress but it started to crystallize so I told myself that before I am going too far with this I should ask for some feedbak.
Please fell free to comment either here or on my site and send me your suggestions

thanks and happy to join you!
recharts

PS: I hope this message will be approved by admins and it will be validated as genuine with no intentions to spam but rather to share data and still remain anonymous

 

[oreocookieplz]

Sept 2013 the turning point in real estate price in the gta.
min30% drop in condos over 2.5 yrs
min25% in cookie cutter homes in 905

 

[daveto]

Sept 2013 the turning point in real estate price in the gta.
min30% drop in condos over 2.5 yrs
min25% in cookie cutter homes in 905

I'm pretty bearish on Canadian RE, but even so I think that drops of that size and speed are very, very unlikely.

RE asset bubbles tend to deflate in the same manner that they first inflated. There was a graph about this posted somewhere over the 500 pages, which showed some 40+ RE bubbles in various countries over the years, and almost without exception the amount and pace of the decreases where the mirror image of the increases.

I don't disagree with the amount of decrease you've stated, but I think it will be over 7-10 years, rather than 2.5.

 

[recharts]

T.O. bidding wars debunked -month to date summary http://recharts.blogspot.com/2013/04/to-bidding-wars-debunked-april-summary_24.html . This is not looking good.

 

[cdr108]

Sept 2013 the turning point in real estate price in the gta.
min30% drop in condos over 2.5 yrs
min25% in cookie cutter homes in 905

I'm pretty bearish on Canadian RE, but even so I think that drops of that size and speed are very, very unlikely.

RE asset bubbles tend to deflate in the same manner that they first inflated. There was a graph about this posted somewhere over the 500 pages, which showed some 40+ RE bubbles in various countries over the years, and almost without exception the amount and pace of the decreases where the mirror image of the increases.

I don't disagree with the amount of decrease you've stated, but I think it will be over 7-10 years, rather than 2.5.

IMO over 5 year span at least as housing (ie. especially condos) are being bought as commodities.
the % is about right as current interest rates are about 300-400 basis points below the long-term historical average and cashflows don't provide enough to cover expenses and compensate for risk

 

[cdr108]

T.O. bidding wars debunked -month to date summary http://recharts.blogspot.com/2013/04/to-bidding-wars-debunked-april-summary_24.html . This is not looking good.

i can't get it to show the price that the property sold for when i hold the mouse over the marker ...
no tip box shows up

 

[PinkLucy]

^^^ same for me

 

[recharts]

IMO over 5 year span at least as housing (ie. especially condos) are being bought as commodities.
the % is about right as current interest rates are about 300-400 basis points below the long-term historical average and cashflows don't provide enough to cover expenses and compensate for risk

Here is how it worked in US

I am seeing there just 5 out of 15 cities above the 80% of the peak value after 24 months from the peak
10% per year seems to be reasonable
One aspect that you did not mention is that the stepper the appreciation curve the stepper the depreciation curve

Where do you think that Toronto is right now? How far from the peak and on what side of the slope?

 

[recharts]

i can't get it to show the price that the property sold for when i hold the mouse over the marker ...
no tip box shows up

The month summary is just a picture ..It does not have that option
I tried to upload the interactive version (based on Google maps) but blogger did not save the data (probably the postwas too long) I will have to find other ways to do it
So far this is the only convenient way to do it, so for the big picture you will not have that info, you willl have to watch the daily updates for that

 

[daveto]

Interesting analysis of 48 housing bubbles.
http://leithwheelerblog.sitecm.com/uncategorized/housing-bubble/#more-341

Here is the analysis I mentioned. It shows that RE bubbles decreases usually mirror the pace and amounts of the increases. The US had a much more rapid price increase (5 years?) than Canada, whose increase has been spread over much longer (10 years?) The red line is Canada. The blue line is the average for the 48 housing bubbles