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Baby, we got a bubble!?

New condo sales hit record in GTA (This is up to the end of March, not April.)

Sales in the GTA hit a record in the first quarter of 2010, according to a report by Monday.

Developers sold 5,415 new condominiums in first three months of the year, up 491 per cent or nearly six times more than the recession-impacted quarter of 2009. This represents the highest number of first quarter new unit sales on record, according to Urbanation.

Average price per square foot for all new units sold was up modestly from the fourth quarter of 2009 to $443 from $418. Unsold units on the market are asking an average of $509 per square foot.

Prices at the coveted One Bloor site, which started in the high $700-per-square foot range are now over $800 per square foot.

The sizzling sales also brought out a warning from Urbanation executive vice president Ben Myers against “irrational exuberance” among developers.

--

There were 17 new projects in the first quarter of this year, while the second quarter is forecast to see an estimated 30 projects alone.

According to Urbanation, resale condo sales were also healthy, almost doubling the figures of the first quarter of 2009.

Average resale prices were $331,000 in the first quarter of 2010, compared with $280,000 in the same quarter last year.
 
Err, yeah, duh!

http://ca.news.yahoo.com/s/capress/100505/business/housing_outlook_3

"By The Canadian Press
ADVERTISEMENT

OTTAWA - The TD Bank says home sales will be significantly lower in the second half of this year and next — and prices are dropping too.

The new outlook is in accord with previous expectations, with the exception that TD now believes the slowdown from the current hot housing market to be sharper.

The bank says with home construction stronger than expected, the added supply will soon begin affecting prices.

The first half of this year has been hotter than expected, and the second half will be cooler, the bank says."
 
April 2010 numbers are out.

April 2010
Unit sales: 10898 (+34.4%)
Average price: $437600 (+13.5%)
416 average: $479340 (+13.7%)
905 average: $410293 (+13.3%)
Median price: $373000 (+13.0%)

April 2009
Unit sales: 8107
Average price: $385641
416 average: $421470
905 average: $362009
Median price: $330000

By the way, the average price for a detached in the 416 is now about $685000. It's $485000 in the 905, a difference of over 40%.
 
The article says expected drop of 2.7% in prices. It is a lot better than drop of 15 -20% suggested in a few posts earlier.
 
Eug said:
April 2010 numbers are out.

April 2010
Unit sales: 10898 (+34.4%)
Average price: $437600 (+13.5%)
416 average: $479340 (+13.7%)
905 average: $410293 (+13.3%)
Median price: $373000 (+13.0%)

April 2009
Unit sales: 8107
Average price: $385641
416 average: $421470
905 average: $362009
Median price: $330000

By the way, the average price for a detached in the 416 is now about $685000. It's $485000 in the 905, a difference of over 40%.
Click to expand...

Sales of 10898 are 15% higher than the prior record from 2007.

Mid month April figures were 4601 sales at $430k average. Thus, the 2nd half of April saw 6297 sales at $442k average. (a 40% increase in sales, and a 3% price increase, over the preceding two weeks).
 
If you are looking for forward looking trends an article like this is something to consider if you are still bullish about economic and market prospects over the next 5-years:

From the Globe:

Tavia Grant

Globe and Mail Update
Published on Tuesday, May. 11, 2010 9:43AM EDT

Last updated on Tuesday, May. 11, 2010 11:08AM EDT


.Sometimes, recessions can breed a hunker-down-and-save mentality.

Not so this time. Canadian household debt – a perennial worry in recent years – has ballooned to a point where it’s now more than double 1989 levels – just as rising borrowing costs are set to squeeze budgets, a national report cautioned Tuesday.

Household debt in Canada reached a record $1.41-trillion in December. If that was spread among all Canadians, each person would carry more than $41,740 in outstanding debt – an amount 2.5 times greater than 1989, according to a report by the Certified General Accountants Association of Canada.

And Canadians are okay with taking on still more debt. Nearly 60 per cent of respondents whose debt had increased through the recession – and 92 per cent whose debt decreased or stayed the same – still felt they could either manage it well or take on more debt.


More Discussions in our Globe Investor forums
Advice on Dealing with Student Loans?Started by: naomik2 repliesLast post by Looter
5/7/2010 12:00:38 PM
The recession has done little to dampen Canadians’ enthusiasm for taking on debt, the 13-page study said.

“This report is another indication of Canadians’ readiness to consume today and pay later,†said Anthony Ariganello, president and chief executive of CGA-Canada. “The concern is do they understand the full cost of paying later?â€

Canada now has the dubious distinction of ranking first in terms of debt-to-financial assets ratio among 20 OECD countries, with its debt-to-income ratio hitting 144 per cent by the end of last year.

Read the study

“The growth in household debt has been strong during good times and showed remarkable resilience during challenging times,†said Rock Lefebvre, co-author of the report. Now, it seems “set to continue its upward trend as we navigate interesting times.â€

The culture of consumption – or the habit of unrestricted spending – is likely one of the important factors explaining the unaltered trend in household borrowing, the report added.

•How can I spend less on debt?
•Pay down or save up? Jasmine's story
•How can I get out of debt?
•Is there such a thing as smart spending?
•Why should I try to avoid debt or pay it off quickly?


Mortgage rates – which have been trimmed in recent days – are higher than the start of the year, and poised to rise further as the Bank of Canada readies for a rate hike in the next month or two.

If mortgage rates rise by 2 percentage points, mid-income to mid-to-high income families may have to cut about 10 per cent from other expenditures if they want to maintain the same level of spending on shelter, taxes, food and transportation, the report said.

A separate report yesterday said almost half a million more mortgage holders would be in trouble if their rates hit 5.25 per cent. The study, by the Canadian Association of Accredited Mortgage Professionals, said about 375,000 mortgage holders “are already challenged†by their current payments.

Canada’s personal savings rate -- which climbed during the recession -- is now starting to fall. The rate ebbed to 4.6 per cent in the fourth quarter, down from 4.9 per cent in the previous quarter, according to Statistics Canada data.

Tuesday’s report, based on a partly survey of 1,530 people conducted in February, advised Canadians to consolidate their credit card debt and replace it with a lower-cost line of credit.

“But it’s ill debt,†Mr. Ariganello noted. “You don’t want to hang onto it any longer than necessary.â€
 
The party will end in a few years when the economy starts to pick up more steam and inflation kicks in driving up interest rates. As long as rates are at historic lows people will keep on buying.
 
This thread is making me think too much. Wondering how long to hold out before buying. Canada seems much more stable and resilient vs many other countries. I'm not so sure about talks of a 5-20% correction, but I wouldn't want to be wrong and rush in and get caught if it does drop like crazy. Very undecided at the moment.
 
onfence said:
Very undecided at the moment.
Click to expand...

Sounds like your living up to your handle!!

On a more serious note, investor confidence has dropped substantially in the city in terms of condo purchasing in the most recent poll I saw and even Stephen Dupuis the head of BILD (and a shill for the industry) changed his stance on what will happen in the second half of this year in the most recent condo guide and says he sees a slowdown coming. Take a look at how the Vancouver RE market is starting to collapse and perhaps you'll feel a little better. It's tough I know. When I first bought in 2003 lots of people were calling for a bubble pop in condo's, which of course never came because Toronto completely changed its entire paradigm with regard to condos. This time however, I think there's enough empirical evidence to suggest a correction will happen. April will be a turning point I believe so if you can hold out a couple more months, you might be able to see whether a downward trend is emerging. If that's the case then you can hold out longer, if not, then maybe it will be a good time to buy. At the very least, with all the new supply on the market, month over month price increases are gone so whether you buy now or in two or three months, it will not affect the price. Also, the major banks just reduced their mortgages by .1-.15 and that should hold steady for fixed terms for a little while. :)
 
simuls said:
Sounds like your living up to your handle!!

On a more serious note, investor confidence has dropped substantially in the city in terms of condo purchasing in the most recent poll I saw and even Stephen Dupuis the head of BILD (and a shill for the industry) changed his stance on what will happen in the second half of this year in the most recent condo guide and says he sees a slowdown coming. Take a look at how the Vancouver RE market is starting to collapse and perhaps you'll feel a little better. It's tough I know. When I first bought in 2003 lots of people were calling for a bubble pop in condo's, which of course never came because Toronto completely changed its entire paradigm with regard to condos. This time however, I think there's enough empirical evidence to suggest a correction will happen. April will be a turning point I believe so if you can hold out a couple more months, you might be able to see whether a downward trend is emerging. If that's the case then you can hold out longer, if not, then maybe it will be a good time to buy. At the very least, with all the new supply on the market, month over month price increases are gone so whether you buy now or in two or three months, it will not affect the price. Also, the major banks just reduced their mortgages by .1-.15 and that should hold steady for fixed terms for a little while. :)
Click to expand...

Yup, I gave good thought to my handle before choosing it lol.

Thx for your input. I read that article too from Dupuis...seems like the consensus is that the prop mkt will be stable or lower, definitely not up anymore. I don't mind a 5% max correction, but anything more than that w/o a foreseeable recovery point, say, in 2 years' time thereafter, would not be palatable for me. I can wait as long as I can but do prefer to make a move if the conditions are right sometime w/i 2010. I'm not sure if there is indeed downward pressure, how aggressively I can negotiate w/ developers w/ excess stock in their condo units?

Do you mean that banks reduced their rates? I thought that interest hikes were coming?
 
Onfence, I think you told yourself the truth when you said you are thinking too much about it. If you are buying to live in you've got to just live. On the other hand saying "...don't mind a 5% max correction, but anything more than that w/o a foreseeable recovery point, say, in 2 years' time thereafter, would not be palatable for me." is a clear decision to not buy. If you care about 5% corrections and 2 year time periods there is no way you should consider buying real estate of any kind.

I think there are many people here who understand the numbers more than I do, but frankly I think a buy don't buy decision is more a feeling. There are two thinks you need to know: What do you want? And what is the upside potential?

You can't brush off the first question, it is by far the most important. Very few people understand what they want and consider what they want prior to proceeding. Mostly people do what other people do, what other people say, what they think they should do, or do for any number of other messed up psychological reasons like because their dad never said he loved them.

Upside potential is a sense of all the factors and trends that will influence what you get out of the property in the future. What this potential means to you depends on the first question "what do you want?". If it is growth of my financial position the sense goes beyond a numerical analysis. "The numbers" are very misleading taken in isolation. A property can have amazing "numbers" and no upside potential.
 
TrickyRicky said:
Onfence, I think you told yourself the truth when you said you are thinking too much about it. If you are buying to live in you've got to just live. On the other hand saying "...don't mind a 5% max correction, but anything more than that w/o a foreseeable recovery point, say, in 2 years' time thereafter, would not be palatable for me." is a clear decision to not buy. If you care about 5% corrections and 2 year time periods there is no way you should consider buying real estate of any kind.
Click to expand...


Gr8 advice; almost like you read my mind.
 
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