Baby, we got a bubble!?

[interested]

These numbers are for SFH's.
I would like to see downtown TO condo numbers from Teranet.

 

[recharts]

Common sense question for the RE exuberant people:

CMHC just imposed a cap for the mortgages that will be insured till the end of the year
Considering that the salaries are stagnant, the prices are going up, and the sales will not decrease, has anybody calculated to see if all these are possible within the limits imposed by CMHC?

 

[klb86]

The yield on the 10 year Canadian bonds are now at a 2 year high....another mortgage bump coming?

 

[marsh]

Toronto Condo Prices Have Likely Fallen Sharply: Developer
The Huffington Post Canada | By Daniel Tencer Posted: 08/19/2013 12:36 pm EDT | Updated: 08/19/2013 2:02 pm EDT


Condo prices in Toronto may have fallen steeply from their peak when you take into account incentives being offered to buyers, a Toronto developer has reportedly said.

The Globe and Mail reported Monday that a developer “who declined to be named” estimates the actual prices of condos have fallen by about 15 per cent.

The unnamed developer's assertion echoes comments commonly heard within Toronto's real estate community these days, and it suggests Canada’s largest real estate market may be weaker than recent data indicates.

With the number of condo sales falling, developers have turned to giving buyers discounts in the form of free furniture or reductions on condo fees, among other things. Thus the official sales prices remain steady, while actual prices come down.

Real estate research firm Urbanation reported earlier this month that condo sales in Toronto have fallen 18 per cent over the past year, though that survey showed prices per square foot rising a modest 2.6 per cent, to an average price of $376,000 for a new condo.

But what may be bad news for condo sellers may also be good news for condo renters. The research firm reported Monday that rentals of condos in the city jumped 20 per cent from a year earlier.

Faced with high prices and predictions of a housing market correction, many buyers have chosen to stay out of Toronto’s condo market and rent instead, placing upward pressure on the rental market. Rental prices are up 4.1 per cent in the past year, Urbanation said.


Urbanation Senior Vice President Shaun Hildebrand credited “a lack of growth in traditional rental supply” for the boom in condo rentals. (After a boom in the 1960s and 1970s, few new rental apartment buildings have been built in Toronto in recent decades.)

But even the rental market could soon be under pressure. While condo rentals spiked 20 per cent, the number of rental condos coming online grew 22 per cent, suggesting that supply is still larger than demand.

But housing market analyst Ben Rabidoux, who some see as a notorious pessimist about the Canadian housing market’s prospects, sounded a positive note on rental prices.

“Rents tend to be far stickier than prices,” Rabidoux tweeted. “Rents may decline marginally in extremely overbuilt areas, but [it’s] not likely to be dramatic.”

 

[interested]

What I was told was that better projects are selling reasonably with minimal discounts.
Better suites are going.
"Dog suites" are sitting and being discounted.
More established developers are still selling but a few less well known developers are putting projects on hold or unable to get financing.
Not sure if this is accurate but I personally would not be surprised that there are 10%+ incentives on new product but given that new is 20 % over existing (assuming $500 vs.$600 approximately for resale/new) it stands to reason the gap would shrink.

 

[Chris_Hull]

GTA REALTORS® Release Mid-Month Resale Figures
*
August 16, 2013 -- Greater Toronto Area REALTORS® reported 3,359 sales through the TorontoMLS system during the first two weeks of August 2013. This result represented a 22 per cent increase compared to 2,743 sales in August 2012.Sales were up on a year-over-year basis for all home types. Total new listings were up over the same period, but by a much lesser rate than sales.
*
“The strong annual sales growth experienced in July was sustained in the first two weeks of August.* The fact that sales were up for all major home types in the City of Toronto and surrounding regions suggests that a wide range of buyers are active in the marketplace today – from first-time buyers through to existing home owners whose housing needs have changed,†said Toronto Real Estate Board President Dianne Usher.
*
The average selling price during the first two weeks of August 2013 was $494,617 – up three per cent in comparison to the same period in 2012.
*
“Sales growth that is stronger than new listings growth is indicative of more competition between buyers.Against this backdrop, it makes sense that the average selling price continued to grow,†said Jason Mercer, TREB’s Senior Manager of Market Analysis.
*


Summary of TorontoMLS Sales and Average Price
*
*
*
*
*
*
*
August 1 - 14
2013
2012
Sales
Average Price
New Listings
Sales
Average Price
New Listings
City of Toronto ("416")
1,164
$507,288
2,156
978
$503,559
1,954
Rest of GTA ("905")
2,195
$487,897
3,623
1,765
$466,208
3,466
GTA
3,359
$494,617
5,779
2,743
$479,525
5,420
Source: Toronto Real Estate Board
TorontoMLS Sales & Average Price* By Home Type
*
*
*
*
*
*
*
August 1 - 14, 2013
Sales
Average Price
416
905
Total
416
905
Total
Detached
345
1,243
1,588
756,278
581,146
619,194
Yr./Yr. % Change
12.0%
27.1%
23.5%
-2.2%
3.7%
1.3%
Semi-Detached
100
246
346
576,055
409,728
457,799
Yr./Yr. % Change
17.6%
17.1%
17.3%
12.9%
3.8%
7.0%
Townhouse
125
437
562
421,126
375,489
385,640
Yr./Yr. % Change
12.6%
29.3%
25.2%
-3.7%
6.4%
3.2%
Condo Apartment
585
216
801
368,058
282,231
344,913
Yr./Yr. % Change
25.5%
13.1%
21.9%
7.8%
1.3%
6.7%
Source: Toronto Real Estate Board

 

[recharts]

It took you some time ...

 

[klb86]

The yield on the 10 year Canadian bonds are now at a 2 year high....another mortgage bump coming?

TD, RBC follow other banks in hiking mortgage rates

TD Bank has joined the rest of Canada's big banks in hiking mortgage rates.

Its special five-year rate increased to 3.79 per cent on Thursday, up 10 basis points from 3.69, with the closed five-year rate now at 5.14 per cent.

On Wednesday, the Royal Bank said it is increasing several of its residential mortgage rates, including fix posted rates as well as special-offer rates. It was following Bank of Montreal which raised some of its mortgage rates Tuesday.

For the most part, Canada's largest bank is increasing the rates by 20 basis points, with its fixed five-year closed mortgage rising to 5.34 per cent and its five-year special rate to 3.89 per cent.

The rate changes are effective Thursday.

Other rates rising 0.2 percentage points include the bank's posted three- and four-year closed rates to 3.95 per cent and 4.74 per cent, respectively.

Royal's special offer four-year closed rate also goes up 20 basis points to 3.59 per cent, its seven-year special offer closed rate by 20 basis points to 4.19 per cent and its 10-year special offer closed rate to by 30 basis points to 4.59 per cent.

The five-year fixed closed rate and the five-year special fixed closed rate are now both 3.79 per cent.

Homeowners' monthly costs will rise

Laurentian Bank has also raised its rates, announcing on Wednesday 20-basis point boosts to its three-year, four-year and five-year fixed rates.

The rates are now 3.95 per cent, 4.74 per cent and 5.34 per cent, respectively.

Rising rates push up the average monthly costs faced by homeowners. A rise of 20 basis points means an increase in mortgage payments of $60 to $100 a month on a mortgage of $500,000. That's money homeowners won't have to put into other spending, including cars and home improvements.

In the past five months, banks have increased interest rates by more than a third, from less than three per cent to around 3.79 per cent. For most homeowners that means monthly costs are up eight to 10 per cent.

With many Canadians carrying a heavy debt load, rising mortgage rates can make housing less affordable for some families.

Yesterday, Finance Minister Jim Flaherty said he does not plan to intervene in the housing market and believes Ottawa has taken the steps necessary to calm overheated prices.

Younger generation never saw high rates

This generation of Canadians has never experienced high or even rising interest rates and may be surprised at the higher costs they face, said Benjamin Tal of CIBC World Markets economics department.

"The government has been trying to slow down the market for three-four years and now interest rates are joining the game. Now we have a situation in which especially young families in Canada will feel the pain," he told CBC News.

At this point, short-term rates look more attractive for most prospective buyers, Tal said.

"So far we haven’t seen any increase in the prime rate in Canada because short-term interest rates are not rising and won’t be rising any time soon at least until mid or early 2015, so you see long-term rates are rising and short-term rates are remaining where they are," he said.

However, he warns short-term rates may rise faster once they start to move upward. He expects the Bank of Canada may be ready to raise the prime rate in about a year

More rate hikes to come

Ben Rabidoux, an analyst with market research North Cove Advisors, said rates are definitely on the rise and will probably go up again in the next four to six months.

“Where we are right now, we’re still at extremely low interest rates historically. On the general trend, they’re going to jump and over the long term there is no question that they will be up,” he told CBC News.

Rates are rising because banks are facing higher yields on Canadian bonds, a result of the U.S. Fed signalling to investors that it will soon taper its purchase of U.S. bonds and mortgage-backed securities.

Canada had a huge influx of foreign capital when the Fed started its buying program in 2009 and when it slows its bond buyback, that capital will head back to the U.S., Rabidoux said.

CMHC’s cap on the value of mortgage-backed securities banks can create may also push up rates at which banks borrow capital, ultimately forcing interest rates higher.

But Rabidoux doesn’t expect the rate hike will affect housing prices until later in the fall, because many Canadians rushed to buy homes ahead of this round of hikes.

“A lot of the sales activity we’ve seen in the past month and a half is I think related to people who were rushing to beat the rate hikes. These rate hikes were very well telegraphed by the mortgage industry,” he said.

Those buyers locked in their rates 30 to 60 days ago and the impact on housing prices won’t be felt until a new round of prospective homeowners discover how much more expensive it is to carry a mortgage.

http://www.cbc.ca/news/business/story/2013/08/22/royal-bank-mortgage-rates.html?cmp=rss

 

[js97]

Since the tightening of credit and increased mortgage rates, there have been many more "Conditionally sold" properties then previous years.

Signs of a softened, or at least a financially restrictive market (or objectively, a 'normal' market).

 

[ponyboy]

Nice to see 5-year bond yields finally rising. I hope that continues. I remember expressing a cautious tone when friends were wanting to buy a house in the winter of 2009. Fortunately they didn't listen to me. It turns out they bought on a dip, and have realized a (paper) gain of 30% or more. Who would have known? It is amazing how long interest rates have been so low. I have benefited in some way because I have a (income) property with very low financing costs, but we are holding tight (fortunate to find a nice rental) hoping to one day buy a principal residence. Any predictions on how long it will take for interest rates to increase 100 basis points more? When will the prime rate be increased?

 

[marsh]

Nice to see 5-year bond yields finally rising. I hope that continues. I remember expressing a cautious tone when friends were wanting to buy a house in the winter of 2009. Fortunately they didn't listen to me. It turns out they bought on a dip, and have realized a (paper) gain of 30% or more. Who would have known? It is amazing how long interest rates have been so low. I have benefited in some way because I have a (income) property with very low financing costs, but we are holding tight (fortunate to find a nice rental) hoping to one day buy a principal residence. Any predictions on how long it will take for interest rates to increase 100 basis points more? When will the prime rate be increased?

I think alot will depend on how quickly the Feds pull back on the quantitative easing - I thinks it going to be harder from them to pull out then they thought plus the major world economies are still sputtering in terms of economic growth. Personally I think that interest rates will continue to remain low over the next year with very minor increases.

 

[ponyboy]

I think a lot will depend on how quickly the Feds pull back on the quantitative easing - I thinks it going to be harder from them to pull out then they thought plus the major world economies are still sputtering in terms of economic growth. Personally I think that interest rates will continue to remain low over the next year with very minor increases.

thanks. I want to park money somewhere for a while, and don't have a problem with moderate risk. With money so cheap to rent, what asset classes, if any, have not received much investment? Is there a way to short the residential housing market without actually buying options (calls or puts)?

 

[Kenny]

thanks. I want to park money somewhere for a while, and don't have a problem with moderate risk. With money so cheap to rent, what asset classes, if any, have not received much investment?

REITs have fallen recently, so they might be a bargain right now.

 

[Chris_Hull]

*
*NEWS RELEASE*
*


More Sharing ServicesShare this article

GTA REALTORS® RELEASE MONTHLY RESALE HOUSING MARKET FIGURES
*
TORONTO, September 5, 2013 -- Greater Toronto Area REALTORS® reported 7,569 residential transactions through the TorontoMLS system in August 2013.* This represented a 21 per cent increase compared to 6,249 sales in August 2012.
*
“Sales were up strongly this past August for all major home types compared to last year.* Many households have accounted for the added costs brought on by stricter mortgage lending guidelines and have reactivated their search for a home.* These households have found that a diversity of affordable ownership options exist throughout the GTA,†said Toronto Real Estate Board President Dianne Usher.
*
The average selling price for August 2013 was $503,094 – up by almost 5.5 per cent compared to the average of $477,170 in August 2012.* The MLS® Home Price Index (HPI) composite benchmark was up by 3.7 per cent over the same period.
*
“Despite an increase in borrowing costs during the spring and summer, an average priced home in the GTA has remained affordable for a household earning an average income.* With this in mind, tight market conditions are expected to promote continued price growth through the remainder of 2013,†said Jason Mercer, TREB’s Senior Manager of Market Analysis.
*

Summary of TorontoMLS Sales and Average Price August 1 - 31
2013
2012
Sales
Average Price
New Listings
Sales
Average Price
New Listings
City of Toronto ("416")
2,665
$518,145
4,475
2,237
$496,927
4,247
Rest of GTA ("905")
4,904
$494,914
7,733
4,012
$466,155
7,436
GTA
7,569
$503,094
12,208
6,249
$477,170
11,683
TorontoMLS Sales & Average Price* By Home Type August 1 - 31, 2013
*
Sales
Average Price
*
416
905
Total
416
905
Total
*
*
Detached
846
2,789
3,635
783,708
590,583
635,531
*
Yr./Yr. % Change
23.0%
24.6%
24.2%
4.7%
5.1%
4.9%
*
Semi-Detached
231
536
767
576,022
409,322
459,528
*
Yr./Yr. % Change
7.4%
16.5%
13.6%
8.7%
5.1%
5.8%
*
Townhouse
285
938
1,223
416,463
374,494
384,274
*
Yr./Yr. % Change
12.6%
19.2%
17.6%
-0.8%
6.7%
4.5%
*
Condo Apartment
1,280
506
1,786
357,572
293,825
339,512
*
Yr./Yr. % Change
21.4%
16.9%
20.1%
2.3%
7.1%
3.7%
*
*
*
*
*
- 30 -*
*
*

 

[Chris_Hull]

Sales are up substantially, and prices keep going up