Condo Coverage VS. House Coverage

[Granny]

I had this recurring thought come to me once again while I was going through the Saturday paper.
It was triggered by a remark in an article in the 'New Homes' secton or possibly the 'Condo' section of the Toronto Star.
There was something to the effect of New Condo sales now representing 60% or so of sales last month. The month before it was something similar, and the month before that etc.
So why...can somebody explain this mystery to me.. is there on a regular basis probably well less than 10% coverage given to condos compared to houses with regards to articles about new condos coming on the market, decorating condos, intersting features of buildings across the GTA, new technical developments compared to Houses etc?
If more people are interested in condominiums than there are people interested in houses, then how come newspapers are not picking up on this and writing articles aimed at the obvious demographic target readers. Isn't this how you sell more newspapers? What am I missing here?
Love to hear opinions on this one.

 

[gei]

Even though "new" sales are 60% condos, house owners may still represent the vast majority of existing real estate owners. Hence more information catering to them.

 

[JasonParis]

Plus New In Homes seems to cater to the entire Greater Golden Horseshoe, while Condo Life is more Toronto/inner-GTA based.

 

[Observer Walt]

On the positive side, Christopher Hume now seems to be back to providing his "ratings" of condo projects on a weekly basis.

 

[lowesthangingfruit]

I had this recurring thought come to me once again while I was going through the Saturday paper.
It was triggered by a remark in an article in the 'New Homes' secton or possibly the 'Condo' section of the Toronto Star.
There was something to the effect of New Condo sales now representing 60% or so of sales last month. The month before it was something similar, and the month before that etc.
So why...can somebody explain this mystery to me.. is there on a regular basis probably well less than 10% coverage given to condos compared to houses with regards to articles about new condos coming on the market, decorating condos, intersting features of buildings across the GTA, new technical developments compared to Houses etc?
If more people are interested in condominiums than there are people interested in houses, then how come newspapers are not picking up on this and writing articles aimed at the obvious demographic target readers. Isn't this how you sell more newspapers? What am I missing here?
Love to hear opinions on this one.

I get the sense it is 50/50 with the TO Star at least. New in Homes more to do with homes, condo life, more dealing with condos.

What's interesting to me is what I read recently in the Dec 07 issue of Macleans that depicts the marketing of condo buying as being cool, hip, chic, insert any buzz words here...etc... Marketing fantasy aside, one would have to step back and recognize that the reason why new condo sales are now dominant is because of pricing. Most are priced out of detatched/low rise now. Yes, I know there are lifestyle choices, maintenance free (which is BS cuz ur PAYING for maintenance so it's not free), location issues, speculation that drive condo market, but it doesn't take a brainiac to figure out that condos would be the next housing class to go up once the detatched and low rise markets gets priced out. Whether that gets translated into the condo life section becoming bigger than the new in homes section, who knows.

 

[Observer Walt]

^ These posts are getting a bit tiresome. If you know anything at all about the Canadian mortgage market, it is nothing like the American market. We don't have the problems in the mortgage market that the Americans have, and it is specifically because the Canadian lenders (largely the big banks), far from being "late to the party", are if anything well out ahead of the U.S. system. Watch for major changes in the U.S., and if I'm not mistaken, in a few years their system will look a lot more like ours.

Without rambling on about the many points of difference, I would mention one specifically. In Canada, the huge majority of mortgage loans go on the books of the lender and stay there. If collection action is required, the originator (bank) is also left to collect the loan, and write off any resulting losses. This imposes a built-in discipline, which has been largely lacking in the U.S., where the banks "package" and sell the loans, getting them off the balance sheet as fast as they can.

Yes the American problems have slopped over into the Canadian market (hello, CIBC!), but that's because some Canadian banks and investment dealers bought into the American paper without a clear fix on the level of risk involved. You can be quite sure that that's changing.

 

[lowesthangingfruit]

Right, the old 'decoupling' argument again. Tell me then, why did the big US CMBS lenders close up shop here in January? I guess they just decided that there was too much business here for them and they didn't want to make any more money.

Educate yourself, friend. Canadian lenders have been extremely aggressive during this boom. They were all hungry for more business and have indeed slackened their underwriting standards considerably. We are not immune from the fallout of the misdeeds of our neighbours. Not by a long shot. Mortgage funding is way more difficult to come by today than it was before the summer and this will undoubtedly make its way through the system. This being a urban TORONTO forum I believe that Toronto is vulnerable to weakness as a result of the more difficult financing environment.

http://www.thestar.com/article/304688

Apparently you don't need to be "subprime" to join the credit gong show. Interesting to see now how far and wide this contagion goes. I'm betting credit card defaults are gonna be the next shoe to drop.

As for Canada, correct me if I am wrong, but I vaguely recalled that before this pile of shit hit the fan full force, one of the big 5 was offering 100% mortgages ?? Anyways, just anectdotally, I know of a few ppl that took out high ratio mortgages to buy stuff I thought was out of their league. Now I wonder how much Kraft dinners can one eat before they can't tolerate it anymore and walk away.

 

[Observer Walt]

http://www.financialpost.com/story.html?id=228768

Sorry, you were saying?

Thanks for the mildly interesting article, but it doesn't really change anything I said. The securitization of residential mortgages (packaging them and moving them off the books of the originator) is "standard procedure" in the U.S., but not in Canada, and I think the shortcomings of this approach are now becoming glaringly apparent. The market for these securities has virtually disappeared.

As for commercial mortgages, the segment which was referred to in the Financial Post article, they are harder to "securitize" than residential mortgages. Commercial properties are much less homogenous than residential, every commercial mortgage is virtually unique, and commercial mortgages require much more intensive administration. (The larger size compensates for the administrative effort.) Assessing the credit risk in a commercial mortgage portfolio is much more difficult than for residential product, and largely for that reason, relatively few of these have been securitized even during the "good times".

The article refers to $4 billion. I'm not quite sure if that is meant to be the total size of the market, or an annual volume, but either way it's a drop in the bucket, and as the article says, even this is shrinking.

There are a number of other reasons why the Canadian market is in better shape than the U.S. These have been covered elsewhere and need not be repeated in detail, but as I said earlier, it's understood by now that the U.S. mortgage market is in for some major changes. I think it will end up looking much more like the Canadian model.

I certainly don't claim that eveything in Canada is just peachy, but we are nowhere near the deep do-do that they are now in, in some areas of the U.S.

 

[lowesthangingfruit]

^ These posts are getting a bit tiresome. If you know anything at all about the Canadian mortgage market, it is nothing like the American market. We don't have the problems in the mortgage market that the Americans have, and it is specifically because the Canadian lenders (largely the big banks), far from being "late to the party", are if anything well out ahead of the U.S. system. Watch for major changes in the U.S., and if I'm not mistaken, in a few years their system will look a lot more like ours.

Really ?? It seems like the other way around as of late. The more we dig into what the banks are holding and been playing around with, the more we seem to be mimicking the Americans. The only difference I see is that it's an oligopoly here, but greed has no national boundaries.

Without rambling on about the many points of difference, I would mention one specifically. In Canada, the huge majority of mortgage loans go on the books of the lender and stay there. If collection action is required, the originator (bank) is also left to collect the loan, and write off any resulting losses.

So instead of spreading risk and disseminating it, the bank takes it full force ?? Sounds like that will definetly lead to more tightening since we have an oligopoly here and the blast radius is gonna be pretty focused.

This imposes a built-in discipline, which has been largely lacking in the U.S., where the banks "package" and sell the loans, getting them off the balance sheet as fast as they can.

ABCPs ???

Yes the American problems have slopped over into the Canadian market (hello, CIBC!),

.....and BMO and NA and that's just what we have found out so far. Don't even know if the insurer's in Canada got their hands caught in the cookie jar like in the US.

but that's because some Canadian banks and investment dealers bought into the American paper without a clear fix on the level of risk involved. You can be quite sure that that's changing.

Until money becomes cheap enough again to inflate and distort another asset class. Any bets on the next one ??

 

[lowesthangingfruit]

The commodities boom is far from over. I'm sure it will continue to attract its share of housing market speculator refugees.

No doubt Caveat. Related to that some figure the "clean/green" energy and infrastructure sectors are good bets where smart and eventually dumb money will gravitate towards.

But I gotta wonder, with some places in the US down 50% from peaks, how long do you or anyone else think for the excess glut on the market to get reabsorbed and prices stabilize and start going back up ?? Not to say I like to try catching falling knives, but every month that goes by, it gets more and more interesting.

 

[gei]

The commodities boom is far from over. I'm sure it will continue to attract its share of housing market speculator refugees.

hahaha... is this guy still here predicting his doom and gloom?

actually i know a few people like him. Funny thing is the ones I know all began predicting the doom and gloom in the condo market several years ago, and decided to hold out buying a property themselves. Watching while everyone else got in cheap and made good money. All the while getting more and more upset at themselves for not buying when they had the chance.

So of course all they can continue to do is predict the imminent demise of the condo market... and we can all keep laughing at them