Where has the supply gone?

[andrejeffry]

Ya know, all these so-called analysts mentioned that the price increase in Canadian real estate market is due to lack of supply. And they kept repeating the same mantra over and over. But none of these smart-asses can explain where the supply is? Why is the listing down, etc?

Why do you think the supply has gone? It's not like a bunch of houses vanished into thin air? Why are people holding onto their properties? Shouldn't the latest news in the last couple of months encourage more people to list their properties?

http://www.theglobeandmail.com/glob...nadian-home-sales-prices-surge/article1324557

Please enlighten me here. I'm getting tired of reading smart-asses analysts citing lack of supply without being able to explain why

 

[w.ll.am]

That article is all about the U.S. which is a different market entirely at the moment.

Many first timers are buying right now with the low interest rate. Many people aren't moving out because of the low interest rate. If your current variable mortgage was prime -1 and you have to renegotiate your mortgage you'd probably lose out.

Many buildings are still on the verge of being completed so you will see an influx of condos for sale in the next year. This might cause the condo market to dip but the housing market will probably still stay on the rise with stuff going at asking price instead of having bidding wars.

That's my thoughts... i'm not sure about the mortgage thought but it's just a thought that people are comfortable where they are with the possibility of a continuing recession they'd rather not upgrade so not as many old homes on the market.

 

[andrejeffry]

That article is all about the U.S. which is a different market entirely at the moment.

Many first timers are buying right now with the low interest rate. Many people aren't moving out because of the low interest rate. If your current variable mortgage was prime -1 and you have to renegotiate your mortgage you'd probably lose out.

Many buildings are still on the verge of being completed so you will see an influx of condos for sale in the next year. This might cause the condo market to dip but the housing market will probably still stay on the rise with stuff going at asking price instead of having bidding wars.

That's my thoughts... i'm not sure about the mortgage thought but it's just a thought that people are comfortable where they are with the possibility of a continuing recession they'd rather not upgrade so not as many old homes on the market.

oh sorry, must have copied the wrong link

now it's fixed

 

[TrickyRicky]

Interesting question. Lack of supply might actually be a litmus for lack of confidence in the economy or people's faith in their own financial position. People act in their own self-interest, or what they preceive to be their own self-interests. So clearly lack of supply in re-sale means that people would rather, or are being forced to stay put rather than make a move.

So the question becomes first why do people feel they are better off staying put (want)? Second why can't people make a move (forced)?

 

[Observer Walt]

We have all heard that the recession is over, but employment is a "lagging" indicator. As long as people have some doubt about the security of their jobs, they won't sell their houses in order to move up.

More broadly, there seems to have been a wholesale change of mentality about making large purchases. People are now more into saving, less into spending. Savings rates are up. People who might have listed their house, with the intention of moving up to a more expensive one, are more satisfied now just to stay with the status quo. A more conservative feeling seems to prevail now, as opposed to a couple of years ago.

 

[lordmandeep]

Some may sit at the sidelines and see if the prices can go even higher.

 

[js97]

I don't think it's the supply that's gone down, i think it's the Deman has gone through the roof!! - and supply can't possibly keep up (scarcity of land in the city)

If you looked at the 1999 sales transactions and compared them to today, i bet you that the growth rate far exceeds out population increase.

Another indicator is the total number of real estate registered with the Ontario Real Estate association (or whatever it is). 20,000 plus agents in Toronto Alone.... i bet you it was probably half of that in the 90's

 

[Johnzz]

Also, it seems, most people looking to move-up are trying to buy, and then list their existing property for sale afterwards. In the current market, nobody wants to get caught without a home (by selling first).

This phenomenon only exacerbates the current supply shortage.

 

[Therion]

I have no idea why this would be (and I follow real estate and economics fairly closely), but my RE agent told me listings are 40% lower than they were in 2007. Can anyone confirm this?

 

[MBS-Guru]

why do you need a confrimation?. It's on MLS..... about 27,000 listings in oct 08 and now only ~18,000 listings in Oct 09. Supply has dropped b/c people's uncertainty in moving up/down due to the recession ..... more people are staying put in their current homes so that creates a lack of investory.

 

[movieguy]

why do you need a confrimation?. It's on MLS..... about 27,000 listings in oct 08 and now only ~18,000 listings in Oct 09. Supply has dropped b/c people's uncertainty in moving up/down due to the recession ..... more people are staying put in their current homes so that creates a lack of investory.

It's such a cop-out to say "it is a combination of both factors", so I'll lean more towards demand.

Compared to before 2001, and even 2004, supply is still up when ratio'ed with population and income levels, but demand has skyrocketed. Everyone and their baby brother is snapping up real estate, many who shouldn't.

 

[andrejeffry]

It's such a cop-out to say "it is a combination of both factors", so I'll lean more towards demand.

Compared to before 2001, and even 2004, supply is still up when ratio'ed with population and income levels, but demand has skyrocketed. Everyone and their baby brother is snapping up real estate, many who shouldn't.

Baby boomers kids?

From wiki '....Canadian boomer as someone born from 1947 to 1966, the years that more than 400,000 babies were born...'

Children of the baby boomers should be around 20-37 yrs old now

 

[simuls]

Not only have the past 6 months compensated for the lack of buyers from October '08 to March of '09, it has also poached buyers from 2010 and beyond. Be prepared, at least in the condo arena for a large shift to occur in the 2nd half of 2010 as supply starts to vastly outpace demand.