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  #121  
Old Posted Apr 17, 2012, 4:47 PM
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While I was unpacking boxes over the weekend, I came across an old copy of the Financial Post magazine warning of the fallout of the impending real estate bubble in Toronto, with a shot of CityPlace on the cover. The issue was from 2005.

I'm not arguing that because the predictions were wrong 7 years ago, that the doom and gloomers today are also wrong. In fact, the surprising endurance of the boom means that they're more likely than ever to be right. I mention it to highlight the fact that we don't know exactly when this party will end. It could be in three months, or it could be in three years. We also don't know whether it will be a hard landing or a soft and gradual degradation of prices. An upswing in the American economy might very well give the Canadian economy the extra push it needs to stave off a sudden crash in real estate values.
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  #122  
Old Posted Apr 17, 2012, 5:19 PM
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While I was unpacking boxes over the weekend, I came across an old copy of the Financial Post magazine warning of the fallout of the impending real estate bubble in Toronto, with a shot of CityPlace on the cover. The issue was from 2005.

I'm not arguing that because the predictions were wrong 7 years ago, that the doom and gloomers today are also wrong. In fact, the surprising endurance of the boom means that they're more likely than ever to be right. I mention it to highlight the fact that we don't know exactly when this party will end. It could be in three months, or it could be in three years. We also don't know whether it will be a hard landing or a soft and gradual degradation of prices. An upswing in the American economy might very well give the Canadian economy the extra push it needs to stave off a sudden crash in real estate values.
Can't disagree with your assessment. However, I'll still point out that this is in no way a CANADIAN housing bubble, nor will it be a CANADIAN crash (if it happens). This seems isolated to Toronto and Vancouver only - and while those cities may occasionally like to pretend they're the entire country, such is not the case.

This is why I continue to point out that the fundamental causes of this "bubble" are entirely different than what happened in the US. They didn't have 1 or 2 cities in crisis - they had an entire country. Toronto house prices could literally be cut in half and Calgary would keep on chugging without even a blink. Nor would the rest of the prairies.
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  #123  
Old Posted Apr 17, 2012, 5:32 PM
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It could be a national problem if Toronto and Vancouver prices fall enough to cause signficant losses to the Federal goverment through CHMC, and the banks. It is not out of the realm of possibiltiy for prices to fall 20-30% in both cities as that kind of bust has happened before (Toronto in early 90s, Vancouver in mid 80s and mid 90s). The exposure would likely be in the tens if not hundreds of billions.

The fact that Canadian housing prices inflated beyond those in the US in spite of more rigorous lending practices north of the border is of even greater concern. It means that Canadians have an even poorer sense of risk as they were still willing to take on huge debt even without incentives like mortgage interest deductibility and subprime mortgages. The fact that "urban living" is in great demand in Vancouver and Toronto is interesting but irrelevant.

This housing bust is going to be ugly and I hope the Federal government does whatever it can to limit its exposure by for example selling off as many of its CHMC mortgages as possible to non-Canadian banks. I'm not sure what the banks are doing, but given that Canada is still seen as a safe haven there is likely a strong market to unload their garbage mortgage portfolios to foreigners as well.
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  #124  
Old Posted Apr 17, 2012, 5:47 PM
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Originally Posted by Ramako View Post
While I was unpacking boxes over the weekend, I came across an old copy of the Financial Post magazine warning of the fallout of the impending real estate bubble in Toronto, with a shot of CityPlace on the cover. The issue was from 2005.

I'm not arguing that because the predictions were wrong 7 years ago, that the doom and gloomers today are also wrong. In fact, the surprising endurance of the boom means that they're more likely than ever to be right. I mention it to highlight the fact that we don't know exactly when this party will end. It could be in three months, or it could be in three years. We also don't know whether it will be a hard landing or a soft and gradual degradation of prices. An upswing in the American economy might very well give the Canadian economy the extra push it needs to stave off a sudden crash in real estate values.

So True, I was hearing about a market crash in Toronto back in 2003...

Almost 10 years now... and no sign of impending doom. The Media seems to be trying to talk Toronto and Vancouver into a crash. Say it enough times and eventually it will happen. That's what they must be figuring I guess.
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  #125  
Old Posted Apr 17, 2012, 5:59 PM
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Vancouver weighs on market as average Canadian home price falls

"You've got a tug-of-war," Gregory Klump, CREA's chief economist, said Monday, with fewer sales over $1 million in Vancouver in March weighing on the national average, while high-end sales in Toronto picked up the pace.

By Craig Wong, The Canadian Press | The Canadian Press – Mon, 16 Apr, 2012 1:26 PM EDT

OTTAWA - The high-end housing markets of Toronto and Vancouver headed in opposite directions last month as the average price of a Canadian home fell, according to the Canadian Real Estate Association.

"You've got a tug-of-war," Gregory Klump, CREA's chief economist, said Monday, with fewer sales over $1 million in Vancouver in March weighing on the national average, while high-end sales in Toronto picked up the pace.

"A year ago at this time, high-end sales in Vancouver were running at unusually high levels and they've since fallen back to earth and as a result you've got a year-over-year decline in average prices," he said.

Meanwhile in Toronto, Klump said sales of single detached homes over $600,000 as a percentage of total sales have picked up as well as the high-end condo market.

"It's the sales mix," he said.

The association said the national average home resale price in March was $369,677, down from just under $373,000 in February and $371,591 in March 2011.

That compared with an average residential price in Toronto last month of $504,117, up from $456,147 in March 2011, and an average residential price of $761,742 in Vancouver last month, down from $786,311 in March 2011.

However, Klump noted that the number of sales across the country reached their highest mark in nearly two years.

The association said the number of sales conducted through the industry's MLS system was up 2.5 per cent from February, making last month the busiest sales month since April 2010.

For the first three months of 2012, a total of 108,373 homes traded hands — a heavier volume than the five- or 10-year averages for first-quarter sales volume.

BMO deputy chief economist Douglas Porter noted Toronto is not Canada, nor is Vancouver.

"Excluding these two wildly divergent markets, average prices and sales across the rest of the country posted modest gains from year-ago levels in March," Porter wrote in a note to clients.

"For most cities, the market looks well balanced, and is broadly moderating on its own accord."

The busy spring real estate market comes as both Finance Minister Jim Flaherty and Bank of Canada governor continue to raise concerns about household debt.

TD economist Sonya Gulati said the market will face negative headwinds from households beginning to curb their spending in light of interest rate hikes to come and record-high household indebtedness.

"It was around this time last year that Vancouver was labelled the hottest housing market in the country. Back then, high-end home sales were driving up out-sized sale and price gains," Gulati said.

"The 2012 data suggest that the accolade has now been given to Toronto. But, both urban cities should experience weakness in 2013-14 as interest rates begin to inch up from current lows."

Last month, several of Canada's big banks raised their posted mortgage rates signalling that the era of cheap borrowing may be drawing to a close.


...

http://ca.finance.yahoo.com/news/can...131144371.html
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  #126  
Old Posted Apr 17, 2012, 7:01 PM
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Originally Posted by caltrane74 View Post
So True, I was hearing about a market crash in Toronto back in 2003...

Almost 10 years now... and no sign of impending doom. The Media seems to be trying to talk Toronto and Vancouver into a crash. Say it enough times and eventually it will happen. That's what they must be figuring I guess.
A stopped clock is correct twice a day, and all that.

Calgary saw prices drop 20-30% in just over a year, and there wasn't a panic, there wasn't a run on the banks, the CMHC didn't get dissolved, Ottawa didn't have to step in with trillions in bailouts, and our economy did not collapse overnight. Granted Toronto/Vancouver is a much larger piece of the pie, but the assumption is that falling housing prices instantly lead to defaults/foreclosures, and bank failures. I don't necessarily agree with that premise.

Toronto/Vancouver forumers: do you find that most people in your cities are "house poor"? Or are people mostly able to keep up with the cost of housing in your areas?
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  #127  
Old Posted Apr 17, 2012, 7:11 PM
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^ everything is cyclical though, and the greater and more frequent the sine wave the greater the impact on either end of the spectrum. The frenzied run-ups in Edmonton and Calgary lasted less than three years, whereas prices in Van & Tor have been ramping a lot longer than that... And yes, even though the softening of reals estate prices may not have affected many of us, it was felt here, mainly by people who bought at the peak.

I am curious, after the last big run-up in Alberta, everyone was swimming in extra cash from the equity in their primary residences, and a lot of Albertans bought in the Okanagan, leading to a price run up that forced a lot of locals out of the market. Something of the same force appears to be happening in Van & Tor, only the money is coming from out of the country. Stil not a good thing overall.... Absentee owners don't really help the local economy all that much
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  #128  
Old Posted Apr 17, 2012, 7:30 PM
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Absentee owners don't really help the local economy all that much
The investment in Toronto Condo construction growth is actually impacting the local economic growth, and is even pulling Canadian GDP growth forward. Last month permit value alone was $720 million dollars.
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  #129  
Old Posted Apr 17, 2012, 7:37 PM
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^ you're talking apples and oranges though. The absentee owners aren't actually building the structures, they are purchasing the units that are built (or will be built) Yes the construction itself advances the economy, but does not help the local economy vis-a-vis the money that a typical occupant of a dwelling would spend in & around their community.
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  #130  
Old Posted Apr 17, 2012, 7:40 PM
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^^ But the money has been invested in an asset. A Canadian Asset.

#Economics 101
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  #131  
Old Posted Apr 17, 2012, 7:45 PM
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You're not getting it.... do you understand what a local economy is ?

If 50 Albertans buy 50 houses in a cul-de-sac overlooking Okanagan lake, and spend 1 week there a year, how much is being contributed to the local economy Vs. 50 full time residents living in those same homes, purchasing all their goods, and perhaps working in the area ?

It's not that hard to figure out which scenario puts greater pressure on the local economy
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  #132  
Old Posted Apr 17, 2012, 7:57 PM
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Look at the flip side, in the Toronto scenario. - New homes have been created (built), and people are moving into the core. So for the local economy whether the initial investor (foreign or domestic) lives there or not is beside the point. Someone will be living in the unit, and if you forecast for a 20% vacancy rate, you're still looking at an 80% impact from each person that is living in any newly built community.

Here is what I mean

Quote:
That’s more than triple the average population density of about 4,150 people per square kilometre for the rest of the city.
Once home to a spiderweb of tracks and derelict buildings, it’s evolved into a vibrant sporting and residential community. Nine new buildings have gone up since the 2006 census, says Ben Myers, executive vice-president of the condo market research firm Urbanation.
Many residents — such as Gratto, 34, her husband Souheil Badran, 33, and their two young children — rent from investment buyers.

http://www.thestar.com/news/article/...onto-s-density
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  #133  
Old Posted Apr 18, 2012, 1:48 AM
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I don't necessarily think that is a good idea. While I don't believe a CMHC insured mortgage is the best idea for the reasons I stated further upthread, it really is the only way for a lot of first time buyers to get into the market.

The people driving up prices in Toronto and Vancouver are not doing it by financing their properties with insured mortages. I'm sure that the vast majority are either paying cash or putting huge down payments for their investments.
My parents saved up for their first home. When did buying a home become a right?

Its the exact reason of people who are able to enter the market whom would not be otherwise be able to if requirements we're more stringent that causes markets to become wonky. If home entry was fueled by savings or overall growth in incomes and the economy you would be left with a sound and normal market.

Shelter is a right that must be available to all Canadians (the socialist in me talking). But a mortgage is not the same as shelter. That in my opinion is not a right (the libertarian in me talking) but for many people especially in my generation (young 20s) they believe it is.
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  #134  
Old Posted Apr 18, 2012, 3:59 AM
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Originally Posted by caltrane74 View Post
Look at the flip side, in the Toronto scenario. - New homes have been created (built), and people are moving into the core. So for the local economy whether the initial investor (foreign or domestic) lives there or not is beside the point. Someone will be living in the unit, and if you forecast for a 20% vacancy rate, you're still looking at an 80% impact from each person that is living in any newly built community.

Here is what I mean



http://www.thestar.com/news/article/...onto-s-density
Uh, yeah, except without the speculative buying driving up prices, the people you use as your example could have bought their own condo, instead of having to rent it off an absentee landlord.
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  #135  
Old Posted Apr 18, 2012, 4:37 AM
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My parents saved up for their first home. When did buying a home become a right?

Its the exact reason of people who are able to enter the market whom would not be otherwise be able to if requirements we're more stringent that causes markets to become wonky. If home entry was fueled by savings or overall growth in incomes and the economy you would be left with a sound and normal market.

Shelter is a right that must be available to all Canadians (the socialist in me talking). But a mortgage is not the same as shelter. That in my opinion is not a right (the libertarian in me talking) but for many people especially in my generation (young 20s) they believe it is.
You have a very black & white interpretation of the issue. It is not about rights at all (very confused as to why you would even bring that up ??) But young people like yourself who may find themselves in a situation where they have gainful employment and a place where they wish to set down roots may wish to purchase a home, but for those starting out (those who CMHC is designed to help.... not that I am endorsing this) saving several tens of thousands to fulfill that dream is not realistic. I took my lumps and got a CMHC mortgage ten years ago on an inexpensive condo in Calgary to help me get into the market... and ten years later and a few flips I have a house in Edmonton that I love living in (gotta live somewhere, y'know) that is worth almost three times what I owe on it.

Providing home ownership opportunities to those who can afford and support it is a good thing.
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  #136  
Old Posted Apr 18, 2012, 4:50 AM
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You have a very black & white interpretation of the issue. It is not about rights at all (very confused as to why you would even bring that up ??) But young people like yourself who may find themselves in a situation where they have gainful employment and a place where they wish to set down roots may wish to purchase a home, but for those starting out (those who CMHC is designed to help.... not that I am endorsing this) saving several tens of thousands to fulfill that dream is not realistic. I took my lumps and got a CMHC mortgage ten years ago on an inexpensive condo in Calgary to help me get into the market... and ten years later and a few flips I have a house in Edmonton that I love living in (gotta live somewhere, y'know) that is worth almost three times what I owe on it.

Providing home ownership opportunities to those who can afford and support it is a good thing.

It is a good thing. But many people don't go the route you do. You did it the old school way.. work hard, saved bought whiten your means and upgraded when the opportunities were right. I don't think you bought a 450K home as your starter (my friend just did this, 2 months before he graduated trade school...). But I feel from your standpoint the opportunities you had over the last 10 years as the market has greatly appreciated will not be the same for me. This is where I bring up the "rights" aspect. If I were in a position to buy a homne I would not view the curretn situation as favorable, but I am not under the notion that I deserve or have a right to owning a home. It will come with hard work and proper oppurtunities this is how my parents and many older people I talk did it. A older lady I worked with told me they had to put down 35% to get thier mortgage in the 70's to by a modest home in Uplands. This was typical at teh time. She had to work of and on and raise her kids and put money away. This sounds like a story of slavery and struggle to my generation whom has had it qutie easy lol.

Now a days you can borrow the 5% percent you need down, have some lucky parents with cash or find a sucker to co-sign for you and yo can get into a 450K pad just like my buddy did. I sat down with him and I explain to him the risks months ago but Homes are nice, and societal pressure for my generation is quite high. he gave in and bought. Contrast this to another friend whom busted his ass and saved since HS and bought a modest 120K home (Regina prices) its a cozy little dump he will put work in to spruce up but he is in a comfy situation and wants to be close to his family and is going to take over his Dads modest business when he retires. Two opposite stories but the first represents how the majority if people my age are thinking these days.
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  #137  
Old Posted Apr 18, 2012, 5:58 AM
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Uh, yeah, except without the speculative buying driving up prices, the people you use as your example could have bought their own condo, instead of having to rent it off an absentee landlord.
They have a place to rent in thanks to those absentee landlords investing in the construction of new housing. Could have been the otherway around, nobody investing in housing, and the cost of renting through the roof.
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  #138  
Old Posted Apr 19, 2012, 8:59 PM
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sales and prices are up!!!

http://dcnonl.com/nw/31154/cb


Condominium Apartment Market Summary
First Quarter 2012
2012 2011
Sales Average Price
Sales Average Price
Total GTA

total sales 2012 | 5,027 Price 2012| $ 334,952 sales 2011| 4,932 price 2011 |$ 322,857


Condominium Apartment Market Summary
First Quarter 2012
2012 2011
Sales Average Price
City of Toronto

sales 2012| 3,546 price 2012 |$ 360,892 sales 2011| 3,539 price 2011| $ 348,779
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Last edited by caltrane74; Apr 19, 2012 at 9:16 PM.
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  #139  
Old Posted Apr 19, 2012, 9:05 PM
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Edit: never mind.
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  #140  
Old Posted Apr 19, 2012, 11:53 PM
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urban intensification is the prime driver of the condo boom in Toronto

So says the globe and mail

http://news.google.com/news/url?sa=t...tent%3D2407607
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