[interested]

Or could it be marketing to give the apearance of demand and because of the lottery "you better sign up?"

George, I am glad things are picking up (even if only a few days) but isn't that "seasonal". It would be a bad sign if there was no pickup after the summer months since when things were slow in summer, people said it was due to pulled forward sales but also due to seasonal demand being slow in summer when people are off doing their summer activities. We should be fair and not try and dismiss the seasonal pickup.

I would hope but suspect that if/when things slow in November/December, the industry will say this is an expected "seasonal slowdown"

 

[daveto]

Typical full month september sales are 7,000. 2,613 is pretty low (although it included the labour day period at the beginning of the month)

About prices, it's important to remember normal seasonal variances.http://guava.ca/?cat=3

Comparing aug to sept, 2004/2009, there is an average 3.7% increase.
2004 305k/321k
2005 323k/338k
2006 338k/349k
2007 368k/380k
2008 365k/368k
2009 388k/409k

Whereas comparing 2010 mid-month aug/sept we have $413k/$412k. A 0.2% decrease.

Seasonally adjusted this appears to be a 3.9% decrease? If so, that would be one of the biggest monthly drops, seasonally adjusted, in the history of toronto real estate. As an acknowledged mega-bear on Toronto RE, even I am surprised by this, and if someone can point out an error in my calculations please do so.

One thought, perhaps the seasonal uptick in Sept prices happens more in the latter half of the month? After labour day etc? I did a quick check on the midmonth figures from TREB's releases, and they seem to show the same seasonal variation as the full month. But even so, I'd suggest waiting until the full month figures are released.

Sept 2010 full month figures are out.
http://www.torontorealestateboard.c...et_news/news2010/pdf/nr_market_watch_0910.pdf
http://www.torontorealestateboard.com/consumer_info/market_news/mw2010/pdf/mw1009.pdf

6,310 transactions at $427k. Transactions are about 10% below typical Sept avg of 7k.
New listings and inventory are average.

Also note that the $427k avg represents a 3.9% increase from the aug 2010 figures. This is a standard seasonal variance. Note that 3.7% is the avg 2004-2009, and 3.7% vs 3.9% is statistically insignificant. wrt my quoted post above, it would appear that the 1st half of the month was some sort data anomaly.

 

[simuls]

It's also important to note that yoy % increase continues to decrease. April was 13%, May was 13%, June was 8%, July was 6%, Aug was 6%, September is 5% over last year. As last year was an anomaly with prices continuing to escalate over the normally slow winter months, I would expect this to continue and for us to be around 0% yoy by late November and hit negative by January. An even more accurate barometer is the median sales price - a lot of higher end homes were sold last month which really skews the average. The median number which was up 13% in May is now only up 4%.

In addition, the ytd sales continues to decrease vs last year and I would expect that by the end of the year we will have fewer houses sold in 2010 than in 2009.

On the bright side, the May vs September price is in accordance (down about 4%) with most years except 2008 and 2009 because of the recession and the wild swings that occurred in both directions.

I must say that I am somewhat heartened by these numbers - especially the last couple weeks of September which were on track to exceed the average. Torontonians continue to surprise me.

 

[interested]

I too must agree with Simuls that the numbers are not deteriorating as fast as I thought they might and I concur with his analysis which I believe accurately summarizes the state of the market.

Anectdotally, I was talking to someone in business who tells me things are going quite well now but they anticipate a marked slowdown with the US economy going into more trouble in 2011. This would suggest continued stimulative monetary policy and as such may delay/postpone any severe market corrections hopefully allowing us to ride out with only a slow decrease in price. Then, if we do have a recovery, perhaps we will see a few years of stagnation before upward trends start again and avoid a major downturn/collapse in housing prices.

 

[Condo George]

Do you recall my prediction about the last 2 weeks of Sept

 

[interested]

George,
You may be right only in that Ben Bernacke is going to Quantitative ease, thereby making more money available and effectively prolonging/delaying the reckonning which ultimately has to happen. Simuls post 1700 is an objective balanced view of what the numbers mean.

Today, the stock market went up 2%, gold up $20+ dollars, Canadian $ up. Since Sept, the stock market is up 10% so if we look short term its great but look on the year, not so good. All this because the economy is not doing well and we are devaluing currencies around the world. This is all artificial and in direct response to the Fed QE that they announced. More money driving up ALL asset classes (money looking for a place to park) and putting a floor to real estate. This is manipulation George and the longer it goes, the more severe the correction will be. At least that's my opinion.

Just remember if numbers go down again in Nov/Dec I hope you won't put forth the "seasonal excuse".

That said, you predicted a pick up and you were right (though still down compared to last year which I agree is a silly comparison). Just don't gloat too much because from experience, just when you think you are cruising along, all the wheels tend to come off. Believe me, it is very humbling.

Sales are still down and numbers dropping. I guess it is whether one sees the glass as 1/2 full or 1/2 empty. Unfortunately, if you are right and numbers/sales start to go up further in the near term, it will only mean a more significant correction down the road.

 

[urbandreamer]

Err, didn't I call the numbers before CG? I stated that due to the stock market soaring, the Fall 2010 Condo market etc would be great, as many well-heeled condo investors do indeed follow the $INDU....

Post#1499 on 8 Sept 2010:

^$INDU PF target: 11500. Just in time for a sales surge following some presale price cuts. imo.

 

[BobBob]

I seem to recall your signature from a while ago predicting $300psf in October 2010 or something like that. You removed it at some point...

 

[daveto]

?? I'm not sure I see where is the good news? I'm a mega bear, and even I wouldn't expect monthly price decreases (seasonally adjusted) of anything beyond maybe 0.5%. Sorry, but from what I'm seeing, the only good news in the Sept numbers is that the last 2 weeks weren't as bad as the horrific 1st two weeks.

September sales are lower than any year for which we have data (2004-2009). Q3 2010 has just concluded the lowest level of sales (seasonally adjusted) out of any qtr for which we have data (2004-2010).

National figures are consistent with Toronto's Q3 2010 figures, and thus the RE sector (20% of GDP) has just single handedly dropped national GDP by 3%+ YOY from Q3 2009. It's now an even money bet on whether we have GDP contraction for Q3 2010.

 

[Shtopor]

Did TREB mentioned that 6,310 sales for September is THE LOWEST FOR THE MONTH IN OVER 6 YEARS!

September 2008 was 6424, and that was when the financial crisis was getting worse day by day.

 

[lafard]

Don't forget year-over-year figures are still skewed by the sharp transition between boom and bust. This time last year sales were way up but prices had only just began their meteoric rise.

Because of the anomalous jump in prices last fall and into winter, even a decent market here will be negative year-over-year when you compare Februaries for example. Although the realtors will spin it, and for once they'll be justified in doing so, it will make a gentle decline look terrible.

The only way they CAN stay positive is if price trends creep back into bubblish increases again. This situation is probably worse than a gentle decline as it further destabilizes things and renders a "soft landing" even less possible than it already is.

 

[interested]

?? I'm not sure I see where is the good news? I'm a mega bear, and even I wouldn't expect monthly price decreases (seasonally adjusted) of anything beyond maybe 0.5%. Sorry, but from what I'm seeing, the only good news in the Sept numbers is that the last 2 weeks weren't as bad as the horrific 1st two weeks.

September sales are lower than any year for which we have data (2004-2009). Q3 2010 has just concluded the lowest level of sales (seasonally adjusted) out of any qtr for which we have data (2004-2010).

.

I don't consider myself a bear but rather a realist. I do believe things have gone too far up. That said, I don't think there is anything suprising about the fact that there is some pick up over the last 1/2 a month. Recall, everyone was saying early in the year that sales were being pulled forward due to low interest rates and the new rules re mortgages and the HST. So it is not suprising that Q3 2010 would be weak.

Also, I am quite sure that despite the "last 2 weeks" of Sept showing some slight improvement, Q4 2010 will almost certainly be weak and definately weaker than last year Q4 in which Alan Greenspan's "irrational exhuberance" quote comes to mind.

I agree with Lafard's last sentence in post 1708: For all concerned, I sincerely hope that we do not see prices increase in the near future but rather stabilize or gently decline. That is our best hope for a longer term stable market. As pointed out before by others and David Rosenberg, if prices inflate further then the correction when it occurs (as nothing goes straight up forever) is more likely to overshoot on the downside the more it inflates on the upside. While some speculators/flippers may see this as opportunity, for investors and the average home owner, this is not a good thing. It results in instability, inability to reasonably plan, and is an overall negative for the real estate and for that matter any market.

 

[interested]

This article is on the globe and mail web site today.

I don't think CG will agree but the article reflects alot of what others and I have been saying for a while now.

http://www.theglobeandmail.com/repo.../housing-prospects-dismal-imf/article1745015/

Housing prospects 'dismal': IMF
STEVE LADURANTAYE — REAL ESTATE REPORTER
Globe and Mail Update
Published Wednesday, Oct. 06, 2010 9:27AM EDT
Last updated Wednesday, Oct. 06, 2010 10:30AM EDT
67 comments Email Print/License Decrease text size Increase text size

Residential housing will act as a drag on economies around the world for the next eight years, the International Monetary Fund said Wednesday, even in countries such as Canada that appear healthy.

In its October World Economic Survey, the organization warned of “dismal” prospects for real estate, saying “rebound” economies such as Canada and those in the Asia-Pacific region were faring well, but that government intervention to cool overheating markets means that real estate won't be a source of growth in the coming years.

The Canadian government stepped into the market earlier this year, making it more difficult to obtain a mortgage and requiring a higher down payment for
investment properties. Higher interest rates in the next year are also expected to further quell the Canadian market, which has already shown signs of cooling.

As rates rise, many homeowners may not be able to afford the mortgages they took out when rates were low, the IMF cautioned.

“A feature of the real estate cycle over the past decade that differs vastly from past cycles is enhanced access to credit,” the report stated.

“Easy monetary conditions and financial innovation gave households greater access to credit and led to a buildup in leverage. The process of deleveraging could make the macroecnomic impact of this housing bust greater than in the past.”

Households take longer to deal with bad loans than financial institutions or the corporate sector, the IMF said, because houses can be difficult to sell. That's why a residential real estate recovery will take so long to happen.

Households take longer to deal with bad loans than financial institutions or the corporate sector, the IMF said, because houses can be difficult to sell. That's why a residential real estate recovery will take so long to happen.

The recovery is likely to be slower than in recession triggered by problems related to corporate balance sheets,” the report stated.

The report lumped Canada in with Asia-Pacific countries, because the recoveries in the real estate market have been similar. The IMF said “econometric estimates still show a deviation of house prices from fundamental values,” cautioning that the Asian markets in particular are at risk from speculators trying to cash in on the market.

“In contrast to past recoveries, there appears to be little hope for a sustained upside boost to the overall economy from the real estate sector,” the report stated. “In economies where real estate markets are in decline, the drag on real activity will continue. Where house prices and residential investment are rebounding, concern about bubbles is eliciting policy actions that will temper any short-term boost to economic activity.”

 

[KA1]

Interested, you gonna regret that you challenged the wisdom of CG. Amongst all of us, he is the only one who has his ears to the ground -- direct knowledge of what's going on in the market, especially core downtown C1 area.

May I remind you that your master-stroke purchase of a unit in Shangri-La is in C1 area. For your sake, I hope CG is right.

I am waiting CG's response.

 

[interested]

Interested, you gonna regret that you challenged the wisdom of CG. Amongst all of us, he is the only one who has his ears to the ground -- direct knowledge of what's going on in the market, especially core downtown C1 area.

May I remind you that your master-stroke purchase of a unit in Shangri-La is in C1 area. For your sake, I hope CG is right.

I am waiting CG's response.

I believe in the long run I will be proven correct unfortunately. I too would prefer that CG be right and that things just stagnate.

CG believes things are picking up. Well, we just had 3 months of a very bad summer. Some activity was to be expected and talking about 1 or 2 weeks hardly makes a trend. I am pleased that it has occured but am highly skeptical that it will continue through the fall, hence the reason I posted that I hoped everyone in the real estate industry would not say if it slows that it is a seasonal effect.

My point Ka1 is that we should try and look at things in a balanced fashion. That said, I believe I represent somewhat the "bearish view" but I am certainly open to change my mind. When we quote a few days or a week and say that is a trend, I think that is more wishful thinking than careful analysis, whether proven right or wrong. I appreciate CG to appreciates this fact since in his posts he eluded to the fact that it was only a few days/weeks of data.

I can't say that I will be right today or tomorrow but I am quite confident unfortunately that what we are seeing are the "Johnny come lately" to the party and I fear they will be badly burnt. I am not saying within the few months but next year should be very interesting.

It is just that everything I read and see tells me things are just not good out there and yet we expect people with no more money to continue to buy and drive up prices. Eventually interest rates will go up and then what? And if they don't, it is because the economy is in the dolldrums. Neither scenario makes for a rationale argument to have prices go up. As I said, just because people bid it up, still makes no sense in my view.