[dt_toronto_geek]

Also depressing was last night's report on the US mortgage meltdown on 60 Minutes. Sub-primes are just the beginning. Alt-A's and Option ARM's are ready to reset causing another wave of mortgage problems there. Very bad for confidence.

http://www.cbsnews.com/video/watch/?id=4668112n (link may only be active for a limited time)

 

[The Condo Observer]

Taken from TREB's website, released yesterday:

-------------------------------------------------------------



Greater Toronto Home Resales at 1,500 in Mid December

TORONTO, December 17, 2008 -- Greater Toronto REALTORS® reported 1,487 resale transactions during the first half of December, from 2,868 sales recorded in the same period a year ago, Toronto Real Estate Board President Maureen O’Neill announced today.

The average price of a home in the Greater Toronto Area is currently $360,652. This compares to an average of $404,707 recorded during the first half of December 2007 and to an average of $343,048 recorded during the same period in 2006.

“Keeping today’s market statistics in perspective, MLS® statistics confirm that over the last 10 years the price of homes has increased in value. What this means for the consumer is that real estate continues to hold its value and is a solid choice for long-term investments,†said Ms. O’Neill.

In the 416 area, 619 transactions were recorded during the first half of this month, from 1,402 sales that took place during the same timeframe a year ago.

The average price in the 416 area is currently $382,759, from an average of $450,731 a year ago, and $367,650 recorded in the first half of December 2006.

In the 905 region 868 homes changed hands in the first two weeks of this month, from 1,466 transactions that took place in the first half of December 2007.

The 905 region’s current average price is $344,887 from an average of $360,691 recorded during the same timeframe a year ago and $325,477 recorded at mid-December 2006.

“The recent C.D. Howe land transfer tax study confirms REALTORS’® concerns that the second LTT imposed on homebuyers in the City of Toronto has indeed contributed to the economic conditions in the GTA,†added Ms. O’Neill.

There are currently 24,708 listings on the TorontoMLS system, from 17,027 a year ago. The average number of days a home now remains on the market is 43, as compared to 33 days a year ago. Sellers are achieving 96 per cent of their listing price, as compared to 98 per cent a year ago.

“Location, price and your own personal financial and family situation all play an important role when considering a purchase,†said Ms. O’Neill. “REALTORS® can provide you with information about neighbourhoods, school districts and realistic pricing because of their vast knowledge of the local community.â€

This mid month release does not provide a year in review analysis. A summary of activity for all of 2008 including the month of December will be provided in the January 2009 Market Watch Report.

Toronto REALTORS® are passionate about their work. They adhere to a strict code of ethics and share a state-of-the-art Multiple Listing Service. Serving over 28,000 Members in the Greater Toronto Area, the Toronto Real Estate Board is Canada’s largest real estate board. Greater Toronto Area open house listings are now available on www.TorontoRealEstateBoard.com.


-30-








All information on this site is copyright © 2003 - 2008 Toronto Real Estate Board. All rights reserved.
Although TREB endeavours to ensure the accuracy and timeliness of information, it is not guaranteed.
TREB accepts no responsibility for any loss arising from any use or reliance on the information contained herein.

 

[dt_toronto_geek]

Several Economists comment on how they think 2009 will look across Canada

http://www.yourhome.ca/homes/article/561207

 

[TrickyRicky]

So now that hardly anyone is in denial about the sad shape of affairs we are in, the question moving forward in 2009 is will the downturn continuously surprise us with new intrigues as to how bad it is or how it is not so bad? I unfortunately believe the former. I suspect 2009 will be one string after another of bad news so that by the end of the year and into 2010 it won't even be in the news anymore because bad will be the new norm. That is the signal to position yourself for recover, when people are so tired of bad they don't even care anymore. Right now I wouldn't even think about recovery just survival. Take up a new hobby, learn a new language, spend more time with your family and friends. Agents, brokers and other insiders will be lucky to even have a job by the end of 2009.

 

[cdr108]

... Agents, brokers and other insiders will be lucky to even have a job by the end of 2009.

Oh they will still have jobs, just be actually working for the money.

No more easy $10K - $25K (if agent on both sides) in 1 week by throwing up a 'for sale' sign on a property that sold itself in sometimes crazed bidding wars.

Or those realtors we saw on TV lining up for 1BE and Aura with the intent of flipping the condo to make $50K+ at the expense of actual end users.
I hope these 2 specific condos get built and those individuals still hold the P&SA; otherwise, they get their deposit back with no consequences for contributing to the inflated prices in TO.

I wouldn't be surprised if all the doom and gloom rumours about these 2 projects have been perpetuated by RE agents with P&SA because they know they won't get back the price they paid within the next 5 years.

 

[Observer Walt]

cdr, sorry, your comment is short-sighted at best and frankly verges on ignorance.

There will be some "weeding out" of agents, there always is in a down market. Wish them well in finding new employment.

Agents don't decide the prices at Aura or 1BE, or any other project. These prices are determined by the market, which comprises purchasers and potential purchasers, and numerous sellers in the form of the numerous competing projects (and, for resales, the individual vendors and potential vendors). There aren't many markets that are actually as free from manipulation as the real estate market in a large city. There are just too many participants and potential participants for any one group to gain undue influence.

I also can't see how purchasers will "get their deposits back", unless the project in question is actually cancelled by the builder. A signed Agreement of Purchase and Sale is a binding contract. It's surprising how many people don't understand that. If you, as a purchaser, don't close, you don't get your deposit back, you lose it. You may also be open to being sued for further damages.

Also, I have no idea why you assume that "doom and gloom rumours" are being spread by real estate agents. They would have the most to lose if a project either fails to be built, or if values drop significantly during construction. The doom and gloom talk, at least judging by this forum, tends to be spread by people who obviously know little about the market, and / or who just enjoy being contrary for the sheer sake of being contrary (sometimes AKA trolls).

Edit: Not to belabour the point, but I often wonder why people assume that real estate agents do little or nothing to earn their commissions. If it's so lucrative, why aren't a whole lot more people working in the field? I can say from personal experience that the good agents work long and hard. Likewise, the ones who take an attitude that you refer to (just put up the sign and it will somehow sell) will be out of the field soon after entering.

I can't resist one more comment: how exactly is it easy to be an agent in a bidding war, as you seem to suggest? If anything, it's much easier to actually complete transactions in today's slower market, although obviously there are fewer of them being done.

I'm not involved in sales myself, but as an appraiser I have a bit of a front-row seat, and a fascination with the market.

 

[cdr108]

Agents don't decide the prices at Aura or 1BE, or any other project. These prices are determined by the market, which comprises purchasers and potential purchasers, and numerous sellers in the form of the numerous competing projects (and, for resales, the individual vendors and potential vendors). There aren't many markets that are actually as free from manipulation as the real estate market in a large city. There are just too many participants and potential participants for any one group to gain undue influence.

I also can't see how purchasers will "get their deposits back", unless the project in question is actually cancelled by the builder. A signed Agreement of Purchase and Sale is a binding contract. It's surprising how many people don't understand that. If you, as a purchaser, don't close, you don't get your deposit back, you lose it. You may also be open to being sued for further damages....

I think you misunderstood my comments.

Never did I say agents set the prices for 1BE, Aura or any project.

If you happened to see the news, it was shown on TV how agents paid people to line up for a week at 1BE to purchase units. Similar situation was happening with Aura.

Interviews with some of these agents showed that they were PERSONALLY buying the units with the intent to 'flip' them, having stated that it was worth their while to pay someone $1000 to wait in line for them since they'd make a quick $50K (those were their words).

I understand a signed Agreement of Purchase and Sale is a binding contract; therefore, the only to get their money back is if the project gets cancelled.

Hence I feel it would be poetic justice if those that bought for the intent to flip are stuck with the contract and 1BE + Aura get built. With the real possibility of decline in RE values, they will probably holding a losing position if the projects get completed within the next 5 years.

To me, TREB is a reflection of the industry and they voted someone like Maureen O'Neil (sp) as President, who has denied all allegations of market manipulation until presented with files from RECO.

Yes, there are good agents and there are bad agents ... you can determine which ones you work with.

Are you going to tell me that within the last 10 years there haven't been more people in the field since RE values and sales increased ?!?!?

 

[TrickyRicky]

Observer Walt,

Your record of postings on this forum tend to be insightful and informative and add value to the discussion. I am surprised however how much you have been resistant to opinions expressing concern about the market and economy in general moving forward. I would assume as an appraiser you would have front line, real-time insight into how badly things have deteriorated. Conditions may alter in the spring but at present my sense is that it is a wasteland out there. Have you spoken to agents and mortgage brokers and asked them how many deals they have made in the last few months? What about businesses trying to get financing or loans? I think the spring will be the tipping point that many are still holding out hope for. If some residual strength in the market can be mustered in the spring or at least conditions can be described as stabilizing we will be OK. If not, classic panic behaviour will set in and we will be testing the limits of our worst case scenerio forecasts.

 

[Observer Walt]

Ricky, fair enough, you may have a point.

As an appraiser I can assure you that I am talking almost every day with agents, underwriters, and independent mortgage brokers. I follow the market pretty closely. The Toronto Real Estate Board will publish 2008 stats tomorrow (Friday), and I expect sales volume to be down about 19% from 2007. I think I'm living in the real world.

However, I have made a bit of a point of speaking against some of the more extreme "doom and gloom" on this forum, as you have apparently noticed. In the 1 Bloor East thread especially I have been astonished and fed up with the number of baseless rumours, and I guess I haven't been too shy about saying so. They don't contribute anything useful.

I agree with you that the next few months will be crucial, to see if we are at least beginning to pull out of the current problems. Let's keep the fingers crossed.

 

[cabbagetowner]

i would guess the sales volume (dec 07 vs dec 08) will be down more than 19%. wasn't nov.'s decline close to 50%. hard to imagine things have improved.

 

[daveto]

I think Observer Walt was referring to full year 2008 as down 19%, rather than the month of dec. I think in true spindoctor fashion the TREB report will indeed likely focus on the fullyea numbers rather than acknowledging the precipitous drop in the last few months including Dec.

 

[Observer Walt]

Dave, they report both the monthly and the year-to-date figures, every month. Hard to "spindoctor" 15 pages of numbers.

Final 2008 sales volume was 74,552, compared to 93,193 for 2007, a decrease of 20.0%. 2008 average price (full year) was $379,347, compared to the 2007 average price of $376,236 (0.8% increase). Median price for the year 2008 was $320,000, compared to $318,200 (0.6% increase).

It's clear from the monthly stats that the market is declining. For December 2008, sales volue was 2,577, a major drop from 4,646 in December 2007. Average price for the month went from $394,931 to $361,415 (8.5% decrease). Median price for the month went from $320,950 to $305,000 (5% decrease).

As a quick summary comment, 2008 started reasonably well, and went into the tank starting rather abruptly in July.

 

[daveto]

Hard to "spindoctor" 15 pages of numbers.

Here is a brainteaser for you...

A disease test has a 5% false positive test result. 1 person in a thousand has the disease. A person is chosen at random, tested, and returns a positive result.

What is the probability that this person has the disease?

I will post the answer later.

 

[Ken]

My guess is:

0.95 * 0.001

 

[MavRK]

Using Bayes Theorem:

1/1000 or 999 people do not have the disease
5% of 999 are false positive=~50 people
only 1 out of the 51 (remember that 1/1000 will be a true positive) =>1/51=1.96

The probability of a positve test when the disease is absent is:

1.96 or 2%