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- Thread starter simuls
- Start date
daveto
Active Member
Semlohsttam
New Member
If you follow RealNet Reports on GTA condo data you would see there isn't any possibility of a bubble, with over 80,000 new people moving to the GTA every year even accounting for those that leave we are well under housed in this market, we can only build about 15,-18,000 new each year, and our very disciplined builders read and understand the monthly report that RealNet generates.
If you are unsure of how RealNet is so sure of the fact that there won't /Can't be a bubble check out the stats at www.realnet.ca
If you are unsure of how RealNet is so sure of the fact that there won't /Can't be a bubble check out the stats at www.realnet.ca
TrickyRicky
Senior Member
Semlohsttam, you so craz-z-ay.
KA1
Senior Member
If my memory serve me right, sometime ago, Cdr108 had made a post stating that despite this talk of a great number of individuals moving in GTA, actual number of new households bering formed is very low. Perhaps, Cdr108 could direct us to his post.
simuls
Senior Member
The actual number of people who move to the City of Toronto each year is approximately 17 000. Most of whom, do not purchase condos or live in the core.
BobBob
Senior Member
Sure, they probably move into an apartment block in Scarborough, but they displace a more established immigrant family which just bought a house in North York, displacing a mature family where kids moved out (to condos) and parents downsized (also to condos).
ponyboy
Active Member
The issue of in-migration is interesting but is is marginally important compared to the fundamentals (prices relative to rents and income). Also, there is a lot of unobserved/unmeasured "doubling up" that has occurred in this recession. There is a lot of flex in the system, and consumers in doubt (and with bad credit) will seek out more affordable rentals.
Doesn't the price to income ratio today compared to historical averages (and stagnant rents) mean a lot more than in-migration? Whenever this ratio has been relatively high, prices (not incomes) have (eventually) corrected to bring it in line with the historical average. Why should it be any different in the (near) future. It may take a few years because there is so much political interference in the housing market, which is effectively what has propped up the economy over the past few years. The govt is able to prolong the housing boom, but not forever. The last year or so has been an opportunity for smart money to leave the dance.
Doesn't the price to income ratio today compared to historical averages (and stagnant rents) mean a lot more than in-migration? Whenever this ratio has been relatively high, prices (not incomes) have (eventually) corrected to bring it in line with the historical average. Why should it be any different in the (near) future. It may take a few years because there is so much political interference in the housing market, which is effectively what has propped up the economy over the past few years. The govt is able to prolong the housing boom, but not forever. The last year or so has been an opportunity for smart money to leave the dance.
simuls
Senior Member
If this math actually worked it would be wonderful, but it's all kinds of wrong.
interested
Senior Member
I agree that those who come late 2008 onwards will likely lose on paper if they sell in the next year or 2 or even 3. However, if the housing market does go down significantly, I believe by extrapolation every asset class likely will do the same: save cash, index linked T bills and perhaps gold. If however, the economy recovers even if not at a great pace, it should provide some flooring to the drop in housing prices and it is this scenario that I favour and the reason that I feel prices will retreat but back to 2007 and 2008 prices.
To sell for investors, especially less well capitalized investors with alot of leverage/high mortgages, they should be selling if one accepts your scenario. However, for home owners in for "living" and well capitalized investors not looking to jump in and out of asset classes or who have a balanced portfolio, I am not sure that they should be selling unless they believe "the major meltdown" vs. the 10-20% correction theory I believe will happen. Remember, there are alot of costs associated with buying and selling real estate so 5-10% of one's equity can disappear when one buys/sells. Again, this makes sense and I would not be a buyer today, but am not sure I would rush out to sell everything either and then one has the issue of where to hold your money.
Finally, what if one is wrong, and there is no major correction? Recall we have alot of government manipulation. Who knows what other forces will come into play that may affect R/E prices.
CN Tower
Banned
Atlanta grows by 100,000+ people per year as well. In fact I believe it has more growth than any city in America. Check out their house prices since 2005:
http://www.heerybrothers.com/?tag=heery-brothers
Kenny
Active Member
"People are stupid, they will believe a lie because they want it to be true; or they're afraid it's true."
- Wizard's First Rule
interested
Senior Member
Great bit of information and a reality check. To me the most striking thing is the note below the graph which says it is back to 2001 prices.
However, that is a still only a 25% decrease from the peak. I believe it may be somewhat unfair to compare Atlanta to Toronto but the data is still pertinent. A 25% decrease in our prices would only bring us back to about 2007prices and not all the way back to 2000. Let's hope that we don't go back to 2000 prices as prices are up more like 60% + over the 10 years in Toronto so going down the other way would mean a drop of around 40%: That would be a very significant drop. Without going into details, Atlanta being a hub in the South is being very affected by the drastic downturn in Florida and other Southern States. I think an adjustment back to 2000 prices would be an over correction for Toronto but it illustrates how even in a market that did not have massive increases (25% over 10 years) can correct all the way back.
thank you for that "food for thought" CN Tower.
cdr108
Senior Member
from my observations, Toronto RE prices have gone up 100+% in the past 10 years and 150+% in the past 15 years.
in 1996, I was looking at semis (in good condition but needed updating) in S. Riverdale for $200-225K ... similar products are now $600-650K+ ... even units in Leslieville are fetching $500-550K
in 2000, IIRC your basic pre-construction dt condos were ~$225 PSF, with upgrades (like granite, wood floors, s/s appliances, etc) it was around $250 PSF.
the average pre-con condo now which have most of those 'upgrades' as standard are $550-600 PSF
interested
Senior Member
CDR, My comments were based on 60%/ 10 years for some of the areas that have not escalated as high. I appreciate that some areas within the city have had phenomenol growth that exceeds this as you point out. Condos in the core I believe are up perhaps 75%to 100%. Remember that while comparing $225-$250 PSF from 2000 to $550-600 PSF now for new construction, I don't believe developers were factoring in as much "future appreciation" as they have of late. As well, most resale (and remember what was new in 2000 is now older/resale) is closer to $400-$450 or maybe $500. So I don't think one can compare a new condo of 2000 to a new one now because the present price hindges on the "future prices occuring" and if you subscribe to the thought pattern of alot on this forum, that "new premium over resale" will likely narrow shortly. However, I may be wrong. Lord knows it wouldn't be the first time.
Riverdale and Leslieville are areas that became fashionable over the past decade and as such have escalated more than say North York, Scarborough or Etobicoke or areas north of Lawrence. At least that is my impression. To not overstate the case, I simply therefore chose the 60% + figure.(60% being a floor).
Riverdale and Leslieville are areas that became fashionable over the past decade and as such have escalated more than say North York, Scarborough or Etobicoke or areas north of Lawrence. At least that is my impression. To not overstate the case, I simply therefore chose the 60% + figure.(60% being a floor).