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aguduser

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Trying to attach the whole report by Urbanation, but couldn't do it. Don't know why the Attach File function doesn't work.
 

interested

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Eug, I think it depends how one defines a "crash". I don't think anyone was predicting a price crash in 2010 H2. RE prices are slow to move, whether up or down. But if one looks at $volume (sales times prices), seasonally adjusted, we are down 20% YOY 2010 H2 from 2009 H2, and more than that 2010 H2 from H1. I look at what has happened 2010 H2 as a confirmation of what we bears expected.

Agree Dave. Though I think the bears on the forum were expecting more of a price decline as well as a listing plethora. I think we all knew that after the takeoff in late 2009 and the impending HST and people rushing to market in the first 1/2 of 2010, that the latter 1/2 of2010 would be less stellar.
What I find personally, and I do not think I am a bear but rather sanguine and rational about what I see though I do expect a price adjustment downwards, is that the volumes while down have been suprisingly matched to a degree by a decrease in listings. I say this because I would think that if there was alot of fear out there, people would be listing and absolute listings would be increasing at an alarming rate. This so far has not happened.
And if there is no alarming increase in the Winter/Spring of 2011, then there likely will be only mild price adjustments if at all.
 

CN Tower

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The trepidation regarding condominium apartment tenants has been
fodder for analysts in this market for several years, however with
approximately 18,000 condominium completions in the CMA in 2010
(almost twice as many as 2009), there will be much greater competition
for these tenants than ever before. However, Urbanation does not
believe that these factors will have a significant dampening on new
condominium sales in 2011.

Translation- rents are going down and vacancies are going up but zombie investors guided by self-interested/conflicted 'advisers' will continue to pile in as inventory balloons.
 

Eug

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Eug, I think it depends how one defines a "crash". I don't think anyone was predicting a price crash in 2010 H2.
Actually a lot of people were, perhaps not so much in this forum though.

In fact, I myself was predicting a possible mild decline by fall 2010, but what I meant by mild was not just 2-3% off the peak. More like 5 or perhaps 10% with somewhat higher numbers after a period of time.

RE prices are slow to move, whether up or down.
Well, they dropped fairly quickly in the US.

But if one looks at $volume (sales times prices), seasonally adjusted, we are down 20% YOY 2010 H2 from 2009 H2, and more than that 2010 H2 from H1. I look at what has happened 2010 H2 as a confirmation of what we bears expected.
I disagree with that assessment. That's more like massaging the numbers to fit a certain conclusion IMO. In terms of actual pricing, that is not that relevant to a home buyer in practical terms. It only may be relevant if you earn a commission off those sales.
 

interested

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This is old data from the summer. We are at least 3-5 months beyond this.
Again, what would you expect to hear.
While Eli Davis a top realtor is having a bumper year, that means nothing because it is anecdotal. So interesting but one cannot extrapolate the whole market from this and clearly the market as a whole was slowing.
This was essentially a cheerleading session, not objective journalism. And you don't have 1 naysayer and 5 with vested interests to argue the opposite.
 

interested

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Actually a lot of people were, perhaps not so much in this forum though.

In fact, I myself was predicting a possible mild decline by fall 2010, but what I meant by mild was not just 2-3% off the peak. More like 5 or perhaps 10% with somewhat higher numbers after a period of time.


Well, they dropped fairly quickly in the US.


I disagree with that assessment. That's more like massaging the numbers to fit a certain conclusion IMO. In terms of actual pricing, that is not that relevant to a home buyer in practical terms. It only may be relevant if you earn a commission off those sales.


I think however Eug that the last thing to drop is price. First sales will slow. Then listings will pile up. then in new product there will be incentives. Then there may be political interference to try and maintain wealth effect. And then finally there will be price drops.
Prices dropped in the US from 2006 peak but they continued to drop over the next 3 years. We are talking in terms of 3-6 months here.

I agree we are not the US, but that said, even the Canadian example in 1989 the drop took 3 years and then hovered at lows for the next 4 years. So barring an "end of World scenario", the drop will be a hiss rather than a pop. Witness the 10-15% drop over 6 months Sept 2008 when people were much more panicky. And 10% over 6 months is a huge quick drop.
 

Eug

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10-15% over six months is significant. OTOH, 2-3% over six months is barely even noticeable cuz it's within the range of seasonal variation.

As for new listings, they actually went down this period.

Anyways, if the prediction resets every summer, perhaps it will eventually come true. However, that doesn't mean anyone who predicted the drop really is visionary. This predictions have now been out there in Canada for the last 5-10 years.

I could see a prediction being off by 3 years, but one that's off by 10 years probably means they're as clueless as the rest of us. ;)
 
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cdr108

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This predictions have now been out there in Canada for the last 5-10 years.

I could see a prediction being off by 3 years, but one that's off by 10 years probably means they're as clueless as the rest of us. ;)

they may be off on the timing, but they may not be clueless.
who could have predicted QE1, QE2, drastic cutting of interest rates by international federal reserves, etc.

were it not for the above, TO and Cdn R/E prices would have stagnated, if not fallen, several years ago.
 

X2 Buyer

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Stocks Finish Higher Despite Poor Jobs Report

..still mixed messages -

Stocks have now risen for three straight sessions, lending a strong start to December. The Dow rose 2.6% over the week while the S&P 500 added 3%.

The somewhat muted reaction of the markets to the adverse jobs report was surprising given the broad market's strength in the previous two sessions as the Dow posted consecutive triple-digit gains.

The Labor Department said early Friday that the U.S. economy added 39,000 jobs in November after adding 172,000 in October. The increase was much weaker than market projections for job growth of 130,000, according to Briefing.com. The unemployment rate climbed to 9.8% -- the highest level since April -- disappointing expectations that it would hold at 9.6%.

A recent wave of positive economic news and better-than-expected ISM services and factory orders report may have helped investors shrug off the jobs report along with the weaker dollar, which has had a greater influence on stocks in recent months.

Speculation that the Fed might step up its quantitative easing program also aided sentiment. The stubbornly high unemployment rate was one of the main factors cited by the Federal Reserve in its decision to begin purchasing $600 billion of long-term Treasury securities through the second quarter of 2011. The Fed has said it will regularly review the pace of its asset-purchase program against economic conditions to ensure that achieves the central bank's desired goals.

"It's as if everything is upside-down. Bad news is good because that means the Fed will keep on spending. All Bernanke is trying to do with QE2 is reflate the assets so that the market starts to feel better and people start to go out and buy more stuff, increasing demand and spurring employment," said Ron Courser, founder and president of Ron Courser & Associates.

Courser said that while extra liquidity means that the market will grow in the short-term, the real question is where all the cash is going and whether it will work to meaningfully bolster the economy."A lot of it is going overseas or into commodities," he said.


......



Will that include Canadian R/E?
 

interested

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Stocks Finish Higher Despite Poor Jobs Report

..still mixed messages -

Stocks have now risen for three straight sessions, lending a strong start to December. The Dow rose 2.6% over the week while the S&P 500 added 3%.

The somewhat muted reaction of the markets to the adverse jobs report was surprising given the broad market's strength in the previous two sessions as the Dow posted consecutive triple-digit gains.

The Labor Department said early Friday that the U.S. economy added 39,000 jobs in November after adding 172,000 in October. The increase was much weaker than market projections for job growth of 130,000, according to Briefing.com. The unemployment rate climbed to 9.8% -- the highest level since April -- disappointing expectations that it would hold at 9.6%.

A recent wave of positive economic news and better-than-expected ISM services and factory orders report may have helped investors shrug off the jobs report along with the weaker dollar, which has had a greater influence on stocks in recent months.

Speculation that the Fed might step up its quantitative easing program also aided sentiment. The stubbornly high unemployment rate was one of the main factors cited by the Federal Reserve in its decision to begin purchasing $600 billion of long-term Treasury securities through the second quarter of 2011. The Fed has said it will regularly review the pace of its asset-purchase program against economic conditions to ensure that achieves the central bank's desired goals.

"It's as if everything is upside-down. Bad news is good because that means the Fed will keep on spending. All Bernanke is trying to do with QE2 is reflate the assets so that the market starts to feel better and people start to go out and buy more stuff, increasing demand and spurring employment," said Ron Courser, founder and president of Ron Courser & Associates.

Courser said that while extra liquidity means that the market will grow in the short-term, the real question is where all the cash is going and whether it will work to meaningfully bolster the economy."A lot of it is going overseas or into commodities," he said.


......



Will that include Canadian R/E?

I don't know but all that money has to go somewhere and into something. that said, I would not think alot of QE2 will come to Canada with the stronger dollar as this would pose currency risk to the USD unless one believes the USD will continue to depreciate against C$. As well, our real estate is not a cheap asset now and surely there are other areas "investors" could look at that is safer in the long run. At least other areas that would give some rate of return rather than shear speculation that the assets will inherently rise.

The thing to remember is that eventually,the excess stimulus has to be mopped up and taken out of the system. So just as a rising tide raises all ships, in this case all asset classes, the withdrawal of the stimulus should lower all ships as well.

The reason we can't figure out what is happening logically is there is so much political , monetary and fiscal interference
that one cannot make a sensible prediction based on facts and logic alone.
 

simuls

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To update myself, while the average is still a 5% yoy increase (actually it's 4.7%) - the median is now only up 2.5% - another drop of 1.5% yoy. We are also only 1% up in total sales, so it seems a pretty forgone conclusion that the above will happen and 2010 will be lower total sales than 2009. The average price is steady because - again - we saw more higher priced properties selling (double the number of condos in C02 - which have average prices of $850ish vs Sep for eg.)

It's also important to note that in the C01 area, the s/l ratio is hovering around 26.5% - this is buyers territory and has been for a few months.

Also, also, even with prices lower than in the spring the % listing price is now around 98% - vs typical 100% in the spring of 2010.

Active listings are up 24% yoy and days on the market are 31 vs 26 or a 19% increase.

So, active listings are up, days to sell are up, number of listings are up, % listing price is down, median price yoy continues to drop, average price yoy continues to drop. I'm not sure how many more ways there are to say that this doesn't bode well...unless you're a realtor (like the one I just saw from the beaches) who is saying that sales are down because there just aren't enough listings - unbelievably irresponsible spin.

I believe Interested requested I continue my number crunching so in an effort to please, here you go!

Numbers this month are very interesting and are similar to the most recent employment numbers in that they seem to bring hope, but further dissection shows that is not really the case. Happily, a few surprises came about (sales to list ratio) - but when we're talking central Toronto (C1-15) and the downtown market (C01) - which is the only one I really care about - it's not quite as rosy as this report would make it sound.

First let's do the $'s. Remember, the median price increase yoy has been steadily dropping and November continued this trend in central Toronto with the median price coming in at $396750 vs Nov'09's $395000 - a .45% yoy increase and a further drop from the 2.45% yoy increase between October '10 ($417250) and October '09 ($407750) medians. This monthly drop in the median price between October and November 2010 is $20500 or 5% - that is double the drop expected for the seasonal norm. In addition, days on the market yoy are now 31 vs. 21 - a 50% increase, and in the condo dense C01, it's gone from 20 to 35 or a 75% increase and median price in C01 condo is now 0% yoy (346000/345750) and average price is down 1% yoy (387347/391937). Properties are also now selling for 98% of list instead of the 101% in the overheated Nov. '09.

Sales to listing ratio is a bright spot in that essentially the numbers - especially in C01 - indicate that for every new property brought to market, .6 was removed. In C01 Oct'10 there were 1115 active listings with 313 sales - leaving us with 802 listings to begin November with (roughly), but at the end of November we have 986 active and 382 sales, yet 524 new listings came to market. What's up with that? 524 new listings but only a 184 increase in active - so 340 units were withdrawn from the market - fully 1/3 of the inventory - this is huge! Is there a reason for this? Yes - and it's in the numbers above. People are removing and waiting for the spring because they can't get the price they want . Regardless, a lack of inventory is a good thing for prices and the sudden increase in S/L, if it continues, might keep the numbers from falling further. That being said, those 340 units might want to be put back in the market and if several months of this happens and then there's a surge in the spring then we could see the seriously elevated listing that will bring about larger price drops.

As predicted, 2010 has now dropped behind 2009 in total sales and will be less.

So, active listings are up (200% vs Nov.2009) but s/l is too which will help with prices, days to sell are up and increasing, new listings are up, % listing price is still down to 98%, median price yoy continues to drop, average price continues to drop and is negative in C01 condos.

Also interesting to note is that while average price in C1-15 is only down 6% from the May peak ($553566 from $590251) and the median price in C01 is only down 9% from peak ($396750 from $436000), this is more than 225% the normal variance between these two months historically (Eug ;-), so a correction is definitely happening, it's incontrovertible, and most numbers continue to suggest that this will continue at a slow pace. My two cents.
 
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interested

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I believe Interested requested I continue my number crunching so in an effort to please, here you go!

Numbers this month are very interesting and are similar to the most recent employment numbers in that they seem to bring hope, but further dissection shows that is not really the case. Happily, a few surprises came about (sales to list ratio) - but when we're talking central Toronto (C1-15) and the downtown market (C01) - which is the only one I really care about - it's not quite as rosy as this report would make it sound.

First let's do the $'s. Remember, the median price increase yoy has been steadily dropping and November continued this trend in central Toronto with the median price coming in at $396750 vs Nov'09's $395000 - a .45% yoy increase and a further drop from the 2.45% yoy increase between October '10 ($417250) and October '09 ($407750) medians. This monthly drop in the median price between October and November 2010 is $20500 or 5% - that is double the drop expected for the seasonal norm. In addition, days on the market yoy are now 31 vs. 21 - a 50% increase, and in the condo dense C01, it's gone from 20 to 35 or a 75% increase and median price in C01 condo is now 0% yoy (346000/345750) and average price is down 1% yoy (387347/391937). Properties are also now selling for 98% of list instead of the 101% in the overheated Nov. '09.

Sales to listing ratio is a bright spot in that essentially the numbers - especially in C01 - indicate that for every new property brought to market, .6 was removed. In C01 Oct'10 there were 1115 active listings with 313 sales - leaving us with 802 listings to begin November with (roughly), but at the end of November we have 986 active and 382 sales, yet 524 new listings came to market. What's up with that? 524 new listings but only a 184 increase in active - so 340 units were withdrawn from the market - fully 1/3 of the inventory - this is huge! Is there a reason for this? Yes - and it's in the numbers above. People are removing and waiting for the spring because they can't get the price they want . Regardless, a lack of inventory is a good thing for prices and the sudden increase in S/L, if it continues, might keep the numbers from falling further. That being said, those 340 units might want to be put back in the market and if several months of this happens and then there's a surge in the spring then we could see the seriously elevated listing that will bring about larger price drops.

As predicted, 2010 has now dropped behind 2009 in total sales and will be less.

So, active listings are up (200% vs Nov.2009) but s/l is too which will help with prices, days to sell are up and increasing, new listings are up, % listing price is still down to 98%, median price yoy continues to drop, average price continues to drop and is negative in C01 condos.

Also interesting to note is that while average price in C1-15 is only down 6% from the May peak ($553566 from $590251) and the median price in C01 is only down 9% from peak ($396750 from $436000), this is more than 225% the normal variance between these two months historically (Eug ;-), so a correction is definitely happening, it's incontrovertible, and most numbers continue to suggest that this will continue at a slow pace. My two cents.


Yes, I for one very much appreciate your thoughtful analysis and insight Simuls. Please keep up the good work if you are willing.

I have highlighted one conclusion however. You may well be right people have not put their property on the market as they can't get their price or maybe they feel things will go up in the spring. Not everyone is on the same page as most on this forum. However, I think it is important to note that this assumption may or may not be correct.

Other than that, I think your analysis is thoughtful, poignant, and to the point. Things despite the spin are not improving. I think it is helpful when the in depth analysis as done here lays it out for one to conclude from a rational analysis of the data what is truly happening.
 

interested

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the biggest mistake I find people make is they look at real estate in Florida but bring a Canadian perspective. The reality is the local market down in FLorida is very hit and just because it looks cheap by Toronto and Canadian standards and even Florida standards when compared to 5 years ago, does not make it so nor can one conclude that it is reasonable to buy especially to invest. For personal use. Again another story.

It may well be at the bottom but alot of smart people I have talked to expect a further 10% decline.

When few locals are buying and 27% is being bought by Canadians, if we have a correction and those Canadians need to get capital back here, what is the first thing they will sell? You got it. The second home. Has happened many times before and likely will happen again.

so we better hope things keep going well. As Simuls thoughtful analysis shows, things are deteriorating, just slowly so people are not taking note and the R/E industry is just putting forth headline numbers that deceive without in depth analysis to suggest that things are "OK"
 

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