this article shows what has been happening for the last few years. Developers have conscprited the realtors who are willing partners to get at their clientele by offering them in exchange for a middle man profit.
i find similarities to what happened in the brokerage industry when the big 5 banks took over all the brokerages and suddenly brokers had access to alot of the bank's capital investments from its clientele. Brokers made a lot of money. the banks made alot of money.
Similarly, developers make money, realtors make money, and the ultimate consumer pays more since layers have been added, all of which adds to price.
Still, despite all the projects, I believe that if the pre-construction boom is really back, which I don't necessarily concur with, some developers will be caught out as being late to the party as will some of the latest purchasers. History has shown that developers (due to the lead time from start to finished product) must be prepared to whether recessions, changes in market conditions. They will surely overbuild this time as they have in the past. The risk has just been transferred more from developer to investor/end users since they cannot break ground without a minimum of 60% sales in most cases and even approaching 70% now.
Urbandreamer does have a point. Dow is now 7% below the start of the year. In correction territory if one looks at the last 3 months (down more than 10%). Will it hit recession levels and down more than 20%, I don't know but a very real possibility in the next few months. The TSX is down 4% on the year so far again. In the past few months, it is down more than this not only giving up the early gains of the year but losing a fair amount. It appears China's growth may not be as robust as first thought. With withdrawal of stimulus, unless the private sector picks up the slack which is looking shakey at the moment at best, the economy is likely to faulter or at least not grow in the next few months/year.
So again, why shoud there be a boom being back on economic terms? and is it sustainable?. If the article is correct, investors are up to 50% of the market. Are these same investors seeking real estate now as it has continued to perform? bonds yields hit lows again last week. Stock market down, Cash bringing in nothing, wages not increasing, productivity not increasing, yet real estate continues to advance. At what point do the investors lack the cash, or find an alternate new investment, bringing a halt to the investor 50% purchases, with subsequent large fall in demand.
I am not saying it will happen now or when, I just fail to see what is driving this continuous price increase. also, as inventories continue to accumulate, there will have to be at least a pause if not a correction.l
Just look at today's stock market move...it will spook the investor at this weekend's condo sales centres imho.