[interested]

http://ca.reuters.com/article/idCATRE6A14S520101102?pageNumber=2&virtualBrandChannel=0

I dont have time to get a haircut!!!

Encouraging. Always find the inspirational CG. Of course PWC Real estate division would not want to be saying things are bad but I must admit the source is outside the usual suspects that most of us consider totally biased.

Glad you are so busy. Maybe I can become your assistant CG. (LOL)

One more thing CG. Don't get a haircut! Remember what happened to Sampson when he had his hair cut. I would not want you to lose all your Real Estate strength.

 

[gregv]

Lots of comments follow article.

http://www.cbc.ca/money/story/2010/11/17/housing-bubble-warning.html

Housing bubble a danger: expert
Prices could drop by 25 to 30%

One of the first economists to predict the U.S. mortgage crisis warned Wednesday that Canada's housing sector could be headed for a sharp correction.

Dean Baker of the Washington-based Centre for Economic and Policy Research said he sees no reason why average home prices in Canada should be about 50 per cent higher than in the U.S.

Baker said if interest rates rise by two per cent, Canadians could see house prices collapse by 25 to 30 per cent.

Given the potential damage, Baker said the federal government should consider regulations to further tighten mortgage lending and the Bank of Canada should consider raising rates.

Ottawa has already moved once, in February, to tighten lending requirements.

And on Oct. 19, the Bank of Canada left its key interest rate unchanged at one per cent after three consecutive quarter-percentage-point increases, saying that the Canadian outlook had changed and that it expected full recovery to take a year longer than it had earlier predicted.

After that, many economists predicted the central bank would avoid raising rates further for a matter of months.

Baker was recently given the Revere Award along with two others for being the first to sound the alarm on the U.S. housing bubble five years before it burst.

 

[simuls]

New TREB numbers are up:
http://torontorealestateboard.com/consumer_info/market_news/news2010/pdf/nr_mid_month_1110.pdf

Not bad...not bad. First half november numbers are usually quite good however and it's the second half - when people start getting focused on the holidays where it starts to fall. Prices holding up well, but again, I need to see how many luxury properties were sold as apparently that's where the market is really cooking and it seriously affects average price.

 

[PIX]

Assuming there will be a correction in the housing market. Is it logical to assume that the price of condos will drop more than say my newly-constructed, town house in Scarborough? With some many condo projects going forward or will this be an over-all price drop? I'm planning to sell my town and buy a resale condo downtown in about 1-2 years time and hoping to be able to afford a decent size.

 

[CN Tower]

Assuming there will be a correction in the housing market. Is it logical to assume that the price of condos will drop more than say my newly-constructed, town house in Scarborough? With some many condo projects going forward or will this be an over-all price drop? I'm planning to sell my town and buy a resale condo downtown in about 1-2 years time and hoping to be able to afford a decent size.

Prices for properties that aren't end-user owned are most susceptible in a downturn. In addition, property in better locations tend to hold their value (and equally as important maintain their liquidity). The much overlooked risk in the market correction will not be the inevitable drop in prices but the fact that people won't be able to sell their units at any price because there won't be buyers. Just look at what happened in Calgary and what's happening now in the Olympic Village development in Vancouver.

 

[Shtopor]

Guys, once confidence falls, people will stop buying today, as it will be clear as day that tomorrow it will be cheaper. Vancouver, Calgary, Victoria are in trouble already. Below is what is happening in Ottawa as the person who lives there describes it:

" My family and I live in West end Ottawa, nice neighbourhood with a mix of towns, semis and detached between 5 and 40 years old.

Last year the houses sold in 2-8 weeks. Now we have almost zero RE activity in the neighborhood. Towns are up for mid 200k, semis for 300k and detached for 350 to 500k. Most of them have had the signs for more than 2 months with the record holder for almost half a year! At the other extreme, one of the towns got sold in less than 3 weeks last month and brought some hope to the other sellers. It proved to be the odd exception.

My neighbour across the street had an open house each Sunday for the past 3 months. Nobody knocked his door in October and November.

Statistics and press releases could sound rosy, but from the street level it starts to look bad. "

I just don't see how that adds up to public confidence.

 

[cdr108]

my neighbour a few houses over has had their house for sale since May 2010 ...
i haven't seen the inside so i don't know the condition of the place but the price doesn't sound unreasonable.

AFAIK they haven't had any open houses, but i haven't seen more than 10 pvt showings go through.

 

[interested]

And then there's
CG who is so busy, he doesn't have time to get a haircut.

These are anectdotal stories but they are telling. I notice not too many For Sale signs in our neighbourhood but haven't seen many Solds either. However, from this point on, market traditionally will be quiet until probably at least mid January if we have a mild winter and later if the weather really gets bad. This will be compounded by the fact that last year was an exception in that sales were quite brisk in Nov/Dec so if we go back to usual cycles, the drop in sales will be magnified.

For once there will be some merit when the real estate association tries to make this argument.

 

[urbandreamer]

Recall my real estate predictions? I said first there's gonna be surge following some price reductions in the precon market--following the surge in the $INDU of course. Looks like I was right:

From Buzzbuzzhome's twitter:

There were 4,535 new homes and condos sold in October... BEST October result since 2000!!!

&

New home builders sold 3,159 new condo suites & 1,376 low-rise homes in the GTA in October ...Thanks for the info BILD!

 

[interested]

OK UD

What is your next prediction? for the rest of this year and until Spring next year.

 

[Condo George]

http://www.thestar.com/moneyville/realestate/article/894950--new-home-sales-up-in-gta

Cheers, Nov almost done, no sign of sky falling for 2010, like most were speculating back in April.

 

[daveto]

http://www.thestar.com/moneyville/realestate/article/894950--new-home-sales-up-in-gta

Cheers, Nov almost done, no sign of sky falling for 2010, like most were speculating back in April.

I don't recall anyone predicting the "sky falling". Although I do recall predictions of a 25% drop over five years.

By the way, did you actually read that article?

"Sales of new housing hit 4,535 units last month, up by 0.6 per cent from the same time last year according to figures released by the Building, Industry and Land Development Association on Monday. The positive figure is a major rebound from September, when sales were down by 32 per cent."

"“Clearly investors are still active in the property market,†said housing analyst Will Dunning. “It remains to be seen how this will all play out.â€

"Some analysts have said there are too many high rise buildings being built".

"Toronto new housing prices remained flat in September over August, the first time that prices have not increased this year, according to figures released by Statistics Canada. "

"A softening market means builders will have to hold the line on pricing."

 

[Shtopor]

Real estate peaked in 2005 in the US but people were still lining up for condos at the end of 2004 and beginning of 2005:

“Getting Into Trouble: Succumbing to temptation paid off initially for Altman—and the success of Symphony encouraged him to jump into additional Florida projects: Harborage in Stuart, a 129-unit building that opened in December 2004; Astor, a mixed-use development with 90 units and a retail component in downtown Delray Beach that opened in April 2005; and, lastly, Sapphire, a 172-unit project in Ft. Lauderdale that opened its sales office in August 2005.

At first, the interest and buzz in those three towers were as vibrant as with the first project. Consider Harborage, which sold out in December 2004. “We had 2,400 people stand in line to buy 129 units, and they were mad at us because there weren’t enough units to go around,†Altman says.

 

[Shtopor]

BTW, headline number for new home sales is misleading.

http://financialinsights.wordpress.com/2010/11/22/toronto-new-home-sales-tank-condo-sales-soar/

“Yet in a bizarre dichotomy, the actual breakdown of that stat reveals a jaw dropping rise of 27 percent in new condo sales being offset by an equally staggering 32% drop in new lowrise home sales.”

Its not to much different from the US housing market where condo sales remained strong even as new and resale detached market sputtered. Speculators are always the last to get the memo.

 

[interested]

Real estate peaked in 2005 in the US but people were still lining up for condos at the end of 2004 and beginning of 2005:

“Getting Into Trouble: Succumbing to temptation paid off initially for Altman—and the success of Symphony encouraged him to jump into additional Florida projects: Harborage in Stuart, a 129-unit building that opened in December 2004; Astor, a mixed-use development with 90 units and a retail component in downtown Delray Beach that opened in April 2005; and, lastly, Sapphire, a 172-unit project in Ft. Lauderdale that opened its sales office in August 2005.

At first, the interest and buzz in those three towers were as vibrant as with the first project. Consider Harborage, which sold out in December 2004. “We had 2,400 people stand in line to buy 129 units, and they were mad at us because there weren’t enough units to go around,†Altman says.

Well certainly the line ups are not as they were despite people still doing it. Remember last year launches were done with 60% going in 2-4 weeks or less time. Now we read that Bisha did the best at 25-30% in 4 weeks. Still not bad but definately not comparable.

There are always those who believe one way and others the opposite which is what makes the market. When it does stop, it will be almost overnight. I recall this from 1989 Feb here and in Florida over a few months in mid-late 2006. Prices don't drop however initially as people think "it is transient" and then chase the down market over the next few years as others and I have previous posted.

By the time prices drop, we are well into the correction.

However CG is right that the sky is not falling. However, we were not saying it was falling this time around. There are problems all over the World and Canada is no exception. Inflation jumped 0.5% this month to 2.4%. Likely it will reverse a bit next month since the starting point comparison last year but none the less, we are beginning to see price pressure. If this happens, bond holders will demand more on their investments, this in turn will drive up interest rates, making housing less affordable and putting price pressure.