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investor said:
I would agree that the BOC rate will most likely fall before rising however a 5 year mortgage rates is computed based on the 5 year govt of canada bond. The 5 year bond yield has pulled back significantly to under 4% and if you are a strong credit you should be able to lock in now for under 5% for 5 years. Why chance it that inflation spikes as your floating rates spikes along with it? Prime is 6% so at .50 under prime he's paying 5.5% today.

In the business world we look to fix as many costs as possible- why would someone differ in this personal spending habits?
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Getting back to the original thread and issue re. credit crunch.

I would appreciate some opinions if we are headed towards a stagflation environment. And if so, how does this affect real estate markets on a macro level. I am not an economist but on the surface, it looks like a double negative if that is to occur. Thanks.
 
lowesthangingfruit said:
Getting back to the original thread and issue re. credit crunch.

I would appreciate some opinions if we are headed towards a stagflation environment. And if so, how does this affect real estate markets on a macro level. I am not an economist but on the surface, it looks like a double negative if that is to occur. Thanks.
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I'm not an economist either, although I don't put much faith in their forecasting abilities. Personally I believe that with the rise of the developing world the commodities boom will continue to benefit Canada as a whole and it's largest city as a result. I also believe that the distress resulting from the US housing recession will be cleared in the next 18 months and that by 2009 America will be on its way to further growth.
 
investor said:
I'm not an economist either, although I don't put much faith in their forecasting abilities. Personally I believe that with the rise of the developing world the commodities boom will continue to benefit Canada as a whole and it's largest city as a result. I also believe that the distress resulting from the US housing recession will be cleared in the next 18 months and that by 2009 America will be on its way to further growth.
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So you think real estate markets in Toronto is going to be kept buoyant by the commodity boom ?? Yes, I know there are local factors, local supply and demand, etc... but I am asking I guess more on a macro level. The commodity boom no doubt has made alot of ppl "rich" or at least feel rich. But will the tightening credit market (infection from our US neighbours), the potential slow down in ecomony and manufacturing sector (partly cuz of the commodity boom cuz the CAD$ is tied to that) and potential introduction of inflationary pressures (again, thanks to the "commodity boom") going to take out some of the "froth" out of the TO market.

I don't know cuz I am not smart enough.....but when I read about brokers paying homeless ppl to line up for 1 Bloor East,...., I gotta wonder if we're kinda toppy here.
 
lowesthangingfruit said:
So you think real estate markets in Toronto is going to be kept buoyant by the commodity boom ?? Yes, I know there are local factors, local supply and demand, etc... but I am asking I guess more on a macro level. The commodity boom no doubt has made alot of ppl "rich" or at least feel rich. But will the tightening credit market (infection from our US neighbours), the potential slow down in ecomony and manufacturing sector (partly cuz of the commodity boom cuz the CAD$ is tied to that) and potential introduction of inflationary pressures (again, thanks to the "commodity boom") going to take out some of the "froth" out of the TO market.

I don't know cuz I am not smart enough.....but when I read about brokers paying homeless ppl to line up for 1 Bloor East,...., I gotta wonder if we're kinda toppy here.
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I definitely think that the GTA condo market has seen its cyclical inflation adjusted peak. I expect sales volumes of new condos to decline dramatically in 2008 from 2007 and prices to stagnate or fall. I just don't see the market collapsing anytime soon. I think there is enough continued growth in Toronto to absorb the expected supply glut of units coming on stream. I would think that prices in Cityplace-calibre buildings are at most risk for a steep decline given the enormous speculation that has occurred in that development.

Definitely sell now though if your investment horizon is short, you have suitable alternative investment vehicles for your capital and your lifestyle permits.
 
investor said:
I definitely think that the GTA condo market has seen its cyclical inflation adjusted peak. I expect sales volumes of new condos to decline dramatically in 2008 from 2007 and prices to stagnate or fall. I just don't see the market collapsing anytime soon. I think there is enough continued growth in Toronto to absorb the expected supply glut of units coming on stream. I would think that prices in Cityplace-calibre buildings are at most risk for a steep decline given the enormous speculation that has occurred in that development.

Definitely sell now though if your investment horizon is short, you have suitable alternative investment vehicles for your capital and your lifestyle permits.
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So if I am reading you correctly, you feel that a "correction" is more related to local/building specific factors or specifically the degree of speculation in a particular building or area rather than any macro factors I pointed out. I don't think I would disagree with you re. that fact, but wouldn't macro factors such as those I pointed out influence speculative activity in the first place ??

Also, would anyone know of a reliable source of finding out the % speculators vs owners in a particular area ?? Seems everyone's mother has a different estimate and it doesn't seem to be paraticularly transparent. Thanks.
 
lowesthangingfruit said:
So if I am reading you correctly, you feel that a "correction" is more related to local/building specific factors or specifically the degree of speculation in a particular building or area rather than any macro factors I pointed out. I don't think I would disagree with you re. that fact, but wouldn't macro factors such as those I pointed out influence speculative activity in the first place ??

Also, would anyone know of a reliable source of finding out the % speculators vs owners in a particular area ?? Seems everyone's mother has a different estimate and it doesn't seem to be paraticularly transparent. Thanks.
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Toronto should get crunched by both factors- oversupply of units, difficulty in obtaining financing. Both should result in a moderating of prices for speculative units.

As far as % of specuvestors in a building, I believe that any info is anecdotal at best. Developers are not exactly eager to divulge the truth as higher speculative % implies volatility in the demand for the condo long term which is a major negative for a local end user. I would not put any credence in info emanating from the brokerage firms or banks (conflict of interest). If you want the real data just ask Brad Lamb and assume the exact opposite, ;)

A site visit to any of these buildings can be pretty valuable. Local security and concierge staff tend to know the % of full-time residents, owners, and renters in a building.

As far as areas go, consider that most of the below-entry level product along lakeshore blvd west of spadina went to either Israeli or other off-shore investors. By most I would say 75%. CityPlace is probably in the same range with most of buyers being offshore Asian syndicates. These lucky buyers may be looking at paper gains that are attractive relative to their downpayments but they are also looking at rental yields in the 2%-3% range.

Do you think some of them might be looking to cash in on those 'gains' sooner or later?

Hmmmmm.........
 
Investor, just like in the Stork Market, is there a chart system to look at the Short, Medium and Long term Toronto/GTA condo trend? Price, Volume, Moving Averages, Bollinger Bands, Parabolic SAR, that kind of thing? It would be interesting to see that way I could possibly call a top.

I'm surprised no one posted that article in the Toronto Star-t re: American housing market crash volumes.
 
Yes, I heard rumours abound that the stretch on Lakeshore and Spadina lakefront area is spec central. But with so many other developments coming up or newly registered, anyone else heard of other speculative heavy area ?? There's been alot built up along the Yonge Street corridor north of 401 stretching all the way up to Steeles. I thought the potential Sheppard line shut down (is that still up in the air or is it for sure ?) would spook some, but didn't seem to phase anyone. Another hot building area is around the Scarborough Town Centre. Anyone know the speculative status of these areas ??

Thanks.
 
The short answer is that the number of owner-occupied suites vs. investor-owned is not likely to be known.

I'm not quite sure how such data would be gathered anyway, other than possibly a very rough and ready tabulation of the number of buyers, in a new development, who live offshore. Even that's not very useful information, keeping in mind that an offshore buyer may be thinking of moving here and occupying, while a buyer who currently lives just down the street does not necessarily intend to occupy.

In an existing condo, the management company may have such information, but would not be likely to divulge it.

Anecdotal evidence suggests a high proportion of Asian investors in CityPlace, but it's hard to quote numbers with any authority. Anecdotal evidence also suggests that, as an overall average across the city, investor purchases in new developments are now running about 30% to 35%, which (if true) I do not consider unhealthy.
 
Observer Walt said:
Anecdotal evidence also suggests that, as an overall average across the city, investor purchases in new developments are now running about 30% to 35%, which (if true) I do not consider unhealthy.
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More like 60%-85% Walt, which I do consider unhealthy.

http://www.financialpost.com/story.html?id=11b663fd-84f4-4afd-b601-4d46a0224dbc&k=84965

Let me qualify that link and note that the report was produced by ReMAX, a real estate brokerage with competing interests to the developers (ie resale listings) and that the report also appears to limit the rampant speculation to the downtown core.

I personally believe that the report is accurate and that the consequence of this speculation are negative on the whole for the real estate industry/Toronto has a whole. The degree of the disruption is far more difficult to predict.
 
urbandreamer said:
Well after this week's stock market crash it is clear the credit crunch can and probably will cause a major correction in Toronto's condo/housing market. 2008 is the year it shall happen imho!
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I am not looking (and certainly not hoping) for a major correction. But I do welcome a pause and return to steady growth and pricing from the tulip mania that we saw in the 2nd half of last year. The pace of sales and development we saw was absolutely unsustainable.
 
^You can't be a player hater. You've got to be a player participata!

I found the article in the Globe and Mail contemplating signals from the major banks that they may not reduce their prime rates in step with the BoC fascinating as a concept. I could see some banks not doing it but then how can they justify the move to their clients? If all the major banks refuse to drop their prime in lock step how could they justify it with respect to competition laws as this would be a direct signal of collusion would it not?
 
If I go to a sales centre and buy a presale condo, which is what I did a few months ago, how do they know if I'm an investor or an end user.

I plan to live in it when it is built in 2010 earliest. However, between now and then I might get married and have kids. By then my junior 1 bedroom will be no good and I might have to have it sold, or at least rented out.

So am I an investor or an end user? How accurate can people estimate the ratios anyways?
 
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