[cdr108]

http://www.reportonbusiness.com/servlet/story/RTGAM.20081114.wmls1114/BNStory/Business/home

Home resales tumble 14%

LORI MCLEOD
Globe and Mail Update
November 14, 2008 at 12:15 PM EST

Existing home sales fell 14 per cent in October from the month before, the largest month-over-month decline since June 1994.

It was the lowest level of monthly sales activity since July 2002, according to a report Friday from the Canadian Real Estate Association (CREA).

In the country's 25 major markets, sales were down 15 per cent in October compared with September.

Activity was down in more than three-quarters of Canada's housing markets, including the five most active, Toronto, Montreal, Vancouver, Calgary and Edmonton. Fewer sales in Toronto were responsible for nearly one-third of the monthly sales decline.

The average sale price also declined, by 10 per cent in October from the same month the year before, to $281,133. It was the largest month-over-month decline since August 1982, when the average existing home sale price also fell by 10 per cent.

Using a weighted national average, prices fell by 5 per cent on a year-over-year basis on October.

 

[Alvar]

....Anyone...? Hello...?

 

[MuchoGrande]

Hunker down, this looks like it's going to get worse before it gets better...

It seems hard to believe that we'll get any deeper than the US or UK have though...

 

[vegeta_skyline]

These are exciting times indeed!
At least for someone in my position – a soon to be 1st time home-buyer.

It was ridiculous how over-inflated home prices had become in the last few years, its incredible to think that anyone thought this trend was sustainable, this decline was very predictable and quite simply inevitable.

 

[cdr108]

These are exciting times indeed!
At least for someone in my position – a soon to be 1st time home-buyer.

It was ridiculous how over-inflated home prices had become in the last few years, its incredible to think that anyone thought this trend was sustainable, this decline was very predictable and quite simply inevitable.

If I base 'fair value' on historical appreciation of 4% compounded annually and I use $200 psf in 1996 for an average downtown TO unit as the baseline (not luxury buildings or prime locations), that would put 'fair value' in 2008 at $320 psf.

From what I'm seeing, most dt TO buildings are going for $400 - 450 psf; and alot of new pre-construction / under construction at $500 - 600 psf.

Would projects like X, Couture, U, Charlie, Glas, Murano, etc be considered 'average' or above average?
Would one consider their locations to be better than any other dt location?

 

[ducati0000]

"From what I'm seeing, most dt TO buildings are going for $400 - 450 psf; and alot of new pre-construction / under construction at $500 - 600 psf."

pre construction price per sq feet is about right for near downtown condo.Im around the Mystic point area the prices are about $450-525 psf.

 

[W. K. Lis]

Two reasons for the tumble:

1. US mortgage problem
2. City of Toronto land transfer tax

The mortgage problem in the US should have been only a small affect on housing in Toronto, however the implementation of the City of Toronto land transfer tax at the same time had the bigger impact.

 

[BobBob]

The land transfer tax adds about 1% to the cost of purchasing real estate in the city. Is that really a big deal considering prices have been growing by 5-10% per year for a while? My humble opinion: not by a long shot.

 

[AKS]

I don't know if there's going to be a lot of drop, maybe slight correction. I doubt it has much to do with the extra tax but it does suck. I think most people are being cautious and not that they can't afford. Though some people do can't afford. Those who can't will be in trouble if the economy turns for the worse. It's a wait and see how next year's market will be like.

 

[daveto]

Two reasons for the tumble:

1. US mortgage problem
2. City of Toronto land transfer tax

The mortgage problem in the US should have been only a small affect on housing in Toronto, however the implementation of the City of Toronto land transfer tax at the same time had the bigger impact.

AIG didn't fail because of the US Mortgage problem. The auto makers are not on the verge of bankrupcy because of US sub-prime. Germany and Japan and England and Spain and Iceland (and all the rest) are not into recession because of the US housing market.

It is the other way around.

The US housing market (and the UK housing market, and the Ireland housing market, and the various recessions around the world,etc) are all symptoms of the same thing. The credit fueled boom of the last 10 years.

The credit fueled consumption of the past 10 years is an exact mirror to the credit fueled consumption of the 1920s. Although I admit that there are many, many differences in between those two decades, and I'm not predicting 25% unemployment for us (although Spain is different story).

The Toronto housing market is a pimple on the backside of our global economic problems, and we will suffer just as much as the US and Ireland and Iceland and Russia and all the rest of them.

So let's give poor old David Miller and his $200m annual land transfer tax a break, huh?

 

[yyzer]

So let's give poor old David Miller and his $200m annual land transfer tax a break, huh?

ah, no..no break for David Miller and his boneheaded, ill-timed, market-killing tax grab...

 

[cdr108]

however the implementation of the City of Toronto land transfer tax at the same time had the bigger impact.

That statement is the biggest crock by TREB.
1% TLTT relative to everything else is nothing when compared to the 5% commission paid to RE agents.

If anything, it was the propaganda by TREB and realtors making purchasers fear they would be priced out and RE values would continuously rise, so they encouraged bidding wars + paying $10,000s over ask.

Many buyers would be further ahead this year had they waited - they would have paid less in total for the property and still paid the added 1% TLTT.
TREB and realtors have no one else to blame but themselves.

 

[AKS]

That statement is the biggest crock by TREB.
1% TLTT relative to everything else is nothing when compared to the 5% commission paid to RE agents.

Actually, I think agents get 3-4% plus extra bonuses depending on the project. When I first saw went to check out westone and they gave me the agent's promotion instead of buyer, I noticed they it was 4% commission and depending how many thousands, millions of dollars they sell (total sales) they get extra credit (discounts) towards their own purchases. So I guess in a way they might end up with 5% or more if they sell a lot.

 

[cabbagetowner]

the municipal ltt is very painful and it hits everybody (except new buyer credit???) not everyone pays for an agent though.

it kind of took me by surprise but i think in the long run it's a good idea in that it will keep down speculative buying and flipping...