[iheartproperty]

it's definitely slowed down in may after a hectic couple of months .... but again Mar/April sales were due to a lot of people caving in after sitting on the sidelines from Oct-Feb. Based on early trends, it looks like a rather slow summer ahead of us. I won't be surprised of a further 10% drop in prices by jan of 2010.

Year-Over-Year Regional Breakdown
----------------------------------------------------------------------------
2009 2008
----------------------------------------------------------------------------
Sales Average Price Sales Average Price
----------------------------------------------------------------------------
----------------------------------------------------------------------------
City of Toronto ("416") 1,864 $439,459 1,734 $437,205
Rest of GTA ("905") 2,697 $372,408 2,688 $377,344
GTA 4,561 $399,811 4,422 $400,817

Slowed? It looks like the market is outpacing 2008!

Whether or not you want prices to fall it really doesn't look like they are, for whatever reason...

 

[JayBee]

Year-Over-Year Regional Breakdown
----------------------------------------------------------------------------
2009 2008
----------------------------------------------------------------------------
Sales Average Price Sales Average Price
----------------------------------------------------------------------------
----------------------------------------------------------------------------
City of Toronto ("416") 1,864 $439,459 1,734 $437,205
Rest of GTA ("905") 2,697 $372,408 2,688 $377,344
GTA 4,561 $399,811 4,422 $400,817

Slowed? It looks like the market is outpacing 2008!

Whether or not you want prices to fall it really doesn't look like they are, for whatever reason...

As someone who has been actively shopping for a condo since Jan/Feb... Prices have gone UP! Units downtown seem to going quite fast too...no matter how overpriced they are.

 

[urbandreamer]

I hear business is booming at Club Paradise and that other strip club in the Bloor-Lansdowne area...aka, Real Estate agent central. BJL's crew seems to think the bottom is in, however, they don't like what I have to say. (Seems like what happens on the TSX and $INDU is reflected in Toronto's condo market. According to Martin Armstrong, the dow will hit resistance at 9000 or so and crash back to sub 6500 levels, so if he's right, Toronto condo market crashes along with it.)

 

[Eug]

Colour me surprised: Prices and sales volume up in Toronto 416 in first half of May, as compared to May 2008

In the 905, sales are also up, but prices are slightly lower. Overall, the number of sales and prices are remarkably similar to May 2008.

Year-Over-Year Regional Breakdown
----------------------------------------------------------------------------
                                  2009                      2008
----------------------------------------------------------------------------
                         Sales    Average Price      Sales    Average Price
----------------------------------------------------------------------------
----------------------------------------------------------------------------
City of Toronto ("416")  1,864         $439,459      1,734         $437,205
Rest of GTA ("905")      2,697         $372,408      2,688         $377,344
GTA                      4,561         $399,811      4,422         $400,817
----------------------------------------------------------------------------
----------------------------------------------------------------------------

It could just be a blip though. In fact, IMO that's likely.

The Star has added this bit:

While the residential sector is seeing something of a resurgence, the commercial market continues to flounder.

In a separate report yesterday, TREB members reported 466,837 square feet of space leased in April, down from 1.1 million square feet last year. Commercial rents are also 5 per cent lower this year than last.

it's definitely slowed down in may after a hectic couple of months .... but again Mar/April sales were due to a lot of people caving in after sitting on the sidelines from Oct-Feb. Based on early trends, it looks like a rather slow summer ahead of us.

? The numbers showed it sped up in the first half of May. Like I said, it could be a blip, but even so, your observation that it slowed in May is incorrect.

 

[cdr108]

The Star has added this bit:

From the article ... explanations for the continuing sales and steady prices from the horses' mouths:


"More sales and fewer listings resulted in tighter market conditions, which pushed the average selling price back up to last year's level," said Jason Mercer, TREB's senior manager of market analysis.

One big reason is the low interest rates, which have made houses much more affordable.

"Historical lows in mortgage rates are expected over the next two years. This will help to buoy Canada's housing sector in the short term as the economy goes through a downturn," the Canada Mortgage and Housing Corp. said in a report this week.

The CMHC says it still expects the average price of a home in Ontario to fall by 5 per cent this year and another 3.6 per cent in 2010. In Toronto, the average price of a home is expected to drop to $360,000 by year's end.

 

[Eug]

From the article ... explanations for the continuing sales and steady prices from the horses' mouths:


"More sales and fewer listings resulted in tighter market conditions, which pushed the average selling price back up to last year's level," said Jason Mercer, TREB's senior manager of market analysis.

One big reason is the low interest rates, which have made houses much more affordable.

"Historical lows in mortgage rates are expected over the next two years. This will help to buoy Canada's housing sector in the short term as the economy goes through a downturn," the Canada Mortgage and Housing Corp. said in a report this week.

The CMHC says it still expects the average price of a home in Ontario to fall by 5 per cent this year and another 3.6 per cent in 2010. In Toronto, the average price of a home is expected to drop to $360,000 by year's end.

Of course. Low interest rates and and lower numbers of listings are definitely keeping sale prices up. However, the surprising part is just how high they're keeping them... at 2008 levels for the first half of May. IMO, that's truly remarkable, even if it is just a blip.

I also think CMHC's estimates are reasonable, which would bring prices to roughly 2005 levels. That is if we exclude the first half of May, cuz by these latter numbers, prices would still be at 2006-2007 levels even with those 2009-2010 drops.

I've always been predicting prices could drop to 2005 levels, and that was before the late 2008 economic downturn. The surprising part is that even with this downturn, prices are holding up this well.

 

[daveto]

I agree it's a surprisingly high result for the first half of may. I always view TREB data with a certain level of distrust. I place more credibility on the Teranet/National Bank data. (although the later is unfortunately a couple of months behind the TREB data)

 

[Eug]

I don't distrust the TREB data at all personally.

I do distrust the TREB spin of that data though, of course.

 

[TrickyRicky]

Jaybee, I think you were waiting for me to comment furthur on my underwater comment. This is basically how I see it:

We are in the middle of a high stakes game being played out and the Toronto condo market is just a byproduct of this game. The hand has been delt but it just depends on how you believe the chips will fall.

During the last boom an enormous amount of personal wealth was generated on the back of easy borrowing conditions. Now in the current recession this huge stock pile of wealth is being eroded from every direction. But this is no regular recession and the stock-pile of wealth is no regular stock-pile either, they are super-sized. So central bankers have basically stalled for time by throwing everything and the kitchen sink, measures many have not had to take in over 100 years, to sustain inflated wealth valuations in order to stall for time. They want to stall for time until economic recovery can start naturally justifying the present unsustainable asset valuations. They want in essence to freeze asset values for a long long period (even if it takes 10 years) until present prices are justified and sustainable.

People think that wealth just drops off a cliff in a recession but this is not how it works. Wealth continues to erode and people begin to feel poorer and poorer over time. People will feel the least wealthy long, perhaps many years after the technical recovery has started. During this descent there are many false recovery events, each less vigorous than the last because there is less capital and interest left in the system each successive time.

So I believe the spring pop in real estate is just such a false recovery event on the way down. I also believe that the central bankers will not quite succeed in their asset value freeze gambit. The market will in essence overshoot their best efforts at propping up unsustainable valuations. It really depends on how fast the recovery comes, if it lasts, and the abundance of wealth left in the system when all is said and done. So that is my logic but as you can see it could play out many ways and hey, I certainly did not anticipate the vigour of this spring market (within certain asset types at least).

 

[iheartproperty]

I don't distrust the TREB data at all personally.

I do distrust the TREB spin of that data though, of course.

I would not put it past them to distort, gerrymander or outright lie about the sales data. Really who is going to catch them? They are self-regulating aren't they? Hold back a few shockingly low month end closings to the following month to make things look rosier, keep pushing out the bad numbers every month- who is going to catch on?

What shocks me more than the stability of the 416 housing market (I'm not buying this story, folks, sorry) is the meteoric rise in the TSX. The dramatic swings demonstrate a validation of the theory that the market is grossly manipulated by those with great power and ability to do so. I find it difficult to comprehend that an 'efficient' market can swing 30% in several months. Our financial institutions may in fact be the least affected by the global credit crisis but that does not imply that they are in any way above scrutiny.


All the more reason to avoid the broader equities market if at all possible and stick to investing in your own business or ultra secure debt instruments.

 

[Bentley]

No doubt about it, this has been a coordinated effort to boost markets. I would be willing to bet that the real players are selling into this rally, not buying.

The big red flag for me is the fact that almost every piece of good news in the past few months which sparked this rally has been manipulated to seem much better than it really is.

Remember, the event that initiated the rally was when Citi BoA and others started spouting off that they were profitable during the first couple months of the year. Media failed to mention that they were only profitable on the back of the AIG bailout money. Dylan Ratigan on CNBC did mention that, and he was "let go" a few days later.

You also have job losses dropping in the US. What the data failed to mention was that in April the US government added 70,000 temporary jobs for the 2010 US census. So really job losses barely dropped when you discount those fluff jobs that were added.

Bet they all this good news sparks a huge rally in US markets and world markets followed.

This rally may keep going. But I think it's only going to go long enough to sucker the retail investor back in. When they're back in, that's when it will be let go again. When equity markets drop again, real estate real estate will as well.

I know Tribute Communities has been slashing prices in their suburban developments big time. They were moving very little product until March, and when the stock markets began to rise and every idiot on TV said we hit bottom, people began buying again. Yet they've been having to drop prices to maintain that buying. They're clearly expecting things to get worse otherwise they wouldn't be so aggressive. Based on everything I've seen, I expect stock markets to make new lows and home prices to drop to 2003-2004 levels. Too much inventory coming on stream in the next couple years, nobody to buy it.

 

[mrl14]

You will not see a price drop in downtown TO below $350/ft for a mid-level condo. I'd be surprised if it went below $400 at the lowest point. In King West, for eg., two condos sold in my building in the past week both for between $450-470/ft, down less than 7% from market peak. This has also been the range for the past 3 months. I do expect further price deterioration, but not more than another 10%. Look for bottom levels mid 2010-mid 2011. As for new, most builders do need to readjust their asking prices downtown as they're simply ridiculous at around $600/ft for an equivalent product. Just my opinion.

That's because you have agents who continue to sucker people into paying more than they need to, just so they can make a few extra bucks on commission. Patience will pay off...we're far from over this mess. Cash is king and you'll be able to swallow 2 or 3 properties for the price of 1 in 2007 I don't care how low mortgage rates go...if you don't have a job, you're not buying a condo.

 

[mrl14]

Hope not to offend anyone.....

Do people actually think the average condo price will drop to below $200k in the coming few years????? I think this is an unrealistic expectation, and on the contrary, will not see a significant price drop in the condo market for downtown Toronto.

[......]

For our market to crash, we need significant job losses to occur. But as long as interest rates are low, and unemployment stays relatively constant, we will not experience a crash similar to the US. Interest rates will not be moving up too quickly over the next couple of years as we do not want to shock the economic after the recession.

We have to remember that the market goes in cycles, and as always, we will have those that are overly optimistic and overly pessimistic. I am not a real estate agent, but am an ordinary owner of a condo unit downtown, and plan to continue to invest as times goes on.

I think that this coming fall is a great time to invest in resale condos (and in selected pre-construction for those who need the time save a down-payment). Yes, you may profit by waiting a few more months or a year perhaps, but there is also a chance that things may turn around, new regulations come in, etc.

It's not unrealistic to expect housing prices to fall off a cliff. Like a bear rally in the stock market, we're seeing a similar thing in the housing market now. Especially with the oversupply of condo's, coupled with continued job losses, salary freezes, credit freezes, personal bankruptcies and the injection of capital into the markets (that in the end will destroy or devalue global currencies), housing prices have much more room to fall and less room for upside. A bubble bursts for a reason...and you always have latecomers or naive investors who don't truly understand how our economy functions to give us that glimmer of hope of a rebound. This housing drop isn't like any of the past. It's a global crisis.

 

[cdr108]

That's because you have agents who continue to sucker people into paying more than they need to, just so they can make a few extra bucks on commission. Patience will pay off...we're far from over this mess. Cash is king and you'll be able to swallow 2 or 3 properties for the price of 1 in 2007 I don't care how low mortgage rates go...if you don't have a job, you're not buying a condo.

wow, while i do agree there will be a price adjustment, that's an extreme view for TO.

IMO, it'll be more along the lines of 4 for the price of 3 in 2007. (ie. 25-30% reduction from peak) in the general market, unless you're talking about desperate sellers?

 

[AKS]

I say the price drops to $200 psf j/k