[ducati0000]

"Otherwise, Toronto's condo market is vastly over priced. 30% off coming soon."


hahah in yours dreams....ask anyone that is in the industry and they will tell you differently..have you seen the condos in Alberta and BC?...Average condos with average materials in mid level areas are selling %25 more than Ontario condos.A lot of foreign buyers see Toronto as under priced and it shows by the increase in pricing in a slow economy.Less listings but single digit price increase or sometimes double digit.We're in for a soft landing and when USA gets back on it feet with a new president and hopefully a new vision the prices will start to show strength.

 

[urbandreamer]

I'm a contrarian investor. You speak like a fundamental's guy; i'm a technical guy. The technicals indicate overbought. It may continue this summer and into the Fall. But overbought bubbles do not have "soft landings."

Either way, I get to enjoy staring at new condos go up. I'm an urbandreamer, not an urbandoer.

 

[dpylyp]

The sky is falling debate

While I have also seen a few builders with "Price reductions" They appear to be a roll back of previous increases. (IMHO)

Observer Walt I appreciate your sage wisdom

I am surprised no one posted a Marketwatch from Treb
I have one available at my website that I update monthly when the stats come out on the 5th or 6th.

Read the results and decide for yourself.

 

[ducati0000]

How can some thing be "over bought"..I understand hysteria buying but with a exception of a few over hyped projects there hasnt been a buying spree.Alot of first time buyers leaving the family home or apartment renters being able to buy their own property,throw in some investors and you got a healthy real estate market.Is interest rates heading up to double digits,is the job unemployment heading to double digits?..I doubt it very much Canada is in the same boat as the US,we got tighter lending practices and its not easy to walk away from a real estate purchase like the US.With strong oil and golds,with the technology sector showing strength I will bet we will see a fourth quarter push with a strong 2009 for the overall real estate market.

 

[Bigchew]

these negative headlines won't help market psychology.....


Homes market flooded by sellers
LORI MCLEOD

Globe and Mail Update

May 14, 2008 at 4:23 PM EDT

Home sellers flooded the markets in Toronto and Saskatoon last month, causing listings to surge to a record level in Canada.

The number of resale home listings rose by 17.7 per cent in April from the year before to 67,554 units on an unadjusted basis, according to data released Tuesday by the Canadian Real Estate Association (CREA).

Unit sales dropped by 6.1 per cent from the year before, but edged up by 0.8 per cent compared with March, on a seasonally adjusted basis.

Listings rose by a whopping 121 per cent in Saskatoon from the year before, the biggest increase of any city. They rose by a more moderate 18 per cent in Toronto. While this gain was seventh on the list, it has an impact because Toronto usually makes up about 18 per cent of national sales activity on the Multiple Listing Service (MLS).

The number of homes on the market was down in just three areas for which data were available: Kitchener-Waterloo, Newfoundland and Labrador, and Thunder Bay.

The news comes on the same day as a report suggesting two-thirds of Canadians are either negative or neutral about the prospect of buying a home right now.

Asked whether it was a good time to buy a home, one-third of those surveyed as part of a report by the Canadian Association of Accredited Mortgage Professionals (CAAMP) said “no,†one-third said “yes†and the rest were neutral. The response was similar to that in CAAMP's last survey, which was done in the fall.

Residents of Saskatchewan, where home prices have continued to skyrocket despite a cooling trend in much of the rest of Canada, appeared to be most leery about the idea of buying a home. Seventy per cent said it was not a good time to make a purchase, compared with 60 per cent last year.

In 2007, the average price of a resale home in Saskatchewan rose by 32 per cent compared with the national average increase of 11 per cent, according to data from CREA. This year, the average home price in Saskatchewan is expected to rise by 19.5 per cent to $208,400, the highest year-over-year provincial gain in Canada and well above CREA's forecast national average increase of 5.3 per cent.

Sticker shock in regions where prices escalate in a short period of time can sink consumer sentiment quickly, CAAMP chief economist Will Dunning said in an interview.

“Gradual change people can deal with, it's sudden change that people get thrown by,†said Mr. Dunning, who wrote the broader report on the housing industry that was released with the survey.

However, in a strong economy, the state of the labour market appears to be more important to Canadians than home affordability, Mr. Dunning added. Jobs also trump concerns about the broader state of the housing market, including fallout from the subprime mortgage market in the U.S., he said.

“What really matters is job creation, and how people feel about their own personal job situation. If people are comfortable there, they'll find a way to work with the affordability situation in their community,†he said.

“If you start feeling threatened in your job or your neighbour gets laid off, then your opinion will change very rapidly.â€

Atlantic-Canadians were the most positive towards a home purchase, according to the CAAMP survey, with 49 per cent saying it was a good time to buy compared with 24 per cent who said it was not.

Unit sales last month rose the most in Newfoundland & Labrador at a 27 per cent gain over last year, followed by Saint John at 18 per cent, according to CREA.

Sales fell the most in Calgary and Edmonton in April with drops of 31.2 per cent and 25.4 per cent respectively.

Mr. Dunning also said he expects to see a levelling off in the adoption of newer products including longer-amortization and zero-down payment mortgages.

“We had this spike in housing markets across the country in the middle third of last year. I'd say that was largely consumers entering the market because of the new products,†Mr. Dunning said.

“We're seeing that activity come down from that peak, suggesting those products aren't having the same impact they were last summer.â€

Thirty-seven per cent of home buyers took out mortgages with longer amortizations than the standard 25 years in the period from September, 2006, to September, 2007, according to CAAMP's most recent data.

In a survey last month, Re/Max released even more striking numbers, suggesting almost two-thirds of Canadians had adopted longer amortizations, which go as long as a 40-year term.

Data in the CAAMP report were obtained from various sources including an online survey of 2,058 Canadians carried out during the first half of April, 2008.

 

[yyzer]

and here is a positive forecast from CMHC (I agree with CMHC)...

GTA Housing Market will remain resilient in 2008

TORONTO, May 15 /CNW/ - The Canada Mortgage and Housing Corporation
(CMHC) released its latest Housing Market Outlook report for the Greater
Toronto Area today.

<<
Highlights of the report include:

- A record number of condominium apartments will start construction in
the GTA in 2008. In 2009, condominium apartment starts will dip
slightly to the second highest level on record. Low-rise home
construction will trend lower.

- Sales of existing homes will moderate over the next two years, but
remain very high from a historic perspective.

"The high cost of home ownership, particularly for low-rise housing types,
will prompt many households to purchase a condominium apartment," said Jason
Mercer, CMHC's Senior GTA Market Analyst.

- The average selling price for existing homes will grow at a more
moderate pace in 2008 and 2009.

"Buyers will experience more choice in the existing home market through
the end of next year. Offers will be less aggressive in comparison to the last
two years."

- Job creation will remain positive in the GTA, but growth will be
slow.
>>

Across the province, housing demands will generally cool down.
"Demand for modestly priced housing will hold up better as declining
employment opportunities in higher paying employment sectors encourage demand
for both apartment ownership and rental accommodation," said Ted Tsiakopoulos,
CMHC's Ontario regional economist.

Canada Mortgage and Housing Corporation (CMHC) has been Canada's national
housing agency for more than 60 years. CMHC is committed to helping Canadians
access a wide choice of quality, affordable homes, while making vibrant,
healthy communities and cities a reality across the country. For more
information, visit www.cmhc.ca or call 1 800 668-2642.

 

[Observer Walt]

CMHC does some pretty detailed research in the real estate markets and puts out detailed reports, including forecasts. I have seen no evidence that their reports are deliberately being distorted. As with any other forecast, they may turn out to be wrong, but they are pretty well informed and I think as much reliance can be placed on their materials as on any others.

 

[urbandreamer]

"Starts" indicate product that was sold 2-3 years ago? So highrise starts being at record levels, then tapering off to second best next year, would reflect high sales volume a few years ago: Am I correct?

 

[Granny]

"Starts" indicate product that was sold 2-3 years ago? So highrise starts being at record levels, then tapering off to second best next year, would reflect high sales volume a few years ago: Am I correct?

Actually... I think he meant high levels were tapering off from the year before high levels actually reached record levels after the second highest year from the year before or was that the year after sales volumes actually increased from the year before highrise levels increased. ...Yeah thats it..

Glad we cleared that up.

 

[Bigchew]

This article highlights one of the risks of owing a condo (if the Canadian/Toronto economy ever gets into a severe recession or worse.) I'm not saying it will happen here because I don't have the smarts to predict the economy. But I am simply saying that condo owners have a risk that single family home owners do not have in very tough times.



The New York Times
May 15, 2008
Collateral Foreclosure Damage for Condo Owners
By CHRISTINE HAUGHNEY
Barbara Sanz has never missed a mortgage payment, but the plunge in real estate is punishing condominium owners like her anyway.

Four years ago, she bought her first condo in a glassy new Miami tower when the building was filling up. Now nearly one in six residents in the 43-story building is battling foreclosure and their contributions to the building association are shrinking. Each of the remaining owners has had to chip in an extra $1,000 assessment and $50 more a month for cable and Internet. That is on top of Ms. Sanz’s $450 monthly maintenance fee.

Even though she pays more, her building has broken washers and dryers and unusable exercise equipment, and her hallway is spotted with mold.

“It’s not fair,” said Ms. Sanz, a 32-year-old event planner. “The first two years, I enjoyed all of the benefits of living in a condo. I’m disappointed now. I hate the way the building looks.”

When people buy condos, they expect their monthly fees will cover many of the responsibilities that they would otherwise have as owners of single-family homes, like cutting the grass and paying the water bills. Now many find themselves nagging each other in the hallways to pay their assessments and adding special fees while haggling over chores. In Miami, Chicago and San Diego, condo owners are adjusting to the economic woes, sometimes by mowing themselves and working shifts for building security — all while lamenting their lost community.

“What motivated people to go into the condo market in a way that led to overbuilding was the expectation that it would be easier than owning a home on a maintenance basis,” said Sam Chandan, chief economist at the real estate research firm Reis. “The downside is that your fate is tied to 50 or 100 other people who may stop making their condo payments.”

Many of the numbers compiled on home sales specifically exclude condos, which account for one out of eight homes in the nation, and that missing data may be masking just how weak the housing market really is. Sales of existing condo units were down 26 percent in March from a year earlier, compared with an 18 percent decline for single-family homes, according to the National Association of Realtors.

The pain in the condo market, mostly in urban areas, may not only be deeper than in the rest of the housing market during this downturn but more prolonged. Bargain hunters say they are reluctant to buy into a building even when the upfront cost seems low because they might have to pay unexpected fees as distressed neighbors default on their mortgages or just stop paying the association fees that cover everything from taxes to pool maintenance to air-conditioning repair.

Marcus & Millichap Real Estate Investment Services, which is based in Encino, Calif., estimates that nearly 202,000 condo units will be added this year to the pool of 574,000 added nationally in the last five years. Next year will bring 94,166 more units onto the market.

“We have not even approached the bottom and will not approach the bottom until 2009,” said Hessam Nadji, managing director of research services at Marcus & Millichap.

The shabby condition of some condos means potential buyers insist on especially steep discounts on foreclosed units. Alessandro Comoglio, a 34-year-old investor from Italy, recently visited six apartments in Ms. Sanz’s Miami building with a real estate broker. Mr. Comoglio was surprised to find worn-out hallway carpeting and orange foreclosure stickers partly scratched off the doors in such a new building.

His willingness to spend stopped short of $200,000 for the condo units, which once sold as high as $700,000, according to the broker, Peter Zalewski. Mr. Comoglio also wants a written guarantee that he would not have to pay more fees.

“Nobody knows if the worst is yet to come,” he said. “Nobody knows how much prices will continue to drop.”

Rosa Rodriguez, a resident and property manager at Parkview Point Condos in Miami Beach, says her former neighbors have left her with so many problems that she would never buy a condo again. The 38 foreclosures in her 244-unit building and the unpaid dues nearly cost the residents running water because the building could not pay its bills. The building abruptly stopped repairing its ceiling lobby and left its wiring and ducts exposed when the board ran out of money. She avoids answering questions from visitors about ceiling repairs.

“We’re not going to tell them we don’t have any money,” she said. “That’s embarrassing.”

Buildings with few units can suffer even if it just one owner falls into trouble. Doris Wilson, who owns a one-bedroom apartment in a building in the Bronzeville neighborhood of Chicago, struggled to get a lender to pay $2,500 in association fees after it foreclosed on one of the seven units in her building. The bank eventually paid the money, and the association has since been able to paint its wrought-iron fence and clean the sewer system.

Still, Ms. Wilson worries that the expected sale of the foreclosed unit at about $94,000 will hurt neighbors who paid or refinanced their units for three times that price. In the short term, she dislikes asking her neighbors to pay an extra assessment of nearly $220. She dreads going to monthly condo board meetings, and she avoids some neighbors who are struggling to pay the additional fees.

“It’s personal,” she said. “Here they are going through a hard time and you have to ask them to pay.”

Marki Lemons, a Chicago real estate broker, says that investors are hesitant to buy properties with many foreclosures because of the possible problems. Some buildings with four to eight units have had so many foreclosures that their condo associations have disbanded and windows have been boarded up. In these cases, she does not even want to represent sellers, because buyers cannot get financing and will have to pay all cash. Sellers will be disappointed by those buyers’ offers. “They’ll probably give 20 cents on the dollar,” she said.

So far, the Manhattan market has been largely spared, in part because of foreign owners who never sought a quick profit. By the end of the year, about 15,000 units will have been added during the five-year condo boom in Manhattan, according to Miller Samuel, a real estate research firm.

Jonathan Miller, the company’s chief executive, said that foreigners, who have bought up to a third of these new condos, typically put in more cash and plan to hold for some time.

“They’re in it for the long-term equity play,” he said. “They’re looking for a 10-year hold.”

Those who fear a downturn remember that Manhattan co-op prices suffered so much during the housing downturn of 1989 to 1993 that buildings had a hard time luring buyers. This financial instability hurt New Yorkers at all economic levels. Some recall neighbors handing over their Fifth Avenue apartments for $1 because they could not afford the maintenance fees.

Condo owners across the country are trying to ride out the slowdown. Since 2004, when Mark Mills bought his two-bedroom apartment for $622,000 in the 210-unit GasLamp City Square condo in downtown San Diego, 10 of his neighbors have succumbed to foreclosure. The building now has a $115,000 shortfall in its budget because residents failed to pay their condo dues.

He resents neighbors who have rented units they cannot sell to 20-somethings, who leave beer bottles in the lobby and hold late-night parties. He is tired of the constant beeping of a smoke alarm in a vacant unit, indicating a battery needs to be replaced. Still, Mr. Mills is staying because he expects he could get only about $550,000 for his home.

“We couldn’t sell it for what we bought it for,” he said. “I’m in it for the long haul.”

 

[ducati0000]

If the price increases with lower starts Im still positive about the market.It means more choices for buyers but do not expect lower pricing,the builder already has set expenses so lowering pricing is not a option for a healthy market.They might throw in upgrades though.The economy is slowing..most of the people I know from construction to sales has notice a softer start for the year and with the increases in food,fuel and energy its going to get a bit tougher for the average joe/jane to get into the market.

 

[AKS]

wow, that article is scary. I guess it pays to buy from reliable builders? I can't believe things are breaking down in just 4 years. Of course I haven't stayed in a condo for longer than 3 years so I wouldn't know. But even in houses you won't have that issue. The washer and dryers didn't break down for 20 years. I wonder if the builder used crappy material and bad management so the condo has turned so bad. Missing payments shouldn't degrade a condo's quality. Bad tenants do. If they miss payments the bank would just foreclose their apartment.

 

[Observer Walt]

Poor quality of construction may well have been a problem, bot only a small part of it. The biggest problem in parts of the U.S., especially Florida, is that building after building was constructed "on spec", that is, without buyers in place. It was a race to see who could throw up buildings faster.

Combine that with extremely sloppy mortgage underwriting, which was encouraged by the fact that the banks who wrote the mortgages had no responsibility for actually collecting them, and in fact had strong incentives to keep writing them whether the borrowers qualified or not.

 

[lordmandeep]

actually I heard recently the only place in Canada where the prices are not falling are Vancouver (Olympics) and Toronto area, overall ofcouse.

Prices are falling in the West now.

 

[confusion]

The economy is slowing..

Correction, should be slowed...
http://www.cbc.ca/money/story/2008/08/15/manufacturingjune.html

If the manufacturing sector is starting to recover, and the financial sectors have already recovered, and the tech sector barely took a hit, I'd say Ontario is gearing up for a flat 2008 and a strong 2009.

Granted, if the USA slumps even more manufacturing could take a bit more of a hit, but overall right now Ontario is doing well.