# Decrease in home sales in Van and TO....



## JayRoc (Apr 4, 2009)

What do you make of the following articles? Could this be the much-ballyhooed start of the popping of the housing bubble? Or just a blip? I'm firmly on the side that there is a correction coming.


http://www.yourhome.ca/homes/reales...isting-home-sales-fall-by-23-per-cent-in-june

http://www.theglobeandmail.com/repo...ouver-home-sales-drop-sharply/article1629806/


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## the-royal-mail (Dec 11, 2009)

Housing costs (for GOOD houses in GOOD neighborhoods) in major cities are way out of reach for the average worker these days. The prices for housing in those cities are simply beyond me. Just another reason not to live in those places.


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## andrewf (Mar 1, 2010)

I hope you're right. I'd like to enter the market in the next few years and word of a 30% correction would be music to my ears.


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## james_57 (Jul 5, 2010)

the-royal-mail said:


> Housing costs (for GOOD houses in GOOD neighborhoods) in major cities are way out of reach for the average worker these days. The prices for housing in those cities are simply beyond me. Just another reason not to live in those places.


Prime Vancouver RE, is very easy to understand, because there is a concentration of immense wealth in that city, where the wealth of many of the HK families is simply way off the charts compared to the rest of Canadian city populations. West Vancouver, a special case, always paid the highest taxes in Canada, and was proud of it (along with its upper layer affecting a quasi-British accent). 

As for Toronto, it could be undervalued when you look at what people are paying in other world class cities. If Canada opened the immigration door selectively, Toronto property values could double in 7 years, (one cycle) don't you think?


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## GeniusBoy27 (Jun 11, 2010)

I doubt a 30% correction is happening (a la the US). It would mean major defaulting occurring. Having said that, I doubt that Toronto property values would double that quickly, even with open immigration policy.

You would need a major influx into the downtown core by people with cash. Just don't see that happening either. We'd be looking at major changes away from historical norms .... With interest rates returning to norms, I see small, but steady growth.


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## the-royal-mail (Dec 11, 2009)

The correction I would like to see is one where the companies with the good jobs quit locating themselves in these huge cities that have clogged roads and insufficient space. All towns and smaller centers these days have electricity, water, sewer, roads, schools and can easily handle population growth. It would be good for everyone to spread out a bit. Then housing prices would be a lot more balanced instead of so city-centric. People will go where the jobs are and people who do find good jobs in smaller centers (they do exist) have top notch family lives, aren't stressed out etc.

Vancouver and Toronto lol. Life is too short.


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## jamesbe (May 8, 2010)

I've seen sales plummet in Ottawa as well as I have been watching the market. Back in March/April/May homes would go up for sale and be sold in days. I've not watched homes that have been on the market since May just sit and sit.


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## K-133 (Apr 30, 2010)

The point about wealth in Vancouver is something to consider. Aside from that, its a market that I am neither familiar nor comfortable with.

The numbers in Ottawa and Toronto show that sales *volumes* are cooling compared to the recent boom, and that they are now beginning to operate at an average pace. Whether the drop will continue is unknown. Without another recession, I'd expect nothing drastically different from the average, though likely slightly below average growth. 

Recall that 2009 represented a year of general economic fear and uncertainty. People were digging bunkers, which may have been partially responsible for creating the year ending dip in supply, in turn causing an increase in costs.

If sales volumes were to dip within reasonably sub-average numbers, the economy could still be considered stable as prices have risen more sharply, thereby painting a picture of average growth on the charts.

I consider the general RE economy to be 'ok', though still strongly dependent on general economic confidence - which judging from the stock market is mild at best. If the global markets begin to show signs of confidence over the next couple of years, I would be optimistic about continued strength in growth.

For those looking to buy into the market, perhaps a more collaborative effort is neccessary to achieve your goals. Continuously dictating that prices must come down is working against the interests of existing asset holders, making your end goal that much more difficult to achieve.

I myself am happy seeing this slow down and would be comfortable with a short and mild correction.


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## steve41 (Apr 18, 2009)

I don't know if this is an urban myth, but I have heard it said there are more millionaires in China than people in Canada. A major force in driving prices on the Vancouver West side and in West Vancouver are mainland Chinese. It doesn't appear to be abating any time soon.


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## andrewf (Mar 1, 2010)

Price/rent ratios are very high in both Toronto and Vancouver, as are price/income. There is little room for prices to rise unless incomes do, and room for them to fall. Housing affordability is poor in Canada.


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## Cal (Jun 17, 2009)

Personally I am counting on a 10% correction, hoping for more.

I just can't justify what sellers are asking right now.

Although I do think it will be a slow drawn out correction, not as abrupt as the US or as sharp.


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## kcowan (Jul 1, 2010)

steve41 said:


> I don't know if this is an urban myth, but I have heard it said there are more millionaires in China than people in Canada. A major force in driving prices on the Vancouver West side and in West Vancouver are mainland Chinese. It doesn't appear to be abating any time soon.


Back in 1990, HK investors were driving home prices in Toronto during the runup to June 1997. But when the prices stopped rising, the sales dried up and the prices declined.

How is this time any different?


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## kcowan (Jul 1, 2010)

andrewf said:


> Price/rent ratios are very high in both Toronto and Vancouver, as are price/income. There is little room for prices to rise unless incomes do, and room for them to fall. Housing affordability is poor in Canada.


Average rents for 2BR apartments is $1150 in Vancouver and $1135 in Toronto. These do not wash with the selling prices in those two cities.

http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2010/2010-06-15-0815.cfm


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## jamesbe (May 8, 2010)

Not sure if prices will drop or not but many "asking" prices seem well out of whack in my area.

I've seen some asking prices drop as much as $50k, one home we are looking at dropped $50k and we are thinking of offering them $50k less than what they are currently asking -- they are just way way overpriced.


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## james_57 (Jul 5, 2010)

K-133 said:


> (snip)
> I myself am happy seeing this slow down and would be comfortable with a short and mild correction.


These two cities Vancouver and Toronto are totally different RE markets, i have lived and been a developer/builder in both markets, so i know something about them first hand. There are so many differences, its pointless to list them, but the supply of land is a main factor, and the 'proximity' to HK is also a factor, where the Asians are concerned, that being an extra hop +6 hrs from To.

Vancouver is more used to RE bubbles, in fact i would say they thrive on them, its a game everyone likes to play. Its been going on since 1980, and they've been through at least three bubbles since then. So way more volatile. Toronto has what i call a 'real' economy, and has a good manufacturing base, the local swings in employment are not as pronounced, that too makes a difference. 

RE markets in Canada respond to changes in interest rates moreso than any other singular factor, and lending practice, in particular construction loan financing. When the rates are too high, the banks turn the key off for construction lending, and it happens across the sector (all banks on the same week). Nothing cools off the RE market faster in Canada, than a hike in rates, so until rates start moving upward substantially, the corrections in these two cities will be just normal corrections, not the severe boom bust type, IMHO.


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## Jon_Snow (May 20, 2009)

I live in Vancouver. My wife and I make about 140k income between us. We live a small condo. Would love a house, but cannot justify paying 700k for an older bungalow in our neighbourhood. Its a beautiful city, no doubt... but real estate is ridiculous here.

We have a fair amount of cash savings... I hope the market crashes here so we can go into vulture mode and finally have the house we desire without indebting ourselves for life. 

Ah... feel better after rant.


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## K-133 (Apr 30, 2010)

Another opinion from Royal Lepage - http://www.yourhome.ca/homes/reales...ate-decline-forecast-for-toronto-house-prices


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## kcowan (Jul 1, 2010)

james_57 said:


> These two cities Vancouver and Toronto are totally different RE markets, i have lived and been a developer/builder in both markets, so i know something about them first hand. There are so many differences, its pointless to list them, but the supply of land is a main factor, and the 'proximity' to HK is also a factor, where the Asians are concerned, that being an extra hop +6 hrs from To..


Actiually the trip to HK is over the pole and is not much longer than Vancouver. I know we stopped to refuel in Fairbanks. I was surprised the first time I took it.


> Vancouver is more used to RE bubbles, in fact i would say they thrive on them, its a game everyone likes to play. Its been going on since 1980, and they've been through at least three bubbles since then. So way more volatile. Toronto has what i call a 'real' economy, and has a good manufacturing base, the local swings in employment are not as pronounced, that too makes a difference.


Toronto used to have long cycle bubbles. The 1988-89 runup took 7 years to pop with high end properties dropping 50% in value. The current bubble is leaking but has not popped yet. Vancouver makes no sense. So I rent a penthouse in West Van for $100/sq.ft. (30x110).


Jon_Snow said:


> I live in Vancouver. My wife and I make about 140k income between us. We live a small condo. Would love a house, but cannot justify paying 700k for an older bungalow in our neighbourhood. Its a beautiful city, no doubt... but real estate is ridiculous here.
> 
> We have a fair amount of cash savings... I hope the market crashes here so we can go into vulture mode and finally have the house we desire without indebting ourselves for life.
> 
> Ah... feel better after rant.


It might take a long time to regress. Toronto was dropping from 1990 to 1997. A sudden drop needs an external factor like mortgage defaults.


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## james_57 (Jul 5, 2010)

kcowan said:


> So I rent a penthouse in West Van for $100/sq.ft. (30x110)


you sure about the math?


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## Sherlock (Apr 18, 2010)

steve41 said:


> I don't know if this is an urban myth, but I have heard it said there are more millionaires in China than people in Canada. A major force in driving prices on the Vancouver West side and in West Vancouver are mainland Chinese. It doesn't appear to be abating any time soon.


There are 10 million millionaires in the world with a collective wealth of 39 trillion dollars according to this source: http://www.youtube.com/watch?v=dnPatMfEMRM


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## Jon_Snow (May 20, 2009)

Well, my net worth calculations state that I am a "millionaire".... yet if I suddenly lived the "millionaire lifestyle" (big house, fancy car, a boat, sunbelt condo) I would very quickly cease being one.


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## kcowan (Jul 1, 2010)

james_57 said:


> you sure about the math?


Monthly rent is $3210 including parking. Why do you ask?


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## james_57 (Jul 5, 2010)

kcowan said:


> Monthly rent is $3210 including parking. Why do you ask?


=>>"_So I rent a penthouse in West Van for $100/sq.ft. (30x110)_"

Its not $100/sf


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## JayRoc (Apr 4, 2009)

This is getting off-topic....and over $3000/month? Really????


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## kcowan (Jul 1, 2010)

james_57 said:


> =>>"_So I rent a penthouse in West Van for $100/sq.ft. (30x110)_"
> 
> Its not $100/sf


right! Been thinking about basis points too much!

How bout $1/sq.ft. per month?

Thanks James.


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