RBC: No Toronto Condo Bubble

Royal Bank says everyone should stop worrying about the condo bubble in Toronto.

Policy makers in Ottawa and various economists just need to chill.

There is no Condo Bubble in Toronto.

Can someone ask them about Vancouver?

There are more condos under construction in Toronto than any other city in North America, and more residential building is taking place in the Greater Toronto Area than ever before.

Mr. Flaherty’s fears about overpriced real estate, and condo markets in particular, prompted him to surprise the market last month with new mortgage insurance rules that aim to take some of the wind out of the market’s sails. He’s trying to engineer a gradual slowdown of the market, fearing that otherwise it could crash at some point.

Mr. Hogue’s lack of concern about a bubble does not mean he thinks the market will boom, however. He expects condo prices to fall by perhaps 2 per cent to 7 per cent from their peak. He predicts that a two-tiered market could emerge, with condo prices softening while the market for single-family homes is resilient.

Full article in the Globe and Mail.

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[…] Histats.track_hits();} catch(err){}; A day after the RBC released a report saying there is no condo bubble in Toronto we get a conflicting report from Capital […]

Dr. Nick Riviera
Dr. Nick Riviera
8 years ago

@Navin R. Johnson

Rather than rip lawyers, let’s give them their due. Not just any chump can obtain a law degree.

Don’t put words in my mouth. Most lawyers are pretty smart. I said they are generally not good with numbers. They are trained to address legal issues, not calculate things. I simply am saying they may not be great with finance. Obviously this is not true for all of them.

fixie guy
fixie guy
8 years ago

111 Anonymous Says: “They know now that these policies led to a bubble in some key markets in Canada….. They deny the term because they can in a national context – the national context….”

In all key markets. The truth is every market tracked by Teranet shows wildly unsustainable increases in real HPI over the last decade. True, western cities took it to the next level but don’t believe this bubble is a Composite 5 phenomena. The overwhelming majority of Canadians live in a bubble market.

“Buyer sentiment fed on itself on the way up on irrational exuberance which resulted in a delusional, totally uber-priced market.”

Junkies can’t get high without a source. The CMHC handing out free samples to prospective home owners started this party. They’re about to go cold turkey.

Navin R. Johnson
Navin R. Johnson
8 years ago

@Dr. Nick Riviera:

Rather than rip lawyers, let’s give them their due. Not just any chump can obtain a law degree.

Dr. Nick Riviera
Dr. Nick Riviera
8 years ago

Education is WAY overrated awhen it comes to investing. Better to have good “business instincts”, which admittedly is not always easy to define or identify. Laywers, by the way, are great with legal questions but horrible with numbers. Its possible that some of them have calculators but I’m not sure if they know how to use them.

Dr. Nick.
Medical degree from Hollywood Upstairs Medical College.

Anonymous
Anonymous
8 years ago

@jesse: I think that market mentality is going to play a much bigger role and have a far more negative outcome than might be predicted via an otherwise sound extrapolation of recent numbers. There is nothing government or anyone can do now to arrest a precipitous fall as they did post 2008. In fact, they have recognized the error of their ways back then with free money, no downs and ridiculous amortization periods. They know now that these policies led to a bubble in some key markets in Canada, Vancouver being ground zero. They deny the term because they can in a national context – the national context, however, is meaningless as far as markets like Vancouver are concerned and they know this too. Buyer sentiment fed on itself on the way up on irrational exuberance which resulted in a… Read more »

HAM Solo
HAM Solo
8 years ago

@ Jesse Good thought process. Personally, I have a feeling that H2 2012 will not be too far ahead of 2008 for sales .. and maybe even behind. I recognize there were a couple of months around Sept/Oct 2008 where things came to a standstill. However, if you back-out the pre-July 9 numbers from the current stats we are almost at that level now. This fall selling season looks like a huge set-up for a made-in-Vancouver crash, no need to look for an external catalyst. If we do get an external catalyst on the upside, it might just back-up rates enough to act as a brake on housing activity. An external downside catalyst and we will be back in a post-Lehman environment. Best the realturds can hope for is some kind of kick-the-can environment where C$ interest rates continue to… Read more »

HFHC
HFHC
8 years ago

New Listings 263
Back On Market Listings 14
Price Changes 160
Sold Listings 163

All lower mainland

1 Mil + = 19
900k – 999k – 5
800k – 899k = 11
700k – 799k = 12
600k – 699k = 16
500k – 599k = 19
400k – 499k = 18
300k – 399k = 26
200k – 299k = 22
100k – 199k = 11
99k – = 2

Anonymous
Anonymous
8 years ago

@Anonymous: How does one prove one’s self an “expert”? All that matters in these here parts is data, critical thought, and a bit of populism for fun. Leave credentials at the door, they don’t change the arguments unless you want to proxy thinking for yourself.

UnagiDon
UnagiDon
8 years ago

@Anonymous: “For the record the undergraduate degree of Michael Burry is in economics. ”

Thanks, I did not know that.

jesse
8 years ago

@ScubaSteve: “Either way, July, 2012 now has 2nd worst July so far this decade locked in. Photo finish for 1st place.” Or, total sales year to date are the lowest in 10 years. That is directly impacting incomes of Realtors, real estate lawyers, and to a lesser extent mortgage brokers. In 2008 I can tell you that many Realtors I know took jobs in other areas to supplement poor commissions in real estate. This year looks, so far, to be eerily similar so far. Now the second half of 2008 had other stuff going on, most notably stock market distress and banks reining in lending. 2012 has its own thing. – Population growth is now lower than 2008 by about 30% – Interest rates are significantly lower than 2008 – Credit curbs are different; 2008 had a market failure while… Read more »

Anonymous
Anonymous
8 years ago

It’s pointless to say you’re an expert on a blog unless you’re going to back it up with proof. I can’t wait to see where Anonymous Lawyer got his degree.

We could all be dogs, but the facts will still be facts.

Joe_blown_away_by_high_housing_costs
Joe_blown_away_by_high_housing_costs
8 years ago

Just went through my Facebook news feed and I have two friends who updated their status to say they just bought real estate in Canada. One is a condo in the lower mainland. Ouch. These are both people in their early 20s fresh out of university. They’ve never even lived on their own. University paid for by boomer parents. They go straight from their childhood bedroom in their parents house to homeownership. I don’t have the guts to point out their folly. I suspect they have probably suppressed my Facebook posts from showing up in their news feed so they haven’t seen what I have been posting about the real estate bubble over the past few months. I guess they’ll learn the hard way.

Anonymous
Anonymous
8 years ago

@Anonymous: “But, maybe I’m just an “elitist” to care about formal education. Full disclosure: I am a lawyer and a owner of a home and a rental property.” It is kind of funny we have a lawyer questioning opposing opinions to the bank economists. Every time I see a lawyer they are not telling us what they truly believe, they are defending their client. Bank economists are just like lawyers but they are working for the banks not criminal defendants. They are paid to defend their clients financial interests and will say the most preposterous things just like a lawyer will. What an economist says publicly may not be what he/she actually believes. They are just making a case on behalf of their client/employer. The same as lawyers. Do you think Willy Picton’s lawyers thought he was innocent? Well that… Read more »

Navin R. Johnson
Navin R. Johnson
8 years ago

Economists….lol. How many of these high profile, so-called experts completely missed the boat when it came to predicting the 2008 economic downturn?

Jason
Jason
8 years ago

@Anonymous: Book learning is the same as paper training.

ScubaSteve
ScubaSteve
8 years ago

@VHB:

Thanks for the update. Only 5 days left to go, this July is going to be another downer. Should be interesting to see what prices do.

southseacompany
southseacompany
8 years ago

From Vancouver Sun; “Pace of condo presales slows, but numbers remaining high”

http://www.vancouversun.com/Pace+condo+presales+slows+numbers+remaining+high/6983932/story.html#ixzz21ajrF6o1

“… MPC said Tuesday that by the end of June 6,000 new concrete condominiums had been launched in the region. Hancock said the pace of pre-sales has slowed in the last two months, but he expects a “large wave” of new launches in the fall.”

VHB
VHB
8 years ago

Jul-2012 Total days 21 Days elapsed so far 16 Weekends / holidays 8 Days missing 0 Days remaining 5 7 Calendar Day Moving Average: Sales 87 7 Calendar Day Moving Average: Listings 206 SALES Sales so far 1738 Projection for rest of month (using 7day MA) 436 Projected month end total 2174 NEW LISTINGS Listings so far 3849 Projection for rest of month (using 7day MA) 1030 Projected month end total 4879 Sell-list so far 45.2% Projected month-end sell-list 44.6% MONTHS OF INVENTORY Inventory as of July 24, 2012 19272 Current MoI at this sales pace 8.86 year sell list sell/list 2001 2618 3504 74.7% 2002 2670 3929 68.0% 2003 4023 4447 90.5% 2004 3019 4785 63.1% 2005 3652 4107 88.9% 2006 2732 4370 62.5% 2007 3873 4924 78.7% 2008 2174 7104 30.6% 2009 4114 5061 81.3% 2010 2255 4138… Read more »

good-format
good-format
8 years ago

Thank you very much, PaulB.

I have you in mind as my realtor while I buy my house. Hopefully in less than 2 years.

ZRH2YVR
8 years ago

Today’s Detached and Attached sales – 101 units
Pre July 10 – 35
Post July 9 – 66

This makes 267 sales post July 9 so far. out of 1,101 sales.

Quick check of the avg sale price shows continued decrease in attached but we may have a small increase in detached. However, medians are down and down heavy in attached. The avg and median decreases could be due to the “sucking in” and bringing forward of the sales to the very bottom of the market that would otherwise been shut out after the mortgage rule changes and.

Yalie
Yalie
8 years ago

@Anonymous:

One of the brightest minds in the economics blogoshphere is Mish. Engineering undergrad, and no formal economics education. Yet he can run circles around almost any econ PhD when it comes to the big picture.

Anonymous
Anonymous
8 years ago

@unagiDon: For the record the undergraduate degree of Michael Burry is in economics. So maybe he is not the best name to drop before a “no formal training in finance or economics” statement.

He was one of the speakers at this year’s UCLA school of economics commencement ceremony.
http://www.youtube.com/watch?v=1CLhqjOzoyE

ScubaSteve
ScubaSteve
8 years ago

@paulb:

Thanks Paul. That always seems to work. 102 sales. Damn. So close to the double digit streak staying alive. These are still horrible sales though. It’s going to be a close call at the end of the month. Either way, July, 2012 now has 2nd worst July so far this decade locked in. Photo finish for 1st place.

paulb
8 years ago

New Listings 210
Price Changes 138
Sold Listings 102
TI:19272

My weekly stats have been updated!

http://www.paulboenisch.com