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RBC: No Toronto Condo Bubble

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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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JR
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Aw shucks RBC it’s nice to see one of them economist fellas cut through all of the normal self serving rhetoric and get a genuinely impartial take on the real estate market and it’s prospects.

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6 years 24 days ago
Anonymous
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Who cares about Toronto?

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6 years 24 days ago
BestPlace on EI
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Oh yeah nutslaps! Condo market will flatten awaiting next leg up. Gold and Vancouver land to the moon in a near hyperinflationary environment. Wait two years. High end market first in for lunch break!

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6 years 24 days ago
piklishi
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RBC please tell us who is buying? Building the condos seems to be easy now but how of them are going to sell.
RBC-s vision is very limited.

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6 years 24 days ago
rp1
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Ah yes, the “two-tiered market”. They should say that falling prices will be “contained”.

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6 years 24 days ago
ScubaSteve
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I already saw this article. Whew. I’ve informed my friends, family and co-workers that there is no bubble, and we can all proceed to purchase more homes now. I guess it’s off to go condo hunting tomorrow!

Seriously, how sad is RBC? What a bunch of fools over there. This makes them look so incompetent and manipulative. They must be desperate.

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6 years 24 days ago
Dr. Nick Riviera
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Headline in the [i]More Related to this Story[/i] section in the article:

“Cautious buyers send Toronto condo sales plunging”

But there’s no bubble. Everything’s just fine, don’t worry…

How Orwellian.

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6 years 24 days ago
HappyRenter
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“RBC: No Toronto Condo Bubble”

There you go. This proof that there is a bubble.

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6 years 24 days ago
HappyRenter
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“RBC: No Toronto Condo Bubble”

There you go. This proves that there is a bubble.

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6 years 24 days ago
patriotz
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$639,000: 2 bedroom 18 Yorkville Prime Yorkville Location. Rarely Available Se Corner 2 Bedroom Suite 18th floor

$2500: 2br – 732ft² – **SPECTACULAR CORNER SUITE in EXCLUSIVE 18 YORKVILLE BUILDING 22nd floor

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6 years 24 days ago
registered
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” Government actions aimed at curbing urban sprawl are restricting builders’ ability to create new homes and so to meet the demand from the roughly 38,000 net new households in the Greater Toronto Area each year, builders must build upwards, Mr. Hogue says.”

Land within a couple hours travel in peak periods was developed decades ago. Here we go again blaming government interference of developers, paradoxically in a city with the highest condo construction level in the country. It’s getting so you can almost guess which page of the playbook the industry talking heads are quoting.

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6 years 24 days ago
Pies
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The numbers are up and the sales are down, but the mentality of the people has not yet changed, and until the RE fever is broken and a bit of panic sets in we’re not going to have a solid downward arrow in prices. Isn’t it time that the VCI community got more aggressive in getting the real facts out to the people? I know this has been mentioned before, but I think we should brainstorm some ideas for a full advertising campaign. Our numbers are strong enough, and I’m pretty sure most people here would pitch in some money to help get the word out in a serious way. I for one would volunteer my services as a graphic designer to produce posters, motion graphics for videos etc. I’m sure there are others who can add more. Can we… Read more »
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6 years 23 days ago
Anonymous
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@Pies: “The numbers are up and the sales are down, but the mentality of the people has not yet changed”

We know the mentality of people hasn’t changed too much but the availability of mortgages has. That is all that matters at this point. The mentality part will come later. There is nothing an advertising campaign will do. Be patient.

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6 years 23 days ago
Ralph Cramdown
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I LOVE the “two tiered” market sentiment. How many of those youngsters buying a condo to live in want that lifestyle for decades? Not too many. As soon as they find a mate and plan kids, it’s all about the yard and the school district, but it’s a condo to start to get on the “property ladder.” If they lose $50k in equity, they will have difficulty reaching the next rung up. There goes demand.

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6 years 23 days ago
VHB
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Inventory is pretty flat everywhere this week. Except VE SFH. That’s still climbing.

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6 years 23 days ago
Ralph Cramdown
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“[Toronto] Land within a couple hours travel in peak periods was developed decades ago.”

Don’t you believe it. They’re still paving over farmers’ fields north of Highway 5 in Burlington and Oakville, putting up McMansions in Vaughan, Stoufville and Uxbridge. Brampton, Markham, Pickering… the list goes on and on.

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6 years 23 days ago
Bo Xilai
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To paraphrase “Yes, Minister”

“The first rule of real estate prognostication: never believe anything until it’s been officially denied by a bank economist or a real estate lobby group.”

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6 years 23 days ago
registered
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@16 Ralph Cramdown: Exactly, Hogue made the comment in the context of driving Toronto condo development.

“…he believes that record sales for new condos are picking up the slack that exists because fewer single-family homes are being built. Government actions aimed at curbing urban sprawl are restricting builders’ ability to create new homes…”

It’s like claiming government restrictions on single family homes in Maple Ridge and Cloverdale drive Vancouver condos. Fewer single family homes are being developed within a reasonable commute radius of central Toronto not because of restrictions but because the city core was substantially developed a very long time ago and outlying burbs have easier to acquire open land. The sprawl continues unchecked, I no longer recognize the north Oakville neighbourhood I called home 15 years ago.

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6 years 23 days ago
N
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In the States:

“Nationwide, home values rose 0.2% year-over-year to a median $149,300 during the second quarter, the first annual increase since 2007, real estate listing site Zillow reported. Prices were up 2.1% from the first quarter.”

http://money.cnn.com/2012/07/24/real_estate/home-values/index.htm?hpt=hp_t2

Yes, that’s a median price of $149,300.

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6 years 23 days ago
Simple
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@Pies:

“Isn’t it time that the VCI community got more aggressive in getting the real facts out to the people? I know this has been mentioned before, but I think we should brainstorm some ideas for a full advertising campaign.”

–

I have an idea for this. You should team up with the GVREB and make a short video like the ones that the REBGV release each month.

http://www.rebgv.org/rebgv-market-update-june-2012

As a graphic designer you should be able to whip one of these up in AfterEffects quite easily. People hate reading but love video and I’m sure you could have some fun animating lines that go down for a change.

If it got some traction with various social media sites who knows what could happen.

Plus it would really piss off REBGV, which should be motivation enough.

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6 years 23 days ago
Aleks
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Bees against honey?

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6 years 23 days ago
mattymatt123
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@Pies: i’m in!

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6 years 23 days ago
Vote Down The Facts
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@Ralph Cramdown:

“If they lose $50k in equity, they will have difficulty reaching the next rung up.”

Not necessarily. Because the next rung up may have decreased by $80k. So they just got $30K closer. The problem is if they’re plunged into negative equity and therefore can’t sell.

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6 years 23 days ago
900kCrackHouse
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@Simple: This is an excellent idea. I would definitely be on board with crowd-funding a small series of adverts in bus-station shelters, or using some other methods to get the message out. How should we tackle this? Any ideas? Those with graphics design experience would be instrumental in making this happen.

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6 years 23 days ago
taylor192
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Why get the message out? The bigger the bubble, the bigger the pop. Since the market is based on emotion, let RBC tell people there is no bubble and lets see the emotional reaction when prices fall.

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6 years 23 days ago