More homes for sale, fewer people buying
Fraser Valley near record for homes inventory
Garth:
I have ordered your latest book The Greater Fool. I have read the book you wrote in 1997…The Strategy…and followed the Strategy of using the equity in my principal residence….it has benefited me thus far. In fact I have recently re-read that book a couple of times. Your ideas provoke creative energy. I am searching for your thoughts on Timeshares ( for a 61 year old retired couple living/( owning ) in a modest 1100 sg ft Bi-level. Do you have a book or other format which addresses Timeshares both on the national and international scene ??
Wilson
Timesharing is an emotional investment, not a financial one. I have yet to meet anyone who actually made money, but have met more than a few who became snarled in the tax laws of foreign jurisdictions. If you think you’re going to save money by timesharing, over what similar rental accommodation would cost over the next few years, minus buying and selling closing costs, and factoring in the lost investment power of the cash you invest, then go for it. But you won’t.
Hi Garth,
I just finished reading your book titled “Greater Fool†and was very impressed with all the information you provided. Most of it linked to what is happening in the United States but we are definitely starting to see the ripple effect here in Ontario.
As a young buyer, my husband and I have saved up over 20% for the price range we would like to our home for but have been waiting on the market to go down and of course the interest rate to decrease. We have a question that we are hoping you would be able to answer and that is: Is there a website here in Canada (GTA) or an organization where we can find sellers that are on the brink of having their home reposed by the bank and willing to make a quick sale for the remainder of the balance on their home.
Any advise would be greatly appreciated.
Sandra
There’s a word for that, Sandra: vulture. Sadly for you, but fortunately for the sake of privacy, there is no such list of families facing financial stress and the imminent loss of their homes. If there were, I sense you’d be pouring over it with your husband every day.
As for your buying intentions, I hope you’re prepared to wait until the end of the year, since current sales declines will take that long across most of the Toronto region to translate into widespread price reductions. The erosion starts first in vulnerable high-end suburban homes and will actually get to starter-type homes last. That, of course, is what you should be buying, and not some granite-and-stainless palace. Debt kills. Even vultures.
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A fresh anecdotal story from one of my sibling’s in-laws up in Edmonton who works for one of the major North American cement companies: their 2008 year-to-date sales for residential supply is off _85%_ from the same period in 2007. Commercial and industrial contracts are softer but not nearly to the same degree (off 15 to 20%). He also figures that, at the current rate, a number of his SFH residential builder clients will only build 25 to 30% of what they did in 2007.
If the numbers had dropped 15 to 30%, I would just call the situation “a serious cooling-off”. But as they stand, I believe this qualifies pretty closely to a “rout” or a “market collapse” on the residential construction side – at least for the companies involved.
The general sentiment is corroborated by another family member’s neighbour – a retired Edmonton carpenter union leader – who said that large number of members of his hall has left the province to seek work on residential projects.
I just read in the Sun’s Linda Leatherdale’s rah-rah-realestate article that GTA sales are down 27% in March? How did this not make news? Why are they acting nonchalant about this and causually mentioning it? And why do they keep giving us the stats at the half way point in the month? To cushion the blow? Maybe they think “Oo-o-o if we just give them the trunk maybe they won’t notice the rest of the elephant…”
Benjamin Tal, a senior economist with Toronto-based CIBC World Markets, says prices in some pockets of Western Canada could actually fall.
“The sub-prime story is part of the overall economic story,” he says, adding the U.S. recession will hit Ontario and Quebec hardest.
But the sub-prime crisis will probably limit Canadian developers’ access to capital.
http://www.businessedge.ca/article.cfm/newsID/17769.cfm
With all the talks about the ” big collapse” the impending “meltdown” the “correction” how is it that prices in Toronto just keep going up??
I have friends trying to buy near Toronto’s core that have lost bidding wars on four occasions.
I think it’s going to depend what neighbourhoods see these price corrections that are predicted by Mr. Turner. It looks like Toronto is full speed ahead from where im standing.
Sales decline first, of course, and prices follow months later. Wait. — Garth
That is the huge RE falsification of the numbers, because they are playing with average sale price.
In Toronto number of sales reduced significantly,mostly because of reducing of cheaper houses – the crash always is starting from cheaper, poorer part and only after coming to rich part. Because of it the number of more expensive houses between sold houses in Toronto is relatively higher than cheaper and as a result higher average.
The average price is wrong manipulative statistic of RE industry – to find more greater fools.
We should compare the prices only for same type of houses in the same neighborhood, but the RE industry continues its falsification, fraud and brainwashing practice trying to find more fools and to do more money.
Sphinx,
http://www.940news.com/nouvelles.php?cat=22&id=100185
Tal was critical of ex Bank Governor Dodge’s comments that real estate was overheated, now he’s changing his tune, a majority of the economists for the Canadian banks are quickly changing their stories and outlooks on real estate, mainly because if they don’t their future comments will soon become disregarded as hearsay.
This is all about FUTURE credit, if you have yours locked up in a 40 year 1 million dollar house (Or a 40 year 500K house) how much are you going to be able to extract when prices turn flat and sales stagnate, RE will under perform inflation and then start to drop…
I’m listening to the guy that had his hand on the pulse of the Canadian economy and no matter what the IMF says or CMHC, I share his justifiable concerns.
National Bank is one of the Canadian banks that are more worried about the price to income ratio, they state that Canada, on average is less leveraged then USA which I agree with but the average number is growing.
http://www.nbc.ca/bnc/cda/content/0,2662,divId-2_langId-1_navCode-9012,00.html#cg
Increasing of the average price does not mean the real increasing of prices!
In the real life the real estate prices could fall significantly, but the average price could go up!
If RE industry shows only average prices, without to show prices for the same type of real estate in the same neighborhood from month to month – it is manipulation and falsification!
It means they have something to hide!
They are trying to buy few more months to hunt more fools!
Example:
In month A were sold 5 houses for $1 000 000
and 10 houses for $ 400 000
the average price is $ 600 000
In month B were sold 4 houses for $ 950 000
and 5 houses for $ 350 000
the average price is $ 616 667!
What the RE industry will say?
“The prices are up 3% from month A to month B !!!!!!!!
Despite the prices were down between 5% to 12.5%!
It is exactly what we can see those day and it is a good example how RE industry is manipulating and brainwashing naive people.
Toronto Real Estate Board reports:Sales moderate in April but prices up
April statistics show that 8,762 houses sold in the Greater Toronto Area. “The market continues to experience a supply and demand situation and to-date it remains a sellers market,” said TREB President Maureen O’Neill. The GTA market was down 7 per cent from last April’s record 9,452 transactions. However, it is showing signs for a healthy 2008 compared to the diminished activity during the first quarter of 2008.
The sales pace however, did not take place evenly throughout the GTA. With 3,467 transactions in the City of Toronto, sales were down 10 per cent from a year ago. The 905 region was down five per cent from April 2007 sales, with 5,295 homes changing hands.
Prices continued to appreciate last month, to a GTA average of $398,687, up five per cent from last April’s $367,968. The average price in the City of Toronto was $446,781, up six per cent from April 2007. The 905 region’s average price of $367,196 increased five per cent from a year ago.
“For more than a decade, real estate has served as the economy’s engine,†said Ms. O’Neill. “It’s encouraging to see that consumers are continuing to put their faith in real estate as an excellent longterm investment.â€
Breaking down the total, 3,398 sales were reported in TREB’s 28 West districts and averaged $372,575; 1,531 sales were reported in the 14 Central districts and averaged $539,133; 1,768 sales were reported in the 23 North districts and averaged $429,262; and 2,065 sales were reported in TREB’s 21 East districts and averaged $311,350.
************how can prices be up and sales dwn ***
This is exactly the pattern in pre-crash days in 1988. Price declines always run several months behind sales declines, once all the greater fools have made their offers. — Garth
Thanks peter ,,makes sense and explains the rise in price with the lower sales
I purchased a house in the area known as Leslieville which is just east of Toronto’s downtown core in 2002. It is a two store detached on a quiet street. My friend, in this neighbourhood prices are going up monthly. I purchased this house for 279K and smaller houses on the street are selling for well over 500k in just 5 1/2 years. This is not numbers being manipulated. This area for it’s demographics is still cheap compared to other areas. You Garth Turner clonies that are waiting for dooms day to come are still going to be priced out of the market even if things level off in some neighbourhoods.
You said it Danny, if everyone is priced out of the market who is going to buy your house when you go to sell it?
Give your head a shake…
Danny, you did well… happy for you.
… but I’m afraid that a few years from now your comments are just going to be an example of how deluded the crowds can get during real estate mania.
“… in this neighbourhood (Leslievilee, Toronto)prices are going up monthly” – Danny.
Dear Danny,
In the neighborhoods around Finch and Jane (Toronto) prices are going down monthly …
So what?