Toronto melts

Did I mention I am writing a new book? Well, it’s all about what happens now, after the crash of 2008, and it will not make people like TREB’s Maureen O’Neill any happier. I’m forecasting the average house price in Toronto by early 2010 will be a shocking…. well, you’ll just have to buy the answer. More soon. — Garth

(NATIONAL POST) City of Toronto existing home prices plunged 13% in October from a year ago and are now even lower than two years ago, the Toronto Real Estate Board said Wednesday.

The average price of a home sold in the city was $376,896, down from $434,022 in 2007. But the figure was also down from the 2006 average October sale price of $386,807.

In the greater Toronto area, the average price of a home sold in October was down 10% from a year ago to $352,974. GTA average prices were off 1% from October, 2006.

“Consumer confidence is critical to the housing market and it appears that consumer uncertainty has been prevalent in today’s market conditions,” said Maureen O’Neill, president of TREB. “We are confident levels will return as demand for housing in the GTA continues.”

That demand for housing appears to be drying up quickly. TREB reported GTA sales in October were 5,155, down 35% from a year earlier and 25% from two years ago. In the City of Toronto, sales were off 38% from a year ago. In the 905 region, sales dropped 32% from October, 2007 levels.

Ms. O’Neill expressed continued confidence in the Toronto housing market, pointing to a recent study to back her up.

“Earlier this year the International Monetary Fund undertook a study of housing markets in countries and found that Canada was one of only two nations in which house prices are supported by the economy,” she said. “There’s no doubt that real estate will continue to be a solid long-term investment in our country.”

Toronto Real Estate Board official release here.

66 comments ↓

#1 Westcoaster on 11.05.08 at 1:42 pm

Anything for the rest of the country? Vancouver/Victoria? Anything on rural areas?

#2 squidly77 on 11.05.08 at 1:43 pm

Ms. O’Neill expressed continued confidence in the Toronto housing market, pointing to a recent study to back her up.

“Earlier this year the International Monetary Fund undertook a study of housing markets in countries and found that Canada was one of only two nations in which house prices are supported by the economy,” she said. “There’s no doubt that real estate will continue to be a solid long-term investment in our country.”

is it possible to make a dumber argument than that ?

the economy wont kill house prices
house prices will kill the economy..

#3 MikeB on 11.05.08 at 1:51 pm

Most of us who sold and are now in rental mode are very surprised at the speed at which the decline in prices has taken hold in Toronto proper. I can say, as does POL-CAN and others, things are very different now than a year ago when you had to offer at a certain day and time and had to justify your offer. Kinda like the soup nazi in Seinfeld.
I have seen many many propers relist at the notorious PC moniker or just delist totally. I have seen properties which have been completely redone, albeint on the cheap in some areas, that have done reductions. No fast sales from my perspective. Not sure what Garth’s magic secret number for Toronto is but I will guess it is in the 35-40% range. However I feel that with the right buyer and seller you can probably get that now. Hang on tight.

#4 RealityDan on 11.05.08 at 2:01 pm

Funny, all these price drops but If you check MLS some people have an imaginary idea of what their house is worth, and won’t drop their price. Come now people in California thought that too, just this last year when polled by Zillow.com a majority thought their houses llost no value, and some even thought they went up in value. Guess what, Foreclosure. It may not happen here, but prople be real, Recession, Losing Jobs, Gas prices, you need to drop you prices and stop being so pompous.

#5 J Walker on 11.05.08 at 2:02 pm

haha, their still pawning off the IMF report as evidence of no bubble in Ontario??? Cause the Ontario economy is totally stable! What a joke. I’ll check back in 12 months…

#6 EJ on 11.05.08 at 2:09 pm

Expect a whole lot of spin and outright lies from the CREAtins over the next year. The IMF… oh yeah, there’s an impartial and trustworthy group with a great track record… But hey, as long as you say something positive about the housing market, you’ll get quoted by the RE industry, facts be damned.

#7 jon on 11.05.08 at 2:29 pm

According to TREB records, last time sales of homes for October were this low was in 2001 at 5405. Most October sales reported in the last 6 years have ranged from 6000 to 7500 in sales. Average price reported in October 2000 was $250,000. Guess where we are headed?

#8 BCFELLA on 11.05.08 at 2:32 pm

It is about time. Anyone that says they are not over priced is a fool. Now It is time for the ride back to reality

#9 dd on 11.05.08 at 2:36 pm

Garth,

This seems like a plug for your new book … .
Looking forward to the read.

#10 ForWhomTheTollBuilds on 11.05.08 at 2:37 pm

As a westerner, I’d like to offer that this is a huge deal as far as psychology goes for Canada.

If prices can fall in the Center Of The Universe, they will be seen as vulnerable everywhere.

#11 BCFELLA on 11.05.08 at 2:42 pm

I belive the canadian banks have mortage backed securties. They tried to bundle them up and sell them when the U.S had some problems.
I would imagine there was not to many takers.

#12 aloha on 11.05.08 at 2:44 pm

I’m sick of hearing how “housing is a solid investment”. It shouldn’t be treated as an investment, and based on plunging prices in the rest of the world it isn’t that solid either. The securities industry is highly regulated as to misleading advertising or exaggerated claims yet the Real Estate association always proclaims that housing prices only go up.

#13 MikeB on 11.05.08 at 2:50 pm

BCFELLA… hear hear… overpriced is putting it mildly. Toronto is still nuts. At least in Vancouver you have an ocean and beautiful surroundings. What ya got here in Toronto??? Cold, hardly any summer, dark early at night.
Get up go to work…. come home in the dark… Why blow your brains out on a house. It is even more a risk now that they let the cat out the bag. It could stand another 15% drop to make at least realistic for anyone to buy . Honestly I don’t know why anyone would toil their whole life away for a house… a depreciating asset.
Just don’t get it.

#14 womp on 11.05.08 at 2:57 pm

I think all the real estate board presidents should get together and have a little whine and cheese party, maybe play some spin the bubble…er, bottle.

They could talk about how no one could have predicted this, how the price collapse is due to external factors and really has nothing to do with real estate, and how well Canada is insulated from housing bubbles.

Then they can all drink the kool aid.

#15 Rueyou on 11.05.08 at 2:59 pm

Anyone have sales figures/price reductions/thoughts for the Vaughan area?(just north of Toronto) I know this to be quite a pricey enclave where prices are not seeming to budge too much.

#16 So what on 11.05.08 at 3:03 pm

Up or down it totally depend on us buyers.
if we said no thank you that’s too much. Prices has to fall as long as the sellers must sell.
and anyway the buyers pool has almost dried up a long time ago and there is no fresh supply, so even if prices where fair, there is almost no more buyers.

#17 Greg on 11.05.08 at 3:05 pm

I hope all those people who said “Real Estate is always a good investment” will see this article.

#18 Nick on 11.05.08 at 3:18 pm

Hi Garth, do you have a projected release date for your book? I’m wondering if I should add it to my Christmas list.

January 2009. Delay Christmas. — Garth

#19 BBC on 11.05.08 at 3:23 pm

Timing is everything!

#20 Popping Bubbles on 11.05.08 at 3:24 pm

ARRRGH! Yet another citation of the stupid the dumbass IMF report (which used “expansion of credit” as one of the means to justify housing price increases… talk about circular).

MEANWHILE, according to the OECD, the ratio of housing price-to-rents in Canada is off the charts, up 90% from 1991 AND higher than any other country save for bubbly Spain. In other words, relative to renting, the cost of purchasing a home is way too high!

The OECD also shows that Canadian housing prices relative to incomes are over 30% higher than the long-term trends AND that our housing prices are substantially higer (relative to incomes) than those in the U.S. ever were.

For the data, see the “Housing” tab of the following spreadsheet:

http://www.oecd.org/dataoecd/6/5/2483894.xls

#21 dotava on 11.05.08 at 3:29 pm

#3 MikeB on 11.05.08 at 1:51 pm

No house (sup) 4 U MikeB. :-)

#22 dotava on 11.05.08 at 3:35 pm

#5 J Walker on 11.05.08 at 2:02 pm

Doesn’t look that U have to waste that much of your time. Beginning of next year will unfold many things starting with most likely devastating drop in sales during the Christmas rush.

#23 Marco on 11.05.08 at 3:39 pm

Does really economy growth translate to the growth of real income? The statistics for Toronto do not prove it, assuming we had some growth at all.

Ms O’Neill knows what is relevant, but because of the conflict of interest, shifts the focus slightly. Why didn’t she mention affordibility index in historical perspective. We have news about increased poverty, inflation, recession in Canada, … daily. Is it perhaps relevant?

Can we really have once in a generation RE boom, then once in a generation financial bust, and continue like nothing happen ?

How about mortgage conditions?

IS the rule “revert to the mean” still valid?

Cheers.

#24 squidly77 on 11.05.08 at 3:39 pm

mike b..i am an albertan during the eighties i went to toronto for work..both the city of toronto and her residents were great..it is a beautiful city

unfortunately toronto has been hijacked by CREA and there paying members and not unlike every other city there main goal was to drive house prices sky high

i am so sick and tired of anything or anybody involved in real estate.. they have eroded not only canadians lives but our brothers and sisters to the south

i am just sick and tired of there false and relentless statements and claims
i hope that all here will chase away any and all real estate bulls that post here

i have just had enough

#25 squidly77 on 11.05.08 at 3:44 pm

one more thing while i am on a rant
my christmas wish for anybody real estate is a
christmas card from revenue canada

#26 dotava on 11.05.08 at 3:46 pm

Garth,

By statistics that you presented looks that we have double speed on roller-coaster down than up – what bringing us to the point that all RE mess can be mostly clean after 3-4 years. Do you see anything similar in your cards or that is just my wishful thinking that crisis will not last as long as we ride into.

#27 Marcus Aurelius on 11.05.08 at 3:53 pm

MikeB and Reality Dan: I was so abused as a Toronto all-cash, pre-qualified “Buyer” in 2007 (even back in the day when lenders were dumber, money was easier, and purchasers could sell more quickly) that I simply hung up on the search. There were(are) too many crazy semi-coherent agents hectoring their ‘clients’ with their absurd and uneducated views on everything from macroeconomics to historical Toronto area data. Apart from a complete absence of ethics, these ‘professionals’ may as well have been taxi drivers, for all the value they brought to the deal table.

Once these folks are safely back home, or put their working papers from OREA back in the drawer, or are otherwise occupied exploring career options in Food Service, I’ll step back in. I think you are also right to ignore anything ‘Shameless Maureen’ O’Neill deigns to pronounce.

I’m going out in the New Year to restart a search in a ‘Buyer’s Market’. MikeB’s comments seem reasonable. The Toronto RE cabal has no pain threshold, and privately they are already crying like babies. My neighbour (a RE Executive) advised that the industry is now less opposed to presenting (and working vendors to accept) ‘conditional on financing’ and ‘conditional on selling my house’ Offers – like they did for most of the last 40 years, the bubble period excepted. (And it’s the law: agents must present a low-ball and/or a conditional offer if they are your Purchaser Agent, so don’t get put off. An agent cannot enforce the commission agreement if he/she breaches this fundamental license term and refuses to present any Offer you direct him/her to present, if you’ve signed a TREB Purchaser’s Agent form).

I would also add that these MLS listings where the price hasn’t moved in 6 or more months (or vendors have – incredibly – jacked the price by 10-20% since the meltdown began in earnest last Summer) are a waste of time. The vendor isn’t really motivated (yet), and is just playing games for a future sale closer to his unreasonable original list price. Garth’s theory is common-sense: the ones just hanging on by their fingernails are the vendors you want to spend time investigating. As the management/professional and general workforce reductions in the service sector-based GTA start to bite, natural forces will work on those who overpaid in 2005-7 especially.

Good hunting to trade-ups and renters both! 2010 may be a likely general capitulation point, but there are always Greater Fools in need of debt relief in the GTA detached housing market. Don’t let a ‘real estate professional’ ever talk down to your money.

#28 BCFELLA on 11.05.08 at 4:02 pm

Wait till spring when it is the busy time for houses to go on the market. LOOK OUT

#29 Marco on 11.05.08 at 4:21 pm

Toronto seen by an European immigrat in pictures: vast territory, a lot of driving, heavy traffic,houses-ugly, kitchy and cheap quality,quality of customer service plunging, relatively expensive, high taxes but long waiting for doctors,…,more and more services that used to be free are not any more such as TTC parking (soon), garbage collecting,…
On the positive side,… well,… winters are getting warmer.

#30 guava.ca on 11.05.08 at 4:26 pm

Here are some graphs for Toronto:

http://guava.ca

#31 y3maxx on 11.05.08 at 4:33 pm

Garth I do get credit for our new book.

Remember, I am the first one who said Ontario will become a welfare province thanks to it’s dying Manufacturing economy combined with Overpopulation.

Lets title it……….drum roll please……

“”Ontario, learn to b*tch and gripe just like Quebec & the Atlantic Provinces or go bankrupt.””

#32 GenXer on 11.05.08 at 4:36 pm

Markets are stabilizing, the US has a positive outlook to the future, LIBOR rates are normalizing and … Canada starts to feel the real estate crunch?!?

Garth – I’m guessing the next book is about the boomers and their impact on real estate. Something along the lines of – what happens when 40% of Canadian households, who are 55+, lose 40% of their retirement savings to a market collapse and must sell their real estate into a declining market?

I’m not a demographer – but c’mon people, you had to see this one coming… When 40% of a population starts to pull their pensions out at the same time, markets are going to fall. When they do, people pull their equity out of their homes.

Anyone want to speculate on the 6-12 month effect of the bailout packages? Will deflation filp to inflation and interest rate increases?

Down market + Boomer Retirements + Interest Rate Hike – 40 year mortages – 0% downs = ??

Looks like the price / earnings ration on housing is still way out of line. Thank goodness I have 30 years to save for my own retirement. I’m going to go buy a big mattress now…

FYI Garth – I’m not hostile to the boomers, I just wonder where their morality went after Woodstock. Maybe things like family dinners, hard work, environmentalism, respect for elders and religious devotion were ideals worth preserving. Word.

#33 Jeff Smith on 11.05.08 at 4:37 pm

Hahaha, listen to what the TREB realtywoman has to say “There’s no question that in Canada the economic fundamentals to support a healthy housing market remain in place.” LOFL

http://canadianpress.google.com/article/ALeqM5gdIrTI4zpNUF5m4c5D1YuCcI8QfQ

http://www.economicnews.ca/cepnews/wire/article/156271

http://www.theglobeandmail.com/servlet/story/RTGAM.20081105.WBmarkets20081105132502/WBStory/WBmarkets

http://network.nationalpost.com/np/blogs/toronto/archive/2008/11/05/toronto-real-estate-slide-continues.aspx

http://www.allheadlinenews.com/articles/7012922384

#34 Rick on 11.05.08 at 4:49 pm

Check out how the Globe and Mail republished the first article with a bit more spin to suit the advertisers.

http://www.reportonbusiness.com/servlet/story/RTGAM.20081105.whousing1105/BNStory/Business/home?cid=al_gam_mostview

A little calmer, an hour or so later. The first article got bumped to the sidelines and replaced by;

http://www.reportonbusiness.com/servlet/story/RTGAM.20081105.whomestaff1105/BNStory/Business/home

Is a “slump” better than a “plunge”? Personally, I would prefer the facts and let us decide. I thought only the Can West propagandist pulled this sh**!!!!

#35 islander on 11.05.08 at 4:59 pm

Here’s what people who are hiding in their parents’ basements don’t seem to get:

Realtors are salespeople.
Car dealers are salespeople.
The guy at Wood Grungy is a mutual fund salesperson.
The kid at Future Slop is a salesperson.
The woman at Sears is a salesperson.

Salespeople do not control prices. They sell stuff.

If you don’t like what they are selling, don’t buy it.

Blaming salespeople for prices or the state of the economy is pointing the finger in the wrong direction.

If you want to get angry at someone, get angry at politicians. POLITIC|IANS are giving your tax money to CMHC. POLITICIANS will bail out whichever Canadian bank eventually floats dead on the water. POLITICIANS are responsible for creating so much new money that whatever’s left of your RSP won’t be enough for food because bread will cost $27 a loaf.

Stop blaming salespeople who are trying to earn a living. Voting once every 18 months if a dog & pony show to keep sheeple from grabbing their pitchforks and hunting rifles.

POLITICIANS have ruined this country. Focus on the real douchebags.

#36 Downsized and Delighted on 11.05.08 at 5:00 pm

19 BBC” Timing is everything!”

Now that’s funny! (I assume you are referring to Garth launching a book in January!)

#37 DR on 11.05.08 at 5:05 pm

Garth:

So, 5,155 resales in October 2008, figures for this month not seen since 2001 some on the list say.

But this straight comparison is misleading since there are many more homes in the GTA in 2008 than there were in 2001. (Think of all the new 905 subdivisions and condos built since 2001).

So 5,155 sales in 2008 would represent a smaller percentage of the total housing market than in 2001.

So, my question is: are there any statistical indices/instruments which depict resale numbers as a % of the total number of residential housing units in a given area/year?

#38 bill on 11.05.08 at 5:11 pm

Does anyone know if there have ever been any successful class action law suits filed in the past against RE boards?

When one looks back upon all the patently misleading statements made by these folks in the past while, one can’t help but wonder if there will be accountability to come?

Any attorneys (or others) on this forum who might illuminate on this issue?

#39 Indicator on 11.05.08 at 5:11 pm

I look forward to your book. Will you have references to the Gold market. I don’t think anyone really know where this market is headed nor a baseline standard.

Absolutely. — Garth

#40 brazer on 11.05.08 at 5:16 pm

Canada’s housing market is cooling: CMHC
http://www.financialpost.com/news/story.html?id=920010

Cracks appearing in condo land
http://www.financialpost.com/news/story.html?id=917523

Canada’s housing market ‘tracking’ U.S. boom and bust
http://www.financialpost.com/news/story.html?id=914783

=========

sure glad my girlfriend and i sold our toronto condo back in the spring and are now renting.

this is going to get very very ugly….especially for those who thought that buying with zero or 5% down was a smart decision in this bubbled market.

#41 Canned Goods and Buckshot on 11.05.08 at 5:20 pm

#1 Westcoaster asks “Anything on … Vancouver/Victoria?” Check periodically at http://www.vreb.org/
for some Victoria stats. Usually they update the site close to the beginning of every month to reflect the month that just ended. They are really slow this month. Probably still trying to find some way to spin it.

#42 Expat in NC on 11.05.08 at 5:33 pm

Guess what they did over at the G&M website. Initially they had this article titled “Toronto home sales, prices plunge”

http://www.reportonbusiness.com/servlet/story/RTGAM.20081105.whousing1105/BNStory/Business/home?cid=al_gam_mostview

Then they cut off the comments to that and had this article titled “Toronto home sales, prices slump”

http://www.theglobeandmail.com/servlet/story/RTGAM.20081105.whomestaff1105/BNStory/Business

(hope I did the links okay).

Anyway, the new article seems to be “toned down”. Some suspect to appease some real estate advertising clients. Sad.

#43 smwhite on 11.05.08 at 5:47 pm

#31 y3maxx

Jim Flaherty announced that last year during one of his many “tiffs” with McGuinty, that’s long before your sorry ass showed up trolling this blog…

#44 Rob on 11.05.08 at 6:05 pm

#27 Marcus Aurelius

Great post Marcus – tho you were a little rude to taxi drivers by comparing them to RE agents. Many are, at least in Toronto, by far better educated]

#45 smwhite on 11.05.08 at 6:24 pm

#34 Islander,

Its now very apparent the conservatives were well aware of the state of housing and the upcoming downturn in the economy(Flaherty’s prediction of Ontario to be a have-not province), that’s why they pushed the button on the credit afterburner and moved the election to when it was.

As you have stated and I concur, majority of anger should be directed to CMHC and Harper/Flaherty, allowing the swap of Canadian T-bills for mortgage paper so the banks can fill their balance sheets is bull shit, 40 year mortgage is bullshit…

Let the banks suffer their consequences, the stronger and well managed institutions will survive and flourish and the weak and mis-managed will die off like they should. The same to the auto industry, no more handouts, I mean didn’t we get rid of the big cars and V8s once before in the 70’s, so the SUV and $140 a barrel of oil thing shouldn’t be a surprise to most.

You’ve defended yourself and your industry many a time on here and I do thank you for bringing your side of it to light, but you can’t be suprised of the anger directed to agents with a buyer beware attitude.

I understand that the majority of realtors aren’t economics majors and they receive statistics and talking points from their boards just like all sales based industries receive their propaganda from the head of their machines.

If you had been in the market for a home and turned to the bank for financial advice, they would have told you to buy, if you went to an agent, they would have told you to buy, if you opened a paper, it would have told you to buy… Even worse was buy you’d better buy now before you can’t afford it …my personal favorite!

Young people that hadn’t seen this type of economic environment before; and that had to use the 40 year mortgage vehicle have been let down by all the RE stakeholders and the system.

At some point somebody has to step up and say, we blew our forecasts, we didn’t want the party to end so we started getting creative!

Of course it falls back on the consumer’s shoulders.

The problem started when people in the know started presenting homes as investments and not as shelter…

#46 POL-CAN on 11.05.08 at 7:08 pm

# 30 guava.ca

Thanks! You just made my year :)

http://guava.ca

Now if only I could find any historical stats on the GTA by area I could do my own price analisys :(

One interesting thought on a comment above that the price fall so far seems to be steeper then the rise….
I commented on that a few posts back… The real decline started in August of this year, and before that the prices seemed to pretty much flat for months….

The last time we had a housing bubble burst was 89/90/91…. There was no internet, hence no mls, no blogs, and no people like Garth.

I think that by spring we will be down easily 30 % from peak so if you are going to buy now make sure you low ball by what you think the place will be worth 3 or 4 months from now. If the seller counters simply walk away. This might speed things up even more….

#47 POL-CAN on 11.05.08 at 7:10 pm

#27 Marcus Aurelius

Excellent thoughts :)

#48 squidly77 on 11.05.08 at 7:19 pm

islander i own my home
however i have kids that are renting..and trust me it was not easy preventing them from buying many a time i was a pretty unpopular guy with my better half..nuff about me

many are to blame for the coming mess
heres why i am sick of realtors and the REIC machine
they snort and self proclaim that they are professionals and are the only real estate experts worth listening to
yet they have just paid for a cheap course and given the title of realtor

they use fear and threatening tactics attempting to scare people into the market
they boast when refering to rising rents
they hoard as much information as possible
they make untrue and unsubstantiated claims such as we are running out of land (how stupid is that ?)
and they have been very loud and very obnoxious as an example think..vultur
i could go on and on but i think you get my point

as a note i will add that there probably are a lot of good ones out there
and islander you do realize that you are just a tool used by the banks to promote there buissiness
realtors are ones that fairly or unfairly basically get 100% of the blame when prices crash because they continue to say *prices will be up next year*
no sale = no food

#49 jose on 11.05.08 at 7:32 pm

check this site out:

http://pricedoutforever.com/

before you too get priced-out ;)

#50 brazer on 11.05.08 at 8:32 pm

“It is hard to make someone understand something, if his salary depends upon him not understanding it.”
– Al Gore (An inconvenient Truth)

maybe this applies to realtors too?

#51 JO on 11.05.08 at 8:50 pm

The cliff diving has started in TO. As the negative mood in the economy starts to take over an asset that is (was) priced for perfection, anyone who bought since 2004 or so will likely regret the day by the time this is over. We are in a deflation which can last however long..methinks at least anothe 18-24 months but it is also likely it will end in some sort of inflation. Gold ? A little as an insurance policy because anything can happen but i think it is more likely the shiney metal will go down to low 600’s beforw taking off to the moon. Several indicators such as EW and NeoWave and sentiment as well as deflation (destruction of credit and contraction of money and credit) favour lower gold in the next 1-2 years. The real issue will be how to protect capital against both nominall/stated losses and real purchasing power. If the October experience is repeated again, and I think it will in late Dec – Feb, the CND dollar could easily breach the 60’s in a big hurry (within 12 months). So it becomes a game of relative declines. I am looking forward to Garth’s new book. I am expecting a 30-40 % drop over the next 2-3 years with potential for more in the TO RE market. Cash is king for now. If the SP500 breaks 700 on panic, it may be a good point to start building long term equity positions for long term investors with a high risk tolerance. I am looking to short some some puts and calls after buying some shares to get in..we will get past this but it is going to get scary. You need to be ready to hold any asset bought in the next 3-4 years for at least 10 years and try to avoid debt.

It’s about time TO prices come down.For those who have been patient and contrarian (frugal!), spectacular buying opportunities await in the next 3-4 years.
JO

#52 David Miller's savy sex appeal on 11.05.08 at 9:09 pm

IMF were caught high, inhaling petro-dollar last year.

Won’t Toronto’s newest condos be the least desired in the down market? When there’s abundance you’d pick say sq footage/ceiling height over newness?

#53 wealthy renter on 11.05.08 at 9:13 pm

“I can say, as does POL-CAN and others, things are very different now than a year ago when you had to offer at a certain day and time and had to justify your offer. Kinda like the soup nazi in Seinfeld.”

David, for homes under 750K in Etobicoke, things are fundamentally different than the summer! At that time, some overpriced homes might have stayed on the market for 90 days, but they did clear. Even old and beaten “fix me up” homes were selling for top dollar. The house we kicked the tires on sold for 20K over list.

The change in the last few months has been stunning. There is still some strangeness in the West Toronto market. We are still seeing homes asking 50-100K more than last year. Of course, they are not moving.

Most of Etobicoke is not a beacon for jet-setter Bay Street types. When I look at the Stats Canada numbers for the area we want to live in, the house prices are freakishly out of line with family incomes.

Interesting Times

#54 wealthy renter on 11.05.08 at 9:15 pm

Oops, it is Mike B and not David

#55 Kelowna Gal on 11.05.08 at 9:21 pm

Garth,
Can you give us another hint about your book? What’s the title going to be????? I can’t wait. I have bought all your books and I’m so looking forward to reading your next one. Hopefully, you’ll have a few things to say about what is happening out here in the west especially in Kelowna. I think that we’ll keep renting a bit longer. Thanks again for your insight. Canada needs someone like you who’s not afraid to speak the truth.

#56 squidly77 on 11.05.08 at 9:49 pm

already buried

merrill lynch
wachovia
washington mutual
bear stearns
lehman bros
aig
country wide
freddie mac
fannie may
indymac
and thousands more

whos next..
general motors
cerberus
ford
and thousands more

trillions and trillions in stock market take downs
milions of americans in bankruptcy

what countries next..fill in the blanks
1..iceland
2..pakistan
3
4
5
fill in the blanks

this is the biggest crash that anyone still alive will ever see (unless your in your seventies)
perhaps the biggest crash of all time

this crash is in its infancy..there are years and years ahead
deleveraging all the companies from 40-1 back to 12-1
will wipe out hundreds of trillions

deleveraging consumers will also be huge
and while they are doing that the consumers wont be able to consume
causing more stock market losses

perhaps a title to consider might be

*the bubble that broke the world*

#57 Bottoms_Up on 11.05.08 at 10:31 pm

If:

“Consumer confidence is critical to the housing market”

is true, then real estate is not a good investment. It is a speculation. Don’t you love doublespeak?

Garth, love the statement on the picture up top “Giving you the (knife’s) edge”

#58 confused and a little crazed on 11.05.08 at 10:47 pm

Hi Squidly,

I agree for the most part this stock crash is beyond amazing but I still think Fannie mae and freddie will come back to some degree…simply because The gov’t will sell back it shares to the orig companies. Of copurse at a incredible loss to the tax payers. What was it $200 billion.

The gov’t won’t accept the possession of over 5 trillion dollars in mortgages. That an automatic increase of 60% debt. It around $11 trillion now.

So I think it will go up …a long time from now like 7 years…I think that is the duration of a recovery during recession in recovery 1994- 2000

But it probably be $10 as opposed to $70/ share …it’s true value as opposed to it’s spec/ deriv value.

Yea I did buy @ $1.20/ share but very little…ehh :)

#59 T.O. Girl on 11.05.08 at 10:51 pm

Wow you must be a desperate stupid greater fool to actually buy a home in toronto now, with house prices coming down at 5-10% a month. Anyone making an offer now should be bidding at least 30% lower and excepting nothing less!!wake up people youre making speculators and greedy sellers and banks RICH!!!! Stop working for them and work for yourselves!!!! nomore house rich and cash poor THE BOOM IS OVER!!!! Go rent save your money and if you are buying offer LOW!!! more job layoffs are coming tough times ahead Toronto will be hit hard!

#60 macksWebster on 11.05.08 at 11:26 pm

#50 JO

I am just ramping up on many of the Economy based sites like GF, TAE, and Mish’s and I love your posts.

My impression was that the USD will tank sometime not too far down the road and, by default the CDN$ would soar, and you seem to disagree. Do you think it will tank and then soar or just tank?

#61 Rick on 11.05.08 at 11:52 pm

#27 Marc
—-
I couldn’t agree more. I wish I was able to express myself as well as you do. Until then, I will continue to summerize with “Realturd.” On its own, it says it all.

#62 tom on 11.06.08 at 5:52 am

by summer 09, prices in Toronto will be 50% down from the peak in 07 and i expect them to fall another 20-30% thereafter. i’ve been saving for quite some time now and will buy that $1M home in Toronto for $250-300K within the next 18 months. happy days! =)

#63 Kevin Micallef on 11.06.08 at 10:07 am

I completely agree with everything you are saying about the housing market and finacial situation we are in.
I just have one question regarding Toronto’s housing sales decrease. How much can you attribiute to our Mayor’s great idea to add in a Toronto Land Transfer tax which now almost doubles how much a home buyer has to pay for Land Transfer Tax? His timing couldn’t have been worse!
This most certainly must be affecting Toronto sales even a little.

It make a bad situation worse, without a doubt. But look at 905 sales – also down sharply. Miller’s become a tax-loving myopic politician, but the forces sweeping us along are far more powerful. — Garth

#64 CinToronto on 11.06.08 at 1:55 pm

Islander: Your comparison of real estate agents with other types of salespersons is faulty. First of all, real estate agents are “agents,” a concept that has a distinct meaning in law. An agent is to represent a principal’s best interests at all times. The salespeople working at Future Shop are not my agents, and I would never confuse them as such. The only remotely relevant analogy is to mutual funds salespeople, and as others have pointed out, they are regulated much more strictly than is your profession.

#65 Bottoms_Up on 11.07.08 at 3:32 pm

Here, here, CinToronto.

I had a ‘sales agent’ at Best Buy show and explain to me 4 different cell phones/packages, and then he recommended THE CHEAPEST phone (a pay as you go) purely based on my needs. He obviously wasn’t receiving a commission and there was no pressure to buy.

How often does a realtor recommend the cheapest home to suit someone’s needs (seldom!)??? How often do they pressure buyers (often!)???

#66 marcus aurelius on 11.08.08 at 3:01 am

To Rob #43 – I too value and respect taxi drivers (and anyone else who doesn’t profess to sell audio gear, cars or real estate). I apologize for any implication that cabbies are to be lumped in with the likes of Maureen O’Neill. My point was that cabbies would actually add MORE value to a client than the lowest-common-denominator agent in Toronto. And they are indeed, on average, both better educated and speak better English than most of the agents I’ve had the displeasure to meet. My intent is never to offend anyone on this blog who isn’t: (a) a Greater Fool, or (b) sells real estate. (Leaving most of civil society in Canada – including hardworking lawyers, sex workers tax collectors and narcotics dealers – entirely safe from any inappropriate disrespect.