Feel free to share and to re-post the above info-graphic about condo bubble in Toronto. If you have any questions with regards to the stats just ask in the comments section below.
Sunday, 8 December 2013
Thursday, 5 December 2013
Just like in Toronto there was a housing bubble in Norway during the late '80s. In both cases property prices fell north of 30%. Fast forward to today, and once again a bubble has developed in both places.
As Norwegian real estate prices doubled over the past decade, many sounded the alarm bells. For instance IMF believed that the housing market in Norway was overvalued by 40% and both Roubini and Shiller labeled Norway a bubble. Most recently Nordea, the largest Nordic lender, forecasted a hard landing in Nordic country as it expects prices to fall between 15% to 20% over the next two years.
Is Norway special or are they just as delusional as Americans were back in 2004?
Robert Shiller explains:
Labels: global housing bubble
Wednesday, 4 December 2013
The Toronto housing bubble keeps on inflating!
Average home prices in the GTA rose by 11% in November 2013 as compared to a year earlier. Median price rose by 10.5%.
The average price of condo apartment was up by 10% in November 2013 compared to a year earlier.
MLS sales were up 10% compared to a year ago but down 10% compared to November 2011.
Labels: Toronto Monthly Stats
Tuesday, 3 December 2013
Royal Lepage says there is no condo bubble in Toronto - I say there is. In fact I believe there is a nation wide bubble in this country!
Royal LePage hired Will Dunning Inc. to produce the report called Sustainable Growth in Condominium Sector Supported by Market Trends and Demographics. In my view the report is a joke. Not only does it look like a sales pamphlet but it's also full of misinformation!
Let's start at the beginning.
Will Dunning says that "an essential element of a housing bubble is that demand becomes divorced from economic fundamentals and that has not occurred in the markets for condominiums".
Arguably, the most important factor underlying real estate evaluations is income. If both home prices and incomes went up fifty percent in a decade - there is no issue.
I would say that kind of growth is supported by fundamentals. Heck - even if incomes grew 20% and condo prices grew by 50%, with low interest rates, this would still be justified in my view.
But that is just not the case.
For instance, in Toronto condos rose in price by 55% between 2001 and 2011 (median condo price) when adjusted for inflation. During the same time span incomes had declined by 3%.
Mysteriously, the report - sponsored by a real estate firm - had no mention of this. In fact, Will Dunning Inc. did not even analyze the relationship between condo prices and incomes.
Instead the report focused on vacancy rates, demographics and price-to-rent ratio.
Monday, 2 December 2013
There is a reason why the subtitle of this blog says "Largest housing bubble in Canada... Except for Vancouver of course." You see in just a decade home prices in Vancouver have skyrocketed by almost half a million dollars while the average home price in Toronto rose by just over $200,000.
In Toronto (GTA), the 2001 average home price was $251,508. Ten years later, the average home price was $466,352.
But here's the interesting part.
When adjusted for inflation, the average home price in Toronto increased by $156,000 between 2001 and 2011. During the same time period real median incomes (adjusted for inflation) actually declined by $1,900 from $67,400 to $65,500. Bloody marvelous!
So whenever somebody tells you that home prices in this city rose because of rising wages you now know that they are full of sh*t.
Labels: canada housing bubble