Innovative Posted June 12, 2012 Share Posted June 12, 2012 http://updatednews.ca/2012/06/11/condo-rich-toronto-vancouver-face-15-price-decline/ Condo-Rich Toronto, Vancouver Face 15% Price Decline The housing markets in Toronto and Vancouver are likely to pull back by about 15 per cent in the next two to three years, TD Bank economists Derek Burleton and Leslie Preston said in a report published Monday. Canada’s two largest housing markets draw a disproportionate amount of attention, and while they have numerous differences, they share a predilection for condominiums, the authors said. “The most striking similarity is the fact that both markets have been driven largely by condo activity,” the bank wrote. Condo boom Over the past decade, almost three-quarters of new housing units in Vancouver have been condos. That percentage drops slightly to almost two-thirds in Toronto, but both are still well above the ratios in other Canadian markets. Over the past 12 months, however, the figure has increased to 80 per cent in Vancouver and 74 per cent in Toronto. That’s a high ratio, and makes the real estate markets in both cities vulnerable to any sort of slowdown in the economy. “There have been growing signs that the markets have been tilting towards excess supply of new multiples,” the bank said. Indeed, condo prices in both cities have shown signs of slowing down much more than the price of single-family homes, the usual benchmark of a market’s overall health. “In fact, looking at the trend in condo prices, you can see there has been essentially no increase in prices since the federal government first began tightening mortgage rules in mid-2008,” the economists said. The bank notes that despite the recent boom, Toronto’s real estate market didn’t fare as well as some in Canada before the recession. Home prices increased by 90 per cent in Vancouver between 2002 and 2007, but only 40 per cent in Toronto. So part of Toronto’s strong price gains in recent years are simply the city playing catch-up to elsewhere in the country, the report said. In terms of condos specifically, average prices have flipped from double-digit annual gains to declines within the past 18 months in Vancouver. Toronto is still posting five per cent annualized gains in condo prices, but Canada’s largest city is vulnerable to rising interest rates eating into demand. In a time when more condos than ever are coming to market, a dropoff in demand could be painful for prices. Oversupply fears “While Vancouver’s condo market appears to be faced with a larger current challenge, it is likely only a matter of time before Toronto catches up, as the busy pipeline of projects underway are completed,” the bank said. Based on the first quarter’s pace of new condo sales, there is seven quarters worth of supply under construction in Toronto at the moment, the report noted. “Expansions in both city markets are getting long in the tooth.” That’s why the bank says it expects a 15 per cent correction in prices over the next two to three years, with the most significant catalyst likely to occur on the demand side. Still, the bank cautions, any pullback is likely to be modest and manageable. “This correction is likely to be reasonably gradual, as neither market in our view is showing bubble-like symptoms.” (CBC News) Link to comment Share on other sites More sharing options...
Grapefruits Posted June 12, 2012 Share Posted June 12, 2012 Don't buy in Vancouver, plain and simple. Do yourself a favor and go buy a house out in the burbs where the property values are going to go up, and don't mortgage the f out of yourself. Link to comment Share on other sites More sharing options...
Vanuck14 Posted June 12, 2012 Share Posted June 12, 2012 I stopped paying attention to these reports like 5 years ago. Link to comment Share on other sites More sharing options...
Innovative Posted June 12, 2012 Author Share Posted June 12, 2012 Don't buy in Vancouver, plain and simple. Do yourself a favor and go buy a house out in the burbs where the property values are going to go up, and don't mortgage the f out of yourself. Link to comment Share on other sites More sharing options...
Jägermeister Posted June 12, 2012 Share Posted June 12, 2012 Doesn't matter much to me. As a student looking at 6 or 7 more years of University I'll be too poor to rent myself out a storage unit to live in when its all said and done. Link to comment Share on other sites More sharing options...
Truculence Posted June 12, 2012 Share Posted June 12, 2012 Quick, up the immigration rate! Link to comment Share on other sites More sharing options...
Armada Posted June 12, 2012 Share Posted June 12, 2012 Thank god. By the time I need to buy my 1st place it'll be cheaper. Link to comment Share on other sites More sharing options...
Grapefruits Posted June 12, 2012 Share Posted June 12, 2012 That's a lot easier said then done especially when you work near the city and all your family/friends are here. I definitely would do that if I had family/friends in the burbs but it'll be tough driving to work and it would be even tougher to miss out on events with the people you most care about. Link to comment Share on other sites More sharing options...
Innovative Posted June 12, 2012 Author Share Posted June 12, 2012 In reality, its not that far if you really want to own your own place. Why would you have to miss out on events? I can get dt in roughly 30 minutes. Not to mention those friends would probably gladly come out to the burbs for the chance to get away from the "city" You make it sound like its hours away, when in reality it's no different hen trying to cross town Link to comment Share on other sites More sharing options...
MillerGenuineDraft Posted June 12, 2012 Share Posted June 12, 2012 I'm still new with this whole market thing, especially Vancouver's housing market. Exactly why is it a bad thing that the market is decreasing? Doesn't this mean more people will be compelled into buying? Link to comment Share on other sites More sharing options...
I♥Wellwood Posted June 12, 2012 Share Posted June 12, 2012 Vancouver and Toronto home prices will probably experience a relatively mild downturn — of about 15 per cent — in two to three years, but not the dramatic drop that hit the United States a few years ago, according to a report by the Toronto-Dominion banking group. TD said Monday the 15 per cent decline in Canada's two most expensive cities is likely in a few years but it will be gradual, rather than the sudden drop of 30 per cent seen in the U.S. real estate market after it peaked in late 2007. The bank's analysis is consistent with other warnings that Vancouver and Toronto real estate is generally overpriced, but supported by low interest rates and a stable economy. That's not likely to change this year unless there's a major economic shock from outside the country, the TD report said. Link to comment Share on other sites More sharing options...
Buggernut Posted June 12, 2012 Share Posted June 12, 2012 'Tis about time the supply caught up to the demand and the market fixed itself. "Oversupply" my ass. Only if you're a developer or seller. Link to comment Share on other sites More sharing options...
Buggernut Posted June 12, 2012 Share Posted June 12, 2012 Don't buy in Vancouver, plain and simple. Do yourself a favor and go buy a house out in the burbs where the property values are going to go up, and don't mortgage the f out of yourself. Link to comment Share on other sites More sharing options...
Electro Rock Posted June 12, 2012 Share Posted June 12, 2012 Don't buy in Vancouver, plain and simple. Do yourself a favor and go buy a house out in the burbs where the property values are going to go up, and don't mortgage the f out of yourself. Link to comment Share on other sites More sharing options...
Pears Posted June 12, 2012 Share Posted June 12, 2012 Send Luongo to Toronto. I'm sure the market'll skyrocket if that happened Link to comment Share on other sites More sharing options...
Electro Rock Posted June 12, 2012 Share Posted June 12, 2012 Oh and forgot to mention that property prices in the burbs seem to be effected for more by a downturn than in the core, I think prices have been down or flat in most parts of the burbs for years now, wait until the Boomers really start downsizing. Another thing is that there's been a 10-15% drop in Vancouver already, back in 2009, and it didn't last. Link to comment Share on other sites More sharing options...
Shift-4 Posted June 12, 2012 Share Posted June 12, 2012 So from really freakin' ridiculously expensive to really ridiculously expensive? That should change everything. Link to comment Share on other sites More sharing options...
Mr. Ambien Posted June 12, 2012 Share Posted June 12, 2012 Send Luongo to Toronto. I'm sure the market'll skyrocket if that happened Link to comment Share on other sites More sharing options...
taxi Posted June 12, 2012 Share Posted June 12, 2012 Oh and forgot to mention that property prices in the burbs seem to be effected for more by a downturn than in the core, I think prices have been down or flat in most parts of the burbs for years now, wait until the Boomers really start downsizing. Another thing is that there's been a 10-15% drop in Vancouver already, back in 2009, and it didn't last. Link to comment Share on other sites More sharing options...
Electro Rock Posted June 12, 2012 Share Posted June 12, 2012 What *will* sink prices here is when interest rates inevitably rise, since so many folks are already mortgaged to the hilt, and/or when law enforcement starts going after all the dirty money that's tied up in our local economy. Link to comment Share on other sites More sharing options...
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