Last Summer we wrote a post pondering if the housing bubble was finally beginning to unwind and indicators were pointing towards it, but we had this to say: no one knows for sure. Anyone who claims to know is probably either a fool or trying to sell you something (a guy named Garth, perhaps?). This post is a follow up update to that original post.
The basic takeaway: we still don’t know. Prices have been adjusting downwards in multiple markets, but things are still very overpriced. So our advice is to be very very cautious.
As a recent post over at Better Dwelling has noted: Canadian prices are down significantly in Toronto since April 2017 (and Canada-wide since Toronto is such a large economic force), but up in some much smaller markets. The number of sales are also down significantly. These are market conditions that COULD be pointing to the end, but a reversal is, as always, still quite possible.
If you’re a buyer looking to buy the dip, we would strongly caution against it as it’s a situation where you are trying to “catch a falling knife”. Our recommendation would be to buy a house (when you need one) once the market has deeply corrected and once exuberance has been firmly replaced by fear.
Real Estate Agents and Brokers generally like to portray themselves as experts who are “on your side”. While you might find the occasional agent who is working in your best interests, we believe that most agents are in it to make money and little else. And as you will see, there is incredible bias in this department
Continue reading “The Hillarious Bias of Real Estate Brokers and Agents”
The Bank of Canada is in a very difficult position because of House Prices for a number of reasons. It is our current thesis that they are stuck between a rock and a hard place. The rock being the need to raise interest rates to combat inflation and a sinking Canadian dollar and the hard place being the massive housing bubble and huge levels of consumer debt in Canada. Some of these difficulties are also faced by central banks around the world and some are uniquely Canadian.
Continue reading “The Bank of Canada and the Housing Market: an Unenviable Position”
We’ve all seen the headlines (well, those of us who follow this sort of thing), is the Canadian housing bubble beginning to unwind? Prices of detached houses are substantially off from their peak in April in the GTA as well as other previously red-hot markets in Ontario. Worse still, sales volume is also considerably down. Economists from various real estate agencies (who some might label as shills) and many others who frankly have a ton of potential bias tell us that this is either an anomaly or the beginning of a soft landing.
So, is this the beginning of the end? Continue reading “Canadian Housing Bubble: Beginning of the End?”
There has been a lot written about the housing bubble, the average home price in Toronto and the rest of Canada. I thought it might be fun and useful to try and calculate the implied value of all residential real estate in Toronto. My methodology will only give a very rough estimate as there are a lot of unknowns due to unavailability of Statistics. I’ve used stats from Statistics Canada and from the Toronto Real Estate Board to calculate the following figures.
Detached Homes in Toronto = 820,895 X Average Selling Price of Detached homes $1,068,670 = $877,265,859,650
Townhouses in Toronto = 281,795 X Average Selling price $617,000 = $173,867,515,000
Semi Detached homes = 147,600 X Avg. Price $728,814 = $107,572,946,400
Condos/Apartments = 662,285 X Avg. Price of $442,598 = $293,126,016,430
So, the total “value” of all housing in Toronto is about $1.5 Trillion Dollars.
This figure approaches Canada’s entire GDP of 2.39 Trillion CAD. It is nearly 5 times Toronto’s GDP
It’s about half the market cap of the Toronto Stock Exchange at $2.78 trillion.