Garth Turner - Real Estate in Canada

[Peregrine]

 

A house 3 doors down from mine just sold for 1.15 M.  I was shocked.  The asking was 998 k.  Its a 3 bedroom bungalow and hadn't been updated in a couple of decades.  I'd sell our house but move where?

My wife wouldn't allow us to rent... soooo. 

 

Comparatively my place at these prices would sell for 1.4 to 1.5 M. 

 

There are a few curious things going on in Toronto.

 

One is that the supply of detached homes for sale is low.  People aren't selling.  Why? 

 

A friend of mine who does a bit of conservative investing theorizes that in the GTA there is no more room for new detached homes.  He is probably right since there is simply not any space to build.  There has to be an upper limit to prices. 

 

 

You just explained it yourself. It's nice and all that people's homes have increased so much in value, but if they sell they'll still need a place to live in and they'll still need to pay high prices for places in similar locales. And for most, rent isn't a substitute and they don't look at their primary residences as assets that they can flip for profits.

 

The lack of supply in the city area for detached homes is definitely an issue. And that dearth of supply has in turn strongly affected the markets for townhouses and condos. It's the nature of densification.

[Peregrine]

As mentioned before, "global" cities everywhere are facing rapidly rising real estate prices. I don't think that price inflation is unique to Toronto and Vancouver alone, although recent price increases have been particularly sharp.

 

As the following NYT article indicates, supply has simply not been able to keep up with demand in places like LA, San Fran and even Boston:

 

https://www.nytimes.com/2017/02/10/upshot/popping-the-housing-bubbles-in-the-american-mind.html

 

The other question is, how do you distinguish real demand, as in families living in houses, from speculative demand, buying to flip?

 

 

There really is no clear way to distinguish that, but I would argue that speculation in the Toronto market is way less than what many perceive it to be.

 

Home sales activity isn’t all that much above its 10-year average and actually pretty low compared to the demand that we’re seeing. And the number of active listings is at historic lows. If speculation is indeed rampant and driving market mania, you would see substantial transaction volumes and listings – but the data doesn’t bear that out. 

 

[rb]

A house 3 doors down from mine just sold for 1.15 M.  I was shocked.  The asking was 998 k.  Its a 3 bedroom bungalow and hadn't been updated in a couple of decades.  I'd sell our house but move where?

My wife wouldn't allow us to rent... soooo. 

 

Comparatively my place at these prices would sell for 1.4 to 1.5 M. 

 

There are a few curious things going on in Toronto.

 

One is that the supply of detached homes for sale is low.  People aren't selling.  Why? 

 

A friend of mine who does a bit of conservative investing theorizes that in the GTA there is no more room for new detached homes.  He is probably right since there is simply not any space to build.  There has to be an upper limit to prices. 

 

Another friend just sold a house in Pickering (East side of the GTA) for 800 k.  He paid 330 k for it about 4 years ago, and spent 100 k upgrading it - doing the work himself. 

 

I dont know what this all means.  Even a 30 or 40% correction only takes us back to 3 years ago.  This thread was active then. 

 

All I know is that when I do net worth calculations I discount the house by about 40% and remove the transaction fees.  Safer to know where we stand in tue event of a correction.

Large price movement does discourage listings to some extent for normal people. Last month there was a price movement of 6%. To take your example: Since your wife won't agree to renting to get another house, if you sell yours and then buy another one you're out 90k. So why would you do that especially if there's nothing wrong with your house. I am confident that normal folk are afraid of getting screwed over in a market like this so they just sit on their hands instead. On the other hand the number of transactions is up 17% YoY. So there are plenty of listing - as you know for a transaction a buyer and a seller are required.

 

The other point is regarding all the talk around shortage of detached homes. Maybe you can't build any more detached homes in Toronto proper. But I'm not sure there's a shortage. If a shortage of detached homes was a problem what I'd expect to see is prices increases for detached homes outpacing townhouses and semis. Also I'd expect to see price increases for detached homes in Toronto proper outpacing prices for detached homes in places like Milton and Newmarket where there's room to build. However that's not what's been going on. Prices on the outskirts of Toronto have kept pace with Toronto proper and prices for towns and semis have outperformed detached.

[Liberty]

When prices go up 33% in a year, it totally discourages sellers with a different kind of FOMO. Those who considered selling are thinking, if I just wait a bit more, I'll make hundreds of thousands of dollars more of this free money, everybody tries to time the peak, that's why people weren't selling their Nortel stock that had gone up hundreds of percents in a short period of time.

[Guest 50centdollars]

From Douglas Porter's morning note:

 

Having dispensed with the formalities, let’s delve into the real story, which is on a

finer regional level. Almost the entire province of Ontario’s housing market is

now on fire, while most of the rest of the country wonders what all the fuss is

about. Across Ontario, the inventory of homes for sale fell to a record low of 1.5

months’ at the end of March. Of the 8 cities reporting price gains of 20% y/y or more,

fully 7 of them were in Ontario (Victoria is the eighth). Many talk about the lack of

supply and land constraints driving prices, but can that explain why places like

Windsor (+21% y/y), London (21.5%), Kitchener-Waterloo (+32.4%), St. Catharines

(+39.7%), and Thunder Bay (+29.0%) are all seeing prices go vertical? There are lots

of open spaces around London, for example.

[dyow]

As mentioned before, "global" cities everywhere are facing rapidly rising real estate prices. I don't think that price inflation is unique to Toronto and Vancouver alone, although recent price increases have been particularly sharp.

 

As the following NYT article indicates, supply has simply not been able to keep up with demand in places like LA, San Fran and even Boston:

 

https://www.nytimes.com/2017/02/10/upshot/popping-the-housing-bubbles-in-the-american-mind.html

 

The other question is, how do you distinguish real demand, as in families living in houses, from speculative demand, buying to flip?

 

 

There really is no clear way to distinguish that, but I would argue that speculation in the Toronto market is way less than what many perceive it to be.

 

Home sales activity isn’t all that much above its 10-year average and actually pretty low compared to the demand that we’re seeing. And the number of active listings is at historic lows. If speculation is indeed rampant and driving market mania, you would see substantial transaction volumes and listings – but the data doesn’t bear that out.

 

House prices in Toronto are going up bc of speculation.

 

I look at this very simply.  Too many morons are feeling wealthy bc their house prices went up.  There is no free lunch though. 

 

Canadians are waaaaaaaaay more sheep like than americans (especially toronto and vancouver), they are followers, when housing turns its gonna turn for a loooooong time.         

 

If you own a house now, and you have the option, you should sell and rent.  It doesn't matter if house prices double from here.  Sell early (but nobody ever does, which is why nobody makes me money from speculation - they keep speculating until it is too late).

 

 

[Peregrine]

From Douglas Porter's morning note:

 

Having dispensed with the formalities, let’s delve into the real story, which is on a

finer regional level. Almost the entire province of Ontario’s housing market is

now on fire, while most of the rest of the country wonders what all the fuss is

about. Across Ontario, the inventory of homes for sale fell to a record low of 1.5

months’ at the end of March. Of the 8 cities reporting price gains of 20% y/y or more,

fully 7 of them were in Ontario (Victoria is the eighth). Many talk about the lack of

supply and land constraints driving prices, but can that explain why places like

Windsor (+21% y/y), London (21.5%), Kitchener-Waterloo (+32.4%), St. Catharines

(+39.7%), and Thunder Bay (+29.0%) are all seeing prices go vertical? There are lots

of open spaces around London, for example.

 

There are spill-over effects on nearby towns with populations of between 100,000-300,000 when their neighboring city with over 6.5 million inhabitants see detached prices rise by so much. Just a small migration of people priced out of the GTA or selling out of their homes in the GTA and relocating elsewhere will have outsized impact on smaller towns.

[rb]

From Douglas Porter's morning note:

 

Having dispensed with the formalities, let’s delve into the real story, which is on a

finer regional level. Almost the entire province of Ontario’s housing market is

now on fire, while most of the rest of the country wonders what all the fuss is

about. Across Ontario, the inventory of homes for sale fell to a record low of 1.5

months’ at the end of March. Of the 8 cities reporting price gains of 20% y/y or more,

fully 7 of them were in Ontario (Victoria is the eighth). Many talk about the lack of

supply and land constraints driving prices, but can that explain why places like

Windsor (+21% y/y), London (21.5%), Kitchener-Waterloo (+32.4%), St. Catharines

(+39.7%), and Thunder Bay (+29.0%) are all seeing prices go vertical? There are lots

of open spaces around London, for example.

 

There are spill-over effects on nearby towns with populations of between 100,000-300,000 when their neighboring city with over 6.5 million inhabitants see detached prices rise by so much. Just a small migration of people priced out of the GTA or selling out of their homes in the GTA and relocating elsewhere will have outsized impact on smaller towns.

They're migrating to London, Windsor and Thunder Bay?

[Peregrine]

From Douglas Porter's morning note:

 

Having dispensed with the formalities, let’s delve into the real story, which is on a

finer regional level. Almost the entire province of Ontario’s housing market is

now on fire, while most of the rest of the country wonders what all the fuss is

about. Across Ontario, the inventory of homes for sale fell to a record low of 1.5

months’ at the end of March. Of the 8 cities reporting price gains of 20% y/y or more,

fully 7 of them were in Ontario (Victoria is the eighth). Many talk about the lack of

supply and land constraints driving prices, but can that explain why places like

Windsor (+21% y/y), London (21.5%), Kitchener-Waterloo (+32.4%), St. Catharines

(+39.7%), and Thunder Bay (+29.0%) are all seeing prices go vertical? There are lots

of open spaces around London, for example.

 

There are spill-over effects on nearby towns with populations of between 100,000-300,000 when their neighboring city with over 6.5 million inhabitants see detached prices rise by so much. Just a small migration of people priced out of the GTA or selling out of their homes in the GTA and relocating elsewhere will have outsized impact on smaller towns.

They're migrating to London, Windsor and Thunder Bay?

 

I think a lot of retired people are as well as younger people who find the cost of living in Toronto too much to bear.

[DTEJD1997]

From Douglas Porter's morning note:

 

Having dispensed with the formalities, let’s delve into the real story, which is on a

finer regional level. Almost the entire province of Ontario’s housing market is

now on fire, while most of the rest of the country wonders what all the fuss is

about. Across Ontario, the inventory of homes for sale fell to a record low of 1.5

months’ at the end of March. Of the 8 cities reporting price gains of 20% y/y or more,

fully 7 of them were in Ontario (Victoria is the eighth). Many talk about the lack of

supply and land constraints driving prices, but can that explain why places like

Windsor (+21% y/y), London (21.5%), Kitchener-Waterloo (+32.4%), St. Catharines

(+39.7%), and Thunder Bay (+29.0%) are all seeing prices go vertical? There are lots

of open spaces around London, for example.

 

There are spill-over effects on nearby towns with populations of between 100,000-300,000 when their neighboring city with over 6.5 million inhabitants see detached prices rise by so much. Just a small migration of people priced out of the GTA or selling out of their homes in the GTA and relocating elsewhere will have outsized impact on smaller towns.

They're migrating to London, Windsor and Thunder Bay?

 

Hey all:

 

I know many Canadians.  Of the ones I know, they live(d) in Windsor.  A lot of youn(ish) folks in Windsor try to come to the USA.  A lot try to work in the Detroit area because of the economic opportunities available to them in the USA.

 

They explain to me that if you are older, or well established, Canada is a great place to be...but if you are young, and not connected, it is difficult.  At least this is in the Windsor area.

 

I always found this to be very odd...

[Guest 50centdollars]

From Douglas Porter's morning note:

 

Having dispensed with the formalities, let’s delve into the real story, which is on a

finer regional level. Almost the entire province of Ontario’s housing market is

now on fire, while most of the rest of the country wonders what all the fuss is

about. Across Ontario, the inventory of homes for sale fell to a record low of 1.5

months’ at the end of March. Of the 8 cities reporting price gains of 20% y/y or more,

fully 7 of them were in Ontario (Victoria is the eighth). Many talk about the lack of

supply and land constraints driving prices, but can that explain why places like

Windsor (+21% y/y), London (21.5%), Kitchener-Waterloo (+32.4%), St. Catharines

(+39.7%), and Thunder Bay (+29.0%) are all seeing prices go vertical? There are lots

of open spaces around London, for example.

 

There are spill-over effects on nearby towns with populations of between 100,000-300,000 when their neighboring city with over 6.5 million inhabitants see detached prices rise by so much. Just a small migration of people priced out of the GTA or selling out of their homes in the GTA and relocating elsewhere will have outsized impact on smaller towns.

They're migrating to London, Windsor and Thunder Bay?

 

I think a lot of retired people are as well as younger people who find the cost of living in Toronto too much to bear.

 

IF people from Toronto are moving to Thunder Bay, their population should be increasing substantially if prices are rising 30%.

 

Meanwhile, if you look at the data, the population has declined by 0.4% the past 5 years. How do you explain that?

 

https://www.tbnewswatch.com/local-news/thunder-bays-experiencing-low-population-growth-531010

 

 

[rb]

Hey all:

 

I know many Canadians.  Of the ones I know, they live(d) in Windsor.  A lot of youn(ish) folks in Windsor try to come to the USA.  A lot try to work in the Detroit area because of the economic opportunities available to them in the USA.

 

They explain to me that if you are older, or well established, Canada is a great place to be...but if you are young, and not connected, it is difficult.  At least this is in the Windsor area.

 

I always found this to be very odd...

Let me put it this way: While Toronto may be our version of New York City, Windsor is our version of Detroit. They're pretty much screwed. Add on top of that that you have the same youth underemployment problem that you have in the US. Add on top of that that while 08/09 wasn't as bad up here as it was in the US the recovery has been much weaker as well especially when you take out all the housing nonsense. Put all of those together and you're starting to get the picture.

[gurpaul88]

A lot of people have been commuting far distances because they are priced out of the GTA. A lot people have also bought houses far out, rent in Toronto for work and go home on weekends.

[Peregrine]

From Douglas Porter's morning note:

 

Having dispensed with the formalities, let’s delve into the real story, which is on a

finer regional level. Almost the entire province of Ontario’s housing market is

now on fire, while most of the rest of the country wonders what all the fuss is

about. Across Ontario, the inventory of homes for sale fell to a record low of 1.5

months’ at the end of March. Of the 8 cities reporting price gains of 20% y/y or more,

fully 7 of them were in Ontario (Victoria is the eighth). Many talk about the lack of

supply and land constraints driving prices, but can that explain why places like

Windsor (+21% y/y), London (21.5%), Kitchener-Waterloo (+32.4%), St. Catharines

(+39.7%), and Thunder Bay (+29.0%) are all seeing prices go vertical? There are lots

of open spaces around London, for example.

 

There are spill-over effects on nearby towns with populations of between 100,000-300,000 when their neighboring city with over 6.5 million inhabitants see detached prices rise by so much. Just a small migration of people priced out of the GTA or selling out of their homes in the GTA and relocating elsewhere will have outsized impact on smaller towns.

They're migrating to London, Windsor and Thunder Bay?

 

I think a lot of retired people are as well as younger people who find the cost of living in Toronto too much to bear.

 

IF people from Toronto are moving to Thunder Bay, their population should be increasing substantially if prices are rising 30%.

 

Meanwhile, if you look at the data, the population has declined by 0.4% the past 5 years. How do you explain that?

 

https://www.tbnewswatch.com/local-news/thunder-bays-experiencing-low-population-growth-531010

 

5-Year (2011-2016) population growth rates:

 

London: 4%

Kitchener-Cambridge-Waterloo: 6%

Barrie: 5%

Toronto: 6%

Thunder-Bay: 0%

 

But anyway, that’s beside the point. If you’re incoming migration is quite a bit wealthier than the present population, it will affect housing prices.

 

[rb]

Suppose you are correct. Then why aren't they building houses over there to meet demand? Is there a shortage of land in Thunder Bay?

[Peregrine]

Suppose you are correct. Then why aren't they building houses over there to meet demand? Is there a shortage of land in Thunder Bay?

 

I don’t know much about the situation elsewhere so I can only venture a guess. In general, I think housing supply is fairly inelastic in the short run. Not only does it take time to build them but it also takes time to get the requisite permitting, the development approvals, etc. Plus, manufacturing completely new development on new land requires new infrastructure as well and that takes time.

[cwericb]

For years I have said that there cannot be such a diversity of property values in one country. I live in a place where our housing prices are reasonable and downright cheap in comparison to TO or Vancouver. However what we are finding now is that people from those cities are beginning to understand that a lot of people no longer have to live close to the center of a large city so long as they have decent cell phone and internet service.

 

We live in one of the top tourist destinations in the world. We are within 2 hours by air from New York or Toronto. We have some of the best golf courses in Canada. We have a very low crime rate. We have some of the world’s best beaches and a decent education system. Our biggest industries range from tech, bio-science and aerospace to basic industries like farming and fishing. Much of our area is serviced by fiber-op and you are never far from a cell phone tower.

 

You can purchase a relatively new 4,000 sq ft waterfront home in an upscale subdivision on one acre of land within 10 minutes of the centre of the city for less than a million bucks. Move a 20 or 30 minutes out and you can have a 10 year old 2,000 sq ft, 4 bedroom waterfront home in a prime area for $300k.

 

However, people have finally realized this and we are experiencing a major increase in immigration from the rest of Canada as well as internationally, especially from China where money seems to be inexhaustible.

 

Given our present housing prices, even if the Canadian market was to collapse our prices here would likely to continue to increase. There is a lot of comfort in that, and in this discussion people seem to forget a basic fact. In the 1950's the world population was 2 billion people. Today it is approaching 8 billion and rising rapidly. People have to live somewhere and for many reasons Canada is exactly where a lot of people want to live.

 

 

 

[Liberty]

All the rationalizations for current RE prices in Toronto will be interesting to revisit in the future.

 

Toronto had more cranes than any other city in North America (in fact, I think I remember that at one point it had more cranes than many other big cities combined), house prices recently went up by 33% from an already very elevated level, everybody's obsessed with real estate, there are bidding wars for million-dollar decrepit old shacks and sellers refuse  to have inspections done... There's nothing fundamental about the situation, it's animal spirits. When it corrects, it'll overshoot in the other direction, as it usually does when things get this crazy.

[Peregrine]

All the rationalizations for current RE prices in Toronto will be interesting to revisit in the future.

 

Toronto had more cranes than any other city in North America (in fact, I think I remember that at one point it had more cranes than many other big cities combined), house prices recently went up by 33% from an already very elevated level, everybody's obsessed with real estate, there are bidding wars for million-dollar decrepit old shacks and sellers refuse  to have inspections done... There's nothing fundamental about the situation, it's animal spirits. When it corrects, it'll overshoot in the other direction, as it usually does when things get this crazy.

 

The cranes that you refer to are building condos and there aren't many that are saying that there's a supply concern with condos - though listings there have also tightened. It's single detached homes that are now increasingly uncommon and whose prices have risen 33%. Condo prices haven't risen near that much.

[Liberty]

 

Average detached price in the City of Toronto was $1,561,780 in March 2017.

Average semi-detached price in 416 was $1,089,605.

Average town house price in 416 was $761,128.

Average condo price in 416 was $550,299.

 

Avg condo price in 416 in September 2015 (not that long ago, just 1 year and 7 months) was $418,603, so that's an increase of 31.5% since. The only way that can be considered tame is by comparing it to houses on Toronto...

 

The median hourly wage for city residents remained unchanged in February 2017; it is slightly higher than the 2015 annual average ($21.77).

 

https://www1.toronto.ca/City%20Of%20Toronto/Economic%20Development%20&%20Culture/Business%20Pages/Reports%20&%20Data%20Centre/Economic%20Bulletin/Toronto-Economic-Bulletin_March-2017.pdf

[Guest 50centdollars]

From Douglas Porter's morning note:

 

Having dispensed with the formalities, let’s delve into the real story, which is on a

finer regional level. Almost the entire province of Ontario’s housing market is

now on fire, while most of the rest of the country wonders what all the fuss is

about. Across Ontario, the inventory of homes for sale fell to a record low of 1.5

months’ at the end of March. Of the 8 cities reporting price gains of 20% y/y or more,

fully 7 of them were in Ontario (Victoria is the eighth). Many talk about the lack of

supply and land constraints driving prices, but can that explain why places like

Windsor (+21% y/y), London (21.5%), Kitchener-Waterloo (+32.4%), St. Catharines

(+39.7%), and Thunder Bay (+29.0%) are all seeing prices go vertical? There are lots

of open spaces around London, for example.

 

There are spill-over effects on nearby towns with populations of between 100,000-300,000 when their neighboring city with over 6.5 million inhabitants see detached prices rise by so much. Just a small migration of people priced out of the GTA or selling out of their homes in the GTA and relocating elsewhere will have outsized impact on smaller towns.

They're migrating to London, Windsor and Thunder Bay?

 

I think a lot of retired people are as well as younger people who find the cost of living in Toronto too much to bear.

 

IF people from Toronto are moving to Thunder Bay, their population should be increasing substantially if prices are rising 30%.

 

Meanwhile, if you look at the data, the population has declined by 0.4% the past 5 years. How do you explain that?

 

https://www.tbnewswatch.com/local-news/thunder-bays-experiencing-low-population-growth-531010

 

5-Year (2011-2016) population growth rates:

 

London: 4%

Kitchener-Cambridge-Waterloo: 6%

Barrie: 5%

Toronto: 6%

Thunder-Bay: 0%

 

But anyway, that’s beside the point. If you’re incoming migration is quite a bit wealthier than the present population, it will affect housing prices.

 

But if population growth is 0% who are the wealthy people migrating there driving prices up 30%? I dont understand the logic.

[rb]

All the rationalizations for current RE prices in Toronto will be interesting to revisit in the future.

 

Toronto had more cranes than any other city in North America (in fact, I think I remember that at one point it had more cranes than many other big cities combined), house prices recently went up by 33% from an already very elevated level, everybody's obsessed with real estate, there are bidding wars for million-dollar decrepit old shacks and sellers refuse  to have inspections done... There's nothing fundamental about the situation, it's animal spirits. When it corrects, it'll overshoot in the other direction, as it usually does when things get this crazy.

 

The cranes that you refer to are building condos and there aren't many that are saying that there's a supply concern with condos - though listings there have also tightened. It's single detached homes that are now increasingly uncommon and whose prices have risen 33%. Condo prices have risen near that much.

From CREA stats: GTA Condos 29% YoY. GTA single family 30% YoY.

 

Tell me more about supply.

[Peregrine]

From Douglas Porter's morning note:

 

Having dispensed with the formalities, let’s delve into the real story, which is on a

finer regional level. Almost the entire province of Ontario’s housing market is

now on fire, while most of the rest of the country wonders what all the fuss is

about. Across Ontario, the inventory of homes for sale fell to a record low of 1.5

months’ at the end of March. Of the 8 cities reporting price gains of 20% y/y or more,

fully 7 of them were in Ontario (Victoria is the eighth). Many talk about the lack of

supply and land constraints driving prices, but can that explain why places like

Windsor (+21% y/y), London (21.5%), Kitchener-Waterloo (+32.4%), St. Catharines

(+39.7%), and Thunder Bay (+29.0%) are all seeing prices go vertical? There are lots

of open spaces around London, for example.

 

There are spill-over effects on nearby towns with populations of between 100,000-300,000 when their neighboring city with over 6.5 million inhabitants see detached prices rise by so much. Just a small migration of people priced out of the GTA or selling out of their homes in the GTA and relocating elsewhere will have outsized impact on smaller towns.

They're migrating to London, Windsor and Thunder Bay?

 

I think a lot of retired people are as well as younger people who find the cost of living in Toronto too much to bear.

 

IF people from Toronto are moving to Thunder Bay, their population should be increasing substantially if prices are rising 30%.

 

Meanwhile, if you look at the data, the population has declined by 0.4% the past 5 years. How do you explain that?

 

https://www.tbnewswatch.com/local-news/thunder-bays-experiencing-low-population-growth-531010

 

5-Year (2011-2016) population growth rates:

 

London: 4%

Kitchener-Cambridge-Waterloo: 6%

Barrie: 5%

Toronto: 6%

Thunder-Bay: 0%

 

But anyway, that’s beside the point. If you’re incoming migration is quite a bit wealthier than the present population, it will affect housing prices.

 

But if population growth is 0% who are the wealthy people migrating there driving prices up 30%? I dont understand the logic.

 

You can have net immigration yet still a static population. The net immigration might simply be replacing the numbers of people who move elsewhere or pass away. I don't know the demographics but just looking at population statistics tell little about what's happening with home prices.

[Peregrine]

All the rationalizations for current RE prices in Toronto will be interesting to revisit in the future.

 

Toronto had more cranes than any other city in North America (in fact, I think I remember that at one point it had more cranes than many other big cities combined), house prices recently went up by 33% from an already very elevated level, everybody's obsessed with real estate, there are bidding wars for million-dollar decrepit old shacks and sellers refuse  to have inspections done... There's nothing fundamental about the situation, it's animal spirits. When it corrects, it'll overshoot in the other direction, as it usually does when things get this crazy.

 

The cranes that you refer to are building condos and there aren't many that are saying that there's a supply concern with condos - though listings there have also tightened. It's single detached homes that are now increasingly uncommon and whose prices have risen 33%. Condo prices have risen near that much.

From CREA stats: GTA Condos 29% YoY. GTA single family 30% YoY.

 

Tell me more about supply.

 

I find it tiresome to discuss with you because you automatically take something I said, conflate it and then present a gotcha-type conclusion.

 

One year numbers can have plenty of noise, but take a look at the following graph and tell me what kind of housing units have been rising faster than others:

 

http://creastats.crea.ca/natl/images/natl_chartC010_xhi-res_en.png

 

I also said that condo supply recently has been tight, but the supply concern isn't chronic like it is with single family detached homes. You'll see a lot of condo completions this year and the next which will help to alleviate some of that tightness currently. In contrast, there is barely any forseeable development of single family housing in the city area.

 

Anyway, I'm done talking to you about housing.

[TBW]

I think this is an interesting discussion.  I think you can look at things a variety of different ways to attempt to justify what prices are or aren't rational.

 

If you take a big step back this is very simple to me.  The average house cannot be bought by the average family.  That cannot be sustained for long.  Some 'global' cities perhaps it can for a while, but not indefinitely.

 

The bubble in Toronto will pop, likely soon.  Prices will drop significantly across Canada until the average house can be bought by the average family (probably overshoots that).  The underwriters and lenders will suffer massive losses.  Invest accordingly.

 

This has been the same in every country that has experienced the price surge Canada has.  Examples, Spain, Ireland, USA, Netherlands etc.  All have the same issues, rapid price increases, stupid lending, wide spread fraud - then crash.  No different here.