Did we just hit the peak of the Toronto RE bubble?

NotRobot wrote: ↑

Oct 12th, 2017 2:41 pm

You forgot consequences of global warming and threat of nuclear war lol.

I apologize, I guess the cancelation of 16B investment of Energy East pipeline, closing of GM CAMI plant and Sears bankrupt has me in a negative mood. :S

Jungle wrote: ↑

Oct 12th, 2017 2:41 pm

ZOLO says Toronto Detach at 1.4M now. Huge comeback but wondering if there is skew. It shows big increases for 5 and 6 bedroom houses. 3 bed still up 14% MOM

416 Condo 550k

If you look at the breakdown of sales the biggest decline is 5/6 bedrooms. Last year they were 8% of sales, this year only 6%. If anything there is a negative skew caused by the sales mix change.

Also it's not just Zolo, Mongohouse which has a breakdown of all the sales also has Toronto detached at $1.4m.

I've also been tracking price change, Zolo started October at $830k and is now at $863k. Mongohouse average started at $854k and is now at $919k. Mongohouse updates faster too, it's up to 10/10 whereas Zolo is at 05/10. So I expect Zolo will go up over the next week.

Jungle wrote: ↑

Oct 12th, 2017 2:41 pm

ZOLO says Toronto Detach at 1.4M now. Huge comeback but wondering if there is skew. It shows big increases for 5 and 6 bedroom houses. 3 bed still up 14% MOM

416 Condo 550k

Moreover its now confirmed by MLS...Zolo numbers are very close to real this time.

Jungle wrote: ↑

Oct 12th, 2017 2:41 pm

ZOLO says Toronto Detach at 1.4M now. Huge comeback but wondering if there is skew. It shows big increases for 5 and 6 bedroom houses. 3 bed still up 14% MOM

416 Condo 550k

Had a look at the detached, from what I can tell, 70% of the price increase is due to 3 bed, 25% due to 4 bed and 20% due to 6 bed. The 6 bed has a big influence considering only 9 sales.

Prices look like they're holding up on the surface, but the second you look under the hood, it looks pretty bad.

For example, total $ spent is down about 34%. 4bed detached were responsible for about 44% of the total decline in total $spent.

2bed 14%
3bed 29%
4bed 44%
5bed 15%
6bed -1%

Qrewpt wrote: ↑

Oct 12th, 2017 5:04 pm

Had a look at the detached, from what I can tell, 70% of the price increase is due to 3 bed, 25% due to 4 bed and 20% due to 6 bed. The 6 bed has a big influence considering only 9 sales.

Prices look like they're holding up on the surface, but the second you look under the hood, it looks pretty bad.

For example, total $ spent is down about 34%. 4bed detached were responsible for about 44% of the total decline in total $spent.

2bed 14%
3bed 29%
4bed 44%
5bed 15%
6bed -1%

So you're saying prices of houses aren't holding up because there are less sales...? Obviously total spent is down when there are less sales. Also you realize that less money being spent on bigger houses means there is a negative skew right? As in average is being pulled down by smaller houses selling more... Biggest decline is 5 bedrooms, down 55% in sales. If you divide by 1 less sales decline you can get last years sales total. Last year year 8% of sales were 5/6 bedrooms compared to 6% this year. That's a decline of 25%. A big negative skew.

rjg4235 wrote: ↑

Oct 12th, 2017 9:35 pm

So your saying prices of houses aren't holding up because there are less sales...?

Sigh.

Qrewpt wrote: ↑

Oct 12th, 2017 9:41 pm

Sigh.

If you divide by 1 less sales decline you can get last years sales total. Last year year 8% of sales were 5/6 bedrooms compared to 6% this year. That's a decline of 25%. A big negative skew. Do you understand how averages work?

You don't even have to believe me, do a weighted average yourself and see it's actually up 11%. You can also see the drive up is lead mostly by 3 bedrooms. It's crazy to think 1% of sales is dragging it either way and this shows the 9 6 bedroom sales did very little for average.

rjg4235 wrote: ↑

Oct 12th, 2017 9:45 pm

If you divide by 1 less sales decline you can get last years sales total. Last year year 8% of sales were 5/6 bedrooms compared to 6% this year. That's a decline of 25%. A big negative skew. Do you understand how averages work?

You don't even have to believe me, do a weighted average yourself and see it's actually up 11%. You can also see the drive up is lead mostly by 3 bedrooms. It's crazy to think 1% of sales is dragging it either way and this shows the 9 6 bedroom sales did very little for average.

It is kind of common sense in any trading that decreasing volume will eventually lead to price drop.

When price are sticky, volume is always the leading indicator. This is because the seller refuse to lower the price and there is no buyer to support the price.

The problem with September data is that volume shrinks by 40%, which probably means that the price will have to drop sooner or later, especially with rising rate and ofsi rule.

Ceryx wrote: ↑

Oct 12th, 2017 10:21 pm

It is kind of common sense in any trading that decreasing volume will eventually lead to price drop.

When price are sticky, volume is always the leading indicator. This is because the seller refuse to lower the price and there is no buyer to support the price.

The problem with September data is that volume shrinks by 40%, which probably means that the price will have to drop sooner or later, especially with rising rate and ofsi rule.

Oh okay so we are back to the argument that any day now it will decrease? Just go back to any of the 600 pages of this thread and you can see that hasn't changed.

rjg4235 wrote: ↑

Oct 12th, 2017 10:24 pm

Oh okay so we are back to the argument that any day now it will decrease? Just go back to any of the 600 pages of this thread and you can see that hasn't changed.

Real estate is much more ill liquid than most investment.

I wil even say it might stay flat with volume decrease for a year or two until the people starting to lose job that finally bring in the big correction.

rjg4235 wrote: ↑

Oct 12th, 2017 9:45 pm

If you divide by 1 less sales decline you can get last years sales total. Last year year 8% of sales were 5/6 bedrooms compared to 6% this year. That's a decline of 25%. A big negative skew. Do you understand how averages work?

You don't even have to believe me, do a weighted average yourself and see it's actually up 11%. You can also see the drive up is lead mostly by 3 bedrooms. It's crazy to think 1% of sales is dragging it either way and this shows the 9 6 bedroom sales did very little for average.

I'm not following what point you are trying to make, or how it relates to anything I just posted. What mistakes did you see in my findings deserving of your downvote.

Qrewpt wrote: ↑

Oct 12th, 2017 10:29 pm

I'm not following what point you are trying to make, or how it relates to anything I just posted. What mistakes did you see in my findings deserving of your downvote.

You said "Prices look like they're holding up on the surface, but the second you look under the hood, it looks pretty bad."

That doesn't even make sense. The prices are not holding up. they are up, period. There is no under the surface for prices. If anything a deeper look with a weighted average shows they are up even more than 8%.

rjg4235 wrote: ↑

Oct 12th, 2017 2:49 pm

If you look at the breakdown of sales the biggest decline is 5/6 bedrooms. Last year they were 8% of sales, this year only 6%. If anything there is a negative skew caused by the sales mix change.

Also it's not just Zolo, Mongohouse which has a breakdown of all the sales also has Toronto detached at $1.4m.

I've also been tracking price change, Zolo started October at $830k and is now at $863k. Mongohouse average started at $854k and is now at $919k. Mongohouse updates faster too, it's up to 10/10 whereas Zolo is at 05/10. So I expect Zolo will go up over the next week.

Also to add on this, people posting and reading about benchmark being down seem to be forgetting that it's based on land registry data or closing date. Which is why it has a 1-3 month lag on TREB data which is based on when the deal is confirmed. You can expect it to go up a lot after September/October deals close.

Ceryx wrote: ↑

Oct 12th, 2017 10:21 pm

The problem with September data is that volume shrinks by 40%, which probably means that the price will have to drop sooner or later, especially with rising rate and ofsi rule.

A year ago I heard pretty much same about mortgage stress test tightening and 4.54% rule. Surprisingly, for all future-forecasters it had completely opposite immediate effect of panic buying. Moreover, I saw it by my own eyes, while I received extra hurdles to afford the house I want and sellers received extra reasons to reject my offers and prices.
At the end, I guess I should be happy not to buy in October 2016, simply because I found much much better location on January 2017 and got it.

The summary is: don't be so sure how stress test will play out. The unreasonable demand for condos that we see is caused by that 1 year ago stress test - no doubts it started that time. But immediate effect was very bullish and by January 2017 noone doubted it. By May 2017 even 3 idiots in government realized it.

rjg4235 wrote: ↑

Oct 12th, 2017 10:35 pm

You said "Prices look like they're holding up on the surface, but the second you look under the hood, it looks pretty bad."

That doesn't even make sense. The prices are not holding up. they are up, period. There is no under the surface for prices. If anything a deeper look with a weighted average shows they are up even more than 8%.

Ok, more explicitly said:
Prices of sold houses look like thy're holding up - meaning this makes the market look good and strong - no need to get hung up on up vs. Holding up. However when you look under the hood, i.e look a little deeper, for example examine another market metric, in this case, I ran total $spent through the spreadsheet, you can see that there has been about 34% less dollars spent on the detached RE market, which looks pretty bad.

34% seems significant to me for such a large market.