Real Estate Bubble no longer a theory?

[Nemodigital]

http://www.businessweek.com/ap/finan...e_down&chan=db

Its a short article so not going to bother summerizing. I don't think real estate markets where the economy is red hot such as Calgary will be very much effected but morons like this in Toronto will -> http://toronto.craigslist.org/rfs/144914704.html

Its about time that prices adjusted to reflect true value.

[PrinceMS]

Yes there is a bubble of house market. BUT with so many immigrants coming to Canada (mainly Toronto) and just the way economy works....
In the long run, prices will increase. Only people who cannot afford / sit on house to live through this fall - will be in loss.

[Bullseye]

That's an American article, the real estate market is not a single entity, so it may not really hold true here. It's been stated my times by industry observers that many cities in the U.S. are quite bubble-icious, while Canadian prices are still within historic affordability levels.

I've seen no real sign of a bubble-like activity in the GTA, perhaps with the exception of the condo market. I don't think we're in for any drop in prices, probably just a slow cooling of price growth. I can say that for my city, Burlington, people still seem to be commanding a premium price, and getting it, though not in the levels we saw a year or two ago.

[Nemodigital]

That's an American article, the real estate market is not a single entity, so it may not really hold true here. It's been stated my times by industry observers that many cities in the U.S. are quite bubble-icious, while Canadian prices are still within historic affordability levels.

I've seen no real sign of a bubble-like activity in the GTA, perhaps with the exception of the condo market. I don't think we're in for any drop in prices, probably just a slow cooling of price growth. I can say that for my city, Burlington, people still seem to be commanding a premium price, and getting it, though not in the levels we saw a year or two ago.

Well the thing is that the US economy is deeply connected to real estate, therefore any substantial slowdown could effect us since they are our largest trading partner. I do agree that not to the same magnitude and that it could be localized.

[Noob1ee]

The US don't have as much people migrating into it, than Canada...so the data might not be as accurate if being compared to Canada.

[grant]

Its a short article so not going to bother summerizing. I don't think real estate markets where the economy is red hot such as Calgary will be very much effected but morons like this in Toronto will -> http://toronto.craigslist.org/rfs/144914704.html

Its about time that prices adjusted to reflect true value.

Morons? Sounds like you have jealous issues.

"true value" is whatever people will pay for it. Not whatever you arbitrarily decide.

[Qyee]

Accurate article.
My sis been scouting townhouses in Las Vegas or Palm Springs, Ca in the last month and there are lots on the market. She's been down to see some properties and the real estate agents say the markets been flat the last 6 months - prices stable or decreasing. Lots of units on the markets and speculators trying to unload. And especially in Vegas where it is supposedly the hottest growth city in the States.
Right now you can get a decent 2 bedroom condo in Vegas for the 180,00 to 200,00 range.
In Palm Springs and suburbs still higher, but deals can be had.

Right now the agents and pushing the sale, but she may wait now for a better deal.

[Nemodigital]

Morons? Sounds like you have jealous issues.

"true value" is whatever people will pay for it. Not whatever you arbitrarily decide.

Well its the same thing that happend during the dot.Com bubble with IT stocks being way overvalued by speculators without fundamentals to back it up.

[st7860]

A year ago in Vancouver, there were newspaper stories of people enagaging in....bidding on the front lawn of houses during Open Houses.

[Nemodigital]

That's an American article, the real estate market is not a single entity, so it may not really hold true here. It's been stated my times by industry observers that many cities in the U.S. are quite bubble-icious, while Canadian prices are still within historic affordability levels.

I've seen no real sign of a bubble-like activity in the GTA, perhaps with the exception of the condo market. I don't think we're in for any drop in prices, probably just a slow cooling of price growth. I can say that for my city, Burlington, people still seem to be commanding a premium price, and getting it, though not in the levels we saw a year or two ago.

I am actually looking to purchase a condo within 3-6 months time in Toronto.

[actuary]

I believe the real estate market (and the stock market for that matter) is stochastic. Therefore, there is no successful way to predict the future in the short term.

[deep]

I believe the real estate market (and the stock market for that matter) is stochastic. Therefore, there is no successful way to predict the future in the short term.

What exactly is short term? I would say it's impossible in the VERY short term, easy in the short term, very difficult in the medium term, easier in the long term, and impossible in the very long term. Arguments for each are readily available

Any time you have something valued by consensus, such as real estate or stocks, it's not COMPLETELY stochastic. It's easy to identify trends after the fact, but sometimes difficult to see the root causes for those trends, and thus is usually more difficult to identify trends in advance. Impossible? Perhaps, perhaps not.

[actuary]

What exactly is short term? I would say it's impossible in the VERY short term, easy in the short term, very difficult in the medium term, easier in the long term, and impossible in the very long term. Arguments for each are readily available

Any time you have something valued by consensus, such as real estate or stocks, it's not COMPLETELY stochastic. It's easy to identify trends after the fact, but sometimes difficult to see the root causes for those trends, and thus is usually more difficult to identify trends in advance. Impossible? Perhaps, perhaps not.

You're right - it is not completely stochastic. However, for me and the average person who lacks in depth information, it might as well be. The truth is, given what I know about real estate and stocks, there is no way for me to accurately predict the short term.

As for what I define as short term, I don't know. I don't think anyone has successfully defined short and long term. 1 day, 1 week - thats all short term. Larger periods are up for debate.

[barold]

I believe there are fundamentals for real estate as there are for equities -- it's jobs (not just job creation, but growth in income). I agree, some places like Alberta will continue to grow economically but Ontario's does not benefit as much from oil riches.

People continue to cite the immigration coming to Toronto. Well, I personally don't see the same level in growth in jobs out there. Take a drive along the lakeshore (in Toronto) and gaze upon the wall of condos under construction there. How many 500 square foot condo dwelling worker bees will be working in Toronto in 2 years time?

People have been pricing their 25 year mortgages based on current level of interest rates - however, in 5 years time (or whenever they have to renew) what will their interest expense on their mortgage be if rate continue to climb. Affordability may be at the lowest level now, at today's interest rates, but take a look at what your mortgage payment would be if you had to renew at 2% higher. I think there would be a double throttling effect on the economy - people buckle down to pay their mortgages, economy stops growing... fewer jobs created...

[hagbard]

Immigration isn't going to keep up with retiring and dying baby boomers. It is bound to fall anyway, and the world wide bubble has already popped. Hot markets, like the one I live in (Victoria) will be hit hard. And the collapse of the US economy will futher fuel a drop in real estate on both sides of the border. We will live in interesting times.