HawthorneVillager.com

Ol Skool, it is great that you have a beef with how the Bank of Canada manages the economy - you will have to forgive me, but I will go with their expertise instead of yours. the CPI is not what they measure - Core Inflation was 1.7%, which is below their target of 2%. It is not a foregone conclusion that inflation will run above 2% by May, nor is it a conclusion that the BofC will raise rates in July - they may not want to inflate the CAD$ by raising rates. The point is, I do not know what they will do, and neither do you.

BTW, who had 41 pages and no drop in prices in the pool?

That's right, Aug 27, 2010 to April 25, 2011, 41 pages of "facts" and predictions, and the price has kept going up, albeit slower than before.

the simple fact is, no one on this board (not one single person) knows if and when the prices will drop or go up faster or lower than they are now. Anyone claiming to "know" what is going to happen is deluding themselves and/or whoever believes them.

Rick

Sorry, here is the actual article (earlier I posted just a quote from a blog site). It's from the end of March 2011 (3 weeks ago)

http://m.theglobeandmail.com/globe-inve ... le1961301/

Some more highlights:



A year earlier (April 2010), he didn't share the same optimism:

http://www.creditwritedowns.com/2010/04 ... overy.html



So basically, what he is saying is that the market in 2011 is improving -- not declining vs. 2010 and 2009.

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I think regardless (and I hear ya about the measurement), even if they were to look at headline inflation, they would then just have a different benchmark.

i.e. keep core under 2%, keep headline under 4% -- whatever the measure. If they included energy and food, they would just have a higher benchmark.

Regardless, given the numbers they are in no hurry (or need) to jump the interest rates up to anything crazy. You will likely see a .25 in July and maybe another .25 by the end of the year.

Nothing that's going to break the back of the real estate market.

BTW, they use core vs. headline because energy and food are both extremely volatile and will never give a good number to make long term strategy decisions on.

If the mid-west has a bad summer for Tornados and the crop is toasted - you don't want to all of a sudden make massive changes to the economy when it's all going back to normal in a little bit.

Same with oil -- once the issues in Lybia are sorted out, prices will go back down again quickly -- just like the last time they went this high.

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More news about the GTA market now that May is almost over:

http://www.moneyville.ca/article/999612 ... ecast?bn=1



So it looks like when we thought we had a peak a year or two ago, we didn't -- we do now.



But it also looks like the party is going to come to an end shortly. The question will be, will those who purchased when this thread was originally created see a 10% decline in their home price when the party stops. I think the gains made over the past 2 years will ensure that doesn't happen. Maybe a 10% decline over the current peak (now).

To add to that,
http://www.moneyville.ca/article/999555 ... while?bn=1

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Well Australia is something to watch, we aren't easily comparable economy wise.

Aus GDP 925 billion USD
Can GDP 1.35 trillion USD

Aus overnight lending rate 4.75
Can overnight lending rate 1.0

There is also a different in immigration profiles as well as exports/imports with mining and commodities being a large portion of Australia's economy.

There has also been much discussion about the "mistake" made by Australia by rushing to be the first OECD country to raise their rates. Many feel it was far too premature and in effect had a downward effect on their economy and growth after the economic collapse in 2008.

I don't think Canada is looking to jump the rate by 3.75 anytime soon.

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He's probably living on a tree.

My relative in Aussie paid $400K for a townhouse. So it depends where. Location, location, location.

all these posts and not one correction, you can quote gdp in Bangladesh, the situation in Ireland and all other irevelant B.S. Open todays paper and BAM!! 28mil for a condo in Toronto the sky is falling.

That's right as stated earlier you can purchase a house in Timmins, Ontario for $35,000 does that mean house's in Canada are cheap.

ive tried to look real close at yours and ol skools b.s. posts. nada, nothing, Nope! i guess since you went out and sold your house, you must justify it to yourself you did the right thing? if you think ill be looking ahead in 5yrs to see what housing is doing your much funnier than i thought. plus the second rapture is in October,

I think it was in reference to the location matters vs. looking at an entire country or even an entire city.

In that very article many comments were quick to point out that yes, real estate took a dive in some areas, but other more "in demand" areas were still going up, and up, and up with limited supply, lots of demand and quick sales at over asking -- even in the "dreadful Sydney market".

Same goes for Canada.. and Ontario.. and GTA. There are pockets that are over priced and will correct the second interest rates climb a little and there are other areas that are reasonably priced and likely will continue to rise.

Already you are comparing 2005 to now. That's 6.5 years ago. The cost of everything has gone up immensly -- so too should the cost of housing.

I read an article (wish I could find the link) that put the builders cost to build a house of average quality (not cheap and not great) at around $100-$125 per sq/ft in the GTA. That puts your average 2,000 sq/ft home at $200,000 (builder cost). On top of that, you need to add the cost of the land (the closer to Toronto, the more expensive) and the cost to put in the infrastructure (builder is responsible for sewers, fire hydrants, electrical, utilities, lamp posts, roads, streets, curbs, drainage etc) and then make a nice profit at the same time.

If they were still getting $300,000 for a 2,000 sq/ft home they wouldn't be building them anymore. There would be no money left to be made. In the US (which can't be compared), an excess of supply due to the banking fraud means people are buying houses that cost $200,000 to build (parts and labor) for LESS than the cost ($180s, $150s)

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To the point above, I think that this thread has a lot of comparisons to the US in relation to "look at how much their houses cost now" as if it's something we should look forward to. I will come out now with my own prediction and say Canada will *never* look like the United States price wise. It's just not going to happen. The price of their houses (some valued at sometimes half of what the builder actually paid to build it in materials only) is just as un-natural and unbalanced as the low interest rates we have.

You can't say "look, Los Angeles has a 2,000 sq/ft house for $200k, so should we". Doesn't work.

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Europe as a whole is having major issues right now. They aren't bouncing back from the recession like Canada did. Again, apples and oranges.

Will Canada be affected by the Euro debt crisis? Sure they will. But not nearly to the same extent as other European countries.

The problem with many of these countries is that they had insane social programs that were basically being ponzi schemed. There was no way to pay for them and once the world economy took a hit, they got exposed.

Look at Greece, full government pension after 35 years of work? Imagine what happens when everyone in the country was retiring at 55 and living until 75.

The problem with Europe is many of the countries listed have bankrupt governments. When the government is bankrupt, it's very difficult to grow your economy or have confidence in letting other people invest in your country.

Canada is viewed as one of the top investment countries in the world and not something to be wary of, have a lack of confidence in, or be downgraded like what has happened to those Euro countries.

The situation (debt) isn't different between Canada and the US and Euro (i.e. lots of defect, lots of household debt), but the variables in play are quite different country to country and even continent to continent. Those variables play a very important role in determining the outcome and the growth of one economy vs. the collapse of another.

That's why I don't look at the situation elsewhere and say "so it must happen here too". At the same time, I'm also not naive to say "so it can't happen here" either.

---

http://winnipeg.ctv.ca/servlet/an/local ... nnipegHome

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Affordability eroding. That means house prices going up! Good right?
High prices, decreasing inventory with decreased demand.
House prices can only keep going up because we're different here. 70% are home owners so let's go for 100%.

http://www.newswire.ca/en/releases/arch ... c6320.html

Canadian banks received bailout money too so don't think we're different.
If other economies around the world slow then why would ours be steam rolling ahead?
Where's the money going to come from?

Heard this on the radio again this week.
This skit was from last year....

http://www.youtube.com/watch?v=NOzR3UAy ... re=related

Just saying...

http://www.google.com/hostednews/canadi ... Id=6962344



There is a reason we are fighting a high dollar.. Like I said, I know what I see. I work for a large multinational company -- no problems with profits last year -- in fact, it was a record year.

Chrysler is paying back the Canadian government for the bail out, with interest, 6 years early.

Canada is very limited in its economic reach, but right now (especially with the Japan crisis), we are in a very good position.

Big sectors are Automotive, Gas, Oil, Forestry, Steel, Financial, and Service. The service industry makes up almost all jobs in Canada and represents a big portion of the country. It's scary, because it takes a big hit if the other sectors suffer, but right now, every one of those sectors is doing great.

I predict the housing price issue is going to fix itself over the next few years. Here is what I predict:

a) Interest rates go up, the overpriced houses in the trendy areas that don't offer much value for the money will be hit. People only buy 1940s house in the Beaches in need of major repairs for $900k because the interest rates are low and they can. The rates will rise and it will take all the "trendy" star bucks crowd out and those house prices will fall.

b) Houses that still have value and are located in prime locations will continue to rise.

c) New home builders will drastically start to reduce new home starts -- especially in the fully detached arena and start doing infill in and around the GTA where land can be found. You will see a lot more village type homes (no backyard, attached) and townhouses built. The supply of new detached homes will be majorly reduced as the costs will be too much for new home buyers. Basically, no more detached homes on big lots of new home buyers. Sorry. (Unless you move out further)

d) The condo market will continue to grow as it will become the affordable alternative for singles and first time home buyers. I do see the prices will definitely soften in this area because the sheer supply of condos in the city and new condo starts.

e) Some overpriced houses further away from Toronto (just like Milton) will see price increases grind to a halt for a few years (low if any increases) while they come back in line with price vs. value. I also don't feel $800k, $900k for a moderate sized house in Milton is a fair value.

f) Normal prices houses offering good value for the money will see more normal price increases in line with inflation.

g) Within a few years, the supply vs. demand for detached homes will again become out of whack since builders stopped adding as many units and as such the prices will start to increase again and we will be back here arguing about the bubble once again.

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