To summarize, the report from TD Bank explains that Canada was in a real estate boom from 2002 - 2008, a time of unsustainable price increases. What is happening now is basically a market adjustment as "affordability eroded severely over the last two years demonstrating an unsustainable disconect between house prices and incomes that was due for a correction.".
In any case, all these rear-view mirror reports do not give us a clear direction to expect in the coming future. But we can be sure that we are indeed overpriced and overbuilt. Many expect the full unwind of the suffering Canadian economy to be in high gear in Fall 2009 after many of the construction projects are finally completed.
Well, if the upcoming flood of inventories that the market cannot digest does not worry you, you still have the developers in receivership and projects shelved. Meanwhile, there are still optimists spreading rumors that the BC real estate is picking up as evidenced by the following news.
Just so you know, based on volume, the City is extremely dependent on Condos. In January, there are no large condo permit applications and February has one.
So, let us backtrack and ask the question, "Who is buying?". The market is still searching for the bottom, jobs have lost their security as business and credit get caught in the aftermath of the burst bubble, and governments are spending the country out of recession but in doing so building inflation. At this rate, we will not be able to afford what we could yesterday. Thus with low interest rates now, buyers who could not afford yesterday but can today are entering the market.
There is a fundamental difference between true and market value. The true value of any product should be what endusers are willing to pay. Not investors and definitely not businessmen. The market value however, is marked on what the greater fool will pay. In other words, greed has been priced in.
Just remember. You cannot oversell something without someone overbuying. The motivation to build is fueled by the motivation to sell which is fueled by the motivation to buy.
In my case, I could be over-analysing.
5 comments:
How do they calculate the value of building permits?
The value of building permits is just a number they use to determine the health of the construction industry. It would rely on the appropriate appraisal of the potential property/building value after construction.
I am not sure how it compares to the building proposal submitted by the developers. But since it is done by the government, I would expect it to be more conservative.
I will only be taking appraisal later this year, so I have no idea how it's done...
Anyway, Angel told me that she has to hand in assignments for her RE course? in order to be able to take the test. What's up with that? I don't remember you having to hand in any assignments!
I did the assignments in 1 day. All 20 chapters. They are not that hard. 20 questions per chapter. 400 questions. But you do need to get something like 80 or 90% correct to pass. To retake each test, you need to pay $15.
Anyways, you can do the assignments open book, so I dont see what the problem is. I did them almost immediately after I signed up for the course because you can only book a time for exam after completing all assignments.
In any case, the exam can only be booked about 1 month later, so you still have 1 month's time to do the 1000 practise questions which for me was more than enough.
Sorry, I meant to resubmit each assignment in case you fail is additional $15.
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