Danger Of Condo ‘Oversaturation’ In Montreal
A pair of reports from Canada. “The Toronto housing market is showing signs of softening and a real estate analyst says that means it may have reached a plateau where bidding wars will continue for now but not for long. (Analyst) Jason Mercer says home buyers should not expect prices to drop drastically for Toronto homes as they did in the late 1980s when speculators sent the market into overdrive.”
“The latest figures suggest that housing starts in the United States peaked in January 2006, then edged down, and that decline reached Toronto in April.”
“By the end of the year, Mercer says, the market will balance out and buyers will be on a more equal footing with sellers. ‘We’re right on the cusp between a seller’s market and a balanced market,’ he said.”
“Canada’s housing agency is warning that the growing number of unsold new condominium units in downtown Montreal threatens the stability of the marketplace. The CMHC noted there are 225 finished and unoccupied condo units downtown, with another 2,200 either planned or under construction. The inventory buildup is worrisome because only 730 condos were sold in all of downtown last year.”
“‘The market is in real danger of oversaturation,’ said CMHC market analyst Paul Cardinal. ‘That was the outlook in November, when we did our 2006 forecast. We keep repeating it in the hope the builders will take note.’”
“This year, CMHC forecasts nearly as many condo units will be built across the metropolitan area (8,000) as single-family homes (8,500). That stands in stark contrast to 1990, when condo construction accounted for 13 per cent of new-home activity.”
“In central Montreal, several large projects appear to be stalled or behind schedule. Backers of Le Riopelle, a condo-hotel project originally set for delivery last November, now expect to break ground this fall. Nearby, Le Mosaique Southam, another high-end development, is similarly stalled. SLEB has run into financial problems and is reorganizing.”
“‘Everyone thinks that their project is different and that the other guy is the one at risk,’ Cardinal said. He added that local builders might be pulling back or fine-tuning their projects, but those working with foreign investment partners, and there are growing numbers of them, are less concerned with having units sit empty and unsold.”
“‘For Americans, it is nothing to put a building up without a single sale. It’s a different attitude,’ he said.”
“On the resale side, CMHC is forecasting a one-per-cent drop in sales as higher interest costs push some first-time buyers to the sidelines. The number of active listings will continue to rise, including on the condo side, where the pool of available properties is expected to jump 46 per cent.”
‘those working with foreign investment partners, and there are growing numbers of them, are less concerned with having units sit empty and unsold.’ ‘For Americans, it is nothing to put a building up without a single sale. It’s a different attitude,’ he said.’
I guess he is implying that some of these developers are from the US.
I say: “Logements du centre de Montréal pour chacun!”
sf jack: And what’s french for LMAO?
Whoops, I mean Quebequois. Pardon.
Je ne sais pas…
But I do believe that the Quebecois would use “condos” rather than “logements” (as one might prefer to do in Paris).
As you pointed out, there is a distinction.
So it means, “Condoms for everybody?”
Comment by Chip
2006-05-12 18:43:57
So it means, “Condoms for everybody?”
__________________________________________________
Get’em while you can. They’ll be illegal in the states soon. The authoritarians posing as Christians already banned “marital aids” in a number of states…. With the assistance of the republikkkan puppet regime of course.
Help me out here. What’s a “marital aid”? Porn? Date rape drug? Viagra? A kept boy on the side?
Man, the NoVA inventory numbers just keep going! Today: 19,946 active listings. May 1st: 17,950. Eleven percent growth in eleven days. Inventory on Jan 1st was 9,303 - less than half of where we are today. On this date in 2005: 4,285. Loudoun county alone has 4,400 active listings, more than all four counties of NoVA had a year ago. Looks like NoVA is in for a Soft Landingtm
I love the “tm”. LOL
I’m sick of how the realtors keep acting like once it is no longer a sellers’ market that it is immediately a buyers’ market. They need a name for the time in between, such as right now, when it is neither. Call it a “fools’ market”.
fools market…good un!!
Yes!
With credit to optioned unarmed and John in VA…
I say: “Only participants in a “fool’s market” believe in a Soft Landing(tm).”
On Feb 17th everything was just rosy for Jason:
According to Jason Mercer, Senior Market Analyst for the Canada Mortgage and Housing Corporation, strong results through the first half of the month reflect the strong fundamentals that continue to underlie the Toronto area housing market.
Another “dart board” analyst spouting off again.
I now Google these “experts” and easily find contradictory statements.
Good find!
(Analyst) Jason Mercer says home buyers should not expect prices to drop drastically for Toronto homes as they did in the late 1980s when speculators sent the market into overdrive.
Oh, is that what happens when speculators get overly involved in the re market, it takes a dive. Hmmmmm, interesting. Take note David Learah.
Hmm… little speculation this time versus the late 80’s?
I really have to wonder - has Jason been hanging around with Suzanne?
Let me take the opportunity to link to some other Canadian housing blogs:
Victoria, BC (aka home of the newly wed and nearly dead)
Calgary, Alberta (aka Oil City)
Toronto ON (aka t-dot, hogtown, centre of the universe)
Dude, the hub of the universe is Boston. Ask any Bostonian!
Thank you.
The manufacturing economy of Ontario and Quebec is getting slammed by the high Canuck Buck / low greenback. On the other hand, the resource provinces like BC and AB are booming. So, we’re more bubblicious here our west.
The Maritimes seem to be well also. A good friend of mine sold his house in one day in Fredrickton and I routinely get solicitations to buy my place in Chester, N.S.
Plus ca change, plus c’est la meme chose.
Mais non! Cette fois est different.
Professuer, comment dit-on “Pepsi-locked”?
The man knows Quebec!
Oh, and I forgot Moose Jaw, SK
Check out the $20K houses in Moose Jaw. Get ‘em while they’re cheap!
Saskatchewan houses for everyone!
Ha!!
LOL.
it’s friday
we demand the following:
1) a clean desk from ben
2) bubbles the clown
c’mon fellas, the crowd is getting restless………..
We are getting spoiled around here!
Clear your desk
Clear your desk
Clear your desk
And a dash of ‘bubble consensus’ too!
Yeah, where is that clown?!
cereal and I have yet to hear what he’s sayin’ about all those condos down by Petco…
J’aime le joie de vive a la metropole de Montreal! Par example, la fete, “Juste Pour Rire” chaque ete…C’est incroyable!
Mais, il ne faut pas acheter un condo pour profiter des fetes! Louer - c’est liberte!
“Louer - c’est liberte!”
I like that:
“To rent - it is liberty!”
Well, I guess at least we know who the infiltrators are (not to be confused with the paper things for your coffee maker). I used to think that “Vive la bust!” wuz what you hollered at the strippers.
La meteo…un autre raison, n’est pas?. Ce n’est pas la meme chose a Vancouver!
To anyone in Canada that might have the answer …..Is it true that you cannot take the interest rate tax deduction on your residence and its only allowed on investment property ? If you can’t get this tax break ,how do you think it affects the price of homes verses the United States ?
yup,
My parents live in Canada and they can’t deduct the interest off their mortgage payments. AND in Canada you cannot do a 15yr or 30yr fixed loan….well unless you pay alot upfront. Otherwise 5yrs is the usual.
So the main loan programs are adjustable I guess . I would assume that lack of the tax break would tend to keep prices down a bit . Anyway , thanks for confirmation .
Here’s another kicker on Canadian mortgages. (at least, this is how it was 10 years ago; things may have changed). If you sign a morgtgage and then want to get out of it before the term is due, if prevailing interest rates have gone down, you owe the bank the difference. !!!! Yup. I got out of a bad relationship (and house) 2 years into a 5 year mortgage where the prevailing rates had dropped significantly and had to write the (*&&^%^#% bank a check for $19000 to get me out of the mortgage. Ouch.
Yup, that’s right. Canadian income tax code does not let you write off mortgage interest or property taxes on your residence. From a Canadian perspective, we believe that this tax write off has lowered the effective cost of housing to Americans and produced higher housing prices (loooooooong before the bubble, this was conventional Canadian wisdom about the US). We could only sigh and dream that our gov’t would follow the same lead, but clearly that’s impossible. The net cost to the US gov’t of allowing folks to write off their mortgage interest and taxes is huge.
Couldn’t pay for your health care if you gave the home tax deduction I’m sure .
Perhaps, but most Americans couldn’t pay for theirs either, without their employers covering most of the expense.
When I lived in Montreal I got to deduct my rent from my provincial taxes. I don’t remember about the federal taxes.
Having rent be deductable, and mortgage interest not deductable, is a pretty strong incentive to stay out of home ownership, eh?
Eh….You can deduct rent ,but not mortgage interest ? Did I see that right ?
Tulkinghorn is talking about Quebec. And I think it’s probably some sort of percentage credit, not an outright deduction. Montreal has a much bigger percentage of renters than other major Canadian cities, so the political dynamics are quite different in that respect, as they are in many other respects.
I’m very happy that Canada does not allow a mortgage interest deduction. It does not make housing more affordable - it justs drives up prices, encourages people to borrow against the equity in their houses, and costs the government tax revenue, consequences we are seeing in spades in the US.
Note however that homeowners in Canada are never taxed on the capital gains for their personal residences.
Investment RE is treaded pretty much the same as in the US, with capital gains taxable and interest deductible.
Is that why Mats Sundin expects to collect a cool tax free CAD 1.9 million on his flipped personal residence?
I’m saving this thread. It reminds me a lot of why I’ve seen little parallel in the US market to what NHZ describes in Holland/Europe. There are far too many differences in lending practices and governmental confiscation between almost any two countries to make comparisons, of the nature we regularly discuss, easy. Or useful, for that matter.
Do you have a high % of renters under this lack of incentive regarding the tax codes ? This is so interesting to me on how this plays out .
My understanding is that there is a much lower rate of home ownership, at least in the cities where there are a lot of rentals. I do not know if the renters tax break still exists, or if it extends beyond Quebec. This situation arises from a very different social contract than we have in the states, and would be just one of many variables that would have to be considered, so it might not be so easy to figure out how causality works in this case.
Living in Montreal made me realize that Massachusetts is a libertarian paradise in comparison.
Thank you for you thoughts .From what you all have said so far I would think builders would be interested in building rentals ,but also it’s far more complicated to compare with United States .The last time I was in Canada I was amazed at how long the sun stayed up and how soil rich the farmlands looked .
Quebec is its own little economy. It constantly threatens to divorce the Rest of Canada (ROC) but never does it. If you look at the net tax revenues produced by Quebec and the amount of government subsidies the ROC pours into Quebec, you see that Quebec would have to be stupid to leave Canada. So, they threaten and the multicultural elite wring their hands and worry about what would happen if Quebec left - and then the government gives Quebec more money to stay. So, Quebec has to find new ways to spend the money the ROC gives them. Giving money to renters is one such way. Ridiculous, eh? Quebec also has huge bonuses for having children (part of their strategy to one day outnumber the English and engineer a French takeover of Canada on population grounds - that one has been going for over 200 years). Quebec has become a trust fund state, devoid of innovation or large-scale entrepreneurship, with mandated French language education that makes it difficult for its citizens to work in the rest of North America. Sooner or later economic collapse of the Quebec economy is likely. Once the ROC decides to stop subsidizing them.
Mats Sundin (captain of the Leafs) is selling his house in Toronto, which is causing speculation about his leaving the team.
But the reality is that Mats is quite the speculator. He bought it one year ago for CAD 4.6 m and is now listing it for 6.5 m. (A moronic Swedish journalist stated that the price will be bid up by a few more hundred thousand when it sells. Ha-ha!) If the Canadian market has peaked then Mats is going to be chasing this one down the curve for a few years, I would imagine.
The house is on a 50 by 173 foot lot. Holy smoke, I would want a bit more land for that kind of money.
Apart from shoeshine boy signals, atheltes are usually not the brightest investors and is a good sign that the market has peaked.
http://www.theglobeandmail.com/servlet/story/RTGAM.20060511.wxsundin11/BNStory/Sports/home
Frickin hilarious! Even the hockey players want to “cash out”!
Massachusetts allows you to deduct 50% of rental payment. (Maybe with an income cap.) I also think that there is no mortgage interest deduction, but I might be wrong.
Doing the Mass State income tax form in not a trivial matter like other states (after you have done the Fed) because there are so many specific rules.
They also slap you with a 12% punitive tax on all sort of things like interest from out of state banks (!), short term capital gains. Quite the socialist paradise……..