Toronto Real Estate: Price Moderation in October
I have compiled some aggregate sales figures for Toronto Real Estate for the month of October. It is the same story. There is a flurry of active listings when comparing monthly and yearly figures. The total sold has fallen in most areas. Prices have mostly fallen
Monthly
Central - activity (# listings) up 14%, but total number sold is down 16.8%. Average prices up 1.6% but median prices down 5%
East - activity (# listings) up 2%, but total number sold is down 22%. Average prices up 1% and median prices up 3.5%
West - activity (# listings) up 3.5%, but total number sold is down 19%. Average prices down 7% and median prices down 9%
North - activity (# listings) up 2.4%, but total number sold is down 22%. Average prices down 5.9% and median prices down 0.7%
Yearly
Central - activity (# listings) up 65%, but total number sold is down 44%. Average prices down 9.2% but median prices down 17%
East - activity (# listings) up 21%, but total number sold is down 14%. Average prices down 3% but median prices up 0.5%
West - activity (# listings) up 28%, but total number sold is down 13.4%. Average prices down 7.8% and median prices up 1%
North - activity (# listings) up 48%, but total number sold is down 39%. Average prices down 7.2% and median prices down 4.5%
Why would prices be falling here? We see no major job losses and Toronto does not have direct exposure to the fallen commodities market. Supply is increasing because people are seeing the US housing bust storm headed our way. The Toronto stock market was also weak last month due to the falling commodities prices globally.
Just this past weekend I would stroll along various streets. There are literally 3-5 open houses on some blocks.
Monday, November 03, 2008
Summary Notes on TSG Stock Market Letter for the week ending Oct 31 2008
- Emerging Markets ETF was the surprise star performer rising more than 28%. That being said, Zanger recommended that it is best to avoid the market until the wild swings slow down which “could take months.”
- If the rally is to have any staying power we will need to see volume rise substantially in the next few days
- Read full article for some good charts on the US Real estate @ http://tradesystemguru.com/content/blogcategory/34/68/
- It came as no surprise that GDP fell 0.3% in Q3-08 but the one standout in the numbers was the significant 3.1% drop in personal consumption expenditures or consumer spending. It was the biggest PCE drop since February 1991. It should also surprise no one that this number will get worse in the coming quarters
- First American CoreLogic report recently revealed that nearly 20% of mortgage borrowers (on more than 7.5 million properties) owed more on their loans that their homes were worth. Another 2.1 million properties will enter negative equity territory if property prices decline another 5%, according to the report. As of the latest data, 266,000 mortgages are now defaulting every month in the U.S
- To sum up, the underlying premise of these bailouts is to stimulate a rapid reversal and return to the days of high prices and bloated valuations. But this will come at a cost – a fiat currency that has no real relationship to true value and rapidly rising inflation. As a best-case scenario, we risk years of anemic economic performance, a rapidly declining dollar combined with stagflation and eventual spike in interest rates as foreigners avoid dollar-denominated assets like the plague in search of those assets that are realistically priced. If it fails, we can expect a continuation of extreme levels of volatility as markets swing between periods of euphoria as new stimulative plans are announced and then depression as prices plummet and the realization hits home that the latest plan has failed.
Saturday, November 01, 2008
October in Review
To summarize this past month, work stock markets sold off very sharply in October. This was the worst performance since October 1987. It is very important for investors to know what is most absolutely certain to occur next.
In the years ahead after 1987, a recession ensued in North America. In Canada, this was not fully felt until 1991 - 1995. Prior to the recession, the real estate market literally collapsed in 1989. World indexes did not perform well at that time either, most especially in Japan.
Today, it is eerie that the market is undergoing the same economic weaknesses, only it is a lot worse. News reports and analysts repeatedly describe the situation the market is in as "chartered territory." As an independent analyst who thrives on thinking otherwise, I have to agree.
The single word to describe the market problem is de-leveraging, but the problem is a two-step one. First, as we all know is the financial market de-leverage precipitated singularly by the collapse of the housing market in the U.S. and in Europe. Is Canada next? We'll see, but what has already happened (and what I have already written about) is that prices have fallen quite convincingly in Alberta and in Vancouver.
We are only now, today, facing the second problem: a recession. The word is an ugly one but simply describes two consecutive quarters of negative growth. That's just six months. So what's next?
Unfortunately, my analysis is no more positive from here. All leading indicators have suggested the recessionary forces are just beginning. Technology indexes have performed very poorly. See Semis.
The three horsemen of the economy who either led or dominated the economy over the past few years is sick. Housing, automobile, and financials. The cost two the economy will be job losses in this area. This will exasperate weakness in consumer spending.
Buy Stocks?
I am a consistent investor and I remain a value investor. The stock market has certainly become cheaper and the text book answer will be to buy stocks. The enemy, however, continues to be described by that one word: de-leveraging. Hedge funds will be selling into the rally, and only technical charts will indicate to investors when this "sell on the rally" phenomenon will end. A few stocks are becoming value plays, and I will provide an analysis in upcoming entries.
One stock I really like is Canon. I also foolishly like Sony because they have released a very nice digital SLR, but Canon is a more focused company in the photography and computer printing space. Both are consumer goods and might give a leading indicator as to the health of spending.
One more thing to note. I am/was featured as featured manager on the FSX Trader site this week. In addition, the two picks I made in the past two months performed very well. HED is a bear oil fund that I discussed when it was $13.19. It peaked at $45.46. HXD is a bear fund to the Toronto Stock Exchange. It was trending around $18.50 at the time of discussion and peaked at $38.25.
To summarize this past month, work stock markets sold off very sharply in October. This was the worst performance since October 1987. It is very important for investors to know what is most absolutely certain to occur next.
In the years ahead after 1987, a recession ensued in North America. In Canada, this was not fully felt until 1991 - 1995. Prior to the recession, the real estate market literally collapsed in 1989. World indexes did not perform well at that time either, most especially in Japan.
Today, it is eerie that the market is undergoing the same economic weaknesses, only it is a lot worse. News reports and analysts repeatedly describe the situation the market is in as "chartered territory." As an independent analyst who thrives on thinking otherwise, I have to agree.
The single word to describe the market problem is de-leveraging, but the problem is a two-step one. First, as we all know is the financial market de-leverage precipitated singularly by the collapse of the housing market in the U.S. and in Europe. Is Canada next? We'll see, but what has already happened (and what I have already written about) is that prices have fallen quite convincingly in Alberta and in Vancouver.
We are only now, today, facing the second problem: a recession. The word is an ugly one but simply describes two consecutive quarters of negative growth. That's just six months. So what's next?
Unfortunately, my analysis is no more positive from here. All leading indicators have suggested the recessionary forces are just beginning. Technology indexes have performed very poorly. See Semis.
The three horsemen of the economy who either led or dominated the economy over the past few years is sick. Housing, automobile, and financials. The cost two the economy will be job losses in this area. This will exasperate weakness in consumer spending.
Buy Stocks?
I am a consistent investor and I remain a value investor. The stock market has certainly become cheaper and the text book answer will be to buy stocks. The enemy, however, continues to be described by that one word: de-leveraging. Hedge funds will be selling into the rally, and only technical charts will indicate to investors when this "sell on the rally" phenomenon will end. A few stocks are becoming value plays, and I will provide an analysis in upcoming entries.
One stock I really like is Canon. I also foolishly like Sony because they have released a very nice digital SLR, but Canon is a more focused company in the photography and computer printing space. Both are consumer goods and might give a leading indicator as to the health of spending.
One more thing to note. I am/was featured as featured manager on the FSX Trader site this week. In addition, the two picks I made in the past two months performed very well. HED is a bear oil fund that I discussed when it was $13.19. It peaked at $45.46. HXD is a bear fund to the Toronto Stock Exchange. It was trending around $18.50 at the time of discussion and peaked at $38.25.
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