As promised, here is the sequel to Tuesday’s post about a certain company’s “2008 Market Forecast.”

I was so distraught after reading their “Forecast” that I went ahead and “forecasted” myself drinking a six-pack of Corona and passing out on the couch.

I am a MASTER-Forecaster…

For those who have just tuned in to our regularly scheduled program, I’m reviewing a flyer I got in my mailbox from a certain real estate company.  The flyer is called the “2008 Market Forecast,” and is not worth the paper it’s printed on.

The root of my problem is with respect to their supposed “forecast” and how it does not contain one identifiable piece of substance.  There is no data, no statistics, and nothing to back up their claims.  No graphs, no charts, no numbers, NOTHING!

Just a bunch of garb about the market that should have been written on a bar napkin and used to wipe up a spilled Bloody Caesar…

WHAT YOU NEED TO KNOW ABOUT TODAY’S CONDO MARKET: 

1.  There is still a shortage of good condo listings.  The first sign of a market correction will be when we have more listings than buyers – no signs yet.
I agree with both portions of this statement, however what defines a “good condo listing?”  I pull my hair out when I see people buying condos in any of the new developments on Navy Wharf, Lower Yonge, Fort York, etc.  I have a client looking in the $300 – $350K range, and each week we are lucky to get ONE “good listing” hit the open market.  The buyers are out, the sellers are not, and buyers have their fingers crossed that Spring will bring about a glut of new listings.  True enough, in any down market (see United States) there are a flood of properties for sale and not nearly as many active buyers.

2.  “Owner Occupiers” are the major buyers in this resale market – in 2007 investors all moved into new projects, which are completing in 2010/2011.  That is when you will see the market change.
Again, I’d like some data to back this up.  There is nothing I hate more than a statement (especially one in a “forecast”) that has absolutely ZERO credibility.  “Investors ALL moved into new projects,” says who?  Examples?  How many projects were completed in 2006?  2007?  How many were launched in those years?  How many broke ground?  There is nothing to back this statement up.  Their prediction of a market change in 2010/2011 would have been impressive had they made the prediction five years ago.  Define a “market change.”  Seems to me, that a group of expert forecasters such as these people could at least explain what kind of change (plateau, dip, correction, recession) will take place.

3.  The impact of the new City Land Transfer Tax will be minimal.
I agree….sort of.  Residents of Toronto, Ontario, and basically all of Canada are used to being taxed to death.  Our GST has been cut from 7% to 5% in the last two years, but our property taxes have gone up and the land transfer tax has essentially doubled.  I don’t think people are going to stop buying real estate because of this new tax.  It will be accepted, absorbed, and eventually forgotten.  First time buyers don’t have to pay the tax, and the high end richie-riches can consider it a cost of doing business.  Lenders are already incorporating the taxes into their mortgage packages.  The only people really affected by this tax are those condo-flippers who like to buy, sell, and profit each year.

4.  Interest rates are not a factor.  Employment also remains strong.
This is by far, the dumbest statement ever made by any rational human being.  Forget the grammatical inconsistencies by using the word “also” to compare two opposites, and consider any single market in the last two hundred years where interest rates were NOT a factor.  Interest rates are probably the most important factor of any economy, and can single-handedly change the direction of a market.  Just look at what happened last week when the US Fed cut rates by 3/4%!  Surely, if rates drop further, investors will assume more debt and purchase more real estate, and likewise, if rates increased in a couple years, that could contribute to a bubble burst.  They didn’t even put numbers to this statement (unemployment 5.9% in December 2007, prime rate 5.75%).  That took me five seconds to write, and would have taken one minute to lookup…

5.  More people/buyers want to live downtown – not just those who work in 416 but also those who work in 905!  And then you still have significant immigration.
Again, the syntax and grammar makes this statement confusing.  I thought they were talking about net migration, ie. the product of those people moving out of Toronto and those moving into Toronto.  But no, they just added on that last statement about immigration as if it had something to do with the previous statement.  Immigrants are helping our real estate market to increase as much as anyone else.  All these high-rise condos are being built downtown, and immigrants are not only the ones who look to purchase at the bottom of the barrel, but also those most unfamiliar with the city and thus how terrible those buildings are in terms of location, value, and investment.  YAY for Canada’s lax immigration policies!

Well, there you have my comments, concerns, and frustrations with the second part of the Re/Max Condos Plus “Market Forecast.”  I still can’t get over their comment about interest rates…

I’ll leave you with one final idiotic comment that they made:

In the introduction to this “Market Forecast,” they make the following statement: “A young couple, living in a 1-bedroom condo that is expecting a child will move whether interest rates are at 2% or 12%.”

REALLY?

Monthly payment on a $300,000 Mortgage:
@ 2% interest: $1,270.35
@ 12% interest: $3095.70

Yeah, the young couple will be moving, alright. 

Moving to a van down by the river, or under the bridge into the third cardboard box on your left…