So, “The Spike In unsold Toronto Condos Is Not A Sign Of ‘Increased Vulnerability'” According To A CIBC Economist . . . If It Walks Like A Duck, Talks Like A Duck, And Looks Like A Duck, Isn’t It Usually A DUCK


Man, I just can’t imagine where or how they get these guys to write such double-speak!

According to the Canadian Mortgage and Housing Corporation and the Canadian Imperial Bank of Commerce, “the number of new, unsold condos in Toronto swelled from less than 1,000 units last December to approximately 3,000 units this May!

That’s a Three Hundred (300%) Percent increase in just five months, months that are historically big sellers!

It is interesting to me that the report points out that “the number of unabsorbed condos in the city in May was the highest it’s been since the 1990s”.

Mysteriously, they report that “that number fell by more than 800 units the following month“.

Is someone telling us that some how someone sold 800 units in June?

Here’s another interesting by-line:  “This meteoric ascent was not only highlighted by the Bank of Canada as a sign of vulnerability, but also by various short-Canada investors—using that surge as the ultimate illustration of the bubbly Toronto condo market,“.

For CIBC’s Deputy Chief Economist to use adjectives like “meteoric ascent“, one should consider it consequential!

Although he reports that “Usually, when developers find it hard to sell completed condos, it’s a “sign of troubles ahead.” he goes on to state that “the fluctuating numbers aren’t necessarily a reason to panic“.

Now, I’m not a big one for panicking, but really!

Has anyone noticed the remarkable number of condo buildings being erected in downtown Toronto these days.

Do you remember recent articles about “Toronto having the most condos under development that any other North American City“!

With so many condo units coming to be added onto the 26,000 completed units in the first half of the year, 3 times more than the number completed the year before, it really is difficult to not see that there is a problem brewing.

I simply don’t think that our government should use tax payer money to buy down mortgage rates so more people can buy into the Condo Game!

There are only two employment sectors buoying up our economy’s stats, construction and Civil servant employment, so you can see why it is so important that meaningless studies or reports like this one are published!

What is worse, the decided majority of the unsold units are held by only 4 developers introducing a whole new level of volatility to the equation.

I’ve blogged for years now warning my global readers and investors about the volatility of Toronto’s condo market.

I quit buying myself and/or recommending that my global readers and clients to simply hold on the sidelines as I am expecting a significant price adjustment.

I quit the day to day condo business a couple years back when prices passed the equity return threshold (“positive cash-flow“) that I require as an investor.

I canned the term “negative cash-flow” back when the real estate markets crashed back in the late 80’s (my job was to sell for the developers back then and I needed to come up with a salesman’s way of saying that “you’d lose money every month“) and swore that I would never go there myself as an investor and if I wouldn’t go there, I would sell someone else into that type of foolishness either.

I warned my readers and investor clients a couple years ago about “shadow inventories of unsold suites” and I guess this means that they are coming out of the shadows!

It is really only common sense to realize that nothing goes up for ever!  For some illogical reason, condo investors seem to want to defy the logic.

I guess that’s what makes investing so intriguing.

For the conservative investor  .  .  .  .  I’m Charles






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