Claire Neary and Tara Perkins – The Globe and Mail

The CEO of a U.S. luxury home builder says his company considered expanding into Toronto’s condo market but was scared off by the high number of investors buying real estate in the city.

Comment: And where did they get that number from? None of us who live here know what the investor share of the condo market is. And why would they care? The condos sell, they developer gets paid. Why do they care if the buyer lives there or rents it out?

Toll Brothers Inc., which designs, builds and finances homes in 19 states, “snooped around” in the city about three years ago, but was concerned that 60% to 70% of condo buyers didn’t plan to live in their homes, said CEO Douglas Yearley.

Comment: That is a ridiculous figure! No one sane thinks that the ratio of investor condos is that high. Maybe, just maybe, it is 25%. Probably less.

“We’re always looking for new places to grow, but the level of investment, and not just foreign investment, is what concerned us,” Mr. Yearley said following an appearance at the Society of American Business Editors and Writers conference in New York on Friday.

“We saw a lot of people buying with no intention of living there – they just planned to flip,” Mr. Yearley said. “When you have a lot of flippers, that’s when a bubble comes.”

Comment: That is simply not true. There are not a lot of flippers. Where did they “see” them? That guy seems to be not smart enough to run such a large and profitable company. Imagine the money he lost by not getting into the condo market here in Toronto. I guess Tridel and Menkes and Great Gulf are pretty dumb to keep building here.

While he said he hasn’t looked closely at Toronto’s market recently, Mr. Yearley said looking back now, “we missed an opportunity.”

Comment: Ya think? Maybe you were completely and utterly wrong in your bizarre estimations?

The average selling price of an existing home in Canada’s biggest city has risen by more than $100,000 in the past three years, from $465,369 in September 2011 to $573,676 last month.

Economists have cautioned, however, that condo prices may have reached their peak.

Comment: They have been saying that for 11 years now, consistently wrong ever single time.

Toll Brothers recently expanded into Seattle and Mr. Yearley said the company will now start studying the Vancouver market. “We haven’t been up there a lot, but we do plan to look at both Toronto and Vancouver.”

Comment: Right, so Toronto is too scary, but Vancouver – who recently came off years of falling prices and failing projects – makes sense? Who puts this guy’s pants on for him? I mean, seriously…

Mr. Yearley added that a key difference between the Canadian and U.S. housing markets was that Canada doesn’t offer mortgage interest rate tax deductions to encourage home ownership. That has been a staple of the U.S. system for decades, but has not taken hold in Canada.

Comment: And it is so minor as to not matter at all in the grand scheme of things. There are MANY other differences, much more important differences.

Speaking about the U.S. market in general, Mr. Yearley said that while the lasting impacts of the financial crisis have made home ownership less attainable for many Americans, it is still very much “part of the American Dream.” Americans are viewing their homes more as shelter than as investments but still take great pride in ownership, he said.

The U.S. housing market has shown signs of a turnaround this year, with prices, construction and sales rising. However, the pace has cooled in recent weeks.

Comment: Until they get their banking system in order and end the criminality in it, they cannot move forward. And unless they do something to address the growing wealth gap, most Americans will only ever dream about home ownership, as they will never be able to afford it.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.
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