A weekend topic starting with Now Toronto. “A Scarborough bungalow is currently listed at $2.2 million, which is double the record-breaking average price for a home in the Greater Toronto real estate market. The selling agents says that price is not evidence that Canadians are sitting on a housing bubble, as one economist has recently said. The listing says the massive 119 x 112.42 foot lot has approval to be split in half so that a buyer can build two large homes on the property. Realtor Dan Hoffman, who is representing the seller, estimates that building 5,000 square-foot homes on each lot would cost an extra $1 million each. So that’s an approximately $4.2 million investment.”

“‘You’re looking at $2.6 or 2.7 million,’ says Hoffman, predicting what each home would fetch.”

“There’s at least one person in Toronto who wouldn’t go for that proposition. Economist David Rosenberg told BNN Bloomberg that Canada might be experiencing ‘one of the biggest bubbles of all time’ and that he would ‘absolutely not’ invest in a home in the Greater Toronto real estate market.”

“Rosenberg was speaking in reaction to the Bank of Canada’s announcement that they will be holding the overnight interest rate at the record-low 0.25 per cent. He pointed out that Canada’s unemployment rate is at 9.5 per cent, which is higher than peaks during the last two recessions, ‘including the great financial crisis.’”

“I tell Hoffman the idea of a West Hill fetching close to $3 million sounds astronomical. ‘A lot has to do with who’s buying them,’ he responds, suggesting we get away from thinking the traditional four-person family with $125,000 is the only kind of customer in the Toronto real estate market. ‘I’m on the frontlines and I see two families moving into a house like this,’ says Hoffman. ‘I see people buying a house and renting out the basement for $2000. I see a lot of gifted money. I’ve seen parents put $500,000 into their kid’s pocket for the down payment. There’s a lot of money out there.’”

The Toronto Sun. “In the final week of February, a fairly unremarkable 17-foot wide semi hit the market in the west end of the city. It was nice enough, though not particularly large and not particularly updated. It had one parking spot. It was listed just under $1.5M. Well, it lasted a day. The selling price? Just over $2.1M. Let that sink in for a moment.”

“As Chris Kapches, CEO of my real estate brokerage Chestnut Park Real Estate said, what we are witnessing — in real time — is the ‘complete untethering of fair market value from the economic factors responsible for establishing fair market value. House prices have entirely detached from reality.’”

“Interest rates so low that we now joke about money being essentially free. And prices rising so quickly as to produce panic among buyers, their fear of missing out so intense they’d rather overspend today to ensure they’re not priced-out tomorrow.”

From Summit Daily in Colorado. “Summit County’s real estate market was robust before the pandemic hit, but lately, the market has skyrocketed. With the current climate of potential buyers outbidding one another — and even offering much more than asking price — some people are wondering: Is this another housing bubble, like the one that burst during the last recession?”

“‘There is a (buying) frenzy, but it is most definitely not a bubble,’ said broker Ned Walley. ‘It’s a permanent, seismic shift.’”

From CBS in California. “As for how long the bidding wars will last, Michael Delehanty, a Real Estate Agent for Compass, says it doesn’t look like it will let up anytime in the next three to six months. ‘The outlandish aspect is not feeling like this is a bubble, not feeling like this is an unsustainable run-up on the market,’ Delehanty said.”

From NBC DFW. “‘Sellers’ asking prices have marched upward every week this year. Buyers have learned that if they aren’t aggressive enough one week, they will have to bid higher on a home that’s listed the following week,’ Redfin chief economist Daryl Fairweather said.”

The Palm Beach Daily News in Florida. “On the market for six years, the massive ocean-to-lake estate of the billionaire Ziff family has finally sold in Manalapan for about $94.17 million. The 15.65-acre compound at 2000 S. Ocean Blvd. near the Boynton Beach Inlet was last listed at $115 million by Sotheby’s International Realty, although it had been marketed privately in early 2015 by other agencies for $195 million, the same price it had when it first entered the multiple listing service in 2016.”

“Agent Cristina Condon had represented the property with her colleagues since May 2017. By then the estate’s price had dropped to $165 million and fell to $137.5 million before briefly rising to $138.8 million. Last August, the property’s price dropped to $115 million.”

The Real Deal on New York. “When South Korea’s Meritz Securities put together a $350 million inventory loan for a Ceruzzi Properties condo tower last February, it seemed the company’s appetite for risk was growing. The pandemic, which hit New York City a few weeks later, has certainly put risk appetites to the test. For the loan on the Centrale, in Midtown East, caution might have been warranted: A lawsuit alleges the $110 million mezzanine portion is in default.”

“The state-owned Industrial Bank of Korea, acting as trustee for the investment trust backing the debt, is seeking $40 million in damages. According to a suit filed in Manhattan Supreme Court, Ceruzzi missed a $2.35 million interest payment in November. Following an acceleration and with default interest, IBK says the total amount owed is now more than $86 million, of which up to $40 million is subject to a payment guarantee.”

“‘To date, no payment has been received and the full balance remains outstanding,’ IBK’s lawyers wrote when the suit was filed in late January.”

From People Magazine. “Steve Tennison, who owns 98 apartments in a two-story garden-style complex in north Houston, has been lauded by the local apartment association for going out of his way to help renters. Business was going well before COVID. Last April, tenant after tenant started coming in with ’empty pockets,’ Tennison says. Meanwhile, ‘I was watching my bank balance go lower and lower,’ he says. ‘I have about 18 people who trusted me with their life savings to invest in this apartment complex deal,’ he says.”

“Today Tennison says he is breaking even. ‘I’m on the knife edge of profitability and insolvency,’ he says. ‘This is not what I signed up for. It’s a lot riskier than I thought it would be.’”

“The pandemic hurt high-end landlords too. Wayne Zussman owns three condominiums in Washington, D.C. ‘I’ve never had a day without rent in 35 years,’ he says, but urban living has fallen out of favor because of COVID. Compounding that, ‘People with no jobs or a cut in pay are not looking to move,’ he says. One of Zussman’s condo has been vacant for three months and the others may soon be vacated too. Meanwhile, he’s on the hook for expenses, including HOA fees and maintenance.”

“PC Wang owns and manages three apartment buildings in Montrose, an area close to downtown Houston. Vacancies were rare. Now, with restaurants, gyms and offices at a standstill, many of his tenants have fallen behind on rent. Vacancy is up to 20 percent. ‘It is the landlords [who are] the group of people who get hurt most,’ he says. ‘I’m the one who gets stuck. Every month I owe more and more money. I’m going backward. I will never be able to pay it off. I can get by one day at a time, but I owe more money. I don’t know what I’m going to do. I don’t see my dream coming true.’”

“Wang immigrated from Taiwan 50 years ago and worked in IT for years before taking his savings and investing in apartments. At 74, he’s financially helping his two children and three grandchildren, with another on the way, and now he has less to give. He wishes he could hire a manager and retire, but right now he has negative cash flow. ‘You say this is a rich country — it’s a joke,’ he says. ‘Everyone is struggling.’”

The Sydney Morning Herald in Australia. “ANZ Bank chief executive Shayne Elliott has predicted banks could be forced to rein in higher risk mortgage lending at some stage, as cheap debt drives up house prices and regulators worry about the market overheating. With Australian house prices rebounding rapidly from the pandemic, the bank chief said property prices would remain ‘well supported,’ which could ultimately force policymakers to step in, as has occurred in previous booms.”

“Mr Elliott said rising house prices tended to cause social and political problems, such as worries about first home buyers being locked out of the market. There would also be ‘some concern’ from financial regulators about the risks from banks lending against high-priced assets. New Zealand authorities recently introduced caps on loans with smaller deposits, and Mr Elliott said he thought some sort of similar intervention may ultimately occur in Australia.”

“‘Just based on what we know today.. you would have to say it’s more likely than not at some point,’ he said. ‘I don’t think it’s immediate, I don’t think it’s going to happen this week. It may not even happen this year.’”

“The types of policies that could be implemented included restrictions on loan-to-valuation ratios, he said, and there had also been a ‘good debate’ about debt-to-income ratios. Despite the possibility of regulatory intervention, Mr Elliott said there were not yet any signs of more irresponsible lending by banks, and he did not believe the market was in bubble territory.”

The Globe and Mail. “The bull, it seems, has gone berserk. What had been a relentless but mostly orderly rise in stock prices since last spring has given way to a riotous new phase of the bull market, fuelled by frenzied trading among the growing ranks of small investors and rookie day traders.”

“Over the last couple of weeks, an army of retail investors has latched on to a bizarre assortment of companies that had been left for dead by the professionals, setting off a cascade of turmoil through financial markets that has astonished the investing establishment. Since the COVID-19-induced market crash started nearly a year ago, a once-unfathomable volume of monetary and fiscal stimulus has provided a steady supply of adrenaline to revive financial markets.”

“Miniscule interest rates have made the stock market the only game in town. It’s hard to make decent returns with an acceptable level of risk almost anywhere else. And with the market clearly pricing in postpandemic gains in the economy and corporate earnings, stocks are on a run for the ages. It’s getting harder to ignore the signs that speculative excess has inflated the bubble in stocks. The IPO market is red hot, social media platforms are teeming with stock-market banter, investor sentiment indicators are off the charts and penny stocks have caught fire.”

“‘When your teenaged cousin living in the basement starts talking about trading stock options, that is usually the sign of a market bubble,’ said Jason Del Vicario, a portfolio manager in Vancouver. ‘There are just crazy amounts of speculative interest in the market right now. The last time we saw this was in 1999 and 2000. Nobody cares about valuation. It goes up, so you buy it.’”