Slowing market ‘returning to balance’
According to an article in todays Province CMHC has gotten out the crystal balls and they forsee a ‘return to balance‘ in the next year or so in the Vancouver housing market. Hopefully they’re reading the tea leaves and not smoking them. As prices and interest rates have inched up over the years they believe that the recent slow-down is a sign of things to come:
“In general, we see a trend toward more balanced conditions next year,” said Cameron Muir, senior market analyst for CMHC in Vancouver. “In the last few years, most markets in the province have been in the seller’s favour.
“The erosion of affordability is going to begin to impact the market next year. High home prices and increasing interest rates will make housing less affordable and squeeze out buyers at the margins.
“With fewer first-time buyers able to afford homes, it will ripple through the whole market.
“It’s not a disaster, it’s a return to balance,” Muir added.
Ever seen a see-saw when one person gets off? The unlucky fella left on the other end usually ends up with a bloody nose.
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kam Says:
August 16th, 2006 at 2:04 pm
The bloody nose scenario looks more and more likely due to the ridiculous heights this market has gone to. Real estate here never seems to find balance, it just swings like a pendulum from one extreme to the other. This time is not different.
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D_Oush Says:
August 16th, 2006 at 2:09 pm
All you grumpy bears are fooling yourselves. The fact is that things are different. There are so many factors that go into a market that it is overly simplistic to say that the future will look something like the past.
The fact is Vancouver is a growing city. We’re hosting the olympics in 2010, we have a beautiful location, a strong economy and demand from all over the world.
If you don’t buy now you are very likely in danger of being priced out forever. This is not meant to be insulting, it’s just the way things are now.
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solipsist Says:
August 16th, 2006 at 4:58 pm
it’s just the way things are now
“Now” is but a fleeting instant, and it is gone…
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D_Oush Says:
August 16th, 2006 at 5:21 pm
“Now” is but a fleeting instant, and it is gone…
Yeah, but look at the way prices have gone up over the last couple of years. Everything indicates that they will keep going up. Prices here are not really that high, condo’s are still affordable so why not buy now while you can?
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bc_cele Says:
August 16th, 2006 at 6:26 pm
Yeah, but look at the way prices have gone up over the last couple of years. Everything indicates that they will keep going up. Prices here are not really that high, condo’s are still affordable so why not buy now while you can?
So how are your tech stock doing?
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j2theroc Says:
August 16th, 2006 at 8:29 pm
> d_oush; I think your perspective is too narrow.
Many cities in North America are beautiful with strong economies, and their RE markets are stagnating if not dropping.
The Olympics have done nothing for RE in other cities, it is hype.
“Priced out forever” and “things are different” are the bromides of the “soon to be burned”.
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WoodenHorse Says:
August 16th, 2006 at 10:50 pm
D_Oush said…
Everything indicates that they will keep going up.
What are these signs?
Prices here are not really that high,
Compared to where by what measure? (and please….Vancouver’s not: London, Paris, NYC)
condo’s are still affordable so why not buy now while you can?
Why? You need to sell one?
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the pope Says:
August 17th, 2006 at 8:38 am
Prices here are not really that high
Did you read the Cameron Muir quote? CMHC disagrees with you:
“The erosion of affordability is going to begin to impact the market next year. High home prices and increasing interest rates will make housing less affordable and squeeze out buyers at the margins.”
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D_Oush Says:
August 17th, 2006 at 8:46 am
Woodenhorse: What signs prices will keep going up?
1-The olympics are coming
2-Demand from foreign investors
3-Strong economy
4-Many local ski-hills
there are more signs, these are just off the top of my head.
thepope:
Yeah but that quote is from the CMHC – their purpose is to provide ‘affordable’ homes, they don’t have an investors perspective.
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D_Oush Says:
August 17th, 2006 at 8:47 am
Oh, and bc_cele:
You can’t live in a tech-stock so there’s nothing to keep them from dropping to zero. Someone always needs a house to live in.
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WoodenHorse Says:
August 17th, 2006 at 9:12 am
1-The olympics are coming
Name one other city this caused a sustained RE price change? Also: Why aren’t we all living in Torino?
2-Demand from foreign investors
Not according to the recent Landcor study…it found that 94%+ of sales are to BC residents.
see: http://tinyurl.com/s239p
3-Strong economy
Lumber is headed into the toilet. Mining may not be that far off if the RE crash continues in the US.
4-Many local ski-hills
Well dam…you got me there. That justifies the Median house being over 10 times median household income. What was I thinking.
How big is that Condo your selling?
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WoodenHorse Says:
August 17th, 2006 at 9:16 am
You never addressed:
You: Prices here are not really that high
Me: Compared to where by what measure? (and please….Vancouver’s not: London, Paris, NYC)
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D_Oush Says:
August 17th, 2006 at 9:33 am
Why do you say vancouver is not like London, Paris, NY, etc? This is a big worldclass city. We have movie shoots going on all the time, we have the olympics coming. Vancouver is a lot bigger than it was 40 years ago.
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kam Says:
August 17th, 2006 at 9:37 am
d_oush-
I think you’re making mountains out of ski-hills.
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WoodenHorse Says:
August 17th, 2006 at 10:15 am
D_Oush said…
Why do you say vancouver is not like London, Paris, NY, etc?
D_Oush, I wish you the best.
Cheers,
WH
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D_Oush Says:
August 17th, 2006 at 11:38 am
Woodenhorse –
What is that supposed to mean? Do you think that Vancouver is not a growing city? We aren’t as big as NY or Paris yet, but we aren’t a small city like Kelowna. Canada only has a few locations with nice climates all year round and vancouver happens to be the big city smack dab in the middle of the nicest part of canada.
the way prices have gone up recently proves that this city is in demand.
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WoodenHorse Says:
August 17th, 2006 at 12:28 pm
d_oush:
I’m not trying to be insulting, but that statement basically shows me that we’re talking two different languages.
I like Vancouver, and yes, it’s growing. However, housing prices are so far out of wack with respect to incomes and potential rental incomes that it’s not funny.
furthermore, net immigration to BC has been at historic lows during this housing boom and that Landcor study shows it’s BC’er selling to BC’ers in the vast majority of cases. Overseas purchasers represent at most 4% of sales (could be less…check out that link)
However, whether or not Vancouver is in the same class as NYC or Paris is an opinion based debate. How’s about this, answer these questions:
1)Name one other city where the olympics caused a sustained RE price change?
2)How high do you expect prices to go? Especially given that we have near NYC prices with roughly 1/3 the square foot rental returns (not to mention the difference in salary between the two locations)
3)Given that Landcor report are you still holding to “Demand from foreign investors” as a driver of prices here?
4)Do you think Vancouver is immune to what’s currently happening to US RE?
I would like the responses to not have just opinions. Give me data or links (or at least verifiable points: i.e. lumber was 320/board foot last year, is 285/board foot right now).
I am probably the only guy you’ll find on any of these blogs that if you put forward a good argument, I’ll change my opinion. The prices don’t add up right now and are different form any other time in history: What is your justifaction that it’ll stay that way?
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WoodenHorse Says:
August 17th, 2006 at 12:30 pm
BTW: apologizes for the spelling.
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WoodenHorse Says:
August 17th, 2006 at 12:31 pm
Oh: one last question,
Have you ever seen a franklin mint collectable plate commercial? Do you remember what they say at the end of those?
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bc_cele Says:
August 17th, 2006 at 1:03 pm
Oh, and bc_cele:
You can’t live in a tech-stock so there’s nothing to keep them from dropping to zero. Someone always needs a house to live in.
Oh and d_oush everything you just said is the same rehashing of the top housing myths that we see time and time again.
If you are so correct, then explain to me why Hong Kong and Tokyo have crashed so hard and sayed down for years. They have a higher density of people, which I presume most live somewhere, and they have mountains, oceans and all that great stuff we have here. Japan even hosted the Olympics. Hasn’t helped them, though.
And hate to burst your bubble, but Vancouver isn’t in the world-class, yet. Maybe some day, but it isn’t even in the same class as Toronot, let alone Montreal, NYC, London, Paris, or Geneva. I’ve lived in, or around all these cities, and I can tell you that Vancouver has a long way to go.
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D_Oush Says:
August 17th, 2006 at 2:31 pm
We can bounce statistics back and forth, but we clearly disagree about where the market is going. I don’t have time to find statistics to back up my argument, but I would remind everyone that real-estate is an emotional market. Facts and figures say one thing, but it all comes down to opinions and emotion anyways.
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WoodenHorse Says:
August 17th, 2006 at 3:09 pm
D_Oush said…
I don’t have time to find statistics to back up my argument
If you’re laying out the better part of a Million bucks for something, I would recommend that you find that time to do such. And that is where we depart company.
I have numbers,
I have stats,
I have analysis,
I’m not buying.
Furthermore:
but I would remind everyone that real-estate is an emotional market. Facts and figures say one thing, but it all comes down to opinions and emotion anyways.
And that’s where we have the source of air that inflated this bubble. How do you think the “RE Never Goes Down” crowd will react to being bombarded by stories out of the US about it’s RE.
It’s just started…pull up a chair:
G&M: http://tinyurl.com/npehk
Or even:
http://thehousingbubbleblog.com/
Watch the articles, read the stories.
btw: I only just noticed you said this in your first post:
There are so many factors that go into a market that it is overly simplistic to say that the future will look something like the past.
Are you joking? You can’t just wave away history. You do however have to explain why it is different now.
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Anonymous Says:
August 17th, 2006 at 8:52 pm
d_oush, some arguments are just plain wrong and don’t warrant any consideration. Do you honestly believe that a debate, such as this, is nothing more than opinion and doesn’t have to be backed up with evidence? If so then I suggest that you stick to arguing sports with your buddies over a few beers, and leave the academic arguments to those who actually have something to offer.