Market not so sturdy after all?

Marco wrote in with a link to this story in the Globe and Mail. Some of the most expensive cities in Canada saw price drops in new homes for October 2006: This happened in Toronto, Victoria & even oil-rich Calgary. Meanwhile in the US there is a debate over how bad their housing slump is going to get. Realtors think the worse is over, but some academics and economists disagree, with one even saying the housing glut we’ve seen is comparable to the tech boom of the late ‘90s.

So what the hell is going on here? How can we be seeing price drops with a vibrant economy and all that valuable sludge still left under the sand? Could it be that Real Estate in many places around the world is over-valued, propped up by many years of cheap credit as a ‘safe’ investment? And just how much pressure are we going to have to let out of this bubble to keep it from popping?

Obviously we’re going to need more buyers, and it appears like the answer might be closer than you think: Vancouvers booming homeless population needs shelter and we’ve got thousands of new condos being finished downtown over the next couple of years. While some people have the housing issue under control others clearly do not.

There are two ways we could approach this thing:
1) Tough Love: Outlaw homelessness, convert new empty condo units to prison cells and incarcerate the lot of them.
2) New Customers: Work with lenders to create mortgage products aimed at the homeless population, ‘zero down’ and ‘stated income’ could be helpful here.

Option 1 could be VERY expensive tax-wise, so it may not be the smartest move. The only potential flaw with option 2 is that it will take a lot of bottles and cans to get the funds together to cover legal fees and mortgage insurance, and some banks may be hesitant to lend to this market.

If nothing else works I suppose they could just go out and get a real job.

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digi
digi
13 years ago

Anybody who is suprised that our market isn't 'stable' or who is thinking about buying right now should give their head a shake. All the info is out there and worth checking out unless the thought of losing several, possibly hundreds of thousand dollars doesnt bother you..

ken
ken
13 years ago

Its too bad the Vancouver market isn't more in line with Canada as a whole. Not to say that there hasn't been some ridiculous run-ups in other parts of canada, but nobody else can match us for irrational exhuberance and get-rich-quick schemes.

whatever
whatever
13 years ago

Hey anonymous,Just a minor correction: you seem to have misspelled the word 'bullshit'.

Anonymous
Anonymous
13 years ago

Still bullish for the Canadian market as a whole. Lots of new stuff getting built.

Van Housing Blogger
Van Housing Blogger
13 years ago

It was the Statcan New Housing Price index they were reporting on. It's essentially meaningless for Vancouver since it is based on new subdivision construction. We don't really have those.

the pope
the pope
13 years ago

That I can't tell you, particularly since its tagged 'breaking news from the Globe and Mail'.If the news is broken, maybe they havent heard about November yet.

paulb
paulb
13 years ago

Why is the Globe talking about October drops when many local areas dropped significantly in November.