Real estate market sturdy but cooling.

There’s an article in this weekends sun about the Canadian housing market slowdown titled Housing market still sturdy, but cooling. Sort of like a casserole, perhaps soon it will be cool enough to eat without getting burned?

The housing market in Canada is holding up better than in the U.S., but it is cooling and will cool further heading into the new year, analysts said Friday in the wake of a stronger-than-expected housing construction report.

Almost all of those new starts are apartments and condos in the prairies and atlantic canada. In BC housing starts declined by 7.9% compared to last year. J.P. Morgan economist Ted Carmichael is quoted in the story with reasons that the Canadian housing market shouldn’t be in as much trouble as the US market. He mentions that “mortgage rates at large Canadian banks have moderated recently, reflecting the decision by the Bank of Canada to keep its trend-setting rate steady” and:

…the pace of Canadian housing construction has slowed much less than in the U.S., he added, noting that construction in November here was the same at it was a year earlier, while south of the border construction has plunged more than 27 per cent over that time.

Another report, released earlier this week, suggests that the Canadian market will not suffer the same fate as the U.S. market, with the latest barometer of building intentions _ building permits _ still on the rise, even though the increase was also limited to multiple-unit housing.

I wonder what the gap between a building permit or start date and a buildings completion or move-in date? I would assume it must average around a couple of years for the whole process. Assuming I’m not way off, how clearly can anyone predict market conditions in two years?

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whatever
whatever
13 years ago

yeah, nothing quite like looking at the past and calling it the future.

Freako
Freako
13 years ago

The good Ted has construction as a bullish sign. Personally, I would spin it as a bearish sign, increasing oversupply.

Uncertain Buyer
Uncertain Buyer
13 years ago

I would say a "Crash" would be an over-correction of prices which would bring housing prices lower than what they were a few years ago.

time2sell
time2sell
13 years ago

What constitutes a crash? If prices were to drop 25% that would be a couple hundred thousand dollars off the price of the average house. To see $200k disappear in a year sounds like a crash to me.

Anonymous
Anonymous
13 years ago

I meant = not +. Damnn shift key.

Anonymous
Anonymous
13 years ago

The market will not crash but prices will be lower by 25 to 30% next fall. If you bought 4 years ago and need to sell in a year you are still golden. If you bought this year and need to sell next year then you are either a speculator, or have experienced some tough times. In either case I am sorry for you. Like E+MC squared its all relative to where you started from.

ReductiMat
ReductiMat
13 years ago

What's a plonde?

machoslob
machoslob
13 years ago

d_oush is a guy????Here I had him/her pegged as a plonde of the female variety.

Anonymous
Anonymous
13 years ago

D_oush puts forth a lot of silly arguments, I think he's just trolling for responses. I wouldn't take anything he says too seriously.

betamax
betamax
13 years ago

the Canadian market will not suffer the same fate as the U.S. market, with the latest barometer of building intentions _ building permits _ still on the riseA year ago, building permits were on the rise in the US – that guarantees nothing. It's almost amusing to hear the same crap said in the US parroted here a year later, with no doubt the same effect.

the pope
the pope
13 years ago

Hey Solipsist, festive isn't it?Delicious and Nutritious!Buy now before Rainy marketing systems get their hands on it and adds a 30% 'lifestyle branding premium' to the price. The new model will be about half the size, but it will be served on a granite countertop and include the use of a fork for a low monthly maintenance fee.d_oush: be polite and state your point of view without personal attacks please.

betamax
betamax
13 years ago

How can it be bad if it crashes AND be bad if it doesn't crashHe didn't say it wouldn't crash; he said it it would be worse if it crashes LATER, after an even bigger run-up. Being deliberately obtuse does not make you clever.

wannaget2calgary
wannaget2calgary
13 years ago

d_oush said You can't have it both ways.But I can have it good both ways. If it crashes now, that's good because I'll buy now. But if it crashes later, it will crash bigger and that's good too, because I'll buy later for less. How much gooder can it get than that?

stucco-slushy
stucco-slushy
13 years ago

D_oush: Yeah, you too man. Does your standard conversation technique involve asking for clarification on a point and then making flip comments when you get an answer?Is your point that we should ignore anything deemed 'negative' because its not fun?I think you're in for some bad times money-wise if thats your approach.

d_oush
d_oush
13 years ago

I bet you're a lot of fun at parties.

stucco-slushy
stucco-slushy
13 years ago

D_oush: I mean that you can't get something for nothing. At current levels of affordability something has to give, and if our market carries on it makes the inevitable 'correction' all the more painful.Even if the market doesn't 'crash' it will mostly likely flatline or deflate which in real terms means you're sitting on a depreciating asset that is expensive to maintain.

d_oush
d_oush
13 years ago

Hi stuccoslushy, why do you say "with the right market conditions the real drops could be delayed for a few years which would potentially make it all the more painful". If the market doesn't crash now how would that be bad? If we have the right market conditions doesn't that mean we keep having a strong economy and house prices keep solid?How can it be bad if it crashes AND be bad if it doesn't crash, unless you just think everything is bad no matter what. You can't have it both ways.

solipsist
solipsist
13 years ago

That casserole looks fantastic! You could almost live in it!How much did you pay for it?VHB is going to be bummed out for missing that feast.

Anonymous
Anonymous
13 years ago

Oops, forgot about the linking trick. Here's a clickable link to the story:clicky

Anonymous
Anonymous
13 years ago

The US market continues to sink. There's a story today on MSNBC about this being the second year they're seeing drops in existing homes:http://www.msnbc.msn.com/id/16155913/from/RS.3/If only we all had the crystal ball that David Lereah has access to:“By the fourth quarter of 2007, existing-home sales will be 4.6 percent higher than the current quarter,” Lereah said.

stucco-slushy
stucco-slushy
13 years ago

I think its a little overly optomistic to think that the market here will soon be 'cool enough to not get burned'. It was a long ride up and I bet the drops on condo and house values here is going to be a long slow ride down.Probably not like Tokyo with their famous fifteen year drop, but I'd say we're looking at least a couple of years before we're really in the trough, and with the right market conditions the real drops could be delayed for a few years which would potentially make it all the more painful.

ken
ken
13 years ago

WHAT is that PICTURE?! Is that a hot-dog casserole?It looks about as appetizing as the Vancouver real estate market.