Muir sees affordability problems leading to balance.
Reductimat just gave me the heads up on this story: The B.C. Real Estate Association is seeing lower home sales and more inventory going into this spring and they predict this trend will go on due to affordability problems cutting into demand from first time buyers.
The Association’s Chief Economist Cameron Muir says BC housing starts will likely drop 7% this year and a further 6% in 2008. He says the BC market is starting to return to more balanced conditions, and the demand for housing has dropped a bit.
Muir says that’s good news for some home buyer’s deep pockets because there’s more inventory to choose from, and less sales pressure to put a bid on a home right away.
Theres a bit more detail in this story in the Sun where there’s no prediction of lower prices, just less demand and more supply.. clearly they’ve studied some esoteric economics courses that I’m not familiar with.
April 27th, 2007 at 3:19 pm
Doesn’t Vancouver still have a long way to go before the limit is reached?
I mean, the illusion of affordability can be stretched significantly farther by offering 60-year, heck, even 100-year amortization loans like they did in Japan. Is there anything to stop banks from pushing multi-generational debt onto RE-crazed buyers, resulting in ever-higher prices?
April 27th, 2007 at 6:57 am
i spend a couple hours every day with my cup of coffee (americano) reading Ben Jones blog… I think we are in for a humdinger of a hangover. The market has been pushed out of shape and will snap back, the distortions on the up side willcome back in unknown ways. Vancouver is ultra-bubbly, a sitting duck as such.
April 27th, 2007 at 6:39 am
freako: I agree re the rc blog. I started collecting some of the examples of really outrageous illogical statements and preposterous argument, but then I stopped. No point. Any post gets rebutted with complex nonsense.
April 27th, 2007 at 6:34 am
Hi guys. Seems like we're a small handful of bystanders incredulously watching a bizarre tickertape-parade where all the participants are high on something.I posted the following on RET (which is essentially now moribund re any real RE discussion):We have ballooning inventories in most areas and, simultaneously, anecdotes of a small number of properties selling for well over ask on the Westside (most recent a $1.2M ask going for $1.5M).I believe that all property types and geographical areas are going to end up getting smacked for about the same percent on the downside (50%, back to 2001 numbers), but the pattern of descent will likely differ.Currently we have a small number of panic buyers bidding up the Westside, where they have probably told themselves the story that they're buying the last bits of vaguely affordable land in Vancouver that'll ever be available.There are some remarkably modest homes selling for outrageous prices.
April 26th, 2007 at 8:50 pm
“just less demand and more supply.. clearly they’ve studied some esoteric economics courses that I’m not familiar with.”
Same camp, none of my economics courses covered that theory, however I must admit one semester I had econ on a Monday mornings.
April 26th, 2007 at 4:54 pm
“Isn’t that about where we are now?”
It depends on how we define affordability. Is it some guideline of how far we should stretch, or is it the absolute fundamental limit of what people can possibly afford without starving. I don’t really care which, but I can tell you that prices can’t keep rising just because rates are low.
April 26th, 2007 at 3:23 pm
affordable housing would soon be unaffordable, which is an oxymoron.Isn't that about where we are now?It seems to be human nature to think that the longer prices remain detached from fundamentals the less likely they are to correct, when its actually the opposite that is true.
April 26th, 2007 at 2:05 pm
" just less demand and more supply.. clearly they've studied some esoteric economics courses that I'm not familiar with."No sh*t. High prices DO NOT reduce demand. Other way around. High demand leads to high prices and vice versa. The demand function and the "quantity demanded at a given price" are not the same. It seems as if RE economists invented their own version of Econ101."if you visit Chipman's blog you will see some more interesting esoteric economics, "Double no sh*t. I wasted enough time on attempting to apply reason to that mess. Nuff said.The other "truth" being thrown around is that "continued low rates will pressure prices". Hogwash in my mind. Falling rates should lead at best to a one time shot of higher prices, as the new rates are factored in. But they can't keep on giving and giving perpetually like the Energizer bunny. Otherwise, affordable housing would soon be unaffordable, which is an oxymoron.
April 26th, 2007 at 12:10 pm
It's the same old….if you visit Chipman's blog you will see some more interesting esoteric economics, carefully explaining why prices are never going to go down.Surprisingly enough, some people truly believe that's true.My take: we will go through different stages. 1- inventory build up; 2- Sales slowing down even more in reaction to lower buying pressure; 3- Bailing out of some invesotrs; 4- Start of personal bankruptcies; 5- Further inventory buold up; 6- Price crash.Stage 6 is at least 12 months away in my opinion, but it is going to happen just like the sun will rise again tomorrow…..
April 26th, 2007 at 11:53 am
Good news for homebuyers deep pockets? Whats that supposed to mean?