Vancouver Condo Info

Home prices well above long term trend.

Breaking news from the Globe and Mail: in all Canadian markets (with the exception of St. John’s) current inflation-adjusted price levels are well above their long-term trend. This news from a report issued by the Bank of Novascotia.

The current Canadian housing boom, which began nine years ago, has been the longest of the post-war era, with cumulative price gains of more than 60 per cent, the Scotiabank report said. And although the housing fundamentals are solid in Canada because of low unemployment, high immigration and tight apartment vacancies, years of relentless house price increases mean affordability is waning just as risks to the economy mount.

“There is little doubt that current trends are unsustainable,” Ms. Warren said. “Affordability is becoming increasingly stretched for many would-be buyers after almost a decade of rising home prices. More recently, economic risks have increased in the wake of the intensifying financial market turmoil stemming from the U.S. subprime mortgage problems.”

Now before anyone panics here’s the positive spin:

To be clear, Ms. Warren is not predicting a Canadian housing collapse, but rather a cooling in price gains. Nationally, she expects prices will rise 10 per cent this year, slow to the “high single digits” next year, and eventually fall back in line with the rate of inflation, which would put them between 2 and 2.5 per cent.

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16 Responses to “Home prices well above long term trend.”

1. 1
   condohype Says:
   September 13th, 2007 at 1:54 pm
   Here’s the link to the PDF of the Bank of Nova Scotia’s report on housing price trends in Canada.

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2. 2
   the pope Says:
   September 13th, 2007 at 2:03 pm
   Thanks for the pdf link condohype, and a hat-tip to Marco for the original link!

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3. 3
   mohican Says:
   September 13th, 2007 at 2:59 pm
   Scotiabank’s analysis leaves a lot to be desired but they are at least talking about the negative effects of high house prices and the potential for declines.

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4. 4
   tulip-Mania2 Says:
   September 13th, 2007 at 3:34 pm
   “While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late,” Greenspan said in the 60 Minutes interview. “I really didn’t get it until very late in 2005 and 2006,” as he was about to leave office.
   Greenspan had no notion?

   This guy was at the switch of the world’s biggest economy’s money supply machine.

   What else didn’t he “get”?

   Tick Tock, Tick Tock

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5. 5
   Michael Says:
   September 13th, 2007 at 4:05 pm
   Well at least the banks are talking about a slow down in prices. I think saying 2% price increases after this huge runup should be translated as 20% drop in prices year over year for 2008

   We’ve already seen estimates on here for how much of a decrease we are anticipating, but here’s a new one; When will the US go into a recession? I’m saying roughly March 2008. From now until January 2008 millions of ARMs will reset and force millions of families to lose their homes.

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6. 6
   Patiently Waiting Says:
   September 13th, 2007 at 6:42 pm
   michael, some parts of the US are already in recession. eg. Florida

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7. 7
   Michael Says:
   September 13th, 2007 at 6:58 pm
   Sure parts are, but I’m talking the country as a whole, I guess technically by what I’m saying it won’t be a recession yet, with a recession defined as two negative growth quarters in a row. For March 2008, when people look back at that month they will see that as a start of a recession. The market might not even say they’re in a recession until the start of the third quarter.

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8. 8
   Patiently Waiting Says:
   September 13th, 2007 at 7:27 pm
   Hmmm I think they may look at this month as the start of the nationwide recession. Perhaps next month.

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9. 9
   Patiently Waiting Says:
   September 13th, 2007 at 7:30 pm
   that is in retrospect

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10. 10
    tulip-Mania2 Says:
    September 13th, 2007 at 7:32 pm
    The Nova Scotia report claims Vancouver shows only a slight deviation from the long term price trend, which the author speculates it is because RE was undervalued during the 90’s.

    One would almost suspect the Bank of Nova Scotia sells mortgages.

    And further confirms my suspicion that banks and CMHC forecasts are done with a template, which always forecast high single digits during economic expansions, and 2% to 3% price appreciations during recessions.

    Never have they forecast a price decline.

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11. 11
    misanthropic curmudgeon Says:
    September 13th, 2007 at 7:35 pm
    http://tinyurl.com/2zqdgj

    It’s the second bank report in two days to suggest that the housing boom could be faltering.

    drums a gettin’ louder

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12. 12
    Clarke Says:
    September 13th, 2007 at 9:53 pm
    Hmmm. The report is “not predicting a Canadian housing collapse, but rather a cooling in price gains”

    I believe this can be referred to as “whistling while walking through the graveyard”. They could not even choke out the suggestion of modest price decreases……

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13. 13
    freako Says:
    September 13th, 2007 at 10:24 pm
    Vancouver 13% above trendline my ass!

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14. 14
    Ulsterman Says:
    September 13th, 2007 at 10:42 pm
    NYT article showing one of the US leading homebuilders is offering 25% discounts on new homes. 25%!

    http://preview.tinyurl.com/ywwbf3

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15. 15
    aetakeo Says:
    September 13th, 2007 at 10:54 pm
    Anybody know easily what deflated by CPI means? My understanding is that the Vancouver benchmark home is 200K over their, uh, “Price Level”.

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16. 16
    Gianni33 Says:
    September 14th, 2007 at 7:06 am
    They were running a CKNW story on this and I was surprised because they weren’t necessarily talking about the housing market in Canada slowing down or cooling, they were talking about a correction.

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