Are home prices peaking?
This article from the November 2007 issue of MoneySense Magazine looks at prices across Canada and asks the question Are home prices peaking?
RSS 2.0 comments feed. Both comments and pings are currently closed.Even banks are admitting that after a decade of unthrottled expansion, Canada’s real estate boom may finally be losing steam.
The average price of a home in Canada recently topped $310,000, a gain of 60% in real terms in just nine years. Canadians haven’t witnessed a boom like this since just after World War II—and it’s clearly not sustainable. If prices continued to rise at their current rate, the average house would fetch $10 million by 2037. Since that doesn’t seem plausible, the big question is not whether the current boom will stop, but when.
January 5th, 2008 at 8:29 pm
“The continued strength of the real estate market is a reflection of the economic vitality seen throughout the province. With overall wages on the rise and unemployment in decline, buyers and sellers are left with a healthy and strong climate in which to operate,” says REBGV
January 5th, 2008 at 9:13 am
Vanman, you wrote all that for naught. When I say deflation, I of course mean a decrease in general price levels. Declining CPI in other words.
January 5th, 2008 at 3:21 am
Ever since the inception of the Fed in 1914, its mandate is to make the price of money cheaper.
Huh? Do you make this up as you go along?
When people calls deflation, the Fed “tightens” the supply of money
No. Tightening slows inflation. Deflation is an exceedingly rare event, once during the civil war, the other the Great Depression. There have been smidgeons of delation on other occasions, but none in recent history.
But the correct definition is that, the Fed deflates the money supply by raising rates.
Again, no. A tight monetary policy does not entail a reduction in the money supply. The last time the money supply contracted was during the Great Depression.
January 5th, 2008 at 3:20 am
I should have done this to begin with. If you google US Housing Bubble 2005 you get 633,000 hits. The second hit is from a NY Times business story in May 2005:
“Fed Debates Pricking the U.S. Housing ‘Bubble’
WASHINGTON, May 30 – If the housing market has become a bubble, as increasing numbers of economists warn, would the Federal Reserve try to deflate it?”
Let’s recap. Increasing numbers of economists were warning of a bubble, the Fed was discussing it, and Greenspan had earlier in the year referred to “froth” and “lots of little bubbles” in particular local markets.
Apart from all of them, yep, Krugman was a voice in the wilderness.
January 5th, 2008 at 3:20 am
Craig:
Oh really?
Are you talking about THESE Iraqis?
Are you sure you aren’t just making stuff up?
January 5th, 2008 at 3:18 am
Patriotz said;
Credit has to be given to Paul Krugman of the NYT for being right on both these issues, having called the RE bubble top in summer 2005. And I think the Economist called the bubble even earlier, but of course that publication is unknown to most Americans, as opposed to the NYT which is well-known but not well-read – and simply not believed by those with a certain political bias. But both sources admit they did not anticipate the contamination that the mortgage meltdown would bring to financial markets today.
I say;
On his book tour and speech at Google, he did admit making a number of bloopers, but of course proudly announces his 2005’s prediction of the bubble burst as being right. Was he lucky or was he just like any other experts before him who knows how to interpret the numbers and make a definite conclusion?
Ever since the inception of the Fed in 1914, its mandate is to make the price of money cheaper. When people calls inflation, the Fed opens up the supply of money. When people calls deflation, the Fed “tightens” the supply of money. Unfortunately, people love to associate deflation with the drop of asset prices here. But the correct definition is that, the Fed deflates the money supply by raising rates. We see it effecting the US Median CPI, because before 2003, it was hovering around 3%, but from between 2003-2004, it dropped to 2.2%!! It meant that the deflation of the money supply had worked as it slows the inflation rate.
Any trained economists, or even a professor of economics will know how to put these information and form a conclusion.
This is like you telling a 3 year old that you have successfully predicted 1+1 = 2. The 3 year old wasn’t taught this yet. The child does not recognize this formula yet. Can you fool a 15 year old with the same trick? I guess not, but this is exactly what many of you guys have been sold to believe.
Mr. Krugman is a writer for the NYT. He is a professor of economics. He makes a living writing in good times (with Enron) and how conveniently said he’s not involved and he also makes a living writing in bad times too. Remember, this guy needs a job and he will write anything to please his readers, readers like Patriotz because this is something he knows many of you like to hear.
The fact of the matter is, he wasn’t the first to predict it. I could predict it too — just look at the Median CPI published by the Federal Reserve of Cleveland!
January 5th, 2008 at 3:18 am
Patriotz said:
“And, smart guy, I said in the very next sentence that the Economist called the bubble before Krugman did. So take your strawman and burn it.”
You said you “think” the Economist called it, but hey it’s just a detail.
And as for a strawman, if you “give credit” to Krugman for suggesting a bubble in 2005, you think he did something special. He didn’t. It was obvious to many. And the fact that he has ballsed-up so many other predictions is certainly germane.
“What was your position on the US housing bubble in mid-2005, Brainiac? The same as your hero in the White House?”
I sold in 2005.
“And as for the “surge”, any objective observer can see that the entire Iraq project is an unmitigated fiasco, regardless of the perceived outcome of any short-term strategy.”
Do Iraqis count as objective obersevers?
“MOST Iraqis believe life is better for them now than it was under Saddam Hussein, according to a British opinion poll published today.”
http://www.timesonline.co.uk/tol/news/world
/iraq/article1530762.ece
That poll was in March, btw, before the surge pushed violence down to below pre-war levels (and incidentally to half the murder rate of Venezuela).
But, hey, what do people in Baghdad know compared to Patriotz, blog poster extraordinaire.
January 5th, 2008 at 3:18 am
krrish said…
Since 2001 USA tight their immigration policy and tight their borders.
Dammit! Thats why your here!
January 5th, 2008 at 3:17 am
M “I can’t imagine their situation to be anything other than greed.”
I disagree more like nieve I think. People like that have absolute faith in MSM and the “powers of the day”. They live in a fantasy land of “If I am a good person I will be rewarded”. Unfortunately they will be hurt worse than the specuvestor that walked away laughing!
January 5th, 2008 at 3:17 am
“Man oh man…. at this point I think we’re at the “paradigm shift” point on that bubble graph I saw a few weeks ago. ”
I don’t know… i think we’ve still got a ways to go…
here’s a link to the real estate council of bc’s website. they have an annual report there. seems the realtor population hasn’t yet matched the 1994 peak of 20,000.
On the other hand, the number of students has decreased from last year, so i guess interest in real estate as a profession has peaked?
Still, with that number of realtors around, that means the environment is still pretty supportive of a large realtor population. i think it’s still a hostile environment for buyers…
January 5th, 2008 at 3:17 am
Scullboy: I’m a bear. I was being facetious.
As far as what was going through those kids’ minds, the only thing I can imagine, given the absurdity of their to-be-short-lived situation, is that they must be expecting a windfall. They know they’re only going to be there for a couple years, and they’re expecting to come out ahead.
Fear of being priced out forever shouldn’t cause somebody to buy something they know to be wholly unsuitable for themselves to live in. I can’t imagine their situation to be anything other than greed.
January 5th, 2008 at 3:16 am
REBGV stats for Dec are posted:
http://www.nvcondos.ca
Also some commentary on my blog:
http://paul-northvancouverhomes.blogspot.com/
January 5th, 2008 at 3:13 am
Sorry to post twice but it struck me we could just call Sat Poochie. It’s perfect because it’s a bit less over the top, plus Poochie was that Itchy and Scratchy everyone hated.
January 5th, 2008 at 3:13 am
Richard:
Man oh man…. at this point I think we’re at the “paradigm shift” point on that bubble graph I saw a few weeks ago.
Is it any wonder nobody wants to hear the party might not last forever? Consider how MUCH skin people have in the game. Nobody wants to lose that kind of cash….
and I think SatV will now be known as Pooched Out Chocolate Starfish (POCS if you’re lazy) … a nickname is born!
January 5th, 2008 at 3:12 am
Too short to bother tinyurling…
——————————-
Vancouver Sun
Thursday, January 03, 2008
METRO VANCOUVER – Real estate sales across the Lower Mainland in 2007 defied forecasts rebounding from 2006 levels with more transactions and double-digit price increases when forecasters predicted moderation.
In Greater Vancouver, realtors processed 38,050 sales through the Multiple Listing Service in 2007, which was 7.2 per cent higher than 2006, but still 6.1 per cent off the record 2005.
Greater Vancouver prices were also up between 11.4 per cent on single-family homes and 14.4 per cent on condominiums.
Fraser Valley realtors processed 16,547 MLS sales in 2007, three per cent higher than 2006 sales.
Prices of single-family homes were also up 11.4 per cent and 14.9 per cent for condominiums.
January 5th, 2008 at 3:12 am
Thanks for the info Pooched Out Chocolate Starfish! I’m glad you set me straight! Now I understand Vancouver RE no go down cuz we twin Port Mann bridge!
1.Since 2001 USA tight their immigration policy and tight their borders.
Lot people still go, build lots house. More immigrant.
2.Natural Disasters are increasing in volume every time that shows up doing damage upto 16 billions worth of property.
Many disaster and hurricane make vegas and phoenix no gud!
3.Threat of terrorism are being renew too often bin and jarghawi consuming most of media time on all national and state levels.
Cant buy house, terrorist on TV.
4.Investors or genral public estimate the population wrongly because most of people are illegal immigrants from mexico and like wise countries.
Yes, population number cook up!
5.Las Vegas suit better to gamblers or sex industries contrast to that- in Vancouver B.C you can catch all the action of life.
Vancouver good for duck and pot smoker and also condo flipper!
January 5th, 2008 at 3:11 am
link
January 5th, 2008 at 3:11 am
Drachen,
I have to say I’m astounded. That thought was something that just occured to me in passing.
In some ways it really is different here. When I bought in TO, my agent sat me down and told me I should plan to live in my place 5-10 years. She said that was the only way to develop any equity in the place.
She encouraged me to buy toward the upper end of what I could comfortably afford. Her point was that I should find a place I loved and would be happy to live in for a while, otherwise I’d just end up moving in 2 years and spending any money I had saved.
I still consider that to be sensible advice.
I compare that to “buy whatever you can afford just so you are in the market and not priced out forever” I hear all the time here in Van. I just can’t figure out how people here keep falling for that.
I’ve come to the conclusion it’s going to take a really massive todal wave of cold water before people here figure out just how badly they’ve been bamboozled.
January 5th, 2008 at 3:11 am
“The bubble is built on lies, stupidity and greed.”
True enough. I do tend to see people like the couple profiled in the CBC piece as victims more than anything. They needed shelter, wanted to own a place, renting can be real challenge, and they bought into the “buy now or be priced out forever” thing. They did not seem to have a game plan of becoming rich flipping condos, and planning to sell and move out later, hopefully pocketing a few bucks is a pretty common idea, not necessarily indicative of low morals.
A lot of speculators will get what they deserve, but they will certainly not be the only people taking hard hits….
January 5th, 2008 at 3:10 am
Scullboy:
“I was just thinking, even if that couple’s place appreciates at 15%, every OTHER place appreciates at the same rate and therefore relative to all other owners they’re in the same boat, which means they’ll never really be able to move up.”
Yep, that’s the great irony of the ‘property ladder’ if all properties appreciate say 50% between you buying and selling you’ll actually be WORSE off moving up to the next ‘rung’ than if you’d bought the next step up to begin with!
And yet this huge lie, in spite of the obvious mathematical contradiction is scattered about like fish food with the suckers gobbling it up.
The bubble is built on lies, stupidity and greed. I wish our education system forced kids to take some critical thinking and economics classes in HS, honestly a HS graduate who didn’t take either philosophy or economics in higher education is NOT qualified to make six or seven figure investment decisions.
No company would hire someone without the proper education or history to make that sort of decision and THERE you don’t even have the added confusion of undue emotionality.
January 5th, 2008 at 3:10 am
m-
Please, please tell me that post was tongue in cheek, rather than fist in *ss, Thumbs – style…..
January 5th, 2008 at 3:09 am
Pooched out chocolate starfish said
“Growing incomes and a rising population, factors that will help keep housing starts and the resale market up. “Over the next couple of years, the housing market will respond to the fundamentals of population growth and increasing real incomes as lending rates move upwards,”.
Hey f**ktard, Crabby’s stats indicate past population growth was mediocre. It must be really painful, pulling stuff out of your ass while simultaneously jamming your fist in there.
And real incomes aren’t increasing, you drooling idiot.
Could you please jam your other fist deep down your throat? That way you’d be unable to speak OR type, which would spare the rest of us.
January 5th, 2008 at 3:09 am
I figure that couple’s plan is to work here for a couple of years, until they can’t shove the baby in the closet anymore (sometime around 2010).
Then they’ll sell and move back to Ontario with a cool $100K in their pockets, tax-free, where they can buy something that they so rightly deserve, given what smart forward-thinkers they are.
January 5th, 2008 at 3:09 am
btw
Richard, thanks for the link huge drive on assessment feel sorry 4those who miss the boat.
jesse, thanks for being wiseman.
January 5th, 2008 at 3:08 am
Can you explain how this mediocre growth can prevent property values declining while boom towns like Las Vegas (+83.3%) and Phoenix (+45.3%) are in the tank?
Crabman,
1.Since 2001 USA tight their immigration policy and tight their borders.
2.Natural Disasters are increasing in volume every time that shows up doing damage upto 16 billions worth of property.
3.Threat of terrorism are being renew too often bin and jarghawi consuming most of media time on all national and state levels.
4.Investors or genral public estimate the population wrongly because most of people are illegal immigrants from mexico and like wise countries.
5.Las Vegas suit better to gamblers or sex industries contrast to that- in Vancouver B.C you can catch all the action of life.
just forgive me if I am missing something because I don’t really track them.recent stories from usa start throughing words that some states start picking up.most of those top 5 reason we need strong optimistic spirit,strong employement growth,and preventable over supply.
Our Patriotz once explained that there was a huge supply of housing in usa.
for Vancouver part here are little more info beyond what I have post previously, so following fact are in action to support the strong growth.
Growing incomes and a rising population, factors that will help keep housing starts and the resale market up. “Over the next couple of years, the housing market will respond to the fundamentals of population growth and increasing real incomes as lending rates move upwards,”.
You don’t need to look very hard to find infrastructure programs underway for the Olympics – like the RAV line and Sea-to-Sky Highway. Of course, we don’t want interprovincial migrants to pick up and leave after the Olympics are over. What’s going to keep them here in the long term? Jobs!
Major construction projects planned for post – 2010 should prevent a mass exodus of those people drawn here for construction work before the Olympics. Plans are already underway for the Port Mann/Highway 1 Project, the South Fraser Perimeter Road Project, and the North Fraser Perimeter Road Project.
“The current job market is tight and jobs will have to be filled through continuing interprovincial migration. In fact, the unemployment rate estimated for B.C. has fallen into the range of 5.1%, its lowest level in three decades,”
Type of scene creat strong envitronment to keep things going.
what we need to sell is 100-150 units per month in westvan,300 in vanwest,300 in eastvan and around 100 units in northvan.Is that difficult?
Crabman you can point out if i miss something…
January 5th, 2008 at 3:08 am
Crab:
I try. I mean seriously, it’s impolite to make fun of people who really are retarded. Sat/Thumbs is great because you can make fun of him for being so damn stupid without getting in trouble.
I find I can only bear his self-fisting routine because afterwards we’re free to tear him to shreds. Not only is he a complete f**ktard and a liar, he’s transparently easy to spot when he does one of his stupid identity changes:
“Hey everyone, I’m new to this post, I’m not (insert last incarnation here)! Beep beep! Smile for sunny day! Watch me jam my fist elbow deep in my chocolate starfish!”
You’d think he’d realize he gives himself away *every* *single* *time*, wouldn’t you?
I was just thinking, even if that couple’s place appreciates at 15%, every OTHER place appreciates at the same rate and therefore relative to all other owners they’re in the same boat, which means they’ll never really be able to move up.
It’s sad, but not sad/funny like Sat’s self-fisting routine….
January 5th, 2008 at 3:08 am
Hey SATV,
Between the census of 1996 and 2006, Vancouver’s population grew from 1,831,665 to 2,116,581, or 15.5%. If Vancouver were in the US it would rank as the 102nd fastest growing metro area.
Can you explain how this mediocre growth can prevent property values declining while boom towns like Las Vegas (+83.3%) and Phoenix (+45.3%) are in the tank?
I wish I could link to some of the great VHB posts on the subject of population growth… :^(
P.S. skullboy, your post at 1/3/08 9:27 AM had me rolling on the floor!
January 5th, 2008 at 3:07 am
Jesse:
You’re right of course but I can’t help thinking these people are at the bottom of the chain. The banks will have made money, CMHC will have made money, the lawyers will have made money, they city will make money, the agent will have made money, all off their single transaction. Oh and if you’re wondering why so much money is sloshing areound Van, have a look at the above.
Basically EVERYONE feeds off these people and then when they market turns, they’ll be left out in the cold, literally and figuratively.
My own folks made the same mistake in the 70s and ended up paying for it over the next 15 years. I remember what it was like and I can’t help but think it’s a real shame.
January 5th, 2008 at 3:06 am
“These two strike me as having given in to the ‘fear’ of being priced out forever.”
The “fear” aspect, like greed, is inherently selfish in nature. There is 30% of the population that rent at any one time. This couple is not wanting to be part of that group. They made their choice and I assume they know the risks.
drachen: nice quote!
January 5th, 2008 at 3:06 am
Screwed condo owners in Halifax:
http://www.hfxnews.ca/index.cf.....&sc=89
“You’ve decided to buy a new condominium, but now you’re noticing little things going wrong. Windows leak. The insulation isn’t what it should be. Floor boards are warping.
You try to notify the developer, but it’s been more than a year and they say they’re no longer responsible. The numbered company they set up to build the condo has been dissolved.
Soon, you and your neighbours start realizing the largest investment you’ve made was shoddily constructed. Repairs could get costly. As much as you may want to complain publicly, you also realize that it could ruin any attempts to re-sell your condo.
You’re stuck.”
January 5th, 2008 at 3:05 am
assesments are up…
January 5th, 2008 at 3:04 am
Drachen:
Don’t forget there are 2 emotions that drive a bubble: greed and fear. These two strike me as having given in to the “fear” of being priced out forever.
It also struck me that they may have begun to realize how f**cked they are. They may have said “we’ll stick it out inthis unit till 2010 when the kid is 2 years old, then we’ll sell” assuming 2010 was going to be the top of the market.
I suspect they realize they and couple like them will be the ones caught without chais when the music stops…. unless Canada is importing a whole armada of foreign f**tards like Thumbsuphis ass.
January 5th, 2008 at 3:04 am
Krrsh said…
a lot of things whilst firmly jamming his fist up his *ss.
Let me explain it to *you*.
Yes you have to be somewhere. Guess what ‘tard…. you don’t have to live in Yaletown and pay a zillion dollars. At this point you could move to Seattle or Washington state, which hs (SURPRISE!!!!) the same mountains, the same ocean and homes at less then half what they’re going for here, PLUS companies like Microsoft, Boeing Starbucks and Google to keep the economy going.
In response to (1):
Hey f**ktard, you can’t rent a basement apartment in Surrey for the same price as one in the lower mainland. Are you lying to yourself, or are you just completely retarded?
In response to 2:
Learing f**king English. I can’t figure out what the hell you’re saying.
In response too 3)
God you’re retarded. Why am I even responding? OOOO yeah, 100 extra feet in Burnaby. THAT”S enough space to raise a kid in, never mind 2 or GOD FORBID 3.
And at this point this couple and ever straight couple like them have already bought in, ‘tard. That’s the point.
These people are f**ked unless their home appreciates at least 11-15% this year. If it doesn’t and the sell, they’ve lost money. They’re now locked in. They can’t move to a bigger place when their kid gets bigger without losing money.
They HAVE to move sooner or later, and so will every other person in these shoeboxes once they either get married or have kids. Yet if prices apreciation even SLOWS (much less stops or drops) they’re f*cked.
These are the greatest fools, they’re now officially f**ked. They can’t profit and they much eventually move, therefore they’re going to lose money. They only question now is how much.
I watched the video, but unlike you I wasn’t masturbating at the time.
They assesment may have gont up, ‘tard, but that doesn’t help them. They would have to sell in order to realize the profit. Meanwhile they’re going to get f**ked over taxwise.
Yeah that sounds pretty lucky to me all right…. raising a kid in a closet with no money for everything, plus they have to kid away every possesion they have as the kid grows out of them. Wow, sign me up for THAT “lifestyle”.
Sooner or later, Van’s going to run out of couples who are they stupid. Sooner or later, couples like that start looking around and saying “wow, we can buy a tiny little leaky condo in Van, or we can move somewhre else”.
Sooner or later the price you have to pay for accomodation here just fails to be worth it relative to EVERWHERE ELSE ON THE F**KING PLANET.
4) see response to (2).
5) see response to 4).
6) see response to 5)
Jesus Christ you are retarded. I can’t figure out if you took some serious blows to the head or what….
January 5th, 2008 at 3:04 am
krrish:
We all know you’re SATV/Thumbsup and you’re a complete idiot. Please stop with the annoying posts and changing your handle every month or so.
If you’re an agent as some have supposed your complete lack of logical, grammar and reasoning skills actually make your arguments work against you.
If you’re just a “true believer” then go join the Mor(m)ons or something like that where you’re actually encouraged to go door to door preaching the faith.
January 5th, 2008 at 3:03 am
“I try to have some sympathy for kids like these. They’ve made a big mistake early in their lives. I hope they can’ eventually recover.”
I try to have some sympathy too, but in the end it’s like I once heard an old con artist say, “You can only con greedy people.”
These people would never be in the situation they’re in if they didn’t believe that they were somehow cheating the system and getting a bargain that would pay huge dividends in the future. Ultimately it comes down to greed overwhelming common sense. My wife and I were starting to look at places to buy about 3 years back, we looked for a while and having recently moved back from Europe and with essentially no knowledge of the situation here I began to suspect that something was wrong. I did some internet research and found VHB.
I guess I just find it difficult to muster much pity for people who’s greed blinds them to intellectual curiosity. It’s sad that they’re screwed but they made their own problems.