The invincible canadian real estate market
The Canadian Real Estate Association is predicting the Canada resale housing market will remain ‘at or near record levels’ this year.
“The statistics again show just how different the housing markets are in Canada and the United States. Canadian realtors know that Canadian mortgage lenders correctly see that home prices will continue rising.”
The association sees three factors that it believes will save Canada’s housing markets from the woes engulfing the sector in the United States: consumer confidence, employment and affordable interest rates.
CREA economist Gregory Klump said the market will pull back from the “breakneck pace” of 2007, but this is still forecast to be the second-busiest year on record in almost all provinces.
Average prices are forecast to continue rising in record territory, but the increase is likely to become slower, to 5.5 per cent nationwide.
“Slower job growth, not massive layoffs, are forecast for Canada in 2008,” Klump said.
What I’d like to know is which parts of canada will rise as forecast? Are there any overpriced Canadian markets that risk a drop in prices or will we see a steady rise across the board?
note: For a comprehensive look at why all might not go perfectly for the Vancouver market check out Mohicans Bubble Uberpost over at Financial Planning and Personal Sanity.
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January 23rd, 2008 at 11:15 pm
January 23rd, 2008 at 11:24 pm
January 24th, 2008 at 12:59 am
Can anybody make sense of this statement?
The association sees three factors that it believes will save Canada’s housing markets from the woes engulfing the sector in the United States: consumer confidence, employment and affordable interest rates.
1. Consumer confidence is basically psychology based on reality.
2. Employment: If the U.S. goes into recession, our employment prosects will worsen.
3. Affordable rates? WTF? Their rates are way lower than ours.
4. Back to consumer confidence again, if employment worsens, so will consumer confidence.
January 24th, 2008 at 3:24 am
What I’d like to know is which parts of canada will rise as forecast?
None, and I will predict right now that every market in Canada will experience nominal declines in 2008. Perhaps not reflected in the average or median for the usual reasons.
This time next year these people will be calling the bottom. You can count on it.
January 24th, 2008 at 7:29 am
What is moderately amusing is that the media tend to take these press releases and repackage them as news…..
January 24th, 2008 at 7:33 am
Yes that is exactly the problem. Their spin is presented as expert opinion. We have three industries, and they get lions share of media space, the builders, the realtors and CMHC. And look at how much airtime Lereah got in the U.S.
January 24th, 2008 at 7:40 am
January 24th, 2008 at 7:44 am
January 24th, 2008 at 8:08 am
Thursday, 24 January 2008
I almost forgot to mention it; the UK housing market is crashing.
With all this crazy stuff about rogue traders, sub-prime losses and manic interest rate cuts, the UK housing crash has drifted into the background. It is time to bring it out of the shadow; buried beneath today’s shocking financial news, the British Bankers Association issued the latest data on mortgage approvals.
Now what is the right word to describe the latest data? The numbers were miles beyond “bad”. They were well south of “appalling”. In fact, there were found within the vicinity of catastrophic.
December mortgage approvals are down about 38 percent compared to 2006. Moreover, the actual number of approvals were the lowest since records began. Yes, that is right. Let us repeat that; mortgage approvals were the lowest since records began.
Full story at: http://ukhousebubble.blogspot......it-uk.html
January 24th, 2008 at 8:13 am
Well then, prices will skyrocket through the roof! Vancouver’s only got the Olympics and The Mountains and that’s enough to make prices go through the roof. Fort Nelson’s got The Mountains, Beautiful Scenery, Beautiful Lakes, not to mention Bison in Your Back Yard. I predict $850k for a tear-down once the word gets out.
January 24th, 2008 at 9:27 am
NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said that raising the loan limit on conventional financing is urgently needed. “The most effective way to stimulate housing and minimize the potential for a recession is for lawmakers to raise the limit on conforming mortgages to $625,000, which would open safe and affordable financing to buyers in high-cost areas,” he said. “It is grossly unfair that some Americans do not have access to low-interest rate loans. This would help people as they move away from risky subprime mortgages and high-interest rate jumbo loans.”
So the cure for people who borrowed more than they can afford is to encourage them to borrow more? Riiiight.
January 24th, 2008 at 9:39 am
Actually, has the CREA ever forecast anything other than smooth sailing or price increases? I doubt it. Its offensive that the news outlets pick this stuff up and run it as if it has any merit.
January 24th, 2008 at 10:11 am
Naturally since this was a professional news broadcast they also brought in some experts who did not share her views, and contrasted the two in better understand what the realities were.
No, not really. That last part was a lie. They left us with the rosy view of the real estate marketer and didn’t even mention that anyone of note feels any differently.
Heck of a job there, CBC.
January 24th, 2008 at 10:28 am
“Canadian realtors know that Canadian mortgage lenders correctly see that home prices will continue rising.”
Can anybody make sense of this statement?
Freako,Definitley information by communication and data sharing method.
Freako says
“1. Consumer confidence is basically psychology based on reality”.
Freako,Don’t tell that you don’t know what is reality,you shouldn’t have tied your lips on that.
Freako says
4. Back to consumer confidence again, if employment worsens, so will consumer confidence.
Freako,Avoid use of “if” that make us wait for the genuine situation.
For your kind information just one reason does not kill the confidence there is a chain to run all the wheels.
Freako says
“3. Affordable rates? WTF? Their rates are way lower than ours”.
Freako,This sounds to me that you don’t know what is subprime (mess) mortgage.
January 24th, 2008 at 11:05 am
January 24th, 2008 at 11:08 am
Freako says
“1. Consumer confidence is basically psychology based on reality”.
Freako,Don’t tell that you don’t know what is reality,you shouldn’t have tied your lips on that.
Freako says
4. Back to consumer confidence again, if employment worsens, so will consumer confidence.
Freako,Avoid use of “if” that make us wait for the genuine situation.
For your kind information just one reason does not kill the confidence there is a chain to run all the wheels.
Freako says
“3. Affordable rates? WTF? Their rates are way lower than ours”.
Can anybody make sense of the above?
January 24th, 2008 at 11:14 am
There is no way you grew up in Vancouver or you’d remember the asian flu and the leaky condo crisis.
It was only 7 years ago when TD lost money due to the number of foreclosures from people walking away from their condo ownership.
Because of this downturn housing starts dropped, because there is a period of time between approval (of a project) and completion when the demand ticked slightly upward it caused a frenzy.
Krissh1
Who is going to rent the next 10,000 units that’re completing downtown this year?
Will they qualify to pay $1350 per month in rent?
Why would a specuvester want to subsidize someone else’s living expenses to the tune of $2,000 per month?
What capable buyer hasn’t already entered the market?
What rich country hasn’t discovered Vancouver?
Are you presuming your comrades from Poland can afford to move here and pay $1,000 per sq ft?
If yes, why?
Why wouldn’t they go to Hamilton? They have a community there and an opportunity to earn substantially more money.
Krissh1
In case anyone here doubted your stupidity you’ve done a good job of reassuring us all that you are still an incoherent babbling idiot and a sheep who’s going to lose everything.
January 24th, 2008 at 11:17 am
Vancouver’s on the 2nd page right now, #28 below #25 Toronto. How can we call ourselves a worldclass city if we don’t get added to the board game?
January 24th, 2008 at 11:29 am
You’re like those little kids who’ve been indoctrinated in the documentary “Jesus Camp” who deny that global warming exists, don’t believe in evolution and think president bush is a good leader.
You’ve been brainwashed!
Did you see the article in Forbes that stated Vancouver had the 6th most overpriced real estate in the world?
At least we’re top ten in something.
28th in Monopoly LOL!!!!
Why don’t you shoot me down with some incoherent, ignorant, uneducated, quasi retarded logic now?????
January 24th, 2008 at 11:47 am
“Who is going to rent the next 10,000 units that’re completing downtown this year?”
btk,
First let me bring if here: so if that is not possible then rental units will fall into fundamental crises means more supply less demand from rental people, that way rent can come down but so far looking at the future prospects rents are tend to go up by 2 to 4 percent because of forth coming mob of immi,mig.
Important:future projects does not mean to get release in the market on similar dates.
Cascina,
you should put some question I did not find sufficent ground to respond.
January 24th, 2008 at 11:52 am
“Did you see the article in Forbes that stated Vancouver had the 6th most overpriced real estate in the world?”
that’s mean we have 4 more slot to go
January 24th, 2008 at 12:06 pm
If there are 10,00 units and no one to rent them, they cease to be an “investment”
Of course you can attempt to argue that a lot more people are moving here and will buy them, fair enough I don’t care whether the occupants are renters or owners.
The key here is to fill them , or find people willing to pay all the costs associated with owning a vacant “investment” which is losing $3,000 a month in value and costing $3,000 in mortgage and strata.
Immigration is down.
Anecdotally I’m told the Hong Kong investors have been buying in Toronto, not in Vancouver, for some time.
The Koreans are finding L.A. more appealing now since they can buy property for cheaper, the climate is better, and there is a Korean community.
Perhaps there are a few wealthy people moving here, albeit at a 15 year low for immigration, but the majority of those moving here are not in a position to pay $500,000 for a one bedroom apartment.
According to your logic these units will just keep going up.
If this is the case who is going to pay $700,000 to buy a one bedroom?
Why haven’t they already purchased 5 or 6 units in pre sale?
What did you pay for your unit? Do you actually own property? Are you involved with the strata?
Do you know that you can be hit with a special assessment? Do you know that the condo will deteriorate over time? Do you know how much you have to pay a realtor to sell your property? Are you aware that you will be required to pay capital gains taxes on revenue property?
Do you know what a rental yield is?
Do you know that there are hi-rises downtown that are starting to leak?
Do you know who has to pay when it leaks?
The person who has to pay for the leaking condo is the same brilliant investors who’s “investment” is losing $3,000 a month and who’s tenant is paying 1/3 of the carrying cost (losing $2,000 in cash and $3,000 on paper is an enviable position to be in for a world class investor, I guess).
Meanwhile if you had $500,000 at ING you could rent the same unit with the interest and be poised to buy when the market crashes. The sheep will line up to sell as fast as they lined up to buy, this happened ten years ago! You weren’t here so you missed it.
Some of us are not real estate experts like yourself but grew up with parents who’s livelihoods were dependant on housing starts, thus making them more aware of what’s happened historically than others.
You probably don’t remember when you’re parents stopped taking you to the cabin in Alpine at Whistler because they had sold it in a hurry when interest rates hit 18%.
Or when you’re parents had to trade in the bmw 5.33I and get a five year old 1977 diesel orange Rabbit as the family car because mortgage rates hit 24%
Even today they haven’t really recovered, although they didn’t hit bankruptcy like a lot of their friends.
January 24th, 2008 at 12:16 pm
“Did you see the article in Forbes that stated Vancouver had the 6th most overpriced real estate in the world?”
that’s mean we have 4 more slot to go
You’re either an idiot or you’re trolling for reactions, neither is all that admirable position to be in. You do understand that the Forbes measurement of ‘OVERPRICED’ means that related to local incomes and rents the cost to buy is way out of line right? Would moving Vancouver to the MOST OVERPRICED real estate in the world be a desireable goal for you?!?
Just so you know I’m sure we’ve already moved up at least one slot. When that study was done LA was only something like .06% more ‘overpriced’ than Vancouver. Since that time the US dollar has gone down, prices have gone down and vancouver got more expensive. So yes, we are now likely the MOST OVERPRICED REAL ESTATE IN NORTH AMERICA! Congratulations!
Now how many will sell in time and see those gains turn into real money?
January 24th, 2008 at 12:23 pm
I respect your knowledge so I feel bit shy hope you don’t mind.Your argument is bearish thought but sorry to say it does not support the chapter or topic of “Consumer Confidence”.
however your argument is full packed with social issues the pain we suffer through the worse period in our life.
the best answer is we must move forward because homes are basic necessity if they start leaking later on we must fix them.
the new housing law for leaks there is 2-5-10 warranty and if some one buy leaky condo make sure the building is insured rest of balance goes to all owners and fixer also help to increase the price of leaky building with upto date matterial cost.
I would suggest people on the lower end can buy leaky condos there is more profit than the new one.
January 24th, 2008 at 12:37 pm
Yes expensive and unaffordable for those who can not afford but not for those who can afford,If my income does not support me to buy a decent house that does not mean my neighbour can not afford.
Congratulation and cheer for Vancouver you can tell your friends worldwide.please spread the word of mouth……
January 24th, 2008 at 12:46 pm
Making sense of things is sooooo 20th century. The Olympics has changed all that by introducing truthiness to BC RE. Krrish is spreading the essential truth of the ever escalating value of a 500 sf Yaletown condo. Fundamentals, grammar, logic and common sense be damned!
January 24th, 2008 at 12:53 pm
Strange, I hadn’t really considered that in relation to Van RE. I think a lot of young couples (that pair in the 515 SF Yaletown condo come to mind) are about to find out what that’s like…
January 24th, 2008 at 1:07 pm
The problem is that at this point NOBODY CAN AFFORD TO BUY HERE.
That means no new buys.
No new buys means people on the bottom run can no longer sell their place at a profit to buy a bigger one….
and on up the chain.
Got it?
January 24th, 2008 at 1:09 pm
Trust me if he’s any indicator of the brainpower working there, it’s a safe bet that the CBC just isn’t bright enough to connect the dots.
He is awfully pretty on camea though….
January 24th, 2008 at 1:13 pm
No I did not get you, I suppose to be there at 8 with starbucks coffee but I can not afford that timing,I can only be there at 930 on thursday morning but than you can’t be there.
January 24th, 2008 at 1:32 pm
Even Edmonton and Calgary prices are starting to drop.
But it can’t happen here, right?
It’s different here-”the best place on earth”TM
January 24th, 2008 at 1:48 pm
You’re like those little kids who’ve been indoctrinated in the documentary “Jesus Camp” who deny that global warming exists, don’t believe in evolution and think president bush is a good leader.
You’ve been brainwashed!
Did you see the article in Forbes that stated Vancouver had the 6th most overpriced real estate in the world?
At least we’re top ten in something.
28th in Monopoly LOL!!!!
Why don’t you shoot me down with some incoherent, ignorant, uneducated, quasi retarded logic now?????
Cascina I found your post very uniformed and ignorant. I happen to be a bear but associate all of the above with anyone who disagrees with you is childish at best. And I don’t like your reference to Jesus camp try showing some tolerance to other people. Also I am one who doesn’t believe in global warming. Your post shows you have a disdain for religion yet fail to realize that global warming is nothing other than a new doomsday cult. I care about the environment but not for bogus reasons.
Back to housing. I live in Calgary right now. The market has definately turned here but most sellers and buyers are playing chicken seeing who will blink first. I figure we are a year away from huge declines. I think Vancouver won’t see price drops until 2009 when all the new condos are finished and people rush to cash out before the olympics come.
January 24th, 2008 at 1:54 pm
“SATV
You’re like those little kids who’ve been indoctrinated in the documentary “Jesus Camp” who deny that global warming exists, don’t believe in evolution and think president bush is a good leader.
You’ve been brainwashed!
Did you see the article in Forbes that stated Vancouver had the 6th most overpriced real estate in the world?
At least we’re top ten in something.
28th in Monopoly LOL!!!!
Why don’t you shoot me down with some incoherent, ignorant, uneducated, quasi retarded logic now?????”
Cascina I found your post very uniformed and ignorant. I happen to be a bear but associate all of the above with anyone who disagrees with you is childish at best. And I don’t like your reference to Jesus camp try showing some tolerance to other people. Also I am one who doesn’t believe in global warming. Your post shows you have a disdain for religion yet fail to realize that global warming is nothing other than a new doomsday cult. I care about the environment but not for bogus reasons.
Back to housing. I live in Calgary right now. The market has definately turned here but most sellers and buyers are playing chicken seeing who will blink first. I figure we are a year away from huge declines. I think Vancouver won’t see price drops until 2009 when all the new condos are finished and people rush to cash out before the olympics come.
January 24th, 2008 at 2:49 pm
How do you survive in Vancouver with English skills like that? Just this once I don’t mean to offend but honestly, how do you function in this town?
Do you really not understand what I said, or are you being deliberately obtuse because you can’t answer the point about affordability?
January 24th, 2008 at 3:02 pm
January 24th, 2008 at 3:29 pm
http://www.cbc.ca/consumer/sto.....state.html
January 24th, 2008 at 3:43 pm
I will try to ask more questions and be less emotional.
There have been crashes in the last 30 years and just because you weren’t aware of them, Krissh, doesn’t mean that they didn’t happen.
It must have been a good feeling to see the prices appreciating since 2002. If you had bought a condo in the mid 90’s you’d have regretted it. Believe it or not there were people walking away from their condos. Fairview units , with views, were going for $250/sq ft four years ago and there were people who thought prices would never come back.
Now there are people who think it will never ever stop going up because a salesman has told them it’s a good investment. Would you buy a car without having it checked out? Probably not. So why take a realtors comments at face value? Or your neighbour down the street who made money off the unit they bought four years ago. Does that automatically mean it’ll keep going up?
Do you comprehend how fast consumer confidence can swing to negative? Were you aware of the tech boom? Did you ever meet anyone who thought they’d be retired by now because their tech stocks would go up 40% a year for life? Doesn’t that sound foolish now?
In high school everyone thought smoking was really cool, does this mean smoking is a good idea? Does a herd mentality justify spending 70% of your income for the next 25 years? Would it hurt to put your ego away for a year and put some money in the bank while renting an identical place? You could even take a nice vacation and see the world with the difference and still have money banked.
It seems as if new buyers are constantly trying to reassure themselves by insisting that property always goes up. This isn’t always true.
“Past performance does not indicate future returns”
“buy low and sell high”
I still cannot figure out what you mean about wise men buying houses at the top of the market. Do you know any wise men who’re out buying houses right now? If yes, where are they buying? What do these wise men do for a living? what are their credentials? What is their annual income? Where did they come from? Are they currently renting? If yes, why did they wait until now to buy?
Are you sure they aren’t people who’ve been scared into believing if they don’t buy now they’ll be priced out forever?
Isn’t this the same mentality that had Californians scrambling to leverage as much as they possibly could in order to buy the biggest house?
Do you read the newspapers or check the newspapers online? Are you aware of the housing crash and worries of a global recession?
Aren’t a lot of the jobs in Vancouver related to building the infrastructure for the Olympics?
Is the federal Government planning to send Vancouver hundreds of millions of dollars when the Olympics are over?
What city will ultimately pay for this infrastructure and the Olympics? How long will it take?
How many $14/Hr casual labour jobs will exist once the boom ends?
I know I’ve asked a lot of questions but you seem to think you have all the answers.
January 24th, 2008 at 4:49 pm
Don’t bother trying to talk to Krrish. This is his fourth handle he’s on here because everyone quickly figures out what a loser he is and just ignores his posts.
He is completely incapable of reason, he mimics the things he hears from RE friendly sources in much the way a parrot would ie. with no grammar, no analysis and essentially a random stream of strange facts, factoids and misrepresentations. Verbal diarrhoea at it’s worst.
He has complete immunity to intelligent thought which would do the worst of religious zealots proud. It’s like he’s wearing Peril sensitive sunglasses but they’re intelligent discourse filtering instead.
January 24th, 2008 at 5:57 pm
Personally, I have decided that I do not respond to people who are either MORONS or simply trying to get a rise out of me.
Too bad, this blogging software does not have the ability to filter certain handles.
January 24th, 2008 at 6:24 pm
First of all if you are renting a place that is how your psychology ordering you to do that,
“There have been crashes in the last 30 years and just because you weren’t aware of them”
I am very well aware of them, however you can see the graph from than and now, means if you can afford monthly payment for term,Inflation will drive the prices up any time in future but the city shouldn’t be a victim of terrorism and natural disaster and should be nice and best on the foreign policy.
“Do you comprehend how fast consumer confidence can swing to negative?”
Homes are basic necessity, some people temporary can cheat with the market people who own this as bussiness purpose but slowly slowly homes get turned over to genuine owners so the percentage of air presser is temp and very less,{can’t go to far}
well when consumer confidence fall that point tiped over to fundamentals then unit must get sold for some prices either up or down but usually what happened people scared to buy them lets say there are only 5-10% fliper or owners who don’t like to hold their units if those unit does not sell that aquire the forth coming appreciation the point where market turn around(can’t go further).
Include you and lots of other here, are all in affordable situation somewhere in Vancouver but most of them have a desire to live on some perticular place. affordability is not a question just the desire is a big question for them.
Wisemen are people who rent to pay the fool for their labour to handel housing sector.
Fools does not like to rent because they like to get pay for their labour.
“tech stocks”
is O.T.
Sofia,
There is no question in your comment but you have mention about a problem ok let me bring your problem here it is you say…..
“The problem is that at this point NOBODY CAN AFFORD TO BUY HERE.”
Sofia there is no data to support your allegation and you have told me once that you are in affordable situation,again your desireble place is expensive but you can afford according to price,income ratio.
“That means no new buys”.
funny you are hiding your self dolly but yeah you don’t like to buy you wisegirl.
“No new buys means people on the bottom run can no longer sell their place at a profit to buy a bigger one….”
That’s not true either, more than 102,000 unit have been sold last year in B.C.
this is just a 24th days of this month and units are getting through for further spin.
“and on up the chain.”
So far r.e wagon is runing properly with strong joint of chain in the wheels.
January 24th, 2008 at 6:41 pm
Professor Piggington
January 24th, 2008 at 7:02 pm
i detect a thin insistent thread of fear in
the postings… a stream of consciousness primal scream. the market beast is slowly catching up, he can sense the hot breath of utter failure a palpable sense of doom…
the typing skills are akin to hyperventilation.
folks… he is truly scared shitless!
January 24th, 2008 at 7:08 pm
He seems to believe that in order for house prices to drop by say 50% that ALL houses have to drop that amount in their owner’s minds. When in reality all that’s required for prices to drop that much could be as few as 2-3% of the total number of houses selling at those prices because in reality it’s only the ones that sell that determine the market numbers for ALL of the houses.
It’s extraordinarily convoluted logic but that seems to be what he believes.
January 24th, 2008 at 7:09 pm
January 24th, 2008 at 7:14 pm
Next post should be strataman to make a team of losers!Right?.
January 24th, 2008 at 7:23 pm
on troll you are right! when there is nothing for me, I won’t pick up to much that make us quite and time saving from the free assisting service [no money to make].
January 24th, 2008 at 7:25 pm
i would suggest he is a realtor selling to specific ethnic community where referrals and word of mouth are critical. possibly even the manager in a multi broker office.
the news coming in is all bad. everything hinges on consumer confidence and he sees this waning
a little too strident to be just “dicking” around……
January 24th, 2008 at 7:33 pm
I cast my vote for ‘idiot’.
January 24th, 2008 at 7:43 pm
January 24th, 2008 at 8:16 pm
January 24th, 2008 at 8:18 pm
your posts are lucid informative and pleasingly bearish
January 24th, 2008 at 8:24 pm
January 24th, 2008 at 8:27 pm
equating you with Aaron was an egregious error on my part….
a coupla beers later!
January 24th, 2008 at 8:28 pm
the news coming in is all bad. everything hinges on consumer confidence and he sees this waning
a little too strident to be just “dicking” around……
January 24th, 2008 at 8:45 pm
January 24th, 2008 at 9:12 pm
exactly! he sees it coming!
the market is a remorseless beast bearing no animosity to any given individual.
but leveraged assets have a way of biting you in the ass at the most inopportune moment.
iliquidity is a bitch!
January 24th, 2008 at 9:24 pm
January 24th, 2008 at 9:31 pm
check out “The Long Emergency” book by
J. Kunstler
it’s over! tits up! baby!
January 24th, 2008 at 9:42 pm
G&M Story
“In Alberta, resale house-price gains are expected to slow dramatically, from 30 per cent in 2007 to the 9 per cent range this year. Gains in Saskatchewan should cool from the 30 per cent range to about 15 per cent, according to RBC.”
Earth to RBC: prices in Alberta are down 10-15% from the peak in mid-2007.
Remember folks: “house-price gains are expected to slow dramatically” is analyst-speak for “I know prices are falling but my bosses won’t let me say that”.
January 25th, 2008 at 10:06 am