Bidding farewell to the boom
According to this article in the Globe and Mail the Canadian housing boom is now ‘officially over‘.
It’s time for Canadians to bid the housing boom farewell as data for the first quarter of the year, released Thursday by the Canadian Real Estate Association (CREA), showed a 13 per cent tumble in existing home sales year-to-date.
“Canada’s six-year housing market boom is officially over. Aside from a few choice Prairie locales, sales are melting faster than this year’s snow pack,” Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc., said in a research note.
Double-digit declines in sales activity in “more markets than you can shake a stick at,” suggest the weakness has spread across Canada rather than being centred in any specific market, Mr. Porter said in an interview.
Home sales waned and new listings surged in the first quarter of 2008 as activity in Toronto cooled and a glut of sellers hit the markets in Western Canada, according to CREA’s data.
So we’re not the only city in Canada showing this trend change. Spring is traditionally a strong selling season but it hasn’t kicked in yet this year in Vancouver, it’ll be interesting to watch the growing number of listing into the start of the summer to see how strong this trend is.
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April 18th, 2008 at 1:31 pm
I sold my overvalued house and am renting a huge place for a fraction of the cost of ownership, never mind the carrying costs. Better yet, I am using the interest on my savings to pay the rent (locked in at 4.5% interest) . When the inevitable downturn happens I will buy a condo in downtown Vancouver for 50 cents on the dollar from some overleveraged and delusional sap. I will also consider a place in Costa Rice (the secondary home/cottage market is really crashing in the Caribbean). My partner has just sold 2 of her places and is putting her condo downtown up for sale. Hopefully she misses the crash, otherwise we will live in that one. She is holding on to her Whistler Place that she bought in ’78 for a while longer.
Your read on the situation is dead on and your predictions inevitable. Been there in the early 80’s and 90’s when the prices just got too high and were reined in by natural economic forces and a bit of interest rate intervention. My concern is that the insane economic premise, that it is consumer spending, that is driving the economy and must be stimulated, is being adopted by Governments to keep the economy afloat. Consumer spending is a bi-product of a healthy economy, not the driver. The consequences of this policy direction are dire and can be catastrophic, because you are tinkering with economic fundamentals and patching a huge leak with a stick of gum. Capitalism ,especially with the complicity of Government and Institutions, is ruthless and buyer beware. No wonder the rich are getting richer. The middle class are just a bunch of suckers and buy into the “Lives of the Rich and Famous” so that they can feel smug , no matter what the price. When you are taking on water then it is time to bail. Better yet , if you see the iceberg ahead , maybe it’s time to change your course. Otherwise you will go down with the ship and lifejackets will be scarce.
April 18th, 2008 at 12:23 pm
“Average prices will continue to rise. That’s because when the affordability wall hits new buyers, the sales volume drops off the most at the low end, increasing the average even though prices are unchanged or even falling. That’s what happened at the beginning of the US bust.”
Exactly. I’m already amazed (having followed the US bust from the start) at the way in which things here are mirroring it, even down to the spin on the remaining (systematically biased) price increases.
Or maybe not so amazed, really, but bemused nonetheless.
April 18th, 2008 at 11:43 am
DaMann,
You are smart! Don’t be greedy. Price it to sell and this will be the best deal in your life (I rent a GVRD townhouse in Richmond for 985…)
Regards
April 18th, 2008 at 10:42 am
Hmm.. I wonder if road rage is going to increase?
Housing bubbles are euphoric, that energy will have to go elsewhere..anger? Or survival mode as in lies, deceit and manipulation?
April 18th, 2008 at 10:33 am
but this 18,000 is JUST the West End!
I would love to see hard evidence of this. I hope you’re right Drachen, it would be truly awesome to see even 10-20% of those units listed in a rush for the exits!
April 18th, 2008 at 9:18 am
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Don’t get too greedy Daman.
Bin there, done that, and got stuck in 1990 when the market turned a lot faster than i would have thought in my worst nightmare.
April 18th, 2008 at 8:49 am
Oh sure the news starts now that I just listed my place. Can’t they hold off another week or two
It’s quite amazing when my wife and I tell people we are selling our place and will be renting a house instead. They look at you as a reversal from uber citizen to second class citizen. This city has gone mental. Come on market, give me some buyers for just another week or two then I’m OUT! I will sleep better once I’m out of this moronic RE market.
April 18th, 2008 at 8:04 am
Yeah Tony 12-14k in Vancouver (greater or DT?) but this 18,000 is JUST the West End! The 2001 population of the WE was 42,120 so let’s be generous, give them 50% growth over that time period. Again be generous and say they average 2 people per unit. It STILL means that nearly half the units in the WE are unoccupied.
April 18th, 2008 at 7:47 am
Discussion about the empty condos on RET revealed that there are normally somewhere around 12k-14k vacant apartments at any time in Vancouver, even before the boom.
I can’t remember where that info came from but I would remind everyone that Vancouver was late to the RE bubble party so perhaps our neighbours to the South were buying up our condos with the weak dollar and leaving them vacant.
April 17th, 2008 at 11:54 pm
Alexcanuck, Councillor David Cadman says that his “scanning” of BC Hydro records shows 18,000 unoccupied downtown units:
I trust David Cadman but I’d like to get more information about this data. If these numbers are accurate, then they are very disturbing.
April 17th, 2008 at 11:07 pm
Average prices will continue to rise. That’s because when the affordability wall hits new buyers, the sales volume drops off the most at the low end, increasing the average even though prices are unchanged or even falling. That’s what happened at the beginning of the US bust. Eventually the average catches up. Also true for the median to a lesser degree.
Mish sounds Taps for Canada’s housing bubble
April 17th, 2008 at 10:22 pm
Yes, saw the piece on the National tonight – significant that the “milestone” is being recognized by the National news…of course it had to be ruined by the obligatory “average prices will continue to rise”, but afterall Douglas Porter does work for BMO.
April 17th, 2008 at 10:21 pm
Leaky Olympic Venues?
RICHMOND (NEWS1130) – A fungus problem in the roof insulation layers of the Richmond Olympic Speedskating Oval has forced construction crews to replace a portion of a roof membrane system.
April 17th, 2008 at 10:06 pm
Did you guys notice the G&M changed the title of their article? It’s now titled “Housing sales tumble across Canada”. A few more edits and maybe they can make it sound like the Chilliwack RE board’s spin on things – for that full article check out Mohican’s site.
April 17th, 2008 at 9:15 pm
/dev/null-I agree! Isn’t it quality of life that matters in the end? Why should we sacrifice to pay that huge mortgage every month when renting offers a much better lifestyle (along with some cash savings!) I’m happily renting a townhouse in south Vancouver while units here sit unsold-buying one would cost me double what my rent is-even with $50k down and a 40 year mortgage. No thanks! I’ll continue to rent until it really makes economic sense. Remember back in the day when, if you had a 25% downpayment it actually was cheaper to get a mortgage on a decent place than to rent? Funny how it’s the exact opposite these days, plus you can only buy a crappy place in the middle of nowhere!
April 17th, 2008 at 9:14 pm
Moldcity:
From where do you get BC Hydro figure of 18,000? Is that from CKNW Bill Good show guest where I heard it? Or independent source? I’d like more details if you or anyone knows>
April 17th, 2008 at 9:10 pm
franko said “Anyway, stopped for coffey today with a few of my builder buddies: New houses are not only not selling, people have virtually stopped looking, and are you ready for this?…two of them had enquiries from framers looking for work…in peak framing season yet…who’d a thought it?”
In the 80′s there was a building sub-contractor in my family that was caught in the 80/81 RE crash. That was brutal. Another family member bought a run-down shack in a mill town that went bust a few years later. Brutal again. So I’ve seen the bubble and the damage done. Every buyer’s like a setting sun. Oh, the damage done. (That’s a Neil Young reference BTW)
The old Cylon guy lying in the gooey bathtub in BSG Razor said it best. “All this has happened before, and all this will happen again. Again. Again…” Hey! they even film that in Capric… er, Vancouver.
And there was also a BSG in the 80′s… Okay, this is getting freaky. Like Starbuck’s mandela…
Okay, that’s enough obscure pop culture references.
Anyhow, if house building suddenly dries up as builders wake up and smell the napalm in the morning (sorry…), I hope those construction workers break their Vancouver rental leases and dash over to help inflate Saskatchewan’s housing bubble. Thereby freeing up rental units which will distress even more amateur landlords. It’s sick, but that’s gonna help trigger this correction/crash. Anything to help the cause, eh?
April 17th, 2008 at 9:07 pm
Just watching The National tonight, their second story was on housing and very similar theme (Housing Boom over) to Globe and Mail article.
April 17th, 2008 at 9:05 pm
I think alot of the true bears; the ones who really would like to buy but feel something is terribly wrong in our market probably wind up on the blogs trying to make sense of it. This will represent a portion of your pent up demand and I doubt they will be stupid enough to jump in at 10% off.
The rest of the pent up demand is most likely from those priced out, but actually wanting to buy. These people may or may not be interested in what is going on. They may jump in if their morgage people let them; but with the easy lending I can’t imagine theres many of them left. It seems anyone who wanted to buy has been given the opportunity unless they are hopeless!!
April 17th, 2008 at 8:52 pm
I was walking today around the in-construction olympic village around False Creek. 12 cranes in that area working semi-hard to get 2000 condos in the market by the end of 2009. On the opposite side of the “megalopolis” in New Westminter the Sapperton newest buildings are on mls and craigslist for months. Who the hell would pay 300K for a 700 sqft shoebox in that area?
A firend of mine in Oregon just bought a 1200 sqft apartment for 150K 10 minutes from downtown…
April 17th, 2008 at 8:38 pm
I’m wondering what people’s thoughts are regarding those of us sitting on the sidelines with cash in hand..waiting and wanting to buy. Is there going to be a buying frenzy at a certain threshold…say 15% or 20% drop…
Well almost all the US markets are already there, so where’s the frenzy? Did it happen in the early 90′s bust in Toronto? Early 80′s bust in Vancouver?
You think there’s going to be a buying frenzy when Vancouver is down 20%, when comparable US markets will probably be down 30-40%, and almost the whole world into a bust at that point? Can people stay that stupid – and that solvent – for that long?
Because major busts cause a reversal of price expectations, price declines bring out more sellers than buyers (specuvestors, walkaways, job loss foreclosures), all the way down to rent equivalence.
http://cuer.sauder.ubc.ca/cma/
US bust (as of end of 2007)
April 17th, 2008 at 7:47 pm
Yes, please lets keep the blog clean by ignoring the troll.
Regarding ‘pent up demand’, It all depends on how it balances out against ‘pent up supply’. Do we really have 18 thousand empty condos already in this town before the thousands of new units are even finished being built? Thats what BC hyro says. Are the owners going to want to hold them even if prices are dropping?
Almost half the people in my office own more than one place – one recent ‘investor’ just found a renter and now they ‘only’ have to pay an extra $500 a month for the pleasure of owning a little condo that someone else depreciates. Oh yeah, and our US customers have dropped off and if things don’t pick up soon we’re set to do our first round of layoffs.
I see a lot of the same names on the local real estate blogs, if they represent ‘pent up demand’ it ain’t going to be enough to keep the market from crashing hard.
April 17th, 2008 at 7:10 pm
franko; “Does anybody really give a rat’s ass about that krssh?” NO NO!!!!! and I wish people would quit responding to him the Krissh idiot. That is starting to bug me more then him!
I really enjoy the comments of both Bulls and Bears but when I preview the comments and there is a bunch of replies to the idiot, I go back to work and do something constructive rather then contributing to a blog that caters to an idiot.
April 17th, 2008 at 6:41 pm
.
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Does anybody really give a rat’s ass about that krssh?
It’s a little more difficult and irritating to fast forward through the replies than his original gibrish.
Anyway, stopped for coffey today with a few of my builder buddies: New houses are not only not selling, people have virtually stopped looking, and are you ready for this?…two of them had enquiries from framers looking for work…in peak framing season yet…who’d a thought it?
April 17th, 2008 at 5:57 pm
Satv had the same 2008 year guess on RC site krssh and satv are one in the same… Sharing the same brain maybe…
April 17th, 2008 at 3:58 pm
“dingus, Thanks, I understood your krissh translation much better than the original krissh text. Keep up the good work”
Just doing my part. Though from the reference above, it looks like I’ll have to run it through the English Hindi Hindi English translator. Or Punjabi, more like.
April 17th, 2008 at 3:47 pm
I just found this great video that shows how to time entry into the market.
http://www.youtube.com/watch?v=mhg5y6QEN8k
April 17th, 2008 at 3:41 pm
getbackin said: I know a lot of people who have stable careers, money saved and want to stay in Vancouver longterm who would love the opportunity to finally buy a home. I wonder how many of these people there actually are in Van?
I’d like to know too. I’ve heard a few recently (on the blogs) say that if there is a small drop like 10% then it’ll bring affordability down enough for all the pent-up demand to jump in. But I don’t understand how, after this boom and with home ownership levels at all time highs, we have any pent up demand at all.
I’m in my early 30′s and almost everyone I know has already bought something, including many who are younger than me. My wife and I are looked at with poorly-disguised pity by friends and family alike because we still rent. Of course, instead of commuting to Coquitlam every day we both work part time and walk to our jobs from our rented house in Van West. But maybe my priorities are screwed up.
April 17th, 2008 at 2:27 pm
dingus, Thanks, I understood your krissh translation much better than the original krissh text. Keep up the good work
April 17th, 2008 at 2:17 pm
I love it. Increasingly solid evidence that the market seems to be turning and the bears start talking of when to buy. While all the bulls start talking about when to sell. All I can say now to the majority is… PANIC! SELL! GET OUT NOW! PANIC! FEAR, FEAR, FEAR!!!
Buy on fear, sell on greed.
That said, The time to buy will be after the Olympics, when the last wave of the Olympic caravan leaves town.
If we suddenly find ourselves in a buyers market in 2008, some of the buyers may come back in 2009 which might dampen a correction/crash. Maybe. But supply will increase as the construction workers and Olympic caravan leave Vancouver, thus increasing vacancies and subsequently inventory as the rental market becomes competitive, and probably desperate.
April 17th, 2008 at 2:11 pm
Im guessing you’ll get some jumping in for a deadcat bounce at around 10 or 15% down, but the total drop will be in excess of 25%.
‘super-rich mofos’ with cash can’t make properties cash-flow positive, thats only done by either prices going down, rents going up or both. Even if you buy a place for cash current rents in Vancouver won’t cover oppourtunity cost, you’d make more money by putting that cash in a GIC.
April 17th, 2008 at 1:55 pm
I’m wondering what people’s thoughts are regarding those of us sitting on the sidelines with cash in hand..waiting and wanting to buy. Is there going to be a buying frenzy at a certain threshold…say 15% or 20% drop….where buyers feel comfortable to get into the market with the notion that it will stabilze over the longterm?
And likewise, could we see the good units/properties selling quickly like we’ve seen over the past few years and the small tiny junk sitting on the market for months? I know a lot of people who have stable careers, money saved and want to stay in Vancouver longterm who would love the opportunity to finally buy a home. I wonder how many of these people there actually are in Van?
I’m also wondering about the super rich MoFo’s with liquid cash who can sweep in and buy places for cash or at least make a place cash flow positive. How many of these people are they that have pulled their money out already and are just waiting for a softening to get back in.
April 17th, 2008 at 1:33 pm
LaLaLand said, “buyers have become quite cautious. Some have put off buying for now (the smart ones, stating the risks that prices will drop in the near future are too high).”
As a crash-eager bear, I’m hoping the “Some” who have put off buying are only a few. I hope the majority are folks who just don’t qualify for mortgages or those who are relying on capital appreciation in order to buy (such as flipping current holdings).
Because if the majority (somehow) have the cash and stable high income to buy and are just being latently bearish, then the market will only be driven down by bear psychology. Whereas the market needs to be driven down by fundamentals as they apply to the current buyers. There’s two (or more) versions of fundamentals: those that the bears on these blogs see, and those that apply to the buyers and sellers of the market.
In either case, the recent stats are certainly encouraging. And it seems that there is a lot more recent acknowledgment that the market has to correct/crash.
But if it takes a little bit of bearish psychology to get this bear party started, then that’s fine with me. The sooner this gets triggered, the better it is for all, including the bulls.
April 17th, 2008 at 1:02 pm
Okay I was wrong, I thought Krrish/SATV was from Eastern Europe but the name Krissh and SATV
(South Asian Television Canada Limited (SATV Limited)”
Are both South Asian references.
Seeing this I take back the terrorist cracks, if he is South Asian that was a low blow.
But he still doesn’t get it!
His critical thinking skills are nil.
April 17th, 2008 at 12:57 pm
We discover in the beginning of the film that as a young child, Krishna is extremely intelligent and gifted; for example, he is able to draw beautiful portraits of his mother, perform Herculean feats of strength, run at tremendous speed, communicate with non-human animals, and think with great clarity. He is brought before a committee which realizes his gifts, but his grandmother fears that the greedy may exploit him as they did his father, and so the two move far away into a remote village called Vancouver which has some mountains.
Krishna spends his childhood there, playing with other children and racing with animals. However, he soon grows frustrated as he sees that all those his age are moving away to a city to greater and grander things and he becomes upset at his grandmother for making him stay in the village. So he starts posting on blogs that his village (Vancouver) is the greatest place on earth!
April 17th, 2008 at 12:53 pm
http://en.wikipedia.org/wiki/Krrish
“Krrish is a 2006 Bollywood science fiction superhero film directed by Rakesh Roshan. ”
April 17th, 2008 at 12:48 pm
Krissh, you’re a good sport about this but you have failed to say anything relevant to the “bulls” case today and failed to answer. It’s great that you feel your views as a terrorist count for all other terrorists but it doesn’t count. It’s great you think Canada can retain their water reserves but that is just your assumption.Assumptions don’t mean anything. You have never raised a single relevant point despite a 20,000 word count.
Replying with more nonsense to other posters questions does not count!
Posting your own ideas doesn’t count unless it’s accurate.
Instead of making baseless claims try doing some research and citing your sources, stuff that you make up inside your head does not count!
This year there will be 6,000,0000,000 new units completing and an exodus of 500,000 people, this means the price will be $1.
How do you like that?
April 17th, 2008 at 12:46 pm
It’s great that it’s catching on in the MSM, but I actually am more looking forward to the time when Krrish realizes it’s over. I just wish I could be there with a video camera so we could all see the look on his face.
On the other hand it’s possible that prices drop 70% and he’ll STILL be oblivious.
April 17th, 2008 at 12:36 pm
I’ve just figured out who Krrrrish is. He’s Baghdad Bob who has moved to Vancouver to become the “minister of disinformation”
http://www.youtube.com/watch?v.....E&NR=1
April 17th, 2008 at 12:33 pm
Ran krrsh through the translator again. If anyone can find a krrsh-English translator, let me know:
__________
Tony,
the resale table of contents surges because new project some stats is may the use.
The resale will sell drops this year in 35,,000 neighbor units but price countinue last year compares with 48,,000 units with climbs brings the average price to $7.78, million -2008.
In 2009 has cannot be stats therefore the surge will be erases in the table of contents as the future rioter does not have the new family to choose in otherwords……
“they will countinue retains is coming but is we cannot make more”
therefore will have many strees to transform the price in land next countinue to become the new altitude, will be hot like 2,005 must change calm and adopts stride width moderate appericiation but not to have the collapse to make.
April 17th, 2008 at 12:31 pm
Anecdotal:
Realtor friend in Toronto has been noticing the difference in sentiment in the market since January. Subtle at first, but now, especially in the last two weeks, buyers have become quite cautious. Some have put off buying for now (the smart ones, stating the risks that prices will drop in the near future are too high).
April 17th, 2008 at 12:22 pm
Tony,
Listings of resale home are surging because some stats of new projects are available.
sales of resale home will be down this year around 35,000 unit compare to 48,000 unit last year but prices countinue to climb that will bring the average price to $778,000 -2008.
There won’t be much stats in 2009 so the surge in listing will be erase as the future mob not going to have choice of new homes- in otherwords……
“they will countinue keep on coming but we won’t be making more”
So there are lots of strees on land in future that will countinue to convert prices to new heights,the heat like 2005 must cool down and take the pace of moderate appericiation but there is no crash in the making.
April 17th, 2008 at 11:51 am
Torontorian and Albertans now realized that olympics suppose to be held in Vancouver and Beijing will wrap up this year.
So why are listings skyrocketing in Vancouver then? To the moon Alice to the moon Krisshh!
April 17th, 2008 at 11:49 am
“Vancouver barely mentioned in article and given its an Eastern based reporter I don’t think he understands that its different in Vancouver.’
Give it time….there’ll soon be articles in the Vancouver Sun and Province about the boom’s over in Vanouver. They’ll try to spin that it’s a buying opportunity, but will the potential buyers bite?
April 17th, 2008 at 11:39 am
Londonernow,
Torontorian and Albertans now realized that olympics suppose to be held in Vancouver and Beijing will wrap up this year.
April 17th, 2008 at 11:31 am
So who’s going to break the news to Bill Good?
April 17th, 2008 at 11:26 am
Vancouver barely mentioned in article and given its an Eastern based reporter I don’t think he understands that its different in Vancouver.
April 17th, 2008 at 11:23 am
Thanks to Dan & Coton for this link.