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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Lou Campo
Lou Campo
12 years ago

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… Read more »

Edwin Bubble
Edwin Bubble
12 years ago

"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.

Ari telias
Ari telias
12 years ago

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

Anonymous
Anonymous
12 years ago

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?

Tony Danza
Tony Danza
12 years ago

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!

franko
franko
12 years ago

.

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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.

DaMann
DaMann
12 years ago

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.

Drachen
Drachen
12 years ago

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.

Tony Danza
Tony Danza
12 years ago

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.

condohype
12 years ago

Alexcanuck, Councillor David Cadman says that his "scanning" of BC Hydro records shows 18,000 unoccupied downtown units:

“We know from scanning BC Hydro records,” Cadman told the crowd, “that there are at least 18,000 condo units in the West End where the only power use is from a fridge that stays plugged in. The units are empty, bought by speculators who want to flip them for a profit. These empty condos are displacing rental accommodation.”

Source: "Overflow crowd rallies for future of West End housing," Westender, April 17 2008

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.

patriotz
patriotz
12 years ago

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

Re-diculous
Re-diculous
12 years ago

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.

exx
exx
12 years ago

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.

exx
exx
12 years ago

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.

pricedoutfornow
pricedoutfornow
12 years ago

/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!

Alexcanuck
Alexcanuck
12 years ago

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>

BBY
BBY
12 years ago

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… Read more »

punface
punface
12 years ago

Just watching The National tonight, their second story was on housing and very similar theme (Housing Boom over) to Globe and Mail article.

DoDo1975
DoDo1975
12 years ago

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!!

Visio
Visio
12 years ago

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…

patriotz
patriotz
12 years ago

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… Read more »

moldcity
moldcity
12 years ago

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… Read more »

Strataman
Strataman
12 years ago

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.

franko
franko
12 years ago

.

.

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?

disbelief
disbelief
12 years ago

Satv had the same 2008 year guess on RC site krssh and satv are one in the same… Sharing the same brain maybe…