Canadian house prices drop

This from today’s Globe and Mail – Canadian house prices dropped in June for the first time in nine years:

Canadian home prices fell in June for the first time since January, 1999, as the number of houses for sale remained at record levels.

The average price of an existing home fell 0.4 per cent in June to $341,096, compared with $342,615 the year before, according to statistics released Tuesday by the Canadian Real Estate Association (CREA).

“The fall in home prices…is a sizable dip in this indicator, given that not too long ago the Canadian housing market was witnessing double-digit price gains,” Millan Mulraine, economic strategist at TD Securities Inc., said in a research note.

Of the 25 major markets included in the statistics, average home prices declined on a year-over-year basis in Calgary, Edmonton, Victoria and Windsor-Essex. The largest decline of 2.6 per cent was in Edmonton, while the smallest was in Windsor-Essex at 0.5 per cent.

Last month, BMO Nesbitt Burns Inc. economist Douglas Porter raised the possibility of an overall drop in home prices in Canada. Most industry watchers have stayed with the view that home prices will rise slightly this year.

In June, Mr. Porter said it was “unnerving” to note that Canada’s housing market performance appears to be tracking that of the U.S. but with a two-year lag, although he also sees a number of differences between the two markets.

He said he was tracking prices in the “middle ground,” cities such as Toronto, Montreal and Ottawa, which still have fairly robust economic fundamentals but haven’t been supercharged by the commodities boom.

Prices in those cities all rose moderately year-over-year in June, up 3.7 per cent in Toronto, 4 per cent in Montreal and 6.8 per cent in Ottawa.

The Canadian and U.S. markets are still very different, CREA president Calvin Lindberg said in a statement. U.S. home prices dropped by 14.1 per cent in the first quarter of the year, according to the benchmark Case-Shiller national home price index.

Out local market stands out as the biggest year-over-year decrease in sales in all the Nation, Greater Vancouver saw sales drop 42.9% from last June.

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concord owner
concord owner
12 years ago

Ted, The remaining Coopers neighborhood buildings are supposed to complete late this year according to the Concord website. Concord was able to pull off a very rapid completion on the Coopers Pointe building mid-December, 2007. Quality on completion suffered as a result and they had a multitude of deficiencies to fix. They really ought to proceed more diligently on the next buildings before handing over the keys. When I visited the Cooper's Pointe building a month ago, Concord still hadn't completed the painting touch-ups. The common areas had green sticky markers EVERYWHERE! The original paint job was very poorly done. To leave such a visible yet easily fixed mess unattended for a half-year reflects poorly on them. In general, the building was finished to a noticeably lower standard than their earlier 'SILVER' standard buildings. They can't possibly be running out… Read more »

Drachen
Drachen
12 years ago

1) Vancouver has manufacturing?

2) Yes, until it's not, that's the problem with bootstrapping.

3) Uhh did you read what they said? They're holding steady because they're afraid to move it either way due to a shaky economy.

4) Due almost entirely to bootstrapping (see 2).

5) Well you're right on this one, Real Estate prices are steadily declining over the past couple of months.

alexcanuck
alexcanuck
12 years ago

John; to summarize your summary:

"The Bear turns his head, looks at the man and says "You're not here for the hunting, are you?"

John
John
12 years ago

So let's summarize the situation here:

1) Manufacturing is up

2) Construction is still booming

3) Bank holds rates steady due to extremely healthy economy

4) jobless numbers down

5) Real estate prices steady

It's time to go out and hunt down some bears.

Anonymous
Anonymous
12 years ago

he is his Son

Time travel loop? Oedipus complex?

You're correct, of course, just having fun with grammar.

bdk
bdk
12 years ago

"Terry Hui is Li’s son no?"

Yes you're right he is his Son.

Bubble Lad
Bubble Lad
12 years ago

Sorry – missed your reply Vancouver Banker. Thanks. Maybe you should start your own blog and let us know what happens: "Unfinished Vancouver Condo Info". Seems like the next logical step. I'd read it…

Drachen
Drachen
12 years ago

"I’m assuming there’s no real penalty for the builder dumping them – that they’re protected as a numbered corporation"

No, the banks can still come after the corporate officers for up to two years of earnings. It's 'limited' liability not zero liability. It doesn't matter whether the corporation is numbered or named, just people use numbers when they want a throwaway company they don't want to bother giving it a name.

Ted
Ted
12 years ago

I am talking about the three towers under construction – one is complete.

VancouverBanker
VancouverBanker
12 years ago

"Thanks, Drachen! Makes sense (at least in the bizzaro bubble universe). I’m assuming there’s no real penalty for the builder dumping them – that they’re protected as a numbered corporation – and that’s why they’re still starting new projects – to them there is no down side."

This is only true if it's non-recourse (no guarantees) lending, which is very uncommon in Canada, fortunately, except maybe for tiny townhome projects, but even that would surprise me.

Warren
Warren
12 years ago

"at least I don’t pontificate about their situation!"

LOL you are doing exactly that!

They build dozens of towers in Vancouver and the one you happen to watch progress every day is the one that breaks their back? Come on Ted.. things happen slowly. Think occam's razor.

VancouverBanker
VancouverBanker
12 years ago

"VANCOUVER BANKER – what happens to all the partially built condos? I’m DYING to know…who is actually in posession of them – the bank, the city, the builder who? Are we going to end up a city of half-built condo projects functioning as drug markets/de facto homeless shelters just in time for 2010? I have a strange feeling the “developers” are going to vanish into thin air." First we'd try to go after whoever guaranteed the project to put in more money and finish it. Could also try to help them find mezzanine/equity financing through our contacts if possible. Next, try to get them to re-negotiate presale contracts, which has been done a couple times already recently as everyone's heard in the news. Failing that, take over the project and sell it ASAP, which is really the last resort. For… Read more »

Ted
Ted
12 years ago

Terry Hui is Li's son no?

Ted
Ted
12 years ago

Maybe they are waiting for a permit, who knows?

So they erect the building and then have to wait for permits to complete the interior? It's been over a month since any work was done on the interior.

I know nothing more than any of you but at least I don't pontificate about their situation! I am simply observing and speculating because the situation seems odd. I also know that cash flow issues happen to the biggest companies and sometimes their parents (Li) let them die rather than throw money after a losing proposition.

bdk
bdk
12 years ago

"Wow you guys sure know the status of this private company! Li didn’t get rich dumping money "

Li Ka Shing sold Concord years ago to Terry Hui

Warren
Warren
12 years ago

Ted,

1. Are you a contractor familiar with projects of that scale? It could be any number of things holding up the project, or maybe they are just working on things that you can't see. Maybe they are waiting for a permit, who knows?

2. Do you know something about Concord, a private company, that the rest of us don't?

"if anybody has cash, its Concord" means exactly what it says, they'd be among the last of the major developers to fold on a project.

Craigslist shows exactly *one* unit for sale at Coopers, I'm sure they are well sold.

What is your agenda against this one building? Please, let us know.

Anonymous
Anonymous
12 years ago

Top bank holds key rate steady at 3 per cent

Ted
Ted
12 years ago

Ted, if anybody has cash, its Concord. Wow you guys sure know the status of this private company! Li didn't get rich dumping money into losing companies after they reached their prime. Why is everyone so sure they have endless amounts of cash? Because they are a big Vancouver developer and have ads all over their sites? As mentioned I have a good view of this site and over the past month there has been no work going on in the interior. All work is being done on the ground and as for weekend work there are minimal people on site with the exception of security. Any other explanation for the slow down? Why wouldn’t they want to complete and be paid for the units? Think about it – leaking buildings with judgments against them, investors not completing, a soft… Read more »

Anonymous
Anonymous
12 years ago

Canada's manufacturing sector in May posted its biggest monthly sales increase since March 2007, Statistics Canada said Wednesday,

Sales for May rose by 2.7 per cent to $51.4 billion, marking the fourth increase in five months.

http://www.cbc.ca/money/story/2008/07/16/maymanuf

Bubble Lad
Bubble Lad
12 years ago

Thanks, Drachen! Makes sense (at least in the bizzaro bubble universe). I'm assuming there's no real penalty for the builder dumping them – that they're protected as a numbered corporation – and that's why they're still starting new projects – to them there is no down side.

Drachen
Drachen
12 years ago

Bubble Lad "what happens to all the partially built condos?… who is actually in posession of them – the bank, the city, the builder who?" Of course the builder owns them up until they default on payments to the bank and are foreclosed. The bank obviously doesn't want the property, they want money. So they sell to the highest bidder. Under the circumstances there won't be a lot of competition and many times under this kind of circumstances the government steps in (hey, what else are lobbyists for?). I suspect this will be the case for many of the buildings here, either turned into social housing. It's possible that some of the condo projects may end up converted into office space too. However, if the bank can't find a buyer and feels that they can get more money out of… Read more »

Drachen
Drachen
12 years ago

VancouverGuy

"Canada is not going to have to debase its dollar in order to pay its debts."

Even if we wanted to Canada can't play that game. Only the US can because their debt is held in USD. Canadian debt held elsewhere is not in CAD. This is a big part of the reason the US is pissed that many countries are switching to the Euro for their currency of choice for international dealings. In fact it's possible and by many considered likely that the war on Iraq had as much to do with Hussein switching to the Euro in 2000 as it did with anything else.

Anti-Ted
Anti-Ted
12 years ago

Ted is just worried that Concord is going to build a really tall and ugly project called colours right in front of his unit taking away his view for good. He's trying to speculate that Concord is in trouble at Coopers Pointe hoping that scares away purchasers and cancels that Colours project. Sorry Ted, at least the new edgewater casino will be much closer to you.

Bubble Lad
Bubble Lad
12 years ago

VANCOUVER BANKER – what happens to all the partially built condos? I'm DYING to know…who is actually in posession of them – the bank, the city, the builder who? Are we going to end up a city of half-built condo projects functioning as drug markets/de facto homeless shelters just in time for 2010? I have a strange feeling the "developers" are going to vanish into thin air.