House prices fell across Canada in June 2008

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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104 Responses to “Canadian house prices drop”

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1
Burden of Proof Says:
July 15th, 2008 at 9:55 am
There we have it. This was obvious to anyone with a brain. The Vancouver market will be a blood bath for anyone who is over leveraged or bought investment units hoping for capital gains. Needless to say, Vancouver’s ponzi economy will be in the worst shape in a generation.

Bulls will be littering the landscape like sick, weak prey ready to be gobbled up by the greedy bears.
2
patriotz Says:
July 15th, 2008 at 10:02 am
Nope, it will be even bigger and longer than the 80’s bust. Far more dependence on RE for employment, far more mortgage and consumer debt, and no US recovery in sight to pull us out of it. Also no falling oil prices or interest rates.
3
jesse Says:
July 15th, 2008 at 10:09 am
I don’t get it. Vancouver, Toronto, Ottawa, and Montreal all up YOY but the national average is negative?

All real estate is local. The national average is only meaningful if applying a hamfisted national housing strategy. Like CMHC, for example.
4
John Says:
July 15th, 2008 at 10:10 am
Oil fell by over $8 today. Let’s face it folks this is what’s called a soft landing. Nothing to panic about at all. This time next year we’ll see double digit gains again. I just put down deposits on 5 more condos in anticipation.
5
Mold City Says:
July 15th, 2008 at 10:17 am
Only five John? Then you’re a sucker, why not put down deposits on 20 or 30? When was the last time there was this many thousands and thousands to choose from? And with a lot of desperate people now trying to figure out how to get out of their contracts you can get some smoking hot deals for sure! Dash in and pick up as many of those zero down mortgages as you can before October if you really believe the housing market won’t crash and burn.
6
John Says:
July 15th, 2008 at 10:24 am
Trust me I’ve seen this formation before. This is a tripple m top formation and we are about to complete the M. I will sell in 2010 and then buy oil which has just finished it’s M.
7
Mold City Says:
July 15th, 2008 at 10:29 am
Selling in 2010 is a good idea! I’m sure nobody else has thought of that so you shouldn’t have much competition.. you’ll probably be able to ask any price you want and get it. The recent explosion of listings and drop in sales and prices will surely have worked its way through the system by then. Best of luck with those triple M top formations!
8
ouch. Says:
July 15th, 2008 at 10:31 am
This is what a bank failure looks like:
http://ktla.trb.com/news/ktla-mortgages,0,1444873.story

At least three police squad cars arrived at the branch on Ventura Boulevard to restore order before the bank opened its doors at 8:00am. Police urged customers to remain calm or face arrest as they tried to pull their money on the second day of the failed institution’s federal takeover.
9
Re-diculous Says:
July 15th, 2008 at 10:42 am
Monitoring the G&M’s Rob Carrick’s Q&A on the new home purchase rules:

Q (from Vancouver):Do you think removing 0% down mortgages will increase affordability by reducing demand, and therefore prices?

A the short answer is yes. I mean, you’re from Vancouver, where the average house price there is $611,000 according to data released today by the Canadian Real Estate Association. My trusty calculator tells me that 5 per cent of $611,000 is $30,550, which is a fair chunk of change to save up. Never mind that you’ll need much more than that to pay for lawyers, movers and various other home-buying fees. Bottom line: It’s going to take people time to save up that new minimum 5 per cent downpayment, and that can’t help but slow demand. Simple economics suggests slower demand will have a downward affect on prices.
10
Anonymous Says:
July 15th, 2008 at 10:46 am
Oil tumbles
Oil prices tumbled Tuesday, falling at one point by $10 per barrel as Federal Reserve chairman Ben Bernanke offered a pessimistic picture of the U.S. economy.
11
ouch. Says:
July 15th, 2008 at 10:50 am
Would have been a great day to have money in an oil bear index fund!
12
kablooey Says:
July 15th, 2008 at 11:18 am
And construction is proceeding apace. I don’t know how the speculators are dealing with this, they have stronger stomachs than I do for sure.
There is, what seems to me, a classic example of a financial disaster on Main St. aka Chinatown, aka Skid Row. I went by yesterday and the trucks are pouring concrete like crazy. But, I assume the pre-purchasers will have to make another payment somewhere along the way. If some of them decide to cut their losses what happens to the project?
I don’t really know but I picture half built projects sitting idle for a fairly long time. Does this make sense?
13
Bubble Lad Says:
July 15th, 2008 at 11:29 am
I think this sums up most of today’s thread:
http://www.theonion.com/content/news/re … on_demands
14
Vansanity Says:
July 15th, 2008 at 11:29 am
Oh Burden of Proof you have such an eloquent way with words.

Kablooey, I say the same thing daily. We have to remember that most of those places were sold over the last 12-24 months. So, as long as the Developer can afford to, they’ll finish the job and pocket the difference. I think over the next 12-24 months you will see quite a decline in building permits around our fair city.

Anecdote: I just came back from a trip to the kootenays… I have never seen so many for sale signs in my life. I have driven the same route hundreds of times over my life and have never seen so many for sale signs up in every single community throughout the Okanagan and West Kootenay.
15
Patiently Waiting Says:
July 15th, 2008 at 11:53 am
I drove by the Anvil in New West yesterday. Nothing happening there. Its partially finished and looks like it did several months ago.

For a long time I’ve kept an eye on the Whistler-style condos and townhouses at McBride and 6th in New West. I might buy there someday.

This time last year, there may have been three or four units on the market, and they were selling fast when well priced. Yesterday, I counted 15 signs in the complex, and NOT ONE sold sticker. I then went on-line and there are actually 17 units for sale, and lots of price reductions.

Nice.
16
ouch is right Says:
July 15th, 2008 at 12:22 pm
ouch. Says:

July 15th, 2008 at 10:31 am
This is what a bank failure looks like:
http://ktla.trb.com/news/ktla-mortgages,0,1444873.story

At least three police squad cars arrived at the branch on Ventura Boulevard to restore order before the bank opened its doors at 8:00am. Police urged customers to remain calm or face arrest as they tried to pull their money on the second day of the failed institution’s federal takeover.

I know its off topic but who keeps in excess of 100,000 dollars in a savings account? That is just crazy.
17
franko Says:
July 15th, 2008 at 12:23 pm
Gotta agree with patriotz that we’re about to surpass the 80’s bust as the storm seems to getting more perfect by the day.

The Fannie and Freddy mess will make the subprime thing look like child’s play, and those distant warnings of that vicious recession are turning into a mighty roar.

Unfortunately, without any recession-proof industry, Vancouver is just as vulnerable as Miami and San Diego. Aside from our bubble driven construction and marketing, we don’t have any industry at all.

If ya can’t hang on to your job, at least try to hang on to your seat.
18
gah Says:
July 15th, 2008 at 12:28 pm
“Nothing to see here people, move along.”
Officer Barbrady
19
Re-diculous Says:
July 15th, 2008 at 12:38 pm
Per VanSanity (#14)…anyone been to Bowen Island lately? I go there all the time during the summer and there too I have never seen so many For Sale signs….it would seem that that every other house is on the market there and most signs have been there for at least a few months.
20
Dave Says:
July 15th, 2008 at 12:38 pm
The future of BC and Vancouver is very strong.

We have everything in BC that anybody could possibly need or want. We have plenty of natural resources (oil, coal, metals, clean water), the ability to generate lots of energy (wind, tidal, hydroelectric, geothermal), we have a highly educated workforce, we have a multi-cultural society with significant links to Asia (huge future growth), we have the closest ports in North America to Asia, we have a diversified economy, we have good governance (surplus budgets and business friendly government) and we have the lowest personal tax rates in Canada!

And then on top of all that, Vancouver is simply a great place to live (world class city, mountains, forests, ocean).
21
ouch. Says:
July 15th, 2008 at 12:44 pm
Dave, could you clarify, which of those elements were missing during previous housing busts? There have been times when house prices have dropped between 20% to 50% in Vancouver. Whats different about this time?
22
Tom Says:
July 15th, 2008 at 12:50 pm
Ouch, why must you feed the troll?
23
Anonymous Says:
July 15th, 2008 at 12:55 pm
“I know its off topic but who keeps in excess of 100,000 dollars in a savings account? That is just crazy.”

This includes GICs, term deposits.

When a retired couple sells their $1 million mortgage-free home, guess where they do put their money? (hint: not in stocks or oil futures)

There are many people with over $100,000 in their bank accounts. Just go to your local bank and ask for the interest rates they pay for balances over $100,000!
24
Dosh Says:
July 15th, 2008 at 1:00 pm
This time last year, there may have been three or four units on the market, and they were selling fast when well priced. Yesterday, I counted 15 signs in the complex, and NOT ONE sold sticker.

Then its the best time to buy. Haven’t most of you been waiting for the market to calm down so you didn’t have to overbid? Now that its here why aren’t you out there shopping?
25
Matt Says:
July 15th, 2008 at 1:18 pm
The high employment rates that have blessed Vancouver in the past 5 years are due to the high demand of the retail and construction sectors for labour. Canada’s GDP shrank last quarter and inflation is running quite high. Real Estate sales figures for the past 6 months have been sluggish to non-existent and inventory is up to 8 months. Can any of the bulls point me to any economic indicators that conclusively show that Canada and more importantly, BC’s economy will thrive in the next 6 months, thus saving our precious housing market from collapse? Other than its world class status, what could possible convince Asian investors that investing in our houses in Vancouver is an excellent way to weather their undergoing recession?
26
macchiato Says:
July 15th, 2008 at 1:29 pm
Dave, your post is ridiculous, please leave the cave. You have no point to make and you can’t possibly believe you can change a market “en chute” with some general sweeping comments in a blog post.
27
Burden of Proof Says:
July 15th, 2008 at 1:39 pm
Six days ago the BC Business Council put out a report that confirmed that BC is in a slowing economy with back to back quarters of negative growth in the index.

The council notes that the last time this happened was 1980-81, 1990 and 1998. In otherwords, the economy is as bad as it was during the previous three housing busts. The Council notes that back to back declines have forecast past recessions and that the indicator is “not susceptible to false signals”.

Here is the report. It is worth reading.
http://www.bcbc.com/Documents/BCEIndexv7n2.pdf
28
Fuxxy Logix Says:
July 15th, 2008 at 1:40 pm
BC has numerous power projects in the works and will be a major electrical energy exporter into the foreseeable future. Anyone looking forward only 6 months is missing the point, that’s fine with stocks but with homes you should be looking forward a generation.
There are very few places in the world that look as good as we do looking forward 20yrs.
I’m not saying anyone should go out and buy investment properties, but for a home, yes, buy as soon as you can and never look back.
29
franko Says:
July 15th, 2008 at 1:52 pm
As if John & Dave trying to row against the current in futility was not funny enough, I guess it was just a matter of time for Dosh to pitch in and crank up the entertainment.

Yup, just checked the calendar….full moon approaching.

Talk about dumb & dumber.
30
macchiato Says:
July 15th, 2008 at 2:34 pm
Fuxxy Logix, WTF are you talking about, “wait and see” is the at worst the most prudent approach to the market at this point, even for homebuyers, although I prefer … “you would have to be an effing idiot to buy today”
31
Anonymous Says:
July 15th, 2008 at 2:54 pm
Anybody who is going to purchase real estate right now is the dumbest person in the world. Everyone knows the BC Real Estate market is in the Sh1t hole. Over the next 5 year, there is zero upward potential with 50% or more downward likelihood. Why buy now? Just wait.
32
Drachen Says:
July 15th, 2008 at 2:57 pm
John I think is just having a laugh. Sadly Dave and Dosh appear to be serious.

In answer to your question Dosh, why would I buy now, when prices will be 1/2 or less in 3 years? I can save up a nice down payment and buy the place I really want in a few years from now rather than stretching the budget to near braking point to be able to afford a place that’s barely liveable.

Which makes more sense?
33
betamax Says:
July 15th, 2008 at 3:41 pm
I know its off topic but who keeps in excess of 100,000 dollars in a savings account? That is just crazy.

Is it so crazy? That meager 3% interest is looking good compared to double-digit losses in the stock market right now.
34
Anonymous Says:
July 15th, 2008 at 3:47 pm
Fuxxy Logix, do you know the facts?
BC has been a net importer of energy for the past number of years.
The only hope on the horizon is Site C. This still hasn’t been officially approved and even if it goes ahead, it will be 10 to 15 years before it is ready.
Be prepared for higher Hydro rates in the foreseeable future is more like it.
35
JB Says:
July 15th, 2008 at 3:53 pm
European recession looms as Spain crumbles

http://www.telegraph.co.uk/money/main.j … tviewedbox
36
Fuxxy Logix Says:
July 15th, 2008 at 4:14 pm
Site C is only one project, there are hundreds yes hundreds of Run or the river projects either already up and running or going thru the approval process right now. A half dozen wind powered projects set to be up and running over the next couple of years. We are the global leader in wood pellet energy which is gaining strength in europe and could be set up at home. We also hold the largest untapped tidal reserves in the world. While that is years away it will be exploited withing our generation.

And if you look at the facts, while we have been a net importer over some of the last 5yrs it has been deliberate. The reasoning is we buy power off-peak from Alta coal plants when it’s dirt cheap and save our water behind the dams, during the day we open them up and sell the power at on-peak prices. We collect more money this way then if we didn’t import at all.
37
jesse Says:
July 15th, 2008 at 4:22 pm
“Then its the best time to buy. Haven’t most of you been waiting for the market to calm down so you didn’t have to overbid? Now that its here why aren’t you out there shopping?”

Nice try. Buyer’s market is when prices drop to a level where buyers actually start buying again. It doesn’t hurt to lowball though, though the lowballs I’d be throwing are so low they wouldn’t make it through the door. Yet.
38
ouch. Says:
July 15th, 2008 at 4:32 pm
nice time to be in the repossesion racket:
http://www.msnbc.msn.com/id/25691314/

“A repo-mans life is always intense!”
39
ouch. Says:
July 15th, 2008 at 4:36 pm
I moved most of my cash out of the markets almost a year ago, so I’ve got more than 100k in the bank, but I’m not worried. I’m also ok with not having much riding in volatile markets.. could be time to do some selective buying soon though.
40
-A- Says:
July 15th, 2008 at 4:45 pm
“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.”

There must be some kind of a mistake, are you sure it’s not Vancouver WA?

In Vancouver BC-Home of the 2010 Olympics, prices and sales volumes are supported by fundamentals.

So it must be a mistake, it must be Vancouver the American Vancouver, where they haven’t run out of land yet.
41
Dosh Says:
July 15th, 2008 at 4:49 pm
why would I buy now, when prices will be 1/2 or less in 3 years?

If you can tell the future and you know thats going to happen than no, it doesn’t make sense. But what makes you think your predictions are more accurate than all the experts that disagree with you?
42
-A- Says:
July 15th, 2008 at 4:52 pm
The crash of the housing bubble is likely to eliminate most, if not all, of the gains that US families made in accumulating wealth over the last two decades, according to new projections from the Center for Economic and Policy Research.

http://seekingalpha.com/article/84903-b … -of-wealth

Seems perfectly fair, that young families should have a chance at “catching up”.
43
Vince Says:
July 15th, 2008 at 5:34 pm
You know people this reminds me on 1973, when no one could fathom that the government would need to paper over its debts. House prices tripled over the decade. Very few were able to foresee the opportunity. Now is a historic opportunity to protect your wealth by buying real estate or gold. I feel most sorry for people selling real estate now. It is not different this time, history repeats itself. Renters will be marginalized like usual. The money supply must explode for the government to meet its obligations. Protect yourself now from the coming inflation.
44
blueskies Says:
July 15th, 2008 at 5:48 pm
buyers market = $250 per sq ft. YT prices

awaiting with bated breath……
45
buff_butler Says:
July 15th, 2008 at 6:04 pm
wow…

note the words CIBC and solvent

http://www.reportonbusiness.com/servlet … iness/home

(jacked from the alberta bubble blog)
46
Dosh Says:
July 15th, 2008 at 6:10 pm
The possibility of higher energy prices, tighter credit conditions, and a still-deeper contraction in housing markets all represent significant downside risks means house prices in Vancouver will go up!
47
YLTNBoomerang Says:
July 15th, 2008 at 6:11 pm
Good times:

Check out MLS: v718364, 766 SQFT townhouse downtown

Last sold Jan 11 2007 for $425,000
Assessed Value: $416,000
Asking Price: $485,000
DOM: 22
$/ SQFT: 633
Average $/SQFT townhouses downtown: $614
If priced at average: $470,000

It won’t be long before this flipper is negative equity!
48
-A- Says:
July 15th, 2008 at 6:17 pm
“Protect yourself now from the coming inflation.”

Yes Vince protect yourself,get rid of debt, because after inflation comes recession.stagflation ,and real estate crashes…….Always!

Your right Vince ,it is not different this time.

You know you will get stuck with negative equity and negative cash flow.
49
YLTNBoomerang Says:
July 15th, 2008 at 6:20 pm
Another fun one:

v720657 1118 SQFT townhouse in Coal Harbour
Assessed: 741,000
Last sold for 735,000 in August 2007
DOM: 98 started at 829,000 now down to 785,000

This ones going to hit negative land even faster!
50
Clam Chowder Says:
July 15th, 2008 at 6:25 pm
If those YT condos ever get to $500psf I’ll be buying as many as I can get as will all my buddies. So haha good luck getting them at $250psf. Do I expect a correction yes I’m counting on it, do I think we’ll get a crash? no.

Pages: [1] 2 3 » Show all comments newest first

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