CMHC: decline for starts and prices

The Canadian Mortgage and Housing Corporation has lowered it’s forecast for housing starts and prices in BC due to the weak economy.  They are predicting a 43% decline in housing starts this year, and more than 15% decline in house prices over the next two years.

Canada Mortgage and Housing is forecasting the average Metro Vancouver home price to decline 13 per cent in 2009, and a further 2.3 per cent in 2010.

“Buyers’ market conditions that began in mid 2008 will persist through this year before supply and demand conditions become more balanced in 2010,” Canada Mortgage and Housing said in its forecast.

The housing agency expects the decline in sales will flatten out later in 2009 as first-time-buyers are lured back into the market by lower prices, but “[s]lower economic growth will keep demand for home ownership sluggish through early next year.”

In another report, the research firm Landcor Data Corp. noted that real estate sales recorded through the B.C. Land Title Office dropped to their lowest level since 1985 in the first quarter of 2009.

However, Landcor president Rudy Nielsen said the recent trend of rising sales over the past few months could be signaling that the downturn is near its bottom and represent “a light at the end of the tunnel.”

Or, the blip in sales “could be a grizzly bear with a flashlight. It’s tough to guess right now where the hell we’re heading,” Nielsen said in an interview.

If you’re counting on lower house prices to make Vancouver more affordable does the recent blip in sales have you concerned?  Is this a market recovery, a spring bounce or a grizzly bear with a flashlight?

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Record unemployment hits US for the umpteenth month in a row.… Canada mum on information. BC is in information lockdown. Anecdotal information is that jobs are pissing out into the streets. EI clerks have been ordered not to answer their phones. The coffee shops in Kits and Downturn are filled to the rafters with suddenly self employed entrepeneurs trying to sell their services to one another. COV announces quietly this week that it will cover older buildings along city streets downtown with "Wraps" like they did in Beijing to disguise the SRO's, and boarded up and vacant/abandoned shop fronts along Hastings. I can't imagine what they're going to do with the street people but in China all those undesirables were given the bums rush, will that happen in Vancouver? Personally I think a lot of homeless will be incacerated,… Read more »


This is the kind of stat that makes me feel that the US market could just keep on falling.

1 in 4 US homeowners doesn't have a nickel saved. Nada! Rien! Niente! Nicht! Nashi!


Anonymous: its basic economics. lower prices equals higher volumes. That's for consumption. If gas is cheaper people use more gas, if beer is cheaper people drink more beer, etc. And if rents are lower people use more living space, if flights are cheaper people fly more, etc. But the sale of RE is not consumption. It is not the use of anything. It's the change in ownership of a capital asset. It is driven by expectation of price changes as well as demand for use, and the end user is not necessarily the same person as the buyer (i.e the buyer may be a landlord). This is true for all capital markets. Look at the stock market. Are stock sales higher the lower the price gets? No. That's because the stocks are not being "used" or "consumed". A stock is… Read more »


Thx Bilbo

actually – but same idea just a lot more data for all U.S. markets.

Bilbo Bloggins


You talking about this?

San Francisco Home Prices Fall 41?0on Foreclosures (Update2)


Where you been Bobby? Checking on the things down south, seeing how they are "recovering"? Please, go get some more parking tickets. It would be great to know how many condos he actually owns. Or has he been smart and converted to cash.



#45 RD, Boobie says there are only 700 units available downtown. I guess he hasn't looked at the MLS book for awhile or had time to scroll through the thousands of desperate listings on Craigslist, Bwahahahahahahahahaha

Boobie and his boytoy have been spending too much time watching his after lube soaked sex farts waft colourfully through the amyl nitrate confusion of his Mickey Mouse night lite.


German vulture fund puts money losing Caisse de Depot over the barrel and screws 'em raw in Vancouver commercial deal.


Hey, guess who crawled out from underneath his rock today

….Bob Rennie


Read this -still don't know how to attach link

go to bloomberg news … interesting story on San Fran foreclosures … story references DQnews …

Still believe the rally?


patriotzed, (35)

its basic economics. lower prices equals higher volumes.

it is easier to trade up after a huge price drop.

condo loan house loan

400K 100K 1 million 700K

after a 50% drop

condo loan house loan

200K 100K 500K 400K

Is it easier to get a 700K loan or a 400K loan?

I agree with the fact that after a crash, it will take a long time to recover. This is because finally, the idiots realize that "buy now or be price out forever" is full of crap.



#37 as goes the economy, so goes the applications


Bank of Canada reconsiders rate policy

Something must be brewing for them to be considering exotic measures like PT. Karl Marx must be laughing in his grave.



Oh, I want to add: I think the moral to the story about Edmund Andrews is that a person can know something *logically* and simultaneously believe something *emotionally*.

That's why people like Warren Buffett and Sir John Templeton got a lot richer than many other people who were just as smart. They didn't let their emotions get in the way of logic.

“The four most dangerous words in investing are 'This time it's different.'” – Templeton.


Oh, I want to add: I think the moral to the story about Edmund Andrews is that a person can know something *logically* and simultaneously believe something *emotionally*. His financial choices were emotional. This backs up the need for regulation in lending practices, because during a weak moment he was able to do a lot of financial damage to himself and, possibly to the community at large.


"Which means he has basically zero qualifications to write about anything to do with economics, and likely spent the last decade pumping the real estate market and praising Greenspan & Co. Sounds like he got what he deserved."

Actually, as I understand it he has been reasonably critical, and that was part of the shock. I agree that this points to a reason why many reporters were compromised (wanting to believe their own magical reality) but before you slander him, you might check his record.


Quick statistic. I work in a Chartered Bank as a lender. Mortgage applications are down 70% from last year.

If the historic low interest rates don’t stimulate buyers then what will? I think I am the only person at the bank that believes Vancouver real estate still has much more room to drop, which is actually a sign that I may be correct. Contrarian’s investing.


"NoMoneyDown Says:

May 21st, 2009 at 7:22 am

Here’s one to gloat over from the NY Times….

Wow, he's "an economics reporter for The New York Times." Which means he has basically zero qualifications to write about anything to do with economics, and likely spent the last decade pumping the real estate market and praising Greenspan & Co. Sounds like he got what he deserved.

I would also point out, for the record, that I don't think someone's academic and/or professional credentials have anything to do with their ability to make good financial decisions or discern whether they are in a bubble. I know plenty of "smart" people who are drowning in debt, bought at the peak, etc.



Am I missing something?

Lower prices do not translate to more sales volume. The big reason is that after a big price fall many existing owners are unable or unwilling to trade up or down due to lack of equity.

Also once the public has gotten the message that prices are going down FTB's start waiting it out for the bottom and don't buy until they are sure it has been reached. It takes years after a price bust for sales volume to recover. Non-foreclosure sales volume in the US is still way down in the dumps.

Thus the motivation to keep the party going as long as possible regardless of the hangover.


What puzzles me is why these "industry experts" keep lying to the public in a desperate attempt to slow down the crash. The sooner the market returns to fundamentals, the sooner everything will stabilize, people will start buying and selling again, and realtors will start making money again. Am I missing something?



That was a "sarcasm smiley".

There has always been a big correlation between negative equity and payment defaults, because both are correlated with recessions. And foreclosures are almost non-existent during rising RE markets simply because an owner who is unable to make payments, for whatever reason, can sell and pocket the cash. You only get foreclosures when you get negative equity and inability (or unwillingness) to make payments at the same time.

Note BTW that only some US states are non-recourse. Florida, for example, is recourse, and it probably has more walk-aways than any other state. If someone has no other assets (like the 0/40 buyer) and cannot make payments or can make them only with extreme difficulty, walkaway and bankruptcy are the easiest way out.



Good thing there’s no correlation between the two, eh?

Perhaps a bit, but not so much as down south, were the repercussions for walking away from ones mortgage are much less then here in Canada, eh?

I suppose CMHC should care more about unemployment, as that directly affects peoples ability to pay the mortgage.


Here's one to gloat over from the NY Times….




I don’t think CMHC has to care if homeowners are underwater, they only need to care if those homeowners start defaulting on their payments.

Good thing there's no correlation between the two, eh?



I don't think CMHC has to care if homeowners are underwater, they only need to care if those homeowners start defaulting on their payments.