It’s not just Canada
Both Jimmy and Patriotz pointed out this story: real estate markets around the globe are slumping once again, but the change is most dramatic in Canada.
Canada led in the global housing recovery in the first quarter of 2010, but moderating global growth, heightened financial market volatility and sluggish job creation have led to a “dramatic” slowdown in Canada, according to the Global Real Estate Trends report released Tuesday from Scotia Economics.
“Global real estate markets entered 2010 with a renewed sense of optimism, piggybacking on the broader economic recovery underway,” Adrienne Warren, senior economist at Scotia Economics said in the report. “Housing demand and pricing improved in the first quarter of the year in the majority of the advanced nations we track, benefiting from ultralow interest rates, improved affordability, and in some cases, government purchase incentives.”
Australia and Canada, with inflation-adjusted average home prices rising at double-digit rates, led the pack, echoing their relatively favourable employment and lending conditions. Sweden, Switzerland and the U.K. also saw home price increases, while U.S. and French markets reported small declines.
..of course that ‘most dramatic’ change in Canada means the gains are a lot smaller than they used to be, here in Vancouver we’re just starting to see small losses – mostly less than 5% so far.
August 11th, 2010 at 1:54 am
@VHB: Have you factored the plane load of 50 Asians that is coming to Canada to buy real estate?
August 10th, 2010 at 6:50 pm
@Anonymous:
With normal prices, it's better to borrow money to buy (with a reasonable down payment) than to rent until you've saved the whole purchase price because…
BUYING IS CHEAPER THAN RENTING.
It's that simple.
August 10th, 2010 at 5:04 pm
@VHB: Yes, it is the "and more" part that I was asking about!
Not many people I know use the phrase "well posed question".
August 10th, 2010 at 4:23 pm
@Anonymous(GStrader): I am a millionaire dilettante, a renaissance man, and yet more.
August 10th, 2010 at 4:00 pm
@VHB : Are you a mathematician or physicist by any chance?
August 10th, 2010 at 3:18 pm
Real estate markets around the globe are slumping once again, but the change is most dramatic in Canada.
Hey bulls, looks like the suckers rally is over. Hope you cashed out while you could!
P.S. If any flippers are reading this, you are so screwed!
August 10th, 2010 at 2:25 pm
@crashcow:
I think most people understand the concept of a bubble and recognize when housing prices are insane. The problem is figuring out WHEN the bubble will burst. I remember talking about a bubble in 2005/2006 and expectations of a crash. It didn't happen. So when irrational exuberance continues and prices continue to rise despite strong evidence of a bubble, then people question their ability to recognize one and accept the futility in trying to time it.
Besides, those people who bought RE in 2006 despite very strong evidence of a bubble ended up doing pretty well for themselves. So who is to say what the benefit is of "understanding the dynamics of a housing bubble"?
Greed. This has nothing to do with education or experience. Everyone suffers from it. I'm sure we've all made bad choices here out of greed, it just may not have anything to do with real estate.
August 10th, 2010 at 2:12 pm
@Anonymous: It is a linear projection, using the average data we have seen so far this month.
Note that this is a projection, not a prediction. Projections are not intended to be accurate necessarily, they are intended to answer some specific well posed question.
This projection provides an answer to the question, "what will end of month sales and listings totals be, if we continue on this same pace?"
I think that is a useful projection.
If you want to speculate about what would happen if we had a slower or a faster pace, one could do that too.
August 10th, 2010 at 1:55 pm
@VHB:
"Here is the projection for August 2010, based on data so far in August."
How accurate are these projections usually, so far from the end of the month?
August 10th, 2010 at 1:51 pm
@Teddybear:
" Well, if prices were normal, not inflated, a working couple could save enough money in 10 or 15 years to buy an apartment or a house with savings, not borrow from bank. "
Yes, and they could collect the keys just in time for their children to move out. Even with normal prices people still get mortgages.
August 10th, 2010 at 1:25 pm
@Boombust:
"I think many people believe BAD things only happen to others."
Last week I was on my way to use the skytrain to get to a doctors appointment. When I got into the waterfront station a fire alarm went off. A voice over the PA system instructed people to leave by the emergency exits. I turned to leave the building but watched as people hurried to get down the stairs and into the tunnel towards the train. It turns out it wasn't anything serious but people were actually running to the worst possible spot I could imagine in a fire.
http://www.cbc.ca/canada/british-columbia/story/2…
August 10th, 2010 at 1:07 pm
Currency Really Burns
http://jsmineset.com/2010/08/10/the-root-causes-o…
August 10th, 2010 at 12:44 pm
"This is a deep question, but what are the psychological factors that lead to blind optimism?"
I think many people believe BAD things only happen to others.
A punishment or comeuppance of sorts.
You're right, though; MOST people learn from their mistakes, while others don't.
August 10th, 2010 at 12:40 pm
Most regular posters of this blog understand the dynamics of housing bubbles well. What is also an interesting puzzle is why some people naturally understand these concepts while others don’t?
One reason might be Education – especially in an analytical field. But there are people with no post-secondary training that get it while many analysts, economists, accountants and engineers clearly don’t. It seems that some of these “professionals” are hopeless – no matter how much evidence and explanation you provide them, they just don’t comprehend.
Another reason that comes to mind is: Experience. If you have stuck a hair pin in an electrical socket once, chances are you won’t be doing that bright idea again. But experience still doesn’t explain it. After prices plunged 20% in 2008, everyone was given a hard lesson that housing doesn’t always go up. But many erased that valuable lesson in less than a year and back for the socket they went.
This is a deep question, but what are the psychological factors that lead to blind optimism?
August 10th, 2010 at 12:27 pm
No Q.E. from the FED. Balance sheet to be maintained at the current level, NOT decreased or increased. This is a big fat nothing and should support bond prices.
August 10th, 2010 at 12:23 pm
@snatchamoto: Because stock investors include Patriotz had very nice hair cut today while Vancouver Real estate has taken another toke over the mountains.
Uruguay 2
Brazil 1
Argentina 0
I think Jonatahn percival the second is on shopping around downtown.
August 10th, 2010 at 11:56 am
@Anonymous: Well, if prices were normal, not inflated, a working couple could save enough money in 10 or 15 years to buy an apartment or a house with savings, not borrow from bank. Oh, my, what am I saying? Savings? Who has ever heard of such a concept!!!
August 10th, 2010 at 11:55 am
@jesse: Oh, and when the fact that the city has lost $100′s of millions finally hits the front page of the VanSun, are we allowed to publicly stone the first politician or RE pimp who says ‘hoocoodanode’?
August 10th, 2010 at 11:51 am
"Projected New Listings 4690…"
VHB, what would that put the REBGV total at month end?
Thanks.
August 10th, 2010 at 11:29 am
@logic:
"If you can comfortably make the payments, I don’t see anything to be gained by walking away from a mortgage that’s underwater."
.. and if you do walk away, you'll probably never own another house, get another loan, be approved for another credit card, or get a cellphone contract again.
August 10th, 2010 at 11:18 am
@No Longer Looking:
This is the famed "buy high sell low" investing strategy I presume?
August 10th, 2010 at 11:01 am
@snatchamoto:
It's nice weather today, everyone is enjoying outside, instead of posting blog comments. The market will turn around next year, this is just a natural, cyclical slowdown.
August 10th, 2010 at 10:38 am
Here is the projection for August 2010, based on data so far in August.
Days elapsed so far 6
Days remaining 15
Average Sales this month 118
Average Listings this month 223
Projected Sales 2475
Projected New Listings 4690
August 10th, 2010 at 10:10 am
"So there it is. If you can comfortably make the payments, I don't see anything to be gained by walking away from a mortgage that's underwater. If you do, you'll not only lose the money you have invested in the house to date"
LOL> If the mortgage is underwater, what money would that be then? (ie: haven't you already lost it, on paper at least?)
August 10th, 2010 at 9:47 am
"I penned this editorial to calm fears that the real estate market in Vancouver was collapsing …"
http://communities.canada.com/VANCOUVERSUN/blogs/…
DON'T PANIC :O
This article is poorly edited and would actually leave me — if I were a homoaner — even more worried.
August 10th, 2010 at 9:42 am
@snatchamoto – If you ask a realtor, they'll say that there are very few comments because it's a buyers market out there and all of us RE bears are now too busy going out and looking at properties
August 10th, 2010 at 9:40 am
New Listings 220
Price Changes 106
Sold Listings 109
August 10th, 2010 at 9:30 am
Why so few comments today?
August 10th, 2010 at 7:16 am
@SuperSmartBull:
OH NOES!
Less construction means less jobs and higher unemployment.
Drywallers and framers moving back into mom and dad's spare bedroom freeing up yet more condos to an already oversupplied market.
So many empty units already. Dominoes falling everywhere, what to do…what to do…
August 10th, 2010 at 7:08 am
@realpaul:
Isn't that the truth….our local manufacturer of ass wipe and bird cage liner….."The Calgary Herald"…..is already quoting the latest REIN spin survey as gospel as to why we should run out like Randolph and Mortimer Duke and "buy"…"buy"…"buy" !!!!
August 10th, 2010 at 6:55 am
Metro Vancouver July housing starts slow down as real estate market cools off
http://www.vancouversun.com/business/Metro+Vancou…
Look bears, bull news disguised as bear news. Builders get scared because of roaring bears, now there will be shortage in 2011 when Canucks win cup. When Leaf fans cannot buy new house in Van, prices will skyrocket. Maybe that is good thing for everybody, because nobody can stand Leaf Fan.
August 10th, 2010 at 6:51 am
Outdated historic data being pimped out for public consimption…..Look says Royal Le Page….the market is wrong….your house price is going up ….not down.
http://www.montrealgazette.com/business/Prices+re…
expect to see a lot more of this type of bullshit in the near future when plunging sales start pinching off the blood supply ( that your cash by the way) from the commissions not being collected.
It will become a war for the hearts and minds of the weak, the meek and the truly fucked up. If possible and you know someone who is susceptible to lies, give them a pair of ear plugs and force them to wear them over the next six months.
August 10th, 2010 at 6:40 am
BPOM ….Bwahahahahahahahahahahahaha ….doesn't that beat all….the lieing bastards are eating crow….do they care????? probably not…after all, like our own brood of local whores, cheerleaders and pimps they simply say anything that suits their purposes and have the morals and ethics of a crackhead in full tweak.
Lets review the status of the lcal pimps and shitheads that tart thr RE market here….salesmen….reps from the org that touts sales, credit union economist that generates mortgage fees from pimpimg, Uninversity pimp who is funded by the developers…lets not forget our whoreing media that will literally say anything for money without questioning the veracity of the script.
Why this queering of facts is allowed to perpetuate is unreal…you would think that the consumer affairs people would at least force them ( as they do in the US) to disclose the news from the ad copy. When we see BC's 'top reporters' doing a walk through of a new condo project and letting the pimp blather on without stopping to breath you know that the media is a worthless piece of shit.
August 10th, 2010 at 5:12 am
17…and again the retard trolls come out to play.
August 10th, 2010 at 5:06 am
Well bear look like QE work perfect just like stimulus. USA stimulus program save world from economic collapse for sure bear. USA booming and pull China with it. Once full effect of stimulation felt real estate market take off in Vancouver like prom dress.
August 10th, 2010 at 4:42 am
Reality is hitting home for those holding out for the big bucks and think their places are different due to their location. If you don't drop, you don't sell, it's that simple. Funny how the greed factor kicks in even when it's obvious the market is tanking. The word "dramatic" says it all.
August 10th, 2010 at 4:36 am
@VHB: I prefer stoning because it keeps blood off my hands.
I think the media is going to be right pissed at the normal pundits and shills. Why? Because when TSHTF they won't be buying any ad space! LOL
The only avenue bloggers have into MSM is either
1) A smart reporter who actually reads posts and comments here and gives due credit for their prescience (not just passing it off as a "stopped clock"). VHB and condohype made brief forays into this arena for those old and seasoned enough to remember.
2) Someone who reads comments here writing a decent editorial piece that gets published.
But that's hoping for too much. The best you can realistically do is warn friends and family, show them the data and logic, and let the rest suffer.
August 10th, 2010 at 4:32 am
@Best place on meth:
USA seems to be one of the only countries to not be tip toeing around the bond market. Is this part of the original tarp? Is it new!
Could this (and more actions like it) be the thing to finally push up rates south of the border?
August 10th, 2010 at 3:59 am
Fed announces new round of Quantitative Easiness.
http://finance.yahoo.com/news/Fed-takes-small-ste…
Can you smell the desperation?
August 10th, 2010 at 3:53 am
@jesse: Yes, I was a wee bit cocky about the 2008-09 'peak'. But I did say we were only in the 2nd inning of the decline–I just didn't realize the bears would get wallopped in the 3rd and 4th innings. Good thing there are a lot of innings in a baseball game!
August 10th, 2010 at 3:43 am
@VHB: It's funny how your comments in early 2009 were "washed away" with the recent runup in prices from mid-2009 until mid-2010. Boy are our faces red! But, from what I see, the loss estimate hasn't changed all that much. If OV had dropped their prices hard in the last half of 2009 they could have significantly lessened their losses.
Ignoring the land costs to the fair peoples of the city of Vancouver in all those estimates was one of the most disingenuous aspects of the whole affair. City land is an asset and it was given away for nothing.
The other thing that gets me about OV was that the City and its bureaucrats tried to play in the big leagues and got schooled. They aren't as naive as many believe; they're just filled with hubris. I hallow the day the City gets back to being run by boring people, not "all-stars."
August 10th, 2010 at 3:18 am
Here are the forecasts from various agencies and how quickly they change them…what kind of credibility do they have?
http://www.buyric.com/news/canada/bc/2010-2011-bc…
August 10th, 2010 at 3:17 am
@realpaul:
There are a lot of moronic quotes from the U.S cheerleaders 5 years ago.
Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors says that "South Florida is working off of a totally new economic model than any of us have ever experienced in the past." He predicts that a limited supply of land coupled with demand from baby boomers and foreigners will prolong the boom indefinitely.
"I just don't think we have what it takes to prick the bubble," said Diane C. Swonk, chief economist at Mesirow Financial in Chicago, who was an optimist during the 90's. "I don't think prices are going to fall, and I don't think they're even going to be flat."
"I look at this as a short-term investment," said Mr. Farquharson, 36, who works for a venture capital firm, "and plan to unload it as soon as things look dangerous."
Gregory J. Heym, the chief economist at Brown Harris Stevens, is not sold on the inevitability of a downturn. He bases his confidence in the market on things like continuing low mortgage rates, high Wall Street bonuses and the tax benefits of home ownership. "It is a new paradigm" he said.
August 10th, 2010 at 3:05 am
An eternal quote
"A large number of people who bought at the peak of the market never expected prices to decline".
http://www.lasvegassun.com/news/topics/real-estat…
August 10th, 2010 at 3:04 am
On the OV, check out my comment here from January 2009. I stand by that estimate of a $500 million loss. I like in that thread where Michael Geller accuses the media/bloggers of wrecking Vancouver's reputation. I replied:
"Mr Geller: I must disagree with your statement about the reputation of Vancouver. The damage was not done by those *reporting* or *commenting* on the problems. The damage was done by those *signing* the deal. "
Over at Housing Analysis, I quoted the Globe's Gary Mason telling us that the worst case scenario was that it would take 6 or 7 years for the OV condos to regain their value.
My point isn't that I was right on this one. (I've been wrong enough that I have had my fill of humble pie!) My point is that the people making decision on this OV stuff, even in January 2009 when the US explosion was evident to all, STILL held tenaciously to their belief that Rennie could sell these things and it wouldn't be a big deal. The worst possible scenario they could contemplate was $700 or $800/sf. Their contingency planning didn't go beyond that.
Why not? Because the people advising them on this were Bob Rennie and others who had such a huge stake in the bubble. Bob had made people billions of dollars–why not believe him? Really, who would Mayor Gregor believe–Bob Rennie and Michael Geller saying that all is going to be ok, or some random internet wackos like us?
August 10th, 2010 at 2:42 am
Here's a claim that it's cheaper to buy than rent in many of Britain's top markets
In Britain's top markets, buying is cheaper than renting
Oh my.
August 10th, 2010 at 2:41 am
From today's David Rosenberg missive, 'Lunch with Dave', 8 Aug 2010 -
ROOF CAVING IN ON THE CANADIAN HOUSING SECTOR
We saw some more signs of cracking in the Canadian housing market with July housing starts falling 1.6% MoM in July (slightly better than expected). The details were worse than the headline, with single-family starts component garnering particular attention. Single starts plunged 11% in July and are down three of the past four months to levels back to September 2009 — the housing market is fading fast.
Multi-starts jumped 13% and hit the highest level since October 2008. There is clearly overbuilding going on in the condo market to be sure. According to the CPI index, rental prices are running at just 1.3% YoY and given the influx of apartment supply, rental prices will surely soften.
We are already concerned about second-quarter GDP growth (which we think will be in the 2.0-2.5% range versus the Bank of Canada’s 3.0% estimate). While we have had limited Q3 data flow, so far it has not been good (the weak housing starts report follows on the heels of last Friday’s surprisingly weak employment report).
In a separate release, new home prices rose just 0.1% MoM in June, below expected and the slowest rate in four months. On a year-over-year basis, prices were up 3.3%, picking up from the 2.9% rate but we caution that very weak year-ago comparables are boosting the YoY rates. We suspect that we will continue to see modest increases or outright price declines in the months ahead, especially given that housing starts are still running above household formation rates, which means that inventories are building and this is never a good sign for home prices.
August 10th, 2010 at 2:22 am
Too slow my friend, you've got to be quick off the draw; like when picking up pre-sales at the Olympic Village!
August 10th, 2010 at 2:20 am
first?
August 10th, 2010 at 2:20 am
FIRST!!!!!!!!!!!!!!!!!!