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.

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VanRant

@VHB: Have you factored the plane load of 50 Asians that is coming to Canada to buy real estate?

patriotz

@Anonymous:

Even with normal prices people still get mortgages.

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.

Anonymous(GStrader)

: Yes, it is the "and more" part that I was asking about! 🙂 Not many people I know use the phrase "well posed question".

VHB

@Anonymous(GStrader): I am a millionaire dilettante, a renaissance man, and yet more.

Anonymous(GStrader)

: Are you a mathematician or physicist by any chance?

crabman

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!

Anonymouse

@crashcow: 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? 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… Read more »

VHB

@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.

Anonymous

@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?

Anonymous

@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.

Anonymous

@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

No More Gordocracies
Boombust

"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.

crashcow

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… Read more »

Dyugle

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.

Argentina Zero

@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.

Teddybear

@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!!!

Boombust

"Projected New Listings 4690…"

VHB, what would that put the REBGV total at month end?

Thanks.

Anonymous

@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.

Devore

@No Longer Looking:

A house is not a stock, to be sold when earnings disappoint or a sector falls out of favour.

This is the famed "buy high sell low" investing strategy I presume?

Devore

@snatchamoto:

Why so few comments today?

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.

VHB

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

logic

"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?)

No Longer Looking

"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.

Anonymous

– 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