Chopper suggested we do a 2011 prediction discussion thread. So what do you think 2011 will bring Vancouver and the rest of the world economy?
-Changes to CMHC mortgage rules?
-Increased foreclosures?
-Higher prices?
-Higher Interest Rates?
-Increases migration?
-The resurgence of the Euro?
-A US housing market hits bottom?
Post your thoughts and predictions here. Most accurate forecast gets a cookie!
on Big banks facing home credit risk@mac: @condo watcher: Wait! I don't think that was explanation enough for you. By PAST, I mean a few years on Big banks facing home credit risk@condo watcher: Relax! I'm not saying it's happening now. In THE PAST when the MARKET WAS HOT, there were many
on Big banks facing home credit risk@mAC HOW DO YOU GET A SALES TO LIST FIGURE OF 115%--are they selling stuff that's not even on the
on Big banks facing home credit riskHopefully this time it works. Copied from PaulB’s number http://www.laurenandpaul.ca Using good-format’s format. Date Listing Price(+-) Sold Inv Inv(+-) S/L(%) on Big banks facing home credit risk Sorry for the previous post. I seem to have lost my PRE tag "touch". 
“If somehow this market is special, and ignores fundamentals, and keeps going up, in two years my family and I are outta here!” | Vancouver Real Estate Anecdote Archive Says:
January 14th, 2011 at 10:46 am
[...] other weekend and let me say, the raise for moving to Cowtown is much more than $25K!” and January 11th, 2011 at 1:43 pm- “My moving to Calgary wouldn’t be acceptance that the market will continue up, it would be [...]
January 12th, 2011 at 8:06 am
DaMann Says:
January 11th, 2011 at 12:50 pm
@Dave:
>Your not specifying time lines Dave. You said a crash is anything more than 30% anything under is a correction ( and I agree) but over what time? 11% a year for three years for a total of 33% would be crash territory for me, closer to a good hefty correction, but because it’s over 3 years it doesn’t count? What about 12% a year for four years for a total of 48%, that’s not a crash? It most certainly is.
Absolute numbers matter a bit too. A 20% decline from a million will buy you a decent whole house in the States just on the difference. But a 50% decline in a neighborhood of Detroit where the average is $20,000 would only be a $10,000 drop. Would that still be a crash, or just "(further) correction"?
Note: I should not be picking on Detroit, I used to live there. Pretend I said "Flint" in my example.
January 12th, 2011 at 7:53 am
My 2011 predictions:
March, detached house price (0% year on year): 800k (essentially flat from the last few months)
September, detached house price (-12% year on year): $699k
From my rough graph here:
http://worldhousingbubble.blogspot.com/2011/01/va…
January 12th, 2011 at 4:42 am
@VanRant: ……he does not pop the bubble soon or they (The Conservative Party) will get slaughter at the polls………..
By who? A couple thousand moron buyers in Vancouver and Toronto (mostly liberal ridings anyway)? Most people will go on living in their homes and paying their mortgage – just as they did when prices went up to crazy levels – so shall they do when prices go down to normal levels.
They may think they'd have a problem at the polls, but I think most people won't be impacted so they won't give a rats ass. But, prices will still collapse!
January 12th, 2011 at 3:49 am
@Drachen:
It's flat.
January 12th, 2011 at 3:32 am
@Dave:
"No worries. It was subtle. Drachen said my logic was like this Loughner lunatic. My response mirrored the type of logical inference used by Loughner in his videos."
And…sadly, you failed to produce something which was even internally logical in two attempts. Loughner managed that in spite of a severe case of schizophrenia, which leaves me wondering. Just exactly what is wrong with Dave's brain?
January 12th, 2011 at 3:11 am
@metalhead:
That would be perfect, but it will never happen.
January 12th, 2011 at 3:07 am
The housing bubble in Canada is so huge (Mr Flaherty knows that) and he does not want it pop it before the next election. I will be surprise if he will change the CMHC rule too much this time so he does not pop the bubble soon or they (The Conservative Party) will get slaughter at the polls.
January 12th, 2011 at 2:43 am
#129
Flats doesn't need to play dumb.
All he has to do is go to 10% dp/25yr. amort. and restrict CMHC insurance to 1st time buyers only.
January 12th, 2011 at 2:07 am
Damn, I missed the 10K party last night.
I'll be sure to attend the 11K party next week.
January 12th, 2011 at 2:05 am
article at the financial post with a remark by flaherty on banks asking for tighther regulation. rest of the article says basically what people here are saying, the banks don't have any risk, it's the taxpayers who bear the risk.
January 11th, 2011 at 6:21 pm
Flaherty will require CMHC insured buyers to *qualify* for a 30 year amortization. Interest rates will be raised 0.5% in late spring. Listings equal to 2010 with sales trending lower. Average days on market climbs steadily throughout the year. Sellers wait it out.
Unemployment will fluctuate between 7-8%. Nominal economic growth will fall below the rate of inflation by the second half as consumer credit growth tips negative. Thoughts of impending doom will appear in late 2011 and the media will insist there isn't/won't be/can't be a recession. TSX peaks in the Fall, up 12%. Richmond detached house prices pass $2 million dollars.
January 11th, 2011 at 5:54 pm
Does anyone know what happened with the OK Real Estate board allegedly underreporting price drops? Did they address it or did it get swept under the carpet?
January 11th, 2011 at 5:48 pm
couple things to watch, first i would be suprised if houses outperform condos this year. the gap between the two has widened to the point where move up buyers will be lost. will be interesting to watch the developers, they tend to naturally be bullish (sort of opposite of the gang here). wouldn’t suprise me if too much new product is thrown on the market this spring.
January 11th, 2011 at 5:40 pm
If we have buyers who can't even get 5% down, how will they get 10?
January 11th, 2011 at 5:39 pm
@Superfly:
Is it? 10% is double the downpayment. Most banks have 5% cashback mortgages. They're clamoring to tighten lending rules, because they cannot do so themselves (due to competition, who pulls the trigger first?) no matter how much they're itching to. So I do not think we can count on those for much longer. An RRSP loan makes for a comfortable 5% down, but again, that money has to be saved up first.
It's a lot of money. Right now you can get basically get a mortgage with no money of your own to put down. Do you think this will continue to be the case when the DP is 10%?
January 11th, 2011 at 3:00 pm
Jesse – I will get my asbestos suit ready, just in case.
January 11th, 2011 at 1:46 pm
@Royce McCutcheon:
No worries. It was subtle. Drachen said my logic was like this Loughner lunatic. My response mirrored the type of logical inference used by Loughner in his videos.
If A, then B
A
Therefore, B
January 11th, 2011 at 1:26 pm
@BoomBust, "Is the 10K party referring to the 10K or so property listings that were lost from October to January? Is this what the hubbub is about?"
The real 10K party will be in the Fall, when there will be 10K REO properties for sale at realistic prices, in addition to a similar number of non-REO listings. Can't wait for the Fall!
January 11th, 2011 at 12:51 pm
@Superfly: "For price drops this spring, even at inventory levels of 18,000, we would need sales of less than 3000 per month (MOI 6) for a balanced market."
The "heavy lifting" of price drops, if they are going to happen, will occur in the second half of the year. Expect the benchmark to increase in value until May, regardless of how many listings come online.
If it doesn't, put on your asbestos suit.
January 11th, 2011 at 12:44 pm
Is the 10K party referring to the 10K or so property listings that were lost from October to January?
Is this what the hubbub is about?
January 11th, 2011 at 12:34 pm
@paulb.: Love those N/W Van stats. Keep em comin!! yeehaww!
January 11th, 2011 at 12:33 pm
VHB, Jesse, Devore:
10% downpayment won't change anything. We already have 5% and it is easy to get around (cashback mortgages etc.).
For price drops this spring, even at inventory levels of 18,000, we would need sales of less than 3000 per month (MOI 6) for a balanced market. Judging by Fall sales, we'll be comfortably above that unless there is a major global shock. Something needs to happen to choke sales off significantly to get prices to fall IMO.
January 11th, 2011 at 12:20 pm
Interesting set of predictions covering housing and the economy…
http://financialinsights.wordpress.com/2011/01/01…
January 11th, 2011 at 11:44 am
…my dad just got his property price tax assessment… nice house on salt spring island with great view – tax assessed price down 12% over last year. I know thats not a real estate price but its certainly a perceived swift move down
January 11th, 2011 at 10:57 am
@Drachen: Did Dave kill your cat or something? Or are you still bitter about being wrong 2 years ago?
January 11th, 2011 at 10:47 am
@Drachen:
I notice that you don't have a sense of humor.
January 11th, 2011 at 10:25 am
@VHB: Wait–I have to redo my calx based on a fixed available downpayment. That’s a much better way to do it . . .
January 11th, 2011 at 10:17 am
@pricedoutfornow:
“More bankruptcies. I’m already seeing it in my circle. People just have too much debt!”
That reminds me – anybody care to build a tracker for ForeclosureGo.com? Just something that records historical data for a 3 or 4 different areas.
January 11th, 2011 at 10:03 am
2011 will probably be the year the bubble pops. But I wouldn’t bet too much on it (we’ve got a lot of financially unsophisticated and gullible people here!).
Long term I predict home prices will get back to historical price/rent and price/income levels. As I mentioned the other day this means prices will need to fall 50% in real terms. I just don’t see that it’s possible to get there with several years of flat prices as Dave suggests. Neither did Galbraith:
January 11th, 2011 at 9:42 am
January 2011 month-end projections
Days elapsed so far 6
Days remaining 14
Average Sales this month 72
Average Listings this month 231
Projected sell/list 31.2%
SALES
Projected month end total 1440 +/- 357
95% Conf Interval lower bound 1083
95% Conf Interval upper bound 1797
NEW LISTINGS
Projected month end total 4620 +/- 691
95% Conf Interval lower bound 3929
95% Conf Interval upper bound 5311
MONTHS OF INVENTORY
Inventory as of January 11, 2011 10019
MoI at this sales pace 6.96
January 11th, 2011 at 9:42 am
@Dave:
Apologies if I did.
January 11th, 2011 at 9:41 am
I agree with Dave (!) that prices will be somewhere between the March 2009 low and the August 2010 high (by Dec 31, 2011).
I think housing starts will decrease a bit, interest rates will climb slightly, and lending rules will be tightened slightly. The if/when of a federal election will impact this.
What I also think is going to happen in 2011 though is that BC is going to be singled out as a total mess relative to the rest of Canada. Economic and real estate analyses in mainstream media will always take pains to point out how BC is skewing national stats, etc. While the rest of the country may round a corner and have some indicators of economic growth, BC will appear to be moving in the opposite direction. Our differing trajectory will be a key turning point in changing people's attitudes towards real estate here.
January 11th, 2011 at 9:41 am
@Royce McCutcheon: lol there's lots of land, 10,000 plots of it in fact, any one of them a couple of phone calls away from being yours. Buy them now while quantities last.
January 11th, 2011 at 9:39 am
@Royce McCutcheon:
You missed the joke.
January 11th, 2011 at 9:38 am
N/W Van so far this week:
New Listings 61
Price Changes 8
Sold Listings 4
January 11th, 2011 at 9:36 am
Boo-yah
New Listings 261
Price Changes 56
Sold Listings 44
10019
January 11th, 2011 at 9:30 am
Dave said: "If land is in short supply and is being developed, then we are running out of land. Land continues to get developed. Therefore, we are running out of land."
Uh-huh. And if your supply of time is finite and is passing by, then you are running out of time. Time continues to pass. Therefore, you are about to die.
Also, the sun will burn out one day, so we're running out of sun. And about to die.
Not the most useful statements.
Also, I'd question your contention that there is a "short supply", as other posters have shown that there are still other areas with much higher density.
January 11th, 2011 at 9:16 am
@Dave: I think flat prices are unlikely due to the investor driven nature of our local market, which makes prices unstable. If people bought re mainly as shelter only, I could see this, however, in vancouver, re is very much traded like investments, and bought effectively on margin, with capital appeciation being the main driver of our economy. Once that stops, it will cause a deleveraging process similar to what happened in the usa.