A ‘Severe’ Housing Correction?

Are they allowed to print stuff like this in the Globe and Mail?

The current consensus is that Canada’s real estate market has achieved a “soft” landing and that prices will flat line but not decline substantially over the next several years. I disagree. The housing market in Canada is already in bubble territory. Average house prices have doubled in the last 10 years, while rents have risen by only about 30 per cent. The ratio of house prices to rent is now higher in Canada than in any other developed country.

An even more powerful indicator also points to a severe housing correction in Canada. Residential housing investment as a percentage of GDP was 6.48 per cent in 2009, down slightly from 6.76 per cent in 2008, after peaking at 7.13 per cent in 2007. The previous peaks were at 7.26 per cent in 1976 and 7.18 per cent in 1989 – and we know what happened to the housing market in Canada in the early 1980s and early 1990s. After residential housing investment as a percentage of GDP peaked in the previous two cycles, the housing market crashed within a few years.

I believe we are running out of time. By way of a comparison, this ratio peaked at about 6.1 per cent in the U.S. in the mid-2000s at the height of its housing bubble, and toward the end of the 1980s in Japan, when that country was nearing the end of its own property boom. Both countries experienced sharp declines in housing prices soon afterward. (I should mention that the ratio stands at 6.0 per cent in China at the end of 2010 – no wonder there is talk of a bubble in the Chinese housing market.)

Huh. I’m guessing this message wasn’t approved by the Canadian Real Estate Association.

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Patiently Waiting
Member
Patiently Waiting

Funny how when you realize your condo isn't a gold mine, you look around and see your neighbourhood for what it really is.

Read more: http://www.royalcityrecord.com/Misfits+make+area+

Long rant about nasty old New West followed by…

"I tried to sell my condo last fall for less than my cost, and a renovation, but in spite of some compliments, had no serious buyers, and it seemed like it was the area people didn't like."

Yes, blame the misfits.

Patiently Waiting
Member
Patiently Waiting

Senator Larry Campbell says other OV owners' complaints are "garbage" and they are just mad they lost money.

http://www.cknw.com/Channels/Reg/NewsLocal/Story….

Anon
Guest
Anon

When China pops Canada will feel it big time. It could be this year, or could be in 10 years though…

CanuckDownUnder
Member
CanuckDownUnder

In August 2007 it cost 1031oz of gold to buy a detached property in Greater Vancouver. Last month it cost 623oz.

That's 40% off the peak. For some people the correction has already been 'severe.'

crabman
Guest

Are they allowed to print stuff like this in the Globe and Mail?

Yes, but only after it's too late! The G&M must have just given the green light to the bears this month. Look at what they were saying the last few months:

Mar 16:Foreign buyers juice resale housing market

Feb 10:Housing market will be stable next two years: RBC

victoria
Member
victoria

Did you read some of the comments though. The guy who wrote the article is going to get hate mail and possibly death threats. People are angry he would write something like that.

My husband was on Bay Street during the dot.com times. He remembers some guys who said it was all going to blow up were receicing death threats.

frank
Guest
frank

@Patiently Waiting:

Larry always was a straight shooter.

He is 100% right. There is no way they would be whining if the resale market wasn't soft.

I am glad the City is starting to play hard-ball with these people and has moved to seize Millenium's assets. Better late than never.

Anonymous
Guest
Anonymous

@patiently waiting, "Senator Larry Campbell says other OV owners’ complaints are “garbage” and they are just mad they lost money.

This couldn't be the same former Mayor who convinced me to vote for him because he sure seemed to be opposed to the Olympics, would it?

Not the same guy that, by guess and by golly, sure seemed to flip-flop on the issue once he was in office, would it?

Not the same guy who (if I have it right) said he wasn't a politician … but ended up accepting an appointment as a Senator while still mayor, is it?

Well, he would seem to know a lot about people changing their minds. So you'd think he'd be more empathetic to people at the OV who've changed theirs.

pricedoutfornow
Guest
pricedoutfornow

@frank:

Of course they wouldn't be whining, they'd be selling their condos instead! I guess the Olympic condo market isn't as hot as they say it is on the news?

I should ask my friends who bought the Olympic condo, tried to flip and are now accidental landlords renting for $1000/month less than the mortgage payment, if they've joined the legal action. It wouldn't surprise me, they were pretty pissed off-that they couldn't flip! (though they raved about how nice the unit was.)

painted turtle
Guest
painted turtle

BEIJING (MNI) – Fitch Ratings has cut its outlook on China’s local currency debt, becoming the first of the major credit ratings agencies to officially sound the alarm over the extraordinary expansion of Chinese bank lending in recent years.

Fitch said today the large increase in household and corporate leverage in combination with the sharp increase in housing prices and the recent emergence of inflationary pressure have raised the likelihood that “some sovereign support for the banking system will be required.”"The Negative Outlook reflects concern over the scale of sovereign contingent liabilities and risk to macro-financial stability arising from the very rapid pace of bank lending in recent years, especially against the backdrop of rising real estate valuations and inflation,” said Andrew Colquhoun, Head of Fitch’s Asia-Pacific Sovereigns group.

http://www.automatedtrader.net…..-bank-risk

http://www.businessweek.com/ne…..gnals.html

Polly Pollyanna
Guest
Polly Pollyanna

@pricedoutfornow:

"I should ask my friends who bought the Olympic condo, tried to flip and are now accidental landlords renting for $1000/month less than the mortgage payment, if they’ve joined the legal action. It wouldn’t surprise me, they were pretty pissed off-that they couldn’t flip! (though they raved about how nice the unit was.)"

when you ask them,

bring a camera

patriotz
Member
Active Member

@Anonymous:

Not the same guy that, by guess and by golly, sure seemed to flip-flop on the issue once he was in office, would it?

Larry said he would give the voters of Vancouver the final say on the Olympics and he did. They said "yes" 2 to 1.

Those are the facts. The people of the City of Vancouver had the ultimate choice and the people of the City of Vancouver bear the ultimate blame.

Extremely rich Van h
Guest
Extremely rich Van h

Ha Ha Ha Ha a “A ‘Severe’ Housing Correction?”

give me a break men,your asshole may have a much higher chance of shitty correction.Chinese with keep buying Van RE because they have tons of money to burn until the evil white god comes.

space889
Guest
space889
@patriotz: Uhm…how about the fact that the City Council screwed the taxpayers by screwing up this project pretty much every step of the way? An anology, if I contracted a builder to build a custom home for $2 million and hired an independent inspector to ensure that the home is built properly. Now if the inspector accepts a $10K bribe and signs off on the home even though there are tons of deficiencies, am I the one who's ultimately to blame and should just eat the loss? Shouldn't I have the right ot sue the inspector and builder for the damage? In your books Patriotz you would say tough luck, it's my fault so eat the loss. My view would be no, it's the builder and inspectors fault and I should be able to go after them for damages. To… Read more »
Best place on meth
Member
Best place on meth

@Extremely rich Van house owner.:

Hey Horton,

Take your Chinese master race crap elsewhere.

Thank god you can't post your racist pics here.

space889
Guest
space889

Sam Sullivan on Eco-Density – make the neighborhood that doesn't want density to pay for that right.

http://www.vancouversun.com/technology/Opinion+wa

Kind of mixed feelings about his views, though it just smells more like a tax grab excuse than anything else. Why must everything these "think tanks" come up with always come down to tax and paying fees??? Can't they come up with better solutions, geez.

Supersogs
Guest
Supersogs
No surprise here: "The amount of taxpayers' money the City of Vancouver expects to lose in the Olympic Village project continues to climb following revelations Millennium Developments only paid $29 million of the $200 million price tag for the prime waterfront property. At a media briefing on Friday, the city said it expected to limit losses on the Olympic village project to $40 to $50 million on the $1 billion luxury condominium project. But that's just the loss on the construction loan financed by the city, councillors now admit, and the figure doesn't include more than $170 million the developer never paid the city for the land itself before the project went into receivership last November." http://www.cbc.ca/news/canada/british-columbia/st… Millennium also has a property management division which I assume the city has already taken over. They own numerous units for rental purposes… Read more »
Anonymous
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Anonymous

@Supersogs: It was funny listening to CKNW this morning while the "experts" discussed the losses. They actually made a comment that the city only paid $30M for the land originally so that's all they'll lose on it. Wow. I guess they forgot to take into account that the land was an ASSET that was given away. Yup, that $170M giveaway will certainly show up in the books at some point. Idiots!!!

Polly Pollyanna
Guest
Polly Pollyanna

@Best place on meth:

bpoe: i am curious, is horton a van RE bull-troll? or a van chinese bull RE troll? or a white dude pretending to be chinese?

(either way, he's a dick)

patriotz
Member
Active Member
@space889: Uhm…how about the fact that the City Council screwed the taxpayers by screwing up this project pretty much every step of the way? The commitment by the CoV to build the OV was made by Philip Owen's city council in November 2002, prior to the bid being awarded. The deal with Millenneum to build the OV (with CoV guarantees of financing) was made by Sam Sullivan's city council in April 2006, something which Sullivan remains proud of to this day. The OV ran into financial trouble in fall 2008, during the term of the same council. Larry's COPE council made no new commitments regarding the OV, and was the only level of government in the province to give the voters themselves a say. Those are the facts. The idea that taxpayers had any reasonable expectation for CoV participation in… Read more »
jesse
Member

@space889: "My view would be no, it’s the builder and inspectors fault and I should be able to go after them for damages."

You can but the builder is insolvent. Did owners check the warranty and Ts&Cs on their purchase, or were they affixed upon the SubZero appliances and vaulted ceilings in the showroom? Surely the builder not living up to its promises should be a consideration. Or are owners too young to remember the '90s?

I agree with your hate but I do take issue with people not doing their DD getting MY money. I wouldn't have touched those units with a 10 foot barge pole with the way the contracts were written.

Best place on meth
Member
Best place on meth

@Supersogs:

So the province sold the Expo lands for next to nothing, about $10 a sq ft, and now the city has given away the OV land for absolutely nothing.

These are some astute business people we have in government looking out for us.

Patiently Waiting
Member
Patiently Waiting

@Polly Pollyanna: He is not even worth discussing.

AG
Guest
AG

With interest rates this low, property prices will not come back down to earth until there is a significant increase in interest rates to battle rampant inflation. When the rates on 10-yr bonds (us or can) start to go through the roof (which will be soon) as inflation is pushing away bond investors, interest rates will explode. If I am not mistaken, interest rates are near 20% in Greece.

patriotz
Member
Active Member

@Anonymous:

Yup, that $170M giveaway will certainly show up in the books at some point. Idiots!!!

The land was never worth $170M. At the time of the deal with Millenneum, people knowledgeable about property development were saying that it would have got about $100M on the open market, and Millennium had little chance of paying the whole amount based on what the project would cost to build and what the units would likely sell for.

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