Canada Housing Bubble close to bursting

Capitol Economics are the latest group to issue a warning about the Canadian housing market claiming that it is set for a 25% plunge in prices.

“Housing valuations have lost all touch with fundamentals and household debt is at a record high,” economists at the economic research consultancy Capital Economics say in their most recent Canada Economic Outlook, issued Wednesday.

“Our fear is that, with the housing bubble now close to bursting and commodity prices retreating, Canada will go from leader to laggard.”

The report predicts a fall in house prices by as much as 25 per cent over the next three years.

A domestic housing boom coupled with high commodity prices worldwide have spared the economy the severe recession felt by other developed countries.

Hat-tip to Gordholio for the link.

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doug r
doug r
9 years ago

@Absinthe: A lot of bankers DID understand what was going on. Goldman Sachs was buying swaps on stuff THEY WERE SELLING. They knew it wasn't going to last.

A lot of fair to middling house buyers did qualify for better rates, they were NEVER told because low interest mortgages meant lower fees for the bucket shops. When all the "experts" say housing only goes up and everyone else is getting in before they get priced out forever, you'll be very tempted to squeeze your numbers and go for that place that should be just out of your price range. Eventually the two years is up and that reset date comes up.

Unemployment has been around 9% in the US for a couple of years now, they still aren't as used to it as us Canadians….

patriotz
9 years ago

@pricedoutfornow:

That's over a 50% nominal drop (UBC benchmark tracks modest Van East SFH and is around $800K). Not going to happen.

I do think 50% real is in the cards, how that translates into nominal depends on inflation.

Also I don't think we will hit nominal or real bottom by 2015 or 2016, unless interest rates go up a lot.

painted turtle
painted turtle
9 years ago

"could fall from almost $800,000 this year to about $770,000."

With CPI at 3.7% and salaries not catching up… have fun repaying that mortgage!

Interesting article:
http://www.theglobeandmail.com/report-on-business

Anonputz
Anonputz
9 years ago

@pricedoutfornow:

East Van….West Side…West Van….North Van….WTF is the difference ?

Aforementioned areas were inspirations for Darwins' "Origins of the Species ".

Even many religious denominations agree that these areas, geologically, supported the modern equivalent of caves aka basement suites.

From this troglodyte environment, many humanoids evolved.

Their DNA has been extracted via knuckle /ass scrapings on stairs.

Yes, they were all able to interbreed, but the offspring often migrated to Surrey.

Patiently Waiting
Patiently Waiting
9 years ago

@Best place on meth: Done, done and DONE.

Anonputz
Anonputz
9 years ago

I think there are a bunch of Mo-Fu's and Dickheads on this site…bootlegging their internet connection from basement suite off of neighbours cable.

The evidence is overwhelming…just my opinion.

Probably still believe in the Canucks…but concurrently wonder why can't get laid.

pricedoutfornow
pricedoutfornow
9 years ago

@Thats how I see it:

At this point any dreams I have of living in Vancouver west are just that-pipe dreams! East Van is good enough for me. (I mean, a nice-ish area, the one I'm in now is pretty decent, to me at least). Others may disagree, that's fine.

Thats how I see it
Thats how I see it
9 years ago

@pricedoutfornow:

"I still think I’ll be buying a modestly-priced, decent house in 2015 or 2016. In the COV. For less than $300k. Daydreaming?"

Maybe a bit of a dream. Since a decent home in Vancouver west cost about 2 million you need an 85% correction to get it for 300k. It will take more like 8 or 9 years before we hit 85% off. My guess 2020 will get you Vancouver west for 300k. If you are thinking east van (and call that decent) then sure 2015.

Best place on meth
Best place on meth
9 years ago

@paulb:

Done and done. And everyone please remember to vote Cam Good as "The Vancouverite closest to hell".

Rennie usually makes the top of the list but this year there's a new dirtbag in town.

End of month results:

Listings – 5770

Sales – 3284

Sell/list – 57%

Happy Canada Day everyone.

Romeo Jordan
Romeo Jordan
9 years ago

Paul you rock, but if McLosin asks you to sell the three condos he bought last month (ask chimpman and aaron beast, they will confirm this) please tell him to frack ovf, he's a fcricking loser

that said, all the best to YOU, Happy Canada DAy to all!

paulb
9 years ago

New Listings 281

Price Changes 111

Sold Listings 115

Total Inventory: 16191

Please vote Vancouver Condo Info for best blog! And me for best Realtor in the Best Of Van contest!:) http://www.straight.com/contest/vancouver/best-va

Appreciate the support and have a great Canada day!

http://www.laurenandpaul.ca

pricedoutfornow
pricedoutfornow
9 years ago

@cico:

Well, Muir says from $800k to $770k. Get out your party hats!

I still think I'll be buying a modestly-priced, decent house in 2015 or 2016. In the COV. For less than $300k. Daydreaming?

Anonymous
Anonymous
9 years ago

Romeo Fking Jordan,

did you sell you shoebox in north vancouver yet since you know the 50% haircut. otherwise, your new ckick is gonna chase you with your front tail between your legs. sell now you bloody stupid.

Not much of a name..
Not much of a name..
9 years ago

@Romeo Jordan: I am married, but guess what, my wife thinks it's crazy to buy IN VANCOUVER and a correction is just around the corner.

Anonymouse
Anonymouse
9 years ago

@Anonputz:

"Oooh Nooooo…

HAM has nothing to do with it…"

Well, the figures do indicate that local buyers make up the majority by far.

Anonymous
Anonymous
9 years ago

@cico:

When markets start to turn, the pum

TraderPaul
TraderPaul
9 years ago

These same economists and real estate pundits have been predicting that the bubble would burst in the "near future" for the past 2 years. I hope they are right and hope that we see more than a 25% drop in Vancouver, but so far their track record is not too impressive.

Romeo Jordan
Romeo Jordan
9 years ago

MCLOSIN – SUCK MY CAT, YOU CAT SUCKER!

yes you make me sick, you pig!

Romeo Jordan
Romeo Jordan
9 years ago

not much of a name – are you married?

talk about a gun to your head – give it a shake brother!

is everyone out there this daft? retards galore?

come on, give me some hope muchachos!

Romeo Jordan
Romeo Jordan
9 years ago

cico – go f yourself!!

that's what mcloser would say

i thank you for your info – be strong my friend

rj

cico
cico
9 years ago

You know that is real when they say:

"Home prices expected to fall in 2012

BC Real Estate Association expects prices to drop next year"

the question is by how much and how fast

http://www.news1130.com/news/local/article/248219

Romeo Jordan
Romeo Jordan
9 years ago

Also McLosin, I CAN'T BELIEVE that you bought through Chimpan's dog Aaron – how could you????

Please please please – tell me it isn't so – please!

xoxox

Romeo Jordan

Romeo Jordan
Romeo Jordan
9 years ago

Thanks for the email McLosin – I'm sad to hear that you bought that place – good luck – that's what all you losers need – LUCK – as fundamentals are pointing a dagger at your heart.

You will feel pain – wait for it, its gonna hurt.

Your a big fricking loser – stop emailing me!

xoxox

Romeo Jordan

Romeo Jordan
Romeo Jordan
9 years ago

My own well thought out and backtested prediction is for 45-65% declines across the board in Vancouver over the next 700-900 days.

Wipe your ass with that you Cat Suckers.

xoxox

Romeo Jordan

MM
MM
9 years ago

Some help for US homeowners and banks:

http://finance.yahoo.com/loans/article/113040/mor