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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patriotz
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http://www.nytimes.com/2011/06/30/business/30poll… Five years after the top of the bubble, most Americans still don't get it. Forty-five percent of the respondents say the government should be doing more to improve the housing market, while 16 percent say it should be doing less. On the politically contentious issue of direct financial assistance to those having trouble paying their mortgages, slightly more than half of those polled, 53 percent, say the government should help. And almost no one favors discontinuing the mortgage tax deduction, a prized middle-class benefit that has been featured on some budget-cutting proposals… In assessing blame for the housing crash, people are increasingly seeing financial institutions as the central culprit. Amid the swirl of recent disclosures about banks following improper and illegal procedures in pursuing foreclosures, 42 percent blame lenders, while 29 percent blame regulators. And it seems nobody wants… Read more »
jesse
Member

BC Stats: China accounts for 1/5th of net international migration into BC Population highlights, Q1 2011

China is still the leading source country of immigrants to BC and Canada, accounting for 20.7 per cent of all landings in BC during the last quarter. Over the last ten years, China, India, South Korea, the Philippines, Taiwan, Iran, USA and England have consistently been the top source countries. More often than not, the top five source countries combined are responsible for between 55 to 65 per cent of all immigrants landed in the province.

So why is China such a big deal, again?

Alum
Guest
Alum

I don't buy that shit. Same experts were predicting an 8% price increase 2008.

Alum
Guest
Alum

I don't buy that shit. Same experts were predicting an 8% price increase in 2008.

Runawayscreaming
Guest
Runawayscreaming

"So why is China such a big deal, again?"

It's not just Chinese immigrants to Canada that are buying property in Vancouver. Chinese (PRC) citizens who are not immigrants are also buying property in Vancouver.

There is more flight (illicit) money associated with Chinese property buyers than with the buyers from other countries. Iranian migrants are the only other substantial class of migrants in Vancouver associated with flight money and then it is only a small number of Iranians who are absconding with money to Vancouver. The gross amount of Iranian flight money is nothing compared to the tsunami of flight money arriving from China.

aboopoo
Guest
aboopoo

China may be only 5 percent of the market,but its all at the high end of it, and thats what is driving it………..

patriotz
Member

@aboopoo:

Housing markets cannot be driven from the high end. If they could there would have been no US bust – the rich have continued to get richer after all.

vanpire
Guest
vanpire

@Runawayscreaming:

Illicit money? What illicit money? We are catching every single one of them money lauderers.Don't believe me? Well, read this:
http://bc.rcmp.ca/ViewPage.action?siteNodeId=50&a

Read the last paragraph, twice…

Can you back that up
Guest
Can you back that up

@Runawayscreaming:

"The gross amount of Iranian flight money is nothing compared to the tsunami of flight money arriving from China."

Did your Realtor friend tell you that or did you hear it on Global news?

Dead Horse
Guest
Dead Horse

@Runawayscreaming:

How many times do we have to repeat that foreign buyers, especially those from the PRC represent an overwhelming MINORITY. The media would have you believe its the majority, but there is not a single piece of evidence for this other than realtor anecdotes (read: slimy sales pitch).

Best place on meth
Member
Best place on meth

@jesse:

>>>So why is China such a big deal, again?<<<

Because they account for 75% of the people coming to Canada under the Immigrant Investor Program, that's why.

The program is far too slanted towards the Chinese.

Devore
Member
Devore

@patriotz: Of course no one has learned anything, because that would require looking in the mirror and asking some tough questions. Cognitive dissonance. I've been saying for the past year at least, that far from becoming averse to owning real estate, most Americans, even those who got badly burned, want nothing more than to go back to house buying. General availability of consumer credit, bad credit scores, and just plain being broke is what is stopping them right now.

I'm sure some have learned something, and are being more careful and analytical in their approach to real estate. And hey, that's fine, I think as long as lending standards are sane, prices and speculation will be kept in check better. Nothing wrong with people buying houses.

Devore
Member
Devore

@Alum: First, no they were not "all" predicting such. Mostly, contrarian voices, in traditional outlets, keep their mouths shut. Second, that's partly the point. They check which way the wind is blowing (public opinion, employer expectations) before pronouncing their wisdom. So what's changed?

jesse
Member

@Best place on meth: "Because they account for 75% of the people coming to Canada under the Immigrant Investor Program"

And this small swath of immigrants sets the bar for what others must pay? Umm… sure…

Anonymous
Guest
Anonymous

and the expected rebuttal in the Sun this morning

http://www.vancouversun.com/business/Home+sales+r

Best place on meth
Member
Best place on meth

It's the last day of QE2 today.

Who's going to buy all those bonds now that the Fed won't be, and what will happen to yields?

Troll
Guest
Troll

http://www.vancouversun.com/sports/Bubble+talk+ig

“The world population is seven billion, climbing to 10 billion, and the planet isn’t growing,” Pastrick said.

“Something has to give,” he added, which is the price of land.

Over the long run, Pastrick said he expects people will have to spend larger portions of their income for shelter in an increasingly crowded world.

Uh oh bears, better buy soon or you'll priced out forever. Not just Vancouver, but priced right off the Earth. And this guy works for a Bank?

patriotz
Member

@Troll:

Long before the world would even begin to run short of space to live in, it would run out of space to grow enough food to feed everyone. Not to mention stuff like oil, water, etc.

Should be obvious to anyone who thinks, which apparently excludes a lot of people.

DaMann
Member
DaMann

@Anonymous:

Prices to rise 13%? Love to know where they get their numbers. That's 13% for BC not Vancouver. So they must be thinking a good 20% price increase for Vancouver. Riiiight

rksleung
Member
rksleung

"Uh oh bears, better buy soon or you’ll priced out forever. Not just Vancouver, but priced right off the Earth. And this guy works for a Bank?"

Well. The world has plenty of spaces to live. One thing is certain though. Those who have inner ears with the municipalities would make out like bandits if they know ahead of time who parcel of land will be rezoned.

I still can't wrap myself around how some people on Cambie will be able to make 3.5M to 5M (current money) after tax just because they happens to live along it?

I would like to ask everyone here who thinks that he would be able to make that much (current) money in his lifetime after tax???

ReadyToPop
Guest
ReadyToPop

@Troll

In the short run though, Pastrick has lots of places to go RE shopping…..

Quaint cottages in ghost estate with a good spirit

Not much of a name..
Guest
Not much of a name..

@rksleung:

I still can’t wrap myself around how some people on Cambie will be able to make 3.5M to 5M (current money) after tax just because they happens to live along it?

Just because the sale price was for that amount, doesn't mean that is what went into their pockets. Try again.

Devore
Member
Devore

@rksleung:

I still can’t wrap myself around how some people on Cambie will be able to make 3.5M to 5M (current money) after tax just because they happens to live along it?

I would like to ask everyone here who thinks that he would be able to make that much (current) money in his lifetime after tax???

Make your point and be done with it. Why the passive-aggressive stuff? Do you also have trouble wrapping your mind around lottery winners making a lot of (current) money? Patriotz already addressed your gripe yesterday.

registered
Member
registered

1 patriotz Says: "And it seems nobody wants to blame the real culprits – the buyers who paid too much."

If I cover my front lawn knee deep in $20 bills, I share blame for the neighborhood crime stats. Two generations of near religious dismantling of hard fought fiscal regulations, coupled with a bottomless zeal for industry malfeasance (what exactly was Moody's rating in that MBS?), flooded the mortgage industry in the US with liquidity posing no risk to lenders. 'Real culprits' is wildly unfair.

SD92129
Guest
SD92129

@Best place on meth:

RE: Immigrant Investor Program

"The program is far too slanted towards the Chinese."

My opinion differs from yours in that I think it is slanted to those who have lots of money.

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