Big banks and the housing market alarm

There are a few banks out there making noise about the Canadian housing market. Let’s see, what are their names again? Oh, here they are.. Some place called CIBC and Royal Bank and then one called Toronto Dominion. They seem particularly concerned about the market in Vancouver and Toronto.

CIBC chief executive officer Gerry McCaughey told analysts and investors in Toronto that the housing market is “leaning heavily into an area that might be peaking,” and instead will begin to soften.

His comments came as the heads of Royal Bank of Canada and Bank of Montreal also expressed concern over cooling housing prices, particularly in the condo markets in Toronto and Vancouver, where capacity is significantly overbuilt.

And from the second link:

British Columbia is forecast to have it worse, said senior economist Jacques Marcil, and will likely see “a signifcant correction” this year. Indeed, he said in a report today, the Vancouver market likely peaked last year.

The report, which examined the country’s provincial economies, projects home resales in British Columbia will sink 3.7 per cent this year, while prices decline 3.5 per cent.

Sort by:   newest | oldest | most voted
jesse
Member

Not to be a wet rag but are condos in Vancouver significantly overbuilt? I'm not convinced. Overpriced, yes.

patriotz
Member

If condos are overbuilt that would mean condo rents are declining relative to rents for other dwellings.

Could be. But do we have more than anecdotes?

logic
Guest
logic

we'll see how overbuilt they are when the prices stop dropping fast and speculators (who sometimes hold them empty) start offloading them.

Anonymous
Guest
Anonymous

@jesse: "Not to be a wet rag but are condos in Vancouver significantly overbuilt?"

I guess the question is how many are currently sitting empty and in the pipe line being built? The OV as an example of empty units.

The thing I wonder about is how long these furnished rentals will be around. There seems to be so many (half of craigs list for Vancouver condos) with limited demand. What happens when those get back into the regular rental market?

logic
Guest
logic

stop=start

more coffee needed

Patiently Waiting
Member
Patiently Waiting

@jesse: I believe Coquitlam is overbuilt already, especially around Coquitlam Centre, and massive new projects are starting throughout Burquitlam and Maillardville. Other suburbs, like Surrey and New West, are probably in a similar state.

mattymatt123
Guest
mattymatt123

Banks are talking now so they have a way out later when things get bad. "See we told you so!"

Alum
Guest
Alum

Are guys kidding me? What I have learned in the past is never trust the banks.

When banks say housing market is going up, it comes down.

This time, they claim RE prices is decreasing? hehehe.. guess what?

It will go up baby. Look at the history and use your brain.

patriotz
Member

@mattymatt123:

In particular they are taking pre-emptive action to avoid being fingered as culprits by the politicians, and frankly the politicians deserve the blame far more than they do. When the heads of the big banks can come right out and warn people about the RE market when even the NDP is too timid to do so, you know things have turned topsy turvy.

Best place on meth
Member
Active Member
Best place on meth

@jesse:

Question: are condos in Vancouver significantly overbuilt?

Answer: I buy 3, my husband buy 3.

vangrl
Member
vangrl

and 4 more shops close their doors in the last couple of weeks…

Paboom, Le Chateau, Orb and Sterling Shoes.

Lived in this area over 20 years and have never seen anything like this. There have been for lease signs on a tonne of the empty stores on 4th for close to a year now.

Anonymous
Guest
Anonymous

@Alum:

"Are guys kidding me? What I have learned in the past is never trust the banks.

When banks say housing market is going up, it comes down.

This time, they claim RE prices is decreasing? hehehe.. guess what?

It will go up baby. Look at the history and use your brain."

After many years of being a bear I've finally been converted by your well thought out argument. I'm off to buy 5 condos!

vangrl
Member
vangrl

that's 4Th avenue in Kits, Broadway is equally as bad. Retail is suffering like I've never seen before

WFT?
Guest
WFT?

@vangrl:

I have noticed that many of the empty stores with for lease signs eventually have a "Development permit application" sign posted on them because they will be demolished to build condo towers.

They sit empty with a fore lease sign in the window because no one interested in starting a business wants a short term lease with no chance of renewal (because the building is slated for demolition).

Without further investigation, we should not take stores closing as a sign of economic hardship – especially if they are in an older building that could be replaced with a condo tower.

bbb
Guest
bbb

vangrl "There have been for lease signs on a tonne of the empty stores on 4th for close to a year now."

I have never understood justification for high rents on the 4th Avenue. I mean I never see the foot traffic that you have on Robson. It is far away from main transport links. No parking. I guess the only thing that they want to emulate from 5th avenue in NY is high rents.

WFT?
Guest
WFT?

@patriotz:

Banks know that they are on the verge of receiving billions in taxpayer money as CMHC mortgages default and they foreclose. When that happens, they want to avoid as much anti-bank sentiment as possible and certaintly wish to avoid calls for CMHC to be dissolved.

Warning the public in advance casts them as the good guys who did what they could and so when they get their billions of taxpayer dollars through CMHC they will say that they tried to avoid it and that they are not the bad guys. It was all the government's fault or the debtor's fault.

vangrl
Member
vangrl

WTF:

"I have noticed that many of the empty stores with for lease signs eventually have a “Development permit application” sign posted on them because they will be demolished to build condo towers."

that is only for that one block of 4th, the north side of block 1900 or maybe it's the 2000 block, the 4 stores that just closed are not getting demolished, nor are a bunch of others

vangrl
Member
vangrl

Downe on BNN right now (president and CEO of BMO)

"Canada housing starts are "comparable" to pre-crash U.S"

mattymatt123
Guest
mattymatt123
Commercial industrial RE is bad too. Here is what is happening in my complex (Just off Graybar Rd. Richmond B.C. Out of 20 units, there are 8 sitting empty with for sale signs or for lease signs. And I know of 2 more coming on the market within this year. The unit next to me is a investment unit. The guy that leased it for the last 3 years was paying around $3000.00 a month. He found a cheaper place in Burnaby and moved about 10 months ago. The unit sat empty till September and then finally is was leased out… Last week, the COPS were there removing a grow opp of capable of producing 500 marijuana plants. The drug guys had already harvested the crop. Turns out they also only paid rent for the month of Sept. Oct. and… Read more »
bubbly
Member
bubbly

"a signifcant correction" = "prices decline 3.5 per cent."?

crabman
Guest

@patriotz: If you look at construction employment, it sure seems like Vancouver is overbuilt. Here is the percentage of construction employment in the Metro Vancouver workforce for the last 10 years:

2000 5.16%

2001 5.15%

2002 5.43%

2003 5.09%

2004 6.55%

2005 6.86%

2006 7.12%

2007 7.61%

2008 8.46%

2009 7.92%

2010 7.32%

These numbers are almost identical to Sacramento between 1996-2006.

http://cr4re.com/CRimages/ConstructionEmploymentP

paradox
Guest
paradox

You know smth is very wrong with this country when from 8am till 6pm every day of the week the border crossing at Peace Arch is backed up 30 to 90 minutes any time of the day.

Sooner or latter smth will give in and we will find out that we are in a much much worse shape than our cousins south.

jesse
Member

@DEFAULT NAME: Was following immigration/migration stats recently, I was intrigued how much the temp/student intake has increased in the past decade, on the order of about 6% annualized growth. Part of the furnished supply goes towards servicing these people. Also as the city transitions away from cars it becomes that more difficult and prohibitively expensive to move. In other cities furnished is the norm for just that reason.

On another note, a friend of mine thought that the high listings in Richmond were due to people wanting places with multiple suites in Burnaby/Vancouver. Richmond is full of non-suited places. Don't know if it's true but hey spread the word 🙂

space889
Member
space889

@jesse: Maybe not overbuilt but very likely not well built to last. 🙂

Anonymouse
Guest
Anonymouse

@paradox:

"You know smth is very wrong with this country when from 8am till 6pm every day of the week the border crossing at Peace Arch is backed up 30 to 90 minutes any time of the day."

The wait time isn't 30-90 minutes right now.

wpDiscuz