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TD: Housing correction in one year.

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Good news!  You still have a year to cash out of the housing market before it ‘corrects’.  TD says housing correction coming in 2013.

A correction in Canada’s blistering real estate market is set to take hold in 2013, economists at TD said on Wednesday in a note to clients. The remarks come in the wake of figures released by the Canadian Real Estate Association (CREA) showing sales of existing homes fell 4.5 percent in January from the previous month.

So.. plenty of time to install that laminate, paint the place up and stage it.

“This month’s decline is likely reflective of what will shape up to be a softer year in sales, especially when it comes to Toronto and Vancouver condos,” Jacques Marcil, Senior Economist at TD, said in a note. “We anticipate growth will slow down in 2012 both in terms of sale volumes (+0.5%) and prices (+2.5%).”

“In contrast, the actual correction is foreseen to start in 2013, with both resales and prices turning negative.”

In recent weeks a number of executives at the country’s largest banks and economists have voiced concerns over high real estate values. The head of the country’s largest seller of uninsured mortgages recently told BNN that certain areas of Canada’s real estate sector are “overheated.”

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b5baxter
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latest inventory graph is up at:
http://vancouverpeak.com/groups/inventory-graph/f…

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6 years 7 months ago
CashedOut
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A price/rent sample for you all.

This house http://tinyurl.com/7owdfcl was recently sold for ~$920k, about 20k over asking. I know because my brother-in-law put in a losing (winning?) bid. A few weeks later it's on the rental market for $2180 / month for a healthy price/rent multiple of 422!

That's the smart money all right. The lucky renters, I mean.

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6 years 7 months ago
CashedOut
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@CashedOut: Happily, this turn of events now has my brother-in-law and family seriously considering renting for the first time.

It's hard for them to ignore that the same house that they were willing to put up almost a million dollars for can be rented back for fraction of the price.

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6 years 7 months ago
Makaya
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@b5baxter: We're clearly on our way to surpass the 2009 inventory level…

Will we reach 15K inventory by end of month?

We'll see, but that chart looks promising so far.

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6 years 7 months ago
Makaya
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@CashedOut: That's called insanity. Good that your bro is waking up. He just avoided the worst financial decision he could have made in his entire life…

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6 years 7 months ago
backwardsevolution
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I personally know of three individuals who are going to be putting their houses on the market this spring. Elderly, with taxes and upkeep increasing, inflation in everything they need, getting very, very little income from their investments, they are going to pull the plug.

No mention of a housing crash coming; they just feel squeezed!

That's three during a simple conversation.

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6 years 7 months ago
WFT?
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This is the top rated (386 up votes) comment on the CBC website under the Kelowna foreclosures story:

Investors who scooped up properties blocked hard working families from being able to own. If it is the flippers and investors losing these homes… all I can say is, "Ain't Karma a beautiful thing?!"

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6 years 7 months ago
Patiently Waiting
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@CashedOut: The downside to more people renting is more competition for rental units. More so, strong competition from people who would otherwise be in a position to buy. Every year, around this time, I start checking the rental market. Our yearly lease is to May 1st each year. Up until this year, I always found enough evidence to keep my rent from increasing. A few days ago, I was chatting with my landlord (he is old-school, owns a few properties and knows the market well) and he indicated I should expect higher rent this year. My initial research, just eyeballing listings, shows the evidence backs him up this time. Rents are going up faster than before. So I'm expecting the maximum allowable rent increase, which I believe is four percent or so. But, keep in mind, our rent hasn't gone… Read more »
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6 years 7 months ago
mattymatt123
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The heard is now running for the cliff! My parents have finally coerced my widowed grandma to sell her east van special on a double lot! Its amazing how the mind set of people changes when they see its to late….

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6 years 7 months ago
Troll
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@mattymatt123:

The heard is now running for the cliff!

Is that what you herd from the heard?

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6 years 7 months ago
patriotz
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@Patiently Waiting:

"The downside to more people renting is more competition for rental units."

Think so? What happens to the houses and condos that they don't buy?

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6 years 7 months ago
RentingsRight
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New American Dream is renting to get rich:

"Examining 250 properties around the U.S., and going through close to 40 client files to project the financial impact of owning real estate versus liquidating it, Arzaga, an adjunct professor in personal finance at the University of California at Berkeley, found that, "100 percent of the time it was better to rent, rather than own."

That's right: 100 percent."

http://www.reuters.com/article/2012/02/15/us-hous…

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6 years 7 months ago
gordholio
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I posted this over at VREAA this morning and figured it's important enough to put up over here too. It’s a Jan 12 article in the Chilliwack Progress “news”paper entitled “Solid year ahead for Chilliwack real estate,” and it perfectly exemplifies the gauntlet of bullshit the average Joe must negotiate. http://www.theprogress.com/business/137193653.htm…. Note the depth and scope of said bullsh*t, and note that it goes way beyond simple realtor hype (lies). First, phrases that mean absolutely nothing (“solid,” “no surprises,” “value-added buying dollars,” “perfect time to buy a home”) are tossed around like they actually have meaning and actually have bearing on anything. Then there’s a call for a 4 to 5% increase, with absolutely nothing to back it up. The bastards. Then there’s reference to just how much RE means to Canada’s GDP, which is one of the few truths… Read more »
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6 years 7 months ago
patriotz
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@RentingsRight:

Terrible article. It only skirts around the main issue which can be summed up in one sentence: Buying is better than renting if it's cheaper. I mean cheaper over the long run, not just at purchase time.

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6 years 7 months ago
Patiently Waiting
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@patriotz: Eventually they might be rented. But a lot of sellers are in "deer in the headlights" mode right now. The anecdotes I hear from people househunting in the last few months is there is a lot vacant housing on the market.

The way I see it is the situation will worsen for renters in the short term, but will get better again.

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6 years 7 months ago
Re-diculous
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Well it's nice to see BNN reporting how out of whack the RE market in Vancouver has become. I love watching this Brian Ripley give his technical analysis on the market.
http://watch.bnn.ca/#clip620598

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6 years 7 months ago
yvr2zrh
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http://finance.yahoo.com/news/new-american-dream-…

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6 years 7 months ago
Anonymous
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@patriotz: Think so? What happens to the houses and condos that they don’t buy?"…when RE slows down/crashes, the # of day on market increases and inventory rises. When this happens there is a higher % of vacant units in the city compared to when inventory is lower…this puts upward pressure on rents. I house sitting on the market is more likely to be vacant.

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6 years 7 months ago
Not much of a name...
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@Re-diculous: I think someone forgot to tell him that the HPI calculation has changed for Vancouver so that he needed to throw away all his old numbers for Vancouver. He stated in his charts that the detached price in Jan 2012 was the highest price for Vancouver.

Not so fast. Prices have declined ever so slightly over the last 6 months. Did the REBGV achieve what it wanted (for you conspiracy theorists) or was this a major oversight on his part?

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6 years 7 months ago
rp1
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#8 @Patiently Waiting: "he indicated I should expect higher rent this year."

Where are you? I'm in Abbotsford and I checked this two weeks ago. Still lots of "one month free with 1 year lease" and nominal rents are only slightly above 2005. The SFH market out here is soft and the condo market is listing (like a ship), with lots of inventory piling up at the low end. Does anybody recognize this? The overall economy seems fine.

Interested to hear other assessments of the Fraser Valley.

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6 years 7 months ago
patriotz
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@DEFAULT NAME:

"When this happens there is a higher % of vacant units in the city compared to when inventory is lower…this puts upward pressure on rents."

Which way are rents going in Kelowna?

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6 years 7 months ago
Anonymous
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@Not much of a name…: "Did the REBGV achieve what it wanted"

If they have distorted their index to make prices look higher at or near the peak, the benefit to them will quickly sour.

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6 years 7 months ago
Guy Smiley
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@Not much of a name…

Yeah, I like his message but the numbers are bit wierd. The chart seems to end mid 2011, and they say that a new record average high was reached in January (which doesn't jive with REBGV). Maybe they are using only Vancouver proper?

Too bad he didn't mention that the average was skewed upwards by ~ $50k due to three huge, outlier sales that month.

It seems every article i see/ read has a different number for what prices did last month.

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6 years 7 months ago
Patiently Waiting
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@rp1: Looking in Coquitlam (west of Mariner), Pomo, parts of Burnaby and (to a lesser extent) New West.

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6 years 7 months ago
Anonymous
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@patriotz: Do you agree that a house on the market is more likely to be vacant? Yes or No

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6 years 7 months ago