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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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[…]Vancouver Condo Info » TD: Housing correction in one year. » Vancouver Condo Info[…]…

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Drachen

@Vansanity:

I heard it was Harold Ford and the elevator boy, but same principle.

Then again I said that years ago when I heard about an office cleaner who was trying to get several friends together to buy an 'investment' condo.

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Vansanity

A couple anecdotes… lawyer I know was downtown at court, 70 foreclosures being filed. These were for properties all over lower mainland.

I order in tonight from a favorite of mine, food showed up in record time. I told the delivery guy I've never received the food so quickly. He said they've been dead. He went on (in broken english) to describe how most people are paying for their homes and taxes they have no money to spend on going out.

I had to laugh… all I thought about was the story of Joseph Kennedy shoe shine story. It's like, when the delivery boy is talking about property costs you know it might be time to sell that shit. Just sayin.

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chilled

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

I was sitting in a restaurant today, perusing The Georgia Straight (yeah, nothing else to read). The real estate ads seemed to suggest we are locked in a pre-Olympic state of unstoppable financial frenzy and fortune.

I'll bet my previous landlord, who easily lost a quarter million bucks on the place I just moved out of, is chomping at the bit to buy another one. (Nope, it still hasn't sold)

Maybe we should force everyone who lost in the Real Estate Ponzi scheme to wear a small tattoo on their forehead? In a few years, Vancouver will look like downtown Calcutta.

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jesse

@Meh: "If 3.2% rent increases become common that adds up to significant inflation. Is that a good thing?"

Don't know, just stating one particular case with which I'm familiar. One thing is clear, though, is that if rent goes up by 3.2% and wages fail to keep pace, that means the local economy suffers.

I hope people begin to understand how dangerous negative real rates are with prices at current levels. I think most readers here do.

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Meh

@jesse: If 3.2% rent increases become common that adds up to significant inflation. Is that a good thing?

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Best place on meth

What a brutal week for sales.

32% lower than the same week last year but we'll see after tomorrows numbers if that holds.

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exx

Read this in the G&M today. Oh Vancouver…

Five big blunders of 'do-it-yourself' investors

#2. Half-hearted diversification, or worse

Perhaps Mr. Collings’ Vancouver location is to blame for the preoccupation his new clients seem to have with real estate. “It’s hilarious,” he said. “They have their principal residence, they’ll have a rental property and then when it comes time to sit down and talk about their investments, what do they want? They want real estate-style investments in their RRSP.”

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RippedtoShit

Jesse,

Good comments.

But.

Expect vacancy rates to JUMP as the implosion sets in and kiddies bail on their condos to move back in to Mom and Dad's garage.

Exactly as it happened in the US.

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jesse

@patriotz: I am hearing some reports from what I would refer to as "rational" landlords that vacancies are lower and they are having little trouble finding qualified applicants. I don't know if that's translating to the spot price increasing — in many cases landlords won't jack rents up too quickly even if the market is tight due to their long time horizons. Perhaps the market is tighter than it was a few years ago. If so that's probably a good thing as it starts forcing people's hands. I saw this effect up close and personal recently where tenants in a rental complex moved after a 3.2% rent rise. Of the 10 who moved out in the last 6 months, half left the Vancouver area altogether, others moved to less expensive areas of the region. The building manager filled the units… Read more »

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RippedtoShit

Thanks Paul B!

I do miss those 500 listing days, hopefully we see some 400+ days this month!

The MSM is turning on RE, and the buzz on the street is turning from greed to fear, as programmed.

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RippedtoShit

Thanks BPOM, much appreciated!

Troll – I told folks here in the summer/fall that I was buying blue chip stocks/oil and gas stocks/gold stocks/mining (base metal stocks)/china and india funds like there was no tomorrow…and went it went down i'd buy more (and I did) and if it went down even more I would buy even more (and I did).

The trend is the trend, I do try and take advantage of it. Housing prices have confounded me for a few years, but now the trend is reversing. I'll buy when the market gets smashed and good. And if it goes down further, I'll buy more…and so on.

Why don't you go suck some cats on Davie Street now Troll.

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paulb.

New Listings 252

Price Changes 94

Sold Listings 110

TI:14411

http://www.laurenandpaul.ca

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Tornado

@vangrl:

Is that building at the West End on the Barclay St?

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Best place on meth

@RippedtoShit:

Well that's the beauty of it isn't it?

Yesterday I reported 44 sales for the first half of the month which means we're on pace for 88.

Get it? 88 sales? 888 listings? Richmond? Chinese? Superstitious?

This type of hilarity you just can't make up.

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Troll

@RippedtoShit: Is the trend still your friend RJ?

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RippedtoShit

BPOM

Thanks. Can you contrast with prior periods at this time?

What's your guesstimate on Richmond sfh MOI?

This is starting to get fun!

Where's McLover when you want to kick someone in the balls…

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Best place on meth

Richmond detached inventory just reached 888.

BULLISH!

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Absinthe

@DEFAULT NAME:

I remember someone showed around the time of the US crash that in some markets *asked* rents did go up in response to the bubble bursting, but IIRC it had little to do with inventory and didn't have a huge effect on *paid* rents in the aggregate. I can't find a link, sadly…

The theory as I understood it at the time was that people were trying to recoup mortgage through rents, and therefore asked rents were reflecting the serious skew between owners and renters. Only it had no real effect on the long term market, because rents are fundamentally constrained by incomes.

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patriotz

@DEFAULT NAME:

According to the UBC data (link at right of page) real rents have not gone up over 1% YOY at any time since 1983.

Can't speak for the 90's, but my recollection for the previous decade is that vacancies were already very low in 2007, while prices were still rising. So you can't attribute low vacancies in 2008 to falling prices (which didn't start falling until May in fact).

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Kush blazin

Vancouver correction starts now, the rest of the country watches, then boom!! Canada is fucked!

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jesse

@DEFAULT NAME: "but in the early stages when housing first starts to correct, the decrease in supply tends to cause an upward pressure on rents."

There is some weak evidence that this happened in San Diego leading up to their significant price drops. Not that this means anything.

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Anonymous

@patriotz: It was the case in the Vancouver bust of the mid 90's and the Vancouver bust of '08. Vacancy rates was almost zero in those years.

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patriotz

@DEFAULT NAME:

Where are the facts that indicate this? Not the case for the Toronto bust of the early 90's, the Vancouver bust of the early 80's, or the recent declines in Alberta and BC.

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Anonymous

@patriotz: "However you have to compare this reduction in supply with the reduction in demand that is a result of lower incomes, unemployment, people moving in with parents, or leaving town."

I agree with you in the long term that's likely the case…but in the early stages when housing first starts to correct, the decrease in supply tends to cause an upward pressure on rents.

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