The Housing Bottom is There

Bill McBride over at CalculatedRisk has a simultaneously chilling and uplifting post on the US housing market:

There have been some recent articles arguing the “housing bottom is nowhere in sight”. That isn’t my view.

First there are two bottoms for housing. The first is for new home sales, housing starts and residential investment. The second bottom is for prices. Sometimes these bottoms can happen years apart.

For the economy and jobs, the bottom for housing starts and new home sales is more important than the bottom for prices. However individual homeowners and potential home buyers are naturally more interested in prices. So when we discuss a “bottom” for housing, we need to be clear on what we mean.

For new home sales and housing starts, it appears the bottom is in, and I expect an increase in both starts and sales in 2012…

And it now appears we can look for the bottom in prices. My guess is that nominal house prices, using the national repeat sales indexes and not seasonally adjusted, will bottom in March 2012.

The problem with using the house price indexes to look for a bottom is that they are reported with a significant lag. As an example, the recently released Case-Shiller index was for November and the index is an average of September, October and November – so it is a report for several months ago. The CoreLogic index is a little more current – the recent release was for December, and CoreLogic uses a weighted average for prices (December weighted the most) – but that is still quite a lag.

Both of those indexes will bottom seasonally around March, and then start increasing again.

What planet is McBride on anyways? For many Vancouver is different because it is inconceivable that it’s the same. Inconceivable.

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Kush blazin

At 20k, I'm sure people will definitely feel that "it's not different here".

I'm glad I sold. I do t want this to happen, but it is. So I'm prepared and ready to watch as a spectator.


@Peter: "If we keep pulling every single one of the desperation policy levers to keep the RE market inflated we’ll never have affordable rental stock." One, there is no correlation between sale prices and rents, and two, real rents have been declining over the last decades. Vancouver has always had high rents relative to incomes. The impact of the bubble is not on rents themselves, but on the quality of rental stock since so much of it is held for speculative purposes. And as the metro population has grown the affordable rental stock has been pushed further out. This is a normal outcome of growth and has nothing to do with the bubble. The affordability problem for rental stock is really an income problem as Vancouver has a high inequality of incomes. You could say the RE bubble is behind… Read more »


#116: " and the 30% of our economy directly employed by RE will constantly undermine any efforts to have a healthy and sustainable real estate system. Even I’m losing faith that this thing will properly correct." I guess then the smart and the talented will have to leave this city, let the erosion start. Ie. I don't go down town anymore, no use, they just tow your car away, or want way too much to park it, so no more biz for downtown. What is the point of being a debt slave for an outhouse and never have time/energy to "enjoy" the sea/mountains, oxymoron isnt it? And really bad investment for the future as we must put away money for retirement, not for a rotting house. And homes will rot in Vancouver, thanks to the massive amounts of rain and… Read more »


@b5baxter: What numbers you looking at? Why the last 7? After 2009, you got to go all the way back to 1999, which is 15 years (yeah, I know it's 13, but why should everybody else get to mess up the math tonight)


What this city needs is for a handful of intrepid individuals to form an association under the Societies Act, and do independent releases of data each month on the figures. Release average and median prices, and relevant trends/metrics. Not putting a necessarily bearish spin on the data but actually providing an alternative voice to the RE industry and its shills. Even the CCPA gets reported by the Vancouver Sun when they do reasonably good work. Doesn't take much to form a legal society. Watching all this discussion about lack of affordability in the city and the excessive focus on building SROs, purpose-built low income rentals, etc., makes me think that the policy makers really just don't get it. If we keep pulling every single one of the desperation policy levers to keep the RE market inflated we'll never have affordable… Read more »


@Guy Smiley:

It's not that I don't share your disgust, but it is worth keeping in mind that newspapers write what people buy, and people like reading about smart they are for buying real estate. If you've ever tried explaining that Vancouver is in a bubble at a dinner party, you will understand why the editors at the Sun prefer to run rah-rah pieces.

Guy Smiley

Do we remember what 1994 and 2011 have in common?

Stanley cup riots and, while it fell across the rest of Canada, the bankruptcy rate rose in British Columbia?


Larry at Yatter said that planeloads of chinese carrying bucket loads of cash are defending on Vancouver to buy our real estate. Strategic savvy buyers.


15,000 this month (PaulB stats) will rattle the market.

18,000 next month will shake it.

21,000 the following month will rattle it.

25,000 the month following will crush it.

Boys and Chicks, hang on, this could be quite the ride – down.


Navin R. Johnson

Thanks fellas. I like what I see based upon previous years. Be nice to surpass the '09 numbers, but that looks a little unlikely….however, 15,000 would be fab. I'm particularly liking the MOI we're seeing 🙂


@Navin R. Johnson:

check the graph:

14,000 would still keep us the 2nd highest February in the last 7 years.

15,000 would as well, but it would be narrowing in on becoming the highest inventory in the last 7.



Great info Jesse

However do you mean 15,500?

16 x 100 = 1600 + 13793 = 15,393


It's a great time to bye.


@Navin R. Johnson: 15K by months's end…14 by week's end

Navin R. Johnson

OK, it's obvious we're going over 14,000 listings by month's end. How does that compare to previous years? Anyone?


New Listings 281

Price Changes 70

Sold Listings 140


Guy Smiley

:”25% drop in the average house price in close to 4 years? WHY IS THIS NOT BEING REPORTED?”

The media can only devote so much space to real estate. And judging by how many sources i saw repeating the drivel written by shithead Gary Marr "New index shows Canada's housing market heating up again", there is little room left over.

I would guess too there really is nobody working in the news anymore with the mandate to do any actual investigation, let alone look into real estate in any depth. But truly it turns my stomach the amount of media cred enjoyed by the RE industry. It would be refreshing if they could even just evaluate the data a little more critically instead of simply regurgitating the "News Releases" put out by the CREA, CAAMP, REGBV etc.


love these quotes:

"buying a condo is like putting money in a safety deposit box"

"we have no idea who's buying our homes, but we do ask for an address and a SIM #"

"we're finding our investors aren't really concerned about making money month to month"

what a goof..



"Wrong. Firstline mortgages are capped at $1M and there are no “self-certified income” loans of any amount. We should see others follow."

Apologies, you're correct.


"Tenanted for $2950/month while you apply for permits or invest & hold"

ummm ya if you want to subsidize it by about $7000 a month……


@McLovin:"25% drop in the average house price in close to 4 years? WHY IS THIS NOT BEING REPORTED?"

Because the media are useless tools made up of low paid reporters who have very little time to put together a story. They wait for stories to be fed to them by shills of what ever industry wants a story out. I bet if you put something together and sent it to various media they might look into it and report it.