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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Guest
Anonymous
4 years 6 days ago

Are there any areas in the US that are still seeing a price/rent relationship that's up over, say 200x?

What, if any, impact will media coverage on a US housing market bottom have on a potential crash in Canadian RE?

If I were a betting man, my bet is that the majority of the pullback will happen faster than most of us (bears) expect.

FF

patriotz
Member
4 years 6 days ago

@jesse: "just pointing out that the bust in the US has been far from homogeneous." Which also has a lot to do with the bubble not being homogeneous, indeed not all of the country was in a bubble. "What, if any, impact will media coverage on a US housing market bottom have on a potential crash in Canadian RE?" None. Canadians didn't pay attention to news of the bust so I don't see why they would pay attention to news of a bottom. It's different here. "If I were a betting man, my bet is that the majority of the… Read more »

Guest
Dan
4 years 6 days ago

In his defense, Bill McBride does say at the end of his post:

"And this doesn't mean prices will increase significantly any time soon. Usually towards the end of a housing bust, nominal prices mostly move sideways for a few years, and real prices (adjusted for inflation) could even decline for another 2 or 3 years."

Guest
Anonymous
4 years 6 days ago

Need some help please:)

Can anyone tell me what 1291 Morris Crescent (in Tsawwassen) sold for in 2010, I believe it sold around april or may of that year.

thanks in advance!

Guest
van_coffee
4 years 6 days ago

Hello VCI community: I am a long-time reader and infrequent poster, but I have a troubling dilemma I need some help with. Like many of you, I am renting. I would suggest we are renting at the upper-end of the market (> $4K per month) based on my assessment of the market. We recently moved due to an expanding family into a large home. Anyway – here is my question to you all: We moved into the new place about a month ago. Recently, in a conversation with a neighbour, I was alerted to a gruesome murder that was committed… Read more »

patriotz
Member
4 years 6 days ago

@Dan: "real prices (adjusted for inflation) could even decline for another 2 or 3 years.” Try decades. Look what the US now has: – real house prices still above historic norms – declining labour participation rate – interest rates that can't get lower – massive household debt (though now not as bad as Canada's) – declining real wages for most workers I don't see how you get rising real prices out of that. Canada also has all of the above (real house prices way above norms of course), we're just behind the US by 5 or 6 years.

Member
Patiently Waiting
4 years 6 days ago

January stats are trickling out in bits and pieces. Sorry don't have a link that doesn't promote a real estate agent. Found this confusing info: http://www.rebgv.org/housing-price-index?region=a… and Listings/Sales: http://www.rebgv.org/listed-vs-sold My overall impression is certain specific markets might be crashing. Richmond, West Side and Burnaby in particular. West Van SFH to a lesser extent, but not West Van condos. Some markets like East Van and Coquitlam show no clear trend yet. North Van appears to be the one hot market with significantly rising sales and prices YOY. Median condo prices are now down YOY in Richmond, Burnaby and Westside. SFH are… Read more »

Guest
Supersogs
4 years 6 days ago

@van_coffee: It's an unfortunate situation, and while anyone else would also be upset to my knowledge the agent actually had no legal obligation to inform you. I was looking at renting a penthouse not too long ago. I took a look at one at the OMA condo near Brentwood in Burnaby and this was owned by a property management company. I remember vaguely reading about a murder in the area so I thought I would ask the property manager more details on it – didn't think it was actually in that building let alone that unit. I was appalled the… Read more »

Guest
van_coffee
4 years 6 days ago

Jessee –

LOL. :) Not yet, but my wife is getting me thinking…..

I know the person that rented it to us believes in Ghosts.

The only impact it has on the unit is the "weird people" treatment we get from everyone in the neighbourhood for living in the murder house…

You didn't answer the first part of my question? Would you be upset for them not telling you? Would you want to know? What happened to the Golden Rule?

Best,

VC

Guest
Dan
4 years 6 days ago

Patriotz, there is only one factor I can see causing decades of real declines and that would be demographics as America is roughly the same as us

But nominally will of course be a different story.

Guest
4 years 6 days ago

Here is the latest stats release: http://www.laurenandpaul.ca/MarketTrends.ubr

You can see the new HPI near the bottom.

Member
specialfx3000
4 years 6 days ago

@van_coffee:

Sorry to hear about your dilemma. Most renters in Vancouver see 'debt' people.

Guest
Yaya
4 years 6 days ago

@jesse: Yeouch! I love how you say prices in some areas are "only down 10-20%". That would be a loss of $100-$200k on a Vancouver house.

Member
4 years 6 days ago

@PaulB – – Thanks for the link.

What I want to know is who has f—ed up the Whistler stats? There is no way that it has moved in the past 5 years as described in this table. 95% increase in apartment prics in 5 years? Really? I think they have it backwards – prob 50% fall.

Guest
Anonymous
4 years 6 days ago

I don't get this chart, is the 1 year +/- column the percentage that area has gone up or down in one year (feb 2011-feb 2012) ?

ugh, the whole thing is confusing to me

http://www.rebgv.org/housing-price-index?order=pi

Guest
Guy Smiley
4 years 6 days ago

Thanks Paul. I see you have a chart with average price on it near the bottom – are the average and median stats still available somewhere? I understand the problems with using them, but i kind of miss them already…

Guest
Tony
4 years 6 days ago

@Van Coffee, I would be furious!

Whats with this HPI?? It says the avg detached Van home is down .3% over the last 5 years. That makes zero sense whatsover.

Guest
jumping in
4 years 6 days ago

No signs of the CNY in the stats…

Member
Devore
4 years 6 days ago

@Supersogs:

Honestly had I not happened to catch that news article I wouldn’t have asked and probably would’ve rented the place. I called the management company a week later out of curiosity and sure enough the unit had been rented out. With all that happens in the lower mainland, if you happened to miss the news you wouldn’t even know it happened.

Well, how does it affect you? Me, I'll take the 30% cut in price and leave some wind chimes out for the ghosts to play with.

Guest
Dyugle
4 years 6 days ago

Anyone else hear this ad?

"Situated in the heart of Downtown Langley, Serenade is located adjacent to Douglas Park just steps from shops, restaurants … It's free and anyone can join. …. We'll Give You a Brand New Car"

Free car = desperation.

Guest
Guy Smiley
4 years 6 days ago

This might be an awfully stupid question, but didn't the REBGV news releases previously publish average price data?

If not then i had too many drinks at lunch today.

If they did then they have systematically gone through all old news releases and stats packages on their website and replaced it with HPI data.

Member
Best place on meth
4 years 6 days ago
Guest
fixie guy
4 years 6 days ago

He might have a point. The Case Shiller is almost back to 1950's levels:

http://postimage.org/image/j129txrhj/

Member
Patiently Waiting
4 years 6 days ago

So over the last five years, condo apartments in the Lower Mainland have gone up 10% according to benchmark.

Someone who bought a condo for $300K in 2007, might get $330-340K if they sold it today. After all these years of paying the ownership premium, that amounts to a significant loss. Renters who kept their down-payments in savings accounts did much better.

Guest
Nero
4 years 6 days ago
Guest
Independentwealth
4 years 6 days ago
Guest
Independentwealth
4 years 6 days ago

@Patiently waiting

Doesn't sound like a "Bubble" to me.

Guest
Anonymous
4 years 6 days ago

@Independentwealth: "The index rose 0.27 per cent from December, driven by stronger results in Montreal, Toronto and Vancouver." – CBC

Nice reporting! Vancouver prices declined in January compared to December.

Makaya
Member
Makaya
4 years 6 days ago

@DEFAULT NAME: "“The index rose 0.27 per cent from December, driven by stronger results in Montreal, Toronto and Vancouver.” – CBC Nice reporting! Vancouver prices declined in January compared to December." That's the beauty of the new index, you can make up the numbers as you wish. CREA and all the local REB are just deceiving people. This index is a fraud. Now the temperature of the RE market is cooling, they're changing the thermometer. Who are they kidding really? I wouldn't like to be in their shoes when people start realizing that the reported "prices are going up" results… Read more »

Guest
Nadleh Whut’en
4 years 6 days ago

Aboriginals ask China to raise human rights issues with Harper on PM's visit

Aboriginals from British Columbia have asked China's president to quiz Prime Minister Stephen Harper on Canada's human rights record during his visit to the Asian country.

"In terms of tit for tat, this will give (the Chinese) ammunition and put some pressure on Canada. We wanted (Hu) to know that First Nations are not being treated fairly in Canada in terms of their aboriginal rights.
http://ca.news.yahoo.com/aboriginals-ask-china-ra

Guest
Anonymous
4 years 6 days ago

@Makaya: Re-read the article and then read the press release from REBGV. The latter states that prices declined in January compared to December. It was the CBC that prices rose in January with the help of Vancouver. It has nothing to do with changing the HPI just how it's reported in the media.

patriotz
Member
4 years 6 days ago

@Nadleh Whut’en:

They should ask the Chinese to raise environmental issues too, since the Chinese set as good an example on the environment as they do on human rights.

They also don't seem to see the irony of asking the country that wants the Northern Gateway rammed through their territory to speak up for them.

Makaya
Member
Makaya
4 years 6 days ago

There are other RE market that are awaiting an imminent crash… In France, the number of approved mortgages has decreased by 25.7% YOY in January, and 49.4% between December 2011 and January 2012. "La chute est comparable à 2009, au moment de la crise des subprimes américains" (the fall is comparable to 2009, during the US subprime crisis). What happened there? – The government decreased the tax credit for investors buying a newly built property (from 22% to 13%) [understand speculators…] – and cancelled the "Pret a taux zero" (0% interest loan given to qualifying buyers [understand first time buyers,… Read more »

Member
4 years 6 days ago

@Independentwealth:

For detached:

Montreal is -4.6% or -$12,500 since the peak in July 2011.

Vancouver, by the measure they used just until this month, is -3.4% or -$31,000 since the peak in June 2011

Toronto is -4.1% or -$20,700 since the peak in November 2011.

Only Montreal notched up last month, month on month, and that is well within the usual level of noise.

Member
4 years 6 days ago

Richmond – Detailed Data Mining on the inventory. A couple of thoughts – as it is Monday and almost feels like a new year. Wait – maybe it's just supposed to be a New Year!. Did some data mining. Richmond Detached looks like a disaster with over 10 months inventory, 844 units for sale etc. But what you're actually seeing if you break it down is a complete collapse in sales in the category which I would call "Spec build for Chinese buyer". If you break the market into 3 pieces – Lets say – New houses (up to 5… Read more »

Member
4 years 6 days ago

@DEFAULT NAME: That does tend to happen, because the turn in the market is hard to recognize until it has taken hold, then it is just a few months before it picks up momentum, partly from the building recognition. Bubbles and crashes are partly social events, which explains the vitriol from the owners/bulls.

Makaya
Member
Makaya
4 years 6 days ago

@Makaya: for those interested, here is a nice graph representing the RE bubble in France. The red line is Paris. Look familiar?

This is taken from the equivalent of VCI there.

http://www.bulle-immobiliere.org/drupal/

patriotz
Member
4 years 6 days ago

@Makaya:

What I like is that "bulle-immobiliere" (which is French for housing bubble) looks so much like "bull immobile" in English.

Guest
Nero
4 years 6 days ago

@ZRH2YVR:

Great work.

Member
4 years 6 days ago

@Makaya: I am so stealing all your links today. With attribution, of course.

Guest
SunBlaster
4 years 6 days ago

I bet Bill McBride is counting the rebound on new wave of employed people in USA, although someone for got to mention that employment actually didn't increase and food stamps have hit new record highs.

The only way I could see prices in US rising if Ben prints money faster than BofA can foreclose! Hang on, I think that's called inflation.

Guest
Anonymous
4 years 6 days ago

@jesse: " Looking at price-rent ratios in areas like Manhattan show, in some cases, price-rent ratios comparable to Vancouver. But the devil’s in the details, there are other factors at play in markets like Manhattan." Yup, like rent control. There are all kinds of people in NYC renting at as little as a 5th of market value. On the open market you will not find a thing with price/rent ratios comparable to Vancouver. When I moved here six years ago, I went from a pretty crappy three-bedroom floor-though, with bad plumping and 1940s wiring in Brooklyn, to a whole house… Read more »

Makaya
Member
Makaya
4 years 6 days ago

@AG Sage: you're more than welcome. I do it all the time :)

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