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.

Sort by:   newest | oldest | most voted
Anonymous
Guest
Anonymous

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
@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 pullback will happen faster than most of us (bears) expect." Well that's what happened in 2008, nobody was predicting a decline that fast. Going forward, interest rates will most likely stay low, so we may well see a slower decline.… Read more »
Dan
Guest
Dan

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."

Anonymous
Guest
Anonymous

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!

van_coffee
Guest
van_coffee

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 in the bedroom I am now living in. I have confirmed that this occured.

Should I be upset with the agent that didn't tell me this ? (I am).

What should I do?

Best Regards,

VC

patriotz
Member

@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.

Patiently Waiting
Member
Patiently Waiting

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 down YOY in Richmond, and flat in Westside.

Supersogs
Guest
Supersogs
@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 PM didn't say anything about it, but I was told they had no legal obligation to do so unless asked. Not exactly a common question to ask – Is gas included? When does the pool close? Oh, was there a… Read more »
van_coffee
Guest
van_coffee

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

Dan
Guest
Dan

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 http://i42.tinypic.com/5np74.png

But nominally will of course be a different story.

paulb.
Guest

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

You can see the new HPI near the bottom.

specialfx3000
Member
specialfx3000

@van_coffee:

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

Yaya
Guest
Yaya

@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.

yvr2zrh
Member

@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.

Anonymous
Guest
Anonymous

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

Guy Smiley
Guest
Guy Smiley

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…

Tony
Guest
Tony

@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.

jumping in
Guest
jumping in

No signs of the CNY in the stats…

Devore
Member
Devore

@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.

Dyugle
Guest
Dyugle

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.

wpDiscuz