TD: Toronto & Vancouver face 15% decline

It seems like one of these bank economist forecasts come out every week, but TD is calling for a 15% decline in house prices here and in Toronto over the next couple of years.

“There have been growing signs that the markets have been tilting towards excess supply of new multiples,” the bank said.

Indeed, condo prices in both cities have shown signs of slowing down much more than the price of single-family homes, the usual benchmark of a market’s overall health.

“In fact, looking at the trend in condo prices, you can see there has been essentially no increase in prices since the federal government first began tightening mortgage rules in mid-2008,” the economists said.

So if the average selling price on a Vancouver single family home is already down 12% year over year and the outlook for condos looks worse… maybe not the best time to buy a presale condo eh?

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Devore
Member
Devore

@jumpin in: Roubini has officially lost his marbles.

Anonymous
Guest
Anonymous

wtf talk about a greedy private seller. That’s like asking $500,000 if they’d used a realtor to sell that piece of crap. Can’t wait till those shitty apartments are worth $140,000 again

http://vancouver.en.craigslist.ca/van/reo/3072403197.html

patriotz
Member

G&M poll question today: Is Canada experiencing a housing price bubble?

46% Yes, prices are unsustainable

11% No, it’s normal for prices to rise

34% Only Toronto and Vancouver are in a bubble

9% I’m not sure

Now like all online polls it’s not scientific, but the people who read the G&M web site are a lot more representative of the educated public than the people on this blog.

Crikey
Guest
Crikey

Thank you for your response and justification, Jesse!

oneangryslav2
Guest
oneangryslav2

By the way, my in-laws (who purchased a modest place in the Sunrise-Hastings area of East Vancouver just over a year ago, have now lost (based on average prices) just over $80K. They claim, however, that they could get about 100K more for their place today than when they bought it. Strange.

oneangryslav2
Guest
oneangryslav2

@Anonymous:

“wouldnt the Median decrease in house prices be a more accurate number to use?

Yes, and it always should have been used on the way up, but that wouldn’t have made the same types of attention-grabbing headlines as did using the mean. Based on the median prices in Vancouver have gone up slightly over the last two years, and have moderated slightly in the last six months or so. Overall, a slightly down market. But not for long…

oneangryslav2
Guest
oneangryslav2

@Anonymous:

Repeat after me: a household is not like an economy…a household is not like an economy…a household is not like an economy…a household is not like an economy…a household is not like an economy…a household is not like an economy…

Many of the “austerity hawks” suffer from a major flaw (or blind-spot) in their economic thinking about austerity. As Paul Krugman has succinctly put it: “your spending is my income.” Multiply that by tens of millions and you have an economy.

Analogies are easy; good analogies are hard….a household is not like an economy…

dyugle
Guest
dyugle

In the past there was stimulus to get a majority government.
This year there is a majority government.

Devore
Member
Devore

@Anonymous: We track all the prices here as much as we can, average, median, benchmark, index. Like the REBGV, we headline the “best” one. Like the REBGV, we know what the context is. Consistency is key though, if you’re going to use average one month (like last year when all mainstream media lauded the 10+% YoY average increase reprinted from REBGV press releases) you should compare the same one next month (unlike the REBGV which now touts the HPI, which is up YoY while average is down).

Devore
Member
Devore

15% is a nice round number. It’s not too high, so no one need panic. It’s not too small, so it’s srs bzns. It’s a psychologically comfortable number. It’s down, which sucks, but not too much, so no need to worry, it’s not a disaster. If you asked the random person about market declines, they’d probably be pretty comfortable with 15%.

Interesting that the 10-15% (ie “flat market”(tm)) is now becoming “at least” 15%. Many external observers place Canada’s market at 40% overvalued, so I think as all price metrics slide down into double digits, we’ll see adjustments from our banks too.

Anonymous
Guest
Anonymous

it says Vancouver single family homes are down by 12%, which i believe is the average.

I believe i read that the Median price was down by 5% since 2011, is that correct?

wouldnt the Median decrease in house prices be a more accurate number to use?

jesse
Member
@Bull! Bull! Bull!: “What about this years difference makes you think we are going to see a change in the trend?” I see no difference in the trend of higher sales in May-June for this year. Perhaps a renewed bout of stimulus unleashed in the summer will jack up sales in the fall and allow owners to stave off urgency once again. Three reasons (in order of importance) why this year is different from recent past years: – Population growth is down 40% from 2008; – Completed units will start increasing in Q3 and Q4 of this year; – People who prematurely took the plunge into home ownership (as occupiers or amateur landlords) in the past few years will increasingly feel the unexpected pains of property management and have fewer avenues to exit safely. Every year is different because it… Read more »
Troll
Guest
Troll

@Dave:

Greece is done and will likely be gone by this time next year.

The way they played today against the Czechs they’re probably done by the end of the week.

Anonymous
Guest
Anonymous

@jumpin in: “Roubini Tells Europe to Stop ‘the Savings Madness’”
Totally makes sense! If I was facing bankruptcy, I would solve the problem by applying for more credit cards

Dave
Member

@jumpin in:

What an idea. Pay government workers more and send everybody to Southern Europe for a free vacation. I’m surprised the NDP aren’t lapping this stuff up and making Rubini their leader.

But seriously, it’s a little scary to think that economists don’t agree about Keynesian economics vs. austerity.

We basically manage our economic policies ad hoc.

Greece is done and will likely be gone by this time next year.

Navin R. Johnson
Guest
Navin R. Johnson

This is one room where I can say I enjoy hanging out with the pessimists 🙂

jumpin in
Guest
jumpin in

http://www.cnbc.com/id/47778019
Roubini Tells Europe to Stop ‘the Savings Madness’

He should have a chat with Harper 😉

patient renter
Guest
patient renter

@Bull Bull Bull

What is different this year is simple. Less people are buying at these ridiculous prices. Follow the numbers.

patient renter
Guest
patient renter

@Bull Bull Bull

You’re right. If real estate has ever gone up, it means that it will always continue to go up. Just ask the U.S. and Ireland.

Not much of a name...
Member
Not much of a name...

@Bull! Bull! Bull!:

Every year is different. What about this years difference makes you think we are going to see a change in the trend?

Jesse’s stated his reasoning quite well.

What makes you think that the market will continue on the same path it has been on for the last ten years?

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

@jesse: “But this year IS different so who knows!”

Every year is different. What about this years difference makes you think we are going to see a change in the trend?

MM
Guest
MM

A conspiratorial reading: “RE is cooling off, so hands off our mortgage business”

“Assets that are acquired for resale behave completely differently.” – anything in Econ 101 about that?

jesse
Member

@Crikey: http://housing-analysis.blogspot.ca/2012/06/greater-vancouver-market-snapshot-may.html

The answer appears to be May-June for most years, even going back to the turn of the century.

But this year IS different so who knows!

Crikey
Guest
Crikey

Can somebody point to stats that show what is historically the highest-volume sales time of year? Some people say it is summer, some say spring, some say fall…

Crikey

N
Guest
N

@Vansanity:

This is from April, and we discussed it then. I think the consensus was, “Yeah, kind of. What else is new.”