How the boom ends: whimper or bang?

So we’ve gotten to the point where it’s pretty unanimously agreed that real estate in Toronto and Vancouver is over-valued and due for a correction.

The question now is what sort of an end to this housing boom we will be looking at.

Will this be an explosive toppling of values, a market that runs head first into a wall, or will it be a simple slow leak for years and years?

..And which would be better?

You can add David Rosenberg to the list of people that say ‘whimper, not bang‘.

His latest comments fall into the ‘not a bubble, a balloon’ camp:

“Prices are starting to deflate by 0.8% YoY, though more like air coming out a balloon slowly than a giant pop,” wrote Rosenberg Tuesday in his morning note.

“It is gradually becoming a buyer’s market with the inventory of unsold homes rising to six month’s supply, which is at the edge of a balanced market.”

Of course most of that drop nationally is being driven by Vancouver where everything is falling fastest.  What remains to be seen is whether the current drop will remain even or accelerate.

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good-format
good-format
8 years ago

http://vancouverpricedrop.wordpress.com/

Increase by region over the 19 weeks

Burnaby         +69%
Vancouver East  +48%
Coquitlam       +41%
West Vancouver  +39%
Sunshine Coast  +37%
Richmond        +31%
Vancouver West  +28%
Surrey          +20%
White Rock      +16%
Abbotsford      +15%
Langley         +12%
Maple Ridge      +9%
Mission          +3%
good-format
good-format
8 years ago

Single Family Home Inventory Graph

Richmond’s inventory is at the highest point in the history.

http://vancouverpricedrop.files.wordpress.com/2012/07/inventory.jpg

Anonymous
Anonymous
8 years ago

@Navin R. Johnson:

“This argument kind of reminds me of how when the “right” in the US refers to Europe crumbling in debt due to its socialist policies, but fails to recognize that its own country is all but dead due to globalization and the pro big business agenda…”

Riiight, that would explain why open economies that engage in free trade are so poor, and the US states most predisposed to business like Texas are doing worse than everyone

You’re just emoting. Try thinking.

Navin R. Johnson
Navin R. Johnson
8 years ago

This argument kind of reminds me of how when the “right” in the US refers to Europe crumbling in debt due to its socialist policies, but fails to recognize that its own country is all but dead due to globalization and the pro big business agenda…

Navin R. Johnson
Navin R. Johnson
8 years ago

@Anonymous:

What part don’t you get?

Where is the information showing NDP policy directly slowed growth during the 90s?

Navin R. Johnson
Navin R. Johnson
8 years ago

@Anonymous:

Also, if your point is to prop up the current regime, citing these guys moved us forward, I’m not sure that article works for you…doesn’t it state that the under the Libs the economy has declined in the last 10 years? And you state that this one was wiritten by a pro NDPer? Find me a Liberal article then? Oh, that’ll be easy….. Fraser Institute…

You got nothing, but opinion… “other forces” are the world economy which local economy has very little control over

Anonymous
Anonymous
8 years ago

@Navin R. Johnson: “the pure data that you so desperately want just isn’t there”

What part of this don’t you get:

“During the NDP decade, B.C. had growth well below the national average in the 1990s and real personal disposable income per person fell by four per cent.”

Navin R. Johnson
Navin R. Johnson
8 years ago

@Anonymous:

Keep workn’ it! In other words, the pure data that you so desperately want just isn’t there for you, right?

Anonymous
Anonymous
8 years ago

@Navin R. Johnson: “Your rebuttal was totally predictable…. Have anymore lines you’d like to pluck from the article and hang them out there “out of context?””

The article has facts and opinion. The facts were quoted. The opinion was not. Facts cannot be ‘out of context’.

Anonymous
Anonymous
8 years ago

@Navin R. Johnson: “it was other forrces…”

Yes those mysterious ‘other forces’ that could not penetrate other provinces or states. As the world was enjoying good times other forces were keeping BC down. Then mysteriously the ‘other forces’ vanished once the NDP lost the election. You have a great imagination.

Anonymous
Anonymous
8 years ago

@Navin R. Johnson:

You first start out denying BC under the NDP faltered compared to other provinces but when I show you the facts even using the pro NDP article written by an NDP supporter you then claim it was not the NDPs fault. Too funny.

Navin R. Johnson
Navin R. Johnson
8 years ago

@chip:

As I said before, I’m no fan of the NDP as the party is a bumbling mess, hence they elected another has-been to lead them. But, the article even states that despite what the Libs have been touting about how the NDP screwed up province in the 90’s, the article suggests it was other forrces…

Navin R. Johnson
Navin R. Johnson
8 years ago

@Anonymous: Yeah , I read that too. Why? The article seems to suggest that it wasn’t due to “NDP policies”.. Rather, other forces…

Your rebuttal was totally predictable…. Have anymore lines you’d like to pluck from the article and hang them out there “out of context?”

chip
chip
8 years ago

The Liberal Party is pretty hideous and Christy particularly so. But you can’t sugar coat the NDP’s performance in the 90s.

We went from GDP per capita that was 6% above the national average to 9% below by the end of the decade. A net number of people started to leave BC and for the first time we became a ‘have not’ province.

And the debt doubled. Today paying about $1.5 billion in interest every year.

Looking ahead, we probably have the NDP returning to power under an – even for them – left wing leader, the housing market crashes and the shale oil/gas revolution takes off all over North America while BC doubles down on the green economy.

Fun, fun, fun.

Navin R. Johnson
Navin R. Johnson
8 years ago

@BurbsBoy: Very astute evaluation! Agreed..

Anonymous
Anonymous
8 years ago

@Navin R. Johnson: “Better yet..why don’t you show us the comparative information to that statement.”

See previous post…

Anonymous
Anonymous
8 years ago

@Best place on meth:

From your article:

“In its first report on Valentine’s Day, 2002, the board looked back at the 1990s. During the NDP decade, B.C. had growth well below the national average in the 1990s and real personal disposable income per person fell by four per cent.”

Nuff said.

BurbsBoy
BurbsBoy
8 years ago

On topic… one word… Psychology. As much as I am a numbers guy and would love to think they matter, the reality is that people didn’t watch the numbers on the way up and they will not on the way down. As soon as the market has a sustained multiyear dip (say spring of 2013 still in decline) then this market will tank quickly. So my bet is a very slow 2012 decline, then faster spring 2013 decline, then a very rapid late 2013 decline.. and then a few years of generally slow declines until we are nominally 30% down.

Navin R. Johnson
Navin R. Johnson
8 years ago

To me, and my fellow bears, this spring run- up of listings only sets the table for a beautiful rush to the exits this fall when all the re- listing happens. There is still a ton of inventory out there…

jesse
8 years ago

Olympics? Come on, we’re past that!!! Try harder!

jesse
8 years ago

@VHB: “No sign of panic among sellers…”

I would think people who have sold — sellers — would be the last ones to panic. Rather, those who haven’t sold but are trying should be concerned. Inventory is likely to remain elevated for years unless population growth rebounds quickly.

Best place on meth
Best place on meth
8 years ago

@Anonymous:

“Why don’t you show us a graph of BC compared to other provinces during the NDP years? BC was the worst performing province.”

I’m sorry, what was that?

http://www.theglobeandmail.com/news/british-columbia/compared-with-other-provinces-bc-worse-off-in-2010-than-2000/article4181719/

Navin R. Johnson
Navin R. Johnson
8 years ago

@Anonymous: @Anonymous:

#85

Better yet..why don’t you show us the comparative information to that statement. And if you find it, which I doubt, tell us why…exactly.

You’re just spewing pseudo- Liberal propaganda which we’ve hear time and time again by bullshit Gordo and Crusty comments…

Anonymous
Anonymous
8 years ago

@fixie guy: “It’s funny when people can’t read graphs. The 90′s economic growth was roughly between the SoCred and Liberal in performance. BCStats confirms the linked Tyee article.”

Why don’t you show us a graph of BC compared to other provinces during the NDP years? BC was the worst performing province.

VHB
VHB
8 years ago
Jul-2012	
Total days	21
Days elapsed so far	12
Weekends / holidays	6
Days missing	0
Days remaining	9
7 Calendar Day Moving Average: Sales	112
7 Calendar Day Moving Average: Listings	225
SALES	
Sales so far	1402
Projection for rest of month (using 7day MA)	1004
Projected month end total	2406
NEW LISTINGS	
Listings so far	3033
Projection for rest of month (using 7day MA)	2025
Projected month end total	5058
Sell-list so far	46.2%
Projected month-end sell-list	47.6%
MONTHS OF INVENTORY	
Inventory as of July 18, 2012	19180
Current MoI at this sales pace	7.97

New listings have fallen sharply in last 10 days. The 7-day MA on Juy 9th was 284. Today 225. No sign of panic among sellers…