Housing market keeps on cooling

The Globe and Mail has an article about the drop off in real estate sales across the nation.

It’s got some gems in it for predictions from bankers and real estate associations, but it’s also got the standard partial information about ‘government interference’.

As evidence mounted that rock-bottom interest rates were fuelling house prices and consumer debt loads, Mr. Flaherty has changed mortgage insurance rules four times, each time making it more difficult for consumers to take on housing-related debt.

While the three previous rounds crimped both housing activity and the demand for credit, economists and real estate industry experts say this latest round, which took effect July 9, looks as if it is having a bigger impact.

And off course what’s missing is any mention of the government previous moves to make it easier for consumers to take on housing-related debt: moving amortization from 25 to 30 to 35 years, dropping down payment requirements all the way to zero down and shoveling money into mortgage buybacks via the CMHC.

So anyways, it’s getting harder to buy than it was when you could get a zero down mortgage with a longer amortization schedule.  And what sort of horrors has this wrought?

A number of economists, real estate agents, and industry observers say that many prospective first-time buyers have found themselves unable to secure a mortgage, especially in Toronto and Vancouver, and are therefore remaining renters.

Paula Roberts, a mortgage broker based in Markham, Ont., said one of her clients, a young teacher, was preapproved under the old rules, but now that she has found a home she likes, is having trouble securing the mortgage. She will likely have to get someone to co-sign the loan, or come up with a larger down payment, Ms. Roberts said.

“It’s really hindering people,” she said. “Her rent is basically the same as her mortgage payments.” In Ms. Roberts’ opinion, “it’s always better to try to buy something instead of rent.”

Of course, it’s always better to try to buy ..Says the mortgage broker.  Business slowing down Paula?

But this article ends on a bit of a down note for those hoping for a ‘plateau’

David Madani, a bearish economist at Capital Economics, reiterated his forecast Monday that house prices will fall 25 per cent in the next year or two. “The first sign of trouble at the peak of the U.S. housing bubble was that home sales began to drop in 2005, well before house prices began to fall in 2006,” he wrote in a research note.

Read the full article at the Globe and Mail.

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604 Receding Gains
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604 Receding Gains
As noted by Garth tonight: “Such things swirled in my mind as I listened to the reporter itemize the proposed ‘emergency actions’ he heard are being contemplated by government officials. There were three. First, a special fund which homeowners could draw upon to make mortgage payments if a real estate correction impacted their employment. Second, the ability to write mortgage interest off income tax, as is the case in the US (where houses cost a quarter what they do in Vancouver). Third, a ban on anyone losing their home for non-payment of a mortgage.” Speculators can be very well connected and highly motivated to save their ass. And they are apparently workin’ in to get mortgage concessions. So now we face the galling prospect of taxpayers guaranteeing their loans (through CMHC) and now eating their losses. Anyone know how to… Read more »
asalvari1
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asalvari1

@Anonymous:

Bag it and tag it / Anon

Thank you very very much for this info. As much as simple and minute it may look to you, trust me, I did not know that getting rid of the smell in this easy way is possible.

Which also begs the question: Why all these people live in stinky houses?

yvr2zrh
Member
Couple random things. 1.) This is the same comparative week during the year at which inventory peaked in 2008. 2.) Condo sales are really slowing and will come in about 15% below 2008 same month while detached will come in a bit higher. 3.) North Van, West Van and Burnaby – all dead and all forecasted to sell the same number of units this month. For a city like Burnaby, that has to be a disaster. 250K people and only 35 detached houses sell in a month? 4.) Avg Apartment price will spike this month a bit. 2 have sold at close to 5 Million this week alone. Penthouse in Jameson finally moved. 5.) We will be lucky to reach 18,600 REBGV inventory at end of month. 19K is not possible and given the typical slowdown of listings in October,… Read more »
gokou3
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gokou3

@Anonymous: I used to (10 years ago) drive along W. 2nd ave everyday in rush hour. There were rarely traffic jam. But recently, I drove by again, in off-peak hour, and traffic was very heavy. Not trying to sound anti-development, but just an observation that the traffic is a direct result of the new buildings in the area.

YLTNboomerang
Member

And another 2k one bedroom:

http://vancouver.en.craigslist.ca/van/apa/3209534572.html

We are in the same area, 980sqft, 2 yr old building 2bdrm for 1900 plus we have storage and a much better location!

YLTNboomerang
Member

Here’s another, same bldg, 2K for 1 bdrm…dream on sucker

http://vancouver.en.craigslist.ca/van/apa/3280163460.html

YLTNboomerang
Member

@mac: Mac, all these condo’s between 2nd and the Olympic village are teeny tiny too so no long term marketability. The new building on 8th 3 blocks west of cambie has many units listed on Craigslist all at least 300 over rents for buildings in the same location and same size. The newer the building the smaller the unit and the higher asking rents. The speculators that bought these places are bleeding cash now that the building I occupied and nobody renting. Here’s an example asking 2280 for 805sqft…good luck with that!

http://vancouver.en.craigslist.ca/van/apa/3254943759.html

Vote Down The Facts
Guest
Vote Down The Facts

@mac:

Don’t forget the Concord Pacific area south of the viaducts.

market stats
Guest
market stats

@VanDweller expired listings

Looks like sept is on course to be significatly higher than 2011. I also don’t have the data in spreadsheets, if someone were to have the paulb dailies in some columns it may not be that hard to parse out.

Anonymous
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Anonymous

@mac
I can’t believe all the condos being built on 2nd between main and cambie….just drove by that area yesterday for the first time in months, my jaw dropped

mac
Member
mac

My neighbour in the Olympic Village counted up all the condo towers under construction. He counted 14 projects in various stages. Fourteen!! Plus I think there’s a new one at Cambie & 7th. Plus another new one on West Broadway just west of Cambie…

It’s amazing. Plus there are lots of lots with crap old buildings just waiting to be torn down in the same vicinity and then the real “last waterfront development” directly West of the OV, which will block everyone’s view of the city.

Double plus the slope between W. Broadway/Cambie/Main/W 2nd Ave is a natch to be developed just like the Armoury District was. Developers are really going for it over here.

N
Guest
N

I’ve been running with the same fairly large group for a year now. Every time the conversation has gone to real estate, the verdict has always been that Vancouver will never go down. Now, all of a sudden, these same people are saying that the bubble is “finally” bursting, and the group members are teaching each other new terms like, “under water.” It’s amazing how fast it goes.

mac
Member
mac

@admin: Yes. I agree. There are some good improvements from your side. It would be nice if there would be some improvements from our side, so that those of us who want to hear from reasonable bulls can.

HAM Solo
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HAM Solo

@ Anonymous – don’t know, was talking casually with an acquaintance who works for Avison Young

VanDweller
Member
VanDweller

@market stats: I would also be interested in what the expired listing trends are. I only have paulb’s stats. Thanks man!

For what it’s worth this is the data I have:

Date        Expires
2012 Sept   2058 (so far)
2011 Sept   ~2414
2012 Aug    2888. 
2011 Aug    n.a.
2011 Oct    2758

http://www.paulboenisch.com/

Anonymous
Guest
Anonymous

@HAM Solo: Where are they?

Anonymous
Guest
Anonymous

@Anonymous: “We’re these for sale?”

Yup it is our old buddy Gary. Enter his phone number in the CL search to see all Westside houses he has for rent. He has had dozens over the past couple of months, all vacant and look like failed flips.

HAM Solo
Guest
HAM Solo

Well, blow me down, another sub 100 sales day. I found out today another 2 dedicated apartment buildings under construction. WTF?!? Unfortunately I don’t know the details. It seems illogical that a developer would borrow $$ in order to build a building that would negative cash flow. Maybe they had a condo project underway and switched the plan as a face saving reaction once they realized it wouldn’t sell. Or maybe it is dumb REIT hubris money?

Anonymous
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Anonymous

@asalvari1:
I rented one from A & B tool rental on Main St @ 23rd. It was about $50 for 24hrs I think. Simple to do it yourself…they can answer all your questions.

Anonymous
Guest
Anonymous
market stats
Guest
market stats

@VMD or VHB re delists/expired listings

Do you have historical data on the expiration totals over time. I sense there are a lot of delists in comparison to prior years. If so you might interpret that there is a larger than normal proportion of sellers who don’t have an mls listing at the moment.

I have also noted driving by a few sales signs recently which were mls listings previously but never sold and still appear to be for sale, eg. show up on realtors listing page. In any case some hard numbers might support the anecdotal evidence.

VHB
Member
VHB
Sep-2012	
Total days	19
Days elapsed so far	11
Weekends / holidays	7
Days missing	0
Days remaining	8
7 Calendar Day Moving Average: Sales	78
7 Calendar Day Moving Average: Listings	281
SALES	
Sales so far	877
Projection for rest of month (using 7day MA)	626
Projected month end total	1503
NEW LISTINGS	
Listings so far	3363
Projection for rest of month (using 7day MA)	2245
Projected month end total	5608
Sell-list so far	26.1%
Projected month-end sell-list	26.8%
MONTHS OF INVENTORY	
Inventory as of September 18, 2012	19146
Current MoI at this sales pace	12.74

Inventory growth has really slowed. Lots of delists. But those sales are still weaky weaky weak!

gokou3
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gokou3

@joe_blown_away_by_high_housing_costs: Thanks for your explanation. Sounds like another mess.

ScubaSteve
Member
ScubaSteve

Sorry meant “triple digit” sales days.

ScubaSteve
Member
ScubaSteve

Here is the updated chart with Paul’s latest stats. As we can see, we are now 12 sales days post-Labour day and we’ve only had 1 double-digit sales day. In 2011, we had 11 double-digit days at this point.

http://i45.tinypic.com/23sjg3b.gif