How much more will Vancouver prices drop?

Scotiabank is now warning about the housing market falling across Canada.

They are predicting a nationwide drop of 10% over the next two to three years.

That’s the national drop they predict, saying bigger drops are coming to Vancouver and Toronto.

But how much more overvalued are we on a national scale and what sort of drops will we see here and in Toronto to drive national prices down 10%?  They don’t say, but they do remark on how long it took earlier market declines to recover:

The report notes that previous housing market downturns — in the 1970s and 1990s — took eight or nine years to bounce back to price levels seen before the decline.

“Historically, long cycles of rising home prices have been followed by extended periods of persistent softness, allowing affordability to be gradually restored and generating renewed pent-up demand,” the report stated.

The bank also warned that “balance sheets heavily skewed to real estate leave Canadians vulnerable to an adverse shock, including a sharp rise in unemployment and/or a sharp drop in home prices.”

The report predicts a “spillover effect” into construction employment, which — thanks to the massive run-up in house prices — has seen employment grow twice as fast as the economy as a whole.

However, “the full impact of the slowdown may not become fully visible until mid-decade,” the report stated.

Read the full article here.

 

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[…] are weakening. Last I heard they are waiting for the market to bounce back next year.” – RaggedyRenter at VCI 12 Nov 2012 10:16pm [This story, or one very similar to it, also featured on local radio, 14 Nov 2012. -ed.] Share: […]

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[…] “My friends are looking for a house in North Van and they’re lowballing all the time. There is a place in Lynn Valley for sale and asking price was 860k 2 months ago. They made an offer for 760k less than assessment. It was rejected back then, but seller appeared last week and said that they are ready to sell for 760k now. My friends took a look again and decided that they don’t like it anymore. So, 100k discount in 2 months… There are motivated sellers out there!” – Aleksey at VCI November 13th, 2012 at 5:44 pm. […]

604x
604x
7 years ago

:

If CMHC agrees to roll over its guarantee on negative equity loans then the banks will extend and pretend…..and skim a fee for administration of this game.

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[…] like it anymore. So, 100k discount in 2 months… There are motivated sellers out there!” – Aleksey at VCI November 13th, 2012 at 5:44 pm. Share: This entry was posted in 09. Delaying Buying, 16. Missed The Boat? and tagged Anecdotes, […]

patriotz
7 years ago

@Vote Down The Facts:
“Probably more to do with commodity prices and falling global demand, IMHO.”

Remember that Canada was already running a trade deficit before commodity prices started falling.

patriotz
7 years ago

@604x:
“My interpretation on “extend and pretend” relates to an expectation that CMHC will find a way to roll over underwater mortgages and allow renewals”

CMHC insurance does not get renewed. It’s paid for at the time the loan is made and is valid for the entire amortization period. It’s the banks which renew mortgages, and if they are insured the banks don’t care if they’re underwater. The OSFI changes which were first floated would have required banks to call underwater mortgages, but that was dropped.

Oh Oh
Oh Oh
7 years ago

I think the only listing in the entire GVRD that has not dropped its price is Larrys $8.5m haunted house. That ones gonna take a spanking when it finally sells.

Dan in Calgary
Dan in Calgary
7 years ago

@MM, “And what about the idea of a Strata that puts an upper age limit on tenants? I’m sure it would appeal to some.”

Don’t know if it would be legal or not, but there is a news story that new research shows ageism is widespread and tolerated in Canada, so it would probably fly OK with everybody.

604x
604x
7 years ago

@BoomerNation

Great comments. The Boomers have rigged this game.

604x
604x
7 years ago

@Extend and Pretend.

Thanks!

My interpretation on “extend and pretend” relates to an expectation that CMHC will find a way to roll over underwater mortgages and allow renewals even when clearly on negative equity housing. They’ll extend the loan for another 5 years and pretend everything is just fine. They’ll all hope it all sorts itself out by the next renewal. And the poor suckers stuck with the house will be frozen in place – unable to sell and on a debt payment treadmill.

VHB
VHB
7 years ago

@MM: What about one that only allows hot chicks? (Oh, and me and my carefully selected buddies get to live there too–and we buddies have veto power in case the hot chicks start letting themselves go.)

I’m not serious–just trying to point out how interesting it is that we allow discrimination on one dimension (age) but not on others (sex, race, language, hottitude, etc.)

MM
MM
7 years ago

@bubbly: I wouldn’t take children to a strip club, and they wouldn’t allow us in if I did. The rules are there to protect the children, because strip club owners would likely welcome underage paying customers, but they would get in deep trouble with whoever licenses these establishments if they did.

But what does that have to do with housing?

And what about the idea of a Strata that puts an upper age limit on tenants? I’m sure it would appeal to some.

Vote Down The Facts
Vote Down The Facts
7 years ago

@patriotz:

Probably more to do with commodity prices and falling global demand, IMHO.

patriotz
7 years ago

http://www.cbc.ca/news/canada/story/2012/11/13/pol-flaherty-fiscal-update-fall-economic-statement.html

A weakening global economy will result in a dramatic increase in Canada’s deficit this year, Finance Minister Jim Flaherty said Tuesday in his fall economic statement. That weakness will be persistent enough to push his goal of eliminating the deficit another year down the road.

Nothing to do with consumer debt hitting a wall and falling RE prices?

OK Jim.

VHB
VHB
7 years ago
Total days	21
Days elapsed so far	8
Weekends / holidays	5
Days missing	0
Days remaining	13
7 Calendar Day Moving Average: Sales	82
7 Calendar Day Moving Average: Listings	143
SALES	
Sales so far	650
Projection for rest of month (using 7day MA)	1063
Projected month end total	1713
NEW LISTINGS	
Listings so far	1190
Projection for rest of month (using 7day MA)	1853
Projected month end total	3043
Sell-list so far	54.6%
Projected month-end sell-list	56.3%
MONTHS OF INVENTORY	
Inventory as of November 13, 2012	17501
Current MoI at this sales pace	10.22
N
N
7 years ago

@Aleksey:

None of those sales will have resulted from this weekend’s open houses. Even imagining that the buyer’s offer were to be accepted at the open house, there are things that need to be done before it shows up as a sale. It takes at least several days.

Extend and Pretend
Extend and Pretend
7 years ago

@Not much of a name…: $739K to $699k vs $100K 2 year insurance. Please post more of these if you find them. This is very interesting. It is rare to find identical properties priced by two mathematically comparable methods. This situation affords estimating buyer beliefs about price decline as a probability number. The private seller offering $40K today is giving the so called “certainty equivalent” value of the $100K insurance. The private seller believes that there are some buyers for which $40K today is worth more than the expected payout of the $100K insurance policy after 2 years for the developer property. Another way to write this is that the expected payout of buyers is less than $40K out of $100K after the unknown events including price declines and recovery bounces after 2 years. Therefore, the private seller thinks that… Read more »

jesse
7 years ago

Ahem.
Daily sales from November 2011:

116
120
167
106
136
118
87
107
141
137
98
125
105
135
102
101
91
91
106
130
107
Aleksey
Aleksey
7 years ago

BTW another bearish anecdote.
My friends are looking for a house in North Van and they’re lowballing all the time. There is a place in Lynn Valley for sale and asking price was 860k 2 months ago. They made an offer for 760k (less than assesment). It was rejected back then, but seller appeared last week and said that they are ready to sell for 760k now. My friends took a look again and decided that they don’t like it anymore. So, 100k discount in 2 months… There are motivated sellers out there!

Troll
Troll
7 years ago

@Conrad: If by ‘coming back’ you mean down by 30%, then yes, sales are coming back very nicely.

jesse
7 years ago

@vangrl: “exceptions are not allowed”

Exceptions are allowed however they’re difficult to justify in certain cases.

vangrl
vangrl
7 years ago

are those sales all since last Friday, or did I miss yesterdays stats?

Aleksey
Aleksey
7 years ago

@paulb:

104 Sold Listings after the looong weekwnd with a loooot of open houses. It is happening.

Conrad
Conrad
7 years ago

wow sales are really coming back nicely. Looks like a good fall market to me

vangrl
vangrl
7 years ago

“I saw this BTW in one strata where a member claimed discrimination, and it went all the way to the BC human rights tribunal before it was dismissed. This cost the strata tens of thousands of dollars in legal fees. It could have been mostly avoided if they had shown consistent application of their bylaws.”

yes the bylaws must be enforced, exceptions are not allowed.
Allowing children previously was not wise of council, and this could potentially cost them….I’ve seen it before as well