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Is the boomer wave crashing?

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101 Comments

Pacifica Partners has released a new report on the housing market and there’s a write up over at the Globe and Mail.

Anyone still think the housing market’s going to snap back from the weakening trend that has taken hold in the past couple of months? It’s not, so act accordingly. Adjusting our expectations about housing won’t be easy because we’ve seen prices rise dramatically. Canadian Real Estate Association numbers show an average annual price gain of 7.7 per cent over the past 10 years on a national basis.

Aman Bhangu, Pacifica’s vice-president of research, said real estate has performed a lot like stocks did before the twin stock market crashes of the past decade. “At the end of the 1980s and 1990s, you had that mantra of ‘buy and hold, stock markets always go up, just get in there.’ It’s likewise with real estate – ‘real estate always goes up.’”

Mr. Bhangu said that taking a fresh look at the fundamentals supporting the real estate sector suggests prices are overvalued today by one-third, while other estimates call for a price decline of 10 to 25 per cent from current levels. Forecasts like these are educated guesses, whereas the demographic impact on housing is rooted in basic numbers.

It’s worth reading both the original report in full, there’s lots of interesting graphs there.

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Moivng to the States

“They do not make more land.”
They didn’t make more land since dinosaurs roaming the surface of the earth.

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Vulture Fun

Zerohedge just posted an interview with Marc Faber. He talks about the Canadian housing bubble at 38:45.

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RaggedyRenter

@uh huh
Dude, try http://www.clearlycontacts.ca
My glasses used to cost me north of $500 too. Not anymore.
It’s crazy how internet kills all these value-added services like brick and mortar stores, travel agents, brokerages. Maybe 10 years from now real estate agents will be a historical footnote like milkman.

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Achilles HELOC

S&P Lowers credit ratings on six Canadian financial institutions, including BNS, Home Capital Group, Laurentian Bank, National Bank of Canada, as well as credit standards all-stars Central One and Caisse Centrale Desjardins. Party on bears!

http://www.theglobeandmail.com/report-on-business/sp-lowers-ratings-on-canadian-financial-institutions/article6351084/

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uh huh

My prescription sunglasses cost about $500 dollars. They are marked up several hundred times due to being subsidized by insurance companies and employers. The Canadian housing market has been subsidized similarly by way of low interest rates and favorable lending practices over the last decade. If prescription glasses ever become exposed to real market forces, the price would plummet. the Canadian housing market will one day lose the benefit of ultra low rates and loose lending standards and will inevitably have to stand on it’s own, within a more harsh, less supportive, exhausted real estate market. Do you think we are living in the midst of a colossal economic boom and the entire country just coincidentally decided to jump into the market? This real estate market has been artificially pumped up and without indefinite support it will inevitably fall back… Read more »

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Billy Bob

“Anon: “Add a newly elected NDP in 2013 and things really look bleak for the BC economy.”

brrr….are the opening of Gulags in the plan? more doom porn from the bears.

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Anonymous

@Bo Xilai

Yet another totally meaningless anectdote. Is this the “feelgood pablum” Con-Rad was talking about?

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Romeo Jordan

Hey, did McLoser buy his McMansion yet?

When that idiot buys we know the last great fool is aboard.

Looking for 20% down year over year by May 2013. And that’s just the warm up act.

I know you love me. They all do.

xoxoxo

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Anonymous

“That is the Globe and Mail, folks.”

Add a newly elected NDP in 2013 and things really look bleak for the BC economy.

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Anonymous

“Maybe the 15-20% worked hard, saved money, opened a business or did something to achieve their monetary success. Perhaps they made a ton of sacrifices and gave up a lot to get where they are?”

Or they are using a HELOC to live above their means. Personally the people I know who live like this are in debt up to their eye balls and will be in the poor house once real estate corrects. Enjoy those vacations while you can.

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Chem guy

@Girlbear

Their kids will have a nice place to live for free when they go to uni as that’s all these lame way houses will be good for down the road “relative housing”. grown up kids and elder parents.

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patriotz

Harsh reality darkens B.C. premier’s sunny debt forecasts Last year’s projections in B.C. for natural gas revenues have become irrelevant. Royalties have shrivelled to peanuts in the current economic environment. In the meantime, the housing market has slowed to a crawl. Not only are fewer homes being built, but the sale of existing homes can now safely be described as worse than sluggish. In a real estate-centric market such as Greater Vancouver, this has a trickle-down effect. The government is seeing significantly less tax money from property transfers and goods and services associated with the real estate market – the sale of furniture and appliances, for example. The news gets worse when you consider that British Columbians have the highest personal debt levels in the country, thanks in part to the massive mortgages they carry. A drop in house prices… Read more »

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painted turtle

“They do not make more land.”
Well, not really: Just bring in Chinese developers:
http://beforeitsnews.com/media/2012/12/moving-mountains-for-new-chinese-city-2450282.html

Problem solved 😉

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mclovin

“In my circle, about 15-20% of the people I know are gone out of the country for the Entire month (2nd homes, vacations, etc.) Yes, the entire month! Like I said, about 20% of the population is getting richer while the lower 80% is fighting amongst themselves. It is what it is.”

This sounds awfully NDP. Maybe the 15-20% worked hard, saved money, opened a business or did something to achieve their monetary success. Perhaps they made a ton of sacrifices and gave up a lot to get where they are?

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Anonymous

From that bastion of radical marxist analysis known as Reuters: “In the long buildup to the global financial crisis, households took on debt to offset the gradual fall in their incomes and consumption relative to the more wealthy. But as they’ll get little or no help from easy credit today, driving wages down even more risks a cratering of household consumption and a severe test of social cohesion… While the share of U.S. gross domestic product going to wages and salaries has fallen 10 percentage points to about 43 percent since 1970, the slice going to companies in after-tax profits has surged, doubling to 12 percent since 2005 in what HSBC described as “one of the most chilling charts in finance.” Whether you fear the impact on people’s aspirations and sense of social justice or the sustainability of the corporate… Read more »

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patriotz

Chinese miner launches human rights complaint against union

Steve Hunt, the union’s western Canadian director, says the accusation is bizarre, because his union has been fighting for workers rights.

Hunt said the letter was written on HD Mining letterhead, and he says the union knew it would only be a matter of time before the company made racial accusations.

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Troll

@Bo Xilai

You met someone on a flight from Vancouver….who was leaving Vancouver. What are the odds?

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Billy Bob

@Bo Xilai
yup. it must be that affordable housing in Australia deciding factor. one anecdotal family, o well it must be a trend. Gordie Campbell also moved out of Van. scary

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Bo Xilai

I was on a flight yesterday from YVR… A nice young couple with a 2 year old were seated next to me. An English guy and his Quebecois wife. They were living in North Vancouver but were decamping and moving to Australia… They had enough of Vancouver’s horrible weather, expensive real estate and meagre job market.

Chalk one up for another young family moving out of the BC Lower Mainland.

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VHB
Dec-2012	
Total days	19
Days elapsed so far	9
Weekends / holidays	4
Days missing	0
Days remaining	10
7 Calendar Day Moving Average: Sales	66
7 Calendar Day Moving Average: Listings	81
SALES	
Sales so far	609
Projection for rest of month (using 7day MA)	658
Projected month end total	1267
NEW LISTINGS	
Listings so far	834
Projection for rest of month (using 7day MA)	808
Projected month end total	1642
Sell-list so far	73.0%
Projected month-end sell-list	77.2%
MONTHS OF INVENTORY	
Inventory as of December 13, 2012	15407
Current MoI at this sales pace	12.16

I don’t want to make a big deal about December numbers because it is such an inconsequential month, but man these are not strong numbers.

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Girlbear

I swear I would feel like I was living in a dollhouse if I lived here…

http://vancouver.en.craigslist.ca/van/apa/3476836496.html

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real_professional

Avatar test – vote me down people

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real_professional

The growth of debt accumulation in Canada has slowed – and I am talking about consumer not mortgage. It is, however, still growing. I am thinking it isn’t declining because people just need the credit now to pay the bills. The belief that consumers are putting their finger in the air at the Bank of Canada doesn’t make complete sense. On the mortgage front, yes, I think people are playing poker with the devil. But on the consumer side, not so much – that is at least what my gut is telling me. Obviously consumers are trying to hold on to their way of life before making drastic cuts necessary to begin paying down their debt. But an increasing amount of people seem to be debt dependent. If they had their way they would walk around with an IV drip… Read more »

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Girlbear

Actually I think Nordstrom’s announcement of entry into the Cdn market was the canary in the coal mine..large US companies always seem to come into Canada at the top of the market. Think Schwab Canada right before the tech bust.

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paulb

New Listings 88
Price Changes 45
Sold Listings 60
TI:15407

http://www.paulboenisch.com

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