Slumping into the Future

The economist Dave Madani is at it again.

He’s got nothing good to say about the Canadian real estate market.

According to Dave it’s a bit early to claim there will be a ‘soft landing‘.

Finance Minister Jim Flaherty has acted four times in the past five years to make mortgage-lending rules more restrictive amid concern that the Vancouver and Toronto markets were overheating. Flaherty has said he welcomes a slowdown of condominium construction in the two cities and has warned consumers, who have a record debt-to-disposable-income ratio of 165 percent, not to become overextended.

Madani, a former senior economist at the Bank of Canada, was the only person surveyed by Bloomberg News during the past two years who consistently predicted the central bank wouldn’t raise borrowing costs. Madani previously forecast home prices in the country would fall by 25 percent in the next few years.

Read the full article over at Bloomberg.

Sort by:   newest | oldest | most voted
VMD
Member

Fraser Valley REB Stats – as of May 21, 2013
13 of 22 work days
May 2013 Lists: 1907 Sales: 751 (-21% YoY)
May 2012 Lists: 1987 Sales: 949
source

real_professional
Member

Nice!

patriotz
Member

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/slowdown-nearly-half-of-canadian-home-owners-eager-to-buy-property/article12049307/

Another useless survey of future intentions. But there’s a dose of reality:

John Andrew, a real estate professor at Queen’s University in Kingston, Ont., said the high cost of real estate transactions make it unlikely that nearly half of all Canadian home owners will make a move in the next five years.

“A lot of people do not realize how high the fixed costs of moving really are,” he said. Once you factor in real estate commission fees, lawyer costs, land transfer taxes as well as the cost of the actual move, it adds up to a “staggering number.”

pricedoutfornow
Guest
pricedoutfornow

I don’t understand how any reputable economist can go on record saying “yippee, we’ve achieved a soft landing!” (which is all I heard on CBC radio last week)-when all I have to do is google “soft landing” and wikipedia tells me “Nice theory, but it’s never happened. Ever.” I think these economists are going to find they spoke too soon.

Q
Guest
Q
This is a strange article in the Globe and Mail. The headline is “One-third of Canadian households living paycheque to paycheque”. It talks about how people are making just enough money to pay their monthly expenses and have no money left over for saving. Then it jumps into why this is a reason for people to buy real estate! The message of the article seems to be that broke people should buy real estate! “The poll also shows that 25 per cent of Canadian households said they have never or almost never made savings contributions. And it found that the household savings rate has plummeted to 3.8 per cent at the end of 2012 from a peak of 19.9 per cent in the early 1980s. For those Canadians who are building up a nest egg, 80 per cent say they… Read more »
Q
Guest
Q

PS: Thanks to Many Franks who corrected me a few days back when I linked to a Vancouver Sun article about a con man. I erroneously gave the name of the author of the article as the name of the con man. I may have discredited my reading comprehension skills with that one, but I think I comprehended the above Globe and Mail article correctly.

Q
Guest
Q

So embarrassing! I actually did misunderstand the Globe article above. It’s not saying people should buy real estate. It’s saying people should pay off their mortgage faster. Totally embarrassed myself again. I guess I should finish drinking my coffee before posting in the morning.

s1
Guest
s1

@VMD

Do you have any estimates for GVRD’s stats compared to last years so far?

Thanks!

An Observer
Guest

Based on Paul B’s numbers:

2012 May to date
4460 listings
1833 sales (I believe last May had the lowest May sales in over a decade)

2013 May to date
3741 listings
1640 sales

Many Franks
Member

Beware more expensive debt in quest to pay mortgage:

Apparently, Canadians are paying off their mortgages faster. According to The Globe and Mail, in 2012, of the six million mortgage-holders in Canada, 1.9 million made additional payments. With interest rates at historical lows, extra payments bang down your mortgage even faster, so it makes sense to slap that extra cash onto your mortgage, right?

Well, not always.

The same research revealed that those same people, as a result of diverting extra funds to the mortgage, are building extra, more expensive consumer debt outside the mortgage.

It’s pretty detail-free, but anyway.

s1
Guest
s1

Thanks @An Observer, I was hoping we would come in with lower YOY sales. I guess we can’t constantly be below YOY in sales, when the previous year was so bad as Ben Rabidoux said.

Madashell
Guest
Madashell

Re:s1

We are about 193 lower in sale than 2012 according to the numbers from An observer. Thats more than 10% less from 2012!

jesse
Member

From an industry point of view, a “recession” is one with declining market for several quarters in a row. We can do some calculations on the Realtor market in Vancouver as to how their revenues have fared since 2011. By my quick calculations it looks as if they have been in a technical recession for about two years now. That is going to have to hurt.

Not that I’m happy about it — friends of mine are feeling the pinch — but luckily they have other things they can do to supplement their incomes, or have realized they had a windfall the past decade and provisioned accordingly.

Still, recession is recession, and for that particular business it’s deepening (so far).

Real Estate Pimp
Guest
Real Estate Pimp

I wonder if the editors of the Globe & Mail read their own paper,
One article says that half of Canadian homeowners are eager to buy property.
Another one says that 1/3 of Canadian households live paycheque to paycheque.
Hallooo!

CullBull
Guest
CullBull

What the bears always fail to understand is that the average Canadian is stupid. Millions of Canadians who live paycheque to paycheque are very likely eager to buy a home. It may not make sense to you but it is sensible to them. But wait! Maybe they are not stupid after all. People like that who bough a house in the last 10 years are laughing at the bears.

Democrass
Guest
Democrass

Globe and Mail online poll:

Are you planning to buy or sell a home in the next five years?

24%
1013
votes
Yes, I’m buying and selling

13%
530
votes
Yes, I’m buying only

11%
443
votes
Yes, I’m selling only

52%
2187
votes
No, I’m staying put

MORTGAGESSlowdown? Nearly half of Canadian home owners eager to buy property

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

@CullBull

I don’t think everyone that has purchased in the last ten years is laughing. What about those who bought a year ago? Just remember, he who laughs last laughs best.

jesse
Member

“People like that who bough a house in the last 10 years are laughing at the bears”

People like that who bough a condo in the last 5 years are not laughing at the bears.

Free advice: don’t go to Bloomberg.com today, and keep that laser focus on that “forced savings plan”.

crabman
Guest

@CullBull – When you include PTT and the extra monthly costs of buying vs renting, people that bought in the last 3 years are worse off than renters. The only laughter coming from them is nervous laughter.

Bull! Bull! Bull! @ pricedoutfornow
Guest
Bull! Bull! Bull! @ pricedoutfornow

From wikipedia:

“there is not one single verifiable instance of a soft landing following an economic bubble.”

You ASSUME that there is a bubble. If there is no bubble a soft landing is possible.

We are experiencing a soft landing because there was no bubble. that is what the HPI is showing right now

If you have evidence that shows a crash is in progress please present it.

The government has proven again and again that they are masters of the housing market.

It is simple bears, gov says buy; you buy. Gov says sell; you sell.

You guys over thought this whole thing lol.

If you just did as you were told you’d be rich, ROFL.

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

@BBB

How do you define a crash? I find it sometimes difficult to follow some of the back and forth debate without clearly knowing what you debating. For many, everything comes down to semantics.

crabman
Guest

From investopedia:

“A speculative bubble is usually caused by exaggerated expectations of future growth, price appreciation, or other events that could cause an increase in asset values… pushing prices beyond what an objective analysis of intrinsic value would suggest.”

We don’t assume there is a bubble, we know there is:
http://ca2ca.files.wordpress.com/2013/05/canada_us_pr_ratios.png?w=587
http://ca2ca.files.wordpress.com/2013/05/canada_us_pi_ratios.png?w=587

Whipper Snapper
Guest
Whipper Snapper

CullBull and Bull!Bull!Bull! You are really showing your age with your repetitive chant of “Shoulda bought 10 years ago…” I suspect that like me, many of the readers of this blog were in no position to buy 10 years ago. Personally, I have only been in a position to buy for about the last two years – which is when I found this blog. Should I have bought two years ago? Even you will have to admit that sitting tight, saving cash and investing in equities has been a better strategy for me over that time. I am not sure who your beef is with but I think it is time to let go.

logic
Guest
logic
Not much of a name...
Member
Not much of a name...

A day late, but here is my weekend report. I went for a walk down Lonsdale in NV on Monday and just for kicks I went into a couple of sales centres for two new condo developments that are due to complete in 2014. Both developments are now cutting their prices. One, is offering $10k discount on 1 bed units and $20k on two bed units. The other only stated that they have repriced their product.

The most interesting thing is that in both sales centres, after being advised of these discounts, “we will also accept offers”. If the Kimpton (mere blocks away) is any indicator, there will further discounts left. Oh, and both developments still had about 25% of the units to sell.

wpDiscuz