Goldman Sachs latest to warn about Canadian house prices

Ah, Canada.

Are we careening towards a sharp correction in house prices across the country, or are we just comfortably ensconced in the new value of property?

A Goldman Sachs report is the latest voice of warning about overbuilding and overpriced houses in this country.

Adding its voice to a growing chorus of concern, a report from Hui Shan, an economist at Goldman, late last week warned: “what goes up can keep going up, but then tends to come down.”

Ranking high-growth property markets in the last four years, Canada comes fourth behind Israel, Norway and Switzerland, according to her research. But unlike some other markets, construction activity has been trending up for years and has not shown signs of slowing down in Canada, she explained.

“If the elevated level of homebuilding persists in coming years, the risk of overbuilding will increase substantially. And if the ongoing housing boom is followed by a housing bust, the price decline can be quite significant given the excess supply of housing at that point,” she said.

On the bright side for some, they are predicting that prices could still see some upside before correcting.  Read the full article over at CNBC.

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wedding headpieces

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[…] Boomer / 50 mins ago November 1, 2013 Over on Vancouver Condo Info, Ham Solo shares the data from BC Foreclosure filings for Oct. 31, 2013 and month to date totals. […]

reasonfirst
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reasonfirst

Traveler Says:

“Don’t think I’ll be coming back to this site regularly if so many readers approve of posts like that one.”

That sounds like an emotional response…

VMD
Member

Oct vs Sept (same year) Sales: (2003-2012 10Y Avg = +4.4%)
2003: +12%
2004: -3.9%
2005: -7.3%
2006: +8.1%
2007: +9.1%
2008: -14%
2009: +4.1%
2010: +5.3%
2011: +3.2%
2012: +27%
2013: 0% (Oct/13 sales flat vs Sep/13)

2013 vs 2012 YoY Monthly Sales:
May: +1%
Jun: +12% (Fixed rates started rising, last chance to get 5Y 2.79% preapproval)
Jul: +40%
Aug: +52%
Sep: +64%
Oct: +28% (declining YoY gain)(Running out of low-rate-holds?)

2013 Monthly Sales vs 10Y Same-Month Avg Sales
Jan: -18.7%
Feb: -30.9%
Mar: -30.2%
Apr: -20.9%
May: -19.4%
Jun: -22%
Jul: +0.1%
Aug: -4.6%
Sep: -1%
Oct: -8.1% (looks like 120 day preapproval is starting to expire now?)

VMD
Member

Estimated October 2013 Stats:

2013 vs 2012
Sales 2480 vs 1931(+28%)
Lists 4140 vs 4323 (-4.2%)
Ratio 61% vs 46%

Est Month end Inventory: 15340 vs 17370(-11.7%)
MOI:6.2 vs 9.0 (Oct/12) vs 6.5 (Sept/13)

Historical Oct Sales: (2003-2012 10Y Avg=2700)
2002: 2866
2003: 3765
2004: 2734
2005: 3099
2006: 2722
2007: 3028
2008: 1364
2009: 3704
2010: 2337
2011: 2317
2012: 1931
2013~2480 (-8.1% vs 10 year average)

D.Pratt
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D.Pratt

@yvr2zrh

did you have a make up sex after failed bid for a plate? Just kidding 🙂
buy her a flowers tomorrow.

yvr2zrh
Member
Well – #38 managed to get me more down votes in total that I’ve had in the past 2 years combined. Thank you for the various responses – and I was not really completely serious about not taking a woman to a bidding war because she is emotional. I can tell you that the Man’s desire to “Win” and beat the other Man can also bid prices higher. What I think we should all take away (especially if we have never been in some type of auction) is the following: 1.) Discuss this together and agree on process together. 2.) You may be willing to pay more than fair value – but don’t even end up paying more than you are willing to pay (if that makes sense) just to win. 3.) You will probably put a bid in which… Read more »
$85B/mo or Bust
Guest
$85B/mo or Bust
@Would Be Buyer. You should buy, but figure out a way to protect your assets first. Evidently there is a well defined line between counseling bankruptcy fraud and simply taking advantage of a flawed system. The day may come when government will no longer insure anything. Until that day you may as well take advantage. If more people did so, those that are laughing today about their “genius” high leverage RE investment will receive the appropriate comeuppance in the form of the inevitable sovereign debt default and soul crushing poverty for the rest of their lives and their children’s lives. Regarding your $1M one property high ratio insurance problem. Maybe it can’t be insured, but apparently two properties totalling more than $1M can qualify for government mortgage insurance. Check this out: http://www.youtube.com/watch?v=HYExdCm_fMo The only way to put an end to… Read more »
VMD
Member

an article from BIV last month which I just came across, discussing the “dramatic rise in demolitions” (Creating a lot “bubble jobs” in the mean time..)
City post-recession demolitions up
Between 2005 and 2012, the city issued an average of 829 demolition permits a year.

But following the sharp downturn in real estate markets at the end of 2008 and their dramatic rebound in 2009, demolition increased significantly.

The issuance of demolition permits in Vancouver increased 38.1% between 2005 and 2012, but during the latter half of the period – between 2009 and 2012 – they jumped 84.7%, or twice as much.

The single biggest concentration, however, was in the Dunbar-Southlands area, where demolitions spiked a stunning 332.3% between 2009 and 2012. During those four years a total of 354 demolition permits were issued.

paulb
Member

Happy Halloween VCI!! Sorry for the late post.

New Listings 126
Price Changes 82
Sold Listings 96
TI:16361

http://www.paulboenisch.com

Village Renter
Guest
Village Renter

@ Would be buyer….. Why buy?? It’s way cheaper to rent and it’s cool!

Bo Xilai
Member
Bo Xilai

My (former) realtor just added “Foreclosures” to his skills on his LinkedIn profile…

Best place on meth
Member
Best place on meth

Well, there it is.

Another “hot” month of sales that failed to crack 3000.

That’s 10 months out of 10 this year.

Traveler
Guest
Traveler
@yvr2zrh: I’d always been grateful for your informative, intelligent posts. But what silly gender stereotyping in this last one. I’m female. Chose and bought our house in Vancouver when prices were down in 1999. Decided to sell it in 2011, by which time it had quadrupled in value. The decision was solely based on rational considerations. Emotions involved? Some sad feelings about saying goodbye to it were superseded entirely by said rational considerations and then happiness about obviously having made the right decision and having gained financial freedom. We’re now happily renting. Many women aren’t emotional and foolish about decisions this big. (I can’t resist adding I wouldn’t be profligate enough even to agree to bid $1,800 for a vanity license plate.) Don’t think I’ll be coming back to this site regularly if so many readers approve of posts like… Read more »
$85B/mo or Bust
Guest
$85B/mo or Bust
Not only is bankruptcy not bad, it can help with proper RE market timing. http://www.youtube.com/watch?v=J0FxVdJyQ28 Lesson: First time bankruptcy stays on your credit history for 6 years. HOWEVER, if you get yourself a secured credit card right after the bankruptcy, you can rebuild your credit history and be eligible for a new high ratio mortgage loan in as little as 2 years. If there is a housing price crash then 2 or more years later the government will have bailed everyone out and prices will start going up again just in time for you to get another high ratio mortgage backed by government insurance. What’s the downside here? I see only incentives for people with no capital to take a chance using government backed financing to either make big money or just keep pretty much what they have now. Apparently… Read more »
$85B/mo or Bust
Guest
$85B/mo or Bust

Bankruptcy not really that bad. There are some good tips in this series specifically for Vancouverites.

http://www.youtube.com/watch?v=31xZSsuSlOc

Lesson: Be sure to use up any extra equity in your primary residence above $12,000 to finance the purchase of rental income property(s).

Do it now while RE prices are increasing. It doesn’t matter if those properties can’t be rented or flipped – you’ll still keep your primary residence, RRSP’s, segregated trust accounts, and car no matter what happens.

The mortgage insurance and bankruptcy laws in Canada amount to incentive programs for those with no capital of their own to get public financing for a big money roll of the dice on next RE price increase. If prices don’t go up, you can declare bankruptcy and keep your home to continue living rent free.

What’s the downside here?

VanRant
Member
VanRant

Paul B must be taking his kids out for trick or treat. Good for them and I hope they get lots of treats.

good-format
Guest
good-format

Number of sales today is 96 according to RobChipman

http://www.robchipman.net/

tedeastside
Member
tedeastside

Vancouver’s economy and economic future…any thoughts

Son of Ponzi
Guest
Son of Ponzi

@curious # 69
Not trying to be mean, but this is funny:
“usually the trees are blocking the view, but they are not there right now”. 🙂

Son of Ponzi
Guest
Son of Ponzi

#68
Hu asked you?

carl
Guest
carl

70
what does that connect the dot, money leaking to a leg in van. mean

ghost of Matt Simmons
Guest
ghost of Matt Simmons

#64
“I suspect that 20-40% of current “homeowners” would be in serious trouble at either in a 5% interest rate environment or in a material recession regardless of the rate picture.”

yes, let’s check Foreclosure data with every $5 drop in Crude, and see if we get a power law curve.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

people still listen to Peter Schiff? lol. you’re a permabull.