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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forever renter
Guest
forever renter

Ha Ha Ha same old statement has been spitting out from bears’ ass for the fast 12 yrs but it keep going up skyward.They forgot corrupted Chinese officials keep pouring money in Vancouver real estate.

Devore
Member
Devore
@Many Franks “Now, I’m not projecting that all those neighbourhoods will be post-Nuclear drug havens in 2040, but I don’t doubt there will be unintended consequences. The more generational this problem becomes, the more likely it’s going to affect the rest of us.” We can look to the decades old condos in certain areas of Toronto, which are de facto ghettos. Instead of being “the projects”, they are comprised of individually and privately owned condo units. You can buy yourself there a spacious condo for under 100 grand. Of course, there is also that $600+ monthly condo fee, multiple special assessments rivaling the market value of the unit, failing and malfunctioning amenities, and the building itself may just crumble in a few years. We can also look to West End, where this has not happened. Sure, they’re old and busted… Read more »
Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

>“what goes up can keep going up, but then tends to come down.”

what a scathing indictment of the Canadian housing market. it might keep going up, or it might come down. extremely harsh.

“And if the ongoing housing boom is followed by a housing bust, the price decline can be quite significant”

IF there’s a BUST, the price decline can be quite significant. very fascinating reading.

but what would a bust be, if there weren’t significant price declines? if i didn’t know better i’d say that this is a tautology.

a cynical reader might see the author as saying “if prices go down a lot, they will go down a lot”.

but i’m not cynical. i think this is a wake up call for everyone in canada!

Best place on meth
Member
Best place on meth

It’s a new paradigm®.

It’s a permanently high plateau®.

It’s a soft landing®.

These tired cliches and many, many more are brought to you by the worthless cheerleaders association of Planet Earth.

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

@Best place on meth

if you beg and plead maybe paulb will give you 50 sales today.

tin foil hat
Guest
tin foil hat

Bull! Bull! Bull! you’re such an idiot!

Don’t you know that the government, big business and the media are working together to manipulate the housing market?! are you that stupid… or are you one of them??

It’s a conspiracy! Wake up sheeple!

Son of Ponzi
Guest
Son of Ponzi

Real Estate is the Opium for Vancouverites.

mcgregor
Guest
mcgregor

@bpom

Yet its you who continually trots out these clichés.

You do know housing is tied to interest rates right? Overlay the two.

Rates will likely be low into 2020, for a lot of reasons.

Get used to it.

Best place on meth
Member
Best place on meth

@Bull! Bull! Bull!

If I beg and plead will you step in front of a speeding bus?

mcgregor
Guest
mcgregor

@bpom,

Cranky huh?

This will help: http://business.financialpost.com/2013/10/29/dont-look-now-mr-flaherty-heres-another-shot-in-the-arm-for-real-estate/

Enjoy another decade of waiting around for the ‘collapse’

Best place on meth
Member
Best place on meth

“Rates will likely be low into 2020, for a lot of reasons.”

What are those reasons?

Please list them and I want to see “a lot” of them.

tedeastside
Member
tedeastside

other Canadians are asking why vancouverites cherish their house value so much..its becuase vancouver is a dirt poor city with terrible opportunities to make a living….and when even Torontonians can notice vancouverites shallow rat-like anti-social way of life, that’s saying alot!

jesse
Member

“What are those reasons”

I don’t know the reasons but I do know some fixed analysts who know more than I do about it have assigned a significant weight to a near-zero FFR for on the order of 5-10 years.

mcgregor
Guest
mcgregor

Lmao rates might not even have bottomed out by 2020.

You think 2020 is a ‘long time’ right? Hahaha. Rates could very well stay low for DECADES. 7 years is a flash in the pan.

In fact, the history of empire suggests the US will never be able to meaningfully hike rates again, at least until another reserve currency emerges.

FYI, there is a better chance that the next fed move will be a rate cut as oppose to increase.

hey buddy
Guest
hey buddy

ever heard of Coober Pedy OIL?

I’m sure Goldman has, and you will soon!
http://globalwarming-arclein.blogspot.ca/2013/10/coober-pedy-oil.html

istedseated?
Guest
istedseated?

I take responsibility for my own well-being, both economically and socially. Vancouver has plenty of opportunity for both. The city has a reputation for being aloof and cold, but I know and like my neighbours. I find myself chatting with complete strangers on a regular basis.

Like anywhere, the city is what you make of it.

total_confusion
Guest
total_confusion

Haha, I love tedeastside’s posts. I picture Mike Ehrentrout (or however it’s spelled) from Breaking Bad, the tired old ex-cop who now works for meth producers.

Best place on meth
Member
Best place on meth

“In fact, the history of empire suggests the US will never be able to meaningfully hike rates again, at least until another reserve currency emerges.”

That is just fascinating, mcgregor. Please, do go on.

crabman
Guest
crabman

The Great Depression lasted about 10 years and the Great Recession will probably be about the same duration. That means US GDP will probably be back at potential around 2017. When that happens, rates should be significantly higher, otherwise there will be rampant inflation.

Of course, the US housing market is in fairly decent shape now, so tapering should begin in a few months. These ultra-low mortgage rates will probably only last another 6 months or so.

Softy
Guest
Softy

“It’s a permanently high plateau®.

It’s a soft landing®.

These tired cliches and many, many more are brought to you by the worthless cheerleaders association of Planet Earth.”

Except that the above two cliches are true of the condo market. The bears thought that it could never happen. But, after a spectacular boom, we have five years of flat prices at a permanently high plateau and a soft landing in the condo market.

If it was a bubble as the bears contend, why was is followed not by a crash but by five years and counting of flat prices? It never was a bubble.

Why will houses be any different?

HAM Solo
Guest
HAM Solo

BC Foreclosure filings Oct 30

Today / (MTD)

Vancouver: 12 / (111)
Victoria: 3 / (32)
Kelowna: 3 / (30)
New West: 3 / (43)
Cranbrook: 2 / (8)
Kamloops: 1 / (13)
Penticton: 1 / (8)
Vernon: 1 / (7)
Other: 1

Countrywide Cup Foreclosure Lender League Table

MTD

TD: 38
CIBC: 31
Scotia: 29
First National: 22
Royal: 22
BMO: 12
Paradigm Quest: 11
HSBC: 9
Home Capital: 8
Street Capital: 7
Canadian Western Bank: 7

Big day for TD – nine foreclosures, they look likely to be tops for October. Vancouver passes 100 foreclosures for the month .. tracking to 116 – 118 for the full month. Next month will give a sense for trends.

Poloz
Guest
Poloz

Of course Goldman is scare mongering.

They want low rates for as long as possible. For those hiding in their basements, they are heavily into bonds and equities.

Next.

UBC in crisis mode
Guest
UBC in crisis mode

Garth Turner: Canadian Housing Data Unreliable, Needs Regulation

http://www.huffingtonpost.ca/2013/10/29/garth-turner-housing-crea_n_4171093.html

Poloz
Guest
Poloz

Han Solo,

Enough of the foreclosure list. You’re killing the credibility of this blog.

These foreclosures are for strategic planning purposes. Not because the market is crashing.

Sigh…

Poloz
Guest
Poloz

Total confusion:

Don’t blame TedEastSide. Blame the internet that allows anyone with a pulse to post and think they know it all.

Ever see a regular poster who says he doesn’t get it ?

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