Canada, economy, predictions, rates

Poloz: wait and see on interest rates

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95 Comments

The Canadian economic outlook is ‘uncertain’ and that sets a high bar for interest rate changes according to Bank of Canada Governor Poloz:

“The situation hasn’t changed much, as far as I can see,” Mr. Poloz said in the Q&A session following a speech in Toronto Monday evening.

He said the wide range of uncertainties that the bank outlined in its October rate decision, when it said it had considered a rate cut but opted to hold the line until more clarity had emerged on such issues as the U.S. election, the pace of Canadian trade, the evolution of the housing market and the impact of Canadian infrastructure spending “is still present. It’s only been a few weeks.”

Read the full article over at the Globe and Mail.

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southseacompany

“Vancouver Condo Developer Pays People $1800 To Line Up”, Better Dwelling

https://betterdwelling.com/city/vancouver/vancouver-condo-developer-pays-people-1800-to-line-up/

“According to the now deleted post on this Vancouver jobs Facebook group, the publicist was looking for people that would camp in line for a new condo development from November 28 – December 3. The 5 day long working stint works out to $15/hr, less expenses. “

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bullwhip29

New tax on foreign buyers of real estate could be extended to Capital Regional District
http://www.cheknews.ca/new-tax-foreign-buyers-real-estate-extended-capital-regional-district-241395/

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No Money Down

Year End Inventory is a function of total annual sales.

In an average year, the end of year inventory is about 10,000. Higher than average sales, lower inventory.

2015 saw sales 30% above average, and end of year inventory of about 6,000.
Predicted 2016 end of year inventory: 8,400.

https://i.imgsafe.org/eea827ddd0.png

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No Money Down

I’m not trying to convince anyone or win an argument. I wanted to understand what is driving prices and inventory. After a rather cursory look at the REBGV data this is what I found. It makes sense to me. Take it or leave it.

The driver of price and inventory is primarily and overwhelmingly demand (i.e sales). Annual sales explain 80% + of the variability. You really don’t have to look at anything else.

Supply (ie listings) is secondary, but is surprisingly constant year to year.

The obvious question is what is driving demand?

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Just me

This is great work. Thanks for sharing it, it puts back some much needed facts in the discussion.

And yeah, despite all the lamentation of Christy and her band of developers, it is mostly about the demand sude. If we could magically stop foreign investors from using Vancouver as a safe deposit bix, prices would go down very significantly.

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patriotz

Don’t need magic, just need policies that make RE unattractive as a safe deposit box regardless of who the nominal owner is. And that why we don’t have them.

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Oracle

Honest Question : Why do most of you fail to see the root cause? Especially when its as clear as day.

Really seems like a case of Caucasian brainwashing to me.

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Newcomer

Good question to be asking. When my perception is at odds with the perception of many other people, I usually find that we are looking at different information.

Here is another question for you to ponder. You claim to be in a unique and very fortunate position at the moment. You can foresee future prices with complete certainty. That puts you in a position to make a boatload of money. But instead of being out there rounding up every dollar possible and plunking it down on your sure thing, you repeat your predictions twenty-six times a day to the only people in the lower mainland who don’t agree with you. That’s an odd choice. Why do you do it?

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Oracle

To get it thru thick and brainwashed skulls so maybe afterwards we can have a concerted and targeted effort in attacking high prices by bringing them down.

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Newcomer

But if your understanding is correct, prices cannot be brought down because the rises are in response to genuine demand from immigrants. They only lever would be immigration policy. Surely you do not imagine that the opinions of a couple of dozen geeks (and people like us, who spend years looking at the technical analysis of one market are nothing but geeks) could have any impact on federal immigration policy. Are there not more direct ways for you to influence the immigration policy in Ottowa?

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Oracle

Starts at grassroots.

I’m hate these distorted prices a small much as anyone here.

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Oracle

And Trudeau lies to you. They don’t even try to hide it anymore.

Electoral reform = Lie
Fight Climate Change = Lie
Carbon tax for the environment = Lie
Moderately increase Immigration = Lie
Tighten TFW rules = Lie
No tankers on BC coast = Lie

NDP=Libs=Cons

The people in the USA are smarter than you give them credit for. They ousted the establishment/MSM

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patriotz

Trump expected to name Steven Mnuchin as Treasury secretary

President-elect Donald Trump is enlisting a trio of nominees with deep ties to Washington and Wall Street to fill out his Cabinet, including former Goldman Sachs executive Steven Mnuchin as secretary of the Treasury Department.

On Tuesday, Trump also chose Georgia Rep. Tom Price to oversee the nation’s health care system, picking a fierce “Obamacare” critic who has championed efforts to privatize Medicare. And he selected another veteran Republican, Elaine Chao, a former labour secretary and the wife of Senate Majority Leader Mitch McConnell, to lead the Department of Transportation.

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Oracle

Immigration Shill from Ottawa. You always try to throw a wrench into discussions without really adding something constructive.

Trudeau ethics are contagious.

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CanNeverThinkOfAGoodName

And in other news, Trump’s appointed Mexican drugpin El Chapo to be head of the DEA.

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ostritch

So why worry about Trump?

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Oracle

Who’s worrying? We need a Trump to shake the establishment here.

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Oracle

You guys still don’t get it.

Do all the fancy calculation plots. Do comparisons.

You will have a 8K party on Dec 1. The money is starting to comeback back.

I’ve already stated the root cause so good luck.

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Oracle

And inventory is low because most people understand the demand from overseas money brought in by recent PR’s. PR formation rate is at the fastest in Canadian History!!

People know this and what fool would get out of the housing market??

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southseacompany

“Fed’s Powell says case for a rate hike has clearly strengthened since last meeting” CNBC

http://www.cnbc.com/2016/11/29/feds-powell-says-case-for-a-rate-hike-has-clearly-strengthened-since-last-meeting.html

“While Powell said he thinks that the Fed’s patience in raising rates has paid dividends, he warned that moving too slowly could eventually mean that the Federal Open Market Committee would have to abruptly tighten policy to avoid overshooting its goals.”

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Oracle

And?

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No Money Down

Another way to look at it is to plot change in HPI against annual sales. I have normalised the annual sales (x-axis) by dividing by the average annual sales over the last 15 years (33,470 sales/year).

For an average year (100% of average sales), the annual HPI increase is about 7.5%.
When annual sales drop below 85% of average, HPI change is negative.

https://i.imgsafe.org/e6f7e58b3f.png

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Oracle

No offence but why do this? You only need to look at 2 parameters.

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No Money Down

Which 2? I’d say you only need to look at 1 parameter: sales.

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Oracle

That doesn’t tell you the ‘why”.

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No Money Down

If anyone is interested in a break from the BPOM/Space pissing match, I have pulled together a few stats from REBGV. Data are for calendar years 2008 – 2015. Detached/Attached/Condo combined.

The first is the annual change in HPI plotted against the ratio of annual sales divided by total annual listings. Maybe old news, but found it enlightening. A remarkable linear relation with zero annual change in HPI when sales/list ratio is 50%.

https://i.imgsafe.org/e6dd957589.png

.

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space889

The pissers & shiters are fully on the BPOM side…

wonder why that Yunak guy don’t post anymore…maybe he bought last year and now is shitting in his pants at the potential drop that he’s been wishing for years? Oh the irony.

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southseacompany

Nice headline:
“‘Things probably pretty bad’: Metro Vancouver home sales prices predicted to drop next year”, Vancouver Sun

http://vancouversun.com/news/local-news/things-probably-pretty-bad-metro-vancouver-home-sales-prices-predicted-to-drop-next-year

“Tom Davidoff: “When you head into a downturn, typically you see sales volumes fall before prices,” he said. “There’s been a massive decline in volume and a moderate decline in prices so far, and it’s reasonable to infer that we’re going to see, given how bad the decline in transactions has been, that we’re going to start to see a more meaningful decline in prices.””

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bullwhip29

Robson among world’s priciest shopping streets
http://www.theprovince.com/business/commercial-real-estate/robson+among+world+priciest+shopping+streets/12452591/story.html

>>> as mentioned in prev posts over the years, those that compare robson to be the champs elysees or other world famous shopping districts are on crack. half of robson is for lease. the other half is occupied by upscale haut couture brands like the Gap, Dynamite, Forever 21 etc

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space889

They are talking about rent prices, not shopping experience. As long as you are getting the high rent price, do you care much about not as fancy as champs elysees?

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bullwhip29

the increasing number of empty store fronts should be a clear sign that landlords are drunk on the best place on earth coolaid and that rents are simply too high.

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CanNeverThinkOfAGoodName

South Granville is a much better place to send the tourists to to go shopping. Yet the tourism information still sends them to Robson. Weird.

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Oh oh

Millennium Developments. ..you may remember they built Olympic Village and couldn’t finish due to bankruptcy. …well Mr Malek back in business using the same name…building Trioumph condo in Brentwood Burnaby. I guess they will save by reusing business logo and card’s etc

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history

Poloz is more important in this country than Junior, by an order of magnitude. Juniors old man had the Quebecois to deal with, Poloz has the undefendable debt. Junior’s real challenge and legacy is the Aboriginal population. The old man ramped this population.. you reap what you sow.

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HAMster

The fruit doesn’t fall far from the tree.

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history

yup, Junior to have his Watch me moment, hand back half of Canada to Natives

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Best place on meth

He’s not that much of a fruit. Well, maybe the hair and the mannerisms. Ok, his way of speaking, I guess.

Oh god, he’s a mama’s boy.

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space889

And he still accomplishment way more than you and your buddies on here. How sad to be you.

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southseacompany

“Vancouver home sales, prices to drop in 2017: BCREA”, Business In Vancouver

https://www.biv.com/article/2016/11/vancouver-home-sales-prices-drop-2017-bcrea/

“The foreign buyers tax and new government mortgage regulations will contribute to declines in both home unit sales and prices across Vancouver in 2017, the British Columbia Real Estate Association announced November 29.”

“Prices will fall in 2017 as well, the association predicts. The average home sales price in Vancouver will be $940,000 next year, down 8.7% from $1,030,000 this year.”

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Best place on meth

When Cameron Muir predicts an 8% price drop next year, it must be bad out there.

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Newcomer

I wonder where the 1,030,000 comes from. I tried Googling it and found that it was precisely the price predicted by them for 2016 in 2015. But it was predicted as a 15% increase at the time. They subsequently reported a rise of 26% for 2016, so the average price for 2016 should be 1.3, so a return to that number would be a 20% drop.

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southseacompany

“Foreign buyers make up 3% of Metro Vancouver real estate sales in October”, BC LOcal News

http://www.bclocalnews.com/news/403599846.html

“Foreign buyers bought three per cent of residential properties that changed hands in Metro Vancouver in October, the latest figures from the B.C. government show.”

“That’s higher than the 1.8-per-cent rate in September, but still lower than the 13.2-per-cent rate before the province imposed a 15-per-cent tax on residential property purchased in Metro Vancouver by non-Canadian citizens or residents in August.”

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patriotz

Last paragraph is misleading, the tax was announced in July to take effect in August and there was a huge rush of closings in the last week of July to beat the tax, which contributes to that 13.2%.

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paulb

New
101
Price Change
41
Sold
107
TI:9076

http://www.paulboenisch.com

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Just me

I wish I knew what is going on with sales. Any insider info about these comparatively large numbers for late November sales?
Are these earlier sales that are just now entered in the system? Are these sale spikes due to the beating the deadline for new mortgage rules?
Or are we witnessing again what happened in the tail end of 2015 and early 2016, with massive inflows of capital directed to RE purchases?
One thing I know is that this time it is NOT due to interest rates! It has got to be something else. Whether it is a measurement issue or a more substantive one.
Any info would be highly appreciated.

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Newcomer

It’s people buying. It’s a little low for this time of year (about half of last year, but last year was high) and about the same as 2012 (which was slow). Basically, there is nothing f interest in these numbers.

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Best place on meth

What comparitavely large sales?

We’re averaging 112 a day this month, that’s below average.

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Just me

Glad to hear that, can you clarify how much below average?
Is the average a long term (say, 10 year) average? What metrics are you using?

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Best place on meth

2010 was 119
2011 was 116
2012 was 80
2013 was 120
2014 was 133
2015 was 168

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Just me

So this year we stand at around 100 per day? Or closer even to 2012?
It is stunning that sales remain so robust after all the recent curbs. You can’t tame this beast.

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Funky monkey

People believe in RE like they believe in religion.
At least in Vancouver.

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Just me

Yup. Given what happened since August, and all the announcements from the Federal government, I would have thought sales would be much lower.
Granted, there may be some discounts on asking. But from what I have seen discounts average somewhere around 5% off asking.
Given that prices had gone up by over 30%, that is still a lot more exoensive than 2014 prices.
Yet, people (who?) are still buying.

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Just me

And, I don’t suppose all buyers can be people with large downpayments or mover-uppers. There must be some serious borrowing still going on.

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Oracle

Nope.

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Just me

Or perhaps it is foreigners again. I just have this nagging feeling that Christy’s rushed tax was never meant to dissuade most of them.

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Oracle

“Beating the deadline for new mortgage rules”

LMAO

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bullwhip29

Kelowna bylaw makes sleeping in the street overnight illegal
http://bc.ctvnews.ca/kelowna-bylaw-makes-sleeping-in-the-street-overnight-illegal-1.3182244

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space889

so basically they are banning homelessness?

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Best place on meth

How will the condo peddlers find stooges for their pre-sale line ups?

This is so not fair.

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Just me

Hopefuly I am wrong, but I am seeing signs that the market is slowly reverting to the pre-tax patterns. Number of foreign buyers creeping up, sales remaining fairly robust for this time of year, condos selling out within a few days.

Anyone can counter with evidence that I am wrong? Would love to see that, it would make for a much happier Christmas holiday!

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Oracle

You are correct. The underlying fundamentals of immigration (both Temp/Permanent) into Lower Mainland and foreign money inflows (brought by PR people already here) remain at all time highs. Money inflows are now sitting in Import/Export company accounts. This money is playing a wait and see approach. Foreigns students are now waiting for PR now BEFORE buying. The floodgates for foreign students getting PR should soon open as there have been extensive changes made to Express Entry Immigration program that allows PR in a matter of a month. Add to this the fact we are going to double foreign student slots in BC. Foreigners immigrating here want a detached house. NO CONDO OR TOWNHOUSE! They don’t come half way around the world to live like sardines. Trust me on this. Thus, detached will continue to soar over the coming years. You… Read more »

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Royce McCutcheon

Call me a troll if you must, but “Just me” requested evidence.

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Oracle

Call you PC for your mind subconsciously refusing to acknowledge the root cause.

You believe in persuasive coercion aka schooling?

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Royce McCutcheon

Your labels are lazy. I never said you were right or wrong.

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space889

So immigrants are foreigners now? I though immigrants are counted as locals – citizens in waiting?

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Oracle

Semantics. Troll #2

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space889

The foreign tax law would disagree.

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Newcomer

I’m not disputing this, but I am wondering where you get the information, particularly about the number of foreign buyers.

Based on Paul’s numbers, I haven’t been able to see any trend that significantly differs from other years or any anomalies other than low inventory.

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Oracle

Troll #1 has replied.

Anyone else?

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space889

How do you know they are foreign buyers? Because they look Asian and don’t speak English? That automatically mean they are foreigners?

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Confucius

Check out Zolo. Lots of stats in the Trends section. Condo MOI is very low in many cities. Divide the active listings by sold listings for each housing type. 3-6 months of inventory is typically a balanced market. Above is slow and below is hot. Detached is still very slow and prices are falling.

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bullwhip29

no, the number of foreign buyers is not creeping up, only % of sales (which are way down) has reverted back to the averages. very misleading reporting from the msm.

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space889

Hello environmental fantacism – CoV plans to ban fossil fuel & natural gas. Let’s jack up construction cost, make consumers pay more, make building less breath to encourage mold & mildew in our wet climate.

https://ca.finance.yahoo.com/news/vancouvers-plan-shut-off-non-191759688.html

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Newcomer

It’s only been a few weeks and nothing has changed in that time. Right.

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Hyper-mega-Bull

Job ad claims to pay thousands of dollars to wait in pre-sale condo lineup

http://www.cknw.com/2016/11/28/job-ad-claims-to-pay-thousands-of-dollars-to-wait-in-presale-condo-lineup/

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space889

The ad also said bring your own chair, food, sleeping bag. Sounds like you are expected to be at the line up 24/7 for the duration. That works out to be about ~$12.5/hr – potentially tax free. But in this kind of rainy wet cold weather? Not sure if it is worth it.

But I’m sure some bears on here can use a few extra $$ to pad their down payment savings account or maybe just pay their next month rent. Can’t imagine some of them able to hold down any kind of regular job.

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Funkey Monkey

I make 6 figures and don’t own in Vancouver. Oh but I am not handcuffed to my job. Poor me Spontaneous trips, unexpected expenses all covered with cash. What freedom!

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space889

So why bitter about not owning a house here, and enjoy in the suffering of all those poor homeowners who has empty fridge for their kids?

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Funkey Monkey

Im not bitter, I just think houses cost to much here therefore I will not buy a house here. As soon as I find a job in the city in which I want to live I will leave.
But I love my job here.

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Royce McCutcheon

: You are projecting. It’s not about enjoying the suffering of others. And frustration (not bitterness), if there is any, doesn’t have to be about not owning and a poor lot in life.

Like Funkey Monkey, I earn well. I’m portable, I’m debt free, and I’m in demand. Life is good. Doesn’t mean I can’t be frustrated by crappy, short-sighted, and self-serving government policies or the ghost-town-ification of my hometown.

You, BPOM, etc. can up the noise about hate and race all you want (why stop now?). Most don’t care – we just want to see an end to the various factors that are manipulating this market, be it foreign capital (from ANYWHERE) or too-cheap debt.

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space889

I’m projecting? Have you been reading the comments on this blog? Whenever there is any small signs of a potential housing declines, the bears on this blog jump up and down in excitement. Finally able to dance on the grave of those fools who refuse to take their advices and bought a house and enjoy all those unearned equity gains, and holidays on HELOC. Finally, those fools will get their just dues!

And when do I start the hate. Last time I check, I haven’t being calling for extermination of a country, or starting nuclear wars, or exterminating a good % of local population.

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Royce McCutcheon

“And when do I start the hate.”

He started it? Huh. So… you’re 6 years old? Two wrongs don’t make a right. And your status as probably the highest volume poster at VCI in the past 12 months qualifies you as the leading purveyor of hate as far as I can tell (which does not mean I excuse the conduct of anyone else).

You’re absolutely free to do as you please, but if you, BPOM, etc. all just cut the noise, this would be a better place.

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space889

Oh please…double standard much? I call out bullshit & racists posts, and some mockery, and that is now purveying hate? Geez….

Maybe if you, the righteous people on here, actually calls out BPOM & Co’s BS and hate earlier and wouldn’t stand for it years ago, that might have made this blog a better and useful place.

Well, being more open minded and not being 6 years old, constantly calling bulls names when they have been consistent right for years while bears are consistently wrong for years would also help.

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Royce McCutcheon

Guess it’s you against the world. Keep up the good fight Spacey and stay gold.

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Shut It Down Already

Newsflash – “6 figures” isn’t a high salary, especially when most who use that term earn just a hair over $100K.

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Newcomer

So, what do you make Shut It Down Already?

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Royce McCutcheon

Well yeah, would you expect most who earned six figures to earn 900k+? I don’t think that’s how incomes are typically distributed.

Also, in a region where the median household income is just a hair over 70k, I disagree that “6 figures” isn’t a high salary.

Finally, you can assert that most who quote “6 figures” barely exceed 100k, but I think it’s similarly fair to assert that if someone says their household income will be pushing $300k for 2016, they will be far more likely to be called a liar.

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oh la la

I hope you are under 30. Otherwise that is actually recent normal for people around here in their early 30s. Nothing to brag about. Somehow i sense you make bit over 100K. If you happen to be under 30 and making 150K. Yeah you are in the top 75 percentile.

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Newcomer

Have you ever considered basing your comments on facts? It takes a moment or two longer to look things up than to make them up, but you feel less foolish afterward.

http://www.moneysense.ca/save/financial-planning/the-all-canadian-wealth-test-2015-charts/

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oh la la

So?
I have seen this before. Doesn’t make me wrong lol. Don’t get fooled by looking at national average incomes by age in 2013.
You gotta look at richest 20% by city that is $240K for Vancouver. So my comment was to take part in the richest 25%, you gotta make around 150K at 30 in Vancouver and hope to get over $250K at 55ish. – Probably the peak by today’s dollars for employees. So if you are not there, just don’t brag about it. Keep it humble.

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BubbleTea

Nothing new. Remember the two that worked for Mac Reality posing as buyers on the News. Way to go Krusty!

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Hyper-mega-Bull

Updated residential real estate data – June 10 through Oct. 31

https://news.gov.bc.ca/releases/2016FIN0053-002520

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chilled

What a job, what? 1/2 million bucks a year to say, “yeah, what they say” while pointing across the border. Keep the Ponzi scheme going and the expense of savers and financially responsible, the average Canadian is too stupid to understand that this entire process is facilitated by Statistics Canada fabricating a false inflation rate for the last decade. But I’m sure you minions did your Census 2016 diligently, right?

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space889

There is a reason they don’t teach personal finance in high school as part of required curriculum. Frankly, if you ask 500 random people on the street, I doubt you would even get 1 person who can remotely understand how the current monetary system actually works and how money is “created”.

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oh la la

you mean fiat paper currency? I would call physical pres.metals as money. gold silver that is. That paper shit comes and goes.

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