Category Archives: economy

Homebuilder says it’s a great time to buy

Before I make a major investment, I always like to do a bit of research and consult an expert.

Before I buy a new car I always ask a car salesman if it’s a good time to buy. They’re the experts after all.

And when it comes to real estate, who better to ask than a builder if it’s a good time to buy?

Looking at 2011 numbers related to the economic impact of residential construction in B.C., we can easily see that this industry is a massive contributor to British Columbia’s well-being and future success, as well as a huge indicator of the province’s economic climate. Just think: For every single home we build, 3.5 person years of employment are created and more than $60,000 is generated in spinoff spending.

Ah yes, it’s not just a good time to buy, it’s the right thing to do for the economy. Without Real Estate our economy would be in the crapper. What could possibly go wrong?

TD: Toronto & Vancouver face 15% decline

It seems like one of these bank economist forecasts come out every week, but TD is calling for a 15% decline in house prices here and in Toronto over the next couple of years.

“There have been growing signs that the markets have been tilting towards excess supply of new multiples,” the bank said.

Indeed, condo prices in both cities have shown signs of slowing down much more than the price of single-family homes, the usual benchmark of a market’s overall health.

“In fact, looking at the trend in condo prices, you can see there has been essentially no increase in prices since the federal government first began tightening mortgage rules in mid-2008,” the economists said.

So if the average selling price on a Vancouver single family home is already down 12% year over year and the outlook for condos looks worse… maybe not the best time to buy a presale condo eh?

One bubble down, one to go

The Vancouver real estate slow down is making news all over and people are now wringing their hands over Toronto.

This Financial Post article talks about our bloating inventory and collapsing sales while pointing out that Toronto sales are up 11% year over year.

..and yes, there’s yet another warning from the Bank of Canada:

“Although economic growth in Canada was slightly slower than expected in the first quarter, underlying economic momentum appears largely consistent with expectations. However, the composition of growth is less balanced. In particular, housing activity has been stronger than expected, and households continue to add to their debt burden in an environment of modest income growth.”

The warning is apt. Rosenberg said if the Bank of Canada felt the need to re-establish parity between short-term rates and its inflation target it would have to raise the rate 100 basis points.

“That wouldn’t cause a recession, but it sure would be painful for many households,” leading to more loan defaults and less spending growth.

If you can’t afford a 100 basis point increase in rates you probably shouldn’t be taking on too much debt.

‘very clear signs’ of market slowdown

Is the Vancouver real estate market cooked?

Sales are plummeting and the lower mainland is choking on inventory.

Tsur Somerville decided it’s time to sound the warning bell in the Vancouver Sun:

“We’re getting this consistently now,” said Tsur Somerville, director, centre for urban economics and real estate, Sauder School of Business at the University of B.C., after a monthly report by the Real Estate Board of Greater Vancouver showed a continued rise in listings as sales drop.

“We’re in a market that’s much slower than what we’re used to and I think that will transfer into much more sluggish prices, at best.”

According to the board’s report, released Monday, May sales were the lowest total for the month since 2001 and 21.1-per-cent lower than the 10-year average for May sales. Local home sales in April were also the lowest total for that month since 2001.

…yeah, that’s right.  Lowest since 2001.  And the remarkable thing is that the word the real estate board has chosen to describe this market is ‘balanced’.

I guess it is very important to keep your balance while you’re sliding down hill.