A day after the RBC released a report saying there is no condo bubble in Toronto we get a conflicting report from Capital Economics.
Not only do we have a housing bubble problem in Canada, it appears to be peaking and bursting right now.
Economist David Madani says get ready for a 25% drop in prices.
The thing people always seem to forget when it comes to housing markets is that they move SLOWLY.
Housing prices typically respond to changes in the market with a lag of five to nine months, according to Mr. Madani. He points out that home sales have already seen material declines, down 4% over the last two months. Vancouver in particular has been hard hit, with sales down 28% year-over-year.
“Overall, the willingness of buyers to pay these historically high house prices now looks to be proving fragile against the increasingly disappointing macroeconomic backdrop,” he said. “The housing bubble in Vancouver already appears to be deflating, with only Toronto defying the inevitable. Accordingly, we expect substantial declines in house prices over the next year or two.”
Check back here in two years to see whose prediction was more accurate: RBC or Capital Economics.
Royal Bank says everyone should stop worrying about the condo bubble in Toronto.
Policy makers in Ottawa and various economists just need to chill.
There is no Condo Bubble in Toronto.
Can someone ask them about Vancouver?
There are more condos under construction in Toronto than any other city in North America, and more residential building is taking place in the Greater Toronto Area than ever before.
Mr. Flaherty’s fears about overpriced real estate, and condo markets in particular, prompted him to surprise the market last month with new mortgage insurance rules that aim to take some of the wind out of the market’s sails. He’s trying to engineer a gradual slowdown of the market, fearing that otherwise it could crash at some point.
Mr. Hogue’s lack of concern about a bubble does not mean he thinks the market will boom, however. He expects condo prices to fall by perhaps 2 per cent to 7 per cent from their peak. He predicts that a two-tiered market could emerge, with condo prices softening while the market for single-family homes is resilient.
Full article in the Globe and Mail.
Vancouver has a problem with affordable housing.
No matter where you place the blame: speculators, easy credit, housing bubble, foreign buyers – the problem remains.
As a first time buyer how do you get into the market?
How about one cubic foot at a time?
It can be tough to afford a 580 sq ft one bedroom apartment for $415,000 but anyone can find an extra $199 to get that first cubic foot and get in now!
It’s Real Estate 3.0!
This was posted as a submission to the reTHINK housing competition from the City of Vancouver and already the rave reviews are pouring in:
Doug Farmer says:
4 stars – Very outside the box thinking about something inside the box. Has 21st century written all over it.
Our friend YVR Housing Analyst says
A thoughtful submission. I like how they can stack; I, for one, would first have tried spheres.
And Flo says
This is the least creative solution I have seen submitted. I feel hopeless about my future just looking at this.
I agree with arch. This is not the kind of architectural experience that sustains a human soul.
So don’t miss out on your opportunity. Get your single square foot in the market today!
So we’ve gotten to the point where it’s pretty unanimously agreed that real estate in Toronto and Vancouver is over-valued and due for a correction.
The question now is what sort of an end to this housing boom we will be looking at.
Will this be an explosive toppling of values, a market that runs head first into a wall, or will it be a simple slow leak for years and years?
..And which would be better?
You can add David Rosenberg to the list of people that say ‘whimper, not bang‘.
His latest comments fall into the ‘not a bubble, a balloon’ camp:
“Prices are starting to deflate by 0.8% YoY, though more like air coming out a balloon slowly than a giant pop,” wrote Rosenberg Tuesday in his morning note.
“It is gradually becoming a buyer’s market with the inventory of unsold homes rising to six month’s supply, which is at the edge of a balanced market.”
Of course most of that drop nationally is being driven by Vancouver where everything is falling fastest. What remains to be seen is whether the current drop will remain even or accelerate.
Should we have some sort of index tracking Realtors making public statements that it’s time to sell?
The market is sluggish, sales are low, inventory is growing.
..And the number of agents saying it’s time to SELL NOW is growing as well.
Agent Keith Roy was in the news recently with his blog post about the sale of his personal property and now Sam Wyatt is saying something similar:
Vancouver’s real estate market is getting and is going to get hit from both ends. So, now that you are thoroughly depressed, here is the bright light: IF YOU SELL NOW, YOU WILL STILL BE SELLING NEAR THE TOP OF THE MARKET. If you plan to sell, you will need to price BELOW the most recent comparable sales prices. If you don’t do this, your listing will stagnate. I am pleased that this methodology has produced 4 sales in the last 30 days for my clients in a market were most homes are not selling. In one case we had a multiple offer with a significant over asking result and in another we negotiated a full asking price sale.
I guess the important part is in all caps.
So can anyone find me a Realtor saying that now is a good time to buy in Vancouver?