Tag Archives: 2013

FFFA! New Year, Peak & Crash.

It’s the end of another week and that means it’s time for another Friday Free-for-all.  This is our regular end of the week news round up and open topic discussion thread for the weekend.  The first one of 2013!

Lets get to the links:

REBGV HPI: peak down this much
Here’s the press release
Hottest property values dip in 2012
Real Estate boom meet Dot Com Crash
Jesse wins the 2012 prediction contest
Here’s the 2013 prediction contest
Why housing prices aren’t coming back
Whistler condos down 39% over 5 years
Dec 2012 Condo battle map
Vancouver Realtor Hunger Index

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

*Just a reminder: Registration is open over at the Vancouver Peak Forum, but you must leave a human comment within 2 days of registering or your account will be automatically deleted.  This policy helps us keep the board purged of spammer accounts.  Thanks for your understanding!

CREA cuts forecasts for 2012 and 2013

There’s less than half a month left in the year, so that’s a good time to revise forecasts. The CREA has revised their 2012 national sales forecast from an increase of 1.9% to a drop of 0.5%. I’m guessing they’ve also revised their forecast for 2008, 2009, 2010 and 2011.

Looking ahead they expect 2013 to see a sales drop of 2%, but here in BC they forecast both sales and prices to drop just by 0.3 percent.

“Annual sales in 2012 reflect a stronger profile before recent mortgage rule changes followed by weaker activity following their implementation,” said Gregory Klump, CREA’s chief economist.

“By contrast, forecast sales in 2013 reflect an improvement from levels this summer in the immediate wake of mortgage rule changes. Even so, sales in most provinces next year are expected to remain down from levels posted before the most recent changes to mortgage regulations.”

Finance Minister Jim Flaherty moved in July to tighten mortgage rules for the fourth time in as many years in order to discourage Canadians from taking on too much debt. Among the changes, Flaherty made mortgage payments more expensive by dropping the maximum amortization period to 25 years.

FFffffff! Is anybody else getting sick of the miopic talk of ‘tougher’ mortgage rules? Here’s a great point from Ben Rabidoux about how to put these mortgage rule ‘changes’ and Flahertys ‘tightening’ into historical perspective:

Before looking more at the implications of a mortgage rule change like the one being proposed, it may be helpful to provide a brief overview of the mortgage changes that have occured over the past few years:

  • In 1999, the National Housing Act and the Canada Mortgage and Housing Corporation Act were modified allowing for the introduction of a 5% down payment….a far cry from the minimum 25% of a few years earlier.
  • In 2003 CMHC decided to remove the price ceilings limitations. That is, it would insure any mortgage regardless of the cost of the home.
  • In 2005 and 2006, CMHC began insuring 30, then 35 year amortization mortgages.
  • In 2007, CMHC allowed people to purchase a home with no down payment and ammortize it over 40 years. This was changed back to a 5% down payment requirement and a maximum amortization length of 35 years in 2008 once the idiocy of this policy was blatantly obvious.

Here’s the point: CMHC has been in existence for almost 65 years. For the first 60 of those years, they never insured mortgages with amortizations greater than 25 years. Only in the past 5 years has this experiment been started. The 35 year ams that are now on the chopping block have been around only since 2006. So let’s understand that any move to shorten amortization lengths is NOT some new, revolutionary move, but rather a move back towards norms that are both long-standing and fiscally prudent.

BMO: Vancouver price drops for next 2 years

A Bank of Montreal report is predicting that Vancouver house prices will continue to fall for the next couple of years:

BMO Senior Economist Sal Guatieri says the price of homes in Vancouver and uncertainty over long-term mortgage rates are creating a buyer’s market.

He also says rich foreign investors who have driven up real-estate prices in Vancouver are now looking at cities that are less expensive.

“The sizzle is coming off the Vancouver housing market,” Guateri says.

Read the full article over at News 1130.