The worlds biggest bond fund seems to think there’s some sort of an issue with the Canadian real estate market.
Ed Devlin sees a decline somewhere in the range of 10-20 percent for home prices across the nation.
“And if you get that kind of 10-, 20-per-cent real correction, that should alleviate some of the stresses,” he added in an interview with our real estate reporter.
“And so that’s kind of what what we’re seeing. It will start this year, it could be bumpy along the way.”
To be clear, Mr. Devlin is not forecasting a sudden crash, but he joins a chorus of voices, from Deutsche Bank to the Organization for Economic Co-operation and Development, in raising red flags.
Deutsche Bank, for example, believes the Canadian housing market is the most overvalued in the world.
Read the full article here.
Teranet has released their latest numbers and they are down.
Vancouver house prices on the Teranet index are now down 2% over where they were the same time a year ago.
Prices would have to really start rocketing up to keep the YOY numbers from staying negative for a while since prices peaked around June 2012.
What does the RE industry report when they can no longer claim YOY price increases?
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.
If you’re curious what a market looks like when it’s been falling for a while check out these stats for different areas on the island.
John Cooper of ReMax provides some good stats packages for various Vancouver island markets.
It looks like a lot of the outlying areas and recreational property in BC isn’t doing as hot as it once was.
In Qualicum Parksville, a single condo sold last month.