Well well, look at that, you made it to the end of another work week.
This is Friday and that means it’s time for another Friday Free-for-all, our regular end of the week news round up and open topic discussion thread for the the weekend.
Here are a few recent links to kick of the chat:
–Can the industry police itself?
–Ultimate buy / rent calculator
–Boom a bust for heritage buildings
–Canada job market not quite best
–Leaving the city for better economics
–Is the worst over for Looney?
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
Happy day after the new mortgage rules come into effect!
Even before these rules were announced we saw a ‘softening’ in the Vancouver real estate market.
Prices have drifted down as of late and sales are at an all-time-low and inventory keeps growing.
..Yet there are still those that believe ‘it’s different here’.
We saw housing bubbles grow all around the world and pop one by one, but we went through the same steps of pumping up cheap credit to build the house of cards higher.
Check out this post on Alphahunt about Why a Crash in Canadian House Prices is Certain.
What’s amplified our current RE cycle is that credit was steadily made cheaper & easier throughout the boom period – and especially when the RE market suffered in 2008. After finally waking up and seeing the monster they helped create, the Gov’t is making lending rules stricter. Lending practices should not have been made so loose to begin with. And their meddling in 2008 only delayed the inevitable bust.
Today, we’re still at extreme unaffordability and there is no such thing as a ‘soft landing’ or ‘small correction’ for Vancouver RE. Any asset that has seen a price rise of at least two standard deviations above long-term valuation ratios has always mean reverted. If the Vancouver RE market did not return to the normal multiple of income and rent, it will be the first time in history. You can’t binge drink and avoid the hangover. Timing the start of the hangover is always challenging, but what we know with high probability is that there will be a hangover.