Tag Archives: housing market

Open Topic

Friday Free-for-all! Here comes Autumn.

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101 Comments

It’s the end of another work week and you know what that means…

Friday Free-for-all time!

This is our regular end of the week news round up and open topic discussion thread for the weekend, here are a few recent links to kick off the chat:

–World warns of Canada risk
–Fed renews zero rate, hints at hike
–BC too laid back for China business
–HAM a myth?
–How locals afford homes
–Slackers are Debtors?
–FIPA is coming
–

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

BC, Canada, data, debt, economy, opinion, prices

Politicians shouldn’t meddle with housing market

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33 Comments

This is probably the first housing editorial in The Province that most readers here can agree on.  Well, the headline any ways:

Politicians shouldn’t meddle with the housing market.

Imagine a world where the government didn’t meddle with the housing market.  There would be no CMHC insuring close to $600 Billion in mortgages, instead lenders would loan based only on their own assessment of risk.  There would be no HBP, no HOG. In 2006 there would not have been the rule change that allowed zero down 40 year mortgages with interest only payments for 10 years. After 2008 the CMHC wouldn’t have purchased $69 billion of mortgages off bank books.

But of course you’ve probably figured out that this Province editorial isn’t about that. No, this editorial is about someone suggesting we should levy a tax on vacant properties, likely the tiniest possible example you could find for ‘meddling’ in the housing market.

Wong is not alone in unfairly blaming foreign investors for Vancouver’s high housing prices. The reality is that real estate is a commodity whose price is set in a free market, appropriately, through the forces of supply and demand. No one has a “right” to own a house in a particular city or neighbourhood, and it’s about time that people like Wong and her COPE and NDP pals stopped promoting such notions, especially when it involves taking money from one group and giving it to another. You want a house? Work hard and buy one — or move somewhere cheaper.

Read the full editorial here.

 

BC, Canada, debt, opinion, predictions, prices, rates, USA

Yes We Have No Bubble Trouble.

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160 Comments

For all of you worried about a ‘housing bubble’ just stop and read this article:

No Housing Bubble Trouble.

At the national level, what could possibly kick national home prices downstairs? There is nothing to suggest massive job loss ahead or a huge oversupply of new homes. That leaves only the dubious assumption of a big increase in mortgage interest rates as the trigger for any nationwide decline in home prices. But national housing prices did not fall in the past when mortgage rates rose to twice their current level.

Oh, wait.. Sorry that’s from the Washington Times in 2005 and refers to the US market.

This is the one I meant to point to:

No Bubble, No Trouble.

A housing slowdown in Toronto and Vancouver could affect consumer confidence in regions with strong economic fundamentals like Calgary, Edmonton and Halifax, adds Don Campbell, best-selling author of Real Investing in Canada. But rather than a sharp decline, you’re more likely to see slower rates of price appreciation and home sales, says McKellar. “Overall the economy of Canada compared to other countries is still doing very well,” he says. “Housing markets are a function of the economy. Not the other way around.”

Hat-tip to Patriotz and Many Franks for the article links.

 

 

BC, Canada, data, debt, opinion, predictions, prices

Soft Landing Achieved!

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128 Comments

Good news! Despite all the fearmongering, gloom and forecasts of dismay for the Canadian housing market we can now happily report that our market has achieved what the US housing bubble could not – A SOFT LANDING!

“Despite the klieg-light focus on the Canadian housing market this year, its performance has been far from exciting,” said Mr. Porter.

“It increasingly looks like most major markets are indeed undergoing a policy-induced correction. But, for now, the landing looks to be soft in most cities (with some cities actually still lifting off), with the rather obvious exception of Vancouver.”

As Mr. Porter added in an interview, “I don’t think you can call what’s going on in Vancouver a soft landing anymore.”

.. A bumpy landing then?

Read the full article over at the Globe and Mail.

BC, data, debt, economy, opinion, predictions, prices

Why are sales and prices dropping?

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108 Comments

Let’s carry on with our look back at September.

The official stats are now out from the REBGV and there’s some headscratching stuff in there.

Take this article in the Vancouver Sun for example:

Metro Vancouver home prices continue to drop as sales activity falls sharply below historical levels, according to the Real Estate Board of Greater Vancouver.

“We thought we’d see a slight increase in activity in September, but we didn’t,” said REBGV president Eugen Klein. “There doesn’t seem to be any urgency between either the buyer or the seller.”

I guess we’ve gotten so used to ‘increase’ (whether it’s prices or sales) that it’s confusing when the opposite happens.

And you’ve got to love that little bit of justification you see in every housing bubble, it goes a little something like this: “Well, prices might fall a bit in the poorer areas, but not in the hot areas!”

..but of course the hot areas are always the ones that fall:

Prices fell more sharply in expensive areas including Richmond, West Vancouver and Vancouver West, which saw a sharp run-up in prices in 2010 and 2011.

Vancouver West, for example, saw a 6.5-per-cent, year-over-year decline in the benchmark price of single detached homes to $2.09 million.

Tsur Sommerville has some theories about why the market is stumbling right now:

“This is the first time since 2007, 2008, when prices have come down by this degree,” added Somerville. “When you have nine months of continuous months of weak sales, it will show up on the price side.”

Somerville believes high prices, and reduced economic optimism, are behind the sales drop. “And cycles happen.”

The winning quote goes to Eugen Klein, who blames this market change on the federal government ramping back some of their market interference in the form of short amorts:

Klein said some of the fall-off in sales could be attributed to the federal government’s decision to eliminate 30-year amortization on government-insured mortgages.

“This makes homes less affordable for the people of the region,” said Klein.

Yes, as soon as house prices start to fall it puts buyers in a real pickle.  If they fall too far no one will be able to afford a home.

…oh, wait.  He meant ‘affordability’ as in huge long amortizations based on current low interest rates, not on overall price.

Some commenters here posted highlights from the data package.  Not much of a name posted this breakdown:

Overall – benchmark down 0.8% YOY – Down 0.6% MOM
Detached – down 0.5% YOY – Down 0.7% MOM
Apt – down 0.7% YOY – Down 0.4% MOM
Attached – Down 2.7% YOY – Down 0.8% MOM

..and VMD posted this historical comparison of Months of Inventory (MOI):

MOI  2012  2011  2008
Oct        6.6  14.1
Sep  12.1  7.2  12.5
Aug  10.7  6.5  11.4
Jul  8.6  5.9  8.8
Jun  7.8  4.6  7.5
May  6.3  4.3  5.4
Apr  5.9  4.4  4.7
Mar  5.3  3.2  4.8
Feb  5.5  3.9  4.3
Jan  8.0  5.7  5.5

VMD also posted this list of areas with the biggest sales declines:

SFH Stats Sept 2012: (ranked by worst sales decline)

Richmond:
Sales:-50% YoY, -10% MoM
Ratio: 22% vs 32%
HPI: -4.2% YoY, -1.3% MoM
Median: -9.8% YoY, -1.4% MoM

Burnaby:
Sales -49% YoY, -10% MoM
Ratio: 18% vs 35%
HPI: +4.2% YoY, -0% MoM
Median: -13% YoY, -6.3% MoM

Van East:
Sales:-48% YoY, -6% MoM
Ratio: 30% vs 51%
HPI: +3.2% YoY, -1.1% MoM
Median: -2.5% YoY, -0.6% MoM

Coquitlam:
Sales:-37% YoY, +16% MoM
Ratio: 30% vs 51%
HPI: +3.6% YoY, -0.2% MoM
Median: +0.4% YoY, -3.7% MoM

Van West:
Sales:-17% YoY, +15% MoM
Ratio: 27% vs 27%
HPI: -6.5% YoY, -1.3% MoM
Median: +1% YoY, +0% MoM