A High-Flying Market Has Caught A Serious Chill
A report from the Canadian Mortgage Broker News. “A major Canadian Bank believes the housing boom in one of Canada’s most bullish markets will start to cool this year — but to what degree? ‘While the GTA housing market has shown few signs of slowing this year, one thing remains certain: Housing booms don’t last forever,’ TD Bank wrote in a special report, entitled GTA Housing Boom Masks Growing Structural Challenges. ‘The million-dollar questions are: When and to what extent will the downswing take place? TD Economics’ baseline GTA housing forecast is a tale of headwinds and tailwinds, with the former likely to win out and cool the market beginning in 2015.’”
“The condo market is expected to lead the way toward a correction, with 60,000 new units expected to be built in the next few years. TD estimates that the market will be oversupplied by 25,000 units. ‘The impact of increased supply of condo rental units is expected to only partially offset by rising rental demand,’ the report states. ‘In this environment, the cost of condos will likely exceed what an investor can earn on the rent.’”
The Star Phoenix. “It could be a buyer’s market in 2015 for those looking to purchase a house. ‘We have a year ahead of us where there is going to be a lot of selection for buyers and demand is going to soften somewhat,’ says Norm Fisher, broker/owner of Royal LePage Vidorra in Saskatoon. ‘Through 2014 inventories were higher than they have been for five years. (And) we come into 2015 even higher. Our inventory is about 25 per cent above the five-year average.’”
“Fisher doesn’t see Saskatoon as having a housing bubble ready to burst. ‘The definition of a bubble would be rapid increases (in prices) over a short period of time followed by a burst,’ he said. ‘It has been five years since we have really seen rapid increases in our market.’”
The Canadian Press. “The Calgary housing market is cooling fast. The number of homes trading hands has plunged 37 per cent compared to the first two weeks of January 2014, while the number of active listings surged 64 per percent. ‘Calgary’s high-flying housing market has caught a serious chill,’ Sal Guatieri, senior economist at Bank of Montreal, said. The price drop ‘is likely the start of a correction,’ the economist said.”
“Until very recently, Calgary’s housing market was the top performing in the country alongside Toronto and Vancouver. Plunging oil prices have worked quickly to cool things down, however. ‘More pain lies ahead,’ Guatieri said of the Alberta real estate market, noting pending sales in the province’s biggest city are also down 53 per cent year over year. ‘Ouch.’”
From CTV News. “The oil boomtown of Fort McMurray, Alta., is trying to keep its spirits up as crude prices drop. Many of the city’s 76,000 people work in the oil sands. And with crude prices plummeting from more than $100 a barrel in June to less than $50 now, residents are nervous about what the future holds. ‘Everybody’s scared for their jobs,’ said Michael Provencher, a haul truck driver with a private contractor hired by the big oil companies in Fort Mac. ‘For right now, we were told we’re okay. But in a month from now, we don’t know.’”
“McMurray Gospel Assembly Pastor Robert Parmenter, who has lived in the community for 31 years, says the community has been through this boom-and-bust cycle before. In the past, Parmenter even saw people walk away from their homes and turn them over to the bank when times got tough. ‘There is a few people selling right now before it gets worse, not thinking that it’s going to come back up,’ said Parmenter.”
“Although Fort Mac hasn’t reached that point yet, already-high house prices are said to be dipping. For instance, a 1,400-square foot house listed at $739,000 — an average price for the city — has dropped from an original listing price of $759,000 last summer.”
From The Tyee. “Low-Rent Mansion Living? In Vancouver? Really? Yes, really. Groups of frustrated renters are snapping up urban acreages, and spend less on housing than the rest of us. Erik Paulsson and his roommates pay an average of just $750 a month, substantially below the average $1,000-plus one-bedroom rent in the city. But they’ve managed to drive costs down by moving into an abode that is anything but ‘humble.’ Their 7,500-square-foot, six-bedroom Spanish-style mansion, built in 1931 and nestled on nearly an acre of land overlooking the Fraser River, is valued at $5,063,000, according to municipal records.”
“As Paulsson prepares a French press of coffee, for perspective I note that the laundry room adjoining his kitchen is roughly the size of my own bachelor apartment. ‘There’s lots of big houses, including mansions, for rent,’ he explains. This one happens to be a big property bought by an overseas Chinese development corporation. ‘I don’t know if they’re waiting to flip it, sell it or develop it.’”
“‘You have the whole phenomenon of absentee landlords and offshore owners,’ explains roommate Jeet-Kei Leung. ‘Which has led to all these large homes being left empty… They’re empty because they’re hard to rent.’”
