A Little Bit Irresponsible And A Little Bit Crazy
Global News reports from Canada. “First-time buyers are screwed. Many young families who’ve bit the bullet on oversized mortgages are dangerously vulnerable in the event of a downturn, while the whole creaking apparatus of Canada’s gilded housing market could be overpriced by nearly a third. At least that’s what the Bank of Canada now says. Last month, the House Price Index (HPI) benchmark price for a residential property in Canada’s energy capital reached $454,200. That’s a jump of 109 per cent compared to February 2005, when $215,400 got you a mid-market single family home.”
“Meanwhile, home prices in Vancouver and Toronto — the country’s two most expensive markets — have bloated 68 per cent and 71 per cent over that time, respectively, to $641,600 and $522,200 (benchmark price, across all housing types). Incomes haven’t come close to keeping pace. And filling the void has been an ocean of low-interest debt. Household debt has grown 80 per cent since 2005, to $1.8 trillion, most of it — $1.2 trillion — in mortgage loans.”
“‘Canadian housing prices are almost double U.S. housing prices,’ said Hilliard MacBeth, a portfolio manager from Richardson GMP in Edmonton. ‘What makes us think we can afford double?’”
From CTV News. “Depending on where you live in Canada, a million-dollar home can be either a mansion or a fixer-upper. The average price of a detached home in Vancouver reached almost $1.4 million last month. And last month, the city saw 3,000 properties change hands — a 60 per cent jump from January. That can mean waiting as long as six months to get a winning bid on a home, as was the case for Vancouver native Neil McIver. ‘We made bids on three different places, every one of them went above what the asking price was,’ he said. ‘I think it is a little bit irresponsible and a little bit crazy but that is the marketplace in Vancouver (that) you are dealing with,’ he added.”
The Leader Post. “The good news (especially if you’re buying a home) is that housing was more affordable in Saskatchewan in the fourth quarter than in third quarter of last year, according to RBC Economics Research. The bad news (especially if you’re selling a home) is that prices and sales are down and listings are way up over the same period last year. ‘Confidence in Saskatchewan’s housing market appears to have taken a hit, largely in the late stages of 2014, and the significant drop in oil prices was no doubt among the factors behind it,’ said Craig Wright, RBC’s chief economist. ‘Home resales fell by 4.6 per cent in the fourth quarter and by a more substantial month-to-month rate of 19 per cent in January 2015.’”
From News Talk 650. “It’s getting cheaper to rent property in Saskatchewan’s oil patch. During the boom, Estevan had the highest rental costs in the province and it was comparable to bigger cities like Calgary and Vancouver. The semi-annual rental market report from the Canada Mortgage and Housing Corporation (CMHC) shows the vacancy rate in Estevan shot up from 1.8 per cent in the spring of 2014 to 12.5 per cent in the fall of 2014. That’s mostly due to newly completed condominium apartments, but also because the price of oil plummeted around the same time as the completion of the Boundary Dam project which temporarily brought in hundreds of construction workers.”
“As a result, landlords are now asking for about 25 per cent less in rent than they were last fall. ‘There’s a good collection in just about anything you would be looking for, for a rental property available, which is new for Estevan,’ said Lynn Chipley with Century 21 in Estevan.”
The Globe & Mail. “Calgary’s condo market has taken a major hit as a result of diminished consumer confidence, say the analysts closely watching its vital signs. In February, the number of condo sales dropped almost 40 per cent compared with the same time last year, and active condo listings went up 105 per cent, according to Calgary Real Estate Board stats. The benchmark price for February is down 4.34 per cent compared with the same time last year. For the first week of March, condo sales are down 67 per cent compared with the same time last year.”
“Real estate agent John McDonald has seen a bank appraisal already affect a recent sale. In January, he found a condo for a client that was listed at $500,000. The buyer offered $488,000, but the bank refused financing based on an appraisal of $475,000. The seller came down to that amount in order to complete the sale. The condo had been on the market for 45 days. ‘This was a purchaser, a guy in his 20s, who saw the place, loved it, and he wanted that property.’”
“However, other buyers are already expecting hefty discounts, and the market isn’t there yet. Some of his clients have lost out on purchases because they came in with lowball offers or held off on an offer for too long. Most homeowners aren’t at that need-to-sell point yet. A lowball offer is often a turnoff. ‘Some people are looking at an unrealistic offer, and it’s too low,’ Mr. McDonald says. ‘They are expecting a little bit more deal wise. There is some downward movement, but nothing like some buyers expect.’”
From Reuters. “A year ago, one of the hottest parts of Canada’s red-hot housing market was Alberta’s oil capital of Calgary, where cash-rich consumers fought for the fanciest home on the block. Now, a plunge in crude prices is pulling the housing market with it. While realtors in Calgary are loathe to admit the tide has turned, sellers are no longer in the drivers’ seat and buyers are biding their time in hope of a real estate slump.”
“‘We have a plethora of houses, it’s like a beauty pageant of beautiful houses, out there on the market. We know there are lots of people wanting them, but they are waiting,’ said Shirley-Anne Jacques, owner of Parkhaven Designs Inc, who has been building houses in Calgary for 27 years.”
“In Altadore, an upscale neighbourhood in southwest Calgary, one prospective seller said she and her husband were unwilling to take less than the C$855,000 they paid for their four-bedroom house in 2007. The mother of two, who declined to be named, said they decided to sell last summer because they thought the Calgary housing market was overvalued, but delayed after her husband lost his job as a general manager at Devon Energy Corp. ‘We discussed it with realtors and they did not think prices were going to fall,’ she said. ‘Looking back, I wish we had sold in the summer.’”
