“It’s A Good Thing That Party’s Ending” In Canada
The Calgary Herald News reports from Canada. “For only the second time this year, the average resale price of a Calgary home has dropped from the previous month. And the average price of a single-family home has fallen below the $400,000 mark after being above that level for five straight months.”
“The Calgary Real Estate Board reported Tuesday the average residential sale price for November was $360,674, a 3.58 per cent drop from $374,067 in October.”
“Lai Sing Louie, senior market analyst for Canada Mortgage and Housing Corporation in Calgary, said the housing market traditionally slows down a bit at this time of year. ‘In terms of the whole market, the market is still very strong. There’s a lot of active listings out there.’”
“November 2006 new residential combined listings totaled 2,850. That was a 16.47 per cent increase over November 2005 when 2,447 new listings came to the market.”
“‘We’re in a sort of consolidation process right now where you have lots of people sitting on large potential capital gains that if they sell for a little bit less it’s not a big issue to them,’ Louie said.”
From Canada.com. “Canadian builders displayed a surprising burst of confidence in the economy in October by taking out the second-highest level on record.”
“Among cities, Calgary has posted by far the largest gain this year in the value of building permits issued, with a near 45 per cent increase to $4.5 billion, followed by Edmonton and Vancouver. However, all cities west of Ontario have posted double-digit increases as well.”
“Only seven of 28 metropolitan areas surveyed showed declines, with the deepest being in Hamilton and Ottawa.”
The Toronto Star. “Economic growth in Canada in the fourth quarter will be weaker than previously thought, reports and analysts signalled Wednesday, despite a surge in building permits in October.”
“Recent figures showed a decline in house sales and prices in the key market of Calgary, a city that is the chief beneficiary of Alberta’s oil boom. And construction industry groups pointed to a drop in overall activity this year and next.”
“The Bank of Canada said Tuesday that fourth-quarter economic growth would likely be slower than previously anticipated. The Ivey Purchasing Managers Index hinted Wednesday at a sluggish economy in the final quarter. The Ivey report said that purchasing activity growth retreated in November to its lowest level since last year.”
“‘The soft report panders to the idea that the economy is lacking momentum in the fourth quarter,’ said Stewart Hall, markets strategist at HSBC.”
“The Calgary Real Estate Board reported this week that existing home sales in that city fell 11.5 per cent in November from a year ago and that home prices fell 3.6 per cent from October. The year-over-year increase in prices was 36.4 per cent, down from 50-per cent figures seen in the summer.”
The Vancouver Sun. “The Real Estate Board of Greater Vancouver reported MLS-recorded sales of 2,358 units, about 20-per-cent below the same month a year ago. Active listings in Greater Vancouver totalled 11,308 in November, up 30.6 per cent.”
“The average price for a Greater Vancouver single-family home was $765,256 in November, a 3.8-per-cent decrease from October.”
“The Fraser Valley Real Estate Board reported November’s sales, at 1,194, declined 26 per cent compared with November a year ago. Valley listings of 7,391 were up 37 per cent compared to last year.”
“‘Unless we see this dramatic increase in inventory, there isn’t a need to worry about any kind of catastrophe,’ said Tsur Somerville, at the University of B.C.”
“Somerville said the last two celebratory years where people said, ‘Buy real estate, it goes up, we’re doing great.’ That party’s ending. And that’s probably a good thing. No, it is a good thing.’”
“Economist Carol Frketich said that suggests there will be more choice for buyers, and less upward pressure on prices. ‘We don’t see any economic developments out there that would force people to put their homes on the market, which would be an indicator you could see a price correction,’ Frketich said. ‘People are putting their homes up for what they hope they can get.’”
“Dave Rishel, president of the Fraser Valley Real Estate Board said he looks forward to seeing more balance in the market, because ‘if prices [keep going] up the way they were, we’d all be in trouble.’”
“Condominium presales still form an unknown in Greater Vancouver’s markets, Somerville added. Somerville said a large number of pre-sales that were made within the last two years are starting to come into completion, and no one knows how many of them are held by investors who plan to sell.”
“If there has been more unseen speculation by investors looking to cash in on the rising prices of their condos under construction than has been anticipated, and a lot of those purchasers sell into a softening market, ‘that is something that could make things dicier,’ Somerville said.”
“The average price for a Greater Vancouver single-family home was $765,256 in November, a 3.8-per-cent decrease from October.”
Wow. I’d heard that Vancouver is Canada’s analog of San Francisco. Even home prices are similar.
somewhat analogous, though our average gross wage is less than SF; we pay a lot more in income & sales tax, so net wages are substantially lower; we don’t get a tax break on mortgage interest; and the weather in Vancouver is like Seattle, not SF.
Vancouver and south-western BC are sometimes referred to as ‘California Canada’, but probably not by Californians. And yet, locals maintain that everyone wants to live here. But hey, we’re hosting the 2-week-long winter Olympics in 4 year’s time, so I guess that makes up for a lot.
…lets not forget last year we had more rain in SF Bay Area than Seattle…. go 9ers…
A lot of places get more rain than Seattle (Chicago?) by measurement. However, Seattle tends to have more rainy days with lighter rains. Statistics, you know.
and calgary is oil patch-
Funny, just a few months ago the fearmongers were out in force proclaiming that PEAK OIL WAS HERE. Just like in 1979. Will it be a replay? I am betting that it will. Sorry, Calgary and Edmonton.
You’ll lose that bet.
peak oil is real.
US oil production peaked in 1971. So far it looks like world peak was 2005.
There’s a bubble in Canada? What’s that all aboot?
World banking cartel has provided the same easy credit in many countries (US, England, Canada, Poland, Australia, etc.) in parallel. It is almost like they are purposely trying to force something to happen so they can……
i was making fun of the canadian accent, aboot= abute
Maybe in a couple years, I will have some dough, and will try to buy
some property (farm land, maybe houses) in forclosure. I’m interested
in NorCal, but also BC. I live in NM though. Any ideas on how to get
the inside track on this? Buyers agents? Go sit on courthouse steps?
Thx, Matt
Ireally like BC too. Have you been? If not, spend some time driving around. It’s a huge place and population is spread out. I’ll post more on west Canada as this thing gets rolling.
My dad was born in BC and I have relatives and friends there. Watching that market myself. It’s a crazy one.
I love BC, but the taxes in Canada will kill you.
Went skiing there once in Whistler. Probably one of the best ski resorts in the North American Continent.
not having healthcare will kill you. I don’t think the taxes are much higher in canada anyways.
What part of VA did you live in?
“I love BC, but the taxes in Canada will kill you.”
Exactly. I thought nothing could beat the horrible taxes I paid in Canada. Then I got my first property tax bill in Texas…..!!!!!
But seriously, there are some major problems looming - especially in Calgary. My folks live there still and my Dad just told me last week ‘They’re predicting it will keep up like this for another 4 or 5 years!’. He was talking about their booming economy in the city. Since I was living in So Cal the last couple of years before Texas, and following this blog, I told him “Dad, I’ve heard all that before. Whoever ‘they’ are probably have a vested interest in ‘it’ lasting forever.”
Now we see it starting to crack in Calgary. Sales are falling so everyone will be rushing to sell hoping to cash in. Inventories will rise and it will all become a self fulfilling prophecy.
I know people there that were making all kinds of money at the oil firms but those days are going fast. It’s not like people were banking their good fortunes either. I hear of them blowing it on homes, cars, other crap and even (most fittingly) ‘blow’, if you know what I mean. Nothing like rolling in dough to make you feel like coke is a chic thing to do. It ain’t gonna end pretty.
“‘The soft report panders to the idea that the economy is lacking momentum in the fourth quarter,’ said Stewart Hall, markets strategist at HSBC.”
Does not a “soft report” in and of itself intimate a “lack of momentum?” This is one of the dumbest statements in a while and the reporter is even dumber for having put it into print.
I guess that the macro and the micro econ courses I took qualify me as a “market strategist” since I’m smarter than Stewart Hall and the reporter.
Hi Ben,
I played hockey in Nelson as a kid a couple summers. Would
be a lovely place to have a small vacation home, near the river.
We are living very close to the bone, trying to pay off our house
so we can do something like that. Would be great while the kids
(3) are still young.
BTW, love your metals page. Wish it was more user friendly…
-Matt
If anyone knows about the RE market along the Cassiar (sp?) highway, please post.
specifically? or just the general knowledge that it’s ludicrously inflated and primed to go down in flames like the Hindenburg.
Yes, if you have specific info on the CH RE market, that would be great.
I went on a bicycle trip up along Highway 17 in fall of 2005, which the Cassiar goes north from. In the countryside it seemed like more than 50% of the properties were for sale as I rode along. There’s talk that a new container port at Prince Rupert will boost things and maybe an LNG port at Kitimat, but it’s going to take a lot to get things moving up there. It’s a very depressed area, most of the mills have gone bankrupt in the last 15 years. In summary, I think you could find some very willing sellers. Only caveat is that there are many ongoing land claims and one should be careful about the land they choose to buy.
Thanks!
Isn’t Vancouver also tied up more than 100% in land claims? I thought I heard that at one time. Are these things ever going to be settled anyway? At worst I can see a big fat payment from the government which is probably all they’re after anyway.
Yes there are many land claims in BC but it has been clear from the start that private property is not, I repeat not, on the table. All land allocated for native claim settlements has been government owned and will continue to be. Over 90% of the land is BC is owned by the government, there’s lots of it.
And my God, if people are talking about land on the Cassiar highway, I think things have gotten completely out of control. It makes US 6 through Nevada look like the Sunset Strip.
cassiar?? next to no services. remote. wilderness paradise. comparatively cheap but you will need to be self sufficient in the maintainance dept. septic fields and wood heat. water wells. some of the construction were additions to the additions to the outhouse. lol
In canada, we’re about a year behind the US in terms of the cycle. Our realtor associations have borrowed lots of the propaganda from the US cheerleaders a year ago. Lot’s of “soft landing” and only quoting certain stats to make things look like they’re still booming.
You got it…. It’s different here.
Hey Rob, different just like in Seattle, yes? Where according to the MSM, we are “bubble-proof”.
Everyone wants to live in Canada. It must be the weather!
It’s the weather for sure. Last month, previous all time records for rainfall were exceeded for the month of November in King and Kitsap County (maybe others in the vicinity).
Yea right. The other “bubble proof” cities were LA, San Fran, and Boston….go figure.
No bubble here folks…everything is very affordable given the median wage….move along.
How much do those figures translate in U.S. dollars? (or, ‘merican money?)
1 USD ~ 1.14 CAD
Cmon guys, the question is, when there is blood in the streets,
and RE is DONE, how does one snap up the deals without camping
out on the courthouse steps? Are there brokers that can help
with this? Is this a buisisness I should be starting right about now?
Ben, maybe this should be a topic for the weekend?
-Matt
I would start with the MLS. When you call the realtors office phone # and it’s disconnected I think it’s time to buy. At this time I don’t think the banks are in enough pain to do short sales, yet.
Post it in the topics thread on Friday.
You wan to get in with some REO depts of lenders. Get on their mailing lists. Although they are probably going to want to know that you have cash or are a “playa” with a group ready to buy in bulk, otherwise I dont know if you will get any play, especially if you don’t have the contacts already.
Matt, for what it’s worth, real estate rarely falls materially for brief periods of time. In other words, you don’t have “snap it up,” because when it goes down, it is illiquid and just sits there - nary a ready, willing and able buyer for miles. All you have to do is find an area you like and wait. When the time comes, you just wander in and look mildly interested - the surviving agents will chase you down the street, trust me. The only time you will face competition in a down market is when somebody drops his asking price around his ankles just to get rid of the property- that can happen, but it will be dumb luck should you be standing there. (And please, no witty remarks on my analogy. This is a familly blog!)
I’ve been wondering how much of the Canadian market will follow the amazing deflation that we’re all watching south of the border. Here in Montreal we don’t have the exuberant market seen in Calgary/Vancouver, yet prices have certainly gone up since 2001 or so. Canada doesn’t have nearly as many of the loser loans as down in the States, yet if you plot the price of a house in inflation-adjusted dollars, there has been a definite spike. It will be interesting to see how much our prices will deflate compared to American prices. Mind you, I think that interest rates are where our two economies are most tightly linked (no I am not an economist at all) and if your rates have to rise due to the dollar’s losing value, that’ll cause ours to follow and that might cause a big drop here.
Sorry for rambling a bit.
It’s not different here.
Its now starting here too
I live in Vancouver. I can say that without a doubt this place is over hyped by politicans, realtors, some residents who have obviously never been anywhere else. Other than scenery and a post card setting this place is certainly NOT paradise and has horrendous problems. If you like being squished between the mountains and the US border and the ocean on the west then this is your place. But I DO mean squished because there is only one major way out of here so if you like open spaces and lots of interesting places to go on the weekends THIS IS NOT YOUR KINDA PLACE. I dread the day I moved here instead of Australia.
Anybody got any thoughts on Interior BC - kelowna area specifically. i have relatives up there and the cost of housing has hyperinflated since the fire burned up a big chunk of the town a couple of years back. Any signs of a slowdown in Kelowna? thx
the cost of housing has hyperinflated since the fire burned up a big chunk of the town a couple of years back.
LOL. Is that the reason given? Prices went up there because of speculation, just like everywhere else - any other reason is pure BS.
I live here in Kelowna and no signs of a slowdown yet. Bought a 4/2 mid 70’s POS in spring 2005 for $250K Cdn ($225US) and this year similar houses are in the $350-375 range so still completely nuts due to speculation. Most purchases are from Alberta oil folks buying vacation homes and Vancouver equity locusts. My guess is the market in interior BC is more susceptible to a crash before the rest of Canada due to their being very little commercial industry to speak of as this area is totally geared to retirees due to the (for Canada) warm climate. Main employers are tourism (very low salaries), housing and its related industries and forestry which is really starting to tank due to slowdown in the US housing market.
Last week the November RE numbers came out and median price of $440K is pretty hard to swing on an average salary of $40K for the region. Lots of room left to fall but still very early days yet as we’re at least a year behind the US in this bubble.
Hey you forgot fruit picking. Yep, great fundamentals there.
Here is the Calgary housing blog:
http://www.calgary-housing.blogspot.com/
Apparently the price to rent ratio is 250x there.
Ben,
I miss my afternoon california reading! Any more good San Diego articles?
Yeah, I noticed 2 days without a California post.
I know Ben is running a nationwide blog, but as California goes so goes the nation. The entire West is dependent on CA equity locusts for their bubble.
Believe me, this is the thinnest amount of California news I have seen in months.
Maybe CAR is bribing the MSM to shut up.
Today I spoke with a friend who is in the RE business and she said that prices in the Westside went up 17% (I imagine she mean YOY, but I’m not sure). I asked her if there was any talk about LESS houses selling, and she said no. Other people I’ve talked to, who are more tuned in with the finance side of things just said this is a good time for lowballing offers, but all in all there is an eerie silence about the California market, you are right.
Oh, but my realtor friend also complained about the “hysteria” in the news coverage of real estate. I guess one man’s hysteria is another man’s “MSM are in bed with the advertisers”. I guess editors around the country are treading carefully, and they should. That is not going to change things in the long run, though.
I’m in escrow on a house (and, yes, I know that’s a shocking thing to read Ben’s blog). I had an independent appraisal done by a very conservative appraiser referred to me by MortgageGuy. The appraiser did not know the negotiated price. As it turns out, the purchase price was 27% lower than the conservative appraisal and 33% lower than the bank’s appraisal. I’ll share more after it closes escrow, but let’s just say there are exceptional deals right now IF you find a motivated seller. I believe a few of these motivated sales will result in lower comps for specific areas that will, over time, result in a broad market correction. But this will take years of anemic sales.
Note that this is not a foreclosure. From what I can see, the banks will hold firm for some time because: a) they, unlike the truly motivated sellers, don’t HAVE to sell; b) their REO inventories have not skyrocketed yet; c) the analysts are pointing to a quick recovery; and d) Bob Toll says we’ve already passed the bottom.
What part of OC are you buying in?
Maybe MSN is waiting for something intelligent words from CAR… if that possible!!!
With So Cali, there is nothing to do but wait…
Has anyone noticed the MLS is dropping like a rock. In 2 weeks time I’ve seen a 5% drop of my local MLS here in Rhode Island. I’m sure the realtors are out telling people to take homes off the market because sales will be better in the spring.
If we are all right then we should see a tidal wave of homes come on the market starting in February and March.
Thoughts appreciated.
remeber super bowl 06 ?
it was, and is going to boom right after that
I am sure your area is like mine, yes we are down in the last few months, HOWEVER, YOY my mls is up 200%. Wait till January, we we start the year up signifiicantly YOY, then the tsunami of listing will crush this housing market!
Seattle inventory has dropped about 20% since peak inventory (end of Sept.). But YoY it is still up about 25% over last year. A lot of folks have flat out given up for 2006.
This is the calm before the storm…or should I say…the silent spring.
Ben,
Much, much thanks for continuing to post for your Canadian bubble-sitter readers.
this is in FL. Alot of this going on:
” with rising property taxes and insurance in Florida, investors are finding it tough to break even, Skinner said.
Paradiso, the investor, was aware of that problem when she bought her three units.
The rent money from her three condo units falls about 20 percent short each month of covering her expenses, she said. But at some point, she insisted, the rental income will exceed her expenses, and the properties will appreciate in value.
Paradiso has some real-estate expertise: Her mother has been in residential real-estate sales for more than 30 years, and her uncle is Bob Smith, president of Smith Equities Corp., an Orlando apartment-investment brokerage.
“I’m looking at things long-term,” she said.”
>>>I don’t think the taxes are much higher in canada anyways.
I want some of what you are smoking ….
I hate to make generalizations but its funny in America that you tend to think everything is so expensive in ’socialized’ countries outside the USA. I travel on business about 10-15 times to the US every year so have a good basis of comparison and when comparing notes as to cost of living pretty much across the board hands down its cheaper in Canada for the ‘average’ wage earner. Counterparts I work with from Australia and New Zealand say much the same thing as well so not just unique to Canada for this perception. Mostly I travel to the western states and in talking to clients its amazing the misconceptions about living ‘up north’ as people think we’re completely taxed to death. Property taxes - I pay around $100 month compared to sometimes 10X as much for similar properties in CA. Car insurance - full load is $80/month compared to $300. HOA of $300/month - we don’t even have that as don’t need to live in gated communities. On and on it goes with mostly booze, smokes,food and consumer goods only being a bit cheaper in the US. Income taxes are somewhat higher here but big f**n deal - I have never known anyone to ever go bankrupt up here due to medical expenses so paying a bit more for universal health care is worth it. Can’t say the say thing for lots of my clients in CA as know numerous people declaring BK from 1 illness. I’ve had numerous opportunities to relocate to the US (have a CPA equivalency) and weighing the $ and cents just doesn’t make sense as would be far worse off financially after all the cost of living bills are paid due to ridiculously high housing, transportation, property tax and insurance expenses. Blanket statements like ‘I want some of what you are smoking’ don’t necessarily cut it if you sit down and crunch numbers but to each their own. Come up here and check it out as you may be suprised at what you see. Not everything is igloo’s and monopoly money.
I’ve spoken with people living in the US from various parts of the world. They universally complain about the high rate of taxation in the US. I’m starting to wonder if what we’re hearing about being so lucky (eg, getting to keep 50% of what we earn) is a fable, and one which will not be soon untold. Nay, increaseth.
And a parting shot - governments in Canada (all levels in aggregate) are running a budget surplus. Americans don’t seem to realize that the giant budget deficits that US governments are running are just deferred taxes (with interest), or benefit cuts at some point in the future. But of course they don’t seem to understand that with regards to their personal finances either.
And a parting shot - governments in Canada (all levels in aggregate) are running a budget surplus. Americans don’t seem to realize that the giant budget deficits that US governments are running are just deferred taxes (with interest), or benefit cuts at some point in the future. But of course they don’t seem to understand that with regards to their personal finances either.
I think the political sh*t is really going to hit the fan in the US over the next few years when Joe Sixpack starts to realize that he’s falling behind his counterparts in other Western countries.
http://www.nytimes.com/2006/12/06/business/06leonhardt.html?em&ex=1165554000&en=812d7e0e8006dab4&ei=5087%0A
A link from Seattle Bubble website. Interesting article about auction from Florida (believe the auction was covered here before). NY Times (MSM) seems to be admitting problems. Sorry if already posted.
“‘We’re in a sort of consolidation process right now where you have lots of people sitting on large potential capital gains that if they sell for a little bit less it’s not a big issue to them,’ Louie said.”
Oh goodness no. Selling for anything less than the 6-figure capital gains they DESERVE for sitting on that property for a few years would be like GIVING it away. Totally unacceptable.
Just went to Zillow - They are down due to an upgrade! Ha Ha Ha. Statement says hardhats comming off soon. My guess is that the RE syndicate has pressured them to redo things. The RE industry is probably suing them.
Will be interesting.
Better Get Your Hardhat. I thought about sending hardhats to some of the local realtwhore companies. Watch out for those falling house prices.
Looks like Zillow is down are they getting sued or something?
It says that they are under major web sight reconstruction or something to that effect.
The RE syndicate has probably sent their troves of lawyers their way.
Watch out for falling housing pricess!!! AAAAAAAAAAHHHHAAAHHHHAHA AAAAAHHHHaAaaahhaha ahahhahahahhahh!
I’m glad the interest in BC RE has tailed off. It’s already sick here, and it needs a dose of corrective action before it’s worth thinking about.
We are starting to see things beginning to stagger, and the bear camp is waiting for spring for confirmation.
For another take on the Vancouver scene, check out vancouver (un)real estate
Are there any posters with knowledge of Atlantic Canada? I was up there last year and was astounded at the amount of “furreners” running around bidding up houses. There even seemed to be more Europeans doing it than Americans, never mind Canadians. I also understand that places like the south coast of Nova Scotia and PEI have had runs comparable to U.S. bubble markets - 3-500% in five years.
Anybody know?
I travel often to Halifax and St. John’s Newfoundland and over the past 5-6 years house prices have increased maybe doubled over this time. Definitely not a bubble market compared to elsewhere - closest comparison would be the flyover states in the US. The economy has historically been very economically depressed due to fishery closures and people moving to Western Canada but is recently turning around the past couple years from offshore oil exploration. Talk of 3-500% increases is completely wrong. In PEI, Nova Scotia along with Newfoundland there are literally thousands of houses for sale between $150-200K. 5 years ago they were worth mostly in the $80-120K range.
Having grown up in BC (and through the 1982 crash) and now living in Vegas, this is all working well into my long term plans.
BC follows California by 1 yr minimum on recovery. On the slide down it is about 6 months to a year (no retail = no mfg = no need for resources, and BC is generally a resource based economy). Recovery means exhaust inventory, start mfg (use up materials), then buy more resources. So BC gets hit pretty quick, and is slow to recover.
When it hits bottom (use the employment listings in the Vanc Sun + Province to gauge, plus RE listings), then it is time to buy.
By then, I’ll be out of the game here (made my pennies), keep currency in non-cdn bank for a period. Sell home here (as the recovery is underway), then buy in BC as the recovery hasn’t started.
At least thats the current plan…..subject to amendments / changes / adjustments / complete course corrections / about faces / modifications etc….
Land & housing has to drop, 500k+ in Penticton? Over 700k in Vancouver? 550k+ in Victoria? You don’t need to be able to read tea leaves to see whats coming. You just need to recognize a cup of tea, it is soooo obvious!
Land & housing has to drop, 500k+ in Penticton? Over 700k in Vancouver? 550k+ in Victoria? You don’t need to be able to read tea leaves to see whats coming. You just need to recognize a cup of tea, it is soooo obvious!
And yest sooo many stubborn homeowners will deny it. Fools.