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Cracks appear in the real estate market

VIRGINIA GALT

Globe and Mail Update

Latest comment posted at 10:11 AM EDT 15/05/08

Scotiabank report says Canadian housing boom is ending, but there is no ‘major correction' in the cards; construction activity still high by historical levels, CMHC reports ...Read the full article

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  1. Steve Stone from Canada writes: This is major 'damage control' by Scotia Bank. Reminds of the 'no bubble only cooling' we heard down in the US:

    Bernanke: There's No Housing Bubble to Go Bust
    http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html

    Anyone that believed Benanke then was a fool as anyone that believes Scotia Bank now is a fool.
  2. Bill Wall from Canada writes: The banks and the real estate boards are simply not reliable sources for what's going on in the real estate market. They spin in their own self interests.

    It's over and real estate will now at best enter the doldrums for several years, if not slide back 10% in prices. I think it's true that we won't crash and burn like the US, but real estate investors need to be very picky and cautious if they are going to make any money today.
  3. M Clarke from Canada writes: There are a LOT of half-built and unstarted (but promised) condo buildings in downtown Toronto... Will be interesting to see how this plays out.
  4. Aloha Eric from Toronto, Canada writes: www.greaterfool.ca
  5. Phil . from Canada writes: The babbling nonsense from Canada's newspapers never ends.
  6. Chad Remmel from Canada writes: IT seems everyone has been trying to tell Candians that the real estate market is bad. Well it isn't. A bit of a slowdown is normal and demand is still in many areas of the country. Big deal, no story.
  7. Joseph Whistle from Canada writes: House prices are directly related to what people want to spend. In an uptrend people will want to spend as much as they can. It's not an uptrend at the moment, and soft, with the edge of houses priced too high.
    Properly priced houses will remain somewhat solid I think. Properly priced means location, dollar per square feet, age, quality of build, property size.
    Interest rates remain low, might go lower even. Inflation is low (1.4? - 2 is the target), meaning the interest rate can remain low. Previous major correction had a whole different climate.
    People in manufacturing are affected if they work for companies that make bad hard to market products. Large transmission plant in Windsor, and guzzly GM cars are obviously bad product. There is a huge opportunity to start making hybrid cars, but, GM thinks they're smarter than that.
    Point is, we'll pretty strong in Canada. The housing market is NOT going to 'crash' or see a 'major' correction. Perhaps in places where houses really are overvalued (eg. Victoria), they might see 10 to 20% shaven off.
    But in, say, GTA's 905, or Ottawa, places like that, I highly highly doubt it. The economy would have to fall totally flat on its face.
  8. Mike Harris from Canada writes: Self serving Banks keep telling us the market is fine, the realityu is that it is not.
  9. Night Watchman from Surrey B.C., Canada writes: Talk about spin, reality check Scotia bank, the bubble has burst and the only comment you had right in this long winded article is that it will take some time, my guess is two years. The prices in 2010 will plummett and because of the debt load everybody is carrying the bankruptcies will rise.Take that to the Scotia bank.
  10. Michel Frechette from Kapuskasing, Canada writes: Where is it written that home prices will alway go up. As far as I can tell cities are going to raise taxes and cut services. Banks are going to have to raise their rates (fees) and tighten standards. Businesses will eventually be passing their costs onto consumers while governments manipulate the inflation number downward. We will continue raping the earths resources until they are all gone. We will continue showing up for work at our own expense which is yet another subsidy and employers will continue to move real jobs out of North America while governments hand them checks for one thing or another. It is all very depressing and I am sure that before long we will be at war once again fighting for freedom when we could have held onto it in the first place.
  11. lary waldman from Qualicum Beach, Canada writes: I live in a place in Canada were reality seldom shows itself, except perhaps in the fact that people do die, and cannot take it with them. I have several friends here, who like thousands of others thought a good way to make money would be to buy a piece of real estate rent it out and sell it at an appropriate time. Well about eighteen months ago people started to think, hey, this might be appropriate timing, and guess what, not only is their sense of the value of their real estate no longer real, but in some cases what they paid 5 years ago, is no longer attainable. So they are forced to re examine the investment, and if they are lucky sell for near or what they paid. This does not seem to me to be a situation that promotes sound sleep habits, essential to good health as one ages. As a result, everyone driving along looks like someone just stuffed excrement into their mouths. Its a sad , sad, day, when you see people who have so much to be grateful for, so unhappy. But I blame it on the greed thing. There is no such thing as enough boat, there is always a guy with a bigger one, isn't there.

    Lary Waldman
  12. jeff peters from Canada writes: Every time they have an article on real estate, I see a ton of comments saying how bad the market is going to be, 'prices will fall by 10%', and other such nonsense. If I had listened to anyone of these people who think they know something, I wouldn't be in the market and have built up substantial equity, nor could I afford to get in the market now. My property in the Beach area of Toronto has doubled in price in 8 years. It has been a steady climb and an excellent investment.

    I think all these people are trying to convince themselves that renting was a smart choice for them.
  13. maurizio arani from Canada writes: The thing with this statement from Scotia is that it is so misleading. It may be true for Alberta maybe Saskatchewan, But the rest of Canada is definitely in a Bubble bursting housing market. In the GTA alone if you check MLS you will see houses on the market for over 90 days and prices have lowered at least twice. This indicates that the prices of houses are very over inflated and there are big pricing adjustments happening. But the funny thing is how these clowns talk from both sides of their mouths. They warn of slow down high food prices sky rocketing fuel...SO THE QUESTION IS??? where the hell are people going to get money to buy homes at such inflated prices. If all our savings are going to wards maintenance and expenses that leaves very little to upgrade or even afford what we have. I've seenmarket value triple on homes, but truly is it really worth that money???
  14. dav li from Vancouver, Canada writes: What was said in the report was what was said two year ago in US. You see what happened now in US, then you know what it will be in 2 years in Canada. If the market is strong, then it won't be 0 down payment and 40 years of mortgage. You would be a damn fool if you listen to the banks and CHMC to make your judgment about the real estate.
  15. C D from Canada writes: When renters are bitter and home owners are defensive. That does not sound like a balanced market. Sounds like the top to me.
  16. Chris Kempan from Canada writes: Do you think that the people who make money by lending money are going to tell you a house is not a good investment right now? Think about it. Something is going to give. Do you think incomes are keeping up with the rise in housing, gas or food? Things are going to get worse before they get better and you can blame materialistic greed.
  17. Don Portz from Trochu AB, Canada writes: Housing market is predicated on the area that you live in, employment opportunities, relative incomes, perception of stability and demand. Accordingly there will be someas such as the manufacturing where layoffss etc will severely hurt the market. However in areas such Sask. in which jobs opportunities are good you will see upward pressures.
    Areas such as Alta, where I live, has seen the uncontrolled price increase due to demand and speculation come to an end. I suspect we will have a 10 to 15% reduction in prices over the next couple of years and then only increases in line with inflation after that.
    Remeber that you must have a job and income to service your mortgage and if that doesnt happen then you do not buy.
  18. Chris B from Canada writes: Why are we comparing our market to the US? The foreclosure situatio was built on easy, unregulated credit. Yes we have had easing of credit (witness the 40 year mortgage) but nothing like the mess in the US. Moreover, our economic fundamentals, outside of the new rust belt around Windsor, remain good.
    Nobody outside of speculators want to see double digit increases year after year. And I don't think the Banks, as loathsome as they are, want the carnage that has happened in the US to move north. What would be good would be a cooling period, where gains retreat to hiistoric normals of 3 - 6%.
    I hope people cool off their panic/glee at the thought of a bubble bursting
  19. David Smith from Toronto, Canada writes: Spin Spin Spin Well this is inline with Scotia Bank theme, their marketing pitch is 'you have more money than you think' Why do people have to use phrases like 'socialist renters', I have rented most of my live because I like that flexibility, at the same time I owned property that I was renting to others. The property that I could comfortable afford and pay for, was not located where I wanted to live. The place I live and rent is way cheaper than if I was to purchase it. I am NOT going to pay upwards of $2000 to carry a 650sq condo, when I can rent it for $1100-$1200. That being said, my house that I owned and rented paid for itself very comfortably, I even rented it for a little below market value because the tenants were decent and took care of the place, plus getting $1000 for the upstairs and 500 for the basement. well and covered the mortgage, and taxes etc, they paid their own utils. Mortgage on the property was 150k when I bought it for 183k in 97, sold it in 2006 for 298k. Oh the people I bought it from actually paid 300k for it in the 80s. I never raised the rent, I dont want to get rich in a hurry. We are all humans and should behave accordingly, greed is not becoming of anyone.
  20. Mike Harris from Canada writes:
    Banks make money by lending for Real Estate

    Real Estate Companies/Agents make money selling Real Estate

    They forcasts are always self-serving, biased and blindly optimistic and will never admit a housing bubble even when one is popping.
  21. michael d from Vancouver, Canada writes: Why--when we have seen oil prices literally multiply in recent years, apparently with little likelihood of corresponding future declines--is there so little serious discussion here about how both the underlying 'dollar-costs' and 'energy-costs' of constructing new housing has correspondingly multiplied, and will likely also remain far above oft-quoted real estate market 'historical trends.' Modern human dwellings--especially towering skyscrapers of concrete, glass, and steel--are, in essence, 'made out of' fossil fuels. They are, if we trace back their true energy costs and subsidies, literally 'puddles of oil.' If, in this new era of declining oil supplies, soaring oil prices are unlikely to plummet, why should the prices (and replacement costs) of our luxurious, spacious modern homes and condos--despite the usual background local ups and downs in real estate markets--not also reflect this profound new global energy 'reality'? There is more going on here then simple buyer/seller 'supply and demand' for housing. Every element of human society--food, water, health, transportation, education, military-- that is deeply subsidized by fossil fuels is being fundamentally transformed, right before our eyes, as precious fossil fuel reserves become increasing scarce. And those who want to purchase such coveted modern 'incarnations' of oil will increasingly have to pay dearly for each of them. It's a new world: The comforting old price-trend charts may no longer fully apply.
  22. A Narx from Canada writes: Watch out for the upcoming Scotiabank ad campaign:
    You're not as rich as you think!
  23. brokeback mountain from Canada writes: here we go again.. when there is no other negative news in the can, we are back to this just to get more people worried..
  24. Alistair McLaughlin from Canada writes: A Narx, that was funny. I can just imagine the ads for that one. They can have a Scotiabank financial advisor telling a young couple, 'It turns out you won't be able to retire, OR send your kids to university.' The wife will then ask, 'Can we still renovate the cottage.' The advisor will reply, 'We foreclosed on your cottage last year. You're lucky to still have your house.' The husband says, 'Well what about Meagan's braces?' The advisor responds, 'We're having them removed and melted down for salvage value. With the high metal prices, you might remain solvent for another few weeks.'
  25. Jim Somerville from Ottawa, Canada writes: The banks, CMHC, real estate companies, etc. are not going to forecast any major drop, else that becomes a self-fulfilling prophecy as buyers get scared off. One has to read between the lines here. 'Soft landing' = major price drops.

    Historically, the price of real estate only tracks inflation. Inflation is just the increase in the money supply, and that is driven by borrowing, and that is primarily driven by population growth. So real estate prices track population growth, what a surprise. Robert Shiller, the Yale economist, has a nice graph of this although it's US based (I'd love to see the same graph for Canada).
    http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif

    The graph essentially shows that a big correction is in the cards. Beware the 'this time it's different' excuse, remember the tech boom?

    http://himmicane.blogspot.com
  26. Able Bodied Man from Not VICTORIA Island, Canada writes:
    EACH OF US

    My luv is now a red red pen
    That floweth ink beyond all ken
    Take that thou canst, 'twould be the best
    Moneylenders soon shall take the rest.

    For silver is their stock in trade
    Their love, their heart, their pallisade
    Wail you will and tears will flow
    But not from banks who richer grow.

    Your loss, your lesson, said the sage
    A man more wiser than the age
    What you have call not your own
    To something each of us bows down.
  27. Gord Lewis from Canada writes: What the banker says is correct, at least qualitatively. If you follow any of the current affairs programs on NPR and PBS, you will be aware of what a fiasco the Yanks have created for themselves and the world. Canada is an island of sanity in comparison (albeit a paternalistic, monoplistic one). Remember, the banks are not as pressed to loan you money here, because they have your massive service charges for a safety net. Here are a few rules-of-thumb: (1) When the real estate industry and banking hype machine says everything is rosy, cut their rosiness estimate by 50% to obtain reality. (2) When the real estate industry and banking hype machine admits (finally) to things being bad, double their unrosiness estimate to obtain reality. (3) On your mortgage application, take the bank's estimate of your affordability and cut it by at least one-third. They dearly love marginal applicants, because when they start out young and stretched, they end up living on their credit cards and line of credit = much more profit for the bank. (4) Remember, renting for a period of time is not a disaster - as expensive and unappealing as it may be, you have no long-term risk, no property tax, no up-keep, lower utility bills, and it puts you in a position to spring when the market is right. There is no hype factory for renting, only one for buying, and it has co-opted your friends and parents-in-law. It can be hard to resist all that pressure.
  28. Rick C from Canada writes: Cooling off from record pace doesn't mean a bubble is bursting. We are seeing a pullback, but the cause is different from the US.

    We don't have sub-prime mortgages. People aren't going lose their house because payments jump astronomically upon renewal like they are in the US. Interest rates have not gone up much; anyone who is in trouble because of the rate they get now upon renewal shouldn't have been able to buy the house they bought in the first place.

    The price pullback we've seen is due primarily due to speculators and investors leaving the market. Future gains and ROI are no longer there and the feasibility to cash flow a rental property at current prices is much lower.
  29. Dick Nails from Canada writes: Bill Wall from Canada writes: The banks and the real estate boards are simply not reliable sources for what's going on in the real estate market. They spin in their own self interests.

    >> Unlike you have who has no info other than reading the headline and making such a grand statement. How do you do manage to know so much with so little info? You must have crystal balls.
  30. Gord Lewis from Canada writes: What the banker says is correct, at least qualitatively. If you follow any of the current affairs programs on NPR and PBS, you will be aware of what a fiasco the Yanks have created for themselves and the world. Canada is an island of sanity in comparison (albeit a paternalistic, monoplistic one). Remember, the banks are not as pressed to loan you money here, because they have your massive service charges for a safety net. Here are a few rules-of-thumb: (1) When the real estate industry and banking hype machine says everything is rosy, cut their rosiness estimate by 50% to obtain reality. (2) When the real estate industry and banking hype machine admits (finally) to things being bad, double their unrosiness estimate to obtain reality. (3) On your mortgage application, take the bank's estimate of your affordability and cut it by at least one-third. They dearly love marginal applicants, because when they start out young and stretched, they end up living on their credit cards and line of credit = much more profit for the bank. (4) Remember, renting for a period of time is not a disaster - as expensive and unappealing as it may be, you have no long-term risk, no property tax, no up-keep, lower utility bills, and it puts you in a position to spring when the market is right. There is no hype factory for renting, only one for buying, and it has co-opted your friends and parents-in-law. It can be hard to resist all that pressure.
  31. The choices we make decide our place in life from Canada writes: jeff peters from Canada writes: 'I think all these people are trying to convince themselves that renting was a smart choice for them.'

    No jeff, these people are just pi$$ed that they did not, or could not, take advantage of the market conditions over the past 10 years to make some money. It is simple 'eat the rich' jealousy. The current market conditions are just part of the cycle. Time to take a breath and prepare for the next up cycle.

    BTW: Recessions are a great time to get into the stock market. Just stick to solid companies and plan to sit on them for 3 to 5 years.
  32. Joe Smith from Canada writes: Jim Somerville, I think Garth Turner's book 'Greater Fool' (published earlier this year) has a graph similar to the NY Times one you linked, but for Canada.
    The bottom line is that for at least 100 years, housing costs have been stable at a certain percentage of average incomes. When they climb above this stable percentage (as they have in Canada lately) they inevitably 'correct themselves' after a few years. Massive debt (40-year mortgages, low down-payments) sustain this phenomenon but can't prevent its inevitable collapse.
  33. J. Kenneth Yurchuk from Canada writes: Jeff Peters, I also own in the same neighbourhood as you. In the solid neighbourhoods close to the core, there will be a large degree of protection from any general downturn as the commute from the suburbs becomes more expensive due to fuel prices. High demand where you are a 10 minute subway ride or a 20 minute bike ride from work is only increasing.

    Location Location Location.
  34. J. Kenneth Yurchuk from Canada writes: Dick Nails writes: You must have crystal balls.

    ___________________________________________________________

    He must have to walk very carefully Dick! :-)
  35. Yves Farges from Vancouver, Canada writes: Thank you Steve Stone for the 2005 link to Bernanke's famous 'There is no housing bubble' article. (www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html) Real Estate prices are set by consumer demand, and clearly that demand is cooling. In the U.S. it is a disaster and we all hope it does not cave that way in Canada, but it *is* up to the consumer and the willingness of consumers to pay inflated prices for real estate. Real Estate is a great investment, but nowhere is it written that it always has to go up. We are lucky here in Canada that (so far) the consumer has not dramatically cut spending, but it is a good guess that at some point the consumer will cut personal spending. Big ticket item purchase will go on hold. That is the point when supply will exceed demand by a considerable margin. Once that happens, real estate owners trying to sell will stay at high prices for about three months, after which some will start dropping their prices to meet demand. The consumer will set the point at which real estate sales pick up again, not sellers, and there is nothing on the horizon to encourage consumers to buy real estate now, ... quite the contrary. Cracks in the housing market? You bet. Banks painting a rose-coloured picture of 'just a slowdown'? Obvious optimism.
  36. Able Bodied Man from Not VICTORIA Island, Canada writes: Dick Nails from Canada writes: Bill Wall from Canada writes: The banks and the real estate boards are simply not reliable sources for what's going on in the real estate market. They spin in their own self interests.
    ---------------------------------------------------------------------------------------

    You nailed it Dick. The real estate industry is responsible for the ridiculous cliimb in housing prices in the last 5 years on Vancouver Island. It invited their friends the banks to go along on the joy ride. The money flowed like booze at an Irish wedding. It was a feeding frenzy, but with money. When it all settles out, it'll be interesting to see the percentage of the nation's population that can afford a home of their own.
  37. Matthew Thiesen from Vancouver, Canada writes: What goes up comes down. It is not surprising that the market is cooling. All things aside, the biggest reason to my mind is the fact that as the prices inflate (especially above the increases in real wages) the buying (demand) pool shrinks. In our present situation, many people cannot afford even entry-level homes. Prices are clearly inflated to the real, long-term value.

    What i am curious about is the state of the housing market when boomers start to move into smaller places, liquify homes/estates, and generally supply a large glut of detached homes into the market. It won't be some massive sell-off at one time but more of a gradual degrading of prices across the board becuase of supply.

    Realestate way see a buyers market for a long time...
  38. Taras Bulba from Canada writes: So many pessemists here predicting correction. This can mean only one thing - up we go, no correction. It is not gonna happen, not now. When everyone on this board start saying how rosy the real estate market is - that will be another story.
  39. Outlier in Calgary from Calgary, Canada writes: Does this mean I might actually be able to find tradespeople to work on my house in Calgary in the next few years? I can't wait for payback day when they are looking for work and I'll lowball the hell out of them because 'that's what the market pays'.
  40. Phil M from Toronto, Canada writes: Now the CMHC is trotting out 'relative to historical levels' as their catch-all, 'don't panic, there's nothing to see here' quote for the month. Expect to see the CREA,TREB, and local agents use that gem ad nauseam for the next 4 weeks. Then they'll blame the stalling market on unseasonably warm weather.

    Of course levels are high relative to historical levels. When the size of the population and the number of properties grows every year, you're guaranteed to have higher-than-historical results. Talk about a meaningless metric.

    But let's face it, the glut of people entering the market due to 40-year ams is pretty much spent, the economy is stalling, RE markets are still getting worse in the US and England (from which we're nowhere near as 'decoupled' as people think), homes are overvalued, and speculators are active in the market.

    The only thing keeping the prices up right now is the afore-mentioned speculators and the fact that the BoC overnight rate keeps dropping. Watch what happens when they announce there will be no more rate cuts (or even a possible hike) due to risk of inflation....
  41. Ed Long from Canada writes: Investors in real estate are listing their properties because they, like most, can see a protracted period of no or slow growth therefore get the capital out into other investments.

    Long term home owners who have plans to downsize in the future are also choosing now as the time to cash in.

    Continued bleak news from the U.S., not totally relevant to Canada, has many prospective buyers re-examining debt loads and stepping back from the market.

    Projects have been built at a very fast pace and there is an excess inventory of new product in many areas.

    This is not a burst bubble but a slow-down. If the slow-down persists, we will then see substantial price reductions as sellers decide to get serious about selling of pull their property off the market.

    Buyers will react to the economic news. High energy costs, trickle down inflation of consumer goods can undermine the housing industry as people tighten their household budgets.

    We are probably due for a lengthy buyers' market.
  42. Nobody's Fool from Thailand writes:

    Why has there recently been a sudden spike in newspaper articles featuring experts who are saying the RE market is fine?
  43. Gary Dare from Portland, Oregon, Canada, writes: Rick C writes, 'The price pullback we've seen is due primarily due to speculators and investors leaving the market.' Agreed, Canada's issue is that affordability has put a cap on demand. In the US, that's only one of a handful of issues. (As comparison, I'm in the PNW at the moment where there are affordability issues due to California money pushing up prices in Portland, Bend, Seattle, etc.)
  44. Walter K from Victoria, Canada writes: I would suggest that anyone with sizable funds keep their money in insurable amounts in the appropriate accounts. The lending institutions have over extended themselves with speculative loans. They are of course, projecting a positive spin on the declining number of housing units being sold by stating the current values will not fall because of the slowdown. They are not going to say that they are all in danger of holding paper on upside down mortgages. No business person I know of is ever going to say, 'I am having a lousy day, business is bad'. This would be projecting bad business karma to their clients if they do.
    However, there is a problem. Discreetly sweeping up an embarrassing spill under the couch while you have guests in the living room is not going to make it go away.
  45. Gnarly Kanuck from Canada writes: Demographics will dictate just when this bubble will burst....As the boomers begin to experience life changes such as retirement and death, there will be a glut of product on the realestate market.

    New home builders will be faced with competition from the resale market ...People will be interested in more urban locations with lower commuting costs and we may finally see the downfall of the suburban sham.
  46. Mike Harris from Canada writes: The Real Estate Bubble has Bust and the banks/real estate companies are very worried.

    The CREA reported yesterday that MLS listings in Canada are at a RECORD HIGH and at the same time SALES are plummeting, exactly where the US was in late 2006.

    As inventory continues to pile up, expect it to get very nasty soon.
  47. S W from Canada, Canada writes: Sadly realtors are not known for their honesty. I think they are still thought of as a crust above the yesteryear used car salesman. Sorry. As for the builders... let them swing and dry. Many an area has homes that are granite topped crap on postage stamp size lots. You couldn't grow a garden if you had to. Better hope you don't ever have to. It will go on as long as people buy into the lunacy.
  48. bill k from Canada writes: Mike Harris from Canada writes: The Real Estate Bubble has Bust and the banks/real estate companies are very worried.

    The CREA reported yesterday that MLS listings in Canada are at a RECORD HIGH and at the same time SALES are plummeting, exactly where the US was in late 2006.

    As inventory continues to pile up, expect it to get very nasty soon

    The numbers don't lie and no amount of spin can change the fact home prices are coming down and homes are not selling. A home in my area dropped from $520,000 to $450,000 in two months with NO BUYERS. These homes were selling a year or two ago for $525-540,000 and now are sitting on the market. RE agents on here will claim everything is great BUT the numbers don't lie and the fact is homes are sitting on the market and dropping. POP.....what was that?
  49. Able Bodied Man from Not VICTORIA Island, Canada writes: Gary Dare from Portland, Oregon, Canada, writes..., I'm in the PNW at the moment where there are affordability issues due to California money pushing up prices in Portland, Bend, Seattle, etc.)
    -------------------------------------------------------------------------------------

    Big money always arrives to push out small people. Recently on Vancouver Island properties containing mobile parks have been sold to people with big money who then push residents out of their long-term homes in order build monuments to new owners' money.
  50. Shin Dig from Canada writes: I just bought a house! Whoooooo!
  51. Able Bodied Man from Not VICTORIA Island, Canada writes: The choices we make decide our place in life from Canada writes: ...
    No jeff, these people are just pi$$ed that they did not, or could not, take advantage of the market conditions over the past 10 years to make some money. It is simple 'eat the rich' jealousy. ...
    ---------------------------------------------------------------------------------------

    What hogwash. Many people are forced out of real estate because of moving to more expensive centres, situations in life, unrealistic housing values, ridiculous increases in property taxes and service fees and job losses.

    Grow up and discard your arrogance, which, by the way, has as distinct odor of lucre-love.
  52. Ricky for a Centrist Canada from Canada writes: The choices we make decide our place in life from Canada writes: these people are just pi$$ed that they did not, or could not, take advantage of the market conditions over the past 10 years to make some money. It is simple 'eat the rich' jealousy. There's an old latin phrase to describe what you just said: "Futue te et ipsum caballum"
  53. Ricky for a Centrist Canada from Canada writes: The choices we make decide our place in life from Canada writes: these people are just pi$$ed that they did not, or could not, take advantage of the market conditions over the past 10 years to make some money. It is simple 'eat the rich' jealousy. There's an old latin phrase to describe what you just said: "Futue te et ipsum caballum"
  54. D S from Canada writes: Google "This American Life Podcast"

    This week's episode (a free download) gives an excellent overview of the housing crisis in the States, and how it happened. To all those interested in the topic I suggest listening to the episode, then consider how it does and does not relate to the Canadian housing market. It's certainly a better use of one's time that wading through the uninformed knee-jerk reactions that typically plague globeandmail.com comment forums.
  55. William Ross from Victoria BC, Canada writes: Very good news indeed, As the last few years it was overheating so a little slow down might be just what the doctor ordered.
  56. bill k from Canada writes: Mike Harris from Canada writes: The Real Estate Bubble has Bust and the banks/real estate companies are very worried.

    The CREA reported yesterday that MLS listings in Canada are at a RECORD HIGH and at the same time SALES are plummeting, exactly where the US was in late 2006.

    As inventory continues to pile up, expect it to get very nasty soon

    Looks like those who were foolish to buy in the last year or two on 40 year mortgages are feeling the pain of falling home prices. The numbers don't lie and the crash is happening now.
  57. Mike Harris from Canada writes:
    Ask yourselves during how many bubbles and how many times they said "this time its different"...

    and it wasn't
  58. Nicolas Sarkosy from Toronto, France writes: This is nonsense talk. How could bloody Canada, whcih is a sub-vassal of the US not suffer the consequences of a bad economy there ?
  59. Dave C from Canada writes: Yeah Scotiabank, Whatever!!! I'll be the first to laugh when Scotiabank and all of the other mortgage lenders in this country start seeing the "Walkaways" like they are seeing all over the US. To think that markets such as Alberta and BC that have doubled or tripled in price over the last few years, will only gently come down in price is beyond funny. So who is going to keep paying the absurd house prices in these Provinces???? NOBODY, that is why inventory is swelling and sales are dropping.
    The speculators were buying from each other over the last few years and are the reason prices went to these ridiculous, unsustainable levels. Now that those fools are no longer buying from each other, the willing buyers have dried up. For now prices are stagnant and slowly dropping, these drops will gain increasing speed as the carrying costs start hurting the speculators who now have no "greater fool" willing to pay their absurd asking prices.
  60. Mike Harris from Canada writes: I wonder how many fools bought at the height of the market in the US believing Bernanke?

    Bernanke: There's No Housing Bubble to Go Bust

    http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html
  61. Steve Not an Alberta Redneck from Calgary, Canada writes: I've heard a lot of whining from younger workers about how they will "never" be able to own a home. The situation we are in today is hardly the first time this has happened. I faced the same predicament in 1980.

    Basically, the "bloom" is now off the real estate market and when this happens, many of the speculators will want to get out with their gains - if possible. When this happens, there will be a long term softening of prices compared to the average salary. Over time, housing will become much more affordable. So, now is not a good time to buy.
  62. Nick Palas from Canada writes: I guess when your bread and butter depends on making an earnings by giving mortgages or selling homes, you've got to master the art spinning the facts in the sea of negative news:

    So what if we have inventory that according to CREA are an all time high and it's only the end of April.

    So what if have sales that are amongst the lowest in the last several years and we can't blame the snow anymore.

    So what if our biggest trading partner is in a recession.

    So what if the Real Estate Bubble is busting and prices are coming down in markets around the world.

    THIS TIME IT'S DIFFERENT....Trust Us!!

    -signed your local Bank/Real Estate Agent
  63. Marv M from Bubble Land Alberta, Canada writes: I wouldn't buy a house in Edmonton even if prices dropped by 50%. They would still be overpriced. It's so funny hearing the ads from local home builders trying to sell their overpriced shacks. They try to appeal to the new home buyer by trying to sell their houses as some sort of prestigious lifestyle and of course every new subdivision has to have a glamorous name. "The Prestigious Royal Estates of Oak Meadows": Interpretation, an overpriced, cheaply constructed house built on a flat farmland zoned lot with a few transplanted trees. OOOOH, but the brochures make it look so glamorous!!!
  64. Alastair james Berry from NANAIMO BC, Canada writes:
    AS LONG AS OTTAWA CONTINUES TO DEBASE OUR CURRENCY PRICES HAVE NOWHERE TO GO BUT UP!!!

    Sure there are bumps and pot holes on the route but the route in inexorably up!!

    My 1960's saved CAN $ 1 has only got about 2% of it's original purchasing power.

    It's all quite simple if OTTAWA PRINTS ENOUGH CURRENCY TOMORROW my residual 2% vanishes too!

    In 1980 I could purchase a new car for about 1/4 the price now!
    In 1960 a VW cost about $1100.

    Houses and gold have followed a similar price pattern.

    THERE ARE UPS and DOWNS, for sure, but as long as OTTAWA continues to print masses of worthless paper currency(it has no asset backing at all! Only a Politician's promise,,,,and what is that worth these days?) prices for everything in Canada will rise!

    Over the LONG TERM.......say 50 years.......housing prices will rise(unless Canada returns to the GOLD STANDARD) and even today's prices will look good!!

    The Gold standard kept inflation near zero for 6000 years.
    FIFTY YEARS OFF IT, AND THE WORLD IS IN FINANCIAL CHAOS
  65. Virginia Gill from Sault Ste. Marie, Canada writes: I agree with Gnarly Kanuk. I am a BABY BOOMER and last year, due to health problems, I sold my house and moved into a rental situation. In the next decade, more & more of boomers will do the same. Then the Real Estate market will certainly change.
  66. Brenda MacFarland from Calgary, Canada writes: Dear Bill K, "Looks like those who were foolish to buy in the last year or two on 40 year mortgages are feeling the pain of falling home prices. The numbers don't lie and the crash is happening now." What is it with you people and 40 year Morgages? All of you are assuming that this goes hand in hand with little or no down payment and that any downturn wipes them out. Lets try some facts: People can and do take out 40 year mortgages with 20, 30 or even greater % down payments. The longer amortization gets payments down so home ownership is affordable. If there is a fall in values, so what? As long as people are working and can afford the payments does the owner/borrower care? They STILL need a roof over there heads. The REAL crisis in this country is housing AFFORDABLITY ! If everyboby bought Real Estate the way you financial perfectionists would have it, pretty much the majority of people would be looking to rent, except of course, there wouldn't be anything to rent. 40 year amortizations in themselves are no more risky than 30 or 25. Maybe there is less risk of default because the payments are lower. Maybe long loan amortizations are not the greatest and most perfect way to borrow but they are a good investment in terms of getting people housed. The cost of creating housing is huge, just as is the cost of infrastructure. I for one would rather build that hospital or transit system and finance it over 40 years than not at all because in a perfect world it should be a shorter loan period. This is not a 10 year loan term so we can own a BMW, this is about providing one of the three basic needs: Shelter.
  67. Tom Parkinson from Vancouver, Canada writes: Saw my first "Price Reduced" on a real estate sign in the affluent west side yesterday. Condos on our street usually sell within the week. One three doors down has had a sign out for three weeks now.
  68. Remembers 1989 from Toronto, Canada writes: OK, I'll admit it. I'm one of those chicken littles. But, this time, I thought it might be different and RE might stay stable. Then, I hear the words 'soft landing'. Oh boy, that's what they predicted at the end of the dotcom bubble and the US RE bubble. You just don't know how over-extended people really are and what type of speculation is going on - that's why the soft landings turn into hard ones. Greed makes it go up - Greed makes it go down - Greed will make it go up again.
  69. Yvonne Wackernagel from Woodville, Canada writes: It depends on where you live: "jeff peters from Canada writes: .................I wouldn't be in the market and have built up substantial equity, nor could I afford to get in the market now. My property in the Beach area of Toronto" The beaches are blessed with 24 hr. street car service and twenty minutes to downtown on public transportation. On the other hand, you are quite probably living in an old house which has been renovated several times or in any event does not compare to a modern well built house. You have a choice, especially when you compare quality of life and the price you pay for it. On the other hand, Ontario and Quebec WILL SUFFER, whether you want to believe it or not, and whether you suck up what the banks and CMHC tell you for their own purposes. Because, this Province will suffer a recession and if people do not have good jobs, they cannot buy expensive houses . And Ontario IS OVERPRICED. My Developer friends have been making 133% profit minimum for a long time, why, because people are stupid enough to buy their houses, thinking that the good days will only get better! It is better to have your money than to buy an overpriced house and lose much of it when things get back to 'normal'. Besides, the ones who will suffer are the ones who were certainly not prudent enough to weigh all the pros and cons of home ownership before jumping to keep up with the Joneses. And everyone should quantify stress because stress, especially financial stress causes ill health.
  70. Nick Palas from Canada writes: The term "soft landing" was used by the US banks before the Bubble Bust there and then:

    TTTIIIIIIIIIMMMMMMMMMBBBBBBBBBBBERRRRRRRRR!!!!!
  71. bill k from Canada writes: Mike Harris from Canada writes: The Real Estate Bubble has Bust and the banks/real estate companies are very worried.

    The CREA reported yesterday that MLS listings in Canada are at a RECORD HIGH and at the same time SALES are plummeting, exactly where the US was in late 2006.

    Brenda MacFarland from Calgary, Canada it seems you are trying to defend 40 year mortgages which anyone with a half a brain wouldn't touch. In Japan they had what was called a generational mortgage (60 years mortgages) before their housing market crash in the early 90's and they are still deflating. "It's different" which has been proven over and over in history as a lie since it's NEVER different just different suckers. POP.......what was that?
  72. The choices we make decide our place in life from Canada writes: Ricky for a Centrist Canada from Canada writes:"There's an old latin phrase to describe what you just said: "Futue te et ipsum caballum""

    Sorry Ricky; not without dinner first and I don't have a horse. It sounds to me like you are one of the poor saps I am talking about. But please feel free to not buy a house so that you can rent one of mine and pay off my mortgage for me.

    Cheers
  73. The choices we make decide our place in life from Canada writes: Able Bodied Man from Not VICTORIA Island, Canada writes: "What hogwash. Many people are forced out of real estate because of moving to more expensive centres, situations in life, unrealistic housing values, ridiculous increases in property taxes and service fees and job losses."

    So what you are saying is that the people you are talking about bought houses that are so close to their limit of affordability that the slightest tax increase, income disruption or expense increase made the house unaffordable. That sounds like poor planning more than "unrealistic housing values" or "ridiculous increases in property taxes". Growing up means planning for rainy days and eventual economic down turns. Something I have done. You should try it, rather than complain about your failures on message boards. ;-)

    Cheers
  74. Dig Deeper from Canada writes: GOOD NEWS!!!!! Its about time the market took a breather. Home prices are an at all time high with little product that an average family can afford.
    If you want to take a close look at inflation house prices are a good place to start. In the 1970's the price of a house was roughly 1.2 times the average family income. People had a reasonable chance of paying off their mortgages prior to retirement. Currently house prices in urban centres are roughly 4.5 times the average family income. (based on a 2,000sqft house)
    The market is out of control. Bidding wars, unethical practices, and greedy builders (GM of $50/sqft), all drove this current market to insane levels. I hope this correction lasts for a while and brings some relief so those who want a home can finally get one.
  75. Brenda MacFarland from Calgary, Canada writes: DearBill K, "It seems you are trying to defend 40 year mortgages which anyone with a half a brain wouldn't touch. In Japan they had what was called a generational mortgage (60 years mortgages) before their housing market crash in the early 90's and they are still deflating. "It's different" which has been proven over and over in history as a lie since it's NEVER different just different suckers. POP.......what was that? "
    I am sure that you encouraged your Children or Grandchildren to not buy a house until they could afford a 25 year amortization. How long is that? Not problem I guess because if the market crashes than Real Estate can be had for a song. What if you call it wrong? I happen to think that Oil is the second most valuable resource, after land. It is the ultimate limited resource. At least with oil you have alternatives. In the very long run the probability of real estate going up is equal or better to it going down.
  76. Nick Palas from Canada writes: Todays ScotiaBank economist “soft landing” forcast for Canadian Real Estate sounds errily familar to the US forcasts by American economists :

    Economists Predict Soft Landing For Housing

    WASHINGTON, D.C. - After soaring to record levels for three consecutive years, the single-family housing market is gliding toward a “soft landing” in 2006, as rising interest rates, affordability issues and a reduced role for investors/speculators contribute to a softening in demand, according to economists at the National Association of Home Builders (NAHB) Construction Forecast Conference in Washington, D.C

    http://originatortimes.com/content/templates/standard.aspx?articleid=1828&zoneid=5
  77. Ob Server from Canada writes: Big tempest in a small teapot. Canadians should be worrying more about food inflation than the price of their homes. You don't buy and sell a home every day. In fact the average Canadian will trade 3 properties in their lifetime. But you eat everyday and its getting more expensive to eat than it is to live in your home. There's something to talk about. The rest is just lots of noise.
  78. martha stewart from Canada writes: Perhaps some new tax would help? Isn't there carbon in the wood?

    I'm waiting to see how the expanding bureaucracies built on expanding taxes from these inflating house prices are going to deal with this. If it was a fair world taxes would decrease proportionally as house values shrink.

    Since it isn't a fair world, I wonder how governments will twist things to maintain their tax revenues, and their perks.
  79. REV eighteenseventeen from Canada writes: Dig Deeper from Canada - GM of $50/sqft What country can you build for close to $50 a sq ft? Want a condo in Vancouver? You are looking at about...well just add a zero at the end of the $50. Even one hour away from Vancouver you are looking at close to approx $100 per sq ft for a builder's costs for residential construction.
  80. REV eighteenseventeen from Canada writes: Revelation folks-people got to live somewhere. Canada is too cold for tent cities except Vancouver and surrounding area.

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