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Home prices slip for first time in nine years

LORI MCLEOD

Globe and Mail Update

Latest comment posted at 1:16 PM EST 22/07/08

Record number of houses are listed in first half of 2008 as sales slow down ...Read the full article

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  1. Mike Glatt from toronto, Canada writes: This is starting to look ugly. A 15-20 % decline in price and perhaps more would not surprise me.
  2. Marcus Leja from Calgary, Canada writes: The major Canadian banks have also announced they will no longer support 40-year mortgages, as mandated by the federal government. Finally, people who have no business buying homes will find it difficult to participate in the real estate market. I look forward to this bubble popping hard. :)
  3. bill k from Canada writes: The Canadian housing crash has started early this year. As the housing crash gets worse we will see double digit falls in home prices. We could easily see 20-25% drop in prices in one year. this housing crash will get ugly as many people lose their homes.
  4. Winston Smith from Canada writes: Put on your seatbelts boys and girls. We are about to hit a very rough patch courtesy of David Dodge and his easy money policy.
  5. CallofDuty . from Toronto, Canada writes: My cousins in UK are visiting me. Oh boy the stories they have told me about they're housing crash! We are next folks. Like it or not! It's going to get just as ugly!
  6. Crimson The-Red from Canada writes: Houses shot up to high, now they will go down some.... this will only be a wealth adjustment on paper, at the end of the day it will not be as problematic as the USA as Canadians are a bit more conservative... we did not have people running around kicking off builders to build 20 different houses for re-sale purposes.... that was Arizona.
  7. Stop! Think! from Canada writes: Marcus Leja from Calgary, Canada-----It was Flaherty who allowed the banks to start giving 0/40 mortgages anyways..All he is doing is correcting his bone-head move from the '06 budget.....Finally!!
  8. John Hamilton from Canada writes: Where are all the idiots who said this was not going to happen? That we were not in as bad shape as the US?

    Well folks we sell to the US and if they can't afford to buy we will be worse off.

    As a mortgage broker I can tell you over the last year 50% of all buyers were zero down. Those buyers are now gone. Period. so remove them from the equation before you even figure out what is happening to house prices now.

    This past week ING, CIBC, PCF, BMO Firstline said they will implement the October 15th rules effective now. Others are rumored to follow this week. So the effect of taking out 50% of all the buyers is happening now on top of the expected price falling because of the depression on it's way.

    Why is it that people seem to forget what the cycles do? And that every few cycles is a good one. And then once in a while the perfect storm comes along.

    Don't forget, in the 30s when we had 50% unemployment and soup lines, gas and food was very cheap.

    This will be the one that all others are measured by. You all just happened to be born through the lottery of life to be lucky enough to attend this one.

    I'll bet the big five banks get whittled down to 3 at best within a year.
  9. Kothar Rumbleg from Canada writes: Why is it that our governments lie and that our central banks lie. What do they have to gain from this? It is apparent that things are not rosy, yet the finance minister says the Canadian economy is doing great. We have the central bank saying that inflation is not a worry, yet in other countries in the world it is sky high. We have jobs leaving left right and center in ontario and quebec, yet there are lots in Alberta. The US is in financial disarray. Bernanke and Paulson were telling everyone that the housing problem was contained, yet here we have today them bailing out Freddie and Fannie, this ontop of Bear sterns and IndyMac collasping. I think from this point on people are going to have to look after themselves do not rely on others!
  10. Jim **** from Canada writes: (British) house sales slump to lowest level ever:

    http://www.guardian.co.uk/business/2008/jul/15/housingmarket.houseprices
  11. Nick Palas from Canada writes:
    TTTTTTTIIIIIIIIIIMMMMMMBBBBEEEEEEEEEEEEERRRRRRRRRRRR!!!!
  12. Tyler Williams from seattle, United States writes: .

    But how can this be happening, when so many comments on these boards have been informing readers for years, including during recent months, that Canadian house prices would not drop, no matter what was happening nationally or internationally?

    .
  13. Nick Palas from Canada writes: Gregory Klump: “Price increases are expected to be modest in the second half of 2008, as sales continue easing and new listings remain high.&8221;

    How can these idiots at CREA be talking about 'price increases' when prices have already started coming down?

    Its mind boggling. Who do they think they are fooling?
  14. Greg Van Zandt from Canada writes: Holy doom and gloom, there are a few cities where we see a decline but we are no where near as bad as the states.

    Only 4 markets out of 25 saw a drop, mostly out west where prices were overpriced the last few years.

    Most major markets are still increasing...

    'Prices in those cities all rose moderately year-over-year in June, up 3.7 per cent in Toronto, 4 per cent in Montreal and 6.8 per cent in Ottawa.

    For the first six months of the year, listings on the Multiple Listing Service (MLS) reached a record level of 332,958, up 8.1 per cent from the previous record set the year before.

    Listings in the past three months reached record, or near-record, levels in Toronto, Vancouver, Ottawa, Regina and Saskatoon, according to CREA.'
  15. Aloha Eric from Toronto, Canada writes: The CREA president is sounding awfully like David Lereah, former chief economist of the National Association of Realtors in the US. His first book was titled 'Are You Missing the Real Estate Boom'. The 2nd was titled 'Why the Boom Will Not Bust and How You Can Profit From It'. Then of course he predicted 'all of the doom and gloom forecasts of a housing debacle are not only irresponsible, but also downright wrong.' He predicted a market bottom in Sept 06, Dec 06, Mar 07, Jul 07... well you get the idea.
  16. RD Lone from Vancouver, Canada writes: @ Greg Van Zandt: 1) Listings are bad for prices, not good; 2) in the US where the housing bust is a fact, all markets did not decrease until two or three months ago, it starts somewhere then cascades; 3) unless you are a flipper, it'll be ok, you need somewhere to live anyway.
  17. Quirky P from Canada writes: With a market like this it is very risky to move house,if you buy a new property b4 you've sold the old one. You could end up in a situation where you have a new property bought at the increased price but cannot realize the assumed price on the old one.
  18. bill k from Canada writes: 'Greg Van Zandt from Canada writes: Holy doom and gloom, there are a few cities where we see a decline but we are no where near as bad as the states.'

    The propaganda can not hold water any longer. Even Eron manipulated the number for so long until reality sets in and then prices come crashing down. Prices are down across all of Canada.

    'Prices in those cities all rose moderately year-over-year in June, up 3.7 per cent in Toronto, 4 per cent in Montreal and 6.8 per cent in Ottawa.'

    This is IMO a propaganda lie. Prices in my area have been falling for months and in many other area's within Toronto. Record inventory and 20% fews sales equals LOWER PRICES. It's the laws of supply and demand and thus the RE propaganda IMO does not hold water.

    Reality will bring the prices back down to earth. POP....what was that?
  19. Nick Palas from Canada writes:
    Greg Van Zandt,

    Canada is where the US was 2 years ago. According to BMO economist Doug Porter, we are lagging the US by 2 years.

    The US crash started the exact same way, started in a few cities and then spread everywhere.
  20. Chilled One from Canada writes: Nick Palas from Canada writes: Gregory Klump: “Price increases are expected to be modest in the second half of 2008, as sales continue easing and new listings remain high.&8221;

    How can these idiots at CREA be talking about 'price increases' when prices have already started coming down?

    Its mind boggling. Who do they think they are fooling?

    --------------------

    Realtors have quickly gained the notoriety and overall disrespect that once was reserved for lawyers.
  21. Michel Frechette from Kapuskasing, Canada writes: Watch what happens to home prices once property taxes are increased to reflect to the increased cost of fueling the snow removal equipment this winter.
  22. Willard Kurtz from Canada writes: Greg VZ - I'm not sure what your point is? You seem to be implying that, contrary to those reporting that the 'housing' sky is falling, pricing is increasing moderately in most markets. OK however, then you add the last two paragraphs regarding MLS listings at an all time high as support for your argument? Simple economics Greg, when supply increases and demand decreases, prices fall. You may want to rethink that one.

    I've been watching housing prices in a particular TO neighbourhood in the West end for the last year. The first change I noticed about 9 months ago was that houses were going at list or a slight premium in most cases - bidding wars seemed to have tailed off. In the last few months I've noticed a significant change...for the most part, the houses are not selling. They're sitting on MLS for 30, 60, 90 days unsold. These same places have dropped about 3-5% on average from their initial listed prices and they still haven't moved. It seems like buyers are waiting for someone to blink and reset the market. Too soon yet to tell how deep this will go.
  23. Mike H from Canada writes:
    In Toronto the more I drive around the more listings I see with 'REDUCED' sticker or 'NEW PRICE'. Inventory was up 20% in June while sales were down 20% and I can see it as most streets have for sale signs everywhere. I just had an agent call me about a new price on a house I am tracking to let me know the price had been substancially reduced. Seems The panic has officially set in. Maybe he heard the news....
  24. Rick Jolly from Ladysmith, writes: This is the tipping point. When speculators find they can no longer make money, they'll exit the market. That time is now.

    Real estate agents and owners have been clinging to current prices as properties sit for months. They have seen prices as relatively stable - no need for panic sales. No longer.

    The oil bubble is next to burst. Smart investors will begin to convert to cash as interest rates are inevitably increasing. Look for investors to exit the stock market en masse as cash becomes a viable investment. Commodity prices will dip briefly before the next commodity boom brought on by the electrical revolution. In around 10 years, cars will be powered primarily by batteries. At about the same time, solar power will cost less than coal. The electrical revolution will bring the world out of a painful, albeit swift depression. In the end, we'll be better off.
  25. Aloha Eric from Toronto, Canada writes: The OSC strictly enforces misleading claims or statements in the securities industry. How long before we get this regulation of the real estate industry?? After all, isn't your house the largest investment most people ever make?

    The OSC found 'a number of instances where (marketing) materials were prepared in a way that highlights or exaggerates favourable points while omitting or failing to disclose facts that may be less favourable.' Sounds like it would apply to every word out of a realtor's mouth.
    http://www.thestar.com/comment/columnists/article/275251
  26. Michelle Trunk from Vancouver, Canada writes: WILLARD: I agree. I have been watching the Vancouver market very closely for a year, receiving alerts for any detatched house on Vancouver East or West side up to 1.1m. The frenzied pace of sales has been replaced v sharply with the return of subjects and due diligence on behalf of the buyer. Houses are staying on the market for months.
    Also, the volume of houses between 900k and 1.1m has increased noticibly, leading me to believe that these houses would have originally been on the market for well over 1.1m, not showing up in my parameters. Price adjustments down are a VERY common occurence (several nearly everyday), ranging from 30k to more often 100k .
    I agree CREA is hoping people will buy their spin but the evidence is all too clear. They have very little credibility in my mind and their comments are entirely self-serving.
  27. Winston Smith from Canada writes: Take a look at the following links to US, UK housing charts. We're next. http://newsimg.bbc.co.uk/media/images/44820000/gif/_44820230_house_prices_10_07_08.gif http://newsimg.bbc.co.uk/media/images/44611000/gif/_44611865_us_house_prices_gr466.gif
  28. Luc Delorme from Ottawa, Canada writes: Somehow, the more I read here, the more I think that the market here in Ottawa must be an oasis of level-headedness caused by having 25% of the local workforce employed by the government.

    There really isn't much of a bubble here at all. Prices have risen reasonably for years, no big spikes, no big dips. Slow and steady wins the race. The 6% increase seems to be in line with the yearly wage increases of many government workers.

    This is what a housing market is supposed to look like, without speculators, overstretched investors, etc. People here buy houses to live in them, many for their entire lives. Many of my neighbours have lived in their houses for over 20 years, and I intend to do the same. There have been a number of houses for sale in my neighbourhood in the past months. The good ones sell within 2 weeks, the bad ones stay on the market for a long time, because buyers here will not tolerate paying too much if the quality is not there. Take a look at the houses in Ottawa that have been on the market for over 30 days; chances are, you wouldn't want to live in any of them.
  29. Greg Van Zandt from Canada writes: Sorry Bill but I will go with the hard numbers not what you are seeing on your block. Eron? I suspect you mean Enron, although I don't see the comparison, one company cooking its books vs housing numbers which are based on hard data from the mls.

    The situation in the US is from thousands of mortgages given to borrowers with no or bad credit histories. In addition, over 90% of appraisers in the U.S. reported that properties were over-valued yet despite this, mortgages were granted and often for as much as 105% of a property's value.

    Canada did not indulge in nearly the same amount of high-risk sub-prime mortgage lending as the United States and have taken steps (such as eliminating the 40\y mortgage) to ensure it does not.

    "The Canadian housing market does not appear to be characterized by excess supply at this time," Sheryl Kennedy, the central bank's deputy governor, said in the text of a speech delivered yesterday in Banff, Alta. "The proportion of unoccupied, newly built dwellings in most cities remains below historical averages, suggesting that a major widespread reversal in house prices is unlikely in the near term."

  30. Luc Delorme from Ottawa, Canada writes: Aloha Eric: a house is a place to live. It's a purchase, not an investment. A typical person that buys a house and lives their adult life in it would be better of in the end even if it was worth nothing after 30 years.

    Nobody really complains about cars losing value; they buy them because they provide some utility and pleasure to the owner, and you can use it for a while at no cost after it's paid off. I see my house the same way.
  31. Greg Van Zandt from Canada writes: Just because someone dropped the price of their house or it sat on the market longer does not mean anything other than it was overpriced.

    Houses are still selling at higher prices than last year (except in a few areas)

    Remember this data is only for the month of June this year...

    "In the past decade, prices of existing homes in Canada have risen by about 55 per cent, while new-home prices have risen by about 27 per cent. As one of the country's largest housing booms loses steam, most economists are forecasting a small increase in prices this year that will keep pace with the central bank's 2-per-cent target for inflation.

    It's a much different story in the U.S. market, where home prices dropped by 14.1 per cent year over year in the first quarter of 2008, according Standard & Poor's/Case Shiller national home price index."
  32. Binder Dundat from Toronto, Canada writes:
    The winter weather is responsible! David Miller's land transfer tax is responsible (for declines across the country)!

    Sorry, couldn't resist.

    Looks like we're finally seeing a return to reason. Unfortunately, it has taken a potentially devastating slowdown to bring people back to their senses. As a dedicated renter/saver who has been living simply and waiting for a correction, I feel smug. But as a working Canadian who wants to see my fellow citizens do well, I am worried.
  33. David Gibson from Canada writes: Buyers who don't qualify at the bank, head for a mortgage broker. Thus, brokers have a much higher percentage of no-$-down people. .... The US took a dive i n 2002. Canada did not. Looking for direct parallels is dangerous. "If" the US suffers enough, we will too. .... Recessions in Canadian real estate have almost nothing to do with jobs or incomes, they have to do with consumer confidence. In the great recession of the early 90s, maybe 3 or 4 percent of buyers lost their jobs. Real estate sales dropped by many many times that, because even people who had jobs and money felt generally insecure about the economy. .....In Ontario I expect an overall price decline in 2008, of 5% or less, and that is if the US lending crisis continues, as seems likely.
  34. Carmen Rae from Calgary, Canada writes: oh noes! a 2% drop from last June. the sky is falling!
    Give me a break.
  35. Greg Van Zandt from Canada writes: CREA data is based on MLS sales data...ie there is no spin.
  36. Carmen Rae from Calgary, Canada writes: actually I misread it. It was 0.4%. That's right. Not even half a percent. Bitter, bitter, renters.
  37. Greg Van Zandt from Canada writes: Binder Dundat from Toronto, Canada writes: As a dedicated renter/saver who has been living simply and waiting for a correction, I feel smug.

    ------

    Smug? "In the past decade, prices of existing homes in Canada have risen by about 55 per cent"

    Are you getting the same return by renting?

    Calculate what you spent in rent this year..(say 12K) .do you think that prices will drop by that much? Will intrest rates still be at hisoric lowes when you buy?
  38. George D from Canada writes:
    What's funny is that even homeowners like myself hope that prices come down, since I plan on eventually upgrading rather than downgrading anyway. Noboldy likes the fact that real estates agents are making lots of money while it's becoming more and more difficult to buy a house, but one has to deal with it.

    I don't understand the urge to freak out by some of the posters here the minute anything remotely related to housing comes up. I know it's difficult to admit that you don't make enough money to afford a house while others do, but the knee jerk irrational reactions are really annoying.
  39. Michelle Trunk from Vancouver, Canada writes: Luc Delorme: "a house is a place to live. It's a purchase, not an investment. A typical person that buys a house and lives their adult life in it would be better of in the end even if it was worth nothing after 30 years."

    Where I live (Vancouver) this is not possible. "A typical person" in Vancouver must buy and sell several times in order to get into a decent home, in a nice neighborhood, where you can raise your family and stay for 30 years. Families here are typical, with a typical incomes that would love to stay in a house and never leave. But unlike you, we need a bigger down payment (400k ) to afford mortgage payments on a 800k house.
    Do us a favor: Since you live in utopic Ottawa, where houses and incomes co-exist peacefully, can let the poiliticans know that the rest of the country is going to the dogs while you all get fat on our tax money?
  40. J. Kenneth Yurchuk from Canada writes: Marcus Leja: What bubble? Aside from a few specifiv markets where growth has been extremely strong due to the commodity boom, the Canadian Real Estate market has seen only modest gains. BC and Alberta may see a bubble burst, but everywhere else is more likely to see a plateau or very modest decrease in a short lived correction due to increased supply as much as decreased demand.

    In Toronto I expect to see a 3% increase over the next year, and 5% in the year following.
  41. that guy from Canada writes: wow. most of you are pretty off the wall. van zandt and a couple of others are seemingly the only reasonable voices here at the moment. Sure, we lag the US by a couple of years, but you know what DOESN'T lag? one off fall off a cliff bottom falling out of the market events precipitated by conditions that SIMPLY DON'T EXIST in Canada. the subprime resi mortgage market in canada is at most 4% of the overall. in the US it was 20%!!! the subprime market in the US consisted of utter craziness including millions of loans made to people with NO INCOME, NO JOB, or ASSETS. they called 'em 'ninja' loans. these DO NOT exist in canada. You see, there, the risks were layered. here, much less so, in a much smaller segment of the market. when it all hit the fan in the US entire whacks of people simply walked away from their houses/mortgages because they had no skin in the game and went back to renting. we don't have jump up teaser rates here that hit entire cohorts of people at once, thereby causing a flood of defaults simultaneously leading to mass foreclosure and serious oversupply. there hasn't been speculative building of vacation homes in leamington or some other silly place. sure, the market is slowing down due to economic pressue. Sure, there will be price decline over the next couple of years, but tell ya what, 5 or 8 or even 10% price decline over the next couple of years after three years of 10% per annum increases? bottom falling out this is NOT. be rational people. fear leads to irrational action, and frankly when fear hits the untintelligent masses it gets even worse, and for no sound reason.
  42. Yves Farges from Vancouver, Canada writes: Of course home prices are dropping. The abnormally high prices per square foot require demand to stay high. The economy is getting weaker as the influence of the U.S. recession effects the Canadian economy, and this is reducing demand. Now buyers with a modicum of common sense will wait for prices to run down. How far down? Well, that depends on the depth of the recession that is building. A house and apartment is indeed a place to live, so the price going up and going down will not affect home owners. It will - however - hammer the speculators and the overleveraged who decide to ignore the basic laws of Supply Demand, and gravity ... because the truism "what goes up, must come down" is here in force.

    Congrats to the Globe & Mail for reporting the facts, warts and all, without the usual Real Estate industry spin that "all is well and home prices are heading higher", which is finally shown to be utter nonsense.
  43. Tyler Williams from seattle, United States writes: .

    Why do people such as Michelle Trunk from Vancouver use this board to comment that it "is not possible" for her and people like her to hop out and "buy a decent home, in a nice neighborhood, where you can raise your family and stay for 30 years"?

    I mean, seriously, comments such as that are just going to risk really annoying homeowner George D from Canada, who writes: "I know it's difficult to admit that you don't make enough money to afford a house while others do, but the knee jerk irrational reactions are really annoying."

    So stop annoying George D from Canada, people. With so much EXTREMELY annoying and irrational whining on this board, the real and serious risk is that George may get heartburn and regurgitate some Grey Poupon mustard from lunch onto the hood ornament of his Rolls Royce.

    .
  44. Canary in the Wharf from Canada writes: Leverage = investing with borrowed money as a way to amplify potential gains at the risk of greater losses.
  45. Michelle Trunk from Vancouver, Canada writes: Just for kicks, while I have been checking in on this thread (half hour) I have been alerted to 3 new price changes (within a 25km radius).

    #1
    Original price: 998k
    New Price: 950k

    #2
    Original price: 1,180k
    New: 1,029k

    #3
    Original : 1,198
    New: 1,098

    One half hour = 3 price changes. They'll be at least 10 more before the day is over.

    I'm glad that CREA is reporting that there are no decreases, because based on what I see from MLS listings, I'd likely believe otherwise!
  46. Sask Expatriate from Vancouver, Canada writes: Here's my question to the financial wizards on this board - should I be saving, or paying off my mortgage as fast as I can?

    Bought a condo last summer (yes, we have a 40 year - I know, I know - 5.49% rate, closed but good options to prepay) in the Lower Mainland. 5% down, took rest of cash and paid off student loans. No debt now except car loan (about 10K), no credit card debt either. We're 32, no kids but want some, owe $300K on mortgage, make about $5000 a month after taxes. Wanted to wait on house buy, but forced into it when we had to move from rental.

    So tell me - how screwed are we?
  47. Tyler Williams from seattle, United States writes: .

    Michelle Trunk from Vancouver, in her subsequent post of 3:21, is getting close to being guilty of assault against George D from Canada.

    Look, to repeat, George D from Canada clearly explained to people: "I know it's difficult to admit that you don't make enough money to afford a house while others do, but the knee jerk irrational reactions are really annoying."

    So stop annoying George D from Canada, people. With so much EXTREMELY annoying and irrational whining on this board, the real and serious risk is that George may get heartburn and regurgitate some Grey Poupon mustard from lunch onto the hood ornament of his Rolls Royce.

    And really, Michelle Trunk is practically punching George D in the stomach.

    What, she wants George to barf his Grey Poupon mustard AND his cucumber sandwiches with caviar all over his Rolls Royce?

    .
  48. that guy from Canada writes: so LISTING prices came down in the past 30 minutes. the question you have neither asked nor answered is what did the person who is listing that house pay for it?

    so it was listed at 998, and now at 950. if they paid 875 2 years ago, and ultimately even lower the listing price again and sell at 900, what might you call that Ms. Trunk? oh...wait, i know. a price increase.
  49. Binder Dundat from Toronto, Canada writes:
    Greg Van Z,

    You're right. People who bought 10 years ago have done spectacularly well (on paper at least). BUT people who bought say, TWO years ago could be very stretched in the near future.

    Also, buying with historic low interest rates is only a good thing if the principal is small. That hasn't been the case with most buyers in recent years -- those people are barely making a dent in their enormous principal, and higher resets are on the horizon. Not good.

    I hate renting, but I've made my bet that it's the smart thing to do for now. We'll see.
  50. Luc Delorme from Ottawa, Canada writes: Michelle Trunk: While I do sympathise with the younger people in Vancouver, the problem is that people, over the years, were willing to pay higher than the intrinsic market value for a house (i.e. the price of building materials, labour and the land value). When people realize that and refuse to buy a house in Vancouver at overvalued prices, the marker will correct.

    That does mean that many people will have to move away from the area, and they will be financially better off for it. My partner is originally from the Vancouver area. The opportunity of a stable job brught here here (where we met), and decent quality of life and reasonable living costs were good enough reasons to settle down here.

    For those of you in BC and Alberta, here's a little test I'd like to see done. Call your house insurer, and ask them what they have estimates as the total construction (labout materials) cost to rebuild your property in case it burns to the ground. The rest is essentially land value. Is the land out there worth so much as to make ownership almost impossible for many people? I guess people despise snow much more than I thought :)
  51. Chilled One from Canada writes: George D from Canada writes:
    What's funny is that even homeowners like myself hope that prices come down, since I plan on eventually upgrading rather than downgrading anyway. Noboldy likes the fact that real estates agents are making lots of money while it's becoming more and more difficult to buy a house, but one has to deal with it.

    I don't understand the urge to freak out by some of the posters here the minute anything remotely related to housing comes up. I know it's difficult to admit that you don't make enough money to afford a house while others do, but the knee jerk irrational reactions are really annoying.

    ------------------------------

    George, what is really annoying is those who think that we who are opposed to what has happened with the housing markets in this country are "out of the market" or can't get in it. I could buy a house tomorrow and have a sizeble downpayment, I simply refuse to participate in this nonsense and feed a sick and corrupt industry. Right now, I'll happily rent.

    Just one question though; If you where in your 20's, starting a family, etc., could you get into the market? I suspect THAT may be difficult to admit on your part.
  52. Steven Murray from Canada writes: I'd like to believe that those who say the housing bubble in Canada is limited to a few really overpriced markets in B.C. and Alberta. If a market like Toronto is considered to be overpriced, with an average price of $398,000 in May according to the CREA, then what does that say about Vancouver where the average price was nearly 60% higher at $625,000!
  53. Greg Van Zandt from Canada writes: Michelle Trunk from Vancouver, Canada writes: Just for kicks, while I have been checking in on this thread (half hour) I have been alerted to 3 new price changes (within a 25km radius). #1 Original price: 998k New Price: 950k #2 Original price: 1,180k New: 1,029k #3 Original : 1,198 New: 1,098 One half hour = 3 price changes. They'll be at least 10 more before the day is over. I'm glad that CREA is reporting that there are no decreases, because based on what I see from MLS listings, I'd likely believe otherwise! ------------ People choose what to list their houses at and this has nothing to do with anything. I can list my 200K house for a million and price reduce 20X.... this has nothing to do with anything. CREA data is based on MLS sales. This is real data on are what houses SOLD for, then they compare to last year, etc.... It does not matter if you receive 100 alerts or if buddy down the street reeduced his overpriced house. When purchasing a house you should always know what the market value is (the average SOLD price, not listed price) as well as how much the house has increased over time. Your realtor can provide you with this info. Any offers should be based on that, the listed price means nothing.
  54. Mike H from Canada writes:
    The Real Estate Market has JUST STARTED dropping in price. Once it starts it is a slippery slope.

    In one of the most in-demand neighbourhoods in Toronto, Leaside, sales have declined this year by 77%. Yes 77%!!!!

    This HAS NOTHING to do with SUBPRIME. It has to do with affordibility.
    Now we are in a recession, utilities and gas prices are out of control, inflation and interest rates are rising, and thousands of people are losing there jobs. The average person can no longer afford these prices anymore.

    This is a GLOBAL Real Estate Correction. Look at the UK, NO Subprime but prices are plummeting. Same goes for Spain, Austrailia, Austria etc etc etc.
  55. P cheng from ottawa, Canada writes: Sask Expatriate from Vancouver, Canada writes: .

    So tell me - how screwed are we?
    ==========>
    I don't think that you are that bad. They just force you to save more money. If you didn't buy it, the money will be spent on food and drink.

    I told you my story. I took a 20-yr mortgage and did not do anything for 2 years. When my friend from Vancouver visited us, they said that we should pay off the house within 5 yr according to our salary. My wife told me that if the one made less than you tough you how to make money. You are better listened. I went to the bank to re-mortgage (the mortgage rate was going down at that time) and double my monthly payment. We paid off in 4 1/2 year. If I did not do it at that time, I am still have the mortgage and have a big beer belly. At this moment, I am semi-retired with 3 rental properties.

    It is just your choice. Enjoy your life now or later.
  56. Aloha Eric from Toronto, Canada writes: Everyone likes to think we're different here in Canada, that we don't have a sub-prime problem. I'm sure IndyMac Bancorp shareholders would beg to differ, as the bank went belly up on Friday and subprime was only 3% of its mortgage portfolio. The problem is falling home prices.

    Once people get over the "social epidemic" that housing is a fail safe investment, prices will revert to the mean. Don't take it from me, this is from Robert Schiller, yale economist and creator of the S&P Case Schiller Home Price Index. http://cowles.econ.yale.edu/P/cd/d16a/d1630.pdf
  57. CallofDuty . from Toronto, Canada writes: Michelle Trunk from Vancouver, Canada writes: Just for kicks, while I have been checking in on this thread (half hour) I have been alerted to 3 new price changes (within a 25km radius).
    ----------------------------

    I agree with your findings. I too have been watching closely at the numbers from this local RE paper I get once a week. I am keeping track a several houses on the listings. They have been going down 10k per week! This is within the GTA boundaries. Some of the larger houses are going down even further. I sense a slight panic for now.
  58. B Johnson from Halifax, Canada writes: Let me make this short and sweet. I will not finance your retirement by buying the house you've invested the minimal amount you could possibly muster over the last 30 yrs or so. I will not buy a house that has gone up from foundation to finish in 1 full week of labour - however sporadic. I will not put all of our savings from our hard work into shody construction with a 5 yr. warranty. It took us longer than 5 yrs. to build up the down payment. I will wait until your house is priced closer to it's worth before presenting a low offer and I'll probably get it. The ride is over for all those who were riding the speculation train. It's our turn and we're going to make you face some facts.
  59. Ludwig von Mises from Canada writes: It's always gives me a chuckle to see (real estate agent?) Carmen Rae show up and label anyone who has seen this crash coming from miles away a "bitter renter".

    So how's that Calgary real estate market doing? According to the Calgary Real Estate Board, the median home price in Calgary has fallen 7.1 per cent in the last year. (www.creb.com)

    Q: But wait Mr. von Mises, aren't you always wearing your tin-foil hat and spewing nonsense about gold and silver being real money? Shouldn't you really be looking at house prices in terms of real money?
    A: Guilty as charged! Luckily I have those numbers as well. In terms of gold the median home price here as gone from 628.8 ounces to 451.2 ounces in a year. A decline of 28.2%! If you prefer to use silver as money, the average house price has gone from 31,357.1 ounces to 23,652.2 ounces. Only a 24.6% decline!

    In the meantime I will continue to rent, sharing an inner-city house with some friends and paying $450 a month. LOL, I'm so bitter!
  60. Chilled One from Canada writes: Steven Murray from Canada writes: I'd like to believe that those who say the housing bubble in Canada is limited to a few really overpriced markets in B.C. and Alberta. If a market like Toronto is considered to be overpriced, with an average price of $398,000 in May according to the CREA, then what does that say about Vancouver where the average price was nearly 60% higher at $625,000! ------------------------------- Vancouvers market is disproportionally out of whack because of BC's 6 Billion dollar a year marijuana industry. The RCMP want us to believe the proceeds of this industry get turned into guns and crack but that is simply balderdash. If this was the case, every BC citizen would be packing a dozen or more Glocks and be permanently stoned. The majority of this drug money is being laundered into the real estate industry, well known by the industry and somewhat encouraged too. Wait until the proceeds of crime legislation kicks in. This will be the biggest single negative to Vancouvers housing market. The real "user" in for a rude awakening is the Provincial Government addicted to the soon to be rapidly diminishing property transfer tax. (Currently, BC's only *legal* industry turning a profit!!) If the NDP still formed the BC government, the CanWest Global propaganda machine might even be discussing this. Give BC a couple more years and the province will revert back to old faithful; that is, blame Ottawa.
  61. P cheng from ottawa, Canada writes: Mike H from Canada writes:
    This is a GLOBAL Real Estate Correction. Look at the UK, NO Subprime but prices are plummeting. Same goes for Spain, Austrailia, Austria etc etc etc.
    ==========>
    But, US and UK goes up more than 200%. It is only about 100% in Canada. That was the point that there is not a big bubble in Canada. Yes, it will go down but will not be 40-50% (except the western).
  62. Col T from Vancouver, Canada writes: Sask Expatriate from Vancouver, Canada - how screwed are you?

    If you can stand living in the place you bought for 5-10 years - the time it usually takes in a normal market for a home to appreciate to the extent that you can trade up - not very screwed, although this downturn could take a while to get going.

    If you bought with the intention of living in it for a year or so and capitalising on a market that "never goes down" according to realtors then you could be very screwed. The time of double digit year-on-year increases is most definitely over. I'd try selling it now before we reach bottom, cut your losses, start renting and saving again and pick up a bigger places in 2 or 3 years.
  63. Michelle Trunk from Vancouver, Canada writes: (CBC report, May 27 2005):

    U.S. network newscasts all featured cautionary stories this week on the white hot U.S. housing market, raising warning flags that house prices may be ripe for a correction that consumers are not expecting.
    The stories were prompted by figures from the U.S. National Association of Realtors that showed the median price of a resale home had risen 15.1 per cent in the last year – its biggest gain in almost 25 years.

    Last week, U.S. Federal Reserve chairman Alan Greenspan made reference to what he called "a little froth" in the U.S. housing market. "We don't perceive that there is a national bubble, but it's hard not to see that there are a lot of local bubbles," he said.

    Greenspan said he didn't see signs of a worrisome bubble, noting that most Americans still have a lot of equity in their homes. Still, the Fed recently urged lenders to tighten their mortgage lending practices.
  64. Greg Van Zandt from Canada writes: Binder Dundat from Toronto, Canada writes:
    Greg Van Z,

    You're right. People who bought 10 years ago have done spectacularly well (on paper at least). BUT people who bought say, TWO years ago could be very stretched in the near future.

    Also, buying with historic low interest rates is only a good thing if the principal is small. That hasn't been the case with most buyers in recent years -- those people are barely making a dent in their enormous principal, and higher resets are on the horizon. Not good.

    I hate renting, but I've made my bet that it's the smart thing to do for now. We'll see.

    ----------

    There will always be excuses for not buying, look at the longer term. This is the first drop in nine years and based on one month of data after comming off a record year. I guarantee you that 10 years form now the guy that bought 2 years ago will be better off than someone who has rented.

    You can lock yourself in to a long term low interest rate so I don't see your point on the interest rates, I would not count on waiting for the principle to drop. TO housing is still up 3.7% from last year.
  65. P cheng from ottawa, Canada writes: Col T from Vancouver, Canada writes: If you bought with the intention of living in it for a year or so and capitalising on a market that "never goes down" according to realtors then you could be very screwed. The time of double digit year-on-year increases is most definitely over. I'd try selling it now before we reach bottom, cut your losses, start renting and saving again and pick up a bigger places in 2 or 3 years.
    =========>
    Personally, I think that Vancouver housing market will go down after the 2010 Olympic. It is the reason that I have not buy anything in Vancouver yet. You may better to wait after the games and it is normally happen. You can check them out about 1988 Clagary and 1968 Montreal.
  66. Sask Expatriate from Vancouver, Canada writes: No, we bought to live in it...we're not flippers/investors. We wanted a place to live in, and to have at least one baby before trying to move up in BC, or pack up and head back to the prairies.

    I wonder what the Olympics are going to do to us, too...

    Adulthood really blows sometimes :)
  67. Col T from Vancouver, Canada writes: p cheng - that's what a lot of people thought. However, it's already going down as you can see from all the new listings as flippers, speculators and people start to bail out and now that the media are finally telling the real story - that homes in vancouver are ridiculously overpriced - it's going to pick up momentum. A two-week sporting event with minimal appeal in only certain countries and that only the super rich can afford to travel to see - will not affect the market. Higher energy prices and probably an increase in interest rates will also start coming into play this year.
  68. Binder Dundat from Toronto, Canada writes:
    Greg Van Zandt,

    You said "I would not count on waiting for the principle to drop."

    A friend of mine recently listed her downtown Toronto Victorian townhouse for just over $420K. What is interesting is that the SAME HOUSE sold for the same amount -- back in 1989. She paid $260K for it in 2002. Somebody along the way took a bath, big time.

    In 1989, they were saying that real estate was foolproof and that prices would never go down. They were wrong.
  69. Col T from Vancouver, Canada writes: Sask - I hear you. Buying a place to live for the longer term when you can afford to is different. Then the paper value doesn't mean a thing as when you sell the rest of the market will have adjusted so while you may not get a massive increased selling price, you won't need to as the properties above you will also have decreased/increased at a normal rate.
  70. that guy from Canada writes: the problems at indymac have little to do with just that3% of subprime. they had widespread fraud among other issues. my point about subprime is not that the problems are limited to subprime borrowers, and that that's why canada is better off, but that in the US it was the start of the 'cascade' and what led to oversupply etc. etc. the underlying conditions that lead to the bottom falling out of the market simply don't exist in canada. Does this mean that there isn't a correction coming? not at all. in fact, i'm sure there's a correction coming, but i also think that it is limited, and controlled and more susceptible to economic conditions and factors, such as joblessness, falling salaries, inflation, rising costs of everything else, rather than an extraneous event causing a burst bubble and sudden and precipitous falls in housing value. most people in canada aren't in a position where they have negative equity in their home, have an interest only teaser rate about to jump up to an amortizing payment at a reset interest rate, and then find that when they have to sell there house to avoid default that the house is worth even less than what they paid, and so there negative equity is even bigger. this does not happen in canada. the above described person would, and rationally correctly so, simply hand back the keys to the bank and walk away. what do they lose? NOTHING. they will save money by going back to renting. to sum up, surely a correction is coming, but it sure as hell isn't going to be sudden and massive. it will be more controlled and generally limited by the extent to which the economy in general declines. so if for general economic reasons we do reach some great price decline, like 20 or 30%, you can be quite assured that america will have hit something much higher than that.
  71. Sunil Singh from Toronto, Canada writes: lol... good old Globe and Mail comment section.
    "ahh!! everyone panic!! sell now!! we are doomed!! i told you this was going to happen!!!"

    While you old fogeys are predicting the end of the world, I think the rest of Canadians will go on living happily. Don't forget that most of us have already seen a ton of appreciation, and a small (or hell, even a large) drop in property values really won't bother us much.
  72. Greg Van Zandt from Canada writes: Binder Dundat from Toronto, Canada writes:
    Greg Van Zandt,

    You said "I would not count on waiting for the principle to drop."

    A friend of mine recently listed her downtown Toronto Victorian townhouse for just over $420K. What is interesting is that the SAME HOUSE sold for the same amount -- back in 1989. She paid $260K for it in 2002. Somebody along the way took a bath, big time.

    In 1989, they were saying that real estate was foolproof and that prices would never go down. They were wrong.

    -------

    420K for a townhouse in 1989? Sorry I don't buy it.

    If true was the average price of similar townhouses selling for that same price and also dropped by that price or was it a truely stupid purchase or unique circumstance (ie the house burnt or something)?

    I did not say that it is impossible to lose money you need to be smart in your investement and do your reseach.

    For example your friend stands to make some big money if the house is priced right.
  73. P cheng from ottawa, Canada writes: Col T from Vancouver, Vancouver has its unique position that other cities does not have. Its a warm weather (good for the retiree), closed to the Asia (good for Business people), closed to Rocky Mountain (good for the tourism business people). The population will be growth in the long-run. But, in the short run, it is really overpriced. That is the reason that I have not buy any property there yet. I am thinking to retire and live there within 10 years.
  74. George D from Canada writes: Chilled One, what does "opposed to what has happened with the housing markets in this country" even mean? You've made your mind up, keep renting and wait it out if you're so confident and stop whining. Home prices have gone up because there are (were?) a whole bunch of people that could afford it and didn't agree with you. Maybe that's changing, maybe not, but a 0.4% drop over a year right now probably means very little.

    So I'll ask again, what is everyone so upset at? The media conspiracy to hide the fact that homes are overvalued and brainwash people into spending too much?
  75. Col T from Vancouver, Canada writes: Vancouver's unique in Canadian terms, but not in world terms. There are much nicer places for retirees with money. Places where it doesn't rain for 8 months of the year.
  76. Chris Kempan from Canada writes: I welcome this. I bought my house 4 years ago when the market was hot, but had not reached the heights of last year. My home is paid for and I was interested in upgrading to something larger, but the current prices seemed completely out of touch with reality, not to mention, average income.

    I don't want to see people lose their homes, but I would like to see some financial sensibility set in. A 900 sq foot, 60 yr old home with an average lot in a average area is not worth $200,000 in the city of Winnipeg. A shack is a shack.
  77. Col T from Vancouver, Canada writes: George D - there are always a "whole bunch of people that could afford it" when it comes to housing. First time buyers come on the market every year. The point is there have been a whole bunch of people who can't afford it but who have bought anyway expecting high returns or a housing market that never goes down, when renting and saving would clearly have been a better option. First time buyers should expect to spend 5 years or so before they upgrade in a normal healthy housing market. Some people now have the mindset that they need the big house now or in a year or so because they've seen others do it during the bubble. What happened to working your way up the ladder?
  78. Grampa Canuck from Stirlling, ON, Canada writes: House prices will inevitably drop, down to where the price earnings ratio of the home-owning/buying public justifies the price of the house. Currently, the PE ratio (price of house vs. earnings of buyer) is way out of whack by historical standards. Joe or Jo Lunchbucket can no longer buy a house in most major metropolitan areas and the real estate market has had to resort to gimicks, like 40-year mortgages and panic-inducing fake offers get people into the market at the currently high valuations.

    And, the Greenspan liquidity and U.S. debt (public and private) bubble is bursting, drying up all that excess cash that's been sloshing around the world. And soon, all those other governments may start calling in the IOU's from the U.S. So, things that go excessively up, must eventually come down. In the long-run, house prices will end up reflecting the earning capacity of Mr. or Ms. John or Johanna Q. Public, wherever that ends up.

    I realize my analysis is a bit harsh and cynical, but therein lies the germ of truth, as I see it.

    p.s., I am an mortgage-free home owner and would love to benefit from a perpetually hot market with nothing but an upside.
  79. Soft Landing from Toronto, Canada writes: Year over year drop is actually quite substantial, even at -0.1%. We are talking about wiping out all the appreciations gained since July 2007 and setting the prices back to below June 2007 level.
  80. bill k from Canada writes: Greg Van Zandt from Canada facts are fact and the housing crash has only just started. Many propagandists with RE interests are here like Greg Van Zandt since they fear reality and the coming housing crash. Many of them will be out of work and they will soon need to get a real job. You can see the fear in their posts that their propaganda is powerless to the reality of falling prices and sales with record inventory. POP.....What was that?
  81. Greg Van Zandt from Canada writes: bill k from Canada writes: Greg Van Zandt from Canada facts are fact and the housing crash has only just started. Many propagandists with RE interests are here like Greg Van Zandt since they fear reality and the coming housing crash. Many of them will be out of work and they will soon need to get a real job. You can see the fear in their posts that their propaganda is powerless to the reality of falling prices and sales with record inventory. POP.....What was that?

    --------

    Sorry Bill but I own my home. Another bitter renter I guess?
  82. aniphylactic shock troops from Canada writes: Carmen Rae and Greg Van Zandt have resorted to the time-tested elementary school-level retort of: "you're just jealous."

    Numerous posters state facts: Carmen responds with "you're a bitter renter."
    Bill k states a fact. Greg responds with "you're just a bitter renter."

    It's a catch-all argument that eliminates all possibility of rejoinder. They might as well close the comments.
  83. aniphylactic shock troops from Canada writes: As for "that guy" posting his "whistling past the graveyard" posts full of economic fantasy.

    It isn't different in Canada. More than half of all mortgages in the past 18 months were 0 down/40 years. In fact, in recent years only a small fraction of mortgages were 25% down (which was the norm not that long ago).

    Canadian homeowners are as over-leveraged as Americans. Greg Van Zandt will walk into work one day and get fired. Or his plant will close. And he'll have to sell. Then we'll see what a genius he is trying to sell into a market where there are no buyers.
  84. Beer and Popcorn from Canada writes:
    Thanks David Miller!
  85. Michele K from Ottawa, Canada writes: David Miller? What the heck does David Miller have to do with a housing bubble out west, Beer & Popcorn?

    Heck, Toronto homeowners must be feeling pretty darn good right now by comparis