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Resale home listings hit record high

LORI MCLEOD

Globe and Mail Update

Latest comment posted at 4:14 PM EST 05/09/08

New listings soar, while home sales and average prices slump, Canadian Real Estate Association reports ...Read the full article

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  1. bill k from Canada writes: 'Resale home listings cracked the 80,000 mark last month, the highest level ever reached, according to data released Friday by the Canadian Real Estate Board (CREA).'

    This housing crash is going to get bad. RECORD inventory with falling sales. You have not seen anything yet. For those who want a peak into the future look south and see just how bad it will get. This is a would wide housing bust.
  2. jck from ontario from Canada writes: $550,000 for a 500 sq ft studio in Vancouver and we are suprised. When I ponted out the high price the agent replied well this Vancouver not the US good luck.
  3. Soon2be Grey from Canada writes: 2% price drop....wow, what a crash...this is as bad as it gets here unfortunately for the buyers. Get in while you can.
  4. Ori Ben Zion from Vancouver, Canada writes: Soon2be Grey, the downward cycle is just starting. It is more likely than not that we will soon be seeing prices decline 2% a month. More like 'get out while you can'.
  5. TERRI R from Kimberley, Canada writes: This is nothing more than market manipulation by the real estate Corporations of North America.
    Thanks to the SPP that martin signed and steve is gleefully shoving down our throats the worst is yet to come. Considering steve is quoted as saying he will 'Not do anything about a recession/inflation'.
    As we comment here there has been an upswing in financial institutions to 'Bundle' all their bills, that is EXACTLY why the states is in this mess, sell off the bundles as a whole or incremental.
    Smarten up Canadians, lets start asking the really tough questions of our elected/appointed Representatives.
  6. Yvonne Wackernagel from Woodville, Canada writes: If you got good value at the time you purchased, you have nothing to worry about. The definition of 'good value' of course is not based on market flutuations over a short term!
  7. cathy . from Canada writes: Speculators bought a lot of condos on mortgagae term instead of just one unit that they could easily paid off for speculation. This is great! Hope it will fall further and burnt those speculators who flip and cause those houses unaffordable to a lot of people.
  8. Wynden Wetundark from Tokelau writes: BC prices plummet 0.04% Prairies down an unheard of 0.07%
  9. Winston Smith from Canada writes: CREA is no longer saying 'this is a good time to buy'??
  10. paulo silva from Toronto, Canada writes: Keeping bringing in down. I want to see those $750,000 townhomes drop finally. Time to rethink what you can afford. Best way to learn is to lose your shirt. Goverment should not step in. People you have to learn!!! As for the americans, LOL... There learning now how to spend wisely.
  11. 2250248920986777 Canada Inc from Canada writes: The months of May, June and July last year was a peak, even a spike in some regions (e.g Alberta and Saskatchewan). Now if you compare a one-year-old spike with today, that's called distortion. Give us the real data: month-over-month, then the last six months, and finally, the last twelve months. Would you buy shares of a stock if you were given only its price of one single day a year ago, or you'd rather want to know the most recent trend and its average price lately? Gee, to me it is just common sense.
  12. Brian Kates from Winnipeg, Canada writes: Why do people always blame 'speculators'? Who exactly are these speculators?

    And I see the usual doom and gloom from Bill K. I'd better pack up my belongings and put my house on the market before my bank forecloses on my sub-prime mortgage. Oh wait, I don't have sub-prime mortgage. And nor does anyone else in Canada. But Bill is right. The sky is falling! We're all going to die! Err, lose our houses in an apocalyptic meltdown!
  13. Ori Ben Zion from Vancouver, Canada writes: Mr. Wetundark, the plummet has not begun but will soon. Unlike stocks, these RE cycles take months if not years. .04 per month becomes 1% and then 2% per month. August stats for BC will be worse than July. The price decline will be greater than .04%.
  14. 2250248920986777 Canada Inc from Canada writes: No! The decline is not x% PER MONTH!. It's year-over-year data every month in the media, but it is not cummulative. For example:
    May 2007: $320,000 (hypothetical)
    June 2007: $320,000
    July 2007: $320,000
    May 2008: $310,000 (YOY decline of 3%)
    June 2008: $310,000 (YOY decline of 3%)
    July 2008: $310,000 (YOY decline of 3%)
    So the reader sees for 3 months in a row in the media that prices have declined 3%, so they think after 3 months it's down 9%, which is not true, their home value is only down 3%.
  15. Super Soaker from Vancouver, Canada writes: May I refer to some CREA sample forcasts from May 08:

    - National prices forcast to set new records this year and next, rising 5.3% (actual = down 2.4%)
    - BC sales down 14% in 2008 (actual = down 37%)
    - BC average house price up 10.7% (actual = down .4%)

    If I were to forcast this far off in my job, I would be fired instantly for incompetance.
    And still, this reporter continues using CREA data to formulate the (strictly one sided) national report on housing. Anyone who uses rose coloured CREA data to make major money decisions has got a screw loose.
  16. The choices we make decide our place in life from Canada writes: I see the usual 'eat the rich' group is out in force. You guys are probably all renters who are cheesed off that others have done well for themselves by taking on risk in real estate investing. So you disguise your envy as spiteful bile vented toward those of us who have actually done well. Here is a reality check for you guys. Throughout history those with the most money have always been land owners. During bad and good economic times land owners have come out on top because they hold something tangible. Land. You guys are just too bitter and spiteful to realize this. By the way, your rent is due on in 3 days.
  17. 2250248920986777 Canada Inc from Canada writes: Super Soaker: again, let's clarify this bloody confusion the media seems to like to create in the population (same thing in the US).

    The CREA predicts that the AVERAGE PRICE for the full year of 2008 will be higher by x% compared to the average price for the full year of 2007. It is a total different reality than the year-over-year distorted data for one specific month, that runs in the media.
  18. Winston Smith from Canada writes: The choices we make decide our place in life from Canada, I am glad you have can make yourself feel better in light of the dire situation.
  19. Steve S from Kincardine, Canada writes: Why is it Real Estate agents (who make a percentage of the selling price) predicting the future of housing prices and sales? Is it the same reason we listen to Investors about the state of the economy and investing? We are at a point in the information age where it has become the dis-information age. You have to start looking at the fundamentals rather than listening to the Hype. Speculative trading has taught us that.
  20. S. R. from Toronto, Canada writes: Agreed. CREA clearly has a strong bias and it is irresponsible journalism to cite their data/forecasts without spelling out the potential conflict. Naming the source simply is not enough, as less sophisticated readers will not appreciate the potential for 'spin.'
  21. Ori Ben Zion from Vancouver, Canada writes: Sorry, yes the .04 is year over year. No intention to mislead. That doesn't change my view that that percentage and higher will soon be the month over month decline. Watch and see. Mr. Choices, I'm not so sure anyone who purchased a property in Vancouver over the last three years has 'done well for themselves by taking on risk in real estate investing'. Here in the Lower Mainland there hasn't been good investment opportunities for a long time. The only rate of return for the past several years has been entirely dependent on price appreciation. Now that price appreciation is history the 'investing' as you call it is over and the market will decline to reflect economic fundamentals. Also, keep in mind you only that interest in your land that the bank doesn't own. These days, as a percentage, your interest is shrinking and the banks is growing.
  22. Carla S from Toronto, Canada writes: 'The significant increase in supply has been the result of declining affordability in a housing market which experienced double-digit yearly price gains from 2002 to 2007, said Craig Alexander, deputy chief economist at Toronto-Dominion Bank.'

    Since when does an increase in supply result in 'declining affordability'?
  23. Mike Glatt from Canada writes: The real estate market has been driven by three things 1) cheap money 2) extended credit terms 3) low down payments. All of those things are coming to an end except the cheap money but, do you believe for a minute that lenders aren't going to be very cautious about lending into this sector without asking for a higher return or higher down payments. The last question you have to ask is, if the new listings are at a new high are these people selling because they want to or they may have to? I am leaning towards the latter which means look out.
  24. aniphylactic shock troops from Canada writes: @The choices we make...

    'Throughout history,' people who can't win arguments with facts have trotted out the 'you're just jealous' canard to make themselves feel smart. (I used that one a lot in elementary school myself).

    In case that doesn't work, they resort to straw man attacks such 'I see the usual 'eat the rich' group is out in force.' Even when nobody's mentioned rich people in the preceding comments, or that the commenters have banded together to vanquish the 'rich.'

    Then, weak arguers employ universal statements such as, 'all renters' even though there is no evidence the preceding commenters are renters.

    And the classic ending - the ad hominem: 'You guys are just too bitter and spiteful.'

    You might be a landowner, but you're also a dimwit.
  25. Willard Kurtz from Toronto, Canada writes: Again the obligatory 'we're not like the U.S.' assurances. Why has no one done a comparison between the Canadian housing bubble and that of the U.K. ? They had double-digit growth over an extended period, followed by an exiting of buyers as the economy began to turn which flattened prices and then a subsequent tightening of credit as lenders pulled back. So far Canada has followed the first two steps - now it will be a matter of determining whether the changes to lending parameters coupled with conservative bank behaviour will complete the cycle. The next 12 months will be critical in determining whether there is a pop, slow leak or perhaps a step change in the average.
  26. Lee Turner from Canada writes: This is bad for who exactly? As some one looking to buy for the first time, this is welcome news. I can't afford a fridge box they call a condo in Toronto. Drop some more please.
  27. Billy Berk from Canada writes: I keep hearing that the crash (or huge correction) is coming, but Im not really seeing anything major happening. The number of listings are up, and I can see that with my eyes - a lot more houses are up for sale. I see that these houses are staying on the market for more than 6 months and still aren't selling. I see some price drops as well, but nothing too drastic.

    The problem is that I'm still seeing houses that should be no more than 300-320k on the market for 400k. The mortgage rates really need to rise to shake the market up - otherwise I don't see anything major happening. Yes, I'm in the market for a house and have a downpayment big enough that a high mortgage rate won't affect me much at all. I'm still waiting for the big correction before jumping in... hurry up already!
  28. Golden Phoenix from Ottawa, Canada writes: Housing crash? Gee I missed it 'cus it hasn't happened in Ottawa. Probably because we never had an unsustainable, huge runup in prices that would precipitate a crash. A crash won't happen in most of Canada. Not enough speculation, not enough foreclosures to affect the market. No enough situations of negative equity. Not enough shady morgage financing. We might see a 5% or 10% drop in a few specific markets but that will pretty much be it. The G and M can put away the scare mongering headlines when it comes to most Canadian real estate.
  29. Marcus Leja from Calgary, Canada writes: Someone could start a very good business in preparing, selling, and consutling with real estate sales data independent of the industry stakeholders.
  30. Marcus Leja from Calgary, Canada writes: Billy Berk, you should start asking your real agent to start low-ball bidding on some of these homes you're interested in. A list price is just a number in an ad.
  31. Golden Phoenix from Ottawa, Canada writes: To Marcu Leja: Someone already has started that business. Statistics Canada publishes a report called New Housing Price Index. It is published monthly and covers major markets across Canada.
  32. David Gibson from Hamilton, Canada writes: It is the Canadian Real Estate ASSOCIATION, not BOARD. Duh. C-R-E-A. Get it?
  33. aniphylactic shock troops from Victoria, Canada writes: @ Soon 2BGrey, Wynden and Brian Kates, here's how it works: As a speculative bubble grows in any product, buyers are drawn into the game in the hope that a Greater Fool will come along and pay them more than they paid. The entire bubble is predicated on ever-increasing prices. Those prices merely have to STOP increasing, and people hoping to flip their ownership for a gain stop buying. This is point in the cycle we've been in for a few months (in Vancouver and Victoria, anyway). Sellers are still in denial, mind you. And that's why price stats (which only measure SALES) have not shown much decline. Because sellers refuse to take their medicine. However, as the pool of buyers begins to contract, the irrefutable Law of Supply & Demand kicks in. Except this time on the way down. The next step - which doesn't take a genius to foretell since it's happening in the U.S. - sellers have to slash prices to attract buyers. Canada has plenty of sub-prime mortgages. We just don't call them that here. Visit a TD Bank today. They'll lend you the money to buy your house and in the guise of a 'home equity loan' will lend you the difference between the first mortgage and the sale price. In effect, 0% down. If you don't want to admit what's coming, that's fine. The world is full of people living in denial. And I'm a realtor.
  34. George D from Canada writes: Mike Glatt, there's still 35 yr amortizations, and 5% down. That's not a whole lot different than 40yr with 0%.

    Besides, these longer amortizations have only really been a factor for the last couple of years (if that), and we've seen home price increases at 10% a year or so for the last decade (at least).
  35. The choices we make decide our place in life from Canada writes: Winston Smith from Canada writes: 'The choices we make decide our place in life from Canada, I am glad you have can make yourself feel better in light of the dire situation.'

    Actually Winston, the fact that in 40 years of real estate in the part of Canada that I live in real estate prices have only dropped twice. In 1996 and 1997. And those drops were 1.2 and 1.9 percent. Not exactly a bursting bubble. Home construction in this part of the country is also still pretty strong. As for existing homes, I have been watching them turn over in an average of about 3 to 4 weeks and people are getting very near their asking prices. Not too bad for down economic times. The only exceptions are houses that are in poor condition and houses where the sellers are asking way too much for the local market.

    That is what makes me feel better.

    Cheers.
  36. David Gibson from Hamilton, Canada writes: Calgary and Vancouver have been hit because, in part, because of the massive year over year increases recently. It is inflationary, and needs a correction or slowdown. Vancouver prices have held, despite the 63% increase in listings, but they may slide some, but not for longer than a year, and likely 5 to 10% at worst. We will not have the US collapse, because we do not have US problems, there is no correlation. A general slowdown of the US economy will affect our exports, and thus our jobs, and eventually our housing market, as it has in BC; but this is not the same thing the US faces, not in any way, shape or form. We will have a flat market for a year, modest decreases in some previously over-heated markets, and a recovery in late 2009 as the US pulls up its socks as the mortgage losses are finally all declared. Already, bargain hunters are buying homes in the US, with July sales up 3% over the month before. Likewise, the US took a hit in 2001-2002, and we avoided it.
  37. Dave C from Canada writes: ' Soon2be Grey from Canada writes: 2% price drop....wow, what a crash...this is as bad as it gets here unfortunately for the buyers. Get in while you can.'

    Oh Yeah, your typical Realtor Scare tactic. 'Get in now while you can or be priced out forever'!!! Blah, Blah, Blah. it's jokers like you that scared young families into buying extremely overpriced 'shacks' when they never should have considered it. They are now in so much mortgage debt due to paying over 2x plus what they should have in some markets that they will never recover financially. In deep debt for life all because the sleazy Realtors scared them into buying.
  38. Super Soaker from Vancouver, Canada writes: Re: Choices we make..

    Your comments about eating the rich are ridiculous. I know plenty of homeowners who are so house poor that they can't afford to go to the movies.

    We own our home, have some savings, etc but we are certainly not rich.

    Perhaps you mean that you have soulfull riches, like peace, love and harmony within yourself, although I doubt it considering your defensive rant.
  39. Jonathan T from Canada writes: Stats Canada says house prices were down 3.6%

    Foreclosures only occur when your house is worth less than what you owe. At this point, even with a 3.6% decline from peak prices, this would not occur. Wait until home prices are down 10% .

    Subprime was not the cause of the housing crash. An unsustainable run up in prices was. Subprime helped that run up in prices but it was not responsible for its decline. Buyers just ran away when they started to fall.
  40. The choices we make decide our place in life from Canada writes: aniphylactic shock troops from Canada writes: 'Throughout history,' people who can't win arguments with facts have trotted out the 'you're just jealous' canard to make themselves feel smart. (I used that one a lot in elementary school myself).

    You might be a landowner, but you're also a dimwit.'

    =============================================

    Who's arguing? Not me. Thus, neither am I trying to win one. As for the dimwit comment. Who is more of a dimwit. The one who pays off another's property for him with nothing to show for it in the end. Or; one who pays 10% of the value of the property and gets another to pay off the other 90% for him and also gets to collect on the long term appreciation and use that added equity to borrow against to purchase other properties and investment vehicles. By the way, all that interest is tax deductible. Just for clarification. The former is the renter. The latter is the astute business man/investor. If the latter is your definition of dimwit then I guess I am.

    Cheers.
  41. Ms. DeMommies from Halifax, Canada writes: We are happy renters. So are a lot of couples we know. The reason most of us rent is that the prices of homes are speculated to death. We too will keep building our down payment until a more realistic value for real estate presents itself. We'll have the down payment and capacity to buy into all those foreclosures looming.
  42. Was Canadian from New York, United States writes: It isn't just subprime that caused the mess in the US - it was also home equity loans and people's general feelings that they are (were) wealthy. I beleive home equity loans are popular in Canada. In the US, some folks had subprime mortgages, put down very little cash to get a home, and when prices declined they found themselves owing more on their home that it was worth on paper; but many also took what equity they had accumulated and took it out - treating their homes as an ATM - based on seemingly ever increasing home values. There's also a huge psychological effect which was reported by Yale ecomonists several years ago, across more than a dozen countries. When housing prices are going up, people feel wealthier and their household spending goes up, even if they don't have actual wealth because they don't sell their homes to realize the equity & increases. So you have the recipe: people feel wealthy because their house prices are going up, and they're getting 'free equity' which they can take out of their home to maintain their newly-realized status as wealthy. After all, you can't have a home that's gone from $200K to $600K and not have the furniture, granite countertops and 'master suite' to match. But disregard everything I say because (like most NYC-ers) I'm a renter. Albeit not a bitter one!
  43. The choices we make decide our place in life from Canada writes: Super Soaker from Vancouver, Canada writes: 'Perhaps you mean that you have soulfull riches, like peace, love and harmony within yourself, although I doubt it considering your defensive rant.'

    Just countering the offensive rants of the peanut gallery. Don't tell me you have not noticed the tendency for people to go on rants against successful investors every time there is some bad news about the economy. Comments like the investors had it coming, or its about time the investors got theirs, etc. If the less successful are going to make such comments they must be prepared for the more successful to respond. Well, I am.

    Cheers.
  44. George D from Canada writes: Jonathan T, for the most part people started to run because they couldn't afford to refinance, or more accurately couldn't afford ballooned payments on their mortgage resets. Subprime, and specifically lending to people that could not afford it through both fraud and funky mortgages caused the run up in prices, subsequent foreclosures and price declines.

    Read the new articles from the US, buyers ran away mostly because they had no choice. In my opinion, calling a 40yr, 0% down Canadian mortgage subprime and comparing it to what happened in the US is rubbish.
  45. Yvonne Wackernagel from Woodville, Canada writes: Ms. DeMommies from Halifax, I think you have the right attitude and I know a lot of young couples who are doing the same.

    This is not a Canadian crisis; it is a global crisis: the news out of Britain today is dire, with over 2 million more jobs expected to be lost by year end and home foreclosures going through the roof. People in Japan are committing terrible crimes in frustration over the diminishing economy. This is a global problem created by the world banks who still have not come clean with information. So -as the experts tell us - it is going to continue for some time and the smart ones will have patience and wait it out until the situation stablilizes. I predict the best time to buy will be 2009 fall after most of the potential job losses have occurred.
  46. CallofDuty . from Toronto, Canada writes: bill k from Canada writes:

    This housing crash is going to get bad. RECORD inventory with falling sales. You have not seen anything yet. For those who want a peak into the future look south and see just how bad it will get. This is a would wide housing bust.
    --------------------------
    Not only US...go look at UK. They are getting just as bad. Hold on tight people. Its going to get messy very soon. Look at all the bloody houses/Condo's they building in the GTA alone! The people who already bought into them can't be resting well at night. The supply alone is going to make things bad, let along tight credit, affordabilty, etc etc.
  47. Billy Berk from Canada writes: ---Marcus Leja from Calgary, Canada writes: Billy Berk, you should start asking your real agent to start low-ball bidding on some of these homes you're interested in. A list price is just a number in an ad.---

    It's definitely just a number and price can always be negotiated... I just don't see them dropping the price from 400k to 330k or less. I guess there's no harm in trying to lowball to that level but I suspect I'll be chased away. ;)
  48. Super Soaker from Vancouver, Canada writes: Renting vs Owning:

    Brangelina = renters
    Ed McMahon = owner

    The facts are the facts.
  49. John H from Canada writes: Sure are a lot of folks here that must be younger than me... Folks this is a cycle that happens every 10-12 years. As a mortgage broker I can tell you what I see. Appraisals in the GTA are coming in lower. Purchases not as much as re-fi's but that makes sense at the beginning of a drop. And this is not a government led event. In fact if the government was able to prop things up they would have shown us how in the states instead of let it cause their dollar to race towards 50% of last year's worth.
    For those of you who think the drop will be slight, what makes this cycle so different than the last 5? Seems the naysayers will not accept a 20% decline. Well you guys keep saying that at the beginning of every downward cycle.
    And it is not the speculators. It went up because that was what the market would pay. Now it will go down because no one will pay the prices until it comes down. This is a simple market of supply and demand. And with an altime high of supply it is not rocket science to see where things are headed.
    This time round it will be deep because the money system is tighter that last time. At the beginning of this year we were loosing an institutional lender a week. As for commercial, the only lenders left in Canada are some privates and the major banks who want 50% down on almost every deal.
    But the real reason this one might be a really deep one is this is the 1st time we will come out of a recession/depression with 5 dollar gas and home heating bills twice what they were last year. And super high unemployment due to gas prices...
  50. Winston Smith from Canada writes: John H from Canada writes: This time round it will be deep because the money system is tighter that last time.

    During the boom the banks and other big borrowers were able to securitize all types of loans and sell them to 'investors' (who turned out to be big suckers) and move these off their balance sheet and continue lending. Now that these 'investors' got burned the source of cheap credit has been cut off leaving the banks to lend only what is available on their balance sheets. Unfortunately for borrowers, banks continue to take big write downs leaving them no room to lend. Guess what happens to real estate when credit is cut off?
  51. B C from Canada writes: Vancouver prices have dropped a lot more than the benchmarks or averages indicate. Poor quality inventory is not selling, only the premium properties move. The average Joe now anticipates a 10-20 percent correction in Vancouver, but then it will march up again. But what if it is more than 20 percent, and what if it doesn't march up again to present values again in our lifetimes? People were surprised on the upside, and they will be surprised on the downside. Buying in Vancouver now is throwing money away---it is like taking our a 5.5 percent loan to buy a 3% long bond. Very silly indeed. Especially with the mountain of new inventory coming online soon.
  52. Super Soaker from Vancouver, Canada writes: I agree with BC - I see it too.
    There is a house in a very desireable Vancouver west side location that started out at 999k and 2 months later it is at 799k. I bet if they were offered 750, they would take it.
    750 for a house on Vancouver West Side? That is almost 2001 prices!
  53. Alastair james Berry from Nanaimo BC, Canada writes: Things don't look too good out here on Vancouver Island where our traditional industries of Forestry,Mining and the fishery are in a terminal decline.........with Tourism way down too.......the US travellers seemed to be staying home this year. 'For Sale' sprout all over Nanaimo these days! _______________________________________________________ House prices are cyclical ......... they go up............then they go back down! If we had GOLD backing our Canadian Dollar the prices would fall very close to a base line that has existed for 5000 years. The difference in the cycles of today, is the fact that the GOVERNMENT of CANADA keeps debasing the currency by printing more and more 'PAPER MONEY' with no real value that dilutes the PURCHASING POWER of the Canadian Currency already in circulation.................The ABILITY TO PRINT MONEY is as addicting to OTTAWA as heroin is to an addict.............It creates inflation........ AND INFLATION IS JUST A HIDDEN TAX........AN ANNUAL CAPITAL LEVY that purloins the purchasing power from Canadian citizens savings and pay packets and transfers it directly into OTTAWA'S COFFERS. And to ADD INSULT TO INJURY OTTAWA THEN CLAIMS CAPITAL GAINS TAX ON CAPITAL GAINS AS IF TODAYS MONEY HAD THE SAME PURCHASING POWER AS WHEN THE HOUSING CYCLE STARTED TWELVE YEARS AGO!! I just don't understand why CANADIANS are so like sheep being FLEECED and NEVER EVER COMPLAINING or rising up in a REVOLUTION demanding JUSTICE and TRUTH from the POLITICAL MASTERS in OTTAWA!
  54. Wesley Moxam from Toronto, Canada writes: To those who say 'Canada doesn't have subprime mortgages': please explain what this is: http://www.cibc.com/ca/mortgages/better-thn-prime-mortg.html

    'This variable-rate, 5 year closed mortgage offers you an interest rate lower than CIBC Prime Rate'

    'Lower than prime' = 'Subprime', no?
  55. Spence Cole from Vancouver, Canada writes: People don't buy a house 'in Canada'. They buy a house at 123 XYZ Ave, in Anytown, AnyProvince, Canada.

    So the 'average price' in Canada is not relevant. What matters is the average price in the neighborhood of the city where the house is purchased.

    A 2% decline in the national average may not mean much. But if Ontario, Quebec, Manitoba and the Martimes had stable prices, and prices were up in Saskatchewan, that likely means prices dropped 10-15% or more in Alberta and BC. A drop of 10-15% is meaningful, but only to the people impacted in Alberta and BC.
  56. Roop Misir from Toronto, Canada writes: 'While prices will likely drop further in some regions, this should only be troubling for people who bought recently with plans to flip their home quickly, rather than those who have a medium-term time horizon, he added.'

    So there is an element of speculation in the real estate amrket, eh?

    Are speculatiors now flipping mad?
  57. tony knight from Canada writes: Wesley Moxam - 'subprime' does not refer to interest rates lower than the prime rate.

    From wikipedia - the term 'subprime' refers to loans that do not meet Fannie Mae or Freddie Mac guidelines.

    The interest rates for subprime mortgages should generally be higher than the rates on prime mortgages to take into account higher risk of default.
  58. Terry MacDonald from Canada writes: Wesley Moxam - the 'Sub-Prime' moniker is misleading and a poor choice. It refers to the quality of the borrower credit and has no relation to the 'Prime Rate' upon which mortgage lending is based. Lenders consider credits who have a high probability of being able to cover the periodic interest payments on their loans (good credit history, stable well paying employment, ample fairly liquid asset base...etc) to be 'Prime'. Those that were offered such ill-fated products as the now infamous NINJA mortgage (No Income No Job or Assets) were considered 'Sub Prime' and were often offered mortgages with low teasers rates that reset after a period to a rate more aligned with their actual credit rating. Lenders were not concerned as the security interest they held in an asset that was appreciating at double-digit rates per annum was adequate. Plus they were able to bundles these loans up into Asset Backed Securities and monetize the asset. Of course you can see how this would fuel a bubble and it's not hard to see how easily this Ponzi scheme would all come crashing down. Unfortunately greed overruled common sense and we have the Sub-Prime Meltdown.
  59. Peter De Tracey from Ajijic, Mexico writes: Anybody know what the situation is in Ottawa?
  60. Golden Phoenix from Ottawa, Canada writes: Peter De Tracey. I can tell you about Ottawa. Average sale price in 2007 as a whole was $273,00. Up 6% from 2006. The average price in July 2008 was $295,000. Up 9% over July the year before.
  61. John M. from Australia writes: What I can't get over is the price of homes in some of the resource based towns in Canada or Australia. I was in Gladstone Queensland a few weeks ago browsing at some real-estate - you will pay $500-600k for a shack there. I believe it is the same in Fort McMurray, Alberta. These prices are crazy; once the commodity boom goes bust, these homes won't be worth $100k.
  62. Jonathan T from Canada writes: George D. I have followed every single article on real estate for the past two years on US real estate. I understand that many of those articles blame subprime for the meltdown. But if there were buyers for homes at the peak prices in the US, then subprime would never have melted down. Problem was, prices got to high, then fell. Declining prices rarely land soft because people wait to buy. Defaults didn't start to heat up until a year after the housing bubble popped. We do have subprime, near prime, interest only and other loans in Canada although i have yet to see what percent of loans are in that group. Having said that I wouldn't blame those for causing house prices to decline. All that matters is how many buyers are there at any given price, and how many selllers there are at any given price.. where they meet sets the home prices... Right now, buyers are in short supply and there are plenty of sellers. At what price the quantities will balance is anyones guess.
  63. Captain Ontario from Canada writes: John M. from Australia writes: These prices are crazy; once the commodity boom goes bust, these homes won't be worth $100k.

    _________________

    Sshhhhh. You're talking with Canadians.

    Australians are business-savvy and realistic. Canadians are moon children who suk at the te.et of the US market and are not even aware of it.

    Of course, the Canadian West is going to go into the dumps!

    But most here are far too blind to see it, as you do.
  64. Chilled One from Canada writes: This can't be true, the REALTURDS said this couldn't and wouldn't happen, Canada is 'different.' Dispicable industry in need of a serious shake-up.
  65. Adil Burney from Canada writes: Some great comments here.

    I find it amazing the way some use a limited data set (40 years) or recent memory to say that Canada is not going to have a housing correction. The same rationale was used by Fed chairman Greenspan in 2005. This is not your typical housing correction. The boom was unprecedented and so will be the bust (case in point the US right now).

    Jonathan T has it exactly right. Look at the run up in the US to 2006 (and Canada until early 2008). It is price! Historically (in the US from 1890 to 1990), housing prices returned 0% after inflation.

    Prices doubled in this century. There will be years of negative inflation-adjusted returns (or a few sharp -10 to -15% years) to bring housing prices back to their long term values.

    Obviously, we have few foreclosures, TD. That will happen next year when prices are down 10% . We are working on a 1 year lag
    http://canadahousingcrash.blogspot.com/

    Subprime merely was a symptom of the boom that only kicked in the last few years of the boom. I knew that the US was in a housing bubble based on price long before I even heard about subprime. In Canada, we have overprime:

    http://canadahousingcrash.blogspot.com/2008/04/canadas-overprime-problem.html
  66. Captain Ontario from Canada writes: Canada's West is in big trouble.

    Freaks here all giddy about making $15/hr delivering pizzas are going to get ROCKED!
  67. Sober Second Thought from Toronto, Canada writes: The real problem with housing in Canada is the tight credit environment (yeah Canada too). We just renewed our mortgage for the second time and the discounts we were able to get on the posted rates have shrunk -and I went to three other banks to try and get better rates. We have excellent equity, scores, income etc... I have been told this is happening all around the country and this will result in less purchasing power all around.
  68. Gnarly Kanuck from Canada writes: Lies.. Damn Lies and Statistics is what the Real Estate Agents point to... and very few Agents know the difference between Chi Squared and Chai Latte.

    When they talk about average home prices... there is no adjustment for life cycle of the housing stock or demographics. When the price falls... is it because there was a sales push on that targeted first time buyers? When prices rise, is is because of a demographic driven change over in a desirable established neighborhood as the old timers move on?
  69. Andrew S from Canada writes: At least some over priced homes are coming down in price. This is GOOD. Meanwhile, the average priced home will remain around the same.
  70. john w from stouffville, Canada writes: Nonsense.. We only have a few homes for sale and there is multiple bidders on them.. The sky is not falling.. O wait that doesn't sell newspapers
  71. Rudy Krueger from Canada writes: There is a perennial cycle in housing family by family.

    Buy an entry level house then gradually upgrade as you can afford it.

    PEOPLE HAVE TO LIVE SOMEWHERE. Where is the mystery in this?

    When housing prices subside, folk with entry level houses put them up for sale so they can grab what they think is a bargain on the house they never thought they could afford. The renter(s)step out from publicly sponsored affordable housing to take on their first ownership and so on. Seller number one might actually decide after awhile to rent out the starter home and still buy the bargain step-up.

    For an old guy like me, this is a very familiar pattern.

    My point is, just what the hell do you want people to conclude about the upsurge in home listings? Is it that hordes of people are moving back to their country of origin or that the great rapture has occurred and a lot of homeowners have simply disappeared?

    Everybody's gotta be some place. Selling means buying (or renting or building or....)

    Can we call on the Editor to be a bit more careful about the quality of story titles and drifts?
  72. Captain Ontario from Canada writes: Lower real estate prices in the US can be explain very simply for the 'readers' of this website.

    1. sub-prime loans were given to some people who never should have received them.

    2. Lenders began scaling back in 2007, credit tightened.

    3. This tightening has led to declines.

    When the US economy is roaring again in a year or so, credit will again become more available and the real estate market will again flourish.

    Except for the Canadian West, which you should stick a fork in because commodity prices are going down!

    Calgary, sakastoon, whineypeg, etc. SELL!
  73. Rudy Krueger from Canada writes: Uh ... captain Ontario .... You regional bias has once again overshadowed your patriotism and good sense.

    The west is now what it was 18 months ago or 6 months ago or 6 weeks ago. WEALTHY!

    Hundreds of billions of dollars in necessary projects are under way and all of them decided on the basis of oil index price of $60-85 US / bbl and nat. gas price of around $7.50/gj.

    Sorry dude, you don't get to gloat.

    And may you live a long life in humility for your careless remarks.
  74. Brian Thompson from Calgary, Canada writes: Everybody's gotta be some place. Selling means buying (or renting or building or....)

    Yes, but we now have an abundance of homes due to the credit fueled building boom. Speculators have helped create demand for tens of thousands of additional units, not for living in but simply for making a profit. Without rising prices there is no reason to subsidize a renter in anticipation of a higher resale price, thus increasing inventory of excess housing. Prices will fall until this excess supply is absorbed. Unfortunately there is not enough buyers with the means to simply live in the places at the current prices. Prices will drop to more affordable levels and then the cycle begins again.
  75. Yvonne Wackernagel from Woodville, Canada writes: Right now, ALL or mostly ALL of our young people are heading out to Universities or Colleges, most with LOANS. Their parents must keep up with the joneses and are proud as punch to tell everyone about it. This is ridiculous! I think education is extremely important, but financial responsibility and financial education and prudence with some vision are necessary factors at this time. There are so many opportunities in the world right now, companies and projects are crying out for help, all kinds of help, paying cash, big cash with big benefits, even here in Canada, if young people or their parents are too scared to try living in some great cities of the world. Why not defer the university or college education for a few years and accumulate some savings so you can at least get the required education without incurring debt. And in the meantime you will get a great life experience of how the world really works. I really think this is an opportunity of a lifetime for young people, WITH THE SUPPORT OF RESPONSIBLE PARENTS. The young people MUST KNOW that there is security back home so that they can relax and do a good job wherever they are, whilst having SOME fun and SAVING A LOT OF MONEY. They should also be discouraged from buying a car if they don't really need one at this time because this can be an unnecessary expense in many cases. Seek accommodation through the churches or international institutions; start with CIDA and remember to have the right attitude.
  76. Susan Rogan from Canada writes: Brian Thompson: You are absolutely right that subsidising renters no longer makes sense. I've had 2 rental homes for 10 years and have made some capital appreciation over the past 5 years. I plan to sell and make a decent but not excessive return on my risk and capital investment. I don't care that I am not selling at the 'top of the market'. A little before, a little after, that's okay with me. And what's more, I truly hope that whoever buys makes money too.
  77. The choices we make decide our place in life from Canada writes: Yvonne Wackernagel from Woodville, Canada writes: 'I really think this is an opportunity of a lifetime for young people, WITH THE SUPPORT OF RESPONSIBLE PARENTS. The young people MUST KNOW that there is security back home so that they can relax and do a good job wherever they are, whilst having SOME fun and SAVING A LOT OF MONEY.'

    It sounds to me like you are suggesting that kids use their parents as a safety net to absolve themselves of risk while they travel the world. How is that experiencing how the world really works? Guess what Yvonne, us parents of university aged kids are now busy preparing for our retirement. We have spent the last 18 to 22 years spending money on the kids, now it is time they learn to fly on their own. Sink or swim. Kids here should be grateful that they live in a country where anyone can get a university education. Debt or no debt, at least it is available for them if they are willing to do the work. Other countries cannot say the same. Your advice only serves to teach these kids to take the system for granted. Well after 20 years of raising them we parents can't take the system for granted. We will need to make sure we can retire well or our kids could very well find themselves supporting us. Then how are they going to prepare for their retirement when they are supporting their kids and their parents? But if they spend the next 10 years finding themselves, as you are suggesting, that will likely not even be possible. Give your head a shake.
  78. Carl Sterritt from Canada writes: Randy Krueger, you're right about certain areas of the west. Everyone looks at oil as the major contributor to the economy in the west but it's natural gas that will keep the economy going. Throughout the boom bust and echo cycle, natural gas is what has kept the west afloat. In Ontario, there are ares where real estate is still increasing at a rapid pace. Kitchener/Waterloo are booming and haven't been hit by the crash yet. In the London Free Press there was a large article about the number of homes for sale in the surrounding towns including St. Marys where a major manufacturing employer has closed shop.

    Long term, you shouldn't care about real estate pricing if you're only talking about your primary residence. A few thousand dollars either way is not going to make much of a difference over the time most people will own their homes. You can never lose money on real estate if you hold onto it long enough!
  79. pants 7 from Japan writes: There is also about to be a demographic 'challenge' hitting the market.
    As baby boomers retire there is likely to be a rather large number of bungalows hitting the market as the boomers move into condos. The price of well located condos like downtown Toronto or Victoria are likely to move up smartly over the next 15 years. The lucky next generation, unlike the X-ers, should be able to easily move into affordable family homes.
  80. David Gibson from Canada writes: '''' The lucky next generation, unlike the X-ers, should be able to easily move into affordable family homes.''''' Highly unlikely, Captain. The boomers are already moving into the condos, and it has not affected prices, they have risen. There are a quarter million immigrant coming into Canada each year, and they require housing, and most of them are not poor.
  81. David Gibson from Canada writes: Regarding the US 'subprime' melt down: As others have said, 'subprime' refers to the borrowers, not the interest rate. They are not prime borrowers, and the rates were higher, not lower, which is why every bank, mutual fund, etc., bought into them: the return was very good. Trouble is, the borrowers were people who had insecure jobs, no down payment, and most important, no skills at handling money. Our own gov't has just removed the no-down-payment [NDP] option, in response to what happened stateside.
  82. A S from Canada writes: To Carla S from Toronto: I believe the economist is stating that declining affordability of homes has resulted in increased supply on the market.
  83. Josh Taylor from St. John's Dublin, writes: Meanwhile St. John's is gone crazy. They can't keep properties on the market. Just shows how regional all this is. If you are a buyer then you have options. If you are a selling then best of luck.
  84. Col T from Canada writes: We are going to have a 20% to 50% drop in prices over the next 3 years in bubble cities like Vancouver, Calgary, Toronto, etc. It's going to happen because it has to happen. Prices are artificially high thanks to low cost lending which is coming to an end, cost of living is rising, interest rates are likely to rise, job security is reducing... those without much debt, living within their means who own a house for a long-term and have some savings to weather any storms have nothing to worry about. People who bought to speculate or make a quick buck will lose out. Patient renters who have been saving cash for a down payment can rejoice.
  85. David Nagel from West of the Rockies, Canada writes: 'Rudy Krueger from Canada writes: There is a perennial cycle in housing family by family.....Buy an entry level house then gradually upgrade as you can afford it....
    PEOPLE HAVE TO LIVE SOMEWHERE. Where is the mystery in this?'

    Wow, I'd love to meet you. You're responses are chaotically schizophrenic. You make some decent sense of housing economics then refer multiple times to some sort of renter subsidy. What sagacious wizard hat have you conjured this idea out of?

    Sorry, please explain in greater depth this subsidy, I'm curious to understand your comment.
  86. Bill Schonewille from Langley, Canada writes: Please keep to the thread people, verbal smears don't contribute, and devalue the whole discussion. I've been following the marked in the lower mainland for several decades and what has occured is a typical correction. Housing prices were flat during the NDP era here in BC, for over 8 years there was no net increase in prices over inflation. Not a good investment by any stretch of the imagination. We now have a correction which has seen housing values in the fraser valley increase around 100% since 1999, which over 9 years is an average BEFORE INFLATION compound rate of return of about 8%, less than 6% after inflation. When calculated from 1991 the increase is 150% over 17 years which is a return after inflation of less than 4%, which is not such a stellar increase. Overall the current prices are where they should be when you look at 50 year trends. People in the valley are getting over $750/month for a two bedroom basement suite, which doesn't show up in the stats, and this makes a $2400 a month mortgage very affordable for a couple with dual $40,000 incomes. The only thing that would see a 50% decrease in prices as suggested a few comments ago would be a return to double digit interest rates, which given the supply of money sitting around in all the boomer's retirement funds should be an unlikely event. In addition the cost per square foot for building new has also risen proportionately, so the price increases are largley due to the lower mainland's limited land supply. My point? Prices in the valley are based on a number of factors but ultimately are where they should be, within 5%. No complaints. I'm interested if anyone out there has any comments on what the passing-on of the boomer generation will do to a) the money supply and b)inflation when all the 'gen-x'ers and 'gen-y'ers get their hand on the inheritance? I know we don't really have any precident but interested in any real estate thoughts in that direction.

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