Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Canada’s housing boom is ‘officially over’

with 2 comments

National Post

The Canadian Real Estate Association reported 75,476 homes changed hands in the first quarter of 2008, down 13% from the first quarter of 2007. In March, sales dropped 18.7% from the same month the year before, including a 39.7% slide in Calgary, a 34% drop in Edmonton and a 22.2% drop in Toronto.

Average prices rose just 5.5% to $327,620 in the first quarter over the first quarter of 2007, the smallest price increase since the fourth quarter of 2001.

So the sellers are holding out for higher prices against weaker demand at present. But that won’t last long.

Pretty much the same story was reported on Friday here

Sales edged down and new listings took another big jump during April in Greater Vancouver’s real estate markets, although so-called benchmark prices remain higher than they did a year ago, according to real estate board figures.

The Real Estate Board of Greater Vancouver reported 3,218 sales through the Multiple Listings Service, a five-per-cent decline from the same month a year ago.

This is of course just the start of the turn. Markets do not rise continuously over long periods, and the surprise is that ours has taken so long to slow down. And of course the local pundits are still “talking up” the market in the hopes of keeping the buyers interested.

board president Dave Watt, in a news release, said homes, on average, took six fewer days to sell than in April of last year

There are also people who think Vancouver is different – for a wide variety of reasons, of which the least convincing is the Olympics. A two week sports festival affects rentals and leases not sales.

The local trend I find disturbing is that of pre-sold condos turning out to be uneconomic to build. The local building and contracting market is very definitely overheated, and is being blamed for all sorts of project cost increases. That is another reason for thinking that our earlier trajectory could not be sustianed for much longer.

That does not mean there is enough housing – or that people are adequately housed. Because the market does not concern itself with such issues. Sadly, at present, government doesn’t either. Now is the time for government to start moving back into the affordable home business, as private sector projects start to dry up and resources become available again. But that would require a government that is aware, flexible and responsive.

Nah — not gonna happen

Written by Stephen Rees

May 5, 2008 at 8:50 am

Posted in housing

2 Responses

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  1. Correct again mr.Rees—The speculaters will move to more fertile grounds, prices will flatten out by july and start to fall by october, then reality kicks in.

    The market will correct with at least a 20% drop. What happens next ,people bail,leave,send the keys to the bank because median wages don`t come close to supporting these house prices.

    Down in the usa if house prices had continued to rise there never would of been a mortgage meltdown but people do funny things with upside down mortgages, add onto that scenario 1.50 plus a litre fuel, rising food prices,rising utilities,risng municipal taxes,ICBC up, flat wages and what do you have left, a peerfect storm!

    I have said it before but I say it again,housing prices must stay within the median income range are collaspse is enevitable! House prices have fallen 25% in a year in the usa , experts say its got 20 to 25% more to fall , the worst housing crash since the freat depression, if the gvrd follows suit thats 100.000.00 to 200.000.00 drop on a half million dollar home.——————————–signed…………………what happened to all the copper pipes and wire in these vacant homes

    grant g

    May 5, 2008 at 4:36 pm

  2. My savings account interest rate dropped some more this past week and I’m feeling ever more like an idiot for not investing in what may have been a 4.75% GIC. Too late to understand now that the guarantee is what’s important. But the optimism (from my perspective!) in these articles helps to ease the burn a little, anyway.

    Erika Rathje

    May 5, 2008 at 7:23 pm

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