Yesterday we took a look at the CMHC forecast for housing starts over the next two years, Canada-wide. Today the TC has a local perspective titled: Construction boom shows signs of cooling. Remember that CMHC was calling for a 12% decrease equally spread over 2007-2008 from 2006 numbers.
In Victoria we see a 17% decline this year from last (2739 to 2285) and then a further 16% decline the following year from 2007 numbers (2285 to 1940). Wow. Did I say that? Wow.
Considering that everyone wants to be here--actually, from the real census data, everyone wants to be in Kelowna--that says that builders simply don't expect the boom to last.
Now this could be that they just don't make land anymore. Or it could be that the cities (Victoria and Langford) aren't willing to throw the height restriction bylaws out the window. Or most likely, it could really mean that this bumper crop of boomer buyers has a forecasted drought on the way, and fast.
Now you'd think, or you could be forgiven to think, that the RE market might be reflecting some of the same trends: apparently it's not, but according to CMHC it will.
Resales are forecast to go down: 4% this year and another 4% in 2008. Now if you're a shareholder in Re/Max, wouldn't you be a bit concerned about an 8% drop in sales? What's more, if you're a homeowner banking on double digit value gains to finance your renos or your move up to bigger and better property dreams, the drop in appreciation (forecast for 8% this year and 4% next year) should concern you be a bit too. I won't even mention forecasted interest rate rises.
I'm thinking if I just bought, I came late to the party. You know that part of the party where all there is are crumbs on the platters, no ice in the freezer and flat Coke to mix your swill with. If I'm not yet drunk (which I must have been to buy today) I'm likely the next to leave.
I wonder how good CMHC and VREB are at forecasting? Are they like governments who have a habit of underestimating things so they can "outperform" themselves on the upside and quash the fear on the down?
4 comments:
I am certain there is a spin going on. They are of course protecting themselves. In Victoria 1 out of every 280 people is a real estate agent and I am not sure of the stats in other parts of Canada.
They are certainly protecting themselves.
oh HHV, I love you....and your fiance of course. You really have a knack for writing and this morning you made my day. Loving the info.
Interesting little experience yesterday. Husband said "go check it out" for this house in Cordova Bay - had seen sign last summer when I was home. Price has been reduced numerous times, OM, BOM you know the drill. Well I decide "eh, it's a long driveway, (panhandle) I'll peek, no one will notice me." Just as I drive up both owners come out of both houses and are driving out of the lane. doh!
So the second car (owner of house being flogged) rolls down the window and starts chattin about the house. I'm saying "oh sorry, I can make an appt" and that just didnt seem to matter, "go ahead, take a look, no problem, it has X, X, and X," and then the owner drives away.
So I go to the end of the lane, take a quick peek from the car and turn around.
All in all I felt she was eager for nibbles. It's been on the market a LONG time. And it was the first of many houses I will drive by this summer but I'm not slappin any money down. I'm like the designated driver at the RE party.
Anyway, thanks for the great blog! Keep up the good work.
oh and ps just signed up for a year rental at a fabulous place overlooking the water for a fraction of what owning right now would be.
Anon said:
"I'm like the designated driver at the RE party."
Well put. That is exactly how I feel.
They're mad at me though because I'm telling them the party is over and I'm taking away their keys.
I worked in a real estate office in 1997 doing some web design work, and at that time, the real estate market was tanking in the mid island. Around a third of the real estate agents left the business within a year - the board there went from around 1200 members to less than 800 in a short space of time.
Of course, Victoria is already starting that cycle, because even as prices have gone up, sales have declined the last two years - so commission cheques are getting larger - but there are less of them.
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