CMHC says housing starts to decline:
Canada Mortgage and Housing Corp., says the housing boom will slow this year, predicting starts will ease to 213,425 units after reaching 227,395 units in 2006.
A 6% declineA further 6% decline. Yes, that's right folks, 12% in two years
In its second-quarter Housing Market Outlook, the corporation predicts that residential construction will continue to decline in 2008 to 200,175 units. That still means seven consecutive years in which housing starts exceed 200,000 units.
The corporation says higher mortgage carrying costs and the erosion of demand that built up in the 1990s will mean lower starts.
It says sales of existing homes will remain strong, forecasting sales of 487,500 this year.
Prices for existing homes are forecast to grow almost 10 per cent this year, mainly because of strong price pressures in the West. (emphasis mine).
Immigration numbers for 2005-2006 were 254,000. That's not 254,000 families, that's individuals. So we built 1 house for every 1.1 immigrant. Sounds pretty sustainable to me! Not.
8 comments:
So we built 1 house for every 1.1 immigrant. Sounds pretty sustainable to me! Not.
Yes, but how many Albertans own 2 or more homes? Wasn't there even a story in the TC after the release of some Bear Mountain boxes where one Albertan bought two, and wanted to buy another one soon? Hey, it's like collecting baseball cards! There are the wealthy (or over-mortgaged) people out there that own 2, 3, maybe 4 or more properties. Recreational homes appear to be the norm these days.
The greater fool theory is definitely in play now.
I just heard of 2 houses that sold for unbelievable prices. One was bought just last year, now re-sold for $40k more. A dinky little thing on a tiny lot.
The other was "offered to list" to 2 agents I know, and refused by both. Whaddya know, along comes #3 realtor (that WE know of), who listed it and it has sold after a couple of months for $50k less than asking price, but yet still damned ridiculous price for the bull-dozer bait it SHOULD be.
My gosh, people are losing their marbles. I recall 2 OTHER houses which sold lately for huge prices, then were completely torn down, as they were full of black mould. Those suckers (buyers) paid big prices for what turned out to be lots-only! Not even the foundations were saved.
All those sellers must be dancing in the dark, all the way to the bank. Simple inspections would have revealed the problems to buyers, but these buyers were hurriedly over-bidding with no inspection conditions. They were scared to be "priced out forever????"
PB,
point taken, for sure. Will they hang on to those rec properties when they don't hold their value as investments?
I personally think that if we saw the price of a barrel of the black stuff drop to half what it is today, we would see a lot of for sale signs. However, being a peak oil convert, I unfortunately don't see that happening without a severe recession, which would also cause the for sale signs to sprout.
I doubt there are that many wealthy people in this world to permanently skew the housing stats by buying multiple properties.
It is more likely that parents are taking out second mortgages, giving the money to their kids,
who are then buying condos/townhouses.
When the parents get scared, that tap will get turned off.
Also, not sure you can equate immigration numbers with housing starts, as some of the foreign buyers will not be immigrants, ie, the total number of foreign buyers is likely to be higher.
My $.02.
It is more likely that parents are taking out second mortgages, giving the money to their kids,
who are then buying condos/townhouses.
As Garth Turner rightly said these Baby Boomers who are spending a fortune on property also have to retire. They will eventually need the capital they have to live and if it is all tied up in housing what are they going to do?
Kids are expensive enough. I don't think most people can afford to buy their kids homes.
ANONYMOUS -
no, the boomers can't afford to buy their kids homes, by and large, but they are susceptible to being sucked in by the rhetoric of housing bulls.
They are less likely to have been hurt in the early 80s. Most who could afford to buy under high interest rate conditions have only benefited since then as rates dropped for decades, coupled with a steady appreciation of the value of their homes out of all proportion to the original investment.
When the housing bulls warn nobody will be able to buy if they don't do it soon, boomer parents are the most likely to buy the concept and come up with downpayments for kids who don't have the money, and in many cases, based on incomes and position in life, never will otherwise make it.
Does this take the form of cash in the bank or drawdowns on equity? Every situation is different, but supplying the downpayment, co-signing all that type of stuff was made possible by the boom, and helped contribute to it.
I know a number of kids who did well in the last ten years because when their older boomer parents sold and downsized, voila, that's where the downpayments came from.
This type of activity will certainly stop, if it looks like boomer money is going to disappear into a real estate wipe-out, or even if buying starts to look like it will be cheaper next year.
It's like the tide, it's coming in until its going out.
Housing plans built in defiance of the underlying pattern of events, will get swept away.
keepcoding
saskatoon
hashnode
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