Friday, September 14, 2007

Where did Victoria go?

Report on Business has a good article about growth, trends, real estate etc. It closes with a ranking of Hot and Not cities in terms of GDP. I'm assuming Victoria falls somewhere between the Hot and the Not. Maybe that's a good thing?

HOT

Saskatoon 4.7%

Calgary 4.4%

Winnipeg 3.7%

Edmonton 3.6%

Regina 3.5%

NOT

Vancouver 2.9%

Toronto 2.7%

Quebec City 2.6%

Halifax 2.5%

Ottawa-Gatineau 2.3%

Montreal 2.1%

Hamilton 1.3%

They point out that Victoria is currently 10% above the historical RE inflation trend line. I'd thought it much higher, closer to 15%. I can't find the data I thought I'd read (maybe I'm imagining things again?). Anyone in the know, please chime in.

Why are prairie towns so hot right now? Is it because of oil? Considering that Winnipeg stands 3rd on the list I'd say no. I'm willing to venture a guess that goes something like this: incomes are pretty close across the country, within $10K or so in the same jobs in different cities; young people wanting to buy a home and raise a family look where they can get the best bang for their buck; families add to a city's growth, they get jobs, pay taxes, buy cars and furniture and start businesses too; retirees do add to a city's bottom line, but nowhere near the same scale because they pay less tax, buy less, and don't usually start businesses. Of course, the best option and most sustainable would be a healthy mix of both.

7 comments:

Roger said...

More good news for the bears from the Canadian Real Estate Association:

Average home price slips $6,600 in August (Nationwide)

http://tinyurl.com/2mhbfr

Usual spin comparing prices to a year ago. This is like buying a stock that is up 20% from a year ago but has been falling for the last two months.

August's decline was due largely to drops in Alberta, where the average price in Calgary fell $13,000 to $423,801 and Edmonton's average slipped $8,100 to $345,809.

I guess all the Alberta buyers will be flocking to World Class Victoria which is immune to what is happening elsewhere in North America.

Lets see if the TC publishes this one tomorrow!!

Anonymous said...

And speaking about the World Class Prairie cities, I am from World Class Winnipeg - I left 20 years ago - anyway many friends still live there. They have lovely "paid for" houses, take great trips in the winter. Many have cottages. The does not appeal to me but many people are happy there and have a very nice life (some people don't mind the cold- which is odd but true).

JMK said...

They point out that Victoria is currently 10% above the historical RE inflation trend line. I'd thought it much higher, closer to 15%. I can't find the data I thought I'd read (maybe I'm imagining things again?). Anyone in the know, please chime in.


They did their historical fit from 1984-2006. 1984 was a low in the cycle, 2006 somewhere near a high. So fitting this way exagerates the historic rate; they should really fit from a high to a high or a low to a low. i.e. 78-2001 is not a bad fit. I would agree that we are closer to 15% over the trend line right now.

Village said...

TC today had less rah-rah in it for real estate. Still plenty of "Oh, it won't happen/be bad/blah blah." in it. But it did acknowledge it's going to slow down.

I think of this as more of a credit bubble then real estate. Real estate is the obvious symptom that stems from cheap and easy credit. The toll on the economy will be huge if that spigot is shut off. Say goodbye to discretionary spending.

Prairieboy said...

Victoria's forecasted economic growth is at 2.8% for 2007. This puts Victoria in the NOT department.

http://tinyurl.com/322zw5

talus said...

Re: CREA president Ann Bosley.
http://tinyurl.com/2mhbfr

"This is a housing market built on good foundations, including good lending practices," she said.


I nearly spit my cereal all over the computer. Does she really think the foundation is good? Cheap credit built this baby. A lack of borrowing will kill it.

Roger said...

More fuel for the fire:

"Tighter mortgage market may hit housing"

http://tinyurl.com/2j9gxg

"Investors scrambling to convert risky debt"

http://tinyurl.com/2ub7xc

No subprime worries in Canada!!!