Monday, May 26, 2008

This time it IS different

At least in the TC courtesy of Carla Wilson.

Some notable quotes:
Markets in the West, which have risen the furthest above their underlying values, are the most at risk of an increase in defaults as a result of recent mortgage innovations

The delayed arrival of softer housing markets can be partly attributed to recent mortgage innovation that has seeped into the Canadian market during the last two years

so we are looking for even Western Canada to really start to cool off
And obligatory spin from industry:
While there is some "hefty" price appreciation, the market is starting to return to balanced conditions
Prices rose four per cent year-over-year in April, she said.

Canada's housing market is on much firmer footing than the U.S. market," it said, citing more conservative mortgage lending practices, healthy household finances, tight labour markets and a manageable supply of homes on the market
Since when is four per cent growth hefty? I mean if I bought a condo April and wanted to trade up to a house as all my friends have managed to do over the past two or three years, wouldn't I be sad to find out that my "hefty" gains don't even cover my Realtor's commission for selling my place?

I'd like to point out that the US has higher average wages, lower unemployment and just last week the RBC was telling us Canadian's weren't saving enough. How does that equate to "healthy household finances?"

Don't forget owners: you're in it for the long term. Unless you aren't. And then you're a speculator about to get caught, unless you get out now.

I wonder if the next big boom is going to be in counselling services? Can you buy stocks in that? I can see the future headlines: Counselling boom fed by dis-illusioned condo owners "I thought I was only going to have to live in it for a year, maybe two at the most."

Don't let anyone tell you different. This market has changed. And is now starting to show some weakening momentum. Prices will be the last thing to go down. Sales first, prices second.

11 comments:

Village said...

find out that my "hefty" gains don't even cover my Realtor's commission for selling my place?

Isn't that what Craigslist and UsedVictoria are for? Avoiding those pesky realtor fee's. Speaking of which, seems quite a few more listings on those sites then I recall from last year.

Listing for housing on eBay should be the next trend. =)

greg said...

village

actually, between paypal and sellers fees, ebay is the last place I would market my house...

On an aside, I tried to look up some for sale by owner listings locallly - there are so many sites with a handful of listings that it is completely lame.

This fragmentation is one of the only things saving the mls.

Billy TwoBaulz said...

Like a lot of things in Canada, the MLS is, as you note, a protectionist monopoly. I fear that Canadians are too averse to freewheeling business ideas to devise an alternative to the MLS. Presumably any decent competitor will come out of the US. After all presumably the MLS itself is just a US offshoot.

vg said...

Lots of talk today on the business channels about the real possibility of double digit interest rates coming in the next 2-3 years due to inflation. Those sellers sitting on the fence best get that sign up before your neighbour does.

vg said...

The tale of two brains, Greenspan says there's a 50% chance of a recession and Warren Buffet says we are already in a recession and is out shopping ofr deals galore. The conspirator of this whole subprime mess still can't admit it is already in motion, unbelievable but then he denies he's responsible for anything so what else can one expect.

Anonymous said...

I was sitting in my stats class last night (I lead a wild and exciting life, lol) and the professor asked if anyone wants to buy a condo by Thetis Lake (the Lakeside). WTF? I think it's a fellow professor selling it, but come on!!!! I kid you not. He should have been warning them NOT to buy it...

B2B said...

Sounds exactly analogous to a stats prof encouraging the class to buy tech stocks in 1999. It's the marginal moron effect; the shoeshine boy offering Rockefeller (or whoever it was) stock tips in 1928.

talus said...

Snagged from Mohican's here is a NY Times article on buy vs rent...

http://tinyurl.com/5fc8ks

Be sure to check out the multimedia buy vs rent calculator. It's the first one I have seen that allows for negative appreciation...

http://tinyurl.com/6obezf

talus said...

Try this "printer friendly" link if the above link to they NY Times doesn't work for you...

http://www.nytimes.com/2008/05/28/business/28leonhardt.html?_r=2&pagewanted=print

wompeter said...

Hey all - I've finally been motivated to start a blog to track daily stats for Victoria, since I like Paul's and Rob's blogs so much. I'm not a realtor so I don't have access to stuff like they do, but I'm searching aggregate inventory numbers. Check 'er out and leave any suggestions you might have... it'll be in progress for a while, but get your hit of daily stats :) I'll be adding more shortly. I update it sometime in the evening, usually around 6:30 or 7.

http://www.mlsstats.ca

Cheers,
Womp

Anonymous said...

...the MLS is...a protectionist monopoly.
No, it is not. It is a database created, maintained and paid for by realtors. If you're not happy about it, start your own. Oh, wait:

...Canadians are too averse to freewheeling business ideas to devise an alternative to the MLS....

Presumably any decent competitor will come out of the US. After all presumably the MLS itself is just a US offshoot.

Presumably, you're so horribly misinformed as to be laughed at.