"The Canadian housing market at one point during last year's parabolic surge in sales and pricing got as much as 20 per cent overvalued. In recent months, demand has weakened under the weight of eroding homeowner affordability. At the same time, the rush of new construction has elevated the supply side of the equation. and so what falls out these shifting demand and supply curves is a reduction in prices - the long awaited correction is here. Remember - excesses in one direction are generally followed by excesses in the other direction. And bubbles never correct by going sideways. In a nutshell, there's more air to come out of this Canadian housing balloon."There you have it. An independent financial expert has stated the Canada-wide real estate market is in a bubble. Victoria is only amplified exponentially. We've got the listings volume. We've got the drastic reduction in sales volume (June 2010 was an 8-year low for home sales and over 30% down from June 2009). It's inevitable that the rest of this year will play out with consistent and perhaps drastic price reductions. It's also inevitable the Victoria Real Estate Board and their friends at the Times Colonist will issue press release after press release proclaiming entry-level condominiums as the number one choice for buyers looking to get into the market or downsize in this decade's Best Home Buying Opportunity Yet™.
Friday, July 16, 2010
One of these economists is not like the others
Adrienne Warren from the Bank of Nova Scotia says real estate is in for a soft landing. Douglas Porter from the Bank of Montreal says real estate is in for a soft landing. Pascal Gauthier from TD Bank says all is calm on the real estate horizon. But thankfully the Globe and Mail, perhaps Canada's Only Balanced Source of Real Estate News Reporting™ provided an alternative viewpoint from David Rosenburg, who used to work at a big bank's investment arm and now works at Gluskin Sheff + Associates, who don't appear to have much financial interest in real estate: