“Psychologically, They’re Ill-Prepared” – “Canadian Chaos Looms”

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While Canadian bank advocates and their skeptics exchange words, the formerly-white hot housing market is now in deep freeze. March sales in Vancouver collapsed by 31.4% year-over-year according to the local real estate board, the worst showing since 1986 and down 46% from the 10-year average for March. Prices also lurched lower, with the benchmark detached home price falling 10.5% year-over-year to C$1.44 million ($1.08 million). Things are more stable in Toronto, where March sales and benchmark prices were little changed from a year earlier, but those figures remain 40% and 14% below their respective levels from March 2017.

As the housing market sputters, the highly-leveraged Canadian consumer displays increasing signs of distress. According to the Bank for International Settlements, Canada’s household debt stands at 100.2% of GDP as of the end of September, by far the highest ratio among G7 economies (the U.K. is next at 86.5%), while the debt service ratio, or the percentage of disposable income allocated to principal and interest payments, rose to 14.9% in the fourth quarter per Statistics Canada, just shy of the 2007 peak.

That debt burden is starting to weigh on consumers. Auto loan delinquencies rose to 0.97% at year-end according to Equifax, Inc., the highest since 2009. At the same time, 36% of new auto loans in the fourth quarter were leases, the largest such share since 2007. Bill Johnston, vice president of data and analytics at Equifax Canada Co., noted that “we’re starting to see consumer behavior shift to keep the payments as low as possible.”

– excerpt from ‘”Psychologically, They’re Ill-Prepared” – Canadian Chaos Looms’, from Grant’s Interest Rate Observer, via Zero Hedge, 11 Apr 2019

Keeping Up With Other Bubbles – Australia Suddenly Not Running Out Of Land Anymore – “Aussie House Prices Could Halve”

It was supposed to be different there, too

House prices in Sydney and Melbourne could fall by up to 25 per cent this year alone and “there’s a chance they could fall by half” in the coming “property bloodbath”, an economist has warned.
LF Economics founder Lindsay David, who has been warning of the looming property crash for the past five years, said in a report today the recent house price falls were just the beginning.
CoreLogic data for January showed Sydney and Melbourne prices were now 12.3 per cent and 8.7 per cent down from their respective peaks in July and November 2017, with Melbourne falling at “the fastest rate ever seen”.
“We think there’s a chance property prices could fall by half in Sydney and Melbourne over the long run,” David said.
“I wouldn’t be surprised by falls of at least 40 per cent. When all hell breaks loose you’ve only got so many buyers out there.”

His base case of 20 per cent falls in calendar 2019 is significantly more bearish than other experts. AMP Capital is tipping total peak-to-trough falls of 25 per cent in Sydney and Melbourne, while UBS is tipping 25 per cent with a “rising risk of 30 per cent”.
David bases his forecasts largely on the “debt accelerator”, which is strongly correlated with house price growth six months forward. Latest data indicates the debt accelerator is “falling sharply” in Sydney and Melbourne.
If that happens, Sydney and Melbourne “will suffer peak-to-trough falls never experienced before, outside of the 1890s depression and real estate collapse”.

– excerpt and image from ‘Property bloodbath’: Aussie house prices ‘could halve’, Frank Chung, news.com by way of New Zealand Herald, 20 Feb 2019

Watershed? or Dam-Collapsing? – Mainstream Media Quoting Vancouver RE Bear-Tweets, and Predicting Shrinking Realtor Numbers – “What they’re used to is not what real estate is typically like.”

“Warning: Some viewers may find the following footage distressing…”

“There’s a cottage industry emerging on Twitter, with various accounts and followers seeming to take delight in the financial woes besetting Metro Vancouver homeowners hoping to sell their homes, or selling their homes at crushing losses. … Here’s a look at five examples highlighted on Twitter of homes in Vancouver and West Vancouver where the owners took a bath, or are at least one foot away from a nasty fiscal scolding…”
– from ‘Five examples of Metro Vancouver homeowners losing big in a plunging market’, David Carrigg, Vancouver Sun, 7 Feb 2019

Now you notice? -ed.

“The softening housing market could lead to tough times for some realtors, especially those who have recently entered the profession, said the president of the Fraser Valley real estate board. “I think it’s going to be tougher for the more-inexperienced realtors, those who are three or four years in,” said John Barbisan. “What they’re used to is not what real estate is typically like.” The 35-year veteran said agents will be forced to be more like “consultants than auctioneers” as they help to connect buyers and sellers. …
According to the council, there were 25,987 licensed real estate professionals in B.C. as of Dec. 31 — a 36-person drop from Sept. 30, although still slightly higher than June 30. The dramatic increase in the number of licensees — from about 21,000 in 2012 to 26,000 in 2018 — seems to be slowing.”
– from ‘Sales slump could signal tough times ahead for B.C. realtors’, Glenda Luymes, Vancouver Sun, 8 Feb 2019

We can recall when BC Realtors crossed the 10,000 mark. Seems a fair bet we’ll go back below that number once all is shaken out. -ed.

“Within artistic communities in Vancouver it’s hard to spend more than 15 minutes at a social gathering without talking about the cost of rent or knowing of someone who is being evicted.”


Ian Wallace, Construction Site (Olympic Village) III, 2011. Photolaminate and acrylic on canvas, 183 x 244 cm.

“When you’re in Vancouver, within artistic communities, it’s hard to spend more than 15 minutes at a social gathering without talking about the cost of rent or knowing of someone who is being evicted,” says Am Johal, director of community engagement at Simon Fraser University’s Vancity Office of Community Engagement.

In my day-to-day in Vancouver, I find myself preoccupied with constant reminders of my own impermanence. Exiting my beloved Mount Pleasant rental apartment, I’m hit by a thud of anxiety each time I see a development notice erected in my neighbourhood. I pass by so many of my once-favourite galleries (and former places of employment), now repurposed or left empty. Friends and artists leave. Those of us who remain spend most of our time defending the choice to stay. Our defence often sounds optimistic, perhaps naive: staying here and making art is important, too.

In this five-part series, I intend to think through how the housing crisis is having an impact not only on the production of art in Vancouver, but also on art’s responsive and changing communities. Issues of unaffordability, including high rent and inaccessible housing, go beyond dwindling supplies of accessible gallery, home, institutional and studio spaces. Complicating these issues is that artists and art centres are often themselves gentrifying elements within a city, a phenomenon already long-acknowledged and in-process in Vancouver. If we know well by now that unaffordability generates and exacerbates inequality generally, it feels necessary to emphasize that it also generates and exacerbates inequality, and tension, including class stratification, within artistic communities, too. It can be a contradictory conversation or, at least, a circular one. But if we acknowledge the role of the arts in gentrification, we should be looking deeper at what this disparity of opportunity in culture comprises. If the art community is asked to navigate, evade or compromise an ever-tightening commercial grip, we should really be talking about who in that community is benefiting, and suffering, most from unaffordability.

– image and excerpt from Who Has the Right to Art?, Alison Sinkewicz, Canadian Art, 31 Jan 2019.

Macleans Wakes Up – ‘This is how Canada’s housing correction begins’ – “We’re not ready for what happens next”


Kirk Marsh first noticed the mood start to turn in Vancouver’s housing market a year ago. As a real estate investor who buys homes and condos then fixes them up for resale, Marsh has an excellent vantage point on the market. Since giving up his old job in tech three years ago to flip real estate—“Sitting at a desk was killing me,” he says—Marsh has bought and sold six detached homes and condominiums across the B.C. Lower Mainland. “It’s not like TV shows where you see them making $100,000 or more each time, it’s just not like that,” he says. But he’s done well, always able to find buyers and come out ahead.

Or that’s how it used to be. “Today, everything has stalled,” he says.

While visiting open houses over the past year looking for his next flip, Marsh watched the frothing crowds and bidding wars steadily dwindle away. “There’s just nobody showing up at the open houses now,” he says. “Especially downtown. Usually you’d see a group of very aggressive people coming out.” But he’s also keenly aware of the slowdown because he’s trying to unload a renovated two-bedroom condo in New Westminster, just east of Vancouver. The unit, with an asking price of $569,000, had been sitting on the market for two months as of mid-December, with almost no interest.

– excerpt and image from ‘This is how Canada’s housing correction begins’ by Jason Kirby, Maclean’s, 3 Jan 2019

The whole article is worth the read, and nails many things…
Pretty much what we’ve been warning of on these pages for …oooh… more than a decade.
You can only tell who’s been swimming naked when the tide goes out (and that includes entire countries).
Regarding Kirk, starting flipping three years ago was extremely late to the Lower Mainland party and he should count himself very fortunate if he gets out alive.
– vreaa

Vancouver Detached – Sales Down, Prices Down

“Sales volumes are incredibly weak with buyers looking for steep discounts and many sellers still unrealistic with their asking prices. However, sellers who need to sell for whatever reason are increasingly having to lower their prices. There is often a rhetoric that “sellers simply won’t sell” if they don’t get their price, and while this may be true the reality is there are still sellers who absolutely need to move on, such as estate sales, divorces or job relocation. These sellers are ultimately setting the benchmark lower.”
charts and quote from Realtor Steve Saretsky

Classic dynamic for a declining market.
Will crucial technical price supports hold?
Will buyers “rush in” to “snap up ‘bargains'” ??
Fundamental supports are f-a-r below. -ed.

Bloomberg Calls Vancouver ‘The City That Had Too Much Money’


Known abroad primarily for its stunning Pacific Coast setting and athletic lifestyle, the city has since become one of the world’s largest sluices for questionable funds moving from Asia into Western economies. One academic terms the process “the Vancouver model”: a seamy mingling of clean and dirty cash in casinos, real estate, and luxury goods made possible by historic ties to China and by Canada’s lax record of fighting financial crime.

It’s a product of one of the largest financial flows of the 21st century: The money being frenetically shuffled by millions of wealthy Chinese into safe assets abroad, in defiance of their country’s capital controls. Since mid-2014, capital flight from China may have totaled as much as $800 billion, according to estimates from the Institute of International Finance.

In Vancouver, the tidal wave has wrought a dramatic economic, demographic, and physical transformation. Alberni Street, a formerly dowdy downtown thoroughfare, has in the past decade welcomed a two-level Prada boutique with a black marble facade, one of the largest Rolex showrooms in North America, and a 62-story tower with a five-star Shangri-La hotel. All have Mandarin-speaking staff. In May, Rolls-Royce chose Vancouver to unveil its first sport utility vehicle, which starts at more than $300,000, hosting a Champagne reception at its sleek new local dealership in an upmarket neighborhood about two miles south of Alberni. Six sold on the first day—bound, perhaps, for the “car condo,” a kind of luxe garage with customizable suites that’s being built in a majority-Asian suburb. The units start at more than C$800,000, and the first batch recently sold out.

Much of the money coming in has been legitimately earned, if sometimes extricated by gray-market means. But officials say that a substantial proportion is the proceeds of corruption or crime, including the illegal sale of opiates such as fentanyl. With public anger rising over astronomical housing prices and an economy distorted by wealthy outsiders, British Columbia’s left-leaning government—elected last year on a platform focused on calming the real estate market—is building a global laboratory for policies meant to restrain the arrival of Chinese money. The province is hiking taxes, toughening transparency rules, and tightening oversight of casinos and financial institutions.

Change will be difficult and fraught. Vancouver has been closely connected to Asia since the late 19th century, when the first Chinese laborers arrived to help build the trans-Canada railway, and the city is proud of its record of integrating immigrants. Also, beyond real estate, Vancouver’s economic base is shallow. It’s not the business capital of western Canada—that’s Calgary—and it has few major corporate headquarters or large-scale manufacturing operations. “Asian capital has kept this economy alive, end of story,” says Ron Shon, a Chinese-Canadian venture capitalist who arrived as a teenager in the late 1960s. “You can see it in every aspect of our lives.”

The money is arriving so fast, and in such volume, though, that standing by is no longer an option. Vancouver was perhaps the first major Western city to experience the full force of Chinese capital. Soon, it could be the first to learn what happens when you try to stop it.

– excerpt and image from ‘The City That Had Too Much Money’, Matthew Campbell & Natalie Obiko Pearson, Bloomberg, 20 Oct 2018