“As I’m writing this, I can hear the hammers on some of the seven new luxury single-family houses being built within *one block* of my own West Side rental. Indeed, there are not only For Sale signs on literally every block near me, there are often multiple houses/apartments for sale. Furthermore, there seems to be at least one SFH going up on nearly every block near me, sometimes more.
Builders still don’t seem to be getting the message about the housing market slowing down. After I read the Mayor’s excited comments a few weeks ago about a billion dollars’ worth of new building permits, I wrote to someone on City Council saying that what was being built near me, just as one example, didn’t look like it was selling well at all.
It’s the same old story: formerly affordable (some of it admittedly not in good shape) housing going down in favour of new builds that are way out of reach (statistically even!) for Vancouver incomes. I predict the West Side will have tumbleweeds rolling through it by next summer.”
Ben Rabidoux, at ‘The Economic Analyst’ posted a ‘quick note’ [3 Oct 2012] that documents Vancouver’s current sales weakness, making the excellent point that the weakness was present in Vancouver sales by April 2012, but that new mortgage rules were instituted in July – thus attempts by commentators to blame the low sales on the new rules are just dead wrong. Ben’s post also contains the following chart, which nicely complements epte’s anecdote above:
As Ben says: “High existing inventory and weak sales will only be compounded by rising new unit completions set to begin in early 2013. Builders could not possibly have timed this any worse.”
In most markets, insiders are a leading indicator of future market direction.
In real estate and construction, however, developers appear to be consumers like everybody else, and their analysis of market conditions is no better than the man or women in the (noisy) street.
When any RE bubble deflates, there are scores of late-to-the-party builders left high and dry; it appears ours will be no different from the rest.