Financial Times – “The lack of buyers is sobering evidence that Canada’s housing boom, which began in 2000 and bounced back to life after the financial crisis of 2008-09, is now over.”

“The lack of buyers is sobering evidence that Canada’s housing boom, which began in 2000 and bounced back to life after the financial crisis of 2008-09, is now over.
Nervousness about the outlook for house prices, and the effect on the economy if they slump, is casting a pall over the last few months in office of Mark Carney, the Bank of Canada governor who will take over at the Bank of England on July 1.
Mr Carney, who will appear to face questions before the British parliament for the first time on Thursday, was courted by UK Prime Minister David Cameron’s government partly on the strength of Canada’s relatively strong performance compared with other large economies. Just as he is leaving, the shine is coming off that record.
Worries about Canada’s house prices and rising consumer debt prompted Moody’s, the rating agency, to cut the credit ratings of six of the largest Canadian banks last month.

Mr Carney deserves neither all the credit for Canada’s successes nor all the blame for its failures. The economy has been driven by forces beyond his control, particularly events in the US, and he has shared economic management with ministers and government agencies. The biggest changes in the housing market last year were the government’s moves to cut back the availability of mortgage insurance provided by the Canada Mortgage and Housing Corporation, a state-owned company.
Nevertheless, it was the decisions by the Bank of Canada under Mr Carney’s leadership to cut interest rates during the crisis and hold them down subsequently that enabled a surge in household debt and house prices. While American consumers were running down their debts, Canadians were adding to theirs, so that by the end of last year household debt was 165 per cent of income, in the same territory as the peak in the US at the start of the crisis.
House prices, meanwhile, rose 23 per cent in the three years to April 2012.”

– from ‘Canada housing cloud cast over Carney’, Financial Times, 6 Feb 2013

Yes, Canada’s housing boom is over.
The Financial Times makes the same observations about Mark Carney’s tenure that we discussed here (VREAA 26 Nov 2012) when his move to the Bank of England was first announced.
– vreaa

28 responses to “Financial Times – “The lack of buyers is sobering evidence that Canada’s housing boom, which began in 2000 and bounced back to life after the financial crisis of 2008-09, is now over.”

  1. The Poster Formerly Known As Anonymous

    So the bear community should be going mainstream later this year, all hailed as visionaries, as the finger pointing and the “how could this happen” questions get raised. Get ready for the plaudits.

    • “…as the finger pointing and the “how could this happen” questions get raised.”

      Some of the fingers will be pointed (incorrectly) at the bears.

      “See, all of your negative nattering caused this”-type of stuff.

    • The question will also come up at how the “community” could have been wrong since at least 2005. Likely they will be painted as “doomers” who are always negative.

      Timing matters.

    • My favorite line ever:

      “there are only a 150 RE bears in Vancouver, how do I know this? Because that is the number of upvotes Paul B get when he posts the daily numbers”

      Boom.

      • The Poster Formerly Known As Anonymous

        Glad you liked the advanced data gathering methodology. Guaranteed impervious to any peer review.

      • yltnboomerang

        There are more bears each day. I have been a regular since 2004 on the bear blogs (became YLTN in 2007, lurked before for 3 years) and am suprised that quite frequently now I am getting links to VCI and VREAA forwarded to me. I’m getting links sent to me from previous permabulls, and even my folks (the ultimate boomer bulls)!!!

      • The Poster Formerly Known As Anonymous

        But are they bears with cash or bears with real estate holdings? These Nouveaux – Ourses simply mean more listings, don’t they?

      • the poster formerly known as anonymous

        Your bear credentials are outstanding, by the way. There must only be a handful that go back so far.

  2. Real Estate Tsunami

    Wow, Townhouse listings are going through the roof in Richmond!
    At the beginning of the year, there were 244 listings.
    As of Feb 6, there are 345 listings. An increase of about 40% in a little over a month.
    Interestingly, many new listings are now from developers who are finally realizing that they build far too many units.

    • Watch how fast they sink prices for everyone else as they rush for the exits.

      • The Poster Formerly Known As Anonymous

        This could get bigger than our wildest imaginations. I hope the february trends hold or worsen… sooner this boil gets lanced, the sooner we can return to productive economic activity.

      • Cyril Tourneur

        As painful as it may be, a quick drop is probably preferable. Sellers will blink first.

      • Yep, already seeing 10% price drops on the north shore. C’mon sellers hold on for CNY its just around the corner…

    • And there will be an increase in Hondas on the streets of Richmond !( remember the Realtor who was offering a free Honda if you bought his listed unit?)

      • Real Estate Tsunami

        The gimmick does not seem to be working.
        The Townhouse complex on Steveston and Shell has still 14 unsold units.
        Maybe a Honda just does not cut it in Richmond.

      • The Poster Formerly Known As Anonymous

        Some properties may as well be throwing in Maseratis and Rollses soon, considering how deep the discounts are going to be. We must be well into Mercedes E-class league by now.

  3. Financial Times? Never heard of it. I get all my RE info from the Vancouver Sun.

  4. Everything you need to know is over at Larry’s Blog Yatter Matters. A recent post had everyone dancing!

  5. Just had a conversation with a good friend. He has been trying to sell his condo for a few months and isn’t having much success. A few showings but no offers. Now he’s having trouble making the mortgage payments and the bank is coming after him…he’s scared and very stressed but, if he got his asking price, would clear $150K on the sale.

    I said “sounds like selling the place will solve all your problems so why not drop the price low enough that it sells quickly”. His reply “oh no, it’s priced right. I think it just needs a lick of paint before someone will buy it”. I said “really? don’t you think you’d get more interest at a lower price & sell quicker?”. “No” he says “the place will appeal to FTB so it needs to be perfect because they only want to buy places with all the bells and whistles.”

    I suggested he lower the price and see what happens but I don’t think he’ll listen…he prefers worry, stress & legal headaches to recognizing that his condo isn’t worth what he thinks it’s worth. And this is from someone who is still going to pocket $100K even if he drops the price by $50K!

    • This guy should think of a price reduction, double it and add 10 percent. If he’s lucky enough to sell it and squeeze through the door before the herd stampedes, it will the best thing he’s ever done.

    • If he really is a good friend, sit him down with a spreadsheet (include all his monthly costs) with three models, one, drop the price 50k now and sell it immediately, hold firm and sell it in 5 months with a 30k discount he will have no choice but to make, or hold firm and sell it in one year with a 75k discount he will have to make.

  6. This guy need a reality check…and real fast!!

    • he is getting a reality check very soon…. it is going to be called “chasing a falling price market”…. look on the bright side… he has 150K to play with and to use to learn a good lesson… lesson being “take the money and run!!”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s