Prediction: Vancouver RE Prices Will Not Crash… Unless They Crash

“If homeowners can just hold off selling, the Canadian housing market will emerge fine from its current “deep freeze”.
According to a recent TD Economics housing forecast update, the market is expected to gradually recover from the effects of the COVID-19 pandemic.
After an anticipated “historic” plunge in sales in the month of April 2020, a “much stronger activity” is seen next year.
A lot of that depends on whether homeowners can avoid distressed selling during this pandemic.
“Absolutely key to our forecasts is the assumption that listings mirror sales by dropping substantially in the near-term and recovering gradually thereafter,” Rishi Sondhi, an economist with TD Economics, wrote.
By holding off on selling, homeowners can do one thing for the market.
“This puts a floor on prices and sustains relatively tight-supply demand balances across most markets, allowing for the resumption of positive price growth as provincial economies are re-opened,” Sondhi explained.”
– excerpt from ‘Homeowners avoiding distressed selling key to Canadian housing market recovery: TD Economics’, Carlito Pablo, 1 May 2020, Georgia Straight

No, folks, that ‘analysis’ is not from ‘The Onion’.
Seems like the TD analysts have found a sure fire way of maintaining every bull market, forever… (it’s easy: just get sellers not to sell).
It’s remarkable that this kind of ‘analysis’ can get parroted on & on without getting called out.
Remember: Sellers aren’t competing with Buyers, they’re competing with other Sellers. How many Vancouver RE speculators (essentially each and every buyer for the last 10-15 years) are going to realize their thus-far-paper profits? We are already seeing many anecdotal examples of people who bought in 2016 or later taking losses on resales.
– vreaa

13 responses to “Prediction: Vancouver RE Prices Will Not Crash… Unless They Crash

  1. Astonishing that this “financial analyst” is employed.

  2. Sounds like something written about Beanie Babies, in Beanie Baby Investor Magazine, in about 1997.

    This guy is assuming that COVID will not cause the DEATHS, bankruptcies, divorces, or relocations which trigger the auction-style sale of houses at market price.

    Those marginal transactions revalue all properties, whether this fuckstick wants them to or not.

    He is suggesting that every sale in Canada is voluntary and done by people who just want to switch houses for variety or something, and are completely flexible on timing and financing.

    Fuck this guy and fuck his pipe dream. His peyote-fuelled hallucination is going to lead real families to make real, really bad, decisions.

    • Excellently articulated, as per usual Burnabonian.

      Prices are set at the margin, and there are always forced sellers. Even more now that the pandemic is wreaking its socioeconomic havoc.

  3. He is really talking the banks fear. Their worst case scenario is houses selling for lower resulting in lower appraisals for entire neighbourhoods. We all know how that part works. But on the banks ledger it means they will be forced to set aside much higher loan loss provisions as the market grinds down and appraisals come in lower and lower. Disaster strikes the banking sector. Homes go underwater. Credit must be tightened further. Loans start getting called. The only way to stop this from happening and get through another year without facing the music is to discourage selling.

    As long as sales slow then lower valuations don’t get booked.

  4. Why does this bring to mind an image of a line of riot police with linked arms? “Stand strong, sellers! Don’t let those buyers through!”

    Or most investment advisors? “Buy and hold; don’t sell your investments during a declining market!” (Because if you all did, it might cause contagion and we couldn’t get our own money out at a profit)… ‘course they’ve been right for the last 10 years, but will they continue to be now, or will a better entry point be found way below current values? (For both stocks and houses!)

  5. Bill Ferguson

    Feel free to join the “Metro Vancouver Housing Collapse” Facebook group and share in the information/discussions along with 8,980 others since 11/11/17.

  6. CMHC is now saying they will pull back on participating in the Canadian mortgage market. Also forecasting price declines of up to 18% this year alone and thus throwing a whole lot of cold water on the TD analyst discussed in this article.

    Was that the bell rung at the top? Do we even need a bell this time?

  7. Raging Ranter

    What a bizarre world this is. The various private sector forecasts are clearly pumping up the market, while a public servant named Evan Siddall, who happens to be holding the bag for billions in insured mortgages, tells it like it is. Who would have thunk that straight talk about the housing market would come from the CMHC, and NOBODY else?

    • I was surprised. Is he a new guy? Cuz CMHC wasn’t exactly sounding the alarm all these years, if I recall.

      The psychological effect of his prediction will be powerful.

  8. Raging Ranter

    Not new. Evan Siddall has been quite outspoken for awhile now. At least as much as his job as Housing Enabler in Chief allows him to be. This isn’t the first time he’s opined that government should not be pursuing the goal of ever-wider home ownership. Of course, the whole raison d’etre of the CMHC is to promote wider home ownership, but Siddall has always been quick to point out that this goal should be pursued within reasonable limits.

    And not surprisingly, we get the usual reaction from the usual suspects. I won’t provide the link here because I don’t want to end up in moderation purgatory, but you can find this headline over at the Financial Post:

    THE UNINTENDED CONSEQUENCES OF DOUBLING THE MINIMUM DOWN PAYMENT ON HOUSES — HAIDER-MORANIS REPORT

    The subtitle offers this gem:

    Raising the bar for a minimum down payment will exacerbate the fall of housing prices rather than arrest it

    They seem confused about Siddall’s intent. Siddall never claimed that the CMHC was trying to arrest the fall of house prices. He simply stated that he expects prices to fall, and that tighter mortgage underwriting standards and higher down payments a moral obligation at this point, to protect taxpayers from even further risks. He also expressed a desire to prevent even more young people from getting sucked into the housing market at exactly the wrong time.

    The writers of the Haider-Moronic Report, meanwhile, would have you believe that the CMHC’s mandate is to support house prices, even if that means feeding more youngsters into the wood chipper in order to provide mulch for the lawns of those who went before them. Their view is not atypical in the industry.

  9. Thanks for discussion, all. The CMHC/Siddall position headlined in the next post.

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