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Canadian housing sales fall 15%; Stats Canada revises debt-income ratio significantly higher

OCTOBER 17, 2012

Canadian housing sales fall in September:

The Canadian Real Estate Association has released final September sales data.  September sales totals came in at the lowest level since 2001.  This comes as no surprise given the significant decline in sales seen in Canada’s four largest metros, as I outlined in several posts last week.  Click on the links to see the ugly numbers from Montreal, Toronto, Ottawa, and Vancouver.

Despite this, CREA put on a brave face, noting in their press release that, “The number of home sales processed through the MLS® Systems of real estate Boards and Associations in Canada rose 2.5 per cent on a month-over-month basis in September 2012.”

Let’s chalk this up to the “miracle” of seasonal adjusting, as nominal sales fell 11% m/m, the second largest September m/m decline in a decade.  The 14% upwards adjustment in sales was the largest seasonal adjustment ever for the month September. 

Chart courtesy of Scotia.  Hat tip to Mike Fotiou.

CREA attributed this record-high seasonal adjustment partially to the fact that September had only 20 weekdays, which is indeed rare, yet 1990, 2001, and 2007 also saw 20 weekdays in September but had much smaller seasonal adjustments in sales.

The CREA press release was also quick to point out that, “The national sales-to-new listings ratio, a measure of market balance, stood at 49 per cent in September 2012, remaining near the midpoint of a balanced market.”

Once again, the methodology used to seasonally adjust this data strikes me as suspect, as can be seen in the non seasonally-adjusted data below.  The bottom line is that you have to go back to the early ‘90s to find a September sales-to-new list ratio this low:

The sales numbers were bad, even once accounting for fewer work days.  This October will actually have two more week days than last year, so I expect the year-over-year decline to be more muted than we saw in September, likely in the 5-10% range.  I do wonder if the fact that this October has more week days than last will be a prominent theme in CREA's analysis, as it was this past month.  I doubt it.

 

Canadian debt-to-disposable income figures revised significantly higher:

Stats Canada has revised its methodology for calculating the household debt-to-disposable income ratio to align with IMF and UN data reporting practices.

The revision has resulted in a significantly higher debt-to-disposable income reading, with Q2 2012 figures adjusted from 152% to 164%.  The chart below shows the new data plotted against a recent chart from the Bank of Canada, taken from the June 2012 Financial System Review publication.  The dashed, red line represents the new data:

It’s worth noting that the US will be releasing their revised data in early 2013, but as I have frequently argued, the “cleanest” means of comparing debt burdens between two countries is to look at debt relative to GDP, as it removes the influence of differential tax regimes.  The chart below shows household debt-to-GDP figures for Canada and the US:

Household debt-to-GDP patterns are very similar between Canada and the US.  I’ve always questioned the significant gap that previously existed between Canadian and US debt-to-income figures in light of this.  I suspect that even when the US revises their data next year, it will result in a negligible change.

 

Cheers,

Ben

Posted in:

Ben Rabidoux
By Ben Rabidoux

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55 Comments

  • TorontoSkeptic said:
    • 1 year, 6 months

    Great post as always

    If anything I would expect the debt-to-GDP to be higher for Canada. The cost of living is way, way higher in Canada than the US, with almost every component of everyday life - food, liquor, clothing, shoes, electronics, car insurance, housing - costing 40+% more than the US, and generally subject to at least double the sales tax too.

    I have an unrelated question that you might have an answer for... one thing I've noticed tracking the wild and crazy Toronto housing market is that houses are usually assessed for about $250k less than the sale price. I've read some things lately about how Vancouver houses are now selling below assessment, but I'm wondering what the story is with Toronto assessing far below market value.

    It's common to see east side renos selling for $850k+ that are assessed for half that, and I can't recall ever seeing a house assessed for over $400k except in mansion districts and super-luxe condos.

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  • Ralph Cramdown said:
    • 1 year, 6 months

    Without disagreeing with your general comment, I'd point out a few things: The US spends 6% MORE of its GDP on healthcare costs than Canada does. And for every family whose primary breadwinner has a gold plated, 100% employer paid medical plan, there's LOTS who are paying $2-300/month for their share of a crappy plan with a high annual deductible, or $1-2,000/month if there's no employer plan, or simply going without.

    Now, what's this about the relationship between the cost of living and the household debt/GDP ratio? Should there be a correlation? I thought one would live more frugally if he had less of a surplus, rather than borrowing. But more to the point, who'd LEND to someone who isn't going to be able to pay it back?

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  • jesse said:
    • 1 year, 6 months

    "who'd LEND to someone who isn't going to be able to pay it back?"

    I, as Dickson, was disappointed, though deep down not really surprised, to learn the answer.

    Getting a prime loan... well there's two things that can be done. One, just like a wedding, go on a credit diet to make things look presentable for the big day. Two, decrease the LTV. Do those two things and then the question is who WOULDN'T LEND to one? :)

    The other cynical view is that banks view credit departments as profit centres and would prefer a mix of clients who utilize their services without much idle time. Nah!

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  • Dan said:
    • 1 year, 6 months

    Ben - I really enjoy reading your material, very succinct and thoughtful.

    Recently Carney is alluding to his propensity to increase the bank rate to deter spending. I am sure they realize the economy is soft and is likely not going to accelerate in the near term, as they cool housing using the only tool they have which is regulation, I cannot imagine they fool with the bank rate. Our dollar would skyrocket, eastern manufacturing would suffer more than it currently is and the wealth effect of reduced home prices would further kill consumer spending.

    Do you think they are yet again sabre rattling or do you think the issue is serious enough that they would like to see us move to a Deleveraging cycle if it means a drastic recession? I have discounted this happening but maybe I am being foolish?

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  • Ben Rabidoux said:
    • 1 year, 6 months

    Hi Dan

    There is no way the Bank is moving their rate any time soon. There are a number of other means by which they can deter borrowing, and remember that Carney sits on the FSB with OSFIs Julie Disckson.

    This is probably immaterial now as I suspect both mortgage and non-mortgage consumer credit growth will now slow as a result of the new rules. I highly doubt Carney will be sabre rattling on this topic at this time next year.

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  • rp1 said:
    • 1 year, 6 months

    Do you think Canadians will de-leverage?

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  • Newbie said:
    • 1 year, 6 months

    Hey,

    Can someone explain the seasonal adjustment graph to me?

    Thanks

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  • Ben Rabidoux said:
    • 1 year, 6 months

    If you look at the sales chart, you'll see that there is "seasonality" or seasonal trends to the data. Sales are high during the summer, lower during the winter. The same is generally true of prices. This means that comparing one month to the next is tricky. For example, if I said that sales fell in September relative to August, a good analyst would reply, "so what? They almost always fall".

    So in order to be able to compare one month to the next, they seasonally adjust the data by pushing the sales total up for months when the actual number of sales tends to fall, and conversely adjusting them downwards in months when sales tend to rise over the previous month.

    They also consider number of week days and other factors. I'm not a huge fan of seasonal adjusting as it becomes a bit of a black box, but I do get the need to account for seasonality when comparing one month to the next.

    The chart shows how much the September sales are usually seasonally adjusted upwards. Since the actual number of sales tends to fall from August to September, the seasonal adjustment is upwards. The issue is that for this September, the upwards adjustment was an all-time high, which warrants some further explanation from CREA, in my mind.

    Hope that helps.

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  • Jason said:
    • 1 year, 6 months

    Ben,

    Thanks for providing the explanation. So just to be clear, the CREA doesn't even publish their methodology for seasonal adjustments? Meaning they can make up whatever numbers they want?

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  • Newbie said:
    • 1 year, 6 months

    Thanks. That does help.

    Reply
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  • Angela said:
    • 1 year, 6 months

    Thanks, that does help.

    Reply
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  • backwardsevolution said:
    • 1 year, 6 months

    Ben - absolutely great work. Thank you for providing the truth.

    Reply
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  • TNT said:
    • 1 year, 6 months

    How come when they advertise a house in the newspaper or online as SOLD it shows the original asking price even though it went for less.

    How come they say Sold for over asking price but never Sold for under asking price.

    I dont understand?

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  • Loon said:
    • 1 year, 6 months

    Because real estate is an organized crime in Canada, it is built on deceit and fraud and backed by government.

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  • Appraiser said:
    • 1 year, 6 months

    Sales volume tells part of the story. I noticed that there is no mention about average prices, which are up yet again. In fact, after stripping Vancouver out of CREA's stats, prices in Canada were up 3.1%.

    A close look at TREB's mid-month numbers from yesterday indicate that sales were down only 10% thus far for the month of October, after falling 15% in September. That's a significant deceleration in the sales volume drop department. Looking forward to end of month numbers to see where we really stand.

    It could be a short-term anomoly that we are experiencing right across Canada, as the new mortgage tightening rules and the seemingly never-ending onslaught of sensationalistic MSM headlines are absorbed by the general public.

    Time will tell, as prices are still holding firm for the most part.

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  • Greg said:
    • 1 year, 6 months

    Was is not you that said comparing month-to-month figures was for amateurs? Oh now it's all of Canada that's experiencing a short-term anomaly? It's the mortgage rules fault! No it's the media fault! No it's Ben's fault!

    Just admit it App, you can't stand capitalism.

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  • Ralph Cramdown said:
    • 1 year, 6 months

    TREB reported GTA sales of 2,961 for 1H-Oct-2012, and 3,477 for 1H-Oct-2011. That's a 15% decline using the most comparable numbers. If you want to repeat that 10% canard in public you should explain why TREB adjusted last year's number and why it is appropriate to compare last year's adjusted number to this year's unadjusted number.

    Please spare us the bogostats. "If you exclude Vancouver..." "If you exclude the top 20% of the Vancouver market..." "The average price so far this year..." "The national sales to listings ratio..." are all useless factoids completely devoid of justification and of no help to anyone who wants to transact in real estate anywhere.

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  • Appraiser said:
    • 1 year, 6 months

    @Ralphy: Factoids?

    Do you deny that statistically the Vancouver real estate market is not an outlier?

    If prices were to drop $100,000 - 200,000 for SFH in Van, does that represent some kind of bargain for potential home buyers?

    Please.

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  • Ralph Cramdown said:
    • 1 year, 6 months

    Appraiser, I think you should look up the term 'outlier.' Vancouver isn't one possibly faulty datum, it's a composite of over a thousand sales which together comprise the second biggest market in the country and which, I assume, were recorded about as accurately as the sales in the rest of the country.

    In some datasets it may be useful to discard the top x% and the bottom x% and calculate statistics using the remainder. Nobody has put forth a case for that here, and the practice of discarding the worst market if its name starts with 'V' seems to be a very recent one, with no validity and only to further a Goldilocks real estate story. A CREA statistician can have his head in an oven and his feet in ice, and he will say that on the average he feels fine.

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  • Farmer said:
    • 1 year, 6 months

    "....the seemingly never-ending onslaught of sensationalistic MSM headlines...."

    Since when did the truth become sensational, Appraiser? I think a lot of us are quite happy facing facts rather than being spoon-fed predigested pablum from the real estate industry under the guise of "news" that is really nothing more than that industry pushing its own agenda in the public domain.The real shame of it is that had we been getting more balanced views from the media in the first place we might not be experiencing the current levels of household indebteness. It is self evident to me that an informed public makes better investment decisions, the outcome of which affects all of us for better or for worse.

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  • Bally said:
    • 1 year, 6 months

    So you're advocating stripping out Vancouver as an 'outlier'? I guess you were jumping up and down advocating the same thing when prices were rising too right? Right? I mean you wouldn't want to be biasing your analysis by selectively interpreting data to fit preconceived notions of where the market is going would you...that would be stupid.

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  • Appraiser said:
    • 1 year, 6 months

    CREA has said for years that the Vancouver market had been skewing the average national price upwards, but I guess you weren't listening.

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  • Angela said:
    • 1 year, 6 months

    @Appraiser - It does make sense that a change in prices would lag behind a change in demand. No one in their right mind is going to reduce their price unless they have to. Just like the slow down in construction of new homes will also lag behind a slow down in demand for new houses.

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  • Filthy McNasty said:
    • 1 year, 6 months

    Appraiser said:

    ....... after stripping Vancouver out of CREA's stats, prices in Canada were up 3.1%.

    After stripping my grandma`s cancerous liver , she is a perfectly healthy woman.

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  • Appraiser said:
    • 1 year, 6 months

    @ Ralphy, @ Farmer, @ Greg:

    Obviously none of you want to address the price issue. Can't blame you, I guess it doesn't fit the gloomy narrative.

    On a side note: In a recent blog post, resident real estate genius Garth Turner, wrote that prices could continue to rise for two more years, even if the market is actually turning. 'Cause that's what happened in the U.S.

    Good luck timing the market y'all.

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  • JoeSixPack said:
    • 1 year, 6 months

    Some people are able to think only in black and white.....others can think in abstract. There is an enormous difference between "timing the market" and taking the best opportunity that the market gives you. With price/rent multiples at by far the most unprecedented levels in Toronto condo market and virtually all of Vancouver, renting and saving the substantial difference over ownership costs is simply taking advantage of a clear arbitrage opportunity. Guys like you are on the other side of that trade. We'll see who comes out ahead, but I'm VERY comfortable with my bet while you seem compelled to troll every real estate site out there. You nervous or something?

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  • Appraiser said:
    • 1 year, 6 months

    @ JoeSixPack.

    I'm mortgage free on an $800,000 personal residence and cash-flow positive on my investment properties. Last month I flipped my fifth brand new house in ten years for a cool $75,000 in profit (after tax). You better believe I'm on the other side of the trade, and I'll bet I'm way ahead. If you don't know what you're doing that's fine, then steer clear and let the big dogs take care of it.

    Ya still 'feelin comfy?

    P.S. Ooooh, "arbitrage" such a big word, 'kinda like "marmalade" with all those syllables and such.

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  • JoeSixPack said:
    • 1 year, 6 months

    I'll call BS on your whole story. It's not humanly possible to do all that while trolling every real estate site in Canada, waiting anxiously by the computer to comment within minutes of a new comment posted on any of these sites. More likely story is that you're a 15 year old kid talking smack from your mom's basement.

    By the way, I'm a multi billionaire, my 5 girlfriends are swimsuit models, I have a killer six pack, and your mom wants me bad. Ask her when she calls you up for dinner. See....you're not the only one who can make crap up.

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  • Appraiser said:
    • 1 year, 6 months

    @ JSP:

    All true my little friend. I got started a long time ago. FYI my mother's been dead for over 20 years. But I'm sure you're a desireable dude all the same.

    P.S. Are you cyber-stalking me?

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  • Moose said:
    • 1 year, 6 months

    You guys have been renting for years while waiting for the market to turn around. I invested $150k into my first condo in 2004, continued to pay my mortgage down (even made additional payments when I could). I upgraded to a Kits house when market tanked in 2008 taking out a big mortgage. I now have $1.4M equity in my house. Even if prices drop 30% as Ben's worst case scenario suggests, I will still be way ahead compared to renting.

    Keep on renting to retirement. You are dreaming!

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  • PetrSyk said:
    • 1 year, 6 months

    There we have it folks... The RE market cant be timed so lets all go balls out, buy McMansions, a mercedes benz and appear in a hip hop video while were at it... Never would I have thought Id hear that a market cant be timed from an appraiser of all people. Start the car. Where's the nearest Re/max agent? I am going to be priced out forever even when sales are plummeting!! House. Prices. Just. Cant. Ever. Fall. We. Are. Just. That. Special. Here!!

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  • Ralph Cramdown said:
    • 1 year, 6 months

    I address the price issue every day. I buy (often) and sell (less often) based on cash flow, growth, earnings and management acumen. Every evening, when my head hits the pillow having not bought real estate for my own consumption that day, I've addressed the price issue.

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  • Appraiser said:
    • 1 year, 6 months

    The key issue, which you have already admitted, is that you desire to buy. Just like the rest of the country.

    Hey did you happen to see the latest StasCan numbers for average equity of homeowners. Imagine that, average homeowner equity is nearly 70%!

    Fits nicley with a previous RBC study last year that indicated that 43% of Canadian homeowners have no mortgage. Well you know what they say, the key to getting finished is getting started.

    P.S Do you think the average homeowner, sitting on a shit load of tax-frre equity frets over prices as much as you frightful bears seem to. Time to stop living in fear and get in to the game.

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  • Ben Rabidoux said:
    • 1 year, 6 months

    @ Appraiser
    Read some more. Please.

    http://theeconomicanalyst.com/content/look-household-balance-sheets-cana...

    How about 3x as much HELOC debt in Canada than in US? Ever take that into account?

    And I think you should answer Joe's question. Why do you feel compelled to troll every real estate blog out there.....both bull and bear? You are one insecure dude!

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  • Appraiser said:
    • 1 year, 6 months

    @ Ben

    So visiting various blogs and making comments is tantamount to trolling? Why, beacuse I don't agree with you?

    Now who's insecure?

    P.S. Make sure you take a look at those net worth figures for Canadians too now Ben.

    "In the second quarter of 2012, national net worth increased by 1.2% to $6.8 trillion, up from $6.7 trillion in the first quarter."

    "For 2011, household net worth was revised upward from $6.3 trillion to $6.6 trillion. The majority of this increase was due to improved valuation of unlisted shares. Unlisted shares are now recorded at market value rather than book value. This added approximately $108 billion to household net worth. On a per capita basis, household net worth was revised from $182,900 to $190,800."

    http://www.statcan.gc.ca/daily-quotidien/121015/dq121015a-eng.htm

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  • Greg said:
    • 1 year, 6 months

    Here it is again App. 5 Steps Of A Bubble

    Step 3 - Euphoria: During the euphoric phase, new valuation measures and metrics are touted to justify the relentless rise in asset prices.

    I'm very sorry you're having a hard time understanding what peak asset prices means, and why everything you post only confirms that the economy is rolling over.

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  • Appraiser said:
    • 1 year, 6 months

    @Greg: So assets only ever peak once? What ever happened to business cycles?

    I'll live long enough to see housing peak again at least two more times. As I've always preached, I'm not a day trader like you, I'm in it for the long haul.

    Fretting over the ups and downs will just leave you with an ulcer old friend.

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  • Farmer said:
    • 1 year, 6 months

    Looks like I have to rain on your parade of comments, Appraiser. You really have no idea what you are crowing about nor why net worth and equity numbers can be turned into mush on the heels of a deflation in assets. You might have heard that a study released by the US Federal Reserve this summer concluded American families lost almost 40% of their net worth between 2006 and 2010. Most of the losses were attributed to the downturn in real estate as prices plummeted across the country.........but it will be different in Canada....right?

    http://money.cnn.com/2012/06/11/news/economy/fed-family-net-worth/index....

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  • Greg said:
    • 1 year, 6 months

    App is entering a state of denial and if you look at his track record, he's all over the place. He claims average homeowner equity came in a whopping 70%, yet he avoids comparing it to the downtrend. Not to mention how badly flawed this statistic must be considering the entire market having over-inflated valuations, adding phantom equity to one's net worth.

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  • Appraiser said:
    • 1 year, 6 months

    @ Farmer: You're quoting CNN? I thought we already covered the old "just-like-the-U.S" canard.

    Oh well, some people believe that analogy equals analysis. Just remember, a 40% drop in real estate in Canada comes with some very heavy baggage, not the least of which would be a devastating recession. Seems like you're praying for one. Yikes!

    P.S. Will it be different in Canada? It already is!

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  • Farmer said:
    • 1 year, 6 months

    You seem confused. Nobody said anything about a drop in real estate prices of 40%. We were discussing "net worth" as you will recall and housing is but one item in the calculations. Would you prefer to read the New York Times incidentally? They wrote:
    http://www.nytimes.com/2012/06/12/business/economy/family-net-worth-drop...

    "The recent economic crisis left the median American family in 2010 with no more wealth than in the early 1990s, erasing almost two decades of accumulated prosperity, the Federal Reserve said Monday. Falling home prices accounted for three-quarters of the losses in net worth. A hypothetical family richer than half the nation’s families and poorer than the other half had a net worth of $77,300 in 2010, compared with $126,400 in 2007, the Fed said. The crash of housing prices directly accounted for three-quarters of the loss".

    Maybe you can handle the Fed data in its raw form.
    http://www.federalreserve.gov/releases/z1/current/z1r-5.pdf

    The point of this exercise is to make clear to you that equity and net worth figures are not absolutes. They can vary considerably between the peak of market cycle pricing and the conclusion of a period of deflation. Nobody worth his salt would rely on such figures as proof of the strength of the housing market following a period of excess credit as they only paint a picture of current conditions without regard for changing market trends.That is also to point out that losses in equity severly impaired the balance sheets of the typical American family as a result of property price deflation and associated dislocations in the economy as unemployment rose. Now it should also be apparent to you that the trend for sales in this country is down and prices are now following in many cities so there are legitimate reasons to be concerned in interpreting data such as how much equity Canadians have.Try to make an effort next time.

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  • PetrSyk said:
    • 1 year, 6 months

    Soon, you'll have to find a picture for 'Price Reduced' instead of the 'sold' pic.

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  • Van said:
    • 1 year, 6 months

    Real estate pumpers that shout to the high heavens that real estate never goes down and the real they get quite emotional is because they bought with emotional exuberance and not as an investor.

    They post that everyone who doesn't buy real estate is an idiot and they are geniuses. Anytime I see anyone get so worked up on an issue about finance is usually is because they have too much skin in the game and if the prices of their assets drop 20% they will be screwed financially. People get emotional when it is THEIR financial decision that they feel someone is attacking (ie: Appraisal).

    If they can't win an argument based on facts then they will try to turn the tide with "Why would you want assets to fall, we'll have a recession!" and try to scare everyone into buying said asset.

    Another thing, people are always ready to tell you how much they made. They are never prepared to share with you how much they lost.

    We don't seem to be in a crash (yet), but if anyone analyzes the fundamentals one can tell that we are out of whack (great term).

    From 2006-2011 - people/house holds who made less than 100K (pre-tax and about 65-70K after deductions) were bidding for houses (here in Alberta) that cost 400-600K. that's 6-10 times income after tax. I'm not sure about the rest of you, but I pay for items after I pay tax.

    Now I see "price reductions" or "huge price reduction" on MLS and on listings in magazines. Not on a lot of listings, but at least 5-10%. Something unheard of in the past 6 years, except during 2009. There are houses that are listed at over assessment and houses listed at under assessment. I look forward to that trend continuing.

    A small nod to Appraiser: my annual salary is 180K.

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  • John B. said:
    • 1 year, 6 months

    I´m still convinced it highly depends on the area you are talking about. The sales are dropping in Vancouver, but they are still rising in Toronto or Calgary. It is a very speculative to consider Canada as a whole, since housing market is always local. And to be honest, I don´t see that home prices in Alberta would drop any time soon. The current trend of decrease (September: Housing Market Trends in Vancouver) is connected to Vancouver. I´m glad it started to happen, but the future of the housing market as a whole is still at stake. There should be more regulation presented by the government and people should be more aware about the debt and it´s consequences.

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  • Ben Rabidoux said:
    • 1 year, 6 months

    You're right about Calgary looking pretty solid for now, but you're wrong about Toronto sales. The supply/demand imbalance is not just a Vancouver issue". Clink on the links at the top of the article to see the latest numbers out of Toronto, Ottawa, and Montreal. They are definitely NOT rising.

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  • george said:
    • 1 year, 6 months

    And the way I see it, the Fed, ECB and global central bankers today fight a losing battle. The mountain of global debt, securities, and derivatives, along with this destabilizing global pool of speculative finance, just inflate larger by the year – and after each policy response. And the more outrageous the policy measures implemented to try to resolve each crisis, the more these desperate measures further inflate the global Bubble. Ironically, the ongoing assurances of central bank liquidity seem to ensure an eventual crisis beyond the liquidity capacity of central banks. Happy 25th Anniversary, you aged and ornery Credit Bubble. They’ll be reading, writing about and studying you for at least the next century.

    http://www.prudentbear.com/index.php/creditbubblebulletinview?art_id=10721

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  • Appraiser said:
    • 1 year, 6 months

    Hey look, there is common sense in the media after all. See I'm not alone.

    Sensationalistic headlines begone!

    http://www.vancouversun.com/opinion/editorials/Editorial+Household+debt+...

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  • Jim said:
    • 1 year, 6 months

    What a ridiculous article! I wasn't at all surprise to learn that the author is a realtor.

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  • rp1 said:
    • 1 year, 6 months

    Thanks Appraiser for posting the editorial. It should be reassuring to all.

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  • Wayne Masters said:
    • 1 year, 6 months

    Will a tinysmarthouse(.com) shrink in RE value as well? Then some of my gypsy friends may soon afford one.

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  • Appraiser said:
    • 1 year, 6 months

    Demand for office space is 'outta control in T.O.

    http://www.thestar.com/business/article/1275573--toronto-real-estate-dem...

    Hey, check out latest prices for new low-rise homes in GTA according to RealNet:

    "The RealNet New Home Price Index for a low-rise home rose 15 per cent to $623,245."

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  • Ralph Cramdown said:
    • 1 year, 5 months

    Lowest Total Q3 new home sales on record (13 yrs)
    It seems that even though everybody desires it, nobody's buying it.

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  • Berniebee said:
    • 1 year, 5 months

    Can Canadian residential real estate prices come down?
    I invite any American, Irish, Spaniard or Australian citizen to comment*.

    Are Vancouverites "running out land"? I think some Japanese (Population 125 million, on a tiny, mountainous territory, and on a 14 year slide in RE. ) might dispute that.

    Is real estate local? Yes. But what percentage of Canadians live in the five biggest cities? And the prices have shot up in each city far more than inflation. Oh, you mean more local , like Vancouver's Burnaby vs the UBC area. The average Joe-first-timer can't afford either, not by a long shot. In fact, unless Joe wants to eat cat food, he is having a tough time buying in any of the big five.

    Can we ignore demographics? Canada's big fat boomer bulge has reached the time where they are selling off the big house to move to a "mature residence". How many will want to live downtown?
    A tiny fraction who have substantial wealth apart from their house equity, maybe. The rest, who need their cashed out equity to retire on, won't be living anywhere expensive. (Read: Not in one of the big five cities.) As an example, for my mother in law that means a small single floor home just outside a small town with a hospital. Low price, low taxes, low maintenance, but a short distance to food and health services.

    Can we ignore the erosion of the middle class? Big swaths of our youth are in Mcjobs, with no hope of buying RE at present price levels. Anf there's one thing that our better educated youth know, it's that they will have to be extremely mobile to compete. That means not being tied down to a mortgage.

    Can we ignore the fact that the average Canadian house is now twice the cost of the average American house? Historically, US/Canadian prices have been similar. Are our wages twice the US average?

    I've read a few RE discussions and I'm not surprised that price drop denial is still rampant. Canadian discussions parallel the USA crash comments of seven years ago Change the dates, city names , and federal institutions and you could slide the comments right into this blog.

    A 40% correction is not only possible, I can't envision much less.

    *I'm sure most of you know this, but just in case: each of these countries has had a substantial decline /crash in RE.

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  • JKM said:
    • 1 year, 5 months

    Hi Ben,
    A naked, off-topic request: can you quickly summarize the Canada-China trade agreement that is coming into effect? It sounds quite frightening in scope by many accounts, but others describe it as simply a 'normal sort of pact'. Too complicated for me to dissect and amidst the shrieking and polarization i need a trusted and informed opinion on it. I was hoping to get yours....
    Many thanks if you can find the time.

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  • Joel E Toronro said:
    • 1 year, 5 months

    Do real estate agents get paid in seasonaly adjusted dollars???

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