189 new listings after the long weekend and 171 sales, for a sell/list of 90.48%. That’s very strong for the start of the week, and not what I expected.
Inventory reached 11,194, while over 90s were 2,290, or 20.46%.
Filed under Daily Numbers
Rob – do you mean you think Tuesdays sell/list % is strong ?
I am bring coq-mike’s post here to reply to it.
The peak prices in the US occured one and half years ago (esp in Florida) the subsequent drop happened without any of the ‘events’ mentioned.
Interest rates were still benign, job growth robust and foreclosures low. RE jsut became too expensive and buyers were priced out. That and over-building and the fact that there were less and less fools left to flip it to.
As to why we lag the US. Our RE cycles have always been out of synch. They had been rising for a couple of years before we were even invited to the party, so it os understandible if we are a little late leaving as well.
August 7th, 2007 at 5:34 pm
“By no variable does the local real estate market make sense.”
Well, not only are people buying at theses prices they are also making the mortgage payments. So, the current market is making sense to someone.
I think we need to see some large increases in either: foreclosures, job losses, or high interest rates for a prolonged period of time before a correction will happen. The current market is managing well and could just slowly trend back to a balanced market place with normal growth.
People make many comparisons between the Canadian and U.S. real estate markets and assume this will be our fate as well, and that may be true. If you do look into the U.S. market it shocking to see how many people were leveraging flips. A friend of mine just bought an ex-flip from a bank in Blaine last week. Original price 255k U.S., purchase price was just under 200k U.S. The speculator who owned this home tried to complete this flip in under 90 days. After six months he just walked away.
Real estate speculation prior to the U.S. correction had just gotten way out of control. I don’t think our level of speculation is even comparable.
The question I always ask people who believe our real estate market will track with the U.S. is, why the time delay? Something must be different
It will be interesting when this rush of preapproved buyers runs out.
Higher priced homes sales are much slower with price reductions, while lower priced homes are rising in price because a lot of people are fighting over that price range because that is all they can qualify for.
We’re seeing very high sell/lists. Usually Mondays (or Tuesdays, after a long weekend) are on the high side for listings, resulting in a lower sell/list.
So, yes, the sell/list was higher than I expected for the start of the week. It may be a pre-approval bump, but I think its pretty clear that mortgage rates aren’t goign to climb significantly (yes, inflation is a dnager, but so is the high dollar).
Two page article in National Post
Inflation fear rises with wage pressure-
additional fuel for BOC to raise interest rates
The high dollar should help tame inflation by making imports cheaper. It’s not happening at IKEA.
Last week I was in the US and bought two items: a rug for USD149 and some small blankets for USD2.50 each.
Today I was at the IKEA in Coquitlam and the same products were going for CAD199 and CAD3.99 respectively.
I travel quite frequently to the US, and I generally find things are cheaper than in Vancouver. Even in San Francisco, dining out, groceries, taxis, filling up the tank and hotels are the same if not cheaper than here. And that’s before a sales tax that is generally half of what it is here.
Something to consider in that Americans are not only earning more than Canadians, but keeping about a third more after taxes.
I wonder what the rolling 14 day is at now.
Isn’t this suppossed to be the time for the “summer slowdown”?
Seems like anything but…
I noticed that the available liquidity for exotic mortgages practically dried up over the weekend in the US. Starting Friday and going into Monday almost every type of mortgage, neg AM, 20/80 piggyback, stated income (liar loans) and NINJA is no longer available.
Also read about the possibility of car loans and credit card debt being harder to obtain……. of course this doesn’t apply in Lala land so no worries…. party on.
Summer slowdown is nothing like the law that some think it is. Last year it came on time but hung around way too long. The year before it never turned up. This year? Its really a 50% old wives tale sort of thing.
Glad to hear blueskies.
Debt does not equal wealth. Lines of credit are not savings. People are forgetting these things and will suffer for it.
Bring on the crunch!!!
“RE jsut became too expensive and buyers were priced out. That and over-building and the fact that there were less and less fools left to flip it to.”
I am not sure I completely agree with your summary of what happened in the U.S. real estate market. The problem I have is understanding why we would follow the U.S. and also have a strong real estate correction. I guess I just do not fully understand the mechanics of a market correction and the elements it takes to create one.
For example: If you and I each buy a home here in Vancouver for say 800k each. We would both have large mortgages, but like many people we are making the payments and doing well enough. Now, let’s say our buddy Bob would also like to buy a house just like us. However, Bob cannot afford a home like the one we just bought. As the number of Bob’s increases I can see sales suffering, but does this automatically mean prices will fall? Are you going to go sell your 800k house for say 700k? Are builders going to reduce prices on new construction? This may all very well happen, but what would be the reasons? I just think that affordability is only one of the required elements to create a price correction.
I am not sure I completely agree with your summary of what happened in the U.S. real estate market. The problem I have is understanding why we would have such a strong correction like the one in the U.S. I guess I just do not fully understand the mechanics of a market correction and the elements it takes to create one.
For example: If you and I each buy a home here in Vancouver for say 800k each. We would both have large mortgages, but like many people we are making the payments and doing well enough. Now, let’s say our buddy Bob would also like to buy a house just like us. However, Bob cannot afford a home like the one we just bought. As the number of Bob’s increases I can see sales suffering, but does this automatically mean prices will fall? Are you going to go sell your 800k house for say 700k? Are builders going to reduce prices on new construction? This may all very well happen, but what would be the reasons? Is it not possible for supply to trend back down without a crash?
Sorry, double post!
Looked like the message failed to post, so re-typed and sent again.
Ya it’s amazing how people compare USA RE and its economy to Canada’s, then another Vancouverite comes along and says, ” Vancouver is different.”
Will we follow the US?
Are we different?
Let’s get it together. High dollar hurts our manufacturing and exports.
The BOC only prolonged the rate rise as long as they could to help out CHMC’s clever intro of products, products that will help us throw more money in interest back at the bank in a short period of time.
Can the Bank really lose to foreclosure?
Can CHMC lose to foreclosed homes mortgages that it has insured?
“Can CHMC lose to foreclosed homes mortgages that it has insured?”
Can CHMC lose money for foreclosed (high ratio) home mortgages that it has insured?
“I noticed that the available liquidity for exotic mortgages practically dried up over the weekend in the US. Starting Friday and going into Monday almost every type of mortgage, neg AM, 20/80 piggyback, stated income (liar loans) and NINJA is no longer available.
Also read about the possibility of car loans and credit card debt being harder to obtain……. of course this doesn’t apply in Lala land so no worries…. party on.”
The exotic mortgages never did apply to Lala land as they have not been available (yet).
Well, I do believe that the US is different. For one, you can write a check for about $1-2K downpayment to secure a presale in the states, sometimes a little more up to about 10K. Big deal. Here in Canada, a presale will cost you at least a 20% down payment within 6 months of signing the contract. So what you say? Well this fueled a huge building boom consisting of a huge amount of speculators. When people started to walk very fast to the exits with bundles of cash, and that walk became a run – panic set in for the holders of contracts. So how many “buyers” of presales do you think decided to “forfeit” their 1-2K , maybe 10K downpayments when they saw that if they closed on the deal that they would be overpaying by tens of thousands and probably unable to sell? Starting to make sense? In this example anyways, it is different in the US. BTW, Canada never did have a large amount of “exotic” loans, and primarily only in the last year.
So even if there is over “speculative” buying here in Vanhattan, many people who put down 20% on presales will be very resistant walking away from a contract and many more would not have had the funds to jump into the game to begin with.
The financial scene here has always been much more conservative than in the US. Much of the time this restrictive credit availability has hurt Canada, this time around it may save its butt.
First law of the market. Price is set at the margins.
A stock may only trade 1% of it’s market cap on a given day. However if there are more people that have to sell, than people that want to buy, then the price drops.
A 5% drop in that stock price, reduces the holding of everyone who didn’t sell and still holds by 5%.
No big deal if they are long term investors. However no-one likes it to happen to them.
Imagine now that they bought that stock with 80% borrowed money. Now they have lost 25% of their equity.
That is RE. Leverage compaunds on the way up and kills on the way down.
There will always be people who HAVE to sell…death, moving, divorce, job loss and the like. No one has to buy. They are buying from panic and a fear of being priced out.
Same thing happened in California. Now the buyers have pulled back, but the people who have to sell are still there – and have to compete with a 100%+ increase in foreclosures yoy and so pricesdrop.
How will it play out in Vancouver? Who knows? Every on this site is just guessing. Free opinions and hot air.
Yesterday on CBC radio, I heard a CIBC economist (Rubin?) talking about subprime. He said Canada had only 5% of mortgages as subprime compared to something like 20% in the US. OK, so we have a lot less of that junk, sure. But what is the percent in Vancouver. I think it would be fair to say that we have a lot more subprime than the Canadian average. 10%? 20%? How much?
“The exotic mortgages never did apply to Lala land as they have not been available (yet)”
I know a few people who have exotic lines of credit on their homes though. One bought a hummer, others for renos, trips, etc.
Pay cheque to pay cheque people with credit card debt and lines of credit. Party on….
Ontario is losing 190 manufacturing jobs/day. Needless to say, there are a lot of people in SW Ontario in financial trouble. But there are a lot of jobs out west for them to have access to. Its offsetting to some extent. If the US slows down, their demand for fuel decreases, price of crude drops (no brainer) and demand for lumber drops also (US construction bust). Lower crude prices will hit our hottest sector. We’re doing well but PRESERVE YOUR CAPITAL. I don’t think we are going to stay in this Canadian Bull run if the US consumer stops consuming. That is the clearest marker we should be looking at. If the US consumer pulls back the reins, the horses are going to slow down. I would NOT buy risky stock or Vancouver real estate until the fundamentals in the US change and the consumer gains confidence.
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