Canada's real estate market to be worse than the US?

www.reportonbusiness.com...

Merrill sends a warning:

"And as in the U.S. two years ago, we are now seeing completed units pile up unsold in Canada, a clear sign of overbuilding and an ominous sign given the voluminous supply still in the pipeline,” they said.

Inventories of unsold new single-family homes in Canada rose by 56 per cent year over year as of last month, close to the maximum increase in July 1990, which marked the last housing market downturn, the report said.

At the peak in April 2006, inventories of unsold new single-family homes in the United States were up 26.5 per cent over a year earlier, the report said.

The two-year lag could be the result of Canada having more room to run up because its recovery started later than that of the United States. Strong commodity prices and looser lending standards initiated in 2006 may also have contributed to the lag, the report said."

reply to post by leo123


Awesome, maybe I can finally afford to buy something in waayyy overpriced Alberta. I was born in this province but because I was only 18 when the boom started I was never able to buy anything because the boom caused prices to skyrocket.

Merrill lynch is jumping the gun I think. The housing situation is not the same as it is in the U.S.. People will not be losing their homes to the banks like they are in the States, sure It will slow down abit but that will be only in certain areas and for a small period of time. I live in Niagara Falls and there is no shortage of new homes here. We are constantly seeing subdivisions popping up. The price to buy a home is coming down, but that also is reflected in the down turn in the economy. Housing prices have been over-inflated for too long. I'm hoping now it will be a more real reflection of they are worth

Will we be reaping the harvest of following the Bush Doctrine?

Brian Mulroney as well as Stephen Harper have sold Canada to the most powerful bidder and soon we will see very similar results as those of the United States.

We need another Trudeau.

I watch a little CBC television from time to time to keep up with hockey & catch a CFL game or two. Sometimes during halftime or between periods they'll hit a 10 minute newscast from Vancouver which I'll watch. Anyway, way back near the end of last season, during a Canuck game I watched them talk with an analyst about the (then) potentially (LOL) pending economic crisis in the US caused by the ARMs. Their expert actually said that Western canada, particularly Vancouver & Victoria were a powder keg and had the potential to experience an even bigger meltdown than any comparibly sized American city thanks to the lending practices in BC over the last 5-7 years.

That was the first and the last I'd heard of anything about Canada and the mortgage crisis until this thread. If the dude was being truthfull, then at least parts of Canada are in for some real tough times.

Wow I really hope for you guys that this is a scare tatic being presented to you.
I live in Northern California (wine counrty area) at the height of the boom we had 2 bedroom houses going for 700,000 dollars. NO JOKE These where piece of crap houses by the way not worth more than 200,000 if they had land, at best on a "real" market. Now when I go to the store etc I make it a game to spot all the empty ones from where I live to what ever place we are going. So far I am up to 50, which in its self is really sad. But now that I think of it the route we took that day to the in laws was one that was overly priced in the boom so mabe now that this has happened they will bring the pricing in line with the rest of the USA.

Originally posted by red_leader
reply to post by leo123

 

Awesome, maybe I can finally afford to buy something in waayyy overpriced Alberta. I was born in this province but because I was only 18 when the boom started I was never able to buy anything because the boom caused prices to skyrocket.

Red_Leader:

Just remember the old addage - "don't move to soon". Once real estate markets turn it is nor a 6 month event, especially in Alberta. Give it at least, at least 2 full years.

And you can be almost absolutely guaranteed prices will not rebound by any significant margin any time soon after that.

JK's 2 bits.

Originally posted by ARNOMANNN
Merrill lynch is jumping the gun I think. The housing situation is not the same as it is in the U.S.. People will not be losing their homes to the banks like they are in the States, sure It will slow down abit but that will be only in certain areas and for a small period of time. I live in Niagara Falls and there is no shortage of new homes here. We are constantly seeing subdivisions popping up. The price to buy a home is coming down, but that also is reflected in the down turn in the economy. Housing prices have been over-inflated for too long. I'm hoping now it will be a more real reflection of they are worth

ARNOMANNN:

Don't kid yourself, even Canada started issuing 0% down mortgages and 40 year amortizations several years ago. You do the math now that those tens of thousands of people are underwater on their mortgage and the supply of listings has gone through the roof.

JK's 2 bits

I was just sort of being sarcastic about Trudeau in my last post and then I go to Canada google news and......

Justin Trudeau top pick for Liberal leader

He is tall, dark-haired and handsome. He won a seat in the House of Commons on his first try. He's got a famous name. He has a picture-perfect young family. On top of all that, Justin Trudeau is the top pick among Canadians of all political stripes and most age groups as the next leader of the federal Liberal party, according to a new Ipsos Reid poll.

: pollwww.nationalpost.com...

Originally posted by burdman30ott6
Their expert actually said that Western canada, particularly Vancouver & Victoria were a powder keg and had the potential to experience an even bigger meltdown than any comparibly sized American city thanks to the lending practices in BC over the last 5-7 years.

burdman30ott6:

Quite right. This year alone there are, I hear, over 18,000 new condos and townhomes due for completion in Van and the lower half of Vancouver Island alone.

Tranta has over 35,000 due for completetion this year.

Here in Saskatchewan house prices were at a all time high.

The study, called Are Canadian Housing Markets Overpriced? released Monday by the Sauder School of Business at the University of British Columbia, claimed that Regina houses are overpriced by 25 per cent or $87,000.

Tiny, little dives in the hood sell for 120 k.

Goldman Sachs has said the SK market is way over valued and they are predicting up to a 50 % drop in value.

Regina's housing market posted the steepest year-over-year appreciations with gains as high as 49 per cent for standard condominiums; St. John's condo prices swelled 26.9 per cent.

canadianpress.google.com...

I am hoping for a slow slide downward myself.

edit Prices have dropped a little bit in the last month.

[edit on 28-10-2008 by whiteraven]

Ummm... I dunno about 0% down mortgages... I know under the first time homebuyers plan- 1st time homebuyers can purchase for 5% down... I've never heard of 0% down. 40 year amortization though, I know this is true

Originally posted by red_leader
reply to post by leo123

 

Awesome, maybe I can finally afford to buy something in waayyy overpriced Alberta. I was born in this province but because I was only 18 when the boom started I was never able to buy anything because the boom caused prices to skyrocket.

Amen!!
Alberta is deadly right now, and my boyfriend and I are waiting 6 months to a year to buy in hopes of a decline.

If only I was born four years earlier!!

Well I am one of those contractors that builds these new expensive units and I am getting more than double what I was getting paid back in ontario. I do drywall/taping and get .30/.50 a square foot and there seem to be LOTS of jobs where I am atm so I hope this doesnt affect my ability to find work in the coming years as this city is very EXPENSIVE to live in.

I do believe some of these units, mainly condos which go anywhere from 300k to well over a million are overpriced. Spring Creek is a big project that I have been told will last for at least 5 years just for my trades and certain phases havnt even been dug yet: www.springcreekmv.com...

Not only that I can see over other large sites with lots going on and the Silvertip project is going to be huge as well so if this market bottoms out alot of people like me will be screwed.

Problem is that in Vancouver, when you have to somehow cough up over 500,000 for a 425sqft, one bedroom hole-in-the-sky, a market drop of 25% is still putting the price at 350,000.

Now, in my opinion $350,000 for a 425sqft, on bedroom, hole-in-the-sky is STILL overpriced when the AVERAGE wage for a Vancouverite is only about $55,000 a year.

I was always taught that the best gauge of what you could afford for a mortgage was 3X your gross income. Maximum mortgage being $165,000 for someone who makes $55,000. Now you show me someone who has managed to save up to $200,000 as a downpayment on $55,000 a year.

AND, the only way to get that mortgage was if your entire housing costs each month were approx 1/3 your monthly wage. That means your entire mortgage, strata fees, heat, hydro, taxes, has to fit within 1/3 your gross paycheque.

The ONLY way it would be doable for an average Vancouverite was if there were 2 incomes. But that frankly shouldn't be necessary in a fair and objective market.

[edit for grammar]

[edit on 2008/10/28 by juniperberry]

Originally posted by juniperberry
Problem is that in Vancouver, when you have to somehow cough up over 500,000 for a 425sqft, one bedroom hole-in-the-sky, a market drop of 25% is still putting the price at 350,000.

Now, in my opinion $350,000 for a 425sqft, on bedroom, hole-in-the-sky is STILL overpriced when the AVERAGE wage for a Vancouverite is only about $55,000 a year.

I was always taught that the best gauge of what you could afford for a mortgage was 3X your gross income. Maximum mortgage being $165,000 for someone who makes $55,000. Now you show me someone who has managed to save up to $200,000 as a downpayment on $55,000 a year.

AND, the only way to get that mortgage was if your entire housing costs each month were approx 1/3 your monthly wage. That means your entire mortgage, strata fees, heat, hydro, taxes, has to fit within 1/3 your gross paycheque.

The ONLY way it would be doable for an average Vancouverite was if there were 2 incomes. But that frankly shouldn't be necessary in a fair and objective market.

Good points - or if prices dropped more than anyone can even imagine.

JK

reply to post by juniperberry


You'd have to sell crack

Every where I go in Canada I see these empty neighborhoods with new houses that are all exactly the same. The building is non-stop yet people aren't buying.

reply to post by leo123


Except that if the priced dropped more than 25% then we'd have more to worry about then the price of houses. There would be loss of jobs and the average wages would drop accordingly. So even at 300,00 no one will be buying.

reply to Red_Leader:
And sadly selling crack wouldn't be a viable thing to do as the price of crack would have to drop to be affordable in Vancouver. And there is already an overabundance of suppliers.

Too bad they're not killing each other fast enough.

Back in the late 1970 era and early 1980's Calgary realeastate went upside down.

I remember a lot of people walking away from their homes.

If any of you want to see or read about the horrible way the Canadian goverment treated people during the great depression read "The Great Depression" by Pierre Berton. www.amazon.com...

Very good read by a man who shared the herb with the late Prime Minister Trudeau.