The Elusive Canadian Housing Bubble

[GRG55]

Re: The Elusive Canadian Housing Bubble

The epicenter of the oil price instigated national downturn:

Calgary real estate slides again in November as prices drop 5.1%

Homes sold last month sat on the market for an average of 45 days

Dec 01, 2015 10:33 AM MT

Home sales and prices continued their year-over-year decline in November, according to the latest aggregated data from the Calgary Real Estate Board.

A total of 1,263 homes were sold in the city last month, down 28.7 per cent from November 2014.
Average sale prices were off 5.1 per cent year-over-year, sliding to $460,859.

Median prices, meanwhile, were down 4.2 per cent to $410,149.

The number of active listings stood at 5,316, up 31 per cent from a year earlier, while the average length of time homes sat on the market climbed 18.4 per cent to 45 days.

The November numbers continue an autumn trend this year. Average prices in September and October were down about six per cent from the same months in 2014.

[GRG55]

Re: The Elusive Canadian Housing Bubble

More than a third of homeowners struggle to pay the bills: survey

The Globe and Mail

Published Thursday, Nov. 26, 2015 12:01AM EST

Nearly 40 per cent of Canadian homeowners say they have found themselves short of money to cover their monthly expenses at least once in the past year, turning to debt, cashing in savings or borrowing from family to pay the bills.

Rising house prices have contributed to the sizable share of homeowners who struggled to pay their bills, with 38 per cent who have a mortgage telling a survey by Manulife Bank of Canada that they considered their local housing market to be unaffordable.

Of those who said they had been caught short on cash to pay their monthly expenses, roughly a third turned to credit cards. Similar numbers dug into a line of credit, 15 per cent borrowed money from family and 10 per cent cashed in RRSPs or sold investments. Less than a quarter used a dedicated emergency fund, while 4 per cent used payday loans.

“It’s probably a factor of the housing market itself today,” said Manulife Bank chief executive officer Rick Lunny. “A lot of Canadians are all-in on housing these days and as a result there isn’t a lot of flexibility in their day-to-day financial situations.”

Despite sometimes scrambling to pay bills, roughly three-quarters of homeowners said they considered themselves to be well prepared for an unexpected expense, such as a major car or home repair. But that, too, is at odds with their experience. About half of those surveyed said they had less than $1,000 saved away for emergency expenses and many of those didn’t know how much they had saved.

Rising home values helps explain the gulf between Canadians’ confidence in their ability to weather a major expense and their financial reality. The housing market has been a major driver of economic growth in Canada over the past decade, with much of that coming from the “housing wealth effect” – the boost to consumer confidence provided by rising home values, a report from Toronto-Dominion Bank found...

...Not everyone agrees with that assessment. Two-thirds of homeowners told Manulife they expected home prices to continue to rise next year. That figure was as high as 80 per cent in Toronto and Vancouver. By contrast, nearly 20 per cent of homeowners in Calgary and Edmonton expected prices in their cities to fall next year. The average homeowner in the study owed $175,000 in mortgage debt.

The survey, conducted by Environics Research between July 22 and Aug. 7, is based on responses from 2,372 Canadian homeowners aged 20 to 59 with household incomes of at least $50,000...

[touchring]

Re: The Elusive Canadian Housing Bubble

Interesting observation. I ran some ratios of square meters of land area per person for four cities and the results are below. Not sure how meaningful all that is, but if indeed the top end of the markets in Vancouver (and Sydney, SF, LA, etc) are escapee money from China/Asia then as long as that pipeline remains open not much is going to change.

City	Land Area	Population	Ratio
	(sq km)	(millions)	(sq metres/person)
Singapore	718	5.399	133.0
Hong Kong	1104	7.188	153.6
New York	789	8.406	93.9
Vancouver (GVRD)	2877	2.464	1167.6

In Calgary the top end market (a modest threshold of over $2 Million only) is collapsing, and some large property estates inside the commuting radius from downtown have recently been blown out at 60% BELOW list price (and also remember the prices are in Canadian $, which is presently worth only about 0.75 x US$). Not exactly the slow roll over in property markets one usually observes. Wonder if one can even buy a home this big with this much land in HK or Sing at any price?

If you're referring to car commuting distance of 40 mins, then that will be anywhere within HK and Singapore.

You can certainly buy a 10,000 square foot home in Singapore, even 50,000 square foot homes are quite common - don't expect the Lees and their crons to stay in only a 10,000 square foot home.

http://www.propertyguru.com.sg/singa...itude=&submit=

[GRG55]

Re: The Elusive Canadian Housing Bubble

When building for the nouveau riche timing is everything. Yesterday they wanted "crystal-laced faucets and mother of pearl tiles" to impress their associates and in-laws, tomorrow they're just trying to hold on to their job and an underwater condo in Calgary.

"Crystal-laced faucets and mother of pearl tile" seems decidedly over the top for the cowboy culture that still dominates among the high rollers of the Calgary oil patch. I have the impression this home was targeting someone who made it big in the cement business...

[santafe2]

Re: The Elusive Canadian Housing Bubble

An Alberta home with Swarovski crystal-laced faucets and mother of pearl tiles in the master bathroom has sold for nearly half its asking price.

The 9,200-square-foot house located in Priddis, 40 minutes southwest of Calgary, was listed for $3.9 million but purchased at auction for just over $1.7 million.

When building for the nouveau riche timing is everything. Yesterday they wanted "crystal-laced faucets and mother of pearl tiles" to impress their associates and in-laws, tomorrow they're just trying to hold on to their job and an underwater condo in Calgary.

[GRG55]

Re: The Elusive Canadian Housing Bubble

Out of curiosity, I took a look at the price of houses in Vancouver and it seems to me that houses are very cheap for the kind of quality and view.

Take for example, the following property. Something like this in Singapore (without the superb view which cannot be found anywhere on the tiny speck) will cost in excess of CAD25 million, and in Hong Kong, only a billionaire can afford to stay in a house like that.

http://www.vancouverrealestategroup....idx=1423718470

Meanwhile, some good news for you - http://www.bloomberg.com/news/articl...g-money-abroad

Interesting observation. I ran some ratios of square meters of land area per person for four cities and the results are below. Not sure how meaningful all that is, but if indeed the top end of the markets in Vancouver (and Sydney, SF, LA, etc) are escapee money from China/Asia then as long as that pipeline remains open not much is going to change.

City	Land Area	Population	Ratio
	(sq km)	(millions)	(sq metres/person)
Singapore	718	5.399	133.0
Hong Kong	1104	7.188	153.6
New York	789	8.406	93.9
Vancouver (GVRD)	2877	2.464	1167.6

In Calgary the top end market (a modest threshold of over $2 Million only) is collapsing, and some large property estates inside the commuting radius from downtown have recently been blown out at 60% BELOW list price (and also remember the prices are in Canadian $, which is presently worth only about 0.75 x US$). Not exactly the slow roll over in property markets one usually observes. Wonder if one can even buy a home this big with this much land in HK or Sing at any price?

Alberta luxury homes get less than half asking price at auction

2 southern Alberta mansions sold for more than $1M under asking price

CBC NewsPosted: Nov 03, 2015 12:56 PM MT Last Updated: Nov 03, 2015 3:47 PM MT

An Alberta home with Swarovski crystal-laced faucets and mother of pearl tiles in the master bathroom has sold for nearly half its asking price.

The 9,200-square-foot house located in Priddis, 40 minutes southwest of Calgary, was listed for $3.9 million but purchased at auction for just over $1.7 million.

Another luxury property down the street had a similar fate — the $2.9-million mansion was picked up at a 62 per cent discount.

"The buyer paid $1.1 million — the price of a dumpy 1970s Vancouver special," wrote investment adviser and former MP Garth Turner in a recent blog.

The Realtor representing the two Priddis homes says they were new builds, appraised just under their list price...

...Turner, who lives in Toronto but has clients in Calgary, said the Hawk's Nest Hollow properties are a sign of "deep discounts to come."

"Around Calgary in the nice suburbs ... where you've got houses in the $1-million to $2-million range, you go in with a sharp pencil and a cheque book — and you're going to walk out happy," Turner told the CBC.

He said the luxury-real estate market in Calgary and surrounding areas has been "taking it in the gut" for the last few months, but thinks it's worse than anyone is letting on...

In the meantime, the much broader market in the Greater Vancouver Regional District is being fueled by cheap mortgage credit being doled out to Canadians, leveraging themselves up with high-ratio debt made possible through the generosity of CMHC, the taxpayer funded mortgage insurance system.

Chinese money or not, I don't think Vancouver will find itself immune from the ravages now being visited on the uncompetitive Canadian economy

[touchring]

Re: The Elusive Canadian Housing Bubble

I wonder how much longer Vancouver can keep GoingUp?

Out of curiosity, I took a look at the price of houses in Vancouver and it seems to me that houses are very cheap for the kind of quality and view.

Take for example, the following property. Something like this in Singapore (without the superb view which cannot be found anywhere on the tiny speck) will cost in excess of CAD25 million, and in Hong Kong, only a billionaire can afford to stay in a house like that.

http://www.vancouverrealestategroup....idx=1423718470

Meanwhile, some good news for you - http://www.bloomberg.com/news/articl...g-money-abroad

[GRG55]

Re: The Elusive Canadian Housing Bubble

my guess: a lot longer than anyone here would guess.

The chart posted earlier (reposted below) is indicative of the same phenomenon you highlighted about other markets on another thread today - narrowing breadth carrying the market higher until it finally exhausts.

Looking at the national major city price behaviour Vancouver (B.C.), and to a lesser extent Toronto (ON), are carrying the national statistics (CA on the chart) now.

[jk]

Re: The Elusive Canadian Housing Bubble

I wonder how much longer Vancouver can keep GoingUp?

my guess: a lot longer than anyone here would guess.

[GRG55]

Re: The Elusive Canadian Housing Bubble

I wonder how much longer Vancouver can keep GoingUp?

[GRG55]

Re: The Elusive Canadian Housing Bubble

Yes - CMHC is backstopped by Canadian Taxpayers and Genworth with be declared TBTF (or "back door" bailed-out most likely)



I think we'll find out in due course. Timing unknown. Taxpayers for sure will eat it in increased debt obligations via bailouts. Some of it will have been repackaged & resold, diced into derivatives etc. ... as these are Financial Firms with "yield" to sell - "low risk" to boot

So ... keep some cash and wait for the great fire sale is all you can do (control the controllables) ... it will be gov't officials getting "twitchy" to "solve" problems that will be the real bean ball to the head.

[ATTACH=CONFIG]5607[/ATTACH]

Like watching a slow motion train wreck.

CMHC chief paints bleak picture of risks to Canadian housing

7:19 AM, E.T. | November 11, 2015

Canada’s housing agency is painting a bleak picture of the damage that a severe housing market correction would inflict on the country, pulling back the curtain on its stress tests for the first time.

As with all stress tests, the limits are pushed to provide a worst-case scenario - or something pretty close.

The Canada Mortgage and Housing Corp’s “primary bedrock scenario” for its test is a 30-percent plunge in home prices and 5-percent spike in unemployment.

In a behind-closed doors speech to a Bay Street audience Tuesday, CMHC CEO Evan Siddall noted that’s what happened in the U.S. in 2008 as the housing market imploded.

The fallout for the CMHC would be an eight-fold increase in insurance claims to more than $13 billion over 5 years. The agency’s $7.5-billion profit over that period would swing to $2.8-billion loss...

...The CMHC laid out three additional scenarios that would rock the housing market:

- Global economic deflation persisting for 5 years.
- Oil price shock, with crude at US$35 a barrel for 5 years.
- A magnitude 9 earthquake epi-centered in Vancouver, that also results in the failure of a major lender...

[GRG55]

Re: The Elusive Canadian Housing Bubble

October. Breathtaking:

[GRG55]

Re: The Elusive Canadian Housing Bubble

Buy a condo in Toronto with an EV charging equipped parking space and get a "free" Nissan Leaf.

http://www.minto.com/gta/new-condos/...ved~m_802.html

Well, I will take your free electric car & charging station and raise the bet. A condo with no parking whatsoever. Even more remarkable is the fact this development is taking place in downtown Calgary, the oil capital of Canada:

167 condos, 0 parking stalls: Council approves car-free East Village tower

Calgary’s first parking-free condo project will be one of the only of its kind in Canada. There’s so much demand among young buyers and seniors for this option that 650 people have registered interest in the project before pre-sales begin this fall, the developer said.

The N3 Condos’ promoters were fearing council would reject it, and Mayor Naheed Nenshi was surprised it passed through council 13-0 Wednesday.

He said it’s a sign council believes in Calgary’s official smart-growth plan for a city less reliant on the automobile — “a new kind of city that what had been built before,” he explained.

“I think it really says that council has gone through an evolution matching the evolution of the city,” the mayor told reporters.
The 15-storey tower will rise next to the former St. Louis Hotel on 8th Avenue S.E. and 4th Street, a block from the City Hall LRT station. Its basement will offer ample bicycle parking, and each new unit will come with a new bike and credit for the Car2Go car-sharing service...

As far as Canada is concerned the debate about climate change has shifted decisively. Regardless of what side of the debate one was on, arguments about whether it is actually happening, whether it is man-made, whether it will prove to be detrimental to future human existence, and so forth are now completely irrelevant. There is a palpable change in public opinion, and considerable public support up here for meaningful carbon taxes and other policies with similar motivation. The societal schism, once again, is between the cities and the rural areas, and once again it manifests most dramatically in voting patterns. As Canada continues to concentrate more of its population in the cities, especially younger people in the inner city cores, the most astute and successful politicians know where the votes are going to come from and what they have to do to attract them. So do business leaders, including property developers...

[santafe2]

Re: The Elusive Canadian Housing Bubble

Buy a condo in Toronto with an EV charging equipped parking space and get a "free" Nissan Leaf.

http://www.minto.com/gta/new-condos/...ved~m_802.html

[GRG55]

Re: The Elusive Canadian Housing Bubble

I took a look at the CAD vs USD chart and it appears to me that even if Canadian property prices has risen marginally, but at the same time they have depreciated tremendously in terms of the Dollar over the past 3 years straight.

You are catering to the view that Canadian real estate is an international market dominated by foreigners. It isn't. The Real Estate Board and other statistics demonstrate absolutely conclusively that the overwhelming majority of properties in Canada, even in Vancouver, are purchased by locals. They earn all or the majority of their income in Canadian dollars, and their debt is in Canadian dollar denominated mortgages. The price increase, and the increasing debt they are taking on, is very, very real for them.

If you can figure out how the average Canadian can earn their income in US Dollars then you might have a point.