Canada

Canadian Real Estate Sales See Largest Drop Since 2008, Here’s Why

Canadian Real Estate Sales See Largest Drop Since 2008, Here’s Why

Canadian real estate sales just fell off a cliff. Canadian Real Estate Association (CREA) numbers show a decline of buyers in January. The decline is one of the largest in Canadian history. Some agents claim this is temporary, but it’s in line with the estimated declines we posted earlier.

Canadian Real Estate Sales Drop Over 13%

Canadian real estate sales made large declines. CREA reported 39,609 sales when seasonally adjusted for January. This a 13.84% decline from December, and represents a 6.15% decline compared to last year. Unadjusted, that number was just 24,931 sales. It’s normal for a monthly decline in January, but the size should be of concern. CREA noted this is the first time since 2015, that sales have fallen below the 10 year, monthly average.

Source: CREA, Better Dwelling.

Largest Single Month Decline Since October 2008

January’s monthly decline is one of the largest in the history of Canadian real estate. The decline of 13.84% works out to 6,367 less sales than the month before. A decline of this size hasn’t been seen since October 2008. These sales declines will have both an impact on prices, as well as on the broader economy. As sales reduce, so do dollar volumes, which eventually lead to lower prices across the market. Real estate sales also generate “spin off” business activity, which also drops if this persists.

Source: CREA, Better Dwelling.

The Decline Is In Line With Stress Testing Estimates

“The piling on of yet more mortgage rule changes that took effect starting New Year’s Day has created homebuyer uncertainty and confusion,” said CREA President Andrew Peck. The new B-20 Guidelines from OSFI did likely contribute to the sale decline. Only real estate boards are experiencing “uncertainty and confusion” however. We already went over why the decline would be this size.

The Bank of Canada estimated a similar decline of buying activity as a result of the changes in rules. If the stress testing applied to last year’s buyers, 81,000 or about 12.37% of low-ratio mortgages would not have been approved. The full impact of the new guidelines haven’t been felt yet, either. Many lenders still honored mortgages approved before B-20 Guidelines applied. This is even true for foreign buyers, who only saw Guidelines apply to them as of February 1, 2018 at CIBC. Other banks are expected to roll out similar rules for foreign income over the next few weeks, if they haven’t already quietly issued the change.

Source: Regulatory filings of Canadian banks, BoC, and Better Dwelling calculations.

The decline of Canadian real estate sales was expected, as was the impact of B-20 Guidelines. Benchmark prices from CREA typically lag by up to six months. As a result, so do buyer and seller expectations. If you’re in the market for a home right now, make sure you find an agent that is willing to explain that to you as well.

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56 Comments

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  • Investor 10 months ago

    Realtors and special interest groups will always put a spin to the numbers.

    • bluetheimpala 10 months ago

      Yes, realtors are ‘number jockeys’…ride the ups and the downs but in the end they’re just little people riding something they barely understand and are at the mercy of.

  • B-20 Was Economic Sabotage 10 months ago

    I’ve said it before, and I’ll say it again – B-20 is one of the worst rules implemented. It will single handedly crash the economy. Removing dollar volumes from any large industry will ripple through the economy. A home purchase pays a Realtor, the city, marketing professionals, the services theses people utilize everyday, etc.

    • bluetheimpala 10 months ago

      Great, as expected. This is what happens when there is a bubble. Tell your friends, momma and papa, neighbors..tell them, we’re having a multiyear downturn because we’re animals and can’t control ourselves.
      No more ‘eat to excess, puke, eat the puke, poop and eat the poop’ cycle. My dog used to do this until she realized it wasn’t to her benefit…lol, joking she loves poo. But she’s a dog. And can’t buy real estate…legally…in canada…well, ok so she’s a registered director of my REIT but whatever….BD4L

    • Brian 10 months ago

      The money doensn’t disappear from the econmy, it is still used, just not to pay realtors, lawyers, land transfer tax, etc. Instead, it is invested, spent on rent, and other uses.

      • Joshua McIntyre 10 months ago

        While it’s true, the supply of money won’t decrease, the quantity of money circulation will decrease with the B-20 rule. This will happen because the qualifying rate to borrow money will increase, thus decreasing the money consumers can borrow to purchase assets (houses in this case), this results in a decrease in the quantity of money in the economy. Because of the decrease in the quantity of money available to purchase assets and the increasing cost of that money, those assets must decrease in value. They have an inverse relationship.

        Over the past decade with the low cost of money (interest rates) and the ease at which it was given out, we were consuming future growth. Now that this low cost and ease of access will not be available we will be giving that growth back.

        B-20 should have been implemented prior to this run up. Now, we have over inflated assets and the pain will be worse, then had we simply had slower growth in our economy. B-20 implemented 4 years ago would have protected consumers of the impending rate increases as they renew their maturing mortgages.

      • Alistair McLaughlin 10 months ago

        Well no, the money fueling the housing market is coming from mortgage originations – i.e. banks actually creating money out of thin air. When that process reverses, and debt starts shrinking, either through insolvencies or just lower borrowing volumes, the economy shrinks. There’s no dodging that bullet. People don’t take out 500K mortgages and spend it on cars or restaurants or rent. So that demand is being entirely removed from the economy. There’s no avoiding it. It needs to happen. But it’s going to be ugly and painful.

    • RT2020 10 months ago

      Well then there’s something wrong with our economy isn’t there? An economy based on selling over-inflated assets to each other…fueled alarmingly high debt levels?

    • Alistair McLaughlin 10 months ago

      I’ve said it before, and I’ll say it again – the housing bubble is one of the worst things we ever allowed to happen. It will single-handedly crash the economy. Removing dollar volumes from any large industry – which is precisely what will happen as the bubble pops – will ripple through the economy. A home purchase pays a realtor, the city, marketing professionals, plus the services these people use every day.

      There, I fixed it for you.

      Steve Keen explains better than I ever could the inevitable consequence of the unwinding of a massive private debt bubble. There’s no dodging that bullet now. Debt bubbles can only be prevented before they happen – with responsible monetary policy (i.e. higher lending rates, even at risk of a recession) and regulations for the credit industry (i.e. had we implemented B20 in 2002 instead of 2018). Too late for that now.

  • Ahmed 10 months ago

    If only people realized that independent coverage and analysis is the only type of analysis you should be looking at. I think all of us regular readers have seen this coming, and if you were smart, you made preparations for this.

    Bank economists, aren’t allowed to have a negative outlook. Even if they did, they’re blinded by the fact that they work for a bank. They’re paid in stock, and negative outlooks impact banks. They have to slant positive, even if not intentionally.

    Real estate analysts employed by developers? Come on.

    Government analysts have been warning about this, Ben Rabidoux has been, and there’s been daily datapoint showing a lead up to a decline published here. Anyone that’s still exposed, or loses money, you deserve it.

  • Mica 10 months ago

    Government spending went out of control when Trudeau became Prime Minister. This led to a ramp up of printing money, to help pay for the spending. People don’t realize this, but governments are only suppose to ramp up spending to stave off economic uncertainty, which we weren’t facing at the time. When you do that before, it leads to huge asset inflation. For prior examples, see the 1980s, when this happened in Canada as well.

    Liberals screwed us on taxes, income, homebuying, and jobs. Yet poor millennials that think they’re being victimized by the system, continue to support it. They deserve what they vote for.

    • bluetheimpala 10 months ago

      Hello my friend: what say you about the article and something that is, ya know, not political bullshit? Do you not read this blog? This is not the place to bash the current government, the issue is MUCH LARGER.
      But since you brought it up, let’s not re-write history.
      I would argue that conservative free market capitalist policy is at the core of the problem which has been around, in full force, since the 80s. The banking crisis in 2008, led by greed and conservative policy, resulted in a meltdown that the world had to recover from; central banks had to drop rates to stimulate the economy. We had too much cheap money and the rich/right/bankers loved it so it continued for 9 years. If anything left leaning politicians are complicit but you cannot be a revisionist…baby T is not my favourite PM. Wynn the ontario premier is well…hmmm…not winning in the next election unless the PC party chooses a complete dud. I support right leaning policy but not when we sell out Canadians. Have some self respect.

      • Rui Amaral 10 months ago

        BluetheImpala – so true. All leadership is dealing with the idea of econimic stagnation and trying to bolster flagging industries by fake methods. This is going to hurt soon I think

    • Alistair McLaughlin 10 months ago

      I’m no Liberal supporter, but the problem has been growing for as long as Justin and Bill have been shaving. I could show you a timeline going all the way back to 1992 that led us down the path to where we find ourselves now. In fact, why don’t I do that?
      1992 Federal Budget – First time home buyers minimum down reduced from 10% to 5%
      1992 Federal Budget – First time buyers allowed to dip into RRSPs
      1992 Financial reform act – Reserve requirements eliminated for federally regulated banks
      1999 – CMHC makes 5% down available to everyone, not just first timers.
      2001-03 – Bank of Canada follows the Fed and drastically lowers the overnight lending rate way lower than any responsible central bank ever should
      2006 – BoC is tightening (raising rates) by this point, but the federal government undermines this by allowing zero & forty mortgages
      2008 – BoC drastically lowers interest rates in response to the financial crisis
      2009 – Federal government realizes how stupid they were and gets rid of zero & forty, but…
      2009 – Federal government instructs the CMHC to airlift $125 billion in mortgages off the banks’ books so the banks can keep lending throughout the crisis. Banks respond by… you guessed it, lending that money out, at insanely low rates, mostly to home buyers. They’ve been doing it ever since.

      The above timeline covers no fewer than 5 PMs – Mulroney, Campbell, Chretien, Martin, and Harper. 3 Conservative, and 2 Liberal. All before Justin was even mentioned as a potential PM. In fact, since 2009 the government has been slowly trying to undo the stupidity of the previous two decades with incremental rule changes that have basically put us back close to where we were prior to 1992 (except we still have 5% down for first timers). Trudeau has continued that path with last year’s stress testing for CMHC insured mortgages and this year’s B20 for uninsured.

      So, now that we know how we got here, the question becomes: How do we unphuck what has taken a quarter century to get to this level of phuckedness?

      Answer: We don’t. It’s too late for fixes. The Minsky moment is upon us. I believe we will soon face the ugliest recession since 1990-92. I hope I am wrong. It scares the crap out of me.

  • Brian 10 months ago

    Boo hoo, boo hoo, greedy speculators, money launderers, and real estate brokers and agents and others are having a bad month, boo hoo, boo hoo.

  • Functioning Brain 10 months ago

    In 2008 the 5 year interest rate was 7.05%

    The average price of a Toronto property appears to have been about $335K

    At TD today the 5 year rate is 3.49% stress tested to 5.59%

    From everything that has been said it would appear there are at least another 2-3 hikes in the works for this year along.

    So pretty soon the stress test will hit that same 7.05% and perhaps surpass it?

    Currently the average Toronto Price is $736,783

    Unemployment was close to 9% in 2008
    Today it is at about 5.9%

    Immigration was at the highest level since 1970 last year

    Not going to flush this out just going to plot it here, food for thought…

    • 🤦🏻‍♂️ 10 months ago

      “Immigration was at the highest level since 1970 last year”

      I heard the same argument in UK and Australia. Yet Toronto prices got inflated but 2017 CENSUS doesn’t show any noticeable population increase.

      • Functioning Brain 10 months ago

        Oh I think we are on the verge of an epic bubble collapse!

        I think people who are looking to 2015 for the bottom aren’t looking far enough back!!

      • Functioning Brain 10 months ago

        This is interesting:

        “I heard the same argument in UK and Australia. Yet Toronto prices got inflated but 2017 CENSUS doesn’t show any noticeable population increase.”

        I always find that when people look to immigration they forget to take into consideration, lower birth rates, death and migration out!

        These factors create balance.

    • vnm 10 months ago

      Def. food for thought.

      Also …. median household income is about 78K now, vs. about 67K in 2008.
      A fair share of the GTA increase in income may well be due to the
      effects of the housing bubble’s contribution to the GDP.

      The U.S. economy is heating up and makes interest rates more likely, so 7%+ isn’t unlikely.

      Who knows, but we may be looking at a house of cards built on thin ice.

      Unemployment in 1929 just before the crash was less than 4%.

    • Tommy 10 months ago

      The interest rate historical average is 7%

      • Functioning Brain 10 months ago

        So Tommy in Today’s climate that historical rate would be tested as 9%. I imagine that would have some impact.

  • Yeah Right 10 months ago

    Although the percentage drop seems large, the 39k in sales for January is still a big enough number of based on the chart. Feb will need to be soft before all the bears on this site to start planning their parties. It does appear that Van and Toronto are moving pretty slow at the moment though.

    • bluetheimpala 10 months ago

      I agree, we need more data. Grrr…

      • Justin Thyme 10 months ago

        Said by every military strategist, ever, when planning a military operation against the enemy.

        But it never stopped them from executing a plan that was based on incomplete data.

  • Canadian real estate sales just fell the most since 2008. Here’s why. | Amrank Real Estate 10 months ago

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  • Brian 10 months ago

    When the US Fed raises the interest rate the BofC raises our interest rate and the corresponding increased mortgage interest rates will decrease affordability for domestic buyers and remortgagees and those home “owners” who are financially pushed over the edge will be forced to sell which will drive down sales and prices. If NAFTA is terminated, our economy will decline which will cause the Cdn$ to decline in value, reduce investment, increase unemployment, increase bankruptcies, etc., which will further increase the number of properties for sale and reduce prices. That’s when cash is king. Be ready.

  • Professor of real estate 10 months ago

    Hold your horses folks…. GTA is whack. Check out below article with some actual data plots and graphs on real numbers.

    Mid-February GTA Home Sales See Dramatic Pick-up (zoocasa).

    https://www.zoocasa.com/blog/mid-february-gta-home-sales-see-dramatic-pick-up/

    Nigel Powers: upon seeing mini-me ” I thought I smelt cabbage”

    • bluetheimpala 10 months ago

      Hold your horse folks….Prof is here to drop some knowledge. What else my friend? Al Sinclair or the CEOs of RLP/REMAX/etc say the fundamentals are strong…sweet lord, I love to hate you my friend. Keep it up. As you knowing my academic friend, when there is a depression following massive spike, FOMO piles in thinking we’ve hit bottom. I suggest you go and buy some more mini-apartments or investment properties now while the getting is good. Right?

      • vnm 10 months ago

        I kinda lost faith in the report’s perspective when I got to “The market remains largely balanced”.
        These people must have talking points painted onto the inside of their
        rose tinted glasses, if not fused into their neutrons.

      • vnm 10 months ago

        I kinda lost faith in the report’s perspective when I got to “The market remains largely balanced”.
        These people must have talking points painted onto the inside of their
        rose tinted glasses, if not fused into their neurons.

      • Professor of real estate 10 months ago

        Dear Lord. you are a weirdo. I just provided a link with some data. zoocasa is a website that provides information. it is up to the reader to figure it out (just like this websites articles).
        I guess I struck a nerve on you blue. I make money no matter which way the market goes. Why are you so stressed out? Your crappy studio condo drywalls seeping hydrogen sulfide making you depressed? For me, Real estate is just a hobby – making money from it is just to keep score.

        • Yeah Right 10 months ago

          Professor- this link you are referencing (https://www.zoocasa.com/blog/mid-february-gta-home-sales-see-dramatic-pick-up/) shows year over year sales dropping from 33% to 41% across the TREB. These numbers do not support an up tick in the market especially if you take into account the more inventory available same time last year. We all know sales in feb are consistently > than Jan sales in any given year.

          • Professor of real estate 10 months ago

            I know. my last comment about Nigel Powers smelling cabbage was a way for me to be sarcastic with the articles disconnect between the title and data. I guess folks here are too young and never watched Austin Powers from my scarborough buddy Mike Myers.

        • bluetheimpala 10 months ago

          Hello: I’ve seen your posts. They are subversive in nature with a narrative that is inconsistent with reality. Ether. Fugazi.
          There is a large swath of people in this day and age are easily manipulated and may not be able to separate the garbage. You put up links and make comments that are meant to spread disinformation.
          You are garbage. I am the garbage man. See you tomorrow sunshine. ;o)

          • Professor of real estate 10 months ago

            Blue. something is wrong with you. you are studying my posts like you are taking a 12th grade english exam all over again. You are not in my class so you don’t have to take the exam – you are excused due to mental health issues. disinformation? Who says this whole website blog is not all disinformation? You? you are underestimating the folks reading these comments. I suspect they make decisions based on their circumstances not on random unchecked blog comments on a third tier website. Give it up – Your are not in my league. Let me see – your rationale is that I spread disinformation to a few random people on a website blog and somehow that influences the entire GTA market so I can make more money? Wow. I am known as a renowned professor and scientist but not known for moving the entire real estate market single handedly. I guess I have a new skill. I am growing some neuronal differentiated stem cell lines in my lab right now that I need to test on a candidate. We usually do this in mice but maybe you can volunteer. Get the F outta here Fredo.

          • John 10 months ago

            I appreciate everything you have to share Blue. Thank you!

    • Asterix1 10 months ago

      Those sales numbers are horrendous compared to last years number!

      Down between -30% and -56% depending on location and property type!!!

      You can’t spin that….

  • Asterix1 10 months ago

    Why quote CREA, TREB and those other snake oil salesman?

    They have nothing to add to the conversation, just lies, spins and “their” useless benchmark pricing.

  • Functioning Brain 10 months ago

    Here is the way I see it, perhaps I am a Moron (entirely possible) BUT to me this makes sense:

    Incomes have been fairly static for well over a decade now. Toronto is LOW median income.

    No matter what the narrative is about “immigrants” they are not all the ‘filthy rich’ people pretend they are, most come here with barely anything or nothing after the process of immigration and relocation is reconciled.

    The boomers are aging out of their sprawling suburban big-box houses that are for the most part empty nests (not all because some have had to house their Millennial offspring due to the current housing crisis) they are also either already retired or quickly running at retirement (read as won’t be producing will instead be consuming (CPP etc) ) So they will be downsizing and prepping for death not making money and buying bigger better stronger faster houses/shit

    A shit ton of Boomers have NO retirement savings and are banking on their houses as retirement plans.

    When the boomers fizzle out there is not another population boom till gen Z, Millennials are dealing with fragmented contract work, record levels of debt, and rent beyond viability. They are not a group that will be able to enter the housing market with a force and once the bank of mom and dad dries up as they lose equity in their homes to borrow against the Mills won’t have that point of access either

    HELOC are raising in rate and pretty much no one pays more than the interest on them and many homes are using them to subsidize due to their scary debt to income ratios

    The debt to income ratio is truly terrifying

    Trudeau is going to fuxs Nafta

    The dollar is going to continue to slide

    Automation is going to decimate a big portion of the work force (already is)

    Classic retail is in death rattle thanks to China and Amazon

    The min wage hikes have taken a lot of small business out at the knees and will continue to, remember small business employees a shocking 80% of the population

    The liberals are still itching to come at small business even harder so that will compound the min raise (which ironically after increased tax and decreased write offs is less money for the min worker and just more taxes for everyone, but #smokeshow)

    Interest rates have risen and are rising,

    There is a the new stress test,

    Foreign buyers are being addressed more agressively

    Taxes are rising (like they weren’t high enough)

    A lot of write offs the working/middle used have been revoked (transit, kids activities etc…)

    The cost of daycare has gone up from its already humorous heights due to min wage hike (there is another on route for 2019) So for example my 20 month old was $68 a day last month and is now $88 a day to the tune of $1760 a month that is in the burbs and that is one toddler not two kids or three or an infant or a newborn (that would all be even more expensive and the treshhold for subsidies is silly low and their aren’t any of those spots open anyways if people get them – think 2 year waiting list)

    If you make it un-affordable for the services class and middle class to live in the way they through life journey, media, etc…have been led to believe is accessible (like I don’t know not in a car or tent town or 4 families in one single unit) why would they stay? The Nurses, Teachers, Cops, Firemen, Waitresses, Caregivers, ECEs, factory workers etc… then you gutted of essential services, no?

    So when all above roads converge, and interest rates surpass 6% and are then stress tested 2% on top of that I can’t imagine how in our economic situation home prices would not then become the same or less than historic years when interest rates were lateral.

    This would rep about a 50% or larger crash btw…

    If in 2008 the average cost of a house in the GTA was $335K at a 5 year rate of 7% then I can’t see how when economically things are getting worse not better if stress tested to 7% or above that prices won’t fall to that level or lower.

    Like I said maybe I am wrong, maybe prices go up more and more and more. If that is the case due to the nature of my business and my husbands (we are pretty mobile) and for the sake of the kids we just pack up and leave, and many will likely do the same.

    What I see in the horizon is really really ugly and is going to be sad if/when it manifests.

    So I expect a drop of no less than 30% from today, would NOT be shocked with 50% and though I don’t see it happening if 70% happened I would just shrug and say “why you surprised?”

    • Alex 10 months ago

      I’m leaning towards your scenario, however here are the opposite factors you haven’t taken into account:
      * record low unemployment and strong economy (currently)
      * increasing interest rates = increasing inflation = increasing prices on everything including houses (by definition of inflation)
      * Vancouver is way more unaffordable than Toronto and the prices are actually growing right now there
      * If Canadian dollar indeed falls further that will be a huge incentive for all foreign buyers
      * We are having record low vacancy rate for rental units which means there could be shortage of housing indeed unless there are plenty of vacant properties in Toronto (which I believe it’s not the case)
      * Personally I don’t believe interest rate will surpass 3%. Looks like our financial system is working only one way and we’ll see QE and negative rates in Canada as well. Will 3% be enough to trigger massive personal bankruptcies I don’t know.
      * No significant price reduction will happen without economy downturn and since at this moment our economy is considered as strong we shouldn’t expect it right now.

      So even analyzing fundamentals everything is not so obvious. I bet on the housing downturn but it’s basically up to local speculators and foreign buyers to determine the future of our housing market. First time buyers were pushed out of the market long time ago by the government regulations. Big role will also play government intervention which is always a big unknown.

      • Raging Ranter 10 months ago

        Increasing interest rates don’t equal increasing inflation. Lending rates are increased in order to head off inflation before it really starts. So there is no scenario under which rising interest rates will be a positive for housing. Inflation was sky high in the early 80s, as were the rates needed to counter it, but one thing was not inflating – the housing market. It was collapsing, regardless of what prices elsewhere were doing.

        As for the full employment argument, we were there in 2007 as well. That didn’t last. this won’t either.

  • vnm 10 months ago

    What astounds me is how clearly out of kilter this “balanced” market is.
    After tax income on a minimum salary is about $1650, say $1500 once you subtract the cost of a bus pass.
    You couldn’t possibly buy a property, even if you lived in a used car and payed for street parking.
    The most philanthropic landlord in the world couldn’t rent you a basement apartment or even a garage and stay afloat.
    We’re not talking a few stragglers, we’re talking hundreds of thousands of hard working Torontonians.
    The reason why city council is calling this a crisis, is because it really is.
    However outrageously unfair, society can theoretically support a 1%.
    But half a million people in the lower income brackets increasingly forced out onto the street?
    When you suffer an injury, adrenalin kicks in, you somehow manage to limp home. It’s not until later that the consequences of the injury really begin to hurt..

    • Functioning Brain 10 months ago

      agreed! It is too cold here for mass homelessness, this isn’t Florida or Vegas. We are going to have a real embarrassing global theater crisis if hundreds of thousands of employed citizens start freezing to death in the streets!

    • Professor of real estate 10 months ago

      When is there a balanced market? It goes in cycles – the key is in predicting the length of the cycle. Homeownership is basically gone for most young people and the next generation. Welcome to inequality and rental perpetuity. Increasing share of people will be renters and the government will slowly tax/flog homeowners until they share some of their wealth by subsidizing renters. Already happening. Why is everyone in such gloom – future marijuana tax will balance the Ontario budget. (The greatest new revenue tax stream the government will get that will help negate/abolish the loss in land transfer tax).

    • Tommy 10 months ago

      We are turning into a renter society in Toronto, and Toronto is not Canada. Prices will be impacted but if anyone thinks Toronto will ever become “cheap” or middle-of-the-road housing prices, they’re in for a rude awakening.

      Boomers are sitting on their houses for the next 30 years. Current buyers are doing the same while raising a family, unless they lose their jobs. Investors are doing the same to reap the high rents they can charge.

      • Raging Ranter 10 months ago

        “Investors” are borrowing against one house to buy another. (Classic ponzi borrowing according to Minsky). Many are cashflow negative and won’t be able to withstand any decrease in their own incomes without selling. As for boomers staying put, many have no retirement savings. They’ll need to sell their houses to free up cash for living. Also, there are divorces, job losses, illness and death to consider. Houses do get sold, even in the depths of a housing crash. So the idea that owners sitting on their assets and refusing to sell will prevent a crash is a non-starter. Sellers don’t get to chose whether a crash happens or not. If they did, there would never have been a crash of any sort in history.

    • Functioning Brain 10 months ago

      Alex I don’t know that I agree with the picture you paint (below some counters)

      * record low unemployment and strong economy (currently)

      – I think the numbers are cooked. I also don’t think that does exist is quality, a lot of part-time, contract, min wage…nothing that is going to help anyone access housing, high paying stable and salaried jobs are shrinking

      * increasing interest rates = increasing inflation = increasing prices on everything including houses (by definition of inflation)

      -higher interest rates never up the prices of housing to the contrary they are typically the bullet that takes them down. Also in the past 5 years we have outstripped any level of inflation that 50 years would have brought so their is some the opposite of catching up for houses to do in terms of inflation

      * Vancouver is way more unaffordable than Toronto and the prices are actually growing right now there

      – My husband is in Vancouver this week on business he said it is a ghost town, no traffic, no one in streets, scary quiet…this indicates people are leaving, how long can Van roll when eventually it is gutted of its service class and middle class due to their inability to afford housing?

      They can have all the 5 million dollar houses in the world but who will teach their schools, come to their domestics, put the fire out in their houses, serve them Big Macs, and take their blood?

      * If Canadian dollar indeed falls further that will be a huge incentive for all foreign buyers

      – Not if we are in a scary recession and their are record numbers of homeless roaming our frozen streets and their are few service providers around cause they have been gutted

      * We are having record low vacancy rate for rental units which means there could be shortage of housing indeed unless there are plenty of vacant properties in Toronto (which I believe it’s not the case)

      – This could be a graduate thesis

      * Personally I don’t believe interest rate will surpass 3%. Looks like our financial system is working only one way and we’ll see QE and negative rates in Canada as well. Will 3% be enough to trigger massive personal bankruptcies I don’t know.

      – Interest rate can go as high as they want it to and they don’t care #japan90s

      * No significant price reduction will happen without economy downturn and since at this moment our economy is considered as strong we shouldn’t expect it right now.

      – Our economy is strong on the back of debt, that is an illusion of strength at best. Pretty much credit access differed the crash of 08′ here, differed for how long?

      So even analyzing fundamentals everything is not so obvious. I bet on the housing downturn but it’s basically up to local speculators and foreign buyers to determine the future of our housing market. First time buyers were pushed out of the market long time ago by the government regulations. Big role will also play government intervention which is always a big unknown

      – you know what they say, what goes up…

  • Game of Bones 10 months ago

    I use to go to Better Dwelling for the articles. Now I go straight to read the Comments first, almost as informative as the article I eventually read, but far more entertaining.

    • Tits McGee 10 months ago

      Game of Bones,

      Agreed, However I don’t feel Im learning anything new or informative from the abundance of experts in the comment section fighting to convince all the naysayers that Canada is the only market in history that always goes up forever with no corrections.

      I must be pretty ungrateful to not feel like Im not living in the most amazing place in the whole wide world. A lifetime of debt sounds like the best solution to feel grateful and entitled again.

  • Dman 10 months ago

    We may be underestimating how high interest rates will go. It’s out of the BOC’s control. US interest rates could skyrocket.

    Smart money is (as silently as possible) unloading over-valued assets like real estate.

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