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Where Is The Bottom? How Low Are Things Going To Go?

Two reports from CBC News in Canada. “‘Long gone are the days of speculative selling where you could put your house on the market at a price and if somebody falls in love, they’ll pay it,’ said Jason Yochim, CEO of the Saskatoon Region Association of Realtors.”

“Analysts say a number of people who bought homes over the last decade may now owe more money on them than sellers are willing to pay. Last year per capita, Saskatchewan led the country in mortgage defaults.”

“‘People are a lot less likely to give their home away for a lower price than they think it’s worth,’ said Josh Buchanan, a Saskatoon real estate blogger and analyst . ‘They don’t want to take a loss.'”

“Real estate prices continue to fall in Calgary, with single-family homes leading the plunge. ‘Sales activity continues to remain weak … and because we’re faced with this persistent oversupply in our market, prices continue to trend down,’ said CREB chief economist Ann-Marie Lurie.”

“The declining prices can be seen as good news or bad news, depending on your perspective, said Emma May, co-founder of Calgary-based Charles Real Estate.”

“‘For some people who bought when prices were really high, these are very stressful times. There’s days where we go out and we meet people who bought three or four years ago and who now find themselves underwater and they feel trapped. They can’t sell their house and they’re losing equity,’ she said. ‘For other people, for people who are not in the market yet, it’s an opportunity…. That said, some people also then question: Where is the bottom? How low are things going to go?'”

The Epoch Times. “Vancouver’s once meteoric housing market, besieged by regulation and taxes, is getting pummelled. It’s like tweaking the old adage to ‘what rises the highest, falls the hardest.’ The factors that propelled it to the stratosphere have, one by one, been dismantled and perhaps a new, healthier reality will take shape.”

“Luxury real estate, once propped up by Chinese and speculative money, is stagnating as its lifeblood looks for friendlier pastures. The foreign buyers tax of 20 percent—up from 15 percent when first introduced in August 2016—has almost completely shut down purchases by foreigners, says Phil Moore, president of the Real Estate Board of Greater Vancouver (REBGV).”

“The REBGV reported that February home sales were 42.5 percent below the 10-year average for that month. ‘It’s maybe more noticeable now because there are higher-end houses on the market sitting there for so long now,’ Moore said.”

“‘Anything above $2 million has started to become slow,’ Moore said about Vancouver’s market where the benchmark price is $1,016,600 and out of reach of the average Canadian.”

The Globe and Mail. “Canadian home prices fell in February for the fifth straight month as most major markets weakened, data showed. Except for 2009, when there was a global financial crisis, the decline was the largest for February in 19 years of index history, said Marc Pinsonneault, senior economist at National Bank of Canada.”

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This Post Has 19 Comments

  1. ‘Sales activity continues to remain weak … and because we’re faced with this persistent oversupply in our market, prices continue to trend down,’ said CREB chief economist Ann-Marie Lurie’

    Hey Redfin, Ann-Marie spent almost three years trying to talk up this crater. Now she’s begging sellers to bit the bullet.

    ‘Vancouver’s once meteoric housing market, besieged by regulation and taxes, is getting pummelled’

    Hey Redfin, the Vancouver REIC spent a couple of years, after the initial crash, trying to tell everyone it was “to the moon Alice!” Your disgrace is ahead of you.

    1. Is the problem really one of persistent oversupply, or more one of a demand shortage at current asking price levels?

      The only way to figure this out is to let prices fall to dramatically lower levels and see whether the market clears.

  2. ‘Canadian home prices fell in February for the fifth straight month as most major markets weakened, data showed. Except for 2009, when there was a global financial crisis, the decline was the largest for February in 19 years of index history’

    Worser and worser, all around the planet.

    2. Why is there such an extreme bias against normal downward adjustment in prices at the unwind stage of a mania? Is it because the “nobody could have seen it coming” and “real estate always goes up” people inevitably get hurt, due to being woefully unprepared for the eventuality?

      1. Why is there such an extreme bias against normal downward adjustment in prices at the unwind stage of a mania?

        Because it will result in People Who Matter losing a lot of money.
        A LOT of money.

  4. “we meet people who bought three or four years ago and who now find themselves underwater and they feel trapped.”

    They just wanted a place to live, right? Now they should feel secure.

  5. I think a panic sets in soon, retirees (Calif) with temporary equity (bought in 2010-2014) want to try to get at it, and move to a cheaper state with lower taxes. It will get interesting.

    1. Thats a great point and one of the lynchpins of a downward snowball. When that starts, all the employment and median income, and expense ratios etc are out the window. Logic means nothing once fear enters the equation.

    2. I think it might be worse: those who retired between about 2004 and 2010 went upside down on their retirement homes. These communities saw benefits like golf courses dry up, while HOA fees and insurance costs rose, and the residents spent years waiting and hoping things would get better.

  6. ‘For some people who bought when prices were really high, these are very stressful times. There’s days where we go out and we meet people who bought three or four years ago and who now find themselves underwater and they feel trapped. They can’t sell their house and they’re losing equity,’ she said.

    Look at the bright side, Emma. It was still cheaper than renting.

    1. I feel nothing but pure schadenfreude anytime I read of speculators and FBs who made housing unaffordable for the prudent and responsible getting their fool heads handed to them. Let them be a cautionary tale for the wages of greed and recklessness. That goes double for those who trusted the REIC and its MSM lapdogs.

  8. I live close to the close to the real estate crater that is forming called Vancouver. I see for sale signs that have become a permanent part of the scenery as in.. “right by that house with the pretty real estate agent’s face on the sign”. This will be an epic reset. I wonder how many of the ultra high end car dealerships a ten minute drive from my house will be there in a few years…

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