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What We Are Doing Now Is Undoing Crazy Years

A report from Global News in Canada. “A local realtor and real estate blogger has crunched the numbers and he says Greater Vancouver home sales just had their worst month of March since 1986. According to Steve Saretsky, unreleased numbers from the Canadian Real Estate Association show just a little over 1,700 transactions last month. Saretsky said the slowdown is a result of a gap between what sellers and buyers are expecting from the market.”

“‘Primarily because buyers have a certain price they want to pay, particularly given the outlook of housing market, and sellers are still trying to adjust to reality, which ultimately the market isn’t willing to pay for what they are asking,’ Saretsky said.”

“Saretsky said prices are in fact taking a dip, however the slide isn’t evenly distributed. ‘You know you can probably get a 40 per cent discount at a house in West Vancouver, but you might only get a 15 per cent discount on a house in East Vancouver.’ He added that condo sales also saw an 18-year low last month.”

The Globe and Mail. “Housing sales in the Vancouver region tumbled to a 33-year low in March while prices have dropped for 10 consecutive months, after a series of government measures aimed at cooling off what had been a red-hot market.”

“‘The fact that we have very slow sales volume suggests that we will likely see continuing price declines,’ real-estate economist Tom Davidoff of the University of British Columbia’s Sauder School of Business said. ‘Typically, sellers will to have adjust prices down to match what they can get.'”

“Total residential sales last month decreased 31.4 per cent compared with a year earlier, and were 46.3 per cent below the 10-year regional average for March. Total listings have swelled for detached homes, condos and townhouses, with the number of properties for sale jumping 52.4 per cent over the past year to 12,774.”

“The region’s average price for condos sold dropped 9.7 per cent over the past year to $653,705. In the district municipality of West Vancouver, the benchmark price of detached properties fell to $2,583,600 last month, down 17.1 per cent since March, 2018.”

“The benchmark price for detached houses sold in Greater Vancouver last month slid to $1,447,100, down 10.5 per cent compared with a year earlier. Over the past year, sales volume in the detached category dropped 26.7 per cent, while condo sales decreased 35.3 per cent.”

“‘The momentum is definitely downward,’ said Peter Norman, chief economist at Altus Group, a real estate data and advisory firm.”

The Wall Street Journal. “A few years ago, prices in Vancouver and Toronto were growing by up to 30% annually. But today they’re virtually flat, thanks in part to a steep sales tax aimed at foreign buyers and tightened rules to make it more difficult for families to qualify for mortgages.”

“‘Basically what we are doing now is we are undoing crazy years,’ said Benjamin Tal, deputy chief economist at CIBC World Markets Inc.”

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This Post Has 46 Comments

  1. ‘A few years ago, prices in Vancouver and Toronto were growing by up to 30% annually. But today they’re virtually flat’

    With all those resources and the WSJ is, oh, maybe 3 years behind? This article was part of a weird “golly shacks are too expensive all over the place!”

    1. Few years ago the Chinese were gobbling up all that housing with the piles of Crypto they funneled over. Sorry pal they shut down that illegal money laundering operation. There are other more rewarding career options outside of real estate you may want to consider. Used car sales, Uber, dog walking, fast food, all of which will allow you to walk the streets without fear of a violent crime from a past client.

    2. As a dual citizen, I have to say I’m getting great pleasure watching Canada’s bubble explode, whilst roasting marshmallows on the side. We left in 2013, at the time somewhat reluctantly. I still love the Okanagan Valley of BC. But with too much gov intervention (at the same time corruption/hand in hand with PROC) with just about everything up there, I’m happy to watch the boom go bust. Missed out on some real lucrative design /build projects in the Valley by leaving but hey better be early than too late. Maybe if they do actually get to shambles in the price dept we’ll consider Northern BC next. Prince George is booming like you wouldn’t believe, despite oil prices. Mines, lumber, gold, oil its the capital of the North. Big Canadian mills are investing in mill tech for their subsidiaries in the South US that really knocks our local WA / PNW sawmills out of the running when it comes to competition. County to the north of us is heavily dependent on that industry. Think it was Ben who posted the article on lumber prices by The Daily News, regarding Cowlitz County. Its all very interesting watching the dominos go VERRRRYY slowly over. Anyone catch the bloomberg article citing all the layoffs currently underway in banking/ finance? Cleaning up house. Makes sense b/c I personally think blockchain is going to render a lot of middlemen useless. #1 being mortgage brokers and associated. I intend to make the post short & somehow its always a spiel, sorry. <Apologetic Canadian habits die hard

    1. Wa happened Bob? Too much crow?

      What will make the housing boom go bust? ‘Greed’ – The Globe and Mail
      https://www.theglobeandmail.com/…/real-estate/what-will-make-the-housing-boom-go…

      “Apr 14, 2012 – Ben Jones saw the storm clouds forming over the United States housing market back in 2004. Now, he has a gloomy forecast for Canada.”

      A Long Rant About Bob Rennie : vancouver – Reddit
      https://www.reddit.com/r/vancouver/comments/…/a_long_rant_about_bob_rennie/

      May 16, 2016 – One year ago I was blood boiling angry with Vancouver “Condo King” Bob Rennie. I recall distinctly thinking “I want to … You’re just rambling about how people are misattributing the housing bubble as being the result of foreign investment and idolizing an asshole developer.

      Sep 13, 2017
      Brace for more housing shortages, warns Vancouver real estate guru

      torqcampbell on Twitter: “bob rennie: current title holder of the biggest …
      https://twitter.com/torquilcampbell/status/744880110449332224
      Jun 20, 2016 – … bob rennie: current title holder of the biggest asshole in canada

      ASKBiblitz on Twitter: “Crash! And take that asshole Bob Rennie with it …
      https://twitter.com/leobiblitz/status/613724921789743104

      And the “Winners” are … the Worst of Vancouver, 2015 | scamcouver
      https://scamcouver.blog/2015/09/…/and-the-winners-are-the-worst-of-vancouver-201…

      Sep 28, 2015 – BMW (possibly an M5, possibly belonging to Bob Rennie) … be an asshole.

      2013: The Scam Reviewed | scamcouver
      https://scamcouver.blog/2013/12/31/2013-the-scam-reviewed/

      Dec 31, 2013 – bob rennie is an asshole

  4. “‘Primarily because buyers have a certain price they want to pay, particularly given the outlook of housing market, and sellers are still trying to adjust to reality, which ultimately the market isn’t willing to pay for what they are asking,’ Saretsky said.”

    Sellers have it ingrained in there stubborn heads that last years price is the minimum they will accept, the talk about slowing down and declining passes through there hallow skulls when they hear it. The speculators are aware but there greed consumes them and they reluctantly lower there prices knowing they may lose profit if they don’t get out quick enough. It’s the building on fire with the smart ones headed to the exits and the stubborn cotton rated ones sitting in the corner soon to burn. Buyers are waiting outside roasting marshmallows have a great time

    1. Quite the FB story there, reminds me of that movie “the burbs”. Especially liked the part about the contractor who showed up on his bike to bid the job and later took a bobcat tractor into the basement through a large opening he made by destroying the front porch and at the end almost collapsed the shack. Very intriguing read!

    2. Fellow left coaster. Seattle is Dying should be watched by every person in the PNW, stat. I don’t have any fakebook acct but anyone who does, share that link!

  7. “What We Are Doing Now Is Undoing Crazy Years”

    What we are about to be doing now is being undone by crazy years.

    Now the fun begins. 😁

    The increased equity during the crazy years lured ignorant pukes into stupidly cashing out equity that was magically produced by debt-powered price increases. This cashed-out equity was then replaced by even more debt. What a wonder!

    Now there are strong hints that reverse is about to happen, is happening. Prices are no longer rising and just may be falling. This means equity is no longer being produced, will even vanish, leaving behind lots and lots of debt.

    Prices come and go, equity wealth comes and goes, but debt … well, debt gets to stick around.

    1. Debt gets snapped up onto the Fed’s balance sheet once the shtf moment has passed and asset HODLers are deeply underwater.

  8. The match that lit the fuse for bubble#1 was increasing rates of mortgage defaults. bubble#2 is an everything bubble and I keep reading that the new match might well be BBB corp debt (downgrades due to slowing economy/reduced profits, insufficient liquidity) like this from Maudlin:
    I think the next subprime crisis will be in corporate debt.
    and this from Gundlach:
    “The corporate bond market has all kinds of problems. I think investors should use the strength of junk bonds that’s happened as a gift and get out of them,”
    […]
    “So, the leverage in the corporate economy is very bad,” Gundlach said, “There’s been a lot of buybacks — borrow money at low rates, buy back stocks — which of course, it’s just turning the equity market into a CDO residual, an equity piece, that’s getting thinner and thinner, riskier and riskier.“

    In the fixed-income markets, debt securities are sometimes bundled into collateralized debt obligations, or CDOs. In a process called tranching, the CDO is then sliced up into pieces with various levels of credit risk and those pieces are in turn sold to debt investors. The riskiest piece is referred to the Z tranche or residual tranche.

    1. “So, the leverage in the corporate economy is very bad. There’s been a lot of buybacks — borrow money at low rates, buy back stocks — which of course, it’s just turning the equity market into a CDO residual, an equity piece, that’s getting thinner and thinner, riskier and riskier.”

      It’s really little different at the corporate level from households who endlessly borrow against their home equity, then lever up some more when prices increase further, always at highly stimulative, ultra-low interest rates. Pretty soon, all the equity has been converted into debt that has to be repaid, leaving behind a fragile, hollowed-out, high-risk balance sheet which is prone to collapse at the first hint of an economic downturn.

      2. “…it’s just turning the equity market into a CDO residual, an equity piece,…”

        This is exactly parallel to house-proud owners who keep endlessly acquiring a new ‘mortgage residual’ with every 10% annual gain in the value of their home, despite regularly cashing out their most recent bubble gains.

        Once the music stops and the bubble pops, underwaterness is the way forward.

    2. ” … this from Gundlach: … it’s just turning the equity market into a CDO re$idual”

      HB.B ll, will initate differently than HBB l … & the end re$ult$ will bee $imilar, but, without hyperbole: Wor$er!

      Jeffery is quite OK in my estimate$ …

  10. Winner winner chicken dinner

    “That’s an 84% discount from its original list price of $18.5 when it hit the market in 2007.”

    50 Cent’s Mansion Finally Sold at a Huge Discount. What Took So Long?

    By Clare Trapasso | Apr 2, 2019

    After 12 years and a more than $15 million price cut, the Farmington, CT, megamansion of rapper and entrepreneur 50 Cent has finally sold.

    The 51,657-square-foot residence is under contract for $2.9 million, according to the Wall Street Journal. That’s an 84% discount from its original list price of $18.5 when it hit the market in 2007. It had languished there, undergoing price cut after price cut.

    The rapper paid $4.1 million for the mansion in 2003—the same year his best-selling hit “In Da Club” was released. Then he dropped a reported $6 million to $10 million in renovations.

    https://www.realtor.com/news/celebrity-real-estate/50-cent-mansion-finally-sold-at-a-huge-discount-what-took-so-long/

  11. From tv I’ve learned of there’s a recession it will be mild and easily handled by the central planners

  12. Total mortgage applications up 38% last week vs the same week in 2018. Purchase applications was up 10% YOY.

    4. “The run on refinances may already be dying down, however. Mortgage rates bounced back sharply this week, ending Monday about an eighth of a percentage point higher than they were a week ago, according to Mortgage News Daily. They stabilized Tuesday.”

      1. Susanne and johndave told me rates will be going to go to 0%, shacks just aren’t selling like they did back in the Chinese money laundering days. Come on fed, QE needs to keep chugging, RE to the moon so commission checks keep hard working realtors over paid and let everyone qualify for a loan they can’t afford through non fed backed loans. This is the “American (realtors) dream”!

  13. From Marv Beer:

    Housing sales and prices drop across Central Okanagan

    ‘According to statistics from the real estate board, the number of homes listed in March jumped by more than 35 per cent in the Central Okanagan and by 31 per cent in North Okanagan compared to February. However, while the number of listings increased in March, which is typical in the springtime, so did the time it took to sell, which the real estate board says is unusual. The board says in a media release usually when housing activity increases, the number of days it takes to sell a property normally reduces.’

    “Despite steady increases in new listings over the past several months, housing supply is light as we head into the spring market, which is concerning and points to a problem we’ve been stressing for a while, a generalized lack of housing supply,” Okanagan Mainline Real Estate Board president Marv Beer says in the release.’

    https://infotel.ca/newsitem/housing-sales-and-prices-drop-across-central-okanagan/it61032

  16. Oh whoops, we “tweaked” the housing stat reports again, sorry about that.

    https://www.theglobeandmail.com/real-estate/the-market/article-tweaked-days-on-market-data-paint-a-more-accurate-picture-of-toronto/

    “I love that they are responding to something that’s problematic. The DOM stuff is a sneaky little tactic to make a listing look fresh and new,” he said. He also suggested it is not a particularly useful stat to use to judge an agent’s effectiveness, in part because it leaves aside the question of whether an agent gets the best value for a home, or just the quickest sale.

  18. Italian borrowing costs rising and Turkish lira losing more value, making their huge debt burdens increasingly unsustainable. Can you say “systemic contagion risk” boys and girls? I knew you could….

  19. Santa Clara Valley Lives: Family papers reveal Jim Crow restrictions in early Los Altos

    ‘In a pile of old family paperwork, I found the deed to the lot my parents bought in Los Altos in the 1940s. This deed uncovered a great deal more than family history.’

    ‘Because there was very little civilian housing built in the United States during World War II, it was difficult for my parents to find a home when my father took a job at Ames in 1947. He and my mother rented a room in Palo Alto and had to share a bathroom and kitchen with other boarders. They decided to build a house in Los Altos.’

    ‘They purchased a piece of property that had been part of an old apricot orchard, and their deed included three pages of restrictions. They could not live in a trailer. They could not raise farm animals. It was the fifth one that stunned me: The property could not be used or occupied, “by any persons of African, Japanese, Chinese, Mongolian or Malay descent.”

    ‘I knew these ugly “restrictive covenants” were common in other parts of the country. I had no idea they had ever been imposed in California. Los Altos wasn’t incorporated until 1952, so this was not a city issue. The restrictions came from either the developer or the underwriter. I was aghast that my parents had signed such a thing. Imagine how those impacted must have felt.’

    ‘I discovered these covenants were all too common in the Santa Clara Valley and across the country then. Although they were nullified by the U.S. Supreme Court in Shelley v. Kraemer (1948), the restrictions have remained in title paperwork ever since.’

    https://www.losaltosonline.com/news/sections/community/177-features/59787-santa-clara-valley-lives-family-papers-reveal-jim-crow-restrictions-in-early-los-altos

    1. I knew these ugly “restrictive covenants” were common in other parts of the country. I had no idea they had ever been imposed in California.

      I find it amusing that everyone always thinks that it’s other people’s ancestors who were “the problem”. My ancestors got harassed by a very bored KKK in Wyoming just for being Catholic (they were Polish immigrants). At the same time they’d have signed that in a heartbeat I suspect.

      1. Similarly, the main reason Arizona has a big illegal immigration problem is California got walls installed years ago, so the cartels go around it walking in here.

  21. Q1 Carmageddon for GM, Fiat-Chrysler, Toyota, Nissan, Mercedes, Mazda… | Wolf Street

    Some interesting snips …

    “And GM is proud of these price increases, as it announced today:

    “’First-quarter 2019 average transaction prices for GM’s all-new, light-duty pickups were $8,040 higher compared to their outgoing models in the first quarter of 2018, with the GMC Sierra leading the segment, according to J.D. Power PIN estimates.’”

    “When it comes to trucks, automakers have figured out how to wring out Americans so that they have a smile on their face. The truck segment is hot, and bigger is better, according to GM:”

    “… wring out Americans so that they have a smile on their face.” Hey, that’s exactly what I enjoy doing!

    Smile at a puke of a customer, tell him (of her) how smart he (or she) is, then slip him (or her) a few sheets of paper that contain some, oh so interesting phrases such as “adjustable interest rates” and indicate to Mister (or possibly Missus or perhaps even Miss) Smiley a few dotted lines for him (or her) to sign and – presto! – I have just created for myself a debt-slave, one that will work hard for decades and over these decades will willingly – WILLINGLY! – forward to me huge – HUGE! – chunks of his (or her) pay checks – EACH and EVERY month!

    https://wolfstreet.com/2019/04/02/q1-carmageddon-for-gm-fiat-chrysler-toyota-nissan-mercedes-mazda/

    1. Wow, average transaction price for a GM truck was $48k! That is astounding to me. The cost to fuel these things are quite costly, even with $2/gas. If we get up in the $3 or even $4 range, those trucks will be ruinous.

      1. If we get up in the $3 or even $4 range, those trucks will be ruinous.

        Anybody that will be ruined by $4 gas is already on the way to ruin spending that much on a vehicle.

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