Sunday, March 1, 2009

Scotiabank Issues Brutally Pessimistic Report on Real Estate

Adrienne Warren is a Senior Economist and Manager at Scotiabank, holds a PhD in Economics from York University and specializes in forecasting the Canadian and U.S. economies for Scotiabank.

On February 25th, two days after the Urban Development Institute held a confab with local real estate ‘industry leaders’ to tell everyone that we really do not have a housing recession in BC and Canada; Warren has issued a damning report titled the "Deepening Downturn in North American Real Estate Activity".

Her scathing analysis confirms that we, in Vancouver, are still in for some serious downhill declines in real estate values.

From the reports “Residential Outlook — Canada” section:

  1. There was a double-digit decline in single-family homes, with most of falloff in B.C. and Alberta.
  2. There was rising unsold inventory, falling new home prices, greater resale competition and reduced credit availability. All of whichl contributed to the slowdown.
  3. Housing starts have tumbled to an eight-year low and resale activity has cooled even more forcefully, and MLS sales volumes fell 17% last year. When combined with a rise in new listings, the Real Estate market was saturated with product.

The outlook for 2009 was just as bleak.

  1. Housing starts are forecast to fall below longer-term replacement demand with declines across all provinces and in both multi- and single-family segments.
  2. There will be another 15-20% decline in the volume of resales and a further 10% drop in average prices.
  3. Centres with the largest supply-demand imbalance, including Vancouver, Sudbury and Calgary, have relatively greater downside price risk.

All in all it was a bleak assessment of the market from a sector who normally produces positive outlooks to drive business.

Two days earlier the speakers at the Urban Development Institute tried to convince anyone who would listen that the problem with the Vancouver Real Estate Market downturn had to do with "a serious loss of consumer confidence”.

They are right.

Is there any consumer who has still has confidence in the malarky Rennie, Muir et al are spouting?



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