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Tsur Somerville, who holds a real estate foundation professorship at the University of B.C., expects prices to stay flat for a while “because our prices are high relative to what people think they should be,” Somerville said. “Our price adjustment will come from prices being flat for awhile and letting income catch up to where prices are.”
“Most people don’t have to sell their house,” he said. “You bought it for $200,000. The price is now $150,000. Unless you have to, why would you sell it?”
For prices to go down significantly, contended Somerville, “You need people who have to sell, either because the economy has collapsed and they don’t have any income or developers have built a whole bunch of units that are unsold and the bank is screaming at them or foreclosing or something like that.”
None of those conditions appears imminent.
Somerville said it would take “some negative shock,” such as an economic meltdown or mortgage interest rates jumping from four per cent to nine or 10 per cent, to trigger lower prices.
While prospective sellers are waiting, the numbers indicate that prospective buyers are a bit shy as well. “The market right now is both slow and tentative. There are a lot of people out there being very tentative because they’re not really sure where things are going,” Somerville said. “I can’t say how many buyers are in the market — I want to differentiate between that and the prices they are willing to pay. Maybe there are people who are actually interested in buying, but they’re either waiting for prices to be at a certain point, or they’re making offers that aren’t being accepted. I can’t differentiate between those things.”
“To get prices to really tank, you’ve got to have something happen. Either you’ve got to have overbuilding, or you’ve got to have some big change in the world of finance, such as large movement in interest rates or a financial disruption, or you’ve got to have a real negative economic shock,” Somerville said. “You’ve got to have some combination of those, or one of those to make prices drop dramatically.”
Overbuilding of single-family homes in Metro Vancouver is difficult because land is so limited, Somerville said.
Cameron Muir, B.C. Real Estate Association chief economist, thinks if buyers are waiting, they could be waiting a long time.
“Three years ago we saw the largest financial crisis since the Great Depression and an ensuing global recession. If that’s wasn’t enough to trigger a correction in an asset bubble, I don’t know what is,” Muir said.
“The condo market in Vancouver has not been ‘hot’ since 2009, and perhaps even earlier than that. Prices on the condominium side have been relatively flat for three years, so that doesn’t signal any kind of asset bubble welling up,” Muir said. “There has also been little speculation in the marketplace over the past few years and home builders have been kept in check in terms of their total units in production.
the risk of a more difficult adjustment will increase if builders do not soon begin to slow the pace of new construction.
"a market that will have a lot of units for sale and more coming on stream."
As of Feb. 29, 2012, there were 6,000-plus condos for sale through the Vancouver Real Estate Board - up 15% compared to the previous year.At the same time, sales of used condos were down by 18%.Add to this the fact that - according to MPC Intelligence - there are some 8,000 pre-sale condos being launched in the first six months of this year.
The fanaticism and fervor of this year’s Black Friday did not disappoint. There was hair tugging at the Wii U display in Target, a shooting outside of Wal-Mart and long lines as consumers nationwide waited to bust down the doors the day after Thanksgiving.
But while Black Friday did not disappoint, the even bigger success story here is that of Cyber Monday’s explosive sales growth in light of a quickly evolving retail landscape. This analysis puts together the numbers behind both major sales dates, comparing traditional versus online shopping, to find 3 key takeaways:
- Black Friday 2012 outperformed the past 5 years in stock market performance, while Cyber Monday 2012 was likely the busiest ecommerce day in history;
- Traditional shoppers became more tech savvy consumers this year both online and in stores, with in-person shoppers using both apps and smartphones to try to secure better deals;
- Online shopping exploded on both Black Friday and Cyber Monday, seeing higher conversion rates this year.
The 2012 holiday season may have been the worst for retailers since the financial crisis, with sales growth far below expectations, forcing many to offer massive post-Christmas discounts in hopes of shedding excess inventory.
The perfect "10" Kerrisdale custom-built home by Loukas Designs with over 5000 sq ft luxury home. Large 50' x 162' lot. East-facing front to greet the morning sun. 10' to 11' ceiling all over, gourmet kitchen with carrera marble countertops, Sub-Zero fridges, Miele D/W, Thermador stainless steel stove, French doors open to huge west-facing gas-heated covered patio w/ built-in BBQ overlooks the blue swimming pool & hot tub. Total of 5 bedrooms, 6 baths, a media room & exercise room. Bsmt offers suite potential for nanny or the in-laws. H/W floors throughout, radiant heat, built-in surround music system and 3 car garage. The fenced backyard is a kid's heaven. Priced to sell.On July 27th, 2012 it was listed for $4,880,000.
Since 1996, the use of automated computer systems by banks to determine how much should be lent in a mortgage or home refinancing has flourished in Canada. For banks these computer models were cheaper and faster than conducting a full appraisal. However documents showing discussions between Canada’s banking regulator and the financial and real estate sectors show serious concerns about the accuracy of these automated systems, and an over-reliance on them by banks. This adds risk to the housing market.
The documents, marked Protected – For Internal Purposes Only, were obtained by The Globe and Mail through Access to Information during an investigation into lending practices in the housing sector over the past decade. Below are excerpts, along with an explanation of what is being said. All names of the parties speaking have been blacked out by the federal government. Only comments from Canada’s banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), are identified.
"... there hasn't been a crash, thankfully, but Ottawa and the Bank of Canada are desperate to raise interest rates once the economy improves. Economists are expecting the rates to start inching upwards by late 2014 - meaning the price increases of the last decade are long gone."
Last year’s figures must be taken “with a grain of salt,” Muir said because the prices were inflated by a large number of luxury homes for sale in West Vancouver, Richmond and Vancouver’s West End.
"The federal government’s decision to reduce the maximum amortization period for a government-insured mortgage to 25 years from 30 years also affected home sales.
That could add up to $160 on the monthly payment of a $350,000 house.
That no doubt has squeezed some potential buyers out of the market."
History of Central Banks and why we must End the Federal Reserve
- Ralph Nader on CNN
The author(s) of the posts on this site are not investment advisors and they do not offer investment advice. They try to provide some hopefully useful data with sources - especially concerning real estate - and then add their own analysis.
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