Thursday, January 3, 2013

The correction going on in Vancouver is a "fairly sizable one" - RBC

Meet Paul Ferley, Assistant Chief Economist at RBC Capital Markets.

Ferley captures out attention for some comments he made on the Business News Network earlier today.

BNN was running a story on December's real estate numbers which showed Vancouver home sales plummeting again.  BNN started of talking with Cameron Muir, the Chief Economist from the B.C Real Estate Association.

Muir comes on the program carrying the "there is no bubble" standard that he and Tsur Somerville have been pounding for the last little while.

He insists that, after surviving the Great Financial Collapse of 2008, if the Vancouver Real Estate market hasn't collapsed yet then it won't.

As if to point out the absurdity of his comments, while Muir was insisting the Vancouver market has been 'flat' since 2008/2009, BNN flashed across the screen the fact that Vancouver home sales were down 31% year over year in December.

BNN notes how jarring the statistics for sales declines are. Does this not concern Muir?

As always our buddy Cameron dismisses the poor sales, insisting all signs are for positive growth. Muir jumps on the fact that November and December saw sharp pull backs in the number of listings on the market - conveniently ignoring that this happens every year in November and December.

But as we showed yesterday, the number of active listings on the market right now is far higher than in previous years.

BNN contrasts this with comments from Paul Ferley, assistant chief economist at RBC Capital Markets.  Ferley says the bank's research on housing affordability in Vancouver showes that prices in the city had become frothy.
"Certainly the Vancouver numbers have been suggesting stresses in that market with affordability deteriorating and at some point a correction was likely going to have to play out. It was a market looking like it was poised for a correction."
Ferley adds that while prices have yet to fall as dramatically as sales, the city could be headed for "double digit" declines in home prices.
“You're seeing a correction in Vancouver – a fairly sizable one."
The focus on the Spring Market ramps higher with each passing day and the stage is set with Muir and Somerville firmly staking their reputations on a crash not happening.

(hat tip VREAA for Van. Sun image)


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  1. Muir and Somerville are looking more foolish each day.

  2. Interesting... the very end of the video Cameron Muir cites VREB statistics, claiming that foreign buyers of Vancouver real estate only make up 2-4% of the market - for as far back as he can see in those stats.

  3. Time for Good to fire up the yellow heli and call his asian RE buddies and book a time with Goblal before its too late.

  4. I don't understand why Muir and the REBGV are so unwilling to 'tell it like it is' regarding market realities. Why the spin all the time?Vancouver real estate will always be a premium to Winnipeg, we get that. However, at this time, sales are down, prices are soft, and a correction has already taken hold; those are the facts. Maybe the market will rebound this spring and maybe not - who knows for sure? Meanwhile, be credible.

    I think the REBGV spin actually undermines a realtor's ability to offer sound advice to clients based on what is REALLY happening in the market.

  5. i think muir's numbers mean nothing when it comes to foreign buyers. the problem isn't so much foreign buyers living abroad than it is foreigners coming to canada, getting landed immigrant status for them and their families, while bringing over a few million dollars so that their son in college can go buy a poshy, brand new spanking house. those are the types of people that have pumped up this market. ones who 'over pay' for real estate and as a result over the past few years, has made vancouver really unaffordable.

    1. Agreed 110%. HAM has really screwed the market here. I don't beleive the so called experts who state that they are a small part of the problem. My brother in law and most people he knows sold primarily to HAM 2 years ago in West Van. Cruise around the neighbourhood in West Van, and you will understand. BTW, the house that he sold is sitting empty for the last 2 years. The HAM buyers were never interested in living there.

    2. I see a lot of properties being operated as "see throughs" all over the westside.

      A tax on properties that sit largely unoccupied for most of the year would make sense. At the very least, it would expand the rental pool out from crappy apartments and mouldy basement suites stacked eight-deep with undergrads.