Tuesday, April 28, 2009

Welcome to the balanced market

We have moved from a rapidly descending market to one where a bid has appeared for listings.

MOI is in the 5-6 range. Some of the huge drops from list/sell have disappeared and most sold prices I see are coming in near (within 5-15%) the ask price.

This was to be expected. Record low mortgage rates have brought the cost of owning, even at inflated prices, closer to renting, as I showed you in the renting v owning post earlier this month.

As the market strengthens, it then panics those who sat out the long run-up, with the thought that the drop we just had may be it! and we will now embark on a new round of price rises.

I think this current blip will take out the buyers who had been sitting waiting for the smallest drop to get in. Then the driver will be the economic situation once again. On that score things are not a lot better. We had stopped falling as fast, but things are far from a rebound or even stability yet, with huge job cuts continuing in the US and Canada. And we will now have to see what transpires with this swine flu.

This darned disease is another brake on the velocity of money, and an economic damper, when we can least afford it.

I posted before that I thought the market would be stable until June and would then resume it's downward pressure. Lets see if my guess was right and let us hope that the RE market is the only thing we have to worry about.


From Mohican's post http://housing-analysis.blogspot.com/2009/04/teranet-house-price-index.html Vancouver's Housing index is at 135, with 100 being the 2005 price. So we are now 35% over 2005 prices now. Toronto is already down to 106.

I would be very surprised if that's IT for us and we don't get nearer 100. However, as mentioned, we may have price stability for a few months. Then reality rears it's ugly head again.

I suspect the economy and the Olympics have buried any chance of a budget surplus or even a balanced budget for the foreseeable future, so don't expect the Provincial government to be able to bail anyone out.


  1. I see no reasonable evidence to support prices staying high. I can't see how current mortgage rates are sustainable.

  2. Mortgage rates are low, but it is harder to qualify as many realtors have noted.

    Even the CHMC is beginning to see the light and may tighten up it's requirements.

    The truth is, the lenders...banks, mortgage companies, equity loan companies and CMHC are as much to blame if folks get in over their heads in debt, as the borrowers.

    The constant PUSH to borrow more than you can afford is hard to resist and many have succumbed and will pay the price as the economy remains weak and their income stagnates or drops.

    I have lost track of how many times I have gone into my bank, and they notice I dont have a mortgage (or a property) and try their best to get me to see their mortgage specialist!

  3. Things will taper off in the fall. The last two years in AB - prices rise in the spring and fall by Autumn.

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