Wednesday, May 5, 2010


I have never seen so many banks come out with warnings about one asset class.

One by one the economics departments of the big banks are coming to same conclusion that we came to on the blogosphere...that RE is in a bubble and is not sustainable.

Here is the latest from TD (via Reuters and then Yahoo). By the way I think they are optimistic with their forecasts. An asset class that has gone up sooo much doesn't usually just correct gently- unless of course the government interferes again.

Canadian home prices to fall in 2011: TD report
Wed May 5, 1:46 PM

(Reuters)TORONTO (Reuters) - Canadian home prices will likely fall modestly in 2011 as rising interest rates reduce people's ability to buy, Toronto-Dominion Bank said on Wednesday.

The bank's economics group said the outlook for next year has reversed course from earlier forecasts for rising prices, partly because government bond yields have risen faster than expected. Also, markets now expect the Bank of Canada to start raising interest rates in June rather than July.

It said listings this year have been stronger than it had thought, and market balance, as a result, will be "somewhat softer" next year.

In its previous forecast, TD said it expected home prices to rise 10 percent this year, and a small bump in of 1.6 percent in 2011.

TD's forecast for 2010 is largely unchanged at 475,000 transactions with an average price of about C$350,000 ($339,806).

Its updated view for 2011 calls for a modest pullback of 2.7 percent to C$339,700, with seven out of 10 provinces experiencing lower prices. Nationally, sales of existing homes are expected to slip in 2011 to 420,000 units.

British Columbia and Ontario are expected to have the steepest declines, down 3.4 percent and 3 percent, respectively. The three Prairie provinces may have small increases of between 0.5 percent and 1.2 percent, TD said.

($1=$1.03 Canadian)

(Reporting by Ka Yan Ng; editing by Peter Galloway


  1. I guess they can't come out and say what they really think...prices will go down 30% (rather than a measly 3.0%) Well. We shall see won't we? Only time will tell.

  2. A 30% drop over one year would require a Greece-like event IMVHO.

    I am thinking 5% nationally and double that or more in the most bubbly city (you know where), which perhaps drags on for a few years.

    However that opinion and $ know the rest.

  3. Larry and Paulb's numbers aren't very bearish tonight.

    but mine are. From West Van (which I regard as the centre of of the bubble)17 New 5 changed 3 sales.

  4. It's comical that you bears give credibility to mainstream media when their analysis is bearish, however when they are bullish they are completely out to lunch. Continue being wrong bears... 10 years and counting.

  5. Chad- that's actually a reasonable point. (on the media analysis)

    Bears are odd creatures. They looked at Amazon during the dotcom bubble and said- look the valuation is so excessive that Amazon would have to sell every book every published to justify it's market cap. They refused to buy it and broadcast it from roof tops.

    Then Amazon stock (or Nortel or 360 networks) doubles and triples and everyone gets to laugh at the stupid bear. The bear was clearly wrong and things can become even more over valued, and the powers will do everything the can to sustain bubbles.

    Eventually though reality catches up and the stock dropped 90% or like Nortel became completely worthless.

    Housing has even more vested interests and will be therefore be supported even more strongly.

    BTW - this bear has been blogging for just under two years not ten. I have looked at both sides and argued the pro-buying stance in 2009 when both rates and prices dropped much to the anger of some bears.

    We are back near where we were when I started blogging and had a percipitous drop in between, which some took advantage of. I do agree though that if another drop does not show up soon, with the increased inventory and lack of affordability, CHMC changes, and almost every bank now coming out and saying we have a national housing bubble- then I will have to admit defeat for now.

  6. Rent for $1750 or buy for $750K

  7. I hear ya Fish, I wasn't directly talking about your blog, I know there are bears like you that have only recently become bearish but the vast majority that I know have been bearish for pretty much as long as I can remember