Saturday, February 11, 2012

Not much to say...

We have some softness but not a crash. Inventory is building up nicely.

HAM has shown up with selective buys in West Van. The New Year buying spree has failed to materialize yet. However prices are so high and out of synch with earnings that we will need a lot more than that to get a good correction going.

In fact we would be best served by a slow correction rather than a crash. Remember the Feds have been talking tough and that could mean decreasing the amortization period increasing down-payments for CMHC insured mortgages and Not increasing the CMHC cap. Basically reversing their own foolish policies which have helped feed the frenzy.

If we have a significant slow down, then they won't do any of these, and in fact based on previous experience will probably react by jumping into the market and intervening.

After Stephen Harper's visit to China, there is zero chance of Federal tightening up of Chinese off-shore ownership of Canadian assets, however the possibility of an extradition treaty would help flush out some of the really crooked money, as have the recent deportations of a couple of embezzlers back to China to face the music.

Of course the City could come up with rules on off-shore owners and leaving property empty. The CRA could make sure that the 25% is deducted from rents and submitted to the CRA by harassing 'Agents' who are ultimately responsible if it is not deducted. However both these would quickly run up against the strong housing lobby.

That's it for now. Steady to down until March would be good to give the Feds balls to act and then a slow summer and a very soft fall, that would be the best scenario for the bears.

A 5% YOY drop by September would be very nice. 5% which was obvious to all regardless of the manipulation of the stats. With 5% under our belts and new regulations we could see a change in psychology and a more rapid correction.

Surrey - SFH . The three areas I follow 1743 listings and 187 sales over the last 30 days.

Have a great week-end.


  1. Good post. I think it is the madness in Toronto that really concerns the Feds. If guys like Garth are even half right, then TO is still in an expansion phase, much like the Lower Mainland was circa 2008. Most of Western Canada, on the other hand, appears to have crested, and in some cases, is in the midst of an all out depression.

    I think right now that the biggest risk is that a whole generation of Ontarians will be trapped with large mortgages anchored to illiquid condos. For whatever reason, people are willing to pay massive amounts for new multi-family construction, and the Big Smoke is basically Miami when it comes to condo construction---weather not so much.

    Even with Vancouver's double bubble post 2009, condos that are less than five years old have been a poor investment. How do you think they will preform if the entire market is in decline for the next five or so years? I can't see why things would be any different in the winter wonderland.

    It is possible that Vancouver will be the sacrificial lamb in the Feds attempt to slow down Southern Ontario. Combine that situation with China's and it may turn out that quantitative tightening in Ottawa and Beijing is what finally ends up toppling the Best Place on Earth. Real estate might be local, but monetary and fiscal policy are international.

  2. [head slap to forehead]... Nothing counts in this country until it happens in Toronto. Duh!

  3. New Bosa development at Main near 1st Ave apparently has 1/2 sold out on opening day. Word on street: Asian buyers. It never stops.

  4. Eating at a congee house last night with spouse-y... conversations all around have the words 'developer' and 'tenant' spattered throughout. Everyone who's 26 and Chinese is a player in the condo market. Yer nothin' without 2 or 6 condos under your belt.

    On another note, have a friend with a unit in Woodwards... having problems already with plumbing, water going places it shouldn't but only in areas where the warranty has already expired. They are thinking of dumping it. And because it's Vancouver, they'd be using the money to buy another place.

  5. I am beginning to really like Rosario Setticati. He is calling it what it is ...a slow down and a reprieve form the recent lunacy...long may it continue

  6. The city of Vancouver can't do shit to restrict property ownership or usage. There is neither a legal precedent, nor is there a workable enforcement mechanism.

    Aside from cracking down on tax evasion at the Federal level, the only people who have the legal authority to do anything with regards to ownership restrictions are the Provincials.

  7. "I think it is the madness in Toronto that really concerns the Feds"

    All they care about is debt levels, IMO. If prices stay high but debt levels start waning they could care less.

    But of course the problem is that Canadians are attempting to "keep up with the Wangs" and taking on large amounts of debt to do so. I think we'll soon find out how much sausage there is at the party.

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