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Housing starts fall in April

HEATHER SCOFFIELD

Globe and Mail Update

Latest comment posted at 4:23 PM EDT 08/05/08

The slowdown to 213,900 is lower than economists forecast ...Read the full article

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  1. J Kooman from Canada writes:

    The logic was not clearly spelled out by the author, and some clarification is required.

    The number of houses started reflected contracts signed a while ago, not the current market. The 12% drop from 243,000 to 213,900 actually identified (and verified, as suspected by many) the gradual cooling of the realty estate market activities since the end of last year.

    That 12% drop is a contributing factor to the the increasing hesitation for developers to risk their money into the realty estate today. This is validated by the drop in permit application.

    However, they are retreating but not yet running away.

    ...
  2. Aloha Eric from Toronto, Canada writes: "Innovative mortgage arrangements"? Isn't that what they called option ARMs (ie. subprime mortgages) in the US. Look what happened there...

    Sorry, but i prefer to get my real estate news from a non-industry source: http://housingpanic.blogspot.com/
  3. scott thomas from Canada writes: Aloha, why would you get your real estate news from an American source? The markets are fundamentally different.
  4. Paul G from Toronto, Canada writes: ...bad weather in February/March had a big impact in eastern Canada. In fact the snow piled by the City of Toronto along Black Creek was still more than 20 feet high yesterday!
    ...
  5. Aloha Eric from Toronto, Canada writes: Scott, there used to be a great vancouver housing blog, but the closest thing in Canada is www.greaterfool.ca.

    The parallels in housingpanic.blogspot.com to what is happening worldwide, and possibly in Canada are too hard to ignore. It's like a sneak peak into the future. Today's posts include a rehash from the past where the Chief Economist of the National Association of Realtors mocked the "Chicken Littles" who turned out to be right.
  6. David Gibson from Thawing in Ottawa, Canada writes: Aloha, I agree with Scott Thomas, why are you getting your information from that source? Not only that but it appears to be full of propoganda crap (IMHO).

    The cooling off of the real estate market here is much needed, and I am a home owner in a new development. My wife and I have a good household income and are very thankful that we could afford a house in the first place. There many who will justify renting, and there are many who will justify investing in a home...to each is own but when the prices get too high the younger people have a harder time purchasing. Here in Canada, at least as far as I know, there are no high risk mortgages (although I believe there are 0 % down payment mortgages?) as each potential borrower must prove himself/herself to be sound financially, including the 0 % down mortgages.

    I have heard that in the U.S.A. many who did not even have an income were able to get a mortgage...which spells disaster. The Americans needed this crisis in order to clean house and plenty of cleaning they did need. And indeed the sky is not falling here.

    Cheers!
    David
  7. Traciatim No_Lastname from Canada writes: Hey Aloha, that's an American site, the markets are really different. I'm on board with the 'many cities will see declines in prices soon' but I have my doubts that it will be as explosive and catastrophic as our friends to the south.
  8. David Gibson from Thawing in Ottawa, Canada writes: Not sure if my comment made it in or not...so here it is again (possibly 3 times...sorry). Aloha...just to add, each country has its own dynamics and I tend you find you a little panicky. Aloha, I agree with Scott Thomas, why are you getting your information from that source? Not only that but it appears to be full of propaganda crap (IMHO). The cooling off of the real estate market here is much needed, and I am a home owner in a new development. My wife and I have a good household income and are very thankful that we could afford a house in the first place. There many who will justify renting, and there are many who will justify investing in a home...to each is own but when the prices get too high the younger people have a harder time purchasing. Here in Canada, at least as far as I know, there are no high risk mortgages (although I believe there are 0 % down payment mortgages?) as each potential borrower must prove himself/herself to be sound financially, including the 0 % down mortgages. I have heard that in the U.S.A. many who did not even have an income were able to get a mortgage...which spells disaster. The Americans needed this crisis in order to clean house and plenty of cleaning they did need. And indeed the sky is not falling here. Cheers! David
  9. David Gibson from Thawing in Ottawa, Canada writes: Aloha, I agree with Scott Thomas, why are you getting your information from that source? Not only that but it appears to be full of propoganda crap (IMHO).

    The cooling off of the real estate market here is much needed, and I am a home owner in a new development. My wife and I have a good household income and are very thankful that we could afford a house in the first place. There many who will justify renting, and there are many who will justify investing in a home...to each is own but when the prices get too high the younger people have a harder time purchasing. Here in Canada, at least as far as I know, there are no high risk mortgages (although I believe there are 0 % down payment mortgages?) as each potential borrower must prove himself/herself to be sound financially, including the 0 % down mortgages.

    I have heard that in the U.S.A. many who did not even have an income were able to get a mortgage...which spells disaster. The Americans needed this crisis in order to clean house and plenty of cleaning they did need. And indeed the sky is not falling here.

    Cheers!
    David
  10. C D from Canada writes: The warning is in the air. So we have peaked. Now what is going to happen. Best case flat line, worst case nose dive. Pick your sides.
  11. Remembers 1989 from Toronto, Canada writes: This talk of Canada vs US and subprime is bunk. That's just an excuse for greedy homebuyers and builders to blame the bogeyman. They just made bad business decisions - like buying at the peak of the market. It has happened many, many times before and always has a different name - tulip mania, 49 gold rush, klondike gold rush, junk bonds, dotcom, hong kong 1999, oil at $200 and higher, etc. etc. The US and world RE cratered due to overbuilding. I guess we just live in a "bubble" here in Canada since we are immune to basic economics.
  12. god bless canada from Canada writes: i blame it on the media . if the news says we are in a recetion they keep ponding the news over and over again and guess what it happens its a self fuffiling profecy. there was a time when the new reported the news nowadays the news amkes the news whole different story. when the news comes out and say that the price of housing is droping people panic and list there houses they dont sell right away because there is a glut. whatever happened to homeowners buying a home to live in raise there familys in . now people move from house to house every 3-5 years how a house is not a home its a investment when it should be a home
  13. Aloha Eric from Toronto, Canada writes: Houspanic.blogspot.com is mostly a fun, sarcastic, scathing at times blog that is as extreme on the bearish side as the the housing industry's rose-coloured prognostications are on the dovish side. It's a balancing act that is necessary when the only thing that real estate agents say is "it's a great time to buy!".

    Calculatedrisk.blogspot.com is much better for actual facts, data, graphs and an insider's take on the housing industry.

    Everyone should go hit the archives of these blogs a few years back when the top economist in the country Alan Greenspan said there was no housing bubble. Same with Nicolas Restinas from Harvard's Joint Center for Housing Studies, same with David Lereah chief economist for NAR. Even Ben Bernanke a year back said subprime was "contained". How about the new NAR's chief economist Lawrence Yun who called bottom a year ago, that after Lereah called bottom a year a half before that.

    Bottom line, no one can predict if Canada will suffer the same fate as the US (and the UK now). If a significant portion of your wealth is tied up in real estate, you should spend the time to inform yourself of both sides to the story. Don't get your information from the globeandmail comments section! That includes my post...
  14. Emma Hawthorne from Canada writes: How many? These figures are confusing CMHC nonsense in need of translation. I'm guessing they mean per year.
  15. J Lee from Canada writes: This is totaly UnCanadian to imagine that real estate could go down. Let's get real, it's real estate! Our collective glee at house inflation is our national identity, and the real estate game a bigger spectator and participation sport than hockey. Everyday I get more brochures from real estate salespeople that now is the time to buy and prosper. And with extended mortgages and low repayment terms and even lower interest rates anyone can afford to get in. In fact you can't afford not to get in (at least according to them)! And of course our economy is so strong and disconnected from the US that none of their problems could possibly affect us - guaranteed! And surely you know by now that your house is the absolute path to your retirement dreams. And now, along the way to that blissful future you can even buy a second home in Arizona for 20% less than last year! ...Oh god, please make me stop; I'm making myself sick.
  16. RD Lone from Vancouver, Canada writes: Quoting government officials does nothing; tell me a single politician in the US who saw it coming. Basically they (along with the RE boards) cannot admit to a declining market because it would cause panic.

    Just look at the numbers realistically. At the very peak, US housing starts were 2.2 million (search for 'US housing starts historical') in February 2006 when the US bubble was about to crash. The 10 year average is about 1.6 million starts. Now compare it to Canada which has 10% of the population, thus for a 'stable market' we should be looking at 160k starts (on average) or 220k starts on a frothy market.

    Starts in Canada have decreased from 250kish annualized to 215kish. This is higher than the peak US rate on a per capital basis! Btw, current starts in the US are well below 1 million. A mere 4x Canada's starts!

    Read between the lines, analysts are "surprised" by the strength because anyone with basic analytical skills can tell that housing is hugely overbuilt (because specs own so much of the property) and set up for the fall. In the news yesterday there was an interesting article that 10% of Albertans owned an "investment property" (I think avg property price there is 450k or something). Connect the dots folks.
  17. bill k from Canada writes: Just like in the US where all the economists and greenspan said "no housing bubble" which we all know was a lie . Now in Canada we hear the same lies but the reality is starting to break through the lies as the Canadian housing bubble has popped and the fall is just getting started. Many people who own negitive cash flow "investment" properties are now starting to fear it maybe to late to get out with their shirt on. Also people here say the US banks have lent money to people with no money? One couple I know used their credit cards to get their 5% down payment and now use their line of credit to pay the monthly mortgage. Let's not even talk about 40 year mortgages. POP.....what was that?
  18. Brenda MacFarland from Calgary, Canada writes: The Calgary Real Estate Market is in a downturn. My view is that the only builder to make money this year will be the builder that builds no houses at all. The costs of construction is so high that the end result cannot be delivered at an affordable price. The biggest cost is land and development fees. This means that almost all single family housing was built in far away subdivisions miles from work, shopping and schools. Of the 7000 or so Calgary listings, 50% are in the far away edges of the city. Two cars are mandatory to live there. Calgary's market is depressed due to a structural misalignment, an oversupply of unaffordable housing. There is almost no drop in sales of houses listed in the affordable range of Calgary's average income of about $71,000. If Canada's housing strays from the affordable range the market will decline. It is the rule of Economics 101. To the extent that money is lent to people who cannot afford these mortgages we encourage the overbuilding of unaffordable housing. There is nothing wrong with 40 year mortgages, it helps people get into housing, provided it is the right kind of sustainable housing. I am not so crazy about no down payments. Where is the exibited discipline of saving for a downpayment as part of the process to ensure one intends to take making the payments seriously?

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