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Housing slump deepens as prices drop most in 26 years

LORI MCLEOD AND DAVID EBNER

From Saturday's Globe and Mail

Latest comment posted at 12:35 PM EST 14/11/08

Figures ‘suggest the bust has begun' ...Read the full article

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  1. CallofDuty . from Canada writes: The snowball rolling downhill seems to be picking up steam and getting bigger.
  2. Silver Standard (America is a welfare queen superpower) from Canada writes: Well guys in a few years I will finally be able to afford a house. I remember earlier this year I was insulted on this forum for saying such a thing. Prices are going to fall like a rock and we are talking AT LEAST early 90's prices but it should be early 80's/late 70's for the market to really get on track because peoples REAL pay stopped growing after 1980 (as report here awhile back).

    All people have to do is strip away all the credit Canadians have and that is their real wealth, REAL inflation (and debt) decimated speanding power to the point we are far worst off than in the 70's even with all the trouble then. PLUS back then we made everything in North America...now NOTHING. So if you take that in to consideration who knows what will happen.
  3. Raphael Langlais from Toronto, Canada writes: The lag between the US and the Canadian economy: 2 yrs. Not as bad, but not immuned. My guess is that Harper will have to mute about how good our Banks are.
  4. U M from Canada writes: Haven't heard from you in a while...
    Super Farmer, Carmen Rae, Greg Van Zandt, The choices we make decide our place in life, and Oh Really....
    care to chime in you guys???
  5. J Hanner from London, Ontario, Canada writes: Canada is just lagging the U.S. in the house decline.

    Here in London and St. Thomas it is a buyers market and no one is buying because the prices are going down each month. With the amount of Layoffs happening around here,..... there are a lot of people who HAVE to sell and when the Pogey runs out in 2009 you are going to see a Tsunami of foreclosures and panick selling. Just like our neighbors in Michigan and Ohio.

    Why buy into the market when it is still over priced? Just wait and let the over extended home owners die off.
  6. Peter Stern from Toronto, Canada writes: Well let's look at what happened in October... Banks raised rates or kept them high even as governments were dropping the bank lending rates. People aren't stupid... they know that this credit crunch is a short term problem (short-term defined as that it will get resolved in less than a year) and so people are holding off until banks drop their rates and things settle down. And the only people that put their house up for sale in this market are the ones who are desperate. Desperation is a bad thing to have in negotiations. I would not be surprised if things looked like they're bouncing back by December because it takes a little bit of time for the effects of the liquidity the government pumped into the market by buying insured mortgages (which they'll very likely make money on).
  7. Peter Stern from Toronto, Canada writes: Oh and if anyone here is hoping for 'early 1990s prices', that's wishful thinking without having 10% or higher unemployment and 10% or higher mortgage rates. I remember very clearly in the 1990s that the housing market started to come back to life when rates dropped below 10%.
  8. J Hanner from London, Ontario, Canada writes: It will be interesting to see how MPAC in a year or so adjusts the values down of the Tax assessments. The municipalities then will be down in tax revenue.

    Do you think that the Municipalities will cut spending to meet the lower revenue? Not a chance my friend.
  9. s c from Canada writes: Different markets across Canada have experienced different growth and will experience differnt reductions. In my area, prices seem to increase 5%-6% each year. I would agree that sales are down as I have seen houses taking much longer to sell lately but I haven't seen prices falling much. I've been following them out of interest as I bought and sold within the neighbourhood about a year ago.
  10. Silver Standard (America is a welfare queen superpower) from Canada writes: Peter Stern from Toronto, Canada writes: Oh and if anyone here is hoping for 'early 1990s prices', that's wishful thinking without having 10% or higher unemployment and 10% or higher mortgage rates. I remember very clearly in the 1990s that the housing market started to come back to life when rates dropped below 10%.

    ((Actually we could see 10 percent or higher unemployment because its about 16 percent in the USA right now if you calculate it like it used to be so I wouldn't be surprised if it already is 10 percent in Canada. They don't count it right so who knows what the Canadian number is but in the website below you will see REAL American numbers done by REAL private economists that fortune 500 companies use to get around the government JUNK numbers.

    http://www.shadowstats.com/alternate_data
  11. Peter Stern from Toronto, Canada writes: Another thing just occurred to me though... if anyone is looking at moving out of the GTA to somewhere more quiet and wants to retire, moving to Windsor, St. Thomas or other auto-heavy city could be a really good opportunity. You'll get a place as big or bigger than what you have for 1/3 the cost. It won't matter that there are few jobs there since you'll have a nice stash of a couple of hundred thousand dollars or more left over from moving.
  12. Raphael Langlais from Toronto, Canada writes: @ Peter Stern, It's not that easy to forecast...
  13. Magnus Torontonius from Canada writes: You just can't seem to win in this market. Housing prices are finally correcting themselves after being inflated at a tremendous rate for over a decade, and just when you think you're able to afford something, mortgage rates start to rise putting that home out of reach again. Almost makes more sense to just rent.
  14. Fred Draper from Kingston, Canada writes: J Hanner from London, Ontario, Canada writes: Canada is just lagging the U.S. in the house decline. Here in London and St. Thomas it is a buyers market and no one is buying because the prices are going down each month. With the amount of Layoffs happening around here,..... there are a lot of people who HAVE to sell
    _________________________________________________________

    The CREA stats say it was a record September. London prices, particularly in the North, are up 2.7% year-over year. London never caught the bubble and is MUCH cheaper than K-W
  15. Peter Stern from Toronto, Canada writes: Silver Standard, I've read the Shadowstats site before... my opinion is the guy who writes it needs to get on some meds for his mental issues... I can find way bigger holes in the info at Shadowstats than government provided data.
  16. Raphael Langlais from Toronto, Canada writes: Sorry Peter, my last comment was for your first post.
  17. Burlington guy from Canada writes: I would like to see some additional stats on medians as well as averages. How much of this is the higher end of the market falling more than the average or lower part of the market? I assume all levels fall, but generally the higher end rises and falls first and quickest.

    bg
  18. Peter Stern from Toronto, Canada writes: Raphael Langlais, what's not easy to forecast? I wasn't forcasting anything... I was talking about what happened in the past that I observed first hand.
  19. richard kymbal from toronto, Canada writes: Funny thing how MPAC has assessed my home for 2008 with phased in INCREASES until 2012...the increase is up while my property value is going down...perfect timing MPAC.

    More than likely they have assessed values, reassed when neccessary without releasing assessments and waited in the wings to unleash the assessments just as the market takes a downturn.

    Homeowners always gets scr@@d
  20. Ontario Man from Canada writes: Loki Peterson from Toronto, Canada writes: I am praying for a major housing collapse. I hope that all those idiots who did a full reno of their homes lose big money.

    ---------------------------

    Why? Is it envy or jealousy?
  21. Moe Unting from Calgary, Canada writes: Silver Standard: prices may be lower, but your problem will be actually getting a mortgage; if you cant get one now, and with banks looking at tighter lending rules, theres no way you are going to get one later. Everyone wins if you could get a mortgage, now or later. Never means one less buyer.

    October to February are troughs in the real estate cycle so sales are down from September; whats gone is the speculators, who were inflating prices and flipping. Thankfully it is becoming a balanced market.
    The argument for a real estate crash is similar to the predictions of oil heading north to $200. Nobody really knows and extreme predictions are just that. Can you believe the price of gas?
  22. s c from Canada writes: richard kymbal from toronto, Canada writes: Funny thing how MPAC has assessed my home for 2008 with phased in INCREASES until 2012...the increase is up while my property value is going down...perfect timing MPAC.

    More than likely they have assessed values, reassed when neccessary without releasing assessments and waited in the wings to unleash the assessments just as the market takes a downturn.

    Homeowners always gets scr@@d
    ----------------------------------------

    This should really hurt home owners with large expensive homes. Increases assessments don't directly impact property taxes as the tax rate can actually decrease. The tax rates is essentially taxes needed divided by property assessment values. If assessments come down, they will likely come down farther for the big expensive homes meaning an increase in taxes for those with more modest homes (as assessments will come down by less).
  23. J Hanner from London, Ontario, Canada writes: Fred Draper from Kingston, Canada writes: The CREA stats say it was a record September. London prices, particularly in the North, are up 2.7% year-over year. London never caught the bubble and is MUCH cheaper than K-W

    London is heading into the toilet just like anywhere else. There are neighborhoods now that you don't want to be in after dark. London now is much different than even 10 years ago. SOHO neighborhood in particular.

    P.S. - the last thing to believe is Gov't stats and the Realtors. The Realtors want to keep this racket going as long as they can. Self interested all the way.
  24. Crimson The-Red from Canada writes: Just some real estate agents and moving companies making less money here, nothing much else to see.
  25. Paul N from Wellington County, Canada writes: J Hanner from London, Ontario, Canada writes: It will be interesting to see how MPAC in a year or so adjusts the values down of the Tax assessments. The municipalities then will be down in tax revenue.

    Do you think that the Municipalities will cut spending to meet the lower revenue? Not a chance my friend.

    J - a little simple math for you. Your municipality sets their budget for the year. Let's say it is for $1000. Let's also say all the houses in your little town were assessed at $10,000. The town simply divides all the assessments into the budget to get a mill rate - in this case, 10%. They tax everyone at 10% of their home value, and bingo, they rake in the $1000 for their budget.

    Let's say MPAC reduces every home owner's value by 50%, to a total of $5000. Your little town now divides $1000 by $5000 to get a mill rate of 20%, and bingo, they still rake in their $1000 for the budget.

    MPAC assessments must be one of the must misunderstood numbers. It doesn't matter how much you go up, per say, but how much you go up compared to the average. If your home goes up more than the average, in simple terms, your taxes will rise, as you would bear a larger portion of the town's tax burden. If you rose less than average, your portion goes down with it.

    As for prices - I don't see a 90's style collapse, but there are some markets that will correct harder than others, and even pockets inside some cities that will fall more. The market has a pretty good way of shaking out value and leveling the playing field. If I was a first time buyer, I'd wait a bit, but if we see any glimmer of recovery in the spring, the housing market will rise again. (IMHO - I am not a realtor, banker or financial analyst. Just a guy with a house, a mortgage and a job..for now!)
  26. steve rayvonne from Halifax, Canada writes: Lets not forget that while we will all be concerned about the price of our homes going down we still have to maintain a long term view unless we are trying to make a quick buck. Just like the stock market there are some valleys and peaks. But if you look at any long term charts of investing ie. andex chart or real estate you will almost certainly come out on top. And lastly, the last time I checked a home was where you could rest your head at night and enjoy your friends and family - lets not forget most of us are richer than 90% of the world........
  27. john smith from halifax, Canada writes: I hate this website sometimes. Why can't they provide links to websites where you can get more detailed info like the BBC website does?
  28. Raphael Langlais from Toronto, Canada writes: @ Peter Stern: 'that's wishful thinking without having 10% or higher unemployment and 10% or higher mortgage rates'

    You can't just use those numbers and make a direct relation without taking in consideration the whole picture. Bankruptcy is increasing with interest rate decreasing from low, to very low. We are in a deaper crisis than in the '90s. Nothing is fixed, just delayed. The economy is eating sugar. The cleaning is not over.
  29. Paul N from Wellington County, Canada writes: Amen, steve rayvonne, amen.
  30. Fred Draper from Kingston, Canada writes: J Hanner, where is SOHO? I looked at some rental property on Little Grey and wasn't impressed. Plus the ole' Bucket of Blood tavern right there.

    I've got some stuff on Oxford right now. Not gorgeous but it pays the bills.
  31. RD Lone from Vancouver, Canada writes: Since Carmen and Greg seem to have disappeared I'll be the devil's advocate.

    Something about chicken littles, then something about how Canada has no sub-prime. Oh yeah, if you hold on to your house for 50 years it is guaranteed to go up and you will be priced out forever if you don't take advantage of this short drop in pricing. Calgary is immune because it has oil and Toronto is the center of the universe so everyone will move there eventually anyway.
  32. Dave Martino from Toronto, Canada writes: there's bubbles everywhere, unless the lavish lending didn't exist in the places you people speak of.

    we're in a complete crash of the real estate market- globally. If there are countries that had sensible lending the last 5-10 years, they'll be unaffected (their prices won't be inflated obviously).

    throw the sub-prime bologne out the window. Lending institutions got extremely greedy. Some countries were much worse. Don't fool yourself into thinking that because the U.S had horrible lending practices, that Canadian lending was sensible.

    you don't have to be John Nash Jr. to figure out 5% down on a $420,000 would have lead you into problems in the future
  33. Guy Olivier from Columbus, Ohio, United States writes: 'Loki Peterson from Toronto, Canada writes: I am praying for a major housing collapse. I hope that all those idiots who did a full reno of their homes lose big money.'
    ------------
    Man, someone hasn't had their fiber today.
  34. P N from Mississauga, Canada writes: I don’t get too excited with this sort of old news. People will go on moving about their lives for now. Nothing will really happen until the pink slip starts to pick up in 2009. Plus most people will have $$$ to get them though a couple of months. Wth the added safety net that we got, most will survive the winter, spring and the summer. Wait till you see next fall. That&8217;s when you should get really excited. I am looking forward to it. You will see for sale sign being lit up like your Christmas tree. In my area I have notice about 15 houses that still have the for sale sign up. I see them everyday on my way home from work. It's been up for a while now. To me that is a better indicator that what some of these real estate Magician post up on the G&M. Just my 2 cents.
  35. Dick Garneau from Canada writes: Thousands of sellers are removing their homes from the market. They are deferring until the market improves.
    Only those who bought first, sold second are forced to sell at a loss. This inventory will dry up soon in most areas.
    However for prices to return to previous levels will take 3-5 years.
    We are not the USA which grossly overextended themselves.
  36. Hey, that's my armadillo, get your own. from Canada writes: It's great for those that may benefit from lower house prices but must some of them be so mean-spirited about it? Last I looked, everyone wanted to make a buck when they could, and if good fortune and/or hard work has provided the opportunity, who can blame anyone for exploiting it? (Only losers could, I should say)
  37. Dave Martino from Toronto, Canada writes: i thought there was another election called. It seems most people are voting remax....based on the signs
  38. Silver Standard (America is a welfare queen superpower) from Canada writes: Peter Stern

    The numbers on this site are right on the money, people just don't like reality. Bad news is a bummer so they don't want to hear it.
  39. Dave Martino from Toronto, Canada writes: It's great for those that may benefit from lower house prices but must some of them be so mean-spirited about it? Last I looked, everyone wanted to make a buck when they could, and if good fortune and/or hard work has provided the opportunity, who can blame anyone for exploiting it? (Only losers could, I should say)
    --------------------------------------------------------------------------------------

    you're absolutely right, there's no need to be mean-spirited about it. I don't think I have been (i hope not). The frenzied sellers are the ones who were patting themselves on the back last year for their investment 'brilliance'.

    Nothing raises an IQ like a bull market. Even turkeys fly in a hurricane
  40. Carmen Rae from Calgary, Canada writes: Oh, I'm still here. I'm no fool - I've sold all my properties in Calgary because it doesn't look good. I may have been a little late to comprehending how bleak the outlook is, but that's what happens when emotion overpowers logic. Thankfully I made it out, just not at the peak when I could have made more money. Can't time everything...
  41. Statman Sam from Who cares its Canada, Canada writes: We don't have subprime but we did have 40 year no money down.
    Anyone interested in a 400,000 dollar mobile home in beautiful Fort McMurray.
  42. John McCain from Canada writes: We were looking at some recreational properties north of Toronto in Muskoka and the sellers are still delusional up there stuck in the year 2004 where they sell an acre of swampland well outside of Muskoka for $300K.

    I'll know we have hit bottom when those recreational properties start to reflect market conditions, probably at least another year until the sellers come to their senses.
  43. Marcus L from Calgary, Canada writes: If you're an already pre-approved first-time home buyer who received their pre-approval this past summer, I would make a quick move now if you've found the right home at a price you like. Buying next year will result in a full 1.5% mortgage interest rate increase (i.e. Bank Prime negative vs. Bank Prime 1% mortgages) , eating up the large majority of the savings you were hoping to achieve by buying at a lower price.
  44. Dick Dupa from Toronto, Canada writes: Do not care about all this BS. My home is to give me a shelter, that is all. Whether it costs less or more...I will allow idiots to worry.
  45. The Natrix from Toronto, Canada writes: Wait, don't listen to this article.. there's another one here on Globe Homes saying wait till spring for Multiple Bidders!!
  46. Stude Ham from Outremont, Canada writes:

    well what did you expect when the flatulent flaherty no-brains got involved into changing the house purchasing rules?

    harper's biggest blunder so far has been flaherty in finance.

    watch even worse to come with that mike harris cabinet reject in control.

    simple solution to all this...

    DUMP HARPER!
  47. carole campeau from Mtl, Canada writes: Just starting ...
  48. The choices we make decide our place in life from Canada writes: U M from Canada writes: Haven't heard from you in a while...
    Super Farmer, Carmen Rae, Greg Van Zandt, The choices we make decide our place in life, and Oh Really....
    care to chime in you guys???

    ================================================
    Sure, I'll bite.

    Actually this current market provides a lot of opportunities for the astute investor. I already have one rental property with tenants paying off the mortgage for me. Now I am eying several other properties as buying opportunities. Unfortunately I don;t live in Toronto, Vancouver, Edmonton, Calgary or Montreal so I am not seeing the huge decreases in sale values as those markets. In fact the property values here are still up 2.2% over last year. But the volumes are down so I may still get my opportunity. If the right opportunity presents itself I will probably buy 1 or 2 town houses or one multi unit property ( a 3-plex to a 6 plex) within the next 2 to 3 years. And again, the tenants can pay off the mortgage for me. The rent that I am collecting for my current property is covering my mortgage, property tax and insurance. My only out of pocket is upkeep. After depreciating the appliances and claiming expenses, including 6% of my mortgage interest and utilities on my principle residence and qualifying expenses on my vehicle I am doing quite well even in the current market conditions. Several people in my office are also looking at buying rental property opportunities. For some it will be their first rental property, others already have some. Also, with the construction slow down there will be a lot of trades people out of work. Not only will we be able to finally get some trades people to commit to renovation contracts, we will be able negotiate better deals on the labour costs.

    Thanks for asking. Its nice to know you have an interest.
  49. The choices we make decide our place in life from Canada writes: Stude Ham from Outremont, Canada writes: DUMP HARPER!

    =====================================

    Stude: Learn a new song. This one is old.

    You had your chance. Harper is still here. Deal with it.
  50. Bob Robert from Manitoba, Canada writes: Peter Stern from Toronto,'I can find way bigger holes in the info at Shadowstats than government provided data.'
    Okay Peter - care to enlight everyone on your wisdom?
  51. Robert Loblaw from Canada writes: John McCain - Actually John, Toronto prices will bottom somewhat after cottage country tanks. Prices start climbing in major urban centres before the go up in the smaller communities surrounding. Eventually, demand for real estate (in an escalating market) ripples out to the smaller towns. Cottage country follows, as people seek recreational properties as investments, instead of buying inner city condos & flipping them. Conversely, people dump discretionary purchases i.e. investment condos, cottages, etc,. long before the family residence gets sold. In early 1990 just as the bloom was coming off the real estate market in Toronto, cottage country was awash with fire sale priced seasonal homes, several condo projects in Collingwood (actually, Blue Mountain) stopped construction as the market dried up. It wasn't until late '93 - early '94 that the Toronto market hit it's lowest point. Watch Collingwood now - hundreds of condos listed for sale and no buyers, and some pretty fancy large second homes coming on the market as resales. There will be more to come, as people dump the debt load to get out from under. Two summers ago I learned of the sale of an 1.25 acres of 'waterfront' on Lake Joseph - actually it was a cove filled with rushes and reeds - a swamp in otherwords, for $1.35 million. I'd be surprised if the owner could find a buyer for 1/2 that amount today. Keep your powder dry - you'll find some great opportunities in a year or so.
  52. Peter Murray from toronto, Canada writes: It is a pity what is happening in our economy.
    There is no unbiased source of information. (CREA does not count neither does CMHC).
    Irrational exuberance was stoked by the government and by the real estate associations.
    Monetary policies were relaxed to ease the situation in the early 2000's when we should have been reeling in the price to account for real inflation which includes the inflated consumer basket which includes houses and cars....

    We as a nation got greedy for bling and as a blingy pimp with no cash when the loans come due we are going to get punished.......
    Will it be the right group punished.... doubt it.
  53. Happy Place from Canada writes: Natrix - I saw that article on the G & M site this morning also, where CREA claims multiple offers will be happening again this spring, citing the Obama factor. Unbelievable.
  54. Pacific Volcano from Ottawa, Canada writes: Dick Garneau from Canada writes: Thousands of sellers are removing their homes from the market. They are deferring until the market improves.
    Only those who bought first, sold second are forced to sell at a loss. This inventory will dry up soon in most areas.
    However for prices to return to previous levels will take 3-5 years.
    We are not the USA which grossly overextended themselves.

    ------------------------------------------------

    Now the price of Toronto is back to the 2006 level, on its way down, for it to at this level again next time when it is on its way up, it will be 5 years.
  55. John McMortimer-Boyles from An Undisclosed Underground Location Safe From Nuclear Attack, Canada writes: Paul N from Wellington County, Canada writes: MPAC assessments must be one of the must misunderstood numbers. It doesn't matter how much you go up, per say, but how much you go up compared to the average. If your home goes up more than the average, in simple terms, your taxes will rise, as you would bear a larger portion of the town's tax burden. If you rose less than average, your portion goes down with it.

    -----

    Very good point Paul N. Had someone screaming out my way last year how his property taxes were going to go up over 50% because of increases in market value assessment of his home. In actuality, the assessed value of the home went up 50%, which was less than average for the city, and his taxes went up less than the 7% average mine did.

    Over the last three and a half years, the value of my house has almost doubled, but my property taxes only went up about 20%. They city's tax revenue requirement went up the same, and the value fo my house has pretty much tracked the average.

    In some neighbourhoods, where assessed property values have increased less than the average, they've actually seen property tax decreases.
  56. Carl Hansen from Canada writes: Housing is up in price again this month in Manitoba because we get free electricity. We Thank you all in the most of the rest of Canada for those transfer payments.
  57. jeff russell from Canada writes: Loki Peterson from Toronto, Canada writes: I am praying for a major housing collapse. I hope that all those idiots who did a full reno of their homes lose big money.

    Wow what an ignorant person you are! I don't think you realize how wide spread the effects will be if the housing market collapsed like you wish. Just remember that alot of the success the market has enjoyed over the last few years is because of people renovating their houses and such regardless if they borrowed or not to do so.
  58. W.A. Darnell from Canada writes: Move to Nova Scotia where rural real estate is still a great buy compared to most of Canada!! Even top-end homes/estates are a bargain. Take a look at the market in the Annapolis Valley... beautiful homes at great prices compared to the Ontario and BC market.
    http://tinyurl.com/6mmbmw
  59. J. Kenneth Yurchuk from Canada writes: It would be nice to see a breakdown by major market.
  60. Dick Dupa from Canada writes: Pacific Volcano from Ottawa:

    TSX is back to mid 2005 (JFYI)
  61. J Hanner from London, Ontario, Canada writes: Paul N from Wellington County, Canada writes: J - a little simple math for you. Your municipality sets their budget for the year. Let's say it is for $1000. Let's also say all the houses in your little town were assessed at $10,000. The town simply divides all the assessments into the budget to get a mill rate - in this case, 10%. They tax everyone at 10% of their home value, and bingo, they rake in the $1000 for their budget.
    -------------------------------------------------------
    Hey Paul. I have NEVER seen my assessed Value go DOWN. I have never seen my Mill Rate go down. Please don't think that I am an idiot. Every year ( 22 years ) the Township Mill Rate goes Up, and even worse.... the Elgin County Budget portion on my tax bill goes way up because of the 3 long term care facilities and escalating Police and Ambulance costs. I know what I am talking about. Mill Rate Up. Assessed Value Up.

    Maybe where you live. Different. Not here. and I am on fixed income. I will have to go and live with my son because taxes are stripping away any money I have saved. Thank God I have my house equity and it was paid off in 1983. That is all I have to fall back on.
  62. J. Kenneth Yurchuk from Canada writes: As near as I can tell, outside of Calgary and Vancouver, Canadian real estate never really reached the bubble phase, and as a result we'll see a correction (15-20%?) and rebound as in a normal seven year cycle. Drop for a year or so bottom out, and rise for five years. This is fairly typical, although I expect in selected markets, it could get a little steeper than that.
  63. J Hanner from London, Ontario, Canada writes: Fred Draper from Kingston, Canada writes: J Hanner, where is SOHO? I looked at some rental property on Little Grey and wasn't impressed. Plus the ole' Bucket of Blood tavern right there.

    It is South Of HOrton. Mostly East of Wellington. Good luck.
  64. Peter Stern from Toronto, Canada writes: Raphael Langlais from Toronto, Canada writes:'You can't just use those numbers and make a direct relation without taking in consideration the whole picture. Bankruptcy is increasing with interest rate decreasing from low, to very low.' Sure I can. Interest rates and the level of employment and the participation rate are the biggest factors that affect real estate. And if you've been doing your homework on this recent credit crunch you'd know that GOVERNMENTS have been dropping their BANK RATES (the rates that banks pay to borrow from the governments)... banks did not initially drop CONSUMER interest rates. I personally was sending strong messages to my bank criticizing them for not dropping their prime rate - which affects me directly since I have a variable rate mortgage. And in the case of businesses going under... if a business is losing money during somewhat good times (such as Ford, GM and Chrysler did), they're going to get killed in a downturn. This downturn is causing a housecleaning of unviable businesses and business models. If a company is burning cash, interest rates can go to zero and they'll still burn cash... No bank is gonna give a low interest rate to a company in danger of going under. Companies like that need to get weeded out. It's healthy in the long run.
  65. St Fort from Victoria, Canada writes: Things are still great here in Victoria.

    It is a great place to have the right property at the right price.

    Our prices have been holding steady. Not a lot of places in Canada where you really don't get snow.

    The cherry trees bloom towards the first week of March.

    We have deer in our back yard and eagles in our trees ........,and we live 10 minutes by car from the down town core. Perfect!!

    I have been here since 1982. My home town is Perth Ont. The more anyone from Victoria tavels the more one really appreciates what a truly great place this spot is.

    I think that over 50% of people who live in the greater capital area are from other parts of Canada. I came down here in 1982 from Edmonton for a wedding in May. I moved down here to stay two months later.

    This is a a great time to invest in a property here.....as there are loads of new homes on the market. Sales are down,with consumer confidence down all over Canada. When 'boomers' retire quite a few will head to the island. It is like night and day living here compared to Vancouver.

    Anyways......I am sounding like I work for tourism Victoria.......but this truly is a special place.

  66. B C from Toronto, Canada writes:

    For most parts of Toronto, the prices have NOT corrected at all. Believe it or not, the TREB claims are accurate -- that last year's average* price jump was due to a greater number of high-end homes skewing the number, and this year's *average* price decline compared to 2007 is because of the small number of high-end homes.

    So -- those of you who are saying that Toronto has already corrected... you are wrong. Very few homes have dropped even 3-4%, let alone 10-20% like the *average     has.

    The MPAC re-assessments were probably done in late 2007 / early 2008 with some 'buffer' thrown in there to try and account for some presumed gains in later 2008 that never happened. This is why many of them seem so ridiculous now. I think that MPAC should be forced to have a clause in their assessments that says 'we will buy your property at this price'... that would force them to put some actual thought & effort into their job!

    Whatever tax gains they are getting with the huge assessment increases will be taken away by higher Customer Support costs because of all the complaints!
  67. Adil Burney from Canada writes: Kudos to CREA for finally not trying to spin this positive, although it becomes laughable at -10%! Housing market is falling off a cliff. I have been warning of this on my blog for a year. Feel free to check it out:

    http://canadahousingcrash.blogspot.com/2008/11/crea-predicting-negative-prices-for.html
  68. Back to the Future Past History from Canada writes: HI Everyone, Three things contribute to a healthy real estate market: 1) Employment 2) Low interest rates 3) Affordable prices for decent product. In the thirty years of appraisal of real estate I have rarely seen all three at the same time. Calgary was like that from 2005 to June 2006 until every Tom, Dick and Harry jumped into the speculation game. I will let all you people that are waiting in to buy in at much lower prices; Don't wait if you need a house, and have a job and can get some bank to lend you the money. Just make sure you buy good real estate. Even in the brutal market conditions of Calgary high quality real estate is holding up quite well, it is the crap that is getting hammered on price. We haven't quite cleaned out all the speculators yet but the next 6 months should do it. Would I buy their stuff? Only for ten cents on the dollar. Lastly I wouldn't be too quick to write down the cottages in price. This economy is going to force many baby boomers to early retirement and many will downsize and give up the city home for the country lifestyle. The problem with the poor lending practises of the past wasn't just that the borrowers were of poor quality ( sub prime) but the real estate pledged was also crap. The really sad thing is that for the basics it costs the same to build quality as not. Buy quality, settle in and be happy.
  69. Back to the Future Past History from Canada writes: HI Everyone, Three things contribute to a healthy real estate market: 1) Employment 2) Low interest rates 3) Affordable prices for decent product. In the thirty years of appraisal of real estate I have rarely seen all three at the same time. Calgary was like that from 2005 to June 2006 until every Tom, Dick and Harry jumped into the speculation game. I will let all you people that are waiting in to buy in at much lower prices; Don't wait if you need a house, and have a job and can get some bank to lend you the money. Just make sure you buy good real estate. Even in the brutal market conditions of Calgary high quality real estate is holding up quite well, it is the crap that is getting hammered on price. We haven't quite cleaned out all the speculators yet but the next 6 months should do it. Would I buy their stuff? Only for ten cents on the dollar. Lastly I wouldn't be too quick to write down the cottages in price. This economy is going to force many baby boomers to early retirement and many will downsize and give up the city home for the country lifestyle. The problem with the poor lending practises of the past wasn't just that the borrowers were of poor quality ( sub prime) but the real estate pledged was also crap. The really sad thing is that for the basics it costs the same to build quality as not. Buy quality, settle in and be happy.
  70. David any from Loon-a-Tick, Canada writes: What is going on in the Ottawa market? I was told the value of homes there never go down because government workers keep the houses and don't sell( cash for life). Will the prices drop at all?
    Any body?
  71. b W from Canada writes: Back to the Future Past History from Canada writes: Three things contribute to a healthy real estate market: 1) Employment 2) Low interest rates 3) Affordable prices for decent product.
    Now let's look at Toronto where people are saying that the prices will not fall.
    1)
  72. Don Quixote from The autumn mellow Mosquito Belt, Ont., Canada writes: Come next spring I expect LOWER taxes on my overvalued more than a quarter of a century owned deteriorating shack, and the mill rates adjusted to reflect that - after all the market value assessment is supposed to be fair !?!
  73. d p from writes: Carl Hansen from Canada writes: Housing is up in price again this month in Manitoba because we get free electricity. We Thank you all in the most of the rest of Canada for those transfer payments.

    Carl I think you need to look at the data from the Winnipeg Real Estate Board more carefully.

    House prices in Winnipeg peaked in May 2008 with 1564 sales and an average price of $204411.76

    For October 2008 there were 981 sales and an average price of $186952.08

    Some of the decline is seasonal, but this year's decline is more rapid and the average days on the market is increasing. Read the Winnipeg Real Estate Board press release fro October, very carefully...then do some analysis.

    I don't think we will see higher house prices in 2009. May 2008 was our peak in Winnipeg for the next few years
  74. Michael Peters from Vancity, Canada writes: I have never, and I mean NEVER, agreed with a single thing that Loki Peterson has ever posted. Until now.

    I must confess, I do feel a somewhat strong sense of schadenfreude watching real estate values fall into the toilet. Why, you might ask? Simple. As a future first-time home buyer, and I think I'll be so bold as to speak for all of the smart ones here, I've totally balked at the values of homes for the last few years, especially here in Vancouver. The prices simply were not sustainable and did not reflect economic fundamentals. How on gawd's green earth were people affording $1,000,000 homes and their BMWs/Audis/Bentzs etc.? Easy. DEBT. A lot of people were priced out of the market because people were dumb enough to take on crazy mortgages and bid prices way too high.

    Oh. What's that? Bit off more than you can chew? Pardon me while I stand back and watch you deal.
  75. b W from Canada writes: Sorry, hit the send key
    Back to the Future Past History from Canada writes: Three things contribute to a healthy real estate market: 1) Employment 2) Low interest rates 3) Affordable prices for decent product.
    Now let's look at Toronto where people are saying that the prices will not fall.
    1) Employment - numerous layoffs in the banking and financial industry will have trickle down effects on professional firms. Lower bonuses will also take their toll. Automotive areas (Oshawa, Oakville, Mississauga, Brampton) will suffer in the new year. Surrounding areas will also fell the impact.
    2) Low interest rates - prime was 3.75% in 2002 with prices still dropping, and is 4% now. Prime minus mortgages are gone so the advantages of these ahve been reduced. I will also assume that this refers to mortgage costs, which have risen with the elimination of the 0 down/40 yr amort/interest only mortgages. 5 year posted rates are still >7%.
    3) Affordable prices - who thinks the rates in Toronto are affordable? They are not as bad as Vancouver but still above the average.
    Let's also look at other facts, it takes a while for prices to start falling as people must get sued to the fact that their houses are not worth what they thought. In addition, I have seen conditions on sales contracts that did not occur two years ago back (conditional on sale of house, financing) meaning that more of the sales will fall through.
    So, I do not understand how anyone can predict a good spring as all indicators point downwards. But I guess we should all keep on hoping.
    And, I do own a house so while I am not rooting for a decline, I am realistic that my house is worth less today than last year. But then again, I am not selling so who cares?
  76. Dave Hasler from Edmonton, Canada writes: I see optimism and denial is alive and well in vistoria BC ......

    St Fort from Victoria, Canada writes: Things are still great here in Victoria. ........

    Really?

    I have friends that moved to Edmonton for work this past year. They are trying to sell their house in Victoria. The house went on the market for $575,000 earlier this year and was down to $525,000 when they finally took it off the market last month. No real bites and nothing in the area was moving either. The real estate lady worked hard and had several open houses - and the 'price was right'. The house is recently renovated and well kept. Now it is going to be put on the rental market because of the situation.

    You are right - Vistoria is a nice place where the 'blue sky' market which weathered the housing crunches of the 1980s is failing as badly as the rest of the world. The only market that seems intact is the $2million plus which is so 'niche' that it doesn't bear including in most conversations about real estate.

    Sad to say - even in LaLa land there is not much good news.

    2010 or 2011 should be OK. 2009 is a write off.
  77. Peter Stern from Toronto, Canada writes: Bob Robert from Manitoba, Canada writes: 'Okay Peter - care to enlight everyone on your wisdom? '

    Well for one thing, the data isn't seasonally adjusted. I could explain the importance of that, but then I'll end up writing an essay. Also, when it comes to CPI, they don't accept the possibility that consumers can substitute one product for another (the 'old way' government used to do CPI stats), whereas in reality, people can... and government stats reflect that. John Williams (the guy who runs ShadowStats) is obsessed with M3 (the amount of money in the system)... he thinks if there's more money, there automatically is more inflation... which is WRONG... for the simple reasons that up until very recently, population and the economy is growing. If you know anything about Economics, if you wanted zero to low inflation, you will* have to keep adding money to the system if you have a growing population and a growing economy... or you will get deflation. He also is convinced that we're going into a depression. I'm completely convinced that HE DOES NOT KNOW what caused the depression to get as bad as it did (this is something I studied in detail). Now I can go on about why we're NOT going into a depression like the 1930s, but again, I'd end up writing a huge essay. I suggest you do some of your own homework and focus on how the governments *responded to the economic downturn back then versus now. That's the key. You see, I've actually studied economics at the University level. I have a good understanding of the basics. I'm not an expert... but I know enough to recognize BS when I see it.
  78. Dave Hasler from Edmonton, Canada writes: ......

    BTW, are some of the agencies in Victoria still offering to buy houses that don't sell within 30 days?

    My guess is that the discount price offered is VERY low. If it exists at all.
  79. Canuck with Questions from Canada writes: J Hanner from London, Ontario, Canada writes: It will be interesting to see how MPAC in a year or so adjusts the values down of the Tax assessments. The municipalities then will be down in tax revenue.

    J Hanner: You can appeal to your city! MPAC is a private company coming up with the latest house values based on the sale prices around your area.

    If you found cheaper values in your area for your house then you can appeal to the city and cut down your property tax.
  80. Canuck with Questions from Canada writes: Thanks for your post Back to the future! Good one!
  81. Ro Mac from Toronto, Canada writes: Pretty much every asset and commodity is correcting in a major way -- if it hasn't yet it will. Hopefully it won't over-correct, then everyone is in some real trouble.

    Housing is easily one of the most illiquid of the bunch so I think this isn't even close to over - it's going to continue to grind prices and sales down for a quite a while and there won't be reflating of housing until things bottom out and stable growth arrives.

    The 'wait for spring' garbage is laughable but CREA isn't giving up the ghost, have to give them credit for their desperation.
  82. Dave Hasler from Edmonton, Canada writes: Back to the Future Past History from Canada ......... Calgary ???? Affordable with good product in 2006????

    I lived in Calgary in 2006. I somewhat disagree.

    I also worked as a framer there (Airdrie actually). Yes, the market was hot but a 1500 ft2 house on a postage stanp lot for up to $450,000, appreciating at double digits was a real gamble - in hindsite. How many of those mortgates are now upside down?

    Calgary had employment but the debt loading of the mortgages on families - other than 6 figured executives - was enormous. Calgary and Edmonton were also among the first markets to have readjustments - downward - when the crunch hit. Inventory rates are way up.

    Now we have a $55 /BBL oil o contend with. Alberta's economy is a one trick pony despite the diversity we have had in the past few years. Those diversified industries don't pay very well. If you look at oil.com and other sites you will see analysts predicting oil prices as low as $20 BBL. That will hit us extremely hard. Already the heavy stuff is not moving - many oilsands projects are delayed including 2 of the largest FT Hills and Voyager.

    If oil had stayed at $100 BBL or even above $60 - this wouldn't be a problem. Yet 2009 could be a bad year - or we cuold simply ride it out. It won't be spectacular however for most. That includes real estate. Late 2009 may be a good time to buy.
  83. Peter Stern from Toronto, Canada writes: b W from Canada writes:
    '1) Employment - numerous layoffs in the banking and financial industry will have trickle down effects on professional firms.' Mind you we're coming off of a period of record LOW unemployment and we're still at a record-high Participation Rate. The Participation Rate is as high or higher today than 1999.
    '2) Low interest rates - prime was 3.75% in 2002 with prices still dropping, and is 4% now. Prime minus mortgages are gone so the advantages of these ahve been reduced.' That's not true. My mortgage is below prime. The only difference now is that it's just harder to get a variable mortgage below prime for the time being. Existing mortgages below prime (like mine) still exist. And prime isn't just about mortgages... it's also about business loans too! It also takes time for the benefits of low interest rates to be felt.
    '3) Affordable prices - who thinks the rates in Toronto are affordable?' Yes. I bought a house earlier in the year. In Toronto. On one income. And I have two kids. It isn't a McMansion, but I don't want a McMansion anyway. But the extra I spend on the house is saved by not having to drive everywhere as I would in the suburbs.
    'In addition, I have seen conditions on sales contracts that did not occur two years ago back (conditional on sale of house, financing) meaning that more of the sales will fall through.' This is NOT new... hell, my parents had that clause when they bought a house in the early 1970s and when they sold a house in the early 1990s, the people buying had that clause too. And I had that clause when I bought my first place in the mid 1990s.
  84. Kothar Rumbleg from Canada writes: Well in order to buy houses you need jobs and jobs are dissappering and we are in a recession, a bad one, and many people are swimming in debt, and banks are not lending money to anyone off the street anymore. Hence housing will go down.
  85. St Fort from Victoria, Canada writes: As I was saying......in my last posting.......it is a good time to buy in Victoria.....but it is not a good time to sell....

    I stand by what I say......about buying into the market here. We have the lowest unemployment rate in Canada.

    We have a stable work force made up of mostly government and the high tech trade. Also the military.

    They ran an article in our local paper 'The Times Colonist'. Most of the new buyers into our market are between the age of 35 and 55. Most come from other places in Canada.

    It also said in the Times Colonist......that over 50% of homeowners in Victoria do not have a mortgage.

    We have the lowest rental vacancy rate in Canada of less than .05%. We hold two rental properties here in Victoria.

    One is in the entry level market of around 400,000cdn and the other one in the high six figures.

    The average price of a home in Victoria is around $565,000cdn. That is up from from $549,000 in Sept. Prices are stable.

    The other is on the ocean. Both properties will be easy to sell,but now is not the time to sell. Not much is selling these days. I think only

    I don't think this global mess will start to clear up until the end of 2009.

    We plan on hanging onto our properties for around another 7 years.
    Hey don't just take my word for it......read it here

    http://www.vreb.org/mlsstatistics/currentstatistics.html
  86. Paul N from outside of the GTA, Canada writes: from London, Ontario, Canada writes..re: MPAC

    I hear you - taxes are up in Wellington County where I live too. I'm just saying it isn't a simple function of assessment up = taxes up. Your assessment could be frozen (like it was for the past 3 years) and your taxes will still go up. The impact of a new assessment is relative to what you go up compared to the average.

    If your salary is $10 a day, and you spend $1 on apples, you spent 10% on apples. If your salary doubles, and apples double, you still spent 10% on apples, but twice as much money. It's all a ratio thing.
  87. Back to the Future Past History from Canada writes: Dave Hasler from Edmonton, Canada writes: Back to the Future Past