And March was supposed to be such a good month.
Oh well, forget that. This is the faux spring market to be long remembered by those who believed their own media coverage. Canadian real estate’s in the tight grip of an unfolding correction which should have surprised no one. As the little poll we had fun with yesterday showed, the housing guys are in denial. They can’t believe this is happening.
(The head of Urbanation, Ben Myers, sent this furtive note to his contact list on Friday, pulling for votes: “I am getting crushed in this online poll on who is the most trusted expert on the Toronto real estate market, take a look and vote: click here.” It didn’t work.)
So what’s really going on? Pretty much what I told you to expect.
Sales are now falling in every major housing market. February year/year numbers sucked. The ones coming out of March will be worse. It must have killed CREA on Friday to announce a 15.8% gutting of real estate transactions nationally, while anyone who bought a house in the last two years had coffee coming out of their nose as they read the MSM headlines:
Realtors are now cutting their estimates (the third time) for 2013, while momentum turns negative. As this blog has chronicled since last summer, sales have tumbled since F dropped the mortgage bomb on July 9th, and coming off a market one year ago that was frothier than a beagle in heat. Leading the fall were Vancouver (of course), Winnipeg, Toronto and Vancouver. Some areas of the country (BC’s Fraser Valley or parts of the Okanagan) are experiencing sales crashes of 40% and price drops of 20%. This is the leading edge of our correction.
Of course the housing cartel’s working overtime at its usual disinformation. CREA says prices will decline this year by only 0.2%, while its Frankenumber actually rose 2.7% in February. Media everywhere have been told that while sales are down, prices are up more than 1% year/year – if you eliminate Vancouver. As dumbass a statement as that is, it’s useless info for those debating a home purchase, since values peaked last April and have been eroding since. It’s only a matter to weeks or months before they go negative. Include Vancouver, and they implode.
Most importantly, as I’ve said before, is an understanding that sales declines lead to price drops, often with a gap of many months between. In other words, anyone buying now is reaching for a falling knife.
By the way, here’s a handy little reminder, courtesy of Kevin over at Saskatoon Housing Bubble, of exactly what the national housing market looks like this weekend. In case you missed my point, it’s also a leading indicator of price changes in each of these communities.
On a more worrisome note, the real estate fantasy we’ve built for each other sits on a foundation of debt. Forget the untrue meme that borrowing is down, saving is up and mortgages are being repaid. It’s the opposite. Stats Can has just revealed household debt has hit a new record, despite F’s efforts to curtail bank lending. The debt-to-disposable-income ratio has crested at 165%,. In the last 90 days of 2012 alone we added $11,000,000,000 in new mortgage debt.
Canadians owe $1.1 trillion in home loans, and indebtedness is rising at five times the inflation rate. At the same time among our largest population group (the Boomers), 78% have houses, 70% have no pensions and 60% don’t have a hundred grand saved. God help us.
Finally, this week brought big news in BC, and a shameless public act.
House sales across the province have now cratered by 24% and prices already tumbled more than 8%. An irreplaceable mansion in Victoria just re-listed for 28% less. A leading Van realtor in the best of hoods is telling clients, “Declining market trends will almost certainly continue. The bottom line continues to be that prices are falling. The Real Estate Board of Greater Vancouver’s Westside detached home HPI index is down over 10% from its high point last Spring. By end of summer I expect this to have fallen another 10%.”
And now the shame.
Amid this gathering real estate storm, the Vancouver Province this week published a full-page story headlined, “Real estate sales finally recovering.” It’s a fraud – marketing designed as news, false news, to support a mortgage ad.
Is there still doubt where we’re headed?