“You sure won’t find any bidding war here,” says a guy who’s sold real estate on the silk side of Victoria for the past three decades. “Forget that stuff CREA’s telling you. In a normal month this time of year we should have a thousand sales. We’re running at half that.”
Actually 609 properties changed hands in the suffocatingly smug little burg by the sea last month. Up 12% from last year says the local board, but still 40% behind levels last seen eight years ago. In fact, as this blog has shown enough times to be serially catatonic, outside of 416, Van and Testo City, real estate’s sliding into a swamp of failed expectations and jilted buyers.
Detached homes and condo sales slumped in Montreal. Nova Scotia is a mess. So’s Regina. In Winnipeg sales are down 12% while listings have bloated 59%. The number of deals is down in Durham, Cambridge, Fredericton, Kingston, and Milton. In Edmonton sales of detached homes are off 15%, and for condos the decline’s 20%. Of course some markets have improved (Fraser Valley, Barrie, London), but overall there are reasons to be scared if you’re 66 with way too little in your portfolio and a backsplit on the market for five months.
Now even the bankers are on it – a ‘false sense of optimism’ based on year/year price increases which completely mask current trends and market momentum. Here’s BMO’s chief egghead, Doug Porter:
“Canada’s housing market remains healthy and well balanced overall, albeit with sizeable disparities across regions. The major potential flashpoint is that prices in the three hottest cities—Calgary, Toronto and Vancouver—are rising faster than family income, further straining affordability… Meantime, the seemingly calm exterior on sales and prices masks a deepening divide between large cities and small, and West and East. On the sales side, almost half the major markets (12) reported declines last month, with double-digit drops in Halifax, Sudbury and Winnipeg. Similarly, so far this year, precisely half of Canada’s cities saw sales drop, with 8 of the 9 cities east of Ontario down, while only 1 of 8 in the west fell.”
Bummer. In half the places the bank probed, sales are sliding. And in the three spots where enough delusionally horny fools remain, it’s not a boom but instead a “flashpoint.” Meanwhile the Bank of Canada has stopped yapping about a soft landing for the national housing market because it looks increasingly unlikely there can be one. With most of the country already soggy, with US interest rates set to rise in a few months, with bond yields backing up, with incomes stagnant and household debt levels rising, and 52% of people saying one missed paycheque would down them, how does this end gently?
Well, it doesn’t. And not even the aliens can save it.
A major meme on this pathetic blog among the house-humpers has been that unbridled immigration will keep house prices aloft in places like Vancouver and the GTA. Of course, there’s no hard evidence anyone other than lusty Canadians are responsible for million-dollar hovels, but the country’s apparently full of xenophobes who want to blame outsiders. Now the Vancouver mayoral race is being shaken by a long-shot dipstick candidate who wants to tax people who buy houses but don’t live in them.
Even the sitting mayor, Gregor Roberston, is joining the stampede, saying, “We have real concerns around empty homes, and affordability.” So does he question CMHC policies, voracious bankers, kids buying with 100% leverage, condo speckers, sleazy marketers who lie to the media or crazy mortgage rates which have indebted BCers like no other citizens in the country?
Nah. Too hard. Diss the Chinese, instead.
Michael Ward isn’t so sure. The North American CEO of a major forex company, which wealthy immigrants often use to convert cash into Canadian dollars, told this to the Financial Post:
“We’re not real estate experts, we don’t advise [on real estate]. But there a lot more people asking ‘is this going to burst? What are you hearing?’. I think people are nervous, they didn’t see the Canada crash in 2008 like a lot of other markets. It’s stable but you can’t continue to have an upswing. I do think some people who are doing the research or reading the news and seeing the insights are starting to go ‘is the Toronto market’ overbought’?”
Hmm. More wily immigrant-investors wanting to flee Canada than put money here? Maybe they’re not as dumb as the people running for Vancouver council. Hey, perhaps that’s how they got rich in the first place – buying when it made sense, then selling when the local fools rushed in to pay top dollar.
Meanwhile trying to keep foreign buyers out never works. Canadians still snap up Florida digs despite being slapped with a property tax penalty. Central London is peppered with non-Brit owners despite residency restrictions. Australia’s just seen a 45% jump in alien investment (mostly Chinese) despite banning foreigners from owning resales and forcing them to sell when they moved offshore.
In country after country lazy, rabble-rousing, morally bankrupt politicians have won office and changed laws by catering to the lowest common denominator of public opinion – immigrant-bashing. Few have the guts to lay blame where it belongs. Their entitled voters.
No wonder they hated me in Ottawa.