Vancouver Real Estate – Swami’s Crystal Ball

Swami Says

According to the Canadian Press Wolfe and Kwan’s lastest vision in their Merrill Lynch report on Canadian mortgages says we are on the brink.

CP Highlights

Down Side

  • Canadian households are more financially overextended than their counterparts in the United States or Britain
  • matter of time before the “tipping point” is reached and the housing and credit markets crack in Canada
  • Canadians should be wary
  • Canadians carry more debt than households in the United Kingdom and US
  • challenges consensus that Canadian lenders and borrowers have been far more conservative
  • housing prices are now falling and inventories of unsold homes are rising sharply in Canada
  • will not be a transitory phenomenon

UpSide

According to James Marple, an economist at TD Bank

  • we don’t feel there will be the kind of crash as seen in the United States
  • housing affordability has not declined like it has in the United States
  • housing market has stayed closer to underlying demographic fundamentals
  • Canada has not had that kind of glut of housing supply across the country
  • prevailing view – Canada’s lenders issued fewer sub-prime mortgages
  • housing demand in Canada has been the strongest in places such as Alberta where there has been strong income growth and strong migration due to the oil industry and the oilsands projec
  • take out the Alberta housing market, home prices are still rising
  • house prices falling … but nowhere near the type of correction that we have observed in the United States
  • Canadian residential properties are not overvalued – considering the strength of regional economies in resource-rich provinces
  • Balanced market – the last year new listings growth outpace home sales

Slap On the Head

Says Marple: “Merrill Lynch – whose U.S. parent is one of the biggest victims of a crisis in financial markets that is rooted in the American housing and mortgage meltdown.” Do these words suggest a sense of desperation may be the root of their report?

Conversations

Coffee talk today with major mortgage broker found that they are running off their feet processing new mortgages with majority of purchases coming from 35 to 40 year old buyers making asking or above asking offers.

They Said What?

Didn’t the UBC Prof., the Vancouver Sun and our Liberal Friend tell us that housing prices and mortgages are down the drain. Yet the man of sweaters, Mr. Harper, is reported by Reuters to have said “I don’t accept that conclusion, not at all.”

Crystal Ball

I don’t have one! I’m not running for election! I’m not tenured at UBC! I don’t work at the Sun! Yet, my eyes still see a lot of FOR SALE signs on the street and while sipping coffee with a trusted source, my ears hear another story that leaves me asking, who is right?

My sense of it is this. If you pile all the economic Yays in one house and all the economic Nays in another, I suspect that piles will be equal. It’s possible, but only if it’s foretold in the crystal ball.

Got a Vancouver Real Estate question? Always happy to answer it.

Call or send me an email – Twitter or Skype me at YatterMatters.

Larry

*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed. **Numbers provided may vary as they are dynamically posted by the REBGV.

Other Reports:

Canwest News

Globe’s Report on Business

Business News

Canadian Press

Financial Post

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

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*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

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