Vancouver Real Estates Bubble Fatique

Fatique

Are you worn out by the harangue purporting an imminent real estate collapse of the Vancouver real estate market? Are you wishing you could just find a quiet place? If so, you may be suffering from real estate ‘bubble fatique?”

Perkins_Jang Prescription

Tara Perkins and Brent Jang’s report in yesterday’s Globe and Mail mixed considered opinions with evidence of a small but notable rise in the sales to active listings ratio reported by the Greater Vancouver Real Estate Board suggesting both as a cure to ‘bubble fatique’.

Their Research

Perkins and Jang quote Mr. Benjamin Tal, CIBC’s World Markets economist saying -

Garbage No Sleeping Flickr Dean Jarvey
  • “I think the spring will surprise on the upside.”
  • “bubble fatigue may well prove wrong the forecast for dismal sales this spring”
  • “People have been talking about a collapse for two years, so many are becoming a bit skeptical about that”
  • “As well, rates are in fact going down, not up” – a reference to the Bank of Montreal cutting the price on its five-year, fixed-rate mortgage to 2.99 per cent from 3.09 per cent. “The lowest advertised rate among Canada’s big banks, and lower rates are available in the market.”

Supportive Rationale

  • Vancouver sales marked the second lowest level since 2001.
  • Greater Toronto is down.
  • Calgary saw their sales dip 1.27 per cent.
  • In addition, the Fitch ratings agency notes that

  • “There are signs that the sales slump that has persisted since the middle of last year is nearing an end.”

Green Chair Conclusions

Green-Chair-220x184

Toronto Dominion’s real estate economist Diana Petramala suggests that

  • “national sales have fallen by about 8 per cent since Mr. Flaherty tightened the mortgage insurance rules in July.
  • “Our view is that the impact of mortgage insurance rules tends to be very temporary, and lasts for about two to three quarters”
  • “we do think we’ll see a bit of a bounce back in sales, particularly heading into the spring period.”

That’s What They Think

What about you?

Do you think there is sufficient spring in the air to generate a slight up tick in Vancouver’s real estate market? Might the Perkins_Jang prescription offer a measured release to “bubble fatique?”

Quotes: Tara Perkins and Brent Jang – The Globe and Mail

Photo Credit: Flickr – Dean Jarvey

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.

When Life Moves You - contact 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.

Reader Comments:

Not much of name... Says:
March 5th, 2013 at 1:14 pm

What a shock that sales were up MOM when comparing Feb to Jan. To then project that sales will be stronger through the spring is laughable. Isn’t that the same as claiming that this spring will be warmer than winter? I can even conclude that summer will then be warmer than the spring.

March 5th, 2013 at 3:01 pm

@not much
barring global warming influences you make sense to me.

eastv Says:
March 5th, 2013 at 3:43 pm

I’m tired of all thiis bubble talk. I am gonna go snap up a couple million dollar houses and try to shut up all those bubble heads. I’ll show them!

March 5th, 2013 at 3:58 pm

@eastv :)

Not much of name... Says:
March 5th, 2013 at 4:31 pm

@larry

I ended my projections at summer due to that very reason.

Boombust Says:
March 5th, 2013 at 5:58 pm

Larry,

The BOOMBUST scenario is for this bloated, obese, buffet-loving, waddling and twaddling bubble to lose a massive amount of weight.

Just because it hasn’t happened YET doesn’t mean that it won’t.

I am quite sure that patience will pay off for those who have waited.

Groundhog Says:
March 5th, 2013 at 6:04 pm

Bubble fatigue has me buying some acreage in the US and close to moving elsewhere.

Karnac the magician Says:
March 6th, 2013 at 10:27 am

Low interest rates will continue to underpin the real estate market. A general softness in property prices will continue in areas where there is plenty of inventory as a percentage of buyers. I believe Spring will usher in a new wave of buyers who have been cocooned over Winter. That wave will be short lived as we move into July and the City takes it’s annual break. The US real estate upswing will provide further testimony to potential buyers sitting on sidelines that property prices do bottom out. The massive money printing continues to support inflationary policy so hard assets continue to be an area of shelter regardless of month to month or year over year real estate fluctuations. Good properties in good locations seem to weather all.

Reasonfirst Says:
March 6th, 2013 at 1:27 pm

I think “bubble fatigue” should be a new stage in the well-known “stages of a bubble”…somewhere between “denial” and “bull trap”.

http://tinyurl.com/6gcjoxp

Living in Victoria Says:
March 6th, 2013 at 2:19 pm

This is a joke, right? Who would buy now? Seriously. And if you do, well, I guess you’ll get what you deserve. It’s now like the writing hasn’t been on the wall for quite a while now. Ridiculous Van and Vic prices are toast, regardless of what banks do to prop them up. Thank God. Perhaps once this foolishness is over we can get back to trying to doing some actual positive things for our communities here on the wet coast, and stop focusing on how rich we’re all going to be when we sell our stupid houses.

Berniebee Says:
March 6th, 2013 at 5:14 pm

Canadian housing is obviously overpriced to everyone it seems, except Canadians. In Vancouver, the city at the apogee of the Canadian bubble, sales have dropped by close to 30%.

Sales have dropped 9% YOY in of all places, Ottawa. Ottawa, the city where half the population is employed by the federal government, is the most stable city in Canada in terms of employment and income. A drop of 9% in Ottawa is even more shocking than Vancouver’s much larger decrease.
Ottawa’s sales decrease means one thing. People do not want to risk sinking their money in a depreciating asset. They do not believe that prices will stay at this level, let alone rise anymore.

A year of monthly YOY sales decreases says far more than any of Benjamin Tals’ quotes.

Halcyon2013 Says:
March 7th, 2013 at 9:44 am

@Victoria

“This is a joke, right? Who would buy now? Seriously. And if you do, well, I guess you’ll get what you deserve.”

Mate, people are always going to be buying. Fact is a dual income family can easily purchase a nice home on the “west coast”. Go to Shanghai or Delhi, or even some second tier cities in the developing world and you’ll see that Canada still has loads of value. My condo in Asia is junk quality (as are most of them there) yet still translates into a 20% d/p on a house here.

If you are looking for an investment with immediate gains, don’t buy a primary residence now. If you are looking for a home for your family and have a 10 year timeline, now is just as good a time as any.

In short, is the system fair? Of course not. Yet, don’t try to fight the system ~ I learned that YEARS ago, and it has worked out very well for me.

Good luck!

P.S. I enjoy your website Larry

Halcyon2013 Says:
March 7th, 2013 at 9:46 am

@Karnac the magician

Note that the stringent new property rules in China will very likely be bullish for Vancouver RE stretching through the spring/summer months.

I guess we’ll see! :-)

March 12th, 2013 at 12:48 pm

@larry

Correction Larry:

Fitch Ratings did NOT say:

“There are signs that the sales slump that has persisted since the middle of last year is nearing an end.”

That gem of wisdom comes from the writers of the article: Tara Perkins and Brent Jang of The Globe and Mail.

March 12th, 2013 at 1:37 pm

@lookout

a gem regardless

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