Canada's 'housing bubble' deemed close to bursting

[misher]

Originally Posted by WarrenC12

Got a real source for this? RE is pretty much the longest lagging indicator you can find.

Just a few twitter posts from different sources plus the earlier Kelowna article showing a trend so I didn’t bother posting. I did say the same without sources back when things picked up in Q1 2020 which sources later confirmed. Job losses have been concentrated among low earners so it makes sense that the people who were going to buy a home haven’t been significantly impacted. Restaurant workers and movie theater staff aren’t buying homes in any market. But business owners who just got a 40k interest free loan and a 75% wage subsidy might be. Payroll is usually a huge cost to most companies so if your 15% down in March you may end up making more off the subsidy than your losses.

Mortgage approvals are picking up. Realtors are telling me showings have increased.

https://mobile.twitter.com/cdnpoliticalsa1/status/1258964737024380928
https://mobile.twitter.com/DavidMacCdn/status/1258749478292664321
https://mobile.twitter.com/BrianPersaud/status/1258902647500914694
https://mobile.twitter.com/mortgagejake/status/1258503198412808193

In the end even I’m doubtful that the RE machine can be going in this environment so I’m not confident of what I’m saying.

[goodgrowth]

Originally Posted by misher

Just a few twitter posts from different sources plus the earlier Kelowna article showing a trend so I didn’t bother posting. I did say the same without sources back when things picked up in Q1 2020 which sources later confirmed. Job losses have been concentrated among low earners so it makes sense that the people who were going to buy a home haven’t been significantly impacted. Restaurant workers and movie theater staff aren’t buying homes in any market. But business owners who just got a 40k interest free loan and a 75% wage subsidy might be. Payroll is usually a huge cost to most companies so if your 15% down in March you may end up making more off the subsidy than your losses.

Mortgage approvals are picking up. Realtors are telling me showings have increased.

https://mobile.twitter.com/cdnpoliticalsa1/status/1258964737024380928
https://mobile.twitter.com/DavidMacCdn/status/1258749478292664321
https://mobile.twitter.com/BrianPersaud/status/1258902647500914694
https://mobile.twitter.com/mortgagejake/status/1258503198412808193

In the end even I’m doubtful that the RE machine can be going in this environment so I’m not confident of what I’m saying.

An asteroid could vaporize an entire city a real estate agents would still tell you "we actually see optimistic signs in the market and there are some beautiful lots available near crater-view lake"

[misher]

Originally Posted by goodgrowth

An asteroid could vaporize an entire city a real estate agents would still tell you "we actually see optimistic signs in the market and there are some beautiful lots available near crater-view lake"

Whens the last time you told your customers to go away its a bad idea to buy your product?

But seriously I follow quite a few twitter accounts and have friends in RE. I generally have a good idea how things are going. They tell me if things are bad or good. For instance last year Commercial RE was dead. Exact word they used.

By no means am I saying things are normal. But I am saying compared to 2-3 weeks ago things are picking up.

[Truenorth00]

Originally Posted by goodgrowth

An asteroid could vaporize an entire city a real estate agents would still tell you "we actually see optimistic signs in the market and there are some beautiful lots available near crater-view lake"

LOL. Exactly. Reminds me of this clip from The Big Short:

https://youtu.be/MesrrYyuoa4

"It's just a gully."

I'm sure there's a bit of pent up demand after the lockdown. But in a few months, we're coming up to the time where EI starts running out, wage subsidies end and layoffs start becoming permanent instead of furloughs, and so do wage cuts. As that happens there will be fewer people qualifying for mortgages and the amounts they qualify will be lower.

And way before all of the above is the AirBnB crater. The Wall Street Journal recently reported that a third of hosts who rent whole homes have 25+ properties. Only a third of whole home hosts have a single property. There are only so many renters to go around. A lot of that inventory is coming on the market unless tourism picks up massively, by some miracle.

https://www.wsj.com/articles/a-bargain-w...or-overextended-airbnb-hosts-11588083336

[goodgrowth]

Not saying the market is good or bad, just saying real-estate agents are not really the most objective source. Need to see data of sales and whatnot..

[Truenorth00]

Originally Posted by goodgrowth

Not saying the market is good or bad, just saying real-estate agents are not really the most object source. Need to see data of sales and whatnot..

I'll take the word of Moody's over any real estate agent:

https://biv.com/article/2020/05/house-prices-will-fall-10-recovery-moodys

Real estate always lags in a recession though. Which is why nobody thinks it's going to crash right now. Real estate is far less liquid than stocks or bonds. Can't just sell with a click. Not to mention it takes time to simply make the decision to sell. People are still figuring out their finances and deciding if they should sell or not. But I'm thinking inventory will start building shortly. The first wave will be all those desperate AirBnB hosts who can't find tenants....

We only have to look at how many Canadians have applied for forbearance and the already high debt ratios to know that real estate is not escaping this time.

[someone123]

Originally Posted by Truenorth00

Real estate always lags in a recession though. Which is why nobody thinks it's going to crash right now. Real estate is far less liquid than stocks or bonds. Can't just sell with a click. Not to mention it takes time to simply make the decision to sell. People are still figuring out their finances and deciding if they should sell or not. But I'm thinking inventory will start building shortly. The first wave will be all those desperate AirBnB hosts who can't find tenants....

It will take years for this to play out.

[Truenorth00]

Originally Posted by someone123

It will take years for this to play out.

Absolutely. Which is why it's funny that people say that Real Estate is already back to normal.

[someone123]

Originally Posted by Truenorth00

Absolutely. Which is why it's funny that people say that Real Estate is already back to normal.

Imagine the real estate agents of Fallujah. "GREAT AIRBNB OPPORTUNITY! If you haven't been killed by American bombing or ISIS militants yet come check out the remains of this 2nd floor concrete slum. PANORAMIC VIEWS of nearby devastation now that 2 walls are missing. PRICED TO SELL!"

[whatnext]

Originally Posted by goodgrowth

An asteroid could vaporize an entire city a real estate agents would still tell you "we actually see optimistic signs in the market and there are some beautiful lots available near crater-view lake"

Hey! He saw it on Twitter so it must be true, leave him alone!

[misher]

Originally Posted by Truenorth00

Absolutely. Which is why it's funny that people say that Real Estate is already back to normal.

Didn’t say it’s back to normal I said it’s picking up. As in it was dead a few weeks ago now it’s moving.

[Truenorth00]

Originally Posted by misher

Didn’t say it’s back to normal I said it’s picking up. As in it was dead a few weeks ago now it’s moving.

Like I said earlier this is a response to some repressed/delayed demand. Mostly from people who need to move. Presenting this as a rebound is naive. It's still very early in the game.

As of a month ago, half a million Canadians have gotten mortgage payment deferrals:

https://www.bnnbloomberg.ca/almost-500-000-canadians-have-requested-mortgage-deferrals-1.1417067

They all face higher mortgage costs going forward as deferred amounts get added to the principal:

https://www.mortgagebrokernews.ca/news/a...m-mortgage-deferral-programs-328575.aspx

Oh and those deferrals are going to end. Along with CERB, Emergency Wage Subsidies, etc. in 6 months. The housing market is going to get very interesting around Labour Day.

That's just current homeowners. There's plenty of buyers who have seen prequalification fail because they just lost their job or got furloughed and the bank isn't interested in using EI as part of the income calculation. Banks are also increasing rates, despite the Prime cut and quietly cutting Lines of Credit.

Forget talking to realtors. Talk to bankers (the investment kind, not the one drafting mortgage docs) and you'll find out what's really going on.

[LakeLocker]

Does it make sense that a house in western newfoundland is selling for half of what it was bought for in 2011?

>https://www.royallepage.ca/en/property/n...sing/31-west-street/11152460/mls1211588/


I'm looking at houses in Stephenville Crosing Newfoundland and I can't figure out why they cost less than the trucks these people live in.

[lio45]

Originally Posted by LakeLocker

I'm looking at houses in Stephenville Crosing Newfoundland and I can't figure out why they cost less than the trucks these people live in.

That's always been completely nuts to me as well.

I'm the opposite.

In particular, I'll always remember that one time when my property manager negotiated the general terms of a lease for the retail street level of my best-located and most valuable building in downtown Sherbrooke, and after those early meetings and visits came the moment for the "boss" to come meet them and validate what was negotiated so far (that's me...), and I couldn't help them (our future commercial tenant) seeing that I was arriving in a rusty 20+ years old Corolla with a cracked windshield.

Normally I try to park further away...

[LakeLocker]

Originally Posted by lio45

That's always been completely nuts to me as well.

I'm the opposite.

In particular, I'll always remember that one time when my property manager negotiated the general terms of a lease for the retail street level of my best-located and most valuable building in downtown Sherbrooke, and after those early meetings and visits came the moment for the "boss" to come meet them and validate what was negotiated so far (that's me...), and I couldn't help them (our future commercial tenant) seeing that I was arriving in a rusty 20+ years old Corolla with a cracked windshield.

Normally I try to park further away...

I hear yeah, I've never owned a car. On the outside its because I look and act like someone who can't afford one. Ironically my pessimism is the reason me and my wife can afford to be looking at buying a house during all of this chaos.

I had an interview on Wednesday. It's obviously up in the air because of covid. The good news is it's up in the air because they are trying to figure out if I'll be able to work from home versus Ontario. I have 2 years worth of living expenses saved so if the sky is falling, 🞵🞵🞵🞵🞵🞵🞵🞵 that savings might be worth it.

I'm trying to figure out what a $75,000 mortgage looks like, and would the first time home buyers thinger would help. For us we wouldn't live in it unless we reached the worst case scenario of no work/no reason to live on the mainland versus the best case scenario we both work and study from Newfoundland. In between it'd just be an expensive SUV on a 30 year payment plan, that we'd forget about for 5-10 years.

[goodgrowth]

Originally Posted by LakeLocker

Does it make sense that a house in western newfoundland is selling for half of what it was bought for in 2011?

>https://www.royallepage.ca/en/property/n...sing/31-west-street/11152460/mls1211588/


I'm looking at houses in Stephenville Crosing Newfoundland and I can't figure out why they cost less than the trucks these people live in.

How do you know it sold for twice as much in 2011?..

[Marty_Mcfly]

Originally Posted by LakeLocker

Does it make sense that a house in western newfoundland is selling for half of what it was bought for in 2011?

>https://www.royallepage.ca/en/property/n...sing/31-west-street/11152460/mls1211588/


I'm looking at houses in Stephenville Crosing Newfoundland and I can't figure out why they cost less than the trucks these people live in.

Stephenville Crossing isn't really a prime location on the island. Small town, nearest centre is Corner Brook, and that in itself is technically a small town in itself. $132,000 for that house is, in my opinion, too much.

Real estate in rural NL can be had for much less than that. There are homes where I grew up which you could buy for about $15,000. They're not nice homes, and need considerable work, but the money you save by purchasing a home like that can really open up your options. Newer homes, like your standard 2 storey split level or standard cape cod can fetch up to $100k.

It's all about demand.

[MolsonExport]

Originally Posted by lio45

That's always been completely nuts to me as well.

I'm the opposite.

In particular, I'll always remember that one time when my property manager negotiated the general terms of a lease for the retail street level of my best-located and most valuable building in downtown Sherbrooke, and after those early meetings and visits came the moment for the "boss" to come meet them and validate what was negotiated so far (that's me...), and I couldn't help them (our future commercial tenant) seeing that I was arriving in a rusty 20+ years old Corolla with a cracked windshield.

Normally I try to park further away...

Even worse than people who spend a fortune on their jacked-up trucks (while having a crappy snout-house) are those people that spend a fortune on their driveway. Often these people have almost no shrubbery and lack anything aesthetically pleasing about their residence, but the driveway wouldn't be out of place at the Taj Mahal. There are a few people like this in the next neighborhood over from mine, and they are also the ones that get their 🞵🞵🞵🞵🞵🞵🞵 twisted when somebody quickly pulls into their driveway to turn around...one guy has three (3) signs saying "Do not pull into driveway. Private Driveway." The guy has had his driveway tiles glazed and re-glazed a billion times.

(I suppose there are public driveways in apartment buildings, but would anybody think that a house driveway was 'public'?)

[LakeLocker]

Originally Posted by goodgrowth

How do you know it sold for twice as much in 2011?..

I'm talking about different properties, explaining how I know would be doxing myself and blowing a potential deal.

[LakeLocker]

Originally Posted by Marty_Mcfly

Stephenville Crossing isn't really a prime location on the island. Small town, nearest centre is Corner Brook, and that in itself is technically a small town in itself. $132,000 for that house is, in my opinion, too much.

You can literally walk to Stephenville from the crossing. And there are few things in corner brook not found in Stephenville. Beyond that Halifax or St john's are a better option.

I'm looking at spending $75,000 for the record, with about a 3rd being spent on a down payment. The spot I'm specifically looking at is of value directly because I'd have no need for a car. In corner brook there are few places that are walkable that are worth living in long term. The better alternative would be living in Deer Lake.

Originally Posted by Marty_Mcfly

Real estate in rural NL can be had for much less than that. There are homes where I grew up which you could buy for about $15,000. They're not nice homes, and need considerable work, but the money you save by purchasing a home like that can really open up your options. Newer homes, like your standard 2 storey split level or standard cape cod can fetch up to $100k.

It's all about demand.

Are you certain? in western Newfoundland plots of unsupervised land are going for 50k,15k seems like 90s pricing. Obviously this was the product of an absurd property bubble which is kind of the point. What should a home in rural, but well serviced newfoundland cost?

FYI my family already owns a whole lot of land in the Area, so again I'm looking for something that doesn't require a car or excessive walking to get food groceries etc.