This from the Glob and Muck - who have at least recognized that the market is no longer rising. The context is an article entitled Warm weather to warp jobs data.
However, Canada's jobs market will also benefit from a still-solid housing market, compared with a U.S. situation that is in crumbling quickly. "Our housing market may be plateauing but in contrast to the U.S. - where things are in freefall - Canada still looks good," Mr. Lovely said. link
They also say that the US Economists at Goldman Sachs said the unusually temperate weather during the survey week for December — the 9th to the 16th — will boost the month's U.S. seasonally adjusted construction employment by about 17,000. Are they still building like there is no tomorrow in a "crumbling market"?
How long, if ever until the Vancouver market goes into free-fall? Is it possible that Olympic construction will keep demand for housing up, and with it prices? Will we just plateau until 2011, and then correct?
In another article in the G&M, it was said that the combined population of BC and Alberta now surpasses that of Quebec.
But the boom has brought tremendous stress to the West.So there are practical limits to growth - the biggest being housing, and workers, and housing - in a perverse circle. Another aspect is livability - which there are already complaints about.
Alberta has been hit the hardest by the growing pains. Thousands of homeless people are on the street in Calgary, a city whose population surpassed one million in 2006 and whose traffic is continually snarled. A major shortage of workers is hurting service and slowing multibillion-dollar energy projects.
At this point, the West needs a recession, and the East needs action. Where will it go?
This last little blurb from camagazine caught my eye too -
a rise in the real estate market is estimated to have four times more impact on consumption than a corresponding market hike. More specifically, economists maintain that each market dollar gained sparks a 5.8¢ increase in consumer spending, while each dollar of additional real estate wealth results in a 20¢ increase.I believe that this Spendmas saw a fair bit less spending, so where is all the wealth? I guess those mortgage payments are starting to take a bite out of spending.
I wish for two things right now;
1) VHB's analysis,
2) the spring market to commence.
I haven't got a clue what the heck is going on. My head is spinning.
11 comments:
At least some economists are finally admitting that the US Housing Market is in trouble. 0.6% monthly increase from October to November is nice, YOY is still down 10% from 2005.
In the Lower Mainland we never stop building due to winter. It just doesn't get cold enough here.
Eastern Canada is unnaturally warm this year, so that may stimulate the building sector.
I feel the Olympics will save construction employment, housing probably not. Unless the Olympic construction staff get huge raises and start buying houses.
VHB had the right idea taking a break until next year. Things are still too uncertain to get a definite feel.
There was an economist on ROB this evening talking about the future of the US and even he admitted that no one really knows what is going to happen next year. There are guess', that's about it.
Thanks for posting uncertain.
You are right about VHB. There seems to be little of pertinence to write about. I thought that maybe it was just me.
Yawn. Wake me when something happens.
Hey bc_cele. Time to snooze perhaps?
The comment about consumer spending in camagazine is interesting. I have no doubt that a lot of people use HELOC, but would never borrow against their RRSP or IRAs to get that new SUV. Putting a number on this is great.
What it tells me is that a few months from now, consumer spending will go down a huge deal, which might send the US (and us too) into recession. The US economy could do well without housing if each part of the economy was compartimented, but that's not how it works. Since the housing market has started to go down, I think spending will go down too pretty soon (maybe it has already started, we need to see december and january numbers to really know), and consumer spending is too big a piece of US economy (how much is it? 30% of GDP or so?) for that fact to be forgotten.
So basically, if the housing bust shaves the same $ amount of wealth as the .com bust, we're looking at a 4 times bigger problem for spending. I don't think this figure counts for the job that will be lost when KB and Pulte decide to fire half their workforce. And definitely, some stocks (housing and consumer discretionnary mostly) will get hit, making the problem even bigger.
These are interesting times we live in.
A solid career...Define solid career.
el vince - that snippet really popped out at me. Once it starts feeding on itself, it doesn't stop. That's why there are booms and busts.
People act like schools of fish, or flocks of birds - all turning and chasing the food in a frenzy.
The crustaceans lounge around and wonder what all the excitement's about.
What a hazzle, man.
A solid career...Define solid career.
I'll name two.
1) drug dealer
2) bailiff/collections
There was an economist on ROB this evening talking about the future of the US and even he admitted that no one really knows what is going to happen next year.
What else is new? No one ever really knows exactly what is going to happen next year.
However, the plain fact is that the outlook for housing in the US looks worse than at any time since the Great Depression. The only uncertainty is how bad it's going to be. There is no damn way the market can improve until all that inventory clears.
And anyone who claims there's any uncertainty about that is just talking out their a$$.
And what's BC's biggest industry?
Now let me see if I got this straight, if I went for this I would end up paying for part of the mortgage, but I wouldn't get a penny in rent?
Yeah, but it's a much better deal than buying the condo and renting it out. Same negative cashflow but only half the capital loss ;-)
Interesting thought el vince... i remember years ago when coal harbour was being developed & hearing that all the condos there were being snapped up by US investors & that was what was driving the prices up for locals. With the low Can $ then, coal harbour was a steal for Americans. Actually, when I think about it now, this boom may have started with the development in coal harbour 10-15 years ago & branched out to the rest of the city. I guess the expo lands/ yaletown may have also started being developed around that time too...
what does everyone else remember about the start of this boom?
The boom started before 911,before super low rates, and was a little coincident with our local tech(dot com) bubble burst. I remember good friends buying a house because they wanted to customize it to their tastes not becuase they thought it was a good investmenet-that was 1998.
I thus conclude this RE bubble will pop independendant of rates,but simply due to buyer fatigue.
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