By Chris Sorensen - Wednesday, January 9, 2013 - 0 Comments
The housing bubble has burst, and few will emerge unscathed
Keith Roy began warning his clients about a faltering Vancouver housing market in early 2012. The realtor says he was tipped off not by industry statistics, but by chatter across backyard fences. “When you hear about a homeowner who thinks his neighbour got too much money when he sold his house, you know there’s something going on,” says Roy. “That was the first clue.”
The next shoe to drop was a handful of homes in desirable west side neighbourhoods that took a few extra days to sell. Sensing a shift in the market, Roy put his own house up for sale in June and penned a blog posting the following month that advised people to “cash out.” Though he was criticized by fellow agents for breaking rank, Roy says he now feels vindicated after watching Vancouver home sales crumble to their lowest point in more than decade, with prices falling 3.5 per cent since hitting a high last May. The lesson? Recognizing a looming real estate downturn is more art than science; once it shows up in the numbers, it’s too late to do much about it. “One day the phone just stops ringing,” Roy says. “Then you’re in it.” Continue…
By Colby Cosh - Friday, March 2, 2012 at 4:14 AM - 0 Comments
Here’s a blog post that is going to be worth exactly what you paid for it. I promise. Like the rest of you I’ve been reading a lot of “pro” and “con” material about the possibility of a Canadian housing bubble. Including the dramatic material from our latest issue. And I have a couple of problems many of you will have shared in trying to follow the debate. One, my own involvement in the housing market (and we’re all involved, on one side or the other) makes it difficult for me to set aside wishful thinking. Two: the data are awfully slippery. A lot of what we hear is anecdotal; a lot more of what we hear, even from informed sources, seems little better than anecdotal; and where there is solid information about things like debt-to-income ratios and movements in good indices of housing prices, it’s hard to interpret.
The fact is, no one is really sure what to make of the many natural laws of housing prices whose existence has been asserted and whose revenge upon us (us owners) has often been promised. Though we do now know that one formerly popular law, “Housing always goes up”, ain’t much good. (Damn. No free lunch, you say?)
What I decided to do was this: Continue…
By Tamsin McMahon - Tuesday, February 28, 2012 at 10:50 AM - 0 Comments
Why is everyone ignoring this unfolding disaster?
Back in the heady days of 2005, America looked like an awfully nice place to buy a house. Home prices were marching ever upwards. Home ownership was at record levels. Mortgage rates were at historic lows. Unemployment was falling while the economy was growing at a healthy clip.
Home sales had started showing their first signs of slowing that year, but that didn’t sway the National Association of Realtors from its persistently sunny view of the country’s housing market. “We’re confident that housing is landing softly,” David Lereah, the association’s chief economist, wrote in a November 2005 report just before house prices started a descent that would eventually wipe out nearly $30 trillion in global wealth.
Looking back, the signs of a country burying its head in the sand about a housing bubble seem obvious: the well-told tales of tricky teaser rates, of mortgage fraud and of gigantic home loans handed out to buyers with no income or assets. Household finances were even sketchier. In 2005, the average American owed $1.30 in debt for every dollar of income. Home equity was eroding as Americans pulled more than $900 billion out of their homes to buy cars, granite countertops and put their kids through college.