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CANADIAN REAL ESTATE IS
ISN'T DIFFERENT
Prices and sales continue to fall across Canada.
Canadian Real Estate
Prices, Sales and Inventory Data July 2010
Pick a number; combined residential real
estate sales across Canada are down 21-45% Y/Y and 12-29% M/M (scorecard).
Depending on where you stand, prices have fallen 1-11% below their peaks
at a rate of between 3-35% per year (Plunge-O-Meter).
Federal government imposed low interest
rates are no longer a stimulus and buyers are rejecting debt and returning
to fundamentals.... ie: how will I pay for this residence over 25 years
and what is my return on investment if I have to rent it out? Calculate
a scenario with this $5 spreadsheet.
In case you have forgotten the
depth and velocity of the previous market reversal when Canadian real estate
prices plunged in 2007-2008 (chart);
equity vanished as follows:
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Average
Vancouver SFD lost $122,900, or 15.9% in 8 months (current loss $25,210
or 3.1% in 3 mos) -
Average
Calgary SFD lost $92,499, down 18.3% in 18 months (current loss $41,265
or 8.2% in 36 mos) -
Average
Edmonton SFD lost $78,719, down 18.5% in 21 months (current loss $47,049
or 11% in 38 mos)
-
Average
Toronto SFD lost $55,055, down 13.8% in 9 months (current loss $26,111
or 5.8% in 2 mos) -
Average Ottawa
Residence lost $25,664, down 8.6% in 6 months (current loss $11,581 or
3.5% in 2 mos)
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Median
Montreal SFD lost $6,000, down 2.6% in 6 months (current loss $2,000 or
0.8% in 1 month)
Will prices find
support at the levels set in the spring of 2009? It's a different world
now than it was in 2007-2009. The days of
historically low interest rates
are numbered and the cost of carrying debt is being re-priced as is the
value of money.
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The CANADIAN REAL ESTATE PLUNGE-O-METER & PRICE
SUPPORT FORECASTER tracks the dollar and percentage losses from the peak
and projects when prices might find support. Housing price data are average Single Family
Dwellings* except
Ottawa which are Combined
Residential (Single Family, Multi Family and Condos).
Montreal data changed from
average to median at March 2007) |
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*SFD Prices |
Vancouver |
Calgary |
Edmonton |
Toronto |
Ottawa |
Montreal |
|
Prices at Peak |
$818,403 |
$505,920 |
$426,028 |
$446,593 |
$333,408 |
$260,000 |
|
Peak Price Date |
Apr-2010 |
Jul-2007 |
May-2007 |
May-2010 |
May-2010 |
Jun-2010 |
|
Prices Now |
$793,193 |
$464,655 |
$378,979 |
$420,482 |
$321,827 |
$258,000 |
|
Prices Now Date |
Jul-2010 |
Jul-2010 |
Jul-2010 |
Jul-2010 |
Jul-2010 |
Jul-2010 |
|
Months since Peak |
3 |
36 |
38 |
2 |
2 |
1 |
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$ Plunge from Peak |
-$25,210 |
-$41,265 |
-$47,049 |
-$26,111 |
-$11,581 |
-$2,000 |
|
$ Plunge per Year |
-$100,016 |
-$13,742 |
-$14,842 |
-$156,235 |
-$69,295 |
-$23,548 |
|
% Plunge from Peak |
-3.1% |
-8.2% |
-11.0% |
-5.8% |
-3.5% |
-0.8% |
|
% Plunge per Year |
-12.2% |
-2.7% |
-3.5% |
-35.0% |
-20.8% |
-9.1% |
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Deflation per Month |
$8,335 |
$1,145 |
$1,237 |
$13,020 |
$5,775 |
$1,962 |
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**Price Support Target |
$503,141 |
$276,776 |
$216,187 |
$330,545 |
$248,865 |
$215,407 |
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Months Until Target |
35 |
164 |
132 |
7 |
13 |
22 |
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Price Support Date |
Jun-2013 |
Mar-2024 |
Jul-2021 |
Feb-2011 |
Aug-2011 |
May-2012 |
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The price support target** in the table above represents what
average Single Family house prices across
Canada were in March 2005 (Ottawa are combined residential) which marked the beginning of a
5 year
period of ardent speculation in Canadian real estate. Look at the
price chart and see that there was a
4-6 month plateau period while buyers and sellers twitched
like a herd. When the credit spreads narrowed and the
yield curve began its journey towards
inversion, the stampede began.
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STILL NOTE WORTHY:
Is it possible to have a system of taxation which is simple, efficient,
progressive, and revenue neutral replacing all existing taxes: personal,
corporate, provincial, fuel, capital gains, estate, excise and sales taxes
with no filing of tax returns, no lobbying and no special deductions? As
it turns out, Yes.
By capitalizing on financial data processing technology, it is possible to
create a tax code for the 21st century; one that is astonishingly easy for
all citizens to understand, that is easy to administer and to comply with
because it eliminates the need to file tax or information returns. The
system, developed by University of Wisconsin Professor of Economics Edgar
L. Feige, is known as the APT or Automated Payments Transaction Tax.
Dr. Feige would levy a toll (based on U.S. data from
2005) of just 0.6 percent on every electronic financial transaction. The
fee would be split by payer and payee in any transaction, meaning you
would pay 0.3 percent whenever you spent or received money. Someone
spending $50,000 a year would pay just $150 in "tax", without any need to
file a return. A $100 restaurant bill would yield a $0.60 fee split 50/50
between the restaurant and the patron.
Most of the value of transactions in a modern economy consists of
financial dealings: sales of stocks, bonds, currency exchanges, and
transactions at tens of thousands of point of sale terminals.
Implementation of this elegant and simple idea in
Canada would allow Canadians to create an original, authentic social
organization that would eventually be copied by all other nations;
unless of course the incumbents are afraid of change and would rather cling to their failed state agenda.
Let's apply the power of the internet to get this
Automated Payments Transaction Tax idea into the mainstream and into
application. Canadians, write your
Member of Parliament.
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