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Summary of Housing Price Changes for Major
Canadian Cities June 2010 |
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Vancouver's detached house
and townhouse prices in June 2010 continue to drop from their April 2010 high (chart),
and condo prices retreated from their May 2010 high by slumping 1.8%
M/M.
Combined residential listings are up 32% Y/Y and sales have dropped
35% Y/Y (scorecard).
The change in trend is starting to show up as well in my
"Vancouver Bubble Deflator Index"
(black chart below). SFD listings in
just those 4 areas have increased 94% since the beginning of the
year, and in North Van, the number of properties listed under
$750,000 is rising as properties listed above $750,000 get repriced.
Interest rate hikes will lead to debt
exhaustion as the Demographia
table shows. It requires almost 10 times the Vancouver median
income to buy a median priced house. By my calculation,
it takes 3.8 average BC incomes to qualify for an 80% mortgage on an
average SFD here
in Vancouver. Earnings in BC
remain 3.3% below the Canadian trend and 17.4% the Alberta trend.(Earnings
Chart).
Real Estate, Furniture and Sex ads in the
Georgia
Straight, a weekly alternative to the Vancouver
Sun and
Province, shows the spike in real estate ad spending
in April-May and the subsequent drop off back toward the median in
May-June. The HST has come and gone, the BoC is chattering about
raising rates, lenders are imposing more due diligence and now we
are back to the business of how to sell property at the top of a
bubble that everyone knows about.
Price reductions, not advertising will move this market.
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Calgary's detached house
prices ticked down 0.3% M/M in June 2010 (chart)
as sales of SFDs plunged 16% M/M and are now down 42% Y/Y (scorecard). Calgary's detached housing
prices peaked 35 months ago (Plunge-O-Meter)
when the warning showed up in the
Gold to Real Estate Ratio
rising in the summer of 2007 as the Smart Money got out of real
estate and moved into gold. Average Calgary SFD prices remain 4.7%
or $23,956 below their July 2007 peak. The last precipitous decline
that started in the fall of 2007 and bottomed in the early spring
of 2009; resulted in $92,499 of equity being
evaporated from average SFD prices in just 18 months... a boom to
bust decline
of 18.3%.
Edmonton's detached house
prices ticked up 0.2% M/M in June 2010 (chart),
as SFD sales dropped 11.4% M/M (scorecard).
Despite Alberta's record Canadian
earnings
data Edmonton's combined residential sales are down 37% Y/Y and still ranks as the Canadian city with the largest
percentage plunge in price
from their peak 37 months ago (Plunge-O-Meter)
down 8% or $34,531.
Toronto's detached house
prices dropped 2.6% M/M in June 2010 (chart)
as sales dropped 11% M/M, and inventory remains 28% above last year (scorecard). Recall that after the April 2008 gush of exuberance
and climax to a high,
Toronto SFD prices then plunged 14% in only 9 months shedding
$55,000 of equity.
Ottawa's
detached house prices are not available, instead the charts on this
site reflect Ottawa's average combined residential prices.
OREB's report is sparse and the CMHC,
records for Ottawa inventory remain one month lagging. In June
2010
Ottawa's combined residential prices slumped 2.1% M/M (chart).
If prices continue to drop at this rate then in only 12 months you
will be able to buy at Ottawa's March 2005 price levels Plunge-O-Meter.
Patience Grasshopper. Between 2005 and 2009,
government increased its workforce 9.8% while private industry only
increased its employee hires by 4.2%. (Source:
Stats Can). The
Grecian Formula failed, Ottawa's will as well.
In case you have
forgotten the depth and velocity of the last 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, down 15.9% in 8 months,
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Average Calgary SFD lost
$92,499, down 18.3% in 18 months,
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Average Edmonton SFD lost
$78,719, down 18.5% in 21 months,
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Average Toronto SFD lost
$55,055, down 13.8% in 9 months,
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Average Ottawa Residence
lost $25,664, down 8.6% in 6 months and
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Median Montreal SFD lost
$6,000, down 2.6% in 6 months.
Financial history
is clear; after each credit expansion there is a credit
contraction. If you
want to see how history provides a clear roadmap for the path of
deflation after the biggest expansion of credit in financial
history then check out Bob Hoye's weekly online interviews from here:
www.institutionaladvisors.com/whats-new.htm or read his
historical summary of the rise and fall of credit markets "Great
Depressions Are So Methodical" and "Authoritarian
Audacity is Going to Crash" |
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