Housing market has big cracks It is probably a real estate bubble that will eventually burst – two years after the rest of the world

December 16, 2009

Barrie McKenna Published on Tuesday, Dec. 15, 2009

One of the enduring mysteries of the Great Recession is how Canada largely escaped the crushing home price correction that hit virtually every other Western country. After a brief setback in 2008, Canadian prices resumed their upward climb. The average price of a house is up a remarkable 21 per cent in the past 12 months, reaching a new record of $341,079 in October. Fresh numbers on home sales are due out today. In the hottest markets, such as Vancouver, buying fever is back, marked by bidding wars and overnight campouts to buy condos.

Compare that with the United States, where housing prices are down roughly 30 per cent from their peak. Even in Europe, values are off an average of 6 per cent. The contrast is startling, and quite frankly, defies logic. It isn’t as if Canada was immune to the worst recession since the Second World War. The economy contracted, stocks tumbled, unemployment jumped more than two percentage points to 8.5 per cent, 321,000 jobs were destroyed and personal income fell.

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TD Economics – Resale Housing Outlook

December 16, 2009

 CANADIAN HOUSING: FIRST IN, FIRST OUT, BUT WHERE TO FROM HERE?

Existing home sales and prices, as provided by the Canadian Real Estate Association (CREA), went through a sharp downturn last year, falling by 40% and 12% respectively from their peak of late 2007.   Just as quickly and sharply, a phenomenal rebound kicked off early this year and was still going strong early in the fourth quarter. From their trough sales had surged by 74% as of October, while the average price was 20% higher.  In this extremely sharp two-year cycle, the housing market has undeniably held up to its ‘fi rst-in, fi rst out’ (FIFO) historical billing. The downturn in existing home sales and prices (Q1/2008) preceded the start of the technical recession (dated Q4/2008) by three quarters. On the flip side, the strong recovery in existing home sales and prices that started in earnest in Q1/2009 led the end of the technical recession (dated Q3/2009) and the start of the overall economic recovery by at least two quarters.

Furthermore, the Canadian resale housing market downturn and recovery was as V-shaped as can be. The length of each leg of this cycle was also nearly symmetric with the downturn lasting roughly all of 2008 and the ensuing recovery spanning all of this year.  Read the rest of this entry »


US – Administration plans to press mortgage providers to accelerate help to struggling borrowers

December 16, 2009

WASHINGTON (AP) — The Obama administration, battling a foreclosure crisis that shows no signs of relenting, will step up pressure on mortgage companies to do more to help people remain in their homes, officials said Saturday. The administration will announce its expanded program on Monday, Treasury spokeswoman Meg Reilly said. “We are taking additional steps to enhance servicer transparency and accountability,” Reilly said. She said the goal was to increase the rate that troubled home loans were converted into new loans with lower monthly payments.

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