Purley

According to an article in the Globe and Mail today, Canada's housing market is one of the safest in the world to invest in. Apparently the worst is Ireland, the Netherlands and then the UK.

If you want to read the whole article go here:

http://www.theglobeandmail.com/servl...?query=ireland

MB-Realtor

I think part of the reason House prices won't drop much or at all in Canada, is that for much of the Country there was no real boom in House prices until the early 2000's. Most of the large % growth has been in Alberta, fueled by the oil, and this has skewed the average for the whole Country.

Traditionally Winnipeg has been a very flat market, growth has been below or with inflation for the 70's thru 2002, no booms, no busts. The local market here did not start to grow over 10% till 2002/2003. Even with the growth we have seen here, houses are still very affordable compared to income.

I think the only part of the Country that may see a serious loss is Edmonton and possible Calgary. We are having a lot of people returning to MB after going to Alberta to seek a better standard of living, only to find that though they were being paid twice what they'd get here, their standard of living was actually lower, due to the higher prices of accommodation.

MarkG

Saskatoon is getting overpriced too; asking prices for a house like ours in our area are up about $15,000 in the last month alone, and around $80,000 since we bought our place six months ago.

That may be 'affordable' with current low interest rates, but it's not affordable by any historical standards. And with America going into a recession, the money to fund the bubble isn't going to be around forever.

From what I hear, Edmonton has a vast supply of new houses with no-one to buy them, so I can't see prices there staying high for long.

roanin

For two decades Moose Jaw saw an annual growth rate of about 7%, flat as piss on a plate! Suddenly there are some noises about oil and gas exploration here, and the whole province is going nuts! House prices here jumped 27% last year, and are geared for a further similar increase this year. To my mind there is no reason for it, as it's all built on pure speculation. Consequently local prices are spiraling out of orbit, as are rents. This is obviously a "realtor driven" market, and the bottom will drop out of it before long, unless the oil and gas actually start coming out of the ground. Slums that you could buy two years ago for ten grand are now asking for fifty thousand! I will be waiting for the downside before I buy anything else, that's for sure!

MB-Realtor

Realtors do not drive the market. If anything its the other way around.

The housing market, like all markets, is driven by the Buyers and their perceived values. The present housing boom in Winnipeg is being driven by a lack of houses on the market, the classic "supply & demand", when there is a lack of product but a surplus of buyers the price goes up, the other way round and the price goes down.

Realtors control the market no more than Builders or Lawyers do.

MarkG

And, at least as important, by how much money banks are willing to lend. The reason the UK market is on the verge of collapse is that the banks have suddenly realised that lending $500,000 to anyone with a pulse who's willing to pretend they have a high-paid job in the City when they really flip burgers in McDonalds' might be a bad move.

Canada was one of the last Western nations to have its housing bubble, so I'd guess a year or two before it has its housing bust. But, absent big wage rises, that's going to happen sooner or later.

roanin

Your point MB, is as always, valid and traditionally correct. You will know by my previous posts that I am "pro-Realtor" and have always worked closely with the industry. I am however, convinced that there are shenanigans going on in this part of the Country, in so much as a spot of "price fixing" (ie: advice on values to selling clients),, incremental increases that are being pre-determined at Real Estate Board meeting levels.
I have lived through numerous "boom and bust" markets, but have never seen anything like this. The huge spike we had last year, and the prediction for this year are astounding and I cannot see what is driving this so-called economic boom. I truly believe that this "boom" that is perceived around these parts, is one that has been "created", and has no apparent substance to it. There is nothing stopping a "board" from arriving at a consensus that all advisories on values should be increased by a certain percentage every month. This would quickly stir buyers into the "gotta buy now, before prices go any higher" syndrome, and this in turn fuels others to do the same. Next thing you know, rents are sky high, just like here, and no accommodation is available. I would be most interested in your opinion of what might appear to be a rant of mine, but I am (for once) totally staggered by what is going on here.

iaink

Much as I appreciate the work done by Realtors, I'm a little cynical about the nature of property valuation. Ive often wondered exactly how it works.

Most home owners putting their house on the market will get a few realtors to offer values before deciding on a selling agent. I think its only naturally that they want to get "top dollar", so surely there is a temptation for realtors to slightly over state the market value in an attempt to woo the seller to give the commission based sales opportunity to them.

If a realtor were to offer an honest, unpadded value, surely they run the risk of not getting the business.

Most sellers seem to accept the idea that there is bound to be some haggling over the price to seal the deal, so which is the more likely to be selected to sell the property in the following scenario:

• Realtor A valuing a property realistically as worth 300k, telling the seller its worth 320k and then selling at $300 after negotiation
  
• Realtor B valuing it at 300k and telling the seller its worth 300k and selling it for the asking price.

Personally I cant see realtor B having any chance of getting the business...sellers want to hear their property has gained in value, even if it hasn't gained as much as they are told...

Naturally over time people look at the list prices of similar properties to determine the likely value of their house and see all these similar houses to theirs on the market for 320k...so their house must be worth that right? So any realtor who comes in and says its worth 340k stands more chance of landing the commission than a realtor who values it correctly at 300....

Ultimately the market determines the value someone will pay for it, but the general public dont get to see behind the velvet curtain to see which realtors offer accurate first time appraisals and sell at the list price, and which sales go through well below the sticker price on the listing.

gingnut

Don't ask me about the prices in SK. I think some homeowners or realtors have been playing with voodoo. I house do explain the 1/2 duplex or semi that I a bought in 2006 for 74K could probably fetch 190K in 2006? At first I thought that we were just catching up to the rest of the country, now all I cans say is the world is gone mad, and we are lucky we bough in 2006.

AlvicBC

We looked at a house last June in Indian Head which was for sale for $33k, our realtor told us to avoid it like the plague and that it should be condemmed!

When we arrived here in January someone else had bought it - sucker - we thought, they did a bit of reno to it, ok quite a lot, and it went on the market this week for $125k

MarkG

Cheap credit. Interest rates around the world have been artificially low for the best part of a decade, and that's created a tsunami of borrowed money that's flowing from country to country and market to market destroying everything in its path.

Right now that money is going into commodities, which is pumping a lot of money into the Western provinces, and pushing up house prices in the process; and, to a lesser extent, people are using it to buy houses directly as 'investments'.

The only rational solution is for central banks to push interest rates to 7/8%+ to suck up the credit, but that would cause a global recession and hence no government is going to do it in a hurry. The risk is that if they don't raise rates, it will cause a global depression instead.

Lorna_D

CBC News just said that house prices in Saskatoon has gone up 58% this year and Regina 26%

AlvicBC

So hurry up and get out here and get one bought woman!

MarkG

To be fair, Saskatoon prices were probably below sensible values until recently; but I'd say they're substantially over sensible values right now. Our house would probably sell for $100,000 more than I think it's worth based on local incomes.

And some people have been complaining that they can't get anyone to work for them for wages they can afford because other companies are paying much more than they used to for low-skilled or unskilled work, so there have been some wage rises to partially justify price rises. But how long those wage rises will continue is another question; if America goes into a recession and stops buying cheap tat from China, that will eventually reduce commodity demand from Canada.

roanin

Well put Mark. The whole market at this time, is a load of bollocks to say the least. I own and operate a small roofing and reno's company, and I have ditch-digging grunts coming to me for work, and they want $20:00 an hour! not from this boy, I'll do it myself first! Hence I have turned to the US labour pool for my journeymen, and bringing them in on the PNP. My customers wont pay ridiculously high prices, so how the hell can I warrant $20:00 an hour to a numbskull? Sooner or later though, the public are going to have to realize that real estate values etc, transfer into higher building and maintenance costs.