Alberta Canada Foreclosures Personal Finances

Interest rates and defaults

Continuing our consumer debt series, and today we’ll take a look at how interest rates play into things. So lets jump right in and start with interest rates and bankruptcies.

Here I’ve overlayed interest rate and the national and provincial bankruptcy rates. What we can take from this graph is that the gradually decreasing interest rates haven’t had any noticeable impact on bankruptcy rates. The one thing that does stand out is the dramatic spike in interest rates in 1994/1995, which coincided with the start of a more gradual spike in bankruptcy rates which eventually topped out in 1997.

It’s hard to say if, or how much, of a causal relationship may exist between these happenings, but as we discussed in my last post, people are increasingly likely to default on loans early in their terms, particularly when the rates charged are high. So the rise in bankruptcy rate could be a remnant of people taking on debt during the interest rate spike… or it could be nothing. Worth noting anyway.

Moving on, now we’ll hit on interest rates and mortgage arrears. This data goes back one more year, and here we can see there was an additional spike in interest rates in 1991… and like the bankruptcy rate, we can again see an arrears spike lagging, and topping out about two years after the interest rates did.

Again this could be a coincidence, but such a relationship would seem rather intuitive and seems to show abrupt interest rate spikes may contribute to later spikes in loan defaults. The slow decline of interest rates don’t appear to have a major effect, but rapid increases do seem to be a noticeable driver.

So, obviously in our current low rate environment this could spell trouble ahead as rates are almost assuredly to rise at least back to more historical norms. That graph is also another reminder of just how historical norms have been and how fortunate borrowers have had it for the last decade. 7.5% appears quite moderate over the last 20 years (and if we went back 30 it would look even better), but if we suddenly found ourselves in that situation tomorrow, havoc would be wreaked, and not just on the real estate market.

Finally, cause I have the data and went to the trouble of making the graph, we’ll take a look at interest rates and average bankruptcy deficiency We hit on this last week, but for a quick and dirty explanation, deficiency is the surplus of liabilities over assets upon filing for bankruptcy.

This data goes back much further, all the way to 1976 and the series was annual. Obviously what catches everyone’s eye is the big spike there in the early 80′s. Seems there were a whole lot of bankruptcies that included foreclosures during that spike, especially in Alberta.

Beyond that period there doesn’t appear to be as much a relationship between the measures as the ones we’ve discussed earlier. But as I discussed last week, most of the time the majority of bankruptcies do not include foreclosures, so that isn’t surprising. While we don’t have foreclosure numbers going back to the early 80′s, the deficiency measure would seem to indicate there were a whole lot of them.

Anyway, hope you guys found this interesting, a little macroeconomic food-for-though to chew on this weekend. Take it for what it’s worth.

Alberta Foreclosures

Anatomy of a foreclosure

Spent most of yesterday sorting through my database full of info… updating, upgrading and quite a bit of deleting. Long over due as it was a colossal mess, and I needed a refresher over what I had. It was good and got a ton of ideas about things I could cover… and which in all likelihood will be forgotten by time I can get around to it.

And in that spirit, I’m doing a post on something I just randomly stumbled upon while surfing today. Found a old page that was once from the site and thought it would make an interesting topic.

It’s just basic information on 88 foreclosures in Edmonton and Calgary from a couple week of July, 2003. Amount owing, original mortgage amount, month issued and interest rate. Figured it made a nice little random sample to examine, and even better, it’s from a period when the market was far more balanced then what it’s been like the last four or five years.

We can test some axioms, and see where it leads. In articles and interviews I’ve heard it stated that most foreclosures occur in the few years of the loan. So, lets start there:

Seems that claim holds up, at least as far as our block sample goes. Over 60% of those foreclosures had occurred within three years… over 75% within five… and 95% by year ten.

We can also see that most occur in the second year in particular, over 1/4 in fact. Years one and three are the next highest at around 16-17%… from there it seems the general trend it that the longer the mortgage is held, the less likely it is to default.

Those that looked at the linked page may have noticed that a few of those had some rather extreme interest rates, as high as 20%… obviously not made to prime borrowers. So, I also ran the numbers again for rates less-than-or-equal-to 10% just for shits and giggles and so we can see what it looks like for move conventional loans.

Pretty much looks the same, except years one and two are slightly lower, and the rest slightly higher. Not really a surprise, as obviously people taking those elevated rates are higher risk and the rates themselves make the vicious circle complete.

Of the 12 that had the >10% rates, four were foreclosed upon within a year… six in the second year… and the remaining two in the third year. Typically these were smaller loans, often under $25,000, so presumably second mortgages, but a couple were over $50,000.

Now we’ll look at a slightly different angle, this is how much is owing relative to the original loan at the point of foreclosure… or more accurately, how much has been paid off. By far the highest range here are those that actually owe more then their original loan… almost 40% (also did this graph for loans with interest rates at or below 10%)

The incident rate quickly drops to about 24% of foreclosures for those that have paid back between 0-5%. In this sample almost 2/3 foreclosures involved borrowers with less then 5% of their loan paid off. Oddly the rate plummets in the 5-10% range, then bounces back up, but I’d chalk that up to it being a small sample. If we had a larger sample the curve would probably be much smoother.

In any case, we can see that the less principle one has repaid, the more likely they are to fall into foreclosure… or conversely, the more principle one has repaid, the less likely they are to fall into foreclosure.

This would obviously jive with our findings earlier in this post… and as one should expect, those defaulting early in their mortgages life would in all likelihood have repaid less principle.

While I wouldn’t take any of these stats as gospel, as this was just a random block sample, at least it was a fair sized one and the results appear as one would expect intuitively. Anyway, I thought it was interesting to analyse, hopefully you feel found it interesting to some degree.

Alberta Foreclosures Macroeconomics Personal Finances


Hope everyone enjoy their Thanksgiving long weekends, and filled up with turkey and complex carbohydrates.

In the comments section of last weeks post on consumer debt someone referenced these stats on bankruptcies/insolvencies in Canada. I managed to find their historical bankruptcy numbers, but not the proposal and total insolvency stats (insolvencies = bankruptcies + proposals).

So, we’ll take a look at the bankruptcy numbers today, and rather then do one monster post I’ll just do a series and in coming days and weeks I’ll do further comparisons between consumer debt, bankruptcies and foreclosures.

Rather then just quoting the hard figures, most of these measures have been derived to give a better historical context. This is a figure of the number of consumer bankruptcies per 1,000 people in Alberta for any given year. Also included the long term average and median figures for comparative purposes, and a projection of what the 2009 figure will be based on the numbers through August and long-term seasonality.

As we can see, through 2008 we were still in the average range overall, but actually quite low when compared to the prior 20 years (given the shift there must have been some kind of change in measurement and/or legislation around 1990). During the boom period we saw bankruptcy figures fall, but are expected to spike back up this year to pre-boom levels.

It is also interesting to look at the historical figures. For example, we’ve talked here often about the early 80′s recession and have heard the stories about the devastation felt by residential real estate. We can see bankruptcies did double from the boom days in the 70′s to the bust in the early 80′s… but the rate stayed constant right through the rest of the 80′s, no discernible spike as one might expect.

Then in the early 90′s we see the rate climb from 1.0 to 2.25… this also coincided with a recession (though minor compared to a decade earlier), but curiously in the mid 90′s the rate took off again and topped out above 3.5 after the recession had already played itself out.

From what we know about home prices, they had a significant drop in the early 80′s, and minor one in the early 90′s, but were stagnant in the mid-90′s. So, it would seem any relationship between consumer bankruptcies and real estate is probably not closely tied to bankruptcy rate.

Just some food for thought, here is the year-over-year change in bankruptcy rate. Interesting to note that based on our current pace, 2009 will have the highest increase ever. No small feat considering it was not exactly low going in. While probably not directly effecting real estate, it is a rather damning statistic for the Alberta economy as a whole.

Beyond just the number of bankruptcies, the stats also include sets on the assets, liabilities and deficiencies (assets less liabilities). I adjusted all these for inflation (2009 dollars) for comparative purposes and then divided that number by the number of bankruptcies to get a ‘per bankruptcy’ figure.

Here we can really see the effects of the early 80′s recession. While the rate was not so high, there was a HUGE difference in the sums of money per bankruptcy, and that’s likely a sign there there were a lot more foreclosures involved… where as it appears in most years the vast majority of bankruptcies involve those that do no own real estate.

When it topped out in 1984 there was an (inflation adjusted) average of about $237,000 worth of liabilities (very close to the inflation adjusted average real estate price at the peak of that boom, coincidence?!), to only about $60,000 worth of assets. The figures at play between 1982 and 1986 completely dwarfs any figures before or since.

Here is another graph that somewhat combines the two prior. It overlays the rate over the average deficiency (I included nominal and real dollars just so you can see for yourselves the effects of inflation).

Here we can see that the sums involved are really not related to the number of people defaulting. Through from 1991-2001 despite the rate being at all time highs, the average person who filed for bankruptcy was less then $10,000 in the hole.

So we can fairly safely conclude that in those years that vast majority of those going bankrupt were not home owners, or in any danger of becoming one, so the rate itself is probably of little value in predicting foreclosure rates.

What is a better indicator of foreclosure trouble is the sums involved.

The 80′s were remembered as disastrous, and the deficiencies witnessed then reflected that. We had a slight hiccup in the early 90′s, and we can see a corresponding blip in 1990. The more people that are foreclosed upon, the higher the numbers will skew.

That we have been tracking upwards the last few years could be a warning of things to come, but as we’ve discussed here, the levels of non-mortgage debt carried have also taken off of late too, so we must take that into the equation.

It will be interesting to see what the numbers end up looking like in 2009, as I could not do any projection for the deficiencies and that is the number we’re most interested in for our purposes.

Foreclosures Mortgages

Albertan’s continuing to fall behind

Sorry, this will be a bit of a quick one, I’ve been crazy busy, so the blogging is a luxury I don’t really have time for… that’s why the updates are going to be a little slow coming the next couple weeks. Anyway, the CBA released their latest (June) mortgage arrears figures… and no surprise, we’re up again and have now eclipsed the 0.60% mark.

That’s up from 0.58% last month, and 0.26% a year ago. Even the low interest rates and resulting hot housing market in June couldn’t reverse the alarming trend in arrears, as we again draw closer to the previous high water mark of 0.69%.

Nationally arrears stand at 0.42%. Alberta continues to extend it’s ‘lead’ as the next highest rates were in Atlantic Canada and Ontario where they held from May and came in at 0.46% and 0.43% respectively. Saskatchewan now has sole possession of the lowest rate at 0.22%, and Manitoba is next at 0.25%.

Foreclosures Mortgages

Arrears continue ascent

Had been preparing an update on the affordability numbers, but then noticed the latest arrears figures were out, so we’ll knock that one out first and leave affordability for later this week.

As the title implies, there has been no slowing this spring, and as of May we were up to 0.58%, up from 0.25% a year ago, and 0.54% in April. Also getting increasingly removed from the long term average of 0.37% and nearing the record heights reached hit 1997 (0.69%).

It will be interesting to see if the increased sales in June will have any effect on these figures. Obviously the strong sales in May did not appear to, but we should also remember the full effects of the the employment turmoil in the new year were really starting to show up.

Lets take a look at the rest of the nation. Obviously looks to be in a league of their own at the moment, particularly isolating the West. Saskatchewan and Manitoba continue to enjoy the lowest rate in Canada, coming in at 0.23% and 0.24% respectively.

B.C. will be interesting to watch, and their numbers are really starting to pick up since prices started going down there, and it would not surprise me in the least if they are soon tracking very similar to Alberta, and eventually even worse. As bad as it may have got here, the affordability factor there is/was MUCH worse.

In the East, everyone has seen increases since the financial crisis, but much more gradually. Here I’d say Ontario will be interesting to watch going forward considering the hit the manufacturing core has taken.

So, that’s about it for today, should give you guys something to do if you can tear yourself away from JK Wedding Entrance Dance. Gotta admit, even as a person with a cold black heart, and whom hates few things as much as weddings and dancing… even I must admit there is a certain undeniable charm about that video. Any who, now back to more manly things, like sports, scratching and beer.

Foreclosures Mortgages

Arrears… in arrears

The sad state of the news media really hit home this week… literally it seems for me. I’ve been pointing out how the real estate groups have been plastering their ads all over the place, and also seem to get some to get more then their fair share of favourable press as a result.

Well, it isn’t just real estate that gets such treatment.

I usually try to watch the six o’clock local CTV news, or at least have it in the background. Well, Monday I was surprised to see an ad for the Town of Westlock displayed prominently. Normally such things may have gone overlooked, but as I grew up in the area, this caught my attention.

And what do you know, the very next night, the CTV news had a great big puff piece on the Town of Westlock. So, that’s about as much circumstancial evidence as I need to convict on charges that buying ad time is all one needs to do to get your ass kissed publicly.

Not that Westlock isn’t a wonderful town, it is… if you’re looking to score drugs. So yeah, it’s a bit of a shithole, but I say that with love… and just to show I haven’t forgotten my roots, it’s not half the shithole Barrhead is!

Ahh… the pathetic state of main stream media. Anyway, enough babbling, on to the real show.

So, as my faithful readers already know, I’ve been tracking the mortgage in arrears figures for a few months now. Usually I’m right on top of it… and usually there release if greeted with a great big ‘Meh’ from the media.

Of course, this has been the month from hell at work for me, so while I did mention these numbers last week in the comments I didn’t get around to doing a full post until tonight… and because of Murphy’s Law, earlier this week suddenly Alberta having the highest arrears rate in the country was of course suddenly news… even despite our knowing this two months ago… and now to all the googlers out there now I look like a follower, those farkin’ sneaky bastages!

As has been the trend, arrears rates in Alberta continue to shoot up at a rather high pace. As of April the rate stood at 0.54%, up from 0.50% in March and 0.24% a year earlier.

As mentioned, this is the highest in the nation, and by a growing margin, Atlantic Canada in the next highest region coming in at 0.45%. Nationally the rate is 0.40%, and Saskatchewan has the lowest rate at 0.21%.

It is worth noting that apparently only about 60% of lenders are represented in these arrears figures, and are typically the more established outlets… so the actual figures are probably a bit higher as many of the higher risk outlets are not represented. That said, this data is still pretty good, and should be fairly representative historically.

We’ve been over this before, so if you’re that interested you can search the archives. This month I’m going to do a comparison of how arrears relate to foreclosures.

This is a four month moving average of foreclosures in Edmonton and Calgary from Yeah, it’s pretty erratic. If I have time I’ll do it with a moving average and that will clean it up a bit. They do their measure weekly, so some months get four weeks, others five, and it makes things a bit jagged.

Regardless, we can clearly see there was a BIG spike come the 4th quarter of 2008. Now lets compare this to the number of mortgages falling in arrears over the same period. That’s mainly what we’ll be looking at. Oh, and that’s not really an ‘Alberta’ number, that’s just Edmonton and Calgary combined… but it’s late and I’m not gonna fix it, so just keep that in mind. In any case, it’s more the relative values we’re concerned with anyway, and insofar as that goes, this is fine.

Though, it is interesting to note how Calgary is having significantly more foreclosures then Edmonton. Historically Calgary was proportionately higher, but now they’re damn near double. They had largely tracked together, and that they suddenly decouple in the second quarter of 2008 only to resume tracking but at a much lower level… this makes me suspicious of the Edmonton numbers from then on. Very odd, especially considering the market conditions.

Obviously one would expect a correlation, as a mortgage falling three months into arrears will signal the beginning of the foreclosure process. We can see that the upward trend for both started in a small scale in the second half of 2007… no surprise, as that’s when the prices started to fall.

But it wasn’t until 2008 that arrears really started to take off, and decoupled with foreclosures. It’s interesting that while arrears climbed steadily, foreclosures leveled off in the winter of ’09 and then declined in the spring… only to itself rocket up in the fall.

We should probably be wary of this observation (re: foreclosures) in light of our earlier one of Edmonton’s numbers suspiciously dropping at that time, which would account for the drop. Now, if my suspicions are valid, intuition would suggest that the foreclosure level probably would have remain somewhat flat over this time while arrears were still rising… only to eventually shoot up themselves.

Again in 2009, arrears continues to grow, while foreclosures have leveled off… so it will be interesting to see what happens in the second half of ’09 with these figures. There appears that there could be some seasonal differences, while arrears keeps growing, banks for some reason appear less likely to foreclose in the spring… which are typically strong periods for sales and prices, as we’ve seen this year, and last, despite general downward trends.

It’s an interesting observation that the strength of the market doesn’t appear to have near the effect on the mortgage holders as it does the lenders. Mortgage holders appear as likely to fall behind at any time, whereas banks seem less likely to initiate foreclosure when the market is ‘hot’.

It is worth mentioning that I believe these measures are calculated differently. Foreclosures are the numbers instigated over any given four week period… whereas arrears is more an accrued figure consisting of all mortgages that are between 3 months behind on payments or more but not yet foreclosed upon. In other words, a property in arrears may be counted as such for several months, whereas a property in foreclosure will only be counted once.

Alberta Canada Foreclosures Mortgages

Latest Mortgage Arrears Figures

The Canadian Bankers Association released their latest mortgage arrears stats today, these are for March.

As we can see, they’re continuing their meteoric rise, and have now passed the 0.50% threshold. 2,416 Albertans now find themselves three or more months behind on their mortgages (typically at the point foreclosure proceedings begin, though it often takes another six months before such properties hit the market). There are now over three times as many Albertans in arrears then there were two years prior (740 in March ’07), and well over double the number from a year ago (1,054 in March ’08).

We still haven’t neared the levels witnessed in ’96/’97, but are well above the long term average (0.37%) and the current acceleration is showing no signs of slowing down (if the current trend holds (~0.03% MoM, we could hit the 0.70% level by October).

Last month it was requested to take a look at the year-over year change in these figures, so here those are (this is of the % of mortgages in arrears, NOT the raw total of mortgages in arrears)

From mid ’07 on we’ve seen an explosion of mortgages going into arrears, and in the last 8 months this has leveled off at roughly 120% year-over-year increases, which means the figures have more then doubled over any given 12 months. Such year-over-year increases haven’t been seen in the last twenty years, and likely not since the early 80′s when the first bubble burst.

It is interesting to note the contrast with the first graph, where we saw that as many as 0.70% of mortgages were in arrears during the mid-to-late 90′s… and this second graph we can see that was reached after an extended period of more moderate year-over-year increases (30-50%).

This time around it’s been a result of rather explosive year-over-year increases (110-130%), and while it has leveled off, it has leveled off incredibly high and as of yet shows no sign of slowing yet… beyond that, much of the economic turmoil (layoffs, etc) experienced in the new year would still be largely unfelt in these figures.

On a national level, arrears ticked up to 0.39% from 0.38%. Like last month, Alberta again has the highest rate in the country, and is opening it’s lead, as the Atlantic has dropped to 0.44%, while Ontario remained at 0.41%.

At the opposite end of the spectrum, Manitoba and Saskatchewan now enjoy the lowest rates, at just 0.22% each. B.C. is next at 0.29%, but the effects of their housing bust is starting to be felt as the rate there is growing rapidly (they were a nation low 0.16% a year earlier).

Alberta Canada Foreclosures Mortgages

We’re #1!

It’s been a tough week for the province… first we find out that the provincial government thinks our beaches and children are too damn ugly to use in advertising, so they have to co-opt some from England. Okay, and yeah, that foam finger is actually one for the Oakland A’s, but what can I say, our foam fingers here in Alberta just don’t stack up… err, I mean, its use was intentional and to give a more global focus… yeah, that’s it.

If stock photography is good enough for the Province of Alberta, dammit, it’s good enough for my blog! And, honestly, as a marketing type, whomever thought up that “It was intentional” defence, should be given a one-way ticket to Northumberland to find new employment.

Then, as Two-third pointed out, Alberta had the biggest decline in retail sales in the nation in February. Add to that Mark Carney lowering the bank rate and telling Canadians to start spending like crazy or he is going to unleash “quantitative easing.”

So yeah, it’s been a tough week… but fear not, the Canadian Bankers Association had news that is sure to erase all those bad memories. They released their February numbers, and Alberta is now leading the nation in mortgages in arrears.

So suck on that Atlantic Canada, we’re the champs now!

As of February 0.48% of all mortgages in Alberta are now three months in arrears or more. Up from 0.45% in January, and 0.22% a year earlier. Alberta has seen something of a meteoric rise in this regard since bottoming out at 0.14% in 2007, at which point we were neck-and-neck with B.C. for lowest rate in the nation.

Arrears were up all across the country though, the national average now stands at 0.38% (up from 0.36%). Manitoba has the lowest rate in the country at 0.23%, followed by Saskatchewan (0.25%) and British Columbia (0.27%). At the opposite end of the spectrum, Atlantic Canada comes in at 0.46% and Ontario at 0.41%.

So what does it all mean… well, if you’re looking for new business opportunities, I’d say repossession is going to be a real growth industry for the next year or two. Arrears are showing no sign of slowing down, and if people are behind on their mortgages, they’re likely behind on all kinds of credit.

A lot of boys will be parted with their toys, so if you’re liquid and in the market for quads, trucks, plasma tv’s, etc… you can probably get a helluva deal.

Not that these are situations necessary to cheer… but that’s reality. For those with cash in hand, recessions can be a great time to acquire assets, business, personal and luxury… unfortunately real estate is still grossly overpriced, give it time though, even that will one day correct, then it’s vulture time!

Sidenote: I’m trying something new with the comments, because the amount of people posting as “anonymous” was out of hand and you never knew whether you were dealing with one person or six. So please enter some kind of handle to identify yourself as if you want to comment.

I’d rather avoid forcing people to register with Blogger or OpenID, but if this doesn’t work that’s what we’ll have to do. So, if you have any comments or questions, fire away.

Alberta Canada Foreclosures Mortgages

Record number of Albertans in mortgage arrears

The real estate bulls out there will say I’m being sensational… and I’ll say, gee thanks! I always thought I was pretty good, but sensational?! Really?! I mean, I’ve been working out, and my girlfriend has told me I’m the best she’s ever had… but I’ve told her the same thing… and lets just say I know for a fact at least one of us is lying. Not saying which one of us though.

Where was I? Oh yeah, sensationalizing. Okay, yes, yes my title is somewhat sensationalized… but it is also true, and if the pushers out there can cherry pick figures, why not I?!

By now I’m sure you’re all wondering what I’m rambling about, so, lets get on with the show. Today the Canadian Bankers Association released their January numbers of Canadians in arrears on their mortgages, complete with provincial breakdowns.

As the title implies, as of January, there are more Albertans in arrears on their mortgages then anytime since they started recording such things. A graph of that can be found here:

As of January, 2,168 Albertans were three months or more behind in their mortgages. The first time it has eclipsed the 2,000 mark. The previous high water mark February 1997 when it was 1,835, and that number stood until December last.

As you can see, during the boom the number took a big dive, bottoming out in May of 2007 at just 649… since the market has cooled though, the number or those in arrears has skyrocketed up more then three-fold, increasing by more than 100 per month through 2008.

Now, some will argue it’s not really fair to compare straight numbers because the population has swelled greatly, as has the number of mortgages outstanding… and I agree. I just wanted to justify my “sensational” title… now we’ll get on to a better measure, the ratio of mortgages in arrears to the total number of mortgages.

So yeah, by this measure things aren’t so bad… yet anyway. Currently we are sitting at 0.45% of mortgages being in arrears. Slightly above the long term average of 0.37%, but well below the previous high of 0.69% in February 2007.

What should be troubling is that this number is rising quite rapidly, having bottomed out at 0.14% in June of 2007, and increasing every month since, and more then doubling since a year prior.

Some may blame the recent downturn in the economy for this, but remember, the stock markets and oil didn’t plunge until autumn of 2008… and this measure is only of those at least three months in arrears as of January. So the effects of that shouldn’t really be seen yet.

We should also remember all the layoffs that started hitting in the new year, piled up quickly, and continue to… the number of those in arrears is bound to really take off as for savings erode and EI benefits start to expire. When the full effects of that is felt this figure could very well surpass those heights reached in 1997.

Rising numbers of those in arrears will obviously increase the number of foreclosures, and should those start hitting the market en masse its going to put even more downward pressure on prices. This is an emerging issue, and something that will be very interesting to track over the next couple years.

For those curious, here is how Alberta stacked up against the national average:

Alberta was in the same range as the rest of the country, especially since 1995. Since 1990 the national average has been 0.42%, while Alberta came in at 0.37% as mentioned earlier. Also interesting to note that the rate has started to increase nationally over the last six months, and currently stand at 0.36%.

For an idea of how the rest of the provinces stacked up, here is the chart for western Canada.

Here we can see the western provinces have been pretty close for the last decade. It is interesting to see how much of an outlier Saskatchewan was during the early 90′s. Since 1990 B.C. has had the lowest average in the nation at 0.32%, Alberta was second. Saskatchewan (0.54%) and Manitoba (0.49%) on the other hand were on the opposite end of the spectrum.

Here is the eastern half of the country. Quebec is a bit more erratic then the rest, but nothing like Saskatchewan. The average for Ontario was 0.41%, Quebec was 0.49%, and the Atlantic provinces come in at 0.41%.

Forecasts Foreclosures HPI

More Odds and Ends

Don’t really feel like running numbers today, and there were a lot of housing relevant stories coming out this week, so we’ll look at those.

  • Mike Fotiou wrote up an interesting piece on the CREA forecast for 2009, and their past fortunetelling exploits. Their predictions for Alberta are not going to make sellers any more hopeful… an 8.9% price decrease AND 19.1% fall in sales. And this is from the real estate pumpers. I don’t recall seeing any Edmonton specific predictions from the CREA yet, but I’d have to think it’d be right in line with their provincial guesstimates… or as Mike jokingly pointed out, in light of their rather rosy predictions for Calgary released last month, could be far worse… though I suspect there was little consideration for the numbers they pulled out of their ass last month, when they yanked them out this month.
  • Statscan released their latest New Housing Price Index for December, no surprise there, we’re down 8.2 points from last year. By far the biggest decline in the country, almost double the next closest (statistically and geographically), Calgary at 4.3. I should probably run their figures next time I do a piece on new construction, so stay tuned for that.
  • A couple interesting stories out of Calgary that also ring true for us up here. First, an article about the effect of falling resale values on mortgage default rates. More and more people are finding themselves upside down in negative equity, some are saying it’s the worst they’ve seen in 25, which not so coincidently is when the last big boom ended. Scary thing is we’re just getting our feet wet this time around, I have a feeling this is going to become a very big issue in the next couple years.
  • The other article was about the increasing number of vacant new condos hitting the market. With builders and speculators all heavily diving into these entry-level homes, when the market finally hit it’s critical mass, suddenly the bubble kind of burst on demand and we’re finding the cities significantly overbuilt… and still with plenty heading down the pipeline. This is of course leaving developers unable to find buyers, and speculators unable to unload or even rent out their properties.
  • Then we also have the news about unemployment drastically rising. While maybe not directly effecting housing, when people are unsure about their jobs, or losing them, they are not going to be buying houses. Which also kind of ties into the prior two articles mentioned, because with a significant number of developments still under construction but very few new starts to replace those jobs upon completion. That’s only going to swell the ranks of the unemployed, take more potential buyers out of the market, and increase mortgage defaults.

So, to make a long story short, there is a whole lot of downward pressure on prices at the moment.

Oh yeah, and happy Friday the 13th, you have just over 12 hours left to dump your significant other… or I suppose you could just get them something nice, it’s up to you.