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.