One doesn’t have to be an expert in the real estate market to grasp that there’s something different in the market today.  Call it what you will, a sense, intuition or just plain old gut feel but there’s little doubt that things are changing.  The only question that remains is the degree of change?

Here are the facts as we know it:

• Home sales have dropped month over month by 5.8%, which is the biggest monthly drop in two years
• Number of newly listed homes is down 1.7% month over month
• Greater Vancouver Real Estate Board states that re-sales were down 30.7% as compared to August 2011.
• Toronto Real Estate Board states re-sales were down 12.5% as compared to August 2011
• According to the August 2012 CMHC quarterly report, second quarter insured mortgages unit volumes were down 25%

Indeed, things are different today.  The data speaks for itself, and the debate today has been reduced to correction versus bust.  I think it is far too early to come to come to any final conclusion but that will not stop stakeholders and the press from jumping into the debate. This issue is way too sexy to resist, and there’s a lot on the line for our economy and policy makers.  I came across an interesting quote from Wayne Moen, President of CREA., “August’s sales figures will no doubt provide comfort to policymakers, providing the first clear indication that the recent changes to mortgage regulations aimed at cooling the market are working as intended”. Very eloquent but policymakers may find the end result as comfortable a slipping into a pair of size 34 jeans, when you’re a size 38!  Policymakers insisted the most recent changes to mortgage rules targeted the tail end of the credit curve; therefore, the overall impact to the market would be marginal.   Nothing about the statistics indicates marginal, and I suspect home owners in Vancouver and those in the mortgage industry would agree.

 Look for the Vancouver market place to garner special attention in the coming months.   As an example, “the housing market correction appears to be under way, driven by the sharp downturn in Vancouver”, according to TD’s Chief Economist, Craig Alexander.  He went on to say, “we expect the slowdown will become broader based following a fourth round of mortgage insurance regulation tightening by the federal government”.  The way I interpret this is what goes for Vancouver, also goes for the entire country.  And then there’s the obvious, if it all goes bad, you know who to blame. 

Until next time,

Cheers.