Canadian Real Estate UPDATE (Brian Ripley)

In January 2010 Vancouver SFD and Townhouse average prices reached new all time record highs since the last peak in April 2008. Ottawa too turned in a new record peak for combined residential prices since their last in October 2009.Edmonton had a slight uptick in price as Calgary, Toronto and Montreal single family house prices continued heading down. Now we can watch and see if the new Vancouver-Ottawa heights are a blow-off to the most irrational distortion in housing prices in Canadian history thanks to our Central Government's interest rate fixings and price and wage controls and subsidies. We have a conservative government in name only. Or will the pending HST in July 2010 in Ontario & BC as well as the anxiety of higher interest rates this year spark a new rally into prices unknown. Sellers are gearing up as measured by combined residential inventory rising dramatically at 139% M/M in Vancouver and 109% M/M in Edmonton (scorecard). The seasonal spring startup will reflect the Canadian sentiment for taking on debt. The Feds would like you to, it's what they are banking on: "David Wolf, adviser to Bank of Canada Governor Mark Carney, said the revival in the housing market was an intended result of monetary stimulus and that housing would continue "to work as an important engine pulling the Canadian economy out of recession." SOURCE: http://tinyurl.com/yf6fcj2 If rising bankruptcies is a measure of emerging from recession, then the Feds are on target. (Canadian Bankruptcies up 10% Y/Y)http://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br02224.html#tbl1 If converting full time employment to part time is the goal; the Feds are succeeding. http://www.td.com/economics/comment/dp020510_emp.pdf The CANADIAN REAL ESTATE PLUNGE-O-METER & PRICE SUPPORT FORECASTER tracks the dollar and percentage losses from the peak and projects when prices might find support. Housing price data are average Single Family Dwellings* except Ottawa which are Combined Residential (Single Family, Multi Family and Condos). Montreal data changed from average to median at March 2007)  SOURCE

*SFD Prices Vancouver Calgary Edmonton Toronto Ottawa Montreal Prices at Peak $788,499 $505,920 $426,028 $423,559 $320,966 $246,000 Peak Price Date Jan-2010 Jul-2007 May-2007 Oct-2009 Jan-2010 Jul-2009 Prices Now $788,499 $441,217 $367,747 $409,058 $320,966 $235,000 Prices Now Date Jan-2010 Jan-2010 Jan-2010 Jan-2010 Jan-2010 Jan-2010 Months since Peak 0 30 32 3 0 6 $ Plunge from Peak $0 -$64,703 -$58,281 -$14,501 $0 -$11,000 $ Plunge per Year $0 -$25,810 -$21,795 -$57,530 $0 -$21,820 % Plunge from Peak 0.0% -12.8% -13.7% -3.4% 0.0% -4.5% % Plunge per Year 0.0% -5.1% -5.1% -13.6% 0.0% -8.9% Deflation per Month $0 $2,151 $1,816 $4,794 $0 $1,818 **Price Support Target $491,821 $265,173 $204,886 $334,272 $240,533 $209,216 Months Until Target ? 82 90 16 ? 14 Price Support Date ? Nov-2016 Jul-2017 May-2011 ? Apr-2011

The price support target** in the table above represents what average Single Family house prices across Canada were in February 2005 (Ottawa are combined residential) which marked the beginning of a +/- 3 year period of ardent speculation in Canadian real estate. Look at the price chart and see that there was a 4-6 month plateau period while buyers and sellers twitched like a herd and when the credit spreads narrowed and the yield curve began its journey towards inversion, the stampede began (Feb 2005). As of January 2010 banks have their 5 year fixed mortgage rate set at a 499 bps above the BoC rate. They borrow from the BoC at near zero and mark it up 5% all risk insured by you dear tax payer thanks to our elected comrades in charge of transferring wealth from private to public hands.

NOTE WORTHY: The Competition Bureau filed an application with the Competition Tribunal this week, saying CREA's rules are anti-competitive and limit consumer choice. Said Steve Neil, the managing broker of the Vancouver discount home-selling website HomeBuyAndSell.com "There are billions of dollars in commissions at stake, literally, in Canada. I think there's something like $5 billion in commissions paid out annually by consumers. That's a very, very large number. Their (CREA) fear is that some of that is going to be taken away. The system actually works quite nicely right now. They would like to maintain the monopoly on that, which inflates the commissions that they charge." SOURCE CBC News Feb 10/10: http://www.cbc.ca/consumer/story/2010/02/10/consumer-real-estate-fees.html