As we all know housing prices have been stabilising for the past three months.
They were in free-fall in October with no bids and a 20 MOI at one stage. Now prices have ticked up from last month (though still down 10% YOY) and inventory has dropped YOY and MOI is around 4.
Larry Yatkowsky has a quick summary here:
Is that it? Are we off to the races again?
Everyone has their view, but I for one doubt it.
What we have had for the last three months is the coming together of several factors:
1) The irresponsible financial entities around the world have been pulled out of near collapse by the infusion of Hundreds of Billion of dollars of US and European tax-payers money.
2) Interest rates around the world have been slashed to near zero to try and prop up assets. We have the lowest mortgage rates on record.
3) Commodities have got a bid, admittedly from catastrophic levels (especially oil, gold and copper), and that has helped mining and oil producers. However natural gas for which provide the Province a huge % of it's revenue has continued to drop.
4) We had the normal seasonal bounce in sales that occurs in spring.
Now it gets interesting. I think the fun on economic front has just started. The US is losing 500,000 jobs a month! We are their largest trading partner. We will continue to get hit. Interest rates have been ticking up here and in the US, a trend which I hope reverses soon or our collective goose is cooked. Weak demand and higher interest rates would be disastrous.
I expect the recession to start biting deeper soon. I don't want that, but I cannot believe that we skate so close to world-wide economic collapse and then are back to normal a few months later. There are huge swaths of debt that cannot be repaid, on anything from Commercial RE to Machinery.
Employment is likely going to be weak for some time. The job-buying program of both the US and Canadian governments have still to have any appreciable affect. Meanwhile they are all sinking into deeper deficits. Pretty soon we will get Provincial and Federal cut-backs to try and contain these deficits, at the same time as they will talking about job creation.
So, I see this as a brief interlude. I could be wrong of course, and if I see strength in the economy returning over the next few months and housing to continue strong, I will reconsider my views.