(Scroll down for Garth Turner Forecasts)
Canadian home prices in September were down 1.1% from the previous month, according to the Teranet-National Bank National Composite House Price Index released today.
The monthly decline ended a string of 16 consecutive increases in the composite index since the last monthly deflation in April 2009. For the first time since February 2009, prices fell in all six of the metropolitan markets surveyed.
Year-over-year, Canadian real estate values were up 7.9%, showing increases in all cities surveyed with the largest YoY increase in Vancouver & Ottawa at 9.2%.
In Calgary, house prices were down 2.2% from the previous month. It was the second consecutive monthly decline. Year-over-year, Calgary house prices were up 1.7%.
On Forecasting and Humility
I’m used to pundit’s real estate forecasts falling short, but when someone stubbornly asserts something in the face of evidence to the contrary, I get irked.
On November 24, 2010 Garth Turner posted: “I have consistently suggested there will be a correction of up to 20%, followed by a slow and painful decline in prices. Where it ends is anyone’s guess. I do not expect a drop of 40-70% as in Phoenix, and never suggested that would be the case — Garth”
This is where some of his “blog dogs” have taken issue, as some are still wistfully holding onto the promise of 50% declines in Canadian real estate values for years now. But wherever would they have gotten such an idea? Surely not from Garth himself, right?
Don’t be surprised if these things happen
* Real estate prices in Calgary, Edmonton, Fort Mac at 50% of 2006 levels
Expect these things to happen
* Falling house values until at least 2010
The explosion in resale listings across Canada is but the first phase of a market meltdown which will soon move into widespread price reductions in all markets. Those price drops will be between 15% and 50% (as I previously forecast), based on local conditions. My numbers may well be revised in early 2009, and it won’t be for the better.
We are in the early stages of this correction, and price reductions will be much more dramatic by October. Year-over-year, I am sticking with my prediction of a 15% national dive by this time next year, with some markets off twice that amount.
I expect all major Canadian markets will correct by an average of 10-15%, and some areas will be clobbered with 30% declines by the end of 2008, or the early Spring of 2009. Does everyone agree? Of course not…Especially if you are a greater fool.
Home values will be lower next year by between 15% and 50%, depending on the community
The next on the hit list (in this order, I would say), are Vancouver, Toronto, Victoria, Regina, Winnipeg and Saskatoon. In those last three cities, the reduction in home values could look more like Armageddon, with drops of up to 50%. In Vancouver, it will be about 30% by this time next year, and in Torontopolis, 15% with more pain to come after that.
The Canadian market is doing exactly what I forecast. This will continue. Declines in prices of 10% or 12% in Alberta will become 20% and 25%. Vancouver ultimately will be even harder hit, and Toronto values will drift lower at the end of 2009 by about 15%. Some neighbourhoods, far more.
…and those are just some of the forecasts I quickly found while browsing his blog. Ironically, today when a local bubble blogger posted on Greaterfool that “Calgary will become Phoenix and see a 60% plunge,” Garth responded by saying, “Helping people rests on credibility, not hyperbole.” Whoa, talk about a policy shift.
What’s even more tragic about his forecasts is that Canadian real estate prices actually went UP 20% between 2008 and 2009. So to “continue” predicting a drop of 20% followed by a slow melt means what about his previous forecasts exactly?
On November 2008 he posted an artists rendition of the Bow tower, with his comments underneath stating: “This is what the future looked like. Remember it well.”
No reason to “remember it well.” The future is here, and guess what, I see the Bow Tower rising proudly above the Calgary skyline.