May numbers stink

Longtime readers of this blog may remember that back in late winter, declining sales and slowing price growth were blamed on snowfall.

The results for the three months since then have been even worse even as that snowfall has melted away.

The May sales price increase YoY was 1.1%. This was down sharply from April's 3.2%. As I wrote back in April:

I will venture a guesstimate that the national home price "increase" will be close to zero sometime this summer. And maybe then the CREA will blame the heat...

Summer starts in June and we are already close to zero. Let's wait until the June results to try to confirm my guesstimate (and see if CREA blames the heat).

Watch CREA spin (remember they have a fantasylike 5% price increase for the full year despite all the building inventory)

• "Unlike the situation in the United States, re-sale housing prices in Canada continue to increase," said CREA president Calvin Lindberg.

• "The resale housing market has evolved in just a few short months," said CREA chief economist Gregory Klump. "The record number of new listings means more opportunities for buyers.

Yes, the situation in the United States is worse RIGHT NOW. Yes, housing prices in Canada continue to increase. But, the US did not go negative right away. It took almost a year for prices to go negative once the bubble began to unwind. Our bubble only started to unwind a few months ago!

"More opportunities for buyers". Lovely how they spin a record number of listings as a buying opportunity. Yes, there are more houses available and possibly better deals than a few months ago, but this is like saying that internet stocks were a good buy one month after the dotcom bubble began to burst. The housing bubble has taken years. It will take at least a few years for house prices to remove the excesses. Not a few months....

And remember that this housing bubble is unwinding despite record oil prices (Calgary and Edmonton are now the 2 weakest markets), declining interest rates and a strong loonie and new record highs on the TSX.

It will be interesting to see the effects of this week's sharp run up in mortgage rates on the July and August numbers. I think that a negative number in either July and/or August is quite likely. And then, you may (just maybe) start to see articles in the mainstream papers similar to what you've read here since the beginning of the year.