Minus

It's official: CREA reported a negative YoY for June (-0.4%).

I feel good about my prediction back in April that we would be close to zero by summer. I recently opined (and most voting in my poll) that this would wait until at least July but it appears that the market has collapsed even faster than the housing bears (including yours truly) could have anticipated.

Such is the nature of a bubble: Prices go higher for longer than even the bulls can imagine and then they seem to fall faster and harder than even the bears can imagine.
One month of data can always be distorted, but the underlying trend all year has been clear.

The news in the past few weeks has been horrible: declining stock markets including the TSX, carnage in the financial sector, still high oil prices, rising mortgage rates and a new crackdown on overprime. Does this sound like the recipe for June being a one month blip?

The spin by CREA is that the weakness is due mostly to Calgary and Edmonton going negative. I notice that whenever companies or organizations spin numbers, they always omit the very positive numbers (such as Saskatchewan).

"The Canadian real estate market, while cooling, is still much different than the U.S. market with its record low number of foreclosures or defaults" says the President of The Canadian Real Estate Association, Calvin Lindberg. In the United States home prices dropped by 14.1 per cent in the first quarter of the year, according to the Case Shiller national home price index.

True, as of June 2008...Stupid comparison, though. No one is saying that Canadian housing is dropping at US rates today!

It appears that Canada is tracking the US with a 2 year lag, as the US market only went negative in 2006. I suspect that while this lag is currently about 2 years, that it will shorten over time. The US market took about 12 months to cool from overheated to negative. It appears as if Canada has done it in about 6 months. Also, when the US market began to slow, the US economy and the credit crunch were not big factors.

I will update my Chain of Events in the next few weeks. I wonder when CREA will update their fantasy numbers? For CREA's 5% to happen, the YoY increase would have to average about 7% the next six months!