Real Estate

In California, Home Sales Are Plunging Like It Is 2008 All Over Again

  • Last Updated:
  • Nov 5th, 2018 9:17 pm
[OP]
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May 18, 2015
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Thornhill, ON

In California, Home Sales Are Plunging Like It Is 2008 All Over Again

Southern California suffers its worst housing slump in over a decade

Higher mortgage rates and overheated home prices hit Southern California home sales hard in September.

The number of new and existing houses and condominiums sold during the month plummeted nearly 18 percent compared with September 2017, according to CoreLogic. That was the slowest September pace since 2007, when the national housing and mortgage crisis was hitting.

Sales have been falling on an annual basis for much of this year, but this was the biggest annual drop for any month in almost eight years. It was also more than twice the annual drop seen in August.
Sales of newly built homes were 47 percent below the September average dating back to 1988, while sales of existing homes were 22 percent below their long-term average.
Ouch!

https://www.cnbc.com/2018/10/30/souther ... ecade.html
40 replies
Deal Fanatic
Feb 29, 2008
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Has to be those new B20 rules....Oops!
Deal Addict
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Nov 10, 2015
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Monte Creek, BC
We had a number of friends that bought in Palm Springs during the last downturn, and they scored big. Keep an eye on these prices and we might see bargains like before.
No political content in signatures (Who did I offend?)
Sr. Member
Dec 30, 2012
886 posts
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Toronto
poleman wrote:
Nov 2nd, 2018 11:26 pm
We had a number of friends that bought in Palm Springs during the last downturn, and they scored big. Keep an eye on these prices and we might see bargains like before.
Arizona was dirt cheap at the bottom of the housing crash. Unbelievable deals. If I still lived in North America I’d be watching Phoenix and Scottsdale prices.
Deal Addict
Jun 3, 2009
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Montreal
poleman wrote:
Nov 2nd, 2018 11:26 pm
We had a number of friends that bought in Palm Springs during the last downturn, and they scored big. Keep an eye on these prices and we might see bargains like before.
civiclease wrote:
Nov 3rd, 2018 5:20 am
Arizona was dirt cheap at the bottom of the housing crash. Unbelievable deals. If I still lived in North America I’d be watching Phoenix and Scottsdale prices.
What type of taxes you would have to pay to IRS and CRA when selling at a gain? Thanks.
Deal Fanatic
Feb 9, 2009
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i wanna buy a secondary home in cali....when will new home sales be at 80 year lows?
Deal Addict
Jul 3, 2007
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Toronto
Higher rates will do that.... expect it to continue....

and it wont be different in Canada....
Deal Fanatic
Feb 29, 2008
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joepipe wrote:
Nov 3rd, 2018 9:50 am
Higher rates will do that.... expect it to continue....

and it wont be different in Canada....
Correct, but Canada goes even further to hurt buyers. The "rules" that were brought on were not necessary. At least not to this degree because higher rates tend to put downard pressure on prices and affordability. We just multiplied that pressure by 2 or 3. Intervention was not needed. Let the market do its thing and keep rates rising. Get rid of some of these ridiculous rules.
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Jul 3, 2007
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JayLove06 wrote:
Nov 3rd, 2018 10:06 am
Correct, but Canada goes even further to hurt buyers. The "rules" that were brought on were not necessary. At least not to this degree because higher rates tend to put downard pressure on prices and affordability. We just multiplied that pressure by 2 or 3. Intervention was not needed. Let the market do its thing and keep rates rising. Get rid of some of these ridiculous rules.
the "rules" made total sense and were a smart move to protect the banks and economy, they just waited too long to put them in...... should have been in 2015 or 2016 when the market was already hot... the only ones who didnt like the rules were realtors, what a surprise...

people were borrowing at 2.4% and maxing out income qualifying ratios, with no plans on how to handle higher rates in the future
which everyone knew were coming one day....

now they're here, surprise!
Member
Jul 26, 2015
203 posts
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Vancouver, BC
joepipe wrote:
Nov 3rd, 2018 12:46 pm
the "rules" made total sense and were a smart move to protect the banks and economy, they just waited too long to put them in...... should have been in 2015 or 2016 when the market was already hot... the only ones who didnt like the rules were realtors, what a surprise...

people were borrowing at 2.4% and maxing out income qualifying ratios, with no plans on how to handle higher rates in the future
which everyone knew were coming one day....

now they're here, surprise!
There is a big problem with the rules. They only hurt local buyers.

All the foreign buyers and new immigrants (Permanent Residents who moved to Canada within 4-5 years) can get a mortgage with absolutely zero income qualification. Most big banks still have this policy. 35% down and you are all set.
Same interest, No income qualification. Stress test can not be applied, rising interest rates don’t hurt the purchase power, just make it more expensive to hold the property.

The only thing that hurts non-residents is the foreign buyers tax where it applies. But it doesn’t apply to new immigrants, they are residents.

It’s unfortunate, but the stress test simply hurts local people who earn their income in Canada and struggle to get qualified with the new rules.

It’s not a level playing field.
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Jul 3, 2007
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Sam286 wrote:
Nov 3rd, 2018 2:31 pm
There is a big problem with the rules. They only hurt local buyers.

All the foreign buyers and new immigrants (Permanent Residents who moved to Canada within 4-5 years) can get a mortgage with absolutely zero income qualification. Most big banks still have this policy. 35% down and you are all set.
Same interest, No income qualification. Stress test can not be applied, rising interest rates don’t hurt the purchase power, just make it more expensive to hold the property.

The only thing that hurts non-residents is the foreign buyers tax where it applies. But it doesn’t apply to new immigrants, they are residents.

It’s unfortunate, but the stress test simply hurts local people who earn their income in Canada and struggle to get qualified with the new rules.

It’s not a level playing field.
New immigrants are not getting mortgages without income verification....

It did exist with some banks years ago....
Member
Jul 26, 2015
203 posts
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Vancouver, BC
So not true.

Only CIBC really stopped their new immigrant policy.

BMO on another hand is pushing it harder than before and recently raised the maximum amount it can lend under this policy.

Other major banks are on and off all the time, a lot of things depend on the branch and the branch managers. Their underwriters are still generally ok with the process.
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Jul 8, 2010
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Ontario
Sam286 wrote:
Nov 3rd, 2018 2:31 pm
All the foreign buyers and new immigrants (Permanent Residents who moved to Canada within 4-5 years) can get a mortgage with absolutely zero income qualification. Most big banks still have this policy. 35% down and you are all set.
Same interest, No income qualification. Stress test can not be applied, rising interest rates don’t hurt the purchase power, just make it more expensive to hold the property.
Yes, correctly, same field. Locals can buy with 5% down and they are insured by CMHC, PR's can buy with 35% down. Don't pay your mortgage for few months, will that cover the 35% down?!?
No wonder why some banks are pushing hard of those newcomers mortgages...
Sr. Member
Dec 30, 2012
886 posts
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Toronto
JayLove06 wrote:
Nov 3rd, 2018 10:06 am
Correct, but Canada goes even further to hurt buyers. The "rules" that were brought on were not necessary. At least not to this degree because higher rates tend to put downard pressure on prices and affordability. We just multiplied that pressure by 2 or 3. Intervention was not needed. Let the market do its thing and keep rates rising. Get rid of some of these ridiculous rules.
But I thought rising interest rates are bullish for real estate since people rush to secure a mortgage before rates go even higher?
Penalty Box
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Aug 11, 2005
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civiclease wrote:
Nov 3rd, 2018 6:55 pm
But I thought rising interest rates are bullish for real estate since people rush to secure a mortgage before rates go even higher?
or the fact that the economy is growing and people are getting significant raises and people don't need mortgages!
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