Thursday 5 September 2013

Expect 2013's "Demand-Depletion-post-Tightening Phenomenon" to be more pronounced than after previous CMHC rule changes

As I had expected back in June/July in my 2013 Mid-year summary:
3 JULY 2013
Greater Vancouver Sales are higher than last year, however the sales pick-up varied greatly with region. The record-low Fixed mtg rates this Spring was likely the main contributing factor – for the people who can still qualify for mortgages.

If Fixed rates continue to creep higher, we can expect to see people with mortgage pre-approvals jumping into the market before it expires (usually 60 day rate-hold). So we might continue to see a busier July than last year. However, if rates stay high, I expect to see a worse 2nd half than 2012-H2.

Demand was indeed pulled forward with the relentlessly rising bond yields over the last couple months.
However, it seems like the usual rate-holds are 90 days (CIBC, BMO) and 120 days (RBC,TD), with Scotia being 60 days.  It is also worth noting that some of the "special rate sales" offered by banks have a shorter rate-hold (60 days).

Back in June, RBC raised its 5Y Special Fixed Rate from 3.09% to 3.19% on June 10, then 3.39% on June 24.

With Fixed Rate on the upswing since early/mid June, the 90-day low-rate holds are starting to expire right about now.  The 120-day low-rate holds may still have a month left before they expire.

In any case, this seems like The Last Binge.

Globe & Mail had just published this story today:

Mortgage fears drive up Canadian home salesSep. 05 2013Fears of higher mortgage rates are driving strong sales in a housing market that was on the ropes just a year ago.
August sales numbers hint at a Canadian market that has “shades of taking flight again,” said Bank of Montreal economist Sal Guatieri. But observers suspect the upward trajectory will ultimately be flattened by rising rates, which have prompted many buyers to jump in sooner than they otherwise would have.

The rising rates have been forcing potential home-buyers who were sitting on the fence to make a major financial decision within 90-120 days. 3-4 months is enough time for any fence-sitter with a buying-bias to capitulate. This has occurred, resulting in an unseasonably "hot" July, August, and early September.

Contrast this year's 3-4 month "grace period" with previous RE-tightening events:
- 2012 July's CMHC mortgage rule change had 19 days of advance-warning.
- Previous 2 CMHC mortgage rule changes in 2010-11 had 2 months of advance-warning.
*Note that CMHC rule changes, upon implementation, overrides existing mortgage-preapprovals.

In 2013, where the 1% rate hike over 3 months was obviously also a "RE-tightening event", the fence-sitters have 3-4 months to capitulate, after they get pre-approved with lower rates in May/June.

Due to the longer duration of "grace period," I expect the "Drawn-Forward-Demand" phenomenon to be more pronounced than previous RE-tightening events.   I also expect the "Demand-Depletion-Following-Tightening" phenomenon to be more pronounced as well, taking place as early as mid/late September, exacerbating in Fall/Winter.

Sunday 1 September 2013

大温房市中短期展望: Short-to-Medium Term Greater Van RE Predictions - Update

(will translate to English when time permits)

Update 8/31/2013:
1. 国税局开始针对楼花买卖者 全面严格征税罚款
2. 固定利率于6月开始明显上扬,5年固定已从2.69%(4月) 升至3.79%(8月底)
3. 央行8/28提升房贷 核准利率 (Qualifying Rate) 至5.34%, 受影响的包括 1/2/3/4 固定利率 及 浮动利率 申请人,及 HELOC 房屋净资产抵押贷款
4. CMHC MBS Rationing 于2013/9/1实施,造成大银行的 borrowing cost 提高,连接将导致5年房贷利率在短期内上升 0.15%-0.65%
5. 加人非按揭负债率创8年新高, 而 BC省居民非按揭负债量则比加国其他省份高42.5%

- 因为2013上半年维持的极低固定利率,加上6-8月间固定利率的明显攀升,造成7-8月成交量近乎反常的热络。 
- 指标价看来在7月已停止了回升。 2013年7月比2012年7月房价下跌 2.3%。
2013年全年房价的跌幅应不至于原先预测的 同比下跌 -8%, 但GF认为目前我们见到的,只不过是稍微延后了最后的"着陆". 而不管我们最后是"软着陆" 还是 "硬着陆",最后的着陆点还是一样的。
- GF为了不更改年初预测帖的预测值, 同时基于时间所限,没有更新 跌幅预测。 
- GF认为,今年12月底大温全房型指标价,会继续低过2012年年底。 年底同比跌幅约为 3%-5% (年初原预测为-8%)

1. 大温房价其实在2011年6月已达顶点 (但部分区域在2012年5月才到顶)。
2. 大温房价将维持下跌趋势至少到2015年,但有可能从2015年后继续缓跌/持平几年。
3. 大温总跌幅 (从2012年5月算起,全房型指标价), 保守预计为 20%-25%。 GF预测大温房价从最高点到谷底为期 3年(2015) 到 >5年(2017+)
4. 加国经济面临极大风险。 房市泡沫的"着陆"将明显波及加国(尤其大温)的整体经济,家庭收入,就业率,及政府税收。加币也将因此面临继续(兑美元)下跌的风险。
5. 世界经济距离步出阴霾还有很长一段路。 通缩的风险远大于通膨。

GF 建议:
1. 大温投资房 (尤其公寓): 未来一年绝对避免
2. 大温自住房: 若你收入或积蓄能承担房价下跌25%, 及renew 房贷时利率上涨>1%的风险,那量力而为,但能等则等。 若你的收入及积蓄只能让你在最近的(低)利率下勉强贷到款买房,那GF建议你继续租房,或是买较不吃力供款的小房。

关于GF 自己:
- GF于2011年初已存足买二房公寓的20%首付
- GF于2013年初已存足买独立屋>20%的首付
- GF目前以约$2000 的租金租栋较新的小独立屋 (2012市价为$800,000)
- GF 基于生活形式的可能变化,会考虑在2014年底-2016年出手买自住房 (即使房市还在继续下跌)。