Credit problems in Canada
Mish Shedlock has an interesting post comparing the alarming jump in Canadian credit delinquency to the situation in the US. More than 500,000 Canadians are now at least 90 days behind on credit payments, hitting a delinquency rate of 1.52% (compared to a US rate of 1.32%).
The Federal Reserve Bank of New York has Dynamic Maps of Bank Card and Mortgage Delinquencies in the United States that some may wish to consider.
In regards to mortgages, Canada has some “catching down” to do, and it will. All the bubble areas such as Vancouver, Calgary, Toronto, etc are going to get hit hard.
Hat-tip to Adrian for the link.
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July 7th, 2009 at 11:24 am
That’s 500,000! A city the size of Vancouver filled with delinquents.
July 7th, 2009 at 11:32 am
The Canadian hubris, thinking everything is “better” than the USA from banks to beer. Too many Canadians seem to think it’s patriotic to be blindly optimistic.
July 7th, 2009 at 11:45 am
That’s 500 thousand, not 5 million. Still quite bad, though…
Btw, the housing bubble has been restarted in Oz: http://forum.freemarkets.ca/topic.php?id=685
July 7th, 2009 at 12:12 pm
http://www.theglobeandmail.com.....le1208996/
July 7th, 2009 at 12:14 pm
The intoxicating allure of cheap money reminds me of the Oscar Wilde story ‘A Picture of Dorian Gray’. The facts behind the smile are fairly gruesome.
http://www.vancouversun.com/Bu.....story.html
I was reminded again of the shallow phony facade of Vancouver when they pimped the ‘sexy beach’ story. It’s impossible to feel sorry for all those people who choose to lay in feces soaked sand along English Bay. They really should name the city ‘Denial’. I have never been in a place where people had their collective heads so far up their asses.
Me, I’m a zero tolerance guy when it comes to handling, living by, walking past, swimming in, any amount of human feces.
The debt ratio’s are over the top in Canada and thats shitty too. Its been a comedy of irresponsible governance to have politicians pushing more debt onto people by lowering intrest rates that they know will have to go up by factors of 4 and 5 in order to contain the current inflation. Typical short term thinking by politicians who get to bail on a fat pension after only a few years in office.
July 7th, 2009 at 12:23 pm
I thinks that ‘Portrait’ but point taken. This cheerleading by the local MSM pimp machine is nothing more than lipstick on a pig. The fundamentals continue to deteriorate.
http://www.theglobeandmail.com.....le1208996/
July 7th, 2009 at 12:29 pm
Anonymous: Yeah, the beer thing is pretty ridiculous – there are good small breweries everywhere, and the biggest Canadian and American brewers are all pretty generic.
Banks I’ve got no way to rate, but I’m hoping we’re not as bad as the US or we’re all screwed. I mean, they’ve got an economy, where we’ve got wood and oil. We used to have some fish and industry, but they’re gone. If we get in a serious national financial crisis, who’s going to pull out of it easier?
July 7th, 2009 at 12:29 pm
I was listening to Croatian radio last night and there was an extended report on the effects of the global recession on this summer’s tourist season, which habitually swings into high gear after July 1st. (Most of Croatia’s tourists are from Europe–Germany, Italy, Czech Republic, Slovenia, mostlly.) In most parts of the Dalmatian coast, nightly lodgings are down between 35-50% compared to the same period (May 1st-June 30th) last year, and the first few days of July have offered little reprieve.
There was a revealing interview with a charter boat operator, who claimed that the very rich didn’t seem to be hurting, while the middle class has been decimated. He went on to talk about the extent of the penny-pinching that was occurring.
When Czechs (and Slovaks) first started vacationing in Croatia in large numbers, they were unique in that, unlike the Germans and Italians, they would load up their cars, vans, and campers with a week or two worth of groceries and wouldn’t spend any money in the restaurants or stores. Many would find very cheap accommodation and a family of four could literally spend less than 100 Euro per peson for a week’s vacation in Croatia. Needless to say, most Croatian businesses dependent upon tourism were contemptuous of these penny-pinching Czechs.
Fast forward to this summer and even the German and Italians have “gone Czech.” Even those who have enough money to charter a boat for a week have brought all of their food with them and are not spending any money at Croatian restaurants, bars, etc.
In short, reports of the global recession’s demise are exaggerated and premature.
July 7th, 2009 at 12:31 pm
I believe it. I grew up in a small town and keep in touch with some childhood friends. Quite a number of them didn’t go on to pursue higher education, getting married early instead (and then divorced) or just bumming around the world, never settling on a career, and I’ve noticed that a number of them have HUGE amounts of debt-student loan debt, credit card debt, car loans etc. Oh dear, oh dear, as an accountant this makes me feel sick, all that debt among people in my age group-early thirties. What will become of these people-bankruptcy eventually I guess. It’s a terrifying prospect…
July 7th, 2009 at 12:31 pm
rado@freemarkets.ca: Aw c’mon, I was only a zero off, that’s not so bad.
Point taken though, and fixed.
July 7th, 2009 at 12:37 pm
Wow! Looks like some people are taking ‘do not pay for 90 days’ a little too far. Check out that Globe and Mail article that denialisrampant linked to – Bankruptcies are up 31%!
Take a look at the graph of consumer bankruptcies in that link. We’ve got a problem in this country that ‘good beer’ won’t fix.
http://www.theglobeandmail.com.....le1208996/
July 7th, 2009 at 1:37 pm
rado,
Vancouver only has 600,000 people. Poster #1 is not far off. Which city in Canada do you know of have 5 million people?
July 7th, 2009 at 2:15 pm
Luckily, thanks to first time buyers, rents are coming down- providing relief for those who need to pay down debt.
A condition that should remain unchanged for the foreseeable future: as a lot of renters are currently entering the new and improved bull real estate market, while some other renters lose their job.
I just hope that those who have just bought a home don’t end up becoming the ones who lose their jobs.
Oh well, not to worry: they will always be able to sell it for more than they bought it for, and if not, the worst that might happen is that they might lose a small amount of their 25% down payment.
Well, hopefully, the economy will get better soon, stopping the job losses and causing interest rates to rise- that should keep real estate prices up, and delinquencies down.
July 7th, 2009 at 2:19 pm
i havnt seen this vancouver housing/money blog before
http://www.investingintelligently.com/
July 7th, 2009 at 2:32 pm
The Canadian hubris, thinking everything is “better” than the USA from banks to beer.
You’re not trying to make a case for American beer are you?
July 7th, 2009 at 2:35 pm
The debt ratio’s are over the top in Canada and thats shitty too. Its been a comedy of irresponsible governance to have politicians pushing more debt onto people by lowering intrest rates that they know will have to go up by factors of 4 and 5 in order to contain the current inflation. Typical short term thinking by politicians who get to bail on a fat pension after only a few years in office.
Let’s not confuse the politicians’ motives here. Interest rates were lowered in lockstep with US rates in an attempt to limit the rise of the $CD and save manufacturing jobs in Ontario and Quebec.
The subsequent effect on the RE market might be seen as an added bonus, or collateral damage, depending on your point of view.
July 7th, 2009 at 2:43 pm
Canadian or American beer only share the name. Real beer is a totally different liquid!
July 7th, 2009 at 2:54 pm
#13 gvrdpropertyowner
Ummm – last time rates went up in a RE “bull market” in BC, property prices plummeted, so your assertion that higher interest rates will keep prices up lacks any historical relevance. While you might think that rising rates (designed to combat inflation) will lead to a rise in RE prices, not all asset classes follow that model. In inflation rises, paying 2 or 3 times the current mortgage rates will decimate many new RE buyers in Vancouver. Affordability will erode in that situation, leading to greater pressure on prices, and an eventual decline in prices.
And your assumption that new buyers will maintain their “25% downpayment” is really far fetched. There is a reason why zero down/40 year mortgages, and now 5% down mortgages, have been so popular – because FTB’s do not have 25% down anymore! They are lucky if they have 5% down, and even then that is usually due to parental assistance.
Zero down/40 year mortgages permitted those without money to buy an asset class they could not otherwise afford. So while banks once had more stringent lending standards, and required 20% downpayments, the banks have abdicated financially sounds policies in favour of risk free profits from CHMC insured mortgages.
The market has re-inflated because the last wave of FTB’s with no money is capitalizing on the cheap, easy credit. If rates were higher, they would not be in such a panic to buy because they would not be able to afford it. And just as they could not afford RE last fall during the RE downturn when rates were higher, so too will they be unable to afford RE once rates rise (as you are predicting).
July 7th, 2009 at 3:04 pm
“the last time rates went up in a RE “bull market” in BC, property prices plummeted, so your assertion that higher interest rates will keep prices up lacks any historical relevance.”
The reference, of course, is the 81-82 period…
July 7th, 2009 at 3:07 pm
“Ummm – last time rates went up in a RE “bull market” in BC, property prices plummeted, so your assertion that higher interest rates will keep prices up lacks any historical relevance.”
Dude, I was been facetious.
July 7th, 2009 at 3:24 pm
Well except the part about dropping rents- that’s true.
July 7th, 2009 at 3:25 pm
“the last time rates went up in a RE “bull market” in BC, property prices plummeted, so your assertion that higher interest rates will keep prices up lacks any historical relevance.”
The reference, of course, is the 81-82 period…
Except that housing crash started a full two months before the BoC cranked up the interest rates.
July 7th, 2009 at 3:44 pm
“Except that housing crash started a full two months before the BoC cranked up the interest rates.”
The RE downturn in Spring 2008 occurred even with low and declining BoC rates. It wasn’t until the rates reached their all time lows in early Spring 09 that the market picked up.
If RE prices were declining when rates were low and/or declining, imagine what will happen when rates rise….
July 7th, 2009 at 7:35 pm
Heard the Federal Govenment has understated deficit by over 50%. Should be closer to $150 billion according to independent think tank. Anyone seen article on this?
July 7th, 2009 at 7:42 pm
Found it, five year projections.
http://www.cknw.com/News/Natio.....?id=123615
Occupancy rates in Hawaiian hotels 50% below normal for this time of year. News gets better and better. Think all those tourists are saving their bucks for 2010 Olympics and their new vancouver condo they’ll buy new at the False Creek sewer pit!
July 7th, 2009 at 7:52 pm
Things are looking strong on the Island. *cough*
http://www.bclocalnews.com/van.....49032.html
July 7th, 2009 at 8:09 pm
RE: falling rents. A friend of mine is looking for an apartment in Yaletown. Looked at brand spanking new TV towers. Apparently there are few takers of the oddly-shaped 1 beds at $1200/month. The leasing agent, who all but admitted to being semi-desperate, said she would consider any “reasonable offers”…
July 7th, 2009 at 9:17 pm
Yalie:
You mean like this place?
http://www.realtor.ca/property.....Id=8345690
They are asking 279K for this 439 sq ft, um, modified trapezoid (cheapest listing at TV towers). If they are difficult to rent at 1200/month, that means they are really worth little more than 100K. Interest alone at 6% (and yes that’s coming) would be 1400/month on the asking price. 30 listings at TV towers right now. No bubble here, folks.
July 7th, 2009 at 10:17 pm
Turns out to be not quite as bad as shown.
While the 1.52% rate is correct, it’s not 1.52% of all Canadians, but 1.52% of Canadians eligible for credit (~28 million). So the number is ~420 000 – still quite large.
http://www.bnn.ca/blog/10523.html
July 7th, 2009 at 10:47 pm
Mark: Why would you ever include the people who aren’t eligible for credit in a percentage count for delinquencies?
July 8th, 2009 at 6:31 am
JD: Because a year or two ago you could walk your pet into the bank and get a HELOC on the dog house?
July 8th, 2009 at 7:43 am
MrBear: That means the dog is eligible, so you count it.
Including people ineligible for credit in a count of people delinquent on credit payments would be like including water buffalo in a count of dogs with rabies.
July 8th, 2009 at 12:25 pm
No bubble in Vancouver? I don’t think so …
http://www.demographia.com/dhi-ix2005q3.pdf
July 8th, 2009 at 12:26 pm
“Among the major markets, Vancouver is the least affordable, with a Median Multiple of 8.3, followed by Sydney (8.3), San Francisco (8.0), San Jose (7.2), Adelaide (7.1), Melbourne (7.1) New York (7.0) and London (6.9).”
July 8th, 2009 at 12:40 pm
Also from the Demographia report:
All of Canada’s “severely unaffordable” markets were in British Columbia, including Vancouver, Victoria, Abbotsford and Kelowna. Canada had 10 affordable markets, the largest being Winnipeg (3.0).
The most affordable markets were Cape
Breton (2.1) and Thunder Bay (2.2). Other “affordable” markets included Chatham, Windsor, Moncton, Saguenay, Saint John (NB), Trois Rivieres and St. John’s (NL).
July 8th, 2009 at 12:42 pm
The market has re-inflated because the last wave of FTB’s with no money is capitalizing on the cheap, easy credit. If rates were higher, they would not be in such a panic to buy because they would not be able to afford it. And just as they could not afford RE last fall during the RE downturn when rates were higher, so too will they be unable to afford RE once rates rise (as you are predicting).
From what I’ve been seeing the people around me buying, they are buying with 25% down at least. Also I heard the income verification process is a lot more robust this time ’round. I’m not a bull, but this is just what I’ve been seeing..
July 8th, 2009 at 12:59 pm
ABC
“From what I’ve been seeing the people around me buying, they are buying with 25% down at least. Also I heard the income verification process is a lot more robust this time ’round. I’m not a bull, but this is just what I’ve been seeing”
So then I take it they were all RE bears waiting for the right time to buy with 25% on the sidelines? Interest rates were too high before, but now they can afford? If so, great. The capitulation of the last bear marks the end of the bull market. The capitulation of the last bears, with CASH, is even better…
As for income verification, my banker used to be the top mortgage broker at TD during the first 4 years of the boom. He admitted that he personally qualified many individuals that would not be approved had the banks adhered to their traditional lending standards. At his current bank (one of the top 5), he noted that things have not really changed in terms of approvals and income verification. He noted that this particular bank is, and has been, a lot more conservative in its lending practices that its peers. But perhaps that is an isolated case.
As an aside, after 1 year of RE discussions with him (on the US market, Vancouver market, impact of the housing crisis on the stock market), I convinced him to sell his condo and rent, which he did 2 months ago. Even he, when faced with rationale and evidence backed arguments, coupled with his own personal experience and “insider” knowledge, realized that the current Vancouver marker is unsustainable.
July 8th, 2009 at 12:59 pm
ABC: Please don’t down rate these types of comments! They give us a different perspective. Having said that, I’d like to know more about what ABC means by “the people around me”. Are you someone who just signed a free-agent contract with the Canucks? Do you work as a barista at Starbucks? That is, how would you characterize (demographically) the “people around” you?
Thanks,
J
P.S. As for the people “around me” (household incomes averaging over $100,000 annually), most are relatively long-time home-owners, but those who are not currently paying a mortgage are mostly satisfied renting for the time being. One married couple (early 30s) are chomping at the bit to buy, but every time they run the numbers they back off. Another married couple (late 30s) bought about a year ago (I wish I had got to them in time) and just their mortgage payment is about twice what they’d be paying in rent. In addition, the wife’s parents helped with the down payment. I wonder if her parents realize that they most likely did their daughter more harm than good.
July 8th, 2009 at 1:02 pm
“It’s impossible to feel sorry for all those people who choose to lay in feces soaked sand along English Bay.”
Wow, never though about it like that before, now I’m glad the few times I go to the beach I always bring a blanket.
But are you referring to untreated waste from Victoria or here? I thought we didn’t have untreated sewage anymore, only untreated solid waste going to landfills.
July 8th, 2009 at 2:13 pm
VanBanker:
#39 VB, Oh contraire mon frere. The ‘Shitty of Vancouver’ dumps 800 Million litres of raw sewage in the waters of Burrard inlet and English Bay every single day. Now thos are only the ‘official admission’ figures that are currently years out of date. With the exponential growth in downtown Vancouver which pumps 100% of it’s raw sewage into Burrard Inlet, English Bay and False Creek I assert that the number is FAR HIGHER. This makes Victoria’s raw sewage issue look like a a single flush from a small boat compared to Vanshitty.
Think of this ….do you see any pumping stations anywhere in the downtown core? It would have to be a freaking big one about the size of BC Place to handle 800 Million Liters a day. Now realize that the lack of a pumping station and gravity won’t lift that effluent over the hills from downtown to IONA ( which can’t handle the small flow it recieves now). Do you know of any pipes running up from downtown OVER the hills of Kerrisdale and down the hill to Richmond. Big hint….there aren’t any. All the sewage goes straight into the ‘supernatural waters’ of the Bay.
If anyone wonders what the black crap lining the seawall of False Creek is or the sludge that coats the tidal marks everywhere in the Bay are, think no more, it’s fresh human shit. Every one that just flushed a big dump or a needle down the toilet just flushed it directly into a water way near you. That what makes False Creek such a pig sty.
Starting at 5AM the Shitty of Vanshitzone workers skim the crap off the beach at English Bay EVERY DAY to make it pretty for the unsuspecting tourists. It comes back and coats the beach at every high tide. Thats every day for the non nautical people.
The thing is that most people either don’t know, don’t care or are in such deep denial due to personal or financial reasons that the secret sewage dump continues unabated without political disturbance.
False Creek has 26 sewage outlets alone. At the bottom of main street there is a 12 foot pipe which gushes out shit 24 hours a day, there is a city CCTV camera right there to momitor the flow, it isn’t as if they don’t know or something, I have seen the tape rolling, its disgusting to see it.
At he tip of Kits Point there is a 10 footer which you have to walk over if you want to go around to the maritime museaum from the beach. I don’t understand what people don’t get about the existence of that one , it’s so ‘in your face’ you can’t miss it. it ain’t candy floss compadre.
So anyway, I just heard another rediculous statement reported by the CBC coming from an outfit named Argus Research. They claim that affordability on all housing has improved this year based on pre-tax income stats. Argus claims that only 34% of pre tax income goes to housing. Now, the last time I checked the direct and indirect taxation of Canadians added up to 70% ( this is the idea behind tax freedom day and why it gets further away every year). So if after tax I only have 30% of my income left to pay for things like food and housing, how do get an additional 34% out of 100?
If thats the case it’s no wonder everyone is going backwards in this country and debt is increasing so insidiously. The first 70% goes in taxes, the rest is housing, when do the kids get to eat? By this equation my debt service is 104%!!!! That makes perfect sense because the most recent stats indicate that household debt in Canada is 138%. So… that means food and clothing are going on the credit card and adding 34% to my debt load every year. Thanks Argus and the CBC I feel a whole lot better about the affordability thing.
July 8th, 2009 at 3:00 pm
Denialisrampent and realpaul: I was curious about the bombastic facts you claim about hundreds of millions of litres of raw poopy sewage pouring daily into False Creek and Burrard inlet from the dozens of outlets. So, I googled the city of vancouver sewage and came up with the following link that seems to dispel your fanatical foaming at the mouth diatribes:
http://vancouver.ca/engsvcs/wa.....erview.htm
Now, I’m as bearish as they come on Vancouver RE, and would gladly dissuade people from relocating to the “Best Place on Earth” ™ (yeah, right). However, I equally disdain bad arguments and outright BS.
Please provide some comment or clarification that reconciles your “facts” with the information given in the link I provided to the COV water engineering department. And also please provide sources for the 800 million litres of raw sewage a day figure, and others like it. If not, then STFU. The rediculous RE bubble in this town is easy enough to disparage with infantile and trollish BS.
July 8th, 2009 at 3:00 pm
Hey Denial, do you have any links to sources for all these sewage numbers? I got nothing when I googled “vancouver dumping sewage” and the city’s main site seems to indicate that all sewage is treated at one of the 5 treatment plants before being released into the ocean.
source: http://www.metrovancouver.org/.....fault.aspx
July 8th, 2009 at 3:04 pm
BBY’s link is better… guess we thought the same thing when we read denial’s post.
July 8th, 2009 at 3:18 pm
I have been trying to warn people in Canada to little avail. I work in finance as a professional institutional investor in the US but am originally from Canada (went to grad school in the US and then stayed). I spend all day valuing assets and monitoring markets – here is my take:
In my opinion the bubble in Canada may actually be bigger than the one in the US. Mortgage rates are way below their “correct” level (7-8% historical avg.) via govt intervention and the sheer amount of debt is shocking. The govt is the main driver – by insuring the vast majority of mortgages at low short term rates with no downs, huge debt/income ratios, etc. it is like printing money for the banks as they don’t bear any default risk. It drives bank revenues (fees, up front pmts, etc.) Mortgages should be fixed for 10 years plus and amortizations should be limited to 30 years. Finance 101 says loan terms should match the asset life – this hasn’t changed.
As job losses accelerate and prices start declining everyone defaults a vicious cycle ensues as bankruptcies move up the credit chain to “prime” and pushes prices down further. California real estate looks cheap compared to Canadian property (and the decline is accelerating here) now so what does that tell you? Tax revenues are down 40% in the US which driving the government toward collapse.
Also, I know some prominent and successful condo developers in Vancouver and financing for construction has basically been shut down since last year. The bankers know what is coming and won’t lend a dime on a commercial/construction basis to anyone. The banks only continue to lend to individuals because the loans are guaranteed by the government. I did the math on the mortgage market in Canada and I estimate that the Cad. govt guarantees a total of ~$800 billion of mortgages at this point – this amount alone is almost twice the current national debt.
July 8th, 2009 at 3:22 pm
oneangryslav: By “people around me” I mean:
Between 30 and 40, professional, double income combined over 100K, married or engaged with kids on the way, all previous renters. Part of the driver is school district and being close to family. Of course this is only a small sample and may not be representative of the population.
July 8th, 2009 at 3:44 pm
Despite the example of US bubble markets, we seem to be making a lot of the same mistakes. The recent georgia straight article about first time buyers that couldn’t handle rates going above 4% was astounding, but one part of it I haven’t seen comments about is this:
I hear a lot about ‘more responsible’ lending in Canada, but how does this fit in? A loan of that size to this couple would have to be based on fraud, would it not? What repercussions are there for these pushy lenders? Do they get the commission and then get to walk away? Is there ANY regulatory body that keeps them in line?
If a mortgage broker counsels me to commit fraud to get a jumbo sized loan that I can’t afford, is there somewhere I should be reporting that?
July 8th, 2009 at 3:55 pm
ABC: Thanks, ABC. Yes, of course, all of our anecdotal evidence (mine included) is anecdotal, but at least it gives us a glimpse of the market.
It seems as though our circles of people are similar demographically, with one notable exception. None of the couples in my circle of friends is yet interested in having children, despite mostly being in their 30s.
The school district angle is a new one, although I know that I could more easily afford to live in a “good” school district by renting rather than owning. And if the school district worsens over time it’s much easier to move to a better district if one is renting versus “mortgage-paying.”
July 8th, 2009 at 4:08 pm
Griffin:
#42 Griffin, you’re either Google Stupid or Google Lazy. I pulled up the info with one sweep.
Now, you’re either a COV shit head shill or just another dumbass deep in denial. And no I am am not here to help you think or give you a lesson on how to use research tools. Foor the rest FYI, heres a blurb the Macleans published not long ago.
SEWAGE TREATMENT is a complex and expensive issue, one Sierra has been tracking with a series of report cards for more than a decade. Progress is often slow, and grudgingly made, says Werring. In the 1990s, Sierra filed private charges against the Greater Vancouver Regional District for dumping massive quantities of primary treated sewage in the Fraser River and the ocean. The charges, taken over by the provincial Crown, together with pressure from the federal Fisheries Department, forced upgrades to some of the region’s treatment plants, says Werring. Two Vancouver-area plants, however, still discharge sewage with only primary treatment, pouring many chemicals and toxins into the ocean. Overflowing sewers spill as much as 22 billion litres of storm and waste water into Georgia Strait each year.
As I said the official numbers are low. What the case disclosed was 22 billion litres per year , divided by 365 ( thats ‘days per year’ for the reality challenged Griffin, equals 29.2 Billion litres of discharged toxicicity laced raw ubtreated sewage per year.
Of course the ‘Shitty of Van-shitzone’ isn’t going to put this information on their website you dumbass. Maybe you should also Google ‘TIDE’ as well genius to see what happens when the poop comes back. Hint hint, it lays on the beach with you and your fantasy friend.
July 8th, 2009 at 4:13 pm
woops , quick typo mistake. That should read 800 million times 365 = 29.2 billion. I still think the number is low because of the official info not being released for years due to politicial reasons.
July 8th, 2009 at 4:28 pm
Independant News Source quotes ‘in excess of 1 billion litres of raw sewage per day dumped into Georgia Strait’
“Each day over 1 billion litres of domestic
sewage from Victoria and Vancouver
are dumped into Georgia Strait”
http://oceanlink.island.net/ON.....er/ON4.pdf
July 8th, 2009 at 4:32 pm
BBY:
#41 BBY, ya, you’re a real savvy one alright. Your quest for knowledge is pretty limited pal. What does the Province forecast for you? Looking at the official website of the shitty AND believing that BS makes you look pretty stupid
July 8th, 2009 at 4:43 pm
Canadian in Cali – well said. I couldn’t agree more. I work in your industry and also spend my days running numbers on investments, and cannot make any sense of what is going on here in Vancouver. Neither can my colleagues.
One thing that I notice that is different than the American way of doing things…here I see the same houses sit on the market for a year (or more) and no asking price drops. They just sit there. In the states the seller seem a little more eager to actually sell the property. No takers in 3 months, drop the price, still none, drop again.
If I had an asset I was trying to sell and no one was biting, I would lower the price….but maybe I am not thinking straight…cuz you know, it’s “different” here.
Sigh.
July 8th, 2009 at 4:43 pm
Denial, Jeez personal attack much? Like BBY’s posting above mine, I’m a huge RE bear (hence the reason I’m on this blog) and by no means do I think Van is the best place on earth. All I asked for was your source for all the numbers you’re quoting. It’s called academic integrity.
In any case, thanks for the Mclean’s article. I’m not denying that many Canadian cities discharge sewage into our waterways but let’s also get a little perspective. The Mclean’s article states that Vancouver provides at least “primary” treatment before discharging to the ocean, and the 22 billion litres is a mix of storm drain runoff and waste water. Your fantastical argument that there are no pump stations to pump sewage out to Iona was proven wrong by the link BBY posted. All the pump stations in the city of Vancouver are underground.
Honestly I’m not sure why you’re so hung up on the sewage thing. Yeah it’s gross, but what’s your agenda? 90% of the people on this blog are already bearish about RE in this city and the fundamentals alone are enough to indicate we’re in for a deep correction without the need to keep talking about shit.
July 8th, 2009 at 4:45 pm
Sorry Denialisrampant, your source-less and wit-less response identifies you as a troll. Simply put, you suck at life. Now STFU. Everyone else, just mod him down into oblivion and move along…
July 8th, 2009 at 4:46 pm
As the renown investor Sir John Templeton said, “The four most dangerous words in investing are ‘This time it’s different.”
July 8th, 2009 at 4:54 pm
Hey Griffin: Denialisrampant is hung up on sewage because it is his fetish. Perhaps he got the idea from the South Park episode featuring Mr. Hinky, the Christmas Poo. They called the fetish “fecalphilia” or something. But South Park probably seems like reality for Mr. Denialisrampant. After all, he kinda sounds like Cartman, dontcha think???
And correction: Denialisrampant did appear to post a Macleans article. Care to share the date and issue with us? Or would that make us lazy and stupid. Not sure if you’ve ever written an academic paper in your life, but they don’t really pass if the bibliography consists of “look it up yourself, stupid”.
I still think you’re a troll.
July 8th, 2009 at 5:02 pm
BBY:
Oh oh BBY is trying to hide behind the ‘shoot the messenger’ ploy. To bad you’re insulted by your own ignorance douchebag. Let me guess, youre job depends on hiding the facts and you bought a place in False Creek and you’re trying to sell before the Olympics news crews ‘out’ the COV for it’s abysmal practices. I for one will be sending the crews lots of updates for site production before they come.
” From the Van Sun Archives.
Public health and safety threats are escalating in Metro Vancouver because an aging sewage handling and treatment system will fail more often as a result of climate change, according to a federal report uncovered by The Vancouver Sun. The report says heavier rainstorms will frequently overwhelm portions of the region’s sewage system and accelerate the spill of raw sewage into Burrard Inlet and the Strait of Georgia.
That means more raw sewage will be dumped into the ocean more often, in apparent violation of the Fisheries Act. Senior regional officials and politicians have in the past been threatened with prosecution under this act, although neither the federal nor the provincial government has to date shown any inclination to enforce it.
More raw sewage spills also mean more health risks to people using the inlet for recreation – swimming, windsurfing, sailing and fishing. Environmental groups, including the David Suzuki Foundation, were outraged to hear about the contents of the report. They are calling on regional and civic governments to act now to “avoid potential disasters including extreme impacts on human health caused by system failures.”
Lick it up, twisted and perverted one.
July 8th, 2009 at 5:16 pm
Ritz Carlton project is back in action,Economy indicators shows economy is out of recession end of year,and Vancouver real estate already sky rocketing sales and prices.I like to say thanks to all the posters of this site.It was not possible without your contribution you have put in these blogs days and nite,our economy has recovered faster than expected specially Vancouver real estate rocks.
July 8th, 2009 at 5:19 pm
I found this article. What happens to real estate values when False Creek is backed up by sewage and people get cancer from going anywhere near it? Will the world press report on it and really turn people off from coming here?
Laurie MacBride, executive director of The Save the Georgia Strait Alliance (SGSASGSA Sociology Graduate Student Association is in no doubt as to which city is doing the most harm to the marine environment. “Victoria discharges about 21 billion gallons of raw sewage a year; Vancouver has primary treatment, but 38 billion gallons per year miss the treatment plants altogether and are spilled over through combined sewer overflows [sewage, storm water and toxic runoff–waste from Vancouver’s industries, which include electroplating:
In parts of Burrard Inlet, 80 percent of the English sole have precancerous precancerous /pre·can·cer·ous/ (-kan´ser-us) pertaining to a pathologic process that tends to become malignant.
pre·can·cer·ous
adj. tumors and lesions, probably from fossil fuel hydrocarbons in the runoff.”
July 8th, 2009 at 5:37 pm
ABC and oneangryslav,
They are being helped by family. Whether inheritance, parental home equity borrowing, or whatever.
July 8th, 2009 at 7:00 pm
Not quite true Supraboy…
The developer of the site where the Ritz was to go is “considering” starting contruction again. Maybe in the fall, or possibly next year. Article also says the structure will be downscaled to a more modest 4 star property. And Ritz Carlton has not said if their name will be attached.
My guess is if now a 4 star property…they are out.
http://www.cbc.ca/canada/briti.....ouver.html
July 8th, 2009 at 7:27 pm
Vancouver has officially announced a ‘crackdown’ on the homeless who will be forced out of any ‘security zone’ ( downtown vancouver). NDP critic ‘out’s’ the Vanoc asswipes and claims the move is for optics not security, I agree 100%. Is this why they have shut the dragon boat gang out of False Creek? Because they don’t want the press to actually see the carpet of feces , needles and condoms floating outside the ‘athletes village’. I bet that ‘for security reasons ‘ the press will be shut out of the seawall in front of the ‘village’ so that no photos can be taken.
We have been right in our suspicions all along. The bums ( its OK to call them bums now that they have officially been recognized as a threat) are being brutalized by the Vanoc and COV whores. I’m so proud.
The building wraps which will cover the vacant and run down buildings will probably hide the sewage outfalls as well.
So far the people on this board have also been right about the militization of the city and the population control. Protesting will be met with brute force is the plan.
From the real estate perspective I think Van Crapper is going to flush itself down the toilet of history because of the Pimp- lympics. Outside of the official government sponsored websites and hype, there is only total apathy or complete anger about the waste that has taken place. I don’t see any private citizens supporting this event.
The expectation of a boom created by the Sno-Job will be the catalyst that sinks values in this berg for a generation. Prediction… Campbell will have resigned withing 2-3 months of the end out. The numbers will be withheld from the public and then the shit storm will break out.
July 8th, 2009 at 7:45 pm
No second half recovery. Ten cool charts detail the ugly situation.
http://www.doctorhousingbubble.....y-in-2009/
July 8th, 2009 at 8:22 pm
Ya…the Olympics. I think a big part of this RE bubble has been fuelled by the Olympics propaganda. People have been conned into thinking that after the Olympics EVERYONE and their dog will suddenly want to live here.
Meanwhile, in the real world, I had two cousins visiting a few weeks ago, one from Washington, DC, one from New York City. I mentioned something about the Olympics coming here…both of them said “Oh, I didn’t know Vancouver is hosting the Olympics, when is it?” I would guess that many people in the world have no clue about the 2010 Olympics, much less are planning to come.
July 9th, 2009 at 9:26 am
testing a new feature – there is a small x underneath each comment avatar. clicking this will hide the comment text. Next step is to automatically hide negative rated comments. Just need some free time to do some code crunching. As always feedback on this feature is welcome.
July 9th, 2009 at 10:34 am
Reading through the local rags I see that the hype and pump machine is running loose again. It’s a wonder to behold. The US unemployment numbers are really grim as they continue a downward spiral. There is some spin that tries to state the numbers as ‘positive’ but I think any one with half a brain in their heads can see through the BS and denial. As usual, no release of information in Canada. Hmmm.
“The non-seasonally adjusted figure increased by about 17,000 to 577,506 initial claims.
Still, continuing claims jumped 159,000 to 6.88 million, the highest on records dating from 1967. Analysts had expected 6.71 million continuing claims.”
“The four-week average of initial claims, which smoothes out fluctuations, fell to 606,000, down more than 50,000 from its peak in early April.
Still, claims remain elevated: they were at 367,000 a year ago.”
Some salient points from the NYT. The most important figures are the claims, for they are forward looking indicators. The other number to watch for are the estimated 600,000 whose claims run out in September… ”
I am still seeing plenty of layoffs here in BC. The fudging of the welfare numbers in BC were typical, not accidental. The real story is not to be found in the Province, Sun or COV website. The officail practice is deny deny deny, just like at the Braidwood Inquiry, where it was proven that the RCMP lied 100% of the time. Hmmmm.They sure didn’t like that. We now see even reporters getting beat down and their pictures confiscated to try and avoid a repeat of the public ‘outing’ the cops got when they could no longer hide the truth. Same with everything else to do with our government. Its all BS all the time.
The number of FTB’s getting suckered into this low intrest rally is finite. like a pyramid scam. I confirmed that with a banker friend yesterday. Refi madness has abated and precious nothing is selling over 500K, meaning the market is drying up. This is why I believe we’re seeing the hype and pump machine turning up again. They want to get ahead of the curve and try to entice a few more suckers into the shark cage. The hype and pump whores are quietly NOT talking up the sales numbers but are now focused on ‘building permit apps’.
Don’t tell me that browntown contractors are the leading edge of the wedge. I think its more like desperate builders and contractors who haven’t seen a paycheque in six months pouring their own money into projects to try for one last deal before the whole family is titters. Thats why we are seeing so many non-traditional lenders popping up on the sign boards. Its small money jumping into the fire, not smart money building on a successful pattern.
Too bad more people couldn’t figure this out. There’ll be a world of hurt out there when interest rates start going up.
July 9th, 2009 at 11:16 am
I wish it weren’t so, but pals of mine were in bidding wars over properties in the $600 – $700 K range as recently as two weeks ago, purchasing for $40,000 above asking. Panic over rising interest rates has made seemingly sensible people do really senseless things. On a much “lighter” note however, looks like there are going to be a ton more layoffs as the government continues to cut funding to non profits and social workers join the ranks of unemployed. No sector appears safe as this continues to play out.
July 9th, 2009 at 11:50 am
One useful rule of thumb is that house prices should average roughly (say) 3 years’ income for the people living in them. If the average person can’t afford to buy the average house, house prices are too high, and will eventually fall, because people won’t be able to buy them.
But all rules of thumb need to be understood theoretically, to try to understand why they work, and why they might stop working.
The argument from “affordability” doesn’t really work. It is possible to imagine an economy in which house prices are infinitely high in relation to incomes. How then could people afford to buy houses? They don’t; they inherit houses from their parents. That’s an exaggeration of course. Some parents don’t bequeath their houses to their kids; and the population grows and new houses get built and sold. But it still contains an element of truth; a rise in house prices makes houses more expensive to buy but also creates the extra wealth to buy them with.
But perhaps people don’t want to tie up 6 years’ income in housing? Perhaps they would prefer to downsize to a cheaper house worth only 3 years’ income, and spend the freed up 3 years’ worth of income on other stuff? And if everyone tried to do that, house prices would fall until they were only 3 years’ income, and people stopped wanting to sell their houses.
But that’s not right either. How much of your income do you want to spend on housing? The right way to think about that question is in terms of rent: what percentage of your income do you want to spend on rent, either by explicitly renting a house, or in the opportunity cost sense of not renting out the house you own.
Suppose there is some equilibrium rent/income ratio. People want to spend (say) one fifth of their income on rent. (And we need to define “income” here to include the implicit rental income from owner-occupied homes). If real interest rates were 10%, spending 20% of your income on rent (which means 25% of your income narrowly defined) would mean house prices equal to 2 years of full income, or 2.5 years of narrow income. Halve the interest rate to 5%, and those price/income ratios will double.
The equilibrium ratio between house prices and income will vary inversely with long-term interest rates.
Back to the savings glut.
Suppose the savings glut was real, it wasn’t all just loose world monetary policy, so that real equilibrium interest rates were indeed lower than normal over the last 10 years. And suppose governments eventually have to stop running deficits, and start saving again to pay down national debts. And suppose the private savers of the past 10 years want to keep on saving in future. And suppose the dissavers of the last 10 years want to start saving to pay down their debts. And suppose the financial crisis creates a long term fear of debt and dissaving so that those who would otherwise have dissaved don’t do so in future. And suppose investment demand does not increase in future.
Then equilibrium real interest rates will stay low, or go even lower in future. And then equilibrium house prices will stay high, or go even higher in future. And maybe, just maybe, the anecdotal evidence of the Canadian housing market is not just a weird dead cat bounce. Canada, with its relatively OK financial system, may be the bell-wether for what an eventual world recovery would look like.
That’s an awful lot of “supposes”. This scenario could be very very wrong. And I’m not saying it will happen. But I can’t convince myself that it can’t. I just don’t know.
Recent post from Carleton economist Nick Rowe
July 9th, 2009 at 11:51 am
So another economics genius admits that he got things a little bit wrong. Here’s Daniel Indiviglio, business affairs reporter for the Atlantic Monthly:
:
He goes on to explain his logic and how he could have got it so wrong:
Yeah, hoocouldanode that a collpase of the housing market (upon which the entire US–and global–economy was based from about 2001 on) would cause the economy to falter a bit. I guess you don’t have to really know too much about economics to be a business reporter for the august Atlantic Montly.
July 9th, 2009 at 11:51 am
realpaul:
Well said.
This surreal economy makes no sense.
All I am seeing is small ” ma and pa ” builders building now. Many of them had projects ready to go, but were on hold for the last 6 months. Many of these are at the excavation/pre-load stage, and probably won’t start till Fall. Completion?..likley next spring…hoping for Olympic hangover?
I don’t see any of the big developers starting anything now….which is its own warning sign. Seems like a lot of naive wannabee builders are the only ones building now.
Interesting point re: the browntown builders ,another ” canary in the mine “. I see their old “new” inventory finally sold off, and a few new starts…but as you say, they may simply be “make work” projects to keep the crew busy. Many of these are simply built to live in for a short time , sold, make the capital gain , and move onto the next one. However, if this market freezes ie no “greater fool” buyers…watch out, could get very ugly.
July 9th, 2009 at 12:06 pm
Canadian in Cali , Girlbear et al
Keep up the good work with you insider views of what goes on behind the scenes in the financial/investment sector and what their crystal ball is showing. Very enlightening. There are many ways to manipulate and tweak the truth, but it ultimately delays the same end result.
My view is the Feds see the tsunami is coming which has about a 2 year lag phase from its origins in the US.
On the political front, perhaps PM Harper sees its and yet still wants power, Iggy may also see it and says no thanks to being in charge now.
Shell recently anounced the possible closure of a major refinery in Quebec, Shells’ largest in Canada, 75 years old.
Not much good news out there across the board.
July 9th, 2009 at 12:26 pm
oneangryslav.
Re rents and rentals
Good points.
What I am now observing, and a phenomeon I hadn’t seen before, are people advertising ” rooms for rent” with signs and sandwich boards on or near their front sidewalk. Many of these “rooms for rent” are monster homes on good neighbourhoods.
Rents are declining and vacancy is up, or vice versa.
Many buyers had bought these monster homes, in fact, turn these monster homes into boarding houses, before the crash…this had been another phenomenon that likley added to the market demand. Now this class of landlord is seeing less demand and perhaps an inability to pay the mortgage.
The expert you quoted is a classic example of missing the big picture. When the perfect storm hits of people who can no longer afford to keep their homes ….. an oversupply of homes …..and a collpasing economy all align concurrently, rents don’t go up, its an “oversupply” meets “cash – strapped” renters market.
July 9th, 2009 at 12:26 pm
yaletowngirl Says:
July 8th, 2009 at 5:19 pm
“Victoria discharges about 21 billion gallons of raw sewage a year; Vancouver has primary treatment, but 38 billion gallons per year miss the treatment plants altogether and are spilled over through combined sewer overflows [sewage, storm water and toxic runoff–waste from Vancouver’s industries, which include electroplating:”
I’d just like to point out two things:
Victoria was ordered by the provincial government recently to have primary treatment of their sewage, and the City is hoping to have it in place by 2016 at the earliest.
http://seattletimes.nwsource.c.....ge10m.html
Vancouver is slowly replacing all of their combined sewer pipes with separate sewage and storm water pipes, so there will be no more overflow problems once it is complete. Unfortunately, they only replace `% of the system per year, so they target completion by 2050.
Burnaby is doing the same and has a target completion of 2050 for Vancouver Sewage Area outflows, and 2075 for Fraser Sewage Area outflows.
New Westminster seems more ambiguous, but says they’re also doing at least 1% replacement per year.
http://www.metrovancouver.org/.....Sewers.pdf
July 9th, 2009 at 12:31 pm
More signs of the bubble bursting – I just saw a full page ad (back page) of 24 newspaper from (I believe it was) Quantum Homes in Coquitlam. Luxury 2 Bedroom Condos reduced from $389K to $294K ..
July 9th, 2009 at 12:31 pm
“The Pope Says:
July 9th, 2009 at 9:26 am
testing a new feature – there is a small x underneath each comment avatar. clicking this will hide the comment text. Next step is to automatically hide negative rated comments. Just need some free time to do some code crunching. As always feedback on this feature is welcome.”
Hi Pope, I would make one suggestion: if you’re going to have negative-rated comments disappear, I would suggest something like a minimum of -5 before they go, otherwise some of the trolls could make legitimate comments disappear.
July 9th, 2009 at 12:43 pm
“realpaul Says:
July 9th, 2009 at 10:34 am
Refi madness has abated and precious nothing is selling over 500K”
Reapaul is right about one thing, we;ve heard from our clients that under $500k is the sweet spot, anything over that will have difficulty selling. Not surprising at all since that represents the maximum level of affordability for the average income earner with minimal down payment.
July 9th, 2009 at 1:35 pm
VanBanker: if you’re going to have negative-rated comments disappear, I would suggest something like a minimum of -5 before they go
This change is to fix that problem – comments will hide below -10, but you’ll still see the posters name and expand to read them if you want. This way garbage will be hidden, but reasonable comments can be rescued from troll moderation oblivion.
July 9th, 2009 at 2:25 pm
Ok VanBanker , I’ll tell my kids they can get into the water anytime after 2050. Meanwhile, the political pressure is on to hide the ‘shit’ about a lot of things in Vancouver. The deniers and the apologists will have to look at, smell and have their dogs and kids get seriously ill because the COV ‘shiity council’ has decided to keep the issue silent and pretend it away.
The problem we have in Canada is a lack of objective reporting, its all advertising based. So, if a reporter in the MSM writes a hard story about the city, RCMP, FED & Provincial government or major industry they immediatley get threatened with a ‘loss of access’. Meaning they are threatened financially and the boss freaks out and pulls the story, whether its good or bad. The Conservatives pulled this stunt when they refused to allow reporters to ask questions or interview parliamentarians until the MSM in Ottawa stopped lambasting the Party with rabid Liberal diatribe. It was a real bulldog way to deaL with an offensive Liberal medai but the point has been well learned and now everybodies doing it.
The effect has been to shut down criticism in the CDN press. Now that the recession in the medai is on full blast, we have effectivley zerp objective reporting. In fact in the case of Corus aka CKNW they had decided to become a cheerleader and taking off the mask of unbias journalists altogether.
This ploy leaves most people ( public) completley in the dark about the facts of the issues around them. Their 5 minutes of information gathering a day is limited to the propaganda and BS that comes out of the Braying Whores in the pages of the Province and The Sun. Ignorance is not a good thing, but its a very effective tool whaen it comes to crowd control. We have a whole lot of that in BC.
So VB, I and quite a few others are aware of the BI-National pressure that has been put on the City of Victoria and Vancouver to clean up their act but so far the province has reigned in their own crown prosecuters from applying the sanctions already placed on the government for breaking the law under the Federal Fisheries Act. Ipso Facto the Province and the City are openly flaunting their ability to circumvent the law by placing the file in the limbo bin even though they have already been convicted on several counts.
So the COV web page says that they are going to do something over the next 50 years. What that really says is FU to the public. As long as they can keep the issue OUT of the news, they’re gold. Its going to take open warfare from the public and that will only come from keeping these issues IN the news with the help from the International press. Only by embarrasing the shit out of them ( great pun) will we ever see any action.
July 9th, 2009 at 2:45 pm
I see that Warren Buffet is calling for a ‘second stimulus’and predicting an 11.5% unemployment rate. I have been reading that approximately 15 million people in the US are currently unemployed. At 11.5% this represents 30.06 (or roughly double) million people from a population of 306 million. Is that right? Seems like that would also mean that Canadian unemplymnet has a lot of upside as well if we mirror the US by a 10-1 ratio. Get out the ugly stick.
http://www.reuters.com/article.....mp;sp=true
Why would I buy a house in an enviornment of rising unemployment again?
July 9th, 2009 at 2:46 pm
I guess these people never heard of a land making machine
” Four nabbed in ghoulish scheme to dig up graves in historic Illinois cemetary”
Read more: http://www.nydailynews.com/new.....PLuk&C
July 9th, 2009 at 3:23 pm
Why would the City of Vancouver invest tax payers dollars treating sewage when it can spend the money building Olympic Villages and market condos! 2050 until tertiary treatment complete, ha! We’ll all be long dead before this is done because the city is going to lose its shirt on the Olympics.
July 9th, 2009 at 3:25 pm
100,000 Canadian Jobs Lost over the summer.
Big Bad Numbers come out in late edition of National Post
http://www.nationalpost.com/ne.....id=1772116
No recovery seen until 2012.
July 9th, 2009 at 4:03 pm
“Bloomberg reported that the budget office, which is headed by Kevin Page, foresees economic contraction of 2.4 per cent this year, followed by 2.2 per cent growth next year and 3.5 per cent growth in 2011.
The budget office is also forecasting bigger job losses for the country, suggesting that as many as 530,000 jobs could be lost this year, and as many as 700,000 next year.”
http://www.canadianmalcontent......amp;t=6685
Flahrety is trying to shut this guy up but the bad news keeps coming. The jobs loss numbers are in the thousans a day category now and are expected to accelerate according to most independant experts.
This has to be the best enviornment to buy a house ever!!!!
July 9th, 2009 at 4:07 pm
Coming soon to a strata council near you… bankruptcy!
http://www.dailybusinessreview.....uptcy.html
Just wait for it – we will be reading stories like this in the Sun 2 years from now.
July 9th, 2009 at 4:09 pm
grindingtoahalt: “This has to be the best enviornment to buy a house ever!!!!”
Correction, This will be the best…
I’m just waiting and keeping my powder dry. It’s gonna unravel big time in this city…
July 9th, 2009 at 4:40 pm
Does anyone here recall what the Woodwards units were originally sold for at presale etc – a range? There are a bunch of them for sale again now on craigslist.
July 9th, 2009 at 4:40 pm
No, it’s not correct; the denominator of the unemployment rate is not the total population, but some version of the total working-age population. 100 of 1 year-olds are unemployed, so it would be ridiculous to lump them into the unemployment rate. According to the US BLS, the total civilian labour force as of the second quarter of 2009 is about 155 million.
July 9th, 2009 at 5:15 pm
Oh boy, Vanoc desperate for eyeballs. Province cancels elective surgeries during O-Games so that patients ” can watch the games”. I thought forcing the schools and government buildings to close was scaping the bottom of the barrel.
The reservation rate or (buyout) is only half of what we were told. This means few rich groups are planning on coming to Vanc for the games.
El Nino is back ,that means no snow for the games, oh oh, can you say total bust. I don’t doubt that the chidren will be forced at gun point to prove up the backdrops of the empty venues.
Looks like North Flase creek is surrounded by shit on two sides. Homeless refuse to move and false Creek is reeking. Great investment dudes.
Provincial deficit goes through the roof. The 500 milllion projection is falling away fast. Expect a real zoo when theres no money for anything EXCEPT Olumpic fatcats feasts. What is greggy Robertsons big idea, a 50 million dollar bicycle bridge. What an asshole.
July 9th, 2009 at 5:41 pm
Colin Hansen raised his index finger, indicating “one”. That’s one billion dollars less revenue from corporate income tax than expected. Holy carp!!! He couldn’t say it.
July 9th, 2009 at 5:54 pm
Hey Pope, the comments no longer seem to be numbered
Hope you can fix that. Thanks for your work 
July 9th, 2009 at 6:35 pm
Just a clarification: I think the “one” billion dollar signal is maybe for all tax revenue, corporate and personal. Or it could mean a one billion dollar deficit.
Anyhow, I’ll stop speculating when we get a straight-forward answer.
July 9th, 2009 at 7:55 pm
It is possible to imagine an economy in which house prices are infinitely high in relation to incomes. How then could people afford to buy houses? They don’t; they inherit houses from their parents.
You are making the fatal mistake of ignoring the rental market. Who in their right mind would buy or continue to own a house that they could sell for, say, $10,000,000 but could only rent for $2000/month. The answer of course is nobody.
That is the reason why house prices always adjust to a competitive return on rental income regardless of how irrational owners are. Investors must become rational in the long run, otherwise they end up broke.
July 9th, 2009 at 7:57 pm
Oh one more thing – you are also ignoring elasticity of supply. What happens when house prices go up to twice normal multiples of income? You get whole towns of empty houses, like in the US or Ireland, that’s what.
July 9th, 2009 at 8:13 pm
Pope:
I second BBY’s motion.
Please return the numbering system for posts.
Thx !
July 9th, 2009 at 10:12 pm
Mish has the numbers of unemployed millions higher than is being reported. I suspect the same here. The ‘unable to collect’ numbers are the real story. The growing welfare rolls and the underemployed are a big number. This is a good read to get an extrapolation going as to what is happening in Canada.
http://globaleconomicanalysis......o-new.html