Bulls and Bears: prediction face-off
Both of these articles are worthy of their own discussion, and I’ll probably add the links to the Friday Free-for-all, but I thought some of you might like to talk specifically about them. First off Dave points out this very bullish prediction from Helmut Pastrick in the Vancouver Sun:
He predicted that, on an annualized basis, the overall average home price in B.C. will climb to a new high of $463,800 by the end of 2009, erasing recession-era losses, before advancing to $497,800 in 2010 and $534,800 in 2011.
And as a counterpoint Jonathon Tonge over at the America Canada blog lays out the mathematical reason why a housing market crash is baked into the boom:
RSS 2.0 comments feed. Both comments and pings are currently closed.Using this model we can clearly see that by 2016 Canadians will owe an average of 263% of their gross incomes to residential mortgage debt.It’s impossible figure I know. But that is the point. In fact it is unlikely that we will go above 125%, something that will occur by mid 2010.To the bulls and bears, please put aside your emotions. A real estate correction is written into the cards. It’s a mathematical must.
October 23rd, 2009 at 11:44 am
#30, agree re “Bank of Canada monitors real estate surge” http://tinyurl.com/yl2z6qe
”we have confidence in prudence from Canadians”
What???? Prudence in those same Canadians that are asked by CHMC to kindly take out a sub-prime loan???
It’s like locking up the fox with a bunch of chicken and saying “we have confidence that the fox will behave and won’t massacre the chicken”
October 23rd, 2009 at 11:33 am
kansai, bby:
its not 6 months, its 12 months! he projects 12 months out.
“He predicted that, on an annualized basis, …)
in other words, “if the next 12 months behave like the last 12 months…”
I would be so much funnier if no one got hurt by this, but I suspect some unsuspecting readers take it at face value. Helmut is very careful to avoid say something wrong, but his blatant disregard for the statements likelihood of being misconstrued is shameful.
October 22nd, 2009 at 11:57 pm
“He goes home at night, takes the last 6 months worth of data, plots it on a graph.
Then he extends the line to the next 6 months.
Voila, the forecast for the next two quarters.”
It would actually be a very interesting exercise to actually verify that this, or something close to it, happens. Does/has Helmut ever describe his sources and methods? In all the math/engineering exams that I wrote, I had to show my work. Does Helmut show his?