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:

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.

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gorky
gorky
10 years ago

#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"

SD92129
SD92129
10 years ago

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.

BBY
BBY
10 years ago

"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?

kansai_92
kansai_92
10 years ago

@Mark Downs:

Yes, that would be the one and only Helmut Pastrick.

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.

I could train a monkey to do this twice a year.

How Credit 1 can employ such a douchebag is beyond belief

realpaul
realpaul
10 years ago

@Anonymous: #47 Anon, Well thank you, I'm glad to see that at least some people get 'it'. Off topic, on topic, tomatos tamatas, its all the same. The media and the people who speak through it are at war for control of the conciousness of the public. The Canadian public seems to have capitualted for the most part and theres only a few free thinkers left in rag tag pockets of society. The mainstream is drunk on the celebratory end time kool aid. The droning spin of chosen 'on topic' media spun stories is just another way of misdirecting the sheeple from the hard truth when its the truth that should be focused on but would be too difficult to manage for reasons known only to the spin meisters. Well hidden until exposed through the Freedom of Information act that… Read more »

vanguy
vanguy
10 years ago

Carney (BOC);

"We remind people that borrowing is for the period you are going to borrow, not just for the moment you take out the loan."

'huh, you mean my current monthly payment at 2.25% won't last the full 35year term?'

'but the mortage broker at the Dominion Lending Centre told me my payment would be $2,000, I didn't know it could go up'

Anonymous
Anonymous
10 years ago

45

logic Says:

Because – whether we agree with him or not – he comments are usually off-topic.

========================

Off-topic? I have news for you: this bubble "topic" had been talked to death about three years ago. I believe the reason realpaul is being voted down is simple penis envy… because most of you had nothing new or original to say on this blog for the last three years.

Is it a bubble? Really????? Guess what.. it was a bubble yesterday, it is a bubble today and it will be a bubble tomorrow, too. And if you still want to discuss it then you have some serious compulsive-obsessive disorder and you should see your doctor.

Sticking to the "topic" makes you about the most boring person on this planet.

Being off-topic is what keeps this blog alive.

_KC
_KC
10 years ago

I was emailed this article by both the realtor and the mortgage broker I was working with a few years ago. huh.

Also, I was walking through Kitsilano today and the unkept buildings and security bars reminded me of Detroit.

logic
logic
10 years ago

"Just curious: could any of you boneheads share why you keep voting realpaul down? "

——

Because – whether we agree with him or not – he comments are usually off-topic.

Anonymous
Anonymous
10 years ago

"Metro Vancouver taxes may rise, but homeowners will get world-class services, officials say" Right, now that $42,500 wage will buy you water to service your storage locker in maple ridge. Once RealPaul's other old senior buddies' health start failing they will have no choice but to move into low income seniors housing while their worthless houses get sold in a flat market for 100-150 times the rent. If you want to see what will happen google "bubble las vegas, miami, rich people, rich immigrants, different here) http://www.city-data.com/forum/miami/543372-flori… "“This recession proves that Las Vegas' tourism and growth-based economy isn't ….. “'It doesn't feel like the rich people are taking over any more,' said Shawn Wilson …. Better yet, with them will go many of the millions of people here– not always … easing” of California's massive influx of illegal immigrants. …"… Read more »

Anonymous
Anonymous
10 years ago

realpaul Says:

October 22nd, 2009 at 12:32 pm

Big split ‘announced’ ( is it real or just sleazy politics) between the VPD and the Vision Vancouver/ Greggy R/mayorboy/douchebag . Jim Chu-Chief says VPD will not act as Visions bitches and won’t be kicking down doors to enforce the Vision Vancouver vision of an uncivil society.

==========================

Nice. Just curious: could any of you boneheads share why you keep voting realpaul down?

realpaul
realpaul
10 years ago

@NO – LYMPICS:

I heard on the radio this evening that the residents of the Cowichan valley will be wearing their Native made Cowichan sweaters along the Olympic Torch Route when it passes through the area.

The reprter says the Security crazies in yellow striped pants have gone into full defence mode and are swooping down on the bad 'sweater wearers' in the valley banging on doors en masse as a force of intimidation for I guess this anti Olympic 'wearing of sweaters'.

I can see it now, a little kid wearing a Cowichan sweater his grandmother knit him gives the thumbs down to an IOC limo passing through downtown and gets tasered.

Is it April Fools day or something for the radio guys. Can the cops really have gone this insane.

Best place on meth
Best place on meth
10 years ago

When it comes to Vancouver real estate, there is no such thing as bulls.

Only useless cheerleaders.

NO - LYMPICS
NO - LYMPICS
10 years ago

38 scamwow:

Yeah, it never ends, does it?

Couldn't believe it when I read that latest bit of gravy.

What a double dip…buy tickets to make it look sold out yet these same parties get to go on our dime.

SD92129
SD92129
10 years ago

"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."

Helmut is making a very simplistic prediction. All he is pretty much good for is predicting trajectories. I believe he has been with Central since 1997. As he seems to make his predictions based on recent trends, he would only be wrong once in the last 12 years as we have only had 1 inflection point (last spring).

scamwow
scamwow
10 years ago

Did I hear that right? Are the Campbell Libs in the trough for $400,000 worth of Olympic tickets and the COV in for hundreds of thousands more. Is that like another Olympic subsidy to have the taxpayer buy the unsold tickets to make it look like ticket sales are 'brisk'? They're also talking about those same ticket holders as being able to sell those tickets? Will anyone be monitoring the Libs and COV gladhanding of ticket gifts? Is their no accountability? isn't it bad enough that schools will be forced to close for the two weeks of Olympic parties so that "parents can take their kids'. Please I'm going to puke!! For the majority of parents its a huge personal expense to find daycare to cover this 'once in a lifetime opportunity'. How do the guys in jail awaiting trial… Read more »

gorky
gorky
10 years ago

#2 regulate RE through speculation tax and down payment requirement 25%. RE is to live in not to gamble with.

other countries do it.

Not much of a name
Not much of a name
10 years ago

@Right Said Fred:

Who says that our correction has ended? It could be argued that it was just getting underway when the gov't intervened with low interest rates and reinflated the bubble.

Let's give it some more time and allow interest rates to rise to see where we go from here. If I was a betting man, I'd put money on declining prices.

NO - LYMPICS
NO - LYMPICS
10 years ago

32 X Starving Artist

Yes….its very Eastern -centric.

Didn't Harper and Co. create a special Federal bureacracy that isa focussed on Ontario( where the votes are?)

Right Said Fred
Right Said Fred
10 years ago

Here is a real Economist from Carleton University (who also happens to be a respected macro-economics commentator) who says that the Canadian and USA housing markets are completely different:

http://worthwhile.typepad.com/worthwhile_canadian

JR
JR
10 years ago

By the middle of next year, four things are going to occur or will have already occured, and none of them auger well for real estate:

1. The time frame for the Bank of Canada holding pat on the prime interest rate will have expired

2. HST will be implemented in BC and be applied to new housing

3. The Olympics will have come and gone

4. Pent up demand created from sales falling off a cliff in 2008 will have long since been satisfied

I don't know how anyone can connect these dots and plausibly predict higher RE prices.

Starving Artist
10 years ago

The Bank of Canada didn't give a crap when Vancouver and Calgary were bubbling off the charts. Now that Toronto prices are going up its ooh big panic time.

No Longer Looking
No Longer Looking
10 years ago

@domus: "In particular, policy makers will break down the home buying by income groups to see if people might be taking out loans they won't be able to afford as interest rates rise."

Hmmm, I wonder what they'll find.

domus
domus
10 years ago

Mark Carney's comments on the RE bubble (dated today!)

"Bank of Canada monitors real estate surge"

http://tinyurl.com/yl2z6qe

Excerpt:"We expect, and we have confidence in, prudence from Canadians. We remind people that borrowing is for the period you are going to borrow, not just for the moment you take out the loan."

My comment: what are you smoking, pal?

domus
domus
10 years ago

I loved the article by Murray Dobbin, thanks for the tip. Here are my favorite excerpts (hopefully dave will read them carefully and stop asking silly questions): "Sub prime is any loan below prime. If a bank refuses you a loan, and CMHC gives you one, the loan is sub-prime." "what few Canadians realize is that the housing market has avoided collapse (prices are down 32 per cent in the U.S.) because the Harper Conservatives directed the CMHC to change the mortgage rules to effectively make the Canadian government the biggest sub-prime lender in the world." "In an effort to prop up the real estate market in 2008 (when affordability nosedived) the Harper government directed the CMHC to approve as many high-risk borrowers as possible and to keep credit flowing." "This is the ticking time bomb Prime Minister Stephen Harper… Read more »