More on the Canadian Housing Bubble
Several people wrote in and posted a link to this article in Macleans about the Canadian housing bubble. It’s an interesting read and a good introduction to anyone who wonders what all this bubble talk is about.
Room 32 of the B.C. Supreme Court in Vancouver is where dreams of owning a home go to die. It’s the main foreclosure court in the Lower Mainland, where banks and other lenders ultimately turn when homeowners can’t keep up with their mortgage payments. The homes get seized, then sold off. “There are many tears on that carpet,” says Andrew Bury, a partner at Gowlings and the top foreclosure lawyer in the city. But lately the cramped courtroom has come to represent something else entirely—the utter insanity of Canada’s red hot housing market.
Last week Bury was in court to seek approval for the sale of a one-storey foreclosed home in central Richmond for $670,000. That was already $40,000 more than the house had been valued at two months earlier. Then, as he always does, Bury asked whether any other bidders were interested in the 2,000-sq.-foot home. Ten hands shot up. What happened next left him stunned. After a secret auction, the winning couple offered a whopping $852,500. “That’s an extreme case, but it’s the kind of thing we’re seeing all the time now,” says Bury. “It’s a feeding frenzy out there.”
The article points out that we have many scary similarities to the US housing bubble and excessive household debt levels that have raised alarm from many corners. All the same arguments have been made for why ‘it’s different this time’ from ‘wealthy foreigners’ to ‘drug money’ to that old ‘running out of land’ gem. Meanwhile the elephant in room keeps getting bigger and bigger. Interest rates going up just a few percentage points ( a near certainty ) will push many people into deep financial trouble. Unfortunately as the situation down south showed us, it’s not just first time home buyers and recent purchasers that get hurt when speculative housing bubbles collapse.
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February 17th, 2010 at 3:12 am
This is spin doctoring pure and simple by a shyster group of politicians and the media whores who say they are starving for revenue. Its misdirection for local consumption just in case the ‘bad stories’ are being read and discussed around the water cooler.
………………
neeo
uk mortgage
February 5th, 2010 at 2:33 pm
@Due Diligence
I’m not “defending the value of my ‘asset’”. I’m just wondering whether Vancouver will suffer a similar 40% drop. Did you even read what I said?
About the US/CAD dollar, I am well aware of the current exchange rate. But commodity prices are dropping currently, add to that the flight to safety as people by US dollars, and it’s just as likely the USD goes up compared to the loonie as the other way around.
I’m not arguing it’s not a bubble. I’m saying that US and Canadian economies are different (US is 10x the size of Canada, reserve currency, and all that), and the bubble may not play out in the same way in both countries.
February 5th, 2010 at 1:26 am
Ha, good on the ozzies. Hope the tell VANOC to “take a flying fuck”.
February 5th, 2010 at 1:12 am
Olympic team defies order to take down flag
http://www.cbc.ca/canada/briti.....alcomments
February 4th, 2010 at 11:04 pm
@Starving Artist:
9
X Starving Artist Says:
February 4th, 2010 at 2:15 am
Ten hands shot up. What happened next left him stunned. After a secret auction, the winning couple offered a whopping $852,500.
Seriously, who the hell are these people and how can they be so stupid??
============================
Hey, I bought a car last week! The MSRP was $32,000 and I got it after a bidding war! I only paid $38,000!!! The salesman told me to “get in now” or I’ll be bussing it until the day I die.
I’m both lucky and brilliant!!!
February 4th, 2010 at 11:02 pm
“@FORREST: “Who are they gonna sell stuff to if nobody gots any money left?”
They can start buying the stuff themselves. In a bizarro world. Chinese citizens have high savings rates for a reason. ”
—————–
Well, they used to. That was before the xplosion of credit there in recent years that has turned their new middle classes into debt-slaves just like the West.
Also, one has long needed saving in China, as there is little or no social safety net – no EI if you get laid off, no old age pension. You either save when u are working or you starve in bad times.
February 4th, 2010 at 10:10 pm
Friday’s unemployment numbers will reveal that government has under estimated job losses by nearly 1 million jobs!
The end result will continue to panic investors, trigger a drop in consumer spending, and shred profit margins as consumers pull back their horns finally realizing the recession is far from over.
And while I can’t tell you exactly how many more jobs will be lost in this month, I can tell you this: the nearly 1 million jobs that were under reported from April 2008 through March of 2009 won’t be coming back for a very long time.
February 4th, 2010 at 9:58 pm
@Its All In the Name: “Look at RICHmond in Metro Vancouver and RICHmond Hill in the GTA “
How do you explain MARKham?
February 4th, 2010 at 9:57 pm
@FORREST: “Who are they gonna sell stuff to if nobody gots any money left?”
They can start buying the stuff themselves. In a bizarro world. Chinese citizens have high savings rates for a reason.
February 4th, 2010 at 9:04 pm
52. yes.
February 4th, 2010 at 8:42 pm
I would “short” China. Who are they gonna sell stuff to if nobody gots any money left? They will ultimately be just as f**ked up as the rest of us debt whores.
February 4th, 2010 at 7:46 pm
Gonna be a lot less rich Asians around with the Asian stock markets plummeting.
Ah yaa!