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OECD warns on Canadian housing market

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Now we have ‘outsiders’ commenting on the Canadian housing market, I wonder what they’d say about Vancouver?

The rebound in the housing market has been key to Canada’s recovery from the recession. But it has left some facing a toxic combination of hefty debts and rising interest rates as the Bank of Canada pulls back from the emergency low rates used to juice the economy back to life.

The Organization for Economic Co-operation and Development warned in an annual review of the Canadian economy that record high debt levels have left many vulnerable “to any future adverse shocks.”

In the report being released today, the OECD said more measures could be taken by the federal government to keep marginal buyers out, suggesting an “overpriced” housing market needs to cool off before allowing more people to plunge in.

full article at the Globe and Mail, hat-tip to patriotz for the link!

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fixie guy

browntown: "vancouver and singapore

Ah, thanks for the clarification. When you earlier wrote

"Most property bubbles in modern history have been price bubbles because there are unique factors restricting property supply.

the obvious intent was to say most property bubbles in modern history occurred in Singapore. Otherwise by ignoring the rest of the world you stand reasonably accused of ignoring counterfactual data and throwing whatever sticks to the wall, which of course would be disingenuous and far overestimate the strength of your arguments. Or their source.

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Anoymous

@Jimmy:

“If 50 per cent of the people who show up at the polling booths next September say they want to get rid of an HST then certainly, as a government, I would want to get rid of the HST,” Campbell said in an interview.

I note that all the media is interpreting that as "if the people say so, we'll abolish the HST". Read Campbell's exact words again. He's saying "he'd want to" get rid of the HST, not that he'd be bound to do so. He's left himself plenty of wiggle room to renege.

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SupersmartBS

@Dyugle:

TD Economics doesn't understand economics. Trust the 5-week education realtors over the PHD economists. Realtors know real estate and they say it always goes up and now is a great time to buy.

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space889

@Jimmy: That's good to hear though I will have to see it to actually believe it. Knowing Campbell and his track record, I'm sorry but I just can't take his word that 50%+1 yes vote of those who voted will be sufficient.

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patriotz

@browntown:

Restricted supply cannot cause bubbles in RE or anything else. Restricted supply of any asset results in increased earnings, i.e. cost of output of the asset. In the case of oil wells, that means oil. In the case of RE, that means rents. In the case of workers, that means wages. Etc.

Real rents have been declining for decades in Vancouver which means that the supply of dwellings has been increasing faster than demand.

There is ONLY one cause of asset bubbles and that is buyers who are willing and able to pay asset prices out of proportion to earnings. It has nothing to do with actual supply, whether the asset be houses in Ireland (1 in 7 of which were never occupied), US (1 in 8), etc. or fibre-optic cables (360 Networks, etc 90% of capacity never used).

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browntown

@fixie guy: vancouver and singapore

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paulb.

TD Economics now forecasts that Canadian housing prices, already off 3.7 per cent this year, will fall another eight per cent by mid-2011, said economist Diana Petramala. As well, she said, growth in the economy will crawl along for the remainder of 2010 with growth of less than two per cent annualized, edging up to only two per cent in 2011.

Read more: http://www.vancouversun.com/business/Consumers+ec…

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Dyugle

http://www.consumerindexes.com/
That looks like a double dip in consumer spending to me.

Good luck avoiding a recession.

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fixie guy

"Most property bubbles in modern history have been price bubbles because there are unique factors restricting property supply."

You really think all those property bubbles around the world were caused by restricted supply? Like all the 'restricted supply' in the US?

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browntown

Most property bubbles in modern history have been price bubbles because there are unique factors restricting property supply. First, property development is subject to government regulation, and established communities usually have regulations restricting building height and density. In that environment, it is virtually impossible for mature communities to increase supply quickly. hey nutslappers, some nutslap talking about a land making machine Second, infrastructure development takes time. Land shortage is always relative to infrastructure scarcity. Even on an island like Singapore land can be reclaimed from the ocean at low cost. Therefore, land shortage is usually a form of infrastructure shortage. Infrastructure development is time consuming and when property prices are high, even when money is available, infrastructure development usually stalls due to fears about a future drop in property prices. Hence, property supply may not respond to price increases even… Read more »

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Super Smart Person

@manx: Someone mentioned here that rents are negotiable but what if you’re dealing with the property manager or agency that handles the rentals, can you still negotiate prices with them? I’m assuming the owners give them a set price or range? The owners definitely do give the property manager/real estate agent an asking price (with advice, of course). And as someone else said, you can negotiate and the manager/agent will take that offer to the owner. However, you'll never see similar properties asking for vastly different prices (even if the landlord will accept much lower), because it makes the job of the manager/agent harder… they don't want one of their listings to be more attractive than the others. And obviously, as an outsider, you won't know which landlord is willing to accept the lowest. So… the lesson is just to… Read more »

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realpaul

Didn't Gordo just say he was fluffed up and ready to fight when he came back from his European vacation? Where did he go ….France???? He capitulated awfully fast for a fighter and a guy in charge of an election winning party (lol). Gordo has been puking up chunks as he sees his grandiose vision of the future melt down. He was placing himself in the way of getting picked up by the Federal Libs as a possible replacement for Iggy…you know that has imploded with all the shit he's picked up along the way to his trip to oblivion. I bet he's coveting a senate job like Larry…ain't going to happen if he gets trounced on the HST ref. Gordo also promoted himself as an international figure in the lead up to the Olympics…saw himself driving some agenda and… Read more »

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jesse

Frances Bula: Deadline for Olympic village housing operators put back because of complex demands

Or better titled: When 6 Figure Income "Star" City Managers Fail

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Jimmy

space889 Says: September 13th, 2010 at 10:32 pm @anonymous: Well unfortunately for the referendum to pass, 50%+ of the registered voters have to vote yes. ———————————– According to the Vancouver Sun quoting Mr Campbell, it's only 50% plus 1 of the people showing up to vote for the referendum to pass. http://www.vancouversun.com/news/Gordon+Campbell+… VICTORIA — Premier Gordon Campbell said Monday he will scrap the controversial harmonized sales tax if that’s how a majority of British Columbians vote in a provincewide referendum set for Sept. 24, 2011. “If 50 per cent of the people who show up at the polling booths next September say they want to get rid of an HST then certainly, as a government, I would want to get rid of the HST,” Campbell said in an interview. “People have been very clear to me and to the government… Read more »

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space889

@Anonymous: Well unfortunately for the referendum to pass, 50%+ of the registered voters have to vote yes. That 50%+ of the registered voters in the provinces (probably over 1.5M), not 50% of the people who bothered to show up and vote in the referendum. As a comparison, I think the voter turn out in the last Provincial election is only like 30%!! To have the referendum pass, at least 1 million voters need to show up on referendum date and at least 70% need to vote yes of abolishing the HST. This decision is to purely avoid a vote in the Legislature and allow the Liberals to say, hey it didn't pass the referendum and therefore the people of BC are ok/support the HST.

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Spec

Re: CBC AM radio conversation.

I believe it was Moe Sihota. (I subsequently started yelling at the radio from the shower).

He did say that he pulled it off the top of his head, I would argue that it came from some other part of his anatomy. Anyhew, won't happen. Too many contracts up for renewal in these soon to be very tight budgetary times.

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rp1

Here's another article with better graphs:

http://www.theglobeandmail.com/report-on-business…

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doug r

@Best place on meth:

Isn't that what they said about AIG and other "too big to fail" banks?

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For God's Sake

So is it now official that Dave = SSB? Pretty much the same useless theories. I found SSB funnier.

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Anonymous

referendum…screw that….old crazy vanderzalm is going for a recall. I really never cared for him in the past but I have to give him credit. Lets get rid of this hst!

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Anonymous

@NO-LYMPICS:

"A referendum next year?"

Even if the referendum happens, it won't be legally binding.

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Anonymous

@Devore:

"It’s a dumb idea. I’d rather see non-deductible interest, AND real estate capital gains taxes. Why should houses be special."

So if somebody sells for a loss you think they should be able offset that loss against income tax, too? Why should houses be special?

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Devore

@SuperSmartBull:

It would suck for bears to be ’surprised’ again by something new propping the market up.

That's a stupid statement. And pigs may fly. Bears would be surprised at that too.

Are you gonna gamble on that? There you go again, with your improbable what-if scenarios. That's no way to support your position in the market, or plan for the future.

There's no way the government will forgo billions of reliable, predictable tax revenue no one complains about (except those who want to keep juicing the market), and replace it with some capital gains tax on real estate.

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Devore

@SuperSmartBull:

It would suck for bears to be ’surprised’ again by something new propping the market up.

That's a stupid statement. And pigs may fly. Bears would be surprised at that too.

Are you gonna gamble on that? There you go again, with your improbable what-if scenarios. That's no way to support your position in the market, or plan for the future.

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NO-LYMPICS

I see old Vander Zalm has won again with the HST fight.

A referendum next year?

Campbell must have shite his pants and planning his exit strategy.

I can't see a majority voting YES on the HST…but then what?

This could a major chapter in history.

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