But, it’s different here!

Why did Canada’s housing market not suffer (yet) as much as the US? The media will tell you it’s our top-notch banks, prudent lending system and strong fundamentals. But take a close look at the graph below:

Graph

The US and Canada both had an uninterrupted housing boom that lasted 7 years, with US starting and ending roughly 2 years before Canada. After US banks began failing and world stock markets collapsed in Oct 2008, unprecedented stimulus measures were taken simultaneously by Canada and US.

The key point the above graph illustrates is that by the time stimulus was started, US home prices had already been falling for 3 years while Canada had just started their decline 1 year prior. As a result of the shorter stimulus response time in Canada, our housing prices and banks took a smaller hit.

Notice how similar the effects of this stimulus have been to home prices in both countries. By slamming interest rates to the floor, injecting $110 billion into Canadian banks ($65B from the Insured Mortgage Purchase Program and $45B from Bank of Canada) and creating home buyer incentives (US), housing demand was dragged forward and created a temporary rally in home prices. Even more interesting is how the stimulus effects have started to wear off at the same time in both countries.

And are our banks really more prudent than those in the US? As Ben Rabidoux noted on his blog, take a look at the bank leverage ratios (courtesy of Eric Sprott):

Leverage

The media is right – it’s different here. It’s worse.

submitted by: crashcow

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CRASH JPMorgan-Chase
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CRASH JPMorgan-Chase

BOMBSHELL……..GET THIS….IT CHANGES EVERYTHING

Judge Finds MERS Has No Right To Transfer Mortgages, Finds Entire MERS Process Illegal
http://www.zerohedge.com/article/judge-finds-mers
Complete Memorandum Decision By Judge Grossman Finding MERS Transfers Illegal
http://www.zerohedge.com/article/complete-memoran

CRASH JPMorgan-Chase
Guest
CRASH JPMorgan-Chase

"…And with MERS now found to be a fraud, we expect MERS Commercial authority to be likewise eliminated. Which means that the entire US mortgage market, both residential and commercial, is a lie, and built on fraudulent foundations, and that every single MERS-mediated transaction will likely have to be unwound…."

SEE POST ABOVE

SquareNinja
Guest
SquareNinja

So does that mean as both America and Canada fall back down… Canada will just keep falling while America levels off?

registered
Member
registered

Data and graphs, nothing makes bulls scatter faster. Here's another view of the same effect, CS and Teranet for three cities in each country, referenced to the earliest date that data is complete for all six: Feb 1999.

http://img11.imageshack.us/img11/9392/bullkrypton

The American cities include data from Feb 1997. Since Van was still riding high on the wave of mid-Nineties HK appreciation in my opinion this picture significantly understates the magnitude of its peak.

Extremely rich Van h
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Extremely rich Van h

@fixie guy:

Can't apply Yankee's plight here because Vancouver RE market is dictated by wealthy Chinese not Caucasian buyers who already been priced out yrs ago and renting for the rest of their life.

Keeping An Eye On Th
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Keeping An Eye On Th

http://economix.blogs.nytimes.com/2011/02/14/seat

It's different here, does this sound familiar?

"Two local economists were quoted all but guaranteeing that Seattle was immune “if history is any indication.” A market-risk index from PMI Mortgage Insurance gave the odds of Seattle prices dropping at a negligible 11 percent."

CRASH JPMorgan-Chase
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CRASH JPMorgan-Chase
Housing Crash Is Hitting Cities Once Thought to Be Stable The rolling real estate crash that ravaged Florida and the Southwest is delivering a new wave of distress to communities once thought to be immune — economically diversified cities where the boom was relatively restrained. In the last year, home prices in Seattle had a bigger decline than in Las Vegas. Minneapolis dropped more than Miami, and Atlanta fared worse than Phoenix. The bubble markets, where builders, buyers and banks ran wild, began falling first, economists say, so they are close to the end of the cycle and in some cases on their way back up. Nearly everyone else still has another season of pain. “When I go out and talk to people around town, they say, ‘Wow, I thought we were going to have a 12 percent correction and… Read more »
CRASH JPMorgan-Chase
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CRASH JPMorgan-Chase

There are many Chinese on this board and likely many Chinese realtors. I'm sick of people saying it isn't the Chinese that are causing the strength in our house prices. It simply isn't true. Every other place in Canada and BC are suffering price declines.

Renting
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Renting

I’m sick of people saying it isn’t the Chinese that are causing the strength in our house prices.

Sorry but they have little to do with it. You are being sucked in by Realtor spin. It is the same as every other real estate bubble from Iceland to the US. It is caused by locals of every race.

900kCrackHouse
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900kCrackHouse
@CRASH JPMorgan-Chase – Buy Silver: In general I agree with the bears on this blog. However what I do not agree with is the bears perspective on the asian effect. Asian buyers are MOST DEFINATELY driving up prices here. Especially on the west-side and Richmond. However, I know a number of cases of underused houses purchased by asian buyers: 1) My friends apartment was just purchased by foreign buyers and he was kicked out for "renovations" 2) I know a 20 year old university student who's rich aunt from Asia just bought him a house in North Burnaby. He manages the tennants and when he can afford to pay the 70% mortgage, he gets the house. Oh, and I should mention they own two more houses in Burnaby, one of them a $1 million dollar house occupied only by the… Read more »
jesse
Member

San Diego is approaching affordable again:

Shambling Towards Affordability: Year-End 2010 Edition

Hooray for everything!

You know what San Diego's problem is? No rich Asians :mrgreen:

Dan in Calgary
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Dan in Calgary

Stunning graph. Scary table. Truck sucks.

Dan in Calgary
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Dan in Calgary

Dang, I must be sleep-deprived. I'll stop posting for a week now. Meant to write, "Stunning graph. Scary table. Truth sucks."

Dan in Calgary
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Dan in Calgary

Looks like a staff writer at the Vancouver Sun has been reading your blog: <a href="http://www.vancouversun.com/business/Metro+Vancouver+rest+show+sharp+differences+housing+price+changes/4278542/story.html#ixzz1E34zxczG&quot; rel="nofollow">Metro Vancouver, rest of B.C. show sharp differences in housing price changes".

The story shows that, contrary to the BCREA headline discussed here earlier, prices have fallen significantly in much of B.C.

Note the side panel link to a story on Seattle prices.

Seems a good article. fwiw, the rich Chinese don't feature in the article at all; wots up with that eh?.

Anonymouse
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Anonymouse

@Keeping An Eye On The Pimps:

"It’s different here, does this sound familiar?"

How is "it's different here" a significantly different argument to "it's the same here"?

space889
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space889

@International slum village – with regard to your post about Europa having high strata fees due to flooding, shouldn't the strata place a lien on the unit that caused the flooding to recover the repair costs? I thought in cases like you cited the strata even has the power to force the sell of the unit and collect its money which is also ranked higher than a mortgage??

Anyone know the answer to this?

900kCrackHouse
Guest
900kCrackHouse

@Renting:

Suckered in by realtor spin? So you are saying that all of the realtors are lying when they say that their current clientel on the westside and in richmond are primarily offshore asian buyers?

Please, come up with at least some annecdotal evidence that what you are saying is correct before opening your mouth. If offshore asian buyers aren't driving up prices, then prove it! Because the evidence shows that they ARE the primary driver of the current waive of price increases.

paradox
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paradox

@jesse

San diego is not cheap, I check prices for houses and multiapartments regularly. Cap rates are at 6% and below. Of course, compaired to the best place on earth it is cheaper, but then, they dont get our rain.

San diego is only cheap if you take a 0 down 30year morgage and stay in the house for very long time. Morgage payments are very affordable with the low interest rates we have. It is definitly not cheap for a cash buyer.

vreaa
Member

Lots of discussion regarding US/Vancouver comparisons on all the blogs.

Here's a great story:

“I put on my Vancouver real-estate price calculator and made a guess… I had guessed over 10 times too much.”

http://wp.me/pcq1o-1QD

paradox
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paradox
My anedotal evidence suggests that chinese indeed are driving the vancouver market. I dont know if they are offshore or local but there is a lot of activity driven primarly by them. Builders I know tell me that now the chinese are selling houses mainly to each other in vancouver. What happens is that they are buying old houses, tearign down and building new houses for the chinese buyers and tastes. Since you can only avoid HST on the first house only as a first time buyer, there are lots of schemes going on to avoid paying HST, hence a biger involvment of people and higher activity. I find it regretable that the city does not have a betetr say on the preservation of the exterior aspect of some of the old architecture we have left, as I have seen… Read more »
cgh
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cgh

@Anonymouse:

Why are all of your posts phrased as smarmy, contrarian questions that contribute nothing to the discussion?

cgh
Guest
cgh

@Dan in Calgary:

"Seems a good article. fwiw, the rich Chinese don’t feature in the article at all; wots up with that eh?."

Actually, they are indirectly referenced:

"Muir said Vancouver is doing better because its economy is more diversified that the rest of B.C. and also has the advantage of significantly more immigrants, many of whom are in the investor class and typically buy a house upon arrival."

This is why the Landcor etc. data shows few true offshore owners: getting Canadian citizenship is a normal part of investing here, as it is easy and provides security in case things go sideways back home.

WFT?
Guest
WFT?

@900kCrackHouse:

It is not possible to prove the negative, moron.

Why has there been not even one rich asian offshore house buyer shown on TV? NOt even one! All you had was the media stunt witht he local chinese realtors. Where are their clients? Lets have just one photo and interview of an offshore chinese buyer. If I saw that, I may believe the hype. Until then, there is no evidence.

900kCrackHouse
Guest
900kCrackHouse
@WFT?: What you just said makes no sense. There have been lots of articles about offshore asian people buying houses in Vancouver. There have been lots of talk from realtors about this. Why do you think realtors are not suffering right now? Asian buyers. Who is buying all of the houses in West Van – Asian buyers. My wife's prof in West-side Van gets weekly offers to buy out his old house because they want to tear it down. Its crazy over there. Open your eyes. I'm not saying tonnes of houses in Surrey are being purchased by asian buyers, but the prices cascade out from the epicenter of the asian buying. Look at Austrailia, they are dealing with the same problem and have had to bring in restrictions on foreign buyers. I guess in your mind a buyer isn't… Read more »
900kCrackHouse
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900kCrackHouse

@WFT?: And whats with the Moron comment? People of little intelligence resort to calling people Morons when they don't have a real argument to justify their case.

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