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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Simpatico
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Simpatico

@AG Sage: I understand that CA bank capital ratios are looking better in order to meet Basel requirements, only because they are busy with mergers and acquisitions…e.g. Scotia got Dundee Bank. I'm just educating myself so no expert, but doesn't that mean the big banks are still not really meeting the capital ratio requirements, only fiddling with the denominator?

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[…] Can the Canadian housing market avoid a US style crash … […]

patriotz
Member

@900kCrackHouse:

Gold doesn’t lie.

Of course not, it's just a piece of metal.

The price of gold simply reflects the attitudes of gold speculators, and if you think they can't get it wrong, you weren't around in 1980.

BTW how much of a rise in interest rates would it take for short term rates to double, like they did back then?

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[…] This post was mentioned on Twitter by Charles, Kalim Kassam. Kalim Kassam said: RT @reiver: (Part of?) Why the Canadian real estate market didn't crash as bad as the U.S. http://ow.ly/3Xhxk […]

Extremely rich Van h
Guest
Extremely rich Van h

@Absinthe:

In China miracle happen;It only takes 20 yrs to make China from a third-world entity into the number one economy.So Van RE will going up as long as wealthy Chinese government keeps supportting Canada.

Thanks Chinese government and its subjects.China is number.Beijing Model is superior.

rp1
Guest
rp1

Ok, this does it. I am starting a blog. You won't believe some of the stuff out here:

http://www.realtor.ca/propertyDetails.aspx?proper

Look where it is:

http://maps.google.ca/maps?f=q&source=s_q&amp

Bear Patrol
Guest
Bear Patrol

@Renting: Keep those anecdotes coming! Locals posing as Rich Asians™!

It's like going to a crazy party with sexy girls only to find out it's almost all guys and all the chicks have boyfriends… Bear Patrol is sad again. 🙁

Devore
Member
Devore

@Anonymous: So, buy big house because you have too much stuff? I've managed to downsize with every move I've made. Haven't used something in 8 months… can probably do without it. Haven't LOOKED at it in a year, get rid of post haste. WTF does a person do with 10 vehicles?

Like George Carlin said: we buy houses, so we can store our stuff. If we get a bigger house, that means we can get more stuff!

http://www.youtube.com/watch?v=MvgN5gCuLac

TIME MACHINE
Guest
TIME MACHINE

The rich Asian myth is laughable.

Lunch today with my usually smart colleague:

HIM: An old-timer on my block just sold for $2.6 million. That's $400,000 over the asking price!

ME: Wow, that's crazy.

HIM: The mainland Chinese are buying up everything.

ME: What makes you say that?

HIM: They like the neighborhood. It has the best public schools.

ME: Oh. I would have thought someone paying nearly $3 million for an old-timer would have the money to pay for private school. Do you know who bought the house on your block?

HIM: Yeah, our neighbor says it's a couple with teenage kids who just sold their place a few blocks away.

ME: Are they from China?

HIM: No.

ME: Are they even Asian?

HIM: I don't think so.

ME: Ah.

Anonymous
Guest
Anonymous

Nuff said. Now back to the Remax crew to think up some more new rich chinese stories to post.

Here is one:
http://www.bclocalnews.com/news/115999809.html

The guy was screwed by realtors, but it is not their fault: it is all thanks to the Rich Asians (properties are now going from $750 000 to 1 million $ in 3 months).

VHB
Member
VHB

February 2011 month-end projections

Days elapsed so far 11

Days remaining 9

5 Day Moving Average: Sales 154

5 Day Moving Average: Listings 304

SALES

Sales so far 1609

Projection for rest of month (using 5day MA) 1384

Projected month end total 2993 +/- 405

NEW LISTINGS

Listings so far 3162

Projection for rest of month (using 5day MA) 2740

Projected month end total 5902 +/- 182

Sell-list so far 50.9%

Projected month-end sell-list 50.7%

MONTHS OF INVENTORY

Inventory as of February 15, 2011 12203

MoI at this sales pace 4.08

Will we hit 6K new listings in February?? Highest in last 10 years was 2008, with 5260.

Median sales over last ten years is 2859. Might be close to that, but my guess is the March 18th effect will bring sales up.

Renting
Guest
Renting

@van coffee:

Regarding Rich Asians:

– Married Asian.

– Her Parents Love real estate

– They just bought house #3

– They are not rich

– They are not offshore

– convinced all the rich asians are coming here

Nuff said. Now back to the Remax crew to think up some more new rich chinese stories to post.

Anonymous
Guest
Anonymous

even an old bear now understands!

"I've been in a 3200 sq. ft. house for 19 years.

Like I said before, anybody who has lived in a place for a long time knows how you accumulate stuff over the years.

I've also got 6 motorcycles and 4 cars.

It will be a huge pain in the ass when I do eventually move.

I'm not going to move all that stuff into a rental for a couple of years, even if my house may drop a hundred grand in the next few years."
http://www.realestatetalks.com/viewtopic.php?f=8&…

domus
Guest
domus

@paulb: yup, thanks for the link paulb.

I agree with the previous poster who said that the comments are the best bit: people are getting it! One guy said it all: the CREA is asking the government to stay out of the mortgage market, which should mean we should scrap the CMHC!

van coffee
Guest
van coffee

Regarding Rich Asians.

I am white.

Married Asian (Hotty).

Her Parents Love real estate (apparently at any price…). Parents live in Richmond.

They just bought house #3 (2 in richmond) and this final one is one the west side.

It is a shit hole.

One speaks mandarin and cantonese and the other just cantonese.

They are not rich, but they have saved for a long time and have done ok.

They are not offshore (in fact, I the whitey have been to the PRC more in the last 30 years or 2 years than either of them).

Mom in law has never even been there, but she is convinced all the rich asians are coming here. LOL.

I like my in laws but they are soooo delusional.

The rationale for buying the place……get this……saving on taxes because now they wont have all that interest income.

I f*cking love vancouver.

nonymouse
Guest
nonymouse

A quick heads up.

The "ascent of money" documentary series is on Knowledge Network @ 8 (Feb15).

The episode is entitled "safe as house" and should be interesting.

Eddie
Guest
Eddie

Someone posted this 220K house in Florida on Garth's blog… This would go for 5 mil in Vancouver (except for the sunshine and palm trees).

Check out the pool and backyard. And one hour to Disneyworld!

http://tinyurl.com/4qlefog

registered
Member
registered

#123 SourLemon Says: "Some of the comments on that link is priceless."

The degree of animosity is surprising and encouraging. The message is getting out in spite of the MSM firewall.

pricedoutfornow
Guest
pricedoutfornow

@WFT?:

I don't doubt it. I've had two doctors move away on me in the last few years. And no wonder, how would you feel if you were a doctor, after years of studying, and all you can afford is some ugly 60 year old crack shack in East Van? YES!!! All those years of hard work REALLY paid off!

SourLemon
Guest
SourLemon

@Paulb

Some of the comments on that link is priceless.

4sdfgrt and a few are on there heavily defending the industry it seems.

paulb
Member
paulb
Member

Not sure if CREA's plea to stop any futher mortgage rules has been posted yet. The comments are great :http://www.theglobeandmail.com/report-on-business/economy/housing/crea-urges-caution-over-more-mortgage-rule-changes/article1907692/

McLovin
Guest
McLovin

Another net 150. Keep em coming!

stuffit
Guest
stuffit

I asked him if he feels guilty about the government subsidizing his education only for him to leave the country. He said “a little but I’m not sacrificing my children’s future for it”.

He should be slapped with an exit tax.

*******

Let's try slapping all new entrants with an entrance tax. We know they will be using the services.

Oh wait, I guess that sounded too much like a "head tax."

paulb.
Guest
paulb.

New Listings 311

Price Changes 77

Sold Listings 153

12203