Bubbling up in the media

Picture this: a noon news story on Global TV that has a financial expert talking about 25% house price declines in Vancouver. It happened and AJ Sull from Pacifica Partners Capital Management played the counterpoint to the Royal LePage argument that everyone wants to live here:

Of course, by the time the story was repeated at 6pm, it had changed a bit.

Meanwhile over at news1130 they’re reporting on Joe Castaldos warning to young buyers about the ‘normalacy’ of this market and the National Post has a comment about the lack of election talk around a Canadian housing bubble.

In a comment yesterday reader Real Professional commented about the medias difficulty in finding voices of balance when it comes to real estate. There’s no shortage of Realtors who long for that moment of airtime to raise their profile but when was the last time you heard somebody talk about the potential downside of the product they were peddling?

Even if a reporter can find talking heads for both points of view the publisher or broadcaster of the news product may be disinclined to upset advertisers. Reader Southseacompany points out this tidbit about Sun reporter Ben Parfitts early stories on the leaky condo crisis and pressure from advertisers to bury the news.

So what does it tell you if there are all these reasons why we don’t see mainstream media stories about housing bubbles, and yet we’re starting to see all these stories about a housing bubble? Reporters, economists, former politicians, etc.. Is this the tipping point?

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blueskies
Guest
blueskies

I refuse to watch TV and
do not buy the Sun/Prov
fish wrap editions and yet
I feel reasonably well informed.

Why is that?

Keeping An Eye On Th
Guest
Keeping An Eye On Th

Speaking of early stories:

http://www.straight.com/article/reporter-denies-w

Reporter Denies Wrongdoing

"I didn't recall receiving anything at the time," Chow replied. "Now my memory has been jogged and it does appear that I did receive something."

Dave
Member

@blueskies:

Ignorance is bliss?

patriotz
Member
Instead of limiting the types of mortgages that consumers have available to them, the government should privatize the CMHC and allow the banks and insurance companies to decide what types of loans they want to give out and how much risk they are willing to take on. The rest of the article is good, but this is wrong. Since the Federal Government is directly on the hook for the obligations of the banks (through CDIC), it must protect itself by limiting the exposure of the banks to mortgage lending. As well, the government would always be on the hook for private mortgage insurers, because if they failed it would have to step in to prevent the banks from failing in turn. It was just this "hands-off" attitude that led to the disaster in Ireland where the government was ostensibly not… Read more »
Dave
Member

Wait, weren't the recent mortgage changes the tipping point? Or was it interest rate increases? Or was it the first mortgage rule changes? Oh no, I think it was the Olympics. Actually I'm mistaken. It was the financial crash and recession. The media tone will definitely pop this bubble.

chip
Guest
chip

Oh boy.

Chinese Real Estate Bubble Pops: Beijing Real Estate Prices Plunge 27% In One Month
http://www.zerohedge.com/article/chinese-real-est

specialfx3000
Member
specialfx3000

@Dave:

Dave, as always, you're confused. How can the media tone pop this bubble when they continue to cheerlead with BS/altered info. Having no media tone would be a good start.

If media and government stop their pimping services and let the free market work itself out, this bubble will pop.

vreaa
Member
@chip: We also noted this with 'interest' Headlined as part of the chronology: Chinese Real Estate Bubble Pops – Beijing Prices Plunge 27% In ONE Month http://wp.me/pcq1o-28H Our comment: "It is hard to predict the immediate effect on us in Vancouver, which could be anything from instantly freezing up foreign buyers, to an injection of final buyers running from a falling Chinese RE market into what they perceive to be one of the only apparently 'healthy' ones left (Vancouver). Thus, possibly another example of the narrowing that occurs towards the end of speculative manias. Regardless, the Vancouver RE market is far from healthy, and we'll see the crash here too, sooner or later. We're not anticipating 27% drop in the first month, but >50% drops by the trough. We've been anticipating a broad global deflationary wave since late last year.… Read more »
vancouverseniorsecon
Guest
vancouverseniorsecon
"@vancouverseniorsecondarymarket: You can short real estate. No you can’t. You cannot borrow a property and sell it in return for a promise to return the property in the future. That is the definition of short selling. I know there are some futures markets where you can make bets about the performance of some RE indexes, but that is not short selling RE. Short selling is the sale of the actual property as I explained above." @patriotz Thats just like your opinion, man. http://www.bloomberg.com/news/2011-04-14/goldman-… I don't tend to talk out my ass. I do understand from reading this blog that you have a much narrower definition of shorting real estate than Wall Street, but people can and do short real estate. People have made billions doing it. Books have been written about it. Derivitives are not NECESSARILY indexes, (and the ones… Read more »
Aaron Chipman
Guest
Aaron Chipman

Business is slow
No hockey
Weather may not be good for flying
Mental illness kicking in

Uncle Dave may post often

whydoItry
Guest
whydoItry

Shorting real estate.

Sell your home with a long closing date.

Bailing in BC
Guest
Bailing in BC

blueskies, your not missing much. Last night I put on the news (not even sure what channel). Absolutely useless. First ten minutes was about the Canucks and the Stanley Cup, including an in depth look at the history of the colour of their uniforms. This was followed by a story on that guy who slaughtered all his kids and has been granted supervised day release. Next we were treated to ten minutes on some university students who made a music video. That was all the "news" I could stand. I switched to PBS. Apparently there's a war going on in Libya. Hoocoodanode????

jesse
Member

@whydoItry: "Shorting real estate"

Lease with buyback at market rate at the end of the term. If buyback's an obligation it's akin to a short; if buyback's an option it's akin to a put.

jesse
Member

@vancouverseniorsecondarymarket: You're talking about off-label derivatives in a gamed market. GS was acting as market-maker on both ends so of course they had a conflict of interest. Their clients can complain all they want but they should have known better. It's like complaining when a pit boss tells you to leave the casino because you're winning too much money. It ain't fair I tells ya!

Drachen
Member

@blueskies:

You're missing out, as Dave will tell you, if it doesn't say "Fair and Balanced" in the advertising then how can it possibly be either?

It's not like they'd lie to us, would they?

Devore
Member
Devore

@jesse: GS sell-side desk routinely provides advice to their clients that contradicts what the other side of the company is doing, losing them lots of money. I wonder why they still have clients?

VanRant
Member
VanRant

"Inflation Actually Near 10% Using Older Measure (USA)" CNBC

Why the hell is interest rate near 0%!!!!!!

patriotz
Member

@whydoItry:

Shorting real estate.

Sell your home with a long closing date.

That's not a short sale of a house or anything else. When the contract is made you have one house and an obligation to deliver one house. After closing you have no house. You are never short.

Developers who sell pre-sales ARE short RE until closing, because they have an obligation to deliver a property that doesn't exist at the time the contract is made.

patriotz
Member

@VanRant:

“Inflation Actually Near 10% Using Older Measure (USA)” CNBC

Why the hell is interest rate near 0%!!!!!!

On what? Your credit card?

That's your answer.

Kosta
Guest
Kosta

@Dave:

Ignorance is bliss?

Nope, brainwashing is imperative.

jesse
Member
@VanRant: "Inflation Actually Near 10%" Price inflation may be 10% but that does not mean inflation when it comes to what policymakers are looking at. There are two situations: Situation A: I go to the store and see prices are up 5%. I go to my boss and ask for a raise. He pulls out his drawer and shows me a stack of resumes of qualified people who want my job. I don't get my raise and I buy fewer or lower quality goods from the store. Situation B: I go to the store and see prices are up 5%. I go to my boss and ask for a raise. He has lots of work going on and no suitable candidates to do the work so he gives me a 5% raise. I get to buy the more expensive items… Read more »
Junius
Guest
Junius
Clearly we are "through the looking glass" when it comes to the state of our media. Every day is opposite day. This is a tangible result of 2 factors that have taken hold of Canadian media. The first is the digitalization of technology which has led to a significant disruption of the traditional business models. First it was classified ads being killed by Craigslist pushing Newspapers to the brink. Then it was Napster and the music business. Now it is Netflix and iTunes taking apart film and television. While none of this is bad in itself the industry response has been further corporate consolidation leaving us with fewer and fewer voices chasing fewer overall dollars. Operational cost cutting and commoditized content have replace journalism and diverse opinions. We now have 3 cable companies in Shaw, Bell and Rogers owning over… Read more »
jesse
Member

A must-read at the must-read blog of CalculatedRisk: Renting vs. Buying at the High End

Why buy when you can't rent for about half the cost? And the renter is not taking the risk of further price declines.

And if we look at this from an investor perspective, no one would pay $3.5 million for $10,000 per month in gross rent. After taxes, maintenance and a high vacancy factor, this is a cap rate under 2%. Ouch (note: high end homes for lease have very high vacancy factors). …

Just more examples of chasing the price down … and more accidental landlords.

"No one"? CalculatedRisk obviously hasn't visited Vancouver!

Boombust
Guest
Boombust

"The CRTC shit the bed. Our politicians shit the bed."

Yep. Shitheads one and all.

whydoItry
Guest
whydoItry

Shorting real estate

Sell your home with a long closing date.
Buy a similar home, after your sale closes.

End Score

no need to rent, living in similar property, have some extra change in pocket.

As close to shorting in real estate that your going to get.

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