Friday Free-for-all!

The weekend is here and spring is in the air! It’s time to do our regular end of the week news round up and open discussion thread, here are a few stories to kick off the chat:

Vancouver worst place for housing in Canada?
The Bear-king capitulates at $59 per sq. foot
$1.8 million olympic dream turns sour
More residents join OV lawsuit (video)
Rate hike sooner than later?
C.D. Howe: Raise ’em now!
Worst flaws to look for when buying a house
Mickey Mouse is dead to us
Some Kelowna prices down 60%, things ‘starting to change’
China’s ghost cities and the biggest property bubble

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jesse
9 years ago

Canadian Business: Housing: Real insanity

or for Dave "Housing: Nominal instanity"

ht financialinsights

Best place on meth
Best place on meth
9 years ago

Australian real estate market tanking.

http://www.theaustralian.com.au/national-affairs/

Spec
9 years ago

@Some Guy:

Loose lips sink RE bubbles….

paulb.
paulb.
9 years ago

@Some Guy: Nice find.

Some Guy
Some Guy
9 years ago

Perhaps the clearest statement from the MSM yet on the bubble, in the Globe

"I believe that Canada’s high house prices in relation to incomes, combined with record household debt levels and overinvestment in residential construction, will cause a severe correction in the real estate market."

trackback

[…] at vancouvercondo.info April 10th, 2011 at 12:22 pm – “I’m a busy renovator in the lower mainland. Cheap money has without question been […]

patriotz
9 years ago

@Devore:

It is interesting that ECB is raising rates even as another EU country goes bankrupt because it cannot finance itself.

The ECB could cut its bank rate (or whatever they call it) to zero or double it and the PIGS would still be paying the same 9% or more on their debt. They are paying high rates because bondholders are afraid of a default.

You saw that same sort of thing during the financial crisis in late 2008 when the central banks cut their rates to near zero but yields on private sector debt soared. That's the market speaking.

That's also what would have happened to mortgage rates in Canada if the taxpayers had not been holding the bag.

Chipper
Chipper
9 years ago

@jesse:

LOL. I'm sure Flats has CMHC's number on speed dial "just in case." 🙂

jesse
9 years ago

@Chipper: LOL more like:

Carney: Asset prices are climbing and debt loads are increasing. That will mean deflation in a few years.

Flaherty: The economy is doing well. We'll just lower corporate taxes to compensate.

Carney: LOL go ahead. I'll raise rates.

Flaherty: No you wouldn't.

Carney: (silence)

Flaherty: You would?

Carney: (silence) You could claw back CMHC loan criteria…

Flaherty: You know… come to think of it… maybe I should have a word with the guys at CMHC…

paradox
paradox
9 years ago

And now, at last, some good news for the enlightened taxpayers out there:

http://www.youtube.com/watch?v=qz2JWAhXQHY&fe

Chipper
Chipper
9 years ago

@jesse: "If they see asset price distortions that are long-term deflationary, they will, in absence of government action, break the back of an asset bubble and the BoC has stated this openly." Man, I'd love to be a fly on the meeting room wall listening to Carney, Flaherty and co. hammering out the pithy parts you mentioned: Carney: "We see an asset price distortion in real estate that we believe to be deflationary long-term. Especially in the BC lower mainland" Flats: "Well, you know, our opinions differ on that matter. As far as the lower mainland is concerned, and just between ourselves, we're trying to pick up a few seats there so could you just leave inter .." C: "And we don't think enough action is being taken on your part. Me, I've been talking this thing to death for… Read more »

Chipper
Chipper
9 years ago

@Devore:

Agreed. Time for Mark Carney to take his hand off our collective a** and give higher rates a chance on the dance floor. 😉

Devore
Devore
9 years ago

@Chipper: I’m interested in your opinion as to why the federal gov’t wants high housing prices. It's an easy way for politicians to do nothing, but get a juiced economy. Take away growth in the real estate industry due to rapidly escalating prices, high leverage, and easy credit, and what do you have? Growing the real, productive economy is hard, because neither politicians nor government can really do it. They can "stimulate", but that just moves money from one pocket to another, with a hefty middle-man cut. If GDP = C + I + G, the G component always comes at the cost of C and I. When spending by G ends, so do the benefits, because C and I have different priorities. Growing an economy on credit is easy, but growing it on productivity gains and technological advancement cannot… Read more »

jesse
9 years ago

@patriotz: "The BoC does not have a mandate to target asset prices"

They don't have a mandate to target prices but do have a mandate to control the money supply with medium-term inflation in mind. If they see asset price distortions that are long-term deflationary, they will, in absence of government action, break the back of an asset bubble and the BoC has stated this openly.

Anonymous
Anonymous
9 years ago

http://seekingalpha.com/article/262566-canadian-r

The amazing part of this election campaign is that nobody seems to be addressing the 800 pound gorilla in the room. That gorilla is named Canadian Real Estate. The overvaluation of real estate (“bubble” is so overused it has lost its shock value) in many parts of Canada has been propelled by a Canadian addiction to debt and federal government policies that helped to create a runaway freight train in the form of real estate prices. Outside of the Canadian political campaign trail the Conservatives have paid lip service to the issue through their recent series of mortgage lending restrictions, however, this tightening is only undoing the Conservative party’s mortgage lending loosening from a few years earlier. Again, both key facts are rarely mentioned by any of the political parties currently campaigning.

Devore
Devore
9 years ago

@Anonymous: It is interesting that ECB is raising rates even as another EU country goes bankrupt because it cannot finance itself. There is a message in there somewhere for Canadians I think.

crabman
9 years ago

But with friends who have not yet "squeezed in" to the housing market, I am reminded of how I felt when I got accepted by my first choice for college and my best friend got nothing but rejections. What do you say to each other? I try to offer soothing assurances: "I hear there are still some great deals up north." "600 square feet is plenty of room!" But no matter what I say, I know we all feel like they have probably missed their chance, like they didn't buy their ticket on the last spaceship flight off a planet that's about to explode. I fear they're doomed to move back to Missouri in order to afford more than a studio condo on the fringes of the city. Vancouver 2011? No, Seattle 2006. Seattle is 27% cheaper now, those poor… Read more »

Chipper
Chipper
9 years ago

@patriotz:

Shelter != buying RE. Tattoo on your forehead. How are real rents doing?

The BoC does not have a mandate to target asset prices. Asset price targeting is government policy. The reason we have inflated house prices is because the government wants them

As far as getting a tat on my dome … maybe if I was a hard core Maori warrior type… 🙂

Real rents – hard to say. CMHC's stats for 2010 show a yearly increase of 2.3%, down from a 2.8% increase in '09. If I research more I should be able to confirm the national trend over more years. Could not find if inflation is factored into their figures. Do you know?

I'm interested in your opinion as to why the federal gov't wants high housing prices.

Cheers.

patriotz
9 years ago

@Anonymous:

There is a shelter component to the Cdn CPI, but given the nation wide run-up we’ve seen in real estate prices over the past decade, I can’t help but wonder if the weighting for this input is skewed and if headline inflation shouldn’t read higher.

Shelter != buying RE. Tattoo on your forehead. How are real rents doing?

The BoC does not have a mandate to target asset prices. Asset price targeting is government policy. The reason we have inflated house prices is because the government wants them.

Chipper
Chipper
9 years ago

@jesse: I'm a busy renovator in the lower mainland. Cheap money has without question been a key factor (and last year's reno tax credit scheme) behind influencing my clients' decisions as to whether to start a project or not. I know that 70% of the projects we completed in the past year were financed via construction loans thru a LOC. Rising rates will no doubt choke off much of the RE-based exuberance we're seeing and make things more competitive in my world. Don't think that would be such a bad thing though. Quality of work would improve, people who aren't serious about a career in trades would get their chance to bail, and home sellers would figure out that they need to do more than "just wait 18 months to beat the capital gains tax" in order to justify the… Read more »

polly pollyanna
polly pollyanna
9 years ago

@fixie guy:

and i'm not horton, or dave

i'm a whole new breed

i'll call mysel
i'll call mysel
9 years ago

@specuskeptic:

hi,

i am consciously changing my name for fun.

i know that's a strange concept.

it's a free country – still.

Anonymous
Anonymous
9 years ago

@chip: Thanks Chip.

Ironic that the BOC's cheap money policy creates the very dragon they're supposed to keep at bay – as Devore noted. There is a shelter component to the Cdn CPI, but given the nation wide run-up we've seen in real estate prices over the past decade, I can't help but wonder if the weighting for this input is skewed and if headline inflation shouldn't read higher.

Rising interest rates will be the key driver behind real estate price noramlisation I reckon. Now that the ECB's president Trichet has fallen in line with China, India, Poland and Sweden in raising benchmark rates maybe other central bankers will find the stomach to increase rates as well.

vreaa
9 years ago

Raw Video Exclusive: Line-Up For Burnaby 'Chancellor' Condos Commences In Rain, At Night, 6 Days Before Sales

http://wp.me/pcq1o-26M

Krazy Kanuk
Krazy Kanuk
9 years ago

@fixie guy: I found that guys perspective interesting as well. I agree completely. In fact it kinda reads like that commercial for California…you know, that one "you have to be here" Yeah, this place is beautiful, and honestly, I like (or would like to try) all the things he's into. But really, I have to work for a living, and I suspect the vast majority of us have to as well. That's the problem. Yeah, it's beautiful, there's lots to do, but after you work 40 hours a week, pay rent (or god help you a mortgage), food, etc. How much time and money do you really have to spend on these things??? And this is supposed to justify spending 10x your income on a house…no sorry, a townhouse? 🙂 And it's funny, he's obviously in Squamish. I'm working there… Read more »