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A Brief History of the Housing Bubble

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A really good overview and analysis of the U.S. Housing Bubble at OCHousingnews.com. The build-up, collapse, stimulus/supply mgmt. and current double dip all covered in detail.

http://ochousingnews.com/news/a-brief-history-of-the-housing-bubble

From 2003 to 2006, American lenders and borrowers inflated a massive housing bubble. From 2007 to 2012, this bubble has been deflating, but the bottom is proving elusive. The housing market is closer to the bottom than to the top, and if a viable solution can be found to bring supply and demand into balance, the tremendous affordability from low prices and low interest rates will help a bottom form in the near term.

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KK

This site has been posting housing bubble, housing bubble, housing bubble, housing bubble, housing bubble, housing bubble, housing bubble for so many years… still no housing bubble..lol

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Anonymous

@VMD: "CIBC’s wholesale mortgage arm, FirstLine, quietly announced Tuesday that it will no longer accept new applications from “stated income” homebuyers who can’t prove they have the annual net income to qualify for home loans."

I love it when they make statements like this…then collective Canada all wonders, 'what the hell were they doing giving mortgages based on income they couldn't prove?'. Kind of like with CMHC said they're no longer insuring HELOC's.

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jumpin in

Unbelievable!

"Despite that, almost three-quarters of CMHC’s outstanding mortgage insurance is low-ratio (i.e., 20% equity or more). That’s largely because banks have been buying portfolio insurance in gobs to insure against defaults on low-risk conventional mortgages."

More explanation at
http://www.canadianmortgagetrends.com/canadian_mo…

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jumpin in

"I'm sure any kind of signal that might spook the housing market would be considered very prudently and at the same time, if there is any sign the market is starting to demonstrate signs it is going overboard it might want to find ways to cool it."

http://www.huffingtonpost.ca/2012/02/01/cmhc-lend…

Notice the nice slide show at the bottom…

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jumpin in

The BC real estate association will surely start the pumping about the average price.

Where can we find info about the median?

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fixie guy

78 Laibach Says: "HAM = Hosed Asian Morons"

Maybe the late comers. The clever ones who pulled CMHC-backed payments out of the country over the bulk of the last decade were anything but morons.

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Many Franks

Y'know, with all these official warnings flying around, it would be fun to collect all the tut-tutting and finger-waggling in one place.

IMF: http://www.businessweek.com/news/2012-01-25/canad…

Office of the Superintendant of Financial Institutions: http://www.vancouversun.com/business/Looser+lendi…

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

…and of course the constant bellowing from Carney and Flaherty. Anyone got others?

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rp1

Buy fire insurance:

http://canadianbs.blogspot.com/2012/02/buy-fire-i…

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jesse

@VMD: Yes right on schedule, CMHC announces changes (of sorts) in the first 6 weeks of the year.

Why is Firstline doing this? Part of it is to reduce their RWC and limits on available MI means they need to be more selective in loan originations.

There are more signs afoot that 2012 is going to be special.

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Laibach

@Peter:

Might be a dumb question, what does HAM stand for?

HAM = Hosed Asian Morons

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VMD

@0×13: This may be big news! I'll post a part of that article you linked. [Self-employed, new immigrants may find getting a mortgage tougher] CIBC’s wholesale mortgage arm, FirstLine, quietly announced Tuesday that it will no longer accept new applications from “stated income” homebuyers who can’t prove they have the annual net income to qualify for home loans. FirstLine also set a $1 million cap on what it will lend for a home purchase. The major change in policy, which is bound to pique the interest of other major lenders, came on the same day it was revealed that the Canada Mortgage and Housing Corp. could be forced to cut back on the mortgages it insures. The moves are seen as among the clearest indications yet that Canada’s hot housing market and record levels of household debt are a concern… Read more »

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jesse

@McLovin: Closeish to 2011 where SFH prices went even higher. Closeish to 2008 when prices fell over 10%. I'm not seeing much predictive in recent numbers, though them's a lot o' listings!

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McLovin

I like a net +150 as much as the next guy but what does it mean compared to previous years? Are we that much different than the last 2-4?

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Noname

@Curiosity: My kid just had a birthday party. I can assure you that balloons most definately DO burst and they do it a lot louder than bubbles do.

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0x13

An interesting development: http://www.thestar.com/article/1124551–mortgage-…

I have a comment/question regarding CMHC and the housing market. Currently CMHC insures ~$550B and total Canadian mortgage market is ~%1100B, that means that ~50% of the mortgages issued need insurance. Does anyone know if this ratio has been changing over the years?

(Note: I used some data from here: http://www.ratehub.ca/mortgage-statistics-canada – not sure how reliable it is)

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Noname

@Troll: I thought meths comment was saying less about what great deals there are in LV and more about what appallingly bad deals there are here.

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Curiosity

Quoting Devore's message:

Devore Says:

January 31st, 2012 at 12:00 pm

Comment from unmentionable blog:

Sherry Cooper: “more like a balloon than a bubble. While bubbles always burst, a balloon often deflates slowly in the absence of a ‘pin’.”

DAVID LEREAH: “Balloons don’t burst. You can put air in a balloon and it can expand or you can deflate a balloon, where air comes out….But now air can come out of the balloon rather than the balloon popping.”

Who knew Sherry Cooper would be our David Lereah.

Check out the website below for famous quotes made when no one believed that US housing was going to bust:

http://economicsofcontempt.blogspot.com/2008/07/o…

The phrases don't differ much from Cooper's quote but only time will tell………

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VMD

@VMD:

typo. prediction is "compared to Dec 2011 HPI", not Dec 2012, of course.

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VMD

Time flies, it's suddenly end of January. 2012 VCI Price Prediction Contest entry ends Feb 1st @ 23:59 PST So far 5 contestants. For HPI category: compared to Dec 2012 Me: -2.5% by end of Jun, -10% by year end The Ant: -0.45% by end of Jun, -2.8% by year end Jesse: +3% by end of Jun, -3.5% by year end 604x: -5% by end of Jun, -8.4% by year end Absinthe: -1.5% by end of Jun, -11.5% by year end There are a total of 10 categories. Winner nets 1. Bragging rights 2. Bestowed the title "The Prophet" 3. The prestigious VCI Golden Bear Award For the not-so-hardcore VCI members, feel free to drop your predictions for JUST the HPI category (mid year & year end) either here or in the forum. I'll add your predictions into the spreadsheet..… Read more »

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Troll

@Best place on meth: Gosh you really are stupid aren't you? You're actually trying to defend that comment, one of your dumbest ever.

In your righteous rage you chide homeowners for not taking advantage of a deal of a lifetime in Las Vegas, one you haven't taken advantage of yourself. Priceless. Only a blind bear like you doesn't see the problem there. Get out of the house man, see the world, you'll be happier and you'll probably make a little more money so you CAN take advantage of the LV deals.

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chilled

@Peter:

http://bit.ly/zA67ln

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chilled

This is one of those "patiently waiting behind the elderly Chinese ladies as they cautiously and meticulously pick through the carrots" kind of thread.

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Meh

@JR: Cash sales probably would've appeared by now. As HAM can't use CMHC, their sales stats would appear faster.

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JR

@Peter: Hot Asian Money, which appears to have dried up this year relative to past years. That said, sales during Chinese New Year (CNY) may not be reflected in the figures quite yet, being as I expect there would be a lag. We'll see if lag turns in to laggard.

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JR

@VMD: Whatever else it might be, by a long shot it is the steepest climb of inventory on the graph.

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