Martin Armstrong lists Canada under “RE markets to avoid”
While some Canadian cities offer reasonable affordability compared to household incomes, Vancouver’s housing is, by any measure, highly overvalued and vulnerable to a sharp correction. Prices have risen 55% from their 2009 trough to a level 29% above their prior peak. The average home price reached nearly C$800,000 (according to CMHC).
January 29th, 2012 at 5:43 pm
AKA the needle and the damage done, with the "heroin" still being sold freely on the street.
January 29th, 2012 at 7:21 pm
Florida GOP primary rides on housing crisis blame
Of course nobody – not the candidates and not the voters – is willing to talk about who bears ultimate blame for the housing collapse.
THE BUYERS WHO PAID TOO MUCH.
January 30th, 2012 at 12:24 am
Another view from the outside:
"Canada's Subprime Crisis Seen With U.S.-Styled Loans: Mortgages" San Francisco Chronicle, Jan 30/12
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/…
January 30th, 2012 at 12:26 am
Also made Canadian press;
http://business.financialpost.com/2012/01/30/cana…
January 30th, 2012 at 1:09 am
Look at page 18 in the Martin Armstrong article. He shows a 78 year real estate cycle with the final 26 years being a contraction. Those waiting for a quick bottom may be disappointed. Real estate will likely be a declining asset for the next 20 years. Renting may be the best option for a long time. Look at the US they are over 5 years in to a RE contraction with no bottom in sight and many areas still being very pricey.
January 30th, 2012 at 1:29 am
speaks for itself..
http://www.theglobeandmail.com/news/national/info…
January 30th, 2012 at 1:39 am
@ DEFAULT NAME
the Cons are planning to increase French and English speaking immigration at the expense of family reunification immigration.
Currently, immigrants can sponsor their parents and dependent children. I strongly suspect the Conservatives will try to remove the parents from this equation. After all, they are beyond their working years and will almost certainly become a burden on the healthcare system.
As well, they may try to do away with the practice of recognizing dual citizenship. I recall there were whispers about this back during the trouble in Lebanon in 2006 (we spent $85 million evacuating citizens who turned around and went right back to Lebanon after things settled down).
January 30th, 2012 at 2:19 am
Now with CONservative government in majority, get ready for supersonic speeds in wealth transfer, where private losses will be transferred to a public balance sheet for a greater good. Anyone who believes that this government in particular is going to to anything about curbing this overheated RE market, knows nothing about finance and politics or the global power structure.
January 30th, 2012 at 2:28 am
@SunBlaster:
"As well, they may try to do away with the practice of recognizing dual citizenship."
Do you mean recognizing dual citizenship or allowing dual citizenship? Not recognizing dual citizenship means that if you are a Canadian citizen you cannot represent yourself as a foreign citizen to the Canadian government. Not allowing dual citizenship means that you cannot hold Canadian citizenship at the same time as that of another country. China, for example, does not recognize dual citizenship but allows it.
I double very much that you're going to see dual citizenship outlawed as it would negatively affect a great many people many of whom are Con supporters. I believe the country that has the most dual citizens with Canada is the US.
January 30th, 2012 at 3:09 am
Martin Arthur Armstrong (born November 1, 1949 in New Jersey) is the former chairman of Princeton Economics International Ltd. He was indicted on September 29, 1999 in the United States District Court for the Southern District of New York for conspiracy to defraud the United States.[1] for alleged fraud involving Japanese investors. On August 17, 2006, he pleaded guilty to one count of conspiracy to defraud the United States.[2] On April 10, 2007, he was sentenced to five years in prison.[3][4] He was released from prison on September 2, 2011.[5]
Wikipedia
January 30th, 2012 at 3:17 am
[BMO denies housing bubble]
The Bank of Montreal poured cold water on the idea Canada's housing market could be headed for a crash, suggesting that prices are only "moderately high across the country."
"Expect the housing boom to cool rather than crash," BMO's chief economist Sherry Cooper and senior economist Sal Guatieri said in a report published Monday.
The bank does note, however, three risks to the outlook.
1. A sudden hike in interest rates,
2. a widespread Canadian recession, or
3. an economic slowdown in Asia reducing the number of foreign buyers would all take the air out of Canada's housing market.
"But barring one of these triggers, however, a dramatic correction is unlikely," the bank said.
____________________
IMO risk #1 will come sooner or later, but risks #2 & #3 are already in progress.
http://www.cbc.ca/news/business/story/2012/01/30/…
January 30th, 2012 at 3:28 am
http://www.vancouversun.com/Housing+bubble+really…
January 30th, 2012 at 4:17 am
Bank of Montreal (BMO-T58.08-1.14-1.93%) says Canada’s somewhat pricey housing market is likely to cool, not crash.
The bank’s economists say the only real trouble spot is Vancouver, where there are plenty of vacant high-priced condos going begging.
==================
They forgot to mention dramatic price drops to take take place in West Vancouver, swamped stucco houses in Vancouver to implode and cardboard built box houses in rest of Greater Vancouver and turtle pool country in Surrey and beyond where 20% plus drops are expected in short term.
Asset deflation is taking the world by storm – BC is next up!
January 30th, 2012 at 4:31 am
@trash crash alert:
Their "Canada" does not seem to include Calgary and Edmonton, where prices are over 10% off peak and falling again, and the disaster area of Kelowna and the southern BC interior.
Why don't their reasons for why we're not headed for a bust apply there?
January 30th, 2012 at 5:03 am
these kinds of articles drive the bears nuts! soon, more bears will leave for ottawa.
January 30th, 2012 at 6:08 am
@VMD
My understanding is that BMO managed to sell a nice package of MBS that then allowed them to drop the interest to 2.99. From talking to someone at another big Canadian bank BMO is a little late to the party and they want to keep the game going.
January 30th, 2012 at 6:13 am
Isn't Michael Campbell a disciple of Martin Armstrong? Be care full with the negativity Martin. Only Ozzie J will be left to pump R.E. on Money Talks.
January 30th, 2012 at 6:23 am
[Canada needs more tools to cut household debt: FSB]
– 1/30/2012
On the debt issue, it said: “Given recent global market developments, it is important for the authorities to continue to strengthen macroprudential surveillance and consider expanding the range of tools at their disposal – which currently include the leverage ratio and various government mortgage insurance eligibility requirements – in order to effectively address any emerging concerns.”
The report did not prescribe any specific action to rein in mortgage debt.
The issue is not new to Canadians. Carney and Finance Minister Jim Flaherty have warned consumers repeatedly against taking on too much debt at a time of historically low interest rates. The household debt-to-income ratio has reached a record high of more than 150% and the FSB said the price-to-income ratio in the housing market is at a 30-year high.
Since 2008, Flaherty has intervened three times to slow the real estate market. He has lowered the maximum amortization period for new mortgages to 30 years from 40 years, raised minimum down payments required to qualify for government insurance, and required all borrowers to qualify for a five-year fixed-rate mortgage to get insurance, even if they chose another mortgage option.
The FSB urged the government to closely monitor the Canada Mortgage and Housing Corp (CMHC), the federal agency that backstops many high-risk mortgages, to ensure its liabilities are manageable. CMHC is not regulated by the banking regulator but complies with the same rules as the insurance industry.
“It is therefore important that the Canadian authorities continue to closely assess the contingent liability to the public finances posed by CMHC and ensure that its underwriting standards remain appropriate,” the report said.
The peer review of Canada is the first of its kind and is a follow-up to recommendations made to the country by the International Monetary Fund in 2007-08. The FSB has conducted similar reviews of five other countries, including Switzerland this month.
January 30th, 2012 at 6:24 am
link to above news:
http://www.torontosun.com/2012/01/30/canada-needs…
January 30th, 2012 at 6:28 am
For some reason this tune seems appropriate…
http://www.youtube.com/watch?v=vKITpVovTAE
January 30th, 2012 at 6:49 am
And people thought HAM would come to save us all…
Shanghai New Home Prices Tumble 41% In Past Week
Next coming near you…
January 30th, 2012 at 6:56 am
@paradox:
What a shame that we're doing so poorly. It's depressing looking at that info-graphic. Who's been on watch during this time?
January 30th, 2012 at 7:00 am
It feels really good to read so many MSM papers bringing this society back to sanity. I was about to doubt my common sense
But it also troubles me that we had to reach such an extent of madness before reacting. Let's hope the landing won't be too hard…
January 30th, 2012 at 7:24 am
Thank god CNY is over, now HAM can get back to listing their houses.
January 30th, 2012 at 7:32 am
Et tu, Martin Armstrong?
January 30th, 2012 at 8:00 am
Another Mortgage related news update:
RBC Mortgage specialist Jason Wong just wrote:
"For a long time, mortgage debt was not included in many people's credit check reports.
Starting this year, mortgage debt will be listed on credit reports."
ON THE REPORT, IT WILL SHOW,
============================
An “M” for mortgage
Date reported / opened
Original balance
Mortgage balance
Payment amount
Payment history
============================
<a href="http://translate.google.com/translate?sl=auto&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&u=http%3A%2F%2 Fwww.westca.com%2FForums%2Fviewtopic%2Ft%3D423810%2Flang%3Dschinese.html&act=url” target=”_blank”>http://translate.google.com/translate?sl=auto&…” target=”_blank”>Fwww.westca.com%2FForums%2Fviewtopic%2Ft%3D423810%2Flang%3Dschinese.html&act=url
January 30th, 2012 at 8:23 am
@DEFAULT NAME: Keep in mind that HAM, grow-ops and cash deals skew the stats. Each of these problems has gotten worse over the last 30 years.
Some of the highest child poverty rates in Canada in west Vancouver? Really???? Anyone who works with the impoverished knows that they have been consistently been pushed out to New West / Surrey over the last 5-10 years.
January 30th, 2012 at 8:32 am
@Makaya:
Well, this is certainly opposite from what we were told by local media and realtors in the last 10 days or so – the CNY is the time when people go bananas and buy more properties…
I guess (/sarcasm on) all those people from china got here to buy properties, so nobody was buying there. (/sarcasm off)
January 30th, 2012 at 8:37 am
Robert Shiller: A Housing Bottom? What Are They Thinking?
http://www.businessinsider.com/robert-shiller-hou…
January 30th, 2012 at 8:41 am
@patriotz:
"THE BUYERS WHO PAID TOO MUCH."
I hear this a lot but empirically the average person tend to 'max out' at any opportunity given. In my opinion the slogan should be 'The lenders that lent too much'.
January 30th, 2012 at 9:04 am
Saw on BNN this moring the Cons are planning to increase French and English speaking immigration at the expense of family reunification immigration.
January 30th, 2012 at 9:13 am
@southseacompany: Read it, and this:
Low ratio loans along with their lax income verification requirements are a huge ball in the air if home values start dropping quickly. Flaherty has undoubtedly been presented the data, and should be investing in some adult diapers if prices start dropping.
January 30th, 2012 at 9:27 am
@southseacompany: This is a great article. Below are some abstracts taken from the SF Chronicle:
We have a Canadian version of all the wrong doings that occured in the US and put their economy down. You want to profit from the bust? Short Canadian banks…
January 30th, 2012 at 9:42 am
Larry's numbers for today:
Vancouver East & West*
New Listings – 87
Back On Market Listings – 2
Price Changes – 31
Sold Listings – 44
Vancouver All Areas*
New Listings – 288
Back On Market Listings – 5
Price Changes – 93
Sold Listings – 119
*Attached & Detached – Date: 01/30/2012
January 30th, 2012 at 9:48 am
New Listings 292
Price Changes 95
Sold Listings 123
TI: 13380
http://www.laurenandpaul.ca
January 30th, 2012 at 10:04 am
@paulb.:
Ahhhh. Back to business as usual, as I knew it would be. Early January numbers always have low/unpredictable sales and are basically meaningless.
Thanks for the laugh again this year gents. See you next Jan for the same "Oh its crashing……doh" game again. Never gets old.
Lather, rinse, repeat
January 30th, 2012 at 10:20 am
Well, huh: http://business.financialpost.com/2012/01/30/cmhc…
January 30th, 2012 at 10:22 am
@Conrad:
Ummmm, how the hell is a +170 listing day bullish???
January 30th, 2012 at 10:40 am
@Conrad: Yo Conrad. Its different this time.
January 30th, 2012 at 10:50 am
@VMD mobile: We'll see what happens. They may not make any more land, but will they make more money?
January 30th, 2012 at 11:29 am
@oneangryslav2: Well, according to this link, this was the situation as of 31 December 2005.
So they've more than doubled the level of issuance in six years.
http://www.parl.gc.ca/Content/LOP/researchpublica…
January 30th, 2012 at 11:40 am
@oneangryslav2: More searching turned this up:
Year Insurance in Force (Billions)
2005 273
2006 291
2007 345
2008 407
2009 472
January 30th, 2012 at 11:51 am
@SunBlaster: …Now with CONservative government in majority, get ready for supersonic speeds in wealth transfer,..
Yes, you're in luck: they will be pushing additional funding for crop circles and tinfoil hats.
January 30th, 2012 at 12:16 pm
@VMD:
re: mortgage debt will be listed on credit reports
was following the conversations on the chinese forum. Most of the users (including house-pumpers) are seeing this change as quite negative to home price. Previously one can use the same set of credit report to obtain several mortgages. "You used to be able to marry the same girl to several husbands, now you can't, you have to get a divorce first."
Can anyone confirm that credit checks didn't use to include mortgage holdings?
January 30th, 2012 at 12:43 pm
@VMD: Hmm something not working here…
My recent credit report (end of 2011) had my mortgage listed by both Equifax and Transunion. The mortgage is now discharged, don't know if that makes a difference.
January 30th, 2012 at 1:48 pm
Great news: we are now in a balloon. They are harder to pop than bubbles, but they make a lot more noise!
http://www.montrealgazette.com/business/Canada+ho…
What an idiot! And Garth says she is trying to sell her 3 million $ house. What an unbiased "study"…
January 30th, 2012 at 1:55 pm
A comment on Larry's blog:
"Sometimes when you want to believe something, you have a different outlook. I work with mortgages and for a several months it’s been very slow. Ive notice the slowdown since summer and didn’t believe we could see prices come down. I feel different now. This decade have paid us well in the real estate business, But it’s time to face the fact that this could end one day. It looks like this boom is over for now."
January 30th, 2012 at 2:05 pm
She sounds like she is 100 yr old… but obviously invested a lot of her money into cosmic surgery
http://watch.bnn.ca/#clip609859
January 30th, 2012 at 2:28 pm
At 123 sales, today saw the highest daily sales volume of the month. Here is last February in terms of daily sales and listings. If February shows similar trends to January — with listings up 20% YOY — we are in for some big days. But the market has disappointed before so don't get too excited; it just sets you up for failure. "Trust me on this."
sales listings sell/newlist
210 350 60%
147 267 55%
104 267 39%
104 246 42%
93 283 33%
182 227 80%
204 326 63%
81 262 31%
121 281 43%
198 322 61%
153 311 49%
219 287 76%
166 280 59%
116 270 43%
178 297 60%
209 290 72%
172 255 67%
137 280 49%
142 242 59%
204 305 67%
February 2011 month end data
Average Sales 157
Total Sales 3,140
Average Listings 282
Total Listings 5,648
Average sell/list 56%
Days in month 20
Days elapsed 20
% days elapsed 100%
Expected sales 3,140
Expected listings 5,648
Max daily sales 219
Min daily sales 81
Max daily listings 350
Min daily listings 227
January 30th, 2012 at 3:17 pm
Jan-2012
Total days 21
Days elapsed so far 20
Weekends / holidays 10
Days missing 0
Days remaining 1
7 Day Moving Average: Sales 98
7 Day Moving Average: Listings 246
SALES
Sales so far 1481
Projection for rest of month (using 7day MA) 98
Projected month end total 1579 +/- 22
NEW LISTINGS
Listings so far 5484
Projection for rest of month (using 7day MA) 246
Projected month end total 5730 +/- 59
Sell-list so far 27.0%
Projected month-end sell-list 27.6%
MONTHS OF INVENTORY
Inventory as of Jan 30, 2012 13380
MoI at this sales pace 8.47
January 30th, 2012 at 4:36 pm
looking back: USA's classic "There is no bubble" talk – April 2007
When the Census Bureau reported a statistically insignificant decline of 3.9% in new home sales for February, the stock market dropped, ignoring significant increases in both new home construction and existing home sales. Moreover, the monthly housing numbers are notoriously volatile during the winter, because the housing market is sensitive to the weather in much of the country, and has been since the days of New Amsterdam.
But the markets and the press have reversed the old song: they now accentuate the negative, eliminating the positive.
This panic started two months ago, when the two largest subprime lenders, HSBC and New Century Financial, announced that they were suffering large losses from unexpectedly high defaults by homeowners.
…But subprime loans are a small share of the mortgage market. The latest figures from the Mortgage Bankers Association indicate that they account for about 14% of all home mortgages.
…Many analysts foresee worse problems this time around because home prices were rising in 2001, and now, supposedly, the housing bubble has popped. It's certainly true that if prices are falling, more homeowners are likely to default on their mortgages. But, despite the common opinion, house prices are not falling. They are not rising at the double-digit annual rates of recent years, to be sure, but they are still rising nationally and in most markets.
New York is a good example for all of this. In the first five years of the decade, house prices almost doubled, rising at over 15% a year. In 2006, the rate of increase slowed to 6%, still above the national average.
…The overall economy is taking all this in stride. Employment in homebuilding is down about 25,000 workers from its peak last September, while over the same period total employment is up by 1 million, and the unemployment rate has remained around 4.5%, which is unusually low.
Despite the headlines, the subprime mortgage market is not about to lead America into a recession; nor is the housing bubble. The sky is still up there, and it's still in one piece.
Mr. Weicher is director of the Center for Housing and Financial Markets at the Hudson Institute
http://www.nysun.com/opinion/housings-hype/52350/
January 30th, 2012 at 6:37 pm
I just went through the 216 comments on this CBC article and only around 5 out of the 216 had something positive to say regarding real estate (or believed the story), the other 210 comments were either calling for a correction bigger than the article predicts or commenting on the inaccuracy of Sherry Cooper’s predictions over the years…..that’s gotta say something?
http://www.cbc.ca/news/business/story/2012/01/30/bmo-housing-real-estate.html
January 30th, 2012 at 6:37 pm
@Devore:
Wonder what happens when cmhc exceeds its 600B cap…
Also would be interesting to know if cmhc tracks its total exposure live or quarterly…
January 30th, 2012 at 6:38 pm
@Conrad:
“Lather, rinse, repeat”
…exactly what your mother told me while ridin’ the rod last night.
January 30th, 2012 at 7:22 pm
Does anybody have a link that provides numbers for historical levels (in constant dollars) of mortgages insured by the CHMC? I’d like to chart that by house price to show to an especially obnoxious acquaintance.
January 30th, 2012 at 7:40 pm
@oneangryslav2: That’s CMHC insurance in force as of the end of the calendar year.
Source:
http://www.macdonaldlaurier.ca/files/pdf/MortgageInsurance.pdf
January 30th, 2012 at 8:12 pm
What I found most interesting was the reason for the huge surge in CHMC volumes was the bank’s were taking it out even when there was a high down payment and paying the premiums themselves.
This would of course allow the banks to make loans to anybody with no risk with the taxpayer on the hook.
I am not sure this is what they had in mind when they made the program.
January 31st, 2012 at 1:34 am
@Patriotz
Do you mean recognizing dual citizenship or allowing dual citizenship?
To clarify, I think they will try to put restrictions on dual citizens who do not reside in Canada. For example, your citizenship may expire if you live out of the country for a number of years, or there may be increased tax implications.
I am interested in this as I am a dual citizen with the US and I was living there during the Lebanon evacuation so I remember the news stories on these issues at the time. There were grumbles cheapening the value of citizenship, etc.
As it was at the time, all I had to do was file a statement of non-residency to avoid tax implications while living in the US. When I returned, I simply had to inform them I was back and now I again pay taxes as a Canadian.
I am no fan of the Conservatives, but, despite my own self-interest, part of me agrees that this is not quite right. In an age of global mobility, perhaps citizenship should entail certain responsibilities.
February 2nd, 2012 at 4:24 pm
Yeah you can believe whatever you want, but the truth is that there is still quite a big housing bubble. Vancouver is still listed as one of the most dangerous places to invest in real estate and I don´t see any chance of returning to the normal state without significant burst. Toronto is maybe doing a bit better, but to call it balloon instead of bubble isn´t really smart. Calgary and Alberta Real Estate Market are just slowing down after quite an increase in the last quarter of 2011, but their housing market is far from bubble. The prices are quite stable and the increases in home sales were steady last year.
The debt level of Canadian households is one of the biggest and there are growing numbers of retiring people. This does´t make a good prospect for upcoming years, because we will probably see another home value increases, which are the key factor for starting the bubbles again.
February 2nd, 2012 at 9:05 pm
@Sheesh:
"To clarify, I think they will try to put restrictions on dual citizens who do not reside in Canada."
You mean like Wayne Gretzky?
NHLers aside, the Charter of Rights says that citizens have the right to enter or leave Canada at will. I don't think any attempt to limit citizens living abroad would be constitutional.