We want a nice housing bubble

I’m so sick of hearing realtors and mortgage brokers complain about the new CMHC rules.

The government isn’t really bringing in some tough new restrictions, they’re simply rolling back some of their bubble incentives.

The Feds clearly wanted to juice housing and that’s what they got.

Bank of Canada governor Mark Carney says the No. 1 risk to the Canadian economy is a housing bubble. Good grief! How on earth did rock-stable, good-banking, solid-regulating Canada end up on the edge of a possible real estate crisis? Simple. In Canada as elsewhere, housing is a political business policymakers find irresistible. There’s always some government policy — low interest rates, first-time home-buyer incentives, high-ratio mortgages, mortgage insurance, capital gains exemptions, interest deductibility — available to government agencies to bolster the feel-good business of home ownership.

It’s a global phenomenon, from Ireland to Spain, from Britain to the United States. Housing bubbles — rocketing prices following by plummeting prices — are not new to the world economy. The last decade, however, has left an unprecedented trail of housing price chaos and disaster. The similarities from one country to another are unmistakable.

We saw what was happening in the states, and still the government moved amorts from 30 to 40 years and flooded the housing market with money. Where did they expect this to lead?

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patriotz
Member

Where did they expect this to lead?

A majority government, and they got it.

The marks have served their purpose so now it’s time for the government to pretend that it’s preventing a bubble rather than letting the bubble that they created collapse.

G
Guest
G

Government wants more money just like you and me.

Housing bubble is just a normal part of a cycle.

A bust completes a boom, and creates opportunities for another boom.

Anonymous
Guest
Anonymous

Ultimately, the conservatives will get blamed for popping the housing bubble. The scened is now set for a complete doomsday scenario for Canada: federal NDP leading in the polls, separatist PQ coming back to Quebec, global economic turmoil.

crabman
Guest

CMHC’s annual report says it all.

Assets + Insurance-in-force + Securitization Guarantees-in-force:
2007: $148 + $345 + $165 = $658B
2008: $203 + $408 + $234 = $845B
2009: $272 + $473 + $300 = $1,045B
2010: $288 + $514 + $326 = $1,128B
2011: $292 + $567 + $362 = $1,221B

No one can deny Ottawa used CMHC to prevent the 2008 correction, and deliberately re-inflated the bubble.

Page 92:
http://www.cmhc-schl.gc.ca/en/corp/about/anrecopl/anre/upload/2011-CMHC-Annual-Report.pdf

Keeping An Eye On The Pimps
Guest
Keeping An Eye On The Pimps

>>>>>>>>>>>>>>>>>>>>>>>>>>>>PUBLIC NOTICE<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Crimes against the economy should be laid in an International Tribunal.

Main Defendant: Greenspan

Co-Defendants: Central bankers, and Re Pimps for accessory after the fact.

trash crash alert
Guest
trash crash alert

The government sponsored housing bubble produced by CMHC gave Canada concrete shell towers with falling glass and cheaply built cardboard houses held together by glue and 2×4’s, finished with your favorite big box store fake brass finishings and photocopy floors. Way to go bureaucrats! Just as effective as the Soviets diverting water to the Aral Sea.

CMHC should have been replaced by vendor take back mortgages – let the free market take the risk. The whole concept of CMHC was a fraud from day one. The result would have been a significantly lower house price level, an efficient allocation of resources into the real economy, a higher standard of living – less stressed out households and most important, superbly built houses with real hardwood floors just like the original built Shaughnessy houses.

frank
Guest
frank

@crabman:

The irony is we have Carney, Flaherty and Harper prancing around the world lapping up the adulation of the ‘Canadian miracle.’

All the Canadian miracle boils down to is blowing up RE so that we can delay and magnify our crisis.

vanpire
Guest
vanpire

Well, on the upside, if this monster finally collapses under its own weight maybe at least our (grand)children stand a chance of living a decent lifestyle one day. After it all restarts from scratch and the smart ones finally take over from the greedy.
I would doubt that we ever see real hardwood floors ever again though…

PCinWA
Member
PCinWA

The Teranet numbers are out for the month of May. Interestingly, Vancouver is still up 4.4% year-over-year; however, this is down a little from last month’s 4.9% year-over-year increase, and is below the 11-city composite’s 5.8% year-over-year increase.

I’m surprised by this – considering anecdotal evidence of prices falling in Vancouver and listings in certain neighbourhoods skyrocketing, I would have thought the year-over-year increase in Vancouver would have been much lower…

N
Guest
N

@frank:

And sky high commodity prices. Nobody talks about the Saudi miracle, but they are doing just fine for the same reasons as Canada.

registered
Member
registered

@7 frank: “The irony…”

…is we replicated the catastrophic errors of other nations long after the negative consequences were unambiguously clear, and flaunted delusions of superiority in their face while doing so. Harper did damage to our global image that will last a generation, morphing a solid, self-effacing competence into laughable buffoonery.
Granted, he will leave a legacy of performing (temporary) miracles for bank profits.

Just Looking...
Guest
Just Looking...

The post about Google Trends leading cities searching the term ‘housing bubble’.

Look at the google trend graph for the search term ‘housing bubble’ in Canada only:
http://www.google.com/trends/?q=housing+bubble&ctab=0&geo=ca&geor=all&date=all&sort=0

2012 is the only time on record in Canada where there has been a sustained search volume over a period of months. It’s just one more indicator that the notion of a housing bubble seems to have entered the public psyche.

Just Looking...
Guest
Just Looking...

@Just Looking…: Meant to say in my first sentence that the post led me to look at google trends for some data…sorry for the poor proofreading.

real_professional
Member

Yeah the Teranet data is odd.

This is a new high in Vancouver Home Price Index – and volume sales pairs are up 161.954% MoM, while volume over the 12 month volume moving average is up 108.79%.

This is really fishy, very very fishy. I don’t dismiss the findings out of spite but very contrary to the data we have been seeing.

Victoria which is supposed to be very slow has a no change in volume YoY. Off 5% from the highs on price.

real_professional
Member

Teranet Index Change from highs

Composite 6 – new high
Composite 11 – new high
Victoria – down 5% ******
Vancouver – new high **********
Calgary – down 9.4%
Edmonton – down 12.3%
Winnipeg – new high
Hamilton – new high
Toronto – new high
Ottawa – new high
Montreal – new high
Quebec – down 0.5%
Halifax – new high

Teranet Volume change from last May 2011

Composite 6 – up 15.94%
Composite 11 – up 16.65%
Victoria – down 0.87% ******
Vancouver – down 23.86% **********
Calgary – up 16.47%
Edmonton – up 36.1%
Winnipeg – up 6.9%
Hamilton – up 20.27%
Toronto – up 50.90%
Ottawa – up 20.18%
Montreal – up 21.55%
Quebec – up 23.75%
Halifax – up 49.74%

patriotz
Member

@trash crash alert:
“The whole concept of CMHC was a fraud from day one.”

Not day one. CMHC was created to address the dire housing shortage for returning WWII veterans. The free market – such as it was just a year after 1945 with the economy still on a war footing – would have taken over a decade to fix the problem.

CMHC’s mortgage insurance should have been done away with when the baby boom ended around 1965 and actual demand for shelter tapered off.

observer
Guest
observer

@real_professional: If I recall, they recently decreased the time delay in announcing their data (so now it is for the previous month). I don’t know if they had to change their methodology in order to do this.

registered
Member
registered

14 real_professional Says: “Yeah the Teranet data is odd.”

The Vancouver numbers significantly lag national performance and are further still behind the Composite 6. That’s a big change from the glory days.

Navin R. Johnson
Guest
Navin R. Johnson

What’s beautiful fellow “bears” is when we see the numbers, especially the increased volume of listings, we’re just valitading to ourselves that this beast is cooked. Remember a couple years ago after the 2008 drop in prices and then the 2009 rise again? Some of us actually questioned our initial instincts and there was some doubt. Not anymore.

The bigger issue now is the overall shaky economy. I personally think we have yet to see real “bad times.” A collapse in housing prices and the construction industry in general will exacerbate the economic meltdown. I believe that I may have completely missed the boat on ever owning and I’m completely alright with that. I fear more for my children’s future…

Troll
Guest
Troll

@real_professional: So the most trusted bear index, Teranet, is showing the largest YOY price increases. That’s gotta hurt.

Bo Xilai
Guest
Bo Xilai

@frank:
There’s a great article in the NY Times today about Spain’s real estate bubble… Same BS in 2006 there as here now…

http://www.nytimes.com/2012/06/27/business/global/spanish-officials-hailed-banks-as-the-crisis-built.html?pagewanted=3&_r=1&hp

“There was a sense that Europe was different.”
Spanish Banks “fundamentally sound”
“a new era in economic policy”
“For a time, Spanish financial institutions were hailed as paragons of responsible banking”

Absinthe
Member
Absinthe

@real_professional: I wouldn’t say it’s that odd. In several places around BC there’s been some real “hang time” in between 7 MOI and price decreases. Vancouver’s just changing now.
Changes in average and median prices show what’s being sold, not what a particular house is selling for. In my neighbourhood it looks like comps are about the same as last year – ie: no gain, but no loss, either.

Anonymous
Guest
Anonymous

@Troll:

If the data doesn’t reflect my opinion then it’s the data that’s wrong.

Best place on meth
Member
Best place on meth

@Troll:

I’m kind of relieved that Teranet more or less corroborates the REBGV benchmark.

If they’re on the same page then at least we know where we stand and no longer have to be suspicious of the boards new and improved recalculated HPI.

The Ant
Member

@Best place on meth: so it looks like there are a lot less houses trading hands, but those that are selling are not going for a reduced price.

Theoretically if sales stay low it will drive prices down, If sales rise prices will stay flat or rise.

Will be interesting to see how the July 9 rules affect this market.

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