Open Topic

FFFA! Forecasts! Mortgage! Rules! Carney!

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It’s that time of the week again, time for our Friday Free-for-all!  This is when we round up the weeks news and have our open topic discussion thread for the weekend, here are a few recent links to kick off the chat:

–IMF: You need tighter mortgage rules
–TD: forcasting for the provinces
–Teranet HPI scatter plot
–Conservative impact from RE market?
–Carney gets $400k for housing
–Luxury home decline
–Sales below 10 year average
–Stay out of New West Bob
–Home prices fall in most Canadian markets
–

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

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jay

Price drop:
after 176 days on the market, this $12,880,000 (?!) property now asking for $9,980,000, a $2.9 million drop (22.5%) drop:

http://www.realtylink.org/prop_search/Detail.cfm?MLS=V960623&REBoards=All&From=MLS

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Anonymous

“who’ve worked so hard here to bring us regular folk the truth.“

send the Mayan calendar guy a postcard too.

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real_professional

I argue both. CPI is flawed, but so are other measures. I am not one to beat the drum that CPI is flawed so it should be ignored. I believe that ‘true inflation’ is probably just a multiple of headline cpi rate of change, and the multiple is probably between 0.75 and 1.5 in most environments. Like a margin of error. Core inflation on the otherhand, I believe is a dumb measure. What I was refering to was that in the last quarter of 2010, throughout 2011, and even into 2012, headline inflation prints were above 2%…. the “target” inflation rate of the BOC. That was about six consecutive quarters. Carney could have raised rates but did not… citing, currency moves, weakening global economy, and mute core inflation. It was a gamble, it hasn’t hurt thus far…but history will determine… Read more »

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patriotz

Consumer price inflation in Canada has run at 1.85% annually over the last 10 years, which is the lowest over a ten year period since the 1950’s.

You may make the argument that the CPI is inaccurate. If so that is the fault of the government.

CPI inflation is the BoC’s statutory target. It has neither the mandate nor the appropriate tools to target asset price inflation. The federal government does.

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real_professional

Could this be a dig toward Carney by Flaherty? (See link below) Personally I felt Carney was too preoccupied with maintaining cad/usd forex rates and stimulating the economy against future risks eg. Europe and china. He ignored domestic inflation, which was a gamble that appears to have not hurt so far…

http://mobile.bloomberg.com/news/2012-12-23/flaherty-says-carney-s-replacement-needs-to-control-inflation.html

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real_professional

Vancouver’s reckoning is here, merry christmas….

Good article from bloomberg on Toronto’s Trump tower and buyer’s remorse:

http://mobile.bloomberg.com/news/2012-12-24/trump-tower-woes-signal-top-of-toronto-condo-market.html

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Village Whisperer

Merry Christmas to all.

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gordholio

Anonymous:

Deny it all you want. By early March, it’ll be Ark time in the Best Rainforest on Earth. Monstrous personal debt loads + astonishing overbuilding + total and complete end of psychological mania + tightened mortgage regs + prospects of increasing interest rates + 70-plus percent ownership + evaporation of whatever Asian invasion there was + MSM acceptance of price collapse + widespread knowledge that early 2013 will be the worst possible time in memory to buy = The End.

Merry holidays to everyone and thanks especially to those who’ve worked so hard here to bring us regular folk the truth.

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Anonymous

“Should get interesting with the flood of new listings in the spring“

another popular phrase silly bears like to use.

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Anonymous

so, silly bears, nothing happened on 21 dec 2012. time to come out from hiding under your bed and claim your lives back. please dont make another silly prediction.

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Wakeup call

Heard from the wife of a realtor that some ridiculously low offers have been accepted this week.
I guess sellers are looking for relief, closure and peace of mind for the holidays.
These sales could very well set the benchmark for new listings after the holidays, but with potential buyers spooked by all the negative press, I think sales will slow down even more. Should get interesting with the flood of new listings in the spring.

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vancouverguy

Merry Christmas VCI!

May the season bring joy, happiness and a return to rational house prices!

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rp1

#7 Some Guy: “while a household can live beyond it’s means (by borrowing from someone else), a society can’t (who would it borrow from – aliens?).”

I disagree. A productive society can live beyond its means indefinitely by borrowing from the future, and it is both normal and healthy for capitalist societies to do this. The problem is maintaining a high rate of return, and the factors involved all lead to the business cycle. But living on a bit of borrowed time is normal, because there is risk in everything, including being too conservative.

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Miracle Max

BCREA sales and inventory stats are out for the month of November 2012. Here are your MOI calculations. BC Northern Inventory: 2222 Sales: 287 MOI: 7.7 Chilliwack Inventory: 1524 Sales: 166 MOI: 9.2 Fraser Valley Inventory: 7753 Sales: 840 MOI: 9.2 Greater Vancouver Inventory: 16788 Sales: 1733 MOI: 9.7 Kamloops Inventory: 1878 Sales: 133 MOI: 14.1 Kootenay Inventory: 2658 Sales: 197 MOI: 13.5 Okanagan Mainline Inventory: 5289 Sales: 383 MOI: 13.8 Powell River Inventory: 210 Sales: 18 MOI: 11.7 South Okanagan Inventory: 1626 Sales: 94 MOI: 17.3 Northern Lights Inventory: 229 Sales: 20 MOI: 11.5 Vancouver Island Inventory: 5194 Sales: 466 MOI: 11.1 Victoria Inventory: 3583 Sales: 343 MOI: 10.4 Provincial Totals Inventory: 48954 Sales: 4680 MOI: 10.5 Outside Vancouver Inventory: 32166 Sales: 2947 MOI: 10.9 Not a whole lot to say, so I’ll just wish you all a very… Read more »

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patriotz

““…The Emili system does not estimate a property’s market value; instead it uses general parameters to determine a risk potential.”

Whatever this “risk potential” is, it has little connection to reality. The true risk potential depends on how much the sale price is above fundamental value (NOT “market value”), i.e. how much of a multiple of rents and incomes it is. That’s what the determines the likelihood of prices going down and mortgages defaulting.

If CMHC was really concerned about true default risk it would be imposing price caps based on rents and incomes.

Apparently CMHC is assuming a priori that a national decline in prices can’t happen, just as Wall Street did in the US.

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s

,

Interesting it couldn’t find if OSFI was going to implement these changes, have you read anything about when the automated evaluations will be replaced?

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VMD

OSFI “confidential documents” – external consultation comments May 2012 “…The Emili system does not estimate a property’s market value; instead it uses general parameters to determine a risk potential. That explains why CMHC-insured loans are often granted without truly taking into account the property’s market value and – therefore – the LTV ratio. This poses a real danger of altering housing market data. In the case of loans that are insured by the CMHC, the time “saved” comes with a high price tag for the consumer: if the property is overvalued, the insurance premium will be based on the “overvaluation” and multipplied by 25 years of mortgage payments. The resulting sum may be considerable! Thus, the CMHC, a Crown Corporation, cuts corners by not demanding professional appraisals and generates higher revenues by basing its premiums on overvalued figures. This situation… Read more »

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trackback

[…] “I was at a party last night. Some interesting local celebs were there as well as some normal people (like me). One was a young professor from UBC. They are from out of town and are quite open to both renting and leaving town in the mid-term as it does not make sense to own here. They also commented that the University has had little success in attracting talent from outside Vancouver to fill top-level positions. Let’s say you want to hire a new dean of Science. You have found a 48-year-old who is at the top of the field, an amazing educator and researcher and who would be a trophy to have in the school. The chance of them coming here, even with a massive research budget, is basically close to zero becuase they can not afford the… Read more »

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VMD

@#49 I posted that link on the new Saturday thread that’s appearing and disappearing.

As a follow up: another article today on G&M:
Confidential government documents reveal concerns about mortgage lending in Canada

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No Noise

Essential reading for bears:

http://www.theglobeandmail.com/report-on-business/economy/housing/shaky-foundations-how-ottawas-computers-get-canadian-home-prices-wrong/article6673774/?page=all

Someone just posted it and it strangely dissappeared so here it is again.

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patriotz

“I’ll just leave some lines for Patriotz to fill in….”

Can’t improve on this guy:
http://www.prefblog.com/?p=20667

Yes, here in Canada, lenders can freely compete to see who can suck arse in Ottawa enough to get mortgage guarantees.

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trackback

[…] “I was at a party last night. Some interesting local celebs were there as well as some normal people (like me). One was a young professor from UBC. They are from out of town and are quite open to both renting and leaving town in the mid-term as it does not make sense to own here. They also commented that the University has had little success in attracting talent from outside Vancouver to fill top-level positions. Let’s say you want to hire a new dean of Science. You have found a 48-year-old who is at the top of the field, an amazing educator and researcher and who would be a trophy to have in the school. The chance of them coming here, even with a massive research budget, is basically close to zero becuase they can not afford the… Read more »

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VHB

..and if I’m handing out the kudos, then I suggest, ladies and gentlemen, that you give it up for the proprietor here at VCI: THE POPE.

Wow, your work is appreciated. Sorry for all the troubles the spammers and trolls are giving you.

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VHB

Dec-2012 Total days 19 Days elapsed so far 15 Weekends / holidays 6 Days missing 0 Days remaining 4 7 Calendar Day Moving Average: Sales 62 7 Calendar Day Moving Average: Listings 66 SALES Sales so far 953 Projection for rest of month (using 7day MA) 246 Projected month end total 1199 NEW LISTINGS Listings so far 1215 Projection for rest of month (using 7day MA) 265 Projected month end total 1480 Sell-list so far 78.4% Projected month-end sell-list 81.1% MONTHS OF INVENTORY Inventory as of December 21, 2012 14619 Current MoI at this sales pace 12.19 We’re likely to hit like 1150 for sales. That’s remarkably bad. Listing activity low too, though. year sell list sell/list 2001 2394 1856 129.0% 2002 2205 1895 116.4% 2003 2434 2301 105.8% 2004 2065 1764 117.1% 2005 2332 1735 134.4% 2006 1686 1524… Read more »

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MM

@32: There you go! Proof that a wet climate promotes mold induced brain degeneration. No wonder prices have gone so insane if handicapped folks like this are the buyers.

Many people around here like winter sports and cooler climate, just personal preferences.

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