FFFA! Forecasts! Mortgage! Rules! Carney!

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
Guest

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

Anonymous
Guest
Anonymous

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

send the Mayan calendar guy a postcard too.

real_professional
Member
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 »
patriotz
Member

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.

real_professional
Member

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

real_professional
Member

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

Village Whisperer
Member
Village Whisperer

Merry Christmas to all.

gordholio
Member

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.

Anonymous
Guest
Anonymous

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

another popular phrase silly bears like to use.

Anonymous
Guest
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.

Wakeup call
Guest
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.

vancouverguy
Guest
vancouverguy

Merry Christmas VCI!

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

rp1
Guest
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.

Miracle Max
Guest
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 merry Christmas and happy new year!

patriotz
Member

““…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.

s
Guest
s

@VMD,

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?

VMD
Member
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 »
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 »
VMD
Member

@#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

No Noise
Guest
No Noise
patriotz
Member

“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.

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 »
VHB
Member
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.

VHB
Member
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	110.6%
2007	1897	1695	111.9%
2008	924	1550	59.6%
2009	2515	2153	116.8%
2010	1899	1699	111.8%
2011	1658	1629	101.8%
Mean	2001	1800	111.2%
median	2065	1735	114.1%

Thanks to paulb for all that he does. Congrats on #3.

MM
Guest
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.