Moody’s down on Canadian Banks

In one fell swoop the credit rating agency Moody’s brought down the credit rating of six Canadian banks.

RBC was the only big bank to escape this downgrade cycle.

So why is Moody’s picking on us?

“High levels of consumer indebtedness and elevated housing prices leave Canadian banks more vulnerable than in the past to downside risks the Canadian economy faces,” David Beattie, vice-president at Moody’s said in a note.

Canadian consumer debt has risen to a record-high 165 per cent of disposable income in the third quarter of 2012, up from 137 per cent in mid-2007. Bank of Canada governor Mark Carney has repeatedly warned about these levels, but they remain stubbornly high.

Sure, Mark Carney has warned about this, but he’s gone now… doesn’t that mean the problem is gone too?

As always Mr. Flaherty is there to reassure us Canadas banks are the ‘soundest in the world’.

In other news… it’s not a bubble, it’s a balloon.

Image source: wreckonomics at Vancouver Peak.

 

 

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An Observer
7 years ago

@Yalie, we were in the 16 and 17K’s in April – We hit 14K on February 9th.

So, we’re still running ahead of last year and last year was, for most of the year, the highest or 2nd highest inventory levels in over a decade

midnite toker
midnite toker
7 years ago

Epic listings bro!!! RP those lyrics were hella choice!

jesse
7 years ago

I don’t know how many people try to buy/sell before CNY, of all the 1stgen Chinese I know in Vancouver I can’t remember one of them purposefully buying/selling before CNY, though a few of them liked to think that’s what goes on with everyone else…

I think there may be a surge of higher-end properties in the next two months leading up to April 1st when the HST is revoked. The BC Liberals explicitly did not offer any transition tax credits on higher-end properties so that likely caused some $1MM+ sales to be delayed.

Yalie
Yalie
7 years ago

For those of you lamenting that we haven’t yet had a “listings explosion” this year, a little perspective: we just hit 14,000 listings in JANUARY.

Remember 2008 – the year of the giant real estate implosion? In that year we didn’t hit 14,000 until APRIL. I remember finding this blog at around that time. There was a post by someone that said something like “Wow, we just hit 14k and it’s only April. I can’t believe the crash is finally happening”.

If you’re asking why we “haven’t had a listings explosion yet” I really have to wonder what you’ve been smoking. Just take another toke, sit back, relax, grab some Doritos, and enjoy the show. It’s about to get epic.

canadian
canadian
7 years ago

We are looking at MOI of around 14 this Jan in the FV. Excluding 2009, this is pretty horrible. last year it was 10.4 . I see fear in people’s eyes, oops flippers’ eyes.

Groundhog
Groundhog
7 years ago

@Tim

“Hussman is driven by the desire to contain risk. To do anything else at this late stage is close to insanity.”

Agreed. And I’d say this applies to Vancouvers current housing situation as well

Romeo Jordan
Romeo Jordan
7 years ago

I want to see a 500 listing day in February.

Let FEAR rule.

Tim
Tim
7 years ago

@Groundhog

The FED certainly does help levitate the markets, and this may continue for some time.

Are you willing to bet your life on it?

There are 2 rules in investing.

Rule #1: Don’t lose money.
Rule #2: Refer to rule #1.

Hussman is driven by the desire to contain risk. To do anything else at this late stage is close to insanity.

Groundhog
Groundhog
7 years ago

http://www.greaterfool.ca/

Good post tonight on collateral mortgages vs. traditional mortgages, wasn’t aware of this trend and the differences between the two.

Chabar
Chabar
7 years ago

@scotty

Do you really think that all those scumbags, crocks, thiefs, hookers and assholes coming from China with ill-gotten money will suddenly become pleasant neighbors, good citizens and even better parents therefore help all of us to build better society and nicer future? C’mon don’t fool yourself and teach us a lesson.

VMD
7 years ago


one factor to keep in mind (if you believe in Chinese new year effect)
2011: Feb 3
2012: Jan 23
2013: Feb 10

So the last week of Jan/12 was already “CNY buying spree”, which lasts ~2 weeks and historically believed to kick off spring buying season.

Groundhog
Groundhog
7 years ago

@HAM Solo

I really like Hussman and his commentary and I cant say I see anything intuitively wrong with the model he uses, but hes been saying the same thing for the last year if you look back at past newsletters. Not saying he’s wrong, but I just wouldnt expect an immenent drop in the market. Us bears know all about timing. 🙂 The unprecedented control of financial markets assumed by the Fed in the last few years may be throwing his model off.

jesse
7 years ago

The last 7 days of January 2012 saw 97 average daily sales, 2011 was 117. 2013 is about 75.

February average daily sales for each year was about 30% higher than the last 7 days.

That means February 2013 would be about 98 daily sales. Times 19 days would lead to about 1853 sales (as reported by paulb). The REBGV reported is a bit less than this, putting reported at about 1800 or so. Past daily sales for February since 2005 are:
153
147
143
127
74
118
155
121

Aleksey
Aleksey
7 years ago

@44 real_professional
It’s a killer! BTW good comment digits you’ve got =)
Good luck to realtors in next Chinese Year!

HAM Solo
HAM Solo
7 years ago

The stock market is looking unusual here. John Hussman notes a number of times in the past 20 years we’ve seen overbought, overvalued conditions like this right on the precipice of a big decline. The one exception was in 1996, which was in the midst of the great melt up of the mid 1990’s. http://hussmanfunds.com/wmc/wmc130128.htm My guess is that nothing short of a repeat of 1996 could create a good enough global economy to save Vancouver house prices. But, hey, if you are a bull, there’s your last hope. I still think even in that remote possibility that Canadian housing will underperform virtually every other asset class, so no real reason to plow into Canadian RE with money that could go somewhere else. But just maybe some of this market exuberance is rubbing off on potential listers. I tend to… Read more »

VHB
VHB
7 years ago

Past Januaries:

year	sell	list	sell/list
2001	1225	3395	36.1%
2002	2248	3626	62.0%
2003	1966	3810	51.6%
2004	1954	3039	64.3%
2005	1697	3360	50.5%
2006	1924	3471	55.4%
2007	1806	4067	44.4%
2008	1819	4675	38.9%
2009	762	3700	20.6%
2010	1923	5147	37.4%
2011	1819	4801	37.9%
2012	1577	5756	27.4%
Mean	1727	4071	42.4%
median	1819	3755	47.5%
VHB
VHB
7 years ago
Total days	22
Days elapsed so far	20
Weekends / holidays	9
Days missing	0
Days remaining	2
7 Day Moving Average: Sales	75
7 Day Moving Average: Listings	226
SALES	
Sales so far	1233
Projection for rest of month (using 7day MA)	150
Projected month end total	1383
NEW LISTINGS	
Listings so far	4719
Projection for rest of month (using 7day MA)	452
Projected month end total	5171
Sell-list so far	26.1%
Projected month-end sell-list	26.7%
MONTHS OF INVENTORY	
Inventory as of Jan 29, 2013	14084
MoI at this sales pace	10.18
N
N
7 years ago

@scotty

I don’t remember Black being convicted by a Canadian court.

mclovin
mclovin
7 years ago

Happy 14K everyone!

scotty
scotty
7 years ago

Canadians worry about potential corrupt money coming from China, but on other hand allow convicted criminal to host TV show!!!!
http://www.cbc.ca/news/business/story/2013/01/28/toronto-conrad-black-zoomer-media-talk-show.html

we are one fucked up society

paulb
7 years ago

New Listings 206
Price Changes 79
Sold Listings 81
TI:14084

http://www.paulboenisch.com

patriotz
7 years ago

Which is wholly inappropriate for determining suitability for immigration in any class. All countries can and do reject applicants for immigration simply on suspicion of criminal activity. For that matter, they reject applications for tourist visas on that basis.

Vote Down The Facts
Vote Down The Facts
7 years ago

“Simply not being convicted of a crime does not qualify anyone to immigrate to Canada.”

I never said it did. I was using ‘innocent until proven guilty’ as a moral yardstick.

VMD
7 years ago

HFHC, that’s all lower mainland stats as usual?