Learning from the neighbors

There’s another one of those semantics question articles in the Financial Post:

Canadian Housing: Bursting bubble or gentle landing?

Here’s one chunk of that article with a few asides that always seem to be missed:

Lewandowski believes Canada will not suffer a U.S.-style housing crash simply because policymakers had the benefit of watching it happen next door.

“What we experienced here in the U.S. with housing markets and regulators goes directly to the attitude and changes the minister of finance has made in Canada. A regulator who is being proactive is taking Step One in making sure the housing market doesn’t find itself in a bubble,” Lewandowski said.

So often it seems that ‘bubble’ is used as if it refers to the collapse in prices. It doesn’t. The ‘bubble’ is the inflation of prices beyond reason. By the time the collapse comes the damage is already baked in, falling prices are a correction of the problem, not the problem itself.

Both Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty have been on the march against a housing bubble for years, aware how low rates and loose lending standards in the United States ignited a boom and bust there.

Well, Carney and Flaherty have definitely been ‘warning’ of consumer debt levels for a while, but government policies like following the US into 40 year zero down mortgages didn’t help to prevent a housing bubble.

The central bank has held rates low since the global financial crisis because growth remains tepid and global woes weigh on Canada’s export market, and Canadians can find a five-year mortgage rate below 3%.

Meanwhile in the states you can lock in to a 30 year mortgage for 3.35%. In fact, while house prices in the US were correcting, interest rates were falling as well.

But the government’s gradual tightening of rules for borrowers — a firm admission that the market was hotter than anyone was comfortable with — has taken some steam out of the market, and economists, like Carney, seem to believe a soft landing may be at hand.

“We’re encouraged by the fact the level of housing starts has come down to slightly below demographic demand, as we see right now, there’s still more adjustments to go,” he said in testimony to Parliament last week. “We’re encouraged by the evolution of house prices in a number of markets. We’re on the path to a balanced evolution of the household sector and we all have to continue to be vigilant.”

Ok, we’ll continue to be vigilant then.

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auric goldfinger
Guest
auric goldfinger

Why the contingency plan.
Do the Powers To Be know something we don’t?
http://www.theprovince.com/business/bank+bail+plan+next/8265860/story.html

Is the Real Estate Market about to collapse and drag banks with them?
SAVE THE BANKS! SAVE THE BANKS! SAVE THE BANKS!
Screw the home owner who believed in the myth that Real Estate always goes up.
SAVE THE BANKS! SAVE THE BANKS!

Diane
Guest
Diane

‘We’re encouraged by the evolution of house prices in a number of markets. We’re on the path to a balanced evolution of the household sector and we all have to continue to be vigilant’

Mark Carney, an Oxford economist and Goldman Sachs alum, should well know a ‘soft landing’ means the brunt of economic distortions are borne by the government if not by the miscreants who caused this bubble in the first place. It’s a matter now of who pays; a hard landing has additional fallout due to its speed but likewise a soft landing prolongs the inevitable correction.

If Carney is ‘pleased’ with the evolution of house prices I expect he won’t be displeased with chronic lower GDP growth his influence has waked for the next decade at least. Quite the legacy.

patriotz
Member

The FP is taking bubble denial a step further from its role models south of the border (e.g. WSJ), who at least had the excuse of lack of hindsight. It’s clear that the government has indeed watched the bubble and collapse in the US, but rather than using this knowledge to avoid a bubble in Canada, it has attempted to engineering a “smarter” bubble that will not crash and burn Hindenburg-style but will gradually deflate and return to earth. But it’s using the same flammable gas – easy credit.

Lola
Guest
Lola

The Vancouver Realtor Hunger Index for April 2013 was 60.
VCI Bears, Go and buy a home.
Paul Boenisch, aka PaulB , has 3kids and a wife to feed and shelter.
He has fees to pay his brokerage. Cell phone, car expenses etc., etc., etc.
He is NOT A GOOD REALTOR. His site shows only 3 active listings, 2 million plus properties are not his listings.
His only listing is a piss poor $339,000 property.
Maybe he should get a job at a fast food restaurant, now that TFW will be restricted.

Bull! Bull! Bull! @ patriotz
Guest
Bull! Bull! Bull! @ patriotz

are you predicting vancouver prices will be 50% below peak, when? if not, what exactly is your point?

“This SFH in City of Seattle just sold for 50% of the sale price in 2007.

Can’t happen in Vancouver? They said it couldn’t happen in Seattle.”

Muther Teresa
Guest
Muther Teresa
Guy Smiley
Member
Guy Smiley

@ Muther Teresa

While there might be some commonalities behind the two (cheap credit, poor financial planning etc.) what the hell does this article have to do with bearish real estate sentiment? You’re just taking a cheap shot there, conflating bearish real estate sentiment with jealous ill-wishes and vulture dreams. Totally invalid. You’re a retard.

Guy Smiley
Member
Guy Smiley

Or perhaps you’re suggesting that this is where people will end up by not buying real estate today?

If so, you’re doubly retarded.

Carioca Canuck
Guest
Carioca Canuck
Whether a bubble “burts” immediately, or the air escapes from the bubble slowly, doesn’t really mattter as far the overall effect on the “homedebtor” is concerned. They’re still screwed when the value of their asset declines below it’s mortgage amount…..whether it be in 12 months time, or 60 months time, the end result is the same. The statement that the government and central banks are trying to “engineer a soft landing” is just soooo much political bullshit and hyperbole it really does not astound me when you look where it is coming from. The video of the 747 cargo jet that crashed in Bagram this week is a prefect demomstration of what I am talking about. They got about 200′ airborne, stalled, and then slowly fell to earth like a leaf and then exploded in a massive fire ball of… Read more »
Anonymous1
Guest
Anonymous1

CMHC……is not in trouble.

Cap is DOWN from last year. Now only $566 Billion and going down.

Also, 51% of mortgages in the program had originally less than 20% down. Obviously these mortgages have more equity to back them up now since home prices have gone up.

The remaining 49% mortgages have initially greater than 20-25% down payments.

This is an example of the doom and gloom blog dwellers here present without facts.

And let the down voting start because it is different here…

Bailing in BC
Guest
Bailing in BC

Sorry to bring this up again but I think it is important. If you go to the REBGV website to look up the The Stats packages from previous months you will see that only this years reports have any of the graphs and tables that they usually publish. Any of the reports from Dec 2012 back only contain the first page which is the REBGV news release. Does this not seem strange?

http://www.rebgv.org/monthly-reports/december-2012

VanRant
Guest
VanRant

@Anonymous1

Holy Crap, $566 Billion and CMHC is not in trouble!

Another Scandal
Guest
Another Scandal

Thought the “lamb” hotpot scandal last week was bad, read this one.

http://www.scmp.com/news/china/article/1230944/sale-40-tonnes-diseased-pork-sparks-police-investigation

Time to go vegetarian…

Vote Down The Facts
Guest
Vote Down The Facts

“Holy Crap, $566 Billion and CMHC is not in trouble!”

Strong argument……

FATHER
Guest
FATHER

paul b is a good man. 1% of realtors r good but the rest r realturds

Muther Teresa
Guest
Muther Teresa

@ FATHER

paul b is a good man. 1% of realtors r good but the rest r realturds

How do you know?
Inventory is at record high, and he has one crappy listing.
He is not a novice. If sellers had faith in his competency, he would have more expensive listings.
This is Vancouver, land of high priced properties.
Lauren Phillips, his former realtor partner, dumped Paul, because he was not pulling his weight.

Democrass
Guest
Democrass

From Garth:

Sam Wyatt is a no-nonsense realtor working the rich streets of Van’s Westside. What he’s telling clients is far different from Gregg’s deceitful little compadre:

“Months of Inventory (MOI) turned upwards in April, likely signaling the crest for sales volumes this spring. If the MOI follows the pattern of 2012, then we will see it rise again to a new high point late in the year. Last year the MOI figures bounced up to high points not seen since the credit crisis – to over 14 months for detached homes. Attached homes enjoyed the lowest MOI in April at 4.89 months while detached and apartments were both back over 6 months.

“A rising MOI will likely mean that May will be the last really good month this year to sell a home so list the house now.”

http://www.greaterfool.ca/

Lola
Guest
Lola

@ FATHER

paul b is a good man. 1% of realtors r good but the rest r realturds

How do you know?
Inventory is at record high, and he has one crappy listing.
He is not a novice. If sellers had faith in his competency, he would have more expensive listings.
This is Vancouver, land of high priced properties.
Lauren Phillips, his former realtor partner, dumped Paul, because he was not pulling his weight.

FATHER
Guest
FATHER

because bears help bears and how do u know who dumped who? 1 crappy listing is A LISTING.

FATHER
Guest
FATHER

BEARS R ROCKSTARS

Expose Their Malfeasance
Guest
Expose Their Malfeasance
@#11. Here is proof they exist: http://greaterfoolvancouver.blogspot.ca/2011/10/2011-rebgv-stats-pdf.html The first question would be, why are they deleting statistical reports from just 4 months ago when seasonal comparison requires at least 12 months of reports? Those reports contain neighbourhood specific sales and listings. Why did REBGV.org remove public access to seasonal neighbourhood data? Is REGBGV.org trying to keep the public in the dark about the slim chance of selling a home in their particular neighbourhood if they had to? Considering many buyers purchased last year at higher prevailing prices, many would actually lose their downpayment or more if they had to sell today. Is this the fact they are trying to hide from the public? How do I contact the local news departments with a news tip? TEL: 604-662-6801 FAX: (604) 662-6878 Send us your stories and news tips to cbcnewsvancouver@cbc.ca http://www.cbc.ca/bc/contact/#1
BREAKING NEWS
Guest
BREAKING NEWS

Guys! Holly crap! I am in richmond and the market is crashing RIGHT NOW! This is crazy!

Overnight all the houses are 50% off! There are HAM begging for money at the skytrain station! There are poor people everywhere! Renters are being treated like celebrities and women are throwing them selves at us!!!

I thought I would never see it but it’s all happening right now before my eyes!!!

Extremist Bear
Guest
Extremist Bear
Sherlock
Guest
Sherlock

Well now we know that Lola = Muther Teresa = Lauren Phillips

FATHER
Guest
FATHER

in 2001 I was looking for a income property and all realturds would call me it was like being a rockstar but I became busy with other things so I did not now its 2013 and I’m ready but realturds & sellers think they r the rockstars but waiting is key to being a rockstar who knows maybe this time I might even be the king of rockstars

Downtown update
Guest
Downtown update

thanks for that info breaking news, i’m seeing something similar downtown. young people are streaming out of their offices and condos into the streats wailing! they are tearing at their clothes in anguish, yelling something about being trapped in their ‘sky coffin’ forever?? is this the crash we have all been waiting for?

it’s exciting and scary at the same time!

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