Who wants a housing market crash?

You might want a housing market crash (or ‘correction’ if the word ‘crash’ is too strong), but that’s likely because you want to buy a house.

It’s not hard to believe that the majority of Canadians don’t long for a housing market correction, especially those who own property.

It feels good when your equity rises right? What’s not to like?

The Financial Post looks at these feelings, and whether they are sensible or not.

They split home-owers into three categories: First time buyers, young owners with growing families and older owners thinking about downsizing.

They say the first two groups would actually benefit from a crash.

If you’re wondering why most homeowners should be begging for a housing market crash read the article here and let us know if you agree with their reasoning.

 

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Makaya
Member
Makaya

I haven’t posted in a long time, but I thought you guys would be interested in this article .

Secret Path Revealed for Chinese Billions Overseas

For years, wealthy Chinese have been transferring billions worth of their money overseas, snapping up pricey real estate in markets including New York, Sydney and Vancouver despite their country’s currency restrictions.
(…)
Vancouver’s real estate market has also seen the impact, having been “fueled tremendously in the last couple of years by high-end wealthy Chinese and Hong Kong buyers,” according to real estate agent Malcolm Hasman.

But then again, according to Garth Turner, foreign buyers had 0 impact on Vancouver’s RE market…

patriotz
Member

@1: “according to real estate agent Malcolm Hasman.”

Well that settles it then. What more reliable, objective source can you get?

Makaya
Member
Makaya

@patriotz

“Quand le sage montre la lune, l’imbecile regarde le doigt”…

patriotz
Member

As house prices rise, Fitch warns Canada may have to act again
But the leadin is yet another groaner:

Along with a new report today showing Canadian home prices still rising comes a warning from a credit rating agency that the government may have to intervene in the housing market yet again.

As if the Canadian government hasn’t been intervening – continuously – in the housing market since the end of WWII.

southseacompany
Member
southseacompany

Poloz in the Wall Street Journal; “Canada’s Central Banker Talks Housing Bubble, Missing Exports, in Q&A”

http://blogs.wsj.com/economics/2014/07/14/canadas-central-banker-talks-housing-bubble-missing-exports-in-qa/

“In a wide-ranging interview with The Wall Street Journal, the Bank of Canada governor acknowledges that a housing boom was a predictable offshoot of the central bank’s easy money policies launched in response to the last crisis. ”

“Leverage goes up and what people spend on is primarily houses. Prices have gone up as one consequence of that extra demand. So we ask ourselves, ‘Then how do we come down off of that thing?’ There’s no question our economy right now is still running on basically policy fuel, policy induced growth. It’s unsustainable in that basic sense.”

elvince
Guest
elvince

As the US housing bubble was inflating, Warren Buffet was asked if rising house prices were a good thing or not. His answer was roughly: “If you’re a net seller of hamburgers, then rising hamburgers prices is a good thing for you. Same for houses.”

elvince
Guest
elvince

And btw people, wheter wealthy Chinese or pale-white canadians are the ones responsible for inflating prices is irrelevant to the situation. As it is being sold and bought, a house (and its price) doesn’t care who its owner is. Just like a share of Nortel or Google, the important thing is wheter the thing you’re in the market for is overvalued compared to its usefullness or not.

@Makaya
Guest
@Makaya

Makaya, Garth Turner will never let anyone post about HAM. He thinks everyone who remotely has a link with Canada is Canadian.

Obviously he has a financial agenda. He needs new $$ to come in for his firms investment purposes. His blog creates a perpetual fear amongst homeowners there and when they sell, the proceeds sometimes go to GT’s company to invest. Many people have sold in the Toronto area over the last 5 years and they are mostly regretting it. I hear some of these people post but anything negative is censored.

If HAM was exposed on his website, his whole business plan would fall apart. Therefore, he ridicules it and the sheep there happily buy it as they are to far brainwashed…until it is too late.

Joe Mainlander
Guest
Joe Mainlander

As Sotheby’s own stats show, only 2505 homes sold over $ 1mil in Greater Van. There were 28,500 total sales, so that’s only 9% of all sales. Homes over $2 mil only amounted to 5% of all sales. The luxury home market, if targeted by HAM, is only a tiny % of all sales. That would not have caused all home prices to double in the last decade. The numbers, even once exposed, are just not there.

http://www.remonline.com/luxury-market-exceeds-expectations-sothebys/

A few rich folk buying homes is not going to be able to create class-wide asset inflation across a whole nation. But, giving all buyers access to more cheap money sure can.

@elvince
Guest
@elvince

chinese don’t care if they lose money. as long as they have a place to retire to and take advantage of “free” healthcare. and when you don’t pay income tax, it truly is free, isn’t it?

for them, the economic risk of getting sick in china is far worse than a housing correction.

Mick Murphy
Guest
Mick Murphy
elvince
Guest
elvince
@@me: I doesn’t change the fact that the most rational thing to do for you (as far as housing goes) is to buy if undervalued and sell if overvalued. Why someone else buys what is of no concern to you regarding your own housing purchase. Only price and value should be your concerns. Politically, you might want to write letters to every “honourable”, distribute leaflets with your opinions, get yourself elected, sue the government or participate/organise demonstrations. But the reason an asset is over or undervalued won’t change the valuation. Btw, your comment exactly describe what I mean: for a chinese guy, a house in vancouver has higher value than it does for you (because it gives him access to free healthcare, something that you have access to wheter you own a house or not), so he is willing to… Read more »
@elvince
Guest
@elvince

owning property makes your claim to residency stronger, especially when Canada was not tracking entry and exists.

Insanity
Guest
Insanity

@6 “If you’re a net seller of hamburgers, then rising hamburgers prices is a good thing for you. Same for houses.”

The thing is most people are either neutral (don’t buy or sell) or net buyers during a bubble. Few are net sellers. The net buyers include not only first time buyers but people who owned RE prior to the bubble but decide to move up the property ladder, buy an investment property or a recreational property.

Insanity
Guest
Insanity

@8 “If HAM was exposed on his website, his whole business plan would fall apart.”

Why? In the end all that matters is prices are in a bubble. If HAM caused the bubble it does not hurt Garth’s case for not buying RE and or investing with him.

Insanity
Guest
Insanity

@10 “chinese don’t care if they lose money. as long as they have a place to retire to and take advantage of “free” healthcare. and when you don’t pay income tax, it truly is free, isn’t it?”

So someone doesn’t care if they lose millions in equity but they care about paying for health care or avoiding income taxes which would be significantly less? Makes perfect sense.

Insanity
Guest
Insanity

@13 “owning property makes your claim to residency stronger, especially when Canada was not tracking entry and exists.”

I don’t think so. But even if it did owning a studio condo in Surrey would qualify the same as a multi $million house on the West side.

UBC in crisis
Guest
UBC in crisis
Recent list price reduction for Vancouver $800,000 – $1,000,000 (-5% or more): # 604 1661 ONTARIO ST, Vancouver, BC V5Y 0C3 MILLENIUM WATER – The last waterfront community in Vancouver linking southwest False Creek with downtown and other oceanfront neighbour… Condo/Apt – 1,190Sqft. – 2Beds – 2.0Baths $108,900 (11.0%) June 3, 2014 $880,000 62 ONTARIO PL, Vancouver, BC V5W 1R9 First time buyer and investors look no further! Located just west of Main St and close to transit / school and Oakridge mall. This 2 le… House – 1,762Sqft. – 4Beds – 2.0Baths $100,000 (9.1%) June 3, 2014 $999,990 OPENSun Jun 01,2pm-4pm # 1110 5728 BERTON AV, Vancouver, BC V6H 4C2 Must-see brand new condo building “Academy” from prestigious developer Polygon located at the heart of UBC Campus. This beautiful 2 bed… Condo/Apt – 934Sqft. – 2Beds – 2.0Baths $70,000… Read more »
patriotz
Member

@10: “chinese don’t care if they lose money. as long as they have a place to retire to and take advantage of “free” healthcare”

But buying a house in Canada doesn’t gain you immigration status, so money lost on a house is lost for nothing.

Ulsterman
Member
From a pure value perspective it obviously makes sense that HAM buy in desirable locations of the US. They aren’t stupid – they were savvy enough to earn or skim enough to become wealthy. Smarter than me. So why are they still buying here? Some ideas to toss around: 1) Maybe they see the TV image of the US as a nutty country full of Christian fundamentalists and guys going into to Target with automatic weapons and make the incorrect assumption that the entire place is dangerous. When i came to Canada I noticed that Canadians loved to make sweeping generalizations about dumb Americans. Maybe the Chinese do too, i don’t know. 2) Maybe the latest HAM have lots of friends who’ve already moved here and says it’s a great place to live when you have money. You can move… Read more »
patriotz
Member

@14:

That’s a really bad analogy, because hamburgers are a consumable. Buying a hamburger doesn’t get you something to sell in the future.

If you want to talk asset inflation, it should be shares in McDonalds or the like.

patriotz
Member

@20:

Twice as many Chinese immigrate to the US as to Canada. That’s lower per capita for the US of course, but it’s twice as many per capita for the Chinese.

patriotz
Member

@23: “HAM has got to be what is keeping the local buyers confident enough to use the low rates to leverage themselves to the max.”

Yes of course. Every bubble market has its own “it’s different here” myth. But that’s not an external cause, but a rationalization.

World Wide Wet
Guest
World Wide Wet

“During the Beijing news conference, 10 investor applicants said that they were losing their faith in Canada as a “trustworthy country” with an alluring legal, environment and welfare system.”

http://www.thespec.com/news-story/4396341-rich-chinese-nationals-angry-about-canadian-immigration-changes/

Yunak
Guest
Yunak

They were losing their faith in Canada as a “trustworthy country” with an alluring legal, environment and welfare system.”

Irony just got killed, this is the top.

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