Tag Archives: policy

Who wants a 50 cent dollar?

With rumors of another rate cut, Rob Carrick points out 8 reasons he thinks that’s a bad idea. The very first reason? The Looney will fall even further against the US dollar.

For eight years, the Bank of Canada has been trying to encourage economic growth by lowering interest rates. It’s so not working.

In fact, lower rates are hurting a lot of people more than they’re helping. We have to at least acknowledge this as speculation of yet another rate cut grows. It could come as soon as Wednesday, which is the date of the next rate announcement from the Bank of Canada.

The central bank considers the entire economy when it sets rates. Now, let’s look at things from the point of view of everyday people. Here are eight reasons why the Bank of Canada shouldn’t cut rates any lower.

1. The dollar will fall even more: The most disruptive force in personal finance right now is the falling dollar. That’s because it’s hitting us all in a vulnerable spot – our grocery bill. Helpful for exporters, a weak loonie is a tax on families and snowbirds who must change Canadian dollars into U.S. currency. Last week, the dollar fell below 70 cents (U.S.) for the first time since 2003. A lower dollar adds downward momentum.

Read the full list over at the Globe and Mail, although a number of them are directly connected to a dropping looney.

The one group that a dropping looney should help are exporters as their products get cheaper for foreign buyers, but Jayson Myers, the head of the countries largest exporters association says don’t bother.

“Interest rates are low already. A little bit of dollar stability would be better.”

As an interesting aside, in 2002 when the CAD was hitting record lows Treasury Board President Scott Brison said it was

“a pay cut to every Canadian, a drop in our standard of living and a reflection of the fact that Canadians are getting poorer as Americans are getting richer under the watch of the government,”

Scott Brison is now a key cabinet minister and top economic aide to Trudeau.

 A hat-tip to southseacompany for the links.

Friday Free-for-all!

It’s that time of the week again!

lets do our regular end of the week news roundup and open topic discussion post for the weekend!

Here are a few recent links to kick off the chat:

Vancouver sales decline 32%
Vancouver drags down national numbers
Time to panic
Vancouver market cooling too quickly?
Last September was a different season
Realtors forced to change jobs
What did Billy do wrong?
HPI vs the San Diego bubble graph
Policies will not make housing affordable
House rich, lifestyle poor
Condos best rented, not owned

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

August 2012 Vancouver Market Outlook

B5Baxter posted this in the comment section yesterday, but the number of links tripped the spam filter and it was held up in moderation for a while.

We appreciate all market analysis and thought this one deserved it’s own post.

Here’s his summary of where we are in the Vancouver real estate market and roundup of forecasts:

_________________

I have started to put together a monthly housing analysis update that I share with interested people. Here is the most recent one:
—————-
Vancouver Real Estate Market Analysis – August 2012

July saw the lowest Metro Vancouver real estate sales in over a decade. Sales were lower than 2008 when prices saw a significant drop. And inventory has stayed near or above 2008 levels since the beginning of the year. That means that over the next few months we should see a drop in prices at least as great as we saw in 2008.

In 2009 prices recovered after interest rates were lowered and other government policies were introduced to stimulate the market. This time around there is less room to move interest rates and the federal government is signaling that they are interested in cooling the market rather than stimulating it.

The low sales and high inventory would indicate that we may be at the beginning of the long anticipated collapse of the Vancouver housing bubble.

Based on an analysis of price/rent, price/income and price/ gdp growth I am estimating that the current market is overvalued by 40-60% and we should expect to see declines of that magnitude sometime in this decade.

Average prices for detached homes in Vancouver have declined by 15% (www.yattermatters.com) from a peak in February. This is the first time we have seen five months of straight declines since 1996. Some individual asking prices have declined 20-40% (see: vancouverpricedrop.wordpress.com )

The Teranet index for Vancouver (usually considered a more reliable indicator than average prices of the overall market) has not shown the same decline. It has remained relatively flat but tends to lag other indicators. The REBGV index showed a 1.4% drop since May. This would be consistent with price behavior and inventory levels in 2008 when prices started declining in the second half of the year.

This graph ( http://vancouverpeak.com/groups/data-hounds/forum/topic/crash-curve-graphs/#post-2531 ) shows three of those metrics imposed on a graph of San Diego housing prices. I believe the Vancouver market is similar to the San Diego bubble market and the declines may follow a similar pattern.

If Vancouver prices did follow a similar trend to US prices we would see the 40-60% drop occur in 3-7 years.

Other estimates:

http://worldhousingbubble.blogspot.ca has estimated a decline of 41% and a time to bottom of 97 months (8 years).

The Economist magazine recently ( http://www.economist.com/node/21557731 ) stated that Canadian real estate is overvalued by 75% (this is an average for Canada, some markets like Vancouver may be higher).

http://alphahunt.ca has estimated a decline of “about 50%” from a March 2011 peak with a time-line of “5+” years

http://vreaa.wordpress.com/ has projected a decline of 50-66%

Pacific Partners estimates a 40% decline (http://pacificapartners.ca/blog/2012/07/18/canadian-real-estate-bubble-chart-book/#Table2 )

Investment Comparison:

During the last six months Vancouver Real Estate showed annualized return of 1.6% (using the optimistic HPI). During the first two quarters of this year the non-cash portion of my own strategic allocation portfolio returned 5.2%.

Friday Free-for-all!

It’s the end of another work week and that means it’s a good friday to have an open topic discussion thread for the weekend!

Here are a few recent links to kick off the chat:

VREB president unaware of own stats?
Updated inventory graph
Growing majority plan no home buying
Blaming Chinese for high prices racist
Line of credit rules to be tightened
Bank executives don’t follow policy?
Rules cool condo market
Real estate sales continue to cool
Hottest boomtown, Regina?
US Banks neglect seized homes 

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

PS: you’ll find a new link above the comment section that will enable you to view all comments in chronological order.

Cleaning House

Over the weekend we deleted hundreds of user accounts, so if you’re trying to log in and it’s not working you may need to re-register.

Why did we delete these user accounts?

Over the last couple of weeks we’ve warned that user accounts with no comments will be deleted.  We’ve had lots of spam registrations and the only real way to confirm if someone is an actual human interested in the topic of Vancouver real estate is if they comment.  There are security concerns and spam registrations swell the database, so a purge was in order.

How can I keep my user account from being deleted?

This is an ongoing policy, so if you’re going to register an account you must leave a comment once you’re logged in or your account will be deleted.  We understand that not everyone wants to take part in the conversation and some of you may want an account simply for the double comment voting power, but new accounts must have at least one on-topic comment attributed to them or they will be deleted.

Thank you for your understanding.