Wednesday, June 6, 2007

For what its worth

Interesting survey on MSN Finance (Canada) website today. I always take any kind of survey/poll results with a huge grain of salt, but the number of responses lead me to believe that these may be fairly reflective of the true state of mind of the Canadian homeowner/purchaser these days.

I'm not at all surprised that the largest response segment is below average price purchasers. I am a little surprised that the next-biggest is "I wouldn't buy a home at current prices." If this is the true trend, lookout market, seems like Canada is losing confidence in you pretty big.

The line of question is pretty funny really, especially considering the final answer. Why is the question not "what would you pay" rather than "what can you pay?"

Other News

We're watching the lower mainland developments awash with mixed feelings. We feel bad for homeowners and investors, but at the same time, greed does make people do stupid things. Like build on a pretty-regular floodplain.

Rental markets remain tight: no surprise there.

I thinks it may be time to get out of debt completely, don't you?

On demographics and Real Estate:
"This less favourable demographic trend does not in itself pose a major risk to the housing outlook," said Adrienne Warren, senior economist with Scotia Economics. "Real household income growth and the level of interest rates have a statistically more significant influence on housing sales and price appreciation."
Emphasis is, of course, mine. Remember that real income growth is stagnant and mortgage interest rates have already gone up over 2% in the past 3 years and they look to climb back up to historical norms of 7.5% over the next year or so. Interesting times ahead.

But of course, we'll just keep buying new cars to make ourselves feel better.


JMK said...

I am a little surprised that the next-biggest is "I wouldn't buy a home at current prices." If this is the true trend, lookout market, seems like Canada is losing confidence in you pretty big.

I don't know about across Canada, but in Victoria about 30% of households rent as of the 2001 census, so rather than spelling doom for the markets, the survey seems inline with the current status quo.

hhv said...


I hadn't looked at it like that so you could have a point... but, I would say that a fair amount of those people would then choose under $300K. Remember that the answer is I wouldn't, not I couldn't... and that doesn't take into account renters by choice, or renters by necessity.

VG said...

I see the beginning of the end today HHV. I read a report today that came from Morgan Stanley, maybe you saw it. Keep on buying those houses you suckers !

Morgan Stanley has advised clients to slash exposure to the stock market
after its three key warning indicators began flashing a "Full House"
sell signal for the first time since the dotcom bust.

Morgan Stanley warns the 'mid-cycle rally is over'

Teun Draaisma, chief of European equities strategist for the US
investment bank, said the triple warning was a "very powerful" signal
that had been triggered just five times since 1980.

"Interest rates are rising and reaching critical levels. This matters
more than growth for equities, so we think the mid-cycle rally is over.
Our model is forecasting a 14pc correction over the next six months, but
it could be more serious," he said. Mr Draaisma said the MSCI index of
600 European and British equities had dropped by an average of 15.2pc
over six months after each "Full House" signal, with falls of 25.2pc
after September 1987 and 26.2pc after April 2002. "We prefer to be on
the right side of these odds," he said.

The first of the three signals Morgan Stanley monitors is a "composite
valuation indicator" that divides the price/earnings ratio on stocks by
bond yields. It measures "median" share prices that capture the froth of
the merger boom, rather than relying on a handful of big companies on
the major indexes.

"If you look at all shares, the p/e ratio is at an all-time high of 20,"
he said.

The other two gauges measure fundamentals such as growth and inflation,
as well as risk appetite. "Investors are taking far too much comfort
from global liquidity. Markets always return to fundamental value, so
people could be in for a rude awakening. This is the greater fool
theory," he said. "The trigger may be rate rises by the Bank of Japan,
or a widening of credit spreads. There are lots of little triggers."