But then I read this. Now, I do recognize the source, but considering this is a conservative writer taking a conservative finance department to task over what could be viewed as non-conservative financial dealings, I'm left scratching my head. Take this key piece of information for example:
"In a piece in yesterday’s National Post, TD Securities economist Eric Lascelles noted that there are no signs that credit has been withdrawn in Canada or the U.S. — in fact, mortgage lending has grown at 7.7% this year and personal loans are up 15.3% in this country."That really is mindboggling. Mortgage lending grew. Personal loans are up 15.3%. And yet banks are telling Ottawa they have no cash to lend: to business. "We have to get some of these debts off our books if you want us to lend to businesses who need money," say the banks. "After all it's your government's capitalization policies that prevent us from just throwing money at them." Or at least that's what they want us to believe.
So businesses are seen as risky lending ventures right now, but lending to the people who depend on them for their income, not so much. Disconnect? Me thinks there may be.
But what is the government to do when every other capitalist nation is spending like a drunken sailor from Havanna with a no-limit credit card? Acknowledgingly, I don't have too much exposed in this game right now. But in Canada, it really doesn't matter if I have cash in the markets, or cash in my mattress, because the DoF has the ability to grab whatever it needs of whatever I do have, whenever it needs to. So I care. And I think you should to.
I'm all for universal healthcare. I'm all for universal education. But I'm not for corporate welfare for businesses that sell products that people neither want nor can afford. Nor am I for businesses holding the taxpayer hostage crying foul because their cousins in the south and east have been given the tax-slavery proceeds of a nation wrapt in fear of losing their jobs and homes.
I don't want to see people lose their homes or jobs, which is exactly why I say to my government that today is the day that will deliver the least amount of pain. Throwing more money at the same problem doesn't solve it, it delays it and makes it worse. Why should the whole street have to pay for the bad purchasing choices of a few houses? Let those houses fall, and let smart, sensible, competent houses replace them.
For all of us, I hope I am wrong and the policy wonks at the DoF are right.
As an aside, for those of you reading this who want to attack the current government because of their ideology-driven policies, I feel it necessary to remind you that policies like what we have seen today are not dreamt up in some cabinet meeting by politicians, but emerge from the inner workings of departmental policy analysts and financial professionals--they present the government with choices, and you'd be amazed at how much influence the technocrats have with government in Canada, especially with the inexperienced ones.
More good thoughts, IMHO here.
66 comments:
Of course a bank would rather lend money to someone to buy an overpriced house he doesn't need than to a business that would create real jobs.
The reason is simple - the bank is guaranteed by the taxpayer to get its money back on the mortgage loan.
There is no reason whatsoever for the government to guarantee mortgage lending. The very fact that house prices have become so inflated means that there is too much lending available for mortgages, not too little. This excess flow of capital into housing is depriving our economy of productive investment.
Deposit-taking institutions should be forbidden from lending more than 80% of the fundamental value of a property based on market rent. Not the market price based on what some fool is wiling to pay. If this were done there would be no need for mortgage insurance. If equity-funded lenders want to make bigger loans, they should be free to do so.
What about the non-government insurance policy makers like genworth and gmac? as far as we know, and we don't because cmhc isn't required to disclose, the insurance pool that cmhc has could cover much of any potential losses looming without having to seek direct cash injection from gov't/taxpayers.
perhaps the solution is only guarantee the amount exceeding 75% of the appraised value, so lending practices get stricter, without hammering the market all at once?
What about the non-government insurance policy makers like genworth and gmac?
They are backed up (reinsured) by the government too. Didn't know that?
There is no true private-sector mortgage insurance in Canada, because it's impossible for the private sector to do it due to systemic risk (i.e. all mortgages go into default at the same time, as opposed to people having car accidents at random).
That's why MICC went bankrupt a few decades ago. Its business was picked up by Genworth - with government backing.
I repeat, there is no reason for the government to back up house loans any more than car loans. Restrict deposit-taking institutions from loaning more than 80% of fair value (not market price), and let equity-funded private sector businesses loan the rest if they want to. Let the market allocate risk as it should instead of handing the bag to the taypayers.
"This excess flow of capital into housing is depriving our economy of productive investment."
Precisely why the housing bubble is so bad for our society. It's not just a case of "A lot of people made money and a lot of people will lose money." So much more complicated, like a serpent that has it's tentacles wrapped around every aspect of our lives. Innocent bystanders that have made $0 from this monster will ultimately suffer from it.
The fact that our government was a willing player in the scheme only adds insult to injury...
patriotz said:
"Deposit-taking institutions should be forbidden from lending more than 80% of the fundamental value of a property based on market rent."
If you use market rent and captialize the income stream at market rates then you would have market value.
In order to determine "fundamental value" you would need to have a "fundamental rent" or a "fundamental capitalization rate".
So, where would we find these fundamental rents and rates? No where, they do not exist.
Obviously, without knowing these parameters, one cannot calculate fundamental value.
These institutions are responsible to the depositors and shareholders of the company. The government doesn't need to "forbid" them to do anything. If the shareholders do not like the management of the corporation then they will change directors. If the depositors do not like the institution then they will change banks.
Over regulation is not the answer.
Paulson, Bernanke, and the other giant economic brains in the US of A have already demonstrated (and basically admitted)that they really have no idea what to do.
That being the case its a little difficult to see why our finance minister and others around the world are jumping on the "bail out everybody" bandwagon. Our banking system was recently rated as soundest on the planet, but they are still having tax dollars thrown at them to "encourage" them to lend. Thats what banks DO-and IMHO our Finance department should just adopt a universal "no bailouts for anyone" policy and stick to infrastructure spending for stimulus, -and if the major banks dont want to lend to credit worthy customers, other institutions would be happy to take over their business.
Direct inept governmental meddling in the financial and manufacturing sectors aspects of the economy has just added to the chaos and will just prolong this US real estate based "crisis".
It's happening anyway and will pass, with pain and also opportunity for many.
Either that or forget about free enterprise and just admit that we (Canada)are encouraging transformation to a worldwide corporate welfare state.
IMHO.
boomer agreed... but in the last election, the cons were punished for the perception of doing nothing... which was the one policy option that made sense. the electorate is sending the message that action is preferred over inaction, even though the electorate has less of a financial clue than bernanke et al...
hhv
yeah i know
I'm all in favour of Flaherty doing something for the Banks that doesn't cost me any money. Just wait 'til the Automakers start dipping their gold-plated beaks into the taxpayer's pocket.....then we'll really have something to complain about.
Rant - Why can't people just learn not to borrow money?? It's common sense to live on less than you make but barely anyone seems to do that!
I can understand borrowing for a conservative mortgage or to start up a business, but getting a loan for a new TV or getting a car loan??? Come on! Save up for stuff you want, it's not that hard to understand and do!!
If more people did this, we wouldn't be in this mess. And bailing out everyone just let's people keep on doing the same old stupid things.
Anyways, that's my rant. I feel better now. Out of curiosity though, who here has no debt here and actually lives on less than they make? I do, I'm saving up a big down payment for a few years from now when the prices are more realistic.
Cheers!
PS: I've been a lurker since last spring and I love reading the blog and Roger's graphs.
Loving the price reduction on 148 Burnside E today. $460,000 down to $399,000.
That's a seller trying to get ahead of the curve.
"Rant - Why can't people just learn not to borrow money?? It's common sense to live on less than you make but barely anyone seems to do that!"
Hear hear. I have been slack-jawed in utter astonishment listening to political leaders here and in the USA saying that massive injections of taxpayers' money are necessary to keep credit flowing so that companies can "buy inventory and meet their payrolls" - eh what?! I thought that the idea behind running a business -of ANY sort- is to earn INCOME, from which you then buy inventory, pay your payroll, and have some profit afterward. So everyone has really been running their businesses on revolving credit and are actually insolvent without it? Is this what they're telling us? If so, our economy is an illusion, and the Chinese and the Arabs already own us. I'd better start learning Mandarin, Cantonese and Pashtun...
Vic Gal said: "who here has no debt here and actually lives on less than they make?"
Mr.4AM raises hand. I manage to save 40% to 50% of my income monthly. But I admit I make above average income. On the other hand, I can afford to buy a house (easily), with over 25% downpayment, but refuse to at these silly prices.
The government doesn't need to "forbid" them to do anything
Oh yes it does, as long as the taxpayer, aka CDIC, is insuring the deposits and our economy depends on bank integrity which means the government must ride to the rescue if they get into trouble. You think banks should be able to lend just as they damn well please? What part of "Great Depression" or "global financial crisis" don't you understand?
Banks are currently not allowed to lend more than 80% of market price on housing without insurance. My position is that the allowable maximum should not be based on market price but a rent equivalent price. This would have prevented the global housing bubble and the resulting mess we are now trying to dig ourselves out of. No joke.
Germany has very onerous restrictions on mortgage financing and also no housing bubble. Coincidence?
As I have already said, non-deposit taking businesses, and individuals for that matter, are quite free to loan mortgage money on any terms they want and I have no problem with this continuing.
I too have been living frugally for the last 10 years, out of choice not necessity (since access to easy credit has always been available). I bought a home in 2002 when the prices were still what I thought to be reasonable (acreage near Ft. St. John). So the only debt I currently have is my mortgage. I have never carried a balance on my credit cards, never bought anything (other than my home) that I could not pay for outright and I save diligently.I make do with my old TV which is still in good working order (but gee, it's not a flat screen, boo hoo), fixed my oven when it broke down:$90 part vs. $1200 for a new stainless steel with all the bling, I have a 1998 car that I paid cash for that is in very good repair because i take care of it. What I have seen around me is people with $60,000 trucks, quads, sleds, toys & junk all over their zero-down 40 year amm. yards that they bought on HELOCs and now their equity is vanishing and we have a downturn in the oil patch. I think we can see where all this is going to end up with oil under $60 a barrel. People have been accustomed to borrowing from their future to buy crap for today. I find it hard to feel sympathetic with people who have been sucked into the consumer vacuum. Having said that I live well, take nice vacations, donate time and money to charities etc., but I am not greedy and I save for what I consume. It's not that hard. Mind you, I was raised by two people who grew up during the Great Depression and WW2. I appreciate that more than ever.
Vic Gal - I have zero debt too.
vic gal said: "Anyways, that's my rant. I feel better now. Out of curiosity though, who here has no debt here and actually lives on less than they make? I do, I'm saving up a big down payment for a few years from now when the prices are more realistic."
I'm in that crowd as well. I have car payments which are nearly complete and I theoretically have some credit card debt, although much of that is work expenses that I will be reimbursed for. I never carry a credit card balance longer than a month, despite having to make some major purchases lately with a baby on the way. My wife and I are saving no less than 10% of our income every money, which I think is pretty decent.
Funny that this question should come up, as I paid off the remainder of my student loans yesterday. No debt here, either.
Congratulations, mln - what a great feeling that is eh?
In debt up to my eyeballs and really strugling. Oh well, just going to have to claim bankruptcy with all the other condo owners in a few years...
Just kidding.
For the other debt-free individuals, do you get as ticked off as I do when you hear politicians and pundits talk about some form of help for underwater homeowners? I love talk of my tax dollars going to help people who lived beyond their means...
I don't mind tax dollars going to help people as much as I mind the distortion it brings to the market, preventing housing from getting as cheap as it could and blocking entry to the housing market by thousands.
That bothers me more than thinking a few of my tax dollars got misallocated.
Debt free as well, by the way.
womp said...
Loving the price reduction on 148 Burnside E today. $460,000 down to $399,000.
That's a seller trying to get ahead of the curve.
its 369 now....
opps i mean 365, even better!
Man, do you have it backwards.
Banks were at one time requiring a 25 percent home owner stake in the property.
The Government encouraged the banks to lend high ratio by stepping in to insure the loans that the banks were not willing to undertake. First it was Veterans Loans which later evloved into CMHC in the 1970's. It was the government - not the banks that was pushing for more Canadians to own their own homes.
Depositors insurance was instituted by the government, not by the banks, to alleviate fears of a run on Canadian banks in order to STOP a 1929 style depression from happening again.
Do you really think that Canadian banks would intentionally try to put their companies into bankruptcy?
Without credit most companies could never grow to compete in a global enconomy and any large private project would be unlikely. Your standard of living today is a direct result of credit expansion. Not many of us would like to go back to the 1930's we like our internet and toys too much, not to mention medical and other social safety nets.
Although, I did like the Fidora hats back then and even the homeless wore a tie.
Sure, the system got out of control, but so have companies like General Motors that require credit to meet its payroll. But again, its the government that wanted an auto industry with high paying jobs and are constantly keeping these inefficient companies in business for political reasons rather than economic.
So, pardon me while I choke on the thought of the government riding to rescue me from the bad banks.
So far the banks have only sold 12 billion of their mortgages to CMHC under the 50 billion dollar plan. It was probably Manulife One who took the money too since it had balance sheet problems recently.
Frankly I don't see anything wrong here. CMHC is well capitalized and can payout even the highest of default rates and still be solvent. Now the CMHC is offering to buy some mortgages from the banks to help them and CMHC will make some loot in the process.
Just Jack you have it all wrong. It was both the banks and government together that advocated for the formation of the CMHC and the banking regulations we see today. It's a mutually benefitial arrangement for everyone involved. The banks get more risk free mortgages, the government gets to say how great the CMHC program is, and the taxpayer gets to buy a house for little down.
I would draw your attention to the CMHC internet site.
How do we know CMHC is well capitalized?
By introducing and selling Mortgage Backed Securities since 1986, CMHC should be well secured for... for...for... Oh shit.
"CMHC is offering to buy some mortgages from the banks to help them and CMHC will make some loot in the process."
Or more likely get stuck with worthless paper when our real estate really tanks and people start walking.
It's a mutually benefitial arrangement for everyone involved.
No it's not, because houses would be much cheaper if financing were harder to get. Is that so hard to understand?
It's a subsidy for the RE industry.
Here's an interesting perspective on why debt and credit may be so important right now. More debt creates more money in a fractional reserve system.
A channel on November 13th at 11pm continued to support the myth by stating that real estate values in Victoria would continue to hold strong because of the desire for other Canadians and US residents to live in this area.
They don't consult stats? They don't realize that the recession will cause less interest in moving here and more interest in selling a condo that they can no longer afford?
I had to chuckle at the segment on CHEK last night in light of the fact they just had 19 of their coworkers laid off that very day. They went to lower Yates to see how any recession effects are happening on retail stores.
They saw a few new stores opening(what happened to the ones who closed ? ), then interviewed a high end store where the owner agreed things are tightening up, then to another store about to open this weekend with a young guy who had obviously made his business plan 6 months ago and was talking up that all this recession talk is no where to be seen. Then the co-announcer asked the interviwer if he bought anything downtown and he was clearly embarrassed and stammered and said "no, I did my shopping earlier". It was too funny but sad to see some young guy who has spent a bundle I am sure in a high rent,tough clientele area of town where the homeless hang alot.
I admire his optomistic outlook and persaverance but when the winter doldrums hit post Christmas, it will be interesting to see how long these high end stores last coming into this area when the recession hits full bore.
Existing home sales fall 14 per cent
Existing home sales fell 14 per cent in October from the month before, the largest month-over-month decline since June 1994.
The average sale price also declined, by 10 per cent in October from the same month the year before, to $281,133. It was the largest month-over-month decline since August 1982, when the average existing home sale price also fell by 10 per cent.
Source for the above
Hmmm... prices fell greatest amount since 1982, and we've only just begun. What's the next milestone? Have we even been recording month-to-month house prices nationwide long enough?
Follow up to CREA report above:
Existing Home Sales in Canada Plunge in October
Sales fell 14% from the previous month to a seasonally adjusted 32,048 units in October, the lowest level since July 2002. It was the largest month-over-month drop in sales since June 1994, CREA reported.
The number of homes sold in British Columbia plummeted to 4,018 units in October, down 50.8% from the same month last year. The average sale price dropped 6.5% to $420,259.
"Many homebuyers across Canada battened down the hatches in October as they were concerned with dire headlines about stock market volatility and a global economic downturn," said Klump. "Elimination of mortgage default insurance availability for purchases with less than a 5% down payment and for amortizations beyond 35 years also likely played a lesser role in the decline in sales activity," he said.
"Hmmm... prices fell greatest amount since 1982"
But Dallas Chapple said there was no comparion to 1982,whats the deal ? oh right,that fear of fear itself thingy.
The longer she refuses to read the facts put out by her own industry the more she embarasses her own industry.
Just Jack
Today is mid-month. I recall in a previous post you said sales looked bad in November Any chance that you can post some stats for the first two weeks of November??
When the properties are deemed sales are giving me some problems that I have to work through.
For example which of the following is the date the home sold.
1) the date the offer was accepted
2) the date the conditions were removed
3) the date home ownership was transfered
Now, which one does the board use?
Just Jack,
The answer is number 2 - the date the conditions were removed.
BCREA issues their stats on BC..
October MLS sales drop 54 per cent from 2007
"Housing demand was negatively affected by the global financial crisis and a sharp downturn in the equity markets," said Cameron Muir, BCREA Chief Economist in a news release. "These events exacerbated an already low level of consumer confidence, keeping many potential homebuyers on the sidelines."
Residential sales in October were the lowest since December 2000, on a seasonally adjusted basis.
And then the usual spin!!
"Home sales are unlikely to fall much further," added Muir. "While the provincial economy has weakened, the fundamentals support a higher level of home sales than experienced last month."
Cameron... The November numbers will be worse and then over the cliff.. December.
Generally, there is only about a week difference in time from when the buyer and seller had a meeting of the minds and the offer was accepted.
Some times, that can be much longer for the conditions to be removed.
And even longer for ownership to be transfered.
So, you could have the parties come to an agreement on price on November 1
The subject's removed on December 1
And the property transfered on January 1
If the board is using the date the conditions are removed, then there will be a lag time in reporting of the accepted offers. So, if I run the first two weeks of November, I may only be getting one week of data.
Just Jack,
Once a conditional offer is accepted most deals have the subjects lifted in 1-2 weeks. Securing financing, home inspection and title search are pretty quick.
I think the database flag that VREB uses is P for pending completion of sale. PCS uses this flag to mark SOLD on the listing. In a hot market properties on PCS were marked sold in 2 or 3 days (buyer foolishly did not do home inspection).
The actual transfer of funds on the completion date could be one to several months after that. Stats on this transaction date are not published (to my knowledge).
Readers might want to watch the news on TV tonight. Not good news for homeowners with the CREA and BCREA reports on the same day.
CBC Newsworld is already talking about it and Global TV has a text report on their Website. CHEK and Global @6 should be carrying the story. CBC and CTV evening news will have national coverage.
TC already has the story on their site and the Saturday paper should make for a good read.
Sales are few and far between this month on Matrix & PCS. Next week there should be more price reductions.
I'm guessing the effect of the 5%/35 year amortization will become more pronounced now as we move forward.
It's interesting to think that many (of the few) October sales may have been the last of the 0/40's...
Real Estate Shills Keep Pumping
Vancouver is tanking these days with 20,000 MLS listings and 1,500 sales last month
Province - Where are the buyers?
"A year ago, homebuyers in B.C. were competing against each other in auctions for available houses, but now homesellers are competing for buyers," noted BCREA chief economist Cameron Muir.
Unlike Merrill Lynch economists Carolyn Kwan and David Wolf, who warn Canada will suffer the same fate as the U.S., only with a two-year time lag, Muir said, "I don't believe Canada's following in lockstep with the U.S. at all."
"There's no question prices are declining and probably will until the end of the year, but 2009 will be very strong," said Shafik Ladha, a RE/MAX Westcoast realtor in business for 19 years who has already sold 97 homes this year.
"I'm tired of all this doom and gloom in the headlines because it doesn't really apply to us here. Yes, there's been a price correction, but in this market, when you sell low, you can also buy low, and interest rates are low, too."
Grace Kwok, owner of Anson Realty Inc., acknowledged that "sales are definitely lower because with all the uncertainty in the world, the appetite to buy is not as strong."
But she predicts, "Wait a few weeks until all the election headlines are gone."
Kwok said she has advised some clients that "if there's no urgency to sell, don't list it right now," but points out that as inventory declines, sales will pick up in price and quantity.
"In a few weeks when the panic factor dies back, prices will correct," says Kwok, one of Metro Vancouver's top 10 realtors.
Looks like the Major banks want to loan mortgage money again! BMO announces a drop in 5 year fixed rates from 6.14% to 5.25%
Toronto Star story here
Realtors will be trumpeting the drop in rates. Will buyers jump on the bandwagon again??
"In a few weeks when the panic factor dies back, prices will correct," says Kwok, one of Metro Vancouver's top 10 realtors."
Sounds like this one above and DC are on the same planet. Sorry but real estate prices just don't correct like a stock price does. Along with Muir's comments there should be a nice list for the history books on dumbass predictions for future generations to refer back to.
That's an interesting development about the lower interest rates. It appears to be alligned with this disinflationary cycle, but it will seem odd if "it" (deflating real estate + lower mortgage rates) last for long.
Japan has had ridiculously low interest/mortgage rates for years, still they've been in a continuous real estate deflationary cycle for more than a decade (possibly closing up on two decades!)
Interest rates have a huge impact on consumer confidence to purchase real estate and can not be ignored all together, but the lowering of interest rates by a whopping 1.25% by a bank in the same week as the government is dishing out $50 billion to buy troubled mortgages, not to mention the barrage of negative headlines from all over the world... one has to wonder if this lowering of mortgage rates isn't a move based on concern to stay afloat (by attracting long term depositors), rather than execs finding confidence in their bank balance sheets and passing down the savings to consumers.
This move is not unlike companies on the stock market initially raising dividends so that investors wouldn't dump their stock. If you look at them now, they are slashing dividends down to zero, because raising dividends to attract customers didn't work. So what I'm saying is if the lowering of mortgage rates is aimed at trying to keep and/or attract new depositors, it may be a scheme that may not trend for long.
I wish it did though. From my personal perspective, I hope real estate keeps deflating while interest rates keep dropping, although historically these two factors are contra-indicators and don't move in the same direction for long, if at all.
If this pattern does happen though, I'll be smilling a lot a couple of years down the road when I go to purchase a very cheap property, with a very low mortgage rate to boot!
My more realistic expectation though is that long term interest rates (say 1 or 2 years from now) and mortgage rates will still escalate upwards once inflation rears its ugly head. Afterall, eventually somebody has to pay for all these bailouts somehow. If there's any lesson to take from history is that when push comes to shove, in drastic financial situations, the little guy never ends up with all the benefits, if any at all.
Another condo project stalls in Vancouver. Ozzie jumps into the fray with his take on the condo market.
You can watch the video here.
http://vancouvercondo.info/wiki/index.php?title=Quote-tracker
Quote tracker....
Get a load of Tony Joe's full-page spinfest in Saturday's T/C. Oh, yes, the Victoria market is just a balloon. Just a cute little old balloon with just a teensy bit of air that's come out of it. Nothing to worry about here in Victoria; good news for buyers and sellers! You betcha!
Here is a scan of the spin article by Tony Joe in today's TC. Click here
vicbear,
what a load of self serving junk. This clown is still playing the 1998 comparison card. How can he be taken serious ?
As well he says most people buy and sell without considering the current market conditions. Hello ? is this guy for real ?
All this doom and gloom nonsense is unwarranted as far as Victoria goes ? Tony,which planet are you on ?
And the air leaking from the balloon is an admission we are in a bubble which always pops at some point. Man this is disgusting how many mistruths a professional can pump out to save his ass.
I guess Tony doesn't look at the price reductions and ignores recent charts showing downtrends of 6 months straight while he cherry picks his numbers.
And we still have 2 months to go in the year Tony so don't count your "we're up 4% this year" chickens til they're hatched.
One more point, his charts only go to show the chance of a major price decline is at the extreme.
Look at the highest price rise in history the last 7 years and we are now experienceing the largest stock market crash in history but this clown sees no relationship ?
But then again he can't show roger's charts or he'd have to pack up his office. Desperate times seeks desperate measures.
VREB must really be noticing a drop in sales this month if they are prepared to spring for a full page ad in the TC. It won't change a thing. Folks see the headlines in the paper and the TV reports and batten down the hatches.
The problem with this article is that it uses 12 month annual averages to determine price increases. Annual SFH price averages will be up a few percent when comparing annual 2008 to 2007. This is because the bubble kept inflating until April of this year. Since then average prices have dropped in 5 of the last 6 months. Median SFH prices have dropped every month since the April peak. So when you average over all of 2008 you get a small gain over 2007 but the last six months of declines are hidden.
You will note there are no graphs for 2008 in the ad. This is because things are dismal in the Victoria RE market. Here are the graphs that are missing:
MLS Sales and Inventory
Single Family Home (SFH) sales
SFH Median and Average Prices
Readers can see the real story in the Victoria RE Stats Gallery and I encourage them to pass this link to friends, family and anyone else who wants to avoid catching a falling knife.
http://photoshare.shaw.ca/gallery/needinbox/
The trouble with spinmeisters is that they only tell part of the story (i.e. half truths).
Here is Tony's Annual SFH graph, that he printed today, with the BCREA's prediction for 2008 and 2009 added on.
SFH Prediction
Take a close look at 1998 which is VREBs new reference. It was in the middle of a plateau period. Does anyone think we will just plateau after the last six years of price increases and the recent monthly declines??
Maybe Tony should listen to a basic statement from the CREA report that says :
"When consumers are not confident about their financial situation, they're not active in the housing market, and that in turn impacts the economy more."
People may well have jobs in Victoria,but if they are getting killed in the markets and/or there are rumblings in their workplace of potential layoffs if things don't pick up does he actually think they are going to go buy a house ? He is out of touch with the real world and the "average Joe".
Mish grabs a (good news?) BC story...
A microbrewery in British Columbia is toasting the current economic downturn by launching a special brand of recession-style beer.
Howe Sound Brewery has named its most bitter-tasting brew Bailout Bitter in honour of the government bailouts of the financial sector that have taken place in an attempt to mitigate the global financial crisis.
Calling it "bitter ale for bitter times," the brewery said the new beer will cost less than its other brands.
A pint of Bailout Bitter will sell for $5.50, or about $1 less per glass than other brews, at the company's restaurant and pub, located in Squamish, B.C., north of Vancouver.
Another neighbour just sold their house at about 97% of asking price - and a decent price at that. Open houses appear to have suddenly picked up as well. Maybe some bears are getting that pre-slumber itch? Hmmm...
Tony Joe and vreb should be ashamed of themselves - actually trying to tout price increases this year by using 12 month annual averages is completely horrendous and a massive disservice for people that trust and rely on their expertise.
Simply appalling, unethical and shameful.
What options are available to counteract this kind of poison? This kind of ethics makes me sick. I already know too many people that are upside down already or are going to be in the next six months.
Somehow I don't feel like writing to the TC is good enough.
Maybe we should take out a full page ad ourselves pushing for free markets,not rigged markets where salesmen believe the price of a house should never be on sale. This mentality that the industry thinks there is only one way in a "market" is absolutely appalling.
Does a car salesman ever want car prices to go up forever so we all have to pay $40,000 for a low level compact ? No,they want to entice us by saying "we have cut prices to give you a deal" to increase sales. In real estate sales there is not supposed to be any deal to the buyer according to him.
Does GM take out full page adds saying to disregard any rumours we are going under and come in and buy that car now cause the auto industry is fantastic shape ?
Tony Joe comes off looking the greediest salesman ever as he tries to tell people that the market should never go down and according to him all the world turmoil is all bullshit and that is total insanity.
It is unethical to me he is allowed to print that crap in the first place and goes against common ethical business practices in a free market and as head of a real estate board. Maybe a complaint to the BBB is posible ?
anon 4:41
Is that 97% of asking price at 1998 assessment? How much money do you make? How big a mortgage will that carry?
Have to wonder why VREB (and most members) are apparently convinced that their self vaunted marketing skills are only effective in RISING price environments, to the extent that they are willing to face increasing animosity towards their "professional" spin machine. Targeting the few remaining gullible buyers with misleading advertising and cherry picked stats is not "marketing".
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