Friday, January 29, 2010

The looming fire

Every day the fire conditions worsen. It's getting bigger, closer and faster people. And the useful idiots in the offices of industry associations and mainstream media outlets keep proclaiming that the tree on the edge of the fire is still growing.

If you buy a house today, you are either economically ignorant or a fool. And you know what they say about fools and money. (H/T to many of you readers for the links and tips in comments lately).

Just because folks seem to be picking on Cameron Muir's inability to look in the mirror and predict what he'll see, I figured I'd make it easier with a little help from the fine folks over at

Some of my personal favourites include:
“There is no indication, at this point, of any kind of substantial decline in prices,” July 2008

"Muir said home prices have been declining since their peak in the first quarter of 2008, but on balanced over the year, he expects the $453,000 average price to remain three per cent above the overall average home price of 2007.

Muir expects the average home price to decline nine per cent to $413,000 in 2009, but downward pressure on prices to ease by the second quarter of next year as homes become more affordable and inventories decline. Source. October 2008
Read more here.

Sunday, January 17, 2010

Somethings rotten in the CAAMP

I guess fear is a prime motivator after all. [sarcasm off]

I can only imagine the prospect of declining sales volumes has agents and brokers waking up in a cold sweat at night. So much so they must be calling their industry associations each morning in a panic to get them to do something, anything about any possible chance the government could reign in their ability to sell their products.

Before I continue, let me make one thing absolutely clear: I believe the Canadian government needs to reign in the CMHC on behalf of the Canadian taxpayer. I believe the CMHC has moved beyond its mandate significantly and I believe the Canadian taxpayer is at significant risk of financial loss if the real estate market were to correct beyond 15 per cent.

Of course, CAAMP and the CREA take the opposite belief--to them, it is impossible for the real estate market to correct 15 per cent.

To show you how rotten things have gotten at CAAMP, I give you this: In November of 2009, less than 3 short months ago, they published this study, with this graphic showing that 68 per cent of mortgages written in 2009 were of the "fixed rate" variety:

Now with all the pending talk of limiting CAAMP member's abilities to give you and I too much money too fast, they've decided to revise their fall 2009 report with this gem, aptly titled: Revisiting the Canadian Mortgage Market. And here's their revision:

Line extends much higher than 68 per cent doesn't it? Wow. When the numbers don't support your argument, add 20 per cent. Here's further proof they have made this 80% number up (I'm wrong about this assumption, if Rob is correct in the update below).

Their report is full of other baseless calculations and assumptions, like their so-called "stress test" that demonstrates first time home buyers have never had a safer opportunity to buy or exercised such caution when entering the market--forgive me while I puke a little in my mouth.

I won't waste my time ripping the whole report to shreds, instead I recommend that it just get shredded.

I have a very good understanding of public policy process in Canada. It is a crying shame that organizations like this are allowed to play a part in the process at all. It is a freaking tragedy though that policy makers (the public servants who work in the departments, not the politicians) are forced to give these types of reports higher credence than detailed analysis by arms-length third party organizations simply because they don't exist in Canada. This report demonstrates that truth is apparently inconsequential to their business organization and is merely something to be rewritten when it doesn't support their outcomes.

Thanks to Skeptic and Double Agent in comments for the links and tips to this mess. Edmonton Housing Bust has another similar post up, and to their credit, the McListers aren't censoring comments on this bullsh&t on their blog.

In all fairness to the CAAMP and their members, this comment was posted on the McLister's blog by Rob (link above):
...remember that this newest study included only purchases. The November 2009 study included purchases, refis, and renewals. People are more likely to get variables when renewing or refinancing. That is largely why the fixed-to-variable ratio is different in each study.
This explains the discrepancy in reported numbers. I've added a comment above in italics, but did not change my original post, not because I stand by my assertion that the CAAMP was making something up, but because I wrote it first, and meant it at the time given the information I had, and so that you can see I'm not hiding anything. I accept Rob's statement at face value and it is a reasonable explanation for the change in fixed rate percentages.

I still stand behind the general premise of this post: CAAMP is an industry lobby group with a financial interest in seeing mortgage related policy remain unchanged, or further liberalized, so that they can continue to sell mortgage products insured by Joe Taxpayer and they are using "clever tricks" to demonstrate why they believe mortgage insurance policy should remain unchanged. They are not an impartial source of mortgage related information and should never be viewed as such by the general public or the public service.

Friday, January 8, 2010

Utter failure

And they have no one but themselves to blame.

Canwest publishing group is for sale under protection from their creditors.

Are we really surprised when their reporting has become largely irrelevant parroting of industry-driven "news" releases? (H/T Skeptic)

I don't know who I feel more sorry for: the mail room people who will suffer through no fault of their own or the "journalists" who forgot how to Google, er, fact check, or the editors who chose to continually publish this crap under the guise of news.

Oh well, I suppose Canada's New Socialist Government may swoop in and save you from yourselves.

Monday, January 4, 2010


It's been almost three years since I started this blog. In that time, my wife and I have paid around $27,000 for shelter. Had we bought a condo in the first few months of our house hunt, over these past three years we would have paid around $65,600 for shelter, of which about $16,000 would be "equity" and around $50,000 would have been the cost of renting money, otherwise known as interest.

Do we regret not buying? Not. At. All.

Over the three years I've been writing, we have moved three times, my wife has changed jobs three times (all with the same employer mind you, but different locations), I've started my own business and we've managed to save more money than we would have built in equity and still pay down a significant amount of student debt. Looking back, I wouldn't change our decision at all. I'd even say I'm glad we didn't follow the vast majority of our peers and jump into the market at a time in our lives when we were "supposed" to.

We've watched friends and family sell homes to buy other homes. We've seen them earn real profit--all immediately spent on something bigger, newer, movable (read cars) or go to pay some other debt that was nipping on their heels. We've gone to bed at night thinking that could have been us and woken up knowing better than it *would* have been us--because none of those friends and family first bought in the past few years. The friends and family we do know who have first bought in the past few years live in homes we'd never want to live in and deal with location and home-specific costs and issues we'd never wish on anyone.

I've learned a lot about real estate and the real estate market through writing this blog. But the most important lesson I've learned is the importance of the long view. Every January my wife and I chat over a glass of wine about our dreams and plans for the coming year. We always ask the question "will this be the year we buy a home?" Our desire to plant roots is strong, but we recognize it's an emotion, not logic, driven desire.

At the beginning of 2009, we couldn't honestly answer the home buying question. We watched the market in the fall of 2008 drop consistently and rapidly with no signs of stability on the near horizon. We saw a market headed down fast and furious and thought we may find something that fit our parameters late in the fall of 2009. When the market re-ignited in the spring, we shelved that thought and focused on other things.

This year we know we won't be buying. We'll continue to rent. We'll continue to watch the market. We'll continue to learn and I'll continue to write. We'll continue to enjoy the flexibility, the freedom and the financial rewards of renting shelter. We'll continue to sleep well at night knowing our financial plan is working for us. We'll continue to be patient.