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.
62 comments:
"Heritage Minister James Moore specifically singled out Canwest Global in an interview with The Canadian Press, saying the government is looking to help them out of teetering on the edge of bankruptcy."
"As for the publicly-funded CBC, the government said last week it would not be providing additional funding to them."
Wait, what?
My father-in-law is looking to find a nice house for rent in Victoria, 3bed, 2 bath. $1700/month budget. Cat friendly. Anyone got any good leads?
Lemme get this straight: useless re-broadcaster of Bad American Programming otherwise known as CanWest Global deserves financial assistance from the Public Purse but the National Broadcaster can go jump in the lake?
Makes sense....
They just better not touch CBC Radio One, it's the only radio station I listen too as it is the only station with no ads. Good programing too!
Corporate Losses must now be socialized under Canada's New Government....
All hail King Steve-O!
;-)
Seriously, where wuz the debate about the billions given away to two Foreign Car companies (GM and Chrysler) that have since *promised* to reduce the percentage of North American cars produced in Canada to less than 10%..?
Uh, call me stoopid but shouldn't we invest Canadian tax money into companies that plan to *increase* Canadian hiring?
US Treasury Dept claims the money "invested" in GM and Chrysler will never be recovered, so we can kiss our billions goodbye, too....
Rant off.....
How's about this for a bombshell?
from the article OMC posted above
"If you're paying an amount of money, whatever that might be, that you couldn't sustain if interest rates rose by say 25 or 30 per cent - I can see that being a problem for a lot of people."
Since this would only impact people in a variable rate, which can currently be had for 2.25% a 30% increase amounts to a new rate of 2.93%
Are people honestly 68 basis points from financial destruction?
There was a lot of anxiety over at VREB headquarters today because of the Canwest bankruptcy. The chief concern was the possible loss of their beloved parrot and real estate pumper - the TC Business section.
However everyone is feeling OK now that a letter from the TC publisher has clarified a few things.
A letter from Times Colonist Publisher Bob McKenzie
This move is designed to give the company breathing room while it restructures its debt, but I want to assure you that it will have no effect on the relationship between the Times Colonist and you, our loyal readers and advertisers.
[Translation: Readers will get more of the same. As long as we keep getting real estate advertising revenue we will keep reprinting those press releases. ]
During the confusion the Financial Post article that OMC referred to somehow made it onto the Times Colonist Website. This oversight will be corrected with several pro real estate CREA and Remax press release reprints next week .
Skeptic and HHV,
Both of you have referred to the TC parrot article by Royal LePage in today's Times Colonist.
Not only are they reprinting a news release but the LePage stats are just plain flakey. Where does LePage get the numbers for this report?
Answer: From one or two Lepage agents in each city across Canada. Every month the agents supply what they think is the going price for a condo, detached bungalow, two storey home, executive house in their city. HQ "analyses" and sends out a press release. Future predictions are given to one decimal place which is laughable to anyone with common sense.
What happens next? The TC gets the press release and then calls up the local LePage office (which generated the stats for HQ) and gets some pumper comments to accompany the article. A sorry excuse for journalism.
Disclaimer: This is not to be repeated over on KIV. They have reprinted the LePage article and giving them the truth about how the data is collected will just upset their readers.
Robert said:
My father-in-law is looking to find a nice house for rent in Victoria, 3bed, 2 bath. $1700/month budget. Cat friendly. Anyone got any good leads?
There are over 100 rental listings on Craigslist today.
He can also try the online sites for Brown Brothers, Devon, Pemberton Holmes, Duttons, David Burr, Boorman, Cornerstone Properties and Proline. They are all bursting at the seams with properties in this price range.
It's a renters' market. Tell him to drive a hard bargain.
I will not repost. Heavens knows I don't want to upset anyone. :-) They will get that all on their own eventually.
S2
CBC.ca has this excellent story on home inspectors - apparently the story ran last night on Marketplace
Home inspectors not finding grow-op clues
Marketplace hired four different home inspectors in Ontario, including certified and registered ones, to see if they could detect the apparently obvious signs that a house had been a grow-op. None of them did. The story also discusses the lack of standard requirements for what it takes to be a home inspector - I think there have been some recent changes in this regard in B.C. - or maybe they're still in the works - but it still pays to be very careful.
Here's a landlord starting to get antsy on Craigslist: Price Drop
$1350 / 2br - SHOWING TODAY - Rent down from 1500 (Cook St, Victoria) (map)
Contact me about Saturday showing (778 - xxx -xxxx (I'm working today and may be away from email)
Double-Agent brings up some interesting points about the cosy relationship between VREB and the Times Colonist.
For some time I have thought that the Times Colonist was guilty of Yellow Journalism
The paper is highly biased when it comes to portraying conditions in the local real estate market. News releases from organizations with a vested interest in pushing sales and higher prices are given front page coverage in the business section. Glowing stories and quotes from real estate promoters are the hallmark of these articles. Dissenting views or cautionary articles are buried in the back pages with the car ads.
I suppose that a paper desperate for revenue will pander to one one of its biggest advertising sectors. The following are scans of the TC business section this week. You be the judge.
Front Page Business - Tuesday
Front Page Business - Friday
Page 7 Business - Saturday
The readers on Vancouver Island deserve better. One can only hope that the TC gets sold to someone that does a thorough housecleaning of the editorial and reporter pool.
Canwest - it'll be interesting to see what emerges. For somewhere like Victoria, a meaty weekly paper would probably make more sense than the somewhat meagre repeat of press releases. If they published something worth reading once a week, I'd probably be likely to drop $5 on it. But they don't and I don't think they will anytime soon.
There's just too little 'news' otherwise in this town, particularly given that most of the day-to-day stuff is more than adequately covered on the TV and online.
It'll be interesting to see what re-emerges.
It is hard not to be cynical about economists when you see one change their opinion 180 degrees after accepting a new job.
I am referring to David Wolf who used to be the chief economist at Merrill Lynch Canada until he joined Mark Carney at the Bank of Canada.
He made big headlines in 2008 when he released a report on Canada's housing market.
Canada's housing bubble could soon burst: Merrill Lynch
Canadian households are nearing the financial tipping point that Americans reached two years ago, which plunged their housing market into the deepest recession since the Great Depression, a senior Bay Street economist warned Wednesday.
It may just be a matter of time before the Canadian housing market tanks like the U.S. market did, Merrill Lynch Canada economist David Wolf said, warning that Canadian households are now nearly as overextended as households in the U.S., and even more so than those in Britain, prior to the bursting of the housing market bubbles in those countries.
Today he gave a speech in Edmonton - BoC sees no housing bubble yet
It is "premature" to talk about a bubble in the country's housing market, a senior Bank of Canada official said Monday.
"Recent house price increases do not appear to be out of line with the underlying supply-demand fundamentals," David Wolf, an advisor to the governor, Mark Carney, said in a speech in Edmonton.
Following the party line... Must be hard to look at himself in the mirror every morning.
I love being stuck in between a rock and a hard place.
Strong Loonie worries Harper
Skeptic,
Whoa. Awesome find. Well done.
Ah, David Wolf. I really thought he was one of the only ones to tell it like it is.
So sad to see him sell out so to speak but I guess it is hard to argue with your paycheque.
I guess Carney decided he wanted him inside the tent pissing out instead of outside the tent pissing in (to quote Winston Churchill).
S2
Banks have a posted rate and a discount rate for mortgages. The discount rate is what they advertise as a special offer in order to get your business. Some might wonder why they even bother to have a posted rate.
The answer is simple - to shaft the customer at renewal time. If you have a fixed rate mortgage towards the end of the term you will be sent a renewal letter with the interest rate for the next term. This will often be the posted rate. Why would anyone ever sign a renewal for the posted rate?
- Customer is not diligent like they were when they went mortgage shopping.
- Customer can no longer qualify for a mortgage elsewhere so they have to quietly sign the renewal offer.
The latter is going to be quite common in the coming years. Buyers that have taken the maximum mortgage (5% down) and the longest term (35-40 years) may no longer qualify for the outstanding balance of their mortgage in certain circumstances. These include:
- household income has remained at the same level
- reduced income due to job loss or only one family member working (maternity leave)
- market value of property is less than mortgage.
The financial impact of renewing at a higher interest rate has been discussed many times in this blog. If this is done at the posted rate, which is 1 to 1 1/2 percent higher than the discount rate there will be many homeowners facing severe financial hardship.
You can read more about this in an article written by mortgage professionals: Don’t Bite!
Note: Please feel free to post this on other blogs/forums. Consumers need to know what the banks are up to...
The world has changed dramatically in the world of lending.
Back in the 1990's lenders were more cautious in lending to first time buyers. The lenders and borrowers had a parent/child relationship. Where the lender would lecture the borrower about the mortage.
Today, its all about money. The lender wants your business and they know that if they don't get you to sign then you will be off to a broker who will get you to sign with them.
So, no more discussion on the pros and cons of buying - just have the borrower sign the document and have the mortgage insured by CMHC. If the banks had some skin in the game, I think you would see the beginning of cautious lending.
Perhaps, this is what Flaherty should be doing. Telling the lender that will have to accept the first 5 percent of the mortgage default.
Its all about accountability and responsibility. The current system rewards bad lending practices.
Interesting post Double-Agent (re:getting shafted on renewal w/posted rate). One alternative I've seen out there is Coast Capital Savings, who's posted rate is already the maximum discounted rate, so in theory you can't get shafted by that credit union. I'm wondering if there's any other ones like that around
yes, ING Direct is like that too - you can check out their rates on their website.
We have not heard from Marko in a while so here is an update article on real estate construction in Victoria
Victoria came off a booming residential market in 2008 when construction had been running far above the norm, he said.
"It leads to a false sense of prosperity at that time, and now a false sense of loss."
For union carpenters who found plenty of work on high-rise condominiums in Victoria and Vancouver, work is now scarce, said Wayne Cox, executive secretary-treasurer of the B.C. Regional Council of Carpenters.
The Victoria area had 1,000 members a year ago. Now there are 860 and only half are working, Cox said. "I think the construction industry is going to be quite slow for a couple of years, but I hope I'm wrong."
I think rising interest rates and the HST will further exacerbate the industry's problems. Trades will find even less work once the home renovation tax credit expires at the end of this month.
BTW - What happened to Vic? He used to be a regular poster on this blog...
While prices for new homes and lots are at record levels from what I can see here in Victoria, confidence in the market is not there to warrant big money for new development.
A 9,800 sq/ft lot sold yesterday on Bear Mountain for $410,000. A small subdivision on the George increased their lot prices significantly after selling 3 of 6 lots quickly.
I sold the only home I am building in the framing stages last month for over a million.
There simply isn't any inventory of new lots or homes. Anything reasonably priced sells quickly.
Why am I not rushing to start a new project?
1) There is no inventory of lots, prices are among the higest I have ever seen. Development is also out of question, I have had the financing available to me cut by 60% and I have a very long track record of successful projects. If you are a young builder with only one successful project good look getting financing.
2) Trade prices aren't coming down. Framing of my current project cost me about $50/hr (very skilled crew). I had 10 estimates, that was the cheapest. I advertised on usedvictoria, craigslist, government websites, yet none of these "unemployed" carpenters came and offered estimates equivalent to $25 or $30/hour.
If I spend $400,000 on a lot, $550,000 on construction, and sell for 1 million, after comission I haven't made a penny.
I would much rather build homes in the sub $500,000 range but where can you find a lot for under$200,000?
HST is certainly not going to help anyone either. Overall, I think the lack of big development in Victria is going to hold prices.
Marko,
On a previous thread a large landlord had said they could buy apartment buildings for around $120K/unit for large buildings. What I'd like to know is if that cost is anywhere near construction cost?
For a 4-floor, 80-unit building of similar style/quality to the general victoria apartment building population, what do you think it would cost to build?
My specality is residental SFH with the occasional duplex. I cannot comment too much on a 80 unit building. Concrete is something that is down significantly (upwards of 30% from peak). I wouldn't be surprised if construction savings on high-rise concrete buildings were 15% to 20%.
Can't comment too much on 4 story wood structure.
For a standard 2500 sq/f SFH it is extremely difficult to go below the $100 per sq/ft mark.
Cost per sq/ft goes up a lot with bigger buildings.
The economic stimulus package in providing hundreds of billions of dollars in mortgage backed securities, along with the more recent emergency interest rates have been the primary driving force of this market.
I would not be surprised to find that home ownership in Victoria has reached 75 percent. Which is quite a massive increase from a decade ago when home ownership was around 55 percent.
Now, we are reaping the affects of a our past excesses. The market is saturated with homes of five years old or less. New home prices have started to fall which translates into future declines in re-sale home's prices.
The vacancy rate for purpose built apartment buildings has tripled from a half percent to 1.5 percent, as renters have become home owners. And I would expect the vacancy rate in basement suites to be higher at more than 2 percent. Demonstrating that the stimulus package has brought forward future demand. Rents have become wobbly with some 50 to 100 rentals listed each day on craigslist. Our unemployment rate has doubled from 3 to 7 percent and will continue to climb as people elect not to work rather than take a lower wage.
In summation, Greater Victoria has overbuilt and overbought. The quaint mom and pop stores are gone and replaced by the big box American companies selling sub standard goods. Our city has become the city that we thought we had left.
A little Joni Mitchell music would be good right about now.
Marco, Congrats on the sale of the latest build.
If you aren't ready to stat a new project what are you planning on occupying yourself with?
Also, am I understanding correctly that you only cleared about $50K on a $1M home?
If materials and labor are staying constant, and land values are going up, where do you see opportunity to increase your margins in the future?
JJ, Here you go
"If you aren't ready to stat a new project what are you planning on occupying yourself with?
Also, am I understanding correctly that you only cleared about $50K on a $1M home?
If materials and labor are staying constant, and land values are going up, where do you see opportunity to increase your margins in the future?"
- I will be doing construction management for custom homes. You buy the lot, you design the home, you pay the bills, I organize the trades, inspections, etc.
- It is impossible for me to say how much I "cleared." In total I am doing about $90,000 worth of labour myself (all rockwork, all tiling, landscaping, decking, etc.) I also don't know what my construction costs are going to be, could be $550,000 or $600,000. Impossible to budget accurately due to variable labour and material costs. So while I paid significantly less than $400,000 for the lot back in April what I will clear is hard to judge. If I sell for 1 million and my costs are $880,000 did I clear $120,000 or did I clear $30,000 (factoring in my labour).
- In my opinion there is very little opportunity to increase margins and HST will not help the cause. I cannot start a new project until lot prices correct. This will be the first time in a long time that I will not have a personal project on the go.
When lots are selling in the middle of January on Bear Mountain for $410,000 (Listed for $424,000 and on market for two months) you know what the situtaton is like. I can't pay $410,000 + $600,000 construction costs + $100,000 my labour and sell for 1 million. This isn't rocket science, the numbers don't add up!
so if the numbers don't add up who are the people buying the building lots so fast?
The same people who are buying the lots are the same people buying all those houses; the irrational ones. The frenzy is market wide; you "have to buy". No matter what the cost. People I know selling right now are putting inflated prices on (they know they are crazy prices), but they are seeing what they can get.
I had briefly looked at building to get away from the crazy home market and found the same.
The Times Colonist had the following article in the Business section today. Check out the comments.
Study puts Victoria on 'B' list
Housing, crime cited as factors in report on 50 Canadian cities
The city of Victoria might have made it to the top of the list among Canadian cities attractive to migrants, but pricey housing and what a report for the Conference Board of Canada considers crime problems pulled it down to a "B" ranking.
"If not for Victoria's serious housing affordability and relative crime problems, it may well have emerged at the top of Canada's attractive cities."
In the report, Victoria was ranked at No. 48 for its incidence of violent crime per 100,000 people, and at No. 49 for its incidence of drug-related crime.
Related news: In an Angus-Reed poll over 90% of the respondents thought Victoria was the best place in North America to work and retire. Over 85% thought house prices would continue to rise because everyone wants to live here. **
**Poll accurate to +/- 3%. Survey results based on a telephone poll of 1000 residents of Victoria.
-
"**Poll accurate to +/- 3%. Survey results based on a telephone poll of 1000 residents of Victoria."
What kind of poll is that? You ask people in Victoria what they think is the best place to live in NA?? How about you ask 1000 people in Vancouver or 1000 in Toronto, they will likely tell you similar things. They moved there for a reason after all.
The classic "How to lie with statistics" comes to mind.
"Not only do commuters have a short drive to work, but the city also ranks high on the proportion of people who cycle, walk or take public transit, a "win-win" outcome," the report said.
Some 1500 people start off for work on bicycles in Victoria, however only 1400 arrive.
kunwak said..
What kind of poll is that?
A false one used for illustrative purposes.
It demonstrates that 75% of Victorians own homes, and another 10% are waiting for mom/dad/god to give them enough for a downpayment and some way to make the mortgage payments...
Only way you get 85% thinking house prices will continue to rise.
The other 15% are firmly committed to sitting on the sidelines of the market until sanity once again prevails.
Sure our lending practices are questionable but we are not as bad as the US and that's why we are different.
Lets use that logic in other examples.
Sure I'm drunk officer, but I'm not as drunk as that guy.
or
Like, your sister's boyfriend has had sex with her more than I have.
Or how about one for the future.
Sure, I didn't pay my mortgage this month, but its not like I didn't pay the mortgage for the last year.
Its all about accountability and responsibility. It's ranges from the highest levels of government in not having parliament in session to the average Joe not declaring part time income.
So, God bless Amercia, because if it weren't for them - we would be the largest holder of sub prime mortgages in the world -rather than the second largest.
If 75 percent of Victorians own the home they live in, that all so means that 25 percent of Victorians rent the home they live in.
Obviously then, we can not have 100 percent of Canadians owning the home they are living in. And I would say that 100 percent home ownership is an impossiblity.
Because, that would mean that there is no pool of future home owners. It would also mean the end of the rental market.
But how high is too high for home ownership? 60, 70, 80 percent or more? In my opinion, we have reached that point when the vacancy rate escalates and rents start dropping. And that's where we are, right now.
The government stimulus has brought forward future demand at the cost of the landlord. Every purchase by a first time buyer is now a vacancy for a landlord. A vacancy, that on average, takes longer to fill and may require some downward price adjustment in the rental rate.
Continuation of the current low interest stimulus will only worsen the situation for home owners with suites, putting some of them into mortgage default.
In contrast
A change in CMHC regulations will dramatically drop the number of sales by the first time home owner and by extension the "move up" market. Thereby increasing listings and the time to sell a property. Eventually leading to lower prices.
Its a lose/lose situation.
If we could magically wipe away the last five years of insanity, where people were not encouraged to extend themselves into levels of debt equivalent to nearly a third of their future life time income stream, we would be looking at a more secure future for the 9 million Canadian boomers that are now starting to retire and their children.
But we can't turn back time we can only...
cull the herd.
the word "not" should not be in the statement
"where people were not encouraged to extend themselves"
not because it does not make sense its just that its not correct and does not follow the logic. Not to say that not would not be appropriate if not were what I meant to say. But that would not be correct.
I'd like to point out that we don't *know* if 75% of Victorians own their own homes. I believe the number is still under 50% in Victoria proper, and is probably not close to 75% CRD-wide. Obviously, we're at a point where home ownership levels have never been higher, because it's never been easier nor more encouraged to take the plunge (pun intended).
Where's that number coming from? Is it the Canada-wide number being transposed into the local market?
what are the listing/sales stats looking like so far for Jan? Double-Agent have you got any numbers?
http://www.canadapersonalfinancewebsite.com/
Try the above link for percentage of home ownership.
So reality has set in and we are now looking at higher quality rentals for at least the next year. Did a little comparison, a $600k mortgage at todays to 2% to what I think will be around in 2 years; 6%. The mortgage payment goes from $2050 to $3400, based on a 35 year. We wouldn't use a 35 year, but I am guessing many are.
That thing about leaving wiggle room to go into a 35 year is BS as it is only about $400 difference. If you have a 60% increase in housing costs, $400 a month isn't going to matter.
I an guarantee that 75% of Victoria's do not own their own homes. That is because at least half the houses have big fat mortgages and IMO you do not own your own house until it is paid for.
On average each month 40,000 new homes are being purchased across Canada while this stimulous is in place. The vast majority of these buyers are heavily mortgaging their purchases. Each month that this goverment allows this "false" housing market to continue we see more previously mortgage free homes and rental properties get bought up by heavily debted new homeowners.
If interest rates stay low for all of 2010 which is a good possiblity, we will have seen some one million real estate purchases under this "false" market. I think there are only 13.8 million homes in the country. That is clearly enough to topple the real estate market once interest rates rise and this ignores all the people who bought at the previous peak in late 2007 and early 2008.
I have met so many people who were move up buyers in 2010 it is almost sickening. They all share three things in common; 1) they all made a bunch of money on their first property, 2) they are borrowing excessive amounts of money now at these low interest rates to fund their home ownership dreams and 3) they are convinced that real estate in Victoria can only go up.
IMO, it is not just the first time buyers that will get killed when nterest rates rise.
Statistics Canada has an extensive report on housing trends (pdf) based on the 2006 Census.
The following is an edited version of a table in the report. In 2006 65% of households were owners and 35% renters. Note that 44.3% of homes were mortgage free in the Capital Region District. I suspect that the % of owners is higher now and % mortgage free is lower.
Owner/Renter Breakdown
Owners with a mortgage
Thanks Guys for clarifying the number. I was just trying to be balanced, not being accusatory that someone simply pulled it out of thin air. Often times we bears get accused of making stats up by the other side, so I figured I'd save them the trouble ;-)....
omc - someone bought that piece of crap on deal street!!!!!! wow!
"1) There is no inventory of lots, prices are among the higest I have ever seen. Development is also out of question, I have had the financing available to me cut by 60% and I have a very long track record of successful projects. If you are a young builder with only one successful project good look getting financing."
The perfect set up for a real estate crash identical to January 1981. Low inventory,record prices, and financing difficulties by those with good records. Look out below.
PS Only a $50,000 profit after laying out a million dollars and praying for some deep pockets to come around ? Something called "risk/reward" seems totally out of whack here.
think,
isn't that amazing! $760k for what is basically a tear down. The location isn't even that great. Our realtor was using that houose as a bit of a lesson to us He told us to watch it to get a true idea of how the market is. I guess renting is the only thing to do in this market.
Interesting comments from Winnipeg...
Tiptoe, through the bubble
EVERY bubble bursts. When they are soap bubbles, they are harmless bursts. When they are economic bubbles, they are calamities, and they have been for centuries.
We don't have a subprime problem here, so we won't have a real-estate bubble, we are told.
But I also hear opinions of people in the property racket who aren't so sure. And their concern is not so much that Winnipeg house prices have climbed 78 per cent in the past four years, as the new reassessment reveals. Or that there are stories about house hunters sleeping in the streets of Vancouver in hopes of snapping up a $1-million house that we would pay no more than $350,000 for. No, their concern is that low interest rates and long-term amortization periods are making it easy to get into the market -- maybe too easy. But more concerning is that all this demand is being insured by the Canadian Mortgage and Housing Corp.
But my sources wonder if CMHC, which insured 920,000 housing units in 2008, 350,000 more than it intended, according to the Globe and Mail, was in a position to ramp up its due diligence as fast as it ramped up its underwriting. It's a good question because, if there is a bubble, Canadian taxpayers will be on the hook for all the paper.
I'm not trying to be alarmist here. I simply think it prudent that we start hearing more than "trust me" from the folks in charge of the tulip patch.
Bubble Talk is back in the mainstream news again...
CBC - Record house sales revive bubble fears
The heated debate about whether the Canadian housing market is in the midst of a bubble is likely to continue into this year, thanks to December sales that set a new record for the month.
The stakes are high as the Canadian housing industry battles the government, which has not ruled out tougher requirements for homebuyers to cool the market.
“We think that dismissing housing risks is being a tad Pollyannaish, but it’s all the rage in Ottawa circles these days,” said Derek Holt, an economist with the Bank of Nova Scotia. “The industry is full of talk of an unsustainable non-bubble, whatever that is, and driving a message that borrowers are all acting out of utter forward-looking brilliance.
“A key debate is whether housing will experience a soft-landing toward lower volumes and prices, which is possible, or experience a more sudden decline in activity in the back half of the year and into 2011, which we think is likely.”
Mr. Holt is suggesting that as short-term interest rates go up as much 200 basis points by the middle of next year and supply finally builds up in the Canadian marketplace, prices will drop by as much as 10%.
Canada home resales roar, bubble talk flourishes
"The raft of data will do nothing to quell talk of a bubble, talk that the Bank of Canada and the Canadian Real Estate Association have studiously downplayed," said Doug Porter, deputy chief economist at BMO Capital Markets.
"And, before we officially jump on the bubble bandwagon, we would again point out that the reported price change is skewed by the surge in Vancouver and Toronto sales."
But Scotia Capital economists Derek Holt and Karen Cordes said "dismissing housing risks is being a tad Pollyannaish."
Flaherty must have the mortgage brokers nervous. They are coming out with outrageous statements like this one.
Canadian Association of Mortgage Professionals chief economist Will Dunning - “Virtually every Canadian who is in a position to buy a home and qualify for a mortgage is well-educated and capable of assessing what is in their best interests, of looking forward, and of anticipating threats to their financial well-being.”
"The bottom line from the simulations is that even though mortgage payments will probably rise for most borrowers, the increase in their incomes will more than offset the higher payments," said CAAMP chief economist Will Dunning. “All in all, the degree of risk from rising mortgage rates appears to be small and manageable,” he writes
Here is more nonsense from his boss, Jim Murphy, president and CEO of CAAMP.
"The vast majority of Canadian mortgage borrowers are not taking on undue risks. They have factored rising interest rates in to their mortgage decisions,"
You can read more about the CAAMP report and see some stats on the mortgage market by clicking here. Take a look at the comments section to see what others think of this report.
Once again Times Colonist chooses to put a cautionary real estate article on page B7 of the Business section (by the car ads). Pumper articles always go on the first page. Shame on them.
Page Scan
Here is the article...
Hot housing sales spark bubble debate
.
Funny, I was just yesterday talking to a lawyer who does alot of real estate. He was saying the opposite of the brokers, he figured almost none could afford even a modest rate increase.
Double-Agent -
CAMP is an industry lobby group with a very strong self interest in maintaining the volume of mortgages.
They bring forward three arguments:
1 - Canadians are well educated and capable of making their own decisions. False (and condescending) - Americans were also well educated. The issue is that most everyone follows the herd, no matter their level of education
2 - Increase in income will offset increased payments. O.k. if rates go up to 6% in three years, increasing payments 60% (see OMC's posts) and government salary increases are likely to be 0%, I call B.S.
3 - people have factored in rises in interest rates in their decisions. B.S. again. Why all the talk about 'affordability' and a focus only on the current payments, not the debt load or risk.
There should be a law that puts lobbyists and their constituent boards in jail for false and misleading information placed in the public media to swing opinion for their self interest.
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