Friday, March 11, 2011

Lies, damned lies and statistics

VancouverCondo.info linked to this disturbing article on the CBC's website today. It's a story about a survey that says Canadians are prepared to weather a housing price collapse -- conveniently they don't define what a housing price collapse looks like, and by they, I mean the RBC which conducted the study to support their business. It's actually quite blatant what they're trying to accomplish when you read the actual press release. Here's the synopsis:
  • The vast majority of Canadians (90%) believe in home ownership, you should too
  • The vast majority of Canadians (85%) have no trouble paying their mortgages despite record unaffordability and rising interest rates -- so don't worry about it and get yourself in over your head today too
  • The major reason why most Canadians are motivated to buy soon is rising home valuations (26%) and rising interest rates (22%) -- they want to buy now before they're priced out forever, very smart folks these, use our handy online calculator
  • BCers are most likely to want to buy new rather than used, most likely to buy before they're priced out forever and more prone to group think "buy now, buy now, use RBC, use RBC, buy now, buy now"
So yeah, the RBC release was a bit much in my opinion. But fair enough, we've come to expect this from business, so our spidey senses tingle and we read it for what it is. Note to RBC: in the future, if you want to have your press release turned into a news story without the inconvenience of edits for balance, send a box of chocolates and a bouquet of flowers to the fine folks over at the Times Colonist. They're well trained in the finer aspects of RIGHT CLICK>CUT and RIGHT CLICK>PASTE.

The CBC, well in this case, they did try to inject some balance into the story by using RBC's inconvenient survey contradictions against them. While RBC is currently saying Canadians are having no problems buying and paying for their houses, they didn't ask how the effects of doing so are impacting other important financial activities: like actually saving real money. Thankfully for us, back in October, RBC did ask Canadians that question and thankfully someone at the CBC (likely an industrious intern; they always go above and beyond) Googled for some balance (was that so hard?). Here's what they found:
  • 58% of Canadians can't save what they think they ought to
  • 38% of Canadians can't save at all
But the intern(?) didn't stop there. Industrious little folks, not content to wait for the established players to retire off and open a career path for them; nope, I tell you, these new-fangled millennial careerists are go-getter's who are going to manage the news desks sooner than the previous generations did; picked up the phone (not likely), or e-mailed (they're tech savvy), CAAMP to get a second opinion! And what did CAAMP tell them?
  • "Housing market crash? You're making a big deal out of nothing, there's nothing to see here, we're not like Americans and we didn't load up on mortgage debt over the past decade"
  • Only 2000 Canadian households would face foreclosure if interest rates rise
  • The Canadian mortgage market expanded by 10% this past decade
There's an old saying: there's lies, damned lies and statistics. In this piece, I've pointed out the lies and those last couple of bullet points are most definitely a damned lie (or it could be a misquote). Here's the statistics:

Does that look like 10% over the past 10 years to you? It's actually more than double. Maybe CAAMP meant 10% per year over the past 10 years?

What about last year when CAAMP told us that 16% of Canadians couldn't weather a $300 increase in mortgage payments and that 11% of Canadians couldn't weather a 1.5% rise in interest rates (source)? That surely will impact households significantly and a great many more than 2000 homes could (will) be forced into foreclosure.

21 comments:

happy renter said...

The Vancouver Sun article that I linked to yesterday in the previous post took the same RBC press release and copied it almost verbatim. What's really disturbing is that most people think that newspapers are extremely neutral and only report stories after researching them very carefully to ensure that they are accurate and unbiased. Sigh.

Canadians Remain Confident in Housing Market

DavidL said...

Note to copy editors:
No need to use your mouse when editing ... just open the source article, use CTRL-A to select all, CRTL-C to copy, then CRTL-V to paste. Time for a coffee break!

Just Jack said...

Is it a property ladder or a step stool?

So what happens when your looking at a court ordered sale and you can't put any subject clauses on the purchase agreement. Well, if you're buying in a weak demand area, like Sooke, this can happen.

A recent sale on Phillips at $260,000. The property had originally been bought in April 2007 for $307,500. So that's a drop of 15 percent and 4 years of bank payments gone bye bye.

But as the agent said "this is a great opportunity to get into the real estate market".

Probably what the previous owners were told four years ago when everyone wanted to live in Sooke.

But, that can't happen in the inner districts - unless you bought a condo on Alder Street four years ago for $282K and sold it this week for $284K.

It seems I can pick one or two examples out, almost every day now. Which I couldn't do anytime during the previous 10 years.

Things are getting serious out there. If you're a detached home owner in the urban municipalities consider yourself lucky - for now.

Because today, both the Westshore and Victoria Core municipalities have almost the identical amount of house listings at around 500 each. But the Core neighborhoods have more than double the sales 162 to 70, than the Westshore.

A difference of 92 sales a month is not a big cushion that separates the haves from the have nots.

Just Wondering said...

Anyone know what's up with the 2367Zela flip? Recently sold at $535,000 and now listed at $599,000(this was the fire damaged property for sale as land value only).

Marko said...

"Anyone know what's up with the 2367Zela flip?"

Looks weird in my system - have no idea as to what is going on.

401 - 1007 Johnson (362 sq/ft) just went for $225,000 - must be a nice 362 sq/ft unit!

omc said...

that Zela house still has the same ad as before, just a higher price. Strange

Marko said...

New Realtor from new brokerage just used previous descripton. With a new listing you can have the info pre-filled by the previous listing on that home. Obviously, price and listing date a few other things being different.

Watching and waiting said...

OAK BAY NEWS
Zela house to go back on market
By Vivian Moreau - Oak Bay News

Published: February 23, 2011 3:00 PM
Updated: February 23, 2011 3:47 PM
A Zela Street house auctioned off in Oak Bay’s first tax sale in a quarter century is going up for sale.

Lawyer Patrick Delsey, representing a Vancouver-based mortgage firm, successfully argued in B.C. Supreme Court in Victoria on Wednesday for permission to repossess the house and put it on the market.

Lawyer Michael Soronow, representing Joyce Livia (Zoi) Hahn, the owner of 2367 Zela St., opposed the claim, saying a pending offer of $535,000 had been received.

Delsey argued that “the last-minute offer was simply not good enough,” a point agreed with by court master Carolyn Bouck, who ruled in favour of his client, Paradigm Quest Inc.

Delsey noted that $784,854.30 is owed on the house and no payments have been made on the mortgage since May 2009. The house was appraised at $535,000 last year.

The house was sold to Saanich resident Rob Dosanjh in a property tax sale last fall for $200,000.

Property taxes had not been paid to Oak Bay municipality in three years.

Oak Bay treasurer Patricia Walker said the mortgage company must cover all related penalty and interest charges, plus the interest on Dosanjh’s investment, before it can have clear title on the property and offer it for sale.

Delsey said afterward the house will be put on the market shortly. No selling price had been set.

vmoreau@oakbaynews.com

Marko said...

That is really strange.

Phil and Zoi Hahn are in the top 1% of all Realtors in Victoria.

Watching and waiting said...

Marko - sounds like they have used their home as an ATM to finance their lifestyle/business. Ethical?

jesse said...

@Watching and waiting, that story is a great cursory look at how messy foreclosures can be for banks. For anyone who thinks that low LTV loans are "free" for banks to throw to anyone with a pulse, think again. It can be a logistical and legal quagmire and the total costs are difficult for the bank to fully account.

Leo S said...

401 - 1007 Johnson (362 sq/ft) just went for $225,000 - must be a nice 362 sq/ft unit!

Someone went to IKEA and got a little carried away..

As for that house... How can you end up owing 700k on 500k worth of house? Who would lend you the money when you have negative equity?

Bob said...
This comment has been removed by the author.
Sudden Valley said...

Anyone have info on this Pemberton Holmes Listing? Court ordered sale?

http://pembertonholmes.com/officelistings.html/photos-15525012

DavidL said...

"GREAT BUY SELLING BELOW COST - BRAND NEW HOUSE!"

From the photos on my PCS, it looks like for MLS® 287439 (683 JOLLY PL) that the builder has run out of money. Why no interior pics and the patio and driveway appear unfinished? Perhaps this is why the property was listed at $670K on January 18th, then dropped to $600K on January 31st.

A sign of the times?

patriotz said...

"Delsey noted that $784,854.30 is owed on the house and no payments have been made on the mortgage since May 2009."

Obviously whoever holds the mortgage has dropped the ball, big time. Note that the mortgage holder is not named although this information is public domain. Real bulldog reporting here.

I have a feeling that the mortgage lender is not a bank - they would not screw up on something so simple - rather that there is something rotten on the mortgage side. Fraud, non-arms length, what have you.

Just Jack said...

The bills rack up quick when the mortgage is new, since the monthly payments are mostly interest. The problem with big numbers they leave big debts. No deal cutting with the banks this time - its off to bankruptcy.


How can this market not end as badly as the USA.

Should real estate agents be held up to the same level as other professionals - like accountants?
If so, then any realtor that went bankrupt could loose their license.

Waiting said...

I'm eagerly awaiting the Monday morning update. I didn't used to look forward to Mondays so much!

Marko said...

Monday, March 14, 2011 8:00am:

MTD March
2011 2010
Net Unconditional Sales: 266 789
New Listings: 647 1,719
Active Listings: 3,765 3,712

Please Note

•Left Column: stats so far this month
•Right Column: stats for the entire month from last year

a simple man said...

So, this March may be slower than last March for sales and we have reason to suspect the latter third of the month may be slower than the first two-thirds.

April may be interesting.

Waiting said...

We are into Spring Break this for the Victoria district this week and next week for Sooke/Saanich so things may be slower. Here's hoping.