Monday, April 23, 2012

April 23rd Monday market update

MLS numbers courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.

April 2012 month to date (previous weeks in brackets)
Net Unconditional Sales: 417 [265] (145)
New Listings: 1050 [698] (377)
Active Listings: 4307 [4230] (4116)
Sales to new listings ratio: 40% [38%] (38%)

April 2011
Net Unconditional Sales: 574
New Listings: 1577
Active Listings: 4561
Sales to new listings ratio: 36%
Sales to active listings ratio: 12.5% or 7.9 MOI

Unit sales per day took a bit of a jump this past week to bring the monthly average up to almost 19 per day. They were running at just over 17 per day in the previous week. Is this significant? Not really. Sales numbers continue to lag the long term average despite getting into the so-called silly season of buying activity in Victoria.

UPDATE: Ben Rabidoux of The Economic Anlayst blog has a piece published on the MacLeans magazine website today. It's a must read. Ben examines changes coming to Canada's mortgage market that will have the potential to seriously reverse the availability of credit in Canada.

But don't worry Victoria. Nobody pays anything other than cash for properties here. 


Marko said...

SFH Average = 623k
SFH Median = 565k

Condo Average = 345k

Unknown said...

Other than the "dated" interior, does anybody know anything about 4360 Interurban Rd? It's been on MLS for quite a while now.

Just Jack said...

Did I read the article correctly in that the Canadian taxpayer backs CMHC up to 600 billion and Genworth up to 250 billion.

That's 850 billion dollars of insurance!

How do you own a $200,000 home in Victoria?

-Buy a million dollar home and wait.

Just Jack said...

It does seem that CMHC is the hot potato in the game. Flaherty sure doesn't want to be holding onto CMHC if it implodes. Best to pass it on to OSFI, then spin the collapse.

After all, hasn't Flaherty been warning Canadians about a bubble in real estate prices for years now? At least that's what I read in a MSM article a few weeks back.

If the Conservatives want any chance of forming one more government, they're going to have to distance themselves from CMHC and its potential fall out.

HouseHuntVictoria said...

While I was alive at the time, I was focused on Gretzky rather than Trudeau. Did Trudeau take a hit for bailing out the CMHC in the early 80s? Mulroney was 1984+, pretty sure CMHC needed taxpayer cash in 1982 or 1983.

patriotz said...

"After all, hasn't Flaherty been warning Canadians about a bubble in real estate prices for years now?"

Don't know if a smiley was implied, but of course Flaherty has been denying a bubble for years.

October 05, 2011
No Bubble, Says Flaherty

The government would need to see “clear evidence of a bubble in the housing market” to impose tighter mortgage rules.

“We have not seen (that),” Finance Minister Jim Flaherty told reporters Wednesday.

Jim's definition of "clear evidence" of course does not include the highest price/income and price/rent in this half of the planet.


Just Jack said...

I was a little older and focused on Margaret.

axeman said...

victoria is hot once again, 5 listing I tried to see, all sold in 2-3 days. One never made it past PLS and 2 over asking offers the same day.

omc said...

Bit of a red tide in the old PCS today. I still wouldn't get panicked though.

Marko said...

3541 Doncaster sold within hours...I showed up the first day in the afternoon with my clients and already had an accepted offer. Needs a lot of work but someone paid full asking.

Marko said...

We should be over 600 sales for the month. Not great but better than last year.

House Meat said...

Got a friend in the real estate sign business and he is being run off his feet with sign removals and installs. His take is that real estate in Victoria is heating up!

girlseekshouse said...

Maybe people are buying because interest rates are so low?
Interesting article on the CBC this weekend.
Mark Carney article

omc said...

How many times have we heard Carney say pretty much the same thing. Given that Toronto is sizzling, I would say it is Flaherty's turn next.

a simple man said...

OMC - I could not agree more about Carney. He keeps repeating that things are bad on the housing front and that we are over-borrowing for consumer purchases, yet does nothing about it.

The chatter on some other of the larger housing blogs suggest that Victoria/Kelowna will be ground zero for the correction. How long we will have to wait for that is anyone's guess.

happy renter said...

^ Kelowna is already in correction mode and has been for a while.

dasmo said...

I just see this market at "slightly overvalued" but not a bubble since their is some actual intrinsic value to the assets being valued. It may over-correct and become slightly undervalued, although I doubt it (remember I'm neither a bear nor a bull but a Halibut). To me the latest bubble that's forming is social media startup valuations. like "Pair"; An idea and an afternoon of coding plus two months to percolate it's valued at 10 million. Now that is a membrane full of hot air...

a simple man said...

But, dasmo, these tech startups are cashing out to run with their profits before the gas bag blows. You can still do so in Victoria RE, but not for too much longer.

Since you bought you are a halibut with horns.

patriotz said...

"I just see this market at "slightly overvalued" but not a bubble since their is some actual intrinsic value to the assets being valued

Let me get this straight. You think that an asset can be in a bubble only if it has no intrinsic value, i.e. it has no earnings like a pet rock or Beanie Baby? So there can never be a stock market or RE bubble anywhere at any price?

I'ts hard to carry out a dialogue when the parties are not speaking the same language.

dasmo said...

I didn't buy to make money, I buy stocks and start businesses for that. I got "lucky" and boaught my first place in 2003 and watched to market sky rocket. I don't expect that again. I don't see how it can. From this point I see a correction that we are already in and then a normal growth curve for a while. I would not argue at all that it's a good time to rent. I can't promote that it's a good time to buy but it is a buyers market so you can negotiate and take your time. Rates are also so low there is some benefit their. But if you are renting and saving you are fine.
I enjoy owning my home and look forward to building one. So my hope is that the market will provide me a better environment to build...

PD said...

Interesting to see the bulls getting anxious ^^^

My take is you don't have to look further than the lower mainland to see what's coming. They are setting inventory records much higher than 2008, soon to hit 20,000. Many areas on the outskirts already have higher MOI than Vancouver Island, 10+.

Some believe Vancouverites will sell and buy places like Victoria. The few that are smart enough to get out near the top, will only buy into bottoming markets like the States. Much of W Canada will end up with bubble gum on their face.

Just Jack said...

How much of a property's value is attributable to financing and how much to the utility it brings to an owner?

One way to look at this would be comparing strata titled condominiums that are easily financed to co-operative or leasehold condominiums that have difficulty getting financing or can not be financed at all.

Along Beach Drive in Oak Bay there are several Co-operative condominiums. A Co-Op is when you own shares in the entire building rather than an individual unit, like a strata. Because of you do not own a specific space or specific title, banks can not place a mortgage on the property.

The last few units in one of these co-op buildings have sold at around $300 per square foot.

Compared that with a similar strata title units that sell near $400 per square foot and you can see that ease of financing plays a substantial roll in the value of any real estate.

Oak Bay condominiums are usually reserved for the rich retirees who may be more able to pay cash, so the affect of financing
is probably at its lowest for these types of condominiums. In contrast first time home buyers are typically more in need of financing.

So no less than 25% of the value of a home is in the ability to finance the purchase.

Or putting it another way, if high ratio financing disappeared or was severely restricted tomorrow - what would happen to prices?

dasmo said...

didn't say that patriotz. Vancouver looks like a bubble to me when a 40's bulldozer shack sells for 3 million because it's close to the Canada line. That's speculation "air" that surrounds the intrinsic value as it rattles around inside the bubble... I don't see that so much in Victoria.

a simple man said...

dasmo - I can respect your position and you hope for a better building environment in the future, as I suspect that too will occur (I know you disagree, Marko).

You have purchased your place with a 10% buffer built in, which was wise, paired with the historically low rates. These two factors will help you weather some of the storm for certain - and if you did not have to borrow a lot, I am sure you will make out just fine and be a happy home owner.

Vancouver prices are insane. When I am over there all I can think about is getting out of there. The city has outgrown itself.

What is in store for vancouver, victoria, kelowna, etc?

Only Carney knows.

a simple man said...

and we all know from our mother's teachings in our teenage years - never trust a carney.

PD said...

Whoops, did I say the States were bottoming? Looks like the today's Case-Shiller shows they are still hitting fresh lows.

Shiller himself is quoted today as saying, no housing rebound for a generation or more.

Mrs. W. said...

Just Janice here -
I see stagnation as being the most likely outcome - a correction in real terms but prices that hold or only correct mildly over the next decade. I don't think CMHC is going to go bust on us even if they put the breaks on insuring mortgages. Frankly, there isn't much more left to insure out there. 70 percent of folks own houses, that means only 30 percent don't - so the pool of buyers is now very shallow.

I would agree that right now, buy a house because you need a home and don't want to or don't need to move for a very long time. Don't buy a house as your road to wealth, as it isn't going to get you there. And don't buy a house unless you can afford an increase in interest rates at some point in the future.

There is a certain kind of 'value' that goes with ownership. After all, you don't hack off part of the counter top and install a new gas range in a place you rent. Nor would you ever undertake to have the place painted...or other minor renovations to suit your tastes. You can do that when you own.

Real estate as an investment, no way. Real estate as a home - maybe, under the right circumstances.

dasmo said...

You can make money in the US with RE most likely "when there's blood on the streets, buy property".

a simple man said...

in other news, that flip on Sandowne (2190) has finally hit the market with a $240K increase from the pre-flip price about a year ago. I will be watching this one closely.

Just Jack said...

You don't have to wait for blood in the streets to make money on real estate.

House flippers have made a lot of money in the past because they realized that people wanted homes that have been remodeled and updated. Most likely because the prospective buyers didn't have an extra hundred thousand in cash laying about to remodel a home after they bought it. The flippers moved in and filled that gap. Good for them.

Those gaps happen in every market. You just have to find them and exploit them. Anyone can make money on a rising market, but only the knowledgeable ones can make money in a declining market.

One of the better opportunities coming up would be foreclosures. Probably not in Fernwood or Oaklands, because there are too many people looking in those areas. But maybe one in View Royal or Saanich West say on a large lot. Where the home can be moved over and a lot severed. When you find one of these in foreclosure, your likely to make a tidy profit.

omc said...

My impression of those who buy flipped homes, and I actually know quite a few, is that they have money but no experience or interest in renovating. Another main group is the out of town retiree buying the polished turd in oak bay. judging from the cars most of them drive I think it is safe to assume that they aren't short of money either.

Just Jack said...

What does 17 months of inventory do to prices?

Sooke has some 240 homes for sale and in the last month only 14 have sold. One of those sales was on Golledge, that after being renovated took 240 days to sell for $417,500 which was $20,000 more than what it previously sold for seven years ago in July 2005.

If 17 months of inventory was to happen in the urban core, that would push the median price down by almost 25% from $583,000 to $442,000 which would be a savings of some $600 a month on the cost of a monthly mortgage payment.

So why can't that happen here?

Mindset said...

we all know from our mother's teachings in our teenage years - never trust a carney

Love it. Hilarious.

Fiduciary said...

Just got an email from Teranet, their index, for the month of February, shows Victoria down 1.1% month-over-month and down 1.7% year-over-year.

Marko said...

^The principal on my mortgage decreases approximately 1% every 4 months so 1.7% year-over-year is not really significant.

patriotz said...

A given drop in market value represents the same loss regardless of how much of the mortgage you've paid off.

May not be significant until you sell, but Victoria is now down over 5% from the peak in 2010, which would surely be significant to someone who bought then and is selling now.

Marko said...

The market can't be at the peak every single point in time.

happy renter said...

The Teranet data for major metropolitan areas (notice that Victoria is the only major city in the country that's down year-over-year):

Metropolitan area / % change m/m / % change y/y

Calgary / -0.6 % / +1.3 %

Edmonton / -1.0 % / +1.1 %

Halifax / +0.4 % / +2.3 %

Hamilton / -0.8 % / +7.5 %

Montreal / +0.2 % / +4.4 %

Ottawa / -0.4 % / +4.6 %

Quebec / +1.6 % / +5.6 %

Toronto / 0.1 % / +10.0 %

Vancouver / -0.3 % / +6.2 %

Victoria / -1.1 % / -1.7 %

Winnipeg / +0.2 % / +8.2 %

National Composite / -0.2 % / +6.1 %

a simple man said...

As I said earlier, there seems to be a lot of discussion that Victoria may be one of the first major city to show a major fall.

Leo S said...

^The principal on my mortgage decreases approximately 1% every 4 months so 1.7% year-over-year is not really significant.

That's the oddest argument I've ever heard. Comparing those two things just doesn't make any sense.

PD said...

My bet is the teranet index will be nearing 100 by December next year. We are now at the lowest point since 2009 so the decline should pick up speed now. From 2006-07 the index rose 25% so a mirrored decline is quite likely now that 06-07 factors are all reversing. Note that I amm only referring to teranet true prices, averages and medians are far too skewed at this point with first-timers being squeezed out.

dasmo said...

This makes sense to me. When I was doing research earlier this year I noted that in the neighbourhoods I was looking at it seemed like 60% were selling under the e-value BC value. As I have stated before, I think we are already in a "10% correction". My surprise will come if we go past that.

patriotz said...

Do you mean 10% off peak or 10% off February (i.e. the latest numbers from Teranet). Because the latter is already more than half way to 10% off peak.

Unless things turn around pronto we're looking at 10% off peak before the end of this year.

happy renter said...

"Unless things turn around pronto we're looking at 10% off peak before the end of this year."

Can't really see how things can turn around. It's possible, but I'd say it's highly unlikely. Especially in Victoria given the latest Teranet data.

LWilliams said...

So out of 12 cities 11 have increased year over year. Yet this proves Victoria is the epicenter of the housing collapse as it is the only one down? Am I missing something here?

WorldtravellerPlus said...

"The principal on my mortgage decreases approximately 1% every 4 months so 1.7% year-over-year is not really significant"

Haha, spoken like a true realtor Marko!

Mindset said...

1.1% month-over-month drop

I agree with Marko, 1.7% year over year isn't anything to get too worried about. Thats more of the slow fade that seems to be a popular prediction.

But 1.1% per month? Thats a different story if it maintained for even only one year.

Calculated as a monthly compounded decrease, -1.1% month over month = -14% year over year.

And even if you are paying your place down like Marko at 1.7% per quarter (which is what, a 10 year mortgage with 25% down?) you would still be down 7.1% after the first year alone, and would spend the entire second year playing catch up.

Marko said...

PD said...

That video was interesting to see Toni Joe having to resort to the "feel" and "heart" cards. Maybe it's just me but I sense some desperation. The part that made me LMAO was the Christmas dinner. I don't know about the rest of you, but I enjoy being able to host turkey dinners as I'm paying less than half what the owners are. There's no way I could afford to as an owner. Sometimes brains should trump the heart.

patriotz said...

"Am I missing something here?"

Calgary and Edmonton are over 10% below their 2007 peaks and have gone nowhere for 3 years.

Also Kelowna is too small to be covered by Teranet so they are not covering the bust there.

Mindset said...

Am I missing something here? Re Calgary/Kelowna

The yoy (year over year) story is a bit misleading. It's like all of the statistics that show marginal improvement in the US markets (RE, labour, etc.).

Longer term trends, and ideally something like a case-schiller index here would be excellent at cutting through the 'fox news' style partial stories that we are so often exposed to.

Even though the average/median statistics do not reflect it. My observations and those of others watching the Victoria market is that it is already about 10% here off the peak as well, not 1.7% or flat.

happy renter said...

Re: the youtube video:

"people sometimes get caught up in their thinking in their minds and rationalizing about whether a property should be bought or not bought"

You would hope so.

Marko said...

205 - 3230 Selleck Way (Aquattro Development)

Originally purchased for $960,900+GST.

Sold yesterday for $450,000


Marko said...

2,027 sq.ft 3 bed, 3 bath condo.

Anton said...

Re: the Tony Joe video:
Salespeople are the same everywhere. Its the age old "stop thinking about if you can afford it or future resale value, just think of how good you will look and feel owning this car/truck/boat/house etc." I think it is used so much because it works.

Watching and waiting said...

There has to be a story behind the sale on Selleck; debt? divorce? death? Or perhaps an impending remediation levy and the owner is cutting his losses?

dasmo said...

Places located in unfinished dreams will be a tough sell right now. You could be looking as living in an unfinished construction zone for ten years. $960,900+GST was overpaying, my god that's over $500 a sq foot in an unfinished development in colwood !

Just Jack said...

We took a drive out to look at these condominiums in Colwood and that seems like a great price for 2,000 square feet. I am just a little uncomfortable with the Geothermal heating system. Not the technology but the anticipated cost of the system is usually based on a full build out of the complex. Like in Westhills the developer is subsidizing the cost of the system for the first couple of years until the developer has enough homes built to make the system economical.

But if the developer goes bankrupt then that subsidy would be gone and I would suspect your monthly strata fees to go sky high. How high? Who knows? Because the developer is not being candid about the costs.

I think GeoThermal is great, but I'm not willing to be a Guinea Pig for a developer. Sky high monthly strata fees will have a big impact on value. If your paying $500 more a month than another similar non geothermal suite - thats equates to over a hundred thousand dollars in financing.

I would like to buy a Geothermal suite - but not until the complex is several years older with a proven track record.

nan said...

Marko - you're throwing your money away on equity!!!

DavidL said...

Flaherty moves to tighten CMHC supervision
... the changes outlined Thursday will give the Office of the Superintendent of Financial Institutions — the top financial regulator in Canada — and the Department of Finance ultimate authority over CMHC's actions.

Just Jack said...

Hot potato, hot potato who has the hot potato.

looks like its ISFO

Just Jack said...

ISFO will want to curtail home equity lines of credit (HELOC). Margin calls on mortgages and reducing the global limit on your HELOC are good ways to accomplish this.

Anyway you look at it, the bean counters are taking charge.

Just Jack said...

I suppose it isn't surprising that the experts are now saying that the Vancouver market is unaffordable and it has been for the last three years.

Eh wait, I don't remember any of those experts saying anything like that, last year, the year before or three years ago.

Now prices are unaffordable?

And let's not forget that Jim Flaherty has been warning us about CMHC too.

What? When?

Now, every expert wants to get on the record of having warned us about housing prices.

If you bought a house or a condo, in the last three years, and had to use high ratio financing - you should be wearing a T-shirt with "Road Kill" written on it.

HGTV will have a new reality show. Each week a property virgin is to be thrown into the CMHC volcano until the market recovers.

Mindset said...

Interesting article DavidL, especially this bit about blocking CMHC protection from creating security for other financial assets.

The main change proposed by Flaherty is one that prohibits banks from using mortgages insured by CMHC as collateral in their covered bond programs.

Investors were keen on these types of covered bonds because the underlying assets carried an explicit government backstop and banks were able to issue the bonds at lower rates.

But the rule change could cool the market because the risk that the underlying assets default must now be carried by the banks rather than the taxpayers-backed CMHC

patriotz said...

That last sentence makes no sense. The mortgages held by the banks continue to be insured by CMHC.

DavidL said...

The CBC article has been updated since I first posted a link to it. Here's some more about the mortgage-backed securities:

TD Bank chief economist Craig Alexander called the changes "appropriate" and minor "tweaks" to Canada's financial regulations, particularly compared to the major overhaul occurring in the United States.

"This isn't going to make a big difference to either the real estate market or Canadians," he said. "Banks will continue to offer covered bonds, but they just won't be able to use CMHC-insured products in those bonds."

By forcing the banks to put up only uninsured loans as collateral, the move will force banks to pay a slightly higher fee to investors to make them accept them.

"The story here is that for the banks to raise capital it's going to be slightly more expensive from that one particular pool, which ultimately will filter out to the consumer market," Rabidoux said.

Mindset said...

Good info DavidL, thanks.

Leo S said...

That's great. Regardless of what happens to housing prices and whether there's a bubble or not, as a taxpayer more oversight of the giant liability that is CMHC is a good thing.

patriotz said...

More oversight by whom? CMHC has always done what the government of the day wanted, that's not going to change.

Even if it were to be regulated by people who were actually concerned about the taxpayer's exposure to CMHC's huge contingent liabilities, the damage is already done. The time to fix this problem was before it started.

happy renter said...

"HGTV will have a new reality show. Each week a property virgin is to be thrown into the CMHC volcano until the market recovers."

Ha! I like it!

I've actually noticed recently that HGTV has a couple of shows about renting now, whereas a year or two ago the shows were all about buying or flipping.

CS said...


Re: "This isn't going to make a big difference to either the real estate market or Canadians," he said. "Banks will continue to offer covered bonds, but they just won't be able to use CMHC-insured products in those bonds."

That sounds like spin to me. Where does TD get the money for low ratio mortgages? At least in part, from the sale of covered bonds. So in future, either they will have less capital for low ratio mortgages because they cannot sell the bonds or mortgage rates will have to rise as bond rates increase to reflect increased risk.

If Steve Keen is correct that asset prices vary with the rate of change in credit (i.e., the credit accelerator), an end to CMHC insurance of mortgage bonds means that house prices in Canada will soon be going down.

Introvert said...

Governments will tinker. Interest rates will rise. Prices will go down. Not long after, governments will undo the tinkering. Prices will go up again, especially in the places people want to live: Toronto, Vancouver, Victoria, and a few others.

No learning will happen. Capitalism won't allow it.

happy renter said...

RBC Estimates 7-12% Decline in Vancouver House Prices

patriotz said...

I doubt that the changes re issuing of covered bonds would mean a change in mortgage rates in itself.

The banks can still sell their CMHC-insured mortgages to CMHC (Canada Housing Trust) and get more money to lend that way. Which makes me think CMHC just wants to corner mortgage secutitization (which is what the covered bonds effectively are) at the expense of the banks' profits.

Introvert said...

RBC Estimates 7-12% Decline in Vancouver House Prices

7-12% over the next 2-5 years? That's it? You call that a correction?

Then again, no one can predict the future (and some people are particularly bad at it), so I won't read too much into this "estimate."

patriotz said...

"7-12% over the next 2-5 years? That's it? You call that a correction?"

No, I call it CYA.

Whenever anyone who has a financial interest in higher RE prices - which of course includes the banks - predicts any price decline you know they are fearing much worse.

Just Jack said...

Maybe some of these bank economists should run a grocery store for a month.

How long would a grocery store stay open if their volume of sales continued to drop. And to make ends meet the owner continues to increase the prices.

DavidL said...


Anyone can predict the future... It's only after the fact that we'll know whether a particular prediction was correct. With the wide range of predictions that are circulating, it is fair to say that uncertain times lay ahead.

Mindset said...

Here is another article on the 'surprising' need to reign in current Canadian housing debt.

Flaherty is still concerned about housing market

It's hard to believe the nerve of these folks. Building up record debt through their own interventions, then treating it like something they need to step in to clean up?

This is beyond bold, its crooked.

Dave said...

This Vancouver realtor graph is worth a look.

His comment "some might also say that the meteoric climb in home listings in 2012 has crossed over into the realm of the super natural."

Befitting, he shows a picture of a meteor hitting Earth.

Just Janice said...

The innovations in and of themselves weren't bad, rather how they were implemented was bad. If the most you could borrow was set by the amount you could get if you had 20% down and a maximum 25 year term and the 33/40 rule...then those innovations (zero down and extended terms) would have improved affordability and the stability of the market. Unfortunately these innovations were deployed with the intent to increase the amounts people could qualify for, adding fuel to the real estate fire. If the use of these innovations was 'prudent' it could have improved the household balance sheet and increased the resources available to be used on other things (RRSPs, cars, tvs, education, etc.).

Mindset said...
This comment has been removed by the author.
Mindset said...

...then those innovations (zero down and extended terms) would have improved affordability and the stability of the market

In my opinion, these interventions are way less harmless than you make them sound.

Only short-term affordability comes out of reducing interest rates or extending borrowing durations. We are monthly payment animals, and what we can afford as a monthly payment is generally what we sign up for. It's also important to remember that both interventions drive up housing prices, which in turn, create 'buy signals' in the market that housing is going up, drive more people into the market, and increase our willingness to take on more debt. Classic asset bubble economics.

Now, not only are our house prices driven into 'unaffordability', but we have a record number of people with record durations of record debt.

I am certain our leaders were very aware of these consequences of their interventions, even if most of us were only exposed to the Fox News sound bites they have been communicating.

You don't lend more money through CMHC in 3 years than you did in 50 years of CMHC history without some serious intention of action. I find it offensive that they are now having to 'step in' to an overheated market, they were neck deep in this the whole time.

Mindset said...

Tripped across another article that reflects my observations fairly well and thought I would share, Carney's warnings at odds with his own monetary policy .

Mrs. W. said...

Mindset - did you completely ignore the restriction I said would be needed to make those innovations a 'good thing'?

patriotz said...

Any government policy which enables people to buy who otherwise could not buy increases prices.

To make housing more affordable government should eliminate all programs which assist people to buy.

The outcome would be that prices would be low, but a good sized down payment would be required, which would be an incentive to save money, which is what this country really needs.

Just Jack said...

Or a first time buyer using high ratio insurance would have an amortization period 5 years less than others.

When the home owner makes it through the first 5 year term then they can go to a full amortization period.

happy renter said...

What a headline on this morning's CBC page:

Canadian Banks Got $114B "Bailout"

a simple man said...

So there goes the argument that the Canadian banking system is different than the US - out banks didn't need bailouts.

But in fact, yes they did, the government just decided to not let us in on how they were spending our money.

Apparently, BMO, CIBC and ScotiaBank were under water.

What was the one identified life preserver for the bank? CMHC. They bought $69 billion worth of mortgages from the banks to help them out.

Wow. This is worse than I thought.

Marko said...

Monday, April 30, 2012 8:00am

MTD April
2012 2011
Net Unconditional Sales: 564 574
New Listings: 1,372 1,577
Active Listings: 4,393 4,561

Please Note
Left Column: stats so far this month

Right Column: stats for the entire month from last year

Marko said...

SFH Average = 628k
Condo Average = 329k

So, sales will be better than last year by 20 or so, less new listing, less inventory, and prices stable.

Mindset said...

did you completely ignore the restriction I said would be needed to make those innovations a 'good thing'?

My general point was more that there was little chance that any of those interventions would have done anything but drive buying activity. And buying activity drives up prices, which drives buying activity, which drives up prices.... well, you get the picture.

It’s a very predictable outcome when cheap money hits any asset class. Unlike standard economics for consumables (i.e. when the price of TV's double, people stop buying them), house prices doubling creates a very strong buying signal.

You cannot leave a free market to figure itself out with non-consumable assets like housing, and you definitely don't pour cheap money at them for any extended period of time. It's a well known recipe for disaster.

There is no way Carney, Harper and Flaherty were not aware of this.

Phil said...

Finally some questions about the great Canadian bailout of '08 that has kept our party going: here

chickinvic said...

I agree with Mindset, there is no way that those "innovations" can do anything BUT drive up house prices. None. So to say if only they hadn't been used in this way or that way is pointless. They can only have the outcome that they did have. And yes, everyone in charge was fully aware of these things beforehand (of course).