Monday, September 28, 2009

Bears feeling cheated??

Understandably the bears are growling.
They were on the cusp of a major drop in house prices, a veritable waterfall in the numbers and then <<<<<<< happened.

Rates were cut and banks were bailed out world-wide, including in Canada.
Forcing consumption, penalizing savers became the 'play book' that governments followed. Never mind that the poor earth is groaning under our current orgy of consumption. We have built such a worldwide ponzi scheme that any let up will cause the over-leveraged house of cards to collapse.
Welcome to Capitalism in the 21st Century.
So 'cash-for-clunkers', zero interest rates on deposits, 'home improvement' tax-credits and other imaginative schemes were implemented. There aren't many more bunnies to be pulled out of the hat though.
So if/when RE resumes it's drop (unless we are in an inflationary spiral), there wont be much else that can be done. I doubt we will have tax-deductible mortgages in Canada, as they do in the US, the costs of this would be fiscally prohibitive.
Meanwhile Vancouver's housing bounced on a trampoline.
A quick drop, blink and you missed it, and up we went again.
Here is the graph again in case we forget how far we went up and then down:
Based on Kelpto's numbers below, September should be pretty flat. Now we will have to wait and see what October's has in store for us.


  1. I always think that there cant be much more in the gov's bag tricks but they always seem to come up with something. They just bought a bunch more mortgages from banks a couple of weeks ago. It almost seems like they will bankrupt the country before they let RE fall.

  2. Davers- it is the big kahuna.

    Better to have let assets drop, keep rates reasonble, let the stock market crash, and punish specultors...I am talking about 2000!

    That's when RE really started flying in North America- when they decided that asset bubbles had to be maintained at any costs. Actually it started before that with LTCM and the Asian contagion and all the other bursts that they delayed.

  3. West-bubble-Van. 14 new listings, 3 price changes. 0 sales. zippo, zero, none.

  4. Sorry error there, more price chnages, less new listings, but still no sales.

  5. 0.25%! Who would have thought it. That is a crisis number. If we don't have rampant inflation with that low a number then things are really bad.

  6. canada reminds me soemtime the old Soviet Union with cheerleading press releases when the reality is not so much different than in the states. If anything, US will be the first to come out of this crisis.
    In my opinion rates will stay low for the foreseable 3 to 5 years where we will go through a situation a la Japan. Real estate will go down here because we will eventually run out of people to qualify even for those low rates. The supply of buyers is depleeting very fast. Listings will explode after the Olympics.

  7. Man oh man...looking at the above graph of "Vancouver-on-a-trampoline" made me quickly go to this graph to compare (we've seen it a million times over but I think is still more than relevant)