This morning The Current on the CBC ran a piece on the Housing Bubble and the warnings from the OECD and Carney, the changes from Flaherty and the OSFI proposals.
It is here if you would like to listen to it.
Here is the disappointing part- the panel. Sherry Cooper, a media-savvy bank economist, the head of a mortgage broker's association, and a realtor! Where is the balance??
Where is David Madani, how about Ben Rabidoux even Garth Turner?!
If you are going to ask such a one-sided panel, why not just bring on the board of the CMHC and ask them what they think about it?
First, Sherry (God her voice grates on me) says the 1 TRILLION in mortgage debt the Canadian banks hold is not a big deal as the highly leveraged stuff has been insured by the CMHC, then she dismisses the calls from the OECD for higher rates.
Did she forecast the US housing bubble and subsequent collapse? If so, we should listen to her, if not...
The other two had their expected pro-RE positions. Toronto keeps marching along, one of them said gleefully, not understanding that they are marching over the abyss.
Actually the panel were not as partisan as they could have been. I think even the RE-ra-ra movement realizes that we are dealing with fire here. Fire that could very easily consume us all, and they are trying to sound responsible, least they be held resposnible for what follows.
How far can the post-election rally run?
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*Mid-week market update:* The latest BoA Global Manager Survey shows that
institutions have stampeded into U.S. equities in the wake of Trump's
victory. ...
8 hours ago
A realtor, a bank employee and a mortgage broker, that's fair and balanced!
ReplyDeleteI guess the fascist err....conservative, government is telling CBC how to spin things more now than in the past. They got what they wanted. A majority government based on the "good times" the RE bubble provided. They didn't care what long term damage to Canada and Canadians their engineered bubble caused. No thinking person could lower rates, cut downpayments, extend mortgage terms, and instruct cmhc to accept virtually all customers, including HELOCs with no docs to prove income and not expect we would all pay for it in the future. It was happening in the US when they did it, so they can never say "who could'a knowd?" it would have a terrible effect.
ReplyDeleteIts obvious that the correct way to handle the situation would have been to lower rates to help liquidity but at the same time increase down payments and shorten amortizations to prevent a real estate bubble from getting out of control. Would that have been so hard? I don't think so. It just proves this was done intentionally so Harper could get a majority, not to do the best thing for Canadians.
Sherry Cooper didn't forecast the US bubble. But I distinctly remember her saying in the media in 2008 during our quarter meltdown that she advised her son not to buy. Then, a few months later she changed her tune.
ReplyDeleteI think we will see a nice tumble in the average price this month.
ReplyDeleteThe HPI is more uncertain due to the machinations of the RE board.
The three were railing about the mortgage qualification issue. First Cooper starts off about the increased lending costs because of the requalification overhead (which is true) but then gets sidetracked by the others into how borrowers could be thrown out in the cold because of the proposed changes. It is difficult to see how this will be the case. Lenders can still lend to borrowers who fail to requalify, they just have to mark the asset to market instead of to myth. The asset (the borrower and their property) is the same, so why would a bank suddenly decide to stop lending to them? Um... maybe they wont.
ReplyDeleteThere's something that's not being said there, that lenders are taking risks on assets they know will be eventually underwritten by the government if TSHTF. The government figured this out and is telling lenders to shape up.
And on the interest rate side, the 10 year is pushing new lows again. Now the interesting question: will low rates save the housing market? Carney seems to be saying no.
I posted too soon. $11 Mill West Van sale today. Not sure if HAM or not? (how many super-rich can afford that much after paying tax?!) That may pull the averages up a bit
ReplyDeleteMay 31, 2012
ReplyDeleteOfficial PMI fell to 50.4 in May
A separate gauge from HSBC Holdings Plc and Markit Economics showed a seventh straight contraction, the longest since the global financial crisis.
http://tinyurl.com/bt5l6b3
May 31, 2012
China Slowdown Ripples Through Hong Kong as Sales Weaken
http://tinyurl.com/7xonhc3
May 31, 2012
ReplyDeleteHome Prices Fall in More Than Half Cities Tracked
http://tinyurl.com/7nlsbws
``Banks in Beijing started offering mortgages to first-home buyers at or below the central bank’s benchmark rate in February, according to Bacic & 5i5j Group, Beijing’s second-biggest real estate brokerage.``
When are our banks starting another round of mortgage war! Or BoC rates coming down to zero by end of this year!
Invisible hands are working behind the scene.
China PMI: http://www.zerohedge.com/news/china-pmi-plunges-most-28-months-reverts-hsbcs-reality
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