Attached = Condos and such

Inventory/sold last 31 days and I did the MOI to save Makaya the trouble :)

Coquitlam = 532/72 = 7.4

Maple Ridge 278/25 = 11.2

N. Van 478/75 = 6.3 (2 X the SFH MOI)

Richmond 1226/130 = 9.4

Surrey 1485/152 = 9.7

New West 137/15 = 9.1

Burnaby 956/132 = 7.2

Nothing bullish in these numbers...

The downside of housing speculation..

To read some of the housing and bank economists it would seem like there is no downside to having a bubbling RE sector.

Lets see what the benefits are:

1) Hundreds of thousands of low-skilled employment in the construction industry and thousands of skilled jobs too (electrician, plumber etc)

2) Lots of transactions generating tax revenue, and commissions which keep another big swath of folks working and paying (hopefully) some taxes.

3) The 70% of people who own FEEL richer. they spend more, buy that BMW they always wanted, renovate which employs another chunk of people.

4) Money pours into the country to buy into our RE bank from all over the world.

There would seem to be no downside. No wonder Governments love to stimulate housing. Even the Conservatives who closed the Wheat Marketing Board against the Farmers' wishes because it was not 'free-market enough' turned to the enabler of speculation, CMHC, to boost housing and get them re-elected.

Of course we bears know the down-sides all too well.

An economy overly dependant on one sector, which when it stumbles will bring many things down with it. Firstly how will the hundreds of thousands of hammer-ready workers transition to anything else? There will have to be a constant stream of 'road to nowhere' projects to keep them employed.

What will replace it?

Should we not be looking at retraining this army of low-skilled workers now and diversifying our economy away from just banging together two-by-fours and putting up some tarp paper??

Real Estate Agents could transition to other sales jobs.

Then there is the effect on young couples who have to enter this frenzied markets, burdened by debt and fear and uncertaintity. Even is China where the frenzy of speculation has reached fever pitch and which is being exported to our shores, the fate of those just entering the property market is precarious.

Once again the prudent are being penalized and will be penalized even further when the bust happens and we will all be asked to help out the speculators and the innocent young couple. Interest rates will remain low forever, the CMHC will affect the Canadian government's fiscal rating (the IMF has said as much) and we will enter a post RE-party with a hang-over that will damage our society.

The worse thing is that it could have all been prevented.

Some numbers

Sorry no time to calculate the MOIs. But you can work them out. Some areas still hot and some definately NOT.

All SFH unless otherwise stated. 1st number = inventory. 2nd = sold in the last 31 days.

New West: 78/19

Pt Moody: 93/17

Richmond: 891/88

Squamish: 155/11

West Van: 391/60

Van West: 786/141

Van West condos: 1985/246

Surrey: 1806/197

Bowen Island: 66/4

Coquitlam: 354/85

Maple Ridge: 587/56

North Van: 234/76

Ghost streets

MOI coming up tomorrow.

Meanwhile, I had a very interesting conversation with a couple of West Van realtors. They said there were some streets in West Van which are basically 'Ghost streets'. Almost all the houses are owned by Mainland Chinese owners and are mostly unoccupied and sitting there as insurance or to park money- or for rent at exorbitant amounts (hence mostly unoccupied too).

You can tell how devoid the street is of habitation by the very few garbage cans that are put out on garbage days.

They mentioned Westhill as a hot spot and certain streets in the British Properties. Should we be pleased that we have owners who are elsewhere paying taxes for the services we all use, or upset that houses come out of the over-all stock putting strain on those trying to live here.

Should we even care. Yes, I know China is very tough on outsiders owning property and has even clamped down on Chinese owning multiple properties, but we are different.

As the CHMC draws closer to it's cap..

Let us remind ourselves who is at the helm of this many Billion dollar organization...that should reassure us:

From an earlier post:

(BTW- Will do some MOI numbers later in the week-end)

Board of Directors — Biographies

In accordance with the Canada Mortgage and Housing Corporation Act, the CMHC Board of Directors is responsible for managing the affairs of the Corporation and the conduct of its business. The Board is comprised of ten members, including the Chairman, and the President and Chief Executive Officer.

Dino Chiesa
Toronto, Ontario
Chair of the Board of Directors, CMHC
Principal, Chiesa Group

Karen Kinsley
Ottawa, Ontario
President and Chief Executive Officer
CMHC

James A. Millar
National Capital Region
Associate
The Sussex Circle

Brian Johnston
Toronto, Ontario
President
Monarch Corporation

André G. Plourde
Montréal, Quebec
President, Groupe immobilier de Montréal Inc.

Sophie Joncas
St-Hubert, Quebec
Chartered Accountant

E. Anne MacDonald
Pictou, Nova Scotia
Lawyer

Michael Gendron
Edmonton, Alberta
Chief Financial Officer
Mancap Group

Rennie Pieterman
London, Ontario
Partner, Practical Plumbing Co. Ltd.

A rather small board considering the Hundreds of Billions which are at stake. Their background, from what I have gleaned from the CMHC web-site...

A developer, a CMHC employee and executive, a consultant, another developer, a real estate broker, a CA, a small town lawyer with RE/Wills and municipal experience, another developer, a partner of a plumbing and renovation company.

I am sure they are well meaning people. However I am not reassured. Neither it would seem is the IMF which has called for more supervision.

Where are the well-known Business and Economic Professors from U of T or McGill? Where is the seasoned insurance executive who has dealt with major losses? Where is the representative from the Canadian Tax Payers Association? WHERE is the significant representation of NON-housing interests? Why not have an a housing skeptic Economist like David Madani on the Board?

Would we only let Doctors and Nurses run the Ministry of Health? Of course not. Should the Minister of Health only ever be a doctor, and the Minister of Defence only ever be a soldier? Of course not. We need outside views to be heard too, especially when we all have to share in the liability.

Here is more of what the IMF had to say..

Gian Maria Milesi-Ferretti, the IMF official who led the review of Canada, stressed on a conference call with reporters that the fund has no reason to think CMHC currently represents a risk.

Rather, the IMF simply thinks the government should evaluate closely whether it’s appropriate for one of the country’s largest financial institutions to operate without formal oversight, he said.

This has the potential to have very serious adverse consequences. Anyone who thinks we cannot have a crash like the US because we do things differently here, have not lived through the last few crashes we have had here! This time the stakes are much higher.

Feeding Frenzy

Just a diversion from our regular programming.

Forget HAM- we have home-grown pork barrelling.

The missing women's inquiry is costing us $80K a day in lawyers fees!!

WTF! - the police screwed up. Admit it. Move on. Give the money to the families.

But NO we have to have a media circus, with everyone lawyered up at the tax-payer's expense including apprently Mr Greenpsan (who represented that up-standing citizen Conrad Black)- at over $1000/HOUR!

So far they have spent $4 million on this circus, most of it going to lawyers, with no end in sight.

That's on top of the trial which ate through untold Millions to tell us that Picton-the-devil was gilty and now we have to pay to hear how the police didn't screw up.

Right next to the Sun article on the missing women legal expenses is another article about heart surgeries at Childrens Hospital. Do you think we could spend our money a bit better on the latter than the former.

End of rant.

Not much to say...

We have some softness but not a crash. Inventory is building up nicely.

HAM has shown up with selective buys in West Van. The New Year buying spree has failed to materialize yet. However prices are so high and out of synch with earnings that we will need a lot more than that to get a good correction going.

In fact we would be best served by a slow correction rather than a crash. Remember the Feds have been talking tough and that could mean decreasing the amortization period increasing down-payments for CMHC insured mortgages and Not increasing the CMHC cap. Basically reversing their own foolish policies which have helped feed the frenzy.

If we have a significant slow down, then they won't do any of these, and in fact based on previous experience will probably react by jumping into the market and intervening.

After Stephen Harper's visit to China, there is zero chance of Federal tightening up of Chinese off-shore ownership of Canadian assets, however the possibility of an extradition treaty would help flush out some of the really crooked money, as have the recent deportations of a couple of embezzlers back to China to face the music.

Of course the City could come up with rules on off-shore owners and leaving property empty. The CRA could make sure that the 25% is deducted from rents and submitted to the CRA by harassing 'Agents' who are ultimately responsible if it is not deducted. However both these would quickly run up against the strong housing lobby.

That's it for now. Steady to down until March would be good to give the Feds balls to act and then a slow summer and a very soft fall, that would be the best scenario for the bears.

A 5% YOY drop by September would be very nice. 5% which was obvious to all regardless of the manipulation of the stats. With 5% under our belts and new regulations we could see a change in psychology and a more rapid correction.

Surrey - SFH . The three areas I follow 1743 listings and 187 sales over the last 30 days.

Have a great week-end.

FVREB..

They have rejigged their HPI too!

Anyway the 'new' HPI shows a 7.1% YOY gain for SFH..

While Median is down 0.8% and average is up 0.5%

ie flat at best YOY.

MOI is 10.5

Here's the link

The HPI shows lots of losses (- numbers) over the last five years. eg Mission detached down 5% over 5 years or Abbotsford condos down 5% over 5 years. RE is all about timing .. some categories are down 12% over 3 years.

Look at the graph of sales/active listings ratio . Currently at 10% (same as an MOI of 10) and see how far it is in buyer's territory. The last time it got that lower was in 2008/9.

Any boots of the ground reports from the FV?

Here we go...

Confusion reigns the day. Please take this quick post with some slat and correct any errors.

We have a new method of calculating HPI which the REBGV says we should not compare with previous HPI's and then it goes ahead and compares it... and lo and behold there are two charts with completely different numbers.

While we sort though this confusion, here is what is certain:

"We are seeing trends emerge that favour buyers.." so says the REBGV Prez.

13% less sales than last year. 18% less than 2010.

19.9% increase in new listings from last year (Jan 12 v Jan 11)

253% higher than December 2011

Total listings up 20% from last Jan. Highest Jan listings since 1995.

MOI = 12544/1577 = 7.9! Is that right.


Now here is the confused mess:

Press release chart with HPI chart

Another HPI chart

The second one shows a LOT more areas with 5 year negative values and makes more sense to me eg Whistler condos; which is +95% on the first chart and -6.8% on the second. I presume one is using the old HPI and one the new, though the discrepancies are just too large.

Can anyone make sense of this? Jesse? anyone else? I am too busy to try and plow through it right now.

Sure would like to see the median prices.

Dang...

Numbers are out courtesy of Larry and the averages have regained all they lost last month and then some.

I did not expect that. I know we had a few very large sales and expected that to skew things, however volume was so anemic and HAM buying so sporadic that I really did expect a flat to down reading.

Perhaps the benchmark will filter out the upper end buys.

HOWEVER....

...... if we do not have some good downward movement in the averages in Feb, I am going to quit posting, since the market seems to be defying all logic. The only thing I can say vaguely positive in this lunacy is that this will increase the ammunition for those who want tightening of mortgage rules.

We should be sitting around the 8 MOI range and eventually this must hit prices.

However I thought I would really have better news for you this morning.