- Maclean’s latest cover ‘You’re About To Get Burned’
“The resilience of the Canadian housing market continues to confound experts. … this sector has become even hotter, exhibiting strong signs of a classic bubble. More than ever before, I believe that Canada’s housing market is due for a severe correction.”
- from ‘Canada’s housing bubble: This time is not different’, George Athanassakos, Globe and Mail, 23 Feb 2012
“A fall in house prices decreases the value of collateral held by households, leading to a deterioration in the state of household balance sheets,” the central bank said, noting that many families “could therefore experience a significant shock if house prices were to reverse.” …
Finance Minister Jim Flaherty, meanwhile, said on Thursday in Toronto that authorities are keeping an eye on the hot condominium market in some cities, and urged borrowers to resist buying “the most expensive house they can possibly buy.”
- from ‘Central bank targets home-equity credit lines’, Globe and Mail, 23 Feb 2012
“An indebted household, particularly one that has borrowed against home equity, is one that is vulnerable to the forces of depreciation.
The behaviour of the Canadian housing market over the past several years alone has some convinced of an impending correction.”
- from ‘Why we’re in trouble if housing craters’, Financial Post, 23 Feb 2012
—
“Okay.
Show of hands.. Anybody who hasn’t heard that Housing in Canada is in a ‘Bubble’?
Nobody?
Okay… so we’ve all heard.
Pumps are primed.
Now class… How are we going to respond to initial price drops?
Anybody?”
- vreaa
[hat-tip Makaya for three of the above links -ed.]
Cue hyperinflation.
Actually, I was thinking more.. deflation.
Then, later, maybe, inflation.
Hard for anything to overcome the next deflationary wave, IMHO.
Yes vreaa, it is a deflation of assets that is coming. If China’s bubble is bursting it may also be a deflation in commodity prices that follows next year. I hate to tell you this, but a combination of the two will not result in a garden variety recession. Now we really are screwed.
Crystal balls? Fun in all sectors. For hyperinflation there is supposed to be savings. Oil up, health and procurement up, foodstuffs track oil, so open market consumables up. Clearance prices on discretionary goods and services until supply aligns with demand. Commercial landlords will have to be negotiable. Big toys down, investment portfolios down in a lunge for liquidity, and then the naked shorts default.
An orderly descent unless famine hits.
Doom scenario: Currency tanks. Taxes increase with a smaller resource pool to service operations and an unsupported debt. Government sells out to London banks, like Greece, instead of uniting to chase off the bankers with rocks, like Iceland.
Make sure that astute residents get a savings exemption for boycotting this addiction to real estate porn. Happy trails.
Like Debtless says: “Biflation”. The types of things that households count as “assets”, most importantly housing of course, will lose value. Wages will stagnate.
But necessities will cost more, and the currency will lose value, devaluing savings and negating any stock market gains like we’re seeing in the states. The current rally here can be mostly accounted for with dollar devaluation.
Increased tolls on BC transportation corridors announced today. So it begins.
http://www.globaltvbc.com/translink+recommends+extensive+road+tolls+all+over+metro+vancouver/6442588019/story.html
PS: I could be wrong, natch.
It happened before.
Once.
In the 60′s.
I thought I was wrong, but I was actually right.
Are you that old?
Older.
Kiddin’ — my grand-pappy told me about the 60′s.
People in Vancouver will believe none of this until it actually hits them square in the face.
They are, in my opinion, imaginatively impaired.
It’s going to be like rubbernecking at a car wreck.
No time for popcorn: just get the damn life jackets and the barf bags.
What a day. The news about our housing market, debt levels, interest fears and the worries expressed by so many in government and the media were almost overwhelming. I could hardly believe what I was actually reading today. All at once. Just incredible.
And not one word of it came in time to prevent the bubble from bursting. Nor did it come in time to prevent a bubble from building. Sorry to say, the horse is out of the barn now. And that is because not one word of the news came until it was already stale news.
It is all after the fact. Too late to be of any use to anyone who will soon be under water on a great big fat mortgage, in bankruptcy, in an EI lineup or sitting anxiously waiting for news of a pink slip or a foreclosure.
Waste of time. You cannot tell people anything. I spoke to a couple this very evening who actually laughed out loud at me for fretting that there was a credit bubble in this country that would soon harm our economy.
Bloody idiots think they know better when they know squat.
yawn
barf
And that means you formula1. Idiot!
yawn = anxiety
“What-me-worried?”
I have a friend who yawns when he lies.
OK. You are right. I can calm down. Just had a moment there. Feigned indifference and yawning are signals folks give when they don’t have a case for a good argument. It lets them off the hook.
lol,, rustys getting ready to shift gears.
soon he will be on financial advice/help forums bitching people out ad-hominim about buying a house, what a supid decision it was and how stupid they are.
She is our generations version of an attention whore. Not unlike Paris Hilton or tila tequila
I cant wait for an internet ID system so I dont have to deal with this psychopathic cowardice anymore.
Ok. I have seen the reference three times now. Don’t keep me guessing. who is Rusty?
Ooh, Macleans has a housing bubble issue. It must be spring!
Everyone is calling one but real rates are very negative. Either you take the punchbowl away and accept that people are myopic or take your chances with the eventual reckoning of ECON101.
Somewhat unrelated to RE, but related to the high cost of living in YVR: did anyone see the gas price ($0.10 jump overnight) this morning? If people are smart, they’ll be paying off any unsecured debt ASAP and liquidating real estate unless they plan to live there for a long long time or are mortgage free.
This is showing all the signs of the the Titanic’s meeting with the iceberg, I’m sad to say.
Yes, future trading on oil showed the spike coming. Watch for embargo on Iran July 1, coinciding with increase in BC carbon tax. There’s no resistance above $115 per barrel up to $150 per barrel. Increases are adjusted immediately on retail stock while decreases take six months to roll over from the refinery. How to make money? Buy shares in refiners and run a cheap gas guzzler you can repair with duct tape.
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