Slew Of Mainstream Press Articles About Canadian RE

‘Housing a ‘balloon’ not a bubble: economist’ 11 Jan 2012
“Sal Guatieri, Senior Economist at BMO Capital Markets, tells BNN that housing is not in a bubble, but rather a “balloon.”
“In a balloon the air can seep out slowly, it doesn’t necessarily need to burst unless something comes along to prick the balloon,” he says. “That something could of course be a recession or a loss of incomes or job…or a big spike in interest rates that worsens affordability, but we don’t see that happening.”…
Guatieri says that while home valuations are “excessively high” in Vancouver and “somewhat high” in the Greater Toronto are, he doesn’t expect a major implosion in home prices.
“We think Canada’s housing market will fizzle out rather than flame out,” he says. “It will indeed soften, there’s no doubt it will because household debts are relatively high — there’s only so much more rapid mortgage growth that can be sustained in Canada’s housing market and economy.”
CIBC chief executive officer Gerry McCaughey told bankers at a gathering that the housing sector may have peaked and will begin to soften.
RBC CEO Gordon Nixon and Bank of Montreal CEO Bill Downe also expressed concern about housing prices, saying the next few years could see a pullback.
Many economists say the condo market is particularly vulnerable if there is a pullback in home prices, but Bank of America Merrill Lynch Canada economist Sheryl King says predicting an isolated fall in home prices is risky.
“I don’t think that anybody would want to say with the lessons that we learned with the United States that you can isolate a particular sector or a particular part of the market and say everybody else is going to be protected,” she says. “There’s a lot of exuberance in this market right now, there are increasing signs of speculation…this is a market that is red hot and you have to be a little cautious right now,” she adds.

‘More gains in home prices expected’
Vancouver Sun, 12 Jan 2012
Canada’s housing market will continue to be strong this year, with rising property values expected in all major markets, real estate brokerage firm Royal LePage said Thursday.
The company’s forecast called for prices across to country to rise 2.8 per cent by the end of 2012, after stronger gains last year. …
“Widespread calls for a major real estate correction in 2012 simply can’t be justified,” Royal LePage CEO Phil Soper said in a statement. “The industry has significant momentum entering the year, and buoyed by the stimulative effect of very low interest rates, we expect the market to continue to expand — albeit at a slower pace.”
The Canada Mortgage and Housing Corp. has forecast the average price of a listed homes for resale to be $363,900 this year, up 1.2 per cent from 2011. The Canadian Real Estate Association predicted that the average price would be relatively flat at $362,700. Both forecasts were made in November.
Royal LePage said even pricey housing markets in Vancouver and Toronto — where standard two-storey homes averaged $1.1 million and $629,188, respectively, in the last quarter — will see continued price appreciation in 2012.

Bill Good Show, CKNW Radio
calguy via e-mail to vreaa, 12 Jan 2012
“Just listened to Cameron Muir [chief economist of the B.C. Real Estate Association] on the ‘Bill Good [radio] show’. He says the market will be flat …except for the premium pockets.
Interesting he says the influx from China is a big factor, especially in areas like Dunbar etc, and West Vancouver. He says they are bringing lots of cash but
also taking loans out. He basically admitted that young people have to look at a condo in order to buy a place.”

‘Mark Carney’s low-for-long rates yielding more houses than machines’
Vancouver Sun/Bloomberg, 18 Jan 2012
Bank of Canada Governor Mark Carney’s 1 per cent interest rate has fostered the opposite of what he has said the country needs to be competitive — record borrowing by consumers, while companies pare debt ratios to the lowest in decades. …
“For the bank to be exhorting businesses to go out there and spend at a time when the bank itself admits the global environment is quite uncertain, I think it’s being a bit disingenuous,” said Mark Chandler, head of fixed-income strategy at Royal Bank’s Capital Markets unit in Toronto.

‘Chinese cash buyers may be about to spice up choice neighbourhood real estate market’
The Province, 19 Jan 2012
Will the story of 2012 in real estate-mad Vancouver be a “not very sexy” period of moderation, or another surge of cash-in-hand transactions in the “micromarkets” favoured by Chinese investors?
For answers we interviewed Cameron Muir, chief economist of the B.C. Real Estate Association, and Julia Lau, Chinese real estate specialist at Sotheby’s International Realty Canada.

‘Year of Dragon heats B.C. real estate market’
CBC, 25 Jan 2012
“Real estate agents in and around Vancouver are expecting big things this week, thanks to the Lunar New Year, which is typically a great time for sales.
Real estate agent Malcolm Hasman showed four Chinese families through a $7.8 million mansion in West Vancouver on Tuesday. The home has panoramic views, two kitchens and even a heated driveway.”

UBC Prof. Duanduan Li says the Year of the Dragon is auspicious for big changes, including big purchases. (CBC)

‘Household borrowing surge driven by most indebted’
CBC, 26 Jan 2012
“The debt-to-gross income ratio of those most indebted families is 160 per cent. The proportion of the most indebted families is greater in British Columbia, Alberta and Ontario where housing is the most expensive.”

‘Pending housing bubble spells trouble for Canada, experts say’
Financial Post, 26 Jan 2012
“Patti Croft, recently retired from being chief economist for RBC Global Asset Management, cited the risk of a housing bubble as among Canada’s biggest issues. Part of the problem, she said, is exceptionally low mortgage rates, due to the Bank of Canada’s low interest rate of one per cent — a level intended to support the economy. “Historically, after a long period of low interest rates, what lies ahead is some kind of speculative excess,” she said.

[hat-tips to Makaya, calguy, E.G., others for pointing out these articles. -ed.]

The above only a small sample of the large wave of RE related articles in national and local MSM over the last few weeks. – vreaa

18 responses to “Slew Of Mainstream Press Articles About Canadian RE

  1. They needed a UBC prof to spew the astrology mumbo jumbo?

  2. “We think Canada’s housing market will fizzle out rather than flame out,”

    US deja vu.

    • If sales for Rebgv don’t pick up by the end of March, then we can surely say “correction”. Many signs of a bubble, but hey, it’s extremely hard to predict if RE will crash or deflate slowly.

  3. If they suddenly woke up one day and realised how screwed they were, do you think they would tell you? Of course not.

    The best you will hear will be whispers and anecdotes.

  4. Look! it’s a bubble! No! it’s a balloon. No! it’s super-blimp! But is it filled with helium or hydrogen?

  5. Vreaa,

    What’s up with the pic of that guy on my profile when I post?

  6. This is the year guys and gals! Better late than never!

  7. One in Maclean’s to add to your list above: I’m a fan of “The signs of a bubble are unequivocal” though less happy to see “A whopping 75 per cent of mortgages in Canada are fully insured by Ottawa, according to the Financial Stability Board.” as a statement that’s somehow supposed to make me feel better about the whole thing.

    • Good one, thanks!

      Below is an abstract for the record:

      So, are we literally living in a bubble? And when it bursts, will it get as ugly as it did south of the border? Here’s where the most recent speculation is pointing:

      Yes, we’re in a bubble, and it will probably pop soon. [bold in the original text as well!]

      The signs of a bubble are unequivocal. At 13 years and counting, Canada’s current housing boom is one of the longest-lasting in the world, the Bank of Nova Scotia noted in a recent report. The real price of Canadian homes has increased by 85 per cent on average since 1998. Prices stagnated in 2008, at the height of the financial crisis, but they were back on the rise again as soon as 2009, when they grew by nearly 20 per cent, according to the Canadian Real Estate Association.
      The scary part is that, by most accounts, 2012 is going to be the year when housing prices start heading south. The housing market is already showing signs of weakness. Despite a rebound in December, housing starts fell in the last quarter of 2011. And in some smaller markets on the west coast, condo prices have already declined 15 per cent, according to Merrill Lynch. The bank predicts that prices nationwide will slip by five per cent this year in the best-case scenario. A spike in unemployment could trigger a 10 per cent price drop.

    • “A whopping 75 per cent of mortgages in Canada are fully insured by Ottawa, according to the Financial Stability Board.”

      Perhaps you’d like to find me a link to the actual data instead of quoting someone else’s statement

  8. Pay no attention to the talking heads for they know not what they speak of. They cover their ass with both sides of their mouths.
    “Widespread calls for a major real estate correction in 2012 simply can’t be justified,” Royal LePage CEO Phil Soper said in a statement. “The industry has significant momentum entering the year, and buoyed by the stimulative effect of very low interest rates, we expect the market to continue to expand — albeit at a slower pace.”

    Ho! I am so going to find a way to get a clear scan of the paper I found the other day. It was dated in 2004 and talked of the real estate market slowing down. The quote from Mr. Soper was that it was only natural for prices to ease as homes were simply unaffordable at those levels (avg under $400k!). Stay tuned for that image to come later.

  9. When is the last time you pricked a balloon and the air just fizzed out of it slowly?
    Go ahead. Try it at home.

    Seriously, you know we’re in big trouble when economists start splitting hairs over the metaphors they’re using to signal the impending doom.

  10. @RagingRanter – there are those old baloons that you have left over from parties. You know the kind. They were once inflated to near bursting levels and then the air slowly escaped over time leaving a half inflatred shriveled rubbery shell of it’s former self. Stick a pin in that in you will get accelerated fizzing till it’s just a stretched out piece of garbage.

    I think that is what many regulators and officials were hoping for. That we as consumers would just slowly escape the balloon without too much damage. Did they not know that when yo prime the pump with low interest helium and MSM BS the balloon will stretch beyond expectations? This sucker is gonna blow! Get ready for panic and distress!

    • Right. And then there are the helium balloons that I carefully opened up and inhaled so that I could talk in a funny cartoon voice. Their sad, wrinkled little carcasses littering the floor as my head spun from lack of oxygen. Still a frightening metaphor for the housing market.

  11. My justified worry – when the inevitable and impending doom unfolds, how much of my money will be expected to help alleviate the onus of excesses of others?

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