Canadian Business Housing “Crash!” Cover


– cover, Canadian Business, Jan 2012, for the record. [hat-tip ‘J’]
Featured article ‘Prediction: The Canadian housing market will crash’, by Joe Castaldo, 12 Jan 2012, was recently discussed on these pages [VREAA 21 Jan 2012].

14 responses to “Canadian Business Housing “Crash!” Cover

  1. Now I’m wondering if the bubble won’t keep inflating. I read this article last week, but wasn’t expecting to see it on the cover. Usually when a major publication tries to call an end to the boom with a big cover story, it means the boom still has some legs. Normally the crash happens only when EVERYONE in the major financial press has given up calling for it.

    I recall a similar cover on Time Magazine in 1998 at the height of the Asian crisis. Something like, “Are the Good Times Over”? Of course the stock market and the US economy kept roaring ahead for another 2 years, finally crashing in 2000-01.

    Who knows? Could be the writing is already on the wall, and these guys are just pointing it out.

    • The magazine cover indicator, seems to date from, or be most famous for, the ‘Death of Equities’ Business Week cover in August 1979.
      It doesn’t seem to hold much water for local RE (witness the Classic top-of-the-market Georgia Straight cover down near the bottom of the right hand sidebar).

  2. perma-bear Joe Castaldo. If you listened to Joe back in 2010 when he warned you away from real estate you’d have missed out on 30-35% appreciation.

    “Why buying a house may be a bad investment
    Georgetown Real Estate
    By Joe Castaldo, Canadian Business Online
    Monday, March 15, 2010 provided by Canadian Business”

    http://www.georgetownon.ca/index.php/real-estate/georgetown-real-estate/442-why-buying-a-house-may-be-a-bad-investment

    • haha, “back in 2010”, as if that was ages ago! Anyone who thinks 30-35% appreciation over one or two years is at all normal, or sustainable, is truly fooling themselves.

    • What’s the problem?
      Joe was correct in 2010 and he’s still correct now, in 2012.
      A bubble can only deflate once. When you’re in it, you can be sure it’s present, but you can’t be sure when it’ll eventually pop.

    • Only in bubblicious Vancouver F1. By the way, Castaldo is a journalist and simply reports others’ opinions. It appears that you regard anyone who has a bearish view on RE as a perma-bear because of your own small narrow-minded experience. At least Canadian Business provides predictions with well discussed rationale. You on the other hand, are great at “predicting” what happened over the past 10 years which is completely useless.

    • That 30 – 35% appreciation means what exactly? To realize it one needs to sell the home first. If that is your residence then you need to buy another home that has risen by the same percentage. Home equity is phony wealth.

      As for house-flippers, just ask our neighbors to the south how well off house-flippers are these days.

      • Ralph Cramdown

        Or you can sell and rent for a while, or downsize for a few years. Buyers are encouraged to buy early and often, trading up the “property ladder.” This would be the equivalent of what’s called “pyramiding” in other investments, except that RE transaction costs are so high that it serves to enrich RE and mortgage brokers in this case.

      • i think the majority who own don’t care about appreciation whatsoever. A 35% appreciation just increases property taxes right? The only loser in that case is someone not in the market, as the access costs have been elevated.

  3. Finally, someone in the media with enough balls to print the truth.

  4. The one thing that is never known is the exact point of a bubble popping. The key issue is to identify the bubble as early as possible.

    Once you identify that it is a bubble, then you must accept you are now just gambling, and the reality is that the house nearly always wins in the long run. Only 1% of people represent the house. Unfortunately if you want to gamble then as part of the 99% you will lose

    Everybody wants to sell high! Trouble is by the time the bubble pops, you now just become a casualty figure, because you now become part of the flood.

    Take a quick look at Vancouver property listings v sales and you can see the herd heading for the exit. Most will get slaughtered.

    The bigger the bubble, the greater the number of buyers, the greater the bang, the greater the number of sellers, and the larger the falls, all fighting for the small number of buyers, many in no mood to save you.

  5. Quite the focus on the Canadian real-estate balloon lately.
    Here’s some coverage from the Economist.
    http://www.economist.com/node/21546057

    • Thanks Nonymouse.

      “However, the state has refused to use its most powerful tool. To protect business investment, the central bank has made clear that it plans to keep interest rates low. As long as money stays cheap, the balloon could get bigger—perhaps big enough to become a fully fledged bubble after all.”

      Yep.

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