Froogle Scott – “By systematically promoting only one side of the opinion and emotion, Vancouver’s MSM is participating in the manipulation of the citizenry.”

“Over the past few weeks I’ve had some interaction with two couples, both of whom are currently renting, and are contemplating house purchases. I’ve outlined the bear/bubble case for one couple, and hinted to the other couple, in more muted terms, that they could be buying at or near the peak. Everyone has been polite, but you can feel how uptight it makes people to hear these opinions. Including other people present at these conversations. It’s as if you’re the dinner party guest pushing your personal religious, political, or social beliefs onto others. It obviously makes people uncomfortable.
That’s the problem with the unbalanced and unethical MSM coverage of real estate in Vancouver. It conditions the vast majority of people to believe exactly what the vested interests want them to believe. And it makes people uncomfortable with legitimate and healthy debate. It’s all opinion, it’s all emotion, but by systematically promoting only one side of the opinion and emotion, Vancouver’s MSM is participating in the manipulation of the citizenry.”

Froogle Scott, at VREAA, 27 May 2012 12:31pm

Those of you who don’t already know Froogle’s epic Vancouver RE story are encouraged to check out ‘The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise’.

44 responses to “Froogle Scott – “By systematically promoting only one side of the opinion and emotion, Vancouver’s MSM is participating in the manipulation of the citizenry.”

  1. Au contraite there have been many articles mentioning Vancouver’s high prices, some forays into price-rent, a recent one I mentioned on housing analysis.

    We sometimes see what we want to see.

    • Sure, as you know we’ve headlined some of those ourselves here.
      A careful and comprehensive analysis of RE articles in local media coverage over the last decade (the actual work of which we’ll leave to a future young sociologist or journalism major), will reveal many many years of unquestioning RE promotion, and now a peppering of questions about the high prices, and the possibility of bubble (but even now in the minority cf articles/mentions that still, overall, hopefully promote market strength).
      This will be shown to contrast starkly with the pattern of commentary on Vancouver originating from elsewhere, where the market has been seen to be overextended for years.
      So, we think it fair to conclude, as Froogle has, that local media have shown a very clear systematic bias.

      • It seems a fair point the recipient has been more than willing. I don’t see much evidence any assault took place.

      • How willing will the recipient be when prices tank? Not very. That’s not the point. The point is that MSM reporting has been totally unbalanced.

    • I have to agree with Froogle on the point of making an attempt to discourage someone from buying a house in this market though. It is a real faux paus at dinner, especially with a group of new homeowners.

      They pile on you with dogmatic vehemence and the infallible conviction of certainty. You might as well have seated yourself uninvited and called them all a bunch of flaming idiots…..or just farted out loud.

      I think I have figured out why newbie buyers cannot be educated just prior to the big purchase. It is simply because they have already done the deal and concluded the purchase within their own minds.

      Even if no actual sale has yet occurred, the deal is already sealed. From the moment you hear your friend utter the words “I am thinking about buying” ……well, it is already too damn late to stop them. Even if you know for a fact they are committing a huge financial blunder it pays nothing to warn them away because at that point you are no longer a friend. And nothing will be allowed to ruin their dream of homeownership from that point of decision onward.

      I am not sure I blame the media. Not in good conscience anyway. The coverage on the issues related to the housing bubble or the potential of a bubble and all the negative ramifications such as high consumer debt or the risk of interest rates changing, have been well telegraphed.

      If anything we are collectively walking face-first into the best advertised housing crisis in history. Our American friends never had the benefit of 20/20 vision like we have had to witness a similar property bubble deflation. In their case the number of voices warning of trouble were few while those who argued against were the overwhelming majority. There was little in the way of precedence prior to the US Housing crisis.

      But what the hell is our excuse? Here in Canada we have been treated to a plethora of quality internet sites populated by some of the most insightful bubble and economy watchers that can be found anywhere and still Joe Public ignores the warnings. The media, our think-tanks and most of our public institutions were listening though.

      The Governor of the Bank of Canada has issued a constant stream of warnings that have been echoed by many in public office. Our business and financial papers have covered the issue in depth and the story has been carried on radio and TV by all the major networks. It is almost impossible to ignore it anymore.

      What more can be done?

      There is surely more to this puzzle than meets the eye. We know for a fact we all live in a media connected world and that as a society, Canadians are amongst the most literate in the world. There is not a chance in a hundred that the message has not reached the ears of virtually everyone in this country with an income and the desire to buy.

      And still we bubble and froth like a pack of hairy uneducated hillbillies.

      So it seems we don’t have any more advantage than anyone else on earth for if we did then we might have collectively taken evasive action already and this would not even be a story. When will we admit we are acting out the same herding behaviors that are being witnessed everywhere else on planet?

      When do we admit, as Canadians, we are not all that special?

      • “I think I have figured out why newbie buyers cannot be educated just prior to the big purchase. It is simply because they have already done the deal and concluded the purchase within their own minds.”

        I think that is spot on.

      • Ralph Cramdown

        To a first approximation, NOBODY sells their primary residence and rents in anticipation of price declines. So once you’re on the ladder, you’re a secular bull until you die. 70% are on the ladder, and they tend to earn more than those not on the ladder. So in any given peer group, the owners will almost all be bullish, and likely more “successful” appearing than the renters. Who will the renters emulate? Or will they listen to that short guy on the TV buzzing that now isn’t the time to overextend?

      • Peter Schiff sold his house and became a renter just prior to the US housing collapse with the intention of buying back in after prices fell. It was an exceptional statement to make publicly and you can be sure he was reviled for having done so. Peter is a millionaire and could have weathered any storm that was coming but his belief was strong enough and his knowledge of the markets so certain he did not hesitate to make what I would call a sane financial decision. So some people do in fact sell and rent in advance of major price declines, Ralph. You just have to let pride get out of the way and be prepared to take the abuse most contrarian thinkers are usually subjected too. Funny how those people keep coming out on top though, isn’t it?

      • As always Farmer, a thoughtful and considered post. For what it’s worth, I must say there have been a whole lot more warnings in Canada than there were in the UK – in 2007, we basically went “over the top” with a 15% decline in house prices in 12 months – and there wasn’t a word of warning about indebtedness from the MSM before.

        Now, if you look back from five years’ distance – well, it’s obvious.

        By the way, UK is now -35% in real terms from peak five years after top. A similar pattern would see the YVR average at (by my math) $650,000 in 2017 – does that tally with your estimate?


      • So glad you started posting again, Farmer. You can troll through 50+ comments on here until you get the same amount of information as in one of your posts. Exceptional clarity of thought. Thanks!

      • Thanks Craig. Thanks Ray (don’t make me blush, man!)

        I can easily imagine a 35% decline nationally and that would align with declines seen in other countries so it cannot be dismissed as being a plausible outcome. Vancouver gives me the shivers though and so I am anticipating much worse for that city. I really don’t think that 50% is out of the question and in some burbs it could easily be worse. If it were not for the fact that China is slowing so quickly I might be more optimistic but the policy level changes there mean BC is in for a few years of hurt. In the big picture, the entire globe is about to embark on a lengthy period of deleveraging. How long it takes is anybodies guess but when we consider how deeply indebted most countries and thier citizens are I don’t think a decade is out of the question. Look at the US. Just 5 years into its own correction and still no bottom is in sight. Our best hope up here is a healthy recovery down there. That would soften the blow. I am sure most will hang on to their homes though. Hell, it is not like we can walk away and go camping all winter or live in our cars like so many did in the warmer US states. Just the aspect of the weather will motivate more in this country to remain rooted and pay down the debts. Strategic default is therefore much less likely as a lifestyle choice.

    • One word: Global.

  2. Im an outsider and I dont need to be nice. From the outside it has been very obvious.

    Since just before the 2008 correction ive been trying to get into peoples minds and make the vast majority of zombies think.

    Those pushing this are fully aware how easily led most people are. And they are making tens of millions off this – and stupidly so. In the long run they will be hurt far more. But they will take the short term profits every time.

    i find the mania frankly totally sickening. Ive been a developer for over 20 years the campaign across Canada with its a short term and stupid strategy, will in the long run hurt everybody including the developers.

    And the zombies fall for it every time. If you watch zombie movies and relate to the humans rather then the zombies, then maybe its time to start thinking like a human and not a zombie

  3. Renters Revenge

    My sense on the discomfort with the bear/bubble case is more due to the vested interest that most people have with their own real estate investments and the critical impact that has on their personal financial planning. The severe discomfort that I have seen in peoples faces when the discussion comes up, is from the subconscious realization of just how bad it will be when the bubble finally does burst. I once let it slip to a friend that I thought prices would come down 60-70% and he reacted so oddly – he didn’t argue that they wouldn’t based on any particular logic, he simply said they couldn’t. Leaving unsaid the fact that if they did he was completely screwed. I could see it in his eyes, and I honestly felt bad for expressing my opinion so plainly. Nobody wants to hear the awful truth.
    The MSM is clearly biased to the bull side but I would argue that is more a function of the same vested interest among individuals within the media than it is any grand conspiracy to promote only one side of the debate.

    • Agree.
      The overall large patrern of bias originates from individuals making many small biased decisions rather than from some grand conspiracy.

  4. Ralph Cramdown

    I wouldn’t go so far as to say that the MSM’s coverage of RE is unethical. I don’t think there’s any actual malice. RE is not hard news, but it isn’t the puff/lifestyle stuff that all gets outsourced to freelancers, either. So the junior reporters get put on the job. They do get manipulated by the super sellers that the RE industry naturally attracts, and few of them look for a dissenting opinion.

    To an extent, everybody’s talking their book. Well over half the population owns, and a large slice is involved, directly or indirectly, with construction/sales/financing &c. I think for a lot of uncritical thinkers (sheeple?) the feeling that RE will continue to do well is more of a subconscious thing, wherein they don’t want to think about being unemployed or losing equity. Heck, even among the renters, many (I’d say the majority) aspire to ownership. The trend is everybody’s friend.

    I recently sold a house for my elderly relatives. I’d been thinking about this house on my frequent visits for years. Good layout*, good bones, large lot, high, relatively unobstructed unfinished basement. 50 years old, original condition. Would need 2 complete bathroom renos, all new windows, replacement of the oil furnace and electric HWT with gas and the addition of AC, more insulation, finish the basement, and a kitchen embiggenment, likely by pushing out an outside wall and changing the roofline (alternatively by losing the smallest of the 3 bedrooms). We could have bought the property (or just structured a deal whereby we paid their living expenses in their new digs while fixing up the old one), done the renos, sold and done well, contingent on the market continuing. Tax free capital gains!

    At this stage in the cycle, I wasn’t ready for that risk. So I had to put on my selling hat (and trust me, I didn’t own one), and extol the virtues of the house, the lot, and the street to people who were either going to spend a lot of time and money in renos or build new. When asked why we weren’t moving in, I had to say that with my wife working downtown, a 2 hour commute would be unfair to our young child. Everyone talks their book.

    * – except for that kitchen!

  5. Nobody wants to face the grim reality, so they subconsciously look on the bright side. Being the bearer of bad news generally doesn’t sell newspapers. And it’s especially tough for traditional media to do business days… just look at ongoing newsroom and newspaper cutbacks.

    • That is part of the bias, yes. (Or, better put, one of the many types of bias that come into the cumulative grand bias).
      Humans are predisposed to being irrationally optimistic. This has been of evolutionary benefit over time, but there are many examples of it leading to disaster both on the personal and the group scale.

    • Awesome blog name! Makes me want to go for dim-sum… 😀

  6. great subject for sociology/anthropology thesis, with a chance to observe cult-like mentality “in the wild” – ironically, this subject may not be interesting enough until after the crash

  7. note parts 1, 2, 3 … … funny thing is if you dig around enough in msm, you can find most of the relevant facts … they just happens to be buried and marginalized … the trashy rags are often better than the ‘respectables’ … good, timely op-ed is rare though … for that, need to look outside the msm model

  8. You may wish to save your ardor for the astrological explanation. The West Coast is ruled by Neptune. Neptune rules movies, films, television. Why? because Neptune rules deception, illusion, disillusion, addictions. B.C. politics is like no-where else in Canada. Why? Neptune. Drug addicts on the coast? look around you, the place is a mecca for those with water element afflictions (Cancer,Pisces,Scorpio). That the RE bubble can inflate and inflate on the Coast thru tv media pumping…. no prob figuring that one out… Neptune. Neptune is a feminine planet. Want to try Mars aggression on the coast? sorry, won’t get you far. But if you want to refine your deception talents, there is no better place.

  9. joe_blown_away_by_high_housing_costs

    I find the ‘group think’ element to the RE bubble to be very interesting and frustrating. I don’t talk about this blog with my homeowning friends because I don’t want to scare them and I know they won’t be able to receive the message.

    A related phenomenon is academic fads. I studied urban planning a few years ago. My academic colleagues have all bought into ‘New Urbanism’–which is an urban planning ethos born out of a rejection of the alleged monotony/car dependence/anti-community nature of the suburbs. New Urbanism is about increasing density, walkable, transit-friendly communities in central areas of cities. It started off as being highly critical of property developers although in Vancouver it has been co-opted by developers. Vancouver’s EcoDensity policy comes from New Urbanism and it is also a developer’s dream. Vancouver actually has its own form of New Urbanism known as “Vancouverism”, which refers to the condo tower perched on a block pedestal that contains street level shops and townhouses.

    The people I went to school with simply cannot tolerate any criticism of New Urbanism. One critique of New Urbanism is to point out who it has been a key part of the real estate bubble. All this high density development is very much about keeping the bubble going. It’s not so much about peak oil and minimizing our ecological footprint–although that’s what is supposed to be the motivator of high density, in theory. As soon as you start criticizing New Urbanism and EcoDensity, you are seen as a lover of suburb sprawl and car dependency and a denier of peak oil. Adherents to New Urbanism just cannot see how their planning ethos is being used to inflate one of their largest real estate bubbles in human history–which is not only economically unsustainable but also environmentally unsustainable. People can’t afford to live in Vancouver so they move out to the burbs, contributing to suburban sprawl. So New Urbanism isn’t exactly the antidote to suburban sprawl that it was promised as. But New Urbanist ideologues just can’t accept that.

    I feel like we live in a time when people have lost the ability to participate in critical thinking. It’s like there are large groups of ideological adherents. If you’re not 100% on side with the New Urbanist, you’re a pro-suburban sprawl type. There’s no middle ground. There’s no ability to self reflect and see the internal contradictions of our theories/beliefs/ideologies. Most people are just caught up in group think. Read the social science of the 1960s–far richer and better ability to critically reflect on theories than what you see today. But that social science is dismissed today for being ‘politically incorrect’.

    • I’m not sure I follow you here. New Urbanism is one of the myths that help drive up prices, is that your thinking? You aren’t being explicit about the mechanism. There certainly might be some truth to that notion, especially in driving young people to buy before they are anywhere near being in a stable financial position or even before they really should be deciding to never move again or be faced with the accidental absentee landlord lifestyle.

      I believe, however, that we are seeing the bubble strongest among condos has much less to do with New Urbanism and far more to do with it being the easiest market point to enter at. Also, it’s promoted more heavily. It’s just the Walmart of the property ladder and therefore draws the widest number of shoppers.

      On the other hand . . . Speculatively, condos should be a hard sell. You aren’t getting any dirt, you are getting . . . density. Lifestyle. But condos have been a speculative instrument from back in the 80s, long before New Urbanism, when in my neck of the woods they were suburban, and only medium density.

    • I don’t see the mechanism for New Urbanism feeding the bubble, myself – although no doubt they’ve been correlated in our case – but I *do* think that the WAY we’ve done densification is contributing to sprawl.

      What is the median size of your average downtown condo? If you actually want families in their earning years to stay downtown close to their offices, allowing them all of 800 square feet is going to backfire. So you have young persons in school or working entry level jobs living downtown, and also seniors – and the people in their main earning years move to the suburbs so that they can have any space at all and commute. Bass-ackwards, if you ask me.

      I keep seeing it happen – and not just for the SFH, either. No one I know can afford a SFH! But families with kids often want 1100-1400 sq.ft. so they move to 3 bedroom condos and to townhouses in Port Moody, Surrey, New West. Places where there’s enough space that you can store senior child’s clothes until junior child grows into them: that you have space to store camping equipment, sewing machines, a barbeque, etc. Kitchens that have enough cupboard space that you can have staples always on hand and mainly cook for yourself. Etc.

  10. Froogle Scott

    > jesse
    The last year has seen a definite increase in bearish RE coverage in the local MSM, although the articles often issue various caveats, and find ways of undercutting their own message, as if they can’t quite bring themselves to make a direct, unequivocal statement along the lines of ‘we have a massive bubble, it’s been growing for almost a decade, and it’s probably going to collapse’. In all fairness, if I were a member of the MSM, I might hesitate to make such a bald statement myself.

    One thing I find especially disingenuous in a lot of the pseudo-bearish coverage is the notion that ‘a bubble may be starting’, or ‘we risk getting into bubble territory if this goes on’. A willful blindness to what has actually happened. Our house has increased by an average 10% p.a., compounded, for 9 years straight. Ten years straight if you include the year before we bought. A normal market would be price appreciation at the rate of inflation, 2.5% or 3%. Perhaps a little higher because of Vancouver’s cachet. (I have read some of your thoughts on Housing Analysis regarding what Vancouver’s true baseline/trend line might be.) VHB was calling this a bubble 6 or 7 years ago, and had a considerable following. The MSM roundly ignored him — as far as I know. There was the Vancouver Magazine mention, but only as a foil for Bob Rennie. So when I call the MSM coverage of Van RE “unbalanced and unethical”, I’m thinking about the entire past decade, when they could have been saying something a little more balanced and analytical, rather than boosting and cheerleading and marveling about ‘the land of real estate millionaires’.

    The cynical interpretation of the new more bearish slant is that the MSM don’t want to look like they were caught totally off-guard if the bubble does burst. But it’s still potentially unethical if members of the MSM have suspected for years that there was a bubble, and yet said nothing, or continued boosting. Closers of the gate after the horse has bolted, and after having applied a switch to the horse’s rear end.

    > Farmer
    “And nothing will be allowed to ruin their dream of homeownership from that point of decision onward.”

    That’s really it, isn’t it? You’re seen as dumping on someone’s dream. And for most of us, our dreams and aspirations are what motivate us to keep going. So anything that threatens that is interpreted as especially hostile. It’s a tough one. How do you tell someone that their dream is potentially dangerous? I’ve ventured my opinion lately because I really think people could suffer some serious financial harm. But I’m thinking I’ll probably go back to keeping my opinions mostly to myself – except on the blogs, of course.

    > joe
    Good points. I’m guessing the 60s thinkers and original New Urbanists included a diversity of income levels in their theories, and housing affordability would be seen as a fundamental plank of a healthy urban community. That’s what’s missing now. Vancouverism can look like a great thing from the outside, but it’s still anti-community if there are invisible gates based on income level.

    Ironically, a rejuvenation of New West may be in the works because of middle-class Vancouverites fleeing prices, and associated housing configurations, in the core.

    • Sure Scott. I chalk it up to plain laziness and outlets who don’t reward reporters for going the extra mile. It’s complicated, actually, but I think reporters often get swooned by those versed and talented in media relations. The dirty underbelly of this bubble is something that isn’t directly quotable.

      Wow, who thought that being a journalist can be difficult. If they want to know why their readership is in the pooper it shouldn’t come as any shock.

      My suggestion: white board, post-it notes, critical thought, and scepticism. Give it a try.

      • following that logic to it end … having accepted the function of msm for what it is (a propagandist network for hire) it’s not too difficult an adaptation to obtain useful news from it

      • The difficulty the media has to constantly contend with though is that it is by definition a backward looking narrative. It is not the role of newspapers, magazines or the visual media to speculate or draw conclusions before events have actually taken place. Good fair and balanced reporting tells us with as little bias as possible what has actually happened. Blow by blow events are expected. It is up to the audience to draw conclusions about what the ramifications are and in this respect I think the blog world excels and has a place to share with our other media. What are we all doing daily is projecting potential outcomes onto the future and offering our best analysis based on the facts as we aqcuire them. This is why I try to reserve judgement on the MSM where possible. I actually do not want them to do my thinking for me. Just give me the facts, man. I will come to my own conclusions.

  11. @Ralph Cramdown
    “To a first approximation, NOBODY sells their primary residence and rents in anticipation of price declines. So once you’re on the ladder, you’re a secular bull until you die.”

    I assume that you meant NOBODY literally, which simply isn’t true. We sold our home in Kelowna over two years ago (a couple years past the peak – it took over a year to convince my wife that renting was an option) and we have been renting while Kelowna home prices have continued to fall.

    We are not a mobile young couple, but a family with 3 kids under 5. Contrary to many peoples beliefs, the world didn’t end when we brought our youngest daughter home from the hospital to (god forbid)… a rental.

    We have had the problems that exist with rentals, and have moved once since selling (which is an incredible pain with 3 young kids), but when I put a dollar value on it (i.e. calculate the amount of cash we have saved and earned on our investments) then it becomes palatable, even for my wife who was vehemently opposed to it originally.

    My family (parents, grandparents, etc.) developed condos in the 80’s and 90’s and has always owned property, mainly commercial, some residential. I was and still am a firm believer in investing in property, but anyone logical and analytical could easily see that the numbers in BC haven’t made sense for years.

    We bought a house as soon as I had my first real job, back in 2003, and a rental cabin soon after. Real estate has been a way to get ahead in the past, and it helped us do exactly that, but it only works if your property cash flows and/or if you know when to sell.

    I don’t discuss this topic with just anyone. As noted by several here, it isn’t a popular dinner party subject and we’ve just given the explanation that we’re not ready to buy again; we’re trying out neighbourhoods; we’ll buy when my wife returns to work full time; etc.

    Lately, people have started to comment how the timing is going to work well for us (with house prices coming down) so it is becoming more widely known and acceptable to discuss the price slide. Those people are usually the ones who have moved in tha past few years. By now, it is pretty clear to everyone that condos and recreational property here were a bad investment, but a lot of others still think house prices in Kelowna have been going up all that time.

    I have made my case clear to people close to me (a couple close friends, siblings, etc.), and have even gone as far as to suggest selling and renting is their best, if not ONLY option. It still isn’t popular, but I think that the value of the message in those cases is worth the tension in those relationships that are important to me. For everybody else, when we eventually buy again at a drastically lower price I’ll just shrug my shoulders and plead dumb luck.

  12. As a secondary note on selling and renting (and discussing it): We still considered buying again if we could find the right house. We viewed dozens of homes, and in our price range, we simply couldn’t find what we wanted.

    I compare it to buying a car or even a big screen TV. I know a car is not an investment, but I still own one, and probably always will. I own one because the convenience is worth the cost to me. At the time, we were considering if the cost of buying a home was worth it to us, and it wasn’t. For a few it will be, no matter the declines. For most, unfortunately, they don’t even consider the true cost.

    If I do discuss house prices with someone, I often bring that up to soften the blow to their “dream of homeownership”. I ease into conversations saying that we really want to buy again sometime, but right now it’s just too expensive “for us”.

    Similar to Froogle Scott, I’ve started widening that circle of people with who I will discuss this because I’m worried that they are going to suffer serious financial harm.

    “It isn’t an investment, it’s a home…” Giving someone that “out” can make it easier to breach the subject of price declines and the true cost of home ownership. Then, if you can get them to rationally consider the cost, without actually telling them they should sell, then they may eventually come to that conclusion on their own or may decide they that the cost is worth it – both scenarios are better than blindly considering it an “investment”.

    • My car offers significant time savings. I haven’t accounted for it exactly but having one definitely has value, enough that I would call it fungible value.

      • Our first vehicle offers significant time savings. Our second adds a little, but not much. Same with the TV and a lot of luxuries in our home – they aren’t returning value to us, but buying them at a certain price was a conscious choice.

        My point being that many people would be willing to pay a premium (cash premium and risk premium) for the perceived benefits of owning a house vs. renting, myself included.

        Whether they realize they are paying a premium is what is questionable.

      • “Whether they realize they are paying a premium is what is questionable”

        Sure. The issue is when people start using the word “investment” then talk about intangible benefits of home ownership, the whole affair gets muddled. I just wrote about this on mohican’s blog, but how much I value my car bears little relationship to how much I have to pay for it in a competitive marketplace. Not so, apparently, with housing.

        I think we’re stating the same thing in different ways.

    • My first post didn’t come through, but essentially it was a reply to Ralph Cramdown’s statement that “NOBODY sells their primary residence and rents in anticipation of price declines”.

      We live in Kelowna and did exactly that 2 years ago. Sold our cabin as well even though it cash flowed because the capital could be better invested elsewhere.

      • Ralph Cramdown

        OK, that’s two that have come up with counterexamples. I said “To a first approximation…” Can we say of property owners that fewer than 1 in 20 would consider selling their primary residence and renting, with the intent of buying again after a decline?

      • @Ralph Cramdown

        I agree. 1 in 20 would still be very significant, but it’s probably fewer than 1 in 1000, or even 1 in 10000. but I disagree that “once you’re on the ladder, you’re a secular bull until you die”.

        A lot of people who were bulls on the way up will panic and sell on the way down, or will get burned and never invest in property again. This includes the parents with their “investment” property for the kids, or the forced landlords who bought a new place but won’t sell the old one “for less than it’s worth”. I think their attitudes will eventually change drastically even if they continue to own their principle residence.

      • I agree with you Ralph. The truth is that the majority will not sell to take advantage of an opportunity to capture gains off the top with the expectation of buying back in the bottom. That is way too sensible for most people to consider.

        Few can time tops and bottoms anyway and the experience can be negative if you get it wrong. I have been picking up anecdotes of realtors bailing out though. Some of those dogs knew we were bubbling all along.

        There is also a fairly savvy group of market watchers who hate losing so badly they would never consider holding property during an obvious decline. And then there are the speculators. That sorry class of misfits who seek only quick and easy profit are doing the most damage as they pile on and all list sales together thus driving prices down for everyone.

        Course, they are a little more desperate than most. Unfortunately, it is the average stable working family with no intention of moving that will see equity wiped away unexpectedly. These people who were not expecting big changes will be shocked to discover they don’t qualify for thier own homes in a few years or that their HELOC has been called by the bank on little or no notice. The shakeout will be terrible.

    • BTW I like the angle, first take $ off the table and talk about the intangibles, then bring it around to talk about “the numbers”. Bears are salespeople too I guess, but only at dinner parties!

  13. 4SlicesofCheese

    Not sure if this has been posted.

    “Housing Market: Mortgages & Interest RatesAs a nation, we are Deep in Debt. As homeowners … are we also Deep in Denial? OSFI is proposing major changes to the way mortgages are refinanced. Today we look at the implications on proposals for higher interest rates and new mortgage rules.”

  14. In general – unasked for advice is always taken as criticism. It’s good to remember this at dinner parties, when hanging out with family, and in the workplace – pretty much everywhere. Unless people are asking you “do you think this is a good time to buy?” giving your opinion on their upcoming housing purchase will only result in hard feelings. This is the simple rule of tact, and since their finances aren’t theirs – you don’t really need to worry about what other people are doing. And -there- is my unasked for advice on how best to deal with dinner parties!

    • Actually, this blog has spent months, years even, highlighting precisely why we should worry about the enormous debt loads people are taking on. It does affect all of us. It’s hardly the right thing to do to just sit on your hands and watch people blow their financial brains out, not when that action has the potential for so much collateral damage.

  15. One of the commenters for a G & M article today accused housing bears of being “unpatriotic”. Because a housing correction is bad for the economy, therefore to hope for a correction is anti-Canadian.

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