“Canada’s Housing Slump can’t be pinned on last-minute regulatory changes. Blame it on excessive debt. Blame it on over-enthusiastic realtors, or homebuyers who have finally drawn a line in the sand on house prices.”

“To hear Canada’s banks, industry groups and even the Conference Board tell it, the slowdown that descended on many Canadian housing markets over the summer is the fault of the strict new mortgage rules Flaherty put into place this past June.
“To the surprise of no one, following the introduction of the most recent rule changes, sales activity ratcheted down,” said Gregory Klump, chief economist at the Canadian Real Estate Association, in announcing a 15.1-per-cent year-on-year decline in home sales for September.
The Toronto Real Estate Board chimed in: “Some households have put their home purchase plans on hold in response to the higher cost of home ownership brought about by the recent changes to mortgage lending guidelines.”
The industry has good reason to maintain this narrative. For one, it makes it seem like falling sales volumes and prices are all “part of the plan,” nothing to worry about. (Not true.) And it also deflects uncomfortable questions about the role of real estate developers, agents, banks and industry groups in creating the inflated house prices Canada has seen in recent years.
The media are happy to go along with it, because it offers a neat and simple explanation for why Canada’s decade-long housing boom is coming to a halt. The only problem is, this isn’t what’s happening.”

“However you slice it, this is one phenomenon that you can’t pin on last-minute regulatory changes. So blame it on excessive debt. Blame it on over-enthusiastic realtors, or homebuyers who have finally drawn a line in the sand on house prices.”
– from ‘Canada Housing Slump: Flaherty’s New Mortgage Rules A Scapegoat For A Much Bigger Problem’, Daniel Tencer, Huffington Post Canada, 2 Nov 2012 [hat-tip to kf and other readers]

Blame it on a speculative mania that has turned.
See the main thought of this article previously listed as one of the
‘Erroneous Causation Theories For Falling Prices’.
– vreaa

17 responses to ““Canada’s Housing Slump can’t be pinned on last-minute regulatory changes. Blame it on excessive debt. Blame it on over-enthusiastic realtors, or homebuyers who have finally drawn a line in the sand on house prices.”

  1. convulsing over blame is this sites bread and butter

    a dude with no debt

    • Real Estate Tsunami

      Just semantics, just semantics.
      Call it blame, cause, result,whatever, the fact is that we are knee-high in debt. (See also today’s Province).
      And don’t be so smug. If this thing goes down, we all lose.

      • ok, so, let’s NOT let this thing go down. Everyone pay your $1000 rents and reward the speculative landlord capitalists. They have earned every nkicel of our economic leadership trust.

      • Paul.. I’m really not sure of your position, based on the above.
        Regardless, people are going to ‘blame’ all sorts of factors on the way down.
        And “this thing” will go down regardless of anybody wanting to “not let” it do so.

      • LOL…I will enjoy watching everyone of these smug shits eat their HELOC and paper profits. Love watching the divorce as the better half bails once she realizes the ATM is shut off.. Love to see all the traitors who embraced selling off their childs future to a bunch of offshore thieves go broke. IF you you mean “everyone” who works in the real estate pimp/ponzi scheme.. agents, architects, stagers, printers, etc etc etc.. f&%k em. they have it coming. and the entire smug lower mainland with its no industry, no decent jobs fantasy land. bout time it got taught a lesson in reality

      • Rusty can't wait to watch the tears in the Walmart parking lot


        Can I get a hallelujah?

  2. It fits the psychology perfectly. Its everyone else fault but mine, im the good guy, i did the right thing. Its everyone elses fault. especially the GOVERNMENTS or
    (insert establishment media hyped boogeyman here…unions, teachers, NDP, liberal, parasites, socialist, freeloader, renter, racist, druggie, cop-hating, child molesting, immigrant, homeless, aboriginal) here.

    • 100% of ManichaeanDualists would agree that there is only one plausible explanation… “It was Beelzebub WotDoneIt!”

      [NoteToEd: Well… it is Sunday…]

  3. vreaa, my position means squat.

    • Rusty's moon is waxing

      Well, that’s one thing staring at the stars all night will do for ya – it makes you realize the scale of your insignificance.

  4. Everyone seams to forget the Political welfare shitheads at the ASSessment Offices who generated the rosy property tax papers proving and providing proof that everyone’s property was constantly increasing in value. Of course they were using cherry picked and very Massage Fictional Accounting ideas to make the base tax value increases look so dam promising. Why hell in 3 years the ASSessment value will match what I paid, what a deal… Idiot’s the whole lot of them. Watching all these idiots with no money crash and burn is going to be a comedic riot.
    Hell I paid a shit load of extra property taxes(27% compounded per year) for the show and I’m gonna really enjoy watching the rending of hair, the stupid starving entitled special kid’s having to get a job for spending money,… and buying cheep at all their yard sale deals… and then the houses later…. with of course the proper depreciation .
    let the Games begin.

  5. A well-written article in “The Guardian” about ground zero of the US housing bust: Stockton, California:


  6. “Just don’t blame it on Harper and Flaherty. All they did was close the barn doors after the horses had fled, and help the chickens come home to roost.”

    Ummm… “all they did” was preside over the past seven years of housing policy formation. In their defense I don’t see other parties stepping up. So no I can’t really fault them from giving the populace what it wants. I guess.

  7. http://www.rew.ca/articles/353

    Interesting that no fewer than 15% of property sales are of properties held for 2 years or less.

    • Interesting but I would look a bit deeper into their methodology. Not that I question the conclusions here but completions were much higher during the time when properties were being “flipped” so we would expect once a unit completes it might be more prone to being sold by an investor.

      It could well be that flippers are more absent now than before — that would certainly make some sense given appreciation over the past four years is lower (for condos at least) and carrying costs reduced by means of lower mortgage rates. My belief is that “flipping” is not a guarantee things are fine, rather negative real rates have temporarily masked a looming problem.

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