“The real estate industry has ramped up its attack on rules making it harder to borrow but its challenges face one big obstacle — mortgage restrictions are working exactly the way the federal government wants them to.
In the past week the Canadian Association of Accredited Mortgage Professionals weighed in with complaints that Ottawa’s restrictions were killing consumer confidence and even raised the stakes further by suggesting the entire Canadian economy was at stake.
Toronto builders joined the fray, calling out the federal government for rules it maintains have a lot to do with the cooling market in the city that saw sales in October dip 14% below their long-term average.”
“One executive who says he’s changed his tune on the government’s crackdown is Phil Soper, chief executive of Royal LePage Real Estate services. When the latest regulations came out in July, he was one of the first to suggest the time was wrong, but he’s gone full circle since then.
“At the time, I thought it didn’t make sense,” said Mr. Soper. “I’m being contrary again. I think the impact of mortgage regulation is being blamed far too often these days in what is clearly just a natural cyclical slowdown in the market driven by overpriced homes. We were due for a slowdown. The timing was unfortunate but it’s not a major event. I think chances of it being reversed are close to zero.”
– from ‘As tougher mortgage rules slow housing market, critics call for a reversal’, Garry Marr, Financial Post, 26 Nov 2012 [hat-tip CM]
We agree with Phil regarding mortgage regulations being erroneously blamed. And hats-off to him for admitting his earlier error in judgment. We suspect we’d likely disagree with him on the magnitude of the coming ‘slowdown’, however.
The spec mania was waiting to pop, would have done so with absolutely no precipitant at all (spec manias finally collapse under their own weight; fallacious ‘reasons’ for the collapse are always blamed).
We’ve already started collecting ‘Erroneous Theories For Falling Prices’. Number five is ‘Tightening Of Mortgage Rules Caused The Crash’.