Wednesday, September 28, 2011

Bits and Bobs

1) China's RE bubble is in trouble. This is critical for us here in BC. This guy says..'get out of China'.

IF he is right, commodities will be in big trouble.

2) Mixed picture on the prices from Larry- some places like Coquitlam are down big while others like East Van are up big, even with lower sales. Well, we will know in a few days what the average and benchmark numbers are.

3) Make this site your RE hub. This may not be the best or most high tech site, in fact far from it :)

but I have listed all the best site here >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

And you can see in an instant when they put up their posts.

4) Ads. Well readers I know you are interested in the ad experiment and I did promise to tell you how rich I got from throwing the ads up. I have made a total of $39 from ads since I signed up with Google Adsense two month ago. In fact I haven't made anything since they only pay when it gets to $100 and then after you jump through a number of hoops. SO what say you all..since the return is so minimal shall I get rid of the ads and spare you all the distractions. I will be swayed by your comments.

Tuesday, September 27, 2011

Just to remind ourselves where we are...

As we head into the September numbers, this is the most anticipated report since last fall. At that time we had high inventory, but dropping listings robbed of us of our correction.

This year we have higher inventory, but no let up in the listings flow and a real drop in the list/sale ratio. Good things better flow from this.

It is useful to know where we stand now. As you can see even though some areas are still on fire, there are other areas which are already down YOY... and this clears that awful post with the many fonts :)

From the recent BCREA report:

According to the BCREA survey, the average price in B.C. rose 10.7 per cent in August compared to August 2010 to $540,000 from $488,000.

However, price changes fluctuated sharply by region, with the Fraser Valley showing the sharpest increase of 19.7 per cent over the year, from $424,000 to $508,000.

Metro Vancouver prices rose 14.4 per cent from $681,000 to $779,000, while Victoria prices rose 13.7 per cent from $472,000 to $537,000. The rest of Vancouver Island showed a slight price drop.

However, Powell River showed the sharpest drop - 12.7 per cent, from $297,000 to $260,000 - while the Okanagan Mainline recorded a 0.3-per-cent drop in prices from $384,000 to $383,000 and the South Okanagan dropped 7.2 per cent from $331,000 to $307,000.

Year-to-date, it was more of the same, with B.C. recording a 14.7-per-cent price increase in the first eight months compared to the same period in 2010, Metro Vancouver recording a 19.2-per cent hike over that period and the Fraser Valley seeing a 12.6-per-cent increase.

However, the Okanagan Mainline saw a 2.5-per-cent decline in the six-month period and the South Okanagan recorded a 5.4-per-cent drop in prices.

Powell River saw an eight-per-cent drop in the six months, while Victoria recorded a 0.5-per-cent decline in the average price.

The Kootenay region recorded a 4.4-per-cent increase in August compared to August 2010, from $274,000 to $286,000, although the average price fell 3.5 per cent year-to-date.

Sunday, September 25, 2011

Is this fellow right...

I found this excellent article by an Economist, Alexandre Pestov at the Schulich School of Business (try saying that twenty times fast) in a comment posted On Ben's site . The graphs are excellent, so are the arguments- though I didn't see much mention of HAM or outside money which has had such a significant effect on our prices.

It was written in Feb. 2000 and he makes the usual case for the bubble in Canada, however he also states the things that may make the bubble pop, which he mentioned may all come about in 2011.

Here are some excerpts:

Current housing prices in Toronto, Vancouver, Montreal and Calgary are difficult to rationalize using any combination of fundamental metrics. As history shows, this leads to a price correction. The disparity between gains in income, growth in rental rates and home prices in Canada is quite apparent.

Over the last 13 years, growth in home prices substantially outperformed all other components. From the fundamental price-to-rent perspective, real-estate as an investment no longer represents an attractive asset. In fact, at the current home prices in major Canadian cities, renting an apartment makes more financial sense than owning it. This market state leads to an array of predictable consequences. For instance, renting a property out now requires a substantial subsidy by the home owner, which effectively eliminates renting out as a contingency measure in case of income loss.


The price-to-income ratio in Canada is at a historically high level. In fact, in some cities it is the highest on record. Over the last 13 years home prices have become decoupled from homeowners income, the mean household income has risen by 23 to 32 percent in the four largest Canadian cities.

Over the same period, the average house prices in these cities increased between 100 and 200 percent. Based on the price-to-income ratio, the four major Canadian cities experienced growth comparable to that of the hottest spots of the US housing bubble. Yet, the US bubble burst, but home prices in Canada remained around these tremendously high levels.


Affordability in Canada is approaching historically high levels. In Vancouver, the housing affordability index exceeded the peak of the latest housing bubble of the late 80s. Adjusted for interest rates, the current affordability index in other Canadian cities is at par or above the peak of the late 80s bubble. If interest rates went up to the historical average, average households in Toronto and Vancouver would be paying 100 percent or more of their gross income towards ownership costs.


On the median multiple ratio measurement, Vancouver (9.3), Toronto (5.2), Montreal (4.9), and Calgary (4.6) hover substantially above the “normal” 3.0 level. Based on this valuation, Toronto is considered a “severely unaffordable” city, while Montreal and Calgary lie on the border between being “seriously unaffordable” and “severely unaffordable”. Vancouver prominently stands out even from this crowd: it is not just “severely unaffordable, but it is also the least affordable city in Canada, the US, UK, Ireland, Australia and New Zealand.


There are three main triggers that may help to set off the housing market decline. They are: HST, Olympics and rising rates


The whole piece is worth reading. But basically he says the triggers could be quite minor.

Eg the end of the construction boom linked to Olympics and the public debt problems that come out of it

Or a small rise in rates.

Or the advent of HST which has pulled demand forward (often due to confusion) and left a drop off that follows

He stated that all three were likely events in 2011.

Well I think he has been partially right. Bubbles are impossible to time and the 'trigger' for the burst is usually not what one would have expected.

Eg we have had the post Olympic drop in public spending, but the Government has kept the build-out going. Also the main hang-over (the Olympic Village) seems to have been thrown around the neck of the City of Vancouver and not the Province.

Also rates did start to move up in 2010 and many thought they would go a lot higher (not us here) - but the worldwide economic crisis has stopped the rise dead and a drop may now be on the cards.

However 2011 does indeed seem to have been the top for now. April to May 2011. And new possible 'triggers' have emerged. These include; a slow-down in China, another world-wide economic crisis, changes in Federal policy on mortgage length and CMHC insurance, a drop in commodity prices and higher unemployment. Maybe something else will come along and be 'blamed' for the fall. Whatever it is, it is never due to our own greed or our leaders' complacency. If it wasn't for 'X" we would still be in a boom!

And if you want a clear indictment of the foolish decisions our leaders made in this whole mess, there is no better summary than this. This is THE MOST important paragraph of our BUBBLE. I have re-read it many times.

Well done Mr Pestov for outlining it so clearly:

It is worth reminding ourselves that the bubble in Canada did not burst due to the massive intervention by the Harper government.

The intervention was orchestrated by injecting thousands of new buyers - many of whom cannot afford owning the property they purchased – into the market to prop up the prices.

The scheme worked, and the disaster was temporarily averted. However, the problem was not fully or even partially rectified.

By postponing the bubble deflation, the bubble was inflated further. If a housing market collapse would have caused pain and distress on behalf of a large and overleveraged Canadian population in 2007, the housing crash of 2011 will affect all the same buyers, plus many more of those who were sacrificed to keep the prices going up. More fire sales and more competing properties on the sell side will cause a sharper and a deeper downturn that would have been experienced in 2007.

Furthermore, CMHC, the second largest crown corporation in Canada, would require a bailout due to all the risky sub-prime mortgages it has insured. Every single one of the main sub-prime lenders in the US went out of business or required a massive bailout2. Unlike the US, the Canadian sub-prime lender would not require a bailout. In Canada, the bailout is already embedded in the system. It would simply be passed on to tax payers in the form of a larger national debt, higher taxes or tighter funds for social programs.


That last sentence explain why we are ALL in for a very difficult time when this bubble bursts. The Government has already committed to the bail-out! The only thing that remains to be decided is when and how much we all pay.

Saturday, September 24, 2011

We are hitched to China...

As the BC Premier quite clearly stated in her job's initiative, she is looking to Asia for growth and more investment.

The fate of our Provincial economy is tied to China in the way it was once tied to the USA. Our housing market especially is hitched to Chinese buyers.

They are the main buyers at the high end, there seems little doubt of that. They are also acquiring mid-level properties, often in bulk from developers for investment or to diversify or to move money out, no one is quite sure about the exact reason since the net returns are so low.

In any case it is a fact that we have to accept and deal with.

The quantities of money are also well beyond what we are used to. We have lots of people in Vancouver earning high 6 figures, but when you see 13 super-luxury cars - some $400K+ impounded for speeding, some driven by teenagers who OWN them know we are dealing with a different level of wealth.

I am sure most of it is legit however I am also sure that some of it is not, and is very hot money.

We have a reputation after all for allowing very hot money to hide, particularly in this Province where we have a huge and thriving cash drug business. And as soon as you set foot here, even if you are a crook, it will take Millions and many years to get you took 13 years for the Thai Government to get this fellow, meanwhile he lived in the lap of luxury in Vancouver.

Dozens of Hong Kong policemen and their underworld associates who amassed huge fortunes and escaped to Canada were never sent back. In fact they became amongst the wealthiest real estate investors in this Province. They came with wives, children and even concubines and yet how many people have even heard of them, and most of them died of old age here, unmolested by the law and enjoying their ill-gotten gains. There is a lot more on the net about this if you want to check.

OK, so we are bound in many ways to the state of the economy in China. It is indeed a double edged sword.

If they falter, the steam comes out of housing, but we may be really hurt. Think the $C hitting 75 US cents again, and big cuts in Provincial spending...OR...maybe instead someone will start to question the origin of the huge funds that are coming into our city and buying $7 homes or new developments.

I think that is very unlikely.

The whole world is now begging for Chinese money. We have it. The last thing our Governments want to do is frighten it away by asking too many questions.

Does this mean there won't be a correction?

On the contrary. My neck is sore from sticking it out so much, but I think we will have our correction anyway because locals are totally priced out and we are already at super-low rates and wages are not keeping up. I also think China will trip a little (but not fall) and that will add some drag too.

Thursday, September 22, 2011

Time to stick my neck out...

I did it before. In May I said that looked like the high point for Average SFH prices was reached or I would quit blogging. Luckily it was..for now.

In June prices dipped a bit. In July they dipped a lot and in August they had a small rebound. So far May has been the high water mark.

I think May's lunatic prices will hold. Here's where my neck comes out a full foot or so.

I think September will show a significant drop again in the SFH average price. Di I have any special inside info. Not at all - only the stuff I post for you.

However once again , if Economics makes any sense, with lower sales and higher inventory- we should get drops. This time we have a back-drop of financial crisis and mayhem too, and the Government says it wont stimulate housing again the irresponsible way they did the last time.

Yes interest rates are super low. Yes the HAM buyers are still throwing money at stuff like it was free (maybe it was), but speculation is becoming passe- and we are the epitome of Speculation.

Wednesday, September 21, 2011

Inventory Keeps going UP

Folks we are in for some interesting times.

We have been to the alter so many times, that it hardly seems like we can ever get some relief. However this year is different from last year, when inventory was dropping and we had one more boost up to new highs which kicked the air out of the prudent patient bears.

Why is it different now?

Well prices are a lot higher! And interest rates are a tad higher. And the world economy is starting to unravel, whereas everyone was pretty optimistic this time last year. The TSX is actually exactly where it was a year ago.

So what should we expect now? Lower prices that's what! Once again if Econ 101 is right, we have more inventory and lower sales, so prices should come under pressure, especially in the areas where MOI are very high like the FVREB (see last post)

Meanwhile the BOC is between a rock and a hard spot.

Rock= higher than expected inflation. An astounding 3.1% rate (while you get 1% on your hard earned and saving deposit accounts)

Hard spot = an unfolding banking crisis -Part 2 and Canada is wilting under lower commodity prices and the global slowdown.

So what is the BOC to do? Probably cut rates back to near zero again. The market already thinks so, by selling the CAD even more than the Euro.

Monday, September 19, 2011

Some FVREB Stats for Anon

North Delta

SFH listings : 183
Sales 30 days : 38
MOI = 4.8


SFH listings: 1026
Sales last 30 days : 79
MOI: 13


SFH Listings: 881
Sales: 48

South Surrey/ White Rock

SFH: 753
Sales: 56
MOI: 13.4


SFH Listings: 589
Sales: 21
MOI : 28!!


SFH Listings: 315
Sales: 24
MOI: 13

North Surrey

SFH : 431
Sales: 31
MOI: 13.9

So apart from North Delta, which is a small market, we are deeply into buyer's territory and should expect some price drops in September's numbers.

Sunshine Coast over 30 MOI now.

Friday, September 16, 2011

Inventory is not going away like 2010

Could this be the year? I feel like a pregnant elephant with a gestation period of 660 to 760 waiting to give birth.

We have been down this road to affordable housing so many times, just to be scuppered by Government shenanigans or 'emergency' rates that fuel speculation, that one dare not hope.

Even if this is the real thing, we may not see price reductions immediately, product will have sit out there for a while and swelter until those that need to sell start discounting.

Meanwhile in a sign of the lunatic times we have in RE here, I saw a house listed for $9 Million+ in West Van which hadn't sold in 100 days, then jack it's price up to $12 big ones and then a little later drop it to $10 M. ( I am rounding off since a few hundred thousand makes no difference). What is clear is that no-one is sure what the 'value' of this house is.

That can be said for all our housing right now. What is the value? The rental value? The carrying cost? What someone with bags of cash from out East or the Far East will pay for it? Who knows? we have surely reached the mania stage of the bubble even as inventory is piling up there are buyers in full panic-mode.

Here is an excellent essay on bubbles and what may lay ahead for the US and China in the year ahead. Of course we are mentioned. Near the end, there is a paragraph about our fine city and helicopter-buyers.

I really suggest you spend five minutes reading it this week-end.

Wednesday, September 14, 2011

It's the LAW

Off-shore owners are required to send 25% of their rental income to Ottawa. Their agents are responsible to do this, or if tenants send their payments directly to the owner, they - the tenant- are responsible!

Then the owner is supposed to submit a special tax return at the end of the year and may then receive some of this money back.

However, they have to deduct it. No ifs ands or buts. Here it is in Black and white.

Ok how many of the gazillion properties owned by offshore owners and rented out are paying this? I would say very few. Probably some managed by Property Management companies are, I hope. However many are managed by realtors, and I have spoken to several and most had no idea they are supposed to deduct this. The rest are probably managed by a cousin or friend and the chances of deduction are zero.

We should disseminate the above link. Send it to those who rent out properties and remind them of their duty to pay Canadian taxes.

We need more aggressive CRA auditing eg of helicopter families who live in $3 M homes and declare very little income.

Enough of that.

Now to Whistler.

32 MmmmONTHS of INVENTORY. We are so far into bear country that sellers should only venture out with bear bells, spray and even a gun. We would be in fire-sale territory were it not for the still blazing Vancouver market and zero % interest rates which give sellers no incentive to sell ( sell and do what with the money).


..Prices are definitely DOWN. When was the last time you could pick up a nice up-dated suite, offered at $248/foot??

A VERY Long time ago.

Monday, September 12, 2011

What is the CMHC up to?

Last week we were all angry about the lunacy of the BC Ferries Corp buying boxes at Canuck games and paying untold amounts to be a Canuck's major sponsor...and to what end?

Is there another Ferry corp that they are competing against? Do we have a choice? We have the helicopters and sea-planes and all their capacity will fill half a ferry without cars. So why are they spending OUR money this way. When we see the Ferry Corp logo on the TV are we going to run and book a ferry crossing to Victoria?

Well it seems that this self-serving type of advertising is not restricted to just provincially owned corps. I was browsing some international financial sites and lo and behold, there was an ad from the CMHC! It said something like ..'keeping Canada's housing market stable' or some such drivel.

In my very very humble opinion I think that is misleading advertising. How is helping facilitate a bubble keeping things stable? BTW - I won't bore you with how again, the CMHC is garnering a veritable army of on-call critics and Ben here is one of the best at exposing their many flaws.

Anyway back to the ad. Not only is the ad not true BUT why is it even there??

Presumably they are paying good money to have the ad there. Why? Will we rush out and get a CMHC insured mortgage after reading it? I doubt it, since their mortgage insurance is peddled by Mortgage Brokers.

Maybe it is a self-serving way to counter the many critics, including the Government, which is trying to reign in the monster it helped create. Better keep their money for when the time comes to pay the policy holders (banks).

BTW this is what the Irish have to say about our CMHC! Full Article Here

Because the government not only owns the Canadian Mortgage and Housing Corporation (CMHC), which accounts for more than two-thirds of the mortgage insurance in force, but also provides a 90 per cent guarantee on private mortgage insurance obligations, policymakers play a major role in the evolution of underwriting standards and can thus contain potential excesses.

The government may well exert a strong influence on underwriting standards on paper but, in reality, the government-backed guarantees have introduced moral hazard through the transfer of default risk from bank shareholders to taxpayers.

Bank managements are incentivised to play hard and fast with the written rules and, should a negative shock arise, the CHMC has little room to absorb the losses. The government-owned company currently insures $536 billion in mortgages and has just $11 billion in equity: just 2 per cent equity against its total exposure. It’s easy to envisage a scenario in which the taxpayer is left holding the bag.

When this bubble bursts and we are deep in it, the analysts and the Government and the CMHC will be saying 'who-coulda-known'. We must not let them get away with it. We have ample, well written info in bear blogs, for years now, saying that such a high level of risk is not acceptable.

Saturday, September 10, 2011

Another thing to watch this Fall


The chart would not up-load so I put a link above. As you can see 2010 was a go-go year for our markets. They had a little dip into August and then Ben Bernanke made his famous Jackson Hole QE 2 speech which ignited all commodities and risk assets.

The result was stunning, a 25% rise in the TSE which peaked in March- just a couple of months before our property market peaked.

Now fast forward to today. We had a bigger dip into August, all 25% of the gain in fact. And then we had another little pop and it looked like we were going to repeat 2010. However it is losing steam. I am going to watch this index more carefully. I very much doubt we can see more declines in the TSE and still have a robust housing market, the two seem very closely related and the thread seems to be 'speculation'.

Thursday, September 8, 2011

Refreshingly Honest Video Up-date from the REBGV


Where we go now is crucial for bulls and bears. Last year we at the same spot- less sales but also lower inventory, so about the same MOI, then a few things happened:

1) Inventory came off the market and the MOI started to drop.

2) The economy picked up, so much so, that the B of C raised rates a teenie-weenie bit and threatened more of the same.

3) The HAM buying spree went into over-drive.

4) The Government changed the rules for the CMHC-Monster and pulled demand into early 2011 to beat the changes.

The result was a dizzying new high in prices in early 2011.

What about now? Some things are different, others the same:

1) Financial anxiety is up. So much so that the Bank of C has vetoed any more hikes and may even lower rates! So no help from interest rates, but also a different backdrop for speculators from the go-go late 2010 time-frame.

2) The HAM are still coming. No stopping them and their bags of money.

3) Prices have peaked in April and have been drifting slowly down since then. Outside Vancouver we have MOI in the double digits and prices falling significantly.

4) The Conservative Government is finally coming to the understanding that building a huge property bubble is not a good legacy. I don't expect them to do anything about it, but they may not reach to stimulate so fast the next time we have weakness.

We have to watch inventory. If we start to drop again, we could be screwed again! Fingers crossed.

Tuesday, September 6, 2011

Ok Number crunching

First glance at the August reports

Median SFH in the Central OK drops about 1%, Average drops 5%.

Central OK

5237 listings and 286 sales = 18 MOI

North OK

2681 listings and 115 sales = 23 MOI


1838 Listings and 65 sales = 28.7 MOI

Over-all : 9756 listings and 466 sales = 21 MOI

Sunday, September 4, 2011


It is natural for all bloggers and commentators to rarely talk about their mistakes and regrets and only mention 'how they got it right'.

I am no different.

From my first post (the first year was deleted after a serious illness) I posted about the high price of RE in both Canada and the US which did not make sense to me. It had surpassed all fundamental supports, such as income growth, population growth or rental return. The root causes were the same speculation fuelled by low interest rates, easy lending, and government policies which favoured speculation (tax deductible mortgages in the US and the numerous measures like RRSP down-payments, extended mortgages etc that our Conservatives instituted)

As I blogged the world started to change in a way I expected it to. The US, which was far more expensive on all metrics, started (after a few stops and starts) to correct. The correction was initially gentle and then quickly became more steep.

It threw the whole US financial system into chaos. I waited patiently for Canada and specifically Vancouver to have it's hallelujah moment. It eventually started late 2008 and early 2009 the housing market went into free-fall. This was it!

However as we all know the Bank of Canada cut rates to zero and the CMHC was pumped up and commodities flew. I blogged about how the result of the drop in prices (10-15%) and the drop in carrying costs (25-30%) was the same as the 40% drop I had expected as the final outcome and that was driving demand again and some people may want to buy in.

HOWEVER- I didn't buy in! Why? Because I didn't expect this state of affairs to continue for so long. I expected rates to be forced up, but two and a half years later they still haven't moved up. In fact long rates are even lower.

I expected the Government to realize what a potential risk to the system the CMHC insured mortgages were, based on what had happened in the US, and tighten their leash sooner (they only did that earlier this year which BTW coincides with the top of the market).

Finally I completed missed the huge flow of Mainland Chinese money as a major factor.

I am still waiting and looking for that crack, that break that will bring prices back to reality (at least my definition of it). Any weakness is pounced upon, any sign of building inventory noted, any new bank report mentioning unprecedented un-affordability adds to the strength of my opinion that this state of affairs is not sustainable.

However I recently read two quotes at this blog which I should also keep in mind.

"People who hold strong opinions on complex social issues are likely to examine relevant empirical evidence in a biased manner. They are apt to accept confirming evidence at face value while subjecting disconfirming evidence to critical evaluation, and as a result to draw undue support for their initial positions from mixed or random empirical findings.

Thus, the result of exposing contending factions in a social dispute to an identical body of relevant empirical evidence may be not a narrowing of disagreement but rather an increase in polarization."

Charles G Lord, L Ross, Mark R Lepper, Biased Assimilation and Attitude Polarization: The Effects of Prior Theories on Subsequently Considered Evidence

which I had not come across before and this one which I had read many times, but which resonated with me:

"Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof."

John Kenneth Galbraith

I will certainly bear these two in mind as the fall numbers come in. if, like 2010, inventory starts to drop again, then it would be foolish of me to expect a different outcome from another run-up, particularly if rates keep moving down and the Government comes out with more pro-housing initiatives on the back of economic weakness. Housing it seems is the cash-cow that must be milked when everything else fails.

If, on the other hand inventory does not fall this fall :) and sales continue at their current rate, even with the other factors, we should expect a different outcome.

Please reader- hold me to these parameters and do not let me pick on only the data that supports my belief systems but deliver a cyber-slap of reality to me.

Saturday, September 3, 2011

Fraser valley stats

From the FVREB

“Year over year, home prices in the Fraser Valley are either on par or showing increases; month over month, benchmark prices for the three main residential property types combined declined by 1.3 per cent.”

The benchmark price of a single family detached house in the Fraser Valley in August was $528,959, an increase of 3.7 per cent compared to $510,107 in August 2010.

For townhouses, the benchmark price in August was $327,317, an increase of 0.9 per cent compared to $324,485 during the same month last year. The benchmark price of apartments in Fraser Valley in August was $245,751, an increase of 2.5 per cent compared to $239,659 in August 2010."

My summary:

SFH and Apartment Median price DOWN YOY!!

More listings. More sales. Softening prices, but HPI still up YOY- but close to or less than inflation.

South Surrey White Rock, negative for 5 years! Most other areas well below inflation.

The further we get from the HAM frenzy, the more likely we are to see weakness.

Friday, September 2, 2011


Less sales, more listings

House Price Index (or benchmark) down July to August by under 1% -$4,500
HPI Detached down over 1% -$10,600

This would support my spin that the small blip up in average was from expensive homes being sold.

Not much else we can say for now. At least we are moving in the right direction.

News release here. The title is : Greater Vancouver home sales trend toward buyers’ market over summer.

I will post again if anything hits me from the stats package.

Thursday, September 1, 2011

Is the CMHC history being rewritten in Preparation for a coming crisis?

We all know that the CMHC has bitten off so much that it has put significant risk on the back of tax-payers should the housing market take a big nose dive.

Well maybe someone doesn't want us to remember why.

Missing documents on the CMHC site and even 'sanitized' Wiki pages sounds like subterfuge and skullduggery. However we may just be looking at such an event. I came across this information on one of my favorite blogs.

I suggest reading this post, especially the second half and make up your own mind.


CHMC plans to expand securitization of debt to 370 billion by the end of 2009 as per the Conservative government request.

In 2008, Canadian home prices started to dip as affordability became the worst on record in many cities.
  • CMHC publicly admitted that it was ordered to approve as many high risk borrowers as possible to prop up the housing market and keep credit flowing. In 2008 some 42% of all high risk applications were approved, a 33% increase over 2007
  • ...................................

According to CHMC figures from 2008 and 2007 it is clear that CMHC has drastically exceeded their planned figures. It is expected that 812 billion is more than likely to be a minimum target. At these rates of progression the Government of Canada will in effect be insuring well over $500 billion in securitized mortgages and lines of credit by the end of 2010. The Canadian Government will also have issued over $600 billion in outstanding mortgage insurance. Many economists are unsure if this level of individual mortgage debt or CMHC mortgage securitization is sustainable. If it turns out the CMHC's debt levels are not sustainable the Canadian taxpayer will be negatively affected (by and increased tax burden relating to CMHC's maintenance and support) for potentially a decade or more.

Well we missed the drop last month and we got it wrong this month!

Thanks to Larry for first being first out with the numbers

SFH moved up 2% from last month.

In our poll last month we thought the prices would go up and the fell hard. This time we decided they would fall hard and they had a little jump up.

SFH sales are down a little from July (about 8%) and we are at over 6 MOI.

However I would be lying if I said that the numbers aren't a disappointment. I had expected them to be flat at worst, and slightly down was my hope. Not that a few % up or down makes any difference after such a huge run-up but it would have been the psychological effect of having two months down, and perhaps it would have kept a few young couples from getting into a mountain of debt at these levels with the promise of more sanity coming.

Warning spin coming here: I think the numbers are being skewed by the huge buys on the Westside and West Van by certain off-shore buyers.

Well not much we can do except dive in or wait. The periphery is weak. Vancouver is still defying the odds.