Friday, June 22, 2012

Misplaced anger?

Back on March 22nd, Vancouver Sun columnist wrote a column that garnered a lot of attention in the real estate blogosphere.

Ostensibly the article was an attack on affordable housing.  A view reinforced by the headline which blared: "Affordable housing in Vancouver? Who wants that?"

It made me chuckle.

If you talk to those scribes who write for the mainstream news and have a conversation with them about their profession, there is one interesting complaint.

They don't get to write the headline for their columns.

It's their Editors who do that.  And often the writers themselves disagree with the choice of 'eye-catching' headline.

This particular column about the Vancouver housing scene was a rant against Social Engineering.

McMartin's opinion is that the meddling of the Social Engineer's rarely works and more often causes more problems than it solves.

In the case of housing affordability, he offered this quote:
"There's nothing that this task force can do to make Vancouver as inexpensive as Toronto or Edmonton. But I do believe it will mean changes in the processing of building permits, and in the wording of zoning bylaws that ultimately will lead to increased competition and more affordable housing choices."
To which McMartin countered that this would lead to more densification - an outcome he did not believe people wanted.

McMartin closed with another quote:
"The only thing that's going to make housing in Vancouver cheaper is a collapse in housing prices."

To which he replied:
Hands up, you well-meaning social engineers, who want that.

Now the real estate bear community jumped all over McMartin for this.

I think he got a bad rap, personally.

He was railing against social engineering.  The point he was making is that all the social engineers would create was more densification... not affordable housing, something most of us don't want.

McMartin was saying that the only thing that would create affordable housing was a collapse in housing prices. A fact, he noted, that none of the social engineers would actually want (if only due to the havoc this would create on social services).

And I agree with the point of the March article.

But because McMartin had spoke about his own travails with home ownership when he first moved to Vancouver, he was vilified for appearing to be against deflating the housing bubble.

Today McMartin came out with another article.

It concludes by noting:
"In the meantime, in the very near future, on Monday, Mayor Gregor Robertson’s Task Force on Affordable Housing will deliver its recommendations. After months of consideration and research, city hall will finally reveal how government can make housing more affordable, despite the fact that the market has been busily doing just that. In real estate, timing is everything."

It's another cheap shot at Social Engineering.

Those who want regulations on flipping houses, or regulations on foreign buyers, etc... they are missing the point.

Our real estate bubble has been created by cheap credit and policies that accommodated massive debt.

Flippers, speculators and foreigners may have capitalized on it... but they are not the problem to be addressed.

With this latest article, McMartin will get flack from the real estate blogging community again.

The headline, "The Market is Teetering! Happy Now? implies McMartin is unhappy with the regulatory changes that have just been made instead conveying what his column is actually doing: taking a shot at the social engineers.

McMartin isn't criticizing the steps just taken by Flaherty and Carney, he's taking yet another cheap shot against the Social Engineers.

And I completely agree with him.

Hopefully most of the blogging community appreciates what he is railing against.

Side note

Some interesting stats in the body of this latest article.

Meanwhile, Metro’s real estate market is holding its breath. Or possibly it’s stopped breathing. It’s hard to tell.

Sales in May for all forms of housing across the Multiple Listing Service were down over 15.5% from last year, and the lowest for the month of May since 2001.

The news for detached homes sales was even worse: They were down 25% for the same period last year.(Commenting on these numbers, the resolutely sunny Real Estate Board of Greater Vancouver decided this was “indicative of balanced market conditions.” But then the board would have viewed the crash of the Hindenburg as the result of “normal deflationary conditions.”)

While sales have fallen, the number of listings has risen. In the Vancouver westside, which is held up as the main beachhead for the Asian invasion, the total of active listings — those homes for sale that haven’t sold — has risen to 1,100 properties at present from 600 a year ago. That is, during all the time the alarmists were certain that Asian buyers were pushing up house prices across Metro, the market in that neighbourhood most cited as the cause of those rising prices was already languishing.

The take-a-way here is that the dreadful statistics are now getting mainstream coverage.

Combine this with the press from the latest Flaherty, Carney and OFSI offerings and the psychology of the general public regarding real estate is taking an absolute beating.

It will be fascinating to watch the last half of this year.


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  1. So right Whisperer. Every regulation comes with unintended consequences. Whether the rules are made to hinder speckers or flippers or foreigners they can all lead to pressures building elsewhere. We never really know the outcomes until after the fact.

    A good understanding of what is really driving the market is essential. In this case I don't think many will argue that easy credit conditions charmed the public into taking risks that were quite rational in light of the economic environment.

    This is why many have called for some interest rate hikes despite the risks and costs as that is seen as the source of our distortions in places like Vancouver. I like the new set of regs the government and OSFI are introducing though. Tough maybe. They are essential in a world where interest rates must remain low for an extended period of time.

    At the end of the day it was not monetary policy that would save us from our nesting instincts but rather a sharpened regulatory environment that is just broad enough that everyone can still participate if they choose and no group is singled out.


  2. I drove past the "Solo" development on the corner of Willingdon and Grandview Hwy this morning around 11AM and no one one was there but on the way back around 12:30PM there was a line up about a block long on Willingdon to get into the sales centre. I wonder if this was another manufactured line up because it appeared almost from nowhere.