The Canada Mortgage and Housing Corporation (CMHC) insists there will be no housing market crash in Canada.
CMHC has been saying for some time that it expects housing prices in most local markets will grow more slowly than they have been recently.
The Ottawa-based federal agency isn’t calling for a major decline, but its latest forecast suggests next year will be somewhat softer than estimates CMHC issued in June while 2012 may be somewhat stronger than previously expected.
(In other words, they keep getting it wrong and have to 'revise' their forecast constantly)
Mathieu Laberge, CMCH’s deputy chief economist, said:
“Balanced market conditions in most local housing markets will result in a slowing in house price growth”
Is that why they call it right now? A 'slowing in house price growth'?
(Prices never go down, you see... growth simply 'slows')
Contrast this with the normally always upbeat and optimistic Ozzie Jurock. On August 4th, Jurock pulled no punches in analyzing what is currently happening in the real estate market. Rather than spin the numbers, he offered a very succinct (and negative) take on the drop in the average price.
The real estate market is down 12% on the average price - July over July ... but down a whopping 20% in price over May 2011!!!
July 2012 - $669,000 to July 2011 - $762,000: down 12%
July 2012 - $669,000 to May 2011 - $834,000: down 20% !!
Volume is down too. Listings are higher.
As Ozzie succinctly notes, the average is down 12% on a simply year to year comparison, but go back a couple of months more and it's down a full 20%.
So if a 20% decline in prices is a 'softening', what will they call a decline of 50%?
One thing we know for sure... they won't call it a 'crash'.
So if a 20% decline in prices is a 'softening', what will they call a decline of 50%?
One thing we know for sure... they won't call it a 'crash'.
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It's a moral hazard. If they called for a 5-10% decline then the prudent thing for them to do it to limit mortages to minimum 10-15%. But by playing dumb, they can continue business as usual and when things turn sour they can play the "no one could have ever seen this coming" card.
ReplyDeleteAlso remember it was OSFI that initiated the new CMHC rules, not CMHC.
Good think we have blogs like here to know the truth.
ReplyDeleteSame old same old. Remember Ben Bernanke saying things like "the subprime mortgages will be contained" and a whole bunch of rosy predictions. It must feel a whole bunch of mega mortgage holders feel better. Good NEWS!
ReplyDeleteWe are in the middle of "the crash" right now, but no one in the industry wants to recognize that or call it for what it really is.
ReplyDeleteIf this is the middle of crash it ain't much of crash...
ReplyDeleteStill waiting for your listings to hit 20k...funny.
Distracted so easy...
Blogs predictions are for chumps!
Is it called a crash when you drive off a cliff or when you land?
ReplyDeleteI got contacted by the CMHC to participate in a survey last Friday. I live in a ludicrously rich postal code in White Rock--probably seeking the right demographic to give them rosy answers (what rich dick wants to admit his paper wealth is going to go down by 70%?).
ReplyDeleteI laughed and told them we were in the first stages of a terrible collapse that would crush BC's economy and pauper a lot of paper morons, and they were culpable.
They didn't seem to like my responses.
CMHC does survey's on consumer confidence? I didn't know that.
Delete... Of course they do! It's obviously one of the key numerical backbones of their precious pernicious HPI
Delete