There's been lots of chatter in the media from numerous sources lately (including our own new Bank of Canada Governor) talking about how the Vancouver (and Canadian) real estate bubble hasn't collapsed yet and insisting the 'threat' is simply not there.
This despite the fact all the elements telling us we are in a bubble are still present.
So it's timely that gordholio over on Vancouver Condo Info has posted the following quotes from 2005 in America. After hearing about warnings of a housing bubble for years, and seeing no collapse, the public was provided with these treatise's.
"We are really on track for a soft landing. There are no balloons popping.”- David Lereah, National Association of Realtors, December 2005“The retreat in housing-market activity that’s now under way amounts to a simmering-down process rather than a classic cyclical contraction that could spiral down for some time.”- David Seiders, Chief Economist, National Association of Home Builders, Jan 2006“The idea that we’re going to see a collapse in the housing market seems to me improbable.”– John Snow, Treasury Secretary, 2005“I think the bloom is off the rose, but there is no doom and gloom.”- Alan Nevin, Chief Economist, California Building Industry Association, Dec 2005.“There was never a “bubble”, so there is nothing to “burst”.- Jeromith Sutton, 2006, NAR Investment Advisor
And, of course, there was America's central banker himself who in 2005 insisted there "is no housing bubble to go bust."
Sound familiar?
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Pop, pop, pop. Drop, drop, drop.
ReplyDeleteVancouver Housing Price Drop Song:
http://www.youtube.com/watch?v=GLnhCFbOCsk
Didn't he just say there may be room for an rate adjustment "down" and yet a few weeks ago he said get ready for the rise......I could be wrong but...
ReplyDeleteCheers,
Of course the bankers will say there are no bubbles. If they say otherwise, the economy will crash instantly.
ReplyDeleteEconomists -- -worse yet, government economists --- are pretty much useless anyway. On top of that, add in the outright fraud going on in the financing market at the time, and they were just oblivious pawns.
ReplyDeleteCanada will be different...in that the whole mess will simply be (relatively quietly) shoved onto the generic, opaque taxpayer, funding billions in new, long term bonds...complete with with juicy, good old-fashioned interest rates...to make the banks whole.
At least the "We're Better Than All of You" Dept. of Finance world speaking tour might finally end.
Where does all the money from the property taxes based on ridiculous high prices go now? I would say it is mismanaged as everything is going up in this city. We are so polite in this country fighting against corruption. Where will they get the money in the future?
ReplyDeleteNice Song. Problem is the Bank does not know what to do any-longer. If they raise the rate significantly - those for a mortgage renewal will be doomed. If they keep the rates low or drop them - they will then invite more "swimmers-wonna-be" on a boat that is going under water. The banks and Realtors will keep the game-ace on even if noone is looking no more.
ReplyDeleteExport is dead due to the high loonie. Housing in unaffordabe nor prices are justified. Economy is not in good shape. Deflation has been knoking on the door for too long. Normal rate is around 5-7%. Million dolla slums in Van are pathetic. Bank expects are graduat adjustment over time. Let's just see how gradual it will be.
Conclusion: the Bank can not and will not hike the rates significantly not to "bankrupt" the homeowners in dept. Yet, the Bank must restraint potential buyers from going into the dept. We will see a sligh rate increase over 2 years and slight price drop as well...until a major correction. Thank you. Simon.
The U.S. is well on the way to economic recovery (while we here have yet to even admit our RE problem...) and the C$ is therefore headed back to its natural level of 70 cents as we speak. Hope you enjoyed the 4 years of parity that we had. Never again.
DeleteI like the new photo " Edge of the Rain Forest"....very West Coast. Feds have been feeding Canadians a steady diet of low interest loans for too long in order to avoid US style recession. It has gone too far and some folks will be underwater at edge of the rainforest at next mortgage renewal.
ReplyDelete