Mortgage & Finance Experts Say - No Housing Bubble?
(June 29, 2016
)
Fasten your seatbelt folks, put your seat in the upright position and you better put that Starbucks non fat soy late down too! THERE IS NO HOUSING BUBBLE, and any misguided attempts to fix one will cause bigger problems in the long run according to Canadian Mortgage and business professionals. Unless of course politicians meddle in the market - then there is a qurantee it will either crash or they will just bleed it dry to pay for their collective election promises.Do we detect a pile on effect taking place? Have they been listening to our own BCHH urban and suburban real estate analysts or perhaps they have gotten into the Koolaide or Mayor Moonbeams private reserve of BC bud?
Anyone that hasn't self inflicted brain injury knows full well that here on Canada's ultra far left wing coast politicians and every manner of special interest group scream for more and more taxes and more and more spending on every manner of social program, housing project, unicorns, rainbows...you get the picture. So, it is of no surprise that Moonbeam and his merry band of socialists have been attaching the only real bell weather of the BC economy - real estate.
YES, our very own real estate group have slammed the few corrupt realtors and anyone acting unethically - as we should! However, to cast a net over the entire profession here in British Columbia or Canada is like saying every single politician, journalist, teacher, doctor etc. in BC and Canada is unethical and corrupt. Perhaps we should be heavily regulating and examining everything the Canadian media says and does? No, we don't think so, that would be dictatorial and fascist wouldn't it.
Getting back to chicken little screaming and hoping the sky is falling for a moment. The headliner is one of the main takeaways of a new report from Mortgage Professionals Canada, the industry group that represents 11,000 mortgage brokers across the country.
Getting back to chicken little screaming and hoping the sky is falling for a moment. The headliner is one of the main takeaways of a new report from Mortgage Professionals Canada, the industry group that represents 11,000 mortgage brokers across the country.
Housing bubbles do not exist in Canada," the group's chief economist Will Dunning says in the report, adding that it would be "tragic" if any misguided attempts to fix a problem that doesn't exist were to happen.
The report cites U.S. economist Joseph Stiglitz as saying a key requirement of bubbles is that the price of something is "high today only because investors believe that the selling price will be high tomorrow."
In other words, a bubble occurs when people buy something solely because prices are rising quickly and they deduce that they will continue to do so.
Unlike other purely financial assets, which people primarily buy because they plan to sell them for a higher amount later, housing is different, because people's main motivation to buy is often to live in it.
That is why Dunning doesn't buy the housing bubble thesis. He says there are reams of evidence that suggest housing price appreciation is solidly backed by fundamentals — people want to buy houses because they want to live in them.
"Price growth in Canada, even in Vancouver and Toronto, is still consistent with the economic fundamental of interest rates and affordability," the report says.
The report cites U.S. economist Joseph Stiglitz as saying a key requirement of bubbles is that the price of something is "high today only because investors believe that the selling price will be high tomorrow."
In other words, a bubble occurs when people buy something solely because prices are rising quickly and they deduce that they will continue to do so.
Unlike other purely financial assets, which people primarily buy because they plan to sell them for a higher amount later, housing is different, because people's main motivation to buy is often to live in it.
That is why Dunning doesn't buy the housing bubble thesis. He says there are reams of evidence that suggest housing price appreciation is solidly backed by fundamentals — people want to buy houses because they want to live in them.
"Price growth in Canada, even in Vancouver and Toronto, is still consistent with the economic fundamental of interest rates and affordability," the report says.
In its recent Monetary Policy Report, no less than the Bank of Canada noted that it is on the lookout for "self-reinforcing price expectations" in the housing market.
As far as Dunning is concerned, however, there's little to worry about in the numbers, because he notes that while mortgage debt is increasing, with rates so low the amount of mortgage payments that go to paying down the principal versus interest payments is near record highs.
Still, group isn't without some concern about the housing market. On the subject of foreign buyers, the report does concede that there's at least anecdotal evidence that moneyed foreign buyers are driving up prices in Toronto and Vancouver, especially in the market for high-end homes.
As evidence, the group notes that in both cities the "rates of price increase are now much higher for single-
detached homes than they are for lower-priced townhomes and condominiums. In other centres covered by the CREA index, that pattern is absent."
As far as Dunning is concerned, however, there's little to worry about in the numbers, because he notes that while mortgage debt is increasing, with rates so low the amount of mortgage payments that go to paying down the principal versus interest payments is near record highs.
Still, group isn't without some concern about the housing market. On the subject of foreign buyers, the report does concede that there's at least anecdotal evidence that moneyed foreign buyers are driving up prices in Toronto and Vancouver, especially in the market for high-end homes.
As evidence, the group notes that in both cities the "rates of price increase are now much higher for single-
detached homes than they are for lower-priced townhomes and condominiums. In other centres covered by the CREA index, that pattern is absent."its recent Monetary Policy Report, no less than the Bank of Canada noted that it is on the lookout for "self-reinforcing price expectations" in the housing market.
As far as Dunning is concerned, however, there's little to worry about in the numbers, because he notes that while mortgage debt is increasing, with rates so low the amount of mortgage payments that go to paying down the principal versus interest payments is near record highs.
Still, group isn't without some concern about the housing market. On the subject of foreign buyers, the report does concede that there's at least anecdotal evidence that moneyed foreign buyers are driving up prices in Toronto and Vancouver, especially in the market for high-end homes.
As evidence, the group notes that in both cities the "rates of price increase are now much higher for single-detached homes than they are for lower-priced townhomes and condominiums. In other centres covered by the CREA index, that pattern is absent."
As far as Dunning is concerned, however, there's little to worry about in the numbers, because he notes that while mortgage debt is increasing, with rates so low the amount of mortgage payments that go to paying down the principal versus interest payments is near record highs.
Still, group isn't without some concern about the housing market. On the subject of foreign buyers, the report does concede that there's at least anecdotal evidence that moneyed foreign buyers are driving up prices in Toronto and Vancouver, especially in the market for high-end homes.
As evidence, the group notes that in both cities the "rates of price increase are now much higher for single-detached homes than they are for lower-priced townhomes and condominiums. In other centres covered by the CREA index, that pattern is absent."
"This is consistent with increased buying by affluent foreign investors, although it is not conclusive proof," Dunning says.
"We should accept that foreign buying is very substantial in Vancouver and that the Vancouver housing market is being severely distorted in consequence," the report said.
"In Toronto, we do not have the same amount of anecdotal evidence, but the recent great strength in the market and an acceleration of price growth have led to suggestions that a similar set of effects may now be developing."
Lawmakers in Ottawa are currently attempting a so-called "deep dive" for more information on the housing market, something that MPC supports, but cautions against drawing the wrong conclusions from the data based on misperceptions of a problem.
One of the factors being discussed would be an increase to down payment requirements, something that critics say would push house prices further out of reach for first time buyers while doing little to deter speculators.
"A much greater risk to the housing market would be policy changes by mortgage insurers or mortgage lenders that make it harder to finance home purchase," the report says.
"Now that the energy sector is no longer a major economic driver, a healthy housing sector is even more essential …. It would be tragic to unnecessarily impair this key economic force."
"We should accept that foreign buying is very substantial in Vancouver and that the Vancouver housing market is being severely distorted in consequence," the report said.
"In Toronto, we do not have the same amount of anecdotal evidence, but the recent great strength in the market and an acceleration of price growth have led to suggestions that a similar set of effects may now be developing."
Lawmakers in Ottawa are currently attempting a so-called "deep dive" for more information on the housing market, something that MPC supports, but cautions against drawing the wrong conclusions from the data based on misperceptions of a problem.
One of the factors being discussed would be an increase to down payment requirements, something that critics say would push house prices further out of reach for first time buyers while doing little to deter speculators.
"A much greater risk to the housing market would be policy changes by mortgage insurers or mortgage lenders that make it harder to finance home purchase," the report says.
"Now that the energy sector is no longer a major economic driver, a healthy housing sector is even more essential …. It would be tragic to unnecessarily impair this key economic force."
Does anyone else remember the horrific 1990's in BC when the NDP nearly destroyed this province with enough beaurocratic red tape, taxes and Cansian economics to choke an army? We understand our provincial government is doing its best to keep our province running and growing while the media, opposition and uber left special interest groups wage war against it. That's BC politics 101. Meanwhile anti industry mayor Moonbeam and his ilk continue to pander, tax, spend and social engineer metro Vancouver and choke the only golden goose it has.
We have stated countless time, of course the real estate market will slow and change and speed up and grow, unquestionably. If politicians let nature take its course and stick to what their jobs really are, living off of tax payers and trying to play God.
Alright, there you have it folks, another less than entertaining real estate exposition. However, if you or anyone you know are considering the purchase or sale of any metro Vancouver, Fraser Valley or BC home or real estate don't hesitate to call us any time, 604-767-6736. We guarantee to tell you the truth about real estate!
ShareCategories
Archives
- May 2022 (1)
- November 2021 (2)
- October 2021 (3)
- July 2021 (1)
- March 2021 (1)
- April 2020 (1)
- January 2020 (1)
- October 2019 (1)
- September 2019 (1)
- August 2019 (1)
- June 2019 (1)
- April 2019 (1)
- December 2018 (1)
- August 2018 (1)
- July 2018 (1)
- June 2018 (1)
- April 2018 (1)
- March 2018 (1)
- February 2018 (2)
- January 2018 (2)
- December 2017 (1)
- November 2017 (2)
- October 2017 (2)
- August 2017 (3)
- June 2017 (3)
- April 2017 (3)
- March 2017 (3)
- February 2017 (1)
- January 2017 (3)
- December 2016 (4)
- November 2016 (2)
- October 2016 (3)
- August 2016 (3)
- July 2016 (1)
- June 2016 (3)
- April 2016 (3)
- March 2016 (3)
- February 2016 (10)
- January 2016 (5)
- December 2015 (1)
- November 2015 (4)
- October 2015 (3)
- September 2015 (1)
- August 2015 (3)
- July 2015 (3)
- June 2015 (10)
- May 2015 (4)
- April 2015 (9)
- March 2015 (3)
- February 2015 (5)
- January 2015 (12)
- December 2014 (7)
- November 2014 (13)
- October 2014 (13)
- September 2014 (9)
- August 2014 (4)
- July 2014 (10)
- June 2014 (12)
- May 2014 (10)
- April 2014 (5)
- March 2014 (23)
Subscribe To This Blog
© 2004. An independently owned and operated broker member of Sutton West Coast Realty. Each office independently owned and operated.
Sutton and Sutton West Coast are service marks of Sutton West Coast Realty and are used herein under license. Mandeep Sendher is the licensed realtor at The BC Home Hunter Group and though he is not the owner of any BCHH domains, trademarks, branding or content he assumes 100% responsibility for any and all online and offline print material, artwork, reports etc. MANDEEP SENDHER is responsible for all problems and issues including this web site or other BCHH social media platforms or electronic communication.
All photos, artwork and materials are assumed to be in the public domain unless otherwise stated. Copyright claims will be honored upon specific identification of material and immediately dealt with upon request.
The content of this website is protected by copyright law. All rights reserved. Unauthorized use in any way, shape or form is prohibited. Information is deemed reliable but is not guaranteed. Maximum care has been put into the accuracy of the content, but specifications and details should be verified by the parties involved in transactions, and we are not liable for any losses whatsoever incurred as a result of information on this website.
You are not permitted to post on or transmit to or from this web site any unlawful, threatening, libellous, defamatory, obscene, inflammatory, pornographic or profane material, or other content that could give rise to civil or criminal liability under the law.
This web site does not grant you any rights to use our trademarks, service marks, logos, artwork or trade names. The content on this site is protected by copyrights, trademarks and service marks, other intellectual property laws, and other laws and regulations.
The design, layout, graphics, photography are copyrighted and the property of THE BC HOME HUNTER GROUP, and may not be reproduced and/or used for any purposes whatsoever, without written consent. THE BC HOME HUNTER GROUP does not claim to own the rights to any or all artwork, designs, photographs etc, found on this web site or any other or any social media unless otherwise stipulated.
BCHOMEHUNTER.COM
VANCOUVERHOMEHUNTER.COM
FRASERVALLEYHOMEHUNTER.COM
NORTHVANCOUVERHOMEHUNTER.COM
WHITEROCKHOMEHUNTER.COM
LANGLEYHOMEHUNTER.COM
CLOVERDALEHOMEHUNTER.COM
WESTVANCOUVERHOMEHUNTER.COM
PITTMEADOWSHOMEHUNTER.COM
BURNABYHOMEHUNTER.COM
COQUITLAMHOMEHUNTER.COM
DELTAHOMEHUNTER.COM
MAPLERIDGEHOMEHUNTER.COM
PORTMOODYHOMEHUNTER.COM
SURREYHOMEHUNTER.COM
SOUTHSURREYHOMEHUNTER.COM
FORTLANGLEYHOMEHUNTER.COM
MORGANHEIGHTSHOMEHUNTER.COM
604LIFE.COM