JANUARY 06, 2011
As we anxiously await the December stats from the last few big real boards, let's turn our attention to the antics of increasingly desperate realtors.
"Buy a house.....PLEASE" -Royal LePage
I may have paraphrased it slightly, but that's the gist of a 'report' by Royal LePage predicting *surprise, surprise* that real estate prices will increase in Canada in 2011.
"Across Canada, the average price of a home is forecast to rise 3 per cent over the coming year to $348,600 while the number of transactions is expected to drop 2 per cent."
Is it ever a bad time to buy a house? Despite this 'report' being the equivalent of Coca Cola releasing a report stating that it produces a delicious, refreshing beverage, it didn't stop all the major dailies from picking it up as news.
House prices to see steady climb- Globe and Mail
Royal LePage sees house prices rising further- National Post
Canadian housing prices set to rise in 2011- Toronto Star
Buying frenzy to push up house prices- Toronto Sun
It's interesting to me that only the Post article even mentions that the source is Royal LePage. It all reeks of the same old garbage being pumped out by realtor boards in the US and willingly propagated by an obedient media.
The same arguments are always recycled: A strengthening economy, low interest rates, continuous demand, a great investment (which I agree with when the fundamentals support it....which they currently don't). It's reminiscent of this ad by realtors in the US back in 2006.
Realtors are pulling out the heavy guns as they are no doubt crapping their pants at the prospect of a necessary tightening in mortgage lending standards. Garth Turner recently highlighted a CREA memo calling the minions to action.
I would likewise urge my readers to action. If you haven't educated yourself about the loosening of mortgage requirements by CMHC, you should familiarize yourself with it. With well over half the new credit creation being attributable to mortgages, and another significant portion associated with wealth effect spending and HELOC/line of credit growth, tightening mortgage requirements is step one in righting Canada's credit bubble.
Jim Flaherty's (Minister of Finance) email address is firstname.lastname@example.org.
Your local MP email address can be found here. I would strongly urge all my readers to email both Flaherty and your MP with even a simple email expressing your support for mortgage rule changes. It need not be more than a couple sentences.
Canadians bearish on the economy
We also found out today that Canadians have become more guarded about the economy perhaps finally starting to grasp the considerable headwinds lining up against Canadian economic growth.
Thirty-eight per cent of Canadians feel the economy will improve in the next year, compared to 54 per cent last year
One in five think the Canadian economy will actually get worse this year, up from 14 per cent who felt that way last year.
Top economic concerns include the cost of living, government deficit and national debt, and having enough money to retire.
Remember that consumer spending constitutes 65% of GDP. Consumers who lose confidence in their future prospects tend to hold on to their dollars a little more firmly than when they see sunshine and lollipops in the future. While these polls are notoriously volatile, I expect a clear trend of falling consumer confidence to emerge over the next 12 months.