No evidence of housing bubble: Flaherty

[chemgear]

Nothing to worry about, it's all good folks: http://business.financialpost.com/20...bble-flaherty/

Asked at a news conference in New York what it would take for Canada to act again to cool the market, he said: “It will take clear evidence of a bubble in the housing market in Canada, which we have not seen.”

Asked what would constitute evidence of a bubble, Mr. Flaherty said: “If we saw dramatic surges in prices in some part of the country. There’s some demand in Vancouver in particular, particularly from the Asian people coming to Canada who are investing in real estate. So there’s some demand there that is unusual in terms of the entire country, but overall across the country there’s been some moderation, which is good.”


Arguments aside about whether there is a bubble or not, I have to admit that I'm more curious if a politician can ever really say anything different than this - I assume not.

[Kavvy]

Originally Posted by chemgear

Arguments aside about whether there is a bubble or not, I have to admit that I'm more curious if a politician can ever really say anything different than this - I assume not.

Well there's Harper's "Its a good time to invest" (misquoted) but I agree, he can't really come out and say "Don't buy real estate, it will collapse!"

I guess if he didn't believe it he could have had a bit of a more misdirected reply.

[VladtheImpaler]

Originally Posted by Kavy

Well there's Harper's "Its a good time to invest" (misquoted) but I agree, he can't really come out and say "Don't buy real estate, it will collapse!"

I guess if he didn't believe it he could have had a bit of a more misdirected reply.

Yeah, he could have just ducked it and said something like "Our economists are currently studying the market indicators, and we will take appropriate action once we have some solid information and analysis".

[Slava]

Or he could just be telling the truth...that the evidence doesn't appear to show a hiusing bubble? I guess that doesn't make for an exciting story, but its still possible.

[Cowperson]

Originally Posted by chemgear

Nothing to worry about, it's all good folks: http://business.financialpost.com/20...bble-flaherty/

Asked at a news conference in New York what it would take for Canada to act again to cool the market, he said: “It will take clear evidence of a bubble in the housing market in Canada, which we have not seen.”

Asked what would constitute evidence of a bubble, Mr. Flaherty said: “If we saw dramatic surges in prices in some part of the country. There’s some demand in Vancouver in particular, particularly from the Asian people coming to Canada who are investing in real estate. So there’s some demand there that is unusual in terms of the entire country, but overall across the country there’s been some moderation, which is good.”


Arguments aside about whether there is a bubble or not, I have to admit that I'm more curious if a politician can ever really say anything different than this - I assume not.

In the Globe and Mail last week:



Doesn't have to mean anything but . . . . . .

Cowperson

[macker]

Originally Posted by Kavy

Well there's Harper's "Its a good time to invest" (misquoted) but I agree, he can't really come out and say "Don't buy real estate, it will collapse!"

I guess if he didn't believe it he could have had a bit of a more misdirected reply.

Mark Carney in a somewhat unusual move has stated on more than one occassion in the past year that Canadians should not take the current low interest rate environment for granted and should not take on more debt as rates will rise in the future and they won't be able to handle things. Part of these warnings is based on the fact that Canadian consumer debt is at an all-time high of $1.5 Trillion. Things have escallated from 2005 when Statistics Canada showed debt to income of 116% to this year where the same ratio is at an all-time high of 150% even though consumers ability to pay back debt is not rising nearly as fast. The equity people have in their homes hit a 20 year low in 2010 and stood at just 34.3% Carney knows that he needs to make these comments as things will eventually change and easy credit and easy rates that are creating these elements logically have to go up. One day he will be able to sit back and say that he warned everyone well in advance as it is not a trend that is reversing thus far.

[chemgear]

Originally Posted by Slava

Or he could just be telling the truth...that the evidence doesn't appear to show a hiusing bubble? I guess that doesn't make for an exciting story, but its still possible.

Very true. And exciting stories are often a bad sign when it comes to markets/politics.

[Mike F]

I routinely deal with real estate buyers and sellers through work, and I can say that the real estate environment in my area is nowhere near the overheated level it was back in 2007, despite the historically low interest rates. Most sellers are having to work to finalize deals, and we're not seeing multi-party bidding wars that drive prices significantly above assessed values.

If the housing market takes a serious dip, I believe it will be collateral to a tanking economy generally, not because the market itself is inflated to unreasonable levels.

[photon]

The banks are insanely harder to deal with now too, requiring far more now than ever before, even 6 months ago it was easier.

[SebC]

Flaherty? The guy who said Canada wouldn't go into deficit? Yeah...

[Kavvy]

Originally Posted by macker

Mark Carney in a somewhat unusual move has stated on more than one occassion in the past year that Canadians should not take the current low interest rate environment for granted and should not take on more debt as rates will rise in the future and they won't be able to handle things. Part of these warnings is based on the fact that Canadian consumer debt is at an all-time high of $1.5 Trillion. Things have escallated from 2005 when Statistics Canada showed debt to income of 116% to this year where the same ratio is at an all-time high of 150% even though consumers ability to pay back debt is not rising nearly as fast. The equity people have in their homes hit a 20 year low in 2010 and stood at just 34.3% Carney knows that he needs to make these comments as things will eventually change and easy credit and easy rates that are creating these elements logically have to go up. One day he will be able to sit back and say that he warned everyone well in advance as it is not a trend that is reversing thus far.

I am confused.....

My understanding of what your saying is when the economy turns around for the good (be it today or 5 years from now), the government raises interest rates to account for normal growth & inflation (or on the flip-side - hyperinflation would require raised rates if my very weak understanding of economics holds true).

But your also saying, due to the high debt levels, higher rates will force people into hard times because they are budgeting with the current low rates.

So times will be better, as the economy is healing, but no one will have money due to large dept levels based on lower interest rates. Doesn't that throw us back to square 1?

[Winsor_Pilates]

Originally Posted by Mike F

If the housing market takes a serious dip, I believe it will be collateral to a tanking economy generally, not because the market itself is inflated to unreasonable levels.

Very good point.
People always try to separate the two & point to the "bubble" as the source of potential collapse, when in reality is the external forces of the crippling world economy that concern me more on real estate values.