“It’s a great time to buy a house” -Royal LePage; Canadians opinion on the economy sours

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.

Strengthening Economic Recovery and Low Interest Rates Point to a Stronger Than Anticipated 2011 for Housing Market

“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 jflaherty@fin.gc.ca.

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.

Cheers

Ben

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10 Responses to “It’s a great time to buy a house” -Royal LePage; Canadians opinion on the economy sours

  1. Chris Reed says:

    When I was driving in today, they had it on CBC radio for the third story on their news broadcast (right after the Juniors team shitting the bed last night), and I couldn’t help but laugh. I can point out at least three houses in the local area that I’ve been following their pricing on that fly in the face of such a report, all of which have declined by at least 10% and remain unsold. Even one as high as 30% off it’s original price. A bull market indeed.

  2. Alex says:

    Sorry, I’ve had no time to write Flaherty or my MP as of yet. Have been too busy writing the editor-in-chief of every major mainstream media outlet in the country that had the audacity to publish this pump-job as news. It *isn’t* news. It’s an opinion. And a greedy, borderline evil one at that. If they’re going to publish bogus realtor opinion pieces as *news,” they’d damn-well better publish the other side too. My god, have they no shame?

    Thanks Ben, and thanks to Garth too for doing the digging and once again telling it like it is.

  3. jesse says:

    Does Flaherty read email? To be extra sure I’ll send a hand-signed letter via Canada Post.

  4. Alex says:

    Oh, and I’ve just written the CREA too. Today, both it and the mainstream media have bloody well gone *too* far.

  5. Lumpen says:

    As I’ve said previously, I enjoy your blog and appreciate all your efforts – it’s a great data source and in my top 5. I agree with you on the fundamentals of the situation.

    But in the last two months, your tone (if such a thing exists in writing) has changed – from impartial to sarcastic. A couple of examples from this post alone:

    It all reeks of the same old garbage being pumped out by realtor boards in the US and willingly propagated by an obedient media.

    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.

    FWIW, some of your readers may appreciate and enjoy such, but I believe you have a group of above-average readers based upon the comments. We recognize the inherent bias of most people, and realize that people talk their books. Give us credit that we’ll figure it out and mentally weight the data appropriately.

    I would hate to see such an informative blog even start to go down the zerohedge route of guns ‘n ammo.

  6. Anthony Silvestro says:

    Keep buying suckers and when interest rates go up and the price of your house starts to plummet, don’t say you weren’t warned. If you are buying a house now, you are an idiot.

  7. pascal says:

    Hi M Harper
    Please change the rules for the mortgage to 20% cash minimum and maximum 25 years amortization.
    The past politics 0 cash 40 years amortization or the 5% cash 35 years is a serious problem for the family who needs a roof over their heads. Put back interest rate to the historical norm. The prices of real estate as double, triple quadruple since the year 2000, it’s unacceptable. Theirs no question that you are working hard, the question is…who you are working for! Its time, with 150% average indebtedness of your average Canadian citizen, to step in, and act responsibly.
    Thank you.
    M Harper electronique mail:
    http://pm.gc.ca/fra/contact.asp?pageId=30&featureId=10

  8. Jon says:

    stumbled onto you blog and must say I find it very informative, interesting and a refreshing change to main stream media. I agree with you in regards listening to realtors who keep informing us now is the best time to buy, before the rates go up. It reminds me of the commission earning department store employee telling you “you have to buy today before the sale is over, or it will cost you more to buy tomorrow” How can we continue to listen to realtors whose sole purpose is make money off the buying/selling of homes

  9. Paul says:

    I am surpized about the propaganda possibilities of stakeholders here in Canada and the press. Information is very one sided, and limited. Abroad they appear to have very different opinions about the canadian economy, house prices, tax payer backed banks and so on. How long can the stakeholders ( politicians, banks, realtors, middle men) keep most Canadians in the dark from reality? If it is so called the health of the canadian banks who bear no risk, no competition and so on compared to european, asian etc. banks. When does this propaganda stop, as well as reality that for example most european banks are in great health, unemployment in northern europe is lower than even Alberta? Or even about the 30 year old, unsafe and expensive payment systems canadians have to deal with?

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