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You Can’t Build A Country On Making Houses For The Country

A report from the Wall Street Journal on Canada. “Tougher rules for new borrowers, rising mortgage rates and new taxes for home buyers have been put in place by Canadian regulators in recent years to tame some of the most overheated housing markets in the developed world. “

“But they have also shut prospective homeowners out of the market. That has slowed sales in cities like Toronto and Vancouver in recent months, prompting some to call for Canada to loosen the restrictions lest they brake the economy too much.”

“Evan Siddall, a former Goldman Sachs banker who now runs Canada’s housing agency, is unmoved. In fact, he doesn’t think the tougher rules go far enough. ‘Residential real estate has become too large a part of our economy, and it’s diverting investment,’ he said in an interview. ‘You can’t build a country on making houses for the country.'”

“For the housing industry, the rules have been painful. Home sales in the Vancouver region plunged more than 42% in November from a year earlier, following a 35% drop in October, according to the Real Estate Board of Greater Vancouver.”

“‘We understand why this was done,’ said Canadian Home Builders’ Association spokesman David Foster. ‘But it seems to have done what the government wanted to do, and from hereon in mostly what we are going to see are a lot of negative side effects unless that policy is recalibrated and rethought.'”

“The rules also threaten to worsen income inequality by keeping young families from building wealth, said Paul Taylor, CEO of Mortgage Professionals Canada. ‘It’s a bit of a nanny state when you say, ‘We don’t think it’s in your best interest to buy property at that level now,’ said Mr. Taylor.”

“‘We had to make it harder for people who were borrowing with too little equity to expose themselves to the housing market. And that’s first-time home buyers,’ Mr. Siddall said. We actually probably could have done more.'”

From Better Dwelling. “Greater Toronto new homes sales are cooling. BILD and Altus Group numbers show sales dropped to multi-year lows in November. The decline in sales is combining with higher building activity, sending inventory higher than we’ve seen in the past few years.”

“The price of a new home is up… or down – depending on what you’re going to buy. The benchmark price of condo apartment reached $786,602 in November, up 11.9% from last year. The price for a single family home hit $1,150,823, down 5.9% from last year.”

“The City of Toronto saw new home sales fall much faster than the suburbs. The City of Toronto represented 1,141 of the total GTA sales in November, down 53.35% from last year. Condo apartments represented 1,124 of the sales in the city, which was down 53.64% from last year. As you’ve probably noticed, the vast majority of the sales declines were in Toronto.”

“New homes for sales is surging higher across Greater Toronto. An estimated 16,797 new homes were for sale across Greater Toronto in November, up 42.49% from last year. Condos represented 11,254 of those listings, up 34.77% from last year. The number is higher than we’ve seen during the past two years.”

“Inventory is now just above historic levels, which sounds great when the industry says it. However, sales are significantly below historic levels. That means more pressure on home prices to stay where they are, or even drop.”

From York Region. “Her facial expression changed from neutral to complete disgust. She was a gym goer, like me, and somehow both of us learned about the grim news when we were briefly looking at the TV screen in the women’s locker-room in East Gwillimbury.”

“On Wednesday, Dec. 19, Humberto Velasquez, 34, was shot multiple times near King Street West and Spadina Avenue, so close to the hipster-ish BrainStation, a training centre for really smart-looking people, who earnestly want to reach their full potential in ‘geekiness’ and ‘nerdiness.’ It was also in an area known as fun-loving a.k.a. the Entertainment District.”

“But that face of disgust isn’t exclusive to responding to news emanating from Toronto. These faces were made this year when hundreds of former Icona and Cosmos condo purchasers were ‘out-priced’ from the continuously appreciating real estate market after the developers decided to scrap the projects citing the inability to secure ‘satisfactory financing.'”

“Their challenge is worsened when developers need more incentives to make profit amid already high prices for real estate. It gets even more complicated as there is no shortage of land to develop as York Region officials admit: “We have quite a years-of-supply, about 21 to 23 years’ supply.'”

From Portage Online. “The Portage la Prairie housing market saw its fair share of movement during the past year. Portage la Prairie Chamber of Commerce President Guy Moffat says the market overall, was up and down more than really trending in a certain direction.”

“‘It was sort of a mixed bag in 2018,’ says Moffat. ‘The housing market, as far as sales go, at the start of the year it was quite hot. There was a lot moving, it was a very exciting time. Then, over the summer, which is when it’s normally supposed to be busy, things kind of dried up a bit.'”

“Moffat notes in the past month and a half the market has shown an upward trend, most likely the result of an increased amount of inventory. He notes the main issue appears to be finding appropriate prices for the market.”

“In 2019, Moffat says the biggest news will be the massive influx of inventory into the rental market. ‘We’ve got two large-scale apartment complexes that are coming up,’ notes Moffat.”

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This Post Has 37 Comments

  1. ‘It’s a bit of a nanny state when you say, ‘We don’t think it’s in your best interest to buy property at that level now,’ said Mr. Taylor.”

    It’s not in my interest as a taxpayer to bail out the banks to lend money to stupid, irresponsible FBs.

  2. ‘We have quite a years-of-supply, about 21 to 23 years’ supply’

    That’s some shortage.

    ‘These faces were made this year when hundreds of former Icona and Cosmos condo purchasers were ‘out-priced’ from the continuously appreciating real estate market after the developers decided to scrap the projects citing the inability to secure ‘satisfactory financing’

    It’s really bizarre that the public is so ignorant of what’s happening. Jeebus sad pandas, the reason they are cancelling condos left and right in Toronto is the business is cratering!

  3. ‘Residential real estate has become too large a part of our economy, and it’s diverting investment,’ he said in an interview. ‘You can’t build a country on making houses for the country.’

    And he’s in charge of a housing agency! I like this guy.

    1. ‘You can’t build a country on making houses for the country.’

      How can the US get similarly enlightened leaders in governmental housing agencies?

      1. After the next housing bust and Great Financial Crisis, I suspect there’s going to be a long-overdue purge of complicit and criminally negligent regulators, enforcers, and policymakers. Wall Street grifters and their Fed accomplices may even face criminal penalties this time around.

    2. “The housing agency –snipped– also considered recommending limits on how much banks could lend relative to their borrowers’ income but dropped that idea, he said.”

      Just when they were starting to make sense… wtf?

    3. “Average household borrowing, of which housing is by far the biggest component, was nearly 174% of income as of Sept. 30, according to Statistics Canada.”

      Gotta wonder if that “average” is limited to households in debt, or are they using all the households in the country to “work” the numbers?

      1. That’s gotta be the average. Even in the 1970s households were borrowing 200% of income for housing. They must be counting renters and elderly who own their homes outright.

    2. Lime Chili Shrimp Flavor dang Ill have to find this…….but 910 mg salt per serving 38% daily dose and 2 per bag……..yikes

  5. Is the Plunge Protection Team about to trigger a massive Santa Claus Rally?

    …
    Treasury Secretary Steven Mnuchin will host the call with the president’s Working Group on Financial Markets, known colloquially as the “Plunge Protection Team.”

    WASHINGTON HAS A PLUNGE PROTECTION TEAM?

    Yes, although it does not deal exclusively with Wall Street panic. The Working Group dates to March 1988 when Washington was still trying to figure out what was behind the “Black Monday” stock market crash of October 1987. Then-President Ronald Reagan created the group to find ways to keep financial markets operating smoothly. The group also met in 2008 during a profound financial crisis and issued recommendations for overhauling banking regulations and rules on mortgage lending. The group, however, does not always meet during a crisis. In 1999, the group issued a report asking Congress to change laws on derivatives markets.

    WHY IS THE GROUP MEETING NOW?

    Financial markets are not in crisis but lately they have had a very bad run. The benchmark S&P 500 stock index is on pace for its biggest percentage decline in December since the Great Depression. The Treasury Department on Sunday said the Working Group will discuss “coordination efforts to assure normal market operations.” Financial turbulence is not always a sign of trouble in the economy, but Federal Reserve Chairman Jerome Powell, who is a member of the Working Group, said last week that tighter financial conditions were partly behind a downward shift in economic growth expectations.
    …

    1. “Financial markets are not in crisis but lately they have had a very bad run.”

      Translation: The patient is morbidly obese and diabetic, and due to extremely poor circulation an amputation of both feet is necessary to prevent sepsis.

  6. Now that word is out that this year’s highly anticipated Santa Claus rally has morphed into a serial crash and a bear market, what should investors do: sell or HODL?

    1. Does it seem as though market commentators are overly optimistic about future prospects?

      Markets
      Business
      World Markets
      ‘The worst is yet to come’: Experts say a global bear market is just getting started
      Published Mon, Dec 24 2018 • 12:20 AM EST
      Updated an hour ago
      Yen Nee Lee
      Key Points
      – Volatility on Wall Street has led shares worldwide on a wild ride in recent months, resulting in a number of stock markets dipping into bear territory — typically defined as 20 percent or more off a recent peak.
      – That’s set to worsen in the new year, experts told CNBC on Monday, pointing to risks including the Federal Reserve likely raising interest rates further and mounting concerns about a global economic slowdown.
      – “I think the worst is yet to come next year, we’re still in the first half of a global equity bear market with more to come next year,” said Mark Jolley, global strategist at CCB International Securities.
      …

    2. Check out the Dow and S&P 500 charts that accompany the article posted below. They have essentially gone straight down with almost no interruption since the beginning of December. Who fired the shot that spooked the lemming herd into stampeding over the cliff?

      Economy
      Can Trump fire Fed Chair Jerome Powell?
      By Adriene Hill, Janet Nguyen, and Daisy Palacios
      December 24, 2018 | 2:14 PM

      As the stock market hits record lows, President Donald Trump is placing the blame on one man: Federal Reserve Chairman Jerome Powell.

      For the fourth time this year, the Federal Reserve raised interest rates, hiking its benchmark rate a quarter point from 2.25 percent to 2.5 percent.

      These increases have “upset investors,” wrote New York Times reporter Binyamin Appelbaum.
      …
      Hill: Wall Street seems to be nervous, maybe, about news that came out this weekend about Treasury Secretary Mnuchin making phone calls to bank heads, sort of saying, “No, no, everything’s fine, don’t panic,” when no one was panicking. What do you make of that?

      Appelbaum: It was a remarkable display. Secretary Mnuchin has been under enormous pressure from the president to calm the stock market. I think President Trump believes that the stock market can be made to go back up, and he’s demanding that someone do that. And Secretary Mnuchin responded to that pressure by reaching out to the heads of banks to have these conversations on Sunday, where he basically sought their assurance that everything is going fine. But as you say, it was the equivalent of announcing that a problem didn’t exist. No one thought it existed. It’s like saying, “Everybody rest easy, we have plenty of zombie vaccine in store,” and all of a sudden people are thinking about zombies. So it was a very odd performance, and it really appears to have contributed to the market’s decline today. It really freaked people out. It’s the type of thing we only hear a Treasury secretary saying when things are actually going quite badly.

      1. Business
        Why Are Stocks Crashing?
        Deepening Bear Market Could Last 6 Months, Bank of America Chief Says
        By Benjamin Fearnow On 12/24/18 at 2:29 PM
        Business

        Top banking strategists declared a bear market and pointed to a more than 20 percent decline in Standard & Poor’s 500 index since its all-time highs on September 21. The S&P index joins the Dow on track to have its worst years in more than a decade.

        Stephen Suttmeier, chief equity technical strategist at Bank of America-Merrill Lynch, produced two S&P 500 charts on CNBC suggesting an increasingly deepening correction and evidence stocks were under a bear market. On Monday, the Dow dropped more than 650 points to below 22,000, and the S&P fell 65 points, or 2.7 percent, by the market’s 1 p.m. E.T. early close Monday. The U.S. stock market nosedive is the single worst day of trading on Christmas Eve ever.

        The S&P 500 has fallen 20.06 percent from its September highs. Wall Street firms and analysts traditionally dub declines of more than 20 percent from recent highs as bear markets. Both the S&P and Dow Jones markets began falling off around October 3, and Suttmeier is among the analysts predicting this could remain the case for another six months.
        …

  7. Dumb question of the day: Why did Trump and Mnuchin deliberately spark a stock market crash, just before Christmas?

    1. The Financial Times
      Markets volatility
      US stocks slide as Trump adds to unease from Mnuchin comments
      Worst Christmas Eve trading day leaves S&P 500 more than 20% below previous intraday peak
      Steven Mnuchin said in a statement that the chiefs of the US’s biggest banks had confirmed to him that they have ample liquidity
      Joe Rennison in New York, Demetri Sevastopulo in Washington, and Kate Allen in London 9 hours ago

      The US stock market index suffered sharp losses on the day before Christmas as investors reacted negatively to US Treasury secretary Steven Mnuchin’s highly unusual effort to reassure investors about Wall Street banks’ liquidity.

      The S&P 500 finished the holiday-shortened day down 2.7 per cent at 2,351, more than 20 per cent below its previous intraday peak in September and 19.8 per cent below the closing high. It marks the worst Christmas Eve trading day on record.

      “Now we have some severe technical damage in the market going into year-end and investors continue to suffer from fear, uncertainty and doubt,” said Michael Underhill, chief investment officer at Capital Innovations. “More than a buying opportunity, you have a negative feedback loop.”
      …

  9. Markets
    Asian stocks plunge following Wall Street rout
    Nikkei at 20-month low; Shanghai, Taiwan shares down on global economy fears
    MITSURU OBE, Nikkei staff writer
    December 25, 2018 09:35 JST Updated on December 25, 2018 15:57 JST

    TOKYO — Tokyo stocks plunged Tuesday, sending the benchmark Nikkei Stock Average sliding more than 1,000 points to its lowest finish in 20 months, as U.S. policy chaos sharpens investor concerns over the health of the global economy.

    Other Asian markets that were open on Christmas Day also sold off. The Shanghai Composite Index fell 1.4% while in Taiwan, the benchmark Taiex index closed down 1.2%.

    The Nikkei ended the day at 19,155.74, down 1,010.45 or 5.0%, ending lower for the fifth straight session. It was the index’s first close below the key 20,000 level since Sept.15.
    …

      1. All the speculators who rode the Bernanke-Yellen Quantitative Easy money train to bubble riches have jumped off the train just before the washed-out bridge ahead was encountered. Good luck to the bagHODLers who didn’t realize when they needed to jump.

          2. ‘Just like the now confirmed Plunge Protection Team, China’s “national team” of state-backed funds often buys shares during turbulent times. Large caps like banks are among the most favored targets, and buying often comes in the afternoon so gains, or at least smaller losses, are locked in for the day.’

            Doesn’t state purchase of shares result in the redistribution from the public trust to wealthy investors, and also lead to perpetually overvalued stocks?

  12. Survey shows 99.89% of realtors are trading “rare” flavored ramen noodles on the black market to supplement loss of income. Widespread shortages of ramen noodles are now spreading through coastal cities in the US and realtors have resorted to violence to obtain their precious ramen currency.

    They’ll kill for it’: Ramen has become the black-market currency

    https://www.washingtonpost.com/news/wonk/wp/2016/08/23/soup-is-money-in-here-ramen-has-become-the-black-market-currency-in-american-prisons/?noredirect=on&utm_term=.92b426df36f4

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