Visitors Now:
Total Visits:
Total Stories:
Profile image
By Greater Fool (Reporter)
Contributor profile | More stories
Story Views

Now:
Last Hour:
Last 24 Hours:
Total:

The illusion

Monday, November 28, 2016 15:42
% of readers think this story is Fact. Add your two cents.

(Before It's News)

metal-modified

This, says Tennysen in Vancouver, is “the illusion of demand.”

How elegant. How concise. The real estate and development industry doing all it can to conceal that market fundamentals are changing by the day. And not for the better. It’s an attempt to fool the media, social media and ultimately consumers. In one Facebook post, we have before us the death knell of our times.

Shannen Carlson is a West Coast publicist, marketer and purveyor of beautiful women as president of Calendar Girl Productions. This time she’s been hired to make a new condo development look like it’s news – a purposeful act to mislead. The intent is not to market the real estate project to potential buyers, but to create FOMO by hiring people to pretend they want it.

Isn’t business great when ethics aren’t involved?

line-up

Needless to say, shams like this – intended to score a precious few minutes on the local TV newscast, or go viral – wouldn’t be required if enough people actually cared about a new set of condo boxes being built. But they don’t. Sales in Vancouver last month were a disaster (again) – down 38.8% from a year ago, and 15% below the declining 10-year average. The market in BC peaked last winter, and was in serious distress even before local politicians polished it off with the Chinese Dudes tax and the vacant-house levy – just as Wild Bill Morneau was stressing the moisters.

What a perfect storm.

“Changing market conditions compounded by a series of government interventions this year have put home buyers and sellers in a holding pattern,” says local realtor boss Dan Morrison. “Potential buyers and sellers are taking a wait-and-see approach to try and better understand what these changes mean for them.”

And that’s when you hire Shannen and her Lawn Asians.

But this is not just about losing a moral compass in troubled BC. People across Canada should see what’s happening in markets that were on fire three years ago – Vancouver, Calgary or even Saskatoon (apartment vacancy rates are now surging there with rents falling) – as harbingers of conditions everywhere. Lots of other people do.

The latest worriers are no slouches. On Monday Canada’s banking regulator gave financial institutions a blunt warning housing could blow up and taken some lenders with it. “A pronounced or prolonged economic downturn could well involve a meaningful housing price correction. This could translate into significant losses for lenders and insurers,” said Jeremy Rudin, head of OSFI (Office of the Superintendent of Financial Institutions). “Given the risks and vulnerabilities arising from the current environment, sound underwriting is now more important than ever.”

“A pronounced or prolonged economic downturn could well involve a meaningful housing price correction. This could translate into significant losses for lenders and insurers… House prices in most Canadian markets have never been higher, supported by mortgage rates that have never been lower.”

But here’s the thing. Bankers are coming off eight years of loaning money recklessly – financing first-timers with no credit history and no money, for example, at the same low rates provided to experienced buyers with 50% deal equity. Foreign students get loans. Retired pensioners get them. There are even mortgages for laneway houses, for people shacking up with unrelated other people and (of course) purchasers who have no down payment and need to borrow that, too. No wonder mortgage debt is off the chart at $1.3 trillion, yet wages have barely budged.

What’s Rudin worried about now? Simple. A real estate correction dropping prices 30% would (says Moody’s) result in $17 billion in losses for the companies he regulates. And just imagine the impact on taxpayers, who stand behind CMHC. No wonder that agency is arguing for higher down payments plus linking the amount a person can borrow to a multiple of their income.

There’s more. Now the OECD is on our case.

The international body has just issued a report spanking Canada for creating an “acute risk” of a housing correction, especially in Vancouver and Toronto. “Such a correction would reduce residential investment and, through wealth effects, private consumption, and in an extreme case could threaten financial stability,” it says, stating the downturn is likely to be “disorderly.”

Well, there ya go. The bank regulator, CMHC, Moody’s and the international community vs Shannen.

But, jeez. Eighteen hundred bucks for sitting outside in a chair? I’m in.

Report abuse

Comments

Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories

Register

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.