Question the sources and motives of “doomsday theorists”…

The Canadian Real Estate Association provides a monthly overview of the housing market in Canada.  CREA compiles statistics of properties sold through MLS and tracks market trends for prices and properties sold.

According to a recent report in The Ottawa Citizen, CREA president Calvin Lindberg projects the average selling price of homes in Canada will still hit a new record high by year end.

Inevitably there will be some Canadian markets softer than others, but month after month activity continues to demonstrate that market fundamentals in Canada are different than those of the housing market recession underway in the US.

The National average in June-08 was $314,028 compared to $313,997 in June-07.  British Columbia average results for June-08 show $463,458, up from $445,881 in June-07.  In our neck of the woods, the average for June-08 in Vancouver was $611,613, up from $564,702 in June-07.

Some of the stuff I’ve been hearing reported in the media seems extreme in contrast.  When I checked Merrill Lynch, the source of a CTV report, I learned that only one of the economic models run was being reported; the doom and gloom model.

Yes, listings are up, sales are down, and locally we are in a buyers market, but let’s continue to carefully monitor and question the sources and motives of “doomsday theorists”.

1 thought on “Question the sources and motives of “doomsday theorists”…”

  1. Carolyn Kwan and David Wolf, are Merrill Lynch Economists and authors of this report: “Peaked: Canada’s housing market in-depth.

    Here are a few comments (and “excerpts”).

    “To be clear, we do not expect Canada’s housing market to crash. The risk of double-digit declines in house prices over the medium-term Canada-wide appears small to us.”

    On August 8, 2008, CTV’s account of this report portrayed doom and gloom; it was totally irresponsible and had no balance.

    In a Toronto interview, Ms. Kwan stated that there were two separate models run; one showing a slight decline and one showing a slight increase in prices. Hmm, I guess the positive model was discarded.

    This excerpt: “…high valuations, lots of supply and potentially limited demand, we expect a weakening in prices and a pullback in homebuilding ahead.”, seems to generally sum up a few widely held opinions.

    This point however needs to be brought to the forefront of Canadians. “Homebuilding has outpaced household formation”, and, “Canadian developers have been overbuilding relative to this benchmark for six years running”.

    Canadians need to know that what might be experienced in the coming years is, in large, because of the sustained overbuilding and greed of the homebuilding industry.

    Why isn’t CTV reporting this?


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