Housing Prices

Bank Of Canada Warns Of "Higher Possilbity" Of Housing Downturn, Sees Vancouver, Toronto Prices Unsustainable

Just a few days after the OECD warned of the risk of a "disorderly housing market correction" in Canada, moments ago the Bank of Canada also chimed in and warned that the "potential" for home price downturn in some areas has increased, and that Vancouver, Toronto home price gains likely unsustainable.  Which is curious because the vast majority of price gains in Toronto and Vancouver have been driven by the outflow of the trillion in Chinese inert deposits, which promptly find their way into Canadian real estate (and lately bitcoin). In other words, is the BOC assuming that China will crash soon?

Vancouver Homeowners Made More From Sitting On Their Assets Than The Entire City Did By Working

The most stunning statistic to come out of China's offshore money-laundering mecca located in Vancouver, where over the past two years Chinese buyers have created the biggest developed world housing bubble in recent history as a result of unprecedented capital flight from China's financial system, is that just by sitting on their assets local homeowners "made" more in 2015 than the entire city population earned by actually going to work.

China Is The Biggest Short...Ever

As simply put as possible... over the next 2 decades, there will be an average of 7.5 million fewer 0-55yr/old Chinese every year vs. an average annual increase of 9.5 million 55+yr/olds. And the wealthy minority of the elderly have stashed their reserves in a whole lot of expensive, vacant real estate that they intend to pass along (rent or sell) to the declining young population.  What could go wrong since housing prices only go up...right!?!

Frontrunning: June 2

  • Global stocks struggle as ECB and OPEC meetings loom (Reuters)
  • Iran Resists Saudi Gesture for Unity as OPEC Fractures Reappear (BBG)
  • Clinton to blast Trump on North Korea, NATO in foreign policy speech (Reuters)
  • Hillary Clinton Shifts to California as Race Tightens There (WSJ)
  • Puerto Rico’s U.S. Rescue Won’t Come Soon Enough to Halt Default (BBG)

OECD Warns Of "Disorderly Housing Market Correction" In Canada

The OECD is ringing fresh alarm bells over the frothy nature of the Toronto and Vancouver housing markets and high levels of consumer debt. “In relation to household incomes, both house prices and household debt are high." But the loudest warning was the OECD's assessment of a “disorderly housing market correction,” notably in Toronto and Vancouver, as the biggest threat to Canada’s economy.“

The Great Hollowing Out Of The Middle Class: New Business Formation Collapses

For a country that prides itself (or used to at least) on the success of the entrepreneur and small business creation, a disturbing trend has developed. According to according to a new analysis by the Economic Innovation Group, fewer new businesses were created in the last five years than any other period since at least 1980..."It's hard to put into scale the collapse of new business formation. We have no precedent for that rapid and steep of a decline. It will have a ripple effect in the economy."

Losing Ground In Flyover America, Part 3

The Fed’s crusade to pump-up inflation toward its 2.00% target by hammering-down interest rates to the so-called zero bound is economically lethal. The former destroys the purchasing power of main street wages while the latter strip mines capital from business and channels it into Wall Street financial engineering and the inflation of stock prices.

Riksbank Says It's Time To Prepare For Helicopter Money

it will not be possible, in the future, to conduct monetary policy in the way and with the impact we have previously been accustomed to. And this is something for which we need to prepare ourselves. She notes that, alongside cutting the policy rate to below zero and purchasing securities, so-called helicopter money could provide a hypothetical path to take to increase scope for monetary policy.

Dear Homeowner, What Exactly Do You "Own"?

If we understand property taxes as a lease from the local government for the right to gamble on another housing bubble arising, we see "ownership" in a different light. As the saying goes, buyer beware, especially if there's no limit on how high desperate local governments can jack up their lease fees, i.e. property taxes.