Friday, May 30, 2008

Paid obfuscators

Obfuscated definition:
Darkened or cast in the shadow or background; obscured by withholding proper light or emphasis; hence, confused, bewildered or lost sight of.

Obfuscation refers to the concept of concealing the meaning of communication by making it more confusing and harder to interpret.

Lets look at the Calgary Herald:

MLS sale price falls first time in 12 years

Market eyes stability amid higher listing

...average price increases peaked for the province in close to mid-2006 and they've become smaller ever since." The province is following a general trend being experienced in Calgary as well with falling sales, stabilized prices and increasing listings
Lai Sing Louie, senior market obfuscater in Calgary for Canada Mortgage and Housing Corp.

Average price increases have become smaller, then reached zero and are now negative.


"The reason you've got a month-over-month decline (in Alberta average prices) is that the sales price in April last year was extraordinarily high, It has come back just a little bit but it has stabilized."
Gregory Klump, CREA's chief market obfuscater

People paid too much for houses last April in Alberta.


But... but.. look at Fort McMurray!

"The one market where there's still a lot of price strength is in Fort McMurray (Wood Buffalo region). If you look up there, that real estate market still seems to be rising there,"

I also have a comment on the increasing prices in Fort McMurray. I can only present theory and conjecture but I still think it is useful. Here me out:

Even if the Fort McMurray's economy continues to boom, which many expect it too, it is still possible for real estate to stabilize or fall. Consider a $420,000 mobile home for a moment. Even a price of $320,000 would require an insane economy and more importantly insane rents. So even if you are sure the boom will last "at least another 10 years" there is an equilibrium price for a mobile home - and its not infinity. Look to Edmonton which has demonstrated a strong economy and falling prices.

I also want to hear from fort McMurray locals. I see "offer pending" on many questionable listings and I presume its some REALTOR method of creating hype and drama. What is a pending offer?

See previous post on Relaxing Housing Prices


squidly77 said...

they have no interests in providing the public with honesty
they set out to confuse
real estate boards are worse they deny public access to information
and in the next breath claim they provide a public service
a definite oxy-moron
when organizations zealously refuse to open their books
it leads to suspicion
after all what are they hiding ?
great blog and witty postings

squidly77 said...

i believe that the mls is here to stay...however real estate boards and their members have done too much damage this time..theyve gone too far..not just here in alberta but possibly world wide
there is something very odd within the real estate industry
companies like redfin
and zillow
are the future of RE transactions

BearClaw said...


I am still hopeful that comfree gets their act together cause there is potential there.

I think comfree should publish what properties sell for and make this searchable on their website. Then you could find comparable yourself. They have no need to keep the info secret cause, unlike realtors, their business model does not rely on it. That would give them a huge advantage, and bring in buyers, or at least lookers.

BearClaw said...

why is the states always miles ahead? Zillow is great.

Anonymous said...

Industry participants (especially the CMHC) willfully ignore and publically downplay what is going on. The mainstream media are their paid shills (grab a weekend paper and look at the percentages of advertising which is real estate or lender related!). Instead we should all worry just a little (but not too much) about...

a) the fact housing affordability is at its worst level since the last housing bubble burst [RBC. Housing Affordability. Mar-2009, p.1]

b) the fact that real housing prices have increased substantially more than during the last three housing cycles dating back 40-years (all of which ended badly) [Scotiabank. Real Estate Trends, 26-Feb-2008, p.2]

c) the fact that real housing prices in Canada have risen more from trough to peak than in the U.S., where prices and the general economy are now tanking [Scotiabank. Real Estate Trends, 26-Feb-2008, p.2]

d) the fact that Canada's housing prices-to-rent ratio is higher than in any other OECD country save Spain and 90% higher than the long-run trend [OECD Economic Outlook No. 82, December 2007. Data table can be found in the housing price ratio tab of]

e) the fact that Canada's housing prices-to-income ratio is 32% above historic trends and substantially above the ratio which prevailed when the last housing boom bubble popped in the late 80’s / early 90’s [same source as (d)]

f) the fact that the unprecedented run-up in prices have been fueled by a proliferation of risky lending practices such as (i) a decrease in the required down payment from 10% to 0%, (ii) an increase in the allowed amortization from 25-years to 40-years, (iiI) the proliferation of 7% cash back mortgages and other lending gimmicks (teaser rates, step mortgages, skip a payment, builder rate buy downs, etc.), (iv) the proliferation of home equity lines of credit, and (v) lenders not being on the hook for the vast majority of risky loans they write (CMHC guarantees low-down payment and/or extended amortizations)

g) the fact that studies show typical consumers do not fully understand the implications and risk of low down payment, long amortization and gimmicky (e.g. 7% cash back) mortgages. How many consumers do you think have run a scenario analysis which asks, “what would happen if interest rates went to 8%, 10% or even 12%? What would happen if my partner or I lost our job? What would happen if real estate prices dropped by 10%, 20% or 30%? What impact will extending myself for this house have on my retirement plans?”

h) the fact that housing bubbles around the world are beginning to deflate. By way of example, the UK (admittedly a worse market then ours) mortgage lending in the first quarter is down 40% to the lowest level in 33-years and things are only beginning to get rolling there. In New Zealand housing sales are down 53% year-over-year. And we all can see what is going on in the U.S.

i) the fact that housing construction is far in excess of household formation. CMHC data shows housing starts averaging 226,000 units per year from 2003 through 2007, 33% per year above the roughly 170,000 net new households formed each year [as estimated by TD Economics and others]. Based on housing permits and starts, this trend is expected to continue well into the future.

j) the fact that Canadian MLS housing inventory is at record highs while at the same time the number of sales is dropping dramatically [Canadian Real Estate Association (CREA)]

k) the fact consumer indebtedness is at record highs relative to disposable income [Vanier Institute. The Current State of Canadian Family Finances. 11-Feb-2008. p.28]

l) the fact that savings rates are close to nil even though the baby boomers should be saving for retirement [Vanier Institute. The Current State of Canadian Family Finances. 11-Feb-2008. p.9]

m) the fact that Canadian incomes have stagnated. Statistics Canada recently reported "that adjusted for inflation the earned income of the ‘average’ Canadian -- the so-called median income - was the same in 2004 as in 1982”

n) the fact that the economy is bordering on a recession. The high Canadian dollar has pounded exports and the U.S., which absorbs some 70% of our exports, is likely in a recession. And what would happen if the rose comes off the construction and commodity bloom? Heresy I know, but both of these sectors are well above trend and are the only real source of strength in the Canadian economy.

o) the fact that inflationary pressures are building, raising the prospect of higher interest costs for borrowers.

I guess it is easier to put on our rose colour glasses, look in the rearview mirror and admire how pleasant the trip has been. Never mind the cliff dead ahead.

BearClaw said...

popping bubbles,

That list is hardcore, thanks for commenting!

There were also interest only and no-doc mortgages in Canada as well. Not sure how prevalent they became.