Realtor disinformation campaigns are not confined to the United States. Canadians have their own Real Estate Association spinning the data.
Irvine Home Address … 17 IMPERIAL AISLE Irvine, CA 92606
Resale Home Price …… $410,000
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I Wake Up
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Money Maker — Imperial Squad
As a somewhat cynical realist, I am suspicious of sources and motivations when I read news stories because big money can spread disinformation and influence public opinion. Realtor associations have a powerful influence. They create their own fictional economic universe and they work diligently to spread the Good Word. Part of their process is to feed press releases to lazy reporters who regurgitate realtor spin and give it the veneer of impartiality.
Bullshit, if separated from its source, smells just as sweet.
As I was researching yesterday’s story on the Canadian Housing Bubble, I came across a piece of realtor spin Canadian style, Fears of Canadian housing bubble dwindle.
First, note the title of the piece is written as if it is fact when we know from the numerous stories I linked to yesterday that fears of a Canadian housing bubble are intensifying, not dwindling. The title of this article caught my attention because it was counter to the obvious.
I started getting visions of George Orwell’s character Winston Smith doctoring the historical records creating imagined pasts without fears of housing bubbles. Articles like this one are historical fiction planted in the news archives of the internet to betray future historians to the truth of the era; a dastardly deed Big Brother would deviously bemoan: PAST IS FUTURE.
To the article:
“A surge in new listings in November helped ease a chronic supply
shortage and temper prices from a month earlier, easing fears of a
bubble in the making even, though the rebound in the market continued
unabated.”
The author shows skill to shove so much nonsense into a single sentence (but not as many Ss). What “chronic supply shortage?” What proof do you have of this? When and where is this mentioned? This is an example of stating what you want to be true as if it is truth when in fact, it is a combination of wishful thinking and seeding one’s own argument. If you reject this premise — which I do, since it is false — then the rest of this argument falls apart.
“That’s what economists were looking for because a steady string of
monthly price increases could inflate an asset bubble and lead to a
severe correction when interest rates eventually rise. For the past
several months, prices have been rising month-over-month, with
double-digit percentage increases posted year-over-year.”
Economists are not looking for the set of conditions the author describes in the first sentence as confirmation that there is no housing bubble. He made this up. The reason economists were looking — the steady stream of price increases indicative of a bubble — that is still a concern, and the authors feeble idea of new listings easing a chronic shortage does nothing to abate fears of a housing bubble. All it does do is show that sellers are coming out in large numbers to take advantage to foolish buyers who think prices are going to the moon.
“Listings in November increased by 5 per cent compared with October, the
largest one-month gain in two years, the Canadian Real Estate
Association said Tuesday. The increase is a sign of consumer
confidence, and signals a return to normalcy in what has been an
extremely volatile market. More inventory ultimately means lower
prices. The average national price in November declined by 1.1 per cent
from October to $337,231, although that was still up sharply from the
depressed levels 12 months ago.”
Another treasure trove. Blah, blah, blah, consumer confidence, return to normalcy; do you see the template the author was working from? My favorite in this piece comes at the end of the above section when the author mentions that prices are up sharply from 12 months ago — the primary concern of everyone looking for a housing bubble. Note the author added the qualifier “from depressed levels” to insinuate that current prices are not inflated because, due to some magic, prices 12 months ago were “depressed.” Bullshit.
“New listings are helping to balance the market and are letting a
little bit of air out of the tires,” said Gregory Klump, chief
economist at the Canadian Real Estate Association. “We are starting to
see affordability eat into demand.”
Notice the realtorspeak, instead of the obvious, “prices are too high,” the author goes for the negative, “affordability eat into demand.” Affordability is portrayed as this evil dragon that devours market demand, a beast to be slain, preferably through toxic financing and large doses of kool aid.
… While Peter Aceto welcomes a moderation in prices, the chief
executive officer of ING Direct worries buyers are purchasing homes
they won’t be able to afford when interest rates move higher. He has
advised his employees to run clients through different scenarios to
make sure they realize how much more their payments would be under
historically average circumstances.
For example, a five-year variable rate mortgage at 2.25 per cent on
$300,000 would carry a monthly payment of about $1,300, assuming a
25-year amortization period. A move to 5 per cent would boost the
payment to $1,750. It’s a 34-per-cent increase, something many family
budgets wouldn’t be able to accommodate.
Exactly why housing bubbles are a huge problem. People become reliant on ever increasing house prices and declining borrowing costs to fuel and finance consumer spending. When house prices and interest rates go the other way, it is shattering to those dependent upon borrowing to sustain their lifestyles.
“I understand how people get caught up in a hot market, but they are
doing some odd things that really worry me,” he said. “You see multiple
offers, and houses going for 20 per cent above asking. Those aren’t
normal things, and the high level of confidence out there really does
make me scratch my head a little.”
It should make this guy do a little more than scratch his head; perhaps he could blog anonymously for a while and try to warn people….
The Bank of Canada had a similar warning for consumers last week.
A Royal LePage survey of real estate brokers shows Canadian home
buyers are also wary, although most don’t believe a large price
correction is imminent in 2010. The main concern among buyers,
according to the 1,200 brokers who participated in the survey, is
economic instability. They also worry about whether they’ll be able to
get the price they want for their house should they sell.
“People worry when they see the kind of volatility we’ve been
through,” Royal LePage chief executive officer Phil Soper said. “Abrupt
changes in either direction cause concern, but as we edge toward
normalcy in the market and everything levels back out those concerns
should start to ease.”
I am not surprised a survey of buyers showed they did not believe a price correction is imminent in 2010. A survey of buyers anywhere would reveal that sentiment, so what? Most buyers are naive, and with everyone feeding them a steady diet of propaganda disguised as news, it should not be surprising everyone thinks house prices are going to rise quickly, and that they should buy now or be priced out forever.
Irvine Home Address … 17 IMPERIAL AISLE Irvine, CA 92606
Resale Home Price … $410,000
Income Requirement ……. $87,425
Downpayment Needed … $14,350
3.5% Down FHA Financing
Home Purchase Price … $306,500
Home Purchase Date …. 11/25/2009
Net Gain (Loss) ………. $78,900
Percent Change ………. 33.8%
Annual Appreciation … 187.9%
Mortgage Interest Rate ………. 5.26%
Monthly Mortgage Payment … $2,187
Monthly Cash Outlays ………… $2,870
Monthly Cost of Ownership … $2,160
Property Details for 17 IMPERIAL AISLE Irvine, CA 92606
Beds 2
Baths 1 full 1 part baths
Size 1,075 sq ft
($381 / sq ft)
Lot Size n/a
Year Built 1993
Days on Market 5
Listing Updated 12/22/2009
MLS Number S599611
Property Type Condominium, Residential
Community Westpark
Tract Cb
Corte Bella gated community. Mediterranean style with fountains & statues. Newly installed carpet & blinds. Plantation shutters. Custom crown moldings & base. Upgraded wood floor & granite counters in Kitchen. Walk-in closet with Mirrored wardrobe. Walking distance to community park & Colonel Bill Barber Memorial Park. Ready move-in condition.
Realtors: home prices to rise 4 percent in 2010
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