Monday, September 15, 2008

Spin, baby

I wrote on Friday's preannouncement:

I now expect August to be at least -5% for the country overall. My
projection of -6% to -9% by December
is looking more likely and perhaps
skewed to the low side of that projection.

Today the news: -5.1% in August.

Vancouver, Victoria, Calgary, Edmonton and Windsor all negative. Toronto was barely positive (0.8%). Ottawa and Montreal keeping the number from tanking at 5.6% and 6.2% respectively.

I wrote on Friday:

And CREA will likely spin away 1) saying that the market is now balanced and a great time to buy, 2) the number is skewed by Alberta and BC and 3) this is just a
healthy correction and that Canada is nothing like the US.

The actual spin had heavy emphasis on 2 with a new take on 1 (stable/solid) and 3 (as quoted):

CREA President Calvin Lindberg. "In light of that fact, our current market can certainly be characterized as stable. The Canadian market fundamentals are still solid, and mortgage rates are still at near record low levels," the CREA President adds. "The challenge is for sellers to price their home to meet the local market realities, and for buyers to realize there is no real estate bubble that will burst and send prices to new lows."

Stable = -5.1%. I would hate to see what instable looks like....

The guy is exhorting sellers to cut their prices ("for sellers to price their home to meet local market realities") and commanding buyers to just buy already and close your eyes to the overvaluation in prices from any type of historical perspective or to the news everywhere else in the world.

I suspose that Lindberg will write you a put option on your house if he is wrong? CREA sounds desperate but words alone will not prevent the bubble from imploding. Look at Lehman...


Anonymous said...

nice post

Anonymous said...

It's starting to get UGLY! What is surprising is how fast things have turned.