Canadian Home Prices Will Plunge 25% From Here

Commentaires à l’intérieur.


Extrait : ANALYST: Canadian Home Prices Will Plunge 25% From Here, Business Insider, Mamta Badkar, Oct. 26, 2012

Canada's sub-prime mortgage industry is said to be growing and there are supposed to be $500 billion in high-risk mortgages in the Canadian housing market.

But some like Robert Shiller have argued that if Canada's bubble were to burst, Canada's experience would be very different from the U.S. because banks aren't as burdened by sub-prime loans and because the mortgages are insured by the Canadian Mortgage Housing Corp. (CMHC).

Que la réponse est facile, c’est juste le peuple qui va écoper, on n’aura même pas besoin de secourir, Fannie Mae, NOUS SOMMES FANNIE MAE, belle réponse stupide, après on se demande pourquoi on est dans merde avec de tels raisonnements.

Pourquoi, pensez-vous que Flaherty veuille vendre la SCHL, il commence sérieusement
à
sentir la soupe chaude !

A new report by Capital Economics however says Canada is "not immune to potential sub-prime problems".

While they argue that there isn't a sharp distinction between prime and sub-prime lending and that non-prime mortgages account for 20 percent of total residential, unlike the 50 percent touted by many, they do think there is too much optimism about Canada's housing market:

"In Canada's case, the evidence also points to errors of optimism. The run-up in household debt-to-GDP (adjusted for methodology differences) looks very similar to what occurred in the US.

This suggests that Canadian households might be equally vulnerable to a housing correction. The Bank of Canada recently commented that the revised Canadian debt figures 'imply a more vulnerable household sector than previously thought'. We couldn't agree more."

Household debt to GDP

Moreover, they think the construction boom is going to end soon and the share decline in existing and new home sales suggest that a housing correction has already begun.

On le constate indirectement examiner les ventes de Rona,
les gens commencent à devenir prudent.

Recul des profits de Rona

Rona (TSX:RON) vient de connaître un autre trimestre difficile : les ventes du détaillant québécois ont encore baissé et son plan de redressement, dévoilé plus tôt cette année, prend plus de temps que prévu à mettre en oeuvre.

Au troisième trimestre, qui a pris fin le 23 septembre, la chaîne de quincailleries québécoise a enregistré des profits nets de 5,1 millions de dollars (4 ¢ par action), en chute libre de 89,3 % par rapport aux 47,8 millions (36 ¢ par action) dégagés pendant la même période de 2011.

« Ce fut un trimestre difficile dans un contexte difficile », a commenté le grand patron de Rona, Robert Dutton, au cours d'une téléconférence avec les analystes.

« Après une embellie observée de février à juin, les conditions de marché du trimestre ont reflété un retour à la prudence du consommateur, voire à la réticence à l'achat », a précisé Rona dans un communiqué.

Compte tenu du contexte difficile, Rona renégocie certains contrats avec ses fournisseurs dans l'espoir d'obtenir de meilleurs prix et demande à ses directeurs de magasins de gérer étroitement le nombre d'heures de travail de leurs employés à temps partiel. (Réf : 1)

 

They project house prices will correct 25 percent and point out that "…pessimism is unfortunately what happens at the end of housing bubbles."

Bottom line - "We see similar errors of investor optimism in Canada which is corroborated by evidence of excessive household credit growth and over-building. These housing excesses, especially condos, will eventually swarm the existing housing market, where falling sales and rising new listings have already begun to cast doubt over the rose-coloured consensus outlook."

However, top economists including Robert Shiller and David Rosenberg are increasingly sounding alarms that the Canadian housing market is the next bubble and it's about to burst.

Canadian home prices are up nearly 100 percent since 2000, according to Euro Pacific Capital. And there are other characteristics that do bear some striking resemblance to America's housing boom-bust story. Moreover, this comes at a time when the nation's economic outlook has become uncertain.

Canadian existing Home