RE-VIEWING NEWS: CBC moral panic “What If?” as if we haven’t heard it for 4 years

It has been said before. It has been cried before. It has been repeated and rehashed so many times it’s a continuous story with an array of bylines.

Here we are in 2017 and the coming doom that has long loomed over Toronto’s housing market is still being orchestrated by the media.

A month ago, CBC in an article titled “The worst scenario: What if Canada’s real estate bubble burst?” discussed the hypothetical aftermath of a hypothetical possibility in light of a cooling market.

That title alone is a shame.

“Click here and see what you don’t have to fear but could fear,” even in light of a market that followed a changing pace in April and a consecutive example in May, that being that Toronto real estate is showing signs of a market headed towards slower accumulation.

I’m not saying there isn’t going to be a crash or that there is no possibility of that crash, but I won’t create hypothetical articles of the, “what ifs.”

Especially in light of the fact that house listings are up and sales are down. That’s some sure signs of a market in a state of caution cooling itself before the 16 measures of the provincial government.

Here we are still after a steadier spring season with more supply and lesser demand, and still they won’t drop the idea that the market has to crash or will crash.

And it’s not just because it’s a possibility and the responsibility of a public media to inform its citizens, but surprising to see a publicly funded media playing the same click-bait and fear-pull game that every other modern news organization uses in the current light of the Trump era.

*coughuffington* *poughst*

CBC does take note of this fact but decides to frame the article to educate people about the very hot topic and common headline in Canadian real estate and especially that of Toronto’s hot real estate market.

The latest numbers from the Canadian Real Estate Association show the average home price in Canada climbed by 10 per cent to $559,317 in April. Notably, the number of sales in Toronto’s red-hot market fell by almost seven per cent but prices continued to rise.

No one is saying the end is nigh. Most are still banking on that ambiguous “soft landing” policy-makers have talked about for years. But, for the sake of argument and for a better understanding of the risks, let’s talk about what a real crash would look like.
Excerpt from CBC

Ambiguous soft landing with just as much detail as your said crash… Nice unbiased reporting…

So in a justifying regard for the cooling reality of Toronto’s housing market and that of the rest of Canada, CBC jumps in with just one more hit from that good old title that scares so many homeowners into reading across the country.

In hindsight it would be far from the last.

I guess we pay taxes to be informed about hypothetical fears of the Canadian economy.

But CBC isn’t alone or guilty, they are just playing the real estate news game. That game is producing shocking and fear mongering headlines that cause invested homeowners to flock.

IMAGINE YOU HAD A FUCK TON OF CHOCOLATE. AND EVERYDAY YOU GET UP. THE NEWS KEEPS TELLING YOU THAT CHOCOLATE COULD MELT. BUT IT ISN’T MELTING, BUT IT COULD.

especially in light of Toronto’s very hot market the subject in itself is a wildfire that generates enough views that it’s insane.

Damn right I’m going to be reading that article about melting chocolate when I have a huge investment in chocolate.

On the one hand, a crash might be good for some Canadians already priced out of the market. And even a dramatic 40 per cent drop in prices would set homeowners in markets like Toronto or Vancouver back, what, two or three years?

Excerpt from CBC

CBC discusses how a crash may be good for the market. Yeah for one side of the market. For the side that isn’t invested in the market.

In reference to Toronto’s early 90s crash, CBC makes reference to how not all homeowners will be affected by a crash, especially if they don’t plan on moving.

Like then, some owners would be largely unaffected by a crash today. Someone who isn’t going to move and has a lot of equity in the house would be set back, but given the enormous increase in house prices (33 per cent in 2016), they would have something of a cushion.
Excerpt from CBC

I mean these are all great points, but Toronto’s market isn’t necessarily a home market, yes people live in that market but a majority of it remains speculation and investment assets, vacant or not.

 

It’s seems a good majority of this article removes the fear out of the click-bait title. By confirming that a real estate market crash in Canada might not actually be that bad for everyone being the homeowners who are in for the long run and the prospective younger generations that want to get into the housing market.

But this is only looking at the framed reality of Toronto realty and that of its effects on the housing market directly.

Due to Toronto’s (Canada’s) hot housing market over the past couple of years, especially considering the past year, it has created an adverse wealth effect in the pockets of homeowner Canadians.

A housing crash will most definitely have an effect on homeowners especially considering that the entire state of Canada’s wealth effect will dissipate.

This wealth effect is created when homeowners increase their standard of living and expenditures in light of their rising asset property.

In the hypothetical case of a housing crash I will confirm that there will always be more damage than good.

There is nothing good about a housing crash, and it can’t be framed that way in the light of one reality.

That reality being that it would make it cheaper for prospective buyers currently pushed out by the high heat of Toronto’s housing market.

The negatives far outweigh that single positive. The negatives being a complete turn around of the Canadian economy.

That turn around being caused by a reversed wealth effect. We will see a variety of implications that both slow and are caused by a slower Canadian economic growth.

Real estate, and especially that of Toronto, has been out pacing every other sector of business in the country.

Canada has come to rely on real estate in its economic growth.

We aren’t just talking about jobs in Toronto real estate. We are talking about the amount of wealth that has been generated in that market, whether that be the selling, buying and development of that property.

Joblessness would spike, and it would be made worse by people’s reluctance to move for work because they are tied to monster mortgages for homes worth less than they paid, Schamotta says.

That would be bad for productivity, but it would also make Canada’s entire economy less able to react to global changes. And the loonie would likely fall, too, hurting imports while boosting exports.

And even those homeowners who have equity in their homes and don’t plan on leaving wouldn’t be immune.

High house prices boost the rest of the economy because when people feel wealthy they spend more. But the opposite is also true, economists warn. (Frank Gunn/Canadian Press)

Excerpt from CBC.

Who wants to have a nice picnic in Trinity Bellwoods and dream about a housing crash now?

That’s a pretty appetizing paragraph after an article that introduces the crash as positive for Millennials trying to get into the market, which I can promise wont be positive nor will it drastically decrease property prices like some people imagine, especially when we compare the possibility to the constantly referenced early 90s Toronto housing crash.

Benjamin Tal, deputy chief economist at CIBC World Markets, says the important question isn’t how far prices would fall, but why they fell in the first place. If prices fell because Toronto’s well established supply issue was sorted out, that could actually prove positive for the economy.

But if they fell as a result of a quick rise in interest rates, as happened in the United States in 2006, the impact could be severe.

Excerpt from CBC.

If prices fell in a market dominated by supply, I wouldn’t call it the crash the headlines have been painting on the ceiling of Toronto’s real estate bubble.

And that decline would be a soft correction of the market, at most.

The wealth effect is an economic theory that for every increase in wealth there’s a disproportionate increase in spending. In housing terms, that means that for every one per cent increase in prices, we usually see spending go up about five per cent. Tal says the reverse is also true, that for every one per cent fall in prices, people spend disproportionately less.



Based on this theory, it’s not hard to see why a double-digit correction in prices could cascade through other parts of the economy, “and that can feed on itself,” says Tal.



On the upside, just about everyone agrees that nightmare scenario is still unlikely. Prices are slowing in Toronto and Vancouver. And Tal says one big difference between today’s situation and the U.S. housing crash is that everyone in this country is trying to slow down the market.

Excerpt from CBC.

I don’t know how you could write such a thing as a conclusion to a “what if” article.

If that isn’t the most contradictory point. How about an article like “Canadian real estate different than American bubble due to conscious public.”

Educating homeowners about a hypothetical crash that has been said to be unlikely, especially in light of a market showing signs of cooling, is highly irresponsible and more so in light of a title that is clearly fear-bait content.

CBC’s “The worst scenario: What if Canada’s real estate bubble burst?”

you’ve been given a Centre of the Universe Yellow Belly Reward!

Congrats cowards!

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