Let’s say you’re a realtor afraid the feds will squash you like a bug in the next budget. Whaddya do? Right. Fudge the numbers. And starting at noon Monday, that’s exactly what will happen. Real estate boards in Toronto, Vancouver, Calgary and Montreal are banding together with the mothership, CREA, to launch the Home Price Index. The goal: to make real estate look stable. Predictable. Safe.

Bubble? What bubble? You’re delusional, F. Go back to screwing seniors out of their pensions. We’re good here. Scoot.

As you may know, the finance minister’s expected to drop his 2012 budget next month. Besides starting to goose the age at which wrinkly people can access public pensions (as I detailed in the last post), the elfin deity is expected to address a housing market responsible for turning Canadians into voracious debt piggies. Odds are the 30-year mortgage will be toast, and he might even find the courage to ban the practice of banks giving people down payments in the guise of ‘cash back’ home loans.

Of course he has to decide whether or not CMHC will be granted more debt ceiling, now that it’s burned through its $600 billion allotment. And while at it, he might follow lenders’ reluctant lead and outlaw ‘stated income’ mortgages which allow self-employed Vancouver hairdressers to get $500,000 mortgages.

The impetus for all this is a massive run-up in real estate values of the kind announced on Friday by the realtor cartel in godless GTA, followed by The Mold House incident. As you may have heard, the average Toronto-area house (including a billion condos) now sells for $463,534, up 9% in a year. During that same year, family incomes fell 1% relative to inflation and household debt reached an all-time crescendo.

Worse, if you strip condos out, the average detached home in 416 is selling for $743,993, which is a gain of 15% in twelve months. That’s roughly equivalent to anything that happened during the American housing bubble which, sadly, ended in tears.

And it’s getting worse, at least in some areas, among people who get aroused by fungus.

The City of Toronto put three properties up for sale – run-down dumps which had formerly been used for community housing (unneeded now that poor people have been banned). They attracted 72 bids and orgiastic frenzy among a few dozen realtors. By quitting time a boarded-up semi-detached house full of mold and in need of a total gut, listed for $495,000, sold for $770,000. Here it is…

“It basically shows that there is a lack of supply on the market and, until that changes, prices are going to continue to rise,” realtor Brian Prashad told the media. (His client bid on three-storey home listed for $995,000 that went for $1.111 million, and is a total junker.) There are 11,009 houses for sale in Toronto right now, compared with just over 12,000 a year ago.

Of course, there would have been no sales and price surge without BMO’s 2.99 Special, no-money-down bank mortgages, 30-year amortizations or CMHC to wipe away lender risk. And while realtors may rejoice at the steamy market in 416 (one of the only places still delusional), it’s helped make the average house unattainable to the average family. That’s bad politics.

Enter the MLS Home Price Index. It’s clearly designed to obfuscate. Say the realtors, “HPI provides a less volatile measure of home prices and home price change compared to traditional average and median measures, which can swing dramatically in response to changes in the share of very expensive or inexpensive home sales from one time period to the next.”

In other words, it’s likely the beginning of the end of real estate boards publishing monthly average or median prices, instead referring media and the house horny to an index, designed to move in a far narrower range. The Vancouver board has used a similar fudger for some time, calling it a ‘benchmark.’ Monthly releases there no longer even give the average selling price of SFHs, for fear of scaring the crap out of everyone.

This is as regressive as it is cynical. By removing raw data further from public scrutiny, the real estate monopoly’s found a way to easily misrepresent market conditions, smooth out trend lines and stabilize a volatile and emotional commodity – just when the whole thing’s in danger of imploding.

But will the property virgins, impressionable cash-drenched foreign buyers and house-porn-loving urban masses fall for such a transparently manipulative trick?

Of course they will. This is Canada. It’s different here.

So over to F, to save us.

OMG.

Monday 3 pm update: Well, it’s as suspected. The realtors have launched an index which is described thusly: “The MLS(R) HPI is calculated using a sophisticated statistical model that is a hybrid of both the repeat sales and hedonic price approaches.” You can read all about it here. Hedonics. Damn, that’s what we’ve being missing.

Days ago I called retired people living in trailers on CPP, ‘losers’. Many blog dogs took offense. Which tells you how screwed we are. One of our myths is that the government will look after you when you wrinkle and shrivel and grow hair in the awful places. In reality, public pensions may keep you alive, but barely.

Worse, the system of income support we have now will soon be under attack, which should scare the crap out of every forty-something with a fat mortgage, two kids and 90% of net worth in a house. In case you had any illusions, the average amount of Canada Pension paid to people at age 65 is just $512 (you can double that if you contribute for a lifetime, but most don’t). And also at 65, everybody gets the Old Age Supplement. The average here is $504 (the max is $540).

So, that’s a grand a month – $12,000 a year. For a couple who both worked the average number of years, income is double that. Now name a single Canadian city where two people can afford rent, food, a car (or transit), cable, insurance, clothes, meds and a few simple Victoria’s Secret cherry red teddys with embroidered transparent organza bodice inset, on twenty-four large? Can’t be done.

And yet an apparently huge number of Boomers (and their house horny kids) are headed in precisely that direction. More people are retiring with a mortgage than ever before. Over 70% have no other pensions. Half the population have no savings. Debt is rampant and third of all households can’t pay their monthly bills.

And yet seven in ten Canadians have the most costly single possession of our society – a house. What’s wrong with this picture? Why would a blogger – whose parents (68 and 65) sold a $400,000 in Toronto, ended up broke after paying down debt, and face living in a buggy Muskoka trailer on the public stipend – defend them? There’s no justification for blowing through six decades of life and having nothing to show for it but a defensive 39-year-old.

CPP and OAS were never intended to finance anyone’s life, and never will. They exist as retirement supplements to money you’re expected to save and invest – skimpy little safety nets to round up the income that RRSPs and TFSAs and non-registered investments provide.

So what’s gone wrong? Sure, interest rates have tanked, so Canadians’ fav investment – GICs – pay next to nothing (that isn’t going to change). Yeah, financial markets have been scary for a few years and many people got creamed buying high and selling low (Nortel). Few employers offer pensions now, and even plump public-sector plans are under-funded and uncertain. But mostly, it’s been the historic concentration of wealth in real estate that’s truly messed with our heads.

Gone are the days when people waited until they had 20% or 25% for a house down payment. Now they buy with 5% down which means zero equity after closing costs and a new deck plus 60-inch flat screen. They have a baby or two, move up, spend more and borrow more. By age 40 millions of them have all kinds of stuff and obligations, but no actual money and precious little equity. It’s a financial death spiral.

The stuff I hear is sad. I sit with way too many couples on the path to nowhere. Their laser focus is on getting a hunk of real estate, and nothing else comes close. They can recite the current table of fixed and variable mortgage rates, but have no idea a TFSA is not a savings account or an RRSP is not a thing. I see middle-aged couples with zero savings frantically trying to pay down mortgages with rates less than inflation. It never occurs to them they have no diversification, way more risk and are paying back a 2.5% loan with money that could be earning 6%.

And daily on this pathetic blog we hear from house-heavy Boomers who simply can’t sell their properties. Too late they realized real estate can turn cold and illiquid. It’s an experience vast numbers of retiring homeowners are about to discover. So if you think a house is a financial strategy any more, think again. The coming tidal wave of wrinkly sellers will change your mind fast.

But here’s the news: Public pensions, as piddly as they are, will soon be under attack.

Over the next two decades the number of old retired farts will double. The cost of OAS alone will go from $36 billion a year to $108 billion. The bulbous generation will suck off $2.8 trillion more in retirement benefits than the taxes collected to support it.

So, expect the CPP age to eventually rise from 65 to 67, as is happening in the US and the UK. Expect to receive OAS only if you need it, not just because your sperm count falls. Expect the feds to again drop the age at which retirement plans turn into taxable income. Expect to lose the ability to take the public pension early, even discounted. Expect marginal tax rates to rise.

And expect Boomers to do to real estate what they did for saving.

Except for trailers.