The Housing Bubble Seemed Like It Would Never End
The Melfort Journal reports from Canada. “The housing market is continuing to boom in the Melfort area. ‘We’re still very busy. There are lots of people looking for housing and as new listings come up, they’re selling very quickly,’ said real estate agent Colleen Ratcliffe. ‘I would think pricing is maybe still rising just a tiny bit, not like it was earlier in the year.’”
“There are several reasons for the increase in the housing market. ‘Because Saskatchewan is a great place. Our prices have been so much lower than the rest of Canada for so long and now people are just discovering how great it is. They can sell their high priced properties in Alberta or Ontario or B.C. and come here and buy an equal property and put hundreds of thousands of dollars in their pockets,’ Ratcliffe said.”
“Bill Madder, the executive VP of the Association of Saskatchewan Realtors, said the market has been stable or low for many years and people are drawn to the relatively low prices.”
“The increase in sales is happening throughout the province. Agent Richelle Rogers said real estate agents are seeing increases in housing sales everywhere including Tisdale, Humboldt and Nipawin.”
“‘It (the housing boom) came completely out of the blue,’ said Ratcliffe. ‘It’s not just Melfort. Sales are happening all over.’”
The Ottawa Citizen from Canada. “It could get harder and more expensive for Canadians with impaired credit to get a mortgage in the months ahead as waves from the U.S. credit crisis begin to reach into Canada, analysts say.”
“Canada’s small but fast-growing subprime mortgage segment, devoted to riskier borrowers, is headed for a slowdown that could have lasting impacts, Benjamin Tal, an economist with CIBC World Markets, said yesterday.”
“Within the past week, two large Canadian lenders, GMAC Residential Funding and MCAP Finance Corp., notified mortgage brokers they would not be providing subprime mortgages to new customers, at least in the near future.”
“‘We expect over the next six months, we will see a noticeable softening in the subprime activity in Canada,’ said Mr. Tal, who says loan growth in the sector has hit explosive annual rates of 40 per cent so far this year and 50 per cent in 2006.”
“When it does return to what he calls the ‘new normal,’ those offering subprime mortgages to riskier consumers will charge relatively more, compared to conventional loans, than they do now, he said. And annual growth ‘will be around 10 per cent, rather than 40 per cent.’”
“‘All the alternative lenders in the Canadian mortgage market are obviously impacted by the ability to issue paper to raise money for new mortgages,’ said Jim Murphy, president of the Canadian Association of Mortgage Professionals.”
“The problem ‘is very much imported from the U.S. We have a market that is very much healthier in terms of people making payments,’ said Mr. Murphy. ‘But this is having an impact in terms of the ability to sell mortgages.’”
The Edmonton Sun from Canada. “Home sellers are slashing their asking prices by tens of thousands of dollars as Edmonton’s once sizzling housing market continues to cool, says a city real estate agent.”
“And new figures from the Edmonton Real Estate Board show the vast majority of sellers are now getting less than they’re asking for - a stark contrast to the bidding wars of a year ago that routinely forced buyers to pay more than the list price.”
“‘There’s tons of stuff on the market. There’s twice as much inventory in residential real estate today as there was a year ago at this time,’ agent Abe Hering told Sun Media yesterday.”
“As a result, Hering said he routinely advises clients who’ve had their homes on the market for awhile to drop their asking price by 10% in order to remain competitive. On an average $417,000 single-detached home, that works out to more than $40,000.”
“‘There’s no sense reducing any product by 5% because it just doesn’t work. We’re seeing reductions of 10% and more,’ he said.”
“Jon Hall, with the Edmonton Real Estate Board, said 85% of single family homes that sold over the past 30 days went for less than the asking price. Condos didn’t fair much better, with 79% going for less than the asking price.”
“‘What most realtors seem to be saying is that the sellers haven’t adjusted their mindset to the new reality - that we have over 8,000 listings and that buyers have choice,’ Hall said.”
“He said many sellers are knowingly asking for more than their home can fetch. ‘And quite frankly, the realtors are getting a bit frustrated,’ Hall said. ‘If the seller says, ‘I want it listed $20,000 above the market price,’ they’ve got to do it. Ten days or two weeks later, the realtor’s coming back and saying, ‘I told you so,’ and dropping the price.’”
“Carolyn Pratt, president of the Realtors Association of Edmonton, said some investors are trying to dump property. Pratt said she’s also heard some homeowners cashing out and moving back to their home provinces, like Saskatchewan, where homes are cheaper.”
“Keith Mackie, fleet director for Budget Rent-a-Car, sees it every day. He said demand for moving trucks going to Saskatchewan from Alberta and B.C. has recently increased three-fold. ‘It seems like a lot of people are going home,’ said Mackie. ‘There’s no doubt about it, it’s a significant number.’”
“Hall said many sellers with homes on the market in Edmonton today won’t sell. ‘It would be fair to say a lot of listings will melt. They’ll just disappear,’ Hall said. ‘They’ll just be withdrawn after a typical 60- or 90-day listing period.’”
From KTUU.com in Alaska. “The housing bubble seemed like it would never end as home values soared and loans were offered on terms allowing just about anyone to buy a home.”
“Don’t have a job? Credit shot? Short on assets? It seemed nothing could keep you out of the housing market. But those practices are coming to an end and for many, it’s ending tragically.”
“Homestate Mortgage Company’s John Carman said it had reached a point where it was almost too easy to get a loan.”
“‘For awhile, the pendulum swung to where the criteria got easier and easier and easier to get a loan, to the point where we had what we called ninja loans — no asset, no income, no job, not a very good credit score, no down payment — you could barely fog a mirror and you could buy a house,’ Carman said.”
“Jan Jones with the Consumer Credit Counseling Service sees many of those who can no longer afford their house payments. ‘We’re averaging, right now, about five or six calls a day from people,’ Jones said. ‘A lot of people right now are thinking, ‘If I can just hang on until October when the Permanent Fund Dividend’s in, I can fix it all.’ What they don’t realize is it’s probably just going to be a temporary fix.’”
“Some real estate agents say Alaska has seen 600 recent foreclosures, with more on the way. Just about every day, in the public notices section of the newspaper, you can read about the new foreclosures.”
“While fault lies with over-eager buyers, many blame mortgage brokers and bankers. The mortgage industry was a largely unregulated one until the Legislature passed - and Gov. Sarah Palin signed - a new law this summer.”
“‘We’re actually asking the state to come in and regulate our industry. I wouldn’t do that if I didn’t think there was a problem. Yeah, I think there was a problem. I think there were a lot of people getting into the business that probably shouldn’t have got into the business. They either didn’t have the knowledge or didn’t have the ethics to be in the business,’ Carman said.”
“But for many residents with sky-high mortgages, it will simply come too late. ‘Every office we have here has a box of Kleenex because it’s a tough situation. I don’t like having to sit across the desk from someone and tell them your choices are sell your home or it’s going to be foreclosed,’ Jones said.”
what % does a realwhore in CANADA get ?
in UK its 1/2 to 1 % and going down
after the crash people will use the net having been fckd by realwhores galore
I would _never_ use a realtor, but I’d love to hire a buyer’s rep. Show them what I am interested in (based on using the Net), and pay them a percentage of the overall total, plus a bonus for any price drops due to their negotiating. I want our contract to stipulate that the buyer’s rep works FOR me, with MY concerns in mind.
I also want an attorney who understands closing contracts and buying agreements. I want someone who will sign an agreement with my with my stipulations (no HOA, house condition requirements, etc).
I’d happily pay 2% to a buyer’s rep, plus 10% of any savings below asking price. Happily.
they are realtors- good luck w that
Dada;
A Buyers rep in Florida has to be a Licensed Realtor and I think that is the case in most states. If the house you are trying to buy is listed than there is an agreed upon commission, the “Buyers” Rep gets half or a % . If the house is not listed you would pay the buyer’s rep’s commission.
What happens often is the Buyers Rep or Buyers Agent steers you toward their own listings or their company’s listings.
The laws prevent an unlicensed person from representing anyone in a third party sale. The RE laws are not providing protection to the public as intended. The theory is that a Licensed Realtor has had legal, market and ethics training so you won’t get screwed. We all know how well that works.
I am a licensed Broker so I can have access to MLS and invest in real estate for myself. MLS is still the main repository for most of the RE for sale in any given market. I don’t have to represent anyone and I don’t represent and list houses for clients.
You do bring up an interesting point. If a Licensed Broker advertised himself as an exclusive “Buyer’s Agent” who did not have any of his own listings and worked solely for the Buyer that might work. I think you would run into the “Transaction Broker” problem where if I found you an unlisted house you liked, I would almost have to represent the seller also.
Interesting concept. But if you really are serious, become your own buyer/negotiator. You don’t need a license to buy RE. In
this market you can get some killer deals. You don’t need me.
I have no license and make deals- fck em
Understanding a person’s motivation in working with you is essential.
The more money you spend, the more expensive the house, the more money a buyer’s agent makes. Thus, his interests are opposite to yours. They’re just like regular realtors.
That’s the same for a realtor or a car salesman or virtually any other commissioned salesperson.
The current structure of the buyer’s agent fee is still contrary to the buyer’s interest. It serves the sellers interest and the agent’s interest. The current concept of the buyer’s agent is merely a marketing gimmick.
That’s a good question.
Pretty sure it’s typically 6%, same as the US… but there are budget realitards out there too.
I can only comment from a Florida perspective but in Florida it is illegal for Realtors to agree upon a commission they will all charge, so commissions vary.
The upshot is you can negotiate commission, which a lot of people do not realize. And not just with the Sellers who typically pay the commission. As a Buyer you can tell the listing agent that you’ll do the deal if they drop say 2% off their commission and you get that in full as a discount.
If youe buying right now and your not negotiating hard, you’re leaving money on the table.
In Canada the standard commission is 7% on the first 100K and 3% on the balance that is split usually 50/50 between the buyers and sellers agents. So for a $500K sale (average for most of BC and Alberta right now)that works out to $19K total or $9500 for each side (dual agency is not allowed in most provinces - could be all but not 100% sure).
So to answer the question the rates are on a sliding scale from 7% maximum for a doublewide down to around 3% on a million dollar property.
If you understand the basic laws of any particular market, you’ll always understand that bubbles always do end, usually violently for those left holding the bag.
Supply and demand are key in any market. Bubbles are created for one reason: the Federal Reserve sets their target rate artificially low, and in order to hit that target rate, they have to inject liquidity (inflationary currency or credit creation) so banks will reach that rate. Honestly, would YOU loan someone $500,000 for 30 years at only 5% interest? Neither would I.
As the supply of money goes up in a particular market, the prices tend to rise. Malinvestments happen because people con THEMSELVES into thinking that this particular market always goes up. The Fed is the primary blame.
As malinvestments occur, a trigger is sent to manufacturers of products or services in an industry that more supply is wanted. Rising prices tend to tell manufacturers to create more product, hence more houses were built. This is the Fed’s fault.
All bubbles end. All bubbles start with Federal Reserve idiocy. While YOU might want a 6% mortgage, YOU would never tie up your investment money loaning it to anyone else for 30 years for a measly 6% return over 30 years, especially with a risk of default. You’d never do it.
Housing prices should never be even more than 3X income, unless the supply of houses in a particular market has an incredibly good reason for being so expensive only the (truly) rich could afford it. Manhattan, maybe. Ocean-front? Only if they can also afford real market-priced insurance against flooding and weather. Duh.
The Fed is to blame. Yes, the lenders, brokers, realtors and buyers are all idiots — they’re also to blame. But penalizing any of them and NOT penalizing the Federal Reserve with being fired forever is the only way to stop this madness.
I want my (gold-backed) dollar back. I want it to be worth more over time even if I stick it in my mattress. I want the poor to know that they CAN save their money and have it worth something in 5 or 10 years.
“Honestly, would YOU loan someone $500,000 for 30 years at only 5% interest?”
I have to admit that I was rather amazed that Wells Fargo provided me and my wife a non-jumbo 15-year fixed refi at 4-5/8% with no points, or that earlier this year Chase offered us an unsecured $50,000 credit card “loan” at 2.99%. We’ve earned the privilege of receiving these sorts of offers by living in a frugal manner relative to our income, and by building an outstanding credit record; still, it’s shocking when banks practically ask to throw low-rate (essentially free) money at you.
Don’t wait for the government to tell you gold is money; beat the rush.
“Honestly, would YOU loan someone $500,000 for 30 years at only 5% interest? Neither would I.”
An institutional investor like a bank will think of a 30 year mortgage in terms of Macaulay duration, which is much less than 30 years. So, it’s not quite as wacky as you make it out to be.
Exactly, amortized to get all interest first and start hitting the principle last. Usually house gets sold before much principle reduction.
Larry Kudlow thinks that more paper money is needed.
http://corner.nationalreview.com/post/?q=NjIwNzAwZDljYmE2Y2Y5ZjEwNDliYTZiZGIyODA4NTE=
when larry goldilocks kuntlow speaks, cartoon characters react!
From the article:
“The Fed needs to stop this deflation by pouring in new cash. I call it the growth solution. Growth will solve the credit problem as the Fed moves to stabilize the credit and housing deflation we are now experiencing. And as future investment and economic growth are enhanced, the value of the dollar will get a boost.”
So the solution to the credit bubble caused by loose credit is… even more liquidity! And printing money makes the dollar stronger? I never thought I’d hear that one, even from the mouth of Kudlow.
Larry is a hand puppet for Wall St.
Monitization of debt is probably somewhat of a better option than the FED cutting rates. I’d like for the money to go through other channels than Wall Street.
That would blow his mind.
Anyhow… I feel people are going to develop a debt alergy real soon. I can feel people cutting spending and rejecting debt.
Ahhh… the sweet smell of deflation.
Saskatechewan> I (just my personal take) couldn’t care less if i could get 10,000 sq ft for 400k the mere thought of a winter in that part of the world makes me cold thinking about it, right now where i live it is 94 outside, think i’ll jump in the pooll and have a lap in the towns honor?
There was a guy who posted a hilarious comment about his stay in Saskatchewan. I think it was John from GA now VA. It was around November last year.
C’mon it’s a dry cold.
Whoa….wait a second you mean to tell me all these people telling me to buy right now are not being honest? I know they researched this, and they all work in the industry, why would they not want to tell me the truth? Suzzane and all RE agents all tell me it is a great time to buy RE, how can this not be so….they even have gold jackets who tells lies in gold jackets for God’s sake??
BEN -can we get a string or 2 on commercial - I think it’s cracking
Yeah, it is. Post that in the topics thread on Friday and we’ll see if anyone is interested.
Craig Hall says so too, as posted about a week ago. He knows.
I’m very interested in commercial, thanks.
It will be a disaster here in PHX. SOOOO much commercial and retail construciton.
Condos have the potential to be bigger than the S&L implosion. SFH market is an order of magnitude larger, and add commercail collapse on top of that????
Cheap money inflated bubbles in all classes of R/E, and it will all come crashing down at once.
7% on the first $100,000 ,then 3.5% on the rest
“Canada’s small but fast-growing subprime mortgage segment, devoted to riskier borrowers, is headed for a slowdown that could have lasting impacts, Benjamin Tal, an economist with CIBC World Markets, said yesterday.”“The problem ‘is very much imported from the U.S. We have a market that is very much healthier in terms of people making payments,’ said Mr. Murphy. ‘But this is having an impact in terms of the ability to sell mortgages.’”
- There was a poster here last week named ‘Smirth’ or something like that who seemed to think that Canada was immune from the USA.
‘Oh Canada’ … how great will be thy fall.
If the US was a body Canada would be one of those unmentionable parts. We could wake up one morning and if Canada had been stolen by aliens during the night, we probably wouldn’t know for a week or so.
Just what exactly does Canada suppky the US or the world that we can’t get anywhere else. They have some respectable agriculture in the western provinces, oil production and lots of timber but aside from flannel shirts and those hats with flaps on them I can’t think of much else.
However, if the US gets a cold, Canada goes in a coma and needs a heart transplant.
I wonder if you can get a loan on a log cabin with a dirt floor and an outhouse. Probably a 500K arm, stated income, zero down.
To answer the question about what Canada sends us that we can’t get elsewhere, Natural Gas and soon Oil from Oil Sands. They are rich in resources that I think will soon seem pretty important to U.S. citizens. I’d hold fire on thinking them insignificant. Plus they seem to be pretty good neighbors.
They send us Bee Hive corn syrup too, which I can’t find anywhere in the U.S. Try it sometime. It’s good stuff.
They’ve also got Red Green.
Time for me to get oot of here. LOL
They’re much better neighbors than the ones we have to the south.
Thank you for saying that.
Yu betcha
Eh?
I believe it is time to crack open a Moosehead.
or, if you parlay-voo, a fin du monde
Yea, and if Americans hadn’t invented cars, Canadians would be complaining about all that oily sand.
Cars were invented in Europe by people like Daimler and Benz (sound familiar?). Americans invented cheap cars.
Americans invented crappy cars. The development of the automobile was virtually simultaneous in the US and Europe.
Ever hear of Henry Ford?
Still if someone else hadn’t developed technology that runs on oil, the Canadians would be complaining about the oil in sand.
Love Canadians. Great cities, polite people (being polite is the second national pastime after hockey) and a ton of natural resources. I would move there in a heartbeat if I could. I was there 10-12 times a year on business back when and always loved it. p.s. The Canadian Rockies are the most beautiful place on the planet.
Your Canadian insults are rather cruel words and considering a lot of readers on this board are Canadians you should be more respectful.
A lot of readers on this board are Realtors but we don’t whine when someone is “disrespectful”
Disrespectful? Ill show ya disrespectful.
Your sister is a hamster, and your mother smelt of elderberries.
Ha. Now thats some disrespect. Not like the disrespect we used to get back in my days, mind you, but pretty good for these days.
Also, I was married to a Canadian. That gives me license.
Incidentally, she wasn’t very polite either. Neither were those two guys who beat me up in
Quebec City in 1981. Oh wait, they did say please can we smash you’re face in and thanks for the
“American” money. “Now we can see an orthodontist!”
To make a blanket statement that everyone in Canada is polite is absurd. The scenery is great and unspoiled. Mainly because no one wants to live there. And their “socialized medicine” is so great that anyone who can afford it comes to the US for treatment.
Other than that, it’s a great place.
Canada has water. LOTS of water. Unlike CA and AZ. As us nicely in 15 years when those states are dying and blowing away and we might sell ya some - for $10 a gallon. Or maybe y’all will just invade us and take it.
I believe the name was “skank”. She was trying to make us feel bad ’cause we don’t have universal healthcare and her waitress in Florida was nearly toothless. My husband, originally from Ontario, explained that even Canada’s universal healthcare doesn’t cover dental.
You know what made this bubble so obvious. When you saw highschool dropouts, people with no real skill sets or trade living in 500K homes and driving around a leased BMW. I knew something made no sense.
How about 24 year old non-citizens with 25 “investment homes” in Phoenix and Tucson being profiled in Forbes?
It has been a long time since a market day has pissed me off as much as this one.
Casey???
No, that Egyptian guy. Ben posted it on here when it was first in Forbes and then an update where the scumbag has lost everything.
Hey Chick, the buzzwords for today were “bargain hunting”. Wall Street was seeking out bargains. That is on everybody’s lips today. Stop over and have dinner with the wife and I tonight then you can walk over to the stock exchange and bust some of their windows. The New York Fed is just down the block, too. I will take a whiz on the wall to show them what we think of them.
“bargain hunting” … on ‘Light Volume’ it was said.
What makes me mad is these volatility sellers never seem to get punished.
Might not want to do that. A friend of mine got in big trouble for taking a Poo on the front steps of his college, shortly after it was discredited midway through his education. ANd by caught, campus police had polaroids of him mid-movement, shall we say.
Why would you think that, most of the richest people in the world never had much of a education they are risk takers, my father came from Italy with third grade schooling, he couldn’t tell you anything about new or old math, but who knew a good deal when it come to light?
Oh please. That “risk takers” thing is used as an excuse for all manner of stupid, greedy action. The clown I’m talking about was just a piece of meat to be chewed up by the machine. Him and his 27 houses he had never seen.
Sounds like a guy I read about in Money Magazine sometime in late ‘05 or ‘06. Copied that article and kept it, that was my sign (being in MM) that things had gone too far.
It seems to me that the “risk takers” who make it are like good poker players who already have a pretty good idea about how the hand is going to turn out.
The 24 year old is a like a bad poker player, just taking risks randomly, hoping sheer luck is going to deliver his winnings.
When you saw highschool dropouts, people with no real skill sets or trade living in 500K homes and driving around a leased BMW. I knew something made no sense.
Soon they’ll be slinging burgers, living a decrepit crack house apt, and will have a bus pass in their pocket!
The new Alaskan regulation of mortgage brokers (from the State website):
“Below are some of the highlights of “the Mortgage Licensing Bill.” To view House Bill 162 in it’s entirety please click here.”
” 1. Requires pre-licensing compentency testing for all originators.
2. Requires a 7 year all-state and federal background check
including fingerprints.
3. Requires state certified continuing education courses be
completed.
4. Requires that an originator work for, or under contract for, a
bonded and State approved Mortgage Licensee.”
“In addition, the legislation provides penalities for enethical behavior, false, misleading, or deceptive advertising and requires compliance with all applicable Federal Law. (i.e. RESPA, HMDA, CRA, CCPA, FHA of 1968, etc.)”
In general I am not too impressed. Licensing does not have much effect on the quality of professions such as mortgage broker- it just leads to more abuses due to the new monopoly position that is obtained due to restriction on entry to the field. Continuing education is usually the biggest crock of all- it will spawn a bunch of blow off classes at the nearby college. If they had cut out all but the new penalties against fraud, it would be a much better bill.
(pdf warning- the actual regulation)
http://www.akamb.org/PDFs/HB162.pdf
–
“The Housing Bubble Seemed Like It Would Never End”
That is when the end is near or has already come.
Great titles for the threads, Ben.
Jas
Since this thread is about Canada, I have to ask opinions on the US dollar - Canandian dollar relationship. The exchange rate is currently about 1.06 “loonies” per greenback, but it may reach 1:1 soon. At that point does it make sense for Cananda to “lock” at 1:1 with the US, so that they can continue to sell to their biggest customer (70% of exports, 50% of GDP). In essense dollarizing but keeping the notes and coins with the Queen, etc. Or would that be a scary step towards the “Amero”?
RE: 1.06 “loonies”
There go the long weekends to Montreal and Quebec City right down the toilet.
Comment by hd74man
2007-08-29 13:38:43
RE: 1.06 “loonies”
There go the long weekends to Montreal and Quebec City right down the toilet.
You said it hd. We’ve been to Montreal four times this summer and Toronto and Quebec once, those hotels used to be cheap but now it’s starting to hurt!
DP
Pegging the loonie to the greenback at parity would take away the Bank of Canada’s ability to make Candian exporters more competitive by allowing the loonie to float down. Think of it this way: what is the biggest complaint about China (aside making toothpaste and toys that can kill)? Answer: that the Chinese govt keeps its currency too low compared to the dollar in order to make its exports cheap — perhaps too cheap but that’s another argument for another day.
Many Canadian exporters are howling to their government that a too strong loonie is killing their US sales because right now there is virtually no cost advantage in using a Canadian supplier. Expect the loonie to trend down in response to these complaints, especially since so much of Canada’s international trade is with the US (>80%, IIRC).
For much of the 20th century, the two dollars were at virtual parity, so much so that Canadian coins freely circulated as legal tender in border cities like Buffalo or Detroit. In the early 80’s, with the Canadian economy on virtual life support, the government began allowing the loonie to drop in order to improve export earnings. Now many Canadian industries depend on a cheap loonie to stay afloat.
The loonie’s recent rise to near parity has much to do with the boom in commodity prices, the demand for several of which (wood products especially) is closely tied to, you guessed it, housing construction in the US. And we all know where that demand trend is headed.
So you think the Bank of Canada will let the loonie fall relative to the dollar, which will be falling relative to the euro, pound, yen, etc? I get the feeling that the “independent” Canandian economy will be for all intents and purposes absorbed into the 10 times larger US economy if there is any real global slowdown. Parity will just take away the uncertainty for Canadian producers.
Yes, the Bank of Canada will no choice but to let the loonie fall. Exporting industries will (and may already have) demanded just this result since they are being priced out at the current rate.
While it’s true that 1:1 parity would remove uncertainty for producers, it would also tie Canada’s monetary and fiscal policies to the US in ways that most Canadians would find unacceptable for nationalistic reasons. For instance, as an economy that is still heavily dependent on commodity exports, a spike in US interest rates would reduce American demand for many of those commodities, and this would choke off a sizeable segment of their industry. Without the flexibility to lower interest rates thereby making its own currency cheaper in order to make their products cheaper, the Canadian producer would have to wait until demand in the US bounced back before returning to profitability. By retaining control over its currency, the Bank of Canada can mitigate the effects of shifts in demand brought on by changes in American interest rates or an economic slowdown.
Optimism is more important than reality to the market:
Stocks Skyrocket on Rate Cut Optimism
Even though, Subprime Mortgage Crisis Spreading to High-End Housing Market http://tinyurl.com/yru9kn and
Mortgage Application Volume Falls 4 Percent As Market Continues to Struggle
Must be the excellent fundamentals of increased foreclosers, lower housing demand, steadily decreasing home values, higher consumer debt and no savings! The market can’t seem to get enough of that kind of good news. Must be that all those on the cusp of foreclosure and sinking further will buy lots of things with a fed cut of 1/2%.
Is it just me, or does it seem like somebody knows something. The melt up is familiar, kinda like before the Fed cut the Discount Window Rate.
“Free Markets”…..yea it’s free for the Banksters to shear the Sheople.
Good point, if this melt up is simialr to the fed rate cut a couple weeks ago, then the fed may cut rates tomorrow and the rally will be in full swing. Since there was little to rally markets today besides “optimism.”
I’m a semi-frequent lurker on this blog, and this is my first post. I live in Saskatchewan, and can testify as to what is happening there. Housing prices have shot up in the past year and a half, and in my opinion are quickly becoming unaffordable, especially in Saskatoon. People apparently are moving back to the province because jobs are available, even our increasing prices are still a lot lower than elsewhere, and the quality of life is pretty good too (if I may say so). I heard from someone that price increases are finally starting to flatten out, and if so it would be none too soon I think. I should also mention that rents are increasing as well.
I think Saskatchewan is one of the last places in North America to experience a housing boom, we have had
lowaffordable prices for so long. I just hope it does not become too speculative like other places. Maybe the recent housing implosion in the U.S., now plastered all over the news, will cool investors down a bit.Thanks wacko. BTW, being consistent with your log-in info is the best way to avoid problems posting.
Interesting that you’ve had some of the same observations in your part of Canada as I’ve had in my own home area in the US: The Southeast. TN, NC, GA, AL, and SC are still in comparison to most other parts of the US fairly inexpensive. For example, a small home in San Francisco CA is around $650,000. The same sized home in NC can be had for $120-150,000.
Now we’re getting all these people from NY, CA, etc etc who really don’t have much of an economic plan other than to sell their overpriced homes from wherever they cam from and buy a house here for cash. It is concerning. The prices have gone up quiet a bit, but it seems that their ability to sell homes has dried up, hence the slowdown is now in the South too… which I think is a good thing.
And boy, do they see those out of staters coming from twenty miles away!! Buy my cheap house, Mr. Suckers!! Ooops, I mean Mr. New Yorker!
Remember, the houses only stayed level in price due to the bubble. Southern houses should only cost 50 to 100 grand, at most.
But its different in great old Alberta - prices will not go down as the O & G sector, especially the oil sands, is just too hot. Now where have I head that before??
Texas, 1982.
LOL. We were just pups then, Ben.
Thats what I’ve heard, we are the new state of Albatexas! Please welcome us.
According to an article in the August 9 Rolling Stone, recovering a barrel of the tar-like substance you refer to, “…consumes five barrels of water, carves up four tons of earth, uses enough natural gas to heat a home for up to five days and creates even more climate-warming pollution than coal-to-liquid plants.” It’s listed as one of the “fuels for fools” in an article entitled, “The Ethanol Scam”.
Colorado, 1982, shale oil, Tosco/Exxon. BTDT
Back when I was lending I took a look at the Oil Sands financing. Said no (didn’t feel like getting pummelled by the loan committee because it was such tough sell) although in my heart I thought it was a yes.
God knows i dislike investors and agents who rape neighborhoods, but in their defense just a thought, these flippers had to sell to somebody and the somebody’s were the fools who paid these prices remember this saying>>> stupid seller wants to meet stupid buyer?
Try the SDCIA. Might be more to your liking.
Why on Earth would anyone want to move to South Dakota and work for the Central Intelligence Agency?
Luv,
Jen
Unlike Corporate America you won’t get laid off and there will be a pension waiting for you when you retire.
For you mortage guys out there, is anyone offering 10/1 I/O loans anymore w/minimal downpayment? I’m not anywhere near wanting to buy, but I don’t necessarily want to put my nest egg down for an asset that may depreciate further, plus I want the I/O flexibility and never stay anywhere longer than 10 yrs unless I have to.
the simple answer is to wait until prices start going up again. Nobody can call the bottom, but by waiting until prices start edging up again, you’ll be closer to the bottom than the top. Secondly, this shakeup will take years to correct: prices are so high above realistic economics, there’s simply too much of an extreme difference. Wait and you won’t need to use a loan such as that.
Good points. If prices drop far enough, I’ll have no problem w/10-20% down on a 30 yr fixed and still have money left over. I was just curious because I could not find any of these loans online when they were prevalent just a few months ago.
The Housing Bubble Seemed Like It Would Never End
Yeah, just like Castro. But he’ll die eventually, and so will the bubble.
On another board, saw a post “should I buy this house”. It was in Canada… forget where.
I asked questions like how much it could rent for, what would be the cost of constrcution, what is the ratio of household income to home prices….
Answer I got back was “It is different here”.
That told me all I needed to know. If someone says that it is different here, it means it is no different there.
Reminds me of the “its just common sense” argument. If you could make an argument that supports your opinion, you would. Saying something is common sense shows me that can’t justify their belief using data or logic.
“It is different here” means they can’t come up with data or logic explaining why prices are justified.
OK, I know I shouldn’t be suprised by anything in the MSM, but does it not seem like the headline gets this story 100% backwards?
http://money.cnn.com/2007/08/29/news/economy/bernanke_schumer.reut/index.htm?postversion=2007082916
The headline says: “No limit on investment caps - Bernanke”.
But the article says that Bernake says the caps should be left at the limits they are at.
How does such a thing make it past an editor?
P.S. In this case, good for Ben!
OK, I reread it again, and I guess its some kind of double negative that I missed. Limiting the caps means less caps, although that does not really make sense either. The point should be that Fannie and Freddie have limits, and BB is saying the limits are there and should remain that way. By saying the caps should be unlimited, it looks like they are proposing removing the caps.
Ben new terms need to be added to the vocabulary:
FI - F*ed Investor
FP - F*d politican
FILL’IM - F*d illegal immigrant
FO - F*d observor
FDIW - F*d & Dead in Water
Members of the above group will surface when the pain or opportunity to demand the gov. bails ‘em out.
“As a result, Hering said he routinely advises clients who’ve had their homes on the market for awhile to drop their asking price by 10% in order to remain competitive. On an average $417,000 single-detached home, that works out to more than $40,000.”
Is it just me, or does the fact that an Edmonton RE agent quotes an “average” SFR price which exactly matches Fannie/Freddie’s current conforming loan cap seem oddly coincidental?
wow, wait til those equity expats from Vancouver and Toronto experience their first winter in the middle of Saskatchewan. -40 is the same whether it’s Fahrenheit or Celsius.
That is what makes it so great. After a few years of that, they will soon know what “Next Year Country” is all about. Summers aren’t much better. Deathly hot with lots of mosquitoes and black flies for all 90 days of summer.
“Bill Madder, the executive VP of the Association of Saskatchewan Realtors, said the market has been stable or low for many years and people are drawn to the relatively low prices.”
This just points out what will happen when house pricing bottoms out. People will move back to where they moved from. I understand people moving for a job, but moving just to buy a house in another state because it was cheaper vs renting where they are never made sense to me. As I’ve gotten older there are certain things that I want, if I have to rent to enjoy them so be it. It just means that I have to become a better investor with my funds setting on the side. For the past 10 years you’ve either been renting from the bank or a risk-taking landlord; earlier in this span you enjoyed the equity ride up and now you enjoy the equity slide back to reality. As for me I sold in Aug 2004 because of a job transfer and find myself in a little bit of (renters) heaven.
It’s still going strong in Vancouver. Apparently, we are bubble-proof.
Just moved to Kelowna, BC, Canada from Phoenix, AZ. After the real estate roller-coaster ride in Phoenix, all I hear now is realtors here saying how “Canada is different”. “It won’t happen here.” Of course the weather is “better here” (I’ll wait until January for my take on that one) and the “Baby Boomers all want to be here”. Plus there’s the fact Canada doensn’t have the same subprime market issues… or so they tell me. I’ve even heard that the “California investors all love this place”. I for one, am more skeptical. I mean, 20% plus increases annually for several years now and frenzied buying… Sounds like a repeat of Phoenix to me.
By the way, I appreciated the update on the Canadian market and even the sometimes ignorant banter about Canada!
here is what 500K gets you in Vancouver.
Our median family income is around 60K C$, so I say that we are the most overpriced market in North America, relative to incomes. Our prices are like the Bay Area; our incomes are like Kentucky.
And that’s not a cherry-picked one either. Browse the MLS listings and you’ll see what I mean.
If you want to exit the world of ugly, it’ll cost you one million.
Everybody wants to live in Saskatchewan. Maybe we should send Saskatchewanites articles from CA, FL, AZ, NV around 2005. Everybody apparently wanted to live in those places as well.
I’ve actually spent 10 winters in Saskatchewan, there was a reason why the houses were cheap!
Actually the winters don’t have much to do with it. The real reason housing has been so cheap in Saskatchewan is that it has fewer people living there than in the 1920’s. The place never got over the Dust Bowl, just like N. Dakota across the line. Less than a million people in a place the size of Texas. And the low (agricultural) incomes don’t help much either.
But the shot heard round Western Canada was the decline in Edmonton. That city was suppose to be Tar Sands Central and absolutely immune to any price declines. Unfortunately the bulls hadn’t noticed the vast expanses of empty land surrounding every city. Alberta does have a higher population density than Saskatchewan - 3 million people in a place the size of Texas. But its housing prices are over twice Dallas or Houston.
Next up, the province that has “The Greatest Place on Earth” on the license plates and the city that’s really, really, really different - Vancouver, BC.
Oh how I hate Gordon Campbell. When those TV ads pissed me off rightly… As someone who has travelled a bit but never been to say, Tibet, New Zealand, and hundreds of other potential “Greatest Places on Earth” I know that the most I could ever claim of my home town, Victoria, would be “probably ranks among the greatest places on earth” It is ridiculous for the government to proclaim their province the greatest, but they did it, to buy their votes… And now you can hear it in the spug attitudes of all of the specuvestors in BC. I have finally moved out of the country, but I can’t wait until the RE market there crashes and burns.
PS. I’m now in Sweden where the bubble here hasn’t tanked yet either… It’s been 4 years now since I noticed this bubble… I can’t WAIT until it’s finished. First day on the job I was told that I should buy some RE ASAP.