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Opinions of the future of the housing market
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Author:  Darrell & Taralyn [ Mon Jul 14, 2008 12:50 pm ]
Post subject:  Opinions of the future of the housing market
Looking for opinions on what people feel is going to be happening with the housing market in the mid to late part of next year

We bought a second home last year with a two year closing (originally going to close end of june next year), we have recently been informed that the due to infrastructure delays the house is being delayed 3-5 months

With the slowing economy and the flattening of the housing market I am concerned that these delays are going to be detrimental to us with having to sell the current Mattamy home we live in now, listing the home anywhere from June/ July and later next year depending on how construction progresses.
Author:  luvthegame [ Mon Jul 14, 2008 1:03 pm ]
Post subject: 
All I have to say that it will be a rough ride. The housing prices are already coming down because the prices were not realistic. It was mostly speculation.
We are in a correction mode thanks to the greed in USA, the bastion of naked Capitalism (AKA as screw others and make your millions)

So hang it there, as the worse may yet to come.
Author:  JClayton [ Mon Jul 14, 2008 1:55 pm ]
Post subject: 
You're exactly right Andy. There are vast differences in regualtions and trends between Canada and the U.S. It's one of the only times I'll priase Canadian Government Intervention on the free market. Sometimes, I guess, people do need protection from themselves.

Every once in a while, CNN.COM does some sob story of a single mother, or a family, who lost their house because of the melt down. THEN, you start looking into it, and you just want to shake these people. I remember one specific single mother who was complaining that her mortgage rates went up and she lost her house. It turns out she was a single mom, two kids, and a 500,000 house!!! Really, she should be happy that she got to live well above her means for a couple of years, but I can't feel sorry for reality checks.

The americans are, as we speak, getting ready to vastly increase the standards of lending so that these shady practices are limited. How long until the government is going to be criticized for "not letting low income people own their own house". Four years max, I say, as people have such short memories.
Author:  JClayton [ Mon Jul 14, 2008 2:22 pm ]
Post subject: 
And to add to it, they were also putting clauses into the mortgages that would increase their rates every year. Some of these people were paying like 12% by the fourth year of their mortgage!

Thinking that the economy will only keep going up is so 1929. Have we learned nothing?!?
Author:  JClayton [ Mon Jul 14, 2008 4:06 pm ]
Post subject: 
Where are you getting your numbers? The Canadian average house price rose 78% from 1997 to 2007. Compared to the U.S.(165%), Britain (213%) and ireland (240%). When the prices of these houses fall (or in Canadas sake, stop rising - bubbles burst, remember) it is the subprime owners who get hit. They are the ones who lose their houses, and their defaulted mortgages are the ones that put the banks in such a shitty situation as they are in the states right now. Then the cycle begins. How can you say that it has nothing to do with the subprime mortgages?!?

Subprime mortgages made up over 30% of all mortgages in the U.S. from 2004-2006, while it was about 4% in Canada.
Author:  JClayton [ Mon Jul 14, 2008 4:08 pm ]
Post subject: 
LG wrote:
The U.S meltdown had nothing to do with subprime either, people over spending is what led to the meltdown


Subprime mortgages ARE overspending. Since houses are generally the most expensive thing that people buy, they are the biggest sourse of overspending.
Author:  JClayton [ Mon Jul 14, 2008 6:18 pm ]
Post subject: 
Relative to the rest of the developed world, property in Canadian cities is still reasonably cheap, even in Vancouver. So what are you comparing prices to when you say that they are expensive? And why is expensive a bad thing? Houses are an asset. Even in the housing market TANKS, I can still pay my mortgage, and If I decide to sell when its down, the next house I buy will be that much cheaper to buy.

There is a difference between sub prime and 40/0. Subprime means that they have a horrible credit rating. They could have personal loans out the yinger, and defaults all over the place. These people don't get mortgages in Canada. 40/0 is an option that you or I could do if we wanted to. Some people might see a 5.5% interest rate, compare it to any number of bluechip companies that YEILD more than that (let alone capital gains) and have decided to invest with the banks money. Who knows. Obviously most 40/0 people aren't doing that, and the smart ones would do it with a home equity line of credit instead of a mortgage (Smith Manoeuvre - tax deductable) but there is a huge difference between this setup and the american subprimes in question.
Author:  macbcomm [ Mon Jul 14, 2008 7:54 pm ]
Post subject: 
JClayton wrote:
Relative to the rest of the developed world, property in Canadian cities is still reasonably cheap, even in Vancouver. So what are you comparing prices to when you say that they are expensive? And why is expensive a bad thing? Houses are an asset. Even in the housing market TANKS, I can still pay my mortgage, and If I decide to sell when its down, the next house I buy will be that much cheaper to buy.

There is a difference between sub prime and 40/0. Subprime means that they have a horrible credit rating. They could have personal loans out the yinger, and defaults all over the place. These people don't get mortgages in Canada. 40/0 is an option that you or I could do if we wanted to. Some people might see a 5.5% interest rate, compare it to any number of bluechip companies that YEILD more than that (let alone capital gains) and have decided to invest with the banks money. Who knows. Obviously most 40/0 people aren't doing that, and the smart ones would do it with a home equity line of credit instead of a mortgage (Smith Manoeuvre - tax deductable) but there is a huge difference between this setup and the american subprimes in question.


Did you just say property is cheap in Vancouver??!!
Author:  ppst99 [ Mon Jul 14, 2008 9:48 pm ]
Post subject: 
Yes but most people who buy a 400k or 500K house, that isn't their first house. They have built up equity from previous homes.

That being said, our house, is about 400K after upgrades, and we are first time buyers. but our debt ratio with this mortgage is under 20%
Author:  rrknight [ Mon Jul 14, 2008 9:49 pm ]
Post subject: 
tpanepinto wrote:
Wow, lots of great information on this topic. My question is where are all these people in Milton working in order to buy all the house in this area that are 400,000+? I don't want to claim to know everything, however according to stats canada the average hourly wages in ontario are approx $22. If my math is correct I would assume that there are many people that are overextending themselves with credit, or are very good at budgeting.


There are a lot of flippers in Milton where they made enough $$$ from previous phases to upgrade to $400,000+ homes.
Author:  PaulMeredith [ Tue Jul 15, 2008 2:53 pm ]
Post subject: 
It really is interesting to hear some peoples opinions on how good or how bad our economy is when it comes to real estate.

The fact is, the economic fundamentals in Canada remain strong. We have a very high employment rate, rising incomes as a whole, and low mortgage rates. This represents a strong foundation for a solid housing market. Now, this is expected to trend downwards slightly over the next year and a half, but it is no where near as bad as some people make it out to be.
Let me ask you this. Is the market slowing down? Or is it just stabilizing? 2007 was a record year for home sales in Canada with 520,192 sales through MLS. We really can't get spoiled and expect it to always be increasing at the same rate. So what is expected for 2008? The expected number of sales through MLS for 2008 is 476,000 units representing a decrease of 8.5% from 2007. In 2009, that number is expected to drop another 2.3% to 465,000 units.
Despite what everyone may be hearing from some people, or what you might hear on the news, the market is still relatively healthy. The average price of resale homes grew by 11% in 2007 and is expected to grow another 5.5% in 2008 and 3.3% in 2009, keeping the average MLS sale above the inflation rate. While the growth is slowing as the market stabilizes, it is important to keep in mind that it is STILL GROWING and DEMAND IS STILL STRONG by historical standards.
Mortgage interest rates are expected to stay low through the end of 2009 with possible increase of only 25 to 50 basis points (1/4 to 1/2%) by the end of next year.
The reasons for the 'stabilization' are of course, tied to the US market, as well as increasing carrying costs due to home inflation. I am not going to say that the market or economy isn't slowing. It is. It will not always stay at the same pace. What I am saying is that comments like 'we are in for a rough ride' are a little extreme. Our economic growth is expected to slow to 1.8% in 2008, pick up to 2.3% in 2009 and by 2010 we are expected to be at 3.3%. Income levels are still increasing nicely, migration is still very strong and overall consumer confidence is still high as a whole.

On another note, The Bank of Canada had their rate meetings today and there has been no change to the prime rate. Their next meeting is September 3rd.

The sources for my numbers are from CMHC and Bank of Canada.
Author:  williamb [ Tue Jul 15, 2008 8:51 pm ]
Post subject:  i suggest every read Bill fleckenstein..msn
Credit fallout is just beginning
A shrewd observer of the US credit mess says the problems are "considerably worse" than reported. He's betting on financial-system upheaval, failing companies and an even-slower economy.

Latest Market Update
July 15, 2008 -- 16:25 ET
[BRIEFING.COM] Wednesday was an extremely busy and volatile session as market participants digested testimony from Fed Chairman Bernanke, several economic and earnings reports, and a plunge in crude oil prices.

In heavy trading, the stock... More


E-mail to a friendTools IndexPrint-friendly versionSite MapArticle IndexDiscuss in a Message BoardDigg This By Bill Fleckenstein
The problems gripping the credit arena continue to occupy the headlines. Two weeks ago, I reprised the view of George Soros. This week, I would like to share like-minded comments from Ted Forstmann, IMG's chairman and CEO.

In a recent Wall Street Journal interview, Forstmann warned:

"We are in a credit crisis the likes of which I've never seen in my lifetime. . . . The credit problems in this country are considerably worse than people have said or know. . . . It's hard for me to believe that it gets fixed without upheaval in the financial system. Things are going to fail. Enterprises are going to fail. The economy is going to slow."

As to Forstmann's timeline: "I think we're in about the second inning of this."

(That guess is not so dissimilar to that of a friend I call the "Lord of the Dark Matter," who says he doesn't know what inning it is but is sure it's going to be a double-header.)

Ironically, even though Forstmann cites monetary policies and financial innovation as the root cause of our problems, he does not blame former Federal Reserve chief Alan Greenspan. Quite frankly, I don't see how one can understand the situation as Forstmann does and not peg Greenspan as the man at ground zero. (But as they say, that's what makes markets.)

Regular readers know my long-standing view: that Greenspan pursued reckless policies during his two-decade term as Fed chairman. In fact, it was a climate hospitable to risk taking generically and stock speculation specifically. And Greenspan's "lesson" survives: With "muscle memory" intact, stock bulls have proceeded to pile into risky technology stocks.


Credit crisis over? Not likely
Global economy won't bail out the US
In favor of bubble-free prosperity
Where did our financial stability go?
Fed chief still doesn't get it
Consider the frenzy for tech stocks July 8 in the face of an important pre-announcement from VMware (VMW, news, msgs), which specializes in a really hot niche known as virtualization.

There's no point delving into what virtualization is. It's just important to understand that VMware has the market virtually to itself. So when the company pre-announced that revenue for the yearwould be less than expected, it was a significant data point.

But while the news mattered to VMware that day -- its stock declined nearly 30% -- companies similar to it were being purchased.

A spending slowdown weighs on Cisco
Meanwhile, another data point was delivered after the market's close July 8. Call it a stealth pre-announcement: Cisco Systems (CSCO, news, msgs) CEO John Chambers told an interviewer that his company's customers were now looking at next year for a rebound, instead of prior expectations of a second-half recovery in 2008.

Not surprisingly, Chambers noted that enterprise spending remains challenging and that there'd been a further slowing in the U.S. (especially on the West Coast), as well as in Europe.

Video on MSN Money
The next bank disaster

There's a new danger to the economy: commercial-real-estate loans by small banks. About half have three times their capital at risk, and losses are 15 times higher than in 2007, MSN Money's Jim Jubak says.Of course, that Cisco is seeing problems corroborates what common sense would suggest (and corroborates the data point underscored by VMware), as it demonstrates the slowdown that has occurred in enterprise spending. Of course, that should come as no shock because the biggest consumers of tech are the financial-services companies, and everyone knows what state they're in. Thus, after July 8's frolicking to the upside, I was particularly curious to see whether Chambers' comments would be ignored or would matter.

On Wednesday, the market cast its vote for the latter. Cisco was down about 4%, with many associated companies also taken to the woodshed, as dots were finally connected that maybe tech companies were sensitive to gross domestic product -- as though that shouldn't have been obvious all along. It must be dawning on some of the Goldilocks crowd that troubles are greater than they'd assumed up to this point.
Author:  JClayton [ Tue Jul 15, 2008 8:55 pm ]
Post subject: 
And here I am thinking it was tuesday all day.
Author:  williamb [ Tue Jul 15, 2008 8:57 pm ]
Post subject:  The end of the superbubble
one more before all the hacks come on board

My man Bill fleckenstein

The end of the superbubble
That sound you hear is the popping of a financial bubble in housing, the economy and the market. And you can trace it all to Alan Greenspan's Federal Reserve.

Latest Market Update
July 15, 2008 -- 16:25 ET
[BRIEFING.COM] Wednesday was an extremely busy and volatile session as market participants digested testimony from Fed Chairman Bernanke, several economic and earnings reports, and a plunge in crude oil prices.

In heavy trading, the stock... More

By Bill Fleckenstein
Reading the papers, it's quite clear that the enormity of the problems facing Americans (and the world, for that matter) has emerged to the fore. Consequently, I decided a quick recap of our troubles might be useful.

There is a budding realization that the housing bubble's collapse will be more difficult than the masses and Wall Street had believed. You could see this last week as the market moved back toward the lowest levels since the collapse began last fall.

It's now obvious that this is a problem not only for the consumer but for the financial system itself, which is in dire straits as it tries to deleverage, thereby compounding the problem.

In addition, it has become common to see stories about runaway inflation somewhere around the globe, with riots and protests against high food prices being a binding theme.

A magnificent mirage unmasked
For quite a while, many believed that because sovereign wealth funds were deemed to be flush with money, the banks and brokers could just grab some capital from overseas investors and cash-rich nations and go back to doing what they had done before. That has clearly turned out not to be the case.

However, leverage is quite capable of creating the illusion of liquidity. Thus what many had seen as excess liquidity was simply massive leverage, which is now being unwound. (The surfeit of savings, which is what "liquidity" alludes to, never existed.)

All of these problems trace their roots to Alan Greenspan's years at the head of the Federal Reserve.

What began as small bailouts along the way ended with the blowoff of the stock bubble in March 2000. In an attempt to ease the effects of the bubble's collapse, interest rates were taken to the absurdly low level of 1% and held there far too long. That engendered a housing bubble, which was nourished by the abdication of lending standards in the banking system -- as securitization, spearheaded and championed by Greenspan himself, and deregulation of the banking system were thought to be the solutions to any imbalances.

More from MSN Money
When will the market face reality?
Is your stock on the 'hit list'?
Fed chief still doesn't get it
Where did our financial stability go?
The Fed embraces inflation


Meanwhile, the aftermath of this housing/credit bubble is far different from that of the stock bubble. Now the lending institutions are swimming in bad debts. Homeowners have mortgages they can't pay, just as the assets (houses) behind those debts are dropping in price.

As if that weren't enough, consumers' paychecks are eroding, thanks to galloping inflation created by the money printing that fomented the housing bubble (and by the credit that Greenspan's replacement, Ben Bernanke, has subsequently thrown in to ameliorate the aftermath).

Behold the wretched beast he created
The truly sad part is that this outcome was foreseeable.It was possible to anticipate a catastrophe of such dimensions even when the housing boom was still in full swing. Unfortunately, the very institution that had the regulatory authority to supervise the banking system was the one leading the cheering -- namely the Fed, in the form of Greenspan. (That was sort of like putting a bartender in charge of adjudicating disputes over breathalyzer readings.)

The collapse of the housing bubble is taking the economy with it and pressuring the stock market as well. Thus we will have all three markets feeding on each other as each deteriorates.

Video on MSN Money
Judging Bernanke

Bill Fleckenstein, the author of "Greenspan's Bubbles: The Age of Ignorance at the Federal Reserve," and Jack Malvey of Lehman Bros. discuss Ben Bernanke's job as Fed chief.

Unfortunately, the Fed is going to be faced with a Hobson's choice: trying to respond to that triple threat while its hands are tied, to some degree, by inflation. When push comes to shove, the Fed will choose lowering interest rates over fighting inflation, but it won't matter.

In his latest book, "The New Paradigm for Financial Markets: The Credit Crash of 2008 and What It Means," George Soros makes the case that we are witnessing the end of a 25-year superbubble.

I certainly agree with his observation and would note that the time frame of this superbubble roughly approximates the career of Alan Greenspan, who in my opinion was responsible for its creation -- and the enormous pain caused by its collapse.
Author:  williamb [ Tue Jul 15, 2008 9:10 pm ]
Post subject: 
just a quick note,

ive also just run into to home ownwers who have sold thier properties and each of them losing 100k

one major facto in the loss as ive explainedseveral months ago is the fact that people are mis-valuing the return on builders upgrades.
THERE IS NO RETURN
your in the negative the minute you walk into the design centre.

this is especially true for the folks buying this past yr and in the present
just remember, if your spend 50k in builders upgrades, at best your probably getting 10k in value where it cost you 50k

add to that the fact that prices are now starting to decline

for all the newbies on board, this link was posted about a yr and a half ago

http://video.google.com/videoplay?docid ... 9528285056
goodluck all

we are headed for troubled waters
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