HawthorneVillager.com

let me know when your bomb shelter needs a refill of bottled water and canned food. You've been in there for a couple of years now.

Thanks for this response. I have been looking for answers regarding the Canadian Housing market and this seems to put my mind to some ease

thanks

You know, WilliamB is sounding a lot like our honourable MP Garth Turner on the issue.

I've never heard a broker/agent be anything other than bullish on the housing mkt. Their livelihood depends on it. While current fundamentals remain ok I don't know how anybody could be excited about the real estate mkt in the near future in the face of 138/crude, a crumbling credit mkt, a rapidly slowing economy and the recent record run in prices we've seen over the last 10 years. When mkts correct they correct hard. Everything flatens (stablizes) before the downturn. Somebody mentioned "keeping up with the Jonses in the U.S." It's occured just as much up here. To think Canada while be immune from the global real estate downturn is extremely naive. Your avg simpleton only thinks of their monthly payment. When they bought their big house, took out a 300k mortgage, they never considered the consequences of higher interest rates, losing a job. Some tool making 80k a year feels like a big shot and now wants the big house, the leased BMW, want all their friends to think they've "made it". It's a BS...all smoke and mirrors....this lifestyle has been achieved through easy credit. I've been scrathcing my head for years how people do it. The piper is being paid in the US.....it's only starting....The same thing is gonna happen up here.

Everything is cyclical...the upcycle lasted a long time...now it's the time for the down cycle...Deleverage...own some goldstocks.....trade in that BMW lease for something more sensible....garner some joy from the relationships you have with friends and family instead of your financed lifestyle.

Maybe if we can get commodity prices to come in real hard, real fast inflation will slow down and we can keep rates down here, the economy can dig in and will be ok.....watch the oil price...that's the key.


quote="PaulMeredith"]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.[/quote]

What do you mean by "come in real hard". Do you mean oil needs to come down, or go up?

If someone says that the market is bullish when it isn't, they are painting a rosie picture. I think my post says pretty clearly (using facts) that the market is slowing down, so I don't think my comments are calling the market bullish at all. You also state that you don't see how anyone can be excited about the real estate market right now. Agreed completely. How could anyone? Both the real estate market and the economy is slowing, but as I said, it is not as bad as some people think it is. With the way the housing market has been appreciating, homes are priced accordingly. As the market is stabilizing, sellers are not getting their asking price because property values are no longer appreciating at the same rate. However, they are still selling for more than they would have in the recent past.
I am not saying that we are not going to be affected by the US, but I am saying that we are not going to have a meltdown as in the States. So rest assured, it won't happen here. The big difference lies in the way we lend money:

_________________
Paul Meredith
Mortgage Broker
CityCan Financial (est 1976)
416-409-8009
http://www.easy123mortgage.ca
paulm@citycan.com
Lic#10532

Follow me on Twitter! http://www.twitter.com/paulmeredith

The roller coaster is cute, but I’d like to overlay a population graph over it as well. In 1890, there were 62,000,000 people compared to 302,000,000 people. Land mass, however, hasn’t changed. With that in mind prices going up 99% (adjusted) in 116 years doesn’t seem that bad to me.

What's the difference how the money was lent if it can't be paid back? It's the same result in the end.

So you're suggesting that there would be no change in mortgage defaults in canada if we started lending 10 year olds $500,000???!!!? How can you not understand risk in lending?

JClayton Posted: Wed Jul 16, 2008 11:32 am Post subject:

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Greg and Sarah wrote:

Maybe if we can get commodity prices to come in real hard, real fast inflation will slow down and we can keep rates down here, the economy can dig in and will be ok.....watch the oil price...that's the key.



What do you mean by "come in real hard". Do you mean oil needs to come down, or go up?

"Come in hard"....means price needs to drop dramatically

Did you mean to quote me in there too? Because it included 2 different thoughts...

I'm saying don't fall back on on the notion that just because we have stricter laws in lending here in Canada that we can not have the problems similar to the US.

If you are one of the tens of thousands of people in Ontario that work in manufacturing, and you lose your job due to high energy costs, and decreased exporting, you can't really go to the bank and say...

"Well I took out a 400k mortgage, but we're in Canada, so there is no way I can possibly default on it."

If you are out of work, and can't pay the money back... the result becomes the same as that in the States.

We may not hit the bump the same exact way the Americans did, but I think a larger looming problem lies ahead.

You're skipping the cause, and jumping right to effect. Why, then, are mortgage defaults a bigger problem right now in the U.S. than they are here? Rising engergy costs are the same here. Manufacturing sectors are experiencing the same problems.

In the states, massive lending companies are going into government protection, images of run-on-the-bank type frenzies are happening, and people are walking away from houses. It may have been triggered by higher costs of living (energy, food, etc.), but the main reason it is so bad compared to Canada is because these lending practices exposed WAY more people to these financial situations which have no breathing room.

The topic here is on the future of our housing market. Not, will we suffer the exact same fate via the exact same avenue as they did south of us.

It's well documented as to why there are more defaults in the US over Canada right now, so we don't need to rehash that.

Looking forward for our housing market and economy, we will suffer different hardships than that of the US.

Namely, if they stop buying our goods... we're screwed.

How many people out there can carry their : Mortgage, line of credit, credit card carry over balance, 2 car payments, insurance, and monthly expenses, all on one salary if their spouse got laid off? Not many. We're just as over extended as the best of US households.

So it comes back to my original point.

What's the difference in the how or why there are mortgage payments issues, if the final answer is.... It can't be paid back.

Now imagine, you're not just "walking away from your unpaid mortgage". But walking away with no job to boot.

You said it yourself. This topic is about the future of canada's housing market, not what happens to you if you work in ontario's munfacturing sector.

Canada's exporting is based on resources, energy (oil - yes, we are a net exporter of oil), and food (wheat). All of these things are in increasing demand from other parts of the world (China, especially) regardless of whether the U.S. is buying maple syrup. The U.S. has already stopped buying our manufactured good because of our high dollar, and most of our other imports to them are necessities that they need, not want.

It would be foolish for me to say that our economy is not closely related to trends in the U.S., but there is a reason that our dollar is so strong, The TSX is breaking records, and our property values are still holding strong when the U.S. is shrinking.

Employment is directly related to the ability to pay ones bills. So talking about the future of our housing sector and the future of our jobs go hand in hand.

We have already agreed that Canada has better lending laws than the US, so we have to talk about where we are vulnerable. Where can or where are we likely to be hurt going forward the next couple of years, and what is likely to cause those problems.



Oil is great for Alberta, and wheat is great for saskatchewan. Ontario manufactures goods for export, mostly to the US. A very large % of people in Ontario are directly or indirectly employed via manufacturing. That directly effects us here in HV, and across the GTA.

On the topic of our dollar - today, you are correct. It's strong against the greenback. The US got hit first, so they took the first dive.

Ever hear the saying that if the US sneezes....? Well they sneezed, and maybe the cold is just taking a bit longer to incubate in Canada.

Only time will tell if you are I are correct.