Real Estate Crash thread

[Eldo]

Sold my house in Calgary on Monday after five days on the market. Feel very lucky that our market has survived with so much turmoil in other countries.

Now watch prices go up 15 per cent this year.

[LeeLau]

congrats eldo. Where to now? Move to Vernon and buy a sled???

[Eldo]

Not sure. Still looking around. But somewhere warmer for sure.

Any space in your garage for a cot?

[LeeLau]

Not sure. Still looking around. But somewhere warmer for sure.

Any space in your garage for a cot?

Sorry I have Aussies and Quebexicans stacked like cordwood and hanging on the walls paying rent

[liv2ski]

Sorry I have Aussies and Quebexicans stacked like cordwood and hanging on the walls paying rent

They may be able to buy in a few years

"Bubble trouble

Last week, Capital Economics released its Canada Economic Outlook Report (Q1 2010), which predicts sharp falls in Canadian house prices, household deleveraging, and anaemic economic growth into the future.

The report warns that Canadians' belief that their economy is somehow invincible after emerging from the crisis relatively unscathed is "disconcerting" as house prices lose touch with fundamentals.

"Relative to incomes, our calculations suggest that Canadian housing is now just under 40 per cent over-valued, which is about the same level of excess that the US market reached before it collapsed. We have pencilled in a 25 per cent cumulative decline in house prices over three years, mirroring what happened south of the border.

"The biggest downside risk is that an adverse feedback loop could develop, as it did in the US, with rapidly falling house prices leading to a contraction in both output and employment, which puts even more downward pressure on house prices."

Capital Economics also warns that the government-owned CMHC could be exposed to significant losses should house prices fall significantly.

"According to our reading of CMHC financial statements, insured mortgages and securitised mortgage guarantees total an amount close to $C800 billion. The total equity of CMHC is $C10 billion.

"If house prices collapse further than we predict, say by 35 per cent, with a default rate of 10 per cent and average home equity of 10 per cent, then the potential capital loss amounts to $C20 billion".

So I guess it is the D.D.S.S. in the North American R.E. World.

[Eldo]

Yeah, that report got attention for all of about 10 minutes up here, mostly because of Capital Economics' dubious track record of predicting the real estate market in the UK.

Basically every year starting around 2003 CE predicted a 20 per cent drop in UK prices over the next two years, but prices instead climbed 10 to 15 per cent a year.

After being wrong again and again, in 2007 their prediction was the status quo, and their spokesperson basically said it was foolish to keep predicting a correction when prices kept rising. Of course prices then dropped 15 per cent.

If a baseball player had that kind of batting average, he would soon be in the stands selling peanuts.

Sorry, but when the zombie attack hits California and you need to flea to Canada, you will be stuck paying our high RE prices.

[liv2ski]

Yeah, that report got attention for all of about 10 minutes up here, mostly because of Capital Economics' dubious track record of predicting the real estate market in the UK.

Sorry, but when the zombie attack hits California and you need to flea to Canada, you will be stuck paying our high RE prices.

Nope, my sis said she will make room for us in her garage in West Van Eldo, I don't know shit about the company that wrote the piece, so your info was somewhat amusing for me. Just goes to show there is always about three sides to every story. However, it is pretty easy to get negative on RE once values far exceed certain income multiples. Also, you know me, I think the US will tank again at some point, which should reduce commodity pricing, which could slow shit down up there. We will see. I was talking to my 25 year old yesterday and was trying to convince her it was in her best interest to go back to Canada or immigrate to the Land Down Under. Long term, I like the prospects for those two places, especially for a young person.

[powder11]

I think Canada will dodge the continuing RE meltdown that is going on in the states. I think high RE valuations in Canada are sustainable as long as interest rates stay low and Canadian mortgage companies stay the course with more strick lending guidelines than the US. I think the only reason things got so fucked in the states is that lenders used sketchy mortgage products to give money to people who could not pay it back. Canadians are WAY more prudent with their money (lenders and buyers). Historicaly, most Canadian homeowners put at least 20% down, buy what they can afford, stay in the same house for years and contribute more money to their payments over time in hopes to pay the place off for retirement. Canadian RE is built on a strong, solid foundation and for that reason alone, I don't see why things will collapse.

The other reason things are cooking in the great white north is strong demand. They say immigration is really pushing the RE cart in Canada; particularly Vancouver. Fairly recent immigrants believe that home ownership in Canada is the cornerstone of their existance. I talked to an east Indian guy from Surrey who is looking to buy income properties in Whistler. The guy doesn't even ski. I guess he owns a bunch of Vancouver RE, which he is selling and looking to buy in markets that represent value.

As Eldo stated, the house we bought in 2004 may have fallen off the 2008 high, but I am still up 15% from 2004.

[Benny Profane]

[XXX-er]

Canadians are WAY more prudent with their money (lenders and buyers). Historicaly, most Canadian homeowners put at least 20% down, buy what they can afford, stay in the same house for years and contribute more money to their payments over time in hopes to pay the place off for retirement. Canadian RE is built on a strong, solid foundation and for that reason alone, I don't see why things will collapse.

.

I disagree with that statement

IMO the only reason we are not in a similar leaky ship as the US is that Paul Martin did NOT allow the big class A canadian banks to deregulate and fuck everything up OR they would have so they could make more money

Then we could have been posting in our own "Canadian RE crash" thread

Canadians are ALSO carrying huge debt loads ,Canadians are also spending money like it is water

Around here things dropped 20% ,SO if you bought 5% down at the peak don't have a lot of equity and need to sell you could be just as fucked as the americans


the vancover market is just stupid and people are paying huge amounts of their monthly income to be in the game

RE is a game so remember ,in a poker game if you don't know who the patsy is ...its probably you

[Toadman]

WASHINGTON (Reuters) – Sales of previously owned U.S. homes plunged in February and prices hit their lowest level in nearly nine years, implying a housing market recovery was still a long way off.

The National Association of Realtors said on Monday sales fell 9.6 percent month over month to an annual rate of 4.88 million units, snapping three straight months of gains. The percentage decline was the largest since July.

Economists polled by Reuters had expected February sales to fall 4.0 percent to a 5.15 million-unit pace from the previously reported 5.36 million unit rate in January. January's pace was revised up slightly to 5.40 million.

"This is a frustrating number. The U.S. residential real estate market doesn't seem to want to turn around despite better affordability," said David Carter, chief investment officer at Lenox Advisors in New York.

Maybe when Northern Japan resettles, the U.S will market itself as a great, low cost place to live. Besides the Yen is just killing it right now agaisnt the dollar.

[ass-to-mouth]

Sales & prices are down because of bad weather. /Larry Yun

[WICS]

Just read an article that REIT owned multifamily housing may start to care more about rent increases than occupancy. If I understood correctly, they may make more money keeping occupancy rates at 93% but charging more rent without the worry of being at 100%. My whole philosophy has always been to slash rents if we have units sutting for a month...interesting idea though.

I was with one of the larger REIT's for 10 years and have been with a regional firm for the last two. The goal is to maximize collections (obviously). Our philosophy is if occupancy is over 95%, the rents are too low, money's being left on the table. But we're managing 50+ unit properties, so the economics are different than that of a small property.

Most markets we're in have rents trending up. Many folks are locked out of home ownership now (foreclosure, bad credit, no down payment) and there's not alot of new multifamily product coming online. 2011 will be a good year to be a landlord.

^QFT.



"For now, [REIT] says it isn't worried. Its portfolio is 96% full and shares of the company have soared nearly 40% in the past year. 'This is a company that's well positioned for the next five-to-10 years in light of the demographics, in light of the operating platform,' [its CEO] says. 'I hate to say it, but there's not much that can go wrong in our business.' "




Best to all mags.





$.02

[liv2ski]

The thing 90% of the people don't stop to consider is the purchasing power of their $$$. USD has declined about 20% in the last year. That means everything is costing more. Hell, that is almost your increase at the gas pump. And ya, it does seem like it is becoming more of a landlords market, but the quality of the tenants is going down. So while you may be able to get a bit more for your place, chances are higher you will have tenant issues.

[Benny Profane]

The thing 90% of the people don't stop to consider is the purchasing power of their $$$. USD has declined about 20% in the last year. That means everything is costing more. Hell, that is almost your increase at the gas pump. And ya, it does seem like it is becoming more of a landlords market, but the quality of the tenants is going down. So while you may be able to get a bit more for your place, chances are higher you will have tenant issues.

RE: Parvo's roomate blog.

[Cono Este]

Sheet, stuff is still bad.

Personally, Ive been renting out my big house and going where the four winds take me. Hoping to land some where cool and continue renting my house until I can swap it. Too nervous to put it on the mkt and have it sit empty for 12 months.

I feel for you Mock Vomit. Click on my sig and you can see the extent of my misery. Add in divorce and the fact I was lucky mofo all my life.. and all I can tell myself each day is

"Someday this war is going to end"

And I am 100% it will.

[meatdrink9]

I just watched "Inside Job" last night. Great documentary about how completely out of hand and corrupt the financial sector has become. I highly recommend it to anyone. We got it off Netflix. Not an instant stream, but worth waiting for it to arrive via mail.

It really is going to take a small scale revolution or a complete meltdown of the system for anything to change. They own Washington. If nothing changed after this giant mess I can't imagine just how bad things will have to get before something changes (any real financial regulation, prosecution of fraud, reform, etc...).

[AKPogue]

I just watched "Inside Job" last night. Great documentary about how completely out of hand and corrupt the financial sector has become. I highly recommend it to anyone. We got it off Netflix. Not an instant stream, but worth waiting for it to arrive via mail.

It really is going to take a small scale revolution or a complete meltdown of the system for anything to change. They own Washington. If nothing changed after this giant mess I can't imagine just how bad things will have to get before something changes (any real financial regulation, prosecution of fraud, reform, etc...).

What do you mean has become? It has always been that way.

[Hugh Conway]

If you say so.

[snowsprite]

Word on the local news this a.m. is that housing on the eastern "gold coast" of Fairfield county has never been slower to move. Ridiculously low amount of sales. I heard high end places (couple of mil) are still moving, but even that slowed. Regular folk homes are just sitting. I could have told you that driving around the neighborhood. Feel sorry for the poor bastards selling right now. I really should be one of them but not that desperate (yet).

Sprite

[Benny Profane]

Sprite, I just had to bite my tongue and walk away when I overheard a few people at work buying in the past year. Both at least a half million, which is middle market around here, and I know these people don't make too much. One woman is working a second job to afford it, and, the husband works too, of course. What a trap.

[liv2ski]

This is now officially the worst housing crash since the Great Depression. Putting aside hyperbole new home sales fell 80 percent from 1929 to 1932. Those years, if you know a bit of history were not model years for the U.S. economy. In fact, the economy imploded in spectacular fashion at that time thanks to time honored Wall Street spec Bernank has supported Wulation and massive debt leverage. So a fall of new home sales by 80 percent during those years would be expected. Over this duration the Dow Jones Industrial Average fell 89 percent. Now compare this to our current situation. New home sales from their 2005 peak have now fallen by 82 percent! However the Dow Jones is only off by 13 percent from the peak reached in 2007. The big difference in this crisis is that we had a Federal Reserve that bailed out big banking interests under the pretense of saving the housing and consumer market. Yet how can you save a housing market that by definition is too expensive for the immediate population? Going on four years of this crisis I’m sure many now understand the finer points of crony capitalism. Hope Now, HAMP, foreclosure moratoriums, and other methods of saving the housing market were largely cover for a bigger bailout scheme and most of you were not included.
http://www.doctorhousingbubble.com/t...+Love+SoCal%29
Got to love how the Bernank has protected his Masters while the middle class goes down

[Benny Profane]

This is some nasty stuff: http://www.oftwominds.com/blogmar11/...using3-11.html Thing is, he's been pretty much spot on since '06.

[4matic]

gloom and doom

Nice move up in Treasury yields. Did you buy the dip in TBT or still looking at it?

Dollar made a nice move up on higher rates and Fed/ECB action.

I moved 10% of cash into equity last Thursday. Small Cap is really outperforming which is remarkable but since no one expected that it makes perfect sense. Failure here would be bad news on equity. Although, an equity correction puts commodities at greater risk for failure.

The housing news is bad but any improvement there will be more fuel for equity. Although, we are closer to the end of this leg equity rally than the beginning for the year.

[Benny Profane]

I jumped in Monday, and I'll be happy riding the market up 6% and then put up the shields again, but, it's playing with fire. War in Lybia, Meltdown close to Tokyo ("where are the parts to finish this fucking car/computer!"), Spain waiting in the wings after Portugal, and will there or won't there be QE3? The balls are in the air.