Back in the 1990s, all the fear surrounded what would happen when the computers all crashed because of the Y2K dilemma with using 0s and 1s for programming. Anyway, long story short the techies figured it out, the markets didn't crash, we put all of our faith in the dot commers and low and behold, just two short years later KABOOOM!
Many people lost their shirts, their savings, their jobs and some even their homes by being heavily involved in companies called Cisco, JDS Uniphase, blahblahblah.com, etcetcetc.com and so forth. Did they learn? Sure did. The proof is in the (no, not pudding) in the world wide (no, not web) real estate market.
Many people ignored the warning signs: like where companies didn't have anything other than a website to claim their existence, let alone anything that indicated sales. But some just got caught up in good companies that got overvalued as a result of a hyped up market. Last time I looked Cisco is still around and doing quite well. Much like many of the other overvalued established companies from just 5 years ago. Except now they're priced more relative to their underlying economic fundamentals.
Perhaps the current RE market run-up is a direct result of people having lost in a more liquid market and looking for a tangible "investment" that they could look at and feel? Now the real estate market is showing similarities to that crazy time; every house party I go to has people standing around talking about how much money they've made in their home; like back in 2001 those same people were standing around talking about how they were going to retire at 45 thanks to their investments in tech stocks. Remember the Internet was going to change the world, this time things were different.
Reminds me of what people say about our RE market these days: we're not the US, this isn't the 1980s, this time it's different. To those I offer up an original catchphrase: Y2ThisTimeIt'sDifferent... Not too original and a bit long so have at 'er in comments. To those still clinging onto those myths of our market I give you this:
It's the latest blow for Canada's beleaguered forestry sector, which has seen dozens of mill and plant closures in the past few years.
A report from PricewaterhouseCoopers said the Canadian forestry industry lost $152 million in the first three months of this year.
The housing slump in the U.S., weak demand for newsprint, falling prices and a soaring Canadian dollar have resulted in big losses.
"Earnings in the quarter were affected by sharp declines in prices for structural lumber and panel products, higher fibre costs and weaker paper prices compared to the same quarter in 2006," the report said.
Commonwealth Plywood laid off 1200 of its 2500 workers. That's 1200 well paid Canadian jobs. That's likely 1200 people who are going to have a tough time paying their mortgages. That's 1200 people who are suffering purely because of a hyper-inflated global RE market. And that is just one company in a multi-billion dollar Canadian industry that is suffering and will continue to do so for some time. Reminds me of those unfortunate Nortel employees who got caught in tough times.
Yah, this time it's different all right.