Friday, August 3, 2007

Y2ThisTimeIt'sDifferent

If you're a regular reader of this blog, this next statement will come as no surprise:
INFLATION IS NOT JUST 2-3%, REGARDLESS OF WHAT THE CPI SAYS
Need proof? How about the impending Latte Recession?
For years, Starbucks has claimed its perpetually growing chain of stores was resistant to blips in the U.S. economy. But this week it tempered that message, implying its customers might actually be cutting back on that extra Frappuccino

...taken a hit as consumers trim spending in the face of higher gasoline and food prices (remember, CPI doesn't include these, they're too "volatile")
Get ready for more stories in the near future about FOODFLATION!
Ethanol demand drives up costs for summer BBQers

Get ready for the 5 dollar loaf of Wonder Bread

And you thought gas was expensive? Time to get on the porridge bandwagon.

How does this impact the local RE market? September is the next expected interest rate hike. Bond yields will rise, sending mortgage rates higher. Think you that we may get another central bank rate hike come December?

UPDATE: Thanks S2 for the links.

Your home may not be the investment you think it is

Best in the West yes, but best overall? Think again.

9 comments:

hhv said...

Just a little anecdote: talking with someone I know who has made about $300K in 3 years on his two homes (realized gains), reading the TC over coffee, turns to me and says "isn't it disgusting how they keep pumping RE in this town? I guess they know where the bulk of their advertising dollars are coming from. Don't the know the party is over?"

olives said...

OH MY GOD:

http://www.cnbc.com/id/15840232?video=452808336

vg said...

As long as ole Jimbo can keep pumping his spastic mantra then thats what it's all about to him,his ratings must be tanking.


jmk,
the police have my whole street blocked for the last 5 hours cause of some drive by shooting and some guy holed up with some guns,only in Seattle you say ? ;)

PS it was right across the street almost to the three guys they took down not many months back for the gangland killings the last couple years.Safe place that Victoria is.

Anonymous said...

If the pop. growth is only 5.8% that means not "Everyone in the Whole Wide World" does not seem to want to live here.

Also our salaries are not that high to warrant the prices of RE (which is high because everyone in the Whole Wide World" wants to live here.

olives said...

vg,

Cramer's tune has drastically changed - did he say that "everyone" who has taken a mortgage in the last two years is going to lose their home?

There is a good discussion about his meltdown on the Calculated Risk blog - and how even if rates were lowered they will have no impact on the credit crunch already in progress.

vg said...

Olives,
this is the most eye opening MSM segment I have seen yet that explains what we have been all reading and predicting since we heard the word "subprime" and truly understood it. So many want to bury their heads and say it's in the US only.
Think of the implications of what Cramer is saying, 7 million out of 14 million took the teaser rate mortgages and they are gonne lose them,that is frigging massive and thats not counting the ones who will be over the next 2 years when those 14 million come up for renewal. Thanks for posting that.

vg said...

Correction, that was 3 years not 2.

House Frau said...

I found this blurb in a Toronto Real Estate Blog.

Victoria – The risk of a price bubble continue to grow in this commonly perceived resort-market. Home price growth remains very intense (inflation adjusted prices grew by 16.8 per cent from a year ago in the third quarter), while our estimate of irrational exuberance is not only at an all-time high but is also at the highest level in the country (22.7). Meanwhile, strong price pressure resulted in further erosion of affordability to 37.5 per cent in the third quarter from 35.2 per cent in the previous quarter. This remains the second worst reading among major markets in the country.

Anonymous said...

"House Frau said...

I found this blurb in a Toronto Real Estate Blog.

Victoria – The risk of a price bubble continue to grow in this commonly perceived resort-market...."


PLEASE post the link to this story, as I don't know here to find it. Many thanks