Not too much, if any, commentary today... but here's a bunch of links for you to discuss, or not.
Markets, dollar go up on a day when our southern neighbours feel more pain
TD says "Get ready for some rockin' and rollin'"
New homes get more expensive, more slowly (see post below for some insights into what this may mean near-term)
When in doubt, follow the smart money
I'm really waiting to see this headline read CANADA
"In fact, there were excesses going on. The market was taking risks that I think were not adequately being rewarded." Not here though, not this time, haven't you heard, "This time it's different"
25 comments:
I'm a bear on both. Though I do expect certain asset classes to do well. I expect world banks to inflate/inject liquidity/etcetera to the point the stock markets themselves may not go down. But the value of the dollar will.
So, precious metals, consumer staples and energy assets I figure will hold or go up. Basically, hedges against inflation and recession. Tech stocks, discretionary goods, luxury items, and things like that I expect to go down.
Cash itself seems like a bad idea long term. But on the short term, decent to hold until trends show.
At first though, everything should go down as people cover loses and run for cover.
I say everything with no authority and mostly I hope educated guesses. =)
I'd say I'm fairly bearish - expecting a deflationary depression. It appears to have already started.
same as village, bear on both but positive on the metals and oil,have to be picky what you buy though.
Housing affordability quickly eroding, RBC says
Higher home prices, mortgage rates, utilities and property taxes gobbling up more income
Some in the mortgage industry say half of new business is now in the 40-year amortization class.
"The new-found ability to extend amortization up to forty-year mortgages temporarily offsets affordability pressures by rolling the clock back to late 2005 and early 2006 affordability conditions," said the bank in a release.
As we predicted this bubble has gone two years longer than it should have.
http://www.canada.com/victoriatimescolonist/news/story.html?id=e66b006c-6222-428d-990b-dbff7eb8d9d6&k=75476
one more :
Housing seer says there's worse to come
"Well, if you thought things were bad now, just wait. Think bank failures, recession, soaring default rates, home prices plunging by at least one-third and layoffs rippling across the economy. The unwinding could take five to seven years before the housing market hits bottom, he says."
http://tinyurl.com/2hcvma
I don't get this RBC guy,he was just on BNN and when asked if a bubble may pop or even a correction he nixed that possibility cause of the economy doin well and the "changes of product in the mortgage lending". What a bunch of crock. Then he explains how you can buy 30% more house with a 40 year and that these only became available a year and half ago. Hmmmm, another shill who doesnt want to see his McMansion lose value but damn those Americans who borrowed above their means.
On a side note he did say Vancouver is now 71% on the affordability scale,I imagine Victoria isnt far behind since we have all the rich wage earners here.
This is gonna come back to bite this guy bigtime,quite the double speak we have been accustomed to seeing when the writing is all over the wall.
vg - that makes me laugh too. The guy says Canadian real estate won't go down *because* we have exotic new lending. The same argument is usually flipped for why we won't crash like the US - we "don't have creative lending".
Hmm - can we have it both ways?
anon,
exactly,and don't forget the good ole Royal Bank who would hurt the most in a correction can't dare imply a correction is coming. That would go against all those recent customers they signed up telling them the same thing but they can't be held responsible when the shit hits the fan cause they also told everybody the affordability levels were at the extreme so don't blame us,we told ya. Speaking out of both sides of their mouths.
It is beyond disgusting that we have a clear view right now (looking down south) of the outcome of these products,and yet Canadian banks, knowing the carnage that has been created (the paint increased substantially BECAUSE of subprime mortgages), are offering this crap.
assinine, unbelievably stupid and completely immoral because they know what the outcome will be. They have a "crystal ball" available (so to speak) but fail to look at it??????
paint = pain
we are different olives,we have rain and more junkies per capita then the east side of Van,what more do you need to make you want to put your life in hock for the next 40 years ?
vg.
If we are so bad then why do so many consider us a world class city and every rich person from all over the world is flocking here to buy up our reasonable (compared to the rest of the world) real estate. :)
S2
S2,
Cause we are San Fran North,didn't you know that ? we had the fog today to prove it and our crimes are getting almost as bad. Twice my neighborhood has been in lockdown the last few weeks and some months back the biggest SWAT team takedown of gangland killers in Victoria history,helicoptors and all. We are definitely setting some world class records for Victoria this past year....but I still love this place,just need a good ole RE correction so average people can afford the place once again. :)
sorry there guys, I temporarily used my brain and thought for myself....
must remember - canada is different. canada is not affected by what goes on in U.S. Canada is different Canada is different canada is different canada is running out of land everyone in canada is loaded, different, retired blah blah blah
Olives, even if what is happening elsewhere does end up happening in Canada the mantra is Victoria is different, Victoria is different, Victoria is different.
S2
"Twice my neighborhood has been in lockdown the last few weeks and some months back the biggest SWAT team takedown of gangland killers in Victoria history,helicoptors and all."
What neighbourhood is this? I never get to see stuff like that, just the occasional siren going by.
aleks,
Shelbourne between Bay and Hillside,used to be a nice area,now the scum have inhabited it.
CHEK6 did the most schizoid segement I have seen yet.
1.The market is "brisk"
2.Get used to 40 year mortgages
3.People in Europe have mortgages they pass on to family for centuries according to Coldwell Banker
4.You will need a suite to make ends meet
5.There is a change in the market
6. There will be a correction and possibly thru the end of 2008
So lets get this straight,they used the word "bubble" several times.
The market is "brisk" but no mention of the word "hot".
There was supposedly everyone calling it a bubble for 8 years the agent says. Really ? I have only thought the last 2 years,the rest was inflation and some new demand.
So the guy gets a little defensive about a "bubble" popping but admits there will be a correction.
What a mixed bag,that was brutal to watch,I'm sure the masses are sure to run out and buy after watching that.
PS
almost forgot, Victoria is now #2 in the country on the affordability index.
I know,another VG post but this one is really interesting.
It's on mohicans site and is worth posting here,thanks mohican !
Historic Turning Points in Real Estate
http://cowles.econ.yale.edu/P/cd/d16a/d1610.pdf
VG,
I saw that Chek 6 segment too and thought it didn't make any sense whatsoever. He can use any terminology he wants - popping, correction, downward slide, decrease - whatever - it all means the same thing. duh.
I agree - there was no indication of a bubble 8 years ago - although if he's saying that's when the run-up started (and he should know), I guess we can expect (in his opinion anyways) for prices to decline to that of 1999 - or if, like they usually do during bubbles, to overcorrect, maybe to 1997 levels! or less!
If he's claiming that the run-up began in 1999, then maybe he'd better look at the VREB history, cause according to them, the run-up began in 2002, 5 years ago.
I think we may have lost sight here people.
I saw the CHEK6 newscast and while it was all over the place, as always, it did say bubble and correction FINALLY on a local newscast.
What do you think average joe homeowner is going to think of that.
Of course, my husband, ever the optimist, says the public will hear what they want to hear.
Hey vg. You aren't that far from us.
S2
S2
yes it was good to hear the bubble and correction words but it was the last comment that got me too,something about "better hurry up and get out of that basement rental and buy" or somethin along that line. They even played it on Global Vancouver which made it look that much more stupid with the journalism flip flop.
You could probably find news casts from Arizona, California and Florida a year or two ago that looked much like that Chek one did.
I think we are at the stage of the bubble where people are aware of the bubble but are in the denial phase.
Next we should see flat prices and rising inventory before it falls off a cliff.
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