Real Estate

[Merged] Real estate crash - yes, no, maybe?

Poll: Canadian Real Estate Crash

  • Total votes: 1772. You have voted on this poll.
Yes
 
727
41%
No
 
716
40%
Maybe
 
329
19%
Deal Addict
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Apr 1, 2007
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AMDCanuck wrote: "Your lifestyle suffers, your worries mount—and yet, no matter how much data you throw at people, there’s an ingrained belief that being a homeowner signifies maturity and that renting connotes instability and transience."

I like the other info as well, however I want to focus on this comment.

I see more of this attitude than anything else (when speaking of the housing markets in the GTA). People have put on the blinders, and nothing will change their viewpoint. In the end, this incredibly static view is what spurs my belief that the market will fail. The market is not based on anything fundamental. It is based on a notion that has no basis in reality, and debt that will have to be paid eventually.

If you ask me (I know, no one has), availability of credit in the modern era has created a house of cards, ripe for crashing. Common sense is not as common as some people think.

In the end of this ponzi scheme, people who can hold onto their equity (non-housing of course) will end up coming out of this on top. Essentially, the wealthy will get wealthier, and the middle-class will further deteriorate. If you follow history, this almost seems clockwork.
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Apr 4, 2001
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WontonTiger wrote: In the end of this ponzi scheme, people who can hold onto their equity (non-housing of course) will end up coming out of this on top. Essentially, the wealthy will get wealthier, and the middle-class will further deteriorate. If you follow history, this almost seems clockwork.

I think I agree with you, but whose fault is it?
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bcbgboy13 wrote: Condogeddon:

Statistics on the Toronto (416 only) condo market - where the most of the speculation is done and money from here used to finance the move up buyers.
This (and the deep suburbia due to the gas at record levels) will be the first two dominoes to fall.

Jan.2011:
first 2 weeks - 292 units - down 12% - $ 333,558 Av. price
whole month - 805 units - down 14% - $ 327,868 Av. price

Feb.2011:
first 2 weeks - 612 units - down 6% - $ 359,775 Av. price
whole month - 1158 units - down 10% - $ 355,615 Av. price

Mar.2011:
first 2 weeks - 703 units - up 1% - $ 352,057 Av. price
whole month - 1645 units - down 4% - $ 352,320 Av. price

Apr.2011:
first 2 weeks - 683 units - down 11% - $ 351,596 Av. price
whole month - 1427 units - down 20% - $ 351,763 Av. price

May 2011:
first 2 weeks - 684 units - down 12% - $ 356,452 Av. price
whole month - 1575 units - up 3% - $ 355,347 Av. price

June 2011:
first 2 weeks - 788 units - up 13% - $ 347,472 Av. price
whole month - 1746 units - up 22% - $ 358,881 Av. price

July 2011:
first 2 weeks - 668 units - up 50% - $ 351,040 Av. price
whole month - 1452 units - up 32% - $ 353,189 Av.price

Looks like the flippers are out in full force to get out but there are enough buyers to keep the average price around $ 350k -360k (for now).

=======================================================================================================
And the TREB July stats is here (2 pages) and here (complete report)

Other interesting parts:
"The greatest rebound was seen in the condominium apartment segment in the City of Toronto," said Toronto Real Estate Board President Richard Silver."

"Tight market conditions have boosted the annual rate of price growth this year. However, the listings situation is starting to improve. A better supplied market later this year and into 2012 would lead to a more sustainable rate of price growth,” said Jason Mercer, TREB’s Senior Manager of Market Analysis."

And these new changes in the report:

"The reporting geography within TREB’s Market Watch publication changed with the release of July 2011 statistics."
"Due to month-to-month volatility in sales and average selling prices, TREB will not produce monthly reports on a community-level basis. Instead, detailed community-level statistics will be published every six months"

LOL. This type of stuff makes them seem so biased, I don't know how you could ever read their analysis (aside from the raw numbers). They should realize that the faster we get the reduction over with, the better WE ALL WILL BE!

"Due to information that doesn't fit the way we want our analysis to look, we will now only publish reports when the information fits with our ideology."

"Tight market conditions have boosted the annual rate of price growth this year." :lol: WTF does "tight market conditions" mean? If I published a report like this, I would be fired. I know there is bias in almost everything, however you should at least TRY to look objective.
mbg wrote: I think I agree with you, but whose fault is it?

It's all of our faults. I'm not old enough to bear the majority of the blame, however I will point my longest finger at the Baby Boomers.

Perpetual consumption and growth is a myth. People got too used to the good times, and the wealthy wanted to be wealthier. As soon as the exporting of jobs overseas occurred, it was the beginning of the end of the prosperous West. Shortsighted businessmen wanted more money, and in the end, they will enjoy their money as infrastructure crumbles around them, or they will learn how to speak Chinese (or another in-demand language) and move overseas.

Unless we come face to face with our reality, it will only get worse.
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Feb 15, 2008
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Image

Interesting chart of what happens to rents (and hence, real estate prices) during increasingly strong, and in the extreme, hyperinflationary scenario.

Of course, we have been in a deflationary regime for the past decade or two because rents as a percentage of household income have been steadily rising.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Jul 27, 2008
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Is it a good idea or bad idea to buy CMHC backed Mortgage Backed Securities from TD? They say if held to maturity you're guaranteed full principal plus interest and the yields are 4-6%, better than all GICs. Is it really low risk?
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May 28, 2007
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Mark77 wrote: Of course, we have been in a deflationary regime for the past decade or two because rents as a percentage of household income have been steadily rising.

Wrong. We've been in an inflationary regime for the past decade because everything essential in order to survive has gone up. Housing, food, energy, utilities, etc.

Consider Mark's bias on this stance. He has a business and he has stocks. When interest rates goes up, this hurts his bottom line on both counts. He has a vested interest in repeatedly denying that there is no inflation hoping that interest rates will never rise. Similar to Carney and Flaherty. This is how the rich get richer. Feed the average person a pack of lies or distract them to forget how bad things have really become. (and how much worse they are about to get.)
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extnct wrote: Is it a good idea or bad idea to buy CMHC backed Mortgage Backed Securities from TD? They say if held to maturity you're guaranteed full principal plus interest and the yields are 4-6%, better than all GICs. Is it really low risk?

The bank stocks have been dropping like a rock. You'd better read the fine print and see if those securities are truly guaranteed. Even money market funds are NOT guaranteed. And for a long time companies have been subsidizing them for investors not to lose their money on them.

And watch out for the European banking collapse/crisis ahead. Italy's stock market has been dropping hundreds of points. Too big to fail. Too big to bail.
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ShopSmart wrote: Wrong. We've been in an inflationary regime for the past decade because everything essential in order to survive has gone up. Housing, food, energy, utilities, etc.
Okay ShopSmart, what happens to bond prices in an inflation? They go down, right?

So why the heck have bond prices continually gone up over the past decade???

I don't know where you're seeing inflation, but I'm not seeing any. A few raw items have gone up in price, but margins have been compressed dramatically on finished goods due to additional capacity and competition. Further, certain goods, such as cars and computers, offer vastly greater utility at similar or lower prices in the past.

My stocks would be doing much better if there was inflation...but there is practically none. After all, the long term growth rate in stocks ~= market E/P + *inflation* + real GDP growth rate.

If you look at firms like Bell, they're suffering the worst of both worlds -- little inflation in the price of delivered goods and services, while general economic deflation makes the relative debt service burden greater because of their long-term debt. Utilities and others who finance long-term infrastructure with long-term debt are facing the same sort of armageddon.

During a deflation (like the past decade), people get so desperate for cashflow that they bid all sorts of cash-flowing assets up to the stratosphere, like real estate. Sure sounds/smells like what's been going on, eh? During inflation, people do quite the opposite; a relatively low fixed rental yield just isn't good enough so they go out and buy active businesses that are true inflation hedges.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Nov 16, 2007
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Mark77 wrote: Okay ShopSmart, what happens to bond prices in an inflation? They go down, right?

So why the heck have bond prices continually gone up over the past decade???

Here is the 10 year bond rate over the last 11 years.

[IMG]http://www.tradingeconomics.com/charts/ ... -yield.png[/IMG]

Maybe I am looking at the wrong time frame for the bond, or the wrong type of graph??

Connie
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walshsurvey wrote: Here is the 10 year bond rate over the last 11 years.

Maybe I am looking at the wrong time frame for the bond, or the wrong type of graph??

Connie

Prices are the inverse of yields. So flip that chart upside down :) .

Here's another fun chart to look at:

http://finance.yahoo.com/echarts?s=%5ET ... X;range=my

Sure looks like 30 years of deflation to me, ie: the dollar getting stronger, and investors more willing to accept increasingly smaller returns because they are confident inflation is practically non-existent.

The problem, at least for real estate owners, is what happens when that gets unwound? :lol:
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Mark77 wrote: Okay ShopSmart, what happens to bond prices in an inflation? They go down, right?


Not necessarily. As proven by the chart you posted of rising bond prices in an inflationary period.

Just because something happened one way in the past, doesn't mean it must repeat itself in exactly the same way. The financial markets are not so formulaic. Otherwise, everyone would be winning.
Mark77 wrote: So why the heck have bond prices continually gone up over the past decade???

Simple. Because ppl have gone to bonds as a flight from volatility due to systemic fear of the markets. Fear which has recently shown to be substantiated.
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Jan 30, 2006
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Mark77 wrote: Okay ShopSmart, what happens to bond prices in an inflation? They go down, right?

So why the heck have bond prices continually gone up over the past decade???
government bonds are rigged game now.
what you see now is asian central banks frantically search for a safe place to put their money and they don't consider inflation in their decisions for now
and don't forget the US Fed which buys bonds, and ECB
next reason is flight to safety
and the last but not least - speculators who trade for capital gain and not yeild

inflation is not the reason why all those parties invest or not into government bonds
all reasons on the surface but you should be honest with yourself when you invest
and then 20% drop in TSX instead of doubling as you expected won't be a surprise
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ShopSmart wrote: Not necessarily. As proven by the chart you posted of rising bond prices in an inflationary period.
Falling bond prices, ie: higher yields, is what's on the chart I posted, during the (obviously) inflationary period of the 1970s. The past decade has seen falling bond prices, which is consistent of my view that the economy has been in a deflationary quagmire.
Just because something happened one way in the past, doesn't mean it must repeat itself in exactly the same way. The financial markets are not so formulaic. Otherwise, everyone would be winning.
The economy, over the long term, oscillates between inflationary periods (which correspond to capital expansion in industry), and deflationary periods (which correspond to letting existing plant and equipment wear out).



Simple. Because ppl have gone to bonds as a flight from volatility due to systemic fear of the markets. Fear which has recently shown to be substantiated.

For the past few decades? :lol:
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Toronto Star has an article on possible overnight rate cuts.

Strange part is..
The market has already priced in a cut by December, and there’s some indication people believe something could be coming in September,” said David Watt, senior fixed income and currency strategist at RBC Capital Markets
source: http://www.moneyville.ca/article/103706 ... -fall?bn=1

Really? Who was expecting an interest rate cut in Canada by December? Is that a very recent thing?

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