Caught the CTV late local news last night. They ran a piece about the hurt of the Calgary condo market. They said lots of people (they specified investors) were walking away from their deposits and some builders may go out of business. It also said the underground parking portion of some downtown condo projects may be the only portion that gets completed for several years.


Calgary home prices fall 8%

http://www.canada.com/calgaryherald/news/story.html?id=14366dd6-fb80-4291-a225-8b46cbfa6957

...................MLS sales dropped 10.9 per cent in Canada in July.

In Calgary, sales were down 13.1 per cent compared with July 2007, according to the CREA report.

"Canada's housing market is running into some seriously foul weather amid the weakest affordability in nearly two decades," wrote Douglas Porter, deputy chief economist with BMO Capital Markets Economics in a commentary on the CREA numbers...........


Someone comment nice on great fool:
If you do not need to buy and can wait, it would probably be a good idea. By renting now, it is much cheaper and you face no risk in your net worth.

http://www.greaterfool.ca/2008/08/14/denial/#comments

This is the first inning in the price drop game. I work for a FI and speak with loan officers on a regular basis and in most locations in GTA there has been a sharp, protracted decline in # of mtg applications and clients indicating that home are on the market much longer. In a popular suburb east of TO, clients that used to sell within a month have been waiting 3-5 months. We need to remember that much of the developed world’s economic “boom” of the last 5-6 years was based on several factors, none of which are sustainable and have never created true wealth creation. This crisis is in my opinion being completely under-estimated by most mainstream “experts”. The foundation of the economy/housing market is the sea of credit and in many cases, debt on debt. A blow off top in credit creation over the last 5-6 years played a major role in creating the illusion in the housing market / economy. And now, the most overleveraged society of modern times, with much of the credit / debt being tied to housing valuations which are far out of sync with reality, faces rapidly increasing unemployment, a major decline in global growth, and a negative social mood that is rapidly spreading and resulting in rising savings rates and an inclination to reduce debt. The world has never seen something like this. It is a haphazard gues, but from my years of reading and researching most past financial crisis, i think we have at least 3-5 years of “de-leveraging” ahead. Things that are not suppose to happen, likely will. If you do not need to buy and can wait, it would probably be a good idea. By renting now, it is much cheaper and you face no risk in your net worth. I have noticed a tendency in the past that when assets start dramaticallyy outperforming their long term average ROR, they usually take about the same amount of time deflating. It is entirely possible the housing market could decline for 6 years before touching the bottom, if we accept 2002 as the start of the sharp rise in prices. True wealth creation in not achieved in a major credit inflation. They are always destroyed through periods of deflation and eventually inflation.

Rahul, you are just awesome doing great work for the community. Everyone should be thankful to you for invaluable analysis.

Pain levels rise as economic ills spread

Canada's weakened economy, hit by the slowdown in the United States and dampened world demand for commodities, could push the country's biggest stock market to retest this year's lows, given its heavy reliance on oil and gold.

Investors have long feared the slowing U.S. economy would rub off on Canada and show up in a depressed S&P/TSX composite index on the Toronto Stock Exchange. Now the economic signals are not good and the market lethargy has arrived.

"There's clear evidence that the U.S. economic slump is dragging down Canada's economy," said Sal Guatieri, senior economist, BMO Capital Markets. "It just doesn't look good."

Canada's economy shed 55,000 jobs in July, the biggest monthly loss since the 1991 recession. The number surprised economists who were predicting a gain and who called it "stunningly bad" and "extremely ugly."

As well, gross domestic product unexpectedly fell by 0.1 percent in May compared with April and Canadian housing starts fell almost 15 percent in July.


The problems aren't expected to be short-lived, either. Sprung -- like many economists -- isn't expecting a recovery from the malaise until well into 2009.

"Our view is that we are unlikely near the bottom yet," he said. "Hopefully, by mid to late next year, the market will be beginning to anticipate a better climate going forward."


complete story

http://ca.news.finance.yahoo.com/s/15082008/6/finance-pain-levels-rise-economic-ills-spread.html


Cheers!

The tighter banks get with credit, the longer the economic slump will persist.

Residential mortgage credit was tougher to get all around. The Fed began breaking out separate figures for three sub-categories of home mortgages — prime, nontraditional, and subprime — in the second quarter of 2007. And right now, banks are tightening standards across the board.

Some 74% of banks surveyed said they're tightening standards on prime mortgages, up from 62.3% in the second quarter of 2008. A net 84.4% said they were cracking down on nontraditional financing, up from 75.6%. And a net 85.7% said they were tightening on subprime loans, up from 77.7% a quarter earlier.

These numbers are off the charts. The previous record for the home mortgage category was 32.7% in 1991. So in plain English, you have more than twice as many banks tightening standards now than EVER before.

* The trend is spilling over into commercial real estate. This is no longer just a subprime mortgage crunch. In fact, it's not even a residential real estate crunch. The Fed's commercial real estate (CRE) figures prove it.

A net 80.7% of survey respondents said they were tightening standards on CRE loans. That was up from 78.6% a quarter earlier and the highest on record.

* Consumer credit is tougher to come by. The story is the same for credit cards, auto loans, boat loans, and other forms of consumer credit. Some 66.6% of lenders said they were tightening standards on credit card borrowers. That was up from 32.4% a quarter earlier and the highest since the Fed began collecting data in 1996. 67.4% are making it tougher to get other consumer loans, up from 44.4% and another record.

* C&I customers can't catch a break, either. Lastly, banks are tightening standards and raising the cost of the loans they do make for commercial and industrial customers. A net 57.6% of banks are tightening standards for large and medium sized borrowers, up from 55.4% a quarter earlier and the highest since the first quarter of 2001. More than 80% said they were raising the spread over their cost of funds that they charge large and medium sized borrowers for access to money. That was up from 71% a quarter earlier and the most ever.

What Tighter Credit Standards Mean to You ...

You practically need the Jaws of Life to pry open a banker's wallet these days.

We have record-high percentages of lenders tightening standards on residential mortgages, commercial mortgages, credit cards, and consumer loans.

Businesses are also finding it tougher and costlier to borrow.

So what does it mean to you? The tighter banks get with credit, the longer the economic slump will persist.

If companies can't borrow to expand factories ... if developers can't get loans to build office towers and shopping centers ... if consumers can't find financing to purchase cars or homes ... we're all going to feel it.

Corporate America will get hit particularly hard with sales and earnings slumping. That's bearish for the stock market.

As for the financial industry, it's yet another sign that the worst is NOT over.

Banks are the stingiest ever because they went overboard during the housing bubble, leaving them vulnerable to large losses on previously issued home mortgages. Unfolding downturns in other sectors, like autos and commercial real estate, are starting to drive up delinquencies in other parts of their loan portfolios, too.


Cheers!

U.S. retailers face frugal shoppers through 2009 over economic slowdown

NEW YORK - The lower profits and muted outlooks this week from U.S. retailers such as J.C. Penney Co., Macy's Inc. and Nordstrom Inc. are heightening concerns among investors that shoppers' focus on necessities and buying at discounters could linger well into next year.

"I don't see how consumer spending turns around anytime before the second half of 2009," said Ken Perkins, president of research company RetailMetrics LLC. "Where are the new sources of funds coming from for the consumer? Clearly, the earnings reports show that we are living in a discretionary versus nondiscretionary world."

Penney's chairman and chief executive, Myron (Mike) Ullman, told investors after the company reported a 36 per cent drop in second-quarter profits and lowered its outlook that he expects "the environment to remain difficult" into next year.

"We know our customers are struggling," said Ullman, who believes that back-to-school sales will be weaker and also occur later this year than they did a year ago.

While oil prices have declined in recent weeks, gas at the pump still remains high. And shoppers are contending with higher prices on daily basics such as food that are not keeping up with their wages. The deteriorating economy overseas, which has been dragged down by U.S. economic woes, could also further derail the job market here, Perkins said.

complete story

http://ca.news.finance.yahoo.com/s/15082008/2/biz-finance-u-s-retailers-face-frugal-shoppers-2009-economic.html

Thousands of buyers who got into real estate since about 2005 will be under water. Those young couples who took forty-year mortgages and made zero downpayments will be financially screwed, unable to sell their houses without a loss of tens of thousands of dollars and at the mercy of a rapidly slowing economy, higher energy costs and dwindling job prospects.

http://www.greaterfool.ca/

What was GTA average SFH price in 2004?

Tough market? Not for all!

There is no doubt that the once hot Mississauga real estate market has cooled off (changed into a balanced real estate market) this summer. Many sellers are still expecting their home value to appreciate the way it has been for a few years now. Upon listing their property at a higher asking amount, many sellers are encouraging the buyers to just sit and wait for a price reduction.

Mind you, there are still many buyers in the Mississauga market, but due to a recent slow down in Ontario’s economy and falling real estate markets in some over-valued cities (Edmonton, Calgary, Vancouver, Saskatoon and Regina) has scared off a lot of first-time buyers. The Global economic slowdown and the US housing market’s downfall is simply adding fuel to the fire.

In fact, many hot neighbourhoods are not hot any more. The types of homes that sold in a jiffy or even received multiple offers are moving slowly now.

Here is what sellers can do, read my latest blog post: http://condopundit.com/wordpress/?p=75

Regards,

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Amit Kalia, Broker, REALTOR®
RE/MAX Real Estate Centre., Brokerage
independently owned & operated
100 City Centre Dr, Unit 1-702
Mississauga, ON L5B 2C9
Phone No.: 905-339-5111
Website: https://www.realestate-ontario.com/
Condo Blog: https://condopundit.com/blog/

A friend who lives in a Townhome near square one told me that 2 months back a similar home to his sold for 314k and last week another one of the similar model sold for 302K. Both had same features (no hardwood, white appliances, no finished basement)

I guess the prices are coming down..

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Live and Let Live