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Originally posted by febpreet

My question is, if the house prices are going in a steep decline and interest rates are falling as well, then why the potential buyers are not taking a plunge and buy their dream house? Afterall, why wouldn't someone be happy to pay $350,000 with interest rate 3.8% when an year ago the same house was going for $500,000 with rate of $5.9%?

Why the buyers are still wary of buying a house? Isn't it a (more than a) golden opportunity ever in the housing market? Here're my reasons:

1. Recession
2. Unstable employment - fear of layoffs
3. More in your savings account - much better
4. No significant yearly appreciation (even a single digit) for the next 2-3 years, even if buy a house for $350,000
5. Wait and watch game (with the hope that prices will go down further)

I would love to hear more in the same context from the analysts. I'm confused here.

Thanks.

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RE Crash is inevitable.

The dow is now off 7,200 points and yet the government still can not keep its fingers out of the markets. They have accomplished absolutely nothing. They need to let the markets do what the market will do anyways. only when it bottoms can we hope for better times.


But there are few people still believe in RE porn channel like HGTV, TLC or Global tv news( sponsoered be Remax), CHMC/RE experts interviews. Did anyone catch the DELIBERATE FRAUD being passed of as news, by the real estate shills on Canwest GLOBAL Channel 7 news in Calgary.

Laurie Dahl, their resident talking head introduced the lead "news" story being presented by Bindu Suri, that was all about how first time buyers are now rushing back into the marketplace due to the price drop in Calgary, and the sudden magical affordability of homes brought about by same. They interviewed some realtor bimbo (Nancy Johnson) and a young naive pair of fools who said that "it's close to our rent so we're looking at buying".

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Did your RE expert and TV channel tell you that?.....

Subprime, over construction, layoff, tight credit is the first round of RE crash. Second crash round will start with higher interest rate.

with interest rates this low it makes buying a house using a 5% down payment extremely risky with these jumbo prices. Five years down the road when you have to re-new your mortgage rates could be substantially higher.

using the avg sfh price of about $400,000 and assuming your mortgage is the same and assuming you have a rate of 5% today going forward 5 years rates will likely be higher lets assume that are 8% when you renew
that would cause your yearly mortgage interest owed to go up by $3,000 per $100,000 borrowed or in the case of $400,000 you would be paying $12,000 more yearly or $1,000/mo

also if you are under water on your mortgage (owe more than its worth) your chances will be slim at best of being re-newed by the bank

so its just a matter of time until we are in the same mess as the US and thats inevitable.


http://jonnyoblog.com/?p=69&ref=patrick.net

Robert Shiller summed up RE experts' motivations nicely in this passage;


“The predictions from those guys are very biased,” he says. “They know that in a declining market, the volume of sales falls dramatically and real estate agents lose their jobs. So they don’t want to say anything that could be seen as contributing to a falling market. If their economist predicted a decline in the market—and then it happens—that’s deadly. The guy would have to watch out for his life.”


It's scary that people are making decisions involving their long-term financial health when practically all the sources have a common vested interest... and for the most part these 'forecasts' and 'industry experts' go unquestioned by the media because they are dependent on the industry for their advertising dollars.

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Nice to read Peter Schiff:



In past generations, homebuyers were required to save for down payments and postpone their purchases until they could actually afford conventional 30-year fixed mortgages. But in recent years, as home ownership became a matter of public policy, the government accused lenders of discrimination and urged lower standards and easier terms. With government guarantees in place, the mortgage industry was happy to both expand their revenues and promote a better society.

But by denying credit, even if it requires borrowers to forgo something they clearly want, lenders not only provide a valuable service to borrowers, but to society. Given the mess in which we now find ourselves, due to the bad loans made during the real estate bubble, this lesson should have been well learned. Unfortunately it hasn’t, as the same dynamic is now playing out on a much larger scale.

Faced with a prospect of downgrading its lifestyle, the U.S. government is instead borrowing trillions of dollars to artificially inflate our deflating bubble economy. The money is being used to both expand the size of government and finance additional consumer spending. Given our financial position, this is the exact opposite of what we should be doing.

Our global creditors are now making the same mistakes made by subprime mortgage lenders. They are loaning us money that we will never be able to repay. In the process, they are enabling the largest expansion in the size of our government since the New Deal and crippling an economy already suffering from excess consumption.

Although it may sound harsh, it would be far better for all involved if our foreign friends simply cut us off. Since their loans are merely fueling the growth of our government and artificially pumping up consumer spending, their savings will not only be lost but their sacrifice will severely exacerbate our problems as well.

Just as homebuyers did earlier in this decade, the U.S. government will borrow as much money as the world is foolish enough to lend, and it will use those funds to smother the life out of our economy. At this point government is growing like a cancer, feeding mainly off the funds it borrows from abroad. In the process, it is placing a horrific debt burden on its people, committing them to either a lifetime of crippling interest payments or run-away inflation.

There is nothing inherently wrong with foreign lending. If funding were directed toward private business to enable capital investments, the loans would not only benefit lenders, but they would benefit our nation as well. The funds would fortify our industrial base and provide the necessary foundation upon which to rebuild a viable economy.

Chinese finding U.S. real estate a bargain
With U.S. home prices so depressed, the Chinese are coming


http://www.msnbc.msn.com/id/29162036/

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Sunny Leone a true Canadian DESI now back in India !.

Tent Cities in America: A Lisa Ling Special Report

http://www.oprah.com/dated/oprahshow/oprahshow_20090218_recession

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Sunny Leone a true Canadian DESI now back in India !.

pls Delete

Half-billion dollar downtown Vancouver Ritz-Carlton project dead

http://vancouvercondo.info/

http://www.vancouversun.com/business/fp/Half+billion+dollar+downtown+Vancouver+Ritz+Carlton+project+dead/1324305/story.html



The Ritz Carlton work stoppage we reported on last October has been confirmed as a complete project cancelation. The developer is blaming the ‘global recession:

The half-billion-dollar Ritz-Carlton hotel-condo project in downtown Vancouver is officially dead — a victim of the global recession.

Buyers who purchased luxury condos in the 60-storey tower that was supposed to be built at 1155 West Georgia are getting a letter this week telling them the project has been cancelled.

The letter from lawyers representing developer Holborn Group states that “worldwide economic turmoil” has had a significant negative impact on the sale of units in the project, as it has with most other Metro Vancouver developments.

“As a result, sales have not met the developer’s expectations,” the letter states. ” … We hereby give you notice that the vendor cancels and terminates the contract due to the fact that the vendor has not entered into binding contracts of purchase and sale for at least 75 strata lots in the development.

“As a result of this termination, the contract is now at an end.”