Rahul - Please keep posting and updating. Your posts are very informative for one and all.

Keep writing .

Cheers!

Rahul -- keep it up

Your posts are informative

Quote:

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Originally posted by Krazzyfour

Rahul - Please keep posting and updating. Your posts are very informative for one and all.

Keep writing .

Cheers!

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"After climbing a great hill, one only finds that there are many more hills to climb." (Nelson Mandela)

Wall Street loaned too much money to Main Street without any check and balance. Average Americans used this windfall for the biggest shopping cart in world history. As a result our entire economy has been transformed from one based on savings and production to one based on borrowing and consumption. Now borrowing is over so consumption is gone? What to do? How to keep borrowing/consumption economy running or transfer into savings/production? If someone knows the answer then he/she will be the great economist.

I don’t think real estate values are deflating; instead they are coming out of a false bubble pricing regime which was solely the product of artificial low interest rates and easy loan available.

But our RE experts are doing their job.

http://www.calgaryherald.com/Business/Entry+level+buyers+driving+Calgary+home+sales+report+says/1377235/story.html

"Canadian markets from coast-to-coast are ripe for a reawakening as the weather warms up," said Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "First-time buyers seem more acclimatized to economic factors, even though the barrage of bad news continues to flow. Those who are secure in their jobs, have accumulated good down payments, and have acceptable credit ratings are continuing to venture forward, undeterred by tighter lending criteria."


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Q: how many renters available who are willing to buy home with secure jobs, good down payments and have acceptable credit ratings?


Auto, energy sector, tourism employees have been asked to cut down their salaries. When RE experts proclaim that prices have never been more affordable some first time buyers (victim??) foolishly believe them. They don't stop to think that more than likely prices will fall another 30-40% (or more) to their pre- Bubble levels. They also don't stop and consider just how painfully large their monthly mortgage payments will be when these historically low interest rates possibly double or triple in 5-6 years when their mortgage comes up for renewal due to predicted Inflation. Hey, even Warren Buffet is suggesting that Interest rates could hit highs unseen before. Remember, those very same groups were telling the public 1.5 years ago that it was a Great time to buy, that was a 100,000 dollar in house value drop ago. At least I can not save 100k in 1.5 yrs.

RE lotto performance Review:
http://www.canadian-housing-price-charts.235.ca/

$ Plunge from Peak
VANCOUVER: -$117,869
Calgary: -$90,352
Edmonton: -$78,719
TORONTO: -$37,382

February jobless rate rises to 7.7% in Canada and Highest Unemployment in 6 years in Alberta (5.4%). That takes us back to 2003. This is officially 6 years of jobs gone. Double digit unemployment is very likely before the year is out.

Changed Employment picture -from an 'employees' market to employers market.

While the central banks are trying hard to inflate another bubble, it may not happen. Japan couldn't re inflate even when they had the good fortune of exporting to countries experiencing two booms (tech and housing) during the last ten years.


The RRSP increase for first time home buyers is of no use. People have lost 25% so far in RRSP, and if they pulled out 25K to put down on a house, they will lose ability forRRSP to rebound, and buy a dropping asset. This first time homebuyer is not jumping in at this time.


But here is report from RE professionals:

http://www.greaterfool.ca/

“A report released today confirms that entry-level purchasers are now the engine driving home-buying activity in almost every major centre in Canada,” says Re/Max Canada. This story, of course, made it into virtually every major daily in the country, not to mention TV news read by people with nice hair.



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Q: Real Estate prices are still very high. If we have unwound to the unemployment levels of 2003, energy prices of 2003, why won't we see real estate prices of 2003?

My take: It's coming.

Great post - Rahul. Much appreciated.

Totally with you RE pricing has to come down to 2003 Levels atleast or may even fall further as the magntude of this economic recession is wide, deep and global and has not been understood by economists, do not how ordinary individual will understand.

Recession is still at its teeth and final bite has not let up yet.

Cheers!

I always say that is a great forum and thanks to all the Contributors. It's one of the ways to learn by knowledge sharing and how we see market.

Let talk about business….
Our RE boards and experts are telling "It's a right time to buy as interest rates and prices are record low. New home owners will be excited that they are now able to afford to own a home."

There is Saturday’s advisement in Calgary Herald by a builder. “If you are making 60K family income then you can qualify for 400K mortgage”

But Globe & Mail and Garth's web site are bringing Canadian sub-prime and non stoppable foreclosure tsunami that we discussed here many times.

http://www.theglobeandmail.com/servlet/story/RTGAM.20090313.wsubprimefactbox14/BNStory/National/home?cid=al_gam_mostview

http://www.greaterfool.ca/2009/03/14/the-subprime-press/#comments

Meanwhile few reporters have yet to understand the role of the 0/40 loans that also constituted Canadian subprime equivalents, and which had the official sanction of the Government of Canada. Within a year and a half of 40-year amortizations and zero-down payments becoming eligible for mortgage insurance (which protects the lender, not the borrower), they accounted for over 60% of all new mortgages. Simply put, this meant people without money could buy houses. And they did. In droves.

Today there are thousands of young couples who bought homes with no equity, based on their employment income only. Sadly, the world has changed. Declining home values mean many are sliding into negative equity. And with Canada shedding jobs at a far faster pace than the US (Friday’s numbers were appalling), lots of folks find they cannot make payments, have no savings and can’t sell their homes since they owe more than they own.

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Do our RE experts taking care of their clients’ interest by considering the fact if mortgage will be 10% then how's their clients will be going to pay?