[Eug]

US foreclosure rate 2008 Q4:



Florida 9%
Nevada 6.6%
Arizona 4.6%
California 4.2%

The average for the entire country is 1.7%.

[Kerrigan]

Originally Posted by Kerrigan 

People have been talking about the looming real estate bubble for 2-3 years now, and it hasn't happened.

[Eug]

Housing rebound 'nothing short of amazing'

Canada's housing market has become so much more grounded since the ugly property bust of the last recession that this time around it is one of the most resilient sectors of the economic downturn.

The lessons learned from the housing bust of the early 1990s helped prevent Canada from being tempted down the subprime path that devastated the United States and, combined with record low interest rates and government stimulus, has caused the impact of the latest slump to be less severe and relatively short-lived, figures released Tuesday underscore.

"The turnaround in Canadian housing this year might be the single most surprising turnabout we've seen in any economic indicator I can think of," said Douglas Porter, deputy chief economist at BMO Capital Markets. "The fact we saw a little bit of a rebound isn't a total shock, but the extent of it is nothing short of amazing."

The average price of homes sold in the month was up 1.7% from a year earlier, skewed higher by rising demand in some of the country's most expensive markets, such as Toronto and Vancouver.

---

Colour me surprised. I figured Vancouver would get a moderate hit, and Toronto would get a mild hit. We did in winter 2009, but suddenly it all snapped back. So for the first half of 2009, we got an average of increased prices compared to last year so far in Canada. In fact, Toronto in June was the highest June on record, both for unit sales and for pricing, and June 2008 was already several percent higher than June 2007.

Those super low interest rates have certainly stimulated sales. I do wonder what will happen when interest rates rise though. They rose a bit recently, so along with the normal fall slowness, we will likely see sales and prices moderate a bit, and maybe again next year when rates rise again.

But so far the so-called crash has been avoided here for the most part. The risk is if interest rates spike, sales and prices will tank. For this reason the federal government has already said it will keep rates reasonably low for at least into 2010. I was predicting a 10% price drop in Toronto (and more for Vancouver), but if prices manage to even just stay flat here for the next couple of years I'll be impressed. Some people will argue that flat prices represents lower value in real dollars due to inflation, but most people probably wouldn't care that much IMO.

Meanwhile, the US real estate market seems to be turning around too. Home sales are increasing rapidly around the country. Some are predicting that the bottom for unit sales was winter 2009. Unfortunately, a significant portion of those unit sales are still foreclosures.

[Phileas]

Toronto is still underpriced, compared to other cities of similar size and statue. The last house I owned before buying in Toronto was in London, UK, and I could not believe how reasonable Toronto properties were when it came to buying here.

Admittedly London is in a different league altogether, but even compared to San Francisco or Boston, Toronto is still very affordable.

[ort888]

I thought everyone in Canada lived in igloos?

[hyteckit]

Originally Posted by ort888 

I thought everyone in Canada lived in igloos?

No, that's Eskimos in Alaska.

[Paco500]

Originally Posted by Phileas 

Toronto is still underpriced, compared to other cities of similar size and statue. The last house I owned before buying in Toronto was in London, UK, and I could not believe how reasonable Toronto properties were when it came to buying here.

Admittedly London is in a different league altogether, but even compared to San Francisco or Boston, Toronto is still very affordable.

Not in any way meant to pick on Toronto- it's a great city, but it's not really in Boston or San Fran's league either.

[Eug]

^^^ In a way I agree, but then again I'm definitely not a big fan of Boston.

Here are a list of the top 50 cities in the world. No, I don't really agree with the list either, but it's interesting to see what some people (at Mercer) think.

1 1 ZURICH Switzerland 108.1 108.2
2 2 GENEVA Switzerland 108.0 108.1
3 3 VANCOUVER Canada 107.7 107.7
3 4 VIENNA Austria 107.7 107.5
5 5 AUCKLAND New Zealand 107.3 107.3
5 6 DUSSELDORF Germany 107.3 107.2
7 7 FRANKFURT Germany 107.1 107.0
8 8 MUNICH Germany 106.9 106.8
9 9 BERN Switzerland 106.5 106.5
9 9 SYDNEY Australia 106.5 106.5
11 11 COPENHAGEN Denmark 106.2 106.2
12 12 WELLINGTON New Zealand 105.8 105.8
13 13 AMSTERDAM The Netherlands 105.7 105.7
14 14 BRUSSELS Belgium 105.6 105.6
15 15 TORONTO Canada 105.4 105.4
16 16 BERLIN Germany 105.2 105.1
17 17 MELBOURNE Australia 105.0 105.0
18 18 LUXEMBOURG Luxembourg 104.8 104.8
18 18 OTTAWA Canada 104.8 104.8
20 20 STOCKHOLM Sweden 104.7 104.7
21 21 PERTH Australia 104.5 104.5
22 22 MONTREAL Canada 104.3 104.3
23 23 NURNBERG Germany 104.2 104.1
24 25 CALGARY Canada 103.6 103.6
24 26 HAMBURG Germany 103.6 103.4
26 31 OSLO Norway 103.5 102.8
27 24 DUBLIN Ireland 103.3 103.8
27 27 HONOLULU, HI United States 103.3 103.3
29 28 SAN FRANCISCO, CA United States 103.2 103.2
30 29 ADELAIDE Australia 103.1 103.1
30 29 HELSINKI Finland 103.1 103.1
32 31 BRISBANE Australia 102.8 102.8
33 33 PARIS France 102.7 102.7
34 34 SINGAPORE Singapore 102.5 102.5
35 35 TOKYO Japan 102.3 102.3
36 37 LYON France 101.9 101.6
36 36 BOSTON, MA United States 101.9 101.9
38 37 YOKOHAMA Japan 101.7 101.6
39 39 LONDON United Kingdom 101.2 101.2
40 40 KOBE Japan 101.0 101.0
41 44 BARCELONA Spain 100.6 100.2
42 45 MADRID Spain 100.5 100.1
42 51 OSAKA Japan 100.5 99.6
44 41 WASHINGTON, DC United States 100.4 100.4
44 41 CHICAGO, IL United States 100.4 100.4
46 43 PORTLAND, OR United States 100.3 100.3
47 53 LISBON Portugal 100.1 98.9
48 46 NEW YORK CITY, NY United States 100.0 100.0
49 51 MILAN Italy 99.9 99.6
49 47 SEATTLE, WA United States 99.9 99.9

I don't think Toronto is underpriced though. I think Toronto is either a bit overpriced or at best appropriately priced.

Sure, prices will go up in the long run, but like I said earlier I think Toronto would be doing well to keep prices relatively flat over the next few years, which could mean a small depreciation over that period in 2009 dollars due to inflation.

[colourfastt]

Originally Posted by Eug 

US foreclosure rate 2008 Q4:



Florida 9%
Nevada 6.6%
Arizona 4.6%
California 4.2%

The average for the entire country is 1.7%.

I'd have to say FL is really higher than 9%; in my subdivision near The Rat, we have a 30% foreclosure rate and that's low for the area (I'm on the HOA board so I get monthly updates of homeowner status).

[Eug]

What is The Rat?

And yeah, some subdivisions have huge foreclosure rates, but 9% was for the entirety of Florida. 9% (2008 Q4) was still wickedly high. It should be less than a couple of percent.

I wonder what the foreclosure rates were in the US in the first half 2009.

P.S. Since some MacNNers are obsessed with celebrities, here is a brief Celebrity Foreclosure Overview.

[Phileas]

Originally Posted by Paco500 

Not in any way meant to pick on Toronto- it's a great city, but it's not really in Boston or San Fran's league either.

Five years ago I would have agreed with you, but we're getting there, rapidly.

[Phileas]

I lived in Duesseldorf for a while. I have no idea why anybody would put that place even into the top 1000, never mind into the top 100. Duesseldorf sucks in more ways that I ever thought possible. Most people I met were either German rednecks or they swang to the other end of the scale and had completely unjustified allusions of grandeur.

If you want to live in Germany, Berlin beats it by miles.

I disagree with Eug on Toronto's prices. I am certain that prices will continue to rise here.

Edit: got my numbers right.

[turtle777]

Originally Posted by Phileas 

I lived in Duesseldorf for a while. I have no idea why anybody would put that place even into the top 100, never mind into the top 100. The place sucks in more ways that I ever thought possible.

If you want to live in Germany, Berlin beats it by miles.

I loved in both places (D'dorf only for 3 months), but Berlin beats it hands-down.

-t

[Eug]

Originally Posted by turtle777 

I loved in both places (D'dorf only for 3 months), but Berlin beats it hands-down.

In what ways though?

I've been to neither, but my guess is I'd prefer to live in Berlin too, just because it's a more metropolitain city. That said, I don't know the differences in rents, taxes, traffic issues, crime, etc.

---

Toronto continues to defy gravity...

Toronto Home prices in the first half of July are up 4% y-o-y. Year to date prices are only down 1%, and that's including the abysmal numbers from the first calendar quarter in 2009. I wonder how long this is going to last.

Meanwhile in the US...

The US Integrated Assets 360 home price index has US home prices up 1.6% in May, the largest recorded increase by the index since July of 2005. The data is from more than 15,000 US sub-markets. So, perhaps the US market has finally hit bottom? Well, kinda sorta, but not quite:

"Maybe on a national basis, but definitely not in dozens of markets where prices are still slipping because of rising foreclosures and unemployment."

[turtle777]

Originally Posted by Eug 

In what ways though?

I've been to neither, but my guess is I'd prefer to live in Berlin too, just because it's a more metropolitain city. That said, I don't know the differences in rents, taxes, traffic issues, crime, etc.

All of the above.

Berlin is affordable, low cost of living, very diverse, awesome night life, very international etc...

D'dorf is just blah in comparison. You either like it or not. But there is no diversity like Berlin.

-t

[Eug]

U.S. New-Home Sales Climb 11%, Most in Eight Years

Purchases of new homes in the U.S. climbed 11 percent in June, the biggest gain in eight years, underscoring evidence that the deepest housing slump since the Great Depression is starting to stabilize.

Sales increased to a 384,000 annual pace, higher than any forecast of economists surveyed by Bloomberg News and the most since November

The median price of a new home decreased 12 percent to $206,200 from $234,300 in June 2008. Last month’s value compares with $219,000 in May.

Sales of new homes were down 21 percent from June 2008. They reached a record-low 329,000 in January, down 76 from the July 2005 peak.

The jump in sales in June was led by a 43 percent surge in the Midwest. Purchases increased 29 percent in the Northeast and 23 percent in the West. They dropped 5.3 percent in the South, to the lowest level since January 1991.

---

So it seems we're probably getting pretty close to bottom now in terms of median prices, and the bottom in terms of unit sales in the US already happened months ago.

P.S. As of last week, this thread is three years old.

[turtle777]

Hooray, more green shoots.

Well, green shoots my a$$, we'll see job losses continue through 2010.

-t

[Eug]

Originally Posted by Don Pickett 

A roughly 30% drop puts us about back where prices were before the bubble. So, expect a roughly 30% drop when this thing is all over.

[Eug]

Maybe the US real estate market has indeed hit bottom (at least in some areas).


Bloomberg: U.S. Home Prices Rise for First Time in Three Years

Home prices posted their first monthly gain in three years in May, a gauge of values in 20 major U.S. cities showed, reinforcing signs of stabilization in a market hammered by the worst slump since the 1930s.

The S&P/Case-Shiller home-price index rose 0.5 percent from April, the first monthly gain since July 2006 and biggest since May of that year, the group said today in New York. The measure was down 17.1 percent from May 2008, less than forecast and the smallest year-over-year drop in nine months.


CNN Money: Home price index up for 1st time in 3 years

These efforts may have given the market a boost. Prices have also fallen so far in so many places that it's drawing people back into the market.

In Las Vegas, prices are off about 53% from their peak, set in August 2006. Phoenix prices are down 54%.

Overall, the 20-city index is down more than 32% from its high.

Interest rates were very low in May, which also could have helped the housing market. The rate for a 30-year mortgage was well below 5% during the month, which encouraged buyers and drove up demand.

[ort888]

Yeah, I bought my first home in 2005. Wheeeeeeeeeeee!

[Eug]

Where and how's the market locally?

Several US cities have stayed remarkably resilient, at least with lower to mid-priced homes, as well as even lower priced luxury homes in some areas.

[ort888]

In suburban St. Louis. Our home value actually has not tanked, but if we had bought 2 years earlier or later we would have saved $20,000.

But **** it. I can't live my life around the whims of the market. That was when we were ready to buy a house. That was when it made sense.

[Phileas]

A house that's smaller than ours, not as nice as ours, without a garage - which we have - is currently on the market for $150.000 more than we paid for ours last year. According to the agent, interest is brisk.

[Eug]

Originally Posted by Phileas 

A house that's smaller than ours, not as nice as ours, without a garage - which we have - is currently on the market for $150.000 more than we paid for ours last year. According to the agent, interest is brisk.

Well, the other question is if it's well priced. If it isn't, it may just sit there, even in a hot market.

I bought a house in 2007. It was bigger, nicer, and a better quality build than another house that was priced 12% higher than the asking price of my house. The benefit of the other place is that it had a bigger lot, but the lot wasn't as well-developed. Ultimately, I bought my house for 6% under the asking price, while the other house didn't sell that year. It was eventually taken off the market and put up for lease.

It will be interesting to see what the house you're talking about actually sells for.

P.S. For my house, interest was brisk too, and the former owner was hoping for a bidding war. Despite the interest, they didn't even come close to that, and it ended up just sitting there for over a month, when I came in with the offer well under asking.

[ort888]

In other news, we must be very unpopular... because our neighbors on both sides of us both quietly moved out AND the neighbors right across the street as well.

The three occupants of the houses to the right and left of us have ages that add up to about 260 or so, so its not really a shock... and the woman across the street went through a messy divorce and is moving in with her sister...

Still, it's kind of funny.

My neighborhood is full of old people who have lived in their homes for 50 years and young people who moved in because they are nice starter homes for young couples.

[Eug]

Foreclosures: How bad is your city?

Sun Belt cities dominated the list of metro areas with the biggest foreclosure problems during the first six months of 2009.

Cities in just four states -- California, Florida, Arizona and Nevada -- captured 29 of the top 30 places with the highest foreclosure rates, according to a report issued by RealtyTrac on Thursday. Greeley, Colo., was the only outsider, coming in at 29th.

The good news is that some of the worst hit spots, such as the Central Valley cities in California, showed some improvement, according to James Saccacio, chief executive officer of RealtyTrac.

Code:
Rank	Metro area	Foreclosure / # homes	Change from 2008 H1
1	Seattle			107		+72%
2	Minneapolis		90		+58.6%
3	Phoenix			22		+51.7%
4	Miami			28		+40.9%
5	Tampa			39		+31.5%
6	Chicago			59		+30.3%
7	Los Angeles		42		+29.9%
8	Riverside		17		+11.8%
9	Atlanta			49		+11.5%
10	San Francisco		52		+8.7%
11	San Diego		37		-0.1%
12	Philadelphia		168		-6%
13	Washington		73		-9.6
14	Dallas			131		-16.5%
15	Detroit			54		-16.4%
16	St. Louis		127		-21.2%
17	Baltimore		212		-22.5%
18	New York		211		-23.5%
19	Houston			153		-31.3%
20	Boston			144		-40.7%

So, almost 6% of all homes in Riverside, California are in foreclosure. Almost 5% in Phoenix. However, that pales in comparison to Las Vegas, where it is 1/13 properties, or almost 8%. Truly amazing. It's only 0.5% in New York, but that's still a bit higher than historical levels AFAIK.

Taking the title of foreclosure capital is Las Vegas, which surpassed Stockton, Calif., for the honors. Stockton, which is 80 miles east of San Francisco, wore the crown for all of 2008.

Vegas, with a whopping 1 in 13 properties receiving a foreclosure filing during the first six months of 2009, is six times worse than the national average of 1 in 84. The number grew 56% since the first half of 2008.

The Cape Coral-Ft. Myers, Fla., area was second with 1 in 14 homes. California posted six cities in the top 10 list, with Merced coming in third at 1 in 15 homes being in trouble.

Miami is at almost 4%. People I've talked to there are saying the economy is really, really bad. A coworker says a dept. she was working at. had several people leave. However, even though the workload has increased, they're not replacing anyone, which just means even more people are going to leave. Prices are through the floor, which is good for anyone wanting to buy, but instead many people are just moving away. She did the same. She just moved from Miami to Toronto, which is unfortunate in terms of housing, since prices in Toronto have now peaked again. They may fall, but then again they could plateau out, and she needs a place soon and is having a very hard time getting the home she wants because the nice ones get sold in less than a week after they're put up for sale.

As for the rust belt (which was mentioned at the beginning of this thread back in 2006), they seem to finally be recovering a bit.

Originally Posted by Cody Dawg 

Some "coastal areas" that this guy may be referring to are areas known as the "rust belt." But the coastal areas in Florida have generally all been insulated from any price degradations or depreciation.

The Rust Belt, however, may have put the worst of its foreclosure problems behind it. Now even economically devastated Detroit recorded only 1 in 54 properties receiving filings. That's a 16% decline over the first half of 2008.

Cleveland, one of the first cities to get whacked, has also improved and is now ranked only 56th among all U.S. metro areas. The city was once home to the nation's hardest hit neighborhood -- Slavic Village -- but filings are now just 1 for every 73 homes, a 30% decline.

P.S. The table on the original CNN Money web page does not display properly in Safari. It looks better in Firefox, but still seems a bit off kilter

[mrtew]

Originally Posted by Eug 

[i]The Rust Belt, however, may have put the worst of its foreclosure problems behind it. Now even economically devastated Detroit recorded only 1 in 54 properties receiving filings. That's a 16% decline over the first half of 2008.

That's because all the houses in Detroit that aren't already paid-off have been foreclosed on a long time ago and are standing empty and gutted and burned dude.

[Phileas]

Originally Posted by Eug 

It will be interesting to see what the house you're talking about actually sells for.

Sold at 7% above asking. Of course, it helps that Parkdale is going through a major upswing. It's probably the last part of downtown Toronto where you can buy a large Victorian house on a tree lined street at a half decent price.

The old rooming houses are being bought up one by one and renovated back to family homes, the way they were built. We bought just over a year ago, we could not afford to buy our house were it on the market today.

[Eug]

Originally Posted by Phileas 

Sold at 7% above asking. Of course, it helps that Parkdale is going through a major upswing. It's probably the last part of downtown Toronto where you can buy a large Victorian house on a tree lined street at a half decent price.

Interesting. Those sub 4% interest rates are really doing their job to stimulate the real estate market.

Maybe the owner did some major interior renovations? That goes a long way to increase the price, and often more so than a garage in this city. This is esp. true if there is a driveway or other parking available.

It's nice to hear about the upswing happening. It will be a while before the apt. buildings join the fray though I'm guessing. In my area, we live in a nice enclave, but the main thoroughfare 1 km away is not very nice. It's all uber low density retail/commercial. However, the zoning is being changed this year to allow increased density both for retail and condo & townhome development, with emphasis on pedestrian friendly design. (Furthermore, no new gas stations or used car lots will be allowed under the new rules.) Hopefully that will significantly improve the look along that street, although it will probably take 20 years. The proposed road conversion to eventually include bus rapid transit with dedicated centre lanes and dedicated bike lanes should also help.





BTW, I don't have a garage either, but I'm not complaining... The reason I don't have a garage is because it was converted into a home theatre room. It looked good but despite an air vent added for the forced air heating it was extremely cold in the winter. A single air vent for that sized room, along with no air return vent just didn't cut it. I briefly thought of converting it back into a garage, until I came to my senses. I added electrical baseboard heating, and now it's perfect.

P.S. In some ways I kind of like electric baseboard heating even more than I like central forced air heating. It's expensive of course, but OTOH the temperature stability is super tight. The thermostat I bought for it can vary the heating element from 0 to 100% power in 25% increments as needed, so you don't get these 2 degree temp shifts like you do with forced air.

[ShortcutToMoncton]

Kinda looks like what they're doing with those Liberty village condos.....

[Eug]

Originally Posted by ShortcutToMoncton 

Kinda looks like what they're doing with those Liberty village condos.....

Liberty Village is different. It was unused industrial land that was transformed into downtown condos/townhouses.

The area I showed above is low density retail strip mall usage with a 6 lane thoroughfare.

The Toronto Transit Commission is proposing to claim two of those lanes for dedicated rapid bus transit, while the City of Toronto is going to rezone it to exclude certain types of commercial use (eg. gas stations and car lots) and encourage higher density building. That would eliminate humungous road-side parking lots (which is seen in the left side of that picture.

The buildings would move much closer to the road, with wide treed sidewalks, and they would also go higher. That would allow the existing retail (which is currently only 1-2 storey because of zoning rules) to remain there on the ground level, but additional office space or residential condos would be built upwards.

So you are right in that the style would be similar to Liberty Village, at least if it happens the way the city wants it. Note though, this is just zoning rules. The developers have a fair amount of leeway. The good news is they won't build 1 storey retail again, because it doesn't make them much money. The higher the density the more money they make.

P.S. The reason that mockup reminds you of Liberty Village is the height restriction close to the road. They'll be relatively short at the sidewalk (eg. 5 floors), but might be stairstepped higher in the middle. The reason for doing this is so it doesn't look so claustrophobic when you're looking from the sidewalk. You'd understand what I mean if you're walking up Bay Street in the business district. Very imposing structures, and no sun on the sidewalk.

[ghporter]

I've seen a number of "residential over commercial" developments lately, and except for the fact that some are placed on virgin land, like "The Domain" in Austin, they sort of make sense. Quarry Village in San Antonio, for example, isn't on "virgin" anything-it's on the edge of a very old quarry that has been turned into a golf course, and across the street from one of the "upper" upscale shopping centers in the area, Quarry Market. (Hint-the only Whole Foods in all of San Antonio is there. Need to know anything more about how "upscale" it is?)

The problem with all of these developments here? They are nowhere near where they could be useful, as the developments Eug is talking about are. NOTHING in Downtown San Antonio is going in that direction. To the contrary, they're building ONLY residential developments, and ONLY (low density) commercial developments. We have a surplus of office space, and have had for years, but instead of doing something creative with that, developers here are just bulldozing more and more to put up less and less. Without infrastructure investment (some of our roads suck, and many of the rest are worse), nobody's going to flock to any sort of new development downtown anyway. While historical issues are a complication, there is a lot of real estate that SHOULD be redeveloped in this way, and not just upscale areas either. Since selective routes and "cost cutting" make the Via Metropolitan Transit service only sketchily useful to many areas of the city, it's hard to call it either "metropolitan" or a real service, so higher density "do it all in one place" development could be extremely good for lower income parts of town, while saving developers tons of cash.

So people in the lower income areas get by with clunkers that are too old to qualify for "cash for clunkers" (and are often not insured because of the cost), people in those areas live in housing that "may" fit the lower end of "acceptable," and everyone loses out.

[Phileas]

Originally Posted by Eug 

Maybe the owner did some major interior renovations? That goes a long way to increase the price, and often more so than a garage in this city. This is esp. true if there is a driveway or other parking available.

For me, a garage is an absolute necessity. I thank my lucky stars every day in winter, when I see poor souls cleaning their windshields and I just drive the car out of the garage, clean and warm. I also use my garage as a workshop and general man-cave and that's really valuable.

According to a realtor friend of mine, a garage adds between 3-7% onto the price of a house, especially downtown.

[Buckaroo]

I heard that Real Estate for 2011 is going to be even worse.

[Buckaroo]

Although the following quote is not what I was referring too, it backs up the comment that I heard that the worst is yet to come.

Housing could take another turn downward: Greenspan | U.S. | Reuters

"It is possible that could get a second wave down," Greenspan said. "Under those conditions, we would get a very significant change in the underlying confidence in the consumer area," as foreclosures rise and more home values fall below their mortgage levels.

[Phileas]

I have lost all respect for Greenspan. His decisions are at least partly to blame for this mess, so whatever he predicts I'll take with a huge grain of salt

[OldManMac]

Originally Posted by Phileas 

I have lost all respect for Greenspan. His decisions are at least partly to blame for this mess, so whatever he predicts I'll take with a huge grain of salt

I'll agree with most of that, but I also believe that anybody who thinks the worst is over is fooling themselves.

[mrtew]

I think the worst is over.

[OldManMac]

You're entitled to your opinion, even if it is wrong.

[turtle777]

Originally Posted by mrtew 

I think the worst is over.

Maybe for Canada, but not for the US.

Let's look at some key facts of the US economy:

a) the job losses are going to continue through 2010, maybe at a lower loss rate than before, but still
b) GDP last quarter was carried by consumer spending even more than anytime before.
==> with more people losing jobs, consumer spending will not recover, hence GDP growth will be stagnant at best
c) Ultimately, inflationary pressure is going to push interest rates up
==> people will be less inclined / able to buy homes; the housing market will remain stagnant and not see a healthy recovery
d) As inflation rolls in, people spend a higher % of their income on food and basic necessities, and less on luxury and discretionary spending

All in all, this is a recipe for longer stagnation, if not recession.
It doesn't really mean anything if the recession was declared over from a technical point of view; the reality for most Americans will be that the recession continues well into 2010, maybe even longer.

-t

[mrtew]

Originally Posted by turtle777 

Maybe for Canada, but not for the US.

Let's look at some key facts of the US economy:

a) the job losses are going to continue through 2010, maybe at a lower loss rate than before, but still
b) GDP last quarter was carried by consumer spending even more than anytime before.
==> with more people losing jobs, consumer spending will not recover, hence GDP growth will be stagnant at best
c) Ultimately, inflationary pressure is going to push interest rates up
==> people will be less inclined / able to buy homes; the housing market will remain stagnant and not see a healthy recovery
d) As inflation rolls in, people spend a higher % of their income on food and basic necessities, and less on luxury and discretionary spending

All in all, this is a recipe for longer stagnation, if not recession.
It doesn't really mean anything if the recession was declared over from a technical point of view; the reality for most Americans will be that the recession continues well into 2010, maybe even longer.

-t

a) not a key "fact"; just an alarmist prediction
b) good; consumer spending is great
c) what inflationary pressure? not a key "fact"; just another alarmist prediction
d) actually savings are higher than in many years because people like you have everyone so freaked out... once people start to relax they'll have plenty of money for discretionary spending and all the people that were laid off by freaked out companies will be in great demand for all the new jobs. Anyone with bad "news" gets all the headlines in this climate. Once the headlines find something more interesting I predict things will improve really quick.

[turtle777]

Originally Posted by mrtew 

a) not a key "fact"; just an alarmist prediction
b) good; consumer spending is great
c) what inflationary pressure? not a key "fact"; just another alarmist prediction
d) actually savings are higher than in many years because people like you have everyone so freaked out... once people start to relax they'll have plenty of money for discretionary spending and all the people that were laid off by freaked out companies will be in great demand for all the new jobs. Anyone with bad "news" gets all the headlines in this climate. Once the headlines find something more interesting I predict things will improve really quick.

Oh geez, so you drink the cool-aid from the press as well ?

Re: continued job losses are even expected by the administration to continue through 2010. Do you really believe that companies will hire anytime soon ?

Re: inflationary pressure: the dollar just hit this year's low in the dollar index. If you think the dollar will go up long-term, you are a fool. But hey, I'm not keeping you from buying Treasuries, go right ahead.

Btw, many people took significant pay cuts. I'm at 20% so far this year. Don't you think that this is effectively like inflation ? It takes away purchasing power, you can afford less than before.

"all the people that were laid off by freaked out companies will be in great demand for all the new jobs."



Who is going to buy all that stuff and pay for all those salaries ?
Don't you see how trillions of dollars get wasted for unproductive government services and gimmicks, paid for by inflation and higher taxes ? None of what the government does with that money creates sustainable growth and competitive advantages.

-t

[mrtew]

Your smugness has convinced me that you're right! We're all doomed just like we were after the last 5 panics. Oooooh scary. Things will never be the same.

[stumblinmike]

Perhaps Beck or Hannity will open their panic rooms for their sheep to hide in!

[turtle777]

Originally Posted by mrtew 

Your smugness has convinced me that you're right! We're all doomed just like we were after the last 5 panics. Oooooh scary. Things will never be the same.

Yeah, whatever, why would I give a crap what teh intarwebs think.

I'll be ready for whatever comes.

-t

[ShortcutToMoncton]

Originally Posted by Eug 

P.S. The reason that mockup reminds you of Liberty Village is the height restriction close to the road. They'll be relatively short at the sidewalk (eg. 5 floors), but might be stairstepped higher in the middle. The reason for doing this is so it doesn't look so claustrophobic when you're looking from the sidewalk. You'd understand what I mean if you're walking up Bay Street in the business district. Very imposing structures, and no sun on the sidewalk.

Yeah, sorta like Manhattan but on a shorter scale. It's a good idea, not to mention makes for lovely sun-drenched decks.

greg

[Eug]

Where are you talking about for Manhattan? Manhattan has lots of short buildings that are just short and not stairstepped. However, Manhattan also has lots of tall buildings, many of which are right up against the sidewalk for the entire height of the building.

Is NY trying to doing the same stairstepping thing to increase sun availability for new non-commercial builds in certain neighbourhoods?

P.S. Back on topic. Manhattan had been remarkably resilient, despite the financial sector meltdown... until the last few months:

Manhattan home prices plunge

The housing bust has finally clobbered super-pricey Manhattan home prices.

Reports released Thursday by four major New York brokers show that prices cratered during the three months that ended June 30.

Prices fell between 13% and 19% compared with the same quarter last year. The brokers found median prices that ranged from $795,000 to $849,000.

The decline shows a marked turn from the first quarter of 2009, when the year-over-year change in median home prices ranged from a loss of 2% to a gain of 6%.

The good news though is that because of the 15% drop (and relatively low interest rates), unit sales has actually jumped significantly.

[Buckaroo]

This is what I heard: About half of U.S. mortgages seen underwater by 2011

About half of U.S. mortgages seen underwater by 2011 - Yahoo! News

NEW YORK (Reuters) – The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.
Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.

[turtle777]

Oh you guys, stop the bad news mongering, the recession is over, everything is going to be happy-happy-joy-joy

-t

[turtle777]

So, is Canada's housing market the next bubble to burst ?

Some think so. The housing price index looks bubblish.

As U.S. Struggles, Canada Worries About Housing Bubble - WSJ.com

What's interesting is the following:

In Canada, nearly 40% of gross domestic product historically is generated by exports, mainly to the U.S., where economic weakness persists. To stimulate its economy, the government has focused on the domestic slice. In an effort to boost internal consumption, it has kept a key interest rate near zero—resulting in exceptionally low mortgages rates—and has offered various financial incentives and tax credits.

Consumers have responded. Average home prices in Canada have risen 23% from their trough in January 2009. Home-sales volumes are up 70% over the same period.

Wow, this kind of thing has never happened in the US before, and for sure didn't blow up in our faces.

But Canada's housing slump didn't last long. In October 2008, the Bank of Canada made the first of a series of rate cuts that eventually lowered the target for its key overnight lending rate to 0.25%, which in turn reduced banks' prime rate—the basis for calculating variable-mortgage rates in Canada—to 2.25% by April 2009. In Canada, nearly all mortgages have rates that adjust at least every few years. Currently, rates on some loans have fallen to 2% or lower.

Well, to make matters even worse more fun, most mortgages in Canada adjust after a few years.
Essentially, you have a mortgage market full of ARMs.

Fortunately, Canadians wouldn't go into stupid speculation like Americans did. Right ?
Oh, wait, nevermind.

Ms. Girard has been buying and renting out apartments for years. In 2009, she went into overdrive, buying six units in six months, with mortgages at rates ranging from 2.45% to 3.95%. She says she "maxed out" on the last mortgage, which pushed the family's ratio of debt service to income into the mid-40% range—above the level many Canadian lenders are comfortable with.

Ms. Girard, the housewife in Red Deer, says she hopes to buy a seventh unit in a few months—after she pays down enough of her credit-card debt to qualify for another mortgage.

Muahahahaha

This possibly can't go wrong.

-t