Alberta Bubble Blog - Latest Comments in And the secret recipe for continued housing strength is...

Re: And the secret recipe for continued housing strength is...

kirm — Sun, 01 Nov 2009 14:08:57 -0000

Hey, I've been thinking lately that the interest rates are low and housing prices have dipped so maybe I should take advantage and buy. Then I come on here and realise that that's the stupidest idea I've had since the last time I was here.

Thank you all for your very sensible and reasonable arguments and you're terrific links. You've been saving my a$$ since 2006.

By the way, where's the Squidmiester? Probably working in the tar pits...

Re: And the secret recipe for continued housing strength is...

Totalmotorcycle — Fri, 30 Oct 2009 09:01:48 -0000

Deleted

Re: And the secret recipe for continued housing strength is...

Carioca Canuck — Thu, 29 Oct 2009 23:26:50 -0000

Quite correct......

The economic "recovery" we are seeing is an deliberately orchestrated and poorly manipulated balance sheet fraud that many of us can see right thru. It always has been from day one.........and when the money runs out, errrrr sorry about that, gotta use the correct terminiology here, when the Chinese demand a much higher return.........the house of cards can no longer sustain itself, and we collapse along with the US debacle.

Re: And the secret recipe for continued housing strength is...

BAD — Thu, 29 Oct 2009 21:55:13 -0000

-
Meanwhile in Canada:

Payroll employment, earnings and hours

An indication of the coming R/E market boom, eh?
After all, once the job is gone, where else one can make cash but in flipping houses? Can't lose proposition, eh?
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Re: And the secret recipe for continued housing strength is...

Mick — Thu, 29 Oct 2009 20:02:05 -0000

US GDP grows at 3.5% annualized rate in 3rd quarter. Wow, the recession is gone, maidens are singing again while butterflies float over balmy fields and sunny skies. But wait, what is this..."Growth was fuelled by government-supported spending on cars and homes, raising some questions in the market about the sustainability of the GDP increase." http://money.ca.msn.com/inv...

Hmmm, let's do this again. Govt spends our money creating more debt and more taxes for us in order to fuel growth for companies that have lobbed off large parts of their workforce to achieve stunning corporate profits and big fat bonuses for their head honchos. So the US 3rd quarter climb in the GDP came on the backs of consumers bearing the brunt of more debt in newer cars stimulated with the cash for clunkers program and new houses stimulated by the housing incentives. More debt for consumers means more profits for those that benefit from the debt (companies) and the economy shows growth. Again, Main Street gets the full ungloved shaft.

Re: And the secret recipe for continued housing strength is...

Jim_s — Thu, 29 Oct 2009 13:25:49 -0000

Subprime back with a vengeance?

http://www.housingwire.com/...

At this point, and with the economy so heavily manipulated by gov't liquidity and intervention, almost anything is believable.

Re: And the secret recipe for continued housing strength is...

CM — Thu, 29 Oct 2009 11:40:19 -0000

Hi Atzi,

Thanks for sharing your story, I'm sure you're not the only one in such a situation right now.

I often check the data on www.rentfaster.ca (a website I would recommend you post your rental on). Since summer, I've noticed the listings have increased quite a bit, and the median price for rentals has dropped by about 8%.

In the past month or so, I've noticed the 'one month free', 'rent reduced', 'move in bonus' and 'discount for one year lease' taglines starting to appear frequently in a lot of the ads.

Here's a search query on RentFaster.ca for every 1-2 bedroom condo in the SW.

http://tinyurl.com/yhvbuax

You might want to do an advanced search, and search for condos in your specific area that are similar to your own. Then you can get an idea of what a good market price might be for yours.

I have a feeling there are a fair number of 'accidental landlords' in Calgary right now, with more to follow. People that can't/won't sell their current property for a loss, so have decided to rent it out and move on up the property ladder and now carry two mortgages.

Re: And the secret recipe for continued housing strength is...

nfnnln — Thu, 29 Oct 2009 00:42:48 -0000

End of story:

http://www.youtube.com/watc...

8:50 and on for a summary.

Re: And the secret recipe for continued housing strength is...

Atzi — Thu, 29 Oct 2009 00:23:53 -0000

While may people here talk about their friends’ experiences - and it’s good to hear more stories – I would like to share with you my OWN PERSONAL experience with Real Estate.
Here are the Facts:
- we lived in a modest home in Country Hills when all the craziness happen, and everyone was talking about their newly acquired paper wealth. It was the everyday topic at work, on the street corner, in line at the grocery store..
- jumped on the wagon and bought a condo in 2006 in SW Calgary, took possession in fall of 2007
- paid 280,000 with 20% down for 870 sq.ft. 1 bdrm + den
- it was supposed to be our first ever “investment”; we said we will either hold it a few years for our teenage kid, or sell it for a profit.
- prices of the condos in the complex started falling soon (2008)
- we are now at a loss! (between 10 and 15%)
- we do have a 5-year closed mortgage @ 3.75% (re-mortgaged this year to take advantage of the historically low rates)
In 2008, when we realized we COULD be VULNERABLE (although our combined income at the time was approx. 160,000, we though “what if one of us will lose the job?”), we sold our house and decided to rent instead. I remember we were so scared to owe $600,000 combined! (we are from Europe “DP’s” Delayed Pioneers with ESL, and not used to what happened here, but that’s another story..). And boy! were we ever right, when last month I lost my job and I am now on EI!
So, now we are renters and landlords at the same time!!! (don’t ask why, but if you do.. we rent a VERY NICE 1600 sq.ft. double garage townhouse in SW, more than we need, for a mere 1500/month, now 1,400). 1 min walking distance from our kid’s school..
Yesterday, our tenants informed us that they plan to move, so we are frantically evaluating the options: leave a better degree of comfort and move to live in our “investment”? or, find new tenants. By the way, we have reduced their rent with 10% (voluntarily!) a few months ago, just to prevent them from leaving (they are such a nice family). Unfortunately, the young mother wants to get a part-time job, but the place is rather isolated and the husband takes only car to work, etc. Bottom line, she needs to be closer to LRT, shopping centres.
We’re have to start posting ads on the free websites like kijiji and Calgary craigslist (do you know of any others?) to find good tenants, so we can … continue renting the place we have. Ironic? Surely, interesting..
If you ask me if I believe we’re going to see another bubble, I surely wont know what to say. While all the common sense, decency and oral principles tell me that’s not possible, I am amazed by the level of greed and almost cheating surrounding us. Clients used to call my ex-company and ask for product x, which we would then buy from “another company three block down”, mark it up 50% and resell it to poor guy (instead of telling him “look, we don’t sell/stock that, go three block down the street to company X”). I never liked that practice!!!
We deserve what we got!

Re: And the secret recipe for continued housing strength is...

Carioca Canuck — Wed, 28 Oct 2009 12:42:40 -0000

Dr. Sirius.......

Interesting story you got there......please allow me to add to it.

One of my friends, he's a doctor, and his wife is a physiotherpist (as is my wife) sold his zero lot line carboard shit shack here in Calgary for $500K back in early 2008, and moved to the US (Arizona) this year for a better paying job (2X the salary paid in USD).

He was sweating bullets for the 6 months it took to sell, as he was tapped out on his unsecured credit line here (the banks apparently love to give money to doctors with no assets, but huge incomes) and saw the RE market coming unglued. Talk about a walking time bomb stress wise. Luckily he got a greater fool and walked away with $175K of equity after Re fees, commissions and mortgage debt, which allowed him to pay off his credit line in full, leaving him broke, with absolutely no cash, but he still has his $200K unsecured credit line to draw from. He has been using that to live......andhas nothing to show for it either, drives 2 leased cars and has nice furniture and big screen TV's with lots of holidays for the family.

He's renting in Arizona for $750 a month, told me the other day that he was lucky to have learnt from this experience (I disagree as he had no cash left in his pockets to speak of after selling his place and paying off debt, but didn't say anything to him) and that he was not going to buy in Arizona, as he thinks prices there are still going to fall and their RE market is a mess. He's only got 3 mor eyears nhish contract anyways as well. Told me about entire subdivisions of empty houses with overgrown grass for sale....etc.....

Re: And the secret recipe for continued housing strength is...

nfnnln — Wed, 28 Oct 2009 11:58:07 -0000

Re: And the secret recipe for continued housing strength is...

nfnnln — Wed, 28 Oct 2009 11:57:10 -0000

What I don't get is who is actually buying these 460K condos to live in? It doesn't make sense. In order for you to only spend 30% of your salary on housing (460K @ 3% over 25 years = 2176). An expensive place like that probably charges 400/month for condo fees. So after mort., condo fees, prop. taxes and utils you're looking at 35K/year. At 30% GROSS income... you'd have to make 117K a year to live comfortably. It's up to you to decide how many 117K/year jobs there are for non-families (it's a 2 bedroom).

Re: And the secret recipe for continued housing strength is...

Dr_Sirius — Wed, 28 Oct 2009 09:42:10 -0000

Dr. Sooo Serious,
You must be pretty busy these days with the H1N1. Thanks for making time for the board. Seriously though, what makes you think house prices have anywhere to go but down? Did you invest in a couple condos? Are you in Calgary or Edmonton? The reason I started looking at these blogs was because another student in my class put down money on a very expensive new condo in Edmonton. He was trying to get myself and one other student to consider it. I think it was around 460K or so for 2 bedrooms. They are very nice condos here in Edmonton, but that just seemed too expensive. Anyway, his plan is to sell the condo after residency and pay off all of his student loans/line of credit with the increase. He took out a big chunk of change from the LOC for the downpayment. You know how easy the banks throw money at professional students. To make a long story short, he is still the only one to take the plunge. Another girl in my class is close. Her mother thinks it is a great time to buy. I told her that I don't think it is. There are actually a few of us reading blogs right now and most of us believe we will get a better price in a couple of years when we are finished with school. Do you think this assumption is crazy? Remember I am not very good with assumptions.
Good luck at the hospital.......if you want to shed some light on where you think that is going and the possible fallout for the economy, I would appreciate that too.

Re: And the secret recipe for continued housing strength is...

Totalmotorcycle — Wed, 28 Oct 2009 06:33:41 -0000

Deleted

Re: And the secret recipe for continued housing strength is...

Dr Soooo...Serius — Wed, 28 Oct 2009 00:17:48 -0000

Dr_Sirius says:

"It's just something [he] has to work on, so don't get offended. Good luck with your sales man."

Intensivists don't make sales man...Assumptions are another something you will have to work on.

Good luck!

Re: And the secret recipe for continued housing strength is...

arnie2O16 — Tue, 27 Oct 2009 21:34:19 -0000

Another bit of information to take for what its worth.

Personally i think the only reason they show growth is because of borrowed money but to each their own

http://www.theglobeandmail....

A good test is going to be India, they announced they are ending stimulus

http://www.theaustralian.ne...

Re: And the secret recipe for continued housing strength is...

Mr Happy — Tue, 27 Oct 2009 20:46:50 -0000

Here I found you a better deal. You can 4 for the price of 1. Fixer uppers though.

http://www.northwest-nation...

Re: And the secret recipe for continued housing strength is...

Mr Happy — Tue, 27 Oct 2009 18:32:44 -0000

Here is a graph on Consumer Confidence and retail sales.

http://mam.econoday.com/bys...

It's been going up and down since May. It was getting better in May, then worse in June, better in July, then worse in Aug, then better in Sept, now worse in Oct. So what, overall it's just flat, the good news is retail sales are trending up even though they are still below 80.

Re: And the secret recipe for continued housing strength is...

Jim_s — Tue, 27 Oct 2009 14:15:59 -0000

The Conference Board's Consumer Confidence number for the month of October hit 47.7, a major decline from the September number of 53.4 and over a 5 point differential from the expected reading of 53.1. The data series has trended flat since hitting a high of 54.80 in May and has recently accelerated its pick up. As a reminder a reading above 90 means the economy is on solid footing. Above 100 signals strong growth. We are nowhere close and in fact getting worse by the month with unemployment, commodity inflation and wage deflation taking their toll on US consumers.

Re: And the secret recipe for continued housing strength is...

Carioca Canuck — Tue, 27 Oct 2009 11:47:12 -0000

Whenever you see a post here that is filled with hyperbole, insults and emotion which looks like it is from a real etate agent, just click on this link to have a flashback to one of the greatest RE infomercial scams of all time.........ladies and gentlemen, from the 1980's I give you.....Tom Vu and How to Make Money in Real Estate.

It is the funniest 4 minutes fo your life, these ran on late night TV for about a year and the guy made a killing selling his courses. Don't know about his customers though.......

Re: And the secret recipe for continued housing strength is...

Carioca Canuck — Tue, 27 Oct 2009 11:41:29 -0000

Dr. Sirius said........"I have taken a lot of formal education and there are many things that I know very little about"........the definition of what constitutes a truly smart person is the ability to seek out knowledge where they freely admit none exists.

In my almost 30 years of working I too have seen many a person with numerous pieces of paper from various institutions of higher learning, who do not have the ability to rationalize even the simplest scenarios outside of their box.

Welcome to the "Bubble Blog"......stick around and take part in the conversation !!

Re: And the secret recipe for continued housing strength is...

realstinkyagent — Tue, 27 Oct 2009 07:35:17 -0000

these people (realtors and speculators) are not here for discussions about real estate bubble or related topics, they are here to cause disruption, they don't like any valid arguments post here regarding real estate bubble, all they got is "we have oil", "we are different", and the usual BS about how great real estate is.

Since they have no good arguments about why real estate is not in a bubble, they turn to insulting people, calling names, threats, spamming, even picking on grammar and spelling, or pick at anything they can pick at like in your case, and using multiple names in doing it, just ask CC or squidly.

This is what you can expect from them, the best thing to do is just ignore them, like the BS billboards and junk mail,

most people here get what you are trying to say so no need to explain to us, we are glad you are here and keep on expressing your opinions.

Re: And the secret recipe for continued housing strength is...

Dr_Sirius — Mon, 26 Oct 2009 21:13:47 -0000

My response was to successful guy's comment,
"Take it from one educated man to another... stop posting here, your comments are better left for the more intellectual reader."

Please read my post again and realize that I am saying the same thing as you Dr soooo Serious. I don't think education has anything to do with success. I have taken a lot of formal education and there are many things that I know very little about. Successsful guy's comment on education and intellectual ability are elitist and should have warranted the same response you made to my comment. I agree with you that many of the most successful people in this world have no formal education. Many of the successful business people I have encountered do not have an MBA....you catch my drift? As far as medicine goes........the formal education is required, and I'm sure you are not going to question that. As far as real estate and the economy goes, I have very little experience and come to this blog for information. I'll be honest, realtors annoy me. Their costs, their billboards, the constant junk mail....etc. It's just something I have to work on, so don't get offended. Good luck with your sales man.

Re: And the secret recipe for continued housing strength is...

BearClaw — Mon, 26 Oct 2009 20:16:13 -0000

Depressed may be overstating it but up until August this year starts and unit under construction were still down considerably from the boom.

For example SFH starts August YTD for Edmonton CMA
2007 5608
2008 1729
2009 1764

http://www.cmhc-schl.gc.ca/...
http://www.cmhc-schl.gc.ca/...

I wouldn't be surprised if things are turning around now as building has become more competitive vs. resale.

Re: And the secret recipe for continued housing strength is...

jonathankallen — Mon, 26 Oct 2009 19:37:02 -0000

These comparisons are stark, but it's not realistic to attribute to inflation. Real estate markets are NOT homogenous in cities, let alone large countries or entire continents for that matter.

While it may be tempting to compare averages or worse, a sample size of 1 in two entirely different markets, it is not logical to then offer this as an indication of a massive inflation differential.

While the average house price in the US is dramatically lower than that of the Canadian market, this is a function of many things including exchange rates (of which inflation is a component), replacement costs (many US homes are cheaply made compared to Canadian homes, e.g. basements, insulation) and most importantly, the supply and demand characteristics of localized markets.

Local market conditions notwithstanding, the replacement cost of a 3,000 sf house in the US is around USD $450,000 ($150 psf)and the replacement cost of a 900 sf house Calgary is USD $200,000 ($200 psf, $1.10 exch.).

The rest of the price differential is explained by differences in local market conditions. For example, both houses valued at USD $300,000 mirrors the 30% market correction in the US and the extreme shortage of entry level housing in Calgary which are occuring simultaneously.jonathan