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All the government of Canada did was delay the cash. My original thinking was late 2009 for the crash and we were on our way with an 18% drop from the peak. No one anticipated the goverment of Canada would drop interest rates to 0.25%.
How long can they keep rates that low? another 12 months or so max. Once rates creep up, you'll see a panic of selling as people realize they cannot afford their overpriced houses.
Australia bumped up its rate by 0.25% and they expect another jump before the end of the year.
Asian central banks will follow, then european, than north american (that is my guess).
I'm sure there are only about 15-20% of the mortgages out there that are financed at 95% or 100%, but don't forget about the people that took out HELOCs (lines of credit) that once house prices go down, they can't pay back. Alberta is #1 in Canada for HELOCS!
All it takes is 15-20% of mortgages to go bad and it feeds through the rest of the system.
Ask California. Ask Nevada...then ask the rest of the U.S.v
I too have questioned if I am on the right track and while it is difficult to feel confident sometimes, at the end of the day, I am convinced it can only go so far before reality has to surface and things will inevitably correct in real estate and potentially stock markets as well.
1. We are at a historicly low period of interest rates. Which can only move up. Canadian banks are predicting a .75% move in March followed by a .50% increase soon after.
2. Jobless recovery is non-sense, you cannot have a recovery without jobs.
3. Highly volitile flux of prices (gold, oil, stocks, RE, etc) means people are jumping from one ship to another gambling their life savings they are "in" the right investment... Well, the house always wins.
Mike
So, in my jaundiced GOOGLE street view totally uneducated man of the salt outlook, the same crooks are still around, but with their hands on even more of our money, and they still have no valid plan other than to pray and keep kicking the can down the road. The same problems are still with us, but with an extra zero on the end of the bill.
Unfortunately, it is just going to get much more worse than it could have ever possibly been under scenario #1, because Obama and Flaherty have now saved us.
The collapse will still happen.........just in slow little bits as the whole thing falls apart when the government pulls the money out, the layoffs continue, and consumers lose confidence. And they have to eventually.
so I have been persuing a rent reduction. Got a letter under my door today that I needed to come to the office to sign time sensitive papers. I thought, ok they bent my way. Nope. They are seeming like Boardwalk at the moment. The papers were for a rent INCREASE. I said forget it. They said ok no increase but please sign to renew from Feb on. I declined since the only reason to sign is law requires 3month notice from the landlord for rental increase. I am month to month and I will wait until February when conditions change in my favor even more. So it's a "we are raising your rent but we decided not to but sign here" "Doesn't it make you feel better your rent is not going up??"
"Well yes, yes it does, where do I sign"....lol... I guess that was their attempt at "rental incentives" to sign a new lease.
Other people were falling for it I was a bit shocked. I will not. I said I am aware of the market and will move if rent is not reduced to current market conditions.
We are actively looking elsewhere now anyway.
Sort of like when you decided not to pay your bills and simply go bankrupt?
http://finance.yahoo.com/news/Roubini-says-hous...
You couldn't say it better Gloria "the laws of common sense have all been rewritten".
Common sense what happen to it? back before 2006 when everybody had jobs nobody with an average family income would pay 1/2 million $ for a house but in the last few years people are lining up to buy one even when the economy is crappy and people are losing jobs, doesn't make sense.
People have to get back to reality and understand that affordability is the most important factor in buying a house or anything for that matter, economy is very important too but just because the economy is good and everybody have jobs don't mean that we should all buy anything we want , does it make sense to buy a lamborghinis, or fly around in private jets, just because we have average paying jobs?
it's about AFFORDABILITY first, but off course the gov't, banks and especially realtor estate industry don't want to talk about it if they do it's only comparing to "last year" or "last month" or when ever it was less affordable than "currently", they all seem to love to talk about "green shoot" and "recovery" only, great now that we have green shoot and recovery let's all go out and buy a 1/2 million hou$e so that we can all be slaves to the banks for the next 35 years.
The guys on Wall Street are simply shifting bailout money around in speculative plays as the ponzi scheme is played out all over again. What I am looking at here is how the baby boomers who got hammered last yr and most of this yr will react when their nest egg recovers it value or gets close to it - will they cash out now and downsize?
When they are faking the news to try and convince the last few stragglers in a bubble you know it is the top.
Glad to be a renter. Cash is king.
Mike o rama how did you find out about the interest rate changes next March?
Second, the countries that the US dollar is declining against are more fiscally responsible. For example Canada's debt, deficit and trade imbalances are 'less bad' than those in the US.
Anyone want to acknowledge today's employment report? It showed losses in part time jobs and gains in full time employment. I remember there was extra emphasis here and on Garth's blog when the reverse happened.
For the record I am somewhat bearish for 2010 (~5% price declines).
"......not trying to be argumentative here, but, if you have enough cash down or equity, you don't have to prove anything to anyone regarding income. I get fliers from AMBA mortgage brokers and hard money lenders all the time in the mail.......the common standard that is advertised seems to be 33% down = no proof of income or employment required.
Now, who has the required 33% down becomes the question.........
When you coming to YYC there Bearclaw, I still owe you drinks and a dinner. Remember our bet I lost ?
There probably is some amount of mortgage fraud going on. But to my knowledge the amount of people buying houses without employment is negligable.
I may be driving through Calgary next week.
Not all mortgage brokers are "find you the best rate broker" ie . the kind that work with mainstream lenders, like banks and trust companies, that get you the best rate. There are a some mortgage brokers that have access to private money and they lend it out to people who can't qualify through normal channels. ie. If a person declared bankrupcy or just started a business or has no credit or has bad credit rating, or anything else that stops them from getting a mortgage through conventional channels.
Those "no doc mortgages" as they're called are really "equity backed interest only loans" but are registered as a mortgage so the lender has protection , ie: claim to a property. The property is the equity in the equity loan part. The loan is registering as a mortgage to protect the lender if there is a default. The lender registers a caveat with land titles against the property that states they have interest in the property, so if the borrower defaults the lender has the right to start foreclose. If the borrower tried to sell and run, the Alberta land title caveat stops them. The Torrens land title system that Alberta has implement makes this all possible. It protects the lender and their interest in the property.
There is one big catch with no doc mortgages and that is the interest rates charged. They are usually 10+% and most of time there is a broker fee's of 10+% of the value of the mortgage. So people that need a no doc mortgages are not getting them at bank rate prices, they pay a fairly steep premium for them.
I know all this because that's what the wife does for a living and I have invested in these for the last 15 years and have never lost a cent. They're about as close as you can get to a Government backed guaranteed investment because of the protection that the land title caveat gives. Plus it has been paying me an average of 14% return for the last 15 years which is as good as your Brazillian bonds.
the 33% equity is usually existing equity. ie. the borrower owns a house or land that they put it up to secure the loan (sorry mortgage). I have never heard of a borrower using a no doc mortgage to buy their own home. They usually use the money for other things, like buying flipping property,renovations, money for the new business and "yes" sometimes I think just to head to the casino. There are a few idiots out there that have got a property or two through inheritance and pissed it all away in less than a year. So as you can tell with a no doc mortgage it's doesn't really matter what they want the money for as long as they have enough equity to pay back the lender if things go south.
Second: Find a different broker. One that doesn't take any portion of your interest rate. The fee's that the broker charges the borrower are more than enough.
Third: When dealing with brokers make sure that it's your entity that is the registered caveat at land titles. Your entity could be you, a company or your RRSP account. If not, run do not walk away from that broker.
Also if you invest in mortgages, be carefull when investing in 2nd mortgages. As a 2nd mortgage holder you are behind the 1st and if things go into foreclosure you are second in line.
The stimulus is happening regardless of how you want to count it. It could last awhile. The work may not be as effieicent as the private sector that does not mean the jobs add zero value to the economy.
If the loss of part time jobs is seasonal why was this idea not presented when the reverse happened?
I don't expect to win any popularity contests here being a totally deranged and bias homeowner.
I think this blog needs some villains. ;-)
Hey Carioca, even you can go buy a house now!
The Financial Post has learned Century 21 Canada is suing Zoocasa Inc., which officially launched last month, for “scraping” information from sites provided by Century 21 brokers and representatives. Sources indicate privately controlled Zoocasa is nearly 100% owned by Rogers.
The move by Rogers, the largest telecommunications company in the country, into the real estate sector could have major repercussions and Century 21’s chief executive Don Lawby says he wants to ensure Zoocasa does not have an unfair competitive advantage.
The Financial Post has learned Century 21 Canada is suing Zoocasa Inc., which officially launched last month, for “scraping” information from sites provided by Century 21 brokers and representatives. Sources indicate privately controlled Zoocasa is nearly 100% owned by Rogers.
The move by Rogers, the largest telecommunications company in the country, into the real estate sector could have major repercussions and Century 21’s chief executive Don Lawby says he wants to ensure Zoocasa does not have an unfair competitive advantage.
http://www.keycanadablog.ca/?p=622
CREA: "Housing Boom Not Sustainable"...
Existing home sales in Canada have rebounded sharply in the past few months, but Canadian Real Estate Association chief economist Gregory Klump doesn’t see the surge lasting much longer.
“The big jump we’ve seen is housing activity in recent months is not sustainable, in fact it’s already shown signs it’s leveled out,” Klump said during a video interview with Reed Construction Data at the CanaData Construction Industry Forecasts Conference in Toronto
http://blog.buzzbuzzhome.com/2009/10/canadian-r...
CREA: "Housing Boom Not Sustainable"...
Existing home sales in Canada have rebounded sharply in the past few months, but Canadian Real Estate Association chief economist Gregory Klump doesn’t see the surge lasting much longer.
“The big jump we’ve seen is housing activity in recent months is not sustainable, in fact it’s already shown signs it’s leveled out,” Klump said during a video interview with Reed Construction Data at the CanaData Construction Industry Forecasts Conference
http://blog.buzzbuzzhome.com/2009/10/canadian-r...
California for example.
http://www.marketwatch.com/story/california-hik...
Alberta did it recently as well and offered a higher rate of return than government of Canada bonds.
Mortgage rates compete with Bonds. As bond yields go up...mortgage rates go up.
it is inevitable.....with all these governments issuing bonds.
http://en.wikipedia.org/wiki/Bond_credit_rating
http://www.bloomberg.com/apps/news?pid=20601087...
even though your are becoming more bias now on the bullish side but I'm glad you are still here and posting.
I know all that......you could have saved yourself the typing. Used to be banker, remember ?
7.5% - 10% is the quoted rate from the place that keeps filling my mailbox up. No fees except for appraisal and legal, is what they say on their flier, and the Fair Trading Act covers you if they lied. All you need is equity. Maybe we should set that to the Beatles tune.
"All you need is equity.....dah, dah, dah, da da"
FWIW the wife and I were approved for $175K back in 2004 (6 years post BK for me) at the banks base rate +2% with $50K down........but we didn't buy anything.
I'd imagine that it is a good investment, being a hard money lender, if you know the ropes.......and your property.
Interesting thing is, I've seen more than a few first mortgages for sale in the G+M, as well as other places as of late.....40-50 % LTV ratios too with 7-10% stated rates.....guy probably figures it is better to take haircut and find a sucker than foreclose ina saleproof property.
Bearclaw.....
Let me know if you can make it.......you have my e-mail.
-------------------------------------------
"Century 21’s chief executive Don Lawby says he wants to ensure Zoocasa does not have an unfair competitive advantage."
You mean like the monopoly that is the MLS ??? This has to be the bullshit quote on the year from the REIC.
Carioca... it is too bad you did not capitalize on that mortgage approval and buy a home back in 2004. But hindsight is 20/20 I guess.
A few latest articles supporting why a commodity based economy like Canada's will emerge from this recession better than our southern neighbors:
http://www.calgaryherald.com/business/Suncor+re...
http://www.bloomberg.com/apps/news?pid=20601082...
some propaganda:
http://www.calgaryherald.com/business/real-esta...
The wife and I have saved a ton of money (bascially the rent/buy difference) which I have oft commented on here on this blog and others. A figure roughly equivalent to that which would have been equal to the accumulated equity had we bought a house.
But.......
It will not cost us 7/3% to take some money out.
It will not cost us an appraisal, mortgage fees and/or bank fees to get it out.
It generates cash flow 10% annually with a 13% yeild at maturity.
I can move wherever I want, when I want, without the financial risk of home ownership.
I don't need to call someone in the middle of the night and pay $500 when my sewer backs up.
Etc........
I agree that heavily indebted consumer and commodity based economies will do best when things turn around. But for things to turn around people have to start working again.....that is the primary and most important US and Canadian problem hindering recovery.....there are no jobs nor is there a desire to create them amongst government and employers.
he like me has seen the madness and prefers cash
your belief that canada is different is flawed
dont beware zoocasa beware google
the wolf thats hiding in sheeps clothing
http://www.zillow.com/homes/map/33312_rb/
zillow or google same beast that will slay the REIC for the benifit of us all..minus the parasites
Don't kid yourself...call a spade a spade and move on. In many respects Carioca avoided a lot of the risks by staying in his safety investments. Nothing wrong with that. But to say that in 20/20 hindsight his bonds did better with a piddly return (without leverage) compared to if he were to buy real estate in 2004...comon, that is just extreme denial.
Now, if you compare real estate PRESENTLY vs. bonds.... the jury is out. Perhaps Carioca's investments are better than real estate PRESENTLY... especially since they are foreign and not USD based. I've always said this may be the case. But do you know how many "renters" out there do NOT have the discipline Carioca may have? Perhaps they have yet to experience their first bankruptcy filing and do not understand saving/investing for a rainy day.
Rent vs. buy is a good argument with no concrete answer. All I know is that BUY wins out for those renters who rent and then blow the rest of their money away instead of investing into something tangible to their name.
I agree with you there. The one thing I'd add is risky investments are, risky. Sometimes you make a lot, other times you lose a lot. With GIC's (safe investments) you always make a little, but risk nothing.
Historicly, RE I would still classify as "pretty safe and a decent return", but in times like these I would say it's "somewhat risky with little to mostly negative return".
I'll get back into RE again, but for now, I'll keep saving like CC, but in CDN dollars as I don't like the foreign exchange risk myself.
I also find an interesting thing taking place too, the more money you have the more "risk adverse" you are as you can't bare to lose even a small % of it. Not sure how to circumvent that issue right now myself.
Mike
he like me has seen the madness and prefers cash
your belief that canada is different is flawed
dont beware zoocasa beware google
the wolf thats in sheeps clothing
When you step outside the Canada box, you will see you are actually making a GREAT return on the CDN! 3.6% ROI in just 5 days, wow!
"The Canadian currency posted a 3.6 per cent gain for the week, the biggest five-day advance since July. " - Today, Toronto Star
Of course it doesn't mean a lot if you are not buying non-CDN assets with it. This is why GOLD is not such a good value for a Canadian as it is priced in USD. As CDN gets stronger, you actually lose on Gold.
Mike
Overall, we are all in a good position as CANADIANS! Thank goodness we all work for CDN$ and own things in CDN$.
Celente - People Should Brace For 'Greatest Depression' 2012 Forecast - Food Riots, Ghost Malls, Mob Rule, Terror
Between the $50K we started with back in 2004, the accumulated interest and continual monthly savings made to our investment account, we have, at today's forex rates, less the 15% taxes we have had to pay on our interest (I didn't forget to subtract that, just to be accurate) roughly $265K CAD +/- givne where the bonds are priced and the nominal cash balance in our accounts. It would have been more, but the Real is appreciating right now........not going to cash out however, so it's really no matter to me.
Sounds like about the same gain as had we bought.
Now, here's the big question......can you do that today and accumulate the same amount of equity in the next 6 years wth RE ? I can still buy the bonds close to what I paid with the same yeild........but he forex is 10% against me. Are houses going to go up that much in 6 years ?
Mike
Agreed, you cannot possibly "guarantee" that you can do that today with Real Estate. The bubble has already been blown up and deflating for Real Estate. However, with the introduction of QE, low rates, etc... that throws a wrench into things. If you are buying foreign bonds and foreign currencies in countries rich in commodities.... then this may be far better than real estate presently.
However... how many renters are doing this? I bet you are 5% of all renters actually doing what you are doing. The rest do not even understand how to open an account like that. Not only that, they probably don't understand anything other than "forced savings via roof over your head".
So, I do not believe that the guy who is renting and not investing any of his leftover cash is better off than the guy who bought wisely (good land, inner city, etc) and locked in a dirt-cheap rate. Buying a home is, in some respects, the less savvy way to play the ensuing inflation. You can play it with gold, foreign bonds, or just simply selling all your USD's. I would even be afraid to keep all my money in CDN$ GIC's.... I'd probably diversify at least 50% of it into some other investment vehicles.
Mike-o-rama.... to have all your cash in CDN$, and in CDN$ GIC's is pretty much saying you have all your faith that Carney will not perform QE. If you have 1 million in all CDN$ GIC's then god help you when and if Carney prints all of its value away.
Despite the rise of the CDN$ you cannot buy as much gold as you could 6 mos ago, EVEN with the lower CDN$ of that time. So tell me, do you REALLY feel richer?
I've heard a LOT of people on talk shows, financial news and the internet talk about these dates and the stock market in a negative way. The USD is doing down fast and the CDN is going up fast.
Could the 13th to the 20th be a down turning point? I will tell you something, I won't be putting money into anything during this period myself as I watch the markets.
Did anyone read this article today in the Toronto Star?
"Loonie's rise sparks fear of rate hikes
Bank of Canada seen moving sooner than expected as dollar flies past 96 cents (U.S.) to one-year peak.
The yield on the two-year Canadian bond climbed as a result, increasing the gap between it and the comparable U.S. Treasury note to the widest since Dec. 2008, a development analysts said puts more upward pressure of Canada's bank rate.
RBC Capital Markets said Monday that investors should sell the U.S. dollar against its Canadian counterpart on prospects the Bank of Canada will increase interest rates sooner than the Federal Reserve.
It will become increasingly clear that the Bank of Canada will raise interest rates well ahead of the Fed and once it embarks on the normalization path, rate hikes will likely be more aggressive than the Fed," Sue Trinh, a senior currency strategist in Sydney"
Mike
Hence, investors are thinking the BOC will raise rates similarly to Australia. So they are buying the loonie up now, before that happens.
Thanks!
Mike