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This just occured to me and my question is, what do you guys think about the role of Media in this real estate gloom/bust and potential recession? In my opinion, they played an aweful part in a propaganda (24x7) that affected the mood of buyers and overall real estate. They always do, and the same part they played in the boom time. However, I am not denying the current state of affairs of the economy/market. I am sure there are home owners in this forum that bought houses during the last 2-4 years, and curse their fate to buy the house in the first place. Thank Almighty God that we are not that much affected as US has due to already stringent banking system here.
Can Mr. Kalia or someone else in Real Estate business provide a clear picture on these home owners fate or just an advise on plan of action that could atleast help these home owners? Considering they can't sell and seeing their house value going down the drain. With media(including this site) going ga-ga over the recent real estate bust I won't be surprise if the current affairs must have given a sleepless nights to these home owners. I agree that the market is deflating but there are always a sort of tips/tricks to sail safely to the other end. And, I am not talking about $0 down and 40 years mortgage holders who couldn't afford a home in the first place.
Please do not cite one side of the story only. I am sure any helpful advise would be appreciated to these home owners.
Quote:Well put indeed !
Originally posted by amit kalia
My job role is not to predict markets. Often I give my clients an overview of current market conditions and projections based on their specific properties and neighbourhoods. I am a sales and marketing person who deals in buying, selling and renting real estate in Mississauga, I am not Nostradamus.
Rahul, you are treating home purchase from a purely investment/speculative perspective, just like buying a stock share or a bond.
IMHO, a home is first and foremost meant for living - it's roof over your head and raise your family in.
It is true that an apartment can provide the same, but most people would agree that home provides much better emotional value, attachment, sense of ownership and comfort than a leased apartment can.
I would like to believe (but have no stats to support) that most people go for home ownership primarily for those reasons and not for investment/speculative purpose.
It is true that some people get carried away and buy more property than they can afford in terms of total debt and monthly payments.
It is also true that during the course of your mortgage, your circumstances can change such that what was affordable yesterday may not be affordable today or the other way around.
It is true that a lot of people buy properties for investment and speculative purposes (house flipping) and that's ok.
This trend has been particularly strong in last 3 - 5 years.
Some have made huge profits and some made similar losses.
I don't think those statistics and experiences should be used by someone to decide their home purchase.
It is similar to gold, for example, which is meant for both consumption and investment purposes.
If you want a gold engagement ring because you are getting married, are you going to buy your sweetheart a nickel ring just because you expect the price of gold to fall in next 6 months?
Will you postpone your wedding plans to coincide with the price of gold?
I don't mean you personally, I mean in general - pl. don't take personal offense to this.
I love your posts and wonder at your commitment to research.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
pratickm.. I love you man.
Nice post.
Couple of hundred dollars is not making/breaking anyone for buying Tiffany's nice ring for sweet heart. But we never like to marry our daughter to a man whose asking for million $ condo in dowry does not matter how well he and his family doing. Right?
RE is not like stock if I loose 5K that not good but okay. RE is big investment and that affects whole life/family/career if we make wrong decision at wrong time does not matter we are buying for living or flipping.
I agree if housing expense are under 35% we are safe in bad days too. But we have seen how families/kids are getting impact by bad RE decision.
I agree most of the time with Amit Kalia and no doubt he is one of the finest Realtor. But how I don’t understand how can house price going down is a bad news. What's wrong when houses are more affordable and people have some extra money for family than mortgage slavery for banks.
Quote:
Originally posted by pratickm
If you want a gold engagement ring because you are getting married, are you going to buy your sweetheart a nickel ring just because you expect the price of gold to fall in next 6 months?
Will you postpone your wedding plans to coincide with the price of gold?
Quote:It is bad not per se, but because of the way the Western "capitalist" economies have been functioning for the last two decades or so.
Originally posted by rahul_singh23
But how I don’t understand how can house price going down is a bad news. What's wrong when houses are more affordable and people have some extra money for family than mortgage slavery for banks.
If you look at the USA, UK and other so-called "developed" Western countries in a broad sense, you will see that since the mid 70s, their economies have been surviving on bull runs in some or the other sector.
The Great Depression of the 1930s was immediately succeeded by 6 years of devastating world war.
The next 25 years or so since the end of WWII was spent in re-constructing Western and other countries by huge investments in infrastructure, science and technology.
The period from 1945 - 1965 was perhaps the best boom period in 5 generations or so.
It was also the time when consumerism really took off and got etched into the western psyche - televisions, washing machines, microwaves, new cars, etc. because affordable for even lower middle class workers in these countries.
That in turned further fueled the economic growth.
But, like every other boom, it contained the seeds of its own destruction, - the results of which we are seeing now.
A lot of things happened in the 1970s that changed all that - the US debacle in Vietnam, the oil crisis, the unsustainability of infrastructure investments, gradual disintegration of the Soviet bloc, rise of the "third world" as potential economic powers with their cheap labour and managed, planned economies(India, China, SE Asia) etc. led to sustained recessions in the Western world.
There was smaller recoveries but overall the period from the mid 1970s to early 1990s was that of stagnation and recession.
More than economic, the stagnation was in the intellectual, scientific and manufacturing areas.
However, during this time, the governments and the "captains of industry and finance" in the western world also figured out how to keep propping up the capitalist economies by using various tools of monetary policy.
They found ways of manipulating interest rates, money supply and protection of certain sectors (arms, oil, automobiles) can allow them to keep propping up the economy whenever recession starts to re-surface.
The ever expanding international nature of capitalism in terms of trade, finance, inter-country lending, etc. allowed western governments to leverage their way out of looming recessions simply by creating debt and selling it to emerging countries (since their own economies were saturated and had become heavily net consumers instead of net manufacturers).
In the mid 1990s, we saw the first big boom of our generation (my generation, at least) - it was the tech/dot com boom.
The western countries were thrilled.
They all insisted that "this time it is different".
Internet companies will revolutionize modern capitalism like nothing else since the time of the railways.
It will create infinite, sustainable growth forever, etc.
But as we know, that was not to be so (for obvious reasons).
Anyhow, the years following the bust also brought political turmoil (terrorism, wars, etc.) which had been seething under the covers for many decades.
The whole housing thing was the way out.
Western govt. and large corporations used low interest rates to generate infinite money supply and infinite consumption/consumerism.
But unlike the 1950s and 1960s, all of this was leveraged by household and govt. debt.
To cut this short, falling housing and oil prices are very, very bad for the stability of the world economies.
That will bring back 1930s style depression - deflation, unemployment, bank and stock market failures, etc.
It is in everybody's interest to keep the housing market on a floor and not let it fall to the extent that will bankrupt all households and banks.
I'm not suggesting that housing prices should be as crazy and overinflated as they have been for last 5 years.
However, the market has to find a bottom, stabilize there and then begin trending upwards at a manageable and sensible rate.
Same for energy/oil prices.
While it may be good for individual home seekers like us for prices to fall to fire-sale levels, it will be disastrous for the world economy and in the end, everyone will lose.
No one wants the 1930s style depression.
We all know what that led to and how that depression got solved.
I'm sure no sensible person wants that solution to be repeated to get out of the depression.
Sorry for the long rambling post - it's snowing outside and I'm thinking it's already Friday
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Location: God's own country
Posted on: 20-11-08 16:14:39
Quote:
Originally posted by pratickm
To cut this short, falling housing and oil prices are very, very bad for the stability of the world economies.
While it may be good for individual home seekers like us for prices to fall to fire-sale levels, it will be disastrous for the world economy and in the end, everyone will lose.
Pratick,
Donot agree with you for Oil prices...
USA need the Oil price to be low to sustain any economic development as it is heavily dependant on Oil. The lesser the price of Oil the more will be the development. Again one of the reason which hampers the economic development of USA is the prospective rise in oil prices as was seen in the last summer. No one has any doubt that if USA goes back to the boom days Oil will once again test $100-$150 range. Therefore unless the USA is guaranteed low fuel costs , development will be hampered to an extent. Again there may be alternative routes developed (like working from home, high density housing etc...)
You forgot a major impediment and that is the Auto Industry. The USA or USA and Canada produces 16 million vehicles of which only 10 million vehicles is needed on road. Now USA/Canada canot export these 6 million leftover units to other countries as it canot make a profit (as the exported countries are in more dire straits than USA/Canada itself except may be the Gulf). So we are looking at job losses for the 6 million left over units even if there is a bailout.
The housing crisis is on USA's own doing. We need more jobs to be created to fill in the houses. Fortunately NA houses last for 60-100 years atleast and so they will be there when the people need them.
Hope this helps
Peace by TK
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I am a Gents and not a Ladies.
Quote:
Originally posted by tamilkuravan
Pratick,
Donot agree with you for Oil prices...
USA need the Oil price to be low to sustain any economic development as it is heavily dependant on Oil. The lesser the price of Oil the more will be the development. Again one of the reason which hampers the economic development of USA is the prospective rise in oil prices as was seen in the last summer. No one has any doubt that if USA goes back to the boom days Oil will once again test $100-$150 range. Therefore unless the USA is guaranteed low fuel costs , development will be hampered to an extent. Again there may be alternative routes developed (like working from home, high density housing etc...)
It is debatable whether oil at $50 or so (as it is now) is "low" or not, and what a fair price for oil is to ensure US growth.
I also think that $150 or higher is ridicolous too.
I believe we need to see oil higher than $50 to ensure global stability, not to mention Canadian prosperity.
At $50 or lower, Canada is not making any money on oil production and there is no incentive to exploit newer sources of oil.
On the other hand, the entire middle east and some parts of Latin America are totally dependent on oil revenues.
If oil keeps falling further, ME countries will go into turmoil and who knows what the results of that will be.
ME countries have major investments in the US economy and they are in a blackmail kind of position with the US.
If they decide to suddenly dump all their US investments (including their USD reserves), the US will crash overnight.
China (and to a lesser degree, Japan) are in a similar position of control.
I don't think any of these countries will actually do that, unless they are pushed into a corner and their hands are forced.
Another unrelated factor is the environment - we need to move away from fossil fuels ASAP.
If oil goes down to $20 and stays there for the next decade, there is no incentive for anyone to explore other sources of energy, particularly renewable sources of energy like solar, wind and hydro.
The recent slide in oil prices has bankrupted the largest ethanol producer in the US overnight.
It is guaranteed that if oil goes lower and stays there, all investments in alternative sources of energy will be dumped, which will be a very bad thing from future perspective.
Quote:I actually don't give a rat's a** for the big US auto-makers - they can all go bankrupt for all I care.
You forgot a major impediment and that is the Auto Industry. The USA or USA and Canada produces 16 million vehicles of which only 10 million vehicles is needed on road. Now USA/Canada canot export these 6 million leftover units to other countries as it canot make a profit (as the exported countries are in more dire straits than USA/Canada itself except may be the Gulf). So we are looking at job losses for the 6 million left over units even if there is a bailout.
I don't think them going bankrupt will have a large impact on the US in the larger scheme of things.
Large financial institution collapses like Wells Fargo, Citibank, etc. will probably have much bigger impact because of snowballing effect in financial instruments.
Also, the big US automakers have been protected and spoilt for too long.
They have been making inefficient, oversized, gas guzzling cars and selling them to redneck consumers in the US who have been borrowing against their homes to pay for those.
Their executives are fat cats - flying around on private jets at the expense of the tax payer.
Their unionized employees are spoilt, cuddled, overpaid, and underworked.
One of the reasons for their poor financial state are the millions of $$ they are paying in pensions, health care costs and life insurance coverage for all those employees (and their dogs) who retired decades ago.
Hourly wages of unionized auto-workers is way, way more than what similar workers make at the Japenese and Korean auto firms.
I know the US and Canadian govt. will probably bail out the 3 auto makers, but I wish they don't.
GM and Chystler deserve to go bankrupt.
One of the good side effects of this recession should be that all inefficient, corrupt and over-protected companies need to go bankrupt and get taken apart and sold off.
I'm thinking of companies like AIG, Goldman Sachs, Lehamann Bros. Freddie and Fannie, etc.
And of course the 3 auto makers.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
pratickm - again Smart Post. 100% agree so no comment.
Here are few tips to sell house on higher price.
So how can you make your house, townhome or condo stand out from the crowd and snag a buyer that still has access to credit?
There’s a saying: you can’t make money without spending money. So with that in mind we offer the following tips to increase foot traffic at your open house and sell your property in a falling market:
1. Paint your roof gold: This will really make your house stand out amongst your neighbors, particularly if you use real gold-leaf, not that cheap fake gold stuff.
2. Hire underwear models: Want foot traffic at your open house? Hire a few underwear models to lounge around the yard and entry way.
3. Offer free beer and weed: Or if you want to be family-friendly coffee and cookies, etc, but the underwear models will prefer the beer and weed.
If these techniques don’t work for you, the market may have gotten worse. In that case you have two options that may still work as a last resort:
A. Pray to the money god for a buyer with great credit and a lousy eye for value
or
B. Lower your price.
Hey, it just might work!
http://vancouvercondo.info/
Quote:
Originally posted by pratickm
Quote:
Originally posted by tamilkuravan
One of the good side effects of this recession should be that all inefficient, corrupt and over-protected companies need to go bankrupt and get taken apart and sold off.
I'm thinking of companies like AIG, Goldman Sachs, Lehamann Bros. Freddie and Fannie, etc.
And of course the 3 auto makers.
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