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Originally posted by rahul_singh23

It’s just a discussion we are not bashing out anyone personally.

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Are you there?

the party is not over yet in Canada

Record home sales forecast
http://www.thestar.com/Business/article/248004

Colin Perkel
Canadian Press

Home buyers in Canada will shrug off stock market volatility caused by the U.S. subprime mortgage crisis and drive up both the number of homes sold and average resale prices across the country to record levels this year, the Canadian Real Estate Association predicted today.

Powered by frenzied resale activity in the first six months of the year, overall national sales should rise 8.1 per cent in 2007 to just over 523,000 units, with records set in most provinces as well, the association said.

In addition, the average price of a home is expected to rise by about 10.4 per cent to just under $306,000, with oil-rich Alberta leading the way as prices in that province go up almost 25 per cent on top of last year's eye-popping 31 per cent increase.

"The Canadian economy has been remarkably strong," Gregory Klump, the association's chief economist, said from Ottawa.

"Job growth remains very upbeat and, because of that, consumer sentiment is running very high."

The biggest year-over-year growth in unit sales in 2007 is expected to occur in Saskatchewan at 34 per cent, followed by New Brunswick with a spurt of almost 16 per cent.

In absolute terms, Ontario is expected to lead the way with close to 211,000 homes sold, followed by British Columbia with 101,000.

The bullish outlook comes despite recent volatility in the stock markets and the subprime mortgage problems in the U.S., which have done serious damage to housing markets south of the border.

Klump said the home-financing market in the U.S. and in Canada are completely different.

"(Canadians) have to pass tighter credit standards in order to get home-mortgage financing," Klump said. "So, there's no unwinding in Canada as there has been in the States."

However, with interest rates up slightly and house prices continuing their seemingly ever-upward march, affordability is declining and the resale market cooling, if ever so slightly.

In 2008, the association is predicting the overall number of sales to fall two per cent nationally to about 513,000 units, with the biggest drops coming in P.E.I. and Alberta.

"The erosion in affordability due to the continuation of price increases and interest rates is the main factor in why it is we're forecasting that sales will gradually come down from their break-neck pace of the first and second quarter," Klump said.

"Even in the second half of this year, we expect activity to come off the boil."

Still, prices are expected to rise 5.5 per cent in 2008, led by Manitoba and Nova Scotia, the association predicted.

The forecast is more optimistic than one issued last week by the federal housing agency, Canada Mortgage and Housing Corp., which is predicting 515,000 homes sold this year and 495,000 next year, due to higher carrying costs and prices.

CMHC is also calling for a decline in all provinces next year, except for Manitoba where the agency predicts markets will remain flat.

Still, the agency forecasts a 9.9 per cent rise in prices next year, to go along with the average 10 per cent annual growth since 2002.

"The (sector) is supported by strong economic fundamentals," Bertrand Richer, senior economist with CMHC, said today.

A record percentage of Canadians are employed, and unemployment is at 30-year lows, he said, adding, "We've registered also good income gains."

For a long time, I've had a lot of trouble understanding this sub-prime lender thing. It just couldn't be real. I figured it must be some higher economics that I, as a high school graduate, could not hope to understand.

Here's the way it seemed to me: Guy walks into a lending institution and says, "I'd like to buy a house. I have no assets, no job and only one form of identification, a Cody, Wyo., library card."

Lender: "Of course you want to have a house. It's the American dream. Heck, I own a house, and as you can see I'm wearing a suit that cost more than your car. And I know you want security for your family. So how much do you need?"

Borrower: "Did you hear the part about my current financial situation?"

Lender: "This is America! Everyone deserves a break, a second chance, a piece of the pie. I don't even want to know the details. Do you have a dollar in your pocket?"

Borrower: "Sure!"

Lender: "That's your down payment! Simple as that. Now, how big a mortgage do you want?"

Borrower: "Uh, $200,000?"

Lender: "Two hundred K? In this market? Are you kidding? Let's make it 600 K. You can get a nice little starter house in a marginal neighborhood for that. And here's the best part: For the first year, your payments are only $49.95 a month. After that, rates and payment schedules change, but that's a whole 12 months away and in between, you'll be the envy of your friends. Shake, partner."

Now, who on God's earth thought that was a good idea? Couldn't even the dullest adult (like, say, me) see disaster coming a mile away? It did not take a particular kind of genius to forecast despair and heartbreak.

But the lending institution wanted the mortgage because it could sell it to another company that would use the full value of the mortgage as collateral to get a loan to take over U.S. Plumbing and Parrots (USP&P), a publicly held company. And everyone would pretend that of course the loan was going to be repaid, that it was a rock-solid investment, and everyone could trust everyone and all the birdies in the trees sing your favorite melodies.

In fact, not a negative word was heard from the people passing by.

And the borrowers! I can kind of understand the dynamic, using a frat-boy brand of logic. "Hey, we get this great crib right now for peanuts, and the payments will get huge at some point but, dude, by then we'll be in Mazatlan. My brother!" And then there'd be tribal-recognition finger waggling, and they'd own a house.

Or rather, they'd be entitled to live in a house that someone else owned, but they'd still get to be called homeowners and deduct the interest paid from their income taxes, provided they had income.

Come to think of it, maybe that's what the lenders were thinking about too: Mazatlan. As long as the fragile bubble did not burst, they would make a lot of money and purchase, through a dummy corporation, a very large house in Mazatlan. What they were doing was not illegal - indeed, it could even be seen in benign social terms, as lowering the barriers to home owning or some damn thing - but, when everything fell apart, people might get mad and the lenders might want to be in Mazatlan, where they could surf the same beaches as the people who borrowed money from them.

Not surfing the beaches would be anybody who took this subprime lending stuff seriously. That would include young families who somehow thought their house came with magic beans, and the holders of stock in subprime lending companies, who also believed in magic beans, plus an unknown number of citizens who invested in some fund somewhere that was trying to show a high rate of return by purchasing subprime mortgages.

"What's safer than real estate?" they would say. "They're not making any more land." It's a seductive line, but it's just another line, much like "I'll call you in the morning." And then everybody runs around for a while singing Bruce Springsteen songs, and stocks go tumbling and people sell at a loss because people mutter "dot-com, dot-com" to themselves with great regularity while waiting for their broker's Web page to reload, and finally the business page has something to write about.

I know I must be missing something, because it can't be this simple. The fundamentals are sound, we are told, and the Fed is sanguine, and Fannie Mae and Freddie Mac are doing just fine, so settle down, little children, as you sleep on your aunt's sister's couch. It's all a big adventure.

One more item - the number of MLS property listings of all descriptions in Edmonton have increased by 50% since June 15th.

Data Last Updated June 15, 2007, 5:42 pm
Total Properties 8050 - Res 3591 - Condo - 1989

Data Last Updated August 16, 2007, 12:09 pm
Total Properties 11641 - Res 5580 - Condo - 3025

Data Last Updated August 23, 2007, 5:10 pm
Total Properties 12014 - Res 5804 - Condo - 3099

That makes the rate of increase (listings above sales) at about 400 properties a week with no end in sight.

Here's a home in Calgary site asking $539,000

http://tinyurl.com/33wl8j

Here's a home in Atanta, Georgia asking $499,000

http://tinyurl.com/38s438

here is home in Dublin €849,950

http://www.daft.ie/dublin/blackrock/1249624/

Quote:

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Originally posted by rahul_singh23

Here's a home in Calgary site asking $539,000

http://tinyurl.com/33wl8j

Here's a home in Atanta, Georgia asking $499,000

http://tinyurl.com/38s438

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Rajeev Narula, Broker, REALTOR®
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