Posted on: 03-10-08 13:03:42
http://www.househunting.ca/buying-homes/story.html?id=b2b862bb-ef9e-4caa-878f-e7fca45193d4
For years, bankruptcy trustees and credit counsellors in Calgary haven't had enough work.
View LargeIn July, 494 Albertans declared bankruptcy -- a 24 per cent increase from the previous year, according to the Office of the Superintendent of Bankruptcy.
Photograph by : Justin Sullivan, Getty ImagesARTICLE TOOLS
Printer friendly
Calgary homebuyers' appetite for luxury declinesHouse prices still falling, CIBC saysCanadian housing market faces U.S.-style bustExperts urge buying for long haulWestern cities hot, others notBut in the past couple of months, the workload has picked up as some Calgarians fall behind on their mounting debts and mortgage payments.
"We are seeing people now who are going into bankruptcy, walking away from properties that in the last . . . four years in Calgary has been very, very, very rare," said David Smith, a trustee in bankruptcy at Bromwich & Smith Inc. "Now it's becoming more common."
In July, 494 Albertans declared bankruptcy -- a 24 per cent increase from the previous year, according to the Office of the Superintendent of Bankruptcy
Calgary house prices drop in third quarter
http://www.canada.com/calgaryherald/news/story.html?id=fbbb438e-7c90-4268-8e84-e5a38cb2c890
....The company's House Price Survey Report said the year-over-year change in the Calgary market varied from a drop of 8.7 per cent for a standard two-storey home, 8.2 per cent for a standard condominium and 6.2 per cent for a detached bungalow......
Financial turmoil hits home
Swiss giant UBS AG selling Calgary unit
http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=30e3e759-9ca6-4938-8117-564bc54e2a11
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Loooking at downtown west end apartment condos on the new MLS website this morning......many of them (2 bedroom, 2 bathroom) are off $200,000 from their highs of 18 months ago......and most listings have "REDUCED, BRING OFFERS, MUST SELL, VACANT, IMMEDIATE OCCUPANCY" in the text description.......
Q: how CDs are forecasting next few months/a year RE market in Canada (GTA, Calgary)? Smart advice for first time buyers?
Quote:
Originally posted by monty74
http://www.househunting.ca/buying-homes/story.html?id=b2b862bb-ef9e-4caa-878f-e7fca45193d4
For years, bankruptcy trustees and credit counsellors in Calgary haven't had enough work.
View LargeIn July, 494 Albertans declared bankruptcy -- a 24 per cent increase from the previous year, according to the Office of the Superintendent of Bankruptcy.
Photograph by : Justin Sullivan, Getty ImagesARTICLE TOOLS
Printer friendly
Calgary homebuyers' appetite for luxury declinesHouse prices still falling, CIBC saysCanadian housing market faces U.S.-style bustExperts urge buying for long haulWestern cities hot, others notBut in the past couple of months, the workload has picked up as some Calgarians fall behind on their mounting debts and mortgage payments.
"We are seeing people now who are going into bankruptcy, walking away from properties that in the last . . . four years in Calgary has been very, very, very rare," said David Smith, a trustee in bankruptcy at Bromwich & Smith Inc. "Now it's becoming more common."
In July, 494 Albertans declared bankruptcy -- a 24 per cent increase from the previous year, according to the Office of the Superintendent of Bankruptcy
Condos have dropped 15% from peak value of 2007 - a saving of $44,000 from 2007!
Single family homes have dropped 10% to 13% from peak value of last year - saving of as much as $66,000 from 2007!
Is it going to fall more? Most definitely YES!!! I'd say another 15% for SFH and 20% for Condos from today's values in another 12 months. Is October 2009 the best time to buy? I am unable to say that.
What is the meaning of "Normal" by these compulsive liars? We heard these statements few months back from south of the border too.
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According to several CanWest publications Western Canada's real estate market it normal.
Victoria real estate market gets 'back to normal' as industry sees signs housing boom is over
CanWest Global's Vancouver Sun
http://www.canada.com/vancouversun/news/business/story.html?id=eb96cfa3-c78e-4860-8322-4c5b5a88ecab
"We're also looking over the last five or six years and what we're finding is things are just coming back to normal,"
-Victoria Real Estate Board President Tony Joe
Lower Mainland real estate market returning to 'normal' levels
Canwest Global's Vancouver Sun
http://www.canada.com/vancouversun/news/business/story.html?id=d5ad92e6-492e-4bbd-9337-6eb99b53b51d
"We're experiencing a return to more normal market conditions," Kelvin Neufeld, president of the Fraser Valley Real Estate Board said in a release.
http://www.canada.com/reginaleaderpost/news/story.html?id=8eae67ce-5c84-4f1c-9bc6-79afbd687029
Regina housing market back to normal
CanWest Global's Regina Leader-Post
The housing market in Regina was at a frenzied pace earlier this year, but during the third quarter, prices have cooled down and flattened out, says a report by Royal LaPage Realty. More available listings and less demand from buyers means the province's housing market has returned to more normal conditions, the real estate company said Monday.
http://www.canada.com/calgaryherald/news/story.html?id=f779011f-98ec-4fcd-a67e-df0231791985
Condo market returning to normal
CanWest Global's Calgary Herald
"In 10 to 12 months, the supply and demand in the condo market will be normalized. It's starting to shrink already."
-Calvin Buss, president of Buss Marketing
Levelling in real estate market sets stage for stronger 2008
CanWest Global's Edmonton Journal (from August 2007)
http://www.canada.com/edmontonjournal/news/business/story.html?id=6f34d769-e171-4bfb-98de-a0b9f38d2a02
"I don't really want to use the word 'softening' because I think this is more of a normalizing market. We were super-heated, and now we're coming down to something that's more reasonable."
Saskatoon home prices stabilizing
CanWest Global's Saskatoon Star Phoenix
http://www.canada.com/saskatoonstarphoenix/story.html?id=04e43490-4078-48b4-9632-5179bc242dd9
This fall, Janzen forecasts a real estate climate more in line with Saskatoon's "normal" residential sales market.
"We're more on par with 2003, 2004, 2005 - so we're indicating a return to a more normal, stable environment," he said, adding the market is expected to stay in a similar state for some time.
http://www.msnbc.msn.com/
U.S. set to go into deep recession, IMF says
Are we heading into recession? There is nothing wrong to cut down the daily expense/cost like recession than waiting someone from CNBC or CBC will confirm recession.
US: $700 billion package is not working. US Treasury Secretary Henry Paulson said that more financial firms were expected to fail in the US despite a $700bn government bail-out program.
UK: The UK government unveiled a package of measures aimed at rescuing the banking system which could add up to £400bn ($692bn).
Iceland: $$ billion injected by Russia into Iceland banks. Iceland's prime minister said he hoped to find a "mutually satisfactory solution" to the loss of UK Icesave deposits after Prime Minister Gordon Brown threatened to sue Iceland to recover the money.
Canada: BOC already invested $22 billion to save our biggest trading partner to fall down along with rate cute today.
Oil: Oil companies stock are hitting hard as oil is $85-$95 range.
Stock market: We know about that
Mortgage rates: Does not matter BOC or world cut the interest rate. There is no easy credit available in the market so variables are hitting as prime. Yesterday there was report on CBC about TD bank as new variable rate will cost $160/week more to customer. Remember a big population bought 40 yrs mortgage with variable rates and living paycheck to paycheck.
Average consumer mood: It seems from ceo to Wal-Mart cashier are very much aware: Market is bad, seems like recession soon, people are not spending as much, house price going down, inventory is high , hard cash/saving is king,
House inventory and price: It’s all about market and average consumer confidence. Our govt. and experts did a good job to tell people that we are different but not easy to sell now. Half brain consumer is more concern about his/her single dollar spending.
There are lot activities happened in last 2 weeks in financial market including Obama's big lead against John Mcbush.
I am big fan of Peter Schiff's and Ron Paul's view on USA and world economy. Most of the news anchor does not want to bring them as these two men do not make sweet conversation and people do not want to listen that.
Main Street - wall street, Subprime or 40 yrs was not a problem till house price was going up. Biggest Problem is main street greed and financial irresponsibility. People want to listen oh.. you bought condo for 400K then refinance for new BMW and now you broke. That okay as Govt. will take care. There is no leader in the country who likes to talk directly with Main Street. Hey listen your housing ATM and BMW made mess now it's your problem. You have to take this s**t ($700 billion) or ask help from your friends/experts who helped you to put in this mess and including bank.
Govt. problem - Housing is a human rights and not a privilege for rich people only. So who can not afford home we need to make them able to afford. If banks are not taking risk we can ensure bank with Freddie /Fennie and CHMC. Very soon CHMC will be next Freddie /Fennie and we tax payers has to pay for.
Q: How do our CD expert and ordinary people (like me) predict RE market in next 6 months or a year?
My take: RE market will go south faster than we thought because sum of all fear.
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US Govt. approach will bankrupt the US Fed.
http://www.europac.net/
We are being told loudly and repeatedly that the gargantuan mortgage bail-out package is necessary because illiquid mortgage-backed securities are clogging our financial arteries, threatening the economic equivalent of cardiac arrest. The idea of the plan is to transfer these supposedly valuable, but currently unmarketable, assets to the government so that private institutions can freely lend once more. The monumental flaw in this argument is that the mortgage backed securities are in fact highly liquid, just not at the prices the owners would like to receive.
Mortgage bonds are just like houses. They won’t sell if the owners stubbornly refuse to drop the price. However, they can find buyers if they acknowledge reality, and lower their expectations accordingly.
The government tells us that if these assets are held to maturity their full value will eventually be realized, and that it is only because of a lack of current liquidity that their value is not reflected in the market. However, as many private transactions have shown us in recent months, these assets will find buyers at the right price. These are not overly exotic assets but relatively straight forward mortgage obligations. The inability to find buyers is not a function of liquidity but simply of price. The government is seeking to “create liquidity” by overpaying.
The government’s assumptions about the “held to maturity” value of these mortgages completely understate the likelihood of widespread default. Some of the “illiquid” assets represent tranches of mortgage-backed securities that will be completely wiped out. Even the higher quality tranches will suffer severe losses due to mortgages that will inevitably go bad.
For example, take a $500,000 adjustable rate mortgage on a condo in Las Vegas that has a current value of only $250,000. To assume that this asset can be safely held to maturity is absurd, when in all likelihood the borrower will default shortly after the rate re-sets, even if the borrower has not yet shown signs of distress. Of course such a mortgage would be completely illiquid if one tried to sell it anywhere near par, but would be extremely liquid if priced to reflect a more realistic value; say 35 cents on the dollar. But if the government pays prices that fairly factors in likely defaults, it will bankrupt the very institutions it is trying to bail out.
Another factor that has not yet been considered is that that the government has already indicated that it will try to avoid foreclosures by reducing the principal and interest rates on the loans it acquires to levels current homeowners can afford. This will immediately eliminate the delusion of the government recouping its “investment” as even if held to maturity the mortgages will never be worth anything close to what the government pays.
Quote:
Originally posted by rahul_singh23
http://www.msnbc.msn.com/
U.S. set to go into deep recession, IMF says
Are we heading into recession? There is nothing wrong to cut down the daily expense/cost like recession than waiting someone from CNBC or CBC will confirm recession.
US: $700 billion package is not working. US Treasury Secretary Henry Paulson said that more financial firms were expected to fail in the US despite a $700bn government bail-out program.
UK: The UK government unveiled a package of measures aimed at rescuing the banking system which could add up to £400bn ($692bn).
Iceland: $$ billion injected by Russia into Iceland banks. Iceland's prime minister said he hoped to find a "mutually satisfactory solution" to the loss of UK Icesave deposits after Prime Minister Gordon Brown threatened to sue Iceland to recover the money.
Canada: BOC already invested $22 billion to save our biggest trading partner to fall down along with rate cute today.
Oil: Oil companies stock are hitting hard as oil is $85-$95 range.
Stock market: We know about that
Mortgage rates: Does not matter BOC or world cut the interest rate. There is no easy credit available in the market so variables are hitting as prime. Yesterday there was report on CBC about TD bank as new variable rate will cost $160/week more to customer. Remember a big population bought 40 yrs mortgage with variable rates and living paycheck to paycheck.
Average consumer mood: It seems from ceo to Wal-Mart cashier are very much aware: Market is bad, seems like recession soon, people are not spending as much, house price going down, inventory is high , hard cash/saving is king,
House inventory and price: It’s all about market and average consumer confidence. Our govt. and experts did a good job to tell people that we are different but not easy to sell now. Half brain consumer is more concern about his/her single dollar spending.
There are lot activities happened in last 2 weeks in financial market including Obama's big lead against John Mcbush.
I am big fan of Peter Schiff's and Ron Paul's view on USA and world economy. Most of the news anchor does not want to bring them as these two men do not make sweet conversation and people do not want to listen that.
Main Street - wall street, Subprime or 40 yrs was not a problem till house price was going up. Biggest Problem is main street greed and financial irresponsibility. People want to listen oh.. you bought condo for 400K then refinance for new BMW and now you broke. That okay as Govt. will take care. There is no leader in the country who likes to talk directly with Main Street. Hey listen your housing ATM and BMW made mess now it's your problem. You have to take this s**t ($700 billion) or ask help from your friends/experts who helped you to put in this mess and including bank.
Govt. problem - Housing is a human rights and not a privilege for rich people only. So who can not afford home we need to make them able to afford. If banks are not taking risk we can ensure bank with Freddie /Fennie and CHMC. Very soon CHMC will be next Freddie /Fennie and we tax payers has to pay for.
Q: How do our CD expert and ordinary people (like me) predict RE market in next 6 months or a year?
My take: RE market will go south faster than we thought because sum of all fear.
---------------------------------------------------------------------------------------
US Govt. approach will bankrupt the US Fed.
http://www.europac.net/
We are being told loudly and repeatedly that the gargantuan mortgage bail-out package is necessary because illiquid mortgage-backed securities are clogging our financial arteries, threatening the economic equivalent of cardiac arrest. The idea of the plan is to transfer these supposedly valuable, but currently unmarketable, assets to the government so that private institutions can freely lend once more. The monumental flaw in this argument is that the mortgage backed securities are in fact highly liquid, just not at the prices the owners would like to receive.
Mortgage bonds are just like houses. They won’t sell if the owners stubbornly refuse to drop the price. However, they can find buyers if they acknowledge reality, and lower their expectations accordingly.
The government tells us that if these assets are held to maturity their full value will eventually be realized, and that it is only because of a lack of current liquidity that their value is not reflected in the market. However, as many private transactions have shown us in recent months, these assets will find buyers at the right price. These are not overly exotic assets but relatively straight forward mortgage obligations. The inability to find buyers is not a function of liquidity but simply of price. The government is seeking to “create liquidity” by overpaying.
The government’s assumptions about the “held to maturity” value of these mortgages completely understate the likelihood of widespread default. Some of the “illiquid” assets represent tranches of mortgage-backed securities that will be completely wiped out. Even the higher quality tranches will suffer severe losses due to mortgages that will inevitably go bad.
For example, take a $500,000 adjustable rate mortgage on a condo in Las Vegas that has a current value of only $250,000. To assume that this asset can be safely held to maturity is absurd, when in all likelihood the borrower will default shortly after the rate re-sets, even if the borrower has not yet shown signs of distress. Of course such a mortgage would be completely illiquid if one tried to sell it anywhere near par, but would be extremely liquid if priced to reflect a more realistic value; say 35 cents on the dollar. But if the government pays prices that fairly factors in likely defaults, it will bankrupt the very institutions it is trying to bail out.
Another factor that has not yet been considered is that that the government has already indicated that it will try to avoid foreclosures by reducing the principal and interest rates on the loans it acquires to levels current homeowners can afford. This will immediately eliminate the delusion of the government recouping its “investment” as even if held to maturity the mortgages will never be worth anything close to what the government pays.
Above seems absolutely convenincing. No one can deny these facts.
Thanks Rahul for posting.
Ecom
Crashing in Kelowna
http://www.greaterfool.ca/
According to OMREB (Okanagan Mainline Real Estate Board) data, our housing market peaked out in March of 2008, with the average home price sitting at around $542K. In the six months following the peak of our market, the average home price has fallen about $67K; by far the highest raw dollar and percentage rate in all of Canada, and perhaps in all of North America for the six months following a market peak.
This is greater than Vancouver ($45K over 5 months), greater than Calgary ($62K over 16 months) and greater than Edmonton ($64K over 14 months). In effect, the owner of an “average” home purchased at the height of the Kelowna housing bubble has been losing $11,000 per month, or about $370 per day of their home equity.
When you look at that $67K drop, that ends up being about 12% from the top of the market, or 25% annualized. This is a rate of decline which is accelerating, because the annualized rate based off of August OMREB figures was 21%. I would not be surprised to see the annualized rate of decline to hit 35% before the new year.
The thing is, when you have a look at all 5 Fundamental Housing Rules, the Net income of the average Kelowna family and combine them with Kelowna’s 50-year moving trendline, it would not be unreasonable to expect prices to fall 70% (or more) in order to return to the realm of affordability.
These “5 Fundamental Housing Rules”, which have been used to great success for the last century, are:
The monthly mortgage payments should not exceed 33-35% of monthly Net family income.
The monthly mortgage payments should be around 1/120 of the mortgage, and no less than 1/200 that of the mortgage (this is the “120 rule”).
The monthly mortgage payments should be - at minimum - 15% less than comparable rents for similar units in the rental market.
The price of the house should be about 3 and no more than 3.5 times that of Net annual family income.
And perhaps, the most important one of all;
The average house must be affordable by the average family and their combined income.
Using all 5 fundamentals, the 50-year moving trendline of the price of an average Kelowna home ($174K) and the average Net family income for Kelowna residents ($53K/yr), the resulting “window of price ranges” means that the average home price should sit somewhere between $150K and $180K. This is a drop of about 70% from the March 2008 high.
Image that… a price drop of 70%. And this is a middle-of-the-road estimate; neither optimistic nor pessimistic.
Now imagine if the world enters into a Greater Depression. Average wages decline, which then causes the “window of house prices” (as defined by the 5 Housing Fundamentals) to go downward as well. If we do indeed end up facing harsh economic times down the road, we could easily see a peak-to-trough drop of up to 80% in the value of the average Kelowna home.
80%. Peak-to-trough. Boggles the mind, doesn’t it?
What makes these figures all the more realistic and rational is the state of the Kelowna and area economy. In a normal, healthy economy that can weather significant changes in prices, there tends to be 30% of the population employed in service-level and/or entry level jobs, 60% in middle-income, middle-wage jobs, and 10% employed in high-end, top-tier jobs that garner the highest wages. With this kind of a distribution, the middle-income, middle-wage families provide the economic buffer to moderate any bubble and cushion any crash.
Unfortunately, Kelowna has these percentages switched around — over 60% of our economy is service level and entry level jobs, many of which garner less than $12/hr (and this is in an economy where people require a minimum of $15/hr in order to properly support themselves, much less a family). Only about 30% of the jobs in Kelowna bring in a decent, middle-income wage. As such, Kelowna is particularly vulnerable to dramatic bubbles and catastrophic crashes.
And there is precious little optimism for future growth. The Alberta Oil Sands projects are slowing dramatically, and fewer Albertans are going to have the cash or the desire to spend copiously on a second or third vacation home. Retirees, who have made up more that half of our population growth, are seeing their retirement funds wiped out; both in the devaluation of their current home (which many retirees have been relying on to fund their retirement) as well as the value of their investments in the overall markets. In particular, the massive declines of the stock markets have been delaying the retirement of many baby boomers by as much as a decade or more. Remember, retirees are on a fixed income, and as such, are by far the most cautious of people — they are the first to avoid a declining market and the last to jump back in once it bottoms out.
Compounding this entire clusterfrack of a housing bubble is the speculative market. Many new developments have had the majority of their units sold to speculative investors. The Centuria project on the corner of Bernard Ave. and Gordon Dr., in particular, is over 60% flips and assignments. Even my own apartment complex - which is relatively new but far from prestigious - has had close to 15% of its units purchased by speculative investors. Once all of these speculators and flippers try to flee the market, we will have an unprecedented glut of housing that will push prices through the basement.
In fact, we are already seeing a massive spread between listings and sales that is unprecedented in our history. Sales for September have all but collapsed (265), and listings continue to reach for the sky (6692). If the trend continues, as many as one in five homes within city limits could be for sale at some point in 2009. Heck, we already have 25 months worth of inventory sitting on the market, and a healthy and normal market should only have about 3 months of inventory. These kinds of market stresses will only force the price plunge to be sharper and deeper.
Yes, things are going to get very nasty in Kelowna over the next few years. There are going to be many homeowners, speculators and flippers who purchased within the last few years who will find themselves holding an asset that is worth far less than the mortgage on it. I have posted at length on this subject in a local community website and forum called Castanet.net; you can find my forum threads at http://tinyurl.com/castanet-1 and http://tinyurl.com/castanet-2. Be aware, however, that the second one was started last November, and currently is sitting at 338 pages and 5080 posts. It will be a long read.
The Chinese have a very polite curse: “May you live in interesting times.” To be certain, the next three to five years will be very interesting times for Kelowna and its residents.
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Q: 70% crash in this article makes sense? Most of the financial irresponsible home owner can not take 15-20% price down.
