Vancouver housing bubble
By ebizniz on September 1, 2007 - 6:15pm
A blog posting by Vancouver Home Mortgage:
It was reported in The Financial Post on Sept 01,2007 in an article "Ultra-low Fed rates stoked housing boom: Taylor"
The bursting of the tech bubble and September 11/2001 terrorist attack on World Trade Center has resulted in Greenspan aggressively cutting interest rates and holding them too low for too long. The asset inflation had resulted in the US housing boom built with too much liquidity and un-regulated mortgage lending. With the collapse of the housing market, US home owners lost billions of dollars in their property asset values all over the US. And, the bottom is not in sight yet!
The recent injection of liquidity by the US and the likely reduction in interest rates will not solve the current problem on US housing deflation. The correction in house prices will take many years to unwind until consumer confidence returns to the market.
The housing problem in the US was explained superbly by the blog posting by Dr. Housing Bubble on the housing and real estate problem in Los Angeles.
By ebizniz on August 12, 2007 - 7:41pm
As I see it by Vancouver home Mortgage:
Published: Saturday, August 11, 2007 by Paul Vieira, Financial Post
The International Monetary Fund said the global financial market turmoil and related credit crunch should be "manageable."
In recent days rates on the overnight market had climbed well above targets set by central banks.
The widespread credit crunch is the result of mounting defaults in the U.S. subprime mortgage market, where individuals with higher-risk credit ratings are able to obtain financing for home purchases. This spilled over to banks and investment funds, which had exposure to this market.
Click here to read the full report.
There are great concerns by the world financial markets that the credit sqeeze and lack of liquidity as a result of mounting U.S. subprime mortgage defaults may result in widespread economic slowdown.
The market is concerned that the U.S. subprime mortgage meltdown will spread to the general economy. As reported by Newsweek Business article A Widening Credit Squeeze? is spilling over to America’s credit-card debt.
By ebizniz on August 3, 2007 - 2:54pm
As I see it by Vancouver home mortgage:
In yesterday's Financial Post,
Reuters
Published: Thursday, August 02, 2007 reported
"Canadian, U.S. banks face limited subprime shocks"
So, it looks like the banks in the U.S. and Canada are well covered and can withstand the sub-prime mortgages meltdown.
But, Canadian home owners who bought into their homes recently will not be so lucky. The reason being that these home owners paid a lot more for their homes than those that bought a few years earlier.
In Canada, we will not be immuned to the price correction when the housing market turn south. It's not unreasonable to expect prices to correct 15% to 20% considering house prices have gone up almost 100% over the past 6 years.
In the hot housing markets in Vancouver, Victoria, Calgary and Edmonton. there are not much up-side potential in house prices continuing to increase without a correction. The down-side risk could be devastating for many home buyers who only bought their homes in the recent months.
By ebizniz on July 31, 2007 - 3:06pm
A posting by Vancouver Home Mortgage:
The real estate frenzy especially for Western Canadian cities like Vancouver, Victoria, Calgary and Edmonton is all consuming. Canadian home owners are happy with the huge price gains in their house values over the past 5 years. Many more people are encouraged to jump in for fear of loosing out as housing reports from real estate experts and economists are predicting another 7% to 8% price gain for the next 2 years?
The Canadian housing cycle will take its course and unwind itself to a level when rental return and housing affordability are in balance. There is a disconnect between the average Canadian household income and average housing cost. As it is now, there is a "madness of crowd" mentality that if one is not jumping in to buy a home, or 2 or 3 (for speculation), they will miss the boat.
We, in Canada are faced with the following problems:
1) over-valued house prices - similar to the U.S.
2) major problem with housing affordability - maybe worse than the U.S.
3) over-supply of housing inventory (not apparent now)
4) bullish crowd mentality on real estate - people think we are different from U.S.
5) an economy exporting 80% to the U.S. - danger of economy contraction
By ebizniz on July 26, 2007 - 9:28pm
A blog posting by Vancouver Home Mortgage :
With the Bank of Canada raising interest rates and Canadian Banks offering more attractive saving rates to consumers, investors will be tempted to move their real estate investments to safer savings account and GIC investments.
The Bank of Nova Scotia is advertising a 4.85%* on a 24-month GIC. The offer is only available until August 04. There are minimum deposit of $1,000 required and the GIC is non-redeemable.
ICICI Bank offers a more flexible deal, offering 4.5% on C$ deposits and 5.0% on US$ deposits on the bank’s HiSAVE Savings Account. There is no minimum deposit required and interest is calculated the daily balance and paid monthly!
The Canadian housing market is faced with:
* Rising Interest Rates
* Severe affordability problem
* Rising dollar impacting the manufacturing and resource sectors
* Softening in oil and gas prices
* Increasing new and resale home inventory
* Distinct possibility of US recession
These are negative forces that could topple the unrealistic real estate markets in Greater Vancouver, Fraser Valley of BC, Calgary and Edmonton.
What are your thoughts?
By ebizniz on July 22, 2007 - 5:53pm
A blog posting by Vancouver Home Mortgage :
The U.S. housing market has been on a downward slide for the past 1.5 years. More troubles on sub-prime mortgage problems and foreclosures are being reported every month. Each month, there are more bad news that home builders are slashing prices to unload their inventories. The housing problem in the U.S. as reported by many economists is nowhere near to hitting the bottom yet!
On the contrary, Canada real estate across all the provinces are reported to continue their upward march to new record house prices. House prices are now double what they were 5 years ago!
Why Canada so different from the U.S.? Is there a danger that the real estate prices in Canada will fall like the US?
Many people are wondering whether we are at the top or near the top of the housing market. What are your thoughts? You are welcome to post your comments here.
By ebizniz on July 2, 2007 - 9:52am
An article by Vancouver home mortgage:
Vancouver home mortgage is reporting a slower Canadian economic growth for the second half of 2007.
TAVIA GRANT from The Globe and Mail reported on June 29, 2007 a slow down in wholesale trade for March, 2007. The lower growth number at 0.3% is the first time in 10 months, and economists are projecting a lower growth number for April to be at 0.2%.
Inspite of the slower growth in Canada's economy, no one is expecting the long expect interest rate hike by the Bank of Canada to be post-phoned. "Rates may rise by a quarter percentage point on July 10, but the outlook for borrowing costs is fuzzy after that, an economist said".
JULIAN BELTRAME of Canada East Online reported on Thursday June 28th, 2007 "High-flying Canadian dollar helping bring down inflation". With the Canadian dollar at 30 year high at around Cdn $94.00 against the US dollar, economists are projecting a slowing down in Canada's economic growth. Eastern Canada's manufacturing companies are already reporting higher costs and projecting lower revenues from exports to the U.S.A. and overseas due to the high Canadian dollar.
By ebizniz on June 27, 2007 - 4:09pm
A web-log posting by Vancouver Home Mortgage...
As reported in Calgary’s Herald on June 23, 2007 CMHC green house incentive to home buyers. This is a good gesture by CMHC encouraging first time home buyers to buy homes meeting energy efficiency standard under the “go green program”. The savings are in the form of 10% discount on the high ratio insurance premiums and waiver of surcharge for extending the 25-year amortization period to 40 years.
In another article on the same day, "Condo living a lifestyle choice for home buyers in Calgary" the newspaper reported that condo living in the city is a preferred lifestyle choice for many new comers to Calgary.
It’s true that for many home owners, condo living is a more suitable choice beside being more affordable. There are also many other advantages of condo living especially in the city centers. In the major city centers like Toronto, Vancouver, Montreal and Calgary, young single and married couples are happy living in condos.
By ebizniz on June 16, 2007 - 5:00pm
On the housing market front, higher house prices are reported across Canada. In today's Financial Post article,
"INCOMES LAG BEHIND RISING HOUSE PRICES" investors are reported to be cashing on the hot housing market in places like Saskatoon.
You can follow and track the housing market for 6 Canadian cities by following
Brian Ripley's housing price charts.
The chart showed that Edmonton house prices have increased significantly since early 2006. The charts showed that Vancouver, Calgary and Edmonton are way ahead of the other Canadian cities in housing price increase for the past 18 months.
There are signs of pricing gains in Toronto and Montreal lately. Ottawa will likely attract buying interest as house prices are still low compared with other major Canadian centers. The housing markets in Toronto, Montreal and Ottawa could experience some catching up on real estate prices.
In addition to the above major cities, real estate investors will have to search out other Canadian towns that have good attributes for real estate value appreciation.
