We hear this a lot lately:
What about foreclosures? Do you have any foreclosures?
With all the media hype about what’s happening in some (I say some because it is definitely not all) American markets a lot of people are wondering if we in Edmonton are being affected by foreclosures.
To be clear, our legal system and the foreclosure process here in Alberta is different in many respects than even the Ontario process, where they often refer to foreclosure listings as "Power of Sale."
What is a foreclosure?
A foreclosure in Alberta is simply a property that has gone through the Judicature process.
How does it happen?
Most commonly it’s because someone has defaulted on their mortgage payments. However it could happen because some has not paid their condo fees, taxes and so on.
In the not to distant future we will have an expert on foreclosures post a couple articles on the process, some of the work arounds, your legal rights and issues with buying a foreclosed property on this blog.
Today I’m just talking about the changing market. We have seen very little on the way of foreclosures in Edmonton for the last few years, mostly because the market was rising and therefore someone who found themselves in trouble could count on the market to get them out of it. . The reality is we are now seeing increased activity in this area. In days gone by foreclosures were a staple in Edmonton.
I used to handle a lot of the Bank of Nova Scotia foreclosures in the 90’s and it lead to my first interview with the twisted media with the then "Alberta Report". By that I mean my answers were taken to fit the context of the writer’s mindset which was that the world was ending because of foreclosures.
Anyway, it’s likely that we’ll see an increase in foreclosure sales. A quick search of the market in Edmonton today only displayed 95 bank owned or “in foreclosure properties”. I do expect this number will increase and will be keeping an eye it. If you’d like to follow the search I’ve set up for myself to see what properties are available click here.
Keep in mind some foreclosures are not always the deals you may think they are. In my opinion some estate, and divorce sales are better values than foreclosure sales, but that’s a story for another day.
I am a realtor in Downtown Vancouver and we aren’t seeing too many foreclosures here. With oil at $60/barrel are you starting to see an effect on the Edmonton Real Estate market?
Well have a look at the plunge-o-meter.
http://www.canadian-housing-price-charts.235.ca/index.htm
Lower oil prices caused projected profits from badly over-run upgrader projects to be scrapped or shelved. Layoffs round 1. Those support industries that directly serve the tarstruction industry: construction labor, construction management, steel suppliers, fabricators: they’re next. Then, the trickle down effect starts in the supply chain for these companies. All the while, there are fewer people “living large”. There are more restaurants and more retail outlets (that were built frantically to catch boom dollars) that will be seeing fewer and fewer spendy customers. That’s okay – they were short-staffed anyhow because their help could not afford to BE in Edmonton for $12/hr and pay the “new speculators” $1500/month for rent.
I think housing prices will continue to go down. I think those who are holding one, two (or more) investment properties that are losing money and hoping for this to be a “minor correction” will bleed out by spring and the spring sale will begin. Except there will be a glut and panic will be on the sellers time for the first time since 2007. I also think inventory numbers do not truly reflect the number of rental properties and empty investent properties that are not listed.
A lot of people are citing good job numbers while one of our major industries – conventional oil and gas – has already been priced out of a market. Well servicing costs are up to 2.5 million per well per year from $1 million a few years back as suppliers go for the throat and employees demand high wages to offset high living costs. Now these same companies are looking to Saskatchew and BC for gas – a very important part of Alberta’s economy. Tar is not our main or only bread and butter, and the tarstruction projects that were to keep (and bring) people here in droves are being scrapped one after the other as oil tries to settle in at $55/barrel. OPEC will try to cut production again in December to try and get it back to $70-$90, but that could be as effective as the LAST cut – which only reinforced the idea that demand (especially for China and India) were grossly overestimated based on their economies continuing to take off, and not being hit by the global financial crisis.
Sure we have lower than average unemployment – right now. And probably will have better than average employment numbers than the rest of Canada – this is nothing new. But those who said there were no more boom/bust cycles were wrong. We’re HEADING into a prolonged bust cycle after a long speculation ehanced boom cycle. Big party done. Big hangover coming.
That’s one Redmonton Oilbertan’s take on this. And I’ve lived here almost 40 years and seen a few booms and a few busts.
As a realtor you either believe in a global housing speculation price run that turned out to be the world’s largest ponzi scheme or you don’t. But the prices all went up and up and up – together – and now are all coming down and down and down.
Perhaps the old supply and demand and affordability of “joe six pack” will restore market fundamentals after all.
Those who are STILL praying for this to be a temporary correction on the way to “infinity and beyond” (I call it Buzz Lightyear Economics) should squeeze their hands a little tighter. They’re in for a heck of a ride.
Cheers,
E-town
Well, Mike. We’re seeing a slow down but it’s not because of $60 oil… Yet. The $60 barrel of oil is a new phenomenon that will really hit shores here in about 6-12 months. What we’ve seen here in Edmonton is the collapse of the world housing inflation ponzi scheme – flippers selling homes to flippers and so on and so on. House prices are falling in every city all over the world and it has NOTHING to do with the price of oil. It was happening when oil ws $147 a barrel. Eventually, market fundamentals (supply, demand and affordability) will come to call and it’s happening.
The price drops caused by oil demand destruction and it’s effect on the “oil dependent” Oilberta economy will not be slow and tolerable like the present slow down. I am predicting a $100K drop inside of couple of months come spring when panicked sellers who tried to weather the storm bleeding money from bad specuvestments hit the streets en-masse for the “spring housing rush”. We’ll see who can no longer handle those carrying costs soon – once stubborn sellers realize the ponzi scheme is over. The jig is up. A shoebox in Edmonton was not worth $450K in E-town. And it won’t be again for a long long time. The price blip from the last of the great 0/40 mortgages in September (showing a tiny increase in sales) resulted in big SALES ARE UP! headlines but to no avail. The herd mentality has swung the other way. Potential buyers (if there are any left) have dug in and are really indifferent to what Oilbertan homeowners *think* their homes are *worth* – which is always “more than what we paid”.
The people tricked into the 2007 housing panic (Alberta is out of land, they’re right we’re going to be locked out forever!) are all used up. Only the stubborn and educated remain, who know it’s a very bad time to buy right now. Besides, storefronts littered with “Help Wanted” signs is not a sign of a good economy – it’s a sign the bottom 1/3 of the working class (the service industry) can no longer afford to live here – and have left. So, unless another wave of soon-to-be-rich tarstruction workers comes in for some miracle projects that become “unscrapped”… I think there is simply no NEED for overpriced housing in Edmonton, and prices will continue to fall.
Edmonton was undervalued. 25% or so. Not 250%. Wake up people this is a bubble. Sell your hard assets and toys and unload debt now – reduce that HELOC before it’s too late. There is still time… Sellers can lay low and pretend all is well to (smartly) avoid adding to the panic/herd mentality. But for how long?
Cheers,
E-town
Sheldon/Sara: Sorry for the double post. It was not intentional. I thought my first post didn’t make it through. If you want to delete the first one go ahead, my thoughts were summarized in the second one.
Cheers,
E-town
As much as being right about something can feel good, I can speak personally that being right about something bad isn’t a good thing.
The only benefit to have seen all of this coming after reading/studying articles from the US for 2 years is that I have been preparing my personal balance sheet for the last 18 months.
I work for a venerable Oil/Gas service company, and I have been warned that the middle of next year will be a sharp drop-off in business activity…oilsands and conventional.
The reason being right sucks is that we all will be caught up in this one way or another. Even the guys who’s income will not change, and will see their purchasing power rise for used and domestic products will still be affected by the same decisions that the government will make, and the social problems that come from sever economic periods.
With such a rapid fall in commodities, slowing of consumer spending, rising layoffs and a general knowledge amongst the public that things are fast going to hell in a hand-basket, how can anyone not see that real-estate is going to suffer going forward?
Maybe the sky won’t hit the ground, but I like many others, have cut back on my spending.
I think what makes me the most uncomfortable is the fact that the level of desperation on the street will intensify as more people find themselves near crime and violence. I hope not.
Canada, US, UK, and many other nations economies have been consuming like everyone is getting 30 hrs/week overtime … now we are going back to 40 hours/week and many have committed their financial obligations around those overtime pay-cheques.
It should be clear by the spring that Canada is in a lot of trouble in many sectors of it’s economy, and that personal wealth will be vaporizing from real-estate.
I hope that in a couple of years when things settle-down (bottom) that we return to a sustainable level of economic activity; not like the 2004+ years.
In the future, I hope people who occupy their homes do so in with the perspective of shelter, not an income-supplement or a quick dollar. If we don’t, we can expect boom-bust cycles to continue and all of the pain and dysfunction that comes with it.
E-town,
The story you post is the way you would like to see things will happen in Alberta and in the world in that matter.
Are you one of those folks who thought the oil soon will be $ 250 a barrel and now believes that oil soon will be worthless?
Every company made it clear, that
they will continue with their oilsand projects at a later date, that means, we are at standby mode, but not by any means busted or finished.
And even if you call this a bust and the end of everything, we will not be staying in this state for very long.
RE and oil prices will hit the bottom just to go back up again.
Never in history they stayed low forever.
And the money alone, world governments injected into economies will have to show up somewhere.
Help wanted signs at store front mean that so many people moved up for a better paying jobs, it’s a challenge to find anyone, who wants to work for $8 – $14 range.
I have been driving right across Canada in the summer and it’s very visible that jobs at Tim Hortons, seven elevens etc. filled by folks well over 50 or 60 years old, something you won’t see in Alberta. Here, these positions are “reserved” (entirely filled) by third world immigrants and by teenagers.
Speculators and flippers are long gone from Edmonton RE market.
What you see is the average folks selling and buying, that’s it.
I just don’t believe your predictions.
Karl said,
“Speculators and flippers are long gone from Edmonton RE market.
What you see is the average folks selling and buying, that’s it.”
Karl, what do you do for work to be so in the know. The entire condominium building behind my duplex seems to be owned by specs. Many of the units are empty and for sale. They have never been lived in. There are so many listing shingles that the bottom six are laying on the ground. I think you would be more correct to say that the “smart” specs and flippers left town a long time ago. But of course that assessment may not be prudent depending on what you do for work.
Average folks may be trying to sell, but the smart average buyers are still waiting.
Another rate cut by the Central Bank of Canada:
http://www.reportonbusiness.com/servlet/story/RTGAM.20081119.wcarney1119/CommentStory/Business/home#comments
If I sold my house tommorow I would probably lose $10 grand from what I recently paid however, because I am on a Mortgage that is Prime – .85, I am saving more than $50 grand in interest payments over 5 years. I figure it is a wash! Because in 5 years, I expect the market to finally bottom out. Who knows by then, my house could have gone down in Market value by $50,000.
By saying I saved $50 grand in 5 years, I am comparing the mortgage I have now with a fixed rate mortgage of about 8%.
My suggestion to all those out there that recently bought a home, is to save your money and pay down as much as your mortgage as possible.
A home is a home is a home. It is a place to live and it is a long term investment.
Dont’ panic, but most importantly, don’t get foreclosed!
Spence,
Karl is right. Spec/investors are out. The reason you see so many condo units coming on now is because Condos take a couple of years to get onto the market. These are likely pre-sale specs that were bought 11/2-2 years ago depending on the project. SFH spec/investors have been out since late spring 2007.
E-Town this one for you
Do you want to see a miracle?
ohh ohh ohh, ohhh ohh ohh…
It seems so exceptional
That things just work out after all.
It’s just another ordinary miracle today.
Sun comes up and shines so bright
And disappears again at night.
It’s just another ordinary miracle today.
ohh ohh ohh, ohh ohhh ohh…
It’s just another ordinary miracle today.
question: if as per your advise everyone should sell, who should buy and buying in your opinion is not wise right now? So is your advice good for buyers?
Karl:
You’re living in a utopian captilalist dream world. Nice kids quitting school to work in tarstruction jobs. Immigrants working where they are supposed to be – pouring our coffee. Housing prices going up 40% yoy from flip after flip. Help wanted signs everywhere – everyone needs cheap labor but nobody can work for anything less than $20 because speculators are renting out their flips at $2000/mo. The tar machine will just run the province, no matter what the price of oil sinks to, or what global demand is, or what the environmental or social cost is. All because “China needs the oil” and anyone who has any brains is a landlord.
Well, it’s a very nice dream (personally I consider it to be a rather surreal nightmare). And today, it might be reality. But it’s not going to last because there is a dirty little word the uber capitalists like to avoid like the plague during the booms times: Sustainability. Something the “rest of us” have been talking about for a few years now that has largely been falling on deaf bull ears.
What is your high-school dropout grunt labor force going to do when all the holes that need to be dug are finished? What happens to Harpreet and Yu-Lang working at Timmies when the “nice white kids” come back from tarland looking for jobs to pay for tuition when they realize the REAL PERSONAL cost of selling out for short term money working for big oil? What happens when folks do NOT ‘pay that mortgage at all costs!’ when their mortgage is worth more than your house and just fold and go back home? (thanks Uncle Julian – you’re clearly a bank stakeholder… PAY THAT MORTGAGE you signed up for during the peak kids! AT ALL COSTS! Make me rich! [Make me laugh]) Some bulls state that people layed off here will stay here and be layed off HERE rather than go home. They’ll just have 3 or 4 couples to a home to afford the rent and bills – because Edmonton has such great weather and safe streets… Honestly, I am starting to think aliens are doing mind control on people considering how plain silly they sound.
As for ME being a boom/buster that flipped from Bull to Bear…Karl, bulls are blaming bears for cheerleading a bust just like bears denounce bulls for cheerleading a boom. One is not better or worse than the other – they just take turns fuelling the teeter-totter. People claim to be above the herd mentality but it’s clear everyone likes the nausiating ride up and down the boom and bust cycles. We fuel them with speculation, greed and fear. I don’t think I am personally responsible for this glaring defect of human nature but thanks for suggesting I am so omnipotent. I assure you I am not, and only wish to brace up for the coming economic challenges. I do hope that some folks who believe in nothing more than making a quick buck off the backs of others get their just rewards. Call me whatever names you have for that, but I do believe in karma. And I have more respect for hardworking people (like myself) that little opportunistic flipper cockroaches, and I really don’t think I am alone here. I also don’t feel too badly for people who are trying to live this hollywood star lifestyle as shown on HGTV or in the glossy pages of Canadian Living magazine on credit. These people can be found in the dictionary – under Darwinism.
As for the tarsands being in slowdown mode only, you are overgeneralizing things here. Tarsands extraction is full steam ahead and it will be unless oil tanks completely. Bitumen is profitable down to around $35 or so per barrel. Upgraders were a great idea and even though construction costs were %250 so was the price of oil, so some were optimistic. They were wrong. Oil tanked and credit became constricted while the labor force still wants to be paid in piles of gold bars. Sorry kids – the game is cancelled. Rained out by greed. The upgrading part of the tar machine is NOT going to get built here now, and will NEVER get built here if a) construction companies keep gouging b) supply companies keep gouging and c) China does not get their act together and start buying all of our dirty tar oil.
Right now, the USA buys all of our dirty tar oil on the cheep, refines it there, and sells it back to us in the form of overpriced gasoline. Rednecks cannot understand why we pay so much for gas even though “We have the oil”. Well, it’s simple: we sell our resources to our neighbours down south and they refine it, mark it up, and sell it back to us at whatever rates they can gouge us at.
No upgraders here Karl. Not for a long long time until the greed monster goes back to sleep. You KNOW people are being greedy when BIG TAR can’t even afford the prices!
So, we have tar. So what? Tar companies get rich. Conventional oil and gas put more bread on more tables than tar. Why are they looking outside of Alberta to make money? 250% increase in cost of servicing a well in recent years. Same well. Same guys. 2.5x the cost. Well, people went for the throat so they could afford their flips, hummers and widescreens, and now companies are fighting back with a vengeance. They can’t do business here anymore. Not oil. Not gas. Not even tar. We’ve priced ourselves out of a market here Karl.
The economists that are objective are saying it like it is: the greed and corruption resulted in an economy rotten to the core. Why shouldn’t it collapse? It’s a beautiful, fragile thin shell loaded full of hot steaming worthless BS.
Cheers,
E-town
Reb:
Sorry – didn’t mean “sell the farm” there. I mean unload toys and other physical assets that you don’t really need that are just adding bloat to your debtload. Like the greyhound bus sized motor home. Or his and her collectors edition Harley Davidson noise makers. Or the lease on the Hummer.
I really don’t think smart sellers will OR SHOULD get caught up in a housing bust frenzy. It will have as many victims as the price-run frezy. I don’t want ALL homeowners to suffer so that some bears on the internet can have vindiction on some flippers they prefer to loathe. Most people IN homes live IN homes and are not opportunists – they’re just putting a roof over their heads.
What I hope for? Oil to settle in at a nominal rate – maybe the $70 to $90 barrel that OPEC is shooting for (like they can’t control that anyways!). I hope housing prices deflate to where they “should” go – back to what 2009 numbers would have been if there was a PROPER correction plus nominal annual inflation – not to be confused with the speculator driven price run that some still like to call the ‘badly needed correction’. I hope the economy here does NOT bust and can keep chugging along during the coming economic white waters. I hope people can make a living here, afford housing here, and live in a place where there is more to the culture than Rednecks, pickup trucks, beer, drugs, gang violence and syphilis. (Sorry Red Deer – you’re not the STD capital of Canada anymore. You’re in 2nd now.)
I know. Hoping that everyone should have a decent shot at living in a home in a decent neighbourhood – tar people and non-tar people alike – makes me a filthy scum communist.
I just can’t help thinking about the reported 70% of Oilbertans that were in fact not doing any better (sometimes worse) as a result of the tarstruction explosion which caused (for them) a simple huge jump in the cost of living.
Those who say “You’re wages should have tripled like mine in the last four years!” are clearly the same contractors that even Big Tar can no longer afford to hire.
The greed will bite ya boys! It always does! The term “Priced out of a market” exists for a reason.
And we’re it. It’s here. Now.
Cheers,
E-town
E-town,
Perfectly said. You got it bang on!
Itchy:
I KNOW people still trying to hang on to the “last great flips of 2007″. They’re being RENTED man – if not sitting empty between tenants. I got people on my Facebook page ADVERTISING THEIR FLIPS and begging people (even friends and family) to tell everyone about their GREAT rental DEALS! Please Mr. Construction guy! Please come pay the mortgage on my revenue property so I don’t lose the entire farm!
Well. If there ARE layoffs in the construction realm and the supply chain and service industries that will follow, and fewer “wealthy renters” running around with fat paychecks…
We’ll soon see the speculators that are in over their heads come running for safety like rats out of a burning barn.
All the speculators are gone and it’s back to normal now? I don’t think so. Those speculators know when to dig in, hole up and hide now don’t they? And they’re being REALLY REALLY quiet, perhaps maybe nobody will hear them. Maybe nobody will pay no mind to the “For Sale or Rent” signs. Maybe they can slowly sell off their overpriced homes and not panic and flood the market again this time. Maybe nobody will smell their fear. Maybe there won’t be a feeding frenzy with speculators at the top of the menu.
Shhhhhhh! Someone is coming….
Cheers,
E-town
E-town,
My BAD when I said spec/investors are out…I didn’t mean to imply every spec/investor home that was purchased in the runup was sold, I simply meant they’ve been out of buying since spring 2007. This is added to the fact that builders either cancelled or vastly scaled back their own spec home programs means a lot less in inventory coming on next year than last. I didn’t think I needed to state the obvious in my last post, but I’ll say it anyway…..the market is not normal.
Itchy:
Okay – yeah I see it now. I thought you were agreeing with Karl when he said:
“Speculators and flippers are long gone from Edmonton RE market.
What you see is the average folks selling and buying, that’s it.”
And I jumped down your throat because I thought this was what you were agreeing with. Whups. My bad. Sorry dude.
I think there *IS* conventional market activity going on now. 2nd timers are not concerned because their equity position is relative to the market as is the house they want to move up to – so they are probably seeing a wash in price difference as the prices fall. They’re actually smart not to wait because they are taking advantage of slow conditions to a) take their time and b) put some pressure back on the seller. But they too are a seller if they are a 2nd timer looking to move up. 1st timers could be waiting on the sidelines for sure. They don’t want to jump in too quick and end up like the 2007 peakers facing $45 – $65K in negative equity.
So, in effect I agree with Karl – the trickle of sales represents some normal market activity. What I am blathering on about is the number of 2nd and 3rd investment properties there are in people’s portfolios, and what kind of position are these folks in. Long time investors with revenue properties that bought LOOOONG ago are probably renting to decent people at very competetive rates. But recent specuvestors trying to get their (much larger) mortgage rates out of their renters must be having a tougher time. And if layoffs continue, the revenue properties that were purchased long ago at lower prices will have the most room to move in rent reductions to keep renters in them. The new speculators will not be able to compete, unless they are willing to go into negative earnings each month, charge less than their mortgage payment and hope their “investment” recouperates in the long term.
We’ll see who’s got steel nerves quite soon here I imagine!
)
Cheers,
E-town
E-town
good comments, especially the link to the “plunge-o-meter”.
Until Feb 2005, prices were pretty flat. Then they started moving upward, but the real explosion occurred over a 17-month period from January 2006 to May 2007.
Let’s say buyers didn’t really catch on, until December 2007. (I assume that anybody who bought in 2008 knew the overall price picture and was fine with it.)
That means that, at most, 42,528 properties were bought while prices were climbing, or shortly thereafter. (Some were “flipped” one or more times and should really only count once.)
Trade-ups may have had hefty downpayments from the sale of their previous property. So, it’s difficult to quantify how many of those 42,528 buyers are in real trouble, today.
The majority of people who were conservative in the amount of debt they took on – and who are able to stay in their homes for a few year – will probably not feel too much pain from having bought high. Rather, they’ll mainly suffer the same effects of the economic downturn as those who did not buy during that period.
The people who are hurting now are most likely:
“Investors” who bought high, can’t afford to hold on, and are forced to sell low.
First-time buyers stuck with high morgage payments and low equity for a long time.
People who moved up to “too much house” and too many toys, and are now being choked by the associated expenses.
Anybody (including renters) with a high debt ratio and the risk of decreased or lost income.
While the price of oil and the job-producing investments in Alberta are important factors (out of the control of individual Edmontonians) the challenge will be to avoid panic and shut down personal spending and investments entirely.
(I am sure a good number of people will continue to shop until they are entirely maxed out, hopfully postponing their downfall until the economy has steadied itself.)
Can lower house prices help our economy? Probably.
Sellers who bought their house a decade ago should not really suffer too much if they have to sell today at February 2006 prices (unless they got that HELOC maxed out…)
That would allow a number of people back into the market. They would then need new furniture, window treatments, etc, which would keep the economy going…
Maybe I am just an optimist and the gravity of the situation will hit me eventually…..
Fair comments on the state of the market. My own take is that we were headed for a very soft landing this spring, housing wise, with a return to more average inventory levels until the global fiasco we see now ruined peoples confidence. We’ve been running 500-600 new listings a month less since about May this year (which makes sense considering the lack of new spec homes and the reversal of the migration numbers).
The future may be bleak or bright, who knows. I don’t even think the so called experts know. I suspect it’s all dependant on length and depth of the global funk. If things start to turn in a year or so…then we get off lightly. If we’re in the same situation 2 or 3 years down the road, well it’s trouble for a resource based economy. I do know that there is day after day of bad news headlines that at some point is going to turn good again…it always does. When that happens there is going to be a lot of pent up demand and I hope we don’t start the crazy boom all over again. Something positive and substainable will do just fine.
Great comments here guys. I’m a 1st time buyer, or was in April 2007. I bought a place that worked for me, my budget and postion in life at that time. Currently I am in a much better situation financially in terms of income, so I’m easily living within my means. I didn’t buy the place I’m in as investment, but rather a place to live and not pay a landord my potential equity. So, in my opinion I bought for the right reasons. However, I’m really kicking myself in the pants for taking the plunge when I did as opposed to doing it now; yup, like some have said 50K haircuts to be found. It hurts, and it hurts twice as bas as winning but what can I really do about it?? At the end of the day, nobody can really say what will happen in the future…..if that were the case, then this whole mess probably wouldn’t have happened in the 1st place. Bet lets face reality here, who isn’t holding at least one investment (RRSP, fund, stock, etc) that isn’t down right now?? I’d like to see home prices at least return to 2007 peak prices shortly just so people like me in my situation have the chance at “upgrading” into something new. As it sits though, my property is pretty worthless and if I had to sell tomorrow it wouldn’t be pretty…
Thanks again for all the comments
MDM:
I agree. We’re on the same page, totally. And here I thought I was the only contrarian out there who gave a rats rear end about the little guy – the working stiff. Cheers.
Itchy:
I hope you’re right. Pent up demand could equal another price run. Buyers sitting in the sidelines were warned, this could happen. But I still think that time is on buyer’s sides for now. Those who wait for homes to tank could be (literally) left out in the cold. Timing markets is said to be bad thinking, but after such rampant speculation and price runs you can sypmathize with people holding out for a while yet.
Jeremy:
Hey – nobody is bashing people who bought homes to live in. You paid too much because of people who never intended to live in the homes you were trying to get a decent price on. They made their money, and they think it’s pretty funny you’re stuck with a large mortgage payment. They don’t care about you. I, on the other hand, the evil socialist anti-tar sayer of doom do care. I am happy to hear that you bought a place according to your needs and budget. For you, I hope you can hang in there, and that after the bottom is reached, homes will slowly appreciate normally again, and you will see positive equity. It’s just a matter of time if you’re in it for the long haul. You made a decision with the best information you had at the time. Don’t let uber-bears knock you for making a decision – at least you made one – they never will. Some chose to buy – some chose to wait. And hold on because the waiters have not “won” anything yet. I know I sound like I contradict myself sometimes, but as bearish as I am I do not claim to be able to predict markets or know what any SPECIFIC individuals housing needs or risk tolerance is.
As for the people flaunting their recent financial victories in the face of Albertans not doing as well in the boom – just getting by perhaps, or slowly sinking:
Laugh it up baby. Falls from high horses have been known to kill.
Laugh it up.
Cheers,
E-town
Thanks for the comment E-town. Just a side note, I hope that my time in the market is more important than the timing of the market as it is with purchasing equities…
Nite all
No I am not a Bank Stakeholder.
I was smart and got a good deal / reduction when I bought.
Get real here E-town, at the peak,
there were 2000-2500 or even more Real Estate
transaction a month, here in Edmonton and another 1500 pending, now there is less than a 1000 a month and 35 pending.
Where do you see investors, specuvestors and other monsters here, in this picture?
I say again, it is the average folks that are buying and selling, that’s it.
I think Karl is right that it’s average folks that are buying and selling. The speculators certainly aren’t buying (no hope of a quick profit), and they aren’t selling because their asking prices are too high.
Somewhere the train got derailed and we’re arguing for the sake of arguing and I think I started it.
Specs are not buying. Agreed.
Specs have harding time selling. Agreed.
CURRENT market activity = people needing housing / need to move. Agreed.
Number of Specs sitting empty / being rented / for rent? Dunno.
Number of Specs in trouble? Dunno.
Like I said – 2nd timers who have a place already are only looking at the difference in the two properties, plus whatever equity gains they may enjoy if they bought/owned before the run-up. These people could explain the trickle of market activity.
Specs have left the building “market wise”. But there are still “X” amount of specs/flips that are being held (for dear life) and it’s going to be interesting once we find out the magnitude of “X” and what will happen to this potentially “hidden” inventory that could show up… anytime.
Uncle Julian – just picking on you. “Pay off that mortgage” is traditionally what smart people did. Most are still best suited to do that. But if house prices fall drastically, the few that bought at the peak might want to do long term math on other options, even if those options seem scary in the short term.
Ultimately, having a mortgage worth much more than your house is not a good thing. If they can ride it out and the monthly payments are not drowning them, then they may want to stick it out. How many 1st time buyers that took the plunge in 2007 are “getting by nicely” though? Hmmmm… 2nd timers might be okay because their properties went up as well and they had a good downpayment. But 1st timers? on 5/35s and 0/40s? They can’t even get a HELOC because of the negative equity! Ouch. No Hummer for these kids…
Might be a blessing in disguise for people that tend to abuse their credit to get that “Canadian Living Magazine” lifestyle – and those sexy red curtains to go with their chocolate brown furniture.
Yeah, gotta love those bright red curtains. We’ve come full circle from Hunter Green folks. Full circle. And we all know what happened to hunter green…
Cheers,
E-town
The speculators are not buying now is true, however there sre many speculators who bought into the prebuilt condo market in winter to early summer of 07 whose units are now just completed. Tons of them, to be honest. I know of one condo complex with 80% investor owned units just now taking posessions. Not a good news story for those speculators.
$48.50 for a barrel of oil and .50 cents for a share of Nortanic. When will the knife hit the floor?
20 years ago we had oil prices around $ 10 a barrel and pump prices at 29.9 cent and companies did not go out of business.
“20 years ago we had oil prices around $ 10 a barrel and pump prices at 29.9 cent and companies did not go out of business.”
And $30K a year was a good salary.
Karl:
Why are the conventional oil and gas boys either laying off workers and shutting down wells or looking to Sask and BC? It’s because in the last three or four years ALONE the cost of servicing a well has almost tripled (estimated at 250%). So how is profitability of oil in 1988 – not adjusted for inflation – of any relevance today in a market where peopl are naming their price because of hedged bets on $200 oil?
You’re comparing apples to oranges here. Tar is profitable (not 250% over budget upgraders – just bitumen) down to about $30/barrel and one would HOPE that even it oil DOES reach this level that it would surely be a short term bounce point and recover from there. But conventional oil and gas “left the building” long before oil corrected – operating costs in one direction and low gas prices in the other and there was just no profitability there.
Cheers,
E-town