There was an interesting comment from Ron Hutchinson (EVP of the Realtor’s Association of Edmonton) in the Edmonton Journal today:
"I think if we get our numbers down to around 6,000 units, that’s likely where we’ll see a balanced market as far as inventory is concerned."
Makes sense to me….but when will this happen? For the past five months the inventory has dropped an average of about 500 listings per month. If that trend continues, it will take 5 months until we hit that normal range. Of course, that trend won’t continue – we know the inventory tends to rise for the first part of the year. Perhaps by the end of next year we’ll be back around that 6000 mark:
As always, you can see the close relationship between inventory and price:
All in all the press release from the board focused on the fact that the market is steady. The sales for October were low (as we’ve already addressed) but within the normal range.
I don’t see any improvements in the short and medium term in the total number of sales to absorb our current (and growing) inventory. The reasons are:
- most of the buyers are not first timers, thus they have to sell their existing home first
- consumer confidence deteriorating rapidly, too few people are crazy enough to commit long-term when they are not sure there is a job tomorrow
- 0/40 no more the option, thus many stupid buyers are out
- as real estate gets cheaper in other places in Canada, see the 13% drop in Toronto, fewer people will be willing to change their better house for a shack in Edmonton
- there is no shortage in land supply in and around Edmonton, eager builders will build cheaper and faster
- hidden inventory that is being rented out will pop up again closer to February
I agree. If we end above last years inventory then it’ll be “one more year of winter”
This was the exact trend certain cities in the US followed.
“hidden inventory”
Now there is an interesting term.
What about homes that have been purchased for revenue (rental) or just speculation that are simply not being put out on the market at this specific time? Perhaps some of those that are “digging in” hoping to see their gains come back once the dust settles are not bothering to list yet.
All this talk about inventory as if someone is out there… taking inventory! Inventory only represents what is being listed correct? To me it seems there is the “listed inventory” versus the real “actual inventory” and people can only speculate (that word again!) as to how many homes THAT actually is…
Cheers,
E-town
I HATE THE NEW MLS WEBSITE!!!!!!!!FREEZES ON ME EVERYTIME. MAYBE SALES ARE DOWN CAUSE KNOW CAN LOOK AT ANY FLIPPIN HOMES ON THIER WEBSITE. Anyone esle having problems.
We received notice from CREA today that fixes are underway for the issues with Realtor.ca. They first fixes will be up in a couple of weeks.
The Spring of 2009 will be an ugly wonder.
I fully expect to see inventory records broken yet again by those who de-listed this summer/fall with optimistic hopes of a spring bounce, and by those who are in full panic mode.
This won’t be any good for 98% of the population. Our government will be blowing our Tax dollars out the window to try and save banks by buying their bad “assets”…mortgages and other consumer debt.
25 Billion in Tax dollars already spent on mortgages, likely followed by another 25 Billion or more.
Add that to the sums that CPP invested a while ago in Asset-Backed commercial paper…so prematurely.
All of the side-effects of shrinking consumer spending combined with the effects of Billions of Tax-payer dollars that will continue to be thrown into the ether…sad for Canadians.
With so many headwinds, I find it difficult to believe that anyone can honestly believe that house prices are anywhere near bottom, or that now is a good time to buy.
Dear First-Time buyers,
If there are any of you left, and if you have a down-payment…hold onto your down-payment for a while, and watch it effectively grow via house-price declines.
Next year you will have so much to choose from, and if your job is still solid, you will have much to be thankful for.
It won’t be doom and gloom forever, but don’t be naive that the clouds are clearing so soon. It is far too early.
Michael:
All good points, but here is one point you overlooked – where are the potential first time buyers supposed to live while they are holding onto their down payments? Ah…yes, I see. They are going to be giving away their down payments little by little each month to a landlord who owns one of those properties you so despise. So in effect their down payment is disappearing each and every month anyway. At least by buying a house they have something decent to live in and their money is going toward something useful. By following your advice they should give away their money each month to live in some rat-infested hole with drug addicts next to them partying until 5 am every night rather than paying down a mortgage each month and living in a decent neighbourhood.
To each his own. You can go ahead and rent. I’ve been there and believe me, being in your home is so much better, even if, as you firmly believe, it will fall more in value. So what? I’m happy where I am and in 20 years when it’s worth more than double what I paid I’ll be miles ahead of the guy who is still paying his landlord with nothing to show for it except a rich happy landlord. And don’t forget, in 20 years those rent payments will have doubled or tripled too.
So go ahead and live in fear. In the long run there is nothing that can outshine a house for creating wealth.
GM
look at the rise of the price then the rise in amount of inventory. how is that good?
They are over priced and there is too many? did the population double in 2 years?
Every single private dwelling sold in 2007 was sold for highly “speculative” and absurd price, too bad for those buyers which are now seeing their homes going down in value, but how many families made the mistake of buying a place to live last year???? 20 thousand families perhaps??? Now how many private dwellings are there in the City of Edmonton? 300 thousand (according to the 2006 Census) How, on earth, the mistake made by the 7% of the population of the City can affect the mortgages situation of the remaining 93% of the Edmontonians?
I will be concerned about the Regional Economy when I see 2 out of 3 Edmontonians in a Credit Over-stretched situation (like in the U.S.) and with 4% prime rate and close to record low unemployment rate (and accelerated job creation rate) I don’t see that happening any time soon. Although, I do have to say that the inflation rate in Edmonton is a little bit scary.
The bottom line is that most Edmontonians can easily make their mortgage payments and still have some disposable income to keep the economy alive through decent spending. Most of Edmontonians who bought a place to live in, back in 2007 are planning to live there for at least the next 10 years. Just because prices went down (back to normal) does not mean those families lost money, unless they decide to sell their homes tomorrow, however, as long as they make their monthly payments for the next 10 years, they will be just fine, we all are going to be just fine if we have the right attitude, stop being negative about our economy.
Alberta will become the Energy Capital of the World. Foreign Investors and Entrepreneurs will come to Alberta establish their businesses here and create jobs and wealth to the province. Only the strongest will survive the growth pace of Alberta, and at the same time, the people that complaint for everything all the time, people that can not find the way to pay their property taxes, the people that don’t innovate, people that don’t invest their time and money wisely, the people without a vision, the people that won’t adventure to start a small business in this great economy will be forced to leave the province.
My advice to you (the bear); sit down and think how can you help the economy of this great city, the City of Edmonton, your city, perhaps having a 8-5pm job and paying income taxes is no a solution, maybe you can start a small business and create jobs, enjoy the benefits of the corporate taxes instead of income taxes. There’s got to be something you can do for your city, throw some ideas on a paper, elaborate a business plan and take it to your bank, apply for a business loan and take advantage of all the tools and the low interest rate out there. You have no idea how many entrepreneurs from outside Canada are wishing they were Canadian Citizens so that they can use their entrepreneurial vision to create nothing but great things for this country, and yet all you can see are bad things in your economy, when all they can see are great opportunities.
Stop counting the INVENTory and INVENT something
I belive you underestimate how much of the economy over the last 5 years was constrution.
you want to see people go bankrupt and lose houses?
Construction of one of Vancouver’s most prestigious condominium projects has been halted, but the developer says design changes, not the international credit crisis, are behind the move.
Work halted on the Ritz-Carlton construction site on Friday, and crews did not return on Monday after the weekend, leaving a giant hole in the ground near the corner of West Georgia Street and Bute Street in the heart of Vancouver
Onterio is in bad shape layoffs all over. what do you think will happen to those houses?
George Cope’s 100-day plan for fixing Bell Canada, which included laying off 2,500 managers, could hit a slight legal snag.
they want more pay but they are as good as layed off
The number of drilling rigs working in Alberta continues to decline, which is having a direct impact on several of our oil field service business units,” …
layoffs and slowdowns. how do you pay a gaint mortage with no work around?
“Steady Edmonton Real Estate Market Maintains Stability”
Really? Since when? Last week?
Stability? Prices have been dropping since May 2007!!!
I’m just glad you’re not my stock broker!
LOL!
***Amma,
I’m glad I’m not your stock broker either. Considering the financial turmoil that has taken place. Things have been extremely steady. Like the stock market not all real estate has performed poorly. There are a number of areas that have performed well above the average. But if you like many are only interested in looking at theface value of things then you’ll see what you want to see.
Sheldon
GM:
Do you seriously think that first time buyers that are currently renting are losing portions of their downpayments every month?
Renting is a hell of a lot cheaper than owning in this city. Most first time buyers are like myself, DINKS. Double income, no kids. Myself and my wife are spending less than 10% of our income on housing at the moment. Our downpayment isn’t being used to pay for rent….
On the other hand, had we bought a year ago, we would have easily lost $30,000-50,000 in equity by now.
$6.5 billion in building permits in September, up 13.4%, in Canada.
Value of building permits in Edmonton for September 2008 = $350 million
http://www.statcan.ca/Daily/English/081106/d081106a.htm
Nice work kenucho – great to see someone putting something positive up in this sea of “doom and gloom”.
I look forward to the new year when details of the downtown arena are released – big project that will be sure to attract some positive spinoffs…
‘Herd of negativity’ tramples Alberta’s good-news story
National media ignore signs pointing to continued growth, economist says
Edmonton / Richard Corriveau has a bone to pick with the media — the Toronto-based national media, in particular — and I think he’s got a point.
Corriveau’s beef? One-sided, overly simplistic, obsessively negative coverage of the economic slowdown in Alberta.
While Ontario and Quebec do face some tough challenges, Corriveau — Canada Mortgage and Housing Corp.’s regional economist for the Prairies and territories — says Alberta is in far better shape to weather the storm.
Sure, a slowdown in Oil Country is underway, he concedes, after years of overheated growth. But contrary to some of the gloomy headlines he’s seen in the national press, the sky isn’t falling.
“We’re not suggesting that we have a shield around this province, but we are forecasting that Alberta will remain one of the growth leaders into 2009. We’ll remain one of the strongest economies with one of the strongest labour markets,” says Corriveau, who addressed the 2008 CMHC Housing Outlook Conference at the Shaw Conference Centre on Wednesday.
———————————————
“I think the media have their role to play. But I’m not certain the debate is balanced. So we’ve tried to present in our outlook some of the bright spots we see that are simply being ignored.”
Example: Alberta’s huge lineup of major capital projects, totalling more than $286 billion as of September. The tally includes more than $210 billion of energy projects, and $37 billion of infrastructure and institutional projects.
http://www.canada.com/edmontonjournal/news/business/story.html?id=41ff0d74-0cf0-450d-b6d3-dbd72cec41bc
I wouldn’t put much faith in the so called “experts”, no matter what they are selling (boom or bust).
The only thing that seems to be constant with them is they are usually wrong. Anyone remember prior to the Tech boom when “they” were prdicting Dow at 20,000. Does $200 Oil ring a bell.
Without the huge profits we have been counting on from Oil and with less tax dollars coming in from peoples Capital gains etc., where is the funding going to come from for all these infrastructure projects that are keepig us rolling for the moment. When I looked five minutes ago Oil was $60 and a few cents, we will soon be in the fifties…
The circle of Alberta/life continues.
“In the long run there is nothing that can outshine a house for creating wealth.”
This is the single most ridiculous thing I’ve seen on any blog to date. You take 35 years to pay 2.5 times for something that MIGHT double in value and get a “nice place to live” as a return and that nothing can outshine this theory for creating wealth???
No wonder so many Canadian households are so far in debt with this kind of “investment mythology” going around!
Cheers,
E-town
***Having a home is like a forced savings program. Many times the ability to create wealth comes out of having equity or the ability to get credit to invest in a business or opportunity. The biggest myth that exists today is that renting is the best investment. It all depends on time lines and other factors.
Sheldon
Kenucho: Right. All the 9-5 stiffs in engineering, service industry, healthcare, auto sales and service, food industry… we’re all just going to put on our cowboy hats and become entrepeneurs. This narrow minded view of what constitutes a healthy economy is why were in this boom/bust mess. The real heros in Alberta are not the ones who packed it in and started serving the oil gods – it’s those who struggle to do good work at their chosen careers despite not benefitting directly from oil, and accepting a lower standard of living due to inflated living costs while others make quick money. Most of these “quick money making entrepeneurs” you paint with such a brightly colored brush are going to make their quick oil dollars fast, use Alberta like a cheap call-girl and leave her in a steaming environmental, social and economic pile of mess when the leave to go back to where their hearts never left: home. You seem to think people here now actually CARE about this place and paint such a shiney picture of unbridled capitalism. Your post read like wartime propaganda for capitalism and opportunism – and if you think everyone here has “vision” for how to make this place truly better and not just line their pockets, you definately have fooled yourself just like those buying into new economic theories such as “house as an investment”.
Cheers,
E-town
By the way Kenucho
“How, on earth, the mistake made by the 7% of the population of the City can affect the mortgages situation of the remaining 93% of the Edmontonians?”
There are more people in trouble besides just those that bought at the 2007 peak. In fact, it’s the 2007 peakers that are the VAST MINORITY in the Canadian version of the housing crisis. In fact, it’s folks who bought BEFORE the peak that are likely in more trouble. And here is why. The paper value of their homes went up drastically in many cases and the lure of pulling this equity out was TOO much to handle for many Canadians.
You see, compared to our US counterparts, we have less money to spend (due to higher taxes) and our dollar does not go as far. But despite this economic reality, Canadians have bought into “Canadian Living Magazine” lifestyle hook line and sinker. We are meeting and beating the Americans in the bling and “excessive lifestyle” department despite things costing more and paying more taxes. Where is this money coming from? It comes from the “New Canadian Household Economics”. The “House as an ATM economics”. The HELOC. The “You’re richer than you think ™” economics. The “House is an investment” theory. The ‘money tree in the backyard’ philosophy.
Kenucho: They leaves are all off the money tree. A paper loss in home value means nothing to someone just LIVING in their home for the long term, correct. But for those middle-classers with Canadian Living lifestyles and Mercedes and Hummers in the driveway, all on HELOCs and PLCs, the credit monster is coming to call.
If you don’t believe this, or understand this (as many of Canada’s leading financial experts do) that’s fine. Some people who believe in this new “equity gravy train” economic theory are well suited to remain in denial.
Just remember folks. Banks and lending institutions beg the government to buy their bad debt and governments cave in to help keep the economy going. Unfortunately, there is no bailout for joe-sixpack. He gets to face far less appealing words like foreclosure and bankruptcy.
Canadians are up to their necks in debt maintaining an excessively lavish lifestyle for typical middle class working Canadians. All the women bought into the Canadian Living magazine image. All the men were too whipped to put them in line.
And now they’re going to pay the cost.
As Ripley once said. “Believe it, or not.”
Cheers,
E-town
You create wealth when you invest money. The positive return from the money you invested, that can be called “wealth”. Unlikely, when you spend money, the return you get is not necessary “wealth” but a benefit in the form of a service or a product that can go up or down in value and create capital gain or a loss if you decide to sell it, but if that product or service your are spending money on every month is the place you live in, what’s the point of selling it for a profit if you will be left with no shelter but a good amount of cash in you pocket??? How can a bunch of cash protect you from the sun, the rain and the snow??? Why would you want to see the money you spent on your house back in your pocket??? That will leave you with no house.
Your home is not an instrument to create wealth, on the contrary, is an indispensable long term liability. The money you put towards your house payment every month is being spent in exchange of the benefit of having a warm shelter every day, a roof under which your family will sleep every night, this is not money invested to create you wealth.
A second property, a rental property or an investment property, well managed, can count as a mean to create wealth, but not your home.
The $1 you pay for a cup of coffee every day, will benefit you by giving you that energy boost you need every morning, you will never see that dollar back in your pocket, you did not invest a dollar in a cup of coffee, you spent a dollar in a cup of coffee, how can “spending a dollar in a cup of coffee every day” will create wealth for you, if the benefit you get from the cup of coffee is something you don’t want to trade???? It is exactly the same with your home, you will need a cup of coffee every day until you leave this planet, likewise, you will also need a place to sleep every night until are no longer
E-town, you are talking about those, who are irresponsible in life, most poeple are not like that.
And house is a good investment, even now, that prices retreated 10% of their historically record highs.
At times, when a one bedroom apartment is $800 and to rent a house is $1,300- $2,200 anytime I would choose to own.
Karl:
You would THINK most people are smarter than that. I THOUGHT most people were smarter than that. But geez for every friend I have that is leary of credit and responsible I have two other friends that are jumping in the deep end of the credit swimming pool.
Fact: Canadians are using more credit than ever before, and more are paying interest only on large revolving credit balances.
Fact: Canadians are saving less cash than ever. In fact, Canadians are now doing something new, like negative equity, called “negative savings”. They have no cash and are in debt.
Fact: Canadians are using revolving credit for staples like food, utility bills and gasoline. This is a red flag for many economists.
Fact: Canadians are just as “bling bling” as Americans with working class aspiring to own bling-bling luxury vehicles, and home furnishings featured in Canadian Living magazine.
Fact: Many Many E-town bungalows that had rusty old cars in front of them suddenly had brand new Lexus, BWM, Acura and Hummer SUVs in the driveway. Did everyone quit their jobs and start working for big oil? Everyone did well in the market? Or did some or most turn some home equity into a needless depreciating asset also known as a bling-bling ride?
Fact: Canadians bought into the “home as an investment” theory in the price run-ups. They were told homes were undervalued and the value would ramp up and then slow to more inflationary level gains. It appeared to these folks that they were sitting on a pile of money that would never go away. Are these people all coming out and announcing their greedy stupidity to the world? Canadians are too proud to admit this, so I beleive there are far more suffering quietly right now and losing sleep than we think.
They were richer than they thought ™. Now they’re probably not as condfident. From reading this blog, some are in deep deep denial. We’re still allegedly in a “short minor correction” on the way to $200 oil (or is it $250 now) and 1/2 million shacks in e-town.
Of course people who are “letting it all ride” think this way. Ever see a guy roll the dice and cheer for snake-eyes?
What you’re hearing is people speculating that THEY were smarter than everyone else, THEY were okay to spend the equity out from underthemselves and THEY will read the markets right and THEY will end up on top, sneering and leering at “bitter renters” everywhere.
Or it’s 1980 all over again. Either way, I’m not situated to win big OR lose big in this big speculator driven ripple. I’ll weather the storm because emotion and greed didn’t get the best of me.
Cheers,
E-town
E-town,
I, like others would like to see the sources of your “facts” – or is this your “opinion” based on your circle of “friends”?
Yes E-town, you are right, I do have a brightly colored brush, but I can not help it man, I’m sorry, I wish I can see things differently, but the truth is, I don’t see any major or prolonged economic problem for Alberta, I really don’t.
We are in an economy that allows a guy that does “window cleaning” to have good house, investment properties, lands and a good lifestyle, an economy where a dispatcher in a mechanical shop can become an inside sales representative in less than 5 years with the company. Alberta’s economy (and Canada’s) is being sustained by the small and medium size companies sector. Private companies and Alberta Government are investing a lot of resources in training, education, research and development to improve our Labor Market.
“…Canadian citizens and Permanent Residents who have resided in Alberta for at least two years can sponsor a parent, child, brother, sister, aunt, uncle, niece or nephew for provincial nomination. Though applicants do not need a job offer, they must possess certain minimum criteria to ensure that they will integrate into the workforce well. They must have a post-secondary degree, diploma or certificate, work experience, and be between 21 and 45 years old…..The new Family Stream will open the door to a new category of applicants who can contribute to the provincial workforce…”
http://www.albertacanada.com/immigration/immigrate/familystream.html
http://www.albertacanada.com/immigration/immigrate/ainp.html
Why would the government want to bring more skilled workers to a province where there is “debt crisis”? What are you seeing that the government is missing? What can you see that the government can not? Why would the government want to bring more people into a troubled economy? Please explain that to me
SOME OTHER FACTS:
Unemployment rate in Canada = 6%
Unemployment rate in Alberta = 3.5% (lowest in the country)
Population annual growth rate in Canada = 1.17%
Population annual growth rate in Alberta = 2.11% (highest in the country)
GDP annual growth rate in Canada = 2.8%
GDP annual growth rate in Alberta= 3.3% (highest in the country)
Average weekly earnings in Canada = $ 792
Average weekly earnings in Alberta = $ 871 (highest in the country)
http://www.finance.gov.ab.ca/aboutalberta/economic_bulletins/current_economic_indicators.pdf
I’m trying to see how can convert all these statistics into a bad thing, but I just can’t
Every single of our major financial institutions (TD, CIBC, ScotiaBank, Royal Bank and Bank of Montreal) have been posting nothing but profits, although earnings have shrunk a bit, but earnings after all, still on the positive side, on the green side.
I will start to concern about our economy when I see the Canadian banks reporting big scary losses like Lehman Brothers one, or when I see people leaving the country, or when people stop coming to Canada, or when our International Trade Balance starts to fall, but in the mean time, while we wait for that to happen, I am off to buy a Blackberry (instead of an iPhone) to promote the Canadian economy since Blackberry was developed by “Research In Motion” which is an Ontario based company that happens the represent the 5% of the Canadian economy.
Just a source of data on bankruptcies in Canada. Stats about those who were not richer than they thought(tm)…
http://calsun.canoe.ca/Business/2008/11/06/7324576.html
allin,
re. the new MLS site, I have sent multiple emails to the Canadian Real Estate Association, to point out what I perceive to be shortcomings that should be addressed.
In the meantime, I have contacted about 30 realtors directly, to tell them that their listings are not showing up where they should… i.e. a house in the Southeast showing up as a dot in the middle of the North Saskatchewan river, or an out-of-town listing 50 miles away showing up near the University.
Those vendors are missing out on visibility, but by now, I am tired of pointing out the obvious.
My neighbors put their house up 2 weeks ago. I can still not find it on the MLS site… probably someone mistyped the postal code. The house also does not show up on their realtor’s website and is not advertised in the Real Estate Weekly………
According to CREA, it is every realtor’s responsibility to make sure houses display properly. You can be sure that I won’t give my business to the guy my neighbors are dealing with !
E-town,
we sold our McMansion to people who were in search of the Candian Living Magazine life-style, in April 2007. Our neighborhood was full of high-end vehicles, and we had the feeling that a lot of the lifestyle had to be fuelled by HELOCs.
Then we moved into a different kind of neighborhood – decent houses that were the cat’s meow about 20 years ago. Very different vibe!
We have met many of our new neighbors, since then. Mostly single-income families living within their means, with paid-off mortgages. Totally oblivious to the increase of real estate prices. No HELOCs or PLOCs.
We may just have hit that pocket of “steady Eddies”, but you can’t imagine what a relief it is to live among them.
Initially, we thought we would just stay a short time and then trade up again, but there is something to be said for “keeping it simple”. We’ll rather pursue other investment opportunities, for now.
Having a high-end house in Edmonton does not seem to be the best investment, at the moment. A few years ago, the number of sales above 500K was minimal. Since then, that number has sky-rocketed and is on the decline again.
Could it be that everybody who can afford an upscale house already has one, by now? And could it be that much of the high-end inventory now for sale is lacking a bit of “location, location, location”, with huge houses on tiny lots?
At the other end of the spectrum, I do believe that entry-level buyers should consider taking the plunge, provided they are looking for a home “to stay”, and provided their finances are in order.
TO Kenucho
The BoC has revised its estimate of GDP growth in 2008, down from 1.0% to 0.6%. It has also revised its forecast for growth in 2009, from 2.3% to 0.6%.
http://www.journalofcommerce.com/article/id31106
***Comment deleted see code of conduct ***
Hi Jerry my friend, I am an Engineer too, and currently working on getting my P. Eng. I work at a Valve Company for the Oil Industry, my wife used to work in a daycare, but she is now staying at home, since we just had a baby. I make $57k per year, I’m bringing home $3,400 monthly, I don’t drive a new car, I have a 1991 Toyota Corolla, I live in a 3-bedroom townhouse I bought back in 2006 for $120k, my mortgage payments are $740 a month, with utilities, condo fees and property taxes it all adds up to $1,200 monthly. If I decide to sell my townhouse for $200k today I will make a capital gain of $80k, but if I would have sold it back in July 2007 I would have made $130K capital gain, the value has gone down a lot from last year peak. Housing price would have to go down another $80k, in order for me to be even, not losing money, but even, and yet why would I sell my place just because went down in value if can still make the monthly payments???
Life is good man!
MT
You are right about the GDP estimate; I had not seen the updated statistics before posting the comment. But that link you show the GDP of Canada. I wonder where we can find the GDP growth estimate for Alberta only; and compare it to that 0.9% GDP growth of the whole country. I’m pretty sure that whatever the Alberta GDP will be for 2009 will outperform the National GDP.
Here is another Report I have found, released on October 31, 2008 (they posted a base case and a pessimistic scenario)
http://www.td.com/economics/qef/fcstrev_1008.pdf
Kenucho,
I am on your side and really hate having to prick your balloon but facts are facts. The latest ADP report says that for the first time in years SMEs shed jobs. Firms under 50 employees are shrinking their payrolls and the shrinkage appears to be accelerating. Based on what you’ve said here I am sure you will find that a little discouraging. There is no data from western Canada yet showing the same trend but it seems well entrenched over all of the US and Canada in a general sense. Doesn’t mean there isn’t a bright spot here but I doubt it. If there is it won’t last.
All the stats you sight are lagging indicators. They are telling us about what happened in the past, not what is going to happen in the future. We know that no province exports as much of its GDP to the US as Alberta. History has shown when America gets a cold we die. Were you here in the late seventies and early eighties when we went through this the last time? I know, I know, it’s different this time, right? Yeah, we are less diversified, more dependent on the US, more indebted, more inflated real estate price wise, and we have our own made in Alberta NEP coming on line driving our largest employer (the natural gas industry) out of the province.
In the long term many people will go back to working for themselves, they will innovate, our economy will diversify, people will choose to go back home to be poor (when you are poor family and friends become more central to your life which may not be entirely a bad thing). Volunteer rates will skyrocket, useful public projects will be funded and built, and gradually we will begin the long climb back to a boom state. Eventually our oil will be extraordinarily valuable, we will figure out how to produce it cheaper, cleaner, and faster. We will exploit our other vast energy resources with clean technologies. Maybe this time we will be smarter and turn the next boom into long term prosperty.
That said, we are looking at a very long, rough road, which probably will be worse here than nearly anywhere else in North America and to ignore that, to fail to accept that, prevents or delays the improvements that will once again make Alberta a great place to live.
As an aside you do know that GDP is imputed right? That is to say when calculating GDP they include things like OOH. OOH is how much money everybody who owns a house could make if they rented that house out. This, of course, utterly ignores the cost of living somewhere else if you had to actually collect this rent, none the less, they call it real economic growth. (They also include a similar weighted stat that allows for rental income as if 100% of all rental units were occupied and had no expenses.) The OOH makes up 10% of GDP in the US, 9% in Canada, and lord knows in Alberta. The Canadian and American numbers have doubled in the last ten years. If you remove OOH growth in this year from the GDP this year you get us having been in a recession in Canada since the beginning of 2008.
I don’t think we yet know how bad things are truly going to be in the US. The IMF is openly speculating that earnings might drop as much as 50% over the next three years. Several analysts have called for $50 a barrel oil as far out as 2010. US treasuries bond traders (check out the website – across the curve) are saying we might be about to see massive devaluation of the US dollar. It could all get very ugly indeed. Me, I’m hoping it doesn’t but I think to claim it is different here, that we are fire walled when all the evidence is to the contrary is both silly and dangerous.
Maybe, I am wrong and you are all right but until we know that we have emerged from the dark woods with all our good ole boy redneck limbs intact and our Alberta butt unbitten the wise course no matter how positive you are is to hedge your bets.
Jerry:
Thanks for the nice feedback. But always remember that my opinions are only my own, and that everyone owes it to themselves to look at ALL perspectives of a given situation to make the choice that is best for THEM. My bearish posts are intended to offer a contrarian view to some of the more bullish ones. But some of the bulls have some good points too. For example, the best investors have the emotional detachment to buy in markets when investor confidence is through the floor. Saving money is a good thing and being cautious is also good but I can (honestly) tell you that there have been a few times my bearish tendencies have cost me as well.
And somewhere in between uber-optimism and depressive-doomsaying lies the balance of being positive but cautious in good but uncertain times.
Cheers,
E-town
***very well put
Sheldon
Rhettro:
I get my data where everyone elese does. Media, CREB, EREB, canada.com, blogs, Newspapers, interviews with economists and industry leaders, Stats Canada, and reports from banks and major lending institutions. I don’t link to my sources as much as others at times, but I do try to base my statements on what I’ve read in past months. I read so much stuff at home at night and I’m bad for not saving links.
But I’m not making this stuff up. Canadians have “keep up with the Joneses” fever and how much unserviceable debt this is going to translate into remains to be seen. My friends (large in number because I am so cool and funny ha ha) represent a good cross section of different Redmontonian folks from service industries, the patch, tar, engineering, healthcare and even realestate! Some friends have done well and deserve to live at a slightly higher standard. Others are not seeing wage gains being in industries too far removed from energy, are getting hammered by living costs and are a bit too comfortable with their debt levels than they perhaps should be. (Then again, I tend to have slightly less debt and risk tolerance being on the bearish side!) Some doing well are living below their means due to their bearish farmer-style save-coins-in-a-cream-can mentality they got from frugal parents. Some bulls might ridicule this kind of home economics but I happen to respect it. Now I have no issue with talented business guys or big dollar CEO’s with 6.5 figure incomes having a lavish home and a 90K ride. But when working stiffs try and adapt this lifestyle… and maybe flip a few homes to get there overnight… well look out!
I even have friends in TAR that were calling for a slower pace for the growth so that it would be more sustainable and not add to the boom-bust nature of things around here. C’mon. When the TAR GUYS are concerned about the overheated economy – ya gotta take notice! This is their bread and butter! Why were the SMART ones concered? Because they know if things went too big too fast it would come crashing down like a card house and it’s much harder to plan ones long term financial goals in such a situation.
Cheers,
E-town
Whale Blubber:
Excellent post. As much as Kenucho’s attitude is a good thing, we can’t rely on optimism to weather the coming storm.
I hope greedy people learn a lesson or two. I hope hard working people don’t get hurt too bad.
I may be a bear, but I am in NO WAY cheering for a devastating crash here. If anything, I would like to see changes made to lessen the boom-bust nature of our economy, stop being a one-trick pony once and for all, and learn how to grow slowly and steadily in a sustainable manner and not this boom bust madness.
There are social and environmental costs to boom busts that never see paper that we all should take at least some time to look at.
Cheers,
E-town
can someone advice on how to get out of a contract from the builder as the prices are coming down, we could be paying 100000 more than today’s price.
****Talk to a lawyer.****
E-town,
I, like you agree that the uber-optimism is no solution. But in a world that seems to love rolling around in the crap of doom and gloom – someone has to be a ray of light.
We are not immune here in Alberta, but I believe, as others do, that we are going to come out okay.
http://www.canada.com/edmontonjournal/news/business/story.html?id=41ff0d74-0cf0-450d-b6d3-dbd72cec41bc
Worse then the Great Depression
http://leavittbrothers.com/essays/20081104%20Worse%20than%20the%20Great%20Depression%20by%20Krassimir%20Patrov.cfm
As a new reader of this blog, I have to say that some of the comments are down right depressing… Then I realized that almost all the negative stuff on here is being posted by two or three main actors. It seems like whatever is posted on here, E-town can be counted on for finding at least five negative things to say about it. Between E-town and Brent, you would think the world is about to end, and it’ll happen in a black hole that originates in Edmonton.
As a recent home buyer (a few months ago) I’ve been keeping an eye on real estate stats lately, and while clearly what’s going on out there in world real estate markets is not all roses, I have not lost my shirt yet either.
Just a few points, from a recent first time home buyer:
1. I did not go 0 down 40 years, or a HELOC, despite what E-town may think of all new homebuyers.
2. My home is a place to live. I’m not owning it to make a pile of money, nor do I view it as my own personal ATM. I still believe that most Canadians treat their homes that way too.
3. Sure, it may turn out yet that now was not the best time to buy a home… Only hindsight will be able to tell that one for sure. What I can say is that I have gained a great deal of satisfaction out of my home, and I intend to live here a long time, so any paper gains or losses in the short term really are not important.
4. This is coming from a guy who in general is really conservative. I could have bought a home many years ago, but instead I went the conservative route and saved up longer for a down payment. In hindsight, I probably would have been better off buying earlier, as despite saving up a bigger down payment, the oversized gains in real estate during those years meant I had to pay far more when I finally did buy. This just proves my earlier point. Hindsight is 20/20. People living in the real world make decisions based on the best information available at the time, and then you live with those decisions and move on. Whatever may yet happen in the market, I’m quite happy with being a homeowner. The alternative would be to be depressed and paranoid about the world all the time like E-town seems to be, and that would probably lead to living most or all of your life in mommy and daddy’s basement.
***Fred,
Some people have nothing better to do. Then look at the dark side of things. I regularly get emails from people saying why don’t you ban so and so. You have to understand that everybody gives their perspective and some even have an agenda, but we do appreciate all viewpoints. Thanks for reading
Sheldon
This is good….
http://www.youtube.com/watch?v=bNmcf4Y3lGM
E-Town,
You say that owning a house is a poor investment, and that there are many other ways to accumulate weath that are far superior.
I am willing to take you at your word. I wish to learn more, as I would also like to be rich like you.
Could you please post some suggestions as to where I should invest my money that will gain me a greater return than my house?
Thanks.
GM
GM,
The key word is “timing”
For the last year and at least the next year is not the time to buy!
Cheers
Another Fred:
I never said home ownership is dumb. I said the fear-mongering in 2006/2007 that we’re out of land and that anyone who didn’t buy a bungalow in E-town for $450K would be “locked out forever”… I said THAT was dumb.
I never said to rent forever. That’s dumb. Even if home ownership costs more each month, the idea of not having to worry about a $500 rent hike when you’re on a fixed income and too old to return to work has HUGE value.
I simply offer a contrarian view to those who believe:
a) Prices of oil and homes will go to infinity and smart savvy realestate investors will be able to afford everything and dumb bearish bitter renter people will just have to leave Alberta. (This is the Bull fantasy island.)
b) Alberta is an island, immune to global economic meltdowns, demand destruction of oil and credit constriction. More Bull fantasy.
c) Anything in Alberta with four walls and a roof is “worth” 1/2 million dollars, and that this shoebox compares in any way to a property in Vancouver or Toronto and the median family income needs to jump from $70K to $140K so Joe and Mary can afford a box to put their kids in. Real estate bull fantasy.
d) We don’t have a credit problem in Canada, and that generally homeowners here did not get caught up in the home equity ATM game. House proud homeowner bull fantasy.
And as long as my parents keep cooking with cheese, I feel no need to leave the comfort of their basement. I don’t HAVE living costs Fred. I spend all my money on Pizza pops, video games and mutual funds.
Because I am clinically obese and my computer chair is now lodged in my oversized ass I don’t even have to mow the lawn anymore.
But you sir need to get up on a ladder and clean the leaves out of the eavestroughs. Don’t want water to back up, seep up under the shingles and get into the basement come springtime! Maybe you could multitask and throw the Christmas lights up at the same time.
Good luck with all THAT!!
Cheers,
E-town
I’m sorry GM. Looking at short term performance, I just don’t see any of my investments tank to the tune of $50K this past year. (ZING!)
As for the long term? A GIC can beat a house hands down if you put the same amount of money in each month.
But you can’t live in a GIC… can you now GM?
Hmmmm… A house may or may not be an investment but an investment is never a house.
Hey! Oil broke the $60 barrier and traded at a 52 week low of $59.97. The sky is falling! Negative spin.
And gas today is 88.9 in E-town! Time to take the tarpaulins off those Hummers boys! FILL ER UP – no need for a half-tank today! Let’s go to the mall – in RED DEER! Who needs good mileage when gas is THIS CHEAP HEY?!? Positive spin.
See? I can spin in both directions…
Cheers,
E-town
I think inventory is understated for two reasons:
(1) There are many listings I am assuming are expired (not listed on the mls) that still have have for sale signs and presumably are for sale. I live in old strathcona and there are 3 such houses on my street
(2) I believe two years ago comfree had 22% of Edmonton listings, they now account for 30%.
As a side note I obtained several quotes to construct a new house about a year ago and they were all $200+ a square foot. One of the companies recently called offering to do the same plan for $120 a square foot. If this is legitimate (doing due diligence now) this means building a new house is cheaper then buying a new house in the ‘burbs or buying preowned inventory.
I’d think if this were indeed the case (builders dropping prices) it would have some downward pressure on the market
***AF
The inventory is actually overstated. Many of the homes that were trying to sell have either rented or have come of the market. Your comment about comfree having 30% of the listings was true when MLS was at its lowest but it has become a parking lot with a 15 month absorption according to their august stats.
The reality is that we will have higher listed inventory for sometime to come but it is a much smaller percentage of the market that is actually competetive. All other things aside this is what gives buyers the advantage and why many say that now is a good time to buy. That too is an oversimplification.
E-Town:
You still haven’t answered my question. Or is “buy a GIC” your answer? GIC’s pay around 4% and the gov’t takes half that in tax. Any other ideas, or is that all you have?
GM
E-town wrote:
“And gas today is 88.9 in E-town”
Well, in Ottawa it is 82.5… I thought you guys in Alberta were oozing with oil? how come it’s cheaper in Ontario?
You guys make me laugh… all is better in Alberta because 15 more persons work there compared to another province? LOL.
Where oil at today? $62 a barrel. No wonder Big Oil is scaling down hugely in Oil Country…
Anyway, a sober reminder of things to come- and why home prices must come down a further 25%- from Garth Turner’s blog:
“Residential real estate accounts for almost 85% of all family net worth. Meanwhile the Canadian savings rate – as in the US – is now zero. Once home values start to slide, nothing has more of an impact on consumer confidence and concern about financial well-being. Since house prices rose by more than 73% in the past decade (about the same as the US in the years following Nine Eleven), mortgage debt has exploded. After all, household incomes have barely budged, so pricier houses simply mean more borrowing.
So, never before have we (a) saved nothing, (b) had so much of our wealth in one asset, (c) owed so damn much or (d) shown such appalling financial planning, with a total lack of diversification, as now. It was obvious when the average price of a home exceeded the ability of the average family to buy it, the market was over-valued. It would have corrected harmlessly, had it not been for the geniuses who invented subprimes in the US and 0/40 mortgages here. The boom became a bubble, and now a bust.
It was real estate, after all – not Wall Street, hedge funds or the greedy twits who ran Lehmans or Bear Stearns – that created the mess in America. The middle class there is being dealt a body blow and it seems we’re destined to be smacked in the same fashion.
Officially, home prices have fallen just over 6% nationally in the past year. But that number’s misleading. In Toronto, they’re down 15% from the peak, and an equal amount in Edmonton and Vancouver. Condo projects are being cancelled all over everywhere while home sellers now wait months for an offer and realtors play with their Berries during clientless open houses.
Listings have hit a high point, and sales are off 50% in BC, 43% in Muskoka, 70% in Leaside and by half in Kelowna. Spooked by the times, and rightly so, buyers are staying home in drives, knowing prices will be lower in January than they are now.
There is no option but for the Canadian government to push for lower interest rates, bring in an income tax cut and throw more billions we apparently don’t have at the Bay Street lenders. If that were to happen immediately, in an economic statement, it might help some to keep the real estate melt from becoming a meltdown.
But don’t hold your breath. It’s different here. You’ll see.”
***Amma,
I don’t have time to check facts all the time but I know some of yours are out of whack, but your perspective is coming in loud and clear. The typical in negative post this is bad, this is bad, this is bad, some personal jab and then the sky is falling quote. As for blaming it on real estate. That’s rich since it was the hedge funds who bought these subprime mortgages like crazySame ol same ol. Plus comparing 0/40 to subprime is equally rich.
p.s. I’m happy that gas is lower in Ottawa is lower than here and hope that things in Ontario can improve sooner rather than later.
Sheldon
GM
I dont think theres any one answer. The market is incredibly dynamic right now. If a person left all their money in one form of investment its likely they’ve been cleaned out by now.
“That’s rich since it was the hedge funds who bought these subprime mortgages like crazySame ol same ol. Plus comparing 0/40 to subprime is equally rich.”
I think all groups are at fault. Everyone decided to get “creative” at once and then there were chains of counter party failures.
One man’s ” negative ” post is another man’s ray of light. E-town, amma, Brent. To me what you guys are saying has a very positve ring. I’m a power engineer who took a job with the department of national defense, after turning down a position with Shell in Ft Sask. I make less than half of what those guys make. The thing is I’m not fearing for my job like many of my friends in the Oil industry are. I will soon be looking to buy my first home and all of these ” bearish ” views are very encouraging! I just want the prices to drop, drop, drop! A year ago I thought I’d be renting forever or at the very least be house-poor over a shack. Now I see the sun coming through the clouds. The ” bullish ” views are doom and gloom to me. It’s all a matter of perspective. It isn’t entirely a bad thing that young people who are becoming teachers, nurses, ect who are not making 100k a year in the oil patch will finaly be able to afford to own their own home. I admit I know nothing of economics, I just see housing prices dropping and I’m getting exicited to do what I had previously thought was impossible.
Jerry,
once you bought that house, you will be happy to see prices going up and up again.
Certainly, you don’t want to see them dropping more and more!!
GM:
Answer: someone who puts the equivalent of your mortgage payments into a mattress will have more money than you after your mortgage is payed for.
GASP! Yeah. Do the math. It’s not that hard.
The answer is paradoxical because home ownership is more complex than a basic investment. Sure, you get to live in it and it saves you from rental costs. But you have interest costs and maintenance and upkeep plus you need to substract anything owing on the home. And if you still NEED the home when it’s time to “cash in your investment” you either can’t, or you sell and rent.
Folks who think that their home is a sufficient retirement fund and the best and single only investment they need to make might be in for a shocker when they finally hang it up and retire is all I am saying.
Then again, someone aged 30 that took our a 0/40 does not need to WORRY about retirement because they’re going to be SEVENTY when the house is paid for and they don’t need much money at that point now do they? 5, maybe 10 more years to go? So they could sell their house and give the money to an extendicare facility and spend their remaining days sitting in a hospital setting getting spoon fed jellow looking at pictures of the garden they used to have.
Homeowners need to STOP WATCHING HGTV and get themselves to a REAL financial planner and ensure that their financial planner is not involved, in any manner, in realestate.
Oh. And stop cooking with cheese if you have kids. You can’t sell your house and use the equity for retirement if your kids and their kids are living in the basement. Unless you’re renting them the place I guess…
Those cheerleading rampant inflation of their homes because it’s their only “investment” who also have kids are betting against themselves. Their kids won’t be able to afford their OWN home so they’re going to stay at home with mom and dad.
The “need a place to live” is both an advantage AND a disadvantage.
It’s a semantics argument GM. I don’t consider a house to be an investment by the traditional definition of the term. Equity is great. Home ownership is great. But I’d be worried if it was my only “investment”, and would seriously want to recheck the math.
Home ownership is part of a strategy to build wealth, but it’s being marketed to people as the ONLY thing people need to do to build wealth. We’ll just run up housing prices with speculation and fancy color palettes and some hardwood flooring and live off home equity. Ah, the Canadian Living dream! Buy the house, stick in a straw and suck out all of that sweet home equity. Saving money and tradition investing the hard way? That’s for suckers right! Price of house goes up, equity takes care of careless spending, and leaves you with a nice pile of money so you can retire in a tropical seniors paradise.
WOW. Houses are going to need to be worth $10 million to cover all that now! This “house as an investment” pitch is as big of a myth as the myth Sheldon cited where people think “renting is the best investment”.
Home ownership is an ELEMENT to wealth building. Not the answer to it. Get a financial advisor if you don’t believe me. Any more coaching from me and I’m going to send you a bill.
My chargeout rate is $125/hr. See why I’d rather work on Saturday and pay a kid to paint my fence and mow my lawn? I just don’t ENJOY that handyman shit.
)
This post cost me $62.50 and now I have to work until 7:30. I must really love blogging. Yeah, I do.
Cheers,
E-town
E-town
When you wrote….
Then again, someone aged 30 that took our a 0/40 does not need to WORRY about retirement because they’re going to be SEVENTY when the house is paid for and they don’t need much money at that point now do they?
Do you think everything stays the same forever? Incomes never rise? Everything just stays the same and a 40yr mortgage can never be paid off in 15 or 20 yrs. Is that what you really think? If it is I can see why you have such a negative outlook…
Another thing… you supposed facts are not facts at all. They are conjecture and only in your mind.
So here’s a fact to most people on this blog, so it can’t be interrupted as conjecture.
Fact: Not everyone buys a house as an investment.
You stated that everything you buy has to have some type of investment attached to it. So just for arguement, here’s a question for you.
Why would you buy a vehicle, furniture or other household items? when, technically, they are all depreciating assets. Money losers. Why bother buying when renting or leasing is cheaper over the short term? According to your investment philosophy renting or lease is better than owning. So why do people buy vehicles when renting or leasing is cheaper? The reason is they want something to call their own so they have the right to do what they want with it and without having to ask someone elses permission first. That’s why most people buy things.
So this is why most people buy homes. (Notice I didn’t say houses or realestate, because those are investments. Homes are not, they’re a place to live and raise a family is you so choose)
PS: A bad Financial Adviser can lead you to financial ruin faster than investing in Real Estate ever could. So why not trying educating yourself and do some of that financial advising yourself. To start with actually check out the data your sources quote, don’t just take their word for it. Most information is in the details, not in the headlines. Hell it may show you that things aren’t quite as bad as you think they are…
Regards
Another E-town resident.
It seems to me what e-towns critics are saying comes down to “quit it with the negative vibes” and “you’re bumming me out.”
Perhaps you need to be bummed out. Buddhists actually think it is a good thing to be a bit depressed. Consider the following rumination on the power of depression from Shambala Sun.
“But depression is not necessarily a bad state to be in. When we are depressed, we may actually be able to see through the falsity and deceptive nature of the samsaric world. In other words, we should not think, “When I am depressed my mind is distorted and messed up, while when I am not depressed I am seeing everything clearly.”
According to Buddhism, the world that we perceive—the world we interact with and live in—is insubstantial. Through the experience of depression and despair we can begin to see things more clearly rather than less clearly. It is said that we are normally charmed or bedazzled by the world, like a spell has been put on us by the allure of samsaric excitements and entertainment. When we get depressed, though, we begin to see through that—we are able to cut through the illusions of samsara. Depression, when we work with it, can be like a signal, something that puts a brake on our excesses and reminds us of the banality of the samsaric condition, so that we will not be duped into sliding back into the old habits again. It reminds us of the futility, insignificance and non-substantiality of the samsaric condition.”
My question to Sheldon et. al is,
Are you sure you aren’t being charmed and bedazzled by the samsaric world?
Maybe e-town is more enlightened and clear thinking than you know.
I believe we should all begin by acknowledging the weight of diminishing expectations on our financial, spiritual and mental health. Denial does us no good, though it is a natural defensive posture on the part of those whose world is changing. Only when we reach acceptance can we begin to move forward into a brigher future. Remaining in denial leaves us stuck in a past filled with too many things and not enough joy.
Whale Blubber
Do happy people commit suicide?
PS: Whale oil, made from whale blubber (your nic), was the last great source of energy before the petroleum era. It, like oil was also a finite resource and slowly over time got harder and more expensive to find and produce. Back then they had to build bigger and bigger whaling ships and travel further out to sea to get it. But even with all the money they spent, production slowly declined because of the lack of whales. Doesn’t that sound familar…just think, compare giant whale ships to giant oilsand projects…. it’s like deja vu.
Are you guys all related to Barack Obama??
Surely, you can talk (write) a lot
in one sitting!
He-he-he
Neil:
You need to read my posts again. Breathe first, slow down, don’t skim them to get to your rebuttle because your rebuttle seems to indicate you either didn’t read or grossly misinterpreted what I have been saying here.
1) We all buy depreciating assets and consumables. This is a straw man you put up here: I never said all purchases are bad. Life costs money. We need stuff. I said going into DEBT and squandering equity (especially the negative sort) on “keep up with the Joneses” lifestyles is what hammered folks stateside and it could well hammer quite a few here.
2) I never said “Rent instead of buy” I said “Buy what you can afford, don’t squander your equity on bling, and invest in something other than the house because a house is not equal to saving for retirement and if you think it is you need a new financial advisor.”
3) I never said that everyone buys a home as an “investment”, and nor did I say EVERYONE digs the equity out from under their homes and spends it. I also did not say everything purchased must be an investment. I was speaking to GMs query, which alluded to the possibility that he not only thinks that a house is an investment, he might think it’s the only financial vehicle he needs to consider to build enough wealth for retirement. I can find you bears, bulls and fence-sitters alike who all agree this is a potentially dangerous idea.
4) The Bulls and RE boards and oil cheerleaders here post all of the “positive spin” posts. I have said repeatedly that I offer a contraian view. The bull posts are as one sided as mine are. As Sheldon says, you can tell what people’s agenda is by what spin they put on everything. I really don’t care if RE goes up or down. It won’t affect me. I don’t care if tarsands scraps projects. My work is far removed from oil and tar and I’ve worked in this town with little or no unemployment for over 20 years. My agenda here is simple: to provide a contrarian view to “Alberta has tar, and we’re immune to everything from the global housing crisis to the global market meltdown to global demand destruction of oil and besides we’re not a one trick pony anymore.” A contrarian view to the last statement is easy. It’s wrong on all counts. I will let folks make their own assumptions about what situation folks are probably in to be so adament about “Alberta Island” economic theories.
5) As far as my eduction is concerned, I have done my homework and can see both sides and draw my own conclusions about where the ‘middle line’ is going to be drawn. Many people agree with me. Alberta as a province is postured to take less of a hit than other provinces. But how well individuals do has pretty much everything to do with what basket they have their eggs in and how much they are leveraged. I just really get the feeling some folks here are just plain nervous. I have acknowleged my position as “Bear”. They don’t want to admit they are scared bulls. They just want to be right. It does not take Nostradamus to figure out why the perma-bulls are so restless, what they’re into and why they’ve bought into “infinity and beyond” oil prices, housing prices and demand for oil. Bully-bull-bulls can spike commodity and housing prices all they want in the short term with child-like speculation-fests. But market fundamentals will always come back to call.
Greed time is over. Fear time is here. Some choose denial over fear – sort of a new trend these days. It’s admirable but “wishing it away” is not going to change the outcome.
Reminds me of the craps player blowing on dice and yelling at them all their way to the end of the table. Eventually, if you play enough at that game, the house wins. As is the case with speculation and over-leveraging.
Cheers,
E-town
E-Town
Your comment:
Greed time is over. Fear time is here. Some choose denial over fear – sort of a new trend these days. It’s admirable but “wishing it away” is not going to change the outcome.
Is partially right. BUT
Fear time is over too. Now is the time of reasoning and reflection. Time to sit back at realize the end of the world is not nigh and really never was. You think the worst is still to come, I think the worst has already come and gone.
We live in a new world. The new information age we live in is running at fiber optic speed compared to the past snail mail speed. Fixes these days are quick and concise, so the recovery will be just as fast.
Also this new world’s economy is based on credit and that isn’t going to change. Sure there were excesses in the system, but those have been worked out and are being written off as we blog.
So in the end, the world will survive this intact and in better shape for the next leg up. Growth will be slower than in the past but there will be growth. BRIC and middle eastern countries will continue to grow which will require more and more of our resources. So this bodes well for Alberta and Canada.
You seem to forget one important human trait. After a period of time people get desensitize to things and fear is one of them. Sooner than later people say “fu** it”, I’m gonna live my life the way I want and that’s when reasoning takes over. I hate to break it to you but we are currently in this period.
Sure they may be a short period of reckoning while everyone evaluates the effects of fear. But I’m betting the world will come out of this little setback quicker than most people think.
Hell it looks like it has already started.
Cheers
Another E-Town resident.
Neil,
Well said, I agree with you!!
Neil:
I think it’s a good thing when people are less emotional about investing don’t too caught up in boom-bust cycles, especially here where they are somewhat of an inevitability. It IS the greed/fear mentality that really adds fuel to the fire. Some are inclined to believe that greed is a natural human condition, and fear just systematically follows. But you’re right – people cannot live their lives arguing bull or bear positions on blogs and need to make financial goals and decisions for both the short and long term.
HOWEVER. There is a big difference between “F**K it – I am going to take a calculated risk with money that I can afford to live without.” and Cara’s version (at the Alberta Bubble Blog) which was to bet the farm for a small $20K gain, or the “Keep up with the Jonses F**k it” where folks can’t afford the lifestyle they are aiming for but go for it anyways because everyone else is doing it. And here we have the guy who said F-it I want out on my contract and I want professional people to come here and help me do it just because, Accountability? Well F that too. He wants to win when he wins and get bailed out when he loses. Dude. You’re not a lending institution or a bank. THere IS no bailout for you!
F-it can be a good thing. We all need a little F-it in our attitudes.
Another question is: how many F-its can each family afford? The widescreen. The new vehicles. The travel. The home fashions. The kitchen renos.
C’mon. Ya gotta pick and choose if you’re on a budget and some folks are indeed saying “F-it, we’re NOT going to pick and choose we’re going to get it all now, because we’re living in the single best investment ever known to man that was just recently discovered – home ownership and equity!”
I could be wrong. I sometimes am. But most folks I am talking to seem to know more and more people who have a lifestyle that just doesn’t make sense for what they bring home. And the lifestyle started as soon as the price-run happened in 2007.
It does not take Inspector Jacques Clouseau to figure out what went on! They were probably “Richer than they thought…(tm)”
Anyways, I am going for a non-appreciating, consumable, money burning dim-sum brunch. I will pay in cash, and I will enjoy myself very thoroughly.
Good afternoon to all bulls, bears, lurkers, RE agents, doom-sayers, eternal optimists and fence sitters alike.
Cheers,
E-town
E-Town
Do you think credit overextending is a new phenonomon? It’s been going on for as long as I can remember and I’m over 50) Even I got caught up in it when I was younger and had to get a consolidation loan to get out of it. Had to live like a pauper for a couple of years, but I survived and the world kept right on spinning, even without my excess spending.
So a few people get caught, so what. My motto is “Sh*t happens, so deal with it”. The people who gambled and lost will just have to deal with it like everyone else who was in that postition in the past or those who surely will in the future. Hopefully they learn something from it, I know I did. (See… there is a silver lining in everything, you just have to look for it.)
As far as Cara or RA.. I would recommend they take their lumps and move on. Don’t forget you started with nothing so returning to nothing is not that bad. It may actually be what they need, it can be humbling. Don’t forget if you have to start from zero again the only real thing you lost was time. Plus if you have nothing it doesn’t cost you anything… (Jeez .. another silver lining)
To answer your question: how many F-its can each family afford? The widescreen. The new vehicles. The travel. The home fashions. The kitchen renos.
In Alberta it seems like a lot can; highest wage earners in Canada, bankrupcies are still well below normal, foreclosures are still well below normal, GDP is still positive while others are in recession or may be heading there very quickly, unemployment rate is still below %4, housing prices are coming down, payroll taxes are the lowest in the land, no debt or deficit, no more healthcare premiums (Yahooo), etc, etc, etc…. If only we still had Ralphie life would be grand, but all we have now is Eddy, oh well can’t have everything
….
Those people you talk to.. do they have an unsustainable lifestyle or are they saying other they know do? Because if they are, I call BS, I think what their actually referring to is really called “jealousy”.
PS: Why are you so worried about other people anyway, they made mistakes, so what, everyone does. That’s life. If their not thinking about commiting suicide, it’s not going to kill them, only humble them a bit.
Cheers
Another E-Town resident.
Neil:
“I call BS, I think what their actually referring to is really called “jealousy”.
It’s not hard (if you know someones take home pay) to tell whether or not they are living within their means. People that are overextended often say “You’re just jealous” as rebuttle, as this dismisses the possibility the person is correct, and they can remain in denial. That does not mean that there are not jealous people around. Myself, I tend to be more frugal in general so MOST people have more “toys” than me and spend more lavishly, but I am not jealous because I tend to save more and enjoy a very “potent” credit rating plus I am putting a fair chunk of change away each month for the kids college funds. (I don’t want my kids to have no recourse in life but to become Fort McMoney Tarstruction Welders. I want better things for them than this. If they go up there, it will be their choice.) I am lucky, too, that my particular hobbies and interests are either already paid for or just not that expensive to partake in. In fact, a couple of my hobbies have recently shown the potential to pay some dividends in addition to the “pleasure factor” which alone makes them worthwhile. A family member of friends we know has a VLT hobby! Not a good hobby… Being “Don’t smoke, don’t drink, don’t drug, don’t gamble” goody goodies may sound boring to some, but it’s really another variable in the road to wealth that many people don’t even consider.
“PS: Why are you so worried about other people anyway,”
Well, although most would say I should mind my own business, when people in general are doing things that impact the social, environmental and economic conditions of the world that my kids will one day take over for me, it IS my damned business. I notice that it’s usually people who are serving only themselves at the expense of others that want the “rest of us” to mind our own damned business.
Anything that affects me and my family IS my business. And what goes on inside Canadian homes is a reflection of the kind of people my children are going to have to live, work and play with when they grow up. And I need to know what people are up to so I can arm my kids with the knowlege they will need to survive and prosper in this world by avoiding behaviour that only leads to trouble.
Cheers,
E-town
Nice charts, good job.
People can speculate all they want, but this data is a good thing to watch.
Keep up the good work.