DISQUS

What about all those people who bought 10 years ago, when house prices were much less than they are now?

They will be benefiting massively from these low interest rates too.

The Canadian banking system is adequately capitalized to handle the recession. The IMF ranks the Canadian banking system as being the soundest in the world. As of March 2009, Canadian monetary aggregate M1+ is 14.0%, M1++ is 14.9%, and M2++ is 8.8%. Canadian money multipliers have been rising. The spread between GoC long term bond yields real and nominal is get this... 2.0% .

So, if there is deflation I can't see it anywhere in the framework of our financial infrastructure, I also can't see it in market expectations, and I can't see it in terms of a contraction in monetary supply.

I might sell, in 2034, when rents are over double what they currently are and I own a 100% interest in the property... I am uncomfortable with high risk speculative momentum positions and also with short positions. Unlike the netizens, of this blog I don't buy and sell on an annual basis, and am more focused on long term capital preservation.

Please panic more. THis message is not getting out to the media outlets. Tjhey don't know the truth Squidly77. Carioca Canuck, didn't last year you start putting ads in the newspaper last year?

Maybe, we need a second round of newspaper ads, and twittering to get this message out about the upcoming bust?

Who is living in a fairytale now?

I am wondering what it is like to be living inside of a dying bubble blog? Do you see your life flash before your eyes? Perhaps Gloria White walked too close to the white light.

The 30 day average for SFH in Calgary has now risen to $446,503. This is above the price prior to the Lehman failure in September 2008 of $444,048. The Case-Shiller futures market is forecasting the bottom is in for the US real estate market.

Enjoy...

PS: The rapid inventory decline in the resale market is not over.

As of Q4 2008, Edmonton is now one of the most affordable cities in Canada. More affordable than Toronto, Vancouver, Calgary or Ottawa. It is tied for affordability with Montreal.

Hello Edmonton Advantage. Rents are fairly high, and I understand there is less condo supply than in Calgary. Could Edmonton already offer some of the best real estate investment yields in the country? Meanwhile, Edmonton sales are set to break a new record for June.

I am wondering what has happened to Gloria. Has anyone heard from her lately?

Just some calculations estimating the impact of a spike in interest rates:

Average Calgary Annual Household Income: $84,600 (2006)
6% increase (2007)
5.7% increase (2008)
5.3% increase (2009)
=$99,811 in 2009

$384,213 at 4.35% is $2103/month
$384,213 at 8.7% is $3146/month
Increase $1043/month incremental payment shock due to DOUBLING of interest rates

Annual salary in 5 years
Assume 2% inflation, which is in line with inflation and LESS than recent historical increases
$99811*1.02^5 = $110,199

Incremental household income due to inflation $866/month

So my estimate has that a potential interest rate shock may not vastly impact the market in 5 years as when many people go to renew mortgages in 5 years that they will also likely have higher wages with increased affordability.

Bottom line: MAJOR interest rate increases can be comfortably offset by only MINOR increases in inflation

I am a bit disgusted with the bubble bloggers. Seriously, I would think by now they would have learned that the mortgage market is not in distress. Yet they continue to claim that waves of foreclosures and new listings are going to flood the market. I have asked pertinent questions, such as how much will it take for new listings to rise to swamp the sales rate, and I have not yet heard a credible argument to this. My biggest problem is that bubble bloggers have not been able to quantify the size of the risk. I have read that only 5% of Canadian borrowers were subprime (highest likelyhood of default) compared to something like 30% in the US that were in non-conforming loans. The bears continue to argue that the Canadian situation will align with the American situation with a lag, yet the financial data we have on hand shows that new listings are down dramatically. The level of starts in Calgary is brutally low, lowest in decades on a per capita basis. Yet, the bears think that all this supply is going to come online and flood the market. Not only that, but I also track residential building permits, and they are down considerably as well. So inventory is basically in the balanced range, but falling lower fairly quickly and there is little supply in the pipeline, and very little at the starts or permit level.

I honestly don't want to see a repeat of the 2006-2007 experience, but I am worried that if there isn't any new residential investment that we will get behind the curve once again in terms of new supply.

Whereas, the upward prices in 2006-2007 were caused by excess demand, I have identified that there is a possibility of a strong V-shaped housing increase. The 80% sales to new listings ratio is a sign of an overheated market, and if new supply does not increase in the next year, then the market may start stampeding upwards again. I honestly think the probability of a sharp rise is remote, but it is now on my radar screen whereas I had previously entirely written off the possibility.

I think that buyers and sellers are essentially at a balanced market though what I think might be happening is that a lot of developers, financiers, investors and the like may continue to keep capital off the table in terms of investing in real estate. As long as that capital stays away from continued investment in real estate, population growth (2.5ish%) will continue to grow, and that over the next couple years there will be a gap between what was needed by demographic demand and what happened in the real estate investment. It is this gap that may end up sending prices upward rapidly.

Over the past couple months, I have had to continually revise my estimates upward of the price projection for real estate in Calgary. While my idea for a "bottom" in prices for Calgary real estate has been adjusted from a date almost a year in the future to a date that occurred in the past.

Ultimately, I think if one has a conservative budget that they are comfortable with now might be a good time to buy (need to examine interest rate sensitivity). If you aren't comfortable with the budget, then realize that you may be looking at wage garnishment and seizure of your property if you default. It is much better to rent in this sort of situation to prevent this from happening, and invest in other securities, and then buy when the price\time is right.

Just my humble take...

Too bad they don't see twitter as the worldwide telephone instead of a megaphone.

Too many charities are blasting out messages and too few are listening and having a conversation.

The current level of housing starts in Calgary assumes that the current level of housing starts is only enough to replace the current housing stock with a lifespan of 137 years. Meanwhile, another 23,200 have made Calgary there home this year. The current gap between housing starts and demographic demand is massive. In fact, for the data that I have up to 1987 starts have never been as low as they were in the first quarter of 2009. Meanwhile the population base has increased by 80% since then, which means that as houses decay they will need to be replaced. Also, population growth rate is now 280% more.

I believe that the housing market was overbuilt during the period 2001-2005 caused by excess consumer demand. But the level of housing starts may indicate that the housing start correction is already well underway. In fact, it is possible by the end of 2009 we may already be in a large deficit situation in terms of housing inventory, and if left unchecked into 2010 may result in another price spike. We are currently running an annualized housing construction deficit of about 10,000 houses per year.

Don't forget to wave bye bye to the resale housing inventory.

McBride is now a serial adulterer...she had an affair with Bucher as well. She's a terrific model for journalistic ethics. And if this were say Jim Doyle - there's no way you are letting him off the hook.

The first bit was creepy, then, it was extremely erotic up until the last sentence, it was a little bit weird. So, you want to die in your fantasies?
How about next time, you concentrate more on the "during" rather than the "before" and "after", because I liked it a lot when you got going, you are really descriptive, and don't leave much to the imagination! xx

allie,

For clarity, sunny SW is which metro area?

Besides house declines, lower interest rates, there is also the impact of household income on affordability. Currently, affordability is better than the long term average, and better than the average in Canada.

According to Statistics Canada, as of May 2009, the average hourly rate in Alberta is up 5.0% year over year. As of March 2009, average weekly earnings are up 5.6% year over year and labour income is up 2.7% year over year.

Awesome article! I've been trying to find good sculpting tools for ages and now that I know what they're called (clay shapers) I was able to find a whole stack of sellers. Great work!

I find your blog fascinating and think you have an interesting interpretation of the world. I find Mulvey's theory of the male gaze less accurate in today's society, as the male body is quite objectified in the media now, but nonetheless still present. I will definitely be coming back for updates!
x

Is anyone else having comments that are going missing? Thanks.

One thing about bond yields rising and the potential to affect interest rates; risk spreads after the big wave of the financial crisis hit in September of 2008, or the spread between mortgage rates and bond yields grew incredibly high. In fact the spread between 5 year bond yields and mortgage rates in January 2009 was as high as 5.23%. This is the highest I have data for. Also note that January sales were some of the worst in a decade.

Currently the risk spread, is 2.68%, or the lowest since the crisis started in mid-2007 and falls in a middle range for normal historical range.

Financial crisis don't last forever. Historical precedent is that when mortgage rate risk spreads are in a normal range, house prices are flat to up.

While rising bond yields do have the potential to upset the housing market. I think it's unlikely that risk spreads will rise from here, which I actually believe is a better key to understanding short term corrections to the real estate market then bond yields in of themselves.

One update a week isn't enough for this kind of scene. Although I imagine the artist is getting quite a buffer of comics done due to all the white.

freaking unbelievable-im not supprised- people are gonna be pissed (esp. if you actually live in vancouver, like myself.) but you dont see me trying to scam the visitors here for the twilight series filming. vancity allie, go get a life (and possibly a REAL job? you know, try to make honest money for an honest days work sort-of-thing? ever tried that? maybe you should start.). kilpatrick, i guess youre ok cause youre not organizing stalkathons.

and the perfect manga for you would be....XD

Is there another available option instead of putting the file onto the reference drive, such as another free server for us to download it? Seeing as we have to be in the labs itself and be on our laptops. furthermore, we do not even need to use laptops yet for any of our modules

*All of those authors at least.

*continuously.

F. Scott Fitzgerald wrote The Great Gatsby to make money. He continued to return to it and make changes years later.

Jack Kerouac wrote On The Road on one big scroll, continuously

Ernest Hemingway rewrote chapters of The Old Man and the Sea several times.

Charles Bukowski wrote so you want to be a writer because he had something to say.

All authors have timeless works. All of them, I'm pretty sure, had different ways of completing them and for different reasons.

Just write.

Or don't.

Somehow I think the rest of us will be able to enjoy it without your critically important aprroval.

Thanks for the useful input, though.