lordmandeep
Banned
lol...
"real estate only goes up!!|
That scene in downfall is just classic..
"real estate only goes up!!|
That scene in downfall is just classic..
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Real Estate Predictions
- Thread starter Flux Capacitor
- Start date
TrickyRicky
Senior Member
The one question you really need to ask yourself if you are a little bullish or less bearish on real estate is how can the market recover? How is it possible for the market to recover? Try to envision the strategic path or trajectory the market will take towards recovery. It's there somewhere however improbable it might seem but it's so far in the future and so out of focus pretty well everyone trying to predict it is completely and utterly wrong.
BobBob
Senior Member
Inflation?
cdr108
Senior Member
Inflation results in Central Banks raising their rate, which ultimately depresses the value of items.
RE values will go down b/c affordability will be strained, and individuals will put money into other assets that achieve returns with much less risk.
Roy G Biv
Senior Member
Like?
AKS
Senior Member
blue chip stocks of course.
mrl14
Active Member
Anyone who thinks that the market will recover this year or next year is in for a massive surprise. Anyone who listens to the crap spewed out by Americans who get TV time will also be in for a big surprise. When a guy like Ben Bernanke goes out on a limb to say the US will be out of a recession by late 09/early 2010, he's simply trying to calm the markets, since he has the power to do so.
We're in for a tough 5-10 years. At best we remain flat during those times. Like several people have said, real estate has appreciated at a rate far greater than the average person's income to a point where even renting out the units won't cover the mortgages.
They may say banks in Canada are safe...but what does it mean to be safe? Our regulations are tougher than those in the USA? Do you think Canadian banks aren't invested in the States? Do you think outside investors aren't invested in Canada? Investors who have been scared by the bank failures in the USA? A lot of banks are well capitalized...but you can't stop fear from spreading and causing people to pull their money. Remember a lot of people aren't educated on the financial system.
This mess is far from over.
We're in for a tough 5-10 years. At best we remain flat during those times. Like several people have said, real estate has appreciated at a rate far greater than the average person's income to a point where even renting out the units won't cover the mortgages.
They may say banks in Canada are safe...but what does it mean to be safe? Our regulations are tougher than those in the USA? Do you think Canadian banks aren't invested in the States? Do you think outside investors aren't invested in Canada? Investors who have been scared by the bank failures in the USA? A lot of banks are well capitalized...but you can't stop fear from spreading and causing people to pull their money. Remember a lot of people aren't educated on the financial system.
This mess is far from over.
AKS
Senior Member
That's a little too negative to say it lasts 10 years 
http://en.wikipedia.org/wiki/Recession#History_of_recessions
It seemed to last 8 months to 2 years in the US.
The great depression lasted 10 years from start to finish across the world. But some starting later ending later and starting earlier ending earlier it's less than 10 years in a country I would think.
http://en.wikipedia.org/wiki/Great_Depression
I don't think our international trade has plunged by half nor personal income halved. Minimum wage just went up. Construction hasn't halted here. It's just slower and fewer. I don't see crop prices falling by 60%. Farmers are still farming, miners are still mining. The sky really isn't falling. Unemployment is rising, but it's not like half of Canadians are unemployed.
http://en.wikipedia.org/wiki/Recession#History_of_recessions
It seemed to last 8 months to 2 years in the US.
The great depression lasted 10 years from start to finish across the world. But some starting later ending later and starting earlier ending earlier it's less than 10 years in a country I would think.
http://en.wikipedia.org/wiki/Great_Depression
I don't think our international trade has plunged by half nor personal income halved. Minimum wage just went up. Construction hasn't halted here. It's just slower and fewer. I don't see crop prices falling by 60%. Farmers are still farming, miners are still mining. The sky really isn't falling. Unemployment is rising, but it's not like half of Canadians are unemployed.
Roy G Biv
Senior Member
While I agree that the mess is bad, how do you know?
No one really knows anything. Public and private Forecasts are being "readjusted" daily, and you pretend to know what's going to happen?
cdr108
Senior Member
There's a wave of ARMs coming due for rate adjust in 2009/2010 in the US.
The concerns are:
- will the principal be modified lower by the banks/gov't;
- will the interest rate be increased as per original ARM contract or will it also be modified lower by the banks/gov't;
- will the above be sufficient for homeowners to make them stay and continue to pay the mortgage, or will they still walk away if they owe more than the property is worth.
This is NOT a typical recession; however, Central Banks and gov't reactions around the world have NOT been acting typically either.
There has been so much gov't intervention that I believe the world will avoid a depression.
However, I would guess to say that this is the Great Recession that will last ~5 years.
The concerns are:
- will the principal be modified lower by the banks/gov't;
- will the interest rate be increased as per original ARM contract or will it also be modified lower by the banks/gov't;
- will the above be sufficient for homeowners to make them stay and continue to pay the mortgage, or will they still walk away if they owe more than the property is worth.
That's a little too negative to say it lasts 10 years
http://en.wikipedia.org/wiki/Recession#History_of_recessions
It seemed to last 8 months to 2 years in the US.
The great depression lasted 10 years from start to finish across the world. But some starting later ending later and starting earlier ending earlier it's less than 10 years in a country I would think.
http://en.wikipedia.org/wiki/Great_Depression
This is NOT a typical recession; however, Central Banks and gov't reactions around the world have NOT been acting typically either.
There has been so much gov't intervention that I believe the world will avoid a depression.
However, I would guess to say that this is the Great Recession that will last ~5 years.
Last edited:
Ken
New Member
cdr108
Senior Member
http://money.cnn.com/2007/07/09/real_estate/resets_are_coming/index.htm?eref=rss_topstories
Many Adjustable Rate Mortgages (ARMs) from 2004/2005 were set low for the first 5 years compared to the first 2 years as stated in the above article.
http://www.businessweek.com/lifesty...68.htm?chan=top+news_top+news+index_lifestyle
The above article states about a million borrowers have option ARMs, but only a fraction have already fallen due.
There's alot more info ... do a search on 'google'
northstar
New Member
^^^
With mortgage rates falling to historic lows, I wouldn't be surprised if some of these ARMs (Adjustable Rate Mortgages) result in "lower" mortgage payments when it comes time for rate adjustments to kick in.
Unless they are somehow locked into higher rates (which would seem rather odd), most mortgage rates are falling.
With recent quantitative easing measures announced by the US Feds, mortgage rates might possibly go even lower by another 1/2 % or so.
________
Of course, such low rates will cause a flood of new buyers to enter the market, thus renewing a whole new inflationary cycle...
and the beat goes on!...
With mortgage rates falling to historic lows, I wouldn't be surprised if some of these ARMs (Adjustable Rate Mortgages) result in "lower" mortgage payments when it comes time for rate adjustments to kick in.
Unless they are somehow locked into higher rates (which would seem rather odd), most mortgage rates are falling.
With recent quantitative easing measures announced by the US Feds, mortgage rates might possibly go even lower by another 1/2 % or so.
________
Of course, such low rates will cause a flood of new buyers to enter the market, thus renewing a whole new inflationary cycle...
and the beat goes on!...
ponyboy
Active Member
No one knows for sure. I don't see how real estate (I live in Toronto) can go up anytime soon. It has declined only 10% (equities have declined 40%), and can go no where but down because interest rates can only go up from here. Also, the health of Canada's banks books is but one factor. The "real" economy is taking a cumulative beating with lots of people losing jobs and soon defaulting on their mortgages. Because most people's emergency funds are few, many are just a couple paychecks away from terrible predicament. The affordability measures of housing are a reflection of very low interest rates rather than rising incomes or low house prices. Because most of us have to renegotiate our mortgage every 5 years, this leaves these affordability measures very sensitive to interest rates changes (in the US most negotiate rates for much longer terms). None of the establishment stakeholders (politicians, financial industry, real estate industry) want to mention the risk to consumers because they make money and stay in office from elevated prices and transactions (REIF). The smart money, like these builders cutting deals, is trying to reduce exposure before it gets worse. The current recession is not like most other recession because it is being driven by the massive write-down of asset values (similar only to 1929-36, and Japan's lost decade). These kind of problems are very difficult to resolve. It will take years to sort out unfortunately.
Ron
New Member
One thing to consider is rents. Rents always go up, not down. Especially as we are in for major inflation. Properties mainly condos below 300,000 cannot drop much more in price. I don't think a situation will arise where you could carry a 2 bedroom condo for 1000 where the present rent is 1800. There is upward pressure to keep condo carrying cost close to rental prices. It would be interesting to verify historical rental rates especially during the last housing crash in canada and see if rents crashed as well?