ReMax: We're still in a Giant RE Bubble

[broken_legs]

http://www.theglobeandmail.com/report-on-business/remax-reports-record-breaking-sales-of-luxury-homes/article1546686/

ya ya ya OK... you have to really have to read between the lines a bit :D It's only meant to stoke some discussion.

Important parts highlighted below:



Luxury homes sales not only recovered from recessionary depths in the first quarter of this year, ReMax Canada said they shattered previous all-time records in most Canadian cities studied.

Attributing the upswing in sales to “improved economic performance, increased personal wealth, immigration and foreign investment” in its Upper End Market Trends report, ReMax Canada said previous sales records for high-end homes broke records in nine of the 13 regions examined.

The real estate sales company didn't provide statistics to back up the reasons for the bounce in sales, but did allow that the comparisons to last year's first quarter are flattering because very few people were buying and selling through the recession.

“It is anecdotal information gleaned from interviews we completed with the brokers in each market, and based on trends they are noticing in the marketplace,” a spokesperson said Monday. “As such, statistics aren't available, but it is a trend that was mentioned consistently among markets.”

ReMax's definition of a luxury home varies by market, from $400,000 in St. John's to $2-million in Greater Vancouver. The amount is usually arrived at by looking at the top 1-to-5 per cent of sales in any given market.

[kaput]

.

[spikerS]

it is them taking a small gleam of hope in a report, and trying to impose a rosy outlook in the hopes of getting those people sitting on the fence about home buying into the market, who would otherwise be waiting for stronger signs.

[sputnik]

That's some pretty creative "reading between the lines" and then coming up with that conclusion.

[broken_legs]

http://www.theglobeandmail.com/report-on-business/economy/report-warns-of-housing-bubble-threat/article1548082/

It's different this time.
It's different in Canada.
etc...

Houses be crazy.



Canada's housing market is looking increasingly like a bubble in the making, Edward Jones said today in a report.

“Canada’s housing market escaped the recent severe downturns in the U.S. and other countries. However, today’s conditions in Canada share some characteristics of those countries prior to their downturns, leading us to take a cautious stance on housing investments,” wrote analysts Kate Warne and Craig Fehr, adding that Canadians should prepare for “the possible impact” of a housing downturn.

An asset bubble forms when cheap money causes speculators to flood into a market, driving prices higher despite weak underlying fundamentals. With unemployment high and the economic recovery on shaky ground, the rapid recovery of Canada's real estate market has many economists concerned that prices could head lower. Prices have gained almost 20 per cent in the last year, as a lack of inventory and easy access to cheap money has propelled Canadians toward home ownership.

[broken_legs]

THERE IS NO BUBBLE

http://www.theglobeandmail.com/report-on-business/economy/housing-market-to-cool-carney/article1548762/



Housing market to cool: Carney
Bank of Canada Governor Mark Carney

Ultra-low interest rates can’t last, Bank of Canada Governor tells Commons committee



Canada's hot housing market will likely start cooling off this quarter and continue at a lower level of activity over the next few years, Bank of Canada Governor Mark Carney says.

Mr. Carney told the House of Commons finance committee Tuesday that economic activity, including the housing market, has rebounded strongly from recession — perhaps too strongly in the case of housing.

But he said he expects activity in the housing market to slow in the current quarter.

“We see a marked weakening in housing over the course of our projection (into 2012), starting from the second quarter of this year and over the balance,” he said.

[broken_legs]

10 yr going to the moon.

http://www.theglobeandmail.com/report-on-business/economy/debt-crisis-spreads-through-europe/article1548038/


http://beta.images.theglobeandmail.com/archive/00610/greecebonds_610784a.jpg

[sputnik]

Originally posted by broken_legs
10 yr going to the moon.

http://www.theglobeandmail.com/report-on-business/economy/debt-crisis-spreads-through-europe/article1548038/


http://beta.images.theglobeandmail.com/archive/00610/greecebonds_610784a.jpg

Where are the graphs for Canada.

Doesn't it strike you as odd that they just used 4 European countries for that analysis.

Interest rates in Europe and Asia have always been considerably higher than in North America.

[HuMz]

Originally posted by broken_legs
10 yr going to the moon.

http://www.theglobeandmail.com/report-on-business/economy/debt-crisis-spreads-through-europe/article1548038/


http://beta.images.theglobeandmail.com/archive/00610/greecebonds_610784a.jpg
Canadas in a completely different situation, don't see how those graphs are really relavent to our situation.

[broken_legs]

Originally posted by HuMz

Canadas in a completely different situation, don't see how those graphs are really relavent to our situation.

I don't really see how some stupid bets that Bear Sterns and Lehman Brothers made should affect the whole world but it did.

There's a lot of counter party risk associated with Greece. For all we know the banks in Canada are holding some of that crap.

I'm not saying that Greek bond rates 100% = mortgages go up in Canada. But I am saying that as risk increases, banks are going to raise their rates. Maybe a few European countries defaulting isn't going to affect anything, who knows.

Here's the Canadian 10yr.

http://i274.photobucket.com/albums/jj259/broken_legs/BoC10yr.jpg

[Supa Dexta]

So what happens when the bubble pops? Are rates going thru the roof to make that happen, or will rates bottom out again to help recover from it?

[Abeo]

Originally posted by Supa Dexta
So what happens when the bubble pops? Are rates going thru the roof to make that happen, or will rates bottom out again to help recover from it?

The rates are what got us in the mess in the first place, if we keep rates low we risk runaway inflation (while productivity, employment and income stay the same). The Bank of Canada isn't concerned with real estate as much as its concerned with inflation (it tries to keep it at 2%) and what our dollar does (which is secondary to inflation). The government likely has something in place to try to keep the bubble from popping, as they have the most to lose from it (ie the CMHC shitting the bed from people defaulting, not to mention lost tax revenue from a depressed economy)

[Xtrema]

Originally posted by Supa Dexta
So what happens when the bubble pops? Are rates going thru the roof to make that happen, or will rates bottom out again to help recover from it?

It ain't going to pop like the 80s. Too many part of our lives are now based on credits and high interest rate would kill us.

We are caught in a bind. Currency is so high that we can't afford to raise rates. But the RE market is overheating that it need higher rates to prevent a bubble and stop people from buying houses.

The RE surge right now is caused by panic. Panic of new rules and rising rates. I still don't see much demand after this surge is over after the summer. But it's not a giant bubble. There will be corrections.

[TomK]

Originally posted by broken_legs


I don't really see how some stupid bets that Bear Sterns and Lehman Brothers made should affect the whole world but it did.

There's a lot of counter party risk associated with Greece. For all we know the banks in Canada are holding some of that crap.


One day of activity does not a collapse make, but Spain's debt has just been downgraded as well so the next crisis could be underway...

In the US, the financial crisis (which would have destroyed the banking system worldwide if left unchecked) was stopped by moving the unpayable debts of big businessmen onto taxpayers.

Who can be made to pony up this time to prevent the, "end of days"? Germany's taxpayers could shoulder a lot of it if Euro-zone rules could be circumvented (and the Germans painted as greedy extremists for resisting).

Ron Paul has been pointing out the Fed has the ability to buy foreign debt so maybe it will be Americans again...

I have come to the conclusion that between legal tender laws, the ability to tax and print money and the ability to change the rules of accounting as they become inconvenient, governments can keep "the system" from melting down pretty much indefinitely. There will be big scares from time to time, but its all theater designed to garner political support for bailouts. By the time the dust has settled the taxpayers are actually *thanking* TPTB for robbing them blind to prevent a much bigger tragedy.

I think in the long run, its the savers that always get killed by the debasement of fiat money (the whole point of fiat is to be able to create more, otherwise we'd still be on the gold standard) so having significant (but manageable) mortgage debt might be the only way to come out even over the next 20 years or so. You just have to be able to hold on during periods of economic shock.

Maybe the world didn't have to be this way. But it is this way...

[TomK]

Originally posted by TomK


Who can be made to pony up this time to prevent the, "end of days"?

As always the truth turns out to be so much worse than the fevered imagination of a lone nutter.

http://www.telegraph.co.uk/news/worldnews/europe/greece/7696870/British-taxpayers-ordered-to-bail-out-euro.html

Welcome to the global economy. Wonder who my taxes will eventually be used to bail out?