Rob Chipman, the realtor who has been blogging and posting numbers steadily for the past few years put up a thoughtful post recently: http://robchipman.net/blog/?p=349 In it, he admits that even he is surprised by the strength of the Spring bounce and wonders what's up?
Well I think what's up is that a lot more homes just became affordable. We are down anything from 12-15% from the peak and interest rates have brought the monthly mortgage payments down 20% or more. Combine those two and you can estimate, that even though we are still at bloated valuations (compared to income, historically etc), homes have become 30-40% cheaper to buy than at the peak.
That's pretty good and some folks who have been waiting to buy, or move up, have jumped on this opportunity. Others have refinanced at these low rates and so maybe able to hold on to their homes longer through these difficult times (another good thing)
This is exactly what the central banks wanted. They could see assets..land, residential and commercial property and stocks in free-fall and the whole system was at risk of collapse.
In our leveraged society, the ultimate holders of these assets are the banks, insurance companies and CHMC. The only thing that they could do, was what they had done again and again for the last two decades, debase money so no one wants to hold it.
Forgetting of course that this was exactly what got us into this mess in the first place. However, this time they had no choice but to pull out all the stops.
Frankly speaking if this didn't cause a small blip up in activity then we could all kiss capitalism goodbye and look for another system of societal interaction.
In the US, the blip was tiny, but enough to stabilise the stock market from it's quickest decline in history.
In our city, the blip was a bit more. That's good, but unfortunately I don't think it will persist for much longer.
We still are in a nasty recession. Lay-offs like the 800 person closure of E-bay's Burnaby call center will continue. Add to that the government cut backs, that in my opinion, WILL come from Gordon after the election, when a 'special budget' will show us how bad the books really are.
However for now there are folks buying. You see, there are some people who look at monthly payments and some who look at price. Those who look at monthly payments, cant believe their luck; prices have dipped, rates are down..they can buy...and they have decided that they wont look at the price in 6 months and kick themselves if their equity goes, or if the foreclosure down the street shaves 20% off.
Others are focused on price, they see a 20% a year, multi-year rise and then, in the worse financial crisis since the great depression, a 15% drop. Surely that cant be it? They would be upset to buy something, the biggest thing you ever buy, and then find it 15%+ cheaper in a year or two.
Count me in the second group. I have waiting so long another year is hardly a chore.
June and the summer will be very telling.
Just got back from the EPIC sustainability show. A bit of a disappointment. I was expecting some solid ideas on how to reduce waste, particularly plastics which are destroying our oceans and rivers. Instead I paid $15 to wander through a bazaar with people trying to sell me stuff.
There were a few stands given to Fraser River protection and other environmental groups, and some interesting speakers, but ING? Investors group? The car companies??
Lots of food samples, given out in little plastic cups...duh! How the heck is that sustainable??
Kudos goes to Salt Spring Coffee Company which was the only one (that I saw) using coffee mugs for their samples, and this company stood out for me: http://www.besics.ca/. You can buy all your summer picnic wear..plates, cutlery, even straws for $30 or less and it's all biodegradable.
However the show did not meet my expectations, but then it was sponsored by my least favorite media monopoly.
First look at the convention centre for me, and I liked it. Lets hope it isn't an expensive white elephant.
BTW - when I bought my ticket they asked for my phone number? Huh? Why? The last thing I want is some call centre trying to sell me something...maybe even a newspaper subscription?? No!
Friday Free-for-all! August 18th 2017 - It’s Friday and that means it’s time for another Friday Free-for-all! This is our regular end of the week news round up and open topic discussion thread fo...
2 days ago