I am seeing homes that have sat unsold since last fall selling at or above listing!
I don't understand that. Yes mortgage rates are at historic lows, as I keep saying, but if the house wasn't worth $X six months ago, it isn't worth that now either.
What could be the conceivable reason for buyers to get back into 'panic' mode:
1) We have had a flood of retirees from Alberta and out East.
2) Buyers think they have missed the correction (which lasted from last August until December 2008) and house prices will run from now on and they will never be able to buy.
3) Like a Pavlovian dog, they have been beaten so many times by resurgent prices, that they are using the lower rates to jump on property, price be D@mned! Just gotta get in!
4) We bears are wrong and the correction is over. The recession will now end and the money will be flowing into over-priced assets again. The new buyers are just a sign of that happening.
5) There are off-shore buyers coming in with lots of cash eg from a newly resurgent China or 'fear' money from South Korea and Iran, and they don't really worry about Days on the Market or other subtleties.
FWIW:
Prices are still well below 2008. The recession has stopped dropping into a depression but is far from over. The TSX dropped 5% in one day at the first whiff that demand for commodities may not be that strong, when the World Bank said the world will contract next year.
Today it is rising off a bid from a Chinese company for one of our oil producers and raised OECD world growth estimates.
Which one is right? Growth in 2010, or further contraction?
How are you going to place your bets?
Stock market clues from the bond market
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17 hours ago
I am almost certain of further contraction in 2010. This talk of recovery next year is all just wishful thinking or complete BS. With things as unstable as they are no one could know for sure, but the future certainly isn't looking rosy, especially for Vancouver which has about 5% of the working population employed in construction. Since no major developments are starting up and olympic construction is almost finished, it looks like those people may have to look for other work soon.
ReplyDeleteThe main reason prices haven't continued their plunge is the interest rates, but they can't stay low forever, in fact they are already on the rise. Combine the rates with the most popular time to move for anyone with kids (due to summer holidays) and you have steady prices, with strong demand. The real test will be when 5 year rates get above 6% and then I think the fall will continue.
It's hard to say what will happen.
ReplyDeleteWhere does one get accurate information- Gordon "what welfare" Campbell? Bob "how did that per-sale work out for you" Rennie? Bill "developers are the only advertisers I have left" Good?
There are far too many people in the Government, the business community, and media who would be in big trouble if the market explodes- real chance this could happen.
If not, who cares, the long term fundimentals don't look good. Primarily, as a result of an aging society. One in four British Columbians will be over 65 within 20 years. With the Boomers past peak consumption, it is hard to see how they will drive up prices.
So it's left to the Echo Boomers; their parents encouraging them at every step- possibly even supplying the down payment by way of the "old family credit line".
It's a good time to buy right now!!! You might want to turn off that radio.
Almost as cheep as rent. Did you know that rents are comming down- I would bet that by late fall, you might be able to pick up a decent 1 bedroom in the West-End for under a thousand. Where will interest rates be then? Who knows, but they wont be any lower.
If the constuction industry continues to shrink: look out below!!! Is there any other businesses that can take up the slack?
The government has been propping up housing prices since the 80s with one measure after another to stimulate demand. Every time the market stalled the government brought in a new measure so you could get into debt deeper and faster. Can't save up a 25% down payment? We'll make it 20%. Still too much? How about 10% down? Still too much? We'll let you raid your RRSPs. Next up 5% down. Market stalling? 40 year amortizations and zero down. And finally, a Bank of Canada rate set at 0.5%. We've witnessed over 20 years of rabbits being pulled from hats. Every time I think there are no more rabbits, they come up with something new. It can't go on forever though, and when it ends, it will end very badly indeed. (By MarKoz)
ReplyDeleteIndeed Markoz
ReplyDeleteThe baby-boomers (of which I am at the tail end of) have been a most irresponsible generation.
The amount of debt left to future generations is staggering.
And you are right, our leaders have done their best to prevent any pain whatsoever. The RE values must be maintained to allow BBs to cash out or borrow against to pay for their retirement, trips etc.
All the while the govenment is borrowing to pay the BB increasing medical costs.
The next few generations will have to pay this debt and buy the inflated homes, then in a few years when rates have moved back up...they will be squeezed between higher taxes and higher mortgage rates. Not a good situation.
Latest ING rates:
ReplyDelete5 Year Variable 2.85%
1 Year Fixed 3.39%
2 Year Fixed 3.59%
3 Year Fixed 3.65%
4 Year Fixed 4.09%
5 Year Fixed 4.49%
7 Year Fixed 5.50%
10 Year Fixed 5.50%
About 1% higher than a month ago. That's quite a jump. We should know in the next few weeks, whether we will keep moving up or drop back down.
If we drop down it will due to weakness in the economy and deflation.