friday free for all!

Here's your open topic for Friday September 28th.

-The Canadian credit crisis
-$26 Million up in flames in New West
-US new home sales hit 7 year low
-Fewer flock to Alberta
-'Unwavering Demand' supports rising prices

What are you seeing out there this week? Post your news, links and anecdotes here!

How do you afford your rock n' roll lifestyle?

The article I mentioned on Tuesday is now up at the National Post - Brian Hutchinson takes a look at the total imbalance between local incomes and local housing prices and tries to figure out how it all works. Its nothing most of you haven't already been over numerous times, but its interesting to see it examined a bit closer in the mainstream media.

Check it out.

..and then the renters moved in.

What's worse, irresponsible owners or irresponsible renters? There's an amusing article in the Real Estate journal about the way the speculative boom down south went sour when the market turned, spawning complaints from residents who now live in neighborhoods with absentee landlords.

"I like to know my neighbors," says Lyletta Robinson, who says she has had disputes with some of the tenants in her 18-unit condo complex in Chicago's Woodlawn neighborhood. "I like to know who's coming and going out of our building, and it's difficult to do that with renters."

Of course, plenty of renters cut their grass, take in the garbage cans and turn down the music at 9 p.m. And not all homeowners are model neighbors. Denise Bower, of Community Management, Inc., which manages 122 developments around Portland, Ore., says renters are often more responsive to complaints because they know they run the risk of losing their leases if they don't. "I have more problems with owners, by far," Ms. Bower says. "They get stubborn."

Bosa: Trouble in Paradise

No, not OUR paradise, but down south in California where the slumping market is causing Vancouver developer Nat Bosa to delay building the first high-rise project in Orange County.

"I was supposed to start last year," Bosa added, "but I'm probably not going to start them until the middle of next year." Bosa said San Diego, where he is also building condominiums, is also at the bottom of the real-estate cycle, and "I've seen quite a few of them since the '70s."

He is not alone. Other developers, including Canadian firms that went south of the border to jump into hot U.S. markets have also put projects on hold while times are tight.

Orange County's condo market exploded after Bosa Development started the Marquee project, the Orange County Register said this week. However, the Register reported that some 17 of 37 proposed highrise condo projects might be delayed due to slumping markets.

Bosa added that the collapse of the American subprime mortgage sector has compounded some of the market's difficulties, making it harder for buyers to get financing.

"Getting a mortgage three months ago was like a walk around Stanley Park," Bosa said. "Getting a mortgage now is more like walking the Grouse Grind. It's tougher."

Tuesday Free-for-all!

Lets break the rules - its not Friday, but lets do an open topic post anyways..

-US house price decline accelerates
-Canadian ownership increasing despite high cost
-I believe there will be an article in the National Post this week about the high cost of housing in Vancouver and how professionals in this city are able to afford it with relatively low local incomes.

What are you seeing out there? Post your news, links and ideas here..

The ripple effect of a housing downturn

When house prices get pushed up beyond their fundamentals it doesn't take an economic downturn to cause prices to drop, they can drop simply due to exhausted demand and a smaller pool of buyers due to lack of affordability. Unfortunately this in itself can lead to an economic downturn as the ripple effect takes over and less money changes hands leading to leaner times to all types of connected and seemingly not-so-connected businesses.

There's a scary article on MSNBC right now about how this seems to be playing out in the US, where home prices peaked two years ago and have been soft or falling since.

The Sun Belt city of Fort Myers saw real estate and construction grow to dominate its economy, accounting in recent years for nearly one out of every four jobs. That meant the housing downturn hit swiftly here, making it a kind of early and extreme indicator of what might happen to the U.S. economy as a whole.

The effect could be less dramatic in places like Washington, where government contracting and other industries may provide a cushion. What the Federal Reserve is trying to determine, as it decides Tuesday how much to cut a key interest rate, is to what degree the rest of the U.S. economy will behave like that of Fort Myers.

How much of our local economy is based on temporary boom-time employment due to construction and infrastructure projects that will be completed in the next couple of years? What happens when those jobs disappear, will there be others to fill their place and will they pay as well?

Friday free-for-all

Here's your open topic post for Friday September 14th, lots of stuff happening this week!

-GVRD housing headache
-RBC: BC housing affordability plummets
-boomers keep our market booming
-Edmonton 'correcting not crashing'
-Scaffolding collapse at the falls
-Countrywide boosts ability to borrow money
-Forecasts for more bad times in the US market

So what are you seeing out there? post your news, links and anecdotes here!

Home prices well above long term trend.

Breaking news from the Globe and Mail: in all Canadian markets (with the exception of St. John's) current inflation-adjusted price levels are well above their long-term trend. This news from a report issued by the Bank of Novascotia.

The current Canadian housing boom, which began nine years ago, has been the longest of the post-war era, with cumulative price gains of more than 60 per cent, the Scotiabank report said. And although the housing fundamentals are solid in Canada because of low unemployment, high immigration and tight apartment vacancies, years of relentless house price increases mean affordability is waning just as risks to the economy mount.

“There is little doubt that current trends are unsustainable,” Ms. Warren said. “Affordability is becoming increasingly stretched for many would-be buyers after almost a decade of rising home prices. More recently, economic risks have increased in the wake of the intensifying financial market turmoil stemming from the U.S. subprime mortgage problems.”

Now before anyone panics here's the positive spin:

To be clear, Ms. Warren is not predicting a Canadian housing collapse, but rather a cooling in price gains. Nationally, she expects prices will rise 10 per cent this year, slow to the “high single digits” next year, and eventually fall back in line with the rate of inflation, which would put them between 2 and 2.5 per cent.

friday free for all!

As you may have been able to tell I've got my hands full with other things right now, but it is Friday and this is your open topic post!

Whats going on out there? Post your news, anecdotes, links and theories here!

US foreclosures hit record high

Marco sent in the link to this story in the G&M about the US market where foreclosures have reached a record high for the third consecutive month (now at .65 percent of all mortgage holders) with signs that more are on the way:

The delinquency rate, which tracks the number of people who are behind in their payments but have not yet entered the foreclosure process, was also up sharply during the spring, rising to 5.12 per cent of all loans, up nearly three-fourths of a percentage point from the same period a year ago.

Doug Duncan, the MBA's chief economist, said the worsening performance was driven by two factors — heavy job losses in the Midwest states of Ohio, Michigan and Indiana and the collapse of previously booming housing markets in California, Florida, Nevada and Airzona.

The interesting thing about those 'previously booming markets' is that as far as I know they weren't hit by any economic shocks, they simply collapsed under their own weight and suddenly ran out of demand.

Analysts said the problems in the formerly red-hot housing markets of California, Florida, Nevada and Arizona reflected in part speculators walking away from mortgages they can no longer afford.

During a five-year housing boom, the prices in these areas surged, creating what many analysts have described as a speculative bubble as investors bid up the price of homes hoping to quickly resell them for a profit.

Coincidentally this is also the third consecutive month that Vancouver has neared record sales volume.