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TheStar.com | Business | House market crashes, sales hit a 30-year low

House market crashes, sales hit a 30-year low

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British home sales plunged to their lowest level in at least three decades in September as the financial crisis worsened.

A leading survey of estate agents showed yesterday that they sold an average of 11.5 properties during the three months ended in September – less than one property a week each, according to the Royal Institution of Chartered Surveyors. That number is 52 per cent lower than a year earlier, and the lowest level recorded since the survey began in 1978.

Home sales in London were hit the hardest, with agents there selling an average of just 8.3 properties over the past three months. And 91 per cent of British agents said prices fell in that period.

The housing crash marks a massive turnaround for the market, which had enjoyed record price rises for a decade. In the 10 years to 2007, the cost of an average house in Britain nearly doubled.

i do offer a seniors discount

The housing market in Alberta BC "Canada" is still rising has not slowed down.

Sometimes, when I read these blogs I get freaked out. I’ll be honest. Sometimes I read the news and see things going completely to pot. I’m never going to be able pay for my kid’s education. People are going to loose all the value in their homes, investments and businesses everywhere will fail.

Then I shake my head and come back to reality.

Yes, read that correctly.

There’s enough ‘bubble’ blogs out there to choke a horse. People like Garth Turner have been singing the same tune for a decade.

What you see on CNN, CBC, or hear on the radio isn’t reality. Not reality in any sort of way that’s truly relevant to my life and my future. The media doesn’t communicate reality; mass media, and even much of the blogosphere, exists only communicates "what sells", what generates traffic, or controversy, or sales.

I read resources to remind me of what I have, and what’s really real for me. I own real estate in one of the most robust economies in the world, with one of the most stable governments and banking systems.

This is what I know... I am in Canada.

The Party is Over..by Peter schiff


More than just a mere liquidity or credit crisis, the current financial storm represents the death throes of the old global economic order, and perhaps the birth pains of a new one. The sun is setting on the borrow and spend culture that has all but defined us for a generation. Our long ride on the global gravy train is finally coming to an end, and once it does nothing will be the same. The sooner we come to grips with this the better.

Despite the myriad of proposals that are coming from Washington and other world capitals, we must understand that this crisis cannot be cured by governments. In the United States, credit is gone because savings are gone. Our shallow pool of savings has been depleted through bad loans, and we can no longer entice foreigners into lending us their available savings. Given that we are already too loaded up on existing debt that we cannot realistically repay, who can blame them for not wanting to lend us more?

As a result, the free market is trying to put an end to our spending spree. Without savings or home equity to fall back on, Americans struggling with rising prices are finally being forced to curtail their spending. This has terrified our leaders and is causing them to dismantle the remaining structure of our free enterprise-based economic system.

The intention of all these daily federal interventions is to keep the credit spigots open so Americans can go even deeper into debt to buy more stuff they can’t actually afford. This should be clear enough to anyone who listens to what our leaders are actually saying. When speaking about the need for an even larger fiscal stimulus package, Barney Frank, chairman of the House Financial Services Committee, said, “We have to prop up consumption.” He has it backwards. The government has been propping up consumption for far too long, and the best thing they can do now is remove the props so spending can be replaced by savings.

The sad reality is that we borrowed and spent our way into this crisis, and we are not going to borrow and spend our way out of it. Legitimate credit can only be supplied if there are genuine savings to finance it. Savings can’t be magically concocted into existence by a printing press, but can only be created by consumers who spend less than they earn. Efforts to fool the market will not work and will ultimately lead to a monetary disaster and runaway inflation.

Were the government to allow market forces to work, Americans would now have to pay cash for their consumption. That would mean no instant credit for new cars, plasma TVs, appliances, consumer electronics, clothing, furniture, etc. Unless buyers actually had the cash in their checking accounts these purchases would have to be deferred. From an economic perspective this is precisely what the doctor ordered. But for an economy based 72 percent on consumer spending, the medicine will go down hard.

Ultimately, a serious reduction in consumer and mortgage credit, combined with an increase in personal savings, would again provide a pool of needed capital for businesses to produce products and provide employment opportunities. However, the danger is that this potential credit could be completely crowded out by massive borrowing by the Federal Government. In addition, prices for such things as houses and college tuition will fall sharply, as the credit artificially propping them up disappears. People would still be able to buy houses and send their kids to college only they would pay much lower prices when they do.

However, if the government keeps creating inflation to artificially sustain consumer borrowing and spending, there will be no savings left to fund anything and prices will be so high that despite massive consumer spending there will be few goods that Americans could actually afford to buy.

All I hear is Americans...
Let's talk about the average Joe.
Yes, Americans overspend, everyone drives an Escalade or a Ferrari. And "they" (the ones who overspent) are paying the price.
Let's think of people we know, I know and you must know, a lot of people from the USA. The ones I know do not drive these vehicles and they are doing just fine. They have not lost their Jobs, homes or vehicles. They are living life and still enjoying vacations. It's not like suddenly every person in America is losing their homes. The people who lived moderately are still living the same life.

However in Canada majority drive Mini Vans and small cars. Honestly, very moderate I'd have to say... I don't think we are living this over the top life. And even if we did live in a cash world, I don't believe to many of us would go bankrupt over it. So we just wouldn't have, no interest, no payments for one year from "Leons".
We are not these flashy people in the states, where everything is about appearance a name brands.
We are a society that drives mini vans (new & used) and maybe a new small car, we shop at Leons (Not to many of us at Ethan Allen's) and Walmart is another favorite... Name brand for our children is GAP not GUCCI.
I don't think we over spend because we buy a lifetime purchase (a home).

October 17, 2008

Not Your Grandfather’s Depression by Peter schiff


The current stock market crash has spurred a vital national debate about the causes and catalysts of the Great Depression. The dominant school of thought believes that the stubborn refusal of then president Herbert Hoover to intervene after the stock market crash of 1929, and his preference for free market solutions, led directly to the ensuing decade-long catastrophe. Through this lens, our leaders assure us that the most recent raft of government measures will prevent another episode of bread lines, Hoovervilles and pencil salesmen. As usual they have it completely wrong. In my view, the Depression was created precisely because Hoover followed the path that our government is now taking.

When the stock market bubble of the Roaring Twenties (which was created as a result of the loose monetary policy of the newly created Federal Reserve) finally popped, Hoover would not allow market forces to correct the imbalances. His policies were aimed at propping up unsound businesses, artificially supporting prices, particularly wages, and providing Federal funds for public works projects. These moves went well beyond the progressive reforms of Teddy Roosevelt, and established Hoover as the most interventionist president ever up to that point. In fact, much of what eventually became the New Deal had its roots in Hoover’s policies.

However, at the time, there were those who recommended a different course. Andrew Mellon, the long-serving Secretary of the Treasury whom Hoover had inherited from the prior two Republican Administrations, was labeled by Hoover as a “leave it alone isolationist” who wanted to “liquidate labor, liquidate stocks, liquidate the farmers, and liquidate real estate.” Hoover would have none of it. In fact, during his nomination speech for a potential second term, Hoover bragged “We determined that we would not follow the advice of the bitter liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction.”

Hoover chose to ignore the sound advice of his Treasury Secretary (in contrast to today where the current Treasury Secretary Henry Paulson is actually leading the charge over the cliff) and instead used every tool at his disposal to “fix” the problem. As a result, rather than allowing a recession to run its course, with healthy and rapid liquidations of the mal-investments built up during the boom, Hoover inadvertently created what became the Great Depression.

When Roosevelt took office he continued the same failed policies only on a grander scale. The magnitude and the idiocy of many New Deal programs, such as the wage and price setting National Recovery Administration (NRA), compounded the problems. So while Mellon’s advice would have caused a sharp but relatively brief economic downturn (which occurred after the Panic of 1907, for example), the Depression plodded on for nearly a decade until the country began gearing up for the Second World War.

In an amazing feat of revisionist history, somehow Hoover’s interventionist policies have been completely forgotten. It is taken as fundamental that his inaction led to the Depression and Roosevelt’s “heroics” got us out. Unfortunately, since we have learned nothing from history, we are about to repeat the very mistakes that lead to the most dire economic circumstance of the last century.

A major difference however, is that the structure of the U.S economy today is far weaker than it was in the fall of 1929. Years of reckless consumer borrowing and spending, and enormous trade and budget deficits have resulted in a hollowed out industrial base and an unmanageable mountain of debt owed to foreign creditors. Instead of the support of a strong currency backed by gold, the public now must deal with a modern Fed free to print as much money as politicians want. So rather than getting the benefits of falling consumer prices (as happened during the Depression), consumers today will contend with much higher consumer prices, even as the economy contracts.

With Barack Obama now waiting in the wings to conjure a newer New Deal, far larger than even FDR could have imagined, and at a time when we cannot even afford the old one, this will not be your grandfather’s Depression. It may be much worse.

Well looks like the worst is passing.
People are starting to buy homes again at regular prices. For those who are still thinking of buying now is the time because you will see prices slowly rising again. In the last two to three weeks yes, the housing market slowed. And seller got scared dropping their prices buy 20,000 to 30,000.
Yet, houses sold this week in the Wilmont Milton area show that the prices has not dropped.
3 homes sold in this past week in the Wilmont Area
36' lot Quincy corner Asking $394 Sold $385
36' lot Thistle Bay Asking 425 Sold $419
46' lot home on Cousin Terrace Sold for $573 Not sure the asking.
Doesn't look bad to me...
Plus the bank is dropping another 1/2 and I firmly believe you will see the banks drop another 1/2 late next week.
I also believe the banks will lighten up in their mortgage lending a little within the next month.
By February 2009 you will see higher prices then summer 2008 months.

we can all sleep better now, justbecause justagirl gave us her blessings...

http://www.canadian-housing-price-charts.235.ca/

the guru

That's right

ALL RISE

LOL

lets get ready to ruuuuuummmmmmble

um well we could always blame the japanese right?

privatize the profits, socialize the losses

you know what really funny is that i heard a canadian banking guru that indeed the "sky is not falling"

when these clowns are talking crap like that...its time for a revolution

have a great day boys

off to sniff some glue

JUST ANOTHER DAY ON THE TSX...10 % DOWN...OUCH

The Tales Get Taller.... the one and only Peter schiff


When inexplicable events perplexed our early forbears, village wise men concocted elaborate and colorful explanations to soothe the populace. Earthquakes, hailstorms, and solar eclipses were all ascribed to root causes that made sense to the villagers and increased the esteem of the story tellers. The recent, unexpected surge of the U.S. dollar has led many Wall Street witch doctors to conjure a series of logic-defying tales to give reason to what is surely the random scramble of a confused herd. Wall Street spun similar yarns during the dot.com and real estate bubbles as investors groped for reasons to justify sky high prices.

The recent surge, which has pushed the dollar up more than 30% against some currencies in recent months, is purely a short-term technical phenomenon. The move is caused by global investment deleveraging, in which major financial players are reversing (unwinding) risky trades and piling into what is erroneously perceived as the safest haven they can find. Increasingly, foreign assets, many of which had appreciated more than American assets, have been sold, and the proceeds stashed into U.S. Treasury bonds, which these investors believe to be the Fort Knox of finance. The cascade has caused momentum trades, margin calls, redemptions, and other factors having nothing to do with the underlying fundamentals of the dollar or the U.S. economy. In fact, all that has happened to the U.S. economy, and all that the government has done, and is likely to do, in their misguided attempts to contain the damage, is extremely bearish for the U.S. dollar.

Mesmerized by technical moves and oblivious as always to the fundamentals, the Wall Street brain trust has offered flimsy explanations. One popular rationale is that as bad as things are in the United States, they are even worse every place else. Still another is that since the U.S. was the first country into the crisis that we will be the first nation to come out. Still another is that since our government is acting more boldly than most to tackle the problems, our economy will not suffer as badly as others where governments have been slower to react and more timid in their responses. In addition, many still perceive the United States as the citadel of stability in a world of second-rate economies.

However, if we look beyond these “explanations,” the fundamentals loom simple and irrefutable: American borrowers of all stripes cannot afford to repay the trillions of dollars we owe. Over the past decade, the vast majority of lending has come from abroad, and as Americans don’t pay, the losses show up on foreign balance sheets. Since we blew most of the money we borrowed on consumption, we simply lack the industrial capacity to repay our debts without resorting to a printing press.

In bankruptcy, both the debtor and creditors are affected. However, while creditors take a financial hit, ramifications for debtors are typically more severe. Creditors are generally better prepared to absorb their losses. However, for bankrupt debtors usually much more substantial changes ensue.

Since America is the world’s biggest debtor, with our IOU’s broadly held by every creditor nation, the effects of our bankruptcy are being felt worldwide. However, while our creditors are suffering now, their pain will be temporary and relatively mild compared to what awaits Americans.

So while it may appear to some that things are worse abroad, that is only because the full extent of our problems has yet to be reckoned with. The main lesson our creditors will learn from this crisis is not to lend American consumers any more money. Once the lending stops, our “cart before the horse” borrow to spend economy will crumble. While the rest of the world absorbs their losses and moves on, we will be digging our way out of the rubble for years to come.

Earthquakes are caused by the fundamental shifts of tectonic plates beneath the Earth’s surface. A similar move is underway in the global economy. Describing either event without a basic understanding of either geology or economics will simply result in a tale being told by an idiot.

Bill Fleckenstein my brotha


In the past expansion, economic growth was almost entirely about real estate. Gross-domestic-product growth, excluding mortgage-equity extraction, was almost nonexistent. In addition, when you consider that 30% to 40% of all jobs were real-estate-oriented, it's clear how hollow the economy is liable to be going forward.

Considering the capital destruction and the credit contraction now under way, I have a hard time seeing where the new jobs will come from to handle all the layoffs that are going to take place. Given that lots of marginal businesses have survived on consumers' wild spending, many of them will not make it as folks retrench aggressively. That's on top of all the carnage in anything related to real estate or finance.

Building a highway to job creation
Parenthetically, I hope that as the government goes about spreading taxpayer money everywhere, it does something intelligent, such as spending money to rebuild our infrastructure (roads, bridges, ports, etc.) or undertaking the task of stimulating alternative energy resources while building plenty of nuclear power plants, so we can create jobs and eliminate our dependence on foreign energy sources like the OPEC nations.


I'm sure there will be other ideas about how best to help create jobs, but one "solution" that's no solution at all is trying to put a floor under home prices. The problem is, home prices in America are still too high, relative to average income, and the average income is going down. So, trying to "stabilize" home prices is (a) impossible and (b) a complete waste of money.



Dollars to doughnuts, we'll borrow in euros
The third crisis that I see coming, which is theoretical but I suspect cannot be avoided: At some point, the U.S. will not be allowed to finance all of its debts in dollars. We have proposed better than $1 trillion worth of bailouts, and there will be more money thrown at the economy, I'm sure. I cannot see why foreigners would fund a couple of trillion dollars in spending in our currency, given our recent behavior.

Thus, somewhere down the road, we might have to borrow in foreign currencies, which would cause an additional set of problems. Hopefully, we'd be far enough along in the first two crises that this wouldn't be a catastrophe.



To return to baseball metaphors: As I said earlier, I believe the credit crisis is probably in the eighth inning. The economic crisis is still taking batting practice. As far as the funding crisis goes, I don't think folks even realize that game is on the schedule. That's my view of where we are and a bit of a road map as to where we could be headed.

Obviously, there are many things that I can't know, and there will certainly be more surprises from the dark matter of the world's financial institutions. Any market rally we see is almost certain to be transitory. And while it may be tradable (depending on the setup and the skills of individuals), it will not be something you can buy and forget about.



and another great read

http://www.pimco.com/LeftNav/Featured+M ... +CQish.htm