“The assurance of relatively low borrowing costs has likely given home buyers confidence while rising home values have kept new listings at a healthy level. Stable employment has provided some assurance to owners and buyers alike.”
The Canadian housing market continues to exceed expectations and is now forecast by many experts to remain healthy well into next year despite a slowdown in the overall economy.
The Canadian Real Estate Association revised its forecast upward Tuesday after reporting strong October sales. It now projects sales this year will be up 1.4 per cent from 2010, half a percentage point better than its previous forecast.
However, CREA expects there will be slightly fewer units sold next year than in 2011, but the 0.5 per cent decline is still an upward revision of its earlier estimate.
The association forecasts 453,300 home sales countrywide this year, up from 446,915 in 2010. The forecast for 2012 is 451,200 homes sold.
The latest RBC Housing Forecast released Tuesday also predicted 1.4 per cent growth this year, but was more upbeat than CREA about future sales, expecting a 0.4 per cent increase in 2012.
The revisions come at a time when central banks in Canada and the United States are keeping their key lending rates low to counter slowing global economic growth.
“There was no shortage of headline news in October about global financial market volatility and economic uncertainty, but it doesn’t appear to have dampened homebuyers’ spirits,” said Gary Morse, CREA’s president.
However, heavy borrowing activity signals dark clouds on the horizon for some households as debt reaches record levels. The most over-leveraged Canadians could find themselves unable to cope when interest rates eventually rise, federal Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney have warned. Source (1) Canadian Business News
On what grounds would I believe a press release (because thats what the above article is about) from a group of market manipulating, self-serving, fear-mongering, deceitful, neck-tied, land pimps, sucking their price-fixing commissions from the life equity of people’s homes?
The Bank of Canada, whose mandate was supposedly to keep domestic inflation under control, has cultured the largest bank mortgage ponzi scheme ever to be unloaded on our children, that of record unaffordable housing prices, and the BOC continues to allow housing prices to increase beyond the reach of the average Canadian, further eroding the spending recovery of the Canadian consumer due to inflated mortgage interest, effectively killing this country’s global competitiveness.
And they’re probably right. Now the fed has said that rates will be effectively zero for another two years and the BoC seems to be caught in the side-effects of that, more and more people are going to overextend themselves into living the good life they will not be able to afford if rates were ever to go back to historical levels. This setting us up for a housing bubble like the one that burst wiht such disastrous effects in the U.S.
Overly-expensive houses require overly-expensive wages, and manufacturing, industry, and investment will continue to be off-shored and outsourced to countries whose citizens don’t need high wages to pay for half million dollar bungalows.
For some unfathomable reason we, as Canadians, have been brain-washed by the Canadian Real Estate Association (CREA), the Canadian Bankers Association (CBA), and other self-interested parties into believing over-priced housing is a good thing when, in fact, it has become the largest domestic job-exporting pyramid scheme ever to be unleashed upon Canadian society.
When you leave in rates this low for this long, there is a consequential misallocation of resources. While indebtedness is being rejected by the US consumer, it is being embraced in Canada. Thus, while US consumers are actually paying down debt, Cdns are still shopping, buying cars and pumping up RE prices and incurring more debt.
While interest rates are certainly an important factor in real estate prices, there’s another one that doesn’t get nearly enough attention.
It’s the ratio of HOUSEHOLD INCOME : PRICE OF HOME
Historically, this ratio has been about 1:3 or 1:3.5 – through the good times and bad, and across a myriad of interest rates. In other words, if your combined household income is $100k, you should be living in a house that’s worth around $300-350k. Levels now are closer to 1:5 or 1:6. That just ain’t sustainable, folks.
The middle class is eroding in the West. The replacement for traditional household wealth and capital (the source of which used to be gainful employment) is household debt. We continue to try to live the baby boomer lifestyle without the traditional employment income levels we used to enjoy. We manage to do this by leveraging to repugnant levels. If we don’t have $1000 of disposable income left over to spend each month like we used to, we now simply borrow it (credit card).
This is sickening, if you really think about it. All the traditionally well paying jobs of yore have been shipped offshore, for 1/50th the cost.
The 2008 crash was just a trailer. The lights are dimming, the real movie is about to begin.
Gerald Celente, Founder of Trends Research and the man many consider to be the top trends forecaster in the world, had some of his money in MF Global when the firm imploded. He is, understandably, not happy about it. KWN readers may not realize this but Celente would use a futures account to take physical delivery of gold and he was about to take delivery of gold on December contracts, “One of my methods of buying (gold) is to buy futures contracts. I buy futures, build up enough money in the account and then take delivery on the gold. I had enough money in my accounts to take delivery in December, which is what I kept telling the broker over and over, that I was taking delivery in December.”
With gold trading at $1,725 and silver above $32, today King World News interviewed John Embry, Chief Investment Strategist of the $10 billion strong Sprott Asset Management to get his take on where he sees gold, silver, the US dollar and the mining shares headed. When asked about the Australian Conference, where he was a keynote speaker, and the action in gold and silver, Embry responded, “I just got back from Australia last night and I thought the conference was absolutely outstanding. It was a credit to everyone involved in organizing the event, it was first class. As far as the action in gold, I don’t want to be arrogant, but I actually know that we have a big option expiry coming up on Tuesday and this is just business as usual.”
With continued turmoil in global markets and gold remaining firm in the mid $1700s, today Michael Pento, of Pento Portfolio Strategies explains for King World News readers globally why a full-blown bond market crisis is coming in 2012 and how investors should prepare, “The European debt debacle continues to unravel and yet many investors fail to recognize the profound ramifications of taking the largest economy on the planet offline. EU 27, which has a GDP north of $16 trillion, is the largest export destination of some of the world’s fastest growing economies.” 