Sounds like you were probably very young or too young to remember the 1970s..

I have known Mr. Shilling since the 70s, so he’s been around longer than any young guns that you find in your local banks pretending to be investment or real estate experts.
He’s been through many ups and downs and had been ranked as the 3rd top stock market forecaster. Guest who was number #2? Warren Buffett (yet another investment guru).
His impressive resume includes predictions of the
1969-1970 recession (nobody predicted that).
The 1973-1975 global recession (which has the similarities to what we are in right now). He also predicted double digit inflation in the late 1970s, the tech bubble and the RE boom that came later. He is also predicting mild deflation after the recession (this supposedly coming one). The same mild deflation Japan had been going through from 1992-2002.

The numbers just simply don’t lie. Just like the tech bubble with Enron, Nortel and Global Crossings.
You can cook the books, but you can’t cook them forever..

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Ok… so the guy who predicted a housing bubble 5 years ago (which was basically the rampant growth stage) is now predicting economic collapse in 2007? Sorry but timing is everything… I can predict an asteroid hitting Vancouver, but that doesn’t mean you should pick up and move to the southern hemisphere next week.

For the record I’m not a bull, but its hard to read this kind of stuff “coming soon” for the last 3-4 years and keep believing it.

If:

6. The insatiable U.S. consumer will spend until borrowing power is exhausted

then what is the justification for:

4. China will suffer a hard landing due to domestic cooling measures and U.S. recession

When is this borrowing power exhausted? Could be another 2-3 years or more.

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These “exotic” mortgages don’t support prices long term, they set the stage for the inevitable crash, as we saw over a decade ago in Japan and see today in the US.

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If I start seeing a 100 year mortgage becoming common in Vancouver I’ll be out of here until the spectacular crash.

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Is there really demand out there for an apparatus to pass house debt on to the next generation? The 100 year mortgage is an assanine proposition that would only serve to make a crash worse (ala Japan).

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I respectfully disagree. I don’t presume to take responsibility for other peoples financial decisions. I’m not out there selling people on overpriced leaky condos. If they ask my opinion I’ll let them know that yes, prices CAN drop, and no, it’s not actually different this time, but in the end its their decision.

If people feel they NEED to buy that place at any price, and they can afford the monthly payments for now, who am I to tell them they shouldn’t? And besides, why do I want to have to bid against these people in the future? Let em’ buy.

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No doubt a response to the growing awareness that affordability limits have already been reached.

The premise of perpetually high appreciation requires one to fabricate increasingly questionable rationalizations to support it despite the obvious limitations.

If anything, the reference to 100 yr mortgages should conjure nightmare comparisons to Japan; that it doesn’t suggests how blind to risk everyone has become.

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Here are the predictions for 2007.

JANUARY 2007
“The 2007 Investment Outlook: 12 Nonconsensus Themes”: As was true in 2006, six background elements will dominate the investment climate in 2007:
1. The world is still awash in financial liquidity
2. Inflation remains low
3. So many investment returns are low
4. Speculation remains rampant
5. So investors assume more risks to achieve expected returns
6. The insatiable U.S. consumer will spend until borrowing power is exhausted

In this climate, we foresee 12 investment themes, eight of which are likely to unfold in 2007 while four will probably work but maybe not until later:
1. The housing bubble will burst. If so,
2. The Fed will ease; meanwhile, the yield curve will remain inverted
3. U.S. stock prices will fall, perhaps below the 2002 lows, in the midst of a major recession
4. China will suffer a hard landing due to domestic cooling measures and U.S. recession
5. Weakness in U.S. and China will spread globally, dragging down economies and stocks universally
6. Treasury bonds will rally
7. The dollar will rally, but not before the recession is global
8. Commodity prices will nosedive
(Means Canada will suffer greatly, especially in the West Coast)
9. Maybe global and chronic deflation will commence in 2007.
10. Maybe U.S. consumers will start a long-run saving spree, replacing their 25-year borrowing and spending binge
11. Maybe deflationary expectations will become widespread and robust
12. Speculative areas beyond housing may suffer in 2007

2007 will be an interesting year. If his predictions come true, then I’m afraid a lot of those so called home buyers that bought out at the top will — read his 2002 prediction about the doom of the housing market..

JULY 2002
“The Housing Bubble”: Housing has benefited from falling mortgage rates, easy affordability, accommodative lenders and disdain for stocks and low-interest returns. Now it has taken on self-feeding, bubble dimensions that will sooner or later collapse. We don’t foresee rising mortgage rates that would burst the bubble, and overbuilding isn’t a problem, at least so far. But falling house prices will be lethal to the residential boom and are part of the deflation we forecast. The spur to declining prices is likely to be a consumer retrenchment-led second dip in the recession, spawned by the continuing bear market in stocks. Rising unemployment will devastate recent first-time home buyers with little home equity or other assets. The lenders will withdraw and the bad news will ripple up the housing chain, depressing house prices at all levels.

He is not the only one preaching this. John Talbott of the author “Sell Now” is predicting the same thing. Worst, it could replicate what Japan had went through 20 years ago — deflating house prices..

To summarize.. The higher this thing goes, the worst the fallout and the “longer” it takes for excess speculation to wrung out. I hope the deflationary period scenario does not come into play here in North America, but it’s hard not to think about that..

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I think you will find this cat is made of rubber. This market is not soft: supply is slow coming online, people have jobs plus assets, and lenders have lots of cash to loan out. I have never witnessed a price reversal predicted by some bears but maybe I’m too young. If such a reversal comes, like life, it will be anticlimatic due to all the FUD.

That said, it appears prices are choppy right now. I hear anecdotal stories of over-list and under-list. Doesn’t suprise me for this time of year as the spring pricepoints shake out.

Given the choppiness, I am still sticking to my +5% appreciation prediction for 2007. Though I think Realtors are going to feel the heat this year, given added agent competition and the market’s lack of urgency.

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BUT…
If they sell their old house quickly (while the market is temporarily, stupidly hot for some reason), the damage is minimal. I’ve suggested that they forget about ANY renovations on their old place and just get it on the market NOW. Theres a leak they should take care of, THAT’S IT.
Also, fortunately, they can afford this (very successful business) and would have a minimal mortgage by Vancouver standards. But this is a little close to home and is stressing me out right now. For the moment, I’ve switched sides and I’m paying for the market not to suddenly crash.

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The general consensus among my circle is, that prices have come down a tiny bit, but are set to take off again, and will keep going up until the Olympics, beyond 2010, the 100 year mortgage will come to the rescue.

Funny enough, I keep hearing about the 100yr mortgage often these days. Is this the new myth to go along with the running out of land bs?

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sorry to keep using your page

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Because, at this stage the question is not whether it is or not a bubble, but rather when will it burst.

The financial devastation will be enormous for those who will not be able to ride out the 10 to 20 year slump.

If we don’t warn people, how would we differ from the deceitful shills?

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http://vancouver.craigslist.org/apa/283959764.html

I would like to see the idi…, ehm smart person who is willing to pay this much…
))))

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albertabubble.blogspot.com

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Everyone who can buy now should! Don’t wait!

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http://www.thetyee.ca/Mediacheck/2007/02/20/VHB/

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i am going to post an edm site
since the calgary one is now suddenly gone

…edmonton-housing.blogspot.com

thanks for letting me use your site

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thanks..jc..moe..rej..and all the calgary bulls
i enjoyed our debates

most thanks and congratulations to rob
good luck in the future

and good luck and future enjoyment to all the calgary bloggers

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calgary housing blog site closing down

3 housing blogs in 6 days

weird

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Several realtors told me I should make a living as a designer… haha, and I’m straight ! Go figure…

We had 10 showings over that weekend and it was not even an open house.

later

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Yeah, I think we can safely assume that any further increases in RE prices are just a dead cat bounce.

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