Comments on: The Liquidity Issue.

By: RentingSucks

RentingSucks — Fri, 22 Jun 2007 07:53:00 +0000

Rents are correlated with prices only in the very long term. Take a look at the REBGV house price graph - do you really think rents follow a roller coaster like that? In fact they track household incomes. It seems like we are in a really weird spot right now because rentals are tight and lots of specuvestors are overextended and therefore ask more and they have a chance of getting it. This means some short term pressure on rents. My point was if this causes rents to go up the hammer is gonna come down because it will spark inflation and cause the BoC to raise interest rates.So in a way this bubble is only possible because rents don't track housing prices at all.

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By: digi

digi — Fri, 22 Jun 2007 07:13:00 +0000

The agency has got to be RethinkHahah. I've done some work with them and I think you're probably right. I actually think some of their off-the-wall ideas are good, but sometimes they just come across as uncomfortable, you know, like sharing a mortgage. How do you know of them?

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By: patriotz

patriotz — Fri, 22 Jun 2007 01:09:00 +0000

That ad with the 2 couples in the bed???Bob and Carol and Ted and Alice?If housing prices start putting upward pressure on rentsRents are correlated with prices only in the very long term. Take a look at the REBGV house price graph - do you really think rents follow a roller coaster like that? In fact they track household incomes.

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By: RentingSucks

RentingSucks — Thu, 21 Jun 2007 21:46:00 +0000

If housing prices start putting upward pressure on rents (and it seems they are) won’t this spike inflation. In turn this would cause interest rates to rise and liquidity to dry up eventually causing house prices to go down.

In an ideal world this would trigger a vicious cycle of doom that would give prices the smackdown they deserve .

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By: Jade East

Jade East — Thu, 21 Jun 2007 21:18:00 +0000

That ad with the 2 couples in the bed???FTF? The agency has got to be Rethink,they're not even trying to making it looklike a good idea.

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By: Patiently Waiting

Patiently Waiting — Thu, 21 Jun 2007 20:05:00 +0000

The mess may be contained on Wall St. but Main St. America is going to get ugly in the second half of this year. The ARM resets will be at a peak and foreclosures will shoot to the moon.

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By: digi

digi — Thu, 21 Jun 2007 19:04:00 +0000

Theres a somewhat related article in the Globe about the IMF's recent stand against currency manipulation, particularly the Chinese.

I'm not sure if this really means anything though, since they don't have the power to do anything, merely 'expose' currency manipulation which everyone seems to already be aware of.

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By: tulip-Mania2

tulip-Mania2 — Thu, 21 Jun 2007 17:56:00 +0000

I think the real mess will be contained for a while. At least until the boys from Bear Stearns et al, manage to package and repackage what are now lower than junk bond grades, and most of their corporate and large clients have sold off the bulk of the MBS and the derivatives hidden in the hedge funds.I still maintain itâ€™s a combo RE/Credit BubbleI'm keeping lots of cash on hand. Tick Tock, Tick Tock

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By: mold city

mold city — Thu, 21 Jun 2007 15:24:00 +0000

Aleks - I guess there's a sucker born every minute, so thats a lot of potential 'customers'.Speaking of bank mortgage ads, does anybody know what the hell is going on with that Vancity 'mixer' mortgage with the two couples in bed?Its almost like they're showing all the ways that sharing a mortgage would be uncomfortable and a negative experience. How is this supposed to be a good thing?

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By: Aleks

Aleks — Thu, 21 Jun 2007 15:01:00 +0000

Scotia Bank has an ad for a 100% mortgage with the tag line "You're richer than you think." I can't help feeling sorry for the suckers who would fall for something that transparent.

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