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.

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There aren't as many as there are in the States, but there are still plenty in Canada.Visit <a href="http://www.bcforeclosurelist.com<br />they provide pre-foreclosure listings for the Greater Vancouver area.


Forclosure?I ain't find a word like that in Canada;it's only a yank problem. To hell with US subprime Cos here is Canada sitting on top of tons precious resource.


Keep blowing the horn but the horsemen will never come.Van RE owners has scored a jackpot enough for retirement while those stubborn bears scratching their head why their conviction has priced them out forever from even owning a chicken shack.


"bear blowing the horn since 2003;they failed time and time again."Is there a reason the the bulls on these forums have such poor communication skills? A sign of poor logic skills perhaps?Actually bubbles take TIME to burst Chief, calling it a bubble in '03 cannot be proven inaccurate until at least 5-10 years has passed without a pop. As I said to SATV earlier 6 years of a trend does not disprove the 120 years preceding it of ALL trends without valid basis reverting to the normal baseline.


I feel sorry for our US bro and sis and very thankful to our lord that Van RE still has much room to the north no matter how bear blowing the horn since 2003;they failed time and time again.Watch out bears!


But there is no point in buying investments outside your RRSP if you have a mortgage on your house anyway, because paying off your mortgage is both a risk-free and a tax-free investment. Non-RRSP investments are neither.Sometimes people love avoiding taxes so much, that are willing to be worse off than if they paid them.As for the Smith Maneuver, it is no free lunch, just a restructuring of your debt. Your effective cost of capital becomes your cost of borrowing (say 6%)less your marginal tax rate.


They SAY that through their system you can essentially re-structure your mortgage debt in such a way that your payments become tax deductible.Tax deductibility of a loan is determined by what the loan is used for, not what assets (if any) are pledged for security.Thus if you borrow money to start a business the interest is deductible. It doesn't matter if the loan is secured against your personal residence. The income from the business is taxable, thus the interest is deductible. Likewise any other investment.It's not a scam and you're not getting something for nothing. It's just leveraging, and as always you can lose bigtime with leveraging if the market goes the wrong way.But you can't just wave a magic wand and make your mortgage deductible. You have to pay it off first (presumably by selling unleveraged investments you already… Read more »


Satv,the realtor clown,who hopes the government hand out will prevent the inevitable.No cure-all expected if Fed cuts benchmark rate in SeptemberAnd thinks the pretty scenery can prevent a repeat of previous real estate crashes.We are no longer isolated here from the possible bursting of a national housing bubble.

The tax man is watch

A lot of those financial geniuses from the other blog, who use the smith maneuver, will have a huge tax bill.


Ahh I see, if anyone else is interestedHere is a breakdown of the "Smith Manoeuvre" Here is a list of problems with the "Smith Manoeuvre" (essentially it says invest in RRSPs first, if you have money left over do the Smith but be aware that if your investments turn out badly you may lose your house.)All in all I'd say it's too risky in the current context, maybe in 3-5 years when prices have bottomed out and the market has settled down and I'm earning enough to max my RRSPs I'll give it a try.


drachen,They are probably helping you implement the Smith Manoeuvre, which is a very legal way of converting your mortgage to a tax deductible loan. Google it.


Hey has anyone heard of this MLink company? <a href="<br />I got some junk mail from them the other day, their deal sounds too good to be true (and probably is).They SAY that through their system you can essentially re-structure your mortgage debt in such a way that your payments become tax deductible.The advertising says you pay less for your mortgage while at the same time building equity in an investment portfolio.(from the brochure)[Over the course of a $300,000 mortgage with the same monthly payments as a regular mortgage]- $82,059 in tax refunds- Mortgage paid off 3.5 years sooner.- Investment portfolio of $240,354So what's the deal? How does the scam work?


Drachan,Vancouver is not a story of five we will disscuss that far I like to appreciate "CHIEF"for his STUNING comment I my self never have said that better,so I like to refresh his comment…Such RE glut will never happen here in Vancouver.1. There are thousand of Chinese and East Indians who will scarify their life for owning a property.2. RE price is still far below than other major US cities.3. Vancouver has the best sceneryand air quality in the world.4. living cost is far below than other major cities.we will keep it rockin…….


*Besides, anybody choosing to lighten up on their RE now IS a bear. Color me bearish then.

misanthropic curmudg

satv: revert to the mean chew on that for awhile and for a chaser always


On sellers vs buyers.Putting it at an individual level.The buyer will buy anyhow, all the seller is doing is adding more diversity to the market and by keeping higher inventories hastening the decline. The sooner the fall comes the less damage it will do. So actually sellers are a force for good in a bubble market. Buyers are a force for keeping the bubble going and if they're dumb enough to buy something they can't afford well then sorry, go live in Cuba if you can't handle your money better.


SATVUmm so let me get this straight, your 'argument' is that because real estate HAS gone up for five years it will go up forever?Never mind that every time it's spiked ANYWHERE in the past without a massive shift in the fundamentals it has come down to an equal or lower level than the start of the run up (after inflation).Essentially what you're saying is that the most recent five years of history carries more weight than the hundred and twenty five years before that?That's an awfully big fish to swallow.

misanthropic curmudg

OK Metro Vancouver fall 2009 <a href="<br />hurry because prices can only rise from this low point


Do you therefore feel anger towards the sellers?Did they make the buyers "an offer they couldn't refuse"?Remember, someone always has to sell, but nobody ever has to buy. The buyers determine the market price. Always.


OT: Just picked up a copy of the Westender ( and noticed that the front page headline screamed "Buy High, Sell Higher". I'm hoping that once papers like this discover condo-assignment flipping, it's a sign from the shoe-shine boy that the game is almost up.To their credit they do include a quote from Les Twarog of ReMax: "The US has sneezed and we're going to catch a cold soon…", "…It just can't keep going. Sooner or later the bubble will burst."Yes, you heard that correctly, a ReMax agent using the word "bubble".


Chief said… Such RE glut will never happen here in Vancouverthats very well on prediction.Chief,are you the real cheif economist Gregory Klump?yes or no ,but he is here to back you up.2007*************************2008 Canada $305,900 10.4% –$322,700 5.5% B.C. $429,700 9.9% –$454,200 5.7% Alberta $355,600 24.6–$379,000 6.6% Sask. $155,000 17.4% –$163,600 5.5% Man. $167,100 11.2%–180,000 7.7% Ont. $302,300 8.6% –$316,700 4.8% Que. $207,100 6.7% –$219,700 6.1% N.B. $136,300 7.4%–$142,100 4.3% N.S. $184,800 9.2% –$198,600 7.5%P.E.I. $132,400 5.6%–$139,200 5.1% N.L. $144,000 3.2%–$149,900 4.1%


No, quite the opposite, bears feel admiration for the sellers.They are cashing out and taking profits into the tail-flick of a big run up.Bully for them. Sell High.I feel genuine admiration for them, especially those that are selling by choice (those who don't have to sell for extraneous reasons like retirement/death/divorce etc).*Besides, anybody choosing to lighten up on their RE now IS a bear.


"I feel truly sorry for those people who are buying homes right now".Do you therefore feel anger towards the sellers?Are are all subject to your derision?


And it wasn't even close to an economic shock. The US just came out of a quarter with over 4% GDP growth, the services sector beat expectations, jobless claims are falling and productivity just surged to almost 2.5%. The Vancouver economy can't claim anything close to the depth and diversity of economies in many of those US cities that are now experiencing corrections. If it's going to get ugly anywhere, it will be here.


Hope you had a nice little break pope. The higher and faster our house prices go the lower and faster they will fall. I grin and shake my head every month we reach a new high because of what it means for the future. I feel truly sorry for those people who are buying homes right now at radical multiples of what it costs to rent the same property.