Mortgage crisis spreads beyond sub-prime

Condohype just sent in this link to the main story in todays New York Times: Mortgage crisis spreads beyond sub-prime. This story will be of interest to anyone who believes that our local economy is affected by the US, our largest trading partner.

As home prices fall and banks tighten lending standards, people with good, or prime, credit histories are falling behind on their payments for home loans, auto loans and credit cards at a quickening pace, according to industry data and economists.

Chip posted this link to a government of canada site in the previous thread which I believe neatly ties into why US economy stories relate to Vancouver real estate prices:

Canada’s economy is less than a tenth of the US economy and it is highly dependent on the US economy. Eighty-five percent of Canadian exports are destined for the US and about fifty-nine percent of its imports come from the US.

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Toronto neighbourhoo

It is without doubts that our local economy is affected by the US. It has to be. They are our neighbour and our largest trading partner. As you mentioned in your article "Eighty-five percent of Canadian exports are destined for the US and about fifty-nine percent of its imports come from the US", so that's quite an influence. I am not as familiar with the situation in Vancouver as you are, but here in Toronto neighbourhoods it looks probably similar. Some brokers used predatory lending to sell to people thet were not good candiates for mortgages, appraisals were over inflated to close on home, and resale values fell. Easy.

Anonymous

“The outlook for the economy has worsened in recent months, and the downside risks to growth have increased,” Bernanke told the committee. “To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so.” Bernanke also said that the “virtual shutdown” of the market for subprime mortgages — given to people with blemished credit histories or low incomes — and a reluctance by skittish lenders to make “jumbo” home loans exceeding $417,000 have aggravated problems in the housing market. I'm sure that lenders don't have a problem lending large amounts to people that can pay it back. I suspect they just don't want to give jumbo loans to deeply in debt people earning $35k a year so they can buy… Read more »

Mold City

Forgot the link to the full story:

http://www.msnbc.msn.com/id/23164148/

Mold City

Federal Reserve Chairman Ben Bernanke told Congress Thursday that the country’s economic outlook has deteriorated and signaled that the central bank is ready to keep on lowering a key interest rate — as needed — to shore things up.

If stupidity got us into this mess, why can't it get us out?

Re-diculous

Some better RE value perhaps?

http://www.ushomeauction.com/auction-registration

Krissh1

Ohh Krissh, how clever of you to post as an anonymous poster.

Anonymous

Tony,Btk,Scullboy, you guys are annoying dog barking if you don't get it read the brand new post from the pope.You guys should post your opinion on related topics do not make this thread boring. "Anyone here reading from NJ or NY"?-Tony "Why do you ask"?-Scullboy "Krissh1, you have never responded to anything".-Bdk krrish1 2008-02-07 18:14:03 but we have our own Canadian cities- we are not American cities those are victim of Natural Disaster,Threats,Subprime Mess,Gambling Addiction,and Field Wars. No, since the wisemens are coming to know that they are drinking recycling water from glycol recovery shhhs those are running to buy in Vancouver B.C. California stink with smell of marlboro and industrial gases now it’s right time for them to buy here. bdk?Hello? and also check the link from MS kids on the fresh post,you guys refuse to believe,reject the truth… Read more »

scullboy

Hey Krrish

SFTU.

scullboy

Whoops, that's STFU. Hey, this is fun! Why bother replying to a helmet wearing 'tard? Only one response will do:

STFU!

btk new name bkd

Krissh1, you have never responded to anything. You have written a bunch of borderline retarded regurgitated sales pitches with the occasional rap and incoherent tales about "wisemans". Imagine going into a Hyundai Dealership and the car salesman telling you that the Hyundai was as good as a Porsche, would you repeat this as truth? Would you then pay the same price for a Hyundai as a Porsce and start rambling incoherently on blogs about your "Porsche like" car? So why would you, or the otehr troll on here, believe Vancouver is anywhere near the same league as New York? Because a realtor told you? Has it occurred to you that realtors make commission off of sales? What is it you do that makes you think you know anything? You've never said anything that indicates you're more than 12 years old.… Read more »

krrish2

most recently I had respond to BTK about California here is full video which cover some problem and the rest, I will provide some link to recycling water from Glycol Recovery in California,this recent documentary cover the problem of water and industrial green house gas emission.

Ok here we got some thing to WATCH http://www.cbc.ca/national/blog/video/internation

Crabman,btk,sofia and to whom else it may concern………

krrish2

TONY,

Is that related to housing sector?why don't you post your opinion regarding the topics even your first comment was not making any sense on this board are you alright?.

I was driving by broadway and cambie I saw road block and a seen of recent explosion at 686 WB some matterial from above residential units were down under to commercial units of Starbucks and Taco time here is the story:
http://www.cbc.ca/canada/british-columbia/story/2

Tony Danza

STFU

scullboy

I second that. Krrish, STFU.

bdk

I third that SHUT THE F^CK UP KRISSH

*Krissh is too stupid to understand abbreviations.

Michael Randallbard

"I was driving by broadway and cambie I saw road block and a seen of recent explosion at 686 WB"

Keep trying….if you try and try again (your suicide bombing stunt) you will succeed one day. We are standing behind you….way behind you.

coco

Canadians getting less upbeat on economy

http://tinyurl.com/34fxx5

coco

Anatomy Of An Intentional U.S. Foreclosure

(there is a video on the left hand side you can watch)

http://tinyurl.com/2xcewv

Digi

Ouch! I remember a couple of years ago reading about the San Diego boom – it sounded like they were using all the hype excuses about why prices would never go down that you hear around Vancouver. Is it different here?

coco

The U.S. foreclosure crisis is worsening and the number of foreclosures will become even higher over the next few years amidst growing economic uncertainty. Housing Predictor extends its foreclosure forecast into 2011 nearly doubling its original prediction.

http://tinyurl.com/22wcwb

crabman

Properties in San Diego foreclosure auctions last month sold for 63% of peak prices. 37% down in 2 years and still falling! Looking at it another way, this wiped out a 59% gain! (37/63 = 59%)

Link

Of course we have great weather, the ocean, olympics, blah blah blah.

blueskies

Heads up!

cash is king!

http://tinyurl.com/2gj32h

Based on the interpretations and implications

from this chart, after the Aug/07 credit crisis

the US Fed opted to protect the dollar and

let hard assets deflate.

They basically flipped the bird to the big banks

and started draining liquidity from the system.

The way they are handling the systemic risk is

to remove the punch bowl and drain the swimming pool.

Cash is king, hard assets (incl RE) are deflationary toast.

Leveraged RE bulls just took one in the shorts!

Sunshine and blueskies this AM with a touch of fog.

also posted this on chipmans site:

Drachen

BTK

"Does anyone here have any articles written by people who thought the tech market was going to go up forever even when it started to become obvious that it wasn’t going to?"

How about a book, "Irrational Exuberance" 1st edition. 2nd edition focuses on real estate.

By the way do you know your handle is also the nickname for a serial killer? I hope that isn't why you picked it.

His full nickname was "Bondage Torture Kill" for his M.O. but he was usually just referred to as BTK.

pricedoutfornow

Mom, Dad, where's my condo? ;p

I'm sure there aren't THAT many people in that situation. I have a friend whose parents are in their fifties. Their mortgage (on a house in Surrey) is $400k. They tried to sell last year for $800k. It didn't go, despite being on the market for almost a year. Their rational for having such a big mortgage? "It cost us $400k to build, we'll be able to sell for at least $600k." Hope to God I'm not 50 years old with such a huge mortgage!

patriot1

They probably view the house as their retirement plan and are not putting anything into RRSP's. They missed the chance to sell at the top and will probably hold on to the property all the way down. They will face retirement with big house payments and minimal equity, and may well end up being forced to sell.

This is yet another red flag – people who are effectively speculating on their own residences. They buy the very biggest house they can, with maximum financing, in the hopes of cashing out and downsizing into another property with minimal debt. Works fine if you get in and out at the right time, but not if you don't.

Very, very common in the US. It represents additional pent-up supply that is missed by the statistics.

jesse

Tax laws in the US have it that you can defer capital gains as long as you buy an asset of equal or greater value within a certain timeframe. Thus the continuous push up the property ladder.

patriotz

That used to be the law, but it was changed a few years ago to make gains tax free if the property was owned for 2 years, without further conditions. This is regarded as one of the facilitators of the current bubble on HBB and elsewhere.

jesse

Yes, only up to $250K though.

scullboy

I think this whole mentality is part of the problem. "Our house should be worth 600K because we say so."

patriotz

Wrong. RE prices are determined by the buyer, not the seller. What the seller thinks their house is worth is irrelevant.

freako

Jesse, condos don’t increase productivity, but they do increase use of land.

Semantics. The land is more productive. For some interesting glimpse of what the future may bring, google "contour crafter". This thing essentially "prints" a house with concrete, much like a bubble jet printer prints on paper. In theory, it could build a floor a day, at a far lower price. To date, construction technology has improved, but the inflation adjusted cost per square foot has not gone down. If that changes, the whole equation will be altered.

freako

But the stock price of Nortel is still 1/10 of what it was at it’s peak?

Try 1/100.

blueskies

here's how it is done!

just ask satv/k

http://tinyurl.com/yvgyfr

They don't like to tell you, but we see kids come in who are in their early 30s with a nice home and no mortgage,

krrish2

Bluskies,

Thanks for the link but it's very difficult for me to disscuss on this issue because of people from different culture and their life style.

I just like to say this is a responsibility of the parents toward child to provide them 'three essential eliments' of economy those are food,shelter,and education depend on income and family size that help is vary.

My parents were renting to raise our family,when we got job every single member of my family own a home for each,we never have to borrow loan for education.

only this much from my family tree and all of us are connected with each other for freequent visit and family get together. help can come and go with exchange of C$,USA$ and UK # Sterling.

crabman

Homes in Bubble Regions Remain Wildly Overvalued

Next year this can be re-written. Just replace California with BC.

patriotz

Did the guiding lights at the WSJ tell us that house prices were overvalued, wildly or not, before they started falling?

crabman

Probably not, but the Economist did.

Digi

Gah, nice to see a story that focuses on that. I'm not suprised that 30% of the US buyers from the last two years are underwater though. When prices drop here we're going to see the same thing. I remember a few front page articles here in the early nineties about people who were underwater on their mortgages. Just wait till we come off the peak of this boom!

Digi

Jesse, condos don't increase productivity, but they do increase use of land. To me the condo boom kind of puts to bed the notion that we're running out of land. I've seen the land of two single family homes turned into 64 'dwelling units', even if those houses had basement and atic suites thats still a more than 10x increase in the number of homes on that land.

gah

Holy crap. Here's an interesting stat from the US – 30% of people who bought in the last 2 years are underwater.

http://tinyurl.com/38pect