End of the year Free-for-all!

It’s not only that time of the week, it’s that time of the year. The end is upon us. Let’s bid a farewell to 2011 and say hello to 2012. This is our regular end of the week news round up and open topic thread, hope you’ve all had a terrific year and have an even better New Year.

-We’ll add story links here later.

What are you seeing out there as the year draws to a close? Post your news links, thoughts and anecdotes here and have an excellent weekend!

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0x13
Guest
0x13
Sorry for the repost – I am wondering if anyone has any insight into the last part of my post. In my mind the faster things fall apart the less painful it will be to get back to developing the "real" economy. Can the pain be avoided/mitigated for the spectators (non-participants) of this RE gong-show? ———————————– Recently I had an informal talk with a friend who works at one of the big Canadian banks. I asked him if he noticed any changes in the mortgage business. He said it’s still going strong. Interestingly though he also mentioned that he noticed an interesting phenomenon. Based on his day to day readings of a range of clients mortgages it seems individuals with mortgages about as high as $300k were actually making progress towards paying the principal. However if the mortgage was $600k… Read more »
rp1
Guest
rp1

"CMHC issues warning on high household debt"

"Crack dealer warns you all on crack"

rp1
Guest
rp1
T
Guest

@0x13

Not sure if this will answer your question but my mother works for one of the big five banks…and has done so for the last 35 years. She told me that back in the eighties, when RE was crumbling and interest rates soared, her employer released an internal memo instructing its branch employees to renegotiate any clients that tried to hand in their house keys and walk away as the bank was not in the business of selling homes but rather of selling financial services.

On another note, she has also told me on several occasions recently that there seams to be a large increase in NSF charges for "everyday" items like hydro and phone services. I imagine that this is probably an important indicator of where the economy is sitting.

patriotz
Member

@T:

"She told me that back in the eighties, when RE was crumbling and interest rates soared, her employer released an internal memo instructing its branch employees to renegotiate any clients that tried to hand in their house keys and walk away as the bank was not in the business of selling homes but rather of selling financial services."

And yet RE prices went from nominal top to nominal bottom in less than two years.

Bailing the Titanic with champagne buckets. And remember there are way, way, way more people today who bought at ridiculous prices and are over their heads in debt than there were in the 80's.

rob
Guest
rob

I wish I could find the picture online but pick up the Toronto Star today and flip to the Business section. I have never seen anything like this before. The headline claims 2011 to have been the year of the high rise and the image is of a tower taking up a good 20% of the page both above and below the fold… BUT what stands out is that there is a giant bubble taking up 20% of above the fold space floating over the top headline (on RIM), the section title, and apparently crashing into the tower and about to pop. The article doesn't mention much of popping (just the last two paragraphs with the summary of multiple analyst fears) but the image is powerful and surprising.

OV Renter
Guest
OV Renter
Annonymous
Guest
Annonymous

$1200.00 a month rent for 30 years is $432,000..and that's cheap for a 2 bedroom just about anywhere.I know you people are VERY concerned about Canadians debt..losing sleep over it and all but you should just chill out and try and enjoy yourselves..things are good in this Country..Not perfect but good.
http://www2.macleans.ca/2011/12/19/on-top-of-the-

anon
Guest
anon
@ 0x13: — I also asked what would happen if the clients can’t pay… does the bank take the property into foreclosure? The way he answered caught me a little off guard. It felt like he never quiet thought the process through. He said that the bank will work quiet hard to “help” the client continue paying (I’m not sure if this meant they’ll lower the monthly payment). He seemed to think that the foreclosure procedure was the solution of last resort. === Of course it's the solution of last resort. Foreclosure is a royal pain for the bank – carrying costs before a new buyer is found, court proceedings, usually lower price as many buyers aren't interested in foreclosures, etc. Much better to have the client slave for them & pay interest-only forever… Where does this stop? I am… Read more »
space889
Member
space889

@T: The other thing is that as long as the borrow is paying, the bank don't have to recognize any loss or hike its loan loss provision. Given the current environment of live or die by not just meeting but beating whisper quarterly numbers, I think banks will do everything they can to delay recognizing any losses.

Dave
Member
@patriotz: In over their heads? No. Greater amount of debt? Yes. There was a huge amount of speculation and leveraged purchasing in the prior year to the crash in the early 1980's. Prices doubled in a very short period of time. Of course, prices were going to correct when interest rates soared. It killed all the speculators and levered investors. If anything, it's amazing that prices didn't correct more at that time. None of the above is relevant to our current situation. We don't have speculation. We don't have that positive feedback cycle of rising prices allowing greater and greater amounts of leverage. Prices are flat. People aren't flipping. Interest rates aren't going to spike up. Think about it. If your theory was correct, we would have had the crash 3 years ago.
Anonymous
Guest
Anonymous

end of 2011 = same posters = same contents for the past many years! The only new thing is the one of them moved to Ottawa!

By the way, this is the end, so happy new year!

registered
Member
registered

11 Dave Says:"None of the above is relevant to our current situation. We don’t have speculation. We don’t have that positive feedback cycle of rising prices allowing greater and greater amounts of leverage. Prices are flat. People aren’t flipping. Interest rates aren’t going to spike up."

^Demonstration by adamant proclamation.

DonLogan
Member
DonLogan
@0×13: "I also asked what would happen if the clients can’t pay… does the bank take the property into foreclosure? The way he answered caught me a little off guard. It felt like he never quiet thought the process through" Economics is often referred to as the "dismal science", but really is it any different than organized religion? Conversations of this sort can go so far, as any questioning of the basic precepts your friend believes are tantamount to atheism. You hear the words "market confidence" often used by talking heads in connection with respect to an economies health, but aren't we talking about belief? Start with a system of belief and there is no shortage of corroborating evidence to support your claim? Can you tell I just finished reading Michael Lewis' new book "Boomerang"? A fun read, but I… Read more »
Annonymous
Guest
Annonymous

Too funny..Any Optimistic posts disappear.You guys sure you're not Americans?
http://www.angus-reid.com/polls/44253/canadians-h

trash crash alert
Guest
trash crash alert
It always amazes me how the government CMHC provided mortgage insurance for the 'land' component of real estate. They should have focused only on the 'building' component. As land has very little economic rent except if you want to grow some vegetables, get a goat to eat the grass, have some chickens. Mass government interference in the free market inflated the land component and gave Canada $1 trillion worth of insured cardboard houses that sit on for the most part land with minimal economic rent. These cardboard houses have at best 30 to 40 years of economic life – houses consisting of simulated plastic, white doors that weigh three pounds, cheap phony brass purchased from box stores, drywall of which all is assembled in 1 to 2 months. Concrete condo towers are a whole another story of fogged windows to… Read more »
YLTN @ Work
Guest
YLTN @ Work

@0×13:

I asked my buddy at BMO how things were going on the mortgage front and he said historically mortgage lending has been the largest income growth source for the bank however 3Q 2011 was different in that the mortgage business was ranked 4th for growth. Investment banking was at the top.

VMD
Guest
VMD

[BC will require English proficiency testing for all Provincial Sponsored immigrants]

– Breaking news from Singtao Chinese newspaper

"Traditionally PNP (Provincial Nominee Program) immigrants do not need to meet a standardized English proficiency test, thus PNP had become a very popular route of immigration"

"Starting June 2012, BC will now require proof of English proficiency, be it TOEFL, IELTS, or CELPIP; BC will also require proof of employment of the last 10 years"

"If English proficiency is not met, the employer can consider sending the applicant for 6 months of language school"

<a href="http://translate.google.com/translate?hl=en&sl=zh-CN&tl=en&u=http%3A%2F%2 Fwww.westca.com%2FNews%2Farticle%2Fsid%3D216982%2Flang%3Dschinese.html” target=”_blank”>http://translate.google.com/translate?hl=en&s…” target=”_blank”>Fwww.westca.com%2FNews%2Farticle%2Fsid%3D216982%2Flang%3Dschinese.html

Many Franks
Guest
MadasHell
Guest
MadasHell

2012 Prediction: Investor will realized the housing market had peaked and are turning, panic dumping of their real estate investment and flooded the market with inventories. Sales and prices will drop as no one will buy into a dropping market. Flaherty and Carney watches helplessly on the sideline as the economy tanks and they can not drop interest rate any lower!

2012 will be the Year of the Housing Bears.

annonymous
Guest
annonymous

@madashell….Your typical Vancouver Condo contributor…Praying the "economy tanks" to get "The Crash" they've been calling for since 2004. How this benefits anyone but ultra rich housing speculators I'll never know.The wealthy love it when things Crash because they get to own way more of everything.

trash crash alert
Guest
trash crash alert

Canadian Banks in 2004 had $368 billion in outstanding mortgages, now it is over $1 trillion.

Mortgage rates have fallen 50% since 2004 along with an extensive loosening of credit qualifications with a period of time experiencing zero down, 40 year amm, interest only, stated income, goes on and on.

Here is a house built in 1610.
http://en.wikipedia.org/wiki/Holmshurst_Manor

This house likely has another 500 years plus of economic life not like the CMHC guaranteed cracker jack cardboard special house that is now our new national bird in Canada.

patriotz
Member

Well so much for "5000 years of Chinese culture"

http://www.bbc.co.uk/news/world-asia-china-163674

"China says about 44,000 ancient ruins, temples and other cultural sites have disappeared.

That's the conclusion of the country's first heritage census for more than 20 years…

Liu Xiaohe, deputy director of the survey, told state media that economic construction was the most important reason for the damage to cultural relics…

Two years ago a Qin Dynasty part of the Great Wall was said to have been damaged by miners who knocked holes in it while prospecting for gold."

Nice to know that plain greed can be just as destructive as Mao's ideology.

Elvince
Guest
Elvince

Small (3 minutes) interview with Schiller.

http://www.fool.com/investing/general/2011/12/23/

This is actually pretty good for a 3 minutes long piece. The guy can almost sum what was said the last 7 years on this blog in 3:23.

Anonymouse
Guest
Anonymouse

@patriotz:

Try visiting Rome sometime and see how some of their historical sites have been "preserved" with concrete, electric lighting, and garbage bins bolted to the walls. Not everything we build is meant to be kept for eternity, sometimes we need to give up the nostalgia to make progress.

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