The everything bubble: how does it end?

Does every major asset seem expensive to you right now?  Does it seem overpriced?

Well, what if it is, where do we end up?

The NY Times has an article titled How The Everything Boom might end: The Good, Bad and the ugly.

Basically it breaks down into (1) the good: Low price of capital unleashes productivity, economy grows into current valuations. (2) The bad: Japan style stagnation 15 years of low rates and low returns or (3) the ugly: spike in prices with a depressed economy.

But the pattern of the last few years shows that the “bad” scenario has been closest to the reality. That doesn’t mean the rest of the bad script will continue in the years ahead, but it should prompt those predicting the first or third outcome to wrestle with why they have been wrong so far.

So what do you think? Whats the future look like from your view point and would it have been any easier to predict the future in the past?

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Loon
Loon
6 years ago

Excellent article from Macleans (#76).

If housing prices started sliding down, job loses would surely follow in constructions and other areas. This would have a cyclic effect of lowering prices further and more job losses. In turn, mortgage lending LTV ratios would probably be tightened and mortgage insurance restricted further, which would be the death knell for housing. The banks would get bailed out, the borrowers not so much.

I’d be interested to see if Canada follows the same path as the US in this downward cycle.

So, save your pennies as vultching a property may be in order, but don’t expect much help from the banks when it comes to lending.

Gord
Gord
6 years ago

I hate to say it but with Maclean’s and Morningstar’s record of predicting, you can be sure a correction is more than 5 years away.

Bull! Bull! Bull!
Bull! Bull! Bull!
6 years ago

remember those hedge funds who went short the canadian housing market in 2013? i haven’t heard much from Vijai Mohan or Hyphen Fund since… wonder how they are doing?

Romeo Jordan flipped a 94 Porsche and lost money
Romeo Jordan flipped a 94 Porsche and lost money
6 years ago

“Investors should stay away from the Canadian housing market, warns a new report from Chicago-based investment firm Morningstar. A house price correction is “inevitable” within the next five years and could send house prices falling as much as 30 per cent.”

Oh that Morningstar! Who are they? Only a huge and extremely well respected independent research company.

I prefer to get my research from Realtards, Bull Bull Bull and they guy who is the head of Royal LePage who says we are going up 5% a year forever.

mikey
mikey
6 years ago

@University #73
Somebody from my family bought there at the beginning of 2008 335K 2 bedroom, sold this year for the same price. It is a nice area but foggy 6 months a year. The prices seems to be steady in the last 4-6 years 5% up and downs. The family member offered me the apartment for 300k 2 years ago, not desperate but wanted to buy a house. No close high school though… poor store selection, you have to come down the “mountain”(it is a big hill actually) to buy decent groceries

OV
OV
6 years ago

Globe and Mail, “Vancouver targets housing speculation”

it’s becoming an election issue. things move slowly, but they are moving.

it’s too bad the HAM denialists and sino-apologists slowed down efforts to have this problem examined and dealt with.

bullwhip29
bullwhip29
6 years ago

@ southseacompany:

Macleans also published this article today. FWIW…

http://www.macleans.ca/economy/realestateeconomy/why-canada-isnt-immune-to-a-u-s-style-housing-crash/

southseacompany
southseacompany
6 years ago

Macleans; “Why Canada isn’t immune to a U.S.-style housing crash”

http://www.macleans.ca/economy/realestateeconomy/why-canada-isnt-immune-to-a-u-s-style-housing-crash/

“A new report warns that Canadian home prices could fall 30 per cent in the next five years”

“Investors should stay away from the Canadian housing market, warns a new report from Chicago-based investment firm Morningstar. A house price correction is “inevitable” within the next five years and could send house prices falling as much as 30 per cent.”

would-be buyer
would-be buyer
6 years ago

Perhaps as the property bubble implodes in China you will see the gov relaxing purchasing rules throughout the mainland:

http://www.scmp.com/property/hong-kong-china/article/1551495/jinan-becomes-latest-chinese-city-relax-home-purchase-rules

Could this slow down the flight of cash from China to the US and elsewhere? Interesting how the Chinese do not invest in the stock market. I wonder why? They love real estate above all else for some reason.

Bo Xilai
Bo Xilai
6 years ago

How do rich Chinese elude foreign exchange laws to move their money abroad? Take your pick of ways

New South China Morning Post Article…

http://www.scmp.com/business/banking-finance/article/1551510/how-elude-chinese-foreign-exchange-laws-take-your-pick-ways

University
University
6 years ago

Anyone have any thoughts on buying a condo at SFU’s UniverCity project? Iv heard mixed things about the community and wanted to know your thoughts

southseacompany
southseacompany
6 years ago

Re: Quiz. I got 67%. C+

southseacompany
southseacompany
6 years ago
southseacompany
southseacompany
6 years ago

Macleans:, “Who said it: the Canada-U.S. housing bubble quiz”

http://www.macleans.ca/economy/realestateeconomy/who-said-it-the-canada-u-s-housing-bubble-quiz/

“A lot of reasons are given for why Canada doesn’t have a housing bubble. Almost all were said about the U.S. housing market before that bubble burst.”

southseacompany
southseacompany
6 years ago

BNN: “Housing prices skewed by Toronto, Vancouver and media”

http://www.bnn.ca/News/2014/7/9/Canadian-housing-prices-skewed-by-Toronto-Vancouver-and-media-reports.aspx

“While prices increased 5.2 percent nationwide to an average of $406,454, the highest ever year-over-year gain, a closer look reveals those numbers were largely driven by urban centres, specifically Toronto and Vancouver.”

“Soper also blames media organizations centred in metropolitan markets for inflaming the public’s hysteria. “If you look at the Toronto numbers and certainly headlines about real estate, you’d think that the market as a whole is on fire or in bubble territory,” said Soper, who worries that such headlines are encouraging intervention from Ottawa through mortgage insurance policy.”

southseacompany
southseacompany
6 years ago

Globe and Mail, “Vancouver targets housing speculation”

http://www.theglobeandmail.com/news/british-columbia/vancouver-targets-housing-speculation/article19559458/

“The City of Vancouver is launching an agency to help figure out how to limit investor speculation in housing – a controversial issue in Vancouver’s inflated market certain to be debated in this fall’s municipal election.”

“But it is also intended to contribute to an “informed” discussion of housing, collecting data and providing “information on ways to limit investor speculation and unnecessary vacancies in Vancouver’s housing market,” said a statement issued by the mayor’s office.”

Westside Realtor
Westside Realtor
6 years ago

What continues is slow sales in my work area
Went from red red hot

To not.

UBC in Crisis Mode
UBC in Crisis Mode
6 years ago

Do you know who wants to move money overseas? Almost all Chinese officials have family members living overseas (including the bankers!). They all want an easy way to do it.

You think the government is for the people or the interest of the country?

Best place on meth
Best place on meth
6 years ago

So the Chinese kleptocrats and oligarchs are laundering their ill gotten money through official Chinese banks while the Chinese government looks the other way?

I’m shocked!

I never would have guessed that there could be so much corruption at every level in China.

paulb
6 years ago

New Listings 235
Price Changes 83
Sold Listings 94
TI:16869

http://www.paulboenisch.com

Madashell
Madashell
6 years ago

Money transfer holes being plugged, travel movement monitored, immigration policy changed, CMHC being conservative, interest rate going up very soon. I can feel the storm is brewing against housing in Canada.

Nonplayer Character
Nonplayer Character
6 years ago

Oops, it’s already posted. Could you please remove these 2 comments of mine? Thank you.

Nonplayer Character
Nonplayer Character
6 years ago
Bo Xilai
Bo Xilai
6 years ago

Zerohedge picks up Chinese Banks Laundering Money for Oligarchs story from SCMP with commentary… Wonder what the effect on high-end US housing and Vancouver will be?

Did China Just Crush The US Housing Market?

http://www.zerohedge.com/news/2014-07-10/did-china-just-crush-us-housing-market

infiniti
infiniti
6 years ago