So it has come down to this.

It was only a year ago that no one believed this would happen. There were a few, but the majority was in denial.


I have to admit I am starting to get really worried about the future of our Economy. It is pretty obvious that housing is taking a hit and it will continue for some time. Interests rates are up, investmensts are down, and people are holding on to their money. How long will this last??


Next year will be the tell. If things start to improve then we will be moving back up in a year, if things don't improve, in 2009, then it will continue for some time. How will all these bailouts effect the future? Are we in for massive inflation to pay for all this?

Housing Market????

If you have been reading my Blog you already know my story. I Sold my House last year, in the Lower Mainland, and found that the Housing Market had lost its energy. Was it seasonal or was there a trend starting?? I moved to my new town and rented, while keeping an eye on Real Estate. I found a house that was almost perfect; location, size, neighbours, etc. and decided to buy back.

I admit I am still extremely curious of what is to come. Will House Prices hold?? Are we to expect the same housing slump that the US is experiencing?? Is the US RE Market actually suffering as much as is being reported?? How much will Canadians pay for Real Estate??

There are other countries in the World that have worse affordability issues than we do, even at our current prices. Is this influencing our Market? The internet has definitely opened up information and made our MLS available to anyone with an internet connection.

From where I sit I am seeing the Canadian Housing Market still moving along, especially in Alberta. It will be interesting to see what the Spring Market brings. More Listings? Or more Sales?? I guess only the market knows, and time will tell.

Don't forget to check the RE Board STATS for this month which should be out over the next week.

Speculators. Housing, Oil is there a difference?

Here's an article that I came across while on the Calgary Contrarian Site that was really interesting. It talks about oil and its crash after Speculators got out. Read this Article, and think about what has happened to the Real Estate Market over the past few years.

Oil: It's Back To Supply And Demand
The speculators who bid up the market last year are in retreat. So much for the new reality

"Last July, when crude oil was surging toward $80 a barrel, the talk of a new reality in the energy markets hit a fever pitch. Some said China and India would so voraciously suck up supplies that we might never see $50 a barrel again. Others noted that the nations that make up OPEC had finally figured out how to put the screws to the West for good, emboldening Iran and Venezuela to send prices higher with a mere rattle of their sabers. The "multi-decade supertrend" mantra echoed through the canyons of Wall Street" Full Article

"Last July, when the median price of housing was surging toward $500,000, the talk of a new reality in the housing markets hit a fever pitch. Some said immigrants from China and India would so voraciously suck up Real Estate that we had better buy, or be priced out forever. Others noted that the Olympics would keep prices increasing forever. The "multi-decade supertrend" mantra echoed through Condo Sales Offices all across the Lower Mainland."

Things to watch for this week.

1. What will the US FED do with interest rates?
2. How does the US Rate affect the Canadian Dollar?
3. January Real Estate STATS should come out by Friday, maybe early next week.
4. Price of oil. Saudi's are fine with $50/barrel.

2006 Was the Worst Housing Slump in Nearly 20 Years - US

Finally, some honest Real Estate reporting. I guess it really has to be, in your face, obvious before the MSM will report it.

So 2006 is the Worst Housing Slump in 20 years. So what does this mean for Canada?? We have had a slow, arguably declining, market since late summer of 2006.

Is 2007 going to be Canada's Worst Housing Slump in 20 Years????

My Thoughts on the Housing Market and its Future.

As a consumer I always research everything before I buy. I am in the market for a new home and have been reading trying to get a feel for the Housing Market and where it's headed.

I have set up Google Alerts where I get emails sent to me every time a new article comes out concerning housing, real estate, housing bubble etc. Plus I read Blogs, Real Estate Board Stats, MLS, and look around my neighbourhood.

Here are some of my observations:

1. Canadian Real Estate is definitely slowing down. Which is leading to some minor price reductions. Those that are being stubborn and are asking too much aren't selling. It is a Buyers Market out there. Still far from a crash and prices are still quite high. Will this change next year?
2. The US Market is definitely in serious trouble. There are so many News Articles pointing towards this that it is hard to miss. Prices in some areas are down almost 40%.
3. Housing does go down!!! If another person tries to tell me it doesn't I'm going to lose it! Just look at a Graph that shows the History of Housing Prices, it goes up and down like a Stock. Of course it goes up in the long run, so does everything else you buy, it's called inflation. There are definite ups and downs, and sometimes they are extreme.
4. The Real Estate Industry is not working in your best interest. They are interested in keeping the Market going. They are always optimistic during any state of the market. The US NAR has gone from, "Prices will never drop." to, "Now that prices have dropped, it's a great time to buy." I don't blame them because it is their job to sell Real Estate. Negativity does not sell. People just need to be more aware of their tactics.
5. In Canada the RE Industry is still claiming that next year will be a strong one for RE. While there are a lot of Economists that are cautioning against that.
6. Canada seems to be following the US market, they usually say that we trail about 6 months behind.

I would say this is not a good time to buy a house. The market is likely to start showing more signs of deterioration when more supply is added to the market in the Spring. The market has lost its momentum, this is giving buyers more time to think clearly about their purchase. As I am.

Are Today's Housing Prices Sustainable?

Here are some numbers to think about before you answer that question. Think of your own wage, what you take home after Tax's, Benefits, etc.. Take into account that the average household income, before Tax's, is around $55,000/year.

$200,000 Mortgage over 25 Years =

• $1279/Month @ 6%


• $1526/Month @ 8%


• $1788/Month @ 10%

$300,000 Mortgage over 25 Years =

• $1919/Month @ 6%


• $2289/Month @ 8%


• $2683/Month @10%

$400,000 Mortgage over 25 Years =

• $2559/Month @ 6%


• $3052/Month @ 8%


• $3557/Month @ 10%

You can see how interest can make a huge impact on your payments. Interest rates can go up and the have in the past.

Who can afford these payments?? Based on 35% of Gross Monthly Income.

• $50,000/Year should be paying around $1458/Month for total house hold expenses
• $60,000/Year should be paying around $1750/Month for total house hold expenses.
• $70,000/Year should be paying around $2041/Month for total house hold expenses.
• $80,000/Year should be paying around $2333/Month for total house hold expenses
• $100,000/Year should be paying around $2916/Month for total house hold expenses

Don't forget that these are included in you Total Monthly Housing Expenses:

• Property Tax's, which increase as your property appreciates.
• Gas and Electricity
• Garbage and Sewer
• Metered Water
• Up Keep, Roof, Hot Water Tank, etc.

What about:

• Saving for retirement?
• Saving for Children's Education?
• Job Loss?
• Vacation?
• Furniture for your home.?
• Clothing, Food.?
• Car Payments?

It's quite scary when you actually take the time to add it all up.

In Summary:

From what I can see here the only people that can afford to purchase at these prices will be those who are already in the market and have equity, those who have saved up a lot for a down payment, and those who are wealthy.

I don't know what percentage of the population is fortunate enough to be in this situation. But I am sure it isn't enough to sustain the market.

Considering the price of Condos, most "First Time Buyers" have been priced out.

If prices stay like they are all those "Baby Boomers", who want the younger generation to fund their retirement, are not going to be able to find enough qualified buyers.