There is no Canadian Housing Bubble!

[Aman A.K.A. Ahamburger]

There may be a possibility of a housing bottom in 2011. A few encouraging things have happened. It should be an interesting year. A couple of points to consider below; any thoughts??

Housing bust? So what? We still want to own:
money.cnn.com/2010/12/16/real_estate/homeownership_desire_high/index.htm

Cambridge founders launch Royal Oak Homes:
www.orlandosentinel.com/business/os-cfb-real-estate-cambridge-122010-20101219,0,1081744.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+orlandosentinel%2Fbusiness+%28OrlandoSentinel.com+-+Business%29

[Cheesy FL-Vol]

I work in a housing construction related business in FL, and the signs right now are that '11 will still be slow, and it may still be '12 before things really begin to turn around. Without reading the articles you posted, but having read articles in our industry related magazines in the last few months.

[Aman A.K.A. Ahamburger]

I was reading an article a couple weeks ago about a big builders CEO being optimistic for a bottom in 2011 and a recovery in 2012. Seems in line with what your saying.

[Cheesy FL-Vol]

Of course...at this time the market will be no where near what they were in '05, and possibly never be at that point again.

[Aman A.K.A. Ahamburger]

I agree. A lot of the demand wasn't real. There is room for improvement; however I don't think anyone wants to get back to a bubble. IMO, a house is a good long term investment. It's not supposed to be a quick flip.

It sucks that some of the jobs won't be returning, however, maintenance is going to be picking up. A lot of old infrastructure needs to be replaced, as you can see in the news. People with skills in the construction industry do really well in maintenance.

[neohguy]

It will probably vary by region. Don't expect much new construction with average wages falling and a return to tighter lending.
Housing comes down to affordability. Can the average wage earner in your state/province qualify/afford the current median new price for the area they live in? The answer in most cases is no. Younger people that are qualified are wisely not purchasing new or used homes if their job requires possibly relocating. The "mobile" professional home owner was only possible because of the housing bubble.

[poorandugly]

Dec 21, 2010 10:35:06 GMT -5 @neohguy said:

It will probably vary by region. Don't expect much new construction with average wages falling and a return to tighter lending.
Housing comes down to affordability. Can the average wage earner in your state/province qualify/afford the current median new price for the area they live in? The answer in most cases is no. Younger people that are qualified are wisely not purchasing new or used homes if their job requires possibly relocating. The "mobile" professional home owner was only possible because of the housing bubble.

Amen brother!

[poorandugly]

So much for more doing and less this, isn't that right neo?

LOL.

Is this site smart phone friendly? I had problems with msn on my I phone. I am not a technophile as others tend to be.

[mikec]

I think it depends on the area. MOST areas might be at the bottom already and could start a small recovery 2011. Some ( you know the 4 hit the worst) may take a year or two longer...

[Deleted]

90% of the country is slowing working through the problem

Ca, Fla, and Nevada will be last places to recover

The foreclosure problems there will take maybe another three years to get through

I just added OC to my watch list....as homes finally start to be constructed these are the companies that will be worth owning

[scaredshirtless]

CA, FL, NV & AZ

Those states will see new all time mortgage default highs in the second half of 2011. That's when all the 5 year teaser rate pay option ARMS all recast to new (higher) interest rates. You know - the stated income type. This wave will last into early 2012.

Turnaround in 2013???

Other areas - sooner!

[neohguy]

"
this is going to be a long term process to get back to normal"
Above by wxyz (I haven't figured out how to reply with the box yet)

I don't think we know what normal is. Is it the Mcmansion craze from 2000? Is it the split level of the 80's and 90's? Is it the 3br 1b from the 40's-60's? Is it the duplex from an earlier period? My guess is the next big move might be much smaller energy efficient homes as fuel and other commodities become expensive due to limited supply. 1998-2006 was not normal imo. We don't want to see that crazy excessive era again.

[The Virginian]

A friends husband works for a very large construction firm here in Virginia, she said business is picking up but it is mostly from government construction contracts, not much building by private firms.

[comokate]

Until there are some constraints put forth on "free trade", I don't think we are going to get "back to normal' ( i.e. the post WW2 growth until the 1970's).
The "boom" years post 1980 were a series of financial bubbles and an economy that was fueled by credit purchases by consumers who did not see real growth in their wages.
American workers cannot compete with workers who get paid cents on the dollar. The sheer cost of living in the U.S. prohibits that. So, keeping that in mind, where will the demand be for existing homes?
( note to any builders; there may be a market for homes that offer living spaces amenable to multi-generational families co-habitating, "boarding house" style homes, or townhome/condo "co-ops". The single family home may end up going the way of dinosaurs; too big/sucking up too many financial/other resources to survive)
We will continue to see a deflation in the price of housing because of continued job losses/ wage reduction.

[sangria]

Did you see the "10 worst stocks" on the MSN pages? Pulte took a beating.

G'damn scumbags!

[j453]

I'm deep into residential housing. Here's what to expect in 2011. The large saturated metro areas will have subdued growth, albeit just slightly above 2010 figures, with foreclosures still hindering recovery. Prices will be stable and the dreaded "second leg down" in housing won't be much more than 5-10% drop in a few select regions. The areas with smaller populations, strong job growth, and lack of inventory will attract the larger builders. You will see many more smaller subdivisions of 50-100 homes as compared to the massive master planned communities of years past. The volume of homes built will be comparable to 2010 levels but margins will be higher. Builder stocks will waver until at least 2012, and some today are already overvalued. Smaller nicely appointed homes will be the norm, and the 4,000 ft structure on a 8,000 ft lot will exist only in small numbers. Moving onto 2012 will start to see even more increase in building volume. Keep in mind, for the last year the majors have been positioning themselves with land acquisitions, all thanks to the new home buyer tax credit that padded their pockets with hundreds of millions in taxpayer dollars last year.

[Aman A.K.A. Ahamburger]

Dec 21, 2010 12:00:06 GMT -5 @franktheimpaler said:

"A" man...glad you are part of the migration...whats the matter too much snow and you can't go out today?

LOL, this is going to be a good place to migrate too. Much warmer than the weather has been up here. I have had two b'day parties for a 6 yr old to get through(Friends/Family) and both of my older boys have had the flu in the last 2 weeks. It's been crazy! Projectile vomit anyone?

@j453 Thanks for the balance outlook, and informed opinions! One of the articles I posted is about building companies increasing land; so it would seem that things are lining up.

As far as affordability for young people, a lot of times it comes down to if it's cheaper to own than buy, however I hear you about being "mobile" neoh.

Here in Canada it goes Van at 68.8%, Tor at 47.2%, Montreal at 41.7%, Ottawa at 38.2%, Calgary at 37.1%, Edmonton at 32.7%, then goes down from there. How is affordability to income shaping up in area down there??

[Aman A.K.A. Ahamburger]

This would appear to be a big event. Especially because of the worries about long term health of the economy. The fact that this happened in an area that everyone agrees has been badly hit, is another strong sign!

Miami Tower, A Business Gauge, Is Sold:
www.globe-democrat.com/news/2010/dec/21/miami-tower-a-business-gauge-is-sold/

[neohguy]

Ahamburger, I'm in Ohio so the situation is different than some other areas of the US. We did not experience much of the housing boom because the state has been in recession since the early eighty's. There is little to no new housing construction at this time and we have a massive inventory of homes available for sale but very few buyers because of economic reasons. Other parts of the country may be different but the majority is similar to us in varying degrees. This is understandable because a big bubble just burst and the bigger the bubble the longer the recovery. Think NASDAQ.
I'm not Canadian but some Canadian writers think that Canada's bubble is still inflating. If this is true, and I'm not saying that it is, then the bubble would be invisible to most Canadians probably. I did not buy a home during the US bubble but thought my old house would be worth a lot of money in 2015. It won't be worth what I had anticipated but it's not a big deal because it was paid for a long time ago.
Back to the US market, Comokate has provided an accurate reason in post #16 about why housing in the US will not return for a long time. Housing has taken a 30% hair cut, interest rates are record low, and potential buyers were given generous government incentives to buy. It was a bust because too many people can not afford to buy existing inventory let alone new construction. The "normal" was only possible because of a reckless credit bubble.
There may be indications that things are improving but this is only natural wave action. Imo, the trend is still down.

[Aman A.K.A. Ahamburger]

Neoh,
The problem with the Canadian housing market is that 50% of sales are made up of property in Vancouver and Toronto. So a housing "bust" can occur in Canada and the rest of us will be like "wha??" Like I posted above income to sales price in Vancouver is 69%, and Toronto is 48%, Montreal 42%. These were all the markets that I was saying earlier in the year that have the possibility to run into trouble. I have been saying that the west cost was in for it ever since prices kept going up because of Olympic speculation, and everywhere else had a price correction.

Like I was saying earlier this year when we were talking. You have to afford a house in Canada, there are pretty strict rules, if the bubble would have kept going in the US, we would have been in the same boat because the mortgages that had problems here where the first ones that were like all the sub prime crap down there. The difference and why the housing bust in Canada will be somewhat isolated is because the job situation is entirely different here. I honestly think barring another huge shock to the system(like '08 big) There will be a leveling of prices and a reduce of overall average because again, Vancouver is 20% of the housing market in Canada. However sales will continue because of a decent job market, affordability, and the lack of options.

On that note, another reason why I think there will be a decent bottom in the US market in 2011, I keep reading things like this.

Seven states to boost minimum wage
money.cnn.com/2010/12/21/pf/minimum_wage_increases/index.htm

[neohguy]

From yesterday's existing home sales (Bloomberg):

noir.bloomberg.com/markets/ecalendar/index.html

Released on 12/22/2010 10:00:00 AM For Nov, 2010
Prior Consensus Consensus Range Actual
Existing Home Sales - Level - SAAR 4.43 M 4.750 M 4.250 M to 4.990 M 4.68 M
Existing Home Sales - M/M Change -2.2 % 5.6 %
Existing Home Sales - Yr/Yr Change -25.9 % -27.9 %


Highlights
Sales of existing homes are slow but improving, up 5.6 percent in November to 4.68 million, an annual rate that's a little slower than expected. Details show gains across all regions along with a strong 6.7 percent rise in sales of single-family homes, the report's key component. Another plus is that prices didn't soften, up slightly to a median $170,600 to end a nearly six-month run of declines. Supply on the market fell for a third straight month yet at 9.5 months is still very heavy.

Strong pending home sales data, released early in the month, pointed to gains for today's report and also point to gains for the next existing home sales report on December. Unfortunately mortgage applications, data released early this morning and which show declines, are not pointing to gains for December.

All in all, the outlook for the housing sector is improving and if it does turn around, a major drag on the economy will have turned into a plus. There was no significant early reaction to today's report but if the stock market rallies later in the session, don't be surprised if existing home sales get the credit.

[Deleted]

When pressed for comment on a residential decision, I tell people they can be absolutely confident they are not buying in at the top.

Have things hit bottom? Certainly not in a lot of areas, but $-wise, close enough if contemplating a purchase.

[neohguy]

"When pressed for comment on a residential decision, I tell people they can be absolutely confident they are not buying in at the top.

Have things hit bottom? Certainly not in a lot of areas, but $-wise, close enough if contemplating a purchase.

Read more: notmsnmoney.proboards.com/index.cgi?board=moneytalk&action=display&thread=134#ixzz18xCadvv2"

I agree. Especially if they intend on living in it.

[Ralphy]

IMO housing in the worst areas is not close to bottom. This is driven by the foreclosures. What recently happened with the banks rubber stamping foreclosure has come to an end and thus the velocity of transactions they are now processing has gone down. This is the main reason it was reported foreclosures are less. So the dynamic creates a false positive of sorts.

These states with huge foreclosures will take at least another 1.5 years to hit bottom. Although saying bottom doesn't necessarily mean prices will still go down, rather they won't go up.

In the better faring states bottom probably has been hit yet I don't really see pricing ticking up this coming summer by much over this past summer.
By all means this is the best time to buy for long term living because once it turns around and demand comes back, the tremendous price cuts will come back quickly to the 3% long term trend line. For states like Florida and Nevada that means when turn around happens you'll see 20% gains (or more) occur in a short period of time.

[usaone]

I think we get a solid bottom in most areas by May 2011.

[inhouston]

It will all balance itself out - eventually. Houston was like a ghost town in some areas when I moved here in the late 80's. I wound up becoming - an Accidental Landloard - now a nice slice of passive income.

[Aman A.K.A. Ahamburger]

When pressed for comment on a residential decision, I tell people they can be absolutely confident they are not buying in at the top.

I hope they listen to you!

]I wound up becoming - an Accidental Landloard - now a nice slice of passive income

Sweet!!

Thanks for adding the numbers neoh! Let's see where everything goes from here!

[blackcard]

Turned our 1st and 2nd homes into rentals also. Working out very well for us.

[DumDeeDoe]

SO when you speak of "housing" what is the best indicator? Is it new construction (jobs) or price (value)?

[Aman A.K.A. Ahamburger]

I'm talking about sales growth. Not necessarily price. Since all areas of the USA had sales increases this month, and I think that Oct was the lowest month on record for sales. Going forward you could almost argue that things have bottomed right now. If prices fall over the next year 5-10% in areas, but sales are up; a recovery would follow.

Things like this are a signal, IMO.

Almost! Two Expansions Bring Resnick Building to the Brim
www.observer.com/2010/real-estate/almost-two-expansions-bring-resnick-building-brim