News   Jul 26, 2024
Maple House Wins Sole Canadian ULI 2024 Americas Awards for Excellence
 902     0 
News   Jul 26, 2024
Three Towers up to 55 Storeys Proposed near Sheppard West Station
 2.4K     2 
News   Jul 26, 2024
A Peek Inside The Canada Malting Silos & Bathurst Quay Revitalization
 2.1K     3 

Canada's 'housing bubble' deemed close to bursting

M II A II R II K

M II A II R II K

Senior Member
Member Bio
Joined
Apr 24, 2007
Messages
3,944
Reaction score
1,061
Canada's 'housing bubble' deemed close to bursting


Jun 29, 2011

navbg.gif


Read More: http://www.cbc.ca/news/business/story/2011/06/29/housing-bubble-capital-economics.html


Canada's housing market is in a bubble that's set to burst and prices could plunge by as much as 25 per cent, a major independent research firm warns. “Housing valuations have lost all touch with fundamentals and household debt is at a record high,†economists at the research consultancy Capital Economics say in their most recent Canada Economic Outlook, issued Wednesday. “Our fear is that, with the housing bubble now close to bursting and commodity prices retreating, Canada will go from leader to laggard.†The report predicts a fall in house prices by as much as 25 per cent over the next three years.

A domestic housing boom coupled with high commodity prices worldwide have spared the economy the severe recession felt by other developed countries. Canada’s economic success could become the thorn in its side as the threat of a downturn in the housing sector looms, the report says. The firm says a burst housing bubble would shrink real estate investment and hurt consumption — two things that would considerably slow economic growth. This decline in consumption would mean a slowly rising unemployment rate as well, according to Capital. The company says Canadian house prices are overvalued by approximately 25 per cent, close to excessive levels seen in the frothy U.S. market at its 2006 peak.

.....
 
What's the name of that Scottish play, with the self-fulfilling prophecy? Oh darn, I wish I could remember the name. I guess they must teach it in economics these days.
 
Yeah, but we haven't had 3.7% inflation since 2008. I don't know if there will be a bubble pop, but this is the first hard economic data to show that things are actually changing. In fact we haven't had inflation this high for 8 years. Rates are going up and that is going to cripple a lot of people's ability to buy a property. I think a lot of young people have no experience living in a high inflation environment and it's going to be quite a shock for them.
 
the only reason for such a high inflation is gas prices which is not related to supply but speculators.OPEC refuses to increase production and reserves are at all time high.Add into the mix of another euro mess in July caused by Greece again defaulting on its payments and possible Ireland defaulting you wont see any sort of hyper inflation people are screaming about...Canada employment numbers are strong,banks already has taken out most of the more risky buyers with tighter regulations and what you got left are buyers with good credit and little debt to cost ratio.You take out energy pricing and inflation is low.If its a bubble why do you still see huge line ups at the hot openings,why are builders still going full tilt on new projects,Im sure they do more DD on the future of the market than the average joe screaming "bubble" on the website or the so call "experts" on a newspaper.
 
Despite the best efforts of economists, the housing market as well as the economy in general are both cyclical. Corrections are healthy and normal, not to mention guaranteed. The only unknown is when, by how much, and for how long.
 
ducati0000 said:
the only reason for such a high inflation is gas prices which is not related to supply but speculators.OPEC refuses to increase production and reserves are at all time high.Add into the mix of another euro mess in July caused by Greece again defaulting on its payments and possible Ireland defaulting you wont see any sort of hyper inflation people are screaming about...Canada employment numbers are strong,banks already has taken out most of the more risky buyers with tighter regulations and what you got left are buyers with good credit and little debt to cost ratio.You take out energy pricing and inflation is low.If its a bubble why do you still see huge line ups at the hot openings,why are builders still going full tilt on new projects,Im sure they do more DD on the future of the market than the average joe screaming "bubble" on the website or the so call "experts" on a newspaper.
Click to expand...

Regarding this speculators and OPEC conspiracy against the world? Bullshit..

The underlying issue regarding oil and gas is supply and demand. The world's global oil production peaked back in 2005 and exporting countries can't keep up with demand.

Several of the exporting countries like Saudi Arabia have large populations and their own consumption of oil is going through the roof. OPEC can't increase capacity because there is no spare capacity. Ever since global production peaked in 2005, oil prices have steadily climbed and then in mid 2008, at $147/barrel, the economy tanked and oil prices plummeted. Coincidence?

Look up terms like demand destruction. Only economists like Jeff Rubin recognized what had happened and what was beginning to unfold.

Insiders have been warning for some time that the OPEC countries have seriously exaggerated their reserves and the world has quietly reached Peak Oil. The recent announcement to raid reserves and sell back to the market should wake people up. If there were plenty of oil just lying around and lots of spare capacity then oil prices wouldn't be this high.

This is just the beginning but people want BAU to continue and everyone has their blinders on.
 
Last edited:
tkip said:
Regarding this speculators and OPEC conspiracy against the world? Bullshit..
Click to expand...

Thank you. We've been blaming speculators ever since gasoline rose above 60 cents a litre. Inflation didn't happen because a trader in NYC decided to buy gasoline futures. It happened because oil is a scarce commodity!
 
Last edited:
Why is everything blamed on speculators?
Are people too lazy to do the research?
And despite what the realtors and mortgage brokers tell you there will be a correction. When, how much, for how long are the questions to be asked.
 
Speculators are partly to blame, but only because it is easier and easier to speculate on commodities. Buying and selling things like oil and corn used to be the domain of professionals on the Chicago Mercantile Exchange. Now any dipshit with an Etrade account can buy an oil ETF and "own" a couple of barrels of the stuff. The ETFs like USO and UCO do own the contracts, so they add to buying or selling pressure.

The "good" news is that we're discovering huge reserves of hydrocarbons on a regular basis, and oil in the 90-100 dollar range makes them profitable to extract. So there's no real worry about running out of the dino-juice (or nat gas, or coal or heating oil), it's just that it will probably never be cheap again. Production can and will rise to meat all the new demand from China and other developing nations, but will likely always lag a bit, as these things usually tend to do.

As for the housing market, the real problem is neither the high prices, or the soon-to-rise interest rates. It's the combination of both. People can afford one or the other
 
Therion said:
The "good" news is that we're discovering huge reserves of hydrocarbons on a regular basis, and oil in the 90-100 dollar range makes them profitable to extract. So there's no real worry about running out of the dino-juice (or nat gas, or coal or heating oil), it's just that it will probably never be cheap again. Production can and will rise to meat all the new demand from China and other developing nations, but will likely always lag a bit, as these things usually tend to do. or the other
Click to expand...

Again. Bullshit. Sorry to burst your bubble but this is fantasy.

Anyone that pays attention knows that large oil/hybercarbons discoveries peaked many years ago. If you're thinking shale then this too won't save us. It takes a lot of energy to get the stuff out of the ground and shale isn't anywhere as energy dense as oil. Think oil sands.

There is a lot of denial out there thinking that we can continue BAU with another energy source and merrily keep growing economies and population. And people actually thinking China and India with populations of over 2 billion, happily joining the race and doing okay are living in a dream world. Their new middleclass won't last long in a world with shrinking resources.

Oil was what allowed us to create modern civilization/globalization on the scale it currently exists including agriculture which resulted in the population explosion we've seen since. Overlap charts showing oil production and population growth and they follow a similar pattern to each other.

Look, like it or not we're entering a era of extreme energy scarcity involving conflict, shrinking economies and collapses in population at some point. The dominos are already starting to fall.
 
Last edited:
Jonny5 said:
Thank you. We've been blaming speculators ever since gasoline rose above 60 cents a litre. Inflation didn't happen because a trader in NYC decided to buy gasoline futures. It happened because oil is a scarce commodity!
Click to expand...

Thanks. It took me a while, reading lots of reports and articles to understand the nature of the situation we're facing. With economies faltering and countries in europe on the verge of economic ruin amidst high unemployment and people think we'll bounce back and things will go back to normal? 7 billion people, fighting over the same, shrinking resources. You do the math.
 
Last edited:
You must log in or register to post here.

Back
Top