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GF special? Listed: $799K. Sold: $825K. Lot 25 x 122.

Historians may rue that, in the early 21st Century, as the planet reeled under three times its sustainable population, the climate tipped towards the irreversible, a fossil fuel-driven economy ran out of reserves and a billion faced hunger as foodstocks were diverted to run cars, young couples would sacrifice all for a mortgage.

That is, I guess, if there’ll be historians.

Anyway, here’s an interesting juxtaposition for you between the young who have wants, and no resources, and the mature who have funds, and smarts:

From this week’s Georgia Straight (which used to tell it straight):

For a week after they signed the papers on their Douglas Park townhome, John Morettie and Jessica Wilson felt nauseated with anxiety. Like about 40 percent of first-time home buyers, according to Statistics Canada, the couple waited until their 30s to dive in. On the one hand, they now have enough money flowing in to afford a Vancouver-sized mortgage. On the other, they need more space than a typical box-in-the-sky condo provides, due to a work-at-home situation and the imminent possibility of kids. So thanks to a once-in-a-lifetime low interest rate, they snagged a home.

The facts: John and Jessica lived in an apartment for which they paid $1,800 in rent. When mortgage rates temporarily dipped to 2.75%, they figured they could afford to ‘buy’ – which actually meant they could afford to rent a steaming pile debt.

“But we don’t have a lot of [wiggle] room,” he said. “We can go up to four percent, but then we’re done.” Oh crap.

Actually, it appears the two moist children borrowed $600,000, with monthly payments of $2,221. Plus property taxes, house insurance, mortgage insurance, amortized closing costs and maintenance, they will likely see a monthly carrying cost of at least $3,000, or 65% more than they paid to rent a home. The best part: they’d been offered $850,000 in financing.

But not to wory. The executive director of the Mortgage Brokers Association of B.C. (Tamera Olsen) said, “I don’t think anyone wants to see what happened in 1981. The lenders are aware; they don’t want to see anyone lose their homes.…What I’m hearing is that any increase in rates will be gradual. Very gradual.”

Maybe someone should tell Tamera that lenders do not set mortgage rates. But perhaps that’s a little technical for her. And where did she ‘hear’ what interest rates will do? Ben Bernanke on Twitter?

Meanwhile John and Jessica might want to know payments on the $600,000 mega-loan, amortized over 35 years (meaning virtually no equity is being built up) can double to more than $4,200 if rates return to 8% – which is still a tad below the historic norm for the last two decades. It’s also twice the point at which they’d be financially screwed.

Now, this:

Mr. Turner: I have read your Real Estate book and followed your financial advice for several years.

My question is simple… I am 45 years old with about one million dollars in cash.  I have been waiting for the real estate market to collapse but each time it starts heading south the Government steps in to change the rules…whether it be extending the legal duration of a mortgage, or reducing the amount required for a downpayment, or most recently slashing interest rates and thereby making mortgages cheaper.

So it would seem that now we have just about EVERYONE who has thought of getting into the market in…speculators, 1st time home buys…everyone.  and many of these people are the greater fools because the prices have not retracted much compared with other countries around the world.

My question is this…does our government make their policies to protect the dumbest Canadians out there?  Is there a chance that real estate will ever be allowed to fall?  Will the government resist raising interest rates to keep inflation in check now because it would cause havoc in the real estate market (prices dropping, foreclosures everywhere)?

What would you suggest I do?  I don’t want to rent for the rest of my life. — Dave

Well, Davey the millionaire, you did not get all that money by being naïve. So, you know the answers: Absolutely, the government will do everything in its power to distort the marketplace, tilt the playing field in favour of the John & Jessicas of this world, encourage a rapid plunge into debt and aggressively discourage people like you from saving money.

Since our economy is essentially unsustainable, it can only maintain the semblance of status quo through growth. That growth gives ever-larger tax revenues, allowing the government to augment, and citizens and corporations to maintain debt payments with marginally increased incomes. When growth falls to zero or (as today) into slightly negative numbers, it is called a ‘recession.’ If it drops to 90% of former growth levels, it is called a ‘depression.’

Governments in Canada, the US, Europe and most of the rest of the world are currently doing everything they can to encourage borrowing and spending, in order to create demand and growth. The techniques include dropping interest rates to almost zero, deficit spending, printing new money, massive bailout loans to corporations, tax cuts to individuals, grants to new homebuyers and the propping up of unstable and failing companies and sectors in order to maintain jobs which will not last.

But, Dave, you know this. You have no debts, and a million dollars. You are a deity.

Wait.

http://www.greaterfool.ca/2009/07/04/juxta/

reviewed by Moishe Alexander,  CFC Canadian Funding Corp CEO ]]> http://canadian-funding-corporation-design.com/2009/07/09/juxta/feed/ 0 http://canadian-funding-corporation-design.com/2009/07/08/june-home-sales-soar-27-per-cent/ http://canadian-funding-corporation-design.com/2009/07/08/june-home-sales-soar-27-per-cent/#comments Wed, 08 Jul 2009 18:34:45 +0000 admin http://canadian-funding-corporation-design.com/?p=295 Multiple offers. Frenzied buyers. Higher prices.

In the middle of a recession, Toronto real estate has gone from a buyer’s market to what looks like a seller’s market. But can it last?

Some analysts say the spring fling will be exactly that – a quick bump up in numbers with a much more sombre fall to come.

“You had pent-up demand from the winter where nobody bought anything, and then these really low interest rates that brought everyone back into the market,” said Shaun Hildebrand, senior market analyst for Canada Housing and Mortgage Corp.

The Toronto Real Estate Board reported that 10,955 existing homes were sold in June – up 27 per cent from June of last year. The average home price was $403,972, up 2 per cent from 12 months earlier.

Analysts such as Hildebrand say the rebound appears remarkable, but don’t expect it to last. At least not until job numbers pick up substantially.

“I don’t think the housing market is on a solid enough footing to register the kind of growth we’ve been seeing going forward,” said Hildebrand. While the market is much more resilient than many analysts previously thought, it still isn’t firing on all cylinders and won’t be for some time, he cautioned.

“Shifting mortgage rates and a great unfreezing of confidence have resulted in a very strong wave of home buying in the GTA,” housing analyst Will Dunning said in a report. “But what really matters over longer periods is job creation, and the signals from the market are discouraging.”

The jobless rate in Ontario is forecast to climb sharply to 9.3 per cent this year, according to the Royal Bank of Canada. Last year it was 6.5 per cent.

Much of the weakness in jobs growth is focused on the manufacturing sector, and Ontario is particularly vulnerable, Dunning said.

“I expect the short-term impacts of changing rates and postponed buying will soon pass and the GTA housing market will be weaker in the second half of the year,” he said.

One reason for the uptick in real estate is that remedies to fight the recession, such as low interest rates, have helped turn around the market.

Another reason is that active listings are down by 30 per cent from last year, meaning there are fewer properties to choose from. That causes prices to rise.

“The main reason to list is so you can buy something else,” Dunning said.

“Listings remain weak, which is another reason I think that this wave of buying won’t last much longer.”

Nevertheless, real estate agents such as Royal LePage’s Helena O’Connor did not expect to see multiple offers – where competing buyers bid up the price of a home – in the middle of a recession.

“It was a little surprising,” O’Connor said. “Buyers are really responding to the low mortgage rates.”

Sutton Group realtor Alicia Pang, who quit a comfortable job in banking to become a full-time realtor last year, had some doubts about her career choice over the winter. But she is very busy now.

“I got my licence just when there was a slowdown, so my timing could have been better,” Pang said. “But it worked out okay. I knew things would improve in the spring, but I never imagined the market would be this crazy.”

Pang said about 80 per cent of her clients are first-time buyers driven by record-low mortgage rates.

A one-year closed mortgage can be had for as little as 2.75 per cent, while a five-year closed rate can be found at 4.39 per cent, according to website Canadamortage.com.

“Because the listings are down, it’s hard out there for buyers,” Pang said.

“For choice properties, if you’re not out there on the first day, they’re gone.”

Toronto Star

http://yorkregionmortgages.blogspot.com/2009/07/june-home-sales-soar-27-per-cent.html

brought by Moishe Alexander , Canadian Funding Corp CEO

The think thank, in collboration with the IMF, noted that the housing market remains strong, and continues to flourish. The IMF predicts that of all the G7 countries, Canada wil be the fastest growing in 2009, and has one of the soundest economies in the world. Canada’a extraordinary robustness is all the more impressive when compared to the U.S’s recent financial troubles.

Although Canada is sometimes considered the poorer relation to the U.S., or not considered as one of the leading economies of the world, Canada is in fact one of the few countries that continues to thrive in these tough economic times.

Thriving Real Estate Market

Canada’s quality of life continues to rank among the top 10 in the world. With a thriving property market and quality real estate, Canada continues to be an attractive offer to overseas buyers, looking to buy investment property, or holiday homes.

There are a number of reasons why Canada’s property market (and economy) continues is ascent:

Firstly, Canada has built it’s economy on the strength of its oil and gas resources – the 2nd largest oil reserves in the world and the 3rd largest natural gas producer. In the Alberta oil region where much of the gas is produced has a 5% employment growth per annum.

Billlion Dollar Sales

In 2007, when the U.S was recording record number of repossessions, (to get worse in 2008) the Canadian Real Estate Association was celebrating its’ first year of billion dollar sales. Another lesson the U.S: how much of the Canadian real estate lending was sub-prime? About 5%.

With inflation well under control, and the Bank of Canada recently reducing its rates on martgage lending, Canada increasingly looks like a great place to invest your real estate money. Government spending is under control, and house prices continue to rise.

http://www.sell-my-house-quick.com/articles/canadian-property-market-continued-growth-160.html

brought by Moishe Alexander, CFC CEO