Tags: US

3 Jul 2009, Comments Off

In the Future, Interest Rates Will Soar and Consumers Will be Sore Also

Author: admin

By: David Petch
Jul 02, 2009

At the present, governments around the globe are printing money as if there were no tomorrow in order to try and prevent debt-laden banks from going under and trying to stimulate the fractional reserve banking system. The past 20 years of economic growth has been based on a “Pay it Forward” basis…someone gets a new couch or car and ends up paying for it over a defined period of time. The expansion of credit in turn allowed for false consumption because most people never really had the money in hand.

In the past, whenever any purchases were made, most people either saved up until they had money in hand or used “Lay Away” programs for purchase (an individual would make biweekly payments until an item was paid for in full and then taken home). As the global economy continues to shrink and get worse, the first knee-jerk reaction is to start saving, which is evident in the US as reached 6.9% year over year. When prices decline, it makes sense to save money as it does not make any sense to buy things when there is economic uncertainty.

During periods of economic contractions, the absolutely worst sectors to be in are retail or any consumer-related businesses that people do not absolutely require, such as getting manicures and pedicures, furniture, cars, etc. Areas that tend to maintain somewhat of a stable environment are Pharmaceutical (especially those that provide life-saving drugs), food and energy sectors. One of the hardest sectors that will get hit in Canada in the coming years will be the government sector. There is so much money being pumped into government up here at present that it is serving as an artificial inflator of the economy.

When the S&P eventually bottoms in late 2009/early 2010, the economic bottom should follow history and be in place 12-18 months afterwards. This suggests that mid to late 2011 should mark the bottom of the global economic recession from a bottom in residential real estate…note: commercial real estate has recently succumbed to the global recession, so it is likely the consumer will bottom before businesses do. In other words, the bottom of the economy could be flat for a subsequent 1-2 years until consumers retrench from their bunkers and again begin spending.

Analysis today will focus on the 10 Year US Treasury Index and how it should behave over the course of the next 6-12 months.

The Rest…MarketOracleUk

http://revolutionradio.org/2009/07/02/in-the-future-interest-rates-will-soar-and-consumers-will-be-sore-also/

reviewed by Moishe Alexander, CFC CEO

29 Jun 2009, Comments Off

Canadian Funding Corp Sees Continued Growth in Property Market

Author: admin

More good news for Canadians this week, as an official think tank has predicted that Canada will continue to avoid the harshest affects of the recession.

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

26 Jun 2009, Comments Off

Don’t believe the housing hype

Author: admin

Judging by the latest real estate data, the Canadian housing market could scarcely be better. Average home prices are up more than 16 per cent this year, and in May they hit an all-time monthly high, according to the Canadian Real Estate Association. By those numbers, Canada didn’t just sidestep the housing market crash that continues to plague the United States, it sailed right through it virtually unscathed. And yet, there are plenty of signs that the Canadian housing market is still sitting on some very shaky ground—and even the potential that Canada’s big housing crash is yet to come.

There is one particular statistic that suggests trouble could be brewing. Unlike in the U.S., Britain and most European countries, household debt in Canada is, incredibly, still growing. That rising debt is being driven largely by record-low interest rates. Canadians have been buying homes not so much because they can afford them, but because many believe there’s never been a better time to buy, with lending rates so low. “There is no doubt that record-low mortgage rates have juiced Canada’s housing market,” wrote BMO economist Sal Guatieri, in a recent newsletter. Houses are barely more affordable now than they were during the market peak. And as people keep buying, houses may only become less and less affordable.

Not everyone agrees with the CRE figures that suggest the market has managed such a quick and painless turnaround, either. According to the Teranet-National Bank housing price index, Canada’s housing market is not recovering yet. Home prices have been falling for the past eight months, according to its latest statistics. Vancouver, Calgary and Toronto have each experienced significant price drops compared to last year. This would seem more in line with what one would expect after an unprecedented six-year housing boom in which home prices shot up 80 per cent.

It is, of course, possible that the correction will, ultimately, be modest. Guatieri expects that interest rates will remain low and income growth will remain subdued this year, before picking up next year. That will keep housing prices down, but would likely mean the worst of the correction is behind us.

But if mortgage rates go up sharply then “affordability will get crunched again,” says Guatieri, in an interview. Things could get much, much worse. And that’s not an unthinkable scenario. Some banks have already boosted interest rates twice this year. Then there is the possibility that job losses continue and the economy doesn’t recover quickly, putting further strains on household finances. The low interest rates and continued debt problems mean that Canadians could find them themselves badly over-exposed.

Guatieri isn’t forecasting a housing market crash. But, as he wrote last week, “it’s worth remembering that the further house prices go up and the longer household finances get stretched, the greater the risk of a painful correction. Anyone who doubts that should talk to an American or British homeowner.”

http://www2.macleans.ca/2009/06/26/dont-believe-the-housing-hype/

brought by Moishe Alexander, CFC CEO

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