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

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

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

“Some feverishly argue there’s no way Canada’s real estate market will crash and burn like the U.S. market, where one prominent analyst warns that the meltdown is more fast and furious than during the Great Depression”.

“Others say, get real: Canada’s largest trading partner is the United States, and if this one-time economic superstar is in a recession, we’re going down, too”.

Read the full article here.

The Royal Bank of Scotland recently released an advisory to its clients to braise for a “global stock and credit crash” over the next 3 months. The UK housing market may not recover until 2015. The housing market and debts problems in the US and UK, record high energy and food prices could eventually drag Canada into a housing down turn as we experienced in 1995 to 2001. Except, this time the problem could be very much worse than what we experienced previously.

Greater Vancouver Housing Market

The Saunder School of Business’s housing chart for Greater Vancouver below shown that it took 8 years for the housing market to recover to it’s 1981 peak at around $240,000. The housing downturn from 1995’s peak at $420,000 took almost 9 years to recover. Using the charts presented here up to 2007, and plotting the trend lines for nominal and real prices, $540,000 seemed to be about the “right” price level where the Vancouver housing price should be. This represents a 30% to 35% price differential below the current Vancouver nominal and real housing prices.

The price gains over the past 30 over years is attributed to excessive liquidity and priming of the money pump, we have over-shot the price gain by 30% to 35%. If the housing down turn is going to hit Canada, we could be facing a more serious price decline from that happening in 1981 and 1995. Click here for the latest news on Richmond’s real estate market.

The chart below for Greater Vancouver from the Real Estate Board of Vancouver plotting housing data up to May 2008 confirmed the sharp housing price gains that are “unsustainable”. The escalation in prices since 2002 to present out-paced the gains in the past 25 years.

Last week’s 400 plus points drop in the Dow could signal the big one is coming. Canada is unlikely to be insulated and not affected by the financial meltdown.

The debate as posted by Linda Leatherdale will continue. My take is that our real estate market is not so different from the US and UK. Our housing market is way over-priced and overly propped up by past years price appreciation. It is a matter of time we will face a painful price correction resulting in huge financial losses by many home owners. You are welcomed to post your comments.

http://activerain.com/blogsview/573085/the-canadian-real-estate-debate-goes-on

Be cautious, says Marty Lapedus.

Window manufacturers may have historically quoted R-values that were for centre-glass and now refer to the centreglass U-factor when describing their product. This does not include heat loss through the frame and sash assembly, which can be significant. It is more appropriate to use total-product U-factor.
U-factors and R-values are determined either by physical tests (using ASTM or AAMA tests) or by computer simulation using the FRAME and VISION programs, as defined in the CSA A440.2 Standard.
VISION evaluates the centre-glass portion of the window, whereas FRAME analyzes the frame–sash assembly and the edge-glass region (the glazed area within 63.5 mm [2.5 in.] of the sightline of the window). In the U.S., computer-simulated values are generated using programs called THERM and WINDOW. These component values are area-weighted to define a total-product U-factor for the window, door or other envelope area of interest.
Three sources for total-window U-values are
1. the Canadian Window and Door Manufacturer’s Association (CWDMA) Certified Products List (first edition, January, 1995)
2. the ASHRAE Handbook of Fundamentals
3. the (U.S.) National Fenestration Rating Council Certified Products Directory.
Data for all sources was generated by computer simulation (using FRAME and VISION in Canada, and THERM and WINDOW in the U.S.). The CWDMA source also lists data for window SHGC, ABC ratings (resistance to air leakage, wind-driven rain, and wind deflection), energy ratings and, in some cases, condensation resistance (see the following sections).

Solar Heat Gain Coefficient

The solar heat gain coefficient (SHGC) is the amount of solar radiation incident on the exterior surface of a window that is transmitted through the window to appear as solar gains in the building. It is a decimal fraction with a value between 0.0 and 1.0 (that is, from completely opaque to completely transparent). Practical considerations limit the range of SHGC to 0.20 for a glazing system with reflective and tinted glass, to 0.87 for a single-glazed system.
Older texts refer to the shading coefficient (SC), which is the SHGC of a window relative to the SHGC of a single-glazed window at the same conditions. The SC multiplied by 0.87 provides a reasonably close approximation of the SHGC for most glazing systems.
The total-product SHGC should be used when referring to windows. Total SHGC includes solar heat gain through the frame and sash (admittedly, a small value) and gain through the glazing system, and is a smaller value than the centre-glass SHGC.
The “Fenestration” chapter of the ASHRAE Handbook of Fundamentals (chapter 31 in the 2005 edition) is a good source for SHGC values. SHGC should not be confused with visible transmission, which is discussed later in this article.