Canadian resale housing market continues to recover in April
May 18th 2009, 10:48 pm
#46
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: Canadian resale housing market continues to recover in April
Wage inflation will reduce the proportion of my wages that are needed to pay off the mortgage. Price inflation will reduce the value of my mortgage relative to everything else.
May 18th 2009, 10:55 pm
#47
Born again atheist
Joined: Jul 2005
Location: Europe (to be specified).
Posts: 30,259
Re: Canadian resale housing market continues to recover in April
Hi
A good one I was told the other day,
as to find out when the housing market was bottoming is to watch the current gas prices at the pumps, if they are slowly creeping up it means people are spending and the oil companies think they can get away with more as the economy is improving.
An interesting theory I will be watching this year.
I like talking with long term vancouverites, who have seen it all happen before,they have great stories
like the see saw effect of east - west canadian economy.
if it's bad in the east it's better in the west.. & vise versa
Often wonder if it was the $4 gas price last year that killed the economy and not the negative equity.
cheers
Jerry
A good one I was told the other day,
as to find out when the housing market was bottoming is to watch the current gas prices at the pumps, if they are slowly creeping up it means people are spending and the oil companies think they can get away with more as the economy is improving.
An interesting theory I will be watching this year.
I like talking with long term vancouverites, who have seen it all happen before,they have great stories
like the see saw effect of east - west canadian economy.
if it's bad in the east it's better in the west.. & vise versa
Often wonder if it was the $4 gas price last year that killed the economy and not the negative equity.
cheers
Jerry
May 19th 2009, 12:39 am
#48
Joined: Aug 2005
Posts: 14,227
Re: Canadian resale housing market continues to recover in April
Price inflation (or monetary inflation) will, however, reduce the value of your house - in fact this is normally what happens. People often get confused between nominal and real house prices.
Last edited by Alan2005; May 19th 2009 at 12:45 am.
May 19th 2009, 12:48 am
#49
Joined: Aug 2005
Posts: 14,227
Re: Canadian resale housing market continues to recover in April
Thought there will undoubtedly be fluctuations in its price it doesn't reassure me because I don't think governments would not allow that much value to land in the hands of those who have hoarded it... they have a habit of confiscating it when feeling worried, or broke.
These are unsettled times. I'd think in terms of basic necessities.
These are unsettled times. I'd think in terms of basic necessities.
May 19th 2009, 1:03 am
#50
Just Joined
Joined: May 2009
Location: Brazil heading for Vancouver
Posts: 17
Re: Canadian resale housing market continues to recover in April
Ha ha ha... I'm more in favour of investing in farms than bunkers. But beans is a resourceful start!
May 19th 2009, 1:18 am
#51
Seasoned Maritimer
Joined: Jun 2005
Location: Fredericton, New Brunswick CA
Posts: 8,309
Re: Canadian resale housing market continues to recover in April
I dont say it was an indicator that the market has bottomed, I dont have crystal ball and I am not prepared to say with any certainty what will happen tomorrow.
Very dependent on your market and (in a lot of cases) how lucky you have been. At the moment 75-80% of FB that I come across are prepared (at least partially) to buy because their mortgage payments would be lower than they are currently paying in rent.
What has concerned me MOST this week is the current promotion by ATB where they are offering cashback mortgages (upto 25k back which you can use for the down payment) at just shy of 6%. Assuming you can qualify on income this raises your budget for a home by UPTO half a million. Now THAT is INSANE
Very dependent on your market and (in a lot of cases) how lucky you have been. At the moment 75-80% of FB that I come across are prepared (at least partially) to buy because their mortgage payments would be lower than they are currently paying in rent.
What has concerned me MOST this week is the current promotion by ATB where they are offering cashback mortgages (upto 25k back which you can use for the down payment) at just shy of 6%. Assuming you can qualify on income this raises your budget for a home by UPTO half a million. Now THAT is INSANE
May 19th 2009, 1:44 am
#52
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: Canadian resale housing market continues to recover in April
Which will be cold comfort if your wages haven't increased. It's wage inflation that erodes debt, not price inflation, that just makes you poorer.
Price inflation (or monetary inflation) will, however, reduce the value of your house - in fact this is normally what happens. People often get confused between nominal and real house prices.
Price inflation (or monetary inflation) will, however, reduce the value of your house - in fact this is normally what happens. People often get confused between nominal and real house prices.
Wage inflation increases your ability to service debt as the debt, and its payments, remains constant - all other things being equal.
Price inflation reduces the relative value of your debt. The dollar value of your debt remains constant while the dollar value of your non-cash assets increases.
It is not that hard to understand is it? (See - I can be patronizing too.
)
Last edited by JonboyE; May 19th 2009 at 2:09 am.
May 19th 2009, 2:07 am
#53
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: Canadian resale housing market continues to recover in April
I am probably going to regret this because I suspect Novo knows a lot more about the oil business than I do, but still ...
The wholesale proce of oil has increased by almost 50% in the last few months. This suggests that the markets think global economic activity is on the up rather than down. I am not convinced that the wholesale price of oil has that much influence on the retail price of gas. However, if you do, then an increase in the retail price of gas does reflect a view than the global economy is ready to recover.
My opinion is that the retail price of gas is a consumer pricing issue: it is set at the lower of what the market will bear, or what maximizes the industry's profits. While some of the demand for gas is price inelastic, some is highly elastic. Prices are pushed upwards until the volume of sales decline. The fact that the price has gone up over 25% in the last few months suggests that people still have disposable income and sufficient confidence in the future to spend it. This confidence can spread to the housing market.
Not exactly scientific proof, I agree, but I don't think jerry's comments are complete tosh.
The wholesale proce of oil has increased by almost 50% in the last few months. This suggests that the markets think global economic activity is on the up rather than down. I am not convinced that the wholesale price of oil has that much influence on the retail price of gas. However, if you do, then an increase in the retail price of gas does reflect a view than the global economy is ready to recover.
My opinion is that the retail price of gas is a consumer pricing issue: it is set at the lower of what the market will bear, or what maximizes the industry's profits. While some of the demand for gas is price inelastic, some is highly elastic. Prices are pushed upwards until the volume of sales decline. The fact that the price has gone up over 25% in the last few months suggests that people still have disposable income and sufficient confidence in the future to spend it. This confidence can spread to the housing market.
Not exactly scientific proof, I agree, but I don't think jerry's comments are complete tosh.
May 19th 2009, 2:14 am
#54
Joined: Aug 2005
Posts: 14,227
Re: Canadian resale housing market continues to recover in April
Wage inflation increases your ability to service debt as the debt and its payments, remains constant - all other things being equal.
Price inflation reduces the relative value of your debt. The dollar value of your debt remains constant while the dollar value of your non-cash assets increases.
It is not that hard to understand is it? (See - I can be patronizing too.)
Price inflation reduces the relative value of your debt. The dollar value of your debt remains constant while the dollar value of your non-cash assets increases.
It is not that hard to understand is it? (See - I can be patronizing too.
)I guess we are arguing the same thing, you are comparing your debt against the value of your asset that you purchased it with*, and i'm comparing it against incomes. This is probably due to my expectation of inflation being in items that are NOT bought with leverage (i.e. your groceries) - items bought using credit are going to continue to deflate (at least imo)
May 19th 2009, 2:16 am
#55
Joined: Aug 2005
Posts: 14,227
Re: Canadian resale housing market continues to recover in April
I am probably going to regret this because I suspect Novo knows a lot more about the oil business than I do, but still ...
The wholesale proce of oil has increased by almost 50% in the last few months. This suggests that the markets think global economic activity is on the up rather than down. I am not convinced that the wholesale price of oil has that much influence on the retail price of gas. However, if you do, then an increase in the retail price of gas does reflect a view than the global economy is ready to recover.
My opinion is that the retail price of gas is a consumer pricing issue: it is set at the lower of what the market will bear, or what maximizes the industry's profits. While some of the demand for gas is price inelastic, some is highly elastic. Prices are pushed upwards until the volume of sales decline. The fact that the price has gone up over 25% in the last few months suggests that people still have disposable income and sufficient confidence in the future to spend it. This confidence can spread to the housing market.
Not exactly scientific proof, I agree, but I don't think jerry's comments are complete tosh.
The wholesale proce of oil has increased by almost 50% in the last few months. This suggests that the markets think global economic activity is on the up rather than down. I am not convinced that the wholesale price of oil has that much influence on the retail price of gas. However, if you do, then an increase in the retail price of gas does reflect a view than the global economy is ready to recover.
My opinion is that the retail price of gas is a consumer pricing issue: it is set at the lower of what the market will bear, or what maximizes the industry's profits. While some of the demand for gas is price inelastic, some is highly elastic. Prices are pushed upwards until the volume of sales decline. The fact that the price has gone up over 25% in the last few months suggests that people still have disposable income and sufficient confidence in the future to spend it. This confidence can spread to the housing market.
Not exactly scientific proof, I agree, but I don't think jerry's comments are complete tosh.
May 19th 2009, 5:23 am
#57
9 months, start to finish
Joined: Jul 2008
Location: VANCOUVER
Posts: 904
Re: Canadian resale housing market continues to recover in April
i know that i'm going to regret this statement too, as no doubt novocastration will be along to shout me back into my box but hell, i like to live on the edge......
seasonal peak! that's all it is, a seasonal peak!!!!!! plus little housing stock available versus buyers.......
i'm heading for the box now........
seasonal peak! that's all it is, a seasonal peak!!!!!! plus little housing stock available versus buyers.......
i'm heading for the box now........
May 19th 2009, 5:38 am
#58
BE Enthusiast
Joined: Jun 2003
Location: 100 mile house BC (tiz a long way away from devon)
Posts: 888
May 19th 2009, 10:49 am
#59
Seasoned Maritimer
Joined: Jun 2005
Location: Fredericton, New Brunswick CA
Posts: 8,309
Re: Canadian resale housing market continues to recover in April
Oh thank God.... I can sleep again.
May 19th 2009, 1:12 pm
#60
RETIRED Realtor
Thread Starter
Joined: Aug 2006
Location: Winnipeg, Manitoba
Posts: 2,087
Re: Canadian resale housing market continues to recover in April
Wall.
Head.
BANG .. . .
