Market Correction....Debt...Bankruptcy....

[looking4alady]

In todays economy (I'm thinking Alberta, as that's where I'm from), we are seeing:
- a booming economy....
- endless job postings...
- housing prices climbing by the month..
- rents being raised by astronomical amounts..

plus much more....

The one point that we don't talk about is....bankruptcy/debt. I was just thinking while I was out getting grocerys of all the activity in the marketplace and what we aren't hearing about.

- how many people are losing their houses because they can't afford their mortgage payments.
- how many people are getting forced out onto the streets because they can't afford their rents.
- how many people are actually facing bankruptcy.

There are 26 pages in the Edmonton Yellow Pages for Bankrupty companies. There must be another side to the economy that we aren't hearing about because otherwise a lot of these companies would not be around taking up 1 or 2 page advertisements.

Just wondering if anybody has any intel on the "other" side of the economy. What are we not hearing about? I was speaking to one colleague recently and he had heard that in Grande Praire (NW of Edmonton, population 47,000 plus), one oil company had a slowdown recently and 26 people walked into the bank and threw their housekeys on the desk, saying "the house is yours", because without their oilfield salaries, an average income wouldn't cover their debt flow.

Does anyone think if we will be seeing a market correction in the near future for real estate? How much bankruptcy is their actually happening out there?

Feedback ????

 

[Bare_Facts]

All I can say, is that I am glad I'm not trying to get into the housing market in Edmonton right now. It would be scary with two incomes. Mind you, I've also heard of rent as high as $2 to $2.5G for a good place. Scary!

 

[Smother]

Well judging by this chart of the Vancouver Housing market. You can't tell me that this doesn't scare you!!?? Just look at the last 3 - 4 years of this chart!! A nice pull back would be very healthy I think!
Of course the ones that will disagree are the ones that own houses!
No surprise though. We would expect that!

http://jaybanks.ca/vancouverrealestate/vancouver-real-estate-prices-200607.gif

 

[LaCreme]

Does anyone think if we will be seeing a market correction in the near future for real estate? How much bankruptcy is their actually happening out there?

i hear many time SP Co-worker telling me hey you should try Alberta.. they are rich over there because of the oil. or a not her success story telling that the provincial gave to every body 500$ each people in each family. to show how much big they were compare us . we were like "oh even children too? then "yeah like dah". then we were like "wow".

Bankruptcy indicate they were in the wrong Field.. and make sure you have the whole money for the house before getting it.. it is a real joke if you have to give it**back.. that why the interest are high. they all know many "couple won't survive"**they are just waiting to you to give it back after all interests payed up.. best real estate deal is to get it from a bankruptcy.

 

[Bare_Facts]

Well judging by this chart of the Vancouver Housing market. You can't tell me that this doesn't scare you!!?? Just look at the last 3 - 4 years of this chart!! A nice pull back would be very healthy I think!
Of course the ones that will disagree are the ones that own houses!
No surprise though. We would expect that!

http://jaybanks.ca/vancouverrealestate/vancouver-real-estate-prices-200607.gif

When the markets here in Edmonton have jumped 50% in the last year, Yeah! And yes I do own a house.

 

[looking4alady]

The money that was given to us was back in 2005..and it was a one time payout of $400.

But no one has dealt with the point of bankruptcy..I'm sure it's out there, otherwise we wouldn't have all of these bankruptcy places in business !!

 

[metoo113]

The money that was given to us was back in 2005..and it was a one time payout of $400.

But no one has dealt with the point of bankruptcy..I'm sure it's out there, otherwise we wouldn't have all of these bankruptcy places in business !!

The bankruptcy businesses are there because people can't learn to live within their means. They want something and they want it now so they buy it and can't pay it off. Sooner or later they are bankrupt.

 

[jjinvan]

All it will take is interest rates to go up a point or two and the housing market will take a nosedive.

Too many people have mortgages with far to little difference between the market value and what they owe. If you get a slight drop in market values, then all those people have to suddenly come up with the difference and if they can't, their houses go on the market.

By the rules of supply and demand, more supply => lower prices, then you get more people who owe more than the market value and so on and so on... badness all around.

This happens to the 'middle' of the local housing market. The upper end, the people either have enough equity to ride it out or they can afford to cover the increased interest rates or any payments if the value dips a bit. The lower end, the supply is very very low and it doesn't take a lot of $$ to cover any short equity positions so you don't get the snowball effect.

But the 'middle' market, lookout.

 

[sdw]

The statistics from the Canadian Government, Alberta Government and British Columbia Governments indicate that the number of consumers going into Orderly Payment of Debt or Bankruptcy has decreased.

BC Stats
http://www.bcstats.gov.bc.ca/data/dd/handout/BANKRATE.pdf

Canada Stats
http://strategis.ic.gc.ca/epic/site/bsf-osb.nsf/vwapj/07MRCHSTATS.pdf/$FILE/07MRCHSTATS.pdf

First Quarter of 2007 National Stats
http://strategis.ic.gc.ca/epic/site/bsf-osb.nsf/vwapj/Q107Bulletin_E.pdf/$FILE/Q107Bulletin_E.pdf

Portal into Canadian Stats
http://strategis.ic.gc.ca/epic/site/bsf-osb.nsf/en/h_br01011e.html

The province that is increasing in bankruptcy is Ontario.

 

[InTheBum]

Stupid People...

The bankruptcy businesses are there because people can't learn to live within their means. They want something and they want it now so they buy it and can't pay it off. Sooner or later they are bankrupt.

Everyone that I have met, that was or is bankrupt, are incredibly selfish and stupid with their money. Case Closed!

 

[LaCreme]

Well judging by this chart of the Vancouver Housing market. You can't tell me that this doesn't scare you!!?? Just look at the last 3 - 4 years of this chart!! A nice pull back would be very healthy I think!
Of course the ones that will disagree are the ones that own houses!
No surprise though. We would expect that!

http://jaybanks.ca/vancouverrealestate/vancouver-real-estate-prices-200607.gif

wow.. up up and more up!

 

[LonelyGhost]

All it will take is interest rates to go up a point or two and the housing market will take a nosedive.

interest rates already have gone up a couple points! i was on a variable
rate mortgage and every couple months up it went so i locked in at a low
fixed rate for 10 years ... may cost me more but since i'm on a fixed
income a fixed expense can be budgeted for better than one that
keeps going up!

If there is a 'crunch' or 'correction' it will be in marginal properties (most
likely to be leveraged with zero down or minimum down) or those
under construction.

Good properties in desirable areas may lose a little value but all that
will do is stimulate others to buy them.

If interest rates double then, yeah, crunch: but things have changed
in the 'flip' market that preceded the last big crunch ... you seldom
find situations where people buy a condo over breakfast and flip it
at lunch and it gets flipped over dinner again ...

Yes, EVERYONE is over-extended these days, but that doesn't
mean that just because someone declares bankrupcy that the
bank will necessarily foreclose on the house unless its in a very
desirable area ... better to let Joe Debt pay what he can until
his situation improves.

 

[Cosmo]

Yes, EVERYONE is over-extended these days, but that doesn't mean that just because someone declares bankrupcy that the bank will necessarily foreclose on the house unless its in a very
desirable area ... better to let Joe Debt pay what he can until
his situation improves.

Sept. 1929: Economic forcast... "things can only go higher"

Nov. 1929: Ecomonic forcast... "minor bump in road, markets to recover quickly"

There is an extremely tenous position developing in real estate. A great many buyers are in at 5% down or 0% down. Husband and wife working to barely make monthly payments on $350K to $700K properties and they all got in at 3.5% (on a variable or short term fixed rate) several years ago.

1981: Prime interest rate 19% (real interest rate 22%) - no one remembers this, or at least, wants to remember this.

2007: Prime interest rate 6%.

2009: ?

If interest rates go up to 8 - 11% (will only take one or two sigificant world events to trigger that), you will see the first big wave of mortgage defaults.

As banks flood the market with default mortgage homes to cover losses (will get whatever they can for property to write off loans), the market will drop $200,000 overnight.

This will trigger the second wave of defaults as people walk away from a mortgage they can't afford on a property they paid $600k for, but is now selling for $400K (and dropping quickly).

This second wave is what would bring the real estate market crashing down.

But it is all contingent on what happens to interest rates.

And the goverment would never allow interest rates to balloon to over 10%, right? (Statement many made in 1978 as inflation rocketed upward and many lost their life savings in the real estate market)

Better to let Joe Debt pay than default on mortgage? There is a breaking point to this, and it was hit in the early 1980s.

Will history repeat itself? Nahhhh... history never repeats itself and works in cycles... that's how we know the current market will only go up, up, up.

 

[Smother]

interest rates already have gone up a couple points! i was on a variable
rate mortgage and every couple months up it went so i locked in at a low
fixed rate for 10 years ... may cost me more but since i'm on a fixed
income a fixed expense can be budgeted for better than one that
keeps going up!

If there is a 'crunch' or 'correction' it will be in marginal properties (most
likely to be leveraged with zero down or minimum down) or those
under construction.

Good properties in desirable areas may lose a little value but all that
will do is stimulate others to buy them.

If interest rates double then, yeah, crunch: but things have changed
in the 'flip' market that preceded the last big crunch ... you seldom
find situations where people buy a condo over breakfast and flip it
at lunch and it gets flipped over dinner again ...

Yes, EVERYONE is over-extended these days, but that doesn't
mean that just because someone declares bankrupcy that the
bank will necessarily foreclose on the house unless its in a very
desirable area ... better to let Joe Debt pay what he can until
his situation improves.

Good point lonely....but Our Dollar is at levels not seen since the 70's.
Therefore, the finacial market is a leading indicator. The dollar's uptick is indicating the higher interest rates are coming. And with that chart I've posted....that worries me. Charts that show a big climb...is destined to fal abit. And I hope it does becaues it would be healthy. NOTHING GOES UP IN A STRAIGHT LINE!! Your a fool if you believe that. It all depends how much the rates are pushed up. Don't forget. There are many people living paycheck to paycheck and alot won't be able to make payments if rates climb. Of course depending on they're plan.
But who know's......after the Olympics things could fall alot. It did after Expo if you remember.

 

[LonelyGhost]

With houses, my point was mainly that banks will TRY to avoid
too many foreclosures and TRY to keep someone paying something
rather than dumping the property on the market.

Second point was that desireable properties will keep their value
despite a drop in junk houses ... everytime i see a house on a
shitty street with a 4-sale sign you know its gonna sell again
in 6 months.

I'm not saying the market WON'T correct in real estate, but i
do think that things like 'pre-sale' on new construction helps
cushion the fluctuations a little bit ...

where i live now, in 1995 they had over 100 brand new homes
you could buy for under $75,000 because they 'built them on spec' ...

now its 'pay up front' and we will build when we get around to it ...
there are projects here that are nearly TWO YEARS behind
supplying the houses that have been paid for!!!! And those houses
started at $269,900 and go up almost every month!

There is a bit of an 'articial' demand with new home construction,
but unless our BC economy tanks, it may go for a while ...

Sure, you can't sell a 4 bed/3 ba house in the Glebe, Ottawa for
enough to buy a one-bed condo in Vancouver, but you can still
get nearly $300,000 for that stupid condo tomorrow ...

 

[LaCreme]

Good point lonely....but Our Dollar is at levels not seen since the 70's.
Therefore, the finacial market is a leading indicator. The dollar's uptick is indicating the higher interest rates are coming. And with that chart I've posted....that worries me. Charts that show a big climb...is destined to fal abit. And I hope it does becaues it would be healthy. NOTHING GOES UP IN A STRAIGHT LINE!! Your a fool if you believe that. It all depends how much the rates are pushed up. Don't forget. There are many people living paycheck to paycheck and alot won't be able to make payments if rates climb. Of course depending on they're plan.
But who know's......after the Olympics things could fall alot. It did after Expo if you remember.

Expo i remember.. it was like i was almost there.. i still have stuffs they had bought during that period. it went down and right now is up again..
i know what is living "paycheck after paycheck" i had been threw that as well. example if you lose your job "you are fcuk" i will do anything to not going back to this state of mind.

 

[ronnyraygun]

i still remember alberta after the nep hit us hard, never want to see that again