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Article Archive: Real Estate Rent or buy 03/30/24   Real Estate "Putting the non-monetary issues aside, the most eye-opening thing I learned from this analysis was that you cannot know with certainty whether buying or renting is the right choice until far into the future. Why? Because of future inflation" Could you afford it? 12/15/23   Real Estate "How many homeowners could afford the monthly payment on their house at current levels of mortgage rates and home prices? Take the current value of your home, subtract 20% for a down payment and slap a 7% mortgage rate on it. Could you afford it?" 7 per cent mortgage rates 08/07/23   Real Estate "The recent surge in rates started in June, and if there is an impact on sales from higher mortgage rates, it will likely impact closed sales in the August through October timeframe." Housing affordability 06/04/23   Real Estate "Even when adjusting for inflation to even things out a bit, housing prices are precarious at the moment for anyone taking on a new mortgage payment" Rent deceleration 06/03/23   Real Estate "My suspicion is year-over-year rent increases will slow further over the coming months with slow household formation, and as more supply comes on the market." Extend and pretend 05/28/23   Real Estate "Most of those are mortgages with amortizations 35 years or longer, as reported by the banks. The share of the Canadian mortgage portfolio with amortizations 35 years or longer was 25% at CIBC, RBC, and TD, respectively." The ugly truth behind the ugly 05/21/23   Real Estate "Now it's David's turn to refuse to walk away: He's using proceeds from the sale to continue his elder abuse lawsuit against Patriot Holdings. A trial date is set for June." Your house is a terrible investment 03/12/23   Real Estate "Hey I've got an idea. We're always talking about good investments. What if we came up with the worst possible investment we can construct? What might that look like?" Starter homes gone 02/19/23   Real Estate "If you're in the market for a new home I'm sure you've been waiting for years for prices to come down. Maybe higher mortgage rates will help. But unless there is some government action at the federal and local levels to make it easier to build more, the days of new homes going for $300k or less might be a thing of the past." The Fed screwed up the housing market 09/11/22   Real Estate "if you are someone that's considering buying your first place you've been screwed in two different ways. Not only is it now more costly than ever to buy a home because of higher housing prices and mortgage rates, but rents are screaming higher as well" Housing shortage 07/10/22   Real Estate "While there are numerous factors driving the rise in house prices, the increasing scarcity of housing units has risen to the top. This problem has been building (or not, as the case maybe) for decades." Home sweet whatever 07/03/22   Real Estate "When I sold the house in 2017 and paid off the mortgage, I pocketed roughly $86,000. When I consider the total cash outflow during the time I owned the place, I calculate an internal rate of return of -5.08% - and the return would have been even worse if I adjusted it for inflation. That isn't the sort of performance anyone would want on an investment." 30-year's soar 06/17/22   Real Estate "The 30-year fixed rate for top tier scenarios was 6.13% today, up from 5.55% last Thursday." A normal housing market 06/12/22   Real Estate "While the Fed is slowly raising the Fed Funds Rate, mortgage rates didn't want to wait around for Jerome Powell. Rates went from 3% in January to more than 5% by April. And the move higher was basically uninterrupted. The only period in history that comes even close to matching the speed and magnitude of this move was in the early 1980s." The 6% mortgage 06/12/22   Real Estate "Current 30-year mortgage rates are around 5.85%. Mortgage rates are probably close to the peak for this cycle (depending on inflation) but might rise to the low 6% range. Mortgage payments - for buying the same home - are up over 50% year-over-year." The start of a real estate bust 05/15/22   Real Estate "During the market peak, sellers were receiving so many offers they weren't even considering conditional ones. That pushed some buyers to make high, firm offers just ahead of the market softening. Now, as they near their closing date, appraisals are coming back tens or hundreds of thousands of dollars short, leaving people scrambling to pay the difference or risk losing their deposit - or worse." Housing and demographics 05/01/22   Real Estate "The current demographics are now very favorable for home buying - and will remain somewhat positive for most of the decade, although most of the increase is now behind us." Why homeowners aren't selling 04/24/22   Real Estate "Nine out of ten mortgages in America carry an interest rate of less than 5%, which is the official level at which most new 30-year fixed-rate mortgages are now being written." Talk about hot 04/03/22   Real Estate "I was presented with an all-cash offer of $125,000 over the asking price. All contingencies and inspections would be waived." Financially independent and renting 04/03/22   Real Estate "I am often struck by people's obsession with owning a home. We owned a home for 15 years, and it was a wonderful experience for that time in our lives. But owning a home should not be universally equivalent with financial success. Here are seven reasons renting can be much better than owning." Higher mortgage rates 02/13/22   Real Estate "With 4% 30-year mortgage rates, we will likely see a slowdown in both new and existing home sales (based on previous periods of rising rates). It also seems likely house price growth will slow." Investing in banks 12/19/21   Real Estate "Local real estate prices have not just acted as a predictor over the full period, but they have also been a very consistent predictor. The spread between the top decile and bottom decile of stocks ranked by this factor has persisted through multiple market environments." The days of cheaper rentals are over 10/07/21   Real Estate "Rents are up 9.6% nationwide in 2021, to an average of $1,649 a month, according to Dwellsy, which calls itself the largest rental housing platform in the country." Future housing returns are stark 09/05/21   Real Estate "I wouldn't have the success of my financial plan be wholly dependent on further prices increases on residential real estate. Speculating on prices increases in real estate is fine - so long as if the amount at stake isn't material to the success of your financial plan." Death of the starter home 09/05/21   Real Estate "If we take this to the extreme - the monthly payment for a $1,000,000 home is now $520 lower than the monthly payment for a $750,000 home in 2002. Add in fewer homes being built, a touch of inflation, scarred homebuilders, HGTV messing with our expectations and it's no wonder new home sales prices have risen over the past 20 years." Hyper zip code inflation 07/04/21   Real Estate "In its effort to control asset prices, we believe the Federal Reserve has lost control of the real estate market. While they have succeeded in building a floor under home prices, they forgot about the ceiling! Assuming zip code hyperinflation spreads, we expect wealth inequality and housing affordability to become an increasingly hot topic in upcoming elections. In the meantime, the Federal Reserve's balance sheet continues to inflate as millions of potential homeowners are being squeezed out of the market. How much longer will the inequalities created from ultra-easy monetary policy be tolerated and left unchecked? We're not sure, but given the growing extremes, we believe it is the Fed's ability to QE without consequence that has become transitory, not inflation." Canadian home prices a deal vs US bubble 06/06/21   Real Estate "Canadian real estate is receiving a big warning sign from an indicator that was an alarm for the US in 2006. The house price-to-rent ratio shows Canadian real estate is overvalued. When contrasted to the US is when you really get a feel for how much Canada went all-in on real estate. It makes 2006 America look like a sleepy backwater market of value investors." A bad time to be a homebuyer 05/30/21   Real Estate "Because houses are selling so quickly, buyers are having to make all kinds of concessions to get the place they want. People are waiving inspections, paying in all cash and offering well over asking price in many cases." Canadian property bubbles 05/23/21   Real Estate "They found Canada's hottest real estate markets are now less affordable than globally influential US cities. Heck, Canada's property bubble even pushed the tiny steel city of Hamilton to become less affordable than Los Angeles or New York City." Affordable cities in Ontario 05/09/21   Real Estate Hello Deep River, Smooth Rock Falls, Rainy River, Marathon, and Englehart. Canadian systemic risk 03/28/21   Real Estate "In Vancouver, you currently need to earn at least $147,600 to make the payments on a typical home in February 2020. Over in Fraser Valley, you can get away with $143,700 per year. That's 44% and 40% higher than the current median household income, respectively. Greater Toronto real estate also requires much bigger salaries to carry the mortgages. The payments on a typical GTA home needs a minimum salary of $148,570. In Hamilton, it's estimated at $128,100 at minimum. The minimum income is 45% and 25% higher than the current estimated household income, respectively." Homes in a bubble 11/14/20   Real Estate "The bad news is all previous history came at higher mortgage rates. The average 30-year fixed mortgage rate fell below 3% for the first time in August 2020, and rates are close to the lowest possible levels given the credit risk and costs of writing mortgages. It's one thing to be a peak valuation, it's another to be at peak valuation with no discernable upside." Workers cannot afford rent 07/18/20   Real Estate "Full-time minimum wage workers cannot afford a two-bedroom rental anywhere in the U.S. and cannot afford a one-bedroom rental in 95% of U.S. counties, according to the National Low Income Housing Coalition's annual 'Out of Reach' report." Property ladders 11/03/19   Real Estate "A few years back, I could do a little experiment with audiences in the UK and the US. I would ask them to raise their hands if they thought stocks are riskier than real estate. Most hands went up. Then, I asked them to raise their hands if they thought stock returns were higher than real estate returns. Less than half raised their hands. In effect, people were telling me that stocks were riskier than real estate and provided less return. I cannot do that exercise anymore today, because after a 10-year bull market in stocks, perceptions have shifted - until the next bear market, when they will change once more." Real estate vs stocks 04/03/19   Real Estate "Comparing real estate to the stock market or bonds or any traditional asset class is difficult because there are so many other variables involved in real estate. There are taxes and costs involved just like there are in the stock market, but then you have to consider the leverage involved, the cost of borrowing, the length of time in the home, the imputed rent, the psychic income from home ownership and the fact that you have to live somewhere." Rental market nightmare 11/26/18   Real Estate "The result has been skyrocketing prices. Condo rents soared 7.6 percent to an average C$2,385 in the third quarter over the same period a year ago and were up 17 percent for newly available purpose-built units, according to data from Urbanation. Meanwhile, the apartment vacancy rate sits at about 0.5 percent." Rich ghost towns 10/15/18   Real Estate "These days, walking through parts of Manhattan feels like occupying two worlds at the same time. In a theoretical universe, you are standing in the nation's capital of business, commerce, and culture. In the physical universe, the stores are closed, the lights are off, and the windows are plastered with for-lease signs." Geoarbitrage 08/28/18   Real Estate "So the meat of the matter is, how much is the gap between the actual median income for each state, and the income it takes to buy the median priced home in each state?" The rate of return on everything 01/01/18   Real Estate "This paper answers fundamental questions that have preoccupied modern economic thought since the 18th century. What is the aggregate real rate of return in the economy? Is it higher than the growth rate of the economy and, if so, by how much? Is there a tendency for returns to fall in the long-run? Which particular assets have the highest long-run returns? We answer these questions on the basis of a new and comprehensive dataset covering total returns for all important assets classes - equity, housing, bonds, and bills - across 16 advanced economies from 1870 to 2015" Shadow lending growing in Canada 12/18/17   Real Estate "They opted for a third route: adding a second mortgage with an interest rate of 10.5 percent to pay off their debt. Their salvation came from a private unregulated lender, a move many other Canadians are making as the government tries to rein in a home-price surge that's driven household debt to a record. But like a giant game of Whac-A-Mole, the risk to the financial system from tapped out borrowers is merely shifting -- this time to a market where there's no oversight from the country's national bank regulator and new stress-test rules don't apply." Insane Canadian housing numbers 08/20/17   Real Estate "While leverage can help boost performance on the way up, it becomes very dangerous on the way down. Leverage can turn even the best investments into poor ones when things go wrong, as losses are amplified. Equity can get wiped out pretty quickly on an overleveraged asset." Addiction to real estate 08/07/17   Real Estate "Canada's addiction to real estate goes far beyond our obsession with talking about it. Our economy actually relies more on the fees associated with buying and selling houses than it does on agriculture, fishing, forestry and hunting combined." Low delinquency rates 07/23/17   Real Estate "The problem arises when house prices stop rising and creating new equity against which stretched homeowners can borrow. People who are tight for cash rob Peter to pay Paul. And shifting debt from one lender to another has just been far too easy to do lately. Even a slowdown in house price appreciation, let alone a correction, would bring an end to that." The new normal 06/04/17   Real Estate "These days, the average home price is between seven and eight times income. To return to the ratio of the 1980s, the average household income has to jump to $160,000, or home prices have to fall back to $460,000." Too much housing 05/14/17   Real Estate "Don't let the mushrooming condos downtown fool you. There is no housing shortage in Toronto, says new planning research out of Ryerson University." Fortress fails to silence critic 01/22/17   Real Estate "In 2011 the Ontario Securities Commission accused the pair, along with a third man, of engaging 'in conduct contrary to the public interest' by selling clients of their debt-management business shares of companies caught up in a B.C. stock scam. Petrozza and Rathore agreed to pay close to $3 million and were slapped with a 15-year ban on trading securities." Corruption in Canada 09/11/16   Real Estate "Kathy Tomlinson reveals how loopholes and lax oversight are making it easy for a network of local and foreign speculators to play the system, and, in the process, fuel the steep rise in Vancouver home prices" Lethargic Canadian economy 08/06/16   Real Estate "Real estate and financial services now account for 20 percent of the economy, levels not seen in the data since the early 1960s. That could be a problem, with household debt at a record and policy makers scrambling to slow price gains that are making homes unaffordable for all but the wealthiest buyers." Homes disappointing 07/17/16   Real Estate "Buy land: They're not making it anymore. That often repeated adage sounds like good financial advice. But over the long run, it hasn't been. Despite solid price increases over the last few years, land and homes have actually been disappointing investments. It's worth considering why." Housing bubble 06/11/16   Real Estate "Know a bad deal when you see one. Overextending yourself just to get a piece of the real estate action in Vancouver or Toronto is not just a bad deal, it could spell your financial doom." Canada's real estate problem 01/31/16   Real Estate "As a result of its gains in 2015, the real estate industry accounts for 12 percent of Canada's gross domestic product through November." Housing market still not rational 07/25/15   Real Estate "The housing market is another matter. It is far less rational than even the often irrational stock market, for a couple of important reasons. First, most investors find it difficult to understand how housing supply responds to changes in demand. Only a small minority of people think carefully about such things. Second, it is very hard for the minority of smart-money investors who do understand such matters to bet against bubble-level prices in real estate markets. In housing, the smart money has relatively little voice." What's scary about mortgages in Canada 04/21/15   Real Estate "if real estate disappoints and/or interest rates swell, just when it comes time to renew your mortgage in three to five years, well, I guess these 1.8 million Canadian families will learn what it's like to run their house like a hedge fund." Sell Oakville, buy Windsor 08/10/14   Real Estate "Investing strategist Dan Hallett has been saying this to friends of his lately: With an eye on retirement, sell your home in Oakville, about an hour's drive west of Toronto, and head another three hours west on Highway 401 to his own city of Windsor." Why Canada isn't immune 07/12/14   Real Estate "History has shown, time and again, that 'this time' is not different. We believe the same is true for the future of Canadian residential real estate." How much did your house cost? 03/22/14   Real Estate "In the case of the Irish property market, it would appear that mortgaged households have considerable difficulty in accurately recalling the actual house price paid for their property." Canada's mixed blessing 06/09/13   Real Estate "This is a mixed blessing to say the least, since there was already plenty of concern that the Canadian job market had been artificially pumped up in recent years by the building boom - well, double down on those concerns, as construction payrolls now account for a record high of overall jobs at 7.6%." Why home prices change 04/14/13   Real Estate "In an ideal world, steady and uniform inflation would have no effect on rational decision-making because it affects incomes as well as prices. But in the real world, inflation does affect our psychology. People feel more optimistic when their nominal pay rises or when a neighbor's house sold for more than they paid for theirs. But in thinking about investments for the long term, we should focus on fundamentals - on real, inflation-corrected values and on the economics behind them." Shiller on housing 02/09/13   Real Estate "Robert Shiller, a professor at Yale University and co-creator of the S&P/Case-Shiller index of property values, talks about the outlook for the U.S. housing market." A new housing boom? 01/27/13   Real Estate "After the traumatic collapse of the last price bubble, Americans seem less sanguine about owning versus renting. According to the Census Bureau, the homeownership rate has been falling, from 69.0 percent in the third quarter of 2006 to 65.5 percent in the third quarter last year." We're number 1 01/26/13   Real Estate "Canada has a new worthwhile initiative. After years of booming prices, that bastion of politeness north of the border is looking to avoid a catastrophic housing bust for something more, well, boring. Initiatives don't get more worthwhile, and perhaps not more difficult considering Canada just might have the biggest housing bubble in the world right now." Housing affordability crisis 12/29/12   Real Estate "For just the second time in the past century, the country's housing market is pushing the limits of affordability, according to key statistical measures, shutting many potential buyers out of the market, and making it harder for those who have already taken the plunge to pay off their mortgages." Shaky foundations 12/22/12   Real Estate "When Dennis Gilmore gathered financial analysts and investors on a conference call last summer, the head of California-based First American Financial Corp. had some troubling news. It was what he referred to bluntly as 'the situation' up in Canada. The Los Angeles-area insurance company was losing tens of millions of dollars due to hidden problems in the Canadian housing market, and there were no assurances that the bleeding was going to stop." Vancouver crash 08/04/12   Real Estate "The bottom line is that I'm confident that there are many households now reliant on home equity extraction to maintain their current lifestyle and likely to continue making timely payments on debt obligations. I suspect that when the tide goes out, we'll be shocked at how many Vancouver households have been swimming naked:" Mawer Q1 04/28/12   Real Estate "In Fairfax Financial's Annual Letter to Shareholders, Prem Watsa observes, "there are more condos in construction in Toronto than in the 12 major cities in the U.S. combined, including New York and Los Angeles." According to the Toronto Real Estate Board, the average condominium in the City of Toronto went for $361,488 in the fourth quarter of 2011, up 7% year-over-year. Condo sales were up 10.5% year-over-year. The average sales price to list price registered 98%, which is well above the historical long-term average. The Toronto condo market is hot. Looking at the situation from a national perspective, the Canadian Real Estate Association reported that the average house price in Canada was $372,763 in February 2012. This compares to the $203,100 average price reported by the National Association of Realtors in the United States. Our question is simple: why should the average house in Canada sell for 84% more than the average house in the United States over the long run?" Real house prices 04/28/12   Real Estate "The Shiller graph has suggested to many observers that house prices track inflation (i.e. that house prices adjusted for inflation are stable - except for bubbles). Last year I pointed out the slope depends on the data series used, and that if Professor Shiller had used either Corelogic or the Freddie Mac house prices series, before Case-Shiller was available, there would a greater upward slope to his graph." Owning too much real estate 04/21/12   Real Estate "In the past, young families first purchased a starter home, lived in it for a few years and then sold it and upgraded to a bigger home to accommodate a growing family. These days, many families appear to opt to rent out their starter home when upgrading to a larger property." Pity about your retirement 03/08/12   Real Estate "Buying a house can wreck your retirement. Did your real estate agent or bank not tell you that? Of course not. All they worry about is whether you're making enough money to carry your debts. The question of whether there's enough money left over to save for retirement is of zero interest to them." Time to panic 03/01/12   Real Estate "More worrisome is where consumers have been getting their spending money. As wages stagnate and credit card use levels off, Canadian consumers have increasingly turned to their homes as a source of cash. As of last year, Canadians had pulled roughly $220 billion from their houses in revolving home equity lines of credit, a per capita amount three times larger than the U.S. at its peak." Toronto condo bubble 02/13/12   Real Estate "A record 27,504 condo units in the City of Toronto were under construction at the end of last year, according to Canadian Mortgage and Housing annual data, adding to the city's total of 199,000 units. "If builders stopped building today, there's five years worth of supply that is about to be delivered, relative to what normal population growth is," Bank of America's King said." Look out below 02/03/12   Real Estate "When the United States saw a vast housing bubble inflate and burst during the 2000s, many Canadians felt smug about the purported prudence of their financial and property markets. During the crash, Canadian house prices fell by just 8%, compared with more than 30% in America. They hit new record highs by 2010. "Canada was not a part of the problem," Stephen Harper, the prime minister, boasted in 2010. Today the consensus is growing on Bay Street, Toronto's answer to Wall Street, that Mr Harper may have to eat his words." China housing set for hard landing 01/23/12   Real Estate "The numbers are grim: China's property bubble is heading for a spectacular burst, and its effect on the country's economy will be widespread." House of horrors 11/26/11   Real Estate "Based on the average of the two measures, home prices are overvalued by about 25% or more in Australia, Belgium, Canada, France, New Zealand, Britain, the Netherlands, Spain and Sweden (see table). Indeed, in the first four of those countries housing looks more overvalued than it was in America at the peak of its bubble." Rising from the ruins 11/07/11   Real Estate "The economic landscape is unquestionably littered with the wreckage of the crash. Home prices languish near post-bubble lows, over 30% below peak. The plunge in prices has left nearly a quarter of all mortgage borrowers owing more than the value of their homes nearly 10m are seriously delinquent on their loans or in foreclosure. The hardest-hit markets are ghost neighbourhoods, filled with dilapidated properties. Housing markets are far from healthy. Yet current pessimism seems overdone. A turnaround in sales, prices and construction may be closer than many imagine." Real estate never goes down ... 10/29/11   Real Estate "In real terms, the National index is back to Q3 1999 levels, the Composite 20 index is back to July 2000, and the CoreLogic index back to June 2000. In real terms, all appreciation in the last decade is gone." [Or to some time in 1988 by my eye.] Too hefty to handle 08/26/11   Real Estate "Three years ago, just one out of every nine mortgage-holders borrowed more than 80% of the value of their homes. Today, it's one in six. These are verifiable facts whether they add up to a bubble, I can't say. But given the data and the terrible consequences of real estate bubbles, the Harper government could - at the very least - stop pumping air into the property market. And that means reining in the Canada Mortgage and Housing Corp., the vehicle through which you, dear taxpayer, have assumed the risks for these urban bidding wars and the jumbo mortgages they create." How long can home prices keep rising? 08/20/11   Real Estate "I can't tell you when the housing correction will come. But I can tell you that when it arrives it will be correlated with other bad news. And it's the second correlation that worries me." Rental complex 07/26/11   Real Estate "The belief that we're not responsible adults until we own our home, whether or not we can afford it, has distorted and stigmatized the cheaper and safer alternative: renting." Misvalued Chinese land 07/16/11   Real Estate "In the little-known Chinese city of Loudi - which is home to 4m people - there is a 1.2bn yuan ($185m) leisure project currently being developed, money for which was raised through bonds guaranteed by land valued at $1.5m an acre. Those prices, says Bloomberg, are comparable to acreage values in one of Chicago's plushest suburban neighbourhoods." Double Dip 05/06/11   Real Estate "National home prices are officially on the hunt for a new bottom. After beginning to decline again this summer, once the home buyer credit expired, home prices hit a new post-bubble low in April, according to housing industry consulting firm Clear Capital. It reports that national home prices now sit 0.7% below their March 2009 low. Over the past nine months, they're down 11.5%." T.O.'s unquenchable thirst for condos 05/04/11   Real Estate "The still-buoyant real estate market hasn't just kept house and condo prices high it's held rents aloft as well. Developers in Toronto and other major Canadian cities stopped building large new rental high-rises in the 1970s. That was partly due to rent controls in Ontario and other provinces, but also because condominiums offered a faster, more certain payoff to a developer - once the building is completed and you've sold the units, you're out. You don't have to manage and maintain it for years, even decades. As for owners, they could either occupy the units or make a pretty penny renting them out. "Condos have become the de facto new rental supply," says consultant Barry Lyon. That supply is much more expensive than old rental high-rises. Lyon and other analysts say that renters typically pay 50% more for a new condo unit than they would on rent for a comparable apartment in an aged building." Owning Loses Appeal 04/21/11   Real Estate "The median U.S. home price tumbled 32 percent from a 2006 peak to a nine-year low in February, data from the Realtors show. The retreat surpassed the 27 percent drop seen in the first five years of the Great Depression, according to Stan Humphries, chief economist of Zillow Inc., a Seattle-based real estate information company." Home Prices Since 1890 03/26/11   Real Estate "Are you one of those people who still thinks buying a home is a good investment? Perhaps some historical perspective will help. VisualizingEconomics provides a fascinating chart showing how nominal and real home prices have changed since 1890" A Red Flag On Reverse Mortgages 03/13/11   Real Estate "It is the saddest of paradoxes: a government-backed financial maneuver intended to free up extra money for struggling older people turns out to have left some widows and widowers on the brink of foreclosure." Google Map Foreclosure Tricks 12/09/10   Real Estate "I wanted to demonstrate the full extent of Foreclosures in the US, so after setting GMaps on foreclosure listings, I slowly zoomed out of the map. Voila! Most foreclosures that are for sale in the USA are now showing on your screen." The 25-Year Foreclosure 12/05/10   Real Estate "Patsy Campbell could tell you a thing or two about fighting foreclosure. She's been fighting hers for 25 years. The 71-year-old retired insurance saleswoman has been living in her house, a two-story on a half acre in a tidy middle-class neighborhood here in central Florida, since 1978. The last time she made a mortgage payment was October 1985." Why the housing bulls are wrong 11/22/10   Real Estate "Hedge fund manager Bill Ackman is the latest prominent investor to jump on the housing bandwagon. But here are four reasons by housing is still not a good investment." The two key housing problems 09/16/10   Real Estate "It is important to note that falling house prices helps clear the excess supply, although more jobs and more households is the preferred solution. However falling prices makes the negative equity problem worse." The lost half decade 08/25/10   Real Estate "While it has been a 'lost decade' for equities, housing isn't too far behind. The sector is now in the midst of a lost half decade and counting. Following up on yesterday's downright awful release of existing home sales, today's new home sales report for July came in at a seasonally adjusted annualized rate of just 276K, which is a record low dating back to 1963. Since peaking in July 2005, new home sales have now declined by more than 80% in five years." Credit score is the tyrant 07/25/10   Real Estate "A FICO score, he patiently explained, is merely a tool that lenders use to help manage their risk; criticizing it is akin to criticizing 'a saw because the construction job turned out badly.' With big banks making thousands of credit decisions every day, they couldn't possible do it without some standardized benchmark; a credit score provided that benchmark. Over the years, he added, the algorithm had gotten very good at predicting the odds of a borrower defaulting. In fact, FICO scores are not the best predictor. The amount of equity a person has in his home, his debt-to-income ratio, his job stability and his cash reserves are all better predictors than credit scores, according to Dave Zitting, the chief executive of Primary Residential Mortgage, a leading mortgage lender. And yet, he said, 'The credit score has become the line in the sand for the banks.'" Vancouver's bubble trouble 06/27/10   Real Estate "In Vancouver, new developments are pre-sold via "assignment letters," or commitments to buy. Throughout 2009, say Connell and others, assignment letters were being flipped. "The minute I actually heard a taxi driver talking about flipping assignments," says Connell, "I knew something had to give."" The homeownership gap 06/04/10   Real Estate "Recent years have seen a sharp rise in the number of negative equity homeowners - those who owe more on their mortgages than their houses are worth. These homeowners are included in the offi cial homeownership rate computed by the Census Bureau, but the savings they must amass to retain their home or purchase a new home are daunting. Recognizing that these homeowners are likely to convert to renters over time, the authors of this analysis calculate an 'effective' rate of homeownership that excludes negative equity households. They argue that the effective rate - 5.6 percentage points below the official rate - may be a useful guide to the future path of the official rate." The return of housing 04/27/10   Real Estate "That brought a dramatic change in the first quarter of 2010. "All of a sudden," says Castleman, "demand stabilized at around 60,000 units a quarter, and stayed there." To be sure, that's an extremely low number. Castleman estimates that in a normal economy, around twice that many units should be selling. But housing starts, by the end of 2009, had dropped to an astounding 30,000 a quarter, an extraordinary one-fourth of what the market normally requires. "Now builders are seeing, for the first time in years, that they don't have enough houses either finished or under construction to meet demand," says Castleman. Result: In Metrostudy's markets, housing starts spiked by 44% in the first quarter of 2010, versus the same period last year." Don't bet the farm on the housing 04/11/10   Real Estate "The question now is whether a strong case has been built for a new bull market since the home-price turning point in May 2009. Though there is no way to be precise, I don.t believe it has." Why house value won't rise 04/08/10   Real Estate "Like any other well-functioning industry, the construction industry experiences technological improvements and increased efficiency. In the computer industry, technology has meant that affordable laptops have computing power that would have been exorbitantly expensive in 1980. As a result, no one ever buys a computer thinking that it will rise in value. The real cost of building a home declined by about 3 percent in both the 1980s and the 1990s. In principle, declining construction costs could also lead homes to become more affordable year after year." How Texas escaped the real estate crisis 04/04/10   Real Estate "If there's one thing that Congress can do to help protect borrowers from the worst lending excesses that fueled the mortgage and financial crises, it's to follow the Lone Star State's lead and put the brakes on "cash-out" refinancing and home-equity lending." Flaherty's mortgage changes 02/16/10   Real Estate "On Tuesday, the Department of Finance announced three changes to the standards governing government-backed mortgages, that come into force April 19. Here are a summary of the changes." [Too little too late] Foreclosures seen still hitting prices 02/16/10   Real Estate "Some borrowers are catching up on payments after having their loan terms modified, but S&P says current trends suggest that 70% of such borrowers eventually will redefault." U.S. housing aid winds down 02/16/10   Real Estate "Over the next six months, the federal government plans to wind down many of its emergency programs for housing. Then it will become clear if the market can function on its own. People here are pretty sure the answer will be no." Global household leverage 02/09/10   Real Estate "Household leverage in the United States and many industrial countries increased dramatically in the decade prior to 2007. Countries with the largest increases in household leverage tended to experience the fastest rises in house prices over the same period. These same countries tended to experience the biggest declines in household consumption once house prices started falling." A new bubble 02/08/10   Real Estate "As the U.S. struggles to get out of its housing slump, its neighbor to the north faces a different challenge: Canada's housing recovery has been so rapid that some here are worrying about a bubble." All those little Stuyvesant Towns 02/01/10   Real Estate "In a letter warning Vantage of impending litigation, Mr. Cuomo's office contended that Vantage, which has bought more than 125 buildings in Queens, Harlem and other areas since 2006, had engaged in a 'systemic pattern of harassment' to generate significant tenant turnover. Increasing turnover was central to Vantage's business strategy, the attorney general's office said, so that it could charge much higher rents after renovating the newly vacant apartments." A bust with precedent 01/31/10   Real Estate "The original wave of securitizations took place in the 1920s, when the United States went on the greatest building boom ever. Many investors saw how rapidly real estate prices were rising and wanted in on the action. The builders and brokers were only too happy to oblige." Unlock the housing market 01/30/10   Real Estate "In the United States, you can find and bid on a house using an iPhone. So why is it that in Canada, much of the information prospective home owners need is a tightly held secret, unlocked only by real estate agents? It's the question at the heart of a dispute between the industry and the Competition Bureau -- the resolution of which could radically change how houses are bought and sold" Why Canada's housing bubble will burst 01/27/10   Real Estate "Reading the newspapers these days, you have to wonder whether Canada was on another planet when the global credit crisis hit. House prices have actually increased in some provinces and now there is a shortage of houses for sale in southern Ontario. Credit is flowing everywhere. But what few Canadians realize is that the housing market has avoided collapse (prices are down 32 per cent in the U.S.) because the Harper Conservatives directed the CMHC to change the mortgage rules to effectively make the Canadian government the biggest sub-prime lender in the world." International housing affordability 01/25/10   Real Estate "Vancouver remained the least affordable market of any size in the surveyed nations, at 9.3, worsening from 8.4 last year. Toronto joined Vancouver as severely unaffordable, with a Median Multiple of 5.2. However, Barrie, within the Toronto region was moderately unaffordable, at 3.4. Victoria, Abbotsford and Kelowna (all in British Columbia) were also severely unaffordable. Housing affordability continues to deteriorate in Montreal (Median Multiple of 4.9), where an agricultural urban growth boundary has seriously constrained development on the urban fringe. The most affordable major market in Canada was Ottawa, with a Median Multiple of 3.8 (moderately unaffordable). However, housing affordability has deteriorated materially in Ottawa-Gatineau, which was affordable as late as 2007 (Median Multiple of 3.0). The most affordable markets in Canada were Thunder Bay and Windsor (2.2), followed by Moncton (2.5), Saguenay and Saint John (NB) at 3.0." Underwater, but will they leave the pool? 01/24/10   Real Estate "A provocative paper by Brent White, a law professor at the University of Arizona, makes the case that borrowers are actually suffering from a 'norm asymmetry.' In other words, they think they are obligated to repay their loans even if it is not in their financial interest to do so, while their lenders are free to do whatever maximizes profits. It's as if borrowers are playing in a poker game in which they are the only ones who think bluffing is unethical." Walk away from your mortgage! 01/09/10   Real Estate "Mortgage holders do sign a promissory note, which is a promise to pay. But the contract explicitly details the penalty for nonpayment - surrender of the property. The borrower isn't escaping the consequences; he is suffering them." Are homes now "cheap"? 12/30/09   Real Estate "House prices are not cheap nationally. This is apparent in the price-to-income, price-to-rent, and also using real prices. Sure, most of the price correction is behind us and it is getting safer to be a bottom caller! But "cheap" means below normal, and I believe that is incorrect." Put option: default, then rent 12/11/09   Real Estate "Thanks to a rare confluence of factors -- mortgages that far exceed home values and bargain-basement rents -- a growing number of families are concluding that the new American dream home is a rental. Some are leaving behind their homes and mortgages right away, while others are simply halting payments until the bank kicks them out." Why didn't Canada's housing market go bust? 12/03/09   Real Estate "Housing markets in the United States and Canada are similar in many respects, but each has fared quite differently since the onset of the financial crisis. A comparison of the two markets suggests that relaxed lending standards likely played a critical role in the U.S. housing bust." Why loan modifications fail 12/03/09   Real Estate "Why are so few temporary mortgage modifications turning permanent? One reason may be the same one that a lot of bad loans were made in the first place. Borrowers can declare their income, and the banks are willing to grant temporary modifications based on those figures, without any evidence to confirm them. But to make a modification permanent, the banks have to see proof of income, and the borrower has to make three monthly payments of the new lower amount. In most cases, those requirements are not being met." What are these home owners thinking? 11/19/09   Real Estate "Those who fail to study history are condemned to repeat it. Those who ignore very recent experience are just being stupid." Acorn and the housing bubble 11/13/09   Real Estate "Fannie and Freddie also acquired $2.2 trillion in subprime loans and private securities backed by subprime loans from 1997 to 2007. Acorn and the other advocacy groups succeeded at getting Congress to mandate "innovative and flexible" lending practices such as higher debt ratios and creative definitions of income. And the serious delinquency rate on Fannie and Freddie's $1.5 trillion in high-risk loans was 10.3% as of Sept. 30, 2009. This is about seven times the delinquency rate on the GSEs' traditional loans. Fifty percent of the high-risk loans are estimated to be CRA loans, with much of the remainder useful to the GSEs in meeting their affordable-housing goals." CMHC needs to review policies 11/06/09   Real Estate "Another characteristic similar to the U.S. meltdown is the fact AVMs, RATs, no physical inspections and speedy credit approvals enhanced a form of mortgage fraud known as "boost and flip."" The dog ate your mortgage 10/25/09   Real Estate "But some judges are starting to scrutinize the rules-don't-matter methods used by lenders and their lawyers in the recent foreclosure wave. On occasion, lenders are even getting slapped around a bit. One surprising smackdown occurred on Oct. 9 in federal bankruptcy court in the Southern District of New York. Ruling that a lender, PHH Mortgage, hadn't proved its claim to a delinquent borrower's home in White Plains, Judge Robert D. Drain wiped out a $461,263 mortgage debt on the property. That's right: the mortgage debt disappeared, via a court order." Homebuyers' handout 10/22/09   Real Estate "Following the cash-for-clunkers idiocy, the federal government may extend its subsidy for homebuyers. The $8,000 tax credit for first-time homebuyers is due to expire Nov. 30, but our solons in the Senate are looking to push back that deadline and possibly expand the credit to $15,000 to most homebuyers, not just newbies. As with the clunker cash, Uncle Sam is giving money to folks to do what they would have done anyway." A Bounce? Indeed. A Boom? Not Yet. 10/11/09   Real Estate "At the moment, it appears that the extreme ups and downs of the housing market have turned many Americans into housing speculators. Many people are still playing a leverage game, watching various economic indicators as well as the state of federal bailout programs - including the $8,000 first-time home-buyer tax credit that is currently scheduled to expire before Dec. 1 - in an effort to time their home-buying decisions. The sudden turn could signal a new housing boom, but is more likely just a sign of a period of higher short-run price volatility." Mortgages made simpler 07/05/09   Real Estate "In the past year, we have learned the hard way that when people take out mortgages they cannot repay, the entire economy can be disrupted. Fixing the problem is complicated. But a good first step is to make the mortgage lending process Homer-proof." Tax appeals take rising toll on governments 07/04/09   Real Estate "Homeowners across the country are challenging their property tax bills in droves as the value of their homes drop, threatening local governments with another big drain on their budgets." New evidence on the foreclosure crisis 07/03/09   Real Estate "What is really behind the mushrooming rate of mortgage foreclosures since 2007? The evidence from a huge national database containing millions of individual loans strongly suggests that the single most important factor is whether the homeowner has negative equity in a house -- that is, the balance of the mortgage is greater than the value of the house. This means that most government policies being discussed to remedy woes in the housing market are misdirected." U.S. home prices down 18% 06/30/09   Real Estate "The 10-City and 20-City Composites declined 18.0% and 18.1%, respectively, in April compared to the same month in 2008. These are improvements over their returns reported for March, down 18.7% for both indices." A recession measured by new-home sales 06/27/09   Real Estate "There have been bad housing markets before, but never in post-World War II history has the market for new homes suffered as badly as it has in this decline." Return to 0% down 06/03/09   Real Estate "The days of home buying with little or no money down may be back - this time thanks to Uncle Sam." A 3rd wave of foreclosures 06/03/09   Real Estate "The next group of Americans to lose their homes seemed to have good credit and affordable loans. But those families have been walloped by the recession." Problems with housing data 06/03/09   Real Estate "Housing is at the epicenter of the financial crisis. Home values affect wealth, personal consumption, and the need for further write downs in "legacy" (formerly known as toxic) assets. We would love to have good data about housing. Forget it. Nearly all of the housing series are flawed with significant discontinuities or conceptual problems. No matter what the data report, there will be plenty of opportunity for pundits to dispute the results for the next year or so." Home prices began 2009 with record declines 05/26/09   Real Estate "The S&P/Case-Shiller U.S. National Home Price Index - which covers all nine U.S. census divisions - recorded a 19.1% decline in the 1st quarter of 2009 versus the 1st quarter of 2008, the largest decline in the series. 21-year history. The 10-City and 20-City Composites recorded annual declines of 18.6% and 18.7%, respectively. These are slight improvements from their returns reported for February." Job losses push mortgages to foreclosure 05/25/09   Real Estate "In the latest phase of the nation's real estate disaster, the locus of trouble has shifted from subprime loans - those extended to home buyers with troubled credit - to the far more numerous prime loans issued to those with decent financial histories." U.S. homeownership by age group 04/27/09   Real Estate "Back in 1985, the homeownership rate declined significantly after people turned 70. However, more recently, the homeownership rate has stayed above 80% for those in the 70 to 75 cohort, and close to 80% for people over 75. I expect the homeownership rate to remain high for the boomer generation too." Fannie Mae creates housing mirage 04/24/09   Real Estate "Give money away. That was a solution to the housing crisis mortgage giant Fannie Mae hit on last year. Faced with growing numbers of homeowners unable to make mortgage payments, Fannie decided to fund loans to borrowers that were instant losers." Down and out 04/24/09   Real Estate "British and American consumers have been obsessed with the idea of a house as their main store of wealth, regarding it as a combination of cash cow and pension plan. But the idea that we can all get rich by buying and selling each other.s houses was always an illusion. Maybe it will die out for a decade or two." Housing is not coming back 04/24/09   Real Estate "The entire world is hoping that housing is about to "recover" and re-ascend its glorious bubble-era heights of valuation. But it's not going to happen." Spat over historical trends 04/24/09   Real Estate "For now, Mr. Lawler says, the government does a better job with its monthly index of pricing for women's undergarments than it does with housing." The housing crisis isn't a crisis 04/10/09   Real Estate "His research has revealed three distinct types of housing markets--and only one of the three shows real signs of distress. Even then, that distress is only in a limited number of areas." New home sales fell 41% 03/26/09   Real Estate "After incorrectly reporting the Existing Home Sales, the mainstream media misread the Census department report of New Homes. No, New Home Sales data did not improve. In fact, they were not only not positive, they were actually horrific. The year over year number was a terrible down 41%. Sales from this same period a year ago have nearly been halved." Curse you, Zillow! 03/21/09   Real Estate "Yes, the market has plummeted at roughly the speed of a large melon dropped from a tall building. But an Internet appraisal can only compare a house's worth to that of other houses. It doesn't see inner beauty. It knows nothing of kitchen renovations or landscape improvements. It is an inherently limited measurement, as shallow and as damaging to homeowners' egos as teen fashion magazines are to body-conscious adolescent girls. Still, when I learned this week that the median Southern California home price in February was just $250,000, I did something that turned out to be a very bad idea from an emotional health perspective. I looked up my house on Zillow." Attack of the condo craters 03/04/09   Real Estate "Many project failures are indeed just rumours at this point, but the numbers indicate an imminent oversupply of boxes in the sky. 'It's night and day from just a few months ago,' says Adam Vaughan, a Toronto city councillor. On any given day for two years he'd receive at least one application for a new condo project in his Trinity-Spadina ward, but hasn't seen one in six months. 'There were more 50-storey buildings under construction in my ward than Calgary has ever built,' he says. Will Dunning, a Toronto real estate economist, says that although the fall-off in new projects has certainly been dramatic, it may not have been fast enough. Today, he says, there are roughly 35,000 units on the go in Toronto. But in December, just 198 new condos were sold, a stunning 81 per cent drop from the year before. 'This very large pending inventory is setting the stage for a substantial correction within the condo market,' he warned in a report late last year." Mortgage delinquencies rise to record 03/04/09   Real Estate "Mortgage delinquencies increased to a seasonally adjusted 7.88 percent of all loans, the highest in records going back to 1972, the Mortgage Bankers Association said today. Loans in foreclosure rose to 3.30 percent, also an all-time high." 1 in 5 mortgages underwater 03/04/09   Real Estate "It's bad enough when the value of your house is sinking like a lead balloon. But for a growing number of Americans, their woes are compounded by owing more on the mortgage than what that house is now worth." Home prices fall 18.5% 02/24/09   Real Estate "Home prices in 20 U.S. cities declined 18.5 percent in December from a year earlier, the fastest drop on record, as foreclosures climbed and sales sank. The decrease in the S&P/Case-Shiller index was more than forecast and followed an 18.2 percent drop in November. The gauge has fallen every month since January 2007, and year-over-year records began in 2001." Housing starts at another record low 02/18/09   Real Estate "Total housing starts were at 464 thousand (SAAR) in January, by far the lowest level since the Census Bureau began tracking housing starts in 1959." 19 million U.S. homes vacant in 2008 02/04/09   Real Estate "A record 19 million U.S. homes stood empty at the end of 2008 and homeownership fell to an eight-year low as banks seized homes faster than they could sell them. The number of vacant homes climbed 6.7 percent in the fourth quarter from the same period a year ago, the U.S. Census Bureau said in a report today. The share of empty homes that are for sale rose to 2.9 percent, the most in data that goes back to 1956. The homeownership rate fell to 67.5 percent, matching the rate in the first quarter of 2001." Rents are falling fast 02/01/09   Real Estate "Fritz Frigan, executive director of sales and leasing at Halstead Property estimates that when these incentives are considered, rents are actually down some 10 percent to 15 percent since the market peak in mid-2007." The growing foreclosure crisis 01/18/09   Real Estate One oft-repeated assertion no longer holds true. Those in trouble are not, primarily, lower-income borrowers. The foreclosure crisis has become a wave, afflicting neighborhoods of every stripe -- but particularly communities created by the boom itself."" Home prices post record 18% drop 12/30/08   Real Estate "Home prices posted another record decline in October, falling 18% compared with a year earlier, according to a closely watched report released Tuesday. The 20-city S&P Case-Shiller index has posted losses for a staggering 27 months in a row. In October, 14 of the 20 cities set fresh price decline records." Former WaMu employees tell of the push to lend 12/29/08   Real Estate "As a supervisor at a Washington Mutual mortgage processing center, John D. Parsons was accustomed to seeing baby sitters claiming salaries worthy of college presidents, and schoolteachers with incomes rivaling stockbrokers'. He rarely questioned them. A real estate frenzy was under way and WaMu, as his bank was known, was all about saying yes. Yet even by WaMu's relaxed standards, one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer." U.S. home prices drop by record 13.2% 12/23/08   Real Estate "Purchases declined 8.6 percent to an annual rate of 4.49 million, from a 4.91 million rate in October that was less than previously estimated, the National Association of Realtors said today in Washington. The median price dropped 13.2 percent from a year earlier, the biggest decline since records started in 1968. Separately, the Commerce Department reported today that new-home sales fell 2.9 percent last month to a 17-year low." How high-risk mortgages crept north 12/13/08   Real Estate "The untold story of how elements of the first Conservative budget in 2006 encouraged big U.S. players such as AIG to make a push into Canada, creating our version of subprime mortgages" The American Dream? 12/13/08   Real Estate "Using a unique data set that links up well-being and housing consumption, this paper sets out to measure systematic differences between homeowners and renters, in term of moment-to-moment emotions, life satisfaction, joy and pain derived from domains of life including home and neighbourhood, family life and time use. A remarkable similarity between homeowners and renters is found. Controlling for demographics and income, homeowners do not report higher levels of well-being by any measure in this data set. In fact, they report to be less healthy, derive less joy from love and relationships, spend less time with friends and on active leisure, and also experience less positive affect during time spent with friends. Their time use patterns reveal little evidence of them being "better citizens". Due to self-selection in the housing tenure choice, these results are likely to represent upper bounds of the causal benefits of homeownership. Homeowners who live in ZIP code areas with higher rates of homeownership report more positive attitudes only if other owners are similar to them in socio-economic terms, lending some support to the idea of beneficial social interaction among owners." Foreclosures soar 76% 12/05/08   Real Estate "This means that one in 10 borrowers in America are either delinquent or in foreclosure. Many of those troubled borrowers are in California and Florida, which have among the highest delinquency rates in the nation." Home prices in record decline 11/25/08   Real Estate "The S&P Case-Shiller Home Price national index recorded a 16.6% decline in the third quarter compared with the same period a year ago. That eclipsed the previous record of 15.1% set during the second quarter. Prices in Case-Shiller's separate index of 10 major cities fell a record 18.6%, while its 20-city index dropped a record 17.4%" Housing market gets even weaker 11/24/08   Real Estate "The national median existing-home price in October was $183,300, down 11.3% from a year ago when the median was $206,700." Home prices in 20 U.S. cities fall 16.6% 10/28/08   Real Estate "House prices in 20 U.S. cities declined in the year ended in August at the fastest pace on record as more properties went into foreclosure before the credit crisis deepened this month. The S&P/Case-Shiller home-price index dropped 16.6 percent in August from a year earlier, as forecast, after a 16.3 percent decline in July. The gauge has fallen every month since January 2007, and year-over-year records began in 2001." Home prices seem far from bottom 10/19/08   Real Estate "Home prices across much of the country are likely to fall through late 2009, economists say, and in some markets the trend could last even longer depending on the severity of the anticipated recession. In hard-hit areas like California, Florida and Arizona, the grim calculus is the same: More and more homes are going up for sale, but fewer and fewer people are willing or able to buy them. Adding to the worries nationwide are rising unemployment, falling wages and escalating mortgage rates - all of which will reduce the already diminished pool of would-be buyers." Canada may face housing bust: Shiller 10/01/08   Real Estate "The Canadian housing market could face a similar housing bust to the United States, particularly in more bubbly markets as Vancouver and Calgary, said Robert Shiller, the Yale University professor who predicted both the 1990s stock market boom and bust and the US housing slump." U.S. home prices declined 16.3% in July 09/30/08   Real Estate "The S&P/Case-Shiller home-price index dropped 16.3 percent from a year earlier, more than forecast, after a 15.9 percent decline in June." Housing costs: Half your income? 09/25/08   Real Estate "More than 7.5 million homeowners spend at least half of their income on housing; 19 million are above 30%. That's 53% of all homeowners with mortgages. No wonder Americans feel strained." The mortgages of the future 09/21/08   Real Estate "Mortgages could be structured differently, so that adjustments in payments would be made as a matter of routine - systematically, automatically and continuously - starting even before any distress is perceived by borrower or lender. By avoiding thousands and even millions of individual family crises, we might also make institutional crises, like the collapse of Lehman Brothers and Bear Stearns, less likely." Steeper drop in Canada's existing home prices 09/15/08   Real Estate "The average price of a home sold in Canada's major markets dropped 5.1% in August from a year ago, the largest decline in more than 12 years, according to the Canadian Real Estate Association. House prices have dropped for three straight months and it's probably only the beginning, says Benjamin Tal, senior economist with CIBC World Markets." Real national prices decline to Q4 2002 levels 08/27/08   Real Estate "In real terms, the Case-Shiller National Home price index is off 25% from the peak. Real prices are now back to the Q4 2002 level (nominal prices are back to mid-2004)." Foreclosure fallout: Houses go for a $1 08/14/08   Real Estate "So desperate was the bank owner of 8111 Traverse Street to unload the property that it agreed to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer's closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000." One third owe more than house is worth 08/12/08   Real Estate "Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.com, an Internet provider of home valuations." 'Stealth' housing bailout 08/06/08   Real Estate "The numbers are staggering and likely to get much larger. What we have here is, through a variety of programs, a stealth bailout where more than a trillion dollars of taxpayer guarantees have been extended to the housing market, both to keep it going and to clean up the mess from the past." British house prices fall 07/01/08   Real Estate "House prices in Britain have fallen at their fastest annual rate for 16 years, new figures show. Average property values in June stood 6.3pc cent lower than a year before - the biggest such drop since the 1990s crash, the Nationwide building society said." The housing abyss 06/27/08   Real Estate "Steve Hawks, owner of RE/MAX Platinum real estate agency in Henderson, Nev., says he has been flooded with calls from people interested in "buying and bailing" - that is, buying an additional house while their credit is still good, then walking away from the old one unless they can cut a favorable deal with the lender. So far the number of people who have done so appears to be small. But Hawks says banks are receptive to lending for such purchases because they figure the buyer will be able to afford the new, cheaper place. Also, says Hawks, they know that, since the buyer's credit will become damaged, he or she won't pull the same trick on them, at least for a few years." [More madness from U.S. lenders.] SP/Case-Shiller home prices fell 15.3% in April 06/24/08   Real Estate "Home prices decreased 1.4 percent in April from a month earlier after a 2.2 percent decline in March, the report showed. The figures aren't adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month to month." Mistaking consumption for investment 06/24/08   Real Estate "During the housing bubble a lot of people confused consumption with investment, a fact now becoming painfully obvious in Britain as prices fall and businesses suffer. As in the United States, home owners helped inflate a wider bubble by plowing money into housing-related consumption, from granite kitchen countertops to living room furniture to under floor heating. The illusion, or justification, was that this consumption, often financed via mortgage debt, was actually investment in a can't-miss real asset. It wasn't, it's stopping and the impact on the economy will be considerable." Downsizing the American home 06/10/08   Real Estate "During the housing bubble, KB Home priced out first-time homebuyers by building bigger. Its new, more modest model provides a glimpse of what the return of the housing market may look like." About 1 in 11 mortgageholders face loan problems 06/06/08   Real Estate "All told, about 8.8 percent of home loans were past due or in foreclosure, or about 4.8 million loans. That is up from 7.9 percent at the end of December. (About a third of American homeowners do not have mortgages.) Delinquency and foreclosure rates started rising from historically low levels in late 2006 and have picked up speed in nearly every quarter since. Analysts say at first past due mortgages represented mostly high-risk loans made to borrowers with blemished, or subprime, credit. Now, as the economy has weakened and home prices have fallen in many parts of the country, homeowners with better loans are also falling behind." Lipstick On A pig 06/06/08   Real Estate "Credit scores used by the mortgage industry are often supplied by credit-reporting agencies that also offer borrowers assistance in figuring out how to game the system. They use computer programs that suggest tactics that can lift scores for a few days or weeks. This credit gentrification occurs quietly at the beggining of the loan process, and like a summer-before-college nose job, nobody has to know." Housing bubbles collapse inward 05/30/08   Real Estate "The trends that pushed housing demand toward distant suburbs and rural areas were not sustainable. Although housing in outlying areas was relatively less expensive, a few years of double-digit appreciation quickly made these homes unaffordable for most households, especially after the sub-prime mortgage crisis (which started in August 2007) shut down non-conventional lending. Speculators could only profit from flipping when prices were rapidly increasing. When prices stalled and started to fall in 2006, investor demand for residential properties evaporated, and many speculators left holding unsold properties were forced into foreclosure. There is also some evidence that household preferences for larger homes may be shifting. In part, this is simply because of sharp increases in commuting costs." Through the floor 05/30/08   Real Estate "As house prices in America continue their rapid descent, market-watchers are having to cast back ever further for gloomy comparisons. The latest S&P/Case-Shiller national house-price index, published this week, showed a slump of 14.1% in the year to the first quarter, the worst since the index began 20 years ago. Now Robert Shiller, an economist at Yale University and co-inventor of the index, has compiled a version that stretches back over a century. This shows that the latest fall in nominal prices is already much bigger than the 10.5% drop in 1932, the worst point of the Depression." Home prices take record drop 05/22/08   Real Estate "Though prices have dropped overall, homes still have retained much of the value they gained in the housing run-up that began in 2003. And of course that is a good thing for owners of homes who want to hold on to the value of their investments. But there are those who look at the big picture and predict that the current decline won't end until house prices are again affordable for many more Americans. For that to happen, prices must fall to about where they were before the bubble began, the theory goes. If so, there's still considerable room to drop. Census Bureau figures showed the median price (half cost more, half cost less) as $227,600 in March, having retreated from last year's $262,000. But even that deflated figure is 22% above the median price from 2003." Subprime in sheep's clothing 05/08/08   Real Estate "Unlike subprime folk with expired teasers who have been putting capital into their homes for months and perhaps years, many Alt-A borrowers with years left on their payment-lite teaser periods are going to wake up one day to homes that have hugely deteriorated in price and have little if any equity in them. That is the exact recipe for foreclosure that bank insiders and credit analysts are warning about. Mark Zandi of Moody's Economy.com estimates that, by the end of June, 21.0% of all first-mortgage holders in the United States, or 10.6 million homeowners, will have zero or negative equity in their homes. For now, Alt-A loans are performing better than subprime mortgages. The risk, however, is that generally well-heeled Alt-A borrowers will adopt the same flippant attitude to paying their debts as lenders did in evaluating them. An additional pressure: 23.7% of Alt-A loans were not taken out for primary residences are often considered investments and have a higher rate of foreclosure. Only 8.7% of subprime mortgages were for absentee landlords, according to the New York Federal Reserve Bank." Doubts raised on big backers of mortgages 05/06/08   Real Estate "As home prices continue their free fall and banks shy away from lending, Washington officials have increasingly relied on two giant mortgage companies - Fannie Mae and Freddie Mac - to keep the housing market afloat. But with mortgage defaults and foreclosures rising, Bush administration officials, regulators and lawmakers are nervously asking whether these two companies, would-be saviors of the housing market, will soon need saving themselves." Subprime outcomes 05/06/08   Real Estate "Our second point is that house price depreciation - negative house price appreciation(HPA) - is the main driver of foreclosures. The easiest way to see this is to look at aggregate data. Figure 1 shows that periods of exceptionally high HPA in Massachusetts, as in 2002-2004, are associated with exceptionally low numbers of foreclosures, while periods of negative HPA, such as 1989-1991 and 2005-2007, are associated with high foreclosure rates. Cash flow problems at the household level, driven by job loss, for example, play a role, but only when HPA is low. For example, in 2001, a recession generated a record high number of delinquencies, a sign that many households had problems making monthly mortgage payments. During this time, however, there was a record low number of foreclosures in Massachusetts. Thus, the phenomenal levels of HPA in the early 2000s enabled many borrowers to either refinance or sell to avoid foreclosure." House prices decline 04/29/08   Real Estate "House prices dropped 2.6 percent in February from a month earlier, after a 2.4 percent decline in January, the S&P/Case- Shiller report showed. The figures aren't adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month-to-month. The group's 10-city composite index, with a history back to 1987, fell 13.6 percent in the 12 months ended in February, also the most on record. Nineteen of the 20 cities in the index showed a year-over- year decrease in prices for February, led by a 23 percent slump in Las Vegas and a 22 percent decline in Miami. Charlotte was the only area showing a gain with a 1.5 percent increase. Compared with January, homes in all 20 areas covered dropped in value." You can't pay them enough to leave 04/24/08   Real Estate "When the city of Youngstown, Ohio, proposed incentives to move people out of declining neighborhoods, it sounded like a good idea - in theory. The city hoped to lure holdouts living on nearly empty blocks and relocate them to more lively areas, as part of its plan to remake itself in the wake of the steel industry's departure and the foreclosure crisis. It's already cleared some lots for things like playgrounds. Now Youngstown wants to close entire streets and bulldoze abandoned properties so it can shut down city services like street lighting, police patrols and garbage pick-ups that it can no longer afford to maintain. To do this on a large scale, the city needs to get about 100 residents to relocate. Each is eligible for $50,000 in incentives - plenty, in this town, to buy a new home and move. The hitch: Youngstowners don't seem to want to leave their homes, no matter how blighted or abandoned the neighborhood may be." New-home sales in the U.S. plunge 04/24/08   Real Estate "Purchases of new homes in the U.S. plunged more than forecast in March to the lowest level in almost 17 years as stricter loan rules and falling prices caused buyers to hold off. Sales dropped 8.5 percent to an annual pace of 526,000, the fewest since October 1991, from a 575,000 rate the prior month, the Commerce Department said today in Washington. The median sales price slumped 13.3 percent from the same time last year, the most in almost four decades." Here comes the next mortgage crisis 04/17/08   Real Estate "California should be the poster child for a mortgage-loan bailout. In few other places have so many taken on such onerous debts with so little equity. Unfortunately, the crisis in California is going to get much worse, and there is no bailout that will solve it. Why? Because if the first stage of the foreclosure crisis was about people who could not afford their mortgages, the next stage will be about people who have every reason not even to try to pay their mortgages." Lenders swamped by foreclosures 04/04/08   Real Estate "Banks are so overwhelmed by the U.S. housing crisis they've started to look the other way when homeowners stop paying their mortgages. The number of borrowers at least 90 days late on their home loans rose to 3.6 percent at the end of December, the highest in at least five years, according to the Mortgage Bankers Association in Washington. That figure, for the first time, is almost double the 2 percent who have been foreclosed on." Buyers' revenge 03/28/08   Real Estate "Analysts predict that as many as two million homeowners could enter foreclosure this year, caught by a slowing economy, falling house prices and, in many cases, adjustable mortgages with rates rising from high to higher. In Las Vegas, 1.9% of homes in the Las Vegas area were in the foreclosure process in January, almost triple the rate of a year earlier, according to First American CoreLogic Inc., a Santa Ana, Calif., real-estate and mortgage data company." Grim realty 03/26/08   Real Estate "According to the newly published S&P/Case-Shiller index, house prices in ten metropolitan areas fell by 11.7% in January compared with the year before, the biggest fall since the index was created in 1987. The larger 20-city index tumbled by 10.7%. Sunbelt cities which earlier saw the most dramatic price rises are now enduring the hardest falls." The next shoe to drop in housing 03/15/08   Real Estate "The credit crunch has finally hit the traditional mortgage market. Investors are now shunning mortgage-backed securities issued by government sponsored enterprises Fannie Mae and Freddie Mac, which have been critical in keeping the real estate market from completely falling apart. Some fear this development will make it harder for people, even those with strong credit histories, to get a home loan." Morgan Stanley, Lone Star stick taxpayers on defaults 03/09/08   Real Estate "The public's bill for maintaining foreclosed properties abandoned by lenders and investors may reach as much as $50 billion this year, according to Peter Sepp, vice president of the National Taxpayers Union in Alexandria, Virginia. The U.S. Congress is considering various bills to help cover some of the costs to towns and cities for securing and policing the empty homes, Sepp said." Preparing for a 'real estate apocalypse' 03/09/08   Real Estate "The year has not been off to a great start. In figures released last week, a blustery February knocked existing home sales down by 11 per cent for the month, while residential building permits were down by a significant 47 per cent in January. Growing uncertainty over the U.S. economy, where housing values have plummeted in some states, has also cast a long shadow over the Toronto market." Home economics 03/04/08   Real Estate "Even without lending and borrowing excesses, though, our high rate of homeownership would likely create problems as the economy slows. To recover from recession, economies need prices to fall until they reflect genuine supply and demand. With certain kinds of assets, like stocks, these adjustments take place quickly, sometimes viciously so. Buying and selling houses, though, is a far slower process. The good thing about this is that housing prices never suffer crashes on the scale that you sometimes see in the stock market. The bad thing is that it can take a long time for housing prices to reflect reality. Homeowners, as economists have shown, tend to remain unreasonably optimistic about the value of their homes, and they hate to drop their asking price. As a result, existing-home sales in the U.S. are now at a nine-year low." Subprime loans defaulting even before resets 02/20/08   Real Estate "During the boom, rapid price appreciation meant borrowers built up home equity quickly. That minimized defaults, since owners could draw from that equity to pay their bills - including their mortgages - through home equity loans. But prices fell starting in 2006,leaving borrowers with less home equity to draw upon when they run into financial problems. Median home prices fell 5.8 percent nationally, and by double digits in many areas. That, along with the deterioration in underwriting, changed the default math. Owners with mortgages worth more than their homes simply began walking away from their homes when costs become unmanageable." Can't pay? Just walk away 02/06/08   Real Estate "Lenders are afraid that borrowers may find it's worth the hit to their credit scores, if they can drastically reduce their housing expenses. Someone with good credit and a $600,000 home in a town with cratering real estate prices could buy a similar house nearby for $450,000, and then let the other $600,000 mortgage go into foreclosure. The stage is set for this kind of thing particularly in California, where huge numbers of buyers used low or no-down deals to buy homes. The trend has even spawned at least one new business, San Diego-based YouWalkAway.com, which for a fee of $1,000 purports to guide clients through the process of ditching their mortgages. It launched in early January, and says it has already signed up 180 clients. California is a bit of a safe haven for these borrowers, since banks that repossess and then sell a foreclosed property for less than the mortgage that was owed on it cannot come after borrowers for the difference - as long as it's the initial mortgage, one that has not been refinanced. So if a borrower owes $200,000 and the bank sells the house for $170,000, the borrower comes out of it debt-free. And for many homeowners, the prospect of becoming debt-free is growing increasingly alluring." Getting Knocked Down by Prime ARMs 02/05/08   Real Estate "We've been reading a lot lately about how subprime mortgages have submarined the economy. Lenders and banks have been taken to the woodshed for irresponsibly giving money to home buyers with poor credit just so they could bundle up the mortgages and resell them as toxic residential-mortgage bonds. But, while there's no denying the subprime problem, on closer look it's clear that even prime borrowers were taking on more debt than they could afford. How bad is it? In Arizona, between the third quarters of 2006 and 2007, there was a 902% rise in foreclosures started against homeowners who had prime adjustable-rate mortgages, known as ARMs, according to the Mortgage Bankers Assn. ARMs, whether prime or subprime, are the real culprit in the housing crisis because they've allowed too many people to buy homes with almost no money down, with the hope that they could flip the properties or have rates drop before the loans reset. The rise in prime ARM foreclosure starts isn't isolated to a few states. Nationally, foreclosure starts related to prime ARMs jumped 253% in the third quarter of 2007 when compared to a year earlier." Housing meltdown 02/01/08   Real Estate "Brace yourself: Home prices could sink an additional 25% over the next two or three years, returning values to their 2000 levels in inflation-adjusted terms. That's even with the Federal Reserve's half-percentage-point rate cut on Jan. 30 While a 25% decline is unprecedented in modern times, some economists are beginning to talk about it. "We now see potential for another 25% to 30% downside over the next two years," says David A. Rosenberg, North American economist for Merrill Lynch (MER), who until recently had expected a much smaller slide. Shocking though it might seem, a decline of 25% from here would merely reverse the market's spectacular appreciation during the boom. It would put the national price level right back on its long-term growth trend line, a surprisingly modest 0.4% a year after inflation." Generational housing bubble 01/23/08   Real Estate "Communities in the United States face an historic tipping point. After decades of stability, we expect the ratio of seniors to working-age residents to grow abruptly, increasing by roughly 30% in each of the next two decades. We also expect that this change will make many more homes available for sale than there are buyers for them. The exit of the baby boomers from homeownership could have effects as significant as their entry, though with different consequences." Homebuilding: Sharpest drop in 27 years 01/18/08   Real Estate "Housing starts and building permits plunged in December much more than expected, resulting in a full-year decline in new home construction that was the sharpest drop in 27 years. And there is little sign things will get better soon. According to government data released Thursday, the full-year total for building permits posted the biggest drop in 33 years. The sharp dropoff in building is one of the reasons that many leading economists are growing increasingly fearful that an economic recession is near, if it hasn't already struck. The pace of housing starts in December dropped 14 percent to a seasonally-adjusted annual rate of 1.01 million in December, according to the Census Bureau report." Appraiser exposes toxic debt tie to inflated values 01/18/08   Real Estate "Perez valued eight unfinished properties at the Deere Lofts development on April 2. Some were missing ceilings, cabinets or sinks. Each had been bought the previous week for $90,000 to $167,000. Perez said they were worth $177,000 to $330,000, according to the U.S. Attorney's Office in Atlanta." Lennar's new homes fetch 60% less 01/10/08   Real Estate "Lennar Corp.'s November sale of 11,000 properties in eight states set a price that may mark the bottom for the U.S. housing market: 40 cents on the dollar." Dirty deeds 01/05/08   Real Estate "Still, even with novel and aggressive tactics, the path to resolution for many properties in Buffalo can be tortuous and protracted. A house at 1941 Niagara St. - one of dozens of properties that Cooper examined as a graduate studenthas yet to see its final chapter, though it may be close. In 1998, Elizabeth M. Manuel obtained a $34,500 mortgage on the property from IMC Mortgage (since acquired by Citibank). By 2002, the loan had been sold into a securitization trust administered by Chase Manhattan (now JPMorgan Chase) as trustee. It also went into default, and Chase began foreclosure proceedings. In a court filing, Manuel (who could not be located for comment) said she left the home while the foreclosure action was pending. More than five years later, though, the title remains in her name. The house, although still standing, has become a fire-gutted wreck. In May 2007, Nowak issued a default judgment against Chase for $9,000. But these cases can be notoriously difficult to untangle. Thomas A. Kelly, a spokesman for the bank, notes that Chase sold its trustee business to the Bank of New York Mellon (BK) in October, 2006, and couldn't locate anyone at Chase able to comment. But he reiterates the industry view that Chase can't be held responsible for maintaining a property it never owned. He acknowledges that if a home didn't seem worth taking as collateral, the bank may have made a decision to "just walk away." The value of 1941 Niagara, estimate city assessors, is $4,500, of which $4,300 represents the value of the land. The home, Cooper says, is slated for "imminent" demolition." Home prices post record decline 12/26/07   Real Estate "Home prices fell 6.7 percent in October, compared with a year ago, according to the S&P/Case-Shiller 10-city home-price index. It was the largest drop recorded since the index began in 1987. It marked the 10th consecutive month of price depreciation and 23 months of decelerating returns. "No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert J. Shiller, chief economist at MacroMarkets, in a statement. Case-Shiller's 20-city index fell 6.1 percent. Shiller noted that 11 of the markets in the 20-city index posted a record fall." Pain Street USA: '08 housing outlook 12/21/07   Real Estate "The United States is deep in its worst housing slump since the Great Depression, and according to a new report, it's not going to get better any time soon. In a new survey, Moody's Economy.com says many metro areas will record losses of 20 percent or more during the downturn, with the national median price for single-family homes dropping 13 percent through early 2009. Factoring in discount offers from sellers, the actual price decline would be well over 15 percent. 80 of the 381 metro areas covered by the report will record double-digit losses, according to the report. Most of the worst-hit markets are in once high-flying areas such as California and Florida." Lining up to invest? I'm inclined to look the other way 11/17/07   Real Estate "It is here that memories of gold buyers lining up before Deak Pereira in 1980 keep running through my mind, and bring up the nagging thought: Can this be the top of the million-dollar-condo bubble? It is, of course, possible that it's not, and that a four-room (as yet unbuilt) Toronto condo would be worth $10-million - maybe more - very soon, just as it was possible that an ounce of 1980 gold would be worth north of $800 soon after. But just as the gold of 1980 revisited its price only 27 years later, those lining up to buy downtown Toronto condos today may also find they must wait several years - perhaps many - before they get their money back." For sale: 2 million empty homes 10/26/07   Real Estate "The number of vacant homes for sale rose in the third quarter, according to the latest government reading that casts new harsh light on the weakness of the housing market. The Census Bureau report puts the number of vacant homes for sale at 2.07 million in the period, up about 2 percent from the second quarter, and 7 percent above year ago levels." Housing: that sinking feeling 10/19/07   Real Estate "For the first time, big builders are offering massive, often six-figure, price cuts in overbuilt developments nationwide, giving the industry a kind of shock treatment designed to move inventory off the books fast. It remains to be seen whether these radical measures will revive the market or deepen the slump, but it's certainly having an impact on the local communities." Housing woes hit high end 08/20/07   Real Estate "The jumbos are probably a bigger impediment than fear. The term refers to home loans in excess of $417,000. By rule, they cannot be guaranteed by the government-sponsored mortgage finance companies Fannie Mae and Freddie Mac. Of late, if Fannie or Freddie aren't vouching for your loan, there's trouble. As with most mortgages, jumbos are typically bundled together by lenders and then resold to investors (often mutual or pension funds) as mortgage-backed securities. The problem: The rising number of defaults on subprime mortgages -- particularly among borrowers who took out interest-only or other exotic loans -- has laid bare the, um, less than diligent practices of many lenders. That has spooked investors and dried up the secondary market for mortgages -- even those of sterling quality -- that aren't guaranteed by Fannie or Freddie. Unable to resell their jumbo mortgages on Wall Street, lenders are now making far fewer mega-loans, and those they are making charge much more onerous interest." Why rent? To get richer 07/22/07   Real Estate "Shares return 7% a year after inflation because that's how fast companies tend to increase their profits. Houses have their own version of profits: rents. Tenant-occupied houses generate actual rents, while owner-occupied houses generate ones that are implied but no less real: the rents their owners don't have to pay each year. House prices and rents have been closely linked throughout history, with both increasing at the rate of inflation, or about 3% a year since 1900. A house, after all, is an ordinary good. It can't think up ways to drive profits like a company's managers can. Absent artificial boosts to demand, house prices will increase over long periods at the rate of inflation, for a real return of zero." Florida foreclosure future shock 07/07/07   Real Estate "A tidal wave of foreclosures may be heading toward Florida, if you judge by the number of homeowners looking to get rid of their homes as fast as they can. Duane LeGate, president of House Buyer Network, arranges quick sales for home owners in distress. He claims he can predict where markets will go bad by looking at the traffic on his Web site. "We can tell you what's going to happen nine months from now," he said. His most endangered market right now is Orange County, Florida, home of Disney World." Don't buy that house 07/01/07   Real Estate "The dream of owning your own home is as American as apple pie--and (supposedly) better for you. Over and over, we are told that homeownership will make you happier, healthier and wealthier. Heck, it's even supposed to make you a better citizen. Of course, there are times when, depending on your age, your savings and your income, buying a home can be a smart decision and an excellent way to build wealth. But is buying a home really such a universally good idea?" Houses cheaper than cars in Detroit 03/24/07   Real Estate "With bidding stalled on some of the least desirable residences in Detroit's collapsing housing market, even the fast-talking auctioneer was feeling the stress. "Folks, the ground underneath the house goes with it. You do know that, right?" he offered. After selling house after house in the Motor City for less than the $29,000 it costs to buy the average new car, the auctioneer tried a new line: "The lumber in the house is worth more than that!" As Detroit reels from job losses in the U.S. auto industry, the depressed city has emerged as a boomtown in one area: foreclosed property." Foreclosures force suburbs to fight blight 03/24/07   Real Estate "In a sign of the spreading economic fallout of mortgage foreclosures, several suburbs of Cleveland, one of the nation.s hardest-hit cities, are spending millions of dollars to maintain vacant houses as they try to contain blight and real-estate panic." Mortgage liquidity du jour 03/24/07   Real Estate "We believe that 40% of the market (share of subprime and Alt-A) is at risk of significant fallout from tightening credit and increased regulatory scrutiny. In particular, we believe the most pressing areas of concern should be stated income (49% of originations), high CLTV/piggyback (39%), and interest only/negative amortizing loans (23%). The proliferation of these exotic mortgage products has been disproportionately weighted to former hotbeds such as California, Nevada, Arizona and Florida, which have accounted for the lion share of builder profits." Is your apartment like a dot-com stock? 03/16/07   Real Estate "The scariest aspect of today's real-estate market is the conviction that houses are always a good investment. In the nineties, the mantra was "stocks are the best investment for the long haul." This had the benefit of being true, then and now; for 200 years, stocks have outperformed every other asset class, including real estate. But the "long haul" is long. For vast stretches of time.1901 to 1920, for example, or 1966 to 1982 - stocks have performed terribly. And, in New York, the same goes for real estate." Not in your backyard? 03/15/07   Real Estate "But Westie's peaceful life was shattered last January when he and his neighbours found beer cans and crudely spray-painted signs on old-growth trees that read "Active Mining Claim" strewn across their properties. It soon became clear that Bruce Essington - a reclusive nearby resident whose only discernible connection to mining is an old leather miner's helmet that locals have seen him wearing as he tromps through the bush - had painted the signs. When Westie began noticing the man walking on his property - even allegedly lurking around his home - he became so concerned for the safety of his family that he briefly moved his wife and 10-year-old daughter into town and bought a second guard dog. When Westie first called police to complain, he was told there was nothing they could do. Essington had secured the mineral rights to Westie's land and much of the surrounding area. Under Canada's "free entry" mining system, prospectors and mining companies have the right to enter both public and private property to explore and develop their mineral claims. That means they can legally cut down trees,dig trenches, drill holes and even use heavy machinery to take away thousands of tonnes of rock samples . all without the permission of a landowner. "A free miner is the last free man in Canada," says Westie- "They have more power than the RCMP to go on your property and do whatever they wish."" Real estate can only fall 10% to 20%, right? Right? 03/15/07   Real Estate "You've probably read this before: Even when housing prices slump, they don't fall all that much, at least compared to stocks and other risky investments. I've passed on this bit of "wisdom" myself. And it it's not a totally ridiculous thing to say: Even in the big California bust of the mid-1990s, prices in the L.A.-Orange County metro area fell only 20% peak to trough in the region's worst five years. That's no Nasdaq. But, well, there's a bit more to it than that...." Renters gloat over the housing slump 12/30/06   Real Estate "For years, Americans who refused to buy real estate at what they considered excessive prices were ribbed for failing to profit from one of the greatest booms in history. "Are You Missing the Real Estate Boom?" needled the title of a 2005 book by David Lereah, chief economist of the National Association of Realtors. Now, with the housing market in a slump, renters who sat out the boom are finally getting some satisfaction." The 400-square-foot dream home 11/20/06   Real Estate "Teeny-tiny houses are the next big thing on the horizon. Those who've downsized say you can save a ton of money and time -- if you can handle the challenges of living small." Ouch! Your house payment just doubled 10/03/06   Real Estate "Big, fat surprises are ahead for about 20% of homeowners: Their complicated, often-risky adjustable mortgages are going to soar as introductory interest rates expire." Read between all those for-sale signs 08/29/06   Real Estate "Perhaps the biggest reason to be skeptical about a real estate crash is that the country has not really suffered through one before. Not since the Depression has the combined value of residential real estate fallen over the course of a full year. Homes seem to be much less vulnerable to crashes than other assets, because people rarely sell them in a panic. But earlier booms have been followed by modest price declines in some cities that turned into long periods in which increases trailed inflation. After peaking in much of California and the Northeast in the late 1980's, house values fell during the recession of 1990-91 and then drifted for years, often rising more slowly than the price of milk." [Note Shiller's interesting long-term graph at the end of the article] Getting real about the real estate bubble 08/27/06   Real Estate "For the past five years, the housing bulls have been trotting out one rational-sounding argument after another to explain why the boom made perfect economic sense. Forget about a crash, they assured homeowners. Expect a "soft landing" where your three-bedroom colonial in Larchmont or Larkspur not only holds onto its huge price gains, but keeps appreciating at a "normal," "sustainable" rate of 6 percent or so into the sunset. Americans wanted to believe, and they did. Now, the giant popping noise you're hearing is the sound of yesterday's myths exploding like balloons pumped up with too much hot air." Be greedy when others are fearful 08/24/06   Real Estate "So why are we pounding the table for homebuilding stocks? In short, some homebuilders are well positioned to survive this housing downturn, and current share prices reflect a doomsday scenario that's unlikely to happen." When homeowners are desperate to sell 08/22/06   Real Estate "In its report released Aug. 15, the National Association of Realtors reported that 26 of 151 metro areas experienced outright price declines in the March-June quarter. The biggest price drops in percentage terms were in Danville, Ill., where home prices fell by 11.2% in the spring compared with the spring of 2005, and the Detroit area, where home prices were down 8%. For condominiums, 1 in 4 metro areas reported a decline in prices." The housing bust is here 08/21/06   Real Estate "It begins with the story of a Detroit accountant who was looking to lower her monthly payments. In 2004, she refinanced a $312,000 mortgage via an option-adjustable-rate mortgage that offered various payment choices, as do so many of these plans. Her (introductory) rate of 2.3% is now up to 8.75%, and her loan balance has grown to $324,000. She claims that the terms weren't clearly spelled out. But if she actually read the documentation, as accountants often do, and didn't get it, you can imagine how many people truly understand their mortgages. (Hint: The number rhymes with "hero.") Since she's unable to refinance (in part, due to a nasty prepayment penalty), she must sell her house. The problem: Because everyone else is pretty much in the same boat and Detroit's economy isn't so swell, she can't -- even with having reduced her original asking price of $470,000 to $270,000. (Note: That would leave her $54,000 in the hole.)" Housing crash puts sellers in debt crisis 08/21/06   Real Estate "Auction clearance rates are hovering around 48 per cent since the recent interest rate rise, but plummeting property prices have meant many vendors are confronting negative equity, where they owe more on the property than it is worth." CMHC's risky mortgage moves a bad bet for taxpayers 07/07/06   Real Estate "The thing is, CMHC is out of control. Last week, CMHC announced that it was going to enter the sporty world of "sub-prime" mortgages by offering insurance on interest-only mortgages, waiving the application fees on such loans, and also insuring mortgages with 30- and 35-year amortizations. No money down, no principal payments for five years and 35 years to pay: That may work for The Brick, but it's a lousy business model for a taxpayer-funded entity." Foreclosures may jump as ARMs reset 06/19/06   Real Estate "Unfortunately, during a runaway market, many buyers, sellers and mortgage brokers were more excited about making deals than making smart deals, and the fallout has just begun. "We are on the front of this ARM problem. It will roll out over the next several years," Boas said. "Owning a home is the American dream, but losing one is the ultimate nightmare."" Real estate is risky business 06/18/06   Real Estate "Though U.S home-price gains have slowed, prices still far outstrip fundamentals, according to Yale economist Robert Shiller. Speaking Friday at a press conference in New York, Shiller, the author of "Irrational Exhuberance" and co-producer of the Case-Shiller real estate indexes, pointed to several measures he tracks.In justifying his pessimism, he pointed out that price increases have far out paced rises in construction costs, rents and income. In addition, inventory levels are up, as are interest rates and real estate holdings as a percentage of the gross national product." Welcome to the dead zone 05/07/06   Real Estate "Real estate survival guide: The great housing bubble has finally started to deflate, and the fall will be harder in some markets than others." New home sales soar 04/30/06   Real Estate "But economist Bob Brusca of FAO Economics said last month's drop in new home prices is a sign that the market for new homes isn't nearly as strong as the jump in sales would suggest. He noted that the report showed an unusual drop in prices from both February and a year earlier, which could be a sign that home builders are cutting prices to move a large supply of new homes now on the market. "New homes sales sprang back to life like a zombie in a cheap horror flick," Brusca said. "And like that zombie, housing really is dead. Don't let all that twitching fool you."" At long last, a new home sale slump 03/25/06   Real Estate "Sales in February drop more than expected, as median price falls and supply grows. Is the real estate bubble bursting?" More Americans are losing their homes 03/12/06   Real Estate "Risky borrowing is catching up with a number of homeowners across the U.S. Foreclosures rose 45% in January compared to a year ago, and experts only expect the pace to accelerate." Perils in online real estate 03/11/06   Real Estate "Buffalo has been particularly hard hit by online flipping, as the city's persistent population decline and high foreclosure rates have created a glut of some 20,000 vacant houses. "Ninety-nine percent of these online ads have some kind of fraud or lies," said Tracy Krug, a building inspector in Buffalo. "They paint a nice rosy picture: 'on a bus line, near a nice market.' They don't tell you you're going to be across the street from a crack house."" From Dutch history, an exuberant lesson 03/03/06   Real Estate "What makes Pieter Fransz's neighborhood unique - and uniquely interesting to some economists who are studying today's global real-estate boom and wondering whether the bubble that has been expanding for the past decade and more is in the process of bursting - is what real-estate experts call a constant quality index." Foreclosures: Bargain hunters beware! 02/16/06   Real Estate "You might think that a slowing real estate market would make foreclosure investing a snap. Don't bet on it." Most overvalued housing markets 01/01/06   Real Estate "Sixty-five of the nation's 299 biggest real estate markets are severely overpriced and subject to possible price corrections." Hear that hissing sound? 12/08/05   Real Estate "To judge the fair value of homes, the OECD uses the ratio of prices to rents, which is a sort of price-earnings ratio for housing. If prices are too high relative to rents, potential buyers will rent not buy, eventually pushing down real prices. In Australia this ratio is 70% above its average level over the period since 1970." Spur growth -- dump mortgage deduction 11/19/05   Real Estate "Then in 1988, Nigel Lawson, Margaret Thatcher's finance minister, the Chancellor of the Exchequer, changed the rules. He pulled the top tax rate down to 40 percent and cut back on MIRAS. Property values dropped as much as 20 percent -- for a while. The fact that interest rates were heading up at the time made the pain even worse." Piggy bank -- or house of cards? 10/08/05   Real Estate "More and more homebuyers are discovering that in a bull market, acquiring assets with other people's money is the path to riches. They're borrowing a rising percentage of their purchase prices, contributing to the housing boom. The danger is that if prices begin to fall, people who have stretched to buy houses with 100% financing will be under water on their mortgages and at risk of default if they have to sell." Empty houses, falling prices: A boom dies 10/03/05   Real Estate "You can see how the housing bubble is bursting in places like Columbus, Ohio, where builders and lenders threw common sense away and enticed people to buy homes they couldn't afford." When booms go bust... 09/19/05   Real Estate "A look at the not so distant past reveals numerous examples of cities that went through housing busts -- followed by years of falling prices. Some have never fully recovered." The three myths of condo investing 08/21/05   Real Estate "The growth in condo-investing mythology may be more worrisome than the risk of overbuilding. Here are three whoppers that need reality checks." Is housing too expensive? Blame the government 08/07/05   Real Estate "Elementary economics tells you that in a competitive environment, the price of a new house should equal: the price of land + construction costs + a reasonable profit for the developer. But in most cities, that sum is not even close to what buyers are paying." Mortgage insurance: homebuyer beware 08/07/05   Real Estate "The Crown corporation with the lion's share of the mortgage insurance business is making a killing for Ottawa. And Canadians are paying through the nose." Housing markets pricing out middle class 07/10/05   Real Estate "The red-hot housing market in booming cities across the country has made the dream of owning a home out of reach, not only for low-income families but also for white-collar professionals." The hidden costs of moving 07/10/05   Real Estate "Not only is moving one of life's most stressful and exhausting experiences, it can cost more than you ever imagined. Here's why." The danger of a global house-price collapse 06/17/05   Real Estate "The whole world economy is at risk. The IMF has warned that, just as the upswing in house prices has been a global phenomenon, so any downturn is likely to be synchronised, and thus the effects of it will be shared widely. The housing boom was fun while it lasted, but the biggest increase in wealth in history was largely an illusion." The global housing boom 06/17/05   Real Estate "Japan provides a nasty warning of what can happen when boom turns to bust. Japanese property prices have dropped for 14 years in a row, by 40% from their peak in 1991. Yet the rise in prices in Japan during the decade before 1991 was less than the increase over the past ten years in most of the countries that have experienced housing booms (see chart 3). And it is surely no coincidence that Japan and Germany, the two countries where house prices have fallen for most of the past decade, have had the weakest growth in consumer spending of all developed economies over that period. Americans who believe that house prices can only go up and pose no risk to their economy would be well advised to look overseas." Appraisal fraud: your home at risk 05/23/05   Real Estate "In theory, it's in a bank's best interest to make sure its loans are based on accurate appraisals, said M. Thomas Martin, of the National Mortgage Complaint Center in Seattle. "But if you're selling the loans to the secondary market, you really don't care," he said. "The higher the value, the better."" Boomtown USA 05/20/05   Real Estate "Something strange happens when real estate makes everybody rich. Is this where your town is headed?" Renting is the real bargain 03/27/05   Real Estate "Potential home buyers increasingly are facing a difficult economic and emotional quandary: Soaring housing prices in many parts of the country have made renting a bargain." Gurus want your money 10/04/04   Real Estate "Among those making money on real estate are the gurus selling (expensive) words of wisdom." Homeowners should not think they're bubbleproof 09/19/04   Real Estate "The Canadian housing market is a bubble-free zone right now, but let's not get complacent about it. With concern about housing bubbles now cropping up in the United States, Britain and Australia, you have to wonder how long homes here can continue to deliver the plus-sized gains of the past few years." Bubble trouble 09/19/04   Real Estate "Forget book clubs and poker nights. America's property craze has spawned a new social network: the real estate investment club." Real estate: What could go wrong? 08/09/04   Real Estate "I think buying the lot next to my house might be a good investment, but could this be a bad choice?" For rent, cheap 02/11/04   Real Estate "High vacancy rates, falling rents: music to a renter's ears and causing heartburn for landlords." Home buying with no money down 12/24/03   Real Estate "In fact, according to a survey of buyers conducted in early 2003 by the National Association of Realtors, less than half of all buyers put down 20 percent. Among first-time buyers, 33 percent kicked in less than 10 percent of the purchase price, while 28 percent financed the entire price of the home." The child molester next door 12/07/03   Real Estate "From the start we had vowed not to skip the inspection, despite prodding from our realtor. Yet by the time this house came on the market, we had already lost out to rival bidders on two other homes. In the first case we were outbid because another couple's escalation clause a stipulation in an offer that a buyer is willing to pay a certain amount above the highest bid up to a specified maximum beat ours by a few hundred dollars. We lost the second house because another buyer waived the home inspection outright. After that experience, we were tempted to throw caution to the wind. Thankfully we didn't." The seven deadly sins 11/29/03   Real Estate "In 1929 John D. Rockefeller decided it was time to sell shares when even a shoe-shine boy offered him a share tip. During the past week The Economist's economics editor has been advised by a taxi driver, a plumber and a hairdresser that "you can't go wrong" investing in housingthe more you own the better. Is this a sign that it is time to get out? At the very least, as house prices around the world climb to ever loftier heights, and more and more people jump on to the buy-to-let ladder, it is time to expose some of the fallacies regularly trotted out by so many self-appointed housing experts." Your home: Worst-case scenario 11/10/03   Real Estate "Will rising interest rates unravel all of the gains of the recent housing boom?" The case of the double agent 09/09/03   Real Estate "How can you make sure your real estate agent isn't working for the enemy?" Refinancing choke jolts homeowners 08/27/03   Real Estate "Many homeowners who tried to refinance their mortgages at lower interest rates this summer are seeing the volume of applications choking the process, a report said Tuesday." Your home: Worst-case scenario 08/09/03   Real Estate "John R. Talbott, a visiting scholar at UCLA's Anderson School of Business and author of "The Coming Crash in the Housing Markets," has a thesis that will leave you quaking from behind your picket fence." Malls: Death of an American icon 07/04/03   Real Estate "If you spent your formative years at the local shopping mall sipping Orange Julius and hanging out near the ubiquitous water fountain, you might be sad to learn that the mall as you know it is headed toward extinction." Landlordship has its privileges 04/08/03   Real Estate "Ann-Marie Williamson turned a $6,000 investment in foreclosed property into a six-figure nest egg." Hot property 06/23/02   Real Estate "A fierce debate is raging between economists over whether the authorities should try to let the air out of the market, risking a global property crash and possibly a world recession, or whether they should let the market continue to expand, which risks creating a bubble that would inevitably burst." Going through the roof 03/27/02   Real Estate "Despite the sharp fall in share prices and a worldwide plunge in industrial production, business investment and profits, consumer spending has held up relatively well in America, Britain and several other economies, supported by low interest rates and the wealth-boosting effects of rising house prices. Over the 12 months to February average house prices in America rose by 9%, and those in Britain by 15%. Adjusting for inflation, this is the biggest real increase on record in America and the biggest in Britain since 1988."	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