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Content By: The Coming Depression Editorial Staff (dates cited below)
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housing bubble Bursts
All the news reports from US and Canadian real estate associations touting that the housing “recession has ended” is just about as worthless as the hot air coming out of politicians mouths. Very low interest rates made houses and condos too expensive, especially compared to the price of renting equivalent properties. Logic dictates that this is not the right time to buy a house (unless you expect currency depreciation and higher prices throughout the economy to reduce the value of your debt in real terms, a mere fraction what it is now). The best time to buy a home is when interest rates are at historical highs, and only the most qualified borrowers can keep up their payments. Higher interest rates will help correct some of the insanity in the ‘residential’ housing markets. Indeed, there is an affordable housing ‘crisis’ in Canada, due in large part to low interest rates, 35-40 year amortization mortgages and an unregulated monster they call the ’speculative’ market.

“The reality is, that if we put interest rates anywhere near where they ought to be, we would bankrupt most of our financial entities and we’d have a real collapse. We’re never going to have a real recovery until the market lets us have a real recession. Our phony consumer-based economy isn’t viable; it only exists as long as the Chinese and Japanese lend us money to buy their stuff.” — Peter Schiff

Home-Purchase Index in U.S. Plunges to Lowest Level Since 2000
By Bob Willis

Nov. 12 (Bloomberg) — Mortgage applications to purchase homes in the U.S. plunged last week to the lowest level in almost nine years as Americans waited for the outcome of deliberations to extend a government tax credit.

The Mortgage Bankers Association’s index of applications to buy a house dropped 12 percent in the week ended Nov. 6 to 220.9, the lowest level since Dec. 2000. The group’s refinancing gauge rose 11 percent as interest rates decreased, pushing the overall index up 3.2 percent.

The drop in buying plans points to the risk that the recent stabilization in housing will unravel without government help. In a bid to sustain the recovery, Congress passed and the administration signed a bill last week to extend jobless benefits and incentives for first-time homebuyers, adding a provision that also made funds available to current owners.

“Uncertainty over the housing tax credit sent some tremors through the market in recent weeks,” Michael Larson, a housing analyst at Weiss Research in Jupiter, Florida, said before the report. “But now that Congress has extended and expanded the credit, we should see demand pick back up.”

The MBA’s overall index climbed to 627.5 last week from 608.3, the banking group reported today in Washington. Its refinancing gauge increased to 2998.2 from 2693.7.

The share of applicants seeking to refinance loans rose to 71.5 percent of all applications, the highest level since May, from 66.1 percent a week earlier.

Rates Fall

The average rate on a 30-year fixed-rate loan fell to 4.90 percent last week from 4.97 percent two weeks ago. The rate reached 4.61 percent at the end of March, the lowest level since the group’s records began in 1990.

At the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be $530.73, or about $84 less than the same week a year earlier, when the rate was 6.24 percent.

The average rate on a 15-year fixed mortgage decreased to 4.33 percent from 4.34 percent the prior week. The rate on a one-year adjustable mortgage increased to 6.85 percent from 6.83 percent.

Combined sales of new and existing homes were up 24 percent in September from the lowest level in at least a decade in January, helping pull the market out of its worst slump in seven decades.

Rising demand, in turn, has helped stabilize home values and construction.

You can find the full article at Bloomberg


The next bubble to burst will be the low-interest bubble.

Your cash is gone; Your paper investments are long gone; Your credit goes tits-up; Your pay can’t keep pace; Your jobs disappear.

Finally your housing investment collapses, but there is no market because the majority of us are in the same boat.

You had better hope you have your residence completely paid off, hopefully some room to grow a garden to keep yourself fed, and enough under the mattress to keep paying the taxes on what you ‘own’ outright, because anything less looks bleak.

And we live in a democracy, right, where the government represents the will of the people?

We are all getting rail-roaded.

But we stopped caring about each other long ago. As long as we are OK, right?

It must be the loonie lefties fault because they are sucking too much money out of the economy. It couldn’t possibly be the bankers who collect 90% of the nation’s income tax just to service the usury debt our government got us in to when it abandoned its sovereign right to control its own currency.

Now we will watch Harper once again re-tie our loonie to the sinking US greenback out of his loyalty to a failed capitalist plan.

Harper simply has no vision. He sees no options. He is a scared man who cannot stand up on his own feet. He is incapable of leading Canada back to a sovereign nation. I suspect he doesn’t even know what the word means.

And he is not alone on the Canadian political landscape, but he has the wheel at this time so the buck stops with him, today.

What a miserable disappointment Canada has become in the last 50 years. For a very young country with such prospects, it didn’t take long for it to fall to its knees.

Are we going to remain docile and watch this happen?

In the 50s and 60s there was a massive property boom in the world, but real estate remained affordable, so standards of living rose. This last 20 years has reversed that. Many families put so much into property now – and if you look at what other North Americans pay, even before the market soured in the US, you see that we are getting hosed.

Banks are already back to 100% mortgages, despite the government saying they are not (look at Scotiatbanks “free” 5% down mortgage).

Gentle growth would be far more resilient in the long run, now we are back to bidding wars in Van and T.O. you can see that the volatility is back.

Why Canada’s Housing Bubble Will Burst
‘The largest sub-prime lender in the world is now the Canadian government.’
By Murray Dobbin, 22 Oct 2009, TheTyee.ca ALSO confirmed with Rabble.ca

What do the mid-recession housing boom and the Harper Conservatives’ rise in the polls have in common? Answer: the Canada Mortgage and Housing Corporation’s massive sub-prime mortgage scheme that is keeping up the appearance of an economic recovery. 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. What’s almost as alarming as this reckless policy is that no one in the financial media is talking about it, even though everyone knows the facts. I was alerted to the scandal by David Lepoidevin, a financial advisor with National Bank Financial, in a warning letter to his clients.

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This entry was posted on Thursday, November 12th, 2009 at 12:40 pm and is filed under North America. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Comments

  1. November 13, 2009 @ 1:12 am


    Recovery might be near but some are still in the turmoils. It’s indeed an unfair world. Thanks for sharing. By the way, I know a real estate coach who could also help many in the real estate industry make money despite the current crisis.

    Posted by Janice
  2. November 14, 2009 @ 3:54 pm


    Look up who brought back usury it was the lefties/loonies and what president let glass-steagall go so this could take place that would be clinton you are hoodwinked if you think they are your friends. They also sold out American’s in the UNFAIR free trade. Ah the strange death of liberal america.

    http://thestrangedeathofliberalamerica.com/foreclosed-blame-bill-clintons-repeal-of-glass-steagall.html

    http://www.freedomsphoenix.com/Article/058142-2009-09-23-the-misinformed-masses.htm

    Posted by Lori

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