I'm worried that prices and interest rates going up won't slow spending enough to slow inflation. People seem immune to thinking about spending now.
New cars are flying off the lots at 30% over MSRP. Those can't just be people that totaled their current car. A lot of people are paying that much just because they want a new one.
House prices even in smaller towns around here are crazy.
Last time gas prices topped $5 a gallon people were dumping their huge vehicles for hybrids but we are well into the $5 price and I'm seeing more and more monsters being bought and they are being driven like the accelerator is an on/off switch. I dropped my normal freeway speed down to 70 from 75 and I'm getting nearly 3 more miles per gallon.
It really doesn't work if you want to get what was a slightly more expensive house 10 years ago because what was $50,000 more is now $200,000 more
It seems you are speaking of somewhere other than Canada. In the hot spots, we are in an absolute building boom to the point where there is an anticipated glut on the horizon.
And you are lucky. We are paying $1.87 USD per litre for the good stuff, which is still cheaper than other parts of the world. The nice thing is that at that rate, the difference between good gas and regular (87 vs. 94) is only 15%, whereas the mileage increase is 17%.
I have an old friend in Mississauga, some 40 miles from Toronto.
A lot of people living there commute to work in Toronto.
His information about house prices, lack of new construction, no new investment in roads was relayed here in this forum.
The responsibility, it seemed from my conversation, was that of the central government, decisions taken by Premier Trudeau.
I apologize if the opinion was based on wrong information.
A lot of people living there commute to work in Toronto.
His information about house prices, lack of new construction, no new investment in roads was relayed here in this forum.
The responsibility, it seemed from my conversation, was that of the central government, decisions taken by Premier Trudeau.
I apologize if the opinion was based on wrong information.
As for the property bubble, several stock market scams have occurred in India, based on false statements to banks about the financial strength of the borrowers who used the money for stock market speculation.
Similarly, a property should not triple in value in less than ten years, unless it is in a prime location, and also the same property should not go more than 5x in twenty years.
After that, the area will go out of fashion, and thirty years on, the price growth will be in line with the average..
What seems to be the issue here is that a lot of extra money is in a frenzy state, for high short term gains, which really does not happen in real estate.
Money which might be deployed in the bond or stock markets is being diverted to property, and high appreciation is expected in a short time.
Also, interest only loans are not prudent, the banks will not get their capital back to deploy elsewhere.
In India, the interest rates are in the 6.5 to 7% range per year, 10% to be paid at least by the buyer, for 15 year tenures. Shorter tenure attract more interest.
The loan amount is generally based on fair market value based on rates decided by the government, and recent transactions.
While some valuations have been found faulty, this is generally a fairly robust system.
Our property valuations are about 100x monthly rental, but in some areas 50x.
So the decision by tenants to buy property may be based on a perceived saving in the long term, and of course most prices appreciate by the time the loan is paid off.
This frenzy might just be a result of catching up, as things were on hold during the pandemic.
You might do well to look at the same property valuations in 2002, 2012 and 2022.
That would give a more sober idea of price trends.
Another factor is that the materials used for construction have gone very expensive...steel is almost double in two years...and wood, don't even ask!
Similarly, a property should not triple in value in less than ten years, unless it is in a prime location, and also the same property should not go more than 5x in twenty years.
After that, the area will go out of fashion, and thirty years on, the price growth will be in line with the average..
What seems to be the issue here is that a lot of extra money is in a frenzy state, for high short term gains, which really does not happen in real estate.
Money which might be deployed in the bond or stock markets is being diverted to property, and high appreciation is expected in a short time.
Also, interest only loans are not prudent, the banks will not get their capital back to deploy elsewhere.
In India, the interest rates are in the 6.5 to 7% range per year, 10% to be paid at least by the buyer, for 15 year tenures. Shorter tenure attract more interest.
The loan amount is generally based on fair market value based on rates decided by the government, and recent transactions.
While some valuations have been found faulty, this is generally a fairly robust system.
Our property valuations are about 100x monthly rental, but in some areas 50x.
So the decision by tenants to buy property may be based on a perceived saving in the long term, and of course most prices appreciate by the time the loan is paid off.
This frenzy might just be a result of catching up, as things were on hold during the pandemic.
You might do well to look at the same property valuations in 2002, 2012 and 2022.
That would give a more sober idea of price trends.
Another factor is that the materials used for construction have gone very expensive...steel is almost double in two years...and wood, don't even ask!
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To be more clear, the banks ask for 'margin money', a sort of down payment, of at least 10% and in some cases up to 30% of the assessed value of the property.
So for a property worth 100K, you will get 70-90K as a loan.
And due to many reasons, up to 60% of the value is paid in cash, as among other things, property transfer costs can be up to 20% of the value.
So, really, the property is 70% paid, the banks are giving you only about 30%.
They know it, so the default rates on house loans are low here, the loss is very high for the defaulter.
So for a property worth 100K, you will get 70-90K as a loan.
And due to many reasons, up to 60% of the value is paid in cash, as among other things, property transfer costs can be up to 20% of the value.
So, really, the property is 70% paid, the banks are giving you only about 30%.
They know it, so the default rates on house loans are low here, the loss is very high for the defaulter.
The entire game is about perceived value, and net worth.
If the bank holds a lot of expensive real estate, it is important, and adds value indirectly to the nation's currency.
Due to declining birth rates, the median age of population in Europe and North America is increasing, and industry is declining.
The pension funds in the government sector are passing the deposits from employed workers to pay the retired workers.
At some point, there will be more retired workers than active workers, so the government will have to pay the dues by diverting money from taxes.
In privately administered cases, the pension fund managers have to earn money through the financial markets to regularly pay their pensioner investors.
So the requirement for profits is up, and some of the methods used are very high risk.
In the long term, the ageing population will have to have an influx of younger immigrants, simply to keep things going. Many will be illegal, and outside the tax system.
Food for thought.
Bigger food for thought is that retired people are in houses that still have a pending mortgage....and have borrowed against their equity for essential expenses at times.
Those still have to be paid off, the question is who will do it?
So the house ultimately gets sold, and the mortgage is transferred to the new owner.
The current seller gets little in hand.
A fragile, and tense financial system is in place.
If the bank holds a lot of expensive real estate, it is important, and adds value indirectly to the nation's currency.
Due to declining birth rates, the median age of population in Europe and North America is increasing, and industry is declining.
The pension funds in the government sector are passing the deposits from employed workers to pay the retired workers.
At some point, there will be more retired workers than active workers, so the government will have to pay the dues by diverting money from taxes.
In privately administered cases, the pension fund managers have to earn money through the financial markets to regularly pay their pensioner investors.
So the requirement for profits is up, and some of the methods used are very high risk.
In the long term, the ageing population will have to have an influx of younger immigrants, simply to keep things going. Many will be illegal, and outside the tax system.
Food for thought.
Bigger food for thought is that retired people are in houses that still have a pending mortgage....and have borrowed against their equity for essential expenses at times.
Those still have to be paid off, the question is who will do it?
So the house ultimately gets sold, and the mortgage is transferred to the new owner.
The current seller gets little in hand.
A fragile, and tense financial system is in place.
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In conclusion, if an entity holds so much real estate, directly or mortgaged, it is valued on those holdings.
But if the land is of low value, and holds little interest for buyers, then what?
The entity becomes worth much less than was seen earlier.
That will have consequences when the bubble gets pricked, banks and currencies will be affected.
No bubble holds forever, but the question is whether it is a bubble, (my opinion), or a long overdue correction (others' opinion)...
That remains to be seen.
If anybody feels like, they can track the corrected (to current date values) of real estate in rust belt America, and Middle America (trading, not manufacturing) cities, from 1960 to 2020.
The conclusions will be enlightening.
But if the land is of low value, and holds little interest for buyers, then what?
The entity becomes worth much less than was seen earlier.
That will have consequences when the bubble gets pricked, banks and currencies will be affected.
No bubble holds forever, but the question is whether it is a bubble, (my opinion), or a long overdue correction (others' opinion)...
That remains to be seen.
If anybody feels like, they can track the corrected (to current date values) of real estate in rust belt America, and Middle America (trading, not manufacturing) cities, from 1960 to 2020.
The conclusions will be enlightening.
The aftermath of 2008 changed their minds about that. Look into Blackrock and Vanguard transforming corporate residential ownership.
Canada also backstops home mortgages.
After the last housing bubble burst in 2008/9 the house next to me sold for $37,000
It was sold to Zillow for $164,000 last August. Zillow painted it inside and out
and put up an American flag on a pole by the garage and sold it for $249,000 last October.
According to Zillow, the expected selling price of my home went up 15% in April this year.
It was sold to Zillow for $164,000 last August. Zillow painted it inside and out
and put up an American flag on a pole by the garage and sold it for $249,000 last October.
According to Zillow, the expected selling price of my home went up 15% in April this year.
Yes, and they estimate the house next to me is now worth $279,000 with it;s
10 year old asphalt roof and airconditioner. While my house with a 2 year old
metal roof, and a six month old complete HVAC replacement is worth $20,000
less. Same square footage. Zillow, if we sold it i'ts worth more!.
True, I don't have a flag pole.
10 year old asphalt roof and airconditioner. While my house with a 2 year old
metal roof, and a six month old complete HVAC replacement is worth $20,000
less. Same square footage. Zillow, if we sold it i'ts worth more!.
True, I don't have a flag pole.
Seriously, you are looking at a big upheaval in the financial markets if this kind of manipulation continues.
It could even affect the value of currencies which are considered to be safe havens.
A lot of us are retired, or approaching retirement.
Take care to secure yourself.
And this could be long term, as the global power balance shifts to countries with younger and more prosperous populations.
It could even affect the value of currencies which are considered to be safe havens.
A lot of us are retired, or approaching retirement.
Take care to secure yourself.
And this could be long term, as the global power balance shifts to countries with younger and more prosperous populations.
It is time for a reset, a really big reset. Luckily I live in a country where it is possible to buy a piece of land at a rational price. I need to act quickly,I have the experience to know what materials to use and how to build so that my energy needs will be easily met and backed up with a diesel generator, diesel because it is stable and easily stored, a pure sine wave inverter and the latest batteries) To know how to create real food storage areas - paranoia, no common sense.
All currencies have no real value, only 'perceived values'. What is a 'safe haven' currency and country - one that can easily defend itself, one that can feed itself and one that can produce it's own power. There is only one country that fits that bill entirely and that is the USA.
China that is was created out of the greed for higher profit margins by western companies It was and is the reason for globalisation along with other low wage economies. If the world economy or as some state - the international Ponzi scheme collapses so does China's markets. Ergo it is not in China's interests to dump the US$ or to collapse these markets as it would lead to real revolution at home.
If the US$ was to collapse then most places on the planet would not be good places to exist, let alone live. Long before the tipping point is reached the housing markets worldwide would have collapsed along with the banks. In the Weimar Republic the expression - 'items of stable value' came to be truly understood indeed.
All currencies have no real value, only 'perceived values'. What is a 'safe haven' currency and country - one that can easily defend itself, one that can feed itself and one that can produce it's own power. There is only one country that fits that bill entirely and that is the USA.
China that is was created out of the greed for higher profit margins by western companies It was and is the reason for globalisation along with other low wage economies. If the world economy or as some state - the international Ponzi scheme collapses so does China's markets. Ergo it is not in China's interests to dump the US$ or to collapse these markets as it would lead to real revolution at home.
If the US$ was to collapse then most places on the planet would not be good places to exist, let alone live. Long before the tipping point is reached the housing markets worldwide would have collapsed along with the banks. In the Weimar Republic the expression - 'items of stable value' came to be truly understood indeed.
After the bubble burst in 2008-2010, investors bought a lot of distressed real estate "cheap" (typically at foreclosure auctions) and converted what they could to rental units. Of course it was for speculation too; and any investor that was able to hang on will be/has been rewarded. Of course, if this speculation sector of the market becomes too large, then the market will be distorted. And once the feeding frenzy starts, the bubble blows up fast and then it bursts. It's all a moving target, but we could be looking at this scenario.
"All currencies have no real value, only 'perceived values'. What is a 'safe haven' currency and country - one that can easily defend itself, one that can feed itself and one that can produce it's own power. There is only one country that fits that bill entirely and that is the USA."
This is true, but there's more to it than that. In the early 1970s, Richard Nixon forged the petrodollar. This elevated the US Dollar from a currency subject to the whims of foreign markets (and the Dollar was taking a pounding back then and making things really hard here) to a world reserve currency. In other words, virtually every country had to maintain a reserve of $US for foreign trade. No $US, no oil. This totally changed the game and got us where we are today.
There will come a time when the petrodollar will be challenged. Part of Putin's agenda is to compete with the petrodollar. He's already talking about "no Rubles, no oil." This rhetoric is familiar to those of us that have been around for a while. If Putin succeeds, then world markets will be rearranged. And it is my opinion that Putin is at least as brilliant as Nixon was, and probably more evil too.
"All currencies have no real value, only 'perceived values'. What is a 'safe haven' currency and country - one that can easily defend itself, one that can feed itself and one that can produce it's own power. There is only one country that fits that bill entirely and that is the USA."
This is true, but there's more to it than that. In the early 1970s, Richard Nixon forged the petrodollar. This elevated the US Dollar from a currency subject to the whims of foreign markets (and the Dollar was taking a pounding back then and making things really hard here) to a world reserve currency. In other words, virtually every country had to maintain a reserve of $US for foreign trade. No $US, no oil. This totally changed the game and got us where we are today.
There will come a time when the petrodollar will be challenged. Part of Putin's agenda is to compete with the petrodollar. He's already talking about "no Rubles, no oil." This rhetoric is familiar to those of us that have been around for a while. If Putin succeeds, then world markets will be rearranged. And it is my opinion that Putin is at least as brilliant as Nixon was, and probably more evil too.
'There will come a time when the petrodollar will be challenged' - very true Eddie but that time is in the future. Also agree about Nixon and Putin but although many will continue to do business with Putin, at the first opportunity they will dump him, simply because he cannot be trusted. Fascist dictatorships never last, they always implode, Rome lasted longer than any but still fell.
Putin has to have a measure of success in Ukraine or he will be terminated from within his circle of brown noses. His satellite States will turn against him at the first opportunity. When Europe finally stops buying gas and oil he will only have China to sell to and they will have total control over the Russian economy - would you like to have the Chinese emperor as your only friend? think the preying mantus.
No the planet itself will determine the future - check out the heatwaves affecting a lot of the USA right now or the Indian sub continent or the droughts or floods and not forgetting the viruses. Continuing growth LOL - all you can get from a pint bottle is a pint, if you think you can get more then you have a mental health problem. The value of your home will be completely irrelevant.
Putin has to have a measure of success in Ukraine or he will be terminated from within his circle of brown noses. His satellite States will turn against him at the first opportunity. When Europe finally stops buying gas and oil he will only have China to sell to and they will have total control over the Russian economy - would you like to have the Chinese emperor as your only friend? think the preying mantus.
No the planet itself will determine the future - check out the heatwaves affecting a lot of the USA right now or the Indian sub continent or the droughts or floods and not forgetting the viruses. Continuing growth LOL - all you can get from a pint bottle is a pint, if you think you can get more then you have a mental health problem. The value of your home will be completely irrelevant.
Oh I agree. Putin's going to have to win big to keep his oligarchy afloat. It looks like he's using all his political currency in this endeavor, but time will tell.
I agree the petrodollar isn't going anywhere for now. But there will continue to be shots at it. I'd be surprised if China wasn't cooking something up.
What a great show.
I agree the petrodollar isn't going anywhere for now. But there will continue to be shots at it. I'd be surprised if China wasn't cooking something up.
What a great show.
Real estate is looking like a gambling game here. In February I paid a deposit to purchase a new home that is currently being built. Local law allows the seller a few days to accept the deposit. On normal times, this is done to allow the seller to do a backgrond check on the buyer. On this crazy times, the seller turned the sale in a kind of unregulated auction between peoples that had manifested interest in the house before. It ultimately sold the house well above the initial asking price, that already was above market average. I declined to increase my proposal by 20%, so the house was probably sold at more than that.