Wednesday, January 03, 2007

the end




Wow. The commodity markets, the dollar, are taking some lumps these last couple of days.

Oil down over $5 in the last two days. That is about 9 1/2% Copper down. Precious metals down. Winter doldrums? Profit taking? It's hard to say - I'm not a market analyst type, but if oil continues to go down, that would likely slow down Alberta, and by extension, BC. Less Alberta oil money in the BC RE market (if that ever had anything to do with prices...), and if the lay-offs start in the oil patch, there might be a few "investors" that need to dump their holdings in a hurry. Could this be one of the nails in RE's coffin?, or at least a staggering blow to the head? Is the global economy fatigued enough that we might be seeing the beginning of the global recession that a lot of us are muttering about? Or, does it just mean that the mild temperatures are causing a diminished demand for oil? What about copper and other metals?

I'm thinking that a "perfect storm" is brewing.

Thoughts?

16 comments:

Uncertain Buyer said...

The smart money sells high and buys low. It seems to be hard to buy anything low right now......something has to give.

the pope said...

Its hard to be smart these days? :-)

Wu'kong said...

The Economist's annual year-end survey magazine, "The World in 2007" has a neat little article called, "Boom-time for mafias".

Thanks to the spread of so-called "grow-ops" .... Canada is now home to the largest number of criminal syndicates in the world (using, that is, the most common law-enforcement definition that considers three people involved in the commission of a crime to be a syndicate) .... In 2007 the expansion of weed cultivation from British Columbia towards the eastern seaboard will accelerate ...

We're #1! We're #1!

That's just gotta protect us from any kind of economic slowdown, right?

wannaget2calgary said...

solipsist,

I agree. It's all starting to unravel. Cash will soon be King.

Jim said...

As a recently cash out homeowner, I find it just as stressful to be sitting on my downpayment(at 4%) waiting for the "correction" to buy. I may jump in early if I can find something underpriced. Maybe this summer? Cash is king, but it comes with its own burden of responsibility.

** Ego ** said...

You know that perfect storm is brewing when CCC rated junk bonds yield only 10%...

patiently waiting said...

jim,

I don't give advice as I hate getting it myself. But I'll tell you why I don't buy right now:

1) I think about what I'm willing to spend and what it will buy right now. All I need to do is look on the MLS to remind me of the crap that's in my price range. I don't want to waste my life throwing my hard-earned money into a depreciating leaky condo.
2) I can easily rent something decent in my price range. In fact, I pay less than a quarter of my income into housing costs.
3) When I start to forget how much money I save by renting I take a look at my savings (enough to live on for a couple of years) and lack of debt (credit cards with no balances), go and spend some of my hard-earned cash (not credit) on something fun and frivolous, and schedule some time off work just because I can. You can't do these things when you're a slave to a depreciating leaky condo.

Pondering said...

jim,

Not only that you can move somewhere else and enjoy time away from work rather than sitting in a cement box eating ramen

the pope said...

It greatly depends on your time line, (last year july to july RE did much much better than cash) but if you bought in september 2006 your cash at +4% has done much better for you than the loss of value in real estate since then. -1.4% average in a condo and -2.4% average for Vancouver detached. The extra drag is it will cost you at least an extra 1% to sell.

If you're uncomfortable with the 4% you're gaining from the cash and don't care about prices dropping you can buy today. Unfortunately if you're uncomfortable with your purchase its not quite as liquid as the cash is.

Wu'kong said...

Any guesses if a slowdown will force a reduction/cancellation of the hated PTT?

Uncertain Buyer said...

I can relate to Jim,

That's why I just got myself into a 12 month lease so I wouldn't be tempted. I actualy have a clause that allows me a 60 day notice out.

Jim, just keep following the News and trust your gut. I feel it's only going to get worse for housing. It will probably play out like the US.

Go check out Robs Real Estate Blog and see his numbers. LINK

Uncertain Buyer said...

Jim, where are you getting 4%. My Bank is only going to give me 3.5%

solipsist said...

Jim, where are you getting 4%. My Bank is only going to give me 3.5%

I believe that INGDirect, and President's Choice are paying 4% (they were last time I checked).

I'm getting 3.65% (or so) from RBC for a 1 year cashable GIC, but indolence/apathy have kept me from switching.I really ought to split it up though, because CDIC only covers up to $100K. I am taking a great leap of faith that RBC will not go under in the event of a financial meltdown (which the occurrence of would not surprise me...).

Uncertain Buyer said...

Thanks.

patiently waiting said...

I'm getting 3.9% on 2 year Premium Redeemable with TD. I basically said make it worth my while not to bother moving my money over the PC. They bumped it up from the posted rate which was around 3.6 or 3.7 at the time.

patriotz said...

I may jump in early if I can find something underpriced

Housing is underpriced when you can buy it and get a substantial positive net cash flow (>20%) of gross) renting it out.

Also, IMHO if housing is "underpriced" you're not jumping in early. It's the market bottom.

You're in for a long wait. Try 2010.