Thursday, April 17, 2008

zombie market


As I was drifting off to sleep last night, it occured to me that this real estate market (at least, the participants) has a lot of characteristics of The Undead, or a Zombie.
Dictionary.com Unabridged (v 1.1)
zom·bie
–noun 1. (in voodoo) a. the body of a dead person given the semblance of life, but mute and will-less, by a supernatural force, usually for some evil purpose.

Wallstreet Words
zombie
A company that remains in business even though it is technically bankrupt and almost surely headed for the graveyard.

Jargon File
zombie
n. [Unix] A process that has died but has not yet relinquished its process table slot (because the parent process hasn't executed a `wait(2)' for it yet).
(definitions from dictionary.com)

It just won't die, and it cannot be stopped.

16 comments:

Anonymous said...

it eats cheap and easy credit instead of brains

j6p

solipsist said...

I think that it eats brains too.

Paul said...

Once bitten or scratched you immediately get a huge HELOC and buy a Hummer or boat.

solipsist said...

paul -

and/or, an investment condo.

I just saw an article on CBC that the RE Board of Canada (I think...blah, blah) released data saying sales are down some % or other country-wide, with Tarawna down 22% (hey, I wrote that a week or more ago!), and Calgary down 36%. But prices are still rising. Some banking boffin bleated that values would not retreat. Uh-huh.

Spooky zombie market. This is a double-creature-feature. Godzilla returns and eats the paper profits, and smashes a few ugly buildings for good measure and special effects.

More popped corndo anyone? Bubble-Burst fizzy drink? Firenze Fritos?

patriotz said...

Housing sales tumble across Canada

“Canada's six-year housing market boom is officially over. Aside from a few choice prairie locales, sales are melting faster than this year's snowpack,” Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said in a research note."

It's over, baby.

“There's a window of opportunity for the market to cool down and affordability to improve before the next rate tightening cycle, and if that happens … we shouldn't see a pullback in home prices,” Mr. Alexander said.

Uh huh. Now how long before Mr. Alexander and company come out with the first bottom call?

solipsist said...

Thanks for the link patriotz.

The booms of the 60s, 70s and 80s are noted, but the busts are not mentioned. And no boom in the 90s? Maybe this is a twenty year up-cycle rather than a ten year one?

I think that they will call more bottoms than we did tops. I look forward to buying a fixer upper on a 40 foot lot for $250Gs.

patriotz said...

And no boom in the 90s?

In Vancouver no boom started in the 90's, rather the boom that started in 1985 continued until 1995, with a small correction in 1991.

Similarly the early 80's boom really started in 1979. There was a boom in the early 70's, followed by a real (not nominal) bear market.

But now that I think about it, the writer was probably just talking about Toronto, which had a huge bust in the early 90's and actually saw negative price change over the whole decade.

BBY said...

I plotted condo prices of two Toronto neighborhoods for the 90s Toronto bust. It was pretty spectacular. The run-up was steep and short (a few years), and the collapse mirrored the run-up, with prices returning to what they were (i think...) There was a bit of a dead cat bounce and then prices remained flat for almost 10 years before appreciating nominally just before Canada's current 6-year boom. That was a crash.

I concurrently plotted condo prices in a local neighborhood. There was shallow appreciation, followed by a shallower depreciation. That was a correction.

It's how I developed the opinion that the slope and duration of the decline corresponds to the slope and duration of the run-up.

Data was tediously gleaned from the RBC tri-annual reports available at the local library.

Vancouver Real Estate (VRE) should become a dirty word, as much as the Vancouver Stock Exchange (VSE) became a dirty word in this town. I'd consider buying when VRE is a dirty word.

Anonymous said...

An unfair analogy if ever there was one.
Your lawyers will hear from our lawyers.

- Zombie Non-Human Rights Committee




[aka 'rentah'... Although some zombies likely own.]

Drachen said...

"The booms of the 60s, 70s and 80s are noted, but the busts are not mentioned. And no boom in the 90s? Maybe this is a twenty year up-cycle rather than a ten year one?"

That's what I've been saying for a year now!

solipsist said...

Read @ Garth Turner's political blog.

Moral Hazard and the Lender of Last Resort

Wasn’t it England that first pointed to the Dangers of Financial Moral hazard?

Oh yes, here it is….Mervyn King, the Governor of the Bank of England said, “the Bank of England should not lend money to banks that could not borrow from one another during the credit crunch, because “the provision of large liquidity facilities penalises those financial institutions that sat out the dance, encourages herd behaviour and increases the intensity of future crises”.

Moral hazard is the removal of the incentive to avoid the disaster of default through fiscal mismanagement by providing a taxpayer funded safety net.

Mervyn King is now hatching a plan to take the currently riskiest mortgages that Financial Institutions hold and accept them as collateral for what used to be considered the safest - treasury bonds.

So much for the value of the bonds. The “herd” is having yet another punch bowl party.
Have you ever been to the the Head Smashed In Buffalo Jump Mervyn?

Good thought for the daY: The silver lining to the American housing crisis is that all those empty Vegas Mc’mansions will use less water and electricity this summer.

By Pecked to Death by Ducks


(emboldening mine) But why should we with level heads bail out the stupid zombies?

Mind you, the BoC has not proposed such yet (at least not overtly), but just wait 'til the foreclosures start to hit here...

solipsist said...

An unfair analogy if ever there was one.
Your lawyers will hear from our lawyers.

- Zombie Non-Human Rights Committee


I apologise unequivocally, and regret any perceived slights against the un-dead. Please do not eat my brain, n'or tax my savings.

Grovellingly Yours,

solipsist

PS: I do not have a lawyer - let alone a team of them.

Please address all complaints to 555-666-OOPS (5568)

patriotz said...

Maybe this is a twenty year up-cycle rather than a ten year one?"

I take the opposite view. The bear market which started in 1995 was interrupted by the global RE bubble in 2001. That bear market would have taken real prices down to the same levels as in the 1980's IMHO.

see what I mean

Strataman said...

http://tinyurl.com/5anq3t
Seeing as I cancelled my weekend out because of the 'WORLDS BEST WEATHER" I thought I would cheer every body up!
http://tinyurl.com/5anq3t

kris b said...

" I look forward to buying a fixer upper on a 40 foot lot for $250G"

In Spanish Banks. A few years of depression and unemployment north of 20% will do the trick.


"That bear market would have taken real prices down to the same levels as in the 1980's IMHO."


We are still going back to 1985 price level. Justice delayed...........

Anonymous said...

This guy is moving to tsawwassen
http://tinyurl.com/447o4l
but has done some good research on Commercial Dr
http://tinyurl.com/3podn8
and its gentrification
http://tinyurl.com/5xs6k5

Buy?
$650000 Commercial Dr area East Vancouver
Date: 2007-08-15, 8:43PM PDT
For Sale RM 4 zoned large lot 33 X 132 with large two storey house over full basement. Each floor can have two bedroom suites + Currently rented on month to month basis. Private sale Photos available on request.
Location: East 1st Ave
PostingID: 398180078

Or Rent?
http://tinyurl.com/5yko4a
$1 / 3br - RE: $1200 / 3 BEDROOM EAST VANCOUVER
Reply to: see below
Date: 2008-03-13, 10:41PM PDT
FYI - to anyone interested - this place needs A LOT of work. Be aware that the owner is actively selling the house and wasn't up-front about it when we viewed it. A "For Sale" sign was in the front yard for quite a while previously to the posting, however on the day we viewed, the sign was gone. Owner said he was getting another Realtor and a new sign would go up within a week or so. You may want to ask about this.
Just be wary that if he does sell - the new owners may or may not want you in it !
Anything could happen, you could live there happily ever after for all I know! :) - Again - this is just an FYI!