Housing and Condos are going to crash

[icespot]

What impact would 30% unemployment have on mortgage defaults? I can guarantee the banks on both sides of the border have run those numbers.

This article is from 2016, but provides a possibility of what could be....large part will depend how many people stay afloat and how many go under. Then it will depend on what % of people just walk away and let's face it when they lose everything, do you think they will be thinking how they can help those that still have their home?


One of the big bads from the 1980s is starting to emerge again in Alberta.

Jingle mail — the act of walking away from an underwater mortgage by mailing your keys back to the bank — is a peculiarity of the Alberta residential market and an act of desperation. However, a combination of high debt and lost jobs make it an option in a province going through a significant economic reckoning.

"It's when you see high-end home prices drop 20 per cent below the peak," said Alger. "I think there are people considering walking away and I've talked to one or two myself."

Why Alberta is different
Alberta is the only Canadian province to broadly offer non-recourse residential mortgages. Those are loans with at least a 20 per cent down payment and thus are not insured by the Canada Mortgage and Housing Corporation (CMHC).


If you walk away, you lose your home, but otherwise have no personal liability. Elsewhere in Canada, your lender can take you to court and seize other assets, such as RRSPs, vehicles, and even garnishee your wages.

https://www.google.com/amp/s/www.cbc.ca/amp/1.3430867

 

[icespot]

It’s been my experience over the past 20 yrs that the naysayers who scream a crash is coming are the same people who want to keep you out of the market.

I bought a fixer upper that needed a lot of work around landsdowne & bloor in 2008 for 180k. Put 40k into it and still live there but it’s worth north of 1 million now. Fully detached and the neighborhood just got better o er the past 12 yrs.

Don’t listen to the bubble and crash people

Actually they are the ones warning you based on past experience about the ones that want you to get into the Market and drive the price up until it crashes.

Then the big fish move in and make a killing.

Everyone knows Real State is a great business, but the Sharks are the ones that love the crashes.


Take Warren Buffett for example, he has billions of worth in cash assets, and right now is taking out loans and increasing his cash stock pile. The why is obvious, there is a big crash coming and if he times it right, he will buy everything up at huge discount and then by his same actions watch his investment sky rocket when it all turns around.

People are not trying to scare you, they are warning you. If you are like the Buffet's of the world, what is about to happen is the best thing in the world.

But if you are like the rest of us, it's time to start planning.

"Berkshire's cash pile exceeded the individual market capitalizations of Tesla, Starbucks, Nike, and McDonald's at points in March, underscoring its wealth of opportunities."

https://www.google.com/amp/s/markets.businessinsider.com/amp/news/warren-buffett-berkshire-hathaway-investing-128-billion-cash-bill-ackman-2020-4-1029097370

 

[Butler1000]

What impact would 30% unemployment have on mortgage defaults? I can guarantee the banks on both sides of the border have run those numbers.

Right now I'd be worried about Las Vegas starting a run. They aren't reporting it much but Nevada is about to become a major default state.

And with the Banks holding a crapload of bad debt again.......

 

[WyattEarp]

Right now I'd be worried about Las Vegas starting a run. They aren't reporting it much but Nevada is about to become a major default state.

You're right. How do you get people back into casinos? What industry does Nevada really have besides gambling and its associated tourism?

I have friends tell me their businesses and companies are doing okay. They think because they are not impacted by the quarantine/sheltering, they will not be impacted. There are very few recession proof businesses. Most of our businesses and companies will be impacted economically.

 

[Butler1000]

You're right. How do you get people back into casinos? What industry does Nevada really have besides gambling and its associated tourism?

I have friends tell me their businesses and companies are doing okay. They think because they are not impacted by the quarantine/sheltering, they will not be impacted. There are very few recession proof businesses. Most of our businesses and companies will be impacted economically.

Considering the major impacts 9/11 and 2008 had, then translating over.

They are royally fucked. No one will travel because of two week quarenteens outside of their nations for months. Social distancing make shows done. Buffets done. And table gambling done. Who wants to handle chips, cards and cash right now? No sports no sports gambling. Online? Doubt there is enough to remotely replace.

And no tax base means the state and local govt's are also fucked.

You could be looking at a worse situation than Detroit for the whole state. A mass exodus of people seeking work. And with the Banks having pulled a 2008 again with mortgage debt the defaults could set off another cascade.

 

[fictionfactor]

Considering the major impacts 9/11 and 2008 had, then translating over.

They are royally fucked. No one will travel because of two week quarenteens outside of their nations for months. Social distancing make shows done. Buffets done. And table gambling done. Who wants to handle chips, cards and cash right now? No sports no sports gambling. Online? Doubt there is enough to remotely replace.

And no tax base means the state and local govt's are also fucked.

You could be looking at a worse situation than Detroit for the whole state. A mass exodus of people seeking work. And with the Banks having pulled a 2008 again with mortgage debt the defaults could set off another cascade.

that's a really good point, governemennts too are getting fucked , much less tax revenue...…..unless I am missing something here? this is not good for anyone, maybe china?

 

[jcpro]

You're right. How do you get people back into casinos? What industry does Nevada really have besides gambling and its associated tourism?

I have friends tell me their businesses and companies are doing okay. They think because they are not impacted by the quarantine/sheltering, they will not be impacted. There are very few recession proof businesses. Most of our businesses and companies will be impacted economically.

The casinos will lead the way in the recovery by financing check in tests at their hotels, aggressive housekeeping and universal temperature taking at all entrances. Needles to say, they will ruthlessly test their employees.

 

[escortsxxx]

Hi Folks,

As the most ill-liquid asset and with stock indexes at a new low (in the coming months) It's my opinion, time to sell those investment properties. No more HELOCS no more anythings, housing is high leverage, and If you think "this time it's different" well you have more balls then I do.

Take care folks

Dah. If you didn't realize this for sp rates I give you a basic lesson on mega depression economics. I bloody did a high school paper on it for the g-7 (it was rejected but got an honorable mention for good try) Personally anyone who did not see the supply shock mega depression coming and are experts should be fired.

 

[Butler1000]

The casinos will lead the way in the recovery by financing check in tests at their hotels, aggressive housekeeping and universal temperature taking at all entrances. Needles to say, they will ruthlessly test their employees.

They aren't going to reopen. Between bailout money (Sheldon Addison remember him) and that the occupancy rates won't cover costs until a vaccine is available.

Remember that even if they open international travel is fucked. Would you quarenteen for 2 weeks for a weekend in Vegas?

And how many will be able to afford to go? And why would they.....

No shows, no sports gambling, let alone handling chips and cash.

 

[FlorenceYi]

This thread turns me on. I love all my sharks.

 

[jackal2006]

I don't think housing will collapse the more I think about it. Housing is part of the Ponzi scheme of Canada. They bring in more immigrants to keep household spending up. If housing collapses the economy is fucked. Household spending is about 60 per cent of GDP. I think the government will continue throwing money at households so they don't collapse. Going forward though there is no thing as a free lunch. Taxes will be immense and future growth is now compromised for generations to come.

 

[fictionfactor]

don't go for the bait...low interest rates......we are no longer savers...…..I was just saying when people cant go 1-2 months without income, we have a big problem...this should be wake up call...have 3-6months min emergency funds

 

[Butler1000]

don't go for the bait...low interest rates......we are no longer savers...…..I was just saying when people cant go 1-2 months without income, we have a big problem...this should be wake up call...have 3-6months min emergency funds

Same with businesses too. And business that can't survive this either is a bad business model or gas poor management.

I do feel for brand new start ups. Hopefully they can bounce back.

 

[fall]

Dah. If you didn't realize this for sp rates I give you a basic lesson on mega depression economics. I bloody did a high school paper on it for the g-7 (it was rejected but got an honorable mention for good try) Personally anyone who did not see the supply shock mega depression coming and are experts should be fired.

High-school paper? Yep, very important stuff.

 

[fall]

They aren't going to reopen. Between bailout money (Sheldon Addison remember him) and that the occupancy rates won't cover costs until a vaccine is available.

Remember that even if they open international travel is fucked. Would you quarenteen for 2 weeks for a weekend in Vegas?

And how many will be able to afford to go? And why would they.....

No shows, no sports gambling, let alone handling chips and cash.

Actually an interesting point: are Casino located on first-nations land are subjects to the regular government rules?

 

[fall]

don't go for the bait...low interest rates......we are no longer savers...…..I was just saying when people cant go 1-2 months without income, we have a big problem...this should be wake up call...have 3-6months min emergency funds

Nope, have 2 years worth of equity in your real estate investment accessible by HELOC

 

[hoorawr]

I scooped up a property in 09 in beautiful Lorne park for bargain bin prices from a guy that couldn’t hold his mortgage. It has almost tripled in worth since then.

I would love for that to happen again, but I don’t think it will

1. 08 crash was all based around housing/financial crisis (the two were tied)
2. Corporations were affected big time
3. This time the crisis is all around the service industry / part time workers / gig workers
4. The corporations are getting HUGE bailouts, many corporations are doing just fine
5. Since most corporations are okay and have WFH initiatives, the middle class folks will be able to keep up with their home expenses
6. Service workers / part time workers / students weren’t buying homes to begin with, nor had homes

Lastly the entire Canadian GDP is way more reliant on housing than it was 12 years ago.. the government will do anything to prop it up I think

So .... no crash I don’t think. But I have cash ready just in case

 

[Butler1000]

Actually an interesting point: are Casino located on first-nations land are subjects to the regular government rules?

When it comes to insurance and being sued. Absolutely. And labor laws as well.

In Ontario they are licensed by the govt. In the states I don't know. I imagine they have to obey govt regulations to stay open.

 

[WyattEarp]

Dah. If you didn't realize this for sp rates I give you a basic lesson on mega depression economics. I bloody did a high school paper on it for the g-7 (it was rejected but got an honorable mention for good try)

I'm guessing the teachers reviewing your high school work had to reject a paper regarding the depression's impact on SP rates. Perhaps privately, they passed it on to a college recruiter.

 

[WyattEarp]

I didnt say it would happen, I said it could happen.

Have a look at this: https://finance.yahoo.com/news/money-losing-meaning-100023306.html

To answer your question as to when it will happen, hopefully never. But the longer this thing drags on the more likely it becomes

The expansion of the money supply the last ten years hasn't been inflationary for a variety of reasons. The article referenced above hit on one of them demographics. There are other major factors.

I don't think pumping money into the economy for several months is going to cause inflation. In fact, I think there will be deflationary pressures that will scare us.

Phil's right. The longer this goes on the more likely inflation will become. You can't pay people to stay home forever and lower output while doing it.