Stocks down - real estate up?
- Thread starter jkcomm
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I think the general public has no idea what to do right now. I don`t feel they will choose real estate, even though we know it will do well, as they see what`s going on in the US market and many people think we are going down that path.
People, in general, will select safe and secured investments such as money losing GIC`s paying a whopping 3%. Either that or hide their money under the mattress.
What I can`t stand is the financial professionals out there right now frightening their clients to sell right now for a loss to increase their % of cash in their portfolios, and then buy again when the market goes up. Do you think they make some pretty good commissions on each buy/sell transaction!!
Who knows when the bottom will hit, but I also think now is a decent time to be looking at buying stock of a number of solid companies...as Warren Buffet says, "I like to buy things when they go on SALE". This is one of the best "sales" I`ve seen in a long time.
Over the long term, cashflowing RE will still prevail as the best option.
Let the fear/greed cycle continue...
People, in general, will select safe and secured investments such as money losing GIC`s paying a whopping 3%. Either that or hide their money under the mattress.
What I can`t stand is the financial professionals out there right now frightening their clients to sell right now for a loss to increase their % of cash in their portfolios, and then buy again when the market goes up. Do you think they make some pretty good commissions on each buy/sell transaction!!
Who knows when the bottom will hit, but I also think now is a decent time to be looking at buying stock of a number of solid companies...as Warren Buffet says, "I like to buy things when they go on SALE". This is one of the best "sales" I`ve seen in a long time.
Over the long term, cashflowing RE will still prevail as the best option.
Let the fear/greed cycle continue...
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just dont vote in the GREEN SHAFT...or we will see home prices fall
I also would love to hear what some educated guesses would be. I`m not knowledgeable enough for my opinion to be taken seriously so please take it with a grain of salt. I can`t see what is going on right now to be good for anything. People as a whole are going to have less money, and definitely less willing to "risk it" in an investment, banks are going to be a lot less willing to lend money (they`re basically the ones who got us in this situation)...I think the demand for everything is going to go down - and nothing is going to look good in the short term.
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Investment doesn`t drive Canadian real estate prices, so I don`t think prices will respond the way you suggested. The vast majority of demand is from single family buyers. For multi-family properties, I think we`ll see slightly elevated prices, but that`s a more complicated pricing situation.
I think we`ll see housing price increases cooling for a little while.
I think we`ll see housing price increases cooling for a little while.
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QUOTE (ChrisDavies @ Oct 6 2008, 01:20 PM) Investment doesn`t drive Canadian real estate prices, so I don`t think prices will respond the way you suggested. The vast majority of demand is from single family buyers. For multi-family properties, I think we`ll see slightly elevated prices, but that`s a more complicated pricing situation.
I think we`ll see housing price increases cooling for a little while.
I think the media, the market crash and the US subprime issue will have people frightened into either selling or doing nothing. I think prices will remain fairly flat over the next 12 months. Inventory of houses (and multi units) are too high too be driving up prices. Back to the old supply and demand rule. I am personally seeing vendors much more motivated now than ever. The next 12 months is the time to buy (in the right places). I am out lining up as many JV partners as possible and am going to be looking at the next year as a feeding frenzy. In my case cash flowing multi unit properties with motivated sellers. Then sit back for the next 5 years and watch them grow. More fortunes are made when times are tough than when then economy is thriving. My take anyways.
Mark
I think we`ll see housing price increases cooling for a little while.
I think the media, the market crash and the US subprime issue will have people frightened into either selling or doing nothing. I think prices will remain fairly flat over the next 12 months. Inventory of houses (and multi units) are too high too be driving up prices. Back to the old supply and demand rule. I am personally seeing vendors much more motivated now than ever. The next 12 months is the time to buy (in the right places). I am out lining up as many JV partners as possible and am going to be looking at the next year as a feeding frenzy. In my case cash flowing multi unit properties with motivated sellers. Then sit back for the next 5 years and watch them grow. More fortunes are made when times are tough than when then economy is thriving. My take anyways.
Mark
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I like Mark and Chris`s post.
I`m voting on Multi unit investment valuations on average have gotten streched and their (inflation adjusted but NOT nominal) price levels will fall for the next 2+ years in Canada. Guessing this based on current low cap`s plus expected restrictive financing, increased costs.
I`m voting on Multi unit investment valuations on average have gotten streched and their (inflation adjusted but NOT nominal) price levels will fall for the next 2+ years in Canada. Guessing this based on current low cap`s plus expected restrictive financing, increased costs.
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Interesting times. With stock portfolios/rsp shrinking folks must be feeling a little poorer these days. Doubt if they are going to run out a buy property in the near future. For those few who have been waiting on the sideline since mid 2006 with their cash WOW! What great times. Still no rush ! Lots of time to pick over things. Talked to some small builders today . They still have on their rose colored glasses. I say let them bleed a little more before picking their bones.
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QUOTE With catastrophic gyrations in the stock markets recently, will real estate prices be driven up as investors scramble to invest in something more stable?
Highly doubt it - and on that note, wouldn`t you say that there has been "catastrophic gyrations" in many areas of U.S. real estate markets, too?
I don`t really think that the average person considers real estate as a realistic investment vehicle, pretty much for sheer lack of knowledge/interest. It`s either too much hassle, too hands-on, too expensive, etc. Most people, I would suggest, look at real estate and they see places to live and/or raise families, whereas we, as investors & economists, seek to invest in fundamentally strong areas with great prospects for future appreciation. It`s a completely different mindset. Kinda like how most of us/those not directly involved in the world of finance/banking have little idea of what equities our mutual funds actually hold! You have an RRSP - OK - where is its investment focus? What types of companies is the plan buying? What percentage of small-cap stocks (ie, risk [usually]) do you own? I`d venture a guess that not many would be able to answer these, kinda like how many focused on the world of finance/banking don`t particularly care where a new transportation upgrade is being constructed and/or how it`ll impact surrounding real estate values.
As for the stock markets, I`d expect most sophisticated people to either not panic or to take a chance and aggressively buy. I know of a few people who are buying-up high quality, large-cap, high-yield shares by the boatload. But - it`s a risk, and they know it. They could go way lower. The economy-at-large has barely even started to feel the effects of this, but it will. Unemployment will probably rise significantly, real estate will probably go down in a lot of areas, and overall there could be slower growth for the next 5 years.
Gotta love market inefficiency!
Highly doubt it - and on that note, wouldn`t you say that there has been "catastrophic gyrations" in many areas of U.S. real estate markets, too?
I don`t really think that the average person considers real estate as a realistic investment vehicle, pretty much for sheer lack of knowledge/interest. It`s either too much hassle, too hands-on, too expensive, etc. Most people, I would suggest, look at real estate and they see places to live and/or raise families, whereas we, as investors & economists, seek to invest in fundamentally strong areas with great prospects for future appreciation. It`s a completely different mindset. Kinda like how most of us/those not directly involved in the world of finance/banking have little idea of what equities our mutual funds actually hold! You have an RRSP - OK - where is its investment focus? What types of companies is the plan buying? What percentage of small-cap stocks (ie, risk [usually]) do you own? I`d venture a guess that not many would be able to answer these, kinda like how many focused on the world of finance/banking don`t particularly care where a new transportation upgrade is being constructed and/or how it`ll impact surrounding real estate values.
As for the stock markets, I`d expect most sophisticated people to either not panic or to take a chance and aggressively buy. I know of a few people who are buying-up high quality, large-cap, high-yield shares by the boatload. But - it`s a risk, and they know it. They could go way lower. The economy-at-large has barely even started to feel the effects of this, but it will. Unemployment will probably rise significantly, real estate will probably go down in a lot of areas, and overall there could be slower growth for the next 5 years.
Gotta love market inefficiency!
My question is: given the economic uncertainty and banks more hesitant to lend, is it likely that mortgage interest rates will go up significantly or would that just worsen the whole situation? I did listen to Benjamin Tal`s talk and wonder if given the latest things he might be less certain? I do hear people saying lock in! lock in! with mortgages but it doesn`t make sense to me to pay an extra 2% interest at this point. I have a 2 rental properties that just break even right now. I had been thinking of selling one but now I`ll hold off.
Any thoughts would be appreciated.
Any thoughts would be appreciated.
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QUOTE (Naomi @ Oct 6 2008, 11:21 PM) My question is: given the economic uncertainty and banks more hesitant to lend, is it likely that mortgage interest rates will go up significantly or would that just worsen the whole situation? I did listen to Benjamin Tal`s talk and wonder if given the latest things he might be less certain? I do hear people saying lock in! lock in! with mortgages but it doesn`t make sense to me to pay an extra 2% interest at this point. I have a 2 rental properties that just break even right now. I had been thinking of selling one but now I`ll hold off.
Any thoughts would be appreciated.
Unless you`re having trouble sleeping and its a result of your VRM, I wouldn`t lock in now. Today I read the Finacial Post and the 5 big economists at the 5 big banks all point to a slowing economy. If anything the prime rate will stay the same or possibly drop. That said I`m not an economist, I just know that variable rate is still the best place to be over a long time period - and isn`t that what RE investing is about - a long term investment?
Any thoughts would be appreciated.
Unless you`re having trouble sleeping and its a result of your VRM, I wouldn`t lock in now. Today I read the Finacial Post and the 5 big economists at the 5 big banks all point to a slowing economy. If anything the prime rate will stay the same or possibly drop. That said I`m not an economist, I just know that variable rate is still the best place to be over a long time period - and isn`t that what RE investing is about - a long term investment?
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QUOTE (Jack @ Oct 6 2008, 07:30 PM) Highly doubt it - and on that note, wouldn`t you say that there has been "catastrophic gyrations" in many areas of U.S. real estate markets, too?
I don`t really think that the average person considers real estate as a realistic investment vehicle, pretty much for sheer lack of knowledge/interest. It`s either too much hassle, too hands-on, too expensive, etc. Most people, I would suggest, look at real estate and they see places to live and/or raise families, whereas we, as investors & economists, seek to invest in fundamentally strong areas with great prospects for future appreciation. It`s a completely different mindset. Kinda like how most of us/those not directly involved in the world of finance/banking have little idea of what equities our mutual funds actually hold! You have an RRSP - OK - where is its investment focus? What types of companies is the plan buying? What percentage of small-cap stocks (ie, risk [usually]) do you own? I`d venture a guess that not many would be able to answer these, kinda like how many focused on the world of finance/banking don`t particularly care where a new transportation upgrade is being constructed and/or how it`ll impact surrounding real estate values.
As for the stock markets, I`d expect most sophisticated people to either not panic or to take a chance and aggressively buy. I know of a few people who are buying-up high quality, large-cap, high-yield shares by the boatload. But - it`s a risk, and they know it. They could go way lower. The economy-at-large has barely even started to feel the effects of this, but it will. Unemployment will probably rise significantly, real estate will probably go down in a lot of areas, and overall there could be slower growth for the next 5 years.
Gotta love market inefficiency!
Very interesting post Jack...
I don`t really think that the average person considers real estate as a realistic investment vehicle, pretty much for sheer lack of knowledge/interest. It`s either too much hassle, too hands-on, too expensive, etc. Most people, I would suggest, look at real estate and they see places to live and/or raise families, whereas we, as investors & economists, seek to invest in fundamentally strong areas with great prospects for future appreciation. It`s a completely different mindset. Kinda like how most of us/those not directly involved in the world of finance/banking have little idea of what equities our mutual funds actually hold! You have an RRSP - OK - where is its investment focus? What types of companies is the plan buying? What percentage of small-cap stocks (ie, risk [usually]) do you own? I`d venture a guess that not many would be able to answer these, kinda like how many focused on the world of finance/banking don`t particularly care where a new transportation upgrade is being constructed and/or how it`ll impact surrounding real estate values.
As for the stock markets, I`d expect most sophisticated people to either not panic or to take a chance and aggressively buy. I know of a few people who are buying-up high quality, large-cap, high-yield shares by the boatload. But - it`s a risk, and they know it. They could go way lower. The economy-at-large has barely even started to feel the effects of this, but it will. Unemployment will probably rise significantly, real estate will probably go down in a lot of areas, and overall there could be slower growth for the next 5 years.
Gotta love market inefficiency!
Very interesting post Jack...
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My guess is that non-RE investors (the part of the population that buy and sell the most) may be a bit nervous about trading up from rentals or buying larger homes with all this R-word talk. So in some areas where it has been a sellers` market, there will a drift towards a buyers` market, and in some places, possibly price reductions or stabilization (woo hoo!).
In brief, I do agree with some of the other posters here that it may be a good time to buy.
One does however have to look at the metrics of their specific investing region e.g. changes in commodity prices may affect some areas more than others etc
Manj
In brief, I do agree with some of the other posters here that it may be a good time to buy.
One does however have to look at the metrics of their specific investing region e.g. changes in commodity prices may affect some areas more than others etc
Manj
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most people who play with paper investments dont really invest in real estate (some but not a lot) just like vise versa, there is always this stigma between the 2 types of investments. RE investors mainly think that playing the market is unsafe and paper investors say that it takes too long to make money in RE and it actually requires work. So I would say no
my 2 pennies