Canadian home resale prices decline with U.S.

wealthyboomer

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Canadian home resale prices decline with U.S.
Wednesday, 29 December 2010


As U.S. home prices slipped in October so did Canadian home resale prices, falling 0.4 per cent from September, according to Teranet-National Bank composite house price index.

This was the second consecutive drop in the index. Calgary and Toronto posted the worst declines at one and 0.9 per cent respectively. Ottawa also fell by 0.3 per cent while prices remained flat in Montreal. Halifax and Vancouver experienced slight gains, up 0.7 and 0.1 per cent respectively.

Though resale prices are down, sales of existing homes in Canada rose for a fourth straight month, according to the Canadian Real Estate Association. Next year may be lacklustre, reported Scotia Economics in a year-end review, but 2011 will actually be stable compared to the buying frenzy levels of 2009.
 

Thomas Beyer

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[quote user=wealthyboomer]... at one and 0.9 per cent respectively. .. by 0.3 per cent while prices remained flat in .. slight gains, up 0.7 and 0.1 per cent respectively. ..






THIS IS NEWS ?





This is GOOD news .. if one considers it newsworthy ! namely: prices are essentially FLAT in a time of year which is historically slower than summer/fall.





Make money in flat markets by paying down your mortgage !! Assume you buy with 25% down .. no cash-flow .. and no equity gain. In 5 years your mortgage has been paid down 10% .. so you made 10%/25% = 40% on your money ..





NOT BAD .. in a boring market !!!!
 

gwasser

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This is the third time I am trying to put in a reply. The program malfunctions everytime I press post and responds that there is no content in the message.



BTW. If it was because of the lack of content in my messages, maybe all of them should crash :)



Where are the emoticons when you need one? :))
 

gwasser

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Even the smallest scrape lets some blood. That doesn't mean you're about to die!



You would think that the messenger knows better than to compare minor Canadian real estate market declines with the debacle south of our border?



Why such an alarmist post? Is it to kling to misguided notions that the we are in for bad times? Guys, I've got some bad news!



The worst is over. We're into a 3 to 4 year bull market! Don't fight the trend in the misguided search to justify some doomsday outlook!



Happy New Year!
 

EdRenkema

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No argument here Godfried, its not over in the US though, see here:

http://www.financialpost.com/Housing+woes+deepen/4034764/story.html

(thanks David it worked!)



Over and over I see it and hear it, prices up or prices down, certainly a distinguishing variable but what happened in the US is more of a factor of people not being financially educated. As most of us know RE as an investment is a business and needs to be treated as such, a business is a function of the cashflow it creates. Most non investor owners in Canada or the US do not understand this, Canadians are simply better protected from the profiteers by our regulated finance industry,

OK I'm preaching to the choir - you know this :)
 

Rickson9

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Speaking for myself as an investor that rarely, if ever, sells - I much prefer lower prices. Always.



I am quite disappointed in an asset class that reports year-over-year prices increases and often look elsewhere if the trend doesn't change.



The good news is that investors can buy U.S. property at $50 per sq ft. If the future involves lower prices, this is very good news indeed.



If $50 per sq ft isn't lower than replacement cost, it's probably fairly close.



Best regards.



"If you expect to be a net saver during the next 5 years, should you hope for a higher or lower asset prices during that period? Many investors get this one wrong. Even though they are going to be net buyers for many years to come, they are elated when prices rise and depressed when they fall. This reaction makes no sense. Only those who will be sellers in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices."

- Warren Buffett, 1997 Chairman's Letter to Shareholders
 

Thomas Beyer

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[quote user=Rickson9]Speaking for myself as an investor that rarely, if ever, sells - I much prefer lower prices. Always...




.. Prospective purchasers should much prefer sinking prices."



interesting .. albeit somewhat silly .. if one honestly expects prices to FALL (be it stocks or real estate) .. why buy NOW ? why not wait ?



I am a buyer, a holder/improver and a seller .. and honestly I am NOT happy if I buy an asset for X and a year or 2 later it is worth X-20% !! You are ?
 

Rickson9

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[quote user=ThomasBeyer]interesting .. albeit somewhat silly .. if one honestly expects prices to FALL (be it stocks or real estate) .. why buy NOW ? why not wait ?


It is unfortunate that you consider the contribution of my ideas on this forum to be silly. Speaking for myself, I appreciate the point of view of all the posters here.



However, having said that, I only buy after a fall. With regards to expecting prices to fall, I don't expect anything because I don't make decisions based on what may or may not happen in the future.



[quote user=ThomasBeyer]I am a buyer, a holder/improver and a seller .. and honestly I am NOT happy if I buy an asset for X and a year or 2 later it is worth X-20% !! You are ?




Again, I only buy after a fall. I am always happy when prices fall.



In the past I have bought after a fall and the prices have fallen further, and I buy more. A good question is how much of a fall is necessary for me to consider buying.



Best regards.



"There's no reason we should become fearful if prices go down. If the price goes down 50%, I'd look forward to it. In fact, I would offer you a significant sum of money if you could give me the opportunity for all of my stocks to go down 50% over the next month."

-Warren Buffett, 2008 Berkshire Hathaway shareholders meeting
 

gwasser

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I bought after a significant price declline in Calgary a Condo Apartment for 230K in late 2008. A few months ago I bought a similar unit in the same complex for $180K. Do I consider these brilliant purchases? No, but both properties cash flow positively and over the long term they will work out.



I bought other investments for $11 per share and they peaked at $57. Now 2 years after they crashed down to $26, they're back at $45. I made a lot of money, but would it not have been smarter to sell at $57?



Fact is, the stock went up so fast in 2008 that I did not have the chance to sell enough fast enough.



Would I be brilliant if I bought more today or during the crash because it was after a significant price fall? I don't think so, buying at $11 was the brilliant move and I bought at a peak!



You buy when the price is right at any time. How much the appreciation and income from an investment will be, you can only guess. But as long as the investment has earnings power that growths, over time it will work out.



I admire people who buy at the depths of a down market. I always buy too early, sometimes dead on the low point and often a fair bit after the low point of a market. I also have bought 'falling knifes'. Overall, I think you can not time markets and thus I buy whenever the price is 'right'. Peter Lynch ones explained that he was on vacation and had no clue as to what was coming during the October 1987 crash. Yet he was one of the world's most successful money managers.



I often buy during down turns, but then I hold on to the investment during many later up and down turns. In the end the effects of whether I bought during an upturn, down turn, or whatever other stage of the market cannot be found back in the overall return of the investment.
 

Rickson9

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As always Godfried, your insights are amazing. Great post!



I know I'm biased, but I liked the reference to Peter Lynch. He couldn't foresee the crash (I don't believe that anybody can so I don't think about it, but that's another story ;) but is still regarded as one of the best.



Best regards.
 

Thomas Beyer

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gee .. maybe I am too old fashioned ..



I'd like to buy stuff that GOES UP IN VALUE !!



Can you make money in a falling market ? yes, with PUT OPTIONS .. or going short.
 

Rickson9

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[quote user=ThomasBeyer]gee .. maybe I am too old fashioned ..



I'd like to buy stuff that GOES UP IN VALUE !!



Can you make money in a falling market ? yes, with PUT OPTIONS .. or going short.





Actually I never said that I didn't like to buy assets that will go up in value. I said that I like to buy after large price declines.



I also implied that I would be discouraged in buying into an asset class that shows year-over-year price increases.



Some readers may have recognized these subtle distinctions.



Best regards.
 
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