Unsold Homes

[August1991]

In the US, unsold homes have reached a two decade high:

Sales of existing homes in the United States fell for the eighth time in the past nine months, with the backlog of unsold single-family homes rising to the highest level in more than two decades.

The National Association of Realtors said that existing home sales dropped by 1 per cent to 4.89 million units, matching the all-time low set in January. These records go back to 1999.

G&M

In Canada, house listings have reached a record high:

Canada's housing market might still be expensive, but sellers are going to lose some of their negotiating power over the course of the year as housing supply floods onto the market.

The number of homes for sale in April was double that of the number that were sold, as new listings reached a record high, the Canadian Real Estate Association's monthly Multiple Listing Service figures showed.

Residential listings for April jumped 2.8 per cent from the previous month to a seasonally adjusted 77,248 units, while home sales rose 1.2 per cent to 36,614 units. It was the first time monthly sales increased this year.

The Gazette

Record listings can mean only one thing: many sellers believe their house is worth more than the market's truth. And many neighbours are counting the number of months that place down on the corner has been listed (what are they asking?) and discussing the closing price of that place across the street.

The housing market is sticky going down, and it's prone to unemployment or vacancies. No one wants to reduce their selling price/accept a lower wage and it takes several vacant/unemployed months before people realize that they just won't get the price they believe they deserve.

So, what does this imply for the broader economy? And what does this mean for the baby boomer generation that believes that their real estate house/cottage is their nest egg for their retirement?

If immigrants don't arrive to buy property, what will happen to house prices?

[bush_cheney2004]

Record listings can mean only one thing: many sellers believe their house is worth more than the market's truth. And many neighbours are counting the number of months that place down on the corner has been listed (what are they asking?) and discussing the closing price of that place across the street.

Housing valuations are inflated; assessed value and closing prices are readily available online from government tax records. There is no mystery.

The housing market is sticky going down, and it's prone to unemployment or vacancies. No one wants to reduce their selling price/accept a lower wage and it takes several vacant/unemployed months before people realize that they just won't get the price they believe they deserve.

Not always....the quickest way to move a property is to price it below market. Right now is a buying opportunity and I won't mind taking a haircut on one property to gain an advantage on another.

So, what does this imply for the broader economy? And what does this mean for the baby boomer generation that believes that their real estate house/cottage is their nest egg for their retirement?

You still have to live somewhere....and you can't eat gypsum board for dinner.

[August1991]

Housing valuations are inflated; assessed value and closing prices are readily available online from government tax records. There is no mystery.

B_C, you state all of this as one who has never signed a mortgage or owned a house. Even if you live in the basement of your mother's home, you might want to think about resale value.

Don't be so flippant. It's real money to real people and unless you've seen it, you don't really understand.

[bush_cheney2004]

B_C, you state all of this as one who has never signed a mortgage or owned a house. Even if you live in the basement of your mother's home, you might want to think about resale value.

Don't be so flippant. It's real money to real people and unless you've seen it, you don't really understand.

That's where you are wrong....like unrealized paper gains on equities, it is not real money if its just your imagination. Real estate is not very complicated unless you want something for nothing.

Where were you when the prices were rising to stupid high levels? Didn't you have some smug judgements or lesson for us then? Or does the Enron alarm only work when greedy people lose their lunch?

I have purchased and sold several homes in my lifetime with no tears....so I will still be as flippant as I please.

Edited May 25, 2008 by bush_cheney2004

[August1991]

That's where you are wrong....like unrealized paper gains on equities, it is not real money if its just your imagination. Real estate is not very complicated unless you want something for nothing.

Complicated? Imagination? Paper gains?

We are talking about prices - the basic element of a market economy. Prices provide information. A falling house price is a baby boomer's worst nightmare of their retirement.

b_c, if you can't understand this in a human way, how about a macro way? What happens to the rest of us when a large generation fears that their savings won't take care of their retirement? (My guess is that payroll CPP contributions will increase to "balance" the pension budget.)

Edited May 25, 2008 by August1991

[bush_cheney2004]

Complicated? Imagination? Paper gains?

We are talking about prices - the basic element of a market economy. Prices provide information. A house price is a baby boomer's "imagination" of their retirement.

WTF? Anybody who is counting on their home equity as the sole source of retirement income besides social security deserves to eat cat food.

b_c, if you can't understand this in a human way, how about a macro way? What happens to the rest of us when a large generation fears that their savings won't take care of their retirement? (I fear payroll, social security taxes to "balance" the budget.)

Tough titty....old geezers have more wealth now than in any time in human history, and younger workers will bear the brunt of the burden in years ahead. Will they get to buy a house if "prices" do not reflect market value?

Sounds like you are worried....I'm not.

[August1991]

WTF? Anybody who is counting on their home equity as the sole source of retirement income besides social security deserves to eat cat food.

...

Tough titty....old geezers have more wealth now than in any time in human history, and younger workers will bear the brunt of the burden in years ahead. Will they get to buy a house if "prices" do not reflect market value?

They can vote and tax you and me.

Where do you think this idea of "balancing the federal budget" comes from? Do you know what the CPP contribution is now?

[bush_cheney2004]

They can vote and tax you and me.

Where do you think this idea of "balancing the federal budget" comes from? Do you know what the CPP contribution is now?

Hell no...I'm an ignorant American...dont'cha know!

But I learned long ago that government can only get the money from people who have it.

[Wild Bill]

Hell no...I'm an ignorant American...dont'cha know!

But I learned long ago that government can only get the money from people who have it.

Ah, that explains much!

Did you know that in Canada we can't deduct mortgage interest from our tax returns? It can make house "flipping" a bit less casual.

[Guest American Woman]

In the US, unsold homes have reached a two decade high:G&M

In Canada, house listings have reached a record high:The Gazette

Record listings can mean only one thing: many sellers believe their house is worth more than the market's truth. And many neighbours are counting the number of months that place down on the corner has been listed (what are they asking?) and discussing the closing price of that place across the street.

The housing market is sticky going down, and it's prone to unemployment or vacancies. No one wants to reduce their selling price/accept a lower wage and it takes several vacant/unemployed months before people realize that they just won't get the price they believe they deserve.

So, what does this imply for the broader economy? And what does this mean for the baby boomer generation that believes that their real estate house/cottage is their nest egg for their retirement?

If immigrants don't arrive to buy property, what will happen to house prices?

I have been hearing that the real estate boom in Canada is ending. It's the way of these things, really. There are ebbs and tides. Right now it's a buyer's market in the United States, so for people buying it's a good thing. For people selling, not so good. In a lot of instances, people are doing both-- they are in the market to buy, but they also have a house to sell.

I look around at all of the houses for sale and wonder who there is to buy all of them too, especially since people in the market for a house aren't just buying existing homes, some are building. Lower real estate prices is good news for people who otherwise wouldn't be able to afford to buy, though, such as young people who aren't finding as lucrative job markets as in the past after graduating from university. But people have to accept the fact that they just aren't going to get what they think they "deserve" for their houses, and settle on a price they can accept and live with so their house doesn't sit on the market forever. One also has to be careful when borrowing/planning around the 'value' of their home at any given time. In other words, one has to be conservative/realistic about the value because these things do tend to fluctuate.

Did you know that in Canada we can't deduct mortgage interest from our tax returns? It can make house "flipping" a bit less casual.

I'm not sure what you mean by that. What is "house 'flipping'" and how would being able to decuct mortgage interest from tax returns affect it? We get to "claim" mortgage interest" on our returns, not "deduct" it from what we owe the government, so we get a percentage of it back-- and that percentage depends on what tax bracket we are in. So we end up paying more than we get back, and mortgages involve closing costs too. So again, I'm not sure what you mean.

Edited May 25, 2008 by American Woman

[margrace]

Housing valuations are inflated; assessed value and closing prices are readily available online from government tax records. There is no mystery.

Not always....the quickest way to move a property is to price it below market. Right now is a buying opportunity and I won't mind taking a haircut on one property to gain an advantage on another.

You still have to live somewhere....and you can't eat gypsum board for dinner.

Have you seen the street people, or the hidden people who live in tents?

[Wilber]

Ah, that explains much!

Did you know that in Canada we can't deduct mortgage interest from our tax returns? It can make house "flipping" a bit less casual.

Unless it has changed since I was in the US, Americans also have to pay capital gains on any profit they have made on their residence when they sell, unless they buy one another of equal or greater value.

[Wild Bill]

I'm not sure what you mean by that. What is "house 'flipping'" and how would being able to decuct mortgage interest from tax returns affect it? We get to "claim" mortgage interest" on our returns, not "deduct" it from what we owe the government, so we get a percentage of it back-- and that percentage depends on what tax bracket we are in. So we end up paying more than we get back, and mortgages involve closing costs too. So again, I'm not sure what you mean.

House flipping is where you buy a home in an appreciating market. In a short period of time the home's market price is higher than your original purchase price. So you sell it to buy another home, pocketing the profit from the first as increased equity into your second, and so on.

As for mortgage interest, Canadians can't get a tax break on this in any way, shape or form, at least on their principal residence. You can make some claims if you borrow to buy a property for investment income, such as a house to rent out. On your own home you get no percentage on your mortgage interest at all.

[Guest American Woman]

Unless it has changed since I was in the US, Americans also have to pay capital gains on any profit they have made on their residence when they sell, unless they buy one another of equal or greater value.

In the past, you could sell your house and 'buy down' once without having to pay taxes on the capital gains, but that's changed. You have to own the house for at least two years, but Congress enacted a law which makes your primary resident exempt from the capital gains tax. According to the Taxpayer Relief Act of 1997, capital gains created from the sale of your primary residence all the way up to $250,000 are tax free. For married couples, the amount is $500,000. link

So primary residences would be exempt, but buying up real estate for profit wouldn't be.

Edited May 25, 2008 by American Woman

[Guest American Woman]

House flipping is where you buy a home in an appreciating market. In a short period of time the home's market price is higher than your original purchase price. So you sell it to buy another home, pocketing the profit from the first as increased equity into your second, and so on.

As for mortgage interest, Canadians can't get a tax break on this in any way, shape or form, at least on their principal residence. You can make some claims if you borrow to buy a property for investment income, such as a house to rent out. On your own home you get no percentage on your mortgage interest at all.

I'm not sure if we'd be able to claim mortgage interest on our taxes in a situation like you describe. But like I said, there's closing costs and real estate taxes too, so I'm not so sure it would be much of an 'incentive' even if we could.

I wonder why you can't deduct mortgage interest on your principal residence in Canada? Seems to me that would be the most logical deduction.

[Wild Bill]

I wonder why you can't deduct mortgage interest on your principal residence in Canada? Seems to me that would be the most logical deduction.

well, you have to understand that through most of our history we've been ruled by Liberal governments. The Liberal Party has always believed that increased taxation is a Canadian citizen's normal and rightful state.

Take every cliche uttered by your Rush Limbaugh when describing the Democrats, square it and that would be a good description of the Canadian Liberal Party.

[Michael Bluth]

Anybody who is counting on their home equity as the sole source of retirement income besides social security deserves to eat cat food.

A little harsh, but the sentiment is correct. Those people will have to downsize in their retirement years, but it's not the end of the world. Hopefully they don't get sucked into those terrible reverse mortgages.

Far too many people treat their houses like ATMs.

The stories of people here in Alberta who took second mortgages on their houses because the 'value' appreciated so much and are now stuck with more in total mortgage than their house is worth are growing more and more. A slight downturn in the economy out here and you'll see a rash of foreclosures.

Those are the people it's tough to feel sympathy for.

Edited May 25, 2008 by Michael Bluth

[Bryan]

I have been hearing that the real estate boom in Canada is ending.

They keep predicting it, but every time they do, the market surges again. Houses still routinely sell in less than a week around here, and there's almost always a bidding war. I really feel sorry for anyone trying to buy a house in Winnipeg right now, because they can hardly even guess as to how much they'll need to bid to get a given house. I know people who have lost out on several houses because the eventual selling price ended up being twice what the property was listed for. How do you plan for that?