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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russet who wrote (6107)	5/16/2002 2:20:00 AM
From: macavity	Read Replies (1) \| Respond to of 33421

There is a similar situation in the UK. -Banks are giving 90% and 95% mortgages there as well. -Between 25% and 33% of new mortgages are for 'Buy-to-Let'. -The Banks are also fixing (upto 3 yrs) mortgage rates (they are usually floating in the UK as opposed to fixed as in the US) at rates that cannot be seen at any point of the yield curve c.f. 3% GDP. In short 'everyone wants in' and the banks are only too pleased to lend. In UK property represents a far larger proportion of net worth than anywhere else. (Island nation mentality - I suppose). Historically housing usually has topped anything from 20 -30 mths after stocks, so I guess we are in that region now. Yup, the bubble has moved, but then again it always does. I am not sure where the next one will be, but I reckon we may get a good multi-year rally in commodities. I am not sure that this will turn into a bubble due to the amount of protectionism in the air at the moment, but you never know. -macavity (wishing I had not sold my gold shares in april)

To: russet who wrote (6107)	5/16/2002 7:52:15 AM
From: Enigma	Respond to of 33421

Yes I've been hearing stories about the Toronto market with buyers paying $100,000 over the asking price, sometimes $200,000, but not sure if they have renting in mind.

To: russet who wrote (6107)	5/16/2002 8:46:50 AM
From: Terry Whitman	Read Replies (1) \| Respond to of 33421

Great comments. These people buying into rentals are probably making alot of the same mistakes the 'bubble-onians did'. They're investing in something they don't understand, because it looks good at the moment. Greed driven, in other words. They think they're investing, but it turns out they're just speculating. I looked at an apartment building a couple weeks ago. It seemed priced a bit high for the area- and after inquiring about the current rental income, I found that it would take 11 or 12 years of the gross rental receipts to pay it off. The rule of thumb used to be 6 to 7x gross annual recpts (on an 11 mo. basis). I think it has creeped up a bit in the past decade or so- but I wouldn't ever pay more than 10x gross. Would only go that high if I thought the area was growing- otherwise, I'd try to stay in the 6-8x range. Regards, TW

To: russet who wrote (6107)	5/16/2002 9:23:42 AM
From: Cogito Ergo Sum	Respond to of 33421

Hi russet, The Toronto bubble, hyperbole or early days ? I went through the last one very profitably :o) This one is not the same and I have serious doubts (for the nonce) about the popping effect greatly influencing the overall economic situation here. I live now out east on the Toronto side of the Pickering border. (ex: Thornhill dweller). I bought my current home for 220K. It is probably the lower end of the midrange for my area. The folks I bought it from paid 320K about 8 months after the last bubble peak (EDIT my timing may be a bit off there). My home is about 250K market value now, 7 years later, a long way from the last bubble peak. While it is certainly true that like the last bubble you bid over the ask as a rule, it is not the rule like last time. My point is that the bubble is not epidemic in Toronto and outlying areas like the last time ( at least not yet) but constrained to specific areas without a general spillover. Interestingly my next door neighbour is a home appraiser. I questioned him specifically on this seeming anomaly. He told me that this was indeed the case that he was seeing, very localised bubbles especially in the higher (lower volume) high end homes. Maybe it's moving to hard assets and / or cocooning for those more affluent ? I know 'cottage' prices in the traditional getaway areas are definitely sky high though. More anecdotal evidence: One of my customers is a home builder of lower to midrange homes, in the burbs. They are doing a booming business BUT not seeing bubble increase in prices year over year. Of course we may be just at the point where it starts to go parabolic and raises all boats and is not anywhere near popping yet. Frankly if my home goes back to last bubble valuations I'd be hard pressed not to sell and relocate for a few years. (My home equity is high). On the productivity / unemployment issue: Message 17465855 As usual all FWIW, MHO and I may be all wet.... regards Kastel

To: russet who wrote (6107)	6/3/2002 10:29:50 PM
From: Cogito Ergo Sum	Read Replies (2) \| Respond to of 33421

Hi russet, re: As usual all FWIW, MHO and I may be all wet.... from Message 17475523 I may be getting damp... I was speaking to my appraiser neighbour again. Recently a house down the road (much bigger than mine :o) went for 550K) and has since 'floated all the boats' in the neighbourhood. My property and his (a mirror image of mine) are now floating just about 20K under last bubble prices. I guess the spillover is occurring after all and pretty fast to boot. regards Kastel