Tuesday, November 18, 2008

This And That

Houses are still homes - "Falling home prices can actually result in positive change. For one, people will be less inclined to borrow against the equity in their homes to pay for things that don't appreciate in value -- and that they don't really need -- such as vacations or home renovations. Too many people, when their equity was growing faster than a properly pruned hydrangea, treated their homes like shingle-clad credit cards.

Home buyers will also, one imagines, be more reluctant to purchase houses they can't really afford. In recent years, many people worried little about buying well beyond their means because they believed home prices could only go up. A homeowner who lost a job or experienced some other financial calamity could always sell and reap a tidy profit. Why worry? But now, with home sales falling alongside prices, we now know that no plan is free of risk.

Another benefit to a more rational housing market is that people learn to diversify their investments. It is not uncommon for homeowners to have the vast majority of their net worth wrapped up in their houses. But buying a big house is an inadequate retirement plan. After accounting for expenses -- property taxes, insurance, repairs, renovations -- it becomes clear that a house, while a sensible investment, should not be one's only investment."

No, a house isn't an investment unless you have planned for it to be. It's true many people use their home equity to buy depreciating goods then complain when markets fluctuate (as they do) and they are left with huge mortgages. Buying an investment property and using your home as a credit card are two entirely different things.

Market worries take whack at your wallet - " Frugality is the new black. A financial meltdown has sent markets and consumer confidence sliding.

An October report from the Conference Board of Canada ranks faith in the economy at its lowest level in more than 25 years.

Even the once-ravenous shopping appetite of Albertans is shrinking, with retail sales dropping about 18 per cent from August 2006 to August 2008.

Alberta is the only province where retail sales in August fell from the year before, Statistics Canada says.

Sales here remained below year-ago levels for the fourth straight month as retailers head into the crucial holiday season.

Some economic observers say Albertans are reacting to bleak headlines about troubles elsewhere, not to hard times at home. Locally, at least, they think the crisis is mostly in our heads.

"The pendulum tends to swing to the fear side, and we're right at the extreme end of fear right now," Canadian Western Bank president Larry Pollock said."

Alberta is a financial island in Canada. The province is strong economically and there is a lot of demand in the real estate market. However seeing paper assest drop will makes consumers wary of spending freely.

Condos going ahead More private capital being used than borrowed - "The last few weeks have seen condo projects in Calgary, Kelowna and Canmore grind to a halt. But developers behind some of Edmonton's most high-profile projects insist it's business as usual.

"We're building those first two phases," "I think the fundamentals in Alberta haven't changed. I think we're better off than the rest of the world so we haven't noticed even in our Calgary projects any cancellation of deals." George Schluessel, CEO of Procura Real Estate Services."

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