Zillow: No Respite From Housing Recession in First Quarter

Discussion in 'Fugu's Business of Hockey Forum' started by knorthern knight, May 9, 2011.

  1. knorthern knight

    knorthern knight Registered User

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    For full article, see http://www.zillow.com/blog/research/2011/05/08/no-respite-from-housing-recession-in-first-quarter/

    The business of hockey requires discretionary spending by fans on hockey tickets, parking, concessions, sweaters, etc. That type of discretionary spending requires some consumer confidence. Local house prices are one major factor in consumer confidence. And that factor is negative right now. The above URL points to an article on the Zillow real estate website. In addition to the article, there are some graphs/charts/tables/etc. One nugget in the numbers is the Year-Over-Year percentage change in housing prices. I've selected a subset that includes NHL cities. You'll notice that the numbers are all negative, i.e. house prices have declined March 2010 to March 2011. Here they are...
    • New York -8.2
    • Los Angeles -7.6
    • Chicago -13.8
    • Dallas-Fort Worth -6.9
    • Philadelphia -10.3
    • Miami-Fort Lauderdale -12.8
    • Washington -7
    • Atlanta -17.3
    • Detroit -17.3
    • Boston -5.3
    • Phoenix -11.2
    • Minneapolis-St Paul -15.1
    • St Louis -9.6
    • Tampa -10.9
    • Denver -9.6
    • Pittsburgh -0.1
    • San Jose -5.9
    • Columbus -11.9
    • Nashville -7.3
    • Raleigh -7.3
    The decline is a symptom of a stalling/falling economy. This is a triple-whammy, cutting into the ability of...
    • fans to buy tickets and stuff
    • businesses to buy luxury suites and spend money on advertising and sponsorships
    • team owners to absorb heavy losses
    As noted in the first paragraph of the story, the decline is accelerating, and is at the same level as in the dark days of 2008. This is scarey. Unless some economic miracle happens, I expect several relocations, if not outright contractions, in the NHL (and possibly other sports) in the next 12 months. Depending on how bad things get, we may even see one or two foldings/relocations during the course of the season, unless the NHL bites the bullet and cleans house now. The bad days for the US economy are probably the last best hope for QC and Winnipeg, maybe even Hamilton.

    I'm OK with including other sports MLB/NFL/NBA/CFL/MLS/etc in the discussion if the moderators don't mind. The NFL and NBA may even prefer to force lockouts this year to minimize their losses. Maybe I'm just cynical.
     
  2. Killion

    Killion Registered User

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    Wow. Those numbers are staggering. I hadnt looked for a couple of years.
     
  3. htpwn

    htpwn Registered User

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    The housing market never crashed in Canada, in fact it blossomed in some parts. Foreign investors turned away from New York and Chicago, which helped fuel the building booms in Toronto and Vancouver.

    I'm not sure the CFL or Canadian franchises in any league will suffer unless the US goes through a double dip recession.
     
  4. sh724

    sh724 Registered User

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    Thats because Canada didnt have the fair housing act and unregulated banks who could write loans to anybody no matter what their credit was and sell the papers to other banks dumb enough to buy them.
     
  5. Dado

    Dado Guest

    There is a recent paper out of the Philadelphia Fed showing the real return of US ownership over the past 35 years has actually been negative. Interesting read, that.

    Speaker Boehner a few hours ago opened the door to the possibility of the US defaulting on it's sovereign debt. If he's not just doing Congress Critter posturing for the debt ceiling debate, that would have an incredible effect on discretionary spending.

    We need to find a big whack of cheap oil, fast...
     
  6. OthmarAmmann

    OthmarAmmann Omnishambles

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    You think the blossoming might have to do with extremely low mortgage rates? The CMHC isn't tightening up underwriting standards for no reason. Almost no residential mortgage in Canada has a term greater than 5 years. If mortgage rates were to spike 700 bps over a short period of time (don't say it can't happen) Canada is in a world of hurt.

    Fair housing act? The fair housing act had nothing to do with the explosion in corporate debt. The LBO boom of the last decade was bigger than in the 80s. Similarly the fair housing act had nothing to do with the dozens of pre-approved credit card offers that stuffed my mailbox every week.
     
  7. BB79

    BB79 Registered User

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    I hear Winnipeg's housing market is a lot better than Phoenix's...eat that for lunch, Bryzgalov!
     
  8. Dado

    Dado Guest

    Vancouver in particular would be completely screwed.

    It's been so long since we've had mortgage markets unencumbered by gov't subsidies either direct or indirect that people forget what a true "market rate" mortgage looks like - 50% down, 5 year interest only with a balloon payment for the entire loan amount at the end of the 5 years.
     
  9. htpwn

    htpwn Registered User

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    Probably in part, but in Toronto's case, I don't think you can isolate one lone reason why a city goes on a building spree of this scale. It has been going on since 2006 and as evidenced by the last three days (proposals for 3 towers reaching 58 stories in height), it is still going strong.
     
    Last edited: May 10, 2011
  10. OthmarAmmann

    OthmarAmmann Omnishambles

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    I own some Canadian real estate, but your comments about Toronto are making me consider taking money off the table.
     
  11. htpwn

    htpwn Registered User

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    :laugh: It just seems like its asking for a crash, but you know what? People have been saying "it cannot keep going, its going to crash" for 3 years now.

    I'm not exactly very knowledgeable on the subject (read: do your own research, don't take my word for it), but based on some articles I've read, experts are split. Some say that because of the Greenbelt legislation, not as many homes are being built, thus high rises are making up the difference. Others argue foreign investors, mainly from China and the Middle East, are buoying the boom.

    It seems no one really knows where the market is going to go. I've read some people saying there is going to be an inevitable crash. I've also read that despite the boom, due to immigration and other factors, we need to build more.

    It should be noted that condominiums are not the only ones that have been built during this time although some of the most prominent projects are residential (Ex. Aura/72 stories, One Bloor/65 stories). Three major luxury hotel brands set up shop in Toronto within the last five years (Ritz Carlton, Trump International, and Shrangri-la), along with Four Seasons building its flagship hotel. Several office projects have also been built, including the 51 storey Bay-Adelaide Centre and the 42 storey RBC Centre.
     
    Last edited: May 10, 2011

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