What The “Recession” Really Is … And What It Means For Your Real Estate Market Part 3

February 22, 2010

Kalles also notes the hysteria during this boom:

Kalles:  My brother bought a house at $2.8 million, $700,000 over asking …  (The house had) seven offers.

Then the doom and gloom pundits threw their hats into the ring.  The Post asked the group:

Post: Is the real estate market starting to, if it hasn’t already, catch up to the reality of what’s going on in the global economy?

Sherry Cooper, Bank of Montreal’s chief economist, replied:

Cooper: I think that many Canadians are still in denial and that there’s a lot of la-la land still around.  There are whole swaths of the city’s upper-income people that have lost, as they say, 50%, even 60% of their wealth and their jobs are at risk … The last thing they’re going to do is make an important residence decision.

Garth Turner: I think Sherry’s absolutely right.  If you look at what’s happened in the financial services sector, that’s likely to happen again {in the real estate market}.

Cooper: That was the next point I wanted to make: that it isn’t over.  It’s going to be worse before it gets better.

I think the only people in denial are the fear mongering pundits like these.  And they’re not talking about reality, they’re talking about themselves: who they are, the people they know and the types of people the banks do business with.  Many fairly well-to-do corporate types like Cooper would have lost a lot of their middle class investments in their bank’s offerings or their bank’s stock.  That’s the banks’ fault, not the economy’s fault.

I want to tell you the real reasons behind our so-called recession.  The core reason is the US financial institutions (and some Canadian ones) got too greedy and went way overboard in their lending.  Their greed has been evident in the past 5 years by their financing millions of Americans to live way beyond their means.  They gave millions of people from all income levels mortgages on homes they couldn’t afford.  They gave them credit cards with high limits (often without any income verification) to outfit those houses with luxuries and live lifestyles they couldn’t afford either.  These US financial institutions were betting heavy on the US Government to bail them out if things went wrong as happened with the US Savings & Loan scandal in the 1980’s.  History repeated itself.

Filed under: Inspiration

Tags: Big City Broker, Brad J Lamb, Brad Lamb, carriage trade, depression, doom and gloom, economy, Elise Kalles, Garth Turner, Harry Stinson, Harvey Kalles, Mike Eppel, real estate market, recession, Richard Wengle, Sherry Cooper