What The “Recession” Really Is … And What It Means For Your Real Estate Market Part 5

February 24, 2010

The fallout was the 1990-1991 recession and a bleak period for the real estate business.  In fact, between 1986 when the boom peaked and 1991, the number of new homes constructed per year dropped from 1.8 million to 1 million, which was at the time the lowest rate since World War II.

Fast forward to recent years.  Enter the Bush Administration in 2001.  More than ever, with Bush as president (and VP Dick Cheney for that matter) the line between business people and politicians become ever more blurry.  The US financial institutions looked back and remembered what Uncle Sam had done for the S&Ls in the 1980’s with the last Republican president.  With someone like Bush in office, the US financial institutions decided it was high time to go on another lending spree.  But they bet even heavier on getting bailed out than the S&Ls did because Bush and Cheney are money people too.  

It was a good gamble: surely Dubya would be there for them whenever things went wrong.  And most certainly the Bush administration did all it could to bail these financial institutions out.  But many of these banks simply went too far, many beyond the point from which even the US government could help them.  No one ever dreamed that many of these banks would actually go out of business.

So the bottom line is this: the US banks are largely the ones who have suffered in the past few years.  Considering banks are so important to the economy, I believe their woes have been almost single handedly been responsible for the recession. So naturally people like Sherry Cooper from Bank of Montreal and those who have invested in banks (whether it be in bank stocks or the other ‘safe’, low return investments banks offer) would have suffered along with them.

So what does this all have to do with the rest of the economy?  Not nearly as much as the media wants you to believe!

Let’s get back to our discussion group.  The Post then asked the group:

Post: Then let’s talk about timing.  Imagine your son wants to buy a condo downtown.  Should he buy now or wait?  And if it’s to wait, for how long?

Eppel: I would say to wait at this stage.  There are just still too many unknowns. Every morning you wake up and the question is: Have we reached bottom?  Under these circumstances, you can afford to wait and let things settle down a little bit.

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