Juggling Dynamite

The rapid cooldown in real estate threatens to worsen a global economic downturn and is emerging as a key variable for central bankers who want to tamp down inflation. Here is a direct video link.

Also, see The World’s Hottest Housing Markets Face a Painful Reset

In Australia and Canada — two of the world’s bubbliest markets — economists anticipate a notable crunch…

Variable-rate mortgages accounted for nearly 60% of all new [Canadian] home loans at the height of the country’s real estate frenzy earlier this year.

Of the roughly half a trillion Canadian dollars’ worth of variable mortgage debt outstanding, about a third have seen their monthly payments go up in line with the central bank’s benchmark rate, according to research from the National Bank of Canada. Combined with things like lines of credit and fixed-rate mortgages coming up for renewal, these rising interest payments could collectively shave 0.65% off Canadians’ collective disposable income over the next three years, the research shows.

Central banks, like the Bank of Canada and U.S. Federal Reserve, “have their head in the sand because they’re focused on fighting yesterday’s war,” according to David Rosenberg, founder and president of Rosenberg Research.

“All the things (commodities) that were producing the inflation that occupied our minds for the past a year and a half, they’re all unwinding in spectacular fashion as if these central banks have their head in the sand because they’re focused on fighting yesterday’s war,” Rosenberg said in an interview Thursday.

“I imagine a lot of it is because they are so ashamed and so embarrassed of having missed this mini inflation cycle that they’re trying to make up for by being unduly aggressive, just as these inflation indicators principally in the commodity markets are rolling over in significant way.” Here is a direct video link.

This segment offers a good overview of the global housing downturn. Rather than thinking of it as a housing “crash” though, realists can see it as an inevitable mean reversion cycle following a massive speculative bubble.

Home Prices across America are DROPPING FAST, according to New Data from Redfin. Metros like Austin, Dallas, San Jose, Denver, and Las Vegas have some of the biggest declines in median sale price over the last 3 months. In total, there are over 180 cities where home prices are declining…

Home prices in countries like Canada, Australia, and Sweden have declined significantly over the last 6 months. This would be the 3rd global housing crash of all time. The previous two occurred in 1929 and 2007. Global crashes are worse due to the contagion effect that occurs.

Looking at data from the last global housing crash – it becomes apparent that prices started declining in September 2006. A full two years before Lehman Brothers occurred. And 3 years before foreclosures peaked. Here is a direct video link.