Do any of you know of the economist David Rosenberg? Long-time readers of Boom2Bust.com know that Rosenberg, considered one of the best North American economists around, is one of our original “crash prophets” and called the current recession and crisis a long time before most of his colleagues. As a matter of fact, not only was Rosenberg correct about the recession, but his timing on the start of the downturn was only off by a few weeks. I wrote the following way back on November 12, 2007:

A runner-up in the October contest was chief North American economist David Rosenberg of Merrill Lynch. The Wall Street Journal is reporting in their MarketBeat Blog post today that Rosenberg is saying the U.S. economy may already be in a recession.

And here’s a post I dug up from July 17, 2008, which isn’t too far off from what some of his contemporaries are now warning about:

According to the Financial Post (Canada) from July 9, David Rosenberg, the chief North American economist at Merrill Lynch, is warning of the possibility of not one U.S. economic recession, but a series of them. The Post’s Jacqueline Thorpe wrote:

Rosenberg has consistently held one of the more pessimistic views on Wall Street, arguing the housing slump and credit crunch will exact a heavy toll on U.S. consumer spending. He believes the data will eventually show the recession started in January.

But he adds it’s not the peak-to-trough decline in real GDP that’s important but the duration. Trouble is, the duration could be Japanese-like (about a decade).

Just like Japan, he says a series of rolling recessions is possible for the next three to five years, making it extremely difficult to time the market. Japanese equities got trashed through the process. At the 1998 post-bubble lows, Japanese bank, construction, real estate and transport stocks were all down 80%, retail stocks were down 50%. The only place to hide was bonds, notes the bond bull.

Rosenberg told the Canadian publication:

We are nervous that we have ended up following in Japan’s footsteps due to the inept fiscal response to the problem. A temporary tax rebate from Uncle Sam to buy iPods tackles a real estate deflation and credit crunch as effectively as the LDP’s (Liberal Democratic Party) “solution” in the early 1990s to build bridges and pave river beds that nobody needed.

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So, what is Rosenberg, now chief economist and strategist at Toronto wealth management firm Gluskin Sheff, forecasting these days? From the CNBC website yesterday morning:

The stock market is still in danger of breaking through its March lows as the economy continues to struggle, economist David Rosenberg told CNBC.

An additional round of government stimulus is likely to have little more impact than “cushioning the blow” of unemployment that will “easily” break the post-World War II high of 10.8 percent in 1982, said Rosenberg, chief economist and strategist at Gluskin Sheff.

“Could we see a new low? Who’s to say that we couldn’t?” he said. “A lot’s going to depend on the economic outlook. I don’t think another fiscal package is going to save the day.”

Some of Rosenberg’s other points:

• The market is currently only half-way through a secular bear market that could last another nine years. “You’ve got to trade accordingly, because there’s going to be huge spasms and rallies along the way,” he said.
• Stocks have priced in an earnings level that probably won’t be achieved until 2012, posing more danger of a move lower.
• The gap between the so-called “U6″ unemployment rate, which entails virtually all jobless including part-time workers who want to work full-time, and the number the government releases is at its widest ever. That indicates that even when the outlook improves for companies they are likely to bring part-time workers to full-time status first before hiring new workers, which in itself indicates a protracted period of a high unemployment rate.
• Cutbacks at the state and local government levels as well as a massive reduction in household balance sheets pose further headwinds for the economy.

“There are secular changes taking place in the economy right now, and you really have to be braced for it,” he said.

http://www.boom2bust.com/2009/07/08/stock-bear-cycle-only-half-over-9-more-years-to-go/

posted here by Moishe Alexander, CFC Canadian Funding Corp CEO

The real estate market in Calgary has changed significantly in the past few months. We went from having an over-supply of homes where sellers waited endlessly for offers, to a brand new market where, in certain price ranges, multiple offers on the same home are becoming more and more common every day.

Here’s the latest News Release from the Calgary Real Estate Board…

Calgary, July 2, 2009 – The number of single family homes and condos sold in June in Calgary metro are both up from the same time a year ago.
MLS® sales activity of single family Calgary metro homes was 1,837 in the month of June 2009, showing an increase of 16 per cent from 1,584 sales in May 2009, according to figures released by the Calgary Real Estate Board (CREB®).
This is the sixth consecutive month home sales have increased in Calgary Metro. This was an increase of 28 per cent from June 2008, when single family home sales were 1,439. The number of condominium sales for the month of June 2009 was 738, an increase of 13 per cent from the 653 condominium transactions recorded in May 2009, and an increase of 33 per cent from June 2008, when 556 condominiums changed hands.

“This is the third consecutive month we are seeing our inventory return to a balanced market,” says Bonnie Wegerich, President of the Calgary Real Estate Board. “Our inventory turnover for single family homes and condos in metro Calgary is now just over two months. This is a remarkable shift from the nearly 11 months of inventory we saw in January of this year.”
“A rise in demand along with fewer listings has helped bring supply in balance with demand,” says Wegerich. “Affordable prices, low interest rates and pent-up demand continue to fuel this gradual rebound. Should this trend continue, I think we can confidently say the bottom of the market has come and gone before many buyers had a chance to notice.”

The average price of a single family Calgary metro home in June 2009 was $447,142, showing an increase of 2 per cent from May 2009, when the average price was $436,427, and showing a decrease of 6 per cent from June 2008, when the average price was $473,774. The average price of a Calgary metro condominium was $285,595 showing a 4 per cent increase from May 2009, when the average price was $275,212 and a decrease of 9 per cent over last year, when the average price was $315,042. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.

“It is not the buyer’s market we saw in January of this year. As our inventory trends lower, choice and selection will decrease. Nonetheless, there are still great opportunities out there for buyers,” says Wegerich.

“The good news is pricing remains relatively affordable,” says Wegerich. “We are not liable to see significant price gains in 2009, but more likely a gradual and steady improvement in home values.”

Single family Calgary metro new listings added for the month of June totaled 2,244, no change from May 2009 when 2,235 new listings were added, but showing a decrease of 19 per cent from June 2008, when 2,787 new listings came to the market. Calgary metro condominium new listings added in June 2009 were 927, down 7 per cent from May 2009, when the MLS® saw 998 condo listings coming to the market. This is a decrease of 25 per cent from June 2008, when condominium listings were 1,234.

The median price of a single family Calgary metro home in June 2009 was $399,000, showing an increase of 2 per cent from May 2009, when the median price was $390,000, and down 2 per cent from June 2008, when the median price was $408,000. The median price of a condominium in June 2009 was $265,500, up 4 per cent from May 2009, when the median was $255,000, and down 6 per cent from June 2008, when the median price was $282,000. All Calgary metro MLS® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median price.

“We are encouraged by this upward trend in sales but there are still some economic fundamentals needed before we will see a full recovery in the housing market,” added Wegerich. “A rebound in employment and oil prices will have a significant impact on the housing market in Calgary-we expect this won’t fully take effect until the beginning of 2010.”

http://yourhomeincalgary.blogspot.com/2009/07/its-july-2009-and-weather-is-fine-so-is.html

viewed by Moishe Alexander, canadian funding corp CEO

Royal LePage survey – Vancouver’s real estate market is still witnessing a course correction, as prices continued to decrease in the first quarter of 2009, according to Royal LePage’s quarterly House Price Survey. The average price for homes on Vancouver’s West side and East side, North Vancouver and West Vancouver saw an average year-over-year decline of 12%.

West Vancouver home prices witnessed the largest change, seeing an overall decline of 16.3% year-over-year across key housing types surveyed, however prices stabilized in the first quarter of 2009. Average prices for bungalows dropped 16.2% year-over-year to $880,000, standard two-storey homes dropped 17% to $930,000, and standard condominium prices declined 15.8% to $400,000.

“Prices are definitely down from a year ago,” said Bill Binnie, President of Royal LePage Northshore in North Vancouver. “But prices are starting to stabilize in the middle price range.” Binnie said first time home buyers are accounting for the bulk of sales activity in Greater Vancouver, although home sales are beginning to pick up in the high-end housing market.

In North Vancouver, prices for standard two-storey homes are stabilizing, with the average price of $660,000 unchanged between the fourth quarter of 2008 and first quarter of this year. Standard condominium prices have also stabilized, up 3.6% from last quarter to $290,000. However, prices for key housing types in North Vancouver are down a year-over-year average of 14.2%.

Homes priced according to recent sales in desirable areas are selling quickly, Binnie said. In the first quarter of 2009, the West side of Vancouver saw an increasing number of million dollar home sales. “This increase in activity gives us a parameter we can use to analyze the market,” Binnie said. “Now we have a sense of what people are willing to pay. In January, there were very few sales – so we didn’t have a frame of reference.”

Binnie believes the time is right for buyers looking to move up into a more expensive property. “If you’re moving up, I’ve got great news for you. The spread between the property you want to buy today and your current home is a lot smaller than it would have been a year ago. Secondly it’s going to cost you a lot less to carry a mortgage because of the low interest rates.”

Meanwhile, Victoria home values proved to be somewhat more resilient, with an average year-over-year depreciation of 4.6%. Bungalows in the capital city bucked the trend by increasing both annually and within the first quarter of 2009. Overall, Victoria homes in key segments saw average first quarter price gains of 0.5%.

Carol Geurts, Managing Broker for Royal LePage Coast Capital Realty, believes Victoria is weathering the economic storm better than other parts of the country. “We still have a vibrant local housing market that’s better than in most other cities,” she said. “We’re seeing a lot more activity than last fall. There’s optimism in the market, and that translates to transactions.”

Inventory in Victoria is up, particularly under the $500,000 price point. “The supply of inventory has continued its upward climb early this year, so buyers will have lots of choice this spring. Low interest rates and the departure of winter weather mean a return of consumer confidence.”

While prices in other housing segments have increased this year, Geurts has noticed a decrease in condominium prices. “An interesting trend is that many new condo units are being reconfigured to target first time buyers. We’re also seeing things like cash bonuses and auctions for buyers, so sellers are getting creative.”

Victoria is still seeing multiple offers for homes, which is unusual in a buyer’s market, Geurts said.

Royal LePage’s quarterly House Price Survey shows the following annual change of prices for key housing segments in select Vancouver markets:

————————
National

Consistent with current economic trends, Canadian residential real estate prices declined during the first quarter, according to a quarterly House Price Survey released today by Royal LePage Real Estate Services Ltd. As the market correction unfolds, year-over-year home prices were lower, as was expected. Increased buyer activity at the end of March suggests that spring will bring its typical increase in unit sales activity as buyers target summer moves.

Regional disparities in quarterly housing prices showed markets in Atlantic Canada outperforming other areas of the country as hardy local economies spurred house price growth across the three housing types surveyed.

Markets in central Quebec and eastern Ontario held steady with areas of modest growth and limited declines. In the balance of Ontario, and in particular the Greater Toronto Area, prices retreated from the record levels set in the first quarter of 2008, with most trading areas showing mid to low single digit declines. With the exception of Manitoba, western provinces saw significant changes as the rapid run-up in prices experienced earlier in the decade gave way to double-digit declines in most regions. As market corrections in B.C. and Alberta were underway well ahead of the full impact of the current economic crisis, it is suggested that these areas may be first in Canada to stabilize.

“We expected a sharper decline in house prices across Canadian markets during the first quarter,” said Phil Soper, president and chief executive officer, Royal LePage Real Estate Services Ltd. With economic hardship dominating our global consciousness, it was predictable that dwindling consumer confidence would continue to drive prices lower. But markets were relatively resilient during the period. Soper continued, “Canadians in most regions should not expect the prices of their homes to begin appreciating again until the overall economy begins to stabilize, likely in the first half of 2010.”

The report shows that the average price of a two storey home in Canada declined 6.5% to $379,636 compared to the same quarter last year. In Vancouver, the average price declined 12.6% year-over-year to $828,750 while in St. John’s prices climbed 15.6% to $265,000. With consumer confidence bolstered following investments by Vale Inco NL and Hebron, Soper commented: “Using house price change as a gauge, Newfoundland is Canada’s sole remaining seller’s market.”

Moderate growth occurred for detached bungalows in Montreal (up 2%) and Ottawa (up 1.9%), while Toronto saw a decline of 6.3% compared to the same period in 2008. Prices in the prairies and in western cities declined with the average price for a detached bungalow down 8.1% in Saskatoon and 11.2% in Edmonton.

The nation’s condominium market waned with the average price of a standard unit dropping 3.4% to $232,877 compared to $241,152 in the first quarter of 2008. Calgary saw a 12.8% drop in average price of condominiums, but declines were less severe in Vancouver (down 5.3%) and in Toronto (down 3.1%). “Condominiums are generally the most affordable housing option, especially in urban centres,” Soper said. “With record low lending rates and new government initiatives aimed at encouraging first-time buyers to enter the market, ownership at the entry level is becoming increasingly accessible.”

Noting recent global efforts to address the economic crisis, including the coordinated response from the world’s leading economies coming out of the G20 meeting and stimulus package announcements at home and in the United States, as well as what appears to be the beginning of equity market recovery, Soper commented, “These glimmers of economic hope are coinciding with a time of year that typically brings renewed interest in the housing market.

Traditional spring trends – increases in open house attendance, calls to brokers and viewing appointments – tell us that potential buyers are stepping off the sidelines and an increase in purchase activity is likely to follow.”

As described by Moishe Alexander, CFC CEO