I’ve heard many times that America “learned its lesson” from the real estate breakdown in 2008 and won’t repeat those mistakes again. It’s quite possible that this conclusion was completely wrong. In any case, whatever is happening down there will not miss Canada this time around.
The layoffs at Opendoor will … come in the wake of a sudden shift in prices that has forced the company (Nasdaq: OPEN) to sell homes for less than it paid for them.
Opendoor, which went public in December 2020, lost money on 42% of its transactions in August, and it warned investors that it expected to lose as much as $175 million in adjusted earnings before interest, taxes, depreciation and amortization in the third quarter.
Wonder how much money the executives at Opendoor are getting paid.
I bet there’s really big bonuses for ‘guiding the company through difficult times’.
Canada actually went in the opposite direction. We’ve relied on artificially low rates and residential real estate in 2 markets to keep a fragile economy afloat. And now the bill has to be paid.
The critical thing common to the crash of 2008 and the 2022 real estate collapse is Democrats meddling with economic systems they’re too stupid to comprehend. In 2008 Barney Frank and Bill Clinton, and now Joe (who knew you could destroy an economy this quickly) Biden.
First: Dodd and Frank passed banking regulations MANDATING mortgage loans to poor (read: black) people regardless of their ability to pay. Then, when that all blew up in our faces, they converted the college loan system into a young adult welfare system. Then, when that FAILED they defunded the police facilitating smash and grab looting. Then, an feeble old, senile, dementia-ridden POTUS attempted to forgive those welfare, err college loans .
Yeah … the Demoncraps have been consistently trying to create Capitalism escape hatches for BIPOC’s and lazy Americans for decades. Trouble is … economics don’t lie. You either WORK and EARN your way through life … or you “work” for the government. Even when the Dem’s have stolen their last election, and completely destroyed the American economy … the same economic realities will emerge in the black market, barter, system that replaces it. Economics is human reality … it cannot be fooled with. Because economics = basic human survival, and we humans will do what’s needed to survive.
Libs 500,000 immigrants per year artificially increases housing demand.
I read that too. Goodbye old Canada. I guess that it has been gone for a while, though. I just have buried my head in the sand.
A buying opportunity for Blackrock.
Good point Burton – perhaps housing has been just a bit too resiliant in the face of interest rate increases. Solution? Jack em up even higher and faster. You will live in a pod and like it.
Exactly.
More like this was created just for Blackrock and Vanguard to scoop up properties to rent out later.
The Great Reset continues to roll on.
Blackrock was one of it’s ‘lead’ investors
And so was the tax funded HOOPP … the Health Care of Ontario Pension Plan for Ontario’s nurses, docs, Multi-millionaire Administrators
https://www.crunchbase.com/organization/opendoor-2/company_financials
Learn their lesson this time
vs
It’s different this time.
It’s different this time is the chosen view — every time.
Don’t know about Americans but I know Canadians do not learn. Glaring example: PM Scumbag was elected 3 times in a row. He’s clueless, he’s a liar and a hypocrite, a narcissist and a petty little dictator, did I mention zero-character/scumbag? Still, he was elected PM 3 times. I know, excuses, deflection (more people didn’t vote than vote, it wasn’t me, it was with the help of media, NDP etc) still the fact remains: a complete and total idiot with zero character was elected 3 times PM.
Don’t underestimate the foe.
A lying, shameless, hypocrite who manages to maintain a cowered cabinet and fearful NDP.
DanC, Mike,, Justin did not get to where he is only due to the efforts of the amoeba-brained. China helped.
People in this country will lose everything and then off themselves and their families.
Justin won’t care because he still gets his pension.
The Romanians had the right idea and we all know it.
The assorted socialists/fascists and other such ‘ists don’t need to learn any lessons on anything, they already know things, everything that needs to be known.
They of course, don’t know what they don’t know, so that will make them immune to the real world.
Am I supposed to be upset that corporations buying up every available house to re-sell at a large profit when none were left available on the open market are losing money?
They and their investors need to consider themselves lucky that they are not being dragged into the streets and used as halloween decorations for the lamp posts.
Canada may well take an economic beating from falling property prices, but I can’t see it being anywhere near as bad as the financial crisis of 2007-2008.
First, low-down-payment mortgages are CMHC insured. This might mean the government has to print money or run up debt should there be a run on claims, but it also means that corporate banks are not greatly exposed to risk.
Second, the subprime mortgage market in Canada is quite small — about 5% of the total market. In 2007, it was about a third of the U.S. market.
The banks may be buffered by CHMC insurance, but property owners could take a beating when their payments jump under their variable rate mortgage or the term is up on their fixed rate mortgages.
If interest rates double what happens to payments? Up 80 or 90% if early on in a 25 year amortization mortgage?
Since most people buy the most expensive house they can handle payments for they’ll be in trouble.
Prices tend to drop when interest rates go up so now not only can’t they manage the payments they’re underwater and can’t sell their way out.
A world of hurt.
Government bailouts requiring the borrowing of even larger sums than were borrowed during the pandemic will be a problem all on its own. The bailouts just kick the can down the road. As government debt service costs soar, that can gets pretty beat up.
Follow Ron Butler on Twitter for excellent info on the state of the RE market with particular emphasis on how HELOCs are essentially performing the role of sub-prime mortgages.
Guess who has two thumbs and a nice profitable put on OpenDoor that expires tomorrow? They just posted a bigger loss thane expected.