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Futures Market Predicting Troubled Assets Relief Act Passed Quickly September 24, 2008

Posted by DustinRJay in Uncategorized.
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The Intrade futures market is currently predicting that there is 73% chance of approval for $700 billion US government bailout (Troubled Assets Relief Act) being approved before the end of the September.  Passage of this act will help to reduce risk spreads and LIBOR rates and is seen as essential to preventing systemic risk to the American financial system.  In addition, passage of this plan should make it easier for American banks to lend and mitigate damage to the US housing market.  Most analysts expect this bill to be approved quickly barring any political interference.

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Calgary Misery Index – A Reason For Optimism in The Housing Market September 23, 2008

Posted by DustinRJay in Calgary real estate, inflation.
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The misery index is a commonly used as a metric for stagflation.  Stagflation is a combination of high unemployment and high inflation.  High inflation and low unemployment rates created sharply rising house prices in the Calgary real estate market during the period from 1973 – 1983.  In 1983, rapidly rising  unemployment caused inflation levels to cool significantly, and house prices to fall. Again in 1990, upward trending unemployment rates caused house prices to stay flat for roughly 8 years.

In general, the following conditions are supportive of real estate growth:

  • Low unemployment
  • High Inflation

Today, we have near record low levels of unemployment (3.6%) and relatively high inflation (4.3%) and therefore provides two reasons for conservative optimism in the Calgary real estate market.

The following graph illustrates the relationship between inflation and unemployment to house prices:

Data Sources: CREB, Bob Truman – First Place Realty, Statistics Canada – Calgary Inflation, Alberta Unemployment Rate