Oct. 11 Stats Update
If you could ask the Real Estate Board of Greater Vancouver anything, what would it be?
If you could tell the REBGV anything about social media marketing, what would it be?
Let me know asap.
Meanwhile, the numbers – the market remains strong. Slowing,perhaps, but still strong. ‘Nuff said.
Inventory for REBGV and FVREB attached and detached was 19,090, of which 5,612, or 29.4%, were over 90s. For the REBGV the numbers were 12,130, 3,415 and 28.15%. For the FVREB the numbers were 6,960, 2,197 and 31.57%.
REBGV detached and attached numbers for last week were 1,421 new listings, 441 price changes, and 937 sales for a sell/list of 65.94%.
12,130/(800*4.25) = 3.04 MOI.
FVREB detached and attached numbers for last week were 679 new listings, 297 price changes, and 329 sales for a sell/list of 48.45%.
6,960/(329 *4.25)= 4.98 MOI.
Combined detached and attached numbers for last week were 2,100 new listings, 738 price changes, and 1,266 sales. Sell/list was 60.29%. 19,090/(1,266*4.25) = 3.55 MOI.
First chart is REBGV, second is the Valley, third is combined.
Rob’s Report Generator
Data for File: SalesOct112009REBGV.csv
| All Properties | |||||
|---|---|---|---|---|---|
| Sales | Average List Price of Sales | Average Sales Price | Difference ($) | Difference (%) | DOM |
| 937 | $629,961.15 | $615,864.75 | -$14,096.39 | -1.67% | 46 |
| Attached Properties | |||||
| Sales | Average List Price of Sales | Average Sales Price | Difference ($) | Difference (%) | DOM |
| 561 | $458,425.24 | $449,517.06 | -$8,908.18 | -1.55% | 41 |
| Detached Properties | |||||
| Sales | Average List Price of Sales | Average Sales Price | Difference ($) | Difference (%) | DOM |
| 364 | $895,758.89 | $875,587.65 | -$20,171.24 | -1.55% | 51 |
Data for File: SalesOct112009FVREB.csv
| All Properties | |||||
|---|---|---|---|---|---|
| Sales | Average List Price of Sales | Average Sales Price | Difference ($) | Difference (%) | DOM |
| 329 | $442,161.83 | $429,354.03 | -$12,807.80 | -2.66% | 53 |
| Attached Properties | |||||
| Sales | Average List Price of Sales | Average Sales Price | Difference ($) | Difference (%) | DOM |
| 131 | $296,100.22 | $288,425.95 | -$7,674.27 | -2.67% | 49 |
| Detached Properties | |||||
| Sales | Average List Price of Sales | Average Sales Price | Difference ($) | Difference (%) | DOM |
| 187 | $546,893.78 | $531,078.48 | -$15,815.29 | -2.48% | 55 |
Data for File: SalesOct112009REBGVFVREB.csv
| All Properties | |||||
|---|---|---|---|---|---|
| Sales | Average List Price of Sales | Average Sales Price | Difference ($) | Difference (%) | DOM |
| 1266 | $581,157.06 | $567,395.54 | -$13,761.52 | -1.93% | 48 |
| Attached Properties | |||||
| Sales | Average List Price of Sales | Average Sales Price | Difference ($) | Difference (%) | DOM |
| 692 | $427,696.08 | $419,021.49 | -$8,674.59 | -1.76% | 42 |
| Detached Properties | |||||
| Sales | Average List Price of Sales | Average Sales Price | Difference ($) | Difference (%) | DOM |
| 551 | $777,360.02 | $758,667.12 | -$18,692.91 | -1.86% | 52 |
185 comments
Here is one that blueskies and roberts creek should like.
World’s Best Town…………… Gibsons!!!
http://www.cbc.ca/canada/british-columbia/story/2009/10/13/bc-gibsons-liveable-award.html
Rob,
Yes, I agree (bases on all the new For Sale signs in now seeing), the market IS slowing.
Thanks for the stats….mi still low, so mkt still pretty robust. What do u make of the valley – it looks like things could be in the beginning of freefall there, any comments?
Ciao
Did we add or lose listings (net) yesterday? Any numbers? thank you.
1 streel Wed, Oct 14, 2009 | 4:06 am
You do keep track of who says what on here!No more promoting Gibsons for me though-don’t need things to change too quickly here
Rob,
Social media marketing is about *content*. A large number of realtors have these things they call “blogs”, largely because they’re using blogging software — but instead of stories, or even fully-fledged listings, they have stuff like this: http://tinyurl.com/yfah7ly (My favourite part is how the Google Street View link only shows the neighbouring property.)
Blogging software offers a great convenience to the maintainer, but it has to offer something to the visitor. All the above site does, is give a persistent home to listings so Google can find them for me. There’s no meat there, so it’ll never attract any regular attention. Worse, it seems like offices will set up this sort of site, and even the realtor who maintains it hasn’t necessarily “bought in.”
Now, I think there’s a real opportunity for realtors to present themselves as individuals with particular focuses, areas of expertise, and personalities. How do people find realtors now? Maybe they pick someone who’s worked for a family member. Maybe they interview one or two, which isn’t nearly enough to get a representative sampling. It’s an easy improvement for a realtor to say “here’s who I am, here’s where I work, and here’s what I think is relevant.” Even Mike and Ian (“the Video Clowns”, I can’t help but add) seem to have figured this out (although I think their target market must be used-car salesmen who can relate to unctuous self-absorption.)
You spend a lot of energy here: maybe not much on a daily basis, and some weeks are lighter than others, but there’s a significant investment of time involved in maintaining this place. You might argue that blogs can save realtors work too — if, in drawing people in, the obvious questions get answered, then the conversation about buying or selling can start at a higher level. Likewise, you can improve how listings are presented and provide links to Google maps and street view.
Sorry for the long post.
anyone know if we added or lost net listings yesterday?
bonds continue to sell off, yields going up – what will this do to mtg rates? thanks.
(rolling eyes) … 7 posts so far and 4 of them are from Anonymous. Jesus man, you’re like a kid in the backseat …
“Are we there yet? Are we there yet? Are we there yet?”
“Can I have a pony? Can I have a pony? Can I have a pony?”
-
Wow, Your Weather Has Arrived.
Hey Wow,
It’s time to think about this: there may never be a “freefall”.
Developers have gotten rid of a major amount of inventory over the spring and summer and the only big section of the city left to sell is the Olympic Village. Can the developers synthesize low inventory plus post Olympic hype plus the potential of a return to a better economy in the rest of Canada featuring in springtime headlines to start another round of real estate mania? Yes, I think they can. And judging by Rennie deciding to hold Olympic Village sales of Millenium Water off until the spring, I’m betting that’s exactly what he’s planning to do.
He’s good at what he does, unfortunately for us bears.
VD, perhaps…bonds continue to sell off – will mgt rates rise again this week?
VD, do you know if listings (net) grew or fell yesterday? I’m just wondering if there are more or less pickings for the boisterous buyers…I’m also curious if there are more or less buyers…you know, simple supply and demand analysis.
Yes, I love this weather – let’s hope it holds for the weekend.
Turkey,
Beg to differ a bit. But not about the unctuous Ian, Mike and please don’t forget Tom. But I think social media is about relationships. That and two way conversations.
The fact is Rob has created something here. But like Frankenstein, he hasn’t quite been in control of what he’s created. If my theory is right and social media is about conversations and, like you say, getting something from those conversations, then Rob has been very successful at finding about 3,000 people in this city that want to talk to him about real estate.
The problem is, and I’m thinking that all business endeavours that wade into the social media sphere have to face this music sooner or later, the people on here aren’t necessarily customers. They’re talkers, bloggers, opionators, obsessives, people driven crazy by real estate but not for the purposes of buying the host’s services.
Now that’s a problem. But it’s not just Rob’s problem. It’s every corporation’s problem online. Why wade into the territory of outspoken, anti-establishment, conspiratorial-minded basement dweller like us to try to sell us your product? It’s a strange phenomenon.
@11/Anonymous Anecdotally all I can say is that our target home is one of those duplex-style townhomes in the Cariboo Heights area. Everything we’ve looked at so far has had multiple offers and has sold near list price (-$10k) within 10 days.
I can’t figure out for the life of me why the surge to buy these days.
Note: I am neither bearish nor bullish for the short-term. Everything is wacky.
VD/12,
Interesting thought. (And while we’re disagreeing — whether Rennie sells condos now, or in six months, doesn’t bother me much. If he’s pushing aggressively, you could argue that he’s stealing demand from the future, which doesn’t bode that badly for us bears.) Whether, in doing so, he manages to skate over other economic factors isn’t something I think I can predict enough to have an opinion.
Here’s an opposing thought: any impression on clients is better than none. This site is bringing Rob enough attention that Somebody wants his opinions about it (Rob, fill us in?) If I’m looking for a realtor, I want to see evidence of a professional human being, with opinions that don’t change with the direction of the wind. In that sense, we’re character foils, and it doesn’t matter what our opinions are (as long as we’re not completely insane. Uh oh.)
If a realtor wanted to help stuff the trust-fund-and-credit-card-debt crowd into their comfy condo cubbyholes, this blog may not be the way to do it. (Back to Mike’s example: have your friends post empty comments?) But, there are other markets to be served as well.
we dropped 10 listings, net. Low listings day.
Well, fewer listings for buyers to pick over!:)
Let’s see what tomorrow brings. 14,000 this month (listings)? Time will tell.
Mano – I hear ya…..
In another sense, we generate a base level of activity that helps generate and sustain site traffic. Come for the blog, stay for the listings. Maybe we’re the bacterial culture that makes blog cheese…
Gibsons!
….. what a freakin’ coincidence!
market is slowing (Rob Chipman), but still pretty strong…could we hig 14,000 listings this month – only time will tell. JMHO.
Turkey,
Definitely, I agree. It’s a great way to get your name out there. It’s just as you said, it takes time and time is money. But I believe Rob has already said that this blog has earned him a few customers.
At this point, the market is preventing more of us bears from becoming his customers. You never know, should the market correct and 99% of realtors starve, Rob might be flooded with the bear-buyers other realtors may have criticized him for wasting his time with all these years. Wouldn’t that be ironic?
Turkey,
Not to mention the value of a potential customer coming here and “testing” Rob out anonymously. Again, his only problem would be us–the basement dwellers who will attack anyone who comes here earnestly looking to get into this market.
That’s what makes this type of social media a weird forum for most businesses. There’s always some guy (or gal) on there that hates your product and who will harangue potential clients. It’s an interesting topic because as a marketer and with social media as the allegedly latest and greatest thing, your clients are always wondering if they should doing it. They all want to go viral on YouTube etc, but the things that go viral aren’t exactly the safest. And corporations love safe, especially their lawyers. They can’t get enough of bland, safe ads or ad venues.
here’s the missing word from the above post…
be
I will check back in 1 year to see if there is a downward trend in real estate in vancouver.
If not, I am taking my pile of savings from renting in this overpriced city and buying something outright in another part of Canada. Life is too short to live in a city where people are obsessed with real estate to the point it drips in to every conversation.
Sorry, but no other city I have ever been to or lived in is this focussed on RE to the point that there are no longer any intelligent conversations about civic affairs, national politics, global affairs, etc. When people only have one thing to talk about, it shows me that the society is both neurotic and immature.
I think the French in Quebec have the right balance with their cost of living, focus on living, and enjoyment of life.
Hib – how do most bubble mania’s end?
24
This bubble has been 5 years now. Do I want to wait another 5 for it to end? Living with people who have nothing intelligent to say other than “my house went up 150k this year”? Not bloody likely.
Hib…remember the technology bubble…just when it appeared like it was going to go on forever…it didn’t…and then it fell and bounced hard….took a lot of money back in…and then the second leg down was amazingly more powerful than the first….what makes you think its different this time/here? Dave and RS? Gimme a break.
Hib – if listings grow to 14,000 this month would that make you feel better?
How about 15,000 next month?
Let’s see what transpires….
Is this inflation or deflation?
Breaking News from The Globe and Mail
Oil prices jump to one-year high
GEORGE JAHN
Wednesday, October 14, 2009
VIENNA — Oil prices jumped above $75 (U.S.) a barrel Wednesday for the first time in a year on investor optimism crude demand will improve ahead of the Christmas shopping season.
26
RE are not like stocks. They don’t go up and down in minutes or days, they take yeeeeeaaaaaaarrrrrrrsssssss. 7 years up, 7 years down.
they went down 16% in 8 months last year – was that long or short in your view?????
Fair enough – but the went up 10 percent too in 5 months. I chalk it up to an anomaly.
Still think it will take several years to go back down again, especially since people saw how quickly it went up again. People now know that market here is strong, so less of a willingness to cut prices now even if there is a downward trend.
It’s just a true sentiment of the stupidity that is the seasoned Vancouver (west side) buyer. They will buy anything in the downtown core with granite counters and SS appliances regardless of fundamentals.
“It’s just a true sentiment of the stupidity that is the seasoned Vancouver (west side) buyer. ”
Stupid people. Sinking all their money into these consistently appreciating assets.
i thought prices were lower today than a year ago, and lower than their recent peak of spring ‘08 – does this qualify as ‘appreciating’????????????????
Please confirm, thank you.
“especially since people saw how quickly it went up again.”
Hell, it DROPPED 15% in the space of a few months.
Can and WILL do so again. Soon.
smart
http://www.globeinvestor.com/servlet/story/RTGAM.20091014.whongkong1014/GIStory/
The yield curve gives an expectation of rates. Of course you can continue to go short, and many people do – which is the logic of a VRM. But when rates do increase from historically low levels, the yield curve could well flatten over time, putting short-term borrowers at risk of actually paying more with no long-term rate stability. — Garth
Rob said the market is slowing.
Nuff said.
GuyCaballero’s question: ‘If you could tell the REBGV anything about social media marketing, what would it be? ‘…
HP’s 2 word answer: Authenticity/Veracity
Hibernating:
You’re either hanging around with the wrong people or your skin is too thin. I’m a realtor and I don’t even talk about the market when I’m not working or blogging. There’s plenty more going on here other than RE.
Anonymous:
Slowing, as in, not on record scorching pace. 14,000 and 4 MOI does not a correction/crash/buyers market make. You’ve been down so long everything looks like up to you!
39
Sorry Rob, but you are in the older demographic that has owned for many, many years, and bought when homes were closer to the rule of three times income (you did buy in 1990).
Purchasing your home back then meant buying a home first and foremost, and then maybe as a long term investment. Flip that rationale around, where the investment properties of RE are the primary motivator, and having a home is secondary, and presto, the role of RE changes in social conversations. Just like people will always ask how is the market doing, people now ask, how is your house doing.
Just had a meeting the other day with a chap that moved from Montreal, where he had a 2 year old 3500 square foot house for less than 350. Once we started talking, he commented how everyone talks about RE here, especially at social functions. I told him he is not alone in thinking that, as in the past several months, I have met with people from Europe, the US, and other parts of Canada, who travel here for business or now live here, who have all said the same thing. Just passing on my “anecdotal” experience….
Listings in my target areas, size, and price range have almost doubled from 88 to 170 in the last 6 weeks….
Rob, haha…true!:)
FTB - THANKS for sharing this valuable info!!!!! Ya, me too (more listings in my search parameters)….there are simply more listings for the fewer (not scorching levels of) buyers…interesting…I wonder if we’ll make up ground on the 10 listings fewer we have today vs. yesterday when Gavin updates later today….will listings grow or shrink – time will tell.
anon 33 Stupid people. Sinking all their money into these consistently appreciating assets.
I guess you will be one of the “smart” people camped out to buy one of Rennie’s $2000/ft post olympic suites. Lots of luck with appreciation there. When you buy at the top you stand to lose a whole lot…
Hibernating@40: Right on! In the days when RE was housing, I’d imagine few people would be able to price their house accurately or say what the market was doing. The only time these things were remotely important was when they had to move and put their place up for sale.
Disbelief 32 … “They will buy anything in the downtown core with granite counters and SS appliances regardless of fundamentals.”
And regardless of the construction quality too. Let’s face it, glitz sells.
Just wait until the shine comes off a bit. New buildings are sparkly and fun, but they’re also the cheapest built from what I’ve seen. Just wait until one or two of these buildings start needing the full window curtain walls replaced … that’ll wake a few people up.
Window curtain construction has a life expectancy of about 10-20 years, then the seals start to go, moisture gets in, the panes get opaque and they start to leak. Then it’s really really big-bucks time. I’m guessing the buildings around Marinaside will be due relatively soon.
-
“I’m guessing the buildings around Marinaside will be due relatively soon.”
1099 marina side sued concord pacific for readily apparent problems
before the 10 year warranty was even up…. probably prompted by
the govenors’ tower law suit/rebuild
Surprising nobody mentioned yet that interest rates are up….
http://www.theglobeandmail.com/globe-investor/big-canadian-banks-raise-mortgage-rates/article1322321/
Anyone remember VHB? He and all his hyper perma bears bought houses in 2007.
This market is super hot by 10 year standards. Its only cooling by its own comparator.
Aren’t prices lower than last year? Please correct me if I’m mistaken – thank you.
weather does not look too too bad for the weekend…we need heavy rain…that will help jumpstart MOI….just hurry it along to where its going anyways – which is….drumroll please…HIGHER.
Haha.
There. I said it.
we added one new net listing today…not great….march to 14,000 proceeds very slowly…market remains slowing and not so hot, but still strong….wonder also if the lift in rates will create more of a rush….still, mtg brokers are sensing a slowdown, so is Rob’s gut…let’s see if we see 14,000 listings this month and 15,000 next month – or NOT.
one new listings and listings 9 listings off of a multi-month high in listings is still something to note…10 more listings (net) and we have a new multi-month high.
market not so hot and below peak prices despite record low interest rates…what gives?
Steve Ladurantaye
From Thursday’s Globe and Mail Published on Wednesday, Oct. 14, 2009 10:27PM EDT
For the first time since Jason Pilon began selling houses two years ago, he’s fielding questions from anxious clients about rising mortgage rates.
The Ottawa-based real estate agent has sold nearly 100 properties this year as historically low rates fuelled a buying frenzy in the city, with house-hunters rushing to take advantage of easy money. The same trend has played out across many parts of Canada over the past few months, but higher rates set this week by the country’s biggest banks may soon cool a hot market – and do a favour for Bank of Canada Governor Mark Carney.
The central bank has said it expects to keep its key short-term lending rate locked at 0.25 per cent until mid-2010 to spur an economic recovery. Chartered banks, however, are finding their borrowing costs increasing for longer-term money, as investors bet that improving economic conditions will eventually bring more inflation.
By raising their mortgage rates and making it more expensive for customers to borrow money for a home, the banks are effectively throwing some cold water on residential real estate. That, in turn, might allow the Bank of Canada to keep its short-term rate unchanged as pledged.
“One could make the case that the Bank of Canada’s stimulus is being whittled away by the banks,” said Eric Lascelles, Toronto-Dominion Bank’s chief economics and rates strategist. “The clear risk for housing is that the market is overheating, and that should make the central bank squeamish. But the banks may be slowing an area that quite frankly could use some slowing.”
After Australia’s central bank boosted its rate last week, speculation has mounted that the Bank of Canada could move rates higher sooner than promised if the economy continues a faster-than-anticipated recovery. But if the banks make borrowing more expensive, there could be less pressure for the Bank of Canada to do so.
“In this case, I bet the [central] bank is actually pleased with the development,” Mr. Lascelles said. “Generally speaking, the cheap credit has put them in a bit of a pickle. If the banks subtly take things into their own hands and move rates higher and that leads to more manageable growth, I’m not sure that’s such a negative outcome.”
The five-year mortgage rate is important because it’s the standard term chosen by those who want to lock in a rate rather than take a chance with cheaper, but more volatile, variable options. It’s based on the Canadian government’s five-year bond, the yield on which has risen this month about 0.3 percentage points, to 2.86 per cent.
While the higher mortgage rates will help banks protect their profits as their borrowing costs rise, it could also have consumers second-guessing whether they can afford the costs of home ownership.
But although rates are on the rise from April, when they hovered at 5.25 per cent, they are still far below the 7.25 per cent reached in 2000. (They were as high as 21.75 per cent in August, 1981.)
“Any degradation in affordability is going to have a dampening impact on housing-market growth,” said Phil Soper, chief executive officer of Royal LePage Real Estate Services. “We’ve come through almost a decade where people could obtain mortgage financing for reasonable prices. Where rates will go is anyone’s guess, but I would think people would assume they’d be going higher over time.”
In the short term, that prospect could push a number of buyers off the fence and into the market.
“If you didn’t buy at the beginning of the year, then you really missed out,” said Mr. Pilon of Keller Williams Ottawa Realty. “There’s no inventory left, and prices are heading higher as everyone scrambles to make a purchase before rates spike.”
129% Sell / list ratio today?
Who says the market is cooling?
“Who says the market is cooling?”
The guy who bought last month and trying to sell today at 25% higher…the market was white hot, not it’s just red hot….arrrgggg!
prices are 8% lower YOY in vancouver and 10% lower in victoria for the person that was asking. It would be great to show YOY values…
55, let’s see if its stays that way…funny, listings are 9 off their near-term highs (multi-month). Sales – I’m not sure how they are tracking – they still look strong.
Bonds are selling off a tad again today – could rates go up again this week (mortgage rates)?
Rob, is the recent rate increase expected to have any impact?
good article … http://tinyurl.com/yl96upc
-
http://www.globeinvestor.com/servlet/story/RTGAM.20091015.whousing1015/GIStory/
Funny, no shortage of listings here, in fact they are at multi-month highs, I believe. Well, 9 listings total off recent highs. Wonder if we go lower or higher (net listings) over the rest of the month – let’s see what happens. I suppose the recent mortgage rate increase could spur buying by those with rate pre-approvals, we’ll see I guess. Could it spur sales by those that worry about higher rates impacting the market (ie. investment holdings), guess we’ll see. 14,000 this month?
CBC Headline: ”
House sales up 18% in Q3
”
http://tinyurl.com/ygm66f6
The national average price surpassed all previous monthly levels in September 2009, rising 13.6 per cent year-over-year to $331,602. July and August also posted new average price records for their respective months.
the comment section features some rather cranky people and a lot of partisan comments…. lethal mixture
“129% Sell / list ratio today?
Who says the market is cooling?”
That was for “SFH”. Condos were much different at 47%. Its weird to see them so different.
Regarding sell/list ratios, MOI, etc: I don’t really care. What is important is what prices are doing. If prices are rocketing up and the sell/list is 20%, I’m not happy. If prices are dropping like a stone and the sell/list is 200%, I’m happy. Probably the best indication of price trend would be MOM price increase/decrease as compared to the average MOM for the same month from the last 10 years (to account for traditional monthly differences). YOY is too long a time span and anything shorter is too small a sample size.
And while average resale values dropped by about one-third to $436,000 between last October and this April, TD said prices recovered to an average $608,000 by August, a mere eight per cent from their previous peak.
However, for Metro Vancouver, Gauthier said TD Economics’ estimate is that the pent-up demand that welled up during the uncertainty of last fall’s financial crisis was largely met by June.
“The current sales rally will probably wane in the months ahead,” said report author, economist Pascal Gauthier, “and more listings have started to come on tap, a trend we expect to continue.”
And while Gauthier doesn’t expect prices to dip again, economic conditions will likely take another bite out of sales in 2010.
He said incomes in Metro Vancouver are not rising substantially, although home prices have nearly recovered, so the increased affordability of housing “rests solely on low interest rates, which will start to reverse course in late 2010.”
Nationally, the TD Economics report noted that Canadian housing sales rebounded by 61 per cent at the end of August compared with a year ago after collapsing by almost one-third in the last half of 2008.
While some had argued all along that Canada’s housing market would not experience the extreme decline seen south of the border, “the magnitude and speed of the rebound was nonetheless surprising,” Gauthier said.
“No other Canadian economic indicator has rebounded as sharply as sales of existing homes over the last few months.”
Gauthier said current low interest rates, spurred by “aggressive easing of monetary policy” by the Bank of Canada, which were intended to cushion the Canadian economy from the worst of the U.S. credit crisis, “proved to be more of a trampoline for resale housing markets.”
Once the dust from the economic downturn had settled, Gauthier wrote, people who had only held off buying a home because of uncertainty about their own financial situation found themselves in an excellent position to take the leap.
Mortgage-carrying costs, which fell from 32 per cent of an average earner’s income in early 2008 to 26 per cent a year later, should remain in the area of 27 to 29 per cent next year, which should be “good enough to support a modest growth in sales and prices.”
“And while prices are trending up again, this window of opportunity remains open to many Canadian households, even first-time buyers,” said Gauthier.
But this demand will have spent itself by November, Gauthier estimated.
depenner@vancouversun.com
With files from Canwest News Service
© Copyright (c) The Vancouver Sun
he says prices only 8% below peak, but sales hot. he says sales slow after November, and interest rates rise. what do you think? Are sales higher this month than last, thus far? Or lower? Can anyone compute? Rj?
with sales red hot and rates much much lower and carrying costs lower, why are prices lower? why are listings growing?
anyone address that point? dave? rs?
What do to when historically low interest rates are fueling a potential housing bubble without raising interest rates and jeopardizing the nation’s recovery.
Have CMHC reduce the amortization period to a maximum of 30 years and require a 10% down payment.
That way the Bank of Canada can keep interest rates low and help deflate a potential housing bubble.
Thoughts?
“What to do…”
The article says 1/3 down from the peak, so we had a 33% decline? Yet realtor stats showed a 15% decline?
There are just way too many articles coming out now that show prices all over the place – resale up, new houses down, prices up to 3% from the peak, now down 8% from the peak….
This is garbage and does nothing to inform the average buyer…
Well, let’s say the CMHC does implement those changes. There’s an abrupt reduction in demand (anyone know how many homebuyers are putting 10% down, or taking 30-year ams? How many could, if required?) Now, if rates rise, with or without the BoC’s say-so, some people will be forced to sell into a reduced pool of buyers. Ouch? It depends on how big each of those effects is. But it’s a bearish influence.
I’d love to see this sort of change. I’d be tickled if the BoC realized they’ve got more weapons than the prime rate, and generate some pressure on the CMHC. I’m not holding my breath.
rents are falling in US:
http://globaleconomicanalysis.blogspot.com/2009/10/year-over-year-cpi-negative-7th.html
I think we can not avoid this path, long term. Red Light for anyone buying property with rental income.
confused@69
I agree, and I tend to ignore them and trust my eyes more: I have seen condo (in my area of interest) sold two weeks ago for similar price paid (within single digit K) 2007 summer (forgot which month). That tells something, eh?
Again, single sales are not real representative on the actual market value for all the properties – the low interest rates distorted the values quite a bit (in favor of SFH, and out of favor for attached because the maintenance cost would carry 50 to 100K from bank)
All I can say at this moment is: FTBs at all, knock yourself out completely!
just to clarify myself – the very same condo that was bought summer 2007 was sold 2 weeks ago for virtually same price as paid. The seller consumed the Realtor fees, taxes and maintenance cost. Seller probably got hit by the mortgage discharge, and or, mortgage interest. There is very little doubt that seller lost money on this transaction.
(here comes my all time fav : they lose on every transaction but make up on volume)
2 posts back –
usurper (207) wrote
>> OK maybe Rob is a balanced commentator in a forest of
>> bears. I just assumed(incorrrectly?) that a realtor would
>> be pro-real estate.
I just got this little invite from a list I’m subscribed to. I think the assumption that “Realtors are pro-Real Estate” is a pretty safe one to make…
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Anyone going to go? Chaddywack? Dave? robertscreek? romeo? WoW?
Cheers,
WBWUCR’t'13?
Wow. You actually have to pay for that. Shameless. Step right up and buy now and lose your shirt and everything else you worked for.
Ahhh…if I had 500k to invest, would I listen to a salesman realtor or a certified financial planner?
That’s a no brainer to me. But of course when its not your money (ie borrowed), you listen to the salesman. Sigh…
Whybuy:
“I just got this little invite from a list I’m subscribed to. I think the assumption that “Realtors are pro-Real Estate” is a pretty safe one to make…”
For that to make sense Ozzie Jurock woud have to be a realtor, no? Do you know whether he is or not? Similar to the last time you talked about realtors screwing people and nothing being done about it, I think you’re misinformed. I think (and perhaps I’m wrong, and perhas you will be able to show me the error of my ways) that you’re tarring realtors with someone else’s reputation.
What say you?
Apologies for the off-topic question, but I was told by an agent hosting an open house recently that the city now longer allows external storage lockers in new constructions due to fire regulations, and all storage must be insuite. Can anybody confirm or deny this?
Net new listings today = 47
New multi-month high, I believe.
More supply – how about demand – is it equal or less or more than in the past handful of months?
thanks.
14,000 this month (total listings)?
Interesting, let’s see…if the rain/weather has any impact.
WBWYCR, no I am not going. I don’t think Ozzie has much to offer me.
I am a long time lurker and to sort of answer Rob’s question, what I would tell the REBGV about technology (maybe not social media per se) is:
Many of us are accustomed to using the web to research everything we buy, from a meal to a car. We are therefore taken by surprise to find that this massive purchase, the biggest of our life, is so difficult to research. I am willing to dig (and sometimes spend a lot of time looking for zoning applications on city websites and/or on the wayback machine looking for old developer’s sites – with varying degrees of success) but I don’t understand why realtors don’t pool their efforts and (?collectively) do something for condos / townhouses like Les Twarog does for downtown condos. The features on each building’s page on his site are so useful – especially the floor plans. I know floor plans often do not reflect the final product, but if it does, why on earth would one not provide that information to potential buyers?
If the listings required such basic things as direction(s) the unit faces / end or middle unit (in the case of townhouses) / number of parking spaces (and ideally the floorplan, etc) it would keep us from wasting our realtor’s time and the listing realtor’s time. I know that the listings our realtor sends us has parking information, and some additional info, but the regular MLS doesn’t.
We did drive-bys (sans gat) when we were looking at townhouses, but if we had a floorplan, we could have eliminated some of them or considered others.
It also annoyed the living heck out of us that the MLS takes so long to be updated.
There could be a social media aspect to it, but I’m with VD in thinking that the downsides may be too much for those who are invested (and I don’t think everyone quite gets this yet – I posted a snarky comment on some dolty realtor’s blog posting about a unit, and he didn’t even moderate or remove the comment. I felt *slightly* guilty afterwards – I assumed someone would have been moderating the comments, and would have edited the listing, but the comment just went straight up, and the listing was not edited).
Demographic info: mid-late 30s couple, renting, me-bearish, husband-not quite a bull, but sick of renting. Sitting on a decent down payment, decent combined income (touch wood!) but it took a fairly long time for us to graduate, clear our student loans and save the down payment. We are both very fiscally conservative (which is why we have had trouble committing to such crazy prices).
Thanks for hosting this, Rob, and thanks also to the regular commenters for the interesting perspectives.
mish comments Vancouver re as unsustainable:
http://www.howestreet.com/index.php?pl=/goldradio/index.php/mediaplayer/1429
What an odd article from a wall street analyst who bills himself as Miss America.
Here’s the ending from his article:
p.s. To me, I’ve lost so much interest in economics and finance in the last year. When the financial world started to resemble something as comical as the “professional wrestling” it gets hard to take yourself serious as an analyst of that venue. For me, (or the pros like Nouriel, Krugman, Schiff) or anyone else to sit here and make realistic prognostications on what will or should happen is as ridiculous as talking about whether Hulk Hogan was really better then Andre the Giant. It’s all fake people. Whether we are fundamentally right, momentum can irrationally go another way. Even if we are wrong, governments can intervene, “manipulate/correct” or “save” the economy for whatever reason.
And here’s the entire piece:
http://tinyurl.com/yftjrfu
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I’ve been popping in every once in a while over the last couple of years to have a look at some of the posts here. It seems that there are 2 types of posters, established folks that view the macro picture, and those that are considering buying an actual home.
To home buyers, or really anyone getting started, from my experience it doesn’t make much sense to pay much attention to the sky-is-falling bears that reside on this site.
I recall a year and a half ago, posting on this board that I sold high and bought high and that it made sense for me. Man, did that generate some laughs from the bears. They just couldn’t understand how it made sense for me because it was a better neighborhood, it was close to my son’s elementary school, I was in for the long haul, and that it was beneficial to be able to unload my house quickly for top dollar in a hot market. Gotta say, no regrets.
Since then, I partnered with my brother and bought another place. Again, many a chuckle here when I shared the details. However, some in-depth look into the City’s long-term plans, detailed discussions with an urban planner, a real high offer that persuaded the owner to make it conditional on a zoning amendment, and I picked up a place with great potential. A year later, it has a mixed-use zoning designation and has been renovated with suites up top and my so-far-so-good start-up business on the main.
Guess all I am saying is that it is if you are looking for an actual home and/or have some motivation/creativity, don’t sit back and listen to the macro bears. Buy on the common sense stuff. And get creative. If the macro bears spent half the time they spent sharing their cynicism and instead rolled up their sleeves and got their creative juices flowing, they would be a whole lot more productive.
Just my thoughts, and it sure has worked for me. I guess I could say, but, but, but, but, I may lose my job, the market may drop 40%, my renters could leave or destroy the place, my business could fail….. The funny thing is that if that were to happen, I would not be much worse off than if I would have lost my job a year and a half ago. It’s easy to say the sky might fall. It is also easy to assume it won’t, take reasonable steps to protect yourself from downturns, and live life to the fullest rather than sitting around watching it pass you by.
Sorry about that last post, lessson learned – cutting from Word not good.
http://tinyurl.com/yftjrfu
I’ve always wondered how the American Empire could actually collapse. I think we’re starting to see the outlines of it.
here is a story for alexcanuck, he went to europe too early
)
http://tinyurl.com/yk72q5b
And still some people here keep comparing Vancouver to Paris , London and New York….. I like the view from the restaurant, no mountains but still so unique…
Rain is here…lets see if Wow’s theory materializes…
James 85: Common sense personal anecdotes about one’s own situation are not welcome here. We need to hear about how many for sale signs you drove by today. Or how a guy you know heard that the market is slowing. Or how the American Empire is about to collapse because HGTV says so. Or how you have been a renter for 17 years, or living in your mom’s basement, biding your time to strike when the bottom is nigh. Personally I trust my relator in all things real estate, and my banker in all things banking, and the Hell’s Angels in all things criminal.
So… your point is, James?
And get creative. If the macro bears spent half the time they spent sharing their cynicism and instead rolled up their sleeves and got their creative juices flowing, they would be a whole lot more productive.
I used my “cynicism”, or knowledge of economic indicators, to liquidate while I was ahead in the summer of 2008. I got “creative” and borrowed on my line of credit and shorted the stock market until December.
I guess you can saw I did roll up my sleeves, did my due diligence, and got out there and “made something of myself.” Did pretty well for myself, while still living. But each chooses their own path…
Usurper – 90: lol…good stuff.
Vomitdog-91: Two main points in my #85 post. First, I caution against taking the advice of many on this board who feel the sky is falling. Second, I recommend to those starting out to roll up their sleeves, get to work, and be creative. Good things happen. Sitting around saying the sky is falling doesn’t seem to work. What seems to work is common sense and initiative.
Like I said, it may make sense to take the bearish macro approach for the establised, large volume investors. My concern is that others will translate this to a more basic level. Common sense, initiative, and creativity is the most likely to bring happinesss.
I like my story better than those outlined in Usurper’s post (90). I don’t like to toot my own horn (I remember my dad saying that) and am not that kind of guy. However, given the kick in the teeth I recieved twice on this board much time ago when I floated my ideas, I sorta feel I am entitled
VD/91… I think ‘James’ is enjoining us to stop wasting our time on real estate blogs and instead, to emulate him… viz. – residential/commercial property development and entrepreneurialism…
ExB/59 – very useful site/worth bookmarking (at least for those of us who aren’t Bankers - ex, or otherwise)….
Usurper/90… be careful whom you patronize, the HA aren’t quite the ‘organization’ they used to be…
92: Good call! That sure is not the type of cynicism I was speaking of!
But, judging from my past experience on this board regarding my plans , you are not the average poster. Yup, I was kicked around pretty good
“I used my “cynicism”, or knowledge of economic indicators, to liquidate while I was ahead in the summer of 2008. I got “creative” and borrowed on my line of credit and shorted the stock market until December.”
Survivor bias – http://en.wikipedia.org/wiki/Survivorship_bias – is a well-understood logical error committed by many people. Congratulations on winning the lottery for now, however.
James,
Who gave you a drubbing? All Google shows me is indifference (http://robchipman.net/blog/quick-update-9), but I can’t find anything earlier.
I feel like you’re putting words in our mouths. There isn’t a single bear archetype any more than there is a single bull archetype.
James (85), all good stuff.
Different folks have different goals, different tolerances for risk, different levels of interest in being a handyman or a reno site supervisor.
You can post on any blog and get flak. I think if you look carefully at your post from a year ago you’ll find a vocal opposition, but a few folks that simply took what you said at face value and wished you the best.
I’m glad it worked out for you. My choices have worked out well for me also.
WBWUCR’t'13?
76, what’s the difference between a salesman realtor and a certified financial planner? They both want to take money from your pocket and put it into theirs.
EB 96
Jeez, I never knew there was a name for that … Survivor Bias. Hmmm, I do the same thing with my stock trades. Toast the winners and (try to) forget the losers.
-
Turkey, nope that was not one the ones I referred to. The one you found was referring to the same transaction I was talking about in my first post though. I don’t recall what name I used…but I’m not putting words in anyone’s mouth. And I even recall Rob coming to my defense
Anyways, I’m just killing time till my son is finished school, so I figured I’d drop in. Like Whybuy says, to each their own, and I couldn’t agree more. I have a thick skin, but I just got thinking about some of the people that don’t, and may have a similar experience with some folks on here and let it dampen their drive. On secound thought, if they let online ridiculing cloud a well thought out course, that may be a blessing in disguise…
Anyways, best to all. Hopefully next time things will still be good and I won’t be hearing “I told you so”
oh yeaah! whats up nutslappers! forgot to tell “MISH” in vancover might might a new billbored, might find sammy salo with the nurse but will not find
“a land making machine”
Whybuy 74/Sigh 76/Anonymous 99:
The person put up as an example of a realtor isn’t a realtor. The claim that the “ …assumption that “Realtors are pro-Real Estate” is a pretty safe one to make…” is based on a faulty appraisal of evidence. Let’s get some facts straight before we continue with the comparisons, ‘kay?
As counterpoint to the recent “I listened to the bears and am now priced out forever. Thanks a lot losers!” here are some folks in Florida who really, really wish they HAD listened to the doom & gloomer crowd.
http://tinyurl.com/yzj3xxv
Just shows how how some people refuse to take responsibility for their own actions. No one held a gun to your head either way. Although given the Abbotsford action and the tie-ins to RE I might be wrong about that.
Rob: Given your market niche and reputation, I’m a bit surprised at your passionate defense of realtors in general. Strikes me that being a shining beacon of trust and integrity in the midst of a swamp of commission-grubbing sleaze and hyperbole would be good for your business model, not to mention your self-esteem. Do you really want to be on record as defending the business practices of those who will pay a homeless guy to stand in a lineup to create “buzz”?
Just saying!
Well, James,
It’s the way you put things, I suppose. The whole shirt sleeves thing and rolling stuff up. It’s kinda a reference to one party being a man’s man and the other being lazy cynical boys or somesuch, maybe even the word cowardly springs to mind.
I think you’ll find as a few more bears react to your post that some of them who reside here are, well, they’re rich. They’ve made money. Some even in real estate. So let’s say you’re not referring to the “rich bears” and somehow you’re warning the priced out bears not to listen to all this negativity and cynicism because if they join you (in selling your house, moving up and then buying an investment property) they’ll be fine.
And, if they had done that over the last 7 years they would be fine, arguably, for now.
But how can a priced out bear do that? They’re priced out. They didn’t have a house they could trade up in the first place! And one of the constant criticisms we General Bears rage at the marketplace is that house prices are supposed to be affordable based on rents/income/people who live in this city (many of whom are those priced out bears).
So what’s your point again?
AC:
I’m trying to bait Whybuy a little (just for fun) and spur a discussion about either who does what in this industry (Ozzie, who he uses as an example of a realtor, isn’t a realtor; realtors, Whybuy says, can screw you, and nobody does anything, but he doesn’t explain why) or how the internet, especially anything veering toward social media, is wide open to misinformation and conspiracy theories. Do I want to defend all realtors? Clearly no. Do I want completely naive and inaccurate info to pass unchallenged? Also no, hence the rub.
V-dog:
This blog has taught me much, including:
Some bears are rich, and some are smart, and some are funny and friendly, and some are all of those things together.
Some live in their mother’s basement and wouldn’t make a decision if you put a gun to their head, but they’d try very hard to convince you that they know everything.
Some bulls are manly, some manly men are bullish, and some are just lucky. James strikes me as a bullish and lucky man. Fortune favours the brave (until it doesn’t). We can probably agree on that.
We should probably also agree that some bear arguments aren’t much more than wishful thinking leavened with envy and topped with intolerance.
(Speaking of smart, rich, funny, friendly, suave, debonair, well travelled and well read, when are we going to get together so I can give you that prezzie from HP, btw?)
V-Dog:
“And one of the constant criticisms …is that house prices are supposed to be affordable …”
Its a tough to argue that prices aren’t affordable (a subjective comment most of the time) when we’ve seen record numbers of sales at record high prices. You can put all kinds of numbers out there and predict all kinds of future scenarios, but the fact remains that low interest rates and favourable mortgage terms have resulted in record sales, and that means that record numbers of people…afforded real estate. James makes a point that he was able to afford the stuff, and has done ok so far, despite bearish advice and taunting. Fair comment, I think.
“We should probably also agree that some bear arguments aren’t much more than wishful thinking leavened with envy and topped with intolerance.”
I absolutely agree.
“Its a tough to argue that prices aren’t affordable (a subjective comment most of the time) when we’ve seen record numbers of sales at record high prices.”
Not that tough. Watch: These are strange times, Rob. House are definitely affordable with today’s low interest rates and long, long amortizations. And it feels good to be able to buy such a valuable commodity for such reasonable monthly prices. But what if this valuable commodity turns out to not to be so valuable as it has in:
England
Spain
Ireland
France
Australia
New Zealand
Shanghai
Singapore
Japan
Dubai
Saudi
United States
over the past few months and years? (Now bulls, don’t pick apart my list… I’m just trying to make a point that housing prices have bloody well fallen all over the world except for here and maybe Norway!! You catch my drift.)
Hahahahaha renters=losers.
All these housing bears are pathetic losers.
I’m sitting in my plush den of my OWN home watching the equity rise and witnessing all of the squabbling between the “bears” to best explain when/how/why the crash will happen…..but once again these lunatics are DEAD WRONG
VANCOUVER RE NEVER FALLS, do you get that now or do you need it beaten into your head through a few more cycles
LOSERS!!
Rob,
I just read your last line there… too funny!
HighRoad,
That must be water you’re watching rise. You can’t actually SEE equity until you sell. Time to get on that high road, I guess.
HR/110,
It’s considered good practise to misspell something in that sort of post. May I recommend “loosers”, or if you’re feeling extravagant, “looser’s”?
113
LMAO ….too true
at last, someone is starting to ask the good questions…
http://tinyurl.com/yjqf66v
are bonds the next bubble to burst – anyone think rates will rise (bank mortgage rates) again before year end?
Good find, GG. Scary as well. As someone said in the comments, no wonder our Canadian banks did so well in the crisis, we bailed them out before it even started! All risk to the taxpayer.
85 James Fri, Oct 16, 2009 | 9:16 am
Good points–!
And one of the constant criticisms we General Bears rage at the marketplace is that house prices are supposed to be affordable based on rents/income/people who live in this city (many of whom are those priced out bears).
Is there some sort of constitutional right to be able to buy a house in the most desirable city in Canada at a good price?
German Guy-What do you think of this part of the article you linked
n an e-mailed response to questions, CMHC said housing affordability has improved over the years. The monthly mortgage payment on an average-priced house has decreased as a share of workers’ incomes, the agency said.
As of the second quarter of this year, the mortgage payment on an average-priced house was 29 per cent of disposable income per worker, down from just under 39 per cent at the end of 2007.
As an afterthought–the large real estate exposure of CMHC gives the government a strong incentive to keep the market stable or rising–would you say this is bullish or at least limits downside risk?
Constitution? Does that even make sense?
There is a valid criticism that the RE prices have left fundamentals behind. I don’t think I’m invoking the notwithstanding clause, am I?
GermanGuy – read Garth – u will like what he has to say (I think).
Do u think the recent focus/scrutiny on cmhc will have any impact on their operations…?
They reckon 1,000,000 properties in the UK sit empty. However, unlike here, they have squatters rights:
http://www.guardian.co.uk/society/2009/oct/16/empty-houses-london-wealthy-owners
You can STILL get a mortgage for five times your salary
Read more: http://www.dailymail.co.uk/news/article-1220976/You-mortgage-times-salary.html#ixzz0UDlg7IJy
If I could ask for one thing, it would be to fix the mess that is the MLS website. It’s difficult to use, buggy, and down right ugly – I can’t believe a realtor in 2009 is satisfied with what their fees are buying.
Turkey/113….
!
GuyCaballero/107… I do believe I’m going to blush!
<i>Is there some sort of constitutional right to be able to buy a house in the most desirable city in Canada at a good price?</i>
A very reasonable question, IMO.
If houses are being bought and sold in Vancouver-proper – and they clearly are – then they are by definition affordable for that segment of the market regardless of the selling price. That they aren’t affordable to a larger segment of the market borders on the irrelevant.
Anybody here have rental properties up north? By “up north” I mean Smithers, Terrace, Houston, etc area. Doing cashflow-positive seems to be very feasible there – is there much chance these places turn into ghost towns in the near future?
roberts creek: 120
I dont think affordability has improved in absolute terms, what is happening is simply people taking longer time to amortize their morgages, so it looks like people pay less whereas in reality they are taking more debt. Look at the recent history of CHMC, in March 2006 CMHC began insuring 30-year terms, then April 2006 35-year terms. In January 2007 they allowed 40-year terms! and now we are back to 5%down 35years terms. I think CMHC is also a very opaque company and we dont know much about their books. Try to get stats on CMHC losses and delinquencies on their pool of insured morgages. Nothing, Nada! Secret d’etat!
Freddie mac and Fannie Mae publish full transparent stats on losses and delinquencies publicly on their web site. Why CMHC cannot do it?
I am sure the truth eventually will come out as the prices will not keep going up forever. There is no big salaries in this country to allow people pay 1m for a house, it is cheap credit given by canadain banks.
All it matters to the canadian banks , is that your morgage qualifies for insurance from CMHC. They dont care if you are able to pay or not, they are not taking any risks. This is receipe for disaster and not sustainable in the long term. But what do i know?
Because of all this housing subsidy from CHMC, i think we will start to see the cracks in the comercial real estate first. I know many investors who are under water with their loans and are desperate to find financing as the banks are reluctant to lend (no CHMC insurance here, the bank must keep the loan on its books) Available space for lease in vancouver has doubled since last year and vacancy rates are going up sharply.
Yes, CHMC is a big scam. Thanks for the article and tips GG.
The insurance provided by tax payers through CHMC reduces the interest rate charged to people with low downpayment.
In short, this means that tax payers are takingon part of the ownership cost (interest) which should be paid by new homeowners.
Write to your MP and make yourslef heard. This is a scam and it won’t end well.
Once we hit the affordability ceiling (5% down, 40 years seems hard to strecth further) the whole domino will come crashing down.
The only thing left to do for politicians and buraucrats wil be to have a spurt of inflation, which hopefully will erase all nominal debts and liabilities.
Time will be our judge.
From the Globe article:
“Did CMHC help to improve house prices today? Yes, they did because they gave cheap credit to bank and banks were able to provide credit and low mortgage rates, which I think is the main reason why house prices are rising now. That’s a reflection of a system that works, in my opinion,” Mr. Tal said.
===
It’s a sad reflection on our society when rising house prices are considered an “improvement”. Why don’t we consider it an improvement when prices rise for food, transit, education, etc? Shouldn’t it be considered an improvement when things are made more affordable to people?
Yalie,
I am with you 100%. It doesn’t make any sense, actually it is quite a stupid statement. Who is this Tal?
Commercial real estate is in trouble do some DD and you will see it is a sad situation as corparoations claw back to try and cut costs.
Hey!
Where’s Jeff? Did he go back to selling real estate?
Yalie 133: I think there is one other factor to consider. Assuming the CHMC = Government of Canada, the ability to bear risk is more robust than for individual banks that can be subject to runs. There’s an implicit diversification function by having backing from a pool of tax payers under a democratic system with property rights. This also lowers required returns since the overall risk profile is more diversified than otherwise. The government is the ultimate risk manager which can shepherd the economy to a improved state when things go awry (like we’ve seen over the past few months).
http://www.theglobeandmail.com/globe-investor/vancouver-ranks-first-for-net-worth/article1223946/
Vancouver ranks first for net worth(globe and mail)
As I recall posters on here have theorized Vancouver is more highly leveraged than the rest of Canada due to high prices-seems the opposite is the case-family net worth is double that of Eastern Canada.Would that be bullish for our market?
just like Long-Term Capital Management, leverage doesn’t matter when profits are fat. Cinderella doesn’t want to leave the party when nobody knows what time it is.
Everybody understands the link between smoking and cancer, but the pack-a-day smoker doesn’t care about all that scientific mumbo-jumbo.
Leverage doesn’t matter when profits are fat. Cinderella doesn’t want to leave the party when nobody knows what time it is.
Everybody understands the link between smoking and cancer, but the pack-a-day smoker doesn’t care about all that scientific mumbo-jumbo.
Deutsche Bank Canada chief economist John Clinkard is among those who believe the bank will take a cue from its Australian counterpart and raise rates earlier than expected, probably in the second quarter of 2010. But he says Governor Mark Carney will hold his tongue for now out of fear of pushing the Canadian dollar even higher.
hmmm, wonder if we see rate increase sooner than later….hmmm…wonder what rate increases coupled with post-Olympic hangover will look like…wonder how the rising C$ could turn of Chinese buyers, who may start to look to the US for buying opportunities…imagain if the US starts a buy a home imigration policy like Canada did – that would re-direct a lot of traffic – there is increasing talk of it…
interesting times…we are just shy of a multi-month high (reached earlier this week) in total listings, the rains are here….MOI in the valley is above five, above three in Vancouver…it will be interesting to see how the trend unfolds from here, will listings breach 14,000 this month or will buyers attach existing inventory and take us down below 12,000? Let’s see what the week ahead brings.
Fools and their money…
RS, its all RE honey, all RE…we live by the RE we’ll die by the RE…we have an economy that is more leveraged to RE than any other part of Canada…then again, maybe prices can only go up from here…
I’ll look for a new rental this spring..where I am now, the cost of renting is about 50% of the cost of owning – in this market, that seems way to high – I’m going to look for a greater bargain.
In the meantime, my income is booming, my stocks are booming, my savings rate is booming….now, will house prices continue upward? I doubt it, but let’s see….the ownership boat is packed to record levels….I guess that bodes well from here?
buying in cash, and waiting for the crash.
I for one look forward to Rob’s statistical update tonight. I believe anonyWoW could be onto something, perhaps the market is slowing further as I too see more For Sale signs in my daily moveabouts. Guess if you call for rain long enough it will finally come.
No way on earth I’d pay current bubble prices. I agree, market is crazy and only fools would buy now.
As other’s have said, why bet against Rob’s tummy teletales?
http://www.reuters.com/article/usDollarRpt/idUSN1631064820091018?pageNumber=2&virtualBrandChannel=11604
This is the article you read,I am guessing,Anon.
Did you note these parts?” Eight of Canada’s 12 primary dealers polled by Reuters forecast the bank will not lift rates until late 2010″
* BoC likely to keep low-rate pledge, upgrade forecasts
* Heightened rhetoric on currency expected
* Inflation outlook largely unchanged
The way I read the article rates may rise if inflation or growth starts to accelerate faster than the Bank’s forecast-either one of those will counteract any negative effect higher rates have on real estate-the Bank predicts 4%growth first half of 2010–will that be bullish for real estate?
Predictions are for sunshine Monday-will this make sold signs sprout?:)
If growth hits 4%,will rents rise accordingly?
Interesting data point to put RC’s “bullish” for real estate in context… Vancouver city has 56%renters, Calgary only 30%. Could the LACK of throwing all that money away in the form of interest to the banks have anything to do with the high net worth in Vancouver? Renters aren’t leveraged at all. Be interesting to see a breakdown of.
Just saying!
There is, of course, far more to it than that. You can show any conclusion you want starting from the same raw data.
Van Housing Bull 137:
you are not making any sense, mate!
What you say boils down to: profits are private because homeowners will keep the full appreciation, but risks are socialized as taxpayers carry a big chink of them.
Why? Why society should carry your risk, but not participate in your profits? Is your housing investment more deserving than, say, a private medical lab buying a piece of machinery?
We are all subsidizing your RE investments, and we are just saying: enough of that!
144 Alexcanuck Sun, Oct 18, 2009 | 8:37 am
What I wonder is which came first:did high net worth create a real estate bubble or did a real estate bubble create high net worth?
As for the 56% renters in Vancouver,I didn’t realize the pool of potential buyers is this large-no doubt the reason for our aborted crash,as soon as prices drop a bear buys-and we have a lot of bears in B.C.
145 domus Sun, Oct 18, 2009 | 8:44 am
Inequities abound in government housing policy.Why do owners get a grant(for owner occupied only)towards property tax but tennants or landlords don’t?Government policy is slanted towards home owners,which is part of why many aspire to it.
147 robertscreek
147 robertscreek:
I agree, there are many inequities. This particular one is pushing and supporting RE prices to levels beyond reckoning. The underlying asset is grossly overvalued because of it, and becomes a risk to stability.
Think about it: the government/BoC can barely increase rates, because it is held hostage by the negative wealth effect associated to house price drops.
It is not just a matter of making favors to RE buyers and subsidizing their purchase. It is a problem of overall stability and economic policy: RE cannot and should not be the determinant of monetary policy in a developed country.
Let me also stress that I know personally many people who cannot afford RE purchase because of this ill-thought policy. These are people with large downpayments but unwilling to take on 95% LTV mortgages. The government is really supporting risk taking and penalizing cautious behavior.
People should talk to their MPs and protest this state of affairs. It has lasted too long and it has to change.
Domus/149,
Don’t worry, it can’t continue like this. Denninger recently discovered (with a great puff of pompous excess) the exponential curve. (See e.g. http://tinyurl.com/yjlz6qt for a hit parade.) He’s using a line on a graph to call for a tax revolt, which is a little silly, but he’s right about one thing: governments can not artificially extend an exponential growth curve for long. The CMHC is just such a beast, and it will change (or be changed) sooner or later.
149 domus
I don’t expect any changes in Gov. policy given recent economic turmoil and majority of voters being homeowners.Can you imagine the outrage if they proposed to tax capital gain on residential real-estate?Or the odds they want to run a risk of crashing real estate now?One may not like these facts,but they are real and affect prices and markets.
151/RC,
You’re right, but if the government is worried about orderly deflation of a housing bubble, a change in the rules that affects only buyers (for example, the introduction and revocation of 40/0% ams) could be sufficient and wouldn’t get torches in the air.
Governments are running out of money.
Majority can be homeowners, but the cost will become so high they will have to do something.
RE valuations in real terms will have to come down. How that will happen will be a matter of policy.
152 Turkey Sun, Oct 18, 2009 | 9:45 am
Yes they could tweak it-but with rate increases in less than a year and fixed rates up earlier they will probably just wait and watch how that plays out
Don’t forget the fact that the majority of our net worth is in our homes, the overwhelming majority in the case of most. The non-RE assets are concentrated in the hands of a tiny minority. At some fast approaching point people will have to start tapping that RE equity as retirement looms its head. Without a still-growing credit bubble to allow a new generation (who, exactly they are is another question) to buy at insane valuations how will that work?
Fascinating article, RobertsCreek 138.
Thanks for that. Here’s a guy who had a job, had a business, canned those and switched over to real estate for his profession. Sounds like he’s 90% invested in real estate. Since when is this smart investing? Real diversification? Or a wise move? Plus, he’s now in a position to give advice to others… wow!
The article touts more net worth here than in Calgary or Toronto or Montreal or Halifax. For sure, my 1/2 house out here was worth more than most whole houses out east. But it’s all on paper, isn’t it? Well, at least he has rental income. That’s not too bad if all goes South.
Hey AnonyWow,
Where’s Jeff? And where’s RJ?
What do you think happened to Jeff? Did he silently return to earning 200K/year selling real estate? Hiding his thoughts that the market would tank from his clients drunk on low interest rates? What do you think happened to RJ? Do you think he’s kicking himself that he didn’t buy a condo in the Lions when they were cheaper and rates were low? Did he get laid off from his job?
Well, at least he has rental income.
As long as rates stay low and rents stay high…
Italics still broken!
156 vomitingdog Sun, Oct 18, 2009 | 10:32 am
Agree the”Success story” sounds like fluff but the net worth number surprised me.As for being all on paper-I suppose you could sell at market price,for paper money,or borrow paper money against that paper equity-is that how you meant It’s all on paper?
RC:You just hit upon the problem… Yes, he could sell and have those gains as real money, but EVERYONE can’t. As long as you leave it tied up and we all pretend it’s actually worth that this could maintain itself indefinitely, but the idea in many cases is to cash out at some point. Without continued price growth the only reason to enter such an overpriced market would vanish.
That is the problem with bubbles, as long as they grow there are all kinds of reasons for continued growth and everyone involved wants them to grow and they support the growth, until it has grown so far beyond fundamentals that all the participants have been forced into the role of speculator. Once the music stops…
What will it take to pop ours? I don’t know. But the fact that (as far as I know), every other RE bubble in the world has popped despite the best efforts of the authorities to prop them up doesn’t bode well for us. Or perhaps I should say you?
RC,
No. To me this guy has paper worth. He’s got 3 properties and no money. If I were him, I’d sell off some of my properties and diversify, pronto. Because if he’s wrong about the medium-long-term value of real estate, he’s not a wealthy as he thinks. And I’d extend that thought to the general statement made in the article about net worth in Vancouver.
Just watching a few videos on CNN and Tech Ticker now, many people are talking about just how many foreclosures and bad debt is still on bank books. Banks are pushing out these losses into the future and not wanting to write them down now. Their balance sheets look good for this year because they’re recapitalizing by borrowing dosh dirt cheap from the gov’t and lending out with good margins. But with all this bad debt on the horizon, I don’t know how seriously to take the news that their earnings are good.
Same with some of my US clients. They’re back in black because they’ve cut so much fat from within their company and slashed their ad budgets but they can’t move. They can’t sell, can’t talk to their customers, can’t compete with competitors or move product efficiently because they’ve got prohibitive budgets and half the staff they used to have. And with all this in the backdrop, here’s some guy pictured on a trail in N.Vancouver with 90% invested in RE, 3 properties and now a job in the industry as well. I think he’s nuts. And I can’t believe the journalist doesn’t put this “net worth” story into some greater context.
I’m rambling a bit. Sorry.
VD:
Your ramblings make no sense.
Or should I say the underlying facts you are basing your rambling on makes no sense? Because you do indeed portray it well, and I think you are right on the money in your assessment. Nothing has been fixed, everyone has just delayed the reckoning a little bit longer, as they have been doing for way too long before it all threatened to blow up. Pushing the problem down the road is getting VERY expensive though. Some two trillion $US in deficits in the US, that’s federal only, add the state and local shortfalls to that, and that’s just the cash spent. There is also the guarantees and purchases of dodgy debt by the Fed, 10-20 trillion $US this year alone if we don’t have a true recovery in the underlying economy.
Up in Canada $50 billion federally, 3 billion here in BC (don’t forget the coming “conditions have deteriorated more than anyone could have foreseen” revisions), 200 billion in mortgage purchases from the banks (remember that? $6500 each Canadian, babies included. All good as long as the credit crisis is just a bad dream) and on and on. All just to buy some time, not to fix the problems.
Meanwhile the media laps up the story, and almost everyone believes it because it just feels so good and the alternative is too horrible too contemplate. “You’re richer than you think” feels a lot better than “you really blew it this time”! http://en.wikipedia.org/wiki/Truthiness is a powerful principal, used very effectively.
VD, you’re in advertising, right? You must be very familiar with how willing people are to accept a comfortable lie over an inconvenient truth.
Jeff is out pumping and selling d/t condos. he has to hide from this blog cuz of his shame prediction.
R/J is too much in love; he moved in his in law basement and retired from buying d/t condo.
Everyone is happy ever after…
Very apropos: a mess of debt numbers.
http://americacanada.blogspot.com/
Why it can’t continue.
From Globe and Mail (October 6)
Canadian’s household debt is now 140 per cent of income, up from 131 per cent a year earlier.
http://www.theglobeandmail.com/globe-investor/personal-finance/household-credit-defying-gravity/article1313505/
US household debt peaked at 135% in December, 2007, and currently stands at 129%. A ratio above 100 per cent is generally considered unsustainable.
US household debt peaked at the same time that their recession began. Coincidence?
I’ll keep waiting!
AC,
You know what? They’re never going to raise interest rates in June. How will the BoC take that action when the US will never be able to? They’ll have to keep interest rates down in the US so that the millions of people who will be part of that mountain of foreclosures put off and yet to come have a faint hope of renegotiating at 5%/30 yrs.
I had previously thought that most of the underwater mortgages had been cleared up in this way. I remember reading something by Mish to this effect but it seems now that the 2nd wave of mortgage defaults is yet to come. Elizabeth Warren (head of the TARP fund) has some interesting things, if not frightening things to say about what’s ahead:
http://finance.yahoo.com/tech-ticker
I’m hoping she’s as impartial as she appears and isn’t just trying to build her profile after Michael Moore’s recent doc. As for people believing lies or truths, I dunno. I actually think what we’re witnessing is the bursting of a bubble. NYTimes.com had an interesting piece on how major bubbles have burst in the past… in groups and by re-flating, the re-popping, and then inflating other bubbles in other sectors. It kind of makes sense because you have a population that is CONVINCED that ROIs are HUGE. Those who’ve sold out of the 1st bubble, have the cash and need to put it into the next big thing with this same expectation on returns. And because the amount of people who’ve made lots of money in the 1st bubble is substantial, when they all move into the next thing, it bubbles up fast (stocks, commodities, oil right now?). It then bursts and with each subsequent bubble bursting a bit of that original money is lost, which, I guess is what needs to happen to remove the excess out of the system.
At first I thought the Van RE bubble would burst fast. Exactly like what happened between July-Jan last year. But now I’m thinking that it’s impossible for major bubbles to burst this way. Because of all the millions, if not, billions of dollars made during the bubble, the prolonged exposure to bubble mentality and expectations, and the ability newly liquidated money to move itself en masse to the next big thing, delaying the burst and creating mini bubbles elsewhere.
Sh*t! This thing could take a decade to unwind. Now I’m really rambling and a bit crazy with it too?!
VD:
Good thinking except, major except, each bubble must be bigger than the previous one to keep the game going. Nothing on the horizon bigger than the housing bubble, that’s why the private sector isn’t pretending to have a recovery despite un-precedented government “pump-priming”. Priming doesn’t work when the well is dry.
Here is the money quote from your linked article, VD
“While she has no judicial or legislative power as chair of the Congressional Oversight Panel, it hasn’t prevented Warren from talking tough.”
PR exercise? Something to allow the masses to think “someone” is doing “something”, while business as usual (looting and despoiling for personal gain) gets one last gasp?
VD + AC/multiple…. touché (P.S. – a billionaire Vancouver property developer I once interviewed/photographed for our weekly national newsrag [yes, that one] passed on an interesting piece of financial advice – to wit, ‘I never went broke selling too soon’…)
Afterthought… re: VD/162… “Same with some of my US clients. They’re back in black because they’ve cut so much fat from within their company and slashed their ad budgets but they can’t move. They can’t sell, can’t talk to their customers, can’t compete with competitors or move product efficiently because they’ve got prohibitive budgets and half the staff they used to have.”…
In much the same way as the character/quality of network ‘upfronts’ – adspend has always been a leading indicator of where we’re headed…
“But now I’m thinking that it’s impossible for major bubbles to burst this way. Because of all the millions, if not, billions of dollars made during the bubble,…”
Actually, they can and do burst that way, in part because a lot of that money is destroyed and in part because, as you say, it can move elsewhere.
“millions, if not, billions of dollars made during the bubble,”
That is not money being made. It is, to a degree, money changing pockets.
As a rule, due to waste during the bubble and useless what-evers left over after the bubble popping value is destroyed by bubbles. Any “money” left over is better thought of as inflation: a general devaluation of everything else in order to make room for the “profits” people think they have. Money does, however, most certainly change pockets!
AC,
Here’s what you’re talking about in a graph:
http://people.hofstra.edu/Jean-paul_Rodrigue/jpr_blogs.html
Scroll down to:
Blowing Bubbles: From Technology to Commodities (3/14/2009)
He’s kinda an interesting guy:
“Real Estate and Impoverishment (6/26/2008)
The wealth effect of real estate has often been underlined, particularly within the “ownership society” framework. The assumption is that home ownership provides financial stability and an asset that can be borrowed against in time of needs (e.g. medical emergency, funding college, etc.) or to cash out and fund retirement. However, it can be argued that in the current context real estate is more a cause of impoverishment than of wealth since the asset has essentially been tapped out. For many, homeownership has become a very relative term as they “own” a huge liability instead of an asset. The main impoverishment effects caused by homeownership are:
Income diversion. A large share of the family income is diverted to sustain a non-performing asset that has limited utility and, outside asset inflation, does not provide any real return. Thus, what is spent to cover a liability is not used for consumption or savings. Another sign of impoverishment is the strategy of many homeowners in view of rising mortgage payments due to rate resets and rising utility bills. Many will keep up the payments as long as they can (reducing their consumption) in the hope of keeping their home, thus exacerbating the income diversion effect.
Destruction of savings. Concomitantly with the income diversion effect, many are digging into their savings (if any), their retirement funds or other assets (e.g. jewelry) to keep up with their mortgages. This simply delay the inevitable if the mortgage load is too high comparatively to income. The outcome is even worse; a homeowner (homedebtor) would end up losing the house anyway in addition to severely deplete his existing non-housing assets.
Additional debt. In some cases where income diversion is pronounced and where savings are not available, a homeowner will contract additional debt either to keep up with debt obligations and to cover living expenses (food, energy, clothing, etc.).
All these factors are a real source of impoverishment, undermining the financial stability of many families in an illusive attempt to keep up with the “debt is wealth” paradigm. You end up no longer a homeowner, but “homeowned”. This impoverishment effect will not stop until home prices are the equivalent of renting.”
Homedebtor instead of Homeowner. It kinda has a nice ring to it?!
Nice find, VD.
Yeah, that’s what I’m talking about! I’ve got nothing against a certain degree of pride of ownership and spending more than you have to (but can afford!) to live in a nicer place and/or neighborhood, but we have people who have no money or life other than their mortgage payment. If they didn’t think that by paying more interest than they can afford they would “win the lottery” and get rich they’d never dream of paying that much for a roof over their head. Years of kraft dinner (actually, the discount brand. Real KD is too expensive right now.) all to enrich realtors, builders, banks and lucky flippers who guess right. Wait until all those boomers start to cash out… Unfortunately, bubble economies are very expensive even for those who stand back, and then are forced to help pay for the bailouts.
Meanwhile, my beer-making day is almost done. Mmmmm, beer!
176:
I like home-ower as well, or homemoaner
161 Alexcanuck Sun, Oct 18, 2009 | 11:10 am
“RC:You just hit upon the problem… Yes, he could sell and have those gains as real money, but EVERYONE can’t. As long as you leave it tied up and we all pretend it’s actually worth that this could maintain itself indefinitely, but the idea in many cases is to cash out at some point”
But we could all borrow 90% and buy more real-estate with the equity draw down,sort of fractional lending but in real estate-would’t that keep it going ten more years?Or diversify buy stocks etc-now you still have your real-estate and your paper profit can play the market-so how do we know clever Canadians didn’t use that extra 10% they borrowed this year to buy cheap stocks or discounted Florida Condos-after all net worth is up so they didn’t spend it all on widescreens
So sad:
http://tinyurl.com/yfzevgp
V-Dog:
Sad story indeed, but is she really a victim of foreclosure? Was real estate a bad move for her? She had a $45,000 house with $400/payments, and a second property. Unfortunately, she lived beyond her means. That had nothing to do with her real estate. She ran up credit card debt, had a marriage break up and became unemployed. She’s more properly a victim of those three things, or of spending more than she earned, than of foreclosure. If she hadn’t owned real estate she’d be in the same position, only more in debt.
Rob (77) wrote
>> What say you?
Hi Rob,
Last time we debated this we agreed to disagree. I don’t have any further comments.
I did do a quick survey of random Vancouver Realtors from Google, and, to their credit, they weren’t as schmarmy as I recall them being the last time I looked a year or so ago.
WBWUCR’t'13?
robertscreek (181) wrote
>> But we could all borrow 90% and buy more real-estate with the equity
>> draw down,sort of fractional lending but in real estate-would’t that keep it
>> going ten more years?
robertscreek — I think if you run the numbers that your debt always increases faster than your appreciation.
S’pose you buy a nice Yaletown condo for $450K. Your monthly cost of ownership is about $4K, right? (Interest, Tax, Insurance, Repairs, Association Fees?) And you can rent it out for $2000/mo. (that’s $1900/mo with a 5% vacancy rate)
Here’s one for sale at $450,000, 9th floor, rents for $2000/mo. At “Pacific Place Landmark”
http://vancouver.en.craigslist.ca/van/reb/1428447563.html
And to confirm the rental value, here’s another suite in the same building listed at $2200/mo. 22nd floor, with sunroom (definitely a better product)
http://vancouver.en.craigslist.ca/van/apa/1422891657.html
So as owner you pay $4K/mo, and take in $1900/mo. Not pretty. To have price appreciation cover your loss, you’d need to go up $25K each year. That’s a little 5.5% annual appreciation.
And that’s to break even. When you sell you’ll pay mortgage closeout fees, Realtor fees, possible 2 months rent returned to tenants, possible month or two of vacancy, etc.
Call me a skeptic, but I don’t think we can expect 5.5% annual appreciation in perpetuity. Plus you’re locking up $10K of your own cash in the place every year (above and beyond the $25K you’re throwing away outright).
If we just get, say, 4.5%, then you’re losing $5K/yr. Compounded. If we get, say, -4.5%/yr for a couple years, then you’re losing $55K/yr. Compounded. (Though we can’t sustain loses like that long-term, of course, it would level out and head back up at some point. Like it’s doing in Japan).
Your thoughts, your numbers?
WBWUCR’t'13?