Here’s the open topic for June 29th
-CB Developments lose their license.
-Torn up contracts head to court.
-Mohican has a brand new look.
-Hong Kong changed us.
-Too soon to call bottom in the US.
What are you seeing out there? Post your news, links and rants regarding the Vancouver housing market here!
on Days of ultra-cheap money coming to an endmac, that was you? Holy crap you brought it, too bad the blog was shuttered. I should have copied your on Days of ultra-cheap money coming to an end@M-: OSFI strikes me as proposing doing what's right, not what's politically feasible. The requalify scheme does have issues, first
on Days of ultra-cheap money coming to an end@mac: Not sure why your comments got held up in moderation, something tripped the spam filter. Hopefully posting works better
on Days of ultra-cheap money coming to an end@Bob the builder: "Have a look at the correlation of oil and the major indexes. They tend to go up
on Days of ultra-cheap money coming to an end@spareanickledimedollarpenny: "The 1880 Section 10 of the Canada Interest Act puts a maximum penalty of 3-months' interest on repaying any
July 3rd, 2007 at 2:20 pm
I don't know why we feed the troll, he deletes comments off his blog, when he doesn't like what others posts.
July 3rd, 2007 at 1:41 pm
"That was a remarkably well-written post by SATV. How much of his usual fractured bluster is a put-on, I wonder? "Very inconsistent. I think babelfish goes down from time to time, so this person has to mangle the English manually, which can be a tedious task.
July 3rd, 2007 at 11:12 am
SATV said -"While the insurance premium is a one-time charge, it is typically added to the mortgage amount and subject to compounding interest.as far as I understand this ratio can be calculate this way." That was a remarkably well-written post by SATV. How much of his usual fractured bluster is a put-on, I wonder?
July 3rd, 2007 at 8:47 am
sorry from deseprate "seller"
July 3rd, 2007 at 8:45 am
jadeup side market is mostly condo market,because of house price's are too costly so people definitely going to grab a piece of condo just to put them self in.Vancouver has recently become a paradise city of the world,we also have a town that's going to become heven around 2009 this town is called "gastown" this area is in transition.because of high price in west vancouver,so gastown and north vancouver giving tough fight to west,stabalizing sales and price in the wv.till end of this year north and gastown will slide upward to much that will make people belive that west vancouver prices are level or low then after jan.15 all of the vancouver will start going up agian smoothly.around 2009 be will be out of construction,congestion,and stress as well,then we will discover brand new Vancouver.lowest price in november are not guranteed, but thats the least some one can bargain under list from deseprate buyer because mkt.cool down too much.have you heard november rain by guns'n'roses,after that it is all the way brayan adam heaven for 11 month.
July 3rd, 2007 at 8:10 am
Some studies are for discussion on the Bill Good Show, The Province and The Vancouver Sun.Then there are studies, which are not intended for the use of marketing, but for decision making.These expensive and confidential studies indicate, beyond any doubt, that the Vancouver RE market is already a disaster.
July 3rd, 2007 at 7:02 am
satv Does that mean your going to put more skinin the game in November?If so.What market segment do you see the most upsideand why?
July 2nd, 2007 at 9:24 pm
Grant I don't have any cycle, its just food for thought when some one expect a crash.Vancouver is doing excellent no need to pull any rugs.crash,bubble,ghost does not exist any more and vancouver will countinue to grow at fast pace.I would say best time to buy again will be november 2007 another chance to stay in.
July 2nd, 2007 at 8:57 pm
Satv where does your seemingly arbitrary 30-year cycle # come from?
July 2nd, 2007 at 8:35 pm
Remember the market peaked out in 1981.then market should be peaked out in 2011 and crash in 2012.then again 2041 and crash in 2042,just to keep 30 ratio or cycle.I think it is good to buy anytime because after crash another crash does not happen till next 30 year.so something that is 350k today will be worth 2.5 million what a crash.no body will ever sell their property again if crash is that cool.sky rocketing price will become space rocketing till then.
July 2nd, 2007 at 8:15 pm
I expect a crash.Remember the market peaked out in 1981 and started declining when the economy was still looking good. The recession hit in 1982 after a year of declines and delivered the coup de grace.All the ducks are lined up for a bloodbath in Vancouver yet nothing has happened yet. Once the US officially goes into recession (1q 2008 by my bet), the rout will be on. Or some other event may trigger it sooner. Or the market may just exhaust itself like in 1981, or south of the border in 2006.
July 2nd, 2007 at 6:58 pm
but we're especially vulnerableno we have solid firewall protection,and spam control with pop up blockers,so we wont let it pop up.
July 2nd, 2007 at 6:15 pm
I also think the crash will move quickly once it starts. People are over-extended on credit and leveraged speculation while maintaining a negative savings rate, and they'll be screwed once the appreciation machine even flat-lines. The imminent recession in the US will take a lot of countries down with it, but we're especially vulnerable, and once the crash begins there, no one here will be taken seriously if they try to spin our dropping prices as a temporary dip (though I expect Freako's right in expecting some to attempt it).
July 2nd, 2007 at 4:43 pm
I think it is going to hit hard and fast.Look at the U.S. It was not a slow decline.
July 2nd, 2007 at 12:46 pm
Agree, freako, and LOL about your waiting award.
July 2nd, 2007 at 12:13 pm
"I'm more inclined to believe the whole house of cards will suddenly collapse at some point. ""I'm leaning toward your assessment patiently, the whole thing will fall apart real fast and it will be very unexpected. "I will have to join in this as well. I don't know if a rapid decline is probable, but it is definitely much much more likely than expected. Why?Precisely because it is not expected. I have railed against this bubble long enought, but one of the key causes are some of the old wives tales circulating that RE doesn't go down. That, of course, holds true until the tale in itself causes people to throw caution into the wind, and abandon common sense.The related topic I have railed against is that there are no mainstream critics of high valuations. Not in industry, not in the media. But that is another story.Back to the topic of speed of decline. Prices are still at record levels, so market particants are obviously feeling confident at the moment. Despite what is happening south of the border. They are feeling confident, becauase they don't believe that prices can go down. The worst case scenario is flat prices. With such an ignorant mindset, there is potential for shock. Shock causes panic. Panic causes selling. Selling causes prices to crumble. And so on.On a related note, I have an "Ignorant Asshat" award put aside for the first pundit to declare prices "undervalued" once they have fallen 5% or so. Do not doubt it. It cracks me up when you see some homeowner who declares that prices will go up back up again when told that he is down 3% from purchase price. These clowns think that the market is undervalued, even though it previously doubled on sh*tty fundamentals. It would be comical if it wasn't so tragic.
July 2nd, 2007 at 11:42 am
mohican, I'm also now leaning towards a big dislocation at some point. A threshold of some sort (readiness of banks to lend is the most likely) will be crossed and buyers will dry up while sellers surge. Perhaps in the Fall. But still think June may have been a top.
July 2nd, 2007 at 9:04 am
I'm leaning toward your assessment patiently, the whole thing will fall apart real fast and it will be very unexpected.
July 2nd, 2007 at 2:37 am
I thought that if the housing market went into several years of slow decline, it would be rather quiet. Nobody would want to talk about it. Just a silent, painful standoff between buyers and sellers.I'm more inclined to believe the whole house of cards will suddenly collapse at some point. I'm not sure when because I think it will result from a complex series of international financial crises. Just a guess…
July 1st, 2007 at 9:42 pm
Any thoughts on when the crash will actually happen?I don't expect a crash, I expect years of decline with lots of noise on the way down.
July 1st, 2007 at 9:39 pm
I see Canfor is blaming the US housing slump for their financial woes.
July 1st, 2007 at 9:04 pm
in greater vancouver
July 1st, 2007 at 9:29 am
had enough people have to start somewhere, then rest is easy lets say you can manage 25% then save.on 650.000 (20,150 saving)on 380.000 (11,780 saving)on 300.000 (9330 saving)and there is additional saving for first time buyers saving of almost 6,500 on ptt under 375,000 purchase.despite all these, there are more than 30,000 units are being sold every year in canada.one can not be advice to buy or sell.but our needs make us buyers and sellers.
July 1st, 2007 at 8:35 am
My husband found this on ReutersReal Estate: Two-thirds of investment managers showed little enthusiasm about the Canadian real estate sector. "There has been so much publicity regarding the glut of supply and high-risk mortgage lending problems in the U.S.," said Hicks, "and with the strong likelihood of higher financing costs, both south and north of the border, managers are more bearish about Canadian real estate."
July 1st, 2007 at 6:03 am
ptt+hr(high ratio mortgage) the pope this sun article did not calculate high ratio mortgage amount and article also does not mention that first time buyers are exempted from amount under 375k as promise in bc budget so that is little confusing.there was law that mortgage amount over 75% will be count as high ratio but that has been changed now to over 80%.High-ratio mortgage insurance will still be required for mortgages greater than 80 per cent of the home's value.Those borrowing 80 to 85 per cent of the purchase price pay a premium of 1.75 per cent of the amount borrowed, rising to 2.0 per cent on 85-90 per cent, 2.75 per cent on 90-95 per cent, 2.9 per cent if they are borrowing with a five-per-cent down payment, and 3.1 per cent if they have no down payment.While the insurance premium is a one-time charge, it is typically added to the mortgage amount and subject to compounding interest.as far as I understand this ratio can be calculate this way.WITH NO DOWN PAYMENTon 650.000 +20,150 hr+11000ptton 380.000 +11,780 hr+5600ptton 300.000 +9330 hr+4000pttThere is a change in fedral law, means savings of $2,500 for a borrower with a $250,000 mortgage representing up to 80 per cent of the home's value.
June 30th, 2007 at 10:35 pm
buy or not to buydo not forget to enjoyhappy canada day every body
June 30th, 2007 at 8:53 pm
That's crap. People are spending the absolute maximum on buying houses that they can scrape together (I hesitate to say "afford"). The notion that people are making lower down payments, and hence higher mortgage payments because of PTT is absurd.Sellers have to sell to someone. If there aren't enough buyers guess what – the market price comes down.If the tax were removed tomorrow the market price would just jump 11K. No surprise the usual suspects are campaigning for the removal of the PTT – and as the market declines you can expect even bigger idiocies such as mortgage interest deductibility – to make housing more "affordable". The goal of course to prop up the market and head off the only true source of affordability – lower prices.
June 30th, 2007 at 7:38 pm
Realestute commented in the previous thread about the land transfer tax and the fact that it was higher here than in other places in Canada – Coincidentally there's an article in Todays Sun on just that topic.A detached house will have a tax of $11,000, an attached house $5,600, an apartment $4,000.At the margin, the property transfer tax could keep homebuyers out of the housing market. Even if someone can manage to pay this tax, it means they forgo a bigger down payment. As a result, they would be left with a bigger mortgage payment for the rest of their working lives.
June 30th, 2007 at 4:52 pm
Digi,Thats a nice smack-down for CB developments.According to previous news, CB Developments was already in a money-losing situation so losing their license sounds mostly symbolic.I'm not sure why people are taking so much glee in this license revokation… it doesn't help the original purchasers.
June 30th, 2007 at 9:48 am
just for lough1. How do municipalities set property taxes?they just take a look through your patio.2. I haven’t improved my property. Why are my taxes higher this year?because you do not clean your bathroom timely3. All the homes on my street are identical. Why are my property taxes more than my neighbours’?because you bother your neighbours with loud music.4. Like many baby boomers, I own a second home. How are they assessed?by landing on the roof from helicopter5. If I buy a new home and there are taxes owing, who is responsible?your neighbours.6. I didn’t receive my tax notice. What do I do?buy some beers and chill out.7. I’m selling my home. Should I claim the Home Owner Grant?sure if you can pay back on right time.8. I want to appeal my taxes. What do I do?take a microphone and loud speakers.9. I forgot to claim my Home Owner Grant in previous years and I paid the full amount of taxes. I want to claim back my grants. Can I?no they gonna find out where you live,then those pending tickets,credit cards bills,then summons etc.
June 30th, 2007 at 8:41 am
I think we have already seen the peak in some parts of the GVRD. Prices are no higher in New West than they were last fall. I'm seeing asking price reductions in New West during the Spring. I suspect it may be similar in places like Poco, Surrey etc.
June 30th, 2007 at 6:18 am
si_fu "Any thoughts on when the crash will actually happen?" this fall September, when the depth of interconnections between the inflated CDO's and intertwined hedge funds are rated downward by rating firms such as Moody's. I would be willing to bet our mortgages with Canadian banks are also backed by the fake market. Canadian Banks have been caught in several US financial messes. (Enron/CIBC for instance). Also likely some of our major pension funds. The idea that the Vancouver realestate market is a stand alone economy is for the deluded!
June 30th, 2007 at 6:11 am
si_fu said "The speculators are still coming…"Which is very true except the ones I see now are not experienced and often first time. I have a lot of experienced ones that are quietly taking their profits. I call them investment speculators as opposed to (stealing from blog lingo) "newbie speculators"
June 30th, 2007 at 1:45 am
Historically total return for RE (capital gains, rental income (cash/imputed), -expenses) has outperformed fixed income and underperformed stocks.Which is what you'd expect. RE has to outperform fixed income in the long run (like any other equity).On the other hand it should underperform stocks because earnings from housing (rents) are more predictable than earnings from stocks. Less risk, lower reward.
June 29th, 2007 at 7:05 pm
"The real average housing price reported by the REB is higher now mainly due to larger lots size and big box house. "I don't know about you, but I (and I presume most other people) focus mostly on the GV benchmarked median. I don't even know what the average is at these days."I've seen a study done where they took the same bundle of real estate back in teh 60s and tracked the same homes over 40 years."Shiller goes back further 100 years. But first of all, you are ignoring rents and imputed rent. These add to the return, especially if compounded. Second, I think the Shiller graph (and the others) which suggest flat real prices are flawed. Urban real estate most definitely has returns above inflation. Don't forget about the appreciation that is hidden in density increases.
June 29th, 2007 at 4:56 pm
Any thoughts on when the crash will actually happen?Tuesday.Only kiddin'.I stuck my neck out recently and called June 2007 a top (based on topping Chinese markets, bond fiascos, interest rates, etc). Still possibly right.Only correct answer, other than flippant guesses, is that nobody knows, but top it very definitely will.
June 29th, 2007 at 12:38 pm
chrisnott:"Now owners of half a million dollars of firewood."They own half a million dollars of firewood on a specific and reasonably valuable piece of land.
June 29th, 2007 at 12:30 pm
"Like one of the other blogger states, "tick-tock, tick-tock". Just a matter of time!"Sure we all know the bubble will pop eventually, but when? I don't see it happening anytime soon, based on what I have seen in the market lately. Frenzied interest at open houses, multiple offers, etc. This is still happening in the DT condo market for places in the 275-325 range, and prices are creeping up. Lots of blogs have been predicting "The End" since around 2005 or so, but the market hasn't fallen off a cliff. The speculators are still coming…Any thoughts on when the crash will actually happen?
June 29th, 2007 at 11:38 am
chrisnot: nice analogy, although to make it complete you need to include the fact that you heard somebody crossed the bridge before and found thousands of dollars on the other side, and a small group of people to point out that the money has already been picked up and the bridge is in even worse shape now.
June 29th, 2007 at 11:19 am
http://www.signonsandiego.com/news/state/20070507… – San Francisco couple's $525,000 'fixer-upper' collapses. Literally. Just from historic neglect the rot had become so bad that it just fell down. Now owners of half a million dollars of firewood. What type of market makes people want to buy structures that are so past the point of being condemned? Analogy: I hike which means driving logging roads and on some unmaintained roads, the bridges are rated at 0 tonnes meaning they could collapse if you drove over them. Would you risk it? These people did.
June 29th, 2007 at 10:57 am
Hey sifu, rent Blade Runner. You cannot stop it but you can slow it down.
June 29th, 2007 at 10:56 am
or…tinyurl.com/yfw62g
June 29th, 2007 at 10:54 am
calgary/edmonton/vancouver and bubbles every where..tinyurl.com/2fphpx
June 29th, 2007 at 9:24 am
I can't believe the self-serving nonsense in the Straight article about HK. Reminds me of the (semi) satirical article in the same rag a few years back about how Caucasians are racially inferior. Thank goodness the privileged and greedy overseas investors showed us backward racist bumpkins how we ought to live.What happened here is similar politically and economically to the Cuban colonization of Miami. The net result has been that both cities are bigger, denser, and less liveable.
June 29th, 2007 at 8:31 am
I have to modify my previous prediction of price declines commencing this fall. Over at SATV's (I mean Chipman's) I see the sell list ratio is unusually high for this time of year. I actually don't think its people rushing to lock in at low rates. If so they are being foolhardy as ultimately the price you pay for the house dictates its long term affordability as much as your monthly payment. As Rentah previously commented there are many costs beyond your monthly payment. In fact with a high down payment, a higher rate could mean a higher ROI on renting, and investing your down payment elsewhere. Ultimately buyers pay a huge "control" premium. I look at it as an extra $1000.00 per month to have the joy of cutting my own lawn and knocking down walls. Your principle residence should be carefully considered and you should make the best deal you can. You should not expect continued appreciation as a God given right, nor should you fear a crash. I respect and admire people that do the analysis and wait for their moment to buy-wether its 2005 or 2009. I loathe those that blindly follow either the bear or bull mantra but don't committ based on who *they* are. I see Rob "called out" VHB but he nobaly stayed silent.
June 29th, 2007 at 8:26 am
I agree with you digi on the comment regarding RE not being liquid and is sticky downward, but nevertheless will go downward.All these people who buy homes before they are built should not be protected at all. The government should do nothing about it. Simply because there is nothing wrong with the system. It's simply a contract. If the buyer feels the contract is not being honour faithfully, then sue the seller. Nice and simply. The buyer must take on some risk. It's only fair. Buying something before it's completed inherently has risk. Now the negative impact of the risk came about and those buyers don't want to face the consequence. It's like you wanna bet at the Casino but you're bitching about the house winning. Maybe now, people will only buy units when they are completed.Personally I have no idea why anyone would every buy a condo before it's built in Vancouver. That's just crazy. New York, Tokyo, or Hong Kong, maybe. You don't even know if you will like it. It's most people's biggest investment. I guess people who flip them don't really care, they're not living in it.
June 29th, 2007 at 7:23 am
The Riverbend developer getting their license pulled must make that New West developer a little nervous about their court case.Thats a nice smack-down for CB developments.
June 29th, 2007 at 7:17 am
by the time your listing hits the MLS, it could be over priced. This is evident in US. Some of the homes decreased 35% in listing price over two years.This is the flipside of the illiquid nature of real estate – it doesn't tend to crash quickly like stock markets, but is a long slow slide down any less painfull?The problem as always is spotting the top. Doing that precisely is a spin of the wheel, you're better off looking at whether or not an asset is overvalued and taking profit when you can.
June 29th, 2007 at 7:01 am
From the Sun: Western Canadian bankruptcy firms feel pinch of good timesBankruptcy filings are way down in western Canada (focus is on Alberta), but as the article points out folks are going further into debt by refinancing their homes. Seems to me that while the current housing boom borrows demand from the future, it also defers demand for bankruptcy services. As for the oil boom:'Alger also says "things are starting to change." His contacts in the oilpatch, which has been hampered by high costs for everything from labour to materials, say utilization factors for their rigs have dropped as low as 15 per cent. Some oilfields are actually releasing employees, McCulloch adds.'Also: '"The economy is not in as great shape as we've been led to believe," says Alger. "The bloom is off the rose."'There's also a reference to the huge increase in listings in Calgary (Edmonton is way up too).
June 29th, 2007 at 5:55 am
FROM THE INFLATION UPDATED VHB'S CHARTAs we can see from history, every time the real housing price booms, the bust overshoots the downward as dips past the inflation adjusted price. That's a pretty steep fall. Clearly, real estate is not the best investment. Time and time again I've been telling people that in general, real estate just goes up with inflation. This graph is even in the bull's favour. The real average housing price reported by the REB is higher now mainly due to larger lots size and big box house. I've seen a study done where they took the same bundle of real estate back in teh 60s and tracked the same homes over 40 years. The return was less than inflation. This resulted in a negative real return. The depreciation on the house was greater than the appreciation on the land. So back to the comment I've made a few days ago. 50% is being conservative and on the bull side. It's likely to crash even more. History don't lie. I'm sure if you look up newpapers and articles in the past booms, they had reasons why the market will keep on going up, just like those silly reasons we have today. But did it? NO!!!!! So really? What makes it different this time? Olympics? We had Expo 86. I would argue it's a bigger event. The Loonie is greating stronger and the Canadian Exporters are not doing good. The Bank of Canada will have to battle inflation by increasing interest rates. This will cause the Loonie to soar more. So, increasing price in real estate and decrease substance to support the boom. What do you think is gonna happen? To all those flippers. When the market turns, my recommendation would be to sell below the market value to get rid of the inventory. Far below. Take the hit! In a falling market, by the time your listing hits the MLS, it could be over priced. This is evident in US. Some of the homes decreased 35% in listing price over two years. Ouch!!!! Paying two years of mortgage and still losing 35%. The investors were probably thinking, it will turn around, it will turn around. I didn't do the calculation, but if 80% of the property was financed, this person would have lost over 200% the initial investment. That's pretty risky stuff. The flippers with slow decrease in their list price got hit the most. So when the market turns, take the first low ball offer you can get, because it's probably your highest one. I haven't looked at every graph around the world for inflation adjusted prices on real estate, but I've looked a many. None of them plateau after a boom. That was history. Will Vancouver be any different? Will it plateau off like most people with conflict of interest states? Or will it free fall? History vs People of Conflict of interest. You make the call.I bought my place during the boom in the 90s. Back them, just like all the other investors, I thought the market will go up forever. VANCOUVER IS NOW ON THE MAP!!! It's different this time. But I was wrong. The value of my place fell by 30%. My neighbour bought his place for less than my mortgage. Ouch. Oh well, I've learned from my lesson. That's why when the market went crazy, I sold it. Like one of the other blogger states, "tick-tock, tick-tock". Just a matter of time!