Markets keep dropping.
So much for the subprime problem being ‘contained’. Marco sent in these links to coverage of the ongoing fallout from the US housing market problem:
-Coventree’s problems continue: can’t find buyers for debt.
-Vancouver based mine developer Redcorp Ventures caught up in credit mess.
-The credit crunch is global.
-But hope looms in talk of a Canadian bailout.
-Meanwhile down south: US housing slump starts in July
How much longer will our real estate market exist in a vacuum?
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August 18th, 2007 at 4:45 pm
I know pet owners are paying big premiums. Its sad. I was just talking to my barber, and she is about to get evicted. She’s overpaying rent beyond her means because she won’t give up her cats. Eviction shouldn’t happen to someone who works 60 hrs/week and lives modestly.
August 18th, 2007 at 2:08 pm
chipman is even posting crap on his site to this effect.
Chipman has posted this in the past, and I refuted him using the most clear cut logic I could muster up. Lost cause.
Rents will absolutely NOT go up because landlords need more money. It is supply and demand pure and simple. Landlords compete for tenants and tenants compete for rentals. There may be some mispricings due to market frictions and imperfections but these in no way or form constitute increasing rent levels.
August 18th, 2007 at 12:07 pm
“As mentioned, the #1 clue is lagging rents. It is such a strong bearish argument, that the onus is on the bulls to explain it away. In the absence of such an explanation, the crash is waiting, albeit patiently it seems. Mystery reasons don’t cut it.”
freako, i think the realtors(tm) are on to this. i’ve been watching craigslist for sometime & see a lot of the overpriced rentals on there are posted by realtors & their agencies/ partners, etc… the effect of this is that amateurs see these overvaluations & post their places at a premium. renters who are too stupid or lazy or desperate rent this crap and it becomes a self-fulfilling prophecy. chipman is even posting crap on his site to this effect.
i’m so sick of the manipulation. why are people so stupid.
August 18th, 2007 at 8:59 am
Also,We hardly see snowing in this beautiful city.Such advantage warrant a high premium.
Yeah, everytime it snows in San Diego or Miami I laugh at those poor cold soulds.
August 18th, 2007 at 6:03 am
Patriotz said:
Yes of course I am. But you said “people sell only when they have no choice”. I.E. all people. That’s just not true.
Oh by way, there’s another group of people who always have to sell. They’re called “builders”, and you can see them keepin’ on keepin’ on south of the border, even as prices tank.
I say:
Let’s no feed words into my mouth alright.
Here,
Let’s assume that you have 80 percent debt on your home and the market price drops say by 10%, you have just absorbed at 50%, yeap that’s a 50% drop in the value of your equity. Do the math.
Assume a $500,000 home with the initial equity of $100,000 (your downpayment) and a $400,000 mortgage. 10% down from half a mil would be $450,000. Since you don’t own that $400,000 in money, you are only left over with $50,000 when you sell.
However, if we do the math again with a 40% stake equity (downpayment or a few years into the mortgage), but the market suddenly drops 30%, you will see a 75% of your total equity wiped out.
As I said in the earlier post, people with a significant built-up equity to cash in, which means 100% equity with no borrowed money will not be forced to sell. You see, a 50 to 100% decline of investor’s net worth in the stock market has NEVER happened before, not even the 1929 crash. Never. BUT, a 30% decline in house prices in Vancouver (though I think it would be even more) would quickly wiped out up 75% of the net equity worth.
gone. If house prices decline say 50-60% from the highs, then it would practically wipe out everyone’s total home equity.
Why?!? Because, most of them use their existing paid home equity(principle residence) to speculate on many condos and homes they bought with borrowed money.
Builders again would face the same problems. They are sellers, but they are also borrowers too! If they are forced to sell in a down market, they face the same lost of equity they did with regular home buyers but at a much magnified magnitude.
August 18th, 2007 at 12:48 am
US houses keep dropping but it will never happen in Van because you can’t compare a apple to a rotten egg such as NY and other major US city.Where in Canada you can have flowers growing all yrs long?Also,We hardly see snowing in this beautiful city.Such advantage warrant a high premium.
RE price is still far lower than London,Hong Kong,Japan and other major world-class city.Houses will costs 1 million dollar for sure in 2010.Get in guys before it is too late.The current RE price is still a bargain.
August 17th, 2007 at 9:28 pm
You are talking about people who already have a significant stake of equity in their homes. People who downsized or move to a different locale had built-up equity to cash in. People who buy homes these days DO NOT. That is the difference.
Yes of course I am. But you said “people sell only when they have no choice”. I.E. all people. That’s just not true.
Oh by way, there’s another group of people who always have to sell. They’re called “builders”, and you can see them keepin’ on keepin’ on south of the border, even as prices tank.
Markets are set at the margins. If a significant number of discretionary sellers head for the exits, that can be enough to stop price appreciation. And then new buyers sit back and ask themselves what is the point of buying. And the downward spiral begins.
August 17th, 2007 at 4:36 pm
not are our interest payments tax deductable.
The more reason for our prices being out of line. Our affordability has to THE worst in North America by a good margin.
August 17th, 2007 at 4:35 pm
I don’t mind that some of my arguments get taken apart – that’s why this board is for.
I wasn’t refering to your arguments in specific, but any argument from anybody. What is left over will hopefully be closer to the true picture, which I imagine is the ultimate goal of most posters.
But what I am trying to say is that something is missing in this analysis. Something that would explain the change in attitudes and acceptable prices/debt levels.
I see things which explain the insane valuations, but nothing that justifies them.
As mentioned, the #1 clue is lagging rents. It is such a strong bearish argument, that the onus is on the bulls to explain it away. In the absence of such an explanation, the crash is waiting, albeit patiently it seems. Mystery reasons don’t cut it.
Remember, we don’t have the exotic mortgages that US has, not are our interest payments tax deductable.
That argument has been made before. I think we do have f*cked up lending here. There is no way that we could be the 4th most expensive metro in North America without it. Our incomes are way down the list. Our population growth is mediocre. I don’t know exactly what is going on, but in the absence of evidence to the contrary, I presume that it is simply a speculative mania that will end sooner or later. I won’t bet my life on this, but I am fairly certain.
August 17th, 2007 at 3:56 pm
macho slob:
I’m reminded of the backwater that we still are, when folks in Florida ask me if I mean Vancouver, Washington after I proudly tell them where I’m from; or when I discover that I cannot book a direct flight to Hawaii
Get a new Travel Agent. Air Canada does daily flights (non-stop of course) to Honolulu and Maui. I do a lot of travel for business, and one thing you can’t knock is our airport. Its fantastic when compared to others. We aren’t a major hub city, but the flight options are decent considering we are in the far corner of civilized North America.
Almost everyone I talk to around the US knows where Vancouver is. My flights home are typically filled with tourists in the summer.
I’m sure you know from travel to Florida that they probably don’t know where Atlanta is, or who the current president is.
August 17th, 2007 at 1:55 pm
Doubt it, they looked like sincere opinions. It is good to have devil’s advocates on each side. The weak arguments will get picked apart, and we will all have a better understanding of what is going on.
I am more then sympathetic to the people who would like to see a correction. Honestly, I am shocked at what people are paying for their homes. When I bought the first place here I was slightly worried by my 150K mortgage and I worked as hard as I could to pay it off as soon as possible. And now? People take 400-500K in mortgages without blinking.
I travel to Texas on business from time to time and what I see there makes me wonder why am I bothering to live in Vancouver. Vancouver is not 5 times better to live in then let’s say Austin or San Antonio.
I don’t mind that some of my arguments get taken apart – that’s why this board is for. But what I am trying to say is that something is missing in this analysis. Something that would explain the change in attitudes and acceptable prices/debt levels. This last real estate boom is like no other before, so what is it that has changed? Remember, we don’t have the exotic mortgages that US has, not are our interest payments tax deductable.
August 17th, 2007 at 1:36 pm
Basically, you can’t easily compare the current Vancouver housing market to anything in living memory. Even many bulls I know were caught off guard by how long this has gone on and how high the prices climbed. In my experience, the slight aware average person just declares it “insane.”
August 17th, 2007 at 1:15 pm
But you guys are interpreting any new information out there as a sign that the boom is over and yet they keep going up.
I think people are looking for the trigger that will set in motion the long overdue correction. Sooner or later they will be right. The wolf did come.
August 17th, 2007 at 1:13 pm
OWG = satv or rChipman, maybe geezer got tired of rattling cages over at the other board?
Doubt it, they looked like sincere opinions. It is good to have devil’s advocates on each side. The weak arguments will get picked apart, and we will all have a better understanding of what is going on.
For example, the observation that 1982 was the result of an quick up down market was interesting. As mentioned, I don’t agree with it, but still worthy of consideration. On that topic, as I posted at vannumbers, I think the percentage of housing stock that paid signficantly above long term trendline is much much larger now than in 1981. In that sense, this is a much more precarius situation.
August 17th, 2007 at 11:42 am
Yes, as soon as somebody has a different opinion he must be banished from the board. Look if you guys want to sit here and convince yourself that the prices are going to fall I am not going be in your way. But you guys are interpreting any new information out there as a sign that the boom is over and yet they keep going up.
August 17th, 2007 at 9:21 am
OWG = satv or rChipman, maybe geezer got tired of rattling cages over at the other board? owg if prices aren’t going down then why don’t you just go out leverage yourself to the hilt and buy as many condos as you can instead of wowing us with your profound analysis.
August 17th, 2007 at 7:02 am
Landcor released some data in 2006 showing 94.4% of BC residential property was bought by BC residents, with a further 2.4% bought by Albertans.
So you are telling me that this type of property (http://tinyurl.com/2oleqv) is being bought by local folks? Condos ranging from 1.4 to 13mil?
Secondly, they may be local as in having Canadian Passports, but they may not be living here. Those 300,000 Hong Kong residents with Canadian Passports perhaps? Have you seen Coal Harbour towers at night? Very few lights and activity in general, especially in the winter. Now compare that to towers where people actually live (West End, Metrotown).
Don’t take me wrong here, I would like nothing more than to be able to buy myself a brand new house in Vancouver for $200,000 like I can in Austin, Texas – but that ain’t gonna happen.
August 17th, 2007 at 6:08 am
People starts selling only when they have no choice
Not true. Downsizing is an obvious exception, as is a move out-of-market to a cheaper location. Also investors may choose to get out if returns look unattractive going forward – especially if they are cash flow negative.
I say..
You are talking about people who already have a significant stake of equity in their homes. People who downsized or move to a different locale had built-up equity to cash in. People who buy homes these days DO NOT. That is the difference.
People who have no choice but to sell realize that, negative equity will hurt them more but since they didn’t put into the homes much, it’s less painful to bail out. Whereas, if you actually put 25% to 40% cash down on a home and the price went upside down however, it will be less likely for that person to walk away. This was what happened after the 80s recession.
Also, another trend that’s developing nowadays is with people using the paid homes to finance other homes or other equity plays with borrowed money. I know of several people who had borrowed money from the bank to buy 4 other homes (now valued up to 3 million dollars) and 1 land in Alberta, all from their valued $750,000 home in East Van. While we don’t have sub-prime in Canada, or at least in Vancouver, this is just as deadly as sub-prime.
This is because, they are in the false illusion that all these homes they bought with borrowed money had some built-up equity from their original home. That illusion, however, will be tested if and when the market starts to slide. One poster was correct in saying that most of the homes were bought by local BC residents, but with leveraged equity from their primary residence.
People like to protect their principle residence. Secondary and so forth and so on are not tax free when sold, so the likely of selling or walking away are much greater.
A consumer led recession had a surprisingly effect to people. It makes them savers rather than borrowers. This was true in the early 80s and 90s. That was not true after 2001, hence the term negative savers. That is why, there is this thing in the news of credit crunch bailout and the fed now reducing the discount rate, all in an attempt to prop up the market.
Why?!? Because everybody knew the game is ending, but also wanting to sell out as the prices go up again.
Just like the good old net days. People still bought Nortel even when it dropped from $120 to $75 then lower and then lower.
Be wise. Don’t try to catch a falling knife or it’s going to hurt.
August 17th, 2007 at 4:29 am
I suspect Canadian Banks are not in the mood to lend much right now except to persons with close to 60% equity.
Why not, as long as CMHC and Genworth are the parties actually holding the bag? Come to think of it, they might just prefer to loan >80% LTV just to get the insurers on board. Moral hazard, anyone?
People starts selling only when they have no choice
Not true. Downsizing is an obvious exception, as is a move out-of-market to a cheaper location. Also investors may choose to get out if returns look unattractive going forward – especially if they are cash flow negative.
Once price appreciation stops, the bell starts ringing for many of these people as they realize that it’s now or never. And the race for the exits begins.
August 16th, 2007 at 9:57 pm
I have looked at prices in Florida
(http://tinyurl.com/2ftrmn). The condos are down 1% YOY and houses are down 3%. Souther California is actualy up YOY by 3.7%. LA County is up 5.5%. Hardly doom and gloom. And yes, the sales are down.
Nice catch, Patriotz, I missed that the first time around.
OWG, here is your chance to learn something new, (unless you are playing games with us). I posted on this just the other day. NAR’s median has San Francisco up 7.4% yoy, whereas Case-Shiller has it down 3.4% yoy.
Now that is some huge discrepancy. Which is more accurate? Which is more accurate? Case-Shiller of course, as it measures apples to apples. The median is totally distorted as a result of the low end drying up due to subprimce.
The U.S. is a slaughter, and it will get much worse. As patriotz mentions, foreclosures are up. Inventory in some parts of Florida is nearing half a decade.
August 16th, 2007 at 8:59 pm
The Sun has an article with usual suspects telling us that our economy is just to hot for prices to go down.
Gee I heard that in 1981 too. Did they use the old articles as a template?
August 16th, 2007 at 8:56 pm
I have looked at prices in Florida
(http://tinyurl.com/2ftrmn). The condos are down 1% YOY and houses are down 3%. Souther California is actualy up YOY by 3.7%. LA County is up 5.5%. Hardly doom and gloom. And yes, the sales are down.
BWAHAHAHA!
Come on guy, don’t peddle crap like that on this board. Florida is a bloodbath, off 25% already in many areas. California Central Valley and Inland Empire are in similar straits, San Diego and outer Bay Area (Sonoma) falling, only a matter of time till the illness spreads to LA, OC and inner Bay Area.
I don’t give a hoot what someone’s aggregate statistics say, look at same-unit prices. It’s ugly.
Oh, and pardon me for asking the obvious, but if prices aren’t falling, why are foreclosures exploding and the secondary mortgage market tanking?
August 16th, 2007 at 7:28 pm
of course vancouver is immune to the credit crunch, the bloggers have been talking about for a long time
August 16th, 2007 at 5:49 pm
People seemed to have forgotten that when people are willing to carry a high leveraged insured mortgage, they are willingly in doing so because of the high confidence they have with their employment. You really can’t buy a home if you don’t have a source of income. This is not a problem not in BC in 2007. That wasn’t a problem then in BC in the early 80s either even with double digit inflation plus double digit interest rates. If some of you could clearly remembered. Or err I’m sorry, many of you were probably still in diapers?
Right now, mortgage payments for most BC home owners have passed 50%. I’m not surprised if some are at the 70% mark. Which means, having a good source of income every month helps keep the mortgage in check.
Canadians, like our American counterparts down south, are mostly negative savers. A rainy day fund for most of us? Probably not. I’m guessing that the majority of BC homeowners are living pay to pay.
Remember, it’s pay to pay.
A lot of people seemed to discount this credit crisis as being nothing more than just a slight hiccup.
But is it?
If the US goes into a consumer led recession, which I believe has a very high likehood, then we will eventually get the spillover. And when that happens and the job market starts tightening is when you will start to see things crumble.
You see, if most BC homeowners have CASH, real CASH in the bank account to help them weather through a recession of up to 1 or 2 years long, then yes, home prices will stay put. No one’s selling.
People starts selling only when they have no choice. Usually, we know only by how bad the recession lingers. The 2001 recession was just a hiccup, so there weren’t any major damage done hence stable prices in Vancouver. If Alan Greenspan were to keep rates as they were when the tech bubble burst and let the credit pain from the dot.bomb linger for a year or two, all of you might have a different picture about your homes today. Mr. Greenspan did the opposite which now created a much bigger problem.
I personally don’t believe that the credit problem is small.
Are you seriously led to believe that no one here borrow money from the bank to try and invest in anything to become rich when you’re close to retirement with barely any savings from your RRSP or in retirement but chasing fantastic yields?
Vancouver homes will only loose value if the underlying borrowers are weak. Just like the homes themselves. If you build them on a weak foundation, they will eventually sink. Today’s borrowers are that foundation. How strong are their credit worthiness? Last I’ve checked with FICO, the picture isn’t pretty.
All this talk about Vancouver being the best place to live in and with the Olympics are the same sugar coating the dot.com companies made a couple years back when they pitch for more fiber optics highway.
Yeah right.
August 16th, 2007 at 4:49 pm
“Except that instead of rich Russians moving in we have Asians and some Europeans.”
OWG,
Thanks for trotting out that old “rich foreigner” myth. I hate to say you’re wrong, but you are.
The last I heard, most real estate in Vancouver is bought by locals, who make local salaries. Vancouverites love to drive up the price of real estate and then watch it crash back to earth, as has been done about once each decade.
Landcor released some data in 2006 showing 94.4% of BC residential property was bought by BC residents, with a further 2.4% bought by Albertans.
Here are some choice quotes from an article on the report:
“Nielsen says he’s not surprised that B.C. residents still account for the lion’s share of all the real estate buying activity in B.C. “In all my speeches for years I’ve been saying the biggest buyers of recreational and small-town properties (in B.C.) are people from the Lower Mainland,” he says.
“And that applies to (purchases of) Lower Mainland properties as well.”
“So why is there such persistent talk on the West Coast that out-of-province buyers are pushing up B.C.’s real estate prices?
“I guess it’s (just) people talking and saying Americans are buying up the province and Albertans are buying up the province,” says Nielsen.
“I think it’s more that the local people get excited and they start buying.
“I think that’s really what’s happening. So it (foreign buying) is not as serious as everybody thinks it is.”
http://www.niho.com/Press/Pres.....ournal.asp
August 16th, 2007 at 3:58 pm
‘81 looks to me more as an anomaly then a rule. The prices spiked and went down over a very short period of time.
If prices are out of line with fundamentals, does it matter how long it took for that too happen?
August 16th, 2007 at 3:33 pm
the pope,
Most preapprovals have a 3 month term and the ones that are being excercised since the rate hike only hav about a month left, but even those have slowed to a trickle since the recent liquidity upheaval.
owg,
I’m reminded of the backwater that we still are, when folks in Florida ask me if I mean Vancouver, Washington after I proudly tell them where I’m from; or when I discover that I cannot book a direct flight to Hawaii, but have a choice to so from Seattle, LA, SF, Phoenix, Vegas, or San Diego.
robotman,
Not sure if financial, rather than economic blogs would qualify, but you might want to try:
http://www.financialwebring.com
freako,
Can’t disagree with anything you say….give em hell!
August 16th, 2007 at 3:19 pm
If it happened in ‘81 without a “a major catastrophe or a total collapse of the economy”, then those conditions are not required for 30-40% price drops.
‘81 looks to me more as an anomaly then a rule. The prices spiked and went down over a very short period of time. The current price buildup has started in 2001/2002 – so some 6 years ago.
Said ad nauseum last year in California, Florida, etc, on the same evidence (i.e. none) but no one’s saying it there any more.
I have looked at prices in Florida
(http://tinyurl.com/2ftrmn). The condos are down 1% YOY and houses are down 3%. Souther California is actualy up YOY by 3.7%. LA County is up 5.5%. Hardly doom and gloom. And yes, the sales are down.
August 16th, 2007 at 2:59 pm
Robotman … the difference in Canada is that the originating mortgage is done with stricter adherence to prudent lending practices … with the exception of your secondary lenders which, I believe, constitutes a much smaller part of the Canadian lending market.
That said, the current credit squeenze originated from excessive liquidity that’s quickly drying up. Japan’s carry-trade is being unwound, Canadian/US interest rates are rising, etc. etc. etc. This situation has been in the making for more than 1 year as economic impact resulting from interest rate movement takes about 6 to 8 months to manifest itself.
So, it would be unlikely that interest rate movement direction will change just because of the liquidity challenge.
There will be more shoes to drop, but I think the stock market is deeply oversold and is poised for a bounce. BUT, do not be fooled, fear has now gripped market participants.
Vancouver’s RE market will not be immuned to the credit squeeze are our chartered banks are a real conservative bunch. When they see that mortgage cash flow coverage in Van’s RE is 60-70% before taxes, coupled with the current liquity challenges, they will tighten. It is a matter of “when”, not “if”.
August 16th, 2007 at 2:52 pm
Who cares if prices keep going up. Finally they’re making houses small enough that I can afford to buy in to the ladder!
Introducing the 70 sq foot home!
August 16th, 2007 at 2:41 pm
I am afraid that barring a major catastrophe or a total collapse of the economy (30s depression, and not the current BS credit “crisisâ€) the prices in Vancouver are simply not going to go significantly lower in any reasonable future. The may stagnate (and thus lose a bit of value due to inflation) or slow down but if you guys are waiting for a 30-40% drop based on what happened in 1981
So many errors in logic; where to begin…
If it happened in ‘81 without a “a major catastrophe or a total collapse of the economy”, then those conditions are not required for 30-40% price drops.
the current BS credit “crisis†is just getting started. The majority of mortgage resets and subsequent defaults are yet to come; the ‘08 vintage is expected to be particularly toxic. By the time the “crisis” has played out in ‘09, no one will put think it necessary to put quotation marks around word.
prices in Vancouver are simply not going to go significantly lower in any reasonable future. The [sic] may stagnate
Said ad nauseum last year in California, Florida, etc, on the same evidence (i.e. none) but no one’s saying it there any more.
August 16th, 2007 at 2:26 pm
Here’s a question, slightly off topic: How do the secondary mortgage markets work in Canada?
Reading blogs like Calculated Risk, I’ve got a pretty good handle on how this works in the States:
1) Mortgages get made by originating banks.
2) The mortgages are then securitized and bundled up by type (Prime, Alt-A, subprime)
3) The GSE’s (Fannie Mae, Freddie Mac) buy up most of the Prime-rated Mortgage backed securities.
4) The remainder are sold to Investment banks who bundle them up into CDO’s.
5) These CDO’s are divided into tranches.
6)Institutional investors buy up the seniormost tranches (The AAA rated stuff), with the remainder gobbled up by hedge funds and other gunslingers.
__
But how is this different in Canada? Do we have an equivalent of the GSE’s? Is there a market for Canadian subprime mortgage backed securities? Where/How/Who?
Reading about Coventree and these other trusts selling Asset Backed Commerical Paper, I see many parallels, but I’m not sure if it’s the exact same thing. Is it?
Also, are there any particularly good Canadian economic blogs out there? All the good ones I’ve stumbled across seem to be American.
August 16th, 2007 at 1:32 pm
I think that logic would apply if Vancouver was the only city in Canada experiencing this real estate boom. But look elsehwere, Saskatoon 54% increase YOY!? What does Saskatoon have to offer? I know a couple that is looking at a $700K house, well beyond their means, but because they can get away with a ridiculous mortgage they’re set to buy it.
Lucky for them I guess though… at these rates it’ll be a multi-million dollar house by the time the Olympics arrive.
August 16th, 2007 at 1:24 pm
I am afraid that barring a major catastrophe or a total collapse of the economy (30s depression, and not the current BS credit “crisisâ€) the prices in Vancouver are simply not going to go significantly lower in any reasonable future.
Rents, rents, rents. If Vancouver is all that, why don’t the rents reflect it?
August 16th, 2007 at 1:17 pm
Don’t forget real estate only ever goes up.
August 16th, 2007 at 1:11 pm
You really think Vancouver and London are the same.
Salaries, size, incomes.
London is an interntional banking centre but then again Vancouver has the olympics. ooops forgot.
August 16th, 2007 at 12:52 pm
I have been following this and other real estate blogs for some time now. I own 2 properties in Vancouver since about 10 years ago and live in them. I don’t rent them out, I don’t carry mortgage and I don’t consider myself a real estate investor. So, I don’t have either the bull or bear ulterior motives in all of this. I guess you could call me a bystander.
While I would like to see the real estate in Vancouver be cheaper and thus more affordable for people I am afraid that barring a major catastrophe or a total collapse of the economy (30s depression, and not the current BS credit “crisisâ€) the prices in Vancouver are simply not going to go significantly lower in any reasonable future. The may stagnate (and thus lose a bit of value due to inflation) or slow down but if you guys are waiting for a 30-40% drop based on what happened in 1981 think again. Over the past 20 or so years Vancouver has been upgraded from a back water town to an international destination that is considered cheap by Euro and Asian standards. They don’t make properties like the ones we have in Europe or Asia. People live there in tiny, old apartment buildings or multi-family houses. Canada is also by far the easiest place to immigrate to and by far the most stable. If you want to compare us to somebody think London and not Las Vegas or Florida. Except that instead of rich Russians moving in we have Asians and some Europeans.
August 16th, 2007 at 12:51 pm
I just had someone tell me that Vancouver real estate is very under priced since it is a world class city. My husband having lived in Mahattan, London and Paris (Toronto does not count – its not world class) was shocked by this declaration.
People must have their heads in the clouds.
August 16th, 2007 at 12:12 pm
I was predicting that rising supply was going to be the trigger to prices dropping, but the credit woes seem to be set to take a big wollop out of demand.
Nevertheless, in the last month, I have run into three people who just bought in now, and I am still a little punch drunk when I found out what they had each paid…..
August 16th, 2007 at 12:06 pm
Let’s all make friendly bets on who they’ll blame when hell breaks lose. I say weather and global warming will have something to about it.
August 16th, 2007 at 12:01 pm
“the key elements of the rescue plan are to convert this short-term debt, which is sold through special-purpose trusts, into longer-term instruments”
Translation: Please lift the rug up a little higher, so that we can sweep this under the rug a little further in.
Freako:
Agreed, they will be so surprised at the unforeseen events.
Who would have thought there would be adverse effects to printing money, and then lending it to anyone willing to take it.
Who would have thunked such.
August 16th, 2007 at 11:49 am
we have a credit score mid 800’s.
yesterday my wife received a nice letter from CIBC raising the limit on Visa card from 18K to 26K…
Well it probably takes a while for the marketing department to catch up with the risk exposure department. But no, the world is not ending. But let’s give this a week or so to play out. It will be very interesting to see how Shanghai handles this. Surely the government will try to intervene, but a full out panic would be hard to stop.
And I think we are about to find out the impact that foreign bond buyers and Yen carry traders had on U.S. excess consumption.
August 16th, 2007 at 11:09 am
suspect Canadian Banks are not in the mood to lend much right now except to persons with close to 60% equity.
we have a credit score mid 800’s.
yesterday my wife received a nice letter from CIBC raising the limit on Visa card from 18K to 26K…
they like us… they really like us
August 16th, 2007 at 10:53 am
They didn’t have a credit crunch, I suspect Canadian Banks are not in the mood to lend much right now except to persons with close to 60% equity.
I can already picture the story that will be pushed for posterity.
All was going well when this unforeseen liquidity crises caused great Vancouver real estate market to crash. Who could have foreseen such an event?
At least that is better than that idiot journalist Chamberlain in San Diego who bitterly accuses bloggers of forcing down home prices. He is a certified crack pot.
August 16th, 2007 at 10:50 am
The Sun has an article with usual suspects telling us that our economy is just to hot for prices to go down.
Is there anybody connected to the industry (Mohican?) who can tell us whether the liquidity issue has affected local mortgage origination?
As I have mentioned in the past, lending in Vancouver is extremely risky, even with 25% down. Surely the banks are aware of this.
What about Genworth? Are they still insuring 5% down? You’d think headoffice would tell them to close the shop.
I have made many premature calls in the past, but if Vancouver RE continues to rise through the fall I will eat my virtual hat.
August 16th, 2007 at 10:48 am
“Plenty of people were buying in Miami in 2005″
They didn’t have a credit crunch, I suspect Canadian Banks are not in the mood to lend much right now except to persons with close to 60% equity.
August 16th, 2007 at 10:11 am
I don’t know about that Mohican – there’s still a couple of months worth of preapproval mortgages to work through at a lower rate, and plenty of people not paying attention to global credit markets. Even if they’ve heard whats going on I think they truly believe that it can’t affect BC real estate.
Plenty of people were buying in Miami in 2005.
August 16th, 2007 at 9:59 am
“How much longer will our real estate market exist in a vacuum?”
About another 2 weeks! Then its crash time!