Comments on: friday free for all! http://vancouvercondo.info/2007/12/friday-free-for-all_20.html?utm_source=rss&utm_medium=rss&utm_campaign=friday-free-for-all_20 Bubble? What Bubble? Thu, 24 May 2012 04:16:47 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Re-diculous http://vancouvercondo.info/2007/12/friday-free-for-all_20.html#comment-8190 Re-diculous Wed, 26 Dec 2007 10:08:00 +0000 http://vancouvercondo.info/?p=363#comment-8190 Merry Christmas....lots of Holiday reading for you here:http://money.cnn.com/real_estate/foreclosures/ <p class="top-comments">Current score: <span class="top-comments-karma" id="karma-8190">0</span> <small>(to vote for this comment, please visit the site)</small></p> Merry Christmas….lots of Holiday reading for you here:http://money.cnn.com/real_estate/foreclosures/

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]]> By: TheVanMan http://vancouvercondo.info/2007/12/friday-free-for-all_20.html#comment-8189 TheVanMan Wed, 26 Dec 2007 06:54:00 +0000 http://vancouvercondo.info/?p=363#comment-8189 Patriotz said:You couldn't make a worse comparison. A handful of airlines selling a service which lasts only a few hours, with an adjustable supply (flight scheduling)and highly variable demand, versus a huge group of landlords selling a service which lasts for years, with a relatively static supply and demand.I said:But this is where you are misinformed. Rental units are never relatively static in supply and demand. During a housing recession, lenders may curb or stop lending, but the builders DON'T! They keep building, albeit at a slower rate compared to the boom. Statscan report showed it all from 1992 to 2000. How are you sure that some of these homes aren't destined for rentals?Homes and planes both share 1 thing in common. Fuel! You need fuel to heat the home in the winter and fuel to fire up those jet engines.And what had airlines been doing lately?!? Buying or leasing new planes that are more fuel efficient and smaller planes so they can compete more effectively and fill seats easier.In the real estate rental market, demand actually rises as the afford ability index rises as house prices keep dropping. Most people aren't in the mood to buy than they are to rent. They like to sit on the sidelines. But of course, during a housing downturn and if history is of any indicator, our banks and our fellow Vancouver homeowners are mostly going to sit it out too, demanding "fair market value" for as long as it takes. If it took 8 years then, this time it may take longer! In the meantime, there's going to be a glut of unsold homes probably destined to serve as rentals.Here's the problem. Just like the airlines, companies can charge only 1 market rate for fares, but they ain't going to be compete fairly with older and non-fuel efficient planes. They want newer planes with in flight TV monitors.In the rental market, this is going to happen the same way. If you have 2 buildings not separated from too far apart and one is very new and has the latest toys and energy conservation technology built-in, front loading washer and dryer, new fridge and stove and the works against an older "estabished" building or home with far less modern furnishings and energy conservation technology. So, how do you expect a renter pay the same 1 market price for an established rental unit to a new unit? You would expect to get a discount to market value on the "established" unit. And that's what I think things may happen here. It did happen in late 80s and during the 90s. And that's why I said renters pay a different market rate depending if they stay in an old established unit or a more modern one. The difference isn't that much though, but it does reflect the fact that renters aren't dumb! <p class="top-comments">Current score: <span class="top-comments-karma" id="karma-8189">0</span> <small>(to vote for this comment, please visit the site)</small></p> Patriotz said:You couldn't make a worse comparison. A handful of airlines selling a service which lasts only a few hours, with an adjustable supply (flight scheduling)and highly variable demand, versus a huge group of landlords selling a service which lasts for years, with a relatively static supply and demand.I said:But this is where you are misinformed. Rental units are never relatively static in supply and demand. During a housing recession, lenders may curb or stop lending, but the builders DON'T! They keep building, albeit at a slower rate compared to the boom. Statscan report showed it all from 1992 to 2000. How are you sure that some of these homes aren't destined for rentals?Homes and planes both share 1 thing in common. Fuel! You need fuel to heat the home in the winter and fuel to fire up those jet engines.And what had airlines been doing lately?!? Buying or leasing new planes that are more fuel efficient and smaller planes so they can compete more effectively and fill seats easier.In the real estate rental market, demand actually rises as the afford ability index rises as house prices keep dropping. Most people aren't in the mood to buy than they are to rent. They like to sit on the sidelines. But of course, during a housing downturn and if history is of any indicator, our banks and our fellow Vancouver homeowners are mostly going to sit it out too, demanding "fair market value" for as long as it takes. If it took 8 years then, this time it may take longer! In the meantime, there's going to be a glut of unsold homes probably destined to serve as rentals.Here's the problem. Just like the airlines, companies can charge only 1 market rate for fares, but they ain't going to be compete fairly with older and non-fuel efficient planes. They want newer planes with in flight TV monitors.In the rental market, this is going to happen the same way. If you have 2 buildings not separated from too far apart and one is very new and has the latest toys and energy conservation technology built-in, front loading washer and dryer, new fridge and stove and the works against an older "estabished" building or home with far less modern furnishings and energy conservation technology. So, how do you expect a renter pay the same 1 market price for an established rental unit to a new unit? You would expect to get a discount to market value on the "established" unit. And that's what I think things may happen here. It did happen in late 80s and during the 90s. And that's why I said renters pay a different market rate depending if they stay in an old established unit or a more modern one. The difference isn't that much though, but it does reflect the fact that renters aren't dumb!

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]]> By: patriotz http://vancouvercondo.info/2007/12/friday-free-for-all_20.html#comment-8188 patriotz Tue, 25 Dec 2007 22:08:00 +0000 http://vancouvercondo.info/?p=363#comment-8188 <i>In a sense, the real estate rental market operate like an airline</i>You couldn't make a worse comparison. A handful of airlines selling a service which lasts only a few hours, with an adjustable supply (flight scheduling)and highly variable demand, versus a huge group of landlords selling a service which lasts for years, with a relatively static supply and demand.<i>In the case of rental apartment complexes, every tenant pays a different market rate rent.</i>Wrong, there is only one market rate, the rate that an apartment will rent for when advertised openly.Some sitting tenants may be paying below market due to rent controls, of course. <p class="top-comments">Current score: <span class="top-comments-karma" id="karma-8188">0</span> <small>(to vote for this comment, please visit the site)</small></p> In a sense, the real estate rental market operate like an airlineYou couldn't make a worse comparison. A handful of airlines selling a service which lasts only a few hours, with an adjustable supply (flight scheduling)and highly variable demand, versus a huge group of landlords selling a service which lasts for years, with a relatively static supply and demand.In the case of rental apartment complexes, every tenant pays a different market rate rent.Wrong, there is only one market rate, the rate that an apartment will rent for when advertised openly.Some sitting tenants may be paying below market due to rent controls, of course.

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]]> By: TheVanMan http://vancouvercondo.info/2007/12/friday-free-for-all_20.html#comment-8187 TheVanMan Tue, 25 Dec 2007 15:05:00 +0000 http://vancouvercondo.info/?p=363#comment-8187 Blogger Patiently Waiting said... "Unless people bought foreclosed homes from the banks or at a deep discount to real asset value, you will be subsidizing the renter in Vancouver at market rent prices." I guess it depends what you mean by subsidize. From the renters perspective, paying market rent means you are not subsidized.But what is market rent? Imagine an airplane full of passengers and all are sitting in the same economy class. Are all of them paying market rate for their fares? Not necessarily. Because airlines need to fly with a full load to justify its operating costs, they need to fill all of the seats by any means possible. So, some passengers pay full rate, some pay more than full rate and some pay less or even none because of air miles. In a way, some of these passengers are subsidizing a few others who would otherwise have to fly at full rate.In a sense, the real estate rental market operate like an airline. An empty house can become victims of vandalism and therefore difficult to insure, so landlords always want to fill it with people.In the case of rental apartment complexes, every tenant pays a different market rate rent. Some of them who had lived for years pay a market adjusted rate subject to inflation + 2%. Some inherited the lease from the previous tenant (a family member or relative) and will enjoy the same affordable rent. It is the new tenant that will face the current market value. But many of these apartment complexes are owned by owners who own them 100% outright. They have 100% equity, so really all these buildings are doing is collecting rent minus building and management expenses and the remainder goes to the owner or owners.Owners of RE who have very little equity, usually 0 to 10% or even 20% usually end up subsidizing these renters. The key word here is "equity". How much equity you've got in the home translates to how much debt you need to service on your rental property. Real investors usually fork out a huge sum of cash to secure enough equity to get better financing in form of lower interest rates much better than most people get who have no cash, poor FICO scores or nothing to show for. And don't forget that in any market sized correction, even a small 20% market price correction puts A LOT of people into negative asset territory. If your half a million dollar rental condo is 100% leveraged after a 20% price correction, who is going to be footing this mortgage bill now? The renter with a lower paying job, whose in essence is being asked by the landlord to pay the full 100% of the mortgage for him or her?Rent - Mortgage Payment (more than the collected rent itself due to negative asset possibility in the future) - operating expenses is what many of these highly leveraged specuvestors are going to be facing. You can slice and dice it all you want, but people with very little equity is going to end up subsidizing renters regardless.To answer your question about the impending baby boomer generation and their need to sell which can depress home prices..I think we need to the remember that the price of the house reflects upon the price of money, or the worth of money itself. Ever since the inception of the Fed Reserve of 1914, money always get cheaper through fractional banking.In a way, the true price of the house reflects the true financial fundamentals at the time. But people have a choice to sell their homes at fair market value or at a discounted value. So why would these baby boomers sell their homes at discounted values when most of them own them outright. There is no reason for most of them to do that, unless they are in a financial mess.A lot of books and speeches had been given by a lot of financial gurus, none other so valiantly as Garth Turner in the late 90s, when the tech boom was rampant. He convinced many of these folks that their homes would be worth nothing when the boomers start selling. In the end, most of them ended up loosing their homes anyhow, not due to boomers selling, but due to massive losses incurred by them speculating on Nortel and 360 Networks.Again, I think the boomers selling out is a myth simply because, when you own something outright and you're financially ok to survive, there's really isn't any incentive for anyone to sell their homes at insanely cheap prices. <p class="top-comments">Current score: <span class="top-comments-karma" id="karma-8187">0</span> <small>(to vote for this comment, please visit the site)</small></p> Blogger Patiently Waiting said… "Unless people bought foreclosed homes from the banks or at a deep discount to real asset value, you will be subsidizing the renter in Vancouver at market rent prices." I guess it depends what you mean by subsidize. From the renters perspective, paying market rent means you are not subsidized.But what is market rent? Imagine an airplane full of passengers and all are sitting in the same economy class. Are all of them paying market rate for their fares? Not necessarily. Because airlines need to fly with a full load to justify its operating costs, they need to fill all of the seats by any means possible. So, some passengers pay full rate, some pay more than full rate and some pay less or even none because of air miles. In a way, some of these passengers are subsidizing a few others who would otherwise have to fly at full rate.In a sense, the real estate rental market operate like an airline. An empty house can become victims of vandalism and therefore difficult to insure, so landlords always want to fill it with people.In the case of rental apartment complexes, every tenant pays a different market rate rent. Some of them who had lived for years pay a market adjusted rate subject to inflation + 2%. Some inherited the lease from the previous tenant (a family member or relative) and will enjoy the same affordable rent. It is the new tenant that will face the current market value. But many of these apartment complexes are owned by owners who own them 100% outright. They have 100% equity, so really all these buildings are doing is collecting rent minus building and management expenses and the remainder goes to the owner or owners.Owners of RE who have very little equity, usually 0 to 10% or even 20% usually end up subsidizing these renters. The key word here is "equity". How much equity you've got in the home translates to how much debt you need to service on your rental property. Real investors usually fork out a huge sum of cash to secure enough equity to get better financing in form of lower interest rates much better than most people get who have no cash, poor FICO scores or nothing to show for. And don't forget that in any market sized correction, even a small 20% market price correction puts A LOT of people into negative asset territory. If your half a million dollar rental condo is 100% leveraged after a 20% price correction, who is going to be footing this mortgage bill now? The renter with a lower paying job, whose in essence is being asked by the landlord to pay the full 100% of the mortgage for him or her?Rent – Mortgage Payment (more than the collected rent itself due to negative asset possibility in the future) – operating expenses is what many of these highly leveraged specuvestors are going to be facing. You can slice and dice it all you want, but people with very little equity is going to end up subsidizing renters regardless.To answer your question about the impending baby boomer generation and their need to sell which can depress home prices..I think we need to the remember that the price of the house reflects upon the price of money, or the worth of money itself. Ever since the inception of the Fed Reserve of 1914, money always get cheaper through fractional banking.In a way, the true price of the house reflects the true financial fundamentals at the time. But people have a choice to sell their homes at fair market value or at a discounted value. So why would these baby boomers sell their homes at discounted values when most of them own them outright. There is no reason for most of them to do that, unless they are in a financial mess.A lot of books and speeches had been given by a lot of financial gurus, none other so valiantly as Garth Turner in the late 90s, when the tech boom was rampant. He convinced many of these folks that their homes would be worth nothing when the boomers start selling. In the end, most of them ended up loosing their homes anyhow, not due to boomers selling, but due to massive losses incurred by them speculating on Nortel and 360 Networks.Again, I think the boomers selling out is a myth simply because, when you own something outright and you're financially ok to survive, there's really isn't any incentive for anyone to sell their homes at insanely cheap prices.

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]]> By: Michael Randallbard http://vancouvercondo.info/2007/12/friday-free-for-all_20.html#comment-8185 Michael Randallbard Tue, 25 Dec 2007 11:26:00 +0000 http://vancouvercondo.info/?p=363#comment-8185 <a href="http://globaleconomicanalysis.blogspot.com/2007/12/credit-card-defaults-move-to-forefront.html" rel="nofollow">HEY CHRISTMAS SPENDERS</a> <p class="top-comments">Current score: <span class="top-comments-karma" id="karma-8185">0</span> <small>(to vote for this comment, please visit the site)</small></p> HEY CHRISTMAS SPENDERS

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]]> By: Re-diculous http://vancouvercondo.info/2007/12/friday-free-for-all_20.html#comment-8186 Re-diculous Tue, 25 Dec 2007 11:26:00 +0000 http://vancouvercondo.info/?p=363#comment-8186 ...just browsing canoe this morning and noticed the Forbes article listing the 10 cities with the most overpriced real estate which was previously posted a couple of months ago.....here it is again for those that missed it then...a good readhttp://tinyurl.com/2ll926 <p class="top-comments">Current score: <span class="top-comments-karma" id="karma-8186">0</span> <small>(to vote for this comment, please visit the site)</small></p> …just browsing canoe this morning and noticed the Forbes article listing the 10 cities with the most overpriced real estate which was previously posted a couple of months ago…..here it is again for those that missed it then…a good readhttp://tinyurl.com/2ll926

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]]> By: TheVanMan http://vancouvercondo.info/2007/12/friday-free-for-all_20.html#comment-8184 TheVanMan Mon, 24 Dec 2007 18:25:00 +0000 http://vancouvercondo.info/?p=363#comment-8184 I was in Vancouver, Planet Earth, where the RE market peaked in 1995 after rising for about 10 years, and then fell for about 5 years.Apparently there is a Vancouver on another planet which you are referring to.Hmmm, I see. Don't get too excited buddy. I just put a test on you to see where you're getting your ideas from. Now, I know where.Statscan article # 11-010-XIB under the title the "West Coast Boom" written by P. White, P. Cross and M. Michalowski in May of 2006.And no, I live in the same Vancouver as this article described.First of all, congratulations on your purchase of a home in 2001, or eh super excellent timing. Very few real estate moguls could time it just as well as you do. Before that article came out, however, a few of the real estate investors I know thought that 1994 was the inflection point. Of course, some were proven wrong, but then even Warren Buffett wasn't perfect either.Vancouver was never an affordable city to live in. In the early 90s, the affordable index was at 65%. Only in 2001 when the affordable index came down to about 44.7%. Again, articles like that mentioned above give you all the stats. But why would I say the best time to buy is in 1994?A couple of reasons. During the early years of the housing bust as I recalled from 1992-1994, there would be available few foreclosed properties at very good prices. They are extremely hard to come by. You really need to get to know key bank personnel to give you a heads up and sell at below fair market value. And most of them are not in the greater Vancouver area. But even then, it's a joke.Google David Folster's letter to John Reed about his dealings with the Vancouver RE after taking Tom Vu's seminar summed it up quite well. He practically gave up. Which means that even buying at year 2000 prices, you are still not getting a good investment deal.Living is ok. As a renter turned homeowner, 2001 can be said to be a good year. Whether or not people took advantage of that during the middle of the recession is another matter all together.Why? Simply because, while BC did generate new jobs during the 1990-2000, maintaining an average GDP growth of 2 something %, they were mainly part time jobs. These people would probably be interested in renting rather than home buying. Unless you have a keen eye, they will sit on the sidelines. This also explains why so few ever thought the TSX would ever go to such lofty heights and that our Canadian Banks after been punished by the Enron and Global Crossings accounting problems soared to new heights too not until the latest ABCP scandal.So why did I say 2001 is a renter turned home owner year?!? It's because, the affordability index had lowered to 44.7% after the high of 65%. While higher than Toronto and Montreal, it's better. People with jobs see this as an opportunity to buy a home. Do they see this as an opportunity to buy an investment property? Not really, not at least in the beginning. Finally, homes have became affordable. Finally interest rates had came down so low. You put 2 and 2 together and you get a deal. Remember that interest rates and housing prices all balanced out in a sane economy.Lower housing prices with high rates and higher housing prices with low rates. It's all relative.You picked 2001, because you know that's when the inflection point of interest rate turned.Anyhow, a pleasant discussion with you and I wish you and your family a Merry Xmas and Happy Holidays.Cheers! <p class="top-comments">Current score: <span class="top-comments-karma" id="karma-8184">0</span> <small>(to vote for this comment, please visit the site)</small></p> I was in Vancouver, Planet Earth, where the RE market peaked in 1995 after rising for about 10 years, and then fell for about 5 years.Apparently there is a Vancouver on another planet which you are referring to.Hmmm, I see. Don't get too excited buddy. I just put a test on you to see where you're getting your ideas from. Now, I know where.Statscan article # 11-010-XIB under the title the "West Coast Boom" written by P. White, P. Cross and M. Michalowski in May of 2006.And no, I live in the same Vancouver as this article described.First of all, congratulations on your purchase of a home in 2001, or eh super excellent timing. Very few real estate moguls could time it just as well as you do. Before that article came out, however, a few of the real estate investors I know thought that 1994 was the inflection point. Of course, some were proven wrong, but then even Warren Buffett wasn't perfect either.Vancouver was never an affordable city to live in. In the early 90s, the affordable index was at 65%. Only in 2001 when the affordable index came down to about 44.7%. Again, articles like that mentioned above give you all the stats. But why would I say the best time to buy is in 1994?A couple of reasons. During the early years of the housing bust as I recalled from 1992-1994, there would be available few foreclosed properties at very good prices. They are extremely hard to come by. You really need to get to know key bank personnel to give you a heads up and sell at below fair market value. And most of them are not in the greater Vancouver area. But even then, it's a joke.Google David Folster's letter to John Reed about his dealings with the Vancouver RE after taking Tom Vu's seminar summed it up quite well. He practically gave up. Which means that even buying at year 2000 prices, you are still not getting a good investment deal.Living is ok. As a renter turned homeowner, 2001 can be said to be a good year. Whether or not people took advantage of that during the middle of the recession is another matter all together.Why? Simply because, while BC did generate new jobs during the 1990-2000, maintaining an average GDP growth of 2 something %, they were mainly part time jobs. These people would probably be interested in renting rather than home buying. Unless you have a keen eye, they will sit on the sidelines. This also explains why so few ever thought the TSX would ever go to such lofty heights and that our Canadian Banks after been punished by the Enron and Global Crossings accounting problems soared to new heights too not until the latest ABCP scandal.So why did I say 2001 is a renter turned home owner year?!? It's because, the affordability index had lowered to 44.7% after the high of 65%. While higher than Toronto and Montreal, it's better. People with jobs see this as an opportunity to buy a home. Do they see this as an opportunity to buy an investment property? Not really, not at least in the beginning. Finally, homes have became affordable. Finally interest rates had came down so low. You put 2 and 2 together and you get a deal. Remember that interest rates and housing prices all balanced out in a sane economy.Lower housing prices with high rates and higher housing prices with low rates. It's all relative.You picked 2001, because you know that's when the inflection point of interest rate turned.Anyhow, a pleasant discussion with you and I wish you and your family a Merry Xmas and Happy Holidays.Cheers!

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]]> By: Anonymous http://vancouvercondo.info/2007/12/friday-free-for-all_20.html#comment-8183 Anonymous Mon, 24 Dec 2007 17:49:00 +0000 http://vancouvercondo.info/?p=363#comment-8183 <i>If Japan is of any indicator, we could see a prolonged housing deflation. Or debt deflation, where prices keep going down and down as there is no end in sight.</i> what a coincidence! this is what is happening now in the US and elsewherethey don't see a bottom to the problem anywhere..... so yes we potentially have long term depreciation for the entire RE asset class....California is a warning to us, the market is screaming "GET OUT" maybe we should listen.blueskies <p class="top-comments">Current score: <span class="top-comments-karma" id="karma-8183">0</span> <small>(to vote for this comment, please visit the site)</small></p> If Japan is of any indicator, we could see a prolonged housing deflation. Or debt deflation, where prices keep going down and down as there is no end in sight. what a coincidence! this is what is happening now in the US and elsewherethey don't see a bottom to the problem anywhere….. so yes we potentially have long term depreciation for the entire RE asset class….California is a warning to us, the market is screaming "GET OUT" maybe we should listen.blueskies

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]]> By: Van Real Estate Cras http://vancouvercondo.info/2007/12/friday-free-for-all_20.html#comment-8182 Van Real Estate Cras Mon, 24 Dec 2007 13:59:00 +0000 http://vancouvercondo.info/?p=363#comment-8182 Anybody involved in RE will tell you privately that the numbers just don't make sense.Look out below! <p class="top-comments">Current score: <span class="top-comments-karma" id="karma-8182">0</span> <small>(to vote for this comment, please visit the site)</small></p> Anybody involved in RE will tell you privately that the numbers just don't make sense.Look out below!

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]]> By: Patiently Waiting http://vancouvercondo.info/2007/12/friday-free-for-all_20.html#comment-8181 Patiently Waiting Mon, 24 Dec 2007 11:37:00 +0000 http://vancouvercondo.info/?p=363#comment-8181 "That means that the 150k detached median in 1987 would be about 242k today."Yeah I agree, because according to family incomes, most SFH in Vancouver should be in the 242k range. That mean our real estate is 3x or 4x overpriced. Wow, just wow. I'm glad I'm on the sidelines, just watching. <p class="top-comments">Current score: <span class="top-comments-karma" id="karma-8181">0</span> <small>(to vote for this comment, please visit the site)</small></p> "That means that the 150k detached median in 1987 would be about 242k today."Yeah I agree, because according to family incomes, most SFH in Vancouver should be in the 242k range. That mean our real estate is 3x or 4x overpriced. Wow, just wow. I'm glad I'm on the sidelines, just watching.

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