Its Friday in rainytown, lets do the open topic thing:
-Buy only what you can afford
-Emotional rollercoaster of leveraging
-Loonie at five week high
-US home price decline sets record
-UK Mortgage approvals down 44%
-New Home sales at 12 year low
-Tips on surviving a recession
What are you seeing out there? Post your news, links and anecdotes here!
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December 29th, 2007 at 9:04 pm
Future construction cost and the fourth coming pop blast will carry the trend of from Eyewitness 77-2007
you can see some temp dents by fundamentals then fundamentals adujst with the wind and steer up words simultaneously with all families and friends.
Jim Yih……….
Real estate prices go up and down.
Fortunately, they tend to go up more than they go down and that’s why, long term, it is better to own than rent. There’s always someone quick to predict what house prices will be in the next months or years, but the fact is, nobody knows. Anyone predicting is guessing. Buy because long-term owning is better than renting. Buy within your means so that you can weather some of the tougher times.
That’s the right answer you can catch the full version of bulls part 2007. paste this into your url and enjoy the party.
http://www.veoh.com/videos/v239788j4edhWne
December 29th, 2007 at 8:48 pm
Recession?
As far as mortgage concern people can buy insurance on their mortgage that cost around $25 on $100,000 if anybody lose their job your mortgage company will pay for your monthly payment unless you get new job to pay the difference.
as explained on last page type of MOB is just a fear, when we are not aware of what mortgage products are available to purchase.
anyway !
Happy! New! Year! every one on board cheer up
December 29th, 2007 at 4:41 pm
..of course its not just an issue of psychology, its an issue of affordability which is what give the market so much downside (doubly so in vancouver).
December 29th, 2007 at 4:39 pm
on the ‘12 year low’ article there’s a connected article buyers wait for market bottom. This nicely sums up the issue with booms and busts – when prices are going up people don’t want to get priced out, but when prices are dropping why jump in and pay more than you have to?
December 29th, 2007 at 4:27 pm
anybody reads this from Chipman’s blog?
thanks for that. keeps my conscience from becoming stagnant.
December 29th, 2007 at 3:45 pm
The article was nothing more then a piece of fluff, still encouraging people to buy.
thus = propaganda
December 29th, 2007 at 11:24 am
My goodness – I didn’t realize that Jim Yih had a fan club – but I’m still not impressed.
Anyone who writes, in capital letters, “IT’S BETTER TO GET INTO THE MARKET” – when discussing real estate in B.C. in 2007, is nothing more then a shill trying to get another link for his portfolio.
As for discussing “Buy what you can afford” – buying what you can afford is a moot point for the majority of the population right now.
The article was nothing more then a piece of fluff, still encouraging people to buy.
December 29th, 2007 at 11:20 am
“Jim Yih is NOT an unknown character. He’s been around, and yes he does sometimes give free advise too. People think that if financial advisers get paid, he or she must be biased or bad.”
If it’s “advice” posing as “news” I would say there is a certain conflict of interest.
For the sake of argument, let’s say he’s the real deal, and his advice is pure gold. Are you saying “now” is a
BETTER (time) TO GET INTO THE MARKET
or should he have mentioned waiting a little bit? Wonderful piece of advice to leave out, don’t you think? Or were you implying anyone who carefully read his article should get into a time machine, go back to 1992, and buy?
December 29th, 2007 at 10:27 am
anybody reads this from Chipman’s blog?
“Looks like Rob can’t handle the truth so he edits the poignant truth pointers.
But, month end is just around the corner, and his badly inadequate and bruised conscience will get some numbing yet one more time.
I can just picture Rob stepping out of his tax deducted car, making his way up the slime and fungi buttressed unsafe stairs of the dilapidated east end crack house to pick up the rent cheques.
He composes himself, and thanks his lucky charms, that the conflicting emotions will need only to be endured for a short while.
He is disgusted by the dog mess on his shoes, and the guilt from living off the avails of the aging couple who pay him 80% of their income for sub standard shelter, and the part time hooker and single mother who is high as a kite, but still reminds him that there is still not heat in the child’s bedroom.”
December 29th, 2007 at 8:19 am
Jim Yih is NOT an unknown character. He’s been around, and yes he does sometimes give free advise too. People think that if financial advisers get paid, he or she must be biased or bad. I guess, people who doesn’t get paid must be good? As I had read previous posts on this blog from interesting characters who got snippets of information from Stats Can and or the Wikipedia or Howestreet.com can attest, their information are truthful, but lacking with real facts.
If anyone bothered to read Jim Yih’s article in great detail from the Vancouver Sun, especially he mentioned 1992 as when he bought his place. Read the article carefully and you’ll notice that he mentioned buying within your means, which is actually what is known as your capitalization rate. What makes any good investment is that you have low capitalization rate.
Otherwise, your return of capital will be lower than the final transactional costs plus mortgage rates. You are in effect a negative cashflow investor, as is with SO MANY RE investors of today.
Most rental properties these days are negative cashflow. Very few are positive since most Canadians borrow more than they could afford,
they have higher capitalization start up rate.
It’s unfortunate that some people just browse through the article without reading it in great detail and make foolish judgment on this person.
By the way, Mr. Jim Yih had made some contributions to the Canadian Money Saver magazine, a publication which I consider to sound and faithful with contributors that are experienced and to the point. And yes, they are all paid. They need to feed their families you know..
If that’s bad, maybe you should work for free for awhile.
December 28th, 2007 at 10:45 pm
also see his web site
December 28th, 2007 at 9:49 pm
Well, you can get paid or you can get picky with other peoples spelling. Your choice.
December 28th, 2007 at 9:28 pm
well, I won’t get paid to write an article if I spell it “payed”.
December 28th, 2007 at 7:46 pm
or you could get payed to write an article
i prefer to look at it as getting paid to write propoganda
December 28th, 2007 at 7:43 pm
Jim Yih is a financial adviser and his website can be found..
Instead of ranting against the mainstream media you guys should be working with the mainstream media like this Jim Yih guy.
Think about it.. You could pay to put an ad in the paper and get it ignored like all the rest, or you could get payed to write an article and use it as an ad to get business. This is the miracle of the mainstream press, put it to your advantage now!
December 28th, 2007 at 6:36 pm
posted by strataman on that “other” blog:
“any more strong evidence?â€
anecedotal unforunately but a close friend who is an appraiser says their company is appraising condo’s at 2005 prices resulting in some sales failures. Some sort of instruction from their bank customers. He had 6 this last week that fell thru because appraisal was less then asking substantially. I have no idea how relevant this is at this point.
tipping point anyone?
December 28th, 2007 at 2:50 pm
The best way to survive a recession is to cut back your spending. Sell your car. Take the bus. Never eat out. Buy day old bread.
A recession is coming to Canada, and people will be losing their jobs. Save right now. Sell your home and rent. It’s the best time to sell now. Find a part-time job. Cut back and downsize. Hold cash!!!! Sell all investments. Sell stocks, sell bonds, sell Real Estate, sell your car, sell your collection.
December 28th, 2007 at 2:11 pm
Ya, that Jim Yih dude is full of crape. He totally ignore the transaction cost of sell and buying the next home. Secondly, if a person buys a home that is outside the affordability, that means that the person cannot save to build equity in the home.
December 28th, 2007 at 1:46 pm
on that Vancouver Sun article – who the heck is “Jim Yih” – and why did Canwest think I should listen to him – I hate Vancouver Media.
December 31st, 2007 at 11:17 am
“So essentially you’re not taking other peoples incomes into your factor of what local homes should cost?”
I’d love to take other people’s incomes… it would help me buy real estate… but the “other people” might have objections if i took their income…
“Ooookay” is just the sound of you going one way and me going the other. that’s still allowed, right?
December 31st, 2007 at 9:34 am
Dosh is an agent, of COURSE he’s going to say “buy now”.
Never mind that if you rent now and buy later you can live in a bigger, better place now AND later. His only concern is to keep things going a little longer.
Mark my words, if you buy now you will regret it, whether it’s within your means or not. Losing half of the value in the biggest purchase you will make in your life doesn’t sound like fun to me. Especially if you knew that waiting for a couple of years would let you get twice the home for the same price.
December 31st, 2007 at 8:50 am
Dosh said…
“Buy what you can afford and let the rest take care of itself”.
Well Said.
Actually that’s what the artical meant for and all these
Freako,Mold,and Panda etc.are involved to disscuss buying vs renting an years old issue.
Yim Yip’s article is meant to get into the market and does not force people to buy what they can not afford.
He is trying to differenciate a fact when one think of R.E. price goes up or down he goes tend to go up,what does that mean?
Let’s say Panda is renting a million dollar house on west side but willing to buy only after 50% fall.bring yim yip back here r.e.tend to go up………
so price won’t fall but panda will run out of age and time…..now bring back yim yip again he goes buy what you can afford mean…
Panda should leave west van and buy something affordable house as his desire amount in east side or somewhere else…
Now Panda is in the market and time or age won’t affect him because he is in…..either he can countinue to rent his desireble west side house and put his own unit on rent to some one else.
in a case one he will run out of time and age and can not pay double the value where prices are standing right now.
Vanman was word to word correct rest of posters does not provide alternate roof and tied their lips when it comes to pay tax…..
December 31st, 2007 at 2:10 am
If you want to get super rich the best way to do it is to find an asset class that has gone up tremendously over the last five years and has completely detached from fundamentals.. That means that ‘it’s different this time’ and you’re practically gauranteed to get super-rich!
Worked for me with Nortel and 360 Networks…
December 31st, 2007 at 1:14 am
you’re not taking other peoples incomes into your factor of what local homes should cost?
I know you were replying to Richard and not me, but I cant let that one slip. You do know about our local incomes right?
They ain’t that high.
December 31st, 2007 at 12:29 am
Ooookay….
So essentially you’re not taking other peoples incomes into your factor of what local homes should cost?
Yeah, well Gee. Thats just part of the reality around here. Buy what you can afford and let the rest take care of itself.
December 31st, 2007 at 12:09 am
what is the market value of your legal tender against the claims that held against it, which is the Government of Canada? None! Zilt
WTF vanman?!? you sound like a completly looney doom and gloomer – Are you saying that the only thing that has ‘real value’ is property? Whats that deed printed on? OH.. paper.
If things get so bad that GIC’s aren’t honored I think there may be some issues with land deeds, etc, but I really dont think things are going to get that bad
But by all means if you think its necessary dig a giant concrete pit in the ground and fill it with gold and canned food. Good luck with your version of the future!
December 30th, 2007 at 10:05 pm
Money saved from renting is NOT equity, because legal tender has no claims against anything. It’s just a piece of paper.
I am not done with this assinine argument just yet. A man wins $14 million playing Loto 6/49. He shoudl be excited, but he is not because his winnings, legal tender has no claims against anything. It’s just a piece of paper.
Well vanman, give me all your money. It has no value to you apparently.
December 30th, 2007 at 10:01 pm
So you don’t know when is a good time , but you do know now is not a good time? Where does your knowledge end?
As an analogy, which is easier to predict? Which current fads will die out, or what will become a future fad? Asymetry IMHO.
Second, times when price to rent is relatively high is probably a bad time to buy, and vice versa.
December 30th, 2007 at 9:53 pm
Money saved from renting is NOT equity, because legal tender has no claims against anything. It’s just a piece of paper.
WFT are you talking about? Fine, he bought stocks for the whole lot.
December 30th, 2007 at 9:52 pm
Do you agree with me that all BC owners were once renters in the first place?!?……
I don’t know why spent 500 words on this. It is fairly black and white. Since rental income (or rent equivalent) doesn’t come close to matching carrying/opportunity cost, there is absolutely no building of equity. Rather, there is a loss of equity vis a vis a renter.
And many of them bought into the 80s market, paying sky high prices and double digit interest rates.
1. Mr. X bought in 1981. Mr. Y rented 2 years before an buying equal dollar amounts worth of property. Mr. Y’s property is worth 54% more to this very day.
Market timing is not easy, but let’s not pretend that entry does not matter.
December 30th, 2007 at 6:10 pm
If you want to get super rich the best way to do it is to find an asset class that has gone up tremendously over the last five years and has completely detached from fundamentals.. That means that ‘it’s different this time’ and you’re practically gauranteed to get super-rich!
December 30th, 2007 at 5:32 pm
“So you don’t know when is a good time”
Yes, i already said i don’t.
“…, but you do know now is not a good time?”
I did not mean to imply I KNOW now is not a good time. It is just an OPINION, which i had no intention of dressing up as “NEWS”.
” Where does your knowledge end?”
I know enough not to believe everything I read in the papers and the internet.
“And as far as affordability goes thats an individual thing. How do you know that there aren’t millions of people earning over $100k per year here? The more you have on hand the less of a big deal ‘affordability’ becomes.”
Ooookay….
December 30th, 2007 at 5:26 pm
You said:
The Vanman: I can’t find a single post extolling the virtues of renting for life, and your challenge to pin point perfect time to enter the market is a straw man’s argument.
I say:
We as adults make choices. Renting for life is a choice, an individual made choice. I have a friend who loves to bicycle tour all over the world for as long as I’ve known him. Owning a home makes no sense. His home would be left empty for the majority of the year. He’s not a bum either as he used to teach at McGill. It was a lifestyle choice.
My wife always told me that he wasted his talents to a bike. He could easily make lots of money, instead he lives a life as a traveling bum. I respect him for what he does. But generally, owning is better than renting. Generally when people rent, they ARE NOT FULLY COMMITTED into a relationship with a surrounding community that he or she lives. I’ve noticed that renters usually don’t participate fully in any community sponsored events, even being asked very nicely. But, I am not saying that all are like that either.
You said;
Is it a good time to buy specifically in Vancouver, and specifically at this time, when the affordability index is at 70%? The obvious answer is: No
I say;
The affordability index is based on an average. On homes that banks think you should buy, which usually is MORE house than you can afford.
In Jim Yih’s article, he mentioned that the bank can easily help him finance to buy the $100,000 home, but he opted instead to buy the $50,000 condo. Let’s assume then in 1992 that the affordable index for his province was then around 60 or 70% for what the bank wants him to buy, but if he opted for the $50,000 condo, do you agree with me that the index would have fell by 50%, which is like 30 to 35%. This in line with standard mortgage practises.
The problem I see from people here is apparent. Most of you want to buy that one perfect house at the upper echelon of the affordability index. A lot of people had done so now. They will regret soon. But this is not something new. It happened in the 70s, 80s and in the 90s too. Life goes on.
You said:
index was this high, a combination of a price crash, and a reduction of 1500bsp brought the affordability levels back in line.
I say;
But the index during the mid 90s was like 65%! Only in 2001 that it feel to like 44.7%. Remember that this reflects the average. People who make $100,000 really don’t care if its 20% less or not. And past BC home owners and banks practise had been to sell homes at fair market value. There are very few foreclosures, if they are, they are bought by people with cash outright.
December 30th, 2007 at 4:56 pm
Blogger Re-diculous said…
Thank you Freako – that claim had to be addressed. I might add that all those with interest only mortgages ain’t accumulating any equity – again, appreciation/depreciation aside
I say:
Except Freako neglected to tell you and many of us one thing.
Money saved from renting is NOT equity, because legal tender has no claims against anything. It’s just a piece of paper. When money was no longer pegged against the gold standard, it’s worth is determined by the Federal Reserve. We now know that money depreciates every year. It’s called inflation.
Can a home on a piece of land be re-printed again and again by the Government of Canada? Hmm, I don’t think so. But heh, maybe Freako knows something I don’t.
December 30th, 2007 at 4:46 pm
Freako said;
Actually, right now it is the renter accumulating equity if he reinvests the rental savings. Appreciation/depreciation aside of course.
I say;
Do you agree with me that all BC owners were once renters in the first place?!? And many of them bought into the 80s market, paying sky high prices and double digit interest rates. Lots bought in the 90s where the afford ability index were 65%? How are they doing right now?!? I know some of them had finished paying, owning homes outright that are now worth 1.2 to 2 million dollars. Some had already sold, realizing profits already. I’m not saying that it was easy to mortgage a home. Me and my wife went through hardship with our kids. It certainly wasn’t a walk in the park either. But we came through and so did many others including Mr. Yih. Do you agree with me also that it is simply difficult if not impossible to make a million dollar simply by buying GICs with a regular joe paycheck Remember that, your first home is tax free. Equity is the difference between the market value of the property and the claims held against it. Whereas if you are a renter, what is the market value of your legal tender against the claims that held against it, which is the Government of Canada? None! Zilt, because money becomes less worthy every year. It’s called inflation.
Secondly, savings left from renting is subject to taxes if held into a trust account, being savings (GIC, term, money market), stocks, bonds or otherwise. You will need to file a T form (3, 4 or 5) every year for gains, dividend or income realized. You have no choice. This is the law, or the CRA will eventually audit you if you refuse.
It is the taxes that eat into the return of your savings, which in effect make it impossible to beat inflation.
December 30th, 2007 at 4:18 pm
So you don’t know when is a good time , but you do know now is not a good time? Where does your knowledge end?
And as far as affordability goes thats an individual thing. How do you know that there aren’t millions of people earning over $100k per year here? The more you have on hand the less of a big deal ‘affordability’ becomes.
December 30th, 2007 at 11:33 am
“When do guys think it’s the right time to get into the RE market?”
You got me there. I really don’t know. But then, I don’t write advice and post it as news in the local paper.
“Please give me an exact year and date after 2007. Can you or could you?”
No I can’t. That’s one of the problems i have with the “news” he gives. For one thing, good news to me answers “What, why, when, where”. His piece is missing out on a lot of those.
“Jim Yih’s article never did mention market timing, nor did he advocate to buy anything other than to say that owning a home is better than renting. Are you guys putting words into his mouth?”
Not me who wrote these BIG BOLD WORDS
“IT’S BETTER TO GET INTO THE MARKET” – Jim Yih
And you know, if someone reads that piece in today’s paper and it mentions no date, would it not be just as reasonable to assume he is implying “today” as it is to assume he is implying “tomorrow”, and way way more reasonable than to assume he is implying “1992″? If you read it any differently, then bully for you.
Look, it wasn’t Jim Yih I was objecting to. It’s entirely possible he is the stand up guy you make him out to be. He might be the most competent financial adviser you’ll ever meet or read about. Maybe someday I can benefit from his advice.
What I was questioning was a) why didn’t he say anything about waiting, about how right now housing is so unaffordable? b) is it really news? where were the editors?
December 30th, 2007 at 11:32 am
Weekly REBGV numbers are up on my site:
http://www.nvcondos.ca/index.jsp
Happy New Year!
December 30th, 2007 at 11:24 am
The Vanman: I can’t find a single post extolling the virtues of renting for life, and your challenge to pin point perfect time to enter the market is a straw man’s argument.
Is it a good time to buy specifically in Vancouver, and specifically at this time, when the affordability index is at 70%? The obvious answer is: No
The last time the affordability index was this high, a combination of a price crash, and a reduction of 1500bsp brought the affordability levels back in line.
I don’t think we can count on another 1500bsp cut in interest rates, but I am quite sure a price crash will bring the affordability level back to long term trend.
As for Patricia, she is a pumper, and not in the good way, I can’t be sure, but I do believe she is a VP at the TD, Can you connect the dots?
December 30th, 2007 at 11:20 am
Thank you Freako – that claim had to be addressed. I might add that all those with interest only mortgages ain’t accumulating any equity – again, appreciation/depreciation aside
December 30th, 2007 at 11:11 am
Buying a home ultimately is better than renting since you are accumulating equity. Regardless whether you are going through an up or down market, you still need a roof over your head.
Actually, right now it is the renter accumulating equity if he reinvests the rental savings. Appreciation/depreciation aside of course.
December 30th, 2007 at 10:07 am
m-: thanks for the comment on tax deductibility. Of course, one may wish to check one’s particular situation with an accountant
My main point is not deductibility specifics but that Yih’s article is overly simplistic if he doesn’t even allow for such possibilities to exist.
December 30th, 2007 at 9:51 am
Panda: keep in mind that mortgage interest for investments is only tax-deductible if you have an investment with a reasonable chance of making a profit. CRA does not consider capital gains as part of your expectation of making a profit.
A significantly cashflow-negative “investment” property, where the tenant is not paying enough to cover all of the strata fees, taxes, maintenance, and mortgage interest is not technically a for-profit business, and if CRA finds out, you’d lose the tax-deductibility of mortgage interest and other costs associated with the property. Another risk to add to the pile…
December 30th, 2007 at 9:08 am
Yih’s piece can be picked apart in a number of ways. He doesn’t seem to acknowledge in the second one that mortgages for investments are tax deductible. And also if “Jim Yih’s article … say(s) that owning a home is better than renting” then he is making a broad-based statement that is often false. Eg, some people go bankrupt owning, or spend most of their lives house-poor. And yes, in fact some can make much better use of their capital in equity markets or elsewhere. It would be much more interesting if the Sun printed an intelligent article arguing against home ownership (like that will even happen!).
December 30th, 2007 at 7:08 am
To Richard and Anonymous,
When do guys think it’s the right time to get into the RE market?
Please give me an exact year and date after 2007. Can you or could you?
Jim Yih’s article never did mention market timing, nor did he advocate to buy anything other than to say that owning a home is better than renting. Are you guys putting words into his mouth?
Timing the RE market is extremely difficult. But doesn’t stop people from claiming that they scored RE deals in 2001 and they knew the bottom was at hand. Congrats to them. Funny thing is that, the Stats Can articles that came out explaining the situation were published 5 years later. So that can only lead me to believe that people who bought homes in 2001 are either smarter than the Stats Can people or are simply lucky. I don’t mind if folks here share that luck with me.
Buying a home ultimately is better than renting since you are accumulating equity. Regardless whether you are going through an up or down market, you still need a roof over your head. That’s why he advocates buying a house you can afford. Payments that don’t put you into negative cash flow, which unfortunately many people do.
Credit Counselling of Canada Spokesperson on the Patricia Lovett Ridd money show said that these segment of the debt addicted population are increasing 10% YOY.
So the question to you Richard is, Do you agree with me that it is not easy to time the RE market? If you don’t, do you care to provide with me again with the exact date and year when everyone here should get in?
December 30th, 2007 at 1:31 am
Hi every one this is me I am east Indian male here in canada since 1997 and I am a Canadian Citizen since 2000
Oh NO! We’ve been infiltrated by real estate experts wearing suits and ties……..and running shoes
December 29th, 2007 at 9:35 pm
Wow.. satv/thumbsup/krrish
so Mumbai is hotter than Bomcouver, eh?
December 29th, 2007 at 9:11 pm
Hi every one this is me I am east Indian male here in canada since 1997 and I am a Canadian Citizen since 2000,I have lived in vancouver since that long and I love Vancouver like other 4 millions, I am here to replace our Satv and Thumsup from different angle.What I might be thinking about the market and life is?
In my point of views:
“Market and Life is a circus we are straight now and upside down in a moment” that is a theme of this world from begining to onwards.
as far as this concern to Vancouver, it’s totally different because Vancouver tend to replace all assss humps cities of this world by 2021 that’s the bottom line.
well so far up to here but will try to assist in critical times in the blogs to come when ever,what ever till than se/ya.If I have to deal with any recession ,This is how I would deal with recession in my way following is my introduction.
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