Its friday and that means open-topic time for a brand new year. Here are a few stories I’ve noticed this week:
-We’re the 11th happiest town in Canada
-A Million dollars aint what it used to be
-Maybe don’t buy the 2nd home just now
-Macleans: Is it a bubble?
-CBC Video: 515 sq foot family
What are you seeing out there? What are your predictions for the new year? Post your news, links and anecdotes here!
Bears repeating… Victoria Realtor, stay away from me Victoria Realtor, mama let me be Don't come a hangin' around my door I don't wanna see your ads no more I got more important things to do Than spend my time reading crap from you Now Realtor, I said stay away Victoria Realtor, listen what I say-ay-ay-ay-ay-ay — Lead Guitar— Victoria Realtor, get away from me Victoria Realtor, mama let me be Investment condos and big returns Think I'll wait 'til the market burns Zero down can hypnotize Sparkle some dumb GF's eyes Now Realtor, I said get away Victoria Realtor, listen what I say-ay-ay-ay — Lead Guitar Solo — Victoria Realtor, said get away Victoria Realtor, listen what I say You tell me profits are "in the bag" Much more spin's gonna make me gag I don't need your flipper… Read more »
Y'all need to head over to this post at Canadian Mortgage News & Trends and check out the chart showing the spread between the five year mortgage rate and Gov't of Canada bonds. The chart goes back to 1980, and indicates that since that time values over 3.5 have only happened during recessions. The spread has spiked over 3.5 now.
Huge Assessment drive to"million-dollar club" Vancouver Area Assessor Jason Grant said…. Increases of 10to20 percent for single family homes and condominiums are very common." Overall,the city of Vancouver's assessment roll increased from $156 billion last year to $182 billion this year. B.C. – The assessed value of all privately owned real estate in British Columbia increased by 16 per cent in 2007 to top $940 billion, the B.C. Assessment Authority reported Wednesday. A new record for new construction value of $21.6 billion accounted for some of the change, as did the addition of new properties. BC Assessment evaluated 1.82 million properties for the 2008 property roll versus 1.78 million in 2007. However, the vast majority, some $110.4 billion represented increasing property values in B.C.'s hot markets. Property assessments are used by municipalities in setting property tax rates. BC Assessment evaluates… Read more »
that would mean I steal from myself! 🙂 I own my own business dear sir! 🙂
PS; All my employees (7) are homeowers so to speak, they really love any overtime I can give them! I'm the only poor renter!
There's a report about the US housing market crash and recession risk playing right now on CKNW. Its pretty in depth and pretty scary.
The fact that people happily sign on to 40 year mortgages, and/or interest only loans is terrifying in and of itself. Any sane person might be tempted to think that if the only way you can afford to buy is through these means, then maybe you should not buy…….
"Finally, the recent boom went on for so long that it cemented in people's minds the fantasy that prices could keep rising forever. They can't. At some point reality must kick in and our wages must be allowed to catch up with house-price growth. The sooner that happens, and the sooner reality sets in, the better." from the aticle ulsterman linked to. Common sense right? Yet most buyers I meet lately do not even consider the possibility of prices being level with NO appreciation, and find it incomprehensible that the costs could go DOWN. What is it with that kind of mindset? They seem to be almost incabable of even considering that scenario. Many of these seem to be otherwise bright people. I wouldn't even mind if they said there is a 1 outa 4 chance prices will drop, but… Read more »
I think peoples' mindsets may have changed in the last year. Last year people told me "Get in now or you'll be priced out forever" This year I'm hearing more "Prices will go down after the Olympics." Personally, I think it will happen before the Olympics, but hey at least people are admitting that prices CAN go down!
I had talked w/ a banker buddy of mine about this two years ago (he's also waiting this bubble out to buy) … I suggested prices would follow the Expo 86 model & drop within two years of the circus – he had suggested they would before, about 2009 … all signs point to him being quite accurate about this.
At some point reality must kick in and our wages must be allowed to catch up with house-price growth. The sooner that happens, and the sooner reality sets in, the better.†from the aticle ulsterman linked to. Common sense right? Well no. First of all the labour market doesn't care how much it costs to buy a house, so it doesn't make sense to talk about "allowing wages to catch up" with house prices. It's the opposite: house prices must adjust to wages. Second, and this is crucial: inflated house prices can't stabilize at some plateau, because this means house owners will be receiving a negative total return because of financing costs exceeding yield. There is no reason at all for anyone to buy, and plenty of reason for discretionary owners to sell. This is the reason why bubble markets… Read more »
Tell them to look south, or back in time…….I think it speaks to the arrogance that this city has gained
Does anyone know the ratio of median disposable income vs house prices for Vancouver? This was used in my Daily Telegraph posting about for the UK and i'd be interested to compare.
ulsterman: Disposable income is defined as gross income minus income taxes. The numbers in the Tele were for Britain as a whole so probably not worth comparing for Vancouver specifically.
Back of the envelope puts Vancouver CMA detached price to average disposable income at around 13:1. But Condo/TH is less of course.
Back of the envelope puts Vancouver CMA detached price to average disposable income at around 13:1.
Well, GV median detached benchmark is 730K. Median household income? According to statscan it was $58,800 as of 2005. Let's add 3K for inflation to bring it to $61,800. Taxes? Total guess, but what about 30% average tax rate? That would leave $43,620. Divide 730K by this and we get a multiple of 16.7.
I used average price around 590K.
I'm just finishing off a trip home to visit family and friends in the UK, and all the msm is talking about is the impending crash/correction. Here's an article from the Daily Telegraph:
The people here to watch are the buy-to-let landlords – will they be forced to cut and run? Of course, Vancouver doens't have them so we have nothing to worry about…
"buy-to-let landlord" is UK English for "specuvestor".
Great Article!! Bring it on! The wealth generated in UK RE has helped to propel Vancouver which used to be cheap by UK standards. Can't wait for our MSM response once that market turns about how Vancouver / Canada is so different form the UK
A group of linguists have chosen subprime as the word of the year
From the article… "Consumers, what with overamped credit cards and plummeting prices on their overleveraged houses, will curtail their spending. The U.S. economy will go into (may already be in) recession, and may well drag the rest of the world with it. Meanwhile, inflation, at least in stuff like food and energy, which are non-discretionary expenses for everyone but central banks (who ignore them in calculating "core" inflation) is rising." Pretty bearish view from a senior Canadian markets analyst. I have to agree with him on most accounts. I started the year 2007 with 50% cash position in my portfolio, and over the year that has increased to the point of starting this year with an 85% cash position. I've also switched most of my equity exposure from "value" type stocks to "growth" type stocks. This is because I believe… Read more »
Back to the open topic topic: For what its worth here's some doom and gloom predictions in the Globe and Mail.
Koza mostly talks about the US and global markets. For a "Canadian markets analyst" he was pretty light on Canadian content. He's likely right that the debt markets have not bottomed yet.
Lets move all discussion related to the mechanics of this site to the previous post, and leave this one for real estate market related comments. Thanks!
Problem solved! If you're concerned about other people posting with your handle register it at the upper right corner of this site. Currently Strataman and casual observer are registered so new users can't post with those handles.
Registration is optional, you can still comment without registering if you prefer. I'm amazed at how civil and spam-free this site has remained. Thank you all for your contributions!
Reply posted on previous thread, as per your request. Thanks.
Hi Pope; I registered and it accepted user name. Then I logged out and just entered my user name without email or logging in, and you have it I think! 🙂 I'm also at my office differant IP from my usual one at home so I think IP checking would not work! Just my thoughts.
I’m also at my office differant IP from my usual one at home so I think IP checking would not work! Just my thoughts.
IP checking is really for individuals with multiple handles. As pope suggests, it is just something to turn to if all goes to hell. Until then, enjoy the new look and civil discourse to date.
Pope, sorry for monopolizing this thread with my questions, but I have just one more. Is there any way for me to delete a post once I've posted it, if I change my mind?
Maybe if you've registered, I'm not sure. Post the comments link you want deleted here and I'll delete it along with the request.
There wasn't any particular post that I wanted to delete, it was just a "what if" type question. I've registered as casual observer for your site, and I'll see if the blog allows me to post this reply as CO without signing in.
A little Off Topic… Hey Pope, is there any way to ensure that no one else is going to post under someone else's name. As far as I can tell, there doesn't seem to be anything preventing people from posting under any name they want. This could potentially be an "identity theft" problem. At least with Blogger, I was fairly assured that no one else was going to post under my handle. The other question I have is whether or not you can view the posts in order of when they were posted (time). When I come back to this blog and there are new posts added , if they were replies to existing posts, I have to go through and re-read the whole blog in order to find which ones were new. It would be nice to be able… Read more »
I'll have to second CO's request for comments sorted by time posted. I visit numerous times daily, and it makes it harder to find new comments that are nested halfway up the page. Another possibility is for a way to suppress comments that I've already read.
Thanks!
Also, I tried to register with wordpress, but they said that my username was already taken. Don't know whether registering would prevent someone else from using my name, but I guess not, since I'm able to post using it.
I've added a registration link to this blog at the top of the right hand column, try that one for now. I'm looking into ways to stop spoofing proactively instead of retroactively.
Good points – I need to look into the spoofing problem, for now I can check IP addresses and remove obvious fakes. So far we're all honest, but I will ban problem IPs.
As far as the threaded comments thing goes I may have a solution for you. I can change comments back to linear so newest comments are always at the bottom of the page, but I like being able to reply directly to a comment and I think it makes it easier to read for first time visitors.
At the top of every comments page (just below the posting) there's an RSS Feed link that sorts the comments chronologicaly. You can click that link when you return to check comments, or you can just add it to your feed reader and let the comments come to you!
Thanks Pope, I'll try out the RSS Feeds thing, but what if I want to post from a different computer with a different IP address, like from work or something? Would my post be deleted then? Also, checking IP addresses for each poster manually would seem to be a time consuming task. Hopefully a more workable solution will be found.
I know that it's your blog and you have your reasons for leaving blogger, but if an acceptable solution cannot be found, I would recommend going back to blogger. Just my opinion, no disrespect intended, and I'm not trying to create problems for you.
And by the way, thank you for all the work you do put into this blog. I don't post all the time, but I do read it frequently.
The deletion option is only a stop-gap solution and would only happen if there are complaints of abuse, you can post from any computer you want. The registration for this site doesn't care where you're posting from if you're logged in.
Try registering at the top left for now and I'll look into other options. It will help me if some of you are registered to see if I can filter out those 'pre-claimed' Ids.
Don't worry, I'm sure we can find a solution. Thanks for the feedback!
‘Feisal Panjwani, a senior mortgage consultant in Cloverdale, estimates that 95 per cent of his first-time clients are going long-term with 40. There are also zero-down mortgages and an interest-only mortgage that help them get into the market, he said.’
Anyone who wishes to see how and why bubbles form need only look at the psychology playing out in Canada. Every warning sign being ignored and going head-long over the cliff.
Comment is by Ben Jones, creator of the Housing Bubble Blog.
BC popn: 13% of Canada … around 4.42M
BC mortgage debt: 19% … appears right given the fact that many foreigners are parking or laudering their cash in RE here.
A few examples are foreign dignitaries (such as Thai princess, Singapore ruling families, etc) and white-collar crooks from Philippines, China, and Taiwan (recent case circulating in the Chinese media).
DEBT milo. If they're parking cash or they're very wealthy why would they have debt on the properties they own? Wouldn't they own them outright?
Especially in the case of hiding ill gotten gains, why would you want the paper trail a bank loan creates when you could just buy outright?
"Anonymous 2008-01-06 11:46:33
Especially in the case of hiding ill gotten gains, why would you want the paper trail a bank loan creates when you could just buy outright?"
Don't know Anno. But the media said the million$ house in Vancouver-West recently sold by these Taiwanese couple was in the name of their Filipina maid. They're curently living in another million$ house in VW.
But I know for a fact that Banks will lend mortgages to new arrivals with no jobs and without any proof of overseas assets. But I was surprised though when one told me she bought 4 detached properties within 6 months of arrival and she was coaching another on how to proceed.
the pope,
how come flood of comments are flying in the room can you fix that sorry and thanks.
Krrish
From the Macleans article…
"What's driven things in the U.S. was a parlous mix of overheated financial markets, a culture of debt accumulation, and a heaping dose of pure speculation."
Are things very much different here?
Indeed. Isn't the forest industry in the dumpster? Just what is keeping BC going anyway, except construction?
Didn't Bob Rennie say that Vancouver is now a "real estate city"? How is that business model working out south of the border?
The Pope,
Congratulation on this new-new year concept,the pope goes HD just need hd source so I have put those official stats in chow!
"The continued strength of the real estate market is a reflection of the economic vitality seen throughout the province. With overall wages on the rise and unemployment in decline, buyers and sellers are left with a healthy and strong climate in which to operate," says REBGV president
official stats are available now.
http://www.realtylink.org/hpi/rebgv/images/1207-h… http://www.realtylink.org/hpi/rebgvhpistats.cfm?d…
"When the last bubbles burst in the 1980s, it brought many Canadians to their knees financially. In 1989, house prices in Toronto dropped 41 per cent and took more than a decade to recover. Vancouver fared even worse in the early 1980s'
And thus the industry will pay ANYTHING to stop this from happening, including stories in Macleans.
The industry doesn't pay to stop housing crashes, and this isn't the 80s. Prices are still going up here, there's no reason for that to change.
The last bubbles were totally different in both areas. Prices in Toronto in the late 80's were increasing at a lot greater rate than the 20% annually, or so, that we have seen in most western markets the last few years. When the Toronto market crashed in '89 interest rates were around 14% for a 5 year mortgage. Same goes for Vancouver in the early 80's. Prices rose close to 100% from '80 to '81. As I remember it, having been there, the prices in Vancouver fell something closer to 25% after having risen more than 100%. The only ones who lost were those who bought at the top, when interest rates peaked above 20%. Even so, if they had been able to hang on they only had to wait until about 1988 to see prices rise well above the… Read more »
The Pope,
Congratulation!on your new concept going HD,tell us the housing market success remind us the change to like some thing diffrent,change and adjust to market fundamentals congratulation!vancouvercondo.info you got new living room and ball room require some HD,HDMI source ok we got some here.
"The continued strength of the real estate market is a reflection of the economic vitality seen throughout the province. With overall wages on the rise and unemployment in decline, buyers and sellers are left with a healthy and strong climate in which to operate," says REBGV
Greater Vancouver new bench mark for dec,07 Detached $730,399 Attached $456.941 Appartments $377,579
I posted the weekly REBGV numbers. As expected the sell/list ratio is back in check.
Hi Paul
Why don't you show the REGBV graph of the average Vancouver Price. You know,… the one posted by the the Board. Maybe point out the head and shoulders formation of the current graph.
Just a thought.
Hugs
g
I'm amazed at how quickly 40 year mortgages have been accepted. 95% of first timers!? Crazy how readily nearly everyone is to take on massive debt on usurious terms. But what's more surprising to me is how much risk the banks are willing to take on. Even a 5% drop in prices anytime over the next 5 years will put the banks in a position where many loans are not fully secured. Everything is premised on the assumption that prices will continue increasing significantly. But keeping the party going now will require further "innovation" (risk-taking). I have to think they're close to the limit already in terms of how much risk they are willing to take on, particularly with the US debacle continuing to unfold. I really can't see 0-down interest only loans becoming the norm. But even if they… Read more »
But what’s more surprising to me is how much risk the banks are willing to take on
CMHC, not the banks. All high ratio mortgages must be insured, which is why the banks are more than happy to make them. Given the housing industry hacks on the CMHC board, don't expect them to get cautious any time soon.
What puzzles me is why Genworth, which is an alternate provider of mortgage insurance and is US-owned to boot, hasn't gotten out of this market already.
What puzzles me is why Genworth, which is an alternate provider of mortgage insurance and is US-owned to boot, hasn’t gotten out of this market already.
Especially since parent GE is risk averse, AND lost a bundle on subprime. I saw an interview with Immelt where he acknowledged bad investment but noted that they learned from their mistaktes. If so what is Genworth doing racing CMHC to the bottom? Anybody in the biz have any anecdotal info on whether Genworth has pulled back?
GE spun Genworth off, and now holds very little Genworth stock. See the major owners at the bottom of this page: http://tinyurl.com/2hvopw
Thanks for the update. It looks as if GE unloaded their last stock in mid 2006. Is anybody in charge of this future trainwreck?
