Friday Free-for-all!
Ah! The weekend! Make it through the next week and you get a long weekend as your reward. The end of the week is also when we do our news link round up. Here are a few stories I’ve noticed:
-Weakness in economy helps home buyers
-Construction workers to be drug tested after accidents
-Gas and food drive inflation higher
-Global economic confidence at lowest level since 2001
-The slippery issue of oil market speculation
-Bailouts for Fannie and Freddie?
So what are you seeing out there? Post your news, links and anecdotes here and have an excellent weekend!
note: any conversation on Vancouver, real estate or economics is allowed, please keep it civilized. When posting articles please only quote pertinent points and link to the original instead of pasting the entire article here. Pasting a link will automatically create a clickable hot-link. Thanks!
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August 26th, 2008 at 10:16 am
Higher number of MLS listings is having a negative impact on the prices, everywhere…
August 25th, 2008 at 5:35 pm
Backlog of US homes for sale is worst on record
http://www.independent.co.uk/n.....08689.html
August 25th, 2008 at 2:24 pm
Keep in mind that getting another degree isn’t always the best thing you can do for your salary. I graduated recently and now I’m earning about half of what I was before. (Although my situation isn’t entirely typical.)
August 25th, 2008 at 11:32 am
drachen, that quote was from sheepless. My point was the same as yours, that it is the median that matters.
August 25th, 2008 at 10:54 am
Aside:
For anyone who might have been waiting for the next chapter in Chris Martenson’s “Crash Course”, it was published on the 23rd, here:
Chapter Seventeen: Peak Oil
For those who haven’t seen it, you might really want to check out the previous chapters, especially the ones immediately preceding, on bubbles and “fuzzy numbers”. Fascinating stuff, IMHO.
August 25th, 2008 at 9:38 am
Patriotz
“Actually, the average family income for Vancouver in 2000 was $70,000 ($75,000 for couples) http://www.bcstats.gov.bc.ca/d.....onincl.pdf
Even if salary increases didn’t keep pace with inflation, the average now should be over $80,000 so the average family should be able to afford a $240,000 mortgage. Hope they have a big downpayment.”
Median is $62,000 give or take a few hundred at the last statscan measurement. Median is a far better measure of what regular people can afford because it’s not skewed by a small group of super-wealthy people. And Vancouver median family income is increasing far more slowly than inflation, it has been for some time, we’re now four or five from the bottom of the 20 biggest Canadian cities for median income.
August 25th, 2008 at 8:42 am
Anecdotal report from the trenches. I was at a BBQ this weekend. 2 early 30s couples are in the process of selling both of their homes. They’re the ones who got help from their parents to perform a flip and hopefully make enough for their own downpayment, you know instead of working for it and stuff like that. Anyway one got a fool right away to offer above asking but did not accept the offer. She thinks they’ll be cleaner offers coming soon.
The other one has yet to put the house on the market because they’re just finishing up. Both have said they are planning on doing another flip!
Everyone at the BBQ parroted the spin from what a month ago or whatever about the soft fluffy landing. This is actually a change from before with this group. A few months ago these people said that real estate would never ever slow down and prices could never fall.
August 25th, 2008 at 8:01 am
Matt(112), are you sure tech workers are going for more degrees? My experience over the last few years is that my coworkers and I drop some saved up cash on certifications our employers won’t cover, and BCIT-type courses we can take in the evenings, just to update and round out our skills. None of us have the time or money to invest in doing lap 2 on the university circuit…but maybe that’s just my poor/lazy peer group.
August 25th, 2008 at 7:47 am
About IT in Vancouver (and SAP BOBJ)
My experience with contracting is that yes, you will probably end up with a 6 month contract, but if you’re good, and using a rare skillset, you end up geting your contract renewed a few times until you’ve been there for years…longer than most of the full-timers. It’s rather funny actually, but stressful every 6 month while you’re waiting to see if you’ll get signed up for the next stint or not.
I happen to know someone who works in IT at BOBJ.
So far SAP is saying there’s no plan to shut down the Vancouver operation, and they’re turning the whole BI PG into what they call a ‘lab’. I expect there will be more info coming around Q1 next year.
August 25th, 2008 at 5:22 am
Actually, the average family income for Vancouver in 2000 was $70,000 ($75,000 for couples)
It’s the median income that is significant for housing affordability (with respect to the median residence), not the average. Having Jim Pattison or Bill Gates in your city does not help you buy a house.
August 25th, 2008 at 5:18 am
That would also mean the supply of asian buyers will dry up (as well as Americans).
There have never been significant numbers of American buyers in Vancouver, and Asian buyers (I mean foreigners, not legal residents or citizens of Asian origin) are far fewer than people think.
I think foreign purchases from all countries amount to less than 5% of total.
See this study from Landcor which shows that 7% of condo purchases in the West End are foreigners (clearly % of all residences in GVRD is much lower):
https://www.landcor.com/market/reports/West_End.pdf
It’s the local buyers who have driven this bubble, just like in 1980/81, and the lack of local buyers which will bring it down.
August 25th, 2008 at 5:10 am
Actually, the average family income for Vancouver in 2000 was $70,000 ($75,000 for couples) http://www.bcstats.gov.bc.ca/d.....onincl.pdf
Even if salary increases didn’t keep pace with inflation, the average now should be over $80,000 so the average family should be able to afford a $240,000 mortgage. Hope they have a big downpayment.
August 25th, 2008 at 2:37 am
I don’t think you’ll see too many people buying if this global recession drags on for longer than 2009. Then the really big job losses will start to accumulate. That would also mean the supply of asian buyers will dry up (as well as Americans). When your average family income in Vancouver is around 60k and there is no growth in industry to speak of, the outcome is destined to be negative for the real estate market.
August 25th, 2008 at 1:15 am
“Call me strange, but I consider spending an afternoon looking at open houses to be a fun time.”
You’ve got lots of company. Wandering through open houses on the weekend seems to be peculiar to Vancouver. I’ve not seen the same attendance at them in other cities.
I agree that most people at open houses are just kicking the tires, checking out the decor or otherwise amusing themselves, but I don’t think it was much different in the past. And, yes, people are holding back waiting for prices to go down. I think they call that pent-up demand. If prices don’t go down by much, anyone have a guess on how long they will hold off buying? In my case, it’s until interest rates start going up. The latest predictions by economists is between March and fall 2009.
August 25th, 2008 at 12:17 am
“There’s been a steady decline in university enrollment ever since the echo boomers matured and are now starting to enter the workforce.”
Some of the echo boomers are still in high school. The peak of the baby boom in Canada was 1959, but if you account for immigration, the peak in population in that age group today would have been born in 1961.
The echo boomers started coming into the world in the mid-1980s. I think that lasted until 1995 which would mean the echo age group is currently between 13 and 23. This would explain the enrollment decline in the elementary schools that the Lower Mainland has been experiencing over the past few years. It will be a few more years before this has an impact on university enrolment.
A bachelor’s degree is comparable to what a high school diploma was twenty years ago. Most jobs require some post-secondary education (whether it’s needed is another story). People returning to school to get second or graduate degrees are adding to the enrolment. International students also make up an increasing proportion of the student population. The latter pay higher tuition fees so post-secondary institutions love them.
Technology will have a bigger impact than enrolment levels. Once it becomes acceptable to deliver lectures and classes completely online, there will be less need for lecturers, etc. But with a good proportion of their employees nearing retirement, the likely scenario at post-secondary institutions is lower employment through attrition.
August 24th, 2008 at 10:44 pm
Call me strange, but I consider spending an afternoon looking at open houses to be a fun time. Since I have no intention of buying, I don’t bother wasting the agent’s time — I just look. Lately I’ve noticed a lot of people doing the same. The thing is, nobody’s browsing with the intent of making a purchase. They’re just scoping out the goods. Speaking to the “regular folk” at these open houses, the conventional wisdom is that there’s no point buying now because prices are heading lower.
August 24th, 2008 at 10:35 pm
Thought this was pretty good, albeit from a UK perspective
http://www.youtube.com/watch?v=v8GPgBM_crU
August 24th, 2008 at 5:40 pm
Here’s some anecdotal stuff from my open house visits this weekend. I only stopped by two – both East Van fixer-uppers in the $700,000 to $800,000 range. The open houses were busy. At least a few seemed to be more than just looking.
Both houses have been on the market for six or eight weeks. Both have been family owned for the last 30 – 40 years, but currently empty because the single occupant (owner or member of the owner’s family) had moved on. One had obviously consisted of three or four rental suites many years ago. Both were approximately 100 years old. They were huge and needed a lot of work. The linoleum in one of them looked to be around sixty years old. The buildings themselves were solid which is more than I can say for anything built since 1980.
I expect they’ll sell, maybe for $50,000 or so off the asking, to one of those young couples wandering about with their kids in tow looking for an extreme home makeover.
August 24th, 2008 at 5:05 pm
#104 read on, there’s been a steady decline in university enrollment ever since the echo boomers matured and are now starting to enter the workforce. I doubt many labourers and baristas will be going back to get a BA or BSc due to a recession. Tech workers with BA or BScs are more likely to go back and get MBAs and other advanced degrees but I am unsure that it is enough to offset the decline of Bachelors’ enrollments.
August 24th, 2008 at 4:47 pm
machiatto
I am in the medical domain.
Bizznitz
Funny you should mention them, I worked there for two years. Still have friends there…
Regards,
arit
August 24th, 2008 at 3:38 pm
Heard there’s a hiring freeze on at Sage/Accpac.
August 24th, 2008 at 3:20 pm
Arit, What sector of IT are you in?
August 24th, 2008 at 3:18 pm
To James’ point regarding IT projects underway, here is an NY Times article I came across today by coincidence:
http://www.nytimes.com/2008/08.....ref=slogin
Gartner group, I am sure they’ve gotten it wrong before, about 8 years ago, and probably got it terribly wrong.
We’ll see what happens this time.
August 24th, 2008 at 2:54 pm
BTW, the word in the IT industry is “silent-alarm” aka freeze hire all across. No recession here?
I’ve heard from a few local tech insiders that they’re being affected by the credit crunch in the US. Development money was easy to get the last few years, almost like the dot.com era again, but recently the US investment capital spigot has been turned off, and small-company hopes of being bought out by a bigger US company are fading fast. Some companies with shallow pockets and a high burn rate are going to run out of money next year.
August 24th, 2008 at 2:04 pm
matt Says:
August 23rd, 2008 at 3:44 pm
Where else do you all think we’ll see job losses in Vancouver? What large companies will run into problems? Perhaps Home Depot and Rona? That’s a toxic combination of retail and construction. Is there any chance that UBC or SFU will start laying off employees due to reduced enrollment?
****
Matt, Universities generally INCREASE enrollments during economic downtimes as more poeple choose to study rather than take construction jobs at 19, etc.
August 24th, 2008 at 1:41 pm
Denninger rant:
Canada may be in better shape, but here in BC we have a -7 or -8% savings rate. Its probably worse in the Vancouver area.
Back in the 80s recession, most people actually had savings, along with much less debt. We also had a stronger social safety net. IIRC At one time EI (UI) covered 80% of wages. Now its usually about 50%.
So my guess is a recession equivalent to 1982 would have much more dire consequences this time. You can let your imagination run wild as to how bad it will get.
August 24th, 2008 at 12:52 pm
“Yes, but those people you’re speaking of are not convinced that RE only goes up, they’re just pretending. The ones who are convinced are the suckers who own 2 or more properties and are planning on retiring in the next 10 years or earn a wage far less than is needed to maintain their mortgages.”
BINGO!!!!!!!!!
“they’re just pretending”
Exactly and they make a lot of money at it, radio talk show hosts,TV anchor, RE get rich quick seminar pimps,and also, (we won’t name names,)a slimy, slithering, cagey realtor/blogger,who get’s tons of free advertising from us bears.
August 24th, 2008 at 12:21 pm
AlexCanuck
your response to “the same people convinced that RE only goes up”
“Not so! The bubble blowers are under no illusion as to the nature of bubbles. They get paid by boosting, and most are safely out of it by the time the bubble pops. It is naive bubble participants that get burned.”
Yes, but those people you’re speaking of are not convinced that RE only goes up, they’re just pretending. The ones who are convinced are the suckers who own 2 or more properties and are planning on retiring in the next 10 years or earn a wage far less than is needed to maintain their mortgages.
August 24th, 2008 at 12:00 pm
#97
Many will suffer, few will benefit. Vancouver in particular is unlikely to be prepared for such an outcome. All that glitters is not gold.
Thanks for the link squidly. Mish is always on target.
August 24th, 2008 at 11:29 am
BuffButler
Contracting is not so popular around here. The big contracts are usually exported to India. In the serious companies most employees are full-time or contracted before hired.
BTW, the word in the IT industry is “silent-alarm” aka freeze hire all across. No recession here?
Regards,
arit