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October 3rd, 2008 at 2:46 pm
“There are many stocks still making money”
Good luck picking them. I’ll keep my meager 3-4% from the bank; it’s looking a lot better than double-digit losses right now.
October 3rd, 2008 at 2:29 pm
California can’t pay it’s bills because of the financial crisis! Governor Schwarzenegger asks for emergency loan from Treasury!
http://biz.yahoo.com/cnnm/0810.....risis.html
October 3rd, 2008 at 2:22 pm
I prefer my land medium well… for the right price.
October 3rd, 2008 at 2:16 pm
Wow, listening to John is almost as good as listening to David Lereah. Look at the latest economic indicators:
1) HUGE DECLINE in auto sales:
http://www.ctv.ca/servlet/Arti.....name=Autos
2) 159,000 U.S. jobs lost, worse job loss in last 5 years:
http://www.marketwatch.com/new.....ist=msr_17
3)U.S. GDP revised DOWNWARDS:
http://www.forbes.com/markets/.....ets25.html
Add on top of this, the recent financial crisis and recent bankruptcies!
October 3rd, 2008 at 2:08 pm
Friday afternoon… mind already in weekend mode.
Above should say raw land not rare land.
October 3rd, 2008 at 2:06 pm
I haven’t met too many people with over 100K in their bank accounts, no offense but that’s not a very good place for the money. If you have a sizeable amount you are always better off investing it then having it sit in the bank where it isn’t even keeping up with inflation. There are many stocks still making money, there are even stocks that pay higher divends then the bank pays in interest. In these times of stock market turmoil there are still stocks that are a safe bet, as are certain commodities. If the market begins collapsing the best thing is to buy real assets, rare rural land is among one of the safest investments in rough times.
October 3rd, 2008 at 1:42 pm
RRSP’s are fully protected against mortgage recourse, under the new legislation, unless the money was put in during the last 12 months, in which case creditors can go after them.
October 3rd, 2008 at 1:40 pm
Ok let’s get some facts out there for all the fence sitters. As you have seen here the bears are truly delusional. You’ve seen Vancouver and how great it is. We all know that this is the best place on earth.
Fact #1) Bears don’t own real estate and instead rent and “invest” in the stock market which is currently down about 10% on the year at least. Looks like this was a poor choice.
Fact #2) Bulls own REAL ASSETS that don’t decline in value in a single afternoon. Sure some houses sold for less than they did before but overall the owner made a killing and at worst broke even.
Fact #3) Rents are high vacancies low and the economy is BOOMING.
Fact #4) Rich Albertans and asians are selling their risky stocks to buy stable financially stable robust vancouver condos. Surrey is not on the list of places to buy in due to the fires.
October 3rd, 2008 at 1:37 pm
Had a worrying thought the last few days regarding the practical reality of the $100K deposit insurance. Here’s the scenerio:
A person has $500K distributed equally in 5 institutions (BankA, BankB, BankC, BankD and BankE), so that there is $80K in each bank. We enter into difficult fiscal times and BankA goes belly up. The person retrieves their $80K from the deposit insurance, but needs to put it into another bank. However the number of available institutions if falling due to banks collapsing, so this money is distributed into one of persons other banks. Now all the accounts are at or above $100K. Times get rougher and now another one of the banks has collapsed which erases anything over $100K in that bank. And then two other banks have merged, leaving only two institutions to distribute the $500K minus the loss from the second bank collapse. Suddenly, this person is only insured to $200K. Kinda scary, isn’t it.
So, raising the deposit insurance limit seems like a good idea to me.
October 3rd, 2008 at 1:29 pm
“can I just open a second ING account attached to the first one?”
That would be way too easy and the answer is pretty much no.
October 3rd, 2008 at 1:27 pm
Does anyone want to read more dosh quotes?
October 3rd, 2008 at 1:25 pm
“So the Bailout passes and markets go down? Not even a day-long spike? Wasn’t this supposed to “save” Wall Street. Uh-oh.”
Bearette
As explained above:
“American Bail Out have need to understand, it give time to old money to put pants on and shoes to run out of big fire to come.”
October 3rd, 2008 at 1:24 pm
To make sure the whole amount is insured do I have to move money to an account at another bank or can I just open a second ING account attached to the first one?
Had this discussion at work recently, and the consensus was that the $100K deposit insurance was per institution (NOT account) per individual. I have my powder store in a handful of institutions. Only one instution exceeds $100K, but enough is held in investment funds to keep the cash and trading account total below $100K.
October 3rd, 2008 at 1:18 pm
A really bad idea if you’re overextended and facing the possibility of bankruptcy is to raid your RRSPs to pay your bills. Not only will you be depleting your retirement funding and take a tax hit, you’ll be moving your money out of safety and into an asset that will be lost in bankruptcy and is facing years of decline in its value.
A very good point! Can someone with accurate knowledge comment? Are RRSP’s are fully protected against mortgage recourse? With a period, or with caveats?
October 3rd, 2008 at 1:14 pm
For sale by owner,
“You borrowed demand from the future.”
Doesn’t that statement mean that there WILL be a derth of buyers? If you borrow demand from the future, there is less demand now, meaning less buyers and lower RE prices.
October 3rd, 2008 at 1:11 pm
All this talk about deposit insurance has me curious.. I’ve got a bit more than the 100k limit in an ING account. To make sure the whole amount is insured do I have to move money to an account at another bank or can I just open a second ING account attached to the first one?
October 3rd, 2008 at 1:02 pm
So the Bailout passes and markets go down? Not even a day-long spike? Wasn’t this supposed to “save” Wall Street. Uh-oh.
October 3rd, 2008 at 12:36 pm
“If you have no assets to go after you had might as well take the BK hit sooner rather than later.”
Many have more net worth than just a house (though many, especially in BC, do not). I won’t belabour the point, only that those with some equity built up, in the house or elsewhere, and needing to sell will want to get to the front of the line.
October 3rd, 2008 at 12:24 pm
If you have no assets to go after (and RRSP’s are protected now) you had might as well take the BK hit sooner rather than later. And if you lose your job that decision is going to be made for you.
A really bad idea if you’re overextended and facing the possibility of bankruptcy is to raid your RRSPs to pay your bills. Not only will you be depleting your retirement funding and take a tax hit, you’ll be moving your money out of safety and into an asset that will be lost in bankruptcy and is facing years of decline in its value.
October 3rd, 2008 at 12:20 pm
The humongous US bail out bill has passes with a good ol’ fashioned helping of pork:
Another one of those provisions is $478 million in tax breaks for film and television production that’s shot in the USA. With the near parity dollar already hurting the Vancouver film production industry this certainly doesn’t help our local outlook.
October 3rd, 2008 at 12:13 pm
quoting Jesse: There has been talk around local blogs about discretionary versus non-discretionary sellers and how much inventory there “really” is, the theory being that most people trying to sell are doing so on a lark but will revert to holding when they don’t get their price.
Those blogs couldn’t be more wrong.
The carrying costs for investors is just too steep at our price levels. People cannot afford to hold.
Our drop is looking like it will be faster and even further down than what’s happened in Calgary. At least there, the prices are low enough and the income high enough that they can sit pat and rent it out and not bleed too much month to month.
Somebody said in RET the cure for higher prices is higher prices. Once the music stop, there’s nothing that can stop the slide until the prices are sound again.
Everyone thinks we’re not in a recession, but I highly doubt that. The numbers posted by the government are spun so many times and in so many ways, the public has no idea what’s going on.
Check out http://www.shadowstats.com
For example, you can’t look at job numbers alone because if you lose 10 high paying jobs but then add 13 part time or lower paying jobs, your net job growth is +3 but in fact total real wages and salary (wealth) have declined.
October 3rd, 2008 at 12:10 pm
I don’t know if “walking away” is a viable option. It is an option but it can’t get much worse than that with the threat of recourse.
Recourse against what? If you have no assets to go after (and RRSP’s are protected now) you had might as well take the BK hit sooner rather than later. And if you lose your job that decision is going to be made for you.
There were a lot of foreclosures in the 80′s bust and remember the previous runup only lasted a year and a half.
October 3rd, 2008 at 11:58 am
“Conclusion: there will be no derth of sellers.”
There will be no derth of buyers . You borrowed demand from the future.
What very little demand there may be going forward, will be met by hungry builders, and lot’s of owners who bought before the bubble.
The fools who wait until the 11th hour, and 59th minute, will have to compete with the Marketing Machine and Low, Low Prices.
Conclusion:
You are screwed.
October 3rd, 2008 at 11:48 am
The awareness of the troubles are truly gaining critical mass in the public eye. I don’t find myself treated as some dour loony ranting on about imaginary disaster anymore.
Yes, the other day at work I mentioned waiting to buy till prices drop further and was surprised to find the other person immediately and enthusiastically agreeing. Apparently the coming crash is “obvious” these days.
I heard people talking about the markets on the Grind also…a lot of people are worried now, rightly so. Bears are everywhere!
October 3rd, 2008 at 11:46 am
“big tax free gain and they want to the money to retire or whatever.”
Mr.Market, what happens when the Baby Boomers start selling their houses (say for $1.2 mil and up) who is going to step up to buy them? It’ll be interesting to see how many land rich and cash poor boomers are planning to downsize in order to fund their retirements and how it’ll pan out if a bunch of neuro surgeons (or whatever job earns $250k plus) line up to buy the house or if they decline to a level more in line with the average pt grey residents ($115,000), furthermore anyone who’s bought a condo now has a $2,000 per month liability (to subsidize the tenant) which’ll affect their debt ratio.
The boomers created the demand for housing initially and if they all head to the exits what happens?
October 3rd, 2008 at 11:40 am
“For cash flow negative investors, the paths are slightly different – sell or walk.”
I don’t know if “walking away” is a viable option. It is an option but it can’t get much worse than that with the threat of recourse.
October 3rd, 2008 at 11:37 am
To those with two viable paths forward (sell or stay for owner-occupiers; sell or rent out for investors)
You should have said cash flow positive investors. For cash flow negative investors, the paths are slightly different – sell or walk.
October 3rd, 2008 at 11:18 am
a significant portion of sellers bought houses 15-20 years ago. They are sitting on enormous profits right now. Even if they sell after prices are down 50% from the February 2008 peak, they will be laughing to the bank.
I take your point, but many have borrowed against those gains and all have counted on them as ‘money in the bank’. They’ll chase the market way down, and they won’t be laughing.
October 3rd, 2008 at 11:14 am
The December inventory numbers will be an indication on how much truth there is to the discretionary seller argument.
People have been listing ‘on a lark’ for years now, posting a ‘wishing price’ and seeing if they’ll get it, so I don’t believe that the recent spike in inventory reflects insincere sellers. Rather it represents people who need to sell or want to sell at the perceived peak, and the 50% drop in sales volume ensures that inventory will spike up.
A lot of legitimate sellers will delist over the slow winter months with the intent to relist in the spring, so spring will tell all — but we already know what it will say, and it won’t be pretty.
October 3rd, 2008 at 11:09 am
“I don’t think people try to sell on a ‘lark’. “
To those with two viable paths forward (sell or stay for owner-occupiers; sell or rent out for investors) it is entirely discretionary on achieving a “good” price. My argument is that those more desperate to sell will be more likely to keep listings around through December and January.
“Thus if they withdraw from the market it’s neutral to negative for net demand.”
Sales are levered off market entrants. Demand dropping 40% is not FTBs dropping 40% but the entire property ladder hinging on finding FTBs buying at the bottom. In terms of listings, the question is how quickly will prices drop and how substantially December inventory drops may be an indication of the volume of “motivated” listings.
October 3rd, 2008 at 11:00 am
Remeber, a significant portion of sellers bought houses 15-20 years ago. They are sitting on enormous profits right now. Even if they sell after prices are down 50% from the February 2008 peak, they will be laughing to the bank.
These sellers want to sell but have such a big capital gain cushion they can affort to wait in the greed induced hope that prices will recover. When they see reality, they will sell at a lower price, somewhat disappointed they did not sell earlier but pretty happy with their relatively fat, tax free capital gain.
I would say most RE inventory currently for sale was purchased before the current boom (no data to back it up). These sellers will still sell in a declining market because they sill have a big tax free gain and they want to the money to retire or whatever.
Conclusion: there will be no derth of sellers.
October 3rd, 2008 at 10:48 am
When the bubble burst this year, it was because the demand disappeared from speculators believing the market can only go up.
Unfortunately, when the economy grinds to a halt, we will have artificially low demand because non-speculators – people that really want to buy a place to live – will hold off their purchase if their job is on the line.
I am prediciting that as the U.S. economy plunges and the Canadian economy follows, we will see even lower sell/list ratios than the 30% sell/list of the last two months.
October 3rd, 2008 at 10:29 am
A friend who works for an engineering co just got his layoff notice.
Most of the talk on BNN the last couple of days seems to be about RECESSION, RECESSION, and more RECESSION, and it’s not just about the US, it’s global….no wonder the commodity heavy TSX is leading the market retreat as demand for commodities will dry up. It might take awhile, but western Canada (which is all about nat resources) could be hit harder and longer than any other area on the bloody continent….you just have to revisit previous recessions and stop believing our politicians.
October 3rd, 2008 at 10:20 am
the theory being that most people trying to sell are doing so on a lark but will revert to holding when they don’t get their price.
Such people are almost always planning to buy another property if the old one sells, and often a more expensive one.
Thus if they withdraw from the market it’s neutral to negative for net demand.
As usual, evidence for this theory can be found south of the border.
October 3rd, 2008 at 9:48 am
How to make a million. You start with 35 and then “invest in real estate”.
October 3rd, 2008 at 9:31 am
Good Morning Satv/aka Rob:
American Bail Out have need to understand, it give time to old money to put pants on and shoes to run out of big fire to come.
Then when Wall Street Gang out of danger of blaze, inflation report show interest rate must move up, and not good news for mortgage renewal at high rates when big job loss in Vancouver.
Then price drop , and can’t sell, but not can rent high enough to pay mortgage.
And not renew at 45 yr. Then subprime lend you 2nd mortgage to keep you stuck, while new developer sell unit like yours at ½ price and free trip to view bargains on Vancouver Island.
October 3rd, 2008 at 9:18 am
The problem with deposit insurance limit being only 100K is that most payroll accounts exceed of that amount. Wipe out payroll accounts and lots of small people get hit. Withdraw these accounts and you have a bank run.
October 3rd, 2008 at 8:57 am
I work for a local company that has seen way too much work drop off this year, not just from US customers, but from Canadian customers slowing down as well. We’ve laid off almost half our small staff in the last month in an office of around 20 people (temporarily we hope) and cut back the hours on several others. My position is relatively stable there, but I’m not sure how long we can hold on without getting more business in, so I wouldn’t be surprised if I get laid off as well, or the company goes under.
My wife works in an office that is having similar problems, if they don’t pick up more customers in the next few months her job is at risk as well.
It’s times like these that make me glad that we’ve been saving cash for the last several years instead of taking on a bunch of debt. If we’re both laid off, we’ve decided that we’ll leave Vancouver and do a bit of traveling to figure out where we want to live next. Vancouver’s nice and all but there’s no reason to stay here without two decent incomes. Thank goodness (and common sense) for the savings account!
October 3rd, 2008 at 8:28 am
Through 2009, as condo construction slowly completes (new starts will fail to keep up with completions) and Olympic-related construction completes, a big void will develop in many companies’ checkbooks, leading to layoffs.
Lots of people won’t be able to sell due to the market dropping below their mortgage value, and they’ll have trouble keeping up with the mortgage payments. While they struggle with their payments, and hope and hope for the market to recover so they can escape, it’ll only get worse, leaving them facing bankruptcy. It’s all too predictable of a pattern. Those troubles won’t significantly start affecting the market for another 2-3 years.
It’s going to implode regardless of the larger credit-market troubles.
(incidentally, last weekend I hiked the grind, and heard a number conversations about stock markets and drops)
October 3rd, 2008 at 8:08 am
Jesse, I think high gas prices in the spring caused many people to put off buying. Once inventory started to rise, I think the speculators started to list to get out early. I don’t think people try to sell on a ‘lark’. You buy into the same market you sell. There is no point in losing equity to a realtor if you don’t need to.
I do think a lot of people will just sit tight and not sell. Inventory will undoubtedly be lower come December. I think the real test will be next spring / summer.
October 3rd, 2008 at 7:53 am
“Much of this depends on how bad the U.S. economy gets. Right now, it’s not looking too good in the U.S.”
The run up in prices began when the economy was still in the dumps, after the dotcom bust.
The bubble has burst while the “real economy” is relatively not bad.
Bubble prices are not a result of sustainable economic factors, and therefore, a bad economy, or a good economy only affects the psychology of the market players only in terms of how long the party will go on, but it does not change the result- big time hang over coming up.
October 3rd, 2008 at 7:47 am
The awareness of the troubles are truly gaining critical mass in the public eye. I don’t find myself treated as some dour loony ranting on about imaginary disaster anymore.
you just need a way of saying:
“nyah! nyah! I told you so!” without
being impolite….
October 3rd, 2008 at 7:29 am
My work entails me visiting a diverse range of businesses, mostly small/med manufacturers. Almost everyone is slow, and worried about the future. The more export- oriented ones are really hurting.
Overheard coming down the tram from the Grouse Grind: “I don’t know what they are going to do. They can’t afford the mortgage, and they can’t sell it until the market recovers.” I had to bite my tongue.
The awareness of the troubles are truly gaining critical mass in the public eye. I don’t find myself treated as some dour loony ranting on about imaginary disaster anymore. I just hate it when people roll their eyes at me!
October 3rd, 2008 at 6:54 am
“Inventory from this year will carry over to next year. While there may be a drop of inventory as we approach December, we will probably hit 20K again by March of 2009.”
There has been talk around local blogs about discretionary versus non-discretionary sellers and how much inventory there “really” is, the theory being that most people trying to sell are doing so on a lark but will revert to holding when they don’t get their price.
The December inventory numbers will be an indication on how much truth there is to the discretionary seller argument.
October 3rd, 2008 at 6:47 am
“I don’t see what the big deal is about increasing deposti insurance.”
There are good arguments that the limit would have to be raised substantially to stave off a bank run. There are many depositors with silly amounts of $ sitting in the bank that would be wiped out. The $100K limit is to ensure the little guy isn’t thrown on the street; the rest of us can live without gravy.
October 3rd, 2008 at 1:55 am
I don’t see what the big deal is about increasing deposti insurance. The argument that it will discourage people from making riskier investments doesn’t hold any water as most people are incapable of saving as it is. But us savers should not be punished as we are not the ones that created this mess. I have more than $100,000 in a bank account waiting for prices to drop. Mind you if I was really concerned a Canadian bank would fail I could easily split my accounts. Well I already sort of have my banking split but the point is we should be giving reassurance to the few Canadians who are living within their means. I am by no means rich.
October 3rd, 2008 at 12:36 am
I’m guessing at the rate our businesses are suffering, the big price drops will occur in 2009. The following will happen next year:
1) Inventory from this year will carry over to next year. While there may be a drop of inventory as we approach December, we will probably hit 20K again by March of 2009. From there, inventory will spike like crazy and we’ll probably exceed 25K inventory during 2009
2) The demand will drop next year as Canadian banks tighten their lending standards and many Canadians are layed off.
Much of this depends on how bad the U.S. economy gets. Right now, it’s not looking too good in the U.S.
October 3rd, 2008 at 12:26 am
Companies are starting to lay people off now in Vancouver. My friend’s company is a small company, with about 30 people. They layed a few people off today because business has been so bad with their U.S. customers.
October 3rd, 2008 at 12:21 am
From Calgary article:
“Clearly, it’s still a buyer’s market and the opportunity for first-time homebuyers, to get into the market, is better than it’s ever been,” said CREB President Ed Jensen.
Better than it’s ever been, Ed?
How about “the worst time to buy ever except from 2007 up to now”.
October 3rd, 2008 at 12:05 am
From the deposit insurance article:
Boosting deposit insurance would be a good way for the federal government to reassure Canadians about the security of their funds, Mr. Georgetti said.
Really Ken? How much of your membership has that kind of loot sitting in the bank? I think you’ve been away from Trail too long.
People with over a million bucks kicking around (100K per bank) don’t need hand holding.