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October 5th, 2008 at 8:25 pm
satv was right!
john was right!!
dave was right!!!
Believe it or not, house prices are going to soar
With developers unlikely to respond quickly when the market bottoms out, prices may recover more quickly than people imagine.’
That price rise may be every bit as large as the current price falls.
http://tinyurl.com/4ug4t6
October 5th, 2008 at 7:43 pm
is it just me or does the up arrow add 2 points to the score?
October 5th, 2008 at 7:43 pm
It seems to me that a characteristic of balloons and bubbles is that they never pop just a little bit… it’s pretty much all or nothing.
October 5th, 2008 at 7:09 pm
Satv,Rob,:
You see the connection between the money printing presses and inflated asset prices, yet you fail to see the event that always follows the inflation phase.
But no problem, you will see if first hand – inflation, recession, panic selling.
In California prices are down 47% in some markets, even with Bernanke putting an extra graveyard shift on the money presses.
October 5th, 2008 at 6:54 pm
“The main reason the inventory of unsold homes has grown so rapidly is that the buyers have gone on strike.”
Actually it doesn’t take much of a strike at all for sales to drop off a cliff. For every new buyer there are 2-3 that rely on that buyer to sell their own properties. Take away only 15% of demand and that’s your 40% drop right there.
October 5th, 2008 at 6:50 pm
The great bear panic is underway big time. How are those paper investments doing bears? Us bulls have a nice cozy house for the winter and lot’s of real assets instead of a depreciating bank stock.
October 5th, 2008 at 6:14 pm
hey nutslaps! i see signs bears starting to panic! like printing press coming into den! try to shrink bull rocket!
hey! if you like canucks this yr press green arrow below
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October 5th, 2008 at 4:57 pm
“Are Dave’s comments above in a small font because they are getting ranked lowly?? That is childish – I like it!”
Unlike his blog, where he censors the truth, here, the posters decide.
October 5th, 2008 at 4:54 pm
For $390k you should be able to buy the whole city of Greenwood! Seriously, I checked out real estate out that way a few years ago, a typical house in Greenwood was about oh, $40,000. About a year ago people realized the RE out there was dirt cheap and rushed in to buy. Too bad they didn’t realize the RE market there is pretty dead, hard to unload that shack you bought these days. All those for sale signs along the highway makes me laugh. Suckers!!!
October 5th, 2008 at 4:08 pm
Are Dave’s comments above in a small font because they are getting ranked lowly?? That is childish – I like it! But can his comments please get marked in a way that is still readable without copying the text into another program – say put them on a darker coloured background?
I like to follow both sides of the conversation, and I don’t think it does us any good to completely shut out the bullish views. And since we are all fairly certain that Dave is somehow involved with real estate in his professional life, his comments are a useful way for us to see how the dishonest and/or clueless members of these professions are currently tricking people into buying.
October 5th, 2008 at 3:57 pm
Vancouver investors recognize good value, and the solid fundamentals of the Vancouver market make investing in the best real estate anywhere an undeniably great investment for investors from abroad as well as local.
The metrics tell the tale:
S/L ratio: in the high 90’s
MOI : 1.5
And let’s not forget, the shortage of land, the fact that Vancouver is a world hub of business, and did I mention we are the California of the North?
(maybe I shouldn’t use the California of the North thingy anymore)
October 5th, 2008 at 3:51 pm
Whenever I see an MLS listing where the description includes what the unit currently rents for, I always do a quick calculation of what the unit would yield and how much the new owner would lose if they kept it as a rental.
The results vary greatly – but I’ve never seen a montly loss as low as $200. I would say $500 minimum (this would be on a smaller 1BR.)
If anyone sees any listings like this, post them … they are interesting!
October 5th, 2008 at 3:48 pm
A friend of mine bought in Vancouver at the beginning of summer. She and hubby got a mortgage from a broker in Alberta. I can’t even believe the terms: 5% down, and 60 year amortization! I didn’t even know this was possible… (on their mortgage papers, they are “self employed”.)
The rationale is to keep the monthly payments within their range, and longterm they’re counting on appreciation… I tried to get them to read this and other bear blogs, but they wouldn’t do it. I guess they’re not that worried, they’re in for so little it will be easy for them to walk away if things get tough.
October 5th, 2008 at 3:08 pm
CPAB, why are you accusing me of being Rob Chipman and why is the text in my posts so small above?
October 5th, 2008 at 3:06 pm
Been waiting eagerly for pope to implement the “thumbs down” option for instant relief from the nagging of a couple of bulls still stuck in denial.
Well, sumbith, I was so pumped to blast away at the first sight of Dave and John that I hit the wrong damn button…that feels even worse than the agony of not having the “thumbs down” option.
O man, will I be waiting for you creeps the next time.
October 5th, 2008 at 2:50 pm
I’ve driven by many, many times and wondered what the history of this building was … it’s described in the MLS listing. Bet that’s about all you know about Greenwood, a city rich in history.
I grew up in the southern Interior, wise guy, so I’ve known about Greenwood since I was a kid.
If you think being “rich in history” makes a house in a ghost town worth 390K, go ahead and buy it.
October 5th, 2008 at 2:35 pm
Germany seeks to reassure savers
German Chancellor Angela Merkel has moved to reassure savers in German financial institutions that their deposits are safe.
The BBC business editor says the biggest worry is now in Iceland, where the government is trying to shore up the entire banking system before markets open on Monday.
http://news.bbc.co.uk/2/hi/business/7653317.stm
October 5th, 2008 at 2:21 pm
Alright Annonymous I shouldn’t rise to your troll bait.
Here’s a unit that would cost over $400k if available right now for $1400 (650 sq ft) in Coal Harbour with pool.
“$1400 1br – 1 Bedroom w/View at Coal Harbour for Rent (#1204-1328 W. Pender St., Van, BC) (map)Well designed 1 bed suite, 7 appliances, granite countertop.
12/Fl, view of Coal Harbour, Park, marina and mountain.
Building has Resident Manager, concierge service, indoor swimming pool & full rec facility.
Come with 1 parking and 1 locker. ”
So what is it you are trying to say?
Are you suggesting it’s only a loss of $250 if you buy it outright? What about the opportunity costs of putting up hundreds of thousands?
If vacancies are so tight in coal harbour why do I have my pick of hundreds right now?
You actually need 25% down for an investment property, which you must know. The fact that people lie and put 5% down and then rent them out isn’t a secret.
If you can find me a place and then rent it out at a loss of only $250 per month I’ll write you a cheque.
The truth is it’s a loss of $1500 per month and since the market will tank anywhere from 20-40% it’s a paper loss of thousands per month which requires a further cash injection of another fifteen hundred just to avoid foreclosure, hurry there are rich asians coming to buy them so if you don’t buy now they will!
October 5th, 2008 at 2:12 pm
My favourite – Greenwood, population 656, Canada’s smallest incorporated city.
33 listings – one for every 20 people. Look what you can get for just 390K LOL!
Thanks for bringing this listing up. I’ve driven by many, many times and wondered what the history of this building was … it’s described in the MLS listing. Bet that’s about all you know about Greenwood, a city rich in history. Regarding “LOL”, you big city folks are all the same … full of yourselves.
October 5th, 2008 at 2:08 pm
“- While you can rent downtown for $1300-$1500 a decent sized 2 bdrm in a new building with a pool is a different story.”
That is a 1 bedroom price in coal harbour, those numbers make sense it’s a $2,000 loss to the landlord every month
October 5th, 2008 at 1:59 pm
“bdk Says:
October 5th, 2008 at 12:17 pm
Downtown rents cover 1/3-1/2 of the mortgage payments with 5% down ( I know 25% percent is required but people lie).
$600 per $100k on a $489k (oops $450 now) plus strata fees ($230),maintenance and insurance is over $3,000 per month.
The rent for this unit (and there are hundreds so this is a fair sample) is $1300-1500.”
- No one is paying 6% on a mortgage not even close.
- A 20% downpayment is required to avoid CMHC costs.
- While you can rent downtown for $1300-$1500 a decent sized 2 bdrm in a new building with a pool is a different story.
- Vacancy is low enough that you can assume full rental all year right now.
So in the examples posted the owner is losing $250 dollars a month. Hardly the 1/3 to 1/2 you claim.
October 5th, 2008 at 1:22 pm
If it makes bears feel better to claim that the stock market declines are GOOD for them then hey keep saying it. We all know what the truth is here. The bears are now scared half to death. Gone are the bear bravado about being able to snap up multiple houses for cash. Meanwhile the bulls are still ahead because real estate is still solid and will always be. Gee looks like the experts were correct. What a shocking turn of events.
Bears current score : -100
Bulls current score : many million and climbing daily
October 5th, 2008 at 12:38 pm
“So, raising the deposit insurance limit seems like a good idea to me.*
I disagree. Say economic times get tough such as your example and bank A fails the government may have to cover a little bit. The next time a bank fails (bank B) theyll have to cover even more because funds have been redistributed from the bank A failure. Now say this continues to bank C the bill would grow exponentially. The result of all this is the government to cover the loss would have to take out a discusting ammount of dept (exponential each time) to cover this loss and it would be put on the hands of the taxpayer. To cover this dept they would likely print money and deflate the dollar so all that money youve protected would have been a waist. The number must be chosen to curb risk in the worst of economic times such that it will not worsen the situation. Logic dictates this number would be lower rather then higher.
October 5th, 2008 at 12:18 pm
Does the UK have massive subprime?
October 5th, 2008 at 12:17 pm
Downtown rents cover 1/3-1/2 of the mortgage payments with 5% down ( I know 25% percent is required but people lie).
$600 per $100k on a $489k (oops $450 now) plus strata fees ($230),maintenance and insurance is over $3,000 per month.
The rent for this unit (and there are hundreds so this is a fair sample) is $1300-1500.
This puts the landlord in a situation where they must pay $1,500+ when the unit is rented and over $3,000 when it is vacant. Factor in that the same unit is now “asking” close to 10% less than June 2007 and you’ve got close to $6,000 in combined losses per month.
Obviously there are a few “investors” who can afford this but there are also a lot of “Joe Six Pack” buyers who cannot and the shit is hitting the fan right now and even the most ignorant Vancouverite won’t touch real estate so things will not be improving now (or gently plateauing for a few months before the next leg up) or when 8,000 more units hit the market or when unemployment creeps up and historically high construction wages start reverting back to the norm.
Hopefully the rich asians will hurry up!
October 5th, 2008 at 12:16 pm
From BS man’s own blog
“On the other hand houesprices are falling at an annualized rate of 12% and everyone in Britain expects this to last at least a couple more years….an haircut of 30% nominal value on housing, together with inflation in the 5% range gives you an HALVING of real capital value of housing over the next 3 years. Anyone interested in Rob’s “metrics”? You’ll need a lot of luck to find something good for the foreseeable future.”
http://robchipman.net/blog/?p=135#comments
October 5th, 2008 at 12:14 pm
The rental you listed is fair but smaller than the unit for sale adjusting for the size diff you get a rent of 2162/month which puts you down $500 a month. Which everyone agrees is not good but I’ve seen a lot worse elsewhere. Hence my question.
Good posts ING.
I think it shows the downtown market isn’t nearly as out of whack as many would wish it to be. You also have to consider that every year rent keeps going up while your mortgage remains at the same level. The value of you home will go up over time and you also get to build equity each and every month. On top of that, there is a value to owning your own place rather than renting.
October 5th, 2008 at 12:05 pm
Rob, so predictable when confronted with the truth, you automatically default to the usual tactics.
Conversation is over BS man.
October 5th, 2008 at 12:03 pm
“Ok, Fair enough. I think we’re both saying the same thing in the end”
I think we are. The point I’m trying to make is that everyone is saying downtown condo’s are the worst of the bubble and I just can’t see it. I don’t know the local situation on the greenwood listing but I be willing to bet that the rent wouldn’t even cover heat on a 111 year old log cabin. Forget about carrying cost of the 390k or maintanence for that matter. If you look at the condo examples you posted taking into account the principle payed off every month the owner is losing $250 dollars a month. Again not an investment I’d make but not even close to the level of stupidity of the shack in greenwood.
October 5th, 2008 at 12:00 pm
CBAP… of course there is some percentage of low quality mortgage loans in the Vancouver market. The only question is what percent and is it comparable to the US. I don’t think so.
The number one cause of foreclosures in the US is due to health care bills. With our universal health care system, people don’t go bankrupt when they get sick.
October 5th, 2008 at 11:45 am
Hello Dave, or should I say Rob.
I knew I could draw you out with my last comment.
So you think hyperinflation will save the bubble from bursting in Vancouver?
You must also think there is no subprime in Vancouver.
Just a bit of a mystery how $10.00/hr vegetable wholesaler workers got strapped to a ½ million dollar mortgage.
October 5th, 2008 at 11:32 am
Or… Home prices have never falling during past periods of hyperinflation.
Hard assets do well in times of high inflation. It’s cheaper to buy something in small nominal dollars today than inflated dollars tomorrow.
October 5th, 2008 at 11:28 am
missive from Mish:
http://tinyurl.com/3lsqfs
There has never been hyperinflation in history with falling home prices. And home prices will continue to fall
October 5th, 2008 at 11:20 am
Interest rates may be set to drop, however, it won’t matter much.
Why have the American politicians surrendered to Socialism?
They have voted to pass a trillion dollar bail out, rather than let Bernanke print more money and reduce the Fed rate further?
Because it’s useless to print more money.
The real bank rate has been less than zero for some time, yet the economy has lost steam and is headed for a severe depression.
October 5th, 2008 at 10:29 am
http://www.cbc.ca/arts/artdesi.....unday.html
This was worth it for the mention of
“Zombies in Condoland”
October 5th, 2008 at 9:59 am
One more thing as regards the following:
“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 main reason the inventory of unsold homes has grown so rapidly is that the buyers have gone on strike. So even if some sellers pull their properties we will likely still see prices decline.
And, it only takes a few sales at the margin – at low prices – to set the new “average” price.
October 5th, 2008 at 9:28 am
Patriotz – I go back and forth to my old hometown in the West Kootenays a few times per year (heading there next weekend) and have done so far over a decade now. The last time I went, I have never seen so many for sale signs in my life. Talking to people in Osoyoos and Grand Forks, they were all saying how the market dried up. Talking about how so many people took out home equity loans to buy their big truck, boat, seadoo, skidoo, etc… Bottom line is most of the interior cities and towns of this province is already in recession and they will be getting slaughtered.
I saw places in Nelson for sale that have similar prices to Vancouver! That is outrageous! The prices are so out of touch! This was just a classic bubble, greed, fear, speculation, low interest, zero down mortgage, strong unsustainable economy, you name it, it all has had an impact on it and the good times are coming to an end. This is the mother of all housing bubbles. The pop will likely echo for years to come.
October 5th, 2008 at 4:32 am
The downtown fundamentals are better than anywhere else in the sense that when you get kicked out of your condo your heroin fix and cardboard box are only steps away.
October 5th, 2008 at 3:36 am
“the thought of buying a home, for me, connects me to the area beyond what I’m comfortable with. Maybe I just take buying a home too seriously…
”
I know what you mean. Also, I worry about some parts of the city declining in hard times.
The area I rent in is OK for now, but the longer I live here, the more I see the rough edges (gas thefts, shifty characters, police incidents in the middle of the night, pitbulls next door). If it gets to be too much, I can move with a few months notice. Despite some conveniences, no way would I buy here.
The idea of buying at all, has lost its luster. Even my wife has lost interest in ever owning again
We’ll see what she says if we have children 
Anyone else see the latest stats on Agent Wills site:
http://agentwill.com/weekly-stats/
I know these are volatile weekly numbers, but this blew my mind.
Attached down 14% YOY
Detached down 18% YOY
Attached only up 7% in three years. In other words, if you bought a condo three years ago, you’ll lose money selling it today when you consider transaction costs. :O
October 5th, 2008 at 12:53 am
#103 says…
“Look what you can get for just 390K LOL!”
“and the original gun turret”
jeezuz h tapdancing christ. just shoot me now.
390K in the middle of nowhere? why on earth would anyone want to be there…other than to die of cabin-fever?
October 5th, 2008 at 12:32 am
Ok, Fair enough. I think we’re both saying the same thing in the end – the fundamentals for investment downtown suck right now. They suck all across the lower mainland. I haven’t done enough research on the matter, but I have a hard time believing that downtown has the ‘best’ fundmentals in the Lower Mainland. If that’s true we’re in worse shape than I thought.
October 5th, 2008 at 12:19 am
The thing is you can’t assume rents will stay the same over 35 years either so you need to look at the current conditions.
449,900 = 2130/month + 365strata + 150 taxes = 2645/month
The rental you listed is fair but smaller than the unit for sale adjusting for the size diff you get a rent of 2162/month which puts you down $500 a month. Which everyone agrees is not good but I’ve seen a lot worse elsewhere. Hence my question.
October 5th, 2008 at 12:09 am
Ozzie Jurock said he wouldn’t touch downtown condos with a ten foot pole even if his ‘life depended on it’. That should give you a rough idea of the sort of fundamentals that are downtown right now.
October 5th, 2008 at 12:07 am
I know what you said, but you can’t possibly believe it. Do you seriously believe you can’t find anywhere else in the lower mainland with better fundmentals than downtown? I suspect even the fundamentals in Port Moody are looking better now that the benchmark price there has dropped 20% year over year.
Yes, if you’re paying more than 4.5% percent right now your credit sucks, but look around. Wake up and smell the credit crunch, do you really think you’ll be able to get an average of 4.5% over the next 35 years?!?
October 4th, 2008 at 11:57 pm
Can you not read? I said “STRONGEST FUNDAMENTALS IN THE LOWER MAINLAND” not “GOOD”. Seriously learn to READ before you freak out. DUMBASS.
My question waits.
Also if you are paying over 4.5% your credit sucks.
October 4th, 2008 at 11:51 pm
No, Seriously dude.. You’re trolling right? I asked for numbers, anything that would show downtown has what you call ‘good fundamentals’.
Look, I’ll just grab a quick example off craigslist. Spectrum is downtown right? Here’s a two bedroom for rent at Spectrum for $1850 (one of many up for rent):
http://vancouver.en.craigslist.....62507.html
And look! here’s a two bedroom at Spectrum that’s up for sale and its even listed below market value so you know you’re getting the best deal for it at the low low asking price of $449,900.
http://vancouver.en.craigslist.....52290.html
Some real quick math: Lets go for the longest amortization period you can go for, 35 years at zero down. If we assume we can get an average rate of 6% on that mortgage we’ve got a monthly payment of $2543.07. Maintenance is another $300 each month which means as long as you don’t end up having to pay any special assessments or extra repairs you’ll be paying about a grand a month over your rental income.
That’s some strange fundamentals you’ve got there!
October 4th, 2008 at 11:49 pm
“Look what you can get for just 390K LOL!”
“and the original gun turret”
Wow that has to be the first use of the term gun turret in a real estate listing. Awesome.
October 4th, 2008 at 11:44 pm
If you want some real entertainment go to realtor.ca and check out the ghost towns along highway 3.
My favourite – Greenwood, population 656, Canada’s smallest incorporated city.
33 listings – one for every 20 people. Look what you can get for just 390K LOL!
http://www.mls.ca/propertyDeta.....Id=7495149
October 4th, 2008 at 11:36 pm
“God, this guy is the RE Energizer Bunny … just keeps on spinning and spinning and spinning…”
Can someone tell me where in the lower mainland has better fundamentals then downtown Vancouver?
October 4th, 2008 at 11:23 pm
Rob A. Says:
October 3rd, 2008 at 3:59 pm
I’M GLAD I SOLD WHEN I DID, I MADE OUT LIKE A BANDIT! LOL.
Shouldn’t you be blowing off your big bazoo over at RET? They love this kinda shit.