Friday Free-for-all!
Its time for our regular end of the week news round-up and open topic discussion. Here are a few stories I’ve noticed lately to kick off the discussion:
-Greater Vancouver average house price drops 8% from 2007
-Canadian house prices down, blame British Columbia
-Infinity Surrey condo tower: Anyone got $100 million?
-Victoria: development halts at $1.4 billion cappela condos
-Kelowna: 21 story condo development grinds to a halt
-angry condo owners seek stronger protection
-Realtors to host grow-op meeting
-The end is here for 40 year mortgages
-banks push locked-in mortgages
-CMHC buys $5 billion worth of mortgages from banks
-Conference Board of Canada: No recession in Canada
-Bank of Montreal: Canada can not avoid recession & deficit
-Vanoc: $48 million deficit for 2008
-Japanese shares market drops 11.4%
-Construction cranes nearly extinct in Miami
-Paulson: regulation bad! er.. regulation good!
Phew! So how’s everyone doing out there? Is it time to panic? Time to buy? Time to hide under the covers with your fingers in your ears? What are you seeing out there? Post your news, links and anecdotes here and have a great relaxing non-panic filled weekend!
UPDATE: The CBC Early Edition is putting together a story for Monday morning and would like to talk to anyone who invested in a development and is trying to get their deposit back, or those who have succeeded in getting their deposit back. Contact jennifer.chen@cbc.ca or elizabeth.hoath@cbc.ca if you have a story to share. Tell ‘em VancouverCondo.info sent you!
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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October 16th, 2008 at 10:16 pm
Since the financial crisis, it’s probably a different market now for those that want to sell. If sellers are smart, they will have to price very agressively and undercut their competitors’ prices to sell in this market.
October 16th, 2008 at 10:30 pm
I doubt that it can get quite that insane with Vancouver real estate, but you have to admit that there are lots of potential circumstances where properties could get treated the same way… y’know, where someone absolutely has to dump the property at whatever price.
Someone who I know and trust tells me that a condo sold in Coal Harbour for $900k last week which had originally been listed for $2.1 million. Apparently the non-resident owner absolutely had to sell.
Perhaps I am getting ahead of myself but it seems like buyers must be getting cold feet right now, what with the continuous news flow about the looming recession, lay-offs, credit problems etc. Therefore, if there are any forced sales you would expect that the final selling prices will be exceptionally low.
I guess what I am speculating on is that it’s probably already happening. I know that I have to remain patient but it really may not take that long.
October 16th, 2008 at 10:34 pm
Like when the rent is only covering half the monthly expenses, and the market price is dropping a few per cent per month?
Ya think?
October 16th, 2008 at 11:50 pm
My neighbour is still trying to sell his East Vancouver old-timer. Starting price of $750K, but no offers, not even low-balls. I wonder if I should tell him to think about how the price is probably $650K now, and will likely drop another $100K by Spring…
@MickeyFinn: Your Coal Harbour story reminds me of chatter I’ve been hearing about massive hedge fund selling. Funds are being forced to liquidate whatever they can to meet redemption requests. With equities down 40%, and other formerly liquid markets completely seized, the scenic Vancouver apartment’s gotta go…
After all, what would you do if your hedge fund folded and your palatial Malibu residence was at risk? Keep the place in rain-ville? Fagettabahtit…
October 16th, 2008 at 11:51 pm
US investors who bought Canadian property during the good times are now watching their Coal Harbour place drop by 10% in a week just as a result of the CAD souring due to falling oil prices.
October 17th, 2008 at 12:09 am
>Perhaps I am getting ahead of myself but it seems like
>buyers must be getting cold feet right now, what with the
>continuous news flow about the looming recession, lay-
>offs, credit problems etc.
Absolutely. You’d be nuts to purchase a place now, knowing that our economy will fall into a recession at some point, and companies are going to layoff workers.
Unless you are working in the government, a utility company, or a guaranteed stable job, you’re just asking to foreclose your new purchase if your company lays you off.
Cash is king now. The sellers need to realize the market has really changed the last few weeks of the financial crisis and their petty price cuts over the summer were good enough before the financial crisis, but those same price cuts just don’t cut it for the new market realities.
October 17th, 2008 at 12:10 am
When a retired hockey player teams up with Pam Anderson to build condos, you know the jig is finally up for real estate in this province.
October 17th, 2008 at 12:24 am
Like all the coming layoffs in the RE/construction industry.
October 17th, 2008 at 12:31 am
Really? Like the stock market going up in smoke isn’t going to stop people from paying Toronto prices to retire on the Island, if they can afford to retire at all?
Or do you think they’ll reopen the Nanaimo coal mines or something?
Da plane! Da plane!
October 17th, 2008 at 12:35 am
Brand new condos in non-bubble cities like Winnipeg or Halifax sell for substantially less than that - and make a profit for their developers. How is it possible that Vancouver developers can’t make a profit at that price?
October 17th, 2008 at 12:58 am
October 17th, 2008 at 1:17 am
In reality though it is not relevant because Vancouver real estate market is domestic. Also, lately most cross-border real estate investors were going north to south, and those folks are probably smiling at the exchange rate today.
October 17th, 2008 at 1:22 am
Because the costs of all their inputs, particularly land and labour, have been inflated by the RE bubble.
More than any other sector, the cost of inputs to construction is driven by the price of the finished product. Not the other way around.
Land is never going to be as cheap here as in Winnipeg or Halifax, but its cost is going to come down big time, as will labour costs, just like in the 80’s. Because they are determined by what the developers are willing to pay given the market price of the finished product.
October 17th, 2008 at 1:24 am
Even if prices drop quickly, this does not mean it won’t take long because then prices will drop some more, and more… It will take a while to hit the bottom and then even more time before there is any meaningful growth in inflation-adjusted terms.
October 17th, 2008 at 1:29 am
In US people can apparently walk away from their mortgages, which they can’t in Canada. So what- is this going to stop people from not being able to pay for their mortgages?
And when Canadian banks start getting high percentage of mortgage defaults the fact that these mortgages were not packaged and sold off to other entities will help Canadian banks exactly how?
Is it crazy to think that Canadian banks are in good shape today because the RE bubble did not burst YET?
October 17th, 2008 at 3:44 am
People can walk away from mortgages in some states, most notably California.
If people can’t pay their mortgage, odds are CMHC has the mortgage insured. The banks laugh all the way to themselves and the taxpayer picks up the burden (Harper is lying through his teeth when he says there won’t be a taxpayer funded bailout, it’s already in place!)
October 17th, 2008 at 5:59 am
The “study” that was recently released is a sham.
The banks were not audited; the so called “study” had less stringent criteria than a survey that would be found in Real Estate Weekly.
It was a mere opinion poll, apparently few people were polled, the methodology is not known, neither what questions were asked.
It was one of those “ x out of y people were asked, and a majority loved our product”
BS, total BS.
But it all fits in, it’s logical, I guess, that the best place on earth, has the best banks on earth
October 17th, 2008 at 6:41 am
“If I had a Million Dollars to invest right now, what would I do with it “? ie invest in the stock marker , the real estate market or keep it in the bank or….?
In my view, I would keep it in the bank. I think we have been hit by an global economic tsunami. Too much initial damage still to be assessed. The lurking iceberg is the long term effects. If someone came up to me and said they would sell me their new condo for say 30% off what they’d paid…I’d say thanks but no thanks. We have no idea what the bottom is, but we realize things are going south(ie down), not north.
October 17th, 2008 at 6:50 am
It used to be the financing phases would be at least to fund the project to “lock up”. However, like the Infinity project, if the financing was fragile, has ultimately bailed, and the market is crashing…and no one willing to step in and lend money , will this result in a lot of projects sitting unfinished for years, with pigeons as their only residents?
October 17th, 2008 at 7:31 am
Well, you forget that the homeless will move in…. eat the pigeons….. and burn the shell down…… so I’d say no!
October 17th, 2008 at 7:33 am
October 17th, 2008 at 7:34 am
October 17th, 2008 at 7:44 am
October 17th, 2008 at 7:50 am
someone should take a picture of Infinity today the view will not change for the next 15 years….
rust never sleeps.
October 17th, 2008 at 8:05 am
What are the chances that old Pam has even seen a single drawing? Part of me wonders whether she put a dollar into it. Maybe just an equity share so that the locals can go around talking about the Pam Anderson project. Awesome.
And, what is it with hockey players and real estate development…
October 17th, 2008 at 8:27 am
If you are right, then Warren Buffett is wrong:
http://www.nytimes.com/2008/10.....ffett.html
October 17th, 2008 at 8:29 am
October 17th, 2008 at 9:44 am
http://www.marketwatch.com/New.....C0FD6BD%7D
October 17th, 2008 at 10:11 am
In my view, I would keep it in the bank.
I’m buying stocks. I went to mostly cash last year, but I’m buying back into the market, there are some pretty good deals out there. Most people don’t realize that stocks start rising long before recessions end. The best time to buy is when everyone else is scared and selling.
For example, look at Johnson & Johnson (JNJ):
9.1% 10-year return in a recession-proof business.
3% Dividend Yield.
Currently trading at 13.5x 2009 Earnings.
Compared to JNJ, cash is trash.
October 17th, 2008 at 10:24 am
WTF can they possibly be thinking?
The only thing I can figure out is that those sales that are showing up now actually happened about 3 weeks ago, when a few buyers still believed the BS from Harper and Flaherty that our economy was not so bad….How dumb can you get?
Even without the recession that is taking the world by a storm of epic proportions, there was no hope of slowing the dramatic slide of Vancouver prices, which will now make the 81 crash look like a picnic.
October 17th, 2008 at 11:02 am
ING Canada is CDIC insured. It’s also a penny-ante operation by Canadian standards so if it failed it would probably be taken over by one of the majors, or perhaps the credit unions. who wanted to expand into the no-frills market. Rather like the takeover of Bank of BC by HSBC in the 80’s.
I would be more concerned with a bank like ICCI which would probably end up liquidated like its compatriot BCCI because it has no goodwill to appeal to a solvent bank. Insured depostors would get their money back of course, but it might not be seamless.
October 17th, 2008 at 11:18 am
Point 1: WB knows what he is talking about.Listen closely.
Counterpoint 2: WB can afford to hold.
Counterpoint 3: WB can get a lot of publicity and move markets substantially, hence profiting more in less public areas than this PR stunt costs him. Especially considering point 1.
WB, although hugely influential and not to be ignored, may have other reasons for this move.
October 17th, 2008 at 11:29 am
I know this because I am a realtor who works with Buyers even as I write this and who have fully disclosed the pitfalls of buying into this market at this time in the market cycle to them.
Of all the potential buyers whom I have briefed approximately 50% will move forward and continue on with the buying process. I am surprised at how determined some of these people are with home ownership. Of course for these clients I advise them to be prepared to hold onto whatever they purchase for a long time (min 10 years) to ride out the future market decline.
Please note that my opinion and view is based solely on my experiences with my own clientele.
October 17th, 2008 at 11:35 am
October 17th, 2008 at 11:53 am
I am investing as much as I can right now (have never gone above 10% in energy over the last five years but still got hammered by 27%) but it’s important to note that Warren Buffet’s deal with GE was for Perpetual Preferred Shares that pay a 10% dividend and he has options to buy them at the very low price that he paid for five years ($23 I think?) so unless GE goes bankrupt he has nothing to lose.
The last time GE called me to offer me stock it was just common stock and it was a one time deal….
The small/mid cap U.S. market is only down 3% YOY if I’m reading it correctly??????????
On the real estate front we’ve entered the new paradigm where buyers think it’ll go down forever whereas a few months ago people would get mad and shout that the Olympics and rich asians were coming and there was action downtown!
It’s been awhile since we’ve heard from the semi literate warehouse worker Krish/thums/satv/browntown/informer and whatever else it called itself, it’s last post said the crash was only occuring in Pt Moody…
October 17th, 2008 at 12:02 pm
October 17th, 2008 at 12:20 pm
What personal circumstances could possibly compensate for overpayment of 50% of someone’s life avings? Even a realtor with just a lick of common sense should be able to figure out that potential buyers will be facing opportunities of a lifetime, regardless of the commisions you might miss over the next 2 years.
October 17th, 2008 at 12:29 pm
Warren Buffet types are another quantum leap. He can afford to gamble and has been a big time player and very experienced player. I heard he made $500 Million recently from one of those tanking US firms.
My “Million in the bank ” is simply a “wait and see” approach based on we haven’t seen the bottom yet, most certainly in real estate. The stock market is the usual kneejerk of parties diving in at some point in the downward slide, a minor recovery , then cashing in . No brainer.
October 17th, 2008 at 12:30 pm
Could you send a few of them over the next time I have a bridge to sell? I’ll pay you the standard realtor commission.
October 17th, 2008 at 12:37 pm
October 17th, 2008 at 12:37 pm
Looks more like 8-10% loss yoy.
http://www.nacm.com/products/p.....rowth.aspx
October 17th, 2008 at 12:43 pm
The fact that the mortgages were CMHC insured at time of issue is exactly how the banks will be helped. You and I are holding the bag, not the bank shareholders.
Yes the banks can and do issue non-insured mortgages for less than 80% of the sale price, but I don’t think many such mortgages will be defaulted on as so few have been made in the past few years on first time purchases, and the banks have a pretty big cushion against losing on them.
It’s the 0/40’s which will be going up in smoke, very soon.
October 17th, 2008 at 12:48 pm
I just know that in this country it seems that ex-hockey players often get tied into real estate developments or golf courses or sometimes a combination of both.
I think it’s because hockey players are the closest things we have to celebrities in this country who still live in this country.
I think developers bring them in for a small piece of equity and the free marketing that celebrity association provides.
It was just a comment…
PS I have no interest in living in a condo development in Ladysmith, neither does Pam Anderson, nor does Geoff Courtnall (I’m assuming).
October 17th, 2008 at 12:58 pm
Canada accounting change seen helping banks
*forehead smack!*
October 17th, 2008 at 1:12 pm
Now if it were Donald Trump talking…
October 17th, 2008 at 1:14 pm
October 17th, 2008 at 1:26 pm
http://www.ravagedegmont.com/index.htm
October 17th, 2008 at 1:27 pm
http://www.nytimes.com/2008/10.....tt.html?em
October 17th, 2008 at 1:38 pm
October 17th, 2008 at 1:39 pm
warning*** read before shrinking****
October 17th, 2008 at 1:42 pm
What would a smart nutslap do now?
October 17th, 2008 at 1:46 pm
http://www.publiceyeonline.com.....01348.html
October 17th, 2008 at 1:49 pm
October 17th, 2008 at 1:53 pm
October 17th, 2008 at 1:53 pm
October 17th, 2008 at 2:17 pm
October 17th, 2008 at 2:26 pm
October 17th, 2008 at 2:50 pm
Just sell now John. We are going to get hit by a recession and prices will freefall, nose dive, meltdown, crash, and plunge even faster! Sell now before your lose over 50% of the value on your property!
October 17th, 2008 at 3:12 pm
http://money.cnn.com/2008/10/1...../index.htm
October 17th, 2008 at 3:14 pm
http://tinyurl.com/57g5yj