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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Gadwin Says:
October 16th, 2008 at 10:16 pm
Good to see Bank of Montreal is pragmatic and admits Canada cannot avoid a recession. Retail sales in the U.S. plunged abruptly, as per the media release, so it’s just a matter of time until the havoc reaches Canadian shores.
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.
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MickeyFinn Says:
October 16th, 2008 at 10:30 pm
Over the past two weeks we have witnessed the share price of some truly major companies absolutely tank. With many of these companies it appears that investors are throwing out the baby with the bath water. The pundits explain this phenomenon as being the result of forced sales… forced by margin calls or fund redemptions etc. When you get down to it, what is happening is that people are making sales for reasons other than rational business decisions. The sellers of the shares simply must have cash.
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.
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patriotz Says:
October 16th, 2008 at 10:34 pm
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.
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?
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Rocker Guy Says:
October 16th, 2008 at 11:50 pm
… So this means that prices have fallen 13% from the April peak, for a 24% annual decline – and the curve is still steepening. Folks: This is a crash. Getting from 24% down back to April 2008 levels will take a 32% price increase – that’s nine years at 3% per year. And we haven’t even begun to talk about what the rest of 2009 will bring, once the panic really sets in.
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…
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Rocker Guy Says:
October 16th, 2008 at 11:51 pm
Just thought of something else: Currency.
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.
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Gadwin Says:
October 17th, 2008 at 12:09 am
>MickeyFinn wrote:
>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.
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You can't make this stuff up Says:
October 17th, 2008 at 12:10 am
“Also in the works is the 83-unit Ladysmith waterfront development headed by actress Pamela Anderson and hockey star Geoff Courtnall.”
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.
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betamax Says:
October 17th, 2008 at 12:24 am
y’know, where someone absolutely has to dump the property at whatever price.
Like all the coming layoffs in the RE/construction industry.
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patriotz Says:
October 17th, 2008 at 12:31 am
Despite postponing Capella, Quigg said, “We still believe the fundamentals for Vancouver Island are exactly the same as they were three weeks ago and three months ago. There’s going to be an influx of people to the Island.”
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!
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You can't make this stuff up Says:
October 17th, 2008 at 12:35 am
$350 million project. 1,400 units. Divide one by the other for a break-even cost of $250,000 per unit.
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?
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Anon Says:
October 17th, 2008 at 12:58 am
It is crazy to read forecasts of Canada avoiding recession. Manufacturing is hurting, forestry products demand is nowhere close to recovering, energy sector is under pressure, real estate is getting ready to crash which together with financial mess will drag down the banks. And all this will result in economy growing? I wonder how they measure it? These folks are either incompetent or dishonest. My bet is both!
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Anon Says:
October 17th, 2008 at 1:17 am
Rocker Guy, it depends which currency you measure against. If you measure against AUD you get quite a different picture than with USD.
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.
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patriotz Says:
October 17th, 2008 at 1:22 am
How is it possible that Vancouver developers can’t make a profit at that price?
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.
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Anon Says:
October 17th, 2008 at 1:24 am
“I know that I have to remain patient but it really may not take that long”
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.
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Anon Says:
October 17th, 2008 at 1:29 am
Question: do you believe the statements that Canadian banks are solid? Canadian media keeps repeating that our banks are the best in the world…
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?
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Drachen Says:
October 17th, 2008 at 3:44 am
Anon
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!)
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Keeping an Eye on the Pimps Says:
October 17th, 2008 at 5:59 am
Aside from the fact, Canadian banks are an oligopoly; there is nothing more sound about them than any other western county.
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
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NO -LYMPICS Says:
October 17th, 2008 at 6:41 am
Perhaps the question should be posed
“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.
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NO -LYMPICS Says:
October 17th, 2008 at 6:50 am
What will be interesting is the status of many projects started but not completed…say a 30 story Hi-Rise tower where all the floors are built but the windows are only in 30% of the building. I vividly recall a project years ago near the PNE that sat around for years as an unfinished concrete shell…almost as if it had been bombed.
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?
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alexcanuck Says:
October 17th, 2008 at 7:31 am
Vi>will this result in a lot of projects sitting unfinished for years, with pigeons as their only residents?
Well, you forget that the homeless will move in…. eat the pigeons….. and burn the shell down…… so I’d say no!
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bearette Says:
October 17th, 2008 at 7:33 am
Down 13 per cent from April’s peak? Someone just made my day! Love it!
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NO -LYMPICS Says:
October 17th, 2008 at 7:34 am
There ya go alexcanuck…brilliant ….you have solved the problem….You get Gordo’s job.
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alexcanuck Says:
October 17th, 2008 at 7:44 am
Stop that right now! I will NEVER! EVER! take that job!
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blueskies Says:
October 17th, 2008 at 7:50 am
will this result in a lot of projects sitting unfinished for years, with pigeons as their only residents?
someone should take a picture of Infinity today the view will not change for the next 15 years….
rust never sleeps.
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vanguy Says:
October 17th, 2008 at 8:05 am
I love that Pam Anderson and Geoff Courtnall are fronting a condo project.
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…
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scoop Says:
October 17th, 2008 at 8:27 am
“If I had a Million Dollars to invest right now, what would I do with it “?…In my view, I would keep it in the bank.
If you are right, then Warren Buffett is wrong:
http://www.nytimes.com/2008/10.....ffett.html
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MickeyFinn Says:
October 17th, 2008 at 8:29 am
Any schlep can be a real estate developer… the bar is not set very high.
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Richmond Renter Says:
October 17th, 2008 at 9:44 am
For those of you using ING for your savings account – one word of advice: BEWARE!
http://www.marketwatch.com/New.....C0FD6BD%7D
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crabman Says:
October 17th, 2008 at 10:11 am
“If I had a Million Dollars to invest right now, what would I do with it “
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.
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sluggo Says:
October 17th, 2008 at 10:24 am
I am totally amazed that there are still a few IDIOTS buying into this market.
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.
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patriotz Says:
October 17th, 2008 at 11:02 am
For those of you using ING for your savings account – one word of advice: BEWARE!
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.
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Alexcanuck Says:
October 17th, 2008 at 11:18 am
If you are right, then Warren Buffett is wrong
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.
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CarlK Says:
October 17th, 2008 at 11:29 am
Some of the people still buying into our real estate market are not idiots. Some of these people understand fully the circumstances and the potential down market they will be experiencing once they buy. So why do they do it? They do it due to specific personal circumstances such as a growing family combined with the instability of the rental market etc.
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.
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Chincy Says:
October 17th, 2008 at 11:35 am
#25 do your homework…the courtnall bothers have made an absoulte KILLING in real estate development over the last 10-15 years.
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bdk Says:
October 17th, 2008 at 11:53 am
It’s an interesting time to be investing in the markets.
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…
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jfk Says:
October 17th, 2008 at 12:02 pm
Any developor who failed to make a killing over the last 10-15 years would have to be a total moron, and any developer who failed to understand that the party was over a year ago is also a total moron.
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jfk Says:
October 17th, 2008 at 12:20 pm
Hey CarlK,
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.
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NO -LYMPICS Says:
October 17th, 2008 at 12:29 pm
re earlier comment:
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.
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patriotz Says:
October 17th, 2008 at 12:30 pm
Please note that my opinion and view is based solely on my experiences with my own clientele.
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.
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The Pope Says:
October 17th, 2008 at 12:37 pm
The CBC Early Edition is putting together a story for Monday morning and would like to hear from anyone who has invested in a development and is trying to, or has succeeded in getting their deposit back. The contact info has been added above to this post.
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Anonymous Says:
October 17th, 2008 at 12:37 pm
The small/mid cap U.S. market is only down 3% YOY if I’m reading it correctly??????????
Looks more like 8-10% loss yoy.
http://www.nacm.com/products/p.....rowth.aspx
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patriotz Says:
October 17th, 2008 at 12:43 pm
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?
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.
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vanguy Says:
October 17th, 2008 at 12:48 pm
I don’t know anything about the Courtnall brothers…KILLING IT or otherwise.
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).
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umdesch4 Says:
October 17th, 2008 at 12:58 pm
This is just great. Now we’re moving towards fantasy valuation of assets, just like in the States:
Canada accounting change seen helping banks
*forehead smack!*
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crabman Says:
October 17th, 2008 at 1:12 pm
It’s hard to find a more stand-up guy than Warren Buffett. I’ve listened to him for years, and have never heard anything other than his honest (and usually correct) opinions. If he says it’s a good time to buy stocks, it isn’t to prop up his portfolio, it’s because he honestly believes it’s a good time.
Now if it were Donald Trump talking…
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crabman Says:
October 17th, 2008 at 1:14 pm
P.S. The anti-Buffett (Jim Cramer) says it’s time to get out of stocks, confirming the buy signal!
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Anonymous Says:
October 17th, 2008 at 1:26 pm
Here’s a bit of background info on Geoff Courtnall and his business called Pacific Northwoods Resources Ltd. From what I gather he was involved in clearcutting a mountainside near Egmont on the Sunshine Coast.
http://www.ravagedegmont.com/index.htm
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bdk Says:
October 17th, 2008 at 1:27 pm
Buffet on investing:
http://www.nytimes.com/2008/10.....tt.html?em
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john Says:
October 17th, 2008 at 1:38 pm
Warren Buffet buys companies he feels are managed well and provide good value to investors because they provide a good return on capital. He buys these companies when the price makes sense to do so. He buys and holds for a very very long time. Warren Buffet is much like a real estate investor in Vancouver condos. Now is an excellent time to buy Vancouver condos for long term investing and rich asians around the world know this.
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keeping an eye on the bears Says:
October 17th, 2008 at 1:39 pm
yeah sluggo! now is better time to buy than last year nutslap! see psychologies work for buffetted investors! next leg up will come faster than bdk fear factor! yeah!
warning*** read before shrinking****
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bdk Says:
October 17th, 2008 at 1:42 pm
So is it a good time to buy browntown?
What would a smart nutslap do now?
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Anonymous Says:
October 17th, 2008 at 1:46 pm
A little more about Courtnall:
http://www.publiceyeonline.com.....01348.html
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keeping an eye on the bears Says:
October 17th, 2008 at 1:49 pm
yeah bdk! buy before next leg up! go to open house now, look tricky and hint have cash good to go! tell realtor to prop up low ball offer to put nuts on table for commission dinner!
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jfk Says:
October 17th, 2008 at 1:53 pm
He he, sounds like our browntown is one of those poor IDIOTS that sluggo was wondreing about.
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bdk Says:
October 17th, 2008 at 1:53 pm
So browntown, will the realtor accept 50% off list price now or should I wait a few more months?
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Anonymous Says:
October 17th, 2008 at 2:17 pm
The good thing about the global economic crisis is that since everywhere is going down relative to Vancouver, we get to keep our title of “Best Place on Earth”. That should keep the prices high.
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john Says:
October 17th, 2008 at 2:26 pm
Everyone knows once Warrent Buffet starts buying stock it’s time to buy again. Vancouver real estate is on the edge of a buffet moment as we speak. I have heard that Ozzie is going to be buying some condos downtown in the next couple of weeks. You heard it here first. I’m already invested, the conservatives won thanks to me so I’m staying here.
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Anonymous Says:
October 17th, 2008 at 2:50 pm
John, Vancouver condos prices are plumetting off a cliff! What would be a good word to describe how fast prices are falling: freefall, nose dive, meltdown, crash, or maybe plunge?
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!
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Anonymous Says:
October 17th, 2008 at 3:12 pm
Recession fears overpower Google’s earnings and Buffett’s comments in choppy session.
http://money.cnn.com/2008/10/1...../index.htm
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Anonymous Says:
October 17th, 2008 at 3:14 pm
Recession fears overpower Google’s earnings and Buffett’s comments in choppy session.
http://tinyurl.com/57g5yj
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Anonymous Says:
October 17th, 2008 at 3:18 pm
Buffett: I’m buying stocks
Berkshire Hathaway CEO gives advice on how to invest during America’s money crisis in a New York Times op-ed.
http://tinyurl.com/5jahao
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Lager not logger Says:
October 17th, 2008 at 3:32 pm
2008 assessments will be coming out in a couple months, but they will be figured based on July ‘08 prices. This means there will be a point where the only stuff selling will be going for dramatically below assessed value. I suspect this will hit the news and make some scary numbers along with the huge number of listings NOT selling. More concrete into the boots of this sinking market!
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NO -LYMPICS Says:
October 17th, 2008 at 3:47 pm
C’mon now re Buffet
He is at a level of self -fulfilling prophecy;
He could buy Bre-X or thalidomide stock and have a bunch of naive suckers follow in his jetstream by buying in and driving up the price . Then he can dump it and cash in.
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Anonymous Says:
October 17th, 2008 at 3:48 pm
Wow! realtors are meeting about starting grow-ops?
The market must be worse than I thought!
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blueskies Says:
October 17th, 2008 at 3:52 pm
john:
next leg up is …DOWN!
..this is Vancouver specific info…ignore it at your own peril
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NO -LYMPICS Says:
October 17th, 2008 at 4:11 pm
I kinda had a suspicion re some of these “Non condo” non private sector ie public sector projects in BC …under the umbrella of financing in general.
Apparently the Golden Ears Bridge is being financed via (2) European firms called “Depfa” and “Dexia”, both of which have been close to insolvency or recieved emergency injections of cash. If they have problems , the financer of last resort is, of course, the BC Taxpayer.
Lets hope other morons in Gov’t like Translink put a lot of their dumb ideas back in their pants, there may be a silver lining in the financing crisis and save us from these drunken sailors.
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Rob the banker Says:
October 17th, 2008 at 4:38 pm
Wether the BC government or a couple of european firms finances the Golden Ears bridge, it’s really doesn’t matter, even if there are cost overruns the private partner is the one that eats them.
The only issue is if the firms folds or calls in the loan, all work stops as there is no more money. The private partner must then find immediate funds to repay the loan and since they are in a bind they could end up paying a higher rate, that is the situation that infinity is in and that Millenium almost found themselves in. (by the way Millenium is now resolved). Back to GEB worst case scenario is the BC government becomes the lender, it doesn’t cost the taxpayers anymore money as we are paying for the bridge anyways and we then get a rate of return on the loan.
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Brittanny Says:
October 17th, 2008 at 4:55 pm
A friend of mine works at a Canadian bank in the valley. I asked him if anyone was pulling money out of their accounts. He told me that they were advised at a meeting to not discuss it with anyone outside of the bank, because it was not in the best interest of the public. And yes they were.
Gulp.
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alexcanuck Says:
October 17th, 2008 at 5:03 pm
thebigpicture has a great one. That’s the way to retire! Perfect for a Friday.
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Anonymous Says:
October 17th, 2008 at 7:15 pm
Signs of North American economic meltdown mount
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Vansanity Says:
October 17th, 2008 at 7:31 pm
“The Canadian Association of Accredited Mortgage Professionals estimates that 37 per cent of all new Canadian mortgages taken from the one-year period ending in the fall of 2007 were longer than the standard 25-year amortization period.”
So, lets assume half of those were 40 year mortgages, they just removed approximately 20% of sales. Considering where sales are at right now, the next few months should be interesting to watch. Will sales continue to drop as a result? Makes sense.
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Lager not logger Says:
October 17th, 2008 at 7:38 pm
Alexcanuck, that bigpicture link is an amazing read. Thanks for that, what a way to close a fund!
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Lager not logger Says:
October 17th, 2008 at 7:45 pm
Anon, nice article as well – there seems to be no shortage or reading out there this weekend. I expected market corrections, but everything is happening a lot quicker than I thought it would, I’m amazed we’re already down so far from the peak in local house prices, but I suspect we have a ways to go yet. Our little real estate market is getting the double whammy of a price correction due to lack of affordability AND a global recession. Geez. Kick a guy when he’s down why don’t ya?
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patriotz Says:
October 17th, 2008 at 9:03 pm
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.
Gee that story sounds familiar, where have I heard it before. How about…
As Condos Rise in South Florida, Nervous Investors Try to Flee
MIAMI, May 25 (2007)— As dozens of condominium towers conceived during Florida’s real estate boom near completion, investors who snatched up units in the preconstruction phase in hopes of turning a quick profit are increasingly trying to break contracts, even walking away from fat deposits.
“Motivated” sellers are flooding online forums like Craigslist with advertisements for condo units still months or years from being finished. And lawyers have been inundated with calls from people hoping to avoid closing on units they bought during the speculative craze of 2004 and 2005.
But I thought it was different here!
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Keeping an Eye on the Pimps Says:
October 17th, 2008 at 9:57 pm
I still see the odd gas guzzling 450 cu.in trucks with “I’m backing the bid” bumper stickers.
Wonder if those drivers, will be keeping the stickers on when all this is over, and the bills start coming in , the construction industry is on the ropes, the provincial debt has ballooned, the MacMansions are worth 50% less than the mortgage, and the mortgage helper is no help because it can’t be rented when there is a condo glut.
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patriotz Says:
October 17th, 2008 at 11:02 pm
I asked him if anyone was pulling money out of their accounts… And yes they were.
And where is the money going exactly? Cash under the mattress? Now that’s an attractive risk/return LOL. If not, doesn’t the money end up deposited back in some bank somewhere?
Anyway, bank runs (in the sense of losing deposits) are not really a big problem. The BoC can just loan the banks money to replace the deposits. No change to the balance sheet. The real problem is when the banks have liabilities they cannot cover with their assets, i.e. are insolvent.
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ILoveING Says:
October 17th, 2008 at 11:17 pm
Cash under the mattress?
At least a few hundred if things hit the fan and the atms stop working for even a few days you will appreciate it.
And where is the money going exactly?
Gold. Stocks in low risk companies. Government bonds. I would guess. Sadly I don’t have enough money too be worried.
I have also heard stories I would love to see numbers on how much cash is being pulled out.
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patriotz Says:
October 17th, 2008 at 11:28 pm
And where is the money going exactly?
Gold. Stocks in low risk companies. Government bonds.
Yeah OK, but what are the sellers of these assets doing with the money?
Get the picture?
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Lager not logger Says:
October 17th, 2008 at 11:29 pm
Hey Rob the banker:
worst case scenario is the BC government becomes the lender, it doesn’t cost the taxpayers anymore money as we are paying for the bridge anyways and we then get a rate of return on the loan.
I don’t fully understand this, if its a positive for BC taxpayers to foot the bill for projects like this and it results in a positive return, then why don’t we do it all the time?
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patriotz Says:
October 17th, 2008 at 11:58 pm
Because that would make less money for the financial industry, silly,
Privatize profits, socialize risks.
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NO -LYMPICS Says:
October 18th, 2008 at 7:19 am
Re Golden Ears Bridge:
I assume the Gov’t went into this venture because it didn’t have the funds in place to finance it. Campbell is into P3’s etc. and the carrot dangled on this one was toll revenue for the partnerships, wasn’t it? . We also have the foreign worker issue…if our economy tanks will their be resentment re: the foreign workers taking jobs BC residents may need ? I think ventures such as GEB are created so as to mask the true accounting and hence mask accountability, given the weasel clauses of confidentiality once a private sector aprtner is involved. I never liked these P3’s as I see little benefit and less transparency.
The GEB was based on an optimistic business model involving the private sector. However the private sector can go broke…but ironically Gov’t can’t. Yes we will get a bridge, but at what T-R-U-E cost? This type of arrangement can create a huge black hole where Gov’t naively figures it can afford it, but if things blow up in their face…WE PAY , but can we afford it on top of everything else ?
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alexcanuck Says:
October 18th, 2008 at 8:44 am
From the NYT. Home Prices Seem Far From Bottom. More bad news in the US housing market. The bottom callers (ex-cheerleaders) are still waiting for a chance to be right.
One snippet, kind of interesting. I haven’t seen this data before.
As of June, 2.8 percent of homes previously occupied by an owner were vacant. Nearly 1 in 10 rentals was without a tenant. Both numbers are near their highest levels since 1956, the earliest year for which the Census Bureau has such data.
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patriotz Says:
October 18th, 2008 at 8:53 am
I assume the Gov’t went into this venture because it didn’t have the funds in place to finance it
Nonsense, Translink could have borrowed the money through MFA. Or the government could have borrowed the money itself on its capital budget. Check out the interest rates on BC govt and crown corp debt (Hydro, etc).
P3’s don’t exist because governments have trouble raising money. Quite the opposite. It’s because a private business would have trouble raising the money. The goal is to let private business receive the returns from infrastructure projects, while enjoying a low cost of capital due to government guaranteed financing.
If private enterprise wants to build a bridge and pay for it themselves, like Guiness did with the Lions Gate back in the 30’s, they’re quite welcome to do so AFAIC.
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Keeping an Eye on The Pimps Says:
October 18th, 2008 at 8:53 am
“After five years of unprecedented increases, housing prices are beginning to realign,” REBGV president, Dave Watt said. “Although the economic situation in the United States has affected consumer confidence globally, the consensus view remains that our local housing market is underpinned by solid economic fundamentals.”
Yep, our market is underpinned by solid economic fundamentals, said REBGV president, Dave Watt, perhaps it’s time to buy.
http://www.rebgv.org/news-stat.....ty-demands
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alexcanuck Says:
October 18th, 2008 at 9:35 am
The goal is to let private business receive the returns from infrastructure projects, while enjoying a low cost of capital due to government guaranteed financing.
Privatize the profits, socialize the losses.
Another benefit to Gordo: Crow to the electorate of your financial prowess by delivering shiny new hospitals, bridges and a nice party in 2010 while running a surplus. Never mind that in the end MY pocket will still be paying for the next 40 years or so. I will pay for both the bridge and the profits. Some strength to the argument that private can build more efficiently, but don’t try to tell me that I am not paying for it!
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NO -LYMPICS Says:
October 18th, 2008 at 9:41 am
Patriotz:
What “nonsense”?
If Gov’t c-a-n finance…why doesn’t it?
BC Hydro ? ….may soon have huge infrastructure update. costs…scary reading some stories of how old some of its equipment is…ripe for the perfect storm . There was no need for the GEB except to facilitate future growth in the area….the GEB is irrelevant to most of us. GEB will probably benefit the huge project Genstar has tabled on that side of the Fraser.
The Public is always the lender of last resort…if we can afford it , fine, if we can’t, shelve the idea. In addition, building these sorts of projects during good time simply adds to the cost…projects like these are best built when times are bad and help the local economy. Projects built under these scenarios have all the potential of tanking when the economy goes bad with huge cost overruns. Some parties claim the “toll based” Coquihalla , now toll free, hasn’t paid back the million sof $$$ in interest costs, just the capital costs.
Again, who pays ?
Gov’t accounting is bizarre at best, thank God for the Auditor General.
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alexcanuck Says:
October 18th, 2008 at 9:53 am
I’m outa here for the weekend. Get some good stuff ready for me on my return. I wanna see numbers, facts and solid links, not just round and round!
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patriotz Says:
October 18th, 2008 at 10:32 am
Some strength to the argument that private can build more efficiently,
Er, private contractors have always built bridges, hospitals and other civil works. The government puts out specifications, asks for bids, and the winning bidder takes on the risk of building the project for the contracted price.
P3 really has nothing to do with private provision of goods or services, but government backstopping of private risk. That is something different altogether.
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greed Says:
October 18th, 2008 at 11:16 am
Don’t worry people, Cameron Muir said in an article this week (misplaced the link, maybe someone has it available) that he can’t see prices increasing until at least Spring 2009. WTF? There was no elaboration on this, but maybe we should give him the benefit of the doubt that his comments were edited to make for a better read and not cause further panic in the market. I am thinking of attending this REBGV event and asking him to elaborate and especially ask for elaboration on how it is possible that most local economists and industry player refer to the local economy being underpinned by solid fundamentals. I am going to pull my hair out if I hear this statement again, fair enough make it, but back it up with a solid argument. My argument is that the local economy is not underpinned by solid fundermentals given the slow death of the forestry sector, commodities bust that will see exploration cease and mines closed, pending layoff in construction (this is happening already and will be huge), finance and real estate (relatively minor as both are not huge contributor to local economy but still well paid jobs lost). Of course this flow through to the broader economy. We will see unemployment at 8% to 9% by 2010 quite easily I would imagine and drop of in migration. The black market economy (already one of the largest contributors in the province) will help us a bit, but we will have to live with the social costs. Even gangsters will have trouble leasing their Hummers with tighter financing and underwriting returning to “strict level”.
Based on this reason, I see no short to mid term price growth in local real estate values and in fact, I anticipate a 30% to 50% correction by 2010 and beyond with perhaps modest price appreciation in 2014 when the broader economy start to grow again.
Hope some bears can make it to the presentation, but wouldn’t surprise if there is no Q&A, similar to Tsur’s presentation at the RI/AIC.
Sponsored by REBGV’s North Shore/Sunshine Coast/Sea-to-Sky Division
BCREA 2009
Real Estate Outlook
Presenter: Cameron Muir, Chief Economist BC Real Estate Association
With degrees/diplomas from SFU, UBC and Kwantlen University College, Cameron
Muir is a well known economist and real estate market expert, providing
insight into how economic forces impact real estate markets in the province.
Learn more about…
. How will the weak U.S. economy impact us
. How will home prices hold up in 2009
. How is the credit crunch impacting home-buyers
Friday, October 24, 2008
9:00 am Registration & Breakfast
9:30 – 11:00 am Presentation
Capilano Golf & Country Club
420 Southborough Drive
West Vancouver
Club Rules: No Jeans & Cell Phones
$14.95 (plus GST) until Oct/19/08
$19.95 (plus GST) After Oct/19/08
*Includes Full Hot Breakfast
memberservices@rebgv.org or 604-730-3090
Note: 48 hour cancellation required. Tickets are non-transferable.
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Keeping an Eye on The Pimps Says:
October 18th, 2008 at 11:35 am
Greed:
“$14.95 (plus GST) until Oct/19/08
$19.95 (plus GST) After Oct/19/08
*Includes Full Hot Breakfast”
As usual, the local RE “experts” are mispricing, i.e. Breakfast and facilities must be worth $15.00
The cost of Muir’s insight is overpriced, by many multiples.
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NO -LYMPICS Says:
October 18th, 2008 at 11:39 am
Patriotz;
I’ll rest the argument , simply concluding that if the Public will ultimately claim title to a given civic project, one way or the other, we are obligated to pay all bad debts. Rememenr BC Place contractor who went broke in a pahse of the project? Highways projects are notorious for over budget adjustments…with contract language to inevitably obligate the taxpayer fiscally, not the contractor. If we can’t have the same standard open and transparent process for all civic projects, the public has every right to be skeptical and demand answers.
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VancouverGuy Says:
October 18th, 2008 at 4:16 pm
Regarding the Golden Ears Bridge,
First, to Rob the Banker, there is no ability for the bank to call the loan, regardless of their solvency situation, unless there is a default at the Project level. If the funding banks became insolvent, then the Project would not have an obligation to immediately pay off the loan. What would likely occur in the insolvent bank would sell the loan, and the corresponding obligation, at a discount in the secondary market during their liquidation process. Some other bank would then step in and take on the obligation. If you could buy the paper at 80 cents on the dollar and then fund the remainder of the Project as a lender, you probably would. And if it wasn’t 80 cents on the dollar, maybe it would be 20 cents. If it is a forced sale, it will go at some price at some point.
If the Concessionaire were not able to find any banks to step in and take on the obligation (EXTREMELY unlikely, especially given the facility is likely close to fully drawn already, so there should be no way that someone wouldn’t be willing to buy the paper at a deep discount), then you would have a problem. But in this case, a Termination for Concessionaire Default, the government would end up purchasing the Project back at a discount from the Concessionaire or selling it at a discount to someone else, wiping out the Concessionaire equity. The Government would first try to sell it and then give whatever the sale price was to the Concessionaire (who would then just give that to debt because it would be insufficient to pay lenders in full) or pay the Concessionaire at a discount TAKING INTO ACCOUNT ANY FORECAST OVERRUNS. The Government would likely sell the Project, rather than actually step into it, anyways. The market for P3 debt still exists, and there would be equity willing to invest to purchase the Concessionaire likely as well. As a result, the Government would not lose money on this transaction. Even if everything went REALLY bad, then you would still have a project that was significantly complete and the Government could pay the Concessionaire nothing if cost-overruns were forecast to be 80% of the original cost still.
Now, what would happen if the Design-Build contractor actually failed? Well, generally there are parent-company guarantees for a portion of the contract price. So there would have to be significant cost overruns, or Bilfinger parent would have to go broke, for this to occur. In that case, the Concessionaire or Government would have to find someone (Kiewit anyone?) to replace the Design-Build contractor. The project would likely be close to completion at that point, and given the parent company would have had to have borne significant cost overruns already. So if the Concessionaire could not fund the remaining price, the Government could once again pay the Concessionaire a discount based on future cost-overruns or a rebidding procedure. The Government would not lose money, and could likely find someone to step into the shoes of the Concessionaire at a big discount to capital value anyways.
In summary, it is unlikely the Government would be forced to step in and fund the remainder of the Project, and ALMOST IMPOSSIBLE for them to take a loss on the Project. If the Project is 60% complete already, then cost-overruns would have to be 60% of the original contract price for the Government to lose money (because then they would just not pay anything for the 60% already complete).
Believe me, these contracts transfer A TON of risk to the private sector. When things are going well, you may not value it, but when things are going badly, damn, we as taxpayers are in a good position as a result.
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Dyugle Says:
October 18th, 2008 at 4:16 pm
Russel 2000 and the Dow are down about the same 35% over the last year. http://finance.yahoo.com/echarts?s=^RUT#chart1:symbol=^rut;range=1y;compare=^dji;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
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exx Says:
October 18th, 2008 at 6:00 pm
Would-be Quattro condo residents to get answers Sunday
Sethi said the project would go ahead as planned and people who have paid deposits would not be able to get out of their purchase agreements.
“They cannot get out of the contract, no. It’s the same as us. We can’t get out of the project just because the price has gone up. Deals are firm,” he said.
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Tony Danza Says:
October 18th, 2008 at 8:29 pm
Our good buddy Tsur is digging himself into a deeper hole in the current Georgia Straight:
“But Somerville added that buyers shouldn’t delude themselves into thinking that the Greater Vancouver housing market will suddenly become affordable, because there’s a shortage of land, and a lot of people want to live here. “Depending on how you measure it, I don’t think anything from a five- to 15-percent decline in prices is going to solve the affordability issue,” he said.”
There’s a shortage of land, right, EVERYONE wants to live here, right. How much longer are we going to have to listen to this “expert” make a fool of himself?
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patriotz Says:
October 18th, 2008 at 9:33 pm
“Depending on how you measure it, I don’t think anything from a five- to 15-percent decline in prices is going to solve the affordability issue,” he said.
Well then, that means that prices are going to have to fall more than 15%. Right?
If prices aren’t affordable, just who is supposed to be buying?
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jesse Says:
October 18th, 2008 at 10:38 pm
“If prices aren’t affordable, just who is supposed to be buying?”
Almost nobody. That much is now obvious. Somerville is saying that Vancouver normally commands price AND rent premiums relative to incomes. His level of what this future premium will be is IMO way off, probably to the tune of 30% off. The fact that real rents are flat should be a warning sign to him.
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The Van Man Says:
October 18th, 2008 at 10:54 pm
This credit crisis mirrors the exact course of events that had happened from 1973 to 1974. Then, there was a housing crash and a stock market crash. The Bank Of England had to bail out several banks then.. Okay, let’s fast forward to today! Bank Of England again bailing out banks today!! The US went into the recession as so did many countries. Then, Warren Buffett was a relative unknown. However, he did buy several distressed companies based on the principles of Benjamin Graham (he was a pupil of his). This was fact and what is also fact was that in between 1974 to 1993, the US stock market went relatively sideways. It was not until 1993 that buy and hold investors would had broken even with their investments made during the 70s boom! Whereas, with Warren, his investments increase 20+% Year Over Year. Yes, that’s 20% for 20 straight years.
If Warren is buying now, he usually buys businesses that he recognized as being sold below its intrinsic value. He has a way to determine this because he understands the business he’s buying into. Sadly, when John made the comment that our Vancouver RE is well priced because it has dropped, what is Vancouver RE’s intrinsic value? It is the value that normal working people who can afford to mortgage, not some inflated numbers.
When East Vancouver homes were reaching or even superseding the 1 million dollar mark, you know that their intrinsic value had gone way out of line.
This credit crisis feels like 1974. I really hope it doesn’t behave like 1974, because while stocks did recover before the recession ends, inflation went through the roof and that it took 20 years for buy and hold stock investors to recoup their loses. Which means, those baby boomers who are either retired or close to retirement may find that retirement can become a challenge. For young people in their mid 20s and 30s, however, this crisis presents a buying opportunity in stocks.
RE prices usually can’t fall as drastically and quickly as stocks do because unlike stocks, they are illiquid. It takes time for a home to realize a sale. Like one of the realtors posting here, some people buy homes out of special circumstances. Those who buy usually have a certain commitment they are willing to accept (like holding the home for 10+ years) and these people will set new prices. As long as you have a sale, you have a new price. People can forecast, speculate or ponder for low ball prices, but as long as owners take affirmative action and stay, prices won’t drop. Besides, Vancouver has a unique distinction of taking no prisoners — prices usually and hardly ever drop drastically during past mild recessions.
AND unfortunately, many people only remembered the mild ones and never experienced the harsh ones like the one in the 80s. People are naturally arrogant and confident that BC will weather it. I hope so, but if the 80s tough days do come back, it will sour even the most optimistic and positively thinking citizens to sheer submission.
I’m not really sure how this recession is going to be. I think we’re heading for one. We have to cause it’s the natural business cycle, but if the stock market is any indication, the housing market usually follow suit.
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Keeping an Eye on Pimps Says:
October 18th, 2008 at 11:06 pm
Land shortage? There are cities with the population of the entire province of British Columbia, in countries with less land mass than Vancouver Island.
It’s one thing for some dim-witted fcuks such as realtors Maggie, or Aaron to say something so ridiculously stupid but, Tsur, is supposedly a scholar.
How low can you stoop Tsur?
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MickeyFinn Says:
October 18th, 2008 at 11:57 pm
It’s gotta be tough being a Vancouver area real estate agent right now.
At some point the penny will drop and they will realize that they must advise their clients to drop asking prices or there will be no sales. No sales equals no commissions.
There’s not a lot of commission revenue being earned these days.
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NO -LYMPICS Says:
October 19th, 2008 at 12:01 am
Hey..it’s midnite !
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NO -LYMPICS Says:
October 19th, 2008 at 12:01 am
Hey..it’s midnite !
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NO -LYMPICS Says:
October 19th, 2008 at 12:01 am
Hey, its midnight!!!
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Michael Randallbard Says:
October 19th, 2008 at 12:07 am
crabman….if you had a million dollars you’d leave it in the bank?
Did anyone here listen to me a couple years ago about buying gold and silver as a protection?
http://www.safehaven.com/article-11594.htm
While COMEX futures gold prices have fallen, the real price for actual physical bullion continues to surge as there are little or no sellers and nearly all are buyers. Shortages of small and midsized bullion coins and bars appear to spreading to the large bar market with reports of London Good Delivery Bars becoming harder and harder to buy, get hold of and take delivery of (especially in New York).
Futures prices are falling while gold prices for physical bullion are increasing with a surge in price of premiums for all coin and bar products. Investors do not want promissory notes or futures contracts rather the safety of physical bullion. Barclays analysts note that “There has been a swing from investors investing in gold in any form to investors specifically choosing to invest in physical gold.”
Unfortunately for those who didn’t listen no silver or gold in any decent size is available in any of the bullion and coin dealers in Vancouver or anywhere in Canada and the USA. Oh well. Next time listen to me rather than tell me I’m wearing a tin foil hat. The Comex price of silver is 9.35 USD today, down about half from last year. The price, if you can find any, of USA Liberty Silver Eagles on Craigslist in Seattle is now 22.00 to 26.00 USD !!!! Canadian silver maple leafs in Canada if you can find any are hovering in the 20.00 CAD range still in spite of the Comex price which incidentally no one cares about anymore as the Come has been discredited.
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Michael Randallbard Says:
October 19th, 2008 at 12:15 am
“And where is the money going exactly? Cash under the mattress? Now that’s an attractive risk/return LOL. If not, doesn’t the money end up deposited back in some bank somewhere?”
Still, even if the deposits are guaranteed it is a hassle and it may take months to get your money so the best thing to do is withdraw a 3 months supply of cash and keep it somewhere other than in a bank and this money would be about what one might need to keep going for 3 or 4 months. For most this would be about 5 to 10,000.00
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patriotz Says:
October 19th, 2008 at 12:57 am
as long as owners take affirmative action and stay, prices won’t drop,
Time to take another hit at this canard.
Existing owner-occupiers don’t drive the market, because they almost always sell to buy another property. It doesn’t matter whether they stay put or not.
Market prices are determined by those who are buying and selling. Nothing could be more obvious really, but for some reason it has to be pointed out.
What matters is the marginal buyers and sellers – would-be new buyers and investors, current investors (especially the cash-flow negative ones), forced sales (estate, etc), and builders.
Once prices start falling (like right now), the marginal buyers dry up and marginal sellers increase, big time. Which means a big increase in inventory (like right now). And remember, many of the marginal sellers have to sell, but nobody has to buy.
The market changes from one driven by expectations of price increases to expectations of price decreases. Look out below.
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jesse Says:
October 19th, 2008 at 4:47 am
“This credit crisis feels like 1974. I really hope it doesn’t behave like 1974, because while stocks did recover before the recession ends, inflation went through the roof and that it took 20 years for buy and hold stock investors to recoup their loses. Which means, those baby boomers who are either retired or close to retirement may find that retirement can become a challenge”
Big difference: personal savings rate was significantly higher during the ‘74 crash and most retirees had pensions or other guaranteed retirement schemes. Now these schemes are personalized and/or heavily invested in equity markets. Adding to this, housing has increased significantly in real terms in the 2000s, much more than the ’70s, and now is dropping way more in real terms.
The fear of default — the credit crunch — extends to individuals and businesses, not just banks. Hoping that restoring bank confidence will somehow “trickle down” to these banks’ individual relationships with customers is a huge leap of faith. This is the so-called “pusing on a rope” argument and, while the effects look like ‘74, I think it a very different beast this time.
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NO -LYMPICS Says:
October 19th, 2008 at 6:44 am
In a review of the past several “boom – bust” cycles re: real estate, I think one consistent indicator of a bust is how the realtors and real estate board are quoted in the media.
Through gritted teeth they talk about a balanced market… ie prices have stabilized , supply meets demand etc. ie very coded slef serving language . It must be quite a shock for realtors when the sales and listings data rolls in and they start to realize the party is over,the market is tanking , but now they have to try to BS the public that all is well with their coded language. The facts are the facts, but over the past several cycles I have noticed the same flowery BS almost verbatim, then the sh*t usually hits the fan shortly after.
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Anonymous Says:
October 19th, 2008 at 8:55 am
Seems like times are tough all ’round.
http://vancouver.en.craigslist.....21722.html
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Piddlesbby Says:
October 19th, 2008 at 9:40 am
“as long as owners take affirmative action and stay, prices won’t drop
Time to take another hit at this canard.”
To patriotz:
Thank you for explaining in layman’s terms the RE sales cycle. There is really no need to get into it further deeper than this. Remember, most players in RE are not educated & trained economists. Just regular folk who took a RE course. Yes, there are the marketers with BA’s, but they too had very humble beginnings.
I certainly don’t mean to offend anyone, in RE but if you are hurting right now and your commissions have disappeared, well, you should have practiced some succession planning. It’s SALES, and this profession you have your up and down years and anyone who sells in other industries knows this very well.
So take this time to upgrade your skills, network strategically, call on referrals and be truthful to your current client base. They will respect you and call on you when they are ready.
Listen to “patriotz”, this person is bang on with what is really going on in the RE market and explains what is needed for it to change. It’s going to be a while. The only potential buyers are domestic and it’s slim pickings. The Global buyers aren’t because either their currency has fallen or mostly they lost alot of $ in other investments. The last thing they want to do is buy a condo that is falling in value. I don’t think so. If anything they are selling and flooding the market. Remember supply and demand, well there is going to be a whole lotta supply going on for the next few years, at least.
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Dan in Calgary Says:
October 19th, 2008 at 9:50 am
Somerville is saying that Vancouver normally commands price AND rent premiums relative to incomes.
This is certainly true enough — Vancouver has always drawn people from the Interior and from other provinces. People have been willing to pay a premium for its charms. And its good reputation was, imho, always well justified … until recently. Regrettably, Vancouver has changed in a way that I found so detrimental that I left the city that was my home for 20+ years.
These days, when I return to Vancouver to visit, I often wonder why I stayed so long. I think Vancouver’s charm is essentially gone. It’s reputation seems to persist, but that will fade soon enough. And when it does, the willingness of people to pay a rent or purchase premium will disappear.
Certainly, people will continue to move to Vancouver, but it has pretty much become “just another big city”. Rent and purchase premiums won’t be justified.
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Keeping an Eye on the PImps Says:
October 19th, 2008 at 10:53 am
Real estate workers feel industry’s pain
“The real estate boom lured many new real estate agents, mortgage originators, appraisers, home inspectors, and title and escrow workers. Now, the slowdown is hitting many of these same people the hardest, forcing them to cut back, find second jobs or change careers altogether.”
Naturally this can’t happen in Vancouver. Seattle has so much more land than we do, and doesn’t have the Olympics, and of course it rains a lot there.
We have no subprime (how to explain farm workers and warehouse labours with 500k mortgages, is a mystery, that we are working through to explain).
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Keeping an Eye on the PImps Says:
October 19th, 2008 at 10:56 am
http://seattlepi.nwsource.com/.....ource=mypi
Forgot to post link for Seattle story
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Keeping an Eye on the PImps Says:
October 19th, 2008 at 11:05 am
“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,”
Anybody want to bet the story will end with the obligatory assurance from an” independent expert “such as Sommerville, Muir , Pastrick, or a rep from the developer business, that all will end well, and we are not like the USA?
Heck, we may be even treated with an honest opinion from Rennie himself. But I’m no fool, unless I hear from Bill Good and his guest professionals,that all is fine, I will not buy.
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Human778 Says:
October 19th, 2008 at 11:58 am
I’ve been checking out Coal Harbour rents – especially in the newly completed buildings. There seem to be a lot of re-posts from people on Craig’s List trying to rent their condos. I found this ad a little amusing. Somebody’s crapping their pants and trying not to lose a few grand in rent new month.
http://vancouver.en.craigslist.....;bedrooms=
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fruitcake Says:
October 19th, 2008 at 12:40 pm
“Piddlesbby” is quite right about global buyers fleeing the Vancouver market….they’d have to be nuts to buy into a market that is just starting to crash, when nuggets can be found in the ashes of sunny Forida & California wayyy before the flames subside around here.
BTW, anybody hear about the $2 billion Kitimat project being cancelled?…that would be a serious blow to our economy.
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jfk Says:
October 19th, 2008 at 12:47 pm
“Piddlesbby” is quite right about global investors fleeing Vancouver….they’d have to be nuts to buy into a market that is just starting to crash when nuggets can be found in the ashes in sunny Florida and Californaia wayyyy before the flames subside around here.
BTW, anybody hear about the cancellation of the $2 billion Kitimat project?….that would be a serious blow to our economy.
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NO -LYMPICS Says:
October 19th, 2008 at 12:55 pm
jfk and fruitcake….
Do you two think alike, exist in parallel universes, or are you the same person, given you eerily similar posts ?
Fruitcake : who is L.H. Oswald
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Anonymous Says:
October 19th, 2008 at 1:07 pm
anybody need to rent a place by the hour?
http://vancouver.en.craigslist.....37220.html
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cashisking Says:
October 19th, 2008 at 1:18 pm
Shangra-Lai (sorry about the spelling) …. prediction it won’t be built
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Anon Says:
October 19th, 2008 at 1:32 pm
Retirees flocking to Victoria.
Well, with the new tent city growing in Beacon Hill Park and their leader saying on the news their goal is to expand to parks in Oak Bay I am sure many retirees will be moving to Victoria in droves.
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Brad Says:
October 19th, 2008 at 1:47 pm
ING news:
http://www.businessweek.com/ap.....TO7Q80.htm
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Asun Says:
October 19th, 2008 at 1:48 pm
Buffett hasn’t been bulletproof lately. He invested in Countrywide Financial at the height of the bubble. Can uncle Warren tell us how did that one go?
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Drachen Says:
October 19th, 2008 at 2:12 pm
Anonymous
There’s only one reason people rent a room by the hour. Normally it’s only the seediest of hotels that even have an hourly rate. Any working girl making a decent amount of money just gets a room for the night and uses it multiple times.
Yes I do know a bit about these things but it’s not what you think! My best friend in HS helped out at the motel his family owned which was cheap and near the working girls.
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Anonymous Says:
October 19th, 2008 at 2:19 pm
“Buffett hasn’t been bulletproof lately. He invested in Countrywide Financial at the height of the bubble. Can uncle Warren tell us how did that one go?”
this says he didn’t. did he really?
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Keeping an Eye on the Pimps Says:
October 19th, 2008 at 2:37 pm
Renting a place by the hour is perfectly fine. I keep an eye on this market segment .
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NO -LYMPICS Says:
October 19th, 2008 at 2:45 pm
Interesting stuff re: Buffet and the Country Wide Financial ” rumour” , and the associated company which built luxury homes..
Re: old “pearls of wisdom” ….Sort of reminds me of why Wal Mart has ben so successful .
” You can become poor catering to the Rich $$$….
” You can become rich $$$ catering to the Poor ”
PS the hourly rate condo is probably a joke… way too obvious..much like when someone put the NDP Fast Cat Ferries on E-Bay.
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bdk Says:
October 19th, 2008 at 6:51 pm
Sounds like the reason Dave has so much time on his hands (enough time to try to run disinformation on several blogs at once)!
“The real estate boom lured many new real estate agents, mortgage originators, appraisers, home inspectors, and title and escrow workers. Now, the slowdown is hitting many of these same people the hardest, forcing them to cut back, find second jobs or change careers altogether.”
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just saying Says:
October 19th, 2008 at 7:25 pm
Just had a conversation with a realtor friend of mine. When I suggested that things probably wont be better next spring (IMHO) he nearly bit my head off.
Tensions are rising…
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Anonymous Says:
October 19th, 2008 at 9:23 pm
http://www.canada.com/vancouve.....62d6ff28fb
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Keeping an Eye on the Pimps Says:
October 19th, 2008 at 9:56 pm
“he nearly bit my head off.”
You are brave. It is very dangerous to do what you did.
It’s much like telling a gambler who has just won, that gambling is not a good thing.
Your friend has probably drank the Kool-aid,and actually believes:
http://642blog.ca/2007/12/27/s...../#comments
Why is the Canadian economy booming, while the United states is suffering? I’ve written about this before, but it’s worth mentioning again. I read this post on a local real estate bear blog which, while clever, is wholly inaccurate. What the bubble-blowers here in Victoria fail to note is that the reasons for our continued economic success here in Canada are not the usual Canadian success stories of manufacturing in Ontario and Quebec brought on by a favourable exchange rate. The rise of the dollar over the last 24 months and the expansion of our economy is driven by global demand for what Canada has to offer: minerals, resources, oil and gas, wheat, technology. This time around is different. Prices here in Victoria are not inflated beyond their sustainability. These $100,000 price drops are not going to happen. Not in 2008, anyway
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Anonymous Says:
October 19th, 2008 at 10:08 pm
Keeping an Eye on the Pimps:
Prices here in Victoria are not inflated beyond their sustainability. These $100,000 price drops are not going to happen.
Stop drinking the kool-aid. Commodity prices are tanking right now, especially Oil which is running at $75 a barrel, almost half of its high at $140. Canadian companies will be laying people off as consumers world wide, especially in the US, cut down on spending.
Home prices in BC can only go:
DOWN,
DOWN,
and DOWN.
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bdk Says:
October 19th, 2008 at 10:25 pm
Whomever wrote that crap on the Sooke blog is going to feel pretty silly for writing what he has and leaving an open forum…
“You would have to be seriously dimb or delusional to think that prices can only fall 30% now that investor sentiment has changed, supply far exceeds demand, and the world is slipping into a recession.
We will be lucky to get out with only a 50% drop!
Especially in a backwater town like Sooke which had gone too high too fast.
Prices will go up again just give it 25 years or so…..”
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patriotz Says:
October 20th, 2008 at 12:56 am
Whomever wrote that crap on the Sooke blog is going to feel pretty silly for writing what he has and leaving an open forum…
Realtors are incapable of feeling silly. Read Tim Ayres’ response of 19 October on the 624blog (link above) to see what I’m talking about.
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Keeping an Eye on the Pimps Says:
October 20th, 2008 at 4:51 am
“Realtors are incapable of feeling silly. Read Tim Ayres’ response of 19 October on the 624blog (link above) to see what I’m talking about.”
Patriotz: Agreed, in general, Maggie, Rob, Aaron, come to mind. But in all fairness, there are those like Jeff, Paul, and the realtor below and I quote:
http://www.milliondollarjourne.....canada.htm
Get a grip, I’m a Realtor on the front lines in Victoria. I see the disaster that is slowly unfolding. Don’t fool yourself into believing that Canadian 40 years ams aren’t the American version of subprime. Rampant overbuilding, greedy speculators, and buyers that just ‘need to get in right now’. The writing is on the wall people
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NO -LYMPICS Says:
October 20th, 2008 at 7:16 am
It’s too bad Canadians are so insular and have been brainwashed into thinking what happens elswhere won’t happen here. Having many relatives in the eastern U.S. we muse how what happens in the U.S. on mnay fronts eventually finds it way north to Canada … it used to maybe a 5-10 year delay lag. Now it is much quicker, like the border doesn’t exist.
Without trying to casting Realtors in a negative light….they are not much different than a stock broker simply promoters, they are promoting a commodity which in this case is real estate. It is their job to promote, not critique or criticize. One well known local realtor and I had a conversation re: the business, and he said that of his original class of approx. 30 realtors who graduated from the licensing program, only 2 were still practicing. Most of those that last probably have a lot more credibility, and a straight shooter is the one to seek out, moreso in these turbulent times.
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patriotz Says:
October 20th, 2008 at 8:18 am
they are not much different than a stock broker
They are a LOT different from a stock broker:
1. Stocks are sold on an open market with known bid and ask prices.
2. Stockbrokers do not negotiate selling prices. The market does that.
3. Stockbrokers are not paid on a % commission basis.
4. Stockbrokers are forbidden from making any representation about the future performance of stocks.
Those with more knowledge of the securities industry may add more.
Realtors are like used car salesmen, except a used car salesman would never claim that the car he’s trying to sell will be worth more next year.
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Dave Says:
October 20th, 2008 at 8:52 am
It sounds like patriotz is in the equity business.
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NO -LYMPICS Says:
October 20th, 2008 at 9:10 am
Patriotz:
I appreciate your insight, and whatever expertise you have and collectively adding to the debate.
My previous take on realtors was on the theme that they promote a commodity, and their bread and butter is commission – based on both ends of the transaction ie Buying and Selling.
They will promote the given commodity in as positive a light as possible…Stock Brokers and realtors literally read out of the same sales manual . That’s the basics, they are very similar , the rest is just hair-splitting semantics .
It’s often not in their interest to be candid, but to promote things on the upbeat/positive light, that IS my point.
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alexcanuck Says:
October 20th, 2008 at 9:10 am
they are not much different than a stock broker
5. I can call my stockbroker and say “sell” and he will say “(clickety-click) Done.”
Liquidity, baby! Anyone out there wish they had a bit more liquidity right about now?
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NO -LYMPICS Says:
October 20th, 2008 at 9:29 am
I was reading about the Quattro in Surrey, the one that burned down, and how they had a meeting yesterday in Surrey amongst developer, realtors, bankers and purchasers in . This will be an interesting project to watch as a market parameter.
In todays paper, one buyer stated he bought into this project based on brochures of having “Yaletown” in Surrey’s Whalley area (LOL !) but all he sees is addicts and fights. He requested a refund , but was told he can’t get his money back unless he sells.
Given the fire will obviously move all timelines forward, and people will not get any funds REfunded , I wonder how many will choose Plan B and simply walk and the whole thing falls into bankruptcy? I mean, for all intents and purposes…they are starting fresh with new construction like any other development, but there will also be a lot of desperate sellers of other completed projects. I’ll bet many will bail on Quattro and go bottom – feeding elsewhere .
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jesse Says:
October 20th, 2008 at 11:48 am
“They are a LOT different from a stock broker:”
I’d say there is more similarity of a Realtor to a financial advisor than a “stock broker”, the latter of whom is more a technician and is prevented from offering financial advice.
Ask your financial advisor, should you have one, about commission disclosure of the specific funds and stocks they are selling. I would treat a home purchase with a Realtor with as much, if not more, skepticism as advice from a commissioned investment dealer.