Friday Free-for-all!
Better late than never, it’s time for our open topic discussion post. Here are a few stories I’ve noticed this week:
-Bring on the real estate crash
-BC Expected to barely avoid recession
-BC economic stimulus package: an extra $70 for you
-Scotiabank: Canadian housing market slide overstated
-Canadian banks: longest profit slide in two decades
-You can still get a zero down mortgage
-What will happen to luxury condos?
-Harper will ‘do what it takes’ to fight economic crisis
-Fears of deflation
-Economics 101: everything you know is wrong
-67,000 Chinese factories closed in six months
So what are you seeing out there? Post your news, links and anecdotes here and have an excellent weekend!
note: any conversation on Vancouver, real estate or economics is allowed, please keep it civilized. When posting articles please only quote pertinent points and link to the original instead of pasting the entire article here. Pasting a link will automatically create a clickable hot-link. Thanks!
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November 24th, 2008 at 12:00 pm
Carioca Canuck:
Re Calgary City Hall
No, you were right ….it IS communism.
What is often a major warning sign is when they raise taxes and also the perks levels to City Staff. This is the makings of a mini – fascist state. It’s usually either the CAO or the Mayor (or possibly both )
They pay the staff well, keep the senior administration rolling in dollars and added perks…with severance packages in $100′s of thousands of dollars. This gets them support and heads off internal coups…they often have a few heads rolling from time to time to send a message to the others.
The bunker mentality reins, having built the aforementioned walls at City Hall to protect them from the general public (ie their actual bosses) or frustrate them from mounting any opposition.
November 24th, 2008 at 10:11 am
Yes, unfortunately we have had an influx of eastern liberal types (due to economic immigration) in the last 3 years. Sorry to say…..
Guess that explains why the Liberals took all the Calgary seats in the 2008 provincial election… oh sorry they only got 4 out of what, 20 or so?
Then I guess only eastern liberal types vote in Calgary civic elections. Well that’s the fault of the 81% who don’t vote, isn’t it?
As for the “socialist” Calgary city council – would you believe that in Calgary you have to pay $12 a year to use the public library? Yes, it’s true. Roll over, Andrew Carnegie, you old commie.
November 24th, 2008 at 10:08 am
“When we got home I checked the mail and the Wynn wants us to come back to Vegas for $169/night (half price). I’m seeing a theme here, everything is dropping to HALF PRICE!”
What, only half? You’re getting ripped off
I’m taking a 1-week Caribbean cruise out of Miami on the 6th, the brochure price is $1699 + 75% single supplement, I’m paying $135.00 and no single supplement. Yes, the port charges are almost double what the actual cruise line is getting, less than $20 a day, you read that right.
And I’ve got a March reservation for a week in Cuba, all inclusive (even drinks!) and including Vancouver return air fare, CDN $502 including all taxes that’s the final price, which is something like a quarter of what the same vacation was a year ago.
So, yeah, for travel freaks like me it’s the best time EVAR as the vacation industry plummets into collective bankruptcy, “50% off” isn’t even close.
I’m kinda thinking that after those two little jaunts I’m going into serious cash conservation mode though. Might need it all pretty badly before this works itself out…
November 24th, 2008 at 10:01 am
Patiently Waiting – that’s exactly what I’m doing. A year ago everyone looked at us like we were nuts for renting a house (but were too polite to say so). Just in the last few months we’ve had three people tell us what a good idea it is. Of course, they attribute it to luck and not foresight, but whatever.
November 24th, 2008 at 9:51 am
Mickey Finn:
Re the sales…
Do these sales simply reflect the transfer date ?
I other words, all or some of these sales you noted may have been negotiated before the RE crash, but what we see is that the sale has actually completed (and shows the other data associated with it).
I think the next few months will show even more major drops in the categories of “List” vs. “Sold” and Decline %, and thus they will be more reflective of the impact of the RE meltdown.
Re That house at $29.9 Million (list) selling for $25.9 Million (ie sold for $ 4 Million less) kind of indicates to me they still sold an overpriced listing to a sucker purchaser who may be on the railings of the Lions Gate Bridge as we speak (ie that house they bought for $25.9 Million is probably worth a lot less now and will continue to decline). That price range sounds like it must be in Point Grey waterfront, new home, on about an acre lot.( unless it’s one of those pretentious hi end penthouse condos , but you did note your list was for SFH ).
November 24th, 2008 at 9:48 am
Why buy when you rent a large Westside family home for $2000?
http://vancouver.en.craigslist.....07022.html
That’s cheaper than many suburban homes in places like Coquitlam and its not the first time I’ve seen a Westside deal like this.
Yet Westside real estate is always so much more expensive…for now. This just shows you how little there is to justify million dollar tear-downs.
If I had kids, I’d rent a place like this and send them to one of those nice Westside schools.
November 24th, 2008 at 9:42 am
Assessed value is a true certificate which give the bank an idea to allow further loan to the applicants,bank runs similar method to assess current market value through appraisal agencies.
Any area that countinue earn appreciation also help to add more value into assessement i.e.100%+1 to 15% then banks keep 25% on hold and the left over amount get passed to the applicants in case of guarenteed expected appreciation bank can pass more part of 25% to the applicant or bank can hold more part otherway around.
Assessed value is best method to measure current market value than the hpi by the real estate board because board is unable to take a solid grasp of sold properties in any perticular area but city gets hard factual information in their system a recorded value of multiple units sold in any perticular area at any perticular time.
Tax is not based on assessed value but tax is based on the future budget for city and where to get that money from when city figured out how much money they want to generate through perticular channels then it’s easy to calculate total amount through assessed value.
In 2007 and 2008 there was no big change in property taxes.
In the side note “buyers who did not shop for home yet are starting to trailing behind who ever did a complete shopping”.-Flash1.
November 24th, 2008 at 9:36 am
Patriotz…..
Yes, unfortunately we have had an influx of eastern liberal types (due to economic immigration) in the last 3 years. Sorry to say…..
Our current Mayor, Dave Bronconnier, is a red liberal to the core, and was thinking about running for the provincial party’s top spot, but declined…..half of city council plus the one vote needed to rule, is uber left wing…….
I don’t know why no one showed up to the civic election either, except to say that perhaps good ‘ole voter apathy was the reason……Vancouver only had 22% voter turnout in your recent civic election IIRC……go figure eh ? And look what the result was there. A christmas cake got elected mayor.
What happened here was that Bronconnier wanted a 9.5% property tax increase to pay for the city budget ($500 a year per home), and as a result people got so pissed off (the city hall hearing room was overflowing outside in the halls, with around 800 people showing up in a room that holds 300, on consecutive hearing days, phones were ringing off the hook, etc) that they cut the tax increase back to 5%……
But it is not over yet, they want to build a $1.5MM gym for city hall staff whenthey can drive 5 minutes, or walk 15, to the best one we have here, and a couple of $25MM foot bridges over the Bow river…..people here are really pissed off now…..and the mayor is really kissing ass and sucking wind.
Lula is a communist. Commies call themselves “socialists” because communist is a bad word. Socialism is the same as communism, but without the guns and gulags.
Lula is toast. In September’s Brasilian legislative elections, the PT Party (Lula’s party) lost their seats in every in every population center over 200K……the only people who voted for him were the outright poor who live in the NE of Brasil, and who get handouts for free from his government. I’m not saying helping the poor is bad, just stating a fact.
November 24th, 2008 at 9:28 am
Major Olympic sponsors bailing ?
http://www.businessweek.com/gl.....l+business
Maybe this is a harbinger of things to come, and that the Olympic movement is becoming over-ripe. The Global economy has over-saturated brand names, and many think the Olympics is a waste of resources. Given the IOC gypsy/bandits have raped and pillaged just about every major country now that China has just hosted them in 2008 , perhaps people will have connected the dots and see the litany of lies and debt once the Olympics side show leaves town.
Maybe public floggings will make a comeback…for any politician that even dares suggest an Olympic bid be submitted, given many will see it is a big negative simply funding political egos.
Toronto was a bit pissed when they lost the 2008 games to Beijing, but maybe Toronto is heaving a collective sigh of relief…given the summer games cost Billions, their economy is tanking, and the last thing they need is is an additional 30 year fiscal debt “hangover” like Montreal had since 1976 Olympics. They played the 2008 Grey Cup in the Big “Owe” ..but what else do they do with that white elephant from 1976?
I think its a given that with BC economy down…we will see an increase in 2010 Olympic boosterism as a desperate by BC Gov’t in an attempt to deflect attention and keep people upbeat. The danger Gordo runs is people seeing through this type of classical smokescreen tactic by Gov’ts and simply expediting a revolt by the masses.
November 24th, 2008 at 9:27 am
“The higher the assessment, the higher the taxes, you can’t argue with that.”
Not true. If our local government decides to spend EXACTLY the same amount as last year, but EVERYONES assesment doubles, thier taxes will remain the same. If one half of the cities assessment doubles and the other half remains the same then the doubled assessments have to take on a higher portion of the tax burden.
Assessments here only matter in relation to other assessments. We’re different from California in that way.
November 24th, 2008 at 9:25 am
A friend sent me a list of every sale of a single family home on the Westside of Vancouver in the last 30 days… there have been only 16 sales… so given that there are still over 900 active listings it implies close to 60 months of inventory.
I will cut and past the details of the last 30 days of sale here but I do not know if it will work.
List Sold Decline %
839,000 810,000 29,000 3.5%
859,000 800,000 59,000 6.9%
1,048,000 1,038,000 10,000 1.0%
1,148,000 928,000 220,000 19.2%
1,198,000 1,050,000 148,000 12.4%
1,198,000 1,040,000 158,000 13.2%
1,199,000 1,120,000 79,000 6.6%
1,249,000 1,100,000 149,000 11.9%
1,268,000 1,220,000 48,000 3.8%
1,588,000 1,450,000 138,000 8.7%
1,798,000 1,558,000 240,000 13.3%
2,090,000 1,950,000 140,000 6.7%
2,198,000 1,980,000 218,000 9.9%
3,150,000 2,800,000 350,000 11.1%
4,380,000 3,550,000 830,000 18.9%
4,780,000 3,550,000 1,230,000 25.7%
29,990,000 25,944,000 4,046,000 13.5%
November 24th, 2008 at 9:04 am
Richmond Council changed the OCP for the City Center, effectively turning the light industrial commercial area into Hi Density.
This created huge tax increases based on ” highest and best use” designations and many owners and tenants organized to seek tax relief. Knowing some of them …I found out that the assessment did not change, but apparently the Mill Rate was adjusted a bit, but not much . One can try to hire a private firm to review the assessment ,….but apparently these tactics do not meet with much success. I have been to appeal boards several times(and won some minor victories)…and in my view it is a waste of time…given the work/ reward ratio.
These private firms have all sorts of rates, I hear some charge 1/2 of what you saved in increased taxes. However, unless mistaken, if one owner in a certain category wins an appeal, the result would be applied to others in the same situation , thus one pays while all the rest gain from their efforts. Then , in all liklelihood, Mill rates for other categories rise, to make up the slack, as we have to keep in mind Local Gov’ts will have determined a budget,need $X per fiscal year , and will get it one way or the other.
However, like Carioca Canuck implies, maybe the issue is not so much the assessment , but the Mill Rate, which is simply a multiplier variable based on your Local Gov’ts wish list and how to fund it.
Perhaps taxpayer revolts demanding Local Gov’ts buy a lot of sharp pencils , proof of more bang for the buck and less pissing tax $$$ down a rathole will be more constructive than appealing assessments.
November 24th, 2008 at 8:56 am
Our socialist gubmint here in Calgary is tax hungry and the population revolted last week
The city government in Calgary is “socialist”? Didn’t Ralph Klein use to be mayor? What happened, did you get a huge influx of pinko voters from Saskatchewan or something? Has a single NDP MLA or MP ever been elected in Calgary?
If Calgarians are so up in arms, why did only 19% of the voters turn out for the last civic election?
BTW if you consider Calgary city council “socialist”, what would you call Lula?
Patriotz: The higher the assessment, the higher the taxes, you can’t argue with that.
Yes I can. If everyone was assessed at double market value, everyone would pay the same amount of taxes. The only thing that matters is what % of the total assessment base your property is. That determines what % of taxes you pay.
If you want to pay less city taxes, elect a city government that spends less money. And for those of you who lived in Vancouver in 2003, voting “no” to the Olympics would have been a good start.
But I have a funny feeling that the people who are bitching the most about taxes are the same people who were the biggest Olympic boosters.
November 24th, 2008 at 8:32 am
PATRIOTZ SAID…..”If there were systematic overassessment there would also be large-scale appeals.”
—————————————————
I live in Calgary. That is how it works here. We have entire industries that specialize in doing nothing but corporate and personla tax appeals.
Altus Group….Deloitte……Rickard Realty Group…..CV Group…..et al…too many to list. One of my clients runs Altus and told me he has never been busier in the last 18 months and is almost booked solid now for 2009……the city lets many of them right to court where they usually lose. Our socialist gubmint here in Calgary is tax hungry and the population revolted last week.
November 24th, 2008 at 8:04 am
B.C. apartment sales drop by half
VIRGINIA GALT
Monday, November 24, 2008
The commercial market for apartment buildings in British Columbia has “come to a near standstill,” according to a report issued Monday by real estate firm Avison Young (Canada) Inc.
“There is now a standoff between purchasers, who in the wake of the global credit meltdown have changed their pricing expectations, and vendors, who are looking for yesterday’s pricing in a much more challenging market,” Avison Young principal Rob Greer said in releasing the report.
The number of real estate transactions in British Columbia’s “multi-family market” has dropped to 76 so far this year, down from 153 in the corresponding period of 2007, according to a survey by Avison Young.
“The total value of multi-family investment transactions year-to-date … amounts to $270-million – approximately 52 per cent of the $519-million recorded in all of 2007,” Avison Young said.
Local private investors accounted for the majority of buyers and sellers in 2008.
Prices for apartment buildings are likely to fall even more next year, Mr. Greer said.
“Should financing troubles continue through 2009, we may see values move as much as 20 per cent as investors re-evaluate their required returns on investment,” Mr. Greer said.
Avison Young said in its report that the “once prevalent multiple-offer situations have shifted to ones of price reductions and lingering listings.
“Of the current 130 listings on the market, approximately one-quarter have received at least one price reduction in recent months. This does not include any recent sales that involved a price reduction to induce the sale,” according to the report.
Michael Brodie, an adviser with Avison Young, said tighter credit has hurt the commercial real estate market in B.C. and elsewhere in Canada.
“The inability to get yesterday’s lending has driven many potential purchasers from the market simply because they don’t have enough equity,” Mr. Brodie said.
Credit issues will also hurt “highly-leveraged” building owners who have to refinance in 2009, said Mr. Greer.
However, he said, B.C.’s market has not been affected as significantly as other markets, and apartment buildings are still among the most stable commercial real estate investments.
“Housing is also one of the last places people stop spending money, and we can expect the region’s average rental vacancy rate, currently less than 1 per cent, to remain at historically low levels,” Mr. Greer said.
Mr. Brodie added that “investors requiring high leverage may be sidelined for now, but even if the credit markets remain tight for the foreseeable future, multi-family assets should perform well operationally and provide relatively stable cash flows.”
© Copyright The Globe and Mail
November 24th, 2008 at 7:46 am
Back of the envelope stuff
GVRD detached Benchmark price for last month was 695,962 from realestate board MLSLink Housing Price Index
Paul B median house price from weekly stats for three weeks in Nov (ending Nov 22) are 630,000, 660,000, 547,500 or an AVG of 612,500
695,962-612,500=83,462
83,462/695,962=11.99% DECLINE
Understand the shortcomings of Median prices but lets not forget the shortcomings of Benchmark … I use a blended rate.
November 24th, 2008 at 7:40 am
meant to “hear”, too early for me i guess
November 24th, 2008 at 7:40 am
Low prices mean the best time to buy real estate is now. I see deals everyday and so can you if you look. Do you want to make money and get rich? Then get off the couch and away from computer and start shopping. The doer gets rich not the loser.
November 24th, 2008 at 7:30 am
Anyone else here the economic alice-in-wonderland boosterism taking place on cknw 980 this morning? They’re giving their staff a 1/2 day off to go shop with in their advertisers’ stores. Apprently the dire economic times are all in our collective heads. We ARE different from the US. If we just went out and spent more all the bad news would go away.
Do you reckon mgt. got together with stuff and asked them to run this shameless fluff or maybe face job cuts down the road?
November 24th, 2008 at 7:05 am
Economist ? = are psychologists that can do Math.
Most of these experts are hired to provide some credibility to the message they are hired to spoon feed the public.
They are fully aware of the herd mentality and how the truth and ” news ” affects herds. Since the early 1990′s these ” economists ” must have been aware that much of the domestic and international economy was based on bubbles….they should have seen this latest bubble coming, and thus they are either lying through their teeth or truly ignorant.
A lot of these professionals travel in packs , joining the given bandwagon, continually selling themselves out. Any idiot can report the obvious when times are good, but when times are bad or tanking, why sugar coat it ? That’s what I see their role as.
November 24th, 2008 at 5:49 am
Patriotz: The higher the assessment, the higher the taxes, you can’t argue with that.
November 24th, 2008 at 4:27 am
I was reading stuff over at http://www.johnchow.com. He has a post where he tours an unfinished home in West Vancouver. 7000 sq. ft. for 3.5 million, down from 6. One of the commenters says:
“It’s a buyer’s market, especially for higher-end homes like these. Snatch it up and rent it out to international millionaires when they visit for 2010.”
I wonder how much of the 3.5 million you would recoup renting the house out for the Olympics?
http://www.johnchow.com/house-.....y-estates/
November 23rd, 2008 at 11:38 pm
Assessed value is truly meaningless and will be for the next decade IMHO. It is a falsly inflated figure used by municipalities to generate tax revenues.
You don’t understand how property taxation works in BC. Property taxes equal local government spending. They are not a function of assessments. Anyone who has owned a property through the RE cycles of the last few decades knows this perfectly well.
Assessments are not perfect, but there are the best (actually the only) universal estimate of market value we have. If there were systematic overassessment there would also be large-scale appeals. The people doing the assessments aren’t dumb, they don’t want people appealing, and they try not to overassess. As I have already pointed out, overassessment does not result in increased property tax revenues. Also assessment is not done by the municipalities, but by the BC Assessment Authority.
Getting back to the original question, I’ll buy when I see a property I like at rent equivalence (all expenses). I’m buying for long term and I don’t care about future price movements. It’s about the yield.
November 23rd, 2008 at 10:26 pm
Check Paul B’s latest weekly prices.
http://www.nvcondos.realpagema.....?aPageId=9
It looks a huge chunk has been taken out of both SFH and condo median prices in the last week. SFH down 17% and condos down 14%. I know this could be blip, but it happened to both at the same time.
At this pace, I’ll have to buy a house by Christmas.
November 23rd, 2008 at 10:14 pm
Freako–how does #125 relate to the bit about econ profs? In 125 you are talking about economists like Pastrick, who is most certainly not an econ prof.
True that. I just felt like going on a rant. I hit Helmut’s bio, and there is no title at all. What’s he got? A bachelor’s in Economics?
November 23rd, 2008 at 7:27 pm
Thanks everyone for the star on posting #112 and thanks for your advice on #129. I appreciate it.
Gadwin: Grow up!
November 23rd, 2008 at 6:52 pm
Pope: I think there is a bug in the system.
Gadwin seems to be demoding my postings multiple times when he doesn’t agree with them.
Please check his IP address and how many times he is voting.
Thanks.
November 23rd, 2008 at 6:48 pm
Pope: how can I register my name? People keep stealing and posting under it.
November 23rd, 2008 at 6:14 pm
Gadwin, I feel your pain. You must be furious. How dare someone take your fictitious name.
Please give the address where we can send our donations.
You poor thing.