Good Friday Free-for-all!
Happy weekend everyone! It’s time to do our end of the week news round up. Here are a few stories I’ve noticed lately:
-Vancouver house prices take a steep dive
-We’re #1: Vancouver has biggest price drops in first quarter
-We’re #1: BC leads nation in job loss
-BC housing starts down 70%
-Cruise visits drop off, hammering Vancouver
-Council expedites 2010 rental rules
-We’re #8: Calgary named ‘best city on the planet’
-Peter Schiff on mark to market: Lets play pretend
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent long weekend!
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April 9th, 2009 at 10:04 pm
This couldn’t possibly be a deal fraught with danger…could it? From p8 of this week’s Georgia Straight:
Polygon Homes – “Branches on the North Shore” Apparently this new development is “North Shore Living that Suits Your Budget” How’s that you ask?
Well you can move into your 2 bd condo for only $889/month!! How?
10% down and…0% teaser rate fixed for 1 year. They also offer 3 year fixed @ 1.95% and 5 years @ 2.95%
Thank goodness we aren’t like those nasty American people.
April 9th, 2009 at 10:06 pm
Not just Vancouver…I was in Kelowna this week on business and noticed a HUGE number of houses sporting “For Rent” signs out front (often accompanied by “for sale” signs) Since they can’t sell, try to rent, my contacts tell me. (1000+ condos on the market in March, and a dismal 47 sales) However, the construction jobs that made the city boom in the last five years are gone, and quite possibly the construction workers as well-so lots of vacancies. Because even the nightclubs are not doing so well either.
It seems Kelowna is returning to the city I knew in my youth: low-paying jobs, not many opportunities and just generally not a city you’d want to stay in if you were past 20 and moderately ambitious (and not a retiree). Makes me glad I left.
April 9th, 2009 at 10:40 pm
From “Vancouver house prices take a steep dive”:
Average home prices in Vancouver have dropped more than 12 per cent during the first three months of 2009 when compared to the same period last year.
Could someone explain to me what that is supposed to mean?
Would that be some math and English challenged person trying to say, “Average home prices are down more than 12% YOY as of the end of 1Q2009″?
April 9th, 2009 at 10:42 pm
The bulls would argue that the spring bounce is stronger than usual.
I suspect it’s simply the last batch of first home buyers getting dragged into the market by temporary low interest rates and a recent decline in prices of about 14%.
There’s no more buyers left on the sidelines. Anyone who’s capable of buying has already purchased during the past 7 to 10 years.
The ones who didn’t are that last batch I’m referring to.
I expect to see a inventory spike into the summer as the unemployment numbers start working their way into the system.
Sales will continue to be flat and that means MOI is on it’s way up.
April 10th, 2009 at 12:12 am
At least all RE Bullshit merchants, Alchemist/Illusionists and Wizards are always ready for action, no matter what’s going on. I just wonder what kind of mental damage one could have to still keep repeating things like this:
“A 10 to 20% price reduction is good news for employment because home sales are increasing, which employs Realtors, advertising media, conveyance staff, home inspectors, building trades, moving & renovation companies, etc. That’s all good news for our economy. Steve at http://openhousenow.ca”
Comment at : Vancouver house prices take a steep dive
April 10th, 2009 at 12:21 am
Not much for sale on the east side right now. A suite in our building sold in less than three weeks.
A co-worker who moved here last year from out-of-province just bought a house; another – newly married – is looking. This weekend, I’ll be tagging along with a friend who is moving back to Vancouver next month and MUST (his emphasis, not mine) buy a place right away.
When I went to renew my current mortgage, my banker told me I’d qualify for five times that amount. I’m not biting. I guess that’s what “you’re richer than you think” means.
April 10th, 2009 at 9:55 am
The strong bouce is not a surprise. Imagine you’ve been waiting in the wings for 5 years, diligently saving your downpayment. You don’t read the paper much let alone the financial section, LET ALONE real estate bear blogs. You get your news from your “knowledgable family members” who made money in real estate, your bank, CKNW, Global TV etc. All you’ve ever heard is real estate always goes up in the long term and renting is paying your landlord’s mortgage.
Now you play around with the online mortgage calculator and see how much you can borrow. Wow! With the recent correction and the low rates you discover you can buy a house.
Of course people are going to jump. They just don’t believe prices here are going to fall another 20-50%. Oh, and i nearly forgot the serve-serving lies spewing from the mouths of real estate “experts”.
April 10th, 2009 at 10:08 am
Hard to tell without the evidence of Paul/Gavins stats, but the “for sale” signs seem to be popping up like muchrooms after a spring thunderstorm.
The fact that prices have not risen with those temporary low mortgage rates that have sucked in a few more FTBs should be a clear sign that this is a dead cat bounce….pity those poor suckers when rates go up as they must.
Another clear indication that the slide is about to resume is that the only stuff moving is the lowest on the junk pile….there has been no action whatsoever in the upscale market of detached SFDs.
April 10th, 2009 at 10:16 am
oh yeaah nutsters! mr market say
“reports of my death have been grately exagerated”
April 10th, 2009 at 10:23 am
from the “they aren’t making land anymore” dept:
http://tinyurl.com/cm3pxr
A huge chunk of land stretching from the Sooke Potholes to beyond Jordan River is back on the market after a developer let his conditional agreement to buy the property expire.
April 10th, 2009 at 10:25 am
Re: low mortgages getting the last suckers on the market
The 10 year locked mortgages interest rates are going down. I think that this is a signal that the inflation is not going to happen – at least not on double digits.
The whole NA market (except some pockets in Canada) is in process of asset devaluation. Once this process starts – why would anybody like to inflate is beyond my understanding – it would create huge problems in the people lives and it would cripple the system we are living (and yes it can be crippled so much that you would not believe it). Deflation however, does not affect the system very much, but it does individuals (albeit, unevenly, some individuals are more exposed to it and some are less).
Having said this, can anyone enlighten me why hyper-inflation would still be a possibility in N/A?
April 10th, 2009 at 10:35 am
i’m heading to Mission BC today to check out some $300K SFH Open Houses
too bad there weren’t any priced like that in East Van….. the ol’ waiting game continues
April 10th, 2009 at 10:43 am
asalvari:
Having said this, can anyone enlighten me why hyper-inflation would still be a possibility in N/A?
Of course it’s possible. The central bankers could just create a flood of paper money like Mugabe. There is no law of nature stopping this.
But it’s not going to happen, because contrary to what some people think, the PTB don’t want high inflation, never mind hyperinflation. It’s bad for business. Really. They just want 2% or so. They will probably both undershoot and overshoot in the short run, but get close to it in the long run.
That’s consumer price inflation I’m talking about. Asset price deflation in RE and stocks has already happened of course, and is not going to be reversed except by fundamentals. For RE that means increasing wages (fat chance), and for stocks that means increasing profits (somewhat better chance).
April 10th, 2009 at 11:00 am
Asalvari, google up quantitative easing. Don’t believe what the governments tell you they want, they will move towards higher inflation with negative real interest rates. Jubak i believe wrote something on this on msn last week.
April 10th, 2009 at 11:01 am
asalvari,
I agree that deflation is a much bigger concern, but don’t confuse monetary inflation with price/wage inflation. The FED will have to raise rates just to pay for all the bailouts with devalued money, and to attract foreign capital.
April 10th, 2009 at 11:06 am
Ursus, the Fed will not be concerned with attracting foreign capital. The debt game is well beyond that point.
April 10th, 2009 at 11:29 am
From my rudimentary memory of the two economics class I took in university, inflation is brought about by too many dollars chasing too few goods.
Central banks are supposed to “create” enough money to match growth in GDP. Any more would mean inflation, any less would mean deflation.
In fact, if the central bank didn’t create money, prices on goods should fall over time given that production and manufacturing become more competitive and efficient over time.
For inflation to take hold, money velocity needs to also be in play. Right now banks aren’t lending as much and people aren’t borrowing as much. Money velocity is essentially dried up.
But eventually the mindset will change and people will think, “wait a minute, all this money printing means the dollars I’m socking away for a rainy day will not buy as much tomorrow as they will today.”
At that point, people will start opening up their wallets in a big way. All that money on the sidelines will be scooping up hard assets as a way to preserve wealth. Prices will climb.
I don’t think hyperinflation will be allowed to happen.
Doing so would mean the collapse of the very fabric of the economic system.
Thus governments would have no choice but to hike up interest rates rapidly.
Real estate, although a hard asset will sustain downward pressure as interest rates rise as RE is usually a leveraged.
I am by no means an expert on the subject. Your comments please.
April 10th, 2009 at 11:31 am
anonymous:
Ursus, the Fed will not be concerned with attracting foreign capital.
The US has a current account deficit of 673bn/year or 3.3% of GDP. The US either has to keep importing this capital or shrink consumption and investment by 3.3%. The latter option is not in keeping with the goals of the administration or the Fed, to put it mildly.
April 10th, 2009 at 11:40 am
Spring is all about psychology. Buyers and sellers are all thinking the same thing: prices down and mortgage rates historically low. Sellers will hold out and buyers feel they may miss out. Sales always pick up in the spring and that will encourage sellers to hold out for a better price as they see homes in the neighborhood selling. Once the spring sales are finished and inventory has ballooned, sellers will either have to cut prices through summer and fall or pull their listing to rent instead. I believe that the US markets did the same thing every spring by showing some signs of life only to collapse again for the rest of the year.
April 10th, 2009 at 11:49 am
And by the way… on the inflation topic. We’re not going to have hyperinflation, that would be a nightmare for everyone. We will get double digit inflation eventually, the US has made a $12,800,000,000,000 bet on it. The only way they will ever be able to meet those obligations without financially crippling the population is inflate it away.
April 10th, 2009 at 12:17 pm
Joycer:
Well I think that most agree on no hyper inflation. However, just for kicks, lets consider the case of “sweeping the debt under the rug”, where the fresh debtor (government) has infinite life, and can repay in zillion years. The math is slightly different in that case, since they can “refinance” it forever.
Its questionable if this is smart decision or not, but definitely is possible. Suddenly, the printed money are on-hold, nobody can really use them. Inflation would be contained.
I may be grossly incorrect here, and after all this (economy) is not my specialty – just another Joe worried whats tomorrow is going to bring.
April 10th, 2009 at 12:20 pm
patriotz:
Thanks for the explanation, as usual your clarity helped a lot.
If I follow your tough, you are suspecting consumer prices inflation. I am afraid , we will have to accommodate that and learn how to leave more “lean”… just like the rest of the world. Because salaries are not going up for sure anytime soon.
April 10th, 2009 at 12:38 pm
Patriotz, economic circumstances change, the US will not be concerned with attracting foreign capital. The 1980′s are over.
April 10th, 2009 at 12:48 pm
kansai_92: “There’s no more buyers left on the sidelines. Anyone who’s capable of buying has already purchased during the past 7 to 10 years.
The ones who didn’t are that last batch I’m referring to.”
There are a lot who chose not to buy, even though they could. Many buyers WERE bears but secretly regret they “missed the boat” earlier this decade. With prices now 10%-20% off peak, it’s like re-living 2006 all over again, when many of these buyers almost pulled the trigger.
Here’s the mentality: there’s nothing like being given a second chance on life. Seize the day and don’t make the same mistake twice.
Ironic how the first “mistake” of not buying in 2006 wasn’t a mistake at all, from an investment standpoint, and them buying now could be the real mistake.
April 10th, 2009 at 1:10 pm
Having said this, can anyone enlighten me why hyper-inflation would still be a possibility in N/A?
——————–
Because the US government just pumped $10+ trillion green colored paper money into the economy over the last few months.
April 10th, 2009 at 3:05 pm
anonymous #23 said:
“the US will not be concerned with attracting foreign capital”
The US debt is expected to grow another $2 trllion this year beyond the current $11+ tril, of which about 30% is held by foreigners (probably moer by now). China and Japan hold most of it, and the US is scared $hitless about hints that China is threatening to bail.
With every US man woman and child loaded down with $36.5k (or over $100k per household), who would be dumb enough to invest in this debt. The only way it can possibly be serviced is for the treasury dept to print more money and to raise rates to avoid spooking foreign investors.
http://www.brillig.com/debt_clock/
April 10th, 2009 at 3:36 pm
The thing is trillions of dollars have just been wiped off the books. That’s what happens when the loans go bad and the banks go down. That’s called “deflation”. This “deflation” far outweighs the money being wasted on bailouts and “stimulus”. Everyone’s talking about inflation like it’s already upon us. It’s far from it. I’d bet against inflation even within the decade.
April 10th, 2009 at 4:04 pm
That’s why we shoul’nt confuse monetary inflation with price/wage inflation. But eventually, one will influence the other.
April 10th, 2009 at 4:18 pm
This is unfolding like a nightmare for the housing market.
Deflation, recession and joblosses will continue to pull prices down, and the knockout punch will come with higher mortgage rates way before we see any wage/price inflation.
April 10th, 2009 at 5:58 pm
“Hard to tell without the evidence of Paul/Gavins stats,”
Gavin has the dailies updated at http://www.nvcondos.ca/page_content-9.html
April 10th, 2009 at 7:02 pm
pricedoutfornow:
I was in Kelowna this week on business and noticed a HUGE number of houses sporting “For Rent” signs out front (often accompanied by “for sale” signs
Well that rings a bell, a few years ago I starting seeing postings on HBB describing the same thing in… lets see where was it… oh yeah…
Phoenix
April 10th, 2009 at 7:32 pm
pricedoutfornow: “Not just Vancouver…I was in Kelowna this week on business and noticed a HUGE number of houses sporting “For Rent” signs out front (often accompanied by “for sale” signs)…”
According to the Okanagan Mainline Real Estate Board (OMREB), Kelowna has a 61 YEAR inventory of houses priced over one million dollars! (367 houses for sale, with only one sale in the past two months)
There should be some really nice rentals coming onto the market in Kelowna soon.
April 10th, 2009 at 7:55 pm
I guess there will be some “nice” rentals.
However, I am not in the business to bail out those that bought by renting high for a “nice” place.
My my job in “ME Corporation” is to pay as little as possible in rent, b/c I am number one, not the landlords.
After all, I am the one holding the money and I am pretty leak proof when it comes to money, since they dont pay decent wages in BC. So I pay myself by not spending, especially on ambitious rents – what’s in it for me???
Anytime there is a price increase I get creative, I think ever further away from the box. One has to be like water, increased costs=more resistance, I find the route of less resistance, and trust me, there are a lot of roads to Rome – who said you need a road to get there.. or ..why Rome?
April 10th, 2009 at 8:04 pm
Alpha_Bear:
LOL!!!! That is just TOO hilarious! Must be some kind of record!
April 10th, 2009 at 8:10 pm
calgary is already getting 400 foreclosures per month
http://www.foreclosurescanada.com/stat2009.html
April 10th, 2009 at 8:18 pm
KELOWNA Yes a good observation of IDIOTS in a BOOM Market.
I think I knew Kelowna very well 20 years ago, 10 yrs ago and 2 yrs ago.
Observing a summer town with rampant relatively affordable housing, no REAL industry/economy-agriculture-farming-no real BIG money.
I like to spend as much time as possible in the OK in the summer as possible.I love it!
The summer of 2007 blew me away with what I saw!
Kids meaning 28-33, left school at grade 10, drywallers, painters, framers, waiters, bartenders, Driving $100K+ cars, $100K amazing boats. I could not believe what I was witnessing!
Where, who, how, can this be happening? I was JEALOUS!
WHAT THE ^&&*^%$ IS happening here?
How many BIG FISH in a low income town can ther possibly be?
IDIOTS making $100K+ per yr because of supply+Demand.
NOW TODAY in Kelowna, Incredible deals on Real Estate, Boats, Cars! Check out Craigslist in Kelowna-2006/7$128K porches for sale for $40-50K.
Capitalism-GOTTA LUV IT!
Let the Temp Rich Party and watch it all fall down!
April 10th, 2009 at 8:26 pm
#36 : Cars! Check out Craigslist in Kelowna-2006/7$128K porches for sale for $40-50K.
– Why pay 40K for a car when you can get a gas miser with plenty of luggage room for less than 4K? And you will not cry your eyes out if you get a dent or a scratch, even better – nobody wants to steal it. Stick the balance in a yielding investment.
April 10th, 2009 at 8:30 pm
lots of repos in calgary
http://calgary.repo.com/browse/Domestic_Trucks
April 10th, 2009 at 8:32 pm
lots in bc too
http://bc.repo.com/browse/Motorbikes
April 10th, 2009 at 8:36 pm
pricedoutfornow:
Housing starts are down 93% in Kelowna. I would surmise that most of the construction workers are gone. The few remaining would be attached to family businesses and a very few part time casual labourers who are part of the grow op sweep currently going on in the Okanogan.
It’s a death spiral for the O – Valley
April 10th, 2009 at 8:40 pm
ursus:
#29 I think you’re right. Wages will suffer due to the ‘recession’. However I’ve noticed that every food store has been steadily raising prices and every restauraunt I’ve been in recently ( two months) has repriced thier menu. There’s big inflation evrywhere except wages. Fishy.
April 10th, 2009 at 8:53 pm
The Okanogan market is booming according to this bimbo/ desperate head case realturdette in Kelowna
http://www.briggsonhomes.com/b…..state.aspx
The slime is oozing out with the spring warming and providing some real entertainment.
April 10th, 2009 at 9:28 pm
depressionwatch:
There’s big inflation evrywhere except wages
Consumer price inflation without wage inflation is, of course, negative for house prices.
April 10th, 2009 at 10:00 pm
Thank you. Yes, it’s cool, Karl’s Mortgage Calculators
April 11th, 2009 at 12:09 am
You are all evil jerks that worship the devil.
April 11th, 2009 at 1:17 am
squidly77: Interesting repo site. Looking at BC repo’d import cars, I have to wonder; how do you get into the situation where your ’86 Celica gets repossessed? Someone didn’t quite make it through a 25 year car loan or what?
April 11th, 2009 at 1:21 am
Here’s a link to that ’86 Celica:
http://bc.repo.com/details/32723
Damn, that’s old and busted.
April 11th, 2009 at 5:43 am
time to buy me a 2nd hand yacht at mark down prices…
April 11th, 2009 at 5:53 am
Buy? Just go south of the border and pick up one for free:
Boats Too Costly to Keep Are Littering Coastlines
April 11th, 2009 at 9:05 am
#45
Hmm, I dont know if I should click on the up or down arrow.
April 11th, 2009 at 12:47 pm
Vancouverite:
Yes, Kelowna has sure been a ridiculous place the last few years. I’d go and visit some friends there, and they’d all be smiling ear to ear, boasting at how rich they’d become (their shack was now worth $500k!) and how “everyone wants to live in Kelowna!” so RE was just going to keep going upupup! I didn’t agree with them, and told them how RE was crashing badly in the US, but they just looked at me like I was crazy. Thankfully my closest friends didn’t get sucked into the hype and didn’t buy, though a few acquaintances happily plunked down $350k+ for tiny condos. There is definitely no industry or real economy in Kelowna, apart from RE and tourism, it sucks for jobs for the most part. I hear tourism bookings are already down for the summer too, so it’s not like those in that industry can count on that for this season.
April 11th, 2009 at 1:02 pm
Are you a FoRenter? If so, then you are a LOSER! If you can buy BUY NOW or be priced out forever paying for my mortgage for LIFE you little pieces of shit. Call me up today.
April 11th, 2009 at 1:05 pm
The Okanagan and Shuswap areas are some of the most bubbly in the world and I don’t care what Schiff says. Vancouver at least has SOME industry like the odd paper mill and a port etc. The Okanagan has skiing and jet boats and some decent camping. Other than that it’s a shit hole. 1/2 million for a house in these areas is absurd to the extreme.
April 11th, 2009 at 1:13 pm
Anyone watching the new condos at cooperage way area closely? The place seems dark at night (or am I imagining things), yet the number of for sale listings is surprisingly low in my opinion.
April 11th, 2009 at 1:39 pm
Housing market collapse great for the homeless
http://tinyurl.com/dkjsav
“Canada missed a big opportunity to add more affordable housing during the building boom of the last several years, he says, but the current economic crisis provides an unexpected silver lining for those on the edge.
Already, the cooling housing market is allowing renters with enough income to become homeowners, he says, and that in turn will take pressure off the rental market and eventually bring down prices.
“The collapse in the housing market is great for homeless people,” he says, adding that they are still vulnerable on the income end of things. “It will take awhile, but this is going to trickle down.”"
The quicker this happens the better. Hear that, all you scumbag realwhores and media shills, stop pumping the market and maybe we’ll finally end the homeless problem.
April 11th, 2009 at 2:42 pm
http://www.youtube.com/watch?v=3KvQR-h_ct0
Ian Watt is the realtor who was trying to sell the foreclosed unit at 1050 Burrard for signifigantly less than the next unit that was for sale and even then no one wanted it. No wonder he’s shouting at the camera while driving around and talking about “affluent” people wanting to lose money by renting out their own properties?
April 11th, 2009 at 4:00 pm
Hi I’m a REALTOR in downtown Vancouver and I DON’T talk to piece of shit renters. So if you’re tired of being a downtrodden RENTER and want to live the high life like me then call me. If you want to STAY a RENTER than continue to post to this piece of CRAP blog.
April 11th, 2009 at 4:46 pm
#57 How charming…you have such a way with words. Thanks for your contribution.
April 11th, 2009 at 4:58 pm
I’m looking to lose over $2,000 per month of after tax income and can’t wait to pay an assessment so that my realto “professional” can earn $24,000 in commission.
Now who can figure out what the present value and future value of $720,000 lost over 25 years is??
Oh and how about the nominal prices for that troll who keeps using nominal as a diversion also what will the inflation adjusted total be?
Presume this investor earns $61k per year.. A loss of $3k of gross income every month? After tax that’s $49k per year and a whopping $4,100 per month.
So with that $1,100 left over live the good life of an owner.
April 11th, 2009 at 5:06 pm
I had no idea that Ian Watt was that much of a knob. Wow, I am blown away by that clip. Is that supposed to be good for his business?
April 11th, 2009 at 5:50 pm
“The Vancouver Sun newspaper says “Ian Watt is the star of his own business video, transforming his blog into a live show in which he tours Vancouver dispensing advice, hitting real estate hot buttons, winning over fans and enraging critics.” Click here to enjoy the show! ”
April 11th, 2009 at 6:52 pm
the ever profound Peter Simpson weighs in:
http://tinyurl.com/crywhw
I watched the TV news recently, and sat through report after report of – wait for it – positive news!
World leaders were actually getting along, financial markets were improving, weather was predicted to be warm and sunny, there were segments on feel-good human accomplishments, the spectacular new convention centre was poised to welcome the world to our wonderful region, the Canucks were playoff-bound, and housing sales and prices strengthened from the previous month.
Goodness gracious, I can’t remember the last time I experienced that many consecutive doses of pick-me-up tonic in one sitting. Even members of the news team were having a great time kibitzing.
So, this column contains nothing but positive housing-related information, particularly since April is National New Homes Month across North America, a time to consider the advantages of owning a new home.
April 11th, 2009 at 7:50 pm
Patiently Waiting:
“The collapse in the housing market is great for homeless people,”
Homelessness has nothing to do with the housing market. Homelessness has increased steadily over the past decades during both the ups and downs of RE cycles. I will also note that real rents have decreased steadily over the same period. There are lots of people working for minimum wage and less who have a place to live. That is because they have the competence and social support to arrange some sort of accommodation that they can afford. Note also that there is very little homelessness among people of Asian origin, due to the high levels of support within their communities. They may live several to a room, but they do live somewhere.
The root cause of homelessness is lack of social support for people with mental health problems, broadly defined – mental illness, personality disorders, personal crises, drug addiction. To associate homelessness with the RE market is to try to excuse such lack of support. People who are homeless today would still be homeless even if rents got substantially cheaper.
April 11th, 2009 at 8:07 pm
Homelessness/Real Estate/Boom Market/ Bust Market/East Side/ West Side/ Olympics?
These people will always be a dredge/takers/give me more NOW or else!
Not sure how/TO deal with these people-you cannot give these people enough, problem, what do you do?
Understandable, these are human beings in a bad situation!
Their situations will never END!
THIS IS A MAJOR PSYCHOLOGICAL PROBLEM FOR CITY HALL!
These people will %$#^everything if given the chance.
Big Dilema for Making Vancouver Look Good!
I may sound like a Capitalist BUT What do/can you do?
Any Gov’t can only give so much!
April 11th, 2009 at 8:24 pm
patriotz,
The lack of social support is true, however the removal of affordable housing over the last few years has added fuel to fire. Low rent housing has often been replaced by expensive condos.
Did this social support exist back when there were few homeless on Vancouver streets? Yes, de-institutionalization happened, but that only explains the minority of homeless who are severely mentally ill.
There is also a significant part of the homeless population that works. If you can work, you have the ability to have a roof over your head if its affordable. If we had many more habitable apartments under $500/month, we would have a lot less homeless.
High land and construction prices also make it more expensive for governments to provide social housing (if we could finally get the political will to do so).
April 11th, 2009 at 8:42 pm
continue from previous post:
All the gentrification that occurred during the bubble displaced low-income, marginal populations. In traditionally low-income neighbourhoods, old shabby apartments that nonetheless had low rent were bought by speculators. The condos were then “fixed up” and sold into the frenzy. The stuck buyer will now try to squeeze every last bit of rent of the “investment” (probably by renting to groups of drug dealers instead of regular poor people).
For marginal people just keeping a roof over their head, any disruption of their lives can lead to a downward spiral. This bubble has been all about disruption of low income areas. During the bubble, every neighbourhood, even the most sketchy, is suddenly edgy, up-and-coming, the new hot yet still affordable district, the next freakin Yaletown.
The poor have to live somewhere.
April 11th, 2009 at 9:06 pm
Patiently Waiting: City governments have land they can use for social housing. The problem is they decided to sell it to the highest bidder and tried to get the social housing for free. They made the choice and the free lunch backfired.
The gentrification we have seen is mostly illusory so while it might put a temporary crimp on housing the gentrification trend now looks set to reverse. Any guess which buildings will be housing the city’s poorest?
April 11th, 2009 at 9:33 pm
Oh you mean the Millenium thing. True about that. But that is one specific case. Overall, I think high land (and construction) prices do limit social housing options. Buying those old hotels was done at a frightful price and so was the renos.
The reverse-gentrification process will come quickly thanks to the recession. I live in an “edgy” area. They just built a 1.2 million dollar McMansion across the street. In this hood? There are several like it around this area of Coquitlam just rotting on the MLS. If someone has a million bucks to throw around, it won’t be in a crappy part of Maillardville. How long can these McMansions sit empty before they attract the non-paying kinds of tenants?
In the suburbs, watch all the developments in New West to see new ghettos emerge. Copperstone and Victoria Hill come to mind. Same for Cora in Coquitlam.
April 11th, 2009 at 9:44 pm
Speaking of Victoria Hill, ONNI is trying to weasel out of its agreement to build an pedestrian overpass over McBride:
http://tinyurl.com/cm6xvu
ONNI must really be short on funds because this is not making them popular with local politicians.
Without easy, safe access to Queens Park and other amenities on the other side of McBride the whole Victoria Hill development will eventually become an isolated slum. There is simply no way to cross safely in that area without the overpass. There has already been a fatal accident with two dead when a motorcyclist hit a teen running across McBride.
April 11th, 2009 at 10:35 pm
patriotz:
#63 patriotz, rents getting substabtially cheaper is saying it mildy. Don’t most welfare cheques top out at $375 a month? If falling rents are going to be a boon to the homeless they have to fall like aa freakin stone from the current levels.
April 11th, 2009 at 11:42 pm
ragingbull:
That’s my point. We don’t have a general rental affordability problem, we have a problem with lack of support for people with special needs.
It’s not about the housing market.
April 12th, 2009 at 1:03 am
This SFH has 9 offers today
MLS®: V760060
For Sale: $500,000
http://www.mls.ca/PropertyDeta.....ID=8147538
April 12th, 2009 at 2:20 am
“This SFH has 9 offers today”
So? Were any high enough to be accepted?
April 12th, 2009 at 3:00 am
Anonymous:
Jul 1, 2008 assessment is $541,000.
I would not call a listing price 8% below assessed a sign of a healthy market.
April 12th, 2009 at 7:25 am
MLS®: V760060
For Sale: $500,000
I attended that open house. Approximately 1400 SF up and 1300 SF down in fully suited basement. Decent house in a nice neighbourhood. Divorce situation where they wanted out now. Priced it below market and got a bidding war.
Smaller house on a smaller lot further up the hill priced $80,000 higher – just a small fraction of the traffic and I’m betting it got no offers.
There are buyers out there ready to wirte contracts today. The problem is most sellers aren’t willing to accept today’s market price.
April 12th, 2009 at 8:21 am
Thats the sad thing about what this bubble has done; people now think $500,000 for a house in Surrey is a good deal. Wake up! I would not buy more than $300,000 for a house in Surrey and any other like city.
April 12th, 2009 at 9:56 am
Re: Post # 76.
What a stupid statement. I totally agree that houses everywhere are overpriced and the correction is not nearly complete. But have you ever been to Panorama Ridge, Crescent Beach, Morgan Creek etc.? Lots of million dollar plus homes, are you saying the market in the suburbs such as Surrey have dropped over 75 %. Attempt to make some realistic statements. No I do not live in Surrey,( NTIM)
April 12th, 2009 at 10:05 am
#77. Sorry about the generalization and vagueness of the post, perhaps I should have said typical neighbourhood in Surrey, i.e. Newton, Clayton, Clovedale, etc and typical house. This crash is top down, so those million dollar properties in the South Surrey neighbourhoods are falling and will fall by a larger percentage relative to those $500,000 homes in the ‘average joe’ neighbourhood of Surrey. Come to think of it, $300,000 for a typical house in a typical Surrey neighbourhood is still too high. Assuming median household income of $75,000 (pretty generous I think) then home value should be around $250,000 to $275,000.
April 12th, 2009 at 10:12 am
RennieWhereRU? said
“Thats the sad thing about what this bubble has done; people now think $500,000 for a house in Surrey is a good deal.”
House is actually in Coquitlam. I probably would have paid high 4′s for the place but with 20 pairs of shoes in the doorway and multiple agents there with their clients that obviously wasn’t going to happen. My guess is the low pricing strategy worked pretty well for the seller.
April 12th, 2009 at 10:28 am
Just hope that house is not in Maillardville! If so, I guess this crash has a hell of a lot longer to play out. Surprisingly, Coquitlam seems to be fairing better than most cities, just wonder how long it can hold on for. Most of the carnage has been in the condo market, but houses appear to be holding up relatively well.
April 12th, 2009 at 12:46 pm
superVancouverBearTurd:
Wrong. One person’s loss is another person’s gain. Money does not disappear from the system because of losses. The same amount of money is still in circulation…… plus $10 trillion and more coming.
April 12th, 2009 at 2:45 pm
It’s always the stupid who think they are much smarter than they are.
Accidentally stumbling on one small one bedroom the mediocre mortgage broker then goes on blogs and pretends to be even stupider than he is.
April 12th, 2009 at 2:52 pm
RennieWhereRU?:
#76 , well said, what kind of a retard would live in Surrey ( The Sewer) at all. Why not not just whack off on the john and flush your sperm down the toilet instead of brutalizing your children with having to grow up ( thrown up) in that shithole of shitholes. It’s a deadend community without peers. You have to really have shit for brains and be so covetous about this whole cheaper real estate thing to make a decision where Surrey ( The Sewer) becomes a viable option.
April 12th, 2009 at 3:24 pm
Post # 83 ragingbull
As George Bernard Shaw once stated never wrestle with a pig, you get dirty and besides the pig likes it.What a juvenile and disgusting statement. The relevancy of this forum has been lost. Have fun preaching to the choir.
April 12th, 2009 at 3:54 pm
not paranoid:
In the immortal words of Gregg Halsey-Brandt ( ex-mayor of Richmond)
” Living in Richmond is never having to say you’re Surrey”.
The irrelevance of someone who trys to justify his existence in the Sewer ( surrey) is not lost on the knowlegable members of this forum. There are a plethora of reasons why The Sewer has earned it’s reputation as ‘loserville’. Surrey is synonomous with destitution and denial.
April 12th, 2009 at 4:19 pm
He strikes me as a coke-up frat boy. No way in hell I would hire that lunkhead to represent the biggest purchase of my life. Dude, where’s my commission?
April 12th, 2009 at 9:11 pm
Anonymous: “Wrong. One person’s loss is another person’s gain. Money does not disappear from the system because of losses.”
Actually, money IS destroyed by
a) someone repaying their debt to a charter bank or
b) someone defaulting on their debt at a charter bank
Not all loans being repaid or defaulted result in money supply contraction but a large portion do.
April 12th, 2009 at 10:33 pm
Anyone feeling smug about the security of their job might want to look at the economy chart on
http://fishyre.blogspot.com
April 13th, 2009 at 12:28 am
jesse:
Actually, money IS destroyed by
a) someone repaying their debt to a charter bank
Yes but where does that money come from? Someone else’s bank account, i.e. I sell some stocks to pay off my debt to the bank, the money comes from the buyer’s bank account. Or I pay off a debt with my earnings, the money comes from my employer’s bank account.
Or to make it really simple, if I owe the bank 10K, and my dad writes me a cheque for 10K to pay it off.
If someone repaying their debt to a bank destroys money, a bank repaying its debt to someone – i.e. someone taking money out of a bank account – has to create money. It evens out.
Actually people taking money out of a bank (which is the bank paying off its debts, not the other way around), and hiding the cash at home, i.e. a run on the banks – decreases the money supply. I think everyone understands that.
And someone paying off a debt to a bank with cash results in an increase in money supply because that cash increases the bank’s reserves which increases the amount of money it can lend out. Functionally that is no different from someone with no debt to the bank making a cash deposit.
Defaulted debts do result in a contraction in the money supply because they decrease the bank’s reserves.
April 13th, 2009 at 10:12 am
If someone has the cash already and pays off their loan to their bank, the money which was created to make the loan in the first place has been unwound and destroyed (“loan money is destroyed”). The banks reserves have increased so potentially they might have the ability to lend out more but might not if they are in dire straits.
If someone takes the money out of another bank account to repay the loan, it reduces that banks reserves, and hence its lending ceiling, so I’m not sure if it evens out as you say.
April 13th, 2009 at 11:26 am
We’re #1, we’re #1
“For months into the economic downturn, Gordon Campbell told British Columbians not to worry. He had no idea what was going on for working families in the province. He responded slowly, and even today he stands alone among western leaders in calling for tax increases and program cuts,” Ralston said.
B.C. job losses largest in the country
‘A lot of hurt out there’
Statistics Canada reports 16,000 B.C. jobs were lost in construction last month, 8,500 in real estate and finance and 6,600 in manufacturing. (Sectors like transportation and food services saw increases, bringing total losses to under 23,000.)
The province has lost a total of 69,000 jobs since October and 73,000 jobs over the past 12 months.
http://www.theprovince.com/bus.....story.html
This is great news for the real estate bulls and the whores who love and support them….not
April 13th, 2009 at 12:04 pm
“And someone paying off a debt to a bank with cash results in an increase in money supply because that cash increases the bank’s reserves which increases the amount of money it can lend out.”
An increase in potential money supply. The reserves allow loans to be made; whether they are actually made is another story. When a loan is re-paid, another is not always issued.
April 13th, 2009 at 2:24 pm
Some predictions :
1) Stock market will rally sometime in the next 10 years
2) House prices will go down in the next twenty years and up again too
3) Oil will go up in the next 30-40 years
4) My books will continue to sell well
5) Don’t take my advice, use a professional financial advisor just like I do
6) Buy Nortel stock while it’s cheap, you won’t regret it
7) Vote for me!
April 13th, 2009 at 2:59 pm
And so it begins. The Option Arm and Alt-A mortgages we have talked about are now starting to reset and are forecast to make the sub-prime crisis look like a drop in the bucket. Anyone who thought it was coming to an end was just deluded.
“Besides layoffs, salary reductions and other recessionary factors, many suburban homeowners are watching their adjustable rate Alt-A mortgages — which are between prime and subprime mortgages in interest rates and risk for the bank — reset with higher payments.
That is forcing some families who owe more on their homes than they are worth to walk away from their property, sell at a loss or face foreclosure. A growing number of owners are rushing toward the brink because home values have fallen so precipitously in recent months: Local prices have, on average, fallen to levels not seen since the mid-1990s. ”
http://www.detnews.com/article.....ages+reset
April 13th, 2009 at 4:17 pm
The plight of the downsizers: Record number of middle classes desperate to sell homes
By Olinka Koster
Last updated at 11:40 PM on 13th April 2009
Comments (0) Add to My Stories
Record numbers of middle-class homeowners are trying desperately to sell and move to smaller properties.
As a ‘white-collar recession’ begins to bite deeply, new figures show a sharp jump in families looking for a quick sale on houses worth £500,000 or more.
http://www.dailymail.co.uk/new.....homes.html
April 13th, 2009 at 6:30 pm
I picked this comment off another blog and it got me thinking about the old ‘six degrees of separation’ idea. If evryone knows somebody in a position where they are underwater or overextended then think about how many clenched sphincters there really are out there. This may explain why the number of ‘specuvestors’ inventory that was purchased over the past two years is vacant and only slowly coming into the rental market.
My guess is that these people are still borrowing to keep current on payments, using rental payments to partially cover the monthly payments and using the last savings they have have built up due to using credit to cover 100% of the purchase. How long can it take to bleed them dry? Obviously a job loss will blow anyone out of the game, but I think the low intrest rates are keeping a huge number of people from getting blown out. It’s a very temporary situation, inflation is raging, the government is going to have to act at some point. Are many specuvestors just 1 or 2 basis points away from disaster.
”
I have a friend who lives in the Mission and used a HELOC as a downpayment to buy several condos. He has to subsidize his condos because the rent doesn’t cover the mortgage. He did this because he was relying on the annual price increase to guarantee a good return on his investment when he decided to sell. Now he can’t sell because the condo’s are worth less than what he owes, and if the value of his own home continues to drop he could wind up owing more on his HELOC than his home is worth. So he has the potential to go from “riches to rags” virtually overnight. Obviously he made some very foolish decisions and is the author of his own misfortune. I’m not defending his behaviour. But when people ask how a massive drop in prices could affect some, my friend is a good example. Because I’m willing to bet there are hundreds more just like him out there.”
April 13th, 2009 at 6:41 pm
What happening in Spain is eerily similar to what is happening here, almost WORD for WORD, uncanny. Funny how ‘Bulllshit’ translates into every language.
Big business leaders in Spain are stepping up their demands for labour reforms following the crash of regional savings bank Caja Castilla la Mancha, the first since 1993. After attempts to coordinate a buyout failed, the Spanish government was forced to inject €3 billion ($4 billion) into the bank to plug a “hole” in its finances and provide €9 billion ($12 billion) in loan guarantees.
The bailout has destroyed the myth that Spain’s banking system was “immune” from the global financial crisis. According to economics professor Antoni Espasa at Madrid’s Carlos III University, “The Spanish economy is in for a ferocious fall… It’s going to suffer more than Europe and take longer to recover.”
Dominic Bryant, Spain expert at BNP Paribas added, “The economy is in dire straits… The adjustment will be enormous.”
When the economic crisis first broke José Luis Zapatero’s Socialist Workers Party (PSOE) government boasted that the country’s large budget surplus and tough regulations and controls on financial transactions would allow the country to resist the worst of the global crisis. This nationalist chimera has been burst. This month, the Economist warned, “Back in September Mr Zapatero had expressed his confidence that the downturn would bottom out fairly quickly, helped by ‘perhaps the most robust financial system in the world’. The recent rush of policy action would suggest that the outlook is now not quite so rosy.”
Since the beginning of this year one million workers have lost their jobs in Spain, bringing the number of those officially unemployed to nearly 3.5 million. The country’s second-largest bank, BBVA, issued a study recently saying that unemployment will rise to 4.1 million by the end of this year and hit 4.5 million in 2010.
Spain’s auto industry, which employs 350,000 is in a particularly desperate condition. Whereas Nissan’s production world-wide fell by 54 percent “year-on-year,” in Spain it dropped by a staggering 90 percent. The drive to cut costs and increase efficiencies in what one government minister described as the “export lungs” of the economy has relied almost entirely on the trade unions. At Nissan the trade unions have agreed to slash 1,680 jobs at its plants in Barcelona.
Last week, the Associated Press carried a report on the situation facing construction worker Antonio Montoya, who until recently “could afford two cars and a nice duplex for his family of six, with a sunny patio and pet canaries singing away. Spanish real estate was booming, jobs were abundant, and as Montoya would drive past the unemployment office, he felt like he was gazing at another planet. ‘I would say to myself, I’d never be in that situation.’
Now Montoya has been forced to go to that same office, “catching a bus to save on gasoline, and joins the sullen, ever-growing line. He sniffs out job offers, signs for his 750-euro ($970) monthly benefit and goes back home, often to meals of leftovers. In disgust Montoya states “Imagine now, here I am at age 54, without a job… I don’t know how long I will be able to hold on.”
http://www.globalresearch.ca/i.....;aid=13056
April 13th, 2009 at 6:48 pm
helltopay:
Sellers who can afford to seem to be waiting it out, hoping for better news – which just won’t be coming any time soon.
April 13th, 2009 at 7:04 pm
Oh well, easy come, easy go.
That is why I am so wary when then put a nice piece of cheese on these complicated serving platters (mouse traps).
Too good to be true, no free cheese bits out there.
April 13th, 2009 at 7:12 pm
helltopay:
But when people ask how a massive drop in prices could affect some, my friend is a good example.
It is your friend and people like him who were directly responsible for the massive rise in prices in the first place, so why should anyone feel sorry for them?
April 13th, 2009 at 9:20 pm
Canada’s Money Supply: http://www.bankofcanada.ca/en/.....bg-m2.html
“Commercial banks and other financial institutions provide the greater part of assets used as money through loans made to individuals and businesses. In that sense, financial institutions are creating money.”
Or, to put the shoe on the other foot, borrowers create money when they take out a loan, use their line of credit or credit card. And then destroy money (supply) when they pay off those loans.
April 13th, 2009 at 9:37 pm
The way borrowers create money has been explained to me like this:
My parents and aunts and uncles save some of their money and deposit it in the local credit union. All together, they deposit 10,000. that is the base money supply. I use my credit card to buy a cheap flight to Mexico. The credit union transfers $400 to the bank account of the airline. The credit union now has 9600 in cash plus 400 in debt owed to it. All counts as “money” assets. The airlines bank has 400. Total money supply $10,400. By going to Mexico, I have created money.
When I get back, I get a job with the airline unloading luggage. They pay me $400 from their bank account. I pay that back to the credit union. Now the credit union has $10,000 cash again, the airlines bank has $0. Total money supply is $10,000 again. By unloading luggage, I have destroyed money.
April 13th, 2009 at 9:58 pm
asp:
Your fallacy is in assuming that the credit union has a bag of money sitting around that it loans out in drips and drabs to people like you.
In fact the credit union loans out all its money all the time, subject to reserve requirements. If it hadn’t loaned the money to you it would have loaned the money to someone else. That’s what the bond markets all are about. All the money loaned out, all the time.
April 13th, 2009 at 10:38 pm
I was just trying to illustrate in an extremely simplified example how money is destroyed and created by borrowers. Of course, there are thousands of credit unions and other financial institutions involved, and money is being created and destroyed thousands of times per day.
During this little credit crisis, is the money supply shrinking because less borrowers are maxing out their lines of credit? Are we then in period when money is being destroyed faster then it is being being created?
April 13th, 2009 at 11:14 pm
asp:
During this little credit crisis, is the money supply shrinking because less borrowers are maxing out their lines of credit?
NO, because all the money (apart from reserves) is loaned out all the time, as I have already said. If it’s not loaned out to someone’s LOC it’s loaned out to someone else. The banks are not sitting on big bags of money.
Isn’t it self-evident that if banks are willing to pay x% interest on deposits, they must be lending the money out to somebody?
Money supply is contracting because of loan losses, which reduce bank reserves, which reduce the amount of money they can lend out.
April 14th, 2009 at 3:51 am
Anyone know what will happen to Global News if Canwest seeks bankruptcy protection?