Friday Free-for-all!

It’s time for the weekender open-topic discussion!  Here are a few stories I’ve noticed lately:

Jameson House wins court approval to restart project
Richmond is lower mainlands hottest market
Real estate is not a religion
Harper: Effects of recession beginning to ease
Carney: Recovery still has a long way to go
World Bank: Global economy to see steeper contraction
Does the federal funds rate affect mortgage rates?
USA: The landscaper is foreclosing
20 largest bankruptcies in history (graphic)

So what are you seeing out there?  Post your news links, thoughts and anecdotes here and have an excellent weekend!

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patriotzed
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patriotzed

Anonymous:

Now might be a great time to buy real estate, no one can say with certainty.

There is no credible scenario – whether inflationary, deflationary, or price stability, apart from selling to a greater fool – where buying Vancouver RE will give competitive returns to an investor.

You have the evidence of the world's biggest economy the other side of Zero Avenue. What more could anyone want?

Anonymous
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Anonymous

Patriotz, that is a dumb post. Inflation might skyrocket, the government might sabatoge the bond market like the 70's, a lot of variables. Now might be a great time to buy real estate, no one can say with certainty. You've sure been wrong a lot of years, don't bother with any crystal balling.

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[…] 15 June 2009 · No Comments Many suspect that ultra-low borrowing rates are continuing to levitate Vancouver’s RE market. This from a ‘horse’s mouth’, Anonymous on vancouvercondoinfo June 12th, 2009 at 7:09 pm – […]

patriotzed
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patriotzed

other ted:

Patriotz what about the term risk when used in context of risk/reward. I think Angryslav was right also because that was his context.

That was my context. The long-term total return of an asset class is positively correlated to its risk, because the more uncertain the returns, the more return rational investors will want.

Vancouver RE is no more risky today than it ever was. It's just ridiculously overpriced. That's something else entirely.

If anyone thinks I'm being pedantic, would you say it's "risky" to jump out of an airplane without a parachute? No, it's suicidal. Just like buying Vancouver RE at today's prices is financial suicide. Risk means undertaking an action with an uncertain outcome, not one with a virtual certainty of a negative outcome.

realpaul
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realpaul

patriotzed:

Risk also refers to 'capital risk', not just an interuption of earnings. Capital risk can account for any potential exposure to loss from currency fluctuation, opportunity cost and direct loss through malfeasance etc etc.

realpaul
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realpaul

The cynical douchebags who fronted the little retarded boy into the mayors chair are striking quickly to cash in. They have just proposed changing the by laws to allow 205 sq ft condos to be built. Think of it, instead of 300 condos in a tower you get 600 on the same land. Quite a windfall for the douchebags. Who sees through this cash grab? Not the little retarded boy in the mayors chair, thats for sure. Instead of letting the market do it's work and bring the costs down, they instead propose another way to make it all seem more 'affordable'. You people better not think of having children or they'll be sleeping on top of the toilet tank.

exx
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exx

Leaky condo concerns cropping up in post-2000 condos VANCOUVER (NEWS1130) – The man who led an earlier fight against Vancouver's leaky condos has a warning for owners of recently built condos: Just because it was built after the year 2000, doesn't mean it's free of the problem. James Balderson with the Coalition of Leaky Condo Owners says they've started to get reports from homeowners in condos built after 2000. In many cases, balconies are needing to replaced, among other projects…but the existing warranties are running out. Balderson says the current leaky condo warning period that ranges between 1982 to 1999 isn't realistic. "I think the real warning period is for condos converted or built after 1970 to the present day. We're hearing reports about the warranties that are supposed to be looking after everything, and disputes are arising regarding the… Read more »

betamax
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betamax

"You are not using the term “risk” correctly."

Risk means different things to different people in different contexts. No one likes a pedant.

other ted
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other ted

Patriotz what about the term risk when used in context of risk/reward. I think Angryslav was right also because that was his context.

Vansanity
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Vansanity

Soaring household debt threatens recovery: BoC http://www.bnn.ca/news/10115.html "But the risk posed by household balance sheets has grown, the Bank of Canada. The level of debt to income reached a record in the fourth quarter as real net worth dropped 6.7 percent from the same period a year ago, the central bank said. While stressing that the possibility of a mass bankruptcy is remote, the ability of Canadians to repay their bank loans has replaced frozen credit markets as the main fear factor among policy makers, the report said. "There has been a further deterioration in the financial position of the Canadian household sector as a result of the continued turmoil in financial markets, the deepening global recession, and worsening labour market conditions," the report said. "Nonetheless, in aggregate, the financial situation of Canadian households remains reasonably healthy." Canadians' household debt… Read more »

VanBanker
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VanBanker

"ursus Says:

June 14th, 2009 at 12:14 pm

I’m amazed that some poor FTBs just cannot see the big picture. How dumb does one have to be not to realise that those artificially low mort rates that interrupted our housing plunge are toast."

I know several people like this who got sucked into the market in the last few months b/c of the low rates. Crazy.

VanBanker
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VanBanker

Big news today: word on the street is that at least a quarter of the buyers at Quattro Phase 1 in Surrey are trying to walk away from presales. They all had 10% deposits.

oneangryslav
Member
oneangryslav

patriotzed: You're right; I was using the phrasing of the person to whom I was responding. Risk does mean uncertainty, and there's an intuitively obvious relationship between risk and rate of return.

patriotzed
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patriotzed

oneangryslav: the preponderance of evidence points to there being much more risk than reward purchasing Vancouver real estate now. You are not using the term "risk" correctly. Risk means uncertainty of earnings. The earnings from Vancouver RE, i.e. its rental value, are no more uncertain than they ever were. RE is far less risky than stocks (because corporate earnings are far more volatile than rents) which is why RE has historically returned much less than stocks. Or to put it another way, risk means uncertainty in evaluating the fundamental value of an asset, which is the present value of what an asset will return to you if you never sell it. Fundamental value for RE is not hard to evaluate. It's just that the market price for Vancouver RE today is way above fundamental value, to which the market price… Read more »

Anonymous
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Anonymous

Supraboy

Your mom's basement is not South America.

Supraboy
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Supraboy

You boys and girls are still crying over real estate prices?

It ain`t going any lower, that`s for sure. I`m in South America right now and when I come back in 2 months, let`s see if anything has changed.

jesse
Member

squeak: "Yes, banks, but, but, but that is NOT your money!"

It's somebody's money. Have any deposits at the bank? Where do you think those deposits end up?

other ted
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other ted

No longer looking good point about the sellers having to pay penalties. Does anyone know the penalty. I always believed it was 3 months interest. On garth turner's page he said it was all outstanding interest(I believe) that seems harsh.

Anonymous
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Anonymous

Is the housing bust about to take Manhattan?
http://www.reuters.com/article/ousivMolt/idUSTRE5

And yet the magical land of Vancouver is never gonna drop, mind you it is the 'best place on earth'.

drop baby drop

ursus
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ursus

Gawd, I wish I had some more properties to sell!

ursus
Guest
ursus

I'm amazed that some poor FTBs just cannot see the big picture. How dumb does one have to be not to realise that those artificially low mort rates that interrupted our housing plunge are toast.

Not only have the fundamentals not changed, but those freaky low rates have sucked in a whole new batch of greater fools that wont be around to affect future demand.

To think that the most overpriced real estate on the continent together with the worst global financial crisis most of us will ever see can be solved with a mere 15% correction is ludicrous.

Sure, some prequalified borrowers could send the market into one final frenzy in an effort to beat the clock, but that would only make the perfect storm a little more perfect.

No Longer Looking
Member
No Longer Looking

I was just reminded of something last night. Sellers who sell during a time of low interest rates will probably face interest rate penalties. If your mortgage is at 6% and the going rate is 4%, the bank will demand the penalty to make up for the loss in profits. This would cost sellers many tens of thousands of dollars. Some sellers will be shocked when this happens to them. Bye bye bubble bux.

Anonymous
Guest
Anonymous

"#79 strataman there is no 2-10-10 warranty anymore." I don't recall saying there was? I deal with warranties over the last 15 years, did you know there are/were strata's with 5-10-20 year warranties? IE the 20 is still in force. Most of my work involves the expired two year warranty, that's why I have a thriving business. Personally the set up for me is great. Sorry but I'm not so much Gloom and Doom as amazed how people think Granit Counter tops is important but never question why major developers got rid of the % year warranty in the last 10 years.Would you now pay twice as much for a new car with 1/2 as much warranty? I'm more into quality, you know if your buying a car you would base it on the seat covers and paint job whereas… Read more »

Anonymous
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Anonymous

#79 strataman there is no 2-10-10 warranty anymore.

Only 2-5-10 I know as much as you do about this topic.

Vansanity
Guest
Vansanity

Strataman: I have seen examples where the developer does a patch only for it to fail later. If an owner is not satisfied, they should notify their warranty. There is an extended 1 year Labour & Materials coverage extended on any repair by developer or warranty, fyi for owners. The warranty periods are as follows: 2 Year – Labour & Materials – including HVAC, plumbing, electrical etc. (within this period a 12 and 15 month warranty are also defined). 5 Year – Water penetration (building envelope), some warranties extend this to 10 years. 10 Year – Structural, only on new buildings not renos. On new developments the owners report all deficiencies to the developer and literally sign off on the repairs once satisfied with the repair. To me, this is a fair arrangement. When the developer fails, that's when the… Read more »