Vancouver Condo Info

Rising bond yields have pushed TD to raise some medium and long term mortage rates with more increases forecast:

Soaring bond yields have set the stage for a second round of interest rate hikes on residential mortgages in about a week.

After nudging rates higher on longer-term mortgages last Wednesday, Toronto-Dominion Bank yesterday raised borrowing costs on its five-year, fixed-rate loan by 40 basis points to 5.85 per cent, effective today.

Last week, TD and the other banks increased rates on five-year, fixed-rate mortgages by 20 basis points to 5.45 per cent.

While no major competitor had followed TD’s move by late yesterday, experts suggested higher rates are likely inevitable because banks are facing higher borrowing costs on the bond market. Banks tap the bond market to finance mortgages because they lend out more money than they attract through deposits.

So here are some questions for discussion: Mortgage rates are near an all-time low, which means you can still borrow money cheaply and local house prices have dropped more than 10% from their peak.  So is now a good time to buy?  What happens to prices when mortgage rates go up?  Are you saving for a higher down payment in an higher interest rate environment or jumping in now, potentially paying more but with a lower interest rate on the debt?  What about buying in non-local markets that have fallen closer to 50% off from their peak?

Here’s an odd jumble of news from today’s Vancouver Sun.  It looks like housing starts did a suprise rebound in May with more than expected increases in single family and multiple dwelling sectors.  The biggest jump was a 22% increase in Ontario, the smallest was actually the opposite of an increase.. A whaddyacallit? Oh yeah, a decrease.  BC housing starts dropped 5% and are now near record lows.  Are developers seeing tough times ahead, or have they over-reacted and are we going to run out of condos?

Meanwhile Vancouver has been named ‘the most livable city‘ by the Economist Intelligence Unit when it comes to the combination of health care, stability, culture and environment, education and infrastructure.  According to the poll, the main problem Vancouver faces is “petty crime and the availability of good-quality housing.”

Here’s someone who might disagree with that assesment and add ‘taxes’ to the list.  A BC realtor has been extradited from Mexico and charged with tax evasion after he filed claims of ‘no income’ for 2001 to 2004.  His argument to the court?  He claims his activities as a real estate agent were not taxable since they were conducted in his own capacity as a “natural person”.

Meanwhile, you better enjoy those stories of celebrity foreclosures while you can, because the OECD has just declared that the downturn has hit bottom in Canada.  Guess it’s a good thing we’ve got that big jump in National housing starts huh?

It’s the end of the work week again and that means it’s time to do our end of the week news roundup / open topic discussion.  Here are a few stories I’ve noticed lately:

-UBC condo buyer gets out of contract
-Bank of Canada warns on loonies rise
-Gen X kicking back at the cottage
-Personal bankruptcies up 36%
-US House prices tracking more adverse scenario
-US jobless rolls drop first time in 20 weeks
-7 Factors that led to economic crisis
-Geitner can’t sell house, decides to rent it out instead.

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

The Vancouver Sun is reporting that the housing market in the lower mainland has struck a balance point, with sales and price rebounding from their winter lows.

The decline of Lower Mainland real estate markets, which started with falling sales more than a year and saw prices drop as the global recession developed, levelled out in May.

Metro Vancouver recorded its best year-over-year sales increase in May since February 2008 with 3,524 sales reported through the Multiple Listing Service, 17 per cent higher than the 3,002 sales recorded in the same month a year ago.

The so-called benchmark price in Metro Vancouver, averaged across property types, hit $506,201 in May, which is still 11 per cent below the same month in 2008, but higher than the $484,211 recorded in January.

Metro Vancouver’s inventory of unsold homes in May stood at 13,641, a 16-per-cent decrease from a year ago.

At the risk of repetition, I’m just going to post one of our favorite charts from Sacramento Land(ing) showing their market going through the seasons over the last three years:

And here’s the up to date version they just posted:

So how do you all feel about your new ownership position in GM?  Stephen Harper refers to it as ‘regrettable but necessary‘.

The federal and Ontario governments’ contribution to the restructuring is set at $9.5 billion U.S., according to a joint statement Monday from the prime minister and U.S. President Barack Obama. For that, Canadian taxpayers will hold a 12 per cent equity stake and will also appoint one independent director to the company’s board.

Canadians could remain holders of that equity as long as 2018, with sales of the shares expected to occur within eight years of a stock offering in the new company.

One of the more interesting aspects of this saga for me is seeing how people think about stocks and money.  As I’ve said before I’m not a financial expert, but I know that buying up the ‘cheap’ shares of a company that is headed towards bankruptcy is a risky bet.  Browsing the Google finance message board it looks like this is not necessarily common knowledge.

The GM restructuring is already wreaking havoc on the real estate markets of some industry towns in Canada, but what about the larger implications?  How will this move help or hinder the Canadian economy at large, and what sort of impact will we see here in the lower mainland?