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Friday Free For All!

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It’s Friday!  Let’s do our end of the week news round up and open-topic discussion.  Here are a few stories I’ve noticed lately:

–Vancouver house market jumps in June
–Americans now saving more than Canadians
–First time buyers can handle rates up to 4%
–Canadians falling behind on credit payments
–Province headline still says Van prices up 16%
–Housing recovery expected to be tepid
–Recession about to hit BC businesses?
–US Jobless rate hits 26 year high
–Manhattan home prices plunge
–California runs out of money
–Air Canada union threatens olympic strike
–Canadian jobless benefits below average
–Wealth in stocks, not real estate, key to consumer spending

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

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observer

patriotzed: It's even worst than that. A guy with 5 drunk driving convictions and several accidents would be put in jail but the guy who ruins the economy by using our currency to feed the RE bubble gets further encouragement from the government and banks.

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patriotzed

observer:

This is yet another indication that CMHC does not provide insurance in the true sense at all. CHMC charges the same premiums everywhere in Canada, all the time. It's like an auto insurer charging the same premiums to a guy with 5 drunk driving convictions and several major accidents and a little old lady (and before someone gets smart, no ICBC does not charge these people the same).

CMHC's de facto mandate today is simply to pump as much capital into the RE industry as possible. Go to their website and look at their board of directors and you'll see why this is no surprise.

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observer

patriotzed: If the CMHC were smart, they would increase their premiums for BC properties due to the bubble risk, just like bad drivers need to pay more for their car insurance.

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Anonymous

#101 this is a blog about condos

condo means shared ownership, which means neighbours regardless of whether you rent or own. thanks for trolling

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Vancondobear

Somewhat unrelated…but I was in the lovely vacation-y area of Semiahmoo this weekend. There seemed to be a lot of for sale signage…

So I went to Trulia. There are a total of 657 residences for sale. Then I checked the census and the Blaine area constitutes 1496 in total households. 657 out of 1496 – 44% !! WOW.

Guess the second home thing for Seattlelites and Vancouverites is off. Possibly some good summer rentals to be had! Good for me so I can get out of my half a mill box in the sky.

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/dev/null

I'd rather buy when rates are at 10% than at 3%. The prices will drop to keep the monthly payment in the same range and there is less chance of rates doubling over the course of the loan.

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Van Man not asian

Word to all you over educated underpaid vancouver rental people, from a so called blogg trogg. Does it make you'all feel better to cut down the city you live in and call home. I'm sure any of you could afford to buy a home in any other city in Canada! Have you ever been invited to a barbeque in Van with the outdoor speakers blasting good tunes, hottub/pool maybe,neighbors are guests, well behaved adult social gathering. Then you go home to your stinky,smokey/curry/noisey apt, that is a $great deal? C'mon, get real! If you could afford to buy a detached home in The Lower Mainland, without being financially stretched, who wouldn't. LIFE IS TOO SHORT TO LIVE IN A STINKY RENTAL APT/CONDO LISTENING TO YOUR NEIGHBORS NASTY NOISES! Yes, waiting for RE prices to come down in Van is a… Read more »

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rubberduckie

NLL – I live in one of the primo locations. I've lived all over the city and I know what I like.

Most of our friends agree that although it's smallish and old, our rental has some charm and we've done a nice job. You know who practically insulted it outright? Our realtor. He said "I can't believe at your age you would sell your lovely townhouse and live like students." This same realtor would probably be singing the praises of this house's stained glass etc. if we'd bought it for $1M!!

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Anonymous

I just came across this and had to laugh. I live about half a block away from this listing in a large one bedroom apartment. I rent for $780 a month. Even if someone had this place paid off, their maintenance and tax every month would be about $558 a month, plus any other expenses. Granted it's a bigger, nicer place than mine, but $555,000?

http://www.6717000.com/mls/V757491-1404-1111-haro…

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patriotzed

observer: Exactly how would CMHC handle a situation (what would happen to bond holders, bond prices, yields) where widespread defaults happen. CMHC is a Crown corporation and its obligations carry a Crown guarantee, no ifs, ands, or buts. If CMHC got into a position where it was unable to pay its bondholders due to mortgage defaults the GoC could advance it the funds to do so, or CMHC could simply sell more bonds on the open market. The GoC could either lend the money or grant it (purchasing equity in effect). The BoC could also purchase CMHC debt but cannot buy equity. If CMHC were lent the money either by the GoC, BoC, or the bond market it would have to recover it though higher premiums which would be just desserts IMHO. There is no doubt CMHC will suffer big… Read more »

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observer

Stu: Sounds to me more like an immigrant rip off than immigrant stimulus.

Anyways, it isn't clear to me that Vancouver will be able to continue to grow in population if it doesn't have a meaningful economy to support it. Having the economy based on housing people and swapping RE isn't enough.

It could go the route of a resort city but then eventually the population would plateau in that case.

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No Longer Looking

rubberduckie,

We had to give a little on location to find places like this. Our rent would get us a rathole in Kits/West End/The Drive.

In our previous place we had a Tenant From Hell upstairs. We're so glad we left.

This is a great time to find a better place. Lots of good stuff is coming on the market after being foolishly abandoned by FTBs.

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Vancondobear

Boombust:

You said your parents bought a new house in Coquitlam in 1966 for $16,250.

To put that in perspective, the average income in the US for 1966 was $6,900. Sorry couldn't find Canada for that year but prob not far off of that.

So that NEW house cost approx 2.4x avg income.

Try finding that these days.

Declining standard of living…

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Stu

Listen son, the Japs don't do immigration like we do here. The Shinto spirit must be preserved at the expense of any immigrant stimulis. If it was the same here Coquitlam would still be half bush.

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observer

LordHuggington: The prolonged low interest rates in Japan didn't save the housing market there. Actually, if you look at the graph of the Japanese housing prices, it's pretty astounding.

http://en.wikipedia.org/wiki/File:EconomistHomePr…

It goes to show that you can't have sustained growth in house prices over long periods of time, so eventually the thing collapses. Not even low interest rates can keep it up. And if you think the old adage that there is only so much land in Vancouver, you certainly cannot deny the adage should apply to Japan, yet even that didn't save them.

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Disbelief

Renting sucks…. I know but how would you feel to face foreclosure. This will happen to many FTB's that have got in at the top. It's simple it is not the time to buy if you have to get a high ratio mortgage it is just too risky. If you have just sold and are looking to buy then that is very different. I have bought and sold many homes and will never put any less than 25% down. I will not pay the CHMC blood money they demand that is a waste of money. Just flush that right down the toilet. I like how Dave makes statements like the bank won't raise rates over the next 2 years. He is always badmouthing others on their opinions and that is pure oral sewage. The fact is none of us even… Read more »

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LordHuggington

So, does anyone want to take a stab at when we may see interest rates may start going up, or what we'll need to see happen to cause such a thing? I'm not a finance guy, so have no idea. I just hope we don't see the same thing here as has happened with interests rates in Japan, where they've been non-existent for ages. =(

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realpaul

Thats 15% not 155% BTW

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realpaul

Deliverator: #86, you can also buy individual second and third mortgages through a plethora of mortgage brokers and second tier lenders . You still have to do your homework and realise you either know people or not before going into this buisness. At todays rates I wouldn't touch one with a ten foot pole as you can get better returns in dividends with less risk. In the old days when 155 was the norm on a second it was not too bad as that was a few points above the T-Bill rate. As I said earlier I will be surprised to see the low interest charade last much longer and things will get rocky.The most recent wave of FTB's are barely working their mortgage at 5%. Anything above the and things are really going to fall apart. The Feds know… Read more »

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Bubble Lad

Apologies if anybody already posted this.

It’s from today’s Province, and concerns how that condo presale you “sold” to someone else, may not actually stay sold:

http://www.househunting.ca/homes-and-gardens/theprovince/story.html?id=5a95b7ea-5396-409f-b925-70e2325338e3

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rubberduckie

No Longer Looking – that's it, I'm moving to your house! 🙂

You lucked out, sounds like. And with a pet, no less. Lord knows the 10% of rentals that allow pets are typically the least desirable 10%. I think they say "It's already soaked in cat pee and dog smell so who cares."

When we viewed our house, the windows were all open and the house smelled great. The reality is it took 3 coats of urethane (put on by me) after we moved in to make it nice.

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Deliverator

Interesting. The article states these bonds are guaranteed by the government and my interpretation is this makes it different than a true mortgage bond. It would appear to be so. Assuming the mortgages backing the bonds are CHMC-insured, they would be de facto government-backed. At any rate, since the CMHC is federally-backed, the bonds they issue amount to federal government debt, though that debt does not appear on the books as such. In a mortgage back security MBS, if your mortgagees defaults, that would mean you don’t get any payments or even possibly your principal back, right? Typically, they are divided in tranches, with the highest rated (and therefore lowest-yielding) tranches being payed out first. Since default rates have been extremely low over the past 20-odd years, typically the principal has been safe in these instruments, and even in the… Read more »

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observer

Deliverator: Interesting. The article states these bonds are guaranteed by the government and my interpretation is this makes it different than a true mortgage bond. In a mortgage back security MBS, if your mortgagees defaults, that would mean you don't get any payments or even possibly your principal back, right? It appears from the article that the CMHC uses this money to fund residential mortgages but it is the CMHC who is responsible for maintaining the interest payments to bond holders. But of course one has to read the fine print. If that is the case, there is an added layer of security to these bonds. This essentially means the government has to bear the consequences if things go wrong, perhaps through higher debt servicing costs if CMHC gets into trouble, so in a sense we are back to square… Read more »

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Neptune

drugs “r” us:

You remember Miami in the 80's, I guess not. The cocain train eventually derailed.

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No Longer Looking

I live in a four-plex where a couple other tenants do serious landscaping (their choice). Nobody has built anything yet, but my deck is huge (a requirement for me). 🙂 I garden on my deck to my hearts delight and BBQ and let the cat out (on the deck). We hang art as we wish, and don't get too stressed about holes in the walls. I get to do all the extras while not worrying about boring basic maintenance and repairs. I did that stuff as a home owner, and didn't care for it. Extending a deck is outside of my skill-set, but I'm sure its fun. 8) Home owners rarely get to avoid cohabitants in Vancouver, sadly. And they will come to you for repairs and maintenance. And you have to jump through legal hoops to evict a Tenant… Read more »

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