July 2009: First timer frenzy!
The Vancouver Sun is spreading the news: July sales in the Lower Mainland lept up. Prices in Vancouver and the Fraser Valley are still lower than they were a year ago, but a large number of first time buyers are said to be moving into the market:
Lured by the correction in home prices and low mortgage rates, first-timers are jumping into buy in numbers that are now rippling across the market as evidenced in July with record numbers of sales for the month in both Metro Vancouver and the Fraser Valley.
Proof that it’s different here? Or are these people looking forward to the same disappointment many in the US are experiencing?
Tsur Somerville, a real estate expert in the Sauder School of Business at the University of B.C. said there are signs of more stability in the overall economy, but it is difficult to see the pace of sales continuing at such peak levels.
“This is a very, very high level, and [long-term mortgage] interest rates have already started creeping up,” Somerville, director of the centre for urban economics and real estate at the Sauder School of Business said.
“It’s a wonderful, positive statement about people’s outlook for where things are going,” he added, “but it’s hard to put together the set of circumstances where sales of this level are sustainable and persistent.”
Tsur also says he doesn’t expect prices to turn around and plunge without a substantial change in rates.
Full article in The Sun.
August 8th, 2009 at 2:14 pm
This is hilarious! You Canadians are trying so so so hard to be like Americans…God knows why…I see a sh*tload of people being severely underwater in the coming years in BC….very sad.
To use myself as anecdotal evidence, I've been looking for work up in BC for over a year and half now. I'm down in So Cal. I have a master's in engineer…work shouldn't be too hard to find relatively speaking at least to other professions right? Wrong.
I make a quarter over 6 figures down here in LA….I'd be lucky to break 6 figures up in BC. How does that translate to buying a home in BC? Well..apparently BC homes are as expensive in most areas as in LA.
Having seen what the job market is like there, how much people get paid there in BC, and how they live (go out alot, spend money on food, etc), pay even more taxes than us down here, it's doubtful BC folk are any better off financially than we are down here. The median price in BC is greater than that of LA County…does that make sense when incomes in BC are lower, jobs are less, job losses are rising? Maybe it does to Franco with his kindergarten level of intelligence.
The same idiots who were outbidding each other out of fear and lack of brains are back at it. The RE industry has been relentless in pumping fear and reducing peoples’ logical choices down to meaningless levels….I mean…when was the last time anyone heard a Realtor actually tell a buyer or seller it makes sense to act rather than they better because they’ll miss an opportunity?
Couple that with the nonsense of “you must have a home” in order to feel like a human being….well…this mantra has been ongoing for a some time now…and it’s becoming ingrained in the way people think now.
August 7th, 2009 at 1:39 pm
"Next year this time is going to be ugly",sort of like Zombie uttering,while the Van RE keeps its healthy appreciation,which is one of the supporting pillar of our Great and Beautiful British Columbia.We are tired of negative and resentful moaning from ppls from another Province.
August 7th, 2009 at 1:41 am
Personally I'm glad the greater fools are rushing in and keeping the market propped up. If there was a real correction before the Olympics, there's a slim chance the visitors might actually want to buy here. Now they will leaving shaking their heads and thinking "what on earth are they smoking in that city? oh right….."
Next year this time is going to be ugly
August 7th, 2009 at 1:15 am
Franco is a douche….just ignore this idiot.
He should go and buy a property TODAY if he's got the balls and wants to put his money where his dumb mouth is.
The shit he says is so nnonsensical it hurts.
August 6th, 2009 at 11:24 pm
We should be hoping these deluded bulls keep buying for as long as possible.
Remember: the more people who buy at inflated prices, the fewer people who will be able to buy at reasonable prices.
Right?
August 6th, 2009 at 10:32 pm
My daughter was just dressing Kurt Cobain on Stardoll … anything must be possible!?!
August 6th, 2009 at 10:32 pm
From Garth's latest post:
In fact, a new study estimates that (are you sitting?), 48% of all mortgage holders in America will be under water by March. That’s 25 million households with mortgages larger than the total value of their homes.
This is not a rogue number. There were already 11 million families in negative equity by the end of 2008 and 15 million four months ago. So if housing prices drop another 14% (on top of the 30% the country has already experienced over four years), 25 million houses will be unsalable by their owners, many of whom will chose to walk.
(Sadly in Canada, walking is not an option. You’re still responsible for the mortgage amount, penalties and costs, even if you deposit the keys up your loan officer’s rear.)
Of these underwater households, 41% are expected to be ‘prime’ borrowers – Leave-it-to-Beavers who bought their homes with significant downpayments and have conventional mortgages. Half of those will owe an astounding 25% more than their houses are worth, making a sale virtually impossible.
And this: It’s estimatesd that within half a year 77% of borrowers in New York City will be in negative equity, 65% of mortgage-holders in Chicago and 93% in Fort Lauderdale.
There, but for the grace of God, go we?
==========
IMHO, once negative equity occurs here in Canada, and especially in this overleveraged environment, the tipping point will be reached, the floodgates will open, the collapse will feed upon itself and snowball.
August 6th, 2009 at 9:31 pm
It's just insane. I have a former co-worker who for years agreed with me about the housing market. Now, I hear through the grapevine she and her husband just put in offer in on a East Vancouver special (anyone wanna guess the price, $500k plus?) Um, did I mention that they are in their mid-50s? Immigrated to Canada about 15 years ago, both are professionals and never bought, always rented. Why now? Why, when one would *think* that retirement would be more of a consideration than racking up the debt (who wants to work until they're 80?) Their children are also in their early twenties-teens, so why the need for a house? I'm pretty sure they wouldn't have TOO much of a downpayment (though I suppose you never know) but given what I know, it seems unlikely.
All I can think of to say is…WTF???
August 6th, 2009 at 6:12 pm
Franco = Supraboy
August 6th, 2009 at 5:54 pm
Well if interest rates going up…eventually…don't kill this market I'm sure this new HST tax will pretty well kill any sort of commerce in BC. I would strongly urge everyone and I mean everyone in the province to write to their respective MLA to voice an opinion of this tax. This prov. govt has seen huge windfalls of tax with every property transfer (PPT) over the last 8 years, and they've pissed it away, the financial stewardship is abysmal. Save for a rainy day typical of the times. Get off your butts and send an e-mail or phone, write bug youe MLA. Google bcmlagov for email, phone etc.
Uncle Dog
August 6th, 2009 at 5:24 pm
Franco 31 "Internet stocks=House ownership come on Sir. go back to high school for econ 101 first."
ECON 101 is actually a university course. That tells me a lot about your level of education.
August 6th, 2009 at 4:51 pm
"48000 is a lot of money for you guys? My Chinese clients with modest household income 35000 to 55000 can pay it off in two yrs"
What a troll. Take a second and read what you wrote. Lol. You just discredited any anecdotal "information" or stories you have provided in the past, present, and in the future.
And don't even try to say that those incomes are based on each person of the HOUSEHOLD making 35-55k, or that the 35-55k is aftertax income.
I guess when you have an illegal grow op or human smuggling operation in effect you can throw 50k at your mortgage every two years if your entire household only makes 35k.
Hey why not, keep your legitimate income below the radar to reduce taxes, and max out your income from illegal operations. So that's how they do it….
August 6th, 2009 at 4:34 pm
They can pay off more than one years after-tax income in two years? Do they eat out of dumpsters and own nothing but hand-me-downs and real estate?
August 6th, 2009 at 4:30 pm
Internet stocks=House ownership come on Sir. go back to high school for econ 101 first.
August 6th, 2009 at 4:28 pm
48000 is a lot of money for you guys?
My Chinese clients with modest household income 35000 to 55000 can pay it off in two yrs.
August 6th, 2009 at 3:55 pm
Asian buyers:
Granted, it appears that many of the buyers are Asian, but that is not an endless supply. My guess is many of them have help from family /in-laws. 30 + something types driving $ 40,000+ vehicles and "owning" $ 400,000 + condos just doesn't add up. (I don't see this demographic owning SFH). tapping into family is not hgoing to sustain the economy….its a crutch, not a stand alone indicator. Watch the family feuds when the prices drop and they start to go underwater
Bulls versus Bears ?
Bulls require B.S. which is provided by other Bulls and thier ilk.
Bulls like to pick and chose their facts and figures, and if that fails, simply proclaim "RE never goes down", "buy now or forever be priced out" and other such mantra.
On the other hand:
Bears know history ,read history,(ie it repeats itself if and when allowed to) …..don't trust the experts, nor Finance ministers or B of C governors who are lying through their teeth.
Bear can see that the current low interest financing scams that were never in place in previous RE markets are the only thing propping the current RE market. That indictates that the "rich asian" market was long tapped out.
August 6th, 2009 at 2:51 pm
Franco: Franco I asked you if you could provide "the percentage" of homes being bought by Chinese (and by this, I mean residents/citizens of China) not Chinese-Canadians. "Most" is not an appropriate answer. And an anecdote is not data. As for your friend, congratulations to him. I hope that he's smart enough to understand that he did his buying and selling over the course of the largest real estate bubble in the history of humanity (that's not a hyperbolic statement, by the way).
I know friends who, in January 2000, considered themselves savvy investors because they had "made" (all unrealized gains, by the way) boatloads of money on Internet stocks. They didn't feel so savvy about a year later.
August 6th, 2009 at 2:39 pm
Franco,
Your friend must be doing well to be able to plow over $45,000 per year into a mortgage to pay it off in 4 years (2004-2008).
August 6th, 2009 at 2:10 pm
war between canada and iran? wtf?
and yes, it is a well-known fact that past performance = future performance. quick, go borrow some more money and buy more RE.
August 6th, 2009 at 2:06 pm
MR. oneangryslav
Most of those buyers are Chinese immigrants from China in early mid 90,early 2000 and newly arrived in past months.
Friend of mind who is penniless bought his first apt at North RD,PoCo in 2001 for 48 grands borrowed from in-laws,and sold it three yrs later for close to 70000.This smart guys again used the earned money as down payment bought a new single house along Boyd ST, Rich,for 250000. Amazingly again, he sold it in 2008 yr ago for 420000 . Once again,after he had paid off the mortgage and the money borrowed from in-laws few yr back ,he used the earned amount as down payment for a 5 bedrooms 12 yrs old single house at Wilson court Rich for 580000 again and now the house is assessed at 638000.So my friend, that is a ,successful story of home buyers in the past 10 yrs and beyond. it is not a grain of salt but a daily occurrence happened among thousand of homeowners in Van, no matter what racial background,gender,and age they affiliate to.What you guys are so stubborn with? a total collapse of Van RE?
I can tell you that no a chance it will be feasible in your lifespan unless there is a N WAR between Iran and Canada.
As long as Chinese population is the dominant element in Great Van,there is not a chance for major correction in Van RE although there may be tiny adjustment but once the hiccup is over, Van RE will be hot item again,just like what is happening now.If you were already priced out,why not move to Florida USA.
August 6th, 2009 at 1:53 pm
Franco
I rent in Shaughnessy – have gardeners, a pool etc and I'm paying 50 cents on the dollar if you take (and you should) the full price my house would sell for on a cost of capital basis. I can easily prove (b4 large capital expenses ie repairs) that it puts 75k a year in my pocket before depreciaton/appreciation.
Please explain why I should buy? If 75k is about 3.5% of the house and inflation is 2% then the house has to appreciate at least 5.5% for me to break even …
August 6th, 2009 at 1:33 pm
With the exception of Dave, why is it that every real estate "bull" cannot string together two coherent sentences, or write anything that resembles proper syntax and grammar?
August 6th, 2009 at 1:27 pm
I can see China from my window.
And what I see there is a couple of big freaking bubbles just itching to go full Hindenburg. Oh, the humanity!
August 6th, 2009 at 1:03 pm
I have a feeling .. that those that are holding off buing anything real estate now are the down to earth frugal people and not impressed by bling and asks who is beind the curtain. I question and am not impressed by bling .
And as a frugal mousie I am also hell bent on that I am not paying more than 650 in rent, no matter what, I will even go as far as sharing or relocating in order to stick to my principle. And relocation is not moving far out into the subs (unless close to work)but a reasonalble town or province. Still my income, and nobody elses either has gone up substantially, so paying more rent is not making sense.
So those those that are wishing and hoping for a nice tennants in their basements or condos and hoping for 800 +/month are going to find those few and far in between.
Not going to subsidize madness and wishing thinking, my name is not Money Penny Fairy, it's Modest Mousie.
As always, the one hand must wash the other.
Ok, nuf squeaking for now. Squeaky is putting the sailor hat on now..going on the ferry, special ferry fare today. Ahoy!
August 6th, 2009 at 1:03 pm
Franco: Ok, Franco. For now I consider you to be a sincere, but brainless, bull. You can change my mind (and the minds of others, possibly) by answering this question: what percentage of sales this spring have been from buyers living in China?
Thank you,
OAS
August 6th, 2009 at 12:59 pm
Bulls will believe in any nonsensical theory. If you don't believe me you should tune in to Chippy's blog they are sucking each others dicks over there. Dave and Chippy are singing the recessions over and happy times are here again. This comes from the always brilliant finance minister. At least Bear theory comes from some sense of logic not "Were different"- Such a logical statement. Take what a Bull says with a grain of salt. They are already in and want everyone to buy so they can realise more growth (on paper anyways).
August 6th, 2009 at 12:50 pm
Franco
"biased"
tiny rental room? err, I rent a 4 bedroom house in kits.
yes, we are very close to china. merely a short drive away.
and yes, invincibility often means a 10% decline.
August 6th, 2009 at 12:35 pm
Bears are very bias and in consistent denial of reality thrown on their face. Whenever there is any honest view contrary to their deliberate and bias resentment and treacherous misinformation,they would explode in rage. Face the reality and come out from your tiny little rental room to have some fresh air;anyone who bought house in the past 10,is very happy and secured for their future.Van RE,specially single unit,are unique because our close approximate close location to China and its Chinese population, both factor would ensure Van RE's invincibility though there could be a 10% or little more adjustment but after the negligible hiccup,Van RE will for sure be back to its upward climb.
August 6th, 2009 at 12:32 pm
From the article:
"B.C.’s employment picture, especially in Vancouver, has shown signs of stabilizing with the addition of more full-time jobs in recent months after a period of losses, said Carol Frketich, regional economist for Canada Mortgage and Housing Corp"
OK, lets see what other fields of life besides mortgages and employment the CMHC "experts" (read "trolls") can offer their "pro" ideas on:
- Health care
- Family counseling
- Babysitting
- Weather forecast
- Waste management
- Bullsh**ing
LOL! I think the last one is the one where they excel though.
August 6th, 2009 at 12:03 pm
indeed. will stop projecting my own situation onto others.
in fact, I think I'll just go to the beach and wait until this madness subsides. What? Where did my heatwave go?
August 6th, 2009 at 11:53 am
read on:
plus this assumes a 90,000 down payment or around 25 percent. Not sure too many have amount, around 25,000 is more realistic, when talking of first timers that is.
August 6th, 2009 at 11:52 am
I can guarantee you that "oppourtunity cost" is not in the vocabulary of these FTBs. They also likely "know" that real estate only goes up and is the only true road to riches.
August 6th, 2009 at 11:49 am
People make strange decisions, I'm just glad they aren't making them for me.
August 6th, 2009 at 9:28 am
^^ onyl 1500 a month?
plus opportunity cost on the 100 k deposit, condo fees, maint., insurance, prop taxes, (downside equity risk), etc etc
August 6th, 2009 at 8:56 am
A new 2br in that area could rent for 1600 or more. If her mortgage is 275,000, payments on 5 year fixed 25 yr am would be ~1500. Go 30 years and risk the floating rate, and payments are ~1100. Obviously there is rate risk and opportunity cost, but I can see how people make these decisions in this low interest environment.
August 6th, 2009 at 8:48 am
http://www.bloomberg.com/apps/news?pid=20603037&a…
About half of U.S. mortgages seen underwater by 2011
August 6th, 2009 at 8:28 am
Hmm.. this seems familiar. In 2006 there were plenty of Real Estate agents in the US saying it was a buyers market and a great time for first time home buyers. I found this gem from Oct 2006 on a Sacramento realtors blog: Where is Chicken Little?
Now just in case you're wondering prices in Sacramento have dropped about 50%. Talk about a shtty leveraged investment! I guess they found chicken little.
August 6th, 2009 at 6:35 am
The article was a wild read. If anyone can explain how purchasing a two bedroom apartment for $365k can work out compared to comparable rents in that area, I would love to see it.
August 6th, 2009 at 3:18 am
These people are bat-shit insane! Seriously, who upon seeing the largest financial crisis in 80 years, decides to borrow 5-7x income on a 30-40 year term because the lowest interest rate possible makes it temporarily affordable? You would need incredible job security or a financial backstop. I think that huge numbers of them are going to go bust, and taxpayers are going to eat it courtesy of the CMHC. Hello Lehman Brothers! Lending gobs of money into the maw of a financial crisis. What do you expect?
August 5th, 2009 at 9:42 pm
oh yeah nutsters send up the rockets! only killer flu could slow
"the next leg up"
August 5th, 2009 at 9:12 pm
See, I told you so,now everything is back to normal now. The imaginary Van slump is all over now. However,you guys have to act faster otherwise bears will be priced out from Van and can only live in a cave somewhere in Yukon.
Stop whining,and work hard for you first house.
August 5th, 2009 at 9:03 pm
I remember back in school from time to time other kids would get a broken arm or leg and show up in a cast. Other kids would fight to sign the cast, doodle, draw artwork.
I also remember being just a tiny bit jealous of them for having the cast. Which is ridiculous, because a broken limb sounds pretty horrible and painful! But seeing them with the cast, getting all the attention, I wanted one.
I think home ownership is a bit like that.
August 5th, 2009 at 9:00 pm
I just spoke to a friend of mine who is a real estate agent (for the recored my only friend who is a real estate agent) and he said he is now busier than he has been for years and years (after just saying 4 months ago that is was the slowest he has ever seen it). For all you Bulls…I am not a bitter Bear and did buy a vacation home in January that was a very distressed sale….I just live in the world of reality. People who make under $150k per year (and not many in this town make more than this) are getting mortgages for $1MM so they can bid up tear down homes on the West side to $1.5MM that need a few hundred grand of renos. People that is a mortgage in many cases of 8x gross income when many large corporates these days are hoping to get 2.5 to 3.0x cash flow. Keep smoking the pipe people. This is not reality. I will enjoy my vacation home and continue to rent here in town for when you all default. Vancouver cannot be the only city in the world where real estate goes up when the whole world is going down. When you default I will buy up your wreckage. I am patient…this cannot last forever but it may last longer than it should as the CMHC continues to provide a securitization vehicle for all of the Canadian banks to stuff these subprime mortgages to. I have seen this movie before…it was called Subprime in the USA…only difference is that instead of banks using securities to securitize their junk – we skip the middle man and our government does it for us directly.
August 5th, 2009 at 8:52 pm
"There are none so blind that will not see!"
Blueskies congratulations you are at number one today that why you can't see anyone above you.
August 5th, 2009 at 8:46 pm
there are none so blind that will not see!