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Home Sales up 117%

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From the Vancouver Sun: Home sales this August were up 117% from last year.  Things were certainly booming again this summer, the Vancouver real estate market appears to defy all common sense.  Something in the water? A rush to beat the HST?  A huge underground economy?  Or are things just different here, this time?

“Canada’s housing market has taken its cue more from the Great Houdini than the bear (economist Noriel) Roubini, fully escaping from the clutches of a potentially lengthy, harsh downturn,” said BMO Capital Markets deputy chief economist Doug Porter.

“Record-low borrowing costs combined with the growing realization that the economic storm is passing have fuelled the remarkable turnaround. However, the gaudy sales growth will be tough to maintain now that prices are moving higher again.”

Resale activity rose from year-ago levels in about three quarters of local markets. Year-over-year gains of 117 per cent in Vancouver, 27 per cent in Toronto, 17 per cent in Calgary, and nine per cent in Montreal contributed most to the national increase in activity.

Well, there you have it.  Mr. Porter has declared the good news: we’ve fully escaped from the clutches of a potentially lengthy, harsh downturn.  Now we have nowhere to go but up!

Time to capitulate?

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Franco

Denial Denial Denial……………leads to hallucination and fantasy,Bear wake and give up now and back to your free cave which is free in Yukon. Every time you lose.

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squeako

I was laughing at the head line, not the comments you "dummice".

Now Im gonna read the comments.

And the recession is over? Wow.. I guess I will look forward to people dropping some brie cheese bits on the floor again. Squeak!

But I will not go for the big aromatic cheese bit that is on the guillotin like serving tray.. nope, njet, nein.

I bin nicht ein dummkopf.

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Arwen

Anecdotally, I remember Whistler rents in the 90s being priced well ahead of local incomes, because indeed most of the renters weren't locals. I had friends working retail crammed many into a trailer during the tourist/winter season and then living for cheap rent in houses with jacuzzis in the summer as part of "looking after" someone's property (with 2 week notice that they'd have to vacate…) Generally, it was only worth it if you were a boarder or skier.

I wonder if a resort's fundamentals are different because tourism's the main industry, and a great percentage of the real estate is in secondary/vacation homes?

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patriotz

@ReductiMat:

Hey Patriotz, I’m interested in your thoughts on Whistler.

I'm not interested in Whistler (not even to visit) so I don't follow the market there. I can say though that just like everywhere else RE prices there must eventually adjust to fundamentals, and the fundamentals (rental demand) are far more volatile than they are in Vancouver or other cities, as NO -LYMPICS pointed out.

Both the demand for and supply of ski resorts is highly elastic. Granted Whistler has quick access to Vancouver which makes the demand more reliable than, say, Revelstoke, but you really don't know how fashionable the place will be 20 years from now.

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admin

@Strataman: Excellent! Looking forward to your writeup!

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observer

p/e ratio of s&p was 129 as of august 2009. This is a bad omen. Granted the explanation was that this year's earnings were completely wiped by last year's meltdown. Still, I wonder if it has ever been this high … even in previous recessions, I don't think it has exhibited such extreme behavior before.

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NO -LYMPICS

Strataman:

Look forward to your expose'!!!

Flood? Funny you mention that.

One of my neighbours manages a rental building downtown. Apparently someone left a washer running unattended, something f*cked up….it was on an upper floor, $250,000 in water damage to suites below ( excluding renter's losses…many of them did not have coverage for personal effects, very common problem).

Re: strata OWNERS… seems to be a common theme, stretched so thin they don't have a pot to pee in. I smell financial disaster down the road.

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NO -LYMPICS

Last night's Global News said Whistler accomodation prices have been cut over 25%, one of the highest % drops in North America.

If they think the 2010 Olympics will help them(which is what they said), they are nuts…2 weeks of price gouging won't help and will turn people off.

Didn't VANOC put a hold on thousands of room several months back ? I wonder how that will play out !

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ReductiMat

@patriotz:

Hey Patriotz, I'm interested in your thoughts on Whistler. We love it there and I can use the lifts year round… if prices stay as they are here we'll have no qualms in getting a place in Whistler and renting here 'forever'.

All the stuff we're looking at now is stagnate and prices are dropping… I'm betting there's still plenty of room to go down once we're in full-blown Olympic hangover.

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Limey

"From my perpective (Dublin), I’m watching Canada with morbid curiosity. Van/Vic/TO/Calgary, all of it, looks like the mother of all bubbles."

Yeah, me to – from the safe distance of New Zealand.

I'm just interested what happens when the FTBers that have got into the market over the past 2/3 years renew their mortgage in 3/5 years. I'm going to guess at interest rates are going up – and if there's a substantial increase there could be quite the fallout.

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Strataman

Franco "like those Chinese immigrants and locals who is prudent and responsible in their household finance. Vancouver is a place for elites,not for losers."

Hey Pope haven't forgotten at all! You see lately I have been totally run off my feet by the before mentioned elites! I have had flood after flood in dear downtown Yaletown and am battling the fore mentioned elites who ALL apparently cannot afford their $500.00 deductible on many many insurance claims. Some have broke down and cried saying they could not eat if their strata would not cover everything. I will really try this weekend to supply you with my promises expose!

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No Longer Looking

Follow-up to post 42:

http://www.youtube.com/watch?v=RDTXjzLracY&feature=related

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NO -LYMPICS

Good video re: grassroots economics

Last minute is the best.

http://www.youtube.com/watch?v=KWu-efNN8PM&eu…

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best place on meth

Hey, is this option to hide low-rating postings something new?

FAN-F****G-TASTIC!!

No more supraboy/Ian Watt crap showing up on my screen.

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No Longer Looking

2400 rental listings in 48 hours, on Vancouver Craigslist.

http://www.youtube.com/watch?v=2DDtFElr-yA

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No Longer Looking

Suspicious bedroom for rent?

http://vancouver.en.craigslist.ca/pml/apa/1377346…

$650 for a bedroom in Mission. I suspect greed. 😛

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Up, Up and Away

Lets see. The stock market has rallied 50%, and home prices here have rallied 13%, during the so-called worst recession since WWII, according to the media. Unemployment in BC has only doubled, getting back to historic norms. Seems like this year has been a pretty good year for investments, if invested from March on.

If this is as bad as it gets, this will have been the weakest recession I have lived through. I guess sitting on the sidelines, being financially prudent, is the wrong lesson from this "worst recession" business. I guess red is the new black, and if you want to get ahead, you better play the game and get some of that debt.

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rp

Parabolic blowoff.

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NO -LYMPICS

On Garth's blog this comment from a guy in Dublin

From my perpective (Dublin), I’m watching Canada with morbid curiosity. Van/Vic/TO/Calgary, all of it, looks like the mother of all bubbles.

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NO -LYMPICS

Ghost Towns May Haunt Ireland in Property Loan Gamble (Update2) http://www.bloomberg.com/apps/news?pid=20601068&a… Finance Minister Brian Lenihan will detail tomorrow how much Ireland will pay for about 90 billion euros ($131 billion) of real estate loans now crippling what as recently as 2006 was one of Europe’s most dynamic economies. In what may be the biggest financial gamble in 87 years as a sovereign state, the government will become the owner of loans for property developments that have plunged in value. “Short of declaring war, this is the most important decision these guys will ever make,” said Brian Lucey, associate professor of finance at Trinity College Dublin, who opposes the plan. “Our entire economic credibility and independence is at stake.” Ireland is suffering the worst economic slump of any developed nation since the Great Depression, according to the Economic & Social Research… Read more »

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NO -LYMPICS

From Garth's blog: I was chatting with a realtor in August at a family reunion (he elected to join our family by elect through marriage on my mothers side, but I grew up with him in high school, so we’ve been familiar for a long time, nice guy). I ask him how things are going and he says, “great!” “Things have really picked up. They were slow this winter with the recession, but April on has been excellent.” So I asked him what he figured would happen over the next 3 years or so. He tells me that he figures home valuations will continue to rise. I ask him, is this because he thinks interest rates will continue to be so low? The realtor says, “yeah” and looks at me with some seriousness at that point, knowing I know why… Read more »

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ReadyToPop

This cheap money from the BOC is really to keep Ontario afloat right now. I'm sure they know that the Vancouver market has been pushed past the brink, but this part of the country is not nearly as high a priority as the East. Think VOTES.

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NO -LYMPICS

Why next economic crisis will be worse http://www.thestar.com/business/article/695644 You might wonder why a Democrat-controlled U.S. Congress would allow almost every reform initiative to become stalled – the likely fate of the new financial consumer-protection agency once again called for yesterday by Obama. One of the Dems' dirty little secrets is that they've long been in thrall to Wall Street campaign donors. That might sound counter-intuitive. But New York is a "blue" state. And Wall Street financiers donate accordingly. And so it's Dem committee chairs, as much as anyone, who have stalled and diluted proposed reforms. =================== What all this means – and it's tough to disagree here with the informed doomsayers – is that the next crisis will be worse than the one just passed. By bailing out all but Lehman, world authorities have created the worst "moral hazard" problem… Read more »

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NO -LYMPICS

31 X patriotz Well said ,as usual, patriotz ! This is the insidiousness of Canadian mortgages. The Canadian Gov't has simply cut out the middleman and made the CMHC, another Federal Gov't agency, the insurer of last resort. We , the public are effectively subsidizing credit junkies. Not much different than say anyone going to the casino and having Big Brother cover any/all losses, a no lose situation. No,…actually its worse, the banks are literally guaranteed a profit. This is the false sense of security many suckers have NOT wrapped their heads around…it is an inverted argument. The Gov't is benefitting the banks, and making their constituents beleive all is well as the abyss edges closer. It has nothing to do with the "recession is over" or a healthy economy. This will prove to be THE biggest Gov't backed ponzi… Read more »

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pricedoutfornow

Here's a couple questions for those of you in the know:

-CMHC insures only high-ratio mortgages, those with less than 20% downpayment

-If the banks lend to people with more than a 20% downpayment, CMHC is NOT involved, therefore the bag would be left in the bank's hands in case of foreclosure, as the mortgage is NOT insured at all.

-The banks have figured this out, so it is in their best interest to pursue clients who are in the position to buy with less than 20% down, it's a win-win situation for them (hm, reminds me of "predatory lending" we heard about in the US).

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