less money, more expense
Well, this was completely unexpected. Just like the country and the province, lower mainland cities are looking at deficits and budget shortfalls. It’s a total shocker, just like recent problems with the Canadian economy. Vancouver is looking at ways to save money and hasn’t ruled out raising property tax rates.
So what do you think it will be – service cuts, property tax increases or both?
During the boom we had plenty of money coming in to city coffers thanks to all the new construction. Unfortunately we were building condos, which pay lower taxes and use more city services than commercial property. Businesses have been complaining for years about the disproportionate tax load they bear, does anyone think residential property tax will not be going up in the next couple of years?
RSS 2.0 comments feed. leave a response, or trackback from your own site.
1
X
Dave Says:
September 30th, 2009 at 8:36 am
I say it will likely be a mix of all of the above, but it should really be ‘none of the above’.
The problem we have are too many groups trying to do the same things. For example, why are the City, the Province, the Feds and all the NGO groups involved in creating and administering social housing? It’s a waste of effort and a waste of money. Why is the City demanding social housing at the Olympic Village with construction costs around something like $600 ft2?
Our governments are too bloated, too unfocused and too inefficient. The demographic shift is an excellent opportunity to reorganize government.
2
X
Anonymous Says:
September 30th, 2009 at 8:45 am
… which will be squandered
3
X
other ted Says:
September 30th, 2009 at 9:50 am
After switching to the inflation camp it looks like garth is now talking defaltion. Check out his latest thread. Does anyone think deflation is around the corner here? It is possible but with all the money being printed I am doubting it. Either way I don’t think real estate should continue going up.
4
X
read on Says:
September 30th, 2009 at 10:10 am
Mish certainly does, and has argued thus for quite a while.
I personally don’t know.
5
X
TL Says:
September 30th, 2009 at 10:15 am
I agree that deflation is around the corner too. Check out Elliott Wave Int. (Robert Prechter) for a strong argument. Governments can print all the money they want, but it doesn’t mean that overleveraged banks will be willing to lend, and it doesn’t mean that credit exhausted consumers will be willing to borrow. Frankly, nobody has the cash, and the world can’t revolve on credit alone forever. In short, the economy needs to be ‘working’ to get that supply into the system. If all the Joes of the world simply don’t have the cash (or the means to borrow it), they’re not buying the big screen tv (or whatever), and the banks are not forking over the capital to the manufacturers because they are no longer worth the risk. What we have suffered through for the last decade (or more?) is a credit expansion. The popping of that bubble necessarily means a credit contraction. Nobody lending + nobody buying = deflation. Deflation is a must in my opinion because eventually, prices must match the buying power of the consumer if a company is to stay viable. I think we all have a pretty good sense around here what the true buying power of the average consumer is! That’s my two cents, anyways. I’d love to know what others think.
6
X
Arwen Says:
September 30th, 2009 at 11:14 am
I was just talking to a friend about services as provided by our tax dollars. My son’s school saves money by extending four days and then making one day a half day: my friend’s children’s school doesn’t have anything approaching the necessary number of books. In the past 20 years, our transit system has gotten increasingly crowded. There just seems to be an overall lack, less wealth in society overall. The only things ‘affordable’ appear to be the extras; the iPods and laptops…
I wish inflation was indexed to those oh so variable societal needs instead of wants – housing, transportation, medical, food, utilities, education, etc. We can live without our cheap extras – it hardly matters what the mix of that stuff looks like, to me.
7
X
bums up2 Says:
September 30th, 2009 at 11:59 am
$10 trillion of losses vs $2 trillion of stimulus printing. Deflation is not even a question.
We’re in it.
Focussing on prices / CPI is red herring.
8
X
bums up2 Says:
September 30th, 2009 at 12:00 pm
TL’s point about velocity of money is right on the money as well. HAH.
9
X
blur Says:
September 30th, 2009 at 12:02 pm
If the city is running out of money, claw back the benefits and wages that climbed in the past 5 years during the boom.
Tighten the spending and cut all stupid social programs that only small minorities benefit, then clean houses by axing bloated bureaucrats.
6 weeks vacation is not a right!
10
X
NO - LYMPICS Says:
September 30th, 2009 at 12:09 pm
Gov’ts have effectively taken their democratically achieved powers and turned them into dictatorships in between elections. Elections have been bastardized to the point democracy only exists on voting day.
This has allowed the Local, Provincial and Federal Gov’ts to embark on all sorts of silly frivolous pet projects.
Always cut out the fat first, and don’t dare come to the taxpayer for any more $$$…we’ve been taxed too much , enough IS enough. Gov’t was never meant to be a blankcheque between a bloated bureaucracy and egomaniacal politicians.
11
X
rp Says:
September 30th, 2009 at 12:11 pm
It’s deflation in the short term (2-4 years) at least, but it all depends on the amount of free credit and money. In Canada you have the CMHC backing more and more high ratio loans. This is suicidal for their balance sheet, but having the government pay people to buy assets they can’t afford will prevent asset price deflation in the short term.
Eventually people will figure it out and demand that government funds be spent on schools, etc, instead of encouraging people to bankrupt themselves, but we’re a long ways away from sanity folks! Governments will do whatever they can to prop up the bubble, because in their opinion there was no bubble. Japan did the same thing. They had the government buying stocks!
The more free money the government throws around the more inflation there ultimately could be, but I find it unlikely that any of it will stick unless there is an actual recovery based on something. We need billions in new spending every year to match the demand pulled forward by easy credit. Where does the money come from?
12
X
NO - LYMPICS Says:
September 30th, 2009 at 12:20 pm
So, according to the Pope’s link…COV, Burnaby and Surrey etc. are claiming revenue shortfalls based on lower than projected building permits. This implies that either they didn’t learn anything from this time last year when things were tanking …..OR it’s worse than they thought, assuming they had lower projections.
However, they should never use these projections as part of their budget, as when they fall short they have a built-in excuse to raise taxes to cover the shortfall.
Local Gov’ts , when compared to the Provincical and Federal Gov’ts, are the canary in the mine. If they are projecting deficits, you know we are in trouble, given a lot of the grief is as a result of downloading . If that’s the case, then Local Gov’ts will have to take the lead , show by example and start to cut out the fat.
13
X
rp Says:
September 30th, 2009 at 12:27 pm
While in the short term I believe we are in deflation and the price of houses will go down either way, I also think that after 2-3 years of deflation western governments will panic and try any or all of the following disastrous things, in about this order:
1) run annual deficits in excess of 10% of GDP
2) give free money to everyone
3) start a world war
4) debt jubilee
If there is one lesson to learn from history, it is that stupidity really is infinite and things can always get worse. Those steps above would certainly stop deflation, but they correspond to a fiscal crisis, a currency crisis, a good chance of annihilation, and the complete breakdown of money and our society. I think our current leaders are stupid enough to try at least the first two.
14
X
NO - LYMPICS Says:
September 30th, 2009 at 12:45 pm
From Garth’s bog, this post
Overall, for the 20+ years in debt home buyers it doesn’t really matter if it’s inflation or deflation, in both cases they are screwed.
- In case of inflation the household income increase will not keep up with the higher interests rate and the home prices will not inflate (in case they do, not by much)
- In case of deflation home prices will decrease, mortgage rates will remain on the same level, many jobs will vanish and the minimum wage law will be canceled or at least the amount will decline.
Their only chance is not to have inflation, not to have deflation, but to live in this fairytale forever, and hope that every time there will be a sucker bailing their debt out.
=========================
So,in other words…screwed either way.
I noticed gas prices were down today….99.9 cents /litre
Keep in mind one main reason that RE ,market is kept bubbled…it’s all part of the political Houdini act. Housing is a domestic industry, its very blatant and visual. Even buyers like to see SOLD signs, it gives them a false sense of security that all is well and its their turn now and that a greater fool will displace them/bail them out.
“Phoey” wrote in the last topic that he feels these blogs are unhealthy and he appeasr ready to buy. Yes, one can hold off a purchase forever, but than again what you save is better than what you spend after taxes. I think the writing is on the wall and Gov’ts have simply delayed the inevitable. I still think buying NOW is foolish, unless prices drop, given this will be a slow RE season till say Spring 2010.
15
X
realpaul Says:
September 30th, 2009 at 1:04 pm
@blur:
70% of the city budget is wages and benefits. The next 4% increase wages will kick in this year. Wonder why the city is scrambling to explain itself?
16
X
No Longer Looking Says:
September 30th, 2009 at 1:32 pm
I’m all for chopping the fat in government. But the fat has influence. It will be the muscle and bone, I fear. And these are not the better off civil servants, in many cases.
17
X
realpaul Says:
September 30th, 2009 at 1:41 pm
@NO – LYMPICS:
Oil kicked up over 3 bucks today so don’t wait to fill up your tank at 99.
Information is where you find it:
http://www.bea.gov/newsrelease.....elease.htm
Hard data is hard to refute, it is not looking good. Both the CDN and the US economies are in fact retracing the weak gains that were recorded when the stimulaus tsunami went through in June.
However the optimistic are planning fo a quick recovery, but based on what I don’t know.
http://finance.yahoo.com/news/.....0.html?x=0
I went to exchange my unspent Euro and Pounds this morning reminding me of what a Zimbabwe currecy the CDN dollar has become. It was like exchanging dollars for LIRA back in the days when the Italian currency was falling over itself to devalue in much the same way as the $CDN is today. The way the CDN government is attempting to sack our dollar you’d think the Americans by comparison were doing something right.
It also reminded me of how nice it would be to be a foriegn national bringing their currency into Canada for the big boost in net worth.
A Brit for example would only have to sell their 300K home in Britian to be able to buy a 525K house here, because the Pound just bought 1.75 Canadian dollars. So creates the myth of ‘rich foriegners.It is in fact just a stronger currency allowing a foriegner to muscle a local buyer out of the way when they can’t compete with the same level of savings.
The myth of wealthy Chinese was invented in the same wrong headed way. In fact the bulk of the of wave of immigrants from Hong Kong in the early 90’s was small time cab drivers, restaurant workers and box cutters with HK dollars which were indexed to the very strong USD dollar which was trading up over 1.50 CDN to one USD at the time. The few David Ho types were in fact few and far between. Davids case proves that any idiot can inherit money.
It allowed the foriegn nationals to buy much more real estate than locals could because the locals were hamstrung by the value of their savings in $CDN. The foriegners were getting $CDN at a 50% plus discount. The newcomers weren’t smart or rich at all, it was the CDN taxpayer who was forced to bend over by the policies of their own government.
I’ll give you an example. At that time I had a niche specialty of negotiating contentious estates to settlement. This is a situation where sons are sueing mothers and sisters sueing brothers and half brothers sueing sisters etc when a will is contested. If anyone thinks that a will is sacrosanct …well think again.
The fact is that lawyers are very unwilling to settle any disputes quickly. They do this because they have a schedule of ‘averages’ wherein billings are standardized to the length of time these cases will languish in arbitration before a court date is assigned,never mind achieved, usually years away. Time is the lawyers friend.
I figured out that I could negotiate with the lawyers by paying them in present value dollars to make them whole as if the case had taken much (years) longer. That gave me the latitude to approach the greedy inheritors and show them all how to get their money faster. Its dirty and complicated but thats life eh? The promise of fast cash always greases the wheels of young people who can’t wait to buy a new Camaro or whatever. Why did I do this? I could bring previously unavailable product to market without interferance from real whores. How I found these deals is a state secret.
I had a situation where a guy from HK who had a house on SW Marine was shot dead in a gambling debt dispute. Many sons and daughters involved, and the wife of course. She was the second wife with children of her own from a previous marriage. They all lived in the house together, nine or ten in a three bedroom.
There was piss all in cash for expenses and the estate was the house which was mortgaged to the hilt. The only income that the family had was …get this…paper routes!!!!!!! The all got up in the early hours and delivered massive numbers of newspapers and flyers to put food on the table while ‘looking rich’ in the house on SW marine. It turned out that the guy had been a cab driver in HK whose savings looked a lot better in Canadian dollars than they did in HKD. And Voila, a rich foriegner. A newspaper baron, Bwahahahahahahahahahah.
18
X
NO - LYMPICS Says:
September 30th, 2009 at 3:29 pm
realpaul:
Good story
I agree, that most of the Asian wealth came in the late 1980’s and early 1990’s. Even back then it rumoured that when HK expatriates came to BC they were buying at a bargain when all was converted and they drove the prices up.
Now, I do see many of Asian background attending open houses, in both SFH and condos. My guess is few pay cash and are mortgaged up the ying yang, no different than a lot of greater fools.
If there were lots of rich Asians still coming, there would be no need to lower interest rates to lure buyers. This is simply a domestic social engineering policy that will end up badly.
19
X
domus Says:
September 30th, 2009 at 3:38 pm
The pound is at an historic low against the CAD$ (while the Euro is quite strong). Just 5 years ago the pounds would buy well in excess of 2 dollars.
20
X
Skye Says:
September 30th, 2009 at 4:11 pm
That “shocker” article was hilarious, keep them coming, I can use the laughs.
The auto sector had “nice bounce back”? I wonder how nice it will be when the end of the clunkers program starts rippling outwards. I read Ford is looking pretty shaky now too.
One thing that nobody has dared raise is the spectre of Protectionism. When things start getting bad, don’t count out strong populist leaders to start playing on the fears of the 15% unemployed.
21
X
Skye Says:
September 30th, 2009 at 4:24 pm
Oh yes, we’d better interview pumper Peter Simpson to see what HE thinks!
====================================
Employment Insurance claims up in Vancouver
http://www.news1130.com/news/l.....70302_7168
VANCOUVER (NEWS1130) – Vancouver saw a huge jump in the number of Employment Insurance claims from July last year to July this year.
University of Victoria labour relations professor John Fryer says Vancouver has been starved of federal economic stimulus money. “What it means in my view, that an increase in the construction and other sectors, is that clearly the stimulus packages the government is talking about are not really biting everywhere.”
From July last year to July this year, Employment Insurance claims in Vancouver went up by over 15,000 claims for a total of 37,500. Most of the claims came from people who had jobs in manufacturing, construction, transportation and warehousing.
Professor Fryer says the numbers also show the Olympics did not generate the jobs many hoped it would. He notes the $70 million Ottawa announced for Vancouver last week for infrastructure projects is just a drop in the bucket when you look at how much highway, transportation and bridge projects actually cost.
Meanwhile Peter Simpson with the Greater Vancouver Home Builders Association says people thinking about a career in construction shouldn’t lose hope. “I was just looking at a number of different housing developments and there’s a lot of activity on those sites, a lot of noise. That noise to me is the sound of jobs and that’s good. There is a future not only in home building but in home renovation. Home renovation is expected to be a $7 billion business in British Columbia.”
Simpson also says housing starts picked up this summer in parts of the Lower Mainland, Victoria and the Okanagan.
22
X
realpaul Says:
September 30th, 2009 at 5:57 pm
@Skye:
Skye, less than 2 weeks after the ‘CFC’ program folds and Saturn bites the dust. Too many green shoots maybe blocking the sun.
Same today with many business apologists touting the rise in residential construction stats since the low interest rate program came into effect as a vision of the recovery at hand. How long will it be before the industry crashes if the taxpayer can’t afford to subsidize the low rates anymore. One interviewer though did ask the tout if he thought the consumer would continue spending if rates increased and the tout shamefacedly said “we have to be optimistic”. In other words, no one really believes what is being put out by the industry spokes whores.
#19, Domus, so what you’re saying is that the $CDN is still worth less than shit, only now you’re willing to accept that it stinks?
Lettuce at $10 bucks a head anyone? I don’t think the Mexicans are going to take increasingly worthless dollars without raising the price. As we see the Arabs aren’t willing to take devalued dollars for their oil to fill the tractors to till the soil for the Mexicans to grow the lettuce to ship to CDN consumers.
23
X
asp Says:
September 30th, 2009 at 6:31 pm
@other ted:
I don’t think the money being “printed” by governments these days is inflationary, because the shadow banking system was printing a lot more during the height of the bubble.
24
X
other ted Says:
September 30th, 2009 at 6:44 pm
Good point Asp. But all that money was absorbed by the assets. Even if we are not printing as much and the assets are no longer absorbing the money, can the money we are printing now still not be sufficient for inflation? Just a thought. I mean if we are printing money at a faster rate than the economy is growing that is inflation. Even if that rate is lower than previous years.
25
X
NO - LYMPICS Says:
September 30th, 2009 at 7:14 pm
realpaul:
You are right…looks like Saturn is going belly up
Saturn Falls Along With Penske Deal
Would-Be Buyer Couldn’t Find A Manufacturer
http://www.washingtonpost.com/.....04812.html
General Motors is closing its Saturn business, ending the once-ballyhooed effort to build “a different kind of car company,” as the implosion of auto sales that started last year continues to ravage the industry.
The decision Wednesday to abandon Saturn came after negotiations broke down to sell the brand to Penske Automotive.
The setback follows a massive bailout effort in which the government sought to rescue the industry with aid for GM, Chrysler, suppliers and financing companies, as well as the “Cash for Clunkers” incentive program.
The Saturn closure reflects just how difficult the market remains: Penske balked because it could not strike a deal with another company to take GM’s place as manufacturer. As a result, more than 350 Saturn dealerships are now slated to shut down and 13,000 jobs are threatened.
==========
26
X
ReadyToPop Says:
September 30th, 2009 at 7:44 pm
Between the local governments possibly raising taxes and the BOC’s cheap money artificially propping up core assets (punishing any savings you DID manage to keep from the tax man), it’s a wonder we all haven’t just stopped reproducing and started living for ourselves. Oops…maybe it is happening and that’s why the population is shrinking.
27
X
mk-kids Says:
September 30th, 2009 at 8:58 pm
“There is a future not only in home building but in home renovation. Home renovation is expected to be a $7 billion business in British Columbia.”
After the war, my grandfather built his house. He built it planning to spend his life there so he built it to last. If something went wrong, he knew how to fix it. He built it to accomodate the family he and my gran planned on – 2 kids. It seems sad to me that people today can’t build or fix or renovate their own houses, that something so basic, so fundamental to our daily needs has become so foreign to us and we have to pay strangers and hope they are skilled and trustworthy.
Is it just me or does anyone else think this is crazy… in just 2 generations! Thanks baby boomers!
28
X
Mark Downs Says:
September 30th, 2009 at 9:04 pm
There is a future not only in home building but in repairing all the leaky condos we’ve built over the last several years.
29
X
realpaul Says:
September 30th, 2009 at 9:47 pm
@mk-kids:
Hey mk-, Its not the BB’s that can’t fix their houses, its the kids that are buying them that are clueless as to how to drain a hot water tank or re-seal a window.
Now, thats not to say that the new skills are less valuable. Its that the new skills ain’t the ones that are going to get you to Home Hardware to replace a worn gasket on the throne release or knowing how to pull the induction fan out of the ceiling.
Frankly I’m not convinced that the plug for the building trades is entirely innocent of social engineering but thats another topic. When we see that 15 to 20 percent of the BC pop were directly or indirectly employed by the real estate boomlet and that a majority of the unemployed in this province are the refuse of the slow mo collapse we can also see the fallacy in the argument of selling your kid on the idea of getting into renovation work as a life time career choice.
Lets face it the union movement is dying in Canada, they needs dues paying members to stay alive financially and politically. Without the support of the Trotskyite wing of the BCTF and their dreams of social shaping from within the school system the idea of a growing unionized sector is dashed against the tides of reality and so goes the entire socialist movement into the dustbin of history.
Your kids are just cannon fodder in the war against the impending nightmare scenario of another Tollpuddle Massacre as they see it. The unionists are not concerned with the plight of working people anymore than they are concerned about the survival of the Royal Bank. Its all about power politics and who is winning. For the unions its about votes and free money. No votes, no free money, not rocket science is it?
Now if I was a Machiavellian union leader I would love the idea of housing becoming so unaffordable that no young person could participate in the market. The dispossesed are easier to manipulate. Is revolution in the air? Is that why the government is building the numbers of police officers so quickly that the vetting process has broken down showing examples of a spike in civilian deaths by unqualified personell?
Have the social engineers also forecast chaos coming out of the process of change and the government is palnning for social unrest? Is that why the government recently signed a treaty with the US to allow American police and soldiers to pour across the border if social unrest becomes a force the local government deems itself unable to cope with?
Will real estate retain any value under such a scenario? I read recently that the government is agitating in the press that the citizen is now saving too much money. I am reading articles where so called pundits are saying that saving too much is actually ‘dangerous’. Now a certain number of idiots are actually going to believe this and start putting money into the hands of the banksters to create wealth for the banks that they couldn’t have done for themselves. It also serves the governments purpose of having citizens pay taxes on the transaction fees etc that are part of the process which is not not happening. maybe the governments feeling the pinch. After all the figure that has been bantered about is a cool trillion.
The government has already wiped out the seniors and now it has its sights set on the middle class. Heres a scenario I could foresee setting up. People get broken down and pissed in a sudden one generation type time frame,(say inside 20 years) quickily so everyones involved, then there is a phony struggle situation set up by the government forces, probably through agents of the RCMP which makes it looks like there is social unrest about to destabize the country. Then a special but neccesary law is passed introducing a quasi martial law temporarily and your individual rights get stripped away forever. The government then goes on a multi year propaganda campaign telling you it’s good for you and provide polls to prove that a majority of Canadians are onside with it. Believe it, a whole lot of those idiots you call neighbours are going to be sucked in and start agreeing with the new age slavery.
Hey. I’m just speculatin’.
30
X
Supraboy Says:
October 1st, 2009 at 1:10 am
IMF reports on the economy:
http://finance.yahoo.com/news/.....amp;ccode=
Seems like the economy is going to recover soon. I’m jumping in to load up more houses in the winter when the prices take a seasonal dip.
31
X
patriotzed Says:
October 1st, 2009 at 5:53 am
@rentah:
‘The four most expensive words in the English language are “this time it’s different”.’
- Sir John Templeton
32
X
patriotzed Says:
October 1st, 2009 at 6:04 am
@other ted:
BFD. You can call an increase in M0 or M1 “inflation” if you want. What matters to everyone else is how much things cost, i.e. price inflation.
Money supply has increased tremendously in Japan since 1990:
http://commons.wikimedia.org/w....._japan.gif
33
X
patriotzed Says:
October 1st, 2009 at 6:10 am
@Arwen:
It is.
“12-month change: Continuing declines in transportation, shelter, and clothing and footwear costs”
http://www.statcan.gc.ca/subje.....pc-eng.htm
Remember – buying a house is a want, not a need. Also CPI does not include the land component of house prices, which accounts for almost all price changes, because the land is not consumed (remember what the “C” in “CPI” stands for).
34
X
realpaul Says:
October 1st, 2009 at 8:04 am
The CFC program ‘buying’ juices the consumer spending numbers but unemployment also increases to over 500,000 for the week. More numbers out tomorrow – except Canada where these facts are kept secret. What is that telling us? Is the real economy just government spending now.
http://finance.yahoo.com/news/.....amp;ccode=
On the positive side the Mayor of Denial-Couver has announced a Grand World Tour for himself and his pointy hatted entourage. Isn’t that nice. Party On Greg.
35
X
crabman Says:
October 1st, 2009 at 8:53 am
Just posted this on Chipmans site. Some of the usual RE pumpers have been touting Vancouver’s population growth recently. Thought a dose of reality was in order. Here are the 5 year growth rates for some North American cities:
Raleigh, NC 22.9%
Las Vegas, NV 22.3%
Austin, TX 20.1%
Phoenix, AZ 19.8%
Charlotte, NC 17.4%
Atlanta, GA 16.6%
Orlando, FL 15.6%
Dallas, TX 13.8%
Calgary, AB 13.4%
Edmonton, AB 10.4%
Toronto, ON 9.2%
Vancouver, BC 6.5%
http://www12.statcan.ca/census.....amp;RPP=33
http://www.census.gov/popest/m.....p-chg.html
36
X
Hovering Says:
October 1st, 2009 at 9:01 am
http://www.housepriceindex.ca/Default.aspx
Teranet data out for July
Vancouver up 1.5 % that month but still down 9.3 percent from peak.
This is data I trust (e.g. not “facts” provided by reltors or banks flogging mortgages).
I’m seeing more listings in my hood. Hopefully the boomers all list at once.
37
X
Supraboy Says:
October 1st, 2009 at 9:09 am
Just wondering, how many of you posting here have a job? The economy isn’t so bad when all of you have a job. And look at how many of you are so unproductive spewing nonsense here all day. It goes to show that your companies have hired dead weights and can afford it. Looks like there is too much money sitting around out there and this economy is definitely booming.
38
X
Anonymous Says:
October 1st, 2009 at 9:11 am
pot kettle black
39
X
rp Says:
October 1st, 2009 at 9:22 am
The Teranet data really does put everything into perspective. Does anyone think it’s going back to 150? Supraboy?
40
X
patriotzed Says:
October 1st, 2009 at 9:58 am
@crabman:
Note that LV and Phoenix have seen the highest post-peak price declines of any US metros – over 50% – yet over the same period have been among the fastest growing in population.
Nothing, but nothing, can support bubble pricing in the long run.
41
X
No Longer Looking Says:
October 1st, 2009 at 12:21 pm
One thing for sure, landlords won’t be able to raise rents when their property taxes go up.
I’ve been watching rents for new two-bedroom condos in the eastern suburbs (Burnaby, Tri-Cities, New West). On Craigslist, the rents used to start at $1500 with a some dreamers trying for $1900.
Now, I’m often seeing rents for these units at $1300-1400. Sometimes even less.
$1395 at Brentwood Gate
http://vancouver.en.craigslist…..54972.html
$1275 at Cora
http://vancouver.en.craigslist…..62431.html
Rents at Azure Plaza 88 in New West are often under $1400.
42
X
realpaul Says:
October 1st, 2009 at 12:26 pm
@Supraboy:
economy is booming you say?
http://www.bloomberg.com/apps/.....pOSmUs_EfE
43
X
patriotzed Says:
October 1st, 2009 at 12:34 pm
@Dave:
Well then I guess you’re in favour of getting rid of the most bloated, unfocused, and inefficient government housing program of them all – CMHC insurance – and letting house prices be determined entirely by the free market?
Right?
44
X
Anonymous Says:
October 1st, 2009 at 12:49 pm
@patriotzed: Patriotzed, you’re so intelligent, yet so naive. (j/k)
When people like Dave say things like “our governments are too bloated…and inefficient” what they really mean is I wish the government would stop spending money on things that I don’t like or don’t help me and focus its resources on things that are good for me and my finances.
Spend tens of Millions on homelessness–bad, bad government, wasteful, profligate, etc.
Spend tens of Billions on propping up private owners of real estate–good government, and please send some more money this way.
45
X
Dave Says:
October 1st, 2009 at 1:06 pm
@patriotzed:
There are private mortgage insurance options available (e.g. GE). I don’t have a problem with removing CMHC as the backstop.
46
X
Renter Says:
October 1st, 2009 at 1:15 pm
I’m not sure about the complexities of issuing municipal bonds in Canada, but we could see these cities getting more of their capital and operating cash from selling a lot more bonds than they have in the past. Multiply this by the many cash strapped cities around the country and you’ve got another big factor helping push up mortgage rates.
47
X
Dave Says:
October 1st, 2009 at 1:20 pm
@Anonymous:
I am generalizing that governments are bloated and inefficient. To claim otherwise is simply ignorance. I am sure that some groups and branches are focussed and efficient. Most are not.
Higher efficiency and focussed programs allow us to achieve more for a smaller cost. This is a positive thing for whatever political position you advocate.
Having multiple levels of government working on the same problems is simply not efficient.
I have seen City of Vancouver workers playing cards for half the day in their site trailers. Do you support that? We could probably cut the union labour in half and not have an effect on the level of service to the City. Do you not find it strange that City managers were able to run things with only 10% of the workforce for numerous months?
48
X
patriotzed Says:
October 1st, 2009 at 1:30 pm
@Dave:
No there aren’t. 90% of Genworth and AIC’s obligations are guaranteed by the federal government. And they aren’t satisfied with that:
As the Globe reported this week, Genworth and AIG want the finance department to guarantee their mortgage insurance 100%, just like it does for Crown corporation CMHC.
Isn’t “free enterprise” great?
The last genuinely private mortgage insurer in Canada, MICC, went bankrupt and there is no way any company would be in the business today without government backstopping. Especially after the events of the last couple of years.
49
X
patriotzed Says:
October 1st, 2009 at 1:38 pm
@Renter:
BC municipalities (and I think also those in other provinces) are forbidden to borrow for operating expenses. It has long been standard practice for them to borrow for all capital expenditures, which is the reason why you get that ballot with all the capital projects on it at election time.
BTW only the City of Vancouver borrows in its own name, all other municipalities borrow though the Municipal Finance Authority which is a BC crown corporation.
50
X
patriotzed Says:
October 1st, 2009 at 3:31 pm
@NO – LYMPICS:
Vancouver voters were asked in February, 2003 whether they wanted the Olympics. 2/3 said “yes” (I said “no”).
They got what they voted for.
51
X
NO - LYMPICS Says:
October 1st, 2009 at 4:20 pm
# 50 patriotzed
True re COV voters in THAT case, but by and large democracy, R.I.P.
52
X
hongcouvercrackhead Says:
October 1st, 2009 at 4:38 pm
datsunboy – quit slackin and get back to work… stickin yer nose up cam muirs ass
53
X
Boombust Says:
October 1st, 2009 at 5:01 pm
“I’m seeing more listings in my hood.”
Yup. This is it. Not Dieppe. Juno.
54
X
NO - LYMPICS Says:
October 1st, 2009 at 5:01 pm
49 patriotzed
BC municipalities (and I think also those in other provinces) are forbidden to borrow for operating expenses. It has long been standard practice for them to borrow for all capital expenditures, which is the reason why you get that ballot with all the capital projects on it at election time.
========
True,….Local Gov’ts generally went to referendum to request votoe permission for capital projects/expenditures.
However, they can still skirt this if the are creative enough. City of Richmond, for example re-built City Hall(Approx. $50 Million) with no referendum. It engaged in an RE venture called Odlinwood rezoned and re-developed 30+ acres for housing(right under the YVR flightpath), and who knows how it really did ..they developed it in the late 1990’s when the market was flat…?
Same with Olympic Oval…Richmond Council cut a deal in the summer months 2004, and never went to referendum…who knows what it dipped into to pay…VANOC contributed approx. $60 Million,…Casino revenue of $5 Million /year for 10 years…so where did the balance come from to pay for the $180 million tab?
The Local Gov’t Act/Community Charter has many loopholes that allow Local Gov’ts to set up various business ventures so as to skirt accountability.
Didn’t Langley hide behind P3’s to build that new multi-plex ? Wasn’t one of the Tri Cities in a similar mess after P3 details were devulged?
Gov’ts fear their citizens…referendums are becoming extinct.
Local Gov’ts are some of the most corrupt dictatorships out there.
55
X
NO - LYMPICS Says:
October 1st, 2009 at 5:04 pm
From Garth’s blog:
Judging by some comments here in the last twenty-four hours, there are people disturbed I would write such things. And while I personally think higher rates, higher taxes and a sputtering economy are what likely lies ahead, a deflationary spiral into the unknown has been a possibility now for almost a year. Last winter I put the odds at 20%. Still do.
Don’t know about you, but anything I judge has a 20% chance of happening to me, I do something about. It’s called insurance. Maybe you should get some, too.
Regardless of which road opens, there’s one inescapable conclusion: Real estate loses.
If inflation wins and rates rise, the market will correct. Has to. Affordability takes a big hit and an asset priced at the top of its cycle declines. Hundreds of thousands of people face the real potential of negative equity.
If deflation wins, and rates stagnate, the market will correct. Has to. Falling demand, consumer stress, rising unemployment and business failure dictate it. Hundreds of thousands of people in this scenario also face negative equity.
There is one consistent message on this blog. Whether you like it or not.
Having the bulk of your net worth in one asset is a very bad idea.
=======
56
X
NO - LYMPICS Says:
October 1st, 2009 at 5:10 pm
Also from Garth’s blog:
Tourism in Manitoba’s in the crapper. Visits from Americans have plunged, hotel vacancy rates are up and business in poor Churchill is off 30%.
The giant government fund standing behind US banks is empty. Goose eggs. Starkers. The Federal Deposit Insurance Corporation has burned through $60 billion and will remain in the red until at least 2012, despite a massive new levy on solvent banks. Evidently saving capitalism’s a bitch.
Tons of grapes will rot on the vines in the Niagara Peninsula and the Okanagan this autumn as the Canadian wine industry deflates. Prices have crashed by 40% or so as consumers stop boozing, or turn to rotgut. In a classic case of supply and demand, supply loses.
Expect the orgy of bank loans and cheap money to end soon, says the IMF. As the government stimulus tap starts to shut in North American and Europe, ‘funding gaps’ will materialize, which will stall the recovery and likely add to unemployment.
And, of course, a new ruckus over whether the economy is getting plumper or limper in the wake of plunging numbers in Japan, news Canada stalled out again and predictions the US faces a lost decade.
=======
No surprises….even the wine industry.
I always wondered how many new wineries the Okanagan (and Vancouver Island) could support. I guess they have run out of uppity buyers willing to spend big $$ on overtaxed plonk.
57
X
patriotzed Says:
October 1st, 2009 at 5:26 pm
@NO – LYMPICS:
In what respect is BC less democratic today than a generation ago under Bill Bennett or two generations ago under WAC Bennett? Or under the NDP?
Most people would say that Canada is more democratic now under a minority government than under Cretien’s or Mulroney’s or Trudeau’s majorities.
So if democracy is dead, just when did it die?
58
X
Wishitwaswarmer Says:
October 1st, 2009 at 5:57 pm
@NO – LYMPICS: But that’s how democracy works. You vote for people to make decisions, if you don’t like the choices they make, you vote them out. If you think government is expensive and wasteful now imagine if they spent money for a referendum for every single decision.
59
X
NO - LYMPICS Says:
October 1st, 2009 at 6:18 pm
57 patriotzed :
58 Wishitwaswarmer:
Sorry, but while no Gov’t is perfect, I’ve noticed an increasing detest for the citizenry , and politicians increasingly assuming their elected mandate as a venue for a dictatorship.
Referendums are in place for certain uses, and I can recall participating in them…if the capital project is placed on the civic election ballot, no extra cost. Civic elections are every 3 years, surely a Local Gov’t can plan ahead and put them to a vote after making a good case why we need them, given the given project and its capital costs are often outside the normal civic budget.
Gov’ts are ,in essence, a service provider , and shouldn’t go off on tangents with pet projects and agendas to satisfy their egos. I see too much of this in the present, moreso than in the past.
60
X
other ted Says:
October 1st, 2009 at 6:42 pm
@32 patriotz. What prices are coming down now? are your groceries cheaper, cars, clothing etc.? Not so sure where you are seeing the deflation.
61
X
read on Says:
October 1st, 2009 at 7:05 pm
59 – “Gov’ts are ,in essence, a service provider , and shouldn’t go off on tangents with pet projects and agendas”
—————
so say you. there are many different theories of what govt “should” be.
62
X
read on Says:
October 1st, 2009 at 7:07 pm
60 – ted, my holidays were cheaper this year. my flights to europe were cheaper. if i were to buy a new car, it would be cheaper (but i am happy with my current one). many things are, or are becoming cheaper. not everything, no, but some things.
63
X
patriotzed Says:
October 1st, 2009 at 7:16 pm
@other ted:
My post #32 was about Japan.
But I think cars really are getting cheaper here. Can’t say much about the rest, you might want to check out that statcan link in my post #33 to see where they get their information from. My point was not to make a claim that consumer prices were going up or down, but to point out that CPI really does include basic necessities.
64
X
Anonymous Says:
October 1st, 2009 at 8:56 pm
56
NO – LYMPICS Says:
October 1st, 2009 at 5:10 pm
Also from Garth’s blog:
============================
NO – LYMPICS, thanks, but we can read Garth’s blog if we want to.
65
X
other ted Says:
October 1st, 2009 at 9:27 pm
Thanks for the response guys. At first I saw prices dropping. Cars especially used. Flights, etc. But it seems I am starting to see prices go up again. Groceries. Gas has gone up, down again. And who knows next week. I have heard of good deals on new cars in the US but the Canadian consumer is stubborn. We really have a complex where we like to pay more. I am hoping for deflation. Not too sure.
66
X
Bently Says:
October 2nd, 2009 at 9:02 am
“@32 patriotz. What prices are coming down now? are your groceries cheaper, cars, clothing etc.? Not so sure where you are seeing the deflation. ”
Well, my rent has gone down. Cars? Are you kidding me? Have you read the motoring section of the sun lately? Cars are way, way down in price! If car prices are an indicator of where we’re headed, gee wiz, fasten your seatbelt!
67
X
Bently Says:
October 2nd, 2009 at 9:06 am
@crabman:
Exactly, comparing Vancouver to La Jolla or Beverly Hills is just stupid. Why not Vancouver to Paris or London, New York. The fact is that Vancouver is none of those things. “Seattle is a far better comparision in terms of location, industry, pop, etc etc…..”
And, of course, there’s the rain!
68
X
tim Says:
October 2nd, 2009 at 1:40 pm
BTW,
Vancouver, BC 6.5%
6.5% growth means that the population will double in 10 years. That’s… pretty fast still. Is Vancouver properly architected to accommodate this growth?
69
X
Tiny Brained Timmy Says:
October 2nd, 2009 at 2:16 pm
That is the change from 2001 to 2006. That is a 1.2% annual rate of growth.
70
X
tim Says:
October 2nd, 2009 at 4:38 pm
Ah. well, that’s much more reasonable. Should’ve RTFL.
71 X Population Growth: Vancouver BC vs. Raleigh, Las Vegas, Austin, Phoenix & more. | Vancouver Condo Info Says:
October 5th, 2009 at 4:34 am
[...] live in Vancouver right? Well apparently not so many of them are achieving that dream. Crabman posted these numbers in a comment last week putting our population growth in perspective when compared to a few other [...]