Monday: Recession, Games, Loony, Fail

Let’s do a quick round up of some of the links that showed up in the Friday Free-for-all post:

Nassim Nicholas Taleb is interviewed in the Globe and Mail.  Is the recession over, or do we still have the same disease?

A lot of the growth of the past few years was fake growth from debt. So swallow the losses, be dignified and move on.

The Economist has an interesting article looking at some of the challenges facing the BC economy during the winter games.

The provincial government insists that it will not spend more than C$765m on the games. But that omits some C$4 billion for infrastructure projects which formed part of the successful pitch to hold them.

In the National Post Flaherty admits there are ‘limited’ tools to control the loonies rise.

Mr. Flaherty’s admission caught some analysts off guard. Eric Lascelles, chief economist and rates strategist at TD Securities, described the comments as “unusually frank” for the Finance Minister.

Meanwhile in Victoria the drop in tourism has taken another victim: Travellers Inn has filed for bankruptcy.

“In the interim, we’re just trying to inventory and assemble any assets that are available so that we can start trying to distribute funds to the creditors, the first of whom would be the employees for payroll,”

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Ulsterman
Ulsterman
11 years ago

@Posting Abroad: You forgot to mention RealPaul's eye-popping, foaming-at-the-mouth hatred of teachers.

Anonymous
Anonymous
11 years ago

@Girlbear: And why would I not believe that criminals habitually tell everything to everybody about what they do.

No Longer Looking
No Longer Looking
11 years ago

@Boombust: I voted it up myself, despite the length, because its totally on topic. Don't take those vote-downs to heart because people can manipulate it if they wish, and I think that could have happened in this case.

NO - LYMPICS
NO - LYMPICS
11 years ago

#55 BoomBust

Maybe its due to the length.

However,excellent primer on what the cycle involves and the warning signs.

Duly note this person speaks from being burned then reverse engineering to see what happened.

I agree, IMHO we are at Stage 4

Boombust
Boombust
11 years ago

52 X NO – LYMPICS Says:

September 15th, 2009 at 12:33 pm

@Boombust:

Can’t see why people voted down this post.

Thanks boombust !

ReplyCurrent score: 2

Me either. I thought it was in interesting read.

Such a capricious crowd.

No Longer Looking
No Longer Looking
11 years ago

US credit shrinks at Great Depression rate prompting fears of a double-dip recession.

http://www.telegraph.co.uk/finance/financetopics/

NO - LYMPICS
NO - LYMPICS
11 years ago

realpaul:

Keep us posted.

Keep asking the Europeans you meet if they know about our 2010 games and if they or anyone they know is going to attend.

Also, the Euro Real Estate market updates as well, given the news has been thats it's been a disaster (ie Ireland Spain etc).

Have a good trip.

NO - LYMPICS
NO - LYMPICS
11 years ago

@Boombust:

Can't see why people voted down this post.

Thanks boombust !

No Longer Looking
No Longer Looking
11 years ago

@patriotz: Obviously the renter only cares about the accommodation, not the titles.

I think I'm the exception to this rule. I avoid rental condos because I don't want to be in the middle of foreclosure situation and I don't like too many rules and nosy people.

SD92129
SD92129
11 years ago

No Longer 48,

Increasing property taxes should have a very similar effect. In certain locales in the US, owner occupied parcels get a tax break.

Property taxes are low in Vancouver compared to the US.

No Longer Looking
No Longer Looking
11 years ago

I've been in my place for over two years. In that time, my rent has gone from $1180 to $1200. Then, as now, I'm paying $100-$200 below equivalent units in my area (this is due to my credit score, references etc.).

No Longer Looking
No Longer Looking
11 years ago

This is a comment under http://www.cbc.ca/canada/british-columbia/story/2… by DarrylLamb: "It's time for an Empty dwelling tax in Vancouver!! It is crazy out here. New building goes up, some corporation from Texas or Taiwan buys the entire building and then pieces it out one unit at a time. We've got huge towers in Coal Harbour, Yaletown and the repidly gentrifying downtown east side that are empty, just driving up the cost of living. It's time to pass a tax that says if you or your company own more than one dwelling in the city limits and it's empty you have to pay the city $300 a month until you rent it or sell it. One company owns 450 dwelling units in the city alone. I imagine they would move a little quicker to sell them if those units were costing them $135000… Read more »

Arwen
Arwen
11 years ago

Sorry, I shouldn't paint 'landlords' with a brush there. There are lots of professional landlords with commercial buildings who understand the business case.

What I meant mainly was the amateur hour that's showing up in the condo and secondary suite markets.

Arwen
Arwen
11 years ago

Rents are tied to incomes, and renters tend to fall either on the upper and lower ends of the income strata. Let's ignore the second-apartment for a business person "premium" rentals, for now, as they are an overserved small market share. In ye olden times, making substantially over the median meant that ownership was a possibility. Not as much, anymore. Still, I would suggest that in the main, those making less than the median will be renters, and form a good percentage of the market. SO: if the median Vancouver income is $64Kish for a family and 25Kish for a single person (via census data), and if spending more than a third of gross income on rent makes an expensive city impossible to live in, (*and effects the local economy*) then rents on non-premium suites are going to have a… Read more »

patriotz
11 years ago

@read on:

crabman, would downtown buildings cost more because of the potential land development value?

I think you're on the mark here. These buildings aren't very big (look at the monthly rent), and of course land values downtown are set by condo prices because all new construction is condo. It would appear that the owners are trying to sell to speculators or developers, not to someone who would keep the property and rent it out. The numbers don't work for that.

Posting Abroad
Posting Abroad
11 years ago

33 Real Paul

I am not quite sure which "anon" you are referencing, but I have not commented on your "posts" before.

I simply raised a point that if you are actually traveling abroad, and I mean actually, take some time to smell the roses in other countries. If not, your venomous anger and bitterness, which is manifested in EVERY one of your posts, will led to a premature death.

Your postings create a very visual image of an angry individual slamming away at the keyboard, cursing, and ranting, all the while attempting to project credibility by crtiticizing the state of the economy, the political system, the immigration system, the Olympics, and Vancouver's sewage problems. Hell, you would probably slam "hummingbirds" if it came up as a topic on this site.

patriotz
11 years ago

@Dave:

The average monthly rent for a rental condo in downtown Vancouver (Fall 08) was $1,604, which is roughly a 50% premium.

Which means the average condo downtown is really worth $160K. Thank you.

And I don't accept your use of the term "premium" as accurate. The average rent for condos is higher simply because on average they are bigger, newer, and have more expensive finishings. That's not a premium for renting a condo versus a purpose-built rental – that's a premium for renting a fancy apartment versus a plain one. Obviously the renter only cares about the accommodation, not the titles.

read on
read on
11 years ago

crabman, would downtown buildings cost more because of the potential land development value?

Just a question.

crabman
11 years ago

@Dave:

We actually aren’t that far off from 100x monthly rent on multi-unit rental buildings.

Here are two rental buildings for sale downtown:

1775 Pendrell

Asking: $4.5M

Rents: $21,533

Ratio: 208

935 Jervis

Asking: $5.5M

Rents: $29,354

Ratio: 187

Supraboy
Supraboy
11 years ago

Recession is over morons!

http://finance.yahoo.com/news/Bernanke-says-reces

Isn't it too bad you people filter the good news and promote the bad.

Dave
11 years ago

I never used the word identical. The average monthly rent for a multi-unit rental in downtown Vancouver (Fall 08) was $1,075. The average monthly rent for a rental condo in downtown Vancouver (Fall 08) was $1,604, which is roughly a 50% premium.

Good data on rents falling? Let's see it.

patriotz
11 years ago

@Dave:

We actually aren’t that far off from 100x monthly rent on multi-unit rental buildings.

That was my point. People who buy multi-unit rentals are real business people, not fools.

Condo rentals currently have about a 50% premium over multi-unit rentals and I believe their rate of rent appreciation has been stronger in recent years compared to multi-unit.

Premium over what? Are you saying that a condo will rent for 50% more than a substantially identical purpose-built rental? Don't think so. Let's stick to apples to apples.

And we have been getting some good data on this board that nominal condo rents have been falling recently and look set to continue. That trend is our friend.

stop the madness
stop the madness
11 years ago

"rent appreciation"?

That would be my rent that has gone up zero % nominal over the past 3 years? (and yes, I know – an anecdote does not a statistic make)

Dave
11 years ago

@patriotz:

We actually aren't that far off from 100x monthly rent on multi-unit rental buildings.

Condo rentals currently have about a 50% premium over multi-unit rentals and I believe their rate of rent appreciation has been stronger in recent years compared to multi-unit. The trend isn't your friend here.

patriotz
11 years ago

@Carioca Canuck:

I rent 1,100 square feet, 2 BR 2 BTH with parking for $1,500 a month… (after expenses) you now have $1,000 a month to service debt…….which qualifies you for a mortgage of $150,000

Spot on Carioca and thanks for the math, which confirms that…

Condos are only worth 100x monthly rent, and condo prices will revert to this multiple. That is the traditional multiple for multi-unit rentals, and if anything condos should have a lower multiple, because the separate titles reduce owner control and increase owner risk.