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October 21st, 2009 at 10:35 am
@logic:
#84
RealPaul is quite right. I chose my school district by the academic reports. Had I chosen my school district by real estate value I would risked putting my children into one of the many notorious schools that produce nothing but failure.
If you don’t have children or are consumed by real estate values only and not the future of your children then by all means listen to the naysayers.
Thanks to people like RealPaul to have some guts to speak up against the crap thats put out by the papers.
October 21st, 2009 at 10:35 am
@patriotzed: Oh yeah, very valid points about the damage of high real estate prices on the economy. It is particularly bad when you combine it with low earning potential. It just drives good businesses and talented workers away.
Also, when people have high mortgages, that sucks money out of the local economy. Instead of shopping in local stores and dining out, all their money goes to the bank (which probably isn’t a BC-based business unless its a local credit union).
October 21st, 2009 at 10:29 am
@FORREST:
You mean 8 years in office?
How about, say, the same as Kim Campbell?
October 21st, 2009 at 10:10 am
@Purp: Sounds you’re hoping for a Japan scenario. That’s not pretty either. They talk about lost decades and a lost generation.
I don’t think it will be fun regardless of whether its fast or slow. From everything I’ve read, I believe its going to be fast (and the quick turn in 2008 further convinces me).
Unlike most people, I’m not obsessed with owning. I don’t WANT to see it fast, I just honestly believe it will be the case. Not to mention, that a quick crash might be like ripping off the band-aid. Let’s get the pain over with.
October 21st, 2009 at 10:10 am
Harper will eventually suffer the same fate as GW Bush after the CMHC ponzi scheme fails. Maybe we will get the first ever First Nations Prime Minister? Any takers?
October 21st, 2009 at 10:06 am
@Purp:
No that’s backwards.
As I have said, the longer the bubble lasts, the more people will buy at inflated prices. Every purchase of a house at an inflated price (as opposed to just renting) reduces the future purchasing power of the buyer, and thus overall demand in the economy, for decades. This will remain the case whether or not house prices come down.
Fat lot of good an “orderly decline” did Japan. The sooner this idiocy ends, the better.
Vancouver saw a very rapid bust in 1982-83 and it was the best thing that could have happened to the city. Housing that was affordable to the middle class was an important factor in the diversification of the local economy into high tech, film making, etc. – a diversification which has largely been reversed over the last decade.
Regarding bailouts, the banks have already been bailed out in advance by CMHC, and the only bailout John Q. Homedebtor is going to see is in bankruptcy court. Once again, the faster the price drop, the lower the overall cost.
October 21st, 2009 at 9:28 am
People can complain about CHMC. This is still a democracy: at least it should be known that for some parts of the population the CHMC funding and operation is a scam.
All I can say, for what is worth, is: write to your MPs.
October 21st, 2009 at 8:01 am
#90, #91 No argument that the bubble (purchase of assets at inflated prices) is the disease. That’s done, we’re there. The question is how this thing corrects back to a normal market. My point was that I’d prefer to see an orderly, slow decline or several years of price stagnation as opposed to a violent, quick drop of 50+%. I think the latter would result in a lot of pain for people losing homes and livelihoods as well as cost the rest of us as the government would most certainly try bailing this mess out. That sort of sudden change just isn’t good for anyone, regardless of what we think about the stupidity that got us into it.
I think the result of the cure is the same, it’s just a difference in how the treatment is administered.
October 21st, 2009 at 2:44 am
Interesting post at america-canada:
http://americacanada.blogspot......-rise.html
October 21st, 2009 at 12:05 am
@other ted:
Right on and as I have said before, it is the purchase of assets at inflated prices that is bad for the economy, not the return to normal prices.
Blame the disease for the suffering, not the cure.
October 20th, 2009 at 11:44 pm
#48 purp you bring up a good point that what the bulls wish for is really harmfull and scary yet you turn around and attack bears for wanting a correction using a typical bull argument that they are vindictive people. Whatever the correction 20% or 70% it doesn’t matter. What matters is real estate returns to fundamentals. I feel you threw in that comment about bears to come across as a fair and balanced person, but instead you come across as someone is is imbalanced. pick an argument and stick with it. Either the bubble is harmfull or it isn’t. Prices will correct to where they should if the economy is destroyed it wasn’t our doing. In fact the faster it corrects the less likely it will be bad. I fear we arepast that point. But delaying the inevitable and wishing it away won’t work.
October 20th, 2009 at 11:34 pm
@NO – LYMPICS:
Glad you brought up the Fraser Institute.
What do you think our champions of “free enterprise” have had to say about CMHC’s propping up of house prices at the risk of the taxpayer? Nothing. That’s right, nothing. The Fraser Institute has never, ever, made any criticism of this massive exercise in central planning. The only criticism the FI has made of government price supports for real estate has been to complain that they do not support high enough prices:
http://www.fraserinstitute.org.....ldhuis.pdf
See page 3 in above link.
Oh BTW, I don’t recall the FI offering any criticism of government funding of the Olympics, either.
October 20th, 2009 at 11:30 pm
@Chris: “a fatal mistake at worst.”
What? Renting is like death? I’ve been an owner and a renter, and one thing I’ve learned is owning isn’t everything its cracked up to be. If you own a house with a suite (like I did), you have to be landlord. If you buy a condo, you don’t get to really own land and have to with Strata BS.
October 20th, 2009 at 11:09 pm
@Chris: Hey Chris…. That’s a classic ‘top of the bubble’ post.
(just kiddin’, because I know you’ve heard that before, too).
Actually, the point is, nobody, but nobody, can time the top.
I know you’ve heard that before, too, but it’s true.
Nobody can time the top.
These things go on until they fail.
This one’s heading for a doozie of a fall.
The one additional thing we’re seeing recently is the ‘i don’t give a damn’ bears saying “bring on the biggest buying frenzy and price spike to get it all over and done with…!”.
My commiseration regarding the exhaustion and the demoralization.
But it really is going to crash.
Have you been following Jonathan Tonge’s blog?… some great stuff for the bears there:
http://americacanada.blogspot.com/
Remember: price/rent ratios, price/income ratios, free money, bullish sentiment euphoria, sucker rally into double top, and now, moral hazard CMHC with an unsustainable rate of market goosing: It’s ALL still true, and it’s not going away.
2010? 2011 (my guess)? 2012??
October 20th, 2009 at 10:49 pm
@Ulsterman:
Ulsterman, that is precisely my fear. Given what’s happened (and not happened) over the past five years or so, I see less and less chance of a significant correction. I used to fully buy into the bear arguments, but it seems to me they have just become more esoteric or obscure as time goes by and they’ve not come to pass. Some still talk about the ratio of median income to median home price, but obviously we’ve been living with that for years now and it’s made absolutely and utterly no difference. Now the CMHC is the devil. Yawn.
Obviously, for whatever reasons, people have more money than the statistics show. Maybe their parents give them big down-payments. Maybe they’ve been smart and ridden the upswing. Maybe they’re all studying while earning minimum wage and by the time their mortgage renews, they’ll be lawyers. Who knows? All I know is that, like you, I waited and it’s looking like a boneheaded decision at best, a fatal mistake at worst.
“The bull market is over when the very last of the bears that are destined to capitulate do so.” I’ve been hear this for years. I suspect we’ve probably had our correction (the 10% last year) and prices will now stabilize and drift for a long time.
October 20th, 2009 at 9:54 pm
“Some schools are teaching, others are definatley not. “
realpaul, you’re terrific. Never change, honey.
October 20th, 2009 at 9:51 pm
oh god – now the retard is going to return to his school district rants
off-topic much?
October 20th, 2009 at 9:46 pm
@oneangryslav2:
#75 OAS, Now isn’t that the knee jerk reaction I was alluding to? The FI publishes a spreadsheet that happens to include the scores of the individual schools province wide. It is the BCTF and the union drones who do not like to see this information published ‘because’ it doesn’t include all the explanations and justifications that they add into the noisome press releases following the publication.
The FI does not include a table hammering political analysis or quasi philisophical addendum to the publication. The numbers speak for themselves and people ( like myself) come to a conclusion of district/school efficacy based on the facts. If the ratios of success are not an indication of effective education then what is?
It is the hard facts that the BCTF etc seem to be so much in diagreement with ( well, I would say denial) and then lambast the documentation with clouds of PC obfuscation and misdirection as to why the numbers are misrepresenting the universe as they see it. Simple honesty would indicate otherwise.
The income debate is a red herring. I have personal experiance in two school districts and can say from that experiance the it was the individual schools adherance or rejection of an attitude towards excellence that makes all the differance. Some schools are teaching, others are definatley not. There are entire districts ( Surrey for example) where the majority of children are being taught to fail, in the context of academic performance. How else do you explain the fewer than 2% of graduates who have university entrance marks upon graduation?
October 20th, 2009 at 9:38 pm
@we’re not # 1: #50
Actually, it was voted (by readers of the magazine) #1 city in the Americas for 2009, although I would still call it bullshit propeganda. Interestingly, five of the top nine are Canadian cities. Makes me wonder who reads this magazine, Canadian tourist industry members?
http://www.concierge.com/tools.....ice/cities
October 20th, 2009 at 9:22 pm
#77 @BBY: Good observation about the rental increase cap. I wonder how many potential amateur landlords are aware of this?
October 20th, 2009 at 8:55 pm
@RVW_0824: “In the U.S your get a ~40% interest tax shield on your primary residence mortgage interest – in Canada – you get nothing.”
The tax break actually doesn’t mean prices will be permanently higher. Investors have a different tax regime and will eventually set the market price. Mortgage interest deductions will exacerbate booms and busts but cannot permanently add a price offset: if this were true the investor’s returns will be permanently lowered, which is near impossible to happen forever.
October 20th, 2009 at 8:44 pm
@SD92129: “My point is about SFH housing, which because of mortgage helpers, allows people to pay more for a house than one should. Laneway and units within apartments should have a similar effect.”
Suite income is a valid reason for higher prices but renting out accommodation like this is not free money. There is turnover, wear-tear, and risk. The additional structure required eats into returns — buying a property with a suite requires paying more for the structure in the first place. And finally the utility of the primary resident is decreased due to issues like more noise, less privacy, and less hot water. A town home arguably gives MORE privacy and utility than an SFH with 1, 2, or 3 suites.
Add all these up and sure an SFH carries a premium but after netting the costs, tangible and intangible, the amount it should add to the price is less than looking at gross rent.
October 20th, 2009 at 7:53 pm
I also find it amazing that our prices are what they are here in Vancouver (especially) and Canada you can’t deduct mortgage interest. This suggests that not only prices need to come down to similar levels to comparable areas in the U.S – but that our prices should be materially lower. In the U.S your get a ~40% interest tax shield on your primary residence mortgage interest – in Canada – you get nothing. So you are buying an asset that is massively overvalued based on the return it provides and when you leverage up to buy it – you get no tax shield. To summarize – buying a primary residence in this market will prove to be one of the worst investments anyone could ever make. Just wait until people start defaulting in Canada – trust me it will happen.
October 20th, 2009 at 6:10 pm
There’s something so incredibly special about renting that I now appreciate:
While in a tight rental market, rent increases cannot exceed the annual rent control cap (~4% in BC) or the ability of renters to pay, there is no limit on how much a landlord can decrease rents to attract tenants.
Really. This is a thing of beauty.
In other words, rents can decrease more than they are able to increase.
The long term ramifications of this are hilarious because in the high vacancy rental market we seem to be heading into, a lot of owners could slash their rates in a furious race to the bottom. Yet, once the landlords take on a longterm tenant, they cannot raise the rents more than 4% per year. And that is only if a tight rental market allows it. So if we have a place that rented downtonw in 2008 for $2200 per month, being slashed to $1900 per month, it will take several years for the owner to increase the rent back to $2200. And in a renters market, he can’t afford to have a place sit empty while he waits for the rent he wants.
The consequences of a renters market lowering rents are therefore felt by the owner long after the renters market has subsided.
More and more, I appreciate the benefits of renting in vancouver’s current market. So much less stress. If it all returns to some sensible fundamentals, I’ll buy. But not now. I’ll reap the rewards of renting.
October 20th, 2009 at 6:07 pm
Cashisking 71:
agreed with your invitation. Let me repost it for everyone:
“Everyone should send an email to their local MP and the Finance Minister about CMHC. If you care about your kids/this country don’t be lazy – just do it.”
It only takes a phone call or an email……do it if you can.
October 20th, 2009 at 6:05 pm
@realpaul: Once again, rp, you’re stretching the truth. The FI does not only “take the test results of the provincial exams and publish them without edit or audit.
If they were only to do this, there would be no criticism of their reports. They use this to push a scientifically-unproven view of educational achievement. The argue that the scores are “indicators of effective teaching” when any one with any familiarity with education knows this to be a crock of bull. The strongest indicator (by far) of test grade achievement, and therefore–if you subscribe to the views of the FI–of “teaching effectiveness”–is parental income.
The teacher’s at the best performing schools must be so effective that they’re able to increase parental income in addition to all of the other things that they do in the classroom.
October 20th, 2009 at 6:00 pm
@Hovering: “umm can someone explain the grey thingy’s. # 49 for example ? ”
Hovering -
Not meaning to freak you out. Those grey ‘thingy’s’ are automatic ‘pingback’ posts when another site posts a link to a post on this site.
In that particular case it occurred because I ‘harvested’ your anecdote and posted it at VREAA (Vancouver Real Estate Archive).
I collect good anecdotes that reflect personal experiences of the Vancouver RE market to that site. The blog ends up reading like a string of stories about the market/the bubble (depending on your viewpoint). Take a look HERE, if you like.
The Pope has VREAA in the blogroll sidebar as ‘Anecdote Archive’.
Please post your anecdotes. Post them here, at vancouvercondo.info, and I’ll post them at VREAA, or post as comments on latest thread at VREAA.
The whole point of VREAA is to complement blogs like vancouvercondo.info, by serving as an associated archive.
I anticipate some good stories over the next year or two.
BTW, if the grey ‘thingy’s’ are irritating, I can stop the pingbacks. As they stand, they don’t seem too intrusive, and they let posters know they’ve been archived.
-vreaa
October 20th, 2009 at 5:59 pm
@No Longer Looking:
#46 We build condos everywhere, even in noisy industrial areas:
http://www.cbc.ca/canada/briti…..fight.html
+++++++++
No where is it mentioned how much these fools paid for their “condoms.” They should look on the bright side; the compressor noise will drown out the knock from repo man.
October 20th, 2009 at 5:51 pm
It seems my tag has been hi-jacked. The last post for me was #50. All the rest #’s 65, 66, 67, are somebody else.
October 20th, 2009 at 5:49 pm
Everyone should send an email to their local MP and the Finance Minister about CMHC. If you care about your kids/this country don’t be lazy – just do it.
I remember back in the early 90′s (think it was W5) their was an program highlighting Canada’s debt/deficit problems … we were compared to New Zealand who had recently gone bust … it was a real wake up call for the country …
If ANYONE has a contact with W5 please get them to look at this … I honestly fear for the future of this country if we keep going down this path.
I feel like that we’re in the movie “Perfect Storm” (sorry it was on the other night) … remember the part when the crew sees the clear sky of the eye and woops b/c he thinks they’ve survived.
October 20th, 2009 at 5:44 pm
@NO – LYMPICS:
#63 NO, Correct, any reportage which disagrees with the current politically correct agenda of the competing special intrest groups is broadly attacked as anti social, incorrect, neanderthal etc. These groups fight the message and hate the messanger regardless of the facts presented. The arguments are always of the ‘what if’ variety, as if actual fact with out the taint of politics is evil and entitlement must always take precedence over fiscal responsibility.
A classic case in point is the education system. The FI takes the test results of the provincial exams and publishes them without edit or audit. Well, you’d think that it was Beelzeebub himself opening the gates of hell for all the screaming misdirection instantly emanates from the BCTF and their drones. Truth just doesn’t sit well with some people.
October 20th, 2009 at 5:41 pm
“65 X we’re not # 1 Says:
October 20th, 2009 at 5:29 pm
and the vacancies and rental drops continue!”
Yikes! You should see all the brand new ghost towers in the Newport area of Port Moody!
Panic is setting in and renting is the only option for many of the “investors” as they cannot sell.
They are now slitting each others’ throats with their rent “slashing”.
October 20th, 2009 at 5:36 pm
“They’re the equivalent–not only in ideology, but in analytical rigour and intellectual honesty–of the American Enterprise Institute in the US.”
Isn’t the Fraser Institute a CIA front?
October 20th, 2009 at 5:34 pm
”
People, this is a gateway city. There is an influx of cash and people are willing to double up (or triple up in the case of laneway housing). It is just like any high density metropolitan area where housing takes up a larger percentage of household income. get used to it. ”
Ummm, are you talking about big cities like New York or comparable cities such as Cleveland and Seattle?
What is Vancouver’s comparable household income to these other cities? How about relative to the rest of Canada?
What’s that you say? Vancouver has the lowest median income and the highest cost of living?
Well sign me up I want to pay 99& of my new income now before interests rates go up!
Luckily people in my office ,who make half what I make, have already bought in so I’ll be able to rent from them for about 20% of the carrying costs and then buy them out for a song when they go tits up
October 20th, 2009 at 5:30 pm
Fraser Institute=geriatric right wing lobbyist err “think tank”
October 20th, 2009 at 5:29 pm
and the vacancies and rental drops continue!
http://vancouver.en.craigslist.....20112.html
This is crazy, building that never had vacancies have more than ten.
It’s a problem because I want to move but with the prices dropping and selection increasing every day it’s tempting to wait a while longer.
After the Olympics rental prices will probably drop another 40%!
This is after the 30% drop!
October 20th, 2009 at 5:22 pm
“My friends the pricing still keep going up daily, monthly, quarterly and annually and you guys are still in a state of perpetual denial…..”
Of course prices are going to keep going up, except when they go down. LOL
October 20th, 2009 at 5:21 pm
59 oneangryslav2
social engineering ?
That’s like saying life isn’t political.
NDP Premier of the day, Dave Barrett, was quoted as stating that the NDP electoral win in 1972 surprised even them, they were of the view they would only be in power for one term, thus they had a ” to do ” list to pass their agenda before it was too late.
The BC NDP is the Dr Frankenstein of social engineering.
Anyway, read the whole report. It pokes a lot of holes in the current cult beliefs (like 100 mile diet etc.) and why BC is turning into a bubbled shithole.
October 20th, 2009 at 4:54 pm
60 X Anonymous Says:
October 20th, 2009 at 4:37 pm
My friends the pricing still keep going up daily,monthly,quarterly and annually
————
Thank you so much for your well-reasoned and evidence-supported “argument”. We shall be in touch.
October 20th, 2009 at 4:40 pm
Thanks for the hat tip to my comment on Garth Turners blog.
The CMHC situation seems very similar to the U.S. three years ago – people took no-questions-asked mortgage money knowing that they could barely pay the interest, and hoping to make a profit if house prices continued to increase.
Canadian taxpayers are the ones that will have to pay to clean up the CMHC’s mess.
October 20th, 2009 at 4:37 pm
My friends the pricing still keep going up daily,monthly,quarterly and annually and you guys are still in a state of perpetual denial.
You guys need a psychiatric assessment.
October 20th, 2009 at 4:24 pm
@NO – LYMPICS: Yup, I sure did. And I stand by my assessment–the Fraser Institute publishes crap that can’t withstand basic analytical scrutiny. I’ve set aside any judgment on the specific report linked above, but will not be surprised if it is just as flawed logically and methodologically as EVERY OTHER SINGLE REPORT that I’ve read that’s been put out by the Fraser Institute.
Now, maybe the only other reports of theirs that I’ve read have been those popular, or controversial, enough to have been brought to my attention. So it may be that only a particular subset of FI reports is flawed, though I’m not sure.
October 20th, 2009 at 4:02 pm
57 Anonymous:
Huh?
You’ve made an assessment on the article based on the source, THEN you say you will read the specific article I refer to ?
Are you in a pre-sale line-up ?
BTW: I saw on Global a mortgage broker say the banks want developers to have 75% in pre-sales before they get financing, up from the previous 50%.
October 20th, 2009 at 3:57 pm
@Anonymous: That was my comment in 56 above.
So, the first paragraph of the executive summary has the phrase “social engineering.” Nice. According to their implicit definition of social engineering, putting a traffic light at an intersection could also be deemed social engineering.
October 20th, 2009 at 3:54 pm
@NO – LYMPICS: The crap that the Fraser Institute puts out isn’t worth the paper it’s written on. Every single FI analysis that I’ve read has significant flaws in it. They’re the equivalent–not only in ideology, but in analytical rigour and intellectual honesty–of the American Enterprise Institute in the US.
I’ll take a look at the piece to which you’ve linked and give my assessment later.
October 20th, 2009 at 3:30 pm
Hey patriotz:
Here is fundamentals in the extreme:
Is this a $6,900 home bargain?
Detroit’s four-figure home prices are unusual, but investors around the country think foreclosed houses are too cheap to pass up. How to tell a great deal from a money pit
http://money.cnn.com/2009/10/1.....2009101615
October 20th, 2009 at 3:09 pm
Hey Pope:
This just out from the Fraser Institute:
BC Agricultural Land Reserve: A Critical Assessment
http://www.fraserinstitute.org.....eserve.pdf
Lots of good info and discussion re BC and high RE prices.
Good background of where we are and how we got here.
Brian Lewis of the Vancouver Province ragged on about this being right wing bias, which encouraged me to read it. Lewis is objective on some things, but he is becoming a subjective ideologue on others.
October 20th, 2009 at 3:01 pm
Re CMHC:
In some ways not surprised, as many of us have concluded that RE is about the only thing the Gov’t can attempt to manipulate and keep the sheepie masses happy.
However, didn’t the Feds extend another program that had only used about 50% of what was allotted ie $180 Billion of $360 Billion? Why are they now topping up the CMHC, (unless its the same $$$?)
Regardless, I think the supply of greater fools is going to collapse, they have effectively used up the majority of the future supply of buyers.
I am going to predict that this will backfire…people will get nervous and SELL….dump a lot of product onto the market to either bail or make what capital gains they still can. Watch the market tank !
The Feds have further exposed this RE ponzi scheme, and are simply adding gas to the fire. The banksters shouldn’t brag so much our CDN banking system is better/stronger….they, via the CMHC sugar daddy, are the biggest corporate welfare beneficiaries our there…they would be toast if not for Feds.
October 20th, 2009 at 2:54 pm
umm can someone explain the grey thingy’s
# 49 for example ?
October 20th, 2009 at 2:46 pm
home values to rise 6- 8%. Sales will rise 25% in 2010.
http://news1130.com/more.jsp?c.....64109_6728
so is it true that BOC will not raise rates?