Friday Free-for-all!
Hey! The weekend is nigh! Lets do our regular end of the week economic news roundup and discussion, here are a few stories to kick off the conversation:
-Homeowners ignore Olympic rental license requirement
-Olympic Village $132 million over budget
-Mixed residential and industrial zoning not ideal
-Vancouver condos not such a bad idea
-The great BC real estate bust
-BOC focus on consumers worries analysts
-Canada needs to cool bragging?
-US: Dead government walking (pdf)
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
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November 2nd, 2009 at 6:17 pm
@oneangryslav2:
So you heard from people. Watch the rental rates skyrocket at the last few days before the Olympics begin. There will be a mad scramble for accommodations.
There are so many bears here it’s unbelievable. You people think it’s all about the Olympics. There are so many new immigrants ready to scoop out properties here at any cost. It’s unfortunate that some of you don’t own a place, if you do and decide to put up a for sale sign on your house, you’ll have people lined up ready to bid up the prices.
November 2nd, 2009 at 5:35 pm
98:
Yeah – I have friends trying to let their condo – which overlooks the Olympic village – and the company they lsited with failed compeltetly to do so, despite continual reassurances.
November 2nd, 2009 at 3:20 pm
I heard a story on CBC Radio this morning warning would-be landlords to Olympics visitors that the riches they’d dreamed about may remain but a dream. This was with Cecilia Walters and she interviewed someone local–who runs a company that helps place visitors in private accommodation–and this gentleman (whose name I failed to catch) claimed that expected room rates have fallen 50%.
So, while landlords had believed that they could get about $600/night for their condo/apartment, they should only expect about $300/night. I think that even this is wishful thinking for most. I’ve also heard from people who work there, that some local hotels–Richmond, Burnaby, Coquitlam–have many, many rooms to spare during February.
November 2nd, 2009 at 2:36 pm
Whoops, I added “At the same time affordability is dropping as the BOC begins to raise rates and some borderline mortgage owners are forced to sell because they can no longer make payments.” to the wrong section, I meant that to be at the end of Spring 2010.
November 2nd, 2009 at 2:35 pm
@Purp:
My predictions are as follows:
Spring 2010 there is a listings boom as people who have been holding out for the post-olympic rush of foreign investment finally sell, prices stagnate or fall somewhat while inventory skyrockets, by the end of summer prices are falling decisively.
Fall 2010 prices continue to fall while listings remain above anything we’ve seen up until now although many are taken off the market in the hopes that they can be re-listed to sell (at a lower price) in the spring.
Spring-Summer 2011 prices continue to fall, people around Vancouver who have been stubbornly refusing to admit that real-estate can and does go down suddenly realize they were wrong, in the rush for the exits listings boom and prices begin to drop like a stone (until 2011 I do not foresee really big drops, here is where the curve begins to pick up steam). At the same time affordability is dropping as the BOC begins to raise rates and some borderline mortgage owners are forced to sell because they can no longer make payments.
Fall 2012 – Time to buy! Prices have fallen nearly 60% and if you do some bargain hunting you can make some serious deals from shell-shocked owners or on bank foreclosures.
2013- onwards. Prices begin to settle, at approximately 40% of peak values. Government regulation (I hope!) and the shock of thousands of people declaring bankruptcy helps to stabilize the market as people realize the dangers inherent in this sort of bubble (and then everyone promptly goes off to invest in a DIFFERENT bubble).
That’s my best guess. I’d only give about even odds on the exact timing, as we’ve seen government intervention can delay the inevitable for years and I think it’s entirely possible that we’re so far beyond what other markets in North America have seen things could fall abnormally fast, so give or take a year on the overall cycle.
Price percentages are in adjusted dollars from peak values.
November 2nd, 2009 at 2:25 pm
Krikey, double post, sorry.
November 2nd, 2009 at 2:24 pm
http://www.theglobeandmail.com.....le1347932/
Nice to see the fools are being dragged into the story kicking and screaming. Denial becomes increasingly uncomfortable doesn’t it. One fool at a time, thats all it takes.
November 2nd, 2009 at 2:20 pm
“This unraveling may not occur for a while, as easy money and excessive global liquidity can push asset prices higher for a while. But the longer and bigger the carry trades and the larger the asset bubble, the bigger will be the ensuing asset bubble crash. The Fed and other policymakers seem unaware of the monster bubble they are creating. The longer they remain blind, the harder the markets will fall. ”
http://www.theglobeandmail.com.....le1347932/
PS, good to see the clowns are still following the story. Awareness changes attitudes, one fool at a time.
November 2nd, 2009 at 2:17 pm
I read the paper and they said it will burst on Nov. 6 at 4pm.. better double check with a realtor.
November 2nd, 2009 at 1:38 pm
It’s clear this market is still wildly overvalued, however it’s been chugging ever upwards in obvious defiance of fundamentals and bears’ analysis for quite a few years now, so what bursts the bubble and when? People who need to make future RE plans (rent/buy) want to know! Predictions?
November 2nd, 2009 at 12:00 pm
Looks like the realturds will actually have to start working a bit harder!!!!
http://www.yourhome.ca/homes/n.....alty-costs
November 1st, 2009 at 6:25 pm
“all the mega-projests such as EXPO 86, the Alex Fraser Bridge, Northeast Coal, The Expo Skytrain line, BC Place Stadium…”
Oh, and don’t forget the Coquihalla Highway.
November 1st, 2009 at 5:50 pm
“Longer Looking Says:
November 1st, 2009 at 11:34 am
Boombust: I vaguely remember it as I was really young. A lot of good that did us.”
The 1976 UN “Habitat Forum” featured all kinds of exhibits/displays from downtown all the way to Jericho.
In one of the old Jericho aircraft hangars, they boasted about having the longest bar in the world.
(So much for our Islamic visitors…te he…)
I remember seeing delegates wandering around town in their “native dress” whenever possible.
A friend of mine managed to get ahold of the cardboard furniture that was part of the Gov’t of Canada display at the Courthouse fountain.
Although it was a little “stiff” to sit on, it looked great in his second floor suite (overlooking the daily traffic jams) in that old building that is still on the corner of Davie and Burrard. (Rent then was $125.00/mo.)
So, there you have it.
Two years later, in Europe, someone asked me where Vancouver was.
November 1st, 2009 at 5:49 pm
Fall in rent in most US metropolitan areas
From the WSJ via Calculated Risk:
http://tinyurl.com/ygk423m
“.. Equity Residential said new tenants in the third quarter paid 9% to 10% less rent than the previous residents. … Denver-based UDR is offering renewing tenants a flat-screen TV, new carpet, kitchen upgrade or, $300 in cash. … Some landlords have also become more open-minded about tenants with credit issues involving home foreclosures.”
AND
“Note: REIT BRE reports tomorrow and their CEO always some interesting comments.
“I think it is shaping up there is another leg down in terms of market rents and effective rents and that will be somewhere late this year or early [next] year where I think all the operators will move their rents down to basically handle the late stage of this recession.”
BRE CEO, Aug 5, 2009″
Of course, Vancouver is nothing like SF, LA, NY or Chicago….we have the Olympics!
November 1st, 2009 at 5:31 pm
“meaning the U.S. government will lose the $2.3 billion it sank into CIT last year to prop up the ailing company”
——–
If I was a US taxpayer/voter, I would be so so happy today…
What’s another 2.3 billion?
November 1st, 2009 at 4:44 pm
More green shoots
http://www.cbc.ca/money/story/.....uptcy.html
November 1st, 2009 at 1:14 pm
@Boombust: @nonymouse:
I tried to find whatever I read the bust to boom ratio. For some reason Peter Schiff comes to mind, but when I google it, I find nothing.
I did find an IMF essay from 2003 that says RE busts are twice as long as equity busts (typically 2.5 years). So to end the topic, the bust will last 5 years, minimum.
But first… it must begin.
November 1st, 2009 at 11:43 am
When the crash does return ‘for real’ (summer 2010?), I’m anticipating a fairly rapid fall over about 2 years (30-40%), with demand seizing up and hot money speculators getting out. This will be followed by perhaps 5 years of slower grind down, well past 50%-off pricing, as all the 5 year mortgages reset (at much higher rates, forcing sales) and the boomers start getting out.
(The only way this trajectory could be different is in hyperinflationary circumstances.)
One ugly consequence is going to be the wrecked retirement plans of those who have almost their entire networth in their primary residence.
I suspect I’ll buy a house from one of the earlier boomer-bailers in about two years time.
November 1st, 2009 at 11:34 am
@Boombust: I vaguely remember it as I was really young. A lot of good that did us
November 1st, 2009 at 11:31 am
@nonymouse: Agreed. Assuming the pop occurs post-Owelympics in 2010, we will have had a run-up of 8 or 9 years. So look for the next run-up starting around 2018-2019 (after all those years of falling prices, and having friends and family go through hell). Jeez, I’ll be an old man then.
Wanderlust is returning.
November 1st, 2009 at 11:28 am
Oh, and of COURSE we hosted the 1976 United Nations “Habitat Forum”.
Anyone remember the giddiness over THAT?
I do.
November 1st, 2009 at 11:25 am
One more thing about this Olympics nonsense…
As I have said before, all the mega-projests such as EXPO 86, the Alex Fraser Bridge, Northeast Coal, The Expo Skytrain line, BC Place Stadium… didn’t do anything to energize the housing market in the early ’80’s.
So, how some people believe a TWO WEEK EVENT (and the structures are now all built!) is going to prop up an economy that is getting weaker by the day, is beyond me.
Dumb and dumber.
November 1st, 2009 at 11:19 am
@ Vansanity I was under the impression that many bubbles are symmetrical in nature. http://tinyurl.com/n3ntfu
November 1st, 2009 at 11:18 am
“I remember reading somewhere that in real estate the bust is typically twice as long as the boom.”
Interesting that you bring this up. I remember reading the exact opposite.
I also remember Warren Buffett saying that 20% off the top is guaranteed after ANY boom.
Hmmm…so that, coupled with “the premium” extra prices people have paid, looks like a supernovae blow-off to me.
And, sooner than “most people” think.
Baaa, baaaaaaaaaa!
November 1st, 2009 at 9:37 am
@Boombust:
An initial crash, perhaps. But when you consider the number of renewals that will come up between 2011-2014 with rates higher, it will go on and on…
I remember reading somewhere that in real estate the bust is typically twice as long as the boom. If that trend is true, we’re looking at a 20 year bust. Think about that for a minute, that means RE won’t see an upwards trend until around 2030! People with plenty of “skin in the game” better hope and pray that is not the case and I’m just an idiot on some blog.
November 1st, 2009 at 9:29 am
“I’m sure all the deniers and the crazies who have demanded my head on this issue are lining up to apologise for having their heads up their asses.” -reapaul
Actually, their heads are on the floor.
They got there by laughing so hard.
November 1st, 2009 at 9:26 am
“The bubble’s burst will go on for years and years, you can count on it.” -Vansanity
Not so fast. Vancouver will surprise you to the downside. Quick and without mercy.
“Investors” will wish they had never heard of this pipsqueak town.
October 31st, 2009 at 10:19 pm
Looks like the flu vaccine is unavailable in Alberta and that will be the case very soon here in BC. In the US they are finding that kids die in surprising numbers and they are telling parents to take their kids to the hospital quickly if they suspect pork flu. Here they tell you to stay home unless you feel you are dying. Let’s see how this plays out. I suspect many Canadians will soon be learning just how great “free” healthcare really is.
October 31st, 2009 at 9:47 pm
RealPaul, it must take amazing strength to rail against the man on a blog read by hundreds of Vancouverites. How do you cope? Aren’t you afraid the police will eventually track down your whereabouts and put you away?
October 31st, 2009 at 9:05 pm
“I’m sure all the deniers and the crazies who have demanded my head on this issue ”
————
Who are you?
Ego much? Legend in your own lunchbox?
October 31st, 2009 at 8:14 pm
Just watched the damning W5 report on the RCMP and the cozy system of hiding , lieing, tampering , denying and bullshit that I have been reporting on this and many sites for several years. I hope that people insist that truth will make for a better Canada and will watch this report until they immediatley email or phone your local and federal MP to demand justice, criminal charges and a complete rout of the miscreants and fools that have been thrust into positions of power by seniority instead of ability or any will to serve the public.
It was only after public pressure was focused on the church that the pedophiles and molesters were jailed. We need long prison sentences for the RCMP officers who have murdered citizens. RCMP is not above the law, they only think they are now. But just like the molesters we will drag them out of their retirement homes and away from their Christmas dinners to imprison them and force them to face the victims in shame.
I’m sure all the deniers and the crazies who have demanded my head on this issue are lining up to apologise for having their heads up their asses.
When a national braodcast like W5 exposes the truth I feel justified.
When the Police Complaints Inquiry office is branded an RCMP apologist by the media I am justified.
When a member of the legislature stands up and says ” Are we being protected by the police, or do we need protection FROM the police” I feel justified.
When a thirty year veteran of the RCMP comes out and says ” The RCMP is an ethics free universe” I feel justified.
For all of you people who are bringing these lies to the attention of the international media , feel righteous when you make out that fiftieth call. maybe it’s the constant streaming that breaks stories like the Economist ran recently on the bullshit facade that is Vancouver. Keep up the good work. We’ll get these bastards eventually as has proven to be the case with the molesters and the RCMP.
October 31st, 2009 at 5:40 pm
Vansanity
DITTO … I don’t even have the energy to read about it anymore
October 31st, 2009 at 4:52 pm
Ahhh cute, a baby bidding on a house.
http://www.yourhome.ca/homes/n.....your-house
October 31st, 2009 at 4:48 pm
CTV runs W5 story that produces evidence of BC RCMP cover up in the deaths of 3 men. Says that government has seen proof and was aware of the evidence that directly contradicts the stories of the RCMP yet chose not to proceed with investigation or charges which seem to have indicated charges of murder and wrongful deaths been merited based on the facts of evidence involving these citizens deaths at the hands of the RCMP.
This issue has been a long time coming to the surface. People in Canada have been treated with gross disrespect by the government and media at having been managed like a bunch of retards who can’t make their own decisions.
RCMP-an ethics free universe’, that should be the new motto on the sides of the cruisers.
October 31st, 2009 at 3:42 pm
Really interesting analysis of the Canadian housing bubble on ‘Running of the Bulls’:
http://tinyurl.com/ybnz2dw
Here below I report their take on what is going on right now in Canada (and Vancouver in particular, as they mention):
Now, let us put this into a Canadian perspective, with some unique Canadian facts.
* Canada gets its house in fiscal order in the mid-1990s, becoming arguably the best run developed country in the world after being perhaps one of the most fiscally irresponsible during the 1970s and 80s.
* The Canadian economy, which is heavily reliant on commodity prices, takes off, particularly in western Canada. However, the strong loonie hits the manufacturing base of eastern Canada.
* Hedge funds became far more prominent in the financial markets. With the advent of technology, they search the world to take advantage of arbitrage opportunities and carry trades. (A carry trade is when a fund borrows in a country with a lower interest rate and lends in another country with a higher interest rate.)
* Hedge funds and other financial institutions begin to allocate more money to Canada because of the commodities boom and because of Canada’s fiscal position. The Canadian dollar, aka “the loonie” rises above par vis-a-vis the greenback and hits a multi-decade high.
* Liquidity floods into Canada, driving up asset prices, including home prices.
* Canadian banks were not as reckless as American financial institutions. Banking is better regulated in Canada and banks hold more capital than their American counter-parts. Banking is essentially an oligopoly, with six banks accounting for about 80% of the market in the country.
* Because Canada’s financial system is stronger, there is less forced selling of financial assets. A “death spiral” – whereby lower financial asset prices leads to impaired capital in the banking system, which leads to more selling, which leads to lower prices, which leads to more impaired capital, which leads to more selling, and so on – is fairly absent in Canadian fixed income markets.
* Therefore, Canadian housing prices fall less than their American counterparts as capital is not as constrained.
* Governments and central banks institute enormous amounts of stimulus around, depreciating the value of fiat currencies and increasing the prices of real assets, including commodities. Stimulus in China is rammed through the financial system as banks are told by Beijing to lend, leading to stock piling of raw materials in China, and higher commodity prices
* The Canadian economy is highly reliant on the United States. Roughly 40% of the Canadian economy is dependent upon exports, and 80% of Canadian exports go to the United States.
* The US government’s and the Fed’s actions are bearish for the US dollar. The US dollar becomes the currency to finance the global carry trade. The dollar begins to fall and the loonie begins to rise.
* In response, the Bank of Canada keeps interest rates low to offset the weakness in the US and to avoid the loonie from rising too high against the greenback, lest the strong loonie wipes out the manufacturing base of eastern Canada.
* Low interest rates spur borrowing for mortgages. Sales of Canadian homes reaccelerate. In some cities such as Vancouver, home sales over the past few months are breaking all-time highs.
October 31st, 2009 at 3:02 pm
Hard lessons learned by US is going unnoticed by Canadian authorities.
‘More than any private sector actor, the federal government created systemic risk through its efforts to cajole or mandate banks to lend money to people for home purchases they couldn’t afford — particularly through Fannie Mae and Freddie Mac. Loans enabled by these government-sponsored enterprises (GSEs), coupled with ones insured or required by government programs, account for nearly two-thirds of bad mortgages.
Fannie and Freddie were able to operate beyond market-based standards because everyone thought they were too big to fail and would be bailed out by the federal taxpayer. This belief became reality last year when they collapsed, and taxpayers were stuck with $1 trillion in bailout liabilities.”
http://www.usatoday.com/printe.....t1.art.htm
October 31st, 2009 at 2:51 pm
HST revealed as tax on savings. Insidious and sneaky governemnt tax grab digs deep on money you thought you’d already been taxed on.
http://communities.canada.com/.....e-hst.aspx
October 31st, 2009 at 2:22 pm
#62 C, yes indeed, we should be getting our ‘fair share of abuse’ ( You can’t always get what you want , Rolling Stones)
It was pleasing to see that the Horse Charge that the mercenaries had planned was halted by a loosing of innocent marbles. Thats real brains over brawn. Violent intent met with non violent tactics. Bravo to the violence containment strategy of the people who are forcing the media to pay attention to the farcical advertising of the Olympics organizors and the punks who have drank the kool aid.
The cops said it wasn’t fair, so, then leave the animals out of it. Do they think they’re leading a charge against savages with sharpened pieces of mango? What is the horse charge but a bitter relic of authoritarion abuse?
I’m surprised the SPCA hasn’t lodged a protest against this animal abuse by the police force. Leave the animals alone, they have taken enough abuse from humans. They don’t deservge to be used as tools of destruction by the tools of destruction who ride them into crowds of innocent citizens.
http://www.theprovince.com/new.....story.html
Whats the matter with police these days? Why are they so fixated on violence dealing? Are they having to pay for their own dry cleaning or something? The Nintendo generation cops have become tuned out into an artificial world of video game macho violence and are obviously not psychologically competant to work with real people in the real world.
October 31st, 2009 at 1:32 pm
@scullboy: Good luck scullboy! You were the best at giving satv/krishh sh%t! And thanks for being part of the solution. The more people that leave, the more prices will come down.
@scoop:
Initial teaser rates of 1.5%. What could go wrong?
@realpaul: What are you still doing here? Don’t you have a torch relay to disrupt?
October 31st, 2009 at 1:20 pm
I’ve spent the morning reading some interesting articles on the boc, cmhc, interest rates, flaherty, bubbles, re, usa… you name it and I’ve read it.
The RE bubble is so obvious, it’s painful. I no longer debate the issue with naysayers, I honestly don’t care. If anyone can’t see the writing on the wall, they’re more than likely allowing their emotions to formulate their opinions, rather than facts.
Higher interest rates are coming, no one, not even the most bullish on RE are arguing that. Variable rate mortgages that aren’t locked in will feel it first. 5 year fixed will feel it upon renewal. The bubble’s burst will go on for years and years, you can count on it.
There’s no point to the debate. In the end, when this all goes down, sure it’ll be nice to say ‘I told you so’ but really, what’s that worth? I don’t care to argue anymore. I’m just going to look after number one.
I’m really glad this site is still around, keep it up Pope.
October 31st, 2009 at 12:44 pm
After last weeks BOC ‘announcement’ that all economic numbers published by the government were being revised downward, we get this great guffaw from the US Veep.
http://www.realclearpolitics.c.....urate.html
Now, I don’t question the veracity of government pronouncements often. In fact I am prone to believe that the government is my freind and that they are watching out for me. But could something be going on here? Is the sudden international push for higher interest rates scaring some local ghosts out of the closet?
We have seen that the pronounced GDP numbers have been solely the creation of money dumping by various government agencies and that no real recovery is taking place. In fact we saw last week that unemployment in BC has increased 8.5% over the past month alone.
So why the sudden backpeddling? Thats a ponder all right. Is free money complacency affecting the polling numbers for the Federal Politicians. Could higher rates lead to a wave of unhappiness in the population as they suddenly get hit with double mortgage payments at the same time as having to pay double up gas prices, grocery bills and fees?
Could it be that the interest rate debate will have to wait until we see a federal election in Canada and get over the election cycle in the US? In that case, inflation would have steamrolled through the current price points and we would be looking at much higher prices for everything, including real estate. Politics and putting bread on the table have very little to do with one another.
October 31st, 2009 at 11:56 am
Newsflash: Low interest rates may be starting to create a real estate bubble in Canada. But no worries, feds are watching the situation to make sure it doesn’t become a serious problem. Phew.
http://www.theglobeandmail.com.....le1346308/
October 31st, 2009 at 11:16 am
The Provincial “Health” Officials assure us that the death toll will continue to rise unabated.
http://www.vancouversun.com/he.....story.html
Now don’t you feel better. There is a spike of childrens deaths being reported in the US. Of course all deaths are not being reported in Canada. As in everything else, the government and the media whores want you to keep spending and don’t want to think the plan for recovery should be derailed by a few deaths.
But, they still expect their fat paychecks and perks packages don’t they? After proving themselves to be incompetant we still have to keep paying them the big bonuses don’t we?
When they come around to strike the next time we’ll have to remind them of the children who died due to the incompetance of the so called ‘Health Professionals”.
In other ‘Health ‘ news , did you know that Manitoba has a higher Tuberculosis infection rate than Bangladesh? Oh sure , we’re really number ONE!!!
http://www.vancouversun.com/he.....story.html
October 31st, 2009 at 10:48 am
The article posted about mixed zoning residential and industrial made me laugh. I have seen it before in Asia. You know the place where all the rich people supposedly want to move from at all cost to live here.
And what is the point of this mixed zoning. Its not like we have much industry left. It just seems like a bad excuse to move our only growth industry housing into new neighborhoods.
October 31st, 2009 at 10:45 am
I was just wondering how many landlords are gonna hold out for the big jackpot during the olympics. Only to price too high and end up getting a big fat 0 for the month of february and possibly march as they scramble to find a tenant.
October 31st, 2009 at 10:00 am
Here’s a fun little mashup that displays craigslist rentals on a google map. It would be neat if it would give a time-lapse view, but even as-is it’s pretty interesting:
http://www.padmapper.com
October 31st, 2009 at 9:53 am
Arguing that rents have not come down does not make a troll anymore than arguing that they have. They are still crazy expensive – not compared to mortgages, but they are high and getting higher. Don’t take my word for it though, look at this “reasonable” suite.
http://vancouver.en.craigslist.....86228.html
October 31st, 2009 at 9:17 am
I know someone with a rental posted on Craigslist. It’s for a brand new 2bed/bath highrise in the Newport area of Port Moody.
He listed it a bit below his “competitors” of which there are MANY.
Not ONE contact in the past four days.
October 31st, 2009 at 8:52 am
Good One John.
Problem is anyone who can read will see units that were rented for $2100 last year are vacant after two months at $1700.
Still thanks for coming out, you are always good for a laugh.
There might be people stupid enough to believe a troll instead of actually looking at the classifieds in the local paper, walking around downtown and going to showings, hell even Craigslist proves it’s down 25% since 2005.
October 31st, 2009 at 12:30 am
My impressions of the rental market match Arwen’s. I’ve been passively looking to move, so have been on top of the market for about 3 or 4 months. Even in places like Yaletown and Coal Harbour prices are dropping. Not by much yet, as the specuvestors are basing their asking prices–particularly on Craigslist–not on what the market can bear, but on what they need to cover their mortgage payment. Something makes me think that Mr. Market will deal these budding Tom Vu’s a harsh lesson in reality.