Sales boom sparks bubble fear

Rock bottom interest rates are working their magic as real estate sales leap up to record levels. Was that the shortest correction ever? Even as unemployment levels creep up, house sales are brisk and prices are rising, leading some to believe we’re in a housing bubble.  Scotia Capitol is the latest to use the ‘B’ word in public:

“Is Canada in a housing bubble? Probably, but low rates, mortgage innovation and a relative shortage of new supply are likely to keep it going for a while yet,” Scotia Capital analysts wrote in a report.

And as CREA economist Gregory Klump points out, when it comes to people losing their jobs it’s more of a glass-half-full scenario:

“If we have 10-per cent-unemployment, that means 90 per cent of people are employed,” he said. “People are re-entering the market – they have the confidence to take advantage of bargain-basement prices. There’s been a release of pent-up demand, and that has a long time to play out. Prices have gone as low as they are going to go.”

Whatever is in that glass, it’s working.  Sales in BC hit record levels in October.  And every real estate sales organization and mortgage broker seems to think that it should pretty much carry on indefinitely, and this enthusiasm seems to have been absorbed by the population in general:

According to the CAAMP report, Canadians are increasingly confident that the value of their homes is rising and optimistic about their local housing markets. It also said that the Canadian mortgage market is rebounding and will surpass the $1 trillion mark in 2010.

Scotia Capitol economist Derek Holt points out the obvious when it comes to record low interest rates:

Mr. Holt expects the average mortgage to creep toward 5 per cent within three years, which could mean hundreds of dollars more a month for the average mortgage holder.

For example, a five-year variable rate mortgage at 2.25 per cent on $300,000 would carry a monthly payment of about $1,300, assuming a 25-year amortization period. A move to 5 per cent would boost the payment to $1,750.

“I think that causes a slight pullback on prices,” he said. “Right now, you have conditions that only come around once in a century and it can’t stay that way forever.”

But it’s not like Canadians aren’t used to dealing with heavy debt loads, and we have a distinctly Canadian way of dealing with debt-based money problems: more debt.

130 Responses to “Sales boom sparks bubble fear”

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    When things are called a bubble, it really isn't until you get a parabolic move. Expect the run to continue. Anyone who's knowledgeable and serious about the housing markets know it's stupid to stand in front of a moving freight change. Bernanke already mentioned that he will keep rates low. These 'bubble' talks are a bunch of jokers trying to shake people out so they can get in. Until a massive flood of buyers on condos and properties are seen, I don't see a top yet.

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    "I don’t see a top yet. – Supraboy

    Does that means there is such a thing as a bottom?

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    I think this thing will carry on – forever, or until the average single family home tops a billion dollars and unemployment hits 100%. That's what I learned at the Warsaw School of Economics and I'm sticking with it.

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    #1 @Supraboy: "Anyone who’s knowledgeable and serious about the housing markets know it’s stupid to stand in front of a moving freight change." That's great advice, I'm going to stay the hell away from this one. My dreams of buying cheap real estate are over. I don't need to own, and current buyers are far crazier than I would have *ever* expected. We just witnessed a worldwide financial crisis – the biggest in 80 years – and they are lining up to mortgage their lives away for a dream. Casting themselves onto the rocks is more like how I see it, because I don't see how this could possibly be over. I save enough money to provide decent financial security for my family and will continue to do so.

    I'm 30 years old. It would feel good to settle down, but instead I'm going to remain flexible about where I live and what job I take.

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    It just isn't funny anymore. It's like if everyone started coming to work in chicken suits. First it's funny, then it's a bit disconcerting, then it's hysterical, but now I am deeply concerned. The media is all chicken suit all the time. Everyone in a chicken suit insists they're still having fun, but I don't really believe it. Getting into the suits is getting harder and harder. More and more commitment is required. Some people glue chicken suits to their bodies for the next 35 years!

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    Wreckonomics Says:
    6

    Rp: 100, best analogy ever.

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    rubberduckie Says:
    7

    I wish there were something like an MLS, but for rentals. There are sites here and there, but not one single, clean, organized and up-to-date site that everyone uses.

    I would be willing to pay an agent to help me find a nice long-term rental.

    My biggest obstacle is I have a cat, and it seems 90% of rentals don't allow pets. Should I apply anyways and hope they like me so much they'll allow it? Should I lie?

    If legislation passed tomorrow that landlords couldn't discriminate against pet owners, do you think it would have an effect on real estate prices? I bought my first condo because some mean landlords kept slamming the phone down when I said I had a cat. That was in 2001, and it turned out my sweet kitty did me a favour! But now I've cashed out, still have the cat, and it's as difficult as ever! At least I don't have a dog. I think dog owners are worse off than cat owners.

    I am rubbing my hands with anticipatory glee that the rental market will be flooded post-olympics and I can take my pick!

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    No Longer Looking Says:
    8

    "My biggest obstacle is I have a cat, and it seems 90% of rentals don’t allow pets. Should I apply anyways and hope they like me so much they’ll allow it? Should I lie?"

    Maybe 90% in premium rentals, but the numbers are much better in the burbs. I think the numbers are getting better too.

    If you are unsure about their policy, don't bring up the cat at first. Do that after you've impressed them with your income, references, etc.

    Lying is a common strategy for pet owners. Even if the lease species against pets, the landlord still has to make a case before the RTB. Also, some landlords barely pay attention to their place (downside is the place might be a dump). Personally, I opted not to lie.

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    Could this be another case of the "too big to fall"? Could the housing market be something that is so big that if it fell, then the government would bail us out?

    The only way I can see this playing out…without complete self-implosion is gradual increase in interest rates (like 0.25 or 0.5% a year…over 10 years) and a slow steady decrease in housing prices (~5 to 10% a year) and modest salary increases (like 3% a year). Anything more drastic would cause complete mayhem. Of course…to pay for all this mess, my taxes should go back to year 2000 levels — or an extra 10% of my income. It was a bull market for 8 years…I see an 8 year decline to reality.

    My question is…who are the creditors for the $1T mortgages? At 0.25% interest…that's $2.5B in interest. If it goes back to 5%…that's $50B of steady income for 25+ years! The other question is…how did they get $1T in the first place lol!

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    Inflationary effects of easy money:

    http://tinyurl.com/yg65q3j

    When central banks and governments tell you we have a deflation, do not believe them…

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    @Vic: If people pay back, the creditors are the banks. if they don't, it is the CMHC.

    it is a win-win game for the banks: they only get the upside. I know it sounds crazy, but this is what is happening right now in Canada.

    Information is power. The governments are selling this as a 'necessary' policy. It is a scam to keep this circus going (after all, aren't they up for re-election…?).

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    No Longer Looking Says:
    12

    @domus: Yes, I notice the mysterious shrinking boxes of food at the Super Market :P

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    rubberduckie Says:
    13

    @No Longer Looking: I don't want to compromise my location. I'm comparing buying versus renting, not buying in a nice location versus renting in some godawful suburbs or rundown part of town. :-)

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    People have lost their fucking minds, especially in this province.

    Let's recap shall we??

    Scotia says were in a bubble.

    The crea says even 10% unemployment is ok because that still leaves 90% of us available to sell our lives for shelter.

    The first poster here is a full on typical BC real estate zombie who assumes the current circumstace is a good idea.

    I am so glad to be getting out of here. BC is so obviously past the point of no return. It's like watching a bunch of rowdy, drunken frat boys piled into a BMW flying 100 mph down the wrong side of the road.

    Fuck man, it's such a shame. It's such a pretty place.

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    HappyRenter Says:
    15

    @rp:

    RP, people are being sold a dream by developers, agents and bankers but borrowing a nightmare. The only people getting wealthy from real estate at these insanely unaffordable prices are the three previously mentioned parties, as they take their profits at the top of the market. No dream of mine involves taking on 35 years of debt.

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    Supraboy,

    I just received an e-mail alert from "Silhouette" in Burnaby.

    Seems the units are "newly-priced at 299,900"

    With things a flyin' off the shelf, I'm surpired to see any reductions AT ALL!

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    No Longer Looking Says:
    17

    @Boombust: "Silhouette" pre-sales started at 295K back in 2006, according to one article I read. All that risk for no profit. It'd consider renting there, though, at the right price.

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    @rubberduckie:

    I knwo how you feel about the pet situation. I just rented a sweet place on the westside, gorgeous roof top deck, view , everything. Current tenant said he would not allow pets. I called him, told him our situation and what we wanted to rent, he said I like you guys let's do the paperwork. It was then that I told him we had a dog, he said no way, sorry no pets. I sweet talked him for a good 15 minutes, finally he caved. Having a good long term tenant who really wanted to look after the house like it was their own sold him. He wanted a few extra provisions in the lease but we were ok with that. I completely know your frustration with the pets, it's what drove us to buy in early 2005, but we cashed out last year and it was still bad for finding rentals with pets. Bottom line, apply to any place you want, sell yourself to them, especially if you want long term and have excellent credit ( telling him you just sold your own place helps), then once they have their heart set on you " oh by the way, I have a cat". But don't rent the place and lie about having a cat, that will just create stress on you and isn't really fair.

    It's better than asking " do you take pets" they will all say no, after the Olympics that will change, rental arket will be SATURATED.

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    rubberduckie Says:
    19

    @DaMann: Good strategy. There's a lot of legwork in being a renter!

    The path of least up-front resistance is buying. Eager Realtors drive you around to showings on your schedule. Property sellers scrub every inch and bake apple pies to try to get your interest!

    It's a vastly less glamorous experience when you're renting.

    I recently viewed 2 apartments for rent. Both places, completely independent of each other, had dirty underpants on the bedroom floors.

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    duru2000 Says:
    20

    My landlord( a realtor agent btw) is selling the house expecting the prices to go down in 2010. I was thinking to buy at the end of next year, but since Bank of Canada kept the party running with crazy low rates i will have to wait a little longer. So i took craigslist and there are plenty of places to rent in my range (1000$) right now, not like two years ago. I was playing with the idea of buying a place right now but i'm not going to do it, i rather have a 200K mortage at 7% than a 400K one at 3.5%. I can put a lot of money down but it doesn;t make any sense right now. Everywhere in the world (except Monaco but that's a different market) the Real Estate took a 25-40% haircut in the last 2 years, but here…

    i honestly expect a tsunami starting february 2010, once the olympic hype fades away there will be blood on the street again, 2008 was just the beginning, it is like that in every recession, this is called the bear trap rebound.

    BTW, do you want a 800K house in east Vancouver? i can hook you up fast ;-)

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    Absinthe Says:
    21

    After a lifetime of stable renting, my family and I went through some serious bubble related instability with our rental last year. Now we're paying just slightly more for more bedrooms and a yard, so it's turned out for now- but I must admit for the first time getting grumpy about this bubble. The insanity in the housing market is making rental feel insecure, and I'm having trouble feeling settled. That, I don't like.

    But I realized there's your self perpetuating mechanism: newbie specuvesting landlord runs all over his business obligations, makes the renter feel insecure, the renter jumps into a terrifyingly risky but looks-easier-to-live-in purchase situation.

    And seriously – I've never seen so much housing aimed at the double income professionals with no kids no pets no roommates no parties and no smoking advertised. If you go on Craigslist, it's almost pathetic; I want to grab the ads and shake sense into them. *Those renters are out of your league, dank moldy 2 bedroom. They don't want you. Allow a frikkin' cat, you morons.*

    I'll tell you, though, if the *banks* are admitting a bubble in housing, it's huge. That's a shocking thing for a bank to say.

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    No Longer Looking Says:
    22

    I'll be honest, this is another reason I'm nervous about owning a structure in BC:

    http://www.cbc.ca/canada/british-columbia/story/2

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    ReadyToPop Says:
    23

    “You only find out who is swimming naked when the tide goes out.”

    Warren Buffett

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    @Absinthe:

    The no-cat landlords are really showing their amateur status I think. Our landlord is semi professional, he's been doing it for 20 years but with just one house of 3 units and everyone in the building right now has a cat (I think he actually prefers tenants with cats). At the end of the day he's happy because of the new rules that allow him to hold double the damage deposit for pets, which is really what all landlords should be looking at, it's your insurance that you won't get totally screwed by a tenant, the risk of having a cat pee on a few rugs is completely offset by the doubling of your insurance policy.

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    nonymouse Says:
    26

    @Bizznitch:

    Yet somehow nobody will see it coming.

    Like or Dislike: Thumb up 0 Thumb down 0

    Bizznitch Says:
    28

    They never will. Harpoo will have a bit hand print on his forehead when he slaps himself and says "I had NO clue this was going to happen!"

    Like or Dislike: Thumb up 0 Thumb down 0

    @Bizznitch: Great post…and yes, when it happens, they will say: "who could have known???"

    Like or Dislike: Thumb up 0 Thumb down 0

    @scullboy:

    You've been complaining night and day, you missed out on the real estate run and now you're a bitter loser. Life sucks doesn't it. Why can't you just accept reality? Instead, you come here with your jealousy and drivel hoping that everyone is on your side, which they are because they are obviously bearish and they also missed the run. You are so one-sided in your nonsense and using four letter words wouldn't help your case. The city is better off without jealous people like you. There's a reason why people can afford million dollar homes. They found a way to make money, if you can't come up with your own method of making money, then too bad. Don't go pointing fingers at BMWs and be pissed off about life. It is better for you to spend some time to ask yourself why you weren't able to get a property, and ask yourself what you can do to change your mentality, perhaps then you can come up with your formula to make money.

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    @Boombust:

    Yes, there is such a thing called a bottom. It is spelled with a "Z" and the word is ZERO.

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    I shouldn't ruin all the dreams of the Bears here. You can all continue to dream about a market crash. As Martin Luther King says in his speech, "I Have a Dream". This is one of the few places online where bears gather together with a dream, a dream of a property at fire sale prices, a dream where Vancouver rid itself of mainlanders from China, and a dream that one can own a BMW without being jealous at others.

    Let property prices come down

    Let mainlanders leave this town

    Let the BMWs come to me without hard work

    Let jealousy disappear

    Let all the bears rise and take over west side homes without working

    All bears, rise together and say, "I have a dream, a dream of a Vancouver where property prices crash because I cannot afford a house. Let prices crash because I missed out on the run, and let prices crash because I'm not smart enough to make money!"

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    No Longer Looking Says:
    33

    You know what would be a neat improvement to these boards? If you could auto-block postings from certain people (for those of us who sign-in).

    Like or Dislike: Thumb up 0 Thumb down 0

    ditto

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    @rubberduckie:

    #7……..My biggest obstacle is I have a cat, and it seems 90% of rentals don’t allow pets. Should I apply anyways and hope they like me so much they’ll allow it? Should I lie?…….

    ===============================

    Do like my partner and I did. We took the two cats to a taxidermist, did the deed and lo and behold, two critters that no longer shed, nor need feeding and that nasty litter box – a thing of the past. We can go on holidays for weeks with no worries or concerns!! No critters "hogging the bed" either!!!

    The only disadvantage is the constant stare, the evil eye that seems to follow us everywhere and anywhere. But hey, we are getting used to it. And when we move, the bread box becomes an efficient cat carrier.

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    nonymouse Says:
    36

    Vancouver running out of land?
    http://tinyurl.com/y9avzx7

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    other ted Says:
    37

    I have been watching this nightmare for so long I feel that once the bubble pops it will be anticlimatic. I have moved on literally and won't be buying as I no longer live in Vancouver. If it wasn't for family constantly prodding me to buy in a city I no longer live in I would not be following this.

    Yes Vancouver you are in a bubble the fact that some banksters are admiting it is the fat lady singing. Look out below we are only a few months from the olympics once its over its too late specuvestors. Sell now before its too late.

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    Bizznitch Says:
    39

    Ah, here's a good one. http://www.theglobeandmail.com/globe-investor/per

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    Boombust Says:
    40

    "Boombust:

    Yes, there is such a thing called a bottom. It is spelled with a “Z”

    Okay okay. Zottom it is.

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    And as CREA economist Gregory Klump points out, when it comes to people losing their jobs it’s more of a glass-half-full scenario:

    “If we have 10-per cent-unemployment, that means 90 per cent of people are employed,”

    That's a nice spin on the 10% unemployment, they sound just like my mortgage broker "It's not a half million dollars of debt you're taking on, it's a half million dollars of equity you're building".

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    This board is so one-sided. When will you people crawl out of your own box and see why people can afford million dollar homes instead of screaming crash for the past 3-5 years?

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    Supraboy – that's what's so great about the net. You are totally able to start your own blog, with ease, on which you can give a detailed analysis of your case and encourage discussion (ala Mish). You could present cases, statistics, trend projections, etc. I'd quite like to see that.

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    nonymouse Says:
    44

    Supraboy put up or shut up. Where is your blog?

    Like or Dislike: Thumb up 0 Thumb down 0

    For what it's worth, I enjoy most of Supraboy's posts. They're a good counterbalance that keeps this place interesting.

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    Anonymous Says:
    46

    And considering the shape of our RE market, Supraboy seems to represent the majority – like it or not…

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    oneangryslav2 Says:
    47

    @Supraboy: Please let us in on the secret. How is it that people can afford million dollar homes? I still don't get it. I'm single and have a salary that in the high five-figures, which puts me up in the top 20% of households in Vancouver, yet I can't afford* to purchase a SFH in East Vancouver. So, Supraboy, lead me to the holy grail.

    *I suppose that I really can "afford" to "own" real estate, if I use Dave's "affordability" criteria, or (more accurately) criterion.

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    You guys are looking at it all wrong. Bubbles don't pop until the last bear has capitulated. Supraboy is providing a service by working hard to make that happen. :)

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    No Longer Looking Says:
    49

    @Purp: But that didn't happen in the US or anywhere else in the world. :P Or are we different?

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    be afraid Says:
    50

    Corruption rife in Canadastan. Fuck ups in health car prove the point.

    http://www.vancouversun.com/health/Quebec+nurses+

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    YLTNBoomerang Says:
    51

    @rubberduckie:

    I hear you on the cat issue! We just moved into a place (with my partners cat) that originally was no pets. In their add they never mentioned pets, we never brought it up until we sat down to sign the lease and they had the "no pets" box ticked to which we replied "we have a cat, at no time did you say no pets or did you specify this in your listing. The specuvestor looked at his wife, whispered in her ear, then crossed out and initialled the no pets clause.

    It's easy for the landlord to say no pets on the phone, but once they have the forms filled out and are sitting in front of you, they can smell your money and will be suddenly very flexible to get you in their unit than risk at least another month of lost rent. Our place is $2K/month; with us moving in they don't suffer the opportunity cost of one month lost rent and can hold us to at least our security deposit if the cat goes crazy – show me a cat (or an owner that will let a cat) do $4K of damage to an apartment!!!

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    NO- LYMPICS Says:
    52

    Re Pets:

    Be upfront with your potential landlord re pets….most ads for rentals will state whether pets are allowed.

    In addition, and I posted this waaayy back several months ago, but I couldn't find a single insurance company that would cover ANY damage caused by pets. That's one reason many landlords don't want pets, or should be aware of. It's not a prejudice per se, its an insurance/liability matter.

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    NO- LYMPICS Says:
    53

    BTW…has STRATAMAN posted his expose' on problems with new buildings(based on his experience and expertise)?

    Like or Dislike: Thumb up 0 Thumb down 0

    oneangryslav2 Says:
    54

    @NO- LYMPICS: Welcome back. Where have you been? And, to answer your question regarding Strataman, no he has not.

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    NO- LYMPICS Says:
    55

    54 oneangryslav2

    Thanks :

    I've still been around, but at times finding myself getting jaded by the system to the point of tuning out. The world is going down the toilet.

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    Hang in there bears. Fundamentals and facts are on your side.

    Most people I am talking to at the moment around the city are bearish as well. I know lots who want to buy but are holding off to buy until prices come down. Like you, they are waiting for all the listings to come on after the Olympics as well and are expecting prices to start dropping.

    Realtors, bankers and architects I speak to are also increasingly bearish. Overvalued is the word they most commonly use.

    Stay strong!

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    scullboy Says:
    57

    I love you Supratard. I really do.

    YOU are the true voice of the Vancouver bull. You stand in line at a restaurant and somehow think that gives you insight onto the food and beverege industry. You live in your parents' basement and yet you think because they managed to pay off their mortgage that makes you Donald Trump. You see a few leased cars around and somehow that makes you a high roller.

    I come from money you dumb fuck. Unlike you and the rest of the Richmond crowd I'm not vulgar about it. My family have been in this country a he'll of a lot longer then you and your nouveau riche, wanna be wealthy family. Unlike you I actually owned property and sold at a profit.

    God I hate you and every fucking idiot in this town like you. I'm so fucking glad to be moving to a city where the metrics actually make sense. I'm especially glad to be moving to a city where nobody thinks rich Asians somehow keep the city and it's economy afloat.

    You make me laugh, you really do. You can't seem to see the warning signs and you continually make braying, jackass sounds. You aren't a high roller you ficking idiot. You are an idiot wannabe poser and before too much longer you, your stupid ficking family, your stupid fucking friends and your entire wretched fucking community are going to discover the difference between the apoearance of wealth and real wealth.

    Now put the ball gag back in your fucking mouth and jam that G.I. Joe action figure back up your ass. I'll flip you a quarter when you go down with the ship you shabby, third rate excuse for a citizen.

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    Scullboy, there's no need to be coy, you can tell us how you really feel.

    Like or Dislike: Thumb up 0 Thumb down 0

    scullboy Says:
    59

    Drachen,

    I would but I ran out of obscentites. ;)

    Like or Dislike: Thumb up 0 Thumb down 0

    2010SuperBoomTime Says:
    60

    Once the Olympic games begin the rushing sound you will hear will be rich asians and europeans running into the streets to buy condos in Vancouver. Every other porsche driver will be a rich asian or european businessman who enjoys figure skating and 500 sq ft apartments in multicultural cities.

    Like or Dislike: Thumb up 0 Thumb down 0

    Wreckonomics Says:
    61

    @2010SuperBoomTime: What about the curling? I was told they would all be rushing here because of the curling.

    … Well, that and the rain.

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    ReadyToPop Says:
    62

    I've got news for Clunkerboy or anyone else with a condescending attitude toward bears. I can buy a place in Vancouver easily but I'm still a bear. I just don't see good value in RE right now and I'm in a position which allows me to wait. I'm sure there are a lot of other bears (lurkers and posters) who are in the same position.

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    observer Says:
    63

    Buyer's have choice now. Buy the tulip for $1,000 and hope it increases in value to $1,100 and doesn't drop much below $1,000 or wait until the tulip costs $5. Clearly, you shouldn't be buying the tulip at $1,000. However, it seems like many people or investors are doing it, and it is being made cheaper because it only costs $4.37 a month in payments, a real bargain. So it seems.

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    ReadyToPop Says:
    64

    @observer

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    ReadyToPop Says:
    65

    @observer

    *claps hands*

    Like or Dislike: Thumb up 0 Thumb down 0

    This piece of news from Bloomberg links up quite nicely qith the discussion we had about CMHC and unsafe lending in Canada (keep in mind that CMHC is funding a much larger share of new loans in Canada than the FHA does in the US!:

    "The Federal Housing Administration, the agency that insures home purchases made with down payments as small as 3.5 percent, may create another lending crisis, Toll Brothers Inc. Chief Executive Officer Robert Toll said.

    “Yesterday’s subprime is today’s FHA,” Toll said today at a New York conference for builders sponsored by UBS AG. “It’s a definite train wreck and the flag will go up in the next couple of months: Bail us out. Give us more money.” Toll Brothers is largest U.S. luxury homes builder.

    The FHA’s insurance reserve ratio fell to 0.53 percent, the lowest level in history, and more steps are needed to shore up the agency that guarantees one of every five single family loans, Housing and Urban Development Secretary Shaun Donovan said Nov. 12.

    While the insurance fund’s capital ratio is at an all-time low, Donovan said those who say FHA is the next subprime- mortgage crisis are “dead wrong.” The quality of the loans FHA insures is “actually very good,” Donovan said."

    The discussion of these news at this blog is even more interesting:
    http://tinyurl.com/yamb2zc

    Basically, all these new loans which are guaranteed by FHA seem to experience huge default rates (surprise, surprise) and they are worse than old junk subprime! But the Canadian government and central bank still think we should let CMHC bankroll the excesses. This will end up in tears for many and huge bust of the RE bubble! Vancouver, look out below….

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    scullboy = racist

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    observer Says:
    68

    Vancouver council endorses high-density plan to develop former Expo lands

    http://www.vancouversun.com/news/Vancouver+counci

    Looks like more development along northeast false creek.

    More condos: This is good, the greater the supply the better. Forget the park space, just cram as many units in there as you can.

    New civic plaza: Not so good. Smells like a hidden bailout of Millenium. Taxpayer money to erecting facilities which aren't really needed in order to increase the value of the real estate in the area. Do we really need to move the art museum and library to this location (at least that was one of the proposals if I remember correctly)? Tough luck to those city staff to be laid off. Tough luck to the cramped user's of translink services.

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    @Chuck:

    Nah, he's just a potty mouth.

    Or potty fingers.

    Something like that.

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    Freddy the Freeloade Says:
    70

    On the Oct 22nd Friday "Free for All" a reference was made to Murray Dobbin's piece "Why Canada's Housing Bubble Will Burst" on the Tyee. Mr Dobbin mentioned David LePoidevin's letter to his clients. Why do you think this letter http://www.nbfinancial.com/web/davidlepoidevin_20… has been removed from Mr LePoidevin's National Bank Financial website http://www.nbfinancial.com/en/davidlepoidevin/ind…?

    Hmmmmmm

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    CelicaMan Says:
    71

    Little loser boys and trolls will be left holding their little tools, bears, just grit your teeth and be patient.

    My strategy lately has been to remove the excess cash from my savings account (after paying rent and bills), and put it into my safety deposit box. This prevents the bank from leveraging it up and loaning it out. I figure if they aren't going to be prudent about whom they give loans, nor give me a reasonable return for my risk, why should I allow them to use it as they see fit?

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    Boon Duck Says:
    72

    Celicaman, thanks for keeping inflation down. All those who buy real estate are not as smart as us on the sidelines.

    Like or Dislike: Thumb up 0 Thumb down 0

    @CelicaMan: You could buy bonds of more responsible governments (though admittedly, I'm not exactly sure how to do this, except perhaps through some specialized etf's).

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    CelicaMan Says:
    74

    @observer: responsible and government are mutually exclusive terms

    Like or Dislike: Thumb up 0 Thumb down 0

    All governments may be irresponsible but some are less irresponsible than others. Australia seems to be in this camp in that they actually started to raise rates.

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    @CelicaMan:

    "Little loser boys and trolls will be left holding their little tools, bears, just grit your teeth and be patient.

    My strategy lately has been to remove the excess cash from my savings account (after paying rent and bills), and put it into my safety deposit box. This prevents the bank from leveraging it up and loaning it out. I figure if they aren’t going to be prudent about whom they give loans, nor give me a reasonable return for my risk, why should I allow them to use it as they see fit? "

    haha…..talk about stupid. Stupid 101. If you can't afford to buy a house, at least put the money to work in the stock markets. Now I know why you stupid bears are crying over why people are rich. Those who agree with your strategy are either stupid, or they are pretending that you are smart while they're putting their money to work. People like you deserve to rent for the rest of your life.

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    @Boon Duck:

    Celicaman, thanks for keeping inflation down. All those who buy real estate are not as smart as us on the sidelines.

    Are you exaggerating? You've missed a +20% rise in the past 3 years sitting on the sidelines, keep on sitting there where you belong for your stupidity. People posting here are getting more and more stupid and the jealousy index got quite a bit higher.

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    CelicaMan Says:
    78

    Poor little boy, you assume so much…I was wise enough to sell my house and buy a nice pile of gold 4 years ago…I've been seeing new highs on a daily basis, son. Put that in your coffee-can tailpipe and smoke it.

    Child, Supras are for drifters, Celicas are for Pike's Peak-class climbers. Be silent and you can learn much from a Jedi-like master.

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    Supraboy,

    Unlike our over-emotional friend scullboy I actually welcome you here, no pun intended. You bring a contrary opinion and that is welcome (maybe just tone down the insults a tiny bit). I respectfully disagree with your assesment of the current situation, but we can still chat.

    My only request to you (and I know that is futile, but I want this for the record), is to ask you to STAY here when (if?) the tables are turned. I personally want to know what happens to people like you when the SHTF.

    Best regards

    arit

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    Celicaman said he's taking money out of the bank. Think about it guys, that guy is obviously beyond stupid if he thinks he can stop inflation with his $1000 worth of savings or less. Even if Warren Buffett took out all his money and parked it in his garage, do you think he can stop inflation?

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    Hey Chuck, thanks for answering a question nobody fucking asked.

    I'd say "I'm not a racist" but what's the point? Every racist on the planet says that.

    What I will say is I'm fucking sick of hearing "all the rich (insert ethnic group) comin into Vancouver who are affecting home prices" when that's just plain bullshit.

    Also sick of the knee jerk "most immigrants are hard working taxpayers so how dare you impugn them with your damned calumny ". I'm using big words on purpose to confound Supratard.

    I personally know several immigrants connected with the seedier parts of the Vancouver demimonde. Rest assured there are a lot and I mean a LOT of connections between here and Asia involving drugs, human trafficing, And laundered money. If you want to be all PC and pretend it's not true then that's your deal. It's pretty hard to ignore when the people involved are TELLING YOU HOW THEY SCAM THE SYSTEM.

    Likewise I personally know people who are scamming the refugee system. There are lawyers in this country who know exactly what story to cook up for the refugee board. I know this because I went through it with an ex boyfriend. I witnessed the scam from
    start to finish. You can't tell me it doesn't happen, I fucking witnessed it.

    So yeah call me a fucking racist if you like but I'm really only reporting the facts as I've personally seen them.

    This country needs to be a lot smarter about what's happening within it's own borders and people need to stop being so knee jerk PC.

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    Celicaman

    How do you account for a case of a bank closure if the deposit is in a bank?

    and offtopic a bit…

    Which was the best year for the Celica? I claim 1994! Downhill from there LOL.

    Pike's Peak(!!!) Gentlemen, here is someone who knows what he is talking about, please listen to him.

    Best regards

    arit

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    @arit:

    I've been around here for awhile as you know. When will your so called SHTF occur? And why should I continue to stick around under your command?

    As for Celicaman, he sold his house 4 yrs ago and he's been on the sidelines. That explains his bitterness.

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    Hi Supra,

    Of course you have been here a while, I know. When will the SHTF? I do not know. Maybe when the government stops interfering with the market. If they stop.

    Under my command? LOL No, I do not command anything. Thank GOD I am NOT in the army anymore! Under my request, yes. But I have a gut feeling you will dissapear from here if things turn out to be the way we bears believe.

    I did not sense any bitterness in Celica's response, but then again, a am a bitter renter too, right.

    And I admit: I need another washroom. One is not enough when you are the man of four women!!!

    Regards

    arit

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    scullboy Says:
    85

    Supratard,

    Listening to you prattle on about real estate is like listening to a Catholic priest give advice about heterosexual sex.

    What other ostensibly rational transaction do people partake of joy or bitterness? Only in real estate do we see fucktards like you ascribe emotions to transactions.

    That kind of think is the hallmark of a rank amateur. In your case I do mean rank. I can smell the rat-poo dim sum from here.

    So why don't you fuck off down to mummy and daddy's basement and see how many of those die cast action figures and Ciban cigars you can jam in your rectum before you require medical attention? I'm sure the rest of us will appreciate the peace and quiet.

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    scullboy Says:
    86

    Hey Arit,

    I tried for years to offer a rational argument fir what was going on in van both here and on the old vhb blog.

    Know where it gets you with the shatv's and supratards of the world? Nowhere.

    So now I like to think of myself as the unrestricted id of Vancouver bears everywhere. Every time a guy like supratard opens his mouth to lick the window that is Vancouver real estate I just offer a counteropinion in the nastiest terms possible.

    Sure you can argue it's pointless but really, haven't we all said everything there is to say? Doesn't the whole argument feel pretty fucking pointless??

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    @Sandy:

    As long wealthy Chinese and hard working Chinese locals who keep supporting the RE market, the chance for a correction,even minor one,is like winning a Max Lotto.

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    scullboy

    "Sure you can argue it’s pointless but really, haven’t we all said everything there is to say? Doesn’t the whole argument feel pretty fucking pointless??"

    Yes, yes indeed. The talk is just that, talk. We all said what we had to say here and the sides are clear. Now we need to sit down, relax and wait to see who is right and who is poor.

    Just don't get a heart attack, OK?

    regards

    arit

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    No Longer Looking Says:
    89

    All over BC, more folks than ever line up for a few measly cans of food to get them through another cold, hungry week. And the government lets this shit happen:

    http://www.vancouversun.com/business/Time+take+lo

    The things I'd like to do to some people…

    Anyhow, back on topic.

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    No Longer Looking Says:
    92

    BTW here is BC Rail CEO Kevin Mahoney's email: mahoneyk@bcrp.ca

    Let him know what you think.

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    Deliverator Says:
    93

    Doug Casey, an investment letter writer and entrepreneur, had a very interesting thing to say about Vancouver real estate (he says it in the context of describing the state of real estate in the US and how Americans should look globally in their search for real estate investments)[emphasis mine]:

    http://www.caseyresearch.com/displayCwc.php?e=tru

    Doug: Let’s look at the various regions of the world. For people in the U.S., Canada is the easiest place to move to, and I do think Canada will fare much better than the U.S. in the Greater Depression. But that doesn’t mean I want anything to do with Canadian real estate now. It’s far from cheap – in fact, Vancouver real estate has become some of the most expensive in the world today. If I owned anything in Vancouver right now, I’d be hitting the bid.

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    scullboy Says:
    94

    I think the fact that I didn't verbally sodomlize Franco for his last posting should be proof enough that i'm not, in fact, racist.

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    No Longer Looking Says:
    95

    Coming soon to Vancouver. You'll have more than just pleasant memories of your old condo.

    http://news.bbc.co.uk/2/hi/business/8366949.stm

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    This is the best time make an investment in real estate market. Prices are all time low; mortgage rate is all time low. What else you need to think before investing. Inventory is short in some of the regions but even that is not a problem and buyers are moving to invest in real estate sector. This is the high time for real investment.

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    VANCOUVER (NEWS1130) – New York, London, Paris, Tokyo…and now Vancouver. The Lion King–the Broadway musical–is coming to the Queen Elizabeth Theatre for four weeks next summer. Opening night is July 15th.

    Disney's The Lion King is into its second sold-out decade in New York and has won dozens of awards, including Best Musical. Tickets go on sale in March from $26-$98, plus service charges.

    See Vancouver is World Class after all :D

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    @scullboy:

    You sound really bitter. Why don't you just get you just leave this city? Your four letter word antics are useless. It goes to show how uneducated your are.

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    @Franco:

    "As long wealthy Chinese and hard working Chinese locals who keep supporting the RE market, the chance for a correction,even minor one,is like winning a Max Lotto."

    Actually, Landcor says that more homes are being sold by foreigners right now than are being purchased by foreigners. So the whole argument of the rich foreigners saving the market is a total myth. Aside from which, this idea has been around since the very first recorded bubble. It wasn't true then and it's not true now.

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    "This house sold in 1996 for $32,000, 1998 for $105,000, 2003 for $140,000, and in 2005 for $208,000. Now in foreclosure, yours for $54,400."

    -Greaterfool, talking about a house in Compton California.

    'cause nobody wants to live in sunny California right? Too much SUN, give me Vancouver rain any day!

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    patriotz patriotz Says:
    101

    @Vic:

    Could the housing market be something that is so big that if it fell, then the government would bail us out?

    There will be NO government bailout of homedebtors.

    One, the government can't afford it. It would jeopardize the Crown credit rating.

    Two, it would be met by huge opposition in the non-bubble areas of Canada which comprise the majority of seats in Parliament – most particularly Quebec.

    Three, a government bailout would mean admitting that the government was fueling the bubble in the first place.

    Governments CANNOT fix asset prices. The market ALWAYS wins.

    South of the border, all of the "homeowner assistance" programs have simply been attempts to keep people making their payments when they would be better off walking, i.e. they are really aid for the banks. Here the banks, who are also the only ones the government cares about, have already received their bailout from CMHC.

    The only relief homedebtors will get will be that same as in prior busts in Canada – bankruptcy.

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    scullboy Says:
    102

    Hey Supra, you reall are a dim son aren't you?

    I'm leaving Van next week. I got an excellent job as a consultant for an American bank. By the way the forecast for today in Halifax is sunny and 15 C. Today in van it's 7C and rainy. Up till Tuesday the forecast is for warmier and sunnier weather in Halifax. My buddy has been sending my photos. It's blue skies and longer daylight hours.

    I hope you and your wannebe wealthy buddies stay here forever, supporting the local $8/hour hospitality industry and buying condos on credit you can't really afford. Seriously. So fucking sick of you and your kind. The best thing you can do is stay on this side of the Rockies so the rest of us never have to put up with your boorish, bourgeois bullshit.

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    duru2000 Says:
    103

    Just in case you forgot where we are…
    http://2.bp.blogspot.com/_mJmwQtPmusk/R8qBvunTR1I
    It really feels like [Return to "normal"] phase these days, so my guess is 3-6 months will be a different story: BoC is increasing the rate, Olympic hype gone, unemployment highest in Canada, do you want me to continue?

    The rental market is so large right now that even the Co-op housing has townhouses for rent, remember the 1-2 years waiting list? gone.

    This city is not different, just more stupid.

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    2010SuperBoomTime Says:
    104

    Rest assured that supraboy is just faking it. True real estate investors never buy toyotas unless they want to be laughed at. If you want to be taken seriously as a real estate investor you have to own a BMW or a porsche. I own several cars and not one is a junky toyota super car. True slumlords like me have to flash it into the faces of forenters.

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    realpaul Says:
    105

    The newest proposal to sweeten the HST inmlementation is 525K. If this happenes it will drag the value (monthly payments) of everything below that towards the tax exempt ceiling. Manitoba has rejected the HST grab and exposed it for what it is, a bad idea, a tax grab. Thank you Manitoba. The sheep are a bit smarter on the prairie it would appear.

    The pigs are going to bums rush the homeless into holding pens far up the valley during the Olympics it has been announced. The homeless could find themselves in 'shelters' as far away as Kelowna. That factoid was let slip by a senior RCMP spokesman when speaking to the city coucil when discussing budgeting requirements for the influx. He was quickly shut up of course. This is Canada after all and the people have no right to question the actions of the governmnet.

    http://www.vancouversun.com/news/Homeless+will+se

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    whatthe f@#k Says:
    106

    H1N1 vaccine death toll climbs but officials don't want you to think of it as a roulette wheel (which it is) That shot could easily kill you as many healthy people are finding out.

    I got the same speal from the community health nurse when I asked her about the possible side effects of the poison she was dishing out. When I asked why so many kids seemed to come down with autistic like side effects she said "only one in thousand will have that happen" I said no thanks, I am not a gambler. When she inssited that it benefited everyone I replied "will you guarantee that my kid will be supported by the government if he gets sick" She said no they won't do that".

    I see those asshole sucking CANUCKS also jumped the que over the necks of children, real heroes.

    http://www.nationalpost.com/news/world/story.html

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    #7rubberduckie,

    Re the pets & rentals thing. We encountered the same problem when we moved to Vancouver in the summer. I couldn't believe the number of "no pets" listings. Anyway, it didn't matter in the end, we viewed tons of properties and whenever we saw one we liked, we mentioned on the way out the door that we had pets. They all said "OK". The joke is that the majority of the properties weren't fit for human habitation, let alone pets – and these were all houses priced in the $3-4k/mo range. Unbelievable.

    So, my advice to you is never mention pets over the phone, always leave it until after they've met you. If they like you, it won't be a problem. That was the advice we were given, and it worked.

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    "H1N1 vaccine death toll climbs but officials don’t want you to think of it as a roulette wheel (which it is) That shot could easily kill you as many healthy people are finding out."

    I'm sure there's an appropriate forum somewhere for crazy, unsupported, actively disproven drivel.

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    “H1N1 vaccine death toll climbs but officials don’t want you to think of it as a roulette wheel (which it is) That shot could easily kill you as many healthy people are finding out.”

    - Not True, http://www.theglobeandmail.com/life/health/h1n1-s

    36 serious reactions out of 6.6 million doses and one (unconfirmed) death. Hardly roulette wheel odds.

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    rubberduckie Says:
    110

    @Northeast Canuck:

    I almost spewed some coffee out my nose when I read your post "the majority of the properties weren’t fit for human habitation, let alone pets"

    I think in my next search, when I get up the guts to move (maybe April?), I'll do just that. I'd like to get into a place that's so nice I won't feel I'm "waiting" for a correction.

    This last year and a half since we sold our condo has been a rental nightmare. The building is falling apart, the neighbour tenant was crazy (evicted now), and the management company is beyond incompetent. But it's cheap and I love the location. Isn't life just an annoying series of tradeoffs!

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    Drachen Says:
    111

    @duru2000:

    Yeah I love that graph, the funny thing is it lines up nearly perfectly with the Vancouver graph if you put the start at around '86 or '87. The sell-off/Bear-trap lines up perfectly with the dip in the '90s and even the double camel hump has appeared right on schedule just as I predicted about a year ago when I first composited those two graphs together, it's scary how typical the pattern is actually, Vancouver is a textbook bubble.

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    This was posted by 'German Guy' on Rob Chipman's blog.

    German Guy did something simple, he went and applied for a mortgage, asking questions about rates and downpayments.

    Absolutely great reading, you won't believe it (Thanks German Guy…..I hope it is OK I re-post your findings!):

    I here a lot of talk about how CHMC is the Canadian version of American subprime so since I don’t have much to do in this never ending rainy place, I decided to go and apply for a mortgage to find out what is it all about.

    First , an interesting link then below a simplified transcript of the conversation with the broker.
    http://www.canadianmortgagetrends.com/canadian_mo

    I asked for a 5 /35 year fixed rate with min 5% down payement and 5/35 with 300k down as well as a VMR and wanted to know for how much money I would qualify.

    First , don’t think I am going to buy anything here, it was just a time killing exercise, if anything the terrible never ending rain and dull lifestyle is making me to consider seriously going back home (too bad because summer was nice)

    So after this disclaimer here are the figures I gave the banker ( those figures are imaginary and have no relation to my real revenue)

    Gross annual income: 95k, Est. purchase price 800k

    Expenses estimated by banker: Monthly heating costs $67; annual taxes $2500, loan/credit card monthly: $360

    In case of 5/35 with 40k down he qualified me for loan of $538 842 monthly payment $2404 with 4.20 interest rate

    In case of 5/35 with 300k down he qualified me for a loan of $798 842 with 2534 monthly payment with 4.2 interest rates

    I asked to get a lower interest rate in the second case where I put a bigger down payment since the bank was not taking as much risk as with the first one.

    Answer: we take more risk when you put a bigger down payment because your loan does not have to be insured by CMCH, so if anything your interest rate could be higher because the bank is taking more risk. We are not in the business of foreclosing homes and selling to get paid, we prefer when you have a CHMC insurance as our risk is much lower than when you have a pig down payment above 20% of purchase price.

    I asked for a VMR then, he quoted me a 2.25% interest rate for 35 years and qualified for 665 000 loan with 5% down payment.

    I asked if I could put a bigger down payement ?

    Answer: No. We will not give you a VMR loan if it is not CHMC insured!

    I pointed out the absurdity of the situation in his reasoning, with taxpayer taking all the risk and they making risk free profit but all he said was don’t try to fight the government.

    So in the end, maybe the Canadian banks are sound after all. They are not keeping any loans on their balance sheets, all risk is taken by CHMC.

    As I have stated before, contrary if cracks will appear on the real estate, it will start first on commercial properties and not residential. Or maybe commercial is also CHMC insured? Sorry for long post.

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    pricedoutfornow Says:
    113

    "we prefer when you have a CHMC insurance as our risk is much lower"

    Ah ha! I knew it! That's the question I've been wondering all along: Are banks actively encouraging buyers to put down less than 20% because of the CHMC insurance? I suspected as much, only makes sense that they would be more interested in clients with less than 20% downpayment. I guess if you walk into the bank with a couple hundred thousand they're not so eager for you to be their customer. Makes you think they really know what's going on here, if RE was really so safe why wouldn't they jump to give you a good rate on a mortgage with a downpayment of more than 20%?

    Oh it's so ridiculous, the writing's on the wall, isn't it?

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    Anonymous Says:
    114

    that ought to be criminal but i bet nobody's going to jail for it.

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    Drugs "R" Says:
    115

    I guess everyone knows what happens when a big earthquake hits.

    Whether you have insurance or not doesn't really matter, as the insurance companies go belly-up anyway. Except this time the insurance company is the government… so we all will be paying the premiums for decades to come to cover the asses of those who fucked up.

    UNREAL…

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    screwed Says:
    116

    Was this always the banks policy or was it changed recently?

    So am i screwing myself by saving for 50% downpayment?

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    whatthe f@#k Says:
    117

    The airwaves are replete with stories leaking out of the spike in vaccine deaths in Manitoba and BC. Apolgists have been out in force to try and explain it away and urge calm while they come up with a saleable explanation. The health Professional I listened to blamed the media for running the story. They'll only admit to getting a 'bad batch' of vaccine.

    Thats the Canadian way isn't it. The information is so persistenly false that some assholes even start believing that what the government says is true. Man people in this country are naive.

    My advice, don't leave the clinic where you get your shot for at least an hour after they inject you. The adverse reactions have been hitting people in the hours after they have had the shot. You don't want to be found dead in your car.

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    @Drachen:

    I thought you didn't believe in graphs.

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    Drachen Says:
    119

    Dave: I believe in graphs, I just don't believe that by staring cross eyed at a graph (or squinting or whatever it is you think you can do) you can tell the future. It makes just about as much sense as tea leaves or crystal balls and the science backs that up.

    Screwed: That's a relatively recent policy, it just demonstrates that they KNOW there's a good chance of losing money on the above proposition 30% down payment, which is to say the Banks believe that a 30% or more correction is likely.

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    ReadyToPop Says:
    120

    73 CelicaMan Says:

    Little loser boys and trolls will be left holding their little tools, bears, just grit your teeth and be patient.

    My strategy lately has been to remove the excess cash from my savings account (after paying rent and bills), and put it into my safety deposit box. This prevents the bank from leveraging it up and loaning it out. I figure if they aren’t going to be prudent about whom they give loans, nor give me a reasonable return for my risk, why should I allow them to use it as they see fit?

    Banks are ripping people off…especially seniors who depend on interest income…to do what? Attempt to support inflated house prices and make it harder for young families to own shelter and force them into bidding wars? Where's the "anecdotal man"? Tell you what…I'll make it one of mine.

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    Boombust Says:
    121

    "I predicted about a year ago when I first composited those two graphs together…" -Drachen

    Can you post it again? I would love to see it.

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    Drachen Says:
    122

    Here you go Boombust.

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    Drachen Says:
    123

    Actually I guess that was almost two years ago. My how time flies!

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    Drachen Says:
    124

    I'm not sure if that first link will work properly, I just signed up for the Flikr account just now and don't really know how it works yet. Sorry for the triple post. If the above link doesn't work use this one

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    Time Machine Says:
    125

    What was your prediction again for this fall?

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    Drachen Says:
    126

    My prediction was that it would be falling again by now, but I didn't expect such strong governmental support and I gave myself a window of time (6 months to a year). Also, timing is next to impossible to accurately predict as I've said many times in the past.

    So if it's falling by spring/summer next year it's still well within my predicted zone, just outside the point where I could claim 100% accuracy.

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    Time Machine Says:
    127

    You seemed pretty sure of yourself at the time. Use caution before making predictions.

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    oneangryslav2 Says:
    128

    @Time Machine: As Yogi Berra once famously said…"It's tough to make predictions, especially about the future." He also once opined that "it was like deja vu all over again." Here are some other Yogi Berrisms:

    –"You can observe a lot just by watching."

    –"If you don't know where you are going, you might wind up someplace else."

    –"The future ain't what it used to be."

    Something tells me that Yogi is a closet Vancouver housing bear.

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    Uhh, I'm still pretty sure it's going to prove accurate, as I said nothing in my prediction is false yet because I didn't predict down to the month what would happen, I said "give or take a year".

    So stick it where the sun don't shine, sit down and shut up until you have something useful to say.

    And here's a prediction where I can just throw caution to the wind. You will still be a jerk tomorrow morning and people still won't like you.

    Maybe that's going out on too much of a limb?

    Nah.

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    Disbelief Says:
    130

    These Bulls are being awful cocky. Reminds me of those videos I watched on Youtube where those ultra cocky realtors were outright laughing at the Guy who said the market in unsustainable and will fall. I have to check those out again (priceless). He who laughs last laughs best..

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