Friday Free-for-all!
We’re closing in on the weekend, are you getting excited? Every Friday we do our end of the week economic news round-up and open topic discussion, so lets get ‘er started! Here are a few stories to kick off the talk:
-CMHC: Homebuilding poised for a revival
-Bankers get the bonus, taxpayers take the risk
-Demographia: Vancouver ‘least affordable’ housing (pdf)
-UBC: Olympics offer no economic gains
-Toronto and Vancouver have hottest market
-2000 fewer million dollar homes in the lower mainland
-Scotia Capital thinks Canada in a housing bubble
-Don’t bite off more mortgage than you can chew
-The Desjardins affordability index
-BOC: Household debt ‘most prominent risk’
-US home sales plunge, worst drop in 40 years
-Seattle home prices hit new low
-More China bubble fears
So what are you seeing out there in the streets and lanes of Vancouver? Post your news links, thoughts and anecdotes here and have an excellent weekend!
January 29th, 2010 at 4:51 am 1
Verbatim from the Financial Post:
So the emperor is still waling around naked even after the crowd has pointed it out.
The FP has essentially come right out and called Flaherty an ass.
Who needs fairy tales. We're living in one right now.
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January 29th, 2010 at 5:08 am 2
How much do your neighbours owe on their mortgage? The likely answer: a lot more than you think
And that's Toronto, which is a lot less bubbly than Vancouver.
Don't hold your breath waiting for a similar article in Vancouver "newspapers".
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January 29th, 2010 at 5:32 am 3
#2 @patriotz: They put 10% down in 2004. Are we on the hook for that one? When were the CMHC limits thrown out the window?
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January 29th, 2010 at 5:56 am 4
@rp:
http://www.delzotto.com/featuredarticles/incentiv…
If that mortgage was from a bank, it had to be insured. Non-bank lenders are not required to get insurance regardless of terms.
But I don't think there's much downside past 2004 nominal in Toronto. It's the second mortgage that really looks fishy to me. Too bad the G&M didn't go into more detail.
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January 29th, 2010 at 7:15 am 5
The second episode of our weekly serialized account of a Vancouver homeowner's experience of our RE boom has been posted at VREAA:
'The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise'-
'Part 2: Up, Up, Up: Winning the Real Estate Lottery'
http://tinyurl.com/frooglescott02
"In the three years following the purchase of our house in the fall of 2003, its assessed value increases by 72%, or almost a quarter of a million dollars. This windfall changes the way I think and feel about money." – Froogle Scott
"What effect does all of this distraction have on our city, our society? Froogle Scott generously shares his experience." -vreaa
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January 29th, 2010 at 7:57 am 6
@vreaa (quoting Froogle):
And there's the delusion in a nutshell. It's not a windfall until you SELL and the money's in your pocket.
And it's not possible for everyone to sell, because there would be nobody to sell to. So collectively, homeowners aren't better off at all. The gains of the few individuals who do sell are at the expense of the new owners.
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January 29th, 2010 at 8:47 am 7
Rumour has it that the third office tower in Metrotown has had its financing cut off. First the completion date was moved out to 2012 and now it looks like it may not be completed indefinately.
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January 29th, 2010 at 9:48 am 8
@rp:
10% down 25 years was the old regulation. Now it's 5% 35 years, so yeah, we'd be on the hook.
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January 29th, 2010 at 9:55 am 9
From the bubble in China article, I love this quote, which could apply here too:
"To buy a place in Shanghai means you are digging a grave for yourself, and burying your love"
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January 29th, 2010 at 10:30 am 10
@Deng Xiaopeng:
No offence meant to the Chinese readers out there but I think it's in large part due to the size of the Chinese population in Vancouver that the bubble has been so crazy here. There is a very important role for gambling in Chinese culture and I think it plays out in investment markets too.
Just IMO of course.
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January 29th, 2010 at 11:04 am 11
@Drachen:
The other large part is the perception among the non-Asian population that the Chinese are capable of maintaining high prices all by themselves, so the non-Asians had better buy too. That was very much the case in the 1980-82 bubble when the Chinese population (in particular the ones with money) was much smaller than today. It wasn't the Chinese who were pushing up the prices, it was everyone else (who were blaming the Chinese for it).
Every RE bubble market has similar rationalizations. It's the "rich {insert group here}", who are driving up prices, not John and Mary next door. When in fact if John and Mary had simply refused to buy, prices could not have gone up so much.
The Marginal Home Buyer
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January 29th, 2010 at 11:06 am 12
@Drachen: No offense but totally agree. I'm Chinese and me, my wife, my sister, and my dad all think it's crazy in China about how much they are paying for housing, and you don't even own the land or the condo building! All you get is a 70 year lease to use that land! What happens after 70 years? No one really knows and I guess don't care too much since they will be dead anyways?? One good thing is that mortgage generally runs for 10 to 20 years and government apparently has a law saying your mortgage term can't extend past your manditory retirement age!
Well the above is based on what I saw in TV series Wou Ju -an extremely popular TV series about corruption, social deterioration, and high housing cost facing young people in China today, got banned by the Chinese government for a while because it hit on all the hot button issues in China today and it's extremely well written and made that it does not feel fake at all! But almost (if not actually) based on true story. There are more TV series talking about the downside of high housing cost in China now and it is a big issue that even high level government official are now commenting on now.
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January 29th, 2010 at 11:06 am 13
@Drachen: No offense but totally agree. I'm Chinese and me, my wife, my sister, and my dad all think it's crazy in China about how much they are paying for housing, and you don't even own the land or the condo building! All you get is a 70 year lease to use that land! What happens after 70 years? No one really knows and I guess don't care too much since they will be dead anyways?? One good thing is that mortgage generally runs for 10 to 20 years and government apparently has a law saying your mortgage term can't extend past your manditory retirement age!
Well the above is based on what I saw in TV series Wou Ju -an extremely popular TV series about corruption, social deterioration, and high housing cost facing young people in China today, got banned by the Chinese government for a while because it hit on all the hot button issues in China today and it's extremely well written and made that it does not feel fake at all! But almost (if not actually) based on true story. There are more TV series talking about the downside of high housing cost in China now and it is a big issue that even high level government official are now commenting on now.
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January 29th, 2010 at 11:07 am 14
Sorry for the double post
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January 29th, 2010 at 11:32 am 15
#13 S889 China is not the only place that the free money campaign has caused these bubblicious conditions. Chinese populations do have a unique 'wildfire' mentality for jumping on any passing wagons though. Nothing wrong with that. That history of the general Asian economies is a series of very sharp booms and busts. It is reminicsent of the western ecomies prior to central bank regulation where 'smoothing techniques' have been implemented.
The free money policy around the world is now officially recognized as dangerous setting economies around the world up for another fall. Garth Turner is not the only observer who is pointing out the obvious consequences of a tax shift to national debt without having let market forces restabilize the basis of the economy.
http://online.wsj.com/article/SB10001424052748704…
China pumped trillions into its economy due to its fiscal position in the banking sector not having been as overleveraged at the onset of the recession. However the money in China is spinning in a circle because of the western recession becoming a Chinese bubble.
In a smaller way we have the same problem here in Canada, free money washing the debt plate clean at the same time the general economy is out of detergent. The result being the dishes are still dirty. This is why we have rising unempolyment at a time when real estate values are up. The money is just being churned into the pockets of the people that have it and not to where it needs to go to create real wealth.
Prices in China are skyrocketing as are wages. We are feeling the effects of this inflation here in everything we consume. CPI is tame but this is only due to the massive subsidies the Chinese government is feeding the factories to restart production. The real problem is that those goods are becoming increasingly expensive to produce and we will import that inflation.
Our food and energy cost have been screaming up for several years. The phony obfuscation about 'the price of oil' has now been laid bare. It is the volume of worthless paper flooding the system that is driving costs up. Anyone on a fixed income is of course totally fucked in this scenario. This why seniors now dominate the food bank lines.
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January 29th, 2010 at 11:33 am 16
@patriotz:
And what's the point of looking at these numbers? To show that they are overextended? If so, you can't do that unless you look at their entire financial picture. What other assets do they have? Having a high mortgage on that home may be completely rationale for their particular financial situation.
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January 29th, 2010 at 11:42 am 17
"CANADA'S ECONOMY PICKS UP SPEED IN NOVEMBER".- STATISTIC CANADA.
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January 29th, 2010 at 11:42 am 18
Housing isn't cheap theses days. I can live with that. Owning your own home being a priviledge and all that crap.
What I cannot live with is the fact that we are in CANADA here, not some independent banana republic. And yet it seems like we are detached from the rest of the country indeed, for whatever reason.
Just think about it – an average Joe in Ottawa for example, on an average salary (that is in fact the same or perhaps higher than here) can buy a great house for $250,000 at an introductory rate of 2% right now… and they're afraid it might be a bubble ?!!… So WTF does that make of what's happening here???
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January 29th, 2010 at 11:45 am 19
"WORLD NEED MORE OF CANADA".-AD @HOWE&ROBSON VANCOUVER
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January 29th, 2010 at 12:07 pm 20
19 – is the Advert really that grammatically incorrect, or are you butchering it like you butcher the rest of our language?
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January 29th, 2010 at 12:21 pm 21
@white payer:
But shelter is. That's the whole point.
http://cuer.sauder.ubc.ca/cma/data/ResidentialRea…
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January 29th, 2010 at 12:23 pm 22
@logic: I was just testing if bitch is still around us.
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January 29th, 2010 at 12:27 pm 23
Harper urges World Economic Forum to follow Canada upto best planet place.
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January 29th, 2010 at 12:39 pm 24
Spain: 18.8% jobless (40% for young people).Most of these job losses are in construction. They had a real estate bubble.
We are different here, right?
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January 29th, 2010 at 1:00 pm 25
#19 Uninformed10. The 'world needs more canada' campaign ad is a Chapters Books promotion . The signal that the ad sits atop 'THE BOOKSTORE' might be a clue. I would urge everyone to get inside the store and support CDN authors.
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January 29th, 2010 at 1:26 pm 26
@realpaul: Thanks for pointing that out. I've not read nearly enough Canadian authors. Does anyone have a recommendation?
Thanks.
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January 29th, 2010 at 2:09 pm 27
#26 OAS
Lots of unsung heroes on the list. I'm partial to lierature. Try Margaret Atwood or Micheal Ondaatje
http://en.wikipedia.org/wiki/List_of_Canadian_wri…
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January 29th, 2010 at 2:14 pm 28
@FORREST:
About Spain – in case any of you've never left Vancouver – this is the kind of real estate you can buy in Spain these days – a 2000sqft "townhome" on the island of Mallorca for under a million…. I'm sorry, but how can this possibly compare to the shitty teardowns in east van???? You tell me.
This is the first hit after googling on the subject – go see it, it will make you start doubting the "best place on earth" bullshit, that's for sure.
Here's the link: http://www.kuhn-partner.com//index.php?option=com…
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January 29th, 2010 at 2:41 pm 29
@slav:
Alice Munroe, Anne Marie Macdonald (esp. Fall on your Knees), The Gargoyle (can't recall the author's name right now), Margret Atwood's Oryx and Crake (but it'll make you anxious and give you nightmares), Alistair MacLeod's "The Lost Salt Gift of Blood" and "No Great Mischief" .
Anne Marie macdonald and Alistair MacLeod *really* capture the atmosphere in the Maritimes, it's like visiting without having to travel.
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January 29th, 2010 at 2:42 pm 30
Come to think of it, Atwood's Penelopiad and her Massey Hall lectures on debt and indebtedness are also great.
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January 29th, 2010 at 2:52 pm 31
@oneangryslav2:
You have to read Mordechai Richler. The film version of "The Apprenticeship of Duddy Kravitz" is also very good, starring a young Richard Dreyfuss.
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January 29th, 2010 at 3:00 pm 32
I like Brian Fawcett and Mark Kingwell.
A shot bit Fawcett did recently on the games.
http://www.dooneyscafe.com/archives/1762
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January 29th, 2010 at 5:37 pm 33
from the Van Sun !?!
B.C. real estate 2009 bounce-back to taper off this year, 2011
The mortgage-rate fuelled bounce-back of British Columbia real estate in 2009 has probably used up most of the market’s growth for 2010 and 2011, according to a new estimate from the B.C. Real Estate Association.
http://tinyurl.com/yeacxue
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January 29th, 2010 at 6:08 pm 34
Have you read The Yellow River, by I. P. Frehley?
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January 29th, 2010 at 6:19 pm 35
Interesting piece on the G&M
Battle to unlock the housing market
http://www.theglobeandmail.com/report-on-business…
In 2009, 465,251 homes changed hands on the Realtor.ca system, at an average price of $320,333. Owned by the Canadian Real Estate Association, the database amasses listings from Canada's 101 local real estate boards. Only registered real estate professionals can obtain key data such as selling prices, and only they may use the site to connect buyers and sellers.
CREA tightened its access policy in 2007, after rival real estate websites such as Toronto-based Housing123.com emerged. The interlopers downloaded data from MLS and enhanced it to draw consumers to their own services.
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January 29th, 2010 at 6:27 pm 36
34, who are you? Why do you sign with my alias?
For the record, number 34 is NOT the original domus!
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January 29th, 2010 at 6:43 pm 37
Another example of the bullshit media spin? You decide.
The US channel KING reported today that a homeless protest occurred in Vancouver today, nothing on the local news.
King said that there are 7000 people estimated sleeping outdoors in Vancouver that does not include the 6000 that are in the shelters.
They were also warning Americans about the plethora of ticket scams coming out of vancshithouse.
Again, just cheerleading from the local sluts. Idon't think the American reporters are coming here to deface Vancshitholes reputation in some kind of malicious attack. The truth is going to get out and the Olympics will generate a whole lot more bad publicity which will be longer lasting that the two week whore fest.
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January 29th, 2010 at 6:45 pm 38
@domus (quoting G&M):
Of course that's not true, anyone can get them from the land titles, as you can see from the G&M article in my second post. Seems like their reporters need to keep in touch better.
But only the REB has the listing history. Now it would not be too hard to design a bot which would read the website and store the information, but they'd go after you if you tried to release it publicly.
Not that I give a hoot about the listing history, it means nothing in economic terms.
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January 29th, 2010 at 6:50 pm 39
The most overheard phrase in Vancouver in 2010 will be:
"I sell 3, my husband sell 3".
Quote applies to Shanghai as well.
~bestplaceonmeth – proud unofficial sponsor of the 2010 Winter Hellympics~
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January 29th, 2010 at 7:40 pm 40
How long till the wintergames attack lawyers shut this one down?
http://www.bustedtees.com/winterolympics
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January 29th, 2010 at 7:45 pm 41
@Marc le Narc:
You're right because they're using official logos and making a profit off them.
My suggestion would be a t-shirt that says "I VOTED NO", with 5 interlinked swastikas below the slogan.
VANOC fascist wouldn't be able to touch that in a court of law.
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January 29th, 2010 at 7:53 pm 42
This one is kinda cute…
http://malor.files.wordpress.com/2008/08/olympic-…
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January 29th, 2010 at 8:02 pm 43
@Drachen:
'No offence meant to the Chinese readers out there but I think it’s in large part due to the size of the Chinese population in Vancouver that the bubble has been so crazy here. There is a very important role for gambling in Chinese culture and I think it plays out in investment markets too.'
Thank you Drachen! And this goes for Patriotz too. (I think)
But you seem to finally see the light and what I had listed in yesterday's conversation. Just don't forget the DOPE! It;s also a big part of the equation.
I don't have a source on this (I know, I know…most of you will attack me and ask me shoo away because I can't find it) but it happened in about 2004 and I owned my home back then near No.4 RD & Williams. Well, if anyone here on this blog can remember or have been out of their diapers at least for the last 6 years, do you remeber the Chinese realtor that owned the 'for sale' property on No5 RD north of Williams?
ALBERT LUK was his name (Century 21), and I got the hell out of Richmond when that F@%! head was using properties 3 or 4,to stash enough chemical compounds for Crystal Meth to blow up the entire block according to the RCMP!
So Drachen, do you really have that much conscience on your mind about using the bank's money to help you get ahead, and stiff them if they turn around and try to stiff you?
Btw, my suggestion previously is NOT illegal. And yes we will be like California with the banks scrambling for Gov't bailouts if they let this bubble blow up. The banks will never be able to knock at your door if over $50Billion of loans go into default.
I once heard an old saying, If you owe $1M to the bank that's your problem. If you owe $100M to the bank, that's their problem. This CMHC gamble by Harper the Dictator is going to be a CDN Gov't problem if they can't manage it. Go with the flow.
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January 29th, 2010 at 8:48 pm 44
The global economy isn't going back to that trend line. Over the next decade or more, industry after industry isn't going to gracefully absorb that temporary extra capacity. Instead, the global economy is in for a decade or more of tooth-and-claw fights for market share, bloody consolidation as industries are forced to radically shrink capacity, and an increasing number of the walking dead that are kept alive only by large infusions of capital from national governments.
What if consumer demand is dead?
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January 29th, 2010 at 8:51 pm 45
43 – Jonny
I asked before, and I'll ask againas you ignored me –
So there was no dope industry in BC before 2003 ish? This is a new thing? If not, then why only since 2003?
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January 29th, 2010 at 9:28 pm 46
@logic:
Sorry, I never meant or mean to ignore anyone, I sometimes just fall asleep and call it a night after 9pm.
For the purpose of full disclosure, I'm not a dope dealer nor am I an expert qualified to give an explanation to your question. But… I'll give it a shot.
Just like the N.American companies took 30 years to set up their sweat shops in China to make it now one of 2 biggest manufacturing base and all the while hypocritically telling its citizens hat they were fighting the nasty COMMIES; the exponential explosion of the drug industry in BC (Vancouver being the Heroin port of N.A) has been happening in the last 10-12yrs. Just look at the stats y-o-y for violent crimes in the GVRD and Abbotsford. There is a lag effect before these crime syndicates start using all establishments for the purpose of money laundering. They're not contained to only strip-joints,casinos,wreckers,etc… They got a whole lot smarter and went on to clean their image as legitimate business people. Money-Marts, big townhouse projects such a the one seized in Richmond (Clarence Lowe applicant and subsequently busted in Winnipeg with 10kg cocaine) amongst other Surrey projects.
And that's just the tip o the iceberg.
My suggestion is vote for Bagliatti as we obviously know his agenda is to de-criminalize drugs. If anyone has ever watched THE WIRE and listened to the creator's interview on Bill Moyer, you'll quickly understand where the real problem lies in our society.
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January 29th, 2010 at 11:03 pm 47
@Marc le Narc:
I think that might actually be just this side of legal, it's parody being used for comedic value so they can use the logo.
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January 30th, 2010 at 12:06 am 48
@blueskies: Just to be honest I think Muir is looking for more listings to serve his field otherwise Interest rates will only go up maximum 5.25% with improving economy and increasing cunsumer confidence.In the said situation buyers are willing to pay increase rates in hope to recieve better return.Income most likely to increase with improved economy,Job prospectus will increase to bring down unemployment numbers.Future affordability issue is not a threat as oil prices are not even halfway.While usa $ is gaining it's strength back Canadian $ will go down towards 77 cents to increase export level.BHP Billiton Diamonds buys Anglo Potash,BHP Billiton buys Athabasca Potash,China's CNPC buys Canadian oil firm: company,Korea National Oil Corp buys Canadian oil company.World is looking at Canadian natural resource,Economy boom has begun to assist further housing boom.More peoples are coming to take commands at the head offices they also need a place to live and they also need revenue property to rent it out in Vancouver,high definition city of this world.
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January 30th, 2010 at 12:23 am 49
cun(t)sumer, eh?
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January 30th, 2010 at 12:24 am 50
"More peoples are coming to take commands at the head offices"
———
And which head offices would they be? Well?
Thought not…
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January 30th, 2010 at 2:09 am 51
Hey kids! – time to sit up and take note – Cameron Muir has picked some more numbers from his ass and forecast real estate for this year and 2011:
http://www.vancouversun.com/business/real+estate+…
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January 30th, 2010 at 8:49 am 52
Yup, BCREA predicts a nice 7% increase this year!
Official release: http://www.bcrea.bc.ca/news_room/2010-01-29Foreca…
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January 30th, 2010 at 9:15 am 53
Property value increases ???? LOL !!! I don't know about BC, but here in Alberta, WAGE DEFLATION is occuring on a large scale…..to wit…..
http://www.calgaryherald.com/news/City+cuts+overt…
I want to see what potentially can happen when $15MM of annual income evaporates……..
As before, with my other comparisons and estimates posted here over the past months, my argumentative premise remains the same…….I am still using a 25 year amortization, a 5% fixed rate, and a bi-weekly payment schedule…….after all, gotta assume some of these folks have functioning grey matter and as CAAMP tells us they do…..here we go……
As the online RBC mortgage calculator will "short out" with too many zeros, I did it this way…….
A $1MM mortgage debt on the above terms costs $2,684 every 2 weeks, so multiply that times 26 bi-weekly periods and you get $69,784 of principal and interest to service a $1MM mortgage over a one year period.
Divide $15MM of lost annual income by $69,785 and you get 214.95……or…..$215.95 MILLION dollars of mortgage debt service (or, put another way, consumer buying power) that just evaporated……and that is from the municipal public sector employees only. FWIW…..the private sector is also experiencing strong WAGE DEFLATION as well…….and if I could get a job I'd be able to report first hand what that amount is…….LOL !!!
Now someone will come along and say, hey wait a minute CC…..what about debt service ratios….shouldn't you be using 30/32/34% of that lost income instead of all of it….? Well, if you know what these people are like, and my wife works with them, they are pretty much all buried up to their eyeballs in mortgage and consumer debt. Financially, the majority of them are like the WWII German battleship "Bismarck" in her last hours…..circling helplessly with a broken rudder in the North Atlantic while under a hail of British gunfire and torpedos…..the decks awash in blood and listing to one side.
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January 30th, 2010 at 10:03 am 54
"-UBC: Olympics offer no economic gains"
I love the spin on this. Just proves what a bunch of spindoctors the editors of this site are and how they like to just bury your head in the sand, thinking that they are "influential".
Seriously – a bunch of losers. They just run around and repeat the same nonsense over and over until it finally happens that way and then they think they're special because they it got it right.
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January 30th, 2010 at 10:40 am 55
@tim:
Getting it right on a financial issue certainly is special when everyone else gets it wrong, buddy. And we only have to be right once. The bulls have to be right all the time.
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January 30th, 2010 at 11:11 am 56
Homeowners fear homeless campers pose forest fire threat in Coquitlam ravines. The days are gone when the local woods were there for neighbourhood kids and dog walkers.
http://www.bclocalnews.com/tri_city_maple_ridge/t…
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January 30th, 2010 at 11:52 am 57
The only thing on the rise will be unemployment and foreclosures. Enjoy the Olympics and live it up because when it's over there will be a bitter hangover that follows. Huge debt massive layoffs. Campbell and his buddies will be the ones who profit on the backs of all the taxpayers.
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January 30th, 2010 at 11:52 am 58
#50 L, exactamundo, everytime a foriegn national organization buys a large Canadian resource with sites around the world they do not immediately shut thier offices in Zurich and Rio de Janeiro and rush to relocate in Canada. In fact its the opposite, the Canadian offices down size to match the tax advantage restrictions offered by the government and thats it !
Ex: Korea National Oil Co. recently bought a very extensive collection of properties from one of the trusts that the Mighty Jim Flaherty destroyed called Harvest Energy. The entire company which was once the third largest energy trust in Canada employing thousands of people in Canada and supporting hundreds of thousands more with the income spin off is no more.
People hopeing for a low Canadian dollar are just ignorant of the facts. They have been douched up to the gills with the enema of bullshit from the socialist leaning Liberals. What they can't seem to get is that the dinosaur jobs in manufacturing they were trying to save 40 years ago by draining the countries manufacturing sector of competative productivity capability has come home to roost and as the last few factories close, the entire manufacturing base is dead in a box and being shipped to China for retooling.The union lobbies have been entirely self centered and extremly short sighted on this issue. What can you expect from a bunch of drop outs who's only goal is to collect thier fat pensions and fuck everyone else. Small country small thinking.
And finally, more happy talk about the DTES, nice to see that the pseudo yuppies are clinging to thier dreams. But….what happens to all the homeless and the poor? Are they all going to be found in the ravines of Coquitlam and the alleys of Kelowna?
The Shitty of Vanshithole Council says there are only 15 or 16 hundred homeless people in Vancholio. American reporters from Seattle report the number at 13 to 15 thousand !!!!! Is the BC government in on the conspiracy and 'transferring clients' to the outlaying communities? Are they sending the homeless away from the DTES by saying "We'll starve you out asshole"?
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January 30th, 2010 at 11:55 am 59
http://www.vancouversun.com/Boon+bust+Downtown+Ea…
DTES in the spin cycle from the vanshithouse whores.
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January 30th, 2010 at 12:20 pm 60
@realpaul:
Please. Flaherty did not "destroy" the trusts. They simply have to convert to a corporate income tax structure, to prevent the income being distributed tax-free to non-taxable entities or offshore. People who hold the trusts in a taxable account will be getting about the same returns after-tax, because they will get the dividend tax credit.
Something had to be done before BCE and other big companies converted to income trusts with a big loss in corporate tax revenue.
Disclosure: I bought Harvest Energy debentures at a big discount last winter (price drop due to the financial crisis, not the trust taxation decision which was years before), and KNOC is buying them from me at $101.
Buy low, sell high.
http://investdb.theglobeandmail.com/invest/invest…
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January 30th, 2010 at 12:27 pm 61
@patriotz:
And we only have to be right once. The bulls have to be right all the time.
Wrong again, buddy. This market correction can happen 0-x months/years from now. There are plenty of opportunities to be right and wrong multiple times. How long have you all been wrong for already? 3 years? 5 years? Some people have made considerable gains in this time and are back to being liquid.
There's no time limit to your predictions yet when Rennie "guarantees" the value of properties, people on this board are up in arms, "He didn't say for how long!"
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January 30th, 2010 at 12:39 pm 62
Actually, being right or wrong isn't even the point. The problem with the spindoctoring is that there is no room for improvement. You guys aren't trying to improve your analysis skills. You're just a bunch of yahoo's screaming about nothing and influencing no one.
There are people on the financial message boards who post a message every 30 minutes, "I feel it in my bones, MSFT is going to buy YHOO. They just met behind closed doors and I think that Carol Bartz just blew Ballmer … virtually. It's coming!" That's what you guys are.
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January 30th, 2010 at 1:02 pm 63
@tim:
Someone buying RE now doesn't get another chance. If prices go down, they lose. They won't be able to buy another property when prices are lower because they will have a negative net worth. We're not talking stocks where you can buy or sell a $1000 worth at a time.
The bears aren't losing anything by renting. In fact we're gaining on the owners every month because we're paying less. If at any time in the future prices go down to the level we're waiting for, we win.
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January 30th, 2010 at 1:10 pm 64
@patriotz: In fact we’re gaining on the owners every month because we’re paying less
No you're NOT. You are falling further behind every month and have been for 5 years. If you were getting further ahead you would be more capable of buying each month not less.
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January 30th, 2010 at 1:16 pm 65
@tim: "Some people have made considerable gains in this time and are back to being liquid."
Okay, this is important:
How many people do each of us know who have "made considerable gains in this time and are back to being liquid". [we're talking RE here]
I'll start: Zero.
(I know a LOT people who are MORE into RE now than 5 years ago, or 10 years ago. And almost ALL of them are in with leverage. (= MOST of them have more than their entire networth in RE.) I don't know ONE person who has cashed out, or, for that matter who has even lightened up.)
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January 30th, 2010 at 1:18 pm 66
Actually, sorry, let me correct: I know ONE family that cashed out and left Vancouver.
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January 30th, 2010 at 1:27 pm 67
From SI
' As Olympics near, people in Vancouver are dreading Games '
http://sportsillustrated.cnn.com/2010/writers/dav…
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January 30th, 2010 at 1:35 pm 68
' Sun, Province to Promote Governments' Homeless Message '
http://thetyee.ca/News/2010/01/27/HomelessPRCentr…
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January 30th, 2010 at 1:51 pm 69
@tim:
You mean they became bears and sold for the reasons we've given on this board?
So what exactly are you arguing with?
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January 30th, 2010 at 2:23 pm 70
yeah exactly… what are we arguing? Sooner or later you're going to buy also, and then the market will fluctuate one way and then fluctuate the other way and they you'll be wrong again.
You're assuming that it's going straight down from here. You don't know that. It can go up, down, or stay level for another 1,2,5,10,20 years. Timing is everything, and if your analysis doesn't take that into consideration, then it's worthless.
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January 30th, 2010 at 2:33 pm 71
@vreaa "How many people do each of us know who have “made considerable gains in this time and are back to being liquid”"
I can think of 3 of my close family/friends who cashed out. I know a few others who cashed out in 2005 too, and are technically "underwater" compared to if they sold today.
Never confuse genius with luck. To the untrained eye they appear the same.
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January 30th, 2010 at 2:39 pm 72
@tim:
"Actually, being right or wrong isn’t even the point."
Then why did you bring it up?
"The problem with the spindoctoring is that there is no room for improvement."
Yes, which is why we don't do spin doctoring here, that's what the Bulls do, we try to do actual analysis based on historic trends, comparable markets and internationally observed truths.
"You guys aren’t trying to improve your analysis skills."
THAT's the problem here? Are you serious? How long have you been reading this blog? Over the past year alone we've made huge strides. I for one take credit for pointing out that the 20 year run-up of Vancouver real-estate coincides exactly with the period which the CMHC has been dabbling in mortgage insurance to 'help' Canadians afford housing. Many others here have had similar evidence to add to the pile, we are constantly looking at new ways of analysing the data although most new ideas get thrown out or marked as relevant but not essential to the timing and severity of the coming crash.
"You’re just a bunch of yahoo’s screaming about nothing and influencing no one."
Then why are you scared? What worries you about us? Are you losing business and looking for someone to blame it on? You seem to be spending an awful lot of time and energy here today for someone who thinks this place is all hot air.
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January 30th, 2010 at 2:46 pm 73
@Anonymous: Hmm.. Saving a few extra grand a month I can now buy much more than I could a couple of years ago in Florida, California, Arizona, Spain, Ireland, Etc.. All places where the renters were far behind for years, then suddenly the situation changed: rents dropped AND house prices dropped. If I can never buy in Vancouver I won't be heartbroken, there are many excellent alternatives.
But as long as I can rent so cheaply, save the difference and live my life I'm happy to stay here.
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January 30th, 2010 at 2:53 pm 74
@tim:
If you buy a house (or any other asset) for less than its fundamental value, you're ahead if you never sell it. So it doesn't matter whether the market price goes down, unless you're forced to sell during a mega-bust like the Great Depression.
For example, people who bought a house in Vancouver in the mid-80's would still be ahead today even if they had to sell for the original purchase price – which in real terms is a 50% capital loss.
But I get the feeling that this concept is a bit over your head,
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January 30th, 2010 at 3:19 pm 75
#60 P, its too bad that all the common share holders (majority)of HTE.UN got $10 bucks a unit and lost all thier income. Not to mention my point of the thousands of people who lost thier jobs. The idea that trust income was flooding some mysterious cabal offshore was just the governments spin behind the tax grab. Bottom line is that Harvest is no longer in business due to the cynical machinations of the Mighty Mighty Cons.Thats a lose-lose for Canada in my books because all that revenue goes straight back to Korea now.
You're welcome and congrats on the lucre.
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January 30th, 2010 at 3:41 pm 76
@realpaul:
Well I only get face value plus a buck for HTE.DB.E and I lose the income too. But read this and tell me what's so bad about that:
http://www.marketintelligencecenter.com/article.a…
If the unitholders were so hot on the trust they could have loaded up at $3 and made a bundle on the takeover. A bigger gain than me BTW.
The takeover terms were part of the original share offering and if people didn't like them they didn't have to buy in.
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January 30th, 2010 at 5:18 pm 77
#68 @Anonymous: That article in the Tyee has the MONEY QUOTE. From the editor in chief of The Province:
"We have contra deals with all sorts of agencies and people we report on. And there's lots of things the company does in terms of giving space away and cross-promotion and free promotion that could be viewed as a conflict if it was run out of a newsroom. But it isn't."
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January 30th, 2010 at 5:23 pm 78
@patriotz:
You are absolutely correct. I remember reading an article saying that investment from Asia plays a very small role in this bubble. People see one person buying, then nine others jump in.
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January 30th, 2010 at 6:38 pm 79
"People see one person buying, then nine others jump in."
who sez you can't herd lemmings?
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January 30th, 2010 at 10:01 pm 80
@Dude:
During 2009 more foreign owners sold properties in Vancouver than foreign buyers purchased. So right now the actual impact of foreign money on the market right now is negative. But in that case we were referring to immigrants, not overseas money.
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January 30th, 2010 at 11:10 pm 81
The vancouver scum is out with some more editorial on how taxes and restrictions on developers drive up house prices. Blame that nasty ALR, and taxes for our #1 industry? Good heavens those saintly lords that supply us with the one thing we all have to have, why should they pay anything? I'm sure they'll pass the savings on to *you*.
http://www.vancouversun.com/business/Vancouver+ho…
http://communities.canada.com/vancouversun/blogs/…
I can't believe anyone even buys this newspaper.
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January 30th, 2010 at 11:13 pm 82
@Drachen:
Notice the article in the Vancouver Sun today:
http://www.vancouversun.com/technology/Price+gain…
real estate & financial engineering at its best. BoC has just told the lenders that they want to put this bubble story in Canada to rest once and for all. Just when you thought things were getting a bit heated. See…no bubble, no crash,no worries!
I tried to warn you bears that fighting the Fed is not recommended.
And Drachen, would like to leave you this great quote I read not long ago and I only want to pass it on yo you and all your friends that probably have many years ahead of them, to make wise and calculated decisions but to listen to reason especially when it's given as free advice.
"It has been said that often what you get in life is what you expect to get. This is the root cause of why for example so many people who are born in poverty die in poverty, or why someone who has failed several times to quit a bad habit has a hard time believing that he or she can succeed the next time. Certainly the past doesn’t equal the future- sounds reasonable enough on paper. But whom am I trying to kid? We are emotional creatures and logic often cannot stand a challenge from deeply embedded feelings."
Good night.
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January 30th, 2010 at 11:23 pm 83
Johnny,
I can assure you that many of us here – myself included – are not, and will not be, in poverty. In fact, NOT buying a house in past 4 years (for me – as this is the timframe that I have been in a position (ie: finished grad school) to do so) is a key reason why I am not in current poverty.
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January 30th, 2010 at 11:41 pm 84
@Johnny O:
"“It has been said that often what you get in life is what you expect to get. This is the root cause of why for example so many people who are born in poverty die in poverty, or why someone who has failed several times to quit a bad habit has a hard time believing that he or she can succeed the next time. Certainly the past doesn’t equal the future- sounds reasonable enough on paper. But whom am I trying to kid? We are emotional creatures and logic often cannot stand a challenge from deeply embedded feelings.”"
Everything about that is total crap. Most people take on household debt expecting that they'll earn more money in the future, guess what? Doesn't happen. People born in poverty die in poverty because they don't generally get a decent EDUCATION those who succeed are normally in fields that don't require education for success (music, sports etc.). It's been shown that the number of attempts to quit a smoker has made in the past INCREASES their odds to quit the next time they try.
If I expect house prices to crash and 95% of Vancouverites do not will they crash or not? Same answer as if the pilot expects to crash but his passengers do not.
The future tends to meet our expectations when our expectations are based on logic, otherwise any attempts to predict the future are just random.
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January 30th, 2010 at 11:47 pm 85
@Johnny O: "This is the root cause of why for example so many people who are born in poverty die in poverty"
With the exception being Vancouver property owners, who will miraculously die rich due to their real estate gains. I hope you're being ironic.
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January 31st, 2010 at 4:13 am 86
@rp:
Complete nonsense. If government was actually restricting supply, rents would be higher. Real rents (and even many nominal rents) in Vancouver are falling, and rents are no higher than in Calgary, so effectively there are no more restrictions on supply than in Calgary.
And need I tell you that the same sources were spouting the same rationalizations in 1982 on how prices couldn't go down. Prices didn't crash then because government got rid of development restrictions, they crashed because the market ran out of fools wiling to pay ridiculous prices – as it always does.
If anyone tells you that government restrictions on supply lead to RE bubbles, tell them you just have one word for them:
Florida
There is only one cause for RE bubbles and that is purchasers willing to pay more than rental value. Everywhere, all the time.
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January 31st, 2010 at 5:33 am 87
Surprisingly softball article about Sam Sullivan in today's NYT:
http://www.nytimes.com/2010/01/31/sports/olympics…
Which of course is a bare faced lie.
But if you look at the other articles by the reporter (click on his name), you will find that he is a sportswriter.
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January 31st, 2010 at 7:57 am 88
Trees 1; Highrise Buildings 27.
—
Happy Smiling Buildings? – Subtle Signs Of A Perverted Vancouver RE Market In An Olympic Children’s Book
http://tinyurl.com/happy-smiling-buildings
It would be natural to animate the mountains, trees, oceans, islands… right? Well, yes, maybe you would, if all else were equal. If, however, you were living in a society preoccupied with its profoundly over-inflated real estate market, you’d be moved to animate the buildings. Yes, the buildings. Subtle point? Perhaps. But a preposterously distorted real estate market does effect a society in innumerable subtle ways. -vreaa
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January 31st, 2010 at 8:37 am 89
@patriotz:
Rental rates have outstripped inflation for the last 6 or 7 years. Why you maintain your view despite overwhelming evidence is strange at best.
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January 31st, 2010 at 9:00 am 90
@patriotz:
I have a feeling that inflation is over your head. Mortgages don't go up with inflation. They go down in nominal terms. Houses prices can drop in real terms and an owner can still be ahead in nominal terms, which is all that matters.
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January 31st, 2010 at 9:37 am 91
@Dave:
Are there stats rental rates for non-purpose built rental units (basement suites, etc)?
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January 31st, 2010 at 10:07 am 92
@Dave:
Did you even read the post which you are apparently replying to? Apparently not. I didn't even talk about mortgages, for starters. And just what did you think "sell for the original purchase price" was supposed to mean?
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January 31st, 2010 at 10:14 am 93
Dave real prices matter a whole lot when an owner has to sell. Bubbles and crashes rarely mete punishment fairly. Lazy greedy speculators emerge from a bubble free and clear and honest God fearing families lose their savings when they need to sell due to job loss, illness, etc.
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January 31st, 2010 at 10:23 am 94
@Not much of a name:
Never mind the informal rental market, the official statistics show declining real rents.
http://cuer.sauder.ubc.ca/cma/data/ResidentialRea…
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January 31st, 2010 at 12:21 pm 95
I think the government will either inflate the economy or keep interest rates low. Our economy just could not handle a crash ala the USA
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January 31st, 2010 at 12:34 pm 96
@Wilma:
One, inflating the economy will not inflate wages, and only higher wages will support today's house prices.
Two, you need capital inflows as well as low interest rates to support inflated house prices. CMHC's mortgage obligations are growing exponentially. What does that mean?
With respect to BC, I couldn't agree with you more. But unfortunately, the causes are already baked in the cake.
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January 31st, 2010 at 2:07 pm 97
#73 "If I can never buy in Vancouver I won’t be heartbroken, there are many excellent alternatives. But as long as I can rent so cheaply, save the difference and live my life I’m happy to stay here."
I'm with you. My financial situation is this:
- A property in the UK (my original country before work then marriage brought me here a couple of years ago) almost paid off after owning it for 10 years – worth maybe $230,000
- Savings of $50,000
- No pension
- No investments
- No debt
- Self-employed income varies from 20,000 to 60,000. partner more secure up to 70,000 income
So we have an income of 90,000 to 130,000 and a downpayment of 280,000 and I'm still not touching real estate in Vancouver – vastly overpriced. Much better to rent for $1300 indefinitely. Like you I could buy in another country or another part of Canada (I even like Toronto) but I'd rather rent here. I like to think my frugal, but enjoyable, lifestyle of many years will pay off eventually but at this point I expect never to own property in Vancouver. Houses in decent areas are too expensive and I refuse to pay the ridiculous fees attached to condo ownership. I can see myself maybe owning a vacation property and just always renting in vancouver – if you want to live in a nice area in this city you either rent or mortgage your life away.
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January 31st, 2010 at 2:16 pm 98
finally we get some big press: http://www.msnbc.msn.com/id/35160185/ns/world_new…
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January 31st, 2010 at 2:31 pm 99
CREA and the local real estate boards are fighting like rabid cats in a sack to keep screwing the public with thier monopoly on information and data. Read on.
http://www.theglobeandmail.com/report-on-business…
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January 31st, 2010 at 2:36 pm 100
#98, don't you mean 'some real press?' Seriously, good post
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January 31st, 2010 at 2:58 pm 101
Wage inflation usually goes up in high inflation. That's what happened in the early 80's. Didn't Trudeau bring in price controls of 6% and froze wage increases. If interest rates go up now it's going to cause a huge dragg on the economy the only way I can see them going double didget is with higher inflation and wage inflation. Our worst worry would be deflation.
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January 31st, 2010 at 3:19 pm 102
@Wilma:
A few other things happened in the early 80's. Like "restraint", the Fraser Institute, Kerkoff Construction, Ronald Reagan, etc.
Anyone who thinks wages would track increased inflation this time around is dreaming.
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January 31st, 2010 at 3:34 pm 103
epic dave-fael on the rental data front
just another example that undercuts pretty much everything he has to say.
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January 31st, 2010 at 4:17 pm 104
Dave's whole purpose is to discredit the bulls. He's a bear pretending to be a stupid bull. He thinks it's fun to make silly statements that are clearly wrong and he sits at his computer laughing while everyonetrips over themselves to vote him down and tell him he's being moronic and totally irrelevant.
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January 31st, 2010 at 4:19 pm 105
See we are number 1, buy at woodwards before someone ,who's rich, does:
"This neighborhood is the most concentrated drug and poverty ghetto in North America, with high use of heroin, cocaine and methamphetamine,"
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January 31st, 2010 at 4:22 pm 106
That's right David Vancouver number 1 in wurld heulth ronkings too.
"Due in part to rampant intravenous drug use, the area's HIV rate is the worst in the developed world, said International AIDS Society president Dr. Julio Montaner. The HIV rate qualifies the Downtown Eastside for World Health Organization epidemic status, he said."
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January 31st, 2010 at 5:38 pm 107
informer – "ronkings"? now you re just taking the piss. now we know you too are a troll, lol. funny. have fun trolling.
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January 31st, 2010 at 6:22 pm 108
That's right 107 you are drinking the piss and claiming it's champagne.
Pretending to be stupid must be the funniest thing ever.
Do you live at woodwards smart guy?
iz werst when preten stupid I do or be Dave and rent is going up and I really believe this because I just said it so now it's true and remember the metrics… Ignore the stars like drachen, patriotz etc. and listen to my intentionally stupid posts cause I'm Dave/Satv/John/Dosh
All the same idiot iz him
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January 31st, 2010 at 7:36 pm 109
@Anonymous:
That was just some random guy taking the piss out of Informer10 (note our regular 'contributor' is Informer10 and this guy is Informer5).
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January 31st, 2010 at 10:35 pm 110
Some more press!!!
http://www.guardian.co.uk/commentisfree/cifameric…
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January 31st, 2010 at 10:40 pm 111
Some more news!
http://www.guardian.co.uk/commentisfree/cifameric…
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January 31st, 2010 at 10:48 pm 112
Some more press!
http://www.guardian.co.uk/commentisfree/cifameric…
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January 31st, 2010 at 10:50 pm 113
sorry about the repetition – It wasn't going through.
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January 31st, 2010 at 11:14 pm 114
@patriotz: You forgot to add China and India to the list. Anybody who thinks that real wages will increase is delusional. In fact, real wages in the manufacturing sector have not increased in North America since the early 1970s.
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February 1st, 2010 at 12:44 am 115
@rp:
I took a dump tonight and noticed that there was more useful information written on my turd than in yesterdays' Sun.
Whoever says newspapers don't know shit might be on to something! No self respecting dead fish would be caught dead wrapped in the Sun!
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February 1st, 2010 at 1:02 am 116
@Dave:
Wow, you really don't understand the difference between real and nominal prices, do you, Dave? No, with inflation mortgages go down in real terms, which is one of the benefits of paying off a mortgage during periods of high inflation.
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January 31st, 2010 at 8:45 pm 117
[...] January 2010 · Leave a Comment This from JJ John at vancouvercondo.info 31 Jan 2010 2:07 pm [...]
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February 1st, 2010 at 8:11 am 118
@jjss: Excellent find! So many great lines, but I think this one is my favourite:
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