Kraft Dinner in a million dollar house

The Conference Board of Canada is claiming that 1 in 5 families in this country struggle to afford the home they live in foregoing healthy food and recreational activities.  That’s at a time of record low interest rates.  With the central bank saying they’ll raise rates soon and major banks raising mortgage rates already, what does the future of house prices look like in this country?

The Canadian housing market in general and the Vancouver housing market in particular has been on a huge run for years, but is our unstoppable housing market on the verge of collapse?

Canada’s unstoppable housing market faces a challenge. To stay unstoppable, it needs mortgage rates to remain low and affordable. But to keep setting new sales records, it also needs more people to land more jobs so they can afford to buy more homes.

The problem is it’s next to impossible for the economy to produce both these happy outcomes. Interest rates usually stay low only if unemployment remains high. Once jobless numbers start falling, mortgage rates typically shoot upward. Hoping for both low interest rates and lots of jobs is like a farmer praying for both dazzling sun and buckets of rain.

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Gordon C.
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Gordon C.
Well Jessie, I can tell you if the rent is at market. If there is a chance of how much you can increase rents and what you can expect as a vacancy at that rent. I can also tell you what expenses have been deferred in order to make the statements look better than they are. I can estimate cost of immediate repairs, possible repairs in five years and what reserves you should build for those replacements. But I have never been able to determine the "quality of tenant". Some of the worst tenants, I have had are the richest and the best tenants have been on social assistance. School teachers have trashed suites, while club bouncers have kept the cleanest suites. I've never been able to tell if the person will lose their job in the next month or… Read more »
Yalie
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Yalie

From the Sun article:

the Teranet-National Bank housing price index… also indicates that all the deflation of home prices that occurred during the recession had been regained by January, and will keep going, but more slowly.

What? The Teranet index indicates that home prices "will keep going"? No it doesn't – all it does is show where prices have been. It says nothing about where prices are going.

I've had it with this paper: two ridiculous pump pieces in one day, one praising the CMHC, and another making up complete fabrications out of thin air. How do these guys sleep at night?

Anonymous
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Anonymous
Anonymous
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Anonymous
Average price of Metro Vancouver home now almost $663,000, above pre-recession levels Metro Vancouver's cheap-mortgage-fuelled real estate market has overshot its previous peak for prices with indications it will keep going, albeit more slowly, before cooling with the rise in interest rates. February saw the average property price hit $662,741 in the area of Metro Vancouver within the Real Estate Board of Greater Vancouver. (The board does not cover Surrey, Langley or White Rock.) That is well above the previous $624,639 peak price, which the region saw in May 2008. Now, the Teranet-National Bank housing price index, a more complicated measure of property prices that analyses data from the repeat sales of homes, also indicates that all the deflation of home prices that occurred during the recession had been regained by January, and will keep going, but more slowly. The… Read more »
Bystander
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Bystander

@Kite towards moon

Much of the price shock came from a huge jump in hotel rates due to the Winter Olympics in Vancouver.

Kite, good luck with that. You better get yourself an escort while night is stil young. You need to cool down a bit, you'll kill yourself.

painted turtle
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painted turtle

The Vancouver Sun becoming bearish…
http://www.vancouversun.com/business/Unaffordable

Inventory
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Inventory

************* 1/1/2010 / 3/31/2010 / % change

Bowen Isld 46 / 94 / 104.35%

_Bby East 68 / 149 / 119.12%

_Bby North 345 / 641 / 85.80%

Bby South 362 / 617 / 70.44%

Coquitlam 531 / 978 / 84.18%

Van.&Gulf 215 / 253 / 17.67%

___Ladner 65 / 139 / 113.85%

MapleRidge 575 / 874 / 52.00%

_New West 262 / 535 / 104.20%

_North Van. 412 / 794 / 92.72%

OutofTown 105 / 80 / -23.81%

_Pitt Mead 121 / 179 / 47.93%

_Port Coq. 237 / 428 / 80.59%

PortMoody 213 / 374 / 75.59%

_Richmond 893 / 1580 / 76.93%

_Squamish 402 / 498 / 23.88%

Sunshine C. 656 / 1000 / 52.44%

_Tsawssen 98 / 166 / 69.39%

__Van East 767 / 1189 / 55.02%

_Van West 1396 / 2768 / 98.28%

_West Van 386 / 613 / 58.81%

__Whistler 569 / 730 / 28.30%

_____Total 8724 / 14679 / 68.26%

painted turtle
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painted turtle
Inventory
Guest
Inventory

Mar 1, 2010 = 12255

Mar 2, 2010 = 12324

Mar 3, 2010 = 12459

Mar 4, 2010 = 12670

Mar 5, 2010 = 12775

Mar 8, 2010 = 13019

Mar 9, 2010 = 13244

Mar 10, 2010 = 13439

Mar 11, 2010 = 13551

Mar 12, 2010 = 13609

Mar 15, 2010 = 13755

Mar 16, 2010 = 13779

Mar 17, 2010 = 13870

Mar 18, 2010 = 14042

Mar 19, 2010 = 14103

Mar 22,2010 = 14258

Mar 23, 2010 = 14312

Mar 24, 2010 = 14322

Mar 25, 2010 = 14446

Mar 26, 2010 = 14558

Mar 29, 2010 = 14635

Mar 30, 2010 = 14721

Mar 31, 2010 = 14679

Kite towards moon
Guest
Kite towards moon

Bank of Canada: High inflation may be temporary

"There are some temporary factors at play on the inflation numbers," Jenkins told Reuters in an interview to mark his retirement from the bank on April 7.Much of the price shock came from a huge jump in hotel rates due to the Winter Olympics in Vancouver.

http://ca.news.yahoo.com/s/reuters/100331/n_top_n

Sales
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Sales

Dailies – List || Sold

Vancouver East & West*

New Listings – 83

Back On Market Listings – 3

Price Changes – 32

Sold Listings – 47

Vancouver All Areas*

New Listings – 224

Back On Market Listings – 13

Price Changes – 107

Sold Listings – 124

Absinthe
Member
Absinthe

@The Pope – Yes, that did work! Thanks much!

BeggarCity
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BeggarCity

Take a look at Vancouver's (near) future:

Latvia's spectacular boom and bust
http://news.bbc.co.uk/2/hi/business/8597141.stm

stagnate
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stagnate

chip says:

The price/rent ratio AT BEST is a rough “rule of thumb” and most of the time is grossly inconsistent and poorly applied to provide a value estimate.

well, it's something worth looking at; most of the world's real estate is under land that is worth squat. for the most part supply exceed demand for land. unfortunately not for places like vancouver, whistler and victoria. demand exceeds supply for the land. same concept as a gold bar. a house built on a slab of gold is going to have a poor price/rent ratio. anyone evaluating vancouver purely on price/rent ratio's is in for long term disappointment.

sipping pina-colada
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sipping pina-colada

Are we getting dressed for the party !!! Where is "Inventory"????

other ted
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other ted

Patriotz you bring up a good point. There is a lot of propoganda in sites like demographia that blame regulation as a culprit. And there is almost a mythic belief that calgary is a bastion of deregulation. I can tell you I have never seen a city in bed with developers like Calgary. All the land gets auctioned off to big developers and if you want a new house you have to go to a pre approved builder by the developer in that area. Meanwhile in "over regulated" vancouver(well its outskirts) its easy to find farm land in places like maple ridge and build your own place without going to some big developer.

patriotz
Member

That means I don’t think regulation is causing the bubble, but contributing to it in these areas.

It contributes to the bubble only in the sense that it's used as a rationalization for people to pay excessive prices. The only cause for excessive prices is people willing to pay them. Nobody has to buy.

As I have pointed out for both California and Perth, there is no evidence whatsoever that regulation has limited actual supply against actual demand in these markets. The low rents speak for themselves.

The Canadian city which has shown the greatest evidence of an actual supply shortage recently is – surprise – Calgary, which saw rising real rents over the last 5 years. But the growth in prices far exceeded this, i.e. there was also a bubble.

jesse
Member

The price/rent ratio AT BEST is a rough “rule of thumb” and most of the time is grossly inconsistent and poorly applied to provide a value estimate.

Hogwash. When I look to buy a property the biggest things I look at are:

1) The rent

2) The quality of tenant I can attract

3) The quality of the building

Based on that, there is little debate on what I am willing to pay. I don't know how you invest but I need to know what expected return an investment will generate, not what some fool is willing to pay for it.

Best place on meth
Member
Best place on meth

#57

I guess this strong growth means the BOC is ready to ditch the emergency interest rates ASAP and start returning to normal rates of 4-5% over the next couple of years. So to all those who purchased real estate in the last 3 years:

ALOHA, SUCKERS!!

BTW, they seem to have some semi-literate half-wit doing the proofreading at Canwest – possibly kite to moon.

"Mortgage rates at strongly tied to bond yields…"

realpaul
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realpaul
realpaul
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realpaul
Oh Golly are we being spoon fed information that suggests that intrest rates have to go UP to cool inflation because of a spike in consumption? Bwahahahahahahahaahhaahhaa Like everyone who buys anything hasn't watched prices skyrocket since the government crashed rates ? I guess we're all stupid. More cuts to the poor today as the new 'Slash the poor fuckers throats Liberal Party is 'adjusting' the budget to pay for the Olympics. Today its the diabetics who are getting their testing equipment cut off. Yesterday I posted the Global TV's ridiculous assertion that buyers have got themselves in too deep and will have to sell to get out of unaffordable mortgages but was censored for the comment. Is it any secret that people have been suckered into mortgages they can't afford by greedy shit sucking media assholes who kept baitingf… Read more »
chip
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chip

Patriotz, you really need to read more carefully before you go in all guns blazing. Here is what I wrote:

"Turns out Perth’s problem is similar to the problem that was contributing to the crazy market in California. "

Notice the word 'contributing.' That means I don't think regulation is causing the bubble, but contributing to it in these areas. Of course cheap money and speculation is driving the bubble. I have said as much a million times on this board.

However, regulation is a contributing factor, and partly explains the discrepancy among cities that are all exposed to cheap money and speculative forces, but show different rates of appreciation.

Best place on meth
Member
Best place on meth

"I look forward to the day where I stop giving a shit about the RE market and prices."

The day will come when nobody gives a shit anymore. "Owning" will become a 4 letter word as thousands upon thousands lament the millstone around their necks which they placed there themselves.

VHB
Member
VHB

Hi Gordon,

Try multiplying these two sets of variables to each other:

0.64 0.5

0.45 0.7

0.32 1

0.21 1.5

You'll note you get a constant. The two columns are 1/circumference and the diameter of circles. The constant is PI.

You might say–"but those two variables aren't independent! There is a functional relationship between them!"

I would say, "You're right. And so is there a functional long-run relationship between prices and rents."

Vansanity
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Vansanity

I look forward to the day where I stop giving a shit about the RE market and prices.