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April 19th, 2010 at 3:01 pm
Vancouverguy this published definition may help
“Investment Value: The specific value of a property to a particular investor or class of investors based on an individual investment requirements; distinguished from market value, which is impersonal and detached.”
2nd Canadian Edition – The Appraisal of Real Estate. 2005
-Just thought I’d help. A lot of people on the blog seem to have a difficulty with what an investment is or isn’t
April 19th, 2010 at 2:58 pm
I am at our western approval center (big 5 bank) and all I hear right now is crickets compared to years past except for one year and I’ve been here since 2004
April 19th, 2010 at 2:58 pm
Danielle Park absolutely OWNED Klump on that CBC radio interview. Klump stumbled from one non sequitir talking point to another and I can’t believe the CREA picked him to represent them.
April 19th, 2010 at 2:55 pm
At my big 5 bank we’re using the new 5 year posted rule on ALL applications, cmhc AND conventional. Also prequals have to requalify unless there is a signed offer prior to Apr 19th
April 19th, 2010 at 2:51 pm
@paulb:
Hi Paul,
Question for you: Do you know, or can you tell me how to find out myself how many total properties there are in Greater Vancouver?
SFH/Condos/Attached.
Thanks,
BPOM
April 19th, 2010 at 2:50 pm
thank guys. what a relief.
April 19th, 2010 at 2:50 pm
@VanRod: Lary’s not making any claims of statistical significance (and nor am I). He’s just posting the same ole straight up numbers the same way he always does. It’s interesting thought as at a glance it would seem the tides are changing. Time will tell.
April 19th, 2010 at 2:37 pm
Thanks for the CBC Radio link, great stuff.
CREA economist Klump sounded like he was blustered and on the defensive. “Demand driven decline” with “sticky prices”.
We have saved this quote with the other bubble denier quotes:
Anyone expecting a massive price decline like you are seeing in the US is going to be sorely disappointed.
Gregory Klump, Chief Economist with the Canadian Real Estate Association, CBC Radio, 19 Apr 2010
http://www.cbc.ca/thecurrent/2.....-2010.html
April 19th, 2010 at 2:37 pm
@CbcParkKlump:
Any deal that was not signed by yesterday is subject to the new rules.
Pre-approvals mean nothing now, other than locking in an interest rate for 90-120 days.
April 19th, 2010 at 2:36 pm
@paulb fan:
Not true, ALL mortgages insured starting today must use the new rules to qualify from the CMHC. Pre approvals have nothing to do with it.
April 19th, 2010 at 2:35 pm
@CbcParkKlump:
No he is talking about the effects of the rising mortgage rates only, not the new investor rules and assumes someone gets their pre-approval April 18th. lol!
April 19th, 2010 at 2:35 pm
Ah, what a beautiful day this is – the first day of the real estate crash.
I love the smell of napalm in the morning.
See you all at the 16,000 party tonight.
April 19th, 2010 at 2:31 pm
@CbcParkKlump: Is this true? that would mean the nonsense would continue for another 3 months?
April 19th, 2010 at 2:30 pm
uh-oh
New Listings 174
Price Changes 128
Sold Listings 55
April 19th, 2010 at 2:18 pm
@CbcParkKlump:
Good call. Here is the link.
http://www.cbc.ca/thecurrent/2.....-2010.html
April 19th, 2010 at 2:12 pm
Did anyone else listen to The Current radio piece on CBC. At about 12:45 I interpret Klump to imply that pre-approvals prior to today (he uses a hypothetical pre-approval on Sunday, the 18th) will no be subject to the new rules???
Thoughts?
Klump is not very clear nor a good speaker, Danielle Park delivers well.
April 19th, 2010 at 2:06 pm
2:05pm update
15,978
April 19th, 2010 at 1:41 pm
@Not much of a name…:
The paperwork still has to be sent in to the board and be processed. That’s after the Realtor fills in the required paperwork.
That said you are right, the subjects have to have been removed prior the 19th to dodge the new rules.
I personally don’t expect a surge in sales numbers.
Paulbfan: I woud think by this weeks end.
April 19th, 2010 at 1:29 pm
@VanRod:
“…discredit it to some extent.”
Please enlighten me to what extent, and when that extent does not matter.
Are you ready to claim that despite these statistics, prices are raising there ?
What I am saying is the following:
We can argue what is the actual drop of the prices. I would never claim 24% is correct, neither Larry did that (if you read carefully)
what I read in your comment is that you are dismissing the numbers completely due to low number of samples. That’s my point, you can not dismiss them completely (but to some extent – i.e. percent down is probably wrong) due to huge downward slide. There is no question in my mind that the area has lower prices. (how much ? I don’t know and I don’t believe that we can get that number very quickly)
April 19th, 2010 at 1:27 pm
@paulb: so, till when do we expect to see the April 19 deadline effect? I mean by what time 75% of pre-apr19 sales would be completed.
April 19th, 2010 at 1:19 pm
@paulb:
But if there was a stampede to beat the new rules, then the two week period would be shortened as all subjects would have to be removed prior to today. No?
April 19th, 2010 at 1:00 pm
New Listings 127
Price Changes 108
Sold Listings 51
RE: 1-2 weeks for sales to flood in
Yes that’s about right. I would say in this hot market most of the subject removal periods would be less than 1 week. So 2 weeks is fair considering the info has to be submitted to the board for processing which can take a few business days.
April 19th, 2010 at 12:15 pm
@asalvari1:
“No matter what is the standard deviation , you can not discredit the sheer price move”
Huh? If you have a high standard deviation the price data you get will be less reliable, so you CAN discredit it to some extent.
April 19th, 2010 at 12:10 pm
@patriotz: Someone is not necessarily “certainly” a speculator just because they are investing on the basis of a change in price. For example, if I invest in a toll road in construction on the basis that discount rates decline as roads emerge from construction and then complete ramp-up, I am still an investor, not a speculator. The basis of my investment is potential capital gains, but I am investing on the basis the observed change in market risk perception as the risk profile of the asset changes.
“Speculation typically involves the lending of money or the purchase of assets, equity or debt but in a manner that has not been given thorough analysis or is deemed to have low margin of safety or a significant risk of the loss of the principal investment.”
“Financial speculation can involve the buying, holding, selling, and short-selling of stocks, bonds, commodities, currencies, collectibles, real estate, derivatives, or any valuable financial instrument to profit from fluctuations in its price, irrespective of its underlying value.” – Wikipedia
In the example I discussed above, investing in a toll road on the basis of future price changes is investing on the basis of a forecast change in underlying value because of a previously observed change in asset risk profile for similar assets.
In contrast, those purchasing condo pre-sales are almost certainly price speculators, investing without considerable analysis, without knowledge of the underlying value, and on the basis that prices will likely deviate further from fundamentals in the future.
April 19th, 2010 at 11:53 am
@patriotz:
i don’t think the new cmhc rules and interest hikes will turn off the flow of new homebuyers completely. as asking prices adjust downward, there will still be buyers for whatever reason (pre-approval expiring, nesting, peer pressure, fear etc…) people like my friend, who recently sold (sitting on $200k) are renting sort term until things simmer down a bit (no multiple bid situation) she believes the market will not crash, so she doesn’t see the point in waiting too long. i assume within the next few weeks she’ll pull the trigger allowing the seller to “move-up” to their next place. anyways my point is, there will be a transition period before the full effect of decreased fist time buyers is felt, whatever that may be.
April 19th, 2010 at 11:52 am
@VHB: For the (now past) April 19th deadline the sale needs to have closed, i.e. removal of all subjects. Pending sales take some days due to removal of subjects and this may be the 1-2 week delay to which Realtors are referring. Any sales still pending are SOL for the old CMHC guidelines. I think closed sales are loaded into MLS relatively quickly but paulb can correct me.
April 19th, 2010 at 11:51 am
@VanRod:
I am sorry dude, you have no clue on statistic obviously.
No matter what is the standard deviation , you can not discredit the sheer price move – its more then shocking. Its so shocking that I had to ask if he has a math error in his computations. You can not get these numbers easy…
beside the statistics issue you have, Larry never claimed that the prices are down 24%, read more carefully.
April 19th, 2010 at 11:19 am
Wow, glad I don’t own a home, especially an attached one in the Cambie neighbourhood:
“A popular neighbourhood, Cambie townhomes, condo’s and apartments carved a remarkable downward path with a median price drop of $136,500 in the past 60 days”
http://www.yattermatters.com/n.....will-hurt/
This must be another Larry Yatkowsky in Vancouver, WA since prices always go up in Vancouver, BC
April 19th, 2010 at 11:12 am
@Girlbear: Kind of a dumb post. This yatter matters guy obviously has never taken a stats course. To claim prices are down over 20 percent based on such a small sample size is absurd.
April 19th, 2010 at 11:07 am
http://www.yattermatters.com/n.....will-hurt/
….in case anyone missed this…
April 19th, 2010 at 10:57 am
Now back on topic. About April 19th: We have heard that it takes about 2 weeks for sales to make their way into the daily data.
So, we shouldn’t expect the sales numbers to drop off *today*, but within two weeks or so.
Could someone who knows about this explain why it takes two weeks? What are the steps involved? I will archive the answer over at the forum here so that we can refer to this easily in the future.
April 19th, 2010 at 10:30 am
Girlbear:“Let the new rules kick in”
Old Rules:Mortgage term and downpayments 35 yr 5% down.
New Rules:Mortgage term and downpayments 35 yr 5% down.
Difference:?
No difference.
April 19th, 2010 at 10:29 am
@rig jockey:
And who is going to buy the properties that they are moving up from?
A ladder cannot stay in the air without its lowest rung.
April 19th, 2010 at 10:28 am
“Downtown False Creek North condo inventory (from public MLS) is >1000. chart here.’
This is very dramatic and significant. The supply exposion seems to be amplified by a factor of 4 or 5 in the DT Penninsula.
This geography is the epicenter of Vancovuer RE speculation, where the condos with their lower prices(compared to SFH), ever increasing offerings (compared to SFH) were the perfect RE speculation vehicle for the last 10 years. They allowed the masses to play the game
VHB’s graph is evidence of a comming bullet to the heart of the Vancouver RE bubble and the consequential withering of the masses’ (phantom) net worth.
April 19th, 2010 at 10:13 am
Downtown False Creek North condo inventory (from public MLS) is >1000. chart here.
April 19th, 2010 at 9:57 am
@EndGame:
A significant revaluation of the Yuan is likely to result in a serious correction in Chinese markets. Theirs is the only bubble larger than our own.
Some 50-60% of Chinese GDP is thanks to Real Estate construction. That should tell you all you need to know.
A significant Chinese correction would have the Chinese flipping their condos like Tech Stocks in 2000 and would decimate Van RE.
Don’t act surprised.
April 19th, 2010 at 9:55 am
i don’t think prices will correct by much in the short term (5-10%, 6 months) because move up buyers already have enough equity (if one had bought >3 years) and will not be affected by the new cmhc rules for <20% down. for example, a friend of mine just sold her 1 bedroom condo after 5 years. i'm guessing after paying the balance off, she's sitting on $200k. her and her spouse are now looking to move up to sfh around $750k. they'll be limited a bit by the new rental income rules but they have enough income to qualify at today's rates (4.3% 5 year fixed?) . it's only when the pool of first time buyers completely dries up will we see any movement in the markets. i'm as bearish as they come but most people are fearless when it comes to debt so i think we'll see a gradual correction (~25%, 5 years); unless there's a black swan event.
April 19th, 2010 at 9:42 am
Old Rules:Revenue property =35% Down payment,TD Canada Trust.
New Rules:Revenue property =20% Down payments, All Canadian Banks.
Difference:Minus 15% down payments,now buyers can buy a revenue property on 15% lower down payments compare to the old rules.
April 19th, 2010 at 9:09 am
There will be no crash.
The revaluation of the Yuan will take care of everything.
April 19th, 2010 at 8:59 am
@davers:
“Now” is not going to last long.
April 19th, 2010 at 8:41 am
@davers: Maybe. But remember that presales often price higher than the ‘spot price’ for condos–they bake in some appreciation.
April 19th, 2010 at 8:34 am
Very interesting, I hadnt thought of this either. Someone could have signed a presale agreement well over a year ago and had no idea that these changes were coming. Then again anyone signing over a year ago probably got a cheaper price and will now have a bit of ‘equity’ as wiggle room.
April 19th, 2010 at 8:17 am
#6 said “Don’t forget the pimps have a radio station, and several newspapers!”
True, but the media also like to sell paper, which they do when people are panicking. Remember the H1N1 media splash.
April 19th, 2010 at 8:08 am
@buffates:
“Feels like Christmas morning.”
Ah, the fresh smell of BC pine on the way to work from Burnaby this morning. Wait, that’s not pine, it the good ‘o BC bud smell. Guess it’s blooming season. That speculator needs to come up with the $93,000 somehow.
April 19th, 2010 at 7:09 am
” Fundamentals alway win.”
True in the long run. I think we are quite close to the moment of truth, although there may be a couple more rabbits left.
Don’t forget the pimps have a radio station, and several newspapers!
April 19th, 2010 at 6:59 am
@Keeping an Eye on the Pimps:
Sure there are ways to get around rules, but there is no way to get around higher interest rates. That’s what really matters. Loose borrowing standards cannot sustain a bubble here any more than it could south of the border. Fundamentals alway win.
April 19th, 2010 at 6:55 am
I suspect as the new rules kick in, the line between criminal and “creative financing” will get a little more blurred.
Just because there are new rules, doesn’t mean there are no new ways to get around them.
The pumpers will keep getting more and more “creative” and we won’t know just how creative, or criminal they have become until the crash, and the subsequent need for scapegoats.
April 19th, 2010 at 6:11 am
Feels like Christmas morning.
April 19th, 2010 at 5:44 am
If you listen really carefully you can hear the world’s smallest violin playing a song.
April 19th, 2010 at 3:17 am
From the link:
Nope, they certainly are speculators, just as someone who buys a futures contract on stocks is a speculator. Anyone making a bet on the future price of an asset is a speculator by definition.