Friday April 16th Free-for-all

Well, it’s the last weekend before the new CMHC rules come into effect, anyone out there going to any open houses?  Lets do our regular end of the week news round-up and open topic economic discussion post.  Here are a few recent stories to kick things off:

Housing may have peaked
Home sellers rush to market in record numbers
Sharp increase in number of BC mortgages in arrears
Canadian sales, listings and prices all rise in March
House listings hit March Record
The big one: earthquake or RE market collapse?
Canada housing bubble: Its not different this time
Frustrated couples crackshack quiz targets million$ homes
Vancouver spent more than $550 million on winter games
James Chanos on Chinese real estate bubble.
US foreclosures surge, on pace for 1 million this year
S.E.C. accuses Goldman Sachs of fraud

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

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Starving Artist
Guest
Starving Artist
6 years 3 months ago

Last! (reverse order now…)

patriotz
Member
6 years 3 months ago
Busiest March ever for Canadian housing listings Homeowners across the country are frantically planting “for sale” signs on their lawns this spring, hoping to sell at the top of the market before higher rates and tougher mortgage qualification rules temper the housing sector's incredible recovery. A wave of supply hit Canada's housing market in March, with nearly 100,000 new listings. It was the busiest March on record for listings, according to the Canadian Real Estate Association (CREA). The data suggest buyers entered the market to sidestep tougher mortgage qualification requirements that went into effect on Monday, as well as to… Read more »
patriotz
Member
6 years 3 months ago

From the otherwise worthwhile "Canada's Housing Bubble: It's Not Different This Time":

Likewise, for Vancouver or other Canadian cities, it cannot be said that there is a real estate bubble just because prices have run up

Wrong. If you have a substantial runup in real prices with declining real rents, it's a bubble.

Period.

Keeping an Eye on th
Guest
Keeping an Eye on th
6 years 3 months ago

Open letter to Mark Carney and Jim Flaherty:

You are both azzholes.

Greenspan can claim he was senile, i.e as per Encarta:

forgetful, confused, or otherwise mentally less acute in later life

What are your excuses?

Kite towards moon
Guest
Kite towards moon
6 years 3 months ago

Canada avoids worst of the Great Recession: StatsCan

Vancouver, which saw prices increase by 22% in the last year,to continue to have strong growth:CeoPoll

superboomtime
Guest
superboomtime
6 years 3 months ago

Final weekend before huge rush come into market. Good time to buy before hot money floods in bear. Everybody know that new mortgage rule like throwing match on gas can. New rule make FTB and investor more confident in market bear.

Wreckonomics
Guest
Wreckonomics
6 years 3 months ago

@patriotz: Thats what he's saying. You can't simply declare a bubble because prices rise, as long as incomes and rents are rising at the same rate.

As he also points out, Vancouver is way out of sync with economic fundamentals making it the bubbliest of the bubble markets. The only way to make money on Vancouver realestate is to find a more foolish gambler to sell too (or be the middleman in the transaction).

Dave
Member
6 years 3 months ago

@patriotz:

Bubbles don't last for 25 years. Real rents have been declining for about that long and real prices have been rising for even longer. Some bubble.

patriotz
Member
6 years 3 months ago
@Wreckonomics: Thats what he’s saying. You can’t simply declare a bubble because prices rise, as long as incomes and rents are rising at the same rate. Well no that's not what he's saying. Likewise, for Vancouver or other Canadian cities, it cannot be said that there is a real estate bubble just because prices have run up. That logic is linear and simplistic.That is too easy a hurdle to earn the bubble label. Rather, it is the herd mentality and the belief that somehow “this time is different.” He's saying that to declare a bubble you have to look at… Read more »
paulb
Member
6 years 3 months ago

Morning everyone, Pope I hope you don't mind but I created a blog post last night and want to share it with everyone here. Back later with some numbers. Come on 16k!!!

This is the link:

http://paul-northvancouverhomes.blogspot.com/2010

sluggo
Guest
sluggo
6 years 3 months ago

While most of my speck builder buddies got out of Dodge early in 2007, a couple of them started new projects last fall in a last ditch effort to catch some of those low mortgage suckers.

Now, these guys aren't idiots. Their livelyhood depends on trying to anticipate economic trends, demographics, and interest rates. Well let me tell you, with rates starting to shoot up, they're absolutely scared s..tless, and working 24/7 in a mad scramble to complete before the market gets flooded with new listings.

Honkytonk Man
Guest
Honkytonk Man
6 years 3 months ago

My realtor buddies tell me that the market is HOT HOT HOT!

Too many buyers to handle even if they worked 24/7.

HA HAw HAw HAW

Don Lapre
Guest
Don Lapre
6 years 3 months ago

Thirteenth!!!!

Dave
Member
6 years 3 months ago

@paulb:

Paulb, in your blog you said, "The interview with Will Dunning (mortgage salesman) really irked me when Will blatantly denied a real estate bubble by concluding that since there has been no speculation (funny because Finance Minister Jim Flaherty disagrees) and there has been no risky lending (Canadian subprime problem) there is no bubble, thus we can all chill out."

Dave – Obviously you disagree in that you think speculation and risky lending has been occurring. Can you point me to some data to support it?

joycer
Member
joycer
6 years 3 months ago

@Dave:

Don't waste your time paulb, he's been here long enough to read the posts that would answer his challenge to you… just trolling!

Your time is much better spent posting the daily stats (THANKS!!!).

Here is some troll therapy for the bears. If we hit 16K today we're going to need it!
http://www.youtube.com/watch?v=FMEe7JqBgvg

paulb
Member
6 years 3 months ago
Dave
Member
6 years 3 months ago

@paulb:

How is that speculation? You can't call every investor a speculator. I can't believe Re-Max would print that. Got anything else?

Boombust
Guest
Boombust
6 years 3 months ago

I am STUNNED by the number of auto-update listings flooding into my mailbox from my VOW realtor.

Yesterday, I received 20 and last night, I received another 21…all for SFH in the Tri-cities area.

patriotz
Member
6 years 3 months ago

@Dave:

You can’t call every investor a speculator.

An investor with negative cash flow is a speculator by definition, and every investor in Vancouver today has negative cash flow, when opportunity cost on the down payment is included (and even when it isn't for 90%+ of them).

bums up2
Guest
bums up2
6 years 3 months ago

LOL Dave.

"Got any data to support that?"

"Whoa whoa whoa I mean got any data I'll like?"

Yes, one could argue that indeed every investor in Vancouver is a speculator. Rents being low as they are (relative to prices) means properties have negative cap rate. The only "investors" willing to touch that are going to be speculators hoping for price appreciation / greater fools to recover that loss.

vreaa
Member
6 years 3 months ago

Paul Kedrosky, on his site 'Infectious Greed' calls us

'Vancouver: The Last of the Really Great Real Estate Bubbles'

http://paul.kedrosky.com/archives/2010/04/vancouv

Dave
Member
6 years 3 months ago
@patriotz: Opportunity costs have nothing to do with it. You have to evaluate each investment on its own. Lot's of investors buy with negative cash flow. They know that rents will catch up and they know they are building equity. I know lots of people who plan to own for a long time even though they have negative cash flow at the start. Your definition is faulty. Try again. My definition of a speculator is somebody who buys and sells within a short period of time, or somebody who buys a block of pre-sales with the goal of selling later.… Read more »
kabloona
Member
kabloona
6 years 3 months ago

paulb:

Many thanks for getting your website cranked-up again! Good graphs and of course the pics of the $1+ million "mansions" are priceless…..

Welcome back…. 🙂

mino4
Guest
mino4
6 years 3 months ago

Dave:

Opportunity costs have nothing to do with it. You have to evaluate each investment on its own.

What the hell does that even mean?

Come on Dave, you're not even funny anymore.

paulb
Member
6 years 3 months ago

@kabloona:

Thanks, feel free to post any comments and/or critiques on my blog if you like. I miss the glory days. lol

http://paul-northvancouverhomes.blogspot.com/

And… they're off!

New Listings 4

Price Changes 5

Sold Listings 3

Anonymous
Guest
Anonymous
6 years 3 months ago

@mino4: If you have nothing constructive to say just go for walk outside.

Wreckonomics
Guest
Wreckonomics
6 years 3 months ago

@Dave: I think you just had your ass handed to you on a plate. You know there's a problem when the people selling the product say the market is driven by speculation.

Anonymous
Guest
Anonymous
6 years 3 months ago

If there is no bubble, or prices never go down, why are there so many sellers right now? (and there will be even more) Wouldn't investors want to hold on? The mentality is definitely changing… FAST.

vreaa
Member
6 years 3 months ago

@bums up2: Agree.

One can argue that ALL purchases in Vancouver since 2005 ?, 2003 ??, have contained a spirit speculation in that a growing percentage of buyers would NOT have bought if they knew that prices would stagnate or simply increase at the rate of inflation. This also applies to seemingly conservative purchases of primary residences.

Everybody has been speculating on unrealistic ongoing price increases.

Gordon C.
Guest
Gordon C.
6 years 3 months ago
A bubble is irrational behavior by purchasers. If the sales to new listings ratio is showing a balance between supply and demand, but prices continue to escalate over several economic quarters that would be a bubble. An investor will buy real estate when the rents do not cover the operating and mortgage costs as long as there is a reasonable expectation of increasing rents and/or through efficacy of management to reduce costs. This is a far better way to make an informed decision to purchase than to use the price/rent ratio – which would be like using a meat cleaver… Read more »
paulb fan
Guest
paulb fan
6 years 3 months ago

@paulb: yayyyyyyyyy, paulb is back, paulb is back. I am doing crazy dance on streets. The fun begins. Quick guys, somebody start with those monthly projections – KopyrightKlepto, Canadian anybody?

Absinthe
Member
Absinthe
6 years 3 months ago

@Dave: "They know that rents will catch up".

Do they? Inflation adjusted rents have been pretty steady. In fact, you just suggested in comment #8 that rents have been declining, yes?

Are you suggesting that RE in this climate is a non-speculative investment because in 10 years, an investor might be "breaking even" in terms of rent paying their mortgage?

Imagine a universe where the value of the house is guaranteed to go down or even simply not appreciate in nominal terms. Does it still make sense as an investment?

VRENGD
Guest
VRENGD
6 years 3 months ago
Another "bubble or not debate"? That debate is over. The collapse is forming right now. A listings explosion is always the prelude to a price implosion. Everyone knows it. The question now is what are the possibilities for government intervention to stop the collapse once it gathers steam? There will be a lot of screaming from the RE industry and speculators once prices decline about 20%. What could the government do to pump the market again? Possible government intervension is the only risk to the bear case. I for one think that the government is out of bullets and can't… Read more »
rp1
Guest
rp1
6 years 3 months ago

Linked from the Vancouver Sun front page:

http://www.househunting.ca/buying-homes/story.htm

Last Gasp for Housing

"But there are indications the market has reached the peak with nowhere to go but down."

I hope the devil has a nice pair of ice skates.

Royce McCutcheon
Guest
Royce McCutcheon
6 years 3 months ago

Could someone please point me to the site where trends in rent numbers for Vancouver (and/or the Lower Mainland) are posted? I'm pretty sure I've seen it posted before, but I can't recall where exactly. Much appreciated.

reapaul
Guest
reapaul
6 years 3 months ago

The propaganda campaign goes on in Canada only DELAYING the inevitable.

The wave of ALT-A's in the US is starting to build. The numbers eclipse the Sub Primes by a factor of 3-1.

http://news.yahoo.com/s/ap/20100415/ap_on_bi_ge/u

Fed tells us 'don't worry, it's only debt'. I'm sure glad I don't have any. Bwahahahahahahahahaha.

vreaa
Member
6 years 3 months ago

Loonie down 1.25% today;

Possibility of a top in the general markets.

Boombust
Guest
Boombust
6 years 3 months ago

Does anyone have any idea how much HELOC money has been pulled over the past few years?

This was a bellweather sign for the US market…but I have never seen stats for Canada.

Further to my post at #19, I have never seen so many listings sent to me. Not even in 2008 when inventories skyrocketed.

Gordon C.
Guest
Gordon C.
6 years 3 months ago
It appears that people on this blog do not like speculators. Why? Do speculators not have spouses, children, mothers and fathers. If you cut a speculator will they not bleed. If it were not for speculators who invested in untested technologies where would our society be? Speculators take on a bigger risk than investors, so why should they not be compensated more? And praise the speculator, for without them who would be taking the big loss coming in real estate. I say praise the speculator, give onto him your wine and fruit of your loins. And beware of the false… Read more »
Strataman
Guest
Strataman
6 years 3 months ago

@VRENGD: Yeh I have a contrary view unfortunately, being very much a bear. I think if things go South the government will use our tax dollars (the frugal taxpayer) by saying something like this " we will allow $20,000 tax deduction for first time buyers" or something to that effect. And guess what? Not a one political party will argue! Do not underestimate the one goal of politics, election! That applies to both the governing party AND the opposition parties.

Kite towards moon
Guest
Kite towards moon
6 years 3 months ago

"Possible government intervension is the only risk to the bear case."

what about listings collapse that is above to begun?

Hey bears,

Do not rely on listing status,realtors are busy selling their listings,They will start removing that sold junk begining October 1,2010.

On otherside:Goldman Such draged down entire stock market now stock investor have no other place or cap to believe other than Vancouver real estate,Virtually poised to never go down: VRENGD.

XXX
Guest
XXX
6 years 3 months ago

Gordon C

I'm all for speculators too … just don't bail them out or help them with my taxpayer money like we are doing now. Just sayin.

squidly77
Guest
squidly77
6 years 3 months ago

Vancouverites read this https://secure.preschoicefinancial.ca/cgi-bin/Web

It looks like its 10% down now.

VRENGD
Guest
VRENGD
6 years 3 months ago

@Strataman: That is what they did in australia, so there is a precedent for it.

However, the big Canadian budget deficit may prevent the dolling out of juicy tax cuts.

It would make more sense to do something like increase the home buyer withdraws from RRSP's by another $5,000. This has the benefit of makeing it look like the government is doing something while really having no impact of government revenue or the market.

How many first time buyers in indebted BC even have money in their RRSP's to withdraw? The savings rate is -7% here.

David Chalmers
Guest
David Chalmers
6 years 3 months ago

@vreaa: Paul Kedrosky used to be a lecturer at UBC and I'm sure he couldn't afford to live here. Sour grapes me thinks. But I suppose it's human nature.

Strataman
Guest
Strataman
6 years 3 months ago

@VRENGD: That would be nice if they worried about the deficit but they would argue the increased deficit is "temporary" as the economy is showing signs of growth (false growth) but that's neither here nor there. I could actually see a bidding war!! 🙂 Conservatives $20,000.00, Liberals $25,000.00 NDP $30,000 (+ and extra $5000.00 for union members). Okay I'm cynical but can you blame me? 🙂

Not much of a name..
Guest
Not much of a name..
6 years 3 months ago

@squidly77:

Didn't the CMHC remove the price ceiling limits in about 2002-2003?

Just another change in policy that helped juice the market. It would be amazing where prices would be if mortgage rules were the same as they were even a mere ten years ago.

I'm sure one could track the price changes with mortgage rule changes and there would be a very large correlation between the two.

David Chalmers
Guest
David Chalmers
6 years 3 months ago
I've often been puzzled by the anger that is on display here. On one hand the posters deride the high prices. So why bother to own? Heck why bother to comment on real estate at all? There is more to life than owning, but the insistent commentary is contrary to this notion. Perhaps the government should step in and benchmark house prices to some defined standard of the "average" income, "average" individual. That way, there would be no need for so much schadenfreude. This anomie is making me uncomfortable about some of you that live in my hometown.
David Chalmers
Guest
David Chalmers
6 years 3 months ago

@David Chalmers: Heck why not throw a riot or two?

Not much of a name..
Guest
Not much of a name..
6 years 3 months ago

@David Chalmers:

Probably not sour grapes. My brother is a Phd in genetics and has said to me many times that there are many top researchers who would love to live hear but don't based on two factors.

1. No jobs for them (many of them are in Toronto or the US)

2. High priced RE

So…they can work and make more money elsewhere and buy cheaper RE.

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