Friday Free-for-all!

It’s time for our traditional end of the week Friday free-for-all post where we round up the weeks news and have our open topic economic discussion for the weekend. Here are a few stories I’ve noticed lately:

Businessweek: Vancouvers Bubble Trouble
11 Olympic Village buyers want out
Reading the mortgage fine print
Royal and TD trim some rates
Big bank growth offsets office vacancies
Economist muses on comparisons to 1930s
g20 leaders face worries about rising deficits

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

Sort by:   newest | oldest | most voted
VancouverGuy
Guest
5 years 10 months ago

The key item that the Businessweek article misses is the absolute importance of CMHC to the market. The Canadian market is one built on CMHC and nothing else. Without understanding that, it is difficult to understand this bubble and the general price trend in the Canadian market.

Government intervention in markets that can operate efficiently without their assistance always distorts incentives and screws over one person or another. In this case the intervention created a mass of paper wealth for one generation and committed another to near-permanent indebted servitude.

patriotz
Member
5 years 10 months ago
Talk about not seeing the elephant in the living room: http://news.bbc.co.uk/2/hi/business/10409354.stm "The Canadian character is relatively fiscally conservative. Canadians themselves are relatively prudent, I think, in terms of how much they are prepared to borrow and the risks they are prepared to take." Certainly, fewer risks are allowed in the housing market. Canadian home values have held fairly steady according to Pierre de Varennes, a real estate broker in Ottawa, with 350 employees. He says stricter standards for homebuyers meant no housing boom and bust in Canada: "In Canada, you cannot over-mortgage your property. In fact if you are financing… Read more »
chip
Guest
chip
5 years 10 months ago
" "I'd say over half our high-end listings go to China buyers," says Connell. "Yesterday we did an open house for a $3.5 million home, and six groups came through. They were all Chinese." Broker Andrew Hasman sees 70 to 80 percent of his high-end listings go to mainland Chinese. He oversaw an open house recently for a $1.8 million home. Of 100 visitors, 91 were from China. " I wonder what impact the recent Australian restrictions on foreign buying will have on the Vancouver market. Interesting too that you have to read an American magazine to get an idea… Read more »
chip
Guest
chip
5 years 10 months ago

And just for fun. Searched 'New Price' on Craigslist and one screen was filled with just two days of listings, June 23 and 24.

Scrolled back to May and one screen covered all listings from May 11 to 30.

It's a bubble in New Prices!

patriotz
Member
5 years 10 months ago

@chip:

Really objective sources there. They would say that, wouldn't they?

Anonymous
Guest
Anonymous
5 years 10 months ago

@chip: Relatively few buyers are truly "foreign." Besides there are more than enough properties for sale for everyone!

registereduser
Member
registereduser
5 years 10 months ago
If you believe the "wealthy mainland Chinese buyers" meme now being advanced by realtors, I have a bridge to sell you. While there are a handful of mainland Chinese buyers of Vancouver real estate (if we are talking about the wealthy ones, they buy mainly in the Arbutus, Quilchena, South Granville and Shaughnessy neighbourhoods) they are vastly outnumbered by locals who have lost all sense of what the rest of the world pays for real estate and who take for granted, whether they realize it or not, that "real estate can only go up". It is not wealthy mainland Chinese… Read more »
Leading Story?!?
Guest
Leading Story?!?
5 years 10 months ago

I'm surprised this blog hasn't been on fire with this news I woke up to this morning on CBC Radio!

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

Hearing Rennie stutter on about "waterfront living" & "Sub-Zero fridges" as well as the quiver in his voice when he said he's "not worried about re-selling the units" …

Coup de grâce, anyone?!?

900kCrackHouse
Guest
900kCrackHouse
5 years 10 months ago
@registereduser: Only a handfull of mainland Chinese buyers you say? I personally know a Chinese family that owns a 1.5 million dollar house in Fraser heights – only the Grandma and 18 year old daughter lives there. Another family that purchased a 1.5 million dollar house in Burnaby. Guess who lives there? Their 18 year old son. Friend just built two 1.2 million dollar houses and sold both of them in Steveston area – guess who bought them? Mainland chinese buyers. Obviously this is just anecdotal evidence, but I really believe anyone who thinks that mainland chinese buyers are not… Read more »
Leading Story?!?
Guest
Leading Story?!?
5 years 10 months ago

My bad … didn't review yesterday's blog

Rennie Madoff
Guest
Rennie Madoff
5 years 10 months ago

Be tolerant … or (default &) move to suburbia!

davers
Guest
davers
5 years 10 months ago

@900kCrackHouse: Each and every buyer drive up the market. That buyer was willing to pay more than anyone else who was interested in the place (most of the time).

Sure mainland Chinese buyers drive up the market. The question is by how much?

patriotz
Member
5 years 10 months ago

@900kCrackHouse:

Prices are determined by the marginal buyer. That means that if prices were actually being set by Mainland Chinese (or whatever exotic buyers you choose), nobody else would be buying.

I will also note that if Mainland Chinese were capable of setting prices by themselves, the RE industry would not have to bother marketing to anyone else. What do you think they are paying Bob Rennie for?

Nero
Guest
Nero
5 years 10 months ago
@900kCrackHouse: I too think the presence of Chinese, though overrated, is substantial enough. The proof is in the pudding (prices) obviously. It's made a home in every local buyer's head. But that in itself guarantees the bubble. Chinese are not savvy investors, they are just like the Japanese in the 1980s. People think they're better because their growth rate is apparently higher, but most analysts believe those numbers are exaggerated by the government, and they don't nearly have the economic savvy that the Japanese did back then. They were heads and shoulders ahead of the rest of the world in… Read more »
asp
Member
asp
5 years 10 months ago

@chip, you don't have "to read an American magazine to get an idea of the extent of foreign purchases here." Just look up the stats that Landcor provides.

Eponymous
Guest
Eponymous
5 years 10 months ago

@Happy Renting: What is landcor? The article said that stats on foreign buyers are hard to find, I thought no one had them?

vreaa
Member
5 years 10 months ago

The BusinessWeek article is good, but it's remarkable that fundamentals such as price/income of 10; price/monthly_rent of >300 (or 400 or 500), are not mentioned. That would have given non-Vancouverite readers immediate perspective that they don't get from the article as it stands.

CH
Guest
5 years 10 months ago

"We have buyers going, 'Wow, I love the hardwood floors and the view and the Sub-Zero [fridge],'" said Rennie.

lol, for fuck sakes I HATE salesmen.

anonymous456
Guest
anonymous456
5 years 10 months ago
@Nero: Good point about the Japanese. I still remember when the Japanese-craze hit Canada. I believe there was even a push for "Japanese-immersion" elementary schools (it might have even happened) because according to the media, the Japanese economy was so strong that "one day everyone will have to speak Japanese!" Sound familiar? Is it different this time? I know I'm sure tired of hearing of Chinese dominating the market (and how do the realtors know they're straight from China anyway, I know lots of Asian couples who have been in the country for a decade or more and they're using… Read more »
jesse
Member
5 years 10 months ago

@vreaa: LOL the irony that Business Week can't apply basic business concepts is somewhat ironic if it weren't so predictable.

They did shout out VCI though, so they can't be all bad 🙂

jesse
Member
5 years 10 months ago

Ironic irony. Next time bear proof read. Rent is due next week so understandable.

Tony Danza
Member
Tony Danza
5 years 10 months ago

@chip: I still don't understand why a Chinese gazillionaire is going to use Gwai Lo Hasman as their agent. Maybe he's representing the seller but why would the gazillionaires agent fill Hasman in on the personal details of the buyer?

Anyone?

Recently Bearish
Guest
Recently Bearish
5 years 10 months ago

Out of curiousity,why are the numbers at http://www.yattermatters.com for yesterday's sales so different (89) than those posted by paul b? Do they look at a different overall area? Or is one of them wrong?

Tony Danza
Member
Tony Danza
5 years 10 months ago

@Tony Danza: Oh right because Gwai Lo Hasman is a d!ck sucking liar.

crashcow
Member
5 years 10 months ago

We have talked here about how our housing boom has lead to misplaced values…here's an anecdote from China:

http://globaleconomicanalysis.blogspot.com/2010/0

"I would rather cry in a BMW than smile on the back of my boyfriend's bicycle."

Wow.

DaMann
Member
DaMann
5 years 10 months ago
These realestate idiots are doing no one a service with their latest bullshit about the Chinese. It's starting some dangerous hatred against the Chinese for "driving locals out of their own city" They are creating a tension out there. The Chinese don't come in and say "hey I like that house for 1 million, I'm going to buy it for 1.2 million because I'm rich." They are buying the house at market value nothing more. It's the masses of idiots with free credit in their hand driving up prices. Poor Chinese are going to be well hated if this misinformation… Read more »
DaMann
Member
DaMann
5 years 10 months ago

@Recently Bearish:

Recently Bearish

I have noticed this before. I THINK that Paulb keeps collecting them as they come in, Yatter has a cut off point and uploads the data at that time. He may not keep checking as the new ones filter in as Paulb does. I think that's it anyways.

Raz
Guest
Raz
5 years 10 months ago

The chinese may looks like they can spend like there's no tomorrow. However it doesn't mean that they will be buying into a falling market and the RE hype starts to cool off. After all Vancouver isn't the only RE market in the world, and RE isn't the only investment where they can put their money.

Will see where they will go when they see the drop starts to gather momentum.

SuperSmartBull
Guest
SuperSmartBull
5 years 10 months ago
Look bear, need to understand China advantage. First, they don't have to waste time watch FIFA hifi, team is not in. Also save money on car flag. Extra time spent at RiverGreen construction site imagining utopia and snapping up W.Side bargain homes. Do not want to be lonely man in leaky condo crying on bicycle. Johnny from England and Eduardo from Portugal cannot compete with this advantage, they have to stay stuck to TV. But at least they are relax watching hifi and sipping Cranteeny. Some things are priceless. Alos, please don't forget rent is due next week. Holiday on… Read more »
Fun times!
Guest
Fun times!
5 years 10 months ago

This is really starting to get fun! The mountains of undeniable data that shows we are in a bubble is flooding in. Even the Condo King himself is afraid!

I am going to go out and offer a Realturd a chance to wash my car for extra money. I will then offer $589K with 67 subjects and a 5 month closing on a place listed at $1 million. Wish me luck!

It will be a long hot summer followed by a very cold winter for Vancouver Real Estate!

Nero
Guest
Nero
5 years 10 months ago

@anonymous456:

You know what else is the other elephant in the room as far as China is concerned? Demographics.

China has had that one-child policy for so long that they're getting old just like the Japanese.

And one of the local factors for the Chinese that is fueling the bubble is that with that one-child policy, there are more men than women. How does that affect RE values? Men who one RE are considered far more suitable mates then their poor renting peers. This is helping the rush.

kabloona
Member
kabloona
5 years 10 months ago

CBC interview with the Lawyer trying to void the pre-sales contracts with OV Condos…..in case anybody hasn't heard it.

http://www.cbc.ca/video/news/audioplayer.html?cli

Basically he admits his clients want out because their bet on ever-increasing Vancouver real-estate prices didn't pan out.

😉

Best place on meth
Guest
Best place on meth
5 years 10 months ago

@crashcow:

Ah, the women of China have learned Western ways well.

That's an unfortunate side effect of China's one child policy, a shortage of women. There are now 20 million more men than women and the poorest ones have little hope of finding a wife.

Sounds like the big city girls know they have these guys by the nuts too, they're getting awfully demanding and brazen.

If I were a Chinese guy with money I would stay away from these horrible women and go find a nice girl from the countryside.

coastal
Guest
coastal
5 years 10 months ago
Bang on for those who see through this "Chinese buying tsnuamai" BS. Last gasp excuse by the RE ho's. If these are mainland buyers then they most likely have come into big money for the first time in their lives and haven't experienced a massive decline in any investment. This is so similar to the majority of the recent generation of buyers the past 10 years. They have no idea what it's like to see 50% of their worth erode away in Chinese water torture fashion. This will not be a happy ending. The Chinese are known gamblers on a… Read more »
Bubble Lad
Guest
Bubble Lad
5 years 10 months ago
I'm sorry, but the Olympic Village buyers are imbeciles. How can the builder be in breach of contract, when every condo contract basically says the same thing: "We, the builder get to change whatever we want about the building, whenever we feel like it, according the definitions that the buyer agreed to let us define at a later date, and in return, the buyer gets to lie on their stomach and bite the pillow." I mean, COME ON!!! It's the builder's fault you just decided to wing it without reading the contract? Sorry, all sales are final. You put your… Read more »
SuperSmartBull
Guest
SuperSmartBull
5 years 10 months ago
Uh oh bear, Vancouver is #1 destination for everyone. Look, first Chinese, now G20 leaders will come to snap up OV bargains (they don't need washer/dryer since everything dryclean), PaulB came back, even Scullboy coming back. He knows VanRE is worth more than $2.99 lobster. You can not fight it bear. Keep saying Vancouver is trash, nobody believe you. With direct flight from everywhere, whole world can be here in 24 hours. This world is globe bears, money and people flow everywhere. Rest of world is in toilet, everybody like Flaherty serious face, reminds them of Grandpa. Canada is beacon.… Read more »
coastal
Guest
coastal
5 years 10 months ago

I remember the big Japan fear too. They were on the verge of owning every bank in the USA and they were going to take over the western world. All our kids would be taking Japanese as a second language and Toyota and Datsuns would be our only mode of transportation. It was just another ridiculous fear mania with a very brutal ending like this one is/will be.

Bubble Lad
Guest
Bubble Lad
5 years 10 months ago

'Wow, I love the hardwood floors and the view and the Sub-Zero [fridge],'"

Is there a string in Rennie's back you pull when you want to hear these comments? ROTFL!

Best place on meth
Guest
Best place on meth
5 years 10 months ago

@coastal:

Look, even the RE pimps who are pushing the Chinese buyer story have all said the same thing:

They are going for the high end properties over $2 million.

Ok, so how does that affect average homes since there has always been foreign demand for the high end product? Who's to say these buyers aren't just taking properties off the hands of other foreigners with little or no net effect?

davers
Guest
davers
5 years 10 months ago

@Nero: So what are you saying? Because there's a 1 child policy in China rich people are moving here to have more kids? This has been covered, if you pay the government money, you can have more kids.

If you are saying this affects the local market in China you might have a point, but are you refering to Vancouver RE?

Not much of a name..
Guest
Not much of a name..
5 years 10 months ago

@Best place on meth: "Ok, so how does that affect average homes since there has always been foreign demand for the high end product? Who’s to say these buyers aren’t just taking properties off the hands of other foreigners with little or no net effect?"

– That may explain why the Landcor stats continually show a small percentage of foreign owned Vancouver properties. They just keep selling amongst themselves.

Starving Artist
Guest
Starving Artist
5 years 10 months ago

I'm sure there has always been a similar level of high-end market churn with only the origin country mix changing over the decades. It's just that now the tide is going out and the low- and mid-level buyers are sitting on their hands, it's the only area of activity so appears to be "hot".

Best place on meth
Guest
Best place on meth
5 years 10 months ago

West side median price down 3% this month according to Larry.

MOI at about 10.

http://www.yattermatters.com/neighborhood-numbers

Tony Danza
Member
Tony Danza
5 years 10 months ago

@Best place on meth: West Side real estate soon to become as popular as a redheaded stepchild.

superduperbulltime
Guest
superduperbulltime
5 years 10 months ago

Bear now that government promise doctor for everyone Vancouver real estate market going to take off. Every 24 year old male nurse will move into downtown condo. Top off with Grey Cup 2011 just like Olympic explosion of price. Now is time to get in before wave of 24 year old male nurse and fat overweight cfl fan from saskatoon swarm to town.

realpaul
Guest
realpaul
5 years 10 months ago
Flaherty wants to eliminate deficit by 2013, in the middle of a recession. What does that mean to Canadians? Much higher taxed of course, where will the revenue come from otherwise? Business profits are tanking. The only one hiring is the government. The churn of jobs is a smoke screen of projections. Get ready Canada, the Cons are going to come after you like the Martin Liberals did in the 80's and 90's. New taxes will kill the CDN middle class. Debt prison here we come. BTW ….PC Douchebags and asst retards…of course theres a problem with foriegn nationals buying… Read more »
kansai_92
Member
kansai_92
5 years 10 months ago

RE: Millennium Water

No fcking way that these hosers are getting out of their contracts.

Desperate attempt at trying to weasel out of a gamble that didn't pay out by looking for a legal loophole.

What a bunch of cry babies.

11 contracts being disputed out of 264.

I'll be a few more join the lawsuit.

So you have 4.1% of buyers wanting out.

That speaks volumes about the development and RE market in general.

On top of that, you have agents whispering to buyers "psst, if you don't like this place, I'll take you down the street where prices are $100K cheaper".

kansai_92
Member
kansai_92
5 years 10 months ago

I wonder what goes through the Chinese buyer's mind when, envitably, the yuan begins to appreciates against every other currency in the world (including ours).

Yet they are holding onto a piece of overpriced Vancouver real estate denominated in CAD$.

Depressed
Guest
Depressed
5 years 10 months ago

"We have buyers going, 'Wow, I love the hardwood floors and the view and the Sub-Zero [fridge],'" said Rennie.

Well, if some of you guys had truble understanding the notion of infinity in math class, there you have it, think of human stupidity, you might finally get it.

Bubble Lad
Guest
Bubble Lad
5 years 10 months ago
The whole "rich asian" myth is as fascinating for its complete lack of credibility as it is for its thinly veiled racism. I think people are interpreting China's economic clout as a nation (as evidenced by their ownership as a nation of a trillion in US debt) as economic clout of individual Chinese citizens. My impression is that the trillions of dollars is composed of tiny individual savings in China – working people who save every penny to put aside a few hundred or a thousand dollars. When they bank this money, China invests it EN MASSE in US bonds.… Read more »
wpDiscuz