Significant discounts in the Okanagan
The boom has gone bust inland and we’re starting to see more and more of these news stories about it. Jimmy pointed out this link to some coverage over at news 1330:
Advertised prices on many new developments are down between 20 and 30 per cent, six-figure savings in some cases. And if you really hunt, developer Matthew Hay says deeper discounts can be had.
He says too much inventory was built up before the recession hit, and the newly imposed Harmonized Sales Tax is not helping the market either. “So now not only is there a surplus of product on the market, but you’ve got a whole buyer demographic that is nervous, cautious, sitting on their wallets, waiting to see how things shake out.”
Some of the developers are offering incentives on top of the discounts like covering the HST, or the GST. Hay says some developers are desperate to sell and that is putting downward pressure on the Okanagan market.
July 23rd, 2010 at 1:57 pm
I learn something every day.
Debatable. You need the infusion of credit subprime in part permitted to cause that kind of rapid appreciation. That it collapsed when the tap was turned off I thought to be obvious by now. The extent of Canada's 'subprime' – low/no interest 35-40 years terms to the marginally qualified – has been hashed on various RE forums for years. Either way it's the same infusion of cash into the RE system, the same crazy appreciation, and the same collapse when it's shut off.
Clearer? Any other straw man arguments you want to toss out there?
July 23rd, 2010 at 10:53 am
@fixie guy:
"Nope. You need subprime for high prices."
So I guess Vancouver must have an awful lot of subprime. And I guess all the other bubbles, like the Vancouver 80s bubble, were caused by subprime. I learn something every day.
July 23rd, 2010 at 8:43 am
Newcomer Says: The prices themselves were what produced the instability and the collapse. You don’t need subprime for instability and collapse. All you need are hight prices.
Nope. You need subprime for high prices. High prices alone didn't cause the problems, the discover that high risk subprime had been bundled and resold as AAA debt poisoned the credit system and ground it to a halt. Once historically cheap and free flowing credit – including subprime loans – dried up the writing was on the wall for housing.
Anyone pulling a Glenn Beck about 'elive socialists' really needs to read a detailed account of the history. Recommendation: 13 Bankers. In the US all administrations since about Nixon worked hard at dismantling the financial regulations and protections imposed after the Great Depression and reaped the natural reward of bending over for Wall Street. In fact the authors build a strong case that Wall Street loves the regulatory structure because the morons in charge continuously flipped 'industry experts' through it, who naturally did whatever their future employers on Wall Street wanted.
July 23rd, 2010 at 8:13 am
@patriotz:
Right. The main problem with subprime was that it was one of the factors that put undue credit into the system, which inflated prices. The prices themselves were what produced the instability and the collapse. You don't need subprime for instability and collapse. All you need are hight prices. And we got 'em.
July 23rd, 2010 at 4:57 am
@Jonathon:
The Big Lies refuse to die. One, housing busts are never caused by owner-occupiers having to sell their homes (other than for the usual reasons like death, moving, etc). They start when the market simply runs out of buyers, and accelerate when speculators ("investors") start bailing. Owner-occupiers start defaulting only toward the end.
Two, the bust in the US had nothing to do with "subprime" lending, which accounted for a minority of mortgages in most markets. The bust in the US, like all busts, was due to prices simply being too high in relation to rents and incomes. Regardless of what label was applied to the mortgages. Many of the most overpriced markets in the US, such as Marin County north of San Fransisco, had almost no subprime lending at all.
July 23rd, 2010 at 12:12 am
@chilled:
I nominate your post for the most ignorant of the day.
July 23rd, 2010 at 12:10 am
Exactly how many sides does an "Okanagon" have anyways?
July 22nd, 2010 at 11:49 pm
http://vancouver.en.craigslist.ca/rds/apa/1857549…
This would be cool. Kinda like living in the desert similar to Mohamar Quadafi.
July 22nd, 2010 at 11:35 pm
@McLovin: Hah! All that money, today google ads made a good six bucks here. Not bad, but Robin Leach won't be visiting anytime soon.
Coincidentally, I did spend some time this evening looking into graph/ stats plugins to see if we could rig up a simple system for pauls stats, but it will only work if it's as simple as posting a comment and I'm not sure if he's even interested in doing that. There is no shadowy cabal here trying to keep pauls stats out of the light.
c0der also did some work on the CULT index and I believe that's working now, but only time will tell. The code was fixed days ago, the delay in updating on the site is my fault.
Believe it or not everything doesn't happen automatically here, it's a labor of love and a work in progress. I do appreciate all the feedback though, and try to work it into the site even if I don't always reply directly to it.
July 22nd, 2010 at 11:14 pm
….and no apostrophe.
Hells Angels
July 22nd, 2010 at 11:06 pm
“It isn’t “airy fairy socialism” that got the world in this mess, it was unfetted capitalism and improperly regulated financial markets, under primarily ‘CONSERVATIVE’ governments. You’re not paying attention.”
And England? They were under a pinko government where the state accounted for 50% of GDP. Did they perhaps have a bit of a bubble and maybe a of a financial crisis too.
It's all very simple. If the state steps in to make borrowing easy, people borrow and you get a bubble. It's not like the capitalists aren't involved. There is nothing corporations like more than a rigged market. But it's the commies who come out in favor of rigging the markets time and time again.
If you want efficient pricing, the market has to be free. If you don't want efficient pricing, that's another story.
July 22nd, 2010 at 10:44 pm
Why doesn't the person who is making all the money off of this site give Paul B his own stats on a column on PG 1 and fixed the condo index?
July 22nd, 2010 at 10:42 pm
Another net 100. Ho hum. Is this the new normal?
100 net new daily
1% of total inventory dropping their prices daily?
Honestly, I respect the bull opinion on this site as I never saw the 2009 bounce back coming but how can even the most bullish person see anything but disaster coming?
July 22nd, 2010 at 10:36 pm
Devore, The paradox of thrift says that saving money during a recession is bad because it decreases economic activity at the precise moment when it is needed most. What you don't seem to realize is that Keynes assumed that savings have been accumulated during the good times. You could just as easily talk about a paradox of extravagance, where people spend too much when times are good. The point is that when money is easy to get people spend too much, and when money is hard to come by they save, exacerbating the problem.
Keynes' theory isn't meant to increase overall economic activity but merely to smooth out the ups and downs. Yes the government would dampen private sector gains but also the losses. The point is to avoid bubbles as well as busts. Dropping interest rates and cutting taxes while unprecedented bubbles are raging is exactly the opposite of what Keynes advocated. Most Keynesians today really don't follow his theories very closely. Just like those who quote Adam Smith in regards to the "invisible hand of the market" often ignore his more populist ideas.
July 22nd, 2010 at 9:27 pm
@Devore: The problem with gov't stimulus is it's difficult to know when to stop it to allow private investment to take over. Right now it looks like it's too soon to remove it as unemployment is still relatively high, though the only way to tell is to stop it for a time and see what happens. It's back on life support soon unless private investment picks up (the engine turns over).
July 22nd, 2010 at 9:11 pm
I think PaulB should get his own spot on the front page to update his dailies, he deserves it and it would be easier for people to find. Could also include MTD and projections.
July 22nd, 2010 at 9:09 pm
@chilled:
"It isn’t “airy fairy socialism” that got the world in this mess, it was unfetted capitalism and improperly regulated financial markets, under primarily ‘CONSERVATIVE’ governments. You’re not paying attention."
Good grief. Obviously you're not aware that the govt-backed companies Fannie/Freddie held or guaranteed 59% of all subrime and Alt-A loans in the US, and they were encouraged to do so by a Congress that oversaw them. When asked about risk they were incurring, Dem. Housing Committee member Barney Frank famously said he was "willing to roll the dice."
The implied government guarantee to these loans created what was perhaps the biggest market signal in economic history. The worst case scenario on the bailout required for Fannie/Freddie is now $1 trillion.
As for the failure of regulation all of these loans along with the credit derivatives that insured them, they were all vetted and approved by the regulatory agencies involved.
Incidentally, the head of the Senate's banking and finance committee, Dem. Chris Dodd, took a sweetheart mortgage from Countrywide, a lender he was charged with overseeing.
And Dodd and Frank just wrote the financial reform law which, while devoting much attention to shoe-horning affirmative action into financial institutions, somehow had no time to address Fannie and Freddie.
Some private banks were reckless, others like JP, BB&T and Goldman saw the bubble and were more prudent. Almost no politicians saw the bubble – Lib or Con – and most of them gave drunken sailors a bad name. And still do as the lake of red ink washing from coast to coast demonstrates.
July 22nd, 2010 at 9:06 pm
@oneangryslav2: Keynes also said people saving money is bad, ie paradox of thrift. Where did he think investments and loans come from, the tooth fairy?
There is so much more to an economy than aggregate demand. It's like measuring an economy solely by its GDP. In theory, GDP = C + I + G, but what makes anyone think G(overnment) is able to stimulate or produce aggregate demand at all? Do they have a long history of picking winners? Or would they just spend money on politically favored projects? And does not G get its money from C and I anyways, by necessity decreasing C and I in the equation?
Keynes handed governments and voters around the world a loaded gun in the form of his economic theory.
July 22nd, 2010 at 8:52 pm
@Argentina Zero:
Oh great, superduperbullshitter has a new persona.
July 22nd, 2010 at 8:27 pm
@chilled: Those are tact to bring crowd from the bears,There is a lots of hype that amzn fall 15% to 104 while profit is up by 46% that will bring all the bears in the market to spin demand and supply rules.I think bears love that catchy headlines to tick the market up.
July 22nd, 2010 at 8:27 pm
@realpaul:
It isn't "airy fairy socialism" that got the world in this mess, it was unfetted capitalism and improperly regulated financial markets, under primarily 'CONSERVATIVE' governments. You're not paying attention.
July 22nd, 2010 at 8:20 pm
@Jimmy:
Jimmy Says:
July 22nd, 2010 at 5:48 pm
Developers push wave of pre-sales into slowing market
http://www.vancouversun.com/Me…..story.html
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I wonder which Canwhip Global employee(s) get their pee pee whacked for publishing that article.
July 22nd, 2010 at 8:15 pm
@bumncream: Real estate stats comes through the gauge from the type of properties that get sold in any perticular time,It does not mean that sky is falling.
You are standing close to higher interest rates and high prices surrounded by hst.If you believe in upturn or downturn it will not make any sense to you because vancouver real estate, Rock solid heart touching thus far it will never go down.
July 22nd, 2010 at 8:09 pm
@vibe:
vibe Says:
July 22nd, 2010 at 4:47 pm
Based on Agent Will’s stats 482 units were removed last week, and he looks at a smaller area than PaulB. So there you have it.
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Yeah, those units showed up on Craigslist rentals. You can currently rent an apartment in Vancouver if you have a quarter horse as a pet.
July 22nd, 2010 at 7:59 pm
paulB, incredible.
What are YOUR thoughts with respect to where we are now and how things will unfold?
July 22nd, 2010 at 7:56 pm
angels
July 22nd, 2010 at 7:56 pm
Off topic: Irish are leaving home
"Statistics show that the shift from an immigrant-receiving population to a largely outgoing one began just as Ireland suffered the continent’s most precipitous economic collapse – a freefall that began with the collapse of a real-estate bubble, which in turn set off bank collapses and government-debt emergencies. The result has been double-digit unemployment."
http://www.theglobeandmail.com/news/world/once-ag…
July 22nd, 2010 at 7:55 pm
@NO-LYMPICS:
81 NO-LYMPICS Says:
July 22nd, 2010 at 3:57 pm
Re; Okanagan
……..snipperage……….
There is no high paying jobs per se, as little industry exists.
……..final snipperage
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BULLSHIT! There are PLENTY of high paying jobs in Kelowna
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You just have to join the hell's angles to get one!!!
July 22nd, 2010 at 7:50 pm
@vibe: Agreed. In addition, Keynes argued that economies did not approach their potential level of long-run growth as the result of a shortage of aggregate demand. This is the role of G–government spending–during an economic downturn. Governments around the world have borrowed money recently but have not used it to boost aggregate demand. What effect did Bush giving US banks $800 billion (who then are sitting on it and not lending) have on aggregate demand. It would have been better for that money to have gone directly to consumers to help them with their indebtedness.
July 22nd, 2010 at 7:48 pm
@No Longer Looking:
No Longer Looking Says:
July 22nd, 2010 at 2:14 pm
@space889: One word solution to the stability/affordability problem: co-op. They aren’t low-income slums. Lots of middle class families with children live there.
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X-nay on the po-oc say, eh!!!!!
July 22nd, 2010 at 7:45 pm
The BOC says the economy is slowing but still signaled that another rate hike(s) is coming.
http://ca.news.yahoo.com/s/capress/100722/busines…
Now, what could be missing from this list of risks to the Canadian economy?
"It highlights risks stemming from the European crisis, lower growth in China, high unemployment, loss of confidence, weak consumer demand and businesses too fearful to invest in the future."
I don't know, how about a collapse of the housing price-rent ratio to its historical mean? It does seem to have happened in a country or two over the last couple of years.
What does it take for a 30-40% fall in house prices to get on this vaunted List of Risks?
July 22nd, 2010 at 7:00 pm
Keynes said that governments should run a surplus in boom years and a deficit in recessions. Governments around the world are following only half of the theory.
July 22nd, 2010 at 6:39 pm
@realpaul:
You keep talking about Harper's majority – are you on crack?
He's NEVER getting a majority, you can take that to the bank.
July 22nd, 2010 at 6:29 pm
@DaMann:
"Are there normally that many delists?"
Looks to me like fed up sellers are stamping their feet and pulling their listings, vowing to be back in a few months time when the market turns around.
Stupid fuckers don't have a clue that it's not coming back this time.
I will joyfully watch them suffer as prices fall month after month after month after month with no rebound in sight.
July 22nd, 2010 at 6:27 pm
So, the Keysian model is officially dead. Governments who loved the concept of ever increasing the balance sheet by expanding inflation never conceived of the day when it would all add up to 100%. It all seemed so distant that the future was inconcievable.
"“We will not have any more crashes in our time.”
- John Maynard Keynes in 1927
I guess that todays reality proves out the old adage 'liars can't figure and figures don't lie'.
With Keynes and world leaders swept up in the airy fairy socialism of big government ( in Canada government is the biggest employer and the largest advertiser in dollar terms)the ponzi scam must have seemed brilliant, just tap the fools a drip at a time. It would appear that time has caught up with the greatest fools of all….thats us for defending the policies set forth by these idiots by voting them in.
Spain is a great example of a country running with scissors in the dark. The real estate industry financing grew to consume 45% of the country's GDP, now 40% of the loans outstanding are non performing. There are more than 1 million vacant properties for sale….huge developments of thousands sitting empty…developers are bankrupt, the banks are facing a 'stress test' coming in the next weeks which will expose the depth of the red ink. This could take Spain as we know down the drain on the plain with the rain. They have zero ability to borrow outside the Euro Zone emergency fund.
Canadas 'sub prime crisis has yet to be exposed, although we have been twice warned by the IMF who seems to have better insight into the state of our national economy than the public. The 800 billion at the CMHC if upset by a crash in RE prices will sink the governments ability to support new debt. Don't forget the deficit, officially running at 57 billion is only the tip of the ice berg with all the cities and municipalities also borrowing at record rates.
I'm going to go out on a limb and suggest that the real deficit is probably five to ten times higher than suggested by the propagandists ( if the official number is 57 billion from one department , can you imagine what is really is when its all added together for the final audit?) I think that the multi trillion dollar debt that we have in secret if made public, would sink Harpers chances of a majority and so will remain Canadas most closely guarded secret. Well……..until the shit hits the fan of course as it is in every other country that based its economy on real estate.
Don't forget , this was a globally coordinated bubble. We see the simultaneous fall out in every economy….except Canada ?????? The coordinated crash will be just as vicious as we see happening elsewhere. Its all been based on governments inability to reign in spending. The idea that it has all been 'the banks fault' is a red herring that history will uncover once the current regime is retired and floating around in luxury and no longer seeking votes. Unfortuneatly, its you and I that get left holding the shit sack.
July 22nd, 2010 at 6:20 pm
@Anoymous: For arguments sake, let’s say somebody is losing $200/month renting out their unit. Meanwhile, the value of their property has dropped $20,000. Do they sell and realise an immediate $20K loss, or hope that things even out within a timeframe of 100 months, which would be the time required to take the same loss by sitting tight?
Ask that same question to people in Phoenix and Miami right now? What do you think they'd say? The rental difference will be a lot worse based on what rent to price rates are here and the loss could be much worse than $20K. Look at those cities.