Friday Free-for-all! March 18th Edition
Hey! You made it to the end of another work week! The weekend is nigh and that means it’s time for our regular end of the week news round up and open topic discussion thread. Here are a few recent links to kick off the chat:
-Confused ‘paycheck-to-paycheck’ buyers race to beat deadline
-Buyers unhappy with condos from shell company after developer goes bankrupt
-Olympic Village sales not slowed by allegations of shoddy construction
-Community groups protest Chinatown condos
-8000 Vancouver buildings vulnerable to earthquakes
-You’ll be able to buy more condos at $10.25 per hour!
-Victoria homebuilders blame politics for downturn
-Canada earns a ‘C’ for economic performance
-Where to invest next: Bamfield!
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So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
March 20th, 2011 at 8:29 pm
Macleans article of note:
Macleans: 'The Canada Bubble' –
"Housing has gotten crazy, it’s a bubble. Prices are set to plunge at least 25 per cent."
Link, Excerpts and Comments:
http://wp.me/pcq1o-21n
March 20th, 2011 at 6:15 pm
This is interesting:
https://advisor.rbcgam.com/public/assets/ppt/big-…
March 20th, 2011 at 1:19 pm
Oh look, some anonymous douchebag has thrown down a gauntlet.
Why do I not give a shit?
*****
Everyone posting on this blog is anonymous retard…
And yes, you are included as one of the bears professing the coming collapse with the March 18th rules.
Lets check back in 3 months and see where things are at.
March 20th, 2011 at 12:57 pm
@History of Failure:
Oh look, some anonymous douchebag has thrown down a gauntlet.
Why do I not give a shit?
March 20th, 2011 at 12:53 pm
@Best place on meth:
That guy is great example that bad hair transplants are, unfortunately, not uncommon. I would never take his financial advice after seeing that fiasco at the top of his head.
March 20th, 2011 at 12:47 pm
Well, March 18th is behind us now. It will take a week or so for the sales made before March 18th to filter through the system. Then what?
They what? Well according to all the bears here, March 18th heralds the beginning of the crash. No walking away from it this time bears. Many of you here have repeatedly stated that the market will collapse after March 18th. No pussy footing around about the crash of 2012 if things don't look they are going your way in a few months.
In the next few months, everyone better be seeing price declines or all of you will be utterly useless in your predictions – once again.
First, you were wrong about what the recession would do to RE. Then you were wrong about rising interest rates. The you were wrong about the Olympics, the April mortgage rules and the HST.
If you guys are wrong again, you will officially be the worst armchair analysts in history and will have to move. Because if this crash does not come, every wife, husband, mother-in-law and friend will have the right to chastise your studid move renting.
Tick tock bears….crash better be coming….
March 20th, 2011 at 12:39 pm
@southseacompany:
That's a very old photo of Helmut from way back when he first joined the 17th Panzer division. He and Ozzie Jurock were a holy terror on the Soviet front.
Ah, good times….
March 20th, 2011 at 12:03 pm
Helmut Patrick says, "Soaring jobless rate seen as sign of optimism"
http://www.bclocalnews.com/fraser_valley/missionc…
Now that's a spin!
March 20th, 2011 at 11:46 am
@james:
MULTICULTURALISM HAS FAILED
http://www.youtube.com/watch?feature=player_embed…
March 20th, 2011 at 11:45 am
I was at 4 open houses today too. No Mainland Chinese but several lepricons. Since I speak Irish I know they were in fact lepricons. I over heard one talking about paying full price with a pot of gold.
March 20th, 2011 at 10:45 am
@WFT?:
Well I've already been a homeowner so "ever" excludes me.
What I've given up on is living in Vancouver long term for other reasons (job opportunities & quality of life). If I were interested in staying, I would consider buying if price/rent (including suite income) went down to 150. I'm pretty sure we'll see this again, but it might take over 5 years.
March 20th, 2011 at 10:19 am
@Steve:
When I say Chinese, I mean the real Chinese…that is mainland Chinese. I'm fluent in Mandarin Chinese, so I can understand what they're saying. None of them were speaking English too. I don't know whether they're immigrants or just visiting. Some look pretty young, likely in their twenties.
I also overheard an agent say that his buyer doesn't have income, but will be able to put 50% down against a 570k townhome.
Anyway, I'm just reporting what I'm seeing. Don't shoot the messenger.
March 20th, 2011 at 9:53 am
Lets do a poll. How many people have given up on the idea of ever owning a SFH in metro vancouver?
March 20th, 2011 at 8:51 am
So I went to my trusted old "TD Mortgage Calculator" looking to do some calculations and, all of a sudden, I can't fill in a 35 year amortization, only 30 years or less!!! WTF is going on? I have a hefty DP (well let's pretend I do…). Why is TD reducing their amortizations for ME? I don't need mortgage insurance. Aren't they adequately covered even if I take out a line of credit? Why should they force me into 30 years or less?!?
March 20th, 2011 at 8:42 am
@VHB:
>>>Well, March 18th is behind us now. It will take a week or so for the sales made before March 18th to filter through the system. Then what?<<<
Most sales are counted within 3 days with some stragglers taking up to 3 weeks. We should have an accurate idea by Friday's numbers where we stand.
I expect sales to drop 30% by then.
Then, in another week and a half we move to the next level for listings, the serious numbers where 400 is a normal day and 500 is a good day. MOI should take off like last year.
Where it gets really interesting is will unsuccessful sellers pull their listings like they did last year or not?
No 2 years are the same so stay tuned for the latest unexpected curve ball to this crazy market.
March 20th, 2011 at 8:32 am
@Say what?:
Only Chinese from mainland China can afford living in Vancouver,Asians frm other countries are only poor migrants who are hardly be able afford anything in this expensive city.We should separate Chinese from those poor Asians.
March 20th, 2011 at 8:13 am
"When you say ‘chinese’ do you mean Asians"
When you say "Asians" do you mean people from the continent of Asian? That includes, china, russia, india, japan, etc.
Chinese does not mean the same as "Asian" because "Asian" includes non-chinese.
March 20th, 2011 at 8:01 am
@jjbinx:
Huh, what is that supposed to mean?
Doesn't nice weather mean yardwork? Or was that rain keeping people away? I don't know, I misplaced my excuse calendar.
March 20th, 2011 at 7:58 am
@jjbinx: When you say 'chinese' do you mean Asians? Isn't the Vancouver population half asian, or do you mean they are mainland Chinese who came here just to buy property and they showed you their passports?
I found it particularly interesting that the OV buyers who are suing aren't mainland Chinese, they are local realtors and mortgage brokers who perhaps drank too much of their own koolaid. Funny how every salesperson is talking about Chinese buyers lately and yet we still have NO hard stats. Wonder why that is?
March 20th, 2011 at 7:58 am
@Patiently Waiting:
Don't forget that you won't be able to HELOC you're way into buying an investment property with CHMC insurance anymore (use equity meet down payment requirements). The banks will have to be willing to absorb all of the risk themselves since CMHC will no longer insure HELOCs. Leveraging your existing property into multiple properties is pretty much the definition of a pyramid scheme/house of cards, I'm going to bet the banks won't go for it anymore.
March 20th, 2011 at 7:51 am
Went to 4 open houses today for 3~4 bedroom townhomes. asking prices are 620k to 720k. Still a lot Chinese checking them out. I guess the CMHC rule changes dn't really affect them. Didn't help that the weather was nice too.
March 20th, 2011 at 7:10 am
We also need to consider the HELOC changes which happen in April. That effect will be less immediate, IMHO, but it could be more profound than the amortization change.
March 20th, 2011 at 4:51 am
@Devore: sales above average; not record territory. Listings record territory.
But, how much of the new listings was just the sell-side 'rush to March 18th'? That is, people putting their house on the market to meet the rush to buy before March 18th? That's what will become clear the next few weeks.
The number I'll be watching is total new listings: 300+ a day and we are still in record territory. Under 300, and we are high, but not record territory.
March 20th, 2011 at 4:45 am
How do February and March (so far) sales and listing compare to previous years?
March 20th, 2011 at 4:31 am
Well, March 18th is behind us now. It will take a week or so for the sales made before March 18th to filter through the system. Then what?
As always, the key will be the accumulation of total inventory. If new listings remain high and sales dive down, accumulation will increase.
While there may will be an increase in 'want to sells', we won't likely see a quick crash unless a lot of 'have to sells' join them.
An uptick in 'have to sells' will happen through
- unemployment rising significantly. If it hits double digits in BC, then watch out.
- construction starts down leads to construction employment falling. Not really happening yet.
- Interest rates rising. Watch BoC on April 12th, May 31st.
Without this kind of 'have to sell' uptick, it will be slow.
March 20th, 2011 at 2:29 am
Isn't the ratio, on average, for Canada's top five banks, about 30 to one?
3% reserves?
March 19th, 2011 at 1:15 pm
@Devore: Yes Canada has no reserve ratio but Canada has other capital requirements that act almost the same as a reserve ratio.
March 19th, 2011 at 12:32 pm
@105 SourLemon: Storefronts in the Cambie/Broadway area have been empty going on five years. Others rotate tenants almost seasonally. It's hardly an abandoned, low traffic or undesirable area. Makes little sense unless those properties are being held for appreciation value..
March 19th, 2011 at 12:31 pm
@jesse: Wow, 20%… isn't it 0% in Canada?
March 19th, 2011 at 10:30 am
Marketwatch: China hikes banks’ reserve requirements
Hattip worldhousingbubble. 0.5% is significant when economies are overheating.
March 19th, 2011 at 10:25 am
China Daily: Police nab 196 in pyramid selling fraud
Hat tip Nemesis over at vreaa
March 19th, 2011 at 9:35 am
@granite countertop:
Oh, and the development has quartz countertops. Granite is now passe, quartz the new high end… ?
+++++++++
We have officially run out of granite. Unless of course, contractors start harvesting the local cemeteries.
March 19th, 2011 at 9:24 am
Anyone attend and open house today? Curious if first day post 35 year amort is slower?
March 19th, 2011 at 9:04 am
@pricedoutfornow:
At the onset of the RE bust/recession of the early 80's, people had far, far less debt than they have now, and interest rates declined substantially all through the decade from their peak in 1981. And nominal wages kept increasing as general inflation was still quite high.
And that was a pretty ugly time as those who were around for it can tell you. Think of how much uglier it can get with high starting debt, increasing (or even flat) interest rates, and flat nominal wages.
March 19th, 2011 at 8:30 am
@Patiently Waiting:
"And I haven’t seen a client in a long time with zero debt."
Me neither! From my conversations with clients this week, I seriously think that this year will be the year of reckoning. More and more people are complaining to me that they can't find a tenant who will pay the carrying costs of their mortgage or they bought a condo they can't flip for what they paid for it, or they're just generally drowning in debt. Too much debt! I have a feeling that this is the year people are all tapped out with debt and there's no more credit to be had. In other words, the party's over.
This hangover is going to hurt.
March 19th, 2011 at 8:22 am
"For real, is Dave really Rob Chipman."
If it walks like a duck, and it quacks, like a duck,
It's a duck
March 19th, 2011 at 8:18 am
@Patiently Waiting
Retail. He purchased equipment and inventory from a closing business.
I don't really want to say much more as that exposes his business, which is none of my business.
March 19th, 2011 at 7:38 am
@SourLemon: What kind of store is your friend opening? Is he going to be behind the counter? Does he have experience running a store?
March 19th, 2011 at 6:51 am
Anyone notice stores that remain open even though it made no business sense as you rarely ever see customers inside?
A friend told me that he is opening up a retail business because he couldn't find a tenant that would pay him enough to cover his mortgage on the building (1floor retail space).
I've also noticed retail space at places such as the King Edward Village remaining unoccupied since construction completed over a year or two ago. That building in between No Frills and Cambie station on W. Broadway owned by CoV has also been empty for along time. ex-KFC near broadway and Vine.
It just occurred to me that there are more stories like this out there. Rents not lowering because landlords are preserving value. Owners are now venturing into retail to achieve their ideal rent. Tenants evicted so the building can get rezoned into more profitable space (retail + condo from just retail).
That leaves legitimate businesses with the choice of paying the increasing rent or closing up shop. All this speculation just causes us the consumer to lose out on reasonably priced goods through higher mark-ups or limited choices due to the high barrier to entry for real entrepreneurs and small business.
I can't wait for interest rates to rise so schmoes with empty condos and buildings will wish they had a tenant, or not overbid to begin with.
March 19th, 2011 at 6:43 am
$100K income, with no debt, to qualify for a one bedroom condo:
Mortgage broker Jessi Johnson says under the old rules, a family with zero debt and an income of $75,000 a year would qualify for a mortgage on a home worth half a million.
He says that family now needs to make $85,000, and if interest rates go up to six per cent, they'll have to make even more. "That family would have to make over $100,000 to buy a one bedroom condo in Vancouver with zero debt. And I haven't seen a client in a long time with zero debt."
http://www.news1130.com/news/local/article/199651…
March 19th, 2011 at 6:42 am
@Renting: "The defects and poor workmanship are well documented in the media "
It could well be the perceived protection of a warranty or equivalent encourages people to convince themselves they can care less.
March 19th, 2011 at 6:18 am
True there were some bigger problems in the 90s with leaky condos. I am not sure that problem has been 100% solved and people are still buying places that have not been properly repaired.
For the most part everything built today is fairly low quality with a few exceptions (some buildings in Coal Harbour & custom built homes). The problem is not limited to presales. A perfect example is the people buying the OV units today. The defects and poor workmanship are well documented in the media but people are still buying them. Yes they are 30% cheaper but still for $700 plus per ft you expect the heating system to work, etc. I guess not in Vancouver.
March 19th, 2011 at 5:49 am
@scullboy: "With that video the OV officially jumped the shark. "
Yep, the reason people think the OV problems are "minor" is because, compared to what Vancouver went through in the '90s, it IS minor.
It's a big freaking mess and it will only change when people start demanding more favourable contracts. There is close to zero chance a presale contract in Vancouver would ever be signed if it were in a business environment. But for consumers and
gamblersspeculators it's considered normal.