Friday Free-for-all on the new site!
Hello everybody, it’s Friday and you know what that means.. It’s Free-for-all time, our end of the week news roundup and open topic discussion thread.
Here are a few recent stories to kick off the chat:
-BOC warns of ‘debt shock’ if house prices drop
-Inventory graph: growth slowing but still steep
-RRSP contributions shrink to 1970s levels
-Mortgage fraud blooming in Canada
-Our debt vs. pre-meltdown levels in USA
-Housing Collapse in mississauga. literally.
-Shill article linked by Forbes gone from Vancouver Sun?
-First time buyer bonus to make a difference in suburbs
If you haven’t been here for a few days you’ll notice some changes. We’ve done a full site overhaul and upgrades and that just might mean somethings aren’t fully working yet.
Please post any issues in the comment section. We can’t promise they’ll all be addressed, but we’ve been pretty good about responding to requests so far.
A few new things of note:
Formatting Numbers:
For those that like to post numbers in a table format, we’ve added the PRE html tag to help control formatting and a new comment preview button at upper right of the comment box.
This new comment workaround and preview system might help when you’re posting number data.
Avatars
For those of you that don’t like Gravatar, we have a new local avatar feature. When you log into your VCI account you’ll see your user profile edit page. Scroll down to the bottom of the page and you’ll find a place to upload an avatar.
User Account Cleanup
We’ve had lots of spam account signups lately and we’re starting to purge the user roles for both cleanliness and security. The best way for you to confirm that you’re human is to post an on topic comment after registering for an account. If you register for an account and don’t post any comments your user account will be deleted, especially if your registration email goes to something like spammer@wowfreemoney.con
That’s about it for now, let’s get on with the conversation.
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
Update: Patriotz linked to this image of the Macleans March 5th cover, it’s a doozy:
February 24th, 2012 at 12:40 am 1
Just a note regarding the real-estate media complex. I accompanied my significant other to the Carol Burnett appearance at the Orpheum Theatre last weekend. I was absolutely stunned by the ovation received by the two co-hosts–Global TV anchors, whose names I didn’t catch. After a brief introduction it was they who would go on to introduce Carol to her adoring fans.
These Global TV anchors were greeted like rock stars!
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February 24th, 2012 at 1:11 am 2
I’ve had enough of waiting for the Canadian RE market to correct, hell will freeze over before I buy at these multiples. I’m seriously considering relocating to Pheonix (cheap, warm, hub) or Hawaii (not so cheap, warm, closer to Asia). Florida and LV aren’t really my scene.
Can anyone recommend some relatively unbiased blogs that publish regular data for those markets, AZ and HI?
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February 24th, 2012 at 2:46 am 3
Hat tip to VW at HHV:
http://www.pdfmagazines.org/magazines/3966-macleans-05-march-2012.html
Just this time I think the magazine cover indicator is not contrarian.
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February 24th, 2012 at 3:01 am 4
Yet another story of doom and gloom:
http://www.cbc.ca/news/canada/story/2012/02/23/household-debt-house-prices.html
“Canadians are relying too much on home equity loans for their borrowing, the Bank of Canada warned Thursday.
In four research papers looking at trends over the last dozen years, the central bank says Canadians are increasingly exposed to a correction in house prices because they have increased their borrowing amid a sharp increase in house prices — and equity.”
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February 24th, 2012 at 5:51 am 5
@Patiently Waiting:
“And debt to household equity has risen as well even as home prices have soared”
This is the key sentence. Even with a record increase in house prices, equity has declined relative to debt, i.e. debt has been increasing even faster than house prices. Which of course means it’s a Ponzi scheme.
Compare to the US in 2007:
http://www.calculatedriskblog.com/2007/06/percentage-of-household-equity-falls-to.html
“Despite the significant increase in valuations in recent years, the percent equity has been dropping – and is now at an all time low of 52.7%.”
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February 24th, 2012 at 8:02 am 6
PLZ vote this down, just making sure my user is working and still active.
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February 24th, 2012 at 8:05 am 7
“Carney issues fresh warning on debt ”
this article in the Globe and Mail has almost 300 comments, all comments are basically trashing Carney for yet another warning without actually doing something. Almost every other article in every other publication regarding our debt issues have common comments.
Does he or his P.A’s not read these at all? is everybody wrong in thinking that he should do something NOW to curb the spending?
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February 24th, 2012 at 8:07 am 8
Global TV is absolutely horrendous. From Michael Levy, to Michael Campbell to the anchors themselves; it is “The Province” of newscasts.
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February 24th, 2012 at 8:13 am 9
@patriotz:
Ah, good old media, making it worse on the way up, and making it worse on the way down.
Self fulfilling prophesy of the week: It’s officially time to panic.
People who didn’t really believe in the power of the market and could see no reason why prices would ever go down, forgot about the impact of headlines like these (and failed to factor in the impact of opposite headlines on the way up).
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February 24th, 2012 at 8:44 am 10
@patriotz: Whoa! We’ve seen a few bubble related covers, but that one takes the cake.
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February 24th, 2012 at 8:44 am 11
@vangrl:
“is everybody wrong in thinking that he should do something NOW to curb the spending”
Carney cannot do anything about household debt without putting more industrial workers out of work, mostly in Central Canada, due to a higher CAD.
Flaherty and Harper can.
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February 24th, 2012 at 8:46 am 12
@oneangryslav:
They ARE the equivalent of rock stars around here. That’s all we’ve got in this backwater shitty town after all… Global’s shills are Vancouver’s idols. Can’t get more pathetic than that…
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February 24th, 2012 at 8:48 am 13
@patriotz:
Hello, didn’t anyone notice? That article is about Canada and we are Vancouver ,/b> so, obviously, it is not going to happen here. Duh…
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February 24th, 2012 at 8:50 am 14
@vanpire:
Ooops! … I mean, Ooops!
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February 24th, 2012 at 8:52 am 15
@patriotz:
Mclean’s trying to match Canadian Business magazine in dramatic cover pages lol.
http://s7.postimage.org/6iyybxcy3/Crash.jpg
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February 24th, 2012 at 8:53 am 16
@patriotz:
It seems like Mclean’s trying to match Canadian Business magazine in dramatic cover pages lol.
http://alturl.com/zkwe3
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February 24th, 2012 at 9:22 am 17
@6 vangrl: The feds don’t give a shit about you or me and follow their own agenda. They’re 100% behind corporate interests, domestic and foreign, to the point of trashing democracy for the benefit of Hollywood:
http://www.michaelgeist.ca/content/view/6335/125/
Canada’s spineless corporate Taliban. For all his countless faults even Chretien had the balls to tell the American entertainment industry to screw themselves.
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February 24th, 2012 at 9:27 am 18
(This message was posted to the last thread but got stuck in moderation. Trying again here.)
Anyone else get the impression Mark Carney is recycling his warnings? It’s getting to the point where I don’t really think he believes they’ll be effective any more.
2012: http://www.theglobeandmail.com/report-on-business/economy/bank-of-canada-issues-fresh-warning-on-debt/article2347476/
2011: http://www.thestar.com/business/recession/article/918156–bankruptcy-chief-warns-canadians-about-debt-as-insolvencies-remain-high
2010: http://www.theglobeandmail.com/report-on-business/carney-sharpens-warning-on-household-debt-levels/article1734911/
2009: http://www.theglobeandmail.com/report-on-business/carney-urges-prudence-on-debt/article1396431/
2008: http://www.journalpioneer.com/Personal-finance/2008-12-12/article-1396961/Bank-of-Canada-warns-of-possible-debt-mortgage-defaults-if-economic-conditions-worsen/1
So help me, I might have to start a new Tumblr of Mark Carney cautioning Canadians.
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February 24th, 2012 at 9:58 am 19
(A heads-up to the bear gods: I had a comment get stuck in moderation yesterday, probably due to the number of links in it; I’ve reposted it on this thread and now it’s stuck here.)
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February 24th, 2012 at 10:00 am 20
Regard the $10,000 “tax credit” for 1st home buyer.
“Tax Credit” is used here to mislead home buyers to think they were to get a $10,000 chq in the mail from the Gov.
The correct tax term for this is “Tax Deductions” as it just reduces one’s tax income.
http://www.kiplinger.com/columns/ask/archive/2007/q0319.htm
This is Accounting 101, yet Finance Minster couldn’t get it right.
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February 24th, 2012 at 10:02 am 21
You can’t make this sh*t up. I posted a week ago about the insanity of the East Vancouver market giving the example of a builder who converted a 33×120 lot into a house with a strata titled main floor and basement, as well as a lane house. The main house is up for sale, with the lane house still to be completed.
Well, the basement of the main house has sold.
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February 24th, 2012 at 10:21 am 22
@Anonymous:
A $10k tax credit actually amounts to about $2500 less tax paid doesn’t it?
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February 24th, 2012 at 10:24 am 23
No, Only BC rate is apply. It you are at the lowest rate in Province tax, it is about $500
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February 24th, 2012 at 10:47 am 24
@Many Franks:
Wolf!
WOLF!
WOOLLFF!!
I think everybody is just used to these warnings so they disregard them now. Kinda like the boy who cried wolf.. what happens at the end of that story again?
Oh yeah, everyone gets devoured by the warning they’ve learned to ignore.
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February 24th, 2012 at 10:53 am 25
@Anonymous: It’s interesting that the gov’t in their own information handouts use the term “bonus” more often than “tax credit”.
http://www.bcbudget.gov.bc.ca/2012/homebuyers/2012_First_Time_Home_Buyers_Fact_Sheet.pdf
I’ve also read somewhere that the gov’t has estimated that this program will cost about $24M. That sounds more like people will be receiving a cheque up to $10k rather than a tax credit with a value of $500.
But again, who knows, by the time anyone gets to see any of this credit, it will be past the election next year anyway. Hmmmm….pulling the wool over the eyes of prospective buyers me thinks…
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February 24th, 2012 at 10:57 am 26
@Anonymous:
“Regard the $10,000 “tax credit” for 1st home buyer.
“Tax Credit” is used here to mislead home buyers to think they were to get a $10,000 chq in the mail from the Gov.
The correct tax term for this is “Tax Deductions” as it just reduces one’s tax income.
http://www.kiplinger.com/columns/ask/archive/2007/q0319.htm
This is Accounting 101, yet Finance Minster couldn’t get it righ”
I believe that it also says it’s “refundable” and “temporary” which means it has to be repaid kinda like the RRSPs you can use for your downpayment, no?
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February 24th, 2012 at 11:09 am 27
@mflat: Oh, my god. The “offered” price (I love that, “No, it’s not ‘for sale!’ How gauche. We’re generously offering it to you because we’re nice people!”) was $589,000.
I used to think prices would fall by maybe 20%. But when people are deluded enough to pay the better half of a million dollars for a basement in East Van… wow. How could anyone not see that that place is worth $250,000, max? Maybe $300,000 if you want to add a ‘you-get-to-live-in-Lotusland’ premium.
I don’t even know what to think anymore. It’s hard to see any scenario in which this won’t end very, very badly for more than a few people.
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February 24th, 2012 at 11:29 am 28
@Sheesh:
“How could anyone not see that that place is worth $250,000, max? Maybe $300,000 if you want to add a ‘you-get-to-live-in-Lotusland’ premium.”
300,000 for a basement suite, a basement suite!, in East Van is still totally and completely insane. If the basement suite is worth $300,000, what is the whole house and the associated land worth?
If somebody really did pay nearly $600,000 for a basement suite in East Van, I think they should be awarded the official greatest fool price.
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February 24th, 2012 at 11:43 am 29
How’s this for lofty expectations dashed?
1543 Frances St. listed Oct 18 for $999K
Reduced Dec 8 to $898K
Sold Feb 24 for $790K
21% off original asking price.
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February 24th, 2012 at 12:05 pm 30
This story reeks of someone who reached the end of his home equity, got really hungry, and panicked. I pretty much guarantee you that seasoned shoplifters don’t act like this guy:
http://www.vancouversun.com/news/Shoplifter+returns+crime+scene+keys+caught+after+jump+into+ocean+police/6200133/story.html
Speaking of reeking, ewww he jumped into False Creek.
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February 24th, 2012 at 12:51 pm 31
@Patiently Waiting: I don’t know what it smells like, but that IS bizarre. Maybe it’s a basement dweller, and the magic mould got to him?
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February 24th, 2012 at 12:58 pm 32
@N: I agree with you. I’m not saying I personally would pay $250,000 to $300,000 for a basement (sorry, garden) suite. But have you checked out the rental market lately? There is tons of crap, and it is expensive.
That place is nice, even though it is a basement, and would easily fetch $1,800/month. I’m not a numbers cruncher and am totally just throwing out an estimate, but I think that would support about a $250,000 purchase price.
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February 24th, 2012 at 1:00 pm 33
Don’t think the market is as bad as the Sales/List illustrated.
Here is the stats for 2012 Jan.
Area
Total Sold
Sold above or at Listing
Percentage
VBE19210.5%
VBN631015.9
VBS53611.3
VCQ1462114.4
VNV1112118.9
VNW25416
VPM4149.8
VRI203199.4
VVE1743419.5
VVW2173415.7
VWV11975.9
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February 24th, 2012 at 1:01 pm 34
@vangrl: “is everybody wrong in thinking that he should do something NOW to curb the spending?”
I think all remarks should be focused on the PMO and Finance Department. Carney has marching orders regarding CPI price stability and can only advise on fiscal policy. Right now the economy is hurting the wrong people but in terms of price stability that doesn’t matter.
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February 24th, 2012 at 1:03 pm 35
@rksleung:
Sorry. Bad format. Table does not work in this forum.
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February 24th, 2012 at 1:11 pm 36
@Sheesh:
…place is worth $250,000, max? Maybe $300,000 if you want to add a ‘you-get-to-live-in-Lotusland’ premium.
I suppose you mean the whole house including this basement, not just the basement is worth $250,000, max. Even that much is questionable given the house age, look and the neighborhood.
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February 24th, 2012 at 1:24 pm 37
New taxes/road tolls considered for Translink -
http://www.vancouversun.com/technology/EXCLUSIVE+Road+tolls+recommended+Metro+Vancouver/6201728/story.html
I can’t find the table they had in the printed newspaper version that listed all the potential options.
One option listed with High probability is charging $0.67/km drived on all roads in metro Vancouver. I’m not sure how they can do that without using some kind of transponder on each car. Or maybe calculated the total km drived on your car every time you renew your insurance?
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February 24th, 2012 at 1:25 pm 38
@rksleung: If you’re pasting numbers in with whitespace try using the PRE html tag.
Here’s how it works:
Before the numbers put <pre>
and at the end of the numbers put </pre>
Then use the preview button at upper right of the comment box to see how it will look and adjust white space if necessary.
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February 24th, 2012 at 1:30 pm 39
@space889: That’s ¢0.67 per km right? No way the could charge 67¢ per km.
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February 24th, 2012 at 1:37 pm 40
@Laibach: This cracks me up, it’s obviously a brilliant move by the developer if they got it sold. The went all white and staged it well so the photos don’t look like a dark basement, but it doesn’t change the fact that it’s partly below ground and you’ve got somebody walking around over your head. I hope they put extra soundproofing in the floors upstairs.
Look at the second bedroom shot, the window looks out on a grungy fence and stucco wall of the neighbors house.
At least if you rent a place like this it’s easy to move when you want to live above ground again.
Live the dream!
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February 24th, 2012 at 1:40 pm 41
@Laibach:
Why 250K is questionable for that Van house?
See this, similar Houston house.
http://realestate.yahoo.com/Texas/Houston/6806-fawncliff-dr:cc18c74a419245872931ba26bb8a973;_ylt=Ag7mTsOXsMyYT6Cb.yBtXSJn47Qs
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February 24th, 2012 at 1:49 pm 42
@space889:
>>>One option listed with High probability is charging $0.67/km drived on all roads in metro Vancouver.<<<
This will never work. Why should someone driving a Smart Car pay the same tax per km as someone driving an F350?
This is why we have gas taxes, the more you consume the more tax you pay.
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February 24th, 2012 at 1:49 pm 43
@vanpire: I believe that it also says it’s “refundable” and “temporary” which means it has to be repaid kinda like the RRSPs you can use for your downpayment, no?
I’m not an expert but I think a refundable tax credit means that it can reduce your taxes below zero, whereas a non-refundable means it can reduce your taxes but only down to zero. So you could potentially get a refund from this credit but only if you were hardly paying any tax to begin with. Otherwise it just lowers your taxable income by $10k. I think…
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February 24th, 2012 at 1:52 pm 44
@rksleung: I’m going to try to reformat your data using the pre tag, does this work:
I couldn’t tell where the breaks in your numbers were, so apologies if the is wrong.
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February 24th, 2012 at 1:53 pm 45
@vanpire:
I think you would have a -ve Net Income at line 236 on the tax return. You can get carry backward to get a refund from tax paid previously.
So the person will basically has little to no income for the year and also buying a house. Being unemployed is the best tax planning opportunity.
The BC gov together with Vancouver Sun get a few suckers this year.
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February 24th, 2012 at 2:03 pm 46
@Laibach:
Hah! I swear the exact same house, same crappy stucco, foundation problems, a big sewer access hatch in the middle of the yard, serious drainage issues and landscaping that all mysteriously died after 6 months (including about 90% of the lawn) sold near me for 850k… for the basement. The two units sharing the upper floors both went for over a million each. That was just before the 2008 shakeup started.
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February 24th, 2012 at 2:07 pm 47
@rksleung: Actually these are pretty bearish numbers. I’ve posted historical numbers here a few times and when the market was hot it was running at over 30% sold at or above list. In 08/09 when prices were declining it was running below 10%. I haven’t checked your data but if these numbers are correct the January total is running at 13.8%.
West Van is very low so I’d expect price decreases there.
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February 24th, 2012 at 3:27 pm 48
Inventory of Attached in Van-West by Area including MOI – Sorry for the bad formatting. This is sorted by highest MOI. Interesting to note that University is looking bad – similar to some stories posted in past few days. Also – Coal Harbour continues to struggle.
Area MOI
Dunbar 21.2
Cambine 13.1
Oak 13.0
S. Gran. 13.0
Univ. 10.8
Kerris. 8.9
F.Creek 8.5
Quil. 7.1
S. Camb. 6.5
West End 6.1
Downtown 6.0
Yaletown 5.5
Marpole 5.5
Kits 5.3
SW Mar. 5.2
Fairview 4.8
PG 4.0
Shaun. 3.6
Southl. 3.3
Mount P 3.0
Cambie 2.7
Also – This is by Price. Really shows the cutoff for sales is 500K. Above that – MOI really spikes.
Price….. Units….. MOI
Up to 300K 94 4.61
300-400 245 3.33
400-500 296 4.75
500-600 290 7.56
600-750 313 8.26
750-1000 294 8.45
1000-1500 246 9.33
1500-2000 76 9.53
2000-3000 84 18.26
Over 3000 79 28.62
Total 2017 6.53
One thing I would say is that many of the young people I meet now say – “I’m not going to buy now – It’s a bubble . . . ”
I did have a meeting with a very significant financial player in Vancouver and asked about the market. Said that right now we’re almost 100% supported at the top end by mainland China money. This person has strong Chinese business connections and said that the only way this flow of money will stop is if Canada agrees to share information with the Chinese government. He said much of the money here is illegal, being laundered, and being done to hide from the Chinese Gov’t. What I want to know is who is helping them here with all the property administration. Anyhow . . . Until next week.
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February 24th, 2012 at 3:28 pm 49
“Cambine” should actually say Coal Harbour.
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February 24th, 2012 at 3:53 pm 50
@ZRH2YVR:
Nice work!
The MOI-by-price is also for attached/condos right?
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February 24th, 2012 at 3:57 pm 51
@ZRH2YVR: Here are your numbers with better formatting using the pre tag.
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February 24th, 2012 at 3:58 pm 52
@Don Lapre: “Global TV is absolutely horrendous. From Michael Levy, to Michael Campbell to the anchors themselves; it is “The Province” of newscasts.”
Michael Levy and Michael Campbell are on CKNW. If they appear on Global it is very seldom as part of a story. They are not on their staff.
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February 24th, 2012 at 3:59 pm 53
@FiveNeatGuys: Oops Looks like I don’t completely have a grasp of the PRE tag yet, but at least the first MOI column looks straight.
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February 24th, 2012 at 4:03 pm 54
@fixie guy: “For all his countless faults even Chretien had the balls to tell the American entertainment industry to screw themselves.”
He was too busy funneling money to his friends. The guy was the most corrupt prime minister we have ever had. That is saying a lot. There is a reason the Liberals were decimated in the last election. Also, remember who started this housing bubble.
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February 24th, 2012 at 4:08 pm 55
so weird how all the west side house listings (Dunbar, Shaughnessy, MacKenzie Heights etc) on MLS have more info about the “great” nearby schools than any info about the actual house.
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February 24th, 2012 at 4:14 pm 56
@vangrl: Clearly the target buyer is desperately in need of math lessons and wants to get them from “good schools”.
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February 24th, 2012 at 4:22 pm 57
@Anonymous:
“remember who started this housing bubble.”
If you want to play that game, you’d might as well go all the way back to R. B. Bennett who created the Bank of Canada back in the 1930′s.
Canada has had regional housing bubbles on and off for decades under both Liberals and PC’s. But this bubble – the unprecedented national housing bubble – developed under Harper, who had full power to defuse the regional bubble which had existed when he took office in 2006 but chose instead to foster a national bubble to give an illusion of prosperity.
Blaming a preceding government for policies that the current government has full control over is pure BS. Nobody ever tried to blame Joe Clark for the Vancouver and Alberta bubbles of the early 80′s which started while he was PM, for Christ’s sake.
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February 24th, 2012 at 4:30 pm 58
@FiveNeatGuys:
Le’me try my PRE skillz (thanks for the data):
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February 24th, 2012 at 4:40 pm 59
@Seymour Data:
Thanks a lot for formatting this. Oh. I thought these were decent numbers. Apparentely, you corrected me in saying that a hot market even has higher percentage. One thing I don’t get is how people are so willing to be doped into a bidding war. A bidding war for a > 4M house on the west side??? No clue…
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February 24th, 2012 at 4:54 pm 60
You guys really think house prices are going to go down in Vancouver? When has that ever happened more than a few percent and then always gone right back up. Tons of rich people want to live here, instead of complaining about prices you should get in where you can and let the rest take care of itself. As prices rise you can move onto bigger and better places on the property ladder.
Mortages are easy to get and rates are low, don’t miss your chance.
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February 24th, 2012 at 5:06 pm 61
[...] “You can’t make this sh*t up. I posted a week ago about the insanity of the East Vancouver market giving the example of a builder who converted a 33×120 lot into a house with a strata titled main floor and basement, as well as a lane house. Main house – V930752 – 1.2 mil Basement suite – V930763 – $590K for 1,175 sq ft Laneway home – (still completing) – +$900K So, some guy thinks that a fully developed lot near one of the nosiest intersections in Vancouver proper (Kingsway & Knight) should be fetching him 2.7 million dollars. Another funny piece of info was that the stereo was pumping in the basement to drown out the sound of walking from the upstairs unit. Quality is job one. Well, the basement of the main house has sold: MLS # V930763 1262 East 19th Avenue 2 BR ‘Garden’ Suite; Strata 1175sqft SOLD; Ask price $590K” [sales price yet to be verified] – mflat at vancouvercondo.info 13 & 24 Feb 2012 10:02am [...]
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February 24th, 2012 at 5:26 pm 62
Hey, what happened to my comment?
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February 24th, 2012 at 5:29 pm 63
One more stat before I jump off for the weekend. We will see the avearage detached price go up significantly during February.
One thing I was saying as we saw the average price drop from the summer through to January was that there was really only small price decreases overall but that the average was affected by the slow sales in top markets.
Now – in February / late Jan, we have had a serious amount (well maybe 15-20 properties) that have sold market wide in the over 8 million range. These are serious average movers for just a few properties. And – the fact they are selling in a period of low volume makes the impact even more pronounced. Do not be wavered by anyone who says that – “look – prices went up 15% this month” – It’s a load of S–T. It’s two bentleys full of HAM . . . . (last year there were probably 8 of them).
Stay the course – look at the MOI (seasonally very high and this week it actually went up – which is against the trend). Sales are slow – very slow for the period. Newly built houses are not selling at all – this affects Richmond / West Side. Lowest priced properties still selling because there are still young people getting money and are about to get burned – this rate is slowing however. Also – some builders still must think that they can do a build / flip. It’s not looking good with all the inventory in front of them.
Public sentiment is also shifting. I am now seeing it for the first time. At parties – I am not the outcast by talking about the bubble.
Have a great weekend all.
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February 24th, 2012 at 5:48 pm 64
Toronto blogger raging about prices there…
http://fmlistings.tumblr.com/
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February 24th, 2012 at 5:49 pm 65
@patriotz: This bubble started way before 2006. Check out the graphs. Rapid price increases started around 2002.
Harper just added (a lot of) gasoline to the existing fire.
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February 24th, 2012 at 6:05 pm 66
“If you want to play that game, you’d might as well go all the way back to R. B. Bennett who created the Bank of Canada back in the 1930′s.”
Cutting the down payment to 5% and removing the ceiling on CMHC insurance were the changes that made it a bubble in the first place. No matter what Harper did we were in for a train wreck due to Chretien’s policies. It was too late once Harper took office and although he obviously made the wrong decisions in his first years in a minority government the blame for the bubble lies with Chretien and Martin. Sorry if that does not fit your political agenda but those are the facts. Spin it any way you like.
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February 24th, 2012 at 6:06 pm 67
@ZRH2YVR “average Feb price up”
I agree this will be the case. In nth van for example bidding wars continue for SFH properties, pricing up to 10% over list. While listing low maybe intentional, there is relatively little activity at the lower price end of the spectrum. The latter fact is potentially the result of subprime credits now being squeezed out the market, with those remaining being those with cash and better credit able and willing to spend a lot.
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February 24th, 2012 at 6:25 pm 68
There’s gotta be a way to take advantage of the bc “bonus” by setting up a deal with a developer to buy a place off them, take the 10K then sell it back to them for 5k less. It’s not as simple as this but there has to be a way to launder away the hst and make some taxpayer coin. I hate ripping off the taxpayer but if I’m gonna get fleeced by the bc bonus deal I might as well look to reduce my exposure
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February 24th, 2012 at 6:26 pm 69
@ZRH2YVR: “2 Bentleys full of HAM”…Best quote ever!!!
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February 24th, 2012 at 6:30 pm 70
@bubbly:
I moved here in 2006, and I started reading VHB before I moved here. Remember that graph at the top of VHB’s blog. Definite bubble and we all knew it.
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February 24th, 2012 at 6:34 pm 71
@Gigi: Good find, Gigi. I’ve written to this guy, suggesting that he add a comments section to the blog. It would be good to have a TO equivalent to VCI. I’m in favour of a national network of sane folk.
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February 24th, 2012 at 6:34 pm 72
@ZRH2YVR:
>>>It’s two bentleys full of HAM<<<
I would have thought you could get way more than 8 HAM in a Bentley.
I was thinking about 30-40 but only a controlled experiment would tell us for sure.
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February 24th, 2012 at 7:05 pm 73
@N: “I moved here in 2006, and I started reading VHB before I moved here. Remember that graph at the top of VHB’s blog. Definite bubble and we all knew it.”
The VHB blog started in 2004. Quiz for Patriotz. Which federal political party was in power at that time and had been for over 10 years?
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February 24th, 2012 at 7:20 pm 74
Here are a few charts for the week-end!
Historical consumer credit in Canada:
https://p.twimg.com/AlHLF4nCMAAG8Pl.png:large
And Historical residential mortgage credit in Canada
https://p.twimg.com/AlJMOVwCQAAJNwr.png:large
Ponzi anyone?
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February 24th, 2012 at 7:46 pm 75
Good little story about Kelowna. My buddy’s house has been on the market for a long time and out of the blue he got a bite. It sold for about 5% less than asking and when they were $4K apart he stood his ground and told his Realtor that if he wanted this to happen he and the the other Realtor would have to do something about their commission to make up the $4K because he wasn’t dropping anymore.
At first they said ok, then they said it couldn’t be done, then they said they needed an extra day and sure enough the two of them ate $2K each and the deal got done. Good for him for holding his ground as the Reltard’s tried to wait him out and hoped he would cave.
Even better, he signed a 2 yr lease on a recently renovated 3 bedroom townhouse at the Lagoon’s on the lake for $2200 per month. He figures the place is worth $900K – $1 mil.
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February 24th, 2012 at 7:50 pm 76
Good read.
http://www.macrobusiness.com.au/2012/02/canadian-bubble-trouble-leith-van-onselen/
Funny that it’s coming from Australia when the local media is still pitching buy buy buy.
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February 24th, 2012 at 7:56 pm 77
New Listings 220
Price Changes 88
Sold Listings 112
TI:14775
http://www.laurenandpaul.ca
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February 24th, 2012 at 8:08 pm 78
@paulb.: Went to see last year’s numbers, just for fun:
New Listings – 242
Price Changes – 76
Sold Listings – 142
This were from Larry as paulb was not able to provide them that day.
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February 24th, 2012 at 8:50 pm 79
@OMG: …At least if you rent a place like this it’s easy to move when you want to live above ground again…..
Living below ground would be a blessing in this city: you wouldn’t be stuck looking out the windows all day at the rain.
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February 24th, 2012 at 9:00 pm 80
@patriotz: Everything wrong with this country can be directly attributed to the parasite Liberal governments of the last 40 years. That would be the ‘natural governing party’ that had to stoop so low as to try running a cadaverous American for Prime minister and then when that failed, they asked his moronic inept roommate to step in. If you made this shit up, nobody would believe you.
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February 24th, 2012 at 9:21 pm 81
Love the fact that “bubble” is the new meme in mainstream media. We can argue the facts ’til we’re blue in the face but seeing this will put fear into hearts as well as minds. Now, if you don’t mind, I have to set up some robocalls to frustrate HAM away from some pre-sale lineups….. ’cause that’s just how I roll.
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February 24th, 2012 at 9:31 pm 82
Taking from paub’s number
http://www.laurenandpaul.ca
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February 24th, 2012 at 9:31 pm 83
You’ve probably all seen the new peak of insanity this market has reached, aka the basement sold for $590 in east Van…
http://vreaa.wordpress.com/2012/02/24/basement-suite-in-east-vancouver-sells-for-590k/#comment-28633
Well, it turns out that the buyer is… a realtor!
Speechless…
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February 24th, 2012 at 10:57 pm 84
@good-format: Thanks for the code format for the numbers. Much better.
Sales are a bit on the slow side. Which is odd because there are overasks in certain areas. Strange. Some areas didn’t get the memo there’s too much debt which is a bit counterintuitive because these are the areas whose residents I would expect to be more well read. Not anymore! lol
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February 24th, 2012 at 11:46 pm 85
Man I have been lurking around these sites too long. I first read VHB in mid 2005 and can honestly say that just that one act has led to a 100% change in my ability to understand our financial system… from VHB, to Chipman’s,to Langley Financial, to VCI (with a few stops at some of the other blogs along the way… and also now an avid Calculated Risk reader). Hey VHB… if you are reading this… Thanks! And a big thanks to Pope, Jesse, Freako, Mohican and others who have enabled me to be able to make more rational fact based decisions.
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February 25th, 2012 at 12:05 am 86
@Makaya: There’s nothing like the taste of fresh home-made kool-aid!
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February 25th, 2012 at 12:06 am 87
@good-format: Yay! Thanks for formatting those numbers, so much easier to read this way.
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February 25th, 2012 at 12:32 am 88
15K party next Friday! 20K by end o June! Mark my words!
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February 25th, 2012 at 1:06 am 89
[...] “You can’t make this sh*t up. I posted a week ago about the insanity of the East Vancouver market giving the example of a builder who converted a 33×120 lot into a house with a strata titled main floor and basement, as well as a lane house. Main house – V930752 – 1.2 mil Basement suite – V930763 – $590K for 1,175 sq ft Laneway home – (still completing) – +$900K So, some guy thinks that a fully developed lot near one of the noisiest intersections in Vancouver proper (Kingsway & Knight) should be fetching him 2.7 million dollars. Another funny piece of info was that the stereo was pumping in the basement to drown out the sound of walking from the upstairs unit. Quality is job one. Well, the basement of the main house has sold: MLS # V930763 1262 East 19th Avenue 2 BR ‘Garden’ Suite; Strata 1175sqft SOLD; Ask price $590K” [sales price yet to be verified] – mflat at vancouvercondo.info 13 & 24 Feb 2012 10:02am [...]
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February 25th, 2012 at 2:35 am 90
@Anonymous:
“No matter what Harper did we were in for a train wreck due to Chretien’s policies. It was too late once Harper took office ”
That is an absolute lie. Harper had the power the day he got into office to go back to 25% down, 25 years, or even stricter criteria.
It is a hallmark of neocons that they want unlimited power but refuse to take any responsibility for the exercise of that power.
Well “the buck stops here” is just as valid today as when it sat on Truman’s desk.
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February 25th, 2012 at 2:39 am 91
@Anonymous:
“Quiz for Patriotz. Which federal political party was in power at that time and had been for over 10 years?”
What part of “every government which intervenes in the mortgage market must take responsibility for any inflated RE prices during its term of office” don’t you agree with?
Because that’s what I’ve been saying all along. Including in 2005.
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February 25th, 2012 at 8:36 am 92
@patriotz: “That is an absolute lie. Harper had the power the day he got into office to go back to 25% down, 25 years, or even stricter criteria.”
The part you don’t comprehend is once a bubble is inflated, as it was in 2006, it does not matter what you do the result is bad. If Harper had of changed back the criteria the bubble would have deflated and we would have had the train wreck in 2007. Yes we are going to have a train wreck anyway all he has done is delay it. Yes it would have been better to have done it in 2006 rather than now. Naturally every politician will try to maneuver a soft landing. As we know there is no such thing when it comes to bubbles. I am not saying Harper did the right thing. Not at all. I am just saying Chretien inflated the bubble and the result was going to be bad no matter what Harper did. The bubble was created by Chretien and that is no lie.
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February 25th, 2012 at 8:58 am 93
@patriotz: you can see the future, why did you have to change career five times and move from one place to the others? the only thing you have not seen is that your life is all fu$ked up. how is life in ottawa? working yet or still hide under your wife’s skirt?
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February 25th, 2012 at 8:59 am 94
@Anonymous: I don’t care about the political angle, but what you say is absurd. Sure the government of the day has to deal with the decisions the previous governent made, but theres a huge difference between throwing water or gas on the fire.
The fallout we’ll have to deal with from a bursting housing bubble at this point is way worse than it would have been if deflated earlier.
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February 25th, 2012 at 9:01 am 95
@Burbs Boy: poor your listening to these guys. they have become homeowners long time ago while you become their followers!
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February 25th, 2012 at 9:13 am 96
I just wanted to log onto the new site and see if I fit. I have nothing to say. Have a good weekend.
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February 25th, 2012 at 9:19 am 97
92 Anonymous Says: “The part you don’t comprehend is once a bubble is inflated, as it was in 2006, it does not matter what you do the result is bad.”
Take a look at the graph of the Teranet HPI for a selection of Canadian cities and see if you notice anything different about 2006.
http://oi44.tinypic.com/11uj6fl.jpg
To paint Harper as victim is pure political aplogetics. He threw gas on the fire and say what you will about the crooks in the Liberal party, they didn’t leave the nation in a shambles when they were punted. Between the fiscal mismanagement and full bore attack on civic liberties we won’t be anywhere near as lucky with Harper. I’ll take petty crooks over demented ideologues all day long.
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February 25th, 2012 at 9:32 am 98
@default: Awesome. Yeah, the real measure of success is staying in the same job and living in the same place forever. Get a job out of high school and keep it til your dead. As long as you own a basement suite in east van life will rock!
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February 25th, 2012 at 9:45 am 99
@fixie guy: “Take a look at the graph of the Teranet HPI for a selection of Canadian cities and see if you notice anything different about 2006.”
Yes the bubble was going straight up in 2006 as a result of Liberal policies put in place prior to the Conservative being elected. Teranet we all know lags as well.
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February 25th, 2012 at 9:48 am 100
@fixie guy: “To paint Harper as victim is pure political aplogetics. He threw gas on the fire”
Who started the fire?
It is kind of like blaming the doctor for treating the gun shot wound wrong when the patient dies. Who is really blame the shooter of the doctor?
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February 25th, 2012 at 9:51 am 101
@Anonymous: It is kind of like blaming the doctor for treating the gun shot wound wrong when the patient dies. Who is really blame the shooter of the doctor?
You can bet I would blame the doctor if he threw gasoline on a burning patient.
But maybe I’m just too judgemental.
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February 25th, 2012 at 9:59 am 102
@100 Anonymous: Please don’t vote.
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February 25th, 2012 at 11:32 am 103
This is a wonderful website!
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February 25th, 2012 at 12:25 pm 104
@fixie guy: “say what you will about the crooks in the Liberal party, they didn’t leave the nation in a shambles when they were punted. Between the fiscal mismanagement and full bore attack on civic liberties we won’t be anywhere near as lucky with Harper. I’ll take petty crooks over demented ideologues all day long.”
The Liberals left us with a housing bubble in 2006. That qualifies as shambles to me. You may not like the government tracking your child porn activities but many do like law and order.
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February 25th, 2012 at 12:49 pm 105
Oh good, I’m so glad to see we’ve gotten into a political debate. We should have this sorted out soon and then it will all be clear who the best political party is and we’ll all agree and we’ll have a picnic on a magical hill with ponies that sing and the cake will be the most delicious cake you’ve ever tasted.
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February 25th, 2012 at 1:07 pm 106
As far as I’m concerned, every political party is to blame. I don’t recall a single leader from any major party – federal or provincial – crying out against the CMHC, 40-year mortgages, artificially low interest rates, home renovation tax credits, first time home buyers credits, capital gains exemptions, or any other house-pumping initiative.
EVERY mainstream party has been in favor of these policies, because they all support the bubble. There is no difference between them when it comes to housing, so debating who’s worse it just splitting hairs.
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February 25th, 2012 at 1:28 pm 107
@Yalie
In my opinion, you are correct. This city has been sold out from under our feet by non-citizens of every nationality with hardly a whiff of a suggestion by any party that perhaps we should examine the current situation as it stands. No opposing voices regarding monetary policy either, even though savers are being thrown under the bus, which include senior citizens. My personal opinion is that the defense of the middle class in this city lands squarely with the left wing and unless someone here wants to surprise me with an observation otherwise, they have largely been silent. Perhaps the smell of money has proven to be just too powerful for most and the response at the trough is collective silence. There, I said what badly needed to be said……RTP
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February 25th, 2012 at 1:28 pm 108
“As far as I’m concerned, every political party is to blame. I don’t recall a single leader from any major party – federal or provincial – crying out against the CMHC, 40-year mortgages, artificially low interest rates, home renovation tax credits, first time home buyers credits, capital gains exemptions, or any other house-pumping initiative.
EVERY mainstream party has been in favor of these policies, because they all support the bubble. There is no difference between them when it comes to housing, so debating who’s worse it just splitting hairs.”
This is so very true. I’ve never heard a single politician or party speak out against CMHC or any of the idiotic policies, ever! I wish someone would.
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February 25th, 2012 at 2:11 pm 109
Here is a well thought out thinkpiece from the Vancouver Sun; my favourite parts are the extra hypens.
http://www.vancouversun.com/business/Working+with+Realtor/6203346/story.html
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February 25th, 2012 at 2:12 pm 110
@Don Lapre: please forgive my spelling, the article got me excited.
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February 25th, 2012 at 2:27 pm 111
@good-format:
Thanks a lot for the numbers. I just added one more column cause I like numbers. I also bold-ed the Mondays (first day of the week contains some of the weekend sales).
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February 25th, 2012 at 2:30 pm 112
@VanDweller:
Sorry for the awkward format. When I previewed it it looked a little better. Didn’t realize I can’t add bold inside the tag.
BTW thanks for getting the working Pope. It’s useful.
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February 25th, 2012 at 2:31 pm 113
@Don Lapre: What a load of gar-bage! It looks like that’s just an ad by the REBGV that’s printed as if it’s an article. Take a chunk of it and drop it into google and you’ll find that they just reprint it every so often. Here it is on a realtors site from April 2010:
http://www.garygao.ca/the-value-of-working-with-a-realtor
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February 25th, 2012 at 3:20 pm 114
@Haha: as long as rents keep coming from people like you, like rocks.
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February 25th, 2012 at 4:02 pm 115
@moldcity: make friend with a realtor, he will change your life. otherwise, continue renting in the dark wet basement for the rest of your moldy life.
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February 25th, 2012 at 4:05 pm 116
@DaMann: if you can make a good policy, why dont you run for the office? how long have you been whinning again?
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February 25th, 2012 at 4:26 pm 117
@DaMann: Actually folks one Canadian political party leader, Elizabeth May, does seem to get it…
“Should there be a significant adjustment downwards of Canadian housing prices, Canadian taxpayers could well be on the hook for as much as $125 billion in CMHC-insured higher risk mortgages.”
More here: http://greenparty.ca/article-link/2011-02-10/elizabeth-may-emperor-stephen-harper-wearing-no-clothes
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February 25th, 2012 at 4:32 pm 118
The trolls are back in force today. Slow sales today?
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February 25th, 2012 at 4:55 pm 119
@Makaya: i am just waiting for one of you to move into one of my rentals end of this month.
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February 25th, 2012 at 4:58 pm 120
@default: you mean you’re waiting to subside somebody else’s accommodation? How nice of you! For how long have you been waiting? I hope you’ve not lost too much money. I feel for you man…
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February 25th, 2012 at 5:14 pm 121
Here is what a flip gone bad looks like…
The posting has it all:
Or maybe this guy just got the memo that no new-built houses are selling on the west side right now…
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February 25th, 2012 at 6:09 pm 122
The counter argument on China:
http://blogs.wsj.com/chinarealtime/2012/02/24/crisis-what-crisis-how-to-beat-back-the-china-bears/?grcc=8c5eaa484cd5f780d140128579d5438bZ9&mod=WSJ_hpp_sections_world
It doesn’t hurt to be well rounded, after all.
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February 25th, 2012 at 7:05 pm 123
Does anybody know why houses in White Rock start at $500,000 but houses 5 minutes away in Blaine start at around $90,000?
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February 25th, 2012 at 8:44 pm 124
@Best place on meth
I would guess that it’s because White Rock is a suburb of Vancouver, which is inflated at the moment. Where as Blaine isn’t really a suburb of anything. The border being somewhat of an economic barrier. (maybe someone who lives down there and works up here can weigh in on that) That’s assuming your question wasn’t rhetorical, poking fun at the rediculous spread in valuations.
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February 25th, 2012 at 8:51 pm 125
@ReadyToPop:
100% rhetorical.
I already know the answer, people on this side of the border are the dumbest motherfuckers on earth.
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February 25th, 2012 at 10:42 pm 126
Flaherty and Carney warning about household debt? Don’t worry say the Sun. They know better of course…
Debt-service ratio of 7.5 per cent suggests crisis talk overblown
I like the $200K mortgage part… really entertaining.
I would also love to read his articles once the shtf…
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February 25th, 2012 at 11:00 pm 127
#97 @fixie guy: “I’ll take petty crooks over demented ideologues all day long.”
With the Conservatives in power this long, you may not have to choose.
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February 25th, 2012 at 11:42 pm 128
How are the month end inventory numbers looking like previous years?
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February 25th, 2012 at 11:58 pm 129
The party hasn’t stopped as much as we all hope it will. People are still buying.
I had a good friend over at my house who has been a long term bear and he admitted he put an offer on a house on Main today. He has been a bear for a long time but he finally gave up and threw in the towel he just couldn’t take it anymore. I was shocked because he was one of my few bearish friends in the last several years.
He just couldn’t stand watching a house that was $800K two years ago going for over $1 mil today. His theory is that every year he bet against the housing market and it went up it was like losing $2 not $1 due to the taxes. If he holds off and $1 mil goes to $900K he makes $100K but if he’s wrong and $1 mil goes to $1.1 mil its tax free and and its like losing $200K. I had to admit as much as I disagree with his timing he does have a point about the taxes.
I tried as I could to talk him out of it but he has got his mind made up. I am the first to tell him I have been wrong for a long time so there is no guarantee that I will be right this year. Everybody must make their own choices but even he admitted offering $1 mil for a crack shack felt wrong.
He did mention that there is no HAM at the open houses but a lot of rich (or not as rich) white people driving BMW’s and Range Rovers.
Thoughts? Comments?
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February 26th, 2012 at 1:03 am 130
McLovin,
Today a friend talked to me about spending 1 million $ on a house, in East Van.
We ran some own / rent simulations. His household income is around $200 000.
After 5 years, assuming he can sell then, he would break even if his home appreciates 17.5% ( and this was assuming investing saved money in a saving account at 1%, which is a pathetic ROI). My understanding is that this is without taking inflation into account.
He concluded that it is essentially a question of choosing a lifestyle.
Rent = better neighborhood, better school for his kids, more flexibility/liquidity , less risk, more sleep over the trends of the market/interest rates, no need to worry about maintenance, no risk of bad surprises (remember the house with burnt beams), no stress if you have a stressful (e.g. grow op) neighbor.
He finally said:”if the market does not crash, this city will be so trashed that I will move back East, and if the market crashes, I will be losing tons of money. If the market is flat, inflation alone will make me lose as much money as rent. I should better rent.”
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February 26th, 2012 at 1:19 am 131
any thoughts:
http://www.ottawacitizen.com/business/Housing+bubble+prudent+investment/6208018/story.html
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February 26th, 2012 at 1:36 am 132
@McLovin:
Can’t beat em, join em.
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February 26th, 2012 at 2:05 am 133
#129 @McLovin: “Thoughts? Comments?”
I think for me, the anecdote about the $600k East Van basement suite sealed the deal. I know I’m leaving. 10 years ago I rented a basement suite like that while going to school. It was $600 per month. That is not what I envisioned a lifetime of savings and working would get me. I would not buy any house in Vancouver for even half price. I am getting out of Canadian dollars because they do not buy anything.
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February 26th, 2012 at 2:13 am 134
There are no signs that housing bubble started to lower in the January. The prospects of the real estate market are still quite grim. Even Macleans admitted last week that there actually is a housing bubble in Canada. WOW.
Now we are starting to search for the group to blame. Realtors? Politicians? Buyers? Chinese? You should check: Are Realtors Responsible for the Crisis?, I think it makes a several good points about the topic.
In my opinion, it was neither realtors, nor buyers who made the market grow faster than anything else. I identify the problem with GDP and the political need to keep it growing. All parties are the same. They correspond with the concept of Cartel party from the Stephen Katz typology. Go check it out and you will see a clear pattern of behavior in our Canadian political parties.
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February 26th, 2012 at 3:14 am 135
@Makaya:
“But the estimated aver-age debt service ratio in Canada is far below either of these.”
Average is meaningless because debt and income are so skewed. What matters is the ability to service debt of those on the margin – i.e. the most stretched homedebtors.
“Americans had 45 per cent equity before the housing debacle.”
No, they had 60%.
http://www.calculatedriskblog.com/2011/12/q3-flow-of-funds-household-net-worth.html
Again, averages are skewed. One third of houses in the US remained mortgage free. But that didn’t do the homedebtors any good.
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February 26th, 2012 at 3:21 am 136
@jumpin in:
Garbage. Consider this:
“But you can also make home prices look cheap by comparing today’s average mortgage payment with those of past years. In this case, homes look cheaper than in the past.”
The reason, of course, why the average mortgage payment has gone down is that the vast majority of homeowners bought before the bubble, and interest rates have gone down.
But that’s not what matters to the market. What matters is the mortgage payments of first time buyers relative to income. Which of course is at an all time high, despite all time low interest rates.
Another example of an irrelevant average used to obscure what really matters, buyers at the margin.
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February 26th, 2012 at 7:44 am 137
@McLovin:
“His theory is that every year he bet against the housing market and it went up it was like losing $2 not $1 due to the taxes.”
He isn’t betting against the housing market. Someone bets against a market when they sell short. Short sellers make gains when the price of something goes down and lose when it goes up.
Someone who doesn’t own a house doesn’t lose money when prices go up, because nobody has to buy.
People who buy when renting is cheaper are betting on a perpetual exponential increase in prices to come out ahead of renting. Which is impossible.
People who buy when interest rates are very low are also betting that they will never go up.
Someone who doesn’t own is betting that real rents won’t go up. How has that bet made out?
You’re friend’s thinking is the classic stupidity which feeds all bubbles. Have to get in now before you “lose” more money.
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February 26th, 2012 at 8:05 am 138
@McLovin:
Your friend is confusing paper gains and real gains. In order to put additional money in his pocket with a lower tax burden, your friend would have to, not only buy, but also sell the house. There is no tax advantage to simply owing an expensive house.
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February 26th, 2012 at 8:31 am 139
@Eddie: @Eddie:
May gets the CMHC, maybe, but her plans to ‘Implement a revenue-neutral carbon pricing architecture to modernize our economy’ and ‘Build a “Made in Canada” Green economy’ suggest she’s not afraid to throw money away either.
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February 26th, 2012 at 8:52 am 140
“I had a good friend over at my house who has been a long term bear and he admitted he put an offer on a house on Main today”
sure sign of the top!
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February 26th, 2012 at 8:55 am 141
@Anonymous: it hurts when others buy and you can’t, doesnt it.
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February 26th, 2012 at 8:56 am 142
@Makaya: arent you supposed to feed the kids while husband out there working?
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February 26th, 2012 at 9:04 am 143
@patriotz: “But that’s not what matters to the market. What matters is the mortgage payments of first time buyers relative to income. Which of course is at an all time high, despite all time low interest rates.”
I would also add move up buyers. Most of them are stretching their payments to the limit. Many may be worse off because of the wealth effect the previous property gave them. Consider that person who has just sold a 400K condo that owes 200K. When they move up to a 700K house they now have a 500K mortgage – 2.5 times their old mortgage. Or the person on the Westside who sells the 1.5 mil tear down to buy a 2.5 mil house by adding a mil to their 500K mortgage – again tripling their mortgage. The low rates still mean bigger mortgage payments above and beyond any savings the lower interest rate gives due to the massive amount people are wiling to borrow at every level of the market.
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February 26th, 2012 at 9:07 am 144
@McLovin: “Thoughts? Comments?”
What is the family income and how much did they have down? A mil house sounds like a lot for a first time buyer.
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February 26th, 2012 at 9:07 am 145
@Anonymous: Not every bear has to capitulate at the top, but certainly those with weak reasoning like McLovin’s friend will do so. How the heck did he resist so long?
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February 26th, 2012 at 9:43 am 146
@McLovin:
My thoughts?
When long term bears give up and buy then the top is in.
It’s over.
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February 26th, 2012 at 9:45 am 147
Hey Pope,
The historical archives seem to have disappeared, I’m trying to find the thread for last years February daily numbers but can’t.
Are they gone for good?
Thanks for all your hard work on this site.
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February 26th, 2012 at 10:04 am 148
For further details my friend owns a small tech company and has worked very hard for the past 10 years or so. I don’t know what he makes but I would say $200K+ and he has at least $250K down.
The other point he kept coming back to was that so many of his other friends with less money have vaulted past him in net worth due to the huge move up in prices and this bothered him. I reminded him that if prices drop 20% many recent buyers will be trapped and unable to sell. This theory is he doesn’t care if it goes down because he can afford to carry it even if rates go up dramatically. I again mentioned that he will be trapped and unable to move up the “escalator” .
He second point was that real estate over the long term was an escalator and once you were on you were on. While I did agree that over the LONG term RE does go up due to inflation but there are many periods that it can go down (Japan 20 years +) The USA currently 4 yrs +. I told him that over the LONG term RE cannot go up faster than inflation. It is just not possible and we have been going up in excess of inflation for more than 10 years. I also added that timing is very important. People who bought in AZ in 2007 will take 20 years to get their money back from inflation. People who buy today much less so. Timing, like in stocks is a very important factor to consider.
In closing, I asked him to consider this, does he really think the next 10 years are going to look like the last 10? Even he admits it can’t and it won’t but it still won’t stop him.
The thing we Bears that focus on the facts and numbers often discount is the massive personal and emotional factors that draw some people into buying houses. It is this that allows this machine to continue pulling people in to what any rational person would consider a terrible investment at this point.
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February 26th, 2012 at 10:23 am 149
Maybe they will buy while they are here…
http://ca.news.yahoo.com/blogs/canada-politics/conservatives-mull-changes-citizenship-rules-babies-born-canadian-181211788.html
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February 26th, 2012 at 10:29 am 150
@McLovin:
Your friend has saved an average of 25k per year over the past 10 years (assuming no investment return). Not a lot for a 200K income considering his housing costs are about to go up significantly with a 750K mortgage plus other expenses.
Actually what you have described is classic fear and greed. It is what gets most people into bubbles and it is about the money, nothing else. He thinks he will be better off financially by buying.
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February 26th, 2012 at 10:35 am 151
“Your friend has saved an average of 25k per year over the past 10 years (assuming no investment return). Not a lot for a 200K income considering his housing costs are about to go up significantly with a 750K mortgage plus other expenses.”
That is an incorrect assumption. He owns a business that he has built. I would imagine most of that $250K came in the last few years. Furthermore, his income has gone up dramatically as he built the company. I would think 5 years ago it was $50K.
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February 26th, 2012 at 11:33 am 152
Anyone care to run the numbers on this place? Price vs rent? I have no idea what this would sell for or the taxes maybe someone could help?
http://vancouver.en.craigslist.ca/van/apa/2829479875.html
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February 26th, 2012 at 11:36 am 153
@McLovin: is this bears doing all day long?
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February 26th, 2012 at 11:41 am 154
@McLovin:
It’s probably a $3 million house in todays market which would make the price/rent an outrageous 545.
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February 26th, 2012 at 11:50 am 155
McLovin’s quote:
“For further details my friend owns a small tech company and has worked very hard for the past 10 years or so. I don’t know what he makes but I would say $200K+ and he has at least $250K down.”
“That is an incorrect assumption. He owns a business that he has built. I would imagine most of that $250K came in the last few years. Furthermore, his income has gone up dramatically as he built the company. I would think 5 years ago it was $50K.”
———————————————————————
He can carry his high mortgage if his “small high tech” firm exists. With house bubbles, it also takes businesses down with it.
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February 26th, 2012 at 11:55 am 156
@Best place on meth:
Yes, the forum was a casualty of the rebuild, but we should have backups. We’ll try to get the good stuff (historical numbers) ported over the http://vancouverpeak.com so they’re accessible, but it’s a manual process and slow.
I’ll post a note here when there’s something to look at there.
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February 26th, 2012 at 11:57 am 157
@McLovin:
I bet that investing the $250 K in the salaries of a couple more salespeople for his company would get him a better and faster return than a Vancouver house.
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February 26th, 2012 at 12:04 pm 158
@McLovin: “That is an incorrect assumption. He owns a business that he has built. I would imagine most of that $250K came in the last few years.I would think 5 years ago it was $50K.”
You said he made 200k and worked hard for the last 10 years. A reasonable assumption would be he has had that 200k income for 10 years. But actually that makes it worse if he has only had is for a few years. Business income can change in a heart beat. The tech industry is competitive. Your friend will be in for a shock if his income drops back to even double what he made 5 years ago. A 100K income will not carry that place for long. This one will get ugly real quick.
If he had half a brain he would continue to save. If business is good he will have a lot of money saved. If business is not good he will be glad he didn’t buy the place.
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February 26th, 2012 at 12:09 pm 159
@Anonymous: “I would imagine most of that $250K came in the last few years.”
The other thing is the fact he took 250K net after taxes out of the company (more like 400K before taxes) shows poor tax planning. He probably paid 40% income tax when he could have left the money in the business and paid about 13% corporate then drawn it out later as a dividend or invested it in the company.
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February 26th, 2012 at 1:16 pm 160
#123: BPOM: Living as I do at the border (I can throw a whiffle ball from our front yard and have it land in the States), I’ve alluded to the Blaine/White Rock thing many times before. I’ve stood on properties in Drayton Harbor priced at $200,000 and looked back to WR, where the same thing goes for a million-plus. Moreover, you pay $1/liter for gas (instead of $1.40 here), $9 for a case of beer instead of $24, etc, etc.
I know you ask the question facetiously, but as the weeks and months go by, I’m increasingly convinced we can blame the RE industry, the corrupted MSM, and offshore or onshore speculation all we want. But, as someone else mentioned in this forum this weekend, all of it can be traced back to the government. They know deep down that this thing is going off a towering cliff, but they want – nay, they *need* – to keep it steaming along as long as humanly possible. The world economy sucks, but we *seem* to be doing fine. Why? Housing. When it makes up a quarter or a third or whatever it currently is of the GDP, it’s a massively important cog. When it falls out of fashion, as it’s now on the verge of doing, when the fervor dies, when realtors aren’t rock stars, when people snap out of the hypnosis, when interest rates bump even a wee bit, when the defaults start coming, when the final greater fool has bought, the whole thing’s going to hell. And they know it.
I’ve alluded before to the construction mania taking place right in my own neighbourhood, between the two border crossings and south of 8th. I came home late yesterday afternoon and once again noted how hard these guys (construction, realtors) are working even at 6PM on a Saturday. It’s non-stop, I tells ya. Block after block after block of brand new construction on *any* available land. Sign boards as far as the eye can see. It’s almost like there’s a time limit, and I guess there is. Must finish while there’s still time.
Indeed, I was struck so hard yesterday by what’s going on here that I spent an hour snapping pics. I was interrupted three times, twice by realtors, once by a construction lead hand. I won’t get into the conversations, though I will say I rather forcefully summed up my feelings to the realtors. One of them claimed prices are headed ever-skward going forward, driven by our fantabulous mega-economy and massive immigration that’ll never, ever stop. Suffice to say he had no idea who he was talking to. But as evidenced by his blank expression, wordless rebuttal, and quick disappearing act, he does now.
Is there any way to post pics here?
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February 26th, 2012 at 1:21 pm 161
@McLovin:
Your friend = a mix of greed and envy. Nothing new under the sun…
This anecdote does not mean anything about the market.
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February 26th, 2012 at 1:46 pm 162
Gordholio:
Check out if you can post your pics over at VREAA….I would love to see them.
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February 26th, 2012 at 1:48 pm 163
@jumpin in: never mind about bears. they make a mountain out of nothing.
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February 26th, 2012 at 1:48 pm 164
@Anonymous:
Sounds like the guy is clueless about both finance and tax planning.
I thought “easy come, easy go” went out of style in the tech sector 10 years ago, but I guess it hasn’t for some people.
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February 26th, 2012 at 1:59 pm 165
@gordholio:
>>>But, as someone else mentioned in this forum this weekend, all of it can be traced back to the government.<<<
Thing is, once the market turns there's nothing the government can do.
They've tried everything in the US to no avail, the market is still falling and years away from a bottom and this is with record low interest rates.
As for posting pictures, you should be able to do that over on The Peak.
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February 26th, 2012 at 2:55 pm 166
@gordholio: Yep, you can post pictures at http://vancouverpeak.com if you have a vci user account.
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February 26th, 2012 at 4:42 pm 167
I posted the story of my friend to show the group how and why people are still buying.
I didn’t post it so you could critique my friends business, his tax planning, his saving or his decisions. There is a lot of negativity and anger on this board. IE:
“Sounds like the guy is clueless about both finance and tax planning.
I thought “easy come, easy go” went out of style in the tech sector 10 years ago, but I guess it hasn’t for some people.”
He built a company out of nothing and has a lot to show for it. You guys have no idea what he even does. As far as easy come, easy go, I would say 10 years is hardly easy come.
Again, I used to think people on this board only hated high real estate prices and realtors but it appears a lot of you are just bitter and hate everyone.
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February 26th, 2012 at 4:43 pm 168
@McLovin: well said!
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February 26th, 2012 at 4:57 pm 169
@McLovin:
I don’t hate the guy, I just don’t have any respect for anyone who’d piss away hundreds of grand on Vancouver RE at today’s prices.
Maybe you didn’t get it, but my point is that someone who’s worked in the tech sector ought to be able to spot a bubble when he sees one. Like me.
As for who’s bitter, let’s just check things out a few years hence.
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February 26th, 2012 at 5:06 pm 170
@McLovin: You are taking this personally. Maybe you are a lot closer to this “friend” than you care to admit
I stand by my comment about reasoning, but it doesn’t mean I hate whoever this is.
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February 26th, 2012 at 5:37 pm 171
I have to agree with Mclovin some of you started speculating on his frieind compensates himself with absolutely no idea what you are talking about
In fact you do need to pay yourself in regular wages not just in dividends that way you can take advantage of maxing a Rrsp or some other type of pension plan and other tax deduction so unless your a professional tax planner who knows the guys business your just another speculator
I would still advise your frieind not to buy Vancouver RE though
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February 26th, 2012 at 5:45 pm 172
The nastiest lowlife douchebag in Vancouver says if you blame mainland Chinese for driving up prices then you’re a racist.
http://watch.bnn.ca/the-street/february-2012/the-street-february-23-2012/#clip624734
Thankfully the worthless sack of dogshit does admit that the US is becoming more attractive than Canada for these corrupt commie pigs.
And yes, they are corrupt. The scum basically says as much when he proclaims “the wealthy there have become wealthy based on their relationships with government”.
I think he may however be too stupid to realize that he just called them corrupt.
I wonder if he’ll be arrested in Beijing some day for helping corrupt Chinese siphon billions out of China and into Canada.
Would be nice, yes?
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February 26th, 2012 at 6:18 pm 173
@Best place on meth:
The market is being driven by locals, not foreigners, not mainland Chinese.
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February 26th, 2012 at 6:36 pm 174
Chill out McLovin, get a life or a wife.
And stop that nasty business your in. It may be the oldest industry on earth, but come on man there has to be a better way to earn a living than THAT!!!!
Please, change your nasty ways.
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February 26th, 2012 at 7:00 pm 175
@McLovin: If the guy made mega off his good fortune, sounds like overpaying isn’t a big deal. My free worthless advice is to tell him the risks involved (ie 40% correction or whatever), state you might be wrong but also might be right it’s a severe risk, and change the subject.
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February 26th, 2012 at 7:05 pm 176
@Anonymous:
Of course the market is driven by locals, and locals are driven by fear stoked by scumbags like this.
The point here is that this prick helps launder dirty money yet he’s quick to use the racist card in an attempt to squelch any debate about foreign buyers.
The guy is absolutely vile.
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February 26th, 2012 at 7:09 pm 177
@Anonymous: “In fact you do need to pay yourself in regular wages not just in dividends that way you can take advantage of maxing a Rrsp or some other type of pension plan and other tax deduction so unless your a professional tax planner who knows the guys business your just another speculator”
RRSP and pensions only DELAY paying taxes and are limited in the amount you can contribute. The beauty of running a business is you can AVOID paying taxes if you plan properly. Drawing everything out in a salary is the worst thing you can do. Of course compounding that would be putting the money into Vancouver real estate.
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February 26th, 2012 at 7:48 pm 178
“With a meaningful rebound of domestic demand not in sight, external weakness is starting to bite, adding more downside risks to growth. The PBoC, after delivering this year’s first RRR cut, should step up policy easing as inflation pressures continue to ease.”
China’s new export orders slump in February – HSBC
Some good news for BPOM
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February 26th, 2012 at 7:53 pm 179
Wang says that several of his friends have already emigrated to Canada and that “None of them has tried to talk me out of my plan.” He eventually wants to bring his parents to Canada, as well, so they can benefit from a Western welfare system.
More:
http://www.spiegel.de/international/world/0,1518,817092,00.html
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February 26th, 2012 at 8:21 pm 180
@McLovin: “I didn’t post it so you could critique my friends business, his tax planning, his saving or his decisions.”
You actually gave information on his business, his thoughts on taxes, his estimated savings/down payment and asked for thoughts/commnets. FFS what did you expect?
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February 26th, 2012 at 8:26 pm 181
@Anonymous: He’s going to be disappointed if he really believes that. The gate has closed for most elderly immigrants, from what I hear.
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February 26th, 2012 at 8:54 pm 182
RE: Chinese export slow down.
Is it really the Euro crisis or is it that people are fed up with buying crap Made in PRC that breaks in no time, while PRC brags about their up coming supremacy? May be people buy differently for the sake of their kids’ future. I boycott Chinese products as much as I can. Call me a racist if you want, but I do not mind buying from Vietnam or India. I would love to by made in canada, but this is not a option anymore (if you know a shop that sells such products, please let me know).
I noticed a shift at MEC, they even sale Canadian products now (like sweaters)!
Also SEARS is now posting flags to tell where products are coming from.
Products that used to say “made in china” are now “made in PRC.”
Boycott is the only weapon left to us to avoid being swallowed by globalization…
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February 26th, 2012 at 9:31 pm 183
A business owner should compensate himself with wages and dividends as the wages give Rrsp room and yes you are correct Rrsp only delay taxation but it also can give creditors protection if done properly
Again if you have a successful business I would recommend using an accountant to determine the proper ratio and setting up the Rrsp or pension plan
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February 26th, 2012 at 10:14 pm 184
@Meh:
Forget his parents. The article says he ‘plans to apply…’
He hasn’t even filed papers yet. China will melt down before he gets out.
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February 26th, 2012 at 10:41 pm 185
@Anonymous:
Do I feel lucky getting all that garbage like Zhang Yongjun and his family from China and wasting all my hard earned tax money on those parasites?
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February 26th, 2012 at 10:46 pm 186
This is not a country where sustained growth is likely. This is a kleptocracy.
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/02/26/bloomberg_articlesLZOPJT6JTSE901-M008R.DTL
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February 27th, 2012 at 2:08 am 187
Sorry to clutter up the comments but I don’t see anywhere else to do this– could I please get an invite to Vancouver Peak?
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February 27th, 2012 at 3:39 am 188
@Anonymous:
“RRSP and pensions only DELAY paying taxes”
Wrong, because the compounded value of the tax refund on contribution is equal to the value of the taxes paid on withdrawl (assuming your marginal tax rate hasn’t gone up).
“and are limited in the amount you can contribute. ”
Right.
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February 27th, 2012 at 9:10 am 189
@patriotz: “Wrong, because the compounded value of the tax refund on contribution is equal to the value of the taxes paid on withdrawl (assuming your marginal tax rate hasn’t gone up).”
Putting things in context the choice was drawing the money out of a business in the form of salary (so you can put 18% of that amount back in an RRSP) or leaving the money in the business to invest directly. I think the latter is better. If you disagree good luck with your finances.
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February 27th, 2012 at 9:26 am 190
@jumpin in:
iphones are made in China.
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February 27th, 2012 at 10:34 am 191
@Anonymous:
In the context of a self-owned business yes you are correct.
Sorry for the knee jerk response, far too many people hold the fallacy that RRSP’s (for ordinary employees) defer rather than eliminate taxation on investment returns. Most specifically, many are using this fallacy to justify depending on owner-occupied RE as a retirement plan.
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March 5th, 2012 at 10:55 pm 192
[...] “Good little story about Kelowna. My buddy’s house has been on the market for a long time and out of the blue he got a bite. It sold for about 5% less than asking and when they were $4K apart he stood his ground and told his Realtor that if he wanted this to happen he and the the other Realtor would have to do something about their commission to make up the $4K because he wasn’t dropping anymore. At first they said ok, then they said it couldn’t be done, then they said they needed an extra day and sure enough the two of them ate $2K each and the deal got done. Good for him for holding his ground as the realtors tried to wait him out and hoped he would cave. Even better, he signed a 2 yr lease on a recently renovated 3 bedroom townhouse at the Lagoon’s on the lake for $2200 per month. He figures the place is worth $900K – $1 mil.” – McLovin at VCI 24 Feb 2012 7:46pm [...]
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