Friday Free-for-all!

Yeah, that’s right.  It’s Friday and that means it’s time for another news round-up and open topic discussion thread for the weekend.  Here are a few recent links to kick off the chat:

Canada consumer debt up 3.4% in 1 year
It’s all about the resource economy
Another woah day in sales to list
New Inventory Graph: April will see 17k
Or will it be 18k?
Richmond at inventory crash levels
Can you combat off shore ownership?
Foreigners keep NY agents busy
Ain’t no bubble, chill out.
– Japan gives Canada advice on soft landing

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

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blueskies
Guest
blueskies

I see the “hot offshore money myth” is
still the subject du jour. There is little hope
for mankind when when you can’t see
beyond the end of your nose.

willfully blind consumers + easy cheap credit
= bubble

VMD
Member

[China faces inflation, growth risks]
– China’s GDP grew only 8.1%, the slowest pace since September 2009.
– “HAM” getting cold?

Chinese Premier Wen Jiabao said China faces rising inflation risks even as its economy fights growth headwinds, hours after data showed the world’s second-biggest economy grew at its slowest pace in nearly three years in the first quarter.

Mr. Wen said Beijing would continue to improve and fine-tune macroeconomic controls and policy in a timely way to deal with the challenges, but he reiterated that the government would keep its restrictions on the Chinese property market.
http://www.theglobeandmail.com/report-on-business/international-news/china-faces-inflation-growth-risks-wen/article2400970/

registered
Member
registered

1 blueskies Says: “I see the “hot offshore money myth”…”

Only when defined as non-resident money earned off shore. From a market perspective it makes little difference if the money earned off shore moves here permanently, any more than buying sea side villas boosts Mexico’s overall economy. The production capability that enriches nations remains off shore.

Assuming yearly household income stats in rich immigrant neighborhoods have any validity, they’re populated with consumers and not producers. Since most production is off shore the primary beneficiaries are arguably retail and import.

jesse
Member

@fixie guy: Can also be extended to resident money earned offshore if residents are only in Vancouver for a few weeks per year.

southseacompany
Member
southseacompany

More negative waves from the press: “Vancouver sales slipping. City loses its boom with 30-per-cent slump over last year”

http://www.theprovince.com/business/Vancouver+sales+slipping/6452341/story.html#ixzz1rvsCE0mh

They report a quote from BMO (also in the Sun) about PRICES being down 30% since last year (should be SALES down). Nice mistake.

space889
Member
space889

Hi, did Telus Garden condos sell out or not? I saw people giving out Telus Garden T-Shirts at the downtown Canada Line station for 2 days straight now.

N
Guest
N

@southseacompany:

That mistake might be enough to start some water-cooler conversation and get quite a few people hitting the panic button. They will find out it is not true soon enough, but once the seed is planted in their heads…

Anonymous
Guest
Anonymous
Relax, a whole bunch of real estate experts and real estate economists say there’s no bubble in Vancouver http://www.vancourier.com/business/Economists+discuss+Vancouver+housing+bubble/6452164/story.html One of my favorites: No bubble “Prices are nuts!” “Nobody can afford to get into the market!” “It’s all gotta collapse sometime….” Lower Mainland locals talk about our real estate market obsessively, and try to make sense of it from anecdotal evidence and a tsunami of unrelated statistics. Right, we’re the ones spreading all of the BS about HAM, flying around in helicopters, putting advertisements disguised as news in the papers, constantly pumping the “hot real estate market” on the news, reporting about a bidding war that happened on one property as though everyone’s home is being stalked by wealthy foreigners with suitcases full of cash, telling us that locals should just accept the fact that they can’t afford to live… Read more »
Anonymous
Guest
Anonymous

@Anonymous: …
can have their feet held to the fire.

N
Guest
N

@Anonymous:

That article takes the cake.

“So it’s educational to hear from two professionals whose job it is to make sense of statistics and put them in context.”

Wouldn’t it be more accurate to say, two professionals whose job it is to get people to get people to by real estate?

One of the weirder quotes was Muir’s reported claim that the sell-list ratio is currently in balanced territory: in between 15 and 20 per cent. Where does he get that number from, and in what universe would that be balanced? I guess the reporter just misread their own notes, but it’s scary to think that people read articles like this and then consider themselves informed.

Best place on meth
Member
Active Member
Best place on meth

@N:

Muir is referring to the monthly sales to total listings which is an inverse of MOI, 20% = 5.

But I agree with them that there won’t be any “sudden correction”, this baby is going to be a long and drawn out bear market akin to Chinese water torture.

jesse
Member

@Best place on meth: “this baby is going to be a long and drawn out bear market akin to Chinese water torture”

Maybe but by most measures I track it’s a long way to the bottom. We’re about to find out if low interest rates are a free lunch.

N
Guest
N

@Best place on meth:

I see. Thanks.

Dave
Member

@N:

That’s a standard definition for a balanced market.

Best place on meth
Member
Active Member
Best place on meth

@Dave:

That’s true Dave, but it may not be balanced for long if end of April projections come to fruition.

If we do see 18K inventory and 2900 sales on April 30th we’ll have entered a buyers market of 6.2 MOI.

BoogyBear
Guest
BoogyBear

I don’t believe that there is a “standard” definition of a balance market when it comes to MOI. I would say there is a “rule of thumb” in order to get a quick snapshot of the marketplace. I think that to use MOI simply by itself can be misleading. The MOI, sales to new listings ratio, days-on-market and price trends over the last four quarters would be a lot more informative. Rather than an economist working for the bank or the real estate board making an unqualified statement. This smells more of public manipulation than solid econometrics.

Dave
Member

@Best place on meth:

Not quite. Most people consider that to still be balanced. If it gets above 7, then I think we are just getting into buyers territory.

Whether or not that happens, I still predict the flat market to continue for a number of years. There will be some ups and downs along the way. If people want to buy, try to catch the down periods. I don’t see a crash scenario so don’t hold your breath for that. Rather, stick to my 3 rules:

1. Make sure the product and location is right.
2. Make sure you can afford it.
3. Make sure you plan to hold the asset for at least 5 years.

If you fit that criteria, everything will be just fine.

Many Franks
Guest

Happy Friday! Can anyone get me a sold price on V937810? (Google cache has it recently listed for $688K.)

Dave
Member

@BoogyBear:

MOI has an amazing correlation to prices. It’s by far the best metric in real estate. How can that be public manipulation when the definition has been around for pretty much forever?

AG Sage
Member

@Dave: Spoken like a Cali House Buyer circa 2005. It’s like a giant echo . . .

Ken G
Guest
Ken G

Just a short note on the Cam and Warren. Both are about as in tuned with the “real” world as tom and Jerry from Looney tunes. I remember going to an invite with Warren, what a joker! I went with my business partner and we sat there and looked at each other like “what planet was this guy on?” It was Sept 2008…I kid you not! He was like ” we are going to see a strong US economy through the end of the year” I couldn’t believe my ears. You all know what happened that October no less that 2 weeks later!!!

These Ivory tower joe blows have no clue of what is really happening and they truly don’t understand or have a connection with the real world. utterly useless.

N
Guest
N

@Dave:

Good rules, Dave.

I would add:

4) make sure that, accounting for equity building on one hand and non-mortgage holding costs on the other, it is not cheaper to rent, so you are not throwing your money away; and
5) make sure that, if there is any chance of you having to sell at the end of that 5 year period, you will not be underwater or, if you are, that you will be able to cover holding costs by renting it out

With those five simple rules, I am sure the buyer will be well protected. Would you not agree, Dave?

jesse
Member

@Dave: “Make sure you plan to hold the asset for at least 5 years.”

Not that Canada is the US or anything but prices there peaked 6 years ago and are still dropping. So “at least” seems right.

Best place on meth
Member
Active Member
Best place on meth

@jesse:

To return to 2006 price levels, the Americans will need to hold on for about 30 more years.

At least.

Anonymous
Guest
Anonymous

@Dave: Why should I buy if it’s cheaper to rent?

You are predicting sideways price movement for the coming future so would it not be prudent of me to save the difference in rent versus mortgage (and associated costs) for a larger down payment?

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