Friday Free-for-all!
Yeah! It’s friday and that means it’s time for the sun to shine and for us to do our regular end of the week news round up and open topic discussion thread. Here are a few recent links to kick off the chat:
-Updated inventory graph, still climbing!
-2 experts debate the bubble
-Blame Canada? Blame Europe!
-Nokia shutting down Burnaby
-Why low and stable prices are good
-Will sunshine bring a tear of joy?
-‘Rodeo drive north’ going south
-Van West tilting at windmills
-West Van sales party over
-OECD: Canada suffering Dutch Disease
-Bubble fears a boon to alternative lenders
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
June 15th, 2012 at 7:04 am 1
First. Wake up you bums.
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June 15th, 2012 at 7:24 am 2
@Dave: yeah,instead of spreading fear and resentment those bear bums should find a job and settle down.
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June 15th, 2012 at 7:33 am 3
@Anonymous:
Gandhi wasn’t talking about bears and housing bubbles of course, but it applies equally well.
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June 15th, 2012 at 7:33 am 4
@Anonymous:
Shouldn’t you guys be happy right now? High inventory. Slowing sales. MOI creeping up. Global economy driving for a cliff. You should be voting me up to keep me around for some gloating later, right?
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June 15th, 2012 at 7:35 am 5
@patriotz:
Almost works for me. The only difference was that you guys didn’t ignore me at first.
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June 15th, 2012 at 7:38 am 6
@Dave:
The difference is that we are going to win and you are going to lose, because we only have to be right once.
Trust me on this.
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June 15th, 2012 at 7:58 am 7
A good read:
http://www.theglobeandmail.com/report-on-business/top-business-stories/consumer-debt-burden-swells-to-record-as-incomes-lag/article4264743/
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June 15th, 2012 at 7:58 am 8
@patriotz:
Dave’s a Realtor, isn’t he? If so, he has won many times over. It is perfectly possible to make money out of a bubble. Unless Dave is holds a lot of leveraged property, when alll this is over, he will have done better in the al estate market than I ever will.
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June 15th, 2012 at 7:58 am 9
@Dave: Careful, there’s another one of those from Pauly Shore with a slightly different ending.
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June 15th, 2012 at 8:01 am 10
@N:
I meant lose the argument. It’s the marks who will lose money by and large, rather than the sharks.
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June 15th, 2012 at 8:07 am 11
http://www.theglobeandmail.com/report-on-business/economy/housing/home-sales-fall-in-may-for-first-time-since-start-of-year/article4265840/
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June 15th, 2012 at 8:09 am 12
Yatter Matters has the most scariest table I’ve seen all year:
http://www.yattermatters.com/2012/06/who-is-buying-those-vancouver-homes/
Summary: the majority of FTBs are local, young families putting down 25% or less. HAM is 3-4% if that (an urban legend essentially).
Scary but we suspected this all along. The source data is REBGV (and realtors) so take it with a grain of salt. Overall it looks balanced so have some Free Beer it’s Friday !
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June 15th, 2012 at 8:12 am 13
Propaganda on how the bubble bursting and resulting economic carnage is the fault of the Euro Zone. It’s not often a Vancouver Sun article talking about Canada/Vancouver talks about the prospect of mortgage defaults and uses the term “bloated house prices”:
http://www.vancouversun.com/business/2035/Euro+crisis+could+cross+ocean+Bank+Canada/6787247/story.html
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June 15th, 2012 at 8:25 am 14
“Summary: the majority of FTBs are local, young families putting down 25% or less. HAM is 3-4% if that (an urban legend essentially).”
Yes I can never figure out how so many people got sucked into that HAM was driving the market.
I was surprised by 35% to 40% of the market being first time buyers. If the recent media reports of a bubble and declines in prices gets through to this group the market is toast.
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June 15th, 2012 at 8:30 am 15
N: “Dave’s a Realtor, isn’t he?”
i think he works for developers.
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June 15th, 2012 at 8:31 am 16
@Loon: I wonder whether that kind of survey wouldn’t be very susceptible to inherent bias in the data. For example, how likely would an investor be to respond to a voluntary survey vs. a first-time buyer? What do response rates look like depending on where the survey was sent?
While I also suspect that HAM numbers are overstated, I would expect foreign-investor-non-English-speakers would be a very unlikely demographic to respond to a voluntary survey.
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June 15th, 2012 at 8:35 am 17
@Anonymous: It’s easy to see why people think it’s HAM: go to any open house in North Van, West Van, East Van (mostly), Burnaby or Richmond. Nearly everyone there will be Chinese.
The difference is, it’s not “HAM”, it’s recent immigrants for whom buying a house is an absolute priority, no matter how they get the money or who they have to borrow it from.
Genuine HAM are offshore investors with lots of cash, and they tend to buy condos and really expensive houses. There probably aren’t many of these.
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June 15th, 2012 at 8:42 am 18
@N:
If the market were to crash, you can rest assure that I will feel it.
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June 15th, 2012 at 8:44 am 19
@Loon:
Deals collapsing due to financing? % of realtors saying YES:
hmmm.. is this a trend I see?
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June 15th, 2012 at 8:48 am 20
@patriotz:
“I meant lose the argument.”
True enough. I was just saying to a family member who was mocking me for having been wrong on Vancouver real estate for the last six years that I have, in fact, been right the whole time because it has been true, the whole time, that VAN RE is a bad deal and that prices will go down drastically. They have trouble getting their head around that.
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June 15th, 2012 at 8:50 am 21
Don’t know if this has been discussed yet, CREA is out with the average price data for Canadian homes:
http://crea.ca/content/national-average-price-map
Average price, May 2012 to May 2011 (Y/Y % change):
Canada -0.3%
Toronto +6.4%
BC -12.9%
Vancouver -11.9%
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June 15th, 2012 at 8:51 am 22
@Many Franks: Quoth Larry’s post,
That suggests the responses are from REALTORS®, not buyers… and since we’ve been arguing that REALTORS® benefit from overstating HAM’s effect, these numbers should be skewed (if at all) in the other direction. But — this is a survey, and I’m not so paranoid to imagine REALTORS® lying en masse to their own leadership.
3.7% foreign investment strikes me as a pretty small number. It’s just more evidence that Vancouver will reap what it sowed, without a legitimate reason to blame the foreign menace.
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June 15th, 2012 at 8:53 am 23
@patriotz:
I don’t agree. Using your rationale, prices have been too high since 1983. Prices will never rewind that far. The history of this market shows that a correction normally only gives up 12 to 18 months of price gains. We just had our once in a decade correction and that’s roughly what it took back.
I do think that prices are headed down this Fall and that might continue until next Spring. But, it will only be a pullback, not a correction. As with the 2008 downturn, I am sure you won’t take jump into the market.
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June 15th, 2012 at 8:53 am 24
@Many Franks:
The survey was completed by real estate agents, not by the buyers, so the buyer’s background would not impact survey completion rates.
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June 15th, 2012 at 8:55 am 25
@Dave:
Well then, Dave, I would suggest that you sell now, or be priced in forever. Trust me on this
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June 15th, 2012 at 9:01 am 26
@Turkey: And don’t forget foreign investment also includes investment from the United States. Investment from overseas is well below 1%.
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June 15th, 2012 at 9:01 am 27
@Many Franks: “I wonder whether that kind of survey wouldn’t be very susceptible to inherent bias in the data. For example, how likely would an investor be to respond to a voluntary survey vs. a first-time buyer? What do response rates look like depending on where the survey was sent?”
The survey was for realtors not HAM buyers. You are grasping to keep this myth alive. Exactly what real estate marketers want. Did you notice the only place to get the real numbers was from Larry’s blog? The real estate industry only released the survey to members not the public because they don’t want you to have the real information.
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June 15th, 2012 at 9:32 am 28
@Dave:
“Using your rationale, prices have been too high since 1983.”
What rationale would that be? Price/rent in the mid-1980′s was about 100 for a SFH, and I took advantage of it.
I guess every weekend comes with a strawman.
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June 15th, 2012 at 9:44 am 29
@bum: “I think he works for developers”
Yeah…he’s the guy that cleans up constructions sites on the weekends, which is why he has so much free time to post during the week.
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June 15th, 2012 at 9:57 am 30
@Turkey, @N: Thanks, I sit corrected. @Anonymous: Not grasping, just asking.
Those are some pretty spectacular numbers.
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June 15th, 2012 at 10:07 am 31
@patriotz:
Affordability. The current level of affordability is the same as the late 80′s.
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June 15th, 2012 at 10:13 am 32
@Dave:
I said mid-80′s. The market took off after 1986. Second strawman in a row.
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June 15th, 2012 at 10:13 am 33
@patriotz: “The difference is that we are going to win and you are going to lose, because we only have to be right once.”
how many times have you packed your bags and left town again? please remind the public!
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June 15th, 2012 at 10:22 am 34
@Loon: So only about 23% are CMHC mortgages. How does this compare to past years?
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June 15th, 2012 at 10:27 am 35
@Dave: LOL, love the avatar, bubbles.
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June 15th, 2012 at 10:31 am 36
@Patiently Waiting: Only 23% have *mandatory* CMHC insurance due to high loan-to-value. However, part of the reason we’re rocketing towards the CMHC cap is that banks are buying optional insurance on their own, so the total ratio of CMHC-insured mortgages will be higher.
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June 15th, 2012 at 10:36 am 37
@MrV: I’m still struggling with understanding the discrepancy between the average/medians and the CREA HPI/Teranets. I know the bear story is that the Realtor HPI is designed to mislead, but harder to dismiss the Teranet sales-pair index which has been pretty consistent with the HPI.
Seems to me that these two metrics can’t diverge for a long period since they’re supposed to be measuring the same thing, so what’s next? Is the average/median lagging the HPI or vice versa? Or is one of these metrics not accurately measuring the market at all?
Still some very strong pockets in Van. Western Van East (Main/Commercial/Fraser) detached are still routinely selling for over list, especially for nicely tarted up character homes and larger ‘handyman special’ aka teardown lots.
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June 15th, 2012 at 10:41 am 38
@Loon: Re: Yatters survey. Even if we’re make an assumption that all high-ratio mortgages are taken out by FTB, that means that only two-thirds of first time buyers are high-ratio. That’s lower than I expected and some prominent bears espouse. There’s still some serious money sloshing around if a third of all first time buyers can plunk down more than 25% right out of the gate.
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June 15th, 2012 at 10:48 am 39
@Troll:
But what we don’t know (but can anecdotally assess from what we hear) and estimate based on household debt-to-income ratios is that plenty of those FTBs who may not need CMHC insurance are using HELOCs from their parents.
At the end of the day, all you need to know is that mortgage debt in aggregate is the only thing that has grown to the same extent as prices.
It’s why the fundamentals don’t support anything but a collapse.
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June 15th, 2012 at 10:48 am 40
@Troll:
“Yatters survey. Even if we’re make an assumption that all high-ratio mortgages are taken out by FTB, that means that only two-thirds of first time buyers are high-ratio.”
Remember that all immigrants would be included under FTB, as there is no separate category for them.
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June 15th, 2012 at 10:49 am 41
@Troll: Just because first-time buyers have more than 25% down, doesn’t mean they’re loaded. I’ll bet a significant number of those buyers are recent clients of the Bank of Mom ‘n Pop, which means their down-payment money comes from either retirement savings, in the form of a premature inheritance, or (more ominously) home equity elsewhere in the city.
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June 15th, 2012 at 10:54 am 42
@Troll:
The average is obviously higher because it gets pulled up by the higher end of the market. Since this portion of the market is small, the average is more volatile and prone to change depending on how many sales occur in that segment. For whatever reason, the average price seems to have responded early each of the last few years, ahead of the HPI. In the long run, it’s a useful number but doesn’t say much in the short run. Stick to HPI. Teranet is too slow.
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June 15th, 2012 at 11:02 am 43
@Dave: I agree with the average, it should be stricken from all RE analysis. However, the median is much less sensitive to outliers and it still shows down about 5% YOY while HPI is up. That’s a big difference on a YOY basis, though I’ve not seen a word from the experts explaining the difference. I don’t like the HPI simply because the methodology seems too subjective (ie trying to quantify the value of different home features, like ‘view’ for example). Too much potential for bias there. Teranet’s only detractor was the delay, though it seems they’re ‘catching up’, they are only 1 month behind now.
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June 15th, 2012 at 11:55 am 44
HOLY COMMENTS BATMAN!
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June 15th, 2012 at 12:39 pm 45
@Loon:
I have been saying this for years. Real estate in this city is mostly owned by overleveraged, financially stupid locals.
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June 15th, 2012 at 1:05 pm 46
@Troll:
The bank of mom and dad. While this is admittedly anecdotal evidence, there is not a single person I know in my age group (early 40s), who has purchased a home in the last 10 years, that has done so without help from mom/dad. That’s dozens of households. Many of these individuals have been HELOCing the crap out of their growing equity as well.
This will not end well.
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June 15th, 2012 at 1:11 pm 47
@Dave:
Until the HPI data are more transparent, I’d put little faith in them.
P.S. It looks like a few of you beat me to the Bank of Mom and Dad argument.
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June 15th, 2012 at 1:30 pm 48
Jesse, Patriotz, VHB,
Could this happen here in Canada? Isn’t the BoC more likely to follow in the footsteps of the BoE than any other country?
http://blogs.wsj.com/source/2012/06/15/the-bank-of-englands-zombie-economy/?mod=google_news_blog
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June 15th, 2012 at 1:43 pm 49
Didn’t they just switch the HPI formula around? My understanding is that’s why it’s diverged from Teranet; they’re monkeying with it. The fact that it isn’t catching anything similar to what’s going on the the median’s why there’s concern.
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June 15th, 2012 at 1:48 pm 50
@oneangryslav2: @oneangryslav2:
Anecdotal, but reasonable guess. Still doesn’t negate my point that there’s lots of money around for FTB’s. Moms&Dads are sitting on a piles of equity, especially if they bought years ago. I’m sure some are maxing out HELOCs, but I guess we don’t really know do we?
Isn’t this whole ‘bank of Mom&Dad’ what Rennie was saying a few weeks ago, and which was roundly denounced by the bears here? Now, it’s obvious eh?
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June 15th, 2012 at 1:49 pm 51
@Absinthe: I believe they monkeyed around with the ‘benchmark’ which is applying the HPI to a specific ‘standard’ house. I don’t think there were any changes to the HPI itself.
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June 15th, 2012 at 1:57 pm 52
@Troll: Hm. Is the monkeying-point where the divergence you’re noting happened? Could it accidentally be tracking a very particular market segment with change in the standard house?
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June 15th, 2012 at 2:09 pm 53
@mac:
The essential point of the article is that the UK economy hasn’t hit bottom yet because RE hasn’t bottomed yet, which is entirely correct.
I don’t think you can draw any useful comparisons between the actions or motivations of the BoE and the BoC. The UK pound is near a historic low against the Euro despite the latter’s problems, and also against the USD. The CAD is of course near a historic high against the USD. Completely different contexts.
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June 15th, 2012 at 3:28 pm 54
Still lots of speculation going on out there….
MLS® V941235, $2,480,000
http://vancouver.en.craigslist.ca/bnc/apa/3078796353.html
$5000 / 7br – 4785ft² – Huge 7 bedrooms Single House for rent Starting July 1st, 2012 (Metrotown, Burnaby) (map)
Battle start!
Round 99, Rent vs Sell… tied…
Round 100, Rent vs sell… the battle never ends…
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June 15th, 2012 at 3:41 pm 55
@Troll:
“Prominent bears espouse” What is that supposed to mean?
No one has claimed all first time buyers are high ratio. If anything, popular “bear theory” (to use your language) is that many first time buyers are getting family help to come up with a significant downpayment so they afford the monthlies on their own. Then, if anything, that’s higher than one might expect.
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June 15th, 2012 at 3:53 pm 56
@Steve:
Jeez man, that’s only $700 a bedroom for luxury living.
I think some first year BCIT students should team up on this sweet rental, it looks like a perfect place to hold keggers and tequila nights.
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June 15th, 2012 at 4:08 pm 57
@Absinthe: No, I haven’t graphed HPI and median side by side to see where they diverge. I’m only going by YOY numbers that were presented in the last REBGV stat package.
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June 15th, 2012 at 4:15 pm 58
@Devore: Chillax, if you didn’t say that 9 out 10 new buyers are high ratio then no need to get your panties in a twist.
I just thought it was interesting stat, and one that lends credance to Rennie’s comments that Boomer parents are going to be a big force in helping kids get into the market. At the time his views were mocked, but here’s a data point that supports his view.
The next interesting question is how much M&D equity is available to keep goosing FTB downpayments? Data’s sadly lacking there unfortunately.
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June 15th, 2012 at 4:20 pm 59
@Troll:
Can you point out where bears mocked this comment? You could be right, but I don’t remember it.
I know several examples of Maw and Paw ponying up, co-signing, or offering help. It would be an awfully tough argument to deny the effects of intergenerational wealth transfer.
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June 15th, 2012 at 4:31 pm 60
50 Troll Says: “Isn’t this whole ‘bank of Mom&Dad’ what Rennie was saying a few weeks ago, and which was roundly denounced by the bears here? Now, it’s obvious eh?”
My denouncement remains whole. In Rennie’s mouth that’s another desperate justification for Vancouver prices. An honest dimwit, tousled boyish pretensions or not, understands it will accomplish no such thing. Once the market crashes the assets backing those down payments will be devalued too and ma and pa follow their kids into debt. It’s as moronic as the argument made in the US that real estate couldn’t possibly crash because everyone was rich with unprecedented home wealth.
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June 15th, 2012 at 4:31 pm 61
@Troll:
If it’s true that most first-time buyers can get in only with parental help, that is one of the biggest bearish indicators you could have.
Bulls who think it can support prices long term have got it completely backwards. Only rents and incomes can support prices long term.
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June 15th, 2012 at 4:35 pm 62
Average or median SALES prices don’t tell the whole story. Only he average or median of what happens to be selling.
If one month, only high end homes are selling, for some reason, the both the average and median SALES price goes up. They both would go up even if all home prices remained flat, even if high end home prices remained flat. It just shows what is selling, not the average overall price of a home in Vancouver.
The more accurate price is the benchmark price which follows the price of a typical units in a market. As long as the same typical unit is followed month to month, that gives a better picture of teh market. HPI is supose to do that, nit sure if it really does.
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June 15th, 2012 at 5:21 pm 63
[...] Loon Says: June 15th, 2012 at 8:09 am [...]
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June 15th, 2012 at 5:29 pm 64
New Listings 219
Price Changes 151
Sold Listings 95
TI:19246
http://www.laurenandpaul.ca
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June 15th, 2012 at 5:39 pm 65
@paulb:
sub 100 sales, inventory picking up a bit. Just the way I like it!
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June 15th, 2012 at 5:45 pm 66
@paulb:
… and the endless climb continues. 20,000 before August? With what’s about to go down in Greece this weekend, I’d say it’s a sure thing.
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June 15th, 2012 at 6:43 pm 67
interesting times..
isn’t there a curse about that?
anyone considering shorting europe?
EPV etf perhaps..
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June 15th, 2012 at 7:13 pm 68
95? Why not 100?
Realtors: I am disappoint.
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June 15th, 2012 at 8:10 pm 69
Inventory
A couple of observations;
While historical seasonality suggests that inventory will plateau, all it would take is 10 poor days with +100 inventory to meet or exceed 2008 inventory.
It would be interesting if there was data on all the pre sales and under construction inventory not in mls and understand how that stacks up historically. Visually I am sure everyone else sees the cranes and construction going on all over, how many rebuilds and major renos by developers on your street?
It could be that inventory including this unlisted volume is already at decade highs if not higher. And with sales volume at decade lows, the MOI pressure has to build up to an inflection point at some stage especially with all the volume for sale leveraged to the hilt at multigenerational low interest rates.
That said I agree that while maybe the average price is down due to lack of high end volume, properties for FTB’s and other people on average incomes is not dropping yet.
What will be the trigger for that? And as ZRH2YVR points out, where is the smart money moving? Presumably it has already left the Vancouver RE market.
http://www.bloomberg.com/news/2012-06-13/are-you-with-the-dumb-money-or-the-smart-money-.html
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June 15th, 2012 at 8:12 pm 70
@Yalie: Hm. Do you really think people are paying that close attention and will make a listing decision based on eurozone troubles? Maybe a handful, but I doubt enough to make much difference. The majority will wait until its definately too late.
Buy high, sell low.
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June 15th, 2012 at 8:35 pm 71
Residential tenancies board is allowing a 4.3% increase in rents this year. I can’t recall seeing an allowance that large. Expect much bigger ones in the future. The stock is so old I expect alot of landlords to apply for larger increases in older buildings for “reno” purposes.
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June 15th, 2012 at 8:43 pm 72
Great letter in the Georgia Straight (both online and print) that explains Jane Jacobs and the housing bubble:
http://www.straight.com/article-709386/vancouver/exmayor-should-properly-state-jane-jacobss-views
Best line:
“Watch for the giant holes in the ground left by bankrupt developers—chainlink surrounding vast pits filled with rainwater. Wait for them to seem so familiar you don’t even notice them anymore.”
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June 15th, 2012 at 9:01 pm 73
@b5baxter:
It was a great letter, way to go Michael Brockington (whoever you are!) Cheers! I read the Sam Sullivan article last week and it bothered me a lot. Not only because he said that towers were the way to affordable housing, but because he neglected the whole fact of cheap credit causing a housing bubble. Besides, I think Jane Jacobs had it right-whoever looked at a tower and thought “wow, that looks like a really great place for me to raise my family!” A rowhouse, in comparison, seems quite ideal. I bet Sammy doesn’t even have kids (as I am now in the situation of 2 kids in a 2 bedroom apartment, it’s pretty crowded!) He should come and live in my condo for a day and see how well this situation works. That might change his mind in a hurry.
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June 15th, 2012 at 9:25 pm 74
Jun-2012
Total days 21
Days elapsed so far 11
Weekends / holidays 4
Days missing 0
Days remaining 10
7 Calendar Day Moving Average: Sales 119
7 Calendar Day Moving Average: Listings 256
SALES
Sales so far 1321
Projection for rest of month (using 7day MA) 1186
Projected month end total 2507
NEW LISTINGS
Listings so far 3016
Projection for rest of month (using 7day MA) 2562
Projected month end total 5578
Sell-list so far 43.8%
Projected month-end sell-list 44.9%
MONTHS OF INVENTORY
Inventory as of June 15, 2012 19246
Current MoI at this sales pace 7.68
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June 15th, 2012 at 9:32 pm 75
@pricedoutfornow: “I am now in the situation of 2 kids in a 2 bedroom apartment, it’s pretty crowded!) He should come and live in my condo for a day and see how well this situation works.”
Last I heard Sam Sullivan was in a rental condo downtown with his wife in the Domus building. Domus is condos in the 700 ft to 1000 ft range.
There is nothing stopping you from renting a 3 bedroom or larger place. Why is people a so freaking cheap when it comes to renting? Just spend what you plan on spending on a mortgage when prices correct.
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June 15th, 2012 at 9:59 pm 76
@Ripples: there’s always a 4% increase allowed a year in rent, and yet nobody raises their rent to the max because that would just leave the unit vacant.
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June 15th, 2012 at 10:10 pm 77
@hovering
The fact you are on a real estate blog talking about shorting europe suggests it is closer time to buy. Euro mega caps have an impressive yield and a weak euro helps their exports… these companies will be around forever…like nortel, enron, lehman brothers, and bear sterns… I jest.
Buy on weakness, sell on strength…. Us is the place to be in the equity world.But the world being where it is, large cap, developed europe is in second place
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June 15th, 2012 at 10:18 pm 78
No, it has usually been near 3.5, and purpose built have indeed raised it near this amount. What is interesting is that the 2.3 inflation was due to hst + 2% real return
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June 15th, 2012 at 10:43 pm 79
@b5baxter: The letter comparing density of Vancouver and Paris is also spot on:
It also makes a big difference that Paris was built before cars and elevators which naturally forces density and limits heights. And family sized (3+ bedrooms) apartments are the norm, not the exception.
But they have also had a few more generations to let supply/demand forces sort out appropriate density for the various locations. You may not sell your overpriced SFH in a central location, but your children will.
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June 15th, 2012 at 10:48 pm 80
@Ripples
@Stucco—–BC Residential Board
Allowable Rent Increases for 2012
September 1, 2011
Conventional Residential Tenancies:
For a conventional residential tenancy rent increase that takes effect in 2012, the allowable increase is 4.3 per cent.
The annual allowable rent increase for conventional residential tenancies is determined by the formula in the Residential Tenancy Regulation.
Section 22 of the Residential Tenancy Regulation establishes the annual rent increase formula at inflation plus two per cent. The regulation defines the inflation rate as the “12-month average percent change in the all-items Consumer Price Index for British Columbia ending in the July that is most recently available”. The Consumer Price Index is published by Statistics Canada.
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June 15th, 2012 at 10:52 pm 81
Sorry forgot the link
http://www.rto.gov.bc.ca/content/news/default.aspx
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June 15th, 2012 at 10:56 pm 82
Note that individual landlords can apply for increases that exceed the allowable limit. This will be the norm
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June 15th, 2012 at 10:57 pm 83
Interesting numbers posted by Larry. I wasn’t sure whether to believe the 25% down numbers or not. Or how they count all-cash offers. (I made an all cash offer once which simply meant in that case that I did not place a financing subject on the deal according to my agent).
But really this is all rather unimportant. What matters is not whether buyers have put 25% down but whether they can service the 75%. I am curious as to the mortgage to income ratio.
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June 15th, 2012 at 11:44 pm 84
@Ripples: And of course for new tenants landlords can ask whatever they want to ask for rent, but that doesn’t mean they’ll get it. Check out some of month after month ‘available now’ listings on craigslist asking stupid rent that just stay vacant or have high turnover.
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June 16th, 2012 at 12:26 am 85
@shriller:
All-cash offers are easy to make – just add a ‘subject to inspection’ clause and you’ve got your exit if you need it if your financing falls through.
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June 16th, 2012 at 2:10 am 86
@Ripples: I have seen very few successful appeals for rent increases. Professional will increase rent to keep up with market and build in discount for good tenant, but that’s a temporary effect. For those units who have been perpetually lagging increases it’s more landlord laziness, and it acts as a millstone when trying to sell b/c the new owner has an underperforming asset that is under strict earnings control. In some cases it can take years to recoup the shortfall.
We can look at rents in the long run, they are going roughly with wage inflation which should be no surprise. If rents were increasing faster than this, the local economy would be starved. The HST is a good point. Funny how all the predictions that prices would correct to compensate for the increases. Well they didn’t, I see it in the invoices I pay.
I also am seeing high turnover, more than I’m used to, and that adds to everyone’s costs but without too much payback. Interestingly many are leaving Vancouver so it appears the high cost of living is starting to wear on people. But also the quality of applicant in core areas is high. Confusing, if I didn’t know any better I’d say that the city was gentrifying, but relatively flat wages tell a different story. A lower UE rate may be a plausible reason.
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June 16th, 2012 at 3:23 am 87
@Ripples:
“Note that individual landlords can apply for increases that exceed the allowable limit. This will be the norm”
Why isn’t it the norm already? See other replies to your post for the answer.
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June 16th, 2012 at 6:51 am 88
78 Ripples Says: “No, it has usually been near 3.5, and purpose built have indeed raised it near this amount.”
That fabrication is done. Data from the real estate friendly number crunchers at the Sauder School of Business paints a very different picture:
http://cuer.sauder.ubc.ca/cma/data/ResidentialRealEstate/RentIndex/pctgrowth-vancouver.pdf
Real rents haven’t paced inflation for the past forty years, much less the allowable cap. The reason is obvious, with no possible impact on renters from an expectation of appreciation the rental market remains strongly coupled to their income. A stronger argument is the owner’s expectation of appreciation leads to less effort getting the maximum dollar for their rental, it’s much more work for much less reward than sitting back watching your property go up.
Good luck arguing employers have been giving raises above inflation for the last two generations.
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June 16th, 2012 at 8:14 am 89
@b5baxter: bears said this years ago, watch for giant holes. unforturnate for bears, those building were sold out long before you can get your heads out of the sand!
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June 16th, 2012 at 8:25 am 90
89 Anonymous: Great command of the English language. Equally nice use of punctuation, capitalization, grammar, and sentence structure. I bow to your wisdom.
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June 16th, 2012 at 8:52 am 91
Oh good, here we go again:
Hey, let’s hope they’re also planning to slam interest rates to the floor again. I think 1% would be a great emergency target. Sure, it’s below inflation, but it’s just for a couple of months, right?
Let’s hope the Conservatives will be forward-thinking enough to suspend their balanced-budget plan for just a little while to free up the cash to spend our way out of this properly. Their track record of financial prudence will serve them well as they’ve kept their powder dry for a crisis just like this.
Let’s hope they give some much-needed relief to Canadian banks by buying up some of those 2.99% mortgages. Sherry Cooper’s been a martyr for the Canadian economy for too long.
I’m having sudden visions of a many-ringed finger leafing through my wallet again. I guess that must be Thomas Mulcair’s.
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June 16th, 2012 at 9:01 am 92
Fixie guy great graph. 99% of people do not understand this so it bears saying again. Rents cannot go up in excess of inflation and wage growth for any extended period. The same goes with prices. Yet people accept the argument with rent but dismiss it as hog wash when it comes to prices which should raise forever.
This is often my central argument as to why condo’s are overpriced in Vancouver. A real life example is a place purchased on Seymour in 2004 for $145K was rented for $1100. This place is now around $310K with a rent of $1350.
Over that period:
Price +120%
Rent + 23%
Over that period strata and PPTY taxes are also up so the return is actually lower.
Landlords always raise rents to the max that the market will bear. In this example when he tries to rent it out for $1400, crickets. At $1350 he has 30 people line up. That $50 is the make or break and shows are little capacity there is for increases in Vancouver.
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June 16th, 2012 at 9:09 am 93
@fixie guy: “A stronger argument is the owner’s expectation of appreciation leads to less effort getting the maximum dollar for their rental”
And we’re hearing stories of landlords starting to raise rents. Apparently 3 years of purchases, at a time when there has been approximately flat prices in many segments, is causing some increased urgency to get more revenue.
On a completely unrelated topic, check out this service:
http://ratemylandlord.com/landlords/
Seeing there are literally thousands of “renterbears” on this site, why not start populate this database. And if you have a kick-ass landlord, make sure you give them a good rating.
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June 16th, 2012 at 9:11 am 94
@McLovin: “$1400, crickets. At $1350 he has 30 people line up”
When people talk of a rental shortage, this is simply incongruent. I’ve experienced this too $50 above market gets no traffic.
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June 16th, 2012 at 9:52 am 95
Interesting stuff on the US market from Scotiabank
The S&P homebuilding index has been like a tidal wave so far this year, outperforming the broad market.
· The NAHB/Wells Fargo Housing Market Index of builder confidence in the single-family market has made steady gains over the past eight months, rising fifteen points since September to a level of 29 in May.
· The S&P homebuilding index’s technical and valuation are extended, but for good reason; demand for new homes is gathering momentum after a record-breaking slump.
· Mortgage delinquencies and foreclosures are subsiding. As a result, existing home prices have rebounded.
· Home Affordability index is at the highest level ever with a reading of 210 points; between 1989 and 2008 the index only clipped the 140 point level three times.
· S&P/Case Schiller Home Price Index in March showed little sequential change, and the national composite now reflects a 35% decline from its peak set in June 2006.
· There was an unexpected drop in signed contracts to buy existing homes in April. Sales of distress properties, foreclosures and short sales make up anywhere from a 25% to 40% of all U.S. home sales.
· Housing starts fell 5.8% sequentially in March to a seasonally adjusted annual rate of 654,000.
· In order to see a positive and sustained trend in home ownership, home buyers need to have confidence in the strength of the job market. Employment growth, supported by a steadily improving unemployment rate will be an important factor, and probably more so than home affordability.
· We believe the housing market in the U.S. has likely bottomed, but there will be headwinds and challenges ahead which will prevent the sector from climbing steadily over the coming years.
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June 16th, 2012 at 9:56 am 96
@jesse:
Back when there were non-moot rent controls in BC (continuing across tenancies) there really was a rental shortage. Landlords used to run ads in the classifieds reading “XYZ Apartments. No Vacancies”, just to taunt people.
If any rental units are sitting empty there is no rental shortage by definition.
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June 16th, 2012 at 10:08 am 97
I’ve just written 12 post dated cheques for rent, they didn’t increase my rent at all from last year.
Question: Can they come to me in say 4 months and then ask for the 4.3% increase? or at any other time during 2012?
And in 2013, are they allowed to increase the rent by the amount allowed in 2013 PLUS the amount that they never charged me in 2012? or just the amount allowed in 2013?
I’m in a 5 year lease, and just entering year 2.
thanks!
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June 16th, 2012 at 10:40 am 98
@Anonymous
1. Check the terms of your lease agreement. The increase is normally stipulated in you lease agreement. If there is no increase mentioned, you’re locked in.
2. It really depends on 1, but I recall that there is a limitation from business law 101. I don’t remember the details exactly so someone else fill us in.
The 4% maximum allowed per tenancy laws only cover residential. A 5 year lease agreement with a year’s supply of post dated cheques sounds like a commercial lease. If so, those are not protected by any legislation. Anything written on a lease agreement is law, no tenancy protection what so ever.
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June 16th, 2012 at 10:41 am 99
A 13-storey residential building under construction in Shanghai collapsed on Saturday, killing one worker and highlighting the dangers of shoddy building in fast-urbanising China.
http://in.reuters.com/article/2009/06/27/idINIndia-40638820090627
China…What next?
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June 16th, 2012 at 11:05 am 100
David Madani does great analysis but Helmut wiped the floor with him. It was like he was on a teleconference at the same time or something… they need somebody like Jesse or Meth or Makaya on there!
Love Pastrick’s logic: prices increase faster than rents that’s why they will continue to do so. As opposed to the logic that the two are misaligned and will return to long term average ratios. Talk about tautological: why are price:rent ratios so out of whack? Because price to rent ratios are out of whack, of course!
I’m on the fence whether we’ll hit 20,000 this year – to me the numerator won’t be as important as the denominator going forward… if sales slow and the delists aren’t too egregious – and/or if we get enough new lists to offset the seasonal delists we could hit double-digit MOI by midsummer, which would rock!
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June 16th, 2012 at 11:28 am 101
@lemon.
I’m in a 5 year residential (condo) lease, but it does state that they can raise it the allowable amount per year. It’s just that at the end of the first year when they came to collect another years worth of cheques they never asked for an increase, I’d assume that means that I’m safe for another year…but maybe they can just come back in a month’s time and say they forgot to raise it a month ago and are wanting to do so now.
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June 16th, 2012 at 12:01 pm 102
@jesse: “Apparently 3 years of purchases, at a time when there has been approximately flat prices in many segments, is causing some increased urgency to get more revenue.”
Raising rents at even 4.3% won’t fix their problems any time soon. This will lead to urgency to sell their money-holes.
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June 16th, 2012 at 12:12 pm 103
Confused says
Buy hi sell lo
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June 16th, 2012 at 12:18 pm 104
@Anonymous
In that case, they can come back whenever and ask for an increase before next month’s rent. They can’t ask for an increase of months already passed though.
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June 16th, 2012 at 12:22 pm 105
@ Lemon
gotcha, thanks!
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June 16th, 2012 at 12:22 pm 106
A few weeks ago, I witnessed my first trash-out of a rental apartment (in a purpose-built building at that). At first I thought someone was moving, but then noticed the workers were just throwing furniture off the second floor balcony. Wood was getting smashed. It was going in one of those big garbage containers home renovators use.
I looked in the container, a family abandoned the place fast, not looking back. Kids stuff, personal effects. Even a wheelchair, to my dismay. These weren’t dirty people. They must have lived well not long ago.
A few weeks later, the apartment still looks empty from the street (no blinds). And no, I don’t think its gross or anything. The other day I noticed a jeep with a flat time in front of the building with a flat tire and and a sticker from parking enforcement.
Hard times.
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June 16th, 2012 at 1:03 pm 107
@al:
This story is three years old. Welcome to 2012.
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June 16th, 2012 at 1:15 pm 108
@Arthur Fonzarelli: I would pay money to see freako go toe to toe with Pastrick. Deep in the archives of VCI are some legendary takedowns at the hand of old boldface
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June 16th, 2012 at 2:00 pm 109
Months of Inventory (MOI) calculations for each of BCREA’s sale regions for the month of May 2012. Many kind thanks to the BCREA for publishing timely and accurate sales and inventory data.
BC Northern
Inventory: 2859
Sales: 465
MOI: 6.1
Chilliwack
Inventory: 1901
Sales: 241
MOI: 7.9
Fraser Valley
Inventory: 9051
Sales: 1511
MOI: 6.0
Greater Vancouver
Inventory: 18911
Sales: 2897
MOI: 6.5
Kamloops
Inventory: 2258
Sales: 220
MOI: 10.3
Kootenay
Inventory: 3337
Sales: 210
MOI: 15.9
Okanagan Mainline
Inventory: 6735
Sales: 611
MOI: 11.0
Powell River
Inventory: 281
Sales: 32
MOI: 8.8
South Okanagan
Inventory: 1959
Sales: 159
MOI: 12.3
Northern Lights
Inventory: 260
Sales: 39
MOI: 6.7
Vancouver Island
Inventory: 6808
Sales: 694
MOI: 9.8
Victoria
Inventory: 4060
Sales: 636
MOI: 6.4
Provincial Totals
Inventory: 58420
Sales: 7715
MOI: 7.6
Outside Vancouver
Inventory: 39509
Sales: 4818
MOI: 8.2
Perhaps this month’s biggest surprise is the closing gap between Vancouver and the province’s more provincial parts. While Vancouver’s MOI posted another month-over-month increase, the rest of the province is actually down since last month, in aggregate. The GV region is now at 6.5, not too far behind the rest of the province at 8.2. Is this just statistical noise, or might we see an inversion in the coming months? Time will tell.
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June 16th, 2012 at 2:05 pm 110
An article with a blind spot the size of a condo tower.
From Interest Rate Increases: Why No Canadian Is Safe:
News flash! Not every Canadian has a mortgage. That seems like a pretty major error, given the headline.
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June 16th, 2012 at 5:28 pm 111
@patriotz:
That’s an amazing stat patriotz. I was discussing investing with the father-in-law the other day and he was trying to convince me that buying when prices are 1000X weekly rent is a good rule of thumb. That still works out to a price/rent ratio of 230 using monthly rent.
He also thinks we’re close to that ratio in Sydney today but he must just want us to buy since we’re nowhere near that level. In our suburb you would have to pay 1000X the weekly rent on a 3 bedroom 2 bathroom unit to buy a 2 bedroom 1 bathroom place.
There will (may?) be another small surge in prices here since some juicy home owner’s grants are being removed July 1 but even the most committed bulls have given up calling for a return to the price increases seen over the past 10-15 years. As soon as prices stopped going up the entire speculation rationale for buying went away and we’re back to sales volumes from the mid 90s.
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June 16th, 2012 at 6:19 pm 112
@Anonymous
@Lemon
i think you both should read the BC Tenancy Act–you have a lot of mis-information there–try here
http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/00_02078_01
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June 16th, 2012 at 7:18 pm 113
@CanuckDownUnder – re: Ratio.
Our rent in downtown on Beach Ave. is 1,850 weeks. That’s a really long time. What I was wondering is if you are saying that at 1,000 – it’s a good time to buy or 1,000 is still too much. 1,000 would be pretty good here in Vancouver. That would be a large decrease from today’s prices.
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June 16th, 2012 at 7:44 pm 114
@ZRH2YVR:
My rent just went up by 10% and is now 1731 weeks.
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June 16th, 2012 at 10:23 pm 115
@Anonymous:
i happen to think what’s happening in europe at the moment will have a slightly larger effect on my timing of buying back into vancouver real estate than the chattter on this blog (as fantastic as it is).
I am fascinated to see what happens with the election in greece on sunday. I expect it will not yet lead to greece exiting the euro. something will be slapped together to keep them in the club (but they still can’t pay their russian gas bill).
eventually the euro mess will be the shock that pushes canada back into recession and our housing markets off the cliff..
as an aside, has anyone seen the article on kleptomacy (sp?) in china? great piece. no idea if it’s accurate.
all of the above is relevent, imho, to VCI.
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June 16th, 2012 at 10:47 pm 116
@ZRH2YVR:
(Just for laughs) Look what I found, a waterfront house at 529.6 weekly rent, in Richmond. Under 1000x weekly rent, great investment?
For sale: $165,000
MLS V952136
http://www.realtor.ca/propertyDetails.aspx?propertyId=11965970&PidKey=848739895
Same house for Rent: $1350/month. 800sf 1Br+Den
http://vancouver.en.craigslist.ca/van/apa/3062062463.html
(Caveat: it floats, hope you do too)
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June 16th, 2012 at 11:05 pm 117
@Hovering:
I happen to agree with you re: Europe. Going to watch the election closely. Will be quite interesting if Syriza wins. Spain and even France may come into spotlight very soon. I’ve held some epv (ultrashort europe) and ery (3x bear energy) for several months, just in case europe/world economy blows up… (So far they’ve gained 20% and 40% respectively from March trough) Risky play I know, just a little gamble~
Will concerted central bank efforts overwhelm the deflationary forces? We’ll find out over the next few months!
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June 16th, 2012 at 11:32 pm 118
@condo watcher
Correct, according to section 42, looks like they need to give you 3 months notice with a minimal year inbetween each rent increase.
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June 16th, 2012 at 11:34 pm 119
@ZRH2YVR price to weekly rent
Are these ratios factoring in taxes, strata fees and other maintenance from an owners perspective?
I figure that for many rentals, the taxes fees and maintenance the owners would be paying must comprise 30-40% of the rental income if not more. Meaning that the effective price to rent multiples could be outrageously higher.
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June 17th, 2012 at 3:28 am 120
@market stats:
Price/rent always uses gross numbers only. Which is why houses and condos have different price/rent for the same investment value. A condo should be a about 2/3 of a house. Also a high tax city should have a lower price/rent than a low tax city – but all metro Vancouver cities are low tax compared to places like Montreal or Dallas.
(rent – taxes, etc)/price is called cap rate and indicates your true return on capital.
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June 17th, 2012 at 4:34 am 121
@ZRH2YVR:
Our current place would have a ratio around 1150-1200, getting down to 1000 would still seem way overpriced to me. One of the big data providers has gross yields on Sydney units at 4.9% which seems a bit high, that works out to a ratio of 1060.
We’re planning to hold out until the ratio hits 650 and I see little reason to buy before then. We love the flexibility that renting provides us and finding 3 bedroom apartments to rent in Sydney is no problem at all. That said we may capitulate around 800 if the right place comes up and we knew with certainty that we weren’t leaving town anytime soon!
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June 17th, 2012 at 7:44 am 122
@VMD: you really don’t want to end up with an underwater mortgage on that one!
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June 17th, 2012 at 10:28 am 123
Anyone else having trouble loading the Yattermatters site over the last couple days? I’ve tried on different computers and it either doesn’t load at all or hangs before completing. No problems with any other sites.
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June 17th, 2012 at 11:09 am 124
Solution:
Re-invigorate HAM $$$$
What should do is up the deposit on beverage containers from 5 cents to $25 dollars (minimum).
See many Asians out dumpster diving and with huge 10 ft tall bags full of recyclable deposits tied to their bikes. If the GDP of the loads can increase from $5 Dollah to $500…evelybody wins.
Sure I know such a move may reduce Surreys GDP…but hey its a start.
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June 17th, 2012 at 11:54 am 125
@patiently waiting: same here.
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June 17th, 2012 at 12:05 pm 126
Seems the sun is peeking through so I’m going out. Some current trends.
Richmond – price decreases norm now and may end month with 14 MOI
Vancouver – Sticky – - not too many motivated sellers but we’ll see when the Spec Builders start to unload.
Overall Market – We should end 2012 June with lower sales in market than 2008. Big factor is condo sales slow in Van-West – the largest single component of the market. All locations are down but this big component is down a lot. However, listing pace is not as high as 2008 (yet?) so we will not have as low Sale/List but will be second lowest and far away from seasonal norms.
We may not end Sep/Oct with higher inventory than 2008, but that is still possible. We should have flat inventory from June 30 to Aug 31. We will need a market shock to push housing down. Unfortunately that could be stock market falls.
Tough market to read right now. It is bad all around except for van-East attached. Richmond will end this month with sub-100 sales on 1200 inventory. Van-West – still on track for lower sales than last month and will come in close to 100 and 10 months MOI.
What is strange is that for the first time in a while, the REBGV market is showing higher MOI than FVREB. They have been much worse for a while. I can not imagine what it must be like to be a new buyer right now with a massive – massive debt, no excess cash flow and a very expensive asset which may not recover to its current value in 15 years time. The boom has caused a massive mis-allocation of resources in the next generation / current level of first time buyers.
Anyhow – happy fathers day to all. I’m off to see my family in their fantastic new place. They cashed out in March and now rent a new 3200 sq ft place in Richmond. (Mom’s not quite there on this renting thing yet but I think she’s coming around . .. ).
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June 17th, 2012 at 12:22 pm 127
@Anonymous: “they never asked for an increase… but maybe they can just come back in a month’s time and say they forgot to raise it a month ago and are wanting to do so now.”
I believe they have to notify you in writing three months before a rent increase. You can email the province (they have a contact somewhere on the Residential Tenancy Branch website) if you want to be sure.
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June 17th, 2012 at 2:12 pm 128
@Anonymous: “I’m in a 5 year lease, and just entering year 2.”
I am shocked someone would sign a 5 year lease and not know what the provisions for a rent increase are. I know most people sign almost anything without reading it or understanding it, but a 5 years lease? That is something you must read and understand PRIOR to signing it.
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June 17th, 2012 at 2:26 pm 129
@ZRH2YVR:
Here in HAM-Ville…
Any stats on Richmond MOI?
What I am seeing is projects freezing….aka vacant houses boarded up.
Or properties with development signs now trying to sell the lot and old house
These parties most likely bought at the peak, and have lost big time…cut their losses via do not build. (As the saying goes, the profit was made the day you bought the lot).
Another anomaly:
Watch what the South Asian Builders are doing. Many of them build, live in , do the capital gains then sell…repeat. One near me is not even to lock up yet “For Sale”. These Ma and Pa builders will get hit the hardest as they are often exclusively dependent on HAM as buyers.
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June 17th, 2012 at 2:31 pm 130
@Anonymous:
“I am shocked someone would sign a 5 year lease and not know what the provisions for a rent increase are.”
He said (101) that the lease specifies that rent can be increased by the amount allowed by the RTB. It appears that the landlord screwed up by not giving the required notice.
What surprises me the most is that a landlord would enter into a 5 year lease at all. That means the owner (or subsequent owner) has no right to end the tenancy for 5 years except for non-payment. Obviously that limits the buyer pool severely if he wants to sell at some point.
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June 17th, 2012 at 5:57 pm 131
@patriotz:
He obviously didn’t understand it otherwise he wouldn’t be asking people on VCI when his rent could be increased and by how much. Just because his landlord didn’t increase the rent doesn’t mean he ‘screwed up’. The landlord might value a good tenant and not want to extract every penny he can. Hardly what I would call screwing up. Sure glad you are not my landlord.
If the landlord has no intention of selling, the 5 years lease is to his advantage. There is no advantage for the tenant (assuming the landlord is not going to sell). If there is a tenant willing to sign a 5 year lease it makes sense for the landlord especially since he can increase the rent every year during that 5 years if he chooses. It could be a purpose built rental building owned by a Reit for all we know.
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June 17th, 2012 at 6:26 pm 132
http://www.timescolonist.com/life/British+Columbians+give+thousands+cars+friends+dodge/6706490/story.html#ixzz1y5tvzBwq
What the hell is going on ?!?!!
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June 17th, 2012 at 6:53 pm 133
“He obviously didn’t understand it otherwise he wouldn’t be asking people on VCI when his rent could be increased and by how much. Just because his landlord didn’t increase the rent doesn’t mean he ‘screwed up’. The landlord might value a good tenant and not want to extract every penny he can. Hardly what I would call screwing up. Sure glad you are not my landlord.
no, i do understand (and I’m a she) that the rent can be increased every year by the allotted amount.
I entered into the standard B.C residential tenancy Act agreement, and I read the entire agreement.
The only part I’m confused with was, do they not have to increase it at the end of every year? or could they come to me 14 months in and ask for the increase (even though I’ve already written them another years worth of postdated cheques).
I’m pretty sure that the landlord was aware that they could have raised the rent and just chose not to during my second year, but it occurred to me that they might come forward a bit later and ask for it. I’ve been informed (thanks condo watcher), that they can still ask for an increase as long as they give me 3 months notice of the incease.
This was my place that i sold and am now renting back from the investor. I asked for a 5 year lease, with a condition that I (and only I) can break the lease with 60 days written notice. Yes it makes it hard for them to sell, but they assured me that they weren’t buying it to flip within 5 years, and that they were happy about signing a 5 year lease. On the other hand, if I decide I want to move, no problem…a win-win for both of us
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June 17th, 2012 at 6:54 pm 134
on another note
http://www.theprovince.com/life/Benefits+homebuying/6795853/story.html
are you kidding me…
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June 17th, 2012 at 6:57 pm 135
“there has never been a better time to purchase a new home or renovate your current house.”
says the…
“CEO of the Canadian Home Builders’ Association of B.C.”
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June 17th, 2012 at 7:02 pm 136
@Anonymous: Many people take offense to a sales tax on private sales of used cars, and feel quite right about evading some or all of it. They sort of have a point considering the cars were already taxed when sold new.
When I was young, friends were always selling old junkers to each other and I’m sure nobody bothered paying tax.
Its good PR to point to the high-end luxury sells, but if the government starts cracking down across the board, it could be quite controversial. And how far back can they go (statue of limitations)?
Talk about desperation, when they go down this road for revenue.
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June 17th, 2012 at 7:23 pm 137
@Patiently Waiting:”Talk about desperation, when they go down this road for revenue.”
OK I don’t like the idea of taxing used vehicles. But the law is the law. People are scamming other tax payers by not paying it. It looks like 1/3 of all private sales are ‘gifts’. I applaud the government for doing this.
From the article:
“Almost one-third (161,000) of the 503,000 private vehicle transactions last year were reported as gifts instead of sales. And an estimated 60,000 of those were between unrelated individuals.”
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June 17th, 2012 at 7:34 pm 138
@Patiently Waiting: “Talk about desperation, when they go down this road for revenue.”
More like, my taxes will be less because they’re taxing someone else. And yes, I’m one of those *ssholes who smiles every time I see a red light camera flash go off.
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June 17th, 2012 at 7:38 pm 139
@Anonymous: Sounds like you’re a smart “she”!
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June 17th, 2012 at 8:05 pm 140
Anonymous: Truly a piece of crap article. Here’s the key quote from the CEO of the Canadian Homebuilders Ass:
“The next time the housing market in B.C. comes up in conversation – and we know it will – let’s try to remember that without such a successful industry, our economy would be in much rougher shape.”
No shit. That’s the entire problem wrapped up in the proverbial nutshell. If we weren’t going broke buying and selling criminally overpriced houses to each other like brainwashed zombies, the economy would tank. So nice of him to come right out and admit it.
Indeed, most of the piece discusses how incredibly much of our isolated little world here in the BPOE is built on housing. To anyone with a brain, it’s a frightening read. I wonder if he knew how idiotic his words sounded when he wrote them?
But to then use the horrible truth as a way to guilt the reader – well, it’s the very definition of scumbag, isn’t it?
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June 17th, 2012 at 8:22 pm 141
@gordholio: “But to then use the horrible truth as a way to guilt the reader”
LOL when you see drivel like that in the media, you know someone’s under the gun. Big time.
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June 17th, 2012 at 8:55 pm 142
@gordholio:
“The next time the housing market in B.C. comes up in conversation – and we know it will – let’s try to remember that without such a successful industry, our economy would be in much rougher shape.”
The same could be said of the grow op industry, but they don’t brag about it like these real estate d-bags.
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June 17th, 2012 at 10:06 pm 143
@ VMD
Maybe not a bad idea to sell the 3x shorts. Book your gain. Greeks have delayed the inevitable for another six weeks.
On the investing side, I think the safer shorts are here at home. Read all the way through the 140-odd posts and you see an investor’s dream: an established trend (i.e. declining Canadian home prices), with a long way to run (what do you say, 40-50% clear downside runway to plausible “fair value”), that is not well understood by investors or the general public (why are we spending time on some far flung corner of the internet…because all the MSM is too conflicted or too stupid to see what is happening).
I doubt we have much more time to jump on the trend before it becomes popular. I was just in Toronto, which is a frickin gong show of massive condo developments (you literally can’t go for a five minute walk without getting forced onto a temporary sidewalk caused by condo construction). All the real estate agents in TO are twittering stuff like “what an idiot that guy is to walk away from a great home at a good price.” Yes, it too is cooling/collapsing.
Still not too late to short or put the holy trinity (Genworth MIC, Canadian Western Bank, Home Capital Group). If you are in a long only account HIF is a 1x inverse of Canadian Financials (BTW you lose less on volatility in a 1x inverse than in 2x or 3x). After the big three crack, a good idea is to buy US dollar puts on interlisted Canadian banks (they will get taken down by their Achilles HELOCs and worsening “wealth management” books even if much of their mortgage mess is insured).
If you don’t do this, you will kick yourself later. You are in the perfect position to observe this market every day … no need to decipher stuff from the Telegraph about the next twists in the Greek saga. When else will you really have a front row seat on a great big go-to-zero meltdown?
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June 17th, 2012 at 10:26 pm 144
@Anonymous (and i’m a she)
“This was my place that i sold and am now renting back from the investor. I asked for a 5 year lease, with a condition that I (and only I) can break the lease with 60 days written notice.”
sweet deal–good for you
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June 17th, 2012 at 11:18 pm 145
@HAM Solo: If you short Genworth, aren’t you responsible for covering the dividends? I’m not sure I want this guaranteed liability.
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June 17th, 2012 at 11:36 pm 146
@jesse: ….More like, my taxes will be less because they’re taxing someone else. ….
Good grief, do you really believe that? if so, you should renew your subscription to Gullible Peoples Digest before they’re sold out.
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June 17th, 2012 at 11:53 pm 147
@HAM Solo:
Thanks for the excellent insights! I still need to get myself educated on the more advanced tools of investing (don’t have a margin account yet). Those bear etfs were but my crude attempt to bet against the market (with relatively small amount of $ involved). Lots to learn.
re: shorting Genworth MIC, Canadian Western Bank, Home Capital Group, there were rumors that the upcoming OSIF rule changes are mainly directed against big banks, while these marginal lenders may actually benefit (at least for short-term, until the downturn worsens).
So far I’ve shunned the TSX by significantly reducing my Canadian equities exposure since late 2011/early 2012. Looking back, I probably sold 1-2 months early (late Feb was TSX peak), but at least my most recent RRSP contributions (minimal canadian equities exposure) were relatively unscathed, now that TSX has wiped out all of 2012′s gains.
Re: Europe, it is just my “feeling” that events there may unwind faster (and with more ferocity) than the speed of Canadian housing/bank decline. However, it’s definitely risky playing against central bank interventions..
For now, I’ll stay mostly in cash equivalents, keep renting, read up on investing, and wait : )
- I’ll start an investment thread in the forum for those interested in this topic.
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June 18th, 2012 at 3:45 am 148
@YLTNboomerang:
“If you short Genworth, aren’t you responsible for covering the dividends?”
Yep, and the yield is over 6%. I think the easy money shorting Genworth has already been made. Also, I would stay away from the custom short ETF’s, they usually have very high overhead.
http://www.theglobeandmail.com/globe-investor/markets/stocks/chart/?q=MIC-T
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