Friday Free-for-all!

It’s the end of another work week and that means its time for another free-for-all post.  This is our regular end of the week news round-up and open topic discussion thread for the weekend.  Here are a few recent links to kick off the chat:

Why falling house prices aren’t bad
What impact from the new rules?
OSFI Credit Union loop-hole
Absurd property of the week
‘Just under a million’ price drops
Expert rips Mayors housing report
Fellow realtors complain to Keith Roy
What does Cameron Muir think?
Canada house prices not sustainable
Affordable housing needs replacement
Will we always have leaky condos?
We ain’t Paris

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

..And if you’re interested in signing up for an account at Vancouverpeak.com, here are 10 first-come first-served invite codes:

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f9yq-szx6-tyu9                                    19×5-z7hp-bi6j
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[…] allows me to be doing what I should really be doing – spending time with my young kids.” – No Noise at VCI 13 Jul 2012 6:09PM Share: This entry was posted in 02. Profiting from the Boom, 10. Demoralized Renters? and tagged […]

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[…] that paid nearly a 100k more for the privilege of ownership than a present day buyer.” – Anonymous at VCI 14 July 2012 10:29am Share: This entry was posted in 11. Regrets about Investing in RE, 14. Social Effects of the […]

patriotz
Member

@TPFKAA:
“status, psychological security, believing that your asset will appreciate, failure to account for all costs are all reasons for holding on to an asset that continually loses money.”

Your third point is the definition of a bubble. The other points are saying that the owner is simply a fool.

A bubble cannot be supported indefinitely by factors other then financial return, because there are always players who are interested only in financial return, or bound by it (i.e. will go broke) and when they divest themselves prices have to go back to a level that gives investors an operating profit.

As I said. I think all the “non-financial” reasons given for owning RE are bogus, because as we’ve seen from the US, when it clearly becomes a losing game people don’t want to buy.

rp1
Guest
rp1

#179 @Waiting to exhale: “Just called poster of the CL ad. Apparently it is a two bedroom apartment and the owner wants to have exclusive access to one room (they will be locking it) so essentially you are renting a one bedroom 900 square feet apartment for $1480 with the added inconvenience of an owner popping in and out once awhile.”

Sounds like an axe murderer. The second bedroom is where they chop people up. You’re the fall guy.

Tacky Tocker
Guest
Tacky Tocker

Fixer & Flipper Update

RE http://www.realtor.ca/propertyDetails.aspx?propertyId=12184842&PidKey=-163882389

Open housing today in the area and stopped in for a peak at this recent fixer and flipper,

If you want to laugh, barf, shake your head, or all a little of all i dare you to have a look at this joke of a reno’ed house, truly one of the worst i have seen,

on a side note it and the few other i was at were empty, one of them the realtor was a no show!

Getting interesting out there!

pricedoutfornow
Guest
pricedoutfornow

@Waiting to exhale:

Crazy….sounds like he just wants someone to pay the mortgage when he’s away. I’m sure that’s how he priced it out. Jeepers. Renting a one bed isn’t worth anywhere near $1480/month.

Anon
Guest
Anon

Depends if she’s hot …

Waiting to exhale
Guest
Waiting to exhale

Just called poster of the CL ad. Apparently it is a two bedroom apartment and the owner wants to have exclusive access to one room (they will be locking it) so essentially you are renting a one bedroom 900 square feet apartment for $1480 with the added inconvenience of an owner popping in and out once awhile. I think this owner is dreaming if they want that rent for this kind of an arrangement. I think something around $1000 would be more realistic.

By the way the poster said the owner’s wife usually comes back alone if that makes a difference.

jesse
Member
CBC: Canada froze $4.3B in assets to support Arab Spring How is this relevant to Vancouver? It probably isn’t, but a few paragraphs jumped out at me: Concerning Egypt and Tunisia, authorities zeroed in on residential property valued at $2.55 million and bank accounts containing a total of $122,000 using the Freezing of Assets of Corrupt Foreign Officials Act. As the name suggests, the act allows Ottawa, upon the request of a foreign state, to temporarily freeze assets that former dictators and their entourage have placed in Canada. Something to consider… if a foreign government were to clamp down on corruption in the wake of a financial collapse, the Canadian government has the means and will to act by recovering assets of foreign officials deemed to have illegally squandered state assets, in the name of maintaining a good relationship with,… Read more »
TPFKAA
Guest
TPFKAA

@Waiting to exhale: Yeah I would like to know too. I have a feeling it’s a young-ish person. They should really say what kind of person the tenant would expect to be sharing with and how.

Waiting to exhale
Guest
Waiting to exhale
@VMD: “‘Oversea owner just back 1-2 months a year, last year just back 3 weeks. mostly, you own the total unit’ It’s probably fine if the overseas owner is your close relative.. but having a stranger living with you for 1-2 months a year??” I think the CL poster is implying that the owner wants to keep a part of the unit as a storage area for his/her belongings. I see this all the time; an owner would rent out a whole house but keep the right to store his stuff in one room. They don’t want to pay for a storage locker and would rather give their tenant a discout for this type of arrangement. But how this would work in a one bedroom apartment is beyond me. If they actually think they can rent out a one room… Read more »
HAM Solo
Guest
HAM Solo
Interesting to think about the Canadian MSM’s new meme about a 10-15% real estate overvaluation in Vancouver and Toronto. Here, I believe, is the thought process. The real estate industry knows that Vancouver is already down 15% and that Toronto is softening (especially in the condo area) and so likely to follow Vancouver’s trajectory. They also are aware that the news of price drops is kind of predictable because the real estate industry deals in y-o-y numbers. So even if the sales price is flat for the next eight months, by the spring they will have no choice but to publish -15%. Knowing this, the spin-meisters have to come up with a plan. Part of this is to change the basis of measurement (hello new HPI), but even these douche bags realize they can’t completely fabricate market prices. Ergo, the… Read more »
good-format
Guest
good-format

Sorry. Too many mistakes in previous post.

Got a flyer from a Tri-City Real Estate “expert” — Dan Miller
(604-729-0708)

The flyer says: “Take advantage of this SELLER’s market”

He is either has mental problem or too poor to print new flyers that is suitable for today’s market.

good-format
Guest
good-format

Got a flyer from Tri-City Real Estate “expert”.

The flyer says: “Take advantage of this of this SELLER’s market”

He is either has mental problem or too poor to print new flyers that is suitable for today’s market.

TPFKAA
Guest
TPFKAA

@patriotz:

Not quite following you there… status, psychological security, believing that your asset will appreciate, failure to account for all costs are all reasons for holding on to an asset that continually loses money.

Not sure if I was trying to explain why anyone would – can you clarify what you mean?

jesse
Member
@Just looking…: ” what’s a rational culturally driven premium over the value as defined by a property’s actual productive worth vs other investment types.” There are properties that are art forms, notably those designed by famous architects or restored in period, so they would carry the “speculative premium” you describe. Arguably one could keep a pied-a-terre with fantastic sunset views as a piece of art as well. But where this tends to fall flat is in units primarily rented, where those who rent them are doing so with leverage and keeping cash flow positive. In that respect the comparison to a work of art is wanting: they are rarely visited or even seen by owners, the only cachet is party conversation, a rather odd feather compared to most art forms with which I’m familiar. Any drive through most of the… Read more »
patriotz
Member

@TPFKAA:
You have failed to explain why landlords would hold an asset that continually loses money.

patriotz
Member

@Just looking…:
“Under this definition, gold or art or other similar non-productive but valuable and/or collectible goods would always be in a bubble, wouldn’t it?”

You can say that they are always in a bubble, or you can say that it doesn’t make sense to say that they are or are not in a bubble. You can be bullish or bearish on them, but that’s not the same as saying they are or are not in a bubble.

But their prices are driven entirely by speculation all the time – the only return you get on them is from the next buyer. You could make an exception of sorts for art, since the owner enjoys an intangible benefit from it. But nothing you can use for an objective valuation.

TPFKAA
Guest
TPFKAA

@patriotz:

You beat me to it.

TPFKAA
Guest
TPFKAA

@TPFKAA: I mean if this is older adults in the craigslist ad… one understands migrant workers can benefit from reduced living expenditures, while not necessarily liking the close quarters… needs must…

TPFKAA
Guest
TPFKAA
@Just looking…: That’s a really astute question. I have two observations: 1) I think even at the old multiples of income (3.5) most people end up paying over and above rental value due to all the costs of ownership… So the premium has always existed, but it has a tangible value for many people if only in status and the concomitant psychological well-being it brings. 2) That sense of value may take a temporary hit if the sustained drop in valuation due to credit contraction and deleveraging hurts people badly psychologically, as it did in the states. Therefore, people may lose all the interest in housing as a speculative asset, as they would in gold or paintings or tulip bulbs after a bubble, and lead to an overshoot of even the fundamental floor. This will probably be a cyclical oscillation,… Read more »
patriotz
Member

@Just looking…:
“So, the question is, to what extent is the value of RE culturally driven vs speculator-driven.”

You have your definitive answer from the US. When prices started tanking, the “cultural value” went away.

It was always about the money.

TPFKAA
Guest
TPFKAA

@ScubaSteve:

“Their culture seems to allow this a lot easier (living with strangers). Foreign students seem to have no problem packing in 7 people in a 2 bedroom condo. Usually 2 in each bedroom, 1 in the den, 2 in the living room. I’ve seen it.”

And who exactly is the “they” in “their”? I doubt young Canadians overseas would be too snooty to do what the rest of the world has no trouble doing when young and tight of budget.

But if this is older adults… it’s just creepy.

TPFKAA
Guest
TPFKAA
@VMD: “‘Oversea owner just back 1-2 months a year, last year just back 3 weeks. mostly, you own the total unit’ It’s probably fine if the overseas owner is your close relative.. but having a stranger living with you for 1-2 months a year??” Lol that’s… kind of awkward in a 1 bedroom. Who gets the couch?? It works ok for young students – pretty much any young people will sleep three to a room to cut down on housing expenses when necessary. From personal experience I’ve found this to be true of English, Czechs, Mexicans, Italians, Spanish, Finnish, Germans… don’t know how that shit works for Canadians but I would imagine it’s no different. When you are young it’s all an adventure. It may be a young owner in their 20s expecting a similar tenant. But imagine if it’s… Read more »
Speed It Along
Guest
Speed It Along

if prices go down further but interest rates go up, Keith Roy’s new West Side residence will be worth a lot less than what he paid for it in the fall, and on renewal of his mortgage he will as well be looking at higher mortgage payments. Icertainly hope he’s not telling his clients what he’s telling himself.

_______

I certainly hope he IS telling his clients what he’s telling himself….

The more people with hubris that get screwed over the faster the collapse and the better off everyone will EVENTUALLy be….