Friday Free-for-all!

It’s that time of the week again, lets do our regular end of the week news roundup and open topic discussion thread for the weekend!

Here are a few links to kick off the chat:

Doors shutting on first time buyers
How many realtors is enough?
Vancouver RE plunges
Families leave BC
Housing affordability?
Moodys warn on Canadian debt
Sales/list Sept 2010-2011
Great new source for data
Toronto sales drop 12.5%
Kleptocrats flee china

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

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Vancouver
Member

Where am I… Is this real life..? ok now… I have two fingers..no..four fingers… I can’t see anything… arRHHH!! I feel funny… had I been trolling this forum?
last thing I remembered? why I was having a cool-aid drink that the awfully nice realtor made for me.. Wait a minute…

sorry jesse, I always knew you were right. It’s just that I have this inferiority complex condition.. I get this uncontrollable urge to cynically, forcefully disagree with all the facts.. so that people will stop and pay attention to me… for once…

ScubaSteve
Member
ScubaSteve

Updated September sales graph. Comparing this month’s sales/listings to 2011 and 2010.

http://i50.tinypic.com/2j5yrg4.gif

bubbly
Member
bubbly

How many realtors is enough?

This is how it looked south of the border: http://ow.ly/dx5nP

The REALTOR® bubble has popped there, it will pop here too.

bubbly
Member
bubbly
Re: “Kleptocrats Are Fleeing China” More than a million public servants have sent large sums abroad. Stealing like this is the norm in post-communist countries. Most often, politically connected “experts” are nominated into top management positions in state owned enterprises where they keep signing business “deals” with phantom entities until the companies are completely hollowed out. The less sophisticated thiefs simply take cash and flee. Politically, there is no will to do anything about this because 1) Most of the thiefs are insiders, 2) It is (supposedly) believed that this looting is an inevitable part of the transformation to market system (that is what one politically active sociologist form Eastern-Europe once told me) These thiefs then come to a foreign country and spend money like it has almost no value – because they did not have to work for it.… Read more »
VMD
Member

Anecdote:
Chinese realtor asking “Can any mortgage expert enlighten me: Which banks can still allow mortgage application to go through without requiring proof of income (and also not self-employed) ? Higher down payment requirement is ok. Btw, assume the applicant is not a recent (<5 years) immigrant"

– that realtor had contacted RBC, BMO, CIBC, HSBC. However he was told it may or may not be approved (case-by-case basis).
– a BMO mortgage advisor recommended him to try BNS
– another recommended RBS
– looks like realtors are finding potential (local/non-HAM) buyers/investors having difficulty getting mortgages approved, since they don't want to report their overseas income.

patriotz
Member
Eric Lascelles, chief economist at RBC Global Asset Management, approves of most of the rule changes, but said there is a risk that they are being overdone to compensate for ultra-low mortgage rates. “I wonder if the drop from 30 to 25 years amortization might be regretted in a decade when interest rates have normalized and 25-year-olds are being told they cannot make mortgage payments past the age of 50, even though they expect to work until 65,” he said in an e-mail. What a tool. Not only does he think that this is a bad thing rather than a good thing, he isn’t correct in the first place, since the borrower can refinance at some time in the future when part of the principal has been paid down. Or simply when they sell and buy another residence, which is… Read more »
patriotz
Member

From Mish:
Baby Boomers and Strategic Defaults

22% made the mistake of tapping retirement accounts before walking away and another 16% considered doing so but decided against it. 63% never considered it.

I wonder if the stats will be similar here. Declaring BK before drawing on RRSP’s is the smart thing to do, since they are protected in bankruptcy.

If you follow the link “Foreclosure Stats” at the bottom you will see that some of the leading states for strategic defaults are recourse. So much for the argument that this is a deterrent.

zotitap
Guest
zotitap

@patriotz: ” I wonder if the stats will be similar here.”

Your wondering interests me very much patriotz. May i wonder this alnog with you? Perhaps we can have a heated discussion about this hypothetical situation? Its been my experiance that such discussions are time well spent.

Crikey
Guest
Crikey

@zotitap:
“Perhaps we can have a heated discussion about this hypothetical situation? Its been my experiance that such discussions are time well spent.”
Okay, who went and pissed on zotitap’s cereal this morning?

Yes, zotitap, statistics don’t matter one bit. It never makes sense to study or pay attention to them.

It is a much better use of your time and money to listen to frenzied word of mouth, Global TV, local Used House Salespeople, and the Vancouver Real Estate Board. Just ask anybody trying to sell property in Vancouver today.

Dan in Calgary
Guest
Dan in Calgary
From the “Vancouver RE Plunges” link above, I found another link to Vancouver housing market primed for correction: BMO, and there I learned there was absolutely no problem at all with price stability in Vancouver, because all we need is historically-low interest rates and wealthy immigrants continuing to pour into the city: “BMO senior economist Sal Guatieri says a correction in Vancouver will likely be less severe than previous ones”, explaining that “if interest rates stay low and wealthy immigrants continue to pour into the city, prices could stabilize sooner than in past downturns”. Whew. Crisis over. Time to move on. Language is wonderful. Guatieri’s comments evoked in my mind an image of planeloads and shiploads of immigrants carrying suitcases of cash overwhelming Customs and Immigration as they clamoured to be first in line to snap up RE bargains. I… Read more »
zotitap
Guest
zotitap

@Crikey: You’re right, someone pissed in my corn flakes, so I missed breakfast. But than you for giving me a straw man and false dichotomy for me to eat this morning.

Vancouver
Member

School started three days ago and I already got 3 detentions and 2 spankings by my mom. They tell me to stay schoolin’, not trollin’. Maybe they’re right.. Maybe that’s why I don’t got no friends..

Not much of a name...
Member
Not much of a name...

@patriotz: It seems that 25 year olds did just fine prior to 2006 when amortizations were the same as they are now. It’s amazing how many people have a short memory.

Vancouver
Member

guys I am on meds now. can’t believe I said all those horrible things.
I won’t say anything unless I have something good to say now. If I forget my meds, I might log on as Anonymous. So please vote him into oblivion. Peace!

Troll
Guest
Troll

Well bears, looks like the low sales trend has legs and the inventory is remaining elevated. Just as I predicted. This will lead to further price weakness, though no crash or falling off a cliff. Pleaes don’t extrapolate one month of data into an annualized total.

Next thing to watch for is to see if we’ve got a lot of potential buyers on the sidelines. Let’s see if we get a sales bump as prices fall as ‘bargain hunters’ swoop in. If they materialize then we’re looking at potentially a long slow period of stagnation or prices drifting slightly down. If these buyers don’t materialize then this is a much more ominous sign for the near future.

fixie guy
Guest
fixie guy

@15 Troll Says: “If they materialize then we’re looking at potentially a long slow period of stagnation or prices drifting slightly down.”

Or a dead cat bounce. Maybe collapsed markets elsewhere can offer guidance.

jesse
Member

NOMURA: In The Last Two Days, China’s Stimulus Policy Has Changed

The Chinese government announced on 5 and 6 September that it had approved 25 subway lines and 13 highway projects in June, July and August. Since April, it has also approved several other infrastructure projects including several airport and energy projects. The government also announced the investment amount approved for most of the projects, which total RMB848bn. We estimate the amount approved for all approved projects (including those for which the government did not announce a specific investment amount) totals about RMB1trn, which is 2.1% of 2011 GDP. The average construction time for these is estimated at four years.

This isn’t unexpected — China’s recent rollercoaster-like slowdown was just too fast and steep for their policymakers. I’m no macro guy but that’s a lot of money.

Not much of a name...
Member
Not much of a name...

@Troll:

Next thing to watch for is to see if we’ve got a lot of potential buyers on the sidelines. Let’s see if we get a sales bump as prices fall as ‘bargain hunters’ swoop in. If they materialize then we’re looking at potentially a long slow period of stagnation or prices drifting slightly down. If these buyers don’t materialize then this is a much more ominous sign for the near future.

Why would “potential buyers” swoop in when prices are essentially the same as they were a year ago (according to the REBGV HPI)? What has changed in the year? Why would these people not wait for further price reductions?

Dave
Member
@fixie guy: I think a good gauge of market stability is looking at the number and percent of first time home buyers in Greater Vancouver. If the level is healthy, then the market will support itself and I wouldn’t expect too much of a price correction. But, if first time buyers stay out of the market, then prices will decline until they come back. I haven’t checked those numbers for a year or two, so I don’t know where it sits. The market is slow right now and I don’t expect much to happen until next spring. If we have a weak Spring 2013 market, then the whole year will likely be poor. I actually think the current slow market and likely price correction over the Fall will bode well for next Spring in that lower prices and sideline buyers… Read more »
joe_blown_away_by_high_housing_costs
Guest
joe_blown_away_by_high_housing_costs

Hong Kong not allowing foreigners to buy real estate at two new developments. If Vancouver did this, it would be called racism.

http://www.bloomberg.com/news/2012-09-06/hong-kong-to-restrict-sales-of-apartments-at-two-sites-to-locals.html

Anonymous
Guest
Anonymous

@Dave: Dream on. I’m in the ‘first time buyer’ camp, with an excellent income (120k/year), decent DP, and I have no interest in buying into this market. Many of the people in my generation are shunning home ownership, and appreciate the flexibility and freedom that renting provides. We’re also acutely aware of the fact that we can rent for significantly less than buying in Van.

Also, many of my friends that tried to make a go of it in Vancouver have left for Alberta, or gone to work in the US. Better pay, cheaper housing. This isn’t just anecdotal, as the migration statistics are starting to bear this out, as well.

fixie guy
Guest
fixie guy

@19 Dave Says: “I think a good gauge of market stability is looking at the number and percent of first time home buyers in Greater Vancouver.”

I take it you mean that as ‘potential’ first time buyers. If they have access to mortgages it might be a valid point. Big question mark there.
The first timers who already bought however will be among the most vulnerable. That combination of lowest down payments, highest leverage, early-career wages and future obligations like child rearing will put them squarely in front of the bus.

Dave
Member

@Anonymous:

A lot of people make that choice and a lot of people don’t. The reality of the last 4 years is that first time buyers have been active in the market, which is in contrast to your anecdote. Let’s see how the numbers look over the next six months.

jesse
Member

@Dave: “I actually think the current slow market and likely price correction over the Fall will bode well for next Spring in that lower prices and sideline buyers will come back.”

A rational conclusion unfortunately applied to an irrational situation.

TPFKAA
Guest
TPFKAA

@Not much of a name…: “Why would “potential buyers” swoop in when prices are essentially the same as they were a year ago (according to the REBGV HPI)? What has changed in the year? Why would these people not wait for further price reductions?”

I know a family whose landlord is selling their long term rental next summer. They have a downpayment and decent income, but have been holding off for prices to fall to a more reasonable level. The landlord selling is forcing their hand somewhat, and they are toying with the idea of buying and settling for a smaller discount now so they can have the stability, rather than go through the uncertainty of having the home sold out from under them and then renting again. There can’t be many reluctant knife-catchers like them, but there will be some.

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