Is Emili smart enough to know your house price?
Now that the Canadian housing bubble appears to be running out of steam we’re starting to hear concerns that automated appraisals have helped push prices up higher than they ought to be.
This article in the globe and mail was linked in fridays free-for-all post, but is worth a closer look.
Automated appraisals save time and money but have such a big margin of error that they are practically worthless.
Now people involved in lending are starting to worry about the fall out of relying too much on an automated system:
Introduced in 1996 as a way for the CMHC, banks and other lenders to quickly and inexpensively determine how much money can be lent against a residential property, the database known as Emili is relied upon too heavily by lenders, the documents suggest.
Emili is an automated system that uses figures such as recent sales of nearby homes to gauge values, without sending an actual appraiser to the address. However, the potential margin of error in calculations may pose significant problems. For home buyers, or homeowners with home-equity lines of credit, an inaccurate valuation by the database could allow them to overpay or borrow much too heavily for the home, industry members argue.
For banks, it could mean the collateral they have against the mortgage is not worth as much as believed.
Ooops! But as a comforting side effect, it appears that appraisals that came in too high in a hot market did enable the CMHC to collect higher fees. Read the full article here.
October 15th, 2012 at 3:09 am 1
Canadian housing market peers over the edge
And some real estate players think that it can’t cool quickly enough.
And a memo to the sorcerer’s apprentices – forget the soft landing. It never works.
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October 15th, 2012 at 6:07 am 2
“Is [the] Emili [story writer] smart enough to know [that this is a red herring]?”
Now for the real question. Drumroll please…
Is the CMHC, operator of Emili, achieving the mission of making homes affordable for Canadians?
Short answer. NO.
Because CMHC focuses mainly on the demand side financing, a legion of reckless idiots will borrow as much as CMHC will insure and overpay whatever the market asks because reckless idiots, per definition, think it is free money!
If CHMC was disbanded or at least legally obligated (for example) to focus solely on the supply side financing of affordable construction, the correct and undistorted demand prices would follow the supply curve down to an equilibrium price with wages and rents.
In the supply side scenario, the CMHC would have the tangible effect of further reducing prices below demand equilibrium because of the excess supply of affordable construction. This is the correct role for CMHC if any.
Incidentally, Freakonomics has a new podcast clip on the topic of demand side bounties with real world examples of unintended consquences going back hundreds of years:
http://www.wnyc.org/articles/freakonomics-podcast/2012/oct/10/cobra-effect/
It is an interesting listen and strongly suggests that demand side incentives generally make any problem worse.
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October 15th, 2012 at 8:06 am 3
Don’t worry guys, sales have gone up in September… on a “seasonally-adjusted” basis. The CREA guys are better than the yuk yuk folks…
Year-over-year home sales plunge 15.1 per cent in September
Seriously, WTF?
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October 15th, 2012 at 8:06 am 4
Year-over-year home sales plunge 15.1 per cent in September
Here’s the really egregious bit:
(emphasis mine.)
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October 15th, 2012 at 8:17 am 5
I agree with “More Data”
I’m not too worried about Emili; I believe that it could have had some impact on the market, but the requirement to appraise, in my opinion, would not have changed much. Loan applications are not foolproof.
The real story of the last 4 years (and the following 4), is the CMHC, and the effect of moral hazard.
I put myself in the shoes of a loan originator. I have an incentive to ensure that the loan application is acceptabe to CMHC for underwriting so that I increase my performance, but barely any incentive to perform any other due dilligence.
The CMHC (after a few years of double digit growth) is projecting mid to low single digit growth for the next few years, and this slowdown in growth has begun recently.
Let’s say that 60% of loans are CMHC. and 40% are conventional. In Q3-4, 2011 lets’s say “X” loans are approved by the CMHC. Fast forward to 2012, and say the CMHC loan growth has slowed from 17% to 8%. Thus, from looking at CMHC growth estimates (made nearly a year ago, one could predict about a 50% decrease in the raw dollar flow of 60% of the market, or about 30% decline in raw dollar growth, “X-30%”. This, my friends, is the new trend. Go check out CMHC’s growth forecasts.
Better yet, grab your bank or credit union Q4 financials when they come out and check out the Cash flows statement and loan disclosures to see the makeup and YOY quartlerly growth of insured vs non-insured loans. My guess is that it will be dramatic.
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October 15th, 2012 at 8:34 am 6
As the post indicates it’s not clear to me who’s complaining louder: those who think emili has exacerbated a credit bubble or those who think it’s acting as a wet blanket. BTW emili is not the only AVM around. Remember the story of BMO suing some people in Calgary a few years ago because of fraudulent loans, in part because BMO relied on their automated appraisal system that was easily gamed?
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October 15th, 2012 at 8:49 am 7
It may be a new week, but as Makaya and others have already pointed out, don’t worry – we still have the same old slimy CREA scum:
From CBC: “New mortgage rules continue to keep a lid on national sales activity,” CREA president Wayne Moen said in a release.
Sure thing, Wayne, you lying bastard. Plummeting sales would have nothing to do with savage overpricing or that nobody has any money or that the ecnomy sucks or that way too many of us already own, or that the hurtful effects of nation-wide, realtor-fueled/media-fueled brainwashing are finally ebbing, right?
F’ing criminals.
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October 15th, 2012 at 9:06 am 8
“Canada household debt-to-income ratio revised sharply higher, and still rising”
http://ca.reuters.com/article/businessNews/idCABRE89E0P020121015
Wow!
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October 15th, 2012 at 9:13 am 9
“Canada household debt-to-income ratio revised sharply higher, and still rising”
I wonder where is the limit? How far you can go?
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October 15th, 2012 at 9:40 am 10
#8 @fatso: “I wonder where is the limit? How far you can go?”
Once income starts dropping, to infinity. And that will happen because debt reduces growth. It’s hard to say where the tipping point is however. It could be anywhere around here.
Hot debate. What do you think?
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October 15th, 2012 at 9:42 am 11
@fatso: I think the US personal debt level peaked at about 150% with their housing bubble. Ours has already surpassed that, so what could possibly go wrong?
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October 15th, 2012 at 9:49 am 12
If you want to know what an AVM thinks of your digs, you can try out http://www.zoocasa.com/en/zoopraisal
Like Emili, it can’t see through your roof, so it just assumes you’ve been making the average number of trips to Home Depot and/or hiring contractors to freshen the place every once in a while.
How accurate is it for Vancouver?
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October 15th, 2012 at 10:27 am 13
@Manna from heaven: “Canadian household debt has shot past the sky-high levels that foreshadowed the U.S. housing bust.
…
“Debt growth dynamics over the last decade look eerily similar to the U.S. experience, just before their dramatic housing bust,” economist David Madani of Capital economics said in research note.
“The new data shows a much steeper ascent in the growth of household debt.”
A ratio of 160 per cent was the mark that began the unwinding of earlier housing bubbles in both the U.S. and Britain, Royal Bank of Canada economist David Onyett-Jeffries pointed out.”
http://www.theglobeandmail.com/report-on-business/economy/household-debt-surpasses-levels-foreshadowing-us-housing-bust/article4613321/
160 is the magic number.
Hot debate. What do you think?
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October 15th, 2012 at 10:29 am 14
does anyone know what Vancouver’s debt to income ratio is?
Hot debate. What do you think?
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October 15th, 2012 at 10:40 am 15
@s: I cant find numbers for Vancouver, but of that high national number this article says that BC is the province with the highest personal debt load:
http://www.dawsoncreekdailynews.ca/article/20120829/DAWSONCREEK0101/308299986/-1/DAWSONCREEK/living-large
My guess is that people in Vancouver take on more debt than the provincial average.
Hot debate. What do you think?
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October 15th, 2012 at 10:56 am 16
WRAPUP 1-Canada housing market cools as household debt grows
15 Oct 2012 13:30 ET
* Existing home sales fall 15 pct yr/yr; up 2.5 pct on month
* Revisions show household debt problem bigger than thought
* Business sentiment weakens in Q3 due to global woes
* Data points to restrained growth, rates on hold for now
OTTAWA, Oct 15 (Reuters) – Canadian home sales fell sharply in September from a year earlier while households pile on debt and business sentiment slumps, according to downbeat data on Monday that suggested a struggle for growth in coming months.
Two reports on what policymakers say are the two biggest dangers to the Canadian economy – the hot housing market and high household debt – indicate a fairly sharp decline in house sales at a time when consumers are increasingly vulnerable to a sudden downturn in the value of their homes or a rise in borrowing costs.
House prices continued rising in September, but at a slower pace than in the past.
Separately, the Bank of Canada’s third-quarter survey of businesses showed sentiment weakened on issues such as hiring, investment intentions and sales.
The data feeds into the market view that the central bank should be in no hurry to raise interest rates despite the hawkish language it has used since April.
“Today’s numbers are consistent with our expectation that growth in coming quarters will average 2 percent or less, giving the bank little reason to think about acting anytime soon on its tightening bias,” said Peter Buchanan, economist at CIBC World Markets.
Canada’s export-reliant economy has recovered from the 2008-09 recession and still looks set to grow moderately this year and next.
But the European debt crisis and the spotty U.S. recovery have led to worries that the Canadian recovery will also be thrown off track.
The latest figures show that government efforts to avoid a U.S.-style crash in a housing market that has heated up at an alarming pace since the recession have had some effect.
Most analysts predict a soft landing for real estate, although some still fear a rough ride.
Sales of existing homes rose 2.5 percent in September from August, the first monthly gain since March, the Canadian Real Estate Association said. But year-over-year sales dropped by a sharp 15.1 percent.
CREA’s Home Price Index rose 3.9 percent in September, its smallest gain since May 2011.
The Canadian government introduced tighter rules on mortgage lending in July in an effort to cool the market, and CREA said the new rules have kept a lid on sales.
“While some first-time home buyers may no longer qualify for mortgage financing under the new rules, it is likely that many others are stepping back and reassessing how much house they can realistically afford, which is one of the things new mortgage rules were designed to do,” Gregory Klump, CREA’s chief economist, said in a statement.
Francis Fong, economist at TD Economics, said he did not expect any “precipitous decline” in housing activity, because interest rates were set to remain low.
“Rather, we expect a gradual unwinding of the imbalance in both sales and prices over the next few years,” he said.
NEW MORTGAGE RULES
Finance Minister Jim Flaherty has said he hopes the tighter mortgage rules will also throttle growth in debt, which has surpassed U.S. levels as home buyers take advantage of ultra-low rates.
But the household debt-to-income ratio rose in the second quarter – before the new rules came in – climbing to 163.4 percent from 161.8 percent in the first quarter, Statistics Canada said.
Historical revisions to the data to meet new international standards resulted in much higher ratios than previously reported.
The Bank of Canada survey showed senior managers were more cautious in the third quarter about making investments in machinery and equipment even though policymakers have been prodding them to put their cash to productive use.
Only 37 percent said they expected to invest more on machinery and equipment in the next 12 months while 29 percent expected to invest less. The difference between the two – the so-called balance of opinion – remained positive at eight but was sharply below the second-quarter balance of 24.
Bank of Canada Governor Mark Carney has chided corporate Canada for being overly cautious and sitting on piles of cash instead of spending it on equipment or technology to improve productivity.
News © Reuters Limited. Click for Restrictions.
Hot debate. What do you think?
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October 15th, 2012 at 11:03 am 17
@raincity: “Lots of times, the guys that get into the trouble aren’t the people who are making $40,000 a year, it’s the guys who are making $150,000. I don’t have a study to point to, but anecdotally, I’ve seen it’s often the people with big incomes who have financial problems.”
Here is why the Westside will get even harder than other parts of Vancouver, despite the mistaken beliefs of its residents.
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October 15th, 2012 at 11:06 am 18
@fatso: Buzz Lightyear’s favorite catchphrase “To Infinity and Beyond”.
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October 15th, 2012 at 11:18 am 19
@Ralph Cramdown: @Ralph Cramdown:
“How accurate is it for Vancouver?”
Wow, not bad. It is only 15% off. However, if I correct the lot size and floor footage, it is almost the same as assessed value. I think this is good enough to replace Emili -;)
Hot debate. What do you think?
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October 15th, 2012 at 11:53 am 20
@Makaya: Perhaps they could use a similar “seasonal adjustment” for realtor salaries, only based on the market cycle. i.e. “Well sure, it might seem like you only made $34k this year, but normalized against the 2011 baseline that’s over 100k!”
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October 15th, 2012 at 12:29 pm 21
Ouch. $20/month for Globe and Mail online access. I know they’re losing revenue, but still. I would have paid $5 probably. I think they’ve found a price-point just above what most would be willing to spend.
http://www.theglobeandmail.com/report-on-business/the-globe-to-roll-out-metered-paywall-as-industry-shifts-to-digital-revenue/article4612259/
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October 15th, 2012 at 12:52 pm 22
@/dev/null: “Ouch. $20/month for Globe and Mail online access. I know they’re losing revenue, but still. I would have paid $5 probably. I think they’ve found a price-point just above what most would be willing to spend.”
I’d be happy to pay that if it came with a guarantee that they won’t publish any quotes/forecasts from Realtors, REA’s, or bank economists.
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October 15th, 2012 at 12:57 pm 23
charging customers for online content is loosing proposition. NY times is still has huge loses even with increased subscription. It just show that papers can not rely on online advertising for their revenue.
Hot debate. What do you think?
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October 15th, 2012 at 1:22 pm 24
Seems like these articles are becoming the norm
http://www.vancouversun.com/touch/business/real-estate/Canadian+families+debt+worse+than+expected+housing/7392384/story.html?rel=813152
Hot debate. What do you think?
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October 15th, 2012 at 1:29 pm 25
Again, from the G&M (who I’d happily pay a couple of bucks per month for access, but not $20!): Household debt surpasses levels foreshadowing U.S. housing bust. The last lines should strike holy terror into the heart of bubble buyers:
In other words, “skin ‘em alive and pack the quivering remains in salt” for the good of the nation.
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October 15th, 2012 at 1:48 pm 26
Professional women go it alone to buy their first Lower Mainland home
http://www.straight.com/article-686501/vancouver/women-go-it-alone-buy-their-first-home
looking forward to the comming boom in protstitutes operating out of their condos!!
Hot debate. What do you think?
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October 15th, 2012 at 2:01 pm 27
I knew a single woman who bought a home. She made sure that she switched partners every couple of years so that they would not have a claim on her house. She got them to pay half the bills and then dumped them. She was quite open about this, and we were amazed at how many men would fall for this. There was never a shortage of fools.
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October 15th, 2012 at 2:07 pm 28
@boogeybear:
Well they’d have to pay rent if they weren’t living with her, so perhaps not a bad deal even if they didn’t get a claim on the property, if the “amenities” were good.
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October 15th, 2012 at 2:25 pm 29
Good news, everybody! This is not the great depression, according to Mark Carney. No news yet on whether it is the ice age, the holocaust, or September 11th.
More from Mark:
It seems like he’s talking about an increase in rates as a temporary abberation, rather than a decrease of existing stimulus. But hey, whatever gets him to stop crying wolf.
Hot debate. What do you think?
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October 15th, 2012 at 2:54 pm 30
re: the G&M paywall (and the VS one).
This is not a model that will work. There are too many free news sources on the internet. Who is going to pay $20 a month for something they can get for free?
Hot debate. What do you think?
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October 15th, 2012 at 3:04 pm 31
Someone yesterday (apologies, I forgot who) posted on the amount of rentals available at the new Maynards building near OV. You can just go to craigslist and type in Maynards in “housing”.
Apparently completion is set for October 23rd. The question is how many units are going to pop up on the MLS?? You can already see a couple of listings for sale on CL.
I especially love the one titled “Brand New Really Nice”. That jewel of a list name is followed by “LIVE THE LEGEND AT THE MAYNARDS BLOCK – 2 Intelligently Modern …” Live the legend?? Intelligently modern?? Is this what convinced people to sign away??
In the meantime, check these out:
1. http://vancouver.en.craigslist.ca/van/apa/3310399407.html
2. http://vancouver.en.craigslist.ca/van/apa/3329486617.html
That’s right, 2 units for rent…each. At first glance I thought it was the same listing. Then I realized it’s 4 different units and different contacts. That’s at least 2 smart specu-vestors with 2 units each. Enjoy.
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October 15th, 2012 at 3:37 pm 32
@Supersogs: Can’t wait to see those COCs (Caucasians on credit) bitching and crying on GlobalTV about how the banks screwed them over and Harper is the devil.
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October 15th, 2012 at 3:43 pm 33
@Supersogs: Sad. The interiors look like they were built on the cheap.
Hot debate. What do you think?
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October 15th, 2012 at 3:47 pm 34
@Supersogs: Also, looking at the photos, to me it looks like they are including the balcony in the sq footage…not cool.
Hot debate. What do you think?
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October 15th, 2012 at 3:52 pm 35
@boogeybear: “I knew a single woman who bought a home. She made sure that she switched partners every couple of years so that they would not have a claim on her house. She got them to pay half the bills and then dumped them. She was quite open about this, and we were amazed at how many men would fall for this. There was never a shortage of fools.”
Shortage of fools? Are you kidding? Those guys should count their lucky stars. I wish I’d dated her. Long meaningless relationships are highly underrated!
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October 15th, 2012 at 3:53 pm 36
@Many Franks:
“It seems like he’s talking about an increase in rates as a temporary abberation”
This is a very thinly veiled message to Flaherty and the financial community that he will not put up with any re-loosening of mortgage regulations to try to avert a RE crash.
Hot debate. What do you think?
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October 15th, 2012 at 4:08 pm 37
@Supersogs:
If landlord trows a Kayak in I’ll take it. It was always my dream, since the childhood, to live the Legend (whatever that means).
Hot debate. What do you think?
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October 15th, 2012 at 5:02 pm 38
@Supersogs: It always amazes me to see the layouts of these tiny apartments with a dining room table and living room set in the plan. I mean seriously, 589sqft including balcony??? If I had the time I would measure the plan and the furniture then scale up to see whether a human being can actually sit in the chairs or whether they are just doll sized.
Hot debate. What do you think?
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October 15th, 2012 at 5:07 pm 39
@ Turkey
But economist Diana Petramala of Toronto-Dominion Bank said only rate hikes can put Canadian households on a sounder footing.
…and help out senior citizens who are trying to live off their savings. ZIRP has been cruel to them.
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October 15th, 2012 at 5:12 pm 40
Anyone see the tents and crowds at the MC-2 on Cambie sales center today? It must have been the opening release curious if this will make the news?
Suckers
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October 15th, 2012 at 5:12 pm 41
Just spent the weekend in Portland, OR. The city seems much less prentenous than Vancouver – fewer BMWs, Lexus and oversized SUVs. I only saw one condo complex being built. There isn’t advertising for real estate everywhere. There are still movie cinemas in the city – they are being closed to build new condos. Homes can be bought for under $200,000.
I am looking forward to Vancouver becoming a post bubble city.
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October 15th, 2012 at 5:21 pm 42
Along with keeping rates low, governments are using a variety of tactics to encourage captive audiences, like pension funds and banks, to buy their debt. Consumers, in other words, are subtly subsidizing governments without even knowing it. Economists have compared this phenomenon to a hidden tax on people’s wealth.
“If you ask a central banker is that what you’re doing, and why you’re doing it, they’ll say ‘No, we’re just trying to get the economy going by making it easier for the private sector to borrow,’ ” said Neal Soss, chief economist at Credit Suisse. “But I have a syllogism for you: The government makes the rules. The government needs the money. So why should it surprise if the rules encourage you to lend the government money?”
This is not the first time governments have benefited by depressing interest rates, something economists refer to by the ominous name of “financial repression.”
As Low Rates Depress Savers, Governments Reap Benefits
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October 15th, 2012 at 5:35 pm 43
New Listings 187
Price Changes 155
Sold Listings 101
TI:19047
http://www.paulboenisch.com
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October 15th, 2012 at 5:38 pm 44
@b5baxter:
Same impression I had 2 weeks ago when I was there. It has more ” Real City Feel” compared to Vancouver and indulging absence of ubiquitous HAM shtick (fancy cars driven by zombies and LV bags). Although I have to admit that some interesting parts of downtown are not cheap if you are about to buy.
http://www.portlandcondos.com/portland-oregon-pearl-district-homes.html?x=1&ob=pa&startrow=21
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October 15th, 2012 at 5:39 pm 45
@paulb: how much is 101 sales seasonally adjusted?
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October 15th, 2012 at 5:42 pm 46
Updated chart:
http://i45.tinypic.com/295768g.gif
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October 15th, 2012 at 5:43 pm 47
1. Large 1 Bedroom + Solarium + Flex room (640 SF) on the 10th floor facing East (quiet side). ~$1700/month
Dreaming.
Hot debate. What do you think?
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October 15th, 2012 at 5:45 pm 48
So far every sales day this month has been lower than the comparable day in 2011.
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October 15th, 2012 at 5:54 pm 49
Further to Scuba Steve’s numbers
Oct after 10 days
2012 S/L 39%
2011 S/L 48%
2010 S/L 50%
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October 15th, 2012 at 5:55 pm 50
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October 15th, 2012 at 6:00 pm 51
@b5baxter:
“Just spent the weekend in Portland, OR.”
Totally agree on your POV on Portland. It has everything good about Vancouver (close to mountains, oceans), but also has world-class vineyards half an hour away, without the pretentious douchebag attitude. All that and no sales tax.
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October 15th, 2012 at 6:01 pm 52
@Chabar:
The rents aren’t cheap either:
Elizabeth, The – 1 Bed, 1.0 Bath, 1058 SF $360K
$2000 / 1br – 1058ft²”
Price/rent still high for me, but well under anything you’d see in Vancouver.
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October 15th, 2012 at 6:03 pm 53
From Garth’s Blog:
“That dude (Realtor Philip Chan) selling his house in Vancouver and featured on CBC The National last month (2575 7TH Ave W, Vancouver, BC, V6K 1Y7, Canada) has lowered his price AGAIN.
In March …$1.79 Million
In Sept … $1.57 Million
Then CBC where he says market will only go down “10-12% from March”.
Now: …$1.37 Million + Free Car.
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October 15th, 2012 at 6:05 pm 54
#31 @Can’t wait: “Can’t wait to see those COCs (Caucasians on credit) bitching and crying on GlobalTV about how the banks screwed them over and Harper is the devil.”
Why not? It’s true.
Hot debate. What do you think?
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October 15th, 2012 at 6:14 pm 55
Current October sales rates are way above September’s. I don’t think that’s too much of a surprise, as unpopular as that might be on this blog. It is, however, stronger than I expected.
In perspective, however, an expected ~2100 sales will be second worst October since 2000 and a 9% drop from 2010-2011. That’s slower, definitely, but not a crash. It looks like MOI is going to average about 8 for the year. That would roughly translate to YOY price changes of -4%. If October had been worse that would have led to larger YOY drops.
On the plus side, putting on my rarely-used rose coloured glasses, a stronger October will make it more difficult for industry groups to lobby the government to reverse its amortization changes enacted this July.
And on a final big picture plus, the most recent OSFI mortgage underwriting guidelines won’t be in full effect until the spring of 2013. I don’t think there’s much positive on the horizon, barring a renewed bout of capital flows from offshore.
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October 15th, 2012 at 6:43 pm 56
More amazing than Maynards, is Three Harbour Green at 277 Thurlow Street; completed in the last couple months, a total of 8 MLS listings so far; five by the developer, which means they have at least twice that number unsold from a total of 81 apartments and townhouses in that building:
MLS # Apt # Beds Baths SQ FT Strata fee Price
V971532 # 1101 2 3 2,513 $956 $5,080,000
V973275 # 1102 2 3 2,600 $990 $5,240,000
V972917 # 1901 2 3 2,500 $990 $5,280,000
V951976 # 1202 2 3 2,630 $1,000 $5,800,000
V972419 # 2202 2 3 2,630 $999 $5,800,000
V974510 # 701 3 4 3,130 $990 $6,450,000
V888573 # 2701 3 4 3,320 $1,278 $7,380,000
V975806 # 2402 3 4 3,470 $1,371 $7,480,000
Not sure how many $5,000,000+ apartments have sold so far this year in Vancouver, but this seems like a LOT of supply……………..and pricing that is out of this world……………
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October 15th, 2012 at 6:47 pm 57
http://vancouver.en.craigslist.ca/van/apa/3329486617.html
boring cookie cutter apartments, and whats with “east (quiet side)” umm isn’t this building beside a bridge?
Hot debate. What do you think?
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October 15th, 2012 at 7:15 pm 58
@rp1: Audio of COC’s bitching (preview)!
http://www.cbc.ca/asithappens/episode/2012/10/09/the-tuesday-edition-50/
Seek to 14:30 (14 minutes 30 seconds) to hear a Caucasian saying:
…”we hope mortgage companies take responsibility”…
…”not the ridiculous price that we paid for it”…
…”we’re hoping that it forces mortgage companies to”…
…”we were paying all our bills, … but since then”…
…”not fair”…
…”it’s not [our] fault”…
This audio is a preview of the future Global clip par excellance, but with an Irish accent. Here is one last quote that I found rich:
…”we can’t afford our home anymore”…
Sadly, the interviewer neglected to ask the million dollar follow-up question:
“Is it possible that you really couldn’t afford your home when you originally bought it?”
Another good hypothetical question would have been:
“Were you actually advised by a real person to buy the house in the first place? And, if so, why not hold that person responsible for your financial problems?”
Good grief! People are completely out of touch with reality. There is no earning things anymore. Everyone feels entitled to anything they see without ever doing a reality check on those they envy.
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October 15th, 2012 at 7:18 pm 59
Here’s an article about some beautiful condos in Whalley that was also the subject of a story on Global News tonight.. billed as a great way for those with lower incomes to get on the property ladder…
“If you can afford the $6,000 down payment, and you make a salary of $17 per hour, we have a home for you.”
Who the f#!k would even consider this?
http://www.vancouversun.com/business/Surrey+consider+Micro+suites/7394005/story.html
Hot debate. What do you think?
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October 15th, 2012 at 7:22 pm 60
“Who the f#!k would even consider this?”
Who?
Helmut, the Two Michaels, Tsur, Ozzy and GLOBAL.
THAT’S WHO.
…and, throw in Harper and Flaherty for good measure.
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October 15th, 2012 at 7:25 pm 61
“Current October sales rates are way above September’s. I don’t think that’s too much of a surprise, as unpopular as that might be on this blog. It is, however, stronger than I expected.”
…or, a mere dead cat bounce brought on by falling knife catchers?
Hmmm…
Hot debate. What do you think?
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October 15th, 2012 at 7:40 pm 62
re micro suites in Survey,
these kind apartments usually are built in downtown where land is expensive. why built in Survey? i don’t get it.
Hot debate. What do you think?
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October 15th, 2012 at 7:46 pm 63
@RFM:
I’m pretty sure that building wins the prize for the most ludicrous price/rent ratio in Vancouver:
http://vancouver.en.craigslist.ca/van/apa/3314368730.html
$9,000 a month to rent a $5.2 million apartment, IF they get that. That’s price/rent of 577.
These places could see a 70% crash and they would still be overpriced based on fundamentals.
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October 15th, 2012 at 7:53 pm 64
Sales are down 25% from 2011 for the first 11 sales days, that’s not bad! For us at least.
Hot debate. What do you think?
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October 15th, 2012 at 8:02 pm 65
@Boombust: “a mere dead cat bounce brought on by falling knife catchers”
Asking for a friend, is it possible to catch a falling dead cat?
Hot debate. What do you think?
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October 15th, 2012 at 8:04 pm 66
@jesse: A dead cat may not land on it’s feet
Hot debate. What do you think?
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October 15th, 2012 at 8:13 pm 67
Now for some bear food:
Ran into a amicable co-worker last week and I was surprised to see him because he was suppose to transfer out of Vancouver and begin a new life in Ontario. So I asked what happened and he told me he couldn’t sell his condo and he could not take the financial loss if he tried to sell at current prices. He estimates he would lose between $30,000 to $40,000. Then I asked why not try renting it out and he told me he would actually be short $300 to $400 at current rental prices (he had a rental management company assess his situation).
Now for the details: He bought into a two bedroom low level condo during the pre-sale period for about $290,000 out in Langley. Apparently the last two weeks the builder has been giving $40,000 discounts for similar units; hence, the estimated financial loss if he tries to sell his unit.
He tells me the builder is trying to blowout the final six unsold units by holding barbecues and spreading flyers all over the neighborhood before they start pre-sales for two other buildings next spring.
I didn’t have the heart to tell him that the builder is trying to sell the remaining units with deep discounts because they see the writing on the wall. There will not be pre-sales for two other developments next spring. They are trying to cash out NOW! He will not be able to sell his unit in the near future without a significant loss. But I did mention: “At least you don’t have to deal with Ontario winters and summers.” That seemed to satisfy him a little bit.
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October 15th, 2012 at 8:48 pm 68
@More Data Please:
“Audio of COC’s bitching (preview)!”
It’s amazing… It’s like the woman being interviewed pretends the mortgage company kidnapped her and her husband, pointed a gun to their head and forced them to buy a “ridiculously overpriced” house. Fecking incredible!
Hot debate. What do you think?
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October 15th, 2012 at 8:56 pm 69
@Don Lapre:
“Sethi said this project follows in the footsteps of similar ones in New York, Tokyo and Paris.”
Ah, yes. New York, Tokyo, Paris and Whalley. Makes sense.
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October 15th, 2012 at 9:34 pm 70
snort… HA HA HA.. Paris… Whalley… ok I haven’t laughed that hard in a while…
Hot debate. What do you think?
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October 15th, 2012 at 10:32 pm 71
@Don Lapre:
This is Tien Sher who owns the propertys “Quattro” in Surrey. They originally planned 4 phases. They currently have completed Phase 3 and can’t sell the units.
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October 15th, 2012 at 10:55 pm 72
Your rent check is about to make private equity investors richer
http://blogs.marketwatch.com/thetell/2012/10/15/your-rent-check-is-about-to-make-private-equity-investors-richer/
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October 15th, 2012 at 10:57 pm 73
Anyone heard the latest progress on the 70 OV owners suing the COV for crappy condos?
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October 15th, 2012 at 11:12 pm 74
#2 made some comment, like…
”Incidentally, Freakonomics has a new podcast clip on the topic of demand side bounties with real world examples of unintended consquences going back hundreds of years”.
That phrase pisses me off. Unintended consequences … like it’s a little oopsie … unplanned, unforeseen, an unintended consequence. Never mind it’s ‘going back hundreds of years’.
ffs …
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October 15th, 2012 at 11:47 pm 75
@Anonymous: re: “US bonds backed by rental income”
http://blogs.marketwatch.com/thetell/2012/10/15/your-rent-check-is-about-to-make-private-equity-investors-richer/
I think the sentiment of the article is all wrong. Nobody is getting rich without staking real money in return for the opportunity. This is great news!
First of all, unlike mortgage backed securities, the property itself is fully capitalized by a reliable counterparty who can actually understand and afford the investment.
Second, this will build a stable and reliable stock of rental inventory.
Third, it is better than REIT common stock for investors, because the instrument has a guaranteed maturity value and is non-subordinate debt (which subjects the issuer to direct creditor demands on assets rather than shares).
Fourth, and most important to readers of this forum, it shows how cheap property becomes at the bottom of the cycle!
The announcement of this product confirms that it is now so cheap to buy in some ares of the US, it is a better deal than putting domestic bound capital into mines, oil wells, or forest/agriculture… to name a few.
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October 16th, 2012 at 12:11 am 76
What kind of sales volume is typical for october?
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October 16th, 2012 at 12:48 am 77
@/dev/null:
With Globe and Fail following the footsteps of Hongcouver Sun, now is a great time to start up a free ad-based independent news website.
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October 16th, 2012 at 1:59 am 78
#75 @kansai92: I noticed the Chinese Vancouver Sun doesn’t ask you to pay. Is that a metaphor for our times or what?
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October 16th, 2012 at 8:10 am 79
@rp1: Maybe Chinese businesses pay more in advertising.
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October 16th, 2012 at 9:00 am 80
@Ralph Cramdown: Pretty close. Very surprised.
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