FFFA! Bubble! Battle! Plummet! Onni! Ohno!

You’ve made it to the end of another work week! Lets 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:

Canada, another crisis?
Vancouver sales drop sharply
$300 a day
NS condo project dead
Home sales are plummeting
Battlemap! SFH & Condo

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

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patriotz
Member

Soaring Rents Drive a Boom in Apartments

Houston is better known for urban sprawl than dense apartment living. But as part of a national rush to capitalize on rising rents, developers there are building thousands of apartments like those south of downtown at Camden City Centre, where 268 units will open early next year in a complex that also has two swimming pools, billiards tables, a coffee bar and a fitness center.

Wow! Looks like condos but it’s a purpose built rental.

Why? Because the developer can make more money from rent than from selling condos. That’s what happens when idiots willing to pay inflated prices for condos disappear.

CanuckDownUnder
Member
CanuckDownUnder

We came back from vacation and found the dreaded rent review letter.

The Landlord’s costs have increased since our tenancy commenced. After 21 months our rent will be going up 2.15 per cent. Despite this anecdote one of the used house pimps is claiming that the median Sydney rent is up 20 per cent in the past year.

I wonder how much the owner’s costs are up by?

harvey
Guest
harvey

“OTTAWA – Canada’s unemployment rate fell 0.2 percentage points to 7.2 per cent in November, from 7.4 per cent the previous month. Statistics Canada says 59,000 net jobs were created last month”

doomers on the site will have to wait little longer for their mad max scenario.

Short'em High
Guest
Short'em High

@harvey: Canada Unemployment Down 0.2%

US unemployment numbers were also down by exactly 0.2%. Let’s see how long US stimulus can keep goosing Canada’s numbers.

The very next retail numbers and unemployment reports will be fun to watch. Why are RRSPs being redeemed at record levels? Why are Canadians flooding over the border to buy US retail in volumes that are overflowing the shipping consolidators in WA State? Are they spending the same as last year in Canada? One last fling before before debt prison…

Short consumer discretionary first. Then short mortgage lending, after loan delinquencies rise.

Joe Q
Guest
Joe Q

Does anyone else worry that the next step for the RE boards will be to remove averages (and medians) from their reporting packs all together?

I’ve noticed that gradually over the last 11 months, the press releases have been increasingly blurry as to what the prices they quote actually represent, and slowly the HPI/benchmark is pushing out mention of averages and medians.

In The REBGV report this month the only place you can find an average is in the last page, and even there they make it difficult visually to track MOM or YOY price declines.

(http://www.rebgv.org/sites/default/files/201211-REBGV-Stats-Package.pdf),

I worry that starting soon consumers will be totally in the dark and left to the whim of the *cough* vastly superior benchmark price as their only metric to evaluate the market.

Any thoughts on this?

harvey
Guest
harvey

Short consumer discretionary first. Then short mortgage lending, after loan delinquencies rise.”

Did Ben aka Short and his “professional” buddies from brokerage told you at the presentation?
you will end up like Kyle Bass and his shorting bankrupt fund. Fools get taken advantage by snake oil salesman.

patriotz
Member

@harvey:
“doomers on the site will have to wait little longer for their mad max scenario.”

If you’re looking for Mad Max, he now lives in this California oceanside town where a place like this sells for less than a Vancouver West Side dump:

http://www.zillow.com/homedetails/21701-Pacific-Coast-Hwy-Malibu-CA-90265/20552360_zpid/

Anonymous
Guest
Anonymous

@Joe Q:

These guys, like everyone else, always focus on the number that sells their product. You will also notice that they want to talk about year over year now, instead of month over month, but if there is an uptick, it will be back to month over month. Your concern about consumers being in the dark is not out of place but it’s worth noting that they’ve been in the dark since the get go. That’s why they are holding countless billions in grossly overvalued assets.

Harry Wang
Guest
Harry Wang

@Joe Q:

That’s a concern of mine too. But what I don’t understand is how buyers will react to the lack of information. I assume they’ll still get competitive prices, but they won’t understand the big picture – the market is heading down, and at a rapid rate in some neighbourhoods, which would help the home salesman cartel.

It might help if someone knew how buyers normally operate in such an environment.

harvey
Guest
harvey

@patriotz

yup, hungry refugees from Malibu and Cali are rushing to Peace Arch border crossing.

Short'em High
Guest
Short'em High
@harvey: Short Rotation No, actually. I trade for a living and decide for myself where to look for opportunities. When those sectors come under pressure, I will be short. There are a lot of paper profits that have to come out of the system. If RE owners aren’t eager to realize these profits, then I would be happy to realize the profits into my account while they hold on. Ben actually does not predict consumer pressure until after loan delinquencies from what I gather in the notes posted on this site about his presentation. I asked him directly two threads ago, when he was posting to this site, why he predicted the opposite rotation compared to 2008 and he didn’t reply. BTW, I did not attend Ben’s presentation. His information is interesting about where to look, but my trades actually… Read more »
southseacompany
Member
southseacompany

Vancouver Observer:
“Vancouver real estate market crash? Not so much…”

“For quite some time, many in the media have been predicting doom and gloom for Vancouver’s real estate market………Sorry doom and gloomers, the market is just not crashing.”

http://www.vancouverobserver.com/city/realestate/vancouver-real-estate-market-crash-not-so-much

Prices come down…average family can afford a home… equals “doom and gloom”?

Gas prices come down = good thing. Food prices come down = good thing. Home prices come down = bad thing. Tired of that spin.

Jerry Boyle
Guest
Jerry Boyle

Thought this was worth a repost from late last night — a snapshot of declining affordability for first-time buyers:

“Indeed, a recent Bank of Nova Scotia poll found that taking money out of retirement savings plans is on the rise.

About one-third of respondents said they dipped into their RRSPs this year with the average withdrawal ringing in at $24,531. That’s up from 23 per cent in 2005, when an average amount taken out was $10,716.

In some cases the money was used for daily expenses or to pay for vacations, but the top reason cited was to buy a first home, according to Scotiabank, which polled 2,013 people through a computer-assisted telephone survey last June.”

http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/most-canadians-leave-money-on-the-table-with-rrsps/article6016965/

Crikey
Guest
Crikey

@southseacompany:
“Prices come down…average family can afford a home… equals “doom and gloom”?…. Tired of that spin”

True. I’m also tired of people who are “offended” by getting lower offers than they were expecting. “Surprised”? Fine. “Disappointed”? Sure. “Worried?”. Absolutely. Even “Amused” would make sense, if they are very confident in the value of their home. But “Offended”? Give me a break.

If these same people told their investment managers that they are offended that others are willing to pay much less for their RIM stock than expected, they’d surely be labelled as whackos.

Yes, when you go and and sell your home it is very much an investment, just like stocks and precious metals. Right now is a very bad time to invest in a home.

Best place on meth
Member
Best place on meth

@harvey:

Unfortunately, BC lost over 5000 jobs while the rest of the country was creating them.

Another kick in the face for Christy Clark.

Many Franks
Guest
Active Member
Many Franks
@Jerry Boyle: The news release from the study the G&M refers to is available here. Unfortunately it’s pretty breezy. It’s not clear to what extent people making the withdrawals are actually *retired*, which seems like a pretty necessary bit of info for a survey like this. (Presumably everyone answering is <=71 years of age, because by that point RRSPs must have been converted to RRIFs or annuities.) Some choice cuts: Fourteen per cent of Canadians took money out of their RSPs to cover day-to-day living expenses, and six per cent took money out to pay for a vacation. If these are 45-year-olds going to Mexico on their RRSPs, it’s bad. But again, it could be retired 70-year-olds as far as I can see. For Canadians taking money out of their RSP, those aged 18-34 are more likely than those aged… Read more »
Best place on meth
Member
Best place on meth

@southseacompany:

What a worthless, condescending and misleading article by Mike Stewart – used house salesman.

You’re a slimy douchebag, Mike.

VMD
Member

Unemployment Rate: Vancouver vs Canada
Apr 2012: 6.2% (7.3% Canada)
May 2012: 6.4% (7.3% Canada)
Jun 2012: 6.4% (7.2% Canada)
Jul 2012: 6.8% (7.3% Canada)
Aug 2012: 6.8% (7.3% Canada)
Sep 2012: 7.0% (7.4% Canada)
Oct 2012: 7.2% (7.4% Canada)
Nov 2012: 7.2% (7.2% Canada)

Anonymous
Guest
Anonymous

Thumbs up function seems to be haing trouble on this site since yesterday. When I click to give a thumbs up, the number does not change but the green square gets bigger.

Ben Rabidoux
Guest
Ben Rabidoux

@Harvey

I’m sure the mods can verify that “Short’em High” and I are not the same person.

And as “Short’em High” has noted, I’d put the slowdown in consumer spending after the correction in house prices. House prices are now slowing, though far from crashing, while household consumption was one of the strongest components of Q3 GDP.

Consumer cyclicals will get hit. I’d suspect the majority of the hurt will come after the wealth effect is in full negative swing, but Short’em may well be right that it will occur earlier (like now). Either way, there will be downside.

JR
Guest
JR

@Ben Rabidoux:
Hi Ben,

Can you tell us whether the following metrics are available?
– % of home purchases that are first time home buyers.
Q. Is a first time home buyer for detached or does it included attached?
– % of first time home purchases that previously owned a condo.

What I’m trying to get a handle on is it seems clear the condo market is quickly correcting at the moment, and how that will the impact those individual sellers ability to move up.

WS
Guest
WS

Yuck – very scary graphs depicting demograpahic pressure on hosuing in various countries.
I can imagine a similar graph for Canada….
http://www.businessinsider.com/matt-kings-most-depressing-slide-ever-2012-12

Anonymous
Guest
Anonymous

@Best place on meth: “What a worthless, condescending and misleading article by Mike Stewart – used house salesman.

You’re a slimy douchebag, Mike.”

That’s an interesting post coming from the very person who a few days ago accused me of “pathetic name calling”.

patriotz
Member

@Many Franks:
Anyone 65 or over (whether retired or not) can claim the pension income amount for funds taken out of an RRIF. Because of this, there’s little reason to think that anyone (with any sense anyway) over 65 would be taking money out of an RRSP.

However it has to be kept in mind that this data is from a poll, not actual statistics from the financial institutions or CRA, so there’s a fair chance that the respondents aren’t clear what they’re talking about.

HAM Solo
Guest
HAM Solo
Another lunchtime anecdote. The funny thing is, with friends, I never bring up the subject of RE, but they always just volunteer this stuff. However today at lunch, my friend who lives on the westside said he just accepted terms with a contractor to build him a $300,000 laneway house at the back of his lot. 2 stories, 700 square feet. I asked him how much he thought he could rent it out for and he said about $2000/month. I guess on paper that is sort of a 10% net return if you don’t consider the $1.7 million it cost to buy his house in the first place. Although I kind of wonder who would want to pay $2K/month to live in a shoebox in an alley, westside or not. Also the contract is not fixed price, so if costs… Read more »
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