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FFFA! Bulls, bears & banter. Farewell 2012!

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Hey, it’s not only the end of another week, we’re also heading into the end of the year!  2012 was an interesting time for Vancouver real estate as it peaked and sputtered, ending the year with prices and sales volume down.  What does 2013 have in store?  We’re going to find out soon!

Lets do our regular end of the week news round up post and open topic discussion thread.. and post any suggestions you have for year end topics in the comments here.

And now some recent news links to kick off the chat:

–The state of mortgage insurers
–The last private insurer
–Regulator targets bank risk in 2013
–The fight for deposits
–LePoidevin / Rabidoux talk video
–Down is the new flat
–Drivers licenses are too easy to get
–Computers get house prices wrong
–US: worst holiday sales since ’08

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

 

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painted turtle
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http://business.financialpost.com/2012/12/27/dear-first-time-homebuyer-ottawa-wants-you-to-tread-carefully/?__lsa=3e81-40eb

Dear first-time homebuyer: Ottawa wants you to tread carefully
Your government is increasingly worried about you getting into the housing market, if you haven’t figured it out by now.

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5 years 8 months ago
Makaya
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Bulls can rest assured, the market is not going to crash… Why the housing market won’t crash in 2013 The 12-month change in the Teranet-National Bank House Price Index has decelerated in recent months to 3.4 per cent, led by declines in Vancouver (-1.4 per cent) and Victoria (-1.7 per cent). Some people interpret this weakness as a sign that a housing crash has started – see, for example, the Canadian Business article “Canada’s housing crash begins.” I don’t see a collapse in 2013 for several reasons. One is the highly supportive monetary environment. I will spare you the rest of the article. Here are the “several reasons” given by the author of that article: #1: “Monetary policies are hyper-expansionary, with interest rates at record lows and printing presses running like never before.” #2:”with so much monetary stimulus in the… Read more »
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5 years 8 months ago
patriotz
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They (the federal government) simply wanted to avoid setting up a scenario where they were an accessory to a crime, if you will, by enticing the unsophisticated or younger home buyer into a large asset purchase where if interest rates rose they could not meet their obligations,” said Mr. Soper

Sort of sums up the article. Of course the federal government has been doing exactly what Mr. Soper claims it now wants to “avoid”.

This article is just another in a series from the FP which pretends that the Cons are acting to “prevent” a bubble when they created it in the first place.

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5 years 8 months ago
Anonymous
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….which pretends that the Cons are acting to “prevent” a bubble when they created it in the first place….

Yes, if only we had a good NDP government; they would have done things differently. Barf.

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5 years 8 months ago
specialfx3000
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Farewell 2012 as we welcome 2013 and the new assessments shortly. Things will get interesting as I have read quite a bit recently around selling x percent below assessment vs. the often absurd asking price. So, imagine a west side house that is currently assessed at $4M. With the recent slump, similar houses likely would have been sold recently in the $3.2 to 3.5M range. Now when new assessments come out, will this house be assessed at around $3.4M? With high inventory and low sales likely to continue, sellers will need to up their game, or lower their prices to compete. With buyers bringing their freshly printed assessment numbers to the open house and offering 20% lower (or worse), we’re now at the 2.8M range. So the house that was recently assessed at $4M now goes at $2.8 early 2012.… Read more »
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5 years 8 months ago
Anonymous
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2004-2012 marked 8 years of bears being silly …and counting. Happy 2013 and may the new year bring you back from dreaming to reality. Another 4% rent increase is in the book unless you are locked in or having generous landlords.

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5 years 8 months ago
yvrness
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specialfx: assesments are done in the middle of the year, which means they’ll be higher than current selling prices. Basically anything that sells now will be ‘below assessed value!’.

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5 years 8 months ago
UBC in Crisis Mode
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specialfx3000 Says:
“With buyers bringing their freshly printed assessment numbers to the open house and offering 20% lower (or worse), we’re now at the 2.8M range.”

The problem is that there are very few buyers who can afford 2 M price, Yes, compared to 4 M it is a bargain. Unless more foreign buyers with ship load of cash (Not going to happen) come ashore, Vancouver’s housing market will crash.

Repeat: there is no soft landing. crash = hard landing

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5 years 8 months ago
specialfx3000
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thanks yvrness, I didn’t know that.

Nonetheless, the next assessment will likely be lower than the previous one and with assessment being the starting price to that many people are working from, right off the bat, the price will dropped.

Over the 10 years or so, each year’s increase in assessment had helped the roller coaster ramp upwards; well it’ll be just as effective on it’s way down.

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5 years 8 months ago
Anonymous
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Re. #2

“Lol”? That’s your argument?

http://www.youtube.com/watch?v=NJjZ7Z05f5c

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5 years 8 months ago
gokou3
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Re: #9 specialfx3000

I am not sure if the coming assessment values will be considerably lower than the current one. Like someone else mentioned, the assessments were done back in July. Even though the market was already weak, I don’t think it was showing broad yoy declines yet. I think assessment value trends generally lag the market. OTOH, the values shown in Jan. 2014 will probably show considerable decline.

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5 years 8 months ago
Many Franks
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@Makaya: More from Larry MacDonald e.g. here, where he tut-tuts all of the concern about demographics and housing by finding and bludgeoning a false dilemma to death.

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5 years 8 months ago
Ray
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Five mortgage market predictions for 2013

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/five-mortgage-market-predictions-for-2013/article6198466/

I agree with them all, except that rents will increase. With no capital gains expectation, those holding empty their investment property will certainly start to rent — increased supply. And for every new renter that was foreclosed on, there is always a bank-owned house left sitting. Sure, the bank might hold it in shadow inventory like the USA, but that can only go on for so long.

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5 years 8 months ago
Dumbest time in 30 years to buy RE
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This market does not need excuses like assessment to drive it down. It will do so all on it’s own, thank you very much. We have never had more negative warnings from respected ecomomists (sorry Tsur), not even in 2008. Downsizing boomers will be anxious to bail before it’s too late, and it will take a long time for China money to go anywhere near BC. Bargains in the US would look much more appealing for any dwindling spare cash from Asia. Nor will continued rates be able to save the market, and god help first timers who got sucked into the hype if there is even a hint of higher rates. It has never been more obvious that the jig’s up. It will be the worst time in 31 years to buy RE. Nor does the market need political… Read more »
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5 years 8 months ago
Crikey
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No, the 2013 assessment will not reflect current markets conditions. Current market sentiment, fall in sale prices, was barely getting started in July 2012. Also, Makaya paraphrased: #1: “Monetary policies are hyper-expansionary, with interest rates at record lows and printing presses running like never before.” #2:”with so much monetary stimulus in the system, the price-to-income ratio should also be normalized by income increases.” Low interest rates and income increases essentially have a lot of difficulty co-existing. If everybody’s incomes increase measurably, many prices will go up to compensate. That means inflation. And how does the goverment fight inflation? By raising interest rates, of course. No matter how you look at it, Vancouver prices are doomed for the next couple of years. The only thing that could possible help is if the feds open the floodgates to more foreign investment, and… Read more »
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5 years 8 months ago
painted turtle
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Think twice before buying cheap decorations:
http://www.huffingtonpost.co.uk/2012/12/27/chinese-forced-labour-halloween-julie-keith_n_2370175.html?ncid=GEP

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5 years 8 months ago
VMD
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New proposed regulatory changes to Canada’s international students program announced today.
http://www.cic.gc.ca/english/department/media/releases/2012/2012-12-28.asp?utm_source=bitly-eng&utm_medium=twitter&utm_campaign=generic
#1. Limit study permits to students attending designated institutions.
#2. Can work part-time off-campus
#3. CIC to have authority to verify current enrollment. (“Intent to study” no longer sufficient)

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5 years 8 months ago
patriotz
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“there is always a bank-owned house left sitting. Sure, the bank might hold it in shadow inventory like the USA”

Nope, the incentive for the banks in Canada is to do the opposite. They have to sell the properties before they can make a claim to CMHC to get their principal back.

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5 years 8 months ago
Yalie
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Nope, the incentive for the banks in Canada is to do the opposite. They have to sell the properties before they can make a claim to CMHC to get their principal back.

And they’ve already demonstrated a willingness to drop prices aggressively to do just that. Have a look at “#2” on the Vancouver price drop blog:

https://vancouverpricedrop.wordpress.com/2012/11/27/the-weekly-drop-november-26-2012/

This bank-owned property has been reducing its price by about 20k exactly once a month. They want to look like they’re making a best effort to get “market price”, while also making sure they hit the bid as soon as possible. I think we’ll be seeing a lot more of this kind of price action in the coming years.

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5 years 8 months ago
HAM Solo
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New Years wishes for 2013: 1 (For OSFI) Please make this the year when you stop being cheerleaders for ponzi schemes and start opening up the covers on the country’s shameless and seriously undercapitalized shadow-banking system. 2. (For the Minister of Finance) Tellingly, you asked recently whether the government should be in the business of guaranteeing repayment of bank loans. Make this year count, F, and make banks be banks rather than government subsidized loan brokers. 3. (For RE Pumpers) It’s time to melt into little oil slicks, but be ready to return in 100 years. 4. (For the great unwashed) Enjoy that HELOC-funded Christmas break in Cabo while you still can. Next time you’re at a resort, you’ll be working there. 5. (For VCI-ers) Keep telling the truth, living within your means, and trying to salvage what you can… Read more »
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5 years 8 months ago
HAM Solo
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BTW, I didn’t add that hyperlink to the consumer credit site. I’ve been hacked.

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5 years 8 months ago
oneangryslav2
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I would like to run some simulations, under a series of varying accompanying conditions, projecting the potential trajectory of sales, listings, and prices for greater Vancouver (broken down by municipality). In order to do so, I would like to have data such as those that can be found in the data tables of the monthly REBGV reports (see the link below) in an Excel (or txt) file. Before I start compiling the data myself, I wonder if there is somebody (or somebodies) already compiling a file of this type.

TIA

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5 years 8 months ago
oneangryslav2
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Quick trigger finger. Here’s the link: http://www.hellovancity.com/wp-content/uploads/2012/12/REBGV-Stats-November-2012.pdf

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5 years 8 months ago
VCI Admin
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HamSolo: What link to a consumer credit site are you talking about? I only see the two posts from you in this thread and I see no link to any sites in them.

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5 years 8 months ago
Anonymous
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….Think twice before buying cheap decorations:….

Shouldn’t we be buying more cheap decorations to help these folks get their notes out?

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5 years 8 months ago