FFFA! Forecasts! Mortgage! Rules! Carney!

It’s that time of the week again, time for our Friday Free-for-all!  This is when we round up the weeks news and have our open topic discussion thread for the weekend, here are a few recent links to kick off the chat:

-IMF: You need tighter mortgage rules
-TD: forcasting for the provinces
-Teranet HPI scatter plot
-Conservative impact from RE market?
-Carney gets $400k for housing
-Luxury home decline
-Sales below 10 year average
-Stay out of New West Bob
-Home prices fall in most Canadian markets

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

68 Responses to “FFFA! Forecasts! Mortgage! Rules! Carney!”

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    The following link is to a credit market summary data table (as of Sept. 30, 2012) on Statistic Canada’s web site.

    http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=3780122

    The total debt outstanding in Canada was 5.17 Trillion $ (bottom line of the data table). From Jan. 1, 2012 to Sept. 30, 2012 (a period of 274 days) the total debt outstanding increased by 194 Billion $. Over that 274 day period it increased at a rate of 708 Million $ per day.

    With a total credit market debt of 5.17 Trillion $ and a gdp of 1.75 Trillion $ Canada’s total credit market debt is approximately 2.95 times the size of our gdp.

    The United States total credit market debt is 3.5 times the size of its gdp, which is not too far off our 2.95 times. The following link from the St. Louis Fed shows the ratio of the United States total credit market debt to its gdp over the last several decades:

    http://research.stlouisfed.org/fred2/graph/?g=359

    The following link from the St. Louis Fed plots the United States total credit market debt and its gdp over the last several decades on the same graph:

    http://research.stlouisfed.org/fredgraph.png?g=bIb

    This huge build up of debt in Canada, the United States and the rest of the developed world has been going on for several decades. The situation with our debt sort of reminds me of the old story of what happens when you put a frog into a pot of water and turn on the heat real low.

    One of these days our financial system which has had our total debt growing significantly faster than our gdp for a long time will hit the wall, the second great depression will begin, and the Canadian people (along with the citizens in the other so-called advanced economies of the world) will relearn the lesson the world was taught in the 1930’s depression, that being there are very severe and very painful consquences to having a society which lives way beyond its means for a long period of time. Generally speaking economic depressions are very bad news. However there is one silver lining to this depression which is coming up. When the masses suffer big time economic hardship, you can bet there will be a complete reset of our entire system.

    Hot debate. What do you think? Thumb up 17 Thumb down 1

    The following link is to a credit market summary data table (as of Sept. 30, 2012) on Statistic Canada’s web site.

    http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=3780122

    The total debt outstanding in Canada was 5.17 Trillion $ (bottom line of the data table). From Jan. 1, 2012 to Sept. 30, 2012 (a period of 274 days) the total debt outstanding increased by 194 Billion $. Over that 274 day period it increased at a rate of 708 Million $ per day.

    Hot debate. What do you think? Thumb up 10 Thumb down 0

    I’m a bit jetlagged so I’m up but wanted to post some interesting stats as we go into the weekend. I like to find those hidden trends, facts and issues that are showing market sentiment and activity. As we get to the end of 2012, here are some thoughts.

    1.) MOI for December will be the second worst in 15 years. We will likely hit 11. This is a really bad sign as we are typically quite low at the end of the year.

    2.) Comparing to 2008, we are deteriorating now. For December, there are even pockets of Vancouver where we may see the December sales lower than December 2008. For November, we compared against November 2008, which is likely Vancouver’s worst month in history. We were up 90% against November 2008 in terms of unit sales but for December 2012, we are only going to be up about 35%.

    3.) Van West Detached, Van East Attached and North Van are trending below 2008 lows.

    4.) We are starting to see serious motivation in some sellers. Although we have the real estate board spewing out concepts such that sellers will collude to restrict supply to keep prices high, this just does not affect the market. We have a free and open market with 10,000’s of market participants. You will have a lower supply when prices are weak but this will not counteracy the downward forces of the market.

    On a completely separate note, I was at a party last night. Some interesting local celebs were there as well as some normal people (like me). One was a young professor from UBC. They are from out of town and are quite open to both renting and leaving town in the mid-term as it does not make sense to own here. They also commented that the University has had little success in attracting talent from outside Vancouver to fill top-level positions. Let’s say you want to hire a new dean of Science. You have found a 48-year-old who is at the top of the field, an amazing educator and researcher and who would be a trophy to have in the school. The chance of them coming here, even with a massive research budget, is basically close to zero becuase they can not afford the housing that they would be accustomed to for their life situation. Thus – most jobs are being filled internally now. Not good for the school.

    One final comment – hopefully this does not generate down votes because this post is about stats. The topic is Carney’s housing allowance in London. As someone who has worked around the world for over 10 years and who knows many of the housing situations for executives in Central London, I am not surprised or shocked at the alllowance and what this will allow him to get will be nice but not outrageous for someone of his level. In London, for $20,000 per month, you can get a decent apartment for an executive family. Remember that he will keep his house in Canada and only move there temporarily. Thus, he will need to pay out of his own pocket, extra rent, which when paid for by the BOE is taxed. Thus, a 400,000 annual allowance will basically be enough for him to get a 2,400 sq ft apartment in the city of London in which he can live and possibly use for typical entertaining.

    That being said – if UBC were to hire a professor to come here on a permanent basis, in order to make them whole on housing, you would likely need to offer a 1.5 million signing bonus, which would be taxed, and from which they would have enough to get into the housing market at the level which they are accustomed to. If this city continues as it is for the next 20 years, we will have no more city.

    Merry Christmas to all of you and catch up in the New Year.

    Well-loved. Like or Dislike: Thumb up 117 Thumb down 5

    “You will have a lower supply when prices are weak ”

    Doesn’t necessarily apply to speculative markets where supply and demand are driven by expectation of future prices as well as current prices.

    There is a very large cohort of investors who will lose their chance to get out with a profit, or just break even, if prices fall any further and I expect the smarter ones to get out. It may only be a minority, but that’s all it takes to drive down prices further.

    Hot debate. What do you think? Thumb up 25 Thumb down 8

    ” Remember that he will keep his house in Canada and only move there temporarily. ”

    Doesn’t really need to keep his house of course. If he sold it that would give a message about his views on the housing market wouldn’t it?

    One thing that came to mind is whether Carney would be better off going non-resident for tax purposes. It’s not clear that he would, as the marginal income tax rates in the UK are about the same as Canada/Ontario and he could claim a foreign tax credit if filing in Canada.

    Hot debate. What do you think? Thumb up 12 Thumb down 10

    With a total credit market debt of 5.17 Trillion $ and a gdp of 1.75 Trillion $ Canada’s total credit market debt is approximately 2.95 times the size of our gdp.

    The United States total credit market debt is 3.5 times the size of its gdp, which is not too far off our 2.95 times. The following link from the St. Louis Fed shows the ratio of the United States total credit market debt to its gdp over the last several decades:

    http://research.stlouisfed.org/fred2/graph/?g=359

    The following link from the St. Louis Fed plots the United States total credit market debt and its gdp over the last several decades on the same graph:

    http://research.stlouisfed.org/fredgraph.png?g=bIb

    This huge build up of debt in Canada, the United States and the rest of the developed world has been going on for several decades. The situation with our debt sort of reminds me of the old story of what happens when you put a frog into a pot of water and turn on the heat real low.

    One of these days our financial system which has had our total debt growing significantly faster than our gdp for a long time will hit the wall, the second great depression will begin, and the Canadian people (along with the citizens in the other so-called advanced economies of the world) will relearn the lesson the world was taught in the 1930’s depression, that being there are very severe and very painful consquences to having a society which lives way beyond its means for a long period of time. Generally speaking economic depressions are very bad news. However there is a silver lining to this depression which is coming up. When the masses suffer big time economic hardship, you can bet there will be a complete reset of our entire system.

    Like or Dislike: Thumb up 7 Thumb down 2

    @5 George: “there are very severe and very painful consquences to having a society which lives way beyond its means for a long period of time.”

    While I generally agree with you about the huge debt build-up, and the problems we face because of it, I wanted to clarify that while a household can live beyond it’s means (by borrowing from someone else), a society can’t (who would it borrow from – aliens?).

    The buildup of debt is a result of the financialization of the economy, growing income inequality, concentration of wealth on Wall St., and in London and Frankfurt, and Hong Kong, massive volumes of speculation, wages failing to keep up with productivity growth, etc.

    More fundamentally, the financialization results from a monetary policy in which governments refuse their duty to provide enough currency for the economy to function at full strength, so money must be borrowed into existence to make up the gap. Over time, as the debt piles up, interest rates must go lower and lower in order to encourage people to continue to take on more debt, and to allow them to service the existing debt.

    We’ve mostly reached the point now where, even with rates about as low as they can go, the private sector can’t or won’t take on more debt, so now governments have stepped in as the borrower of last resort. But they too have their limits, as long as they are unwilling to switch from borrowing money to printing money in any sizeable quantity.

    In theory government could absorb most of the private sector debt onto its own balance sheet and then either cancel it or inflate it away (as was done in WWII, leading to a multi-decade boom seen in retrospect as a golden age), but that debt is generally owed to the wealthiest, most powerful people in the world, so it will likely take something on the magnitude of a World War before they will loosen their claim to most of the wealth of the world.

    The wave of baby boomers is an aggravating factor as a large generation tries to all save for retirement at the same time (well, some of them anyway), bidding up asset prices and depressing demand for goods and services, but I don’t think this is the primary driver in the debt buildup.

    Hot debate. What do you think? Thumb up 11 Thumb down 5

    Anonymous Says:
    8

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 2 Thumb down 24

    The wired astrologer Says:
    9

    Astrology newscast.

    The much anticipated Year of the Water Dragon (2012) has been renamed the year of the Coughing Dragon, due to the economic slowdown in China induced by the Water element balancing the Dragon’s Fire.

    The Year of the Water Snake will start on February 10, 2013. A Snake in the House means your family will starve. It also means delusion and deception. Your top priorities should be saving and being thrifty.

    If you live in Vancouver, these are clear messages that you should stay away from the housing bubble.

    Reference: http://www.springsgreetingcards.com/catalogs/store.asp?pid=256628

    Hot debate. What do you think? Thumb up 14 Thumb down 1

    More fundamentally, the financialization results from a monetary policy in which governments refuse their duty to provide enough currency for the economy to function at full strength, so money must be borrowed into existence to make up the gap.

    This is just so unbelievably wrong…

    Hot debate. What do you think? Thumb up 11 Thumb down 4

    patriotz patriotz Says:
    11

    Anyone else getting an ad from wonga on this website? The loan sharks are circling. As with other ads, I think this site is targeted simply because it deals with RE.

    Hot debate. What do you think? Thumb up 10 Thumb down 7

    “there are very severe and very painful consquences to having a society which lives way beyond its means for a long period of time.”

    And that means war, unfortunately.

    Like or Dislike: Thumb up 6 Thumb down 3

    UBC in Crisis Mode Says:
    14

    yvr2zrh Says:
    “That being said – if UBC were to hire a professor to come here on a permanent basis, in order to make them whole on housing, you would likely need to offer a 1.5 million signing bonus, which would be taxed, and from which they would have enough to get into the housing market at the level which they are accustomed to. If this city continues as it is for the next 20 years, we will have no more city.”

    The plan to save the university (no good prof wants to come):
    http://hap.ubc.ca/reference-documents/blog-2/

    Hot debate. What do you think? Thumb up 10 Thumb down 0

    Bull! Bull! Bull! Says:
    15

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 3 Thumb down 28

    Some Guy Says:
    16

    @10 bubbly, “This is just so unbelievably wrong…”

    Wow, you really convinced me. Great counter-argument…

    Hot debate. What do you think? Thumb up 11 Thumb down 5

    “The plan to save the university (no good prof wants to come):”

    These home ownership “assistance” plans were all the rage in the US at the top of the bubble and it’s not hard to figure out how they turned out.

    The solution to high prices is lower prices. In the meantime, the university can build housing on campus and rent it out at market rates, no taxable benefit would result.

    Well-loved. Like or Dislike: Thumb up 26 Thumb down 2

    Many Franks Says:
    18

    Rob McLister reports that Genworth has had its insurance cap lifted from $250B to $300B, probably targeting a small revival of the kind of bulk insurance that has totally dried up this past year due to CMHC nearing its own cap. I doubt it’ll make much of a difference, particularly here in Vancouver, as Genworth has got to be watching things pretty closely.

    Hot debate. What do you think? Thumb up 13 Thumb down 1

    Anonymous Says:
    19

    Re. #10

    “This is just so unbelievably wrong…”

    YES!! And if you don’t believe it, here is a dramatization of bubbly’s powerful argument:

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

    Like or Dislike: Thumb up 0 Thumb down 7

    Most of the world’s elite universities are located in cities with high property prices – New York, Boston, San Francisco, etc. The problem is that UBC, though highly regarded, is still a second tier school compared to Harvard, Stanford, Columbia, etc. Those universities attract the top end of elite academics who are willing to pay a little more for housing in exchange for a seat at a top school.

    Although UBC would like to think it’s one of the world’s elite institutions, its real competition for talent is with second-tier, mostly-public schools like Michigan, UT Austin, Penn State, etc. And most of them are located in smaller cities with much lower house prices.

    Well-loved. Like or Dislike: Thumb up 43 Thumb down 5

    Anonymous Says:
    21

    Here is a little something for you bears might enjoy. A real estate broker resorts to working as a Las Vegas call girl:

    http://tracking.si.com/2012/12/20/suzy-favor-hamilton-las-vegas-escort-olympian/?hpt=hp_t3

    Hot debate. What do you think? Thumb up 9 Thumb down 3

    Re #21: That is certainly a more respected profession ;)

    Well-loved. Like or Dislike: Thumb up 26 Thumb down 1

    @Some Guy:
    You are confused. I wasn’t presenting an argument. I just said that what you wrote is wrong.
    If you said that your car is powered by unicorns, I would also just say that it was wrong. No arguments necessary…

    Hot debate. What do you think? Thumb up 9 Thumb down 11

    It’s worse than it may appear.
    I monitor completed condo buildings to see how the final sales numbers worked out. In summer 2011 (yes, 2011) Rize Alliance Properties Ltd completed a 48-unit condo building at 2511 Quebec Street in the South Main/Mt. Pleasant neighborhood. Promotional materials at the time made it appear the development was sold out or close thereto. Throughout 2012, there were always 5-7 units listed for sale on the MLS by the developer, although there are none listed at this time. However, based on very reliable information, it appears the developer actually has 14 units unsold, all 1 bedrooms, from 639-723 square feet, priced at $357,900-$411,900 with strata fees from $262-$297.
    That’s 29% of the building unsold more than a year after completion. Small projects appear to be having trouble finding buyers; there are dozens of these small developments currently under construction, all over the city, in all price ranges. It’s worse than it may appear and probably not getting better any time soon.

    Well-loved. Like or Dislike: Thumb up 51 Thumb down 0

    “While I generally agree with you about the huge debt build-up, and the problems we face because of it, I wanted to clarify that while a household can live beyond it’s means (by borrowing from someone else), a society can’t (who would it borrow from – aliens?).”

    WE all pay for it. WE become poorer, so WE can keep borrowing. Lower wages, higher taxes, lower standard of living.

    Like or Dislike: Thumb up 5 Thumb down 3

    Harry Wang Says:
    26

    Vancouver is a unique and special place where the impossible is possible…

    “Only in Vancouver could this happen in the same day”
    http://www.reddit.com/r/vancouver/comments/157am4/only_in_vancouver_could_this_happen_in_the_same/

    Hot debate. What do you think? Thumb up 5 Thumb down 11

    patriotz patriotz Says:
    27

    “second-tier, mostly-public schools.. And most of them are located in smaller cities with much lower house prices.”

    And some of them are located in bigger cities with much lower house prices. Like Seattle.

    Hot debate. What do you think? Thumb up 18 Thumb down 0

    Left already living in San Diego Says:
    28

    Long time I haven’t checked in here.
    How is life in the best place on earth?
    Are you still skiing in the morning and golfing in the afternoon on the best place on earth?
    Today I had to put the heat on here in my San Diego house, temperatures came down to 18 degree C, burrrrrrrrrrr so cold and I had to wear my pants instead of my shorts, I guess winter is finally here. Happy holidays!

    Well-loved. Like or Dislike: Thumb up 52 Thumb down 10

    Some Guy Says:
    29

    @28 Devore

    “WE all pay for it. WE become poorer, so WE can keep borrowing. Lower wages, higher taxes, lower standard of living.”

    This is just so unbelievably wrong! :)

    But seriously, who are WE borrowing FROM?

    Not everyone is becoming poorer (hint: look up)

    Not everyone is paying higher taxes

    Not everyone has a lower standard of living

    Some people (look way up) are on the receiving end of (most of) the interest on the mountain of debt.

    There is no WE when it comes to debt, there is a lender and a borrower.

    ‘Down here it’s just winners and losers and don’t
    get caught on the wrong side of that line’

    Hot debate. What do you think? Thumb up 8 Thumb down 4

    HAM Solo Says:
    30

    Thinking a bit more about Genworth regulator changes. One gets the feeling that the files are being handled differently between the CMHC and MIC regulators.

    My main inclination is that it is too late to goose the market in any material way. The price declines underway will cause capital to shrink from lending into Canadian residential real estate…in fact all the changes being announced by banks will act with a lag. In this event, the last thing you want to do as a lender is to grow market share in a collapsing market where the collateral is overvalued and falling in price daily. Genworth’s goose is cooked.

    However, if you think in terms of some Ottawa goofball trying to prop up the system, you definitely need a way to get government guaranteed funds into the hands of lenders. Because, as we all know, the mortgage lenders are really mortgage brokers, writing any kind of dodgy mortgage on any kind of property so long as there is a spread between the interest they pay and the interest they “earn.”

    So here would be a plan: first, make sure there is a ridiculous CDIC guarantee available on term deposits issued by shadow lenders such as Home Capital Group – check. Now, Home Capital Group realizes the market is in decline/freefall, depending on the city, so they wouldn’t lend unless they can sell their loans out the back door. But they can’t sell the loans without a government guarantee. Enter Genworth MIC. They can bulk insure a pile of crappy Home Capital Group “alternative” mortgages, which will bear a slightly higher yield. The “institutions” look at these mortgage pools, understand that there is a 90% government guarantee on them, and accept the risk becuase the yield might be 2.5% for 3 year paper.

    That apparently is someone’s plan. They need to boost the shadow bank support of the housing bubble now that the official banks are more or less closed to originating the kind of mortgage that needs to get written to keep the bubble going. It is different in a way from the model that led to the US mortgage pool collapse because of the 90% Cdn government guarantee. The US mortgage pools had to rely on “AAA” ratings whereas we have a supposedly “AAA” sovereign backing up both the deposits and most of the credit risk.

    To tell you the truth, I think it could work to extend the bubble for another 6 months to a year IF they could flush enough cash through the system. However, there are too many ways the scheme could go wrong. Rates might rise in the rest of the world, diverting the yield pig investment flows. They might not raise enough cash this way, and just end up amplifying the losses of participants in the shadow system (most likely outcome). Or, some other guy in Ottawa figures out that propping up the shadow banking system while clamping down on the official banks is somewhat contradictory. On this last point, remember that the big 5 bank CEO’s will be pissed if they see shadow banks putting up eye-popping loan growth while they are warning on lower earnings.

    Hot debate. What do you think? Thumb up 14 Thumb down 0

    Anonymous Says:
    31

    Re. Left already living in San Diego

    To each his own. I’m looking forward to a winter of skiing practically in my backyard. I hate temperature over 25 degrees almost as much as I hate golfing, and lounging on the beach is about as appealing to me as chewing on aluminum. Wouldn’t mind paying San Diego RE prices though.

    Hot debate. What do you think? Thumb up 7 Thumb down 13

    Anonymous Says:
    32

    “…..I hate temperature over 25 degrees almost as much as I hate golfing, and lounging on the beach is about as appealing to me as chewing on aluminum…..”

    There you go! Proof that a wet climate promotes mold induced brain degeneration. No wonder prices have gone so insane if handicapped folks like this are the buyers.

    Hot debate. What do you think? Thumb up 13 Thumb down 12

    oneangryslav2 Says:
    33

    @ #3–yvr2zrh:

    “If this city continues as it is for the next 20 years, we will have no more city.”

    I completely agree. As I stated in a post a few weeks ago, the negative externalities of high real estate prices is what worries me. Nobody is saying that a working-class couple should be able to afford to purchase a home in Shaughnessy, but real estate prices are so high relative to incomes that a host of attendant social ills is being visited upon this city. It may not be immediately apparent to many why the inability for UBC (and SFU, to a lesser extent) to recruit top-notch researchers to this region ultimately hurts us, but it absolutely does. Look at the places where the economy is dynamic and growing and you’ll see that it is the result of a lot of clever and innovative people working in close proximity to one another.

    People selling depreciating assets to each other at ever higher prices does not lead to sustainable (both in the economic and environmental sense of the word) growth.

    Well-loved. Like or Dislike: Thumb up 28 Thumb down 0

    New Listings 64
    Price Changes 28
    Sold Listings 53
    TI:14619

    Merry Christmas and happy holidays to you all!!

    I’ve had the pleasure of working with (or been referred by) a number of VCI members this year. I really enjoy meeting people from VCI, some which have been following the housing blogs for as long, or longer than I have.

    I plan to reintroduce some housing stats to my website this year… Perhaps weekly and monthly tables with the daily numbers posted here? Any ideas would be appreciated. I want to add value to our community but not overburden myself (have baby # 3 due in March).

    Please never hesitate to call or email me with any questions you may have. I very much enjoy being a part of the VCI community and your support means a lot!

    Cheers,

    Paul

    http://www.paulboenisch.com

    Well-loved. Like or Dislike: Thumb up 131 Thumb down 0

    Groundhog Says:
    35

    Thanks Paul,

    I don’t know if you get hassled at all for giving these daily #’s, but transparency is where the industry is going to be moving to after this whole thing plays out. I really despise the MLS and industry for being secretive with the data. Realtors like yourself will do just fine, whatever happens.

    Well-loved. Like or Dislike: Thumb up 52 Thumb down 0

    @paulb

    congrats on new baby. that is great news. marry christmas.

    Well-loved. Like or Dislike: Thumb up 25 Thumb down 0

    Best place on meth Says:
    37

    Happy holidays and New Year to you Paul, and thanks for everything you’ve done here.

    Congrats on the little one too, although I would caution against naming it #3 as nice as is sounds.

    Take care man,

    BPOM

    Well-loved. Like or Dislike: Thumb up 49 Thumb down 7

    Congrats Paul on your new addition! Thank you so much for your daily stats, very much appreciated.

    Merry Christmas and Happy New Year to you and your family!

    Well-loved. Like or Dislike: Thumb up 22 Thumb down 0

    BPOM you kill me:)

    Hot debate. What do you think? Thumb up 7 Thumb down 7

    Burbs Boy Says:
    40

    From an often lurker, seldom poster… Thank you Paul for your consistency and valuable contribution. I too believe that there will be many realtors who will weather the upcoming storm quite fine. I have been on the house hunt for a while now (sadly quite far away from Paul’s area otherwise I would most likely be contacting him) and I am struggling to find a good real estate agent who is really able to contribute to any meaningful analysis of any of the places I have looked at. At the price range I am looking at (~$800,000) all I seem to be getting is “oh its a great place… fairly priced…” and this is from my BUYERS AGENT!! It is a bit of a sad commentary on the state of some real estate agents that I can provide a significantly better analysis of the purchase than they can.

    Well-loved. Like or Dislike: Thumb up 31 Thumb down 1

    Burbs Boy : “I have been on the house hunt for a while now (sadly quite far away from Paul’s area otherwise I would most likely be contacting him)”

    don’t want to speak for Paul, but maybe he’d be willing to house hunt in the burbs for you. Specializing in one area doesn’t necessarily mean they are restricted to only that area.

    Hot debate. What do you think? Thumb up 11 Thumb down 5

    ReadyToPop Says:
    42

    Feds OK another $50-billion of mortgage guarantees for private-sector players

    ________________________________________________________
    ________________________________________________________
    ________________________________________________________
    ________________________________________________________
    ________________________________________________________
    ________________________________________________________

    I’ll just leave some lines for Patriotz to fill in…. :-)

    Hot debate. What do you think? Thumb up 18 Thumb down 8

    Thanks paulB!!

    Est Dec Sales: -33% YoY, -34% MoM

    Total Inventory (vs last year)
    Dec 20, 2011: 12937
    Dec 20, 2012: 14749 (+14% )

    Est Month-end MOI: ~12 (was 9.3 last month)

    Looking ahead to Jan 2013, if TI maintains +14% YoY:
    if sales -15% YoY, Est. MOI=10.7 (vs 8.0 Jan/12, 5.7 Jan/11)
    if sales -20% YoY, Est. MOI=11.3
    if sales -25% YoY, Est. MOI=12.1

    Well-loved. Like or Dislike: Thumb up 51 Thumb down 0

    @32: There you go! Proof that a wet climate promotes mold induced brain degeneration. No wonder prices have gone so insane if handicapped folks like this are the buyers.

    Many people around here like winter sports and cooler climate, just personal preferences.

    Like or Dislike: Thumb up 3 Thumb down 4

    Dec-2012	
    Total days	19
    Days elapsed so far	15
    Weekends / holidays	6
    Days missing	0
    Days remaining	4
    7 Calendar Day Moving Average: Sales	62
    7 Calendar Day Moving Average: Listings	66
    SALES	
    Sales so far	953
    Projection for rest of month (using 7day MA)	246
    Projected month end total	1199
    NEW LISTINGS	
    Listings so far	1215
    Projection for rest of month (using 7day MA)	265
    Projected month end total	1480
    Sell-list so far	78.4%
    Projected month-end sell-list	81.1%
    MONTHS OF INVENTORY	
    Inventory as of December 21, 2012	14619
    Current MoI at this sales pace	12.19
    

    We’re likely to hit like 1150 for sales. That’s remarkably bad. Listing activity low too, though.

    year	sell	list	sell/list
    2001	2394	1856	129.0%
    2002	2205	1895	116.4%
    2003	2434	2301	105.8%
    2004	2065	1764	117.1%
    2005	2332	1735	134.4%
    2006	1686	1524	110.6%
    2007	1897	1695	111.9%
    2008	924	1550	59.6%
    2009	2515	2153	116.8%
    2010	1899	1699	111.8%
    2011	1658	1629	101.8%
    Mean	2001	1800	111.2%
    median	2065	1735	114.1%
    

    Thanks to paulb for all that he does. Congrats on #3.

    Well-loved. Like or Dislike: Thumb up 39 Thumb down 0

    ..and if I’m handing out the kudos, then I suggest, ladies and gentlemen, that you give it up for the proprietor here at VCI: THE POPE.

    Wow, your work is appreciated. Sorry for all the troubles the spammers and trolls are giving you.

    Well-loved. Like or Dislike: Thumb up 59 Thumb down 0

    [...] “I was at a party last night. Some interesting local celebs were there as well as some normal people (like me). One was a young professor from UBC. They are from out of town and are quite open to both renting and leaving town in the mid-term as it does not make sense to own here. They also commented that the University has had little success in attracting talent from outside Vancouver to fill top-level positions. Let’s say you want to hire a new dean of Science. You have found a 48-year-old who is at the top of the field, an amazing educator and researcher and who would be a trophy to have in the school. The chance of them coming here, even with a massive research budget, is basically close to zero becuase they can not afford the housing that they would be accustomed to for their life situation. Thus – most jobs are being filled internally now. Not good for the school.” – from a comment by yvr2zrh at VCI 21 Dec 2012 4:36am [...]

    Like or Dislike: Thumb up 4 Thumb down 2

    patriotz patriotz Says:
    48

    “I’ll just leave some lines for Patriotz to fill in….”

    Can’t improve on this guy:
    http://www.prefblog.com/?p=20667

    Yes, here in Canada, lenders can freely compete to see who can suck arse in Ottawa enough to get mortgage guarantees.

    Like or Dislike: Thumb up 9 Thumb down 0

    No Noise Says:
    49

    Hot debate. What do you think? Thumb up 13 Thumb down 0

    @#49 I posted that link on the new Saturday thread that’s appearing and disappearing.

    As a follow up: another article today on G&M:
    Confidential government documents reveal concerns about mortgage lending in Canada

    Hot debate. What do you think? Thumb up 12 Thumb down 0

    [...] “I was at a party last night. Some interesting local celebs were there as well as some normal people (like me). One was a young professor from UBC. They are from out of town and are quite open to both renting and leaving town in the mid-term as it does not make sense to own here. They also commented that the University has had little success in attracting talent from outside Vancouver to fill top-level positions. Let’s say you want to hire a new dean of Science. You have found a 48-year-old who is at the top of the field, an amazing educator and researcher and who would be a trophy to have in the school. The chance of them coming here, even with a massive research budget, is basically close to zero becuase they can not afford the housing that they would be accustomed to for their life situation. Thus – most jobs are being filled internally now. Not good for the school.” – from a comment by yvr2zrh at VCI 21 Dec 2012 4:36am [...]

    Like or Dislike: Thumb up 6 Thumb down 2

    OSFI “confidential documents”
    – external consultation comments

    May 2012

    “…The Emili system does not estimate a property’s market value; instead it uses general parameters to determine a risk potential. That explains why CMHC-insured loans are often granted without truly taking into account the property’s market value and – therefore – the LTV ratio. This poses a real danger of altering housing market data.

    In the case of loans that are insured by the CMHC, the time “saved” comes with a high price tag for the consumer: if the property is overvalued, the insurance premium will be based on the “overvaluation” and multipplied by 25 years of mortgage payments. The resulting sum may be considerable! Thus, the CMHC, a Crown Corporation, cuts corners by not demanding professional appraisals and generates higher revenues by basing its premiums on overvalued figures. This situation is that much more inacceptable in that buyers feel reassured with respect to the value of their investments because it was validated by a Crown Corporation, while the CMHC does not appraise the real value of the purchased property. Instead, it appraises the risk associated with the debtor.”

    http://www.theglobeandmail.com/report-on-business/confidential-government-documents-reveal-concerns-about-mortgage-lending-in-canada/article6341116/

    Hot debate. What do you think? Thumb up 10 Thumb down 4

    @VMD,

    Interesting it couldn’t find if OSFI was going to implement these changes, have you read anything about when the automated evaluations will be replaced?

    Like or Dislike: Thumb up 0 Thumb down 0

    patriotz patriotz Says:
    54

    ““…The Emili system does not estimate a property’s market value; instead it uses general parameters to determine a risk potential.”

    Whatever this “risk potential” is, it has little connection to reality. The true risk potential depends on how much the sale price is above fundamental value (NOT “market value”), i.e. how much of a multiple of rents and incomes it is. That’s what the determines the likelihood of prices going down and mortgages defaulting.

    If CMHC was really concerned about true default risk it would be imposing price caps based on rents and incomes.

    Apparently CMHC is assuming a priori that a national decline in prices can’t happen, just as Wall Street did in the US.

    Hot debate. What do you think? Thumb up 21 Thumb down 7

    Miracle Max Says:
    55

    BCREA sales and inventory stats are out for the month of November 2012. Here are your MOI calculations.

    BC Northern
    Inventory: 2222
    Sales: 287
    MOI: 7.7

    Chilliwack
    Inventory: 1524
    Sales: 166
    MOI: 9.2

    Fraser Valley
    Inventory: 7753
    Sales: 840
    MOI: 9.2

    Greater Vancouver
    Inventory: 16788
    Sales: 1733
    MOI: 9.7

    Kamloops
    Inventory: 1878
    Sales: 133
    MOI: 14.1

    Kootenay
    Inventory: 2658
    Sales: 197
    MOI: 13.5

    Okanagan Mainline
    Inventory: 5289
    Sales: 383
    MOI: 13.8

    Powell River
    Inventory: 210
    Sales: 18
    MOI: 11.7

    South Okanagan
    Inventory: 1626
    Sales: 94
    MOI: 17.3

    Northern Lights
    Inventory: 229
    Sales: 20
    MOI: 11.5

    Vancouver Island
    Inventory: 5194
    Sales: 466
    MOI: 11.1

    Victoria
    Inventory: 3583
    Sales: 343
    MOI: 10.4

    Provincial Totals
    Inventory: 48954
    Sales: 4680
    MOI: 10.5

    Outside Vancouver
    Inventory: 32166
    Sales: 2947
    MOI: 10.9

    Not a whole lot to say, so I’ll just wish you all a very merry Christmas and happy new year!

    Well-loved. Like or Dislike: Thumb up 38 Thumb down 0

    #7 Some Guy: “while a household can live beyond it’s means (by borrowing from someone else), a society can’t (who would it borrow from – aliens?).”

    I disagree. A productive society can live beyond its means indefinitely by borrowing from the future, and it is both normal and healthy for capitalist societies to do this. The problem is maintaining a high rate of return, and the factors involved all lead to the business cycle. But living on a bit of borrowed time is normal, because there is risk in everything, including being too conservative.

    Hot debate. What do you think? Thumb up 8 Thumb down 10

    vancouverguy Says:
    57

    Merry Christmas VCI!

    May the season bring joy, happiness and a return to rational house prices!

    Well-loved. Like or Dislike: Thumb up 43 Thumb down 4

    Wakeup call Says:
    58

    Heard from the wife of a realtor that some ridiculously low offers have been accepted this week.
    I guess sellers are looking for relief, closure and peace of mind for the holidays.
    These sales could very well set the benchmark for new listings after the holidays, but with potential buyers spooked by all the negative press, I think sales will slow down even more. Should get interesting with the flood of new listings in the spring.

    Well-loved. Like or Dislike: Thumb up 46 Thumb down 6

    Anonymous Says:
    59

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 5 Thumb down 18

    Anonymous Says:
    60

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 9 Thumb down 17

    gordholio Says:
    61

    Anonymous:

    Deny it all you want. By early March, it’ll be Ark time in the Best Rainforest on Earth. Monstrous personal debt loads + astonishing overbuilding + total and complete end of psychological mania + tightened mortgage regs + prospects of increasing interest rates + 70-plus percent ownership + evaporation of whatever Asian invasion there was + MSM acceptance of price collapse + widespread knowledge that early 2013 will be the worst possible time in memory to buy = The End.

    Merry holidays to everyone and thanks especially to those who’ve worked so hard here to bring us regular folk the truth.

    Well-loved. Like or Dislike: Thumb up 38 Thumb down 1

    Village Whisperer Village Whisperer Says:
    62

    Merry Christmas to all.

    Hot debate. What do you think? Thumb up 10 Thumb down 0

    real_professional Says:
    63

    Vancouver’s reckoning is here, merry christmas….

    Good article from bloomberg on Toronto’s Trump tower and buyer’s remorse:

    http://mobile.bloomberg.com/news/2012-12-24/trump-tower-woes-signal-top-of-toronto-condo-market.html

    Like or Dislike: Thumb up 4 Thumb down 0

    real_professional Says:
    64

    Could this be a dig toward Carney by Flaherty? (See link below) Personally I felt Carney was too preoccupied with maintaining cad/usd forex rates and stimulating the economy against future risks eg. Europe and china. He ignored domestic inflation, which was a gamble that appears to have not hurt so far…

    http://mobile.bloomberg.com/news/2012-12-23/flaherty-says-carney-s-replacement-needs-to-control-inflation.html

    Like or Dislike: Thumb up 2 Thumb down 0

    patriotz patriotz Says:
    65

    Consumer price inflation in Canada has run at 1.85% annually over the last 10 years, which is the lowest over a ten year period since the 1950’s.

    You may make the argument that the CPI is inaccurate. If so that is the fault of the government.

    CPI inflation is the BoC’s statutory target. It has neither the mandate nor the appropriate tools to target asset price inflation. The federal government does.

    Like or Dislike: Thumb up 6 Thumb down 1

    real_professional Says:
    66

    I argue both. CPI is flawed, but so are other measures. I am not one to beat the drum that CPI is flawed so it should be ignored. I believe that ‘true inflation’ is probably just a multiple of headline cpi rate of change, and the multiple is probably between 0.75 and 1.5 in most environments. Like a margin of error. Core inflation on the otherhand, I believe is a dumb measure.

    What I was refering to was that in the last quarter of 2010, throughout 2011, and even into 2012, headline inflation prints were above 2%…. the “target” inflation rate of the BOC. That was about six consecutive quarters. Carney could have raised rates but did not… citing, currency moves, weakening global economy, and mute core inflation.

    It was a gamble, it hasn’t hurt thus far…but history will determine that for certain.

    Inflation being low historically is meaningless… it is back to where it was in the mid 50s, and has been trending down since spike in the 70. Meanwhile rates are lower now than in the mid 50s

    Like or Dislike: Thumb up 3 Thumb down 0

    Anonymous Says:
    67

    “who’ve worked so hard here to bring us regular folk the truth.“

    send the Mayan calendar guy a postcard too.

    Like or Dislike: Thumb up 1 Thumb down 2

    Price drop:
    after 176 days on the market, this $12,880,000 (?!) property now asking for $9,980,000, a $2.9 million drop (22.5%) drop:

    http://www.realtylink.org/prop_search/Detail.cfm?MLS=V960623&REBoards=All&From=MLS

    Like or Dislike: Thumb up 1 Thumb down 0

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