FFFA! Condos! Arson! Flat! Plummet!

It’s that time of the week again, time to our regular end of the week news round up and open topic discussion thread for the weekend.  Here are a few recent links to kick off the chat:

-Great Canadian crash of 2013
-Permits plunge into basement
-BC condo market on fire
-Prices falling faster than USA
-Sales people say soft landing
-Fence-sitters will be sorry
-Price reductions by area
-Inventory Graphs
-Construction quality issue
-Ending debt binge leaves $50bn hole
-Ping Pong Pricing Principle

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

125 Responses to “FFFA! Condos! Arson! Flat! Plummet!”

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    Any predictions on when our first 300 listing day is?
    My guess is next Friday, the 18th.

    Hot debate. What do you think? Thumb up 7 Thumb down 4

    Updated economist magazine housing data for comparison: http://www.economist.com/blogs/dailychart/2011/11/global-house-prices

    Hot debate. What do you think? Thumb up 10 Thumb down 2

    Short'em High Says:
    3

    http://www2.macleans.ca/2013/01/10/tiff-macklem-end-of-household-debt-binge-will-leave-50bn-gap-in-the-economy/

    Deputy BoC Tiff Macklem:
    …We can’t count on the housing market and overstretched consumers to keep propelling economic growth.
    Eliminating Canadians’ private net debt alone would leave a $50bn gap in the economy…

    Duh, but that’s something at least! The problem with Carney evidently, was that he was protecting his future political career(s). What I find remarkable about the whole situation is that Carney wasn’t able to squirrel away billions and that he actually needs the future earnings of his brand rather than a well deserved punch in the face and kick in the ass on the way off the stage.

    The biological model provides poor guidance with respect to those things that must remain in the gene pool structurally, yet must be suppressed at every opportunity. What biology and markets provide is only the guidance on that which must eliminated from the system with extreme prejudice.

    Thus, we have to wait while those exhibitiing monkey behavior are finally margin called/eliminated and/or have their useless offspring unburdened from civilization.

    Hot debate. What do you think? Thumb up 14 Thumb down 7

    Jim Flaherty bills tax payers for his make-up. From the Toronto Sun:

    “Documents tabled in the House of Commons revealed Canada’s finance minister, who makes about a quarter of a million a year, charged taxpayers nearly $130 to pay for makeup. For him. To be precise, Flaherty expensed $119.15 on “cosmetics” and $9.99 for “beauty supplies.”

    He bought Cover Girl loose powder, Maybelline loose powder, Maybelline concealer, Maybelline “Min Blush,” Maybelline LMU, Smashbox concealer, cosmetic wedges, a powder brush, a foundation brush and “SBM Top Zip Shave.”

    http://www.torontosun.com/2013/01/04/politics-isnt-so-easy-breezy-beautiful?utm_source=facebook&utm_medium=recommend-button&utm_campaign=Politics+isn’t+so+easy%2C+breezy%2C+beautiful

    Well-loved. Like or Dislike: Thumb up 26 Thumb down 5

    Canada’s trade deficit soars in November

    Canadian exporters took a hit in November, partly on trade with Europe, while imports climbed, leading to a sharp increase in the country’s trade deficit.

    The trade gap swelled in November to about $2-billion from $552-million a month earlier, Statistics Canada said today.

    Which means that Canada’s “strong” economy is still running on debt. Look for the next consumer debt figures to take another jump.

    Well-loved. Like or Dislike: Thumb up 36 Thumb down 3

    Manna from heaven Says:
    6

    But I thought this was a sure fire way to save money for retirement. How many other people in our fair city are in the same predicament? Many I would guess.

    http://business.financialpost.com/2013/01/11/bad-real-estate-investments-leave-couple-with-1-5-million-in-debt/

    Well-loved. Like or Dislike: Thumb up 39 Thumb down 1

    Anonymous Says:
    7

    @manna, wow! 1.5 million in debt and 2k in cash, it’s the picture of wealth in BC!

    I know several people who are burning up not only their own retirement, but their parents as well having spent their inheritance on overpriced falling down houses.

    Well-loved. Like or Dislike: Thumb up 33 Thumb down 1

    Groundhog Says:
    8

    @Manna

    Most in this situation will be surprised to learn leverage is a double-edges sword. When we’re seeing articles like that after only a 10% drop just imagine a 33%+ drop.

    Well-loved. Like or Dislike: Thumb up 30 Thumb down 1

    Many Franks Says:
    9

    Here’s a morning chuckle for you: Looking Back at Real Estate in 2012

    Sales remained steady! Great price gains across the board! Wow, 2012 was fun, and 2013 is gonna be even better. I’m so high right now.

    Well-loved. Like or Dislike: Thumb up 29 Thumb down 1

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

    Poorly-rated. Like or Dislike: Thumb up 10 Thumb down 26

    Here is my latest crash curve graph:
    http://vancouverpeak.com/attachment.php?aid=11

    The HPI continues to show a strong correlation to my model. This suggests that we will see a pattern similar to what happened in US cities during their crash. If this trend continues we should see prices bottom out in the spring of 2015.

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

    Bag it and tag it Says:
    12

    #11 b5Baxter
    That link takes me to a logon page for VancouverPeak. I was under the impression a logon for VP is only required for leaving comments…

    Like or Dislike: Thumb up 9 Thumb down 0

    Vote Down The Facts Says:
    14

    Could easily golf, ski, and sail today – just sayin’

    ;)

    Hot debate. What do you think? Thumb up 25 Thumb down 6

    HAM Solo Says:
    15

    As I look at 5 year Canada’s touching 1.5% yield going up today, I have to scratch my head at the “financial institutions” still offering 5 year mortgages at less than 3%.

    2 points: First, writing these mortgages is a very marginal activity. Assuming costs of funding are now 2.40% for a 5 year GIC, then the lender is only making a 60bps spread. If we assume a $300K mortgage, that’s only $1800 per year or $9000 for the full term. Against that the costs of appraisal, underwriting, maintenance must be at least a few thousand. Without even considering credit risk, this is probably just above breakeven activity.

    Second point: Think about what kind of return on equity this loan would earn in a traditional banking environment. For a $300K exposure, if a bank were assigning 15% equity, then there would need to be $45,000 of reserves assigned against the loan. If costs (before loss provisions) eat up half the interest margin of $1800 per year, then the annual profit of $900 represents 2% Return on Equity (maybe 3.5% if one assumes the equity is invested in the GCan 5 year).

    Now let’s for the sake of argument say that 5% of these loans go bad in any given year and they have a 10% severity of loss (which wouldn’t be a surprise given the zero-down culture and overpriced environment). So on my $300,000 loan, on average, I would reserve $1500 per year, if I were acting like a normal, traditional bank. Therefore I am losing $600/year taking this business, and the ROE is negative. So no real bank can afford to write loans like these.

    But in our world, loans like this are getting written every day. In fact, just about every mortgage written in the country would be a money-loser to the traditional bank. The only reason they exist is because there is no capital cost. However, capital is not really free, it’s just that the risk bearing entity (mostly CMHC) is not in the habit of assigning capital against insured loans. The mortgage insurers ought to have hundreds of billions of capital assigned against Canadian mortgages, not $10B for CMHC and $2.6B for Genworth.

    Someday this will all make sense to the PTB.

    Well-loved. Like or Dislike: Thumb up 48 Thumb down 3

    @Vote Down The Facts: “Could easily golf, ski, and sail today – just sayin’”

    Don’t forget go swimming/tanning at the beach too, lol. Which after all is the impression that some (but not all) ppl/organizations give of Vancouver as well.

    Hot debate. What do you think? Thumb up 6 Thumb down 4

    The Economist: Jan 12, 2013
    “Over-valuation is especially marked in Canada, particularly with respect to rents (78%) but also with respect to income (34%). Mark Carney…may have shown good market timing with his move to London as well as a deft hand in negotiating his lavish remuneration.”
    http://www.economist.com/news/finance-and-economics/21569396-our-latest-round-up-shows-many-housing-markets-are-still-dumps-home

    Well-loved. Like or Dislike: Thumb up 35 Thumb down 1

    Vote Down The Facts Says:
    18

    “Now let’s for the sake of argument say that 5% of these loans go bad in any given year”

    5% was the peak rate in the US. In Canada right now it’s less than 1%, and I’ve seen figures as low as 0.38%:

    ‘As of the end of 2011, Canada’s severe mortgage delinquency rate
    was a Lilliputian 0.38% compared to the peak 5.02% rate in the U.S. In Ontario, it was a mere 0.28%, and it was a bit higher in British Columbia at 0.47%. Basically, Canadians rarely default on their mortgages.’ – http://www.bmonesbittburns.com/economics/bottomline/20120329/bottomline.pdf

    But of course the US default rate was also low – until it wasn’t.

    Well-loved. Like or Dislike: Thumb up 29 Thumb down 2

    @b5baxter: Thank you for that – interesting graph. I’ve been thinking that a bottom in early 2015 is likely too.
    (I can’t make out the percentages out very well, and clicking on the graph goes to the login page).

    BTW the US markets your are comparing to never had to deal with rising interest rates, which it is increasingly likely we may have to do.

    Hot debate. What do you think? Thumb up 12 Thumb down 1

    Wakeup call Says:
    20

    JD #1

    Just a thought.
    I wonder if we might be focusing too much on blowout listings and not enough on those declining sales.

    Last year at this time folks were still giddy after the big runup in 2011 and were listing for windfalls at ridiculous prices. Needless to say, that crowd has pulled in their horns as reality kicked in.
    I would take 200 motivated listings a day over 300 of those crazies any day.

    I think those dwindling sales are even more important to drive prices down.

    Well-loved. Like or Dislike: Thumb up 42 Thumb down 1

    @HAM Solo, this is what Basel III is supposed to address, at least in part. The writing of loans, in total, is not risk-free because if credit conditions tighten we can expect banks to collectively balk and borrowers must liquidate or pay a higher spread.

    If you look at the spreads from risk-free right now, it should be no surprise banks are lending everything they can, from what I can see primary-borrower spreads are richer now than they were post-GFC bolstered mostly by low real rates. I blogged about it last September:
    http://housing-analysis.blogspot.ca/2012/09/mortgage-spreads.html

    I’ll update the graphs when I get a chance but I think the spread is still very healthy. In my opinion it should be seen as no coincidence that bank earnings are going gangbusters. If banks are now required to hold more capital against certain loans that spread is in effect eroded to some degree. If real rates on the 5 year start ticking up a bit in the coming years we can expect bank profits to be eroded without significant credit growth.

    Disclosure: I don’t know what I’m talking about.

    Hot debate. What do you think? Thumb up 11 Thumb down 1

    Troll Feeder Says:
    22

    @VDTF “Could easily golf, ski, and sail today – just sayin’”

    I could, but I don’t have a large mortgage to cover :)

    Hot debate. What do you think? Thumb up 12 Thumb down 3

    I said: “BTW the US markets your are comparing to never had to deal with rising interest rates, ”

    Correction: part of the meltdown in the U.S. was due to ARMs and other such sources of increasing interest rates baked into mortgage agreements. But base rates did not increase.

    Like or Dislike: Thumb up 5 Thumb down 2

    Van Coffee Says:
    24

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

    Poorly-rated. Like or Dislike: Thumb up 12 Thumb down 21

    @VDTF “Could easily golf, ski, and sail today – just sayin’”

    Nope. No sailing today and even next week. Check out a forecast
    http://www.windguru.cz/int/index.php?sc=3610

    Like or Dislike: Thumb up 4 Thumb down 5

    Anonymous Says:
    26

    Canadian Bankers Assn regularly posts monthly mortgage arrears rates, from 1990 to present, organized by region.

    http://www.cba.ca/contents/files/statistics/stat_mortgage_db050_en.pdf

    It’s not complete: its data sources are primarily the big banks. However, it’s the best data I’ve found so far.

    They also post other interesting stats.

    Like or Dislike: Thumb up 8 Thumb down 0

    Re Van Coffee #24:

    I think P+1% is very reasonable rates for unsecured loans (i.e. not a mortgage) at current times. Usually they run P+2 or even 3%.

    Like or Dislike: Thumb up 9 Thumb down 0

    Re: #26

    Thanks for the great data. So BC has not had arrears above 1% since the 1990s.

    P.S. Geez, they should include plots of these data.

    Like or Dislike: Thumb up 2 Thumb down 1

    I can’t get over the number of Mark Carney fanboys on this site.

    If you talk negatively about him you get as many thumbs up as thumbs down.

    Kind of explains the mentality of Canadians. Some of us are so in love with everything Canadian that we’ll excuse any form of bad behaiour/policy.

    Well-loved. Like or Dislike: Thumb up 31 Thumb down 5

    patriotz patriotz Says:
    30

    “So BC has not had arrears above 1% since the 1990s.”

    The biggest number given for Ontario is .65% at the bottom of the Toronto bust in the mid-1990’s.

    So don’t assume that you need an arrears rate of >1% to get a major price decline.

    Hot debate. What do you think? Thumb up 22 Thumb down 4

    Best place on meth Says:
    31

    I did all my golfing, skiing and sailing before lunch.

    Now I’m enjoying a cranteeny on the patio.

    Well-loved. Like or Dislike: Thumb up 56 Thumb down 5

    Richmond SFH stats from chinese forum:
    Jan 1-11: “4 sales ” (take it with a grain of salt, in reality likely higher)

    All below assessment (remember these are the new assessments)
    #1: assessed 1.36m, sold 1.19m
    #2: assessed 1.04m, sold 0.92m
    #3: assessed 990k, sold 840k
    #4: assessed 716k, sold 700k

    Well-loved. Like or Dislike: Thumb up 55 Thumb down 2

    shriller Says:
    33

    Just an offhand observation — the next Bank of Canada governor may have a lot of indirect input into how the housing slowdown is going to evolve. If Macklem becomes the governor, and personally I hope he will, he has just laid out the dilemma he is facing. Exporters need help and the best help he can give is to try to lower the price of the Canadian dollar. Uncovered interest rate parity suggests that he should try to increase the medium-term interest rate (if he can) since this will lead to expectations of a fall in the exchange rate. Of course, this would be a disaster for indebted households. He will have to make a choice. I suspect that he will bias his decisions in favour of the export sector. In the LR, this is probably the best option for the economy since it will lead to a solid base for future incomes. And I think he is someone motivated by long-term considerations rather than short-term opportunism.

    Well-loved. Like or Dislike: Thumb up 21 Thumb down 1

    Vote Down The Facts Says:
    34

    “So don’t assume that you need an arrears rate of >1% to get a major price decline.”

    Nobody made that assumption – the topic was banks’ cashflow, not price declines.

    Hot debate. What do you think? Thumb up 6 Thumb down 7

    Anonymous Says:
    35

    …..Could easily golf, ski, and sail today – just sayin’ ……

    Guess that what we’ve all be saying: one day of sunshine a year ans somehow that translates into great weather.

    Living here is so much easier when you smoke a lot of Latin lettuce.

    Hot debate. What do you think? Thumb up 12 Thumb down 5

    Anonymous Says:
    36

    “Could easily golf, ski, and sail today – just sayin’ ”

    Ya, Toronto warmer than Vancouver today, by about 10 degrees! Just sayin too. They must have awesome weather.

    Hot debate. What do you think? Thumb up 18 Thumb down 2

    Got another one, West Van
    1083 Duchess Ave
    Asking: $3,188,000
    Assessed: $3,224,000
    Just sold: $2,626,000

    $598,000 below assessed (-18.5%)

    Well-loved. Like or Dislike: Thumb up 68 Thumb down 0

    Just got another one: Burnaby
    7249 Stride Ave
    Asking: 608,000
    Assessed: 657,000
    Just sold: 575,000
    $82,000 under assessed (-12.5%)

    Well-loved. Like or Dislike: Thumb up 69 Thumb down 0

    New Listings 220
    Price Changes 52
    Sold Listings 38
    TI:12682

    http://www.paulboenisch.com

    Well-loved. Like or Dislike: Thumb up 139 Thumb down 0

    Anonymous Says:
    40

    Yowsers…sales still suck.

    Hot debate. What do you think? Thumb up 20 Thumb down 1

    ReadyToPop Says:
    41

    spit says:

    I can’t get over the number of Mark Carney fanboys on this site.

    Perhaps even the man himself….

    Hey Mark…pop it now! ;-)

    Hot debate. What do you think? Thumb up 11 Thumb down 2

    Jan-2013	
    Total days	21
    Days elapsed so far	8
    Weekends / holidays	3
    Days missing	0
    Days remaining	13
    7 Day Moving Average: Sales	50
    7 Day Moving Average: Listings	230
    SALES	
    Sales so far	431
    Projection for rest of month (using 7day MA)	655
    Projected month end total	1086
    NEW LISTINGS	
    Listings so far	1766
    Projection for rest of month (using 7day MA)	2990
    Projected month end total	4756
    Sell-list so far	24.4%
    Projected month-end sell-list	22.8%
    MONTHS OF INVENTORY	
    Inventory as of Jan 11, 2013	12682
    MoI at this sales pace	11.68
    
    
    year	sell	list	sell/list
    2001	1225	3395	36.1%
    2002	2248	3626	62.0%
    2003	1966	3810	51.6%
    2004	1954	3039	64.3%
    2005	1697	3360	50.5%
    2006	1924	3471	55.4%
    2007	1806	4067	44.4%
    2008	1819	4675	38.9%
    2009	762	3700	20.6%
    2010	1923	5147	37.4%
    2011	1819	4801	37.9%
    2012	1577	5756	27.4%
    Mean	1727	4071	42.4%
    median	1819	3755	47.5%
    

    Well-loved. Like or Dislike: Thumb up 56 Thumb down 0

    Manna from heaven Says:
    January 11th, 2013 at 7:31 am

    But I thought this was a sure fire way to save money for retirement. How many other people in our fair city are in the same predicament? Many I would guess.

    http://business.financialpost.com/2013/01/11/bad-real-estate-investments-leave-couple-with-1-5-million-in-debt/

    ————————————

    I’ll bet “Tiff and Sandy” still financially prosthelytize amongst their peers as though they are the second coming of Warren Buffett.

    Hot debate. What do you think? Thumb up 19 Thumb down 0

    The bulls are claiming January has gotten off to a bad start for the bears because of the lack of 300+ listing days but the reality of this is:

    1) There were only six 300+ days last January
    2) We’re on pace to register 40% fewer sales than the January Median and 30% fewer than last January
    3) We’re on pace to register almost 30% more listings than the January Median
    4) The sell/list ratio is almost as bad as 2009
    5) 2nd worst end of January MOI in at least a dozen years, likely much more

    Well-loved. Like or Dislike: Thumb up 92 Thumb down 0

    One thing we don’t know is how population growth within Vancouver CMA compares to the rest of the province in the past year or so. As unemployment festers in areas like Victoria and Kelowna there will be impetus to move both out of province and to Vancouver where there are a wider variety of opportunities.

    I look at population growth as a whole for BC and track Vancouver-specific CMHC data, however it’s also instructive to look at other major centres to see how their construction markets are doing, to get a bit of a clue where intraprovincial migration may be headed.

    One such graph is the “under construction” for Victoria, Vancouver, and Kelowna, I plotted here. It shows that Vancouver has seen a renewed bout of construction while Victoria and Kelowna have been stagnant after the recession. Intraprovincial flows tend not to be reported in a timely manner and rely mostly on projections and extrapolations until they are reset based on census and other data sources. Here are the latest data from intraprovincial but beware the 2010/2011 count is likely going to change, once the 2011/2012 estimates are released later this year.

    Hot debate. What do you think? Thumb up 9 Thumb down 2

    #43 I wonder if it’s the same Tiff.

    Like or Dislike: Thumb up 0 Thumb down 1

    ReadyToPop Says:
    47

    Hackers have figured out a way to exploit Java to install malicious software enabling them to commit crimes ranging from identity theft to making an infected computer part of an ad-hoc network of computers that can be used to attack websites.

    U.S. tells all Internet users to disable Java over hacker threat

    OT: I’ve personally never seen a warning quite like this…..RTP

    Like or Dislike: Thumb up 5 Thumb down 4

    Bull! Bull! Bull! Says:
    48

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

    Poorly-rated. Like or Dislike: Thumb up 11 Thumb down 35

    @VDTF “Could easily golf, ski, and sail today – just sayin’”

    Me too but didn’t have enough cocaine to keep it going and make all three.

    Hot debate. What do you think? Thumb up 14 Thumb down 3

    Achilles HELOC Says:
    50

    Another interesting thing about this January is a near total absence of trolls. First they ignore you, then they laugh at you, then they fight you, then you win. Maybe we are at the “you win part.”

    Well-loved. Like or Dislike: Thumb up 41 Thumb down 4

    Groundhog Says:
    51

    @Achilles HELOC

    Even Bull,Bull,Bull is looking at numbers.

    Hot debate. What do you think? Thumb up 13 Thumb down 2

    No Noise Says:
    52

    Could have golfed, ski’d, sailed today but who would ever want to do sll of that in zero temps – its sounds great in theory but sucks in reality. Youd be run off your ass and unable to pay for your mortgage, hummer, etc afterwards, and the bank would be makin a margin call on you befoe you know it. Time to get back to fical reality people.

    Hot debate. What do you think? Thumb up 6 Thumb down 4

    Short'em High Says:
    53

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

    Poorly-rated. Like or Dislike: Thumb up 2 Thumb down 13

    Anonymous Says:
    54

    Ditch Windows, switch to Linux and you will be safe.

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

    Anonymous Says:
    55

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

    Poorly-rated. Like or Dislike: Thumb up 1 Thumb down 23

    Achilles HELOC Says:
    56

    @ 54

    The Americans didn’t lose in Vietnam…it was a tie

    The Canucks didn’t lose in the Stanley Cup finals, the refs stole it from them

    The dictatorship of the proletariat is inevitable, it was just poorly implemented in Russia…wait until the Cuban socialist model catches on

    And the bull market didn’t end in Vancouver RE … Y’all just got bored

    Hot debate. What do you think? Thumb up 5 Thumb down 6

    @VMD: “7249 Stride Ave”
    Go to Google maps, look up this address, go to streetview, and look at the row of houses across the street.

    Hot debate. What do you think? Thumb up 15 Thumb down 1

    @jesse
    lol, a parade of cookie cutter SFHs. Upper bedroom windows enjoy commanding view of passing vehicles’ tires.
    Pride of ownership…

    Hot debate. What do you think? Thumb up 14 Thumb down 2

    patriotz patriotz Says:
    59

    Well-loved. Like or Dislike: Thumb up 38 Thumb down 2

    A stunning case of tax and mortgage fraud is on trial in Toronto. Notice of Assessments were doctored up to help clients qualify for larger mortgage. In her defense, the girl on trial says she thought it was okay to do that because “the banks did it too”. The article also notes the extensive real estate holdings and lavish lifestyle of this family. The mother is still on the run. From the Toronto Star:

    “Nadine Talotta, the daughter of international fugitive Doreen Tennina, told her multimillion-dollar fraud trial Friday that she made changes on federal notices of assessments for income tax returns after receiving directions from her mother.

    “Yeah,” she said when senior Crown lawyer Connie Zary pressed her about raising income numbers on assessments. But Talotta quickly added she wasn’t part of any fraud.

    Talotta, a “senior accounting specialist” at Tennina’s tax preparation firm insisted she didn’t believe there was anything wrong with the changes because she thought other agencies such as banks did it too.

    The Crown has suggested that the firm jacked up income numbers on the assessments to help clients qualify for mortgages.”

    http://www.thestar.com/news/gta/crime/article/1314075–woman-concedes-making-bogus-tax-data

    Like or Dislike: Thumb up 0 Thumb down 0

    A stunning case of tax and mortgage fraud is on trial in Toronto. Notice of Assessments were doctored up to help clients qualify for larger mortgage. In her defense, the girl on trial says she thought it was okay to do that because “the banks did it too”. The article also notes the extensive real estate holdings and lavish lifestyle of this family. The mother is still on the run. From the Toronto Star:

    “Nadine Talotta, the daughter of international fugitive Doreen Tennina, told her multimillion-dollar fraud trial Friday that she made changes on federal notices of assessments for income tax returns after receiving directions from her mother.

    “Yeah,” she said when senior Crown lawyer Connie Zary pressed her about raising income numbers on assessments. But Talotta quickly added she wasn’t part of any fraud.

    Talotta, a “senior accounting specialist” at Tennina’s tax preparation firm insisted she didn’t believe there was anything wrong with the changes because she thought other agencies such as banks did it too.

    The Crown has suggested that the firm jacked up income numbers on the assessments to help clients qualify for mortgages.”

    http://www.thestar.com/news/gta/crime/article/1314075–woman-concedes-making-bogus-tax-data

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

    So far this month, inventory has been growing at an avg +128 daily.

    http://vancouverpeak.com/Thread-January-2013-Stats

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

    At that pace, we’ll finish the month at TI: 14,470. A solid base as we head towards the spring.

    Hot debate. What do you think? Thumb up 10 Thumb down 2

    Best place on meth Says:
    64

    @crashcow

    “A solid base as we head towards the spring.”

    Is that a skiing reference?

    Cause I love skiing, among other things.

    Hot debate. What do you think? Thumb up 15 Thumb down 1

    @meth: Lot’s of fresh powder so far. Market will have a nice run down the hill. But this time, there won’t be no lift ride back up.

    Well-loved. Like or Dislike: Thumb up 33 Thumb down 2

    To see just how awesome a month-end inventory of 14.5K is, take a look at b5baxter’s graph:

    http://vancouverpeak.com/attachment.php?aid=10

    Like or Dislike: Thumb up 4 Thumb down 3

    Ever declining sales are driving prices down even without a big inventory spike. The thing to watch in a couple of months will be unprecidented numbers of PRICE CHANGES. That alone might trigger a whole bunch of new PANIC listings that could drive prices below our wildest dreams.

    Well-loved. Like or Dislike: Thumb up 28 Thumb down 2

    how is Victoria doing in terms of sales, pricing? I have a someone on my FB page that hypes her Victoria listings. she became realtor very recently. She is pumping Victoria that you would think we are back in boom 2003 year.

    Like or Dislike: Thumb up 1 Thumb down 2

    Groundhog Says:
    69

    @SDR

    I only loosely pay attention through this blog:

    househuntvictoria.blogspot.ca/?m=0

    As far as I know theyve been in decline for a while longer then Vancouver and theres been no improvement lately.

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

    Richmond realtor James Wong 2013 outlook:
    “We could be facing a 10% or more decline for the next 18 months”
    http://richmondbcrealestates.com/?p=859#more-859

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

    Last January, VW SFH added about 200 in inventory over a 2 week stretch from January 5th to 19th.

    This year we’ve added 27 at the half way point of that same 2 week stretch.

    Sales are lower this January so far. Total listings are growing, but not exploding. Early days yet, but this is looking like steady as she goes drip drip drip downward; not BOOM. We’ll get there either way.

    Hot debate. What do you think? Thumb up 20 Thumb down 1

    Makes sense to some degree, why list when nobody’s buying?

    As loans start coming up for renewal over the next year it will be interesting to track how much exposure to Vancouver — and at what spread — lenders will want to have.

    Hot debate. What do you think? Thumb up 16 Thumb down 1

    pricedoutfornow Says:
    73

    Saturday anecdote. Went to see a townhouse for rent in our neighbourhood (sure is a lot of selection!), noticed that yet again the place we went to see was listed for sale, as well as for rent. The original rent was $1800 in December, now down to $1650. Asked the landlord about her plans for the property, she admitted that it was recently for sale but “the offers were so LOW! This is VANCOUVER! I had to turn them down because I’m not going to give it away!” Huh. Guess some people are still drinking the Kool-Aid. I think a lot of people are really going to be stuck.. quite a few places in my hood are for rent AND sale, and doesn’t seem like a lot of them are getting much luck in either case (anyone know why the rental market is so slow, is it just the time of year?) Anyway, we decided to pass on the property, seemed like a nice place but for various reasons just the wrong time of year for us to move. We’ll check back again in the spring…or maybe the market will crash by then and we’ll buy. Not holding my breath tho!

    Well-loved. Like or Dislike: Thumb up 41 Thumb down 1

    Or put another way VHB, whether pop or pfffft, the bubble still deflates, the same amount of air escapes ultimately.

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

    Sellers really are staying cool and not panicking. It’s surprising. What will be the breaking point, the tipping point, the Depends change point (for Boomers)? Slow Chinese New Year probably wont be enough. Maybe electing the NDP in May will spook the Boomers enough to hit the ejection button at any price. In the US apparently it was a ramp-up in foreclosures that triggered the panic. It’s gonna be fun to watch.

    On pricing, every buyer now must be aware of what is happening. If buyers expect a 5-10% drop then it only makes sense to bid a cushion of an extra 5-10% below that. Bidding 20% under the ask (or assessment if lower) is rational at this point – even for a bull.

    Well-loved. Like or Dislike: Thumb up 38 Thumb down 3

    Maybe in 2014? Says:
    76

    Had a courtesy visit by the real estate agent we had used to buy/sell in the past. After selling our place in 2011 we had indicated we would be looking to re-enter the market in 2013 (obviously not quite there yet) so he was just following up.

    Always been a little too optimistic for my liking but always worked extremely hard for us in the past and always found him to be honest.

    Anyway paraphrasing:

    1). Last 1.5 to 2 years have been terrible for his company. 2011 was the first time in memory when the company was in the red.
    2) Did not believe CNY was going to make much of an impact and thought going forward the market would be more dictated by local buyers than in years past.
    3) Plenty of property speculation in both the west and east sides.
    4) Did not think we were hurting ourselves by waiting until 2014 to see how things play out.

    Well-loved. Like or Dislike: Thumb up 49 Thumb down 2

    Girlbear Says:
    77

    Was out with a realtor friend last night. He said everyone has been pulling their listings and plan on putting back on in spring when market is “hot” again. He is a friend so he didn’t pull the BS on me. Thinks it will be ugly. Said the hardest part is telling owners that their property is no longer worth what it might have been in 2011…most get so offended. But he also has no interest in trying to sell a house he knows won’t get sold as price is too high.

    Well-loved. Like or Dislike: Thumb up 69 Thumb down 1

    HAM Solo Says:
    78

    Is it just me, or does the flip of a commercially marginal bar/gallery hotel to some insane condo developer not warrant “lament”? Personally, I’m happy the for the property owner who got it off before TSHTF.

    http://www.theglobeandmail.com/news/british-columbia/patrons-lament-closing-of-waldorf-hotel-after-sale-to-condo-developer/article7139364/

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

    From an article in the Financial Post entitled “Are stubborn sellers killing the real estate crash?”

    “The one thing missing from the market, for all those people looking for a crash, is a catalyst or an event that will force people to reduce their asking prices. Before this housing market burns up in flames, it needs some type of spark.

    And, if you talk to some people, that key event — two that come to mind are a spike in interest rates or job losses — is not happening any time soon.

    “Crashes don’t just happen in a vacuum, you need a trigger,” says Benjamin Tal, deputy chief economist with CIBC World Markets. “I can’t point to any crisis in the history of crashes that didn’t have a trigger.””

    http://business.financialpost.com/2013/01/12/stubborn-sellers-killing-canada-real-estate-crash/?__lsa=b934-85dc

    Hot debate. What do you think? Thumb up 13 Thumb down 4

    Hello K,

    The catalyst will be LOW sales growing to NO sales.

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

    Just to be clear, I am not agreeing with the Financial Post article that says you need a catalyst to spark a crash. I was just posting the article, not endorsing it. But as commenters on this site have pointed out, listings don’t seem to be exploding in 2013. As someone here said, sellers really are “holding their cool”. So it appears the real estate cartel and the banks are going to jump on the sluggish listings growth to point as evidence that the market is not crashing. That’s what the CIBC economist did in the article. So this is an example of the kinds of arguments we will be seeing from the bulls.

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

    pricedoutfornow Says:
    82

    “From an article in the Financial Post entitled “Are stubborn sellers killing the real estate crash?”

    It’s only a matter of time….there are plenty of owners out there right now who can no longer sell nor rent their properties (it would seem). People can only go on so long paying 2 mortgages on 2 properties before they run into financial distress. Also people who NEED to sell (my parents for example, are currently holding onto two properties-one is a house recently inherited from my deceased grandfather-they just want to get rid of it and don’t really care how much it sells for).

    If I remember correctly, there was a period in the US as well where it seemed like the market would never fall, because buyers refused to buy at high prices and sellers refused to lower their prices. Then things changed. It will happen.

    Well-loved. Like or Dislike: Thumb up 30 Thumb down 1

    #81,

    You are absolutely correct.
    There was no catalyst in the US in 2006. People just stopped buying and we all know what happened to the financial markets because of that.
    Like James Hodgins said recently, real estate related industries will send Canada into a recession as the housing marked dries up.

    The best or worst thing for high prices is high prices depending on what side of the fence you’re on, and it looks like buyers have got the message. It’s only a matter of time until sellers do.

    Hot debate. What do you think? Thumb up 16 Thumb down 0

    A sign of the times?

    This ad on craigslist:

    PT Position for Realtors To Bridge the Financial Gap Between Closings

    http://vancouver.en.craigslist.ca/van/rej/3542304715.html

    Doesn’t say what the ‘opportunity’ is, but perhaps a sign.

    Like or Dislike: Thumb up 7 Thumb down 0

    One interesting speculation on the lower listings volumes is the removal of “future” sales, ie places that are not finished construction yet, and this is done every year. If for some reason this stock is slow to be put back on the market it could lead to lower listings volumes.

    I don’t think there’s too much in that, but something to consider. For Van West SFH I expect it’s simply low sales volumes gives few the incentive to have their places listed for many months before a sale, and not any concerted effort to withhold listings.

    Like or Dislike: Thumb up 4 Thumb down 0

    No Noise Says:
    86

    From what I’m hearing rents are really dropping (doesn’t help with endless condos starts/completions) – the CATALYST could be overextended speculators who can’t get required rents and are therefore bleeding cash and will be forced to sell. Also, when valuations drop below outstanding mortgages (recent low down payment buyers) these owners will be enticed to walk away from their “underwater” property.

    Hot debate. What do you think? Thumb up 11 Thumb down 0

    Anonymous Says:
    87

    “Are stubborn sellers killing the real estate crash”

    Vancouver is declining faster than most US cities did during their crash. The crash is on. Unless of course you don”t want to call what happened in the US a crash. Call it what you want real estate corrections almost never happen over a few months. It takes years. The end result is the same. Prices go back to normal or even over correct.

    Well-loved. Like or Dislike: Thumb up 34 Thumb down 1

    patriotz patriotz Says:
    88

    “There was no catalyst in the US in 2006. People just stopped buying”

    Exactly. Somebody always has to sell. What happens if nobody wants to buy? Prices go to ZERO.

    Now Vancouver isn’t Detroit and there is always somebody willing to buy at some price. But it’s what those people are willing to pay that sets the market price – not what sellers want to get.

    Another hole in the “people will just stop selling” argument is that most discretionary sellers are planning to buy another property, so if they decide not to sell they are also deciding not to buy.

    Well-loved. Like or Dislike: Thumb up 28 Thumb down 1

    Anonymous Says:
    89

    Are rents dropping? I think so. The place I live in (2 bedroom downtown) I started renting 4 years ago and have not had a rent increase. I thought I got a pretty good deal on rent at the time. I always check listings and similar places have always been advertised for 20% or more higher. Just scanning CL and I see places with asking rents at what I am paying by property managers. This is the first time I have seen this in 4 years.

    Hot debate. What do you think? Thumb up 16 Thumb down 1

    patriotz patriotz Says:
    90

    “Also, when valuations drop below outstanding mortgages (recent low down payment buyers) these owners will be enticed to walk away from their “underwater” property.”

    Owner-occupier walkaways are really the last phase of RE busts. The phases are:

    1. People who have to sell drop their price because they have to.
    2. Investors sell because they see prices dropping and don’t want to end up underwater.
    3. Owner-occupiers who had planned on cashing out (e.g. for retirement) see prices dropping and decide to sell now.
    4. Investors who didn’t catch on to #2 end up underwater and walk away.
    5. Owner-occupiers walk away, usually because of job loss or condo assessments.

    I don’t expect to see much of #5 until 2015.

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

    Anonymous Says:
    91

    “people will just stop selling” argument is that most discretionary sellers are planning to buy another property, so if they decide not to sell they are also deciding not to buy.”

    Exactly. Realtors know this so they will be pushing those who want to sell to drop their price pointing out the property they want to buy is now cheaper and will make up the difference. If realtors don’t do this they will starve.

    Hot debate. What do you think? Thumb up 9 Thumb down 1

    Vote Down The Facts Says:
    92

    No Noise, you can’t just walk away like many people did in the US as Canadian mortgages, for the most part, are full-recourse.

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

    #87

    “most discretionary sellers are planning to buy another property, so if they decide not to sell they are also not deciding to buy”

    Good point patriotz.

    The big surprise so far in 2013 is the low number of sales.

    Like or Dislike: Thumb up 4 Thumb down 1

    oneangryslav2 Says:
    94

    @#91:

    No Noise, you can’t just walk away like many people did in the US as Canadian mortgages, for the most part, are full-recourse.

    According to this source only 12 states in the US are non-recourse, while the other 38 and DC are recourse. A quick perusal of each category suggests no clear association between extent of real estate bubble (and subsequent crash) and whether a state is recourse.

    Hot debate. What do you think? Thumb up 14 Thumb down 2

    YLTNboomerang Says:
    95

    @68 Anonymous:

    Don’t gauge rents by what Craigslist says, asking rent is not actual rent as everyone starts off asking for what they want and end up getting what the renter is willing to pay. When we moved into our current place just three months ago you had to be fast on your phone and offer to sign asap to get a place (we were looking for a place over 1200sqft downtown which are getting rarer and rarer with all the shoeboxes). I’m now seeing places that before would be snapped up now hang on craigslist for weeks and get price reduced.

    Add to this, the fact that your rent has stayed flat while we have had inflation means your rent has actually declined.

    If you don’t believe me, call up one of the places you see on Craigslist and offer the landlord a lower price and see what happens.

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

    I don’t think Ben Tal’s trigger was required to pop many of these…
    http://vreaa.files.wordpress.com/2012/01/k8947.png
    …especially the one in the middle, nor the tech bubble. Eventually there’s simply no one left foolish enough to continue buying into the pyramid scheme.

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

    Vote Down The Facts Says:
    97

    “According to this source only 12 states in the US are non-recourse, while the other 38 and DC are recourse. A quick perusal of each category suggests no clear association between extent of real estate bubble (and subsequent crash) and whether a state is recourse.”

    Yup, this has been discussed before. But those predicting that Canadians will simply walk away are in for a surprise.

    Hot debate. What do you think? Thumb up 3 Thumb down 8

    Anonymous Says:
    98

    From slow sales to no sales at all on Van West, that will be a historical first. No one in the right mind would buy a SFH right now.

    Hot debate. What do you think? Thumb up 20 Thumb down 1

    Groundhog Says:
    99

    @VDTF

    People walking away vs. not walking away has had no correlation to price drops in the US crash and I agree we won’t see the “jingle mail” happening here to the same extent as the states if at all. But….I can’t find it now but I saw somewhere that in previous RE crashes in Canada some people DID end up walking away and the CMHC/Banks did not pursue a lot of them due to the costs involved and low likelihood of ever being repaid.

    Take that with a grain of salt, I can’t find any sources for it right now but will look, but don’t be so sure that people won’t walk away here even with recourse loans. When you’re house is worth $300,000 and you have $600,000 in debt on it, some people will simply give up trying no matter the repurcussions.

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

    patriotz patriotz Says:
    100

    “But those predicting that Canadians will simply walk away are in for a surprise.”

    In practical terms every foreclosure is the same as a walkaway – it makes no difference to the lender or the borrower whether the borrower simply takes off or gets booted out by the sheriff.

    Do we have foreclosures in Canada right now? Of course, and the great majority of them are (surprise) in markets which have already seen substantial price declines.

    That’s what matters.

    Hot debate. What do you think? Thumb up 19 Thumb down 1

    Vote Down The Facts Says:
    101

    It actually does make a difference, because borrowers are likely to have exhausted much of their wealth before the bank finally forecloses. A walkaway probably won’t have started tapping their retirement savings, for example.

    Like or Dislike: Thumb up 4 Thumb down 4

    painted turtle Says:
    102

    Are realtors interested in keeping the market prices at the top? Some are:
    http://www.realtor.ca/propertyDetails.aspx?propertyId=12702675&PidKey=-230827835
    My understanding is that Claire Rockel is behind this project, and about to get burned.
    These apartments are of poor quality, where built under the rain last winter, living space is very narrow (nothing like the pictures) and I suspect that the sound proofing is not adequate.
    They look good only on paper and could attract foreign investors who buy site unseen. But surely not someone who intends to LIVE there.

    Also, I had enough of MLS “townhouses” like this one = 2 bedroom ground level apartment.
    http://www.realtor.ca/propertyDetails.aspx?propertyId=12595563&PidKey=1282605805
    Realtors are losing credibility.

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

    An email from Onni for the (presale) Westwood project in Coquitlam Centre:

    “Thanks for your interest in Westwood. Here is some more information regarding our project, please see all the details as below:

    Type Plan Size Starting Price Price after Prom.
    One Bed Plan A 595 S.F. – 600 S.F. $ 252,900 $ 242,900
    One Bed Plus Den Plan G/J 695 S.F. $ 305,900 $ 295,900

    Two Bed

    Plan B,D,D1&H

    845 S.F. – 880 S.F.
    $ 349,900 $ 334,900
    Two Bed Plus Den Plan C, E, F & I 975 S.F. – 1180 S.F. $ 402,900 $ 387,900

    Westwood is offering very attractive incentives for holidays right now: $10,000 discount for one bed and one bed plus den; $15,000 discount for two bed and two bed plus den.

    Besides great location, unobstructed view, Club W amentities, and conveninent transit, for very floor up, we only charge $1,000 for one bed and one plus den, and $1,500 for two bed and two plus den now. Therefore, we encourage our clients go with higher floor for nicer view and better home value.”

    Like or Dislike: Thumb up 5 Thumb down 0

    So… $10-15k “incentives” for holidays. I wonder what holidays? The Family Day in February?

    Also, only $1k more for each floor? That seems a relatively good deal. Usually they go for $5-10k per floor at other projects.

    Regardless, >$400/SF is still way overpriced for Coquitlam. Such prices can be found easily in Burnaby nowadays.

    Like or Dislike: Thumb up 9 Thumb down 0

    “Crashes don’t just happen in a vacuum, you need a trigger”

    I recall US stocks being quite overvalued in 1998. The Asian crisis hit in 1998 and the Fed eased. People jumped in and were saying exactly this in 1999 and 2000. Valuation was ignored, stupidity reigned, and the the whole thing boiled over. The S&P 500 returned to its 1998 level in 2009.

    Like or Dislike: Thumb up 5 Thumb down 1

    patriotz patriotz Says:
    106

    “A walkaway probably won’t have started tapping their retirement savings, for example.”

    Nor would someone who just stops paying and stays put until they’re kicked out, if they have any sense.

    It’s not about whether they walk away or not, it’s about how smart they are.

    Like or Dislike: Thumb up 6 Thumb down 1

    patriotz patriotz Says:
    107

    “Crashes don’t just happen in a vacuum, you need a trigger”

    What was the “trigger” for the Alberta crash which started mid-2007? Keep in mind the price of oil kept rising until a year later.

    Hot debate. What do you think? Thumb up 9 Thumb down 1

    RealityCheck Says:
    108

    This chart from the Bank of Canada shows we are presently less in mortgage debt than USA and this is after their crash.

    https://twitter.com/CdnMortgageNews/status/290022922389712896/photo/1

    Interesting stats indeed. I think in Canada we have the haves (paid off houses) or the have-nots (large mortgages). Very little in between. Any other way to explain this stat?

    Like or Dislike: Thumb up 2 Thumb down 1

    Anonymous Says:
    109

    “A walkaway probably won’t have started tapping their retirement savings, for example.”

    LOL ‘retirement savings’. We are talking first time home buyers who couldn’t even save a down payment or put all their savings into a down payment. They have no savings to tap into. The group that walks away is living off credit. Remember our household debt levels are higher than the US was at peak.

    Hot debate. What do you think? Thumb up 14 Thumb down 2

    Anonymous Says:
    110

    “I think in Canada we have the haves (paid off houses) or the have-nots (large mortgages)”

    Yes and the have nots that own houses and have to sell set the price of housing.

    Hot debate. What do you think? Thumb up 11 Thumb down 2

    Anonymous Says:
    111

    @109: Anonymous

    Yes and the have nots that own houses and have to sell set the price of housing.

    Anyone that has to sell would set the market price. In this market, the haves who own their homes will have more dramatic effects. Imagine your primary asset being worth over a million dollars but depreciating 5-10k per month. Those are tax free gains for many, making those losses hurt twice as much. If you have no retirement savings and your only hope is to sell the home and take the proceeds and rent a smaller place (kids gone etc.) then you have some serious motivation to sell and take less than the comparables in your area since the longer you wait, the more you stand to lose. Village whisperer has been calling this the boomer trigger but my family has also seen it with my grandparents passing. Still no sale of grandmas place and they are worried that if they don’t catch someone in this spring market they will be stuck chasing the market lower. So the home has been reduced by 20% from the original fall list price to attract some attention… And that’s not to attract a bidding war, it’s “priced to sell”. The original listing price I suspect was market value from spring 2012 and the realtor just was not up to speed in adjusting their assessment (took everyone by surprise). Oh how things have changed in a year.
    I’m that respect, Tsur and Cam are quite right. Why would anyone commit financial suicide if they don’t have to and sell their home for a loss when they can just keep loving in it. It’s the ones who can sell for a profit that are going to be dangerous in dropping the market an there are some massive capital gains to be harvested out there… If you’re early enough …

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

    down in flamez Says:
    113

    The best part of that article:

    But what if you wait too long? Everyone knows what happened in Vancouver real estate. One day, the money turned off like a tap. What if teams interested in Luongo make alternate plans, unwilling to meet those Canucks’ demands?

    Hot debate. What do you think? Thumb up 12 Thumb down 1

    Many Franks Says:
    114

    Oops, sorry about that missing close tag. More media:
    Cooling in housing market seen as ‘healthy’

    “Stepping back and looking at the market overall, it is clear now that it peaked nationally in the May to June time frame,” Royal LePage CEO Phil Soper said in an interview. “This cyclical correction is well under way, and I would expect that it would continue through the first half of 2013.”

    Compare that to what he said about this time last year:

    “Widespread calls for a major real estate correction in 2012 simply can’t be justified,” Soper said in a statement. “The industry has significant momentum entering the year, and buoyed by the stimulative effect of very low interest rates, we expect the market to continue to expand — albeit at a slower pace.”

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 1

    Anonymouse Says:
    115

    “LOL ‘retirement savings’. We are talking first time home buyers who couldn’t even save a down payment or put all their savings into a down payment. ”

    No we’re not, we are talking anybody who might find themselves in a severe negative equity position. Do you really think that all the people who’ve spent $1m+ on West Side homes are first time buyers? Or that the only people who suffered in the US were FTBs?

    Like or Dislike: Thumb up 1 Thumb down 3

    oneangryslav2 Says:
    116

    @111: Except, unlike in residential real estate (where you can always rent), there are some teams (GMs) who simply “have to buy”. If you’re a GM whose team is in danger of missing the playoffs, and that means the difference between keeping your job or being fired, you’re a potential buyer. From that perspective, there is strong latent demand for the services of a goalkeeper of Luongo’s quality.

    Since this topic was brought up, I think the best move would be to keep Luongo for the whole (lockout-shortened) season, unless Gillis gets an offer that’s too good to pass up. Either way, I’d be very happy if I were in his shoes right now.

    Like or Dislike: Thumb up 0 Thumb down 1

    Ben Rabidoux Says:
    117

    @Reality Check

    It’s true that on the basis of mortgage debt alone, Canada is still behind the US when comparing outstanding debt to GDP. When we factor in other consumer debt, we find we are not just slightly below where the US peaked and well above where they are currently.

    There’s a chart in this post:
    http://theeconomicanalyst.com/content/comments-cibcs-no-us-style-crash-canadian-housing-report-part-2

    One interesting phenomenon is that HELOC debt is FAR higher in Canada….3-4x higher than in the US when compared to GDP. This is “technically” housing-related debt. If mortgage debt and HELOC debt were aggregated, we’d find Canada is well above US currently, but still behind Australia.

    That chart doesn’t give me a whole lot of comfort.

    Well-loved. Like or Dislike: Thumb up 35 Thumb down 0

    Ben Rabidoux Says:
    118

    Oops…”not” = “now” in second sentence below…

    Like or Dislike: Thumb up 4 Thumb down 0

    Anonymous Says:
    119

    “No we’re not, we are talking anybody who might find themselves in a severe negative equity position.”

    The people that will find themselves in the most severe negative equity position will be first time buyers who bought over the past 5 years. That is well over 30% of home purchases. Not everybody who owns a home needs to walk away to make foreclosures sky rocket like in the US. In the US it wasn’t the home owners who owned houses pre bubble that walked away for the most part. Although, I do agree there will be many on the westside who will walk away once values plumet.

    Like or Dislike: Thumb up 5 Thumb down 0

    @Ben

    Tax deductibility might explain HELOC vs. mortgage debt levels in Canada and US. Mortgage interest is of course deductible for US residents, while HELOC interest can be deductible for Canadians if invested (while mortgage interest isn’t). So Yanks load up on mortgage debt while Canadians load up on HELOC. Probably explains some of the difference….

    Like or Dislike: Thumb up 8 Thumb down 0

    Anyone up for waving a red flag at some bulls?

    I came across the comment below from “Kevin” while checking Dr. Housing Bubble’s site about “Minsky Moments” in seller psychology.

    A dare you to do it bears. I might. If you do, please report back here with results. Grab a video of the faces of sellers and post to YouTube for bonus points.

    “Kevin said…

    In the Baltimore Housing Bubble, sellers are having a hard time understanding that their houses are not worth as much as they are trying to sell them for. What I like to do to fuel the soon coming onslaught of decline is to go to open houses and offer 50% of their asking prices. I know this seems cruel and unusually, but when the seller and their agents jaws drop, I simply point to the price on their open house flier and I drop my jaw too. Then I point to their hanging 60 inch plasma TV and I say, “My price also includes you throwing in that TV too.” This is point that I usually get thrown out.

    It not like I was offender the other buyers…I am almost always the only person looking at their home. I then proceed to walk next door to the neighbors house and proceed with my script. I can spend a whole afternoon doing this in just one neighborhood. Call me sadistic, but I find this truly entertaining to see the seller reactions. Even better is the agents reaction. Sometimes I even pull out my check book and start writing a check. This usually get sellers angry. So to make it even better, I start to write a second check out for 30% of the selling value, but I post date it for 9 month later and I ask the seller which they would like. One guy called the cops on me. I decided to wait and see what the cops would do. I explained to the cop that I was trying to buy a house. The cop tells the seller that if they are having an open house then I am allowed to come and make an offer for their home. I trying to get a movement started. Anyone care to join?

    -Kevin
    8:18 PM, April 03, 2007
    sed said…

    ROFLMAO…holy cow, I can’t stop laughing. They called the cops, ROFLMAO….they’ll wish they had taken the first check. Thank you, thank you.
    8:31 PM, April 03, 2007
    samohts said…

    Kevin, what you are doing makes complete sense to me! My husband and I do it every weekend – although not to the extreme :)
    A lot of sellers are still in 2005 with their asking price. It’s a different market – they need to wake up. The sellers certainly reacted when buyers were offering over-asking price for their house a few years ago. Now it’s time they wake up and realize they’ll be getting a lot less.
    8:44 PM, April 03, 2007 ”

    http://drhousingbubble.blogspot.ca/2007/04/manias-panics-and-crashes-2007-first.html

    Hot debate. What do you think? Thumb up 16 Thumb down 0

    And here’s Dr. Housing Bubble’s Minsky Moment tale for housing/seller psychology (my apologies for posting this last week as well, but it is relevant to the comment stream at the moment regarding foreclosures and triggers):

    http://drhousingbubble.blogspot.ca/2007/07/housing-minsky-moment-3-factors-prime.html

    Like or Dislike: Thumb up 2 Thumb down 0

    Re #119 kevin is brave haha… After all many people have guns in the US

    Like or Dislike: Thumb up 2 Thumb down 1

    rockeycycle Says:
    124

    Where’s Drachen??

    Like or Dislike: Thumb up 0 Thumb down 0

    “Another hole in the “people will just stop selling” argument is that most discretionary sellers are planning to buy another property, so if they decide not to sell they are also deciding not to buy” ~~Patriotz
    ————–

    That was an excellent comment Patriotz. It is worth repeating it again even though 5 others already referenced it. I think you have keyed in on one of the most important reasons for coming weakness in homes sales and ultimately prices. Sellers withdrawing from the market and limiting supply do not hold up the market. None of us believe that tripe. The reluctant vendors will only end up reducing gross numbers of sales further.

    Like or Dislike: Thumb up 7 Thumb down 0

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