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!

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JD
Member
JD
3 years 7 months ago

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

JD
Member
JD
3 years 7 months ago

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

Short'em High
Guest
Short'em High
3 years 7 months ago
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… Read more »
K
Guest
K
3 years 7 months ago

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

patriotz
Member
3 years 7 months ago

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.

Manna from heaven
Guest
Manna from heaven
3 years 7 months ago

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/

Anonymous
Guest
Anonymous
3 years 7 months ago

@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.

Groundhog
Guest
Groundhog
3 years 7 months ago

@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.

Many Franks
Guest
Many Franks
3 years 7 months ago

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.

hi
Guest
hi
3 years 7 months ago

Hi I was googling and found this site. I’m interested in buying a place. Do you think it’s a good time to buy?

b5baxter
Member
3 years 7 months ago

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.

Bag it and tag it
Guest
Bag it and tag it
3 years 7 months ago

#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…

b5baxter
Member
3 years 7 months ago
Vote Down The Facts
Guest
Vote Down The Facts
3 years 7 months ago

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

😉

HAM Solo
Guest
HAM Solo
3 years 7 months ago
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… Read more »
Crikey
Guest
Crikey
3 years 7 months ago

@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.

VMD
Member
3 years 7 months ago

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

Vote Down The Facts
Guest
Vote Down The Facts
3 years 7 months ago
“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… Read more »
Crikey
Guest
Crikey
3 years 7 months ago

@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.

Wakeup call
Guest
Wakeup call
3 years 7 months ago

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.

jesse
Member
3 years 7 months ago
@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… Read more »
Troll Feeder
Guest
Troll Feeder
3 years 7 months ago

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

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

Crikey
Guest
Crikey
3 years 7 months ago

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.

Van Coffee
Guest
Van Coffee
3 years 7 months ago
Off-topic question on personal banking. This is going to sound naive, but I am honest with myself. I have very little practical experience borrowing money personally, so I am looking for some comps from those of you that have recent personal banking experience. FWIW I am a renter (hopefully this will not get me voted down as much…..). I have a reasonable amount of equity (cash / stocks / short term bonds) totaling over $2.0 million. Anyway – I borrowed some money recently from a Canadian Chartered bank only to establish some credit (because I have never borrowed money). Not… Read more »
Aleksey
Guest
Aleksey
3 years 7 months ago

@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

Anonymous
Guest
Anonymous
3 years 7 months ago

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.

gokou3
Guest
gokou3
3 years 7 months ago

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%.

gokou3
Guest
gokou3
3 years 7 months ago

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.

spit
Guest
spit
3 years 7 months ago

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.

patriotz
Member
3 years 7 months ago

“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.

Best place on meth
Guest
Best place on meth
3 years 7 months ago

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

Now I’m enjoying a cranteeny on the patio.

VMD
Member
3 years 7 months ago

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

shriller
Guest
shriller
3 years 7 months ago
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.… Read more »
Vote Down The Facts
Guest
Vote Down The Facts
3 years 7 months ago

“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.

Anonymous
Guest
Anonymous
3 years 7 months ago

…..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.

Anonymous
Guest
Anonymous
3 years 7 months ago

“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.

VMD
Member
3 years 7 months ago

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%)

VMD
Member
3 years 7 months ago

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

paulb
Member
3 years 7 months ago

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

http://www.paulboenisch.com

Anonymous
Guest
Anonymous
3 years 7 months ago

Yowsers…sales still suck.

ReadyToPop
Guest
ReadyToPop
3 years 7 months ago

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! 😉

VHB
Member
VHB
3 years 7 months ago
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%
chilled
Member
chilled
3 years 7 months ago

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.

An Observer
Guest
3 years 7 months ago

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

jesse
Member
3 years 7 months ago
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… Read more »
rp1
Guest
rp1
3 years 7 months ago

#43 I wonder if it’s the same Tiff.

ReadyToPop
Guest
ReadyToPop
3 years 7 months ago

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

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
3 years 7 months ago

looks like there is another quality poster on vc.info that i over looked, along with that swiss guy and VMD. “An Observer”.

it’s nice to see real numbers instead of the usual patriotz droning on and jesse sucking up to him.

Chabar
Guest
Chabar
3 years 7 months ago

@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.

Achilles HELOC
Guest
Achilles HELOC
3 years 7 months ago

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.”

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