FFFA! Debt, Money, Numbers, Investing Fail

It’s that time of the week again!

Time to do our regular end of the week news round up and open topic discussion thread for the weekend, it’s Friday Free-for-all time!

Here are a few recent links to kick of the chat:

Tax auditors hunt for condo flippers
Brace for mortgage renewal time
Local data macro and filtered
Debt burden keeps on climbing
Massive interest rate shock?
Napkin math
Population growth and construction
Some not delighted by Trump U
Sechelt price drops
Experts didn’t see India debt bubble
12 signs you’re a renter
12 signs you’re an owner in Vancouver

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

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ILoveCharts
Guest
ILoveCharts

2.89% rate hold is going to expire soon. I’m renting today. I’m either going to buy in the next week or two or wait for a year or two and see what transpires. I’m looking for a 2 bed/2 bath condo.

Vote up if you think I should buy now.
Vote down if you think I should wait.

Interest Only
Member
Interest Only
August 2013 is all but over. This crash is taking its time. Yesterday I was in Burnaby and my family was talking about how they bought a place in burnaby in 2007 for $500,000 and it is now worth $1,000,000. In that time I managed to save up $500,000 with my wife by living a simple, although non-restricted, life. If I was younger and did not have a business here, I would have moved. I know prices are unsustainable. Not to mention, locals are speaking of rate hikes with a fear in their voice and a tear in their eye. Economy is weak, but is it weak enough: “Statistics Canada today also reduced its estimate of the first quarter expansion to 2.2 percent from 2.5 percent, and revised down its estimate of the annual increase in May to 1.5 percent… Read more »
Softy
Guest
Softy

“This crash is taking its time.”

That is the understatement of the decade.

jesse
Member

Free Friday advice:
Do not feed the trolls. Vote them down fast and they will hate you more than you could ever imagine.

lol
Guest
lol

R bears starting to clue into what the rest of the city has always known?

lol
Guest
lol

loyal cadre! The bears of the central committee order you to expunge dissenting opinions! The harmony of the echo chamber must be maintained!

Softy
Guest
Softy

“2.89% rate hold is going to expire soon. I’m renting today. I’m either going to buy in the next week or two or wait for a year or two and see what transpires.”

If your rate hold expires, just take out a variable rate mortgage at 2.6 percent. Variable rate are not rising and will not rise until the BOC raises its short term rate.

Even Garth Turner thinks that variable rate mortgages are better:

http://www.greaterfool.ca/2013/08/27/be-bold/

Softy
Guest
Softy

“If your rate hold expires, just take out a variable rate mortgage at 2.6 percent. Variable rate are not rising and will not rise until the BOC raises its short term rate.”

Thousands of buyers will do just that, keeping sales red hot.

Rent$385
Guest
Rent$385

Mocking people for entertainment seems to be a favourite pastime here, even so far as to vote down #1 ILoveCharts.

jesse
Member
The Bank of Canada posted 5 year rate — this is the rate used to qualify insured mortgages — rose 20 bps last Wednesday to 5.34%. Rates have gone up more than 20 bps over the past few months, but part of the reason for this was that the federal government had been pressuring banks to keep their posted rates high even as rates dropped. (Remember the stories of Flaherty calling up banks.) Risk free rates have gone up enough now that posted rates are starting to drift up. The “average” lending rate through July was not much higher than from April through June. That meant that the “spread” between the 5 year bond and this average lending rate had dropped. This is in part due to banks having rate holds that are being honoured. It looks as if we… Read more »
Best place on meth
Member
Best place on meth

“If your rate hold expires, just take out a variable rate mortgage at 2.6 percent. Variable rate are not rising and will not rise until the BOC raises its short term rate.”

Great idea, so buyers will be good for about a year until the BOC starts raising their rate.

Then what?

Makaya
Member
Makaya

The Troll Index shows it’s a bad day to be a realtors…

Softy
Guest
Softy

“Great idea, so buyers will be good for about a year until the BOC starts raising their rate”

That’s what they said in japan. 20 years later – zero BOJ rates.

Yalie
Guest
Yalie

@softy

“Great idea, so buyers will be good for about a year until the BOC starts raising their rate”

That’s what they said in japan. 20 years later – zero BOJ rates.

So you’re saying we’re going to be like Japan for the next 20 years?

http://www.marketoracle.co.uk/images/2008/japan-house-prices–nov08.gif

Best place on meth
Member
Best place on meth

“That’s what they said in japan. 20 years later – zero BOJ rates.”

Zero rates and they still had a real estate crash.

Thanks for bringing up Japan.

Softy
Guest
Softy

“Zero rates and they still had a real estate crash.

Thanks for bringing up Japan.”

More bear logic – mistaking cause and effect. Real estate crashed and then rates were taken to zero to counter the deflationary effect of the crash. You know, like what the USA did. You know, economics 101.

I’m starting to understand reasons for the analytical track record of this blog.

Softy
Guest
Softy

“So you’re saying we’re going to be like Japan for the next 20 years?”

More simplistic bear analysis. The USA is like Japan – real etstate crash and then zero rates. Canada is not like USA or Japan – no RE crash but with zero rates. Why do we have zero rates when there was no RE crash in Canada? Because our economy is closely tied to the USA – if they have zero rates so will we.

If USA is like Japan and will have zero rates for a long time, Canada will have zero rates for a long time. Therefore, no real estate crash expected in Canada. It’s a soft landing.

logic
Guest
logic

softy, stop double posting. you only get paid by the realtor spam fund for different posts.

RealityCheck
Guest
RealityCheck

ICBC rates going up 4.9%

BC Hydro Going up.

New Sales tax coming courtesy of Translink.

Standard of living will be going down…

RealityCheck
Guest
RealityCheck

Sometimes I’m ashamed at the level of intellect displayed on this blog that I frequent.

Softy is a NOT a “Bull”. Softy is NOT a “Realtor” or has vested property interests. Any amateur Psychologist could tell you that.

Softy IS a renter who has confronted and accepted his worst fear; that most bear arguments have gaping holes in them. Because of this, he vents and screams AT the BEARS posting on this blog because these arguments have led him astray.

What choices is he left with now? Now that RE is too expensive to jump into? Well, he can attack an ridicule the bears because he has seen the light he previously wilfully never wanted to.

Ashamed I say.

cris
Guest
cris

Please stop response to Softy. That’s the only way to stop her.

AND My Fingers are tired trying to stroll pass its related comments.

PLEASE.

ILoveCharts
Guest
ILoveCharts

Lots of votes indicating I should wait.

What do people think about the fact that apartment prices in Vancouver are about the same today that they were in late 2007/early 2008. That was 5.5 years ago and prices have not grown. Isn’t that an indicator that we are ready for some more growth in prices by now?

Best place on meth
Member
Best place on meth

@cris

“Please stop response to Softy. That’s the only way to stop her.”

As much as I love to troll the troll, you did say please and that’s good enough for me.

Consider me stopped.

crabman
Guest
crabman

@ILoveCharts

It doesn’t matter what prices were in 2007 (or in 1982). You have to evaluate the current market. The average Price/Rent for Vancouver condos right now is about 26 or 27 and the typical cap rate is just under 3%. This is pretty strong evidence of severe overvaluation, not a market ready for growth.

And if you haven’t seen the RBC report, Vancouver affordability is close to all-time lows – even with historically low mortgage rates! With rising rates, it will take a severe correction to return affordability to normal.

http://www.rbc.com/economics/economic-reports/pdf/canadian-housing/house-may2013.pdf

Many Franks
Member
Active Member

TD has tried to model the “borrowing future demand” effects of raising interest rates in Recent Mortgage Rate Hikes In Canada — Answers To Some Common Questions:

Our models suggest that historically, every 1 percentage point increase in interest rates leads to an immediate increase in sales of 6 percentage points as buyers rush to take advantage of lower rates, followed by a 7% decline in the months that follow. Hence, the net impact is a 1 percentage point permanent decline in existing home sales due to every 1 percentage point increase in interest rates.

Says Canadian Mortgage Trends,

That is not catastrophic by any stretch, and frankly it seems like an underestimate, if anything.

Interesting to see someone trying to quantify this.

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