FFFA! What’s happening?

It’s that time of the week again!

This is the day, the time, the place, it’s Friday Free For All time!

This is when we do our regular end of the week news round up and open topic discussion thread for the weekend.

-Where are the stories?

Hopefully the lazy admin will add some soon, but in the meanwhile it’s your turn.

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

Interest rates are rising. This should lead to a decrease in prices but sellers don’t seem to be budging yet.

The timing is tricky for those of us holding onto rate-holds and actively searching for a place to call home. My 2.89% still has a little bit of time left and I’ve got a 3.39% that will give me another two months after that.

My goal is to buy with a low interest rate and a low price but I’m doubting that prices will drop fast enough to get the best of both worlds.

Now I just need to find the willpower and balls to let the rate-holds expire in hopes that future price decreases will justify the higher rates of next year.

Ulsterman
Member

I missed the previous discussion on incomes in vancouver and prices so well laid out by Burbonian. Here’s my two cents:

Did anyone hear the MacLeans magazine editor talking with Bill “Vancouver is the Bestest Ever!!” Good on CKNW? The guy was saying that median incomes were in the 40k range and family medians in the 65k range. I listened and thought “how can they have this discussion and not mention house prices?” I feel like Warren Buffet compared to these poor median income earners. How do they possibly raise families on 65k? And to think that half the people earn less than this, really? In Vancouver? How are people buying with these incomes? Baffling.

patriotz
Member

@1:

You do understand that those buying at today’s higher prices with a 2.89% rate-hold are going to have to pay the going, i.e. higher rates when the mortgage comes up for renewal?

To top it off, they will likely be underwater on the mortgage. That means they can’t shop around at renewal time. What does that mean?

So what’s better? Paying a higher rate on a higher price, or a higher rate on a lower price?

yvr2zrh
Member
Here’s an interesting question to all of you. I was wondering about CMHC mortgages and what we could be seeing in the future with price drops. Assume someone bought early this year with 5% down and a 2.79% mortgage. Then assume that upon renewal, the property value has fallen by approximately 10%, and equity in the property is exactly $0. Now let’s say that rates have gone up to 5.5%. This will be a tough situation won’t it? What are the owner’s options at renewal? In order to have the existing CMHC insurance continue, do they have to stay with the same lender? Do they have to continue down the amortization period (i.e. , 20 years now that first 5 have gone by)? Can they shop around? Will they be forced to accept whatever the lender gives them for a… Read more »
Stephen
Guest
Stephen
From Thirties Grind: “I don’t know if you’ve been to Marpole lately, but I wouldn’t consider it a “prime” area. Lots of empty houses, quiet streets and nothing to speak of in terms of entertainment, restaurants or shopping. Why the land here is so valuable is beyond me.” http://thethirtiesgrind.com/2013/08/15/absurd-vancouver-property-august-15-2013/ I just want to say I really agree with this quote. I grew up in Marpole and I used to think it was great. Now I live in New West. A few months back, I started thinking about moving back to Marpole because of nostalgia. Then I realized I wouldn’t be able to walk to any grocery stores. It’s important for me to have a grocery store that I can walk to because I can’t drive due to vision issues. With Safeway on Granville shut down until they finish building the… Read more »
Manatee
Guest
Manatee

I just thought I’d share a little anecdote which makes me think that housing may still have a little ways to go. No less than 4 of my co-workers have either recently bought a place or are looking to buy. They’ve all been considering buying a place for a while, and as soon as interest rates started rising they were worried that they wouldn’t be able to afford a place after their rate holds expire. With the added time pressure, this group is likely to jump into the market at the worst possible time.

Is it just me, or does it seem a bit crazy that people are rushing to buy when they can’t even afford these places at today’s rates, let alone at where rates could be in 5 years? This looks suspiciously like a bull trap to me.

Loon
Guest
Loon
Softy
Guest
Softy

“I just thought I’d share a little anecdote which makes me think that housing may still have a little ways to go”

Real estate as had a “little ways to go” for the last 12 years. A year from you or two or three years from now similar anecdotes will be posted on this blog.

Softy
Guest
Softy

“Interest rates are rising. This should lead to a decrease in prices but sellers don’t seem to be budging yet.”

Why would they budge when sales are white hot? Sellers have not budged during the previous three years of credit tightening. Why would they budge now. There will be no budging. We will have flat prices and a soft landing.

Softy
Guest
Softy

“My goal is to buy with a low interest rate and a low price”

Hope and dreams. Pie in the sky. This kind of thinking keeps you on the sidelines for 12 years and counting.

Pdub
Guest
Pdub

Oh Softy, you are such a dunce!

CPI for BC in June came in flat, which is an improvement over the previous months. Vancouver’s numbers have been basically in line with the province, so it means we are feeling the full effect of any rate increases. While I think the rate increases are a bit overdone for now (see today’s US housing numbers) it is just the beginning of a long-term trend.

Earlier this week Krugman published some charts showing the 30+ year decline of both nominal and real interest rates. Of course that period also saw the price increase of many assets, including Vancouver property. So, if that era is now over, does that mean we are going into a prolonged period of declining asset prices,including Vancouver property?

mosesupposes
Guest
mosesupposes

Softly – you’re such a troll. It’s actually pretty amusing.

“Sales are white hot” = so now a reversion to 10 year averages is “white hot”. Sure.

And is pretty typical to see places selling for 5% or 6% below asking in a white hot market?

“three years of credit tightening” Some tightening – Flaherty’s attempt at using half-assed tightening to engineer a soft landing has failed miserably. All he did is create inertia and two years of absolutely brutal sales. True tightening will only happen when rates rise which is finally happening.

Face it buddy – you’re going to have to get yourself an honest job. Too bad comedy doesn’t pay well.

Softy
Guest
Softy

More evidence that houses are where it’s at and condos are garbage:

http://business.financialpost.com/2013/08/20/condominium-prices-falling-while-low-rise-homes-continue-to-soar/

Condos are for serfs.

Softy
Guest
Softy

How can you say:

“Flaherty’s attempt at using half-assed tightening to engineer a soft landing has failed miserably”

And then say:

“All he did is create inertia and two years of absolutely brutal sales”.

Well, the latter is a soft landing. Flaherty clearly did not fail.

Turkey
Guest
Turkey
An embarassment of riches! Mortgage rate hikes put the squeeze on Metro Vancouver homebuyers. Benjamin Tal: “The unemployment rate will go down, the wages will rise — you know, the positive impact of good economic news — and that will allow people to be able to tolerate this increase in interest rates to a bigger extent,” he said. “My stove is on fire. But, don’t worry, I have a plan: soon, the whole house will be on fire, and that’ll bring the fire department. They’ll put it out before any real damage occurs.” Miraculously, a tiny squib of truth accompanies this thundering flatus: “I think given the fact that we’ve borrowed so much over the past five, six years, as a society we’ve become extremely sensitive to higher interest rates. And it’s starting — we are already starting to see… Read more »
Teddybear
Member
Teddybear
All I know is that I (and wife) am never ever going to spend more than 30% of our net income on housing, and if that means we’ll be renters till we die, be it, I don’t care. We travel, we enjoy our lives. Our rent is 1718 / month, insuite laundry, 2 bdr/ 2 bthr., concrete West End building, parking included, we live in a rental covenant and I’ll be damned if anyone is going to lure me into wasting $1700 more in order to be called “an owner”. An owner of what – a suite in a building which is built to be fixed one day for a sum of 50 k or even a 100k per suite? I don’t care what the maintenance fees are, and I don’t care if the building started leaking one day. We… Read more »
frank
Guest
frank

I trust Benjamin Tal about as much as I trust Tsur Sommerville

Burnabonian
Guest
Burnabonian

Wow Softy hit the booger sugar pretty hard today.

I wonder what’s got him so fired up.

franko
Member
Active Member
franko
I usually go for a walk around the hood after lunch and market close, and while I try to keep greetings with neighbours light, it often drifts into revelations of personal plans regarding RE. Most of the people I encounter are retired and it is surprising how many have plans to downsize or sell…sometime fairly soon, maybe in the fall or maybe next year, or maybe in a couple of years. Of course I can’t resist warning them not to wait too long as rates are rising. What really baffles me is how few are able to make the connection that higher rates could reduce prices substantially. Some are not even aware that rates are indeed rising. At least the number of posts on this site about higher rates is an indication that more people are FINALLY starting to see… Read more »
VMD@work
Guest
VMD@work
@Manatee #6 Agreed. A good friend of mine just bought earlier this month before his 4y-2.99% (30y amort) rate hold from RBC expired. He is a recently-married, first time home buyer. My bro-in-law is sitting on a rate-hold, upsizing from a Rmd TH into a SFH in another suburb. He found a SFH he liked but still needs to sell his Rmd TH first – so far only lookie-loos in the last couple weeks. He put himself, his wife, and his mother-in-law’s name on the mortgage app in order to qualify for enough loans(!) Their plan is to get a bigger house (6+ BR) in a cheaper suburb, with 2 basement/mainfloor suites to rent out. Now my father-in-law is saying “maybe you should also think about buying soon, interest rates are rising and buying a house will becoming more expensive!… Read more »
Son of Ponzi
Guest
Son of Ponzi

Ye doubting Thomases!
Keep your faith!
Victory over the Softys of this world is just one more rate hike away.

Softy
Guest
Softy

“…Softy?”

Well, since you asked, once again the big bank economists are correct, as they have been year after year after year. This is right on:

“The unemployment rate will go down, the wages will rise — you know, the positive impact of good economic news — and that will allow people to be able to tolerate this increase in interest rates to a bigger extent,” he said.</blockquote?

Bears have been wrong for 12 years because they always focus on one variable

Stop all this silly exitement. It makes you look rediculous. Like two days ago when you all went ape over a 65 sales day, only to be drenched by cold water the next day with well over a hundred sales and a 100%+ sell/list ratio.

Softy
Guest
Softy

“Keep your faith!”

That’s right – bearishness is just like a religion.

Son of Ponzi
Guest
Son of Ponzi

@Teddybear #16
Remember it’s “ower” not “owner”.
Until it’s paid up the bank is the owner.

Randy Randerson
Guest
Randy Randerson

Ok,where the hell are the good economic news lately, Softy? Wage in Vancouver hasn’t been increasing more than inflation, in fact it’s probably barely keeping up with it. So how are people able to pay more interest as rate increases, while buying a house that’s absurdly expensive?

Softy, are you secretly Turd Sommerville?

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