FFFA! Red Flags, BS, Inventory, Learning

You survived the rain!

And here we are at the end of another work week, could life get any better?

And since it’s the end of another week, what say we do our regular Friday Free-for-all post?

This is our end of the week news round up and open topic discussion thread for the weekend. ok? Lets do it!

Here are a few recent links to kick of the chat:
–BOC raises red flags over housing
–A new generation of renters
–Bloated debt risk to economy
–BS Talk?
–Spending Vigour?
–What I learned on VCI
–Inventory Graph
–

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent (though perhaps slightly soggy) weekend!

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patriotz

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Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

@Fake Realtor: “I am not sure if you are aware but to pay capital gains taxes you need to make a net gain. If you were to factor in holding costs and transactions costs on the above there would be a net loss on buying and selling westside homes over the past 4 years.”

You are conflating the capital account with the income account. They are separate and are taxed differently.

If I borrow money to buy a house, rent it out at a loss, and then sell it for more than I paid for it, I have a capital gain on the house, which is distict from the loss from renting it out which I incurred each year.

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patriotz

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After resources, there’s no Plan B for B.C.’s economy

No plan B? What about RE?

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patriotz

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After resources, there’s no Plan B for B.C.’s economy

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Ford Prefect

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patriotz, #2: If Turner’s figures are correct, RE is the economy in BC – something like 25% or more of GDP compared for example to mining, oil and gas combined running at about 10%. I am quoting from memory so the figures might be off a little.

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Westside Realtor

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50% of construction jobs are in the residential real estate sector (that is a state for all of you statistics freaks) and the long term historic norm is 30% (another stat, fyi).

As RE slows, BC’s economy will suffer as knock on effects reverberate.

This is one of many reasons why I believe RE here is going to get the stuffing knocked right the heck out of it.

If you feel differently and want to buy into this fat Gasbag of a market, be my guest.

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tigerblood

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Westside I have two friends who’s parents are trying to offload their homes to developers in the Kits area, and they have been on the market for months each, I am surprised at how little interest there has been. I think the boom has busted too. About time!:-) bring on the bust!

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UBC in crisis mode

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No, the lots are still selling in Van West if the sellers are not too greedy.
For example, 4635 W 9TH AV, Point Grey just sold (listed $2,058,000).

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patriotz

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@6,@7: ” parents are trying to offload their homes ”

If you’re asking a price that nobody is willing to pay, you are not really trying to sell. Trying to sell means lowering the price until you get a buyer.

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bullwhip29

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@ tigerblood October 24th, 2014 at 8:39 am Things definitely dead quiet (sales wise, but lots of construction still) in areas i have looked, but I attribute much of this to folks just packing things in for the year. Lots of spring and summer listings just sat there and collected dust all year. FWIW, didn’t see much in terms of asking price reductions however. IMHO, i think many would be sellers, the big five banks, the BOC et al are simply in wait and see (and hope for the best) mode until we get thru all the major holidays. If your two friends are trying to off load the typical fluffed up fixer upper/character home (on a small lot) at a premium price, they wont have any luck. In all likelihood anyone considering those particular locations almost certainly intends on… Read more »

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Eat at Vancouver

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With awesome restaurants like Nuba in Vancouver, real estate will not drop.

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bullwhip29

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@ Eat at Vancouver October 24th, 2014 at 10:49 am

only vancouverites think the food scene in this city is something to brag about. restaurants (and other retail businesses) rivaling some of the best in the world can’t make it here because the ave person has no disposable cash to play with.

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Doug

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Serious question, if resource jobs keep dwindling wouldn’t the rural folks continue moving into the lower mainland causing population growth?

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Slagathor

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…Serious question, if resource jobs keep dwindling wouldn’t the rural folks continue moving into the lower mainland causing population growth?….

You mean: move from cheap places to live with little employment prospects to crazy expensive places to live with no employment prospects?

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VanRant

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“When you go into Sydney, you know, a lot of the $10-, $20-, $30-million properties, are being bought by Chinese with connections to officialdom. These people are not the prize that a lot of Australians had hoped for, and that they are really corrupt; they are not necessarily the type of business people that you want as part of your community,” said Rein.

http://www.voanews.com/content/police-chase-corrupt-chinese-officials-in-australia/2494756.html

Now replace Sydney with Vancouver

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UBC in crisis mode

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@14 “Now replace Sydney with Vancouver”.

No, unlike Australia, we need the money (corrupt or not) to flow in to sustain Canada’s RE industry.

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Brian Ripley

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RE: “Spending Vigour? “Canadians can expect to enjoy cheap borrowing costs for a while yet and the Bank of Canada doesn’t seem to be in any hurry to change things.” I mashed up Cullen Roche’s post on the failure of negative nominal bank rates in Europe since June 2014 to ignite borrowing and inflation with two charts and some quotes here: http://www.chpc.biz/history-readings/supply-side-failure Also included is a ZeroHedge chart on the 18 month slump in Chinese housing prices with momentum stuck in the negative M/M zone during the last 5 months. When loan demand turns down, low interest rates are not stimulative or attractive to private sector investment. … unless you are in the business of supplying military and security state goods and services. In March of 2013 I posted this mashup: http://www.chpc.biz/history-readings/canadian-budget “…the production and trade of military goods is… Read more »

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Son of Ponzi

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Regarding capital gains and property taxes.
In China homeowners pay no capital gains taxes and no property taxes.
Therefore, HAM owning property in Richmond do not have to pay these taxes, because they are citizens of the PRC.

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squeako

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Re: 13: You mean: move from cheap places to live with little employment prospects to crazy expensive places to live with no employment prospects? Interesting question. Of those who have not yet left BC, I wonder how many of the them have given up (due to lack of real jobs and affordable housing) and decided give self reliance a go as in moving out to the country (cheap real estate or rent), grow own food, use solar power, make due with what they have, and take on the odd job for some cash. I have with interest read some blogs of young people who have basically moved into vans and telling real estate business between the lines to go and screw itself. Personally I still live in a city and have FT employment, but witnessing homelessness, mentally ill people on… Read more »

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space889

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Florida seems to be very good at charge triple property tax on properties owned by non-state residents. Paperwork didn’t seem to stop them.

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space889

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@squeako – Good points. For young people with another 40 years to go before they hit the retirement age of 70, I seriously doubt there will be much of a public retirement benefits left for them, despite paying into the system for 40 years. Total debt (public & private) in Canada is over 200% GDP and growing. CCP will start having net withdraw in 20 years unless contribution rates and/or number of contributors go way up, or we cut benefits.

And it seems whatever will/demand people had for balanced budgets (never mind actually paying down debt) is all gone now. Even Alberta is getting back into the spending mode after all those years of sacrifice to get out of debt. The young generation is really getting a bad deal.

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Westside Realtor

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Great post Brian, thank you.

How do you feel that the softeninh in china RE prices will impact on the flow of foreign buying into Canada?

Again, great work on your site/analysis, much appreciated.

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bullwhip29

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@ space889 October 24th, 2014 at 1:21 pm a substantial increase in taxes on foreign owned properties (vacant or not) would wipe out the RE mkt and piss off the who’s who of the Vanc business elite while a token increase or change wouldn’t amount to nearly enough to house all the homeless (at all the other taxpayer’s expense to boot); case in point…Gregor Robertson’s initiative to shut off the traffic on pt grey road just gives you a taste of who is really running the show in this town (anyone that still thinks it was about bike lanes and being green is out to lunch); while many give him a pat on the back for the laneway home initiative, others remain skeptical about the program’s overall effectiveness is dealing with the housing issue (aside from ramping up existing homeowner’s… Read more »

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patriotz

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@20: “Even Alberta is getting back into the spending mode after all those years of sacrifice to get out of debt. ”

Actually Alberta has been piling on the debt for most of the last decade:

Alberta budget replaces years of deficits with $1.1 billion surplus

That story is from last March, that surplus is toast if oil prices don’t recover promptly.

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patriotz

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@19: “Florida seems to be very good at charge triple property tax on properties owned by non-state residents.”

Actually it doesn’t work quite that way, rather the tax abatements apply only to owner-occupiers. There’s one called “Homestead exemption” which is like BC’s HOG but bigger, and another called “Save our Homes” which caps assessment at purchase price.