Archive for the ‘data’ Category

Is the Globe and Mail trolling you?

Monday, January 19th, 2015

Many Franks pointed out what has to be the most bizarre ‘financial facelift’ feature yet over at the Globe and Mail.

You think you have money troubles? Look at these poor people!

[Eric] earns $200,000 a year working one day a week in a medical clinic. But his real love is teaching, which he does one day a week at a university; this earns him $100,000 a year.

WHAT?!

“It is financially possible for them to do the things that are important to them, although by doing so, they will run a cash flow deficit of $50,000 a year until the children leave home,” Mr. MacKenzie says. Over time, their annual deficits will add up to more than $1-million in additional debt.

WHAT?!

They are living rent free in a relative’s house (they pay taxes, utilities and upkeep) and “regret not having bought a house years ago,” Eric writes in an e-mail.

WHAT?!

Eric and Ilsa are fortunate because their parents are willing to put a home equity line of credit on their own home to extend them the $1-million they need to build, and to finance their annual deficit, the planner notes.

WHAT?!

 

Deutsche Bank: Canada is 63% overvalued

Tuesday, January 13th, 2015

If there was a competition for ‘most bearish outlook’ on Canadian real estate Deutsche Bank would take home the prize.

When local banks say real estate is overvalued in Canada they usually go with a safe 10-20% figure.  The Bank of Canada recently said 10-30% overvalued which is pretty damn bearish, but not quite as extreme as this.

Research by Deutsche Bank chief international economist Torsten Slok even manages to out-bear the Economist Magazines estimations:

Broken down, Slok sees the market as being 35-per-cent overvalued when compared to incomes, and 91-per-cent overvalued when compared to rents. That’s a more bearish assessment than most. The Bank of Canada estimates the market is overvalued by between 10 per cent and 30 per cent.

But those are similar numbers to those at the Economist magazine, which for years has been calling Canada’s housing market overvalued. It pegs the overvaluation at 32 per cent, when compared to incomes, and 75 per cent, when compared to rents.

“Canada is in serious trouble,” reads the title of a chart from Slok’s report, showing Canada’s household debt, as a percentage of income, climb to 50 per cent above current levels in the U.S.

See the charts and read the full article here.

 

Does the Bank of Canada Think Real Estate Buyers are Suckers?

Wednesday, December 10th, 2014

Some of you are under the impression that Bank of Canada Governor Stephen Poloz does nothing but sit around all day eating Doritos and watching The West Wing on Netflix, but you are sadly mistaken.

He also issues reports that freak out Realtors.

Consumer debt loads and house prices that could be as much as 30 per cent overvalued are the two biggest risks to Canada’s economy, the Bank of Canada warned in its semi-annual Financial System Review on Wednesday.

Yeah, but “up to 30 percent” includes zero percent over-valued too you know? Surely not everyone is overpaying for Canadian real estate.

The bank says it’s about 95 per cent sure that house prices have been overvalued by an average of about 10 per cent since 2007. That’s based on a new forecasting model the bank says it created, which incorporates existing data from private banks and other government institutions.

Huh. 95% Sure? really? I bet it’s all a’cause of those wealthy foreigners right?

And a lot of those inflated house prices are coming at a cost of rising debt loads. About 12 per cent of Canadian households are considered to be extremely indebted — which means they have a debt-to-income ratio of at least 250 per cent. That ratio has doubled since 2000, the report notes.

Oh.

But that’s ok because younger buyers are building equity right?

Young homeowners, the bank added, have become even more vulnerable to negative shocks to income and to higher interest rates.

Wow. What a buzzkill.

*For those who followed the foreigner link we would like to offer our sincerest apologies.  If you are a glutton for punishment, here’s a video of our prime minister singing Guns n’ Roses “Sweet Child o’ Mine“. If you watch the whole thing you earn a cookie! If you cut it off at 3:33 you have to go to work at a Tim Hortons in Fort Mac. You have been warned.

 

New Record $1.513 TRILLION in Canadian consumer debt

Thursday, December 4th, 2014

Just how fat can this debt pig get before it’s stomach explodes?

You thought this nation had impressive debt levels before? It’s now topped One and half trillion dollars and an astounding 65% of that is mortgage debt.

In one report, Equifax Canada said that “Canadian consumers have yet again tipped the scales setting a new benchmark of over $1.513-trillion in debt.”

That third-quarter figure marked an increase from $1.448-trillion in the second quarter and $1.409-trillion a year earlier, according to Equifax, whose numbers are based on more than 25 million unique consumer files.

Excluding mortgages, average debt held by Canadians has increased 2.7 per cent to $20,891.

The good news is that 27% of Canadians apparently don’t believe that a mortgage is debt, so we shouldn’t really even count that part.

Vancouver Realtor Hunger Index November 2014

Wednesday, December 3rd, 2014

RFM has updated the Vancouver Realtor Hunger Index for November 2014 over at Vancouverpeak.com

The index is creeping up from its mid levels, but nothing too dramatic at this point.

The VANCOUVER REALTOR HUNGER INDEX for November 2014 was 62%. How does this compare? The 17-year average for November is 54%. At 62%, the 2014 November VRHI equaled 1999’s figure and was higher than 10 years and lower than 5 years since 1998.

Details and comparison data for 17 years at:http://vancouverpeak.com/showthread.php?tid=64

What’s happened to condo prices?

Monday, November 24th, 2014

With all the media focus on rising real estate prices in Vancouver you’d think all market segments must be doing pretty well right?

Well it sure looks like condo prices have been languishing.  First we had the CIBC world markets report showing Vancouver condo prices barely budging in the last five years, and now Ulsterman points out the following:

It’s easy to only see the big gains SFH’s have made over the past 5 years and overlook the many “homeowners” of condos who have not made much or even lost money (what!?!, but i was told it only goes…).

I noticed 303-1333 W 7th Ave (V1088944) listed in the Georgia Straight p72 of Nov 20-27 issue). It’s a 1bd/1bath unit listed for $355,000. The key detail was of course, “Amazing deal, listed $20,000 below where it sold in 2009.”

So after paying $70k in interest, $15k’ish in taxes and strata fees, $20k capital loss, CMHC fee when buying (10k) (3%?), $13k selling fees. This gets expensive really fast ($128,000 over 5 years or $2133/month). It probably rents for $1300/month.

Not such a slam dunk.

Are condos just hitting a price ceiling at the entry level? Shouldn’t condo prices be going up more in this market?

Joe Mainlander points out that the REBGV HPI paints a similar picture.

Even the REBGV HPI stats point to a sinking condo market (not 20% though);

Metro Van Apartment HPI;

July 2008 = $367k
July 2014 = $380k

There’s been 10% inflation since then, so HPI would need to be $403k just to keep up.

A 6% drop in real dollars.

House prices up across Canada

Tuesday, November 18th, 2014

The 45 basis point reduction in interest rates at the start of the year has done wonders for real estate in Canada.

The average house price is up 7% and Calgary prices have gone up by nearly double the national rate.

With the October numbers by CREA, the average Canadian home has never been worth more than it is now.

In volume terms, the actual number of homes sold rose by the same amount — seven per cent. “This marks the sixth consecutive month of stronger resale housing activity compared to a quiet start to the year, and the strongest activity for the month of October since 2009,” CREA said in a release.

October isn’t typically one of the strongest months for home buying, as activity tends to be strongest in the spring and summer.

TD Bank said in a note to clients after the CREA numbers were released that in sales terms, the housing market is hotter than it normally is this time of year.

Of course most of these gains are driven by the three cities: Toronto, Vancouver and Calgary.

Will wonders ever cease or this the economic miracle that keeps on giving?

Vancouver Housing Myths

Wednesday, November 12th, 2014

Crabman pointed out this article in BIV: Conference torpedoes Vancouver housing myths

Metro Vancouver housing is affordable. The market is stable. There is no glut of new condominiums looming. And foreign investors are not driving sales and prices higher.

I believe those are not the myths being exploded, but meant to be statements of fact at the beginning of the article. As for the ‘affordability’ issue, the cities top condo salesman says simply omit SFH and disregard the top 20% of the market and things don’t look so bad.

Rennie said media and pundits concentrate on the average price of single-family detached houses in the City of Vancouver, which consistently average in the million- dollar range, with condominiums north of $440,000. But, he said, such higher-end sales represent only 20% of the overall market.

For the remaining 80% of buyers, the average detached house is around $670,000 and the average condominium is $316,000, Rennie said.

But there seems to be some question about how that math works out. Crabman claims to have done the math and come up with a different result:

There are also 383 houses listed over $670k in East Van. When I removed the most expensive 20% of listings, the median price of the bottom 80% was $1,088,000.

And on the west side, the median price for the “cheaper” 80% of listings was $2,888,888.

But even if Crabman is mistaken and Rennie has the math correct, there’s this:

Of course, once you also exclude the top 20% of incomes, $670,000 is anything but affordable.

 

 

Oct 2014 Vancouver Realtor Hunger Index at 54%

Wednesday, November 5th, 2014

RFM has updated the Vancouver Realtor Hunger Index which currently stands at 54%.

That takes it almost squarely into the middle of historical data:

The VANCOUVER REALTOR HUNGER INDEX for October 2014 was 54%. How does this compare? The 17-year average for October is 50%. At 54%, the 2014 October VRHI was higher than 8 years and lower than 8 years since 1998.

Details and comparison data for 17 years at: http://vancouverpeak.com/showthread.php?tid=64

Here’s how that number is calculated:

I start with the total reported sales from the REBGV. I assume 5% of those sales were ‘double ended’ (one realtor kept the entire commission by ‘representing’ both buyer and seller) and add to the number of ‘double ended’ commissions the number of split commissions (which I reduce by an assumed 15% ‘earned’ by realtors who handled multiple sales). I divide the resulting number of commissions by the total number of realtors and subtract that fraction from 1 to yield the percent of realtors not earning commissions and therefore going hungry. In symbols: (((sales x .05) + (sales x 1.615))/(# realtors)) – 1 = VRHI; (1.615 = .95 x 2 x .85). The REBGV website reveals neither the exact number of realtors at any particular time nor the percent actively engaged in selling residential property. I used 11,000 for 2014, 2013, 2012 and 2011; 10,000 for 2010, 9,400 for 2009, 9,500 for 2008, 9,000 for 2007, 8,200 for 2006, 7,800 for 2005, 7,100 for 2004, 6,700 for 2003, 6,500 for 2002, 6,700 for 2001, 7,200 for 2000, 7,800 for 1999 and 8,500 for 1998.

Moving up in Vancouver Real Estate? Not so much…

Wednesday, October 15th, 2014

CIBC World Markets has released research that looks behind the average price moves in Canadian real estate. How are prices moving in Vancouver?

Astonishingly enough it looks like properties under the $1.1 million mark have moved less than a GIC in the last four years.  Here’s a graph from the original PDF:

Screen Shot 2014-10-15 at 2.50.16 PM

 

That boggles the mind. Even Toronto which has prices going up at the high end looks like its been a much better investment at the lower and middle end:

Screen Shot 2014-10-14 at 2.38.45 PM

 

So essentially that idea you have in your mind that Vancouver real estate has been a good investment over the last four years with prices just rising and rising? Not so much.

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