Home buyers may be eating a lot of Kraft Dinner but Realtors are doing fine. From RFM over at Vancouver Peak:
The VANCOUVER REALTOR HUNGER INDEX is the percent of realtors who earned no commission income for the stated month. For June 2015 the VRHI was 34%. How does this compare? The 18-year average for June is 39%. At 34%, the 2015 June VRHI was higher than 8 years and lower than 9 years since 1998.
The lowest June inventory in nine (9) years and strong demand forced already high prices higher, especially in single family homes, where the HPI reached a stratospheric $1,123,900. Fueled by continuing historically low interest rates, a flood of foreign investment money and panic buying by uninformed and delusional buyers, the June sales rate is extraordinary! And unsustainable. And prices are unsupportable. For a complete analysis of the market dynamics of this firestorm, consult the DSM-5! (The Diagnostic and Statistical Manual of Mental Disorders (DSM-5), published by the American Psychiatric Association, offers a common language and standard criteria for the classification of mental disorders.)
Details and comparison data for 18 years at: http://vancouverpeak.com/showthread.php?tid=64
It’s that time again…
Friday free-for-all time!
It’s time for our regular end of the week news round up and open topic discussion thread.
Post your news links, thoughts and anecdotes here and have an excellent weekend!
Remember the 80’s?
Big hair, jelly bracelets and 20% interest rates.
Homebuyers back then had a tough time, they had to save up for a big down payment and the cost of holding a mortgage was high. All that hard work and sacrifice was well rewarded though as Rob Carrick points out in the Globe and Mail:
The high interest rates of the early 1980s must have felt unbearable for all Canadians buying homes and arranging mortgages (it was heaven for savers, but never mind). The reward for perseverance was a 30-year run in which resale house prices on a national basis surged by an average annual 5 per cent and were up in 28 of 34 years.
This rally was fed by falling interest rates. After the visit to high-rate hell in the early 1980s, home owners benefited from a long decline in rates that continued into 2015. House prices haven’t gone up because homes are a great investment, because of immigration, because of foreign money or because home ownership is awesome. It’s because we’ve had a 30-year sale on the cost of financing a home purchase, with ever-increasing deep discounts.
That sale may be ending. There’s a growing sense that the U.S. economy is on the upswing, and interest rates in the bond market have already started to creep higher. Mortgage rates take their cue from rates in the bond market, so we could see lenders increase fixed-rate mortgage costs at some point this year or next.
For the historical perspective read the full article here.
The thing that may surprise you is that despite a housing market that has provided magical returns for older buyers and cheaper and cheaper debt seniors are still going bankrupt in record numbers.
It seems like it was just a few years ago we had a recession, could it really be time for another already?
The Canadian economy has now contracted four months in a row and if that trend continues will Poloz have to cut rates again?
Economists have already written off the first half the year, but something better was still expected for April.
This also brings into question the outlook that had been painted by Bank of Canada Governor Stephen Poloz.
A recession is typically defined as two consecutive quarters of contraction, meaning May and June will have to be stronger to avert that in Canada.
Even if the May showing is flat, said Andrew Grantham of CIBC World Markets, there could still be a “modest negative” for the second quarter.
“It probably already feels like a recession for people in Alberta and Saskatchewan,” he said.
Read the full article here.
It’s another Friday, and that means its time for another Friday free-for-all.
This is our regular end of the week news round up and open topic discussion thread for the week end.
-links to come later
So what are you seeing out there? Post your news links and anecdotes here and have an excellent weekend!
A local developer has figured out a good way to get attention on an 18 million luxury penthouse that has remained unsold since 2012: say its for locals only.
Call it exclusionary, or tapping into the zeitgeist, or just a clever promotional scheme. Langereis says he wants a purchaser who will “commit” to this space and the city, and who will actually live here. If not year-round, then at least most of the time.
He wants to look up from street-level and see the lights on. “I want someone fun, someone who will connect with the rest of residents,” says Langereis. “Not someone who treats this place like some hidden chamber and then leaves.”
Read the full article here.
Many Franks says:
With the “Give Us The Data” rally upcoming, I think it would be useful to collect past unanswered calls for data. I’ve started a thread for this:
If the speakers at that rally can say that consistent, clear calls for data have gone unanswered for half a decade, rather than “hey, does anyone have data?” I think it’ll be much tougher for the old “we shouldn’t do anything until we know more” line to prevail.
All hail the glorious weekend!
It’s the end of another work-week in paradise and that means it’s time for our regular end of the week news round up and open topic discussion thread for the weekend.
Friday Free-for-all time!
Here are a few recent links to kick off the chat:
–Don’t mess with the market
–‘They’ve earned it’
–poverty in a $3 mil house
–may as well get welfare
–ready to give up?
–so who’s happy?
–time to buy?
–Fed says watch out Canada
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
Many Franks pointed out this article over at BiV about house flipping in Dunbar. and points out how the math might not always be as appealing as it first sounds:
“A well-backed investor leveraging 20% down financing [around $400,000] would yield over 100% [on their cash investment],” said Derek Tinney, Landcor Data operations manager.Vancouver realtor Ken Leong, who admits to a brief – and heady – history of flipping condominiums for himself and clients, said it takes more nerve and cash to speculate on Vancouver’s detached-house market than during the exuberant days of condo flips a decade ago.
Leong said that if house price increases go soft – as in the current condo market – investors could find themselves financially under water fast.
Buried below the big numbers and cherry-picked examples are some important details:
[I]f an investor bought a house for $1 million and flipped it a few months later for $1.1 million, he or she would have to pay $18,000 in B.C.’s property purchase tax. Realtor commissions to sell the house would total around $33,500. The capital gains tax, likely at the highest tax bracket, would be roughly $30,000.“So now your $100,000 gain is down to less than $20,000, and you still have to add in the carrying costs of financing of around $4,000 per month while the house is for sale,” he said.
“It would be hard to make a big profit on such a flip,” Leong said. “Actually the government would make more than the investor.”
The last sentence is key.
Read the original article here.
According to this article over at the CBC, Canadians love a good home equity line of credit – they’re practically addicted to that sweet sweet HELOC money at rock bottom rates.
“We are addicted for sure. Who wouldn’t be addicted to something so easy [to get]?” says 35-year-old Ali about the free-flowing lines of credit that have enabled him to splurge on the finer things in life.
“It’s easy, accessible cash at a very cheap price. The banks make it so easy for you to obtain it,” says the software engineer.
Some people say the national reliance on debt is a risk to our economy and to the lifestyles of the indebted. But the Canadian Bankers Association isn’t worried and spenders say they are aware of the risks:
While Ali and Haji like to spend, they believe they’re behaving responsibly and say they’re aware of potential pitfalls. That’s why they’re still undecided about another loan.
“If you get a line on this [house] and God forbid something happens to me or [my wife] and we are unable to sustain our lifestyle or stream of income that we have, then we would be in trouble and that may lead to us losing this house,” says Ali.
And that’s why some rooms in the family’s home remain empty. Ali shows CBC News his large, mostly barren master bedroom and talks about his grand plans to furnish it — sometime in the future.
“Without the credit line, it’s slow,” he laments.
But things could always change. The couple says just last week the bank called, inquiring if the family was interested in another loan.
Read the full article here.