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If you live in Vancouver then you know about the Province newspaper. Thats the handy small tabloid-sized daily paper with headlines like ‘DEADLY KILLER KILLS MAN DEAD’ and ‘WET T-SHIRT CONTEST ENDS BADLY’ as opposed to the other local canwest paper (the Vancouver Sun) that uses more multi-sylabic words, i.e. ‘CATASTROPHE SEEN AS DISASTER LOOMS’.
Anyways, my point is that the Province has always been there for us simple folk. It was the paper to turn to when you wanted to find out what Jessica Simpson is wearing and whats on tv tonight. You could also often find heart-warming stories about 23 year old real-estate investors and which new condo developement they are lining up to buy in.
The one thing you would never find in the Province newspaper was articles like this:
Canada Mortgage and Housing Corp. recently announced moves that critics say will drive many homebuyers to the poor house, as it were, and could leave Canadian taxpayers on the hook.
CMHC is offering mortgage insurance for interest-only loans and on amortizations of up to 35 years, while also scrapping the typical $165 application fee on high-ratio loan products for people with a down payment of less than 25 per cent.
With an interest-only loan, a borrower can pay interest only for the first 10 years, then pay both interest and principal.
Payments are initially low, but since the loan must still be paid off within the original amortization period, payments balloon as the principal starts being paid down, even more if interest rates rise.
That’s right, ladies and gentlemen – I am very sad to report that the Province newspaper has joined the dark side of real-estate negativity, and it gets worse. Much worse:
If a person spends 10 years paying down only interest, he or she saves nothing if the value of the house doesn’t appreciate during that period.
In fact, many people are now buying at the top of a housing boom, particularly in Western Canada, and face the likelihood of selling after the market has cooled off.
Said the Edmonton firm Hendrickson Financial in a recent commentary: “When home prices begin declining, homeowners who have recently purchased with 100-per-cent financing will have to come to terms with owing more than their home is worth.”
That’s when you get people walking away from their homes — when they have no equity to lose and can start all over with a cheaper house that will require smaller payments.
Can you BELIEVE it?!? The TOP of a housing boom?!? Walking away from their homes?!? What is with these people?!? What makes them so cranky that they feel the need to ruin our party? Is it jealousy? Some sort of new-found intellectual ellitism?
I don’t know about you, but I intend to write a strongly worded letter of complaint to the editor. It will be brief. It will contain my own ‘facts’ and ‘figures’, but one thing that it will NOT have is words with more than two syllables.
Well, before you pick up that phone to dial the psychic friends hotline, you may want to save your $3.95 per minute and just read the signs.
The signs I’m starting to see around vancouver say ‘price reduced‘.
And I just have to ask.. WHAT ARE THEY THINKING?!? Has no one told these people that this is a red-hot market? There is no need for ‘price reduced’ signs. If you are having a problem attracting buyers you need to RAISE your asking price not lower it! This is basic psychology. Higher priced things are more VALUABLE than lower priced things. And besides, how else are we supposed to convince someone that they need to BUY NOW or be forever PRICED OUT of the market?
House prices seem to be ‘in trouble’ in the good ol’ USA. If they only had the foresight to host the winter olympics maybe the US housing market could be saved eh? Today’s story in the financial post:
The United States could be heading for its first outright decline in national house prices on record, according to several analysts watching the rapid deterioration in housing statistics south of the border.
Further weakness in the housing sector could stunt construction activity and slam consumer spending, leading to slower growth in both the United States and Canada, analysts said.
“The slowdown in house price inflation has been extraordinarily rapid,” Gabrielle Stein, chief international economist at Lombard Street Research said in a report this week.
Those of us living in Vancouver should perhaps take a moment to be thankful for our rock-solid housing market, and the fact that due to beefed-up border security we are completely and utterly protected up here from whats happening in the US. It’s almost as if we are in a protective bubble!
No! Say it isn’t so!
I go out innocently looking for news of a bright and shiny future in the vancouver condo market and instead I am most rudely confronted with this:
The Greater Vancouver condominium market may be at an inflection point in the real estate cycle. One result could be an over-supply and/or over-priced product in many markets. There appears to be a very real risk of over supply beyond the forecast demand given the escalating market prices in some new condo submarkets in Greater Vancouver.
That bit of news from the PricewaterhouseCoopers (PwC) June 2006 issue of the Greater Vancouver Condominium Market Review release today. The news release is here.
Who are these PricewaterhouseCoopers anyways, and how can they SAY that?! It not supposed to happen here! Vancouver is different!