Monday, April 21, 2008
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About Me
- Prairieboy
- Victoria, BC, Canada
- Having been transplanted from the Prairies to the West Coast, I am left bewildered and confused with Victoria's current housing market.
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110 comments:
Very interesting graphs. Now, what about inventory?
I guess the 1/2 point rate cut will keep the real estate market inflated a little longer but it sure is a bone headed move, imo. Reward the debtors and punish the savers and old people/ poor people on fixed incomes, idiots!
I'm glad I can walk to work but many can't. 118$ barrel oil today and we are going to follow the US peso down.
Get ready for some huge jumps in gas this summer. Everything is gonna go up in price this year. But hey you can always borrow more money at cheaper rates.
With the new frigates upgrade work + 1/2 point drop, RE pumpers in Victoria will have a field day. TC headlines today --- JOBS, JOBS, JOBS. Of course, the next obvious, logical rationalization here in this forsaken city is = DEMAND for RE. Never mind that Halifax got twice the amount for their frigates maintenance work, and there nobody there mentions anything about RE. I wished the government would pass a law on speculation (in New York city there is a 2% flip tax, why not here). In fact, we should make the flip tax 150%, that would bring our market back to normal. The SPECULATOR as a disease that is killing our families (ability to live).
Bank of Canada says "The core inflation rate fell to 1.3%, down from 1.5% in February". What planet are they in? I am not saving a single penny thanks to the increased cost of gas, food, housing, etc. All of these categories don't seem be reflected into their inflation calculations. What the f--k, the BofC types probably get free housing up there in Ottawa, so they must figure noboby spends money on that. What a bunch of idiots. What kind of economist/country do we have here?
The name of that Harper's magazine article on the cpi and unemployment numbers is "Numbers Racket," and that's exactly what it's about--that "core inflation" was a little number made up to exclude things like food and energy (cause they're not essential, of course, not "core"). And they've messed with housing numbers now too. Housing isn't figured as actual prices of real estate, it's figured as equivalent rent, that is, if a house will bring in a particular rent in a particular area, that's what's measure, not the cost of actually purchasing a property. Very useful when you're trying to say there's no inflation.
"But hey you can always borrow more money at cheaper rates."
Like the sucker bank ads say : "you don't know how rich you really are".... until you realize after how little you have left at the end of the month. ;)
Shiller says today the US house prices are going down worse then the depression days and there are jobs down in the US still the last time I looked. The psychology is changing and thats all that matters no matter how low the interest rates go. Houses are a declining asset and the speculation factor is now toast.
U.S. housing slump may exceed Depression: Shiller
Tuesday, April 22, 2008
NEW HAVEN, Conn. — An influential economist says the slump in the U.S. housing market could cause prices to fall more than they did in the Great Depression.
Yale University economist Robert Shiller, pioneer of a widely watched home price index, says there's a good chance housing prices will fall further than the 30 per cent drop in the historic depression of the 1930s.
He says home prices nationwide have dropped 15 per cent since their peak in 2006.
Mr. Shiller, who long predicted the housing market bubble, spoke Tuesday about the state of the economy at the New Haven Lawn Club.
His Standard & Poor's/Case-Shiller home price index is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month.
Canadian Dollars to 1 EUR
2007-11-07 Wednesday, November 7 1.34467 CAD
2008-04-22 Tuesday, April 22 1.60628 CAD
That's quite a move in a short time.
Shows how our central bank is deflating the currency, Euro's are smart they are concerned about inflation more than recession. Sucks if you had a European vacation booked.
from the inventory it looks like speculation buying of victoria condos is finally over, thank god.
If, as Shiller predicts, price drops are greater than in the depression days, that equates to about 75 percent or more in some areas. So far he has been right...
>>Bank of Canada says "The core
>>inflation rate fell to 1.3%,
>> down from 1.5% in February".
It is all sleight of hand and cheap parlour tricks.
Many economists have said that if the government was today using the same basket of products to calculate the inflation rate as they were using in the 1980's, we would be showing a MUCH higher inflation rate.
One giveaway that the inflation rate is completely unrealistic is that government ministers have recently given themselves raises that are much higher than the rate of inflation. Think of the Campbell Liberals here, for example, and their outrageous salary increases last year.
The day they legislate themselves raises that CANNOT be higher than the "official" rate of inflation is the day that we'll start seeing some honesty again in what the true rates of inflation in this country really are.
BTW the lower interest rates may temporarily stave off the worst of the Victoria housing bust, but in the long run will only drag out the time it takes to weather the bust.
Compared to the last couple of years, much fewer people are interested today in buying a home, regardless of how low the interest rates are.
BUT once the interest rates start rising again (and we all know they soon will have nowhere to go but up), there are no two ways about it: real estate prices will go down.
Real estate prices ALWAYS go down when interest rates go up. Combine today's lack of interest in purchasing with tomorrow's LOWER interest rates, and what you have yourself is lower prices coming down the pike.... IE: a really BAD investment if you want to "invest" in a Victoria property today.
"Sucks if you had a European vacation booked."
My buddy was just in London a few weeks ago and he was blown away how expensive it was. A simple lunch for two was over $50.
You have to figure now the stories of people making piles of easy cash are over then fewer younger couples hearing this from their friends will be less inclined to bite the big bullet. That had to be a big portion of the mania the past 3 years.
If you think about it, and assuming you have the resources, the best time to invest in real estate (as a flipper, etc) in Victoria or elsewhere is when interest rates are already very high compared to historical levels and a LOT of room (and signs pointing towards) going down.
That way, you have a fairly good chance of the value of your property investment to go up, as interest rates fall down to "historical levels".
Think of the high interest rates of the early 80's and how much money flippers could have made if they had bought then...
In comparison, any investor would have to be a fool to invest into the market when interest rates are near historical lows, and have nowhere to go but up...
Housing isn't figured as actual prices of real estate, it's figured as equivalent rent, that is, if a house will bring in a particular rent in a particular area, that's what's measure, not the cost of actually purchasing a property
That is the right way to do it. The Consumer Price Index measures the cost of consumption. The cost of consumption of housing is the market rent. The cost of investment in housing, which is something else altogether, is the price of housing.
If people are stupid enough to pay more for an investment (e.g. housing) than is justified by its return (e.g. rent), that's called an asset bubble. But inflated asset prices, whether they be houses today or dot-com stocks in 2000, have nothing to do with the cost of consumption.
"I guess the 1/2 point rate cut will keep the real estate market inflated a little longer"
&
"BTW the lower interest rates may temporarily stave off the worst of the Victoria housing bust"
Naw-'fraid not-the only beneficiaries will be those with floating rate mortgages. (assuming the banks drop their prime rates---at this point they havent yet done so)
Fixed mortgage rates are determined by the bond market, not the Bank of Canada rate. As well, statistics on mortgage quality and defaults influences banks willingness to lend. What this means is that even if the Bank of Canada keeps cutting rates, mortgage interest rates can still RISE if credit remains tight.
Since the BOC started dropping its overnight rate a year ago the actual 5 year fixed mortgage rate ( now without the formerly easily available discounts of up to 1%) has actually increased. With this latest change the banks may drop the fixed rate slightly but certainly not enough to offset the psychological shift about where RE prices are headed.
No one is now going to pony up the big bucks for obviously inflated Victoria Real Estate because they may be able to get 5 year money at 6 1/2% instead of 6.99% (if that even happens).
It's my impression that most mortgages in Canada are variable. I don't know a single person these days that has a fixed rate one.
Will the banks stop offering variable rate mortgages to new or refi's? and make them use a fixed rate.
I doubt the banks will not follow the BOC that would cause a sh*tstorm from the public.
Mish has a good post today - "Deflation in a Fiat Regime?"
We just got a real estate flyer in our mailbox from agent Ron Kubek... In big letters on the front it says (and I quote)
"It is a GREAT TIME to be selling, with low inventory of homes available."
LOL!
patriotz:
>>That is the right way to do it.
I don't agree.
>>The Consumer Price Index
>> measures the cost of
>> consumption. The cost of
>> consumption of housing is the
>> market rent. The cost of
>> investment in housing, which is
>> something else altogether, is
>> the price of housing.
That still doesn't explain why buying a family home (not an "investment") for the family to live is not considered "consumption".
Just because something can be "invested" in (apart from being used in daily life be average Joes like you and mean) doesn't mean it should be disqualified from the calculation for inflation. Are you telling us that the products that ARE currently used to calculate inflation are 100% free of investor influence?
Unless the government thinks/expects it to be a given that all Canadians are destined to be renters for all their lives, it doesn't make sense to exclude family home purchase prices from from "consumption".
It does not make sense to exclude that from the inflation figures.
>>If people are stupid enough to
>> pay more for an investment
>> (e.g. housing) than is
>> justified by its return (e.g.
>> rent), that's called an asset >>bubble.
Why do you think that almost no rental buildings have been built in Victoria for a few decades?
Most developers realize that they
will lose money if they build a "rental" building here, considering all the existing rules in place constraining how much they can charge (and raise) rents (not to mention GST on new units, etc)
And where has that gotten us?
Renters only have so much income they can spend on rent, so the rents can't really go up. You can't charge renters money they don't have.
It has gotten us to a position where the builders have not built rental buildings here in decades because they can only make money on the condos.
Meanwhile, the investors that buy the condo units don't do it because they expect to get a return on their investment only from renters. They do it because they expect a return on their investment as the price of the condo rises.
So that means car prices are not factored in. It's the cost of renting one? The cost of buying furniture, television, fridge, microwave, stove, iron, lamps, beds, bed sheets, carpets, clothes, etc are not factored into inflation figures? It's the cost of renting furniture, TV, clothes, etc? Truly, the only that truly "consumed" then is fuel and food?
>>Truly, the only that
>> truly "consumed" then is fuel
>> and food?
Go figure! - -Those are two things that are left out of the inflation calculations!!!
And not only that, but don't forget that prices for those two categories also can and ARE influenced by investors - BIG TIME!
Just look at increasing price of gasoline. Every week or so, some "scary" thing XYZ happens that is related to an oil refinery, or an oil tanker, or what-have-you ("Oh noes! A refinery somewhere has to shut down production for a week to re-tool itself! Quick, everybody PANIC!")
What happens? Investors hear the story, foresee a temporary shortage in oil, and buy up oil stocks, sending oil stock prices higher. We subsequently see it reflected in higher prices at the pump. (BTW, a week or so later, when the previous week's panic story is no longer an issue, prices often DON'T go back down!)
Get ready for some huge jumps in gas this summer. Everything is gonna go up in price this year.
Surely the price of oil will collapse by 50% after its big runup. After all, that's what you expect to happen to housing. What's the difference?
My buddy was just in London a few weeks ago and he was blown away how expensive it was. A simple lunch for two was over $50.
I predict a lunch bubble crash in London! Those prices are simply unsustainable. After all, the average working stiff in London probably doesn't earn more than $100 per day after tax. That's 50% of his income on lunch!
Oil will collapse Sitting Pretty but by that time we will be in a deepening recession. Ive been predicted the housing crash for 2009 so this is playing out like I imagined. First comes huge inflation then they will have to raise the rates back up, right now the rate cuts are only there to save the banks asses and because of the US elections. But be patient Sitting it will play out. If by fall 2009 house prices aren't down at least 20% from now then come back and mock me. It takes a while for reality to sink all the way in for some people so real estate is a slow moving beast. The crash won't be spectacular like a asteroid, more like when that BC Ferry took out the marina last year.
BEAGLE says: "It's my impression that most mortgages in Canada are variable. I don't know a single person these days that has a fixed rate one"
ROYAL BANK says:
"Of the 23 per cent who plan to buy in the next two years, 15 per cent say they will choose a variable rate mortgage, compared with 13 per cent in 2007. However,
overall fixed rate mortgages are still the preferred choice for potential buyers and current homeowners with (49 per cent), planning to lock in for five
or more years. 37 per cent say they will choose a combination of
both."
Studies have shown that over the past 20 or even 50 years, Canadians would have saved money in the long run by opting for variable-rate mortgages rather than five-year fixed mortgages.
Apparently less than a quarter of Canadian homeowners with mortgages have opted to borrow at a floating variable interest rate. The majority seemingly prefer the security of a fixed rate, even if it costs more.
Wow, Boomer. I'm shocked! Now I really really wonder how people are affording housing! The best fixed rates are well above the best variables.
I too think the price of oil will likely collapse eventually.
The CPI is likely to be negative in the near future IMO.
Oil should hit about $125 or so then slowly decline to the $80-90 range over the next year as the recession kicks in and the inevitable happens and people change their driving habits and the gas storages pile up.
There were some segments on US TV this morning showing how tight families live where they have to cut back on the food bill to pay the gas bill just to get to work. As more and more are forced to do the same the holiday trips and leisure driving gets cut way back.
beagle,
Sitting pretty's snotty ass attitude only shows she's led a pampered life and is in for a rude awakening as her and bubba's paper profits slowly slip away back to a few Nortel shares.
That still doesn't explain why buying a family home (not an "investment") for the family to live is not considered "consumption".
Because consumption means using something. If I eat a meal at a restaurant, that's consumption. If I take a plane trip, that's consumption. If I rent a hotel room or a house, that's consumption. The price of using a house is the market rent.
Buying a house is the same as buying a stock or a bond. It's an investment in a capital good that yields income (rent value) long term. Buying a house and using it are two different things altogether, and the same person doesn't have to be doing both things. That's why buying a house is an investment not consumption, even if the same person is going to live in it. Buying it is investment, but living in it is consumption.
I could buy a house, live in it myself, and then start renting it out after 5 years or whatever. Whoever lives in the house at any given time is the consumer. The person who bought the house is the investor. Right from the time of purchase.
Sorry if I sound patronizing, but you really don't understand the difference between consumption and investment, which is one of the fundamental concepts of economics.
Not to worry in Victoria, we have no inflation. For fuel, we Victorians burn wood as their primary source of heating. We either get the wood from our hillbilly inbred relatives up island or or fill up our 30+ year old diesel spewing pick up trucks with washed up logs at the beach on Dallas road.
As for food, notice that we don't have too many fat people here, and that is not because we exercise (there isn't a single downtown or bike path for biking, rolling blading, jogging -- isn't that something for a world class city) but because we simply don't eat enough as we are cheap and greedy (and think we'll live forever and take all that money upstairs if you know what I mean).
I meant to say that there is not a single gym downtown... isn't that something for a city with world-class status. What about our famous opera house and orchestra? Where are they? What about the zoo? And all those world class museums? What our world famous subway system?
According to this ranking of "world class" cities:
http://www.lboro.ac.uk/gawc/
citylist.html
Victoria doesn't even exist. And Vancouver is at par with Detroit.
We are delusional here in Victoria thinking we are such a hot tourist destination. That is all BS. There is nothing to do here besides butchard gardens. Tourist go where there things to do. The only so called tourists that come here are people from Vancouver who come for day trips (and fill downtown) or BC government workers who stay at hotels.
If in fact we were truly a tourist destination we would have monster hotels with brands such as Hilton, Intercontinental, Radisson, etc and we would have direct flights (on real planes not the turbo prop play plane that flies to Seattle) to major US cities such as Chicago, LA, Dallas, etc. The flight to SF (on baby regional jet) recently announced that is to start flying in June will no doubt be cancelled very early just like the flight we had for a few months to Salt Lake City (Delta hub). Why, because we are NOT a tourist destination, we have not corporate HQs (or jobs) here and no business travel, and above all we are CHEAP.
I guess we can't "consume" our plates, toasters or televisions. Too bad. I guess in the Bank of Canada economists' minds, who probably get free food and lodging thanks to the tax payer, those things are not necessary to subsist and live a normal life.
If the cost of buying a home had been included in the inflation rates in the past few years, then as prices skyrocketed the official inflation rate would have as well.
Naturally, this would have forced Bank Of Canada to put interest rates up (to help stave inflation)... which would have forced mortgage interest rates up as well.
Instead, what we have is a system where inflation in the price of home can be at 30% during a few boom years, but the government pretends it doesn't exist - consumers and young families be damned!
Well, hey, at least that makes the banks happy. After all, that is who are government is out to please, since they're the ones that make the biggest contributions to political parties.
patriotz:
>>Because consumption means using
>> something. If I eat a meal at a
>> restaurant, that's consumption.
>> If I take a plane trip, that's
>> consumption. If I rent a hotel
>> room or a house, that's
>> consumption. The price of using
>> a house is the market rent.
Last time I checked, when a family buys a home to live in, they USE the home, do they not?
And last time I checked, every house must be replaced in due time (perhaps little by little with yearly repairs and renovating, or all at once when it is torn down and rebuilt). If you don't believe me, just walk around Victoria West and you'll see too many examples of what I mean.
Show me a house that will never ever need to be torn down or renovated, and I will believe that a house is never consumed.
I'll give you a hint: such a home doesn't exist.
Ergo, owned houses ARE consumed.
Condominiums ARE consumed too. They don't last forever, and we all know how much has to be paid just to keep them liveable.
I predict sitting pretty's vapor filled puss brain to crash soon. After all, such diseased brain condition can't last forever.
And tourists come to Victoria for our world famous shopping, you know like Value Village. Big tourist attraction.
Tourists also come here for our professional sports: CFL, NHL, NBA, etc
Retail sales slip
Globe and Mail Update
April 23, 2008 at 9:19 AM EDT
OTTAWA — Retail sales in Canada fell unexpectedly in February, declining 0.7 per cent from a month earlier, Statistics Canada said Wednesday.
It's the first decrease in five months, with Ontario posting the biggest drop in retail activity.
Excluding the auto sector activity, retail sales Canada-wide dropped 0.3 per cent on the month.
That's a significant change from the robust 1.5 per cent increase in month-over-month sales seen in January, and the 1.3 per cent rise excluding autos.
British Columbia's retail sales also fell, down 1.1 per cent – the second month in a row for a decrease.
They are still flogging it.
Vancouver Sun article "First-time buyers find way to get a home"
http://www.canada.com/vancouversun/news/business/story.html?id=28bced6a-3ca6-485f-a3fb-61511c870bf2&k=93599
I'd say poor fools but I really have no sympathy.
S2 (too lazy...um busy to sign in)
I wonder if that retail sales trend is partially due to the credit crunch. I don't see as many credit card things in the mail anymore and the rates that the cards do charge are going up. The debt taps are slowly being turned off. Although if you have good credit the rates are getting much better. Guess the rich are getting richer and the poor are getting less plastic and pressboard trinkets from China.
S2, that article makes me laugh in a very sad way. A day after the 1/2 cut Remax is out trying to get a few more greater fools sucked in.
More TC RE pump machine disguised as sympathetic to the affordability factor. No mention of overall inventory hitting 6 year highs or price reductions, just irresponsible comments and reporting of such by Remax that he "hears" that we won't follow the US. Who do does he "hear" from ? this is a high level Remax guy,not some bloggster making an anecdotal comment.
"Ash said he's hearing that Canada will not follow the U.S.'s economic troubles.
The latest cut in interest rates by the Bank of Canada will help improve confidence in the economy."
Let's see her, retail sales are down,especially in BC and rates are being lowered cause everything is peachy ? give me a break,they are soon to raise rates in the US by year end due to inflation and you think we won't follow suit ? More fodder for the history books of dumb comments before the crash.
http://www.canada.com/victoriatimescolonist/news/business/story.html?id=becdc89b-ee20-4b06-8dfe-82b94864a4c6
retail sales are falling,gas and food going thru the roof but dammit we are maxing out every cent to get that 500 Sq Ft box cause there's only 1000 boxes left for sale in this city.
Last time I checked, when a family buys a home to live in, they USE the home, do they not
Not when, after.
Consumption of a house means living in it (or letting it sit empty for that matter). Houses are continuously consumed, just like other capital assets. That's the difference between a capital asset and a consumable like food or oil, which is consumed at the time your buy it or shortly thereafter.
Buying or selling a house is not an act of consumption. It's just ownership changing hands. It's the use of the house which is consumption.Do you think the trading of a real estate investment trust stock is consumption? Consumption of what? That represents a change in ownership of housing too.
patriotz
>>Buying or selling a house is not
>> an act of consumption. It's
>> just ownership changing hands.
>> It's the use of the house which
>> is consumption.
Buying an apple is not an act of consumption either. It is just ownership changing hands. In fact, by the time you buy an apple at Safeway, it has likely changed ownership several times (among various levels of wholesalers).
Likewise to your example, it is the actual USE of the apple which is consumption (or, you could let the apple rot and be naturally consumed in due time).
So you see, it is no different.
But if you want to keep buying into the Government's magical way of calculating inflation, here is what the formula gets you:
(1) since skyrocketing property prices aren't factored into inflation, the BOC does not need to raise interest rates, an act which would naturally reverse the skyrocketing property prices
(2) meanwhile, the government has strict rules on rental income, which means that rental rate increases are severely limited (and other costs for building rentals are prohibitive)
(3) Given (2), builders in Victoria have realized for nigh on three decades that it isn't worth their time to build a rental building in Victoria. And so, they haven't.
(4) Given (2), if rental rate increases are used for calculating inflation, but not property prices, then the rental income rules that the government imposed in effect are rules that help limit the "official" inflation numbers. Makes them look great, don't it?
(5) Meanwhile, in Victoria everybody wonders why there is such a shortage of rentals, yet at the same time rental prices aren't high enough to justify the purchase of a property. Read (2) and (3) and this mystery is solved.
Taking the ideas to the Nth degree, to make a point about how bad it is for the government to calculate inflation without taking into account the purchase price of property:
Imagine a Victoria where there was only ONE rental in all of Victoria but because of rental income rules the landlord cannot raise it rates very much on its tenants (maybe something like 5% a year, tops)?
The government's official inflation rate thus factors in the rental portion of inflation at only a 5% increase.
eanwhile, everybody else that couldn't get into that one rental, and cannot to buy a home at the current bubble rates, lives on the street.
Well, gosh, since the inflation rates show that things are okay, then I guess everything is fine huh? Nonsense!
Of course, we have more than one rental in Victoria, but the point is that there is a shortage of rentals in Victoria (especially at certain times of year).
Now, I know what you are going to say: The current bubble home prices are bound to come down when the bubble bursts, and so then people that can't buy now will be able to buy then.
Sure, maybe 3-5 years down the road? It is a small consolation for the families that cannot find a place to live today. Not only that, but WHAT IF some unforeseen factor keeps the land prices unreasonably high for decades? Think of Vancouver by example, and how a large immigrant population there has kept prices unreasonably high for decades.
You can keep calling the people in Vancouver "FOOLS!" for buying homes that are priced way above the cost of rentals... and you can keep doing that for twenty years... but it is little consolation for those people that have been waiting twenty years for prices to get back in line with rental rates.
If the prices of purchased homes (which ARE consumed, albeit slower than an apple or a one-year vacation round the world) were factored into inflation rates, the forced rises in interest rates during a housing bubble would help the bubble burst much more quickly. This would help average Canadian families by pushing home prices down as soon as they unreasonably skyrocket, instead of making them wait until "FOOLS" stop buying into the expensive market.
It would also be a much more accurate accounting of living costs for average Canadian families.
What a piece of journalistic garbage this article in the TC today. Why not interview real life young families and chronicle their financial struggles. What about a restrospective on the 50% RE correction in 1981 and the 25% correction from 95' to 02'? What about Shiller's analytical and economic discussion and S&P's house index. There is no intellectual content in these TC articles. Do they hire high school drop-outs as journalists?
patriotz:
Forget to add this part to my post directly above..
>>Houses are continuously consumed, just like other capital assets.
So you agree that homes ARE consumed then.
Okay, we have that settled.
>>That's the difference between a capital asset and a consumable like food or oil, which is consumed at the time your buy it or shortly thereafter.
The only difference is the time-scale it takes to consume these things.
An apple takes a minute to "use"/consume.
A Year-long package trip round the world takes a year to "use"/consume.
A purchased house may take 50 years to "use"/consume.
They ARE all consumed.
Another reason why tourist come to Victoria is to experience the feel of being in Canada's city with the highest per capita number of druggies, drunks and derelicts.
"What a piece of journalistic garbage this article in the TC today. Why not interview real life young families and chronicle their financial struggles."
Because that would require credible reporting and not towing the company line of pumping this pig til the bitter end.
It's the equivalent of reporting website hits for the BM site, I wonder what the monthly totals are now that they are trying to sell boxes for $299,000 ? maybe the Remax guy missed those "under $350,000" places on the mountain they say are so scarce.
Sitting Pretty, I do think you need to get up and walk around a bit more often... it seems all your sitting has cut off the flow of blood to your brain (since you use it to sit with) and you simply cannot think clearly anymore.
Roger, since you are the voice of knowledge and reason would you please head on over to KIV and answer the woman who asks "Is not a good time to buy a house?"
Also, I like reading your recent discussions with "islandlady".
oops
not = now
islandlady reminds me of a bimbo cheerleader. Roger is there throwing numbers in her face and the best she can come up with is that the people she met today weren't born on the mid island. To her credit, I don't think she was really throwing insults by saying he was 'off his rocker'. She's just a little retarded like some of the people around here, gotta cut them some slack ;)
Globe and Mail article today, "Stretched Buyers Fuel Boom in Housing." Here's a small quotation, regarding 40-year mortgages, which one guy at TD says constitute 70% of new mortgages:
"The result is that people could pay tens of thousands more for their home when they could be saving for retirement or paying for their children's education, an independent financial adviser said. "I don't approve of it at all," said John DeGoey of Burgeonvest Securities in Toronto. "There are very, very few people who make the payments work in 40 years who could not, with a modest alteration of their lifestyle, make the payments in 25 years." Instead, many people are setting themselves back "massively" by still paying mortgages in the last 15 years of their working life.
"It's not just the young people and the first-time buyers that are coming to the banks asking for it. It might very well be the banks actively trying to foist it upon the first-time buyers," he added.
olives said
Roger, since you are the voice of knowledge and reason would you please head on over to KIV and answer the woman who asks "Is not a good time to buy a house?"
Also, I like reading your recent discussions with "islandlady".
Olives - I see you found RogerVI!! I am surprised at your request given that some consider me "off my rocker" :>) Seriously, I think my stat presentation stuff wouldn't work over on KIV and would be a big yawn to the readers. Some folks just want to buy - damn the torpedoes full speed ahead. Here's hoping things work out for most of them.
I thought you and PH (S2) were doing a great job over there. You seem to have stopped posting lately. Maybe you need to start pointing out that 40 year amortizations and variable rate mortgages should be used with caution. In a few days there will be some VREB news and this might dampen their enthusiasm.
Starbucks reported lower earnings and blames slowing economy and higher costs. Where do people cut back costs first ?
Houses are selling in Saanich & Victoria and there lots of new listings. However, price reductions are often needed before a sale is possible.
Here is an update of my PCS screenshot slideshow
Olives & PH (S2)
Here is an idea for that buy a house thread on KIV. Post the link to Garth's site - www.greaterfool.ca
Some of his anecdotes and letters might have an effect.
snaptee said..
islandlady reminds me of a bimbo cheerleader. Roger is there throwing numbers in her face and the best she can come up with is that the people she met today weren't born on the mid island. To her credit, I don't think she was really throwing insults by saying he was 'off his rocker'. She's just a little retarded like some of the people around here
Yes, like you, moron. I'll paste your comments over on Real Estate Talks so everyone there can see what Roger and his boosters are really like.
Here is an idea for that buy a house thread on KIV. Post the link to Garth's site - www.greaterfool.ca
Ask Garth if he took his own advice and sold his house and moved into a rental. I did: he hasn't responded.
How are things in Colwood Langford? Price reductions there too.
Here is a PCS account that you can check out for yourself. SFD listings are between 550-800K.
Get a free PCS account @ this website. First name and email address required.
sitting pretty is an ugly grey haired or no haired, no teeth cheap bruised old hag of a PoS hooker.. just an old rag to throw in the garbage. Pathetic ugly thing we should put on the street and let our homeless take care of.
sitting pretty go back under the bridge in the park where you belong. You are a disease nobody wants. Go away you piece of stinking sh.t. You are a sicko. Nobody in the world wants you as you are ugly and you stink, and noboby wants you here either. So get lost POS.
SP said, "Ask Garth if he took his own advice and sold his house and moved into a rental. I did: he hasn't responded."
Interestingly, his actual advice was to sell if your real estate holdings constitute more than 30 percent of your net worth. Your attempt to make him sound like a lunatic just continues to illustrate your tenuous hold on reality, or your willful intention to misrepresent the ideas of others, or both. Either way, it's impossible to take you seriously.
Anybody watched the National on CBC Newsworld tonight? Victoria's little secret = the worst place on Earth. The report centered on the fact that we have the highest per capita junkies and homeless. Coupled with the fact that we have no professional sports or other "world class" amenities, we are truly the worst place on Earth. Why, we are not even on the radar according to classifications of world cities (we are worse than Detroit).
http://www.lboro.ac.uk/gawc/
citylist.html
http://www.macleans.ca/canada/
national/article.jsp?content=
20080312_110944_110944&page=2
sitting pretty so upset that her toilet paper profits crashed, so bad that she pooped in her pants and stinks really wicked.. stay away from that disease spreading piece of rag
Maybe instead of stooping to Sitting Pretty's level and spouting vitriol at him/her take the high road and ignore him/her. I find that if you ignore the trolls it really pisses them off.
"Anybody watched the National on CBC Newsworld tonight? Victoria's little secret"
Yes I watched it and it did not paint a pretty picture at all of our fair city. I can only imagine how many potential tourists that scared off and those who maybe who were thinking of coming back who didn't realize how bad it has gotten. They could have shown much grittier stuff though that you see all the time downtown. At least they are finally trying to do something but it won't be fixed anytime soon.
Here's what the CBC should have shown. What we see every day in our shit class city.
http://www.nationalpost.com/news/
story.html?id=a7ae7e29-0353-4cb8-
8dd4-d9e4dca85ad8
National Post article on our pretty city
http://www.nationalpost.com/news/
story.html?id=a7ae7e29-0353-4cb8-
8dd4-d9e4dca85ad8
"Junkies, panhandlers and drunks are growing in number and becoming more brazen. They are scaring people."
"A U.S.-based company cancels its four-day conference in Victoria last summer, citing "countless homeless children" as a main reason.
An event organizer explains that the atmosphere downtown "was not relaxing and enjoyable but rather quite uncomfortable."
Ozzie Jurock was on TV the other day talking about Vancouver real estate. But what was different this time is that he says the market is "out of whack" and predicts a slowdown starting with the condo sector. Falling prices are also discussed.
Watch the YouTube video here
Yes, like you, moron. I'll paste your comments over on Real Estate Talks so everyone there can see what Roger and his boosters are really like.
Who lit the fuse on your tampon?
You were a lot more fun when you started every post with 'my hubby says'. Lately you've just been a cantankerous cunt ;)
Time to leave this city. Let crazies like sitting pretty stay. This city can only get worse, it will one day be Canada's Detroit. You will one day be able to pick up a house here for $10k or $20k like in downtown Detroit.
We're out of this city.. my wife has been once too many hounded by the vermin in this city.. even when we vacationed in New York City we did not see this concentration of addicts and social psychopaths. We will never, never return here.
uh, boys and girls
the post is about "condo sales graphs"
not calling people that disagree with you, cunts, morons, hags, or diseased whatevers etc..
why dont you people start up your own blog or just exchange emails and have at it to your hearts content
Below is the "Complete March 2008 Residential MLS Data Tables" from the British Columbia Real Estate Association's website.
http://www.bcrea.bc.ca/news_room/2008-03tables.pdf
S2
>>the post is about "condo sales >>graphs" not calling people that
>>disagree with you,
Don't fall for it, people.
My money is on "Sitting Pretty" being the one who is logging in and writing all the (base) insults to herself, just so that she can go to a bulls site and say, "Look at how badly Roger and his ilk treat me!!!"
>>"A U.S.-based company cancels
>> its four-day conference in
>> Victoria last summer,
>> citing "countless homeless
>>children" as a main reason.
I take it they're referring to the teens that hang around downtown?
I know that on the whole Victoria and (the Island) has a much, MUCH higher highschool dropout rate than Vancouver. *Sigh* I guess that's what it takes to be a world class city like Victoria?
S2,
That was an interesting pdf file you posted. Sure shows the weakening North of the Malahat.
Olives/Roger, Whatever you do don't try to dissuade anyone from buying real estate now! The more people that pile in the more spectacular the carnage when this thing implodes. Think about it, every person that buys in at the top is one less person to compete with when you try to scoop up some RE at your price point.
Tony Danza,
Are you from the school of thought that says the bigger the bubble the greater the bang when it pops?
We are almost there
Let the speculators continue buying. It's incredible the blinders these creatures wear. Everywhere in the world, there is a RE crash going, and these greater fools are still in a state of euphoric climatic trance. Too bad, they'll just end up on the street and increase our homeless problem.
Great article on Housing Bubble Blog, on California market: "The Pig Going Through The Snake In California"
Here's a good link:
http://www.oftwominds.com/blogapr08/RE-bottom4-08.html
Something we already all know and it relates to the "consumption" discussion earlier. In essence, the bottom of the market realistically should be reached when RE prices reflect their true business value, i.e. as a rental proposition.
Interesting discussion about how flippers are under the illusion they can carry a property by renting if they do not sell.
I have to agree with anonymous at 11:18 am.
Someone trying to make the bears look irrational and nasty.
My money is on "Sitting Pretty" being the one who is logging in and writing all the (base) insults to herself, just so that she can go to a bulls site and say, "Look at how badly Roger and his ilk treat me!!!"
Nope, unlike you I'm not a coward, hiding behind the "anonymous" tag.
po boy said
I have to agree with anonymous at 11:18 am.
Someone trying to make the bears look irrational and nasty.
Not necessary, you fools acomplish that all by yourselves.
Your not anymore brave SP just because you type sitting pretty in the box instead of using anon. Anyway all the posts can be tracked to an IP
so people should remember that when they speak. I'm always amazed at how brave people can be when they are think they are untraceable. I guess it's the same as when they are in their cars or on the phone. But in person these same people turn into total wimps.
I get the private client listing service and I must say I have never seen so many homes over $1 million for sale. It is just crazy.
I wonder if all the "rich" foreigners are leaving?
Speculators are getting desperate. And now they are offering financing?! in this hot market!
See MLS # 243483
An apple takes a minute to "use"/consume.
A Year-long package trip round the world takes a year to "use"/consume.
A purchased house may take 50 years to "use"/consume.
They ARE all consumed
Of course they are.
But an apple gets consumed over about 2 minutes. The eating of an apple consumes the entire value of the apple. So the purchase of a 50 cent apple by a consumer (not an intermediary like a grocery store) represents 50 cents of consumption. The end user purchase and actual consumption of an apple are necessarily linked - they represent the same thing in economic terms.
A house gets consumed over decades. Thus the purchase of a house does not represent 500K of consumption now. The person who lives in the house is consuming it over time. This may or may not be the same person who owns the house. The value of the consumption of the house per month is the market rent, not the previous purchase price.
The value of consumption of a house remains the same whether it is sold or not, and no matter how many times it is sold. Change in ownership of a capital asset has nothing to do with its consumption
Ownership and consumption of capital assets are two different things entirely.
Patriotz,
I admire your patience in explaining consumption and assets. The fact that most people live in their home may make it difficult for some to grasp these concepts. Some mistakenly believe that because they are not paying any rent that their occupancy cost is only maintenance, taxes and utilities and they neglect the value of capital. A few mistakenly say buying is always better/cheaper than renting.
Perhaps it is easier to grasp using an automobile as an example. If you buy a new one you don't consume it right away (like an apple). It is a depreciating asset and the owner has a capital loss and foregoes interest on the money they spent on the car every year they own it. The car also requires maintenance, taxes and fuel which together with the capital loss and lost interest add up to a yearly ownership cost. Now if you could rent one for a year (maintenance and taxes included) for less than the annual ownership cost why buy the car? Pride of ownership - I don't think so.
So the price of cars is directly linked to the cost to rent one. If they somehow get out of whack there will have to be an adjustment to one or the other. The price of homes and rent have a similar relationship with rent tied to incomes. In effect rents are an "anchor" to home prices and they can only drift so far until the anchor line is stretched tight. In Victoria the line is stretched to the max.
"Speculators are getting desperate. And now they are offering financing?! in this hot market!"
the sure fire sign the party is toast,that's what is used as a lure when times are tough not hot,look out below.
Roger
Can I put your car analogy over on KIV? A realtor is asking why renting is sometimes better then buying a house and this is a good way of explaining it I think.
S2
Sure feel free to repost it. If a RE agent needs an answer to the question "when is renting better than buying" that is a realtor to avoid. Prospective buyers need to look at this Rent vs. Buy Calculator ( http://tinyurl.com/yr6jmz )
You might find this useful in the rent vs. buy argument.
Rent vs. Buy Requires Analysis
There is a brand new 400,000 condo that has become available from a developer. The developer will sell it to you for nothing down and offers a 5 year, 5% closed mortgage with 40 year amortization. Condo and city taxes are $400 per month. Or a recent buyer will rent you their identical new unit, on the same floor, for $1500 per month on a 5 year lease. (This is typical of what you might find at the Bear Mountain development.)
Some friends say: "buy you are only throwing the money away on rent and here is your chance to build equity. You can sell at the end of 5 years and move up the property ladder."
Your monthly payments if you buy will be $1915 for the mortgage and $400 for the condo fees and taxes totalling $2315 per month. At the end of 5 years you have spent a total of $138,900. The bank has received $96,870 in interest; taxes and condo fees totalled $24,000. Your equity in the condo is $18,043 and you still owe $381,957 on the mortgage.
If you rented the place instead of buying you would have paid $90,000 over 5 years. Now if you invested the $815 difference between rent and your monthly payments in dividend stocks (minimal tax) paying 3.5% (compounded monthly) at the end of 5 years you would have $53,355 in savings. Even putting it in a 0% interest chequing account you would have saved a total of $48,900.
Now the condo owner would have to sell privately for 35.3K more than they paid in order to be ahead of renting (53.3K-18K). If they used an agent to sell and they paid 15K in fees they would need to sell for $450.3K in order to break even with renting. The situation for the buyer is even worse if you include maintenance, property transfer tax and legal fees.
What happens if the condo market stays flat and you can only sell for $400K? You are now 50K poorer than the renter!! If the RE market goes down you are even worse off.
The point is this. There is a tradeoff between renting and buying and you need to look at the details before making the biggest purchase of your life!!
According to this fellow, all is just rosy in the real estate markets...and Garth's book belongs on the shelf next to a doomsday title.
http://tinyurl.com/56w7r3
Sitting Pretty:
>>Nope, unlike you I'm not a
>> coward, hiding behind
>> the "anonymous" tag.
If you take even a second to think about what you said, you'll realize what an idiotic statement it is.
Ah, yes, because once you sign your posts with a completely made-up pseudonym like, "Sitting Pretty" or "This is my anonymous Name!", you completely lose all anonymity on the bulletin board??? Is that correct???
Why, since you are no longer anonymous, let me look up your address and phone number in the local white pages...AH! Here it is: "Pretty, Sitting 123 B.S. Lane, Victoria".
SHEEESH. Do you even THINK about what you post?
>>I'm not a coward, hiding behind
>> the "anonymous" tag
Well, since you're the one that has thrown down the gauntlet, and we all know that "Sitting Pretty" is as anonymous as most other names here, show us you are not a "coward"- your own words- and post with your real name!
Ah, suddenly it looks like you ARE a coward after all! Thanks for bringing it up!
Posting By:
StandingTall
There is a myth going around Victoria that real estate only goes up or flattens out for a few years.
Her are some graphs that show that these statements are not true!!
VREB Average House Prices Since 1978
Note that the average price fell 26% over 4 years starting in 1981. In 1994 the average price dropped 5% over 2 years and then stayed relatively flat for 5 years.
VREB Prices Inflation Adjusted
This graph gives average prices adjusted for inflation based on 2007 as the index year. The drops are even more dramatic. You will also note that the inflation adjusted price varied between 167K and 330K for 24 years (1978-2002). In 2003 house prices just took off and family income remained constant.
S2/Olives - feel free to link to these graphs. The tiny URLs are:
http://tinyurl.com/5t52qd
http://tinyurl.com/6xq8ua
Interesting Bull report in Canadian Business magazine. What I learned reading that article is that "everybody wants to live" in Saskatoon, Winnipeg, Sudbury and Halifax. Victoria is not even on the radar. Nobody wants to live here as there are no jobs. No wonder we have no more than 300,000 people here. That's pretty small. Oshawa, London, Ont, Niagara Falls are all larger. If "everone wanted to live here", we'd have a population of over 1m.
Roger,
The realtor posting on KIV, Doug Sunray, has now stated twice that it is ALWAYS (his emphasis) better to buy than to rent.
Unbelievable!
Olives,
I read the KIV posts. Any REALTOR® that makes a statement saying that "buying is always better than renting" is either misinformed, uneducated about finances or just misleading the client. There are lots of good RE agents out there and if you hear this baloney a buyer or seller should just walk (run??) away.
Hee is a way of stopping them in their tracks. Simply ask "If someone would rent me their 500K house for $100 a month would I still be better off buying it from them?" Undoubtedly they will say no (or walk away). The next question is "So there is a case for renting. How much does the rent have to be before I would be better off buying?" This is when they walk away or if they are really dumb give a number without doing any calculations.
Ooo, Olives. Ask the question on KIV please. If someone will rent me there $500,000 for $100 am I still better off buying it. Please ask.
The MSM just keeps pumping out these pumper articles but this one has a devils advocate - Adrian Mastracci (a well respected financial manager).
Home debt lasts lifetime
Excerpts:
B.C. housing sales have remained strong and unaffected by the downturn in the U.S. economy largely because of 40-year amortization periods, said Elton Ash, regional vice-president of RE/MAX Western Canada.
The report credits "innovative financing" as the key to homeownership in today's environment, with 62 per cent of surveyed homebuyers signing up for 30-, 35-, or 40-year mortgages and 38 per cent opting for the low or no downpayments.
Adrian Mastracci, a Vancouver-based portfolio manager with KCM Wealth Management, referred to the 40-year mortgages as the "Freedom 95" plan, in reference to the Freedom 55 retirement plan once popularized by London Life.
"The banks will love you because you're going to be paying for life," Mastracci said.
If people don't speed up repayments on such debt, they will find themselves paying it off well into their senior years, Mastracci said. "With a 40-year mortgage, you're not buying, you're just leasing long-term," and will spend the first 30 years making mostly interest payments.
I like that inflation adjusted graph Roger. It's so obvious the over valuation when you look at it. I notice bulls just ignore that one. btw, I'm enjoying your debate over at
BC Realestate Talks
beagle
You might find this inflation adjusted to 1978 graph interesting as well.
When you remove inflation from the equation why is the average house purchased in 1978 for 63K now costing 182K in 2007??
Answer: speculative bubble.
When you remove inflation from the equation why is the average house purchased in 1978 for 63K now costing 182K in 2007?
Er, because property values have risen in absolute terms, like family incomes? Like it or not, stuff is more expensive now. You can dream about a return to 1978, but it won't happen.
Sitting pretty said
Er, because property values have risen in absolute terms, like family incomes? Like it or not, stuff is more expensive now. You can dream about a return to 1978, but it won't happen.
Nice see you looking at the charts. I think what you might not follow is that the 1978 chart has used Bank of Canada CPI numbers to account for inflation. So the inflation in the price of goods has already been factored in. 1978 in this case is the base index year.
This chart is the annual average price without inflation adjustment.
If I had plotted the inflation adjusted price of a basic family car instead of housing what you would see is a relatively horizontal line with some peaks and valleys not a big ramp up in price.
A plot of inflation adjusted wages would have a small upward curve because there is pressure in the labour force to get a little more than inflation as a wage increase.
You might find it interesting to visit the Bank of Canada site and try out the inflation calculator and some of their graphing tools.
I found these inflation adjusted graphs of various commodities which may be of interest to some readers.
Price of oil
Price of gas
Price of gold
Price of corn
Price of Victoria Houses
"...builders in Victoria have realized for nigh on three decades that it isn't worth their time to build a rental building in Victoria. And so, they haven't."
Actually, Quadra Pacific wanted to build two rental highrise buildings on some parking lots in James Bay back in 2004 but the neighbourhood association quashed the project. The developer made the application again in 2005 and was rejected again.
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