Oil hit $135 a barrel this week, and will go higher. Goldman Sachs is thinking $200 / barrel within 2 years.
Another Canadian bank, RBC, is proclaiming that the Canadian housing boom is over. We all know Alberta's market is slumping and Canada's is slowing dramatically. There are 17286 properties for sale in Greater Vancouver. There is an 11.2 month supply of homes in the US.
Victoria, of course, is no different. Sales have slowed. Inventory doesn't stop rising. Right now, we are at 4522 properties for sale in Greater Victoria.
On the MLS, today we have 154 more SFH listed than one month ago, 170 more condos, and actually 5 fewer townhomes. 2 out of 3 ain't bad!
In case anyone is interested, CMHC has released their 2nd quarter housing market outlook for Victoria.
Oh yeah, thanks for visiting this site and making it an active forum for comments. Let's remember to keep the comments civil and focused more on real estate. Thanks.
80 comments:
Oil hit $135 a barrel this week, and will go higher.
We all know Alberta's market is slumping.
Let's see now. Oil prices are soaring but Alberta RE is slumping.
The BC forest industry is tanking, tourism is a disaster, so the outlook for BC RE should be even...
But everyone wants to live here!
negative,negative,negative---
stop being so rational and let the aura of Victoria Real Estate Totality guide you.
When you need to reject logic to recapture the blissfull karma, just close your eyes and intone;
ooommmmmmmmmmmmmmmmmmmmmmmmmmm
and again as required
boomer,
Thank you. I feel much better now.
Roger
California house prices down 32 percent in one year - wow.
check out the article in the Times Colonist about Victoria RE. They acknowledge that the boom has ended but same old spin on how we have great fundamentals, low unemployment, great household finances etc. same old spin.
Which is so funny since there was an article a little while ago about how Canadians are in debt now more than ever and have no savings.
You can find it on Garths blog - at the top under RE breaking news.
the low unemployment theory doesn't wash when 90% of the jobs pay under $15 or less per hour. It's great if you are a student needing to supplement your spending cash but a joke for anyone having a hope in hell of qualifying for a mortgage.
But then again this is all the pump machine has left to grasp on to try and fleece the remaining sheep. Wait til the low tourism numbers roll in by summers end and they all start cutting back staff thru next winter as in past downturns then we will see how hot those job numbers look.
I also think that it is the typical Canadian self-esteem problems that this country has by living beside a giant. Things may screw up there but certainly not here. We are CANADIAN.
Our lending policies are sound - we only lend to people with money. Our household finances are sound - we have no debt. We really are better. Really.
We are always trying to prove that we are NOT AMERICAN!!!! We can be better than Americans!!!! This self-image problem prevails within our government, media and culture.
Why do you think that Canadians walk around European cities plastered in maple leafs (like a bunch of idiots). They love us. They hate Americans but Europeans love us because we are Canadian.
California house prices down 32 percent in one year - wow.
That's the median. The median lagged the actual decline at the beginning of the bust (because sales dropped off more at the low end), and now it's catching up.
California is actually down about 20% over the last year, which is no small potatoes of course.
S&P/Case-Shiller Home Price Indices
Our story: sitting on the sidelines with a measly $500k in the bank.. watching and waiting for the shock and awe of the Victoria housing market to take a hit.
We're in Edmonton this week and are absolutely shocked at the massive amount of development.
Today we toured show homes in what is considered an upscale housing development at the southend of the city. They are MAD.. it's formerly a cowpatch that has been bulldozed. These houses are typical 'bare mountain' style.. the catch..they are asking in excess of $700k plus taxes for a starter bungalow. hahaha..
The realtor tried to convince us that it was a great deal...yeah, so is a 1914 shitbox in upscale fairfield.. riiiiight...
We'll see what the prices are in a year from now..
Good luck to those in the shadows..
signed: R.E. Reaper...
OMG,
Wifey and I just drove by an open house. I yawned and decided to stay in the car while he popped in for a look-see.
Price is in low $700s. 1950s bung. My wife was told that "RE is NOT GOING DOWN in Victoria, so don't hold your breath. Buy now, or forever hold thy peace."
Oh yeah, is that why there were no other customers fighting their ways into the front door?
wifey is a he?
(not that it matters.)
---credit Seinfeld
once_an_idiot_too:
"RE is NOT GOING DOWN in Victoria, so don't hold your breath. Buy now, or forever hold thy peace."
The real estate agent is so sure, is he? Ask him why all the U.S. realtors were saying the same thing not so long ago, but proven very, VERY wrong. Are realtors in the U.S. absolute morons, but Canadian realtors relative geniuses? Ask him what makes him a more knowledgable real estate than the many thousands south of the border.
Ask him, if you buy a Victoria house with him, and the assessed value goes down AT ANY POINT between now and the next 10 years, if he is willing to immediately make up the difference in value out of his own pocket. Ask him if he is willing to do the same if the property value does not keep up with inflation in the next ten yeas (which is the same thing as a loss in value, in fact)
I guarantee he won't be willing to do so. Not much of a "guarantee" if he ain't willing to put his money where his mouth is. Ah, but of course he will be happy to have others risk hundreds of thousands on his highschool-diploma-level musings. Gee, I wonder why?
- Percival
Does anyone else think it is just so weird to watch this all slowly unravel?
It is like watching a slow train wreck.
I got a taste on the weekend of what it is going to be like for the people who are on the tracks and can't get off. It isn't pretty.
It is indeed a slow-motion train wreck! Very entertaining now that it is here, but indeed somewhat sobering as well.
R.E. Reaper - are you fully serious that houses in Edmonton were selling for $700k? This defies belief, even in this bubble.
Ah, but of course he will be happy to have others risk hundreds of thousands on his highschool-diploma-level musings.
I don't think you need a diploma for a real estate license??
I'm not even sure you need to go to high school - don't you just need another Realtor to sponsor you??
"The real estate agent is so sure, is he? Ask him why all the U.S. realtors were saying the same thing not so long ago, but proven very, VERY wrong. Are realtors in the U.S. absolute morons, but Canadian realtors relative geniuses? Ask him what makes him a more knowledgable real estate than the many thousands south of the border."
I'd just ask him how long he's been a real estate agent. My guess is less than five years, and certainly less than the 15 years since our last RE bust.
Just so you know, the real estate exam is not as easy as it used to be years ago. One has to study for at least 6 months, then pass a series of exams.
Once qualified, agents have to take courses to maintain and upgrade their skills. I am not one, never was, never will be. I don't care for the majority of those bast@*ds anyway.
But, let's be fair. There are MANY slimeballs in that industry. However, those bad apples would have been dishonest and moronic regardless of where they worked.
I've met some decent people who happen to be realtors. Some cannot even write out a simple offer without divulging their inability to include numerous typos, bad spelling & punctuation, etc.
When all is said and done, it is what it is: A salesman's job, no more , no less. Let us try to show some respect for the half-decent ones who are trying to make a living like everyone else. In fact, I detest lawyers more than I detest realtors.
Billy TwoBaulz...
Not only were they $700k..but that was the STARTING price. There were ones that backed onto a small ditch (which backed onto a highway) that will be in excess of 1 Million (I kindly asked the realtor how she would spell that ;) )
For that price one would expect the location to be quiet, private, and serene. Not even close.. I am not kidding when I say they bulldozed an old cowpatch and started packing them in.
In the next few days I will take a photo of the pathetic landscape and view one would get if you purchased in this 'pumped' trying to be upscale neighborhood and post it for you to see.
I thought Victoria was bad, but at least you have a chance of having greenery and space between neighbors.(well except at Bare Mountain).
In the area that we are visiting, there are dozens and dozens of for sale signs. I can't say if the outlook for housing is grim here as the wages are really high compared to Victoria where one is punished with the sunshine factor. Food prices are the same if not slightly higher than the Island.
I can't tell you how excited I am for the market to correct so I can say "I told you so" to the countless people that have argued with me that RE in Victoria will never go down.
signed: R.E. Reaper :)
I can say I actually had a very good Realtor (once).
It's husband and wife team that are primarily small town and small time developers (she is the Realtor). They have successfully built 3-5 spec homes a year for the last 20 years and refuse to market them on MLS or allow other Realtors to show their products.
They ended up being great friends and eventually counseled us NOT to buy after the sale of our most recent home.
As developers they have seen firsthand the run-up in material and labor costs and fully realize how unsustainable it all is (was?).
As of 2006-2007 they were unloading their rental properties (beautifully restored heritage buildings). I remember them being so proud that they had made the last mortgage payment on them back in 2000.
I like to think of them as the "smart money".
Just got back from London. As I was packing this morning to leave for Heathrow, had the news on. Newscasters were merrily reporting that housing prices across U.K. were down for eighth straight month. But of course we all know that real estate is local, and there is absolutely nothing global going on here.
R.E. Reaper: thanks for the update on the Edmonton story. Wild, wild stuff...encouraging, I suppose, to see how out of control it has gotten. California mansion prices in Edmonton...what's wrong with this picture??
In fact, I detest lawyers more than I detest realtors.
I don't. Lawyers are paid by their clients to work for their clients. A lawyer may be a bastard, but he's your bastard.
If someone is suing you, your lawyer doesn't get a % of the judgment paid to the plaintiff. In fact he'd wind up in jail or get disbarred if he did.
But the seller's agent and the "buyer's agent" are both paid a % of the sales price.
Get the drift?
It is like watching a slow train wreck.
More precisely, it's like watching a wreck in slow motion on one track of a mainline, and then seeing a train on the other track pile into it after running half a dozen red signals.
If you know what I mean.
Ooo, good one patriotz. That is exactly what it is like.
What's wrong with this picture?
charming 1908 arts & crafts residence - $685K
1915 Oak Bay character home - $1700/month
The first one actually has TWO bathrooms? That's a miracle, must have converted a bedroom into one, or gutted the whole thing long ago to put a reasonable modern floorplan in there. From the look of the kitchen, looks like it.
What's REALLY wrong with it? Looks like a brand new house on Bare Mountain. Which really reflects more poorly on Bare Mountain than this place; when this place was built the 1908 styling was state of the art. What's Bare Mountain's excuse? Are they market researching 110 year olds?
Obviously they stripped it to the studs and built a new house in there, complete with the ubiquitous particle board crown moulding. That's probably why they're asking a new Bare Mountain house price. Bet the windows are all redone double pane factory from the Home Cheapot too.
I'd say the only thing original in this house is the fireplace and chimney, and with a house that's as old as this one, that's probably a good thing.
But really, can you blame them? With identical looking garbage on Bare Mountain commanding similar prices, why should this place be priced any different? The redone insides were surely done as cheaply.
Yesterday I noticed two houses on Usedvic with ads for both sale and rental (can't make up their mind maybe?)
Speaking of houses offered for sale or rental, I have a friend who just relocated within the US to a town on the East Coast that's meant to be like Victoria - a big retirement mecca, very picturesque, etc. Anyhow the market there is still somewhat in denial, and apparently "everyone wants to live/retire there". It's remarkably similar to Victoria in all senses. Anyhow, my friend is renting and many people who have showed them rentals have recently (discovered due to his online detective work) had their houses up for sale for 9+ months, but then decided to rent them out. They apparently insist that their areas haven't been affected by the national downturn because their neighborhood is especially desirable. The question of course then is why their house didn't sell! LOL.
Olives, it'd be interesting to see the usedVic ads, if you can find them.
B2B:
Ad# 5906951 Shows the Irma Street house for sale for $429,000
Ad #5906830 Shows the same house for rent for $1,500
Ad #5907159 Shows this Wicklow Street house for sale for $599,000
Ad #5906855 shows it for rent for $2,400
Sound like great investments! LOL
Looks like another sign RE agents are not going to be able to command their 6% commission for much longer: The US has just opened up MLS to online brokers.
http://tinyurl.com/55twyg
Latest report from the New York Times: Seattle market down 33%
But of course, here, it's different. Why, Seattle might as well be a different country...
Thanks Olives, and I like the B2B epithet as well - it sounds more businesslike than Billy TwoBaulz.
Yeah, great investments at 286 times rent and 250 times rent. But surely a good sign that some investors are not sure what to do with their properties. Perhaps they're in the same boat as the folks in the Southeast US I heard about - they're not sure their houses will sell at an inflated price, so they're prepared to rent and wait it out. Does this make sense? Why would someone offer to rent or sell a house at the same time? It just seems very random. Surely people plan their lives and their finances more finely than this?
Is it possible in Canada as a renter to find out if the place you are renting is being foreclosed on. In the US(or perhaps County specific) they seem to be able to determine if the owner is delinquent.
I would not want to rent a place and find out the owner isn't paying the mortgage.
Looks like another misleading MSM article by Carla in the TC. The headline has nothing to do with the content as the numbers they are touting in the article are from 2007 not half way thru 2008 as the headline implies.
As well Carla seems to acknowledge the March and April numbers sucked and retailers are "hoping" things get better:
"Retail sales started out strong this year but poor weather across the country dampened shoppers' enthusiasm in March and April, she said. Now that warmer weather is here, Hollstein is hoping sales will improve, saying she is "definitely looking for a solid summer."
All this digging back so far in history to make a story and then make the headline appear to be current numbers is another disgusting case of MSM trying to fleece the sheep. When will this crap stop ?
Victoria retail sales showing strong rise
Bay Centre businesses experienced double-digit growth for most of 2007
http://www.canada.com/victoriatimescolonist/news/business/story.html?id=fe8892e1-777a-4093-97bd-fbc2d88105db
http://njrereport.com/index.php/2008/04/09/tracking-realtor-spin/?ref=patrick.net
1. “There’s no question there is a strong demand for housing from a growing population.” - David Lereah, NAR Chief Economist
2. “For the foreseeable future, the demand for homes will continue to outstrip supply” - Al Mansell, NAR President
3. “We’ve been expecting sales to remain at historically high levels, but this performance underscores the value of housing as an investment and the importance of homeownership in fulfilling the American dream.” - David Lereah, NAR Chief Economist
4. “We are returning to more balanced markets between home buyers and sellers… We feel confident that housing is landing softly as rates continue to rise.” - David Lereah, NAR Chief Economist
5. “This is part of the market adjustment we’ve been discussing, with a soft landing in sight for the housing sector. The level of home sales activity is now at a sustainable level. Overall fundamentals remain solid…” - David Lereah, NAR Chief Economist
6. “Higher interest rates are slowing home sales, but we see this as another sign of a soft landing for the housing sector which remains at historically high levels.” - David Lereah, NAR Chief Economist
“After five years of booming sales, we are now experiencing normal market conditions across most of the country… most owners can expect steadier gains in home values for the foreseeable future.” - Thomas M. Stevens, NAR President
7. “Over the last three months home sales have held in a narrow range, easing to a level that is near our annual projection, which tells us the market is stabilizing” - David Lereah, NAR Chief Economist
8. “Now sellers in many areas of the country are pricing to reflect current market realities. As a result, there could be some lift to home sales, but it’ll likely take some months for price appreciation to rise.” - David Lereah, NAR Chief Economist
9. Existing-home sales stabilized at a sustainable pace in August - NAR
10. “…the worst is behind us as far as a market correction — this is likely the trough for sales. When consumers recognize that home sales are stabilizing, we’ll see the buyers who’ve been on the sidelines get back into the market” - David Lereah, NAR Chief Economist
11. “It looks like we’re moving beyond the low for the housing cycle last fall, and buyers are responding to historically low interest rates and competitive pricing by home sellers. In addition, a tightening inventory of homes on the market is supporting prices.” - David Lereah, NAR Chief Economist
12. “Fundamentals have improved in the housing market and buyers see a window now with historically-low mortgage interest rates and competitive pricing by sellers,” - David Lereah, NAR Chief Economist
13. “We also may be seeing some losses as a result of the subprime fallout. However, this is masking improved fundamentals in the housing market, with lower mortgage interest rates and motivated sellers.” - David Lereah, NAR Chief Economist
14. “Buyers who’ve been on the sidelines may want to take a closer look at current conditions in their area – if they wait for sales to rise, their choices and negotiating position won’t be as good as they are now.” - Pat V. Combs, NAR President
ron s:
Great reminder that the NAR, and Canadian counterparts, are nothing but sleazy salesmen that will do whatever it takes to make a buck.
Don't forget, also, to put equal blame where it is due: the MSM. Without the MSM to print their lies, the sleazy house salespeople would not have a "respected" outlet to spew their lies. Mind you, thanks to their own actions the MSM is not quite as well resepected or believed as before.
Cue today's MSM idiocy:
FACTS: April new home sales in the U.S. are down 42% year-over-year , a 27-year record. March numbers were revised down by 17,000.
So guess what the story's headline is? Why, rainbows and sunshine, of course...!
HEADLINE:
"April new single-family home sales rose 3.3 percent"
http://news.yahoo.com/s/nm/20080527/bs_nm/usa_economy_newhomes_dc_1
Biased, manipulative, or downright idiotic media? NAHHHHHHH!
-Percival
? Why would someone offer to rent or sell a house at the same time?
Well simple really. They need the rent money.
You're assuming that it's an either/or situation. I think the house will remain for sale once its rented.
Fair point! They might want to be more circumspect about advertising the fact on the same site.
It sure appears like there will be an adjustment soon - but the problem is that there have been too many people predicting the "crash" for too long.
Unfortunately, it really starts sounding like "The sky is falling! The sky is falling!" and it's hard to separate pessimists from experts...
Many of these Blogs have been predicting the Vic/Van crash for years - how many of these predictions are simply based on "sour grapes"?
We've sold our house in Calgary and are relocating back to Victoria (after 19 years!) as we speak. With the tight rental market, it's hard to know what to do. Unfortunately, we need a place to live - I heard that the Johnson Street bridge is fully booked up for several seasons.
I've been watching things very closely for many months now and it we come across a place that will suit our needs - we'll likely throw some offers out and see who wants to sell.
Some places are still selling very quickly - others sit for months. I know which I'll be targeting...
Hey Rob
Good to hear some level-headed discussion for once. I too came from Calgary (we did well selling our house there). My wife and I will take possession of our "new" place here in Vic on May 31st. We had been looking seriously for the last 2 months.
The "extreme" talk on here I find amusing. I'm of the opinion (yes, it's opinion as no one truly knows the final outcome) that the market is correcting and will continue to do so. How much at the end of the day, well I'm uncertain. We bought in an area that is well sought after and while we plan on raising our kids in this house it's also a bit of an investment long term (in the sense that it shouldn't be too difficult to sell if ever needed).
Anyway, kudos to your post, Rob. I wish there was a bit more of this. I've been following this blog as well as HHV's while looking for a place. Posts of "train wrecks" do indeed come across as sour grapes to me.
? Why would someone offer to rent or sell a house at the same time?
Oh I forgot to add that there was a lot of this in the US a year or so ago.
Not any more - most of the "owners" have simply stopped making payments.
Hi Rob and Zombie T,
Indeed it's great to have some moderate opinions on here, especially when expressed civilly. You're just the sort of posters that help to round out these blogs.
I'm not certain that sour grapes is the overweening sentiment from the bears here though - frustration might be more accurate. Many of us, myself included, have recently sold properties based on our logical conclusion that the worldwide housing bubble is coming to an end. Waiting for the conclusion of this drama is frustrating and requires extraordinary patience.
Rob, you mention the tight rental market - this is a factor, but rest assured there are some great deals out there if you're willing to sift through the chaff (which you'll have to do in spades anyhow with searching for a house to buy). We've had a very good experience in the end working with Firm Management, owned by Rod and Dennis Fimrite, in Saanich. I can definitely recommend them, and they seem to manage higher-quality houses.
Oh, also for anyone who's looking, there's a nice looking house in Oak Bay with Pemberton Holmes:
http://blahblahahah.notlong.com
It's being shown today at 4:30 PM today as it happens. We've already signed on another place, hence my posting it for all and sundry.
"Sour Grapes" - Personally I get the impression most of the regular posters on this blog are in a good financial position and are either simply waiting a while to make what they see as a wise decision for their future - or else simply have an opinion as to the future of the market here. I think the key is finding a great rental house.
Perhaps as you live here longer you will begin to realize that young families are completely priced out, many have moved out of town and others are struggling much more than in most other Canadian cities, getting in way over their head in debt. Maybe it is the debt that makes some people sour.
Honestly, lately there's probably more gloating on the various blogs by the bears due to the fact that the market appears to have turned the corner. (I'm thinking of a couple of the Vancouver blogs run by realtors)
I am presently renting a house in Victoria. Houses in the neighbourhood are selling for 850k - 1 million range. Based on my yearly rent vs. the low end of this amount it works out to a ratio of 28.3
Here is an article in the New York Times that shows the US ratios for various markets from peak to now.
http://tinyurl.com/5fc8ks
This puts us in the same area as all of the ground zero housing bubble cities such as Miami, Sacramento and San Diego.
I was considering buying but it is simply too risky at the moment.
It sure appears like there will be an adjustment soon - but the problem is that there have been too many people predicting the "crash" for too long.
Unfortunately, it really starts sounding like "The sky is falling! The sky is falling!" and it's hard to separate pessimists from experts...
A more apt analogy would be the boy who "cried wolf". After crying wolf too many times, nobody believed there was a wolf around anymore. There was no danger from a wolf, that's absurd.
Until of course the wolf showed up and ate the boy.
The analogy doesn't quite fit, because the bears are not going to get eaten up by any little old wolf. But some of the people who heard those warning calls just might get chewed up and spit out of the local RE hype machine.
Saying that reporting something for awhile that is debateable somehow invalidates the fact it can happen - that's just ostrich behaviour.
If prices start to correct big time, nobody should blame the bears on these blogs for providing a voice of reason in the midst of all the hype and RE pump talk.
For every poster now who finds the point of view quaint, comical, or out of touch with the local financial reality, there will be ten readers who will later say thank-you for a counter balance to the ruthless RE hype.
IMHO.
" olives said...
"Sour Grapes" - Personally I get the impression most of the regular posters on this blog are in a good financial position....."
Yes, Olives, in my case, I CAN pay CASH, but refuse to. The value is just not there. But sometimes I feel I have to justify being a renter, as I think home "owners" look down on us renters.
I've been told to my face that people feel SORRY for me. I suppress myself from cackling "Don't be sorry for me, I can pay $500k in COLD HARD CASH WHEN I'M READY..."
Would that be showing off?
BTW, Olives & S2, did you both notice the latest thread on KIV? It asks for advice on ARM versus locked-in mortgages. TWO of 4 posters so far indicate they are buying SECOND properties, if I'm reading right....
Anyhoo, one said there's no concern for the next 3 years, and the other concedes she/they can afford 5 years of payments, based on today's rates.
I hate to post my burning question...
"What will you do AFTER the 3-5 years? If you still own it, even if value remains high, like today's (HA HA HA), interest rates ARE GOING UP. What if interest rates double in 5 years, from your teaser rate of 4% to a reasonable 8%....
Will you be able to pay roughly DOUBLE the monthly mortgage? Just asking....."
I was sitting in my stats class last night (I lead a wild and exciting life, lol) and the professor asked if anyone wants to buy a condo by Thetis Lake (the Lakeside). WTF? I think it's a fellow professor selling it, but come on!!!! I kid you not. He should have been warning them NOT to buy it...
Olives, I agree - I've just signed on a great new rental (house *on* the water for <$2k), the market appears to be sliding exactly as predicted, and I've literally not a penny of debt and am saving and investing money like mad every month. I am feeling extremely sunny about the future, and I don't envy anyone in Victoria who owns their house. I honestly wouldn't want to trade places with anyone who owns an average Victoria house. Sour grapes is the last thing on my mind.
You might say I'm sitting pretty. :^D
But sometimes I feel I have to justify being a renter
Homeowners are renters too. They are renting their own houses to themselves at terrible yields, and in most cases are renting money from someone else at a much higher yield.
Actually that "someone else" is people like you and me who have cash.
So who's smarter? The one who owns a house and pays to rent money, or the one who owns money and pays to rent a house?
Don't forget, not everybody has sold recently and been rewarded handsomely like those guys in Calgary. Most locals have only their (low wage) salaries to count on, others sold before the boom. So once fundamentals return, i.e. affordability, RE prices should stabilize from what promises to be a severe and deep fall to 2001 price levels.
Good article on rent vs. buy in the New York Times.
Based on a P/E ratio of 15, the following Victoria homes mentioned earlier should be listed more closely to:
Ad# 5906951 Shows the Irma Street house for sale for $429,000
Ad #5906830 Shows the same house for rent for $1,500
--> 12X1,500X15 = $270,000
Ad #5907159 Shows this Wicklow Street house for sale for $599,000
Ad #5906855 shows it for rent for $2,400
--> 12x2400X15 = $432,000
Of course these rents are ridiculously high in the first place and likely unrealistic. So RE prices based on the P/E approach should be even lower. Most Victorians make $12-16/hour, and they are straddled with car loans, cable, cell, etc expenses. The market for rents above $1000 is very very limited.
"You might say I'm sitting pretty. :^D"
LOL
"TWO of 4 posters so far indicate they are buying SECOND properties, if I'm reading right...."
I got that impression too - YIKES!
Some Calgarians can be naive.
Our friends sold their house in Deep Cove for $450K or so in the fall of 2004. Some speculator from Vancouver bought it. The speculator put in a coat of paint, sanded the floors, put a bit of granite, etc very little in terms of true physical improvements, but it looked nice and clean.
By spring of 2005, the speculator listed the house for $789K and sold to a Calgary couple.
$300K + profit in a few months!
These Calgarians didn't even bother researching the area or what houses sold for, etc. Apparently, according to the neighbours they are unhappy today due to low quality cheap renos and have regretted the price they paid. Apparently, had they known the house had sold for $300K a few months earlier, they would never have bought. But, they were caught in the frenzy, with the RE agents saying there were other offers coming, etc all that BS to pressure buyers. Amazing, especially since sales prices are available on the BC assessment site.
"Sour grapes??????"
That's a laugh. The richer you are (and I am) the cheaper you get (and I do.)
Just look at all the multi-million dollar properties flooding the mls. Villa Madrona has been for sale for what, two years now with price reduction after price reduction?
The rich are out there, and we're WAITING. We didn't get rich by buying at market peaks, or into crashing markets just beyond the peaks.
And the vast majority of sellers haven't got the message yet that the party is OVER.
When those price reductions finally and inevitably hit 40-50%, watch the sales fly...
Readers far and wide are expressing their appreciation for realtors over on the the fark.com forums today. The jury is in, and doesn't look pretty for realtors.
http://forums.fark.com/cgi/fark/comments.pl?IDLink=3632400
Here are some highlights:
"The chicks at Supercuts have to be trained for 6+ months and then licensed by the state, just to cut your hair. The person helping you make the biggest purchase you will make in your life doesn't even have to graduate High School."
...
"I've worked as a real estate paralegal for 25 years. Realtors make a buttload of money for doing next to nothing other than filling people's heads with empty promises and bullshiat."
...
"I don't use realtors any more. I just buy use my lawyer and a titling company I hire."
...
"I worked in the mortgage industry (currently in mortgage software industry) and I can verify that the original poster is correct. About one in 10 have a sense of decency. They only last a few months, though. The others, well, you'd be insulting used car salesmen if you compared them to each other."
...
"I've never understood why Americans are willing to hand over 6% to the realtor. In the UK, 1-1.5% is about normal (unless it's an unusual house that's going to be difficult to sell), plus about another 0.5% to your lawyer (which includes the titling expenses)."
...
"I have a very hard time fathoming why real estate agents still exist in the age of the internet"
...
"Remember: You can't time the real estate market, but now is the absolute BEST time to buy!"
...
"Was married to a realtor once...saw behind the curtain and saw just how little they generally do. When buying the 2nd house, I went without a realtor and NEVER ran into a spot that I wished I had one."
...
"Real Estate agents all seem to be of the same ilk. At least the ones I've met, which is about 12-15. Exceedingly phony, heavy on the makeup/perfume/cologne, attitudes like they have the cure for AIDS but don't want to share it, not too bright but throw out the occasional 4 syllable word so that they sound intelligent, and way too cool for the room"
...
"[A realtor is generally] a 30-50 year old selling her bad cleavage and big hair."
...
[Regarding the paperwok that realtors do]."They just fill in the blanks. They are glorified ad-lib writers."
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"The woman who cuts my wife's hair is also a real estate agent."
...
"For the last property I sold I went to the buyer's lawyer and gave him $300 to write up the contract. He pulled a basic contract from his form database and snipped out the irrelevant parts. He was done in under an hour."
...
"1) ALWAYS ask the Realtor for a list of appraisers, inspectors and loan officers they recommend.
2) NEVER use anybody recommended by the Realtor."
...
[In Texas] "Lots of cute bouncie girls get into real estate 1-3 years out of highschool with very little education because the way the culture is (cute bouncie girl with big tits sells home)."
...
"Realtors really are worthless. I'm a real estate appraiser and I have to deal with them all the time. The never call you back, they flat out lie about sales concessions (against the law), lie about the condition of the property, and act like they are doing you a huge favor by even talking to you."
...
"99% of them do not give a shiat about getting you into a bad deal, they are not looking out for you. They want to do as little work as possible."
...
"[Realtors] prey on people's emotions over their sensibility ("this is for your family, if you don't buy that means your kids will be eaten by rats")."
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"One of my best friends is a real estate agent and he pulls in some decent money. He works maybe 20 hours a week...and that is being generous."
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"I'll take the courses/test myself before I pay [a realtor's commission] again."
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"I don't think there is ever a time or situation when it's a good idea to let a salesperson proxy the appraisal, inspection and financing processes. It is an unconscionable conflict of interest. I don't care if it's a soccer mom or the Chairman of the Fed."
...
"went with the broker my boss recommended and i asked him to ONLY pre-approve me up to a certain amount so i wouldnt get pushed out of my price range. He very nicely did that for me...then when my agent got a hold of it, she kept harassing the broker to extend the range...how on EARTH is that legal or in my best interest?"
...
[And a realtor responds to the criticism! I can't believe he actually thought this was a retort!]"The argument that I am trying to make is that we are not overpaid. Yes, thousands of soccer moms and 7-11 clerks did sign up...are idiots and undereducated...during a bubble it is easy to ride the wave of money...Personally I am not working today because I am nursing a hangover [from late-night partying in Vegas]."
...
"I've been dealing with real estate agents for 25 years and know more of them than I care to know. Yeah, there some real good ones out there, but most of them suck in a major way."
What do you call a real estate agent more than 5 feet from their home?
----------an expert
Yes, I did see that over on KIV. That was how I read it too. I had to shake my head and reread it.
Please, please, please OAITS. Post your question over there. I would love to see the answer. Remember though that they are in deep denial (which they have to be when all your eggs are in one basket) so you may get the big run-around answer.
If you do post your question on KIV I promise I will sell you my investment condo really, really cheap. :-)
I'm not sour. Just weary. I know it took years to get up to this point and it may not take years to go down but boy it still moves at a snail's pace doesn't it?
CMHC predicts 14100 new listings for Greater Victoria in 2008. Given May's activity we should make it to at least 7500 new listings in the first 5 months of 2008. I'd be surprised if we can't put another 7500+ listings through the end of the year; I think CMHC have underestimated new listings.
CMHC also predicts about 7700 sales in 2008. My guess is we will have seen no more than about 3300 sales by the end of May. To hit 7700 sales, Victoria 2008 will have to outsell Victoria 2007 for the remainder of the year. I think CMHC have overestimated the strength of sales.
Finally, CMHC predicts a 7.1% increase in housing prices for 2008. Not gonna happen. The only thing that's holding Victoria average prices up these days is that the entry end of the market is now barely breathing. In fact, I'll bet the average price for a Condo will be down at the end of May from where it was at the end of 2007 -- forget 7% growth, I think the scales are finally tipping.
- awum
CMHC is wrong.
"S2 said...
Yes, I did see that over on KIV. That was how I read it too. I had to shake my head and reread it.
Please, please, please OAITS. Post your question over there. I would love to see the answer...."
MY ANSWER:No, No sweet onceharmony. I won't risk asking that on KIV. I'm too chicken.
But you and Olives are good s*@t disturbers on KIV forum. I authorize you to copy, paste and ask my question over there. I won't charge you with plagiarism, I promise.
We're dealing with a different mind-set over there. The immaturity at times is annoying. So, I do what you do. Shake my head hard,causing my brain to scramble, and then get on with my own business. Puts new meaning to MYOB. I now say MYFB.
Leave them alone. Ignorance is bliss. It's probably a case of easy-come-easy-go for some folks.
Remember the forecast that said trillions of $$$$ would be transferred to boomers, yuppies, dinks, etc?
Well, IMHO, that ain't gonna happen any more. When the RE 50% price-cut comes, many "banks of Mom & Dad" could go kaput.
OAITS.
I just posted your question on KIV.
I have no shame. Heck, they hate me already over there what is one more. :-)
The plummet begins?:
503 - 760 Johnson (The Juliet) listed for $459K in Sept 07, sold on May 23, 2008 for $390K. 15% below the original asking price.
- awum
4522-> 4622 listings = 100 new listings since PB posted on Saturday ...
looks like 20 net new per day.
THINKING OF BUYING AN INVESTMENT PIECE OF LAND IN THE BOONIES?
Remember the good 'ole days when buying a large, cheap piece of real estate on the outskirts of town was a great investment, if you were patient enough to hold on for a few decades? That made sense, of course, because as the population boomed and development reached outward, the large tract held obvious eventual development potential.
However, what many people today don't realize is that those days are quickly coming to an end. Developed countries' birth rates cannot currently sustain population levels, and we will NOT much longer be able to depend on stealing well-educated immigrants from other countries. Why? If current trends continue, the world's population is said to start declining in only a few more decades.
A Victoria business news publication has a great editorial on this topic this week, and asks a great question: Who is going to but all the baby boomer's stuff?
In the past, wealth creation has depended on population growth - a sort of human ponzi scheme, if you will.
If you owned a typical house lot of the typical size in the 1950's, by 2008 the population has grown such that chances are good you can now subdivide the plot, or at least there is twice as much relative demand for it (more people to compete to push the price up higher). What happens when there isn't enough population growth to make up the wealth creation the baby boomers need, must less keep pace with their numbers?
The aforementioned business newspaper editorial even admits, "Next year, baby boomers will reach the peak of their spending", and points to Japan for a similar scenario just a few years ago.
It's all downhill from here, folks. Go ask your realtor why in would ever make sense to invest in a large piece of land in the boonies if all population trends point towards the fact that we are about to stop expanding outward in only a few more years.
The bolded question in the above comment should read:
"Who is going to BUY all the baby boomer's stuff?"
"Will you be able to pay roughly DOUBLE the monthly mortgage? Just asking....."
OAIT: You may also want to mention, as the currently historically low interest rates rise (which is not a question of if, but when), does this silly 2nd-property "investor" realize that ALL properties will plummet in resale value?
It is an age-old relationship: As interest rates go up, prices go down.
This not-so-savvy investor is about to get double-whalloped.
So I posted OAITS question over on KIV and someone came back with this:
"...when the rates go up you DO NOT pay more on your mortgage...it just means more of your payment goes to interest and less to the principal, so you won't pay it off as fast."
So I checked on the Bank of Montreal website and found this:
"Variable Rate Mortgage (also known as a floating rate mortgage): A mortgage in which your monthly payments remain the same throughout the term but the amount applied towards the principal (amount initially borrowed under the mortgage) versus interest may change with fluctuations in Bank of Montreal's Prime Rate. As a result, the amortization period may be longer than you selected if interest rates have risen since the start of the term, or shorter if interest rates have fallen since the start of the term."
I have never had a mortgage. Is this new?
Hehe brilliant - so when rates go up, you don't pay more, silly, you ..uh... pay more.
I think term is avg 5 years (6mon - 10 years common) you will have to refinance. Then the rates will go up...they have to.
S2/Harmony,
I saw that you followed up on KIV. I'm now more convinced that there are people who are STUPIDER than I thought. (And, before I begin, for God's sake, I don't need ignorant arguments from anyone here concerning my modest calculations.
I KNOW that my hypo is not exact, and that the $600k debt WILL DECREASE with time, although we all know that it is mostly interest payments during the first 5 years of a mortgage. Just trying to keep it simple to make my point. Amen). It is for info purposes only).
Yes, S2. BMO's (and all banks') explanation works that way. But you need to go back to KIV and ask the bumbling bozos if they got their mortgage broker to actually write down the long-term consequences of paying the same monthly amount WHEN (not IF) interest rates go UP.
Logic would dictate that if one USED TO pay $2200 per month, and let's just put out a figure of $2000 monthly being the interest PORTION of that, (based on 4% interest rates if one borrows $600k).
Here's the math:
Debt is $600k. Interest rate is 4%. Interest is $24k annually, so therefore $2000 MONTHLY.
Interest rate goes up to 6%, so now:
Debt is $600k. Interest is now $36k annually, or $3000 MONTHLY.
NO MATTER WHICH freaking WAY you try to turn this around, the result is the same:
Interest expenses just jumped the SAME 50%. The $2000 per month interest charge is now $3000. Where will they find the extra $1000? Furthermore, this bust will be much worse than my previous 30% forecast. Just look at/listen to the 'investors' who caused the problem in the first place. Ignorance is truly bliss.
S2, ask the KIVers to ask their banks how long they'll have those recurring debts for. Even if house prices held up, they'd still be on S*@t Street. Again, feel free to copy/paste whatever you want from here. I don't see anyone attacking you so far. You're loved over there on KIV, methinks.
" Onceharmony, the creator of the 2008 thinking cap!"
"Some Calgarians can be naive."
Surely you meant to type "rich".
Many people in Calgary are getting bonuses larger than the difference in the house prices you mentioned.
Oh the bliss of being a wealthy Calgarian, so rich and wonderful.
What the heck? Do we have to build an entire housing market paradigm based on this cr*p, in a city 800 miles away from the source of limitless wealth?
Thank god for rich Calgarians, this city is too good for local buyers, who needs them when we can rely on a steady flood of carpetbaggers from ______(pick anywhere) to maintain the fiction of exclusivity in the Capital Region.
Uplands exclusive? Okay...
Burnside/Tillicum? Are you kidding?
Thank goodness rich Calgarians with there fat bonus checks exist in such large numbers they can single handedly support and drive prices higher across the entire province of BC.
This absurd fiction has got to end. If they can't support the prices in Kelowna, don't count on it happening here.
Never mind Kelowna, they can't support prices in their own city. They are down > 10% since last summer.
Fun exercise: find any Calgary property on MLS. Now go to City of Calgary and look up assessment (estimated market value on July 1, 2007).
Surprise! Almost every property is asking (never mind selling for) less than assessment. Prices are falling in Calgary and everyone knows it.
A variable rate mortgage works as the BMO said to a point----HOWEVER, when the PRIME rate(which determines the floating rate) rises to the point where the mortgage payment no longer covers the monthly interest cost the floating rate must be renegotiated to float with the NEW prime rate at that time. If we are talking about a DOUBLING of the Prime rates over time, that would certainly mean that the mortgage payment-after one or two renegotiation(s) would increase and could be drastic. We had a small floater at 50 bps under prime and paid about $350 monthly initially-the first few prime rate increases did not affect the payment but once we reached the threshold the payment went to $540 --and Prime had not even close to doubled from the original level. These goofy "investors" really should get their facts straight before they jump in -especially in this very dubious market.These people are the ones that will eventually be selling their "investments" at exactly the wrong time when the mortgage pain gets more than they can bear.Thats usually near the bottom.
Thanks for all the comments.
Sometimes I get so confused from what people say over on KIV that I start to question myself.
When I'm over there I even start to think that there may never be a correction here and this will just go on forever and Victoria really is different.
Eek! See what happens to me.
The only Calgarians making the big bonuses are the execs from Houston and Dallas running their Canadian subsidiaries in Alberta. They sure wouldn't spend their dough here. Funny too, that Houston and Dallas, being the oil capitals of North America, that their RE prices there are the lowest in the US?
U.S. Federal Reserve officer: The U.S. is truly well farked. (Why should we care? Of course, because a plummeting U.S. economy would drag down Canada as well)
...
"In the distance, I see a frightful storm brewing in the form of untethered government debt. I choose the words—“frightful storm”—deliberately to avoid hyperbole. Unless we take steps to deal with it, the long-term fiscal situation of the federal government will be unimaginably more devastating to our economic prosperity than the subprime debacle and the recent debauching of credit markets that we are now working so hard to correct."
...
http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm
what, where is KIV?
It's the "Kids in Victoria" site.
http://www.kidsinvictoria.com/forum2/index.php
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