This house has finally sold. I don't know how many days on the market. Original asking price - $1049000. Sale price - $767000. That's still too much.
MLS 245596. More power to them. There was a greater fool.
Wednesday, July 30, 2008
CMHC "Housing Now" for June
CMHC has released their "Housing Now" production for June for Victoria and can be found here.
This house has finally sold. I don't know how many days on the market. Original asking price - $1049000. Sale price - $767000. That's still too much.
MLS 245596. More power to them. There was a greater fool.
This house has finally sold. I don't know how many days on the market. Original asking price - $1049000. Sale price - $767000. That's still too much.
MLS 245596. More power to them. There was a greater fool.
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Over at iTulip today, I saw a link to a new documentary that will hit theatres Aug 24th. The title sounds appropriate "I.O.U.S.A".
Apparently the USA is at the very edge of a 62 Trillion economic debt cliff, leaning over and looking down. The question is, is it too late to turn back?
I'm looking forward to seeing this one. YouTube trailer here.
The film features interview clips with Warren Buffet, Ron Paul, Al Greenspan, a laundry list of financial experts and at least 4 presidents.
Sounds like to me like yet another "Inconvinient Truth".
Mr.4AM
More on the 62 Trillion number here. The actual deficit is 8.7 Trillion.
10 more minutes of video from the director of the movie.
Mr.4AM
A trillion SECONDS is just under 32000 years. (neanderthal times)
To spend a trillion dollars you would have to spend a MILLION bucks daily for about 2700 years.
A pile of THOUSAND Dollar bills adding up to a TRILLION dollars would be approximately as high as the road distance from Victoria to Nanaimo.
So 8.7 trillion accumulated deficit is pretty significant-- and GW is adding about another half (est. 470 billion) trillion his last year as prez. to go with the rest of his awesome legacy.
62 trillion is--well-- meaningless.
That house listed at $1.2M on Feb 4.
Reduced to $1,129,000 on Feb 25.
Reduced to $1,049,000 on March 12.
Listing expired May 1.
Re-listed at $999,000 on May 7.
Reduced to $849,900 on June 16.
Reduced to $819,500 on July 2.
Reduced to $795,000 on July 22.
It's an 1100 sqft house divided into two 550 sq ft units. The lot is 60 x 111.
I would like to meet the person crazy enough to pay $767K for that.
That house is no longer in MLS. What part of town was it in?
I could see it *currently* being worth closer to $550,000 if it was zoned for duplexing and could potentially be sold off as two separate units with a strata. That would put each unit at $275,000 or so which in my mind is still pushing it for 550 square feet of very tight living space.
If I didn't know that condos were about to take major hair cuts and I had to "Buy Now!!" I would probably be more tempted to go live in a newer condo with more living space at that price.
Wow. Another crappy 40's bungalow with tarted up Home Cheapot double-paned windows that will go foggy and fail in 10 years is sold to a clueless buyer who thinks they got a real deal.
Happy days are here again... I think a celebration's in order...
I thought Canada was doing pretty good in the debt department, as in 2002 we had finally paid off the deficit, but it seems as if we've recently slipped back into a relatively small deficit of 500 million.
My favorite quote from that article is Flaherty saying "We're not an island, we're not immune to those effects" in reference to the US housing/economic downturn affecting Canada. But our realtors are smarter than our Finance Minister and ensure that every client understands that we're different here, (because we ARE an Island!) ;-)
What I didn't realize is that even though our debt is still shrinking as we've been paying it off slowly over the past few years, according to the CIA World Fact book, we still rank 19th out of 126 countries, where the higher the rank the greater the debt as a percentage of GDP. Ours is currently at an astonoshing 68%, and the bad times are just around the corner.
To put this into perspective, the US is actually better off than us in terms of debt as a percentage of GDP, as they rank 26th on that same list with debt at 60% of GDP, with no thanks to either Bush that drove the debt up, up and up..
Having said that, a 9.5 Trillion deficit will help them rise up on the International debt ranking and maybe in 5 years or so we'll have swapped rankings with them.
ignore that last link in the previous post.
That house is in the 500 block of Quadra (close to Southgate and kitty-corner to Beacon Hill park and across from St Annes Academy Grounds).
Outstanding location, and the original ad was directed at "developers", but I guess they didn't bite.
Given the location, and considering many other overpriced offerings,and if the buyers believe in only a minor correction, that 767k sale might even make some sense. Obviously it did to them at 430k under the original wet dream price.
Canada will avoid the US housing meltdown because our banks are responsible lenders - NOT.
A zero-down mortgage by any other name?
Yet while lenders are phasing out so-called zero-down mortgages, many are still offering buyers a similar option through the use of cash-back incentives in lieu of a down payment.
Cash-back mortgages could be more contentious if lenders start using them to attract leveraged home buyers who otherwise cannot afford to buy - filling a void created with the loss of zero-down-payment.
In essence, the products aren't much different than a 100-per-cent mortgage loan. The difference is that they allow buyers 95-per-cent financing through their mortgage, and the remaining 5 per cent down is paid by the bank in exchange for the borrower taking on a much higher rate. That's usually the posted mortgage rate instead of the discounted rate available to most home buyers, which can mean a cost difference of 1.5 percentage points.
This practice will be up for discussion this week, said Finance Department spokesman Jack Aubry.
What isn't mentioned in this article is what happens if the borrower wants to get out of the mortgage. (sell, switch lender etc.) If they do they are on the hook to pay back a portion of the cash back money.
Hopefully, the feds will disallow this type of consumer trap.
Here is another example - it suggests that the maximum reasonable price to list right now is the 2008 assessed value, and that it can take a seller 7 months to get realistic.
2378 Pacific (Oak Bay)
Jan. 16/08 - $1,270,000
Feb. 14/08 - $1,250,000 wow! - price dropped 1.5%
May 26 - $1,150,000
better - 8% drop
July 5 - $1,095,000
July 15 - $1,050,000
Getting desperate!
July 31 Sold! $1,025,000
dropped price 11% in July.
2008 Assessment: $1,037,000
hp.
I agree, that house is in a nice location if you don't mind being on Quadra there, very close to Beacon Hill (hlaf block).
My guess that it is R-2 zoned, they level the current house and build a fancy duplex or subdivide or rezone.
That price makes more sense in that location with that kind of zoning then a lot of the other $700-$800 thousand dollar houses available all over the rest of Fairfield.
But I agree, in another year or so, that sale price is going to look inflated.
That's what I'm guessing as well - about it being sold for development potential. 550 sqft = small 1bdm at best - what could they rent that out for - $1k max per side? Even though close to the park etc., too small to get more than that IMHO.
The house is in my nhbhd. I always love it when I can learn this type of detailed info about properties in my area, so thanks to all who have provided them.
This nbhd is great, both for beauty and proximity to amenities, but I still can't see how the Chelsea is going to sell 1,100 sqft 2bdm+dens starting at $620,000.
What isn't mentioned in this article is what happens if the borrower wants to get out of the mortgage. (sell, switch lender etc.) If they do they are on the hook to pay back a portion of the cash back money.
Hehe. Full confession time - my last house, in the UK, was a 95% + 5% mortgage from none other than Northern Rock. When we moved back sooner than we originally intended, we were on the hook to pay the penalty for repaying the mortgage in < 5 years. It was £5000! Luckily we made enough to pay for it and then some.
Yes, the penalty will vary from lending institution to lending institution, and also over periods of time with the same institution as mortgage terms change now and then.
I can tell you that a mortgage a family member of mine signed 3 years ago for a 5 year period, stated that if you try to exit out early, it would cost 3 month's worth of interest rate payments; which in my family member's case would be around $1500. So totally worth it to sell and exit soon, before 10's of thousands are put at risk with each passing month.
Also, I believe their house insurance was paid in advance for 1 year; however it is pro-rated, so they would get a good chunk of it back, and the same goes for property taxes, the new buyer assumes a pro-rated amount which can pay for some lawyer RE transaction fees (~$700-$1000 for a seller that is not re-buying).
After doing all the math, if you are selling, everything (gains+losses) may come close to adding up to a neutral $0, except for realtor fees which while can be very high these days, are highly likely worth the gamble, because as I said above, it's all downhill from here as far as property values go. $25K or so in realtor fees are nothing, if you decide to hold for a year and lose $50-$100K on an average priced home's value. Already many houses are selling for the 2008 assessed value or less (which is actually based on a government estimate dating back to July 1st, 2007).
Considering we're in August 1st 2008 now, this translates to a home sold now at a price from July 1st, 2007, to result in a zero gain sum in terms of house value appreciation in the past 12 months.
mr.4am,
In your post you mentioned the 3 month interest penalty for terminating a closed mortgage early. If someone takes a cashback mortgage there is an additional payment that must be made. This consists of part or all of the cashback money that was received at the time the mortgage was established.
That is why I called cashback mortgages a consumer trap (especially as real estate starts dropping). Higher interest rates and significant termination penalties. Of course CMHC still gets an insurance premium if under 20% is used as a down payment.
In your post you mentioned the 3 month interest penalty for terminating a closed mortgage early. If someone takes a cashback mortgage there is an additional payment that must be made. This consists of part or all of the cashback money that was received at the time the mortgage was established.
Indeed my penalty included paying back the cashback (I think it was £2000). But as pointed out above by Mr. 4AM, all the various penalties were irrelevant compared to the house sale proceeds and the fact that had we waited any longer, the UK housing market would be brought to its knees.
So it worked for us, but we were very lucky to buy three years before the end of a once-in-a-lifetime boom and sell right before the peak. I fully agree that 100% and cashback mortgages are a dangerous tool and akin to gambling. I think it's pretty clear to all of us that the gamble inherent in a 100% mortgage is no longer likely to pay off.
Put it this way - I feel like I left the casino "up" and I wouldn't consider getting another >80% mortgage again. There's a time and a place for gambling on a bubble, and that's while it's still inflating, not when it's plateauing and starting to drop.
Washington Politics at it’s Best!
President Bush signs a bill to rescue homeowners.
Change of heart. He first threatened to veto it, but after rethinking about it and saying basically that it was better than nothing, President Bush signed early today in the absence of the typical White House ceremony at the time of signing a new law, a bill that will rescue 400,000 homeowners from foreclosure and that provides assurance to the giants, recently in trouble, Fannie Mae and Freddie Mac.
Usually, the signing of a bill comes with a celebration, souvenirs for other politicians, etc… this time was different. This time, the signing of the bill came early in the morning, only a few White House aides and administrators were present, and the new law was announced by e-mail moments later.
The new law comes with a split decision, Republicans opposed it, and Banks and Home Builders support it.
Now, let’s be realistic, who will this new law benefit?
Homeowners cannot refinance because their home values are much less that what they owe, banks won’t take the risk. Banks are asking borrowers to have a perfect credit score, to be, what it’s known in the Real Estate business as A-Paper or full doc. Is this Washington Politics at it’s Best or is the President really making an extraordinary effort to “rescue” homeowners from loosing their most valued asset?
The Real Estate Market Starts Climing Again
During the past couple of years we've all seen a tremendous change in real estate in the country.
This change actually has spread all over, businesses loosing money while gas prices are extremely high.
The real estate market has become a big issue for all of us out there, we've seen many homeowners loosing their homes and struggling to find a home to rent because of their credit.
What happen to us?
Remember the bubble 4 years ago?
That's exactly the answer, from years of prosperity and times of spending, traveling and investing in stocks and real estate, we are now experiencing another bubble but this time the bubble is going in a different direction and we are wondering what to do.
So real estate was going down and it's still going down, some economists say that it will get stable in 2 years from now.
The sellers market became a buyers market, and today we all know it by now.
Investors and renters that saved their money for better days to buy to make money are in the market today, that's making the real estate market busy.
Real estate agents that learn how to change with the market also learned how to make money from the changes, these real estate professionals are making lots of money and while we are all struggling for business they're making the business.
Today you can get a home directly from the banks for almost half the price.
I've seen homeowners that are so desperate that they're willing to give their homes for free, just come and take their loan and continue their payments.
On the other hand, investors are looking to buy homes in bulk, they can get homes $.50 on the dollar.
Some banks like bank of america and countrywide are selling hundreds of homes in bulk to investors at a discount prices.
So real estate agents are busy getting hundreds of listings and reo's from banks, then they're selling these homes at a low price to future homeowners and investors.
It's definitely a buyer's market like we had in the early 90's, so if you're an investor or a homeowner.
This is your time!
Except that the buyers' market TODAY will not be able to hold a candle to the buyer's market NEXT YEAR, after even the most clueless of sellers have started lowering their asking prices by 50% to beat the neighbors' 40% and 30% drops.
THIS is NOT your time if your a buyer; YOUR time will be coming next year, at the bottom. Only a fool buys at the very BEGINNING of a downhill slide, and only AFTER prices start going up a SECOND time, after the inevitable dead cat bounce...
Next year?? I think that is ridiculously optimistic. Even the market in the U.S. probably has a year or 3 before it bottoms out. Bottom in our country won't hit for 3-5 years mark my words. This descent is going to be almost as long and painful as the climb was.
BEAR ALERT
VREB has released the July Stats.
June shown in ()
MLS Sales - 616 (723) down 33% YOY
MLS listings - 4557 (4513) up 34% YOY
SFH Average - 578.2K (580K)
SFH 6 mo. Avg. - 596.7K (601K)
SFH Median - 529.9K (538K)
SFH Sales - 359 (395)
Condo Average - 302.5 (320K)
Condo Median - 285K (295K)
Condo Sales - 168 (180)
Town Average - 454.9K (432K)
Town Median - 417.5K (400K)
Town Sales - 52 (81)
More analysis and YOY info to follow
VREB YOY STATS UPDATE
GV - Greater Victoria
July 2007 shown in ()
MLS Sales - 723 (922) - Down 22%
MLS listings - 4557 (3402) - Up 34%
GV SFH Average - 578,177 (574,753) - Up 0.6%
GV SFH Median - 529,900 (515,000) - Up 2.9%
GV SFH Sales - 335 (453) - Down 26%
GV Condo Avg. - 302,635 (306,537) - Down 1.3%
GV Condo Median - 285,000 (267,750) - Up 6.4%
GV Condo Sales - 166 (240) - Down 31%
GV Town Average - 446,994 (404,493) - Up 10.5%
GV Town Median - 415,000 (379,900) - Up 11.9%
Town Sales - 51 (102) Down 50%
Correction:
MLS Sales - 723 (922) - Down 22%
Should read 616 (922) - Down 33%
Anon 1:34; Canada ONLY follows the US by a year or two when not being hit over the head with a daily baseball bat.
News flash: The biggest real estate crash in US history (and the biggest world real estate crash in world history) is exactly the right sized daily baseball bat to make Canada catch up with the US to a factor of lagging months, not years, and fast.
Remember that all downhill slides are exponential, NOT linear, and this market will come down a lot faster than it went up.
Useful and to the point info, thanks Roger once again.
Now here's a "funny" video clip with Glenn Beck yesterday speaking about the advice from chief economist of the national association of realtors as he tracks his public statements against house prices in the US.
My favorite part are Glen's sarcastic suggestion that real estate a is a great "long, long, long, looooong" term investment. Or what about that Real Estate ad towards the end, oh man!
Anon 1:34 : Seattle and Portland are actually in the states and they seem to be taking their time. People want the big fast crash but real estate is a slow moving beast most times. A lot of things are still good in Canada so it's going to take some time I feel for the SFHing to go down.
Hahaha, that's a great clip
This, educational video clip on the history of bubbles would seem to show that the time of descent is about as long as the time of ascent.
So with that as our theory, if the bubble here started around Q1 2003 and peaked in Q1 2008, that's 5 years from base to peak. So, given we're in Q2 2008, that leaves 4 years and 3 quarters left to go ;-)
Oh wait a minute, that puts us right into the year *queue the X-files theme song* 2012! heh
Hi,
I think that is ridiculously optimistic. Even the market in the U.S. probably has a year or 3 before it bottoms out. Bottom in our country won't hit for 3-5 years mark my words. This descent is going to be almost as long and painful as the climb was.
I need help with my Real Estate
Many Homeowners and Real Estate Investors need help today.
The Real Estate market or should I say the Economy in the U.S in general made a lot of Homeowners and Real Estate Investors really upset.
Investors are loosing money and Homeowners are loosing their homes, and it all happen so fast we couldn’t even realize what happen to us.
Many Real Estate Investors and specially Homeowners that are not in Real Estate to make money but just to have a home for their family got hurt and don’t know what to do and how to save them selves.
So here is a great tip that hopefully will help you with your mortgage and your Real estate investment.
Hard Money Lenders and Private Money investors.
Hard Money Lenders and private investors will help you with your mortgage so you will loose your home or your investment for a higher interest rate.
I get a lot of calls every day from investors and homeowners that are knowledgeable enough to call a hard money lender. But many of you that are not knowledgeable I just hope you’re reading this article, because I think it is your only way out today.
Banks can’t qualify anybody anymore, it’s sad but it’s true.
So homeowners are loosing their homes, and some homes have equity of few hundreds thousand in them. Because they don’t have the knowledge to call a hard money lender their losing their homes and their money.
If you’re reading this article we can help you save your investment and your home, just call a hard money lender now and save your real estate.
Good Luck.
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