Well, we're a little late to the show, so grab yourself some popcorn and a seat, and enjoy the ride!
Thursday, July 3, 2008
June Sales Numbers
Well, we're a little late to the show, so grab yourself some popcorn and a seat, and enjoy the ride!
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147 comments:
What ride? Median prices are up, YOY, every month since 2005.
The MSM is really on a roll now!! Soon buyers will start lowballing and sellers will get pressure to lower prices from their agents.
Here are some video clips from CHEK news. Brief commercial before each clip
Fire Sale Prices
Real Estate Slowdown
Sitting Pretty, I have a question for you. Why do you hang out in a bear blog? You are happy with your decision to be an owner in this market. No doubt those decisions were made based on some rational thinking. So what do you care if a few "real estate bears" want to hang out and discuss their views on what they see as an impending correction? I wouldn't mind so much if the spirit of your debate was good hearted and constructive, but almost all of your comments seem tinged with malice. Surely you must have better things to do than paticipate in pointless & mean spirited banter. That goes for the less decorous bears too.
Single family homes, crash and burn, just like Garth said.
Yve, sitting pretty thinks by misleading people he/she/it will hold off the inevitable a bit longer.
It's a desperate game, and she/he/it won't gain more than a few days doing it, but apparently they have a pathological need to do so anyway.
I ignore them completely, whether it's really them or one of the many clones.
SP is just a bitter owner paying too much taxes on a declining asset. Must really suck to have missed the peak and have to ride it all the way back down.
Please, stop feeding the troll. I skip over Sitting Pretty, but I do get caught in reading peoples responses to SP.
Just don't respond and it will go away.
received an email from a realtor stating that market is softening due to MEDIA bias
SP-jun.condo prices are lower than 9 out of the last 12 months ----including YOY
BTW roger has jun updates on his charts here:
http://photoshare.shaw.ca/gallery/needinbox/
sorry- still havent figured out "links" on this site.
Hilarious how realtors here are trying to "defend" the market by trotting out EXACTLY the same series of statements about the market as their US brethren. The argument that Canada is different from the US rings a little hollow when the numbers and the script is word-for-word the same with a 2-year lag.
Yve, sitting pretty thinks by misleading people he/she/it will hold off the inevitable a bit longer.
Unlike you bitter renters, desperately hoping for house prices to crash 50% so you can trade your damp basement suite for a crappy 2-bedroom post-war bungalow, I am actually an impartial observer. The cost basis of my house is so low and my horizon for living in Victoria is so long, a price correction will not affect me. As my devoted fans will remember, my hubby and I are both well-paid civil servants with enough seniority to hang on to our jobs or leave with a large enough severance package and pension to retire.
SP is just a bitter owner paying too much taxes on a declining asset.
My property taxes are down $1000 this year due to shifting assessments relative to mine, and the grant threshold moving up enough to include my house.
How much did you rent go down this year, vg?
Does anyone know how many >$1m properties sold in June? It'd be interesting to know how bad the MOI metric is for those properties.
"My property taxes are down $1000 this year due to shifting assessments relative to mine, and the grant threshold moving up enough to include my house."
shifting assesments ? you mean you moved out of the garage and into the basement ? lol... sounds like BS double talk to me.
FYI my rent went up $30, and my portfolio is up 400 % and on track for another 400 % for next year.
SP "devoted fans"?
Well, you seem to have attracted a couple of impostors.
Re:"cost basis of my house is so low and my horizon for living in Victoria is so long, a price correction will not affect me"
That being the case,its a little odd that you apparently have nothing better to do with your time than to waste it on these bear sites defending the onwards-upwards price mantra,and making acrimonious comments about other posters here.
(or is the whole point the acrimonious comments)
Why bother? Go and give "hubby"
a hug instead.
Since everyone seems to be feeding the troll, I'll ask the question again:
Does anyone know how many >$1m properties sold in June? Where can this information be found?
It'd be interesting to know how bad the MOI metric is for those properties.
Just checked out the CHEK news real estate slowdown piece.
What stood out to me is when Tony Joe said we are a small town.
He didn't say world class city. He said small town. Wow!
S2
Tells it like it is. A boring little town on par with Port Angeles, Port Hardy, Ladysmith, Astoria, etc.. we're just a bunch of lumberjacks with diesel spewing rust buckets. How much is a house worth in Port Angeles? They must have a better climate there as they are more in the south? I wonder if they in Port Angeles or Astoria that everybody wants to move there?
Hey there Sissy Pretty...
man-oh-man.. if things with you and hubby are going so swimmingly, if life is such a peach, then what gives with all the narsty comments you keep posting during work-time?
You sound like a tired old bitter queen. Is it hubby? Did she pick something up in Beacon Hill Park and now you have to both rub cream on yourself and boil all your sheets? Ha ha...I'm just kidding! Like the two of you still get naked together.
Get back to work girfriend and don't be so pissy all the time.
anonymous at 9:52 -
I have my own suspicions as to why they stopped trotting out the million plus metric, but according to Roger we will have to wait until the middle of the month to tally it from the detailed report.
Based on last months numbers (24 sales May 2008), there were around 14.5 months of million dollar plus inventory. If the June numbers were lower, a really ugly months of inventory number would result.
When I find out, I'll post the answer over at my blog. Until then, I think it is safe to say there is "lots and lots" of expensive inventory.
As an aside, I tallied up the total listings yesterday and compared that to the numbewr of million dollar plus listings.
Almost 11% of all real estate listed in Victoria is over the million dollar mark.
Does anybody honestly believe that more than 11% of buyers are looking for houses in that price bracket?
I expect severe price compression at the top[ of the market over the next few months as the lack of results starts to penetrate the brains of all those "paper millionaires". we'll see what happens after that......
I like that sitting pretty pokes at the bears now and again. It's a free blogosphere, and she challenges the over-enthusiasm of the groupthink. Good for her.
For one, I think she's right -- it's not a "ride" as yet. Median prices are up, YoY, in every month since 2005 (a couple of exceptions for townhouses, but I won't quibble). You can't deny that.
But lets be honest, shall we? The market is softer than it has been for years. Median prices this year are inching down. It won't take much to have median prices for SFHs back to 2007 levels and condos back to 2006 levels by August. Months of inventory is up 70% plus from this time last year. This is exactly the kind of action which happened pre-freefall in market after market in the US. It's interesting, at least.
But, hey, SP, drop the tired old "bitter renter" stereotype, will you? There are lots of reasons why a correction in real estate prices is not only long overdue, but good news, as well, if and when it comes. Some of us have children who we would like to imagine will have some reasonable chance of home ownership in their future. Some of us think high real estate prices increase the divide between rich and poor. Some of us think that the people who think high prices are good news are guided by nothing more than their own self-interest. Some of us have calculators which tell us that buying at current prices requires a much higher return than is likely going forward.
We're not all renters and we're not all bitter. Some (like me) are out-and-out hopeful of good things to come. I'm happy for you that a drop won't hurt. All the more reason to hope for good news like the rest of us.
- awum
Well said awum
"Buyers rejoice! The Real Estate Board of Greater Vancouver says that due to increased property listing and moderating home prices the market has finally eased into a buyer's phase. The shift follows a 42.9 per cent drop in residential property sales in June 2008, compared to June 2007."
http://vancouver.24hrs.ca/News/2008/07/04/6060926-sun.html
A 42.9% drop in sales year-over-year should by all accounts be FRONT PAGE NEWS in the Vancouver Sun and Times Colonist. That is, if they were real newspapers, and not just biased rags. But no, over there you can only hear the crickets chirping.
Imagine if the opposite had happened, and there had been a 42.9% rise in sales in Vancouver. Do any of you have ANY doubt that if the opposite had happened it would not have been immediately featured as a huge front page story several times in the following weeks?
You can show your disgust for this sloppy, biased reporting - or at the very best "late" reporting by cancelling your subscriptions to these rags and/or writing letters to the editors explaining why, in the age the internet, you have no time for paying for this kind of garbage to be delivered to your door.
Even IF they get off their butts and print a story on this in the next couple of days, there is no excuse for their tardiness on such huge news, such that a few much smaller papers have beaten them to the story.
And in other news...
"Real estate prices have begun to slip in some parts of the Lower Mainland. The cooling trend comes as realtors report high numbers of prospective sellers. 'Real estate is cyclical and the numbers show that we've entered a buyer's cycle,/ said Kelvin Neufeld, president of the Fraser Valley Real Estate Board.
http://www.bclocalnews.com/news/23233764.html
Everybody enjoy the ride down the price trough!
Addendum to previous post:
There IS a small story of the huge year-over-year decline in the Vancouver Sun, but it was hidden away down in the business section, and NOT prominenently whatsoever. Again, the pro-real estate cheerleading news in the Sun (and especially such big news as this) is ALMOST ALWAYS prominently featured in newspaper, not just relegated to the back somewhere.
http://www.canada.com/vancouversun/news/business/story.html?id=3c24f60b-d986-4605-9504-a793b67ef15a
...Sales in Vancouver are DOWN 42.9% Year-over-year...
...Listings in Vancouver are UP 50%+ Year-over-year...
NAH!!! NOTHING TO SEE HERE, PPL!! Right, Tony Joe?
where will sitting pretty be once the YOY does drop under ? no where to be seen ever again on here.
Even Ozzie says it's goin down,Muir says it's goin down but SP is in the denial part of the crash chart with her head in the sand.
where will sitting pretty be once the YOY does drop under ? no where to be seen ever again on here.
I find it hilarious that the bitter renters spend all their time examining individual data points with a magnifying glass, when PB provides the big picture every month. Step back and look at it!
my portfolio is up 400 % and on track for another 400 % for next year
Yeah, right. Since you started with rent money, you still won't have a down payment after 16x appreciation. Either that, or you're a billionaire hedge fund manager with the best two-year returns in the history of the stock market, and you spend all your time here cursing the Victoria real estate market and hoping for the return of the great depression so you can tell all the other people in the bread line how smart you are.
What? You didn't realize 400%/year for 2 years is 16x? That's what I thought.
wow, as an occasional reader of this blog I've seen my fair share of bullsh*t from bulls and bears, but now this takes the cake...
VG maintains he's on track for 2 consecutive years of 400% gains in his portfolio.
We really should take a moment and admire his full commitment to the personal financial delusion in which he is immersed.
This certainly puts all of his 'factual' assertions in this forum over these many months in... ummm... 'perspective'.
VG whatever you are invested in that gains 400% per year, you might as well share it with your comrads here since if we ump on board, surely whatever you are holding will only go up in value because the supply will deminish slightly.
Maybe he shorted subprime. Some funds made huge returns.
Check it out!
Step by step vid on "how to flip a house"
No wonder everyone and his dog is getting rich flipping RE in Victoria....it's soooooooooo easy!
See you all in 2 years - 30% minimum.
http://www.youtube.com/watch?v=JY9dnVy9YnY
share it ? lol, highly unlikely, but you can pay me for it... keep plodding along with your mutual funds, you'll be able to retire in another 50 years....maybe.
sitting pretty, I will own my home outright and not be a slave to the bank like you and bubba,big difference. And I am talking a nice house not some slum lord shack that you call home.
VG, if you are rolling out 400% year over year, why do you care so much about sitting pretty? or for that matter, the dangers of taking a one time hit of say 30% with a home purchase.
I guess what I'm trying to say, is that I think your claim with regards to the rate of return on your porfolio is a complete and total fabrication.
And well, that kind of just sucks, because people reading this blog are trying to figure out what's best for the money, for real--and here you are, one of this blog's most prolific commentators, and as it turns out, you're just making things up.
and here you are, one of this blog's most prolific commentators, and as it turns out, you're just making things up
Ouch! That's gotta sting! And BTW, anon at 4:11 is not me!
I didn't say YOY mr. anonymous with no id name. I said I made 400% last year and am on track to repeat it again. The only fabrication is your "anonymous" postings.
If you can't fathom that people with some market experience and skill can't make these kinds of returns in the most bullish commodities market in 30 years then you best go educate yourself better instead of lashing out at those who have done it. You think I am an the only one making these kinds of returns ? wakey wakey , I know people making 10 times what I make.
PS anonymous, why does sitting pretty care what I say ? cause she is a fake troll or a disgruntled homeowner with no life. Either way the bears day is coming to fruition and I will stay here til the walls come down. Why are you here ? to post "anonymous" BS cause you can't handle reality ?
This blog is really on a roll now that roger has stopped posting his boring stats and predictions.
Keep it up folks - these flame wars make for interesting reading!!
Looks like roger, greg, olives and s2 have abandoned ship (it's not sinking after all). It's up to vg to fight on for the bear cause!
'Real estate is cyclical and the numbers show that we've entered a buyer's cycle,/ said Kelvin Neufeld, president of the Fraser Valley Real Estate Board.
That's realtorspeak for "the bust is on".
That's funny, I was being chastised by sitting pretty a little while ago for spending all my time on this blog instead of working on my own.
Unlike sitting pretty, I don't spend all my time here commenting and winding people up - but I suspect sitting pretty is really a Realtor with a blackberry and an itchy email finger....
By the way, I'm running a poll over at my site on who the most annoying Victoria bear blog "character" is, and you guessed it, it's.....
I've not abandoned ship. My ship isn't sinking.
I just don't have any interest in having a battle of wits with an unarmed person.
I'm bored of the hired (or volunteer?) real estate blog breakers. Pretty pedestrian I say.
Greg. I'm heading over to your site to check out the poll.
It is possible that some "bitter renters" are on vacation... 'cause they can afford it... pass the sun screen
Why abandon just when things are really getting going? I'm enjoying listening to the MSM the past 2 days discuss Vancouver.
as for a 400% return - what about options?
that we've entered a buyer's cycle,
which is equivalent to the 'puree" cycle on my blender....
blueskies
From VG, "I know people making 10 times what I make."
Wow VG — now you can get 4000%
return on the market? — amazing — way to stick to the first rule of lying — when you get caught, double do...err well in this case, add a zero.
Penny stocks, sure,maybe. those kinds of returns are feasible(?) but only by accepting phenomenally high risks.
So what does someone who is apparently accomplished at assuming the risks associated with 400-4000% returns in the commodities market care about the housing market -- where in even the wildest year returns might swing (up or down) between 30 and 50%.
I’m pretty sure I know why the rest of the thoughtful bears are lying low on this comment list right now — who would want to get lumped in with someone who is clearly spinning tales about their personal finances as means of proving they are somehow superior to yet another marginalized nut bar — 'sitting pretty'
Hi olives--options, I hear you--but when was the last time you made 400% two years running by trading?
btw, I'm a certified 'bear'--just one who prefers to stick to the facts.
griz,
and people aren't taking high risks mortgaging their life away with nothing down for hundreds of thousands of dollars and the high risk of bankcruptcy ? I know one couple about to bite the dust due to tough times and it won't be pretty, mid 20's and their credit will be toast for many years.
Junior stocks ? of course, how else can you make that kind of cash but lets talk Potash and several other major stocks on the big board that have gone up 3 and 4 times the past year. Do you read the financial papers griz or just the blogs all day ?
Options ? yes on a smaller scale, I made 90 percent on a trade just last week,could have made 400 % if I waited one more day. High risk brings high reward.
Squatting ugly wanted to know what I do with my savings from not paying the bank for owning an overpriced shack like her and I told you so get over it, jealousy and envy does you no good. I care not what you believe.
"Hi olives--options, I hear you--but when was the last time you made 400% two years running by trading?"
Well I admit that options never did me any favours personally, and I have certainly never made returns of 400 percent (or anything remotely close), but I can see how it is possible. I don't know why everyone automatically assumes it isn't true just because it is extreme. I say way to go VG.
Hi olives--agreed, it could certainly be true--it is feasible--and extremity does not necessarily equal falsehood.
Still, I have come to expect this blog and its comments to be grounded not in the extremity of potential success--but rather the security of wise and prudent investments. I know plenty of realtors who bragged incessantly about incredible returns on condos that were being flipped (though few had the hubris and gall to make claim of the range VG speaks of)...and that's precisely what made me think something was amiss here...here is VG reaching this other extreme, stating on the one hand, unequivocally, that real estate will bust you, but god love the junior mining stock and it's incredible powers of wealth.
Seriously--which would you think a safer bet? a home set to loose 50% next year, but probably break even in ten years, or $400k launched hopefully into a commodity stock that someone tells you is a 'sure thing'.
Unfortunately, I need to make safe bets with my nest egg--too much to loose--and agreed, nothing ventured, nothing gained...but how do we responsibly address the issue of risk in this blog as it relates to the best allocation of our savings in the face of a softening/collapsing real estate market?
hmmm, I think I'm sounding a bit stodgy...but do you know what I mean? being a bear does not mean you need adverse to risk...but surely a bear is always a skeptic first in the face of wild claims of profit...
Did VG really make 400%? This is a pointless debate since nobody can prove the result either way. A better question might be:
How exactly do his gains or losses impact your life? (rhetoric question)
It's senseless to compare our status to others. In trying to be like others, you lose your sense of self in the process. In looking over the fence at the greener grass you bring yourself suffering, as there will always be somebody doing better than you(including VG). In the same way you arrived penniless in this world, in the end, so shall you depart. Spending one's brief in-between-time in petty gossip, jelousy or trying to prove ourselves righteous or others wrong about their conclusions is a long and fruitless endevour that never ends in peace of mind for anyone.
Adeptus
Hi VG--I have no problem you made 90% on a trade last week--definitely something that I’ve seen, many times in fact. But the question I have is how one manages to string together enough 400% plus gains over 2 years, to compensate for losses inevitably associated with such risk taking.
There is definitely a thing called luck in this world, and you are either very lucky, or most certainly a liar. Perhaps the latter is too strong? and you would agree that you are in fact, to put it more generously, prone to exaggeration? I think we would all agree that 'sitting pretty' brings out the worst in us...
griz,
as I said you sound like someone who can't handle someone elses good fortune and need to get over it.
I am not here to brag nor recomend my style of investing to anyone but as stated your house bash queen thinks all renters are living in squalor and are stone broke and I countered with my good fortune.
I am not going to drag this on any further but read what I am telling you griz instead of calling me a liar just becaue I have studied the markets for years and between my "luck"( as you call it but is "skill" in my books) and my very good broker it has helped me get ahead the last 2 years.
I never said I made 400% this year yet, I said I was on track to, so give it a rest as you sound like an ignorant and disgruntled bull in disguise rather than a bear.
PS And those 30-50% swings in real estate as you call it being nothing to worry about ? do you not fathom that is a loss potential of $150,000 to $250,000 on a $500,000 house ? please grab a brain.
back to the real estate talk shall we ?
It sounds like what you guys are seeing is very similar to what we went through in Southern California last year. Sales numbers down, median going up as it is mostly higher-end properties that are moving.
Guess what: This will shift into reverse, where the sales will heavily skew towards the lower-end properties. Then you will see an acceleration of prices downward. We've already passed the point where this bust cycle in one year is worse than the six-year bear RE market of the early 1990s.
If the fundamentals don't make sense, the market can't keep going up.
Many of you are wondering what will happen to the Victoria real estate market in the coming months.
Take a look at this graph of sales and active listings for the last three years. You will note the following:
- In 2005 and 2006 inventory kept climbing until Sept./Oct. In 2007 inventory started dropping in July. Given the current low sales and MSM reports I expect inventory to keep rising until the fall.
- Sales in previous years peak in May and then have a downward trend for the balance of the year. Expect the MOI (months of inventory) which is active listings divided by sales to increase for the rest of the year.
What about average and median prices? Here is a graph of average and median SFH. Note the dramatic drop in average and median price over the last two months. Average and median prices are both lower than they were in February of this year. The average sales price is lower than September of last year!!
What about price tends? This graph shows the 3 month rolling averages. You can see that the 3 month average sales price has been fairly flat for all of 2008 and the median has been flat for three months. Note the big drops in non-averaged median and average price in the last two months. Both are currently under the rolling averages which indicates a downward trend.
What about Year-over-Year price change? This is a rear view mirror real estate board stat that I find misleading. But here it is. It is very spiky due to monthly variation but you can still see the downward trend. You can see trends better if 3 month averaging is used as shown here. In a follow-up post I will show annual and quarterly price gains over time which is a better way of doing price analysis.
All the graphs for June can be seen as a slideshow. Use the controls to pause and single step the charts. The big X will set the presentation to full screen mode.
What about consumer confidence roger ? especially in BC ?
Consumer confidence hits 12-year low
Canwest News Service
Published: Monday, July 07, 2008
OTTAWA - Consumer confidence continued to decline in June, falling to a 12-year low, the Conference Board of Canada reported Monday.
The index, with the level of confidence being equal to 100 in 2002, fell 6.2 points to 79.6, following a seven-point drop in May, leaving the second quarter reading at its lowest level since the fourth quarter of 1995 when it was 68.8.
"The continued rise in gasoline prices and concern about future economic conditions are the likely culprits behind declining levels of consumer confidence," the think-tank said.
The erosion of confidence was widespread, hitting all regions of the country, it said.
The steepest decline occurred in British Columbia where the index fell 9.3 points, dropping below 100 for the first time since mid-2003, it said. In Atlantic Canada it fell nine points, in Ontario 8.1, in Quebec 4.5 and in the Prairie provinces 0.9.
VG said:
What about consumer confidence roger ? especially in BC ?
Could it be that the residents have finally seen that the emperer wears no clothes?
The real estate believers® and easy-credit shoppers have been supporting the BC economy for some time. The recent real estate sales downturn and rising MLS inventory coupled with rising fuel prices, falling stock markets and inflation fears are eroding consumer confidence. Fasten your seat belt - it's gonna be a bumpy ride. Folks would be wise to start saving for a rainy day and cutting back on non-essential purchases.
Excellent post Roger - as usual. I forwarded that one to a few of my friends, so thanks very much! :-)
Thanks for the graphs Roger. So far the graphs alone aren't very convincing looking for a downturn because there have been 2 down months
in the past but if the next 2-3 months are down also then they will signal a definite trend.
Beagle,
Yes, the next three months will really set the tone for the future. What is different with the last two drops from the previous ones is that they happened in the busy spring season and not in the slow December-January months.
There is more downward pressure now as we go forward:
- VREB & VIREB are now telling sellers to be realistic with their pricing. They have also told buyers they can take their time. Removing the sense of urgency from a buying decision is not good for sellers.
- Sales are down from last year and agents are chasing fewer commission cheques. There will be more pressure to make a deal.
- The MSM (national and local) has had lots of cooling articles and buyers and sellers are getting the message.
- Fixed mortgage rates have jumped in the last month.
- There will be fewer sales each month for the rest of the year.
- Consumer confidence is dropping, fuel costs are rising (think suburbs) and the economy is faltering.
Things look good for the bears in the future. The correction won't happen in a few months but will follow the pattern seen in the rest of the world (US, UK, Spain, Australia etc.)
Long time readers may remember the furor that erupted on the bear blogs in March of this year when Helmet Patrick, Chief Economist at Credit Unions of BC made this prediction
Housing prices will reach new highs this year and next, but with a slowing in the rate of increase as market conditions ease. Prices will typically increase by 10 to 12 per cent this year and five to six per cent during 2009, after rising 12 to 14 per cent last year.
Well Helmet is in full back pedal mode now as discussed in this article
The full report as a pdf is here
Some notable comments:
Market conditions in Vancouver and the Fraser Valley are in a buyers’ state. The seasonally adjusted Housing Price Index (HPI) is down for the fourth consecutive month ending June.
The sudden and surprising interest rate moves in June negate any chance of a sales pick-up in July and likely August.
As sales go so go prices, with a time delay. Since the sales adjustment started gradually, up until the most recent months when supply or listings accelerated, prices posted mild gains. Price declines in Vancouver and the Fraser Valley look to continue in the near term. The long-awaited and much anticipated price cycle peak probably occurred in February.
Another thing is as stock markets deflate and peoples portfolios shrink
first time buyers aren't going to see as much help from the parents, etc.
Also i'm starting to see some better deals on recreation properties and more of them on the market. Investors are starting to pull in the horns.
Speaking of the stock market, Globe & Mail and MSN are reporting today that the chief economist for CIBC is recommending withdrawing equitities and holding cash.
From VG “PS And those 30-50% swings in real estate as you call it being nothing to worry about ? do you not fathom that is a loss potential of $150,000 to $250,000 on a $500,000 house ? please grab a brain.”
well let's assume you have a healthy starting portfolio of $200,000, a 400% gain last year brings you up to $800,000 which you then kept in a very very high risk/return portfolio to take you to $3.2 Million by end of year.
Even if you cut those numbers in half, it still seems amiss that anyone who keeps $400-800K invested in those kinds of risk/reward market segments should be here preaching to us about prudent investment for housing.
This is about real estate--it's about how we manage risk, while also balancing the needs of our families...and it's about how to talk about it in a forthright and honest way.
How can we have a meaningful debate about the financial merits of buying a house when you present us with the false alternative of using that money to make 400% a year?
who said I had $800,000 ? lol... you sure like to put words in peoples mouths there bubba, maybe you and sitting pretty should get your own blog instead of carrying on meaningless conversations like some attention ho's on viagra.
You seem a tad obsessed about me griz,get over it and keep to the topic and that is real estate, or are you lying and really not a bear but some troll with no life ? sure seems like it.
PS griz,
lets say I did have $800,000 (which you never really know if I do right ? ), then why would I buy a property now for $800,000 when it may be $500,000 in a year from now ? is that not balancing risk for the needs of my family as you tout is most essential ?
...or does that much money make me some sort of millionaire who can make rash decisions and risk losing $300,000 ? you continue to put your foot in your mouth griz and make no sense, best you drop it while your behind.
VG,
My point is if you are the kind of person willing to yearly risk multiples of $800k on investments that typically yield up to 400%, it doesn't exactly fit the mold of someone worried about suffering a one time loss of 30%-50% on 500k.
I'm not surprised you want me to drop it, but again, my point relative to this blog (and yes I feel it's an important one, so I'm not inclined to be bullied out by you), is we need to understand the real and rational choices available for our investments.
For the typical SFH buyer, I don’t' see how any advice you have can be relevant, since you clearly play in a vastly different (or illusionary) game )i.e. you have alternatives, real or imagined, available for your cash that are in no way available to most (if not all) of us readers.
So we are presented with this artificial choice -- which is wiser asks VG? to sink your money into a house that will decline in value over the next couple of years, OR invest in commodities that yield 400% year after year? well, how could we not pick the latter?
...except that what we don't hear about, is just how risky that kind of portfolio is (even if it actually existed)...and how exceptionally difficult it is to grow your money over time in that fashion.
If you bought your house outright tomorrow--even the 50% downturn would leave you with some assets. But, a few bad days on the commodities market can turn an $800k portfolio into pennies -- in a heart beat.
Another MSM article on the cooling market.
Housing market cools down
But the spin artists keep plying their trade:
But despite the month-to-month drop, the six-month average price itself is still tending up, notes VREB president Tony Joe, climbing $14,000 since January. He expects to see the market level-off at current prices.
Tony, Tony ... You are now talking about 6 month averages??? This graph shows a rolloff in the 6 month average price in the last two months.
The softening is consistent with what the Canada Mortgage and Housing Corporation had been forecasting since last year, said Travis Archibald, CMHC’s senior market analyst for Vancouver Island.
CMHC forecasts housing prices will continue to rise overall in Victoria, albeit at a slower rate. “I don’t think you’ll ever see prices decreasing in Victoria.”
Travis.... wake up and smell the coffee. SFH average sales prices are already down this year from the December VREB report (Dec. 624K; June 580K) Median SFH prices are flat (Dec. 536K; June 538K). And the taxpayers pay this guy!!
Catalyst Paper closes Elk Falls mill
"Catalyst Paper Corp. said Monday it will permanently close its Elk Falls pulp and containerboard operation, blaming the loss of a needed sawdust supply when a neighbouring sawmill shut down.
The Elk Falls mill in Campbell River, B.C., was already weak financially and there was no way to make it profitable when TimberWest Forest Corp. decided to close its lumber operations, Catalyst said.
The closing will eliminate 440 jobs"
No problem, we'll just turn the site into a condo development for rich Albertans and get those 440 workers back to work pronto.
"...except that what we don't hear about, is just how risky that kind of portfolio is (even if it actually existed)...and how exceptionally difficult it is to grow your money over time in that fashion."
uh dude, I explained my risk in detail, your incessant ranting and your lack of reading skills that clearly stated "my style is not your style" shows you are some sort of headcase.
Keep posting though, maybe you will get some write-in votes on gregs blog for biggest anal poster. Maybe you get paid by the post by Remax or something ? ;)
"But, a few bad days on the commodities market can turn an $800k portfolio into pennies -- in a heart beat."
PS grizzwald, who says I am even in commodities anymore ? a smart investor stays on the move and follows the new trends. The "buy and mold" types like you make your 5% and give the fund manager and taxman all of it back. Keep ranting griz, SP is getting all hot and sweaty for you.
Now about that Helmust Patrick guy,can you believe that ?
"six-month average price itself is still tending up, notes VREB president Tony Joe, climbing $14,000 since January. He expects to see the market level-off at current prices."
roger,
they said the same thing 2 years ago in the US at the beginning of summer while Flip this House was all the rage but the same signs were showing up and the US blogsters were all over it like dirty shirts. Even CNN did not make a mention til early September,this is playing out according to plan as per the 2 year delay.
Reading Garth's book right now, interesting that he had an insight into CIBC's "new and creative" mortgages as they hired his film production company to film company promos and commercials to pump to the masses. Interesting for those who think he was just a politician and is just leaping on the bandwagon, he saw it from the inside how they spent multi millions to fleece the sheep.
Nanaimo Daily News printed this story today: Home sales are cooling off here
The latest home sale statistics show a slowdown in the local market and may also indicate that some sellers are asking too much for their homes.
"Sometimes sellers' expectations are more than what the market is," said Jim Stewart, one of four Vancouver Island Real Estate Board directors in Nanaimo.
With some areas of Vancouver reporting slight drops, some buyers are holding off, thinking the same is about to happen on Vancouver Island.
"The favourite saying I hear is the bubble is going to burst. That would suggest we're an overinflated marketplace and we just don't have that. What we have is a market that is solid because it isn't created by cheap mortgages," Stewart said.
Nanaimo is still an affordable market where people want to live, and sellers whose properties aren't moving should consider re-evaluating the price, he said.
Follow up to Patriotz post on the Vancouver Island economy:
Time runs out on Harmac mill
The court-appointed receiver for Pope & Talbot's forest industry assets has decided to shut down the Harmac pulp mill at Nanaimo and sell off its equipment and land, after rejecting all proposals to buy it.
There were eight offers to buy Harmac, some to run the pulp mill and others to convert it to a bioenergy facility or decommission the site. None were recommended to the bankruptcy court for consideration.
""The favourite saying I hear is the bubble is going to burst. That would suggest we're an overinflated marketplace and we just don't have that. What we have is a market that is solid because it isn't created by cheap mortgages," Stewart said."
then how did all those FTB's get in the market ? 15 year mortgages ? what a load.
Tony Joe should be ashamed of himself.
He stated that "the six-month average price itself is still tending up"? That is deliberately misleading. Dishonest.
Think about it. All that statement means is that prices were increasing 6 to 7 months ago, so that each month, a lower number gets dropped off the 6-month rolling average.
He is using old statistics to counter the relevant current ones. Shameless. Realtors can be expected to emphasize the positive as they see it, but Mr. Joe has just stepped over the line to professional misconduct. Or abject stupidity. Pick one.
- awum
"The favourite saying I hear is the bubble is going to burst. That would suggest we're an overinflated marketplace and we just don't have that. What we have is a market that is solid because it isn't created by cheap mortgages," Stewart said."
vg, that is the line that jumped out at me. First my jaw dropped open and then I had to read it again. Wow!
S2
Hey Vg, I'd like to read Garth's book too, can I ask where you got it? and if there were more copies? and how much?
Thanks
Central Banker
"The favourite saying I hear is the bubble is going to burst. That would suggest we're an overinflated marketplace and we just don't have that. What we have is a market that is solid because it isn't created by cheap mortgages," Stewart said."
What we have is a market that's entering the biggest crash and burn in Canadian history because HOUSING IS completely UNAFFORDABLE for MIDDLE-INCOME FAMILIES WITHOUT assuming a 40-YEAR MORTGAGE resulting in 80% of their wealth tied up in a crashing depreciating asset.
THAT'S what we have.
Central Banker,
got it at Costco, I would think Bolens and the others have it too.
"What we have is a market that's entering the biggest crash and burn in Canadian history because HOUSING IS completely UNAFFORDABLE for MIDDLE-INCOME FAMILIES WITHOUT assuming a 40-YEAR MORTGAGE resulting in 80% of their wealth tied up in a crashing depreciating asset."
agreed, the bulls still don't get it, as it gets harder to qualify for even the 40 year scam, then they will stop buying as we are now witnessing in declining sales at the peak time of the year. Wait til fall,it will get real ugly.
RE:Nanaimo
While Stewart's comment is typical Realtorspeak, it is true that Nanaimo has much lower SFH prices than Victoria with lots of basic homes available for under 300k-check MLS.
However,(non-luxury)condos there are actually a lot closer to Victoria price levels, presumably because they havent been overbuilt to the same extent. Nanaimo is often maligned as Victoria's slightly shabby neighbor but the crime rate is lower there than stodgy Victoria and with lots of new downtown improvements and a beautiful setting, is looking pretty spiffy these days.
Having said that,the Nanaimo and area RE market has slowed by about 40% sales-wise from last year -inventories are up and prices are also drifting lower, --sound familiar?
Nanaimo's crime rate is only lower because they compare all of Nanaimo to Victoria's core where all the crime get's concentrated. If you include all the municipalities it would change the stats dramatically for Victoria.
Griz,
No need to buy into risky financial instruments. Go for a 5-year GIC at 4% interest and you'll make more money than buying a house right now.
I think the correct term would be to say that you would be losing less money as a GIC at 4% will barely cover inflation at today's rates.
"The sudden and surprising interest rate moves in June negate any chance of a sales pick-up in July and likely August."
Umm, what moves? Interest rates didn't change in Jume, which means the "sudden and surprising" part was the lack of a drop. If the RE market was counting on an interest rate cut to keep going up, doesn't that mean the party is already over?
VG
Do you trade yourself or do you have an advisor?
Is the advisor "fee for service" or commission based? Can we all have his name and phone number, I would love to give him a call.
Isn't Nanaimo the "illicit drug capital of Canada?"
I see more obvious "Hard Core" drug users ( vein injectors) in DT Victoria than DT Nanaimo--although lots of casual weed puffers in both places--but they dont bother anybody.
Another pet peeve-that phrase "illicit drugs" includes marijuana through to crack cocaine and heroin etc. with no differentiation. Alcohol and tobacco both kill many times more "users" than marijuana and they're legal.
And who would you rather spend time with? Ill take the casual toker over the drunk or even the cigarette smoker anytime.
(OFF TOPIC-SORRY)
metaldwarf,
I trade myself as well as a full brokerage account, I do 50/50 my picks and his picks and no you can't have his name.
VG
Most brokers live and die on referrals, some even pay a finders fee for referrals. If it makes you feel more comfortable you can email me his info.
metaldwarf at hotmail dot com
My investments are performing like dogs and I could use the help.
Sorry, he is also a friend and I don't put friends names out there to strangers, it's not professional and he wouldn't appreciate it.
Just look around for an independent broker that doesn't have ties to the big banks who act for your interest and I am sure you will find a good one that fits your investment style.
That Marijuana you smoke - is not the pot your father smoked!
The potency of today's pot is higher than the nickle bag of your daddy's time.
And chances are, the pot your kids will smoke will be stronger than yours.
Smoking anything is bad and most likely will cause cancer. To use an argument that pot should be legal as it is less dangerous that booze or tobacco is --- well just dopey.
My advise is to save the money you spend on pot and donate it to the relief of homeless realtors or "Realtor Aid". It is heart renching to see the pile of BMW and Lexus keys pushed through the mail slot of leasing companies. The hoards of agents with "will work for Latte" signs at the intersections. Agents in Blackberry detox who are talking to fictitious clients on their cancelled subscription blackberrys. Armani suit gangs cat calling the push up bra and big hair gangs at the all you can eat wing nites. And that old realtor in the dark corner rocking back and forth murmuring "its a buyers market - its a buyers market."
just jack
Interesting story today:
http://tinyurl.com/55w8c4
In Vancouver, Royal Bank reported that last year, the standard 1,500-square-foot home cost nearly $650,000. A survey last year by real estate firm Re/Max found that 50 per cent of all sales in downtown Vancouver can be linked to investors, whose involvement drives up prices.
Toronto has caught the same disease. Re/Max says 65 to 85 per cent of new sales in downtown Toronto are driven by investors.
I guess that means that downtown Vancouver is in for some trouble if RE investments don't make any money anymore.
just jack said:
And that old realtor in the dark corner rocking back and forth murmuring "its a buyers market - its a buyers market."
Yep - buyers have lots to choose from as the listings keep coming. And what about those price reductions?? Lots of 'em. Here is what happened in Victoria & Saanich in the last few days.
PCS Screenshots
Readers will note that reductions are now happening in all price ranges. If you want to keep on top of all those "hot" new listings then add this site to your favourites.
BTW - Sockpuppet is this type of stuff more interesting to you??
siobahn
Would you happen to know the active listings count for town houses and condos at end of June?? If I get these numbers I can update those slideshows now instead of waiting for the detailed CMHC report.
just jack
"The potency of today's pot is higher than the nickle bag of your daddy's time."
no argument but MY daddy (heavy smoker and drinker-no weed that i'm aware off) passed away at age 65 of a heart condition in the 80s
"Smoking anything is bad and most likely will cause cancer."
-thats why users that dont want to ingest smoke with their THC use vaporizers-(google it)
"To use an argument that pot should be legal as it is less dangerous that booze or tobacco is --- well just dopey."
ok then-How about the argument that booze and cigarettes should be criminalized to save thousands of lives and billions of health care dollars?
"My advise is to save the money you spend on pot and donate it to the relief of homeless realtors or "Realtor Aid"."
My advise is to save the money you spend on booze or ciggies and donate it to the relief of homeless realtors or "Realtor Aid".
(well-kinda on topic-LOL)
Sorry, he is also a friend and I don't put friends names out there to strangers, it's not professional and he wouldn't appreciate it.
That's as credible as your 400% gains per year story. You really are a bullshitter.
indeed metaldwarf, I suspect getting a hold of VG's broker maybe akin to finding the Loch Ness Monster.
For current listings I can't set a date such as June 30. I have to use todays date.
Current listings all areas as at July 8, 2008
Condominiums 1,216
Townhomes 344
Hope this helps
S
VG, why is it that anyone who criticizes or critiques you ends up being either a 'headcase' or a bull in disguise?
I think I've posed a very reasonable question as to the logic and relevancy of your prolific advice when it comes to risk and options for building assets.
Yes, I do wish Roger would comment on how he sees the choices you have presented. E.g. buy house vs. 400% returns.
Further, I would ask if it is fundamentally anti-bear to criticize VG? I hope not, because if VG represents the iconic, quintessential and untouchable fountain of truth for bears, then I suspect we are all in trouble.
Turning back to real estate and the June numbers here is something readers might find interesting.
The City of Victoria real estate market took a nasty turn in June. VREB pdf
SFH sales - 39 in June - 63 in May
SFH average - 520K June - 603K in May
SFH median - 478K June - 525K in May
Check it out in the Victoria Stats slideshow
The other area I usually track is Oak Bay. Things didn't go so well there last month either as shown in this Oak Bay slideshow.
The entire RE stats gallery is here
griz said:
Yes, I do wish Roger would comment on how he sees the choices you have presented. E.g. buy house vs. 400% returns.
VG's investment strategy, portfolio returns and finances are his personal business and I am not interested in entering the debate. Flame wars achieve nothing and simply drive away readers. Let's discuss real estate, exchange ideas and have a constructive dialogue.
When does anyone think we will see SFH in City of Victoria for under $300,000 again?
I think it might be possible by the end of the summer.
MLS®: 248878 is being offered for $329,900 - the realtor is our friend Tony Joe. It's 2bds, 900sqft, "downtown".
Probably a pretty crappy property, but interesting to see things at this price. There is also an "as is" property in the Sears area being offered for $317,000.
I think a few months back, the lowest priced dumps in Victoria proper were $358-$369-ish or more.
you better hurry up and buy now then griz or you'll miss the boat.
When are you going to actually make a real estate post here griz ? I have never seen one from you yet, when you going to get in the groove and post something useful ? I think your a fraud bear, all talk no walk.
PS funny how you and SP post back to back like that,must be closely related or you swapped computers at the internet cafe.
"Let's discuss real estate, exchange ideas and have a constructive dialogue."
roger, I don't think that is their intention. Obbsessive compulsive types aren't here to discuss the facts just disrupt. Too bad PB and HHV aren't willing to use passwords,it would cut down on this BS and create way better dialogue.
JPMorgan's Dimon says credit crisis could worsen
Tue Jul 8, 2008 9:21pm
ARLINGTON, Va, July 8 (Reuters) - JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) Chief Executive Jamie Dimon said on Tuesday some problems in the credit markets have been resolved, but that does not mean market conditions will not deteriorate further.
"I do think we have some very serious issues to face," Dimon said at a mortgage lending forum sponsored by the Federal Deposit Insurance Corp. "Things could actually get worse."
Last month's VREB release was interesting in many respects:
1. The Greater Victoria average and median prices both dropped in June from May.
2. SFH sales in Greater Victoria dropped drastically from 441 sales in May to 358 in June.
3. The average SFH sales price fell below the 6 month average in 50% of the areas in the Greater Victoria area.
4. The June Median SFH price fell in 14 out of 16 areas in the Greater Victoria area.
You can see the details in this VREB based chart
Holy moly, a SFH in Fernwood listed for 350K.
PRICE BELOW ASSESSMENT
Somebody out there is getting the message.
Still way overpriced. 1 bathroom. What the heck is this, 1952?
I guess we should be glad the one bathroom is INSIDE the house...
Built in 1913? Yep, the 1 bathroom was a reno...
Hi Muriel,
Yesterday I actually stopped by the property you mentioned ($329K, 2 br, downtown - MLS 248878) and it looked like it was not at all well maintained, not even a coat of paint and the garden looked like nobody touched it for at least a year, plus there's a huge tree blocking all the light.
... and then I noticed that the house right next door (MLS 249174) was also for sale, and looks much nicer, with an identical sized lot but selling for $469,900. That's $130K more for what one would think was a nearly identical property! But if you were there in person, the differences are immediately obvious (very well maintained, nice garden, and 5 bedrooms vs 2), though you have to do some math to see how else they came up with $130K more.
As it turns out after a quick analysis, the huose next door is hands down a much better buy, and if you can afford the $329K, believe it or not, you can actually afford the $469K even easier.
This is for 2 reasons:
- Firstly (MLS#249174), is a 5 bedroom versus a 2 bedroom. To turn the other house into a 5 bedroom, you'd probably have to drop some $75K - $100K easily with the cost of labour these days.
- Secondly, the next door house has $1395 of revenue per month from tentants. This is the key. If you do the math it turns out that you can borrow $250,000 extra with that added $1395/mo income; though you only really need $130,000.
[MATH: Borrow $250K @ 5.25% fixed, 5 yr term, over 30 years, monthly mortgage = $1371 /month]
So let's say you had 10% down (47K), and $1395/mo pays for $250K of the mortgage, so basically you are now down to a 172K mortgage! That's a pretty rare thing these days unless you are going for a condo. Anyway, needless to say much better than the $329K property and with no (or minimal) maintenance required.
I wouldn't scoff too much. There were some very solidly built houses back then with overbuilt timber, nice fir, and old-growth to boot.
Could be a nice prospect for someone who wants to get into the market now - not me, mind you, since surely there will be loads of places like this for sub-$200k, but there are a lot dumber things you could buy with $350k, namely, any condo in Victoria or Langford.
(I was referring to Patriotz's 1913 house post above, of course - sorry, my comment got interleaved there after the longer post)
I would imagine the good house is going to be a hard sell beside the junky house.
Jerry for me really kills the whole point of owning a home to have to live with strangers. If everyone jumps on the rental suite income bandwagon it just keeps upping the price of a house. I also find it funny that the lenders can consider an illegal suite as legit income. What if the new owner of the 329,000$ house moves in and files a complaint to the city, bye bye $ 1395 income. Also you never mention the tax implications in that calculation.
[MATH: Borrow $250K @ 5.25% fixed, 5 yr term, over 30 years, monthly mortgage = $1371 /month]
Jerry, if you need a 30 year amortization, that's not all that affordable - try it with 25.
Also, show me where you can get 5.25% on a 5 year fixed term? The lowest I can see is 5.5 at Coast, most places are going to offer something like 6%. See here.
More TC Real Estate News
B.C. town girds for life after mill closes
VICTORIA - The closure of Catalyst Paper pulp mill and the loss of its 440 jobs is an economic punch to the nose but Campbell River business people said Tuesday it's not a knockout.
Don Samson, managing broker of Remax Check Realty, said one factor seems to be a trend for some working people to take on jobs like mining in the Northwest Territories or in the Alberta oil patch.
Despite that, Campbell River has still grown in recent years and Samson puts it down to the aging demographic. Canadians are retiring to Vancouver Island. "Campbell River continues to grow primarily because it is one of the most beautiful places in the world to live."
Watch out Victoria - you have competition!!
Housing starts cool, but no U.S.-style crisis
The number of housing starts dropped in June but the previous month's figure was upwardly revised, which convinced economists the sector is not headed for a U.S.-style meltdown.
"Canadian housing construction is cooling at a gentle pace and remains healthy," Benjamin Reitzes, an economist at BMO Capital Markets, wrote in a note.
"On the whole, the Canadian housing market continues to moderate as the pace of activity declines to levels that are more consistent with a balanced market, following the boom period not too long ago," Millan Mulraine, economics strategist at TD Securities, wrote in a note.
"However, the decline appears to be both measured and orderly, and is in no way comparable to the correction seen in the U.S."
All lines are from NRA media manual are copyright protected and for exclusive use by RE spinmeisters.
Tourism forecasts falter
It used to be that if June was a strong tourism month in Greater Victoria then the industry could count on July and August to follow suit, said the CEO of Tourism Victoria. "I'm not sure that's necessarily the case this year," Robert Gialloreto said yesterday.
The regular tourism update from Frank Bourree, of Chemistry Consulting, showed that Greater Victoria hotel occupancy was down by four per cent to 61.4 per cent for the first five months of this year, compared with those months in 2007.
More Real Estate News
House sales slow across N. Shore
After years of favourable conditions for home sellers, the North Shore real estate market appears to be giving buyers the upper hand, according to a new report issued by the Real Estate Board of Greater Vancouver.
Multiple Listing Service figures released by the board last week show that sales for both North and West Vancouver in June were down from the same time last year, while listings were up.
The percentage of sales-to-listings for detached homes in North Vancouver last month was 38 per cent, while in June 2007 that figure stood at 93 per cent. In West Vancouver, the percentage was 29 per cent last month and 64 per cent for the same time last year.
For several months now there have been signs of moderation in the British Columbia home market as demand has eased off from the highs of last year, explained Cameron Muir, chief economist with the B.C. Real Estate Association. The market has been rebalancing itself from a high-demand state, and now there is actually higher supply than demand, meaning the market is now favourable towards buyers.
"More balance between demand and supply means less upward pressure on home prices. It also reduces the chance of multiple bids on the same house, giving homebuyers more time to investigate properties thoroughly before purchasing," said Muir in a recent press release. "This is probably a long-anticipated realignment of the market," he added in an interview
Lower year-over-year increases are a result of the rebalancing of the market, said Muir. With more homes on the market, sellers need to be more educated and need to price their homes at reasonable prices so that their homes will sell. Homes that have been on the market for some time and that have been listed in anticipation of continued rising prices may have to re-evaluate their pricing, he said.
And now the RE shill comments:
BCREA expects that price increases will continue, but at a slower pace than the double-digit increases seen over the past several years. According to their spring 2008 housing forecast, the association predicts that overall MLS selling prices for the Greater Vancouver area will rise by nine per cent this year to an average $621,000 and will increase by an additional five per cent next year to $651,000.
"Although housing prices, on a year-over-year comparison, continue to show single-digit percentage increases, we are beginning to see more price reductions in properties listed on the market today," Watt said in a press release. However, lower listing prices do not mean that home prices are decreasing, he explained in an interview. "It's not even that prices have gone down, it's just that they aren't marked up," he said.
With the housing market taking a downturn south of the border, many Canadians have grown wary that Canada will suffer the same fate as the United States, but comparing the two industries is a far stretch, said Gregory Klump, chief economist with the Canadian Real Estate Association. The U.S. housing market experienced extremely rapid price increases and poor lending practices which has now resulted in price corrections, he said. In Canada, on the other hand, price increases of the magnitude seen down south did not happen and Canadian lending always remained conservative, so a real estate market crash in Canada is not likely, he said.
British Columbia, on the other hand, did not see the major price mark-ups seen in Alberta and Saskatchewan, and so B.C. remains in good shape, he said.
"The rate of price increases will slow, but it (B.C.) still has a pretty strong economy," he said, adding that he predicts, "a soft landing, rather than a collapse."
"Things are cooling, but things aren't bad," he said. "Overall, I look at B.C. as very positive," he added, explaining that the province has great natural resources, good tourism and a high quality of life. Even in places where prices may decrease, he says homeowners just need to wait it out because prices will again increase. He said he expects the cooling period to only last two to three quarters before turning around next year sometime.
All shill lines are from NRA media manual are copyright protected and for exclusive use by RE spinmeisters.
Beagal,
It's not exactly an illegal suite. I looked at it, it's zoned R2 (multi-family), but it falls under the category of "legal non-conforming". Even if it were illegal, Victoria is already drenched in illegal suites that city hall does almost nothing unless as you said many neighbours complain.
As for living with tenants, that's up to each one's desires. Of course it's always nicer to not have to deal with tenants, but for me, I'll be looking for a triplex or quadplex in a couple of years as I value a 10 to 15 year early retirement much more than dealing with tenants for about the same length of time - but again, it's up to each one. The days of living in housing like our parents or grandparents are long gone for the average person.
Greg,
Those are the posted rates. Usually you can get 0.5% to 1% discount if you try to negotiate. I think Coast is lower than all the others because they have some policy about not negotiating and just giving you the lowest rate from the get go. I bet they will lose out on some millionaire accts with that kind of a policy though, but probably they make up for it by getting more joe averages.
Also, most people go to brokers these days. As for 30 years vs. 25, considering so many people (foolishly) buy at 40 years these days, I thought 30 years in the calculation was being somewhat conservative, but that wasn't the point. My main point was simply that what looks like a nearly identical property (same size lot, yard & house structure) for $130K more, turns out to be way "cheaper"... IF of course, you don't mind living with tenants in the basement and if you don't want to do any renovations as everything sounded like it was already done.
I've had tenants in the past, and I've never had problems, but I also dig really deep before I accept them and interview them, interview their references, check their financial capabilities, police records, etc. If you don't do most of these kinds of checks, you could be setting yourself up for some serious head aches, as I'm sure we've all heard horror stories before. Unfortunately, as the saying goes "common sense isn't always common practice".
(rant)We have never had so many homes counting on extra rental income. I fear a house of cards is developing. Most of the younger buyers have never lived through a serious recession. If your having to count on your renters for a good portion of your mortgage your taking a huge risk. In a serious recession people will lose good jobs and renters able to pay the high rental costs will dry up. You will also find more people occupying that rental as people double up. There is a lot of risk being a landlord in a declining market. People in Victoria are so use to good times, most are in complete denial that times can get tough here.
If I was buying a house today I would only buy if I could afford it without resorting to declaring income from renting the basement. If this was the standard practice, home prices would be a lot cheaper and guess what, you would see the construction of these weird old fashion things called apartment buildings. The municipalities really screwed up allowing the rental suite thing to get out of hand. (/end rant)
there I feel better now. :)
jerry said:
The days of living in housing like our parents or grandparents are long gone for the average person.
Not true. There are several other options but I don't recommend them right now:
1. Move further out to Sooke or Langford where prices are lower.
2. Move to another province where affordability is much better. BC is the most unaffordable province in the country.
3. Save your money like our parents did before buying. Zero down and 40 year amortization is not a sensible option.
The following option is what I do recommend.
- Save your money and wait for a price correction. The boom is over!! Sales are down, inventory is up and price reductions are happening now. Patience is a virtue.
Roger:
Good points roger. Hey, check this out Looks like 40 year mortgages might be going away.
Wow, a sudden outbreak of common sense from our government! No ETA on new policies yet though.
Beagle:
What were the effects on rental vacancy in previous real estate downturns in Victoria? Currently, we're at something like 0.5% vacancy rates and what we need is MORE rental options, not less. Good luck to anyone trying to find a place to rent next month and september with all the students coming to town.
At less than 1% vacancy rates that we've had for the past god knows how many years, finding people to rent in the central park/downtown area like that house we were discussing, should be a pretty fast and easy process.
Jerry,
most of the posted 5 year rates are in the 7% range, so even with a good mortgage broker, you just can't get to 5.25% for the majority of buyers on a 5 year rate.
The reason I point this out and point out the amortization you use is that, with a likely rate - let's say 6%, and what I consider a sensible amortization, say 25 years, the monthly payment is higher - in fact, it works out to $1599.
Now, if you spend $100,000 on renos to add some space,like 3 bedrooms and maybe a (basic - its for tenants) bathroom/kitchen combo to the cheap property, you now have a comparable property and it just cost you $429,000 instead of $469,000 which is $40,000 less - not chump change to the kind of buyers who would be looking at these properties.
Mortgage payment comparison of two properties with the renos included, 10% down and 5 year 6% rate on 25 year amortization:
MLS: 248878 = $2469/monthly payment
MLS: 249174 = $2559/monthly payment
Like I said, no reason the reno'd property can't be rented out just the same.
There isn't much difference in the properties, but the downpayment was thousands lower on the cheaper one.
It's a no-brainer, if you have the money for renos, buy the cheaper property.
Whoops, something wrong with my previous example - downpayment is $43,000 vs $47,000 = $4000 cheaper.
Correct monthly payment for MLS 249174 should read $2699.
Amen Roger. Common sense isn't so hard to find after all.
jerry said:
Looks like 40 year mortages might be going away. Wow, a sudden outbreak of common sense from our government! No ETA on new policies yet though.
The new rules are planned to take effect October 15, 2008 according to this government news release
The Government of Canada today announced adjustments to the rules for government guaranteed mortgages aimed at protecting and strengthening the Canadian housing market. The new measures include:
- Fixing the maximum amortization period for new government-backed mortgages to 35 years;
- Requiring a minimum down payment of five per cent for new government-backed mortgages;
- Establishing a consistent minimum credit score requirement; and
- Introducing new loan documentation standards
Canadian Mortgage Trends had this to say about the changes
Seems like it is a bit late in the game but there will now be more downwards price pressure with fewer punters able to buy.
But, I don't have an extra $100,000. But if I overpay by $50,000 then I can finance the whole thing.
So, I get a house. The seller gets their money. The agents get their commissions, the broker gets his fee, the lawyers get paid, the bank gets its mortgage, CMCH gets a fee, and the province gets the land transfer tax.
So who gets hurt? Everbody gets something!
At less than 1% vacancy rates that we've had for the past god knows how many years, finding people to rent in the central park/downtown area like that house we were discussing, should be a pretty fast and easy process.
Finding good quality tenants is presumably pretty difficult. Most professionals with good incomes and credit have already bought a house - demand has been thoroughly borrowed from the future and exhausted.
On our search just now, we found a few high-end places where the landlords were very keen to rent to us - and that's with our cat. But we, like many on this blog, are freaks by modern Canadian standards - we have no kids, two professional incomes, stellar credit and no debt. And we rent.
The Government of Canada today announced adjustments to the rules for government guaranteed mortgages aimed at protecting and strengthening the Canadian housing market. The new measures include:
Fixing the maximum amortization period for new government-backed mortgages to 35 years;
Requiring a minimum down payment of five per cent for new government-backed mortgages;
Establishing a consistent minimum credit score requirement; and
Introducing new loan documentation standards.
Today’s announcement marks a responsible and measured approach by the Government to ensure Canada’s housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada.
The new limits are planned to take effect October 15, 2008. This would allow existing mortgage pre-approvals with the common 90-day duration to be used or expire. Certain exceptions would also be permitted after October 15. The Government will work closely with all stakeholders to ensure timely and effective implementation of these measures.
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Big Question:
1. How are these changes going to effect titanic housing market?
"Beagle:
What were the effects on rental vacancy in previous real estate downturns in Victoria? "
In 1983 I rented a 1 bedroom apartment on Gorge road, fairly new building at the time for $350, I was single and 19 years old. I doubt the market was very tight because it was no problem getting the apartment.
We don't know what the rental vacancy rate is now because of all the illegal suites there is no way to track it. Every Tom Dick and Mary homeowner has taken the place of what use to be a regulated rental apartment industry, We only get stats from what's left of the tattered wore out remains of it. My only hope is that all these condos will be converted to apartments after the condo craze crashes. I think in a few years there will be a glut of rentals.
I wonder how many panicking buyers will try to jump in with zero down 40 year mortgages before October?
I think the 5% down requirement is going to have a bigger effect than the amortization change - it blocks zero down speculators from entering the market with someone else's money.
Ron S, (July 9, 2008 2:33 PM):
Those kinds of (relatively) sweeping changes would have some pretty deep repercussions, I would imagine, such as further alienating new buyers from entering the market at current prices (in reality, preventing them at current prices).
That would directly lead to downward pressure on prices, I should think, but deliver a sense of longer term stability to the housing/real estate industry overall.
Does that make sense to anyone else?
greg, I agree wholeheartedly with the comment about zero-down speculator prevention as well, but I would re-iterate that it also prevents people who legitimately want to own their own home long-term, to raise a family or whatnot.
I'm not saying it's a bad thing - for the most part it will help prevent unsuspecting people from being caught unaware in a money trap (current mortgage schemes).
Hey, it might help improve the average Canadian's debt to savings ratio!
In regulating against stupid and irresponsible borrowing behaviour, the govt may well unwittingly promote the behaviour, since people may try even harder to get the "easy money" no-down mortgages now that they're forbidden. The law of unintended consequences and all that.
Greg said,
I wonder how many panicking buyers will try to jump in with zero down 40 year mortgages before October?
This change to mortgage policy will accelerate the RE downturn. There may be a few punters that try to get no down/40 financing and buy in the next few months but I think most lenders will start lending according to the spirit of the new rules right away. The days of arranging no down payment and minimum payments loans are gone!! High priced real estate areas like Victoria and Vancouver will feel the impact very soon.
Biding My Time:
I would expect that the exit of certain speulators fromm the market will result in downward pressure on prices, which will make housing more affordable in the long term for the families you talk about.
What has to happen is price/earnings multiples need to come down from the current 8 to 9 relative to local median family incomes, to something more like 5 or 6. If that happened, you'd be looking at the $350,000 median home.
The more I watch all this unfold, the more likely that starts to seem to me....
It doesn't really matter what the government does now, they are a little late. The credit markets are contracting. Banks won't be able to package up the mortgages and sell them to investors so they are going to be way more interested to who they are loaning the money, the ability to pay and the down payment involved. All the alphabet soup of financial gobbley gook mbs, cdo blah blah blah is over. The market is way ahead of the government.
Mohican over on his Langley Financial Planning blog had this to say about today's Finance Department announcement:
Yes, the combination of the stricter requirements on credit scores, GDS ratio, amortization, and down payment requirements all work together to decrease the pool of potential first time buyers - if there are any left.
Sums it up nicely. Check out his blog for reader comments or add one yourself.
I don't think it will prevent all families from buying. It may just take them longer.
My parents bought their first house when they were 40 and 42 years old. They had a 25 year amortization and paid it off in 20 years.
The days of buying a house in your 20s with nothing are over.
S2
I wouldn't be surprised to see 20 percent downpayment requirements at some time in the future.
The empty unsold condos can be rented out to the city to house the homeless (just like Portland).
olives said:
The empty unsold condos can be rented out to the city to house the homeless (just like Portland).
But do they get to vote at the condo meetings?
5% down is nothing. If you can't put together $10,000 cash for a $200,000 investment you have no business buying. Even with 5% down I'll wager any new mortgages in Victoria will be upside-down within a year.
As for the homeless and low vacancy rate.
How about the City of Victoria, passing a bylaw that condo complexes must allow rentals. And any condos that are left unoccupied for 6 months(you can get this info from BC Hydro power usage) will have to pay an additional tax say of 50 percent of their normal taxes.
Anyone want to comment.
just jack
Hi Jerry,
Interesting to hear about those two houses right next to each other for sale. I actually just moved out of that area (downtown/NP border), and am not be eager to move back.
I'm not opposed to buying a house with a suite, as long I could be in a situation where that extra income is "nice to have" not "need to have."
I'm not going to be in the market this year, and I guess my main point was more about prices of the dumpy places on the lower end of the market. Realtors and the media make quite a big deal when the average or median passes big numbers like four or five-hundred thousand, and I'm wondering if there will be as much foofaraw if/when those markers fall under $300,000. I look forward to seeing it!
Anyone want to comment.
Yes. It's beyond the powers of a municipal government. It would have to be done at the provincial level, and that's not going to happen.
Also rental housing costs or shortages have nothing to do with homelessness. All those people working in Victoria for minimum wage are living somewhere. The homeless have personal problems that keep them from working and functioning properly.
You mean the city can pass anti-idling and bicycle helmet laws, but the City can not pass a bylaw that affects vacancy rates, affordability and municipal taxes.
Shame, shame, shame,
How about we just do it anyway and not tell the province.
And those people are not homeless -there mortgaqe free!
just jack
Actually, this is WAY OT, but speaking of the bicycle helmet law, I assumed this had been repealed. I was out of the country the last 5 years, and on returning, I see people cycling everywhere without helmets, whereas before you would be at high risk of a ticket. Anyone know if it's still on the books? I can't believe people ride without a helmet - I've broken 3 helmets in my life and each time might have been brain damaged or dead without.
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