"It's a bit like closing the barn door after the horse has already run down the road." Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc., on today's announcement from the Government of Canada.
The new regulations certainly won't hurt the impending housing collapse.
Also, CMHC released their numbers for June housing starts for Vancouver Island.
Wednesday, July 9, 2008
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"It's the right move,” said Nick Kyprianou, president of Home Capital Group Inc., whose principal subsidiary, Home Trust Co., provides alternative mortgages. “Why get people overextended? Nobody wins by getting people right to the end of the cliff.”
Others, however, say home buyers and banks have been prudent with their finances, and are being punished for the more lax approach south of the border.
“Things here are not like they are in the U.S. where they had those NINJA loans, no income, no job, no assets. … It's only going to hurt the consumer,” said John Panagakos, owner of Toronto brokerage Mortgage Centre."
Very conflicting statements when comparing the facts and anecdotal experiences knowing several young couples who got in with nothing down and no steady work history,it's a frigging joke.
I can see the Mortgage Centre guy bitching cause he is the type like Mortgage Depot that were handing out the 40 year deals with nothing down like candy to these young and naive couples. Their game is all over,watch them close up shop by year end.
Whereas the first statement is much after the fact, you already have pushed a whole generation to the edge of the cliff cause on top of nothing down mortgages they all turned around and gave them $20-$40,000 lines of credit which they promptly wracked up in a year or two and are now maxed out.
Non-CMHC insured mortgages always have been, and will continue to be available at a higher rate of interest. Don't be so quick to assume the outcome will be your yearned-for crash. CMHC is just covering itself.
It's funny to hear people still think this is a US problem as the world credit contracts and massive deleveraging is taking place. Ninja, no doc, subprime was just the straw that broke the camels back. We've partied hard on easy credit, now it's time for the hangover to kick in. The government is backpedaling big time now because they know it's a big screw up. Wait till the tax payer gets the bill from CHMC in a few years.
sitting pretty said:
Non-CMHC insured mortgages always have been, and will continue to be available at a higher rate of interest.
Who wants a 40 year high interest rate mortgage when you can have a 35 year CMHC mortgage at a lower rate for the same monthly payment if you meet the minimum requirements (i.e. GDS, TDS, credit score, verifiable income, 5% down)? However that monthly payment will now be higher due to the new rules.
The cheap credit days are coming to a quick end. The key change today is the zero down, 40 year mortgage at low fixed interest rates will not be available as of Oct. 15. This will result in fewer buyers getting mortgage approval and shopping for houses.
With inventory climbing to levels not seen in many years, sales down considerably from recent years and a shrinking buyer pool the end result is obvious to most people.
Non-CMHC insured mortgages always have been, and will continue to be available at a higher rate of interest.
Which people won't be able to afford at current prices, because prices have reached the limits of affordability with CMHC-insured mortgages at lower rates.
So what has to happen to prices then?
Well duh, they go up. Vancouver has the olympics! It's the best place on Earth!
"Don't be so quick to assume the outcome will be your yearned-for crash. CMHC is just covering itself."
Can't you read, the party is over SP,get over your denial.
They are already seeing problems otherwise they would never make the change, you know government well as you work for them. They react long after the fact,never before a problem appears.
Our local condo market has been supported by first-timers who have only been able to purchase by using 0/40 mortgages. Any speculator with a brain is going to realize this and slam their "investment" condos onto the market before the October 15th cutoff. I expect Victoria and Vancouver will se a rather large spike in condo listings in the coming few weeks...
vicrebear said:
Any speculator with a brain is going to realize this and slam their "investment" condos onto the market before the October 15th cutoff. I expect Victoria and Vancouver will se a rather large spike in condo listings in the coming few weeks...
In the older condo market (city of Victoria) there have been a lot of price reductions in the last few months. Lots of 2 bedrooms now under 300k (still too high).
Some questions for just jack (siobahn)
I have heard that a large number of the condo pre-sales are made to individual investors or investor pools. Is that true? Now that new condo prices are declining (Juliet, Tuscany, Aria) will we see a spike in assignments and folks walking away from their deposits later this year? Any stats you are willing to share?
roger -
downward pressure on condos only hurts the upward mobility of condo owners into sfh - reducing the sfh buyer pool further.
Just another reason to expect cheaper sfh in the not too distant future.
Here's a fresh anecdote. Acquaintances of mine (middle aged couple) have been trying to sell their lakefront house on Florence Lake for six months. They started it at $899,000 and then bought a $925,000 luxo townhouse at "The Lookout" in Metchosin, which they take possession of in August. The lake house has had no lookers AT ALL over the six months, and after two miniscule price drops three months ago they have now slashed the price to $699,000. I have no idea if any interest is now manifesting at that price. Of course, their initial price was pure greedthink, but that's still a pretty big haircut considering what they're on the hook for regarding their new digs.
"I have heard that a large number of the condo pre-sales are made to individual investors or investor pools. Is that true? Now that new condo prices are declining (Juliet, Tuscany, Aria) will we see a spike in assignments and folks walking away from their deposits later this year? Any stats you are willing to share?"
A couple of years ago, that could have been easily answered and quantified. However, due to PIPA (privacy act) the names of the buyers can not be easily identified.
BUT, just like black holes in space, you don't have to see it, to know that it is there.
When I see that 5 condominiums in a new complex sell on the same day, at full list price, using the same agents then I get suspicious that this may be an investors pool.
By the way that full price offer, may not actually be full price, remember people are buying an option to purchase and proposed condos do not fall under the Real Estate Act for reporting standards. Which also means that the agent does not have to disclose that he/she has an interest in the property they are selling.
I also have heard that a small handfull of agents are buying pre-sales in complexes (again at reported full list price) in order to get the listing contract for the complex.
In my opinion, this practise (if it exsists) stinks. I can imagine a couple wanting to purchase a new condominium and the realtor telling them that the last five condominiums sold at full price. Of course this is going to affect their purchasing decision. Afterall, if the last condo sold at full price -this must be market value. (Could not resist the dig there). The agent of course does not disclose that it was his company that bought them and that after the company sells the other condos, these five suites will be back on the market.
Actually, if you got a ton of cash (ie insurance company, executive for a bank in China, drug dealer, etc), this might not be a bad investment. You would of course not be paying full list price, but buy a block of condos at a discount of say 20 percent below market value (damn there's that silly market value thing again). Then sell them off when the projects completed.
And I am seeing a lot of assignments of contracts (when they are allowed by the developer) currently up for sale. Some developers have you sign that you can not re sell your suite until one year after completion has expired. Hence, your seeing a lot of Humboldt Valley suites coming back on the market now.
When it comes to the condominium market it is really important to determine the level of "flipping" going one. Those cities in the states that had high speculation in the condomium market have had the largest fall in both condo and house prices. This years dramatic increase in listings and drop in sales, I think is a good measure that are market was and is highly dominated by speculators.
How do you define a speculator?
Talk to a realtor and they may say if the property re sells in 6 months then its a flip. If you use that definition there is very little or no speculation at all in Victoria.
Others suggest using one year as the standard as this is what revenue Canada uses (not true, but this is what they believe). Again the level of speculation is not that high.
When I talk with people who are intentionaly speculating in order to move up the property lader there flipping every 18 months to 2 years.
Using 2 years as the measure, you can see the level of speculation, in the percentage of homes and condominiums that are currently up for sale.
just jack
Seems like a slow day on the blog so how about some RE news.
Seems like old Helmut @ Credit Central is changing his tune:
Tighter mortgage rules weigh on market
The Lower Mainland's cooling real estate market got another splash of cold water with Ottawa's decision to ban government-backed mortgages stretched over 40 years or taken out with no money down.
Credit Union Central of B.C. chief economist Helmut Pastrick called it a "prudent" move that should reinforce Canada's cautious home lending reputation.
But he also predicts the changes will put more downward pressure on Metro Vancouver real estate prices.
"It will have a dampening effect," he said. "There will be relatively fewer first-time or low-equity buyers participating in the market."
A maximum 35-year term and higher down payment requirements mean some buyers won't be able to afford to pay as much, Pastrick added.
He said the elimination of the zero down payment will probably have the greatest impact.
"The market this year is still going to head lower," Pastrick predicted.
But Helmut it was only last March that your economist crystal ball forecast that Housing Market Gains Extend into 2009
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.
Are bears the only ones that notice these contradictions by RE "experts"?
Just Jack,
Thanks for the reply. As always you give the bears some insider insight on the Victoria RE market.
Here is some more RE news from our favourite business reporter at the TC - Carla Wilson.
Island housing starts decline
Vancouver Island housing starts slid last month, but the decline was in line with expectations and the market still appears robust despite concerns over an economic slowdown, according to new industry data.
A total of 336 new homes started on the Island in June -- down 28 per cent from June of last year, Canada Mortgage and Housing Corp. said yesterday.
The slump is largely evident in Greater Victoria, where starts dropped to 148 last month from 309 in June 2007.
Too bad the starts dropped - we need more inventory!!
And of course no TC article would be complete without a RE "expert" giving the everything is OK spin.
"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," said Millan Mulraine, economics strategist at TD Securities. "However, the decline appears to be both measured and orderly, and is in no way comparable to the correction seen in the U.S."
https://www.tdsresearch.com/currency-rates/viewAnalyst.action?authorId=36
"in no way comparable to the US". I love how fervent these denials are - methinks thou dost protest too much!
Here's an interesting article on the BoE keeping rates on hold (great news for us savers who keep GBP!):
Telegraph - BoE holds rates
Check this house out:
Calculated Risk - REO slideshow
In a perfect climate outside LA:
""This 5 Bdrm, 4 BA gem is located in the Alberhill Ranch community. Boasts granite countertops, upgraded cabinets & stainless steel appliances. Travertine tile throughout downstairs, bathrooms & laundry room."
• Sales history from Redfin.com: Sold for $570,000 in August 2006
• Current listing price: $349,500"
How to get around the 5 percent rule.
1.) buy a new home at full price. But, you finish the landscaping and miscellaneous items that contribute 5 percent of the value which will be written up as the deposit in the purchase agreement.
Completely fraudulent, but occurs in slow markets. No way to check, unless the property is appraised. But in most cases the lender waives the appraisal requirement or the appraiser is incompetent. Incompetent appraisers are highly praised by the mortgage industry.
2.) borrow the money from your parents and put the money in your bank account for 30 days.
If the lender questions where the money came from, lie and tell him/her it was a gift (never, never say you borrowed the money as it suggests that you may have to pay it back).
3) when the seller counters your first offer - keep the faxed offer with their signiture on it. Eventually, settle on a lower amount for the property. But present the faxed offer which you have just signed to the bank for financing. Completely fraudulent, but again not easy to verify without an appraisal. The lender will use the CMHC computer program which replaces the human appraiser (those silly humans ask too many questions and just get in the way of profits).
4.) take out a student loan and use it as your down payment.
5.)Go down to Monk Office Supply and buy a pack of purchase agrements and make out your own.
Why do these things work today. Because todays culture is for speed and not due deligence. Loan officers and brokers follow the minimum lending rules that are set out and nothing more. If they suspect something, they don't bother going to the boss - he/she doesn't want to hear it. They just want to make their loans quota, collect their pay cheque and try to get promoted before these loans come back to haunt them - then its someone elses problem.
signing anonymously as I don't want to be accused of contributing to the deliquency of a first time buyer.
Nice slideshow b2b
At first I thought the house was in Bear Mountain.
The Radius is toast.
The Radius is just a big, fat hole in the ground. And yes, it is toast.
S2
Nice slideshow b2b
At first I thought the house was in Bear Mountain.
It could easily be - except that you'd never get a 5 bed 4 bath with new high-end fixtures listed at Bare Mountain for $349k. Amazing that in LA, a phenomenally rich city with oodles of jobs and a perfect climate 24/7/365, this house goes for half what it would in FUCKING LANGFORD!!! Pardon the swearing, but REALLY.
Hey BTW where is Radius again? Pardon my ignorance.
Fannie Mae and Freddie Mac insolvent?
Are you listening CMHC?
Anyone remember what happened to MICC?
So what happens if Canada's major underwriter for high ratio loans gets into serious problems like Fannie Mae and Freddie Mac in the states.
Well nothing of course, CMHC is a crown corporation!
Well, who will pay for this mess?
Got a mirror!
just jack
S2 said:
The Radius is just a big, fat hole in the ground. And yes, it is toast.
It's not over yet. I heard a rumour that Townline was negotiationg for the property. They are the folks converting the old Hudsons Bay building into condos. Those HB units will be snapped up fast and they will be on to the Radius next. :>)
Perhaps Just Jack can confirm my prediction.
Canadian Mortgage Trends is a great blog with lots of good info on real estate mortgages in Canada.
They had an update on yesterday's changes to CMHC mortgages.
More on the New Insured Mortgage Rules
The new rules technically only apply to mortgages closing ON or AFTER October 15, 2008. Although some lenders have already started enforcing the new standards. If you want 100% financing or a 40-year amortization it might therefore be wise to find a mortgage soon.
I imagine some lenders and mortgage brokers are not interested in accepting pre-approval zero down/40 year mortgage applications that expire in 90 days. They don't make any money until the funds are advanced and may consider last minute punters without 5% for the downpayment as less desirable customers.
Amazing amount of doom and gloom housing articles in the Vancouver Sun.
"Credit squeeze hits 40-year mortgages
New rules, including no zero-down loans, will cool real-estate market, curb first-time buyers, experts say"
"Canada not immune to housing market slump: government economist"
get that SP ? "government economist" , your employer even knows it but you don't.
"New mortgage products spell trouble
Offering 40-year mortgages and no-money-down options to people who don't know how to budget 'is like taking a child into a candy store and telling them to eat anything they want,' one adviser tells Linda Mondoux."
Detached homes lead decline in housing starts
Provincial housing starts dropped almost 11 per cent in June from the same month last year, Canada Mortgage and Housing Corp. reported Wednesday.
http://www.canada.com/vancouversun/news/business/index.html
The last I heard about the Radius was back in March. So, what does the City do now with a big hole in the ground? If there is no further work, can the city fill in the hole and charge the expense to the developer? I remember Vancouver in the 1980's with several holes in the ground surrounded by plywood fences for years, not a pretty sight.
I'm more interested in the complexes that are nearing completion in Langford. There pre-sales have not been so good and the bills will be coming due and over due soon.
I'm wondering what the developers are going to do with empty suites. Back in the mid 1990's, after our last condo boom, the developers began renting out the suites and selling them off in blocks to investors. Sort of like what is happening in Bear Mountain.
Speaking of which, anyone heard anymore about the Tuscany?
just jack
Funny you should mention Tuscanny. I just went by there this evening to buy a couple of things at Thrifty's. There's a big banner on one of the outside walls saying "Condos Now for Sale". I LOL'ed at the "Now".
The Tuscany will go down in history as the first indicator the boom is over.
I hear even the Thriftys as Tuscany Village is dead.
On Vibrant Victoria someone speculated that the Hudson developer purchased the radius site to prevent possible nearby competition - and then to use it for a future development when the market picks up again.
I hear a project in Langford has died too but I don't know which one.
The Hudson project was cut from 3 towers to two, and considering how long ago they got approval, doesn't seem like much is going on there. With the current climate, I wouldn't be surprised if a lot of these projects never get going.
Until they get the homeless problem cleaned up in a big way I cannot see the Hudson ever going forward. That whole end of town is a shady area to live in and anyone with big bucks will be very choosy in this financial climate where in the world they will want to plunk it down long term.
" http://hudsonliving.ca/ "
take a look and see if there is ANYTHING in this project that you think is gonna fly at (or anywhere near) the current price list in this RE environment.
it's toast, done like dinner, deceased, an EX-project
-just hasn't lain down yet
hehehe - nice one Boomer. The price list reads like a wish list for condos in downtown SF.
Wow, those Hudson Bay condo prices are insane! If you got that kind of cash to throw out the window, might as well do it at Dockside Green. Apparently, their phase 1 still has plenty of condos available for sale. At least at Dockside you'll get some water views, less noise and "green" living.
Note: "green" here refers to both evironmentally friendly as well as a reminder of how much you are overpaying for a condo.
Looks like ING bank doesn't want to process last-minute desperate buyers:
ING pulls plug on 40-year products
ING Direct Canada has become the first domestic lender to officially pull the plug on controversial 40-year mortgages following the federal government's surprising decision to tighten mortgage rules.
The online bank – owned by Dutch financial services giant ING Groep NV – said yesterday it is scrapping without delay its 40-year amortization product as a matter of principle.
"We are going to make that change immediately," president and CEO Peter Aceto said in an interview. "It is really not in the best interest of Canadians."
So it was in the interest of Canadians (i.e ING) a week ago but the government helped them see the error of their ways. :>)
Ho, ho! Good thing the government of Canada knows more than ING about banking (BIG JOKE) or else imagine the mess we would be in!!!
Don't get me wrong, I think personally that 40-yr mortgages are toxic. But should the government of Canada really be passing laws to protect banks from themselves?
In regards to ING, I will give them this much: In the recent past, whenever Canadian financial industry changes are required,they appear to be the first ones out of the gate with the changes available to their customers. So kudos to them for that.
I find it ironic that they are a foreign owned financial instituion in Canada, yet they react faster to change than our own big banks and small credit unions. The last major change that they beat everyone to was the new (TFSA) Tax Free Savings Account
"It is really not in the best interest of Canadians."
What they really mean is it is not in THEIR best interest or they wouldn't have pulled it. I suspect ING and the government have a heads up on something bad showing up on the books ahead of any "official" reports that people are maxed out and showing signs of payback malaise.
Might be an increase in the revolving credit game popping up on the banks radar screens to give them the jitters. This kind of action is never done just for "our own good".
boomer - looking at the Hudsonliving site, seems they've sold a bit more than half the second floor, around half the third floor, a couple on the fourth and none on the fifth or sixth floors.
When I see a price like $465,000 for a 1 bedroom 613 sq foot condo on the second floor, all I can do is laugh. For people with that kind of coin, why on earth would they buy such a tiny shoe box?
Factor in strata/maintenance fees that I would expect will be outrageous, and the "exclusivity" of this project becomes its own worst enemy.
They should be downsizing the hype and upsizing the apartment sizes.
Sub 300 thousand, they could sell quite a few of these. As it is now?????
Where will the pull-back on 40-year mortgages hurt the real estate market the most? Where they are most common of course -- in those markets where the gap between salaries and the price of entry-level homes is the greatest. Count Vancouver & Victoria as two of the markets most likely to feel the difference. The 40-year 0 down-payment mortgage has been a virtual requirement for First time purchasers here for the last couple of years. What happens to a car when it runs out of fuel? What happens to an inflated market when it runs out of qualified buyers who can pay the sticker price for a home?
- awum
OOOH, exciting: the stampede continues!
http://www.thestar.com/Business/article/458918
CBIC, BMO have followed ING and dropped 40-year mortgages.
Did you see the TC today and the mortagage broker trying to get last minute customers to sign up before the 40 year mortgage runs out?
link: http://tinyurl.com/5p59kz
This makes me sick.
"Did you see the TC today and the mortagage broker trying to get last minute customers to sign up before the 40 year mortgage runs out?"
That is digusting, "quick kids,get on the sinking boat now,and no we don't have any life jackets left, but don't worry,just keep treading water and you'll do fine. You do have credit card don't you ? ". ;)
But should the government of Canada really be passing laws to protect banks from themselves?
As long as the taxpayers (CDIC) are backing up their deposits, you bet it should.
Private mortgage companies which loan out their own money have always been around and they can set any standards they like. Individuals can loan mortgage money too.
I was looking at the Hudson a year ago. Flashy web site with mesmerizing music. Almost lulls you into denial. Denial that you have an outrageously priced shoe box with a balcony that faces a courtyard and everybody else's balcony across from it. "Hey there neighbour, what smells soooo good over there? Don't mind me, we can just avert our eyes & pretend that neither of us are here on our miniscule balconies within buckshot range. Yup...How about those Canuks?" How many awkward moments can you afford for $465,000 ?
POP! Goes the weis...credit crunch, as IndyMac, a 4-8 billion financial institution in California becomes the second largest in US history to close up shop after it experienced a 1.3 billion bank run yesterday.
Oh yes folks, the worst is over, the (stock) market has hit a bottom, buy now before she jumps back to record highs!
Mr. 4AM
How many awkward moments can you afford for $465,000 ?
Gack. 465K for a shoebox in Zombieville?
There are plenty of SFH in good areas in Vic proper for that, right now. How crazy do they think people are?
Another week of price reductions in Saanich & Victoria in all price ranges.
Why is this happening??:
a) Sellers are unrealistic.
b) Buyers won't pay those prices any more.
c) Fewer buyers and more competition.
d) Prices are dropping in Victoria.
e) Some sellers are getting desperate.
f) Uh-oh the boom is over.
g) RE market wants HHV to have a beer party.
h) All of the above
roger,
After looking at the slew of haircuts being handed out, it's amazing how you can turn the clock back 12 months and if you mentioned price reductions during the summer slowdown they would look at you like you were on drugs. Bidding wars were the norm as I recall, funny how fast times change. YOY prices will be negative in the not too distant future. The US Fannie Mae fiasco will have a huge psychological effect here even though their system differs.
Construction jobs tightening up up as projects complete is the big indicator in this town as per the jobs reports out yesterday. Those are the highest paying jobs for younger people who would be thinking of entering the market and you know they talk about real estate and hear more than we do on whats happening on different sites and the develpors finacial problems. Any threats of layoffs in that group is a dagger in the heart to FTB's.
Wow Roger, that's a whole lot of something going on there in Saanich and Victoria.
VG: "The US Fannie Mae fiasco will have a huge psychological effect here even though their system differs. "
You'd think, but we have to remember not to overestimate many people's analytical ability - or assume they read any financial news for that matter (that sounds kinda snotty I know, but it's true)
agreed olives, I may be giving people too much credit, all you have to do is walk into Walmart on a Saturday and you can see the possibilities. ;)
Looks like inventory continues to climb in Vancouver.
Paul B's stats show 18,739 MLS listings on Monday and 19,308 yesterday. In all likelihood July will break 20K.
The bears are in fine form over on the BC Real Estate Talks Forum
There is a lot of negative talk about the forest industry but there is a new forestry minister!!
Not all news can be positive
Forest Minister Pat Bell feels it's "unfortunate" that the Daily News maintains a "consistently pessimistic" outlook on B.C.'s coastal forest industry.
He said in a letter to the editor, published Thursday, that the paper's readers should have confidence that "we are in the midst of building a stronger forest sector for Vancouver Island."
I called Bell while he was in Prince George on Thursday and told him that I would be more than happy to write more optimistic forestry stories if any would come along. Few do.
He replied: "Well, now there's a new sheriff in town" and assured me that the forest industry would rebound now that he's in charge of the portfolio.
What, Pat Bell is going to fix the US housing industry? Because that's what's it's going to take to turn forestry around in BC.
What's he doing in Victoria?
So, BC has a strong economy but...
Overtaxed consumers need relief to keep the economy from stalling
The Conference Board of Canada's consumer confidence index sank 6.2 points in June after a seven-point drop in May, bringing the widely watched metric to its lowest level since the fourth quarter of 1995. The biggest drop in consumer confidence was in British Columbia, with the index falling below 100 for the first time since 2003.
The causes of consumer distress are obvious. Rapidly rising prices for energy and food are frightening. Even middle-class families are becoming worried about feeding their children, paying the mortgage, heating their homes and putting gas in the car.
At the same time, homeowners fear a real estate market slump as the number of listings grows while the number of sales falls. They are right to be concerned. Metro Vancouver home sales fell 43 per cent last month.
Governments must remember that the consumer drives the economy. In B.C., consumer spending is responsible for 68 per cent of provincial gross domestic product, the highest level in the country.
So... Consumers drive the BC economy and they are nervous given rising energy and food costs. Their biggest asset, their house, is no longer going way up every year. MLS listings at levels not seen for years and sales are dropping fast.
What do you see in the crystal ball?
I see an end to the current -8% savings rate. You can only live beyond your means for so long.
I don't really see tax relief as saving us at this point. Honestly, barn door and horses and all that.
What worries me is the stories out of the US about municipalities going bankrupt because they banked on ever-increasing property taxes. What do you suppose the picture is like in BC? Has any city prudently looked at the next five years' budget? Are they all being misled by the "balanced market" claptrap of Rennie and Joe?
Womp,
Municipalities in BC won't go bankrupt on that assumption. They'll adjust the tax rate upwards to meet their budgetary needs.
1% on a $600,000 or
2% on a $300,000 house are the same thing
Mark said,
Municipalities in BC won't go bankrupt on that assumption. They'll adjust the tax rate upwards to meet their budgetary needs
Yep - they will just increase the mill rate on the assessed value. However most municipalities increase taxes every year due to inflation and deteriorating facilities (sewers, roads etc.)
I bet there will be some unhappy owners in a few years when they see their assessments going down and their taxes going up.
Yes that happened in the 80's bust too. Taxes just kept going up at the usual pace while property values tanked.
Many people in BC have the impression that property taxes are driven by property values. They're not. As the other posters have said, the local government decides how much money they are going to spend and sets the mill rate to raise that amount of money against the current assessments.
Note that in many US states, property taxes really are a fixed % of market value, so the RE bust is resulting in a major decrease in tax revenue.
In B.C., consumer spending is responsible for 68 per cent of provincial gross domestic product, the highest level in the country.
Yet another indication that BC consumers are living beyond their means.
The "golden decade" is fool's gold, driven by borrowing and spending by both consumers and government, not production of tradable goods and services.
Just like in... well you know.
"In B.C., consumer spending is responsible for 68 per cent of provincial gross domestic product, the highest level in the country."
And BC took the biggest hit on the consumer confidence numbers last week. Look out below.
Your showing your age.
Tax Rate, not mill rate.
“The city really has no control over assessments, but in the end assessments will be used to determine the mill rate” said Victoria Mayor Alan Lowe.
Is it just me, or does or property tax system seem ludicrous to anyone else.
We have, the assessment authority that sets property values each year and sends them to the municipalities.
The municipalities then review the assessment roll and their budjet and assign a tax rate to each class of property.
Now, if the assessments go up, the municipaliy changes the rate. If the assessment goes down, the city changes its rate.
So, why do we have to have new assessments each year, if the municipalities are going to change the rate anyway. Why not save BC some money and have the assessments done every two or five years. Seems a waste of money to me to have new assessments each year.
just jack
The problem is what do you do with new properties. The only data you have on them is the sale price, but it's not fair to base taxes on one place for what it sold for 6 months ago and on another place for what its estimated value was 2 or 5 years ago.
It really does not require much effort to update the assessments every year, they have a data base which records the details of the property, and they then input all the data from property sales over the last year, and the software does the rest. Really makes no difference if they do it every year or every 5 years.
Indymac - bye bye
Fannie Mae
Freddie Mac - bailed out by feds
CMHC - ??
just jack
"The problem is what do you do with new properties. The only data you have on them is the sale price, but it's not fair to base taxes on one place for what it sold for 6 months ago and on another place for what its estimated value was 2 or 5 years ago."
--maybe they could do a fundamental value on them?
"It really does not require much effort to update the assessments every year, they have a data base which records the details of the property, and they then input all the data from property sales over the last year, and the software does the rest. Really makes no difference if they do it every year or every 5 years."
-- In 2006, BC assessments gross revenue was $64,000,000 from tax levies. Wages and Salaries expense was $50,000,000. That's a lot of coin for something that does not require much effort.
---I believe Manitoba does their roll every two years.
just yankin your chain.
jack
"In 2006, BC assessments gross revenue was $64,000,000 from tax levies. Wages and Salaries expense was $50,000,000."
Jack--you're kidding?
I haven't read all the posts so forgive me if this has been posted already.
Interesting Globe and Mail article from today.
"Stocks, lies and the grapevine crackdown -U.S. regulators target short sellers"
http://www.reportonbusiness.com/servlet/story/RTGAM.20080714.wibsec15/BNStory/Business/home
Get ready for higher interest rates
Top bank keeps key rate on hold, warns of inflation and weak growth
The Bank of Canada has kept its trend-setting rate steady, warning both that inflation will be "much higher" than expected and economic growth weaker than forecast.
Inflation will briefly rise above four per cent by early next year, more than double the central bank's two per cent target, while growth this year will be only one per cent, it said in a statement accompanying its announcement Tuesday that its target rate for overnight loans will be kept at three per cent.
The Canadian dollar responded to the hawkish warning about inflation, which suggests the next move by the central bank will be to raise rates, by rising back to parity with the U.S. dollar for the first time in six weeks, and then hovering just below that level.
The variable rate mortgage will seem less attractive to those wanting low monthly payments. This news and last weeks termination of new 40 year mortgages should result in fewer buyers looking for homes this fall.
And so the great RE crash begins.....
http://tinyurl.com/58q88r
Home prices slip for first time in nine years
Markets with greatest year-over-year price declines in June
-Edmonton - down 2.6 per cent
-Calgary - down 2 per cent
-Victoria - down 1.1 per cent
-Windsor-Essex - down 0.5 per cent
But it's suppose to be different here?!!
beagle said:
But it's suppose to be different here?!!
It is - we are down YOY less than Calgary and Edmonton. :>)
Everyone wants to live here, they just can't sell their house in Alberta for what they could last year. Across Canada we are starting to see a decline in the number of greater fools/
roger; tony joe: anybody?
duh--might be obvious but sometimes im not too bright.
howescum the jun numbers fed to us from VREB dont show the same 1.1% yoy decrease that the CREA numbers show?
the only yoy decrease showing on your charts(thanks again!) are in condos-- and thats from a record high in jun/07
Well Boomer, that's a very smart question.
It has always bugged me that the VREB can come up with the monthly figures so quickly. Real Estate is not like the stock market because of the difference in liquidity and time lags in reporting. Unlike, the stock market which is almost instantaneous in its reporting.
With RE, the agent has to expose the home on the market, get an offer accepted, remove the subjects, and finally the deed is transfered. When I look at this process it takes between one week to two weeks for most (except for the deed transfer) of this to be done.
So, if a property sells on June 29, VREB doesn't get the data for a week or two. Then enters it as a sale. While CREA puts out there data later or about mid-month.
So VREB data does not capture the last week of June sales, but CREA does.
hope this helps
just jack
thanks jack- The last week or 2 of jun must have had a pretty large number of lower price sales enter CREA's numbers to skew the average for the month down significantly..
If you missed Garth on CTV discussing 40 year mortgages you can watch it here
It's hard being a spinmeister these days. Cameron Muir, BCREA's "economist" can't seem to keep his story straight.
B.C. housing sales slow
Published: Monday, June 16, 2008
Muir said property prices for the first five months of the year are still, on average, up 11 per cent from 2007 levels. He expects that to ease back to nine per cent by the end of the year.
"It's a gradual easing of prices, and that easing may occur a little bit sooner because of the number of listings that have come on in the spring market," Muir said.
Home buyers finally get upper hand in Vancouver
Fri Jul. 04 2008 15:23:17
For the balance of this year and next year, Muir is predicting that home prices will track the rate of inflation.
"Maybe a little more on average. Still a solid investment but not reaching those 10 [per cent] to 15 [per cent], year over year gains we've become accustomed to over the last years."
The resale market has its challenges, but prices still rise
Published: Saturday, July 12, 2008
But Cameron Muir, the respected chief economist for the B.C. Real Estate Association, said: "There is no evidence of any kind of substantial decline in prices."
Homebuyers get a break as B.C. house prices flatten
Published: Tuesday, July 15, 2008
"We don't expect to see a substantial price correction," said Muir. "It is perfectly reasonable to expect home prices will stay fairly flat or even decline a couple of per cent a year until affordability picks up."
def.
“An economist is a specialist who was trained to make wrong predictions sound sophisticated and convincing”.
That's brilliant Roger! People at work here were asking me why I was laughing out loud. hehe
I wish there were some websites out there that tracked key economists statements and pointed out all the nonesensical contradictions and back pedaling they often do just like you just highlighted. It might actually keep some of them honest!
def. 2:
"An economist is a person who will have to wait until tomorrow to explain why what he predicted yesterday didn't happen today."
Bears might be interested in the latest slideshow. I put the GV June Condo Stats in the Victoria RE Stats Gallery.
Things don't look good for condo sellers!!
- Inventory continues to climb to a multi-year high
- Fewer sales in every month in 2008 compared to 2005
- Average and median prices peaked in January and keep falling every month
- YOY based on average price went negative to -8% in June
- Sales/Active Listings ratio is down to 14% (i.e. buyers market)
After reading this article, I don't want to hear any more complaints about the US economy having problems, I don't care how bad!
In Zimbabwe, they are experiencing 2.2 ***MILLION*** PERCENT inflation!!!
A single loaf of bread costs 100 BILLION Zimbabwe dollars! Now that's insane!
This whole idea that things are not as LAX like they are south of the border and people haven't overextended themselves is absolute bullshit.
Canadians would love to think that but they are delusional.
I was up in Vancouver just this June. the number of places for sale is staggering...and the prices are equally ludicrous.
Since I am considering moving there, I am looking for work and finding out the payscale up there is LOWER than what I would get paid down in LA.
BUT just about everything in Vancouver is on par expense-wise...with some things outdoing LA handsomely...fuel, cars, groceries, etc....
SO...how can these lying sacks of sh8t sit here and tell us that people who get paid LESS and have to pay EQUIVALENT amounts of money for housing aren't overextending themselves?
If we are overextending ourselves down here in California, you can bet your sweet Canadian ass you are overextending yourselves up there.
Utter crap.
On that note there was a woman on the CBC radio this morning - I missed who it was - but she laid out the credit boom/bust scenario/sequence in plain language for all the Canadian toothbrushers and coffeedrinkers to hear (doesn't everyone listen to CBC in the morning?) - something you don't often hear on the mainstream morning news.
Here is the latest on 40 year, zero down mortgages.
- TD bank has joined Ing, BMO and CIBC and axed all new applications for zero down and/or 40 year amortization mortgages.
- Genworth, a large mortgage insurer, will stop offering these products effective Oct. 15.
- AIG and PMI may keep offering these loans
See all the details here
"Brace for inflation surge, Bank of Canada Warns"!!!
Pop quiz, kiddies! What ALWAYS happens when to mortgage rates when inflation surges? And how are housing prices affected by this effect???
See you all in the FALL!! :)
http://www.canada.com/vancouversun/news/story.html?id=3079285c-d3b3-4c5c-8fd2-8f816c5108c9
- Percival
something you don't often hear on the mainstream morning news
Amazing what you can do when you don't have to worry about offending advertisers.
"This whole idea that things are not as LAX like they are south of the border and people haven't overextended themselves is absolute bullshit.
Canadians would love to think that but they are delusional."
That is because the government and self serving enities want the masses to believe that "we are prudent with our lending" so to keep things all calm while Rome is burning.
Watching the Phil Soper guy the head of LePage today on BNN today (yes the guy Garth exposed as nothing but a PR guy who came from IBM in 2003 and Husky Oil before that right at after the boom started and not a real estate guy who worked his way up the ranks over many years and he is the head of LePage) as he spun out the BS as the reporter kept asking how will prices keep going up as he says with all these negative storm clouds around and the answers were the same crap repeated by every other self serving entity.
It is getting quite pathetic watching these guys embarrass themselves. At least my most despised spokesman Helmut Patrick now admits price declines are coming based on the obvious while Muir flip flops and does the slow burn theory. Somethin tells me Soper will be gone in the next year.
The repetitive "this is not a bubble" and "the market is affordable" mantras are now at the nauseous stage.
VG,
Yep, sounds like we're heading towards the "Denial" stage according to the little graph many of us have seen before.
Mr.4AM
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