Thursday Numbers

Things are busy! Sorry!  Quick Thursday numbers are 244 listings and 173 sales for a sell/list of 70.90%.  125 price changes.

New listing.  Burnaby duplex, long term tenants, under-rented and room for development. Listed under assessed value.  Contact me for more information.

 I mentioned Wednesday that I had rented 5 places this month and would probably add two more to the total Thursday.  Those 2 places are now gone. 

 Mortgage increases are the news item of the day (and deservedly so); I’ve mentioned that mortgage increases often give a short term bump to the market as buyers rush to make use of pre-approvals.  Keep an ear and eye peeled for evidence of this sentiment in the media (a caller to Bill Good mentioned doing exactly that this morning).  This is a short term bump, of course, lasting only as long as pre-approvals.

Advertisements

21 Comments

Filed under Daily Numbers

21 responses to “Thursday Numbers

  1. e

    doesn’t the preapproval argument only make sense for those with fixed rate preapprovals?

    and more so with longer tem fixed rate preapprovals (the ones with a 1 year preapproval probably wouldn’t care since they know the rates will be that much higher when they renew not long from today). the ones with the 3-5 year terms may figure they can protect themselves from rising interest and by the time they renew, interest is low again.

  2. ryan

    Here’s the scenario:

    V651388
    Listed $989K, agents open Thursday, Public Open Sunday, offers presented Sunday evening. Accepted offer.

    This morning Price Change to $1,089K

    Why would the agent do this? What perception is she trying to create/negate?

  3. ryan

    P.S. Subject removal is in a couple of days and it sold for “well over asking”

  4. mike

    Yeah, I don’t think playing games in the middle of a transaction is a wise way to do business.

  5. robchipman

    Ryan:

    Thanks for that. I have no idea what’s going on but will try to find out.

  6. fish

    Rob- the re: the Burnaby place.

    can you tell us what the return is?

    Sqay 100% cash purchase. What is the return after expenses/

    Thanks

  7. robchipman

    Ryan:

    Price change was at request of owners. The Realtor has never done this before, nor seen it done, but she is bound to follow the legal instructions of her principal. Probably nothing sinister.

    Fish:

    Nothing is that simple. I’ll let you do the potential numbers. The house is currently under-rented to long term tenants. You can buy and leave them there and have fantastic stability, or keep them and up the rents (you can negotiate higher than 4%, btw), or evict them and suite the units and turn it into a fourplex and hold or re-sell with higher rents.

    Current rent: approx $2,000 month.
    Potential rent: 2 bedroom ground floor suite + 3 bedroom mainfloor x 2. You do the math.
    Taxes: approx. $4000/year.
    Price: approximately $800,000 (below tax assessment).
    Condition: new roof, clean, but dated.

  8. fish

    Thanks Rob

    Lets not suite it, but say the market rent is $2500 X 12 = 30,000 if 12/12 months rental.

    Take off $4000 tax and say $2000 maintenace/repair fund

    $26,000 net

    3.25% on $800,000

    Not too bad for this market, but I will pass and wait for a higher % especially having bought a one year bond (AA) for 4.56% yesterday.

  9. ontheisle

    Rob,
    If RBC says that by early 2008 we should be one full point above where we are at today and that equals 8.44 % and in 2001 this is what the rates were then do you not see a major move down in prices like in 1981 when the same effect of 13% went to 19% ?
    I am not a profesional real estate agent as you are but I did live 1981 and managed to get out at the top based on the same fundamentals as I am seeing today and all I see is too fast,too much,too soon equals kaboom in my books.

  10. ontheisle

    PS
    If people who took out 3 year mortgages in 2004 (which is supposed to be in the 40% -60% range of borrowers) and they would have been in the 4% range, maybe lower, than a renewal now would equal a monthly increase 2 to 3 times the calculations being bandied about of around $183 to $200. How many people can afford $400- $600 increase if you just got in under the wire back then ?, not too many in my books could afford that, 2% pay hikes don’t produce that kinda extra take home pay. I see a huge change about to take place in the next few months.

  11. Snick

    The thing that makes me laugh with all the recent news reports about how it takes 70% of a family’s income…is how it is reported with such straight faces.

    “That’s the way it IS! I you want to buy a place, you’re just going to have to suck it up!”

    Who sez?

    (No mention, EVER, of course, about any price corrections or the continuing mess unfolding in the U.S.)

  12. robchipman

    ontheisle:

    I know the news loves talking about posted rates, which I guess is where you’re getting 8.44%, but I got a 5 year for 5.24% last week and was told that the rate today on another was 5.79%. Canada Mortgage.com shows a 5 year as low as 5.39%.

    Fish:

    That’s great about your bonds. Wicked return, especially if the real estate market tanks. Unfortunately market rent on this property is considerably higher than your calculations (between $4,200 and $4,500 per month), and maintenance is lower. You can make this positive cash flow with about 25% down, locked in for the next 5 years. In other words, rent multiplier around 180 and cash flows at 25%. Those are good fundamentals, and are hard to find in this market.

  13. deb

    Can someone clarify something. If a person gets pre-aprooved at a particular rate for a mortgage for, say, 90 days, within that period they take out a mortgage, how long can it be for?

    Did that make sense?
    Again.
    I get pre-approved.
    I find nice place.
    I buy place.
    What will my interest rate be and for how long?

    Thanks

  14. ontheisle

    I know the news loves talking about posted rates, which I guess is where you’re getting 8.44%, but I got a 5 year for 5.24% last week and was told that the rate today on another was 5.79%. Canada Mortgage.com shows a 5 year as low as 5.39%. ”

    Yes Rob, I am fully aware of this but not all clients are “best client” rates,you have many that are in the US “sub prime” material category trying to borrow still,you don’t give them the best rates.
    As well when the liquidity bubble pops and tightens like a noose then the deals will be only for the elite clients,not joe blow.

    I was listening to Nick Majendie of Canaccord Capital a few weeks past and he commented twice how fast the liquidity market can change and that many people fail to realize and vastly underestimate this and when it does the tap is turned off to all the easy money in a hearbeat. This past 6 years of easy money is a phenomenon not seen in our lifetime and is something that shouldn’t be ignored in the coming months for those about to bet the farm.

  15. Realist

    “Can someone clarify something. If a person gets pre-aprooved at a particular rate for a mortgage for, say, 90 days, within that period they take out a mortgage, how long can it be for?”

    If you are 90 years old, then not long…..

  16. robchipman

    Ontheisle:

    The 5.24% was for a mid-20s single female 1st time buyer. I’m not sure if that was who you pictured as an elite, or best customer. Mortgage rates are very competitive. I see people get mortgages fairly often, and I don’t see anyone get posted rates.

    If the easy money liquidity bubble pops, let’s face it: all bets are off. The last time we had serious money supply problems was the Great Depression. Something tells me the powers that be will choose inflation.

    Deb:

    You get pre-approved today, at today’s rate, for 60 or 90 days. Your rate is guaranteed. If rates fall yu get the lower rate. If rates go up you get the rate you were originally approved at. If the pre-approval period expires you get another pre-approval, but at the higher rate. That’s why a fear of rate hikes spurs people to buy.

  17. Noname

    Rob said – “Something tells me the powers that be will choose inflation. ”

    How do you think the powers that be will choose inflation?

    You mean they will tolerate high inflation therefore leading to high interest rates which leads to basically limiting money supply.

    Or do you think they will simply tolerate high inflation without high interest rates which basically leads the powers to be losing a lot of money by holding a depreciating asset.

    Noname

  18. Realist

    Rob said – “Something tells me the powers that be will choose inflation. ” {over “depression”}…

    Of course Rob is choosing completely the opposite philosphy that Worldwide Central Bankers have developed and determined to be the best for more than the past 2 decades, but he is entiltled to his opinion –
    However, we should remember that it is the Central Bankers decisions which will be reality ..

  19. robchipman

    realist and noname:

    You got that I was comparing another Great Depression with some more inflation, right? 10 years of misery contributing to global conflict compared to an attempt to ride out more asset inflation, right?

    Maybe I’m just too imaginative, but when people say “This global liquidity bubble is going to burst, and easy money will be a thing of the past, and when it happens its really going to hurt” I envision something just a little shy of apocalyptic.

    So…you’ve got “almost apocalyptic” on one side, and “Door Number 3” on the other.

    You’re also probably aware that many people argue that the effects of the Great Depression ( a huge money supply constriction) could have been mitigated by relaxing the supply of money.

    I’m no economist, so take any analysis of mine with a grain or two of salt. However, faced with a choice between two evils, most people choose the lesser, even if the lesser only appears to be lesser because it is unknown. I’m under no illusion that central bankers don’t want to tame inflation, but we’re talking “bursting global liquidity”.

    BTW, realist, I can’t help but wonder: if there is a “philosphy that Worldwide Central Bankers have developed and determined to be the best for more than the past 2 decades,” and its the opposite of choosing inflation, then where exactly did all that money come from? Just curious 🙂

  20. Realist

    Rob – no easy answer to that one – According to various statistics in different areas, it seems that M1 is mostly already contracting, M2/M3 has been deliberately higher, but turned out higher than they initally wanted and now appear to be the focus of “pulling back” efforts…
    Looks like “they” may have considered a bit of extra growth in M2 for a while back there (much like you suggested), but that phase is perhaps now past for the current cycle –
    Sorry my comments are sketchy – no time these days to follow detail properly.. so I may be incorrect..

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s