Wednesday and Thursday Numbers

I’ve been spending a bit of time at Lion’s Gate the past few days, so I’ve been able to see our medical system up close.  As always the people on the front lines are very very impressive.  I don’t think I’ve ever left that hospital ungrateful for what the people there do.  Very hard work.

 Wednesday we had 234 new listings and 147 sales, for a sell/list of 62.82%.

 Today we had 231 new listings and 185 sales, for a sell/list of 80.09%.  Inventory reached 11,305, while over 90s reached 2,598 (22.98%).

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41 Comments

Filed under Daily Numbers

41 responses to “Wednesday and Thursday Numbers

  1. ceejay

    I hope you (or yours) are OK, Rob.
    And now for all you who rant about government interference…see the news on Bush this morning and the Republican sub-prime bailout. Apparently the free market is something that works…in theory 🙂

  2. ObserverX

    Yeah, isn’t it funny how people aren’t up in arms screaming about how Bush is a damn commie? And how about dem Wall St boys? Every time the govt introduces additional regulation, the boys are the first to scream interference with the free market but the second something goes wrong for them, they’re the first to scream for a handout.

    Makes one sick listening to it.

  3. blueskies

    heads up!

    month end:
    http://tinyurl.com/ywto3l

    gonna be an interesting day

  4. coco

    197 billion of U.S. mortgage resets this year is still less than the amount of resets will see in February and March 2008. The first six months of next year will see more resets than the grand total for 2007 or 521 billion.

    Even interest rate cuts will not be able to save this one.

  5. coco

    GM layoffs show Canada is not immune to turmoil in world financial markets

    http://www.thestar.com/Business/article/251932

  6. coco

    Canadian Chrysler Call Centre to close

    http://tinyurl.com/3dbntv

  7. blueskies

    from HBB:

    this is a must read…..
    a real eyeopener for Vancouver:

    some quotes:
    “Instead, prices began falling, and he has been unable to sell the home or find a tenant……
    he is behind on both loans. ‘My credit is shot for the next six or seven years,’………. and he has run through $100,000 of retirement savings. ‘It will take me another five to 10 years to recover that…….

    see speculator/flippers will be “handled”
    no extra taxation required

  8. coco

    Even BC is not immune from layoffs

    http://tinyurl.com/283aad

  9. doubter

    This is entirely anecdotal but last night, despairing of the still-unchanging situation in Vancouver, I looked at San Francisco real estate. I found two decent 2-bedroom condos, one a block from Golden Gate Park, one a block from the ocean. They were both in the low US$500k range. These properties would probably fetch CDN$2m in Vancouver.

    No one can convince me that Vancouver is that much more desirable than SF (I would rather live here, but I bet if you did a survey of people the world over SF would come out ahead or it would at least be close).

    Either Vancouver is in for an ENORMOUS correction (when, oh when?!) or there is something else very strange going on here. I don’t buy that it’s Olympics. I don’t buy that it’s mountains. Are we just nuts?

  10. Anon

    “I don’t buy that it’s Olympics. I don’t buy that it’s mountains. Are we just nuts?”

    Maybe the better lending system in Canada is in fact the cause? A whole lot more conservative in our lending and that’s why Canada continues along without the probs of our US neighbors?

  11. robchipman

    ceejay/observerX:

    Interesting news about Bush and the sub-prime indeed. I think that tends to support my idea that the “powers that be” will choose more liquidity (and hence more inflation) over the pain of a recession.

    In terms of ranting about a free market, take note that on my part I recognize that governments interfere in the market all the time. Sometimes that is actually good for the majority of people. Sometimes its good for the government, and not so good for the people (the idea of BC energy self-sufficiency, for example, has been criticised as inefficinet and expensive to tax payers, but it makes Gordon Campbell look green, so its a go).

    A byproduct of government intervention, good or bad, is that people see it, accept it, and then ask for more (witness the call to restrict non-resident real estate ownership, or, for that matter, restriction of non-resident ownership of Canadian corporations).

    Often the proposed solution falls somewhere between a poor plan and naked envy. However, when you make that criticism you get faced with “So, you like a bare bones, unfettered free market Dickensian economy, right, unless its a right wing politician interfering”. That’s not my position. Some government interference is good, some is bad, and each case has to be weighed on its own merits.

    Hasn’t Bush got a history of being a pretty free spender, anyway? Kind of like Harper? Cold hearted right wingers with secret agendas who actually spend more than their predecessors?

  12. doubter

    But how many “probs” has San Francisco seen? Would the properties I mentioned have been US$2m last year? Are they being sold because someone with annual income of US$35k bought them and an no longer afford them? I strongly doubt both.

    And SF is MUCH more constrained in terms of available land than we are here. It’s a small city.

  13. Anon

    Fair enough doubter. You’re right…. we’re all officially nuts.

  14. ceejay

    Bush is a free spender – on tax breaks for the very wealthy (estate tax 0%) and the military. The left wing conspiracy view is that Bush is running a large enough deficit to doom welfare state programs (like uni health care) in the US by making them fiscal non-starters for the next (democratic) administration. Policy by spreadsheet, in other words. OTOH,
    Harper is running a (surprise :)) surplus to have enough $ on-hand to buy your vote. So between falling interest rates (thanks, George) and more middle and u middle class take home after the election (thanks Steve), well, seems to me that house prices in canada, overall, aren’t at too much risk of a big contraction, ceteris paribus.
    And so I continue to take the bus from Mission :(.

  15. robchipman

    ceejay:

    🙂 That’s good! How does it happen that we go from concern over the national debt (that’s so 1990s!) to chronic government surpluses, without either paying down the debt significantly or reducing taxes? Guys used to say government should run like a business. The last couple gov’t’s took that to heart and are running consistent profits! And we’re the paying customer!

  16. coco

    Consumer confidence is shaken, whether the fed lowers interest rates or not, tries to help out subprime owners, etc., it remains to be seen what the consumer will do.

  17. Noname

    Lowering rates are NOT going to solve the problem (in the long run).

    Inflation is still a concern and when rates are lowered, the US doller will sink prompting inflation to go up.

    When inflation goes up, so do interest rates. (Except in the magical world of Rob)

    Rob, you appear to have the perspective that the Fed can simply avoid recession by lowering rates and everything will be fine. If it was that simple don’t you think they would always keep the rates low? Don’t you think they would drop it tommorow by 2% in order the heat up the economy even more?

    If the fed has such ultimate control of the economy, don’t you think ALWAYS keep the economy healthy.

    Clearly, the Fed has no ultimate control over this. They can lower the rates thus delaying the inevitable, while they are keeping their fingers crossed that another bubble will come to the rescue.

    Noname

  18. ceejay

    You get a dividend in the next budget, provided Steve can figure out how much of a tax break can overcome repugnance with Afganistan.

    The “logic” of not really paying off the debt is in the debt/GDP ratio. As long as the economy is growing, the credit card balance doesn’t look like a big deal. At their peril, lots of householders share this view…except the government isn’t ever going to get laid off .

    Oh, for the days of the..Socreds. Weird, yes, but at least honest from a policy perspective. Real tories you could like or dislike for their home-spun unsophistication rather than the current bunches’ slick spin control.

  19. robchipman

    Noname:

    “When inflation goes up, so do interest rates. (Except in the magical world of Rob)

    Rob, you appear to have the perspective that the Fed can simply avoid recession by lowering rates and everything will be fine”.

    Far from it. I think maybe I’m not making myself clear. I’m not saying that the fed and other central banks should lower rates and choose inflation. I’m not saying its a good idea (nor am I saying its bad). I’m just saying its the course that I think they’re going to choose, for better or for worse.

    Interest rates and inflation aren’t linked as tightly as you suggest. i% lags, based on govt policy, and there’s the rub. Raise them too soon or by too much = problem. Raise them too late, or too little = problem. However, I suspect inflation numbers have been mis-counted in recent years, and I think that is useful to the govt.

    Your question (“if they could do it, why don’t they do it all the time”) is timeless. It applies to the government as well. If they can control outcomes, why don’t they get down to it and create paradise? Why didn’t they do it long ago? We both know the answer: they can’t. The best they can do is lean against one side of the oil tanker and see if they can influence direction.

    ceejay:

    “Oh, for the days of the..Socreds.”

    You’re right. There’s nothing like knowing where a guy stands. You could disagree with Bennett or VanderZalm, but you were pretty sure about where they stood on issues.

  20. coco

    Americans now owe a staggering $16 trillion dollars.($2.4 Trillion in personal loans, and $13.6 trillion borrowed from their house)

    Canadian household debt is climbing at a rate of around 10% per year, now exceeds 100% of disposable income compared to 55% in the early 1980s. Mortgages make up over two thirds of Canadian household debt.

  21. doubter

    coco, these numbers sound scary by themselves.

    However, by my calculation, $13.6 trillion divided by 300 million (approximate US population) is about $45,000. This is every adult and child, so even if we triple or quadruple this figure it doesn’t look too bad to me. I’d love to own a home and have just a $180,000 mortgage.

    I read about three or four years ago that the debt to income ratio in BC had surpassed 100%. I didn’t think that could last long. Somehow, it has. Why? Will reality hit at some point, or is everything somehow rigged economically so that common sense is no longer a concern?

  22. Noname

    Rob said – ‘Interest rates and inflation aren’t linked as tightly as you suggest.”

    That’s right Rob. Banks (and therefore investors) always like to give out money that depreciates faster than what they get in return. They are kind of like charities.

    Interest rates eventually follow inflation. I don’t know too many people who are willing to hand out depreciating money and expect less in return.

    Now, if you are proposing whether the government data on inflation is truly accurate, that’s a different discussion.

    Noname

  23. robchipman

    Noname:

    We’ve had inflation recently, no? Arguably more than 2%-3%, no? And rates have climbeb very slowly, yes? Some rates haven’t changed at all, yes? And we have the spectre of stagflation, with inflation, a poorly performing economy, and I would bet continuing low rates.

    I think that where we differ is that you think the system is more perfect than I do. I think there’s more slop than you do. That’s about all.

  24. Noname

    So, you are saying that inflation is underreported, right?

    Are you saying that inflation is higher than he official reported 2-3% ?

    Noname

  25. Noname

    Sorry, my mistake.

    You are saying that inflation is indeed underreported.

    Now that’s a different discussion. I agree that inflation is higher than 2-3% but you can only hide that for so long until the customer realizes that they are paying $2 for a liter of gas and there is no money left over for anything else.

    Eventually, that will show up, too. That’s only a question of time…

    Noname

  26. DaMann

    Don’t forget that inflation is high in western Canada. that’s not the case out east. I’ve heard that we are around 4%, Alberta close to 8%, Ontario around 1% and Atlantic Canada about .3%. The problem the feds have is that it’s hard to accomidate teh whole country.
    And yes I think inflation is grossley under reported.

  27. The unthinkable "Renter"

    Blue Skies please post news related to Canadian R.E.

    Thanks

  28. blueskies

    please post news related to Canadian R.E.

    Thanks

    http://preview.tinyurl.com/2dgzm7

    OK 🙂

  29. The unthinkable "Renter"

    Hugs and kisses to Blue Skies!!!

  30. The unthinkable "Renter"

    Really all he’s saying is make sure you like what you buy and it fits your plans!

  31. chip

    Rob said:

    “How does it happen that we go from concern over the national debt (that’s so 1990s!) to chronic government surpluses, without either paying down the debt significantly or reducing taxes?”

    Canada’s debt-to-GDP has fallen a fair bit, though more because we’ve stopped adding to it (say thank you to the GST ) and an economic expansion (NAFTA and commodity boom) than anything else.

    (Note that the GST and NAFTA were both opposed by the Liberals but it didn’t stop them from claiming responsibility for the surpluses).

    But the jab at taxes is a fair one. Our disposable income has risen only about 3.5% in the last 15 years, whereas our economy has almost doubled in size over that time.

    So where’s all that new wealth going if it’s not ending up in our pockets? Government spending has also doubled.

    It may come as a surprise to many Canadians but up to the 70s Canadians had more disposable income than Americans. Today, they take home 35-40% more than we do, and the gap is widening.

  32. fish

    Rob

    We have had rip-roaring inflation in the last five years.

    The price of gasoline has almost doubled, the price of housing in Vancouver has almost doubled, rental rates are up (by my estimation) 4-5% a year, food has gone up substantially, all the commdoties have doubled and tripled inprice.

    Gold has doubled.

    This hasn’t shown up in the figures because of the way the governments chose to measure the inflation numbers.

    Of course this was to be expected for two reasons:

    1) We have had rediculous low rates for too long. This not only stimuated demand, but also speculation. One of the reasons commodities have been dropping recently is a lot of the hedge fund money getting out of these trades.

    2) We have a world-wide expansion. This means more competition for food, oil, copper etc.

    Number one is unwinding, even though number two is still strong.

    I suspect we will see some deflation first (house price drops ect) before the Central banks panic and flood liquidity causing inflation again. (or stagflation if they are very unlucky)

    So far we have seen drops in US housing, commodities, gold, oil is settling back, high risk bonds are dropping while treasuries are rising…this all happens in the beginning of a deflationary cycle.

    Lets wait and see.

  33. coco

    doubter,

    Seem to have misread my previous post.

    The American figures are for personal debt, they do not include basic mortgages. Debt is for second mortgages taken out against the house for home improvements, etc. and personal loans for cars, etc. only.

  34. robchipman

    Fish:

    Number 2 is going to be the saviour. If we see problems with that (for example, political upheaval in China, as a spitball) then we’re in trouble.

  35. CC

    Ok, how about this Rob:

    Flippers are negative if they contribute to a bubble. (for a relatively poor analogy see the VSE for most of its existence). Flippers increase prices/inflate market by creating artificial (call it short term or fickle if you want) demand. At some point, flippers sell and walk away with their capital gains (many going offshore with the $$). Downstream purchasers from flippers get to take the loss when the bubble crashes. It is the classic pump and dump.

    All the other spinoff benefits you cite from this “churning” are minimal (i.e. realtors fees, lawyers fees, taxes).

    You have little or no proof that further discouraging flippers would significantly reduce investment in real estate construction. If real demand is still there, then houses will still get built.

    I think a strong argument can be made that further discouraging flippers would benefit the greatest number. The pensioner selling his house is still going to make a rich profit. And his kids are going to be able to get into the market for less. The community stays more stable and diverse (and aggregately less in debt).

  36. ObserverX

    “All the other spinoff benefits you cite from this “churning” are minimal (i.e. realtors fees, lawyers fees, taxes).”

    How does one argue that “churn” is a benefit to society as a whole anyways? Isn’t it just another form of the “helpers” that Warren Buffett talked about in his 2005 letter to the shareholders?
    http://www.berkshirehathaway.com/letters/2005ltr.pdf

  37. ObserverX

    Re: link in last post — relevant part starts around p.7 or 8.

  38. robchipman

    cc:

    Again, I don’t engage in flipping and I don’t recommend it, but…a flipper can sell at a profit as easily as he can sell at a loss. The idea that he’ll profit and leave the country with his ill-gotten gains while the poor, honest, hard-working local buys high and then has to sell low is, well, crappy thinking and poor argumentation. No gold star for you on that one.

    If you restrict demand you probably keep prices lower. We don’t need to argue over elasticity/inelasticity because you’re already arguing that an absence of flippers will keep prices low (that is, more affordable). That’s fine, and I tend to agree with you. However, you can’t continue and argue that low prices will still result in a pensioner making a rich profit. That’s eating your cake and having it too. Doesn’t work. If prices stay low, profits aren’t rich. They just look “rich” or “sufficient” to you because it helps your argument, but it isn’t logical.

    Realtor’s fees and lawyers fees are just one part of the economic spinoff. I’ll concede, though, for the sake of argument, that they are simply churning.

    But, those fees are small compared to the main ones I cited: actual construction of the properties, for example, or, for that matter, the taxes paid through the course of a flip, or the related economic activity (noticed how big home improvement has become?). Count those benefits up.

    A flipper’s demand isn’t artificial. He either reads demand correctly, or he doesn’t. But, all the flipper does is position himself between a seller and a buyer. While doing that he risks his money. He can win or lose. What he doesn’t do is create demand. If the eventual buyer wasn’t there to begin with, there would be no succesful flip. The distinction between real and artificial demand isn’t based on who it comes from; its based on whether money and title actually change hands.

    Flippers contribute to rising prices when demand outstrips supply, and they contribute to falling prices when they have to cut and run (with the total effect depending on how many of them there are, of course). The falling price argument has been made repeatedly by many bears (in predictive form as in “wait for the rush to the exits”). Not many serious observers lay the blame for increased prices of housing (or other hard assets) at the feet of flippers. More blame central bankers for such cheap credit.

    So, I won’t argue that churning is good (who’d gainsay Warren and Uncle Charlie anyway? 🙂 ) But I will say that as long as people say taxing flippers or non-residents is a good idea for whatever reason, and then as soon as you call them on it they back off and say “The impact will be minimal anyway” (as in, non-locals don’t cause the price run ups, or, grampa will still make as much money selling at lower prices anyway), I’ve really got to call bull… I mean, “bad argument”!

  39. CC

    Rob,

    I said that grampa would still make a rich profit. If he bought his Ambleside rancher for $30,000 in 1971 (as many boomers did), then he will walk off into the sunset with a healthy profit, flippers or no flippers. Not as much without flippers but still enough.

    I don’t think non-locals cause price run-ups. I think flippers contribute to them, particularly when there is a bubble. The basic demand may be there (as you point out, someone has to buy from the flippers) but that is also the case in classic pump and dump stock schemes. Flippers help create the impression that sharp increases are warranted and sustainable, thereby inducing others to pay more for the same product (be it stocks or real estate).

    How many flippers have lost money in the last five years in Vancouver’s real estate market? Yes, they potentially can lose money and will lose money if they don’t time the correction. Problem is they will take down many others others with them. If you have trouble understanding what I am saying, think of the pump and dump schemes. The pumpers may lose but most often they are more sophisticated and better able to time the market. They also will have made healthy profits on other properties in the run up.

    O and re the gold star comment…it is usually a good idea to refrain from being condescending when you are engaging in a civil discussion and don’t have a monopoly on knowledge.

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