Tuesday Numbers

There were 241 new listings yesterday and 130 sales for a sell/list of 53.94%

Inventory hit 11,078, while over 90s were 2,473 (22.32%).

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101 Comments

Filed under Daily Numbers

101 responses to “Tuesday Numbers

  1. Grin and Bear It

    Interesting story. I met a RE agent in a social setting and we got to talking RE. I asked if her business has been effected by the U.S. housing issues etc. She promptly replied, “What issues?” She had heard of them but claimed they were not a problem for Canada and especially the Vancouver market.

    This is the type of agent that makes me liken RE agents to slimy used cars salesmen types. Just sickening.

    Happy to see a ‘bearish’ trend with the numbers! Rob, thanks for the info. Let’s get to singing another verse of our fave song in the near future!

  2. Northern Ally

    Wall St. Journal today says 3/4 of 52 economists polled put probability of U.S. recession in the next year at better than 30%, 11 said better than 50%.

    North of the border, RBC report today:

    “In the second quarter, Canada’s housing affordability experienced one of the largest and most broadly based quarterly deteriorations since the mid-1990s,” said Derek Holt, assistant chief economist with Royal Bank. “Higher house prices, mortgage rates, utilities and property taxes all combined to drive the country-wide deterioration.”

    Same report says a typical E. Van. bungalow now eats 71% of an average pre-tax income.

    Gotta believe only the very foolish or very financially secure would buy into this market.

  3. robchipman

    G&B:

    I’m not sure I follow the judgemental strain. The credit crunch and housing challenges in the US haven’t effected us yet, locally, unless you’ve determined that September’s slightly bearish start is a market meltdown.

    We’ve seen these kind of numbers before, btw, followed by renewed price gains and record setting volumes. Deciding that the music has stopped is, therefore, perhaps a little hasty.

    So…if your thinking is that recognizing a rising market for what it is, despite the as yet unsubstantiated assumptions of some bears is slimy, so be it. I’d have to say, on balance, that the Realtor telling you that her business hasn’t been effected by the US slowdown is probably pretty accurate. I have the same experience.

    Does it make me slimy to tell the truth (my business hasn’t been effected the way you seem to assume it should have been) rather than tell you what you want to hear?

    FWIW, I don’t sing kumbayah. I try to recognize what I see, rather than try to see what I wish existed.

  4. New Investor Rob

    I think the reaction of the RE agent is for one of two reasons.

    1. Business is good. There are lots of listings and lots of sales and Inventory is low. This means the RE agent is making money and they are generally happy.

    2. Because they are generally happy they aren’t watching the US news regarding real-estate and didn’t bring it up.

    Or they are just lying.

    Keep in mind it doesn’t matter where prices go, as long as there are lots of sales RE agents are kept happy. The difference between commission of a 400K and a 500K home is not much different.

  5. Grin and Bear It

    Rob, my ‘slimy’ comment was in no way directed towards you. I haven’t not been witness to any truly questionable tactics. I just thought the RE agent in my example was quite ‘slippery’. For her to ‘poo poo’ any concerns about the problems in the U.S. and it effecting us is just sickening.

    I even asked her what I could get on a small income and she was promptly setting me up with a house in Delta. I told her that was way beyond my means and her defence was for me to get a ‘mortgage helper’ to cover about $1 000/mo. The part that made me ill was she had no regard for my reported limited income and how a house wouls strap me financially. It was sad to see she had NO regard for my well being.

    I recognized what I saw and made the right call when I thought she was slimy. I hope there aren’t too many of these types out there.

    I could talk about another agent that convinced my dad to take less on his house just so it would sell quickly (dad didn’t need a quick sale) but I’ll save that sadness for another day…

  6. Al

    Grin and Bear it, if you have small income, it’s not the agent’s fault.

    Why don’t you consider condo instead of house? Or consider cheapper house in Abbotsford, for example.

  7. Grin and Bear It

    Al, my income is fine. However, it would stretch me to buy a house on my own. I suggested a condo type situation to but this particular agent said I could just as easily afford a home by having a tenant in the basement. To me that sounds like a recipe for disaster – talk about over extending. Despite the obvious problems with this scenario she was more than happy to try and push this idea on me. That’s just sad. 😦

  8. Johnnyrent

    Just for laughs, here’s a beaut of a quote I read today: β€œBoth Anderson and UCLA forecasters stress that the biggest risk to California’s economy is that the housing slump will prove worse than they predict. ”

    Now we have economists saying that the biggest risk to the RE market is inaccurate predictions by economists.

    Acutally, they’re probably right. On the other hand…..

  9. Snick

    “I even asked her what I could get on a small income and she was promptly setting me up with a house in Delta.” – Grin and Bear It

    And then she would have phoned you to tell you that there were “other interested parties”.

    Turd is the word.

  10. Snick

    “I try to recognize what I see, rather than try to see what I wish existed.” – Rob Chipman

    Oh, I can just “see” how you’ll say you “saw” it coming.

    It’s called a “see-saw” and you’re really GOOD at riding it!

    I think the teeter is beginning to totter…a lot.

  11. Geezer

    Northern Ally said:
    “Wall St. Journal today says 3/4 of 52 economists polled put probability of U.S. recession in the next year at better than 30%, 11 said better than 50%.”

    So another way to say it is – “the overwhelming majority of the economists polled (41 out of 52) put the probability of a US recession at less than 50%. Furthermore, 25% of them said the probability is even less than 30%”

    After all the negative amateur bear guesses on this and other blogs that’s a very positive outlook, thanks for the good news.

  12. Real Return

    Can we talk about something else than bear vs. bull. How about we consider a real estate investment as opposed to an equity investment. James O’Shaughnessy states that the rate of return on an investment in a US home between 1963 and 2004 was 1.55 percent per year. Compare this with the SP500 at 6.15 or small cap stocks at over 10% per annum. All to often real estate investors do not consider inflation or the real costs of owning a home.

  13. Well, I hate to say that the sky is falling, but it certainly does look like a slowdown is coming in house sales even here in sparkling, ebullient Vancouver. To wit:

    1. The $ CAD. Wow. Looks like parity by the end of September…maybe on September 19th, even. Americans can’t afford to buy here anymore. And too many Canadians will lose their jobs as exports plunge. The BOC will follow with a rate cut soon thereafter but I believe the damage will be done.
    2. Unsustainable prices. I know, bears have said this for years, but now buyers are running into higher rates, hence the 40 yr mortgage. Canadians don’t want it and won’t go for it.
    3. Psychology. The US housing market news isnt good, and when they sneeze we catch cold.

    However…
    1. The BOC will reduce interest rates after the US Fed does on the 18th.
    2. the feds will reduce taxes in the first post election budget late this year or early 08.
    3. they aint makin’ more Vancouver.

    So IMHO, I see a decline, but no power slump.

  14. Anonymous

    Anyone else see the real estate news story on tonight’s Global TV evening news. Real estate agent said there would be correction (not crash) at end of 2008. Story ended with some words to the effect that should get in now before it’s too late.

  15. Anonymous

    Also the agent was talking about generational mortgages where the house is never paid off and debt is passed on to the hiers.

  16. vanreal

    grin and bear it,

    I am sorry but your real estate agent story sounds extremely fishy and dare I say it made up by you. It sounds more like you want to prove a point and made up a story to help you prove it. If I am wrong I do apologize from the bottom of my heart! I don’t I am though.

  17. Snick

    “So another way to say it is – β€œthe overwhelming majority of the economists polled (41 out of 52) put the probability of a US recession at less than 50%. Furthermore, 25% of them said the probability is even less than 30%” – Geezer

    “Economists”? Don’t make me laugh. You should see the predictions “economists” made just prior to the 1981-82 bustup.

    Check out the old VHB sites…see for yourself.

  18. blueskies

    vanreal:
    bears would never lie or even exaggerate

    i’m following West side strata/leasehold….
    2 total 5% reductions in asking price within 2 weeks of first listing/showing….

    the pitter patter of hurried feet heading for the exit maybe?

  19. mk-kids

    fish, is this ad a joke??!! omg. i love the “easy money” scheme link at the end and this guy has been quoted by the straight & van sun??! wow, they’re scraping the bottom of the barrel on this re “expert!

  20. mk-kids

    grin & bear it, i hear ya. reading your account, what stuck out for me was her initial response of “what issues?” like there wasn’t any & once you mentioned them, only then did she admit she knew what you were talking about. It just doesn’t strike me as a honest response. The fact that she minimized the effect of the troubles of our neighbor on us is fine, many realtors & people currently invested in the market are doing that and at least then you can have a discussion, its okay that we all see things differently. But I agree with your assessment of this particular agents character. It’s a subtle dishonesty but a dishonesty nonetheless.

  21. mk-kids

    “Does it make me slimy to tell the truth (my business hasn’t been effected the way you seem to assume it should have been) rather than tell you what you want to hear?”

    Nobody could really disagree with you here Rob – yes you’re slimy if you don’t tell me the truth?! Pleeeeese, who is gonna say that? But it strikes me that you’ve twisted G&B’s anecdote here to discredit his\her experience with your own.

  22. News Flash

    Fish: “Nice price drop”

    I would have thought a house on Westminster Hwy in Richmond would be worth 1.3 million. I wonder why they dropped their price? It must mean real estate is crashing.

    In a related story the price of Honda Civics is dropping rapidly. Last week I saw a 2001 Civic original priced at $27,000. Now you can get it for $15,000 with a free oil change. My bet is prices keep crashing on Hondas and soon it will be sold for under $10,000. Imagine those idiots who bought Hondas this summer and now prices have been cut in half.

  23. Snick

    News Flash,

    You are so out to lunch. What’s your angle, anyway?

  24. Honda Man

    News Flash hasn’t taken a finance course. What is the present value of 36 monthy payments at 0.9%.

    Sounds like a discount to me.

  25. Honda Man

    The market will crash. Doesn’t matter what the bulls say. It just won’t hold.

    But hurry. Buy something before the price goes DOWN and you’ll be priced out!!!

    Just a note for agents. The faster the crash, the faster the market will recover. Short correction is better than a long correction.

  26. New Investor Rob

    News Flash

    I totally agree. I hate it when people try to pull out some price drop on Craigslist to prove prices are dropping.

    I’ve got a pretty interesting anecdotal story. I was in meetings with a lady from Phoenix. So since I’m interested in hearing about the Arizona Real-estate crash. I asked her about the fore-closers in her neighborhood.

    She said its not really as big a deal as everyone is making out. She agreed that there are alot of foreclosures that she has heard about but she hasn’t seen prices go down, they just stopped going up.

    She said that Phoenix was growing at 30% a year so the slow down of building and foreclosures would soon be gobbled up by population growth.

    I’m just repeating what I heard from a Phoenix resident. Don’t jump on me if you think its bogus. Keep in mind this was the mind set of a Phoenix resident who wasn’t a real-estate investor.

  27. Grin and Bear It

    vanreal, 100% true account of my dealings with this woman. I really don’t think it’s that uncommon. When I went to buy a condo last summer my last agent was a bit iffy as well. My earlier account on this blog is the most questionable one I’ve had. It doesn’t matter to me if you buy it or not. Either way it doesn’t make an ounce of difference to me. She was just one reason RE agents get a bad name.

  28. fish

    Newsflash

    The craigslist link is an illustration of how RE is priced in a still hot market.

    A house, clearly on a busy street, is listed at $1,288 Million, and then when it becomes obvious no-one will bite at that price -it is dropped $300K…nearly 25%!

    Crazy. This isn’t the stock market. It is a hard asset.

    Take from that what you will, but ‘the market is crashing’ isn’t one of them.

  29. coco

    Ceejay,

    I’m not sure if you read the link I posted on yesterday’s thread. Dodge has a wait and see attitude about the credit crunch. He sees interest rates as appropriate as our inflation rate is still rising and economy is still going strong.

    This sounds more like a man who is content to keep interest rates on hold for a long time.

  30. africa

    Canadian house prices at risk of dropping: report
    13/09/2007 9:47:10 AM

    ——————————————————————————–

    A hot Canadian housing market has lifted prices above their long-term trend, raising risks of an eventual drop in prices, says Scotiabank.

    The evaluation is made in the latest Real Estate Trends report, released Thursday by Scotia Economics.

    “There is little doubt that current trends are unsustainable,” said Adrienne Warren, senior economist for Scotia Economics. “Affordability is becoming increasingly stretched for many would be buyers after almost a decade of rising home prices.

    “More recently, economic risks have increased in the wake of the intensifying financial market turmoil stemming from the U.S. subprime mortgage problems.”

    From a long-term perspective, the report says there is growing evidence of overvaluation in home prices in some parts of Canada — a common precursor to a period of softening conditions.

    In all 15 cities examined, with the exception of St. John’s, current inflation-adjusted price levels are above their long-term trend. The national average deviation at mid-2007 was about eight per cent.

    Despite the deviation, price growth remains consistent with short-term supply-demand dynamics.

    Most major markets in Canada are still “sellers’ territory,” in which prices are expected to rise faster than inflation.

    “The further domestic home prices climb above underlying economic fundamentals, the greater the risk of an eventual correction,” said Warren.

    “The 1976 and 1989 housing peaks were both followed by some adjustment in real prices. In the past, this adjustment has normally occurred though a period of inflation erosion as opposed to nominal price declines.”

    Still, Warren said the fundamentals underpinning Canada’s housing market remain quite strong.

    “”Unemployment is low, immigration is high and apartment vacancy rates are tight. There is little evidence of overbuilding or speculative buying,” she said.

    “The industry also has relatively little direct exposure to subprime lending, with these loans accounting for only about five per cent of domestic mortgages in recent years compared with about 20 per cent in the United States.”

    The report follows a release Wednesday that found more Canadians than ever before owned their dwelling.

    Statistics Canada said about 68.4 per cent of Canadian homes were owned by their occupants, up from 65.8 per cent in 2001.

    The Royal Bank of Canada also released a report Wednesday, which showed the cost of owning a home in Canada continued to rise in the second quarter of 2007.

  31. Snick

    I guess they have to hedge their bets at some point. They wouldn’t want to look totally stupid with egg on their face.

  32. Snick

    β€œMore recently, economic risks have increased in the wake of the intensifying financial market turmoil stemming from the U.S. subprime mortgage problems.” – Scotiabank

    We’re not immune here? Different? Say it ain’t so!

  33. coco

    The last few years of low interest rates created a boom in the real estate market, there are more real estate agents out there than ever before. Unfortunately, not all of them are looking out for your best interests financially and are more concerned about the amount of commission they can make off you, rather than if you can actually afford the property and the payments are at a comfortable level for you.

    Extending yourself so far financially that you have to rely on a tenant to be able to make your mortgage payment is only good advice if you have a reliable tenant who pays the rent on time. If you have a lousy tenant who doesn’t pay the rent or it takes you a few months to find a tenant then you can be in financial turmoil quite quickly.

  34. sweet succulent grouper

    Well kids the moment we have been waiting for is now here. Here is official MSM coverage of a Scotia Economics Real Estate Trend Report, taken from ctv.ca news:

    “A hot Canadian housing market has lifted prices above their long-term trend, raising risks of an eventual drop in prices, says Scotiabank.

    The evaluation is made in the latest Real Estate Trends report, released Thursday by Scotia Economics.

    “There is little doubt that current trends are unsustainable,” said Adrienne Warren, senior economist for Scotia Economics. “Affordability is becoming increasingly stretched for many would be buyers after almost a decade of rising home prices.

    “More recently, economic risks have increased in the wake of the intensifying financial market turmoil stemming from the U.S. subprime mortgage problems.”

    From a long-term perspective, the report says there is growing evidence of overvaluation in home prices in some parts of Canada — a common precursor to a period of softening conditions.”

    Sorry don’t know how to tinyurl.

    This is better than vhb’s oprah moment.

  35. coco

    You’ve bought a home and you’ve got a five-year $250,000 mortgage at 5.85 per cent. Now for the amortization period – should you go with the traditional 25 years, or use an extended amortization mortgage?

    Amortization Pymt. Interest paid
    25 $788.65 $181,265
    30 $731.85 $216,844
    35 $694.37 $250,370
    40 $668.70 $281,171
    *assumes accelerated bi-weekly payments
    Source: RBC

    Banks love those 40 year mortgages. Of course, the interest rate will probably be higher than the 5.85% quoted here during the duration of your 40 year mortgage, so your bank will love you more.

  36. coco

    Our long housing boom needs to cool (Canada)

    http://tinyurl.com/22wwvr

  37. coco

    Vancouver Least Affordable

    http://tinyurl.com/27ll47

    * Even CREA’s president cautions buyers & lenders

  38. Tony Danza

    new investor rob, Phoenix population is growing at 30% a year?!?!?! Have you ever been to Phoenix Rob? Have you ever been to a city that is growing at even close to 10% per year? According to census figures that you can find here: http://www.census.gov/Press-Release/www/2007/cb07-91table1.pdf
    the population of Phoenix increased 3.5% from 2005 to 2006.

    I suggest that you take anything that your “lady” friend from Phoenix has to say with a grain of salt. 30% population growth in Phoenix?!?!? What an idiot.

  39. Anon

    “Banks love those 40 year mortgages. Of course, the interest rate will probably be higher than the 5.85% quoted here during the duration of your 40 year mortgage, so your bank will love you more.”
    —————————————————————

    And landlords love those 40yr mortgages too when the tenant’s monthly payments pays for it.

    The person who isn’t as much of a fan of it though is the tax man…. That’s a lot of tax-deductible interest that is sure benefitting the real estate landlord in a HUGE way!!!

  40. abc

    And tenants love the 40 year mortgages when their rent doesn’t even come close to covering the interest cost. The friendly landlord even pays maintenance! Too bad that he has to find money someplace else if he wants to paydown the principle. Looks like everyone is happy. But maybe not everyone is correct.

  41. robchipman

    mk:

    I think that if you’re objective about it you’ll realize that, based on the info he’s sharing, G&B isn’t making any kind of case for his conclusion that the Realtor is slimy. Pretend you don’t agree with him and ask the obvious questions. See where it leads your thinking.

    -Buying a house with a suite is a time honoured way for FTBs to get in the market. I’ve done it myself and sold to lots of FTBs who have done it.

    -Buying RE requires sacrifice. It always has and always will. “Over-extended” can be pretty subjective.

    – G&B starts out by saying “The Realtor told me something I don’t actually dispute, so I conclude that she’s slimy. See my point?” Its pretty weak logic.

    I could go on. It possible that he was ID’d as a flake from the hop at the party, and the Realtor was just trying to make polite conversation with someone she regarded as hostile (been there, done that, don’t enjoy it, would rather drop the gloves with the person, but what can you do?) Its equally possible that the Realtor is a slime bucket. Or, that reality lies somewhere between the two extremes.

    My point is that G&B is justifying his bad behaviour (generalizing) with some weak logic. Got a slimeball Realtor story? Got some facts? Send them to me. Others have and I’ve provided some background info and advice, as appropriate. If we discover soemthing that is actually wrong I’ll publicise it as appropriate (i.e., I’ll try to not run afoul of privacy and libel laws, but otherwise I’ll share the info).

  42. Anon

    “And tenants love the 40 year mortgages when their rent doesn’t even come close to covering the interest cost. The friendly landlord even pays maintenance! Too bad that he has to find money someplace else if he wants to paydown the principle. Looks like everyone is happy. But maybe not everyone is correct.”
    —————————————————————

    The tax man is still very unhappy. The friendly landlords supplemented taxable income is reduced by this. Poor fellow 😦

  43. abc

    Interesting point on the tax man being unhappy. I don’t know tax law, so will not comment further on that.

    However, there is still one more twist to the story. The tenant take the money he saves and buys a bank stock. Seems like a good idea, since it is trading at a price earnings ratio of about 12 or 13, while the long term growth rate is estimated by analysts to be about 10%. Make it a drip and you’ve got a PEG ratio of 1, which smokes the ratios he sees on local real estate. So now the circle is complete. Landlord pays tenant through the bank interest, subsidizes his rent, and repairs his accommodation. All with a smile too. Life is good.

  44. coco

    Recent horror stories of bad tenants from people I know that are landlords:

    *Don’t pay the rent or skipped out completely.
    *Used my house for a grow op, totally destroyed, insurance will not cover.
    *Ended up renting to prostitute
    *Damaged my house beyond what I collected in rent from them (have to hunt them down to file a lawsuit, can’t find them yet)
    *Partying/Visitors at all hours

  45. coco

    Being a landlord is only cool when you have a good tenant.

  46. robchipman

    coco:

    We all rent before we buy. The vast majority of us are good people, and ergo, good tenants.

    The risk of a bad tenant does exist. If you’re not capable of handling tenants yourself, use a profesional manager.

    abc:

    I’ve owned bank stock a long time. I’ve owned real estate a long time. Which do you think has smoked which? πŸ™‚

  47. Anon

    However, there is still one more twist to the story. The tenant take the money he saves and buys a bank stock. Seems like a good idea, since it is trading at a price earnings ratio of about 12 or 13, while the long term growth rate is estimated by analysts to be about 10%. Make it a drip and you’ve got a PEG ratio of 1, which smokes the ratios he sees on local real estate. So now the circle is complete. Landlord pays tenant through the bank interest, subsidizes his rent, and repairs his accommodation. All with a smile too. Life is good.
    ————————————————————-

    Oh good. The tenant just made the tax man much happier. All is well and indeed the circle is now complete. πŸ™‚

  48. blueskies

    landlording kinda sux when the tenant you depend on to pay your mortgage is a dope-smoking, beer-swilling nihilist ….

    if you gotta pick your poison this ain’t the route to go

    oh yea…. tenant may also sport some nifty tattoos

  49. Jay

    My uncle has a number of properties that he rents out. They’re decent and located in ok areas. Unfortunately he has had many questionable tenants. Actually, a majority of them were headaches. Having a good tenant is a rareity. Some have been so bad that they’ve caused significant damage to the property. A property mgmt. group wouldn’t be able to stop a tenant from making sizeable damage. A good tenant seems to be worth his or her weight in gold, so to speak!

  50. DTG

    However, there is still one more twist to the story. The tenant take the money he saves and buys a bank stock. Seems like a good idea, since it is trading at a price earnings ratio of about 12 or 13, while the long term growth rate is estimated by analysts to be about 10%. Make it a drip and you’ve got a PEG ratio of 1, which smokes the ratios he sees on local real estate. So now the circle is complete. Landlord pays tenant through the bank interest, subsidizes his rent, and repairs his accommodation. All with a smile too. Life is good.
    β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”-

    Oh good. The tenant just made the tax man much happier. All is well and indeed the circle is now complete.
    ————————————————
    Yes, the tenant did make the tax man happy, but not near as happy as the landlord. Since the dividend income the tenant is receiving from the bank stocks will be taxed at a much lower rate than the landlords rent money he receives once the mortgage is paid off.

  51. robchipman

    Jay, I’ve got hundreds of tenants, and the vast majority of them (90% plus) are very good. That’s partly because people, in general, tend to be good, and also because professional property management increases your chances of success in renting (your uncle’s case proves the point – good tenants aren’t a rareity for me).

    A bad tenant can do a lot of damage, and that can’t always be prevented.

    There’s an obvious question begging to be asked: if tenants are such a headache, why does he own a number of rental properties?

  52. Jay

    Rob, I can’t say for sure but I would have to say for the money. He also sets himself up for problems because he refuses to use mgmt companies. I keep trying to get him to use them.

    If you don’t mind me asking, who do you use? How do you like the services? If you don’t want to note that on a public forum then no worries.

    Personally, I would never manage multiple properties on my own.

  53. coco

    From my insurance buddy about tenant’s honesty:

    Content insurance rates for tenants are 40% – 60% higher premium wise than if your a homeowner due to the high number of claims tenants make over regular home owners due to fraud. (very hard to catch) Additional premiums are charged to home owners who rent out properties due to the fraud risk spillover factor.

  54. New Investor Rob

    Bad tenants is the biggest FUD item that real-estate investment chickens will always tell you about.

    Yes , there are bad tenants, but most bad tenants follow the bad land lords. Its a symbiotic relationship they seem to share. Bad tenants either find the badly managed properties or the sucker land lords.

    If you want to talk about the economy crashing, if most renters were as bad as most people seem to say think they are, then you would really see an economy crash.

  55. New Investor Rob

    fish and tony danza

    My bad, point taken probably not 30% per year.

    Couple of things from the reference material that you sent. You sent census data for Phoenix ‘City’. If its anything like Vancouver its probably land locked and I probably should have said the Phoenix metropolitan area not that that gets me to 30%.

    The chart of asking prices doesn’t exactly show a crash that I hear about in the media about Arizona. I was thinking that the -9.3% price appreciation over 12 months that they showed was low for the doom and gloom I was expecting.

  56. Pondering

    I appreciate you have a dialogue started regarding realtors, rents and such, but I would appreciate getting your views (bears and bulls) on my particular situation. I thank you in advance for indulging my selfishness.

    I will try to keep it short. We are renting and saving up a deposit for a single family home on the east side. We live in a very spacious and comfortable apartment on the west side. We have reached the point where the interest monies on our deposit (invested in cashable GICs) largely pay our rent. Like many people, we are having trouble finding anything in this market that we like and that we can afford. When I say “afford”, I mean something with mortgage payments of about 30% to 40% of our gross household income.

    We have the opportunity through a private sale to purchase a home that is not the style of home we were looking for in a neighbourhood that is not our first choice (though the neighbourhood is popular). The purchase price is probably about $50K to $75K lower than what the house would sell for on the open market. If the market stays firm, I feel that some renovations to the kitchen and bathroom would lift the market price by $100,000 to $150,000. So, there appears to be some opportunity for us to get into the market with this property and perhaps even see a lift.

    The type of house we are looking for in the areas we would like to live are currently about $150k to $200K over the price of the private sale home, and would require the same kitchen and bathroom renos to make them appealing to us. We would also require a suite renting for about $1,000 per month to make such a home affordable according to our criteria.

    Should we purchase the private sale home, do some renos and “get into the market”, or should we continue to wait and save for our favoured home in our favoured hood?

  57. Jay

    My situation isn’t too different from Pondering’s. However, I am not entertaining any ‘deals’ or bargains. Sounds like Pondering might have a bargain on his hands. I would be tempted by it. Tough call.

    Currently, I am waiting to buy but if I found a relative bargain I would likely go after it.

  58. coco,

    when the $CAD hits parity plus, what’s left of manufacturing in this country will get a rate cut.

  59. An

    Pondering:
    I think 80% of the advice and comments from this site are uninformed and fall into the ‘blind leading the blind’ post Rob had a month or so back, so take everything with a grain of salt (my own comments as well of course!)

    I also think there are drastically different considerations to be made with a house that you will own and live in (ie. your home) vs one that is bought as an investment.

    My feeling is that once you own a house and are in the market if it goes up or down matters very little. If the market goes up, it’s a good thing you got in when you did. If the market goes down the value of your ideal home will also go down proportionally.

    Hind sight is always 20/20 but I’m glad I am in the market now. Regardless of what happens with it going up and down I know I have a home now and if I want to move somewhere else in the city the value of the new home will adjust in-line with the value of my current one.

  60. fish

    Ne Investor Rob

    -9.3 for a drop in median asking prices is BAD, very BAD.

    here’s why. These are ‘asking prices’ in a dropping market, so selling prices are likely to be even lower (and will be lagging by several months at least)

    So we looking at probably a drop of 12% + when the Nov numbers are in.

    That will have erased the equity of a lot of buyers (probably most that bought in the last 3 years)

    With 2-4% inflation, that will mean owners have lost 14% in REAL terms over a year…apart from the fact that they have paid more than renting, paid taxes, up-keep etc.

    So if thery do their net position they may find they have lost 16% in a year between buying and renting.

    This is a major disaster there- the proof is the dozens of mortgage companies, some with 000’s of employees that have gone BK, the drop in consumber confidence. We have to see how deep this gets before the government tries (how though?) bail them out.

  61. coco

    Ceejay,

    I agree with your point.

    Some how I doubt he will lower on October 16 as that maybe too soon. He was slow to raise interest rates, so he probably will be slow to lower them too. Maybe the next meeting after that one Jan. 22, 2008? Just before he quits, yes that one would look better. A going away present.

  62. paul

    This Sept has so far been for the bears. Looks like by my count today we have 353 listings and 153 sales. Inventory is fairly low but sales are weak.

  63. Considering

    Pondering,

    I am one of the people who thinks this market is quite likely at a peak and has potentially a long way to fall. However, if you have a chance to buy a house that you can afford, that you would enjoying owning, and you can get it at a below-market price, I would tend to say go for it.

    The fact is that none of us can predict future prices with any accuracy, and certainly not 15 years from now when you may be selling. Buying a house should not be like buying stocks, because the key factor is not investment potential but your choice of place to live. Would you learn to enjoy the neighborhood? Would you love coming home to the house each day once you had done some renovations and improvements to make it your own? Those are the key questions. I would certainly not buy a place where I did not enjoy living just to “get in the market,” as you could get stuck for a very long time. My concern is that you seem to not feel too good about this place and are hoping to live in something different, so I would be careful not to let the below-market price determine you decision. If you like where you are renting better, then there is every reason to stay there and maybe put some money into improving the rental.

    My reason for pointing out the downside of the current market is that many people are greatly overextending themselves with 40 year mortgages that they can barely afford and are buying substandard places where they do not enjoy living. Those people need to think very carefully that they could be making a serious mistake that they might regret for a very long time.

  64. Snick

    “…many people are greatly overextending themselves with 40 year mortgages that they can barely afford and are buying substandard places where they do not enjoy living.” – Considering.

    It’s a real shame. I feel sorry (a little, at least) for people who do not understand how this “boom” wass such a pile of BS.

    The “little guy” will be the one who suffers. (as usual).

  65. Pondering

    I appreciate the comments so far.

    An, all is taken with a grain of salt. While the topic has been flogged to death in this city, I still appreciate the different view points expressed on this blog.

    With respect to there being a difference between buying a home to live in and buying an investment property, I completely agree. That said, unless you are wealthy to the extent that the cost of your home and its future value is not a concern, the high cost of a home in Vancouver means it is both a place to live and an investment. It is truly unfortunate but it is reality in a city obssessed with real estate.

  66. Ulsterman

    Out of curiosity i went to the For Rent tab on this site. 90% of the rental lists had “GONE, GONE, GONE” written at the end!

    This is one of the reasons real estate agents are disliked. As soon as i read this i wanted the market to crash and “Call Amanda @ Coronet Property Management Ltd” to get her comeuppance and the absurdly easy money gravy train to dry up. Grrrrr

  67. whybuywhenucanrent

    Pondering–

    Here’s 2 questions for you–

    1. What is the monthly cost between renting and owning? If, say, the house is $700K, that’s something like $5000/mo in payments, $1000 of which goes to principal. If you’re in a nice place on the West Side you’re probably paying something like $2000/mo.
    The kitchen and bath reno will add how much? $50K?
    So, savings in renting for the next 2 yrs is $2000/mo = $24,000/yr, plus $500 interest, let’s call it $25,000, or $50,000 in 2 yrs.

    Add to that whatever you’d pay out in realtor fees when you sell, if you don’t plan to stay in the house for more than a couple years. What’s a Realtor fee, $25K?

    And, the cost of owning the place for 2 months while you do the renos. That’s $8K in payments.

    2. How important is it to live in a place that puts a smile on your face? If you don’t care for the privately offered house, that’s a high cost to have–go for the next couple years coming home to a place that doesn’t tweak your fancy. Is that a problem, or will you get used to it?

    3. Do you have kids? Is it important for them to have a yard, a place where you can paint their rooms and such?

    4. If you’re not real excited about the house, I’d be real careful about buying it. It will cost a bunch in closing fees (anyone? Closing fees on a 700K house?), $10K in closing costs, $50K to renovate the kitchen to where you’ll like it, and you’ll lose $25K per year, plus 8K the first year. And you’ll shell out another $25K in Realtor fees when you sell. So if you buy, live in there for 2 years, and sell, you’ll be out close to $200K. If the kitchen job upped the value, subtract that. This is assuming a flat real estate market, which is as good an assumption as any.

    5. If you just wait it out another 2 years, you’ll have another $150K in the bank and be able to buy the house of your dreams, assuming a flat or declining market, or at least not another big bump in prices. In the meantime, you won’t have to worry about renovating a kitchen, living somewhere you’re not excited about, fixing drippy faucets, mowing the lawn, etc.

    **Note, all numbers are approximate, you need to nail down these numbers and do the math if you want to make an informed decision. maybe Rob will tell us what the closing costs are and Realtor fees. What were the closing costs for that nice place you just sold in North Van, Rob? How about the Realtor commission? **

    WhyBuyWhenUCanRent?

  68. Pondering

    In response to WhyBuyWhenUCanRent

    1. Your mtg. payment seems to assume no downpayment. The mtg. payments will be $2,600 per month. Current rent is $1,400. Renos will probably be $50K. When we sell, assuming things do not change, realtor commission is: 7% on the first $100K and 3% on the balance. I believe that is the standard. This cost is payable regardless, unless you sell privately.

    2. The place is not awful, it’s just not what we envisioned. Probably get used to it.

    3. Yes, it is an issue.

    4. Closing cost for a purchaser are Property Transfer Tax (1% on the first $200K and 2% on the balance – lets call it $10,500) , legal and land title filing fees of about $600.00. These are unavoidable. All the other incidental costs such as moving costs are unaviodable.

    5. I’m not sure what you mean by savings. Over two years, if we continued in our current situation, we’d probably increase our down payment between $70K to $90k.

  69. coco

    Pondering,

    Personally, I would not settle for a property based on price, if I felt I would not be content living there over the long term.

    A bargain price will not make you happy, unless you have peace of mind with security in the neighbourhood, the type of people that live in the neighbourhood, the type of neighbours you have, etc. etc.

    Best to check the area at different times of the day, night, weekends, etc. Friends of mine did this and discovered that the house next door had a loud garage band on the weekends that played for hours on end. Not great when you have little ones.

  70. coco

    A friend’s wife knocks on neighbours doors across the street when considering purchasing a house. Says, “We are considering purchasing a house in this neighbourhood, we have a little one and my husband works late sometimes? What is the neighbourhood like? Any problems with break ins, etc.?

    It is amazing what people will tell you.

  71. tqn

    Cut and paste:
    “And getting back to the original question – who is responsible for high prices? All buyers. Nobody has to buy real estate, and anyone who pays a price not justified by fundamentals (i.e. that results in payments higher than renting) is part of the problem. ”

    Speechless!

  72. M-

    Pondering, I’m in a situation not too far off from yours, even had a friend-of-a-family-friend who was offering a good deal on a private sale recently.

    The advantages of buying a private-sale deal now are basically peace of mind, the certainty that if the market continues to rise madly, you’ve already bought and you don’t have to worry about it.

    The disadvantages of the private sale deal is that you’re settling for something that’s less than what you want. Saddling yourself with high mortgage payments, and using your life savings as a down payment will basically eliminate your ability to save, which means that your only option in the future to upgrade is to continue to saddle yourself with high mortgages for (potentially) the rest of your life, possibly even into your retirement.

    No thanks! Every year we rent&save means another 10% that we can put towards a down payment. In a flat-or-down market, that’s a huge advantage.

    Another disadvantage is that real estate is ridiculously expensive to sell&buy. With our next place, we’re going to make a long-term purchase. No more buying a place to live there for just a couple years or so– we’ll be at the next place for a good long time.

  73. coco

    Northern Rock Bank runs into trouble in the UK, gets support from BOE (not involved in U.S. subprime)

    Experts urge savers not to panic
    http://tinyurl.com/2x8a64

  74. coco

    One year dip predicted in Greater Vancouver economic growth

    http://tinyurl.com/3bcndw

  75. Dude

    The market will correct. That’s a give. The time is now. The question is how much will it fall. Will it drop 50% or 60% from current market. And this is very realistic. Real Estate at half it’s current price is not cheap.

    Bears are out this winter.

  76. Grin and Bear It

    A correction is coming and it should be significant. When RE skyrocketed the way it did over the last 5+ yrs., it just seemed mind-boggling. The increases are insane and the current market is not affordable. It is shocking to see so many people over-extend themselves and become slaves to their mortgage. I think many people are negatively affected because they have to put most of their $ into their RE.

    In regards to this insane market and the proces: if it’s too good to be true…

    Kumbayah, mofo’s! πŸ™‚

  77. coco

    More…Carole Taylor speaks

    Province revises financial outlook (BC)

    http://tinyurl.com/28g8n5

  78. coco

    Dude,

    That is not a correction, that is what you call a crash.

  79. robchipman

    Jay:

    I own a property management company in addition to a real estate sales company (while you may not have been aware of that, its not news. I’ve talked about that many times on the blog). I have my company manage them.

    Ulsterman:

    Sorry about the for rent page. The fact is that rentals are flying off the shelf these days. Its really tough to keep them updated. Amanda of the gravy train money is my receptionist. You probably don’t really want to yell at her – she’s just trying to do her job! πŸ™‚

  80. coco

    Canadian Sawmills least profitable (BC & Que)

    http://tinyurl.com/3cdtw5

  81. An

    Pondering:
    Hopefully you like salt, you might need more than a grain with comments like “The market will correct. That’s a give. The time is now. The question is how much will it fall. Will it drop 50% or 60% from current market. And this is very realistic. Real Estate at half it’s current price is not cheap.” πŸ™‚

  82. tqn

    An,
    Does it mean buy one get one free? I like the sound of that…:)

  83. paul

    Numbers please? Today will be another for the bears.

  84. Spencer

    Wed/Thurs Numbers are being held back. Why may you ask? It’s Friday and why bother communicating negative trend information just before the weekend. 2-3 days worth of consistant data could negatively or positively impact the value of a potential offer.

    It is too bad there is no third party organization that regulates real estate listings and sales results without any conflict of interest. I am trying to think of what this organization business model would look like but each new idea reuslts with an eventual conflict of interest.
    Government -daily data would be molded to suit economy plan.
    MLS -daily data would be molded to suit Realtor needs (ie-Maximize Sale $$s)
    Private company-I cannot think of how a private company would generate revenue. Can anyone else?

  85. employed

    Rentals are going crazy because

    A. many people cant afford real estate anyomore

    B. renting is cheaper than buying in this city

    C. people who can buy but know better are choosing to rent

    D. People are selling to realize gains and choosing to rent until the market corrects in the future.

  86. Northern Ally

    Thurs. inventory 11474, up 396 or 3.5% since Tues.

  87. Northern Ally

    According to vannumbers but their numbers don’t correlate with this site, so forget it, we will have to wait.

  88. Spencer

    Thanks Northern Ally,

    I sometimes refer to a site: http://vannumbers.wordpress.com/ for the inventory daily numbers.

    I am also interested in the daily number of new listings versus daily sales. Another data point that I have never seen before is how many listings per year by address to beet the 90 day listing MLS rule. I have noticed several listings that have gone through several (3-4 times) rounds of the MLS 90 day listing game. Now, if I had the information that a particular lsiting went up for sale 3-4 times would that not alter the negotiation platform. Where is the tranparency in this industry??

  89. Dude

    An.

    You are totally correct. The market has started to correct. There is no question now. It has started. Even the bulls I know are believes the market will correct. They are hoping a 20% drop only. But I believe a 60% drop from current value will be very likely. That’s still not cheap. $450K for a new East side Vancouver Special is not cheap. $250K for a 2 bedroom condo downtown is not cheap. I wonder if we will have the worst Olympics in history. Great Depression

  90. Pondering

    Truck loads of salt. So much so the price of salt may rise.

  91. coco

    Dodge should of driven Canadian Interest rates up harder

    http://tinyurl.com/2zmegm

  92. robchipman

    Spencer:

    You wrote:

    “I have noticed several listings that have gone through several (3-4 times) rounds of the MLS 90 day listing game. Now, if I had the information that a particular lsiting went up for sale 3-4 times would that not alter the negotiation platform. Where is the tranparency in this industry??”

    The first point is that if you notice the occurrence, its not really hidden, is it?

    Second, any Realtor can provide you with the listing history of a particular listing going back years, with the click of one button. All you have to do is ask. And yes, it would alter your negotiation approach. And yes, a Realtor clearly owes you that information if they act as your agent. Take a minute and read the blue agency brochure that I have a link to on the blogroll – you’ll see its a clear agency responsibility.

    Now, since that otherwise personal and private information that belongs to the individual homeowner is available to you through an agency relationship with a Realtor who is a member of the Real Estate Board of Greater Vancouver, do you really have a case to make about lack of transparency? Where do you think vannumbers or paul get their info? Its pretty wide open.

  93. robchipman

    coco:

    Just curious: is Dodge doing what some of us said CBs would do? Talking a good fight but choosing inflation and liquidity over recession? (Again, I’m not saying they’re making the right choice. I’m just betting that they’ll flinch).

  94. coco

    Rob,

    Given those fighting words I would be surprised if we get a rate cut Oct 16. January 22 is the next scheduled one after that.

    Fed will probably cut 25 bbp on Tuesday and that amount will hardly be grounds for Dodge to cut, unless August inflation numbers come in lower, but those numbers are not out yet.

  95. coco

    Dodge strikes me as the wait and see guy. He was not quick to raise rates, so he may not be quick to lower them either.

  96. coco

    Don Drummond, Dodges potential replacement is a true and true inflation fighter though.

  97. Snick

    Phew!

    On tonight’s Global TV News, Finance Minister Carol Taylor has calmed fears about potential economic problems in a “feel good” piece about the robust BC economy…

  98. ObserverX

    Hats off to Dodge, I say, for admitting they may have erred in the past — if he’d only paid attention to some of us on the blogs, LOL. Now if only they don’t cave …

  99. coco

    Snick,

    Come on, you know Carole has to keep the property transfer tax rolling in.

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