Friday’s Numbers

Some of you won’t like this much.  Friday we had 151 new listings and 176 sales.  That’s a 116.55% sell/list.   After reading the comments on Thursday’s Numbers I’m not too motivated to share the details.  What’s the point? With a few notable exceptions the comments were, let’s just say “less than inspiring”.
Coco mentioned a news report on CMHC’s presentation to Realtors.  I was surprised to hear someone in that story say that real estate can’t go down in the near future because of the fundamentals.  I almost did a double take. His point was partially valid: land, construction materials, labour, development costs – all are rising and show no sign of abating.  As they rise the cost of the finished product also has to rise, or there won’t be a profit.  A simple, and partly valid point.  And, despite the obvious weakness in the logic, it does, I think, point to the key: as long as costs rise but buyers pay, prices will rise.  Friday’s numbers show that, as of now, buyers are still paying the costs. 

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124 Comments

Filed under Daily Numbers

124 responses to “Friday’s Numbers

  1. deb

    well Rob, I for one, don’t like these numbers, but I really do appreciate your posting them. Please don’t give up just because the mob is getting cranky.

    I think there are a lot of people like me who don’t much get into debate and arguments, but read this blog regularly.

  2. Markets are cyclical, housing is a market

    I think this is where Canada now traps in forein money through forein RE investers and immigrants.

    I am convinced that now Canada is raking in forein money!!! Canadians here that buy may not see this picture and when the tide goes out they will be dragged out with it!!!

    I comment here only to contribute to others thoughts so that we may come to a moderate conclusion of what is going on.

    I conclude if locals can’t afford it and like Rob said all costs are going p pushing homes even higher then the end must be allot closer than we probably know. This is frighting as well as exciting.

  3. -A-

    Sure Rob, cost push inflation right?

    Why are the some of the markets in the US imploding?
    Are building costs dropping in Alberta?

    Deflation in primary construction materials or cost of labour is something I have yet to hear about.

  4. Concerto

    Downtown Vancouver RE is now driven by international buyers – not sure if you can call them investors – why buy something on the otherside of the world just to get at best a very small rent return? No, these people are buying in the only place in North America that works for them, that is accessable for them in the long term. Canada on the Pacific.

  5. Wise Guy

    Those daily sell/list numbers are bogus and you know it. Quit head-faking the readers.

  6. DeeDub

    Those daily sell/list numbers are bogus and you know it.

    Then post the real ones.

  7. Thanks Rob

    Thanks fro the numbers Rob. I don’t hate them and i kind of like them. They are the numbers.
    I think prices will stabilize and/or moderately rise until and AFTER 2010 when the rest of the world comes to visit and like what they see. And now because i shared MY PERSONAL opinion i will get flamed by some of the idiots who post here. Because the market will collapse! they have been wrong for soooo long they have to be right now.
    Can’t we just all have differing options and leave it at that?

  8. Anonymous

    like what they see, ah yes the squalor. the number of homeless on the downtown east side is going to rise exponentially in the last three years before the olympics. I hope the olympics is a national embarassement to the world, i hope the city of vancouver is shamed at the squalor they have allowed people to exist then. i think thats the only thing that will finally the govt to do something about it

  9. Take my bottle

    The great thing about the homeless in Vancouver is that they collect returnable bottles and earn their own living. In Toronto, bottles are not returnable and therefore the homeless is more of an in your face thing because they are always asking you for money. When I moved here to Vancouver, I was pleasantly surprised to no longer have the homeless asking me for money… but instead asking me if my water bottle was finished as they would take it off my hands… so helpful… this really is the best place on earth.

  10. AmPa

    Just an anecdote I would like to share with you guys. You can take away any conclusion you want from it.

    Within our circle of family of friends, we know of at least 4 iranian families, all of home are heavily invested in real estate. Here are their stories:

    One bought a unlivable house but with duplex zoned lot last year in Coquitlam for $600,000, and this year is beginning construction. Besides that they own their own house in Coquitlam, a condo in Coquitlam and 2 presales in Maple Ridge.

    A relative of the above family last year completed a 16 unit town house complex in Maple Ridge.

    Another family has bought a multi-family zone lot, with estimated beginning of construction next year. Besides that they also own their own home, in addition to 3 pre-sales awaiting completion.

    Yet another family, also owning their home, sold couple of pre-sales in Burnaby last year. This year they bought 3 more pre-sales.

    Yet still another family, recently migrated here, owns their condo in Coal Harbour, plus 2-3 additional condos in the downtown area they recently purchased.

    Price in Vancouver are not cheap by international levels. But one thing I do know is that coming from Iran, mortgages are a foreign idea to Iranians. The rich from there come here and pay in CASH for real estate. Yes, they do come and pay cash for million dollar homes in West Van (anecdotes I have heard from realtors of that region). This is just as they do RE in Iran. Those that are open to experimenting with mortgages (unfamiliar investment tool for them) buy multiple residences but still put high down-payment.

    And all those people I mentioned above are not scared of a crash. They are willing to literally sit for years on their real estate. Coming from Iran, they know a thing or two about market cycles. One thing they are sure of (rightly or wrongly): RE is a hard asset that will always go up in the long term. My guess is that people from other parts of Asia also share this view.

    I do believe private foreigners drive this market in a major way unmatched anywhere else in Canada.

  11. TI

    Downtown Vancouver RE is very cold now.
    I follow many lowest price units (or lowest price per square foot) in different buildings over one year.
    Many of them sit on the market for a long time.

    They frequently withdraw and relist after couple months.

  12. asun

    Speaking of Downtown, I’ve not seen so many open house signs over the weekend for quite a while now. They’re literally about 5-10 open house signs on each tower that I walk by. Somehow MLS doesn’t show that many listings downtown…. hmm.. I wonder why.

  13. Annon

    At the peak of Japan’s bubble in 1991, total Japan RE is worth 4 times of all of US RE, on paper. 14 years later, the Japan RE still hasn’t recovered. My family’s properties in Asia are still ways off from the peak in early 1990. So there is a real life example that RE does not always go up even in a long term. Unless 15+ years isn’t considered long term.

    http://tinyurl.com/2av2za

  14. Strataman

    Annon; Correct me if I am wrong, but does not Japan have a virtual closed economy, where expansion is primarily outsources to other countries? Also is not immigration basically non-existant? Is not Japan’s population declining? Canada is still a undeveloped extremely large (physically) country, vastly under populated by European standards yet with identical physical, environmental conditions. I see no purpose in comparing the two as the basics from my point of view are totally differant.

  15. Strataman

    TI “Downtown Vancouver RE is very cold now.” Ever since I have lived downtown for 5 years this always happens. Have you ever seen a hot November December in sales here?

  16. Markets are cyclical, housing is a market

    AMPA,

    Nice comment, as my comment above…welcome your friends to Canada economic engine, it runs on immigrants and forein investment. Thus locking thier money here in Canada when a Canadian decides to sell their home to them. He then takes the money for further investment could be RE could be commodity stock, or wait for correction in RE.

    Currently the priced out Bears are the greater fools here for now though some Bears are not priced out but vacationing with their piles of doe from their own RE sale patiently waiting for a 10-20% drop. When the civic jobs aren’t filled and the rich won’t work them.

    Vancouvers entering the unforseen crunch.

  17. coco

    Canada’s W5 report on today’s housing construction

    Click on the video links “From Haven to Hell”

    (there is actually 2 video links, but it seems only one is working at the moment, can be a little slow to load at times, be patient)

    http://tinyurl.com/ysa4ak

  18. coco

    Canadian dollar peaks this morning 107.40
    but back down to 106.95 right now.

  19. coco

    More change…Ottawa considering five dollar coin

  20. coco

    Cooling B.C. economy demands as much action as global warming

    http://tinyurl.com/39eqky

  21. coco

    Hollywood writers go on strike….23,000 employed in Vancouver film industry….

  22. Anonymous

    Posted on last thread.

    “Wholesale sales in British Columbia fell for the second time this year, down 4.9% to $4.5 billion. Declines were widespread, with the most significant drops coming in the personal and household goods, building materials, machinery and electronic equipment and “other products” sectors.”

    In a healthy, booming economy this number would rise not fall. It’s like a little red warning light going off right now. I will let you know when the next stats come in and if this number continues to lose steam or reverses itself.

  23. blueskies

    yep, cranky bunch here

    the Olympics will not be the holy grail some are hoping for. At the moment even the 2008 Beijing Olympics have clouds over it, figuratively and literally.
    By 2010 energy costs will be such that the anticipated crowds may not be able to show up.
    2010 may be the first video conference sports venue.

    for today keep your eye on oil prices (google Mexico Tobasco oil and flood)

    and of course the credit crunch continues to unravel, unknown unknowns….

  24. TI

    Strataman” Ever since I have lived downtown for 5 years this always happens. Have you ever seen a hot November December in sales here? ”

    Thanks, you pointed it out.
    But sell/list numbers on this board didn’t reflect it yet.
    That’s what I confused.

  25. blueskies

    sell numbers could be two weeks old
    list numbers are current ie: this past weekend

    comparing apples and apple pie……

  26. coco

    Loan sharks circling?
    Some deals offered consumers resemble subprime packages.

    http://tinyurl.com/38gdcl

  27. coco

    Canada’s Bonds Rise on Concern Subprime Losses to Hurt Growth

    http://tinyurl.com/2t669l

  28. coco

    Canada Post confirmed yesterday the number of parcels coming into Canada from U.S. retailers is soaring. Deliveries of U.S. parcels in Canada jumped nearly 18 per cent in September, stretching postal warehouses in Toronto, Vancouver and Ottawa to the limit.

    Canada Post has had to add more staff and overtime shifts to deal with the deluge.

  29. jesse

    “Deflation in primary construction materials or cost of labour is something I have yet to hear about.”

    Rising material costs is weird considering the precipitous drop in housing starts in the US and the rising Canadian dollar should be producing an oversupply.

    “The rich from there come here and pay in CASH for real estate.”

    I’m not convinced this is any more prevalent in Vancouver than any other city in the world. Including ones that are quickly falling in market value.

    “it does, I think, point to the key: as long as costs rise but buyers pay, prices will rise. Friday’s numbers show that, as of now, buyers are still paying the costs. ”

    This is true. Of course if prices rise and buyers don’t pay, prices will fall. I don’t sense any significant fear in the Vancouver market so it’s not surprising that the market is treading water. People are willing to pay for owning a property with more of their incomes than ever before so maybe they know something I don’t or maybe they are systematically wrong (like the US, Australia, and New Zealand were, BTW).

  30. robchipman

    Jesse:

    “This is true. Of course if prices rise and buyers don’t pay, prices will fall”

    And that’s the whole point, right? As long as buyers are consuming the product, the sales will happen, and prices will probably rise. I think that contributes to the affordability case made by many: if mortgage rates increase, or incomes drop, we’re looking at falling prices. If those two things don’t change we may not have rising prices. If we get a stronger economy/more affordable lending, then we’ll probably see rising prices.

    So…whither CMHC, GE Capital, and other mortgage insurers? What do they have up their sleeves to make real estate pruchasing (through borrowing) more affordable?

    What things could make this economy stronger?

    If everyone is getting richer (as it appears) but the rich are getting richer faster (as it also appears), could that contribute to a structural change in real estate ownership?

    “People are willing to pay for owning a property with more of their incomes than ever before so maybe they know something I don’t or maybe they are systematically wrong (like the US, Australia, and New Zealand were, BTW).”

    Just asking, but, if bears can say “We’re not wrong, we just haven’t been proven right yet, give us time”, how can we argue that RE investors in other areas were “wrong” if they haven’t sold at a loss? I’m sure that some have, but contrary to what some on this blog think, I’ve spoken to real estate holders in Florida, for example, (Orlando area) who admit that the market there currently sucks, but who aren’t that concerned about it (despite having multiple properties). They’re looking long term. Can the shoe be on the other foot?

  31. /dev/null

    They haven’t sold at a loss but they also didn’t buy at a discount (if they bought recently). I think that’s the “wrong” people are suggesting, not the fact that they still hold RE.

  32. robchipman

    /dev/null:

    You’re right: if they bought recently they may not have a particularly valuable perspective. What if they bought say, 3 or more years ago? Different story? They could be holding deflated, cash flowing properties, right?

  33. Annon

    Strataman,

    HK population 6,980,412
    Taipei Taiwan population: 2,622,472
    Greater Vancouver: 2,116,581

    Do you know the rapid transit (Skytrain) system we are building in Vancouver just for Olympics takes a population larger than what we have to make it sustainable? Or more to the point, it needs a more dense population to make it economically efficient. So yeah, while Japan economy is a closed one, a bubble is a bubble whether the economy is closed or not. Over expansion is over expansion.

  34. coco

    Canadians fed up paying high retail prices and are flocking across the border in droves, ordering from U.S. online companies like it is going out of style. If you saw the news story on TV…Canada Post warehouses are chock a block full with U.S. parcels that are stacked up like a “Christmas” mailing rush now.

    Never underestimate the pull of purchasing power. People will always flock to the best buy, whether that is retail or real estate.

    B.C. Real Estate Association chief economist Cameron Muir stated half the condos sold in downtown Vancouver go to investors. So, one can’t help but wonder when U.S. prices hit bottom, if the pull to buy U.S. housing, just like retail goods, will shift.

  35. Grin and Bear It

    Coco, I was poking around the Blaine/Birch Bay area and checking the real estate there. They have a new development but I don’t know if I want to have a retreat down there. It’s not a great deal but our dollar makes it worth considering. Already bought cars etc from down there why not RE. The US dollar timbled a bit more and should tumble even further (as some predict). We shall see.

    Local RE still makes no sense but many things don’t make sense. Why people will stretch themselves so thin is beyond me. What’s more shocking is how they continue to buy when various economies around them continue to tumble. I would buy right now but I really think there will be a significant downturn in the near future.

    Finally, please don’t blame the bears if you are kicking yourself for not buying 3 years ago. I have always said if the numbers make sense then what’s stopping you. Each person has their own unique circumstances. If I could buy something now and not devote 70% + of my income to it then great. Unfortunately, that’s not the case for me and many others. 🙂

    Beware the Bear!

  36. coco

    Always best to buy stock or real estate when very few people want it.

    Like American Airlines stock after 9 11

    Or…. gold when it was $300.00 per ounce

    Or….. real estate here from 1996 to 2001

  37. jesse

    “If we get a stronger economy/more affordable lending, then we’ll probably see rising prices.”

    There is cause to think prices can stay high for a while. If this is true then Vancouver is unique and personally I cannot really see the difference between Vancouver an other places that have falling prices (not just in the US). What someone who buys now is betting on is that local wage inflation and financial innovation will help improve affordability and keep prices high or that things will remain unaffordable going forward and this will be the norm. All I can say is that a bet on the uniqueness of Vancouver, with fundamentals stretched as they are, seems risky. Even long-term holds will need to tack on many more years of appreciation to recover from a 40% dip in prices.

    As for relying on most people being in the black even with a 40% correction, well, that tells you how far things can fall without most people caring all that much.

  38. Varnadeva

    For those interested,

    I suggest an interesting read: Irrational Exuberance, by Yale economics prof Robert J. Shiller.

    For those that think that real estate always goes up (has gone up long term), think again. This is just not so. Inflation is a key factor here…

  39. Keith

    Coco,

    There is fundamental difference between mortgage industry in Canada and the US.

    In Canada, we do not have adjustable rate mortgages with low interest for the first year or two.

    We also have an influx of immigrants to Vancouver.

    Therefore, you can not predict housing condition in Vancouver by what is happening now in Cleveland, Ohio.

  40. Take my bottle

    Keith, the RE meltdown is a global reality. Prices increased too much everywhere globally and now every single market is slowing down… some more than others as timing differs by location.

    What people try to do is look to other markets to see how much pain is happening as a sign of what will eventually happen to their own market.

    It is sound judgement to get out of frothy markets before the general population heads for the exits in droves.

  41. coco

    Keith,

    I have no idea what your talking about. I have never stated or predicted U.S. housing conditions in Vancouver. I post articles to both Canada and U.S. real estate market that is all.

  42. Sky Towers

    Clear sign that the market has topped… Sky Towers sold out over the weekend… let’s watch the market fall really hard as of today.

  43. blueskies

    Keith:

    article last week in Globe and Mail

    In Canada 60% of all mortgages both new and renewal are for more than 25 years.
    40% are for 40 years and 20% are for 30 -35 years.

    something to think about!

  44. Annon

    Just a side thing, Ron Paul will get rid of US Federal Reserve Bank. He (and many other economists) believes the bubbles (stocks, commodities, and RE) are created by inflation (real definition has it that government prints too much money/credit) and government always tries to solve bubble problems with more printed money. And you know printed money can’t solve problems created by printed money itself. While it seems like a long shot for Ron Paul to be a US president but it’s good to see that at least some do see the eventuality of fiat money going to zero value and wanted to do something about it. If you Google Ron Paul, he’s the most accessed search entry online. His fund raising is top 3 right now.

  45. Priced Out

    How come we haven’t seen the October stats for Metro Vancouver and the Fraser Valley?

  46. Keith

    blueskies,
    coco,

    I do not see why they are promoting the 40 year amortization loans here. Do we really need them?

    If you get a 400k mortgage at 5.99% today for a 5 year term, you pay $2,177 per month.

    After 5 years, the balance is 386k. It means you pay 116k interest and only 14k towards principal.

    If rates go up to 7.99%, for a 35 year amortization, the payments are $2,702 per month!

  47. coco

    Update on my house offer….

    The owners stated they would invite me back when the rot repairs were taking place. As we did not know the extent of rot on the house.

    This did not happen, instead they covered up the rot with fresh paint today.

    I assume the contractor told them that the rot could be minor or major and they decided not to pursue fixing the rot because of the unknown cost factor.

    They also stated that if I put in a new offer I could “not” use the same home inspector. Maybe they hope the second inspector would miss the rot the first one caught? What a joke.

    As they say, buyer beware.

  48. coco

    Needless to say, double dead deal period!

  49. coco

    Lesson learned…fresh paint is not always a sign of a good house.

  50. Priced Out

    coco, your experience shows there are no deals period. If it looks like a deal, there is some hitch. I’m sure the Sky buyers will learn that soon enough.

    My little brother is not buying, I’m happy to say. For now, he has moved into our folks basement to learn to save. He had to leave a disaster of a rental building, and I think the rotten experience as a renter made him want to buy.

  51. Disbelief

    Something is definately brewing and its not just the slow season garbage. There are plenty more open houses that the so called hot seasons. Not sure if its the rush to the exits just yet. You simply can’t compare FLA to Vancouver, Florida is a real destination for retirement or vacation worldwide. Florida is a good investment that will pay off but timing is everything. When you think it has hit bottom buy and hold. Only idiots buy at the top and hold. The smart money has bought and sold in Vancouver already but don’t worry the cycle will repeat itself. Just ask Rob if he is honest he will even tell you. Or maybe just spin it and sell you something today…. ” Buy now or be priced out forever….”

  52. Jeff

    I found a deal over the weekend and almost bought it… the only thing that stopped me was that I’m a bear. I thought… wow… if I am actually considering a purchase now… this market must be headed south soon. I would consider this a case of the last bear finally giving up and buying. So I guess that’s it, the market must be over… so I decided to pass on the purchase and to let the suite fall back by 50%. Maybe then I’ll reconsider the market fundamentals.

  53. coco

    Priced Out,

    Years ago, I was told by a reputable contractor that there are just as many leaky homes as leaky condos in Vancouver. They are just covered up more often because they are privately owned. So true, considering what happened to me with this offer. As I mentioned before, if anyone ever saw this house, no way would you even think it had rot problems. A good inspector can save you a lot of grief.

    Glad to hear your LB is saving. Leaving a rental disaster is a lot easier than leaving a owned home that can become a disaster to fix.

  54. abc

    Coco, thanks for sharing your house offer experience. It was a real eye-opener for me; much learned.

  55. coco

    abc,

    Your welcome.

    It was an eye opener for me too.

  56. Jeff

    Coco, you are a unique purchaser. Most buyers out there are hiring inspectors but not listening to them. They merely are using them as a matter of recommendation from their Realtor. In almost every case the buyer will go ahead with their purchase regardless of whatever the inspector says.

  57. coco

    Went to look a few houses on Saturday. Realtor carrying on how well this all brick house was built.

    Walked out on the enclosed sunroom and it was leaking onto the inside floor from the exterior brick.

    I like rain, shows me where the house is leaking faster than my inspector.

  58. Strataman

    Annon; “So yeah, while Japan economy is a closed one, a bubble is a bubble whether the economy is closed or not.” Never said it wasn’t, in fact it is much worse then Japans, just said Japan and probably Germany are two countries who may not have these wild bubble bust swings anymore (thus are not accurate comparisons), I think Florida is far more accurate as a comparison, what do you think?. My feelings are that real estate that is slow going either way up/down is the healthiest economy. And your dead on right about sky train!

  59. coco

    Jeff,

    I’m amazed that people put more time and research into purchasing a stereo or plasma TV than choosing a house which costs a lot more. Priorities are mixed up, if your not concerned about the structure of your house as repairs can cost you a mint.

  60. robchipman

    Coco:

    Wait, I thought you had a great lowball deal…:-) A guess there was a reason why they accepted it to begin with.

    Priced Out:

    “How come we haven’t seen the October stats for Metro Vancouver…?”

    Probably because this is only the 3rd working day of the month.

  61. Geezer

    Coco wrote:

    “Never underestimate the pull of purchasing power. People will always flock to the best buy, whether that is retail or real estate.”

    Sky Towers put 900 suites on the market and sold them all over the weekend. That seems to prove your point Coco.

  62. coco

    Rob,

    Great deal? Not…if they knew about the rot from the start. (yes, you may have a point there if that is the case, but only the owner knows for sure)

    Great deal, if it was repaired properly, yes.

    Great deal, if covered up with paint? Nah, feel sorry for the next buyer.

  63. Anonymous

    A long shot for Ron Paul to be president… That’s one way of putting it. He has no chance. Or to put it another way he has the same chance of being elected as Vancouver real estate has of not dropping drastically in the next few years.

  64. robchipman

    At least Ron Paul sees eye to eye with Maude Barlow about a few things. Go figure!

    Coco:

    You’re correct. If it was something that it wasn’t, the price would have been great. Mind you, if that were the case you probably wouldn’t have gotten the great price. The next time someone says “Just lowball ’em”, and the Realtor says “Chances of success doing that are low”, let’s not remember your experience as a case study in success. You avoided buying a stinker, but at the same time you didn’t get any kind of deal by lowballing. All it got you was closer to something that you didn’t want.

  65. An

    blueskies
    “In Canada 60% of all mortgages both new and renewal are for more than 25 years.
    40% are for 40 years and 20% are for 30 -35 years.”

    Perhaps not applicable to >25 year mortgages due to extra fees, but when I had extra money last year my accountant recommended not using that money to pay down our current 25 year mortgage. As he says mortgages are the cheapest money you can get… maybe some of those long terms are along those lines too.

  66. Annon

    Strataman,

    I wouldn’t mind at all seeing the Florida kind of RE events taking place in Vancouver. So far, Vancouver has been quite resilient. I can not stress enough to friends and family that if they really have to buy RE today, just make sure that they are not stretched in any way. Warren Buffet sold his house before the RE downturn and moved to a much smaller house in a smaller city. Here are some boring numbers and you probably know better than me. If RE increases a mere 6% year, it takes 12 years for a house to double in price. As of now, the home ownership percentage is about 65~9%. Which means, to maintain the ownership percentage, in 12 years where RE doubles, some people will have to pay twice. But I do not see wages getting a 100% increase in 12 years. Which means that the percentage of ownership will have to drop or the RE price has to drop.

    Regardless of what the bulls say, and like other well positioned bears, I am quite comfortable and happy where I am. And the downturn is inevitable. I don’t think anyone in the world has seen a market that does not correct. Gold was once at $800+ USD per ounce and who would have believed it was then traded at a mere $300 per ounce. At any rising market, it’s just hard to see or believe it can turn south. I mean I have been shocked many times to see how much less skilled people are getting hired like the employers couldn’t find people fast enough to fill positions.

  67. deb

    I saw a nice little house in one of the coastal towns we are considering for our semi-retirement. It has a good view, but the price is steep. I thought I would wait for the price to drop. Today realtor called and said an offer is coming in and if I want I could offer too.

    I thought about it, but we have waited a year for some action and in many ways it would be sad to buy now. The house is not perfect and we haven’t even seen it, it just seems good.

    But I am giving it a miss.

  68. Reknab

    I work for a BIG bank in our western Canadian approval centre. Mortgage application volumes are at the lowest they have been in the 4 years I have been there. I would say the volumes now are less than half what they were during busier times, in fact we have let some agency workers go as there was just not enough work for them.

  69. robchipman

    An:

    There is some sense to not paying down a principal residence mortgage, in that the money is very cheap and you could use the cash for an alternate investment. At the same time, paying off your mortgage means no more “rent” each month, and it definitely makes things easier. Also, once you pay off your house (or a portion of it) you can mortgage it to a comfortable extent to fund other investments and write off the interest (you still get cheap money, plus the write off).

    The paydown and re-mortgaging would have to be big enough to make it worthwhile, and likely you’d have to be able to clearly separate what was borrowed for your home (the original mortgage minus the paydown) and what was borrowed for the investment ($X), but there are ways to do that, and again, you get the two benefits – cheap money and tax write off rather than simply the cheap money. I’m not absolutey certain (especially if CCRA was strict and you needed an audit worthy paper trail), but I suspect a re-advanceable mortgage would do the trick. Ask your accountant. Pay $100 down on the mortgage principal, borrow it back, and invest it.

    Deb:

    If you don’t need the house now, I wouldn’t panic, assuming you have some other participation in the RE market. Today the Realtor is calling you because you’re a prospective buyer and he wants top dollar for his seller. A better situation is for the Realtor to call you because you are a certain buyer for him, provided he finds you something suitable. Tough job for him now, because there are (relatively speaking) more buyers than sellers. Its good to have listings today. Its a tough job always because buyers are less loyal, generally speaking, than sellers (among other reasons sellers are almost always bound up in a contract).

    Find a good buyer agent (someone who will be around in a few years and who you like) and provide commitment and loyalty in return for their energy and expertise. When the market/economy turns you’ll get a pay off. They’ll call you to say “There’s a good listing here and the offer on it fell through. The seller needs to go, and they need a buyer. Come up on the weekend and let’s have a look”. You’ll like getting that call a lot more than the invitation to compete.

    Until then, patience. (If you’re not in the market now you’ve got a tougher battle ahead. You need to explore some alternatives and look at the timeline. And don’t forget a somewhat grim, but overlooked retirement investment risk: you may live longer than you plan, and you may run out of money as a result. That’s a concrete risk to be added to dropping values, low returns or inflation).

  70. anonymoose

    Rob,

    does the owner of the house with the rot now have a legal obligation to disclose the issue to future buyers?

  71. Anonymous

    Geezer quoted me….
    “Never underestimate the pull of purchasing power. People will always flock to the best buy, whether that is retail or real estate.”

    Geezers stated…
    Sky Towers put 900 suites on the market and sold them all over the weekend. That seems to prove your point Coco.

    Maybe, maybe not, I’m not familiar with this property so I’m not sure if it had an attractive price point or not. People flock to real estate hoping it will appreciate as much in the future as it has in the past. There is a difference buying on wishful thinking that the price will go up and finding a property that is good value for its price.

  72. coco

    Ooops, that is me above.

  73. coco

    Deb,

    Sometimes those “offers” coming in don’t materialize. Even if the offer comes in, it may not be accepted either.

    I have heard it all, second & third showings maybe an offer coming in, are you going to put an offer down as another offer is supposed to be coming in, etc. sometimes they materialize and other times not.

    Houses are like buses, miss one and another one will come along.

  74. coco

    Fraser Valley Oct. Stats are out

    http://tinyurl.com/yuge48

    (I expected White Rock detached to jump, as a 1.6 m dollar house sold near my friends house, so that skews the average)

  75. paulb

    Fraser valley stats pkg is soooooo much better than the REBGV one. Such nice charts

  76. coco

    No need to worry, subprime only estimated at one trillion and growing. The highest amount of arms start reseting next year. As they say, “you ain’t seen nothing yet”

  77. LesserApe

    The next time someone says “Just lowball ‘em”, and the Realtor says “Chances of success doing that are low”, let’s not remember your experience as a case study in success. You avoided buying a stinker, but at the same time you didn’t get any kind of deal by lowballing. All it got you was closer to something that you didn’t want.

    So let’s take the same situation without lowballing. If coco had offered a non-lowball price, would the seller have turned him down? Hmm, probably not. So he’d be in exactly the same position if he’d offered more money, but in the event that the inspector hadn’t found anything, he would be worse off.

    In fact, maybe the lowball acceptance increased coco’s awareness that something could be wrong with the house, and made the inspector particularly vigilant. In that case, the lowball was definitely a success (well, except for the realtor and seller, but I think that the buyer should be looking after his own interests first.)

    So, though you seem to poo-poo it, it sounds like the lowball offer was a great success for coco.

  78. tqn

    October housing sales consistent with record highsVancouver, B.C. November 5, 2007

    – The Real Estate Board of Greater Vancouver (REBGV) reports that total
    residential sales reached 3028 units in October 2007, an increase of 11.2 per cent compared to 2,722 sales in October 2006, and a 2.3 per cent decrease compared to the 3,099 units sold in October 2005.

    Property listings remain relatively unchanged compared to last year’s levels, with 4,819 active listings at October month-end, compared to 4,862 last year.

    “This is only the fourth time in 25 years that sales have surpassed the 3,000 mark in the month of October,” says REBGV president Brian Naphtali. “What we’re seeing is a buoyant market fueled by strong demand from both first-time and repeat buyers.”

    “The economy is healthy,” Naphtali says. “There’s virtually no unemployment. Interest rates are steady. These are all factors affecting the continued strong demand for housing.”

    According to Multiple Listings Service® (MLS®) data, sales of apartment properties increased by 17.4 per cent to 1,368 sales in October 2007 compared to 1,165 sales in October 2006. The benchmark price of an apartment property in Greater Vancouver, calculated by the MLSLink® Housing Price Index, is $371,418, up 11.4 per cent from one year ago.

    Sales of attached properties increased by 11.7 per cent in October 2007 to 527 sales, compared to 472 sales in October 2006. The benchmark price of an attached unit is $454,645, up 10.8 per cent from a year ago.

    Sales of detached properties increased by 4.4 per cent in October 2007 to 1,133 sales, compared to 1,085 sales in October 2006. The benchmark price of a detached unit is $730,022, up 12.2 per cent from last year.

  79. News Flash

    Looks like October was another stellar month for Vancouver real estate…

    Volume up, prices up, inventory down.

    On another note did anyone see the CMHC housing forecast report for 2008? They forecast 50,000 net migration to BC in 2008. That is about double what we had in 2003 and the most in the past 5 years.

  80. blueskies

    http://tinyurl.com/25bhkz

    heads up!
    it was contained
    now the “containment” is spreading

    your quintessential “oh sh!t” moment……

  81. Annon

    Anonymous,

    I wouldn’t go as far as saying Ron Paul has no chance. In fact he has much better chance than any candidate other than the top two. And he’s growing more popular day by day. It’s hard to say.

  82. vancouver part owner

    ????? heads up??????

    US banks lent money to very high risk people.

    can anybody prove which Canadian banks are in the same category?

    NONE

  83. /dev/null

    Newsflash said “Looks like October was another stellar month for Vancouver real estate…

    Volume up, prices up, inventory down.”

    Wasn’t the detached benchmark $737,927 in the October report? If it’s $730,022 now it would seem that prices are down.

    Apartments were unchanged (Oct: $371,718, Nov: $371,418).

    Townhouses were up though ($452,944 -> $454,645).

    Am I reading these numbers wrong? Or are townhouses and YOY comparisons the only valid data points?

  84. abc

    Sept housing GreaterVancouver: “The benchmark price of a detached unit is $737,927”
    Oct housing GreaterVancouver: “The benchmark price of a detached unit is $730,022”

    Time will tell if that was the tide turning.

  85. abc

    /dev/null, once YOY goes negative, some bulls will use DOD (decade over decade) and declare prices up.

  86. Jeff

    Those price numbers are ugly.

    Where were they released?

  87. Mightymouse

    Reknab,

    “I work for a BIG bank in our western Canadian approval centre. Mortgage application volumes are at the lowest they have been in the 4 years I have been there. I would say the volumes now are less than half what they were during busier times, in fact we have let some agency workers go as there was just not enough work for them.”

    That’s interesting I like hearing this kind of trench report.

    As far as October numbers. Could it be possible that the sales volume is up because mortgage rates went up and people cashed in on their locked in rates?

  88. coco

    vancouver part owner said,

    “US banks lent money to very high risk people.”

    “can anybody prove which Canadian banks are in the same category?”

    “NONE”

    The following Canadian banks have U.S. subprime exposure:
    CIBC
    BMO
    National
    HSBC
    RBC

    Subprime losses will be reported at the end of this month for Q3 and the following quarter , so it is premature to make statements on what risks the banks took until you see the numbers.

  89. coco

    Canadian dollar peaks overnight at 108.23, trading at 107.81 now

    Oil at 96.25

    Gold shines 825.20

  90. Warren

    /dev/null

    I think YOY is still the most important due to the seasonal nature of RE. But a decrease is a decrease, time will tell. I wonder if we will see a few months of detached decreases before they spread to other areas. The end is near! Now where’s my sandwich board…

  91. coco

    Once the darling of the investment world, CIBC is paying for its romance with U.S. debt.

    http://tinyurl.com/yp2gef

  92. Anonymous

    vancouver part owner,

    Your understanding of the situation is limited. It is not a subprime problem, but a price problem. These loans were turned into assets and leveraged to create more loans. As house prices drop, people walk away as they are underwater (this happens if they are prime,subrpime, jumbo, alt-a or whatever other category they fall into). This hits a banks balance sheet like a ton of bricks due to the leverage. Banks use other banks as hedges. Other banks are having the same problem, so cannot answer the hedge. Subprime just happened to be the first segment to drop.

    Another heads up.. The Bank of Japan may raise rates soon. Thats a major change. Goodbye carry trade and source of global asset bubble.

  93. coco

    B.C. economy rolls along but forest industry takes hit from rising loonie

    http://tinyurl.com/32utho

  94. coco

    Hollywood writers strike hurts industry in Vancouver

    http://tinyurl.com/2sfn7u

  95. coco

    Ford And Honda Jump On Higher Loonie Rebate Bandwagon (follows Chryslers led)

    http://tinyurl.com/2fk8bh

  96. coco

    Canadian banks still fearful lending to each other rate is 4.75%. BoC will probably inject more $$$ into the system this week to get the rate back down to 4.50% Credit crunch lives on.

  97. coco

    Correction…

    The overnight Canadian Libor rate rose to 4.7850 percent from 4.7217 percent on Friday. The Bank of Canada targets 4.50 percent for the overnight rate.

  98. coco

    Canadian dollar now trading over 1.08

  99. Markets are cyclical, housing is a market

    Go coco Go!!! It’s your comments verse CHMC!

    It’s like whatching a war off attrition, so far CHMC has less to say but is winning by today’s high RE costs.

  100. Tony Danza

    Well bears it’s over, the bulls are victorious! Newsflash, Anonymous, Geezer, Vancouver part owner, et al (yes even satv deserves an honourable mention) have through their deft application of the last four years of data vanquished the market cycle. They have proven that Vancouver real estate can only continue to rocket into the stratosphere and beyond. Land really is running out, everybody really is moving here, the baby boomers really are going to live in three condos each, rents are tripling as I write this and Vancouver really has decoupled from the rest of the world. I only wonder which Ivy League B school will be the first to set up shop in Vancouver to study our infinite upward growth that is unconstrained by the market forces that have been in operation for millennia. If only the Romans would have had our incredible knowledge and market prowess, imagine how wonderful the rest of the world could have been!

  101. coco

    Markets are cyclical,

    Go coco go? It was me that posted the CMHC info link in the first place. Read Rob’s comments on the start of the thread.

    Lets try to get this straight…I post news…most people find it interesting to read as a lot of bloggers stated that. I don’t consider myself a bull or a bear and you will see me post news about everything whether you believe it is bear or bull information. I’m not biased.

  102. blueskies

    Well bears it’s over, the bulls are victorious!

    that’s right! the bulls spend so much time patting themselves on the back they are getting carpal tunnel syndrome….. 🙂

  103. robchipman

    Lesser Ape:

    I think you need to think that through a little more. Start with the goal. What is a succesful transaction? Continue thinking through whose interests are being promoted, and how, really, the buyers and the buyer’s agent’s interests substantially diverge.

    I say: don’t expect lowballs to work often or easily, and don’t use Coco’s experience as justification that lowballs work often and easily. Go into them with your eyes open. There are more potential pitfalls. Coco’s experience does, in fact, tend to prove this on many levels (and remember that I called it before she discovered the problems).

    You’re saying (and I admit I’m throwing a bit of spin on your words, but its all in fun): lowballing is successful because your Realtor will get you into a bad deal in order to earn a commission, (you can’t trust them because they’re greedy), but lowballing may motivate your inspector to actually do his job (you can’t trust inspectors normally, because they’re either lazy or stupid), but with a lowball you get out of more transactions.

    It reminds me of the story of the swamp and the alligators. Its worthwhile to actually learn some more about the game and then keep your eye on the real goal. If your Realtor and inspector can’t be trusted, get new ones. Then make one smart deal instead of avoiding 2 bad ones. You’ll be further ahead.

    (BTW, this should not reflect badly on Coco – I think she’s demonstrated time and again that she doesn’t avoid doing homework and she uses her head).

    anonymoose:

    ” does the owner of the house with the rot now have a legal obligation to disclose the issue to future buyers?”

    Its looking more like it, based on coco’s info, but it hinges on what they actually know (which is another way of saying that right now we’re basing this all on hearsay by way of coco, and so can’t make an effective decision). What is true is that sellers must disclose latent defects (those not readily apparent) that are know to them. Whethr these guys must disclose clearly depends on how effectively their knowledge of the latent defect can be demonstrated. Suffice to say that based on coco’s info, if I were the listing Realtor I’d have a new goal: full disclosure! After all, there’s nothing wrong with selling a grow up, leaky condo, or condemened building…provided the buyer knows what he’s getting.

  104. coco

    Rob,

    They got two contractors to give them quotes about fixing the rot problem. Since they chose not to open up the rot, can they avoid disclosure or claim not to know? Or..can this situation set up the realtor and owner for lawsuit, if this is not revealed on the disclosure now.

  105. robchipman

    coco:

    Can the owners avoid disclosure? Of course they can. Let’s assume the know everything about the latent defect and its exactly as you describe it (so we’re now in the realm of the hypothetical, and not talking about those particular owners). All they have to do is lie. Their success depends on how well they lie.

    Does it open them up to a lawsuit? Absolutely.
    But, its easier for them to avoid the fallout.

    The Realtor is another story. The concept of “knew or should have known” applies. He can know or not know, lie or not lie. Doesn’t matter. By virtue of his licence he has a standard of conduct that he has to meet. Failure to do so means he faces the consequences.

    The old story regarding disclosire for Realtors is “when in doubt, spill your guts”. After the dust settles, what can the Realtor answer when asked “What did you do when a buyer agent told you they weren’t removing subjects after an inspection reveled latent defects? What about when you saw the actual written report signed by the inspector? What about when you saw the contractors open the walls and discover the rot? What about when the owners discussed the repair quotes with you? What about when you offered the original buyer a second chance to offer in light of the latent defect? Even if you’re a complete moron, how can you not have known about some sort of latent defect? And if you had any doubt at all, why didn’t you spill your guts or drop the listing?”

    Those are tough questions to answer. There may be a way out for the Realtor, but I suspect that E&O wouldn’t fight the case.

    What would I do as listing Realtor? That’s a personal position, but I’d spill my guts or get out of the agency agreement. The former course of action is best for all concerned. The latter is a safe second prize for me should the sellers ignore my advice.

    Here’s an interesting question: If they go back to you, do they have to disclose or do they say that you already know, so disclosure has been effected?

  106. coco

    Thanks for the info, Rob.

    “Here’s an interesting question: If they go back to you, do they have to disclose or do they say that you already know, so disclosure has been effected?”

    Lets see how I do answering your question.

    They can say I already know, so disclosure has been effected. But…..say if their contractor found other problems during the fix the rot quote process, then they would have to disclose that.

  107. coco

    Of course, the above depends on integrity of the owner and realtor.

  108. robchipman

    Coco:

    LOL! That, of course, is exactly the answer we came up with while discussing your scenario. Inspector says “There’s rot in the wall” and the sellers discover additional rot in the floor, they clearly don’t have to disclose the wall rot, but the floor rot is a different story.

    But, what if the inspector says “Rot is extensive”? And what if the Realtors include the inspection as part of the contract (“…attached to and forming part of…”) and refer to it as additional disclosure? The buyer better make sure they know what they were getting with the inspection, because its become a much more powerful document. Extensive rot doesn’t stop at the wall, and the owner could argue that the rotten floor, roof and foundation were disclosed in the inspection report.

    Again, from the Realtor’s perspective, when in doubt spill your guts. If your Realtor does this to you, recognize it for what it is (an abundance of caution and a wise business practice, not necessarily a definitive description of what’s wrong with the house).

  109. Anonymous

    NewsFlash.

    “On another note did anyone see the CMHC housing forecast report for 2008? They forecast 50,000 net migration to BC in 2008. That is about double what we had in 2003 and the most in the past 5 years.”

    You see, this should be more of a cause for alarm than glee for you bulls. There is no upwards trend, there’s no real reason to believe the trend will jump upwards and yet the CMHC is calling for a massive increase.

    I think this just shows that they’ve become a propaganda machine for the current government, their purpose has changed from helping Canadians find affordable housing to keeping the picture looking healthy until the next election.

  110. jesse

    “They forecast 50,000 net migration to BC in 2008. ”

    There is a possibility that recent migration in the past year has been higher than in the 5-7 years before and this could support the market to some degree. The most recent population stats are typically out of date by months or a year.

  111. Priced Out

    Except rich Albertans, who can migrate here? Why would you move here from Winnipeg or Sudbury or Halifax? Our jobs aren’t any better and cost of living is much higher. I question this migration forecast. Maybe its all to the Peace country?

  112. coco

    Here you go…Stats Can Immigration rates by province.

    http://tinyurl.com/2e3p2b

    “Every province “except” Ontario and British Columbia received more immigrants in the fourth quarter of 2006 than in the same period of 2005. In particular, Prince Edward Island had a record number of immigrants in the final quarter, and Nova Scotia, Manitoba and Saskatchewan posted their highest levels of immigration since the 1970s.”

    (Seems migration follows housing prices)

  113. Priced Out

    Hmmmm, so people are starting to leave Alberta for BC (and Sask). Interesting.

  114. Priced Out

    coco, thanks for the link

  115. coco

    Canada’s population estimates
    As of July 1, 2007

    http://tinyurl.com/28efd5

    (mentions migration & immigration)

  116. Priced Out

    So BC grew 60,000 in one year. A little over half of that goes to Metro Vancouver. Households average a little over two people. Take away that some of the population growth is new born babies. So the needed growth in housing units was perhaps 10,000 for Metro Vancouver. We are building a lot more than 10,000 units per year. I’d guess over 30,000.

  117. coco

    Priced Out,

    Remember that Muir stated that 50% of Vancouver condos are bought by investors. And..that is only the condo rate, what about townhouses and houses, other areas of the Fraser Valley, etc. ?

  118. Priced Out

    So is nobody going to live in those condos? We no longer have 20% appreciation, so you’d think they’d need to rent them out. I know there are still some rich jetsetters but not that many.

  119. coco

    I wonder what happens when the speculators/investors move on to their next ventures? Some of those U.S. real estate prices might start to look pretty attractive sooner or later.

  120. LesserApe

    Actually, I don’t think the buyers and the buyer’s agent’s interests substantially diverge. All I was arguing was that the outcome was a successful result for Coco. The success criteria shouldn’t be “I bought something”. It should be “I bought something I wanted for a price equal to or less than I wanted to pay.”

    That might (should?) mean that most of the time, a transaction won’t happen. When I’m researching stocks, I buy probably 1% of the stocks that I look at. Finding something wrong with the other 99% doesn’t make them a failure. If I find something wrong with a stock, that’s a success. It means I avoided a bad outcome.

    As for the realtor/inspector doing purposefully bad jobs, I don’t believe that. However, I would hope that my realtor and inspector will use all the available evidence when making a conclusion, and I consider the selling price a very important data point. I have no idea why someone would not want to look for an explanation for an anomalous piece of data like an unusually low selling price.

    That said, I think we’re kind of saying the same thing, but approaching from different directions. We both want a smart deal. You implied that somehow this example shows that lowballs are bad. I think that this example doesn’t show anything like that.

    OTOH, if you said, “Because of a lowball, you missed out on buying a house that fit all your criteria — including price — perfectly”, then I would argue that is a reasonable example of the problems with a lowball bid.

  121. robchipman

    Lesser Ape:

    What part of “best price, least time, minimum of inconvenience” turned into merely “bought something”?

    “That said, I think we’re kind of saying the same thing,…”

    Pretty much. You’re saying look at 100 stocks in order to buy 1. I’m saying buying 1 good stock is success. Looking at 99 losers isn’t success. You may need to do the 99 to accomplish the 1, but you’re still looking for the 1, not the 99. (You can argue that its the journey that matters, not the destination, but in this case I think we can agree that speedy arrival at the destination will provide us with the chance for much more interesting journeys).

    I didn’t, and don’t imply that because of coco’s deal all lowballs are bad. I explicitly said do not use it as an example of why lowballs are good. Lowballs are good if they accomplish your goal. They aren’t good if they do something irrelevant.

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