Friday Numbers

There were 206 new listings today, and 64 sales, for a sell/list of 31.07%.  Inventory was 7,563 while over 90s were 2,028 (26.81%).

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121 Comments

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121 responses to “Friday Numbers

  1. donotcareupand down

    Rob, next monday could see 400 listings, just joking.

  2. blueskies

    well ciao all!

    heading to Tofino to stand at
    the edge of the world and watch
    the waves come in..

    play nice!

  3. mike@gmail.com

    200-300 listings per day wouldn’t really surprise me.

    Expect low ratios for a while. This is all normal seasonal behaviour. Over 90’s ratio will drop like a stone as well, of course.

    There were about 8,135 this time last year. There was a surprising lack of listings this winter, given what’s going on in the US.

    Should be interesting to see what happens.

  4. In the REBGV right now inventory is at 8,136. Almost bang on mikes #.

  5. Mightymouse

    Coco Wrote: ‘Tell us more about the impoverished home owners you employ. Are they just making it pay cheque to pay cheque with nothing to spare?’

    One fellow that works for me bought a house in Delta for 550K last year. He and his wife both have to work to make the mortgage payment. If either looses their job they’ll be in trouble. They live paycheque to paycheque. If I remember correctly, I believe the number he mentioned came close to $4000.00 per month, that of course included the mortgage payment, the taxes, insurance and I believe his utilities. I remember thinking ‘Holy cow! They’re paying quadruple what I pay for my little rental dump!’ (I have a gorgeous panoramic view of the ocean, even if the building is about to do the neighbourhood a favour and fall over).

    I’m not saying that their decision was a bad one. They would have needed to borrow money to purchase their home even if they waited a few years for a possible correction, not to mention the loss in rent. So for them, perhaps the numbers still work if you factor in the possibility of future increases in the cost of borrowing and the fact that they didn’t have much moolah to put down hence no loss of interest.

    Coco Wrote: ‘Why did you choose to rent?

    I chose to rent for a number of reasons which I don’t mind sharing.
    #1) I was laid off of my job in the summer of 2005. At first I panicked, ‘How would I make the mortgage payment if I didn’t have a job!’. I decided to sell, free up some equity and rent.
    I was scared. I felt that we had just passed the market peek that summer (2005). I was worried I would have trouble selling if the market psychology had turned. Lucky for me, the lower mainland was still on an upswing and I was able to get out.
    You see, before being faced with the prospect of being unemployed, selling my townhouse wasn’t an issue so I didn’t care what the market was doing. I’m sure there are allot of other folks out there right now, just as oblivious as I was about the potential of a job layoff. Unfortunately, when the economic party comes to an end some of those folks might be faced with the same situation, only they might not be able to escape their hefty mortgages if the market has turned.
    Any ways, the company I worked for offered me contract work for one of their other companies that they hadn’t managed to bankrupt, so I used my new found equity to start my own business and just kept my fingers crossed. Luckily it worked out for me and each new year looks brighter for my little business (which will not be affected by the local economy but could take a hit from the rising dollar).

    #2) This brings me to reason number two. Now that I have security again (and a little more dough), I choose to wait. I don’t mind slumming it for a while in order to obtain what I want (my taste has changed with my new found riches LOL!!!…). Just kidding, I live in a different area and housing is far more expensive here… It’s a much nicer area though, and I want to stay close to my shop so I can spend more time with my baby and toddler. The interest I earn from my very conservative investments is enough to cancel out the money I pay out in rent.
    I await price reductions and for more selection (higher inventory). Conveniently, the two go hand in hand.

  6. Mightymouse

    Oops… Went a little crazy with the bold commands 😉

  7. WoW

    Robert – thanks for the timely numbers, that’s service!:))

  8. WoW

    Rob – can you give us the ‘temperature’ of the market, given that you are talking to both buyers and sellers (and likely developers and lenders as well) – is it similar to this time last year, more/less optimistic – any FEAR out there, that may not have been there 12 months ago?

    thx

  9. News Flash

    “can you give us the ‘temperature’ of the market”

    Hot…soon to become sizzling

    “any FEAR out there…”

    Just the bears…same as last year

  10. Mightymouse, your strategy is wise and you’ll look like a genius when things go your way in RE very soon. It truly breaks my heart to see or hear what people are doing, e.g your employee and his spouse. Doesn’t look good for them.

    I cannot imagine why I would run around in circles, all stressed out about paying $4000 monthly, when I could rent for 1/4-1/3 of that , with no risk or stress involved. I don’t need to share my space with noisy , strange tenants either, only for the satisfaction of saying: “Yeah, I OWN this house.” In actuality, their BANK owns that house. Not them.

    In this market, I guess that the buyers who jumped in with no downpayment have nothing to lose except maybe their credit ratings. They can simply hand in the keys to their banks when they can no longer pay, or if their mortgage balance is higher than their house value.

    Rob called you and me ‘capitalists’, and I think he knows that our cash will prove to be KING. Unless our banks go belly up!

    I don’t like it when neighbours and friends, even some family, all look down on renters and/or feel sorry for them. They have no clue what sits in our bank accounts. We could be richer than them asset-wise. But because we worked hard and saved sensibly, we choose NOT to risk our money in this crazy market by buying RE now. Our day will come, and it’s not sour grapes at all.

    I met a 60-plus year old lady today,who was looking to buy cheap , used furniture so she could rent out the top floor of her NEWLY-BOUGHT house and live in the basement (dungeon, to me) herself.

    She said she had to do that to be able to afford the mortgage payments. I was very troubled. I asked why she bought, rather than choosing rent a modest place herself, and not having to deal with tenants and repairs.

    The poor soul admitted that she’s been losing sleep over the decision to buy, since she bought 2 months ago, but figured than it should be OK in 10 years…. Last fool in? WHO wants the humiliation of losing their home while in their 70s??

    No thanks, I’m happy risking ONLY the rent I pay, which, incidentally is less than the mortgage would be in this good neighbourhood. Never mind that the house desperately needs upgrading. Our annual rent is roughly 3% of the value of this property.

    Maybe I’m fussy, but the day we buy, you can bet I will NOT be the one living in the basement, while a tenant occupies my main floor. Sorry, I believe that today’s folks, the “ME” generation, just want too much, and hang their hats too high, F A R out of reach.

    .

  11. $fromA$ia

    WOW, your on your own.

    Rob doesn’t comment on those kinds a question although he’s one of the first to see the signs.

    Mortgage lenders see the average mortgage and as well have a birds eye view.

    In other words, Rob has this blog to help him aquire more clients.

    Bears here are his pain in the A$$. The only unselfish bit of information that has given me respect as a potential client for Rob is that he said that he wouldn’t be suprised to see a trough comming up in the market.

    Bears, why are you here?

  12. $fromA$ia

    May Day, May Day!!!!

    ATTN: ALL including JEFF & Rob.

    There was this home I enquired on about a year + ago it was a small home on a 20ft lot in Killarney asking $419k.

    To make over and now it’s asking high $600’s!!!!!

    Actually this is GREED to the furthest extent or an outragous deal?

    V673075

    What was the last sale date and for how much was it last sold for?

  13. The Albanian

    Bad news for Rob is coming. He will be out of job in 8 months. This is my 2008 prediction. Good luck Rob.

  14. WoW

    Rob/Jeff – do you think we will see 10,000 listings by month end? Do you think we’ll crack 13,000 listings by late spring?

    Are multiple bidders/wars still the norm? Just looking for changes at the margin….

  15. Mightymouse

    “Forty-year mortgages are allowing people to get into the housing market “but I don’t know how long it’s going to allow them to remain in the housing market if anything happens,” Johnson said.”
    http://www.canada.com/vancouversun/news/business/story.html?id=c79b9297-1f26-449d-a2d9-110e100a2e0a&k=20783&p=1

  16. -A-

    Uncle Rob, on rare occasions, I believe you are sincere, but most of the time ,I believe your are simply sharpening your already well developed self- interest and self-promoting skills.
    Fair enough, just say so.

    Among the many questions you ask is whether or not the government should be involved in picking winners and losers,

    Do you think the government is picking winners and losers when it manipulates the value of money, controls the supply of land, pours billions of dollars into infrastructure to facilitate private ventures such the Olympics, and operates within a tax regime which one’s share of fairness is based on the quality of lawyer or accountant one can afford?

    When people estrange themselves from virtue and truth, they end up like you believing in such myths that ours is a free enterprise economy.

    You are just fooling yourself, buy feasting on the crumbs falling from the real money brokers on Marine Drive in south Van, The British Properties etc.

    Now again I will tell you this is not a fair and free market system, and I will also tell you the standard reply from believers like you and that is:

    “It’s not a perfect system, but it’s the best one we have”

    Sorry Rob, It’s not a satisfactory answer to me.

  17. Anonymous

    Mightymouse,

    Thanks for the link to the article.

    “So while they may get parents to ante up the down payment, the monthly slog may prove to be too much especially when things go wrong and need fixing, Johnson said.”

    I know of a few people who are “living on the edge”…..high mortgage payments on top of a car loan and making partial credit payments on payday.

    One missed paycheque due to illness or labour dispute and they are literally f’d.

    However, Cameron Muir says not to worry:

    “Even those in heavy debt have several hefty bargaining chips, says economist Cameron Muir with the B-C Real Estate Association. And Muir says you should never forget that the bank doesn’t really want your home. “Because the banks aren’t in the business of real estate. They certainly don’t want to take your home back. They’ll bend over backwards to try and work something out that’s amicable to both parties.”

    Muir says the continuing increase in value of homes is also protection from bankruptcy and foreclosure. It provides equity you can borrow against, and if necessary, you can always sell your home to settle your debts.”

  18. WoW

    If the cover/pg2 of today’s vcr sun biz section is not a bearish signal that things have gone too farn I don’t know what is – becoming a debt slave for the ‘dream’ of home ownership sounds an auwful lot like US/UK articles of recent past.

  19. -A-

    Bears, why are you here?

    $fromA$ia. It’s about this significant thing called truth.

  20. Joe

    From the same article:

    “According to statistics released by the Bank of Canada, British Columbians carry 19 per cent of the country’s mortgage debt, yet represent only 13 per cent of the population and 13 per cent of the country’s disposable income, Doug Porter, deputy chief economist with BMO Capital Markets said in an interview”

    Wasn’t it all those rich foreigners buying up all the houses in Vancouver?

    “40 is the new 25” — a couple in their 30s will be in debt until 75! What a way to live a life.

  21. Joe

    “With B.C.’s high prices, more British Columbians than other Canadians are taking out 40-year mortgages”

    “There are also zero-down mortgages and an interest-only mortgage that help them get into the market.”

    I thought we were different in BC?

  22. $fromA$ia

    Thanks, -A-

    Now look at that house I posted with the MLS.

    Its the size of a townhome.

    If this house sells for list or even within $80k of what their asking, this is surely a sign that Vancouver is for real. Ha!

  23. Mightymouse

    Muir says the continuing increase in value of homes is also protection from bankruptcy and foreclosure. It provides equity you can borrow against, and if necessary, you can always sell your home to settle your debts.”

    Yes Mr. Muir, but what if the market turns and you now have negative equity?

  24. jesse

    “Because the banks aren’t in the business of real estate. They certainly don’t want to take your home back. They’ll bend over backwards to try and work something out that’s amicable to both parties.”

    When banks start doing this, losing money hand over fist, what are the chances they would continue to lend with the same qualification standards? This is what is known as the “vicious” cycle.

  25. WoW

    I know folks who bought Nortel at $120 – can these long-term investors borrow against this equity? How about folks who bought safe bank stocks, like CIBC – can the borrow as the value goes up? Laughable.

  26. Joe just Joe

    “40 is the new 25″ — a couple in their 30s will be in debt until 75! What a way to live a life.”

    Are you kidding me? Do you know anyone that took outa 25yr mortgage and needed all 25yrs to pay it off? Same deal with a 40yr mortgage, under 30% of people carry their mortgages till the end and those are usually only people that refinanced for whatever reason. It’s the effects of inflation. You might struggle with a 2K/month mortgage today but in 10 years you’ll be fine, in 20yrs that payment will be small, if you still had the mortgage 30yrs from now 2K/month will be much less then your grocery bills. Fact of the matter is while I don’t like 40yr mortgages either, it is absurd to think someone will still be paying it off in 40yrs.

  27. Peter

    Real estate boom is like a plague that eliminate the buying power of the middel class.

    Just don’t buy what you cannot afford.
    http://www.salon.com/ent/video_dog/comedy/2006/02/06/debt/index.html

  28. dyugle

    December numbers are out and the prices are up to a new high. So much for the rate cut theory. December benchmark $543,401 old high is September at $542,500. I believe we are within statistical error (0.1% higher) but a new high is a new high and the bulls may as well shout it from the roof tops.
    http://www.realtylink.org/statistics/buyers_market_hpi_main.cfm

  29. Snick

    Don’t be soooo ignorant.

  30. Anonymous

    Joe just Joe wrote:

    “Same deal with a 40yr mortgage, under 30% of people carry their mortgages till the end and those are usually only people that refinanced for whatever reason.”

    JJJ,

    So just under 30% of these young couples will piss away their youth and carry their mortgage until 75 years old.

    At your next social event of young folks, look at 10 of them and realize that 3 of them will be in debt until 75 years old. Just make sure you are not one of them!

  31. TDK

    Joe Just Joe,

    Do you know what you are saying? Taking on a longer amortization mean longer to pay off. If a person takes 80% of the amortization period to pay off, a 25 yr mortgage will take 20 yrs and a 40 yr mortgage will take 32 yrs. Don’t know about you, but having a mortgage when you are 60 years old really sucks.

  32. Anonymous

    TDK wrote:

    “Don’t know about you, but having a mortgage when you are 60 years old really sucks.”

    Couldn’t agree with you more.

    People at that age are looking forward to retiring, traveling and living out their golden years not worrying about making that next mortgage payment at the 1st of each month!

    But perhaps it’s different in Vancouver?

  33. Joe just Joe

    I know the longer the mortgage the longer the time to pay off. Thanks.

    Even if you go with your 80% of the time frame figure which is probably in the ballpark. That couple in the 60s will still be paying a mortgage for a couple/few years, but it doesn’t change the fact that the mortgage of ie 2K/month will be peanuts 30yrs from now. If they were renting their rent would be much larger. Again I’m not defending the 40yr mortgage, but it isn’t nearly as bad as some people make it out to be either. On the matter of the 3/10 pissing away their youth, that would’ve be their choice, as stated most people that carry their mortgage to term it’s usally due to refinancing, maybe they bought a boat or a cottage when they were 45yrs old and could still enjoy it, and they feel their neighbours who worked O/T to get rid of their mortgages pissed away their youth as even though they now have all the money free they are too old to enjoy life. It’s all in your prospective. FWIW I fall into the group that rather be clean and free form my mortgage asap, but I can certainly see both sides of it.

  34. -A-

    Joejustjoe:

    “You might struggle with a 2K/month mortgage today but in 10 years you’ll be fine, in 20yrs that payment will be small, if you still had the mortgage 30yrs from now 2K/month will be much less then your grocery bills.”

    Ah! the benefits of inflation cutting the debt down to size.

    But you leave out one important part of the equation.

    If inflation is significant enough to erode the debt, won’t bond holders demand more yield?

    When you go to renew your mortgage on that 500k shoe box, you may not be able to afford the payment if inflation finally is recognized.

  35. WoW

    What is .01percent over that period annualized, as a rate of return? Does it improve if a ppty is substantially cash flow negative?

  36. The sell list ratio is back in check. We can expect it to be very low this month. The REBGV weeklies are posted http://www.nvcondos.ca

  37. $fromA$ia

    Joe, just Joe

    Actually consider that over the next ten years:

    You paid of $11k of your $500k mortgage.
    Your interest hit 10%.

    Lets make it over 40 years?
    Odds are you won’t make it…Inflation is unreported, go out for dinner. It’s everywhere.

  38. Priced Out

    Can the benchmark price in a certain area be increased by a flood of new housing? I’m thinking of place like New West. The condo mix is much different than last year.

  39. WoW

    tinyurl.com/yfw62g

    funny – but a bit too early (note the date on the newspaper headlines). Due for a refresh.

  40. WoW

    Rob – if all the houses in Vancouver were sold for $500k in year one, and then were torn down and rebuilt in year two for a total cost of $1million (original cost and redevelopment cost), and sold for a cool million buckaroos, would the stats show a 100% year over year increase? OR would it be adjusted for inputs/changes, etc? I mean, if billions are being spent on renovations, then the houses sold today have had billions spent on them that are rightfully part of the higher value, but not really reflective of a ‘change’ in value, but more of an input into value that is now reflected in price.

    would you agree? If so, I’m surprised the general media is not commenting on this. Hold on, no I’m not surprised I mean!

  41. beans

    $from Asia- RE: benchmark prices
    The benchmark price is estimated using a statistical hedonic technique that incorporates quantitative and qualititative variables. The price of a “typical” home is a function of “typical” attributes, for example, number of rooms, square footage, and other amenities which are held fixed for a number years until a new basket of amenities and features is constructed. The benchmark price is re-calculated each month given new data, but the equation should keep the same coefficients for variables, with the exception of the pure price appreciation, which changes each month (otherwise, the coefficients would likely not be robust, and previous benchmark prices would need to be revised monthly).

    Provided that the coefficients are robust, and the estimators are unbiased, the changing product mix should not have a large impact on the benchmark price. The difference predicted price (benchmark price), and actual price in a home if one existed that had all of the attributes of the benchmark home and then some, should be captured in the error term, and not the price appreciation variable.

  42. Ted

    If inflation is significant enough to erode the debt, won’t bond holders demand more yield?

    When you go to renew your mortgage on that 500k shoe box, you may not be able to afford the payment if inflation finally is recognized.

    If you were in the “reckless mortgage market of the US” and signed a 30 year mortgage the payment would hold through the entire 30 year term. Here in “conservative Canada” your payment term ends after a maximum of 10 years leaving you exposed to potentially much higher rates. So Canadians go into these long term mortgages without any idea what payments might be like in 10 years, whereas Americans know the payment for the entire life of the mortgage. Sounds like Canadians are reckless…

  43. -A-

    That’s right Ted.

    If you are going to buy a home, be cautious, when evaluating information from: realtors, mortgage brokers, newspapers, bankers, existing homedebtors, and especially realtor/ bloggers with a rich vocabulary and superficial knowledge of basic introductory finance.

  44. $fromA$ia (everybodys a RE tycoon)

    That’s right Ted.

    “If you are going to buy a home, be cautious, when evaluating information from: realtors, mortgage brokers, newspapers, bankers, existing homedebtors, and especially realtor/ bloggers with a rich vocabulary and superficial knowledge of basic introductory finance.”

    I second that! … Whats your monthly paycheck worth to you? To most people these days they throw it at RE Worship in hopes of everlasting price appreciation.

  45. $fromA$ia (everybody's a RE tycoon)

    Please place your testicles on the anvil, we have the hammer ready for you.

  46. -A-

    Something sure seems wrong when the whole farce is based on the paradox of low interest rates and high inflation going forward.

    Of course the other confirmation of a crash with absolute certainty is that you need a constant fresh supply of new entrants into the scheme.

    I’ m quite sure we have run out of super rich foreigners who want to buy a rare piece of the best place on earth in the vicinity of Hastings and Victoria.

  47. $fromA$ia (everybody's a RE tycoon)

    Actaully -A-, I find this whole thing really interesting/amusing.

    The people who have currently a Million dollar home with a $500k mortgage who have recently earned $200k appreciation think they are really smart!?!

    I know this couple and all they eat is Nissan noodles.

  48. Joe just Joe

    I’m referring to normal inflation, of ~3% a year increase in wage, At that rate mortgage rates will stay within the same rage. That measly 3%/year is enough to eat away the debt over the life of it. If inflation where to shoot up enough that rates would jump to 10% you’re wages would be going up at about 8%/year as well, it’s all awash. Inflation will always eat away at debt. The biggest worry would always be no inflation or deflation.

  49. -A-

    Joe just, don’t quit your day job, and please, for your own good and your financial well being, learn to use a calculator.

  50. $fromA$ia (everybody's a RE tycoon)

    3% increase in wage a year? Wow who consistently gets that guaranteed??

  51. $fromA$ia (everybody's a RE tycoon)

    How about the homes go up 300% in 3 years but your salary increased 3×3%=9% in that time and you decide to buy over 40 years..

    Heres the undenying catch! Get your dictionary and calculator ready……

    “Markets are cyclical, housing is a market.”

  52. Priced Out

    High-end Port Moody/Anmore/Westwood Plateau

    Crack?

  53. beans

    my previous response was to Priced Out not $from Asia

  54. -A-

    Joe Just, $100,00/oil, and $900.00 gold, doesn’t seem to support your “just right amount of inflation”

    Are you a realtor? homeowner with a huge mort?,

  55. Priced Out

    bean, thanks for the response. Some heavy reading.

  56. Priced Out

    I mean beans

  57. $fromA$ia (everybody's a RE tycoon)

    Joe, just Joe don’t get me wrong.

    You have a point with income raises, it’s just that things are way more drastic now.

  58. $fromA$ia (everybody's a RE tycoon)

    Priced out, the commute in Port moody, westwood are sucks the big one. Maybe supportive to the CRACK!

  59. Joe just Joe

    Wow, time to put on the tinfoil hats I guess, if you don’t believe the stats put out by Stats Canada. CPI has been tracking ~ 3% for about 2 decades nows. Also sounds like some of you don’t work for a living but most people average at least 3%/yr raises, most even average more as they move up throughout their careers and don’t stay in the same position forever. I know how to use a calculator maybe you should punch in the numbers yourself, I already have. I’m not telling anyone to buy, I only stated I can see the benefits of the 40yr mortgage, reread my posts.
    It’s no wonder this place has turned into such a pit, most people with open minds have been driven out by constant berating by the bears.

  60. beans

    Joe just Joe, your point about 40 year amortizations is valid. The product, gives an entry point for qualified buyers that could not enter at a 25 year amortization period or could not buy the home they wanted at a 25 year amor. At the same time, the key problem with these products is that there is additional risk for the buyer as well especially in the event of a market down turn. At a 40 year am, if prices fall, you are more likely to be holding negative equity than with a 25 yr amor, since you pay down the principal at a slower rate than otherwise. At the same time, 40 yr ams could artificially overheat the market, boosting prices further than warranted.

  61. -A-

    “At a 40 year am, if prices fall, you are more likely to be holding negative equity than with a 25 yr amor, since you pay down the principal at a slower rate than otherwise. ”

    At some point the extreme debt leveraging has to raise a red flag. With little down and a 4oyr mortgage I can see Just Joe’s fear of deflation actually come to pass.

    The people who are heavily mortgaged will contribute significantly to wage deflation.

    Some to the people who were working for top wages before the 80’s bust, ended up taking non union construction jobs at 30% less wage.

    Yes RE prices are sticky on the way down, but wages are not.

  62. $fromA$ia (everybody's a RE tycoon)

    “At the same time, 40 yr ams could artificially overheat the market, boosting prices further than warranted.”

    This is not a pit blog, it’s the contrary to the majority. You know the BULLS that prefer to avoid the stampede off the cliff.

    ~Joe, when the shoe shiner tells you to buy RE. It’s time to take your money and run.

    ~Joe, RE is a great investment vehicle (long term).

    ~Joe, Average family income is how much ($57k)?

    I think we’re pretty rational for the most part.

  63. WoW

    Joe, just Joe – based on your input (and I do agree with what you are saying, to a degree), a 40 year, interest only mortgage may also be a good idea? As the original balance will be much smaller in 40 years, adjusted for inflation, and the home would be worth much more, in all likelihood – right? There is some logic here, but if the 40 year holders see a price decline in the first few years, whammo, that is not fun.

    Now a question – if new rules came into being tomorrow, that said 25% down is a MUST, and 20yr amortizations are a MAX, then what would this do to home prices – well, we all know. So, this loosening of credit, lengthening of amorts, has been a boon to RE prices. What is next, leveraging off of minor children’s expected future incomes, 1,000 year amortizations, etc? Are we out of financial engineering, and if so, what’s next?

    Looking forward to watching things unfold over the next couple of years, as I rent my multi-million pad at next to nuthin…I mean nuttin..I mean peanuts.

  64. Joe just Joe

    Wow that is exactly right, like I said I do not agree with them, but I see the point/appeal of them.
    I am from the older generation where 25% down was the only way. There wasn’t a chmc, well there was but it wasn’t used by normal people. I beleive life was better back then. If we take your example to a bigger exterme, aka Iran where there are no mortgages and had to pay 100% upfront what would that do for property values? It’s safe to assume they’d be much cheaper. But would we be any better off? Most FTBs would not be able to afford a home even if prices came down to 200K for a SFH. There has to be a balance somewhere, I don’t know where it is and I’m not pretending to, maybe the answer is different for everyone hence the options we have available?

  65. WoW

    Joe – here is my concern – when you have record low interest rates, and financial engineering to make RE easier to buy, and then a psychological mania around RE (a frenzy), this is great – for a while – when people start to pay any price, just to ‘get into the market’, and when those prices are not justified by cashflows/fundamental valuation metrics, then once the candybowl is taken away (ie. banks tightening up, increasing interest rates, lower RE mania (perhaps even FEAR!:), increased supply, etc.), the change in situation can be dramatic, and those folks ‘helped most’ by the 40 yr mortgage, low rates, easy lending policy, are ‘hurt most’, by changes – wouldn’t you agree?

    Nothing I know about can sustain prices forever above basic cash flow realities. They never have before, and I contend it ain’t different this time.

    Let’s see how this spring unfolds. Its early innings still in the US/UK/Spain, Alberta – lets see if it spills over, seems to have started to in the Valley.

  66. Whybuywhenucanrent

    The 40 year product might be appropriate at some times, but let’s do it when the housing market is in a deep slump and we need incentives to get people buying. *Not* when our neighbors to the south have just gone through a cycle where they’ve offered easy credit, watched their housing market shoot up, and are now watching a slow-motion train wreck.

    What’s next? A 60 yr mortgage. Bi-generational. Negative equity for the first 15 years, pay off the negative equity during a 15 yr period when both generations are wage-earners, then the younger generation pays off the original principle over the final 30 years. You heard it here first.

    Again,
    Whybuywhenucanrent?

  67. tqn

    Just pop by to see what is new here…not much! Opps, time to deposit the rent cheques.

  68. News Flash

    “~Joe, when the shoe shiner tells you to buy RE. It’s time to take your money and run.”

    What are you talking about the shoe shiner “tells you to buy real estate” -A- is clearly saying don’t buy real estate.

  69. News Flash

    “Yes RE prices are sticky on the way down, but wages are not.”

    Yes, let us know when they are heading down.

  70. A Looser

    “Just pop by to see what is new here…not much! Opps, time to deposit the rent cheques.” says tqn from his parents basement.

    Don’t you have chores to do?

  71. $fromA$ia (everybody's a RE tycoon)

    Tqn, looks like your tenant cheques came in late.

    Don’t forget that those are taxable gains, be a Canadian and pay your dues like the rest of us.

    “What are you talking about the shoe shiner “tells you to buy real estate” -A- is clearly saying don’t buy real estate.”

    Newsflash, I mean when the lowest income earners are giving advice to buy R.E. RUN!!!!

    I hope you understand.

  72. $fromA$ia (everybody's a RE tycoon)

    WOW, thanks for clarifying things to Joe.

  73. Strataman

    $fromA$ia “I hope you understand.” Of course he (newsflash) does! he works midnight shift at 7/11 till his day job starts! He IS a RE tycoon!
    🙂

  74. WoW

    Interesting point. I remember when the lowest income earners were telling everyone to buy Nortel, Worldcom, etc. Now its RE. Next may be gold, agricultural commodities, silver, uranium, base metals….hmm, I might even be ready for that one!

    Last in last out.

  75. $fromA$ia (everybody's a RE tycoon)

    Thats it WOW.

  76. $fromA$ia (everybody's a RE tycoon)

    I don’t get the YVR RE tycoons.

    Even OZZY JUROCK recommends looking at other area in B.C. where homes still have room to appreciate in value.

  77. Anonymous

    V673075
    Mar 2, 2007 for $416,000

  78. $fromA$ia (everybody's a RE tycoon)

    V673075

    Thats what I’m talkin’ about.

    Back then the square footage was under 1000sqf.

    This is a good test of the market in YVR. If it sells for near asking then we know the market is really as hot as everyone says it is.

    If this house sells for anywhere near asking, I will sh!t myself as well.

    Oh how about this, if this house sells for asking in 30 days I will leave this blog!!!

  79. News Flash

    “he works midnight shift at 7/11 till his day job starts! He IS a RE tycoon!”

    Hmm, 7/11 employee or a property manager like Strataman? I think I would take 7/11 job if given the choice. Strataman = unplugging other peoples toilets for just over minimum wage.

    Your family must be proud Strataman. To reach such a prestigious position by middle age. I guess that is how you and your spouse together can afford to live in a 500 square foot 1 bedroom rental. If that isn’t the picture of middle age success then I don’t know what is.

  80. News Flash

    “Newsflash, I mean when the lowest income earners are giving advice to buy R.E. RUN!!!!”

    What do you do when low income earners like Strataman give advice NOT to buy?

  81. $fromA$ia (everybody's a RE tycoon)

    News Flash, Tell me what you think of the market?

    Actually, nobody is priced out it seems.
    Now its whats rational to pay for a home it seams.

    Well? Don’t you agree that Vancouver has reached it’s greatest housing spike ever?

    What are the odds now of continuing price appreciation and for how long?

    I almost sence that comments here hurt those who own as much as those who don’t own.

  82. -A-

    A worrisome sign for sure. Newsflash seems to have a very low level of tolerance to frustration.

    He is lashing out because the bears put forward impermeable arguments, so he resorts to insults.
    This is often a precursor to criminal behavior.

    Newsflash should be aware that this “cyber community” abides by implicit rules of civility, yet he chooses antisocial behavior, and disregards the conventions which the rest of us abide by.

    Rob, you should show some leadership and ask him to apologize to Strataman.

  83. Annon

    Rob, are tqn and News Flash posting from the same IP?

    I think tqn and News Flash will self-destruct with or without the bear’s reminders to other people so that others can avoid being enslaved by life long debt. My brother just sold his house barely making money last month. He bought it less than a year ago. He didn’t take my advice and went for it. Quickly he realized first hand the kind of life one or a family would be living if most of their income ends up in mortgage payments. Although this took place in Taipei that had a longer price rise period than some have predicted. The house price finally cooled and those who seriously pay attention and try to understand will always find out that this whole housing bubble will burst.

  84. Annon

    Bears are here to see when they can possible buy at price they can afford. Yes, according to bulls, bears can end up in zero home ownership forever because house price will never come down. Bulls are here to see when they can sell again. Wait, bulls will never sell because if house price never comes down, why sell it? If bulls never need to sell their houses, that means there is no plan changes to their housing needs and that means they shouldn’t have to worry about bears playing down the fact that housing price never comes down. And it’s kind of rude for some bulls to brag about collecting rents while some bears can barely afford rents.

  85. Strataman

    newsflash “I guess that is how you and your spouse together can afford to live in a 500 square foot 1 bedroom rental. If that isn’t the picture of middle age success then I don’t know what is.” well thank you! 🙂 Actually its 780 sq ft on the 33rd floor, beautifull view, hardwwod floors. Three years now; the owner is always a nervous wreck that were going to leave. Oh yeh its really great to have a brand new high quality condo knowing we benefit from appliances that have never been used before. Stuff is starting to wear out now, owner had to replace all the shower faucets a month ago, figure we’ll rent for another two-three years, by then the prices will have dropped more than our total rent paid. Just imagine; someone is going to buy this “previously owned” condo c/w no warranty, c/w worn out appliances and fixtures! 🙂 Then we can retire in the interior at our beautifull Chilcotin cabin on lake front located in the Rainbow Range! (Tweedsmuir) which I have had for some 23 years! It’s been a pain in the ass flying up there every couple a months…so damn hard to come back to this place sometimes! 🙂

  86. coco

    Canada’s Dodge Says Currency Appreciation Is Damping Inflation

    http://tinyurl.com/3dmxl8

  87. coco

    Loonie cushions Canadians at grocery checkout counter

    http://tinyurl.com/23dq9e

  88. coco

    Canadian Dollars Too Good to Be True; Bears Bite Back

    http://tinyurl.com/2e2pxo

  89. coco

    Mightymouse,

    Thanks for the info.

  90. Popeye

    Prettywoman, you said: “I don’t like it when neighbours and friends, even some family, all look down on renters and/or feel sorry for them.” Au contraire, lovely lady! By the same token you can look down on speculators and feel sorry for them. I am surprised how an intelligent lady like you would allow stuff like that to bother you. Keep your powder dry, my dear. Your time will come.

  91. coco

    Municipalities must come clean over rising property taxes – (BC)

    http://tinyurl.com/2cuu9g

  92. coco

    Strange, but true…..due to a shortage of methanol windshield wiper fluid is set to soar. $5.00 to $6.00 per liter

  93. coco

    Regarding 40 year mortgagees….you have to wonder how prepared people are for the long term, considering inflation/rising costs, major home repairs, cars that eventually need replacing, etc.

    Just Joe mentioned that he thought most people would pay off their mortgage before the 40 years was up. I’m wondering if this is just old school thinking…… I saw a survey quite awhile ago by Canadian banks and only a very small percentage of Canadians actually pay off their mortgages early. Since 40 year mortgages are a “new” product, there is no indicators whether people would actually pay these mortgages off early or not.

  94. coco

    On Friday when the weak U.S. jobs report came out, notice how quick George Bush had a news conference and stated the economy was solid.

    He is trying to restore confidence. We have a credit crunch and if people start pulling money out of the stock market, money market, bonds, etc., in fear this would severely strain the credit markets/financial systems even further.

  95. coco

    A shortage of hops will raise beer prices.

    A shortage of helium is raising balloon prices, even Macy’s Thanksgiving parade floats recyled their helium.

  96. coco

    Future headlines…..inflation rising

  97. tqn

    “And it’s kind of rude for some bulls to brag about collecting rents while some bears can barely afford rents.”

    if this is the case, I withdraw the comment and appologize. I am neither bull nor bear, just a “whatever happens, happens” type!
    By the way, tqn is not News Flash. I wish I was, so I could hold multi million $ RE.

  98. WoW

    http://money.cnn.com/2008/01/07/news/economy/mortgage_jobs.ap/index.htm?postversion=2008010713

    Perhaps these folks should buy RE here to supplement their incomes while they look for new jobs? Can they find some good positive cashflow properties to provide them with a cushion? Any suggestions?

  99. robchipman

    O.K., strataman, Rainbow Range? Lakefront? Not bad, buddy, not bad. You fly yourself there or what?

    Annon:

    They use different IPs.

    $fromA$ia:

    “Oh how about this, if this house sells for asking in 30 days I will leave this blog!!!”

    Not sure if this counts, but that listing has been on the market for 91 days already.

    I’m confused about why you’re bad mouthing me so much lately (indicating that I delete posts regularly or don’t answer questions, etc, which isn;’t accurate). As I recall, last year you asked me to find you a property with some pretty specific qualities, and I did so immediately. Granted, it was more of a job than you wanted to tackle, but at the time you sang a somewhat different tune. You could have made a few bucks on it, as I’m sure we both agree, even without doing any work. Is that or is that not the truth? 🙂

    The assumption that I run this blog to develop business is inaccurate. Its very tough to make a solid business case for a blog. Compare the prospects of Paul, Jeff and myself. Jeff remains pretty much anonymous, Paul doesn’t argue with anyone or put forth many opinion, merrely links to his website, and I probably make more enemies here than friends. Do you really think that money is the motivating factor for me here? If so, wouldn’t I delete Paul’s comments and links? (I’d actually like to elevate Paul to an official contributor, complete with picture and profile).

    WBWYCR:

    “What’s next?” Timely question. A 60 year am doesn’t work. What can lenders have up their sleeves? We’ve seen many, many changes, and they’ve had some effect. What is next? If we don’t get the positive pressures on price that accrue from easier lending (and I guess I’m arguing that the innovations have one time effects), that translates into an absence of some positives, which equals pressure to stall at the very least, no?

    WoW:

    I’m not sure I follow you completely, but you’re certainly pointing to an important consideration. In 1980 we say the average sfh was worth X, and in 2008 its worth X * 600% (say $90k to $540k), but that assumes that the 1980 average sfh hasn’t aged (at least if the argument is that biying your house in 1980 for average price means its worth the average today; its clearly not, in that its moved from being of average quality to being an old property). I think its hard to quantify the difference, but it does obviously exist.

    That said, I think you have to take all values reported with a grain of salt (benchmark, average, median, provincial assessment). Land values have clearly goine up, however, and it gets little impact from inputs (aside from infrastucture); the building lot in Vancouver is more expensive now than in the past, but it still has the same road, sewer, water, etc.

    In response to your other question, no, I don’t see fear among buyers (unless you call not wanting to pay way over list fear). Buyers are well informed about current values (or, if you prefer, current prices), and are certainly considering the effects of the credit crunch and US recession, but I wouldn’t say that the level of bear “fear”, as evidenced on this blog, is representitive of the average buyer or seller (we all know about one listing where both buyers and the seller have shown plenty of courage in sticking to their respective price opinion guns, right?)

    -A-

    “Sorry Rob, It’s not a satisfactory answer to me” – you gave the unsatisfactory answer, -A-, not me.

    The system we have is the one we have. It is what it is. Whether you or I like it is pretty irrelevent.

    I asked you questions to clarify or confirm what you are trying to say. You haven’t answered them so your position still appears confused.

  100. jesse

    “I wouldn’t say that the level of bear ‘fear’, as evidenced on this blog, is representitive of the average buyer or seller”

    In the past years there has been a fair bit of “bull fear”; that is, a buyer’s fear of being priced out forever and a seller’s fear that they will regret selling only to see prices increase more.

    “Bear fear” comes when transactions drastically slow. We could be seeing the beginnings of this in the FV but not all tropical storms turn into hurricanes.

  101. Newcomer

    “…but not all tropical storms turn into hurricanes.”

    Vancouverites are known to be slow (last in, last out) but they are not idiots. The West is going into a recession, as anyone who turns on the TV or picks up a paper is reminded on a daily basis. Only an idiot would over extend themselves at the beginning of a recession. This is it for Van RE. No ifs ands or buts.

  102. jesse

    NewsFlash/Strataman/-A- et al

    You guys usually make decent comments but I think most readers don’t like wading through the attack stuff. If you’re trolling that’s your perogative, otherwise I’d just walk away from the conversation.

  103. BOBBYBEAR

    I am not buyin anything until CMHC gives me:

    1. No Downpayment

    2. No principle on mortgage payment

    3. 50 year amortization

    4. 2.9% teaser rate for 10 years and also

    5. Pay off my credit card

    Have a good day.

  104. Unreal

    Bobbybear:
    Becareful what you wish for.

    CMHC has deep pocket.

  105. Anonymous

    “because the bears put forward impermeable arguments”

    haha, thanks for the laugh of the day -A-

  106. Dude

    BOBBYBEAR,

    Don’t worry. It’s coming. CMHC will soon pay you to take on a mortgage. Anything to keep this R/E market afloat.

    By the way, you forgot signing bonus and a trip to Mexico.

    They just might make your 2 yrs old son co-sign your mortgage because you’ll be dead in 50 yrs or at least I think I’ll be. Who knows, you might even qualify for a 70 yr mortgage.

  107. WoW

    Did prices go up so far this month? How about sales/listings, how is that tracking?

  108. Dude

    Annon,

    Not all bears are here because they cannot afford to buy. There are people buying properties with family income less than average. So if they can do it, many bears can also. Most bears just think it’s crazy to take on so much risk by over paying.

    In fact, many bears I know makes very good salary, including myself. According to the recent income survey, we are the top 5% of income earners in Canada. I’m not buying because I think the prices are crazy and I know they will come down.

    By renting, I am saving $20K plus per year. The way I see it, if R/E prices increase less than 6% per year, I’m better off renting.

  109. jeff jeff jeff

    #
    WoW
    January 6, 2008 at 6:09 pm

    Interesting point. I remember when the lowest income earners were telling everyone to buy Nortel, Worldcom, etc. Now its RE. Next may be gold, agricultural commodities, silver, uranium, base metals….hmm, I might even be ready for that one!

    Last in last out.

    Hey, I’m bullish on gold, agri, uranium. Nat gas too since it’s at historic lows and tracking way below the standard oil:gas ratio.

    RE, man, I think it’s gonna be a bloodbath. Panic buying and manias, have they ever ended otherwise?

  110. WoW

    Panic buying/mania’s

    I done remember them ending any differently. I do believe that at the mid-way point, we tend to hear “but, its different THIS time”….watch.

  111. robchipman

    Jesse:

    I put “fear” in quotes simply because it was the word WoW used. Bears fear that prices will fall the same way I fear it will rain tomorrow – we think it will happen but it doesn’t keep us up at night with the bedside light on. I don’t think most buyers have that fear (duh…they wouldn’t be buying, would they?) but I haven’t seen a lot of sellers with it, either. Some, but not a lot.

  112. jesse

    Rob,

    Yeah I understand what you mean. In a down market buyers could buy but fear that prices will continue to go down and would save mega if they just wait. The term “fear” is perhaps a bit harsh to describe people’s motives in the market, though with RE the amounts on the table are, for most, big enough to churn the stomach.

  113. robchipman

    “big enough to churn the stomach.”

    I know. I see those “flip this house” shows from Dallas or South Carolina and think “Yeah, I’d do a bunch of those too, if I could pick up a house for $150,000!”

  114. $fromA$ia

    Can’t do much with Balloon framing Rob, any work done is to a home that structurally speaking is an eye sore…

    You did a great job with what the market had and fit it well to my criteria. It’s too much work and the stakes too high. As the market climbs the stakes get higher. No thanks but thank you for your efforts.

    Like to see you comment a little more so the dissin’ you get from me is trying to call you out.

    No enemies here, just trying to make sense of this market before I sign my life away again. Right now nothing is making any sence till it does I’ll enjoy my $15k of interest a year and pack away my regular income till things make sence to me.

    I think you have a greater feel for the market than anyone. Wish you would let in more on your gut feelling. Popular or not.

    Let it all hang out… Tell us if you can make sence to this market. Other readers hear ask you if you sence fear in your clients, let us know.

  115. WoW

    I think Rob is a professional, and I think in his mind and gut he knows the market is overpriced, by every standard measure – just my thoughts Rob! I could be wrong – but I doubt it.

    $150,000 – ya, I find it jawdropping to see prices in most decent, non-coastal areas of the US – I mean, I hear of folks who have a combined income of $150,000 buy their dream house for $225,000, and then are ‘ruined’ when it falls 10%. I just wish we had those kind of problems here….our houses are so damn expensive, relative to incomes. Full stop.

    My dad bought the house I grew up in some 30some years ago, and paid 3x’s his labourers (unionized, so decent relative pay, but he wasn’t a doctor, so I’m talking average pay, and sole breadwinner) salary. Ah, the good old days.

  116. WoW

    Oh yeah – it was a very decent house too! in Coquitlam, which at the time was a bit of a backwater (big lots, big trees, big parks, friendly neighbours – ah, the memories!), but still, 3xs income…..could not buy a 500sq foot condo now for the same relative price.

    In any event, what about the future? At some point, does the mortgage/liquidity/subprime mulla dry up?

  117. Dude

    WoW,

    We might not get the good old days back, but it’s not going to be far. I suspect the R/E market will be dead for the next 7 yrs. Starting with 2008. Prices are coming down. Soon, the REBGV can no longer paint a rosy picture with their benchmark price crap. It’s gonna be MoM loss and soon, YoY loss. It’s a coming!!!!! I don’t think it’s gonna be 3 times annual salary for a SFH, but 4-5 times is gonna be in the picture.

  118. Strataman

    Rob; “You fly yourself there or what?” Sorry just saw that, I fly to Hagensborg where a friend keeps my 4X4 and then drive up the “hill” and turn North just west of Anaheim. In the winter I take two snow machines in the back of the PU cause I usually can’t get in all the way. Sometimes I charter a float/ski from Nimpo if I don’t have the time.

  119. robchipman

    WoW and $fromA$ia:

    When I say that I can’t justify purchasing an investment property in this market based on the regular metrics, what makes you conclude that I’m not sharing my true feelings about the market? (Have I or have I not said that repeatedly?)

    When I say that in any market there are people who can profit based on making a trade, am I wrong? How does that conflict with a belief that current prices are out of whack with fundamentals? (Which is also something I’ve said many times).

    One fact is that this market hasn’t sent us any kind of clear signal that it’s stopping soon. Another fact is that the market is, by nature, very complex. Some people think that the future of the market is extremely easy to discern. That’s simple foolishness. Preserving capital because you can’t see a rosy future is something quite different from trying to describe in precise detail the degree of horror to come.

    It is my place to give my clients as many facts as I can to help them make smart decisions. That can include gut feelings, obviously, but those gut feelings can’t be dressed up as fact.

    If you had to make a guess about something, and it turned out that you guessed correctly, would the guess have magically changed, after the fact, to rock solid analysis? If you answer “yes”, you’d be fooling yourself.

    Money: that house was available on a one time basis, contingent on another purchase. It was a bargain to be had, relative to the time. If you had gone ahead, and simply held the property and ignored the balloon framing, you’d have made money (and you can’t argue that I’m wrong on that). The problem is, neither of us knew for certain what the future held. All the arguments about a crash were as valid then as they are now. Would it be fair for me to say now “I told you so! I knew the market would keep going up”? Not really. Why? Because I would have been guessing then, and I still realize that fact now. I could come across as confident as -A-, for example, but lets face it: I’ve got too many miles under my hood for that foolishness :-).

    Strata:

    I know that country and love that road. Good for you.

    Dude:

    The Board paints the picture that exists. The benchmark price was here in down markets, and it will stay around for the next ones. The strong economy isn’t a conspiracy to fool people. It really exists.

  120. $fromA$ia (everybody's a RE tycoon)

    Rob, read your comment to my wife.

    Wife thinks your comment was very, very humble.

    Thanks,

    MFA

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