There were 238 new listings today and 91 sales, for a sell/list of 38.24%. Inventory reached 9,235, of which 2,606, or 28.22% were over 90s.
There were 238 new listings today and 91 sales, for a sell/list of 38.24%. Inventory reached 9,235, of which 2,606, or 28.22% were over 90s.
Filed under Daily Numbers
The Best Real Estate Anywhere! 
Start sharpening those pencils, some deals are about to come up in the near future.
From what I remember, the best deals were cash only deals. Remember the banks will not (or may not be able to) lend you money by then.
Remember those 1 bed appt. in surrey for $39K cash only circa 2001.
Will the Fed drop rates by 0.50% as widely expected today? If so this will be a historically large downward move in rates. Incredible. Scary. They are very worried.
Will massive amounts of bonds in the US be downgraded today? This is more than 2 trillion dollars of bonds insured by companies who gave them a AAA rating and are on the edge of bankruptcy themselves. Talk about a big ponzi scheme.
Have the world’s stock markets peaked out after several years of incredible bull markets? And was last week was the initial breakdown which could be followed by relatively sharp rallies for awhile before the grip of the bear takes hold?
Will gold continue its bull market into new high ground and ultimately turn into a frenzied gold rush which will shake the world?
Beats me.
Is it the end of the world yet?
Warning over one million homes at risk
http://www.guardian.co.uk/money/2008/jan/30/mortgages.housingmarket
The FSA cites three warning signs on mortgages:
· The loan was taken out for longer than 25 years;
· It is worth more than 90% of the home;
· The amount borrowed is 3.5 times or greater than income .
Over a third of all mortgages sold between April 2005 and September 2007 fall into one or more of these categories. This suggests that more than 2m of the 5.7m mortgages written during this period are of potential concern. It is the 1.04m customers whose mortgages contain two or more characteristics who most concern the FSA. It calculates that the number “most likely to default on loans” – those whose mortgage falls into all three categories – is 150,000.
Rob -“What exactly are you disagreeing with, or taking issue with?
I’m saying that the mortgage is a charge against the land, or is an interest in the land, while the covenant is the promise to pay. The mortgage is limited to the land; the covenant is not. You’re saying the mortgage consists of both things together. I think we’re splitting hairs, frankly.”
Why can’t you just admit you are wrong about something. The covenant to pay is contained within the mortgage, a type of loan used for purchasing real property of all sorts. The mortgage charge against the property is simply security for the covenant to pay. They are not separate things. Without a covenant to pay there is no underlying obligation entitling the lender to charge the property. Previously you suggested that one could walk away from the mortgage but not the covenant. That doesn’t make any sense!! The covenant to pay is the underlying obligation (in all mortgages around the world) to the lender for the debt. The charge against the property is security for that covenant. The only way to limit ones exposure to the security on the property is to negotiate a limited recourse loan. That means the lender would agree to limit it recourse to the real property secured by the loan.
I wouldn’t want you to mislead readers like Newcomer into believing they can buy a home they can’t afford and then walk from it with the only conequence being the loss of the home. No such mortgage financing exists!!!
Lower rates are futile. They will be like pushing on a string. These years of excess will be severely punished. That’s just the way it works.
“There were 238 new listings today and 91 sales, for a sell/list of 38.24%. Inventory reached 9,235, of which 2,606, or 28.22% were over 90s.”
Means nothing.
Also:
News Flash said:
“When peoples mortgage payments increase 10 fold here maybe we will see the same thing”.
Rob, you might think that I am trying to scuffle your integrity, but in fact it’s when you let News flash et al, go on with statements such as these, that your integrity goes down the tube.
How do these numbers compare to last year?
>>No such mortgage financing exists!!!<<
You mean to say, in BC. In California, as one of many examples, the bank can in no circumstances go after anything but the house. That was the case in Alberta up to a few years ago, but I remember hearing rumors to the effect that they widened it.
You are speaking with a great tone of authority, and yet you seem to be unaware of how mortgages work outside of BC. Admittedly, we are only talking about BC, but you keep wrongly invoking universality, which greatly weakens the rhetorical effect of your argument.
Yes, Newcomer. I meant no such financing exists in BC. California does have purchase money mortgages that are non-recourse. The personal covenant to pay is still the underlying obligation (as in all mortgage loans) secured by the mortgage over the home. In such non-recourse loans the recourse of the lender is limited to the home. You won’t find such financing here which is the main reason why people here will not walk from their homes.
Lots Going On In Euroland, Not Much Of It Good
New York, January 30th. With the Euro bulls still snorting ahead of yet another anticipated Fed rate cut, and with an obdurate ECB still talking price pressures, the Euro racked up another 1.48 plus print, which had the techies talking about potential triangle break outs, and 1.50 plus again. Economic data out of the continent was once again dire, Spanish retail sales down 1.9% y-on-y, this was the continent’s darling, and source of almost a 1/3rd of job growth a year ago. Now the Spanish banks are using mortgage backed securities as collateral for ECB loans, and predicting housing starts to drop from 600k to 400k.
ECB’s Hurley sees risks to growth from the US slowdown, Garganas sees a US slowdown but no recession. The Swiss Kof was much worse than anticipated, Norwegian retail sales down, and UK mortgage applications lower than anticipated. Dutch central banker Wellink said “the risks of the credit crisis have been underestimated, downward risks are still present, could lead to “a spill over effect in equity markets and other parts of the financial sector” – the signs are all there but the ECB doesn’t care, inflation is the bugaboo. The Fed move today is expected to be 25bp, and if it is, the Euro is vulnerable as it may be a Fed on pause after this, and the ECB playing catch up; spot last at 1.4780.
“Have the world’s stock markets peaked out after several years of incredible bull markets?”
Yes
“And was last week was the initial breakdown which could be followed by relatively sharp rallies for awhile before the grip of the bear takes hold?”
Yes, the market could rally for awhile on interest rate cuts, but if the U.S. falls recession there will be a bear sell off. It is best to hold off buying stocks until the Fed stops cutting rates or pauses for awhile.
“Will gold continue its bull market into new high ground and ultimately turn into a frenzied gold rush which will shake the world?”
Maybe, if the Fed keeps cutting rates and inflation keeps rising.
Housing slump puts a brake on US growth
Growth in the world’s biggest economy slowed dramatically to a 0.6 percent annual crawl in the fourth quarter of 2007
http://tinyurl.com/ysoesc
I find gold price really interesting. Even if USD has to fall, the cost of gold is really still at USD $300 / ounce. I see no justification for gold to be more than $400.
U.S. GDP is revised a lot of times, so this weak number could go up or down in a revision.
U.S. slump spreading around the globe, IMF warns
http://tinyurl.com/2pq985
Annon,
The same can be said for the price of oil.
CTV.ca – Canada ranks best on housing affordability survey- CTV News, Shows and Sports
Canada is at the top of the list in a new study comparing housing affordability in six countries.
The Demographia International Housing Affordability Survey: 2008, released by Wendell Cox Consultancy, compared conditions in the larger cities of Australia, Canada, Ireland, New Zealand, the United Kingdom, and the United States.
http://tinyurl.com/37sx4y
Mr. Maxwell:
“Previously you suggested that one could walk away from the mortgage but not the covenant. ”
Several others suggested that would and is happening now in the states. I said that while you may walk away from the charge on the land, you probably wouldn’t escape the covenants. When you took exception I said that you were probably keying in on the word “may”, giving it more weight than I intended, and that it was probably a bad choice of words. I have never said that walking away from the comprehensive mortgage agreement (as opposed to the charge against the land itself) was an easy or preferable route.
The truth is, the covenant is critical. If you’ve made a covenant but have nothing to back it up, all the lender can do is collect against the property (and give you bad credit). You can walk away, in that sense, if you want to call it that, but let’s face it: if you can’t pay and are being foreclosed on, saying you’re walking away is akin to saying “You can’t fire me! I quit!”. You still lose, either way.
Strictly speaking, a mortgage is not a loan, despite your claim that it is. Its a charge against or aninterest in the property. Its given in return for the loan, but is not the loan itself. That’s clear, and beyond dispute. Why (to use your question) don’t you just admit that you’re wrong? Because we’re splitting hairs. You say the mortgage is the comprehensive document. I say that the mortgage is the charge, and the comprehensive document may (depending upon jurisdiction) contain other convenants.
“I wouldn’t want you to mislead readers like Newcomer into believing they can buy a home they can’t afford and then walk from it with the only conequence being the loss of the home.”
If that’s the issue, let me make it clear: Don’t buy a home with a high ratio mortgage that you can’t afford, thinking that if things go south you can walk away from your obligations without suffering serious fallout. The world doesn’t work that way.
BTW, I’ve argued several times in the past that people here will stick with painful mortgages in order to avoid the greater pain of foreclosure/walking away.
Newcomer:
“Admittedly, we are only talking about BC, ”
Actually, I thought we were talking about more than BC. Domus brought up LA as the model, no?
We’ve caught up to last years total inventory today but started with less at the beginning at the month. Based on Rob’s numbers listing this year are up by 32% at 1787 compared to 1352 last year on this day.
Regarding the demographia study, Vancouver’s medium multiple is up sharply from last years which I think was 7.1. I wouldn’t doubt if we had the largest increase percentage wise. Also, the demographia numbers are for Metro Vancouver including the Valley.
I posted the link to actual demographia study on yesterdays thread. Vancouver, Victoria and Kelowna rank as severely unafordable.
Of course the rest of Canada rated much better.
Cool Guy:
“Canada ranks best on housing affordability survey”
Quoting the beginning of that article spins it one way, but quoting the end spins it the other.
“For example, a household moving from Vancouver to Winnipeg would save nearly $1,000,000 in purchase and mortgage costs for a median-priced house. The savings are equivalent to 16 years median household income at Vancouver income levels or 17 years at Winnipeg rates.”
Toronto-Dominion Bank’s chief executive officer, Ed Clark, says a significant slowdown is coming and the Canadian economy will not decouple itself from the United States.
http://tinyurl.com/3d5w4z
“Actually, I thought we were talking about more than BC. Domus brought up LA as the model, no?”
We were, but the gentleman made the claim that it was different here and, from that point on, we were talking about BC. Apparently it is different here, but not for the reasons Mr. Maxwell originally cited (the low unemployment and the honest, hardworking nature of BC folks).
What I found kind of interesting is that no one here was up to speed on this. You had apparently forgotten the details. Mr. Maxwell seemed to be under the impression that there was nowhere where you could just walk away and keep your money. Everyone else was asking how it worked here (me included). For a bunch of RE geeks, we are not very impressive.
Last year, December and January were about the same; pretty dead. Business picked up in February in a major way, and “Months of Inventory” started to reverse. Curious to see whether anything like that happens this year. I’m doubtful — the only potential buyers left are shooting each other outside expensive downtown restaurants…
perhaps you could tell me, coco, what we import from Britain that is worth around 10 billion….i could not read your link …blurry……and long…….i am sure we import some stuff but am not sure what. or some examples i just do not know thanks
Bloomberg….4th quarter residential spending on construction renovations etc …………..DOWN 24%
Has not been this weak 1n 26 years
2007 – 26 =1981 must be a coinincidence
I tend to agree with awum. It seems different this time because various factors are in play this year as opposed to last year or the previous few years.
I also think, like awum, the criminals would be some of the players in this market. There is a large population of them and the penalties for having huge grow-ops, drug rings etc is a joke. The risk is worth it if you don’t mind a criminal record. If you’re convicted of any of these major offences, you’re probably not going to jail. Our legal system is a joke. I refuse to call it the justice system because justice is not part of this system. 🙂
Buy when things could not possibly be worse
Sell when things could not possibly be better
Does that make any sense or not? somebody told me this
By the way, Bush’s stimulus plan is a joke. But you got to give him the credit and courage to respond to people. People expected him to do something so he did despite how useless of what he did. Seriously when a government is in debt in trillions, what’s another 160 billion? And if subprime (which they keep telling you that it’s too small to be an issue in the market) alone causes 200 billion losses (some predict $600 billions will be the total), the crack in prime has just started. Wonder how Bush’s 160 billion stimulus money can stimulate anything? Only the brainless mass would think what he did makes any sense.
>>Buy when things could not possibly be worse
Sell when things could not possibly be better
Does that make any sense or not?<<
Of course it does — for an investor. But if we are talking about a place to live, then no, it does not make sense.
yes legal system need an overhaul incredibly slow unjust inefficient etc agree 100%
My theory is they want it like this so we dont go after THEM….u know…the big guys….big white collar crime and corruption.
Justice starts at the bottom and works up…if u stall it at the bottom it aint going anywhere
thats the way they want it
Reminds me…..when they going to go on the the BC RAIL potential fraud thing tangled in with the liberal government??
What the HELL are they waiting for??
You guys may think it’s a crazy idea. But lets just say the supply and demand theory holds. How much money can they make from dope if it is made legal? The reason it is so expensive and thus a lucrative business is because there is a demand but supply is limited due to legal issues. No point to argue about whether it should be legal or not as I am not interested in this part of the event. I am just looking at purely the economic side of it. The fact dope costs more than life saving medicines and that so many people seem to be ok with the price deserve our second look at the whole industry.
talking about WHAT the heck is the FED doing?
Why do these guys announce the .50% cut in the rates 8 minites before the gold markets ..COMEX ..closes?
8 minutes … what a coincidence not surprising gold explodes to the upside probably closing at new all time high
If the Fed cant time an annoucement fairly .. you think people should have confidence in them?
So much for Bernanke’s expertise. If their rate cut does not stop a recession in the end, the problem is two fold: recession and worthless dollar.
The funds rate is now the lowest since June 30, 2005. The Fed has cut the funds rate 225 bps in 134 days.
“You guys may think it’s a crazy idea. But lets just say the supply and demand theory holds. How much money can they make from dope if it is made legal?”
Studies based on other countries (Netherlands) show that, if the government legalized and taxed drugs consumption, we could reduce the personal income tax by a few percentage points.
The economy would benefit (lower taxes are often accompanied by higher labour supply and growth). To top it all we would also give a fatal blow to organized crime.
So, what is so immoral about it?
Mr. Maxwell: “In such non-recourse loans the recourse of the lender is limited to the home. You won’t find such financing here which is the main reason why people here will not walk from their homes.”
It gets complicated by MI as well. When does the insurer pay off the principal and will the insurer go after the defaulter. In many cases there is no money to be squeezed or it is too expensive to obtain so the loan is partially written off. I think the point about the “recourse” (the correct term BTW) and potential differences between borrowers in the US “walking away” and what can really happen in Canada is a good one. I don’t have a sense of what reality is on this front but I’m glad it was brought up as I will look into it further.
Rob, if you know someone in a bank mortgage department or a lawyer that could give a guest post on the foreclosure process and what a mortgage actually means in terms of one’s other assets we would be most grateful!
bernanke – drops it!
awesome.
spark
Flagstar Bancorp: Concerned About Consumers Walking Away
“Another effect we are seeing has been a challenge with the media and consumer groups; and with consumers willingness just to walk away from homes. We haven’t seen anything like this since Texas during the oil bust and people just willing to declare bankruptcy and walk away. We are seeing a lot of that similar type social phenomenon occurring, especially in California. And that is concerning to us.”
Mark Hammond, CEO, Flagstar Bancorp conference call. (hat tip Scott)
Hammond also expressed concern that a larger percentage of homeowners – as compared to previous housing busts – that go delinquent, don’t cure. They just “go under” in Hammond’s words.
Here is what Hammond means: Say a homeowner misses a payment and becomes delinquent. Historically most homeowners try to make future payments – even if they stay 30 days late. Now, according to Hammond, once they go 30 days late, many homeowners just give up and keep missing all payments; they go 60 days late, 90 days late, and on to foreclosure.
Also, there was some concern expressed about CRE loan concentrations and delinquencies.
“In such non-recourse loans the recourse of the lender is limited to the home. ”
Suppose the “new” home is with another mortgage bank: they will never allow the previous creditor to attack their asset. I think these guys are home dry……
if u ask me cops find more dead drug dealers than they catch….last i heard marijuana business bigger than our lumber business HUGE
Look .. if loggers were crimimals we could catch thousands of them………. but obviously the dealers have much more brains than our legal system….or is there something funny going on?
Justice starts at the bottom….stall it at the bottom and it aint going anywhere
personally i think a good rally here for awhile in the stocks,,,,backing up and down……..down the ROAD gonna get slaughted….
ANYBODY think that makes sense…i dont know for sure
ps probably should legalize it…get a doctors note..increase tax revenue
What the heck are our governments doing?
Answer…building up their pension plans and opening bank accounts in strange places,,,dont know for sure…make sense?
2+2=4 make sense?
http://www.firstnational.ca/default.aspx?menuId=14&catId=1&Content=Pages/Residential/SolicitorDocuments_bc.html
here is a link to some mortgage documents from First National Financial if you have interest to read the boring stuff.
rob:
your late shift outsourced paperwork distribution system just took one in the gonads:
http://tinyurl.com/252r8v
hmmm plan “B” anybody?
Rob, here is a link to RBC’s standard form mortgage for BC. Read the definition of “mortgage”. It’s the agreement.
Click to access 3994(11-30-2005).pdf
Try this link
http://www.rbcroyalbank.com/RBC:R6DbD471JscAPLAIZ0I/legalforms/download/3994(11-30-2005).pdf
Sorry, this one:
http://www.rbcroyalbank.com/RBC:R6DbD471JscAPLAIZ0I/legalforms/download/3994(11-30-2005).pdf
Just google: RBC Standard mortgage terms. That will get you there.
OK DOC
Looks like the rate cut that led the stock to surge only to decline in the end. Thought the rate cut was what the market wanted it? Bernanke really needs to stop this insanity of panic rate cuts. Just relax and let the market settle on its own for a little while. Don’t do anything silly now.
“perhaps you could tell me, coco, what we import from Britain that is worth around 10 billion….i could not read your link …blurry……and long…….i am sure we import some stuff but am not sure what. or some examples i just do not know thanks”
I got curious about this myself and looked up the top ten for 2006 at strategis.ic.gc.ca:
(figures in thousands of CAD)
21111 – Oil and Gas Extraction 3,937,380
33641 – Aerospace Product and Parts Manufacturing 1,183,232
32541 – Pharmaceutical and Medicine Manufacturing 1,168,736
33611 – Automobile and Light-Duty Motor Vehicle Manufacturing 318,485
33361 – Engine, Turbine and Power Transmission Equipment Manufacturing 317,881
32519 – Other Basic Organic Chemical Manufacturing 251,039
33451 – Navigational, Measuring, Medical and Control Instruments Manufacturing 237,372
33312 – Construction Machinery Manufacturing 193,274
33531 – Electrical Equipment Manufacturing 141,019
33141 – Non-Ferrous Metal (except Aluminum) Smelting and Refining 138,927
Mr. Maxwell: “here is a link to RBC’s standard form mortgage for BC.”
I read through the document (thanks for finding it BTW). Note if a borrower defaults one of the actions available is to sue and it is made clear that, even after money is recovered from sale of the property, they can still go after you for the remainder outstanding (which I assume is the lesser of a valid prepayment option or carrying costs to term).
Imagine a situation where a homeowner defaults on the mortgage and the bank tries to figure what to do. The way I read the contract, this could drive the borrower into bankruptcy if not other options are more economic from the bank’s perspective.
According to the contract, a solution could be to auction the house and recover the balance by forcing the borrower to liquidate other assets (like RRSPs). It may be in the bank’s interest to cram down payments because they offer better returns than straight foreclosure, given the overhead involved and, if prices are depressed, given the value of the house on the open market.
Remember, too, that a bank really doesn’t want borrowers to go bankrupt so, as is the case often with union strikes or temporary layoffs, the bank will work out mortgage payments for a time so as to keep people out of BK. But from what I can see “walking away” is not simple at all unless some mortgage contracts are written differently.
Domus:
The new bank takes precedence over other creditors on the new property. The old bank can only go after equity in the new home, anyway. If the buyer has no equity and no other assets the old bank may not be able to collect, but that doesn’t mean they don’t get a judgement. The nature of judgements vary, and some are good for life (at least I ran across one here that appeared to be). Home and dry is, I think, a stretch.
Mr. Maxwell:
Does these work better for you?
http://www.rbcroyalbank.com/legalforms/ab-residential.html
Click to access form_b.pdf
My question remains: what’s your point? If we all define a mortgage as a comprehensive loan document drafted by a lawyer on retainer for a bank and conforming with BC statute, then you’re correct, and I’m wrong.
If we want to recognize that the term “mortgage” is often used to describe a loan (from the lender to the borrower), rather than describing what it really is (security or an interest in real property given by the borrower to the lender), then we have to admit that you and I can use the same word to describe different things. That’s what happened.
A “mortgage agreement” contains covenants. A “mortgage”, strictly speaking, does not, and is given, along with convenants, in return for a loan. The mortgage and the covenants form the mortgage agreement, which the lender generally defines as the “mortgage”.
The internet has many definitions of mortgage, and they aren’t all the same.
These sites define the mortgage as the promise.
http://www.lectlaw.com/def2/m040.htm
http://www.thefreedictionary.com/mortgage
http://en.wikipedia.org/wiki/Mortgage
http://banking.about.com/od/mortgages/g/mortgage.htm
http://legal-dictionary.thefreedictionary.com/mortgage
http://www.merriam-webster.com/dictionary/mortgage
These ones define it as the loan itself.
http://www.ducksoftware.com/terms/mortgage.html
http://www.investorwords.com/3124/mortgage.html
In the Scotiabank mortgage documents they define the mortgage thusly “Mortgage means the Mortgage Document and these Terms.”
The Royal accomplishes the same thing this way: “Mortgage means the legal agreement between you and us, which gives us rights over your Property”.
Why do they explicity define the term in their agreements? Because they’re changing the meaning of the word, on a mutually agreed basis, for the purposes of both they and the borrrower. Can you imagine what would happen if they didn’t define the mortgage that way, and then renewed the mortgage (the charge) but not the convenant (the promise)?
The definition depends, clearly, on the usage, but outside of a specific document mortgage does not mean the whole agreement.
None of this implies that I think people can adopt breach of contract as a viable method of business. I don’t believe that wholesale foreclosures in the US will result in happy mortgagors.
Somewhat off topic — Does anyone know how things are playing out in the interior? Are there sites with towards numbers, charts or blogs for, say, Kelowna and Kamloops?
Thanks,
Again,
Whybuywhenucanrent?
“Home and dry is, I think, a stretch.”
Maybe. But still a very feasible (and inviting) option if you are deep in negative equity. Otherwise there would not be so many people doing it down south,
I think Canada might be marginally tougher, but the bottom line is that this one is an empirical question: if there was major jingle mailing in Vancouver, what would banks (and courts) do? Is it reasonable that they would prosecute a few thousand people separately, clogging the system?
I have my doubts: I still think this is much more feasible than what many think.
Is today’s post about semantics?
zzzzzzzzzzzzzz….
From Marketwatch:
On Wednesday, the Federal Reserve’s Open Market Committee lowered the target for the federal funds rate by 50 basis points to 3%. In eight days the Fed has cut rates by 1.25 percentage points, the fastest pace in 20 years. See full story.
After the Fed’s move, market rates for 30-year notes and 10-year bonds rose steeply. By contrast, rates fell sharply for 3-month and 6-month bills. See Bond Report.
Fixed-interest mortgage rates are set by markets based on long-term money rates, not short-term rates. If bond investors fear that the Fed is letting inflation get out of control, then long-term rates could rise, as they did on Wednesday after the rate-cut decision.
It’s not just mortages they are a small part of the current world financial crisis.
“In a world where one trader can lose $7.2 billion for a single banking institution, or Citigroup (C) can lose $30 billion in the subprime mortgage business, a few rate cuts and a scolding from the central bank is not going to end the unwinding of the Great Financial Mirage of the 21st century — trillions of dollars worth of investment bank and deposit-taken bank profits that turned out to NOT be profits at all. If this financial crisis runs to its worst conclusion, we have $1 trillion in additional bad paper to add on the subprime funeral pyre.
* Up to $250 billion in bad credit default swap paper
* Up to $200 billion of bad home equity paper (out of $900 billion total)
* Another $150 billion in additional subprime paper
* $100 billion to $200 billion in bad credit card paper
* $100 billion in bad auto loans
* $100 billion in bad student loans
* $250 billion in bad corporate high-yield bonds
This is the trillion-dollar meltdown the Fed is trying to avoid here.!”
this from a financial advisor that charges big bucks … think about it … I would touch a housing investment in the next six months unless you paid me.
The fun is just starting….
should have been not touch.
VD: Yup
Domus: “Maybe. But still a very feasible (and inviting) option if you are deep in negative equity”
For it to be feasible at all you need to be faced with a lender who has no other recourse. I he has recourse you’ll possibly lose any future equity gains in house two, and its possible that he’ll try to collect on other assets or income.
Would banks prosecute people if they’re faced with losses even if it clogged the legal system? I’d think so. Government runs the courts, banks run the banks. The issue wouldn’t be whether they’re clogging the courts, but rather whether the borrowers have any money left (IMHO).
I am not sure about Canada, but in the US you can declare bankrupt and start anew. It’s like raising your hands, saying: take what I have now but from tomorrow I a free man.
This is what the “walkers” are doing: I think they hope that, having no equity in their new homes, they will be left to leave there.
I think we’ll kno more about this in the weeks to come. It can play out in loads of different way, but we still don’t know why because this is uncharted territory.
I keep my reservations: thousand will try to play the game. Will they win it?
Rob, I’m glad you’re taking steps to educate yourself. This is obviously a topic that will become more and more relevant as the market changes.
Here are statements from you yesterday and today:
“Its not clear to me that the lender has recourse to other lands or assets simply by virtue of the mortgage alone. However, some mortgages, as I recall, contain other provisions such as assignments of rents, and personal covenants. I know I’ve signed personal covenants, but that could have been strictly for properties owned in company names, and may not apply to regular residential stuff.
A “mortgage agreement” contains covenants. A “mortgage”, strictly speaking, does not, and is given, along with convenants, in return for a loan. ”
My point is that a mortgage in this jurisdiction is an agreement that contains, among other things, a promise to pay the debt (i.e. a personal covenant). A mortgage is more than just a charge on title. The registered charge on title incorporates by reference all of the terms of the mortgage. When a home buyer or investor purchases a property, they should be fully aware that when they sign a mortgage (the Form B that you think of as the “Mortgage”) they are promising to pay the full amount of the mortgage whether or not the security (i.e. the property) is sufficient to satisfy the debt. They do not sign a separate “mortgage agreement”.
Interesting site:
http://www.foreclosureradar.com/
Mr. Maxwell:
I get your point (and have for a while now). You say the term mortgage means only one thing (the whole agreement); I say it can mean more than one thing, depending on what the speaker is trying to convey. I guess your argument is that a) banks define mortgage contractually in each loan agreement because there is only one definition of the word, b) whats done in BC is definitive worldwide, and c) conflicting web definitions exist because the ones that don’t agree with yours are wrong. O.K., I agree to disagree.
Neither one of us thinks its easy to walk away from mortgaged property. We agree on that.
“This is obviously a topic that will become more and more relevant as the market changes.”
I tend to disagree with you on this. I don’t share Domus’ confidence that we’ll see widespread jingle mail here. Walking away from mortgaged property will remain difficult and by no means an easy solution to your problems. I don’t think a drop in values will precipitate foreclosures. I think we’ll need a relative increase in loan servicing costs for that to happen. I don’t see that in the cards. Do you?
I can’t believe this. Nobody picked up on the fact Mr. Maxwell is an American Troll, probably trained by NAR
Jesse – “But from what I can see “walking away” is not simple at all unless some mortgage contracts are written differently.”
Jesse, you are welcome. I think a lot of people misunderstand their obligations and a lender’s rights under mortgages. Lenders have many remedies available to them against a mortgage debtor who is in default. Foreclosure is only one option. In these parts the rights of lenders under mortgages are very similar. Walking away in BC means you walk away with what the courts let you keep to survive.
Rob, did you re-read your post from yesterday. You are obviously a little shaky on the topic but I’m glad you are doing some research.
I’m not debating the meaning “mortgage” with you. I’m pointing out that when you sign a mortgage in this jurisdiction you are promising many things and not just the security of your home. Read your post from yesterday. Be realistic and not so argumentative.
Did I say what is done in BC is definitive world wide? I don’t believe I did. In my post above I believe I said in this jurisdiction.
Did I say that any of the web definitions are wrong? I don’t believe I did.
My point about relevancy is not in respect of foreclosure, though that may be a possibility. My point is that people usually want to know their obligations and rights under agreements when they are thinking about the consquences of default.
Bobbybear,
To see what we import from the UK or any other country by using this link
http://tinyurl.com/2yjz7s
Change Trade Type on the left hand side to “Total Imports”
Change Trading Partner on the right hand side to “UK”
Change the Product Search to “Top 25 Products”
Click on “run report” and you will see everything we import from the UK.
Things I’m aware that Canada imports from the UK are 23% of Britain’s tea, various liquor, candy, chocolate, cookies, various cars Jaquar, Mini Cooper, Land Rover, Aston Martin, Rolls Royce and various TV shows BBC news, Coronation Street, even American Idol/Canadian Idol shows are spinoffs of the original British TV show called “Pop Idol”
Also Rolls Royce makes jet engines and we import those too.
And some good whisky as well.
….don’t forget marmite…..
Anybody see the global segment on “BC’s Diamond triangle” 700,000 more people expected in the next twelve years. It was on a couple times this week.
Dave
Books, magazines and these….
http://tinyurl.com/yoa8xx
Watched Olsen on your side about a couple wanting to downsize here and also buy a property in Palm Springs.
“-A-
January 30, 2008 at 5:45 pm
I can’t believe this. Nobody picked up on the fact Mr. Maxwell is an American Troll, probably trained by NAR”
Yes, I too have had suspicions. Could also be a CIA mole.
I’m actually from HK and trained in the fine art of tailoring cheap suits.
This is what happens when you are pegging your currency to the dollar:
“HSBC, Rivals May Trim Hong Kong Lending Rates After Fed Move
By Chia-Peck Wong
Jan. 31 (Bloomberg) — HSBC Holdings Plc may lead Hong Kong banks in trimming lending rates to the lowest in almost three years today, fueling a four-year property boom.
The Hong Kong Monetary Authority, the city’s de facto central bank, cut its base rate for overnight lending a half- point to 4.5 percent today, following a similar move by the Federal Reserve yesterday. Fox-Pitt Kelton analyst Warren Blight predicted Hong Kong banks may lower rates by a quarter-point.
Mortgage costs that are below the rate of inflation for the first time since 1997 will help drive demand for property that’s pushed prices of luxury homes to the highest since before the Asian financial crisis a decade ago. Cheaper credit may also buoy spending by individuals and companies, shielding Hong Kong against a U.S. economic slowdown. ”
Rob and others: what are the implications (if any) for Vancouver RE? There are many HK based people living here. Does this make them more or less willing to get involved in local RE?
My impression is that this move generates inflation in the HK dollar and depreciation with respect to the Canadian dollar. Vancouver RE all of a sudden will be more expensive for these guys, some might be better off cashing out.
I am from HK. From what I see, there are very few HK people moving into Vancouver. In fact, even their 2nd generation (Born and raise in Vancouver) are moving back to HK looking for better opportunities. Seems a lot of local fresh gradutes couldn’t find job that has a future. If you are not the smartest potato here, the only option is working at Telus call centres. Many see themselves can do better than that, and decided to move.
There is no future for them here in Vancouver. Very sad.
“Anybody see the global segment on “BC’s Diamond triangle” 700,000 more people expected in the next twelve years.”
Yes the demand will be increasing significantly over the next several years.
But don’t forget there will be a small window coming up soon where the population growth will pause. While this is happening the people who bought over the last few years will just walk away from their homes for no apparent reason other than to provide cheap housing to those who have been waiting on the sidelines. We should see discounts of at least 50%.
If you don’t believe me just ask the experts like A and Domus. They will tell you it will happen for sure. If you don’t believe them Strataman will back them up and Blueskies can provide several US links that have no relevance but are interesting reading.
PS Dave
If you post anything remotely bullish on the real estate market you will be labeled a troll. After all this is a real estate investment blog and only negative things are allowed to be brought up. Please do not post facts, fundamental analysis or numbers in the future that contradict A’s work.
Domus on why we will see foreclosures in 3 years time:
“last time I checked it was inability (or unwillingness) to pay back debt…”
Any reason why people are not unwilling or unable right now? What changes in 3 years time?
Newflash said:
“Please do not post facts, fundamental analysis or numbers in the future that contradict A’s work.”
Please do post facts, and fundamental analysis, it will be greatly valued.
What won’t be valued is this:
“News Flash said:
“When peoples mortgage payments increase 10 fold here maybe we will see the same thing”.”
If you post anything remotely bullish on the real estate market you will be labeled a troll. After all this is a real estate investment blog and only negative things are allowed to be brought up.
http://tinyurl.com/yu7wv6
If you delete a nasty comment, what are the drawbacks? Are you afraid that person might stop visiting your blog all together? Is that really the kind of person you want trolling around your site anyway, just waiting to spew more garbage at you and your readers? In fact, not deleting nasty comments can impact your readership more, as they can make your readers uncomfortable.
Bottom line: it’s your site. You can delete or edit any comment that is left. Don’t give the trolls a voice.
“If you delete a nasty comment”
I guess bullish comments are considered nasty to some. Like those who have bet everything on a certain outcome and it ain’t happening.
Don’t blame the messenger.
newsflash:
you admit to being a troll in the guise of a purported bull and then state trolls should be controlled….
strangely enough i agree with you ……. 🙄
“What won’t be valued is this:
“News Flash said:
“When peoples mortgage payments increase 10 fold here maybe we will see the same thing”.”
So if what is taking place in some areas of the US (teaser rates of 1% being reset to 10%) happens here we won’t see the same thing?
It doesn’t really matter I guess because no such teaser rates exist in Canada.
probably, real estate spends 70% of its time increasing in value historical…..
“So if what is taking place in some areas of the US (teaser rates of 1% being reset to 10%) happens here we won’t see the same thing?”
Newsflash: This is one of the many fundamental flaws in your argument.
If the market hadn’t crashed the overextended would simply sell.
Hence that market crashed independent of the ARM’s reset.
Another fundamental error common among the RE bulls is that you think the US there was a bubble because of easy financing , but in Canada it was all solid economics.
Yet you fail to research the recent history, if you did the research you would realize the RE promoters used the same arguments used over and over you know….. shortage of land , rich immigrants, rich baby boomers etc. and yes the Olympics, the Americans had those too.
Too much, hype, too much easy money, prices get out line, supply is added, demand dries up and the bubble pops-easy stuff.
Newsflash:
I am pretty sure Vancouver population didn;t stop growing during the past crashes. There may be different rates of growth, but the issue is how much supply is out there to accommodate them.
Crashes do occur and persist in growing cities (the first crash in BC was after the roaring 20’s, when Vancouver population tripled!).
I also have to agree with -A- that you make posts which are completely wrong sometimes: the one about the subprime mortgage payment being 10 times larger was basically ridiculous, I didn;t even reply. The average increase, according to Mortgage Insider, is between 25% and 35%.
Check out Paul B’s blog. He has today’s listing numbers (a bit of a different area than RC), and they are positively bearish.
http://www.northshoreproperties.ca/aPage.jsp?aPageId=8
Paul’s numbers – holy crap (Rob, are we allowed to use the word ‘crap’?) – listings are SURGING over last year (I mean number of new listings, not total listings – as was indicated earlier, we started with a lower total base of listings, but now are caught up on the strength of listings relative to sales strength – Rob, I guess I can’t ask daily if we are seeing a trend, but …. are we? And I don’t mean with your activity, but with the macro numbers – thanks.
This is getting fun.
News Flash
PS Dave
If you post anything remotely bullish on the real estate market you will be labeled a troll. After all this is a real estate investment blog and only negative things are allowed to be brought up. Please do not post facts, fundamental analysis or numbers in the future that contradict A’s work.
I am not bullish at all on Vancouver real estate.
I had seen this global segment on “BC’s Diamond triangle” and was curious why nobody had talked about it. Is it realistic? It seems like a lot of new people in a short time to the fraser valley. Where are all the new people coming from and can they afford to live here??
Dave
So much for a rate cut:
NEW YORK (MarketWatch) — U.S. fixed-rate mortgages rose for the first time in five weeks, according to Freddie Mac’s survey released Thursday. The national average interest rate on the benchmark 30-year, fixed-rate loan averaged 5.68% in the week ending Thursday, up from 5.48% a week ago, but down from 6.34% a year ago. The 15-year fixed-rate loan averaged 5.17%, up from 4.95% a week ago, but down from 6.06% a year ago. The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.32%, compared with 5.13% a week ago and 6.04% a year ago. “Mortgage rates ended their five-week descent this week, with average rates on 30-year and 15-year fixed rate mortgages coming up by about 0.2 percentage points,” said Frank Nothaft, Freddie Mac vice president and chief economist. “This increase completely erased the previous week’s decline. The movement in fixed mortgage rates was broadly consistent with the movements of Treasury bonds over the week.”
The Canadian dollar retreated more than a cent against the U.S. dollar Thursday on tepid Canadian economic growth figures, sliding oil prices and rising U.S. jobless claims.
http://tinyurl.com/2mds9y
WOW-
I count inventory at the end of every month. What you guys can’t see from my graphs is we were at 7871 on Jan 1st. We will crack 10k today. That is quite an active month. I suspect most of the early rush was relistings. Last year we had the same amount of inventory so nothing looks unusual so far…
Canadian GDP Posts Small November Increase
http://tinyurl.com/ys8lzv
The country’s economic growth has been slowing since the start of 2007. Quarterly GDP increased 0.9% in the first three months of the year, 0.8% in Q2 and 0.6% in Q3. Assuming no growth in December, GDP would come in at +0.4% in the fourth quarter, a StatsCan official said.
Actual Stats Can GDP report (more detail which industry groups slowed)
http://tinyurl.com/28hpqt
Paul:
“What you guys can’t see from my graphs is we were at 7871 on Jan 1st. We will crack 10k today. That is quite an active month”.
Absolutely.
“I suspect most of the early rush was relistings”.
If you’re correct I think the surge in listings is less important. They were on the market already, and aren’t really new entrants. They’re likely discretionary sellers, and won’t fuel price drops.
But, if you’re wrong, and these are new entrants, then their numbers take on new significance.
WoW:
“Rob, are we allowed to use the word ‘crap’?”
Yes.
“Rob, I guess I can’t ask daily if we are seeing a trend, but …. are we?”
Sorry, that question is not allowed!
Seriously, month long we’ve obviously seen a trend to increased inventory. We also know that breaking 10k is different from breaking 13k. We can handle 12K easily in my area (common level for last year, right?), assuming sales stay at the same volume. I think its also clear that we’re seeing a little stronger listing pressure than we did last year. Look for what way the change goes in February – if the sell/list goes back to what we’ve seen in the past, then we’re going to have a rising market again (I think); if we continue with 50% or less s/l then look out! (So, no to the daily trend!)
-A-
“too much easy money”
Finally, something we agree on. 🙂
Mr. Maxwell:
Sorry, I’m argumentitive by reflex.
“I’m pointing out that when you sign a mortgage in this jurisdiction you are promising many things and not just the security of your home.”
If we define “mortgage” as the loan agreement, then I don’t disagree. The loan agreement contains covenants to make up for the mortgage’s shortfall (if you define “mortgage” as the interest in land).
I said that the mortgage is limited to the property, but other covenants allow the lender further recourse. I also said that the covenants “could have been strictly for properties owned in company names, and may not apply to regular residential stuff”. That’s “could” and “may”, not “can’t” and “don’t”.
If a mortgage and a covenant are different, and if the mortgage is sufficient, why does the lender need the covenant? (If you answer that the mortgage and the covenant are one and the same, then we are arguing over usage).
My point was simply that the mortgage alone does not give the lender enough recourse. Covenants included in the loan agreement serve that purpose.
It seems to me that your point is that mortgage agreements in BC all contain covenants, and aren’t limited recourse. Further, you seemed amazed that I wasn’t up to speed on the details of conventional BC residential mortgage agreements. That’s fine and good, but we were talking about more than BC mortgage agreements.
Not all mortgage loan agreements contain covenants that allow for unlimited recourse. I think we both recognize that. Its is far from uncommon for buyers to purchase land with mortgage financing, strip it of value, and then allow foreclosure. Not all those mortgages have covenants. A similar trick is to mortgage the property as a back door method of optioning it. If it can’t be re-sold the buyer lets the seller foreclose.
Did you say any of the web definitions of mortgage are wrong? No. But you did say that a mortgage is a loan agreement that contains covenants, and while that is correct, its not definitive, and doesn’t give you grounds to disagree with someone who says mortgages are interests in land and not loan agreements at all.
“My point about relevancy is not in respect of foreclosure, though that may be a possibility. My point is that people usually want to know their obligations and rights under agreements when they are thinking about the consquences of default”
Interesting approach. I say I read, understand and agree to contracts I enter at the time I enter into them, and then forget the details because I’ve committed. You find this unbelievable. Now you say that people want to become aware of a contract’s provisions after entering into it, so that they can determine their next course of action. Your thinking appears inconsistent.
Let’s face fact: you and I both like to argue, but we agree on the basics here. Neither of us thinks its easy to walk away from mortgage loan agreements in BC. Neither of us thinks its a good thing to do. Both of us agree that BC mortgage loan agreements contain specific covenants. We’re splitting hairs over the meaning of “mortgage” and the area of jurisdiction. I was originally unclear on whether the convenants were in all BC mortgages, and you weren’t.
Rob, I’m going to be frank. It really, really, really seemed that you could not remember whether lenders can go after assets other than the house in BC. Now it really, really seems that you are trying to redefine the question at hand so that what we are talking about is the way document are broken up. It seems disingenuous.
If this blog is, in part, a marketing tool, I would have been much more impressed, as a potential service user, if you had left it at saying that you hadn’t given that much thought and thanks for the reminder to get on top of that aspect. You can’t know everything and most people would rather deal with someone who is upfront about what they know well and what they don’t.
Rob…..Do you find it harder to rent places lately??
I have been checking craigslist lately to get a feel for rentals in lowermainland ,because we are planning on renting when we move back this may/june. I see a lot of places still available for Feb 1. Did you rent out the house in north van?
thanks….Dave
I’ve looked at some of the new listings in the western half of Coquitlam. Yes, I recognize some but I’m fairly certain most were not on the market last year.
Many have recent renos and some are vacant, so I think there are potentially desperate flippers listing right now. Even some of the re-lists are flippers.
There also appear to be some tear-downs and vacant lots that may be builders backing out for now, along with some new construction (how many people can pay a million dollars plus for a house in Coquitlam?).
Is this good for Edmonton RE?? WoW we are seeing a lot of this – high C$…
Breaking News from The Globe and Mail
Dell closing Edmonton call centre
MATT HARTLEY
Thursday, January 31, 2008
Dell Canada has announced plans to shut down its Edmonton call centre, laying off 900 employees in the process.
The announcement comes just two days after the company revealed it was downsizing its Ottawa operations and scrapping plans to expand in the Capital region.
A spokesman for Dell Canada, a division of Dell Inc. of Round Rock, Tex., said that although a firm date had not been set for the closing of the company’s Edmonton facility, the call centre was expected to close its doors some time between May and July.
More later
© The Globe and Mail
Rob – “If a mortgage and a covenant are different, and if the mortgage is sufficient, why does the lender need the covenant? (If you answer that the mortgage and the covenant are one and the same, then we are arguing over usage).
My point was simply that the mortgage alone does not give the lender enough recourse. Covenants included in the loan agreement serve that purpose.”
Rob, you are confusing the concepts. Mortgage (as you are defining it as a charge on land) and the covenant to pay ARE different. When a person (or company) borrowers money to acquire a property they promise to repay the money. That is what we both call the covenant. The lender can’t register a charge against title (a registered mortgage) without the underlying loan and covenant to repay it. There must be an underlying covenant to pay otherwise there is no basis for the mortgage charge. A mortgage is not registered in the absence of a covenant to pay. There is ALWAYS a covenant to pay.
Recourse relates to the security available to the lender if there is a default. In BC, recourse is unlimited. In California, as discussed the other day, some purchase money mortgages are limited recourse. The California mortgages contain a covenant to pay from the borrower but the lender’s right of recourse is limited to the mortgaged property. You are confusing covenant with security and recourse.
Two observations:
1. I agree with Newcomer. If this blog is a marketing tool, in my view you would impress your readers more if you acknowledged you need to brush up on mortgage details.
2. You do seem to redefine the question to suit your position. You are also at times “wishy washy”. When somone asks your opinion, why not clearly state it? It is an opinion, it is ok if it doesn’t turn out to be correct. Sometimes a yes or no answer is all that is necessary.
Call centres close quickly with no advanced warning. I am very concerned about the future of Vancouver call centres as they represent some of the few solid jobs available to many of our young people. Some call centres are owned by (or outsource for) American companies under new financial pressures and are having trouble keeping good employees here.
BTW I have heard about new call centres in Vancouver, but they are in collections (ugh). Its shaking money out of American deadbeats and FBs.
Rob-“Its is far from uncommon for buyers to purchase land with mortgage financing, strip it of value, and then allow foreclosure. Not all those mortgages have covenants. A similar trick is to mortgage the property as a back door method of optioning it. If it can’t be re-sold the buyer lets the seller foreclose.”
Really. People do this in BC? What does stripping it of value mean?
Rob.
I have been seeing quite a few listing coming back on the market that were advertised as ‘SOLD’ last year. What is the legality of realtors doing this? This listings were not just advertised at ‘SOLD’ on the realtor’s webpage, but also show up as SOLD on MLS.
Here is one example, I can dig up many more if needed.
#3008 1199 Seymour St.
originaly listed mid last year and marked as ‘SOLD’ in November for $874,900.
http://tinyurl.com/2hmj4b
and
http://tinyurl.com/yvthuv
Now, here is is listed again today for only $25,000 more?
http://tinyurl.com/ytxnj3
Rob- “Interesting approach. I say I read, understand and agree to contracts I enter at the time I enter into them, and then forget the details because I’ve committed. You find this unbelievable. Now you say that people want to become aware of a contract’s provisions after entering into it, so that they can determine their next course of action. Your thinking appears inconsistent.”
I wouldn’t call recourse a detail. I suspect many homeowners in BC simply sign the Acknoweldgement confirming they received the mortgage terms without actually reading the terms. That’s understandable since mortgage terms/agreements are often long agreements and the buyers are focused on interest rates and such at the time of closing. Default is not something most people think of as they are buying purchasing a property. Where is the inconsistency?
quote of the day:
“No emergency can justify a return to inflation. Inflation can provide neither the weapons a nation needs to defend its independence nor the capital goods required for any project. It does not cure unsatisfactory conditions. It merely helps the rulers whose policies brought about the catastrophe to exculpate themselves.”
-Ludwig von Mises
(From “the big picture” blog)
What does stripping it of value mean?
Logging it, stripping off the topsoil (or other mining-type forays), are two ways that I can think of.
Mr. Maxwell:
Its done in BC with privately bought and sold land with timber value. I’m sure its done elsewhere as well. I’m not calling recourse a detail in terms of something to ignore. It is, of course a detail in terms of being a constituent part. Its also a moot point – the agreement is made prior to to a borrower deciding they want to walk. Educating themselves about it after the fact doesn’t change that. Anyway, I’ve gotta go for the weekend, so you win – you’re right, I’m wrong!
Dmello:
I’ll check when I get back. Try to remind me, ‘kay?
CRE: Macklowe Cedes Control to Lender
Remember this story? Macklowes On a Wire
Mr. Macklowe and his son Billy paid $6.8 billion to buy seven New York buildings from Equity Office Properties Trust. … Macklowe Properties put in only $50 million of equity and borrowed $7.6 billion, according to the documents. (Mr. Macklowe borrowed more than the purchase price to cover closing costs and other fees.) The deal also had “negative debt service,” meaning that the rents from the buildings weren’t expected to cover the debt payments for five years …Macklowe Properties financed nearly $5.1 billion in debt that must be paid back by February…
Well, the debt apparently isn’t being paid off. Instead, from the WSJ: Macklowe in Deal to Cede Control Of Seven Manhattan Properties
Troubled New York real estate titan Harry Macklowe has reached a tentative agreement with his lender to turn over effective control of seven Manhattan office buildings he triumphantly acquired less than a year ago for $7.2 billion …
Talk about walking away.
Rob, I didnt read the entire thread but did you say you were going to leave us with some numbers before you took off for the weekend? 😉
May I interject with an anecdotal?
I love this one: A friend of mine looked at Polygon’s Sakura development about a year and a half ago. Of course, the units were “snapped up briskly”.
Three days ago he got a call from the sales agent for Sakura saying there were “a few choice units still left”. He told her he wasn’t interested. A few hours later, he got another call from Polygon, this time from the Sales Manager, who he suspects remembers him from a previous Polygon transaction in which he bought and discharged the deal within the legal 7-day time period.
Since then, he has been getting at least a call a day from the manager. He expresses his feelings about this as, and I quote, “The woman’s been livin’ in my ass.”
I’ve told him to forward her my hotmail address so I can see the extent of units they have left. I will report back. But I ask, rhetorically, if the units have sold so well, why does she push so hard?