Friday, October 5, 2007

Open Thread

Ms. HHV and I kinda have a big day today, and then hopefully we shouldn't be around much this weekend.

Here's your open thread to discuss whatever you'd like.

If you post links, here's a little trick to make them clickable:

a href="">link text</a>

Just cut and paste the above into the comments section. You can then change the web address to (or whatever you want) and then change the link text to read whatever. Here's an example linking to Victoria's Truth:

<a href="">Victoria's Truth</a>

Have a great weekend.


Anonymous said...

Times-Colonist article: Developers have to increase disclosure to people purchasing pre-sale condos.


Anonymous said...

I know this site is predominantly bearish, so I'd be grateful to hear some thoughts on this :-).

What if the prices don't go down?

I've heard that many places in Europe it is not usual for first time buyers to be able to afford a SFH. I think many people live in condos or appartments their whole lives.

Every time I think the market is poised for a downturn, it still keeps rising.

Additionally, with the fairly large number of recent sales (at huge prices), I find it hard to believe people would be willing to sell and accept a loss. I know I wouldn't. Similarly, will people who've seen neighbours sell their place for huge prices be willing to accept a lower price for their own house - especially with the mentality that real-estate never goes down? So people may sit in their over-valued house, while the first time buyers sit on the sidelines and wait, or finally sucumb and jump in whether they can really afford it or not.

The pressure to get in while I can almost (but not quite) afford it is quite high. What if, like these guys predict, the prices do rise to $650,000 by 2009? Then despite saving like mad for the intervening years, I really will be priced out of the SFH market. Might I be better off buying now, and paying down as much of my mortgage as possible with the money I would have been saving to buy a house?

I guess it could be thinking like this that keeps the market going.

Any thoughts?

A first time buyer.

Sam said...

Europe is a mix - I lived there the last 4 years. The UK is as obsessed, if not more, with property than Canadians and Americans. But they look more extended than the US by basically every measure, and so we can expect a RE crash in the UK every bit as bad or worse than the US. Other countries are, as you say, less concerned with ownership of property and have a lower overall percentage of ownership as a result.

But let's address this perception that Europeans are "priced out". My experience is not that people live in flats because they are priced out, but because they prefer the urban city life. Cities are the lifeblood of Europe and their cultural centres - like North America, it's true, but even towns are laid out more densely, in city-like fashion. This concentrates leisure and culture opportunities without having to drive for 20 minutes to get to a culturally dead big-box store. Interstingly, flats are not as expensive as Victoria condos in most European cities outside the top flight.

Switzerland is an interesting lesson for North Americas. Here, the majority of people do rent flats their entire life. This is due to the general view being that "used" houses are not desirable. In fact, used houses can and frequently do go down in value in Switzerland as time wears on, since they wear out, and the Swiss insist on a very (incredibly?) high quality of finishing. Generally, therefore, a Swiss professional will rent a flat for much of their younger life, spending the extra on fine food, drink, cars, skiing, holidays, etc (and savings, of course - the Swiss are no fools). Later in life they will typically buy bare land and then build a new house to their own spec and live their later years there.

This kind of sane, reasoned approach to real estate is probably what will prevail (to a greater extent, anyhow) in the Anglo-Saxon countries once this crash has worked its way through all of them.

In short, I do not advocate taking the position you have argued for as devil's advocate. You simply can't compare Canada, the second-biggest country in the world by a small margin with 30+ million people, with Europe - a smaller land mass with 300+ million people. Location, location, location. Tuscany Village is not remotely like Tuscany and never will be.

olives said...

"What if prices don't go down"

Prices are already going down - picking up speed in many areas of the U.S., other parts of the world and starting to decrease in eastern Canada and Alberta. Some categories in Victoria and surrounding areas are also decreasing, or at least pretty flat now.

That article you linked to is written by a real estate agent.

I think you have to keep in mind the "big picture", in particular the credit crunch that is now beginning, and based on similar economic conditions in history, you can get a clearer indication of what may likely occur in the future with regard to real estate prices and the economy in general in Canada (and Victoria).

As for people selling at a loss, check out some real estate news from Florida, Arizona and California. It is beyond trying to sell at a loss, the news is the huge increase in foreclosures, mortgage lenders going out of business, and runs on banks.

vg said...

That was a great explanation Sam,we aren't a Europe with the mass density but we are the type of culture( on the west coast especially) that wants to spend cash and enjoy why you live here. If you get married to a massive mortgage for 40 years you can forget being able to do all this expensive vacations/lifestyle if you are the average income earner. I am betting most would not take that path as first time buyers unless you have well above average incomes.

And please God, give me the strength this Thanksgiving to keep my mouth shut when the relatives brag how much their house is worth knowing they didn't read that article last week about the cooling off of the market here. :)

happy4 said...

Instead of speculating about when and how far the RE market will crash (which I find fascinating, in any case), I am curious about why owning a house is so important to some people.

Is it attributed to the perception that home ownership = financial security? Is it tied to the "pride" of having your own place and know you can do what you want to it? Is it about peer pressure, as we live in a community where most people own?

I think I have some strong arguments to challenge this thinking, so I'm wondering if I'm missing something.

olives said...

Happy4, you forgot "ego"


I lived in Paris for 15 years and many of our friends have now bought houses (in the burbs) and apartments in the city. Young people live in tiny studios and are not concerned about RE and are just having fun but many of the apartments are huge compared to North America - this is where the families live.

We always have this concept that everything is so small in Europe and everything is so big here. If I could have a dime for everytime I heard Canadian tourists say "everything is bigger and better in Canada" I would be rich.

Anyway, many people love the urban lifestyle but also people with families do like the burbs. Many of these homes have pools etc. big fridges etc. etc. When one visits Paris you generally don't go to the housing communities outside of the city so one has the idea that everyone is living in apartments.

France has smaller home ownership than the UK that is for sure. Also many people have country homes and rent in the cities which is great.

Anonymous said...

I can't help but think about one thing: a lot of people like to use the word "crash", in hopeful terms. If we really did experience a serious, deep crash of the housing market, do you not think that your job/ income may be seriously affected as well? And perhaps you'd have more difficulty than at present to purchase what you desire?
"Greedy agents" also gets said quite a bit. It's only grumpy bears that seem to be actually waiting to pounce on some 'good deals' after someone's friend, neighbour, family member goes through some financial difficulties due to the 'crash'.

Who's really greedy? I've never heard an agent expressing the same.

Just thoughts, I'm really interested in how people perceive this.

vg said...

"It's only grumpy bears that seem to be actually waiting to pounce on some 'good deals' after someone's friend, neighbour, family member goes through some financial difficulties due to the 'crash'."

It's the way of the markets,buy low sell hi,don't buy when something is overvalued cause eventually the price will correct.

Many have made money buying low and selling high, and many have been priced out because of "panic buying" which is created by the media and the industry that high prices are a fact of life and we bears have to accept it.

The bears know that overvaluations wether its stocks,cars,houses or any item in demand eventually loses it's lustre and prices come back to reality. We bears are not relishing someone losing alot of money cause they made a huge mistake and bought at the peak of a housing boom,that is not our fault someone did not get good financial advice before buying a house like a big screen TV,in other words not my problem.

Did anyone care I paid too much for my car a year ago when it is cheaper now by a couple grand ? No, and neither will I when someone loses 10-40% over the next year on their house,thats why it's called "the market".

Anonymous said...

Cameron Muir is telling people to put down-payments on their credit cards.

I had a RE agent tell me that the best thing I could do for my children was buy a house - $1.5 million and that is what you will have to spend in the city for a house - buy now while it is cheap. It had rat sh@t in the basement.

I had another agent smugly say we broke $700,000 on Quadra.

I am a bear because I have had enough of this. We own property. A totally renovated house in South Oak Bay and I am a bear. We have been in the market for 20 years and I am still a bear.

olives said...

Anon 12:45.

On this blog at least, any real estate correction or "crash" seems to me to be viewed in realistic terms, taking into account other economic factors. There are lots of discussions and links posted that relate to the economy as a whole. I don't get here that anyone is saying there can be a real estate correction and/or a recession with all that generally goes with it.

No doubt it will become more difficult to purchase in the future, even if you are employed and have great credit - it may be that 20 percent downpayments will again be the required norm. Who knows - things are definitely changing.

As for financial difficulties, I don't think flippers of the last few years were too concerned about the unaffordability for first-time buyers - they were only concerned about their "good deals" as you say. It works both ways.

Anonymous said...

Does anyone else find it funny that on the Pat Bay Highway, there's a billboard from Remax stating: "The right realtor will make you money!" Everytime I see it, I wonder, for how long :)

Tony Danza said...

We bears are not relishing someone losing alot of money cause they made a huge mistake and bought at the peak of a housing boom...

Speak for yourself, but I can hardly wait to laugh in the face of all those who have ridiculed me for staying out of the RE market and waiting for a responsible time to buy.

Aleks said...

If prices don't come down, I'll eventually move somewhere where I can buy a house outright with the cash I've saved while renting here. But the only way I'll consider that is if rents rise here, to match the cost of purchasing. Otherwise, I'm content to keep renting and saving the difference. People are screwing themselves for decades by buying now, and I have no intention of being one of them.

vg said...

"Speak for yourself, but I can hardly wait to laugh in the face of all those who have ridiculed me for staying out of the RE market and waiting for a responsible time to buy."

I didn't say I wouldn't do the same as yourself to a few choice people I know who treated me pretty bad the past few years, but I will pick my spots.

vg said...

"Vancouver's housing prices continue to defy the laws of gravity, but they won't be able to indefinitely thwart the laws of economics.

All markets -- from tulips to tech stocks -- are subject to supply and demand and the housing market is no exception. The question then is not if prices will eventually be subdued but whether that re-alignment will come abruptly, and painfully -- or gradually and gently."