Monday, November 12, 2007

Little of this, little of that

Not much to say today. So I'll give you this: (H/T to Mohican)

On another note: Roger asked about personal anecdotes regarding buyer sentiment. It's been a long time since I heard anyone say now is a great time to buy. Anyone I know that has a home is reassessing their need to continue owning their present house. A few are looking at cashing out. Some, like my parents and their peers, are looking down south.

I know of one flipper (friend of a friend of Ms. HHV) who is having trouble selling his "updated" flip unit. He's lowered the price twice and is now considering, gulp, using a Realtor. The market has definitely changed. It could be seasonal.

It may not be though. Considering sales are higher in October 2007, the start of the traditional slowdown, I'm more inclined to think the price reductions in SFH has nothing to do with seasons and everything to do with affordability. I'm seeing a lot of "deal collapsed due to financing" on MLS. This means either the accepted offer came from someone who couldn't afford the joint, or the lending institution thought it over-valued, under-kept or just a lain old bad risk. I'm glad that for whatever reason, the credit market is tightening; it's good for the long-term overall health of the economy.

Check out this ad from Edmonton. Apparently now is a great time to buy when the developer gives you a money back guarantee that if the market value of your home is less than what you paid for it when you take occupancy, they'll refund the difference. I don't know about you but I'd be hoping that the sub-trades are too busy to get the jobs finished so my "refund" gets bigger. Of course, it will be hard to give back the difference in cash when the company is filing for bankruptcy protection which is what companies do when there is a run on them.

I wonder if we'll see ads like this in Victoria? I wonder if all those people that are expected to come to Vancouver/Victoria? and buy houses during the Olympics will still be coming when the 2008 economic slowdown expected everywhere but China turns to a recession in 2009? Maybe we'll get to see hockey games for less than $500?


roger said...

Calgary prices continue to fall in November!!

If you visit the Calgary Real estate Board you will see that today's 30 day median price is 405K versus 412.5K at the end of October.

The end of October report was as follows:
The median price of a single family Calgary metro home in October 2007 was $412,500 showing a 10 per cent increase over October 2006, when the median price was $375,000 and showing a 1.9 per cent decrease from September of this year when the median price was $420,500.

The difference between median and average prices is explained here

Median prices are a better method of seeing market trends. The Edmonton Real Estate Board offers this explanation:
The Edmonton Real Estate Board cautions that the average residential price is a useful figure only for establishing trends and comparisons over a period of time. It does not indicate an actual price for a home due to the wide selection of housing stock available in the Edmonton metropolitan area.

The median price, the middle figure taken from the current list of all selling prices, is more indicative of activity in a specific time frame, e.g., one month.

Calgary is a world class city™ like Victoria - will we follow their lead?

Anonymous said...

Times-Colonist article: No bottom in sight for US housing fall.

Quotes Shiller


olives said...

I love those guys.

THIS has got to be the quote of the day (from a Bloomberg article):

“There’s a greater than 50 percent probability that the financial system ‘will come to a grinding halt’ because of losses from mortgages, Gregory Peters, head of credit strategy at Morgan Stanley, said.”

roger said...

Here is an interesting article on the debt level of Canadians:

Growing credit debt is crushing Canadians

"The majority of people expect to be able to retire at 60 or 65," Campbell said.

"I don't know how they expect to retire if they're not saving, so there's a real dichotomy between the way people see their future and the way they're handling their money."

The reader comments at the end of the article are also worthwhile reading.

Here is my question to the readers of this blog:

Are you or any of your friends/relatives/work colleagues mortgage poor and getting fed up paying high mortgage payments every month? If so, any plans to sell the property in the near future?

roger said...

Following up on my previous post - here are some interesting mortgage credit stats from Canadian Association of Accredited Mortgage Professionals (CAAMP).

- 37% of mortgage takers in the last year chose long-term amortizations (30, 35, or 40-years).

- 3/4's of Canadians know about America's subprime crisis but only 9% are "highly concerned" about it.

- In the last 12 months, 17% of mortgage holders took out home equity loans or increased their mortgage. The average equity loan was $35,400.

- Mortgage credit is accelerating. It grew 6.9% a year for the past 15 years, but 11.4% over the past two years.

Erin said...

Here in Charlotte, we're still doing well in the market, thanks to people like your parents who move "down south". I wonder, though, how long we can keep being an affordable alternative to our Northern counterparts before we start having the same housing issues.

roger said...

So now we know that lots of folks are hooked on credit cards and taking out big mortgages.

So what do the banks do?

Credit crunch hits homeowners

Garry Marr, Financial Post
Published: Tuesday, November 13, 2007

The credit crisis in financial markets is now starting to hit Canadian homeowners right where they live with higher mortgage rates.

In the past four weeks, all of the major banks have quietly moved to cut the discount they provide on mortgages because their profits have dwindled as their borrowing costs have gone up

Why are they doing this??

Mr. Gaetano said rising rates in the mortgage market can be traced back to the crisis in the asset-backed commercial paper market where investors have ended up being stuck with $40-billion worth of paper they cannot redeem.

Bears - it's going to get real interesting over the coming months!!

hhv said...

roger, you interested in doing some guest posts here over the next little while? Email me and I'll get you a sign in if you'd like. I'm thinking the readers of this blog may like some fresh insights.

roger said...


Thanks for the offer but I think you do a better job than I ever could.

I don't think your blog needs fresh insight. I have tried to prime the pump for discussion a few times myself but I think the readers are suffering from fatigue. Many are getting tired of waiting for the correction. They want it now but that is not the way markets work.

It will take a few months for the ship to turn and for sellers to accept the new reality!! Bears should encourage their friends to read the bear blogs and "educate" themselves. VREB, the agents and the MSM will keep the spin going and these blogs provide an alternative view.

A request to the bear readers:

If you want this blog to continue you need to participate and post your comments. HHV can't/won't keep going if he thinks no one is reading the blog and sharing their perspective.

OLIVES said...

Here's my comment for today - I have a friend whose mother is a realtor, and he told me today that she will be selling her "investment" condo soon because prices in Victoria have been coming DOWN. She was referring to both SFH prices and condos, but she was particularly worried about condos because of the "overbuilding". Good to hear from someone who, just a few short months ago maintained that prices would NEVER decline.....

Anonymous said...

looking for comments, fair enough.

my parents retired to Victoria, after one year they left(2006). Why? House prices too damn high.

several friends and family have also left this past year, back to the eastern provinces. again housing too high, they all cashed out and bought larger homes at less than half the cost.

will I follow, I'm giving it 3 more years.