Sunday, September 7, 2008

Are Victoria Prices Falling?

Courtesy of, and a big tip of the hat to, Roger, for such great statistical analysis of the Victoria and Island real estate markets. He's hit another one out of the park with his latest slideshow: Are Victoria prices falling?

It neeeds to be pointed out that Roger uses VREB published data to produce his excellent graphs and tables. There is no spin. There is no "funky" numbers. Just straight as VREB wants us to have them, laid out in a way they likely wouldn't want you to see them. Cheers, Roger. (Click for larger view.)

Avg & Median Sale Prices


Why 2008 is different


Avg & 6-month rolling Avg


Median & 6-month rolling Avg

YOY percent change - no averaging


Percent change YOY of 3-month Avg


Just the prices - Avg & median

Roger has even given us a PDF version so you can print it out and have it handy to take with you whenever you're talking real estate. (edited)

187 comments:

snug as a bug in a rug said...

I felt ecstatic until I checked out medians in your (Roger's?) final chart.

The places I desire to buy and live in (SE, OB)are not down by much at all. Some of the bigger dips are in places I don't care to live in, like North Saanich, Highlands.

The only bright spot to gladden my heart is that waterfront prices are chopped in half. $725k is looking like a bargain for waterfront! It only gets better going forward. I doubt we'll see the bottom until after the Olympics.

I've waited 5 years. I can certainly wait 2 more!

Anonymous said...

You sat back happily paying rent for the last 5 years? Really?

Anonymous said...

Let's pool our resources, and purchased through this blog, put SFH mean and median graph up in billboard size across from the Times Colonist.

Anonymous said...

The TC did have the VREB average graph showing the house price drops in an article last week.

olives said...

We in Victoria are so lucky to have Roger and his graphs. Thanks Roger!

Anonymous said...

LOL @ Anon 9:29,

More interesting than that would be to put an ad IN the Times Colonist for HHV or PrairieBoy's blog.

"Would you take serious advice from a used car salesman about a used car? No? I didn't think so! So why do you take serious advice from a Realtor about an asset class that is 20 times higher? Want the no-spin 100% truth? Check out (insert blog URL here)."

patriotz said...

You sat back happily paying rent for the last 5 years? Really?

"Owners" pay rent too. To the bank for renting money. Also to the city for renting the land (aka property taxes).

Who pays less rent for the same house?

Anonymous said...

Anonymous said...
The TC did have the VREB average graph showing the house price drops in an article last week.

oops
nevermind

Anonymous said...

Hey HHV,

I was about to share your blog URL with some co-workers & friends to show Roger's great graphs, but the last paragraph at the bottom with the snarky remarks:

"Or why not print off a few copies and lay them in the coffee room at the office, watch your co-workers who have been bragging about their house-created riches squirm a little?"

...while funny, etc for those that have been around here for a while, prevent me from sharing your blog, as my friends/co-workers will think I'm making fun of them, when my intent is just hoping to open their eyes in a non-condescending manner for their own benefit.

So for now I've just forwarded Roger's PDF, but in the future I'd like to give credit where it's due: Roger, you and blogs like this.

patriotz said...

I doubt we'll see the bottom until after the Olympics.

NFW will we see the bottom before the Olympics, it's only 18 months away.

The great bust of 1981-83 took 2 years, and the US is not at bottom yet after over 2 years.

Art Vandelay said...

Bust of '93 took six years to hit bottom in Victoria, and 10 to get back to even.

hhv said...

Anon, at 11:08, point taken and fixed... please give all credit to Roger, he's the genius... I'm just the messenger on this one.

Anonymous said...

Yes, but did the bust of '93 have such a huge and obvious US precursor?

Don't seem to remember anything like the current real estate crisis happening in the US back then.

That current precursor has given our real estate market a huge shove into the precipice. Or rather, a nice hard tug over.

Ryan said...

Unless we see local prices fall faster than the US, I think it's pretty safe to say we'll follow them down just like we followed them up. The US crash started in 2006 and has a ways to go yet, so odds are ours will also take 3+ years to bottom out. I wouldn't expect to start seriously looking before 2012.

womp said...

Anon 9:57:

I've given serious thought to tacking a page like that to all of the real estate flyer boxes around town.

It would be simple to print out 10 of Roger's "what's different" graphs with that comment above them and staple them to those flyer boxes....

Anonymous said...

"Unless we see local prices fall faster than the US, I think it's pretty safe to say we'll follow them down just like we followed them up. The US crash started in 2006 and has a ways to go yet, so odds are ours will also take 3+ years to bottom out. I wouldn't expect to start seriously looking before 2012."


It is difficult to extrapolate at the begining, but it appears that our market is falling at the rate of 2 percent per month. Of course, the news is just starting to filter into the general public, so I would guess that 2 percent per month may be the low end.

That's a minimum 24 percent drop per year! In my opinion, as Victoria, is one of the last to leave the real estate party. We are going to fall faster than the others, just because we have to catch up to them.

If you get hit by a car or a bus, it doesn't much matter to you - but it sure the hell puts a scare in the guy that was standing beside you. He/she may want to get out of the way faster than you.

I'm expecting sales activity to drop substantially and listings to almost double again in the next few months.

We may have dodged the car - but that's a really big bus heading our way.


just jack

womp said...

JJ - using Roger's data that he generously sent me, I've plotted a chart that basically corroborates 2% per month for Victoria at 9 MOI. It still needs some work but I'll have a blog post about it tonight or tomorrow.

In regards to sales dropping substantially - I wanted to ask, what is everyone seeing in PCS/Matrix? There hasn't been a single sale show up in my two Matrix searches (townhouses to $400k, 3 BR SFH to $500k, all areas) since August 28...

Mr.4AM said...

I still think the average Victorian doesn't have a clue what's going on. Most people sadly take realtor's "advice" as fact, and realtors are ever spinning the numbers positive (all the way to the bottom) because panic means drastic reduction in sales, and plummeting sales prices means less comission. Further, I think the average person on the street is optimistic, not just about real estate but about life in general; whereas us bears, are not exactly pessimistic, but we look at evidence and details a lot more closely that suggest reality is more negative than people imagine.

I still know several people that are thinking of buying or upgrading to a bigger home because their realtor said "it's a buyer's market". Recently there was an article in the paper from some survey stating that Victoria on average has the most smart people in the country, but I'm seriously doubting that. I'm taking it upon myself to educate or at least alert some of the people in my circle of influence that things are not exactly as realtors may be painting the story, and then let them make up their own minds. Roger's and Prairie Boy's graphs are a great help in this endevour so I hope they keep the graphs and updates coming. If each of us did the same, after a few months of declining trends on graphs and piling inventory, I think people would start taking the information more seriously and possibly start spreading the word about what's really happening themselves.

As for 2% per month drop adding up to 24%, that sounds a bit high to me. It would mean that a major correction (50%) would occur in about 2 years, and I think it may take closer to 4 years, but I don't have a crystal ball. I'd be happy with 10% drop in average prices per year, but who knows.

hhv said...

I wanted to use Roger’s methodology and see if I can project the last 4 months trend for the rest of the year, based on the last two year’s worth of published data.

If I take 2006, September – December we see an 8% drop in average and median prices. Using 2007 data, we see a 6.8% increase in average prices and a 3% increase in median prices.

If I look at it monthly, using September as a base, in 2006, November was higher than September, but October and December price changes dropped. It was somewhat normal for prices to bounce 5-6% per month during this period.

If I look at it monthly, using September as a base, in 2007, October prices dropped, while November and December posted gains. Again, the price changes fluctuated by up to 5-6% per month.

I don’t think this data helps with any predictions for the next four months. I’d be surprised if we see any monthly increases at all. But I would expect the price drops to bounce around significantly—for example, maybe September shows a price change of -2% MOM while October drops 7% MOM, back up to -1% MOM for November etc. I’d assume this is because of declining sales volume and statistical averaging. All said, by the end of November, I’m thinking a 15% YOY drop from November 2007 average numbers and 5% drop for median is realistic.

Prediction: November 2008 SFH Avg will be approximately $505K and median approx. $485K.

womp said...

Mr4AM:

Keep in mind that 2%/month isn't exactly 24% per year. If you start at 100k and drop 2% twelve times, you end up at $78,471.

To drop 50% from the peak at 2% per month would take ~35 months, or close to three years.

S2 said...

For what it is worth, talk around the water cooler at my office in the past week is that the market has softened and there is a glut of condos.

Not a huge revelation to us but these are people who just a mere two months ago were talking about how well the real estate market in Victoria was doing.

Times sure have changed.

Muriel said...

I think the idea about pitching in for an ad in the TC to advertise this blog is a fantastic one - a cheaper alternative would be a classified in the back of Monday Mag.

A couple decent-sized display ads (app 4.5 inches x 5) could probably be had in TC for about $1,000, if I recall. Or less in Monday Mag.

Re: recent sales activity
I just re-activated my PCs account and today I see that 1345 Grant(Fernwood - MLS 247665) just sold for $505,000, after going on the market 91 days ago for 578,000. Most recent asking price was $519,800. It is 2600sqft, with 4bdms, 2baths, 2 kitchens, and larger than average lot. They were also offering a buyer bonus if a firm offer was accepted by today.
Nice reduction!

Anonymous said...

VANCOUVER (NEWS1130) - Is the real estate bubble about to burst? A new study from UBC's Sauder School of Business predicts home values in many Canadian cities are about to plunge. This comes on the heels of a report last week which indicated home sales in B.C. were already in decline.

The report says homes in most urban centres except Toronto and Edmonton are overvalued. However, Vancouver is not the most overpriced according to the study, with the Vancouver market being 11% overpriced. Winnipeg, Regina, Montreal and Ottawa are priced up to 25% higher than they should be to balance with rents--given interest rates, holding costs and historical rates of price appreciation.

Anonymous said...

New tricks from some ecnomist.

Yes, there will be drop. but WE are different. they will drop 205%, but we only need drop 10%. we are different.

they just thought out a new idea to fool the people.

Muriel said...

Here`s the CBC version of that story:

Urban Real Estate Values Set to Plunge
http://tinyurl.com/6mfdct

Anonymous said...

If we really want to render the TC helpless, one of us (changing hourly) could sit at 2% Jazz all day discussing how we've lost tons of money on our speculative investments. All of the TC writers and editorialists undoubtedly come by for their Java from Sam, and would 'hear' what the people on the street are saying....

o.k., too devious.

- Dumb Canuck

Anonymous said...

Devious idea #2:

Have a protest with a picket line outside of the VREB office. Sure to get media attention...

- Dumb Canuck

snug as a bug in a rug said...

PATRIOTZ: THanks for coming to my defense when Anonymous said...

You sat back happily paying rent for the last 5 years? Really?

September 7, 2008 8:44 PM



Yes, yes, yes ANON, I HAPPILY paid $100k in rent during the last 5 years. MAYBE I should have bought in 2003 when I moved here. I missed the boat because i just did not see the value then.

I can't change history, and it really does not matter now, as I would have had to sell at the top, (3-6 months ago), and moved into a rental to wait it out while ensuring I had captured my gains by selling.

So, just in case you, anon, happen to be , ahem, related to someone like 'happy owner' or 'sitting pretty', here's my logic:

WHEN (not if) RE drops by about 20% on a $500k house, doesn't that mean that renters like me will sort of get a refund of $100k (5 years rent paid)??

I hope you have the capacity to work this out.

Anonymous said...

People buy when they are ready to buy and rent for all kinds of reasons.

No relation to SP or HO, but I do have the capacity to realize I was unkind, sorry.

Hopefully you have had the opportunity as a renter to save a decent down payment, maybe pay-off some debts. And yes you will save money waiting another 1-2years, not sure about 20%, but maybe, only time will tell.

vg said...

those are awesome charts roger, kudos to you for your excellent work.

patriotz said...

However, Vancouver is not the most overpriced according to the study, with the Vancouver market being 11% overpriced. Winnipeg, Regina, Montreal and Ottawa are priced up to 25% higher

Just look at this sentence and you can see that the "study" is total BS. Vancouver is more than twice as expensive as the other cities. You can get a nice house in Ottawa or Montreal for 300K.

See the discussion at Vancouver Condo Info.

womp said...

I just posted some trends analysis over on my blog, based off of some work that Mohican and jesse did over at langley financial planning blog in May.

It's a bit technical but if anyone is interested, check it out. It's going to be fun to see if it works for predicting the price drops!

Muriel said...

That Sauder study may be seriously flawed etc., but it makes for a great headline on the front page of the TC this morning.

Mr.4AM said...

Here's a couple of other interesting trends:

1. The TSX 17% 3 month free fall...

2. ... Is just the beginning, given this 8 yr TSX index chart. It shows the .COM bubble burst taking out some 50%+ of the TSX during the ~2 yr bear market. If we just started our bear market in June 08, by June 2010, the TSX could easily see a total 30%+ wiped off which brings the stock index down to about 10,500 (if not lower). If US goes into a recession, Oil goes down and the TSX down with it.

3. Here's the CDN vs. the USD. CDN spikes appear to be nearly always corelated to oil price increases - thanks Oilberta! I'm guessing that while we may see some significant dips in CDN currency as USD eventually enters a recession (will they ever admit it??), it may be possible to see some upward trends again for the CDN as next year's seasonal spring/summer oil price hikes occur.

4. Lastly, the CDN vs Euro. The Euro would be expected to dive against the CDN as their economy is just now tumbling a la USA style; however, given the TSX chart above, one might say a similar thing about our own economy, so it will be a 'who dives the most contest' between those two currencies.

What does this have to do with real estate?

Well, if you plan on buying outside Canada in Europe or USA, 3 months ago was the best time. It's probably not a bad time to still buy in the USA, before the CDN devalues further; however their RE values are still going down and some estimates are that it will do so for another 10 to 15%, so it's a tough call. My long term expectation though is that the USA economy still crumbles as they are basically insolvent and in ridiculous debt. But who knows how many years before that actually happens.

Anonymous said...

muriel posted...

That Sauder study may be seriously flawed etc., but it makes for a great headline on the front page of the TC this morning.


You can say that again! Here is a scan of that Times Colonist front page

Anonymous said...

Now, that front page HAS to have an impact on prospective buyers!

The only people left to buy are the illiterate and those with too much money.

Now, watch sales volume plummet and listing sky rocket.

PS Roger - your the man! good work!

just jack

Anonymous said...

Just Jack, you are the man too.

roger said...

Thanks folks for your encouragement. I will keep updating the stats gallery for the foreseeable future.

In a previous thread one of the posters (dumb canuck) asked for a graphical comparison between Shiller's US housing data (HPI) and the Victoria RE market.

The slideshow on this request is now completed. I have not annotated the slides - just graphed the data. I leave it to you, the readers, to make any comments that you feel are appropriate.

Is it really different here?

patriotz said...

That Sauder study may be seriously flawed etc., but it makes for a great headline on the front page of the TC this morning.

Indeed, and I'll remind you again - if the usual suspects come out and predict a double digit decline, even 11%, it means they are really expecting a major bust and are engaging in CYA.

If they were expecting a minor decline they would predict minor increases or flat prices.

Mr.4AM said...

Oops, did I say 17% decline in the TSX index in 3 months? Better make that 20.5% as 3.5% was wiped off the TSX alone today due to commodity declines due to fears of economic slowdown. Oh well, so much for that Freddie/Fannie rescue yesterday.

Hmmm, just where will those 5% downpayments come from now? Bank of Mom and Pop's retirement (aka. child house downpayment) fund must be hurtin' a little lately.

Anonymous said...

The photo in this article tells the whole story...

House prices overvalued in Canada

Anonymous said...

I was glad to see the TC finally picking up the housing issue on the front page. The same thing happened in Calgary almost a year ago and it was all downhill from there. I happily cashed out of the real estate market several months ago after making a boatload becasue I luckily got in at the right time. I've just signed a lease to rent for the next year at least, before jumping back into the market. I highly doubt prices will drop 20% like some of you are predicting, but a correction of around 10% seems feasible. There are just simply not the same issues at play here in Canada as there are down south, so we cannot expect to follow their downward spiral too far.

Ryan said...

There is only one issue causing the drop in house prices in the US: the prices were too high. All that other stuff about securitized debt and toxic loans affects the bond market and the stock market, but not the real estate market. The real estate market is the cause of the other problems. The ABCP market locked up because of all the bad mortgage debt, not the other way around.

So, when our housing market crashes it probably won't cause a lot of follow-on problems. But it will still fall until house prices are back in line with rents. In BC, that means a heck of a lot more than a 10% drop.

roger said...

anon 3:14 said:

I highly doubt prices will drop 20% like some of you are predicting, but a correction of around 10% seems feasible.

We are already down 13% in average SFH price and 8% in SFH median price from the April 2008 peak as shown in this graph.

Year-over Year (YOY) We are already negative and have a solid downward trend.

What stat and type of property are you basing your 10% prediction on? What is your starting point - April 2008 or some other date?

BTW - nice to hear that you profitably sold in Calgary and welcome to the Island.

beagle said...

Interesting discussion on Charlie Rose. Nouriel Roubini lays down the bearish arguments pretty good.

A discussion about the U.S. government's takeover of mortgage giants Fannie Mae and Freddie Mac with Mohamed El-Erian, co-CEO co-CIO for PIMCO, Gretchen Morgenson, Floyd Norris both of The New York Times and Nouriel Roubini of New York University.

Mr.4AM said...

Awesome link beagle. Thanks for sharing. I'm familiar with a couple of these speakers and they have been right time and time again. Strongly recommend people watch who want to know what's coming in the future of the USA economy.

vg said...

"I highly doubt prices will drop 20% like some of you are predicting, but a correction of around 10% seems feasible. There are just simply not the same issues at play here in Canada as there are down south, so we cannot expect to follow their downward spiral too far."



The TSX is falling off a cliff,down almost 500 points today. I expect 50% easy within a year to 18 months. Commodities are tanking hard and what is BC's economy driven by ? hmmmm.... 20% will be by next summer.



PS Garth's show is cancelled til end of January, seems he has an election campaign to do so it should be that much more to talk about by then.

Anonymous said...

So, when our housing market crashes it probably won't cause a lot of follow-on problems

Drove by the Starbucks in Broadmead today at 8AM and for the first time I have ever seen it was empty. 5 staff standing around doing nothing. Ate my lunch at my favorite watering hole and it too was had few clients with staff wondering what to do. Talk to any electronics or other big ticket retailer and they will tell you that business is off at least 40% over the past couple of months.

There are ripple effects to everything. Just as increasing housing prices made people "feel" wealthy, the decrease has now made them "feel" poor. The stock market is down 15% over the past week, oil rich Albertans are now starting to panic with oil prices falling below $100 and speculators who gambled on wealthy retirees and tourists to finance our condo boom are second guessing themselves.

The pattern has played out the same way in each of the past few downturns. Businesses have had a good run over the past couple of years so they will wait things out for a few more months. After that the layoffs will start which will further impact spending which will lead to more business closures and home foreclosures.

The bottom is still a few years out and if you think that housing prices are the only things heading down you are mistaken.

Anonymous said...

Roger - thanks for graphing it. When I looked at the month by month data, B.C. maxes out at around 240, and for other cities with similar increases to Victoria, the declines are quite striking. The big difference is that the 8% decline in 4 months in Victoria is much more than at the start in the U.S....

- Dumb Canuck

patriotz said...

Commodities are tanking hard and what is BC's economy driven by ?

Real estate, of course.

Anonymous said...

What realtors should be telling their prospective clients:

Have to sell? You can cut 50% off assessed value now, and hope to at least start a bidding war, or cut it 50% of assessed value later at the bottom and most likely have it sit. Indefinitely.

And that's IF you have granite countertops and new stainless steel, and anything BUT white melamine cabinets in the kitchen. And NOTHING that looks like it needs painting, fixing, renovating, or God forbid, repair. 50 year metal roof would help too.

Doesn't sound like your place?

Don't even bother.

And forget about a fresh coat of poorly applied "designer" color paint or "staging" or fresh flowers. Those tactics have gone the way of the dinosaur.

That's the reality. As far as Starbucks? Kiss it good-bye.

Anonymous said...

I think it's a little early to be placing properties for sale at 50% of assessed value. But 10%-15% below should attract some attention, assuming that assessed value matches July 2007 real estate values of similar homes sold. Assessed value is in fact not a great indicator/variable to use. I've seen assessed values that are ridiculously low, and probably just as many that are ridiculously high.

But ultimately the message is the same, price it right from day 1, or time wasted *will* cost you $$$ in a falling market.

The "We'll start it 10 to 20% above what we actually want, and then negotiate down" days, are LONG past. If you do that, you'll get pretty much no-shows at your open house, except for curious neighbours that have no intent to buy.

I've also noticed some realtors trying to "price it right" a little too low, just so they can sell it super fast, grab their comission, and run to the next desperate soul. So please do some of your own honest & serious research, and if you don't know how, then simply get 3 or 4 opinions from different realtors before settling on a price... and don't pick the highest of the 3 or 4. Pick the middle point or slightly lower.

Good luck and hurry up.... never has "time is money" been truer!

Mr.4AM

Mr.4AM said...

Not all of us have Roger's or Prairie Boy's skills at graphing pictures that describe the market, and so some have resorted to a more pie-in-your-face approach.

For a little humour this morning, check out:

Pictures that describe this Real Estate Market

Mr.4AM

B2B said...

Indeed, there's many similarities with renting out a house. Price the rent 10% below comparable properties at the time, and you will get a large number of respondents and be able to pick those best suited to pay. Just as with undesirable tenants, these days increasingly there will be people with shaky financing, or offers contingent on the sale of their overpriced house.

The house I was last renting is still languishing on the market after 3-and-a-bit months, and because it was priced a bit highly at the beginning, it has had a 3% and then a 7% reduction in that time - but now it's quite stale and the early lookers are probably not interested unless it comes down even further.

VicREBear said...

I see in this morning's TC that old Quigg figures that his four behemoth towers at Bare Mountain are still on track for big sales, because he "firmly believe(s) that the shift we are seeing and the desire for ownership in the market that we are pursuing is much more about a demographic shift than an economic shift." Yet, another article in the same paper reveals that according to Revenue Canada data, half of Canadian households with earners between ages 55 and 64have a net worth of under $120,000 making it impossible for them ever to catch up enough to be able to retire. I wonder if there's a bookie in this town who'd be willing to take odds on Quigg's project ever being completed to its current specifications?

Anonymous said...

I'm checking the mls website every day. 10-15% off assessed isn't attracting any attention.

None. Nada. Zip.

Only one house in Broadmead sold the last three months after being on the market a mere two weeks... it was priced at least $300,000 below peak assessment and what every other fool there is asking. And it had been immaculately and sensitively renovated (Kept modern and updated modern; NOT hideously Victorianized or suited).

There's only one way to sell in this market.

boomer said...

Quigg "firmly believe(s) that the shift we are seeing and the desire for ownership in the market that we are pursuing is much more about a demographic shift than an economic shift."

So Powell River's little Bobby Quigg thinks that retirees world wide are, or soon will be, plunking down the big bucks for the opportunity to live on the 42nd floor of a 650 unit seniors ghetto in Langford?

And also that economics dont matter much?

The guy is definitely a visionary-or something.

hhv said...

Favourite RE Bull myth point one debunked: "We're different than the US because we didn't over build."

Ryan said...

"There are ripple effects to everything. Just as increasing housing prices made people "feel" wealthy, the decrease has now made them "feel" poor. The stock market is down 15% over the past week, oil rich Albertans are now starting to panic with oil prices falling below $100 and speculators who gambled on wealthy retirees and tourists to finance our condo boom are second guessing themselves."

There are ripple effects, but those are very hard to attribute cause to. The real estate crash will obviously end the construction boom and send unemployment upwards, but that hasn't happened yet. Therefor I think it's premature to attribute empty Starbuckses and lower electronics sales to the real estate crash. I think it's far more likely a symptom of the general slowdown in the economy, lead by the drop in the TSX.

The financial crisis in the US is directly traceable to mis-rated CDOs backed by bad mortgages.

roger said...

Global TV noon hour news interview with Ozzie Jurock is now available on YouTube:
Harsh Numbers: Vancouver Real Estate, August 2008

The leadin talks about a developer now including the appliances and another lowering prices by 100K from last years marketing plan.

Ozzie has now jumped on the bandwagon.

Anonymous said...

Hilarious - poor, poor buyers, "forced to endure long lineups and bidding wars to buy their dream home". These people desrve to be hung out to dry.

kabloona said...

vicrebear:

I saw that item today in the TC.....also they had this item about Bear Mountain:

http://tinyurl.com/56j4q5


"Fines have been imposed on the developers of the Highlander condominium project for marketing past an allowed date and for not updating a required disclosure statement.

The development is on the 18th hole of the Bear Mountain Resort in Langford.

....Marketing is expected to resume soon on the Highlander, where about 70 units in the 16-floor building have been sold, Leseur said in an interview yesterday. Total construction costs are expected to be between $90 million and $100 million.

Leseur would not comment on the matters leading to the consent order, saying the project is moving forward.

"It is a difficult time for developers because with the financing markets being tight and pre-sales being a key requirements, it is difficult for developers to meet their pre-sale targets in advance of financing.

"It's almost a catch-22. You need the pre-sales to get your financing but you can't get your financing without the pre-sale. I don't think the legislation has caught up to the realities of the current financing market."

Rather than a nine-month period to line up financing and needed pre-sales, Leseur would like to see that time extended to possibly 12 to 18 months."

Hmmm...trouble in Langford's premium particle-board Paradise?

Also, saw this ad on page C4 of the TC:

"Why aren't they selling?
Victoria's real estate market is changing. There are more For Sale signs up today than in the last 12 years. They're staying up for longer and some properties aren't selling at all.
If you're thinking of selling a property in the next 6 months, you'll need to know the 14 Ways to Guarantee Your Property Won't Sell (WTF?!!), How to Sell For Full Price or More, The 3 Staging Tips That Work Best, How Real Estate Fees Work (ha-ha!), and much more. All will be covered in the free seminar "Why Aren't They Selling?" Saturday morning, Sept 13th at UVic.
Real Estate marketing expert and well known real estate consultant with D*H real Estate Ltd., R*ck C*uv*i*r, is the speaker.
Seating is limited. For those without a realtor, call 250-***-*** for details to reserve a seat."

Ouch!! Bears must be mauling them like that poor fisherman on Saltspring.... ;-)

roger said...

Anyone know what happened to Greg and Cheaprealty.net?

The site has been down for a week. He had useful stats over there. Has he gone to the dark side??

Anonymous said...

Re: TC article "Real Estate marketing expert and well known real estate consultant with D*H real Estate Ltd., R*ck C*uv*i*r, is the speaker [At UVIC]".

I can't comment on his seminars as I haven't seen them, but R*ck actually does know his Victorai real estate pretty good and is a rare and honest realtor with decades of experience, though still a sales guy at heart. I've approached him with bear remarks in the past, and he didn't deny them, or try to spin them into sunshine and lolipops like so many other realtors out there do.

boomer said...

"It is a difficult time for developers because with the financing markets being tight and pre-sales being a key requirements, it is difficult for developers to meet their pre-sale targets in advance of financing.
It's almost a catch-22. You need the pre-sales to get your financing but you can't get your financing without the pre-sale."


huh???????????????
--this from the "vice-president of legal and corporate affairs for Bear Mountain"

what "catch-22"? he's saying exactly the same thing 4 times.

and then
"I don't think the legislation has caught up to the realities of the current financing market."

whoah!
I dont think the brain has caught up to the mouth

Anonymous said...

Don't have the pre-sales!

No problem.

Bulk sale them to the real estate companies doing your sales. Want to have the right to list my condominiums, you have to buy at full price X amount of them. When you have finished selling the remaining 40 percent, then the agency can sell the ones they bought.

This is a pre-construction building, hence the agent does not have to disclose their interest. All they have to say is that 60 percent of them sold in one day at full price.


just jack

Anonymous said...

House prices continue to climb rapidly in Broadmead™. It's a multiculural™, liberal™ area of Victoria full of beautiful golf course like yards. There's a great starbucks™ in the neighbourhood and the region's best Italian restaurant too. Broadmead™ is truly one of the best areas of the one of the best cities in the world. For these reasons Broadmead™

vg said...

"There's a great starbucks™ in the neighbourhood and the region's best Italian restaurant too."



you mean Romeo's ? lol

Ryan said...

what "catch-22"? he's saying exactly the same thing 4 times.

I was going to post the exact same thing. Not only does he not word it correctly for it to be a catch-22, there is no possibility of a catch-22 at all.

As far as I can see, pre-sales are not in any way dependent on financing. Construction is dependent on financing, but pre-sales are not dependent on construction either. Sales may be dependent on construction, but post-completion sales are by definition not pre-sales.

The whole purpose of the pre-sale requirement for financing is to protect the financer from projects that won't sell. In other words, the system is working.

Anonymous said...

Anon 3:01

You have got to be kidding right. You are just joking right?

I live in Broadmead.

boomer said...

ryan--re "catch-22"

looking at the quote again he might have been misquoted by Carla in the last sentence.

- possibly got her mords wixed

LOL

Anonymous said...

Of course he's joking... it's the same claptrap he posts about every neighborhood on the island as soon as it's mentioned.

Only thing he leaves off is "[Insert neighborhood] will always go up in value, because as everyone knows, we live on an island and WE HAVE NO MORE LAND [except for millions of acres]."

Broadmead is mostly big empty freezing houses that no one can afford to heat properly anymore. That you can't suite out without lawsuits and an enforcement board on your back.

Anonymous said...

If you live in Broadmead you know that this is the best place in the entire world to live in. Everyone wants to live in Broadmead and so, house prices will never fall. Romeos is truly the best Italian restaurant on the island and probably the world.

Anonymous said...

Romeos...come on.The pizza sauce taste like the spagetti sauce. I really dont think everybody wants to live in broadmead..lol

Anonymous said...

If you ask me, the house of cards that Len built is about to come falling down. No doubt the reason he has rushed off to Tampa Bay to manage the Lightening.

With projects of that size, any profits made during the initial stages have to be rolled backed into operations to fund the remainder of the growth. You have to think that most of the proeprties are now worth less than the mortgages he has against them.

patriotz said...

You need the pre-sales to get your financing but you can't get your financing without the pre-sale

Er what?

"You need a driver's license to drive but you can't drive without a driver's license"

See what I mean?

Ryan said...

"looking at the quote again he might have been misquoted by Carla in the last sentence."

My point was that it doesn't matter. As currently worded it's just a meaningless repetition. Worded like I think he meant it's flat out untrue. The only dependencies for pre-sales are demand and price.

greg said...

Roger -

cheaprealty will be back soon. I reached the end of my year hosting package and am moing the whole shebang. Between work and life, I haven't had time to recreate the site yet, but I will.

Gee, another problem that doesn't occur when you use blogger...

Thanks for checking!

Anonymous said...

This is from a local "prestige" realtor's "Testimonials" web site page. Break out the Pepto-Bismol :+

"It is our experience that *Famous Local Realtor* knows how to market Victoria trophy properties to international buyers.
She understands that the asking price should be what buyers in New York, London, Beverly Hills, Asia, etc. will pay, rather than sales data from local comps going back historically. She is also willing to spend the large amounts of money required to reach those international buyers. Foreign advertising is very expensive when paying with Canadian dollars. It requires patience and staying power to keep marketing until a buyer is found who will pay top dollar. In the near future somebody will probably open a Victoria real estate firm specializing in selling our unique high-end properties to the international market.
*Famous Local Realtor* seems to have recognized the opening and is headed down the high road."

Ecchh!

Anonymous said...

It is the karma of the property that has to be energized so that the buyers id is sychonized with the pyramidal power of the seller. Only in this way may meaningful exetential value be achieved between buyer and seller.
Ooommmmm

Insert prestigious realtor name
from the firm

Wee Cheetum & How

Anonymous said...

You left out Dewy, I think he might be upset with that.

Yve said...

I guess that's why that mansion in Rockland that started out at 3.1 million & has gone through at least 2 Real Estate Professionals is down to 2.5 million. I guess they need to start spending more valuabe CDN $ to flog that thing to the unsuspecting. Gimme a break. I have had the worst luck with these bozos, even to the unprofessional extent of them using hotmail to communicate with me. It's laughable.The bizarre and acrimonious replies that I have had after asking for nothing more than information on a property is staggering. I feel sorry for the real estate agents who conduct themselves properly and provide a decent service. This downturn will hopefully sort out the chaff from the wheat.

Anonymous said...

I guess being foreign makes people stupid.

These "wealthy" individuals have clearly made their $$$ over the years paying more than market value for their goods and services.

kabloona said...

In case you guys haven't seen this morning's TC:


http://tinyurl.com/473m6n

“Capital region house prices likely to keep falling, credit union economist says.

Slower economy seen as the cause.

Carla Wilson, Times Colonist
Published: Friday, September 12, 2008
Capital region housing prices are expected to keep falling as slower economic growth extends into next year, predicts the chief economist for Central 1 Credit Union.

Greater Victoria’s median housing price is expected to slide by 10 to 15 per cent from its highest point this year, Helmut Pastrick said yesterday from Central 1, the umbrella organization for B.C.’s credit union system. The median price represents the point at which half of all sales were above that price, and the other half below.

Pastrick predicted that by next year the median home price could drop to below $400,000, from a high of close to $450,000 early in 2008. His estimate includes all types of housing.”


But I thought the local economy was still booming...what gives?

Oh...so maybe a house price boom *IS* the economy... ;-)

Anonymous said...

kabloona said....

In case you guys haven't seen this morning's TC:

Here is what the business section looks like for those RE agents and happy owners opening today's morning paper.

Earlier this week our readers had this front page news to read. Last week this article appeared on their doorstep.

I think we will see more listings and price reductions over the coming months.

kabloona said...

Anon 8:59, yeah that's what caught my eye at the breakfast table this morning. It's as though every couple of days they have another downbeat real estate story in the TC business section.

Bring it on....

:-)

But wasn't Pastrick calling for real estate "gains" for the forseeable future? Maybe he should disclose his previous methodology for us so we can all have a good laugh....

roger said...

This article is being carried on the Canwest news wire:

Real estate wall closing in

OTTAWA -- Canadian housing prices need to fall nearly 10% further to bring them back into line with incomes, a major investment firm warned Thursday.

And that assumes continued moderate growth in incomes, according to the report by BMO Capital Markets, suggesting that should income growth falter, housing prices would have to fall even further to bring them back into balance.

"After six years of unsustainable growth, prices have run smack into the affordability wall," said BMO Capital Markets, reinforcing a similar warning issued in a study by the University of British Columbia earlier this week, which said prices in some major cities prices would have to plunge 25% to bring them back into balance.

"Homeowners who purchased six years ago would still have hefty capital gains, but those who bought during the past two years would face temporary losses," Guatieri noted.

patriotz said...

Here's what two of our favourite gurus were saying just four months ago, right at the top of the market:

Mixed blessings for home-buyers

Somerville says he's reluctant to use the B-word because the numbers are not adding up to such a scenario.

"If you say bubble, then at some point it's going to pop. And if you look at our price increases, they've been double-digit, but for the most part they've been between 11 to 15 per cent for the past few years. That's high, but in a bubble you start to see 20-per-cent growth, 30-per-cent growth. Just really rapid acceleration, and we haven't seen that. That's what happened in 1981 and 1982 . . . That's what a bubble looks like."

Helmut Pastrick, the chief economist for Credit Union Central of B.C., concurs with Somerville.

He suspects the Vancouver market is now in the beginning stages of a cooldown. Pastrick is predicting modest price increases for the next two years and potentially small declines after 2010.
--------
I guess 2010 arrived a bit early?

Note also that according to Somerville's definition, the US was not in a bubble.

Ryan said...

"But wasn't Pastrick calling for real estate "gains" for the forseeable future? Maybe he should disclose his previous methodology for us so we can all have a good laugh...."

I believe his methodology is "the current trend will continue". Now that the trend is down, he's predicting more downward movement. Which means that in the short run, most of his predictions are more-or-less right, and all of his predictions are worthless.

VicREBear said...

Hmm. 5025 listings all of a sudden. Seems as though the new negative media coverage is getting the natives restless...

Anonymous said...

I have to say, we've been listed on the market now for about two months. 1-2 walkthroughs in the first week and not 1 since - not even a friggin phone call. It's nothing to do with price, people are simply waiting it out IMO.

We have a beautiful home and just looking to move up, so no big deal. We'll hang in there another month or two and then off-market for a couple years I guess.

Maybe in a year or two we'll move up anyway and rent this one out.

patriotz said...

It's nothing to do with price

It's everything to do with price. People are waiting for houses to get cheaper. If you drop the price enough you can sell it now.

Anyway, if you are trading up, it's better to wait until a market bottom. Do the arithmetic.

Anonymous said...

What I meant actually is that I've priced it right, there's simply no "looky lou's." If the price was off I would at least expect a tire kicker or a lowball (to which I would of course spit fire.)

And sure another year or two might be better even on a percentage basis, but back to the quality thing, we want a bigger house and can afford to buy one.

Anonymous said...

Patriotz said: "Anyway, if you are trading up, it's better to wait until a market bottom. Do the arithmetic."

Wouldn't it be better to sell and then rent for a few years?

Anonymous said...
"What I meant actually is that I've priced it right, there's simply no "looky lou's." If the price was off I would at least expect a tire kicker or a lowball (to which I would of course spit fire.)"

Priced right according to who? Lots of homes sold last month, were they priced wrong? The market is clearly in a downturn and sellers are loosing the upper hand.

Anonymous said...

Everything has a price that someone is willing to pay. Everything also has an infinite number of imaginary prices that no one will ever pay. Which is the real value?

Greed is a harsh mistress. Sell, rent a beautiful house for two years, and pocket tens of thousands, maybe hundreds of thousands. Or stubbornly stick to the "we have a beautiful home and it's worth $xxx and no one is getting it otherwise", and work for an extra 5 years. *shrug*

Muriel said...

It's nothing to do with price

Anon, I don't mean to be rude and laugh at you, but this is a hilarious statement. You're selling something, of course price is a relevant factor. You may think it's priced, but the market doesn't, so that makes you wrong.

If you're getting that little traffic, it sounds like you're way overpriced.

While the market is tanking and will continue to do so for at least the next few years by all credible estimates, there are still people out there who feel they need to buy right now - if you want to get the most you can for your house, you'll have to meet their expectations.

But it sounds like you're unwilling to do that, and since you're happy in your current home, that's not a problem for you. Enjoy staying put.

patriotz said...

"Anyway, if you are trading up, it's better to wait until a market bottom. Do the arithmetic."

Wouldn't it be better to sell and then rent for a few years?

For sure if the market falls. I was just saying, if you're going to sell one house and buy a more expensive one right away, it's better to do so at the market bottom.

Just as it's better to downsize at a market top.

Anonymous said...

Muriel said:
"Anon, I don't mean to be rude and laugh at you, but this is a hilarious statement."

It's always nice to see who comes out to the party.

Of course it is about price, what I'm saying is it's well priced within a range of all of the others in the neighbourhood. I have been watching this market closely for 3 years including the recent changes and have a very good grasp of prices.

I've also been watching the local buying traffic in our newer subdivision. Our house stands out and gets attention from would-be buyers even when it's not on the market. This isn't happening and the traffic has simply stopped.

vg said...

"I have to say, we've been listed on the market now for about two months. 1-2 walkthroughs in the first week and not 1 since - not even a friggin phone call."



It must have been overpriced in the beginning otherwise two months back you would have had a sale.

The first two weeks are critical to a sale and if you didn't drop the price then knowing things were getting tighter than that is where you lost your chance. The longer a house sits the more chance it gets ignored. Bottom line is correct I am sure that now there is no one even looking,two months ago there were still some sheep grazing. As I always say and the bulls always disagree, it's all about timing.Ya snooze,ya lose.

Muriel said...

Another reality check for sellers in the TC this morning:
Provincial house sale values take a dive

Phil said...

From that article: "Thanks to B.C.'s robust economy with low unemployment and job growth, sellers aren't typically forced to sell because of a financial crisis and may choose to wait, Muir said."

Ha Ha. Still denying we will go down like the rest of the planet.

You could also say: "Becuase the Titanic was such a large and safe ship many people chose not to get into a lifeboat and just wait on board."

Anonymous said...

The anon home sellers has had his home up for sale for the last two months without an acceptable offer. If the home does not sell they are willing to take it off the market and try another time.


Beautiful, this shows another stage in the market. The number of listings will show a drop. Which leads us to think that the market is recovering and prices will start to go up!

NOPE. Thats not what's happening. What is happening is the mix of sellers is changing from a market dominated by those that do not have to sell to a market of sellers that have to sell. People like the anon home seller are leaving the market. And the profile of the typical seller begins to change.

I would expect a drop in listings in the future. However, the key is watch the sales/listings ratio and the days on market. I do not expect the sales/listings ratio to significantly improve and I also expect the days on market to worsen by extending into the 60 to 90 day period.

We are not there yet. But I do expect a dead cat bounce or bear trap after a nominal price drop around 15 to 20 percent.

just jack


just jack

Anonymous said...

Muriel,

Thanks for posting the link to the article in today's Business section of the TC.

Here is what it looks like to readers opening the paper this morning. I bet the RE agent and homeowner crowd that paid for big ads in the Home sections are not too pleased.

Anonymous said...

But VREB does have this ad about current market conditions.

vg said...

"People like the anon home seller are leaving the market. And the profile of the typical seller begins to change. "



Correct JJ, these people weren't a serious seller, just a wannabe or if its' convenient at their desired price not the price of reality. The serious and "have to" sellers will dictate the prices now and we all know that direction is down and will be much faster than many think. We now live in a short term thinking market, it was that way on the way up and will be on the way down. There is total fear out there about the health of our complete financial system like there never has been seen in our lifetimes.

As per the denial charts,it will be just a matter of a few more months and we will see the 10-20% range hit then next spring will be a huge hit when the effects of the US Alt A mortgages hit the markets.

We are a global market now as we see Victoria in the New York Times. The term "local market support" is just a real estate agent's term used as a last excuse to saving his ass.... oops I meant "livelihood", sorry bout that Freddie. ;)

Anonymous said...

A number of readers have been asking about our old friend Fred Carver. Fred is still around blogging. See his latest post (Sept. 9) Saanich Peninsula Real Estate Review

Here is Fred's latest perspective on the market:

Average Single Family Home Selling (pending sales) price this week: $586,000 (-12% change over YTD) Average Days on Market= 62

...during 2003 to 2006 we saw around 18 to 20 % gains a year, we're now seeing about a 10% price drop over last year. Our local economy is strong with the lowest unemployment in the country, less than 1% vacancy rate and 4,000 people a year moving here. I expect the market to remain stable. We're in a failrly balanced market, pricing is import for Buyers, as they are comparative shopping with our increased inventory..

womp said...

Wow, the comments on Fred's blog are IDIOTIC. Some realtor from Florida posted "Gee Fred, glad to see somewhere in the world has a good real estate market!".

I think Fred should be locked up before he hurts any more naive young couples looking to buy.

Great last comment though LOL!

Happy Owner said...

And here I thought you guys thought the TC was full of shit concerning any meaningful real estate commentary. I guess if you hear what you want to hear, they are alright with you.

There is little doubt prices are falling. And so they should. I stated months ago the market is in for a 15% drop ( SFH avg should be around $500,000 ) to keep the market aligned for the doubling of prices every 15 years. Prices will probably overshoot and drop further as they have done in the past. This will mean the really overpriced Burnside and Fernwood crap will come down to a reasonable level you Bears might be comfortable with.

All in all, I don't see a problem with the market at all. I see an excellent opportunity to purchase revenue property because rents won't be going down at all. In fact they are poised to increase. After all, rentals are like water front; they just aren't makin' them any more.

Happy Owner said...

Oh ya, buy the way. Nice charts to whoever put the time into it.

Anonymous said...

Great comment HO, but be careful, some on here would like to beleive tht noone else saw the cyclical RE market going up AND DOWN.

Good take on the rental market as well.

patriotz said...

And here I thought you guys thought the TC was full of shit concerning any meaningful real estate commentary.

They still are. What has happened is now that everyone knows that market is tanking, they can't go on pretending everything is rosy and have started to talk about a "buyer's market", which it certainly isn't. A buyer's market is when prices make sense.

I stated months ago the market is in for a 15% drop ( SFH avg should be around $500,000 ) to keep the market aligned for the doubling of prices every 15 years.

And the same applies to you. We've been in a 35 year secular bull market for RE, with occasional corrections, and it's over, baby.

patriotz said...

After all, rentals are like water front; they just aren't makin' them any more.

They aren't are they? So why do I see so many brand new properties advertised for rent? A property for rent is a "rental", isn't it?

And there are plenty more coming up.

Anonymous said...

Happy Owner said... "I stated months ago the market is in for a 15% drop"

We're getting there awful fast eh? Nervous?

Anonymous said...

Why would HO be nervous? The market goes up, the market goes down, homeowners just ride it out generally without consequence (or reward.)

As for Patriotz and the end of a 35 year cyclical bull market, what makes you think that?? If I thought this market was over forever I'd be spending my time elsewhere.

Personally I welcome a 20-40% drop so I can consider buying a couple more rentals.

patriotz said...

As for Patriotz and the end of a 35 year cyclical bull market, what makes you think that?

I said secular, not cyclical. A secular bull market is due to macroeconomic factors, not local market dynamics.

The secular bull market in RE has been driven by:

- increasing real wages from WWII to around 1982.
- falling interest rates from 1982 to today.
- increase in % of working age population due to maturing boomers.
- movement of boomers into peak earning years.
- increasing labour force participation by women.
- decline in average household size due to later marriages and increase in the divorce rate.

All of which have ended or will reverse.

Mr.4AM said...

POP!...And there goes Lehman Brothers. After 158 years in business, the stock lost over 90% of its value in a mere few weeks. It'll be interesting to see the markets reaction on Monday.

Mr.4AM said...

Happy Owner said: "And here I thought you guys thought the TC was full of shit concerning any meaningful real estate commentary. "

The TC was full of *hit on the way up, and is nothing but a lemming and trying to cover it's ass (and by proxy via realtor comments).

The point is, these were the last big cheerleaders, aside from delusional people like Freddie the realtor.

I think all you need to do is look at this chart. The Times Colonist is a newspaper that falls under the "public" category, and you my friend (and many others) are somewhere between the Denial and "it will return to normal" stage.

Mr.4AM said...

2nd paragraph should read:

The TC was full of *hit on the way up, and is nothing but a lemming trying to cover it's ass (and by proxy via realtor comments) on the way down. Are they still full of crap? Yes, they have no opinion of their own and many of the "studies" and people they quote are understimating the downturn.

Anonymous said...

The spermatoza of this market may be traced back to the end of the first world war some 90 years ago.
The birth of the baby boomer parents. These were the captains of industries that built the current huge companies that fed and housed the baby boomers and successive generations.

This generation was the seed that caused an explosion in the birth rate up until the mid 1960's when the birth control pill caused a substantial decrease in family size in the 1970's from 5 to 7 children to 1 or 2.

Good paying jobs and smaller families increased the wealth of the average household and we bought and bought and bought which caused more and more wealth.

Now we face the contraction of system as the baby boomers parents and some of the first of the boomers are dying.

The future is for a large supply of housing but only a small pool of buyers because there has been no significant boom of babies since the mid 1960's. And we just have not been allowing enough immigration into Canada.


just jack

roger said...

VG said,

As per the denial charts,it will be just a matter of a few more months and we will see the 10-20% range hit then next spring will be a huge hit when the effects of the US Alt A mortgages hit the markets.

VG is right on the mark. Here is a Bloomberg article on this subject:

Alt-A Mortgages Next Risk for Housing Market as Defaults Surge

Homeowners lured by low introductory rates to Alt-A mortgages, which typically require little or no proof of a borrower's income, may fuel the next wave of foreclosures and further delay a recovery from the worst housing decline since the 1930s. Almost 16 percent of securitized Alt-A loans issued since January 2006 are at least 60 days late, data compiled by Bloomberg show. Defaults will accelerate next year and continue through 2011 as these loans hit their three- and five-year reset periods, according to RealtyTrac Inc., an Irvine, California-based foreclosure data provider.

About 3 million U.S. borrowers have Alt-A mortgages totaling $1 trillion, compared with $855 billion of subprime loans outstanding, according to Inside Mortgage Finance, a trade publication in Bethesda, Maryland. Of the Alt-A borrowers, 70 percent may have exaggerated their income, said David Olson, president of mortgage research firm Wholesale Access in Columbia, Maryland.


What about Canada - Any subprime or Alt-A to worry about?

The Alternative Mortgage Market in 2007

-Canada will have $800 billion of mortgages outstanding this year.

- Subprime loan volume will more than double in Canada within 5 years, to almost $70 billion.

- Canada's subprime markets consists mostly of high-ratio uninsured mortgages. In other words, most subprime borrowers put down less than 20% and don't qualify for mortgage default insurance (from CMHC, Genworth, etc.).


Aug-08 Opportunity in Alt-A / B?

Some observers feel this will actually create opportunities--opportunities for lenders that is. With less competition from insured products, alternative lenders might theoretically spring at the chance to offer "Alt-A" and "B" mortgages at fat spreads (profit margins).

vg said...

Lehman going under, Merrill forced to be bought out or go under,AIG tanking hard, etc etc,. Tomorrow is going to be very ugly out there, hope you hold some short positions.

Mr.4AM said...

Hmm... Got an email from iTulip this morning, they are expecting Dow to dive between 300 to 600 points.

Makes me wonder if this is the start of their "Poom" (gold goes up from here) in their Ka-Poom theory.

The recent gold dive is believed to have been because many considered it a comodity, and most of the "paper" gold was being unwound as the dollar rose. I'm wondering if the unwinding is over now.

Invest in gold, wait for it to double, find the Victoria housing bottom, sell gold and buy a house.

Oh if it were only that simple! :)

roger said...

CREA released their latest report on real estate in Canada. Here is the Globe and Mail story:

Average home price drops 5 per cent

A declining number of home sales in Canada's most expensive cities dragged down the average price of an existing home across the country by five per cent in August, to $316,052.

The drop in prices was led by a dramatic slowdown in Vancouver, where unit sales slumped 54 per cent and prices fell by 5.2 per cent to an average $557,114 from the year before, according to data released Monday by the Canadian Real Estate Association (CREA).

Edmonton and Victoria were also on the list of cities where home prices have run up dramatically in previous years and are now in decline, down by 5 per cent and 1 per cent respectively.


These are YOY figures. If you look at the April 2008 peak Victoria is down 13% on the average SFH price (8% median).

hhv said...

Roger,

That is really mind boggling when you put it into perspective. What is the US national average drop now two years post bust? Like 18% or so? So in Canada, 4 months and a 5% drop...

we definitely are different up here!

patriotz said...

What is the US national average drop now two years post bust? Like 18% or so?

I think that's the index, not the average. The drop in the US average would be much larger because averages are skewed by the higher priced areas.

What I'm saying is that so much of US RE valuation is in places like California that a bust there can pull down the national average significantly even if other areas are unaffected.

The average is also skewed in Canada but not quite so much.

womp said...

Hey guys - there was a link kicking around to a site that lets you look at mortgage stats for major areas in Canada... I foolishly never bookmarked it and now I'd like to check it out. Does anyone have it? I'm looking for info on numbers of foreign buyers to be specific...

nick said...

Anyone see MLS #252628? For the low, low price of $439,900, you can buy yourself a 2400 sq ft, 10 room Tillicum boarding house and get into the slumlord business. :)

roger said...

Another day - another TC story on house prices:

Victoria house prices decline slightly: Calgary has biggest drop

Victoria's 1.2 per cent drop in year-over-year average housing prices is reflecting declines seen across the country, particularly in the most expensive markets.

Sales retreated in August for the country's five most priciest markets: Victoria, Vancouver, Calgary, Edmonton, and Toronto, the Canadian Real Estate Association said today.

The average sale price among Canada's major markets declined by 5.1 per cent year-over-year, ending at $316,052 in August, the association said.


And now the CREA spin

"New listings have eased in many major centres, and now stand at their lowest level this year," the association said.

Listings always drop off as we get into the fall and winter months but it sounds good if you say it real fast.

"When comparing statistics, remember 2007 was a record year for real estate sales in Canada. In light of that fact, our current market can certainly be characterized as stable."

The usual denial of YOY stats when appropriate. On the way up they loved YOY stats.

"The challenge is for sellers to price their home to meet the local market realities, and for buyers to realize there is no real estate bubble that will burst and send price to new lows," Lindberg said.


Now what kind of double talk is this?? What is meant by "price to new lows"? It's lower than last year nationally by 5% and that seems like a new YOY low to me. Or are they planning to compare things to 2006 in the next release just like the Toronto REB did in their recent release.

Folks - the spin will continue all the way down just like it did with the NAR in the US.

roger said...

The CREA spin gets a rebuttal in this Financial Post story

Steeper drop in Canada's existing home prices

House prices have dropped for three straight months and it's probably only the beginning, says Benjamin Tal, senior economist with CIBC World Markets.

"The 5% is not much. It will get worse. There is no information that it will stop in the west," Mr. Tal said.

The average price of a home sold in Canada's 25 largest markets was $316,052 last month. It was the largest year-over-year decline since February, 1996. The drop comes after prices fell 3.6% in July from a year earlier, and 0.4% in June.

Mr. Tal said the problem in Western Canada was speculation and it was only a matter off time until a correction occurred. He predicts Calgary and Edmonton prices will continue to fall and suspects Regina and Saskatoon, where prices are up 36.1% and 10.3% over the past year respectively, will soon follow. "The West overshot, the rest of the country is simply leveling off," he said.

patriotz said...

This is the same guy who was saying 10 months ago:

How will all of this affect Canada? Tal says:

* There's no longer much correlation between U.S. and Canadian real GDP growth.
* As such, there's been "no sign of a [housing] slowdown in Canada"
* Canada's housing market is stable because "we did not play [games] with exotic and risky mortgages."
* We'll move from a sellers' market to a "balanced" market by mid-to-late 2008.

Things were looking rosy last December

Anonymous said...

They've been keeping gold prices down by dumping all their gold paper on the market, and forcing investors to do the same because of the lowered prices. Why?

They never had any physical gold to back any of it up. No, really. They never counted on a run.

Once they crashed the price, they've been buying up all the physical metal at the bargain basement prices they created in the first place.

The clue? THERE IS NO SUPPLY. How can their be no supply when everyone is "selling" because of the crashing price?

Once all their paper is dumped, though, they will have no mechanism to knock the price down anymore, and that's when gold will zoom to heights never before seen.

So goes the theory. I think it's correct, because nothing else makes any sense.

Happy Owner said...

Lets not over-think what's going on in financial markets with respect to local conditions.

I personally think Victoria is less suseptible to world trends. This is both a blessing and a curse. The curse is that a large industrial or world service industry will not naturally locate here providing a large, well paying "dynamic" economy.

The blessing is that because Victoria is probably one of the best cities IN THE WORLD to live in, it can ( and does ) attract the owners of those world businesses and those who have influence which will keep this economy bouyant for the forseable future.

I have NO FEAR in this market.

When I can read a blog about real estate, in my local city, where most if not of the players are completely against buying ( "renting is the best way to go...for ever") and what they are really saying is WE ALL WANT TO OWN REAL ESTATE but don't have the money or balls to buy right now (but we will), I know this city will NEVER be a bad place to own property.

Anonymous said...

happy owner,

bored tonite? figured you couldn't pick a fight with yer wife/husband so you'd pop by aand stoke the bear fires a burning?

B2B said...

I personally think Victoria is less suseptible to world trends. This is both a blessing and a curse. The curse is that a large industrial or world service industry will not naturally locate here providing a large, well paying "dynamic" economy.

The blessing is that because Victoria is probably one of the best cities IN THE WORLD to live in, it can ( and does ) attract the owners of those world businesses and those who have influence which will keep this economy bouyant for the forseable future.


Have you ever heard of ostriches? They're not safer just because their head is buried in the sand.

Look, having a small-time and undiversified economy does not protect you from economic downturns. It makes them worse. You may as well say that being broke makes you able to weather job loss better.

Lastly, owners of large global businesses do not move here. Ever heard of the head of say Vodaphone or Coca-Cola moving to Victoria? No, didn't think so.

patriotz said...

Kool-aid! Get your Kool-aid here!

"HouseHunt 300 bucks a month to gain equity in a property is a good investment if you are planning to hold the property for a few years. Also you say the property values are falling 2-3 % a month with no end in sight. Using that rational you are guessing that property is going to fall 50 % in two years??? You are living in a dream world.

Property remains an excellent long term investment. The few people that bought multiple units to make a quick buck will lose out but they are a bit players in the total property for sale in the region."

Who's living in a dream world?

BTW when investors are willing to lose money on an ongoing basis in expectation of capital gains, that is a speculative bubble by definition.

phil said...

Happy Owner is right, Victoria is a beautiful place to live. I love it here. And Happy owner is also right, we all want to be "owners". BUT "owning" doesn't mean renting from the bank for double the monthly payment! And we have no problem renting forever if the lemmings keep the prices here so out of line. But they won't, the last 3 months prove that we are sinking faster than the USA ever did.

patriotz said...

And Happy owner is also right, we all want to be "owners"

Well I am an owner, just not of a house right now.

What matters to me is not what I own, but how much I own (my net worth) and how much I can spend (my disposable income).

The assets I own now suit those goals much better than owning a house.

When owning a house works better, I'll buy.

Anonymous said...

Happy Owner, is your day job Provincial Head of Propaganda or what? If not, you're selling yourself short.

Yes, Vic is a nice place, but there are far nicer and far less expensive places to live. A crashing market is a crashing market, and no amount of BS is going to put lipstick on THAT pig...

Anonymous said...

The crashing market is about to crash faster than the speed of light when USD T-bills hit and stay at 0% return, ALL asset classes fall on their face, and nobody knows where the hell to put their money as Credit Default Swaps obliterate the market.

The Federal reserve is near bankrupcy, same with the Treasury and the bail outs have barely begun.

Sovereign Wealth Funds are backing off billion dollar injections to save US corporations that will go bankrupt anyway as derivatives take them out overnight.

That house you are living in? Hope you locked in for 5 to 10 years, because the interest rates will skyrocket into oblivion as the hyperinflation phase kicks in and massive job losses ensue as companies go bankrupt due to line of credits being cut off and unemployment skyrockets while all currencies devalue against the price of goods and hyperinflation kicks in while your bank fails and your $ over 100K goes *poof*.

Expect massive panic in the next few weeks.

You ain't seen nothing yet!

Anonymous said...

"Happy Owner, is your day job Provincial Head of Propaganda or what? If not, you're selling yourself short.

Yes, Vic is a nice place, but there are far nicer and far less expensive places to live. A crashing market is a crashing market, and no amount of BS is going to put lipstick on THAT pig..."

Talk about propaganda, I see these "bears" posting the same drivel - actually cut and pasted their posts!! - on 3 or 4 different blogs. 3 or 4 of them have blogs and reiterate the same nonsense over and over.

Trying to talk the cat out of the tree?? What a laugh. Nothing is crashing and when that cat does move it'll land on its feet alive and well.
Save your lipstick.

boomer said...

"I see these "bears" posting the same drivel - actually cut and pasted their posts!! - on 3 or 4 different blogs. 3 or 4 of them have blogs and reiterate the same nonsense over and over."

anon 6:11 -the obvious solution would seem to be that you, Happy owner, Sitting pretty, Mr. Carver and the many, many others (I'm sure) that have un-bearish opinions on Victoria real estate should start up your own blog perhaps titled "No Fear" or "Cats still in the tree". Its real easy to do-- and it would be real neighborly of you to come back and let the posters on this blog know its whereabouts so that we could all participate in some amicable cross blog chit-chat. Actually, I recall Fred Carver has one but seems to be having a difficult time getting anyone to respond to his posts.

Anonymous said...

"because the interest rates will skyrocket into oblivion as the hyperinflation phase kicks in and massive job losses ensue as companies go bankrupt due to line of credits being cut off and unemployment skyrockets while all currencies devalue against the price of goods and hyperinflation kicks in while your bank fails and your $ over 100K goes *poof*."

Where exactly will that leave wannabe homeowners or those that have recently sold with the idea of buying back in in 2-3 years? Out in the wind I'm afraid.

Do any of you actually think that such a catastrophe won't hurt everyone, you and me included?

Muriel said...

The obvious solution would seem to be that you...start up your own blog perhaps titled "No Fear" or "Cats still in the tree".

:)

Mr.4AM said...

If this isn't the financial 'chart' of the decade, I don't know what is. (That was as of Wed, Sept 17th, 2008)

Unbelievable boardering on UNIMAGINABLE!!!!!

(yes, that one deserves 5 exclamation marks)

FYI, as of a few hours ago, the Federal banks of the major nations in the world are putting on a coordinated liquidity rescue (except China & Russia for some reason) are trying more of the same failed solution - inject $$$ to prop up the USD (and by extension, all other) fiat system(s).

From the few sources I've read that have been right so far, everyone thinks this is not going to work for more than a few days.

When that fails, the stock market may crash hard.

WHAT TO DO:

#1. Call all your family members, and try to remain calm as you explain what is happening, and about to likely happen.

#2.Tell them to spread their liquid cash in banks such that no single account has more than 100K in it.

#3. Spread your liquid cash (especially if quantities are significant) in more than just 1 bank/credit union. Ideally 2 or 3. Get your money out of CIBC, it is the most troubeled bank. I'm almost starting to wonder if the smaller banks (i.e. credit unions) aren't safer than the big banks, but I really don't know. TD was supposedly the safest bank a couple of months ago, but any derivative missel at this point can take out any bank in a matter of 2 or 3 days if not less.

#3.Keep $3K to $5K or so in cash at home just in case you need groceries for a few months under worst case scenario. Speaking of which, now is the time to buy cheap canned food in large quantities and buy a large freezer if you don't already have one - and FILL IT UP.

#4. Exit most of your stocks before the weekend. The stock market is likely to be going into positive territory tomorrow (Thursday) according to this set of pre-market charts. This is primarily because of the co-ordinated international liquidity effort, but don't believe the hype - use this an exit opportunity, as it is likely to go further south from here. You'll note that Gold is still on an upward trend at the same time that equities are going to open up. Those two signals should be opposite to each other, yet they are not. Smart money is getting into precious metals as I type this.

#5. Buy *physical* gold and/or get ready to short indexes if you are a sophisticated investor. Don't however spend 100% or even close to all your money on physical gold. Under a major crisis you won't be able to buy groceries with gold bars. I'm suggesting buying physical gold so that at the end of this chaos you retain some of your networth, and possibly increase it if you time buy/selling correctly. Later today I'm going to increase my total gold purchases to 40% of mine and my family's networth.

The US dollar has never been closer to the brink of collapse, and every single time nations have tried to rescue their currency by inflating it further, 100% of the times this has failed. Only this time, a USD failure will result in a world-wide recession.

If I sound panic'ed you bet your a$$ I am, but in the short term, I will gladly spend $1,000 to $2,000 in costs to prevent my family from suffering majorly during the upcoming crisis. Think of it as a very cheap insurance policy compared to what could happen. Maybe and I hope I am wrong and all the analysts I've been reading are wrong, but if I'm right and I'm panacking now, I'm going to be very glad I was one of the first to panic.

Good luck everybody!

Mr.4AM said...

Sorry, here's the second link again about Federal banks of the major nations in the world are putting on a coordinated liquidity rescue .

Anonymous said...

Mr.4am,
I'm pretty sure you mean missile when you say "derivative missel". Is this correct? Or is this a specific type of derivative??

Muriel said...

Credit crisis to increase delays and paperwork
(Vancouver Sun)

Loan-seeking Canadian consumers and businesses should brace themselves for more paperwork and longer approval periods but not necessarily more rejections due to the global financial crisis, financial observers said Wednesday.

Most Canadian lenders adopted stricter lending policies last year and the current market turmoil will only accelerate that trend, they said.

"Look for Canadian banks and financial institutions to be even stricter now when it comes to mortgages," Vancouver mortgage broker Jared Dreyer said in an interview.

"They'll want to make sure your credit is very good, that the documentation fully supports your income and that the property is an acceptable property."

Anonymous said...

"They'll want to make sure your credit is very good, that the documentation fully supports your income and that the property is an acceptable property."

Does this mean they are going to go back to the way they use to give out mortgages back in the good old days? Shocking!

S2

Anonymous said...

"They'll want to make sure your credit is very good, that the documentation fully supports your income and that the property is an acceptable property."

Does this mean they are going to go back to the way they use to give out mortgages back in the good old days? Shocking!

S2

Anonymous said...

MR.4am,

what is the differnce between "paper" and "phsycal" gold?

where and how to buy physical gold?

Thanks in advance.

roger said...

Anon said:

what is the differnce between "paper" and "phsycal" gold?

where and how to buy physical gold?


I am not a gold bug but here are the answers to your questions:

Buying Gold FAQ

How secure is a "gold certificate"?

Scotiabank gold certificates are backed by the assets of The Bank of Nova Scotia.

In a real crisis would you rather have the physical gold or a promise to exchange the certificate for actual gold?

Mr.4AM said...

So governments around the world injected some 257 Billion that lasted for a few hours of a stock market rally, only to dissapear into a thin mist.

Right now, Gold is dropping hard at 12:20 noon today due to Government RTC intervention

This also caused the Dow to jump 200 points in minutes. Fascinating, but not sure it will work.

In the UK today short selling PERIOD was banned! Wow. Drastic measures indeed.

Not sure who asked where gold could be purchased, but most large banks sell it, but you might get a better rate out of dedicated dealers. Also quantity is important, and so is recognizable bars. Here's a dealer in Surrey.

Cheers,

PS. "missile" - got it. Thanks for the spell check :) Obviously I don't spell check before posting.

Mr.4AM said...

Since I've been pumping gold on here, I'd say keep an eye on 24 hour spot gold before you buy. Right now it's tanking as fast as it went up a few days ago.

If it finds a support level coupled with some major bank/insurer failure or other major negative announcement etc, then it might be time to buy again.

This RTC business is what got the markets out of turmoil during the last crisis in the 80's. It may last a while, but not sure if this is enough to stabalize the markets completely. I have a hunch it will not, but in the mean time, gold may dip further, so look for a horizontal line or a climb back up before buying in if you want optimal pricing today/tomorrow.

Gold going down signifies a deflationary period. It's quite possible massive defaltionary period isn't over now or in a few weeks.

Gold going up fast signifies inflationary period, and if it is sustained for many days or weeks, you might call it hyperinflation... and that's when all hell breaks loose.

Ryan said...

"Where exactly will that leave wannabe homeowners or those that have recently sold with the idea of buying back in in 2-3 years? Out in the wind I'm afraid."

The inflation measured by CPI doesn't include housing. So regardless of what gas costs, the money you have saved to buy a house is going to buy more house in a couple years because house prices are deflating.

Anonymous said...

"The inflation measured by CPI doesn't include housing. So regardless of what gas costs, the money you have saved to buy a house is going to buy more house in a couple years because house prices are deflating."

The price of housing wasn't the point. It's the price of everything else and the overall impending doom predicted by the original poster that makes such a catastrophy relevant to all of us.

As posted: "because the interest rates will skyrocket into oblivion as the hyperinflation phase kicks in and massive job losses ensue as companies go bankrupt due to line of credits being cut off and unemployment skyrockets while all currencies devalue against the price of goods and hyperinflation kicks in while your bank fails and your $ over 100K goes *poof"

Think your safe? According that doomster, the money you have saved will no longer be yours. Where is your nest egg? Stocks, cash, GICs, gold...It's all risky right now - and I bet there's more than a few bears and bulls that have lost more than a few months off their plans in the past month or two (make that in the last week or two.)

The uncertainty in the stock market is part of what got the real estate market moving in the first place.

Anonymous said...

Don't kid yourself, us housing bears with $ are your next buyers. If we lose it, there will be less buyers in the housing market and further pressure on prices going lower.

The "when the stock markets go down, people put their $ into housing" is a passe phase of a previous economy... one where a credit crunch didn't exist.

vg said...

"I personally think Victoria is less suseptible to world trends"


Of course happy guy, we are "immune", we are different, we are an island.
Dude did you not hear the BC pump team and even they are calling for 10-20 percent down ? you go put your head back in the sand with sitting pretty.

vg said...

"What a laugh. Nothing is crashing and when that cat does move it'll land on its feet alive and well.
Save your lipstick."

Sounds like someone who foolishly bought the last 2 years and has the most to lose.

Ever looked at a chart ? the price peaks,(happened), volume drops bigtime (happened), then price drops,(currently happening), price drops start slow, (currently happening),then larger price drops, (next phase beginning). Come back in a few months, we will be officially 10-15 percent by then for starters. By next spring it will be 3 times that.

Muriel said...

From Friday's Globe and Mail
Seller Beware


“If you have bad credit, no down payment and a good job, you can't get a mortgage in Canada any more,” said Alex Haditaghi, chief executive officer of mortgagebrokers.com., a Toronto-area mortgage broker. “Two years ago you could say ‘Let me work on it,' and one of the alternative lenders would have done it for you.”

Such is the new landscape of the housing market as listings surge, sales plunge, prices cool – and the final sparks fizzle out on one of the country's strongest-ever residential real estate booms.

Vancouver is the latest housing market to show dramatic signs of weakening. The number of listings in that city has doubled from a year ago while sales have been cut in half. It's also taking up to three times as long to sell. “Deals that were going through last year aren't going through this year,” said Ian Martin who runs Erealty.ca, an online
Vancouver realtor....

It's people who bought in cities like Calgary at the peak last year, either for capital gains or with a “now or never” attitude, that may now be struggling, he added.

Anonymous said...

"Sounds like someone who foolishly bought the last 2 years and has the most to lose.

Ever looked at a chart ? the price peaks,(happened), volume drops bigtime (happened), then price drops,(currently happening), price drops start slow, (currently happening),then larger price drops, (next phase beginning). Come back in a few months, we will be officially 10-15 percent by then for starters. By next spring it will be 3 times that."

Wrong, I bought back in 2003 and had a very substantial downpayment. No fear or denial, I just do not see this market "crashing" to what you predict to be a drop in prices of 30-45% by next Spring.

sitting pretty said...

#4. Exit most of your stocks before the weekend.

Hmmm. Thursday morning's advice doesn't look so good on Friday morning. Did you sell your stock portfolio, Mr. 4 am? Oh, I forgot, you don't own any stocks.

Anonymous said...

Anon 6:22 AM said:

"Wrong, I bought back in 2003 and had a very substantial downpayment. No fear or denial, I just do not see this market "crashing" to what you predict to be a drop in prices of 30-45% by next Spring."



Well then you should just be fine. Unless, you used a home equity line of credit and increased your mortgage. Then your in the same sinking boat as someone who bought in the last two years. You'll have lots of company as it is the biggest HELOC boat in history, unfortunately this boat doesn't have any life preservers. Tighter lending policies, increasing interest rates, low sales activity, high listings and a recession are the leaks in the boat.


A 30 to 45 percent correction may be an underestimate. At this point no one knows how deep the water is under the boat, but we do know that the ship is sinking and there is nothing than can be done to plug the leaks.

just jack

Libre Esprit said...

Also from Friday's Globe

Developers on shifting ground
Home prices could fall dramatically as baby boomers retire

http://tinyurl.com/5ypnyq

Of course, this isn't anything that demographers like David Foote haven't been saying for well over a decade. Just seems that finally the MSM is catching up.

B2B said...

The markets are going to exhibit violent swings up and down for the foreseeable. But down seems to be a reasonable overall trend for the next while.

Anonymous said...

I refinanced my Victoria home to short stocks. I have lost everything.

Mr.4AM said...

[#4. Exit most of your stocks before the weekend.]

SP said: "Hmmm. Thursday morning's advice doesn't look so good on Friday morning. Did you sell your stock portfolio, Mr. 4 am? Oh, I forgot, you don't own any stocks."

I was still 5% in stocks and exited with a 50% gain on those, so I'm doing just fine. But you are right, I was not expecting the US Government to step in and bail out Baystreet to the tune of $1 Trillion at the cost of Mainstreet (US tax payer). I don't think anybody saw that one coming. And if that hadn't been done, my suspicion was that Monday morning would have been like 1987. While this props up the entire stock market in the short term, in the long term this will be even worse for just about everyone.

Mr.4AM said...

b2b,
I'm not entirely sure that down will be the trend of the stock markets, at least in the short term. The problem with this major intervention is that it punishes the innocent (tax payers) and bails out and fills the pockets of the derivative banking crooks so they can come up with a new scheme to (excuse my language) rape the system again.

I guess, we still have to see the specifics of what this magical proposal is going to be, but I don't see it working too well without sending the bill to the US citizens.

Ultimately the US is still screwed:
1) Ridiculous 9.6 Trillion deficit that will not get fixed anytime soon.
2)Overpriced houses in a continuing downward trend
3)Loss of confidence from Sovereign Wealth funds and other countries in terms of investing in USA given the lack of recent stability in markets and its affects abroad. Think any foreign country is going to buy a US mortgage derivative in the future?
4)Aging infrastructure and not enough funds to address the problem.
5)Contracting credit & access to credit for everyone (prime, sub-prime, near prime, student loans, credit cards, etc)
6)Millions of foreclosures and homeless people
7)An entire nation with a negative savings rate on average
8)Millions of home owners, owning more on their mortgages than houses are worth
9)Majorly screwed Health Care system that is costing them trillions
10)Keeping 2 wars alive at the cost of billions per week.
11) And now... 1+ Trillion in bail outs for Baystreet

... And I'm sure I left out a few other ones too.

Do people really think this is going to end well?

Anonymous said...

JJ Said "Unless, you used a home equity line of credit and increased your mortgage. Then your in the same sinking boat as someone who bought in the last two years. You'll have lots of company as it is the biggest HELOC boat in history, unfortunately this boat doesn't have any life preservers."

Again no, no debt outside of my mortgage, maybe my boat's floating a little higher than average. I do have a LOC against my home but it sits there waiting for a good opportunity or emergency - maybe buy a condo in a couple years or? I'm pretty conservative and therefore will ride through almost any of this - maybe I'll even profit from it.

I had a "very experienced" financial advisor tell me back in about year 2000 that the stock market will "go on full steam ahead" for at least the next ten years."

I told him I was looking at paying down debt - he said this wouldn't take me where I wanted to go and advised that I transfer all of my savings into various mutual funds etc. I decided to skip that advise and focus on paying down debt.

After a couple years and a bit of horseplay with RRSPs, all of my debt was gone and I put 25% down on my first home.

Everyone wants to layout advice for investing and homeownership, but noone ever talks about financial security. Why? Because there's no commission! If I had taken that "professional's" advice I would still be waiting in line to buy my first home. My advice to anyone considering homeownership or stock investment is clean the house first.

Do not go into anything that could sink your boat, and never ever bet your house or any proceeds from it's sale.

Oh, and never ever, friggin ever, think that just because someone works in a bank and calls themselves a "certified financial planner" that they know something you don't. They are in fact low paid (albeit perhaps overpaid) salespersons and most of what they know is tied up in selling you products and insurance you don't need. They will bankrupt you given the opportunity.

vg said...

good advice anonymous 6:42, all those bank smurfs are salesmen and nothing more. But if things get dicey here you may find your LOC frozen,apparently it was happening to some who never used them.

vg said...

"Wrong, I bought back in 2003 and had a very substantial downpayment. No fear or denial, I just do not see this market "crashing" to what you predict to be a drop in prices of 30-45% by next Spring."

we each have our own opinion and you will be safe as you will go back to 2003 prices by next spring/summer.

But do you not see the signs of a cracking economy ? Olympic push coming to an end, real estate projects in decline, deals not getting done,sales volume dropping off a cliff, the US borrowing so much much money it will put us into a recession ? you don't see those things happening and that they may effect people who may be losing their jobs in RE construction realted area as it was 60% of the economy the past 6 years ?

I guess this is your first home and are very attatched to the value to not see the history here. This is way worse than 1982 what is happening here. A recession is coming and it could be a long one like we have never seen before.

Anonymous said...

"we each have our own opinion and you will be safe as you will go back to 2003 prices by next spring/summer."

45% drop by next Spring? I don't see it, but I've also been paying on a mortgage for 4 years at historically unheard of rates. My principle is now back to perhaps 2000 or earlier prices and dropping. Really, nothing to worry about.

On top of that, my background is is in accounting and tax and you watch me make a silk purse out of a sow's ear if necessary :-)

Anonymous said...

"But do you not see the signs of a cracking economy ? Olympic push coming to an end, real estate projects in decline, deals not getting done,sales volume dropping off a cliff, the US borrowing so much much money it will put us into a recession ? you don't see those things happening and that they may effect people who may be losing their jobs in RE construction realted area as it was 60% of the economy the past 6 years ?"

This I mostly agree with and for those reasons would caution anyone against buying a first home anytime in the next few years - regardless of prices.

However, I do think our local economy has been operating at about 30% over-capacity for a few years and needs to shed some jobs to get back in line. Aren't you tired of the half-way service you are receiving from most-often kids these days? What has happened in our economy IMO is way too many people have over-reached their current output abilities and are in fact over-paid. We are not getting what we pay for.

So, you will see a pull-back from this in the next year or two or three and you will see lots of local job-losses. Most of this will be a retraction to capacity.

Really I mean no ill comment to the young workers, they are just doing what they are told to within their abilities (by the slightly older young workers)

Hopefully the over-capacity our local economy has experienced will have at least kick-started some of these "kids" to enter what is expected to be a retirement meca era, where we do not have enough skilled employees to fill the upcoming management retirement.

Mr.4AM said...

"Oh, and never ever, friggin ever, think that just because someone works in a bank and calls themselves a "certified financial planner" that they know something you don't."

I totally agree. I don't even know how some people can face themselves in the mirror day after day of doing this kind of job. Even more so after any kind of crash. How do you look your clients in the face after most of their investments and retirement funds get wiped out because of your certified financial advice?

I consider myself an amateur in these "investment" areas, I read a lot about it and try to stay informed. When I started out, I had little knowledge about how it all worked and I trusted the advice of such "financial advisors". This resulted in my mother's RRSP's getting wiped out by more than 50% back in the mid 90's. It was then and there that I lost trust in these people and started reading and learning.

What I've learned since is that "financial advisors" working for a bank are actually the low end of professionals in their type of career. The really bright people go work for far more corrupt organizations like the big investment firms or hedge funds and manage mostly multi-million dollar portfolios - on the low end.

Bank Financial Advisors go to school and learned complex topics such as how the financial system and the stock markets are supposed to work, and how to manage portfolios of varying degrees of risk and how to assess a person's risk tolerance and make recommendations from there.

It all sounds great in theory, the only problem is that the stock markets are no longer 'free markets', and so the fact that any of their recommendations become reality in terms of gains is more luck than any kind of credential backed advice or wisdom.

Please note that while I am putting down the credibility of bank financial advisors, I strongly believe that most of them have very good intentions and want to help. So it is not a case of them being crooks (quite the contrary in many cases), it's just that they are deluded in thinking they understand the system, when the system is actually rigged.

A free market is one where all information about whatever company you are about to invest in is disclosed such that EVERY investor is on the same level of playing field. I think we all know by intuition that this just isn't so. The markets are no longer 'free' because:

1) There is no transparency
a) Nobody really knows if a company claiming XYZ profits is really telling the truth - even after 'SOX' compliancy (steming from ENRON/AT&T scandals) was implemented, derivatives are a #1 example of this and this past week we nearly saw it wipe out stock markets around the world. Also, most companies medium and large have "off book" investments that are often big enough to counter any gains that they are claiming on their real books and which they are regulated to expose publicly. I'll give you just one example: Nortel. How many times in the past 8 years have they re-stated their quarterly disclosure documents? The answer is WAY too many. Each time they are audited, new problems are found. There is NO trust anymore in such companies. And that is just one of the ones that got caught. There are many others that are much better at hiding the truth of their financial status.

2) It's all controlled by the Big boys - Multi hundred million or Multi-billion dollar hedge funds control the market swings along with short-selling en masse by Investment banks like Morgan Stanley, Meryll Lynch, Goldman Saches, etc. You and me, the little guys, investing based on Technical Analysis or Fundamentals (the two major investment theories) are often in la-la land if we think the market still behaves in such manner 100% of the time.

3) But the number one thing that removes the "free" from the markets is government intervention. How in the world can people make long term investments when the government changes the playing rules every other day as we saw in the past 2 weeks. Government intervention can have a huge impact on the markets. Example, we just went from hanging on the edge of the cliff by 2 fingers to standing 20 feet away from it on "solid ground" in a matter of days. And while the intent is usually good (by gov), the long term results are often do far more harm.

In short, the whole system is more like a casino and most people are actually gambling (wether they know it or not), and not "investing", and when the big players start losing, the casino rules are changed to favor them... and you pay the bill! I wish this was just some kind of conspiracy theory or drastic exageration, but I think what just happened in the past two weeks is plenty of evidence that this is in fact the reality of the situation.

boomer said...

"In short, the whole system is more like a casino and most people are actually gambling (wether they know it or not), and not "investing"



AGREED-
factually MOST retail players lose money---but investment dealers always get their commissions.

Anonymous said...

"but investment dealers always get their commissions."

Or their bailouts!

vg said...

A financial writer I loosely follow who has been bang on the past few years put out an alert today calling to short the S&P if you haven't already as he is predicting over the next 12-24 months the DOW going to 7500-8000 range and the dollar going to 60 cents on the USD index. You know what that is going to do for gold and our "local" economy ? 45% will be a pit stop if that happens.

Of course it is one man's opinion but this guy calls the markets to the upside and the down over the years and not just one of the goldbugs who wants to see the US go down as he is an American.

My gut feel is things will stablize for a few weeks to a couple months then will deteriorate as we get towards year end and we see the economic numbers show up weak and that will be the catalyst. Of course that is just my "one mans opinion".

vg said...

Love this quote from Garth, it is so on the money.



"We don’t need housing stimulus right now. We need housing cleansing. We still have excessive expectations in the system which have to be wrung out. We still have average families who cannot afford average homes. We have supply exploding and demand contracting, which is the necessary purge for a market that went terminally obese on greed and speculation and Mike Holmes fantasy. We still have idiot young couple buying homes they do not need and cannot justify, complete with debt they’ll never repay."

Anonymous said...

Yes, the DOW would have hit 8000 on Friday if not for the dead cat bounce from the US gov sleight-of-hand which only postponed it.

If the uber-rich can think they can have an economy where their bailouts are being paid by the poor and the ex-middle class new poor, they are sadly mistaken. No one will buy anything for decades like the Great Depression, and that will ground everything to a dead halt.

They only managed to stall the crash a bit longer.

Anonymous said...

It also looks as though media is starting to turn on the bailout as opposed to Friday when they were cheerleading it. Even though the powers that be (Paulson, Bush, Bernake) are trying to make it sound like a "necessity" the average American must be asking themselves WHY?

womp said...

Anyone catch CBC Sunday tonight? They had a fantastic report on the financial crisis that perfectly packaged up all the concepts so even the dimmest viewer could understand. They covered everything from the mortgage crisis and traced it through to the bank failures, Canada's ABCP debacle and ended up at last week's market.

The conclusions were all negative. It was a great piece.

roger said...

There have been a lot of financial posts on the blog recently. How about an update on the latest real estate stats from Victoria's professional REALTOR® Fred Carver

Fred has an interesting breakdown on sales by region and these interesting quotes:

Typical Slower time of year for real estate sales as people enjoy their Summer vacations.

single family home Sale Prices as expected slowed throughout the region this Summer

At first while doing the report I thought there was a major shift happening...then I compared the Median Price with the same time last year. I believe the higher priced home sales have slowed with a lower number of Buyers for Victoria Million Dollar homes at this time of year!

sitting pretty said...

They had a fantastic report on the financial crisis that perfectly packaged up all the concepts so even the dimmest viewer could understand. ... The conclusions were all negative. It was a great piece.

You really are a moron if you think the global finanial crisis is good news for anyone.

Metaldwarf said...

This is worth a laugh
http://tinyurl.com/4bpj4z

Anonymous said...

And you, Sitting Pretty, are a moron if you think anyone said that it was great news. Go back to your overpriced piece of crap house and bask in the glory of being an "owner".

roger said...

sitting pretty

We haven't seen you around much lately. I guess once those YOY figures you love so much starting going negative it was hard to swallow all that crow.

Anyway - no hard feelings. Here is a present for you to read and share with your friends in the office.

patriotz said...

You really are a moron if you think the global finanial crisis is good news for anyone.

Every crisis is good news for someone. Great Depression (cash holders), WWII (business owners, farmers), you name it.

Oh before you start no major Canadian bank failed during the GD.

Someone is always in a position to come out ahead.

vg said...

good point patriotz, CIBC is the only sketchy one out there I can see.

Plus TD is in talks to buy WaMu, I'd say thats a good sign all is fine in most Canadians banks. SP thinks if prices go back to 2003 levels the world will end,well maybe her little world.

If I recall Victoria was a nice place to be in 2003 so a correction will balance things out nicely for all. And as one poster mentioned,maybe then we will get some competent help in some of our service sector stores where they will know how to give proper service and operate a cash register.