Monday, October 27, 2008

Steady hand on the tiller

With all the doom and gloom these days, what's a bear to do? Besides strap on the crash helmut (sorry can't leave that poor guy alone).

As much as I hate using the old washed up political cliche, I can't think of a more appropriate way to summarize what the HHV households are up to: steady as she goes.

Here's my top five must do and do not things in an economic environment like that which we find ourselves in today:
  1. Pay down debt. Let's be honest. Investments are not performing. GICs are not performing and interest rates on pretty much any debt eat the difference from anything remotely "safe" that you and I have access to. So the best thing to do is get rid of any and all debt. If you're out of debt, save up a minimum of 3 months worth of expenses, 6 months is ideal. Take confidence in knowing you can weather whatever waves get thrown your way in this storm.
  2. Don't spend any money on unnecessary things. That new Wii so you can play Rockband? Actually, you may want to get that, it could potentially keep you entertained for many a night with the whole family and prevent you from spending other money on unnecessary things. So, Rockband and Wii, cool. New big screen TV to watch yourself rock out, not cool right now. Patience, it will only get cheaper.
  3. Take advantage of every opportunity to learn something new. Instead of spending money going out, read all this great stuff we get for "free" online. We are looking at an unprecedented economic learning opportunity. Drink it in. Disect it. Discuss it. Learn from it. Learn how to make money from it. Learn how to see it coming in the future and protect yourself.
  4. Don't quit your job. I nearly did. I was set to start my own business 2 months ago. I'm delaying that for the near future. Job security is paramount in these times. Remember the pecking order in the downtimes: consultants go first, newly hired next, retirees are offered "early retirement" incentives, and then people plain old lose their jobs. Do everything in your power to be the best employee, contractor/consultant or whatever you are.
  5. Do not make a major purchase. Cars are about to get really cheap. Hyundai is already offering "don't pay till 2010" incentives. But most importantly, no matter how bad your current rental is, do not fall for the "same price as rent" and "time in the market is better than timing the market" advertising going on right now. Need to be convinced your safe not buying? Check out the chart from Roger below. It uses an assumed 5% loss YOY for the next two years. And unless things change, we'll be into double digit negative YOY declines next spring already.

The key number that convinced me here was in the Total Interest row. Saving $44K in interest payments alone using such a conservative correction as a baseline is worth it to me. The savings only get better when you consider the next jump up:

When I see work like this, I realize why I kept blogging everytime I felt fatigued. Thank you Roger, your contributions to my real estate education have been immense.

155 comments:

patriotz said...

But most importantly, no matter how bad your current rental is, do not fall for the "same price as rent"

On bogus one-year paid-down financing incentives, that is.

When owning is truly the same cost as renting - including market interest rates, taxes, maintenance, etc. - I'm buying. Maybe even a bit sooner.

We've got a long way to go pricewise before we're there. But maybe not timewise. :-)

roger said...

HHV,

Do you realize that real estate professionals view YOUR blog as a fear attack on real estate?? :>)

Top realtors criticize housing 'fear attack'

Fears of a major real estate downturn are overblown and the Canadian market is still performing well, say top executives from the country's largest real estate companies.

"We are being overwhelmed by the negativity, the market has not slowed down that much, it's like you're going from 150 kilometres per hour to 120 kilometres, it feels slower, but it's still healthy," Michael Polzler, executive vice-president of ReMax Ontario Atlantic Canada, told more than 1,000 realtors yesterday at the annual general meeting of the Toronto Real Estate Board.

This is a fear attack that will blow over," said Stephen Wong, chair of Living Realty Inc. "We do not have the same problems as the United States."


But what should a REALTOR® do in this time of crisis??

"Just stop reading the newspaper and watching the news," Polzler said to enthusiastic applause.

"The need is paramount now to accentuate the positive," said Gary Hockey, president of Coldwell Banker Canada. "We have to create some positive spin so we don't get dragged down to the doldrums."

roger said...

Globe and Mail also reports on Real Estate Conference:

Agents told to brace for tough times

A crowd of more than 1,000 real estate agents and brokers, including many who joined in the boom and have yet to live through a downturn, gathered yesterday in Toronto for an industry pep talk. The message they got was to expect Canada's residential real estate market to be rocky in 2009, but that it would be followed by a brighter picture for 2010.

"They're basically saying that next year is a writeoff," one audience member said to colleagues at her table.

The meeting came on the heels of a midmonth report from TREB (Toronto) showing sales for the first half of October in the GTA plummeted 21 per cent from a year earlier, and the average resale home price declined by 15 per cent.

Sales and prices in other markets across the country, including Vancouver and Calgary, have also slumped. Depending on the region, the downturns have variously been attributed to lack of affordability, the economy, and taxes.

hhv said...

Roger,

I welcome REALTOR contributions to this site openly. For whatever reason, they have not taken advantage of its openness in their viral marketing campaigns.

Anonymous said...

The hilarious arrogance of realtors and their associations. They really believe they can create and keep bubbles going by lying BS PR.

And alternately that bear blogs can destroy and pop them.

Markets are markets; they do what they are going to do and no amount of spin one way or another is going to move a megaton elephant when it doesn't want to move, or stop it when it wants to rampage.

It is the customers of and believers in the spin of realtor PR Organizations who are the greatest fools of all.

hhv said...

Anon,

Are you saying that I don't have the power to shift the local market?

I guess I'll give up trying then. (BIG TONGUE IN CHEEK)

B2B said...

Hi guys,

OT a little - apologies. But check this Globe article today:

http://merrillalarm.notlong.com

Canadian housing market alarms Merrill

B2B said...

quotes from the above article:

"The number of units under construction currently is just off the peak hit in May, which was the highest recorded in 36 years of available data and 97 per cent above the long-term average...

By contrast at its peak in 2006, U.S. housing construction was 54 per cent above the long-term average."

"Inventories of unsold new single-family homes in Canada rose by 56 per cent year over year as of last month, close to the maximum increase in July 1990, which marked the last housing market downturn...

At the peak in April 2006, inventories of unsold new single-family homes in the United States were up 26.5 per cent over a year earlier"

Nick said...

Great work again on the graphs Roger! How did you do them up, in an Excel sheet? If so, I was wondering if you could make the original chart available to put our own data in the fields (ie, current rent, expected purchase price, downpayment savings, etc)?

roger said...

Nick said:

If so, I was wondering if you could make the original chart available to put our own data in the fields (ie, current rent, expected purchase price, downpayment savings, etc)?


I used a free excel mortgage spreadsheet and did a few modifications for my examples. You can download the original from the developer here.

I used Alt-PrtScr to copy the desired screen image and then went to Paint to clip out what I wanted to post. Saved the file in PNG format and then went to www.tinypic.com to save it and generate a URL link.

Have fun!!

P.S. They have lots of other good free spreadsheets at that site.

roger said...

Globe and Mail has a "bear" writing articles for them:

With collapse, real estate market gets reality check

It seems like only yesterday the favourite parlour game of British Columbians was guessing the obscene sum of money the shack at the end of the block was going to fetch.

And whether it would last more than a day or two on the market.

Now the game has been turned on its ear. Today, people try to figure out how many months a place will take to sell and the amount the owners will have to drop the price to find a buyer.

The implications of the real estate collapse are frightening, especially for those who panicked and took out massive mortgages to get into a market they feared would be forever beyond them if they waited any longer. Homes bought at the market's peak could be worth 30 per cent less than the purchase price in two years.

Some people in B.C. are almost certain to find themselves "under water" - a term applied to those whose mortgage is greater than the value of their home. One in six U.S. homeowners is in that position. And in a period of protracted economic downturn, it doesn't take much to push an under-water mortgage into default.

Dumb Canuck said...

Mother of God - that analysis actually made sense...

I'm still predicting average prices to fall below 330K within two years based on relative Case-Schiller declines in U.S. cities with similar house price increases to Victoria since 2001 or so. Las Vegas went up around as much as Victoria and is now down 36%. We're going down faster and harder and may reach the long term trend within a year and a half at this rate (or less).

roger said...
This comment has been removed by the author.
Mr.4AM said...

Don't look now but the Canadian dollar just went up 4 cents. Quick, buy that US vacation now!! hehe

roger said...

The British Columbia Real Estate Association (BCREA) released its fall 2008 Housing Forecast today.

News Release

BC Multiple Listing Service® (MLS®) residential sales are forecast to decline 28 per cent from 102,805 units in 2007 to 73,700 units this year. A modest 4 per cent increase to 76,500 units is forecast for 2009.

The average MLS® residential price is forecast to increase 3 per cent to $453,000 this year. However, home prices peaked in the first quarter and have been edging lower for several months. For 2009, the average price is forecast to decline 9 per cent to $413,000, with most of the decrease having already occurred by the end this year.

Downward pressure on home prices is expected to ease by the second quarter of 2009, as an increase in affordability and consumer confidence induces a modest growth in sales. The inventory of homes for sale is also expected to decline in the coming months as potential home sellers delay putting their homes on the market until conditions improve.


Fall 2008 Housing Forecast

See page 4 for Victoria

MLS® residential sales through the Victoria Real Estate Board are forecast to decline 21 per cent to 6,650 units this year. A marked reduction in consumer confidence is impacting island housing markets as many potential homebuyers take a wait-and-see approach.

Fewer home sales and a sizable increase in the number of homes for sale has pulled the Victoria housing market firmly into a buyers’ market. Home prices have been edging lower for several months and this condition will likely persist until next year, when more balance between supply and demand is expected.


BCREA Graph

roger said...

More graphs from the BCREA report:

BC Annual Sales & Prices

BC MLS Quarterly Prices

BC Sales to Active Listings Ratio

BC Weekly wages

Mr.4AM said...

"Downward pressure on home prices is expected to ease by the second quarter of 2009, as an increase in affordability and consumer confidence induces a modest growth in sales"

Funny how they think that "consumer confidence" will increase by second quarter of 2009.

Newsflash: Analysts I'm reading are forecasting DOW (and by extension TSX) to go down below 5,000. The IMF laundry list of bail outs is only getting started, the US dollar dive hasn't even occured yet, the inflationary spike is easily many months away , and the Canadian economy is only a few months into feeling the hit of the credit crisis, and somehow what took decades to climax, is all going to be over by 2nd Quarter 2009 with consumer confidence so high that they'll forget the 2% / month real estate dive and get back into "investing" in real estate?

That's not even funny. That's either pure ignorance or misleading lies.

B2B said...

True, Mr. 4am. But they no doubt think they're performing a public service by telling people it will be all right...I think a lot of people, perhaps rightfully, think that society cannot digest the news that things will be rough for years to come.

As a society we have grown so complacent and coddled that it seems we cannot take bad news. It's all rah, rah, all the time, and I'm OK, you're OK, and being pessimistic is seen as some kind of treason.

Surely we will not get out of this coming depression until people fully capitulate and finally admit that it ain't over till it's over. As you say, this will likely take years rather than months.

In recent years, before all this got as bad as it is today, I would look around at people and wonder where all this wealth was coming from. After all, if you drive down the Pat Bay you are surrounded by new cars and insane levels of wasting of money and resources in the form of giant new trucks, yet the people driving them, to judge from their driving habits as well as the general level of public discourse, are mainly idiots. Yet somehow these millions of idiots have all this material wealth and indeed are spending more of the world's resources than it can supply.

What actual wealth is produced by, say, British Columbians that justifies the obscene level of wealth we have? Real estate? Condos, mortgages, realtors? That's not real wealth, it is illusory. Fishing and forestry? Those industries are dying and based on raping resources we no longer have. The provincial government? This huge employer is also just an illusory paycheque, drawn on the taxpayer.

Surely this will not end until we settle at a level of wealth that is commensurate with the amount of value contributed and wealth generated by your average British Columbian/Canadian/American/Brit/Chinese. I would say this level is likely to be shockingly below the current level.

end of rant!

Dave said...

Thanks for the post Roger. It's interesting that they aren't calling for a big correction in Victoria prices relative to Vancouver. I tend to believe it because the inventory numbers are more balanced in Victoria and affordability is better.

However, I'm not sure I agree that apartments and townhouses will drop more than SFHs. Past corrections seem to show the opposite effect. That said, the apartment MOI is quite high.

roger said...

Dave said:

Thanks for the post Roger. It's interesting that they aren't calling for a big correction in Victoria prices relative to Vancouver. I tend to believe it because the inventory numbers are more balanced in Victoria and affordability is better.

One has to remember that the % price changes they are showing are in annual averages. The % change from January 09 to December 09 will be much larger. Here is their forecast added to the VREB SFH price graph

However, I'm not sure I agree that apartments and townhouses will drop more than SFHs. Past corrections seem to show the opposite effect. That said, the apartment MOI is quite high.

I have seen a number of big drops in condos this month. For example - The new Chelsea in Fairfield cut some of their list prices by 40K for units in the 625K price range.

Just Jack said...

Even with this absolute dreadful news in the media, people are still buying real estate in Victoria!

Why?

Sales activity has plumetted, yet there are still sales happening in condominiums and single family homes every day in Victoria. Adding to this perversity is that the sale prices are not that much different than the list prices.

Are they all just "Greater Fools"?

One possible answer might be that the people buying today had sold their previous home in the last few months. These people require a home and are not willing to be renters. They are simply buying and selling in the same market.

Does anyone out there have any anecdotal information on people having just bought and why they chose to buy now?

Dave said...

Sales activity has plumetted, yet there are still sales happening in condominiums and single family homes every day in Victoria.

Jack, I don’t think I would use the adjective plummeted. Rather, I would characterize the drop in sales as moderate. Victoria had 632 sales in September 2007 and 512 in September 2008. That’s not a huge decrease, especially when you consider that 2007 was one of the best years on record.

There are always people who are willing to buy and sell into the same market for whatever reason (e.g. downsizing, kids, etc...). A lot of people don’t want to go from owning to renting to owning again. Fundamentally, I would call that speculation and that isn’t always the best option for people.

Mr.4AM said...

512 sales in 2008
vs
632 sales in 2007

= 19% difference downward

If next year we see another 19% drop (for a total of 38% from 2007), I'd definitely call that plummet.

"A lot of people don’t want to go from owning to renting to owning again. Fundamentally, I would call that speculation and that isn’t always the best option for people."

Funny, I call that a smart move that will save me somewhere between 5 to 10 years of working in life. I'll be retiring at 45 while supposedly *expert professional* real estate agents will need to keep on selling houses to make a living.

Let's get one thing very clear. Buying into a climbing market that had no fundamentals to back it up - that's specualtive buying.

Selling at near peak and waiting until the market hits bottom because we'll be back to fundamentals. I call that a smart financial move, if you're willing to sacrifice a little in lifestyle in the short term by renting (not for everyone - but it is for me).

Dave time to lose the Realtor spin, if you want any respect on this board. Over here we focus on reality and facts, not optimism.

Right now all the facts show a long downward spiral in the real estate market in Victoria, coupled with the worst financial crisis since the 1930's depression.

Time to lose the koolaid.

Mr.4AM said...

JJ asked: "Does anyone out there have any anecdotal information on people having just bought and why they chose to buy now?"

Sadly, most of my friends have all bought already in the last 2 years.

Recently though, two other co-workers were both thinking of moving up from Condos to Townhouses, and a third of buying a 2nd home as an investment property (becoming a landlord).

The first two have gone back to taking a wait and see attitude. I think I had some influence in that thanks to Roger's charts.

The third person, I've been too busy to chat with, but I'll get to him yet ;-)

A fourth friend that owns a new condo downtown for the past year is considering selling it and going back to live in his house. If he's lucky he'll end up flat or somewhere around -$50K on his pre-sale purchase from 2 years ago.

People at my work are now on their own commenting on the financial crisis, specifically concerned over what to do with their RRSP/Mutual funds. Several are too scared to look at their statements and probably won't. Others were hoping that W.Buffet buying into the market a couple of weeks ago was a signal for the bottom. Recently they learned otherwise.

[Greater] Fools and their money will soon part.

All of us here that have been on this blog learning from each other and following the monthly stats know what is going to happen. While the financial markets are highly unpredictable (even though I seriously think the Dow, TSX etc will plummet much further), the real estate market is far more predictable. If each of us influences 3 or 4 friends from buying or moving up, it will have an impact and save them from a very foolish financial move.

Regards,
Mr.4AM

Mr.4AM said...

Ok one last post for tonight.

I just had to share this funny blog link with an illustration of what HyperInflation looks like.

I'm reading theories that hyperinflation at this point is not probable for most Western nations, but it sure would be interesting to tell my grand children one day that in my youth I was once a Trillionaire!!!

roger said...

Mr. 4 AM said:

512 sales in 2008 vs
632 sales in 2007

= 19% difference downward

If next year we see another 19% drop (for a total of 38% from 2007), I'd definitely call that plummet.


VREB Sales Graph

Since February sales in 2008 have been worse every month than any year since 2005!!

Anonymous said...

I was listening to Cameron Muir on the cfax this evening - you know what I don't really understand? Whenever people talk about falling real estate prices, they talk about what a terrible thing that is. It's always taken from the view point of somebody that already owns, losing paper money.

How about my kids that are going to have to buy a $600,000 dump and pay $800,000 in interest over the next 35 years (more if you bought with a 0/40). $800,000!!!!!

Who thinks there's going to a be retirement crises some 20 - 30years from now when nobody has any retirement savings because they've given it all away to the banks as interest payments...?

vg said...

Whats most humorous is that the agents sound like they are all gearing up for the spring and throwing in the towel for the next several months.

Then we will hear the mantra that you will never see prices so cheap again,you have to get in now before they take off for eternity , only to see them get whacked again over the next 6 months. This then scares off those who now see their friends jumped in too soon and got hosed for another 5-10 years worth of mortgage payments. The fear factor of seeing friends get burnt has huge influence on something so big as buying a home.


There is never a rush to buy a house, all those fools who got sucked in that they had to bid on a house like it was up for grabs down at the auction house still blows me away.

The psychology has shifted huge, take your time,like 2 years at least and use this last two years as the biggest lesson in life. When they are lining up for anything, it's the end game.

vg said...

"We do not have the same problems as the United States."



Uh yes you do dummy, over priced boxes putting people in record unaffordability range is a MAJOR problem, especially when one person in the family loses a job. A mine up island just put out 250 guys, no worry,it's not reality.


As well you have bankruptcies related to real estate who have maxed out on their LOC's and credit cards with the latter getting worse by the day.




"But what should a REALTOR® do in this time of crisis??

"Just stop reading the newspaper and watching the news," Polzler said to enthusiastic applause."




Clap clap, yes,yes, thats it ! just stop reading reality and keep telling everyone you know that this isn't the real truth. All those IMF deals bailing out countries world wide is all a mirage and the coming bail out of US mortgages for another $600 billion is all just a bad dream and we are "insulated". Just like in the Wizard of Oz , just keep saying "there's no place like home" over and over. ;)

vg said...

"you know what I don't really understand? Whenever people talk about falling real estate prices, they talk about what a terrible thing that is. It's always taken from the view point of somebody that already owns, losing paper money. "


Agreed 100%, paper gains and losses are all part of a "market" and doesn't mean it was written in stone as the ultimate true value,just a moment in time when someone was stupid enough to pay it.

I wish this Muir would get off his bullshit stance of trying to save the market by misleading people any further,it's a bubble and it popped, get over it.

Just Jack said...

October condominium sales are down 57 percent from October 2007. Single Family Home sales are down 42 percent for the same period.


NOTE: I'm using the first 3 weeks of data of each October for comparison purposes.

Plummet may not be the right word.

Anonymous said...

Really, I can't believe a statement like "Just stop reading the newspaper and watching the news," isn't met with any backlash in the media. If anyone else openly said that they'll bury their heads in the sand, can you imagine the uproar?

Maybe politicians have some to learn from Realtors?

roger said...

Let me see if I can follow the BCREA logic.

1. MLS Sales in Victoria have been lower in 2008 than in the comparable months of 2007, 2006 & 2005.

2. Inventory has climbed to levels not seen since the late 90's according to Tony Joe of VREB.

3. Average and median house prices have been dropping since April.

4. BCREA predicts prices will continue to drop in 4th quarter 2008 and early 2009. BCREA Graph.

5. Stock market has tanked and BC economy is expected to slow down according to Premier Campbell in last weeks 10 point plan announcement.

6. Inventory in the spring will jump to even higher levels and economy will be losing steam. BCREA believes sellers are holding off until the spring because they think they will get a better price. Market will start to improve later in 2009..

I was following along OK until I got to point 6. Am I missing something.??

vg said...

from the Famous Quotes by Dummies archive :

"Renaud said he thinks that the trend to prices for houses has been broken by a temporary lull and that by [next year] or so prices will be equal to or greater than peak prices. (Claude Renaud, VP of Mortgage Insurance Canada on April 14, 1982. The market took 26 quarters (over 6 years) to regain its peak in real terms.)"

Mr.4AM said...

Too many juicy quotes to post from this article. Just read it yourself.

Credit turmoil, costs and threat of a recession have left several Vancouver projects stranded or on hold

I love the last line:

"I've never seen anything so deep, so fast," said Eric Carlson, the CEO of Anthem Properties Corp. "I used to be a know-it-all. Now, I'm pretty humble."

roger said...

Just Jack said:

October condominium sales are down 57 percent from October 2007. Single Family Home sales are down 42 percent for the same period.

Thanks for taking the time to post this info!!

Assuming the last week of October has the same level of SFH sales activity we get this graph . That is shocking!! How will VREB spin those numbers.

David said...

Eric was around in the crash of the early 80's. I believe his company went bankrupt at that time.

David said...

Jack, I don't think it needs spin. I think it's obvious why sales were lower than expected which was the stock market crash.

Mr.4AM said...

David said: "I think it's obvious why sales were lower than expected which was the stock market crash."

Hehe, you might want to hang on to your helmet there David... what you saw wasn't the crash, that is yet to come!

Dumb Canuck said...

Its not the stock market crash, or the fuel prices, or the newspapers. The house prices are just too damned high.

Roger - Tony's spin will be that average prices go up MOM (a few high end sales will seriously tilt the average) and that sales are up 10% over December last year. He'll conveniently forget the 4% drop in one month in median price (to 480K).

David said...

Hehe, you might want to hang on to your helmet there David... what you saw wasn't the crash, that is yet to come!

The bottom is in. Get ready for the Santa Claus rally. The DOW will break above 10k early next year. Things won't be looking so bad come next summer.

Dumb Canuck said...

Here's a good line from Mr. 4AM's link: "Some estimate that fully 70% of condo buyers in recent years were speculators."

So what was it in Victoria?

David said...

That 70% reference is a bad quote. I have heard numbers that high for individual condo developments, but not the market as a whole.

Dumb Canuck said...

Likely true, but it got your attention. My (uneducated) guess is somewhere around 40-50% of condo buyers were speculators. Given the bubble was 4 or 5 years long, and half still probably own their condos, that gives around 120-150% of last years sales as being speculators. Who are currently sweating.

vg said...

"The bottom is in. Get ready for the Santa Claus rally. The DOW will break above 10k early next year. Things won't be looking so bad come next summer"


I think in the next two weeks we could see the mother of all rallies then we will hit another down turn into December. There is a ton of money on the sidelines wanting to make back some losses before year end,toss in post election excitement too and 10,000 could easily be this year not next.


The markets will be volatile like this for the next couple of years,we will have to get used to these swings and learn to trade them. Buy and hold days are long gone and the volatility in the markets will scare the shit out of potential buyers of real estate.

Who would buy with the markets swinging 500 plus points every day for the next couple of years ? the times have changed for a long while here in my opinion.

David said...

vg, that might also be a good reason for people to want to keep their money in a hard asset such as real estate. Stocks may drop 12% in a day but with real estate that would take a year.

roger said...

VG said:

Buy and hold days are long gone and the volatility in the markets will scare the shit out of potential buyers of real estate.

Who would buy with the markets swinging 500 plus points every day for the next couple of years ? the times have changed for a long while here in my opinion.


Aaah... The RE industry will be there to proudly proclaim that real estate is the only safe, long term investment.

Remember - they aren't making any more land, the boomers are coming, don't throw your money away on rent, build equity, Best Place on Earth etc. ....

roger said...

too late.. David beat me to it!!

olives said...

JustJack:

I know two people who have purchased in October:

One is a young woman who wanted to get into the condo market while she still could with zero down, 40-year amortization.

The second is a family who is moving up to a larger home, but keeping their original home to rent out because "now is not the time to be selling Olives, now is the time to be buying" (??????)

Lastly, I have a friend who has a rental in very poor condition, his tenant has just moved out and he is thinking of selling the property for land value only. His realtor tells him he should wait for spring when prices bounce back up. (I have to remember to ask him who this realtor is).

vg said...

"vg, that might also be a good reason for people to want to keep their money in a hard asset such as real estate. Stocks may drop 12% in a day but with real estate that would take a year."



david,
true,it may make some stay put but those will be at the mercy of those who do have to sell so they will still lose big in the end.

The intelligent investor would also be putting small percentages into the market at a time and only at oversold times like we are in now and not the putting in the equivalent of a total house value. Market timing and risk level will be key going forward.

vg said...

olives ,

I have a friend whose neighbor put their house up for sale in the last few weeks in the mid $500,000 range and had to drop it $50,000 and still no lookers and it is in a decent neighborhood.

$50,000 drop in a few short weeks is a major owie,then you know a low ball offer will be coming if you do get some interest. Been there, it is not fun when you have to sell and the market has turned south in what seems overnight.

Mr.4AM said...

David Said: "vg, that might also be a good reason for people to want to keep their money in a hard asset such as real estate. Stocks may drop 12% in a day but with real estate that would take a year."

You guys keep your money tied down to a depreciating asset in a currency that will do God only knows what.

Me, I'm staying partially in cash, partially in physical gold, and I'm seriously thinking of opening up a Forex account to play maybe 10% to 20% of my networth unleveraged on any very obvious plays.

The 27% decline in Canadian dollar (vs USD) in 1 month was a HUGE opportunity. And while it wasn't obvious to me on day 1, by day 3 or 4 it was a given it was going to continue for a while.

There's going to be some big opportunities in the forex markets in the next few months, but you can't play if your money is tied up in a depreciating house.

I also agree, any long term stock market "investments" are likely to get hammered. The long term investment days are over... for at least a year or two.

On another note...
Anybody catch what Porche did to VW stock? Shorts were betting VW was going down, along comes Porche and buys up a huge chunk of VW stock pushing the prices high very quick causing a MASSIVE short squeeze of several hedge funds. Long story short, Volkswagen stock QUINTUPLED (is that a word?) in 2 days, temporarily making VolksWagen the LARGEST company in the world by market cap" (some 326 Billion USD). The German stock market went up 10% in a single day while most others were down 5-8% on average. Next day? Porsche sells off a large chunk of the stock at peak price and walks off with Billions!

And you thought Porsche made their money in selling cars...Talk about insanity!

Anonymous said...

VG, the wild market swings will NOT continue. What you are seeing is the US Plunge Protection Team taking US taxpayers' money and buying stock to fake rally it up.. TONS of it. To lure more suckers in. And remora day trading swing surfers.

All in an effort to make the US economy look "normal" to make a McCain win look "normal".

After that is achieved, they will have NO reason to throw good free money after bad, so the markets will plunge, ALL THE WAY DOWN. 5000 or more likely, below. And then it will stay there for decades and only slowly creep up as the PPT goes the way of the dinosaur.

No matter who they cheat into office.

McCain, once in, will scream and yell, but they won't continue to prop up the market just for him. Their motivation was merely keeping Obama OUT.

Mr.4AM said...

Anon 3:40AM,
I disagree that the wild market swings will not continue. Unless you mean that the indexes close up massively one day, and down massively the next. There is some probability that things may trend upward for a short while (Wave 4 - the leg up). I think inter-day massive swings are still possible. And of course it also depends on which market you are talking about, which I presume are the US indexes.

Your statements also suggest that some group somewhere (iluminati?) is on total control of what is going on, and I call BS on that. There's way too many players (many big ones too), and they are too widely dispersed. In short too many variables changing way too fast. Billionaires are losing fortunes, and at least some of those guys are supposed to be insiders.

If anything, the markets are super fragile right now. Even small events cause massive swings. Now more than ever, any major unexpected event will have massive consequences (i.e. terrorist attack, assasination, etc, etc)

I do not discount the possibility of a few large groups (OPEC, Oligarches in Russia, Goldman Saches, etc) trying to control relatively smalls parts of the market, but 1 small group that can control the whole thing? I'm very doubtful of this. Look at Bernake & Paul, each of their attempts to try to do something is having less and less affect, is more and more severe, and lasts less and less time in terms of impact. Unless of course that was the plan all along! hehe

I think the more probable theory is the Black Swan Theory.

Theory Summary:
In 1600 Europe nobody believed there was such a thing as a black Swan, because all Swans in Europe were white. A black swan was considered an impossibility. Until a disoverer found one in Australia. As single moment of truth instantly erased centuries of denial...further, the theory expounds that almost all consequential events in history come from the unexpected—while humans convince themselves that these events are explainable in hindsight (i.e. iluminati in 100% control of this planet).

An BS event (no pun intended), is an event of occurence that deviates beyond what is normally expected of a situation and that would be extremely difficult to predict. Black Swan events are typically random, unexpected and described as highly impacting. Previous examples: Rise of the Internet, LTCM crash due to Russia's default. The recent derivatives fall out and whatever is yet to come out of all this mess that will be high impacting, and unexpected by the masses, and in particular by those who are suppose to know...like for example

Greenspan (funny)

olives said...

Mr. 4am - it's interesting to see someone refer to Elliot Wave Theory (my dad is a follower and I have read all of Robert Prechter's books). Of course by that theory there are no black swan events, but rather everything (?) in nature, including human mood and response (economics, markets, etc.) is mathematical, fractal and predictable. Even the public's belief or non-belief of certain things (ie illuminati) is predictable based on their moods.

roger said...

Glaring headline in TC today!!

Business Page Image

City, B.C. house sales expected to take tumble

Victoria and B.C. housing sales will tumble by more than 20 per cent this year, housing starts will keep dropping and prices will move up only slightly, according to a new report from the B.C. Real Estate Association.

After hitting record high prices early this year, B.C.'s residential sales numbers are expected to drop by 28 per cent to 73,700 by year's end, Cameron Muir, the association's chief economist, said from Vancouver yesterday.

In Greater Victoria, a 21 per cent sales decline to 6,650 homes is forecast for 2008, he said.

Capital region housing prices are expected to go up by four per cent this year, below last year's average increase of nine per cent, Muir said. Next year will see prices slide by six per cent, to an average of $455,000.

B2B said...


One possible answer might be that the people buying today had sold their previous home in the last few months. These people require a home and are not willing to be renters. They are simply buying and selling in the same market.


Just Jack: Indeed this is exactly what I've seen with the buyers I know of. They are just completely unwilling to consider renting. While they won't really articulate why, I think it's largely emotional, and based on the currently popular meme that renting is for losers. Nothing more, nothing less.

A lot of people that have grown up around Victoria are suffering from small-town disorder, I think, and so they have it hard-wired in their brain that renting is for low-income people and owning is for all the Donald Trumps that have "made it". They haven't lived in or traveled to places like New York or Switzerland where renting is the norm, even by high earners.

Anonymous said...

There's no santa claus rally coming. There is no money on the sidelines. When people sell their stock someone buys it. Work that out on paper for yourself and you'll see that there's no money on the sidelines to come to the rescue.

Pondering said...

We are moving from the rental we are in to a cheaper, bigger and nicer rental. I have noticed more and more houses for rent from people that can't sell them. Our present landlords reacted to us giving notice by trying to sell the place. A few people have been through most of them leave within 5 minutes after realizing that the house is not worth what they are asking. Out of the people who have come by to look there have been 2 couples with young kids, 1 older guy who seemed to just like looking at houses and a younger single women.

roger said...

Sure there are some good reasons for renting especially in a falling market. However, there are some reasons for not wanting to rent:

- Landlord decides how long you can stay. Worse with month-to-month but still not great with a lease.

- Landlord has right to have people tromp through your home if property is put up for sale.

- Limited ability to change the property. What if you want new paint, carpets, hardwood, kitchen appliances etc.?

- Landlord has the right to enter your property with 24 hour notice. Some do this on a monthly basis. Not fun.

- Property may be put up for sale and a great landlord might be replaced with a jerk.

- May not support your desired lifestyle. What if you want to grow a garden or do landscaping? Maybe you like to do woodworking and want to build a shop. Who wants to invest the money and get permission from the landlord only to get the boot when the lease runs out.

- Pride of ownership. I am not talking necessarily about building equity. Just improving and maintaining the property in a way that reflects your interests and personality.

Soo... For some people renting is not an acceptable option.

Anonymous said...

I'm just happy paying $1,100 in rent rather than $3,000 in principle, interest and taxes.

Those who work on a commission basis are really going to hurt.

Nick said...

Thanks for the help Roger, I ran my numbers and my potential savings are massive. When I doubt that staying in my rental place is the best plan, it's nice to have that peace of mind after running the numbers.

B2B said...

That's a fair point Roger, to remind us that there are sound factual reasons why people can be unwilling to consider renting.

But there are just as many advantages to renting over owning:

freedom to move whenever you want, no upkeep/repair bills, no taxes, no penalties and massive fees to pay when you do move, no potential upside-down on the mortgage when you move, etc etc

It depends on whether the individual values flexibility and freedom more, or stability more. I freely admit this depends on circumstances.

However, we are at a point now where IMHO, people are being unreasonable by being willing to take on an absolutely massive risk, and astronomically higher monthly payments, for the "stability" option (which isn't so stable when you consider how fragile the setup is). By being willing to consider the flexible option, people could save a lot of grief. But by and large, the majority are unwilling to consider even temporarily sacrificing stability for flexibility and freedom. They are paying, and will continue to pay, an eye-wateringly high price for the rest of their lives for this inflexibility.

patriotz said...

I'm just happy paying $1,100 in rent rather than $3,000 in principle, interest and taxes.

That's "principal", but I agree homedebtorship exacts a heavy cost in principle too. :-)

roger said...

CREA could not take it any longer. Spin machine set to high output position.

MLS listings fall in third quarter

Fewer homes were listed for sale on the Canadian Real Estate Association's multiple listing service in the third quarter, as the market cooled in Alberta and British Columbia, according to figures released Thursday.

BUT

Calvin Lindberg, CREA president, noted the easing Canadian market differs from the U.S.

"U.S. prices were driven up by speculative investment and relaxed lending standards. Canadian resale housing prices climbed due to strong job growth and low interest rates, especially in Alberta and B.C.," Lindberg said in a statement.

"We did not have the relaxed lending standards offered to homebuyers in the U.S."

CREA Chief Economist Gregory Klump said Canadian consumers should not expect to see a major price correction as in the U.S., suggesting that Canadians are not under particular duress to sell their homes.

"Many may take their home off the market if it remains unsold when the listing expires," he said. "The resulting decline in listings limits the extent to which the resale housing market balance will realign."

Anonymous said...

Mr. 4AM, I didn't say or imply "illuminati", I said "Plunge Protection Team". That is its name, it does exist, it was formed during the Reagan administration after the 1987 crash to try and keep it from ever happening again.

And yes, the conservatives (indeed, the entire business community) in the US has a great stake in keeping Obama out of the White House, and they will succeed.

Volatility in the market ends immediately after McCain secures the White House. Sooner if by some fluke Obama miraculously wins against all real odds.

Plunge Protection Team

Dave said...

I bet Joe the Plumber is somehow involved with those guys.

Anonymous said...

From the TC article Roger posted:
"Capital region housing prices are expected to go up by four per cent this year"

Can somebody explain this to me? I was under the impression that yoy prices were down so far? Am I missing something here??

Mr.4AM said...

LOL Dave.

Anon 3:01 said:"Volatility in the market ends immediately after McCain secures the White House. Sooner if by some fluke Obama miraculously wins against all real odds."

I guess we'd have to discuss what your definition of volatility is. The VIX coming down to normal levels?

The reason I don't buy it is because if these PPT do nothing, the markets will tank. If they intervene, the markets become even more volatile, and eventually tank anyway. The problems are simply too big now, too dispersed (global), and nobody is in control, though the Fed & Paulson are trying like hell.

There's no problems solved or close to being solved on the horizon, which is why I don't believe that volatility will end anytime soon. PPT or no PPT.

Bear markets are by nature very volatile. End of volatility would suggest a slow & steady bull market like we saw in the past few years. That ain't gonna happen for a while yet.

just my 2 cents.

B2B said...

Good one Dave indeed on the Joe the Plumber plunger gag! :^D

vg said...

"Volatility in the market ends immediately after McCain secures the White House. Sooner if by some fluke Obama miraculously wins against all real odds."


LOL, that is hilarious. You mean the war machine ramps up and oil goes thru the roof again. Thats all we need is an old man close to having some medical condition and Caribou Barbie holding the nuclear football. Get off the pipe man !

vg said...

From the TC article Roger posted:
"Capital region housing prices are expected to go up by four per cent this year"

Can somebody explain this to me? I was under the impression that yoy prices were down so far? Am I missing something here??"



It's called the ole duck and weave. Throw out a low ball number to pacify the bulls who just got sucked in the last 2 years listening to their bull, kind of like handing out lifejackets on the Titanic and saying everything will be OK.

David said...

The numbers posted by the BCREA are based on yearly averages. A rough guess for this years gains would be to compare July 2008 with July 2007. The real number will be comparing the average from all of 2007 with all of 2008, but that won't be known until Jan 2nd.

Likewise, the 2009 prediction is based on comparing the average for 2009 with that of 2008.

Get it?

roger said...

anon said:

Capital region housing prices are expected to go up by four per cent this year"

Can somebody explain this to me? I was under the impression that yoy prices were down so far? Am I missing something here??"


What BCREA did was to add together the average sales price for each month in a given year (i.e. 2007) and divide by 12. The numbers for 2007 (563.5K) and estimates for 2008 (586.5K) and 2009 (555K) were in their report.

It is also possible to do this on a rolling 12 month basis as follows:
Dec07 = Average (Jan07 to Dec07)
Jan08 = Average (Feb07 to Jan08)
Feb08 = Average (Mar07 to Feb08)
and so on.....

VREB average SFH sales price and 12 month rolling averages are plotted on this graph The Annual SFH Averages for 2006, 2007 and estimates by BCREA for 2008 and 2009 are also plotted.

There is a problem using 12 month averages for real estate prices. Twelve months is such a long period short term trends are not visible.

So why would BCREA choose to publish a report using annual averages? Why not use quarterly (3 month) averages or the real estate board Year-over-Year (YOY) stats.

If I was being cynical I might think it was because YOY and has gone negative and things are not looking good when you compare Q3 to Q2 2008.

dumb canuck said...

good knowledge David. Which firm are you with?

phil said...

Wow guys, our local RE pimps are sounding word for word like their counterparts down south....

This article is from exactly 2 years ago... We all know what has happened since!

http://tinyurl.com/5jssb2

roger said...

Real estate news....

CMHC predicts shallow real estate correction

The correction in Greater Vancouver and British Columbia real estate markets should be shallow, according to Canada Mortgage and Housing Corp., provided the province maintains projections for weaker economic growth and doesn't go into a full recession.

CMHC released its fall market forecasts Thursday, which predict lower housing sales to the end of 2008 and on through 2009, with price declines to the end of 2009 in the range of seven per cent provincially and nine per cent in Metro Vancouver.

Anonymous said...

Obama has the most money of any presidential candidate in history. Big business is cheering for him big time. Big business loves tax and spenders who are hell bent on regulation. They want bailouts and they of course want to help write the regulations.

B2B said...

Mish just wrote an article on Canada and Vancouver!

http://globaleconomicanalysis.blogspot.com/2008/10/construction-grinds-to-halt-in.html

link

mln said...

Just read in the paper that Townline is axing the Radius residential tower, and building parkade/commercial only.

The residential portion is on hold until "market conditions" improve.

roger said...

Victoria shows that it is a world leader in least affordable housing as determined by Demographia

The Demographia International Housing Affordability Survey uses the “Median Multiple” (median house price divided by median household income) to assess housing affordability. The Median Multiple is widely used for evaluating urban markets, for example being recommended by the World Bank and the United Nations

The housing affordability crisis is most pervasive in Australia and New Zealand, each with an overall Median Multiple of 6.3. Affordability is only somewhat better in the United Kingdom (5.5) and Ireland (4.7), however is still far worse than historical norms. On the other hand, the national Median Multiple in Canada is 3.1, indicating that housing is less than one-half as expensive relative to incomes


Victoria is ranked #22 worldwide with a score of 7.3 which is less than Vancouver at 8.4 and Kelowna at 8.5.

The full 2008 pdf report is here

roger said...

Sales were pretty slow on PCS this month. But there were a number of good "haircuts" in Victoria & Saanich.

You can see some of them in this slideshow. Click the big X for fullscreen.

womp said...

Roger - once again, you illuminate with your information links. I'm not really sure how to show appreciation for what you do!

Fodder said...

I'm not sure if it's just me, but there seems to be a number of adds on used Victoria at the moment for rental units at lower rents than we've been seeing.
a 1 bedroom in cook st. village for $805, and bachelor for near Claremont for $625, and a vic west 1 bedroom for $700. Not saying these are the best rentals out there, but it's been a while since I've seen anything that would leave a person with pocket money.

I know this is a tiny view of the Victoria picture, but it's kinda nice to see things starting to open up a little.

Nick said...

Interesting article on the Globe and Mail site

Safer as houses?

Of interest at the bottom of the article:

Unearthing more granular information is not easy. In its Financial System Review released last December, the Bank of Canada reported that 8.8 per cent of Canadian mortgages had a loan-to-value (LTV) ratio of between 80 and 90 per cent in 2006. A further 1.5 per cent of mortgages had an LTV ratio of between 90 and 100 per cent. The number of mortgages with an LTV ratio of 100 per cent or more was reported at 4.87 per cent.

That last number jibes with the oft-quoted figure that Canada has experienced relatively low exposure to the so-called “subprime” mortgage market. U.S. subprime borrowers have poor, if not wretched, credit ratings. “Here, for a person to purchase a home for no money down they had to have a strong credit rating, or at least a demonstrated ability to pay their bills on time,” says Scott Hannah, CEO of the Credit Counselling Society of British Columbia. Mr. Hannah, who notes that business at the society is sadly booming with a 40-per-cent increase from last September in consumers seeking credit counselling, does not see the push to facilitate home ownership as a good thing. “This was artificial equity built on the basis of providing consumers with access to the real estate market before they were ready,” he says, before adding, “We can't have everything we want.”

Anonymous said...

"8.8 per cent of Canadian mortgages had a loan-to-value (LTV) ratio of between 80 and 90 per cent in 2006. A further 1.5 per cent of mortgages had an LTV ratio of between 90 and 100 per cent. The number of mortgages with an LTV ratio of 100 per cent or more was reported at 4.87 per cent."

While I wouldn't want to be that 10% in 2007 or 08, I don't find those numbers concerning at all. 2006 values should be where this market settles back out to before taking off again in a few years. It's the purchasers in 07' and 08' with similiar mortgage LTV ratios that will feel the pinch - and will create increased default stats.

I cannot imagine living anywhere off Vancouver Island, it's great!

patriotz said...

8.8 per cent of Canadian mortgages had a loan-to-value (LTV) ratio of between 80 and 90 per cent in 2006

That number is clearly for all mortgages that were outstanding in 2006, including those that had been made 20 or more years previously.

What matters is how many mortgages made in 2006 for first time purchases were high ratio. I would say the vast majority of them.

hhv said...

we know that 2007 mortgages in BC were 67% high ratio.

patriotz said...

I assume that's new mortgages, not first time purchases. I.E. it includes trade-ups and trade-downs.

I would bet that over 95% of first time purchases were high ratio.

Anonymous said...

anon 7:46 said "2006 values should be where this market settles back out to before taking off again in a few years."

LOL - That's what they thought in Miami and Phoenix and Las Vegas and San Diego and Sacramento and (insert any other "beautiful" bubble city here)

vg said...

The other major point these RE agents who are predicting a miraculous spring rebound, is that the buying pool is completely drained, they milked it two years longer than it should. Most of the reamining ones who got priced out are not stupid enough to leap back in quick with world finances crumbling all around.

Anonymous said...

"What matters is how many mortgages made in 2006 for first time purchases were high ratio. I would say the vast majority of them."

I'm not sure why that's "what matters." The number is for everybody, it's not relevant to narrow the population down to only those that bought in 06.

Those purchasers by the end of 07' would have revised LTV of perhaps 75% or less. This market correction will bring them back to the point at which they bought.

It's the 07' and 08' first time purchasers that will be underwater for some time - and may be there now. There will also be stats generated from people that have used their equity to invest - oops.

Anonymous said...

"Those (2006) purchasers by the end of 07' would have revised LTV of perhaps 75% or less. This market correction will bring them back to the point at which they bought."

And those that bought in 06 will have now paid on their mortgages for about 2 years at unheard of interest rates. With some exceptions, they should be in a very good position today.

Anonymous said...

I'll just keep putting in my 50% off peak offers... one day, some smart seller is going to say "Yes. Thank you. Dear God, thank YOU TOO."

Bear is ready...

hhv said...

an interesting take on the LTV discussion we've had here.

"One wonders: What might have happened if the CMHC had not retreated from its more relaxed insurance guidelines? By Mr. Hsu's estimate, 12.1 per cent of Canadian mortgage holders have an LTV of 80 per cent or more. A mortgage holder with a thin equity base in, say Vancouver, is most at risk of falling into negative equity. “I'm expecting the peak to trough – the high-to-low decline – to be about 20 per cent,” Central 1's Mr. Pastrick says of house prices in B.C. “If some borrowers were highly leveraged … by that I mean perhaps zero down or 5 per cent down, that kind of thing, with prices dropping let's say 20 per cent, obviously there's a negative equity position.”

CMHC will not break out the data on the number of interest-only mortgages it has insured, nor a breakout of how many mortgages were insured under the 30-, 35- and 40-year amortization periods. “CMHC's business activities are confidential,” an agency spokesperson said by e-mail."

Anonymous said...

“CMHC's business activities are confidential”

Until they demand the almighty bailout aka Fanny & Freddie!

Anonymous said...

Their business is confidential??? I'll have to do some research, I was under the impression that CMHC was/is a government organization of sorts.

roger said...

I just heard that the VREB Comedy Fest is sold out. If anyone got tickets please post a review and let us know if you had fun!!

hhv said...

wow. Don't they know that avg prices have dropped almost 80K and are now closer to $550K than $630K?

patriotz said...

I was under the impression that CMHC was/is a government organization of sorts.

It's a Crown Corporation, and Crown Corporations are not required to disclose financial information in more detail than their annual reports.

Until they demand the almighty bailout aka Fanny & Freddie!

There is nothing to demand, all obligations of CMHC are expressly guaranteed by the Federal Government.

Anonymous said...

Check out the haircut on MLS# 253063.

Original Price: 259,000
DOM 39
Sale Price: 200,000...

Some 22% off the original asking.

Anonymous said...

the oct numbers must be in the tank, no updates on the vreb site yet....

Anonymous said...

yeah, I was wondering what's taking them so long.

hhv said...

"the oct numbers must be in the tank, no updates on the vreb site yet...."

Shouldn't be that difficult, lots less to count this month... still trying to figure out a way to market-word, 50% decline in sales MOM but 2% gain in prices equals more opportunity for buyers...

vg said...

"Shouldn't be that difficult, lots less to count this month... still trying to figure out a way to market-word, 50% decline in sales MOM but 2% gain in prices equals more opportunity for buyers..."



Can't wait for the newest catch phrase from the spin machine. I'm sure they will come up with some good excuse to keep the light at the end of the tunnel shining. Problem is the light is on the front of the train.

Anonymous said...

Here is how creative they are:

"Report: People still intending to buy real estate"

VANCOUVER (NEWS1130) - Homes are no longer selling at a record-breaking pace for record setting prices, but that doesn't mean people don't have plans to buy. A new Ipsos Reid survey shows that the number of people who intend to buy is holding steady.

roger said...

Looks like VREB is slow to release their numbers. The Vancouver Island Board has released their numbers without a press release.

Sales in October for all areas: 235
Sales last month: 331
Sales last October (2007): 446

Average prices down 1% YOY. Averages up in 4 of 6 areas from September on low volume. Median prices down from September in 3 of 6 areas.

Summary: sales dropping fast while prices remain "sticky".

The full report is here (select 2008 and October from menu)

nick said...

Ha, I intend to buy real estate too, when I can afford a decent house without selling a kidney.

Anonymous said...

thought they were waiting till the markets closed, now maybe till after the 6pm news?? i thought the stats came out first thing on the 1st every month, gave them untill today becouse of the weekend, but really how bad can it be?? LOL

roger said...

anon said:

i thought the stats came out first thing on the 1st every month, gave them until today because of the weekend, but really how bad can it be??


VREB is washing the stats today. They are probably on "spin cycle" right now and should be out soon.

hhv said...

Nice roger... usually they are out shortly after lunch... maybe it's the sugar hangover from halloween that has them on sluggish? too bad they couldn't get them done for friday, they would have won the "scariest house" contest hands down.

Anonymous said...

"Ugly wife is scared to see mother-in-law".

Just like the VIRB scared to release the data.

G said...

I just went around to the different places represented by VIREB on realtor.ca to get a rough idea how many listings there are. I counted 5000+ and there were only 235 sales in October. This means there is at least 20 months of inventory in the area. OUCH

vg said...

This is highly unusal and don't recall any late numbers in all the time we have been tracking them the last few years. Probably trying to see if they can fudge a few extra numbers in there on the high end deals.

Anonymous said...

Obviously the VREB is waiting until the news media have gone home for the day!

Dumb Canuck said...

VREB's latest report in their files is on the 4th of the month. My cynical guess is that they are trying to time the release with the U.S. election tomorrow. My less cynical guess is that they haven't got a clue how to actually figure out the number of current listings on the new MLS site :)

G said...

Yep, the news will get buried in the US election coverage...

roger said...

While you are waiting for the VREB spin cycle to finish take a look at Vancouver's October numbers over on Real Estate Talks

You can bet this will be on Global TV news tomorrow and headline news in the Sun.

Cara said...

Metro Vancouver home equity takes a huge hit.

Benchmark down 9.8% from peak, 4.7% YOY, and we're just getting started...

roger said...

Forget tomorrow - Vancouver Sun carrying the story now!

Metro Vancouver home equity takes a huge hit

The decline of the Lower Mainland's real estate market continued in October with the fall in prices erasing any equity gains homeowners saw in the first part of 2008, the region's real estate boards reported Monday.

Battered consumer confidence, despite B.C.'s better-than-average economic performance, kept buyers on the sidelines with the Greater Vancouver region recording less than half the number of Multiple-Listing-Service sales and the Fraser Valley experiencing an almost 50-per-cent decline from October 2007 sales levels.

And in the Real Estate Board of Greater Vancouver's region, the decline in sales and still-high inventory levels has seen the so-called benchmark price of a Greater Vancouver single-family home drop to $695,962 in October, a 9.8-per-cent descent from May. The benchmark, which reflects a typical property in that class, now rests 4.7 per cent below the October, 2007 benchmark price.

Greater Vancouver saw MLS sales of 1,364 units in October compared with 3,028 in the same month a year ago.

Single-family home sales across the region dropped to 493 units in October from 1,368 in October, 2007. Condominium sales were also down substantially to 493 units from 1,133 in the same month a year ago.

roger said...

Cara,

You beat me to the punch!!

Anonymous said...

At least the Vancouver board came out with the bad news. I can see the VREB members stewing tonight on how they can load us up with BS and still spin a happy story.

Sitting Pretty said...

Everything is fabulous. My four condo flips are going up and up in price. I'll be able to retire when I'm thirty-five! Yippeeeee!!!!!




Oh shit.

Anonymous said...

Apparently vreb is having trouble with their software. RE SpinMaster Premium. It keeps crashing when they feed in the numbers:

From the TC:
Real estate figures delayed
http://tinyurl.com/6rpp2e

Anonymous said...

So apparently it's a software conversion problem?!?

http://tinyurl.com/6rpp2e

- StargazerXL

greg said...

VREB Press Release above:

"Realtors are not expected to be affected by the delayed release of data, he said."

What about buyers?

vg said...

Installing a new system right at month end ? brilliant planning. Maybe today, maybe tomorrow,maybe next month.

mln said...

Or maybe the numbers are so bad, they look like an error!

womp said...

This is just a lame excuse. It's not like they couldn't take two hours and manually grab the data, any database administrator could get that job done in no time.

The amount of information in these monthly releases is so minimal - average price, six month average, median and sales amounts. You'd need maybe 10 distinct queries parameterized by area and property type.

The data is there, the motivation (or maybe the knowledge) on how to get it is missing.

roger said...

Here is what the conversation sounds like over at the VREB office:

Tony: Are the stats ready for release yet? The spinmeister needs to write the press release.

IT Guy: I just printed off a copy of the merged database.

Tony: These don't look right. The House sales are 50% of last years sales and the median price has dropped again!!

IT Guy: I am sure they are correct.

Tony: You better check everything again. The REALTORS® can wait for a few more days.

OsirisVic said...

I swear they used this exact excuse before. I cant remember if it was during the small dip last year or earlier this year but it feels like deja vu all over again. Does anyone else remember that?

Dave said...

Roger - Sales were pretty slow on PCS this month. But there were a number of good "haircuts" in Victoria & Saanich.

Weren't all your listings for just Saanich (West and East). Any sheets on Victoria itself?

Anonymous said...

What do y'all think the likelihood is that they'll conveniently release October's numbers just in time to be lost in the election news?

mln said...

It's certainly starting to look that way.

roger said...

I was checking PCS tonight and see a few properties that were entered today as being sold on Oct. 31st.

I wonder if today's new entries will be counted in the October results?? Maybe VREB might wait for a few more days in order to collect some more stragglers. But if they do November sales will be even worse as they rob Peter to pay Paul.

Anonymous said...

Osirisvic,

If you are thinking back a few years, the VREB got "caught" with inflated listing numbers and then blamed a software upgrade on the error.

The new VREB system has been up and running for a few months now. Claiming that they cannot run reports from it is BS.

Libre Esprit said...

Calgary house sales plunge in October
Mario Toneguzzi, Calgary Herald
Published: Monday, November 03, 2008

some ferocious comments from readers of this article - seems like the jig is up even in Calgary and people feel free to let fly at the CREB and the analyst. (why don't we have a comments section for real estate articles in the TC??)

Full article here: (one of these days I'll learn to use HTML)

http://tinyurl.com/63zjab

Mr.4AM said...

I spent most of my evening tonight watching the US presidential elections, as likely many of you have. Between the two, I'm very glad Obama won for many of the reasons stated on the various channels, and I'm glad at least this time around Americans had to choose between two articulate and intelligent men, though Palin was a scary backup option.

Unfortunately, despite Obama's charisma, confidence and intelligence, the odds he'll be able to overcome the impact of the worst financial crisis since the 1930's are pretty damn slim. Even more so, since from what I hear the people he's planning to put in charge of the economy (Treasury, Economic minister, etc) are none other than Wall St. Pros, many of them ex-investment firm/wall street power house names who'll more than likely be looking to save their buddies, rather than implement ground breaking policies to clean-up wall street.

Of all the candidates that campaigned for the presidency, Ron Paul was the only one who truly had a clue about the economy - maybe in 2012 Americans will give him a chance.

Obama will need more than Hope & a 'Yes We Can' attitude... he'll need people with revolutionary strategies on how to deal with the economy, and I have my doubts he will find and empower those few.

Until then, enjoy the temporary sucker rally / dead cat bounce in the stock markets. Markets going up, while revenues and overall outlooks across the board are negative, can only mean one thing - the indexes will eventually dive to new lows that reflect the American greed of the past few years, and the debt they've recently accumulated by trying to print (escape) their way out of the mess.

Good luck Obama, I sincerely wish you & America success, but I'm an even stronger believer that karmic consequences are inescapable.

Regards,
Mr.4AM

Anonymous said...

Ditto on Ron Paul. He was their only real chance for a quick (but painful) turnaround.

The US will now stumble around like a wounded deer for years.

Nick said...

Perhaps Obama advisor Paul Volcker will take over as Treasury Secretary? Seems like the Obmama camp has plenty of highly-respected advisors who might be tapped for a number of positions.

Anonymous said...

Don't forget that Paulson and Bernake are/were highly respected as well. So far they have been either clueless or powerless to stop what Greenspan (used to be highly respected) started.

As for Obama, Goldman Sachs was his biggest campaign supporter and will benefit greatly from the trillion dollar bank bailout Obama just voted for. The only "change" the taxpayer will get is what's going to be left of their paycheck. That's if they still have a job!

Politics as usual I'm afraid...

roger said...

While we wait for the VREB numbers how about a reader survey?

Which of the following expressions will be in the VREB news release??

1. "market is stable"
2. "prices are moderating"
3. "realistically priced properties are still selling"
4. "global and economic uncertainty"
5. "remained steady"
6. All of the above

VicREBear said...

If we match Toronto's decline to below the prices of TWO years ago, only #5 might apply...

Of course, Geoff McLean, as quoted in today's T/C, assures us that sellers will refuse to keep lowering and lowering their prices, and will therefore put a floor under the declines. No more than the current 10 percent decrease. Really. Gotta trust him; he's been selling real estate for 24 years!

VicREBear said...

Oops. I meant #5... If I'm going to be nasty I should at least be correct!

VicREBear said...

ONE more try.. NUMBER 4. Sheesh.

Anonymous said...

Roger, how about this one from Toronto:


“There's no doubt that real estate will continue to be a solid long-term investment in our country.”

Anonymous said...

i know we are different, from the Amerians, and even from our easteners, but this is what happening in Toronto.

Toronto home sales, prices plunge


November 5, 2008 at 12:33 PM EST

TORONTO — The number of resale home deals fell 35 per cent in the Greater Toronto Area last month compared with a year earlier, according to a tally by the Toronto Real Estate Board.

The average price was down 10.6 per cent, to $352,974 from $394,646.

roger said...

In an earlier post on VIREB activity I mentioned that there were only 235 sales compared to 446 last October. Inventory is up 50% over October 2007 according to their Latest news release.

VIREB President Subhadra Ghose says the local real estate market continues to correct. “Despite recent global economic issues, there is encouraging news in the latest local market numbers. Our local market remains stable overall,” Ghose says.

“As expected, the average sale prices are starting to moderate,” she says. “Properties that are priced right are selling. We’re continuing to advise sellers to be realistic and work with their REALTORS®.


Now up in Nanaimo we have this story:

Slowing markets make realtors more innovative

Cash rebates, free appliances and offers to pay strata fees or taxes for a year are a few of the incentives developers in Nanaimo hope will lure buyers to their properties during the real estate slowdown.

Such sales tactics were uncommon a year ago, when consumer confidence was stronger.

Gibson represents the developers for The Texada development in North Nanaimo, which offers to pay buyers' strata fees for a year in addition to $4,000 total in cash and moving expenses.

The Plateau at Rocky Point development will give buyers the choice of either a new washer and dryer or not having to pay strata fees for a year.

"It's really for the people who want to buy and are sitting on the fence. This is enough to get them to step up and make the decision to purchase it," said Gibson.

But compared to other real estate markets in B.C., Nanaimo remains fairly stable, said Vancouver Island Real Estate Board president Subhadra Ghose.

"The market is holding overall. . . we always saw moderate increases (in price), it's not like Vancouver or Victoria," she said, pointing out the B.C. Real Estate Association expects downward pressure on home prices to ease by the second quarter of next year. "Consumer confidence will be back."


Who should a bear believe? Tony says Victoria is insulated. Subhadra says Nanaimo is better off than Victoria.

womp said...

I'm voting for "buyer outlook improves", "now is the best time to buy in the last two years", and "AIIIEEE".

The last one is Tony Joe jumping off his window ledge.

vg said...

"Really. Gotta trust him; he's been selling real estate for 24 years!"


So he missed the crash of 82, too bad, he might have picked up some tips that sellers at some point have to sell and the buyers won't be there.

Anonymous said...

"offers to pay strata fees or taxes for a year"

Ummm... isn't this exactly the same concept of an introductory/resettable mortgage??

So in a year or two, owners will find that their monthly costs are all of a sudden higher?

I wonder if they get approved for a higher mortgage because they be paying strata and taxes when they apply for the mortgage?

roger said...

anon 11:24 said:

So in a year or two, owners will find that their monthly costs are all of a sudden higher?

It will be worse than that. Given that prices are way too high in Victoria now even after 5 months of declines here is a sad scenario.

A young couple without much financial experience buys one of these "deals" and puts 5% down by raiding their RRSP. They get the maximum mortgage they can and move in. In a year from now their costs go up by $250 a month and the property has dropped in value by 10 or 15% so they are "upside down" on their mortgage. By then the economy is in full recession and they are worrying about their jobs.

Tell your friends, family and co-workers to avoid these traps!!

boomer said...

"Subhadra says Nanaimo is better off than Victoria."

If your criteria is rental cost/mortgage cost equivalency for SFHs, she has a valid point.

With recent price reductions and negotiable asking prices a qualified buyer can purchase a pretty decent home for close to rental costs for the same property.
New condos are still ridiculously priced-close to Victoria levels-but there aren't anywhere near as many developments.

hhv said...

boomer,

supply and demand, clearly they are not victoria, and may well be worse off in the long run.

Anonymous said...

VREB has updated their stats, finally...


Property Sales Soften in October; Prices Remain Stable