Thursday, October 2, 2008

Two thoughts

One from someone with no financial interest in the market:

It appears that Canada has been caught up with home buying fever just as the United States and other countries around the world, said Shiller, co-founder of the S&P Case/Shiller Home Price Index.

Asked whether that meant Canada could face a similar bust, he said: "Yes, especially in places that went up a lot like Vancouver and Calgary..."

And another with an invested interest in keeping up the "morale":

Tony Joe, Victoria Real Estate Board president, responded by saying that there are pockets in the U.S. where the housing market is healthy.

If there is a bust in Canada, "There's going to be insulated places in the country and with all the attributes that Victoria has, of all the places in the country, we are probably best-insulated," Joe said yesterday.

Tony's right. There will be insulated places, just like in the US. These places didn't rise too far, too fast and create the conditions for a bubble in the first place. I'm thinking places like Charlottetown and Shediak fit. Does this sound like Victoria to you? Read more at the TC.

64 comments:

greg said...

Anyone who wants to argue with people like Shiller, Schiff and Roubini at this point is a fool.

If you don't know those names, I suggest searching them at Youtube for some consumer friendly sound bites.

roger said...

All the areas north of the Malahat don't have much "insulation." VIREB just released the September Stats (pdf)

Sales held up compared to August with 331 SFH sales versus 328 in August. However they were down 23% compared to 2007 (430) and down 11% compared to 2006 (371).

The average price for all areas in September was 326,673 down 5.5% from August which was 345,722.

As mentioned before average price can be influenced by high-end sales and the median price is a better representation of market conditions. Here are the median prices and change Month-over-Month (MOM):

Zone -- Sep-08 Aug-08 %Change MOM
Campbell River -- 276 309 down 10.6%
Comox Valley -- 330 359 down 8.1%
Cowichan Valley -- 310 352 down 11.9%
Nanaimo -- 343 364 down 5.8%
Parks/Qualicum -- 345 358 down 3.6%
Port Alberni -- 218 206 up 5.8%

Anonymous said...

I wonder if Tony Joe believes his own spin or if he's just full of crap.

I'm wondering if other FTBers here have thought about when they're planning to make a move. How long do we let the market drop before jumping in?

roger said...

The Vancouver Island Real Estate Board just released a press release on last month's stats.

I have never seen such misleading comments by a real estate board anywhere!!

NANAIMO, BC – Multiple Listing Service® (MLS®) sales summary data released by the Vancouver Island Real Estate Board (VIREB) for September 2008, shows a small moderation in average sale prices, lowering unit sales volumes, and more properties listed for sale.

“Our local real estate market continues to be stable overall. We’ve been expecting to see prices start to moderate in some Zones, as the market continues to adjust. ”


What nonsense.
Prices dropped like a stone in September in 5 zones (see post above.) Median prices are down YOY in 4 zones. This is hardly stable or moderate.

No wonder the real estate industry has a bad name. A consumer buying 5K worth of stocks or bonds is given far more information and protection than a buyer of a home. Investment representatives and investment firms must be prudent with what they tell buyers and must fairly represent the financial product being offered. If they fail to do this there are severe penalties and the consumer can sue for damages. Real estate boards, companies and their representatives, on the other hand, can make unsubstantiated claims of past, current and future market performance without fear of reprisal. Misleading real estate board press releases that create a false impression are all too commonplace.

greg said...

Rose colured glasses: Saying average condo prices are up while the median drops, inventory grows and sales volume plummets comes to mind....

S2 said...

But you know what happens when you yell FIRE in a crowded theatre.

Maybe they are just trying to keep the carnage down.

Just Jack said...

The real estate industry is for the most part self-governed. Perhaps the consumers should put forward rules that we would want the agents to follow.

I'll start

1) The agent must disclose the listing history of the property to a prospective purchaser along with the sales history.

VicREBear said...

2) Realtors shall refrain from offering advice regarding the investment potential of real estate or using testimonials referring to investment potential, unless that realtor is a licensed investment planner or advisor.

olives said...

once again, stable = dropping

Rather than lying, why just not make no statement at all and let the numbers speak for themselves.

Anonymous said...

RE pundits in Ottawa in the early 90's said we were insulated from the RE downturn because we were strictly a federal government town. Guess what, the house that sold in Sandy Hill for $250k in 1990, sold for $160K in 1992.

Anonymous said...

are there stats for Sunshine coast and powell river>

patriotz said...
This comment has been removed by the author.
patriotz said...

Oh WOW, heres an incentive that will really bring on a bidding war...

"MUST BE SOLD - Seller offers Bonus - Samsung 42" Plasma HDTV with uncondirtional sale by October 15."

Assessed 425K, asking 450K - dream on

Actually I'd be quite willing to make an unconditional offer (except for inspection) - for 300K. See you in three years.

Mr.4AM said...

"The real estate industry is for the most part self-governed. Perhaps the consumers should put forward rules that we would want the agents to follow."

3) The real estate board (much like the US RE Board, Fed & Treasury, Senate and Investment banking) can no longer be trusted and is to be abolished & nationalized by independant 3rd party citizen elected organization whose individuals must swear to have no conflict of interest in their jobs/opinions and not be biased in their reporting, and provide historical charts of data instead of verbal spin.

4) Along the same lines as #3, the MLS.CA will be regulated by government elected officials, and "sold by owner's" will have access for a small fee to post their house. Further, 3rd party IT companies can for a larger but reasonable monthly fee have full query access to the RAW database so as to provide citizens additional alternative services and sources of info for Canadian Real estate (aka. don't feed us the endless spin, we want the raw facts to form our opinions).

5) Buyers may approach realtor sellers and purchase without having to have their own buyer realtor representing them. It already happens in FSBO to FSBO transactions, why not from realtor to FSBO & vice versa?

6) Realtors *MUST* show all properties by law to their potential buyer clients. This includes all listed properties the buyer is insterested in, be they 1%comission listings, zero percent or FSBOs.

7) No client should be forced to sign contracts with seller realtors locking them in for more than 1 month. To be fair, any advertising costs spent during that time by a realtor may be passed on to the client (with no extra comissions) if the client decides to switch realtors.

8) BC Assessment organization must be revamped by government to establish sensible appraisal rules such as:
-Properties must be physically visited at least once every 2 years.
-Zero conflict of interest must exist between appraisals & property taxes.
-All historical records should be put online for free
9) Title searches should be all digitized and put online for free
10) City hall records should all be digitized and put online for free. Access will be done via same method as how you get a code for voting or for filing your taxes online.
11) To become a realtor, a 1 year detailed course should be mandatory (instead of 5 weeks), including multiple classes on ethics & how to use Email and answer a cell phone, for Pete's sake!
12) Realtors to get all Sundays off and no transactions can take place between 7PM and 7:00AM MON-SUN. These guys need a life too.

13) Real estate agencies must not gauge realtors for having them associated with their name, charge ridiculous fees & comissions that in turn eventually get passed on to the consumer.

14) Real Estate Comissions MUST have a legal cap, NOT based on property value percentage, but a monetary number (i.e. Max $20K, regardless if the property is $200K or 1.8 Million). The amount of effort is nearly the same. Additional costs may be charged to clients if extra advertising is done. Comissions based on % of the worth of a house only promotes realtors to inflate & pump realty prices for their own comission benefit.

14) Realtor agencies must pay base salary to realtors and not 100% on comission. 100% comission earnings leads to sales gauging, spinorama, and much corruption in the system.

I could go on...

Anonymous said...

Good job mr.4am

hhv said...

Mr 4am,

I'm open to hearing more, but I don't see nationalization of the RE industry as either realistic or necessary. Why not just pass legislation that requires full disclosure of pertinent investment sales related information. It works, fairly well, in the Canadian securities industry.

In the case of #5, I as a buyer can deal straight with a seller's agent without an agent representing me. But why would I? The commission that gets charged, which the buyer ultimately pays, doesn't change when two agents split it. Are you suggesting that I should be able to demand a cash-back option, equivalent to a split commission, if I act as an agent on my own behalf?

#6. Buyers have the ability to get this without going to an agent. Why should the agent be forced to work longer/harder for potentially less? The system works in the sense that educated buyers will demand these listings from their agents. If the agent doesn't agree, dump them. This is why I will never sign a contract with an agent I consult with while buying.

#7. There is a 7-day cooling off period that is generally accepted. I'd sooner see a entreprenuer develop some kind of third-party website that works like ratemyprofessor.com where people can post their experiences with agents. Sometimes, the customer isn't always right and I don't envy agents who have to deal with difficult and unrealistic homesellers. Why should an agent be on the hook financially when a surly, emotional homeseller dumps them after 32 days? Remember, 30 days is an abnormally quick time to sell a home... I believe the historical average is somewhere between 60-90 days.

8-12: do you really want your tax dollars to foot these kinds of bills. I work in communications/IT, what your suggesting is very expensive to develop and maintain.

13. sellers have the ability to choose full service Realtors (1% etc) that don't charge rediculous fees. for the situation to change, all they have to do is exercise their free will to choose.

14. Should we also regulate what money-managers can also charge? I have a MF that gives its managers a 20% bonus whenever they beat the market. In the past 3 years, it's made me more money, bonus included, than had I put all my funds in a balanced fund with no bonus structure. I prefer choice. You can choose not to use big brokers.

15. If this happened, selling RE would end up costing significantly more to the homeowner, not less. Certainty is expensive, risk vs reward allows the market to set the price. I agree the market gets spun and manipulated, but we can educate ourselves against this.

I'd add that the main role I'd suggest for government is more basic education for homebuyers. I'd like to see the mortgage broker industry regulated like the banks are, instead of a free-for all with very little oversight and audit control.

greg said...

hhv -

I like Mr 4AMs suggestion #9 on digitization and access to title info. I don't care what it costs - in aggregate, certainly no more than operating a site like MLS.ca, I'm sure. Spread across the country, that's worth at least as much as the taxes spent on industry servant CMHC.

This kind of access is the basis of sites like Zillow in the states. Personally, sites like Zillow are the best thing around for enforcing change onto the RE industry and making Realtors compete for their share of real estate representation.

My $.02.

hhv said...

greg,

could someone duplicate zillow up here?

i don't know much about it, but i'd prefer to see it as a fee-for-service...

i know when i buy a place that i will have non-negotiable closing costs: inspection, appraisal (regardless of whether or not the bank requires it), taxes, legal etc... why not add, title search, RE history search to that too.

I don't believe buying a home should be "free."

I think Mr 4am's points 8-12 are well thought out, i just don't necessarily agree with what i perceive to be the way they get paid... i guess if records are digitized and kept at city hall, they are funded through property taxes, so in a sense, the homeowner pays, but i don't see gov't as an efficient means of providing the best bang for the buck when it comes to these things.

greg said...

hhv -

what I'm getting at is the information is freely available from county records online, not just to potential buyers.

This allows one to get an idea of what taxes, recent sales and current estimates of prices (assessments etc) are. From this, Zillow produces a zestimate.

Even without that, being able to see what houses in your neighbourhood have been selling for lately, or if they have been selling, is a useful feature to break the monopoly of realtors, to move them more to a position as salespeople than as gatekeepers of property information, stats etc.

Without access to these types of records (legal, not just scraped from databases like MLS.cA), it is impossible to launch a Zillow type service in Canada.

Of course, the last thing Realtors want is a removal of the exclusivity of the MLS. Without that, it would be too easy to market and sell property with just the help of a lawyer.

So I think Mr 4am is onto something there. I support that suggestion 100%

greg said...

Just another note, why is it that it is accepted without question in the freemarket US of
A that this information should be available to the public, and in Canada it isn't?

Just asking.

Anonymous said...

I think there needs to be less government oversight and more freedom of information. I agree with Mr 4am that all real estate sales information should be compiled and released to anyone as public information.

Anonymous said...

Mr. 4am is obviuously a card-carrying member of the NDP. Regulate and tax businesses until they go away. Thank God you loonie lefties will never form government.

hhv said...

"why is it that it is accepted without question in the freemarket US of A that this information should be available to the public, and in Canada it isn't?"

Greg, i think the levels of gov't intervention in the canadian mkts are the reason here. the feds and provinces control many industries through regulation (think CRTC, securities commissions etc)... i think the trade off has been the creation of effective monopoly situations which leads to higher prices and higher taxes... so a win-win for corporations and gov't and a lose-lose for the consumer.

In the US, we're witnessing first hand the danger of un-regulated mkts. In the debates last night, you had 4 of 5 screaming for intervention and one saying, woah, slow-down, let's not jump too quick...

now, i'm not advocating for any party here, but what exactly does "intevention" mean here? We've got the BoC dumping billions into the financial system. Are Layton and Dion screaming for further billions to be dumped into the system? Is Harper saying "Carney's got it under control"?

The average consumer out there doesn't have a clue whats really going on. They still have the same credit cards and HELOCs, they aren't rushing to spend big bucks right now on cars and houses, but if you look at our retail numbers, they're still spending.

Is the canadian economy really headed into the tank? Maybe for the 5 million people in southern Ont car/truck belt... but talk to someone in St John's or Saskatoon/Regina and they'll think you're off your rocker...

Obviously I've rambled here, i guess to attempt to answer your question is to state that I think canadians don't really know what they want: not an unregulated market, nor a nationalized one.

Mr.4AM said...

Hey guys,
Ok, that list I put together was admitedly not thought through in a lot of detail, it was more of a rambling off the top of my head as things came to mind. Still, I stand by pretty much all those points, though some could do with better explainations

Anon 12:38pm said:
"Mr. 4am is obviuously a card-carrying member of the NDP.Regulate and tax businesses until they go away. Thank God you loonie lefties will never form government."

Actually, I have next to no interest in politics; though ironically I will very likely vote NDP (least of 2 other evils, IMO).

My ramblings were more along the lines of the following thesis statements:

- Transparency of info = Honesty = No room for spin.Real Estate should be regulated such that full transparency is available to the public. Currently realtors hold nearly all the info and twist it and disclose it as they see fit to suite their sales quota agendas. This is no different than what will hopefuly come to occur in the stock market in a few years after this entire fiasco plays through. Think Sox compliance on steroids. The audits will suck initially, but the outcome is forced honesty.

- Put 21st century Cheap Technology to work could be used at tax payer expense to provide near-free information services back to the public about the biggest investment most will make in their lives. I work in IT, and I can assure you that the computer infrastructure required to provide MLS.CA + Title Searches + BC Assessment searches (already free), etc for 'free' or near free, is very dooable at very low cost. For instance, initial capital investment for servers, 2x colocation space, redundant network links, 2 or 3 full time sys admins would probably start at about 3 Million for first year & about 700K or less per year in Operational expenses. 3.5 Million in first year = about $10.50 per Victoria citizen. Ongoing operational costs after first year to provide a free service would be about $2.30 per Victoria citizen. If you want to charge a one time / year fee to users. Assuming 10% of population is interested in searching for real estate per year, this would translate to a flat fee of $23 / year to get all the info for free. If you then subsidize the web pages with some Victoria business ads, you can probably reduce that back down to free or close to it. As far as digitizing all the info, that's no easy task, but surely an army of summer students to get most of it done over a couple of years for low cost. Whether this should be a government endeavour or done by the private sector, the general idea is that it is doable relatively cheaply and should be done as openly as possible.

- Help support a balanced realtor lifestyle Realtors work 24/7. While many are obviously ok with this, it's hardly a healthy thing for the body and for those with families, and as much as I despise the realtor industry as a whole, I do think they deserve certain breaks. Further, I do think nearly all agencies and various associations they must keep relationships with gouge them on their commissions and that justifies further investigation into alternatives.


Anyway.. if I have time later this weekend, maybe I'll post something more coherent.
Cheers and PS. I'm surprised there was no massive rally after the Bailout got a YES. Guess it was already priced in?!?

roger said...

The Toronto Star reports that GTA house prices fall

Housing prices in the Greater Toronto Area market fell for the first time in more than a decade, down by 3 per cent from year ago levels, according to figures released today.

Average existing home prices dropped to $368,549 in September, from the $380,132 recorded in the same month last year, according to the Toronto Real Estate Board.

The city of Toronto was hit even harder, with average prices falling six per cent to $393,647 from 2007's $420,182 according to the board.


The national MSM reporters in TO (CTV,CBC, Global) will be all over the housing market story now that house prices are dropping in their own backyard.

How could this happen in Toronto?
The diverse economy, universities, arts, immigration magnet, government jobs, tourism, manufacturing & construction should have provided "insulation".

Just Janice said...

I'm an economist. I think everything has been underplayed. the problems that face the economy in general are large, and I think the outlook is rather gloomy.

At best I think the US is set for a recession of at least 18 months duration. At best I think housing prices are due for a 30-35% correction.

The stock market is likely to be bleak for at least 12 to 18 months. GIC's or othe FDIC insured goods are the way to go.

People have forgotten the great depression. The beast is now different (a credit beast as opposed to a savings bease). Few are prepared for the fallout.

The party's over, get ready for the hangover.

J

hhv said...

roger,

TO isn't insulated because every torontonian is moving to Victoria, which makes us insulated and they more vulnerable... (sorry couldn't resist)

Janice, welcome.

Anonymous said...

Is that big E or little e?
Honestly I would have expected more than more of the same from an economist.

I'm a capitalist accountant making money regardless of the economic direction. Victoria needs a 25% retraction just to get back to capacity and that will save me money. Anyone else tired of cold lattes?

patriotz said...

Mr. 4am is obviuously a card-carrying member of the NDP. Regulate and tax businesses until they go away.

I suppose you prefer the US model, which is to let businesses operate without regulation and then bail them out with taxpayers' money when they get into trouble.

I'll take Mr. 4am's model, thanks.

Art Vandelay said...

Just jack wrote: Perhaps the consumers should put forward rules that we would want the agents to follow. I'll start:
The agent must disclose the listing history of the property to a prospective purchaser along with the sales history.


Just ask for it. We've got it in easily readable format. See. It's that easy.

Mr. 4 a.m. wrote:
The real estate board can no longer be trusted and is to be abolished & nationalized by independent 3rd party citizen elected organization whose individuals must swear to have no conflict of interest in their jobs/opinions and not be biased in their reporting, and provide historical charts of data instead of verbal spin.


I have to assume you're still in junior high. You have no idea how markets work, do you?

Along the same lines as #3, the MLS.CA will be regulated by government elected officials, and "sold by owner's" will have access for a small fee to post their house.

Government regulation? Read from Milton Friedman.

FSBO access to MLS? You're free to start your own. The Interwebs are a land of opportunity.

Buyers may approach realtor sellers and purchase without having to have their own buyer realtor representing them.

You can already. And the seller will pay the listing realtor the full commission. And you won't get any representation at all. Go for it. It's your right.

Realtors *MUST* show all properties by law to their potential buyer clients. This includes all listed properties the buyer is interested in, be they 1%comission listings, zero percent or FSBOs.

Who will pay for my time while you waste it?

No client should be forced to sign contracts with seller realtors locking them in for more than 1 month. To be fair, any advertising costs spent during that time by a realtor may be passed on to the client (with no extra comissions) if the client decides to switch realtors.

That's your first sensible suggestion. I'd agree that VREB's rule that listings be at least 60 days are a barrier to competition and should be investigated by the Competition Bureau. Except that the Bureau is a toothless tiger. See Friedman, again.

BC Assessment organization must be revamped by government to establish sensible appraisal rules such as:
-Properties must be physically visited at least once every 2 years.
-Zero conflict of interest must exist between appraisals & property taxes.
-All historical records should be put online for free
-Title searches should be all digitized and put online for free
-City hall records should all be digitized and put online for free. Access will be done via same method as how you get a code for voting or for filing your taxes online.


Who will pay for this magical land of free stuff?

To become a realtor, a 1 year detailed course should be mandatory (instead of 5 weeks), including multiple classes on ethics & how to use Email and answer a cell phone, for Pete's sake

If it's so easy (and it is), you should become a realtor. Then we can all benefit from your blinding insight from the inside.

Realtors to get all Sundays off and no transactions can take place between 7PM and 7:00AM MON-SUN. These guys need a life too.

I'll thank you to not dictate when I can and can't work.

Real estate agencies must not gouge realtors for having them associated with their name, charge ridiculous fees & comissions that in turn eventually get passed on to the consumer.

Your second sensible suggestion (sort of). Not all brokerages charge their agents exhorbitant fees. When you hire the Blue, Red and White balloon company, you are paying for those ads.


Real Estate Comissions MUST have a legal cap, NOT based on property value percentage.

Fine. As long as I get to cap your salary. Like you, I will pull a number out of my @zz: how about $20K a year?

Realtor agencies must pay base salary to realtors.

After you get your sales licence, sell for two years, you can take your brokers exam. And then you can pay realtors for doing nothing. Good luck with that business model.

Anonymous said...

We as sellers and buyers do not have to accept any BS from realtors. They do not own the market. We can FSBO very professionally (just as much so as many realtors I've met and performance that I've observed.) We can also use 1% Realty and still get just as many showings. I sold my house with a 1% agent and saved $9,000 at the time. I'm selling another one now and will save another $10,000 in this transaction.

As buyers we can represent ourselves and we can present offers that dictate only one-sided agents fees.

Agents have no choice but to serve the purposes of their clients (unless they want to stay home which is OK and even encouraged) If the client wants to see a 1% home they see it; these listings are easily viewable and the information is freely available.

How would you feel at the end of the deal when you realize as a buyer that your agent just pumped the price you paid by $5,000-$10,000 to get themselves served? Are you likely to refer them to a friend? It's these lazy and greedy agents that get weeded out in the downturns. Fire that agent at the first suggestion!!

If your agent says he doesn't want to show that 1% home or that he will have to ask for additional commis, find a new agent. It is only your interest that should be being served - you are all that matters when spending your life savings on your new home.

People should know that there are many different opportunities out there for saving money: 1% Realty offers low commis and sometimes pays a buyer a portion of their commission when representing them as buying agent (maybe $1,000?) Costco apparently has a program that you can save thousands if you buy through their chosen agents (not sure how the program works but I know someone that was very happy with the outcome,) and there are many other offerings out there that do not involve handing over $20,000 to an agent for what amounts to a week of work.

Art Vandelay:
Thanks for those reply's to Mr. 4 AM, you just made up my mind that I will never use a full commission agent and I will be very wary of any attitude from any buyer's Agent's self-serving purpose.

roger said...

SFH prices have dropped 5 months in a row and MLS inventory continues to climb.

Will sellers see this in the future??

Buyers seem to be getting more cautious
while agents keep promising sellers a quick sale.

roger said...

The MSM reporters in Toronto are jumping on the bandwagon:

House prices tumble amid freefall in sales

REALTORS® are being candid:

"It looks like we've finally hit that iceberg and are taking on water," realtor Mike Donia said. "The slower sales started in January and now it looks like we're in freefall."

Donia said he is still getting calls for listed homes, but many potential buyers are holding off. "They're saying in another year they're going to get a hundred-grand discount. They've seen that movie before and it's called 1989, the last time we had a bubble," Donia said.

"There's a new reality out there, and vendors aren't up to speed yet on what to expect," said Fremlin.

womp said...

There was a sequel to that movie called 2007. It was only released in the United States, but I hear they've translated it for Canadian markets and it should be here shortly.

Anonymous said...

When I start to think my 'professional job' get's a little crappy, I jump in my uncles cab and drive it on a Friday or Saturday night and let the clientele remind me that my day job isn't that bad at all.

Two tidbits from last night

1) A tweeny something- " My dad is like, so pissed off that the real estate market is dropping"

2) A young twenty-something couple that bought a "condo that was way too expensive" in Langford last year. The lady is going to go interview for a job at a local clothing retail outlet today so that they can have money for Xmas. Her day job is selling homes and lots @ Bear Mountain for the develompment group there. The entire ride home they were calculating how much they spent that evening and who was responsible for what portion of the bill.

Looking forward to dancing with real estate agents and sellers at the Low Ball Ball of 2009...

(Been a RE BEAR since '05)

vg said...

"It looks like we've finally hit that iceberg and are taking on water," realtor Mike Donia said. "The slower sales started in January and now it looks like we're in freefall."



roger,

Heaven forbid anyone at the TC dare spill the beans of what is really going on out there.

They are the equivalent of CNBC talking heads the past year in full denial that anything is amiss in the system.

And now we have Tony Joe taking one for the team as he spins the BS lines to calm all those foolish people who bit the bait thinking the property ladder starts at the top of the chart. This is going to be the ugliest winter since 81/82, I am sure of it.

hhv said...

You know VG, I'm actually starting to think that Tony, Carla, Muir, Pastrick et al actually believe the lines they say/write. I mean, if I'd been telling myself the same things over and over again for my entire professional life (or just the last year of it), I'd probably become a True Believer too.

roger said...

I think Carla Wilson has done a good job in her recent TC articles. Most of the recent articles have talked about a RE slowdown, sliding prices etc. and some of the accompanying housing price graphs tell the real story. Responsible reporting dictates that she write exactly what Tony and Cameron say in her articles, even if it is spin. I think most of the reporters are held back by the editors who don't want to offend the real estate advertisers.

Tony Joe (VREB), Subhadra Ghose (VIREB) Cameron Muir (BCREA)and Gregory Klump (CREA)are all REALTOR® shills and one would expect them to keep cheerleading all the way to the bottom. And Remax and Royal LePage market projections are laughable.

The reporters that are writing advertising supplements are the worst offenders and do not deserve to be called journalists. Take a look at this article by Kathy McCormick of the Calgary Herald.

Victoria Rules

Anonymous said...

That looks like a pretty accurate commentary on Victoria to me.

S2 said...

Cab driving anon.

Thank you very much for those 2tidbits. Very interesting to get the feel from the street.

mln said...

I just heard a radio ad for the Ovation (condo conversion @ Esquimalt & Admirals) offering 0 down/4.5% "extended" until Oct 31st.

I thought the cut-off for 0 down mortgages was the 15th?

Anonymous said...

Wow, check out Edmonton's free-fall.

According to this article:
http://tinyurl.com/4f9tkc

"Edmonton bungalow fell 11.8 per cent "

"Two-storey houses dropped 13.8 per cent year-over-year"

"A standard condominium tumbled 18.8 per cent from last year to $216,667."


Anyone know how accurate this is? Those numbers seem pretty profound...

roger said...

Hmmm... 70K reduction

New condo market future??

womp said...

Looks like we're a hair away from 5000 listings again.

Wouldn't it be something if not only was there no "spring market" in 2008, but there was no winter dropoff in inventory either....

greg said...

womp -

we'll see some drop-off in inventory, but to counteract that, we'll also see some extremely old inventory going into next year. Some of those sellers are going to be getting desperate to unload their places.

Why else are small houses in Oak Bay and Fairfield starting to turn up sub $500k?

hhv said...

"Why else are small houses in Oak Bay and Fairfield starting to turn up sub $500k?"

I'm thinking it's because they're only worth about $300K in reality... but hey, I've been wrong before :)

Muriel said...

In case some of you didn't see this wonderfully titled story in the Vancouver Sun today...

I bought a house at exactly the wrong time

Not long ago, I was addicted to real-estate blogs. More precisely, I was fixated on what you might call the Internet's real estate disaster genre: HousingPanic.com, HousingDoom, FlippersInTrouble and, my favourite, ICan'tSellMyHouse.

I didn't own property, you see. I yearned to buy. Yet I thought the West Coast prices way too high....


The reporter goes on to say that he did buy a house in 2007, and at first it went up, but now he's back to where he started, and anxiously following the market and financial news. Unfortunately, he then calls up Bob Rennie for an opinion on the market - I guess he didn't learn anything from reading bubble blogs!

Mr.4AM said...

That's priceless. Thanks for sharing that. For those of you still wondering, we were forcasting 30+% drops here in Victoria real estate BEFORE this financial tsunami hit wall street.

Now I'm hearing stories here and there of people wondering when they can retire.

And given so many baby boomers have all their wealth in a declining home value, guess what they will be doing in about 6 months from now? SELL SELL SELL!

If that's not convincing enough, mortgage interest rates are climbing, REGARDLESS of any potential upcoming rate cuts to save wall street. If you own a home and are not wanting to sell even if you lose 30%+ of its value and haven't locked for 5 years yet, I strongly recommend you do. As per link above, TD is increasing variable rates to prime + 1%. When was the last time you saw that?

roger said...

But Mr. 4 AM what is a FTB supposed to do now??

- after Oct. 15 CMHC requires 5% down
- no more 40 year amortization means bigger payments every month or a smaller mortgage
- fixed rates have jumped .35% in the last few weeks
- now variables have jumped from 4.15% (prime-0.6) to 5.75% (prime+1)

Answer: Wait patiently.

Average and median Victoria prices have dropped 5 months in a row and that was before the recent credit freeze and stock market crash. This is only Act 1 - Scene 5.

Anonymous said...

Mr.4AM,
What is your view on GIC rates going forward?

Anonymous said...

Anyone care to comment on how GIC rates will move going forward?

greg said...

To answer the question about GICs: what do you think will happen after the election on October 21, 2008 - the next time the Bank of Canada is set to make a decision on rates?

After the election, will the rates go higher?

Or to combat severe recession, will they go lower?

Anonymous said...

Roger said:
But Mr. 4 AM what is a FTB supposed to do now??

- after Oct. 15 CMHC requires 5% down.
- no more 40 year amortization means bigger payments every month or a smaller mortgage
- fixed rates have jumped .35% in the last few weeks
- now variables have jumped from 4.15% (prime-0.6) to 5.75% (prime+1)

Answer: Wait patiently.

Average and median Victoria prices have dropped 5 months in a row and that was before the recent credit freeze and stock market crash. This is only Act 1 - Scene 5.

Roger, would you mind explaining what the combined difference is to a FTB. Potential $50,000 drop in price to date on a $500,000 home and a change in interest rates from P-.8 or P-.9 which is what was offered last fall to P+1 (almost a 2% difference.)

I'll do my own math later, but I'll gurantee you it's not in anyone's interest.

I have a 4.35% 5 year fixed mortgage coming due in about a year and I think I might look to re-write now before rates get silly. I'll see what the bank will offer.

Anonymous said...

Oak Bay? here is one MLS #251528

First listed $699k, sold in Oct 2008 for $545 after 40 days.

Market price on Oct 2009, $300K, or, you give a number.

roger said...

anon 6:39 wrote:

Roger, would you mind explaining what the combined difference is to a FTB. Potential $50,000 drop in price to date on a $500,000 home and a change in interest rates from P-.8 or P-.9 which is what was offered last fall to P+1 (almost a 2% difference.)

House prices are falling and that is good news for future first time buyers (FTB) not current owners like yourself. Why should a patient FTB buy now when they can buy for less in the near future?

What about interest rates?? Yes they have gone up recently and that is another good reason to stay on the sidelines for a while. The BOC will be lowering short term rates before long and the variable mortgage will trend down from today's level. Also a mortgage broker will find assist buyers find a lender that wants less than prime +1.

Fixed rates will also drop before long because the spread between 5 year Canada bonds and 5 year fixed mortgages is abnormally high due to the credit crunch. Once the crunch eases fixed rates will drop to normal spread levels.

I have a 4.35% 5 year fixed mortgage coming due in about a year and I think I might look to re-write now before rates get silly. I'll see what the bank will offer.

I guess you have to do what makes you sleep at night. If it was me I would be waiting for rates to come down from current levels and renew next year. If you are renewing see a mortgage broker and you will get a better deal than going into your friendly banker.

boomer said...

"After the election, will the rates go higher?
Or to combat severe recession, will they go lower?"

yes. (lol)



It's impossible to call anything beyond today-altho the giant throbbing brains have all run to the "lower rates" side of the room-for now, but its hard to imagine how numerous countries all racing to the bottom rate-wise is going to do anything about the basic "credit crunch" problem

Mr.4AM said...

I'm not an expert on GICs, but I can tell you that banks are aware that the best way to save their butts is to hang on to client depositors/savings accts, and what better way to get scared investors to stick around than to get them to move out of the mutual funds, but into another locked in "safe" type of investment such as a GIC?

Ask questions, not all GICs are equal. In fact some are linked to now declining stock market indexes... so the "Guaranteed" part in "GIC" is NOT a guarantee of a return on your ivestment, but rather a guarantee that it is invested - which is basically meaningless.

Where exactly does the bank invest your money so that they can return a profit to you via the GIC? Ask them questions! And if the answers are opaque, either the advisor isn't well informed or even the details are opaque to them, in which case - walk away.

Overall GICs are considered one of the safer investments, but these days "safe" and even "guaranteed" are words you can't just trust without digging into details. GICs are not safer than Tbills, gold or cash. They are however supposedly safer than bonds.

I googled for an asset class chart showing the different types of assets and their associated risk level and return potential, but I couldn't find any with GICs in them. I have however seen them at banks before, on desks of financial advisors. Understand what risk level you are getting into and remember not all GICs are created equal, and if the rate of return is higher than all other GICs make sure it is not intertwined with stock indexes.

Good luck

roger said...

Here is some information if you are interested in GICs and Term Deposits:

- Make sure what you are buying is covered by CDIC insurance

- Do not walk into a bank and buy a GIC without knowing what you can get from a GIC broker or investment broker (TD Waterhouse, RBC Action Direct etc.)

- Stay within the CDIC limits of 100K per account type (personal, RRSP, joint)

- Compare rates and terms. Posted bank rates are low and you need to shop wisely.

Here are some links of interest:

Posted Bank Rates

GIC Broker

RBC Investments (pdf)

Disclaimer: I am not for or against GICs - this is just information for those interested

boomer said...

best GIC rate (without stretching out your term TOO long) i've found currently (if you are over 57)
is 3.92 for 1 year-- with interest paid MONTHLY --at Canadian Western Bank (CDIC covered)


same product at a slightly lower rate if you're not 57 yet-check CWB website

Metaldwarf said...

presidents choice financial (yes the supermarket no-name brand) has a no fee chequing account that pays 3.75% and no lock in.

pcfinancial.ca

Metaldwarf said...

Wow markets continue to get slammed. I opened a tc waterhouse account yesterday, I have a few grand sitting in waiting to buy in. I have an itchy trigger finger but I don't think the bottom is in yet. everything looks like such a good buy, but I am thinking of going into both small cap and large cap value. Commodities look pretty juicy though too.

This is all outside my regular RSP contributions. Anyone got any "HOT" fund picks?

Mr.4AM said...

Hoooooleee Crap!!!!!!!

Let me say that again...

Hoooooleee Crap!!!!!!!



- Pre-market Dow @ -200 AGAIN
- Gold up 3%, AGAIN ($917 USD)

WHY:
- FTSE 6% down!!!!
UK gov announces 50 Billion pound (87 billion USD) capital injection, stock market reacts with 6% down
- China Hang Seng down 8.2% !!!!
- London FTSE down 7.5% !!!!
- German DAX 30 down 8.3% !!!!
- Franch CAC-40 down 8.2% !!!!
- Japan down 9.4% !!!!!!!!!!!!!!!!!
- India down 7.4% (early afternoon)!


(some of the above values were before the individual stock markets closed, so values may change up or down a bit, but you get the picture....)


YESTERDAY:
- Toyota Misses forcast by 40%!!!
- Iceland bank freezes all customer bank accts! Russia had to inject 4 billion to save bank.
- Australia stock market halted at least once
- Russia halted trading for TWO days
- Indonesia halted trading INDEFINITELY, stocks down most in 20 years.
- North Korea is developing Nuclear Missile Warheads
- Oil down to 10 month low of $87on recession fears. (we may see oil @ $50 soon at this rate, watch out Canada!)



Most of these headlines are from either bloomberg.com or marketwatch.com. Sorry, I'm too lazy to provide all the links.

PS. In other news, nothing but sunshine and lolipops seen for the future of Victoria real estate... PPS. Vancouver Sun yesterday: "I remain fundamentally optimistic about the Canadian economy, we aren't in a recession"- Harper

Harper's right, we're going to go right past a recession and head straight on into a freggin' DEPRESSION at this rate!

WAKE UP PEOPLE!!!! Things are happening fast and furious. If Dow goes negative again on Wednesday, that's 5 days in a row!

hhv said...

Metaldwarf,

look at the fundamentals of bank stocks. RBC and TD are two very luring buys. These guys will get through these times and come out much stronger. If you are buying to hold longterm, pick a price to earnings point you're happy with and snap up some shares.

Metaldwarf said...

HHV thanks for the input, while everyone is acting like chicken little I'm a kid in a candy store.

Im going to see what the rest of the week brings, with the rate cut and all. I will probably take the dive into some financials, some blue chip value next week. I am going to hold off on the oil/commodities for a few weeks to months, though SASK. POTASH looks sugar coated at just over $100.

My biggest enemy, analysis paralysis.