Thursday, April 1, 2010

Open post

My wife and I are super busy shopping for a house right now so I don't have much time to blog. We figure this is the perfect time to get in before interest rates and house prices jump higher in unison forever pricing us out. We plan to take out the maximum allowable too before the new lending rules kick in on the 19th. Wish us luck!

237 comments:

1 – 200 of 237   Newer›   Newest»
HouseHuntVictoria said...

April fools! but I'm crazy busy with work and this may be a post that remains for some time.

think said...

Anybody have March full month stats yet??

PainInThe said...

After Prairie Boy's fall, you had me worried there for a sec!!!

omc said...

I am getting buried by new listings!

CD said...

buried, by new listings? omc?

Vic said...

Numbers are out, prices up a whole 2% & 1.6% respectively on the average and median. With 33 sales over $1 million and a $3 million sale in Oak Bay I would say the true average price would have been flat to lower if there was the usual volume on high end buyers.

Double-Agent said...

VREB has released the stats for March. The spin was toned down a bit this month. Average and median house prices up slightly but below December 2009 levels. Click here for report

As expected sales comparisons were made with last year and last month which are misleading. Last year we were in the depths of the recession. Sales always increase every month in the January to May period. So here are some charts which put things in perspective.

5 Year Sales History - Sales below 2005 to 2007 levels. Active listings just below 5 year high.

New listings at 5 year high - Are sellers bailing?

Detailed stats analysis - Take a look at the ratios compared to other years.

As I have posted before things look very similar to 2008 with the exception of the explosion in new listings. Inventory looks like it will keep building and new mortgage rules will be in full effect April 19th. May and June will tell the tale.

Rhino said...

Wow impressive sales numbers. Looks like a lot of activity towards the end of the month. Looks like this pig ain't cooked yet!

a simple man said...

With everyone knowing that increasingly restrictive mortgage terms are on the way and that mortgage rates are sure to climb, I expected a lot of activity in March, which will likely continue for the first week or so into April.

Seems like lots of price reductions lately.

I agree that the interesting stats will be in May/June.

Double-Agent said...

Simple Man,

The activity really picked up starting Mid-March as shown in these charts. I expect high sales levels in April as conditions are lifted from current offers and buyers scramble to use their pre-approval letters. New listings surged this week and should continue.

Weekly Sales & New Listings

Active Listings By Week

Double-Agent said...
This comment has been removed by the author.
Skeptic said...

Another cut and paste VREB stats article at the TC.

Real estate sales up by 27 per cent in Greater Victoria

Nice to see this caveat at the end of the article...

Greater Victoria real estate sales have rebounded after crashing during the recession in early 2009. Year-over-year comparisons do not reflect the long-term behaviour of the market because numbers were so low at the start of last year.

a simple man said...

Thanks for your work, Double agent - it is really appreciated.

I feel many of the buyers in March and April are those that may have wanted to buy in later 2009 or 2010, but felt the need to push their timeline up to either take advantage of the soon-ending historically-low financing rates and/or be able to qualify for a mortgage with the more liberal lending standards before 19 April.

These "temporally displaced" purchasers will cause a rise in sales in the next while, as we have seen, but the market in the later year and in 2010 may be without a large number or purchasers. The "temporally displaced" purchasers may cause some problems in the supply/demand ledger later in the year/2010 as we also know listings are increasing more rapidly than even the current rapid sales.

Who knows? All we can do is speculate and hope for the best.

As a former lurker, thanks to everyone here for all of their great comments and discussions - both bear and bull - as it makes us all question a little more and hopefully understand a little better.

JustWaiting said...

All those new lstings mean bears aren't the only ones that think the Victoria market has peaked!

Skeptic said...

The TC article is now open for comments. Express your opinion..

Click here

Animal Spirit said...

No real suprises here. What I am looking for as a leading indicator of a market turn is the number of listings on the lower end of the market.

In March of last year there were 120 SFH listings between 300 and 400 K. This year there are around 15.

a simple man said...

Hi Animal Spirit,

I don't have the hard data in front of me, just the monthly sales graph - from this it would suggest that there has been about a 16% increase in mean house prices from last March to this past March.

Perhaps for an equal comparator you should move your goalposts up 16% as well to ~350K and ~465? Does that change the numbers appreciably? Just a thought.

a simple man said...
This comment has been removed by the author.
JustWaiting said...

Canadians are overloaded by debt and not sleeping at night. Must be worse in Victoria with the second highest real estate in Canada and a high cost of living.

Royal Bank Survey

According to the March RBC Canadian Consumer Outlook Index, most Canadians (65 per cent) are losing sleep over their finances. More than one-in-four Canadians (27 per cent) are up at night worrying about paying off their debt, followed by nearly one-in-five (18 per cent) who worry about having enough for retirement and 16 per cent who worry about having no emergency fund. The survey also found that one-in-three (34 per cent) were not confident about any aspect of their financial situation.

think said...

WOW!!!!! I thought inventory was coming on strong the last few months but yesterday takes the cake! 104 new residential listings in Victoria yesterday, usually there is around 50-60!! Talk about ramping up the listings! Everyone has decided to start dumping their overpriced real estate now. Fear will start to set into a full panic soon if this many listings keep coming on. If this continues and sales ease off even just a bit this market is sooooo done. We are now over 3700 total active listings for Victoria (up from 2557 at the end of December) and climbing. From my calculations we should break 4000 before the end of the month and then we are in TONS of inventory territory and it WILL start putting major downward pressure on this market. This market is like a giant pimple, and it is definitely coming to a head in the next few months!
Anyone who buys now is a total nutcase!

Double-Agent said...

Think,

Good to see you are still around and in a bearish mood.

What do you think of this??

Inventory Up - Prices Down

This looks like 2008 all over again. This year we not only have listings piling on but new, restrictive mortgage rules and rising interest rates.

Skeptic said...

Carla updated her article with a personal story about how a couple was successful in finding their dream home in Fairfield.

Couple Finds A Home After Losing Budding Wars

It had been a frustrating and discouraging exercise.

After being featured in a Times Colonist story in early March, 30 sellers throughout the region reached out to the couple.

In the end, they found a home in Fairfield through the Multiple Listing Service and took possession of a 856-square-foot townhouse in a 1916 heritage home yesterday.

Although many of the homes being offered to the couple outside of the MLS were at the top end of their price range, Prema said "we felt so embraced by our community."

think said...

Double-Agent,

Yep, I totally agree with your comments, love the graph, this year is definitely shaping up to be like 2008! Over-priced real estate which has reached a price ceiling, pent-up sellers, increased rental vacancy rates, job losses, people with WAY too much debt load, rising interest rates, and mortgage rules changing... really is the perfect storm isn't it ;)

Animal Spirit said...

From March 1 to April 2, listings for 450 - 500 K SFH went up from 38to 74 - a 95% increase. This is for the lowest price point with a signficant number of listings.

(a) Will 450-500 K listings continue to rise?
or
(b) Will listings 400-450 increase in April like the 450-500 increased in March?
or
(c) Will FTB see a buying opportunity at the lower price range and the inventory disappears

Your call.

Grasshopper said...

Look who is coming to Victoria...

http://www.trumpeducationrealestate.com/market-vancouver.html?cid=734125

maniac78 said...

I have to say that family that bought in Fairfield are freaking crazy. There is no possible way they could stay in that place longer than a few years with a young child and all!

Vic said...

Grasshopper,

I would say thats a waste of time for Trump coming here as there are many Trump wannabe's in this town that have large holes in the ground and many trees chopped in the forest and they can't finance any of them close to Trump's standards, if at all.

a simple man said...
This comment has been removed by the author.
a simple man said...

thanks animal spirit,

We will have to observe the next month to see what happens in the lower end.

I have noticed that there has been a lot of price reductions in the past week in my "watch" area of Oak Bay and few sales in the past two weeks (only one pending sale from all new listings in past two weeks). Has anyone else noticed this in other areas of Victoria?

Happy Easter to all

a simple man said...

Another strange behaviour I am noticing is price increases after being on the market a week or two??

I think that some agents are trying to underprice properties to get a lot of people interested to generate a bidding war in attempts to ultimately get a higher price than the "market" price. Perhaps after having convinced owners to underprice by $20K or so to drive up demand, the realtors, with egg on their face due to little actual demand, are readjusting the price up to that of the original "market" price.

The end result: people that were watching the market say "I didn't want to come look when it was priced at the cheaper price and now you want me to come look when it is $20K more?". Lost me.

Skeptic said...

Its time for another story...

Homebuyers' pain, mortgage brokers' gain as tighter rules come into place

Buyer Leslie Urquhart said buying her first home was a horrifying ordeal. Urquhart, 34, began her six-month home shopping odyssey with one goal-to get into the market. But she quickly realized that was easier said than done. Increasing budgets, pressure from her realtor to commit to a place and finding a mortgage made her wonder what she had got herself into.

Urquhart's realtor urged her to use a broker, saying a broker could find a better interest rate than her bank. The broker did find a cheaper rate, but it was still too high for her to manage. But Urquart was left somewhat cold by the experience with her broker. She said she was left in the uncomfortable position of putting her trust in someone she had only spoken with over the phone. "I never met with him, it was very impersonal," she said.

Although she eventually found a condo in for $60,000 more than her original budget, she advised other first-timers to do their homework and prepare themselves for changes. "It's a learning process that's so scary," she said. "No one can ever tell you what it's going to be like."

In the end, Urquhart accomplished her goal of getting into the housing market, but she won't be living in her new place as she had hoped. Instead, she will become a landlord, renting the place out while living in a basement suite at her parent's house where rent is cheap.

"At least I'm in the market and I'm learning," she said.


Living in Mom & Dad's basement while you subsidize a renter. Personal experience is a harsh teacher

Vic said...

simple man,

Good eye,that is strange and only points to the end of the bidding wars which is phase one of the crash.

As Double Agent knows, once there is a new smell in the air of increased listings in your price range, the word will travel fast and you are not going to have a hope in hell of "all bids to be in by 6 PM tonite" on day one of listing. Those days will soon be toast if not already.

Vic said...

"Although many of the homes being offered to the couple outside of the MLS were at the top end of their price range, Prema said "we felt so embraced by our community."



Embraced by the community ? lol...more like the sellers with no buyers anywhere in sight swamped them. More sheep to the slaughter.

Double-Agent said...

Listings are piling on in the 500-700K price range. This will be the first segment to find a shortage of buyers. This will be due to the new mortgage qualification rules coupled with the increase in interest rates.

You will really start to see the price reductions in this price range starting in May. New listings peak in the May-June period and active listings always keep building until the end of summer. A shortage of buyers in this segment will result in seller uneasiness and agent pressure to reduce the asking price. Once this starts happening buyer agents will advise their clients to lower the initial offer price. And down we go.

By late summer the price changes will cascade down and you will start to see more properties at the lower end of the market. The MSM and agents will keep up the downward momentum. Just like 2008 the MSM will print real estate falling stories and agents will do what it takes to make a sale and get paid.

Patience is the keyword.

omc said...

I have noticed the price reduction and then back up again thing lately also. I initially thought it was a scam to get back at the top of the pcs or something. double agent, as you a realtor could you comment on a simple man's theory.

I have been aproached many times by sellers outside of mls, and everyone of them was asking a fortune. They would go on to later sell through an agent for much less.

Rhino said...

New rules for rental properties could squeeze first-time homebuyers

I like the end of it:

Jeordie Dent, of the Federation of Metro Tenants' Association in Toronto, where vacancy and availability rates have dropped over the last year, said he doesn't see a negative impact on renters.

Instead, he said his group welcomes the changes.

Dent said too many people become landlords without the financial or intellectual wherewithal to properly manage their properties.

"Anything that strengthens mortgage rules, from our perspective, is a good thing."

Just Jack said...

So glad to see that things appear to finally be happening in our completely insane market.

I had just the best experience while on holiday. I went to a timeshare presentation.

If you want to see how you will do in a high pressure, sign now or die environment then go to a timeshare presentation.

I made it through 4 VERY high pressure salesmen each one trying a different tactic. One sympathy, one rudeness, etc.

They kept going lower and lower in the cost. Finally, so fed up with it all and wanting to get to the gift they promised me I put my finger on the last price written on the piece of paper and said that they could lower it to a dollar and the answer would still be no, thank you.

The last guy slammed down the piece of paper and I left with my gift.

I'm going to be fine when it comes time to buy a house.

S2

maniac78 said...

Just jack you paid hundreds or maybe thousands of dollars to go on vacation and waste your time in a timeshare presentation for some worthless gift. You are so toast when it comes time to buy real estate! You are the greatest fool.

Animal Spirit said...

maniac78

a - that was S2, just jack's better half
b - you didn't ask what the gift was
c - the experience was used for growth
d - why choose to respond to their post?

PainInThe said...

Good for you S2!!! Now, to achieve your full diploma, go out and try to buy a car after a test drive, with no intention of ending up with one. And carry cash in your pocket; they can smell it a mile away.

When you come out of that cubicle, you will be immune to all life can throw at you!!!

Just Jack said...

Cost of vacation...thousands.

Cost of frustrating 4 timeshare pushers and then walking away...priceless.

:-)

S2

JustWaiting said...

S2,

That was a great story... I wondered where you and JJ had been the last while. Keep posting - ignore the troll.

think said...

maniac78, grrrr.... you are a grumpy little bunny aren't you? Didn't you get some chocolates this morning? Let me guess... you sell timeshares for a living, or at least try...

Happy Easter to all :)

CD said...

I have a question about move up buyers. We all know if they sell a high priced condo and purchase a high priced house, they are only exposing them selves to half the potential downturn since they just sold an asset worth half the value of a house. So the 400 - 600K frenzy club have two groups fighting for it, first time buyers and move up buyers. What is happening to the standard 2 bed 2 bath resale? Is the listings piling up more than the average?

Mr.4AM said...

CD said: "We all know if they sell a high priced condo and purchase a high priced house, they are only exposing them selves to half the potential downturn since they just sold an asset worth half the value of a house."

I'd like to suggest that most people who own 100% equity in their condo (i.e. 100% paid off) are the already downsized retired who have no interest in moving up, not the young couple who bought in the last 3 or 4 years and who may be interested in moving up, but sure as heck are unlikely to have 100% equity in their condo.

In short, I don't think your hypothetical proposition constitutes of the greater reality out there.

Mr.4AM

CD said...

Mr.4AM

Never said they had a paid off condo. Just said they had a condo. I know a few people that bought a condo 3 or 4 years ago that are upgrading so it is happening.

Skeptic said...

CD,

So these people that you know only own their condo for 3 or 4 years and then decide to move up. They pay 10-15K in realtor fees to sell and another 6 to 10K in property transfer tax to buy. Add in two lawyer bills and some moving expenses and you have another 3K. If they don't have 20% to put down then they pay CMHC mortgage fees all over again. And if their mortgage isn't portable they pay a penalty to pay it off when they sell.

On top of all this they are buying a house at the market peak. Unbelievable

CD said...

Skeptic:

Yup. I forgot to mention the original downsize from a larger apartment to a smaller condo. But they still made money since they sold the condo for more than they paid for it. ;) Well at least according to them.

Mr.4AM said...

I give it all of about 12 months before the MASSIVE Chinese real estate bubble pops and takes out 1/2 the Chinese economy and drops another grenade onto the tittering financial world stage... Unless of course they depreciate the Yuan pronto, but of course that can't be rushed as the Chinese govt can't be seen to be bending to Western demands or how else are they going to be able to carry on ruling with an iron fist?

Oh 2011 is sure going to be an interesting year... it just seems as if all the stars are aligning for a 2012 global implosion. Where's that Nostradamus website again? :)

Mr.4AM

talus said...

Ok, need some financial advice here. We have given up on the Victoria market and are going to build a cabin in the woods. We'll stock it with guns, ammo and non-perishables and wait out the nuclear financial realty winter.

The question is - how should I pay for it? The cabin I mean -- already got the guns and ammo (and big dog).

No seriously, we have a couple of acres already paid for. We have been waiting to do something with it and have decided to put 100K into a nice little cabin. It will be a recreation property and maybe more in the future.

80K is invested in the market. The remaining can come from LOC or RRSP's.

My dilemma is that much of that 80K is working nicely and I'm not real keen on pulling it all out (my RRSP's are dogs but that's another story). Is there a tax play here? Should I just pull it out and put it into the property? What makes financial sense here?

maniac78 said...

I'm not trolling here. Bears talk about value and fundamentals all the time here. So think about your vacation time in the same way. For example I get 4 weeks a year and when I go on a nice vacation it's usually for 2 weeks. Excluding travel time that's 12 days of tropical vacation time per year. I've got about 30 years of healthy traveling time left in my life so that's roughly 360 days.

If I waste even 2 or 3 hours of that on a timeshare presentation the prize at the end better be very very good. Even then I don't think I'd waste my time. Always remember that every day you wake up is one day closer to your death.

Skeptic said...

Think said:

maniac78, grrrr.... you are a grumpy little bunny aren't you?

maniac78 said:

Always remember that every day you wake up is one day closer to your death.

Case closed

JustWaiting said...

Canadian five year bond rate is on a tear. Jumped .14% today. This is the benchmark rate for 5 year fixed mortgages. This is not set by the Bank of Canada but by traders in the open market.

Watch for changes in the discounted rates at major banks. They will probably leave the posted rate as is for a while.

Chart 5 Year bond rate
.

think said...

Hey double-agent, just wondering if you might have last weeks stats, from the numbers I added up it looks like a huge week last week for new listings, I think over 450 new in one week - if thats right I guess thats a one week record of new listings so far this year!??! Do you know how many sales happened last week? Just wondering if they are keeping pace with the influx of new listings?

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

Here are some excerpts from the HSBC petition filed in BC Supreme Court and posted on the PriceWaterhouseCoopers site:


-----------------------


12. BMMP (Bear Mountain Master Partnership) has been in default under the terms of the Credit Agreement since 2008. In December of 2008, the Bank (HSBC) attempted to enter into a formal forbearance agreement with BMMP, however an agreement could not be reached among the parties.

....
....

(note: a bunch of extension agreements with more financing from HSBC to cover ongoing expenses are then listed all the way through 2009)

....
....

22. Throughout 2009 the bank continued to extend the Credit Facilities and advanced additional funding to BMMP for the purposes of preserving the development and funding BMMP operating costs, all in an effort to negotiate a long-term agreement with BMMP concerning the Credit Facilities and Development. The Bank did so notwithstanding that BMMP continued to be in default under the Credit Agreement and failed to fulfil the terms of the numerous extension letters. Since November of 2008, the Bank has advanced additional amounts in excess of $25,000,000 to preserve the Development, exclusive of interest and other costs of approximately $10,000,000 in total. During that period, the partners in BMMP have not advanced any funds to preserve the Development.

....
....

28. The mis-management of the Development was masked for a time by rising real estate values and optimism in the real property market in Victoria. However, management had no contingency plan and indeed did not have a sufficiently conservative and planned approach to succeed in anything other than a continuously rising market. If examples of existing mismanagement are necessary, the Petitioner can point to three prime examples (although there are many others). Firstly, BMMP commenced construction of the Highlander Project (a 214 unit condominium project) without sufficient financing in place and without sufficient arms' length presales. This resulted in that project being halted and capped when it was only 20% complete. The concept and design of the Highlander was such that it could only succeed if the real estate market continued to increase. It had to be capped at considerable expense and while at some point what was done may have some value, there will be considerable wastage as a result of lost sales and startup costs. The same can be said for the Corporate Centre, which was built without any core tenants. It remains substantially vacant to this day. BMMP also commenced construction of a second golf course, again without sufficient financing in place and without any real market for the second golf course. To date, neither of the courses has been profitable and both require significant financial support especially in the winter months. Finally, significant funds were spent to expand the Mountain Athletic Centre, whach had always been - and remains - underutilized.

---------------

Wow, Len Barrie put up only $5k of his own money, bled the bank for 5 years or so and still they loaned him an extra $25 million before finally pulling the plug.

Victoria real estate never go down!!

;-)

Mark said...

“There’s going to be a dramatic increase in mortgage fraud,”

April 05, 2010
Cutting Corners With Income Property Financing

rental-mortgage-fraud “There’s going to be a dramatic increase in mortgage fraud,” Don Campbell told the Financial Post last week.

Campbell runs the Real Estate Investing Network and says the fraud will stem from CMHC’s new rental financing rules.

The new rules, which take effect April 19, require borrowers to put down 20% when applying for insured financing on rental properties (up from 5% today).

CMHC is also changing its debt service calculations to make it harder to rely on rent as a source of income for qualification purposes.

Campbell thinks people will therefore try to skirt the rules in increasing numbers. They will do so, for example, by stating that they intend to live in a property as their principle residence, when they really plan to rent it out.

People also try to call rental properties “second homes.” We know because we’ve lost a few deals to branch reps and brokers who facilitate these kinds of deals.

Mortgage broker, Peter Kinch, tells the Post: “I'm shocked by the number of bankers who will say, ‘Let's call this owner-occupied so it'll be easier and we won't have to go through the hassle.'”

Regardless of whether you’re a broker or bank rep, misstating occupancy is a dangerous game. If you’re caught knowingly processing a fraudulent application for a customer, your reputation could be toast, your license suspended or revoked, your employment terminated, and your lender access cut off.

It’s not even close to worth it, but people don’t think they’ll be caught, so they do it.

Of course, lenders and CMHC are well aware that people try to cheat the system by not disclosing the true occupants of a property. After April 19, they will likely scrutinize multi-property applicants with even greater intensity. In some cases they may require proof that a property will be owner occupied.

As always, the best path is the right path. Fraud is fraud and the monetary “reward” for bending the rules is never worth the stress.

Double-Agent said...

Think,

Last week had fewer sales and new listings than the week before due to Good Friday being a holiday. Under 300 new listings and under 150 sales. This week will be slow too because many clients and agents took the weekend off and Easter Monday was a holiday in some offices.

I will put up all the graphs and numbers next week and you will see what 2 weeks of activity looked like. As I have said in previous posts don't look for too much to happen in the way of prices until all the new mortgage rules take effect and there are way more sellers than buyers.

think said...

Hey Double-Agent,

I'm very confused about the number of new listings, let me explain how I calculated it and maybe you can see where I went wrong..

Week 4 of March total new listings 1504, end of March total new listings 1719... so the last few days of March (Mon, Tues, Wed) would have 215 new listings, then I added new listings numbers that I found from another site (I guess these may be wrong) but they reported 104 new listings for Thurs, and 24/23/26 for Fri/Sat/Sun... Doesn't this add up to a minimum of 392? And they claim those numbers are just residential (not land etc)? Hmmm? Maybe I should change my name from Think to Confused ;)

Vic said...

kabloona,

Wow is right,talk about complete financial irresponsibility. You can assume the investors who are now sitting in a very bad place will be taking action. This is like the drunk who never leaves the party. The Globe has been awfully quiet on this story and never reported the last episode. Wonder whats brewing there,hmmm.

What I have a hard time believing is HSBC lent him all those millions for the Lightning when the books had to look shaky. This is going to go end as ugly as the rest of this town's overpriced real estate, in the tank.

Double-Agent said...

Think,

Oops - I neglected to count the weekend listings in my last post. Your 450 number is a bit high. Here is what I calculated.

In the 7 day period from Monday, March 29th to Sunday, April 4th (inclusive) 413 new listings.

This is the highest weekly total this year. However, the first week of any month has a number of "new" listings that expired at the end of the previous month. Next Monday will give us a better picture of new listing activity.

PainInThe said...

"maniac78 said:

Always remember that every day you wake up is one day closer to your death."

With the way things are going in this world, THAT'S supposed to be DEPRESSING!?!?!?

mcnamara_matt said...

Vic,

Check out this article about bear mountain's auditor relating to 2008 Financials.

http://www.theglobeandmail.com/sports/hockey/scathing-audit-of-golf-empire-accuses-canadian-nhl-owner-of-misusing-funds/article1271448/

Skeptic said...

In the news today...

The great sucking sound of Ottawa's housing focus

Housing-promotion policies widen a growing black hole that pull light and oxygen from other areas of the economy. Canadians are funnelling more disposable income to homes at the expense of most anything that isn't housing related. The government is aiding and abetting this with policies designed to support housing, such as tax credits for renovations and mortgages backed by the Canada Mortgage and Housing Corp.

Homebuyers feel pressure to enter market sooner on fears of higher rates

Potential homebuyers spurred into action by fears of an imminent interest rate hike may be better off to wait and avoid bidding wars that can prove even more costly, according to credit experts.

Laurie Campbell, executive director of Credit Counselling Canada, says Canadians already feeling societal pressure to be homeowners are more likely to engage in bidding wars and overspend when they hear that their ability to fulfil that "North American dream" could soon erode.

"Especially right now with this whole time bomb of interest rates, for sure there's a lot of people out there thinking they better get in the market today."

Campbell said she is concerned because people are getting into the market prematurely and may not see the repercussions of high debt levels for a few years.

"We may have a ripple effect of this recession a couple years down the road with people in these homes that they can no longer afford."

kunwak said...

FYI:

http://www.scribd.com/doc/28454918/Canadian-Housing-Bubble

a simple man said...

a few more price drops of houses listed in the past few weeks - one substantial $750K to $700K...seems like active and new listings are growing by bounds...and only have one pending sale in 24 new listings over the past two weeks in my area.

Skeptic said...

Another article to read over coffee..

This spring’s fever? House lust

House lust. It rises in the spring, which is why For Sale signs start popping up on front lawns along with the tulips.

Before the era of debt denial – which is where we are now, folks, in case you didn’t notice – house lust was easier to control. Banks could provide a cold shower. But now, with a 5-per-cent down payment and a 35-year amortization on a mortgage, a newly married young couple can buy a house their parents wouldn’t have been able to purchase until well into their marriage.

“We are living in a day and age when real estate is seen to be a right, not a privilege,” comments Garth Turner, financial expert and author of several books including Money Road and Greater Fool; The Troubled Future of Real Estate. “And the danger is that when real-estate-entitlement culture takes hold, all of a sudden just owning a home isn’t enough. It becomes competition.”

The hot real estate market in major cities across Canada are subject to bidding wars and panic buying, precisely because of this entitlement culture, Mr. Turner explains. “People believe that if they don’t get in now, they’ll never get in. The defining characteristic of people is home ownership,” he explains. “And that’s being fuelled by the real estate industry and ridiculous low-interest rates that won’t stay the same.” Younger buyers who only put 5 per cent down will be “underwater with negative equity” if there’s a 10-per-cent correction in house values, he warns.

Canadians may think they’re in a better debt-to-income ratio than Americans, but “I think we’re delusional. I think have been drinking our own Kool-Aid and swimming in our own soup. We don’t understand what happens when an asset becomes over-valued,” Mr. Turner explains, adding: “Our needle is on red. We are living in a delusional time.”

Real estate agents may see themselves as facilitators, but they’re “merchants of debt” he says.

Vic said...

mcnamara_matt,

Yes that was an eye opener article but that writer has been silent since. I can only imagine he's working on a follow up.



"We don’t understand what happens when an asset becomes over-valued,” "


That is the number one problem here, people have lost total concept of what a house is worth as if it's made of gold,not trees and drywall. I've seen guys freak out over a couple of hundred bucks when they think they paid too much for a used car, can't imagine how they'll cope when it's hundreds of thousands.

Skeptic said...

Victoria real estate - another perspective...

Of 272 cities recently surveyed in six countries, including Canada, Britain and the US, the second most unaffordable is Victoria. In that self-absorbed place, the average home now costs almost 8 times the average income.

By international standards this is a nuclear meltdown. The US real estate bubble blew up when houses started costing 5 times income. It’s completely obvious how this movie will end.


Garth on Victoria

.

PainInThe said...

Prairie Boy, if you see this, e-mail me. I'd be only too happy to clean all the spam off your blog in case you ever want to go back. Getting porn spam now.

think said...

The listings are just piling onto my PCS!!!!! New ones every few hours for the past 2 days - I can't keep up!!! I've never had this many listings! Tons of price changes too (but also that weird price down and back up thing a few times - is this a sign of desperation combined with denial)!!! This market is about to tank - the inventory is just getting huge! And not much selling either!

Month to date stats for Victoria:
63 sales
246 new listings
That is a 26% sell/list ratio!!!!!!!!!!!!!!!!!!
3722 total properties for sale

This market is shifting! Going to get harder to stay in denial for the bulls in the next month or so as it becomes more obvious to the general population!

Double-Agent said...
This comment has been removed by the author.
think said...
This comment has been removed by the author.
Double-Agent said...

Think,

Listings usually increase considerably in April and May but this spring there seems to be more than other years. I think a significant number of owners are bailing - amateur landlords, condo flipper wannabees and developers listing on MLS. There are also some move up buyers that were absent from the market last year.

You made a comment about sales ratios. Here are the common stat definitions in the RE industry.

Sales/New Listings: 40-60% is a balanced market. Higher means market conditions favour sellers;lower means buyers.

Sales/Active Listings: 15-25% is a balanced market. Higher means market conditions favour sellers; lower means buyers.

Months of Inventory (MOI): is calculated by dividing active listings by last months sales. A MOI of 4-6 is a balanced market. Higher means market conditions favour buyers; lower means sellers.

In order to get a good idea of market conditions you should look at all three and how they are trending over a couple of months.

Click here for a graph showing these ratios over rolling 4 week periods.

You mentioned a sales/new listing ratio of 26% in your post. This would indicate a strong buyers market if it continues. Was this a onetime holiday week anomaly? We will have to see. April may be the turning point due to the new mortgage rules and recent increases in mortgage rates.

Marko said...

"Month to date stats for Victoria:
63 sales
246 new listings
That is a 26% sell/list ratio!!!!!!!!!!!!!!!!!!
3722 total properties for sale"

At the end of March we had a total of 3,712 properties for sale. Not to mention Bayview alone put up 30+ units in two days, in essence inventory hasn't moved?

Wouldn't months of inventory be a better indication than the sell/list ratio?

Vic said...

I get a kick out of BNN starting off the market close hour with "How to Buy Real Estate in Arizona". A friend of mine just came back from there and he said you have no idea how bad it is down there. Pick up the paper and all you read is how all the outlying suburbs one by one are being cut off from emergency police and fire services.

Many municipal services are long gone too in these areas. Not to mention anything close to the southern areas have teams of border gaurds on the overpasses packin to the hilt with machine guns while they hunt for Mexicans who are streaming in. There's a reason it's dirt cheap down there. Just found it funny how BNN pumps this stuff without any homework on the realities of living there.

On another note, the City of LA is wanting to cut down to 3 work days a week cause they are stone broke. How can this madness up here continue ? Not too much longer in my humble opinion.

JustWaiting said...

I am seeing the same thing as Think and Simple Man on my PCS - lots of listings and even some price reductions after only a few weeks on the market.

In the last week I am not getting many sales either, especially over 500K. Seems like a sales slowdown to me. Maybe the new rules and higher mortgage rates are already having an effect.

I would like to make a request to other blog readers. Please report on what you are seeing on your PCS.

think said...

Thank-you very much Double-Agent for your great information, you are a valuable asset to this blog. I've learned a lot from you. I've only been using sales/new listings ratio to look at so the other two ratios are valuable new additions for me. Thanks! I agree with you that April might be it... the turning point where the shift is so obvious even the bull-headed ones won't be able to deny it. As you say, time will tell :)

Marko, As Double-Agent said all the different ratios are important so review them all. But also I base my opinions on things other than numbers... it is subjective but I have observed a change in the market - Jan/Feb/March sales were at best "normal" but inventory has been piling on - we started off a very small base - only 2603 active listings at the end of December and record sales that month, then in Jan sales were LESS than December and inventory piled on, then Feb/March consistent piling on of listings that sales cannot keep up with, allowing us to climb from 2603 at the end of December up to 3712 at the end of March. Have a look at the graphs that double-agent posted to see the similarity to 2008. Now we have lots of inventory, and it seems to be piling on just as strong or stronger, and sales seems to have slowed... if this continues we really are in for an obvious change. I tend to get excited early and I love guessing trends - it is early to tell so watch closely this month... the stats at the end of April will be very telling - if we climb to over 4000 listing by the end of April and sales weaken its pretty obvious what is going on!

think said...

Marko,

All stats for March...

sales/active listings for March 21%
sales/new listings 46%
MOI 4.7

So based on these numbers the market currently looks perfectly balanced. Nobody can say its "HOT" so definitely a change from 4 months ago. And this balanced market is only a stop along the way from hot to NOT...

MD said...

I also have noticed a big change in my PCS. Listings PILING on and sales slowing. Things are a changin'!

Just Jack said...

Broke the hundred mark in detached house listings for Victoria today.

House prices now go from a low of $309,000 to a high of $2,995,000 in just 100 listings.

The median asking price being $647,000 for 1,875 square feet 1928 built home on a 6,000 square foot lot in the middle income blue collar neighborhood of Fernwood.

A home that would have sold in 2004 for $320,000 and in 1997 for $233,000.

House prices having almost tripled and the monthly mortgage payment nearly doubling in just 12 years. As has the income to qualify almost doubling from $60K to $115K.

If it weren't for the increasing unemployment rate I'd say it was time to ask the boss for a raise.

But, you could always buy a condominium and in a couple of years move up to that World War I starter home. However, there are 349 condos listed for sale in Victoria at a median asking price of $350,000. So good luck in that one too.

So, will the last one to leave the party please turn out the lights and pick up your credit card from the bar.

Double-Agent said...

Think said:

So based on these numbers the market currently looks perfectly balanced. Nobody can say its "HOT" so definitely a change from 4 months ago. And this balanced market is only a stop along the way from hot to NOT...

You have to be careful when using these ratios to characterize a market with different types of housing stock. Trying to draw conclusions when looking at overall stats can be misleading. You really need to look at specific segments of the market like single family homes (SFH), condos or townhouses.

Here are the detailed stats for all three of these segments for March 2010.

Click here for detailed breakdown

You can clearly see that the condo market is balanced but the townhouse and SFH categories are still a sellers market that may become balanced as more listings pile on.

NOTE: Readers will note that all three segments shown add up to 2196 listings. The other 1600 currently on the market are waterfront and acreage homes, duplexes, lots, manufactured homes, lease properties, commercial land etc.

Double-Agent said...

The March stats for residential single family homes (waterfront and acreage) is a buyers market right now. Here are the stats.

Units listed - 181
Units sold - 46
Active listings - 532
Sales/New listing ratio - 25%
Sales/Active listings ratio - 8.6%
Months of Inventory - 11.6

BTW - Most markets see the initial price increases in this type of high end property. After a market peaks these are the first to drop in price. Anyone buying one of these now can be quite aggressive. Prices start falling at the top end and over months cascade down to entry level homes.

Mr.4AM said...

Those of you holding gold paper certificates from ScotiaBank might want to think twice about trading those worthless papers in for physical gold... REAL SOON... before it's too late.

Mr.4AM said...

More details in an MP3 interview here.

Animal Spirit said...

People have been asking of changes in Victoria inventory and sales. I don't have sales stats, but here is a graphic of the changes in SFH listings from March 1 to April 7, with 2009 added in for perspective.

Listings have increased 34% in just over a month, with the greatest increase in the 450-500K bracket. Compared to 2009, total listings at the lower price range are lower, while from 600 to 900K there are actually more listings.

Have listings that would have been 500K increased by 100K in a year or has the low end inventory listings been moving immediately without too much price increase (or both?)

a simple man said...

cbc top story:

http://www.cbc.ca/money/story/2010/04/08/real-estate-royal-lepage.html

Skeptic said...

Americans learned what a housing bubble is the hard way. They are trying to warn us. Will anyone listen?

Canadian Housing Boom-Boom Around The Corner

Skeptic said...

It is tough to be a real estate agent these days. Was lurking on the KIV site and saw this post by an unhappy real estate agent.

All that work for nothing!

No one likes paying taxes but if you paid 30% on income taxes, after deducting expenses, your net income is well over 100K a year. Seems like a pretty good income to me for selling houses.

Better dig out the crying towel. In a few months all those mortgage rules and high interest rates will push sales over a cliff. Agents will see commissions drop like a stone.

JustWaiting said...

Here is a another news release on that LePage article Simple Man posted.

Different cities, different housing market trends

The housing market is overheated in Vancouver, Victoria and Toronto, according to a new house price survey by Royal LePage, while other cities have seen more modest and sustainable growth.

Robert Reynolds - GBA said...

Re: the Realtor on KIV

As someone who earns commissions, I know first hand that you have to pay the taxman upfront. Spending all your commissions only to file your taxes and get whacked with a big tax bill is ridiculously stupid.

I didn't see where she stated her income but lets assume $100,000 Gross.

30% went to business expenses, 30% to living and 33% to taxes? YOUR DOING IT WRONG.

Business expenses are deductible, so if she had $30,000 in expenses, her taxable income is going to be $70,000. Which is a tax bill of $14,974 her top marginal tax bracket is 29.7% with an average tax bracket of 21.39% of taxable income, or only 15% of her Gross pay. Nowhere near her claimed average of 33%.

Her NET after tax, after expenses income would be a hair over $55,000

Assuming her living expenses are 30% of her Gross, that still leaves $25,000 left over not $2000.

http://xkcd.com/386/

*Disclosure: I am NOT an accountant.

mln said...

The numbers sort of make sense if you assume an income of $500K. :)

Robert Reynolds - GBA said...

@MLN

Then what is she complaining about?!?!?

Robert Reynolds - GBA said...

$500,000 gross
30% or $150,000 expenses
$350,000 net income after expenses
$134,000 in taxes
$216,000 net after tax after expenses income

Taxes still only eat 26.8% of gross revenue. And 200 large in the bank. which is hardly her stated lifestyle 30% went to just living (I don't live a big life at all)

That is a tax problem I WISH I had

mln said...

Haha, me too. The numbers don't make sense--either she's drastically overpaying on taxes somehow or she's embellishing a little bit.

Robert Reynolds - GBA said...

I bet she doesn't understand the concept of Marginal Tax Brackets. and Tax Destructible business expenses.

She is probably doing something like this

I made 100 Grand, I paid 30K in expenses, and I'm in a 33% tax bracket (assumes 33% FLAT) so I only have $37,000 left, less $5000 in GST I shouldn't have been counting as income anyways, I spent $30,000 on living expenses so I have $2000 left.

I really hope she doesn't ever use the line "Real Estate is a great investment" or "You can't afford NOT to buy" with her clients.

Skeptic said...

Robert,

If someone grosses 150K and pays 1/3 to overhead they are left with 100K of net income. The taxes will be 25.8K and the CPP will be 4200 (self-employed pay double). So they are paying about 30K in "taxes" on 100K. This is 20% of gross income or 30% of net income.

Still leaves 70K after tax which many people in town would be very happy to see as their income.

I was self-employed for many years and always put away 30% for the tax man. Several of my consultant friends did not do this and were in for a big shock at tax time. Some had to go on instalments with CRA which is not fun.

Reid said...

Anyone who knows about taxes and can live below their income level will simply roll this income into CCPC and the income is taxed at only 13% (up to $500k). You do not have to pay the 10% CPP on the self employed income. What money you do need to live on can be paid out as a dividend to yourself and you pay about 3% on the first $37,000 of dividend income. You leave the rest of the money in your CCPC and invest it. It is the greatest tax program available in North America and yet most people do not even understand it.

Ever since we paid our house off, we live way below our income level and therefore I leave all the business income we earn in the CCPC as it is such a no brainer. But if you have a $600k mortgage and/or live a fancy lifestyle then you need every cent you earn to live and this tax shelter is meaningless. Now you can start to see why the financially literate so often retire rich.

Robert Reynolds - GBA said...

Tax sheltering of Retained earnings inside a company is a sweet deal. Getting it out can suck though.

mln said...

Another great benefit of a CCPC is the ability to (legally) income split.

patriotz said...

The housing market is overheated in Vancouver, Victoria and Toronto, according to a new house price survey by Royal LePage, while other cities have seen more modest and sustainable growth.

Calgary is in fact slightly more expensive than Toronto, but I guess they don't consider it overheated because it's running out of land. It's also about 10% down from its peak in 2007, which is a funny definition of "sustainable growth".

:-)

Major Cities Chart

Reid said...

"Tax sheltering of Retained earnings inside a company is a sweet deal. Getting it out can suck though."

Robert, it is a retirement savings plan. You pay it out once you quit working and split the income with your spouse. My plan is to retire early and pay about $40k to my spouse and I each year on which the effective tax rate is under 6%, so we have over $75k in after tax income to live on beore we hit 65 and start collecting our pensions, CPP, RRSP income, etc.

As I said earlier, it is a total no brianer as long as you can live below your means and do not need the extra money now. If you need the money out, now then it is painful, but then that person does not get it.

mcnamara_matt said...

Reid,

Have you considered the impact of this strategy on you life time captial gains execemption for CCPC's. 1.5 million tax free is nothing to ignore.

Deanna said...

Long time lurker, first time poster.

I just wanted to share this:
http://www.mls.ca/propertyDetails.aspx?propertyId=8969095

Unbuilt house by Rithet's blog originally up for sale for $999,000. It's been on the market for 105 days. Price came down today to $541,500 - a price reduction of over $450,000.

And someone snatched it up immediately. Sale shows as pending right now. I had thought they had dropped it so far to try to trigger a bidding war, but no - they accepted an offering at the new asking price. I guess there might be a developer/builder in trouble?

Robert Reynolds - GBA said...

Income splitting out of a CCPC is great, and if you trickle money out in retirement then your taxes aren't too bad either.

I know some strategies to get more money out as well. Individual Pension Plans can pull huge (think millions) out of a company in the event that you need to purify the corp for sale. Lots of rules and regs though.

another very good strategy is split dollar Life insurance and split dollar critical illness insurance.

Corporate Insured Retirement Strategies are also freaking fantastic, if you are up for that sort of thing. my blog post on Corp. Insured Retirement Strategy"

The personal capital gains exemption is $750,000 now which comes in handy if you sell the business.

The Capital Dividend Account (CDA) can also be a goldmine for tax free money, but someone usually has to die to get at it :(

One last thing with CCPC's if you build up more than $400,000 of retained earnings you start paying a passive income tax of about 50% on any investment income. Stick the investments in a life insurance policy and they are no longer taxed at the passive rate.

I love this stuff!

/nerdout

Robert Reynolds - GBA said...
This comment has been removed by the author.
Reid said...

Robert, I am quite familar with IPP's and have looked at them, but find the acturial requirements and regulations are too much for the extra value provided. I have read about CIRS in the past but I am not as familar with these. It may be worth considering this concept as the R/E grow closer to that level.

The thing that I find important here is that our tax system is highly benefical to self employed people. Many bears I know are not comfortable with self employment, but it is the bear mentality (they save) that is required to really take lever these tools.

Like you, I love this stuff, but it has taken many years to get to a point where I can really exploit it (i.e. it is really hard to pay off a mortgage - something young people will be learning soon).

PainInThe said...

Deanna, that house is being built by Ernie Yakimovich, who built ALL of Broadmead since the late 1960's. Had that plot of land for sale for years with no takers.

Not surprised that it got snapped up that quickly, even though it's probably not a Mike Nixon plan and will end up being the usual quasi-Victorian monstrosity. I highly doubt EY Properties is in any sort of trouble.

omc said...

Sorry to let the wind out of the sails about that broadmead place but from my PCS: Price reflects cost of building contract. Lot was purchased separately. No deal here.

PainInThe said...

Oh, so they finally sold the lot by itself?

Thanks for the heads-up. Makes sense.

Now they can build their own quasi-1890 Victorian monstrosity.

Don't forget the off-gassing pressboard crown mouldings! Or the 20-year lifespan double-paned windows from the home center...

Muriel said...

This story in the TC:

Vacancy signs appear in Victoria

The sources quoted (property rental companies) say that even though they have high vacancies, rents will be going up, due to the extra costs of the HST that landlords will have to pass on....something's not quite connecting there.

JustWaiting said...

Breaking news! It's off, it's on, it's off again. Pam can't make up her mind...

Pamela Anderson's west coast condo project stalls

Despite Pamela Anderson saying last summer that she was fast-tracking plans for her $50-million waterfront development in Ladysmith, her partner in the project says there has been little progress on their ambitious plan.

"I don't know exactly where she's at with it right now," said Victoria's Geoff Courtnall, a former NHL player who is working with the Hollywood starlet on the development.


Maybe Geoff should call up that famous real estate hockey player and real estate developer Len Barrie and partner up with him.

Skeptic said...

Marko,

Really enjoying your posts over on KIV..

Have you used a 1% realtor? How was it?


I notice that not one of the realtors has posted anything in response. One of them that posts regularly used to work for 1% but is silent. They are probably not happy to have the facts about their ridiculous commissions exposed. I particularly like your statement that it takes 2 weeks of study to become a qualified, professional realtor.

JustWaiting said...

Muriel,

Those rental companies don't get it. They have more vacancies and less demand and they think they can raise rents? If they ask for an unreasonable rent prospective tenants will just look elsewhere and the unit will sit vacant.

Existing tenants can only have their rent increased annually by 3.2%

I prefer to rent privately. The detailed application form that these "professional" rental companies ask you to fill out is a gross violation of privacy and a real risk for identity theft. Most ask you for SIN, drivers license #, address history, bank account #'s etc. Who knows how they safeguard that info at their office and what background checks they do on their employees.

Deanna said...

Ah, thank you for explaining that. We couldn't figure out what was going on.

Marko said...

Yea...

Like my neighbour always says,

"Marko, Canada is a big country; there are plenty of suckers..."

I am just trying to educate the public on how ridiculous real estate commissions are...and I am not exaggerating one bit when I say the course took me two weeks, mind you I have some life experience behind me.

A high school grad it would take at least 4 weeks!!

Leo S said...

@Justwaiting

"Most ask you for SIN, drivers license #, address history, bank account #'s etc."

They cannot legally require this information. We are just in the process of moving, and the application form asked for SIN. We just refused to provide it, they didn't care.

Vic said...

Pammy's too busy getting hammered to worry about building some waterfront green condo. No wonder Geoff can't get a hold of her since last June,lol.


http://entertainment.msn.co.nz/blog.aspx?blogentryid=613581&showcomments=true

Vic said...

Hey Marko,

How come you are only 24 years old as you say on KIV ? You stated on here that you have been building homes here since the early 90's but that would make you about 5 years old. So whose posting here under your ID name ? You and the old man ?


Talk about some smelly BS on this board. Who would want to buy a home from someone who uses different people to post here under one ID ? Shady !



"My name is Marko, local Victorian, I am 24, together with my father we began Juras Construction in 2007."

Marko said...

Hey Vic,

I did make a few postings from the perspective of my old man in the past on this form.

However, I am 24, and I have talked to and met several HHV members in person, and they can vouch for myself and Juras Construction.

You can also get all my contact information on www.jurasconstruction.com, and I can show you any of our projects in person.

Thanks, Marko

Marko said...

I'll be honest, when I started blogging (both on HHV) and other sites I made up a lot of scenarios....I am married...I am not married...I am rich...I own multiple properties....I rent etc....the object was to icilit opinions and people’s views which I find extremely valuable in assessing the complete real estate picture.

However, since then a number of people have contacted directly, and a house we are building right now is for customer that contacted me through a blog.

Therefore, I have the realized the potentially of blogging using my real identity, especially now that I will be launching a 70% cash back realtor scheme this summer.

Thanks, Marko

Vic said...

In other words you're full of shit. Just the type of person I don't ever want to do business with... but you do help keep the shady reputation/image of realtors intact. What a fruad.

Vic said...

Hey HHV,

I assume you were aware of this fraudulent poster's activities ? Since there seemed to be this "protect Marko, he's a builder with decades of experience to offer the board ", I would think you would be in the know ?

The board's credibility is at stake here. Maybe this is why Roger left ?

Rhino said...

Marco, I always thought your opinion that housing prices will not go down were coming from a grizzled old industry veteran....24, you have been living your whole adult life in bubble land dude!

Geez, if you can't trust anonymous blog commentators, who can you trust!

think said...

Oh this market is tanking, tanking, tanking, I can't keep up with all the new listings - I haven't seen inventory come on this hard and fast since spring 2008. And sales are totally starting to sloooooow. I'm sure you'll have no problem getting listings this summer Marko, but doubt you'll be getting many sales as the market is going to be dead by then. If this continues for the next few weeks it's going to be really hard to spin Aprils stats. Can't wait for Monday's numbers but pretty sure I know what they'll look like. The crash is just around the corner now...

Vic said...

"Geez, if you can't trust anonymous blog commentators, who can you trust!"


Especially the ones representing million dollar house builders and touting such indepth market knowledge. No wonder he could never answer a straight forward question. I called this a long time back that he smelt to high heaven.


Can't wait to see all the beer buddies flock to this kid's defence. What a joke, borrowed off daddy's back.

JustWaiting said...

Leo said,

"They cannot legally require this information."

It is perfectly legal in BC for landlords to ask a tenant applicant for SIN, drivers license, bank accounts etc. Landlords can also request a full credit check and get a detailed report from Equifax. It is up to the applicant to decide if they will give up the info and agree to the credit check. Most people give in if they want to rent the place.

Here is why I know this is true. I got so cheesed off when I saw these forms I called the Privacy Commissioners office and asked about the legality of requesting this info. They said send over the forms and we will take a look at them. They did and said that this info could be collected but had to be stored and handled according to BC privacy legislation (PIPA). I said these is a big violation of privacy and they said that if I wanted them to investigate I had to make a formal complaint and they would investigate and make a ruling. The process takes years (Barwatch ID program is an example). I gave up at that point.

Skeptic said...

Leading economist predicts Canadian interest rates are going to rise fast.

Scotiabank sees rates at 3% by end of 2011

The Bank of Canada is set to embark on a series of interest rate hikes, starting in June, that will see its benchmark rate climb from its historic low of 0.25% to 3% in little over a year, Bank of Nova Scotia’s chief economist said Friday in his latest outlook.

Warren Jestin said the move away from short-term “emergency level” rates is necessary due to inflationary pressure that is expected to emerge from stronger-than-expected growth. By the end of next year, the central bank’s target rate should be 50 basis points higher than the comparable rate set by the powerful U.S. Federal Reserve, he said in his latest update to Scotiabank’s economic forecast.

The increase of 275 basis points, to 3% by the end of the third quarter of 2011, is bigger than what Mr. Jestin had previously anticipated. His earlier forecast had the central bank target rate climbing by a cumulative 200 points.

Mr.4AM said...

Competition Chief Ends Talks with CREA

Go Melanie... "Canada's Competition Commissioner is through negotiating with the country's real estate agents, saying the only way the industry will change its allegedly anti-competitive behaviour is if it is forced to do so by a regulator.

In a 15-page filing to the Competition Tribunal, Melanie Aitken argues that the Canadian Real Estate Association has a long history of shutting out would-be competitors and can't be trusted to voluntarily open itself up to competition."

Double-Agent said...

Mr. 4 AM & Marko,

Looks like some BC realtors have jumped the gun! New barebones listing service now available.

One Flat Fee is open for business

One Flat Fee, a ground-breaking website aiming to provide realtor services to homeowners at heavily discounted prices, in light of the recent Multiple Listing Service (MLS) changes by the Canadian Real Estate industry, has announced that it is open for business.

Sellers in British Columbia can list their property on the Canadian Real Estate Association’s (CREA) widely used Multiple Listing Service (MLS) through OneFlatFee.ca and have the potential buyers forwarded to them for as little as $ 649 per listing.


Flat Fee Website

Mr.4AM said...

Nice find DoubleAgent!

But I have a feeling $649/MLS listing won't be the lowest price for too long. There's still a horrendous profit margin in that new 'low low' price.

Still, great start... if you think the listings are piling up fast now, wait until people find out they put their houses up on MLS themselves for a few hundred bucks.

Mr.4AM

Mr.4AM said...

Interesting post over at NakedCapitalism on how in the US, 4 years into the bubble pop rental vacancies are going up as home ownership is going down.

Makes one wonder, where are all the people that have lost their houses living? Apparently they aren't renting. Is that Vic/Van 3 or 4 years from now? If so, that means rents should either remain mostly flat or slowly decrease starting right about now.

Mr.4AM

Vic said...

I'm shocked at the lack of reaction to a fraudulent "Marko" poster on here who is still wet behind the ears telling us all how he knows houses more than any of us.

I guess the bear beer buddies are too chickenshit to admit that they knew his fraud posting game which only lessens the credibility of this board.

HHV's lack of response is even more disturbing and speaks volumes for his lack of character and his rants about honest media/real estate/VREB/government etc etc, ad nauseausm.

How can one blog/rant when one covers up misleading and misrepresentation of a private company that openly advertised for millions of dollars of business and now announces his hair brained "scheme" ?

Looks like the bears here have no morals or ethics to associtate with this fraud and cover it up to the rest of us here. I think I will make like Roger and find somewhere else to do my posting as this blog has lost all credibility.

msr said...

@Mr. 4AM

They're densifying. Getting roommates or moving back in with family. I wonder to what extent Victoria can increase its density given all the suites around?

Bubble 'n Fizz(le) said...

I think I will make like Roger and find somewhere else to do my posting as this blog has lost all credibility.

Don't let the door hit you on your way out.

a simple man said...

I think the value of blogs is that you get many different opinions from many different people. You take all that you learn, apply it to your own experiences and knowledge and use it to develop new ideas, or reinforce old.

One person's comments on a blog, or anywhere really, should not be seen as omnipotent - all of us are subject to bias, either knowingly or unknowingly. And we all make mistakes.

Marko made a mistake in judgement - it happens, and he admitted to it. His comments now will be justifiably be scrutinized from this day forth.

And HHV said that he was very busy with work for the next while, so I doubt he knows about all this.

Let's just all get back to the blog topic - and Marko, straight up from now on, OK?

disclaimer - I have never knowingly met anyone from this blog and my career has nothing remotely to do with real estate

respectfully, a simple man

beagle said...

I'm not really a beagle.

Skeptic said...

Lets get back to our regular programming..

Financial Post reports Subprime prime alive here

It ends up that despite its squeaky-clean financial image, Canada does indeed have its own subprime-mortgage mess.

Industry insiders say that over the next few years the Marentettes' story will play out over and over again across Canada, as an estimated 30,000 so-called "orphan mortgages" reach maturity. Unless the government takes action, this may trigger a flood of foreclosures.

In the wake of the financial crisis, the business of subprime loans has dried up. Prior to 2007, there were at least a dozen subprime lenders in Canada and it was the fastest-growing sector of the entire mortgage market, says Benjamin Tal, senior economist at CIBC World Markets, who pegged it at about 5% of the total market.

But most of those lenders, including players such as Xceed Mortgage Corp., GMAC Residential Lending and Wells Fargo, have either changed their business or closed up shop.

Just Janice said...

I think Marko has damaged his reputation here, and the problem with that is that it can take a long time for that reputation to be rebuilt if ever. I think the lack of response has more to do with people giving the situation the 'cold shoulder' and not feeding into it - Marko, like many 24 year olds, just hasn't developed a sense of judgement as of yet. He even made it incredibly easy to uncover that he isn't who he says he is - didn't even both to change names with a change of scenario...Hopefully he'll grow out of such foolishness soon. I imagine he'll have to learn many lessons the hard way though.

We live in interesting times. I am practically salivating at the thought of higher interest rates. Further, the lack of general understanding of markets and economics will make many people vulnerable...

We are still quite happy in our rental (although we do need a landscaper to come and do a clean up, and as tenants we are willing to 'pitch in' with the cost of that). We are also looking forward to the addition of a daughter to our family in July and so far we have been able to stave off any insane urges to run out and buy a house for the sake of the baby. I guess we've found the substitute of renting a house to be more than sufficient to meet the needs of our family.

Mr.4AM said...

Vic, take it easy man. You've made some valid points, and yes Marko isn't who he claimed to be, and he was young and foolish and went as far as to associate his alias to whom he is in real life; so now his internet deception is tied to his real life name, and for me that's punishment enough. Anybody considering doing business with him may google his name or company name and eventually find this blog and wonder if everything else he said to them is true.

I don't want to speak for others, but my lack of response is because I've been around the Internet for so long that I've seen enough misrepresentation to last a life time, and so perhaps I'm just numbed. But the other side of the coin is that this is also one of the benefits of the Internet - to be able to be whom you can't be in real life and try something new and see how other people react - basically what Marko did. This also helps a person learn and mature in a way that just isn't possible in real life. You can't just go mingle in an expert club in real life and have them listen to your point of view, because most won't even let you in the front door. As the saying goes, the Internet is the great equalizer, but it also doesn't play by the same rules as real life, and if that's what you're expecting, then you're guaranteed to be disapointed. I assure you, this will not be the first 'Marko' you meet online :)

Lastly, while Marko was misrepresenting his identity (pretending to talk from his father's point of view/experience), doesn't necessarily mean that what he said was all lies. I don't think his INTENT was to lie about the CONTENT of the information he conveyed, and that's also important to recognize. Don't throw out the baby w/ the bath water.

Cheers,
Mr.4AM

Vic said...

Sorry Mr. 4 AM, a fraud is a fraud. He misrepresented his fathers business to the Victoria business community in order further his own immature needs. He's talking like a real estate agent pro and he hasn't even written the test yet.


Anonymous posting is anonymous posting, you nor I are not selling anything to anyone nor saying "this is me and this is my business, my words are facts in the house building biz". We don't take anything serious as anonymous posters.

Misrepresentation of a company even on a blog will have long term effects for Juras Construction. Who knows what this kid says is true from here on in ? He says he has a Masters of Health Admin from UBC on KIV ? Does he ? He says he's done million dollar deals, has he ? I say he's full of shit and destroyed this blogs and his father's business credibility imitating someone else. He's 24 not 14, that is a huge difference here, so lets get off the "he is young in his ways" bit.


Hey Bubbles, you must be Marko with a dress on I assume, as you are always so quick to defend the lunatic fringe. Don't let the door hit your head on the swing back idiot ! Defend the fraudulent, what a farce !


If HHV had an ounce of credibility he would ban him from this site but I don't see him having the cajones.

kabloona said...

Okay, I confess....that's not my real picture.

;-)


By the way, I agree that "Marko" has crossed the line but I always take his posts with a grain of salt anyway. We're all just posting opinions here, unless we back those opinions up with solid facts.

I didn't respond to "Vic" because there's no real point.....nobody on here has to "defend" anybody else's crazy opinions....I didn't even think "Marko" was that bearish, to be honest.

Welcome to the interweb...

Vic said...

kabloona,

It's called "businsess ethics", the kid should have taken a course at UBC if he is such a brain child as he spews on KIV.


This is about promoting your "business" in an ethical way, not just some random blog opinion. He posted perceptions that he was a highly experienced builder with inside scoop on what the real facts are in the market when in reality he knows jack.

If Robert Reynold's 12 year old posted a bunch of tax/insurance info that incited someone to call him for an appointment then when he is asked about the tax idea the kid posted and Robert has to say, "oh that was my kid saying that not me", would you not want to get up and walk ? I think most would, and only an idiot would write it off.

When you're in business, blog/online comments change bigtime,and to slough them off as " I didn't take them serious", is sticking your head in the sand. It is not about bull nor bear,it is about business character and credibility and there is none in this case. End of story.

Sayanora.

Robert Reynolds - GBA said...

Cool Vic thinks I'm credible!

I'm 25 by the way ;) no kids yet either.

kabloona said...

Oh yeah? Well, I'm a UBC graduate!!

Seriously! :-)

Marko said...

"Marco, I always thought your opinion that housing prices will not go down were coming from a grizzled old industry veteran....24, you have been living your whole adult life in bubble land dude!"

This is the exact reason I never disclosed my true identity.

It is hard to garner respect for someone who has just turned 24, I can understand, most of my 2004 classmates from Vic High are still working dead end jobs trying to figure out what to do with their life.

Fact of the situation is I am heavily involved in real estate and construction. My father is an old school guy from Croatia; therefore, while he does the onsite construction, I do all the real estate transactions including buy property, selling, negotiations, writing contracts, open houses, ordering material, etc.

Yes, I also have had a position at VIHA since I was 21 and I will be finishing my Masters of Health Admin from UBC next year.

I've done everything from mixing mortar and carrying rocks for my father when he use to be a stone mason to selling 1 million+ homes privately to working at a public institution.

Through my Masters program I've taken courses corporate finance, account, statistics, economics etc....I understand the theory behind real estate....but in my opinion real estate is more about intuition than calculating the net present value of one of our projects.

I will continue to intend to post my opinion on here, and when I receive my real estate license shortly I intend to provide any information board members may request.

Thanks, Marko

Animal Spirit said...

I say all the world to Marko. While it may be true (as Just Janice noted) that what he did lacked some judgement, from my understanding of successful business people, Marko likely will have more than enough to do well. Yes, the misrepresentation would cause me to cross-check details, but shouldn't that occur with any transaction.

Consider the following characteristics that Marko exhibits:
1 - spunk: getting a lot done by 24
2 - multiple interests: the Master's, construction, real estate
3 - willingness to learn: trying out ideas to strangers, testing things, allowing his thoughts to develop
4 - admitting when he has made a mistake
5 - being realistic about situations: not being overly emotional to 'buy' or 'sell'
6 - not locking into a thought pattern: i.e. he doesn't have to have a X% drop in prices to be happy
7 - using both intuition and numbers: the intution will make the $, the numbers will keep it honest.

Marko will likely do extremely well over time.

Vic - suggest taking a good look at what you are saying and why - comes across in an interesting way.

Marko said...

I guess I should disclose my full background before making any more contributions to the blog:

- Currently all of our projects at Juras Construction are sold.

- I am writing my real estate license exam soon, I plan to work as a full service discount commission agent. Since I will only be available part time I am forming a team with another 24 year old UVIC grad who has the same vision (realistic listing commissions, 70% cash back to buyers, lots of volume).

- I personally bought a small pre-sale 533 sq/ft condo (195k) at the834.com last year.

- The rest of my assets are all equities I bought last year: banks, utilities, Suncor and Rogers.

- I am heavily heavily invest in a company based out of Vancouver called Coastal Contacts, so if you hear me raving about how great and cheap their prescription eye glasses are, take it with a grain of salt.

There, now any comments I make about real estate you know what my disclosure is...

Marko

Just Jack said...

Lesson learned. Can you go back to talking about the real estate market?

Also, aren't we all in a way lying by omission on here. Robert Reynolds and now Marko have come out and said who they are IRL.

If we are so quick to judge then shouldn't the rest of us come out also?

S2

Leo S said...

Ok the gig's up. I'm really twelve years old. I'm saving my allowance for a house!

It is hilarious to see someone get upset about lies on the internet. Ahh the innocence.

I would suspect most here are fairly young. Grizzled old vets have no excuse for not having bought into the market 10 years ago, so why would they hang out here?

Just Jack said...

Marko said " I personally bought a small pre-sale 533 sq/ft condo (195k) at the834.com last year."

Now this I'm interested in. Can I ask Marko what are your intentions with this condo?

Thanks :-)

S2

Marko said...

Okay back to real estate..

www.oneflatfee.ca

I really like this! However, there are a few small issues...

"If a private buyer contacts you and you sell the property directly then you have only paid $649 plus GST. If you are contacted by a buyer’s realtor then you will pay the realtor a pre-determined commission."

Let me guess, the pre-determined commission is 3% + 1.5%. Since 95% of buyers who buy off MLS use a buying agent it is going to be rare for someone to contact the seller directly.

You are still looking at $11,000 in commissions on a $500,000 home.

Conclusion: Still too much.

Just Jack said...

Leo S. said "Grizzled old vets have no excuse for not having bought into the market 10 years ago, so why would they hang out here?"

We're grizzled (and jaded) and we are hanging out here.

I'm SHOCKED and heartbroken that beagle is not really a beagle.

I really am Just Jack's better half but I'm not S2...pid (a nickname I picked up on KIV a while ago :-)).

S2

Marko said...

"Now this I'm interested in. Can I ask Marko what are your intentions with this condo?

Thanks :-)"

It is a hedge. If the market stays stable, in my opinion this condo will be worth $220,000 to $230,000 once completed (Fall 2011). I will sell it or rent it out.

Since my peak earning and savings power will start summer 2011 (masters completed, I can work more, no dependence, essentially no personal expenses), I will be able to buy another property if the market goes down (i.e. my condo is worth 180k). At that point I rent out the condo, and based on my savings and a mortgage rates around 6 to 7% I will be able to purchase another 350-450k property.

It would benefit me more in the long run if home values went down; however, if I was 100% sure this would occur I wouldn't have bought the condo as a hedge.

Marko said...

Also purely from limited experience..

If in the market for a pre-sale condo, try to buy pre-sale condos that are listed on MLS....

For example,

You go the the developer's sales office and a condo is offered at $200,000; however, it is also on MLS listed at $200,000. In my opinion the best thing to do here to to hire a real estate agent for $300 to $500 to write the offer for you versus making an offer through the sales office directly. Your buying agent's commission is $4,500 - $500 for your realtor= $4,000 back to you.

Developers tend to look at the gross sales proceeds of a unit; therefore, I think they are just as likely to accept a $198,000 offer directly versus $198,000 through an agent.

Just a thought.

Vic said...

Wow, wonderboy in our presence, I guess ethics are now out the window in the new age of promoting your business online. Many of you think impersonation is a cool way of enticing new clients ? ...amazing. No wonder our youth today are so effed up.


As he said "suckers are everywhere in this country" and I am sure a few more of you here will soon be his next sheep falling for his bullshit.


animal, you need to take off the rose colored glasses dude. If wonderboy was for real, this would be the last place he would be wasting his time. Wake up man.

Animal Spirit said...

changing topics.

883 SFH listings on MLS now. Up 41% since the beginning of March and 10% (80 listings) April 5 to 10.

Also saw a ton of people looking at open houses today. Could be last call before the bar closes.

c said...

vic--didn't you already say goodbye?

think said...

Marko said "It is a hedge. If the market stays stable, in my opinion this condo will be worth $220,000 to $230,000 once completed (Fall 2011)". Giggle...

um, ah, news flash, market ISN'T stable NOW so kinda hard for it to "stay stable"...

All the evidence points toward prices dropping... increase rental vacancies, ice cold upper end of the market already, increased mortgage rates, tightening mortgage rules, exhausting pool of first time buyers, reaching a price affordability ceiling, no hope in hell of wage increases, job insecurities, no more "pent up demand" left, now "pent up sellers" as evident by tremendous increases in inventory over past few months, etc.......

To be fair I should list the evidence towards possible prices increasing.....um.....insanity is about it.

Rhino said...

I have to agree with Vic and call bullshit. Lets look at the claims:
- He just turned 24
- He has completed an undergraduate degree, and has completed quite a number of masters courses. This would imply he has been going to university full time continuously, and started immediately after he graduated high school. tuition is expensive...
-VIHA gave a 21 year old kid, with no degree or health care experience, a part time job. You would assume this is an entry level/co-op position.

Looking at these three facts you would assume the person would be very very lucky to have no student loan debt. But now he apparently has
- A large and diverse stock portfolio.
- A condo pre-sale which you would assume would require at least 10K down (probably more)
- a LARGE investment position in a private vancouver contact lens company.

Where did all that money come from? Well on top of full-time studies and a part time job, he pitched in with the family business. Which would lead me to conclude one of the following is true:
1) His father grossly over-compensated him.
2) His father just gave him a lot of money
3) Its all bullshit.

But anyway I digress..

Marko said...

I graduated from Vic High in 2004; subsequently I went to Thompson Rivers University and obtained a Diploma in Respiratory Therapy. I was hired at VIHA in April 2007. I took two years off school and worked full time which were about three shifts per week at VIHA (35 hours). Another three days a week I worked with my father in our construction business.

I did a few correspondence classes in 2008 and obtained my B.H.Sc. by 2009, wrote my GMAT, and was accepted into the M.H.A program at UBC and started September 2009.

I am not going to disclose my full income, but I've been making over $50,000/year just from working part-time casual at VIHA. I live in a 10' x 9' room at my father's place (who needs more, I am either working, studying, at the gym, or blogging). If I make 5k to 6k a month net, I bank approximately 90%.

Pre-sale condo: $9,750 down.

Portfolio: I invested heavily on margin last year. At one point I bought TD bank at $40/share, it dropped down to $34/share and I was issued a margin call which I covered with my credit card. So, I took a risk knowing I could lose all my money, but it paid off. Subsequently, I have a 6 figure portfolio. I must admit, buying 1000 shares of Lululemon at $6 and selling out at $33 was pure luck thought.

Coastal Contacts is actually traded on the TSX, I have 35,000 shares. That might be nothing to some people, for me it is a lot of money. I consider this a huge investment and a huge risk, but at 24 without kids I am willing to take it, and I believe in the company.

My parents paid for my first year of school (2005), since then I have paid my own tuition.

Any other questions?

Marko said...

Let’s put it this way, there is always an argument between me and my girlfriend: I want to watch BNN; she wants to watch The Office.

Skeptic said...

Marko's stock market stories about making big money remind me of the tales Vic told a few months ago.

Is Marko really Vic's sockpuppet? or vice versa.
Who knows - this is the Internet.

Full disclosure: My real name is Bruno. I am a plumber and live in a trailer in Langford. It's a small place but I have high speed Internet, TV and a beer fridge. All I need for now. Saving to buy a home in Sooke.

JustWaiting said...

I can see why Vic is upset with Marko. When someone tries to have a reasonable discussion and gets personal experience rebuttals that turn out to be BS it is not surprising that they get bitter about it. Here is a link to their one of their debates last year.

Oct. 1 Lively Discussion on HHV

Marko tells quite a tale in that thread. Making big money, wife that is a high paid nurse, young daughter. The story about living in a 636 sq. ft. condo for 8 years until they moved to a 2500 sq. ft. home was a whopper.

mln said...

Having re-read that Oct 1 thread, I can understand Vic's response.

Marko, maybe drop all the personal experience essays?

kabloona said...

JustWaiting, thanks for the October link....hilarious stuff!

I see why Vic is hot under the collar.....personally I assume most of what I read on the net is bullsh*t, but this is pretty amusing material.

His role model must be Leonardo DiCaprio in "Catch Me if You Can".....

;-)

BUSTED!!

By the way, I have a lot of friends who were in Grad School back East at York U, most of them were in their late twenties and broke...that's the *real* life of a student.

Sheesh....

PainInThe said...

"Makes one wonder, where are all the people that have lost their houses living? Apparently they aren't renting."

Tent cities in the parks. And in their cars. Where have you been?

"Is that Vic/Van 3 or 4 years from now?"

You can stake your life on it.

c said...

It would be nice to find the posts where Vic claimed to be making 400% returns on the market year over year. I think he was posting as VG at the time.

c said...

JustWaiting--great link to the past btw (fall 2009)--there I see a few people predicting huge labour unrest in spring 2010 as public service contracts get renewed...another prediction bites the dust?

Mark said...

April 10, 2010
Banks See A 2.75% Rate Hike In 19 Months

Businessman Consulting Glowing Crystal Ball Economists at the Big 5 banks worked overtime this week, polishing their rate forecasts and fielding calls from reporters.

It seemed every major media outlet in the country ran stories on where interest rates are headed.

Here’s what the “prophets’” predict rates will do by the end of next year (2011):

* BMO: +3.00% (Report – a rounded average)
* CIBC: +2.25% (Report)
* Scotia: +2.75% (Report)
* TD: +3.00% (Report)
* RBC: +3.25% (Report)

That’s an average estimated increase of 2.75% in the overnight rate (rounded to the nearest 1/4%). This number will certainly bring doubters out of the woodwork, as some still fear slow growth and/or a double-dip recession.

As for the first rate change, the banks forecast that rates will start their climb by July. Specifically:

* BMO: July 20
* CIBC: July 20
* Scotia: June 1 (Story)
* TD: July 20
* RBC: July 20 (“Although, markets are becoming
anxious about a June increase,” RBC says.)

We’ll get a better sense of the starting date when the BoC makes its next interest rate announcement in nine days.

The next question is: Once rates start rising, how fast will they run up?

According to BMO, “The Bank (of Canada) probably has a predilection to raise policy rates expeditiously.” The average economist polled by Bloomberg expects a one percentage point increase by the end of this year. In turn, that suggests a 175 bps hike in 2011…if the bank consensus is correct.

If prime rate jumps 2.75%, that could mean a 35% payment increase for certain floating-rate mortgage holders. (e.g., payments could jump $284 on a regular $200,000, 1.75% variable mortgage amortized over 25-years). This assumes the banks don’t “give back” the 1/4% they withheld when prime rate dropped 3/4 of a percentage point in December 2008.

As for fixed mortgage rates, the bond market will plot their destiny as usual. CIBC economist, Avery Shenfeld, suggests bond yields could run up more than some people expect—at least initially:

“Once the first hike is in place, the bond market is likely to become even more aggressive in its expectations for subsequent moves. The first hike could also prompt more Canadians to fix their variable rate mortgages, putting even more pressure on five-year yields. Still, hikes in 2011 won’t end up being as steep as what the bond market will, at some point, fear.”

The big banks predict the 5-year bond yield will hit 3.75% to 4.10% one year from now. Based on historical spreads, that would put typical discounted 5-year fixed mortgage rates at roughly 5.13% in 12 months—an 88 basis point increase from today.

____________________________________________________

Sidebar: As always, take any rate prediction with a dose of scepticism. Rate forecasters attempt to see through very muddy waters and the economy can change considerably between now and the end of this year.

Mr.4AM said...

Canadian Subprime in the news again.

Select Quotes:
"
Industry insiders say that over the next few years the Marentettes' story will play out over and over again across Canada, as an estimated 30,000 so-called "orphan mortgages" reach maturity. Unless the government takes action, this may trigger a flood of foreclosures.

The mortgage industry clearly has a problem on its hands.

"This thing is a wave and it's just starting," says Eric Putnam, formerly with a subprime lender, now managing director of Debt Coach Canada, a company that provides financial and bankruptcy advice to consumers.


But the industry is so concerned about the situation that it recently approached the federal government with a request for a bailout.

According to Mr. Putnam and others, it wants the federal government to participate in a $1-billion fund to help finance the coming flood of orphan mortgages."


Yet another nail in the coffin. I would really like to hope they wouldn't socialize the losses, but somehow I doubt that won't happen.

Mr.4AM

Leo S said...

So even though at one point both were working, and the guy is apparently a factory supervisor, so not minimum wage, they couldn't get a loan for 100k? And even now they can't get approved?

While over here we can approve hairdressers for 500k mortgages? What the heck is going on.

maniac78 said...

Trouble in bear land! I love it! Bears I know talking about a bubble makes you feel better and all but please don't be so upset when someone puts one over on you.

Just Jack said...

I'm really a blonde flight attendant.

maniac78. I'm guessing you're really not 78.

S2

patriotz said...

While over here we can approve hairdressers for 500k mortgages? What the heck is going on.

It would appear that the 100K couple can't qualify for CMHC insurance.

If the banks can get taxpayers to hold the bag they'll loan to anyone.

Just Janice said...

Anybody who hasn't unloaded or done serious damage their level of debt and put themselves into a position to amass savings in the last 18 months has done themselves a great disservice and have missed out on the opportunity of a lifetime to dig themselves out. Unfortunately, most do what they shouldn't, interest rates were low so they gobbled up the borrowed money and like turkeys will be fat for the coming rise in interest rates.

Now the exception to this would be those who could borrow low, and invest at a higher rate enabling themselves to eliminate their debts when interest rates rise to exceed their returns. Buying houses in the last year and a half is almost certain to prove to not to be such a wise investment choice. In part because of the amount of leverage involved, in part because of the illiquidity involved (a house unlike a stock or other instrument can't move fast), and in part because of the degree of overvaluation.

Everybody is about to get a economic history lesson in real time. Except the bears...it's almost time for the salmon run.

Vic said...

Hey "c",


Since you only crawl out of your hole to slag post once in a blue moon and offer nothing, I will assume you are a clone of Marko or some other troll. I will set the record straight for the last time on what I posted.

I said I had "one year" where I made 400% on my "high risk" investments in the 2007/08 time frame. I also said I did not make that through the crash where I gave back 40% of that. But I did say I am up 100% the past year(200% now) and am on target for a 400% year and possibly more by then end of 2010. I roll the dice but I do my homework, it's called calculated risk. What do you do ? Sit on your dick all day and count GIC's ?

Get it "C" ? or do you troll because you are another loser who has to post under multiple ID's ? I guess you suffer from lack of self esteem like Marko to twist people words or maybe you work for the TC as they are experts at it. I can make assumptions for what "C" stands for but I'm a gentleman most of the time.


Glad to see some here who see the light of what is truth within a community blog, but it is too bad there are a bunch of regulars who kept their mouths shut and let the Marko charade continue. I could imagine who they are and they lost credibility with many readers I am sure.

It may just be "the internet" but many here claim to be professionals in their fields and this taints them with the same brush if they helped this fraud to keep up his game of misleading people while pumping his business/website and his BS hardship tall tales of the struggling builder living on the edge that never added up.


BTW, I also accomplished alot before I was 24 too but I didn't need to scam people to make myself feel better. Marko is just a small man with no credibility or character no matter how many pieces of paper he brags he has. Those of you who are sucked in deserve what ever comes your way.


Last post "C", you useless POS.

CD said...

Month to Date:
Net Sales: 195
New Listings: 633
Active Listings: 3893

As Double Agent and Think were discussing earlier. Easter may have skewed the numbers.

*numbers are provided to me by a friend who has access to the Matrix or whatever its called.

think said...

I don't think this is a skewed picture because of Easter at all, this is the new reality.

Sales/new ratio 30.8%
Sales/Active listings 5%
MOI 4.9 and climbing
Note we have gone from3722 total listings to 3893 in less than a week. We now have more inventory than this time in 2008 and 2009. Heading into bear territory more and more. The trend continues and is getting more and more obvious! Sales are way down, only 195 month to date - thats crazy! If this continues we will have less sales this month than last month and way more inventory. Hmmmm, connect the dots on that one!

Double-Agent said...

The stats provided by CD are released by VREB to agents every Monday. The Easter weekend might have put a dent in this months activity but there is little doubt sales over the last few weeks have been sluggish. Here is a chart which puts things in context.

MLS - Weekly Activity

It looks like sales are stalling! The next chart shows the total sales and new listings over 4 week periods. A new calculation is made every week using the last 4 weeks of data.

Rolling 4 week MLS Stats

You can clearly see that sales have flatlined while new listings continue to pile on.What is the combined effect of the recent flat sales and surge in new listings.

MLS New & Active Listings

This last slide is for our Uber-Bear "Think". It shows the overall Sales/New Listings ratio has dropped considerably in the last two weeks.

Sales/New Listings Ratio

This coming week will be very telling. It is not a holiday week and weather is great for shopping. If we get another slow week we know where the rest of the spring sales season is heading.

Double-Agent said...

Follow on to last post....

The CREA, VREB, BCREA, Remax, LePage, banks and all the other organizations with a vested interest in pumping real estate have been predicting a big sales surge before the HST, new mortgage rules and rising interest rates fully kick in.

In the charts I posted earlier you can see a sales slowdown in Victoria in the last few weeks. What about other cities? I know a couple of agents who track their local markets and produce good stats. They are seeing a slowdown in sales and big increases in active listings as well.

Agent Will in Vancouver

Take a look at the surge in new listings last week. Overall sales are doing OK but the detached sales (houses) have slowed down and condos are picking up the slack.

Norm Fisher in Saskatoon

Quote: Following a comparatively strong performance in March, sales for the first full month of spring are lagging behind those recorded last April, which you may recall was nothing to write home about. Mind you, lots of month remains and the tide can certainly change but popular opinion had predicted strong sales leading up to the April 19 deadline when new mortgage rules take effect. That doesn’t seem to be happening.

While buyers may have taken a bit of a breather, sellers certainly didn’t. New listings reached their highest level for any week this year at one hundred and sixty-six homes, up on the previous week by twenty-four and ahead of the same week last year by seventeen.


Saskatoon has the best economy in Canada, house prices are much lower than Victoria and sales are slowing down!

Here is what I think has happened.

- The banks implemented the new qualification rules weeks ago. This means fewer buyers out there with big mortgage pre-approvals.

- The self employed qualification rules were effective April 9th and were probably in effect at most banks prior to this date.

- Non owner-occupied homes need 20% down to qualify for CMHC insurance. This drained the investor and speculator pool of buyers.

- Recent interest rate hikes caught many by surprise. Lenders put pre-approval applications at the back of the line and focused on re-financing.

- Warnings of increases in interest rates scared off some buyers. Some figured out that prices were going to fall as demand waned.

As I have said before. This looks like 2008 all over again and prices will continue the downward trend.

bullbear said...

As builder/developers are now discounting their mid/higher end SFH & condos to the tune of 6 figures (even downtown), this has and will keep the average/median sales prices 'seemingly' high for at least another month. We need a better Case-Shiller type index in this country, so that the remaining buyers could clearly see the decline they're buying into. BTW, thanks for your stats Double-Agent.

JustWaiting said...

Canadian Mortgage Trends has an interesting blog post.

Bonds & Fixed Rate Mortgages

CD said...

Thanks for the stats double agent. I agree, next week is a really big week for stats. We need nearly 800 sales to match 2009 and 2008. Even March 2010 sales were nearly 800! Inventory is already at 2009 and 2008 levels 11 days in.

Easter also fell in April of last year.

JustWaiting said...

CD,

Excellent comment about sales history.

This graphically illustrates your point.

MLS Sales History

Going to be hard for the TC and VREB to spin this in a few weeks.

Mr.4AM said...

Thanks for the great graphs Double Agent. This is in alignment to what I'm seeing on my PCS. Last week saw a barrage of new listings like I haven't seen in a long time.

JustWaiting said: "Going to be hard for the TC and VREB to spin this in a few weeks."

Haha, don't bet on it. Come on I can summarise it very easily: "This is a GREAT TIME TO BUY, buyers will have lots more inventory to choose from, so get out there and buy!buy!buy! In case you've forgotten, it's ALWAYS a good time to buy!"

*grin*

Mr.4AM

kabloona said...

Thanks for the great posts, Double-Agent.

Keep 'em coming....

Skeptic said...

This just got reported in the TC.

B.C. government laying off 294 employees in a third round of job cuts

The B.C. government is laying off 294 employees in a third round of job cuts, citing significant budget pressures.

The jobs are in the Ministry of Forests Integrated Land Management Bureau and the Ministry of Energy.

The government is meeting with affected staff today to discuss the process.


Skeptic said...

A few days ago I let you all know that my name is Bruno and I live in a trailer out in beautiful Langford.

Some of you might wonder what it is like living out here on the fringe of Victoria.

Well grab a coffee or a cold one, sit back and enjoy this song about my Hometown.

I Was Born A Langford Man - mp3 - click here

BTW - I am not related to Marko or Vic

Double-Agent said...

Some of you think that it is easy to be a real estate agent. Any successful agent needs to be able to determine the market value and buyer appeal of a property.

So here is your chance to see if you can rate real estate in Vancouver. Just click the link below to play.

"Crack Shack" or Mansion?

So how did you do?

Bob leftcoaster said...

Wow I didn't know that the CREA had an online exam!

I got a 9 which indicates that I shouldn't quit my day job.

Mr.4AM said...

Don't look now, but they just started talking about adding on yet another 'tax'.

mln said...

OT Post: What's everyone paying on unsecured lines of credit at the moment? I'm thinking I can do a lot better than prime +3.5% since the accounts been sitting empty for a couple years.

mln said...

http://www.financialpost.com/news-sectors/financials/story.html?id=2901557#ixzz0l054msoi

RBC just lifted rates 25 bps, on top of the 60 points a couple weeks ago.

JustWaiting said...

mln,

Good post. Globe and mail now carrying the story...

RBC hikes mortgage rates again

Royal Bank of Canada (RY-T59.50-0.07-0.12%) , the country's largest bank, has raised mortgage rates again.

The move, which will result in a 0.25 percentage point increase in the cost of a number of fixed-rate mortgage products that the bank offers, is likely to spark another round of rate hikes among the country's mortgage lenders.

Tuesday's increase will raise the rate for a five-year mortgage from RBC further, to 6.10 per cent, effective Wednesday.


The 5 year discounted rate is now 4.7% which is way up from the 3.95% at the end of March.

The TV networks will be pumping this now that the 5 year posted rate goes over 6%!

Watch for the other banks to jump on the bandwagon later today and tomorrow.

In a few months when those pre-approval letters expire the Victoria RE market will be done like dinner.

mln said...

Agreed. This market couldn't survive normal rates in 2008, and now we have CMHC's tighter requirements thrown in as well.

JustWaiting said...

Times Colonist now covering the RBC mortgage rate increase but they also tried to pump the market.

House sales up as RBC raises mortgage rates for second time in a month

“The rise is tied to our long-term funding costs which have gone up considerably,” RBC spokeswoman Gillian McArdle said. “We have held off from handing them on to consumers but now it has become necessary.”

Meanwhile, numbers from the B.C. Real Estate Association released today show sales in British Columbia were 43 per cent higher in March than the same month last year, when the market was just emerging from the housing downturn.


However the BCREA chief pumper, Cameron Muir, was unusually cautious

The BCREA recorded 7,110 sales province wide in March, which is higher than the same month a year ago, but association chief economist Cameron Muir said in a news release they are six per cent off the pace of sales experienced in December 2009 when seasonal factors are accounted for.

"Home sales have moderated since the beginning of the year," Muir said in a press release.

"Despite an improving provincial economy, higher mortgage interest rates and tighter credit conditions for low-equity homebuyers and investors will squeeze some prospective buyers out of the market this spring," Muir said in the written statement.

Just Jack said...

I think it boils down to "fundamentals"

CMHC and the bank economists have their fundamentals that indicate everything is fine. We have our fundamentals that indicate the sky is about to fall.

So why aren't the "fundamentals', fundamentally the same for everyone?

They use employment, migration, monthly payments, interest rate, household formation, bankruptcies, foreclosure rates, etc.

We use price to median income, price rent ratio's and common sense.

Theirs is more of a picture of where we are and where we were.
Our is a projection of how things can go, given a nudge here and there.

Nudges like the 5 year rate going to 6 percent and unemployment going from 3.9 to 6.6 percent in a year. Vacancy rates hitting 10 percent in some of the housing market sectors. Nah, those aren't really nudges, there more like what my dad did to me, when I took the family car for a drive without a license. He kicked my a..

mln said...

Unemployment up, interest rates up, vacancies up, housing prices... up?

Robert Reynolds - GBA said...
This comment has been removed by the author.
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