Thursday, April 29, 2010

The Rental Market

Just wanted to let you all know our recent experience in the rental market. We're moving in early summer. We just negotiated 7% off the asking rent and got the landlord to agree to NO lease. It's month-to-month for us on a 3-bed house near a recreation centre in the central CRD. We'll be within 15 minutes of downtown and 15 minutes of the highway out of town.

Yep, the market she's a changing.

Oh, and in case you're wondering how we got the discount with no lease: we asked for it, right after the landlord complained about their current noisy tenants wrecking their recent house buying experience, with a reminder that we're married professionals with decent income and quiet lifestyle.


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Anonymous said...

When I was renting every spring was the same thing. Rentals increased and deals were available. This year it does seem like there's more for rent out there and the marginal stuff is sitting but anything good is being rented reasonable quickly.

FarFromHome said...

I am negotiating a small pet, 6% off my rent on a three bedroom house in BM with month to month break lease. I have a friend who owns a well known property management company and he says it's turning into a renters market. If I get turned down from my landlord, I have an equally good deal to go to in an equally good area. I'm renting for another 2 yrs and if things change then I'll jump back into the real estate market.

FarFromHome said...
This comment has been removed by the author.
Olives said...

I've had the same experience in the past few years - two separate landlords automatically offering lower rents (we didn't even have to ask) and also upgrading the property on a regular basis - Each year they have asked what we want replaced. This year I think we may go for new appliances.

I personally like a lease.

Olives said...

...and I have never been turned down for having a pet.

Bob leftcoaster said...

Good score, HHV! Another anecdote from our February rental search. We viewed a suite managed by Duttons. The rep gently advised us that all rents are negotiable and that she would seriously consider any rental offer even if it was below the owner's desired rent. Gone are the days that she would have insisted top dollar for her owners. The market has shifted and soon Realtors will be forced to operate this way to convince clients to buy homes.

wildpacific said...

Yup, changes are afoot, my friend is a realtor in the North Van. She said in the space of one week 800 condos were listed in her area and she told her client that the tide was turning. She said it will be the news of the day soon about the bubble having reached it's limit. She's starting to look at other career options.
I'm mid divorce so I'm hoping that after my ex kicked me out of my home (i'm the wife btw) I can get the equity out now and ride out the downturn by renting.

CD said...

I have a friend who claims he has no options for an reasonable 1 bed apartment style unit (less than 900) that allows small pets such as a pug. He doesn't want to live in a basement suite. Is it that hard to get an apartment for a small dog? In the past yes I agree, but now?

jesse said...

Friends moved into rental in Vancouver recently and, having decent jobs and a pleasant demeanor, got 5% off the asking rent.

If you have a pet, unfortunately, it will be more difficult for you. The landlord takes more risk through suite damage and neighbour complaints. Be prepared to pay a premium or spend a lot more time shopping around.

Having a weak rental market is causal from falling employment.

a simple man said...

lots of listing continue to pile on in Oak Bay as per the last three weeks, however sales this week have been eerie quiet... a few notable price drops as well.

Mondays numbers will be the first indication of things to come, but will be somewhat buoyed by the purchases made to beat the April 19th rules...

Trevor said...

Vancouver is only the 15th-best city to live in in Canada, Victoria number 9. Take that, real estate market!

a simple man said...

Trevor...that was for 2007...for 2009 Victoria was #1...

think said...

But I heard on the radio this morning that for 2010 (or whatever the most recent release) Victoria is number 8 or 9 due to not being affordable. I think they said Ottawa came number 1.

a simple man said...

OK - I can 100% accept that! Thanks for the update.

Just Jack said...

Have to do a little math here and heavily extrapolate the data, but here goes my way out there - you do the voodoo math.

Since April 1, 202 homes have sold for a median price of $601,000 or $296 per square foot.


Since April 1, 80 homes have been LISTED and SOLD for $611,000 or $283 per square foot.

No longer, is it the case that the longer the seller holds out, the higher the price - which would be a rising market. The longer a seller holds out, the lower the price - which is a declining market. A market that is declining at a rate between 1.5 to 4.5 percent per month.

As I cautioned earlier, this is way out voodoo math with very little hard data to support the opinion of the writer. What we have here is a fall in market prices, at a slightly higher average rate (3% per month) than 2008 which was about 2%.

So, assuming that I am correct (and I am not so sure that I am) and the market is declining at a rate of 3% per month would you call that:

A) a bubble

B) a correction (demand driven downturn)

CD said...

Just Jack, Since you put the time in and I assume that your area is not all of the greater Victoria area. Are prices dropping? Month to Month? 601K and 611K seem high for a median price. So that is why I am assuming you are using the core area.

Mr.4AM said...

2 more rent anectdotes:

1) My landlord has not increased my rent in ~2.5 years, has since provided brand new fridge, replacement TV and new dishwasher and just offered to plant flower beds beside our front door.

2) A close family relative whom was renting in Fairfield area states that their apartment complex with about 20 apartments now has 4 vacant suites for the past 3 months. The landlord instead of lowering rents, has decided to update the suites - new paint everywhere, some new flooring, some new stoves, updated bathrooms. New hallway carpets for all 4 floors may be next.


Animal Spirit said...

HHV - congrats - we've been looking for a new rental too. Did it happen to be the house on Falaise (didn't look at it ourselves due to time commitments).

Some of the places that we've called/looked at the landlords are getting a bit desperate - it will be like when the resale market falls - we'll priced houses in good repair are renting, the ones that need work or are a bit overpriced aren't.

Marko said...

Noticed some HUGE price cuts at the Falls today. 2 Bedroom, 2 Bathroom, 1004 sq/ft down to $399,000 from $529,000.

wildpacific said...

I had to throw this out as well. I was driving down Finlayson yesterday noting how many for sales signs I saw btw Cook and Quadra and saw one with the price listed in big red letters at the top of the remax sign. Now, I think that's the first time I've ever seen that here - the price was below 400K. I bet we'll see more signs like that in the future.

Ryan said...

I saw a sign with the price on it too, on Admirals near Gorge. I hope it catches on, it feeds my curiosity.

Skeptic said...

Move over Carla - another real estate shill, Suzanne Morphet, pumps Vancouver Island real estate.

CMHC expects metro Victoria starts to increase by half; top agent expects elderly to keep coming

"There is certainly much greater confidence seen in the market by developers and realtors," agrees Randi Masters, president of the Victoria Real Estate Board, pointing to the escalating number of sales with every month that's gone by this year. January began with just 418 sales, but that increased to 621 in February and jumped to 789 in March.

Randi - What will you say on Monday when the April sales come in lower than March?.

On April 26 there were 605 sales to date for April. VREB needs 284 in 5 days in order to beat March sales.

Skeptic said...

The bears next door in Alberta are talking about homeowners being priced in forever


JC said...

I am looking for a rental right now and have a cat. So far, nothing has changed from a few years ago. Places are getting snapped up quickly. I'd say only 10-15% of adds except pets. This is a totally different rental climate than with non-pets.

JC said...

The 1 bedroom, pet accepting market hasn't changed at all. Calling landlords saying they have 4 to 5 people looking at places and they are getting snapped up quick like a few years ago. I am not seeing deals at all.

Animal Spirit said...

SFH inventory just went way up in the last few days - now up to 986 on MLS, or 58% above March 1. No clue about where condos are.

victoriataxpayer said...

Hello all. I am new commenting on this blog but have been watching and learning now for almost two years.

Mostly I have been watching Victoria and Esquimalt sfh and 2 bedroom condo's in Faifield, James Bay, Vic West (Songhee's) and Oak Bay.

One thing for sure. The condo inventory in these areas are increasing at an incredible rate. Many condo's say in the Fairfield area where just a few months ago would have been eaten up within two weeks are now just sitting there. Most are seeing price changes of at least $20K asking.

Funnily enough....houses priced right in Esquimalt especially those in the Rockheights or saxe point area are selling much faster and for better prices than same thing in Gordon Head/Mount Doug area.

Just Jack said...

In case any of the stats/numbers people here on HHV are interested there is a thread on KIV inviting people to answer the below question.

"quick question~house prices since 2004

I am just trying to figure out in general how much houses have gone up since 2004.

What do you figure in general is the amount that most houses have gone up?

Or to be more specific, how much do you think an average $400 000 house has gone up $500 000 and then $600 000?

I know there are so many factors but i am just looking for general guesses or educational ones too"


Just Janice said...

JC - I'd change your strategy and expand your search beyond those that say 'Pets OK' to those that do not say one way or another and depending on the specific type of place (ie. condo or house) whether or not there is a specific limitation on pets. Many landlords want to avoid the large agressive dog so say a blanket "NO PETS". Do up a resume of you and your pet complete with pet references and you should find renting gets easier.

In the nearly 5 years I've had a dog (small dog), I've not had a problem finding a place to rent - all be it I've had to look a little harder and sell myself a little more.

Skeptic said...

Globe and Mail published a balanced real estate article today.

Housing affordability: the great quandary

History shows that it’s impossible to accurately predict short-term movements of house prices – markets regularly overshoot rational levels both on the way up and the way down. What we can say is that based on current affordability, if house prices do continue to escalate, at some point they’re almost certain to correct back down.

That means there’s no rush to buy and time to wait for the right home at the right price – and that for the next while at least home buyers should evaluate houses as places to live rather than on their potential for appreciation.

a simple man said...

as I anxiously await April's sales and listings numbers on the vreb website I take pause to ask a simple question - who "audits" these numbers from vreb to ensure that they are, in fact, true? Obviously, there is a vested interest for vreb, so they have a major bias for reporting positive numbers.

I am sure there is an independent audit of these numbers, isn't there?

If anyone knows, please enlighten me.

have a great week.

think said...

April Month-End Real Estate Stats

Net Unconditional Sales: 756
New Listings: 1,783
Total Listings: 4,229

think said...

So, sales are down from March - that says a lot right there! New listings continue to pile on (more new in April than March). And having a total of 4229 listings is huge - there is soooooo much inventory! THe sales/new ratio is 42% which is down from 46% in March. THe trend is continuing - this market is moving more and more into bear country. I don't know what average sale price was this month but I'm very curious to find out. Prices over the next months will be falling as there is tons of inventory and in continues to pile on and sales are obviously softening. Great news bears! Enjoy!

a simple man said...

thanks, think. And I think it is very worth noting that total listings are already higher than in any month for all of last year. Many of the factors that will drive this market downward have yet to be felt on ground level.

I really feel badly for a lot of people who are going to be trapped by this.

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

Wow, have April sales ever been lower than March sales before?

MD said...

Great news for the Bears! Winter hibernation from the housing market has paid off in the Spring. When you look at how much sales should have INCREASED from March to April, the relatively small decrease means a bigger change. I find it ironic that only a few months ago, realtors were still spouting their usual retoric about "great time to buy". What can they say now that things are opposite? Rates are up, sales are slowing, and people are coming to their senses and realising the market is overpriced. How can it still be a great time to buy when the market has changed? It can't be great ALL the time, unless you are a realtor I suppose!

Skeptic said...

VREB stats and comments just released.

April Stats

Check this out..

Prices on downward trend - pdf

Listings exploding as sales drop -pdf

Just Jack said...

It seems, to me, the condominium market is really taking a beating on sales volumes and price.

When you look at condo sales in the first two week versus the last two weeks of April, prices are down 7 to 8 percent (new CMHC rules?)

Houses on the other hand were just grazed by the bullet with a 1 to 2 percent drop difference in the two time periods.

Sales volume for condos dropped in the last two week of April in relation to April 2009 by nearly 30 percent.

No market is isolated from another. Condominiums are leading the charge, but single family homes are only lagging the condo market.

Skeptic said...

Last week Randi Masters said..

"There is certainly much greater confidence seen in the market by developers and realtors," agrees Randi Masters, president of the Victoria Real Estate Board, pointing to the escalating number of sales with every month that's gone by this year. January began with just 418 sales, but that increased to 621 in February and jumped to 789 in March.

In today's news release she says..

Masters added that, as anticipated, sales have now returned to levels comparable to a year ago and this is expected to continue throughout the balance of the year.

Anticipated by the bears but not by real estate agents. Last week she talks about rising sales this year and now its back to YOY comparisons. What a pumper.

Next month she will have a real problem because May 2009 sales totaled 879 and there is no way we will see this sales level. That will be the end of YOY comparisons for awhile.

Bears - the market peaked last December. Its all downhill now!

a simple man said...

Hi Skeptic - just want to point out that the listing and sales number pdf is from March still, as it has not been updated on the vreb site.

The linear acceleration upward in listings since Dec 2009 has me almost speechless, and the inclusion of April's data continues the trend.

Wow. This is going to get interesting.

Just Jack said...

Taking a look at Craigslist for rentals in Vancouver and Victoria.

I wanted to see the percentage breakdown for 3 plus bedroom apartments and homes in Vancouver and Victoria to see where a 1/3 and 1/2 and 2/3rd's of the rents are falling and this is what I found.

3 plus bedroom rent
-----------Vancouver and Victoria
$1000-1199 6% and 2%
1200-1399 15% and 10
1400-1599 16% and 21----one-third

1600-1799 13 and 23----one half

1800-1999 11 and 16---two third

2000-2199 6 and 9
2200-2399 5 and 6
2400-2599 8 and 5
2600-2899 4 and 2
3000-3199 6 and 2
3200-3399 1 and 1
etc, etc 1 and 0

So the affordability for renters is consistent in both Victoria and Vancouver with the median rent for a 3 plus bedroom home centering around $1700 per month.

The first third centers around $1,500 per month and tops out at the two-third mark at around $1,900 per month for both cities.

Amazingly tight rental spread of around $500 per month from the bottom third of renters. And amazingly, the same price break points, considering the large difference in market values, between the two cities.

When I started this, I thought I`d find that people in Vancouver paid a lot more in rent than Victoria hence the house price difference. Nope, we pay the same. This shows me that the house market and rental market do not directly affect each other. While there may be a relationship between rent and house price it is but a weak co-relation.

Trevor said...

"While there may be a relationship between rent and house price it is but a weak co-relation."

I would disagree - If I can experience all a city has to offer for the price of rent, why would I pay a higher price to own?

Historicaly, real estate has provided something like 0.5% annual return after inflation since 1890. Clearly buying a house is not a real investment - buying a house is consumption.

The reasons short term rents are disconnected from housing prices are because of a combination of poor public policy (CMHC), realtors and media who habitually abuse public fear and greed to get paid and the public who refuses to see the writing on the wall and think for itself.

When the price of a good goes up, human nature would dictate that demand for "substitute" goods would increase until price levels reach an equilibrium. The price of brown shoes skyrockets, people start buying black ones and so forth.

Look at New York - Housing is astronomical, but so are rents - people can afford more there. In Vancouver and Victoria, they cannot. Hence, dis-equilibrium. Why would I pay $100 for a brown she, when I can get a black one for $30?

Over the long term, I am sure you would find a much stronger correlation between housing costs and rental prices.

CD said...

Trevor: I see your willing to pay 100 for the brown shoe. I want that shoe because you want it. I willing to pay 105 for that shoe.

Good post by the way.

Just Jack said...

"I would disagree - If I can experience all a city has to offer for the price of rent, why would I pay a higher price to own? "

Ahhh, mortgage paydown, appreciation, long term security ....

Marko said...

"Over the long term, I am sure you would find a much stronger correlation between housing costs and rental prices."

Maybe in the USA and Canada. Check out the correlation between housing costs and rental prices in the UK, France, Germany. There is an even bigger disparity!

Just Jack said...

"Look at New York - Housing is astronomical, but so are rents - people can afford more there. In Vancouver and Victoria, they cannot. Hence, dis-equilibrium. Why would I pay $100 for a brown she, when I can get a black one for $30?"

But you want brown shoes! So you would buy black shoes and have them dyed. But what if the cost to dye them was $80. Would the brown shoes at $100 now be a deal?

Just Jack said...

With real estate you don't have to be smart to own it. And you don't have to be smart to be a landlord in fact intelligence may be a liability.

For example, a friend bought a condo all cash. He has rented it out for $1,300 per month. I showed him that he would net more if he invested the money rather than bought and rented the condo. His reply was simply that he doesn't understand equities and bonds but he knows what a rent cheque is.

And its that simple.

Why are there so many landlords in Victoria? Because Victoria has a lot of simple people.

Muriel said...

An editorial in the TC today says this at the very end....

Answering to a landlord is not necessarily worse than answering to a bank and not all that much different when you've put just five per cent down on a house worth 10 times your income.

The editorial appears to be reprinted from the Ottawa Citizen

Leo S said...

I saw that the sales for April 2006 were also lower than March 2006, so it's not totally unheard of.
Didn't have the data farther back than that so I don't know how often it happens.

However, May is going to be the deciding month. If sales aren't in the 900s this year is definitely not normal.

Anonymous said...

The Times Colonist, in a desperate move to keep real estate advertisers happy, published this biased article in the TC today.

Victoria area real estate still strong in April

How can anyone call this a strong market?

- April and May are usually the peak sales months. Sales this April are lower than March. New listings are piling on!! click here

- Active MLS listings are surging at an incredible rate. click here

- Average house prices have been on a downward trend since December 2009. click here

- Average town house prices have been on a downward trend since December 2009. click here

- Condo prices slid badly in 2008 and have changed little since Dec. 2009

This stat analysis points to a dismal real estate market in the months ahead.

a simple man said...

Ultimately, real people are hurt by the TC's reporting of selective statistics.

People deserve the truth, but few actually get it without digging and investing considerable time understanding the different sides of the argument.

I understand their need to satisfy their RE advertisers, but I hope they remember the people that pay to have their papers delivered each day as well.

a simple man said...

and Just Jack...simple is not so bad!

Trevor said...

That TC article reminded me of something funny: Does anyone here remember that episode of "The Simpsons" where Homer and Bart are chasing a pig they were barbequeing down the street through the sewer, out of a drain pipe, through the air, etc yelling "It's still good!, It's still good!" until finally Bart pipes up and says "It's gone" as the pig sails through the air?

I don't think the TC will admit anything until the market is too far gone to argue with. They're shills, everyone knows it.

CD said...


Our market has tried to correct a couple times now. The first time the market was peaking the government brought in the 40/0 and that triggered another surge. Then the market started to correct in 2008, then the economy crashed and the government dropped interest rates to nothing. Again another surge. So the 2006 numbers could have been a peak, if the 40/0 never came into effect. 2010.... is take 3...

I do not recall the exact date the 40/0 was implemented.

Skeptic said...

Here is one agent that gets it!

Aaron Hall

There is now over 4000 properties listed in the Victoria Real Estate Board. This is going to have an effect on our local market. I have noticed over the past month that Open Houses are slowing down and there is less urgency with current buyers in the marketplace.

Steven said...

We've decided to hold off buying a house until at least next year. Having outgrown our place, we thought we'd found a good option where we'd be renting the top two floors of the house that will have a tenant in a suite beneath. The landlord indicated that we'd be responsible for utilities (fair enough) but their definition of utilties includes city fees associated with water, sewer and garbage pickup. My expectation is that such services would be included in the rent (rent is not unreasonable but hardly a bargain). They indicated we'd be expected to pay the bill and then collect a portion (i.e. half) from the tenant below. Is this typical? I've always been in apartments, but this feels a bit odd to me. My understanding is that we're also responsible for mowing the lawn/watering the garden, but I'm unclear what mutual expectations are reasonable given the shared nature of the property. Thoughts? Thanks in advance!

Rhino said...


The tenant paying the city utilities fees is not un-common. Its about 50 bucks a month for a standard single family house in the city of victoria. If you share the building with another tenant it should be agreed upon what percentage each suite is responsible for. Its the landlords job to collect from each of the suites not yours.

In the house I rent, I do all the yard work, and got a rent reduction for doing this.

Skeptic said...

How could this happen in Canada?

Bank of Montreal alleges huge mortgage fraud

The Bank of Montreal is suing hundreds of people in Alberta, including lawyers, mortgage brokers and four of its own employees, in what is one of the largest alleged cases of mortgage fraud in Canadian history.

Legal documents obtained exclusively by CBC News allege the bank was the target of a sophisticated fraud operated by 14 inter-connected groups. The documents allege the scheme generated at least $140 million, about $70 million of which was for phoney mortgages.

Seventeen lawyers have been named in the bank's lawsuit.

Skeptic said...

The Vancouver Sun wrote a balanced report on April real estate market conditions. Too bad our local rag, the Times Colonist, can't or won't do the job.

Metro Vancouver's real estate market lists as demand drops

Chief economist for the British Columbia Real Estate Association said rising interest rates will crimp the ability of new buyers to get into the market.

April was a continuation of the trend that has seen sales ease off in Lower Mainland real estate markets and listings rise, which has taken a lot of the pressure off property prices, one economist said Tuesday.

Both the Real Estate Board of Greater Vancouver and Fraser Valley Real Estate Board released April sales figures Tuesday showing a less frenzied pace of activity and higher levels of inventory.

Muir said those people looking to buy homes as B.C. came out of the recession have largely made their purchases. From here on in, he expects that rising interest rates will crimp the ability of new buyers to get into the market.

The net result, he added, is that prices "will likely face little upward pressure for the balance of the year."

However, Muir said not a lot can be read into one month worth of results.

"If listing inventories climb dramatically and sales drop off current levels, of course there is potential for home prices to edge lower," he said. "But at this point it's too early to make that kind of call."

Note the hedging by Muir at the end of the article. He knows who is paying his salary but can see the downturn coming.

msr said...


I've always done the apartment as well but I refuse to share any utilities/bills with people I don't know. Further, collecting bills is the jurisdiction of the LL, not you.

Offer a fixed amount per month and let the LL pick-up the rest from the other tenant. Anything else is just asking for the other tenant to screw you over.

Just Janice said...

Today in the globe and mail both the TD and the CREA are calling for real estate prices to drop in 2011. Small drops (ie. 3% in BC) but drops none the less and this is coming from organizations who have an interest in declaring that real estate only ever goes ups!

In terms of the utility split - I'd offer to the landlord to split it based on square footage but that he is to collect from the other tenant.

Mr.4AM said...

Steven asked:

"They indicated we'd be expected to pay the bill and then collect a portion (i.e. half) from the tenant below. Is this typical? "

No this is not typical. They are trying to pass landlord duties onto you. Don't accept it. It's not your job to go chasing the other tenants for money, nor would they likely feel right about it, unless it was mutually agreed with the 3 of you at the table, and I wouldn't agree to that duty unless the landlord was compensating me for it. What happens if the other tenants go on vacation, then you are out of x$ for a few weeks if they aren't responsible enough to pre-pay. What happens if they go on a perma-vacation?

Once upon a time when I was a landlord, I got the tenants to agree to split the utility bills based on how many people were living in each floor. So if 3 people upstairs and 2 people downstairs, the top floor would pay 3/5ths of the bill, and bottom floor 2/5ths. I also placed contractual limits for the tenants on how many TVs and computers they could have and put in a vague statement that they couldn't use utilities unreasonably so as to give me the right to address the situation if it ever came up. I always went to the tenants to collect their share of the utility bill each month or two months (depending on the bill). I did not charge them for city costs such as sewer and garbage collection or recycling, that was included in the rent. Landlords who don't want that hassle of collecting separately for utility bills can just add some % into the rent and flat-fee the charges, but run the risk of over-usage. The problem with flat fee'ing is that utilities, especially heat are very seasonal. Winter heating costs can be much higher than summer heating costs.

"My understanding is that we're also responsible for mowing the lawn/watering the garden, but I'm unclear what mutual expectations are reasonable given the shared nature of the property."

In one house I rented with 2 floors, we split this up as you take the backyard and we'll take the front yard.

As renters these are some of the 'gotchas' that we have to be on the lookout for before signing on the dotted line, especially when dealing with unexperienced or greedy/lazy landlords.

At my present place, all utilities, city sewer/garbage/recycling, all yard work and even cable TV are included in my monthly rent which hasn't gone up since I rented this place some 2+ years ago.


omc said...

I am seeing an increase in "home owner is listing agent". A sign of the times.

Just Jack said...

"a simple man said...
Ultimately, real people are hurt by the TC's reporting of selective statistics.

PEOPLE DESERVE THE TRUTH, but few actually get it without digging and investing considerable time understanding the different sides of the argument.

I understand their need to satisfy their RE advertisers, but I hope they remember the people that pay to have their papers delivered each day as well."

They can't handle the truth!!! (to mis-quote Jack Nicholson. Sorry, I couldn't resist :-))

No, they really can't. I've posted the truth elsewhere and well, the anger that it brought up.

And the band kept playing while the ship sunk.


Steven said...

@Rhino, MSR, Just Janice, & Mr.4AM;
Thanks for taking the time to offer your input… very helpful, and gives me a clear path forward.

kabloona said...

Alberta Conservative MP Devinder Shory named as defendant in BMO $70M mortgage-scam lawsuit

The Canadian Press

CALGARY - A backbench MP for Prime Minister Stephen Harper's federal Conservatives is among those named in a lawsuit alleging a $70-million mortgage scam at the Bank of Montreal.

Devinder Shory, MP for Calgary Northeast, is one of more than 100 people — including other lawyers, mortgage brokers and even staff at the bank itself — targeted in the suit, filed in Calgary by the bank.

Shory, 51, said in a statement late Wednesday that he's "done nothing wrong."

He was elected to Parliament in 2008 after failing to gain a provincial Tory nomination seven years earlier. He currently serves on the Joint Security and Regulations Committee and the Natural Resources Committee.

The bank says it has been scammed in several schemes in Western Canada that were first flagged in a security check four years ago. It alleges the defendants found undervalued houses in upscale neighbourhoods, then paid someone a few thousand dollars to put his or her name on a mortgage application.

Documents were then forged to inflate the value of the property and to fool the bank into believing the buyer had the ability to pay. Once the mortgage was approved, the fraudsters pocketed the profit and the money was sent overseas, the bank alleges.

It says the mortgages were worth $69.5 million. After foreclosures, it expects the gross loss to be $30 million and hopes through the lawsuit and other means to reduce the loss even further.

According to the statement of claim, Shory was among a number of lawyers associated with a group of defendants that were allegedly identifiying property to be used in the fraudulent schemes. The group would then find and pay so-called "strawbuyers" to apply for the mortgage, the sums ranging between $3,000 and $8,000.

The allegations have yet to be proven in court. There have been no charges laid in connection with the allegations."

a simple man said...

thanks S2....I agree. When I have posted in any MSM blog, I have been nearly eviscerated by the masses.

But, a large part of their arguments are based in fear and in the twisted statistics provided by individuals, corporations and governments that depend on the market continually expanding.

It really is sad that a lot of good people walking among us are setting themselves up for real hardship.

Just Janice said...

The market behaviour (DOW and S&P) today was just incredible...tomorrow might be interesting. They are blaming it on a glitch - but I think it might just be the start.

Anonymous said...

In the last 5 days, 5 year bond yields have plunged over .25%. That is not going to please you bears at all. We could be back to 5 year rates well under 4% very soon. Mind you if this is the start of the "double dip" bears have been hoping for then all bets are off I guess. Personally I think we'll see another equity market sell off tomorrow, a flat to slightly up market next week and then onwards and upwards. Dow 13000 is going to happen by the end of this year for sure.

Mr.4AM said...

That was insane... the Dow's biggest drop EVER in all of its history, and the biggest drop of stock markets since 1987. In a couple of minutes we saw 1 TRILLION wiped off the face of the Earth!

Peak to trough it was a ~1,000 point drop on the Dow. Of that, 500 points dropped in about 15 seconds. That had to be some kind of HTF (High Frequency Trading) algorythm gone off the rails. If we get a few more of these, we'll have a global SHTF event, as Mark warns. "This is going to happen again, and it will get worse".

There were even a couple of stocks that dropped from $40 dollars to 1 penny, then rocketed back up to $40 in a couple of minutes... total insanity. NYSE's COO talks about this. Man if I had honestly timed that "buy at 1 cent and sell at $40 for a 40,000% gain", I woulda been hella pissed if my winnings were reversed. So much for 'free' markets. SKYNET is in control now people.

Tomorrow, I predict that laundry matt stocks will shoot through the roof due to all the soiled pants on wall street today.


Robert Reynolds - GBA said...

RE: the DOW today, from what i have heard it was a "butterfingers" glitch someone keyed a few extra zeros into a sale of Proctor & Gamble stock.

The correct order was to sell 1,000,000 (One Million) shares what actually happened was a sale of 1,000,000,000 (One BILLION) shares.

The computers and stoploss rules did the rest. Notice that the chaos only lasted about 15 minutes. Amazing correction really I am surprised they didn't close the markets.


Mr.4AM said...

Robert, that was just an ignorant guess by a CNBC commentator in the middle of the chaos.

First of all, it wasn't a single stock, it was several of them all at the same time, so no way that was a human typing error. Second, even if somebody did type B(illion) instead of M(illion) on a single stock and actually had the funds to backup that trade or the leverage, a single stock crashing massively does not take the world with it... and then how do you explain the 6% recovery in a few minutes as well?


kabloona said...

Apparently, most of those trades will be broken overnite and not settled. All NASDAQ trades that exceeded 60% gains or losses will be nullified.

©2010 Bloomberg News

May 6 (Bloomberg) -- Nasdaq OMX Group Inc. said it will cancel stock trades on all exchanges that were more than 60 percent above or below prices at 2:40 p.m. New York time, just as U.S. equities plummeted.

The Dow Jones Industrial Average plunged almost 1,000 points before trimming its drop and ended down 347.80 points, or 3.2 percent, at 10,520.32. About $700 billion of U.S. stock- market value was wiped out in less than 10 minutes, according to data compiled by Bloomberg.

Nasdaq, which investigated trades between 2:40 p.m. and 3 p.m., said it will provide a list of stocks affected and the prices at which the trades will be canceled. The decision cannot be appealed. NYSE Euronext spokesman Rich Adamonis said earlier today "there were a number of erroneous trades." Citigroup Inc. may have been the firm that made a potential erroneous trade, CNBC reported, citing "multiple sources." The New York- based bank said it found "no evidence" of erroneous trades.

Mr.4AM said...

Here's a link to an article with a news video clip explaining how at least 8 different stocks went to zero or 1 penny.

I was just watching CBC newshour around midnight, and after 9+ hours of time to think and analyze the problem they are still talking about fat fingers at the keyboard as the possible problem?! What an utterly clueless bunch, and this is what most Canadians supposedly trust as their news source?! And then on top of that they had some total moron recommending this as a great buying opportunity for long term investing?! WTF ?!? If anything this was a wake-up call to get the *UC* out before the real SHTF due to the upcoming European market blow-up that will make 2008 look like a spring day.


Mr.4AM said...

Kabloona, thats total BS as well.. I mean, they have no clue WTF cause the problem yet they are making seemingly random decisions about how to deal with this? Why draw the line at 60%, where's the logic in that? What about those that lost 59%?

What this does is totally shake up investor confidence. Not only was there a computer glitch which I can understand to some degree, but then to arbitrarily reverse X positions because we say so and you can't appeal... that's just further proof that there are no free markets anymore. Who the hell wants to bet their life savings, RRSPs,etc in this casino gone mad?


PainInThe said...
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PainInThe said...
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PainInThe said...

Plunge Protection Team. Some guy at the Fed Reserve sits at a computer terminal and, before a 1000 point drop hits, starts typing "dollars" into existence, while his buddy at another terminal starts buying stock to prop up the market to an "acceptable" loss "level."

The numbers don't change; just their VALUE.

The eventual result is creeping hyper-inflation, ever creeping higher.

Most likely showing up after the November elections.

History definitely was made yesterday, and today's dollar is barely worth yesterday's dime.

Soon enough.

Mr.4AM said...

Here's the best and most believable explanation so far of the triggers to the markets crashing yesterday.

- Yen rose 4 cents in 1 hour against USD 45 minutes before crash (that's a HUGE move that we haven't seen since like 2008 or so)
- Two HFT (High Frequency Trading) firms had their computers disconnect from the markets after the fast first 500 point drop because they were designed to do this autmatically.

As I suspected HFT had a big role to play in this. This just goes to show how much of the trades of the market are real human beings and how much of them are SKYNET computers. The buys simply dissapeared and in seconds 500 BILLION in equity values gets wiped off the face of the Earth. Then turn the machines back on so to speak, and backup we go. In short, it is estimated that some 80% of world market equity trading is really done by a few dozen or a couple of hundred HFT computers owned by about the same number of companies who DON'T represent in any way joe 6 pack's RRSPs on the street.

All those "investors" you keep hearing about on main stream media that drive the markets up and down... they account for less than 20% of what really goes on in the markets, and really have almost no influence in what goes on.


PS. This was your wake-up call!

omc said...

Talk about markets in a free fall; my PCS that is. Mine stands for Price Change Service.

Skeptic said...

Agent Aaron twitters his view of the Victoria real estate market..

Aaron Hall - realtor on twitter

So many properties for sale right now... Crazy. Saw a house on craigflower $410K... just about drove off the road.

When the agents start to get nervous the boom is definitely over.

Anonymous said...

TD lowers its posted and 5 year mortgage rates by .15%

TD Canada Trust changes residential mortgage rates

I imagine the TC and local agents will pump this news.

Anonymous said...

Where is Think with the latest stat report?

My PCS shows piles of listings this week and not too many sales. What are other readers seeing or hearing about the Victoria market.

a simple man said...

In Oak Bay a lot of reductions continuing...some very large, some laughable. Sales seems to be slowing, but no formal numbers to report. A few sales below appraisal.

think said...

yes, the trend of lots of new listings and not many sales seems to be continuing. This weeks numbers will be interesting - I'll put them up on Monday. There is no doubt the market is softening... it will be interesting in the next few months to see if it shifts into freefall dropping of prices like 2008 - we are certainly heading in that direction!

a simple man said...

and the vast majority of sales are below asking price; that is a real shift from a couple months ago.

Travel Girl said...
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Travel Girl said...

My PCS is for the low end condos in Victoria ($250,000 and below) and I've seen a big increase in listings in the last couple weeks (especially this week).

Anonymous said...

I've been lurking here a while - thought I'd join the discussion. I watch the Gorge area on my PCS. The last sale for over asking was on April 16th. Since then, all sales (both houses and condos) have been under $435k, except for one house at $565.

I'm amazed that some sellers are still asking $140k+ over appraised value. The sales are few and far between these days, but the listings just keep coming.

alexandra said...

The condo's I look at are mostly 2bdrm; 2bath in Fairfield & James Bay.

The prices are coming down; the prices are coming down.

The SFH I look at are 3bdrm; 2 bath in Victoria & Esquimalt

The prices are being reduced; the prices are being reduced!

And the listings keep piling on and the listings keep piling on.

omc said...

Kinda surreal.

All this time of waiting for the correction and it looks like it's finally here.

Mr.4AM said...

Here's the PCS on Fernwood.

Seeing the same as the rest of you. No sales since April 23rd... loads of new listtings and a few price cuts.


Anonymous said...

In April there were 1783 new listings. From May 1-7 MLS shows 512 new listings!! 93 of them were on Friday.

When previous posters say listings are piling on they mean it.

Think - looking forward to your Monday update.

omc said...

It's nice to see some new faces around here. I guess a welcome and good luck is in order.

msr said...

I've finally updated my stats spreadsheet to reflect this month's statistics.

You can see it here. You can switch between listings and sales with the tab at the bottom.

Sales are basically typical for this time of year but March's sales were up significantly. Is this the start of something major or just seasonal variation? I'm not sure, but I think it's too early to call a trend.

Mr.4AM said...

This week should prove to be very "interesting" in the markets. This evening while you were sleeping, Europe just gave itself a 1 TRILLION dollar bailout, some 75% funded by the USA (because hey they own the printing presses) and the other 25% or so by the IMF (because they own the SDR printing presses).

This is getting more and more ridiculous by the week. Those of you who still don't own any gold must believe firmly that fiat printing presses can print indefinitely in ever increasing quantities without any consequences. I'm telling you people, this will NOT end well!

Now back to your regular scheduled programming of Victoria real estate....


Just Jack said...

So, we are now opening the next chapter in the American handbook on market manipulation or the rise and fall of the housing market.

Mortgage Fraud.

As the pace of real estate appreciation slows, flattens and then declines, the "creative financing" that has gotten us into inflated home prices arises.

It seems a lack of due diligence and commissions that reward bad lending practices becomes evident. A system developed for speed and quick profits, where CMHC set the environment and through its lack of enforcement encourages fraud. A government that has used CMHC as a political pawn to remain in power. And an opposition party, from its silence, being just as culpable.

In a truly free market economy we do not weep tears for these gullible or greedy individuals. Yet this market has been manipulated and is not a "free" market. When governments and lenders interfere and encourage these very actions, should they not carry some of the blame.

Perhaps enough boomers have sold their superfluous real estate to ward off financial ruin. I bet most of the politicians have taken advantage of these last two years of a false market to sell off theirs.

Is the Canadian government here to protect its people or protect bank's profits? The answer is bank's profits and when this market unravels, the individual will again shoulder the costs, through foreclosure, bankruptcy, divorce and loss of health.

CD said...

Monday, May 10, 2010 9:00am:

2010 2009
Net Unconditional Sales: 173 879
New Listings: 523 1,362
Active Listings: 4,200 3,789

omc said...

Thanks for the stats. I wonder how current that is? What I mean is is it actually current as of this morning. If it is then we could be in for some fun; this could project a total sales of under 600 for the month. That might be a little hard to spin.

Just Jack said...

When a market, like ours, is on the cusp of a transition from one where the profile of the typical house seller is one of a "move up" to a market that is weighted in properties that are under duress circumstances such as divorce, relocation or court sale, it is important to watch the canceled listings. An increase in canceled listings show a shift in the make up of sellers.

And this is what is happening now. The canceled listings for the last 30 days have doubled that of one year ago. Sellers that are not getting their price are pulling their homes off the market, leaving those that are "motivated" to sell.

So, not only are the number of listings increasing in Victoria, but the make up of the sellers is switching to sellers that are more motivated. The spring market should be the strongest bull market period, but this spring market is more bearish.

The sales to new-listings ratio is important, as is the months of inventory, but one that is often neglected is the increasing canceled listings.

Anonymous said...

Bears get good news today!

The VREB stats report issued today was the second week in a row with low sales figures. Here are the totals for the last 2 weeks (April 26 to May 9)

Total MLS sales - 322
New Listings - 870
Sales/New Listings Ratio - 37% (buyers market)

The Sales/New Listings Ratio for May-to-date is 173/523 = 33% which indicates a solid buyers market.

Buyers better come off the sidelines soon or May sales will only reach about 680 sales which is well below the 756 last month and far away from the 879 in May 2009. VREB and the TC will be facing reality in 3 weeks.

Think - are you dancing?

Skeptic said...

Globe and Mail article..

Rising mortgage rates, rising trouble

Almost half a million more mortgage holders would be in trouble if their rates hit 5.25 per cent, a national survey showed Monday.

Canadian mortgage rates are already climbing ahead of an expected interest-rate hike next month. In light of a rising rate environment, a biannual report by the Canadian Association of Accredited Mortgage Professionals simulated the impact of mortgage-rate increases up to 5.25 per cent.

It found that about 375,000 mortgage holders “are already challenged” by their current payments, and another 475,000 might be if their rate rises to 5.25 per cent.

CD said...

A nice little article. Just Jack was referring to. Sellers and refusing to drop the price.

think said...

Yes, I am dancing!!! Sorry I wasn't around this morning to post stats but thanks to those that did!

Alexandrahere said...

So far today in my areas I have seen 10 price reductions...i.e. this morning alone.

Trevor said...

Is it just me or are there a TON of new houses listed today?

Trevor said...

Is it just me or are there a TON of new houses listed today?

Trevor said...

It honestly looks like someone yelled "Everyone out of the pool!"

Skeptic said...


That Yatter Matters article you posted was interesting reading. Looks like it is all over in Vancouver too. The big bangs you hear are the bubbles popping in Vancouver & Victoria

Skeptic said...

Just Jack,

Another great post. Keep em coming.

Wishful sellers will cancel as you suggest, hoping for better prices in the future. Could be a long wait.

I was thinking today that one reason that sales are much lower is due to the following:

- New mortgage rules and interest rate increases have pushed some FTB's out of the market. So there goes some starter home sales.

- The starter homes sellers that can't unload will not be able to move up. So more sales are gone.

- The mid range sellers that can't sell are unable to buy the high end dream home and more sales are lost.

FTB's are the base of the pyramid. Once they stop buying the whole thing starts to crumble.

Anonymous said...

Longtime Victoria real estate watchers will remember Tony Joe - former VREB president and RE pumper.

Here is what he said about about the Victoria market today.

Tony on Facebook

Sales level dropped from March to April, usually unheard of in this generally busy part of the year.

He knows the boom is history.

Anonymous said...

Here is more market commentary from another local RE agent. This guy has been busy.

Scott Garman on Twitter

At Mayfair Mall kiosk until 3:30. Most asked questions: (1) where's the washroom & (2) where's the nearest ATM!

Animal Spirit said...

SFH listings in Victoria went up 5%last week - huge increase in numbers between 450K and 700K. Compared to last year at this time, there are very few lower end listings, but the same amount in the mid-range. Total listings increase since March 1: 67% with less than 1M being up 78%.

Has anyone else noticed a trend starting with more price changes than sales?

Skeptic said...

Globe and Mail jumps on the "boom is over" real estate bandwagon.

Housing offers glimpses of cooling

A separate survey showed fewer Canadians have firm plans to buy a house. And resale activity is already slowing.

Most economists – including Bank of Canada officials – expect the housing market to slow from its torrid pace. Rising interest rates, tighter mortgage rules and a new sales tax in Ontario and British Columbia will likely dampen activity in the second half of this year. And though monthly numbers – especially in the building sector – can be volatile, economists said the drop in single-family homes suggests the sector is already softening.

The resale market, meantime, also points to some moderation as activity has eased from record levels and more supply is coming into the market, the Canadian Real Estate Association said in March.

Canadians seem set to take a breather. Just 3.4 per cent say they are very likely to buy a house in the next 12 months, “suggesting activity may slow during the remainder of this year,” a Canadian Association of Accredited Mortgage Professionals report said Monday.

Skeptic said...

More real estate news.

12% Worried About Missing A Mortgage Payment: TNS Survey

omc said...

Time for a ride on the real estate roller coaster!
. I know it's Vancouver, but it is probably pretty much the same here.

Skeptic said...

Rising interest rates are going to have a big impact in Canada.

Times Colonist article:

Canadians' debt-to-asset ratio tops in OECD, report says

Canadians are among the most reckless spenders in the developed world, says a new report.

Helped by rock-bottom interest rates, consumers have been borrowing at unprecedented levels and now owe a record $1.41 trillion, putting Canada in the No. 1 spot among OECD nations in terms of consumer debt to financial assets, says a study by the Certified General Accountants Association of Canada.

That puts Canada ahead of countries such as the Slovak Republic and, tellingly, Greece.

Much of this borrowing took place over the past two years, including the latter part of 2008 and early part of 2009 when the country was in recession, the report said.

It equates to $41,740 for every individual man, woman and child, or about 2.5 times the level of debt in 1989.

Anonymous said...

The Feds have changed the mortgage rules for investors and now require 20% down instead of 5%. The rental income offset calculation has also been modified. This should have a significant effect on the condo market and we should see a slowdown in sales.

However, TD Canada Trust has found that a pool of greater fools is available to take their place. The TC, as usual, carries this pumper story.

Invest in Real Estate & Your Kids

Here’s one way to tackle the red-hot Canadian housing market: Get someone to buy you a home.

That someone would be your parents. According to a new survey from TD Canada Trust, 10% of Canadians are considering buying a condominium for their adult children. A year ago, only 5% of parents thought about buying the kids a condo.

Ms. Wisniewski says low interest rates are convincing parents to step up and buy their children homes. The condominium represents an attractive alternative to those parents because the costs are stable.

“They know what the maintenance costs will be,” she says. “[Parents] are thinking, ‘I’m not worried my children are too young to accept the responsibilities of home ownership if I set them up in an apartment. They don’t have to recognize the responsibilities of maintenance in an apartment.’ ”

Parents might also see a condominium as a way to get their kids to start a family. The survey found 36% of Canadians are willing to raise families in a condo.

So... Whatever happened to kids becoming adults and working to put a roof over their own head. (Learning to be responsible) Buying them a condo in order to get grandchildren - talk about control and manipulation.

Just Jack said...

I think it is less about wanting grandchildren and more about wanting a retirement income.

Sure, buy my kid a condo and once I retire I can sell this greatly appreciated (based on past performance) asset and sell it thereby booting my kids out on the street.

You don't really think they aren't going to be on the title do you?


patriotz said...

That idea became quite popular in the US about 5 years ago.

Guess what happened?

Just Janice said...

On the buy your kid a condo front - I think more of the motivation might be to get your kid out of your house.

Many kids now live with mom and dad until they are in their mid-twenties or beyond. The reasons are varied, some will cite the high cost of rent, and others due to high student debts, and others prefer the lifestyle that living with mom and dad offers. Many parents today do not 'parent' their adult children and so the children no longer feel as though the only way to get freedom is to move away.

It's not neccessarily a bad strategy in the right climate. I wouldn't consider doing it for my child under the current circumstances. I might consider doing it for my child under the circumstances that existed between 1997 and 2004 though under circumstances where the prevailing cost of ownership was largely comparable to the prevailing cost of rent - but on a shared risk model and only for a limited amount of time (maximum 9 years post high-school graduation). At the end of the term I would take back the down-payment money plus 5% per annum and would allow the child to retain the remaining equity in the condo. I would expect the child to find a way to pay the carrying costs of the mortgage and maintenance fees but may consider a direct subsidy if the child is in full-time attendance at post-secondary training and has a plan for that training to contribute to a long-run career goal.

Just Jack said...

The TD-Canada Trust give your kid's a condo plan


How to make your kid a "straw buyer".

After all, haven't you paid enough over the years for your kids living, education and entertainment. Well parents -its payback time. Time to give your children the gift that may last a lifetime or (7 years of bankruptcy) and put some jingle in your pockets for retirement too.

And its not all about money. Imagine, as a parent, being able to bring this up each Christmas and Thanksgiving dinner of how great a parent you are! Yes, little Johny would not be where he is today, if Dad or Mom had not stepped in to tell him what to do!

And if things go bad in the market - well hell their young they can take the hit - better them than you - right!

God gave you sperm or a womb for a reason. So go forth and indebt your spawn.

Skeptic said...

Lots of listings and price reductions lately. Now we get the haircuts.

Oak By Bailout

Many more to follow. The buyer will think he overpaid before too long.

Marko said...

"Many kids now live with mom and dad until they are in their mid-twenties or beyond."

Living at home is the way to go in my opinion...I've done in for the last 6 years since graduating from highschool and I've finished my B.H.Sc., first year MHA Masters, worked at VIHA for 3+ years, started a successful business with my old man, finished my realtors course, gone traveling to Europe on 3 separate occasions. A lot of this wouldn't have been possible paying rent. Both of my parents lived at home until late 20s. My girlfriend (also 24) of three years also lives with her parents. We don't plan on moving out together until we both finish our Masters and have solid careers. You basically have to make some sacrafices in life to get ahead in life later on such as living at home.

I really don't believe in the whole you learn life skills living on your own.

reasonfirst said...


I think we are polar opposites. I moved out at 18 to go to university - have 2 degrees. Have travelled for over 24 months in total to about 30countries, have climbed a few mountains, have been charged by a angry hippo, etc. etc. and have had a f-ing blast. Now I am financially stable but not rich and raising a family a little later in life that some might want to but so what. All on my own coin!

You said "you basically have to make some sacrafices (sic) in life to get ahead".

What are you trying to get ahead of???

Enjoy life while you are young!

Skeptic said...

Marko said:

You basically have to make some sacrafices in life to get ahead in life later on such as living at home.

Yea but it is your parents making the sacrifice and paying the bills while you spend your money on traveling and taking more courses. I left home at 19, went to university and lived on my own after I graduated paying my own bills. At what age do you think you should be a man and stand on your own two feet?

a simple man said...

Intergenerational housing is a reality all over the world. It is a really great model if all people in the home contribute meaningfully in some way, whether it be financially or otherwise.

However, many adult children in NA live with the belief that their parents owe free housing and food to them for as long as they want it. Some parents are ok with this, and I say good for them as long as no one is suffering for it. Many adult children that move out and buy a home often get substantial help from parents (I know a couple in town that got $500K plus to "help out" from the parents).

Each situation is unique and as long as no one is being taken advantage of, then I say go for it.

another disclaimer: I moved out very early if life, did degrees all over the place and paid my student loans off before I completed my last degree. My family was poor, poor so I got a grand total of about $150 in cash during my U years. However, my family gave me a strong work ethic and a lot of love, which was worth more in the end.

Also had a blast!

Marko said...

"I left home at 19, went to university and lived on my own after I graduated paying my own bills."

I hear this from 90% of people. How come there is such a negative stigma with living at home in Canada?

My parents both lived at home into their late 20s. I plan on living at home into my mid 20s, and my kids will be more than welcome to do the same thing.

There are two options. I can be my "own man" and move out.

On the other hand, I can finish my Masters in the next 12 months. My girlfriend will finish her Masters in Health Information Techonolgy in 24 months; we can pull our savings which will be about 160-220k with our 200k/year income. Combine this with my realtor’s license and construction knowledge to build a pretty damn nice house for about $700,000 to $900,000. Throw in a small market correction and this could be a new 3500 sq/ft home in South Oak Bay.

Everyone to their own, but I will face taunts from my friends for living at home and go with option two.

Anonymous said...

Simpleman posted:

However, many adult children in NA live with the belief that their parents owe free housing and food to them for as long as they want it. Some parents are ok with this, and I say good for them as long as no one is suffering for it.

Some parents are OK with this because they don't want the kids to grow up and be independent. They feel that if they the kids don't need them financially they won't be around as much. So they are happy to continue the parent child-relationship and keep them at home by paying their living expenses. If they want to move out buying or contributing to a real estate purchase is a great way to make them feel guilty and show up more often as Just Jack mentioned in his post.

So who is "suffering" from this arrangement. Sometimes the parents if they culture a dependency relationship. But most of the time it is the "kids" who never learn responsibility and how to make independent decisions. You have to deal with a few of lifes hardships if you want to become a mature adult.

Marko - You just don't get it. Then again most people living at home in their twenties would give the same response.

a simple man said...


Absolutely agree with your points as well. I know of too many 20-30 years olds that live with their parents and spend their money on expensive toys or street racing cars, which is wrong. Their parents are able to lord over them to some degree b/c they don't pay rent, etc. etc. Strangely, these are mostly young men, but not exclusively so.

I think the parents ultimately need to be in the drivers' seat and make reasonable expectations of their children if they stay at home past early adulthood (ie. 19y) to ensure that they do develop some independence and responsibility. Does it happen much? No.

I think that each situation is unique.

Marko said...

"But most of the time it is the "kids" who never learn responsibility and how to make independent decisions. You have to deal with a few of lifes hardships if you want to become a mature adult."

At 21 I became a Registered Respiratory Therapist. I've worked 4000 hours in adult intensive care, cardiac care, neonatal intensive care, paediatric intensive care, emerg, and general ward duty. I can't even count how many cardiac arrests I've attended and how many people, young and old, I've seen pass away.

At 21 I sold a new home privately, and at 23 I wrote an 11 page contract for a private sale of a 1 million dollar home. Not to mention I've dissected the inner workings for the real estate industry in Victoria.

I opened up a TD waterhouse account at 19, and I executed 72 trades in my Questrader account last year.

However, a 24 year old working on their Arts Degree at UVIC, working at Starbucks, living on their own has learning more responsibility than I have?

I just don't get it. What would I ever do if I was living on my own and the heater stopped working. Without being able to turn to my Dad I would freeze to death.

Deanna said...

Wow Marco.

I left home at 16, moved 1200 km way at 18, put myself through university and never borrowed a dime from my parents. Now I regularly help them pay the bills. Have not had all the fun trips.

Not all of us have the privilege of having parents who live in a university town or who make a lot of money. I do, mind you, have siblings who decided to stay on the farm and work it, so my family does have an inter-generational thing happening as well. The difference is that my siblings on the farm are vital to the farm's operations and are not just taking advantage of free room and board.

Marko said...

Okay okay, I am a bum, I live at home.

mcnamara_matt said...

Back on Topic of real estate, Canadian Finance Minister Jim Flaherty says "no bubble in housing market"

Rhino said...


When to leave the family nest is a very specific to an individuals situation.
- Some families can't afford to support a person after highschool.
- Some kids just don't get along with the family in there late teens and need to get away from a toxic environment
- Some people are free spirits and want to explore the world on there own
- and some people don't want to have sex with there parents in the next room

Whatever the situation, your half-bragging half-advice is totally useless...

Kyle W said...

I can't believe you guys still respond to marco the troll.

CD said...

Marko, don't worry about it. You are saving 800 bucks a month every month. When you are older, the age you moved out means nothing. I am 33 and I can tell you when the topic does come up, nobody cares - of course there are limits. What means the most is your financial situation and career. As long as you are moving forward, who cares about 5 years in your early twenties.

CD said...

So I don't get jumped, I moved out when I was 23.

reasonfirst said...


"What means the most is your financial situation and career."

Are you serious? I feel sorry for you if that's all you imagination can handle.

"As long as you are moving forward, who cares about 5 years in your early twenties."

I care about every year of my life.

You and Marco really need to get out more.

CD said...

Moving out to prove you can do it and taking on financial hardship to do it is getting out more? 5 years of living at home while in your early 20's does not ruin ones life but does have the potential to greatly reduce debt load during a time when buying a house becomes important. Raising a family and such. Money isn't everything you are right.

CD said...

Some people do not have a choice about moving out early. Family reasons, distance etc. And I am fully supportive of them and respect them for what they did. However they should not call down someone who decided to stay home.

Skeptic said...

Back to our regular programming.

Mish posts Canada's Household Debt Reaches Record $42,000 a Person; Fast and Furious Real Estate Decline Coming

Who needs to save when your house is your retirement plan? Sound familiar? It should. That is what nearly everyone in the US thought five short years ago.

Amazingly, in spite of a mammoth collapse in US home prices, our lovely neighbors to the North seem to think "It's different in Canada".

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

More real estate news.

Condo king says prices key to real estate rebound

"A miracle is not going to happen— We are not going to go back to 2002 to 2008 again," said real estate marketer Bob Rennie, adding success in today's market will take the right combination of layouts, sizes and above all else, proper pricing.

New units at InVue, for example, are being sold at 40 per cent off what the going rate was during boom times, and that cut is what’s finally luring some buyers out of their home-purchasing comas.

Many prospective home buyers are gun shy after a year that landed either them, or their friends, hemorrhaging cash from failed investments.

"When you look at the way the baby boomers changed and the ways they're shopping —they're not taking risks," said the condo marketer who had several billion dollar sales-years to his credit. "It's like they were unconscious and now they're really conscious."

Mr.4AM said...

I was out of my parents house at 21 or 22 but could have stayed until 40 if I really wanted to (I have European parents), but I disagree with most of you on this whole subject to some extent.

First of all, this whole leave your parents house at 16-19 is quite simply a North American attitude and culture. This simply doesn't happen anywhere near to the same degree in the other 90% of the world. You might want to ask yourselves why that is. And its not all about money, plenty of very rich families have their kids live at home until their 30s all over the Europe.

In my mind, whether a barely legal adult at 19 *should* leave the parents house depends entirely on the maturity of the individual and their wants/desires in life, their studies, how harmonious the family home is, the capacity of their parents to support them and so on - not because of some limited North American mentality that we try to pass off as culture.

I would venture to say that most 19 year olds dont have a clue about the world and how it works, as much as most of them can find a job at starbucks or some such job, rent a place and live on their own, but sorry I dont buy the value of what that brings at 19 vs 25 or 30, and that certainly doesnt give them a clue of how the world works other than some very rudimentary urban survival skills.

Through my own eyes (not confirmed stats), what Ive seen is that it is the blue collar type families that insist on this leave the house by 19 to be your own man or woman. The richer white collar families know what really counts and ensure their kids finish University and support them through it without adding completely unecessary basic life responisibilities.

If anything, throwing in a bunch more responsibilities (rent, part time jobs, school debt, cooking, cleaning house, etc) onto your kids at 19 while they are just starting University, makes no sense to me. All you are doing is decreasing their study time and increasing their chances of not finishing their degrees or getting lower grades, and increasing the family debt.

If you turn out intelligent and have a high paying job, renting your own place and paying monthly bills is a challenge about as difficult as figuring out how to open a bank account. Big deal!


Alexandrahere said...

The comment I get from friends who have grown children living with them (usually, sorry, males) is if they had to rent an apartment then they wouldn't be able to afford to have there own car. Gee.

Alexandrahere said...

their own car

Just Jack said...

I left at 17 because I wanted to get laid.

Inglishmagor said...

I'm only in my mid 30's and I can see why things changed just after our generation. We ventured out at 18 because we really thought we could build a life, career, and home in the same way our parents did. Things changed though.
Workers became a resource that had to match the bottom line profit ratio. Loyalty became a memory. Housing went from buying a piece of land to build on, to buying your future million dollar retirement cash in.

People staying at home now have a huge leg up on those trying to live by the outdated model. I honestly haven't thought about it's effect on housing, but it could deeply impact rental rates and the amount first time buyers are able to spend.

As with all groups of people there will be those that stay at home until 25 without saving a dime or learning a thing. Sadly they will be screwed, because the people saving their money getting degrees will price them out of everything.

Just Jack said...

I'm okay with my daughter staying home into adulthood with some requirements.

If she is in school everything will be paid for. If she is working she will need to contribute financially to the family.

I left at 21 but had been paying rent because I was working. My mom gave me back all of the rent I had paid to her when I moved out. It was such a surprise. I had no idea that she was going to do this. She said they had asked all of their kids to pay rent and I was the only who did.


Just Janice said...

I'm now very early 30's. I left home just shy of being 18. I finished my undgrad degree at the age of 21, finished my masters at 24 was debt free (including student loans) at 26. I only returned home my first summer, and that was only as a result of medical need. Not once did I ask my parents for financial help after leaving home (and there were some very meagre years). I worked, I got student loans and survived living a frugal lifestyle. To be fair, at the time neither of my parents were in a position to provide financial assistance to their adult children as they were playing catch up in terms of getting their own house in order for retirement.

I think it's about balance - you want your child to succeed and not be burdened without reason. On the same token you also want your child to develop a work ethic and good habits with regard to money and the treatment of others. Lastly, you want your child to be an independent adult. Further you need to meet your own needs for retirement and other stuff.

I might be more generous with my children than my parents were with me - but the context is much different. I'm still going to expect my child (barring disability) to want to be an independent adult as soon as they are capable of being one. I might ease their way a bit more, but I will expect them to learn the same lessons.

Personally, had I stayed home and did my university career living with my parents - I probably wouldn't have had any debt upon graduation - I probably would have owned a car much sooner, I probably would have more savings in the bank account on my 22 nd birthday. But by the time I reached 30, I'm pretty sure I would have been much further behind as I would not have learned all the lessons that needed to be learned to achieve 'bigger picture' success. I might be a worse wife for it too (living with room mates teaches a person a lot about living with people who aren't related to you).

Marko and his girlfriend can keep their lot in life - I wouldn't trade him spots for all the money in their combined bank accounts.

Animal Spirit said...

Just updated my stats on SFH. Listings continue to increase, but there has now been a significant downward change in the median listing price.

On March 1, it was 699.9K. Today it moved down to 649.9K, or a drop of 50K. This is 7.1% in approximately 1.5 months, or around 4.5% per month.

In 2008, the median listing price dropped at around 2% per month while prices were doing the same. If this holds true for this year, one would expect to see median selling prices starting to drop in the next month or two.

The how much is what I am taking bets on.

kabloona said...

In other news.....

It looks like the cops are *finally* on the big "mortgage fraud" case.
Police probe massive Alberta mortgage fraud - Criminal investigation follows $69.5-million BMO lawsuit

Dawn Walton

Calgary — From Friday's Globe and Mail
Published on Thursday, May. 13, 2010 7:25PM EDT

A criminal investigation has been launched into allegations of widespread mortgage fraud at the Bank of Montreal, the RCMP’s commercial crimes section said Thursday.

BMO, which recently handed over thousands of pages of documents to police in Alberta, has filed a massive lawsuit against hundreds of people in connection with an alleged $69.5-million fraud scheme that the bank says cost it $30-million.

RCMP and the Calgary Police Service are now working together on the file, which has been described by industry watchers as the biggest mortgage fraud case in Canadian history.

Alexandrahere said...

Come September I think peoples view of real estate in B.C is going to take on a totally new perspective.

Leo S said...

In my PCS* in the last 20 days I have had 2 sales and 57 listings. Pure insanity.

District: 'Victoria, Saanich East'
Property Type: 'Single Family, Half Duplex'
Listing Status: 'Active'
Current Price: Maximum '$520,000'
Title: 'Freehold, Bare Land Strata'

a simple man said...

Oak Bay Update:

Listings still piling on.

- 34 of the last 100 listed sold.
- 27 price changes in the top 100 (many prices changes in those that sold, at least half.
- many sales below asking, some more than $40K below.
- some sales BELOW appraisal
- many new listings closer to appraisal (as per Animal Spirit above)

Change is in the wind. I do not expect anything substantial until the fall (no pun intended), but I would say we have entered into bear territory.

Still a horrible time to buy, though.

Good weekend to you all.

a simple man said...

Just a point of clarification for my last post...

"27 price changes in the top 100 (many prices changes in those that sold, at least half)."

That is 27 price changes that are still for sale, plus at least another 15 from the sold bin - a total of about 42 of the most recent 100 listings with price changes...and many of the top 30 have not seen a price change yet b/c they are too new on the market...

A few houses in Oak Bay have sold over asking by ~$10K on average.

One house on Cavendish sold first day ($800K) at list with no conditions... similar to the two others that sold there in the past year...quickly and at or above list...I love Cavendish but have resigned myself to the fact that I can enjoy walking down that street a lot instead.

Rhino said...

District: 'Victoria, Victoria West, Oak Bay, Saanich East'
Property Type: 'Single Family'
Current Price: Maximum '$800,000'
Bedrooms: Minimum '2'
Bathrooms: Minimum '1'
Title: 'Freehold'

I am at 267. The worst it was during the last correction was around 240. Sales are still stronger than at that time however. This is getting interesting.....

think said...

Yes, this is getting interesting :) Now is when the action starts. This market shifted starting in January 2010 - listings started to pile on and sales started to cool... slowly at first but steadily we kept building inventory and sales kept fizzling out (speaking of fizzle - haven't heard much from the bulls lately - guess the crash is too obvious now - tuck your tail). Anyway, now we have more inventory than this time 2008 and sales are already dropping off month by month - this is a sign of a MAJOR hard and fast crash to come - if you compare to 2008 house prices started to tank in May 2008 when we hit 4300 active listings and dropped from an average price of $625,000 to $525,000 in the matter of 7 short months. I think this crash is going to be even worse - this is the real deal now - by Oct/Nov I think we may be below $525,000 average house price. Unless of course they decide to lower interest rates again, maybe the banks could start paying us to borrow money ;)

Robert Reynolds - GBA said...

There was an interesting story on the radio this morning, CBC the Current (I think)

They were talking to a guy who started a website (didn't catch the name, I know I suck, when the podcast drops I will repost) that is essentially an eBay style auction house for realtors.

Basically, you list what you need a realtor for, and the realtors bid what they are willing to accept as a fee to provide the service.

IE: Just want MLS listing, realtors bid it down to say $500. lowest bid wins the client.

Or say you want the full meal deal, MLS, brochures, open houses, magazines, overseas advertising yadda yadda. Realtors again bid for what they think they can get the job done for.

Awesome idea if you ask me!

Skeptic said...

A local real estate agent, Tim Ayres posted the results of the April VREB Members Market Survey on his blog

Full report - click here-pdf

Comments anyone??

a simple man said...

Thanks Skeptic...

Of course all of these stats are biased, but they are interesting nonetheless.

My quick observations:

- 20% purchased with high ration mortgage - these folks could be in trouble when rates rise further
- more realtors stating less traffic at open houses (49) than more traffic (34)
- 54 stating less multiple offers, 12 stating more
- 8 stating fewer deals collapsing due to financing, AND 48 state more deals collapsing due to financing

These are interesting stats, especially considering the new mortgage rules really did not officially come into effect until 2/3 of the month was over...

Anonymous said...


Only a few more days until weekly stats come out. My PCS has not had so few sales in a long time. Listings keep on coming but a little slower than last week. I expect Monday stats will be disappointing for realtors and bulls. Bears will be smiling.

Keep dancing!

a simple man said...

Anatomy of a price slide:

2082 Meadow Pl

List Date: April 13, 2010
Asking Price: $729K

Price adjustment May 6
Asking price: $725K

Delist, relist today
Asking price: $700K

I really, really dislike the delist, relist trick.

Just Jack said...

I think the practice of re-listing is bad too. But, it works.

What's really great about these blogs, is people learn so much more.

Like the "days on market".

So many people interpret this wrong. I've heard people say: "It sold in one day - it must have undersold" It may have been on the ML system for one day, but like pre-sale condominiums the agent has been flogging the property exclusively for 3 months.

Think of yourself on opening day in a sales centre for a new high rise. The room is jammed with people and an agent is placing sold stickers on the board. Do you think you're not being manipulated. Do you not think that the agent did not have to agree to buying a half dozen suites in order to get the right to sell the developers condominiums.

And NO, the agent does not have to tell you he has an interest in the building, because it does not fall under the Real Estate Act until it becomes real estate - and that means it has to be built.

a simple man said...

Just Jack...

You are right - it does work. I have watched several in Oak Bay relist and thought to myself that no-one would fall for it only to see it sold within a couple of days...even at a higher relist price.

But it is shady.

In house-purchasing it is important to educate yourself - it is likely the biggest purchase of your life and you will have to live with in and in it.

Robert Reynolds - GBA said...

From Garth

I sell funds (segregated rather than mutual) and almost exclusivly no load funds. Anyone who sells Back-end load (DSC) [deferred sales charge] for speculation rather than loooooong term or RRIF is a sIlmeball only out for commissions

back end load funds pay about 3% commission where No Load funds pay 0.3%

If you are saving your down payment in high risk mutual funds you better understand the risks and be prepared for a downturn, duh

msr said...

As an interlude from housing discussions.

Portal is now free. I repeat Portal is now free. If you have never played Portal, go download it.

The Cake is a lie

Robert Reynolds - GBA said...

This was a triumph...

Mark said...

This really says it all.....

Ten days ago I left Vancouver for the second time in ten years, and for many of the same reasons that prompted my departure the first time. The news that I was leaving Lotus Land for Edmonton was greeted with a mixture of pity and perplexion by a lot of people I know – after all, why would anyone leave paradise by the sea for a concrete jungle that’s frozen solid eight months of the year? But stereotypes aside – Edmonton is far more beautiful than anyone gives it credit for, I think – it is that very comparison that explains why I’m leaving, and why I’ll probably never be back.

Having been born and (mostly) raised in Vancouver, I’m not ignorant to its charms. But it long ago became obvious to me that the average citizen who lives there pays a high price for those pleasures, one that’s only gone up in recent years in advance of the 2010 Winter Olympics. More importantly, perhaps, it’s a price tag that’s attached to an experience that most Vancouverites enjoy only a few times a year, at most. Yes, it’s difficult to match the splendor of second beach on a warm summer day or the proximity of the local mountains in the winter time, but for the average person those are rare indulgences. Are they worth the price that’s being asked? Not for me, they aren’t.

Frankly, I’m happy to exchange Jericho Beach and Cypress Mountain for a city in which there is both real economic opportunity and the chance to finally get ahead in life rather than constantly playing catch up, a game that’s underwritten by VISA cards, lines of credit, and other punishing forms of short-term financing. In Edmonton, and I suspect in Saskatoon, Winnipeg, Ottawa, Halifax, and every other city in this country that doesn’t fancy itself as “world class,” it’s actually possible to build a life without either inheriting a small fortune or sharing a 300 square foot basement suite with two other people.

It won’t surprise anyone who’s ever read this blog that I lay most of the blame for this state of affairs on the overheated real-state market. When the average couple – one without trust funds, inheritances, or seven-figure jobs – can’t afford to buy the average home, there’s a price to be paid. In the short-term, that price will be paid (in a cruel irony) by those very same average couples, who will leverage themselves into knots to get into the market. From there, only two things can happen, both of which will prove catastrophic for our average couple: the real estate market can either correct, in which case they’ll be sitting on negative equity and lifetime of crippling mortgage payments, or it won’t, and they’ll just be sitting on those equally debilitating mortgage payments.

Eventually, though, those average couples will start to look elsewhere, to the Edmontons, the Saskatoons, and the Halifaxes of the country, places where middle class people – teachers, journalists, nurses, and tradespeople, for example – can afford to live middle class lives. They’ll move to places where they can afford to save money, to have children, and to plan for the future, rather than remaining on the economic hamster wheel of places like Vancouver and Toronto, where wages remain stagnant while prices shoot ever higher.

They might even discover that they like these new cities, too. Certainly, from where I sit, Edmonton looks like a perfectly civilized place to spend some time, and I don’t know when, if ever, I’ll leave. But I do know this: until its economy returns to some semblance of normalcy, and until middle class people can afford to live middle class lives, I won’t go back to Vancouver.

Alexandrahere said...

Good luck to you Mark. Back in the early 70's the average home sold for about $3K more than the same house in Victoria. House prices in Toronto were much higher than those in Vancouver and Victoria. How things change.

This morning in some of my target areas i.e. Saanich East and Saanich West $400K to $700K with a minimum of two baths there were 8 new listings and one price change. There were no sales. One property on Lovat MLS 274242 has been reduced again. It started out at $649K....then $$ $599K. Wow $50K reduction. It is a nice house with a three bedroom suite renting for $1400 per month. But the area is average at the most.

a simple man said...

In Oak Bay I am noticing evermore listings and there were a number of sales go unconditional last week, but this week has been very, very quiet on the sales end from my observations.

Lots of open houses...and lots of realtors sitting in them alone watching their blackberries...

Rhino said...

As much as I think real estate is overpriced I can't agree with that Edmonton guy. I lived there for 8 months and found it pure hell. And in terms of only taking advantage of our west coast experience twice a year, that's not true for most people I know. We are out doing camping, boating, hiking every weekend.

Compare rents for Victoria and Edmonton. I would happily pay the extra few hundred to live here!

think said...

Just went through a ton of open houses in Oak Bay and Fairfield... very very quiet... most of them we were the only people, at some only one other couple maybe and they looked half asleep. Gone is the panic and rush - nobody left to buy! Hard to believe that in November open houses were so busy it was hard to find a place to put my shoes! I'm still dancing!! This market crash is picking up steam - I think if the inventory continues to pile on like it is we are dropping 10-20% in prices in the next 3-6 months easily (and I'm conservative and realistic).

CD said...

Think, do you go to open houses just to assess the market?

Mark said...

The author of the article was referring to home ownership, not such he is saying a regular blue collar worker (what Victoria is predominantly is made up of)can no longer to afford to own a home without going into severe debt and lowering their quality of life to do it. Factor in the risk associated with a major market correction and it's a pretty ugly picture.

His point is it's a shame that a young person/couple starting out cannot make a go of it in the cities they grew up in. You just cannot get ahead in this type of you move to places more affordable.

Hey I lived in Edmonton as well and would never move back but if you could get a better paying job, pay a hell of a lot less to get established (buy a home etc) then maybe it will start to make sense for a lot more people.

Either way, I'm not a huge fan of Victoria either but renting ain't so bad and eventually things will turn around and get back to more afordable levels. What we all seem to forget is that Victoria really wasn't all that affordable 7 years ago....I remember looking at a lot 70's breeder boxes that were selling for 250k to 300k and shaking my head in disbelief.

My question to a lot of folks is WHY DO YOU HAVE TO OWN???? A house really can become a money pit and what has occurred over the last 7 years is an anomaly and will never happen again in your lifetime. Get past the the I have to own thing and just live your life.

It sure as shit ain't worth selling your soul or your family's future just to own a crack shack in it?

Personally I can't wait to leave (retirement is not too far off) and really don't see the appeal but that's just one man's opinion (a man that has traveled extensively). Paying a premium to live here is insane! Much better places out there and a helluva lot cheaper :o)

Victoria is the bubble within a bubble.

think said...


At this point, yes, I go to open houses to further my knowledge and experience, given I would be a fool to buy right now. Houses can be very different in person compared to just looking online, this way I can get a very good understanding of value when I see sales prices. This knowledge is very valuable in the long term once prices come down to what I think are close to true value I will be ready to know a bargain when I see a bargain. I already see price softening, but things are still grossly overpriced, I strongly believe we need at least a 20% correction to see homes close to true value, this correction is necessary and inevitable - after it has happened everyone will look back and think "duh" in hindsight. Another reason I like going to open houses right now is because it is fun - no other buyers, agents are nervous and really pumping/working their listings and most of them told me the people are "open to offers so don't be shy" - total change in mindset. We are officially in a buyers market now, but not everyone is aware yet.
Now is the time to wait and watch and learn and enjoy the ride :)

a simple man said...

Thanks, think. I really appreciate the personal "Woman/Man on the street" experiences that give us a greater understanding of the local market. I was going to try and make it out to a few of those same houses today, but family and professional duties overwhelmed me.

Sounds like a different world from last fall.

Alexandrahere said...

CD.....lets give respect to all of our bloggers. I think that it is great that Think is going out and physically looking at some of these properties. Not all of us have the time for this and I am happy to gain the knowledge and insight that he is sharing with us.

So lets not get into little rude comments that so many other blogs are rife with.

CD said...

Think, that is totally cool that you do that. I would have to say that is really doing your homework. I crunch all the stats but its good that you offer on the street info.

Mark said...

Long-Term Mortgage Rate Forecast

Here are the latest long-term interest rate forecasts from Canada’s major banks.

Overnight Rate Forecast

Bank 2010 2011
BMO 1.35 3.35
CIBC 1.25 2.50
RBC 1.50 3.50
Scotia 1.50 3.00
TD 1.50 3.50
Avg 1.42 3.17
Chg 1.17 2.92

5-Year Government Bond Yield Forecast

Bank 2010 2011
BMO 3.60 4.30
RBC 3.45 4.10
Scotia 3.80 3.95
TD 3.50 4.30
Avg 3.59 4.16
Chg 0.62 1.19


Big bank economists, on average, are forecasting a 2.92% increase in the overnight rate in the next 19 months. Their forecasts, if accurate, suggest that prime rate will rise to roughly 5.25% from its current 2.25%.

On the fixed-rate side, bond yields are expected to rise 1.19% in the same timeframe, according to bank estimates. (Bond yields drive fixed mortgage rates). Based on a typical 120 basis point spread above yields, this suggests deep-discounted 5-year fixed rates could rise to around 5.36% by year-end 2011.


Things To Note: These forecasts are made by the banks and are subject to frequent change. This data is provided only for general interest. Always discuss your needs and risk tolerance with a mortgage professional before acting on any information you read online. History has shown that it’s near impossible to accurately predict interest rates long-term so use these figures at your own risk. That said, while economist projections are often wrong, they are still one of the best sources of educated opinion on interest rates.

Mark said...

The Latest Reality Check on Debt

Debt Canadians' debt-to-financial assets ratio now exceeds that of all other OECD countries for which data is available.

That’s according to this new Certified General Accountants (CGA) study.

CGA’s report states that…

* 20% of Canadians feel they have too much debt--versus 17% in 2007
* 1/4 of respondents wouldn’t be able to handle an unforeseen $5,000 expense (The study didn’t note how many of these people had mortgages.)
* A 2% mortgage rate increase would require a 9% to 11% reduction in discretionary spending among middle to middle-high income families.
* 43% of Canadians are “concerned about their financial condition at retirement.” (The reverse mortgage industry will benefit from stats like this, as fewer seniors have sufficient savings apart from their home equity.)

This report comes on the heels of yesterday’s CAAMP survey, which estimated that 475,000 Canadians would be financially challenged if their mortgage rate increased to 5.25%. That’s on top of 375,000 others who are already finding it hard to keep up with mortgage payments.

There are 5.55 million Canadians with mortgages.

CD said...

Next Friday the BoC releases CPI data for April. This will cement a rate increase or not June 1.

Alexandrahere said...

Good day all. I'd really appreciate some financial opinion/advice.

Right now you can get a 5 year GIC at 4%. Would you invest at this rate (wanting total security), or would you keep the money in a high interest (joke) daily savings account until rates go up in June? Or any other suggestions?

Currently I own a modest 2 bedroom condo. I have a small pension and I depend on savings income as a supplement to my income.

I never want to be in a position that I would need to apply for the guaranteed income supplement. Although I am glad it is there for seniors who really need it.

Robert Reynolds - GBA said...


I would say No to the GIC and the high interest account there are better choices out there

Preferred bank shares and bonds pay 5-6%

Segregated funds have a 100% maturity guarantee after 10 years.

GMWB (Guaranteed Minimum Withdrawal Benefit) products like Manulife Income Plus, Great West Life Seg Funds, Desjardines Helios, or IAPs Ecoflextra allow you to stay in the stock market (seg funds) but have a guaranteed 5% ROI (notional account lots to explain, beware of fees, talk to an advisor)

Lots of other better options.

[disclosure: I sell some of these]

Alexandrahere said...

Thanks Robert for your input. To me though I just somehow would rather (at this stage of the game) to opt for say a 4%GIC than a 5%preferred bank share. Only because of brokerage fees etc.

I had a full time job as a single parent but made my money by buying property and between me and my daughter, fixing them up aesthetically, living in it for a year or so then selling. I took many calculated risks and for the most part most projects turned out positively.

I really think that we have seen the last of the risk takers out there in terms of flipping real estate. I think we are in for a nosedive over the next 18 months or so and then we will see a leveling off period for perhaps 10 -12 years where property prices will stagnate. We'll see a great many realtors leaving their "profession", and the fees of the good ones that remain will be highly negotiable.

Our way of life is changing. We'll probably see more families following the European, Asian examples of say three suites in converted existing homes or new purpose built homes. Homes that will stay in the "family" for generations. The "family" will own the house. Grandma and Grandpa after retirement will be looking after the grandkids and greatgrandkids and doing much of the house/garden chores and cooking of meals. The others will be working and contributing their salaries to the household as a whole.

When the family gets too big (many children) to live in the original home, the "family" will purchase another one. And so on. People will depend on each other, share responsibilities etc.

I truly think this is going to be the way.

Maybe I'm wrong.

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

Some of the price reductions I'm seeing on "lower end" Oak Bay Homes:

Heron 679--669 -10K
Townley 669--649 -20K
Meadow 729--699 -30K
Elgin 749--699 -50K!!!
Windsor 789--755 -34K
Cookman 659--649 -10K
St Patrick 779--734 -45K
St Patrick 742--725 -16K


CD said...

Month-to-Date Market Statistics
May 17 2010
Monday, May 17, 2010 8:30am:

2010 2009
Net Unconditional Sales: 325 879
New Listings: 880 1,362
Active Listings: 4,316 3,789

CD said...

It looks like we are at the denial phase of the bubble.

We only have a net gain of ~90 listings from the end of April. 880 New listings, 325 sales.

It seems to be people are cancelling listings or it could be development projects manipulating MLS by reducing the active listing count. ?

think said...

great numbers, the trend continues :)

sales/new ratio 37%
MOI 5.7

I think we are on course for 4500 total listings by the end of the month which is what we had in June/July 2008 and that prices were dropping like a rock then. We have tons of inventory already, now the prices have to come down. Sales are pathetically low - if the trend continues we will be lucky to break 600 sales by the end of the month - that is crazy!!! There are no more buyers left - it is so clear. And the new inventory is steadily coming on. I agree with CD that it is strange that total listings aren't reflecting all the new inventory but I agree it is probably people cancelling listings which as was mentioned before means the sellers are shifting from opportunists that don't have to sell to more distressed sellers that will have to lower prices to make sales. This market is beyond done, its about to get pretty crazy now...

Alexandrahere said...


The TSE is down 293 points this morning

The Dow is down 139.

Things are getting rocky. 2008 here we come?

CD said...

Take the total inventory 4316 and divide them by the estimated sales for the month 650. 6.6 MOI Official bear country.

think said...

I do love bear country :)

a simple man said...

the tide is certainly turning...

I agree that there is now a period of seller denial.

I keep trying to hit the "New Thread" button for this blog, but it doesn't work!

kabloona said...

No kidding.....we need a new thread! Puh-lease....!!!

kunwak said...

Mr.4AM said...

Those in the know have recently had their suspicions confirmed that the stock markets are totally rigged. Between HFT traders boasting a 4 year trading record with ZERO losses(!!!), and the PPT (Plunge Protection Team) soaking up any significant down days back into the green (i.e. May 7th & Today), the little guy has practically zero chance of predicting market direction based on fundamentals in this casino gone mad.

May 6th was a massive wake up call people. Time to Wake UP and smell the Melt-UP (very informative youtube video)... to be followed by a massive Melt-DOWN.

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