Monday, May 7, 2012

Month to date, May stats

MLS numbers courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.

May 2012 month to date 
Net Unconditional Sales: 140 
New Listings: 382
Active Listings: 4451 
Sales to new listings ratio: 36%

May 2011
Net Unconditional Sales: 572
New Listings: 1524
Active Listings: 4857
Sales to new listings ratio: 37.5%
Sales to active listings ratio: 11.7% or 8.49 MOI

Sales are off to a bit of a jump start in May; perhaps a good weather bounce anyway; with nearly 24 unit sales per day thus far. If this pace keeps up, we're looking at over 700 sales on the month, about 20 per cent higher than last year. I wonder why?


Trevor_tni said...
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HouseHuntVictoria said...

Trevor, this blog doesn't exist for you to market yourself or your industry on. Please refrain from posting jiberish and nonsense about mortgage brokers versus banks etc... I'll just delete it. If you want to participate in the discussion, fine. If your participation is purely to promote yourself, your services or your industry... well to the curb it shall go with the other trash!

dasmo said...

Thank you...Nothing is worse than TVP that is not so thinly veiled...

Trevor_tni said...
This comment has been removed by the author.
HouseHuntVictoria said...

Trevor, regardless of what you say about your own comments, I reserve the right to judge the comments and remove them as I see fit. FYI, the offending line contained "mortgage broker" and "massage." I'm confident that no credible mortgage broker would ever want that written about their services.


dasmo said...

I'm not a Bear, I'm a Halibut!

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

Trevor - stick around.

Trevor_tni said...
This comment has been removed by the author.
Just Jack said...

"hit him again - he ain't got no brother"

dasmo said...

Don't give up so easy Trevor! it's the internet and this is a bears blog. If you enter the cage expect to be swung at :-) You have horns, use em.

Jason Lowe said...

Wow!! I missed that post!
I had some guy in his mom's basement rip into me last year for for 8 hours after answering a question someone asked related to my profession. I refrained from ripping this guy a new one, but just left the site instead.
I thought it was positive banter, yet it seems some people are angry for maybe not being able to take advantage of today's real estate/interest rate situations?

dasmo said...

Personally I find it refreshingly real and depressing in here. Researching RE online can be polluted with promotional material big time...

CS said...

"it seems some people are angry for maybe not being able to take advantage of today's real estate/interest rate situations"

Like, how, Jason?

I got cash, if you can tell me of a sure bet, I'll be glad to receive your advice.

Just Jack said...

I think people should be angry.

Not at all real estate agents or all brokers, because they have to feed their families. I don't grudge a person who is trying to feed his/her family. And all sales people will stretch the truth. But, you understand that when you're buying a TV or a fridge. But those things have warrantees and guarantees.

But not in real estate. In order to sell real estate it is important to gain people's confidence. And some sales persons make statements and promises that are misleading because either they don't want to come across as unknowing or just to ink the deal.

And those that step over that line need to be slapped hard. If you want to call yourself a professional, then you should be held to a higher level of professional practice. As has been pointed out on this blog many times before when you are being trusted with what may be the single most important purchase of a person's life. You must be held accountable for your actions.

You can't say to some twenty somethings that buying a home at ten times their income is a smart investment because real estate always goes up. You should be held responsible - in fact you should pay for their mortgage!

Just Jack said...

Having said all that, back to blogging.

The Regulation Sector of the Office of the Superintendent of Financial institutions of Canada has proposed new residential mortgage underwriting practices and procedures.

If you had an opportunity to talk to the Assistant Superintendent, Mark Zelmer, what changes would you like to see made? And perhaps why?

Jason Lowe said...

If you find a deal, buy it and don't sell. You'll never loose money if you don't sell. I think the houses that we grew up in,owned by our parents can attest to that. A market is a market, they go up and they go down.
If prices drop by 10% 4 years from now, so what? If you don't want to own, then don't.
Anyone that has been paying attention for the last 5 years should know it may be a bad idea to purchase to try and sell next year?!
Not sure what Jack's on about..isn't it common sense? You shouldn't buy if you can't afford to make payments.
I'm pretty sure lenders take into account debt servicing! ie: income level to debt level..

CS said...

"If you find a deal, buy it and don't sell."

How is it a "deal" if the price goes down?

I guess if you can explain that, we'll understand why now is always the time to buy real estate, even if the market's reached a generational tippy top.

Just Jack said...

Every property that has ever been bought in the past and every property that will be bought in the future will eventually be sold.

So, it may be true that if you don't sell you won't lose money - only because your dead.

The problem with common sense, is that as an agent or broker your speaking with someone who can easily be manipulated by erroneous statements.

Applicant: "You know with the new baby and daycare costs, we're not to sure we can make those payments"

Salesperson: "there are a lot of people just like you that thought the same way a few years back and now there happy they made the decision to buy and besides we are not obligated to include daycare costs in your debt service ratio - so you'll easily qualify for under 40 percent"

And under the new OSFI proposal for residential mortgages you should have to explain that if the value of your property falls below its mortgage amount, you will have to come up with extra cash to bring your mortgage back to 95% at renewal time.

So, yes if your property falls by 10 percent it is important.

Maybe agents and brokers should give themselves the ethics test.

If a client asked you to put what you just said in writing - would you do it?

If you won't - then maybe you shouldn't be saying it!

Because the first casualty of buying real estate is - common sense.

Irving said...

“You'll never loose money if you don't sell.”

Tell that to the millions of Americans, Spaniards, Irish, Japanese....who not only lost all their wealth but are now underwater in a depreciating liability because they believed quotes like yours and “didn’t sell”.

“If prices drop by 10% 4 years from now, so what?”

What if they drop 75% like Japan or only half that amount? ....still “so what?”

Anton said...

I did read the offending post and it certainly seemed like a sales pitch (for buying now and using a mortgage broker). I think we are bombarded with hype from vested interest groups - Realtors, developers, mortgage brokers etc. that we have detectors that go off when we hear their message. I am happy to hear bullish points of view on this blog and even wish there were more. I also think the conversation going on here should be acknowledged. I am not sure if that is happening when posts read like a script for a loud radio ad from your local(desperate) RE professional.

Jason Lowe said...

as a broker, there are 2 separate cost of borrowing disclosure statements that have to be signed by the broker and the client, one from the lender and one from my company. Problem solved..
There are people out there with ethics. My job is to not only be competetive, but to help people that aren't educated in this matter and explain to them the costs and payments involed. At that point the client would have to make a very important life decesion as to whether or not they can afford this option.
I think everybody and their uncle, along with most people on this web-site would give their 2 cents worth and let them know that the future could possible change for anyone, at anytime, with anything in their lives ie: job, marriage, roof, rates, I could keep going....They will get a mortgage renewal letter to sign at the end of term from the bank they chose and they can sign it without having to re qualify. Although, I wouldn't advise that..

patriotz said...

"Problem solved."

Well no, the problem is agents who say things like:

“You'll never loose money if you don't sell.”

which would get a stock broker or mutual fund dealer prosecuted.

Introvert said...

I have been driving around Gordon Head and Broadmead....

I wonder if those houses will still be standing in 20 years from now.

Many look like they are on their last legs.

I want to go back to what Nancy wrote (above) from the last thread.

I'll be blunt: this is an asinine statement. Most of Gordon Head's housing was constructed in the 1970s. So 30 to 40-year-old housing should be considered "on [its] last legs"? Since when?

"Will it still be standing in 20 years?" You've got to be kidding me.

Yeah, not all houses in Gordon Head are immaculately maintained--far from it--but will they still be standing in 20 years? Geez.

My guess is that this type of comment is symptomatic of a resentment towards homeowners who accrued an unprecedented amount of equity over the past 10 or 15 years. If this is the case, it is understandable.

Jason Lowe said...

Americans weren't regulated, which is why they collapsed. We are attached to them, which makes me nervous. Japan got rocked by a horrible disaster..and the 2008 and mortgage colapse in the US is directly attached to europe, from all the bogus mortgages sold to european lenders by the US. There should have been a lot of people that went to jail on that one!
If we get the big one here, we can all get cheap waterfront..

Just Jack said...

Actually, that's a good thought.

You shouldn't buy if you can't make the payments.

How would you go about finding out, how much you could afford to pay in a mortgage? Who would you ask?

Well, you would ask your real estate agent, mortgage broker or banker.

And what just happened to your common sense here?

Of course you know what you can afford. You didn't arrive on the planet yesterday. Last month you had a hard time making your $1,500 a month rent payment and now you believe people that say you can easily afford $1,800 a month.

You only hear - what you want to hear.

Applicant: "my broker told me that he can get me a mortgage of $300,000 on my income, while the bank turned me down for $200,000. That's why it's always better to use a broker, than go to a bank."

Applicant: "brokers work for you and not the bank, and they don't charge you - its free."

Applicant's friend: "how do brokers get paid then"

Applicant: "from the bank"

And what happened to common sense here?

Just Jack said...

The question may not be if the Gordon Head homes will still be standing, but will it be economical to keep them standing.

The 1970's had their problems with construction, poor drainage, vapor barriers, poor roof venting, etc. that lead to high energy costs. Also the demand for land for a higher density may be greater than the value of a house on a lot in the future.

But it's not just the 1970's home that has problems.

New construction requires a higher reserve for replacement. Maybe not with the structure but with the appliances, flooring, etc. Most of those shiny new appliances and other creature features have a very short life span and most will have to be replaced around five to ten years from now and usually at the same time. Check the thickness of those granite counter tops. Not by looking at the edge, but the thickness near the center. Drop one solid copper pot on the granite and watch $1,500 go bye bye. And forget about getting those appliances serviced, the cost is too high. You are better off to throw them away and buy new again.

Because a higher price today does not mean higher quality - it just means more features.

You don't get what you pay for anymore.

CS said...
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Just Jack said...

Waterfront may come down in price, but it still will be expensive relative to other properties. Especially, if such a collapse happens, very few people will be in a financial position to buy it.

So, be careful for what you wish for - because you just might get it.

CS said...

"all the bogus mortgages sold to european lenders by the US."

There was nothing bogus about the mortgage-backed securities and their derivatives.

They were triple-A rated, remember?

And as long as lending standards were continually lowered, more and more people were drawn into the market, which drove prices higher and higher.

And as long as prices continued to rise the mortgages were good investments. Folks with nothing down who lost their job or had to relocate sold their house, paid of the mortgage and pocketed a profit.

But as soon as prices peaked those with nothing down who were unable to keep up their payments could not clear their mortgage. Hence: jingle mail; foreclosures; bank sales; accelerating price declines; and "troubled bank assets."

Nothing's different in Canada except we may not have peaked yet. And of course here prices never go down. Or if they do, don't worry, just don't sell. LOL

Just Jack said...

Americans were self regulated. Darwinian Capitalism working at its best.

What really happened was that the originators of the loans could pass the risk off to someone else and collect a fee for it.

It was more profitable to sell the mortgage than to keep it on your books. Because the loan originators didn't have any skin in the game they had no reason to be accountable or responsible to anyone.

And that's one thing I would suggest to OSFI, the loan originators should be held responsible. Inadequate loan documentation and a high incidents of loan defaults should be grounds for fines, suspension and expulsion.

Maybe some high profile law suits against some realtors, brokers, etc that have mislead the public in their advertising would help. Kinda like what they yanks did to Martha Stewart.

You put a couple of them up against a wall, the others fall into place quickly.

Just Jack said...

Here's another question.

Should you get mortgage insurance from your lender. Not CMHC insurance but insurance in case you miss judge that bus coming at you while standing in the sidewalk "bulge-out"? So that your significant other has enough money to pay off the home, pay for your funeral and take the pool boy to Mazatlan.

How about earthquake coverage on your home insurance?

How much should you pay for house and content insurance?

dasmo said...

CS your statement "Nothing's different in Canada except we may not have peaked yet" is not true at all... "There was nothing bogus about the mortgage-backed securities and their derivatives." shows you haven't really researched the subject. Their was deception to investors about Fannie’s and Freddie’s subprime portfolios and it was predatory lending that made these subprime borrowers so fragile. Not just over lending but setting them up with no-principle or reverse principle ARM mortgages that came due. So not like a regular ARM that's simple tied to the rate but rather; come two years and your principle has grown, and you have to start paying it! We are talking payments tripping even with rates remaining flat. This was all allowing inflated prices to continue to inflate but with a time bomb attached to it all.

Just Jack said...

Exactly, nothing wrong with MBS's they grease the financial wheels to make things work better.

But when the income from them dropped off and kept falling, how much would you buy them for then? Or better question, why would you buy them?

No problem, the bank that sold you the MBS's just has to top them up with new mortgages to restore the income stream. Lehman Brothers?

Okay so the bank has become insolvent. What are they worth now?

At least get them insured then from Fannie, Freddie

Oh $#@$

Get me Goldman Sachs on the phone, maybe they can show me how to short my own MBS's?

Just Jack said...

Or even better. Why not bundle a lot of these MBS's and sell them to a country like Greece and then make a side bet that Greece will default when the MBS's go sideways on them?

Nah, that won't work that would be kinda like inside trading, some regulatory body would stop you from doing that.

On a side note: did you hear that when Dick Cheney got his new heart, the doctors couldn't find the old one.

Just Jack said...

You could pay a lot more for a home with an interest only mortgage for two years. But in two years you would be able to flip it and make money.

Or how about if you went into the poorest neighborhoods and got mortgages for those that never could get financing before. Promising them that they would pay less on a mortgage than they paid for rent.

"Why rent when you can own" is very seductive to someone working at the Quicky Mart"

Bundle them all up, collect your commission and add another 2,000 square feet on the McMansion you're building or buy that 250 Testa Rossa.

Craig said...

"Americans were self regulated. Darwinian Capitalism working at its best. "

This is dumb on so many levels. Anyone with some knowledge of the financial industry understands it is one of the most regulated in the US.

And for housing in particular, Fannie/Freddie held or guaranteed more than half of all subprime loans, at the behest of Congress which was heavily invested in the idea that the poor needed to own homes and risk controls were discriminatory.

Capitalism today is mostly of the crony variety, with governments and large companies collaborating for mutual benefit while using regulations to prevent smaller ad better businesses from emerging.

Just Jack said...

The Cost of Borrowing disclosures those would be explaining how declining balance works and how much interest and principle would be paid off at renewal time?

Would they also show the amount of penalty or interest rate differential if they were to sell or move their mortgage.

Is this a standard boiler plate form, or is it prepared to show the mortgage the applicant is actually receiving? Does this disclosure, form part of the mortgage agreement or can it be modified without notification to the applicant.

In otherwords is this for the aid of the applicant to explain all of his borrowing costs or is it a CYA form for the bank.

Just asking

dasmo said...

Correct me if I'm wrong but Fannie and Freddie were not insurance companies but were "government backed enterprises" who sold the MBS's. There was also a large private sector that started selling MBS end that was unregulated that added much gasoline to the fire...

patriotz said...

Fannie and Freddie held some trash but on average the quality of their portfolios was much much better than the stuff that was privately securitized.

Remember "subprime" originally meant F/F wouldn't buy them, and it was lenders like Countrywide, who used private securitization, who started the race to the bottom.

CS said...
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CS said...

There was nothing wrong with US mortgage backed securities as long as property went up, because there were no defaults.

Because property "always goes up" AIG and others were prepared to insure mortgage backed securities thereby giving them a triple A rating.

However, under US law, there was no need for AIG or anyone else insuring such bonds to make provision in the event of a default.

Thus when defaults rose the insurance proved in some cases to be worthless.

But mostly banks were killed by the uninsured third-tier debt which they kept on their own books because (a) they couldn't insure it, (b) it yielded a nice fat return, and (c) they truly believed that property always goes up.

Predatory lending is a whole other issue. Some US states tried to legislate against it but the Bush administration scotched that plan, systematic financial fraud being a necessary feature of any Bush administration.

But for the young and innocent person being encouraged by predatory lenders to borrow their lifetime disposable income with nothing down to buy property in the World's most expensive market after a ten year bull run the advice offered here can be summed up in the immortal words of Yogi Berra:

"Buy property and, if it goes up, sell it, if it goes down, don't buy it.”

dasmo said...

"Predatory lending is a whole other issue" ummm it was a key domino in the domino is a great diagram showing all those pieces...

CFA Joe said...

Sorry to burst your bubble:) people but most Canadian banks and trust companies (aka Citigroup, B of A, Coventry) package hundreds of millions of their mortgages (aka MBS's) with CHMC (aka Fannie Mae and Freddie Mac)and sell them to pension plans around the world. Now its not to the same extent as the US but it DOES and IS happening. Read any annual report and you will see a lot of mortgages being "securtized". Ours banks have taken advantage of CHMC to offer default free MBS, sold them for a profit and moved them off their books and into pension plans,etc. The banks had to take advantage of "the best banking system in the world" somehow.

CS said...

"The banks had to take advantage of "the best banking system in the world" somehow."

Of course. They are not in business for the good of their health.

The GoC provided low cost mortgage insurance despite declining lending standards because Steve Harper wanted a majority government, and a majority government required a good economy, and financial stimulus to the housing sector provided the simplest and most effective way to get it.

And re: the role of predatory lending, whatever the exact role of what may be called predatory lending, the fact remains that lending standards have been lowered to an unprecedented degree in Canada as in the states with similar results: an increase in the number of those able to buy, which increased demand, which drove prices up, until there was no one left to enter the market. Then ....

CFA Joe said...

I know of 2 cases in Victoria where the bank is TELLING the client to sell some property so their LTV can get in line with the risk exposure. One case the bank has lent the client 2 million on an income of 62k + 50k in rental income. Guy has 3 properties worth maybe 2.2 m. Call it what you want but if this is not predatory lending I don't know what is. Oh of course he used a local mortgage broker who told him he was crazy. NOT!

Jason said...

@CFA Joe re MBS sold by cdn banks....

I'm not sure, but i think this sucking chest wound has been staunched. As per new OFSI regs, cdn banks can no longer sell bonds using cmhc backed mortgages as collateral. They can still use mortgages as collateral, but not those that are insured by the cmhc.

How this affects the mortgage industry, i'm uncertain. I thought it would pose a challenge for the banks to then find a new pool of money to lend for the mortgages but was assured by patriotz (over at VCI) that the banks have other sources of money (i'm sure they do, he's usually right).

But i think there is more nuanced repercussions to it. Most importantly, i think banks have less incentive to take on the mortgages if they can't securitize them. It's stranded, useless liability.

patriotz said...

"Most importantly, i think banks have less incentive to take on the mortgages if they can't securitize them. It's stranded, useless liability."

One, a mortgage like any other loan is an asset to the bank. It's a liability to the borrower.

Two, the incentive for banks to make loans is that they get paid interest on them. That's what they are in business for.

What would make the banks cut back on mortage lending is the government cutting back on mortgage insurance. Failing that it's still a no-brainer for the banks, they will get the money to lend from the markets. Maybe at a couple of tenths of a % higher, but it's out there.

Jason said...

Is anything changed by this new rule then?

patriotz said...

What's changed is that the banks now have no choice but to securitize though CMHC. I think it's just a move to improve CMHC's profits.

This will ultimately come out of the pockets of borrowers as I noted above.

CS said...


"cdn banks can no longer sell bonds using cmhc backed mortgages as collateral"

"banks now have no choice but to securitize though CMHC"

Are these statements not contradictory? Clarification would be welcome.

CFA Joe said...

@patriotz "What's changed is that the banks now have no choice but to securitize though CMHC. I think it's just a move to improve CMHC's profits"

Ah this doesn't make any sense. Banks don't securitize through CHMC. They package their own mortgages and sell them themselves through their capital markets division. The difference now is that these MBS' are not risk free without CHMC insurance as readily available. Banks were using CHMC for conventional mortgages as well so they could claim the MBS to be risk free (=more marketable). The MBS' will be harder to sell if they contain risk so that's why they will have to charge more.

As for CHMC making more profit, I would love to know how much they make BUT they don't disclose their P/L statements as it isn't a public company, They could be losing money for all I know.

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

"Banks don't securitize through CHMC."


Canada Housing Trust raises $5.5-billion

NHA Mortgage Backed Securities

patriotz said...

"Are these statements not contradictory?"

They are not contradictory, one follows from the other. If the banks can't borrow money using the mortgages as collateral they have sell them to get the money.

CFA Joe said...

Patriotz, I stand corrected. CHMC does sell mortgage bonds. Why I don't know but they do. I don't think CHMC has the market on MBS though. Banks do securitize their own MBS's as well.

My point was it will be harder for banks to package MBS if there is risk, which means they will have to increase rates to compensate.

dasmo said...

I didn't say that CMHC wasn't in the MBS game. in fact this is what the media right now is calling the "bail out" falsely. CMHC did purchase morgages of the banks books to the tune of 69 billion? and sold them as MBS's to investors.

a simple man said...

How about those protesters along Monterey St last Friday?


commuter12 said...

All of you people should really research the whole issue. Go look up "red lining" sometime and you'll see the whole thing was the result of an affirmative action program which Bush tried to stop. It was of course blocked by the democrats in congress.

Hell recently a congressional investigation into "mortgage discrimination" was launched by the democrats. They demand to know why banks will not issue ninja loans to black people. It's all out there. Go have a look. It's racist to demand documentation, assets a good job etc to lend someone money in the US. You're a racist for even reading this post.

CS said...


"cdn banks can no longer sell bonds using cmhc backed mortgages as collateral"

"banks now have no choice but to securitize though CMHC"

If these statements are not contradictory, what do they mean?

In particular, how does a bank "securitize through CMHC" if it is unable to sell bonds backed by CMHC insured mortgages?

Just Jack said...

While there have been several million dollar plus homes sell in the last few months, I feel that the high end market is rolling back faster than the middle income family house.

Such as the recent sale on Third Street in Sidney for 1.2 million. The property had sold back in July 2006 for $1,249,000.

In contrast most middle income neighborhoods have only rolled back to 2008 price levels.

Which leads me to believe that the reason why so many million plus homes have been selling, is simply because they are a better deal today than say a year ago.

But with these million dollar homes coming down in price, it should suppress the middle income neighborhood prices in the immediate future.

patriotz said...

In particular, how does a bank "securitize through CMHC" if it is unable to sell bonds backed by CMHC insured mortgages?

By selling the mortgages to CMHC in return for cash.

patriotz said...

you'll see the whole thing was the result of an affirmative action program which Bush tried to stop.

You mean like this?

Pumper in Chief

Introvert said...

... I feel that the high end market is rolling back faster than the middle income family house.

Such as the recent sale on Third Street in Sidney for 1.2 million. The property had sold back in July 2006 for $1,249,000.

Yeah, that owner is sure going to feel that $49,000 difference! 3.9%--ouch! He'll be smarting for a long, long time! I hope this experience teaches that millionaire a thing or two about how markets function.

And it's also plain to see that this example is a sure-fire portent of a total real estate meltdown in Victoria!

Just Jack, you've done it again.

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

Million plus market blistering today.....SFH average up to 687k MTD.

630 Island Rd listed for $1.695 and sold for $1.9 million.

3355 Midland Rd listed for $1,898,000 and sold for $1,860,000.

896 Lands End went for a cool $3,000,000 today as well.

Marko said...

970 Seapearl Pl also sold today for $1,470,000.

DavidL said...


$1,249,000 in 2006 is worth $1,400,000 in 2012 (12% inflation). Check it out yourself using the BOC inflation calculator.

A drop from $1.4M to $1.2M equals ~14% loss ... with commissions and closing fees, the loss is even more.

*** Note that the core CPI used by the inflation calculator does not include "eight of the most volatile components (fruit, vegetables, gasoline, fuel oil, natural gas, mortgage interest, inter-city transportation and tobacco product".

CS said...


"By selling the mortgages to CMHC in return for cash."

That's not securitization. That's a bailout! Canada's equivalent of TARP.

If the real estate promoters here were candid, they would point out not only high end properties selling at the initial asking price or slightly more, but also the large number of million plus properties that have seen price reductions.

dasmo said...

"That's not securitization. That's a bailout! Canada's equivalent of TARP." sure it's similar to TARP but TARP wasn't the bailout. International lending dried up at that time so I'd say it was more a helping hand than a bailout since assets were purchased.

PD said...

Check out Vacouver's sell/list ratio lately from PaulB’s numbers

Apr30 124 316 39.2%
May 1 179 354 50.6%
May 2 150 371 40.4%
May 3 121 339 35.7%
May 4 77 337 22.8%
May 7 90 353 25.5%

Talk about a rush to the exits to begin May (normally peak selling season)

MD80 said...

Does anyone want to try to rationalize the difference in the sale-list ratio in Vancouver vs Victoria? Victoria's numbers seem to be pretty much business as usual. You would think that the psyche would be similar for both markets so why the rush in Vancouver? Have they realized something we haven't yet?

CS said...


"TARP wasn't the bailout."

But that is precisely what it was. Take a look at the Wikipedia article on Bailout. A bailout is the provision of capital to an insolvent company.

"assets were purchased."

Assets were purchased at more than their market value, and TARP is expected to reap a loss of $80 billion.

Other bailouts include funding to GM and Chrysler and $135 billion to Freddie and Fannie.

The run on the banks that you refer to was another matter: a lack of liquidity, not a matter of insolvency. The US Fed dealt with that by flooding the global banking system with $16 trillion in credit, all of which has now been repaid. Canadian banks received a little of that, peaking at $33 billion, plus another $40 something billion from the BoC.

CS said...

Would someone be kind enough to define "sell-list ratio"?

dasmo said...

because a bulldozer special close to the train will run you 3 million in Vancouver....

PD said...

It's the number of sales divided by the number of new listings during a particular time frame. Below 40% is typically viewed as a buyer's market where prices fall.

How condo boom threatens a 'ghost city phenomenon'
Lots of empty condos continue going up in Victoria.

dasmo said...

A Bailout is the "act of loaning or giving capital" CMHC did not loan or give anything to the banks. It PURCHASED assets.

CMHC is not and was not insolvent.
they had a net income of 1.5 billion in 2011 - no losses there.

They made the move to allow banks to continue lending as global capital froze. It was a move to keep us out of trouble. Right or wrong I don't know but it wasn't a bailout.

patriotz said...

"That's not securitization. That's a bailout! Canada's equivalent of TARP."

No it's not because the mortgages were already insured by CMHC. The government had guaranteed the repayment to the bank right from the time the original mortgage loan was made.

These mortgages were not "toxic", they were the highest quality assets a bank can hold.

omc said...

Ha HA.. That Oak Bay protest is so what my experience is of many living there. They always mention how long they have lived there as if it gives them more authority. Probably a clerk who paid $5 for their crap house when they weren't so trendy, but now thinks they are royalty because they live there.

I kind of find it funny that they think the 30s and 40s houses have character. These were simply cheap spec houses of the era. You could find pretty much the same houses in (almost) any Canadian city. Any city that hasn't pulled them down and replaced them that is. Funny they are calling the new houses characterless boxes, when the shacks are the simplest and cheapest structures that could be built.

If given the choice, I know which one I would choose.

Anyhow, I hope your wife only shops at the old lady shops on the avenue simpleman; I would hate to be the target of their disapproval.

And what is that you are wearing? You some kind of punk rocker freak? It's too bad that they don't sell men's clothes where you shop.. Just practicing my Oak Bay disapproval.

CS said...

"A Bailout is the "act of loaning or giving capital"

Slight difference between "loaning" and "giving" capital!

As the term is generally understood, a bailout is the provision of capital to an insolvent entity to prevent bankruptcy.

"These mortgages were not "toxic", they were the highest quality assets a bank can hold."

Something not quite as you represent it, I suspect. For if these CMHC guaranteed mortgages were worth full face value, why was it necessary for CMHC to buy them?

Most likely because, at the time, no one else would buy them at full face value.

CS said...

PD, thanks for the definition.

a simple man said...

omc - I agree - I really don't see the appeal of the older housing here - it is mostly regrettable.

There are definitely two streams of thought in Oak Bay, from what I have experienced. The heritage folk and the more progressive. Obviously there are the ends of the scale, but most fall on either side.

I love the new west Coast style and I have a real problem telling a person what they can and cannot build as long as they remain within building standards/codes.

My wife doesn't shop for clothes on the Avenue, except at Abra Kid Abra for the rodents. The women's clothing there is too "heritage" for her taste.

dasmo said...

@ CS
"Slight difference between "loaning" and "giving" capital!"

It's not a slight difference. It is different but the CMHC did neither. They purchased. Purchasing is different from loaning and giving.

"As the term is generally understood, a bailout is the provision of capital to an insolvent entity to prevent bankruptcy. "

The canadian banks were far from insolvent but were happy to be able to make even more money because of this.

a simple man said...

What about the $111B bailout for Canadian banks recently uncovered?

CS said...

"The Canadian banks were far from insolvent..."

Well here's a different view:

"The banks don’t dispute that the Canada Mortgage and Housing Corp. bought $69 billion of mortgages off of their books. And, technically, that’s not handing over taxpayer money -- it was a purchase, not a handout. But a Crown corporation bought $69 billion worth of mortgages that banks didn’t want on their books. ...

Those who say this wasn’t a bailout argue Canadian banks had a “liquidity” problem, not a “solvency” problem like the U.S. banks. What this means is that Canadian banks had the collateral needed to get loans to pay their bills, something the U.S. banks didn’t have.

But if the problem was that no one wanted to lend to Canadian banks, as the banks themselves say, then they would have had to sell assets to pay their bills, and pretty soon the banks’ “liquidity” problem would have become a “solvency” problem, just like the U.S. banks.

Without the bailout, the Canadian banks wouldn’t have been able to pay their bills. It’s as simple as that."


dasmo said...

Who knows what would have happened but it wasn't a bailout. it's a misleading use of the term plain and simple. I don't dispute it happened nor that there was a possibility of problems if it didn't. It doesn't change the fact that it wasn't a gift nor a loan to the banks to get them out of insolvency.

patriotz said...

If the banks had a liquidity problem the Bank of Canada simply could have loaned them money (and might well have). That's one of its mandated functions.

The reason CMHC bought the mortgages from the banks was so the banks would have cash to lend for new mortgages. It was a scheme to stop the decline in house prices.

SilverSurfer said...

Thanks for sharing Leon,

"If China stopped buying western debt tomorrow then interest rates on mortgages would double next week. It's simple global economics."

Unless the Fed monetizes the debt. Then you get low interest rates a while longer, but currency depreciation and in the case of the US, lowered international confidence in its reserve currency status.

Keep an eye on these numbers. China & Japan are 2/5ths of the US Tbill holders, China has pretty much stopped buying Year over Year Feb 2011 to Feb 2012. Japan is in no position to make up for China, if China stops buying. The more QE's, Twists and other financial imagineering the Fed does with the bond market to keep interest rates low and the US currency artificially depreciated while exporting inflation, the less likely other countries are going to continue to hold, let alone buy more US debt. The end of a major currency crisis begins with a lack of confidence in said currency.

marcstremblay said...

New participant here, hello everyone!

I'm one of this month's stats, having just purchased a home in Esquimalt that we are going to rent out for 2 years before we move to the Island from Alberta. That makes me a bull but most posters' definition and point of view on this blog.

I read the majority of the comments and few attempted to answer HHV's question: why does it seem to be a bit of a surge in sales?

It is interesting to note that my RE agent reported being much-much busier in the last few weeks. Something seems to be happening to create this extra activity she described as more than seasonal increased activity. Any insights by anyone?

I think that yes, some markets in Canada are overheated and a correction is coming. But I think the Victoria market is somewhat shielded because there are many many people like me who plan to move to Victoria eventually. Few other CMA are desirable in the same way Vic is, in my opinion.

It's also interesting to note that 2 of the 4 groups or families that contacted me about renting our house are people who are moving to the Island, who are renting for 1 or more years to get a sense of where they will buy, eventually.

So yes, I am making a gamble - a calculated risk.

I am betting that over the next 2 years, the market will plod along, probably increasing beyond inflation. Meanwhile, someone else is paying my mortgage and I can write off the interest.

In the meantime, like thousands of people who want to or plan to move to the Island, we can't wait to move...

Question remains: why the apparent surge in sales. Is it a seasonal or a statistical blimp or a sign that prices are relatively low now compared to the last few years and people feel it's time to buy?

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