Friday, February 15, 2013

Economics 101

It's 200 comment time again, so here's a brief update to carry us to Monday.  By the way I still see no signs of a spring market.  Where are the sales?

What happens when you remove buyers from the market?  Well aside from the real estate industry having a coronary, it weakens market conditions.
Months of inventory is highly seasonal, so to clearly see the effect of the restrictions CMHC imposed in July 2012 without resorting to the always suspect "seasonal adjustment", we can look at the MOI over the last year by taking the cumulative inventory and dividing it by cumulative sales for the past 12 months.


You can see a clear upturn in the MOI after the mortgage restrictions came into effect.  Even in Victoria, where clearly no one needs anything as dirty as CMHC, it seems the market is driven by credit.

176 comments:

a simple man said...

Nice graph, Leo. Striking to compare MOI from last Jan to this Jan.

The storm has arrived.

koozdra said...

Sounds awfully familiar.

"Optimists are betting on a so-called soft landing, characterized by flat or slightly declining prices. After analyzing soft landings in once-hot markets such as the United Kingdom and Australia, a report by ING Wholesale Banking said the U.S. housing market won't crash."

USA Today, Overheated housing market is cooling (11/1/2005)

koozdra said...

How many million dollar properties can our little market bear?

Currently sitting at 245

a simple man said...

Don't worry - soon the market will make that number lower, Koozdra.

Introvert said...

The storm has arrived.

Gee whiz, the storm is here. What should I do?

Hmmm. How about the same thing I've always done: pay off my mortgage and live my life as normal.

OK.

a simple man said...

Until your renter packs up and leaves for other rentals.

koozdra said...

"Gee whiz, the storm is here. What should I do?"

Introvert, are you pulling a Totoro and blathering on about your own personal situation?

If you don't have to sell you aren't affected. But it's not the people that don't sell that set the market price.

Alexandrahere said...

Koozdra, I can't remember, are you buying a home or have you always rented?

Introvert said...

Perhaps tangentially related to this blog's discussion is this New York Times article, The Alluring Myth of the Tax-Fleeing Millionaire.

Professor Young said his study looked at every millionaire tax record filed in California over the last 20 years, and "neither tax increases nor tax cuts on the rich have affected their migration rates."

Yet the tax flight myth remains surprisingly persistent, fanned by media coverage of celebrities, who are among those most likely to have the means and motive to choose a home based on tax considerations. "You can always find an anecdote." Mr. Shure said. "Many people want this to be true as a way to discourage tax increases. The rich are always trying to find ways to make the middle class make their arguments for them."

Leo S said...

Seems that's the goto argument of most owners. "I'm ok so everyone's ok".

koozdra said...

I have always rented. When prices decline to "acceptable" levels I will be buying.

I'm more interested in the Metchosin area than Victoria though.

koozdra said...

"neither tax increases nor tax cuts on the rich have affected their migration rates."

We've somehow been convinced that trickle down economics works in our favour. We'll see what our next NDP government will have to say on the matter.

Leo S said...

I'm more interested in the Metchosin area than Victoria though.

You will find deals sooner there.

Just Jack said...

There are 160 properties listed for more than a million dollars in the core municipalities. In January of this year there were 2 sales. None of those sales were in Oak Bay. Last year there were twice as many million plus sales outside of Oak Bay just in the core districts alone.

And looking at the few re-sales in Oak Bay over the last couple of months it appears that Oak Bay prices might be falling faster than the rest of the core districts. But before you rag on me, the data is sketchy. But, certainly something to watch in the coming spring market to see if a trend is established. Those that are averse to risk or have too much wealth in Oak Bay real estate may find it prudent to diversify.

This is what you would expect when 160 people are crowded at the exit door. An internal or external economic shock would be like someone yelling "FIRE" at this time.

caveat emptor said...

" it's not the people that don't sell that set the market price"

since the title of the post is Economics 101:

The market price depends on where the supply curve and the demand curve intersect.

If you would buy or sell real estate at any price then you are part of the supply and demand curve. So in actual fact we all play a part in setting the market price though admittedly it is those that would buy or sell close to the current price that are most influential.

koozdra said...

@DavidL (from previous thread)

"This mean that the purchase price is "locked in" at the beginning of the term, providing a pricing guarantee for the owner - which is very nice when prices are falling. "

I didn't even look into it that deeply. Wow! that is a terrible deal for the "buyers".

reasonfirst said...

http://www.timescolonist.com/business/region-s-forecast-calls-for-weak-economic-growth-1.74570

For the neutered bulls (former bulls who now say flat) who claimed we had a strong economy.

Just Jack said...

In my opinion, only those actively bidding or selling constitute the real estate market. That might only be 3 or 4 percent of the total housing stock at any time. The remainder have no influence on value at all. Which is the basis of one of my peeves of those that compare our market to one that is eight times our size like Vancouver City.

It seems so obvious that you can not make a comparison between these two markets. If would be like comparing a corner grocer store to Thriftys.

koozdra said...

From the Times Colonist article above:

"Vancouver’s economic growth is expected to accelerate slightly from 2.5 per cent last year to 2.9 per cent."

We'll see about that.

koozdra said...

Do they actually think they can get this price? Maybe they are hoping someone will come along and say "what a view!!", 800, 600, whatever, money has lost all value. In all seriousness though, the "executive home" segment has been extremely overbuilt outside of Victoria.

Listed: $835,000
Assessed: $680,000

"Some building materials incl, as is where is."

http://www.realtor.ca/propertyDetails.aspx?propertyId=12782205&PidKey=1929681390

Alexandrahere said...

I don't mean any disrespect Koozdra as I enjoy your posts...however I must say, I also enjoyed and learned from Totoro's posts.

The people that have owned or currently own a home on here are quite naturally going to tell others of their experiences with ownership/rentals.

There are a zillion places on the net where you can capture facts and stats on any subject imaginable. Theory/stats can be so much different than actual experience. You know the old saying on averages .... "the average human has one ball and one breast"...where as the experience of just personally viewing we will see that half the population has two balls and the other half have two breasts.

There are two types of people...the ones that do and the ones that don't.

Owners and former owners on here such as myself, Totoro, DavidL and more would no doubt advise most people not to purchase property right now especially in Victoria or Vancouver. That being said, if you already own a home and you can afford it and are for the most part contented with your lot, probably you aren't going to sell for a myriad of reasons. So much comes into play....neighbourhood, schools, kids friends, proximity to work, your wonderful garden, your dog, pride of ownership and so on and so on.

My own experiences with real estate have resulted in many more gains than in loses. I thoroughly enjoyed the game. If I were to put my condo up for sale now, I would lose a lot of money. I "knew" that when I bought it and renovated. I intend to live here the rest of my life. And really the only loss will be how much less my grandchild will eventually inherit.

In my experience, it is not how much you make, but rather how much and what you spend it on. Many "responsible" people pay all their bills on time, maybe save a titch, and spend the rest. They really don't have a concrete financial plan....no matter how intelligent in other areas they are. So, those people in most times should have bought a home. Why? Because they would have made their mortgage payments, paid their taxes and insurance, saved a titch, and spent the rest. Much of that spending though would have been in small renos, decorating, landscaping etc. Whereas, if they had been renting....the extra cash would have usually went on another video game, a 2nd vacation, a newer car etc.

You may not believe this, but I have seen this time and time and time again.

So my advise to the intellectuals on here that have not yet purchased is don't. You probably wouldn't be reading and or contributing to this blog if you weren't interested in eventually purchasing your piece of the rock.
So, make sure you have a good financial plan, set your short and long term goals and re-visit them frequently....say every 6 months..and if necessary tweak them. Always have a "fun" fund but try to think of more ways to have it that will cost you less...such as having friends over for dinner with all contributing... go on picnics, learn some more card/board games. and play them with your family and friends. Encourage your older children to volunteer in some way to help others. I really believe that in order to be financially successful you must give back either physically or financially to those in true need.

Anyway, I know I am babbling on....please don't think I am preaching to you....I like it when I see younger people taking steps to becoming happier,healthier and wiser so they can become reliable, independent human beings possessing a true sense of self worth and self respect.

Introvert said...

We've somehow been convinced that trickle down economics works in our favour. We'll see what our next NDP government will have to say on the matter.

Adrian Dix and the NDP are real hardcore socialists, all right: their platform is to raise Canada's lowest corporate tax up a couple ticks, and to invest in skills training. In other words, FULL-ON SOCIALISM!

Introvert said...

Alexandrahere, your points are well taken.

koozdra said...

"Adrian Dix and the NDP are real hardcore socialists, all right: their platform is to raise Canada's lowest corporate tax up a couple ticks, and to invest in skills training. In other words, FULL-ON SOCIALISM!"

But the liberals will create a MILLION new jobs and create TEN MILLION dollars to pay down the debt. Maybe we can be the next Alberta.

subprime11 said...

High end buyers are very cautious since the net effect of a further correction could be devastating. Buy over a million now and you are likely going to lose $200K in equity by the end of the year. In addition with the boomer effect starting to take hold many are starting to downsize and the larger more expensive homes are running out of new potential buyers. My kids are just about out the door (famous last words) and we don't need or want the big expensive house any more. Lower end buyers are usually younger with kids and are moving for reasons such as schools and neighbourhood. So this market segment is more active.

koozdra said...

@Alexandrahere

I agree with you on many points.

Lots of people will not admit to themselves that they can't afford real estate. They will stretch any budget just to get in the game. If people actually ran the numbers we would have had a slowdown in real estate a couple of years back. However they rely on the experts to help them out. From the mortgage broker to the realtor, everybody says "go for it".

When they become homeowners they become accustomed to debt. You have a $500,000 mortgage, what's another 20 or 30 to get a new car. We are a culture of debt now. Nobody saves for things anymore. Declaring bankruptcy is not as taboo as it used to be.

This whole house of cards is reliant on low interest rates at it's foundation. Should the rate move it would spell disaster.

I think we should have more financial education at the high school level. Compounding interest and total cost of ownership are sadly a foreign concept for too many.

koozdra said...

"Lower end buyers are usually younger with kids and are moving for reasons such as schools and neighbourhood. So this market segment is more active."

Someone correct me if I'm wrong but isn't the high end of the market more active than the low end right now?

a simple man said...

@Alexandrehere - well said. As a former owner of many homes and now renter of many homes, I can understand what you are saying.

@koozdra - I agree - debt has become so "normal" it is astounding.

I remember when first moving to Victoria, a few years back, I got into a conversation with a stranger. She had just bought a house and said they had over a $500,000 mortgage on it (more than half of the purchase price). She thought it was really high, but said she asked her friends and they said that it was a "normal" mortgage and that everyone was doing it. So they did it, too.

DavidL said...

@koozdra

They will stretch any budget just to get in the game. ... However they rely on the experts to help them out.

I have been amazed by how many boomers have helped their kids (okay, adults in their 20's) to "get into the market". I know too many people whose parents lent/gave them the money for a down payment "before it was too late", ending off being heavily indebted for the next 25 to 35 years.


I think we should have more financial education at the high school level. Compounding interest and total cost of ownership are sadly a foreign concept for too many.

I absolutely agree! I suggest that "Personal Finance 101" should be mandatory for graduation.

DavidL said...

@koozdra

Someone correct me if I'm wrong but isn't the high end of the market more active than the low end right now?

Yes, this is what I'm seeing in my PCS/VREBMatrix. An acquaintance who is a mortgage broker says that with the rules changes last July, it is much harder to qualify for a "starter mortgage".

kabloona said...

Introvert, thanks for the link to the NY Times article...funny stuff.

Leo S said...

Because they would have made their mortgage payments, paid their taxes and insurance, saved a titch, and spent the rest. Much of that spending though would have been in small renos, decorating, landscaping etc. Whereas, if they had been renting....the extra cash would have usually went on another video game, a 2nd vacation, a newer car etc.

Good post, but financial literacy is not caused by whether you rent or own. I suspect that ownership is correlated with increased financial savvy, but only because owners in general are older and therefore have more wealth to think about.
If you are financially literate you will save regardless of whether you rent or own. If you're not then you will spend your money on frivolity either way as well.

An interesting note: The owner of canadianmortgagetrends.com which covers the mortgage broker industry does not own a house. He rents a place in Vancouver with his family. Very rare I think.

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

I suspect that ownership is correlated with increased financial savvy, but only because owners in general...

You left out "used to have to save a substantial down payment".

caveat emptor said...

Nice points Alexandrahere.

The only saving many people will accomplish is forced saving and that is one traditional advantage of homeownership/paying off a mortgage. (Admittedly only in a flat or rising market. In a sharply falling market the "forced saving" is actually just digging yourself out of a hole)

The well to do, financially savvy renters that inhabit this board may think they are the norm, but they are actually the tiniest fraction of the population.

koozdra said...

"The well to do, financially savvy renters that inhabit this board may think they are the norm, but they are actually the tiniest fraction of the population."

I actually agree with you. But I think the amount of financially savvy people in general is decreasing.

Introvert said...

Seems that's the goto argument of most owners. "I'm ok so everyone's ok".

But because some aren't OK doesn't mean that everyone isn't OK.

Leo S said...

But because some aren't OK doesn't mean that everyone isn't OK.

Which, to the best of my recollection, is an argument that no one here has ever made.

Introvert said...

Which, to the best of my recollection, is an argument that no one here has ever made.

Well, now it's made. It's part of my Victoria-will-bend-but-not-break theory of the SFH market.

Just Jack said...

It's a tricky market to be buying into these days. So many pass on homes in Oak Bay, because they rely on the list price being close to the sale price. Not the case anymore when you have a home such as the one along Sutherland in South Oak Bay listed for $599,000 and sells for $520,000.

That makes comparison shoppping difficult for most people. This asymetrical information has lead to adverse discisons by purchasers. Choosing a home in Fernwood at close to asking price rather than making a much lower but fair offer on a home in Fairfield.

Just Jack said...

Since the marketplace constitutes only 3 to 4 per cent of the entire stock of housing, those home owners that are not okay have a larger impact on market prices than those that are okay.

If just 1 per cent of home owners defaulted on their mortgages, that would devastate Victoria. That would make one out every three homes listed for sale under duress circumstances.

patriotz said...

The well to do, financially savvy renters that inhabit this board may think they are the norm.

Hardly, we think we are far smarter than the norm. :-)

a simple man said...

Marko - is Garth talking about you again?

"Why just a couple of weeks ago, the last abusive realtor I punted left me such a nice email: “You think you are punishing me?!? LOL. Geez it’s a blessing to be banished from the lost cause, black hole of this pathetic blog. Something I should have done myself long ago. I gladly leave you Garth to bask in the worship of your loyal pack of ass kissing, ball licking hounds. Look at your audience my friend… is their worship really such a compliment? Don’t you think you could do better?”"

StalJ said...

The crux of the problem..summed up in 1 black line...

http://recessionalert.com/world-plunges-into-recession-in-q42012/

Marko said...

Not me, Garth called me personally complained about something I said in a video blog and I stop reading his blog at that point.

koozdra said...

Assessed: 499
Listed: 619

Hmmm.. seems a little high. 124% of assessed.

"Amazing $180,000 custom renovation."


Oh I see. You have spent 180 thousand of the buyer's money renovating and now you would like to recoup that money. I hope they find a buyer that wants exactly what they wanted out of the renovations.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12840603&PidKey=-1035680183

koozdra said...

Marko, you certainly love your heartstrings.

koozdra said...

Oh wow, I think we have a winner of what I'm terming "drunk pricing".

Listed: $700,000
Assessed: $505,400

"Value Mainly In The Land, Home Is Older And In Need Of Substantial Renovation."

Are there any developers left that are dumb enough to think that they can make a profit from this.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12840597&PidKey=1062977567

Leo S said...

It starts out pretty ok.

"A very rare opportunity to own over 30,000 square feet of flat useable land in the heart of Gordon Head. Steps from Mount Douglas Market, bus, all levels of schools and shopping. Solid 1957's home on over 30,000 sq.ft of land in the heart of Gordon Head."

But then suddenly they had a stroke and thought that every word was now a proper noun.

"Huge Garage. Newer Roof, newer Gas Forced Air Furnace, Newer Gas Hot Water Tank. Value Mainly In The Land, Home Is Older And In Need Of Substantial Renovation. Great Opportunity To Design Your Own Home In One Of Victoria's More Desirable Communities."

Introvert there has to be money in some sort of grammar consultant role for the VREB.

Introvert said...

If just 1 per cent of home owners defaulted on their mortgages, that would devastate Victoria. That would make one out every three homes listed for sale under duress circumstances.

JJ's wet dream.

Introvert said...

Introvert there has to be money in some sort of grammar consultant role for the VREB.

Indeed.

koozdra said...

Went on a stroll through the Ross Bay cemetery today and wondered how much it would cost to be buried there. I'd be buried near the bathroom to maximise foot traffic and admiration.

As it turns out it is twenty thousand dollars. I found this article from 2006 with an amusing title.

"Just like the land for the living, the burial plot costs at the historic Ross Bay Cemetery are taking a jump, proving you can’t escape the hot real estate market and soaring construction costs even when you’re dead."

fta:
Last April council asked staff to review plot pricing to "restrict speculative purchase and the resale of plots."

People will speculate on anything.

http://www.canada.com/victoriatimescolonist/news/story.html?id=2ae63eb3-5142-419a-9267-f2b4d122418a&k=48912

subprime11 said...

I give my head a shake when I hear that place on sutherland in O/B sold for $520K. We've become so desensatized to huge numbers like that due only to cheap money and huge morgages, supported by a housing bubble that makes us feel rich. A 2 bedroom house on a postage stamp log like Sutherland at over half a million dollars!! Of course it's only worth what a greater fool will pay but what is the real value without the bubble effect?

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

But that's a good price for a property on Sutherland. You would have to search back seven years to find a home, within a half kilometer radius, that sold for less than this one. That would put prices for "starter" homes, like this, back to prices not experienced since the last quarter of 2005.

And I would expect homes like this to roll back faster than others in the neigborhood. As most of the value is in the land. The building has only a nominal contributory value.

The home is too small for a middle income family and too expensive for a family starting out. And since there is a glut of million plus homes, most builders would be reluctanct to sink a half million in land cost and then build on speculation.

This sale also gives agents an opportunity to speak with their clients to reduce their prices. As Oak Bay is shamelessly over priced relative to the surrounding areas.

mrmike said...

RE on the Island is with out a doubt the best in Canada...This IS the place to live hands down!

It ain't gonna crash and you had better make a move while prices are still reasonable and rates are in the basement.

Tired of hearing how people think houses and everything is so unaffordable here, perhaps you need a career change.

I know 22 yr old kids making 150k per year with NO student debt.
It's time to adapt people.
Prices here are quite reasonable for Canada.

All
Theseguys are clearing atleast 100k annually. Flights paid, killer rooms, all meals inclusive.

Rooms have since been upgraded, have a
Look

Got a trade with a ticket?
Apply
here

The world aint crashing guys...it's just changing.
Adapt!

Leo S said...

Uh oh. Mike's had half a beer again and got on the internet.

mrmike said...

They fly you from here to camp Free!
14 on 7 off!
Expect NO fire sales from tradesmen!

koozdra said...

Mr. Mike, ever the "optimist".

koozdra said...

"It ain't gonna crash and you had better make a move while prices are still reasonable and rates are in the basement."

You really have to have your head in the sand to make a statement like this. Prices reasonable?

Is this the buy now or be priced out forever argument again?

Do you even read this blog?

mrmike said...

Half a beer?
Not

;)

StalJ said...

@mrmike
unfortunately your oil sand video is 2 years old. That boom is over.

http://www.theglobeandmail.com/report-on-business/economy/twilight-of-an-energy-boom-albertas-new-fiscal-challenge/article8415713/

“The forlorn shell symbolizes the hollowing out of Alberta’s hopes and dreams, as it confronts an energy market that has turned dramatically against it. It is a signal of how fast Alberta has fallen, as it tumbles back to the pack of provinces with severe fiscal challenges. The provincial government has just seen $6-billion wiped off its revenues as a result of declining resource income – equivalent to the province’s annual education budget.”

mrmike said...

The vid is old.
The new upgraded rooms are not.
45 NEW carpenter positions added Friday 75 NEW pipe fitters added Friday 40 NEW scaffolders added Friday...then I lost count.

Oil @ 70 barrel then I might worry.

koozdra said...

"45 NEW carpenter positions added Friday 75 NEW pipe fitters added Friday 40 NEW "


What does this have to do with Victoria?

StalJ said...

@mrmike
we are only getting $50 a barrel...time to start worrying

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/oil-differential-darkens-albertas-budget/article7647602/

“This is not an ordinary storm,” Doug Horner said this week. The dipping price of Canadian oil will strip some $27-billion from the Canadian economy this year, he said in a speech to the Calgary Chamber of Commerce that was designed to soften the ground for what is certain to be a grim provincial budget on March 7.
Mr. Horner’s argument hinges largely on “differentials.” It’s an industry term that describes, in the current context, price discounts. So for example, Canadian heavy oil – which is often traded as a blend called Western Canadian Select – has seen a differential of as much as $42 (U.S.) a barrel below the headline oil price numbers.

mrmike said...

If I was a driller I might be concerned watching oil prices.
I am not, these facilities NEED trades regardless.

mrmike said...

They are importing skilled trades from across the globe...where you been? a cave?

If your Canadian, skilled with trade, and have a heart beat...your hired.

The sky IS NOT FALLING!

mrmike said...

@ koozdra
It has to do with Victoria because they fly you from here. We spend our money here.
Rather than sit in traffic every day we get it over with in one go.
Economics 101

StalJ said...

The “facilities” will soon be finished. The billion$ projects are being cancelled left right& center. Canadas glory days are over. Wake up and smell the stale coffee.
You can count on a whole lot of layed off tradesmen soon to be listing for sale their V island getaways this Spring. They will need the money to ride out the recession.

mrmike said...

Dude...you can't just turn these facilities off. Do you have any idea how many there are?
They require HUGE maintenance schedules performed by skilled trades only.

StalJ said...

Dood...do you realise how much money 27-billion dollars is??*holds pinky to chin*

"The dipping price of Canadian oil will strip some $27-billion from the Canadian economy this year"

Can you not see the wicked recession that is about to sideswipe many home owners that are holding on by their fingertips?

The maintenance jobs on existing upgraders will always be their. The problem is, we are about to lose the main driver of growth that we have relied on for over ten years now- new oil projects! That is the gorilla in the room that is about to throw Canadians a right hook.

mrmike said...

Let's say they just said f#@k it and turned these facilities off (highly unlikely)...it would still require 10 years employment from thousands of skilled trades to make that happen.

These camps house 3000 men at once...just one camp!

In early 09 when the world was over and oil was 35 barrel shit still went on as normal for tradesmen...sure they stopped producing as much, but the operation must be maintained.
Billions went into these things!

koozdra said...

"It has to do with Victoria because they fly you from here. We spend our money here."

Ah, Canada's new economy. Didn't you hear we're going to have a million new jobs here once we start extracting our natural gas. No need to fly to chilly Alberta.

a simple man said...

Sounds like a dream job for any trade with a relationship or family back home.

No thanks. And a lot of that money is spent in Fort Mac.

mrmike said...

@ a simple man
If your a BIG spender you might drop $50 per week in camp(fort mac).
Everything is taken care of.

@ koozdra
Kitimat is still pre mature, but yes it's next...all ready getting recruitment offers. Perhaps when they "Turn Off" the facilities in Alberta(LOL) might consider it.

Fort Mc Money is still where it's at for the trades though.

Defiantly keeping an eye on it though
;)

mrmike said...

@ a simple man

Yeah your right, all local tradesmen should just stay here and sulk, wither away, and eventually starve.

Leo S said...

Best part of these jobs? mrmike can only be here to troll the blog every two weeks. :)

koozdra said...

Mr Mike won't be a happy camper when the February numbers come out.

Leo S said...

Didn't you hear koozdra?
"Expect NO fire sales from tradesmen!"

In other words:

"I'm ok so everyone's ok"

mrmike said...

@ koozdra
If it wasn't for the energy sector Canada would have been tits up in 08.
Sure it can be volatile but its the best choice for growth available ATM. I'm gonna play this game...you play yours.

@ leo

"BC Action Plan" = Keep Mike away from this blog for 2 weeks at a time

subprime11 said...

jack thanks for your comment. Agreed that place on sutherland is back to the same prices as 5 years but still just wonder what's the real value when rates increase by 2% or more. Low rates are still artificially supporting the bubble and prolonging the decline. Real value is assigned based on the perception of the majority of the population which at this point in time is being manipulated by the media. That will end and the majority will realize that the bubble has burst and then what's the value.

StalJ said...

@mrmike
“tits up in 08...best choice for growth available ATM. I'm gonna play this game”

If you want to stay in the game, you should consider becoming a yankee.

http://www.edmontonjournal.com/business/Lamphier+Direct+threat+Canadian+economy/7973383/story.html
(yesterdays news)
“U.S. output now exceeds seven million barrels a day, and that has enabled the world’s biggest oil consuming nation to cut its imports to the lowest level in 16 years.
Since Canada’s crude oil exports are a critical driver of well-paid jobs, royalties, taxes — and ultimately, federal equalization transfers — that’s something that should alarm all Canadians. (emphasis added)
Indeed, if current trends continue, the U.S. will overtake Saudi Arabia as the world’s top oil producer by 2017, the International Energy Agency has predicted.”

Canuckistan is tits up dude!

If you get your green card you could make your $100gran a year and live in a brand new lakefront home for $90 per sq foot ..or for 1.5 times your income.
http://www.zillow.com/homes/for_sale/Dallas-TX_rb/#/community/mountain-creek-lake/2114419382_zpid/

That IS the place to live hands down! At least you would have a future. Adapt! ;)

StalJ said...

They also have a hockey team there that can beat our Canucks hands down ;) You could watch a skilled player like Jaromir Jagr every night. Just think dude. Opportunity awaits!

Introvert said...

I would go after mrmike's grammar mistakes, but there are too many.

Victoria said...

Alexandrahere nailed it with her references to kids/neighbours/gardens/stage of life, etc. being the driving force behind many peoples decision to continue owning.

I agree that most homeowner families aren't going to want to sell and uproot everything and everybody. I can't say I blame them.

But they should.

It is likely you can build wealth now by extracting your equity. Rent for several years. Hundreds of thousands of dollars rest on this one decision.

The answer was definitely sell for me. Others (most others) have answered no.

I don't see an issue with the 'no's' at all when the choice is a conscious one. We all weigh the facts and make our decisions. Time will tell who is right and who is wrong.

The issue as I see it however, is that most people don't make a decision after careful consideration. They make it wilfully blind. They 'assume' housing prices are going up, therefore they continually return to the equity trough to pay for their new 'gotta have it'. They refuse to believe that housing is going down because it allows them to continue to ignore economic basics, not because they have reasoned it out and come to that conclusion. They just wanna have fun!

It doesn't work that way! No living creature gets to bask in the sun and save nothing for the winter. We all have to think of survival during the lean months. Ignoring this is a grave mistake.

I'm actually taken aback by some of the folks I know who are very, very bright and have made such great decisions. Smart, smart people. Dumb, dumb, dumb financially. I really mean it, it's shocked to me. And it's everywhere.





a simple man said...

MrMike - my point was that you are making going to Fort Mac seems so wonderful. There is a reason they have to pay so much to get people there and that the drug and prostitution scene there is out of control. But of course, all these things are included in your camp fees? Like the camp bar tab of that gentlemen you posted ($300?).

And for someone with a family or relationship not in Fort Mac it can be very, very straining.

But I guess if there is no work here.

Just Jack said...

A 2 percent increase from say 4 to 6 per cent would increase monthly payments. But that may or may not have an effect on prices. A lot depends on our economy and consumer confidence. More worrisome for the immediate future is an increase in the vacancy rate.

Just Jack said...

Camp bar tab of $300?

-amateurs!

vawr said...

@ introvert

"I would go after mrmike's grammar mistakes, but there are too many"

That should free up some time for you to focus on your own problems.

Jack and Cate said...

Marko,

If you miss commenting on Garth Turner's blog, here is another for you...

http://www.garthturnergreaterfraud.blogspot.ca/

Jack and Cate said...

Guess Mark Carney is still bearish on our market....

Another 2 years of correction ahead, at least.

http://tinyurl.com/agzjqek

koozdra said...

"Mr. Carney said rapidly rising prices experienced in Canada over the past decade are “certainly not normal” and Canadians shouldn’t count on home prices to be their main source of wealth gains." -Carney

What? that's not what my mom and realtor told me.

koozdra said...

haha, it gets even better.

“Real wealth is built through innovation, and it’s gained through hard work,” Mr. Carney explained in an interview taped before this weekend’s G20 finance ministers and central bankers meeting in Moscow. “It’s not through some magical asset inflation.”

Introvert said...

That should free up some time for you to focus on your own problems.

Well, I write pretty well, so that's not one of my problems.

koozdra said...

This article is full of gems.

"Mr. Carney rejected the suggestion that he may be remembered as Canada’s Alan Greenspan – the former U.S. Federal Reserve Bank chief who many critics blame for inflating the housing bubble in that country – if there’s a housing crashes.

“I’m coming back, so I’ll take responsibility if, if, well, that’s not going to happen,” he said. “I’m also coming back so I’m here to face the consequences, ultimately.”"

I guess Carney agrees with mrmike. "not gonna to happen"

koozdra said...

Uh oh, not good news for mrmike's theory of Canada's path to prosperity.

Thousands gather in protest against Canadian pipeline project in Washington

mrmike said...

You guys are doomers, everything is gonna crash, just give up...its over!
@ StalJ
Asia, India, others are the targets.
@ Introvert
I expected a little more from you ;)
@ a simple man
Try getting drugs and hookers through the gate. Drugs are not tolerated and you WILL be caught. Users don't stand a chance in camp.
Lots of luv'n from family when you get home, more than enough to last until the next rotation.
Not saying there isn't work here, but six figures annually around here are fairly hard to come by.
Not much of a drinker.
@ koozdra
East and North look the most promising since BC won't budge until after the election. East to the Hudson or North to Alaska. One way or another that oil will be piped to a coast.

Anyway, I'm out...been fun chatting with you guys!


Marko said...

Real wealth is built through innovation, and it’s gained through hard work.

I agree with Carney, so instead of complaining about the $520k home in Oak Bay I am working a bit harder.

The days of graduating high school (or university), obtaining a government job with flex days and enjoying a three day weekend 60%-70% of the year in your white picket fence home in Oak Bay and buying a corvette/boat when you retire are long gone in my opinion.

Globalization has made the world far too competitive.

You have to compromise somewhere. Either you work harder/smarter or you buy the same white picket home in Esquimalt for 350k.

Marko said...

I agree that most homeowner families aren't going to want to sell and uproot everything and everybody. I can't say I blame them.

But they should.


No they shouldn't. The market would need to drop at least 15% to make it worth while.

Would you buy stocks where the commission is 15% and the stock has to appreciate 15% for you to break even? Probably not.

Leo S said...

I agree with Carney, so instead of complaining about the $520k home in Oak Bay I am working a bit harder.

Even better, work harder and wait till the house you've got your eye on comes down some more.

Marko said...

Even better, work harder and wait till the house you've got your eye on comes down some more.

Not betting on prices coming down a huge amount. Working harder will still be the main component to the equation in my opinion.

Leo S said...

Thing is, even a small percentage drop is big money in Victoria. 10% is over $50,000. Even on a good income that is 2 years of saving. For the average family that will take years and years to save. Nevermind that BC has a negative savings rate.

patriotz said...

Either you work harder/smarter or you buy the same white picket home in Esquimalt for 350k.

Or you rent the same white picket home in OB from a landlord who's losing money on it.

Decisions, decisions.

Leo S said...

And Marko, in the end it doesn't add up. When someone making 2 or 3 times the median household income thinks they need to work extra hard to afford a below-average house in a city with a 70% ownership rate something isn't right.

StalJ said...

@marko
“No they shouldn't. The market would need to drop at least 15% to make it worth while.”

Also Marko if you consider currency, the market will easily drop 45% or more.

If you sold @ 2010 to rent, and bought say US REITs or rentals in 2011/12 with your tax-free lottery winnings, you will be up hundreds of thousands by around 2018 than if you did not sell.

The math...
Peak = $630K x 1.05currency = $683 USD
Bottom 2018 = $450K x .80 weaker loonie = $360 USD or 47% drop!

Too, if US reits only stays flat 2012-2018, the cash flow would still pay for your rental here while you are riding out the 47% drop.

Marko said...

Also Marko if you consider currency, the market will easily drop 45% or more.

When it comes to me personally buying a home I don't consider currency...moot point to me.

Marko said...

And Marko, in the end it doesn't add up. When someone making 2 or 3 times the median household income thinks they need to work extra hard to afford a below-average house in a city with a 70% ownership rate something isn't right.

In Europe homes in the core have only been attainable through inheritance or being ridiculous rich.

Marko said...

fyi....the 520k Oak Bay home wouldn't really require extra hard work. I could go back to my union VIHA job with that particular place based on 20% down.

When I saw extra hard work, that is more along the lines of a new home in Fernwood.

No_Problem said...

^
In other words, Be or become a high earner if you want to buy and live here.

I agree, it's the sign of the times.
People need good income to afford this life style.

I also don't think it's going to change anytime soon, If ever.

Leo S said...

In Europe homes in the core have only been attainable through inheritance or being ridiculous rich.

Countries in Europe are vastly different. Some are expensive (but don't have anywhere near 70% ownership rates) and some are cheap.

You can have wildly expensive, but not at this level of ownership rate. So either Victoria gets cheaper, or fewer people will own homes here.

No_Problem said...

^
Wrong, try home ownership in Ontario.
Housing is cheap here, for what you get anyway.

nan said...

Having a good income doesn't make the opportunity cost of Victoria real estate lower. A bad investment is a bad investment, as patriotz points out again and again. The price of living in this city (consuming Victoria) is the lower of rent or ownership, which is currently rent. Anything you pay above that is due to your own belief about the future and/or your financial illiteracy and/or desire for status among your social group. I would think that it is NOT income that draws the line between owners and non owners but rather a combination of the three things I named plus maybe a few others. I wouldn't dream of owning at these prices. I mean come - there is an 1800 sq ft place in schoal point for 2500/month rent right now that has sold for twice in the last year for $1,000,000! That is a 400x price to rent! RIdiculous!

No_Problem said...

Well, That's good for you nan.
I'm not the tenant type.
Sure, I guess prices here might tank but I would still rather own my own digs any day.

What ever makes you happy.
In fact I expect further declines, however in the long run (5,10,15) years they always come back.

Pretty good deals around here though.
Beautiful acreages available, you guys are spoiled.

Victoria said...

Was out looking at acreages today. Beautiful indeed. And to quote Alice Walker - Horses Make A Landscape More Beautiful.

The market will drop, IMO, much more than another 15%. Which makes waiting the smart money.

Those of us who can rent comfortable places and are confident the market is continuing its downward trend are happily writing the rent cheques.

And watching the portfolios grow. It's really nice.

And the freedom from any kind of debt or encumbrances is an awesome, awesome feeling.

No_Problem said...

Who said anything about "any kind of debt or encumbrances"?

You do understand people have the ability to pay cash?

Just Jack said...

What's "HOT"

-How about a 7,800 square foot duplex zoned lot in Esquimalt that sold in 9 days for $330,400!

-A 2000 sft. 23 year old updated home in Brentwood Bay with water views for $599,000. Bought previously for $276,000 - 26 years ago.

- A 2000 square foot custom and executive rancher on a quarter acre lot in Cordova Bay for $660,000.

These are some of the best deals that I've come across this month so far. The first one being a development site. The last two in good locations AND quality homes.



Leo S said...

You do understand people have the ability to pay cash?

That's kind of the point of this post. We constantly hear about people having so much money in Victoria, but then a small tweak to mortgage rules that only affects those who don't have 20% down weakens the market significantly. Clearly lots of buyers are relying on cheap and easy credit to buy in Victoria.

No_Problem said...

I think the people selling these "beautiful acreages" are asking the bottom. they understand the current market conditions, these are not stupid people. They will just pull the listing.
Now you don't get the "beautiful acreages" and they probably won't list again for some time.
15% from their advertised bottom is a pipe dream.
Good luck though.

patriotz said...

And as JJ keeps reminding us, the 55+ plus segment, which one would expect to have the most cash buyers, is down the most.

Leo S said...

Wrong, try home ownership in Ontario.
Housing is cheap here, for what you get anyway.


Comparing a small city to a province.. That's sensible.

By the way up until recently Victoria's average house price was higher than even Toronto's.

patriotz said...

In Europe homes in the core have only been attainable through inheritance or being ridiculous rich.

But that goes for renting too. What is Mark Carney's rental allowance for his new posting in London (he's going to rent not buy)?

Leo S said...

By the way, average residential price (includes condos) in Toronto is about $475,000

In Victoria? Also about $475,000

Perfectly reasonable, perfectly justified. After all we're basically the same as the financial capital and largest city in Canada.
The difference is of course that we have near as makes no difference 3 times their MOI.

Leo S said...

they understand the current market conditions, these are not stupid people. They will just pull the listing.

Yes, because people only sell for fun and not because they have to.

No_Problem said...

Go live in Toronto for ONE month leo.
Victoria and south Van Isle for that matter is FAR superior. You can breath the air here without adverse effects to your health.
I don't think you understand what your talking about.

a simple man said...

There have been plenty of examples of amazing acreages going for far below asking lately, so you don't really know the market.

Like swanwick ranch. Initial asking around 25 million, sold for a third of that.

No_Problem said...

^
link?

a simple man said...

Here you go. Acreages are in particularly bad shape right now.

http://www.timescolonist.com/business/swanky-swanwick-ranch-finds-buyer-1.18533

No_Problem said...

^
"amazing acreages"

Links of these amazing deals please.
Interested if you can provide them.
Thanks.

No_Problem said...

You suck at Links

67 acres is a little over the top.

Renter said...

Yeah, I'd like a little acreage for a hobby farm, not a 10 million dollar luxury estate.

Still, there are some good prices out in Sooke and Metchosin and the Highlands are coming down too. Too bad I prefer Central Saanich.

a simple man said...

Manners, No_problem?

Your points of view will come across much better if you are not rude.

Leo S said...

I don't think you understand what your talking about.

You don't understand that more things matter than the environment. People need these things called "jobs" and there are more and better paying ones in Toronto. Lots of people also like the city life and arts and culture, which there is much more of in Toronto. Your point of view that a nice setting trumps everything is very naive.
Also you're deflecting. You said it was way more expensive in Ontario. I proved that even in the most expensive city it is about the same as here. Now you're saying it doesn't matter because it's nice here.

No_Problem said...

I kindly request people post links in the "new" 2013 fashion so other members can just "CLICK THEM" as apposed to dragging them into the browser, as it saves huge volumes of time by doing so.

I am terribly sorry if I hurt any ones feelings, however this is the WORLD WIDE WEB and keeping things current and up to date, makes the internet a much more enjoyable experience for all.

I don't think I was rude, but whatever, I'm sorry.

Victoria said...

A little country acreage amongst other 'hobby farms' is the plan.

I looked at a great one a few years ago. Central Saanich. Had a beautiful west coast style home, an outdoor pool and a private, teeny vineyard.

It was just over $850,000. We debated but didn't go for it because there was a ton of traffic noise that wafted up from West Saanich Rd. That and the price tag. It was a stretch for us. A big stretch.

Sigh. Our little dream place. A glass of vino on the pool deck in the summer. Looking out over the grapes, adding a rescue dog to our little doggie family.

We decided to be prudent.

With a 30% correction that'll be under 6 in a year or two.

When the times comes I think we'll name our rescue cat Prudent. Yup, that or Bubble.

Leo S said...

I kindly request people post links in the "new" 2013 fashion

Telling people they "suck at links" is not kindly requesting.

The problem with blogger is that it doesn't autoparse links. It's a pain to write out the html every time and lots of people have no reason to even know how to, and thus not surprising that most people don't bother linking their links. I'm sure you'll survive the extra 2 seconds it takes to copy/paste.

No_Problem said...

Van Isle Kicks ass on the whole province of Ontario.

Lot's of jobs here with Gov't, Military, VIHA, U-VIC, Sea Span, and most important the private sector.

Believe it or not, this is a very nice place to live.

No_Problem said...

Well he did suck, and you just drag and drop anyway.
lazy!

No_Problem said...

The problem with blogger is HHV left and now your in charge!

Victoria said...

I'd link to this but I'm far too lazy....

So instead.

Imagine.

A Troll.

Leo S said...

Yep, it's like troll tag team this weekend. Who's next? Bubble and Fizzle?

Victoria said...

Maybe it's a full moon?

Nah, at least a third off (couldn't resist).

Discussion appreciated as are all points of view in my opinion. Leo's assistant blog hosting is great, thanks Leo.

I even like Info's grammar policing as I think he/she is just keeping us all on our toes.





a simple man said...

I would love for all of us one day to all meet up for a beer or two. Likely to never, ever happen.

Apology accepted, No_problem. I am on an iPad right now and plain tying is hard enough, let alone linking.

Leo S said...

I would love for all of us one day to all meet up for a beer or two. Likely to never, ever happen.

I'm in. I heard from Marko that it used to happen in the early days of HHV. True?

a simple man said...

Point proven above ^ re: "typing".

Just Jack said...

There are 129 properties out of a total 8,190 properties for sale in Oak Bay. 0.18%

In Langford there are 448 out of a total of 12,731 properties for sale. 0.35%

The general concensus is that the Langford market is considerably weaker relative to Oak Bay.

It's interesting to speculate that if the number of listings in Oak Bay were to increase by say 100 would Oak Bay's market be performing like Langford is today.

How likely is it that a hundred Oak Bay owners would put their property up for sale this Spring?

koozdra said...

The quality of the bullish comments has diminished greatly lately.

CS said...

Hey, No-Prob, you got an acreage near Victoria for sale, by any chance.

No_Problem said...

Yes, Very Nice acreage near Victoria
HERE
Another gorgeous acreage just steps from the inner harbor
HERE
Some very cheap acreage in Oak Bay can be found
HERE

Trolling is Phun!

koozdra said...

No_Problem you have problems.

No_Problem said...

Yes, but you're feeding a Troll.

a simple man said...

No_problem....your links aren't working.

Introvert said...

I would love for all of us one day to all meet up for a beer or two. Likely to never, ever happen.

Not being an introvert in name only, I would rather not get together in a large group!

DavidL said...

I'd love to get together for a beer with fellow HHV-ers sometime. I bet that a few of us already know each other through work, hobbies, kids or just live in the same neighbourhood.

patriotz said...

I'm sure you'll survive the extra 2 seconds it takes to copy/paste.

With Firefox you can just highlight the link and right click. Don't know about other browsers.

Of course I always do my links in full HTML because it allows me to embed a clever remark :-)

subprime11 said...

Renting is a liberating experience after owning for 20 years. Called my landlord yesterday to remind him to clean the leaves out of the gutters and also by the way the dryer needs looking at so would you get on that asap..if you need me I'll be at the golf course till 6PM..alrighty then. I am thinking of putting my stuff in storage and taking a year to travel. 25K annual rent money would go a long way Maybe even rent a motorhome for a few months. Ain't life great!

Renter said...

@Victoria
You can have the vineyards and outdoor pools as long as I can have fully-fenced and decent soil (and not Highlands rock). :-)

Victoria said...

I would bet a beer that some HHVer's will meet for a cold one and a hot debate this summer ;-) Meeting in a public place would be fun and I'll bet we do have 7 degrees of separation and maybe less.

@subprime - I concur! I have also thought about the year off to travel. The nice thing about it is that anyone can do it - renter or owner - with a little bit of planning and some chutzpah.

@Renter - I like your idea!

a simple man said...

@patriotz...same thing with chrome browser.

A beer would be nice - let's pencil it in for later this spring/summer.

Leo S said...

A beer would be nice - let's pencil it in for later this spring/summer.

Sure. I predict by that time we'll all be in a good mood.

koozdra said...

"Not being an introvert in name only, I would rather not get together in a large group!"

Bears only!

koozdra said...

Please start borrowing again... pretty please!

koozdra said...

"When interest rates rise, their debts will become ever more costly to carry."

INTEREST RATES WILL NEVER RIZE, ZIRP RULZ!!!

High-income couple has to deal with some real estate headaches

MC said...

In re to MRMikes shenanigans: There is still no shortages of jobs in Alberta for trades workers, that's for sure. However, like someone mentioned there is a reason you get paid a lot to work in the oilfield. Camp life sucks. If you have a resemblance of a relationship with family or a partner, it can be very straining. 3 weeks away from the people you care about, and 3 weeks being worked like a dog living out of a suitcase. The work is hard, days are long and it is dangerous. Having said that, the field attracts certain personalities who might enjoy the boys club. I for one do not miss being around "rig pigs". It might be a good short term way to make lots of money, but it will be wearing after awhile.

Marko said...

Monday, February 18 2013 8:45am

MTD February
2013 2012
Net Unconditional Sales: 209 497
New Listings: 632 1,318
Active Listings: 3,964 3,977

Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year

a simple man said...

@MC - exactly. The very few people that I have met that truly enjoyed working up there were such foul characters that it was an apt place for them.

The bottom line is that if there was work for trades here there is no way they would fly up to Fort Mac for three weeks in the middle in January. Thus, there must be not enough work for the trades that are here.

koozdra said...

I think if we had a meet up, I can imagine introvert showing up and lurking in the shadows, observing us creepily.

koozdra said...

"I think what we've done successfully, time will tell, what we've done successfully is we've pivoted from stimulating household demand — housing market and household borrowing for consumption — kept employment up, and we've pivoted to focus on investment and exports," he told the CTV Question Period program."

We've tapped out the middle class' capacity for borrowing and now it's time to go back to sustainable activities to run the economy. Throw the housing market to the bears.

"That's a difficult rebalancing, but what we're seeing without question is a very constructive evolution of Canadians' attitude towards debt and towards the housing market and it is moving towards a much more sustainable equilibrium," said Carney, who is about to leave his job to take over the helm of the Bank of England this summer."

He's forgetting the new debt service ratios and other restrictions imposed on the mortgage market. Canadians haven't learned any lessons. They have just had their capacity for borrowing removed. As such we are seeing a decrease in newly accumulated debt.

http://www.cbc.ca/news/business/story/2013/02/18/business-housing-market-carney.html?cmp=rss

a simple man said...

I think if we had a meet up, I can imagine introvert showing up and lurking in the shadows, observing us creepily.

I'll just throw out a few "You ain't seem nothin' yet - the canary is about to sing", and he would self-identify.

kabloona said...

koozdra.....thanks for your (properly coded) links....

That Scotia 10-year rate just amazes me. I remember back in 1997 how lucky I felt when I scored a 4.45% rate from BMO for one year.

When I renewed a year later it was back up to 6% for 2 years.....

a simple man said...

Cooling housing market part of economic transition, Mark Carney says.

for you, No_problem - back on my PC.

Just Jack said...

Fascinating how the government economists understood the Canadian psychic. That the government could stimulate the greed/fear factor in Canadians to load up on debt and ease the recession through consumer spending. Years before the government would have stimulated demand through government spending and loaded Canada with higher debt. This time they were able to spread the debt out to Canadians by increasing personal debt. They understood how Canadians will do almost anything to own a home and to keep it.

Now, all the government has to do is de-leverage Canadians by encouraging home prices to decline. Knowing quite well that Canadians will continue to pay off their mortgage even if the value of their home falls below 20% of the outstanding mortgage.

Pure brilliance by the government.

It is now just a case of steadily bringing house prices and the percentage of home owners down, to create pent-up demand and thus begin a new up cycle in real estate.

If you're a home owner and have fallen into the increasing spiral of debt caused by rising prices and the effect of paper wealth - you should be mad as hell at the government.

They played you like a cheap Violin.

reasonfirst said...

"They played you like a cheap Violin"

the sad thing is that most will never realize this.

Renter said...

If there was a meetup, I'd go, even though I don't comment regularly. I feel like I owe a few people beers for the entertainment and information they provide. Just Jack, Leo, and Marko for starters and no doubt a few others as well.

koozdra said...

"They played you like a cheap Violin."

I just thought house prices would keep rising indefinitely.

STIFFLER JHON said...

"They played you like a cheap Violin." lolx koozdra.. u dont mean it.


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