tag:blogger.com,1999:blog-7123542260692860177.post5273400041822256822..comments2023-12-02T00:38:46.467-08:00Comments on House Hunt Victoria: Birds of a featherHouseHuntVictoriahttp://www.blogger.com/profile/07456914359088891317noreply@blogger.comBlogger46125tag:blogger.com,1999:blog-7123542260692860177.post-47794579642687697572010-02-15T16:32:43.448-08:002010-02-15T16:32:43.448-08:00There isn't a bubble because of a lack of spec...<i>There isn't a bubble because of a lack of speculation in the real estate market, said Scotiabank senior economist Adrienne Warren.</i><br /><br />She is ignoring the fundamentals which indicate that prices are being driven by speculation, as I described above.<br /><br />It would appear that she is choosing her own definition of "speculation" which supports a predetermined conclusion that there is no bubble. The economic definition of a bubble uses the economic definition of speculation which I gave above. Note that nowhere in the article does anyone say what definition they are using for "speculation".<br /><br />http://www.600ckat.com/news/national/more.jsp?content=n083252425<br /><br />She is also ignoring her colleagues at another branch of the bank, Scotia Capital, who came right out last week and said there is a bubble in Canada (which must include Victoria since it's the second most expensive city in the country), based on - surprise - fundamentals. But these guys don't do the mortgage lending. :-) Their business is evaluating investments.patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-3955414723925574322010-02-15T16:08:20.708-08:002010-02-15T16:08:20.708-08:00So, do we all agree that a statement such as Ms Wa...So, do we all agree that a statement such as Ms Warren made or any other person making a similar claim is just trying to pull the wool over your eyes.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-17869649052906909132010-02-15T14:30:37.874-08:002010-02-15T14:30:37.874-08:00Should add that the $5 a year is what I get in a t...Should add that the $5 a year is what I get in a tax shelter such as an RRSP. Obviously in a taxable account I have to pay attention to the taxman. :-)patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-10709581910273794672010-02-15T14:29:08.278-08:002010-02-15T14:29:08.278-08:00I think the revenue canada definition is the best ...<i>I think the revenue canada definition is the best one.</i><br /><br />It's not a matter of "best". When dealing with taxes, you have to use the taxman's definition. When looking at the merits of an investment, you look at the economic definition.<br /><br />For example, suppose I buy at bond for $105, coupon yield 6%, matures in 5 years at face value of $100, YTM 5%. The taxman says I'm getting $6 a year interest income and a capital loss of $5 (which I can't deduct against the interest) when it matures. But economically I'm getting $5 a year.patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-16808821254357687282010-02-15T13:42:48.436-08:002010-02-15T13:42:48.436-08:00@Just Jack and @patriotz
I think the revenue cana...@Just Jack and @patriotz<br /><br />I think the revenue canada definition is the best one. If you're buying a house with the primary intention of selling it at a higher and making money, you are a speculator. If you are buying a house with the primary intention of having a place to live then you are not a speculator.<br /><br />Of course figuring out what one's primary intention is pretty tricky, as of course everyone will want both, but there is definitely a big difference between someone buying just to make money and someone buying to have a home, and incidentally also hopefully be better off financially.<br /><br />Unless you hand out a survey it's going to be impossible to determine what people have in mind with their real estate purchases.Leo Shttps://www.blogger.com/profile/02951281972056927807noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-58115574118722154952010-02-15T12:41:53.026-08:002010-02-15T12:41:53.026-08:00In economic terms none of these definitions is cor...In economic terms none of these definitions is correct.<br /><br />Speculation is when someone buys an asset in anticipation of positive returns based not on earnings (which in the case of RE is rental value), but on capital gains.<br /><br />By this definition <b>everyone</b> buying today in Victoria is a speculator. Unless they expect that prices will never go up further and just don't care, and I don't think that includes many people.<br /><br />Note if you buy a house and your total monthly costs are less than renting, you're not a speculator regardless of what you think about future prices, because you're getting a positive return even if you never sell.patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-52624147633289134652010-02-15T12:29:35.643-08:002010-02-15T12:29:35.643-08:00There in't a bubble because of a lack of specu...<i>There in't a bubble because of a lack of speculation in the real estate market, said Scotiabank senior economist Adrienne Warren.</i><br /><br /><br />This brings up a good point. What is speculation?<br /><br />Depending on how one defines speculation you get different answers. These are the ways I have heard speculation described:<br /><br />From an agent<br />The same home re-selling in less than 6 months.<br /><br />From an admitted serial monogamist home owner.<br /><br />I buy a home every 1 to 2 years, in that way Revenue Canada does not consider this a business.<br /><br />Revenue Canada: <br />it's about intent.<br /><br />None of the above have any base in fact or figures as to what constitutes speculation.<br /><br />The six month example is so restrictive, that it would mean there is no flipping going on in Victoria.<br /><br />The serial monogamist home owner is basing this on something that someone who knew someone said. Heresay<br /><br />The Revenue Canada definition is so vague, it could mean anything they want it to in order to increase taxes.<br /><br />Now the way I would look at speculation, is that years ago, I heard that the typical Canadian owns their home for seven years? If that has changed significantly would that not suggest - speculation? There are no studies of this analysis that I have read. <br /><br />How about the number of persons per household. If that number is dropping would one plausible answer be that on average a household is now owning more than one property? But that information is dated to the 2006 census.<br /><br />So back to Ms Warren's original statement. Its hooey.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-53216169517158785532010-02-15T12:24:43.290-08:002010-02-15T12:24:43.290-08:00I'm still doing the happy dance :)
Month-to d...I'm still doing the happy dance :)<br /><br />Month-to date stats for Victoria - as of Feb 15th.<br /><br />Sales 302<br />New Listings 747<br />Total Active Listings 3001<br /><br />Thats a sales/new listings ratio of 40%<br /><br />Oh yeah :) The winds ARE a-shifting :) Can't argue with the numbers - its been a month and a half of low sales with climbing inventory :) If it continues like the for another month or two prices are going to start tanking!thinkhttps://www.blogger.com/profile/04527051722420253429noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-25692988209221278592010-02-14T20:19:02.567-08:002010-02-14T20:19:02.567-08:00Very large crowd, must have been a few hundred the...Very large crowd, must have been a few hundred there. It was interesting as he compared his visit a year ago and where the markets are at now, but more importantly where we are going. His emphasis on avoiding tax in the coming high interest rate and higher taxes enviroment was the best advice besides dumping your overpriced Victoria real estate. <br /><br />Gold is a currency as well as uses or it wouldn't go up and down with the US dollar. If it doubles to $2000 it won't be because anyone's buying more circuit boards. I have never been a total gold bull and prefer the stocks and don't own any but may in the future as insurance is always a good idea when you realize the debt the US is pumping out. $11 trillion ( and growing) is not going away anytime soon and Canada will not look too much better after the next budget.<br /><br /> I agree with Garth on his view we have another leg up to go in the stock market over the next year then we flat line or correct once again if the sovereign debt problems aren't coralled. <br /><br />One thing for sure is real estate is for fools unless you got some to sell.Vichttps://www.blogger.com/profile/08986654555255579099noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-10746684684844606912010-02-14T19:31:00.897-08:002010-02-14T19:31:00.897-08:00I saw Garth a year ago, didn't bother to go ba...I saw Garth a year ago, didn't bother to go back this time round. <br /><br />I still see gold as any other commodity, it is only as valuable as it's uses. jewelry, circuits, etc.<br /><br />I have been aggressive since the big crash in Oct 08, but I am starting to get more conservative. I have been switching from growth equity to dividend funds. I am also probably going to finish up my high yield corp bonds play this week. <br /><br />Other than the cop-out dividend play I have no idea what to get into next. I see as much uncertainty in the next few months as I did in fall 08.Robert Reynolds - HMR Insurancehttps://www.blogger.com/profile/10939128478955272061noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-89018521756959109222010-02-14T15:15:31.858-08:002010-02-14T15:15:31.858-08:00Saw Garth speak today. Love'em or hate'em ...Saw Garth speak today. Love'em or hate'em he is a great speaker with some good investment and retirement income ideas. As most of us believe, this Victoria bubble will pop at some point soon and is totally unsustainable. <br /><br />I was surprised he likes gold now and thinks $2000 is possible in the next year or so along with record oil prices. Can't argue with that theory.Vichttps://www.blogger.com/profile/08986654555255579099noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-61667554516466079442010-02-14T13:46:08.042-08:002010-02-14T13:46:08.042-08:00As my husband has 2 kids from before me and we hav...As my husband has 2 kids from before me and we have a dog, we were already renting a 4 bed/2 bath house (whole house)...and we just extended the lease to October 2011...so that should be a fair defferal on the buying urges for now...<br /><br />It helps that our rent is less than what the mortgage interest would be.<br /><br />I also think it helps that my training in economics has been rather effective in limiting the emotional impulses associated with home buying. I seem to be able to think about it rationally and to separate 'housing' (a need) from 'home ownership' vs 'renting' and to determine which is the best method at a point in time in terms of achieving the need. Right now its renting, hands down.Just Janicehttps://www.blogger.com/profile/06002680972898096266noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-38912090792616532262010-02-13T12:08:25.143-08:002010-02-13T12:08:25.143-08:00It will take 3 months of increasing listings befor...It will take 3 months of increasing listings before it starts to put downward pressure on prices...these things take time. Anybody have mid-Feb stats for Victoria????thinkhttps://www.blogger.com/profile/04527051722420253429noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-11070565151252264832010-02-13T12:01:20.401-08:002010-02-13T12:01:20.401-08:00The jump in listings looks pretty typical to me......The jump in listings looks pretty typical to me...<br /><br />I'll get excited when we start seeing actual price declines (again).<br /><br />:)mlnhttps://www.blogger.com/profile/17812603610666862194noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-6794611098678067792010-02-13T10:57:59.960-08:002010-02-13T10:57:59.960-08:00From Garth on Victoria
...And so the number of l...From <a href="http://www.greaterfool.ca/2010/02/13/denial-2/" rel="nofollow">Garth on Victoria</a><br /><br /><i> ...And so the number of listings grows as sales wither... </i><br /><br />WRONG<br /><br />listings are <a href="http://www.vreb.org/pdf/vrebgal.pdf" rel="nofollow">through the roof</a>.... /sRobert Reynolds - HMR Insurancehttps://www.blogger.com/profile/10939128478955272061noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-53660315153957025442010-02-12T17:17:25.628-08:002010-02-12T17:17:25.628-08:00Higher rates are coming and the Canadian bankers a...<i>Higher rates are coming and the Canadian bankers are crapping themselves after seeing charts like Robert posted of defaults.</i><br /><br />It's not so much mortgage defaults that the banks are concerned about (as they are insured) but collateral damage to their other loan portfolios. When someone ends up in BK due to mortgage troubles the other loans get hit too.patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-84106614686921772602010-02-12T16:30:51.437-08:002010-02-12T16:30:51.437-08:00Mr. 4 AM,
I am not a proponent of Sinclair by an...Mr. 4 AM, <br /><br />I am not a proponent of Sinclair by any means, just something worth noting. His high level involvement in past economic disasters tells me he knows his stuff but overestimates his timing. I agree it will take a longer time to happen than most think, as in a few years, then we will see the whole inflation effect kick in. <br /><br />Bernake basically waving the interest rate flag the other day says it all. Higher rates are coming and the Canadian bankers are crapping themselves after seeing charts like Robert posted of defaults. It's probably much more than they will admit or they would not be so desperate. Flaherty will crumble and the iceberg will hit the good ship ReMax/CMHC where it counts and deserves.Vichttps://www.blogger.com/profile/08986654555255579099noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-61640685257820112292010-02-12T12:52:50.387-08:002010-02-12T12:52:50.387-08:00I should also point out that a couple of weekends ...I should also point out that a couple of weekends ago, the World Economic Forum held its annual meeting at Davos with the theme of "Improve the State of the World." Which naturally meant coming to terms with the risks out there. Their economists came up with a comprehensive list and assigned probabilities to each--and also mapped the linkages between each one. Then they summarized all those findings in a <a href="http://www.weforum.org/documents/riskbrowser2010/risks/#" rel="nofollow">handy dandy interactive map of top global risks</a> that's sure to delight paranoid conspiracy theorists everywhere *grin*:<br /><br />From the map, note that:<br /><br />Domino Potential = Closeness to center of map<br />Severity in Money = Bigger circles<br />Severity in Human impact = Closer to the top of the map<br /><br />Further, note how nearly all the dots in the center of the map (domino potential) are blue/Economy related.<br />- Note how China is one of the biggest circles.<br />- Note that "Fiscal Crisis" is Smack in the middle of the map, likely with the most connections.<br /><br />- Note how Asset Collapse (aka. Real Estate/Stock Markets) is one of the biggest circles.<br /><br />You can also click on each circle to see a few more details about its interconnectedness.<br /><br />Cheers,<br />Mr.4AMMr.4AMhttps://www.blogger.com/profile/06939742036749753862noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-63306560145979194572010-02-12T12:37:02.637-08:002010-02-12T12:37:02.637-08:00Vic said: "Incase you missed Sinclair's l...Vic said: <i>"Incase you missed Sinclair's letter tonite, he states "THIS IS THE END". I would not be surprised to see one last large move up in the markets first. "Sovereign debt" will be the future buzz words we will hear for a long time." </i><br /><br />VIC, although I agree in general about defaults on Sovereign debts being the looming and eventual black swan(s) that slam the markets into lows not seen since 2008 (that or a China bubble pop, or a major terror attack in a Western nation); Sinclair, has a track record for saying things like that. The reality is that they take longer to manifest than most people expect, although we are closer than ever.<br /><br />A parallel could almost be drawn to the Victoria housing market. Back in 2006/2007, I too thought the collapse for real estate locally was imminent and fully expected it to take a major dive in 2008 from which it would not recover for years, but government intervention prevented this.<br /><br />Be sure to check out this <a href="http://www.businessinsider.com/top-20-soverign-default-risks-2010-2" rel="nofollow">top 20 Sovereign Debt Default candidates</a>. Greece looks like it will be getting rescued although it's not 100% official yet, and I'm not sure what will happen to Spain. Ukraine debt while on the verge of defaulting, looks too small to trigger a global domino effect. I'm not overly worried about Portugal, they've already been in a 7 year Real Estate decline, and their Reserves are 98.5% in gold (probably one of the top countries in the world holding that high a percentage of gold as national reserves, instead of fiat currencies).<br /><br />Hungary has already been to the IMF once, so that's a possible candidate. Ireland is probably the next biggest one though. But I'm still thinking China will eventually pop, and I don't see anyone capable or willing of rescuing China. Their stimulus vs GDP was 3 times higher than the USA, and they are not a reserve currency to be able to print their way out without consequences.<br /><br />India is also on the list of that article, but I really don't see an Indian collapse that would take the world with it. Their speculative SENSEX stock market might see another 30-50% correction again, but that's about it. From a domino perspective, they're a farming and service stronghold, so food prices may rise slightly around the world, and their call centers may cost more to operate for foreign corps, but even a 50% increase there, is not that significant for the rest of the world. It's kind of like when rice doubled in price in the last couple of years... So instead of me paying some $12 for a large (20 lbs?) bag of rice at Fairways, I'm now paying some $20+... but that doesn't even come close to worrying me as a Canadian.<br /><br />So at present, while yes there are a long line-up of debt default candidates, I'm still wondering how much longer this will all take to play out. One thing is for sure though, if several of them fail, even if small, that could also trigger a global market meltdown.<br /><br />In short, there's just too many variables to be 100% sure about anything, especially when governments & reserve banks change the rules to prop up the systems.<br /><br />Mr.4AMMr.4AMhttps://www.blogger.com/profile/06939742036749753862noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-29092945773271994002010-02-12T12:10:16.953-08:002010-02-12T12:10:16.953-08:00Robert, too bad that chart doesn't go back to ...Robert, too bad that chart doesn't go back to the early 1980's so that we can see what we might expect in the next few years.<br /><br />On the US front, this Aug 2009 <a href="http://www.moneymarketing.co.uk/news/one-in-ten-us-mortgages-in-arrears/192087.article" rel="nofollow">article</a> shows them at 9.23%! (nearly 20 times higher than we are at now). Granted that's 3 years into the decline, which over here has not quite yet begun.<br /><br />Mr4AMMr.4AMhttps://www.blogger.com/profile/06939742036749753862noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-89982033799020129252010-02-12T12:08:20.994-08:002010-02-12T12:08:20.994-08:00Sorry I lied about that house that sold for $130K ...Sorry I lied about that house that sold for $130K over asking it was <a href="http://www.rwglobal.com/~realestatesooke/listing2.html?agency_id=54&%20building_id=112014" rel="nofollow">this one</a>, not on Foul Bay Rd.<br /><br />1429 Grant St. <br />List $599,000<br />Sold $734,000Robert Reynolds - HMR Insurancehttps://www.blogger.com/profile/10939128478955272061noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-66796522020819082622010-02-12T12:01:27.270-08:002010-02-12T12:01:27.270-08:00Found the mortgages arrears stats here and made t...Found the mortgages arrears stats <a href="http://cba.ca/index.php?option=com_content&view=publication&id=69&Itemid=56&lang=en" rel="nofollow"> here</a> and made this <a href="http://imgur.com/VRles.jpg" rel="nofollow">graph.</a><br /> enjoy.Robert Reynolds - HMR Insurancehttps://www.blogger.com/profile/10939128478955272061noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-62587007851528526842010-02-12T11:47:35.569-08:002010-02-12T11:47:35.569-08:00Also, Diana told me that there was a house on Foul...Also, Diana told me that there was a house on Foul Bay Rd. which was intentionally priced low to start a bidding war and just sold for $130,000 OVER LIST! redonkulous<br /><br />I don't see it on my PCS, anyone got any info?<br /><br />Disclosure: Diana is in my BNI chapter.Robert Reynolds - HMR Insurancehttps://www.blogger.com/profile/10939128478955272061noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-64992189132524471152010-02-12T11:40:11.135-08:002010-02-12T11:40:11.135-08:00A realtor friend of mine gave me this today. It is...A <a href="http://www.dianadevlin.com/" rel="nofollow">realtor friend of mine </a>gave me this today. It is a graph of mortgages in arrears for Canada and BC. <br /><br /><a href="http://imgur.com/UlFO0.png" title="Hosted by imgur.com" rel="nofollow">http://imgur.com/UlFO0.png</a><br /><br />Sorry for the poor quality.<br /><br />Basically there has been a huge increase in the number of people in arrears, but we are only back to 2004 levels. So, bad for the past few years, but pretty "meh", in the long run.<br /><br />I will see if I can find a better version to post later.Robert Reynolds - HMR Insurancehttps://www.blogger.com/profile/10939128478955272061noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-15519985069487823542010-02-12T11:34:05.150-08:002010-02-12T11:34:05.150-08:00Just Janice, I admire the stance you've been t...Just Janice, I admire the stance you've been taking in regards to resisting the temptation to buy, and continuing this line of thought even though you're about to have a kid.<br /><br />I can tell you that in the case of nearly all my friends, even though most of them are not bearish on housing, it was their wives who eventually persuaded them to buy a house, and in several cases more than they could comfortably afford.<br /><br />So for you to go against what appears to be a (female?) instinct to 'nest' and to further dissuade your husband from treading into obvious folly, I commend you! :-)<br /><br />“The sign of an intelligent people is their ability to control their emotions by the application of reason” - Marya Mannes<br /><br />Mr.4AMMr.4AMhttps://www.blogger.com/profile/06939742036749753862noreply@blogger.com