tag:blogger.com,1999:blog-7123542260692860177.post6753049347060509039..comments2023-12-02T00:38:46.467-08:00Comments on House Hunt Victoria: June 18: Monday Market UpdateHouseHuntVictoriahttp://www.blogger.com/profile/07456914359088891317noreply@blogger.comBlogger161125tag:blogger.com,1999:blog-7123542260692860177.post-35233145135302015892012-06-20T19:59:48.132-07:002012-06-20T19:59:48.132-07:00If the past is any prediction of the future, there...If the past is any prediction of the future, there should be a flurry of buying before the new regulations are implemented. The flurry of buyers should raise prices. Followed by a dearth of sales and a substantial price drop after the regulations are in place.<br /><br />Why the government did not say when this will be implemented is odd. It's like they're intentionally spooking the herd towards the cliff.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-61645517982592753722012-06-20T19:38:06.778-07:002012-06-20T19:38:06.778-07:00Updated affordability graph with amortizations ret...<a href="http://i.imgur.com/gtZr3.png" rel="nofollow">Updated affordability graph</a> with amortizations returning to the levels of pre-2000s and the addition of nominal prices for those who don't like inflation.<br /><br />This is still assuming zero increase in interest rates, and no other external triggers.Leo Shttps://www.blogger.com/profile/02951281972056927807noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-58487008805331648882012-06-20T19:24:51.687-07:002012-06-20T19:24:51.687-07:00Might just get people off the fence, hurry up and ...Might just get people off the fence, hurry up and buy.westcoasthttps://www.blogger.com/profile/12320263147171529802noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-90107121222349097572012-06-20T19:21:33.185-07:002012-06-20T19:21:33.185-07:00Love to hear your answers to both questions.
Thos...<i>Love to hear your answers to both questions.</i><br /><br />Those questions have been asked and answered dozens of times. Prices are high because demand/supply is higher relative to most other cities. <br /><br />That says nothing about the potential of prices to go up or down. It just means that Victoria is likely to retain a premium over other cities. So if other cities go down prices in Victoria will go down (otherwise that premium would have to increase, and I don't see any good argument that Victoria is getting nicer relative to other cities).Leo Shttps://www.blogger.com/profile/02951281972056927807noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-70298308119068663452012-06-20T19:17:00.096-07:002012-06-20T19:17:00.096-07:00Some things to ponder about a drop in amortization...Some things to ponder about a drop in amortizations from 30 to 25 years.<br /><br />Monthly payments increase by about 12.5%<br /><br />Max purchase price would be reduced by about 9%.<br /><br />40% of home buyers in the last year chose an amortization higher than 25 years. That's all home buyers, the percentage for first time buyers is significantly higher.<br /><br />There's a stat somewhere about what percentage of first time buyers would not have been able to buy at less than 30 year amort, but I can't find it right now.Leo Shttps://www.blogger.com/profile/02951281972056927807noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-39485915357612464712012-06-20T18:52:03.530-07:002012-06-20T18:52:03.530-07:00All right. Tell me, please:
1. Why is the averag...All right. Tell me, please:<br /><br />1. Why is the average and median price of a SFH in Greater Victoria substantially higher than every other Canadian metropolitan area save for Vancouver and Toronto?<br /><br />2. Why doesn't the typical home in Saskatoon cost anywhere near $550K? Saskatoon is experiencing far greater economic prosperity than Victoria.<br /><br />Love to hear your answers to both questions.Introverthttps://www.blogger.com/profile/03333045260631104757noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-37906913313607652782012-06-20T18:25:49.043-07:002012-06-20T18:25:49.043-07:00The government announced Wednesday it will reduce ...<i>The government announced Wednesday it will reduce the maximum amortization period for a government-insured mortgage, lowering it from 30 to 25 years, and also drop the upper limit that Canadians can borrow against their home equity from 85 per cent to 80 per cent.</i><br /><br />WHOA! Was not expecting that <i>at all!</i>. So this comes at the same time as the OSFI restrictions. Wow. Things are getting interesting.Leo Shttps://www.blogger.com/profile/02951281972056927807noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-72602759041454923322012-06-20T18:20:43.306-07:002012-06-20T18:20:43.306-07:00If for some crazy reason, house prices were to com...<i>If for some crazy reason, house prices were to come down a hundred thousand dollars</i><br /><br />Like this reason? Well maybe not $100K right away, but it's a start:<br /><br /><a href="http://www.cbc.ca/m/rich/business/story/2012/06/20/mortgage-rules-tightened.html" rel="nofollow">The government announced Wednesday it will reduce the maximum amortization period for a government-insured mortgage, lowering it from 30 to 25 years, and also drop the upper limit that Canadians can borrow against their home equity from 85 per cent to 80 per cent.</a>patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-54788805454025338432012-06-20T16:57:47.245-07:002012-06-20T16:57:47.245-07:00If for some crazy reason, house prices were to com...If for some crazy reason, house prices were to come down a hundred thousand dollars - would that cause people in basement suites to vacate and buy? <br /><br />For some of the starter homes in Saanich West and Sidney a drop of $100K would allow basement renters to buy a home at around the same monthly cost as renting.<br /><br />But that would seriously screw around with the vacancy rate for suites. Could Saanich West and Sidney home owners afford to wait 3 months to find a renter?Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-45798657573762040042012-06-20T15:11:33.779-07:002012-06-20T15:11:33.779-07:00The collection arm of CMHC is the CRA. They can g...The collection arm of CMHC is the CRA. They can garnish your wages.<br /><br />If your going to go the bankruptcy route, then you are going to have to owe a lot of money. Being $50,000 or a hundred thousand in default may not be enough.<br /><br />Best to take all of your 13 credit cards and max out the $30,000 limit on each of them, then proposition your boss's daughter and put animal porn as your computer wallpaper at work. That should get you fired - unless you work in high tech.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-78661778931732341472012-06-20T15:01:12.167-07:002012-06-20T15:01:12.167-07:00Bankruptcy laws were brought into place to ensure ...<i>Bankruptcy laws were brought into place to ensure that people were not saddled with unreasonable debt and that there was a reasonable limit on what lenders would lend knowing that bankruptcy protection was available.</i><br /><br />And a very sensible system it was. Until CMHC allowed banks to offload 90% of the risk and had no more incentive to be prudent.Leo Shttps://www.blogger.com/profile/02951281972056927807noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-35328368884901017082012-06-20T14:53:11.333-07:002012-06-20T14:53:11.333-07:00How do you get out from underwater?
Pay for it,...How do you get out from underwater? <br /><br />Pay for it, or declare bankruptcy if you owe far more than you can afford to pay back. <br /><br />Bankruptcy laws were brought into place to ensure that people were not saddled with unreasonable debt and that there was a reasonable limit on what lenders would lend knowing that bankruptcy protection was available.Anonymoushttps://www.blogger.com/profile/08188115284116016130noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-56992813187069829102012-06-20T14:44:23.587-07:002012-06-20T14:44:23.587-07:00Cracks in the wall are forming as some properties ...Cracks in the wall are forming as some properties in Fairfield are now slipping back to 2007 levels.<br /><br />Half duplex homes, are usually the next, after condominiums, for people to loose interest in, as the market contracts and there are more choices to buy. Such as the sale on Linden of a side by side half duplex that just sold for $625,000 which is $18,000 less than it previously sold for in February 2007.<br /><br />Haven't found any cracks in Oak Bay prices, but I don't expect to at this time. Firstly there are very very few half duplexes in Oak Bay and with slightly less than 4.5 months of inventory there is very little pressure for sellers to make any major concessions on price or terms. <br /><br />And now you really know what the phrase location, location, location really means. <br /><br />Oak Bay houses were the first to increase in price and they will be the last to decrease.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-14774024438264120322012-06-20T14:41:39.135-07:002012-06-20T14:41:39.135-07:00Just Jack,
Interesting comment.
How does a homeo...Just Jack,<br /><br />Interesting comment.<br /><br />How does a homeowner that is "underwater" on their home get out from underneath this albatross.<br /><br />It ain't pretty as this BC real estate lawyer explains in his blog.<br /><br /><a href="http://bcrealestatelaw.com/2012/05/12/distressed-sales-options-for-sellers-of-distressed-property/" rel="nofollow">Options for Sellers of Distressed Property</a><br /><br />The worst scenario for the owner is where the property carries CMHC insurance. In this case the bank has little motivation to do anything to help the owner because in the case of default the bank gets paid the loss by CMHC. CMHC then goes after the former owner for the money.<br /><br />Owners often assume the property is not covered by CMHC insurance if they didn't pay for it. If the LTV is less than 80% the bank may have taken out and paid for the insurance without the buyer being aware of it. HELOCS were sometimes insured this way until Flaherty put a stop to it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-66667940382254133202012-06-20T14:31:44.095-07:002012-06-20T14:31:44.095-07:00The former (saving) refers to an increase in one&#...<i>The former (saving) refers to an increase in one's assets, an increase in net worth</i><br /><br />This is wrong. If the market price of my house or stocks goes up that's not saving. That's asset appreciation.<br /><br />Saving means spending less than you earn.patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-49082820449034874472012-06-20T14:26:15.675-07:002012-06-20T14:26:15.675-07:00totoro victoria,
No I was not referring to liquid...totoro victoria,<br /><br />No I was not referring to liquidity which is different altogether. I think it is important that we all use financial terms as they are commonly defined. <br /><br />You said: <i>that definition is a bit confusing because the term "saving" is also defined as "all of ones assets" whereas "saving" is an "increase in ones asset".</i><br /><br />The definition in <a href="http://en.wikipedia.org/wiki/Saving" rel="nofollow">Wikipedia</a> is quite clear.<br /><br /><i>"Saving" differs from "savings." The former (saving) refers to an increase in one's assets, an increase in net worth, whereas the latter (savings) refers to one part of one's assets, usually deposits in savings accounts, or to all of one's assets. </i><br /><br /><i>Equity</i> is defined <a href="http://en.wikipedia.org/wiki/Equity" rel="nofollow">here</a> as <i>the value of an ownership interest in property. Home equity is the difference between the market value and unpaid mortgage balance on a home</i><br /><br />If I don't spend all my income this month and pay down my mortgage or buy a GIC I am <i>saving</i> money and have increased my <i>net worth</i>. If I pay down my mortgage I increase my home <i>equity</i>. If I buy the GIC I increase my <i>savings</i>.<br /><br />If I have a home equity line of credit (HELOC) and I draw $1000 from it and buy a GIC I lower my home <i>equity</i>, increase my <i>savings</i> and increase my outstanding debt. My <i>net worth</i> stays the same. These transactions cannot be viewed as saving money; in fact I would probably be spending money due to the interest differential between the HELOC and the GIC.Rogerhttps://www.blogger.com/profile/08266466833259484873noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-67902307389130619102012-06-20T14:13:29.461-07:002012-06-20T14:13:29.461-07:00This comment has been removed by the author.Leo Shttps://www.blogger.com/profile/02951281972056927807noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-37104691705821988752012-06-20T14:09:03.718-07:002012-06-20T14:09:03.718-07:00Part of the bundle of rights that you have with re...Part of the bundle of rights that you have with real estate is the right to sell your home.<br /><br />Did you know that the bank may not permit you to sell your home. <br /><br />You would think that if you owned your home, the bank could not stop the sale. Something to think about if you owe more on the mortgage plus discharge costs than what you can net on the sale of the home.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-57147591026471549872012-06-20T13:39:10.705-07:002012-06-20T13:39:10.705-07:00You would think you could get 75 people in Oak Bay...You would think you could get 75 people in Oak Bay to pool their money and buy the island with their lines of credit. At less than the cost of a 1972 built condominium per hectare (2.47 acres) of land or two-thirds the cost of a new blue bridge.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-1270454060732359552012-06-20T13:39:05.836-07:002012-06-20T13:39:05.836-07:00Thanks for clarifying that Roger - I would agree.Thanks for clarifying that Roger - I would agree.Anonymoushttps://www.blogger.com/profile/08188115284116016130noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-90299266309015231742012-06-20T13:31:20.275-07:002012-06-20T13:31:20.275-07:00totoro victoria,
You said My only difference is ...totoro victoria, <br /><br />You said <i>My only difference is that I use the principal payment as a monthly deduction when cost of housing is compared to renting. It really is not an expense, it is savings</i> <br /><br />If you re-read my post you will see that there is not much difference from your way of looking at things with the exception of your definition of savings. I accounted for the principal repayments when calculating how much it cost to live their every month in the <i>occupancy cost</i> calculation.<br /><br />The <b>occupancy cost</b> is the actual cost to live in the home; non-recoverable expenses minus income. It includes <b>mortgage interest</b>, property taxes, insurance, maintenance and lost interest on the down payment (i.e. opportunity cost) minus the after tax suite income.<br /><br /><b>Monthly cash flow</b> (not shown in spreadsheet) is is how much money you have to spend every month. It is a different calculation and consists of <b>mortgage payments</b> (interest & principal), property taxes, insurance and maintenance minus after-tax suite income. <br /><br />If you make extra principal re-payments every month it increases your <i>monthly cash flow</i> but your <i>occupancy</i> cost will remain the same. If you increase the amortization from 25 years to 30 years your mortgage interest will stay the same but your payments will be lower. Your <i>occupancy cost</i> will stay the same but your <i>monthly cash flow</i> will decrease.<br /><br />As I mentioned to patriotz the principal repayments are a form of <i>saving</i> and they increase your equity not your <i>savings</i>. If you put the extra money into a bank account instead you would increase your <i>savings</i>.Rogerhttps://www.blogger.com/profile/08266466833259484873noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-75928363847007400992012-06-20T13:22:18.458-07:002012-06-20T13:22:18.458-07:00Roger - that definition is a bit confusing because...Roger - that definition is a bit confusing because the term "saving" is also defined as "all of ones assets" whereas "saving" is an "increase in ones asset".<br /><br />Making liquidity is a better measure for what you are referring to.Anonymoushttps://www.blogger.com/profile/08188115284116016130noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-84406487399274834902012-06-20T13:17:36.783-07:002012-06-20T13:17:36.783-07:00Any secured transaction includes charges for defau...Any secured transaction includes charges for default. Don't default. Treat credit as a privilege.<br /><br />In the event of mortgage default you have two months' to rectify the mortgage and there is room to negotiate. You have the opportunity to sell your home yourself and pay off the debt and time is given to do so. <br /><br />Foreclosure is a long and expensive process. If you do not choose to sell your home yourself and do not pay your debts I do not think it is fair for the bank to be left with these charges.<br /><br />Equity can be tied up in all sorts of things: bonds, real estate, gold, silver. Some of them have redemption terms and penalties. This system is there to manage risk and without it we would not have the same types of investment opportunities or the ability to leverage.<br /><br />The average Joe should not treat appreciation as cash unless they intend to cash out. The average Joe may wish to treat down payment and principal payments as redeemable interests if they have more that 20% of the value of the home in this portion of the equity and would like a low interest loan.Anonymoushttps://www.blogger.com/profile/08188115284116016130noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-11953104776609402532012-06-20T12:52:46.450-07:002012-06-20T12:52:46.450-07:00James Island is back on the market at $75 million,...<a href="http://news.nationalpost.com/2012/06/05/reclusive-billionaire-selling-enchanted-island-in-b-c-for-75m/" rel="nofollow">James Island is back on the market</a> at $75 million, back just about to the 2001 list price of $70 million.CShttps://www.blogger.com/profile/03399620869685840906noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-45254652436251994122012-06-20T12:50:43.521-07:002012-06-20T12:50:43.521-07:00Patriotz,
I really don't like splitting hairs...Patriotz,<br /><br />I really don't like splitting hairs but since you started here goes...<br /><br />I said: <i>Principal repayments are not a form of saving<b>s</b> - they are simply debt reduction.</i><br /><br />You said: <i><br />That is wrong Roger. All debt reduction is savings. Savings is defined as income - consumption.</i><br /><br />What you defined is <i>saving</i> which is different than saving<b>s</b> See <a href="http://en.wikipedia.org/wiki/Saving" rel="nofollow">Wikipedia saving vs. saving</a><br /><br /><i>Saving is income not spent, or deferred consumption. Methods of saving include putting money aside in a bank or pension plan. Saving also includes reducing expenditures, such as recurring costs. There is some disagreement about what counts as saving. For example, the part of a person's income that is spent on mortgage loan repayments is not spent on present consumption and is therefore saving by the above definition, even though people do not always think of repaying a loan as saving.</i><br /><br />Now savings which is what I was talking about....<br /><br /><i>"Saving" differs from "savings." The former refers to an increase in one's assets, an increase in net worth, whereas the latter refers to one part of one's assets, usually deposits in savings accounts, or to all of one's assets.</i><br /><br />So if you were talking about saving I agree with your statements. What I was talking about was savings which is different. When a person makes their fixed mortgage payments the principal amount is <i>forced saving</i> which builds equity. If they make extra payments they are saving even more. However if they put that money in a bank account they have increased their <b>savings</b>.<br /><br />What I was trying to get across in my reply to totoro victoria is that making principal repayments is not the same as a savings account. With a savings account you can get the cash at any time. With equity you have to take out another loan in order to get cash. In the US people learned the difference between equity and savings the hard way. In Canada with all our HELOCS this lesson will be taught when interest rates rise, property values and equity drop.Rogerhttps://www.blogger.com/profile/08266466833259484873noreply@blogger.com