Saturday, December 29, 2012

What do you think...?

Below are two graphs that look like they may have something in common. The first is from Whisperer's blog. We have posted it a few times here, and it shows how a mania unfolds in a graph.

I admit I have had trouble identifying where we were on the slope, but things may be a bit clearer now.

The second is the SFH average price for Vancouver. You judge.

Thursday, December 27, 2012

Welcome Back

Ben Rabidoux's Vancouver talk is up on you-tube. Most of the charts are not shown, so if you have the package you can flip through them.

Kudos to the LePoidevin Group at National Bank for getting this off the ground, and doing such a professional job with handouts, video taping etc.

For those who missed the talk.

Wednesday, December 12, 2012

Time for a Christmas Hiatus

Best to you and your families. Whichever side of the Housing debate you are on, I hope the year ahead is Healthy and Happy.

See you on the other side of the New Year.


Tuesday, December 11, 2012

It's all over!

May as well collect up your marbles and go home.

Scotiabank has declared it a soft landing. So nothing to worry about. No reckless lending went on, no big losses for the big 5 and the CMHC won't bankrupt us all.

Phew that's a relief!

Monday, December 10, 2012

Very sad indeed

Read this on Vancouver Condo Info blog. How a man denied entry to Canada for human rights reasons still owns 110 condos in Toronto!

How does this happen. It would seem to me the Government needs to worry a little less about the British Royal heritage and a bit more on not allowing our country to become a haven for the world's-worst people and their money. Even the Swiss have been tightening up.

Mr. Malkin, the National Post revealed in 2009, has been blocked from entering Canada by Canadian authorities who accused him of organized crime involvement. In his fight to overturn that decision, it was revealed he owns 111 condominium units in Toronto.
Canada should not be a safe haven for people who do this type of crime. Canada has a very attractive economic immigrant program and it is very popular for Russians so, absolutely, Canada has to be on the list of countries that are doing this

Thursday, December 6, 2012

Bank of Canada shouts 'Fire' again

Panicked about Condos now. I agree, but I think the horse may have already bolted.

Fraser Valley numbers out. Big drop in sales YOY 20%. Drop in SFH average (big 7%) and Median but the benchmark comes through with a 2% YOY increase. Gotta love the

MOI 10.5 or so.

Sunday, December 2, 2012

Warning Political Post

I don't often post political stuff. I don't care who is in control of the reigns as long as they are ethical and don't mortgage the future for short term gains.

I also expect them to not to lie too much- though that is tough for politicians. 

I lambasted the current Conservatives for being so reckless when they doubled the CMHC debt, and I lauded them when they finally reversed their recklessness. I did my own small part when they wanted to send tax-payer money to the big barons of broadcasting and applauded when (no doubt due to grass-roots disgust) they decided against it and the Aspers had to sell out.

However there have been two things recently that have got my gall. 

One happened a year ago but slipped under my radar until now. It was financial malfeasance. At stake were the big back-room honchoes of the Conservative party who could have been tried/fined or imprisoned for authorising $1.3 Million in excessive advertising spending and breaking Elelction Canada rules. Instead the party was fined $55K.

$55K for a party that has received over $145 Million in the last 7 years. That really sends home the message!

While we are on the topic of advertising...

We have been the recipients of Tory attack ads on the NDP's Mulcair, who apparently has a carbon tax up his sleeve which will bankrupt us if implemented, and what a terrible idea a carbon tax  is anyway.."which we cannot afford".

The irony of running that ad in BC does not seem to have struck their high priced ad executives.

You will remember that Gordon Campbell introduced a carbon tax in late 2008. Good for him! Gordon you will remember is one of Harper's favorites, having been appointed as Canadian High Commissioner to Great Britain and Ireland when he had to resign over the HST debacle.

I guess they think we are so stupid we wont remember.

Saturday, December 1, 2012

All averages down

Once again kudos to Larry.

We are now down 14% from the Feb 2012 peak for SFH.

It is interesting that attached and apartments are holding up better. We are always being told that the 'land' ownership in the SFH makes it more valuable than a box in the sky or a sliver of a piece of land.

That may be true, but as you can see from Larry's graph, the lines have diverged from each other sooo much that this is more than (over) accounted for in the price differential. And what goes up the most has the furthest to fall.

In fact apartments/attached may suit the boomers and no kids buyers more than the hassles and extra expense of owning a SFH. We may see a bump up of SFH listings as boomers try and cash out.

Wednesday, November 28, 2012

Missed Ben Rabidoux's talk

tonight due to work commitments.

Those who attended, please give us a summary of his presentation and any comments on the questions/answers afterwards. 


Tuesday, November 27, 2012

A small bone for the bears

OK so sales have been pretty strong and inventory is going into the pre-Christmas decline and bears everywhere are growling. 

Was that it? Where is the new strength coming from? 

I am not sure. Maybe there has been some loosening by the banks and the economic numbers out of China have reversed the year-long decline and have started to move up and there is more optimism out of the US too with firming of housing there..

Maybe these are all playing into it.

On top of all that, we have lost Carney and the next B of C Governor may turn out to be a complete Greenspan clone pumping gas for the speculators..

Here is a small bone. We have long been compared to San Diego. We are both on the Ocean, are scenic and have both attracted a large number of Eastern retirees.

San Diego was rock solid while RE in the rest of the US fell. So solid in fact that many said it was destined to hold it's ground and not drop. But when it did budge, it sure budged...

Monday, November 26, 2012

Carney goes...what now?

What should we expect from Carney's departure to London and is his reputation for 'saving Canada' from the worst of the Financial mess deserved?

He came to the B of C in October 2007 from Goldman Sachs, in the midst of the Bear Sterns collapse which ended with it's tax-payer subsidized sale to JPMorgan. A bad time to take the reigns that's for certain. Did he call for tighter scrutiny of the investment cartel? I don't recall such.

Of course Goldman Sachs has a very poor reputation for honesty which is well outlined by Matt Taibbi's excellent articles in Rolling Stones.

When Lehman collapsed and the US Federal Reserve cut rates aggressively, Carney followed along with every other Central Banker in cutting rates and setting off other speculative imbalances. One of these was our own housing bubble, which was starting to correct in 2008/2009.

House prices stopped dropping and instead took flight as a result of the lower interest rates and of the Federal Government doubling the CMHC lending capacity. Who knows which had a bigger effect, but they both added kindling to the fire. In Vancouver and Toronto, we also had the influx of Chinese money. China had embarked on it's own big program of spending to ward off a slow-down.

Much of this money found it's way into the hands of a few thousand well-connected individuals and from them into Vancouver and Toronto real estate.

Carney was pretty much silent on this build up as far as I recall. The solidity of the banks is a given once rates to depositors are near zero, and where all risky loans are pre-packaged and passed on to the tax-payer.

I do not recall Carney commenting on the huge future liability to tax-payers incurred by the ruinous actions of the CMHC.

Finally, approximately two years ago, Carney started to make comments about the growing consumer debt mountain. He kept reminding us that rates would not remain so low for much longer, but then did not really raise rates aggressively enough to put fear into borrowers. Of course he is in a bind since the rate set by the B of C is used both for businesses (which he wants to benefit from low rates) and consumers (whom he wants to exercise restraint!)

Those consumers that did follow his advice may have better balance sheets, but found themselves increasing priced out of RE by those who did not.

Finally Carney became more strident about debt and came out with out-right dire warnings, which I believe did start the process of bringing consumers to their senses, since banks certainly have shown no restraint in their lending.

I also believe his hectoring on debt also dragged Flaherty and Co. into bringing in the mortgage changes, rather belatedly, which the RE industry is still fighting aggressively.

So all-in-all I would rate him a B-. He followed the play-book of excessive easing, realised the debt-monster he helped build too late...but he did ring enough alarm bells for consumers to start thinking about their situation and he pushed the politicians into doing what they hate- pulling back speculators.

As to the 'strength' of the Canadian banks, we know that they have benefitted greatly from their near monopolistic situation, zero borrowing costs and the passing of risk onto the shoulders of tax-payers, not from prudent regulators.

And the fact we have weathered the last few years better than the US or Europe has much more to do with deficit spending and the rebound in China than the actions of a Central Banker. We are also in a situation that any slow-down in China or housing or double-dip in the US, will leave us with few bullets in the chamber.

However, his B- makes him seem like a hercules compared to the C and Ds the others like Greenspan and Bernanke and King would get.

Let us hope his successor strives for an A.

Tuesday, November 20, 2012


I am being sent the Greater Vancouver list/sales on a daily basis.

Paul B has been providing this information for free and reliably, for a long time on Vancouver Condo Info. I don't want to overlap his work or steal his thunder.

However if I see that his numbers are missing, I will put up what I am sent.

Remember the numbers will be different from his as they have different parameters. My numbers are for the whole GV and all categories of product.

Also there will be no overall inventory numbers for now.

Saturday, November 3, 2012

5 year Benchmark up-dates

Based on the REBGV stats package the following areas have negative 5 year price changes.

Overall (Composite)

Bowen Island -7.3%
Maple Ridge -3.7%
Pitt Meadow -2.3%
Squamish -2.0%
Sunshine Coast -6.6%


Bowen Island -7.3%
Maple Ridge -1.2%
Sunshine Coast -6.7%
Whistler -3.8%


Maple Ridge -7%
Port Moody -1.1%
Squamish -2.4%


Burnaby East -9.2%
Burnaby North -2.2%
Coquitlam -4.7%
Maple Ridge -10.8%
Pitt Meadows -12%
Port Coquitlam -11.8%
Port Moddy -5.6%
Squamish -12.7%
Tsawwassen 2.1%
West Vancouver -8.3%

A significant portion of Vancouver Real Estate is in recession. However there are still areas with appreciation. Eg West Van SFH - which is up 20% over 5 years, but there are special reasons (see the last comment someone put up on my last post) or East Van SFH up over 30% due to forced gentrification from Van West's high prices. I think Whistler's apartment numbers must be an aberrant number.

What I see is a Mexican stand-off in much of Vancouver, with the very high priced houses still selling but at a discount. 

Saturday, October 27, 2012

It is happening as the bears forecast

The Canadian banks are now on credit watch from Moody's due to the housing bubble...

'The rating agency is now reviewing the banks because they “face challenges not fully captured in their current ratings,” including concerns about consumer debt levels, housing prices, macro-economic risks and the weight of their capital markets divisions within their business mix."

In layman's terms..the banks have leant too much to people well over their heads in debt, especially in the bubbly housing sector, and too much of the rest of their income comes from professional gambling departments ('Capital markets divisions')

The only one missing from the list was Royal Bank, as it has already been down-graded!

Tuesday, October 23, 2012

Sorry for the lack of posts

BUT in case you have a few minutes and don't mind taking some gravol to prevent nausea, here is the bloated face of greed claiming he is not a convicted criminal, is proud to have been in jail, and threatens to beat up the interviewer.

But later he says Ok even if he is a convicted criminal he thinks he should be a Lord and make laws.

He used to love everything US and was down on Canada, now he says the US is corrupt. Poor fellow, you almost feel sorry for him his arrogance reaches delusional proportions.

To use a Britishism...What a complete and utter wanker he is...

Sorry to do this to you

Tuesday, October 9, 2012

Fraser Valley Sept stats

Similar to Vancouver, sales have evaporated - down 20% MOM and 26% YOY.

Over-all Average price down YOY

Detached median down, but average and benchmark are still up YOY.

MOI has moved up briskly to 12

The news release blames the Federal Government's changes.

Friday, October 5, 2012

In Case You Missed it...

The REBGV News release

SFH HPI down 0.5% YOY Down almost 1% MOM
Apartment HPI down 0.7% YOY
Attached HPi down 2.7% YOY

VANCOUVER, BC - The summer of 2012 drew to a close in September with home sale activity well below historical averages in the Greater Vancouver housing market.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, attached and apartment properties reached 1,516 in September, a 32.5 per cent decline compared to the 2,246 sales in September 2011 and an 8.1 per cent decline compared to the 1,649 sales in August 2012.
September sales were 41.6 per cent below the 10-year September sales average of 2,597.
“There’s been a clear reduction in buyer demand in the three months since the federal government eliminated the availability of a 30-year amortization on government-insured mortgages,” Eugen Klein, REBGV president said. “This makes homes less affordable for the people of the region.”
New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,321 in September. This represents a 6.3 per cent decline compared to September 2011 when 5,680 properties were listed for sale on the MLS® and a 31.6 per cent increase compared to the 4,044 new listings in August 2012.
At 18,350, the total number of residential property listings on the MLS® increased 14.1 per cent from this time last year and increased 4.5 per cent compared to August 2012.
“Today, our sales-to-active-listings ratio sits at 8 per cent, which puts us in a buyer’s market. This ratio has been declining in our market since March when it was 19 per cent,” Klein said.
The MLS HPI® composite benchmark price for all residential properties in Greater Vancouver is $606,100. This represents a decline of 0.8 per cent compared to this time last year and a decline of 2.3 per cent over last three months.
“Prices in the region remain relatively stable overall, although we do see some reductions in the areas that have had some of the largest price increases over the last year or two,” Klein said.
Sales of detached properties on the MLS® in September 2012 reached 594, a decrease of 37.9 per cent from the 957 detached sales recorded in September 2011, and a 31.4 per cent decrease from the 866 units sold in September 2010. The benchmark price for detached properties decreased 0.5 per cent from September 2011 to $935,600.
Sales of apartment properties reached 676 in September 2012, a 26.7 per cent decrease compared to the 922 sales in September 2011, and a decrease of 30.4 per cent compared to the 971 sales in September 2010. The benchmark price of an apartment property decreased 0.7 per cent from September 2011 to $368,600.
Attached property sales in September 2012 totalled 246, a 33 per cent decrease compared to the 367 sales in September 2011, and a 35.8 per cent decrease from the 383 attached properties sold in September 2010. The benchmark price of an attached unit decreased 2.7 per cent between September 2011 and 2012 to $458,600.
So now that it looks like it is really happening is anyone else getting a teeny bit anxious about it all? Why? for two reasons. The first is that we were here before and the Government shenanigans brought an abrupt end to the correction and re-inflated the bubble. The second is that this correction is starting from even higher levels which means the affect on our economy, Tax receipts, employment, growth etc may be even more significant.
They careful what you wish for in case it comes true!

Monday, October 1, 2012

Larry's numbers are out

Kudos to him once again.

The Average slipped from last month's bounce up. 

But as he also alludes to in his commentary, with sales down 30% from last Sept and inventory being up double digits from last year, things may look better than they really are due to the big sales.

The HPI may tell the story this time, despite all the concerns expressed in many venues regarding it's veracity.

Thursday, September 27, 2012

Sorry about the lack of posts....

Just back from a tour of the Gulf Islands. These places are really ground zero for the sales crunch.

The dynamic of each Island is different. The ones with limited infrastructure seem to be in the biggest trouble. Eg Galliano...lots of properties for sale, some look to have been abandoned by owners and are getting shabbier by the day...

Pender Island is loaded with listings too, some subdivisions seem to have almost every third house for sale.  Pender has some infrastructure - supermarket, doctor etc like Saltspring which is a like a small town, but even there listings have exploded and sales seem to be few and far between.

The market for these Island properties is a very interesting. These Islands used to be the hang-outs of the alternative crowd, especially Hornby and Galliano but they have long ago been pushed out by wealthy Mainlanders and US buyers driving to their week-end places in their Sequoias. The latter have been missing the last few years due to the weak USD and the US recession. Properties are much cheaper in the US Gulf Islands.

Saltsrping was always the artsy place and still is an artistic hub, with a few farms and lots of retirees. However for a number reasons the Islands have been on the wane for several years...

BC Ferries fees have been moving up..
The US buyers have disappeared and are net sellers from what I hear.
The peak for the family recreational cabin peaked with baby-bommers aging
The older baby-boomers want to be close to doctors, hospitals and services.
Pressured life styles leave little time to wait for an hour, get on a ferry for 3 hours and then return in two days.

In Summer when the tourists arrive, all the listings come out hoping to hook one of them. Buy in haste and repent at leisure.

Wednesday, September 19, 2012

Banks Flip...flop

Last year there was no bubble, then there would be a mild correction, then a bigger one and now maybe not. 

That sort of summarizes the sequences of housing reports from the big banks. 

I guess no one really has a clue, but it is not acceptable to say that!

Here is TD in June calling for a 15% drop across Canada (that would be much larger in Vancouver) and would be financially very significant.

Now they say the drop will be 10% and maybe even flat because things are getting better.

Not so says the Royal, things are getting worse!

Scotiabank's CEO just said today- 'we get a soft-landing at worst'.

So place your bets and take your picks. We are certainly seeing all the metrics eroding here and prices heading down. Hard to see what the catalyst for a renewed rise here would be?

We have Provincial debt exceeding expectations, we have a Chinese slow-down, we have a change in psychology and the Bank of Canada and Feds are on the side of caution now (not that there is much more they can do anyway having used of most of their bullets)

Saturday, September 8, 2012

Fraser valley and then some...

Fraser Numbers are out. Terrible sales numbers, and MOI of 10 and yet the HPI is still robust- no kidding!

Anyway to be fair to the Fraser Valley, the prices never got as high as Vancouver so a gentle correction would make more sense.

Here is the news release:

News Release
Fraser Valley Real Estate Board
For Immediate Release: September 5, 2012
Home prices resilient despite lower sales in the Fraser Valley
SURREY, BC – In August, sales on the Fraser Valley Real Estate Board’s Multiple Listing Service® (MLS®) ranked the third lowest for the month in the last decade – after 2008 and 2010.
Last month’s 1,073 property sales represent a 20 per cent decrease compared to the 1,341 sales during August of last year and 23 per cent fewer than in July. In 2008, the Board processed 910 sales in August, and in 2010, 997.
“It was a slower August, but nowhere near historical lows for our Board so it’s too soon to tell if it’s a sign of a longer‐term trend or if buyers and sellers in the Fraser Valley finally enjoyed a bit of summer,” explains Scott Olson, FVREB president. “We do know that our economy currently remains fundamentally strong with stable mortgage and employment rates; and, our region in particular has some of the fastest growing communities in the Lower Mainland.”
Olson says, “And we’re seeing evidence of that growth in the sales of more affordable, attached properties in the Fraser Valley. For example in August, apartment sales went up significantly in Central Surrey and Abbotsford and remained on par in North Surrey and Cloverdale compared to last year, suggesting that first‐time buyers are continuing to find opportunities.”
Similar to sales, the Board saw a decrease in new listings. We received 2,406 in August, a decrease of 8 per cent compared to August 2011 and 18 per cent less than we received in July. This caused the number of active listings to decrease month‐over‐month, however the 10,366 active listings at month end still remained 3 per cent higher than the 10,074 listings available in August 2011.

Across the Fraser Valley, the benchmark price of a single family detached house in August was $551,400, an increase of 3.5 per cent compared to $532,700 in August 2011.
For townhouses, the benchmark price in August was $303,000, a decrease of 0.7 per cent compared to $305,200 during the same month last year. The benchmark price of apartments in Fraser Valley in August was $206,600, an increase of 3.4 per cent compared to $199,800 in August 2011.

Olson adds, “Overall, we’re seeing prices stay resilient, however in almost half of our communities, the three‐ month trend is showing a decrease in prices while the other half is showing increases so for a detailed market analysis, check with your local REALTOR®.”

Here is the whole stats package, look how far into buyer's market the sales stats are (the second graph)

HAM, HAM where for are't though?

Our markets have been HAM deficient for the last few months, which explains the absolute collapse in sales in West Van, Westside and Richmond. 

The Chinese stock market has been at a 52 week low, their economy has been under strain and Canada has finally started extraditing big fraudsters who found permanent refuge here.

Maybe this will change somewhat. The Chinese leader just announced a huge infrastructure spending package and their market reversed the downturn and rocketed up 2.5% in one day. We will have to see if this reignites the easy money buyers into our markets.

Thursday, September 6, 2012

Robert Shiller hammers Vancouver home prices

In his usual rather gentle and non-dogmatic way

Worth listening to. Lets hope the link works, BNN links tend to be hit and miss.

Wednesday, September 5, 2012

No way to put lipstick on this porker

Home sales are in a slump.

REBGV news release

Home sellers continue to outnumber buyers in Greater Vancouver’s summer housing market
Home sale activity remained below long-term averages in the Greater Vancouver housing market in August
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, attached and apartment properties reached 1,649 in August, a 30.7 per cent decline compared to the 2,378 sales in August 2011 and a 21.4 per cent decline compared to the 2,098 sales in July 2012.

August sales were the second lowest total for the month in the region since 1998 and 39.2 per cent below the 10-year August sales average of 2,711.

“Home sales this summer have been lower than we’ve seen for most of the past ten years, yet we continue to see relative stability when it comes to prices,” Eugen Klein, REBGV president said.
New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,044 in August. This represents a 13.7 per cent decline compared to August 2011 when 4,685 properties were listed for sale on the MLS® and a 15.8 per cent decline compared to the 4,802 new listings in July 2012.
“For sellers it’s critical to work with your REALTOR® to understand today’s market and to develop the best strategy for selling your home,” Klein said. “On average it’s taking about two months for a home to sell on the MLS® in Greater Vancouver today.
At 17,567, the total number of residential property listings on the MLS® increased 13.8 per cent from this time last year and declined 2.8 per cent compared to July 2012.
“Today, our sales-to-active-listings ratio sits at 9 per cent, which puts us in a buyer’s market. This ratio has been declining in our market since March when it was 19 per cent,” Klein said.
The MLSLink® Housing Price Index (HPI) composite benchmark price for all residential properties in Greater Vancouver is $609,500. This represents a decline of 0.5% compared to this time last year and a decline of 1.1% compared to last month.

Sales of detached properties on the MLS® in August 2012 reached 624, a decrease of 38.8 per cent from the 1,020 detached sales recorded in August 2011, and a 30.1 per cent decrease from the 893 units sold in August 2010. The benchmark price for detached properties increased 0.2 per cent from August 2011 to $942,100.

Sales of apartment properties reached 725 in August 2012, a 24.1 per cent decrease compared to the 955 sales in August 2011, and a decrease of 22.5 per cent compared to the 935 sales in August 2010. The benchmark price of an apartment property decreased 0.9 per cent from August 2011 to $370,100.

Attached property sales in August 2012 totalled 300, a 25.6 per cent decrease compared to the 403 sales in August 2011, and a 19.8 per cent decrease from the 374 attached properties sold in August 2010. The benchmark price of an attached unit decreased 1.9 per cent between August 2011 and 2012 to $462,300.

Posted: Wednesday, September 5, 2012

9% of inventory selling translates to an MOI of 11.

Saturday, September 1, 2012

Larry has the averages out

They are up for all categories, even with MOI at 11 and with sales down a whopping 25-40% from last year. Some areas will show even higher MOIs for August 16+.

This shows us what a big effect a few big sales are having. The high end buyers are not concerned about the local economy, CMHC tightening or rising rates, they are actually getting some good deals (15% + off in some cases ) but the numbers are still big enough to skew things.

I wondered if this would happen:

What should we expect for August's numbers?

I would be very shocked if the HPI does NOT show a good tumble. If not, then I will be even more suspicious about it's validity.

The averages are more difficult to forecast. Some big sales, but the majority have come in at the low end, even in high priced neighbourhoods.

11+ MOI is where we be at.

Have an excellent long week-end.

I doubt may Realtors are happy with a market that provides such diminished commissions.

And as my last post says, the speculative money from Mainland China is drying up (for now).

Now the HPI is different. If the HPI has any validity at all in looking at the 'typical' Vancouver residence, it should show major declines in my opinion.

One reason the Chinese have backed away from our RE...

Is this 

While the US stock markets have been motoring to new highs, the Shanghai bourse has been hitting fresh 52 week lows. 

 Some of the easy money brought here came from the huge gains insiders got for cashing out their holdings in the newly public companies. The appetite for this type of speculation has been waning in recent times as the Chinese economy has been cooling (still booming though compared to us or Europe).

Monday, August 27, 2012

Should I buy now?

If one can pick just one graph to answer that question, I would suggest this one (From Ben's blog):

Wednesday, August 15, 2012

Is it time to start sniffing around?

I see some comments wondering about whether it could be time to start looking for 'deals'

There is no doubt that there are deals surfacing. Look at Vancouver Price Drop to get some idea about where things are going. Of course there are good deals in the Sunshine Coast, OK and Whistler.

But what about Vancouver? Have we just started the correction or are we just having another dip, followed by a plateau and then up we go again.

Well it may help us to see just how high we went. Here's Larry's Average Price chart:

A technical analyst might say that there is good support at the $1 million level.  What then? Up from there or down further?

It all depends whether we start getting a negative loop. Lower prices and less sales leading to less construction, mortgage and Realtor employment  (10% of employment) leading to a drop in personal net worth and less spending on retail (another 7-8%) 

So you can see how quickly a drop can reinforce itself with negative feed-back. Any further weakness in commodities and it will multiplied.

San Diego which we are often compared to, took a while to roll over, but when it did it went south fast.

So before we dive into the market, we may want to see if this is the beginning of a bigger correction. Looking, however is good.

Wednesday, August 8, 2012

The President calling like it is...a buyer's market

Nothing to add really. I think he says it all. Where to from here?

Will we get a sudden rush of demand? Driven by what? The CMHC has been (belatedly) hog-tied, rates are low (and the 5 year Canadian bond rates have been drifting up), the Government has come to it's sense and is not as speculator-friendly as it was- so we could have more weakness and a stand-off between buyers who are not as panicked and sellers who remember the good-old-days.

As to the discussion below on HPI v Median v Average v Benchmark, it is all academic. The market sets the price. I saw a  home on the sunshine coast sell for 20% under list,  at the same price it was bought for 5 years ago, after being renovated . How will that show up in the HPI??

Tuesday, August 7, 2012

Fraser Valley Numbers


SFH Average is DOWN 2.3% YOY. Median is up a tiny 1.2% and yet benchmark is UP a huge 3.4%! 

That combination must lay at the outer reaches of statistical likelihood.

Apartments are DOWN for BOTH median and average and yet UP for benchmark YOY.

It really does not make sense to me. I think I am going to ignore the Real estate board generated HPIs and Benchmarks and concentrate on medians and averages from now on to gauge the market.

Okanagan Numbers

More sales than last year but median and average prices took a beating. However the sample is small and can't read too much into it. MOI running around 15. Actually higher volume with lower prices would be better for everyone except speculators.

Sunday, August 5, 2012

Life is about Timing...Carl Lewis

Sitting in my local Waves Coffee house sipping my latte and surfing the net when an interesting conversation sprung up next to me. Of course being Vancouver it was about Real Estate.

30's lady sitting with male (?out of town friend/brother) talking about her RE investment. Seems like she bought an expensive condo 4 years ago,  and rented it out cash-flow negative while renting a cheaper condo herself. Rationale was that the expensive condo would eventually be paid off and she would be left with an income stream or could sell and use the money to buy a house or...

A very good strategy in fact, and the negative cash flow is actually another form of saving if it goes to paying down the debt. For the last four years it worked well. Now not so well.

She was complaining that the price, if she wanted to sell was the same as 4 years ago, so no capital gains. 

Also she was just hit with a significant assessment for repairs (why do we build such shoddy condos AND houses here?) which was going to be tough to come up with. 

On top of that the lease was coming to an end and the tenant has said ANY increase and he is walking and she cannot afford to leave it empty for a month or two and eat the whole cost. 

Finally the five year mortgage renewal is coming up next year and she hopes that the rates won't have gone up and that the bank won't make problems as her cash-flow is much more compromised.

She has started managing the rental herself to save some money but that brings the stress of hearing all the tenant whining and complaints.

She looked very stressed and I felt sorry for her. What looked like a good idea for a number of years has suddenly gone awry and we have only had a mild correction so far. In the past, the investor in this situation would just sell, pocket some nice capital gains and thank their lucky stars. That's not an option anymore.

Thursday, August 2, 2012

REBGV Release

Greater Vancouver housing market hits summer lull

Residential property sales in Greater Vancouver remained at a 10-year low in July, while the number of properties being listed for sale continued to edge down and prices remained relatively stable.

The Real Estate Board of Greater Vancouver (REBGV) reports that there were 2,098 residential property sales of detached, attached and apartment properties in July. That’s an 18.4 per cent decline compared to the 2,571 sales in July 2011 and an 11.2 per cent decline compared to the previous month’s 2,362 sales.

July sales were the lowest total for that month in the region since 2000. They were 31.2 per cent below the 10-year July sales average of 3,051.

“People appear to be cautious about making significant financial decisions right now. While our local economy appears to be quite robust, there may be some concern about the impact of international markets and the federal government’s tightening of mortgage regulations,” says Eugen Klein, REBGV president.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,802 in July, the lowest number of new listings for any month this year. This represents a 5.8 per cent decline compared to July 2011 when 5,097 properties were newly listed for sale on the Multiple Listing Service® (MLS®) and a 14.5 per cent decline compared to the 5,617 new listings reported in June 2012.

At 18,081, the total number of active residential property listings on the MLS® increased 18.8 per cent from this time last year and decreased 2.2 per cent compared to the previous month.

“With a sales-to-actives-listing ratio of 11.6 per cent, conditions have favoured buyers in our marketplace in recent months,” Klein said. “That means buyers have more selection to choose from and more time to make a decision. For sellers, it’s important to price properties competitively. For information on local market prices, contact your REALTOR®.”

The MLS® Home Price Index (MLS® HPI) composite benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 0.6% to $616,000 and declined 0.7% compared to last month.

Sales of detached properties on the MLS® in July 2012 reached 787, a decrease of 28.4 per cent from the 1,099 detached sales recorded in July 2011, and a 13.3 per cent decrease from the 908 units sold in July 2010. The benchmark price for detached properties increased 1.4 per cent from July 2011 to $950,200 and declined 1.2 per cent compared to last month.

Sales of apartment properties reached 927 in July 2012, a 10.9 per cent decrease compared to the 1,040 sales in July 2011, and a decrease of 5.3 per cent compared to the 979 sales in July 2010. The benchmark price of an apartment property remains unchanged compared to July 2011 at $374,300 and declined 0.5 per cent compared to last month.

Attached property sales in July 2012 totalled 384, an 11.1 per cent decrease compared to the 432 sales in July 2011, and a 4.3 per cent increase from the 368 attached properties sold in July 2010. The benchmark price of an attached unit decreased 0.5 per cent between July 2011 and 2012 to $468,700 and is relatively unchanged compared to last month.

18% decline is sales and 18% rise in inventory compared to last year. No good way to spin that one.

Their HPI finally takes a tiny dip. About 1%.

Some of the HPI calculations don't make sense to me. Eg Whistler. 5 year HPI over-all up 29%. SFH down 1.4% but apartments up 76%. That is not what I see when I look at the numbers.

Lots of other places have negative 5 year HPI numbers. No gain for 5 years just higher expenses, and the early July bump is behind us. The average price graph is quite something to behold. A double top and then a rapid plop down.

The problem is soo much of our local economy is in the FIRE industries (throw in healthcare too) that a significant slowdown will be very unpleasant. If China falters further, it will turn nasty.

Wednesday, August 1, 2012

SFH Average DOWN $200K from high, back to November 2010 prices.

Thanks as usual to Larry for being so quick with the numbers

SFH down to just over a Million. Down $200 K from the all time high.

Condos and Apartments took a big dive too, with Apartment average prices back to 2008 prices.

This all happened with mortgage rates at almost zero (3% fixed and variable 5 year) and with the panicky buying of early July as the last bunch of highly leveraged buyers were loaded on board the creaking ship HMS CMHC.

August will be very interesting indeed. 

PS sorry about the cliche picture. Had to put something up quick :)

Friday, July 27, 2012

Late to the party...

S and P has done it- they downgraded Canadian Banks based on consumer indebtedness and exposure to the housing bubble (my words)

This is exactly what us chicken little bears have been saying for several years. THIS WILL NOT END WELL. Over-priced housing puts the whole system in peril. Banks,  Provincial, Local and National Governments.

The myth of the rock solid Canadian financial sector and our economic miracle has been exposed to be: the luck of being resource rich and pumping housing by drawing in future demand, dropping rates to zero, transferring the risk to the tax-payer and lax lending. The result.. well we are about to experience that and it gives me no pleasure to say that many of us saw this coming.

S&P: Outlook Negative on BNS, LB, NA, RY & TD

July 27th, 2012
Standard & Poor’s announced:
it has revised its outlooks on seven Canadian financial institution ratings to negative from stable. The financial institutions are:
  • The Bank of Nova Scotia
  • Central 1 Credit Union
  • Home Capital Group Inc.
  • Laurentian Bank of Canada
  • National Bank of Canada
  • Royal Bank of Canada
  • Toronto-Dominion Bank
At the same time, Standard & Poor’s affirmed its ratings on all seven banks.

The outlook revisions are linked to our evolving views of economic risk and industry risk for banks operating in Canada. A prolonged run-up in housing prices and consumer indebtedness in Canada is in our view contributing to growing imbalances and Canada’s vulnerability to the generally weak global economy, applying negative pressure on economic risk for banks. Growing pressure on banks’ risk appetites and profitability arising from competition for loan and deposit market share could also lead to a deterioration in our view of industry risk.

The negative outlook recognizes the potential for deterioration of Canadian banks’ financial performance and capitalization generally, associated with consumer debt burdens proving excessive in an unfavorable economic scenario, or due to competitive pressures amplified by the shift to a consumer deleveraging phase.
Over the past decade, Canadian consumer credit market debt (including residential mortgage loans and consumer credit) has risen to more than 150% from 110% of disposable income, and relative to GDP, consumer debt has increased to more than 90% from about 70%. Over the same period, Canadian house prices have approximately doubled, with compounded real growth in housing prices estimated to be about 5% per year.

Bank risk profiles have benefited from Canadian banks’ underwriting practices, stable performance metrics for banks’ credit portfolios, and the sharing of mortgage risk between the banks, the borrowers (extensively based on full recourse to the consumer), and the providers of mortgage insurance, notably the Canada Mortgage and Housing Corporation (AAA/Stable/A-1+). In our view, Canadian banks’ risk tolerances and risk management capabilities are generally strong and attuned to risks inherent in the Canadian consumer and housing sectors. Even so, we believe there is currently growing potential for deterioration of Canadian bank credit profiles associated with scenarios incorporating consumer sector stress.

Systemic factors are incorporated in Standard & Poor’s rating methodology primarily through its Banking Industry Country Risk Assessment, or BICRA. The BICRA framework takes into account economic and institutional risk factors present in the environment in which banks operate. Canada’s BICRA is currently set at ‘1′ (lowest risk) on a 1 to 10 scale. The BICRA component of the analysis is intended to highlight emergent systemic risks that may not be fully apparent when viewing the sector at the level of individual banks