Some Week-end stuff - AND Numbers

First have a look at these craigslist picks below that caught my eye, then come back later this week-end and I will have the numbers for several areas. Have a good week-end and enjoy the Sun.

BTW- It would be great to get some 'Open House' reports from different areas.

Vancouver special. I would suspect this would have been listed for $50K more 6-8 months ago.
http://vancouver.en.craigslist.ca/rfs/759698695.html

Where would this be?
http://vancouver.en.craigslist.ca/rfs/759913370.html

Reverse the last two years
http://vancouver.en.craigslist.ca/rfs/760027755.html

$500/foot in Y/T
http://vancouver.en.craigslist.ca/rfs/760082879.html

West-end view $400/foot
http://vancouver.en.craigslist.ca/rfs/760115524.html

$200/foot in Langley
http://vancouver.en.craigslist.ca/rfs/760170728.html

Burnaby Townhouse probably close to cash flow neutral with some % down
http://vancouver.en.craigslist.ca/rfs/760531244.html

Get paid to move in:
http://vancouver.en.craigslist.ca/rfs/760651139.html

Subtle
http://vancouver.en.craigslist.ca/rfs/760409432.html

I feel like a kid at a candy store, and the prices are coming down the longer I keep my loonie in my pocket!

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The NUMBERS

N Van
189 new
74 sold
136 changed
449 detached
613 attached
...................29 weeks

West Van
119 new
24 sold
67 changed
545 detached
173 attached
.........................60 weeks!!

Coquitlam
249 new
76 sold
191 changed
766 detached
681 attached
........................38 weeks

Port Coquitlam
123 new
36 sold
75 changed
257 detached
333 attached
........................33 weeks

Maple Ridge
152 new
58 sold
129 changed
697 detached
330 atttached
........................35 weeks

Van East
333 new
109 sold
213 changed
990 detached
790 attached
........................33 weeks

Burnaby
402 new
105 sold
213 changed
705 detached
1347 attached
...........................39 weeks

Commentary Time

OK folks we have a range of 6.7 MOI for North Van to an astounding 14 months in West Van were sales have ground to a halt.

These numbers are more bearish than I expected. It is quite incredible how quickly the market has turned. The price changes are running at twice the sales volume.

A little chat coming up....I run this blog not for money or fame or ads or listings, but because as a thinking person, it was obvious to me that RE is the US and here had reached ridiculous levels. I called both too soon. However in the US it has come to pass and it looks like it will here too.

I am trying to prevent people from diving in to the pool without looking to see how shallow it is, and the rocks just beneath the surface.

If more Americans had read Ben Jone's blog...The Housing Bubble...there would be less foreclosures, less families being broken up, less job losses and bank closures and of course less bonuses for the fat cats on Wall Street!

In any case I would like my readers to do two things this week-end.

1) Ask anyone looking at buying (and there will be some desperate folk who are looking for even the slightest weakness to try and get in) to come and read the numbers on my blog and Paul's and Mohican's and even Rob Chipman who has conceded the market has turned. They can make up their own mind whether they should pay asking price for anything they are looking at or whether, based on the numbers not our opinions, they should throw in a low ball first.

Remember most sellers will be sitting on large paper gains, so they should have lots of room to concede.

2) I would like to get some open house info in the comments section. Maybe you can swing by a couple in your area and see the flow of people and what the realtor says about price flexibility etc

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Here are Surrey's numbers. This post is getting rather long, but there you go:

Surrey 364 new 122 sold 207 changed 1643 detached 567 attached 36 weeks

N.Surrey 187 new 65 sold 120 changed 819 detached 701 attached 47 weeks

S.Surrey & Whiterock 217 new 58 sold 174 changed 927 detached 535 attached
50 weeks

Some deals appearing on Craigslist

Nothing too astounding, but the frenzied pricing seems be gone. If only the buyers would show some self-control and caution the things would really start to head down.
1300 sq foot D/T town house
http://vancouver.en.craigslist.ca/rfs/754550247.html

Kits view T/H
http://vancouver.en.craigslist.ca/rfs/754520931.html

Yaletown P/H at $600/foot
http://vancouver.en.craigslist.ca/rfs/754550319.html

Just over $250/foot in White Rock
http://vancouver.en.craigslist.ca/rfs/754562091.html

Just over $500 for Caol Harbour
http://vancouver.en.craigslist.ca/rfs/754616478.html

Where?
http://vancouver.en.craigslist.ca/rfs/754647057.html

Another D/T $500+/-
http://vancouver.en.craigslist.ca/rfs/754735137.html

OK Folks, so we are seeing some price movement out there. IMVHO if you are a buyer- and you don't at least TRY and low-ball, then you have money to burn.

Here's some things I learnt in RE. Take it all with a pound of salt.

In a rising market, sellers should price above the market and the market will catch up with them.

In a falling market, sellers should bid under market or they will be buying an asset that devalues instantly.

Buyers in this market have a huge inventory to choose from. Look around, take your time. It is less likely to run away from you.

Questions I would ask my realtor:

1) Why are they selling?
2) How rushed are they?
3) How much did they buy the property for and when?
4) Make all purchases subject to a thorough inspection. If you have doubts pay for another one!

It is incredibale how many people will get the cheapest inspector, save a few hundred, on a purchase that is going to cost many $000,000!

If there are big problems on the inspection- pull-out (why didn't the seller know about these -or didn't they disclose it?) or take the cost off the price, or at least split the cost. I have seen so many people extend themselves to buy and then find out there is a major problem to fix and are all tapped out.

5) If your realtor is embarrassed with making low-ball offers change your realtor!

BTW- No one can tell you when to buy. It depends on your circumstances, job situation, down-payment etc.

Sooo-reeee

All 14 day

N Surrey

208 new
61 sold
128 changed
808 Detached
695 Attached

49.2 weeks

Surrey

346 new
109 Sold
193 Changed
1590 Detached
555 Attached

39.2 weeks

South Surrey/Whiterock

377 New
74 Sold
175 Changed
914 Detached
514 Attached

38.6 weeks

June 20th numbers for comparison:

N.Surrey 210 new 80 sold 140 changed 795 detached 680 attached 37 weeks
Surrey 302 new 148 sold 213 changed 1577 detached 528 attached 28.4 weeks
S.Surrey/White Rock 200 new 71 sold 209 changed 888 detached 504 attached 39.2 weeks


and this is for Paul B from an old post:

First base = increasing weeks of inventory

Second base = sudden drop off in sales and dramatic increase in weeks of inventory as specuvestors' mood changes.

Third base = Length of time for listings to sell increases. Units are relisted at slightly lower prices. (denial)

Home = The marginal sellers have to drop their prices to meet the buyers. Prices start a rapid decline.

Second base = when the buyers take their ball and go home.

We are there now:

Coquitlam 202 new 79 sold 179 changed 747 detached 666 attached 36 weeks


Port Coquitlam 93 new 31 sold 69 changed 242 detached 325 attached 37 weeks


Maple Ridge 148 new 68 sold 140 changed 689 detached 317 attached 30 weeks


Langley 222 new 114 sold 190 changed 1018 detached 397 attached 25 weeks


Mission 124 new 32 sold 91 changed 602 detached 102 attached 44 weeks


Abbotsford 247 new 97 sold 180 changed 934 detached 515 attached 30 weeks

please check my numbers. I rushed them out.

Price Reductions....

-West Van 64 reduced in the last 14 days.

-N.Van 152 reduced in the last 14 days.

-Van West 400 reduced in the last 14 days.

Lots of 10% + reductions. Here is a random collection:

MLS # V703908 down $300K
MLS # V674996 down $400K
MLS # V712637 down $100K
MLS # V711363 down $350K
MLS # V711189 down $100K
MLS # V693772 down $200K

Too Late! and Too Little!

Ottawa tries to prevent US-style housing meltdown

Ottawa revamps mortgage rules KEVIN CARMICHAEL 18:07 EST Wednesday, Jul 09, 2008

OTTAWA — The federal government, fearful of a U.S.-style housing bubble, has pledged steps aimed at keeping riskier borrowers in their rental units and away from homes they probably can't afford.

Canada's housing agency will no longer be allowed to guarantee loans with amortization periods longer than 35 years, a move that likely will end the surge in 40-year mortgages, popular because they allowed borrowers to reduce their monthly payments.

Prime Ministers Stephen Harper's Conservative government said Wednesday Canada Mortgage and Housing Corp. will also require a minimum down payment of 5 per cent (whoopie! 5 whole %) to get government insurance.

Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney both expressed concern about the surge in 40-year mortgages over the past year, suggesting the loans were feeding a bubble.

The U.S. housing market collapsed last fall amid record defaults by homeowners who got loans during a period of easy credit at the start of the decade. U.S. officials say their housing problems continue to persist, and many economists say the market's woes have driven the world's largest economy into recession.

“Today's announcement marks a responsible and measured approach by the government to ensure Canada's housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada,” the Finance Department said in a news release. The government also said borrowers will require a minimum credit score of 620 to qualify for a CMHC insured mortgage, and that it will demand stronger documentary evidence that borrowers can pay their loans. (like what?)

The changes take effect Oct. 15 with few exceptions (why wait so long?), Finance said in the release. Economists at Scotia Capital in Toronto said the measures would have a limited impact on Canada's economy, which has gotten a boost from record home buying. “The changes are more about optics (that says it all), in comparison to a fairly modest impact upon the economy, housing markets or financial markets,”

Derek Holt and Karen Cordes wrote in a note to clients. Currently, home buyers can get a CMHC-backed mortgage – even one with an amortization period of four decades – with no money down. Such “financial innovation” only came to the market toward the end of 2006, and the “marketplace has been quick to adopt these innovations,”

Still, the government sought to play down the impact of its housing measures on home buyers, while emphasizing that the growth in Canada's housing market is more boom than bubble. By way of example, the Finance Department said reducing the amortization period to 35 years from 40 years on a loan of $200,000 at 6 per cent interest would result in a $41 increase in the borrower's monthly payment. That borrower would save $49,000 in interest payments over the life of the loan, Finance said.

The department took pains to note that the International Monetary Fund concurs with the government that the surge in Canadian house prices and building is explained by low interest rates, rising incomes and a growing population. The government said it expects construction of new homes to remain at an annual pace of 200,000 new units for a seventh straight year in 2008, and that bank mortgages in arrears are stable at 0.27 per cent, near the lowest levels since 1990.

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5% isn't a whole heck of a lot of skin in the game. We could be down that much in 6 months or less. This will hardly dent the ponzi scheme.

IMVHO it is irresponsible to enable a person who has saved up only 5% (or even 0%) of the down-payment and can only afford the payments on a 40 year loan to buy a house.

What is so hard to understand about that?? Did we learn nothing from the US disaster?

I have a better idea- abolish the CMHC.

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Read Kabllona's comments on the last post.

Week-end rant

Hope everyone is having a great week-end. The market has clearly turned, even the bulls admit that. Since all investing is psychology- we will have to see how fast and strongly the new reality of real estate can also fall will take root.

It would be odd for us to have a huge drop Before the Olympics, most jurisdictions had their rise leading up to 'an event' and then fell afterwards.

However I have heard the mantra of RE will rise until after the Olympics, so much that it would just be like the market to catch everyone off-guard and start a good going decline before they even start.

Fiscal Prudence and Buying a house

I found a great comment by Freako a long time bear on the Vancouver Condo site:
http://vancouvercondo.info/

freako Says:

That is one of the interesting things about this bubble. Historically, owners have acted in a more fiscally responsible manner than renters. But get the cause and the effect right. They are owners BECAUSE they are fiscally responsible. They are not fiscally responsible because they are owners.

Now it has reversed. Of recent buyers, I am convinced that they are overrepresented by fiscally irresponsible individuals, and vice versa.

Never was truer word spoken. In the past, buyers tended to be the more conservative-types, the ones who invested long-term. They would forgo holidays and nights out to pay a mortgage and associated housing costs that were usually somewhat higher than renting.

Some of that payment was applied to the principle, and over time the property rose with inflation and they built up equity. The renter had nothing but good memories.

Currently it is the opposite. The prudent investors cannot bring themselves to buy property. The cost differential between renting and owning is soo much, that you need a big appreciation annually to cover the gap. If that appreciation stops or reverses, you are losing big chunks of money.

Meanwhile the less conservative, are getting themselves into all sorts of debt, with small down-payments and 40 year mortgages, just to be able to say they own. If appreciation stops, or their pay drops, or expenses like gas and food keep rising, they are toast!

How many of them need to take in foreign students to make ends meet?

You can be wrong for a long time

In 1999 all my buddies were making good $ in the dot-com stocks. Nortel was the real darling. It was heading up parabolically. 'Just hold your nose and buy some' they would tell me. But it didn't make sense to me. The price earnings (P/E) ratios were stratospheric. Meanwhile, they bought more and their brokerage accounts swelled up. They used the equity they had built to buy even more stocks with P/E ratios of 100! or even no earnings.

They were making so much money that they were talking of selling and retiring in their thirties. Of course none did. The market corrected. Nortel dropped 60% in one year and then 60% more the next year. They held on, or bought more to average down, or waited for the bounce to sell and break even. Many were wiped out by 2003 and closed their brokerage accounts in disgust, vowing never to trade shares again.

2003, was of course, the beginning of the next bull market.

This has been quite the two decades

None of this was their fault or indeed the fault of the housing speculators in the US who are now walking from their homes and leaving banks with huge write-offs.

It was a global phenomenon which taught people that money was trash. Safe investments would only get you 1-2%...les than inflation.

If you really wanted to make money, you had to borrow, and buy anything that was rising in price. That maybe the stock of a worthless company or an over-priced tear-down in Vancouver.

We can blame Greenspan and all the Central bankers who aped him. Who kept rates too low for too long, who allowed the money supply to grow unfettered.

We can also blame the politicians who have no foresight beyond the next election, and who allowed lax or non-existent regulation.

In any case that tide is now turning.

Until now any time there was a slow-down, these good old boys printed more money and dropped rates. Now with inflation out of control, their hands are tied, unless they want to hand out dollar bills to everyone and devalue it even more (that is what the current US stimulus package is- they are even sending out checks to expats living overseas)

Peter Schiff sums it up well.

http://www.youtube.com/watch?v=7_yjdXoFaic