Is it me or is the Westside getting creamed?

[jesse1]

Well Vancouver I hope you're proud. So much opposition to foreign investment and while it seems to have collapsed on its own it's going to be all to difficult to muster popular opinion to reverse course and tap the only plausible source of capital that can save you, fine City, from abject disaster.

Hope you enjoy the irony.

[thirdlittlepig]

Do you think the slowing Chinese expansion and canadian economy, or inflated prices (lower expected return on investment) could have as much or more effect than public opinion? Also regulation changes for investor immigrants could just be causing a temporary delay as investors digest the changes and refile applications and adjust strategy to meet changes.

[jesse1]

tlp, it's unclear to me how much income factors into purchases today; rather it's about covering mortgage and "building equity". There is a slowdown in China -- and reduced immigration from Asia I might add -- and that will cause some retrenchment of business interests, including not investing in foreign jurisdictions.

It looks like China is going to unleash another round of stimulus in the second half of the year, US QE3 is slated for late Q3 early Q4 2012, and Europe is likely going to recalpitalize its banks (hopefully soonish). My expectation is that Canada is preparing for another round of capital flows, and the announcement of tightening mortgage rules and greater scrutiny of foreign income sources is in preparation for this. That is not necessarily bearish or bullish, but I do think there's a real chance that the second half of the year won't mimic 2008 in terms of sales and might surprise on the upside (and that's a relative statement!).

[gobigorgohome]

tlp, it's unclear to me how much income factors into purchases today; rather it's about covering mortgage and "building equity". There is a slowdown in China -- and reduced immigration from Asia I might add -- and that will cause some retrenchment of business interests, including not investing in foreign jurisdictions.

It looks like China is going to unleash another round of stimulus in the second half of the year, US QE3 is slated for late Q3 early Q4 2012, and Europe is likely going to recalpitalize its banks (hopefully soonish). My expectation is that Canada is preparing for another round of capital flows, and the announcement of tightening mortgage rules and greater scrutiny of foreign income sources is in preparation for this. That is not necessarily bearish or bullish, but I do think there's a real chance that the second half of the year won't mimic 2008 in terms of sales and might surprise on the upside (and that's a relative statement!).

+1

Agreed on all points - Flaherty's regulatory changes were likely in preparation to mitigate the overheating of RE with the coming round of QE this Fall. From that perspective, the regulatory changes had to be made.

[robert james]

tlp, it's unclear to me how much income factors into purchases today; rather it's about covering mortgage and "building equity". There is a slowdown in China -- and reduced immigration from Asia I might add -- and that will cause some retrenchment of business interests, including not investing in foreign jurisdictions.

It looks like China is going to unleash another round of stimulus in the second half of the year, US QE3 is slated for late Q3 early Q4 2012, and Europe is likely going to recalpitalize its banks (hopefully soonish). My expectation is that Canada is preparing for another round of capital flows, and the announcement of tightening mortgage rules and greater scrutiny of foreign income sources is in preparation for this. That is not necessarily bearish or bullish, but I do think there's a real chance that the second half of the year won't mimic 2008 in terms of sales and might surprise on the upside (and that's a relative statement!).

+1

Agreed on all points - Flaherty's regulatory changes were likely in preparation to mitigate the overheating of RE with the coming round of QE this Fall. From that perspective, the regulatory changes had to be made.

Who knows!! Maybe house prices will start going up again like after the 2008 crisis.. Maybe someone should let BBN know about this theroy.. http://www.bnn.ca/News/2012/7/16/Vancou ... lapse.aspx

[jesse1]

Maybe house prices will start going up again like after the 2008 crisis

There isn't enough duration left in mortgage rates to spike prices much higher, unlike in 2008. The slowdown in 2008 was severe, and I am still left wanting what actually happened there. My leading contender is that banks rationed lending because of increased risk sensitivity. I don't buy that market sentiment turned because of the recession -- it was only in September or so that things really went off the rails. By that point Vancouver was already chin deep in listings so the timing doesn't work. But track TED spread and LIBOR distress we can see that distress was evident in March 2008, and that's about when sales started showing weakness. Coincidental if nothing else.

[robert james]

Maybe house prices will start going up again like after the 2008 crisis

There isn't enough duration left in mortgage rates to spike prices much higher, unlike in 2008. The slowdown in 2008 was severe, and I am still left wanting what actually happened there. My leading contender is that banks rationed lending because of increased risk sensitivity. I don't buy that market sentiment turned because of the recession -- it was only in September or so that things really went off the rails. By that point Vancouver was already chin deep in listings so the timing doesn't work. But track TED spread and LIBOR distress we can see that distress was evident in March 2008, and that's about when sales started showing weakness. Coincidental if nothing else.

Actually, that was my attempt at humor.. There are some that don`t think that these prices will be seen again in most people`s lifetime but that remains to be seen..

[timber2012]

I think the Westside is hanging in there nicely actually.

Prices are quite sticky and don't expect much in terms of discounts. Many of the properties that have sold in the past month have sold for far greater than their purchase price of only 1 year ago.

[gse36]

4354 w11th. 1.618M assessed
1.69 no takers. 1.598 no takers. 1.499 now
nice lot. mid block
land value

long time owner it seems. paid 137k in 1985. so theres a lot of profit in there for him anyway.

is he being charitable though?

4218 w 11th sold 1.768M feb 2011 land value. now a new house

looks like he is?

[gse36]

4354 w11th. 1.618M assessed
1.69 no takers. 1.598 no takers. 1.499 now
nice lot. mid block
land value

long time owner it seems. paid 137k in 1985. so theres a lot of profit in there for him anyway.

is he being charitable though?

4218 w 11th sold 1.768M feb 2011 land value. now a new house

looks like he is?

2 other new listings today. looks like they want out.

2606 w34th bailer. paid 2.6M may 2012. asking 2.798M..

2005 w43rd.. bailer... paid 2.2M april 2011... asking 2.298M....

[unicas]

by gse36 » Tue Jul 24, 2012 10:49 am

gse36 wrote:
looks like they want out

Yes, that is what I hear. It is not uncommon for them to hold 4-5 properties at the same time, they had made millions in the past few years. They kind of panic now knowing the tap is switched off.

[gse36]

by gse36 » Tue Jul 24, 2012 10:49 am

gse36 wrote:
looks like they want out

Yes, that is what I hear. It is not uncommon for them to hold 4-5 properties at the same time, they had made millions in the past few years. They kind of panic now knowing the tap is switched off.

Yes, that is correct. Easy come easy go mentality. I mean they made millions in the past. In the grand scheme of things, its okay to bail at a loss if you think the ship is sinking. For you don't know how deep the ship will sink, and when it will resurface! Better to take the money and put it somewhere else to recoup the losses.

i.e. buy at $3M. Bail at $2.5M, invest somewhere else, double it in 4 years to $5M. Still $2M ahead.
Vs buy at $3M, watch it go to $2.5.. or lower... and wait 10 years.. maybe more.. for it to reach $5M.

There are so many opportunities to make money back home in China. If they feel the Vancouver days of 10-15%+ appreciation a year are over, then they will take their money somewhere else.

[Geyser]

4354 w11th. 1.618M assessed
1.69 no takers. 1.598 no takers. 1.499 now
nice lot. mid block
land value

long time owner it seems. paid 137k in 1985. so theres a lot of profit in there for him anyway.

is he being charitable though?

4218 w 11th sold 1.768M feb 2011 land value. now a new house

looks like he is?

It could be an example of the "geezer effect" which I mentioned in an earlier post. Most of us had our retirement plans in place a long time prior to the last decade of massive price increases, if we sell at 2000 prices most of us are still either right on plan or a bit ahead of plan so it's no big deal to lose imaginary paper profits which we had never planned for.

If we sell at 2005 prices we pocket a huge unplanned bonus so there's not much disincentive for us to avoid price cuts in order to liquidate our RE assets - and I'm betting that over the next decade or so a whole bunch of us will be doing just that.

Many of us can easily afford to lead the market down quite aggressively and still make out like bandits, it's one of the very few benefits of being ancient. Of course, if you have a mortgage you don't want to be selling at the same time as people whose priority is to sell quickly and whose price sensitivity is minimal.

If I didn't like my home so much I'd consider selling it now but I've decided to leave this place (my van) in a box. If ill-health forces me into a nursing home for my last hurrah I might just dump my place on the market - and there are lots of us out here!

Also, a lot of us (not necessarily me) enjoy revenue streams from rental properties but when dealing with property management companies or tenants becomes a chore there will be a lot more stuff being dumped at fire sale prices, prices which will still look pretty good to somebody who bought 30 or 40 years ago and has enjoyed decades of revenue.

It's all a matter of perspective, for most of us geezers the year 2000 prices look fantastic compared to prices we paid in the 1970s and if you've only got a few years left who cares? These are not the kind of sellers most people want to compete with.

[rofina]

4354 w11th. 1.618M assessed
1.69 no takers. 1.598 no takers. 1.499 now
nice lot. mid block
land value

long time owner it seems. paid 137k in 1985. so theres a lot of profit in there for him anyway.

is he being charitable though?

4218 w 11th sold 1.768M feb 2011 land value. now a new house

looks like he is?

It could be an example of the "geezer effect" which I mentioned in an earlier post. Most of us had our retirement plans in place a long time prior to the last decade of massive price increases, if we sell at 2000 prices most of us are still either right on plan or a bit ahead of plan so it's no big deal to lose imaginary paper profits which we had never planned for.

If we sell at 2005 prices we pocket a huge unplanned bonus so there's not much disincentive for us to avoid price cuts in order to liquidate our RE assets - and I'm betting that over the next decade or so a whole bunch of us will be doing just that.

Many of us can easily afford to lead the market down quite aggressively and still make out like bandits, it's one of the very few benefits of being ancient. Of course, if you have a mortgage you don't want to be selling at the same time as people whose priority is to sell quickly and whose price sensitivity is minimal.

If I didn't like my home so much I'd consider selling it now but I've decided to leave this place (my van) in a box. If ill-health forces me into a nursing home for my last hurrah I might just dump my place on the market - and there are lots of us out here!

Also, a lot of us (not necessarily me) enjoy revenue streams from rental properties but when dealing with property management companies or tenants becomes a chore there will be a lot more stuff being dumped at fire sale prices, prices which will still look pretty good to somebody who bought 30 or 40 years ago and has enjoyed decades of revenue.

It's all a matter of perspective, for most of us geezers the year 2000 prices look fantastic compared to prices we paid in the 1970s and if you've only got a few years left who cares? These are not the kind of sellers most people want to compete with.

Agree, my parents are in the same boat on both counts. Investment property and principal residence. As are their friends. Its incredible to say, but out of my parents' close group of friends whom I know reasonably well, I can't think of anyone who owns less than 2 properties.

Only last sentence should be corrected, I think these are the type of sellers most people DONT want to compete with.

[Taipan]

There are 5 groups who will push this market down now.

The baby boomers who were depending on selling these properties to fund their retirement. Those who need the cash and cant live on the income will be the first to unload.

Speculators - markets full of them. As prices start to slide they will bail hard.

The high ratio borrowers. Those with 0/40, or only 5% down will get spooked as prices fall past them, and bail as they get back into negative equity.

Those who didnt plan to sell. Divorce, lost a job, got a job elsewhere, married and moved elsewhere. They must move no matter the market

And baby boomers who funded their children into property by using their own properties as ATM's. They too will need to bail as prices fall.

Many of these people will lose relatively little, compared to those who hang in.

Those who hang in, expecting a rebound like 2008 will be smashed and by the time they really need to focus on it, it will all be too late.

(I dont discount that we may see a small rebound on the way down.)

When is the time to buy? When there is practically nobody at forums like this, and people say, why would you want to buy when its cheaper to rent. You only lose money in real estate. (as opposed to the current mantra of, you cant lose buying real estate. Go down to the USA and you will hear a very different view of real estate!)