Okanagan On Sale – “You have to see the for sale signs to believe it.”

arbroathscotland at vancouvercondo.info 3 Aug 2010 9:54 am – “Just returned from Kelowna and Penticton after a week. You would have to see the for sale signs to believe it. They are honestly everywhere. Even some developments that they have stopped working on because they have ran out of money. They are even attempting auction sales in Penticton on new condos. I would not have believed it is as bad as it is up there if I did not get to see it myself. Everyone you talk to up there is talking about it. I truly think the party is over.”

anonymous at vancouvercondo.info 3 Aug 2010 10:37 am – “I know several people who are trying to sell in Kelowna right now with no success. Some people are still delusional, thinking that the market will recover in August, still holding on to their high prices. It is kind of overwhelming when I think of all the people I know who are completely overleveraged in real estate-they have several properties and lots of debt. It is quite scary! It’s the beginning of the end, and yet some people I know are still buying, thinking they’re getting a good deal.”

CREA ‘Forecast’ Is Actually A ‘Backcast’ – “Plus 13.3%… No… Make that Plus 5.5%… Actually, scrap that… Let’s go with Minus 1.2%.. No, wait.. wait.. it’s coming to me..!”

For the very few of you who don’t already know this, realtor industry ‘predictions’ have no predictive capacity whatsoever, they are rearview commentary with an optimistic bent. They mechanically extrapolate from the recent past and call it ‘forecast’. Here are the CREA (Canadian Real Estate Association) antics ‘predicting’ sales for the year 2010, thus far. We presume that by Dec 31st, they’ll have it right. It’d be refreshing if, in future, they simply say “Guys, we have NO idea where the markets are going, but we’ll send out regular reports on where it has gone.” -vreaa

“CREA forecasts national activity will reach 527,300 units in 2010, up 13.3 per cent from 2009.” – CREA News release 8 Feb 2010

“National activity is forecast to reach 490,600 units in 2010, up 5.5 per cent from 2009.” – CREA News release 2 June 2010

“National sales activity is forecast to reach 459,600 units in 2010, representing an annual decline of 1.2 per cent.” – CREA News release 30 July 2010

[Links from Devore at greaterfool.ca 1 Aug 2010]

“I’ve met several people in their thirties with full time jobs who live in apartments with roomates, because they can’t even afford a one bedroom apartment. I made close to $100K last year and I’m renting a one bedroom.”

Tom at greaterfool.ca 31 Jul 2010 11:07 pm – “I’ve met several people in their thirties with full time jobs who live in apartments with roomates, because they can’t even afford a one bedroom apartment. When houses cost a million a pop, who is going to pour the coffee and schlep the beer? People who live with roomates in a basement in Surrey? I made close to $100K last year and I’m renting a one bedroom, because a two bedroom in a decent neighborhood costs well over 400K, plus you have monthly maintenance fees of $250-350, plus taxes.”

Spot The Speculator #8 – “My wife is attending the free English courses available for new Canadian immigrants. She separately asked two of her classmates their opinion of Vancouver real estate.”

4slicesofcheese at vancouvercondo.info 2 Aug 2010 4;14 pm – “My wife is attending the free English courses available for new Canadian immigrants and PR’s at Mosaic Centre on Commercial Dr. In her class she talked to two of her classmates. One is a woman from China and her occupation is “real estate investor”, and the other is an Indonesian woman who works at KFC. She separately asked both of them their opinion of Vancouver real estate, the Chinese woman said without a doubt it is going down now. The Indonesian woman said Vancouver real estate is going up right now. She lives in a 7br house half of which is rented out.”

Couple; Age 30; Work in Public service; Ottawa area; Own 5 Properties

The first three properties have total current market value of $1.35M and mortgages of $845K. Ottawa isn’t in for as big a fall as Vancouver, but this youngish couple are still taking far more risk than they think. -vreaa

Antego at canadianmoneyforum.com 16 Jul 2010 10:24 am & 10:31 am and 19 Jul 2010 9:35 am  -

“I’m looking for some advice. Here’s a look at our ‘portfolio’:

Primary Residence
Market Value is about $550,000
Mortgaged amount is $315,000

Rental Property 1
Market Value is about $385,000
Mortgaged amount is $265,000
Rent is $2200 / month
Net is $-200 (a little more than the equity portion of the mortgage payment) – This includes savings toward agent fees for renting it out and vacancy (1 month / year)

Rental Property 2
Market Value is about $415,000
Mortgaged amount is $265,000
Rent is $2500 / month
Net is $-200 (a little more than the equity portion of the mortgage payment)

Property 3
I own a hotel room abroad which breaks even every year after everything is taken into account. We purchased this as a getaway to use for a couple of weeks every year. Our investment into this is $50,000 of our own money.

Property 4
Pre-construction scheduled for completion in 2014. Will be a rental only. $50,000 invested with another $50,000 required to keep at break even level for rent income. I’m skeptical that this property will appreciate much, and will probably be looking to sell, simply to break even once its completed. Poor decision – but live and learn…

Cashflow
Our net cashflow is +$3500/month on average. Of that, I am willing to use $2500 toward reducing mortgage debt.

What I’m looking for here is some advice.
One of my main objectives is to be mortgage free on our primary residence. But I don’t want to do that at the cost of sacrificing too much opportunity for growth. My father’s greatest advice to me was that life is all about risk management. Without risk, it is more difficult to grow, but risk may also represent disaster. I consider myself a person who is comfortable with taking risk, but would like to keep that within the 10-20% range.

My philosophical strategy is that I look to build solid foundation and then to use the benefits of those foundations to expand (hence the lower risk objectives). As such, I have developed three options:
-1- Sell Rental Property 1, pre-pay $50,000 of proceeds toward mortgage of primary and pre-pay the mortgage on our primary residence at a of $2500 / month. This would have us in a mortgage free position in about 2017. Retain Rental Property 2.
-2- Sell Rental Property 1, sell primary, payoff completely and move in to rental property 2. Be immediately mortgage free. This option would be fine for a couple of years, but we’d have to find a larger place in about 24 months to replace it. The advantage this provides is that the strong foundation of mortgage freedom further increases cashflow.
-3- Sell Rental Property 1, sell rental property 2, use proceeds to pay down primary, and pay down primary at a rate of $2500/month. Would be mortgage free on primary in March 2013. This seems to provide us with a balance between great lifestyle and mortgage freedom in the near future.

I’m sure that you see other options – feel free to share. What do you think is the best option for providing the stability of mortgage freedom while allowing us to maximize growth. We prefer to have mortgages on our rental properties, as we are not interested in the passive positive cashlfow at this time. I would definitely like to dispose of rental property 1 as its mid-lifecycle i.e. Its about 5 years old and will begin to plateau in appreciation within the next 5 years. The market is also slowing and I would like to contract our portfolio for more stability before it becomes more difficult to do so.

We are 30 years old, and I would like the stability so that my wife would have the option of pursuing a more creative career path for herself. By 2014, I expect that she will be bringing in half as much money – therefore reducing our household income by about 20%. Other than that, I don’t have any real goals other than increasing our wealth and perhaps setting the stage for retirement at 45 or sooner. I am also interested in diversifying our portfolio, perhaps in stocks or other market.

I hope this makes sense. Please let me know your thoughts and / or advice. My parents advice is that we should sell off our assets, keep our mortgage and buy other hotel like properties. They have been fairly successful in real estate and have a keen sense for these things. I think they feel that we have a lot of risk with all of these properties.”

“We both currently have jobs with the public service. Given that my wife may make a career change. We have at least one pension. So normal retirement (if early isn’t possible), is not a concern – unless you think it should be.”

“We live in the Ottawa area. I feel that prices here are near their peak, and though I do not expect a burst, the cooling off has begun, and I expect a period of stagnancy.”

Things Have Quietened Down – “If it doesn’t sell we’ll just rent it out. We’re not going to sell it for less than it’s worth.”

McLovin at vancouvercondo.info 2 Aug 2010 9:41am – “A few people I have spoken to have a story of someone who has not had a showing in a month in Surrey or knows someone who is stuck with a condo in Kelowna. It appears to even the uninformed that the market is cooling.”

Anonymous at vancouvercondo.info 2 Aug 2010 10:06am – “Overheard a conversation at the grocery store:
“We put our Tsawassen property up for sale but the market is really slow and we haven’t gotten any offers”
“What are you going to do?”
“If it doesn’t sell we’ll just rent it out, we’re not going to sell it for less than it’s worth”

“We were talking to some local idiots who just speculated on a house, they were telling me how they were going to flip it in a few years and move.”

retalker11 at agentwill.com 29 July 2010 4:10 pm -

“We were talking to some local idiots who just speculated on a house, they were telling me how they were going to flip the house in a few years and move, and I was playing along, cause it amuses me. Then they asked me how I was doing, and I am like nothing much just buying a new car. They asked whether I plan to lease or finance, and after I said cash, they shut up.

Then the other day I spoke to some flippers who got themselves in trouble over a condo contract for $900K. They were trying to get out of it and could not complete, but developer refused to give them back their deposit and counter-sued for everything they have.

The other day I came to my bank to close one of my accounts. Obviously the real estate subject came up, cause our banks is nothing more than mortgage pushers now. They asked to pre-approve me for a mortgage because I have an excellent credit and the rates are low. I said I am not interested in buying a house in Vancouver at this price even if it means renting for the rest of my life. The mortgage pusher seemed to agree and then said that she thinks the prices will decline in two years. As I was about to leave, she asked me if I was interested in the investment property in Brentwood Area….. Two days later I got a card in the mail from her saying “good luck in your house search”….”

Cabbie Talks Real Estate

GB at vancouvercondo.info 30 July 2010 8:32 pm -

“Last night came home by cab from YVR. Had to endure cabbie telling me all about how “real estate only goes up”. Only in Vancouver this conversation would occur in a cab! LOL. I was too tired to reply with much more than “no it doesn’t”. Of course he thought I was an idiot. And of course he is a cabbie and I work in finance. What is the saying?…when cabbies start talking the asset….then get the hell out of that asset! Reminded me of the tech bubble days when shoe salesmen were telling me how they were making it big…”