Roberta and Johnny can’t wait to dump the Squamish condo townhouse they bought three years ago. “It was supposed to be an investment,” she says, “not a nightmare.” Not that the tenant’s much trouble. She’s not. But it’s tough to know what you paid $499,000 for thirty-seven months ago is now worth $358,000.
At least, that’s the offer they have. Worse, the deal has hair on it. Lots of conditions. Long close. Small deposit. Not much of an offer at all, actually. But better than no offer, the alternative in a town where the market’s died.
Johnny writes: “A side note of potential interest is that the owner of a comparable unit in the same complex priced $100K (yes, one hundred) over ours and that has been sitting on the market without viewings for months, if not a year now, called me the other day and left a message saying that he wanted to talk to me about my price. He felt that I would be leaving “a lot of money on the table” and gave indication that I must not understand the state of the market in the area very well. In the meantime, another comparable brand new unit (one of many that are coming out) in a complex down the street was just listed under headlines of ‘receivership pricing’ for $345K. Needless to say I haven’t called him back.”
- Excerpts from a story relayed by Garth Turner at greaterfool.ca 29 Nov 2011
Sellers compete with other sellers, not with buyers. – vreaa
“Sellers compete with other sellers, not with buyersSellers compete with other sellers, not with buyers”
Sellers compete for buyers, what little are now apparently left in that particular market.
Now… dance!
We need a +”lol” button on this blog.
http://www.timescolonist.com/life/Microsoft+open+game+design+studio+Victoria/5795402/story.html
This is interesting news. Just to be clear, the quote “The sun shines over here, there are no hour-long commutes, housing prices are half as much” is comparing Victoria to Vancouver, not Victoria to Redmond.
Housing prices half as much as Vancouver means only twice as much as Redmond!
Setting up an office in a city with a decent engineering compsci university program seems like a good move.
Maybe this will seem like a dumb question but I’m wondering if anyone can explain to me if they think this will have any bearing on the RE market here, or if this is completely unrelated:
“VANCOUVER – Europe’s debt crisis led top central banks around the world — including Canada’s — to join together to free up funds Wednesday and ease the strain on financial markets… the move by the central banks to lower the cost of borrowing U.S. dollars and increase liquidity came as the People’s Bank of China cut reserve requirements, which will allow Chinese banks to lend more money.”
Read more: http://www.vancouversun.com/business/Banks+efforts+ease+Europe+debt+crisis+benefit/5792562/story.html#ixzz1fIhzWkg7
Imagine a casino full of bleary eyed, drunken players, fists madly shaking the dice for the next roll, all hoarding piles of chips they possess only because they hocked their houses, cars and the cutest of their children. Because of the hoarding, the casino had to mold some more plastic chips.
The only move that matters was the Chinese one and it was a small move from an extreme state of designed contraction. It might help Canada kick the can down the road a little farther, but mostly because the market reacted so positively, not because the underlying situation changed a little. If the markets don’t swing back in two weeks, they might be onto something.
Also, if you want to know what happens when a debt crisis is treated as liquidity crisis, look no further than the U.S. circa 2008. The public injections were a shade under $1 trillion, the hidden injections were more like $7 trillion. What you don’t see is more important. And you won’t see it.
i think it means that some large entity was near default and may trigger mass contagion – hence the motivation for such a coordinated move. mass contagion could still happen, as in now … but really, if you back up and think carefully about it … papering things over just delays the inevitable + makes the final outcome worse. (we’re just like moss taking the situation from bad to worse by being obstinant, refusing to accept reality. sorry, it’s just nice to have a visual metaphor. $, credit, etc. not so visual) for vanRE, the key is how this may affect availability of credit. without continued escalating credit issuance, RE valuations will collapse. so, to the extent that can banks must commit capital to avert that crisis (who knows what their exposure is?), they become further leveraged, less able to accomodate further issuance, less able to absorb shocks, more fragile, greater systemic risk.
boc probably also eased for a similar reason – they had to or something was going to blow up now or soon.
altogether, a pretty convincing display of willingness to commit mass printage as needed. it works for now but some day, that will no longer work either. then what?
Thanks so much for the explanations ;o)
maybe someone posted this article already. picked the link on another blog.
http://business.financialpost.com/2011/11/30/some-banks-more-exposed-than-others-to-overleveraged-consumers-moodys/
1, of course rbc will get bailed out if it gets into trouble with uninsureds – the system is designed for the benefit of crony entities at the expense of citizens – equity investors however may get wiped
2, the little debt chart at the end of the article is exactly what many have been discussing recently. the spurt since 2008 correlates perfectly with canRE valuations. any sober analysis of the RE markets eventually boils down to looking at some version of a chart like this. it is whole enchilada in a single pic. compare to anywhere else that saw a big reversal in RE values – the correlation to credit holds up perfectly. at some pt there will be a straw on camels back trigger and thereafter inability + unwillingness to assume more RE credit collapses values back to fundamentals. it is the way of all credit and ponzi bubbles.
But but but Olympics?!?!
y’know, the olympics also dumped a bunch of outside capital at least some of which also got levered up. more punch spiking. curious how magnitude of that compares to ham. it’s sort all starting to make sense why prices got jacked up so much higher than, say, toronto.
Ah the Olympics, a fine example of one of the most well-timed shovel-ready Keynesian stimuli in the history of the modern world.
Remember this, from the mouth of City of Vancouver planner Brent Toderian: “The Olympics changed EVERYTHING“
Kind of ironic how China’s Olympics directly preceded Vancouver’s.
This means now is the time to make millions flipping properties in Sochi.
@Jeff Murdock: In Soviet Russia, property flips you!
@Royce well done lad, well done
Sochi is the Comox of Russia. With direct flights to Moscow!
Okay, I walked into that one…
http://www.canada.com/life/Microsoft+open+game+design+studio+Victoria/5794842/story.html
On choosing Victoria over Vancouver,
“The sun shines over here, there are no hour-long commutes, housing prices are half as much . . . it was an easy decision,” said Robertson, an industry veteran who lives in Victoria and sold his gaming company, Blackbox, to Electronic Arts when Mattrick led the firm.”
Interesting. This should get more visibility here. I was trying to make a similar argument – startups don’t like Vancouver, or can’t pay high salaries in Vancouver partly because of housing prices. Somehow, it’s not sinking in with people on this blog…
Do we know for a fact that the Victoria game programmers get paid less than Vancouver and how much less? Also a lot of game studios only have 50 or even less employees. Even if everyone is paid $20K less than Vancouver, that’s still only $1M/year which for most large or even medium budget games isn’t that much in terms of total budget.
Also if I’m talented video game programmers, which most have to be to work in that industry, why would I take a $20K pay cut to work in Victoria on an island instead of California which is sunny almost everyday?
I did not say that Victoria game programmers get paid less than Vancouver.
The issue I am talking about is two fold:
- Many top talent programmers refuse to move to Vancouver because of housing cost.
- Startups are financially restricted by Vancouver housing cost too. The owners may want to have homes of their own too. For some reason, many people believe that startup owners are all millionaires. Couldn’t be further from the truth.
Your other points are fine, but not relevant to my argument.
I have a patient fighting cancer. Her husband is a game-programmer. He works from home (she needs a fair amount of assistance) and tells me most of the other programmers’ he works with do the same, and many live all over the country. In this day, and in his industry you really don’t need all your staff to relocate here, so he tells me. Btw gamers, I have seen the next FIFA and looks amazing!
I know some programmers that work for EA from home, but that’s an exception, not a rule. They also have to attend meetings from time to time. I doubt that MS will allow the majority of the developers to work from home.
“It was supposed to be an investment,” she says, “not a nightmare.”
All investors need to understand the concept of risk. Consider this your first lesson.
it actually still is an investment…just a money-losing investment. It happens all the time, and they should have ben prepared for that possibility.
An absolutely golden line. My puny human brain cannot comprehend what it will be like when this passage and its brethren get repeated thousands of times over. It’s so… foreign.
yes and along with risk, there needs to be an exit strategy – how long will you hold a loser? i suppose this is one aspect of what is meant by moralizing. functionally, morality is what one wants the world to be. another’s morality may be different. but, reality is amoral – it has its own principles and it doesn’t care what you want or deserve. those unable to accept this, are unable to cut loose a losing position and be at peace. the markets are a daily study of this concept. we are going to see more of this play out. then, what about when the stakes become higher yet?
http://www.facebook.com/ctvlyndasteele
Some great comments under her, “Housing, child care stings ‘Generation Squeezed’ | CTV British Columbia” post
Henry Wong Lynda, my wife and I had dreams of buying a home and having kids, that all changed when we moved to BC. Ww moved here 8 years ago from Toronto, we were shocked at the cost of buying a home and the cost of a block of cheese at the grocery market. Best place to live????? Yeah for the rich people who own homes!
Alison Borden I feel that the advice that the mortgage broker gave tonight was questionable. Take out a line of credit to pay the minimum 5% down?? or take money from your RRSP?? It’s better to rent and stay within your means than to get yourself into serious debt like that. I’m not sure why that advice is okay to offer to viewers….so many people get into debt by buying a home that they potentially can’t afford, and it can be a very difficult hole to get yourself out of.
etc etc
Thanks.
Must headline.