Dave in Vancouver sent VREAA an e-mail, 29 Mar 2010. Thanks, Dave. –
“My realtor just posted this as his facebook status:
“The Vancouver Real Estate market is very busy these days. Rates are anticipated to go up in the very near future so now is the time.”
I assume he means “now is the time to buy.” This makes no sense to me. Rates going up is guaranteed to lower housing prices. Any bull or bear knows this. So now is the worst time to buy. Or maybe he means “now is the time to sell.” What does everyone think?”
Lady Luck at RE Talks 28 Mar 2010 9:45 am –
“After many red hot years the Whistler rental market (for locals, not vacationers) has tumbled. Far more supply than demand. It is now a renters’ market. Rents are dropping by the week. Two bedrooms that were renting for $2000 can be had for $1400. This will also have a spill over effect on the Squamish and Pemberton markets as commuters return to Whistler because of increased affordability. Throw in the 300 new units being turned over to locals at the Athletes Village and there is no end in sight. Not every landlord will be able to weather the soft market. It will be interesting to see if this in turn creates even more inventory for sale. The only thing I see improving the situation (for landlords) is increased tourism next winter.”
A number of Canadian banks have today raised their mortgage rates, with posted five year closed mortgages jumping from 5.25% to 5.85%. Here are some comments made by mortgage consumers below the Financial Post article, 29 Mar 2010. Thanks to metalhead at RE Talks for pointing them out. –
anonymous 29 Mar 2010 1:02 pm – “I still think its crazy to get a locked in mortgage. There aren’t many signs outside of Canada that things are back to normal. In fact its far from it. Right now I have a variable rate of 2.05%. How much could rates really go up with so much uncertainty. If they go up too fast our dollar will sky rocket and cause its own problems. I would get a variable rate which could save you hundreds of dollars per month compared to 5.86%, save the money you would have spent at the higher rate and then if interest rates climb you have a buffer to help you but if they don’t rise beyond the 5.86% then you have a lot of extra cash.”
anonymous 29 Mar 2010 12:41 pm – “I think a lot of the confusion comes when banks close your mortgage for 5 years on a fixed or variable rate, but they automatically amortize it over 25 years. So people think their house will be paid off in 5 years, when it’s just locking in a rate. That is what happened to me when I was 24 years old. I bought my first home, locked in the rate for 5 years only to find out in 5 years that I had put $15K against the principle and I still owed $200K! Then I went to renew, and finally when I asked them, they were amortizing the mortgage over 25 years again. So in total I would be paying off the mortgage over 30 years! I finally got smart and put a short amortization of 10 years and also started making annual payments on top of my mortgage, until I paid off the house 7 years later.”
And relevant confirmation from older discussion at the G&M:
ruthmatthews 14 Jan 2010 3:58 pm – “Most Canadians do not seem to know that in Canada every mortgage is open after five years and their interest rate can increase at that time UNLESS they have been able to lock in for say, seven, or ten years with specific mortgagees. The amortization period is just used to create a monthly payment to suit the financial ability of the mortgagor. I have spoken to a lot of home buyers who seem to think that if they have a 35 year amortiation with a monthly payment of $650, that this amount will be payable for 35 years.”
Posted in 05. Where do Buyers get the money?
Tagged Anecdotes, Banks, British Columbia, Bubble, Debt, Economy, Housing, Interest Rates, Mortgage brokers, Real Estate, Vancouver
Bubbles distort judgment. What was going through the realtor’s mind when they were capturing, uploading and presenting these photographs? Surely some form of cautious description in the MLS blurb would have sufficed? This house was discussed on various blogs recently, including greaterfool.ca 8 Mar 2010. Fascinatingly, an ex-owner supplied an anecdote, which is archived below the photos. -vreaa
MLS#V809495 3635 Prince Albert Street, Vancouver East, BC
Lot size 3,159 sq.ft House 1,650 sq.ft
Asking price $579,900
“Handy man special. Needs TLC. Mainly Land Value.”
Here’s poco at greaterfool.ca 9 Mar 2010 2:58 am – “Believe it or not, I owned this house back in 1973—I can’t stop laughing.–it was a dump back then but from the pics I see they’ve done a few upgrades.
It does bring back a lot of memories from those days. My first wife and I bought it for 28k in Sept 73 from her mother (somewhat as a gift) we split up and I stayed in the house while we tried to sell it.
Finally sold in the fall of 75 for 43k–had a huge moving out party where I met my 2nd wife—-I wrote her phone number in the dust on the siding “shingles” to the left of the front door– whenever we were in that part of town we would drive by and lo and behold the phone number was still there –years later.
Note the dark brown cupboards in the small pantry(?) area– I swear thats the “mac tac” (70s thing) I covered them with.
But thanks once again for that link– I’ve e-mailed it to many–and yes I will be going by it this week.
PS-hope andrew doesn’t see this –he’ll be calling me a fool for not keeping it as a rental.”