Monthly Archives: August 2010

“I personally know of several people who tried to sell recently but didn’t get the price they needed.”

These are examples of one type of  ‘stealth inventory’. Like the other forms (such as boomer retirement plan RE), this is inventory that will be listed with urgency when price falls become well and truly established. -vreaa

Yalie at 27 Aug 2010 7:05pm “I personally know of several people who tried to sell recently but didn’t get the price they needed. They would have needed to cough up a big check if they sold at the price that current buyers were willing to pay, and they just don’t have the money to make up the difference. Some of them bought a couple of years ago at the previous peak, and others are loaded up on home equity debt. I think that unlike 2 years ago, there are far more people who simply *can’t* sell below a certain price because they’re underwater.”

Teddybear adds, 28 Aug 2010 9:35am – “My brother is in that boat. Last summer/fall [2009], during so called “bidding wars” (what a nonsense), they could not get the price to break out even after the realtor’s fees, and they took the condo off the market.”

Loss of Appetite for RE – “Now I find that I’m not sure I want to own any house again, anywhere.”

‘Lost the taste for RE’ at 28 Aug 2010 1:22am“My husband and I were living abroad and visited Vancouver for Christmas 2001. Lots of houses on the market, sales very slow. I heard that real estate boards were lobbying to have the rates reduced to help sell some damn properties.
So I was watching the Vancouver property listings from abroad. When the rates dropped, every house we had some interest in upped their price from between $300,000 and $700,000 — all within 3 weeks. And this was just the beginning.
I used to think we would just continue to rent our current very nice, large house in a beautiful neighbourhood from an excellent landlord — just wait it out [and buy later]. Now I find that I’m not sure I want to own any house again, anywhere.”

Vancouver Island Realtor – “The market is completely dead. This will put us into a huge recession.”

Vancouver Island realtor Shayne Fedosenko, as quoted on 27 Aug 2010“[There are] huge concerns and hardships in the new mortgage qualifications regarding suite income and people having to qualify. This is the way that it used to be: you could take the suite income, say it was $1200/month and they would add it to your mortgage qualifications as a $200,000-$250,000 increase in your qualification amount, now what they do is take the amount of the rent: $1200 /month, multiply it by the 12 months in a year and add it to your income, making only an extra $ 40,000+ to your qualification amount. This is why the market has completely softened. The market is completely dead.  Brand new houses in Sooke, down to $299,900 from $399,900, no calls. The market has dried up all due to financing. I talked to 7-10 mortgage brokers and many agents while I was at the Victoria Real Estate Board golf tournament and everyone is scared. Hundreds of foreclosures coming, about 75% of the home owners could not qualify to buy their own houses (especially with suite). So what happens when their term of mortgage is up and the banks need them to re qualify?  They are doomed. Last month there were 300 home sales on the Lower Vancouver Island with 4700+ listings. One of the worst ratios ever.  End of June is supposed to be the closing day of the year.  Every Realtor has a few nightmare bank stories right now. This will put us into a huge recession.”

[Yeah, this is what happens when a housing bubble starts reversing. The mortgage changes may seem to have precipitated the reversal, but, if it hadn’t been this, it’d have been something else. Bubbles eventually collapse under their own weight; they’re ponzi schemes; they run out of new blood.  -vreaa]

A Different Kind Of Real Estate Line-Up; Bubble Denial Persists In Vancouver

Homeowners line up in the rain before dawn today outside the Palm Beach County Convention Center in West Palm Beach in hopes of saving their homes. The Neighborhood Assistance Corporation of America is making its second whirlwind stop in West Palm Beach to try and save the homes of struggling borrowers. [from The Palm Beach Post 27 Aug 2010]


Bubble Denial Persists In Vancouver
The urges that lead to bubbles appear to be an integral part of human nature. And it’s fairly easy to understand why people argue that the circumstances of a current bubble  are somehow different from those past: They feel removed in space and time from those who went crazy over tulips or railroads or radio.
When the Vancouver bubble implodes, however, it is going to be very, very difficult for local real estate owners and speculators to suggest that they had no idea that such a bust was going to happen. We’ve had the experience of watching it in real time and in slo-mo, playing out to our south.
Despite this, we STILL expect people here to tell each other that “no one could have known” that such a bust could occur. They will do this to protect the fantasy of their own wisdom, in the face of all the evidence to the contrary. -vreaa

Two Charts: All You Need To Know About Canada’s Housing Bubble

First chart: Income and House prices
Second chart: Canada’s Household Debt to GDP Ratio
Study and compare.
Note cause of our bubble.
Any more questions?

[sources: First Chart from Alexandre Pestov’s ‘The Elusive Canadian Housing Bubble’, Summer 2010 edition, July 2010; Second Chart adapted from one in a letter from David Rosenberg, and previously headlined 7 May 2010]

“Here is one couple who are holding off listing now, but will HAVE to sell in the next few months.”

ANon at 25 Aug 2010 2:49pm“Last weekend had lunch with my wife’s cousin. They are moving back to Ottawa in the fall. They spoke to a realtor recently who told them “the market isn’t so hot right now, wait until October, it’ll come back just like last time”. I kept my mouth shut, but there is one couple who are holding off listing now, but will HAVE to sell in the next few months.”

“Of the 6 couples who own; only two came up with their own downpayment; both make >300k a year; now both have been forced to move East for job advancement.”

ANon at 25 Aug 2010 2:49pm“Of my group of friends,  late 20s early 30s, I can think of 6 couples who own. Of those 6 only two actually came up with their own downpayment, and both of them make >300k a year. The interesting thing is, both of them have been forced to move East for job advancement. The rest have all been given minimal downpayments from their parents.”