Monthly Archives: October 2010

High End Market Tales; A Request For Advice

This 18,633 sqft house on 1.12 acres [3489 Osler] in Shaughnessy sold for $17.5M on 22 Oct 2010. It had been listed since 21 Oct 2009 with an ask of $22M.

Regarding higher end properties in this part of town, a successful young Vancouverite sent the following anecdote and request for opinion to VREAA by e-mail. Perhaps readers can volunteer their thoughts. :
“I have some questions, but first, let me give you some background. I was born and raised in Vancouver. I am 33 and married. My wife and I live with my parents in Vancouver and I’ve been watching the prices in Vancouver soar. I could have bought an apartment several years ago but I decided that it would have been foolish. I had some money to play with so I decided to start a company with a few friends.  I am in the process of selling my share of the company for approximately $7 million. My dream is to purchase a home in First Shaughnessy and the home I fancy is on the market for approximately $5 million but its assessment is $2.9 million.  The house is from 1910s, approximately 7,000 sqft in need of some renovations. Lot size is around 14,000sqft.  I am a bear to some degree, but I do not know if we are headed for an absolute crash of 30%+.  I am willing to pay more than the assessment, but in short not a dime more than $3.5m.
Do you truly believe Vancouver west side is bound for a crash when it is irrefutable that the Mainland Chinese are buying everything they can get their hands on? Furthermore, First Shaughnessy is tiny and thus I can see demand for that part of town outweighing supply for years to come.  I am curious to hear your opinion on what you would do if you were in my position. Do you believe that Westside homes will sell near their assessment prices?”

“Update on an Olympic Village rental condo, where the asking rent is decreasing.”

El Magnifico at VREAA 31 Oct 2010 1.12pm“Update on a rental property I posted some time ago. Rents are decreasing as well…
I have been following this 1BR 630 sq.ft. condo in the Olympic village. It has been for rent since at least early August 2 for $1750! (I even sent them an email early September to tell them that there was no way they were going to find a fool that would pay $1750 per month for that). After sitting empty for 3 months, they finally followed my advice and decreased their price to $1,650 which is still very expensive considering the size, location and bad publicity around the OV…
I’m wondering how long it will take them to find a tenant and how much it will have cost them to wait with their overpriced condo sitting empty…
Here is the link:

“Prices are certainly negotiable at the moment.”

logic at 30 Oct 2010 3.07pm“Just had friends drop c.620k on a 2 bedroom place near Commercial (still overpriced imho, but hell, they can afford it). Originally listed at 699 a few weeks earlier. Prices are certainly negotiable at the moment.”

BNN Don Campbell Interview Transcript – “The Apocalypse Is Not Coming” – ‘Plateau’ As Worse Case Scenario

The interviewers ask one or two excellent questions, but the end result is a strange fudging of the issues. Spot the fallacies and misconceptions in the following dialogue. [We list the ones we spotted at the end of the transcript.] -vreaa

From Is Canada’s Housing Party Over? [28 Oct 2010 5:10 PM] [linked here at]

Interviewer 1: Last week the Bank of Canada said there was a prospect of a more pronounced  correction in the housing market and this week The Economist magazine’s latest survey claims that Canadian Real Estate is overvalued by something like 24%.
So, is the Canadian Housing Party finally over?
Here to give us some perspective is Don Campbell, he is president of the Real Estate Investment Network.
Well let’s start with that right away is the bubble over here in Canada, is this the end?

Don Campbell: It’s that magic word bubble, right? You can feel it doing THIS…

…with that word… There isn’t a bubble in Canada… let’s get really clear, there is no national real estate market… it’s very regional… and you’re going to see cities like Hamilton and cities like Edmonton and cities like Maple Ridge BC do incredibly well, for the next, you know, three to five years… and other areas, that are going to be overpriced, like the Vancouver market is overpriced… and will have a tendency to be flat.
And, when they talk about this bubble in their analysis, what it is really, is a big pendulum, and a pendulum has swung so far into the buyers market right now, that you are going to see that the economic fundamentals are going to sit… and they’re going to have to grow to support that… where the pendulum is sitting… And that pendulum will swing down… let’s be very clear. [Let’s try, to be clear, yes, please, very clear. Please. -ed.]

Interviewer 1: What the government, what the BOC keeps saying, and I think they have a valid point, is that the debt people are taking on to buy their houses is really getting out of control… The house prices are running way ahead of income levels… Isn’t that going to be a problem? isn’t that really the bubble that they may be more worried about… the debt bubble.. as opposed to the housing price bubble?

DC: They are, until you look at the housing affordability index… You know the RBC puts out a housing affordability index every quarter… And I keep seeing that it’s less affordable to buy, until you look at a ten year average of our affordability issue… hugely out of whack in Vancouver… slightly out of whack in Toronto… but every city across the country, housing affordability is trading right on ten year average… it’s very interesting.

Interviewer 2: So you don’t see if interest rates start to rise that there is going to be a significant amount of people that are going to be underwater here?

DC: No, I don’t see that at all, because I’m seeing that… Interest rates are going to go up, they’re not going to go up right away, because of everything else that’s going on in the world… but you’re going to see it tick up slowly… a lot of people are still in variable rate mortgages which is a great thing to be by the way… you can win, in that game… but right now, because of that trading range, because of the ten year trading range, I’m not seeing a big bubble anywhere, except maybe in the condo market in downtown Toronto and for sure in Vancouver.


DC: [Discussing CREA changes] As the listings are growing across the country, therefore softening the price increases, these changes, come the spring, probably Jan Feb 2011, you’re going to see the listings start to escalate, over and above what would normally happen, therefore keeping a cap on prices, and therefore keeping it in that ‘buyers market’ arena… Now it’s funny, a lot of people…during that ‘seller’s market’, it was frothing, people going “I just can’t find a property to buy… I can’t”, now you have that exact market you’re looking for is the property you want to buy, and there’s lots of them, and everybody’s going… “Oh my goodness, I wish it was like the olden days, when it was all full, and prices were going up fast fast fast…”

Interviewer 2: I just question that because, having spent two years looking for a house in Toronto, the product though, isn’t great, so it seems to me that if you get a good product you’re still going to have that kind of froth there.

DC: Absolutely, and …

Interviewer 2: I guess people are putting junk out all the time…

DC: Constantly… You’re going to see a lot more junk come on …

Interviewer 2: Is that going to keep prices down, because it’s still (junk)…?

DC: It’s going to keep prices down, especially in that mid-range, the lower range will always sell, because it’s inexpensive, and you look at rent… you might as well buy, in that lower range. The luxury market is actually doing very well as well… It’s that middle market… in Vancouver and Toronto, and even in Montreal, is going to be the one that’s going to be expanding in the number of listings… There’s going to be some GREAT product that comes on board during that period of time…


Interviewer 2: Okay, if we look at potentially what kind of retracing we may be seeing here, let’s take Vancouver which you’ve mentioned several times, we saw sales plummet there in the summer by, I think, 45%, what kind of impact do you think that this could all have on prices in Vancouver?

DC: Well, one thing I think we have to be very, very clear of is average price is just an indicator that doesn’t mean ANYTHING, really, at the end of the day, because those condo, like you said, in certain areas, are continuing to go up while others are going down. You’re going to see the ground oriented units in Vancouver, that prices are going to plateau, which means houses and townhouses… anything with dirt involved in them… because they’re just getting unaffordable… and we’re moving to the boxes in the sky… What you’re going to see is that because of the HST, a lot more sales of the RESALES side of it… and um in the resale side, right now, there are a lot of brand spanking new condos, probably like we’re seeing here in Toronto, … a lot of people bought those properties, they’ve now bought it, paid the HST, and nobodies lived in it, and they’re going to sell it into the market place so there’s going to be a lot of brand new condos coming onto the market which you’re not going to have to pay HST on and that’s where the gold is going to be.

Interviewer 1: So where’s the market headed five years from now?

DC: If we take a national average, it gives a 3-5% average, you’re going to see 2011… not a very good year… but 2012, 2013, 2014, all of our economic analysis is showing that you’re going to see a 3-5% increase which, if you put 25% down on a property… it means you’re getting 20% return on your money… that’s a pretty good place to be…

Interviewer 2: Okay, so none of this/… we’re not looking at anything apocalyptic here, none of these declines of 10% that some of the banks are predicting for example?…
Interviewer 1: 25% though (laughs)…

DC: … The Economist magazine puts that out every month, right, that rating…  The apocalypse is not coming…. I think you have to buy regionally… the number one fundamental that you have to look at if you’re buying an investment property is buy where there’s jobs… don’t buy where the jobs used to be, buy where the jobs are going to be.
You can not analyze a housing market by looking at the housing numbers, you can only analyze the future of the housing market looking at the economic fundamentals, which is jobs and in-migration.


Fallacies and misconceptions in the above dialogue:

1. That “there isn’t a bubble in Canada”.

2. That areas that are overpriced will “be flat”; will “plateau”.

3. That we are in a “buyer’s market right now”.

4. That housing affordability at ten year average is reason for complacency. [hint: emergency low rates]

5. That there is no risk of “a significant amount of people that are going to be underwater here”.

6. That certain areas (Hamilton; Edmonton; Maple Ridge) and certain property types (the very low end; luxury) are immune from price drops, in fact will do “incredibly well”.

7. That there are going to be some GREAT opportunities in the spring [2011]… Including the ‘middle [mid-range] market’ in Vancouver; and the new resale [flip] condos where HST has been paid (“that’s where the gold is going to be”).

8. That “average prices don’t mean ANYTHING, really.”

9. That anybody knows what’s going to happen in the economy 2 years from now: “2012, 2013, 2014, all of our economic analysis is showing that you’re going to see a 3-5% increase.”

10. That leverage is to be embraced: “You’re going to see a 3-5% increase which, if you put 25% down on a property… it means you’re getting 20% return on your money.”

11. That a decline of 10% could be conceived to be ‘apocalyptic’. (“We’re not looking at anything apocalyptic here, none of these declines of 10% that some of the banks are predicting for example?”)

12. That the thought of a 25% price drop is laughable: “25% though (laughs)…”

13. That “you cannot analyze a housing market by looking at the housing numbers, you can only analyze the future of the housing market looking at the economic fundamentals, which is jobs and in-migration.”

14. That the possibility of a bubble existing is to be made light of.

15. That “the apocalypse is not coming.”


Critical Data Point – 64% Of BC Owners Plan To Sell Their Homes Within 10 Years

A new Ipsos-Reid poll (n=3,565 Canadians, 462 BCers) contains a figure that will likely startle even those of us who were already anticipating lots of sales pressure in coming months and years [Vancouver Sun 27 Oct 2010] –

“Only 36 per cent of B.C. respondents said they plan to remain in their home for more than 10 years, the lowest figure in the country. Quebec and Atlantic Canada claimed the strongest connection to home, with 58 per cent intending to remain beyond a decade.”

So, 64%, or two out of every three owner households, plan to sell their homes in the next 10 years. Wow.  Has that figure ever been higher? Let’s see how many of those households rush to bring their properties to a weakening 2011-2012 market, for fear of losing their paper gains. C’mon everybody, surely you can see where this is heading? -vreaa

“After my conversation with my parents’ banker the other day, I guess I shouldn’t be surprised that the craziness continues.”

Patiently Waiting at 26 Oct 2010 at 9:28 pm “After my conversation with my parents’ banker the other day, I guess I shouldn’t be surprised that the craziness continues. You don’t need a steady income if you had one a year or two ago. Just bring in those old tax assessments. The lender won’t just be accepting of your application…no, they will be downright anxious to throw a mountain of debt on your weakened shoulders. When I said I might want to wait to see where prices go, the banker reminded that the homoaners will “just pull their houses off the market” if buyers don’t appear. Why? Banks will now let the homoaners pile on even more debt in exchange for even less freedom. Up to 125% of their property value.”

Carney – “An abrupt correction in Canada’s housing market is possible.”

Bank of Canada governor Mark Carney, shown outside the bank's headquarters on Oct. 20, on Tuesday defended progress made by G20 finance ministers on stabilizing currencies.

CBC 26 Oct 2010“Bank of Canada governor Mark Carney agreed Tuesday that an abrupt correction in Canada’s housing market is possible. Appearing before the Commons finance committee and responding to a question from Nova Scotia MP Scott Bryson, Carney said he was not predicting a significant drop in prices, but given how far prices have risen and the high level of Canadians’ household debt, it could not be ruled out. Carney told the committee the bank is limited in what it can do to use interest rate changes to encourage Canadians to reduce their debt.”

Incomplete Story of a Westside House

3887 West 16th Ave, Vancouver

Built 1930

2006 assessment $738,600

For sale 2006 [MLS: V593865]
2182 sqft; 33x122ft lot
Ask price $849,000
Sold for $835,000   29 Jun 2006


For Sale July Aug 2008 [MLS: V716533], ask price$1,769,000
Price Change Oct Nov 2008 [MLS: V736664], ask price $1,498,00
Sold or taken off-market? [Anybody know? -ed.]

Now:  [MLS: V852381]
‘Built’ [= rebuilt] in 2008
2886 sqft; 33x122ft lot
“Completely rebuilt character home in prime Point Grey location. Almost 2,900 SF of elegant family living featuring Brazilian cherry floors, gorgeous maple kitchen with stainless steel appliances and silestone counters.”
Current ask $1,588,000

“When we settled into our rented apartment she still seemed upset, and confused about why we were renting.”

C at 23 Oct 2010 at 7:30 am“My wife and I sold our condo back in April 2010. We’ve been renting since. At first it took a ton of effort to convince the wife why we should rent and why buying again at this time would be foolish. She reluctantly agreed. When we settled into our rented apartment she still seemed upset, and confused about why we were renting. I just kept printing off 3rd party info, statistics, graphs, charts, and explained to her what they meant. A lot of times they were/are similar to the US situation 4-5 years ago. Now, when we discuss the renting/buying situation she says no need to explain it, I’m on board with you. It feels good to hear that. So for those guys with girlfriends/fiancees/wives with house lust, just be patient and back it up with BASIC 3rd party info. Anyone can say things will go up or down, but if you back it up with concrete statistics from another party, it should help shape the probabilities of things to come. I know there are husbands out there with house lust too so do the same thing with them, and throw in a 6 pack of beers and that should do the trick.”

“She has a friend in West Van that owns a $5 million house and hasn’t been able to sell it, and she’s getting scared since she “can’t” lower her price.”

Two anecdotes. The second on the stigma of renting.

IT_Pro at 25 Oct 2010 2.17pm – “I was talking to a friend (I guess you could call it a date) last week and the topic of RE came up. I shared my bearish views which prompted her to share a couple stories. She mentioned she has a friend in West Van that own a $5ish million house and hasn’t been able to sell it and she’s getting scared since she “can’t” lower her price…and she hasn’t been able to rent it either. She was forced to rent out her smaller primary residence and move into the West Van place. Apparently she doesn’t think she can hang on much longer. I’ll try to get more details as I’m curious how she got herself into this pickle in the first place.

Also, this same girl I was talking to has a sister moving back to Van with her family (two very young kids). Her husband does very well. They already own a 1bdrm in Van that they want to keep as a rental property (it’s too small for them now). They plan to build their dream home in Point Grey when they move back, but they need a place to live while its being built, so they were planning on buying a townhouse while it’s being built. They worked out the numbers and now they are worried that they can’t afford to buy the townhouse without selling the 1bdrm. So that is when I said, “why don’t they rent while they are building the house, then they could keep the 1bdrm…it’s much cheaper to rent than to own in Vancouver”. Well, you should have seen the look on her face while she processed what I just said. I’m pretty sure she wanted to say “they won’t consider renting because they have a family”, or “they would no longer consider renting at this stage in their life”…but I think she may not have wanted to offend me as she new I was a renter. After quite a few ums and awes she failed to comment. It won’t be long before renting will be back in vogue. Vanity will be the great equalizer.”

Contrarian Bet – The US Dollar Is About To Rally

Everybody and their dog seems convinced the USD is going to run off a cliff right now. The weekend’s G20 meeting did little to avert that assertion. Recent ‘the dollar is dead’ claims seem so shrill that, for the fun of it, we’ll stick our contrarian neck out here and say that the USD is about to rally. We’ve annotated the chart above at the point of this assertion, and we promise to update it before the end of the year, whether we are right or wrong in our prediction.
Of course, this all has implications for the immediate direction of the loonie, the stockmarkets, commodities, gold… but we’ll focus this prediction on the USD itself. For the record, this is a short term bet, and we’re not inordinately attached to the USD as an investment vehicle longer term. And everybody should do their own due diligence, naturally.
Below we’ve collected a few sample quotes from today’s news that are bearish the dollar, to contrast with our prediction, and to illustrate how convinced many are that the buck is tanking.

Quotes and headlines from today:

Dollar at Risk of Becoming ‘Toxic Waste’CNBC, 25 Oct 2010

‘G20 agreement unlikely to stop U.S. dollar’s downward trend’Financial Post, 24 Oct 2010 Excerpt: “This outcome should reinforce downward pressure on the U.S. dollar” – Todd Elmer, head of G-10 currency strategy at Citigroup

“The driving theme for the markets remains a lower U.S. dollar via [quantitative easing] for floating-currency countries and higher current account imbalances for managed-currency countries.” – Andrew Busch, global currency and public policy strategist at BMO Capital Markets, Globe and Mail, 25 Oct 2010

Undead Market – “I have a creepy feeling things are heating up again.”

This by e-mail to VREAA from MarKoz 20 Oct 2010 – “A co-worker has a house in Coquitlam which she listed for sale in the spring. It lingered for sale without an offer for 3 months. She just re-listed and it sold in a week and a half. I have a creepy feeling things are heating up again. Open houses and “sold” signs all over Kerrisdale as I drove through on the weekend. I live in the Main area and am surrounded by holes in the ground where older houses (which were listed at $750K+) were demolished to make way for new builds.”

Every City Has Them – “He is convinced that Toronto is the only city in the world worth investing in.”

CTO on 22 Oct 2010 10.33pm“I had a long debate with my nephew this evening. He is convinced that Toronto is the only city in the world worth investing in, and prices here will never drop. He says the condo market $/sqft is the same or less than NYC and that’s cheap for a “world” city like Toronto. He thinks anyone buying outside Toronto is a fool and will not double their money. So many think like him here….they are so smug and self righteous.”

Rental Market Softens Further – “I think there may be some people leaving the city, more now than in better times in recent years.”

Headline low residential rental vacancy rates do not reflect reality. The rental market continues to softened. -vreaa

WCLease at RETalks 15 Oct 2010 9.13am“I had two tenants leave recently in my Burnaby complex. One unit I had to renovate with new flooring and paint. The other one just need a some touch up.
First one sat for a month even though I only increased the rent by $100. Second one is still sitting empty. I might have to drop the rent by $50. This has never happened in the 8 years of owning this complex.”

Johnny Horton at RETalks 24 Oct 2010 7.45am“I think there may be some people leaving the city, more now than in better times in recent years.”

“My wife and I are starting to think about buying a house, although nothing too serious until we see the correction is underway.”

[note that this anecdote is posted here one month after it was up at VCI -ed.]

mflat at 27 Sep 2010 4:48pm“My wife and I are starting to think about buying a house, although nothing too serious until we see the correction is underway. With that in mind, we’ve started looking more at the real estate market to see what’s out there and watch the pricing trends. We did two things this weekend that I wanted to share:
1. Went to the Vancouver Heritage Foundation’s self-guided Vancouver Specials tour. For $25 they give you a map of 4 renovated Vancouver Specials (all on the east side this year) to see what’s possible with these eye sores. As shown, the boxy Special is great for a modern renovation with it’s straight, boxy lines, and simple load-bearing design. Something to think about for when the market tanks and one wants to do a lot of reno to make a house their own.
What surprised us about the tour was the demographic of people we saw/encountered. They were largely over 40-years-old, and many much older. Perhaps those who are looking for their last flip into a house they can reno and be proud of? Something that might get into Wallpaper magazine as they enter their final creative years as a self-published author/poet? Anyway, just odd to see so many older people interested in this sort of thing, and not the young condo flippers that you’d see at every Realtor conference.
2. Took a long walk from downtown to Main & 25th to check out some houses. First up was V840359, listed at $720K. This is a Vancouver Special built on one of the worst bogs in the city. Take a walk down 18th sometime, and have a laugh at all the tilted foundations where neighboring roofs are almost touching due to the house angle. The house listed was like a horror slum on the inside. The worst part of it was the room angles, with sloping floors, and walls/ceilings that felt trapezoidal due to the sunken foundation. No thanks.
Next up was V851300, listed at $790K. A tiny house on a small lot marketed as a better option than a townhouse or condo. Well, maybe at these prices.
Observation is that prices are softening, but not yet to the extent where anything makes sense.”

Sentiment Change Alert – Very Sombre RE Article in The G&M

Sentiment may be changing. The fact that these very important problems are now being more broadly aired is encouraging, but even articles such as this one still underestimate the severity of the problem. They largely cling to the ‘responsible Canadian lending’ myth, and only entertain the possibility of relatively small (5%-20%) price drops. – vreaa

Image and excerpts from ‘The long shadow over Canada’s housing market’ by Steve Ladurantaye, Globe and Mail, 22 Oct 2010

Wake up, Canada: The house party is over.

Victor Fiume, president of the Canadian Home Builders’ Association, remembers speaking at a meeting of municipal leaders at the height of the boom. “They were bouncing down the stairs with excitement about what it meant to their tax base.” Many of them are still holding on to those hopes, even as the market slows. “They [now] find it very difficult to believe we can come to such an abrupt halt.”

A period of stagnation or slowly falling prices, coupled with weak home sales and waning construction activity, would cut off one of the engines that drove impressive economic growth and job creation in the years before the 2008 financial crisis.

This week, when the Bank of Canada released its latest report on the domestic economy, it specifically mentioned the prospect of “a more pronounced correction in the Canadian housing market” as one of three key risks.

It all adds up to a simple, unpleasant equation: High debts, plus high home prices, plus high unemployment, plus slow growth in incomes, equals a housing market that’s much different than the one Canadians are used to.

“Canada doesn’t need a U.S.-style problem to have a problem,” said Alexandre Pestov, a market analyst at Three Bears Research in Toronto. “A Canadian-style issue will do just fine.”

Housing-related spending – including the rental market and the sale of existing homes – accounts for about 20 per cent of gross domestic product in Canada, the Canada Mortgage and Housing Corp. stated in its annual report released in late September. It’s the highest level CMHC has recorded in a decade, and translated into $307-billion in economic output in 2009.

About 35 per cent of all jobs created through the recovery can be traced back to construction, according to the Canadian Home Builders’ Association, with home builders accounting for the majority of the activity. But much of the work taking place today harkens back to sales made last year, when the industry set new sales records. “We’re still building houses we sold in the spring,” said Mr. Fiume, the home builders’ president. “But at some point we’re going to finish that work, and the unemployment rate is going to take a hit because we’ll be laying off workers. Then, more than ever, people will understand why it’s important to have a strong housing market.”

REAL ESTATE BUBBLES The Canadian Centre for Policy Alternatives believes another [bubble] is imminent, because of the way prices have pulled away from inflation [since 2001].

Two Faced Lenders

In one and the same week, the Toronto Dominion Bank has:
1. Issued a report [20 Oct 2010, pdf] warning that “The relentless rise in household debt in Canada, both in absolute terms and relative to personal disposable income (PDI), is a growing cause for concern.”,
and, at the same time,
2. Made changes in lending policies such that all new mortgages as of 18 Oct 2010 will essentially behave like lines of credit, making it easier for Canadians to go into more and more debt.

This is reminiscent of what our own central bank is doing, plying us with cheap money while counseling prudence.
The banks (central included) are aware that any pullback in the rate of borrowing will put the housing market at risk of serious price drops. Yet they also see that more and more borrowing will set up a more and more dire situation that will inevitably, at some point, have to reverse.

Judge them by what they are doing (keeping money cheap and loose) and not by what they are saying (be prudent).
They want the borrowing to continue; they are tolerating expanding debt loads; they hope that the inevitable reckoning happens on somebody else’s watch.
Or, like children covering their faces, they hope that the whole problem somehow magically disappears.
It won’t, but our bankers & politicians don’t seem adult enough to face the problem.

Spot The Speculator #21 – Toronto: Couple in 50’s; $500,000 home; $650,000 in three rental housing properties.

Extracted from the Family Finance section of the Financial Post, 15 Oct 2010
Rose, 55; Edward, 59, a couple from Toronto, are powering down their careers, hers in the airline industry, his in real estate sales.
Their assets:
$650,000 invested in three rental housing properties,
$500,000 home,
$211,000 of non-registered stocks, and
$280,000 in RRSPs.
Their liabilities:
$170,000 mortgage debts.
Total net worth: $1,471,000.
In her retirement, which began this fall, Rose’s defined-benefit pension pays her $1,900 a month. That income will continue until a $573-a-month bridge ends at age 65 and her benefits drop to $1,327 a month. Edward generates variable income from real estate sales and consulting to bring total family income up to $7,300 a month, including money taken from cash flows at three rental properties. However, the properties run at a loss. The couple are actually running a total deficit of $1,440 per month.
[In the article the financial advisor recommends they “sell the losers” (a condo and a rental house) and invest the resultant $280K equity.]

VREAA thoughts:
1. These guys own four properties and have 78% of their net worth in real estate. Welcome to Canada, circa 2010.
2. The financial advisor gives good advice: sell two of the investment properties. Wiser still is to recommend selling all three.
3. Now, imagine if the thousands of couples in this situation in Canada had to seek and act on similar advice. Local speculators alone could crash the markets in months.

Michael Goldberg, Sauder School of Business – “If it’s at the high end of the market, where much of this foreign stuff is, I don’t care. That’s not a social issue.”

From The Vancouver Sun, 20 Oct 2010, ‘World real estate as intertwined as financial markets’

Real estate markets have become just as interconnected as financial markets, so they can be equally vulnerable to volatile swings in global fortunes, argues Michael Goldberg, dean emeritus at the Sauder School of Business at the University of B.C.
“Local housing markets are certainly very open to invasions of capital from abroad, and these can be disruptive,” Goldberg said in an interview.
“When money flows in, people say, ‘Great, we’re on the world map, isn’t that terrific?’”
However, just as easily as it flows in, Goldberg noted that capital can flow out “as somebody finds the next hot place where you simply have to have a condo in the global marketplace.”

In the case of Metro Vancouver, Goldberg said he sides with those who do not believe the city is in a bubble, and he is doubtful that the capital flowing into B.C. from investors, such as wealthy buyers from Mainland China, is cause for concern.
“If it’s at the high end of the market, where much of this foreign stuff is, I don’t care,” Goldberg said. “That’s not a social issue.”


VREAA thoughts:
1. We agree with Michael Goldberg regarding potential for foreign outflow. These foreign speculators are dumb momentum players (buy high, hope to sell higher) and they’ll bail as quickly as the local specs when prices start their inevitable plummet. And, yes, they’ll add to the volatility.
2. We disagree with Goldberg regarding side of the bubble divide. We are, most definitely, in a RE bubble. [We’ll list his assertion in the ‘What Bubble?’ sidebar, for future reference.]
3. We disagree, too, most strongly, regarding inflated prices at the high end of the market not being a social issue. Sure, nobody is out on the street because a home that should sell for $1M is selling for $3M, BUT there are social consequences, most importantly, that a whole segment of educated individuals are avoiding or leaving Vancouver because they are unable to afford housing commensurate with their income and educational level (whereas they can afford such housing, almost everywhere else in Canada and the US). The consequence of this drain is the dumbing down of our culture, the underdevelopment of our legitimate industry, and the conversion of our city into a centre for the fast-and-loose industries that include gambling, porn, tourism, the drug trade, and selling real estate to one another. And that is not even to start to describe the terrible social effects of the misallocation of resources that a RE bubble induces.

“Strange market with pockets not selling anything and others on fire.”

386 West 23rd Ave, Cambie area, Vancouver West
V854672; 3129sqft; 50×148 lot; Built 1943
Asking Price $1,649,000

This discussion regarding this property at RE Talks 19 Oct 2010:

thinktom (a Vancouver realtor) 9.28am – “This property at 386 W. 23rd had 4 offers Sunday. Firm deal Friday. Nice lot size. It had chickens in the backyard. … West side 50 ft lots are still selling like crazy, especially Dunbar, Point Grey, UBC-ish areas. Many multiple offer situations. Strange market with pockets not selling anything and others on fire.”

unicas 9:34am – “I have a client who does renovations, mostly on the West side. He told me when you call the listing agent, first thing they ask is how much over the listing price you want to bid. I guess Tom can varify if this is true or not. Lots of money coming in the market.”

vanpro 9:47am – “For the month of October so far (from REBGV stats published by realtors such as, we are on track for near 2nd lowest sales for October in last 10 years – only October, 2008 was lower (during worst worlwide financial crisis since Great Depression). At best, maybe 3rd lowest (depending on how rest of month turns out).”

Austin 10:36am – “It doesn’t matter. Interest rates are low, inventory is not going up, MOI and prices are stable. The market is in pause mode right now.”

Vancouverite View Of New York City Apartments

‘Bob’ sent the following note and images to VREAA by e-mail, 14 Oct 2010 – “I’m a Vancouverite who recently had a chance to spend time in New York City. The five boroughs have a total population of 8.4 million and a population density of 10,630/km2. The New York metropolitan area has a population of 19 million and an approximately gross metropolitan product of $1.13 trillion (2005). By comparison, our entire nation, the whole of Canada, has a GDP of about $1.3 trillion (2009).

While walking about the city, my wife and I found ourselves looking at photos posted in an upscale realtor window (housing ‘porn’, as some people call it), advertising Upper East-side apartments and condos. Desensitized to high prices by the Vancouver real estate market, we were pretty surprised to see the kind of thing you can get in Manhattan for your buck.

For instance, to give some examples that come up after an internet search (in these cases all by Sotheby’s) – this 1 BR in a very prime area, ‘close to Fifth Avenue, located on New York’s Museum Mile next to Central Park’,  ask $950K:

Or this 900 squ.ft 1BR, 10.5ft ceilings, at 45 East 66th Street, (on Madison Ave, one block from Central park), ask $895K:

Or this smaller 1BR at 345 East 77th Street, ask $399K:

Later, looking to get an early dinner, we asked a respectable looking fellow for restaurant advice.  Me: “Excuse me, do you know this neighbourhood?”, He: “I should do, I’m a realtor.” After he gave us advice regarding where to eat (good advice, it turned out), we asked him about the market. He told us about apartments nearby in the Upper Eastside that were selling in the $600K range. (Looking around the web, for instance at these recent Corcoran sales, it seems properties below $1Million are selling in the $500-$900/squ.ft range, with lots in the $625-$700/squ.ft price range). Perhaps your readers with more experience of the Vancouver condo market can offer opinions on how these prices compare with ours. They seemed like good value by Vancouver standards to me. [Recent sales from prior link saved for the archives here. – ed.] On top of this, it looks like the US property market is about to take yet another step down.

I’m not going to try to list all the appeals of NYC. Anybody who hasn’t seen the place should visit. It is indisputably one of the greatest cities in the world. On this note, I stumbled across two things that led me to consider Vancouver, and BC, and our much discussed ‘Greatest Place On Earth’ theme –

The first was from an ad for a iPhone app that allows you to identify activities of interest around you in NYC. I was struck by the modesty of the claim –

The second was a painting by artist David Shrigley, seen at the Anton Kern Gallery in Chelsea, NYC. For the record, I love Vancouver, and love living here, but seeing this painting in NYC did make me chuckle. A teasing contrast to ‘Greatest Place On Earth’ and ‘Everything Is Going To Be Alright’ –

Realtors Will Add Crash Value – ‘Sharp Pricing’ Will Assist The Bubble Deflation

In December 2009, when we penned our ‘Prediction For The Coming Decade’, we neglected to add a ‘Coming Action’ factor that we have since realized is of considerable importance:
Realtors in need of income will speed the coming Vancouver RE price deflation.

By now almost all of us are aware of the cute study described in ‘Freakonomics’ where realtors selling their own homes were found to hold out longer for higher sales prices, compared with when they are selling the homes of clients. In the latter case, the closed deal (and resultant commission) is far more important to the realtor than getting their client a higher price. In that study, realtors were found to to sell their own houses for an average of 3%-4% more than a client’s comparable house, and they also kept their own house on the market for 10% longer, waiting for that better price. The message from the study is that when realtors are selling a client’s property, they want the sale a lot more than they want a good price.

Sales are down year-over-year in the lower mainland, in some areas of BC they are down as much as 50%.  There are twice as many realtors in BC now than there were 10 years ago, and they are now competing for a shrinking pie. In many markets we are seeing realtors talk about the importance of ‘sharp pricing’. They are applying pressure on sellers to drop prices to points at which they meet buyers. They are a force against the ‘sticky pricing’ that is characteristic of this stage of a bubble burst.

Through the late summer and early fall, many owners have tested the market waters. They put properties on the market, only to remove them when buyer interest proved to be reduced. We presume these owners plan to put those same properties back on the market at some point; many will likely do so in spring of 2011. Changes in volume are predictive of changes in price, and we anticipate ongoing minor drops by year end and larger drops in the first half of 2011.

When prices do inevitably start dropping we have always anticipated that waves of sellers will come into the market, many motivated by fear of further losses of paper profits. Speculators, boomers, foreign holders, overextended locals, developers. They will all be selling at the same time.
The advice given to those anxious sellers by their realtors, hungry for income and eager to close deals at almost any price, will speed the price decline.

“Realtors are saying that if you are selling your home you need to consider dropping your asking price… or be prepared to wait a long time” – A News Vancouver Island 1 Oct 2010

“Anybody looking to sell right now should get ready to cut down their expectations. … It’s going to be a long winter for some sellers. … Sellers need to adapt … People are going to have to be more open to price drops and more realistic prices on their properties.” – Marko Juras, Vancouver Island realtor, on A News Vancouver Island 1 Oct 2010

“If buyers have a lot of choice like they do right now, if your price is not reflective of today’s market, if it’s not priced at or near it’s final sale price, people are just going to let it go … [then you end up with a] four month old tired listing, people ask…’What’s wrong with it?’ “Shamus Baier, Vancouver Island realtor, 29 Aug 2010

“Owners of 1 bed condos need to forget peak prices in order to sell. Lots of buyers out there but the ‘sense of urgency’ is gone and product needs to show really well and be priced competitively.”thinktom (Vancouver realtor), at RE Talks, 12 oct 2010 10:37 am

Spot The Speculator #20 – “My sister-in-law’s work colleague, in her mid 20s and still living with her parents, just bought a two bedroom condo downtown for over $600K, TO FLIP!”

Crash at 12 Oct 2010 8.20am“My sister in law related a brief story to me: a work colleague of hers who is in her mid 20s and still living at her parents home just bought a two bedroom condo downtown for over $600K TO FLIP! The place is now worth less than she paid for it and she thinks she will actually have to live in it (with a room mate to cover part of the mtg payments). I don’t know where downtown the condo is located or the exact purchase price, but this must be the type of naive buyer driving sales now.”

“I was stuck at Thanksgiving dinner this last weekend. My brother in law, a new home owner, went on and on about real-estate.”

real_professional at October 12th, 2010 2:53 pm“I was stuck at Thanksgiving dinner this last weekend and my brother in law was there. He went on and on about real-estate – no surprise since he is a new home owner.
Try as I might, I could not meaningfully direct the conversation to something less inflammatory like religion, politics, or sex. But I decided to just semi-quietly observe the conversation. A few things occurred to me – one of which is how bullish the “dumb money” still is … which don’t get me wrong, is a good thing because you need bulls for a market to crash… And by dumb money I mean: people who haven’t researched any trends, people who haven’t compared prices to anywhere else in the world, or haven’t looked at any metrics on valuations or social debt burdens.
A few things that came out of the conversation:
1) Olympics based boom!!… Are they on crack still quoting the benefits of that dead horse which never was alive in the first place?
2) Rich Chinese people!… – I interjected and asked if they were aware of the Chinese property bubble forming in China and economic issues with the inflating of the Yuan? They looked at me with more dumb money looks.
3) Immigration trends!..?? I piped up and said, growth rates of BC population haven’t changed over the decades and if anything, have been slower this decade than the past – not by much, but definitely no spikes. I went on to say if the population grows at a steady predictable pace that should already be priced into home valuations. More dumb money looks!
4) Strong job market!…? Unemployment is over 8%!!!
5) What a good deal the US housing market is? – Ok, things are tempting south of the border in some regards, but it is far from a recovery, possibly a bottom, but not a recovery furthermore, they were saying this two years ago.
6) Renting is throwing your money away! I couldn’t even comment lest I be struck down with a vengeance of a thousand angry men.
7) The only way to get rich is through real-estate!!!?????? The ONLY WAY????
For what I have had to endure I am going to hate real estate even after the market crashes and I am a home owner.”

“I explained to her that I’m happy renting and she reminded me that renting is throwing away money when it could be put towards a mortgage.”

specialfx3000 at 12 Oct 2010 8.19 am“Over the Turkey weekend, a relative asked me again if I’m still in the market. She reminds me that the rich Asians are taking their wealth out of China and will continue to pump up the Vancouver prices. She said their dirty money needs to be invested in our safe-haven country. I explained to her that I’m happy renting and she reminded me that renting is throwing away money when it could be put towards a mortgage. I told her sales are drying up and she said it’s just the season. I told her local income cannot support the prices and she says that don’t matter. She of course bragged about how much her house is worth now. Thank goodness my baby started crying so I politely ended the conversation.”

Vancouver ‘Unaffordable’ Because Of Move Up Buyers? – “RBC’s conclusion, that it takes 74% of a buyer’s income to cover a typical mortgage ignores the fact that most buyers are selling a home to buy one and have benefited from the increased equity.”

Higher prices begat higher prices; a classic sign of a speculative bubble. The quote below touches on one of the mechanisms that add to that superficially ‘virtuous’ cycle, namely move-up buying. Note that the argument has implicit in it that when prices drop, the converse will be true: wannabe move-up buyers will not be able to make purchases because they will be disadvantaged by the decreasing equity of properties they already own. And leverage that worked magic on the way up, will turn demonic on the way down. A factor that contributed momentum on the way up will do so on the way down. – vreaa

Ozzie Jurock, as quoted by Larry Yatowsky at 8 Oct 2010“The much-covered RBC affordability index, which not surprisingly this week said Vancouver has the least affordable housing in the country, has to be compared against market reality. Vancouver house price have always been unaffordable when compared with the rest of Canada and likely will always be. According to a study at UBC, Vancouver’s affordability has been over 60% for some 22 years. Also RBC’s conclusion, that it takes 74% of a buyer’s income to cover a typical mortgage ignores the fact that most buyers are selling a home to buy one and have benefited from the increased equity. Thus, the average B.C. mortgage is likely not that much higher for most owners than anywhere else in Canada.”

“I was talking to a group of students I teach at a local community college. Nearly all of them own houses and condos, some of them own more than one property. Only one in ten could believe that real estate can go down.”

This from somewhere in Canada. Could just as well be BC, but probably TO.
bsallergy at 8 Oct 2010 10:12pm“I was talking to a group of students I teach at a local community college. They are all apprentice painters and decorators and the discussion was about real estate. Only one in ten could believe that real estate can go down. Of course these guys are painting the new mcmansions growing around the city and nearly all of them own houses and condos, in fact some of them own more than one property and were bragging about how they can’t lose and they’ve made all this money. When you have people in their mid 20′s talking like real estate genii it really has to be time to bail. This will be ugly.”

Non-Crappy Full-Fee Broker Adds $124K Value To One Deal “I recently helped clients purchase a home from a crappy discount broker. My clients got an excellent deal.”

thinktom at RE Talks 4 Oct 2010 12:07 pm“I recently helped clients purchase a home from a crappy discount broker. I thought the sellers (and listing realtor) were insane with the price. My clients got an excellent deal. $124,000 less than a direct comparable across the street. Exact same lot size. In fact, ours had a second floor and garage and the other had nothing better, save for some nicer appliances. Sellers saved virtually nothing on buyer’s commission (maybe $1,000). I didn’t care. Happy clients will make my $1,000 prove to be a good investment in the future, however, that’s a hell of an expensive way for sellers to ‘save’ on commission.”

Possibly the sellers were indeed completely out of touch with market prices, and possibly thinktom did add $124K value for his clients. Alternate theory: At least some of that $124K represents market softening. Or perhaps that isn’t actually a comparable across the street. Perhaps the sellers know something about this property that the buyers don’t. – vreaa

“When I try to discuss low interest rates with co-workers, all I see is blank stares. I don’t know anybody who has any significant savings whatsoever, nobody contributes to RRSPs, they avoid the topic of retirement like the plague.”

giggling at 6 Oct 2010 9.45am“When I try and discuss the low interest rates with my co-workers sometimes, all I ever see is blank stares. Why would they care what the interest rates offered on GIC’s or bonds are? I don’t know anybody who has any significant savings whatsoever, nobody contributes to RRSPs, they avoid topics of retirement and pensions like a plague.
I think it takes a bit of effort, but we need to realize nobody cares about savings vs. rates vs. inflation. What they do see however are 3.5% mortgage rates and 0% car loans. Borrower’s paradise! Or is it consumer’s paradise? Or perhaps it a Working Man’s Paradise!
Finally, after all these years of hard work people can afford things.
Now that’s a good life, no?
This will not change anytime soon.
Blue Pill or Red Pill?

OV Developers On Best Behaviour

“The tax payer has to be paid back fully before we make any profits or before we even get our money back…”
[Interviewer: Is that a guarantee?] “That is something that we are striving (cough) striving towards, and it’s something that doesn’t have to be done now, we have two and a half years to reach that goal.”Malek Brothers, Global TV, 7 Oct 2010
[These guys sure look like they’ve been pulled up in front of the school principal, don’t they?]

Spot The (Disappearing) Speculator #19 – Bob Rennie: “I’ve Lost The Speculative Buyer”

Local condo salesman Bob Rennie describes how speculators have deserted the market for the Olympic Village condos, The Province, 8 Oct 2010
“We have a huge problem with the Olympic Village that it’s not for speculators, it’s for a community of homeowners. I’ve lost that buyer who says, ‘I’ll buy it today and over the next two or three years I’ll figure out whether I’m a passive investor or whether mom lives in it or whether we live in it and sell our house.’ ”

What Mr Rennie is saying is that when people stop buying Vancouver RE simply for the reason that they believe that prices are going up indefinitely, he (and by inference the whole market) has a problem. An interesting observation. One that local RE bears have been singing from the roof-tops for years.

We’ve previously described how almost ALL Vancouver RE purchases over the last 5 years (or more) have had a speculative component woven into them. People have only paid higher and higher prices under the assumption that prices would continue on their upward trajectory, regardless of their value by any fundamental measure. That is the very essence of speculation.

Well, speculation in Vancouver RE is now over, for perhaps a decade or two. Volume is down and prices are going to drop from these giddy heights. When that starts happening, prices will drop further and further, possibly on increasing volume, as weak speculative hands exit the market. These players will rush for the exits as the only factor that kept them in the market, namely rising prices, disappears. Price drops will beget price drops. At 25% off, we may get a bounce, but when we eventually get below that level, the drop will be even more precipitous.

We’ve seen speculative evaporation in the periphery, and now in the ridiculously overpriced Olympic Village condos mentioned above. But speculation will soon leave ALL areas of the market. We think that the most devastating aspect of this process will be when COVERT speculation disappears, meaning that those innocent looking first-time-buyers and move-uppers, who in recent years were merrily signing their lives away with background expectations of price increases, will freeze their buying intentions when they realize that the market has reversed.

What will prices be when people are buying homes without the expectation of price gains?
What will prices be when people are buying homes as shelter (+ modest ownership premium) and not as ‘investment’ (read: speculative) vehicles?
Certainly far lower than they are today.

“I rent in a building that shares some of the LEED technology that the OV uses – ‘what a hunk a junk’ is all I can say.”

YLTNBoomerang at 4 Oct 2010 9.31 am“I rent in a building that was completed about two years ago and also shares some of the LEED technology that the OV uses – what a hunk a junk is all I can say. What is interesting is that it seems that the building is significantly occupied by renters and we all discuss how lousy the construction is and that we would never buy here. The lack of owner occupier’s has also led to poor upkeep where it seems that a lot of people who live here just don’t care about the strata rules or taking care of the common areas. I’m not saying renters are slobs or trash the place but the truth is that when you don’t own, you treat the place more like a hotel than a place that eats up 60% of your take-home (myself included). I pay a lot for rent, I’m not going to wear kid-gloves when I interface with the building, if something breaks from shoddy construction or maintenance I am going to complain to the landlord!”

Sentiment Towards Renting Unchanged – “Oh my gosh….. you are paying $2,100 rent a MONTH, sheeeeesssshhhh… that’s a mortgage payment!!”

With Vancouver RE prices now at the edge of the precipice, here are a few “Why throw your money away on rent?” quotes. They come from the comment section of ‘Tenant of green building sees red’ [The Province, 3 Oct 2010], which deals with the structural shortcomings of the Olympic Village. An OV renter is paying $2100 per month for a 888 sqft condo.
Note the mentality:
Renting is wasting your money. Anybody who can afford to buy, should buy, no questions asked.
One imagines that, once the prices of units like this one are dropping at a rate of greater than $2100 per month, and keep doing so for years, these commenters will finally be able to do the math. – vreaa

anonymous 3 Oct 2010“LMAO!!!!!! wow $2100 a month. so by the standards of living index that shouldn’t be anymore than one third of your monthly income. lady , you’re rich (or your ex is), go buy somewhere….”

anonymous (a different one, I presume -ed.) 3 Oct 2010“Oh my gosh…. Miss LEE… you are paying $2,100 a MONTH, sheeeeesssshhhh woman that is a mortgage payment!! Buy something that will be your own for that kind of money.”

Incumbent 3 Oct 2010 9:59 am – “Lee pays $2,100 a month for an 888-square-foot, what a waste of money. Why not invest in another propertry?”

“We were saving up a downpayment for a place here and now realized we are pretty close to paying cash for a place where we want to live in the states.”

The price differential between the US and Vancouver cannot last. It has to apply downward pressure on Vancouver prices. Foreign investors will find the US more and more attractive, and locals who travel or read will notice the difference too. For the price of a very modest Vancouver condo, you can own a condo in Manhattan. – vreaa

USorbust at 30 Sep 2010 12:53pm“We were saving up a downpayment for a place here, and now realized we are pretty close to paying cash for a place where we want to live in the states.”

TV News Accepts Likelihood Of Price Drops

Price falls of only 5%-10% in 2011 is an optimistic prediction. We wouldn’t be surprised to see 20%-25%-off by the end of 2011. The fact that price drops are being called likely in the MSM is a noteworthy landmark, however. -vreaa

“Experts say home prices are overvalued and due for a correction”
“Central One Credit Union expects a 5% drop in prices in 2011.”
“CIBC World markets say that prices in BC are overvalued… by almost 17%
(! – ed.) and it predicts a drop by 10%.”
Global TV 3 Oct 2010
[thanks to Greenhorn for archiving the video]

Spot The Speculator #18 – Westside Lot Flip Attempt; Seeking $705K Profit In 2 Months

4025 39th Ave West; built 1940; 1,680 sqft; 53×167 ft lot

Listed 3 Jun 2010, $1,875,000
MLS V835246, RE/MAX
Sold 29 Jul 2010, $1,775,000

Listed 1 Oct 2010, $2,480,000
MLS V853284, Royal Le Page
Disclosure: “Seller never lived in property”
[No kidding. -ed.]

Not sure what the flipper is thinking here. The lot tested the market through the summer and sold for $1.875M. Now somebody will think it’s suddenly worth 40% more than that? Or is this a small developer’s ‘Hail Mary’ pass before doing their own building? -vreaa

Olympic Village Fiasco – News Video Archive

Greenhorn (aka SethM), a regular poster at RE Talks, has done a marvelous job of collecting an archive of video news clips regarding the Olympic Village, at youtube. As the story unfolds, we see it interpreted step-by-step by the local news channels. The village will quite likely prove to be representative of the entire Vancouver market. Common themes of arrogance and overconfidence running into the brick wall of reality. Some memorable moments:

“The athletes will move in; they’ll move out; and the consumer will move into their condos, so that there is no cost to the city or the province.”Bob Rennie, Marketer, September 2008

“There is more than sufficient security to back those loans up.”Shahram Malek, Millenium Properties, 7 Nov 2008

“I am confident that this is a very good deal for the taxpayers… there will be no risk to the taxpayers.”Peter Ladner, ex Mayoral Candidate for NPA, 10 Nov 2008

“Welcome to your new digs, John.”Gregor Robertson, Mayor, at key-to-the-village handover to John Furlong, VANOC, Nov 2009

“I feel good about it. I think that everybody will make money.”Bob Rennie, Marketer, 16 May 2010

“My clients thought they were buying a very high end unit and they don’t believe Millenium is delivering anything near what they promised. … Once a purchaser loses faith in a building, they just don’t want to be there.”Bryan Baynham, Lawyer, 26 Jun 2010

“It’s absolutely normal. We have no concerns.”Penny Ballem, Vancouver City Manager, 26 Jun 2010, regarding people trying to get out of presale contracts.

“A sterile environment, it feels like a science-fiction film.”Visitor, 2 Sep 2010

“Promises were made around having a social legacy to the Olympics… Now that the circus has left town, a different story is emerging.”Am Johal, Community Coalition, 2 Sep 2010

“If I have to include the HST portion that’s been added to.. on top of GST, or we’re looking at a couple of months, uh… we’re looking at a couple of years maintenance fees, we’re going to announce those incentives sort of mid-September that what will stimulate people to buy.”Bob Rennie, Marketer, 2 Sep 2010

“It’s like a ghost town. … They were telling me.. look at the benefit you’re going to get, you are going to make so much money.”Mario Loscerbo, Mario’s Gelati,  a nearby business that endured years of construction inconvenience, 30 Sep 2010

“It’s awfully quiet.”CTV News, 30 Sep 2010

Mark Carney – “This cannot continue. While asset prices can rise or fall, debt endures.’’

From The Globe and Mail 30 Sep 2010
BOC Governor Mark Carney used a speech in Windsor, Ontario, Thursday to express concerns over the levels of debt built up during the era of rock-bottom interest rates. Too many households are becoming too stretched for comfort and the dynamic is already proving to be unsustainable, adding to the forces causing growth to slow as some Canadians’ ability to spend seems to have tapped out.
“This cannot continue,’’ Mr. Carney said. “While asset prices can rise or fall, debt endures.’’
His tone was significant because throughout the recession, the central bank frequently expressed surprise at the pace of credit growth, without ringing alarm bells in such stark terms.
“What we’ve urged Canadians, and I think Canadians are starting to heed this message – of their own accord, not because we’re saying it – to think about the debt that they’re taking on over a longer term, and what’s a normal interest rate, and am I comfortable paying a normal interest rate with the type of debt I have?’’ Mr. Carney said after the speech. “Our expectation is that behaviour will become increasingly common, given the level of debt.”

‘Vancouver RE-Verse’ [Found Poem]

took the west coast express

into downtown today

after a long time.

Soon as the train stopped,

there was a mad rush

to the exits.


…………………………………by ‘crashcow’
………………………………… 1 Oct 2010 8:03am