Monthly Archives: August 2011

“CMHC practices have been supporting high debt and risky borrowing by homeowners. The size of the drop in refinancing is surprising to the point of shocking.”

Refinancing activity [at CMHC] tumbled nearly 40% following a move by Finance Minister Jim Flaherty to tighten mortgage rules this spring. Sales of the CMHC’s mortgage insurance fell by 10% immediately after the changes were introduced, though they have regained some ground since then. … Changes to mortgage rules, [included] reducing the maximum amortization period for loans qualifying for CMHC insurance to 30 years from 35 years; lowering the maximum amount that Canadians can borrow to refinance their mortgages to 85% from 90% of the value of their homes; and withdrawing CMHC insurance from non-amortizing home equity lines of credit.

“The size of the drop in refinancing is surprising to the point of shocking. You could hardly have better evidence of the extent to which CMHC practices have been supporting high debt and risky borrowing by homeowners.” – Finn Poschmann, vice president of research at the C.D. Howe Institute

– from ‘Did CMHC support risky borrowing?’, John Greenwood, Financial Post, 29 Aug 2011

Answer: Yes, it clearly did.
The risk remains present in the form of overextended ‘owners’.
– vreaa

Retirement Lotto – “Less than 1% of Canadians have a million dollars outside of their homes. But about 50% of all the people living in Vancouver have $1 million in their homes – at least for now.”

“At age 56, they have a net worth of $1.2 million. That’s good. But 96% of it is in one asset – real estate – which in their city (Victoria) is dropping like a stone. “It’s so scary now,” says Irene, “that I have no idea if we can even sell these places, let alone for what the assessment says they’re worth.”
He was a fireman for the full thirty. She still works, but aches to retire. Both are mid-fifties and when she hangs up the clipboard as manager at a small courier company, they’ll be living on his pension of $3,800 a month.
“Not enough,” Irene says. “I wanna travel.” But that’s not going to happen, unless they give up their entire financial plan – which involves owning two side-by-side houses. The one they live in is worth seven hundred. The one they rent out (for peanuts) is worth five. And the sum total of all RSPs, TFSAs and cash stuffed in the orange guy’s shorts is less than $50,000.”

– story relayed by Garth Turner,, 29 Aug 2011.

Read the whole article, in which Garth also notes:
– “A 50% decline in that market over the next five years is entirely possible.”
– “Less than 1% of Canadians have a million dollars outside of their homes. But about 50% of all the people living in Vancouver have $1 million in their homes – at least for now.”
– “According to a new survey, half of the population can’t save even $25 a week.”

Bobby adds [30 Aug 2011 1:38am] – “Certainly lots of properties for sale here in Victoria. I see clusters of For Sale signs. I was up to Bear Mountain the other day and there was huge number of homes for sale. Certainly a buyers market.”

Kilby adds [30 Aug 2011 1:01am]“Victoria (including Victoria West) August 23 to 29th. 797 active listings, 23 new sales.” [so MOI about 8 -ed.]

“A poll of Canadians aged 45 to 64 conducted by Environics Research for TD Waterhouse was even more mind-boggling: 32 per cent said they expected a lottery win to support them post-retirement—versus 34 per cent who said they had retirement savings plans with actual dollars in them.”
Macleans, 8 Mar 2011 [hat-tip SophieZombie]

Access to adequate saved retirement funds is relatively uncommon.
Canadians are overdependent on RE for their retirement plans, moreso in Vancouver.
Boomers are going to be trying to cash in their RE lotto tickets; this process has already commenced.
There will not be enough buyers for them to realize their thus-far-paper gains.
Imagining a lotto win is not a million miles from banking on a big RE pay-out.
RE in Vancouver is two to three times overvalued; prices will drop 50%-66% peak to trough.
– vreaa

The Costs Of Inheritance – “Waiting impatiently for loved ones to die so you can use their money. Nice.”

“In 2006, a study showed that about 1.5 million Canadians were relying on their inheritance as the primary source of capital to fund their retirement. On average, Canadians expected to receive a total of $150,600 in cash or cash equivalents, and $151,200 in non-cash inheritance. But in reality, inheritance sums received were significantly less – the average inheritance received that year was $56,000.” [BMO report, July 2009]
“36% of the wealthiest families have received an inheritance; the average amount of that inheritance was $136,000.” [G&M, 8 Nov 2010]

[Following responses to Snats, at VREAA, commenting “Waiting impatiently for loved ones to die so you can use their money. Nice.”]:

“I had a friend from high school with that exact plan – then her brother died and she kicked her inheritance-to-be plan into high gear. She convinced her mother to sell her house and move in with her and her boyfriend. The mother agreed, put the house on the market for about $1.5M (Kitsilano) and after paying off the reverse mortgages and deferred taxes mom had acquired over the years to help out her offspring, daughter realized less than $150,000. This was not exactly the plan the daughter had envisioned but I wonder if that is what is in store for many a baby boomer.”
rmac at VREAA 22 Aug 2011 10:12am

“Yeah, my friend had the same plan until his widowed father remarried a much younger woman who is making sure that she will get the house. His wife’s parents are in care (actually two care facilities) which is costing over $10,000 a month for housing and care. They are paying for their care through their real estate equity.”
Vangirl at VREAA 22 Aug 2011 11:17pm

Behaviour around the issue of inheritance is complicated, even at the best of times. Expectations of inheritance may lead to tension amongst siblings, ambivalence about parents’ longevity (“Waiting impatiently for loved ones to die”), distress about parents spending their money on care (or anything else), and a multitude of possible social shennanigans.
In a time of a speculative mania in housing, when the market value of an average property is so high compared to income that it becomes a life changing lottery win, issues around inheritance become proportionately exaggerated.
In Vancouver, real estate is the largest source of expected future inheritances. -vreaa

Renter Displacement – “The cute little 1940s bungalow we’ve rented for the past seven years is for sale; 2,300-square-foot, $2 million, teardown.”

“The cute little 1940s bungalow we’ve rented for the past seven years is for sale, and in the past month the realtor has hosted three open houses. That means we have no idea who’s been walking our hardwood, opening our cupboard doors or peeing in our toilet.
I knew the moment our home went from an exclusive listing to the Multiple Listing Service two weeks ago because that evening I heard voices and looked to find two men and a woman standing in our garden looking in the window. Since then real estate-crazed trespassers have let themselves into our back yard through the side gate, walked across our lawn and flowers and snapped pictures of the house with the glee of paparazzi parked outside Hollywood’s Mr. Chow. The street in front of our home looks like a high-end car dealership with a constant parade of Mercedes, BMWs, Land Rovers, Jaguars, Lexus and Audis. We don’t even blink now when yet another $200,000 black Mercedes SLS stops in front of our home at 10 o’clock at night and the owner gets out to take pictures with their iPhone.
The first open house was as an exclusive listing with one realtor and almost 40 people came through. The second open house was for “realtors” and about 70 people dropped by, while an estimated 200 Lookie Loos were expected for the third open house this past Sunday. It was this last open house that sent me over the top. Prior to vacating for four hours, I printed off signs that read “Please Remove your Shoes” for the front and back doors and “Private” for our closets, which I also tied closed. My thought is that if you have the cash to buy this home I’ll show you my closet, but there is no reason on earth my neighbours or Craigslist followers should get a look at my shoes (or skeletons). I also went completely over the top and wrapped toilet paper around our toilet because I decided no more strangers were going to pee in our home. By this time my partner was beginning to look at me as if I’d lost it, which to be truthful was pretty much the case, but I promise that toilet paper will be coming out again this weekend when the realtor hosts the fourth, and I hope, final open house.
It seems to me the fact the house is going to be torn down makes an open house moot, but hey, maybe that’s just me. After witnessing first hand the extreme interest in this house, I laughed out loud last week when I saw an article in the Vancouver Sun with the headline “More sales listings bring balance to market.” We live in a 2,300-square-foot, $2 million teardown, which to me does not exactly scream “balance.” The article quotes Carol Frketich, regional economist for Canada Mortgage and Housing who says, “typically when prices move higher, listings do come on the market.” According to the Real Estate Board of Greater Vancouver, that trend means a “calmer market” for realtors with fewer bidding wars. Seriously?
I always assumed if I lived in a $2 million home it would include a pool, and more importantly a pool boy, but that’s not the case. Instead, our $2 million home offers well-kept hardwood floors, rounded ceilings and lovely heritage roses planted by the original owner.
In the seven years we’ve lived on our street almost every one of the sweet, little post-war bungalows on our block has been demolished and replaced with a 4,000-square-foot behemoth, which I know is the fate of our place. All of our new neighbours are wealthy Asians, many of whom I’ve never laid eyes on. Just as many seem slow to trust. But in the past year or so I’ve made some headway and I’m now on a first-name basis with two neighbours. Unfortunately, it’s just in time to say goodbye.”
Sandra Thomas, Vancouver Courier, 10 Aug 2011, pg.A08

Talking With Friends About Real Estate

“I have stopped trying to convince people in Vancouver that real estate is overvalued. What’s the point? It’s not worth my effort. I find it’s much more satisfying to agree with them-they have no idea I’m being sarcastic. When they say things like “Real estate only goes up” and “Vancouver is the best place on earth!” I smile and nod.
I’ve found that the “real estate always goes up” argument is dying in other places of the province. People on my old street in Kelowna saw their property values go from around $500k in 2008 to now $350k-they are no longer cheering so much for real estate there. Others have condos that are underwater and are having problems finding tenants. I do believe this will happen here too, it’s only a matter of time before people realize that real estate values are no longer soaring and it’s harder and harder to find justification to buy.”
pricedoutfornow at 26 Aug 2011 9:07am

“I was talking to a colleague about my views of Vancouver’s impending crash but had to stop as I didn’t realize that her husband is in construction and a crash would really hurt their income. It was the look of total fear on her face when I listed the facts that made me stop and ask why she looked so dour.
It is a weird feeling nowadays when I talk doom and gloom wrt real estate as I feel that it is starting to get through and my facts make people uncomfortable. When this happens I try and think something that will make the person feel better such as “well you bought years ago, you’ll be ok”. I just wish that all those caught up in the rush to the top had taken the same tact when berating me about throwing my money away on rent and how stupid I was to sell.”
YLTN@Work at 26 Aug 2011 9:29am

“Last evening, I was in a real estate conversation with my wife’s family and I should win an Academy Award for my acting skills. (Lot’s of nodding and smiling)”
specialfx3000 at 9:39am

PostCardsFromTheBlastRadius #13 – “You’reInvited! GhostMalls ‘O TheOkanagan… by RSVP”

Ya know, the only problem with ‘NaganTouring in a 48 Pontiac Woodie (apart from occasionally having to deal with the irate/disconsolate ‘Darlings’ one neglected to invite) is that they’re Darn!ThirstyBeasts. Which means, sooner or later (usually, sooner) it’s FillErUP!Time… (as opposed to MillersTime – which one ought never to do when in charge of mechanical contrivances in motion; which, come to think it, as ‘catch-all phrases’ go – could include some rather unusual appliances; but I digress  [just this once. -ed.]).

Accordingly, following a recent sojourn exploring the ‘delights’ of Highway97’s assorted RoadSideAttractions/Signage. Imagine, just imagine ‘TheHorror!’ upon discovering that your BigBlockV8 is now reciprocating on mere vapour – and you’re about to experience the GloomyMisfortune of gliding into…

A GhostStation.

As in No SingingTexacoGuyz. No Pumps & Definitely NoGas.

Now, as it happens, there is a good reason why the current PesosPerLitre signage has been ‘blacked out’ at this PitStop…

And it just might have something to do… with whatever it is that’s on the other side of that hoarding. Let’s have a look, shall we?

OhGoodie! RSVP! Have we just been invited to Partay!… @UrbanLiving?

But, “Hey! Just a minute now – this is WestBank. So where the Heck’s The’Urban’?”

Leaving that issue aside, for the moment, upon closer inspection (the kind that reveals the spreading cracks in this faded DevelopersDreamSignage) we discover that this is, regrettably, yet another incitement to ClimbAboard the PreSalesCondoTrain.

Albeit… in this particular instance, a superfluous/obsolete ‘invitation’. For, not surprisingly given the region, the CondoDreams of UrbanLiving’s Montréal QC Developer DevMcGill®, are… Defunct.

Of course, as with all such disappointments… There are consequences.

For example, there are a lot more WestBankers hand-washing their cars themselves these days…

And, more’s the pity, no chance to reprise BackToTheFuture’s superlative retro ‘50’s ‘FullService’ sequence either.

So. What’s an aspiring WestBank, BreakingBad, ‘WalterWhite’ type – looking for a cash business to masquerade his horticultural earnings – to do? Especially, when you allow that the only ‘vacant’ CarWash/GasStation in town is frozen in legal limbo.

‘Better Call Sol’, I guess. Unless…

Yeah! There is a restaurant. Heck, there’s a WholeDarnedStripMall!

Loads ‘a possibilities here! Could work.

Hmmm. Better check out those interiors, though – cause ya never know, do ya. Caveat emptor, and all that stuff.

Ah. Just as well we decided to Peek‘nPoke… Judging by the abandoned air mattress, broken glass and somewhat haphazard arrangement of dusty colonial furnishings – what was once a popular restaurant has been reduced to a temporary refuge for the circumspect (but, presumably, handy with tools) homeless.

Just look at all those stacked/discarded menus. One can almost see them now… The Wives n’ Daughters of The’Nagan. Those effusively fulsome and ebulliently perky purveyors of GrilledSurf&Turf! Rushing to and fro, juggling enormous platters and steaming stainless pot’s ‘o java. Each and every gal lovingly adorned in a fetching, freshly scrubbed ‘PeachQueen@TheProm’ themed ‘CattleCountry’ uniform.

Well, it’s a nostalgic thought, ain’t it?

Yep, “CattleCountry” it once was… but, sadly, there ain’t no RibEyes, Tbones or Lobster a sizzlin’ here. Anymore.

Still – it does afford us a splendid excuse/opportunity to explore the broader implications…

‘Cause, “CattleCountry”, as any aspiring actor could tell ya, or for that matter, anyone who’s ever experimented with OnLineDating in the ‘hinterlands’… is, subliminally at least, an apt moniker for a ‘Nagan eatery.

Even an abandoned one.

And here’s why – because it is also suggestive of that apt turn of phrase from ‘TheShowBiz’, “The Cattle Call”.

So, getting right down to the NittyGritty – it doesn’t take an enormous leap of imagination to equate a Developers’ clarion invitation to StrokeTheSteel & GraspTheGranite to a casting director’s MassAudition (usually to find the perfect DancingTomato, for ‘scale’). Or, for that matter, to the OnLine Catalogues ‘o The Forlorn maintained by the FieldsMedal winning entrepreneurs of SocialMedia. [we’re still with ya, but only just. – ed.]

Regardless, it all amounts to pretty much the same thing… The aggregated exploitation of the ‘vulnerable’ and/or blissfully ignorant.

And, more specifically, the relentless commoditization of people and their dreams.

Well, at the risk of driving a “Steak” through the Heart ‘o those dreams… (or barricading them with welded steel security grilles)… The ‘answer’ just might be…

That some things are best left ‘unsold’. Not hyped. Not marketized. Not ‘traded’.

..& lest we collectively succumb to the temptation of ‘BlameCasting’, however… how about a little reflexive introspection first?

In the LookingGlass. All of us.

For, to quote the MostEstimable Chinese President Hu JinTao’s enthusiastic address to an impressive assembly of the PartyFaithful earlier this year:

“We must go deep down. We must immerse ourselves in the reality!”

“Good night, and good luck” [google that, All – you’ll like it.]


Photos and commentary for the ‘BlastRadius’ series by ‘Nemesis’.
[Images Ⓒ​2011 ‘Nemesis’ – All Rights Reserved]


[Once in a while, it’s good to give your brain a workout. Keeps you ‘agile’. -ed.]

Vancouver Sun Editorial Unashamed RE Promo

‘Detached homes can be had for just over $500,000 in Squamish, less than hour’s drive from downtown Vancouver.’ [Sun image and caption]

It is one thing to run obvious RE-promotional articles by industry insiders (Cam Good [Vanc Sun 21 Apr 2011], James Schouw [Vanc Sun 2 Jan 2010]), it is something else entirely to run an editorial encouraging people to overextend themselves into questionable RE purchases in the latter stages of a speculative mania.
‘Editorial: To dream the impossible dream — home ownership’ [Vancouver Sun Editorial, 25 Aug 2011] encourages “median-income earners” to “lower expectations”, to “make compromises” in property choices (smaller properties; different class of property; outside of the city), to use variable rate mortgages, and to amortize their mortgages over 30 years. In short, it encourages them to find a way, almost any way, to buy.
The editorial is dismissive of the recent RBC report showing the extreme lack of affordability in Vancouver: “… depressing numbers may be valuable for studying trends, making predictions and agitating for policy changes, but they are not useful as a buyer’s guide to the market.”
You are persuaded to step up and buy:“The variety of properties available at different price points and flexibility in financing, including variable rate mortgages and extended amortization, along with a bit of luck, can help fulfil the dream of home ownership for agile buyers willing to keep their options open.”
Vulnerable, naive prospective buyers may be influenced by this peppy argument. ‘Be agile, be flexible, be lucky: be a buyer.’ Those who take the Sun’s advice will very likely prove to be in the group of buyers who will be most severely adversely affected by the coming bust. There is not one word in the article about a possible downturn. It reads a lot like the smooth words of a sales promotion, trying somewhat desperately to get the last buyers, the most dodgy quality buyers, to step up and clear product.
We record the fact of this editorial here, as we’re sure we’ll have reason to return to it in 2 or 3 or 4 years time. It is just one example of the role the Sun has played in this mania.