“We went to an Open House on West 33rd this weekend to gauge whether there was a rush to beat the July 9 deadline. Even the realtor admitted it was dead.”

“We went to an Open House this weekend to gauge whether there was a rush to beat the July 9 deadline. Open House was on West 33rd and it was dead. We attended with approximately 1/2 hour to go and we were only the second name on the sign in sheet. Even the realtor admitted it was dead and asked us if he could send us some similar listings as “he had lots of time on his hands”.
Nice change from the 30 pairs of shoes and multiple offers you would have seen not too long ago.”

MEM at VCI 25 Jun 2012 at 1:52pm

37 responses to ““We went to an Open House on West 33rd this weekend to gauge whether there was a rush to beat the July 9 deadline. Even the realtor admitted it was dead.”

  1. Nothing a lower price can’t fix

  2. people vote with their feet

  3. Just spent the past week in Vancouver. It’s interesting talking to “normal” people there. Absolutely no one sees this coming… yet.

    Either that, or it’s complete denial.

    Maybe a bit of both. They have been very conditioned by the echo chamber.

    • So true EG. Nobody sees “it” coming….weird isn’t it?

      Those of us who follow this drama closely heard thunder claps and saw lightening the day the announcements were made. We just kind of assumed others would see the significance. They did not.

      Most still fail to recognize the danger. Nothing connected. Or if that, just a lazy yawn and a puzzled look asking why we are still on THAT subject. The thing is that we just had a major shift in attitudes towards inflating the economy via cheap credit and household debt acquisition. It was a big deal. A huge deal.

      I believe it was also a landmark event and is one we will probably all remember as the moment when the various bubbles across the country peaked and a slow deflation in prices began.

      Some few did “get it” though. You know who?…..First time buyers that’s who. And Realtors and Brokers and the Trades and Speckers and Flippers and Government agencies everywhere.

      The man on the street is still oblivious despite the news reels but everyone who is even vaguely connected to the pulse of the market saw the signals change right away. And now they are rushing to compensate for the actions, meet deadlines, make last minute sales, get sold out of a spec property or even to prepare for the outfall in other ways.

      Joe Bloke is still watching TV and ruminating on a bowl of Cheeto’s.

      • Most Vancouver market participants (owners with a great deal of their financial security riding on the market value of the real estate they own) haven’t yet heard of the mortgage rule changes.

      • Also, my most oft-heard cliche when people were talking about it… something along the lines of:

        “Well, yeah, prices can’t go up forever. But you gotta live somewhere, right?”

        True enough, but “living somewhere” does not necessarily mean:

        a) living in the Lower Mainland or,
        b) maintaining your shelter via an over-leveraged mortgage.

        But, again, in the Vancouver area the thoughts of either moving away or of not owning your house (“if I get out now, I’ll never get back on the property ladder”) are anathema.

      • It is crazy isn’t it. But then, I suppose that is what makes bubbles so mystifying and why so few (with all the opportunity in the world) never actually benefit from the easiest money the market ever handed them. On a damn platter no less.

        It’s almost inconceivable, but most are about to miss the top altogether. They would not hear the warnings all the way up. Too pigheaded. Now it looks like they will be equally blinded all the way down.

        What’s that expression again? Oh yeah……..You can’t teach stupid.
        (I admit, I foolishly thought they would all start to wake up)

  4. That’s different from my experience. There were lots of traffic in the open house across the street from us this past weekend. Quiet East Van neighbourhood. Steady flow of people right up until the end. Realtor looked happy as he drove off.

  5. Vancouver family couples’ median income posted the highest decline in Canada. http://www.statcan.gc.ca/daily-quotidien/120627/dq120627b-eng.htm?WT.mc_id=twtB2554

    Congrats.

    • Those data are from 2010

    • How much of that is skewed by families ** minus the income earner ** moving to Vancouver. It’s also a huge reason why we have so many children “living in poverty” in their multi million dollar homes since that is also measured in Canadian declared income.

      I wouldn’t put too much weight into it although I’m also not saying that things are great here from a family income perspective but imagine how much worse this is going to get in job losses and lower income when real estate comes back down to normal levels.

    • Interesting stat watchdog. You know, it has occurred to me that the decline represents about one weeks work. There are 261 work days in a year (excluding stat holidays from the equation) and so a 2.4% decline in median household income works out to 6 days work …..more or less.

      As a 2010 stat it might actually be reflecting unpaid time away from work as people burned through their Helocs and extra credit acquired from equity gains. Just a theory of course. What I am thinking is that the decline in earnings is partially a result of people putting in fewer compensated hours by choice.

      Did it not just seem like everyone was taking extra time off work to do a reno, build a new house, shop for a cabin, holiday in Europe or take the vacation of a lifetime to somewhere else?

      The drop in earned income might just be reflecting the destruction of real wealth as owners skinned the extra benefit right out of their homes inflated value.

  6. I’m not sure that it was such a big announcement. Yes, going from 30 to 25 years equates to an almost 1% increase in mortgage rates but we have historic lows in rates right now. That means it equates to about a 4% rate which is what we had when the market was flying just a couple of years ago.

    I would have imagined that the last big mortgage rules change regarding basement suite apartments would have had a much bigger impact. Prior to that change if you were getting $1000/mo (potential) rent from a basement suite they just added that to your mortgage. Then the rules change said that the suite was income and therefore would equate to $12,000 more income which was applied to the debt ratio to give you the equivalent of only $4000/yr or about $300/mo more in mortgage room. The result is a drop in affordability by almost $200,000!

    I guess when that really didn’t have the impact they wanted they just kept having to pile on the rules changes.

    Let’s look at an “average” example.
    Couple has combined pre-tax income of $72,000 with $50,000 to put down on a property. We’ll use a traditional debt ratio at 32% for convenience meaning employment income affords $1920/mo. The property has a basement suite with potential for $1000/mo. Current rates are 2.99% for 5yr and we will use that for convenience throughout the whole process.

    40yr Amort (they still put $50k down even though 0 down is available): Can afford $1920+$1000 for a total of $2920/mo which grants them a mortgage of $819,000 plus $50k for a total purchase of $869,000.

    35yr Amort: They still have $2920/mo and that gets them $761k of financing for a total purchase of $811,000.

    30yr Amort – suite added to income: Suite is now $1,000/mo added for a total income of $84,000 and a monthly debt ratio value of $2240. They can now afford only $533k plus their 50K for a total purchase of $583k. This rule change wiped out 28% of affordability!

    25yr Amort – suite added to income: They can now afford $473k plus 50k for a total purchase of $523k.

    Yes, there are other factors like CMHC insurance premiums that affect this but for simplicity sake we can clearly see that the same couple operating under different rules have gone from purchasing a home leveraged at over 10:1 to 6:1 and the government wiped out 40% of potential debt from households. We also see that the biggest change they made was the way to treat suite income and that that had the biggest impact that never was.

    We all panicked and said “the party’s over” when that rule came in. It wasn’t. What makes everyone so sure these rule changes will be the final nail in the stucco coffin?

    • All properties have suites. Oh no wait they don’t.

    • rob ->
      Nobody can be sure.
      But those of us who watch the market carefully had already seen the recent signs of weakness (increasing inventory, weak sales, slight pullback in prices in most sub-sectors) and knew that this move (driven more by developments in Ontario than the Westcoast, it seems) would have further downward effects on the market. So, in that context, the move was seen as significant; it came when the market was already losing balance slightly.
      You could liken this to an old boxing match, where a blow is landed that, to 90% of the audience just seems like another blow, but to the 10% present who really follow boxing closely, the blow is instantly known to be a game changer (and a little gasp is heard from that 10%).
      The rule changes were a bit like that. Sure, not necessarily the ‘final nail’, but definitely something significant.

    • A drop from $869k to $523k sounds pretty significant to me. IMHO, this is the difference between being able to buy a place with a suite and one without.

  7. These pretzels are making me thirsty

    “You could liken this to an old boxing match, where a blow is landed that, to 90% of the audience just seems like another blow, but to the 10% present who really follow boxing closely, the blow is instantly known to be a game changer (and a little gasp is heard from that 10%).”

    Good example. The proverbial “tipping point”

  8. “Nice change from the 30 pairs of shoes and multiple offers you would have seen not too long ago.”

    try east side sub 900K if you’re looking for a shoe count.

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