Money Tied Up That They Can’t Afford To Lose
The Vancouver Sun reports from Canada. “Buyers from mainland China and a dwindling supply of high-end detached homes are driving Vancouver’s luxury real estate market, with has seen an 80-per-cent increase this year compared to 2014 in the number of sales over $3 million. ‘Mainland China is churning out millionaires at quite a huge rate, and many of them like Vancouver,’ said Wayne Ryan, managing broker at RE/MAX Crest Realty Westside. ‘At this point, it’s all anecdotal, but the reality is we’re finding it’s between 70 and 75 per cent (of buyers.)’”
“More condo buyers are investors, too. ‘A lot of international investors will say, Vancouver’s a very safe market, so they’ll park their money here. That’s why you hear so much discussion about these apartments sitting vacant,’ Ryan said. ‘Because money isn’t an issue — it’s not as if they need to rent them on Airbnb.’”
The Globe and Mail. “Toronto’s condo sector is shaping up to have one of its strongest years on record, dispelling fears that Canada’s largest housing market is ripe for a correction. Builders sold nearly 11,000 condo units in the first half of 2015, the third-best year on record, according to research firm RealNet Canada Inc. Most of the sales activity has been among presales, thanks to 55 new projects that developers launched in the city this year.”
“But buyers have also been snapping up units in projects wrapping up construction, helping to absorb the large surge in completed but unsold units, which had soared to four times their historic norms at the start of the year. Of 453 condo projects in active development, at least 140 are offering some kind of incentive, said Phong Ngo, RealNet manager of new homes research. ‘We’ve been seeing more incentives than previously and things that we haven’t really seen in the past, like the rental guarantees and cash back,’ he said. ‘In the past, it was more on material things, like free appliances and upgraded countertops.’”
“Such tactics helped developers eat through their backlog of unsold inventory in existing projects in order to focus on launching new ones. Urbanation senior VP Shaun Hildebrand estimates the market could see another 14,000 to 16,000 condo units launched in the second half of the year, typically a quieter time for the market.”
The Montreal Gazette. “It’s more affordable to buy a house in Quebec than it has been in nearly a decade, according to an RBC report. ‘While Montreal’s pricing environment remained soft in the second quarter due to fairly loose supply-demand conditions in some market segments, material improvement in affordability in the past year helped re-energize resale activity in the area,’ said. ‘A high inventory of recently built, but still unoccupied condos continues to be a considerable issue for the market.’”
The Winnipeg Sun. “The affordability of bungalows and condos in Manitoba went up slightly in the second quarter of the year, according to RBC Economics. ‘A main challenge for the province continues to be the plentiful supply of homes available for sale — many of them condos — in the Winnipeg market, although the second quarter witnessed some improvement with new listings falling modestly,’ said Craig Wright, RBC’s chief economist, in a press release. ‘Some of the recent absorption issues in the condo market are a result of a wave of new multi-unit completions in Winnipeg last year.’”
The Star Phoenix. “Despite lower housing market activity in the past year, housing affordability actually decreased for single-detached homes in Saskatchewan in the second quarter, while improving slightly for condos, according to RBC. Condos have been in oversupply for a year to 18 months, especially in Regina, which has caused the affordability index there to improve to 24.5 per cent in the second quarter and slightly ahead of the 30-year average of 24.2 per cent.”
“‘On the supply side, there was a bit of an overshoot and the market is adjusting,’ said Robert Hogue, senior economist with RBC.”
The Calgary Herald. “The Calgary Real Estate Board said MLS sales totalled 1,643 in August, down 27 per cent from a year ago. The average MLS sale price in Calgary slid 1.9 per cent last month to $466,570, though the median price edged up 0.5 per cent to $422,500. ‘Thirteen months into the oil downturn combined with additional layoffs and political uncertainty will now push sellers to begin to adjust their prices downward if they wish to move their property,’ said Don Campbell, senior analyst with the Real Estate Investment Network.”
“New listings fell by 12.7 per cent in August to 2,733, while active listings were up 12.1 per cent to 5,146 at month’s end. The apartment (condo) sector was particularly hit hard in August with sales down nearly 39 per cent from a year ago. The average sale price dropped by 10.5 per cent.”
“Jyoti Gondek, director of the Westman Centre for Real Estate Studies at the University of Calgary’s Haskayne School of Business, said there is data to indicate homeowners won’t move unless they can get a job that offers similar or higher wage than what they have. ‘When you look at the impact of the labour market on housing it gets difficult for homeowners to pick up and leave and go elsewhere for a job if there isn’t one available,’ she said. ‘So we tend to see a lot of people who are in ownership situations try to ride their unemployment or they’ll go into a different field. They may accept something at a lower wage. They may even go part-time or try a business from home.”
“‘They’ll try a lot of different options because they’ve got money tied up in their home that they can’t afford to lose.’”
Dude,Canada will be in recession till oil hits $65
Or ngas $4
I spent a week with my boys up in northern Ontario fishing. I’ve been going to this place for decades, first with my dad and now I’m the Grampa. Access by water to the camps and an Indian Reservation. So, the natives have their own parking area, engine block heater hookups and all. The cottagers don’t need them for summer use only.
The native’s cars used to be typically old beaters. There is no “economy” there to speak of. Now those reserved spots have mostly very new cars. I suspect it is just another far flung symptom of the Canadian Credit Bubble.
Canada must wipe out the excess credit in their system before they can rebuild a sustainable economy, just like everywhere else. In the meantime, I will enjoy the dollar being only 75 cents.
“It’s more affordable to buy a house in Quebec than it has been in nearly a decade, according to an RBC report on housing trends and affordability.”
“Affordable”, and interesting term. But how is it defined? Let’s take a look:
“The RBC Housing Affordability report determines the proportion of pre-tax income needed to service the costs of owning a home.”
Ah, so affordability has little to do with the price of a home, instead it’s the percentage on one’s pre-tax income needed to service the costs of owning, er, buying the home. The percentage of pre-tax income that one needs to send to worthy people such as myself in order to allow these people willingly to join the ranks of the rest of the debt slaves.
So, just how much of a percentage of income are these schmucks willing to send to me each and every month? Let’s take a peek:
“For a two-storey home, it takes 40 per cent, down 1.1 percentage points. Bungalows eased by 0.9 percentage points to 32 per cent and condominiums are down 0.5 percentage points to 25 per cent.”
Bahahahahaha … it just goes to show you: People are smart.
Gotcha Number 1:
“When you look at the impact of the labour market on housing it gets difficult for homeowners to pick up and leave and go elsewhere for a job if there isn’t one available.”
Gotcha Number 2:
“They’ll try a lot of different options because they’ve got money tied up in their home that they can’t afford to lose.”
Before you decide to play a banker’s game of Gotcha it’s best to learn the rules.
The above articles are sourced from newspapers that have a vested interest in pumping the market, advertising revenue. The quotations are from the real estate crowd and RBC, a major mortgage lender in Canada. Up here we simply do not know the true state of the housing market because all of the information is controlled and indeed owned by the aforementioned real estate pumpers. Housing is not an election issue this election. Our PM says the recession has already ended, even before it was officially declared yesterday. We are living in an oligopoly, as is the rest of the world. We only know what they want us to know, which isn’t much up here.
Free hc
When your currency is off by 30% and prices don’t go up (at home), it might give you a clue.
The money center “oligopoly” only has power over a people deeply in debt.
‘newspapers that have a vested interest in pumping the market’
But this is what they do; now it turns to, “you sellers are being unrealistic. Look at all these houses for sale. You must lower your expectations!”
It’s as predictable as dawn.
Your bubble has had such an astounding run that most of us will likely be dead before it all shakes out.
“More condo buyers are investors, too. ‘A lot of international investors will say, Vancouver’s a very safe market, so they’ll park their money here. That’s why you hear so much discussion about these apartments sitting vacant,’ Ryan said. ‘Because money isn’t an issue — it’s not as if they need to rent them on Airbnb.’”
We have a lot of that here in NYC. I’m hoping that if things get bad enough, these investors will decide that leasing out the apartment for six months at a time wouldn’t be the worst thing, adding to the housing stock.
Who needs rental income
Got cake?
How much are ‘re taxes (rents) going up in your county?
W no market boost they still have to finance defined benefit pensions
So
Ben Dover
Lease payment to the Gov’t NEVER end!
Ben Jones:
Tell us how this ends?
Fannie Mae has announced their new affordable mortgage product called the HomeReady Mortgage.
Under the new guidelines, borrowers will have to complete an online education course which will prepare them for the home buying process and for sustaining their home after purchase. Additionally, income from a non-borrower household member can be used to decide the debt-to-income ratio for the loan, a development which will help multi-generational and extended households obtain affordable mortgages.
Further innovations are that income from non-occupant borrowers will be allowed to increase a borrower’s qualifying income, and first-time and repeat homebuyers can use HomeReady to buy a home with a down payment as low as 3 percent.
Who qualifies for a HomeReady Mortgage? HomeReady will be available to borrowers at any income level for properties in designated low-income census tracts, and to borrowers at or below 100% of area median income (AMI) for properties in high-minority census tracts or designated natural disaster areas. For properties in remaining census tracts, HomeReady borrowers must have an income at or below 80% of AMI. Approximately half of census tracts will be subject to the 100% AMI limit or have no income limit.
Linky here: https://confoundedinterest.wordpress.com/2015/09/01/fannie-maes-homeready-affordable-mortgage-will-it-be-a-success/
‘A Re/Max report has highlighted a sharp increase in the number of luxury home sales in Vancouver in the first seven months of 2015. There were 572 homes that sold for more than $3 million, according to the real-estate company. That’s a 79 percent increase over the 319 sold over the first seven months of 2014.’
‘Re/Max also reported that some real-estate agents are assisting Chinese buyers in settling into Vancouver by helping them buy insurance and a car.’
‘Meanwhile, real-estate marketer Bob Rennie told the Georgia Straight by phone that 60 percent of buyers at the Independent lived within 10 kilometres of the Rize Alliance project near the corner of East Broadway and Kingsway. “I believe that over $3 million isn’t what we’re worried about with local incomes,” Rennie said. “It’s finding density below [that price].”
“If we acknowledge immigration, we’re going to have to accept solutions, which means density,” Rennie added. “I’m happy to say that unfortunately because of what I do for a living, I benefit from some of these solutions. That shouldn’t preclude me with coming up with solutions.”
Read the third paragraph.
Your body belongs to the bank. Your soul belongs to the realtors. Your brain, well if you had used that things might be different.
‘Edmonton’s tight market for rental accommodation has eased, according to a housing survey released in June by Canada Mortgage and Housing Corp. The vacancy rate in the Edmonton census metropolitan area rose to 2.4 per cent in April 2015 from 1.4 per cent in April 2014, CMHC said.’
“What’s happening is the market is working really well for tenants right now,” said David McIlveen, spokesman for Boardwalk Communities, which owns 12,000 rental units in the Edmonton region. “There’s been lots of new development, lots of new rental developments and condominium developments.”
‘Meanwhile, there are fewer people moving to Edmonton to fill those vacancies, he said. “Right now in-migration is a little bit down, but there’s still lots of new housing being built so supply is going up and the demand is going down and the prices are down.”
‘Rents dropping by $30 or $50 is the norm, and in some cases, incentives are also being offered, McIlveen said. “It’s a great time to be a tenant.”
‘Welcome to Quantitative Tightening as $12 Trillion Reserves Fall’
‘The great global monetary tightening of 2015 is under way, but it’s not being led by the Federal Reserve. Even as U.S. policy makers ponder whether to raise interest rates this month, one recent source of central bank liquidity in financial markets is drying up and the loss of it partly explains August’s trading volatility.’
‘Driving the decline is a combination of forces including the economic slowdown and recent devaluation in China, the Fed’s pending rate hike, the collapse of oil and decisions in Switzerland and Japan to cease intervening in currencies.’
‘Each means central banks are either paring their reserves to offset an exit of capital or manage currencies, have less money flowing into their economies to salt away or no longer need to sit on as much. Whichever it is, the shrinking of reserves means much less money flowing into the financial system given authorities tended to recycle their cash piles into local currency or liquid assets such as bonds.’
‘In the words of Deutsche Bank AG strategist George Saravelos and colleagues, welcome to the world of “quantitative tightening.”
‘They predict 2015 will mark the peak of reserve accumulation after two decades of growth with China in the vanguard as its new currency regime means it has to pare reserves to avoid a freefall in the yuan. It has already reduced its holdings to $3.65 trillion from $3.99 trillion in 2014.’
Enjoy that Chinese money while it lasts Bob.
‘Bond guru Bill Gross, who has long called for the Federal Reserve to raise interest rates, said on Wednesday that U.S. central bankers may have missed their window of opportunity to hike rates earlier this year and doing so now could create “self-inflicted” instability.’
“The Fed is beginning to recognize that 6 years of zero bound interest rates have negative influences on the real economy – it destroys historical business models essential to capitalism such as pension funds, insurance companies, and the willingness to save money itself.”
‘Gross said: “The global economy’s finance-based spine is so out of whack that it is in need of a major readjustment. In this case, even the best of chiropractors could not even attempt it. Nor would a one-off fed fund increase straighten it out.”
‘Overall, Gross said “super-size” August movements in global stocks are but one sign that something may be amiss in the global economy itself, China notwithstanding. Fiscal and monetary policies around the world now are not constructive or growth enhancing, nor are they likely to be, Gross said. “If that be the case, then equity market capital gains and future returns are likely to be limited if not downward sloping.”
“Cash or better yet ‘near cash’ such as 1-2 year corporate bonds are my best idea of appropriate risks/reward investments,” Gross said. “The reward is not much, but as Will Rogers once said during the Great Depression – “I’m not so much concerned about the return on my money as the return of my money.”
http://finance.yahoo.com/news/bill-gross-fed-tightening-cycle-115040897.html
I’ve been asking, was Thelma or Janet driving at the end of the movie?
I just remembered, the woman in charge at the IMF did the same thing. Last summer or so, she was very publicly saying the Fed should raise rates or all sorts of bad things were going to happen. About a month ago she flipped and said the global economy couldn’t take it. Now Gross. Very curious.
‘The greatest late-season surge in a quarter century is already in the books for the oil market. Through Monday, crude had its best three-day percentage gain since Iraq’s invasion of Kuwait in August 1990. The rebound was attributed to investors covering negative bets in the futures market following a six-and-a-half year trough and an easing of deep pessimism about China and the global economy.’
‘Oil futures gave back a chunk of those gains on Tuesday, though, after China’s official purchasing managers index fell to its lowest in three years and a similar one in the U.S. dropped to a two-year low. A final support to a bullish crude-oil thesis may crumble after U.S. government data on petroleum and product inventories are released Wednesday.’
‘But fall “turnaround” season looms and will take many refining units offline. Turnarounds are necessitated both by the breakneck pace at which refiners have been running as well as a government-mandated switch to winter grades of gasoline.’
‘Less demand means that barrels of oil that otherwise would have been used will have nowhere to go but to already bulging storage, or to customers elsewhere in the world. The latter isn’t even an option for U.S. crude as long as an export ban remains in place.’
‘Based on the economic signals from major economies and the short-term demand from the world’s biggest gasoline guzzler, the immediate outlook for crude prices looks murky, at best.’
And to think nothing really happened:
‘its best three-day percentage gain since Iraq’s invasion of Kuwait in August 1990′
Caw!
“an easing of deep pessimism about China and the global economy.”
In a mere three days? I don’t think so. Already headed back down.
One poster put together a long explanation with statistics about drilling and theories on fracking. I mentioned such a large move was more likely Yellen buck speculators. It was the biggest price surge in 25 years! Oh how wild speculation can be rationalized when there are trillions of QE wandering the globe looking for a place to die.
Did you pay over retail for a house in the last 3 years??
Then you just might be experiencing “Crater Rage!”
SOP is to offer one of these.
https://goo.gl/yRCqOC
Help yourself my indebted friends. Drink up.
‘Rising prices in Vancouver and Toronto pushed housing affordability closer to “risky levels” in the second quarter of 2015, according to a report from RBC. Lack of affordability in Vancouver is at a record level, according to RBC’s quarterly housing affordability report released Monday. It is approaching 1990 levels in Toronto, it says.’
‘RBC estimates about 80 per cent of the pre-tax median household income is needed to carry a mortgage in Vancouver at current prices and just under 60 per cent for housing in Toronto.’
“Affordability in Toronto is moving ever closer to the historically poor levels that prevailed in 1990, which may signal that risks are mounting because those were associated with a housing bubble at the time,” it said.’
‘Canada sank into what’s technically considered a recession in the first half of the year, but some economists are hesitant to throw around the “R” word, worried that doing so could erode consumer confidence and lead to a self-fulfilling prophecy.’
‘Moffatt said the Statistics Canada numbers show a decline in business investment that could be troublesome and affect how the economy grows over the next several years. “The Canadian economy is really weak. But that perspective is also important, that this is not 2008, 2009 all over again,” Moffatt said.’
“I’ve been very reluctant to jump on the bandwagon and call it a recession because it can have a bit of self-reinforcing effect,” said Doug Porter, chief economist with BMO Financial Group. “If everybody starts throwing around the R-word, then it can actually be a self-fulfilling prophecy where consumers can become much more cautious, and business can even become a bit more cautious and it can kind of feed off of itself.”
Even better Doug, is if you put your fingers in your ears and say ‘la-la-la-la.’ Works every time.
‘Neighbours up the street call it “the hillbilly house.” Its dilapidated hulk holds three bedrooms and two bathrooms, where dirt and dust collect on plywood floors, light drifts through a hole in the roof and the only stirring comes from an itinerant realtor or the resident squirrels.’
‘Actually, they might be bats.’
‘It doesn’t really matter. Because even though the structure at 41 Kippendavie Ave. is unquestionably decrepit, we’re talking about a fully detached home in the Beaches, south of Queen St. near the lake, with a private driveway and ample yard space that backs onto a leafy park. That’s enough to prompt a flurry of bids for a house advertised as “not currently livable” and in “extremely poor condition.”
‘After two days on the market, the property sold this week for $1 million, more than $100,000 above the asking price.’
‘And this, in response to a listing that advised curious buyers to go visit “at your own risk” and that a “flashlight may be required” because the power is disconnected.’
“I wouldn’t have thought it would have played out that way,” admitted the 20-year veteran realtor hired to sell the place, lifelong Beaches resident Lindsay Wright. “But nothing surprises me anymore as a seasoned agent (in Toronto).”
‘A Vancouver man says he is being evicted after he paid $500 to rent a backyard from a woman who he claims was illegally subletting the outdoor space. Darcy Punton said a Craigslist post that raised some eyebrows last month advertising an East Vancouver backyard available for rent for $500 to a “budget traveller” appears to have been a scam.’
“I think it was a cash grab,” he told Metro. “That’s how I’m seeing it now.”
‘A few days ago, however, Punton said he was shocked to find out he was being evicted with two weeks left on his lease after the real landlord showed up. “The landlord actually just ended up coming by to check on the house and asked why there was a tent in the backyard,” he said. “She had told him that some friends were going to be camping in the backyard for a few days, and that’s all she had said to him.”
“She was actually living in the living room when we moved here,” he said. “She had sublet every room of the house, and she and her daughter were living in the living room.”
‘At times, there were seven people living in the three-bedroom house, he said. Punton said other tenants told him she also advertises a condo on Airbnb. It’s unclear if she owns that property, he said.’
‘He said she moved out of the home Tuesday and threatened to report him to the police, claiming that he was squatting in the backyard and that she did not post the ad. Punton did not want to involve the landlord, who he said has already agreed to return the damage deposits directly to the tenants who were subletting.’
‘While he does not expect to get his money back, Punton said he wanted to speak out about his experience. “I just want to warn people that this stuff happens,” he said. “I feel like it was just dishonesty.”
“I just want to warn people that this stuff happens,” he said. “I feel like it was just dishonesty.”
So it’s “man against man” up in Canada too? Shocking!
Simi Valley, CA Housing Prices Crater 7% YoY
http://www.movoto.com/simi-valley-ca/market-trends/