I came across this cartoon through a Google search for "tired". It exemplifies how I feel in so many ways. Put on a good face for Li'l solipsist and the missus, run the world, process 100's of photo's, do the shopping, paint the paintings, make dinner, and try to skim what's current on the blogs (see sidebar for links).
As I considered this tiredness, I realized how tired I am of this real estate market. I sense the madness starting to go off the tracks, but there doesn't seem to be any evidence of a crash impending. Chipman's #'s are solidly in the sellers' market territory, and poor domus over there - doggedly trying to point the mad down the road to sanity. There is blah, blah from David Dodge, blah, blah, blah here, there, and everywhere. The reportage, and observation seems to be exemplified by the above cartoon as well. "Mustn't scare anyone while the boom is so...booming". Put on a cheerful prognosticator's mask, and pretend that all is well. I'm so fatigued by it.
My "neighbour" just sold his newly built monstrousity to a real estate agent who lives down the road (I have a lot to say about this case, but not tonight). She lives in a big house, so it is more of a lateral move than a move up.
Horse trading, I tell ya. I will get into this when I am more fresh of mind.
So how about that curb appeal/appal series? Tired of that yet? I have lots more...
And that's the long and the short of it.
21 comments:
oh you sound tired. You have good reason, that is for sure, but I agree with you about being tired of this market.
I am waiting...waiting...waiting... like so many others. I guess we sold too early, but, oh well, let's see where it all goes.
Get some sleep when you can and kiss the baby.
so with you solipsist... very weary myself of all this housing market nonsense. My husband & I have been looking 6 months for a bigger place to rent, something reasonable that won't eat up more than a third of our income...not finding much out there.
I'm interested to see your comments on horse trading... I have a conspiracy theory, perhaps a little far-fetched, that a chunk of this market is re agents and their associates buying & selling to each other. We run into a lot of them when we look at rentals (& they are owners, not property managers). Surely some reg folks are still dabbling in the market but their confidence is bouyed by activity, as long as the re agents and developers and the like can keep horse trading, the market soldiers on... call me crazy...
I think you're right to an extent. There's a strong element of a pyramid scheme to the market and the psychology driving it.
Here is my question/thought. If there is 12 000 inventory showing in Rob Chipman's area and we are heading into June, what do you think will happen to them all?
Will they give up and expire. Will they pile on even more?
That is so many people looking to sell; how badly do they need to sell.
Maybe that will move things along.
I'm not convinced we'll see significant declines in the price of real estate unless something significantly (bad) happens to the job market. The BoC is aware of the potential hardships of increasing interest rates too high and will act accordingly. I'm not saying interest rates won't go up, I'm just saying the BoC has no interest in creating economic turmoil.
As long as people have jobs, I'm sure most of them will be willing to tighten their belts and forge ahead in paying their mortgages. Default is likely only to occur when the homeowner(s) aren't bringing home a regular salary anymore. I believe the real estate market in Vancouver last saw major declines in the early 80s and 90s when unemployment was high and I'm guessing that the same condition will be required in future.
With all this said, I still think we'll see some cooling of the market and associated decline in prices but perhaps only to a low extent, say 5-10%.
Frankly this market it starting to piss me off.
- 72 percent of gross median income to buy median house
- 3rd most expensive city in North America for Median house price
- 3rd most expensive city in the WORLD for price per square foot of downtown condos
- Seattle (with all those juicy Microsoft jobs) is half the cost of here.
So 5-10 percent seems like a very tiny downpayment on this insanity.
Grover,
It is possible to overpay for an asset even when the economy is not in a recession. In the U.S. the housing downturn happened independently of any other economic event. There are some steep discounts in California and Flordia even though unemploymnet remains low.
Example
Grover,
The BoC does not give a hoot about how the rate effects housing. It is not a normative issue. If you don't believe me look at the US. Their housing market is seeing declines in the median home price not seen since the Great Depression.
Most people are betting on an increase in Bank rates. Further, mortgage rates are set by the international bond market where banks actually get their money for mortgages, and bonds are clearly up. Finally, most institutions have already raised their mortgage rates in response to the bond market.
This is not esoteric information available only to financial types. Got to Bloomberg and have a look around.
I think when the BC economy takes a turn south, all of the RE blogs are going to be discussing the next great depression since the 30's. I say current personal debt levels are totally unsustainable outside of a booming economy where everyone has a job/income source. Thats my take on the madness.
Not only does the Bank of Canada not care about real estate, the BoC doesn't give a rat's ass about BC. Interest rates were low during the previous four years of the bubble because of Ontario, and they're rising now because of Ontario. Any effect interest rates have on BC real estate is collateral damage. The BoC is neither trying to help FTBs nor home owners out here.
Interest rates are reflecting inflation primarily driven by both Alberta and BC. Ontario and the rest of the country are pretty much sucking wind.
"Frankly this market it starting to piss me off."
I've gone beyond pissed off and starting to develop a real hate-on for the sheer loopiness of this town's housing pyramid.
We're not poor by any stretch and we have decent cash and credit...yet, buying a place right now would be financial suicide.
No point blowing your own future to pay for someone else's.
But, waiting for sanity to return is a real grind:(
For those in the Vancouver area who aspire to be homeowners or homedebtors as the case may be, it's time for you to do some serious reassessment of the opportunity costs of buying into a market that remains anywhere near the current affordability levels.
Even a 20% improvement in affordability would be insignificant enough to justify the opportunity cost of buying into the GVRD market.
You'd be far better off in the long run to change your plans, either rent indefinitely or better yet, or move somewhere else.
The extra years you'll need to save/work to pay off the mortgage debt simply aren't worth it. Life's too short. Don't get sucked into this idea that this is the only place you can live. That's the same mentality that causes people to get trapped in economic dead zones. For you...face the fact that with these ridiculous affordability numbers, Vancouver is becoming your economic dead zone.
I think once you get your head around that...you'll see things in a very different light.
We're moving to a better rental. Its much more expensive than the one we're in now. But we can't live in a basement apartment of a neglected house (with psychotic musicians upstairs) any longer. The extra costs are going to end our saving for the next little while until we can generate more income. At least we're keeping our sanity and not drowning in debt.
We are not even considering buying and now see our down-payment as part of emergency savings/retirement funds. We have now reached the point where we may never buy in the GVRD and are feeling kind of good about it. As renters we can always flee if Vancouver becomes too much of a hellhole.
Re: So how about that curb appeal/appal series? Tired of that yet? I have lots more...
I would love to see a lot more of both types of housing. Bring it on.
Thanks so much for all of your commentary.
I'm tired, but not yet beaten.
I will get to the horse-trading. I'm not sure if that aspect is in the conspiracy territory, but I have other theories... I don't think it's the realtors though, I think that most of them are as clueless as the general populace.
"all of the RE blogs are going to be discussing the next great depression since the 30's"
I've been yammering about that for years - mostly on other fora, but if you do a search for "recession/depression on this blog, you will find allusions to it.
There is too much here for me to comment upon right now, but I will.
The next installment of "curb appeal/curb appal" will feature the "mandarin monstrousity" - hopefully on Saturday.
Thanks all for sticking with me Li'l soli is squawking again, gotta go...
"That is so many people looking to sell; how badly do they need to sell."
I would guess that most don't need to sell. There are the usual DDT's (death, divorce, transfer) sales I'm sure, and then there are the flippers and pharisees who have the Olympics, land shortage, etc., sure there are lots of suckers out there too, and a lot of starry-eyed neophytes who didn't realize how onerous those mortgage payments would be.
It seems like the middle and upper markets still have legs, But how many of the more mediocre SFH's can be torn down and replaced by monsters? It's like a banquet going on with all the waiters and cooks starving to death. Sooner or later there is nobody left to feed the fat cats.
"I'm not convinced we'll see significant declines in the price of real estate unless..."
Neither am I, but I don't necessarily think that it will be any one thing that does it. More like the death of a thousand cuts. Higher borrowing costs, higher energy costs, higher prop. taxes, higher food costs, etc. will do it. People can only stretch so far. Living like an animal sucks.
"Frankly this market it starting to piss me off."
You are much more patient than I am. I have been pissed off for 4 years.
"No point blowing your own future to pay for someone else's."
Second that.
"Vancouver is becoming your economic dead zone."
So true. I have been imagining what will happen to all these poor buggers who signed on to this madness. A $400k mortgage, rising interest rates, taxes, blah, blah, and then when the collapse does come...
I would not touch anything in Vancouver before a 40% haircut. I'm starting to think that even that would not tempt me. The blush is truly off the rose.
I have had two people tell me in recent months about $40k homes in pastoral Brazil. It sounds very tempting.
I would guess that most don't need to sell
Um, if people don't need to sell, why is the house for sale in the first place?
I've never met anyone who had a house for sale who didn't have to sell. Perhaps someone can enlighten me.
Sure there are some cash-flow positive investors, but even they are losing on opportunity costs. The neg-cash flow "investors" are going to get out in a hurry once the appreciation ends.
And for people who just want to move to another property in Vancouver, it doesn't matter if they sell or not, because one less seller means one less buyer.
"Um, if people don't need to sell, why is the house for sale in the first place?
...
And for people who just want to move to another property in Vancouver, it doesn't matter if they sell or not, because one less seller means one less buyer."
I have the feeling that, at this stage in the game, a lot are the latter - people moving laterally.
Some may be just fishing. I have nothing to back that up, just a gut instinct. I do think that as mortgages require renewal, we will start to see more of those who must sell. That is when things will take a turn for the "worse". Those will be the neophytes to whom it never occured that carrying costs can actually go up.
Just read this over at Chipman's place, and it reinforced what I was getting at in a previous comment.
"Mortgage lending makes buying more affordable. If you can’t afford the place at regular terms, get a 2nd, or extend the amortization, of go high ratio. Lenders will oblige. If you really can’t afford it you probably won;t find out until later. "
"It's like a banquet going on with all the waiters and cooks starving to death. Sooner or later there is nobody left to feed the fat cats."
Anecdotally, cooks and waiters are enjoying fairly good standard of living, as jobs are easier to find, and wages are better. Actually, female waitress friends are telling me that they have an easier time at work, as they can walk off their job if their boss start harrassing them.
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