report

Yesterday, the Missus and the Ba, and I (Da) checked out this "lovely 1912 home" just for fun (it was an Open House, and we were passing by). The first thing that the agents said (beyond "hello") was that the price had been dropped from $799k to $709k, and that the sellers were "very motivated". The male agent started blathering about how the market was strong for another 4-5 years. I did not ask why the price reduction in the face of all that market strength.

The agents seemed a bit dejected.

The house is tenanted, with the main and upper floor rented at $1300/month, and the basement suite rented at $700/month. The two bedrooms at the top were very small, and the Missus said that it would be good for a couple, but not so much for a family. The kitchen has been recently modernized, and the basement suite was all modernized -with new plumbing, wiring, drains, etc. I asked if there was still knob and tube wiring in the house, and the agents were...evasive - pointing out the original fir trim and panelling.

The female agent looked at our gorgeous Ba, and said "Hi. You're kind of cute." The Missus looked at her sharply (usually, we hear "gorgeous", beautiful", or "adorable"), and I muttered that the house was "kind of over-priced".

It is a character-filled house, but I would not offer more than $400k.

boiler plate

Jari sent me the e-mail below, as well as the picture above - which I photoshopped a bit more. I'm pretty busy, and you already know that the BoC dropped the prime again, and that they are saying that we will have a downturn that will last exactly two years, and blahbitty-blah-blah, so I will ask you to consider this a guest post.

Thanks Jari

This is only vaguely related to Real Estate, but I wanted to share this with you anyway.

I have to drive daily on the streets of Vancouver, and nothing pisses me nowadays more, than seeing all these vehicles with the Olympic licence plates. To me, the plate is symbol of greed, arrogance and ignorance: the real estate is more unaffordable than ever, there are more and more homeless on the streets and the city and the streets are becoming more and more congested and overcrowded. And the politicians’ solution to these problems is to issue this pretentious new provincial slogan and the licence plate to go with it!

I think that we really need a new licence plate, that reflects better the feelings of most people when they are driving on the streets of the city. Attached is a template that may be quite accurate. I believe, that this also represents more precicely the actual future of Vancouver.


I would love to see people typing their licence plate number on this kind of template, printing it and displaying in it in their vehicle. There are already 80000 Olympic licence plates on the roads. I believe this kind of new plate would balance things a little bit.

Feel free to publish this on your blog, if you find this suitable.


Best regards,

Jari

Here is Jari's template if you want to make your own.

in other words

I checked the listings today to see what's up, and detected a change. There is not a single house in East Vancouver for $2m! For that matter, the highest price was in the $800k range. There are even a couple of places for less than $400K. That and a book of matches will get you a new home in a sketchy area!

Speaking of sketchy, there are some pretty sketchy descriptors in some of the features write-ups on the MLS. Some laughable descriptions of Heritage Style, such as the Pink Manse below. I have used words found in the blurbs in italics.

v690817 this great old timer has many features of a heritage home

I guess post-war salt boxes are heritage now.



v694512 Don't be fooled by it's exterior

I'll do my best. But don't try to fool me with that $799K price tag. Kay?



v695689 Renfrew Heights. Italian style

Not everybody here is a hick, you know. Some people have seen pictures of Italy, and they did not look like this!

By the way, watch what you say about Italians... Capiche?



v693086 This lovely 1912 home

This is indeed a lovely 1912 home - it has HERITAGE writ large all over it. I featured it in "curb appeal" last June. It was not for sale then. I love this place, so when it came on the market (maybe a month ago), I checked it out, and it was asking well over $800k. It's asking $759k today. Note that the foolish exterior above is asking $799k on a 32x110 lot, while this gem is on a 40 foot lot. So things are still whacky as help.

zombie market

As I was drifting off to sleep last night, it occured to me that this real estate market (at least, the participants) has a lot of characteristics of The Undead, or a Zombie.

Dictionary.com Unabridged (v 1.1)
zom·bie
–noun 1. (in voodoo) a. the body of a dead person given the semblance of life, but mute and will-less, by a supernatural force, usually for some evil purpose.

Wallstreet Words
zombie
A company that remains in business even though it is technically bankrupt and almost surely headed for the graveyard.

Jargon File
zombie
n. [Unix] A process that has died but has not yet relinquished its process table slot (because the parent process hasn't executed a `wait(2)' for it yet).

(definitions from dictionary.com)

It just won't die, and it cannot be stopped.

such negativity...

I have alluded to fractional reserve banking in the past, and David sent me an e-mail a while ago wondering about it. I don't have a lot of time these days to delve into it (or much of anything beyond me super cool kid), but I have understood that it was at most 5% (in Canada), and maybe as low as...gulp...0%. Makes you feel good about paying interest, eh?

But I stumbled upon this article that had in its first paragraph -

"The banks have no reserves other than debt."

Negative reserves? We are really fecked. What if I want to pull my million bucks (I wish) out of the bank in Loons? Is the bank going to tell me that they have no money - let alone my money?

It's a short article to read, with references to the New World Order and the Amero in the comments. Here is a snippet -

The reserves have collapsed - the banking system itself is bankrupt. Credit crunch is a very nice way of saying this, credit crisis is starting to sound a little more accurate.

Ah, but the Federal Reserve has saved us from a bank run! Well, they've put up $140 billion (plus whatever they're adding this week) so the economy could have $20 billion in loans - this is an amazingly ineffective & convoluted means of generating financial activity.

The reserves backing your checking or savings account are all owed to the Federal Reserve and the banks don't have the capital necessary to generate enough profit to ever reasonably pay this debt back.

It's a very twisted illusion that we live in.

rebel sell

I had an e-mail asking whether there was any gain in waiting for the Canada Line to finish in order to sell a nearby house. Will there be greater appreciation? I think that appreciation would already be priced in.

I've always been a rebel though, and would cut off my nose to spite my face.

What do you think?

On 11/04/2008, Ben wrote:
Hi there, first of all I'd like to thank you for creating the blog. I really enjoy reading the valuable information and insight that I am currently lacking on the RE market. However, so far I can't really find much posts/commentaries on the affect RAV (Canada Line) will have on nearby real estate units. Please advise if possible since I'm not certain whether to sell my detached home now or wait until the RAV station (the one beside Oakridge mall) near my detached house is finished to get a price appreciation (if any at all). Thank you, it'd be really great to hear what your take is on this matter.

Cheers,
Ben


van unreal wrote:


Hi Ben,

Thanks for writing.

I couldn't say for sure, but my best, common sense opinion is that if the proximity of the RAV line to your house is going to have an effect on its value, that would already be realized. The line is, after all, already under construction, and is very unlikely to not be completed. The selling point would be something like "Just two blocks from the Oakridge Canada Line Station (to be completed August 2008...or whenever)".

By all reports, price appreciation is slowing drastically, as are sales. This summer could very well be the beginning of the end. You may just end up dropping the price repeatedly for the next year. I would say "SELL!".

I am not an expert, and I have been wrong for years, so my advice is worth what you pay for it, but why try to squeeze an extra $10k out of a $700k (or whatever it's worth now) house. Before too long, it will be worth $350k, and wouldn't you kick yourself then?

Good luck - whatever you decide.

solipsist

fool on the hill

the pope already wrote about Garth Turner's new book: Greater Fool - the troubled future of real estate, and there is a blog that goes with it. He did a post on Vancouver (you have to check it out), and I was compelled to reproduce some of his commentary here.

I own a downtown [westend] Vancouver condo in a very good building within 3 blocks of the seawall and many other amenities. At 750 sq ft. it is pefect for a young couple or retirees. The market value is currently about 440K and I have about 110K equity. Is this type of property going to be affected to the same degree as other properties? Would you advise to sell now and wait out the coming crash?
Thank you in advance,
Al

You have a condo the size of my garage, worth $440,000, with condo fees, property taxes and other carrying costs, and you ask if this is a solid long-term investment in an over-valued market teetering at the tipping point of unaffordability? Are you serious?

This is exactly the kind of unit which has an uncertain future since there are scads of competing condos in the area, and a limited universe of “young couples or retirees” able or silly enough to buy one of them. Unless your unit is unique, with a full water view or the latest in amenities, or on the trendiest block, then there’s no reason to believe it will escape the coming correction in Vancouver prices. Get used to it. Or get out.

What is remarkable, is that Turner is an MP in Ottawa, and is quite vocal about the impending downturn in the economy, and the concomitant RE melt-down.

Mr. Turner is best known (lately) for being kicked out of the Conservative party by Herr Harper for being...too vocal. He sat as an Independent for a while, and since joined with the Liberals. He also was an MP in the short-lived Kim Campbell gov't (hey - she's from Vancouver) after losing a bid for the PC leadership to Ms. Campbell. He had a regular column in the Toronto Sun, and has written numerous articles published in other major Canadian daily newspapers.

Turner also has a political blog (link at Greater Fool), that is filled with mostly tedious comments, and Turner's reportage of events on Parliament Hill. Mr. Turner is a great advocate of Mr. Turner. Vexatious, and often vituperative, but both of his blogs are worth checking out.

I just like him because Charles McVety despises him.

i guess

macho slob commented on his disappointment with the disconnect between the blog's title, and some of the recent subject matter. Fair enough, I guess.

Here is some RE schtuff for ye;

I read over at the pope's place (from awum - from Landcor - @ Rob Chipman's) that East Van. condos are crashing - by 15%! It's about time. Check it out at the pope's - there is a graph, and everything! I wonder what that will do to the "W".

Meanwhile, The Province has the headline - Housing market to sink after Games: Expert.

the Olympics will create 3,000 new housing units, which will flood the market.

He said the underlying conditions for a bubble-burst are arriving -- income stagnation, rising interest rates and over-supply of units.

The latest figures show that it takes 79.2 per cent of the average Metro Vancouver income to buy a 1,500-square-foot house, an 18-year-high.

and what happened then?

Metro Vancouver's median income of $59,000 wouldn't qualify for a mortgage on the average house, now $648,592.

Ere, no shite Sherlock.

On the CBC News World 30 minutes ago - 'Toronto home sales down 2% in January, 7% in February, and 22% in March'. Realtors (the only ones at the open houses) blame bad weather.

"Don't worry Maggie, said Seamus incoherently, It'll soon be Summer".

Indeed.

So yeah, I've not been writing specifically of Vancouver Real Estate lately, but what is there to say about it any more? You all know as well as I do that things have been out of line for a long, long time, and we have expected each Spring to spring the trap. Maybe it is this Spring.

We are only really interested in the bottom though. Right?

In the mean time, it's interesting to look at the bigger picture, is it not?

red pill, blue pill

I came across this article, and found it to be "very interesting". The comment below is something that I have alluded to here (and elsewhere) before.

'Bush Caused the Financial Market Meltdown'
Washington ignored the lessons of the bank failures of the 1930s

Not a mistake, not incompetence, its the plan.
"It also ignored the lessons of the bank failures of the 1930s"

I would say "It learned from the lessons of the bank failures of the 1930s"

A crisis of this magnitude is not accomplished by ignoring history, but by learning from it. The Plan is to destroy the US dollar, to bankrupt its citizens forcing them to abandon or sell off their property, and to allow those who designed this collapse to buy their property at discount rates.

This is not a mistake, this is not incompetence, this is the Plan.

Have you never noticed that successive governments at all levels do as much as they can to take from the citizenry's pockets only to line those of their friends, and their own? Let us eat cake, or caka...

Governments are quite good at orchestrating all kinds of complex operations, why not one like this global bubble? Politicians tend to be lawyers and business people for the most part. It may seem to have a tin-foil wrapping as an idea, but really, corporations exist for only one reason, and that is ever-increasing profits. Problem is, we live in a closed system. Everything is finite.

Are we being marched back to feudalism? We might not notice as we sit and watch our favourite idol show (right after CTV/Fox news), load up the IPod, yell at the kids playing with their Wii-Wiis to keep it down while we watch food, fuel, housing, and all of our costs directly related to survival sky rocket. Meanwhile, the cost of all of those distractions keeps falling.

The Matrix written by Andy Wachowski & Larry Wachowski

Morpheus: I imagine that right now you're feeling a bit like Alice. Tumbling down the rabbit hole?
Neo: You could say that.
Morpheus: I can see it in your eyes. You have the look of a man who accepts what he sees because he's expecting to wake up. Ironically, this is not far from the truth. Do you believe in fate, Neo?
Neo: No.
Morpheus: Why not?
Neo: 'Cause I don't like the idea that I'm not in control of my life.
Morpheus: I know exactly what you mean. Let me tell you why you're here. You're here because you know something. What you know, you can't explain. But you feel it. You felt it your entire life. That there's something wrong with the world. You don't know what it is, but it's there. Like a splinter in your mind -- driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?
Neo: The Matrix?
Morpheus: Do you want to know what it is?
(Neo nods his head.)
Morpheus: The Matrix is everywhere, it is all around us. Even now, in this very room. You can see it when you look out your window, or when you turn on your television. You can feel it when you go to work, or when go to church or when you pay your taxes. It is the world that has been pulled over your eyes to blind you from the truth.
Neo: What truth?
Morpheus: That you are a slave, Neo. Like everyone else, you were born into bondage, born inside a prison that you cannot smell, taste, or touch. A prison for your mind. (long pause, sighs) Unfortunately, no one can be told what the Matrix is. You have to see it for yourself. This is your last chance. After this, there is no turning back.

Red pill, Blue pill.

explaining sub-prime

It's the alligators, and me arse...a cheap post is the result. Hopefully better than no post!

Adrian sent me this picture explaining sub-prime a while ago, and I am just getting to posting it now. (Thanks Adrian!)

click picture to enlargeGRAPHIC: By Laura Stanton - The Washington Post - March 14, 2008