Friday, June 25, 2010

$ 1 Billion...

Is that the new Lotto Max jack-pot? Nope it is the cost of the G20 boon-doggle.

What was the rationale for this huge expenditure? show-case Central we are told. You see we had the hugely expensive Olympics to show case Western Canada and so being the fair folks we are, we had to have a hugely expensive event out East to balance things out.

$ 1 Billion. How would I spend $ 1 Billion?

How about $ 1 M each for the families of service-men and women killed in Afghanistan = $ 148 M

Then add in a carton of free milk for every poor kid at school (any who ask for it) = $ 60 M

We know the politicians and bureaucrats want their share - so send them all to an expensive resort to teleconference with each other for a week = $32 M

While we are at it, lets hire 50,000 kids in their university/college breaks to do something useful. Clean stuff up or build something and help them pay for their hugely expensive education. = $ 150 M

That's about it. So we are still left with $ 610 Million. Maybe just use that to repay the debt. Ooops forgot, this is probably borrowed money anyway, since we are running a deficit- so just don't borrow it.

I hope Harper goes in with a bigger message than- 'don't tax the banks'. He seems like a man who's vision for Canada and the world is about as exciting as his suits.

BTW for those of you who still do not believe we have a media monopoly here. Google cost of g20 and click on 'news' - you will get 12 copies of the same article
Without a single word being changed from all the Canwest organs.

The G20 boon-doggle is democracy at it's worst and we have journalism at it's worst covering it.

Here I made it easy for you:

I know I am going off topic. Once we get June behind us, I am thinking of starting the MOI again for different areas. Maybe a different area every few days, so we can how the land lies as we head towards fall and 2011.

Enjoy the week-end.

Monday, June 21, 2010

Not Dumb-bear...Dun-bar...

Which film does that line come from?

Yes there are dumb bears out there. Today an anxious bear called me to say- "Did you hear about the Chinese allowing the Yuan to rise. It means Vancouver RE become cheaper for them".

Of course I had heard about it. It caused a quick (and short lived) stock market rally this morning.

However lets look at the facts:

As you can see, the Dollar held it's own today and in fact is up against the Yuan over the last week or two.

Panic over...

Friday, June 18, 2010

TD Bank Report

I cannot find the original report, however there are many places on the net which each report parts of it. Here are some interesting high-lights:

1) Expect housing to drop 7% from 2010 highs

2) Expect Bank of Canada rates to be 1% by the end of this year and 3% by 2011 even as growth slows.

The second forecast seems to go against what the man with his finger on the button, Mark Carney, is saying.

3) 95 cent Loonie +/-

Here is a brief review:

And here is a BNN interview with one of the TD economists. Canada has now surpassed the US in terms of consumer debt to income. Yippeee! time for a party!

This makes up for not winning the Stanley Cup.

Wednesday, June 16, 2010

Bits and Pieces...

So, as expected (by fish10) Carney backs away from further rate hikes. They are not a foregone conclusion..which means I am already pissing in my pants about the 0.25% we just did, the dollar is getting too strong again and I have received some nasty phone-calls from my buddies on Bay Street.

My Carney Goes To Charlottetown

If our economy is so weak that it can only survive by keeping rates at less than 1% and forcing the prudent to abandon their ways, and join the speculators then we have really got ourselves in a mess. There is nothing else left in the bag of tricks.

That could be it for a while.

Low rates are theft. Plain and simple. It goes from savers who get nothing from their hard earned savings except devaluation, and is a gift to speculators and banks.

Meanwhile the Government is fretting about how little Canadians save for their retirement. is it any wonder?? When all they can get in a secure investment is a fraction of 1%?

The solution??? Increase CPP payments! And guess who is going to pay for that? You and I. So smoke, buy a gas guzzling truck, booze away to your hearts content..don't bother saving because the next generation, already encumbered by huge debts will carry your ass too!

Now in case you think I am just attacking working class free-loaders, here's some balance. One wealthy family moved $2 Billion out of the country in 1996, with the knowledge of the then Government who closed the loop-hole after it was done.

That's a Billion loonies they saved, and we lost, when a Billion loonies meant something. Anyone know who the family was?

Meanwhile News1130 was touting an economist who said BC may experience stronger growth than the rest of Canada...I missed his/her name.

That would not be good for the bears. Interest rates are set based on what happens in central Canada. BC is seen as a boom or bust outlier and so weaker growth there and stronger growth here will NOT strengthen our cause.


All is not lost bears. We have weakening house sales, rising inventory and flattening of prices. If this was a normal market-place...when inventory rises and sales goes down..what happens? Things go on sale! Not in the manipulated, CMHC, cash-back mortgages, zero rates world of housing.

This is the most manipulated market in the world. Unfortunately, we have not learnt from the US experience...Despite Greenspan and Bernanke's assurances that there was no housing bubble (didn't the B of C just say that too).. the bubble burst and the result was carnage. We are all destined to follow the American Experience it seems.

BTW some real estate bozo on the radio 'blamed' the drop in sales on the following:

1) Changing mortgage rules
2) Fear about rising rates

Like somehow, the Government did something wrong by trying (even now when the horse has bolted) to close the gate on excess.

No mention of lack of affordability and wages not keeping up with home prices.

Schiller, the God of RE, says wages and RE have to get back into historic line, which means another 10% drop in prices in the US. Where it puts us, I have no clue.

Lower sales, higher inventory, flat prices = 5th wave divergence in my book.

Friday, June 11, 2010

Putting Some of the Rich Chinese Investor Myth to rest

Some of the Bear blogs are hitting almost a frenzy over the rich Chinese investors who are buying up the whole lower mainland.

Couple of things I have to throw into this pot:

1) It isn't just the Chinese or other visible minorities. I went to an open house for a fancy suite last week and the two out of town couples looking were form Russia and South Africa. The Asian couple were Canadians who had moved from Calgary. So appearances can deceive.

2) Nevertheless there is significant buying from the Chinese Mainland. However these are generally expensive properties in expensive areas (West Van, Van West, Coal Harbour and Yaletown) . They aren't buying in Maple Ridge or Coquitlam or New West. (generally speaking- I know there were some guys laundering money through Real estate- but that is rare)

So while they may be pricing out the locals on the higher end of the market, they have no effect at the middle or lower end, except by displacement.

And we have all time price highs in Ottawa, Toronto and Montreal- is that from Rich Chinese buying too? I doubt it.

There are some good points associated with these Airport-shuttle buyers - they are paying with cash- No CMHC mortgages for these guys, they buy lots of pricey furniture, cars and pay property taxes and strata fees which goes back into the local economy.

Now if they would only move here and pay tax on their worldwide income, things would be perfect.

They also provide employment for locals who built, and then have to repair the badly built units all over again - some days our city looks like half the buildings are under tarp!!

They provide employment for workers to demolish the quaint westside homes and build McMansions in their McPlace .

On the bad side, they often leave the units empty. Now while the City and Province probably regard them as ideal occupants, and wish we could all be like them- pay taxes but stay away and don't use services too much- the truth is that unoccupied units stresses the housing supply in a City with limited space and degrades the standard of living for those that remain.

So Vancouver City officials reading this blog (I know some do) think out of the box- add a 30+% property tax surcharge for any unit unoccupied by owner or a renter for greater than 6 months a year. It would be very simple to verify this from utility bills. Use the money for social/subsidized housing- ooops I forgot there's the Olympic Village bills coming due. Ok use it for that, and the locals would be a lot happier with their rich off-shore neighbours.

The Swiss are the world's safe bankers. They CHARGE you to hold your money. If were have become the world's safe Real Estate bank. lets at least get something in return and not just screw ourselves for a few bucks, lets do it for serious dough :)

Also, Campbell and Harper, please make sure that the chunks of money you are inviting in don't come from theft or bribery or other malfeasance, we already produce enough dirty drug money in our Province, without getting other country's dirty laundry too.

In fact in Coal Harbour there is some social housing, which, from what I understand, was built by the developer to be allowed to put up the luxury units. They sit cheek-by-jowl, right next to each other- different quality of course and one-side is full ++, and the other is almost unoccupied. You can guess which it is.

I sometimes think us bears are not just whining about prices, but hanker for the old Vancouver. Quiet streets, empty trails and about half the number of people we have here now. But for better or worse, we are a large international cosmopolitan city, where a lot of us derive our income directly or indirectly from visitors, ESL students, rich buyers of RE, outside investors etc etc.

It happened elsewhere. Hong Kong was a sleepy fishing village that the Brits decided to make their Far east commercial hub. Taiwan was an equally peaceful sparsely inhabited Island, until mainland Chinese Nationalists moved in en masse.

I am sure those locals weren't too happy with the changes either. We have to go with the flow.

Am I buying RE here though? Nope.

Do I wish I had when I moved here (from another part of BC) nearly a decade ago or even searched for a bargain in the 2008 flash-crash? - Yup (Chad)

I think I will get another chance, Mainland Chinese buyers notwithstanding.

Thursday, June 10, 2010

What would be the best scenario for the bears...

I know everyone has waited patiently for soooo long for this danged correction, that they want it NOW and they want it HARD DOWN.

But actually that would not be the best situation for the bears.

Think 2008/9. We were down hard and sudden and the donut-heads in Ottawa and Victoria panicked and pulled out some bedraggled rabbits out of the hat and up we went again.

If we go down hard, the calls to 'do something' will be deafening and the politicians and Carney will 'do something'..God help us.

So a slow steady decline would be very nice, thank you very much.

Something that doesn't cause panic, that slips under the radar, that allows the Bank of Canada to maybe- if they are feeling very brave- raise rates another 0.25%.

But a decline that keeps giving.

Anyway you wouldn't want a sudden huge drop, imagine those poor Realtors and Mortgage Brokers with cardboard signs at red lights saying..'Spare $5, Mercedes lease payments to make'. Have a heart.

I think another month with declining price, hopefully in all sections and measurements, will start the new trend.

Monday, June 7, 2010

Fiddling While Rome Burns...

What's with Harper and Flaherty??

They are spending all their waking time trying to shoot down a world-wide bank tax. Harper talked it over with the British PM, Flaherty has been campaigning to get the G20 to drop it.. you can google hundreds of articles and video pieces on it: here's a couple
Boys, it's one thing to go to bat for the banks, but there is a frigging crisis out there. European countries are near default, Canadians have been pulled into the worst debt binge EVER, commodities are faltering... and all you can worry about is the bank tax!


I guess the boys think that they can't do anything about the other issues, so at least make sure they keep their friends in high places happy.

The banks have already had it REAL good. All the toxic mortgages have been insured by us, while they get to eat the difference between what they pay borrowers (ZERO) and what they lend it out at (4-5%)... sounds good to me.

Where can I sign up for that please?

Hence wind-fall profits.

And now we have the G20 meeting in coming up in Toronto at a cost of $1 Billion..huh! No-one heard of video-conferencing. Of course you wouldn't get those TV shots of our leaders riding up in limos to be welcomed in nice new suits, solving the world's problems, saving humanity, fighting the bank tax...


Sunday, June 6, 2010

De-leveraging ourselves....part 1 of 4 or maybe 5

The above chart is in response to a certain reader who said:

Fish do you really think a 0.5% rate environment really changes how much debt people are going to take on?

I don't think so it is a fact, and there is lots of data out there to back it up.

The above chart is one of these, which is particularly useful because it compares us to the USA and UK.

All the Central Banks started cutting rates aggressively in the last three years, the Fed went first, then the Bank of England and then in 2008, early 2009 the Bank of Canada slashed rates in a complete panic. What do you see?

The UK and USA which were in deep doo-doo, and even with lower rates their consumers pulled their horns in. Despite the Central Bankers begging them to borrow and spend, they could see the terrible state of the economy and started getting their debt house in order. Borrowing dropped as a % of household income.

Meanwhile what happened in Canada??

We were in pretty good shape. But our consumers could see the carnage that was going on in the US and UK, and so they were just starting to follow the consumers in those countries in trimming debt.

BANG! The Bank of Canada starts cutting and they start piling on more debt, at the fastest rate ever in fact.

So what is the net result of the Bank of Canada's rate cuts. Well one result is that the Canadian consumer which started off with a much lower debt/income ratio than the UK and US, has caught up- just in time for...

1) A housing slow-down
2) Higher rates
3) A double dip recession

If any of the above three happen, we will be in same mess as the US.

Thanks Mark!

Saturday, June 5, 2010

Time to clear up the confusion...

Changes in price from April to May (rounded up):

REBGV Benchmark Price:

All Properties : - 0.6%

Detached : - 1%

Townhouse : - 0.5%

Apartment : + 0.3%

Average Prices:

Detached : - 4.6%

Attached : - 2.0%

Apartments : + 3.8%

Friday, June 4, 2010

Here she is in all her Glory...

The GVREB May 2010 report. Lets hear it for the sexiest report in the last year!

April Detached Benchmark: $818,403
May Detached Benchmark: $810,175

Benchmark all Properties April: $593,419
Benchmark all Properties May: $590,662

Benchmark Attached April: $502,399.
Benchmark Attached May : $500,339

Benchmark Apartment April : $397,77
Benchmark Apartment May : $398,783

10% decline in sales from last month and last year.
48% more new listings in May, than a year ago.
Total listings up 10% from last month and 28% higher than last year.

Ok, so it's not time to whip off your clothes and have a thong part on your balcony, but it is a danged good start.

Detached Average price is down the $40K that Larry said (kudos again)

Now we also know why it took them so long to bring out the report. Those rascals in the FVREB had already taken the word abundance. So the committee had to come up with another word to indicate exploding inventory and declining sales. da..da...

May market offers buyers greater selection

Here is the whole report. Note there are some (-) signs appearing in the 3 year column (Chad). That would mean the benchmark is already down from 3 years ago eg Squamish detached and Maple Ridge apartment.

It's small yet, but from small acorns, mighty oaks do grow:


Thursday, June 3, 2010

While we wait for the REBGV stats

Here is some info from the REB of Victoria for May:

A total of 695 homes and other properties sold in May through the Victoria Real Estate Board’s Multiple Listing Service® (MLS®), down from the 756 sales in April. There were 879 sales in May of last year

As of the end of May, there were 4,521 properties available for sale - up from 4,229 at the end of April. The available inventory is now 19 per cent higher than the 3,789 properties for sale at the end of May a year ago.

I think that makes it 6.5 months of inventory (VREA check my math please)

Victoria Price Graphs

Wednesday, June 2, 2010

Some Fraser Valley Numbers...

Good analysis:


Here's my take. I love the up-beat title:


May that abundance continue in abundance.

Compared with one year ago:

2% less sales than May 2009 and 14% more listings.
Prices up 8-10% though from last May.

Less sales, more inventory and yet higher prices. I am thinking 5th wave divergence.

Compared with April 2010:

17.6% less sales over-all
7.3% higher listings

Benchmark price down 1% from April.
Median and Average prices flat for Detached and Townhouse from April 2010 ie 0, or +1 or -1%
Apartments are up 4%! Despite double digit less sales and 7.8% more listings!

Tuesday, June 1, 2010


Kudos to Larry Yatter for being first out with the numbers.

We are down almost 1% -error it is in fact down -4.6% from April in the detached Average. (hat tip VREA)

If we continue down, then the 'divergent high' theory I posted before will be in play. That is prices rise, but in a smaller area and with lower sales - much as you would see in the final topping process of a stock.

As for the Bank of Canada, they did the deed. + 0.25%. But don't expect a lot more this year, see my comments to the previous post.

Inventory is important.
MOI is important.
Listings growth is important

But price trumps everything....