Friday, May 10, 2013

The Lay of the Land

So where are we now?

We are at decade high inventory.
We are at a MOI of about 6 +/-
We have 3% +/- rates
We have the CMHC with new executives and new restrictions, thank Goodness.
We have a Government who talks the talk, but is still slow and short on action.
Lets see whether they will cut back on amortizations to under 30 years as Garth has promised us.

Recently I have seen some increased Chinese Mainland buying of higher end properties. It always baffles me how a resident of a country that only allows outflows $50K a year per person, can throw down $5 Million on one transaction AND Presumably that is just part of the money they brought here.

Of course the effect of this money is very local, though there will be a trickle down effect into other areas. We will have to see whether this is the start of a new buying spree or just a blip

It is no where near the buying of 2011 which was a frenzy, but there is a little trickle so far.

There are also some well heeled local buyers coming into the market. A few sporadic buys, especially if sellers drop below asking. A recent sale in West Van that sat unsold for many months at Assessed, went quickly once the sellers dropped to $200K under assessed. The MOI is still very high in West Van and Van West.

There are also middle buyers coming into the market. It seems like a 5% drop and lo rates is enough for some people to think they are getting a bargain, or maybe they have other incentives for buying (inheritance etc). rates are low. 3% across the board or less.

As to our local economy, we have seen some significant commodity weakness. Base metals, Gold and Silver have all taken a hit and that will take some of air out of our local promoter crowd. However if the commodity weakness persists, then we are looking at some serious economic weakness in BC which will dampen demand further. Our jobs numbers have been all over the place with a big loss last month and a big gain this...

Sales should start to taper off over the summer months and once again the MOI will start to rise. Now we will see how firm prices are. The trend is still down, but needs confirmation.


  1. This comment has been removed by the author.

  2. Those pesky well heeled foreigners..

  3. numbers

    472 new
    207 price change
    135 sold
    7664 detached
    9278 attached

  4. My mother and my brother are trying to sell their two places with the intention of buying a house with a suite and having my mom live in the suite. They both live in Walnut Grove (Langley).

    Mother had a lot of showings and sold nearly instantly. That didn't happen because the couple, in their late 50s early 60s, said their financing fell through. As a result, she lost the house that she and my brother had put an offer on when another purchaser showed up and offered to buy it without condition of selling their property first. Lots more showings and in the end two families were making bids on mom's place. Still sold for slightly below asking, but just slightly.

    Things have been slower for my brother, but there are still showings every weekend. My mom and brother put an offer on a second place and had to remove the conditions on the offer because another family put a bid on it.

    The point in this story is that I am surprised how many people are active in the market. Like all anecdotes, this may be limited to its own facts but in Langley at least there are a lot of people out looking. Pent up demand? I dunno. Just an interesting story.

    1. There will always be activity in the market for various reason. people coming. going, getting divorced, moving up, down-sizing etc. The problem is when such a huge element of speculation enters a market. Same as the US. Always ends badly. Always causing the recession on the other end.

      As Keynes has said, the cost of not containing speculative bubbles, is mis-aloocation of capital and a huge bust on the other size.

      Not only have our policy-makers NOT controlled the bubble, they have helped blow it up.

    2. I hear you Fish. I am a long-term bear. I go back to the good old days of VHB. I am just surprised that there is still so much market activity given that prices are insane by almost any metric you can name.

  5. Nice

    523 new
    256 price change
    220 sold

    7697 detached
    9280 attached

  6. The movement of money for individuals out of China is done by money 'mules' There is no shortage of people who will line up to accept a fee for allowing their name to be used for the annual $50k transfer of wealth. Wealthy individuals will slowly send money out of China $50k at a time. Generally these funds gradually go to Hong Kong and then to Canada in a lump sum. I work for a Canadian Bank and see the daily wire transactions. Shocking how we allow this.