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will this wretched Olympic village cost us?Now there is this http://vancouvercondo.info/2009/06/mould-risk-at-olympic-village.html which means at the least buyers will want a lock solid guarantee on future leakage problems, pushing the city's liability well into the future.The numbers I heard on News 1130 were from $400 to $1000 Million cost to the city. I assume some of that will be recovered form sales, however either way you slice it, this seems like a bigger mess every day.Government and Private ventures DO NOT MIX WELL. Why? Because the Private takes most of the profits, while the Government takes most of the losses.Who advised the city on this deal..does anyone know? Which law firm, which financial advisers? We should hear from them, or at least we should know who they are. Any readers know or can find out?.....................................................Mortgage rates between a rock and a bigger rockLatest ING rates:5 Year Variable 2.85% 1 Year Fixed 3.39% 2 Year Fixed 3.59% 3 Year Fixed 3.65% 4 Year Fixed 4.09% 5 Year Fixed 4.49% 7 Year Fixed 5.50% 10 Year Fixed 5.50% We are about 1% higher than a month ago. The five year is most important number and we are near pricing people out again and losing the huge push we got from the spring drop in mortgage rates.They are going up, because the bond market is pricing in a recover and rising inflation. If they are right, then rates could rise pretty fast.If they are wrong then rates could go back down once it becomes apparent that the recovery and inflation were just an illusion. So if things get better, mortgage rates could shoot back up to the more normal 5-6%.For mortgage rates to go down, we would have to see evidence of more weakness, job losses, deflation and a severe recession.Pick your rock.
I am seeing homes that have sat unsold since last fall selling at or above listing!I don't understand that. Yes mortgage rates are at historic lows, as I keep saying, but if the house wasn't worth $X six months ago, it isn't worth that now either.What could be the conceivable reason for buyers to get back into 'panic' mode:1) We have had a flood of retirees from Alberta and out East.
2) Buyers think they have missed the correction (which lasted from last August until December 2008) and house prices will run from now on and they will never be able to buy.3) Like a Pavlovian dog, they have been beaten so many times by resurgent prices, that they are using the lower rates to jump on property, price be D@mned! Just gotta get in!4) We bears are wrong and the correction is over. The recession will now end and the money will be flowing into over-priced assets again. The new buyers are just a sign of that happening.5) There are off-shore buyers coming in with lots of cash eg from a newly resurgent China or 'fear' money from South Korea and Iran, and they don't really worry about Days on the Market or other subtleties.FWIW:Prices are still well below 2008. The recession has stopped dropping into a depression but is far from over. The TSX dropped 5% in one day at the first whiff that demand for commodities may not be that strong, when the World Bank said the world will contract next year.Today it is rising off a bid from a Chinese company for one of our oil producers and raised OECD world growth estimates.Which one is right? Growth in 2010, or further contraction?How are you going to place your bets?
Anonymous said...
Who is buying? All I see is lay offs.My response will be my week-end post:This up-tick is sales was inevitable and to be expected with an historic low in mortgage rates.
It has stabilised the market. If it hadn't our banks would have followed the US banks into insolvency. The gradual drop has actually helped things, as it gives time for banks to tighten up and become more prudent with their lending and raise capital (both of which they have been doing).
It also allowed some people who were being stretched to breaking to refinance. Also a good thing.
I would be very surprised however if the whole BC market starts rip-roaring again though.
I still think we peaked late Summer 2007- early 2008. Since then the world has changed a lot. Our largest trading partner is having it's worst recession since the depression, large companies are down-sizing or going BK, and the credit bonanza that Wall Street created has gone taking many of the players with it.
To give you an example of how bad things are in California, a friend told me he was a co-owner of undeveloped land in Ca, that was listed three years ago for over $2.5M. They have been dropping the price, but no bids, until today when someone offered $250K.
We will find out soon exactly how 'different' it is up here.
The Olympic village is draining another $22 Million out of our coffers http://tinyurl.com/mpzjou . The opening ceremony will cost $8.3 Million more than originally forecast.The security amount at $900 Million is five times the original budget. Makes you wonder whether the original budgets were artificially rosy to try and convince the sheep (us) to buy in.With 220 days to go, you can expect the estimates for cost 'over-runs' to keep going up, and revenues to keep going down. I expect big cuts, at the the city and Provincial level, post Olympics to deal with the shortfall. Bet PyeongChang and Salzburg are breathing a big sigh of relief to have failed in their bid. .....................................................................Now a perfect example of why we need to break up Media monopolies like Canwest. Canwest owns all most all the newspapers in BC, and in fact most newspapers in Canada, as well as Global and other Tv and radio stations. They keep trimming down their staff (whom they have just asked to take a 5% paycut) and have debased journalism.Here is an excellent example picked up by the gang at Vancouver Condo. The title blares out "Vancouver area prices UP 16% from last May". The truth is they are DOWN 6.6% from last May. This newspaper cannot tell the difference between PRICES and SALES! That's assuming the mistake was not intentional. Lets wait and see if they publish anything correcting their mistake.http://vancouvercondo.info/2009/06/province-prices-up-16-yoy.html Little wonder the group is near bankruptcy. (in fact it would be if the bond holders insist on payment of interest which the company has been unable to meet)
For North and West Van. In case you missed them.Source: Alan Skinner a realtor, in North Shore Homes:Comparison of Jan-May 2009 v Jan-May 2008North VanDetached: 17% less homes old. Average price down -18%Townhouses: 7% less T/h sold. Average prices down -12%Condos: 23% less Condos sold. Average prices down -16%Inventory down a few % from 2008.West VanDetached: 30% less homes sold. Average prices down -21%Townhouses: 70% less T/h sold. Average price down -29%Condos: 27% less condos sold. Average price down -21%.Inventory almost the same.Both these areas had reached psychotic levels of over-pricing and I think they could come under further pressure if the economy and stock market falter.
After telling us for a year there would be a surplus, then a small deficit, then a moderately large deficit, the Harper Government finally had to come out and told the truth. We are heading into an enormous $50 Billion hole, and very likely don't know is that is the bottom either.The 'good news' was that big chunks of money were being rapidly dispatched from Ottawa to build things that we may or may not need.Add this to the Provincial debts, and in one year , we are back to the Mulroney days of unsustainable deficits. Such is human nature- here in Canada and everywhere. When things are hot, the politicians take the credit, when they are not they point at the sad state of affairs in the world as the cause.When the asset rise was red hot, they did nothing but watch and in fact made sure fiscal measures where so lax as to ignite the asset fire even more.Now that the pyramid has collapsed of it's own weight, they are doing the only thing they know how, which is throw more money at it.Back to housing. Housing is just one asset. As you noticed all assets have been roaring back since March...RE, stocks, Oil , copper and gold. They were in free-fall. This is a good thing, the alternative is that we all KYAGB. However I think this is an interlude. I don't think this is a new bull market in any of these assets.When things go up, we can see nothing but blue skies ahead, when they dropping, we see the pits of despair. Such is human nature.No one can deny that RE has shown strength for the last 3-4 months and prices have stabilised. Some buyer's have got panicked into bidding wars, buying well over listed. Where they smart? In a few months we will find out.
As we all know housing prices have been stabilising for the past three months.They were in free-fall in October with no bids and a 20 MOI at one stage. Now prices have ticked up from last month (though still down 10% YOY) and inventory has dropped YOY and MOI is around 4.Larry Yatkowsky has a quick summary here:http://www.yattermatters.com/real-estate/real-estate-headlines/Is that it? Are we off to the races again? Everyone has their view, but I for one doubt it. What we have had for the last three months is the coming together of several factors:1) The irresponsible financial entities around the world have been pulled out of near collapse by the infusion of Hundreds of Billion of dollars of US and European tax-payers money.2) Interest rates around the world have been slashed to near zero to try and prop up assets. We have the lowest mortgage rates on record.3) Commodities have got a bid, admittedly from catastrophic levels (especially oil, gold and copper), and that has helped mining and oil producers. However natural gas for which provide the Province a huge % of it's revenue has continued to drop.4) We had the normal seasonal bounce in sales that occurs in spring.Now it gets interesting. I think the fun on economic front has just started. The US is losing 500,000 jobs a month! We are their largest trading partner. We will continue to get hit. Interest rates have been ticking up here and in the US, a trend which I hope reverses soon or our collective goose is cooked. Weak demand and higher interest rates would be disastrous.I expect the recession to start biting deeper soon. I don't want that, but I cannot believe that we skate so close to world-wide economic collapse and then are back to normal a few months later. There are huge swaths of debt that cannot be repaid, on anything from Commercial RE to Machinery.Employment is likely going to be weak for some time. The job-buying program of both the US and Canadian governments have still to have any appreciable affect. Meanwhile they are all sinking into deeper deficits. Pretty soon we will get Provincial and Federal cut-backs to try and contain these deficits, at the same time as they will talking about job creation.So, I see this as a brief interlude. I could be wrong of course, and if I see strength in the economy returning over the next few months and housing to continue strong, I will reconsider my views.
