| B.C. Real Estate Crashing Time to Sell !
Posted: 8/9/2008 2:10:14 PM | Oh yeah... and SAMA be careful of your mortgage broker... 40 year mortgages are nuts... The payment size difference vs. a 25 year mortage paid out of every paycheque is not that great -- though admitedly a little lower. But the total amount of interest you pay over the life of the 40 mortgage is very high. Plus over the 40 year terms sometime (when you renogotiate rates)... it is unlikely the interest rates will be a low as rates are today. This will increase total interest cost as well.
Also consider that you will not be working 40 years hence. So buying with a 40-year term, you are betting the price of housing will go up.
We have just been writing that this is not a great bet right now. But good luck in whatever you decide to do. I do wish you the best of good fortune in your new place. | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 8/10/2008 1:32:53 AM | Against my better judgement, I will wade back into this again:
1) Yes, the 1994 downturn was in the order of 20% or so. But, 1982 was more like 40%. The difference (besides interest rates) was that the climb in 1982 was much more dramatic than 1994. In '82, the prices doubled in about 1 1/2 years, while in '94, it took about 5-6 years to double (much like the recent cycle). So, although '82 had a 40% drop, I expect the current downturn to have similar results to '94.
2) In my opinion, the notion that outlying areas will outperform the lower mainland is fallacious. While the argument that people will want to move out of Vancouver to the outlying areas appears to make sense, the problem is that history shows that it is the outlying areas that get sh*t kicked the most in downturns. Mind you, the outlying areas generally show the highest gains during upcycles (as a % of value gain). What is the saying - "those who ignore history are doomed to repeat it"?
3) The notion that babyboomers will want to retire here is true, but it has always been true, so this is a non-factor as this will already have been "priced in" to the local values.
4) Those who say this won't be like '82 or '94 because the "conditions aren't the same", are blowing smoke up your butt hole. As I said in my previous post, the market is built on momentum. It doesn't matter which catalyst kick starts a cycle (be it interest rates, or excess supply, or what have you), once momentum (or buyer psychology, whatever) is built in a certain direction, it is very difficult to change course.
5) I was reading an editorial in the Georgia Straight today where some realtors and real estate board parrots said that the media can affect market psychology and that the public should basically ignore what is printed in the newspapers. Of course, they are correct, but I notice that they didn't say a peep about this when the market was on the upcycle and the media was trumpeting how hot real estate was. Gee, I wonder why? Vested Interest? No way, right?
6) People mention that they have no need to sell, but what if your mortgage is greater than the value of your real estate asset? I suspect most people will do a "Lord Humungous" (okay, this is a Road Warrior reference, which I was compelled for some reason to make, where the Lord Humungous implores to the oil people to 'just walk away', but if you haven't seen the movie, you probably won't get it) and just walk away from their mortgage. This happened a LOT in '82.
Anyway, I guess most of you have figured out that I am a market bear right now. Actually, in my opinion, the market has been overvalued for quite some time, and it will be interesting to see how this all plays out.
1GD | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 8/12/2008 8:33:10 AM | Another good post 1GD. I think that the shortage of money to be loaned is definitely going to be a factor in increasing the momentum of the down swing. Plus the economic problems in the USA causing this problem is far from over. Maybe i am being negative but i am looking at it this way.
1. The USA has the ABCP still on the go with no end in sight still.
2. They have the largest national debt in their history and the numbers are still growing at an alarming rate.
3. The personal debt of the average American after the mortgage is somewhere around 80K.
Is this the perfect economic storm brewing for the world? I hope not because then we will really see prices come down.
I believe that we as Canadians cannot live next to the largest single economy in the world and not feel the effects from them. Hang on because in my opinion we may be in for a hell of a ride.
Just another Bears opinion  | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 8/12/2008 9:26:03 AM |
Oh yeah... and SAMA be careful of your mortgage broker... 40 year mortgages are nuts... The payment size difference vs. a 25 year mortage paid out of every paycheque is not that great -- though admitedly a little lower. But the total amount of interest you pay over the life of the 40 mortgage is very high. Plus over the 40 year terms sometime (when you renogotiate rates)... it is unlikely the interest rates will be a low as rates are today. This will increase total interest cost as well.
Also consider that you will not be working 40 years hence. So buying with a 40-year term, you are betting the price of housing will go up.
We have just been writing that this is not a great bet right now. But good luck in whatever you decide to do. I do wish you the best of good fortune in your new place.
I believe the new federal rules have done away with 40-year mortgages anyways. | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 8/12/2008 11:32:31 AM | The market has peaked...and it was not a surprise to me at all.
This was predicted @3 years ago by the real estate board of BC. The Vancouver market, Greater Vancouver Area is almost identical to what the Sydney,Australia market was prior to their Olympics.
The demographs overall and the makeup of the city, housing, social ammenites, general overal area was basically identical to that of Vancouver.
The Sydney model showed that 18-24 months prior to the Games starting in Sydney that the market peaked...it had been skyrocketing to new highs for years.
Prices started to fall, don't quote me on this, it was some time ago I heard the report...but I think it was like falling 10% /year for a few years....and eventually in a few years the prices would stabilize and go back up...but not at the crazy pace it was rising previously.
so... me?... I bought off the Ex...and my home is not a great house..it is old... it is in need of repairs...but it is my home for my children. They go to school here and this is our neighbourhood. The home belonged to my parents for 20 years prior, it is an investment...but I am not planning on moving for a few years...it is my nest egg.
I could still sell for a damn good price... I live in a desirable area. | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 8/12/2008 12:42:16 PM | great thoughts 1GD^^^
whatever the catalysts for the up or down are is not important for the averages home owner, what is important is the intent of holding real estate and what commodity.
If one owns to occupy and accumulate assets the project is a long term preposition, 10, 20, 30 + years during which time there will be fluctuations. As long as the mortgage burden can be managed and it is relative to a rent for same size etc. there is little need to panic or make a move considering all aspects transaction cost, fees, etc. If the mortgage is greater than the asset...hmm...if income is really low and the difference is substantial...walking away and letting the bank hold the loss may be a consideration...but there are consequences to consider.
IMO the condo market has outperformed the single homes, effectively the need for ownership of those who had low down payments and could not get into a house has been exploited to the breaking point. While the price difference between a condo and a house may still be more or less 1:2 the gap used to be more like 1:3 before. I'm afraid the condo drop will effect the lower income earners who are the least likely to afford the loss...what else is new in the investment scene..lol
Outlying areas may not likely be as 'hot' as they used to be until the gas prices become stable and/or other transportation is available or relocation of employment is an option.
It never made much sense to me to move to an outer area when considering travel time and vehicle cost over the long term, essentially the monetary results were the same except for the time loss. The only justifiable reason for buying 'out' were the lower entrance costs and perhaps a newer home.
In the pig picture there will be population growth almost guaranteed, so downtown will be a lucrative market even if there are temporary losses. The trends of people reasoning housing will remain much the same so outlying areas too will recover.
Cashing out will only be worth while (the loss if any) when one decides to relocate to an area that is significantly cheaper.
For investors the scenario may be a little different and dependent on interest, earnings and tax write off. | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 8/12/2008 6:04:44 PM | from another mkt bear watch out for the tsunami coming from the south that will adjust perceptions for the long term on real estate. Daily involved with US bldg industry and the woes therein are staggering---coupled with credit bubble bursting the family home will take on a whole new meaning. In prior generation people bought homes not investing like today whereby after dot com bubble burst all that cash chased real estate--this bubble is bursting also and personally place blame with the federal government both in US and Canada for creation of these mkt bubbles directed through and in part retirement fund investment.
anyhow enuff doom n gloom 4 today packing my sailboat n sailin into the sunset
pccc3 | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 8/13/2008 4:02:32 PM | 40 year morgages are still avaliable -- I just signed one. My reasons are my own but because of my injury it was the best short term option for me -- I.E. Low cost of living, extreamely low interest. So for the present till I get better and go back to work or take early retirement it fits me.
The US market has dropped about 30% so not that big a deal unless you just bought like a few have mentioned previously.
Al | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 8/13/2008 5:55:18 PM | while paying down a mortgage as fast as possible is very sensible as far as saving interest is concerned in some scenarios a very long term mortgage ie 40 yrs with low interest may not be so bad considering the current rate of inflation and the fact governments have adjusted the statistics not to reflect oil and housing, it may just end up that inflation equals interest...
Selling into a downturn is only advisable in the initial stage, thereafter it becomes a buyers market, though none really have a crystal ball to predict the future. IMO in the long run real estate investment is still a great asset gain when compared to renting when the size relationship of living space needed is the same. | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/5/2008 9:38:21 AM | ^^^^^^^^^^^^^^^^^^^^^^^
Who is interested in any kind of mortgage in a declining market?
The only people who are trying to be positive about real estate
are the ones with hefty mortgages.
Most people who bought in the last 6 months to 2 years
would lose money if they had to sell now.
It will be off another 10% percent by christmas. | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/5/2008 5:48:53 PM | | i am soooo lucky is sold my one bdrm apt. in May of this year. i was so worried i would not sell before the " crash came" usually timing is not on muy side however this tiem it was...big time. hodl on there will be some good buys as i am waiting also... | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/6/2008 8:43:51 PM | I figure BC is not going to see another "buyer's" market until at least 2012 so I am waiting until then to buy. Buy low sell high. I can not and would not buy now but for certain someone IS buying right now. If I owned a house I bought five years ago in Vancouver and it doubled or better in price I would have dropped it as soon as it doubled and then bought down somewhere up north. Buy low and Sell high. No other way.
Prices are going to drop a lot before 2010. That much is for sure. I am willing to wait 2 or three years after 2010.  I will get my place but I am not going to need a 50 year mortgage either. | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/6/2008 11:03:40 PM | I sold my house inVernon B.C. in March 08 & my condo in Toronto in June 08. I'll keep my place on the Water in Vancouver.....you have to live some where. Payed off all debts. Flatten your debts if you can. Stockmarket has taken a beeting!
Good luck
Davie940 | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/6/2008 11:26:35 PM | | Here's to the have nots. They do not figure in this forum. I don't have exact figures but how do you manage in the hinterland to buy a "dump" for $200,000? (No well-paying jobs) And who will service all you lucky homeowners (relishing further gains). B.C. is apparently fine, according to Campbell's finance minister but who is telling the truth? And how in the Hades do any of you manage in Vancouver? Heard a few months ago on B.C./T.V. that many homeowners in Vancouver are paying 75% of their monthly income on their mortgages. Scary. Can't eat the scenery, can you? If none of these facts hamper you now, at some point they will. Math is math. | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/7/2008 7:49:05 AM | to the have nots!
on the BCLC retirement plan......... 
I had a house but the ex forced the sale of the matrimonial home at the bottom of the spike in real estate. Stupid ex. Stupid me for putting my career on hold during the kid years. I hate renting. | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/7/2008 11:24:56 PM | | Anyways in this neck of the woods....the Americas...home ownership is a given. In the rest of the civilized world renting is how you live. I have owned. What a pain when you didn't have enough to pay for necessary repairs and replacements. And when you sold in a cool market unless you had enough to pay for necessary labour what was the real cost of your labour? Owning... unless you are fortunate enough to really own... is fine. Otherwise, rent and save. Until the insanity dies down. I think the party is over. And let all us again value a house as a home, rather than (Yawn) an INVESTMENT!!!!! | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/21/2008 8:44:22 PM | Here in Salmon Arm at least, developers are pounding through as many condo complexes and manufactured home parks as they can to try to have enough for all the retirees downsizing from their big family homes.
This to me says it's going to drop even more in the next few years with more houses/properties coming vacant, but I'm no expert. Anyone?
well being also near the salmon arm area...well as far as i can see is all the albertans(red plates)oil money..... are coming in and buying up all the lakeshore lots/ properties and large acreages they can find...so personaly from what i have heard thru the grape vine well the market is going to remain stable for some time to come and then some .....and for the ederly yes they are downsizing to more retirement vila's and lakeshore condominium developements .but this is the trend in any lakeshore community ......just my 2 centz | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/21/2008 8:54:40 PM | There are lots of strata developments going up in the Lower Mainland, too, but the problem is the buyers are going to be either first timers (who are scared to buy with the prices right now) or down-sizers (who are having a helluva time off-loading their larger homes).
I'm seeing a lot of people buying condo units as rental properties - mainly middle-aged or older people who finance these purchases with their first home equity - and end up putting their grown kids into them. It's going to be very difficult for a young family to buy in this market without family help.
But - again - how do you sell if the buyers are freaked out at the prices???? | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/21/2008 9:03:36 PM | | I'm not surprised that the housing market in BC has stabilized, it is said that stats show a 7 year up and a seven year down. So every 14 years we peek, and every 14 years we hit bottom... it will be 7 years in April 09 since I sold my last house, and I rode the market all the way down... a year or so after moving to my current location things started to move up again, and that would make this the seventh year.... | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/21/2008 10:14:34 PM | going condo shopping once again! this time think we mean business ....... hoping to be out of my boomerangitis status by xmas. Know the prices r dropping.....
Ride the wave of boom, bust and echo!! | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/21/2008 10:45:31 PM | It is just another opportunity time for those big players managing the "smart" money.
Those little players motivated by bandwagon effect when a market starts to rise already buy in late and then greed takes over and they have to sell..lol stock market real estate all the same game.
One difference on should consider, the cost of rent is not deductible a mortgage can be. Either way one has to have housing, if you are in a must sell situation look for another alternative to selling, for those in the market it would be wise to ride out the bump, for those no it would be wise to wait until it has bottomed , settled at a relative stable price and when sales start rising marginally but steady it is time to get in, preferably with at least 20% down. Buy small and trade up over time. Forget your RRSP just a tax deferral and with inflation into account you'll possibly loose in the end. Housing is still one of the best tax shelters we have when one looks at long term as it keeps up or above inflation, may return income (from rental) and could well provide retirement income plus all things planned out right can be passed on to loved ones with little tax paid. | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/21/2008 11:08:06 PM | Up here on the "Sunshine Coast" as the dirt pimps call it, prices are adjusting downward
and listings are up by 40% over same time last year.
Most listings over a million dollars are getting little if any interest and have been on the
market for months.
I have noticed a few sold signs on less expensive properties,say 400 to 5oo,ooo for houses.
Townhouses and condos had a flurry of sales in May and June. Now quiet.
Time to sell? Hard to sell up here as listings increase every month.
For those looking to buy,the banks are tightening up on lending.
If the sub-prime, derivative mess in the US financial markets gets worse, and IMHO it will
(they are just throwing gas on a fire to save the incompetent financiers and bankers), it
will not be a pretty picture a year from now in the US, although I think Canada will be in
better shape to weather the coming storm.
I see confidence and momentem in the housing market heading down in the future in my
area and lower mainland.
My 2 cents.
The 2010 Olympics have been discounted into the market. | |
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| B.C. Real Estate Crashing Time to Sell !
Posted: 9/22/2008 1:26:00 PM | Housing is still one of the best tax shelters we have when one looks at long term as it keeps up or above inflation, may return income (from rental) and could well provide retirement income plus all things planned out right can be passed on to loved ones with little tax paid.
That pretty well sums it up.
Up here on the "Sunshine Coast" as the dirt pimps call it, prices are adjusting downward and listings are up by 40% over same time last year.
Most Properties up that Way are completely undervalued, although some have more than doubled in the last 5 Years. Investment for the Powell River Region is a Long-Term Deal, although Prices may still Dip a little, but I think after the Olympics they are gonna Skyrocket. Nice 3 Bedroom Houses with decent sized Lots & partial Ocean Views going for well under 200K. Perfect Retirement Deals, affordable, and if you can snag up 2 or 3 of them, you're all set. | |
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