No Charts for You!

The kids are napping and I've got only a few seconds to post before going out to enjoy the sun so no charts today.

CMHC released complete April housing data for Vancouver and Abbotsford last week.

Here are the highlights:

Year to Date Starts 2008 - 6691

Year to Date Starts 2009 - 2302

Year to Date Completions 2008 - 5540

Year to Date Completions 2009 - 5377

Under Construction April 2008 - 26253

Under Construction April 2009 - 22494

Completed but Unabsorbed 2008 - 1445

Completed but Unabsorbed 2009 - 2368

Surrey has a crapload of unabsorbed new housing (754 units) and many more units on the way (5344 units under construction).  

House Price Index Indicates Prices are Still Falling

Here is what the press release says:

More deflation, Montreal holding up best Canadian home prices in March were down 5.8% from a year earlier, according to the Teranet-National Bank National Composite House Price Index™. It was the fourth consecutive 12-month decline. March was also the seventh straight month in which the composite index was down from the month before - the longest run of monthly declines since the beginning of index coverage in February 2000. The composite is now down 8.5% from its peak of last August. Teranet – National Bank National Composite House Price Index™ Contact Us For general enquiries: simon.cote@tres.bnc.ca For licenses covering all index-linked products, please contact: Simon Côté simon.cote@tres.bnc.ca  514 879-5379 Website www.housepriceindex.ca

Of the six constituent city indices, four were down from a year earlier: Vancouver (−9.6%), Calgary (−8.4%), Toronto (−6.7%) and Halifax (−0.8%). While prices were still up from a year earlier in Montreal (3.2%) and Ottawa (2.8%), the 12-month increase in those two cities has decelerated markedly in recent months. In Calgary, prices have been correcting for well over a year now - since August 2007 - and are now down 12.7% from the peak of that month. Calgary has shown monthly declines in 16 of the 19 months posted since then, including every month from last July through March. Vancouver prices have also shown nine consecutive monthly declines, and are down 11.7% from peak. Toronto prices have declined seven months in a row and are down 10.8% from peak. Ottawa prices have declined five months in a row and are down 4.3% from peak. A run of three monthly declines in Halifax was interrupted in March, but prices there are 3.0% below their November peak. Montreal prices have held up better. In March they were flat from the month before, down 1.6% from the peak of last September after monthly declines in four of the six intervening months. Teranet – National Bank House Price Index™ The historical data of the Teranet – National Bank House Price Index™ is available at www.housepriceindex.ca. Metropolitan area Index level Mar-2009 % change m/m % change y/y From peak Peak Date Calgary 152.97 -0.8 % -8.4 % -12.7% Aug-2007 Halifax 118.17 1.0 % -0.8 % -3.0% Nov-2008 Montreal 120.60 0.0 % 2.9 % -1.6% Sep-2008 Ottawa 113.14 -0.5 % 1.0 % -4.3% Oct-2008 Toronto 104.68 -1.9 % -6.9 % -10.8% Aug-2008 Vancouver 133.02 -1.7 % -9.6 % -11.7% Jun-2008 National Composite 119.62 -1.3 % -5.8 % -8.5% Aug-2008 The Teranet–National Bank House Price Index™ is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index. This is known as the repeat sales method; a complete description of the method is given at www.housepriceindex.ca

From thesaurus.com:

Main Entry: fool
Part of Speech: noun
Definition: stupid or ridiculous person
Synonyms: ass, birdbrain, blockhead*, bonehead*, boob*, bore, buffoon, clod*, clown, cretin*, dimwit*, dolt*, dope*, dumb ox, dunce, dunderhead, easy mark*, fair game, fathead, goose*, halfwit, idiot, ignoramus, illiterate, imbecile, innocent, jerk*, lamebrain*, lightweight*, loon, moron, nerd*, nincompoop*, ninny, nitwit, numskull*, oaf, sap*, schlemiel*, silly, simpleton, stooge*, sucker, turkey, twerp, twit, victim
Antonyms: brain

In the vein of thinking about people for who may be the greater of the above synonyms (greater fool), let's discuss this article from the Globe and Mail which highlights a reputable survey from Bing Thom Architects (press release) that has been done regarding the Vancouver housing market. This survey dispels some of the myths surrounding the Vancouver condo market.

Foreign Owners - nope
Vacant condos - no, not really
Investors - yup, yup, yup - 50 to 60%+ of condos are owned by investors

The question is, why do these investors continue to hold onto a low yielding investment like a downtown condo?

The answer is that they believe that the price will rise in the future. In other words, they hope to find a greater fool in the future whom they are able to sell to.

No, there isn't anyone else to blame except local speculators, ahem, investors, who have bid up prices and snapped up developer units at an unprecedented pace over the past few years.

Here is a snippet from the press release:


In addition to an estimate on empty condos, the study found that:
• Condo ownership is a relatively new form of housing for Vancouver. Over 88 percent of condo units in Downtown Vancouver have been built since 1990.
• Less than 40 percent of downtown condos have more than one bedroom.
• The majority of condos are not occupied by the property owner.
• The majority of non-owner occupied condos are owned by BC residents, with a scattering of foreign owners, predominately from the western US states such as California, Washington, and Arizona.
• Owner-occupied units are typically worth $30,000 to $40,000 more than nonowner occupied units, and the more bedrooms the unit has, the more likely it is to be owner occupied.
• A family with one child in the City of Vancouver earning the median income of $75,000 a year would have great difficulty in finding and paying for a condo bigger than one bedroom, even if condo prices were to fall 25 percent below 2008 assessment levels.

That last one is a doozy and despite better career prospects that is why I don't live in Vancouver with my wife and two children.

Dr. Strangedebt - How I Learned to Stop Worrying and Love My HELOC

This post is brought to you by the Joneses.

Yeehaw!! I love my Home Equity Line of Credit - HELOC.

On the path to financial self destruction, I use my HELOC to buy cars, cool gadgets, vacations, consolidate credit card debt, etc. You name it, and I've spent borrowed money on it.

My friends all think I make $150,000 per year but I only make $50,000 but I'm not going to tell them. I'm living the high life, drinking Hennessey, weekends in Vegas, new car every couple years. I'm going to keep doing it too until I collapse under the wieght of all the debt and declare bankruptcy or I'm forced to sell my home and pay off my debts. Every time I go to the bank, they offer me more money and my rates keep going down so it frees me up to do more cool stuff with money I don't have. My house is making me rich because I can just keep getting more money because my house went up in value. I bought my house for $300,000 a few years ago, had a $250,000 mortgage, and now the house is worth $600,000 and I have a $480,000 HELOC. I'm lovin' it. I just keep making those interest only payments of $1500 per month and its all good.

Strange thing happened though, I went into the bank last week to increase my HELOC because my 2007 Lexus RX is getting a little old now and I really want a new one so I need a little bit of money ($25,000) to pay the difference between the trade in and the new car but the mortgage rep at the bank told me that there was no more money and that they wouldn't increase my HELOC - the nerve. I was pissed because I work hard and I deserve that new car. I told her that I was going to take my business elsewhere if she didn't find a way to do it. She laughed at me and wished me luck. I thought to myself 'that was a little strange - that's never happened before' and I went to another bank. I couldn't get an appointment for like a week and today when I went there, they laughed at me too.

I'm starting to get concerned because I can't put up with driving this old clunker around for much longer. Any advice for this poor soul!?

Landcor Quarterly Report

I suggest everyone interested in the BC real estate market read the Landcor Quarterly report. It is available here.

I will have some thoughts and highlights later.