Van Sun: Dropping real-estate values are sending more BC'ers into financial crisis

[FunSugarDaddy]

Sorry, I can't be bothered reading your reply, I'll leave it to others to read it and be awake at the end.

The only thing I gleamed out of your reply was you're questioning my comments on how far the real estate market has fallen, when I said 16% (US average in 20 large markets). I didn't make this up it was the lasted result from the case-shiller report. Obviously the main point is that the higher they increased, the further they fell. As mentioned if Vancouver were on this list it would likely be similar to where Seattle is.

But of course we wouldn't want any facts to get in the way of your opinions and rants now would we?

The August report(.pdf) for the S&P Case-Shiller Home Price Index shows the 10-City and 20-City Composite Home Price Indices at new record annual declines of 17.7 percent and 16.6 percent, respectively.

http://seekingalpha.com/article/102...-price-indices-hit-new-record-annual-declines

 

[FunSugarDaddy]

Actually the market I was commenting on wasn't the most or least desirable, it was the one I thought most closely reflected the gain we experienced here. But admittedly it's pretty much off the top of my head, as there could be another city that more closely resembles our gain during this period, but it certainly wouldn't be Las Vegas, Miami or any of those places, we certainly never experienced those types of gains.

However, the bottom line appears to be that you see the Vancouver market crashing and your attempting to use every link link on the net to support this, even though they all basically relate to a different country, never mind a different region, and yet you yourself haven't sold your Vancouver based real estate holdings, assuming you have any. And I'm the one "owned"

Interesting conclusion.

 

[bcneil]

Its amazing how people can write hour long essays to people they dont know on topics they dont understand on a hooker review board

 

[FunSugarDaddy]

These were your statistics and links, not mine. Are you challenging your own statistics now?.

Don't know how you arrive at a 95% decrease from a base that begins at 280 and is now 185, but I'm not ignoring them at all. Wouldn't have posted them if I wanted them ignored. I just simply don't project them onto the Vancouver market as if it's some kind of devine template of sorts.

I actually pay attention to how the markets risen here during that period of time, to what interest rates are here and now, and where they are likely to go, to why forclosue rates are different there verses here, and modify the outcome accordingly.

Hey...you can ignore all the warning signals if you want. You wouldn't be the first idiot who had a winning lottery ticket in their hands and decided not to cash it in..

As mentioned I am trying to sell one of my properties, not because I think the market is doing to crash, but because I think it's going to either drop 10-15% and/or remain flat for a prolonged period of time and it makes sense for me to lock in this gain. From a cash flow perspective I don't have to sell it at all, because it generates rents in excess of the mortgage payments and expenses by a fair margin. But unlike you, I'm not going into panic mode.

Anyway this has been beaten to death, so let's call it a day.

 

[FunSugarDaddy]

Your graph that you quoted that I made reference to uses a base index of 100, not 280. Your numbers you were quoted were derived on a base index of 100 as well

So now we have a base of 100 that's now at 185 and we lost 95% of the value? How'd we managed to do that?

So we have a mortgage credit crisis in our midst in the US like we've never seen, and you figure you know "where they (interest rates) are likely to go"? Interesting, because no one else seems to know.

Well 5 years rates are currently available at less than 6%, hell even 10 year rates are less than 6.5%. So how's this a sign of panic in the liquidity market or that rates and projected to skyrocket up?

Obviously the fact they are available at that rate even as I write this indicates that mortgage companies feel future rates are stable. Hell, I have a securred LOC at one of my places at prime -.25, which is 3.75% So why would anyone thing rates were going to prohibitively expensive in the future, given that the Fed's have just dropped their rate and we're expected to be heading into a recession?

And if you did think rates were going to dramatically increase, why wouldn't you lock into a rate you were happy with now, if you currently own real estate and don't wish to sell it in the near future?

You're selling to "lock in a gain"...don't you think everyone else who has purchased real estate as an investment (rather than their home to reside) isn't going to do the same thing (or at least consider it) whether they have the cash flow to maintain the property or not? What happens if you're property has devalued...then what? Are you going to drop your price further? The only way it makes business sense to keep the property is if the cap rate is acceptable - but we've already established that the fundamentals of owning property in Vancouver don't make sense, didn't we?.

Actually you've missed the point. The point was that it never made sense to buy these properties to begin with if I only looked at the cap rate, but I'm extremely glad I did.

 

[FunSugarDaddy]

I don't own real estate in the Vancouver market and I don't plan on owning any in this market for now. I sold my real estate holdings in Alberta eight months ago and I'm seeking other opportunities...

Well this became pretty obvious. Equally obvious is that you would like nothing better than to see the market crash, so maybe you can buy something here.

 

[FunSugarDaddy]

You're an idiot. LOOK AT YOUR GRAPHS YOU POSTED. The base index in year 2000 is set at 100 for all markets. If it goes up to 110, or up 10 units from the base index of 100, then that is an increase of 10% from the year 2000. If it goes up to 200, that is a 100% increase from 100 based at year 2000, or a 90% increase from the point in time it was at 110. If it goes up to 280 in mid 2006, then it increased 180% since year 2000. IF IT DECREASES FROM 280 at mid 2006 TO 185 in August 2008, THEN IT IS A 95% DECREASE FROM MID 2006 TO AUGUST 2008 USING YEAR 2000 AS A BASE INDEX. The percentages you quoted were all derived from a base index of 2000 as well..

What a waste of time.

A base year means a base year. So if real estate was at 100 in 2000 and it's now at 185 the increase has been 185/100 = 85% at one point it was at 280/100 = 280% if someone bought their real estate when the prices were at 280 and they are now at 185 they've lost 185/280 = 67% loss equals 1-.67% equals 33%.

Don't believe me? Let's use real numbers and say something was worth 100K in 2000, well if the index is now worth 185 that same house is now worth 185,000. Yes at one point it was worth 280,000 but it certainly didn't drop 95% from anyone who bought it in 2000, they did pretty good.

Now if they bought it at the peak and paid 280,000 and it's now worth 185,000 then they lost 95K which in on an investment of 280k is 95/280 = 34%

You're 95% number is first class BS because you're subtracting it from an orginal gain of 280/100= 180 and not mentioning it. All you are saying is that if someone bought in 2000 they had an urealized gain of 180K on a 100K property and now that gain is down to 85K. and the loss of this 95K gain over the base of 100 is 95%. What kind of fucking logic is this?? Nobody lost anything because IT WAS ALL PROFIT TO BEGIN WITH. Even if they bought peak and sold it now there loss was 34%

Proof? 180-95 = 85% which is exactly the gain that someone would have realized had they held onto from begining to end.

The financial markets are all doing everything they possibly can to stabilize the marketplace right now and settle everyone down. The fact is that you can't know if all these financial institutions that are currently offering these long-term interest rates are all going to still be standing next year.

And do you think that any lending institution in their right mind is going to jack their rates up by 5 or 10% right away??? Fuck no...our markets are already in a massive panic. .

Quick folks, we all better lock in now because old Imrokhaard say rates are going to rise. Banks get aren't going to do it right away cause they really don't know what they are doing and many of them aren't going to be around next year, because Imarokhaard says this is going to be the case.

All our stock markets have devalued by 40 or 50 percent because investors are withdrawing their capital from the marketplace. WHERE DO YOU THINK WE GET MORTGAGE MONEY FROM? As cash is withdrawn from our markets, our financial institutions have to rein in their lending even more because they must keep a specific ratio of cash deposits on hand for every dollar of credit they grant by law.

Financial institutions just aren't lending any money period to anyone that they percieve could be any risk at all. They haven't increased their rates yet...instead, THEY AREN'T GIVING OUT MORTGAGES, period. Rising interest rates from retail lenders will be gradually increased as they begin expanding their risk tolerance again and begin lending to a broader range of clientelle over the next few years..

Well if they aren't giving out mortgages than how come I just got one.

How come I received a message from a mortgage broker yesterday saying

"Hello, now offering 5.49% , 5 year fixed on mortgages over $200,000. and 5.29% , 5 year fixed on mortgages over $500,000. Please call me if I can assist.
MAKE a great day!

Cheers,

George"

Guess there not offering any huh?

You need to calm down and try and understand the fundaments of what's going on. Yes there's a liquidy crisis and there's evidence that this is passing. Now we face a recession. rates aren't going to go dramatically up and even someone things they are then they should lock in. I personally have more than one mortgage so I do both. Some of my mortgages are fixed and some are variable.

 

[FunSugarDaddy]

My god...you're a waste of skin. You keep moving around your baseline so that you can fool yourself. You want to break up the timeline so that you can ignore the whole point of using an index.

Using year 2000 as your base year, and using year 2000 as the year of comparison and reference at all points in time since...

a $100,000 home in 2000 is worth $280,000 in mid-2006...a 180% increase from the base year ($180,000/$100,000). If it drops from $280,000 in mid 2006 to $185,000 now, it is a 95% drop USING YEAR 2000 AS YOUR BASE YEAR ($95,000/$100,000). WHY THE FUCK TO YOU WANT TO KEEP MOVING YOUR BASELINE AROUND??? That's the whole point of setting up indices...so you don't fool yourself. So that you have a fixed point of comparison.
.

The fixed point of comparison is the base year idiot. If they bought it for 100K in 2000 and it's worth 185K now they didn't loose a dollar. I'm The truth is at one point they had a GAIN of 180% (or 180K) now the GAIN has dropped from 180% (180K) to 85K (85%) they never lost a $$.

You don't even make any sense. All you're saying is that they've lost about 1/2 of the PROFIT they potentially could have gained. But they never ACTUALLY lost anything because they only paid 100K to begin with and now it's worth 185K Yes at one point they could have sold it for 280K but they never actually LOST ANYTHING.

Here's a basic question, how could someone who bought a house for 100K and it's worth 185K now, loose more than someone who bought it at peak for 280 and sold it for 185, and therefore lost 95k on their 280K investment or 34%?

I hope you don't do your own calculation when you do your taxes because you're seriously lost when it comes to calculating basic rates of returns.

My god..I think I'm arguing with a child. My elementary school daughter is smarter than you..honest to god. And sadly, the fact I'm even having this discussion doesn't say much about my intelligence either.

 

[FunSugarDaddy]

BECAUSE I STATED IT AS A PERCENTAGE DECLINE OF THE BASE INDEX (WHICH IS IN YEAR 2000)...NOT AS A PERCENTAGE DECLINE IN VALUE OR CAPITAL GAINS AT A GIVEN YEAR.

IF YOU'RE GOING TO REFERENCE AN INDEX (WHICH YOU DID, NOT ME) THEN MAKE REFERENCE TO INDEX MEASURES AND LOOK AT THE WHOLE TIMELINE (INSTEAD OF PICKING A RANDOM ONE YEAR WINDOW THAT SUITS YOUR ARGUMENT). OTHERWISE, WHAT'S THE POINT IN REFERENCING IT.

GET SOME READING COMPREHENSION SKILLS. THEN THINGS MIGHT MAKE SENSE.

To put it in child's terms...a 95 point decline in the index over a given period of time has the same magnitude as 95% of the property value in year 2000.

which is a totally meaningless stat, by a poster who pretty much spews totally meaningless info. Glad we cleared that up.

 

[FunSugarDaddy]

LOL!!! It just dawned on me!

You bought real estate in Miami and you probably bought it within the last six months or a year!

You bought property in a market that was one of the hottest in North America...you thought you were getting a good deal because there may have been some declines before you bought.

You're Canadian plus its an investment mortgage, so in order to get a mortgage you've had to put a sizeable down payment into it to qualify as a Canadian and in order to get the mortgage payments to a level where the rent covers your payments. You're committed because you've got a down payment between (at least) gasp 25 - 50%!!!

And now you're seeing stats showing the Miami market is still in freefall and will continue to do so!!!! You've probably had access to these stats the whole time but obviously weren't aware of them and to ignorant to understand them!!!

You're now just finding out in this conversation that your investment choice is fucking tanking and you can't pull out/walk away because you've got too much equity in it!!

Sorry buddy - you must be pissed!!! Sucks to be you.

You're a village idiot right to the end. Truth is I didn't even buy in Miami and never said I did. I bought much further north of that. The gulf of mexico to be specific and it's worth about the same today as when I bought it in January. But to show how absolutely stupid you are, you probably haven't yet comprehended that I actually made a sizable unrealize gain.

Why? Because when I bought it the Cdn $ was at par, and now it's at .82

I've obviously been having a discussion on finances with someone who understands it about as well as Sarah Palin.

 

[FunSugarDaddy]

SORRY PAL. I DON’T BELIEVE YOU WHEN YOU SAY YOUR PROPERTY DIDN’T DECLINE. YOU DIDN’T BUY YOUR PROPERTY IN SOME MAGICAL LOCATION THAT WAS IMMUNE TO THE CRASH IN FLORIDA!!!!

I think you’re lying just to make your own argument.

Well you've managed to bore me to death. As for where I actually bought property, wrong again. But sales (ie sept 30/08) of similar units in which I bought are within 5% of what I paid for it. Believe it or not, I really don't care. You obviously haven't even comprehended the exchange rate issue, so what's the point?

There are basically two people reading this thread and of these two people, I'm bored to tears, so I'm bowing out.

 

[chris2008]

No shit Vancouver was bound for a massive drop. C'mon people, after the hype is over, it comes back to fundamentals.

How can the average typical family afford a $695,962 home (if they have not upgraded)? Even if both couples make 100K a year, it's still friggin expensive when the mortgage payments for that house easily surpass the safe zone 36% mortgage ratio.

It's called a correction, not a crash.

 

[FunSugarDaddy]

Sure...within 5%...whatever you say. I bet the sales activity of the comparables in your complex are going through the roof too (unlike the rest of Florida where nothing is selling)

And every gambler you ever talk to always wins money to.

Let's surmise how badly you're doing with your investment in Florida right now.

You bought on the northern west coast of Florida - so use the Tampa market as a comparable (because that's probably where you bought, isn't it?) and assume your property is typical for this market.

5th hottest – Tampa. Q2 2006 – index = 240. August 2008 – index = 175…decline of 65% since peak.

Since you purchased: Jan 2008: index = 210 – Aug 2008: index = 175 (decline of 35% since peak)

So, in Jan 2008 the index was 210 - for ease of calculation lets assume you bought a condo for $210,000 and you put 25% down (25% is a safe assumption because its an investment property and lenders require at least 25% or more equity plus you're not a US resident. Maybe you invested more but lets assume 25%) = $52,500 cash equity.

We won't consider legal fees, appraisal fees or other fees etc. for simplicity's sake.

Purchase = $210,000
Down payment = $52,500 OF YOUR CASH OUTLAY REQUIRED
Therefore, mortgage = $157,500

Let's address your much ballyhooed currency conversion!!! Let's assume, for your benefit, not only was the canadian dollar at par with the greenback, BUT WE'LL EVEN ASSUME YOU DIDN'T LOSE A CUT IN CONVERSION FEES!! How about that, FSD!!! We'll assume your down payment only cost you $52,500 CANADIAN!!!

Now, the market index goes down to 175 in August 2008, thus your property is worth $175,000. How is your cash investment doing? Assume your mortgage principle after only 8 months has neglibly changed.

Market Value = $175,000
Mortgage principle = $157,500
Therefore, your cash equity = $17,500.

In 8 months your equity...thus your cash...HAS DROPPED FROM $52,500 CDN, to $17,500 US. Oh, wait...let's convert it back to Canadian dollars because that seems to be a big deal to you!!!

$17,500 x $1.1809 (haha...Cdn $ up 1.66 cents today!!)
= $20,666

Total return on equity = $20,666 - $52,500
= ($31,834) LOSS!!!!!

And what did all your conversion fees, legal fees, appraisal fees, etc. cost????

Let's put this into a percentage that you can understand!!!

($31,834)/$52,500
= (60.64%) LOSS

That means that the typical Canadian investor of that market with an assumed 25% downpayment lost 60.64% of their investment since the time you purchased!!! LOL!!!

Wow, buddy. I hope your investment isn't typical of the Tampa market. I bet you bought in a magical fairytale place unaffected by the housing decline though!! It sounds like it.

Ohhhhh...and don't forget. We haven't figured in declines in the market over the last two months...nor that the market is projected to decline over 10% in the entire US (and worse in the bubble states) over the next year.

I'm guessing if you only invested 25% down payment that you've lost 100% of your equity by this point today. If you've invested more...well, I guess the rest of it is at risk.

BUT NOT YOU. YOU BOUGHT IN FANTASYLAND. YOU KNEW SOMETHING EVERYBODY ELSE IN FLORIDA DIDN'T KNOW.

Yeah...I bet that small 17% decline in the US market doesn't hurt very much, huh?

Well I suppose it would if it actually applied to anything I own. But your example is once again delusional.

Why? Simply you took into account only the exchange rate of the downpayment and not the whole value. So if a property had fallen from 210K to 175K that's a loss of 17%. However, if it was bought at Par and the Cdn $ is now at 85 cents, these offset each other. So the orginal purchase price was Cdn 210K and the current value is 175K US /.85 = 206K, so a loss of what? 4K on a 210k investment is about 2%.

My situation is different, as mentioned prices have dropped about 5% based on the latest sales of units in our building and the exchange rate has gone in my favour by about 12%, so I'm up about 7%. Unit recently I was up by about 15% when the Cdn $ was trading at 78 cents.

But if you don't believe me and you insist on using meaningless stats instead of actual purchase and sales prices I don't see the point of the discussion.

 

[chris2008]

I think he's trying to say everyone is fubared right now or at least going to be fubared..and those that say they aren't are kidding themselves as we've been in negative territory the past 2 years.

I have to admit though rokhard has done his due deligence.

But if you don't believe me and you insist on using meaningless stats instead of actual purchase and sales prices I don't see the point of the discussion.

 

[FunSugarDaddy]

I think he's trying to say everyone is fubared right now or at least going to be fubared..and those that say they aren't are kidding themselves as we've been in negative territory the past 2 years.

I have to admit though rokhard has done his due deligence.

Great, let's all encourage him. And no we haven't been in negative territory the past 2 years if "we" refers to Vancouver. But certainly we're in the middle of a correction of some magnitude, we just don't know to what degree. But obviously ol' rok get's a great deal of glee out of this whole correction topic.

 

[bcneil]

LOL 2 guys spending literally hours
fighting on a hooker review board
priceless.

What's that saying about internet fighting, and the special olympics

 

[bcneil]

Apparently you have nothing intelligent nor witty to contribute (except the odd idiotic, racist misinterpretation of the word "spook").

AWW waa waa
tell you what, go up to a big black man and say
"so how you doing spook"

and I am not sure what is witty about literally spending hours on here bitching about property prices in Florida of all places.

 

[bcneil]

Apparently you weren't bright enough to read the "spook" question in the military context it was presented.

With your lack of intelligence it would be hard to entertain you unless "Married with Children" or "Scooby Doo" was on.

oh no I am getting insulted by a man, who spends hours and hours and hours on this thread. I feel so ashamed LOL

How many hours have you spent on this thread 40-50
LOL

 

[bcneil]

Oh no...I'm getting insulted by a man who reads the threads I write and can't pull himself away from it.

I'm guessing your reading and writing/typing skills are at a grade 6 level if that's your time estimate to write these posts.

LOL your posts in this thread are longer than most college essays LOL

Well I am going outside....off the computer....ever do that?

Got a date with a girl.....ever do that?

Enjoy spending your evening typing a few thousand more words in this thread
LOL