Friday, June 29, 2012

On the Cusp

Take a look at the REBGV Average Price Chart.


It is the same as Larry Yatter's, except Larry comes out with his much sooner.


Well we are at a crucial point IMVHO. We had a nice double top in 2011 which matched the 2010 top. Now what will June's numbers bring. If we break decisively below the bottoms of 2010 and 2011, I think the mood will change in RE in this town and we will be in a correction mode.


We are in a different environment from the bottoms of 2010 and 2011. The Government has come to it's senses and reined in the CMHC's excesses, we have a slow-down in China, a recognition that buy and dump by off-shore money and out of Province money for that matter, is a bad thing (though no one knows what to do about it), a resource sector that has come under pressure- but still rock bottom interest rates.


If interest rates had gone up too, we would be facing a cliff drop, which we do not want. That would take the Province and City into a tail-spin and would bring more ill-thought action from the politicians responding to the pain of the home-owners. 


We want a gradual and sensible correction. at least of us who don't want to see our friends, neighbours and Government in severe financial stress.


Of course the market cares little about what we want, and will take it's own course. 


We will know in a few days.


Happy Canada Day!

Wednesday, June 27, 2012

Owl Themed Baby Shower

Hey there! Long time no see:o) You would not believe how busy I have been these past few weeks. Ever since school let out, we have literally had almost every day filled with something to do or somewhere to go. I am exhausted just thinking about it:o) That has left little to no time to do any crafting...I have been so busy that I haven't even desired to do anything crafty...crazy, right?
So anyway, some of you know that I am in the local homemakers club, and we had our monthly meeting at our house last night. One of our members is expecting a baby in August, so we also had a baby shower..you know me..I jumped at the chance to have a special party:o)
The mommy-to-be is decorating her nursery in owls, and as we all know, owls are VERY popular right now, so there were a slew of ideas online to choose from.
Below is a picture of our food table.
The grandmother-to-be made this whimsical center piece...I LOVE hydrangeas:o)
 She also made this cute little fruit baby buggy..she said she found it on Pinterest.
I had some large old blue mason jars, and I filled them as full as I could with flowers. 
 This was one of my favorites of the shower...owl cupcakes:o) They were super easy to make, and would be great for any time of year. I used chocolate cupcakes with chocolate icing. The eyes are made from 2 Oreo cookies & Reese's pieces for the pupils and beak. The platters are just slices of a walnut tree trunk that I borrowed from a good friend.
 The gift table
 My first attempt at a diaper cake...not too shabby..;o)
When the ladies left, they got to take home one of these goody bags filled with chocolate and mints.


We had a wonderful time and the mommy-to-be left with tons of great gifts:o)

Where I found my goodies:
Large White paper lanterns: Oriental Trading Company
Flowers: Costco
Owl on Diaper Cake: Hobby Lobby
How to make a Diaper Cake: Instruction Video on YouTube
Owl Images: Prettiful Designs
White Favor boxes: Dollar Tree in wedding section

Sunday, June 24, 2012

A Response to the Mortgage Industry and those who think Flaherty's actions were Foolish.

There are some who are already starting to blame Flaherty for the housing correction- even though it started a year ago in Vancouver and has not yet started in Toronto. The complaints from the mortgage industry over his efforts to tighten lending have been very loud. The reply to these complaints is a simple one.


John Hussman, a first rate money manager, had it in in his recent commentary. It actually came from Angela Merkel, the Prime Minister of Germany and one of the few politicians who 'gets it'.



German Chancellor Angela Merkel explained the entire situation in five words: "Liability and control belong together." This is a profound phrase, because it also summarizes how the U.S. got into the housing crisis - the government deregulated the banking system and abdicated proper control, while still assuming the liability through deposit insurance and other government backstops. Liability without control leads to disaster.

It is an obvious concept. If you accept liability for a transaction, you must also have full control over it. To put it simply, if you agreed to co-sign for a friend/ sibling etc on their mortgage, you would want to set the term, watch his/her finances carefully, make sure they paid in time so forth.

What the US had which was such a catastrophe for them, was a deregulated lending market ; zero down, money back, teaser rates, document-lite loans etc and yet the Government was taking all the hits via Fannie and Freddie.

This has been one of the major flaws of the current market driven, deregulation capitalism that we have, but I will discuss that further in another post. 

We had exactly the same situation in Canada. The banks and lenders were getting ever more 'imaginative' to get people into over-priced housing and passing the risk onto the Government.

Rather late in the game Flaherty has realised that to transfer the liability to the tax-payer he MUST exercise some control. Maybe he understood what Angela said. Of course there are people complaining. Some are calling it a folly. Where does it say in the Charter of Rights, that we have a right to borrow more than a sensible lender would lend us WITHOUT tax-payer insurance??

Where does it say that you have a right to buy your high leverage multimillion dollar house and if you default the tax-payer, many of whom have decided to rent and live more modest and prudent lives, have to pick up the tab?

To the mortgage industry I would say, I understand your anger and concern, but you have had over a decade of excellent returns even as the risk to Canadians and the Government has become more precarious.

Eventually everyone who feeds from the public trough has to pull away (or be pulled away) some time.   Some very wealthy doctors in Ontario are learning that, civil servants in Ottawa are learning that and others will in due course.

Small Business Accounting - How to Keep Good Business Records

Are you tired of scrambling at the last minute to get your financial records to your CPA? Or are you tired of wasting time trying to find an important invoice, or receipt? Or are you just fed up with being fined by the IRS, Worker's Comp, the State Employment or other agencies because you don't have your papers in order?

Then it is time you got organized.

Now I know that finding financial paperwork can be difficult, especially if you don't have a good system in place.

Or if you have the wrong system, you make it worst, by making it really hard for anyone in the business to locate any of your important papers.

Well, here is a system you can use that will help you stay organized, so that you and your team can find your important financial paperwork in a jiffy - or when you really need them.

1. File paid bills, canceled checks and/or bank statements, and other business documents where you can easily find them. Some people use manila folders or an accordion file divided into types of expenses, i.e. "car', "utilities", "entertainment", and so on.

2. At a minimum, stuff receipts in the proper folders throughout the year and total them up at tax time. Staple the adding machine tape to each folder or stack of receipts. If this works, good for you!

3. An adequate record-keeping system for a small business typically includes:

- Check register - preferably from a separate bank account for your business.

- Summary of receipts of gross income - totaled either daily, weekly, or monthly.

- Monthly summary listing of expenses.

- Disbursements record (check register or actual expense journal) showing payments of bills.

- Asset purchase listing (equipment, vehicles, real estate used in business), and employee compensation records (if you have workers).

4. Every time you spend money in the business (or once a week or month), note in your records the following:

- A brief description of the business purpose of the transaction (office rent, new stapler, gas, etc.).

- The amount.

- The date, and

- Whom you paid (Chevron, Kinko's).

5. Keep all business records for at least six years, then make sure to properly destroy any sensitive information before disposal. You may elect to keep records longer, but the minimum required by the IRS is 6 years.

Now, this is a minimal system for a small business, especially in start-up phase. As the business grows, it will need to migrate to a more structured accounting system to track their financial records.

Thursday, June 21, 2012

Is a perfect storm brewing?

We have the new mortgage rules briefly outlined here. Gotta give some kudos to Flaherty for finally doing something significant about the bubble. The CMHC insurance being limited to homes less than $1 Million is one of those..duh, isn't that obvious, moments.


Isn't the CMHC supposed to help Canadians buy homes? How on earth can it fulfil that mandate by helping squeeze people into multimillion dollar homes? Or help them buy investment properties? All the while having us insure this folly!


Slowly people are coming to their senses (driven by comments from the IMF, Bloomberg and Nomura not to mention our local commentators) and this huge enabler of excess debt and risk is being defanged.


The question is, is it too late? Has the bubble got so big that the collateral damage from it's bursting will be painful for everyone.


Throw in a slow-down in China and significant weakness in commodities and we could have some significant downward pressure on RE.


Bank of Canada Rates will stay low for another year or two, that seems certain. However I would not be shocked, in 6 months or so, to see an event push long rates quite a bit higher and that could deliver the final coup de grace.



Friday, June 15, 2012

Inflection Point near

Ok folks, time to look over the lay of the land.


We have had 10% average price declines in Vancouver and every bank and his dog has now come out saying there will more corrections ahead (mild ones though -only 15%!) but no collapse.


Remember we do not want a collapse. That is what happened in 2008 and Flaherty and Carney opened the helium nozzle. We want slow and steady.


Could this be it?? We have been defeated so many times that it is hard to get too excited. Let us watch inventory. At this time of year listings taper off and people pull their homes as they go on holiday. You can see this clearly in the inventory graphs linked. The first sign that 2008 was very different, was that this drop over late June, July and August did not materialize. Sales dropped so fast that even with the summer removals, the inventory kept going up.


Lets see what 2012 has to bring.


In any case if we do get a correction, there is very little ammunition to reverse things. Rates are too low already. Everyone now admits that the CMHC was part of the problem and puts our national fiscal house in perilous danger and to drag them out of the penalty box would be a major policy reversal. Same with the investor immigration program which is finally being tightened up. Just leaving a few hundred thousand as an interest-free loan with the Provincial Government and then buying a house in another Province is finally being regarded as stupid policy! No kidding. Entrepreneurs are what we really need.


So the wind is our our sails. Carney, who is not under the same pressure from the RE lobby, has finally woken up to the bubble he helped create and harps on about it at every chance. That legacy may be more fragile than first thought.


Enjoy the rest of Junaury.

Saturday, June 9, 2012

A new name to add to RE sanity

David Madani, Ben Rabidoux, Garth Turner and now David Lepoidevin.


Here he is on BNN


How can anyone argue with his facts. How can anyone not think that there will be a day of reckoning coming to us, no less than than that which has come to the US or Spain.

Wednesday, June 6, 2012

Victoria and Psychology of Bears

Here's another attempt at posting. Blogger massacred the first attempt.

Victoria first. Down in Average and Median for SFH YOY, not to mention Townhomes and Condos. Not insignificant drops. From the VREB site:


Tablular representation of sales statistics from the last two months and from last year
Now to psychology. There is some softness in the RE market. It started in the Ok and Whistler and Sunshine Coast and has now arrived in Vancouver with high inventory and a big drop in the averages YOY. However there is skepticism in the ranks of the bears." China will reflate and more hot money will come here..the government will intervene again to save RE...rates need to go up for a drop and they won't" etc etc

This is all good. We need skepticism.

Remember 2008 when RE went 'no bid' up here? The bears were clicking their heels in victory and we know what happened next..a 25% rise in prices s ZIRP, CMHC and HAM pushed us up to another peak. Corrections start with doubt not bravado. We want slow and steady - more of the same please.

Baby Gift

I'm still here, but I have been extremely busy. School has been out for two weeks, so there has been something planned for almost every single day. That doesn't leave much room for blogging unfortunately. 
So, anywhoodles, I have a quick gift I wanted to share with you all today.
I have a baby shower to attend, and this is what I came up with for the gift. I needed something inexpensive & quick. I had all of the materials on hand....doubly awesome:o)
 I love this little hair bow. I'm not sure if the baby will have hair when she gets here, but if she does, she will definitely be able to coordinate with this little bit of sweetness. 
 I hope to get back into crafting mode very soon. 
I sat down in front of my sewing machine for the first time in 2 months yesterday. I have the sewing itch, and I'm dying to scratch:o)
Have a great rest of the day!!

Monday, June 4, 2012

Fraser Valley

Stats out here for May.

1,616 sales
10,826 inventory

MOI of 6.69 a bit lower than I thought we would end up. There was actually a little more buying near the end of the month it seems.

SFH Benchmark up 3.6% YOY and Attached, Condos flat YOY. Of course there has been a lot of doubt placed on the HPI of the various boards. Some say they are designed never to go down!

I cannot comment, not having the time to pour over the statistical analysis, however it is hard to see how the average AND the median are both down for SFH -3.7 and -3.8 and the HPI is still up.

Beats my simple statistical brain.

Friday, June 1, 2012

Down!

Thanks again to Larry Yatter for being out so quick with the numbers.


A solid drop in SFH Average prices, making it a 12% YOY drop. WOW! Lets see how the MSM spins that one.


Condos bucked the trend and are up MOM but still down YOY.


All time high inventory, with sales down 20% from last year.


Enjoy your week-end.