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Not to steal directly from HHV, but I thought I would make some predictions for 2008. In most of the rest of the US and Canada, this probably sounds funny, but some people expect big things to continue in the year ahead in the Victoria market. CMHC are calling for 6% to 8% gains in Victoria in 2008.

Just once I'd like someone to supply a workable thesis to explain the divergence year after year from this level of housing appreciation and the core inflation rate. I mean, how can inflation run at 3-4%, while wages increase even slower than that, while runaway house appreciation continues far beyond the a bility of the marketplace to sustain based on incomes and wages?

Yes immigration, except there hasn't been that much, yes rich foreigners, yes they're very noticeable everywhere I go, yes parents supporting their kin, hmm, don't forget the boomers needing second and third homes....

I'll stick with my previous predictions. Summer 2007 was a high water mark. I expect the market down around 10% by next fall, and for it to then go lower still.

Feel free to disagree.

Anyway, Happy New Year. Here's to whatever 2008 brings!

2007 will be remembered for the worst housing slump in 16 years - in the US. Meanwhile, here in Victoria, every member of my family tells me prices are going higher. Several members of my family bought homes. Others asked why I resisted, or pointed out my house was too small, so what if it costs more for the comforts we need now?

Give up, throw in the towel and buy, there's no point holding out any longer!

Surely when someone like me hears something like that, the end must be nigh. My timing is invariably bad. If I cave and buy now, you can bet at the end of 2008 I will be reading about how that was the wrong time to buy.

This Reuters video goes through the fallout of the past year, for those who ignored their gut feelings and common sense, and jumped in with their boots on.

It encourages me to be just a little bit cautious.

Ron Paul answers a question in a straightforward fashion regarding Greenspan's responsibility for the oncoming recession and housing instability.

Points out how a misdirection of credit causes inflation in areas like housing prices, even while computers and cellphones get cheaper. 

He pins Greenspan for low rates that pumped up the bubble.  Not only was there a bubble, but people looked to asset inflation rather than savings to provide for the future.

So true. 

An excerpt from the Eggs and Politics Breakfast in NH on 12/19/07.

Thanks tnpaulunteers.

"Policies meandered until it bought less than it sold....."

In the spirit of the season, let's open our songbooks or our blackberries to sing together now...

Well, the end of the year draws nigh, but first there is time to celebrate Christmas with friends and family, to take time away from the usual and spend it where it needs spending. Whatever your faith or inclination, enjoy the next few days of the holiday season.

Merry Chrismas!

"US is already in a recession." - Peter Schiff.

"We're mortgaging the farm... to enjoy current consumption." - Peter Schiff.

El programa económico de Carmen Tomás en Libertad Digital Televisión.

Centro is the biggest Australian company affected by exposure to the subprime crisis so far.

Turmoil in the markets swirls. 

Had they expanded too far too fast?

Can they raise capital quickly by selling assets?

If forced to sell? 

Summary of recent actions by central banks to cope with credit problems by injecting cash into banking systems around the world.

From Tonmy213.

Just an observation, but last month in the VREB area, there were 16 sales valued over $1,000,000.00. Some for a lot more, I'm sure.

Anyway, today as I check the MLS for Greater Victoria, I note that there are 209 properties listed at a million dollars and up. Of these, 158 are listed as detached single family dwellings.

So, while every month we get another announcement of a new high in Victoria area single family home prices, at the same time, by my rudimentary calculations, there are now more than 9-13 months of high priced inventory on the market.

There are anecdotal reports on other Victoria real estate blogs that high priced properties are just sitting, or that when they sell, they are doing so with price reductions, sometimes amounting to hundreds of thousands of dollars -- well this should come as no surprise.

In my own area of town, there is a bed and breakfast that has been for sale more than a year and a half. The price has dropped several hundred thousand dollars, based on the MLS listings I have seen during that time, and the owners have now resorted to planting a for sale sign outside their business, not normally done when you might have guest arriving to stay, I would think. Is this desperation, frustration or solid sales technique? Is this a booming market?

Meanwhile, more overpriced and undersized condos are for sale all over town than ever before.

Curiously, in the lower price points, the outstanding supply would seem to only amounts to a few months of supply. As of today, there are only 186 single family homes valued at less than $500,000.00 for sale in Greater Victoria. Since the median last month was $510,000.00 and the total single family dwellings sold last month was 310, we can draw up an approximate picture of the market.

Approximate stats extrapolated from VREB stats for November 2007, based on sales price:

$510 thousand or less = 155 sales

$510 thousand to $1 million = 139 sales

Over $1 million = 16 sales

So maybe this illustrates a simple fact: if your house is priced over $1 million, good luck selling this or next year!

Jim Cramer thinks the rate cuts should have been bigger. So then we could all live in $2,000,000.00 homes and drive those hummers they parked in the desert and couldn't sell when all that home equity evaporated. How can we reinflate that bubble without cheap credit anyway?.

The alternative, painful as it is, is to let banks fail, after which the economy will go into recession.

Or something like that.

The Fed cuts interest rates again, but less than some had expected. The US central bank cut interest rates for a third straight time -- lowering the fed funds rate another quarter point to four and a-quarter percent.

Ozzie sees opportunities for Canadians in US Real Estate.  'Nuff said.

Bush proposes a 5 year freeze on rate resets for those subprime borrowers current on payments but unable to meet payments after adjustable rate mortgages reset.

What this means in real terms?

Hey, we bought this house couple years ago for way too much, but now we have to pay way less then we expected, it should prevent us from needing to sell right now, but since our payments are now continuing as interest only, this house may never be paid off, and the only way I will ever make money is selling for a capital gain years from now, I hope.  Sorry lender, that money you gave me, you'll just have to wait longer to get some more of it back.  The President is looking after the situation, so it will be alright.

Or something like that... 

The US gets itself in a giant foreclosure crisis, then we have Clinton (and now Bush) urging adjustable interest rates should be frozen.  Meanwhile, CNBC which may have its own agenda, or maybe just a director who doesn't know what he is doing at that moment, cuts to several views of a guy pulling faces during Clinton's speech.

This is earnest, insincere or kind of funny.  But I digress... 

Just thought I would start a thread asking the visitors at this blog what they think is the right price for a house in Victoria?

In other words, if you are waiting to buy, or even happily renting, what would an average price be for an average house that would make you decide to jump in the market?

Are you committed to waiting for your price? Do you believe you will ever see the opportunity to buy at a price that is affordable and agreeable to you?

Well, to start off, I think about $350,000 sounds right for me. For that kind of money, I'd like a 1500-2000 square foot 3 bedroom in a location I like, let's say, Fernwood.... Maybe prices won't go down that much and maybe I'll pay more, but that's how much I'd like to pay. Any chance of that happening anytime soon?

If you enjoy visiting this blog, please share your thoughts on this topic, and get some discussions going.

What price is nice?