Extreme makeover, depression edition

38 comments ↓

#1 SSS on 04.28.09 at 5:20 pm

Very sad…

#2 Nostradamus jr on 04.28.09 at 5:44 pm

The Swine Flu Virus is causing a rush of thousands of elite & wealthy Asian families to relocate in Hongcouver.

…Distanced from any City smog,enjoying healthy salt air, w/ regular cleansing rains of North & West Vancouver continues to confirm that they are the two safest municipalities in the world.

Their Real Estate prices are lofty compared to the rest of Canada….understandable when one considers living here adds an extra 10 or 15 healthy years to a residents life/style.

…You heard it here first…

#3 Rob in Onterrible on 04.28.09 at 5:47 pm

Ah, the beauty of American style capitalism. I can’t see that ever happening in Canada. We’d do the right (totally left socialist) thing and give those homes to the poor.

#4 colin on 04.28.09 at 5:56 pm

I wouldn’t buy a home there either. Too many Americans.

#5 Maurice on 04.28.09 at 6:05 pm

Go to Mish’s Economic Trends and read the WHOLE Story. The houses weren’t built to meet code and it was more prudent to ripe them down than trying to correct the building defects. Shame Garth this is below you. Check the facts, don’t mislead people.

#6 Grapes_of_Wrath on 04.28.09 at 6:14 pm

This is like the chapter in John Steinbeck´s novel, where starving depression-era people watched orange growers spray benzene all over big piles of freshly picked oranges, so that they could not be eaten. Thus, keeping the market price of oranges up.

It appears it´s somehow better to keep people in tent cities without proper sanitation, encouraging the spread of diseases like swine-flu, than to put them up in houses that will never be sold at high prices.

#7 Mikaroo on 04.28.09 at 6:21 pm

@Maurice
I think that the fact they were built so quickly+poorly to try and take advantage of the last of the boom *is* the point. Also translates over to the financial sector – we’ve got to tear down all those poorly built financial instruments. Garth: any insights on how all the new credit default insurance of the past few years is actually forcing more companies into bankruptcy now, as the creditors would rather get their insurance payment instead of working with the company to restructure into a successful business model. Will regulation updates take that into consideration in the future?

#8 john m on 04.28.09 at 6:24 pm

#5 Maurice on 04.28.09 at 6:05 pm …….its virtually impossible to build a house to that stage of construction that doesn’t meet code—houses are inspected at every stage of construction and they must pass inspection before construction is permitted on the next stage –cmon now!

#9 the Coming Depression on 04.28.09 at 6:37 pm

Maybe you better read that again! They bulldozed the houses because the builder could not finish them… due to the builder’s bankruptcy ! The banks then took over and since not being a “home building company” couldn’t build them to code.. So they Crushed them! GET IT?

#10 Dan in Victoria on 04.28.09 at 6:41 pm

That is terrible,i’ve seen many old houses used for “cat bait” but never something new.How about this link, a lunch for builders in Washington state “Stop turning away buyers just because of their low credit scores”http://www.masterbuildersinfo.com/index.cfm?Detail=1&PageID=1816&EventID=4255&DateDn=05-01-09&ref=patrick.net Post #5 Maurice “Mish”doesn’t say what the code violations were,it may be something as simple as sheathing not nailed properly, or girder truss brackets not nailed with the proper nails or maybe some point loads not being installed yet.Or even some floor joist repairs from plumbing cut outs,None of us know.Most houses will have some corrections at the framing inspection.The point is, It’s a terrible waste.

#11 Dan in Victoria on 04.28.09 at 6:48 pm

Hmmm….linky not work go to http://patrick.net/housing/crash.html Forth story down on right hand column.

#12 JO on 04.28.09 at 7:28 pm

Ironically, tearing down foreclosed and unsold homes, or incomplete “non-conforming” homes may be the best of bad choices the US government and locals can make.

Instead, the clowns in power decide to come out with a bunch of nonsensical “foreclosure prevention” or “modification” programs for people who have minimal equity. Talk about using tax money from those poor souls who put more than 20 down, or have diligently paid down their mortgage to have good “equity” in order to make what is effectively a direct subsidy to the weakest borrowers.

These programs do not work. Worse yet, they apparently turn non recourse loans into recourse loans, end up defaulting anyway within 1 year, and hurt labour mobility as homeowners are stuck paying high priced rent to the banks. Yet another great example of the blatant government intervention that has created and now will destroy the housing market.

For anyone who thinks the crisis is the result of “free markets”, think again. The market always wins in the end, and it is merely slapping the gov’t, banks, central banks, greedy borrowers, and other players in the face and catching up to the illusion that was the 2001-2007 economy.

Expect somewhat similar issues here in Canada – thanks to the great ponzi scheme enabler called CMHC. Your friendly government helped put many of the weakest/speculative and marginal borrowers into homes they could not afford on the basis of a taxpayer guarantee. Most of these borrowers (last 3-4 yrs) are now underwater if they were to sell, and they were greedy because they thought house prices always go up ! Sadly, if they were prudent, they would have rented for 20-30 % less and with no risk to their net worth/equity or labour mobility.

Most tragically, these gov’t sponsored “insurance” programs, like most collective entitlement programs end up hurting the people they intend to “help”, but even more ominously, the prudent and frugal are left high and dry to deal with harsh consequences despite doing all the right things.
JO

#13 windsrchanging on 04.28.09 at 7:42 pm

This was the best thing to do. Did everyone look at the community, middle of BF nowhere. Who was going to continue to build there. Squatters could even eventually move in. An Alberta homebuiler in Edmonton excavated some poured basement foundations and filled the holes. That was a smart business decision. I hope other companies took notice.

#14 Da HK Kid on 04.28.09 at 8:16 pm

Garth is correct, Mish is correct! This is just another example of the collateral damage caused by the housing bust and oversupply.

These lots will be vacant for 10 years likely or never have homes built on them.

Again, don’t be fooled by the claim in the US of a 9 month oversupply of homes when the banks being stress tested right now have a shadow inventory of over 600,000 homes not even on the market today.

This inventory is likely hidden by the banks on instruction from the Fed or Treasury so housing mess doesn’t take a further blow & stress tests and bank look more capitalized on paper.

It’s all one big sham PONZI event that leaves me with a very clear direction on housing and how to protect my wealth overall.

Benanke, Paulson & Lewis scenario will be swept under the carpet while Madoff is the scapegoat. Get used the above the law governing in the US and in CANADA to take hold.

Don’t be a victim!

#15 Boombust on 04.28.09 at 8:42 pm

“The Swine Flu Virus is causing a rush of thousands of elite & wealthy Asian families to relocate in Hongcouver.”

You sound like a real creep. I am a WASP and I have lived in Vancouver all of my life.

YOU are the one who doesn’t belong here, not them.

#16 Future Expatriate on 04.28.09 at 8:52 pm

#5- AS IF a builder could get that far and build a community of the size that one was going to be (look at the sidewalks and all utilities) and NOT have the tiniest part of it up to code TO THAT POINT. What a load of baloney.

What do you think this is, leaky condo syndrome? Oh wait, leaky condos happened because they were MANDATED IN THE CODE to be that way (sealing up the walls with plastic which worked wonderfully on the dry prairies but not so well in a friggin’ rainforest.)

These houses weren’t “up to code” because they were UNFINISHED. That’s the extent of their “code violations.”

DUH. Talk about desperate realtor-spin…

#17 Future Expatriate on 04.28.09 at 8:57 pm

#13… got news for you. EVERY DEVELOPMENT in the last twenty years in California, Nevada, and most everywhere else was ALWAYS built in the “middle of nowhere.” The land is always cheaper there, and developers would leave huge tracts (in Las Vegas alone, hundreds of thousands of acres) of undeveloped land in between where all the shopping centers, malls, commercial warehouses, and eventually apartments would spring up to fill the gaps.

No one ever built housing developments on land surrounded by already-existing development.

#18 905er & Spouse on 04.28.09 at 8:57 pm

This should be an embarassment to us living in the “developed world”. What an unbelievably gross use of resources.

#19 Mike B on 04.28.09 at 9:09 pm

Amongst all of this the Toronto real estate market is still very active… Saw a couple houses tonight and its as if money was free… Lots of people and house a junker… Even an expensive one over 899 was sold…. Below asking but I am convinced my fellow Torontonians are truly morons… Overpaying even on junk … What a blood bath it will be in 5 years when rates go up … Such A-holes and now the sellers are starting to raise prices on the order of 10-15% and the bone heads are actually buying this sheit. I hate this market.

#20 Jonathan on 04.28.09 at 9:25 pm

A Glimmer of Hope, Economist Magazine, April 23rd 2009

“These crises sent the world economy into a decline that, on several measures, has been steeper than the onset of the Depression… A real recovery depends on government demand being supplanted by sustainable sources of private spending. And here the news is almost uniformly grim.

….it is hard to see the ingredients for a recovery that is robust enough to stop unemployment rising. Weakness abroad will crimp exports. America’s banks are propped up with public capital, but their balance-sheets are clogged with toxic assets. Consumer spending and firms’ investment will be dragged lower by the need to pay back debt and restore savings. This will be a long slog.

Much of the rich world will see jobless rates that reach double-digits, and then stay there. Deflation—a devastating disease in debt-laden economies—could set in as record economic slack pushes down prices and wages,… Welcome to an era of diminished expectations and continuing dangers; a world where policymakers must steer between the imminent threat of deflation while countering investors’ (reasonable) fears that swelling public debts and massive monetary easing could eventually lead to high inflation; an uncharted world where government borrowing reaches a scale not seen since the second world war, when capital controls ensured that savings stayed at home.”

http://www.economist.com/printedition/displayStory.cfm?Story_ID=13527685

#21 Nostradamus jr on 04.28.09 at 9:31 pm

Vancouver/Hongcouver shines in quality of life rankings

#4 in the world…Best in North America

http://www.theglobeandmail.com/servlet/story/LAC.20090428.RTICKER28ART1928-3/TPStory/Business

…Maybe Garth can write up an article underlining how Location, Location, Location is so key in Vancouver/Hongcouver gaining this highly deserved ranking…

#22 . . . fried eggs and spam . . . on 04.28.09 at 9:40 pm

B-B-Q time! — http://tinyurl.com/c9hoch

“. . . the crisis has to end sometime. But it seems much too early to us. Remember, this is a depression, not a recession. It is not a pause in an otherwise-healthy economic model. This time, the model itself is insolvent. Americans cannot continue going further and further into debt in order to provide huge bonuses for Wall Street and employment for China.

“It’s over. Fini. Caput.” — Further,

“. . . Zimbabwe, as long-suffering Dear Readers know, is a monetary pacesetter. It led the world in inflation – with a CPI estimated at 230 million percent. And then, it suddenly took the zeros off its currency – leading the world in deflation.

“The latest report from that benighted land tells us that the chief of the Zimbabwe central bank, Gideon Gono, has found even more novel ways to get his economy rolling. Ben Bernanke, are you paying attention?

” ‘Zimbabwe’s central bank head admits robbing private bank accounts,’ says a headline.”
——
Wayne Madsen first — 1:30 clip. — http://www.youtube.com/watch?v=0sMSokcnJRU

Jim Rogers second — a 6:57 clip as to how this combo. of viruses can affect economies. — http://tinyurl.com/cd6mpd
——
Dem’ thar good ole’ stress tests sure weren’t good for BoA! — http://tinyurl.com/cvp9ew

#23 Average guy The Third on 04.28.09 at 9:41 pm

The exact phrase used by the commentator indicates the Bank was being hit with daily fines for code enforcement because the properties weren’t liveable. Well the properties weren’t liveable because they weren’t finished yet! Any developer in Southwestern Ontario who has been forced to deal with the demi-gods at city hall will appreciate the frustration felt by the bank in California. The story could only be better if it was the building inspector’s house being bulldozed. Well… maybe it could be better if the dozer was being driven by the inspector’s wife who recently separated from him to be with Juan the pool boy. Okay… the demolition occurs while the inspector cowers in the fruit cellar. Now that would be a real human interest story!

#24 Paul Fist In Your Face on 04.28.09 at 10:11 pm

Bulldozing brand new homes. I guess that concludes the price discovery phase of the US housing collapse. Now they might be getting somewhere. They should make sure copies of this tape make the rounds on Wall street. This practicality should be applied to the banks as an evolution of a proper stress test. “Sorry boys you are not up to code”,then knock ’em down. If they went mark to market with the financials you would see the same house “clearing” and a fitting end to the clever greedy men who created this mess.

#25 Davinci on 04.28.09 at 10:39 pm

Hey, those videos where created by a friend of mine. Daniel, the author of those videos is also a gold and silver bug that is 100% out of the dollar.

He did not become a gold bug because of me, he only did so after reading a lot of the information on the subject for himself.

There will be a day when people look back and wonder how the world was duped into thinking paper currency and an electronic account entry is money.

I am not calling the public stupid just trapped in Plato’s allegory of the cave. However as more and more people turn their heads, some will not understand it and some will deny it as real. The truth remains the valueless paper tickets we have used all our lives are no more real than the shadow puppets of the cave.

I know how you feel I was there, we have used paper money for so long for the purchase of goods and services, it has worked and you see no reason why it will not continue.

The truth is there and has always been there, you just need to look. Do it before it’s too late.

Have you studied gold?

#26 dbg on 04.28.09 at 10:58 pm

Big deal people throw things away everday. Liability is the concern. Land value is still there. It’s only a number to the banks. They aren’t emotionally attached.

#27 Farmer Ben on 04.28.09 at 11:34 pm

The Good the Bad and the Ugly

Today I read, Heath Canada now at some airports- Good.

Ken and Barbie buying over their head and daddy will never be paid back his down payment – Bad

This summer in california the N.O.D. letters will get out of hand and the banks will panic because of the rush to walk by people underwater.- Ugly.

#28 taxpayer like you on 04.29.09 at 1:04 am

Maurice and Windsrchagin – I’m with you on this one.

Why are ex pat and other bloggers so up in arms about this? So a builder goes titters (nothing new – even in good times), houses arent to code (yes could be anything but for all we know he didnt even take out permits or call for inspections) so they’re dozer bait. All in the middle of BF Arinevornia. Big deal. Frankly, if I was living in that ‘hood, I’d want unfinished houses dozed too.

I’m goin to the next blog…..

#29 hobbygirl on 04.29.09 at 2:05 am

Perhaps the salvageable material can be donated to Habitat for Humanity where more modest homes can be built for those who just need the basics.

#30 Phil on 04.29.09 at 2:48 am

#15 Boombust

I am also a WASP, and if you stay where you are you will reap the rewards of your misguided perception that wealth is bestowed upon the passive in life.

#31 Anonymous on 04.29.09 at 8:35 am

#25 Davinci,

Dude, enjoy your gold. When it’s collapses to $600, remember nobody wants to hear all the reasons how the price is manipulated. Ok?

Freaking goldbugs are so annoying. I can’t wait until the economy turns around and they scurry back under their rocks.

#32 Darcy on 04.29.09 at 9:16 am

Truly sad! I am sure Habitat for Humanity would have been more then happy to finish those homes off, for the needy.

But it just goes to show, banks are just as damn greedy as the next. God forbid they think of someone else first.

#33 Davinci on 04.29.09 at 10:15 am

#31 Anonymous

I understand your anger and frustration, I’m not mad at you for calling me a names, I was you just 2 years ago. Focusing on the truth angers people and it angered me as well.

Look, at the end of the day I know I will not convince most people. You sound like the type who would disagree with gold bugs even as the currency hyper inflates. Based on the books I have read, you would not be the first person to do this in history and I suspect, you will not be the last. With 80% of the worlds population has complete confidence in the paper money con, this means we are susceptible to accepting a replacement.

Thus my rants are not for you, they are for the people looking for the truth. The reason I want people have gold is because central banks (not governments) around the world have 75% of the worlds gold thus:
“Those that have the gold makes the rules.”
Why?
“Gold is money and nothing else!” JP Morgan.
Therefor:
“Paper is paper and money is money.” 1921 German Farmer

BTW: Gold will not only collapse to $600 it will also go to ZERO the same as it’s official price in Zimbabwe. This IS a mathematical inevitability of our monetary system.

#34 gold bugger on 04.29.09 at 10:42 am

@Future Brain Surgery Patient: Why is every opinion that runs counter to your own “desperate realtor spin”?

Can your febrile brain consider that other people might hold opinions that are contrary to yours? Without being involved with the buying and selling of real estate?

#35 Future Expatriate on 04.29.09 at 11:13 am

#34 – Desperate realtor spin is whatever benefits real estate in a crashing market and suckers more idiots in.

If you speak it, don’t blame me for pointing it out.

#33 – The price of gold is not $0 in Zimbabwe. What an idiotic statement. The price of gold per ounce in Zimbabwe is the same price it is worldwide, only figured in the six digits figured in Zimbabwean currency… oops, sorry, just went into SEVEN digits.

Which will soon enough be the valuation in USD with the Loonie close behind when the USD does the much deserved and long-awaited mating dance with Zimbabwean currency.

#31… people who bought gold at $400 an ounce are STILL far ahead if gold drops to $600/ounce.

There is nothing so annoying as a paper wasp.

SWAT.

#36 Davinci on 04.29.09 at 6:34 pm

#35 Future Expatriate

The OFFICIAL price of gold in Zimbabwe currency is zero. They do not have an exchange system for it, yes you can price it in Z dollars but there is no point. I don’t believe that people buy and sell it as you would need way more that the current currency rate.

This happens in all hyperinflation episodes.

“They shall cast their money in the streets, and their bond shall be removed”

This has occurred more than 1600 time in the history of man.

#37 Boombust on 04.29.09 at 7:02 pm

Phil,

Bug off.

#38 Future Expatriate on 04.30.09 at 2:00 pm

#36 DaVinci, I don’t care what the “official” price is in Zimbabwe, GOLD IS NOT FREE NOR IS IT WORTHLESS THERE.

Which is what you are trying to imply.