tag:blogger.com,1999:blog-5936637281134795592.post7951382653070999613..comments2024-03-08T08:55:52.985-08:00Comments on Whispers from the Edge of the Rainforest: Thurs Post #1: You gotta know when to hold... know when to fold. Speculators bailing and taking a loss - UPDATEDUnknownnoreply@blogger.comBlogger14125tag:blogger.com,1999:blog-5936637281134795592.post-67836152099401335072012-11-01T20:27:55.515-07:002012-11-01T20:27:55.515-07:00Actually, the income tax loss would be a capital ...Actually, the income tax loss would be a capital loss ONLY IF the property was used for the purpose of earning income (i.e. - rented out). If the property was held as a vacant house, there is no capital loss and no loss that can be claimed for income tax purposes, so the "investor" has to eat the loss.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-83920473834233302862012-11-01T15:51:59.227-07:002012-11-01T15:51:59.227-07:00The income tax loss would only be a capital gains ...The income tax loss would only be a capital gains loss. The loss is either carried forward or used to offset other capital gains.<br /><br />With capital gains half is taxable while the other half is not. So example 3 for example (45% tax rate) A $400,000 loss would equate to a $90,000 tax loss carry forward. Davehttps://www.blogger.com/profile/08956155381690841710noreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-25995430464999476972012-11-01T15:07:31.810-07:002012-11-01T15:07:31.810-07:00I just received a special offer of $75,000 off of ...I just received a special offer of $75,000 off of new condos on the North Shore-700Marine. 13% discount. Pre sale only. Limited time offer. Ends Nov 18th. <br />Exclusively for me- only 4 days before it goes to the public. <br />I think we will see much more of these. <br />CJM Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-82288727132530090972012-11-01T11:46:50.000-07:002012-11-01T11:46:50.000-07:00If you get more information on those examples, let...If you get more information on those examples, let us know.Whispererhttps://www.blogger.com/profile/03524022285962626228noreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-10746240962239912212012-11-01T11:45:12.308-07:002012-11-01T11:45:12.308-07:00Yes, the VCI post today is excellent and another &...Yes, the VCI post today is excellent and another 'canary-in-the-coalmine' example. It will be interesting to watch how many other lawsuits come up in the months ahead as people try to escape pre-sale contracts. Thanks for the comment JR.Whispererhttps://www.blogger.com/profile/03524022285962626228noreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-39458969705787470882012-11-01T11:42:59.014-07:002012-11-01T11:42:59.014-07:00Thanks Makaya, post updated and example added.Thanks Makaya, post updated and example added.Whispererhttps://www.blogger.com/profile/03524022285962626228noreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-1259110328713139922012-11-01T11:42:26.424-07:002012-11-01T11:42:26.424-07:00If you are having trouble understand my flow of lo...If you are having trouble understand my flow of logic, there is a reason, as my train of thought was based on todays VCI post about condo buyers suing for their down payments. I just felt like posting it here instead. My apologies. JRnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-6436443643264450152012-11-01T11:30:09.090-07:002012-11-01T11:30:09.090-07:00Great post.
The same thing happened in the US dur...Great post.<br /><br />The same thing happened in the US during the crash with many condo projects. Either the buyers sued or just walked away, as their loss from walking away was smaller then buying and then having to sell. This happened even long into the recovery. <br /><br />I think this sets the stage for three market catalysts which present IMO the great threats to the Van RE market, again with similarities to the US crash. <br /><br />I want to point out that what I'm saying isn't just an opinion, this info has been giving to me from highly knowledgeable friends who work in the Canadian and US financial systems and for developers.<br /><br />1. Buyers walking away. Like described buyers are starting to walk which puts financing pressure on developers. I understand financially this is worse for completed projects because they have all the bills to pay and can't halt once they realized how screwed they are.<br /><br />2. Commercial loan fraud. I'm sure many have heard of the Bear Mountain (the irony) development in Victoria. A friend of mine worked for the developer. The developer, under tremendous pressure from creditors to get paid, was cooking the books to get more money from lenders. It was a pseudo ponzi scheme. I'm sure this isn't an isolated instance.<br /><br />3. Bank fire sales. I believe banks will be aggressive in taking over defaulting projects, finishing them, and selling them as quickly as possible. Since the banks are more interested in cutting loses then making a profit, they will undercut the market. I think this has been pointed out before, lowering values doesn't require everyone lowering their prices simultaneously, just enough sellers to put the downward pressure by undercutting everyone else and setting the pricing precedence.<br /><br />To elaborate a bit on the bank default statement. I believe there are already a number of large projects in default. I'm not very intimate with the downtown market, but there are two I know of in Maple Ridge that are very suspicious. In one instance the developer for the last 6 months has been moving at a snails pace, and has only finished a couple of houses out of several dozen which are half completed, which are now for sale. It's my belief that the developer is so short on cash that the only way to continue is to finish isolated units, sell, and use the proceeds to fund continued development. It's a bit anecdotal, but having worked in the construction industry the pattern isn't matching a standard development cycle, it matches one of desperation.JRnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-39816454906330723802012-11-01T11:04:07.173-07:002012-11-01T11:04:07.173-07:00When the momentum of the crash gets going, these ...When the momentum of the crash gets going, these $100,000 loss will look like drop in the bucket.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-63257810592437729142012-11-01T10:35:10.584-07:002012-11-01T10:35:10.584-07:00Good post Whisperer and agree - This is the smart ...Good post Whisperer and agree - This is the smart (or at least semi-smart) money, exiting stage left now in anticipation of a hard market turn.CanAmericanhttps://www.blogger.com/profile/13498944583802865163noreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-89668949606442650092012-11-01T10:21:08.809-07:002012-11-01T10:21:08.809-07:00You could update your post with the other (and wor...You could update your post with the other (and worse) example I posted yesterday on VCI...<br /><br />"4490 blenheim<br />56×122 lot<br />reno’d (cheaply)<br />HAM sale<br />2.38M in jan finally sold for 1.63 (after some reductions).<br /><br />the owners paid 1.92 for it in july 2011.<br /><br />thats almost a 400k loss after PTT and commission. in 14 months."Makayanoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-62251851543800429932012-11-01T10:06:46.717-07:002012-11-01T10:06:46.717-07:00A few formerly stupid are wising up, but there'...A few formerly stupid are wising up, but there's so many who aren't. Still some people are paying 2010-2011 prices right now, losing 10-20% before they even take possession. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-86689861423083934922012-11-01T09:45:03.096-07:002012-11-01T09:45:03.096-07:00Can they write off their losses on their income ta...Can they write off their losses on their income taxes? I'll bet a least some can, which would make other taxpayers the real LosersAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-35468530644092802272012-11-01T09:00:46.630-07:002012-11-01T09:00:46.630-07:00The knock-on effect of speculators vacating the ma...The knock-on effect of speculators vacating the market because speculation is no longer a nearly guaranteed method of making money should be interesting. Even if there isn't a remarkable crash (which I'm not saying there won't be,) the return of sanity will just see prices slowly slide back down over the next several years. <br /><br />One way or another things are going back down to be in line with local market fundamentals. It just depends how fast.Anonymousnoreply@blogger.com