But I’m SUPPOSED to be RICH!

I have a question for you. We live in a time of superb economic growth for the western provinces, Vancouver is a beautiful place to live and we’ve got two weeks of winter games coming in just 4 years. Interest rates are very low by historical standards and the CMHC will insure mortgages with absolutely no down payment.

So given all those positives WHY IS MY HOUSE WORTH $29,000 LESS THAN IT WAS A COUPLE OF MONTHS AGO?!?

I mean seriously, prices should be going up shouldn’t they? We’ve got nothing but positive economics here. I’m taking some solace in the fact that its the winter and the market usually slows down around now, but a $29,000 average drop in house prices!?

This has got me worrying about the liquidity of my house-riches. What if I can no longer put up some fresh paint and new laminate and increase value by $50k? What if something were to happen to our economic paradise? What then?! I mean if prices can go down when everything is going great what happens if everything stops going great. What if rates rise, more people move out of the province, or the job market starts to decline?

You people have turned me into a worrier, just BUY SOMETHING ALREADY!

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Freako
Freako
13 years ago

"How much of that 75% 'services' represent financial services?"More specifically, a quick Google says over 8% of GDP, which means over 10% of services.

mk-kids
mk-kids
13 years ago

OT – aaronbest said:"Muir/Anon/whatever the hell you call yourself today, you are a tool. You've already been told that you are just a negative person with nothing worth while to add to any discussion."I disagree. Muir/Anon keeps Rob's bull blog interesting these days. You should probably work on getting a little thicker skin and some humility.

rentah
rentah
13 years ago

Thanks freako

Freako
Freako
13 years ago

"That seems to me to be the 'emperor with no clothes' sector, one that could rapidly shrink if folks in other countries stop turning to large US firms to fund/broker deals, set up trading desks, etc, etc."Industries grow and collapse all the time. Undoubtedly, the redeployment of resources will lead to slowing GDP growth. That is probably one reason why productivity generally falls during recessions (the last one excepted).The U.S. economy is very competitive domestically, which is probably one reason why they generally lead the way in terms of productivity growth. Unlike, say, France which has oodles of protectionist red tape DOMESTICALLY. The U.S. have way less restrictive labour laws which means that the economy adjusts much faster and is much more efficient.Where the U.S. lacks competitiveness is in the large oligopolies such as the military industrial complex and elephants… Read more »

rentah
rentah
13 years ago

And, most important, of course, the US financial sector would shrink if foreigners decreased their investments in the US.

rentah
rentah
13 years ago

freako: How much of that 75% 'services' represent financial services?That seems to me to be the 'emperor with no clothes' sector, one that could rapidly shrink if folks in other countries stop turning to large US firms to fund/broker deals, set up trading desks, etc, etc. It seems at least partly dependent on belief in the US, something that could change quickly with one or two large financial incidents.

Freako
Freako
13 years ago

FYI, here is the U.S. GDP break downLAgriculture: 1.6%Industry: 23.12%Services: 75.27%

Freako
Freako
13 years ago

"I didn't say anything about the relative size of the US and Chinese economies. I said that the US is important to the world as a consumer, not a producer"I don't know if I can reconcile that with your earlier statement: "The US economy is even smaller than you think. It's just a house of cards based on borrowing."The U.S. is the LARGEST producer in the world. It produce more than the Japan and Europe combined. That is not a relative statement, it is an absolute fact.Your post gives the impression that the U.S. economy is not real. I don't understand where you are coming from. High consumption does not negate high production. In any case, GDP calculations INCLUDE the current account deficit.IMHO, Americans ARE overconsuming, and the current account deficit is not sustainable. Such an event WILL (as you… Read more »

Anonymous
Anonymous
13 years ago

I didn't say anything about the relative size of the US and Chinese economies. I said that the US is important to the world as a consumer, not a producer.Which is why the rest of the world keeps loaning money to the US while any other country in its current account situation would get the IMF on its case.Which can't go on forever, which is going to have consequences for the Chinese, and us.There really isn't anything that the US currently exports (and that includes Microsoft software and Boeings) that the rest of the world couldn't do without pretty easily.

Freako
Freako
13 years ago

It's the US consumer that's important to the world economies that actually produce things, and he's reaching his credit limit.So do you think the fact the U.S. GDP per capita is 10 times that of China is just manipulation of statistics?

Anonymous
Anonymous
13 years ago

our inferiority complex vis a vis the americans forces people to believe that the US economy is a lot smaller and important than it is.You've got it backwards. The US economy is even smaller than you think. It's just a house of cards based on borrowing. It's the US consumer that's important to the world economies that actually produce things, and he's reaching his credit limit.

rentah
rentah
13 years ago

Hi guys, hope you're all having good holiday season.I'm with freako and the rest of you on lower oil.On China, I'm agnostic, I simply can't juggle all the data and come up with a direction. So much to be bullish about, but also unknown potentially unsustainable factors too. So I'll watch from the sidelines.—-Thanks for the 80's figures and anecdotes.We should package a cut and paste 5-liner on 81, 83, 45%, nominal/real, etc and use for every newbie who asks why we don't buy and hold now, or says that RE never goes down.—-"I had one conversation with a guy who is a doctor. He didn't believe that real estate could ever go down."Fade the doctors and the dentists.They're always very late to the party, and they're impatient, too. Pun intended.

noturaveragebear
noturaveragebear
13 years ago

thanks for the info for the early 80's guys. I am with you guys on china and oil too. I don't think oil is going to crash but its funny how just mentioning it could go below $40 creates such irrational anger in people. The China myth that its the engine for the world economy is deeply rooted in Canada as our inferiority complex vis a vis the americans forces people to believe that the US economy is a lot smaller and important than it is.Its amazing the talks I have had with people in vancouver the last few days about housing. YOu can't debate idiots as they make up facts and refuse to listen. I had one conversation with a guy who is a doctor. He didn't believe that real estate could ever go down. Its not the belief… Read more »

Tulip Mania
Tulip Mania
13 years ago

Just how much more demand can be borrowed from the future?Be it ab-busters, dvd players or mortgages.The China hype is just that, China hype, not different than the Japan Inc hype.

bc_cele
bc_cele
13 years ago

Freako,I'm definitely one of those heretics that think that oil prices are totally unsustainable at their current levels. Seems OPEC must think the same thing as they have been frantically trying to 'talk' the market higher. Like, an addict, however, they have had very limited success in cutting back their habit; estimates I've seen are that they have cut back about 1/2 of what they agreed to.Should be an interesting spring.

TheVanMan
TheVanMan
13 years ago

Ohhh, fear fear fear!!Here's a link to an article which depicted the gloomiest scenario we are about to possibly face and it's not pretty.http://www.canadianmoneysaver.ca/resource_center/homepg_articles/QuonOct06.htm

Freako
Freako
13 years ago

"Probably not me either, though I'm also in agreement."Actually, I think you were the one I was thinking of, Betamax. Interesting how we share different tangents with different people. I think I and bc_cele are united in the belief that oil will come down further."China is building huge overcapacity, and they're very vulnerable to even a slight downturn."My thinking goes along those lines too. In addition, I feel that productivity growth will slow down dramatically once industrialization has peaked. It will be a tough slog to even remotely approach Western levels of absolute productivity.

betamax
betamax
13 years ago

The 80's recession was severe: many lost their jobs and subsequently lost their houses; the unemployment rate for young adults was around 25%; even government workers were laid off or were forced to take 10% wage cuts to avoid lay-offs in their sections.What surprised me, and left a lasting impression, was how fragile our economic system can be. The difference between a healthy 3% growth and a devastating -3% decrease is really not that much and can happen more quickly than most imagine. People say it can't happen again – well guess what, the same people said the same thing right before it tanked in 82. Never say never.

betamax
betamax
13 years ago

I don't see the market getting to the point where my place will be worth $225 000 again. I see a slight decrease but nothing more. Our market is insaneThere's a logical disconnect between your last statement and everything that came before it.

betamax
betamax
13 years ago

I have found only one other poster that agrees with me on this (can't remember who). Probably not me either, though I'm also in agreement. China is building huge overcapacity, and they're very vulnerable to even a slight downturn. My wife is Chinese and knows of some Chinese who are concerned – but they don't get quoted in the media.

bc_cele
bc_cele
13 years ago

Just Observing,Things are normally very quite there this time of year, but they were starting to quicken their pace of attacks when I was there. However, I left just before the latest push (Falcon Summit), and since then I've heard that things have calmed down. Last I heard was that our troops moved into their positions with almost no difficulty and have almost 1000 of the Taliban surronded in a very small area. Everyone at the camp was hoping that we can contain these guys once and for all because it is not a good situation for the locals. There were a number of women killed for the simple fact that they dared to teach children. One woman had to be kept in the compound to keep her from being assassinated. The sooner we can contain them then the sooner… Read more »

patiently waiting
patiently waiting
13 years ago

I was a bit young to be paying attention around 1981. The only thing I vaguely remember is real estate signs everywhere. During an election, someone joked that the real estate signs outnumbered the political signs.What I recall more clearly is the 80s recession. Every night, the evening news had depressing stories about young people trying to find work or mass rallies to opposed cutbacks in just about everything. By the time I graduated – with guidance counsellors strongly urging me to go to college or face doom – the worst of it was over, but it still plays in the back of my mind to this day. I think people my age are a bit more cautious than people 5 or 10 years younger. I think that age group is going to be shocked when they meet their first… Read more »

Anonymous
Anonymous
13 years ago

Three years ago I bought a condo in New West for $225 000. It's 3 bdrms. and in a nice area. A realtor told me I can sell it today for almost $400 000. I don't see the market getting to the point where my place will be worth $225 000 again. I see a slight decrease but nothing more. Our market is insane and I'm glad I don't have to buy.

just observing
just observing
13 years ago

I have found only one other poster that agrees with me on this (can't remember who).Doubt it was me, but I'm in agreement. Here's an interesting article you might like to read from earlier this year (Foreign Policy):Dark Side of China's Rise</a href="http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=18110&prog=zch">bc_cele:What's the latest from Afghanistan?

Anonymous
Anonymous
13 years ago

Is there anyone old enough here who remembers first hand what happened.Yes. I was absolutely stunned. It made me think of London during WWII. Everywhere – holes in the ground, bare foundations, half-finished condos which sat there for years. Almost a whole block of SFH near 22nd and Namimo which just sat and deteriorated. Spooky. Forclosures galore.Decline 45% to bottom in 1983 BTW.Anyone who denies this crash should apply now for a job in the Bush White House. Dubya needs you.