Friday free-for-all
Here’s an open topic for Friday Feb 23rd. What are you seeing out there? Feel free to post anectdotes, questions and links to news regarding the local and global real estate market.
Here’s what I’m seeing:
-Anectdotal buzz about the Vancouver market heating up again this month after a four month lull. Will house prices stop dropping now?
-It’s getting more expensive to park in Vancouver. Heck its getting more expensive for everything here, are we seeing wage increases to match?
-Our neighbors down south continue to experience one of the worst housing slumps in their history. The NAR says the worst is hopefully over, but the builders don’t see a recovery yet.
So what are you seeing?
February 26th, 2007 at 7:39 pm
Warren,Sounds like you were probably very young or too young to remember the 1970s..I have known Mr. Shilling since the 70s, so he's been around longer than any young guns that you find in your local banks pretending to be investment or real estate experts.He's been through many ups and downs and had been ranked as the 3rd top stock market forecaster. Guest who was number #2? Warren Buffett (yet another investment guru). His impressive resume includes predictions of the1969-1970 recession (nobody predicted that).The 1973-1975 global recession (which has the similarities to what we are in right now). He also predicted double digit inflation in the late 1970s, the tech bubble and the RE boom that came later. He is also predicting mild deflation after the recession (this supposedly coming one). The same mild deflation Japan had been going through from 1992-2002. The numbers just simply don't lie. Just like the tech bubble with Enron, Nortel and Global Crossings.You can cook the books, but you can't cook them forever..
February 26th, 2007 at 10:02 am
thevanman said:2007 will be an interesting year. If his predictions come true, then I'm afraid a lot of those so called home buyers that bought out at the top will — read his 2002 prediction about the doom of the housing market..Ok… so the guy who predicted a housing bubble 5 years ago (which was basically the rampant growth stage) is now predicting economic collapse in 2007? Sorry but timing is everything… I can predict an asteroid hitting Vancouver, but that doesn't mean you should pick up and move to the southern hemisphere next week.For the record I'm not a bull, but its hard to read this kind of stuff "coming soon" for the last 3-4 years and keep believing it.If: 6. The insatiable U.S. consumer will spend until borrowing power is exhausted then what is the justification for:4. China will suffer a hard landing due to domestic cooling measures and U.S. recessionWhen is this borrowing power exhausted? Could be another 2-3 years or more.
February 26th, 2007 at 4:21 am
And of course in the US interest only mortages (infinite term) and neg-am mortgages (negative term) have become increasingly common as the bubble has progressed.These "exotic" mortgages don't support prices long term, they set the stage for the inevitable crash, as we saw over a decade ago in Japan and see today in the US.
February 25th, 2007 at 7:48 pm
Of course on preview I see that Betamax beat me to the point with the 100 yr/ japan bubble comparison.If I start seeing a 100 year mortgage becoming common in Vancouver I'll be out of here until the spectacular crash.
February 25th, 2007 at 7:46 pm
RE: 100 year mortgages.Is there really demand out there for an apparatus to pass house debt on to the next generation? The 100 year mortgage is an assanine proposition that would only serve to make a crash worse (ala Japan).
February 25th, 2007 at 7:39 pm
If we don't warn people, how would we differ from the deceitful shills?I respectfully disagree. I don't presume to take responsibility for other peoples financial decisions. I'm not out there selling people on overpriced leaky condos. If they ask my opinion I'll let them know that yes, prices CAN drop, and no, it's not actually different this time, but in the end its their decision.If people feel they NEED to buy that place at any price, and they can afford the monthly payments for now, who am I to tell them they shouldn't? And besides, why do I want to have to bid against these people in the future? Let em' buy.
February 25th, 2007 at 7:39 pm
Funny enough, I keep hearing about the 100yr mortgage often these days.No doubt a response to the growing awareness that affordability limits have already been reached. The premise of perpetually high appreciation requires one to fabricate increasingly questionable rationalizations to support it despite the obvious limitations.If anything, the reference to 100 yr mortgages should conjure nightmare comparisons to Japan; that it doesn't suggests how blind to risk everyone has become.
February 25th, 2007 at 2:57 pm
Here's what I read from Gary Shilling &Co website. He's got an interesting area where he puts his predictions to work. Here are the predictions for 2007.JANUARY 2007“The 2007 Investment Outlook: 12 Nonconsensus Themesâ€: As was true in 2006, six background elements will dominate the investment climate in 2007:1. The world is still awash in financial liquidity2. Inflation remains low3. So many investment returns are low4. Speculation remains rampant5. So investors assume more risks to achieve expected returns6. The insatiable U.S. consumer will spend until borrowing power is exhaustedIn this climate, we foresee 12 investment themes, eight of which are likely to unfold in 2007 while four will probably work but maybe not until later:1. The housing bubble will burst. If so,2. The Fed will ease; meanwhile, the yield curve will remain inverted3. U.S. stock prices will fall, perhaps below the 2002 lows, in the midst of a major recession4. China will suffer a hard landing due to domestic cooling measures and U.S. recession5. Weakness in U.S. and China will spread globally, dragging down economies and stocks universally6. Treasury bonds will rally7. The dollar will rally, but not before the recession is global8. Commodity prices will nosedive(Means Canada will suffer greatly, especially in the West Coast)9. Maybe global and chronic deflation will commence in 2007.10. Maybe U.S. consumers will start a long-run saving spree, replacing their 25-year borrowing and spending binge11. Maybe deflationary expectations will become widespread and robust12. Speculative areas beyond housing may suffer in 20072007 will be an interesting year. If his predictions come true, then I'm afraid a lot of those so called home buyers that bought out at the top will — read his 2002 prediction about the doom of the housing market..JULY 2002"The Housing Bubble": Housing has benefited from falling mortgage rates, easy affordability, accommodative lenders and disdain for stocks and low-interest returns. Now it has taken on self-feeding, bubble dimensions that will sooner or later collapse. We don't foresee rising mortgage rates that would burst the bubble, and overbuilding isn't a problem, at least so far. But falling house prices will be lethal to the residential boom and are part of the deflation we forecast. The spur to declining prices is likely to be a consumer retrenchment-led second dip in the recession, spawned by the continuing bear market in stocks. Rising unemployment will devastate recent first-time home buyers with little home equity or other assets. The lenders will withdraw and the bad news will ripple up the housing chain, depressing house prices at all levels. He is not the only one preaching this. John Talbott of the author "Sell Now" is predicting the same thing. Worst, it could replicate what Japan had went through 20 years ago — deflating house prices.. To summarize.. The higher this thing goes, the worst the fallout and the "longer" it takes for excess speculation to wrung out. I hope the deflationary period scenario does not come into play here in North America, but it's hard not to think about that..
February 25th, 2007 at 1:47 pm
"Yeah, I think we can safely assume that any further increases in RE prices are just a dead cat bounce."I think you will find this cat is made of rubber. This market is not soft: supply is slow coming online, people have jobs plus assets, and lenders have lots of cash to loan out. I have never witnessed a price reversal predicted by some bears but maybe I'm too young. If such a reversal comes, like life, it will be anticlimatic due to all the FUD.That said, it appears prices are choppy right now. I hear anecdotal stories of over-list and under-list. Doesn't suprise me for this time of year as the spring pricepoints shake out.Given the choppiness, I am still sticking to my +5% appreciation prediction for 2007. Though I think Realtors are going to feel the heat this year, given added agent competition and the market's lack of urgency.
February 25th, 2007 at 11:48 am
Someone in my family overpaid for a larger house, at listing price in a nice area. They were going a bit up the property ladder. I'm not happy about what they paid and when they bought. They also agreed to buy without requiring their current house sell first which really pissed me off.BUT…If they sell their old house quickly (while the market is temporarily, stupidly hot for some reason), the damage is minimal. I've suggested that they forget about ANY renovations on their old place and just get it on the market NOW. Theres a leak they should take care of, THAT'S IT.Also, fortunately, they can afford this (very successful business) and would have a minimal mortgage by Vancouver standards. But this is a little close to home and is stressing me out right now. For the moment, I've switched sides and I'm paying for the market not to suddenly crash.
February 25th, 2007 at 11:12 am
"So what are you seeing?"The general consensus among my circle is, that prices have come down a tiny bit, but are set to take off again, and will keep going up until the Olympics, beyond 2010, the 100 year mortgage will come to the rescue.Funny enough, I keep hearing about the 100yr mortgage often these days. Is this the new myth to go along with the running out of land bs?
February 24th, 2007 at 10:22 pm
..albertabubble.blogspot.comfor albertanssorry to keep using your page
February 24th, 2007 at 1:24 pm
devilsadvocate said… Lou: Even if you can get condo's 50 cents on the dollar in the future, why do you want to discourage other people from buying now? Do you really want to have to bid against them in the future?Everyone who can buy now should! Don't wait! Because, at this stage the question is not whether it is or not a bubble, but rather when will it burst.The financial devastation will be enormous for those who will not be able to ride out the 10 to 20 year slump. If we don't warn people, how would we differ from the deceitful shills?
February 24th, 2007 at 12:56 pm
2br condo in Coal Harbour. Only $5500/month!!!http://vancouver.craigslist.org/apa/283959764.htmlI would like to see the idi…, ehm smart person who is willing to pay this much…:)))))
February 24th, 2007 at 9:23 am
a new blog site for alberta bloggers has surfacedalbertabubble.blogspot.com
February 23rd, 2007 at 11:49 pm
Lou: Even if you can get condo's 50 cents on the dollar in the future, why do you want to discourage other people from buying now? Do you really want to have to bid against them in the future?Everyone who can buy now should! Don't wait!
February 23rd, 2007 at 5:53 pm
There's an article about VHB's blog-stopping over at the Tyee:http://www.thetyee.ca/Mediacheck/2007/02/20/VHB/
February 23rd, 2007 at 4:28 pm
dont want to fill your blog with alberta trendsi am going to post an edm sitesince the calgary one is now suddenly gone…edmonton-housing.blogspot.comthanks for letting me use your site
February 23rd, 2007 at 4:10 pm
in the hope that some of there readers will read herethanks..jc..moe..rej..and all the calgary bullsi enjoyed our debatesmost thanks and congratulations to robgood luck in the futureand good luck and future enjoyment to all the calgary bloggers
February 23rd, 2007 at 4:00 pm
something strange is happeningcalgary housing blog site closing down3 housing blogs in 6 daysweird
February 23rd, 2007 at 3:11 pm
Well, here is some more evidence on the dead cat bounce. A couple of friends bid for an apartment in the Caper's building on 4th avenue. They were outbid and there were 3 offers in total. Property went for above list (I think by $15000 or so, roughly 2% of transaction value). My friends are quite depressed about it, but i told them this might be the best thing that ever happened to them…..then they told me to shut up!When I hear these stories with all that is happening in the US (se defaults and mortgage lenders' crashes) I just cannot make sense of it…..VHB where are you?
February 23rd, 2007 at 2:31 pm
We just sold our townhouse for above list price in under 1 week, had 3 bidders going to war over it. Was not undervalued, fair price for well presented property.Several realtors told me I should make a living as a designer… haha, and I'm straight ! Go figure…We had 10 showings over that weekend and it was not even an open house.later
February 23rd, 2007 at 2:23 pm
Another underlying factor is that Mortgage Financing is starting to tighten up.Yeah, I think we can safely assume that any further increases in RE prices are just a dead cat bounce.
February 23rd, 2007 at 2:21 pm
The fire insurance is up by $6,000 per year for the 11 unit apt. building where I live.
February 23rd, 2007 at 2:02 pm
Parking rates doubled in January at the Impark lot on Seymour & Nelson. $20 per day is a bit excessive.
February 23rd, 2007 at 10:36 am
re, parking: stalls at 1010 Howe St. initially sold for $20,000, and right after completion 1 was sold between owners for $25,000.Daily prices have gone up 2/3rds at the parking lots near 1010 Howe st. in the past 5 years.In-building stalls (i.e., can only rent to other residents) used to be ~$70/mo 5 years ago, at howe & davie, now i see them for $100-$125/mo.
February 23rd, 2007 at 9:42 am
Another underlying factor is that Mortgage Financing is starting to tighten up. I know of two deals that fell through due to the inability to secure financing. Inventories will rise and sales will decrease and the glut of downtown condos will create a huge over-supply and prices will fall, dramatically. The % of pre-sold condos is decreasing and speculators are trying to rent or sell or bailing out and forfeiting their deposits. Once the snowball gains momentume then we'll see a dramatic rise in listing perhaps by October/November. For those looking for a steal and who sold 6 months ago at the peak, hang in there and wait , not necessarily for a massive downturn, but for the unfortunate foreign investor that is losing his shirt in San Diego and Florida and Sinapore and is starting to panic about the ripple effect in Vancouver and is astute enough to take a loss now before it gets crazy. Relieve the poor schmuck of his anxieties and pick up his over-priced condo for 50 cents on the dollar which is what it truly is worth
February 23rd, 2007 at 9:41 am
The NAR says the worst is over? Check out "David Lereah Watch" to monitor what it means when the NAR's David Lereah speaks:http://davidlereahwatch.blogspot.com/That's where I found the link to a "MarketWatch from DowJones" article which explained the two universal truths at the National Association of Realtors: 1) It's always a good time to buy or sell a home; and 2) We've seen the worst of the housing market correction.The article also logged statements from David Lereah (the NAR's chief economist) during 2006 and 2007:January 2006Lereah's forecast: "The market is in the process of normalization."Actual sales: Fourth-quarter sales fell at an annual rate of 12.6% to 6.94 million annualized.Lereah's post-mortem: "The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead."April 2006Lereah's forecast: "Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau."Actual sales: First-quarter sales fell at an annual rate of 8.6% to 6.79 million.Lereah's post-mortem: "This is additional evidence that we're experiencing a soft landing."July 2006Lereah's forecast: "The market should even out just below present levels."Actual sales: Second-quarter sales fell at an annual rate of 6% to 6.69 million.Lereah's post-mortem: "The market is stabilizing."October 2006Lereah's forecast: "We expect sales activity to pick up early next year."Actual sales: Third-quarter sales fell at an annual rate of 22.2% to 6.28 million. January 2007Lereah's forecast: "The good news is that the steady improvement in sales will support price appreciation moving forward."Actual sales: Fourth-quarter sales fell at an annual rate of 2.3% to 6.24 million.Lereah's post-mortem: "It appears we have established a bottom." http://tinyurl.com/2kdog5
February 23rd, 2007 at 8:47 am
There are several houses sitting for sale near my place that don't seem to be seeing any bump up in the local market. There must be 8 or 10 within a three block radius trying to sell for at least six months. Of course that could be because they're asking ridiculous prices. (isn't everyone these days?)
February 23rd, 2007 at 8:44 am
here's a business week article on why its a bad time to buy in the states and the effects of speculative prices.
February 23rd, 2007 at 8:13 am
Also of course, a good year for inventory with thousands of new condo units being completed downtown..