Comments on: Markets keep dropping.

By: Patiently Waiting

Patiently Waiting — Sat, 18 Aug 2007 16:45:00 +0000

I know pet owners are paying big premiums. Its sad. I was just talking to my barber, and she is about to get evicted. She's overpaying rent beyond her means because she won't give up her cats. Eviction shouldn't happen to someone who works 60 hrs/week and lives modestly.

Current score: 0 (to vote for this comment, please visit the site)

By: freako

freako — Sat, 18 Aug 2007 14:08:00 +0000

chipman is even posting crap on his site to this effect. Chipman has posted this in the past, and I refuted him using the most clear cut logic I could muster up. Lost cause.Rents will absolutely NOT go up because landlords need more money. It is supply and demand pure and simple. Landlords compete for tenants and tenants compete for rentals. There may be some mispricings due to market frictions and imperfections but these in no way or form constitute increasing rent levels.

Current score: 0 (to vote for this comment, please visit the site)

By: mk-kids

mk-kids — Sat, 18 Aug 2007 12:07:00 +0000

"As mentioned, the #1 clue is lagging rents. It is such a strong bearish argument, that the onus is on the bulls to explain it away. In the absence of such an explanation, the crash is waiting, albeit patiently it seems. Mystery reasons don't cut it."freako, i think the realtors(tm) are on to this. i've been watching craigslist for sometime & see a lot of the overpriced rentals on there are posted by realtors & their agencies/ partners, etc... the effect of this is that amateurs see these overvaluations & post their places at a premium. renters who are too stupid or lazy or desperate rent this crap and it becomes a self-fulfilling prophecy. chipman is even posting crap on his site to this effect. i'm so sick of the manipulation. why are people so stupid.

Current score: 0 (to vote for this comment, please visit the site)

By: freako

freako — Sat, 18 Aug 2007 08:59:00 +0000

Also,We hardly see snowing in this beautiful city.Such advantage warrant a high premium.Yeah, everytime it snows in San Diego or Miami I laugh at those poor cold soulds.

Current score: 0 (to vote for this comment, please visit the site)

By: TheVanMan

TheVanMan — Sat, 18 Aug 2007 06:03:00 +0000

Patriotz said:Yes of course I am. But you said "people sell only when they have no choice". I.E. all people. That's just not true.Oh by way, there's another group of people who always have to sell. They're called "builders", and you can see them keepin' on keepin' on south of the border, even as prices tank.I say:Let's no feed words into my mouth alright.Here,Let's assume that you have 80 percent debt on your home and the market price drops say by 10%, you have just absorbed at 50%, yeap that's a 50% drop in the value of your equity. Do the math. Assume a $500,000 home with the initial equity of $100,000 (your downpayment) and a $400,000 mortgage. 10% down from half a mil would be $450,000. Since you don't own that $400,000 in money, you are only left over with $50,000 when you sell.However, if we do the math again with a 40% stake equity (downpayment or a few years into the mortgage), but the market suddenly drops 30%, you will see a 75% of your total equity wiped out.As I said in the earlier post, people with a significant built-up equity to cash in, which means 100% equity with no borrowed money will not be forced to sell. You see, a 50 to 100% decline of investor's net worth in the stock market has NEVER happened before, not even the 1929 crash. Never. BUT, a 30% decline in house prices in Vancouver (though I think it would be even more) would quickly wiped out up 75% of the net equity worth.gone. If house prices decline say 50-60% from the highs, then it would practically wipe out everyone's total home equity.Why?!? Because, most of them use their existing paid home equity(principle residence) to speculate on many condos and homes they bought with borrowed money. Builders again would face the same problems. They are sellers, but they are also borrowers too! If they are forced to sell in a down market, they face the same lost of equity they did with regular home buyers but at a much magnified magnitude.

Current score: 0 (to vote for this comment, please visit the site)

By: fgah

fgah — Sat, 18 Aug 2007 00:48:00 +0000

US houses keep dropping but it will never happen in Van because you can't compare a apple to a rotten egg such as NY and other major US city.Where in Canada you can have flowers growing all yrs long?Also,We hardly see snowing in this beautiful city.Such advantage warrant a high premium.RE price is still far lower than London,Hong Kong,Japan and other major world-class city.Houses will costs 1 million dollar for sure in 2010.Get in guys before it is too late.The current RE price is still a bargain.

Current score: 0 (to vote for this comment, please visit the site)

By: patriotz

patriotz — Fri, 17 Aug 2007 21:28:00 +0000

You are talking about people who already have a significant stake of equity in their homes. People who downsized or move to a different locale had built-up equity to cash in. People who buy homes these days DO NOT. That is the difference.Yes of course I am. But you said "people sell only when they have no choice". I.E. all people. That's just not true.Oh by way, there's another group of people who always have to sell. They're called "builders", and you can see them keepin' on keepin' on south of the border, even as prices tank.Markets are set at the margins. If a significant number of discretionary sellers head for the exits, that can be enough to stop price appreciation. And then new buyers sit back and ask themselves what is the point of buying. And the downward spiral begins.

Current score: 0 (to vote for this comment, please visit the site)

By: freako

freako — Fri, 17 Aug 2007 16:36:00 +0000

not are our interest payments tax deductable.The more reason for our prices being out of line. Our affordability has to THE worst in North America by a good margin.

Current score: 0 (to vote for this comment, please visit the site)

By: freako

freako — Fri, 17 Aug 2007 16:35:00 +0000

I don't mind that some of my arguments get taken apart - that's why this board is for. I wasn't refering to your arguments in specific, but any argument from anybody. What is left over will hopefully be closer to the true picture, which I imagine is the ultimate goal of most posters.But what I am trying to say is that something is missing in this analysis. Something that would explain the change in attitudes and acceptable prices/debt levels.I see things which explain the insane valuations, but nothing that justifies them.As mentioned, the #1 clue is lagging rents. It is such a strong bearish argument, that the onus is on the bulls to explain it away. In the absence of such an explanation, the crash is waiting, albeit patiently it seems. Mystery reasons don't cut it.Remember, we don't have the exotic mortgages that US has, not are our interest payments tax deductable.That argument has been made before. I think we do have f*cked up lending here. There is no way that we could be the 4th most expensive metro in North America without it. Our incomes are way down the list. Our population growth is mediocre. I don't know exactly what is going on, but in the absence of evidence to the contrary, I presume that it is simply a speculative mania that will end sooner or later. I won't bet my life on this, but I am fairly certain.

Current score: 0 (to vote for this comment, please visit the site)

By: Warren

Warren — Fri, 17 Aug 2007 15:56:00 +0000

macho slob:I'm reminded of the backwater that we still are, when folks in Florida ask me if I mean Vancouver, Washington after I proudly tell them where I'm from; or when I discover that I cannot book a direct flight to HawaiiGet a new Travel Agent. Air Canada does daily flights (non-stop of course) to Honolulu and Maui. I do a lot of travel for business, and one thing you can't knock is our airport. Its fantastic when compared to others. We aren't a major hub city, but the flight options are decent considering we are in the far corner of civilized North America.Almost everyone I talk to around the US knows where Vancouver is. My flights home are typically filled with tourists in the summer.I'm sure you know from travel to Florida that they probably don't know where Atlanta is, or who the current president is.

Current score: 0 (to vote for this comment, please visit the site)