Friday Free for All!

Its the weekly news round-up and open topic post for the weekend. Here’s a few stories to get us started:

-Thinner profits predicted for housing developers
-The fine line between journalism and advertising
-Ozzie: Don’t listen to the gloomers
-Buy a condo, get a free flat-screen TV!
-Pre-sale buyers of failed condo will come out ahead
-Developers say its still safe to buy pre-sales
-CBC: Construction receivership stories sought

And last but not least, a new blog to find and share anecdotes about the Vancouver real estate market:
The Vancouver Real Estate Anecdote Archive!

So what are you seeing out there in the real estate and economics universe? Post your news, links and theories here and have an excellent weekend!

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smelly
smelly
12 years ago

You guys are hilarious! Ozzie published almost the exact same piece in 1998 "A Case of the Yeah, Buts" http://www2.jurock.com/insider/login.asp?c=1&…

He's toying with you gloomy guses! Too funny!

Michael Randallbard
12 years ago

Drachen

Gold is going to $1,650 within the next 12 months. Buy some today or lose out on easy money. BTW, what would YOU invest in now? This should be interesting to hear.

Oh yes most investors are just like me, making about 5 to 10 grand

.

.

.

.

.

.PER DAY

Michael Randallbard
12 years ago

Warren

"A condition of slow economic growth and relatively high unemployment – a time of stagnation – accompanied by a rise in prices, or inflation.

Investopedia Says… Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in. This happened to a great extent during the 1970s, when world oil prices rose dramatically, fueling sharp inflation in developed countries. For these countries, including the U.S., stagnation increased the inflationary effects."

Drachen
Drachen
12 years ago

Patriotz:

I didn't say it was smart, it's just what happens most of the time. Investors for the most part are about as bright as Randallbard, so they invest in "gold" because it's the gold standard right?

ex-vancouverite
ex-vancouverite
12 years ago

As for stagflation, don’t assume that just because the US seems headed for it, Canada is too.

Yeah, I know, we are singularly different.

Canada has nothing to gain from inflation, and lots to lose, in both the public and private sectors.

Frankly, I can't name any nation that has anything to gain by rampant inflation. Can you? It's not as though any populace got together and voted, "Yes. We need more monetary expansion".

bdk
bdk
12 years ago

I can comment on the cashier point I made earlier. I was basing it on a random stat I remembered from first or second year Economics class, that housing had gone up at a ratio of 3 to 1 versus income since 1970 and a cashier I knew who worked at the same grocery store from the late 60's to the end of the 90's compared with the prices of houses in the area where she lived. The problem with having this argument everyday is idiots like Krissh haven't seen how fast "specuvestor" sentiment changes. 95% of Sophia buyers were speculators, I'm guessing 75% of downtown (that means we need 7,500 buyers who earn $300k per year to suddenly move here). Krissh must've moved here from Kazakhstan in 2003, and missed the previous ten years of flat prices because he… Read more »

patriotz
patriotz
12 years ago

Above comment was meant for Drachen's post.

As for stagflation, don't assume that just because the US seems headed for it, Canada is too. Canada has nothing to gain from inflation, and lots to lose, in both the public and private sectors.

jesse
jesse
12 years ago

"Doesn’t recession = lack of demand = lower prices?"

It depends on a lot of factors. As an example, look at Florida construction: excess inventory and no demand yet builders still have projects they are trying to complete! Huge deflation because suppliers don't scale back and demand low and going lower.

Oil is an imperfect example of the contrary, where supply can be changed relatively quickly and keep prices from deflating (though there are a LOT of other factors that make this an imperfect example).

Agriculturals are something different. It appears like increased demand and supply shocks are driving up prices. That and speculation. Peak food, anyone? 🙂

"During economic turmoil investors like to shift their money to “hard” assets. It happens every recession."

It's an interesting exercise to look at historical commodity prices.

patriotz
patriotz
12 years ago

Really? How did that strategy work out in 1990? 1982?

Or 1929?

ex-vancouverite
ex-vancouverite
12 years ago

Can somebody tell me why commodities would skyrocket in a recession economy? Gold, maybe as people fear inflation, but other commodities? Doesn’t recession = lack of demand = lower prices?

I thought this was the beauty of stagflation; where we get the worst of both worlds. Sky-rocketing costs coupled with less ability to pay for it. Apparently, both stagnation (recession) and inflation can be caused by inappropriate macroeconomic policies.

Maybe we could just pretend we are dealing with a sane economy.

Drachen
Drachen
12 years ago

Warren:

During economic turmoil investors like to shift their money to "hard" assets. It happens every recession.

blueskies
blueskies
12 years ago

commodities would skyrocket in a recession economy?

one possibility is wheat and other feed grains

another is potash, critical fertilizer ingredient

gotta eat you know!

Drachen
Drachen
12 years ago

Evergreen "the numbers tell me there is underlying strength in the market." Ahh, are you off your meds again? Numbers don't talk man. And you haven't provided anything substantial about how you chose to interpret the numbers and on what basis you're throwing out all historical data prior to the mid '80s. Are you really saying that 40 year mortgages and partner mortgages will weigh more heavily than the introduction of mortgages? Because that had no impact on RE prices. Think about it, you're going from no mortgages to mortgages in the recorded history of real estate. IT HAD NO IMPACT. You're a loon. Go back on your meds and start experiencing the real world again. As for the DJIA why not start quoting RE prices in India like Krrish? "Prices are falling in the states but the DJIA is… Read more »

Warren
Warren
12 years ago

Can somebody tell me why commodities would skyrocket in a recession economy? Gold, maybe as people fear inflation, but other commodities? Doesn't recession = lack of demand = lower prices?

Iggy
Iggy
12 years ago

Evergreen,

It sounds like your argument is "It should have gone down by now but because it hasn't gone down, it will not".

..that's just retarded

Anonymous
Anonymous
12 years ago

Evengreen,

Stop smoking weed. Your not making sense. The market will crash. No ifs or buts. No justifying. Too much negativity. US is not going to recover. It's got a long way down.

-A-
-A-
12 years ago

How de coupled can our economy be when in fact Greenspan had control of our monetary policy by proxy for almost 20 years?

Bank of Canada has been just a rubber stamp.

Re-diculous
Re-diculous
12 years ago

Even better

B.C.'s boom doesn't echo in the outskirts

http://tinyurl.com/33mxoj

Re-diculous
Re-diculous
12 years ago

Update on "Decoupling Theory"

Canada's Economy slows as Expors fall

http://tinyurl.com/3alngu

-A-
-A-
12 years ago

Evergreem, or should I say Everhopeful:

"The notion of a constant one-to-one relationship between income and RE price across time is no longer useful compared to say, the pre-80s. Population has boomed (natural and immigration) and Canadian real estate is up for grabs for investment both locally and globally"

I think the paradigm shift argument has been used before –it’s different this time right?, And the population explosion argument has bald tires, and has little traction.

What you have left is the creative financing which is blowing up everywhere in much more populated cities than Vancouver.

I have a feeling, yes just a feeling, no science based research like yours, that when the bubble finally pops in Vancouver, our market was fuelled by irrational buyers, accommodated by cheap money.

50% drop from the peak is not far fetched.

evergreen
evergreen
12 years ago

“And I truly doubt BC RE will fall more than 20-30%.” Opinions are like… You know. Any facts or factoids to back up your rhetoric? You’re correct, it's only an opinion. I've relied on two major sources: 1. Paulb’s Numbers I’ve followed Paulb’s Numbers daily for some time. My interpretation might be very wrong, but the numbers tell me there is underlying strength in the market. There has been no hint that RE prices will retreat by at least one-third, something which should have happened well before now given the slew of bad news in the past several months (plus typical end-year sales slowdown). On the contrary, prices are still (very) high, at worst only an average 10% off new highs. Btw, it doesn’t matter whether these prices are nominal or real. These are numbers compared to those only four… Read more »

krrish1
12 years ago

Evergreen,

well said as usual,

world is like throw your money to watch the show no money ok go home.

krrish1
12 years ago

ReductiMat,

YES

Yes there is Inflationary presure in Vancouver like any other stunning cities of the world, because of competition world it is hard to see any down turn,in lots of sectors rates of pay also keeping up with inflation,I can see more than 85% people are in good condition 15% on the bottom line are too common, rents are also affordable and people can easy adjust them self just by moving to suitable places.I can write down a book but let me finish here and yes one complaint for sure, your question was not appropriate as Vancouverites it makes sense otherwise you should have keep Vancouver out of question then I was able to answer more sufficiently -anyway nice to read you after long time…..

evergreen
evergreen
12 years ago

What matters is the price compared to local incomes and rents. The notion of a constant one-to-one relationship between income and RE price across time is no longer useful compared to say, the pre-80s. Population has boomed (natural and immigration) and Canadian real estate is up for grabs for investment both locally and globally. Further, there are now mortgages which allow for more than one income to be combined and there is also available 40 year amortization. These 'creative' mortgage packages mask the real relation between income and RE price. Until these factors are teased out it's simplistic to just adjust property prices for the compounded, annualised inflation rates to determine the 'real' price. In future, if not already, one may just talk about 'affordability' (see Jadeeast's post for link) rather than adjusted or real prices because it will be… Read more »

patriotz
patriotz
12 years ago

Australian Prime Minister Kevin Rudd will unveil a plan on Monday for families suffering mortgage stress.

Hey wait a minute. If the problem in Oz is that housing is unaffordable, aren't falling prices the solution? How can affordability and falling prices both be problems at the same time?

What does "mortgage stress" have to do with falling prices? The price you paid for your house is either affordable or it isn't, regardless of whether prices go up, go down, or stay the same.

People who buy at historically low interest rates and then get into trouble when rates go up have nobody but themselves to blame. Nobody forced then to buy a house.

Who benefits by keeping "owners" making payments on houses with falling values?

Where have I heard this song before?