Friday Free for All!
It’s Friday and that means open-topic time at VancouverCondo.info - here’s a few stories I’ve noticed this week:
- Local RE blogs in Vancouver Magazine
- Credit still easy to get in BC
- Vancouver most expensive for business
- Local business optimism high but dropping
- Little relief in sight for condo buyers
- Craigslist rental price drops
- BC retail sales rank last in Canada
- Rising Loonie hurting our competitive edge
- Foreclosure bus moves across the USA
- The 25% dissolution
What are you seeing out there? Post your news, links and anecdotes here and have a great weekend!
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March 28th, 2008 at 10:27 am
The Pope,
Have you ever done a demographics poll?
It would be interesting to see the bear age distribution on here.
Than we could make random guesses about pent up demand, how many ppl that lived through the various crashes, etc…
I was thinking of this while reading (un)real estate comments and the topic of age came up. But since you seem to like running polls. Apologies to Solipsist.
March 28th, 2008 at 11:06 am
March 28th, 2008 at 11:06 am
On a related note, I think more things should be worded like real estate ads. I think this blog would get much more traffic if The Pope’s posts always said “FANTASTIC ARTICLE!!! HURRY!! THIS POST WON’T LAST LONG!!!!
March 28th, 2008 at 11:24 am
March 28th, 2008 at 11:25 am
March 28th, 2008 at 11:25 am
http://vancouver.en.craigslist.ca/searc … maxAsk=max
March 28th, 2008 at 11:26 am
March 28th, 2008 at 11:29 am
March 28th, 2008 at 11:39 am
March 28th, 2008 at 11:49 am
RIGHT NOW is a critical time for the local and Canadian RE markets.
WHEREAS:
1. We have just hit the unaffordability level that ended the last boom (according to the RBC report). In my view, it was premature to call the top until this indicator reached the level it did over the last month.
2. Comparing the US RE price graph to the Canadian counterpart, reveals that our boom is two years behind the US. This fact has been referred to on BNN a number of times this week. US peaked (from the graphs I’ve seen) in around February 2006. With our two year lag, February many be the peak in price. The local graph for February prices looks like a vertical zoom blow off.
3. Putting 1 and 2 together, the unaffordability roof and the two year lag have coincided in February 2008.
AND SO, THEREFORE, I PRONOUNCE THE LOCAL RE BOOM AS ENDED (with a couple of months wiggle room).
Please voice your disagreements, corrections in data and analysis.
March 28th, 2008 at 12:07 pm
You forgot one key indicator… We have some seriously dumb ass people living in this city!
March 28th, 2008 at 12:49 pm
March 28th, 2008 at 12:58 pm
I know some that I would not consider stupid but are still oblivious to the possibility of a crash. Personally I think the reason is an emotional and selfish attachment to a specific outcome that is more desirable, namely high prices for current owners. It’s hard to separate emotions and I think everyone here, bull and bear, faces the same challenges to some degree. I’m sure even the most bearish of us have asked whether we are wrong about a crash at one point.
March 28th, 2008 at 2:15 pm
So you get people that are just living their lives, who would never take out a $300,000 loan to make a speculative investment without any research, taking the word of a salesperson as ‘expert’ advice and not looking into what factors influence house prices or the historical results of speculative excess.
March 28th, 2008 at 2:31 pm
http://langley-financial-planning.blogs … rpost.html
If they did, we wouldn’t be talking about the current insanity in the market.
March 28th, 2008 at 2:37 pm
How is that not dumb? My wife and I started looking for a place about 3 years back, we looked at three or four places and I said, “Something is wrong here.” Immediately I came to the conclusion that it was probably a bubble, independently and with no research other than looking at some home prices on MLS. Finding VHB and it’s spinoffs and their reams of data only made me more convinced. I’m sure many of you have similar stories. Now the people who don’t make that intuitive leap may be smart in some areas of their lives but I can tell you for SURE they are not smart about markets and real estate and they are probably a combination of dumb and ignorant in this field.
For example, my wife works with a woman who used to create science experiments for NASA. She owns two condos right now and is only planning to sell one after she’s bought again. I talked with her when she only had one place but it was like a brick wall, she is convinced her RE agent is her friend and the agent knows better than I where the market is going.
March 28th, 2008 at 2:40 pm
I sometimes show home-owning friends the charts above and point out that if they had bought in the peak of 95 it would have taken until 2003 to just break even. With current prices way beyond fundamentals compared to those 95 levels, it doesn’t take a genius to figure out that a correction is coming. When you show them these graphs directly they get it. Problem is, probably 1% of people buying in Vancouver have actually looked at charts and graphs like this or though about housing in this way.
March 28th, 2008 at 2:51 pm
http://www.msnbc.msn.com/id/23843931/
March 28th, 2008 at 3:23 pm
Buy now or be priced out FOREVER!
If you don’t buy today you will go to hell!
March 28th, 2008 at 3:24 pm
Then you have the ignorance factor. Someone who has lived here since 2001 who has only ever seen a booming economy and has no clue, and doesn’t want to know, that Vancouver is famous for being a boom bust town.
Then there is the denial group, when you point out that a $500k shoebox with a rent return of $1400 per month with average household incomes of $65k goes against every economic fundamental there is. That’s just the “new paradigm” denial. Much like the tech boom and other RE busts.
All of these I can live with, they are not dumb just misinformed, ignorant, desperate, hopeful? Dunno but that’s ok.
However, when I hear people say “but I hear that people are coming here with suitcases full of money and they are buying everything. I HAVE to buy now or I will never be able to buy ( or i want a piece of the action too)” OR ” All the rich oil barrons are buying up everything so I’m just trying to catch up”
or “everyone in the world is moving here, everyone. The world wants to live in Vancouver.Prices are doubling every 2 years”
Those statements come from dumb people. It sounds nasty but when I hear people say things like that I just walk away. There is no saving them and they should be parted with their money.
I’m no Einstein, but what the F@$% happened to common sense. Why is it EVERY bubble that comes along is the same thing… “Economic fundamentals don’t apply in this case”. Yet in the end, they always end for the same reason, economic fundamentals won out in the end.
March 28th, 2008 at 3:38 pm
For most people, it is extraordinarily difficult to think for oneself and to do something when everyone else is doing the opposite.
Why does no one even try the other door? They have no courage to anything but follow the crowd. That is what is happening in the local RE bubble.
The Bubbleites may not be dumb but they are sheep. And they will believe the most preposterous stories as long as the price keeps going up. This also explains the old and notorious vancouver stock exchange.
There is something about this city. I would describe it as lack of confidence. This explains why so many condo projects and restaurants (Soho, Gramercy Grill) refer to more glamerous places like NYC(Tribeca Lofts) or Europe (Mondrian, Miro -european artists).
I have contempt for these people because of their sheepish lack of confidence (incidentally - this is the reason I have allways detested the Vancouver Canucks).
March 28th, 2008 at 3:40 pm
March 28th, 2008 at 3:52 pm
March 28th, 2008 at 4:02 pm
I was talking to a very interesting fellow over drinks on Monday (for the record he’s owned in yaletown since 2000).
Anyways, he figures the world has figured out that the U.S. is not the super power it was, that they’re trickery is up.
I countered that two years ago no one would have ever believed that and said this is a good time to be buying Starbucks shares. Why not? They’re around $18 Canadian now and were $40 USD a year ago. It’s not like coffee is going away, it’s diversified, rich people like coffee, cities with the olympics drink coffee.
He just couldn’t get his head around it. Warren Buffett’s advice to buy when others are selling applies here but investor sentiment really weighs peoples decisions. Analysts figure 19/1 P/E on Starbucks isn’t as bad as it looks once you scratch the surface (not worth getting into here)
it would seem that now is the time to start throwing extra cash into unhedged U.S. index funds, but people only like to buy stuff when it’s going up.
This will also occur when the market starts dropping.
All of a sudden people will want to rent until the absolute bottom.
In first year marketing there were a few concepts that discuss this mania.
“positive reinforcement” which’s where other buyers all tell each other what a great job they’ve done.
Another one I like it
“perceived quality index” Which explains why people think they got a “deal” by paying $600k for a one bedroom.
March 28th, 2008 at 4:05 pm
“you can’t cure stupid”
March 28th, 2008 at 4:08 pm
Nowadays when I talk to friends that own, I’m not allowed to say the word crash. It’s now taboo to mention such a thing. Shame on me.
March 28th, 2008 at 4:29 pm
“A Nation of Enrons”
http://www.fool.com/investing/small-cap … nrons.aspx
Excerpt:
“In their model, house prices always go up. In their model, you can pay any price for a home, so long as you can make the monthlies with a teaser-rate ARM, never mind the upcoming adjustment to 9%. In their model, you avoid that via a refinance down the line with an equity cash-out to boot. In their model, it’s OK to buy on a less-than-forthcoming, Alt-A “liar’s loan,” because there’s no real punishment for lying on a mortgage application — particularly if everyone’s doing it. With this model, it makes sense to buy three other homes, in order to flip them later. And it makes sense to extract HELOC cash from the home, based on fantasies about continually increasing “equity.”
This is not so different from what Enron was doing. Fred and Ethel were marking up the value of their assets (the home) to a model (their belief that real estate prices always go up) and then spending the “income” immediately, on iPods, Hummers, $250 jeans, and fancy vacations. This happened all over the country, and millions of people behaved the same way. In fact, the American Fantasy of owning a home (for no money down) that would provide leveraged, 10% annual returns for a decade, is precisely what enabled those Wall Street suits to do what they did. It takes two to tango, folks. And this was the biggest dance party in economic history.”
March 28th, 2008 at 4:57 pm
If you can’t sell something, just raise the prices! Unbelievable.
March 28th, 2008 at 5:43 pm
We can all agree that the US bubble markets were fueled by Greed, Fraud and Stupidity.
How is that different than the Vancouver Bubble?
March 28th, 2008 at 6:54 pm
http://tinyurl.com/2vnmyg
Wow! The price is unbelievable and owner is in desperate need to sell!
Price is negotiable………………
real tough negotiating stance!
March 28th, 2008 at 6:59 pm
Strange….I seem to remember this old story…was it in a place called Florida?
March 28th, 2008 at 7:09 pm
reality has a way of changing that,
especially the smiling part….
March 28th, 2008 at 8:13 pm
I countered that two years ago no one would have ever believed that
You’re off a bit, the tipping point was in August, 2005.
Remember?
March 28th, 2008 at 8:42 pm
I agree. My first real estate hunt ended with a sellers agent trying to coerce us into signing an offer without explaining the implications. Something told me not to sign, maybe it was the big price tag, and I’m glad I didn’t. We didn’t have a clue.
I’ve also went through a period when I looked at presales without even considering that I might be better off looking at resales.
And there were times when I didn’t buy when I probably should have because I believed the media hype that you had to have a certaian median income to be able to own real estate in Vancouver.
The first big step is to stop believing what you read in the Saturday Homes section. The next is to ask questions and do some research. But everyone on this blog knows that. It’s the ones who aren’t reading it I worry about.
March 28th, 2008 at 9:29 pm
March 28th, 2008 at 9:36 pm
March 29th, 2008 at 7:00 am
March 29th, 2008 at 9:06 am
March 29th, 2008 at 9:41 am
nuf said.
March 29th, 2008 at 10:18 am
http://www.msnbc.msn.com/id/23853415/
If this goes through I wonder if it will really have any effect on future bubbles since they’re always seen as positive growth until they pop.
March 29th, 2008 at 11:21 am
Read it, but with scepticism. I’m sure there are a few who followed his advice from his earlier book (2015 After the Boom 1005) who are regretting it. But his more general advice and predictions were right on.
I found myself agreeing with a lot of what he said in “Greater Fool”, particularly his comments about the type of housing to buy with the future in mind, specifically, less is more (bungalows, townhomes, larger condos) and urban better than rural (because of high gas prices and an aging population). It was also refreshing to see a discussion of climate change and its affect on housing.
But his view is somewhat Ontario-centric, his target audience solidly middle class and the book doesn’t go into enough detail.
I hope people will read the book and it will generate awareness and more discussion about what he has to say.
March 29th, 2008 at 11:54 am
People prefer to read what reinforces their beliefs and opinions, but the smart ones look at a variety of viewpoints.
Hopefully someone thinking of buying now will come across this blog and become informed before taking on a 40 year mortgage on an overpriced property.
BTW - I don’t agree that 40 year mortgages and zero down are always bad. Amortization periods can be reduced once you get into the market. If you take a long-term view, timing, price and ability to pay are more important than the amortization period.
March 29th, 2008 at 11:59 am
Isaac Newton got duped in the South Sea Bubble. Intelligence has nothing to do with it, because these speculators are acting on emotion, not logic.
Kelowna is a case in point — the phrase “everybody wants to live here” always makes perfect sense to everyone who has already chosen to live there, and it is constantly affirmed by everyone else around them, who have made the same decision. To outsiders who have no great desire to live there, however, the phrase is immediately recognized as laughably egocentric nonsense. People are acting on emotions, not logic. Same goes for Vancouver. If the phrase “everyone wants to live here”, was true, then immigration would be off the scale.
March 29th, 2008 at 12:17 pm
One recently released forecast to 2030 had this to say about BC.
“Over the long term, real GDP growth will average 2.1 per cent in British Columbia and 1.4 per cent in Prince Edward Island, as the two provinces become preferred retirement havens for baby boomers.”
This doesn’t seem too insightful. I don’t know how they’re going to squeeze all those people into PEI nor can I see how retirees are going to afford the high RE prices here.
March 29th, 2008 at 12:42 pm
BC’s population is getting older - which isn’t a good thing - retirees cost money - we’re looking at bigger expenses on healthcare because of all the grey hairs (no offense to any grey hairs)
I wouldn’t put a whole lot of faith in the Conference Board - I find their reports are filled with “fluff” - because fluff is easier to sell
March 29th, 2008 at 2:22 pm
http://www.bcbusinessonline.ca/neighbourhoods
Sure seems like a change in sentiment in the media lately!
March 29th, 2008 at 3:07 pm
March 29th, 2008 at 5:31 pm
March 29th, 2008 at 6:19 pm
Absolutely right. Regarding Newton, I believe that the whole story is that he bought in early, saw the speculation for what it was and then made a lot of money by selling out. However, he then watched it continue up and up, and, out of greed, got back in just in time to be wiped out completely when it blew up. He lost 10,000 sterling, an astronomical amount in those days.
March 29th, 2008 at 7:19 pm
Yeah, but they’re not the ones driving around with plates that proclaim “Texas The Best Place On Earth.”
We’re the only fools with that chutzpah.