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April 7th, 2008 at 8:11 am
USA housing prices fell before sub prime mortgage problems surfaced. At best you can say that the sub prime crisis accelerated housing depreciation. So I would look at the comments they made with even more skepticism than even you suggest.
April 7th, 2008 at 6:22 am
The Van Man:
“Patricia Lovett-Reid, senior vice president of TD Waterhouse Canada Inc., ”
Enough said.
April 7th, 2008 at 6:09 am
Here’s an interesting note..
I happened to be watching a show re-run of BNN with Patricia Levitt Reed interviewing a person from the real estate industry. He was talking about how different the Canadian market is compared to the US and that we won’t suffered a similar downturn like they do. Then Patricia asked him if we have subprime mortgages in Canada. He said no, but in Canada we got something similar like lender B and C. I’m not sure what he meant by that. Maybe someone here could elaborate? But what got me interested was when he brushed it off as being not a big deal. He said, it’s only 5% of the total mortgage and that, it’s really not as bad as the Americans with their subprime..
If Patricia and that gentleman would have done some due diligence with the Mortgage Bankers Association of the United States of America, they have information which would reveal that ONLY 8.64% of total mortgage is subprime. That’s 8.64%. So statistically, a difference of 3.64% makes US case more serious than Canada?
But if you factor in the total population of the US compared to Canada, our 5% is a much bigger deal than US’ 8.64%. And besides, you can’t walk away from a Canadian mortgage than you could with some American mortgages, which could compound the situation even worse.
April 7th, 2008 at 3:39 am
30 years at these prices? bite me…Lots of people are going to die off in the next few years, no matter what kind of medical advancements we have. Their properties will be inherited by scum younger people who by and large will want to liquidate. Boomers also have nothing saved here in the US, dont know about Canada. That;’s going to keep the implosion going for years. I dont think Van’s going to get past 2010 before the bust stinks..
April 6th, 2008 at 7:31 pm
Here’s the breakdown on media reporting, comic style.
This Modern World
April 6th, 2008 at 7:04 pm
has anyone read this forbes article? very interesting.
http://blogs.forbes.com/digita.....y-two.html
April 6th, 2008 at 6:54 pm
babelizer:
i took boilerplate from Bob Rennis site and ran it through babelizer:
Conduit Bob Rennie, specializes Rennie Marketingsysteme, to formulate the plans of risk management single and effective concerning Wohnkondominiummarketing. Narrowly working as “a representative of the promoters”, Rennie defines Marketingsysteme Kondominiumtoleranz, mark of the tendencies of consumer and offers solutions, to carry out market demands. Rennie Marketingsysteme has the admirable relations of Canada with respect to the larger promoters and most progressive and now forms the same relations in the United States.
needs another couple of go arounds….
April 6th, 2008 at 6:41 pm
Hey -A-,
I see you’re doing not bad at all writing in Krrishes lingo. Mind if I ask you where you bought that English to Krrishean dictionary? It might sell for $$$ on eBay
April 6th, 2008 at 6:02 pm
I was at the Opus lounge and I saw a bunch of valets having drinks and I bet one one of them was “Rob A”
I was going to sit this one out since there’s no point trying to tell a dumb shit like him anything but don’t worry he’ll remember what a goof he is when he grows up a bit and realizes he thought past performance indicated future return. There were idiot valets who bought tech stock right before it crashed too and they certainly aren’t laughing about it now.
He probably just got into the market and lives at Spectrum. It hasn’t occurred to him that if “everyone” wants to live downtown they could have bought in the last 120 years but since he was still in Abbotsford ,living with Mummy, he didn’t know the first thing about Vancouver.
In his mind the sun doesn’t rise until he wakes up and since he’d never been downtown before he thinks it’s imperative to own in order to live.
Another reason he thinks you have to own is because property managers tend to pick other applicants when the choice is:
1.some dumb shit with a $7/hr+tip valet job and no references.
2.Anyone else.
Laugh away Rob. A, you should go meet Krissh at the Cobalt hotel and see if you can convince some homeless wacko’s to buy real estate since no sane person with an IQ over 80 is buying right now.
April 6th, 2008 at 5:06 pm
Most Canadians have a lot of their equity (savings) tied up in real estate. They have very little in terms of savings outside of this, so they really depend on the appreciation aspect of the RE to fund their retirement lifestyles. There are a lot of people who do tap the equity out of their homes. There was a whole slew of stuff like this being sold in the late 1990s by a lot of people. Gordon Pape and Garth Turner are the two that came to my mind. You rarely see them do that these days. Mr. Turner even, at one point in time, had a TV show of his own called the Millenium TV and his forum website, not to be confused with another TV Sci-Fi show of the same name.
When I was blogging on his site and that, I was championing people buying RE and not Nortel (when it was on free fall after the last dead cat bounce), he conveniently cut me off or err banned me. Guess what happened now?!?
Having said that, there is no value in our RE — it’s overvalued. At least this time, Mr. Turner is in agreement with me, or at least re-branded one of his older books perhaps, made a few statistical changes and re-launched it as “The Greater Fool”.
When people bought home in the early 80s, I am sure some of them bought them out of necessity. Raising a family in a small rental apartment just isn’t ideal. You need a yard, and a this and a that. When you need a 2008 iPod Touch, you may well just have to “overpay” a bit.
Sure, waiting a couple years later, the Touch would be worth less with scratches and smudges but you wouldn’t enjoy the same privileges of owing it when it was new. The wow factor is gone.
Much the same with RE. It’s hot now. Some of us buy them out of necessity. A lot of us talk about it. We were just at Costco a couple of days ago and we couldn’t stop hearing people talking about condos, mortgages, houses and construction jobs just strolling down the aisle for groceries!!! The last time we went down the same aisle during the late 90s, it was Nortel, the dot.bomb and stuff.
Sure, our RE is due for a correction and when it does, WOULD YOU put yourself in a position to buy with all the bad news flying?!? How many of you actually put money back into technology stocks after the dot.com crash?
Very few. Apple and RIM did well afterwards. Did most of you jumped in and bought when Apple went down to $20? Did most of you jumped in and bought when Transcanada Pipeline was down to $9 or Yogen Fruz was down to $0.50 during the midst of the Eskimo Pie take over, rebranded to Coolbrands and went up to about $30 and then crashed.
I would wager to say that, it’s a simple no, because if some of you did, you could buy your own place today even with the inflated prices with cash, yes cash! Maybe, just maybe some of them did with money earned from these profitable sales? Have you guys thought about that?
Come the next RE crash, I would also wager to say that probably most of you won’t jump right in even if the buying opportunity reveals itself. Just with the internet crash, our Vancouver RE news will only get worse and worse and even worse before it gets better. And when it does, it will already be in the midst of the next bubble, probably and hopefully not longer than 10-12 years.
April 6th, 2008 at 4:48 pm
wow.
my friend and i went to check out some open houses today. i’m officially amazed at the stupidity that’s currently running rampant in this city.
800 sq.ft. unit in a building dt for $650,000.
crappy house on the east side (near main st.) for 1.2 million dollars. realtor tried to tell us that we could rent out the two suites downstairs for $900 each a month. yeah, anyone who buys a home for 1.2 million dollars to live in its upstairs portion is crazy.
wow.
i’m seriously amazed.
April 6th, 2008 at 4:41 pm
Buyers,
I have no clue why anyone will buy right now. The downside to buying R/E is far greater than the upside.
At best, the market will go up 15% over the next 5 years. Which means it will not even beat inflation. Actual gain or real gain, ZERO! However, it is very possible to have at 40-50% or even 60% drop in market value over the next 5 years.
It is currently evident that priced out forever is NOT possible as the price increase flatten.
If you buy now, you could be tied down forever!!!! Now this is possible.
April 6th, 2008 at 4:31 pm
/dev/null,
Very true. But this time, people who recently bought may NEVER recover. NEVER!!!!!! That is pretty scary. Think about that, NEVER!
The madness in the current situation may never again return. Even if it did, it may not be in our lifetime. Almost 70% of the average income goes to mortgage.
April 6th, 2008 at 4:30 pm
Moz,
When you bought your condo 5 years ago, did you put in a lot of downpayment into it? Is it a new building? Is this in a good neighborhood and that you really like the people there? Do you have a lot of equity in it and are you the king of the castle, that is there’s no little lady needing the final sale approval?
Selling the personal condo or house in this up market depends upon a couple of factors and I think one of the most important ones is whether you have a lot of equity sank into it. If you do, you are more likely cashflow positive. You are right. You need a place to live in only if you are cashflow positive.
I don’t know if selling your place, then renting and then waiting a good time to jump in again would be feasible either. In the meantime, you might be tempted to invest your cashed out equity from the sale of your home and invest it into something. And that something is a big mystery. And do you see what happened to retail investors with Cannaccord’s ABCP trouble and that, they were led to believe they were investing in triple AAA securities which turned out to not be? Who would know? How would you know that? And how could you be assured that there won’t be a future financial SCAM that just, and just one day erode or destroy what equity you had cashed out earlier.
I know people that did that and failed miserably in the late 1990s with Nortel and JDS Uniphase. They thought by cashing out of the early 90′s bubble and then putting the bulk of the money into Nortel. And guess who advised them to?!? Mr. Garth Turner, when he was a paid spokesperson for Dynamic Mutual Funds. Yes, the same Garth Turner that’s selling his new book about the “Greater Fool”. I can assure you that he’s no fool.
We are the fools and I saw posts here championing his cause!
The bottom line is this, sell your condo only if you don’t like living in the neighborhood any longer, have very little equity in it and don’t mind renting for awhile.
April 6th, 2008 at 4:14 pm
Krrrsh, I said “your English is incoherent,” … I take that back, I was able to make out what you’re saying. But, I don’t see much value in what you are saying, the waste of time is that I would be talking to someone who thinks fundamentals like local income are not important, a ridiculous attempt at butchering RE economics. I guess you also work in the ‘new math’ where negative cashflow purchases somehow make sense.
Keep on buying, mate.
April 6th, 2008 at 4:02 pm
is there any way to get access to reading the VHB blog? i’d really love to be able to read the old posts.
April 6th, 2008 at 3:28 pm
/dev/null, totally true about 81 peaks, anyone can just go look at the Sauder data for prices in real terms for the benchmark they use, I think it’s 2 storey detached. VHB had also very nicely laid out all the peaks and troughs over the years.
April 6th, 2008 at 3:20 pm
SHOCKING JOBS NUMBERS
My point earlier about the construction jobs was understated, as a bear, I was actually very, very surprised to read this this morning:
“Year-over-year, B.C. has created about 55,000 jobs. The province’s robust construction industry, which generated 28,000 jobs over this period, has been the main engine of that growth.”
This is a shocker, over half the new jobs in the last year in construction. The house of cards gets a few new floors added, maybe the penthouse. This is what Jock Finlayson has been talking about over the last several months.
reference, in the daily bird cage liner, the Province:
“Building drives jobs gain
But unemployment up as people flood labour market”
http://tinyurl.com/4p5j92
April 6th, 2008 at 3:13 pm
Krrsh, your English is incoherent, I wish not to engage in a rebuttal since it is a waste of time, although find it interesting that you mention:
“Drats!this is 2008,30 k people move to Vancouver”
If you mean ‘net new migrants’, cool, that’s less than the 33K from 2006, that I mentioned, thanks for reinforcing my point. That means there is almost 1 new housing unit for every new person, even though the current person per household ratio in Metro Van is something like 2.5 people per unit according to BC stats.
April 6th, 2008 at 2:29 pm
… and that doesn’t even include mortgage interest, maintenance, insurance, property taxes, realtor fees, etc. Not to mention the fact that most people fail to account for inflation when calculating their RE investment returns.
April 6th, 2008 at 1:48 pm
Booya, good point. Someone (freako? mohican?) once pointed out that if you bought at the peak in 1981 you had to wait until 2006 (25 years!) to break even.
April 6th, 2008 at 12:01 pm
“I’ve considered selling my condo, but you have to live somewhere right?”
Moz – owners say this all the time, or the nearly-equivalent “I could sell my house now that the market is peaking, but then I have to go buy another one at peak prices”. Think about it for more than 2 seconds… the market is peaking in terms of price/rent ratios. Right now the cost to rent an equivalent unit is 1/3 the cost to buy. The market WILL correct back to realistic ratios close to 1/1. It ALWAYS does. The smart thing to do is sell now, rent for 5-6 years while the market declines, and buy again at the bottom. The financial case for renting right now is overwhelming.
Despite what a lot of people say, RE cycles are surprisingly predictable. They last about 10-12 years peak-to-peak, which means 5-6 years from peak to valley. The last time RE peaked in Vancouver was 1995. If you bought then, you would have had to wait until 2003 just to break even. Just look at the charts.
April 6th, 2008 at 11:21 am
.
.
.
“-A-, why do you troll for responses from the troll? You know he’ll only post nonsense replies. I don’t care what side of the debate you’re on, I’d rather read comments that make sense, please stop baiting him.”
Anon: The troll above actually gives us an interesting perspective.
If you analyze what he says it’s basically not much different than what Pastrick, Muir, and Mortgage Pushers, disguised as impartial bank economists and realtor board paid shills claim.
He is smart, and delivers the message so to solicit a visceral response which is how real estate in Vancouver is sold.
Yes, he is a low life, but a smart one, who makes a lot of sense to the kool aid drunks!
April 6th, 2008 at 10:32 am
-A-, why do you troll for responses from the troll? You know he’ll only post nonsense replies. I don’t care what side of the debate you’re on, I’d rather read comments that make sense, please stop baiting him.
April 6th, 2008 at 10:11 am
A,
if the sfh cost 50k a homeless on the street can’t afford it anyway.
mortgage term is based on our need their is no lenght of time but it’s based on our ability to pay back- case other than that are not recognized so there is no need to make “stuff up” hammer of inflation drives people to locations and stages.
Leaky condo is cheap compare to human leaks the only thing you were unable to sort out is that you can not budget the water to deal with human’s leak.
You can still bet on condo because not all of them leak but few otherside human?anyway cost to manage leaky condo is less than what ‘miss universe pay for “always”till atleast 50 year’.
April 6th, 2008 at 9:20 am
Krrish you too much smart guy, I thinks it’s smart idea to listen to you and go buy big Vancouver Special and and then become rich.
You very right, i do mathematical work on paper, if Vancouver (world class city to be) when it become big big big, like Mexico City then house cost price go up from 10 mutltiples of resident income to maybe
20,30,40 and then 50.
So now I think question for you…. should maybe buy mortgage company to finance mortgage who will get pay from everyone in family mortgage for 100, 200, 300 year mortgage.
Will condo leaky leak before paid off?
April 6th, 2008 at 8:59 am
methinks chip has been through here before….
drive by trolling
April 6th, 2008 at 8:53 am
Off topic, but in view of the fact that Vancouver just had the coldest last week of March on record, the globe can’t warm up fast enough for me.
April 6th, 2008 at 8:42 am
Oh I forgot about my favourite conspiracy theory. Autism is caused by inoculation (you’d be on side with such intellectual giants as Jenny Mcarthy here).
April 6th, 2008 at 8:38 am
So you’re debating global warming now Chip? Let me guess you’re also a Real Estate bull. Flat Earther? Believe in UFOs? How about the Moon Landing conspiracy? CIA blew up Tower #9?
April 6th, 2008 at 8:25 am
.
.
Er…guys, let’s just buckle up and ride out the imminent crash. We can take care of global waming or freezing after we’ve loaded up on cheap RE.
April 6th, 2008 at 8:11 am
Dosh says:
“The same argument is put up for global warming, many “experts” are paid hefty sums to come up with convincing arguments for the oil and gas industries. Their voices drown out the few professionals who are working on a limited budget but have integrity and honesty on their side.”
You’re kidding, right?
Only someone emerging from a 30-year coma would think there are a “few” climate scientists working on “limited” budgets. They’re drowning in cash.
There’s a speculative bubble in global warming science. Surface temperatures dropping since 1998, troposphere unchanged, oceans cooling — forget about that! — buy into the hysteria now before you get left behind!
April 6th, 2008 at 7:39 am
“1) Vancouver: ~60K median household income”
Not enough to compete with market force but there are alternate people to grab 4-10 to replace 10 with with income challenges.
“3) Net new migrants to Metro Van: ~33-35K (as per metro Van’s site, 2006 I”
Drats!this is 2008,30 k people move to Vancouver and 60,000 to bc in 2007.
“4) Current ‘under construction’ supply = 26K units, making a pretty good care for future oversupply”
Where is it?when ever some project get launched there are presale buyers and there are requirements of sales to get financing from bank otherwise developers can’t proceed,in that case”most of projects are sold and some new one are over 80% sold”.
“You are in a world where just a couple of years ago, the most powerful economists in the world told us their was no bubble in the US, just before the pop began”.
Drats!that’s not Vancouver it’s depend on in what city do you live all different cities of the world got different future,weathers,problems,area,and floor area.
Have you ever heard that we are DIFFERENT here?
“6) Established societal belief and fact: RE in Van. is unaffordable”
Capitalism-Competition- keeps the market to it’s driving forces called “demand and supply”and the future is depend on land size not on INCOME so housing in Vancouver will never be affordable other than with high rates of pay and low-low interest rates.
even for social housing there will be stress from the same forces means people with low income will flood into social housing that will bring the cost to afford social housing UP.
April 5th, 2008 at 11:47 pm
Shiller .. “Vancouver is the WORST city in North America for bubble size.”
Not that I agree at all with Dosh, but to be be fair, I think Schiller later clarified his comment to mean that Vancouver is one of the “bubbliest”, ie) boom, bust nature. He was not specific.
I am not from the US, but I called BS on that market in 2004. It was just obvious for anyone that read a few sites and blogs.
Anyone can come to any blog on read this:
1) Vancouver: ~60K median household income
Economies slowing, some recessionary
2) Median benchmark house price is ~$675K
3) Net new migrants to Metro Van: ~33-35K (as per metro Van’s site, 2006 I believe, most recent numbers offered)
4) Current ‘under construction’ supply = 26K units, making a pretty good care for future oversupply
5) Record price highs in real terms (see sauder data)
6) Established societal belief and fact: RE in Van. is unaffordable
7) fixed rate mortgages not changing in a material way
9) A third of new jobs are in construction (virtual cycle, that will not continue indefinate )
10) Other world RE markets are melting down
What the hell difference does it make about whether someone is local or not, that’s grasping at straws. You are in a world where just a couple of years ago, the most powerful economists in the world told us their was no bubble in the US, just before the pop began.
April 5th, 2008 at 11:45 pm
I’m suprised to see so much negativity about real estate here. I’ve considered selling my condo, but you have to live somewhere right? If I sell and miss out on more gains I’ll be kicking myself, but it would also suck to lose some of the money that I’ve made in the last few years. I admit I got lucky with the market going up don’t mean to be overly greedy:).
I do feel sorry for anybody entering the housing market today, it was tough when I bought 5 years ago but prices now are so much higher I don’t know how people even do it.
April 5th, 2008 at 11:34 pm
nice comic blueskies
April 5th, 2008 at 11:31 pm
Wow. lots of activity on this board, is the housing bubble becoming a bigger deal? Agree with drachen, looks like a market peaking.
And don’t forget the crazy number of new listings coming on so far this year – they’re being added at a faster rate than we’ve seen for a long time and the buyers aren’t showing up like they have in the past. Inventory has to build quite a bit before the market turns and thats what it doing now.
April 5th, 2008 at 9:35 pm
I almost forgot in responding to Dosh.
If you need further proof that the end is nigh just look at the number of responses to this weeks FFFA 112 in 2 days! I think that’s a new record!
April 5th, 2008 at 8:33 pm
Dosh
“how many experts have you heard say that?”
The same argument is put up for global warming, many “experts” are paid hefty sums to come up with convincing arguments for the oil and gas industries. Their voices drown out the few professionals who are working on a limited budget but have integrity and honesty on their side.
Aside from which, Schiller, (who is not from Ottawa by the way) is recognized as THE leading mind in market economics by the non-corporate professionals in the field was one of the first to say Vancouver is the WORST city in North America for bubble size.
And if you want “experts” there are actually a half dozen people here who qualify, which is a half dozen more than you’ll find on the bull side who aren’t having their pockets gilded in one way or another by their boosterism.
April 5th, 2008 at 7:17 pm
Blueskies,
North Americans would eat to live, not otherwise. This, ironically, may result in less obesity, diabetes, and heart problems, which should help to keep the health care costs in check for some. Add to this the high cost of fuel; no more speeding that V6 to get to the gym on time. Walking to the mall and carrying grocery bags back home will efficiently replace it. We’ve got some interesting times ahead to witness.
Higher priced food is good
April 5th, 2008 at 6:51 pm
..everything for sale is overvalued.
which is why i can see a deflationary period ahead of us…with the exception of energy and food and possibly health care
April 5th, 2008 at 6:46 pm
Vanguy……
Wifey and I are sitting with $250K in the bank here in Calgary. Getting 3.55%……it pays 2/3 of our rent.
Worldwide…….equities are overvalued…..commodities are overvalued…..RE is overvalued……collector cars/baseball cards are overvalued, etc…..everything for sale is overvalued.
It’s a stalemate….I will wait while the world around me slowly crumbles.
April 5th, 2008 at 6:40 pm
Why don’t you stop telling people what to do with their money? you so sure that the market is going to crash but how many experts have you heard say that? One guy from Ottawa? What about people that are local and know the market like Ozzy and other experts that have made real money in the game? I don’t hear them telling people to sell and they know whats up.
April 5th, 2008 at 5:50 pm
Hopefully most who invested in RE are out or getting out ASAP and have some handsome profits for their risk.
Trends show we’re at a peak; those who don’t believe that are patting themselves on the back right now, but remember: “Pride goes before the fall”. So, be proud of your current property holdings, enjoy it.
April 5th, 2008 at 5:40 pm
“renters who’ve accumulated savings”
If you decide on equities I would consider a healthy dose of U.S. stocks as I believe that U.S. rates (S term) cannot go any lower. Stay in defensive names (eg J&J) beware the financials – a few of the Horsemen haven’t shown up yet.
Personaly I would still keep a lot of money in cash (or equiv.) but be careful how you do this. Brokers fees and fund fees (MER’s) can kill real rates of return in such a high inflation rate environment.
April 5th, 2008 at 5:24 pm
RobA “I was having cocktails at Opus Bar”I always wondered about that; would often see the kitchen staff in the alley after closing behind the Opus.The manager told me they give all the kitchen staff a bar shot on the house after closing.I look down on that area out of one of the windows of my very cheap Yaletown rental on the 32nd floor!
Was good of you as the doorman to get your wife a job in the kitchen to help with your mortgage after your regular jobs are over. Ease off the poor guy fellow bears! Having a cocktail is something pretty big in his eyes. 
April 5th, 2008 at 4:50 pm
for a good laugh!
http://tinyurl.com/2q4bu6
roll down to 3-28….. your quintessential vancouver bear
April 5th, 2008 at 4:42 pm
I hear the City NDP wants to pop the bubble. Problem is their plan seems a bit backwards to me, see if this makes sense to anyone out there.
Their plan is to legalize all secondary suites
One, there is no “City NDP”. Two, secondary suites were effectively legalized citywide over a decade ago. Three, the housing market is regional.
And last but not least, an asset bubble means that the price of an asset is out of line with its yield. Prices are way, way, out of whack with rents. Asset bubbles don’t pop due to increase in rental supply, but rather due to the exhaustion of greater fools in the purchase market. The GF’s had the option of renting at a much lower price all along.
Got a link to this supposed propopsal?
April 5th, 2008 at 4:12 pm
My friends and I laugh too… we’re all renters
April 5th, 2008 at 3:25 pm
I know this is weird, we’re talking about investments that you don’t need to borrow the money to buy.
and you never have to face a margin call!
one realtor i met said his clients were mortgaging to 90% of stated value (existing home)and investing the funds in the stock market and buying 2 bd/2ba to flip….
i know i couldn’t sleep well under that scenario