Friday Free for all!
Spring thaw edition! It’s Friday so lets do our standard open-topic post for the weekend, here’s some stories I’ve noticed recently:
-Canadian housing boom ‘over’
-Vacant land sales soar in Fraser Valley
-Victoria prices 23% above ‘fair value’
-Calgary sales plunge by 35.9%
-The cash-back mortgage hustle
-EcoDensity and 18,000 empty condos
-Merrill Lynch cuts 4,000 jobs on mortgage loss
So what are you seeing out there? Are we set to copy the housing boom hang-over the US is going through or does everyone want to live here? Post your thoughts, news, links, and anecdotes here and have a great weekend!
April 22nd, 2008 at 4:42 pm
More logic north of the border = less of a mess for canadian mortgage brokers.
MoneyBeat.com
April 21st, 2008 at 7:12 pm
Excellent posts Tacoman and Patriotz, i too would like like to see the format that tacoman showed of Berkeley when Tony Danza 25k+ listings show up.
April 21st, 2008 at 11:03 am
But I guess David Lereism has now become an accepted school of economic thought.
Thankfully this is not true. Note however that the popularity of his preachings (not teachings) has led to his opponents being labelled "leretics".
April 21st, 2008 at 8:10 am
According to PB's stats we should see 15k+ listings by May 1. I predict inventory of 25k+ by this fall, with prices slightly higher as the FTB is dead and all we have left are FB's.
April 21st, 2008 at 8:07 am
I didn't know people still read the Vancouver Sun.
April 21st, 2008 at 5:02 am
“If economic theory holds, solid GDP growth should sustain the housing market.”
Didn't work too well south of the border did it? GDP was growing just fine – until a year or two after house prices started falling. Note sequence.
Every economic theory I've ever heard of, from Adam Smith to Karl Marx, says that the value of an asset to the owner depends on the income that it brings to him (in the case of housing, market price of rent). This has increased very little since 2001, so the value (as opposed to price) of housing has increased very little as well. Anyone who buys an asset for more than its value will lose money, unless he can unload it to a greater fool who will lose even more.
But I guess David Lereism has now become an accepted school of economic thought.
April 20th, 2008 at 10:41 pm
Lurking around US housing blogs, I came across this simple, yet wonderful, web site:
Berkeley Housing Crash
I would love to see the housing data in any GVRD area presented like that!
The funny thing is that prices are quite comparable to here, and the map very much resembles Vancouver (or Burnaby)
April 20th, 2008 at 9:59 pm
The following is an excerpt of a comment from somebody in UK regarding this post in the "Mish's Global Economic Trend Analysis":
"BOE Foolishly Follows Fed Footsteps"
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In my home town, poky, shoddy flats that were bought 1 year ago for $500,000 are now selling for $250,000. They will half in price again (and again?) before its over.
http://www.propertysnake.co.uk shows houses currently on the market at a reduced price (up to 50%). Don't be tempted – save your ammo.
http://www.housepricecrash.co.uk has moved from being ignored, to laughed at, to attacked, to mainstream.
And what you have to realize is that its only in the last couple of weeks that anyone has suggested there may be a "period of flat growth".(!)
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Based on this information, I see two points to observe in the near future:
1. How well the "sticky prices" theory will stick to reality
2. How fast the Vancouver "Housing Bubble Blogs" will move from their humble readership to a mainstream source of information for a substantial number of people
April 20th, 2008 at 9:52 pm
Some humour from Alberta Bubble:
Why spend 405K to buy this in Houston
when 435K gets you this in Ft. McMurray?
April 20th, 2008 at 9:50 pm
Holy smokes, I counted 30 open houses signs along pacific today! If you're planning to sell you have a lot of competition. Don't worry the next plane landing will have the next wave of rich people to buy them.
April 20th, 2008 at 9:04 pm
Forgive the length of this post.
For certain reasons I will not send the following to the Vancouver Sun under my own name. If anyone here wants to send it or any derivation of it under their own name, be my guest. Here it is:
Dear Sir or Madam:
Re: The Firm Foundation of Local Housing Market
Your cheery outlook on our local housing market really should have been preceded with the word “Advertorial”. It hardly belonged on the Editorial page, unless your editorial staff have lost their ability to research and their sense of objectivity.
Had the writer dug into fairly recent history, he or she would have discovered that this market is historically boom/bust in real estate terms. Surely the Sun is aware that no boom in any market continues forever. A quick look at Vancouver real estate prices since the mid-Seventies clearly shows what has happened here after every significant spike up in prices – and, its not a plateau nor a gentle slope in either direction.
Unbelievably, your article cites the “running out of land” syndrome, a red herring that’s been floating around for many decades. Look around you. Are we running out of air space? Are we not taking full advantage of densification? It gets more ridiculous still when you cite immigration. In fact, Vancouver’s population growth has been hovering around 1% per annum for some number of years. This is an anemic rate of growth compared to decades past when immigration/net migration really counted for something and our growth rate approached 4% per annum.
It is estimated by those in the know that half or more of Vancouver’s downtown/false creek condos and townhouses are already owned by investors. Despite this, as your own paper reported recently, the Lower Mainland is constructing an all time record number of housing units. In your editorial opinion would this not have a bearing on supply and demand dynamics?
You say that Canadians are not using their homes as ATMs to the extent of our American neighbors, nor do we have subprime mortgages. I don’t know if you have any facts to support the ATM claim, but in any event your paper has reported on more than one occasion that BC citizens as a whole are up to their eyeballs in debt and have a negative savings rate in the aggregate. Many first time buyers are putting next to nothing down on their homes and taking out mortgages with 40 year amortizations. This may not be subprime, but it’s a very tenuous way to purchase a home. Even a minor correction would place these owners in negative equity territory.
If you’re being really objective, you would know that no local economist is going to call it the way they really see it or suspect it to be, as was the case in the US leading up to their debacle. These folks know that if they were to speculate about a correction, which is both imminent and obvious, that this would start a stampede to the exits. In fact the stampede will start on its own, leaving our local economists to engage in rear-view mirror analysis, for which they have a far better track record than prediction. Perhaps then your paper will abandon real estate puff pieces posing as editorials, and you’ll have something very different on which to opine.
April 20th, 2008 at 5:45 pm
I have said it before and will say it again….The Sun's proportion of advertising revenue coming from RE makes any sort of objective reporting on RE next to impossible. We will be well into crashing prices before the Sun acknowledges any problems.
As far as Michael Campbell goes, he is pretty much like any any local newspaper's business columnist. These people's commentaries are paid advertising for whatever business interest happens to be writing the cheque that week. In Campbell's case, he gets to be less creative than most due to his family obligations to write government press releases that masquerade as economic analysis…..
April 20th, 2008 at 4:28 pm
Anonymous 11:47
As for suggestions on newspapers – I personally have decided to skip RE related articles in the 2 local rags, although I sometimes may skim the first paragraph, determine if its the standard pumping crap and then skip the reast.
I do read the Globe and Mail and actually read their RE reporting, albeit from a national vs. local perspective. There is a very different tone in regards to RE reporting between the local rags and the G&M (which does not have a vested interest in the local RE industry)
April 20th, 2008 at 3:17 pm
19 open house signs on the corner of Richards & Pacific. With so much choice how do you choose ?!
April 20th, 2008 at 2:29 pm
How close to the bust are we?
In the same Vancover Sun "Advertorial", the pimps say:
"In other words, the collapse here may be a year to 18 months away.
According to the Canadian Real Estate Association, sales dropped 13 per cent in the first quarter of 2008 from a year earlier and the ratio of new listings to sales stands at a nine-year high."
AS one of the regular often writes:
Tick Tock,Tick Tock
April 20th, 2008 at 2:09 pm
There was 45 pages of REIC propaganda in yesterday's Calagry Herald "newspaper"…….heh.
If the RE market tanks (and it is starting to big time) they are done like dinner, and I for one, could not be happier……..
April 20th, 2008 at 1:48 pm
The Vancouver Sun can do the math.
You can write the truth and anger 100 or so bears, or they can do what they have always done and pimp for the RE industry and do so lucratively.
The banks, developers, and suppliers all make big money pumping up the bubble, and all of them take risks.
The banks know some loans will go bad on them, the developers will get stuck with inventory they will have to let go at fire sale prices, and a host of other people throughout the supply chain, will get burnt as well.
But the Vancouver Sun pockets the huge advertisement revenues up front. I also wonder who is on the board of directors, and the editorial board, and what business connections they have to RE and supporting industries.
April 20th, 2008 at 1:26 pm
ARE there any.. self correction.
April 20th, 2008 at 12:28 pm
Re. Me's article.
"If economic theory holds, solid GDP growth should sustain the housing market."
I can make an economic "theory" that says anything about anything. Theories are just hot air until you've got something to back it up. In PRACTICE his theory doesn't hold true.
I also notice that this story like so many of it's kind does not list the author's name. Either he's afraid it will impact his career or it's someone like Bob Rennie and he's afraid people will see through his BS if they knew it was someone connected to the industry.
April 20th, 2008 at 12:13 pm
Think about every house and condo in Vancouver reduced in value by 50%+. For us bears, it is a nice dream. But for many powerful forces, this is a disaster of unimaginable proportions. I mean, can we even dare calculate how many dollars will be lost.
This bust will be reported after its over.
April 20th, 2008 at 11:47 am
Is there any newspaper in Canada that one can trust?
If so, please suggest one. I like to read a paper now and then, but I find that after reading the paper I am just as stupid as before.
Suggestions?
April 20th, 2008 at 10:56 am
speaking of thinking we're immune – did anyone read the over the top "pro real estate" editorial in the Sun yesterday
http://www.canada.com/vancouversun/news/editorial…
I sent them a letter asking when exactly it was that they lost their journalistic integrity.
April 20th, 2008 at 10:30 am
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"nobody seems to have noticed because we're all house rich and happy with high paying construction jobs"
I think people are starting to notice big-time…hence the biggest inventory spike in years, soon to be followed by the mother of all crashes.
April 20th, 2008 at 10:21 am
the Olympics (which won’t be so great either if the US is still in recession, fewer tourists).
I think the Olympics themselves will be OK as far as projected revenues are concerned. The TV rights have already been sold, and the visitors to the Games themselves will be mostly the rich, who have been doing very well.
The real issue is with the expected post-games spinoffs. It is becoming increasingly evident that the US middle class is in big trouble and is going to face big cuts in discretionary spending. This is going to be very bad for the tourist industry going forward. And I don't think Asia and Europe can pick up the slack, for they are heavily dependent on US spending too.
Gordo's economic strategy has essentially been to try to turn BC into "party central" for the world. Well I think the world is not going to do a lot of partying for the next decade or so.
April 20th, 2008 at 9:55 am
Anyone noticed that all the doom and gloom articles seem to be coming from out East rather than the West? I guess most British Columbians and Albertans think we're immune to any decline in the Canadian economy. "Recession?" we say…"No, that will only happen in the US, and maybe Ontario where there are manufacturing jobs. Besides, we can always sell condos to each other!" I wonder what kind of economy will be left in this province after the Olympics (which won't be so great either if the US is still in recession, fewer tourists). Someone tell me please! Forestry? No. Mining? Maybe but probably not enough. Tourism? Not likely. What's left? Our economy is swiftly going down the tubes and no one seems to have noticed because we're all house-rich and happy with high-paying construction jobs.
April 20th, 2008 at 9:02 am
Alexcanuck:
Speaking of pimps, this one has been a cheerleader for the last few years:
"And now we see signs of a global housing crash that began in the U.S. and spread to Britain, Australia and parts of Europe may now be washing ashore in Canada."
http://torontosun.com/Money/2008/04/20/5336626-su…
April 20th, 2008 at 8:57 am
Of course Michael Campbell's opinions are for sale… He's the brother of the damn Premier the biggest whore of them all…
April 20th, 2008 at 8:28 am
You dis Michael Campbell for the wrong reason. He is a very smart man with good insights. Problem is, his mouth is for sale to the buyer du jour. One week on CKNW he is all doom and gloom because his buyer (his John? Or his pimp?) wants scared people to fleece. The next he is "the bottom is in, don't miss this opportunity" because his pimp du jour wants naive suckers to fleece.
April 20th, 2008 at 5:56 am
“You forgot Micheal “Dr. Phil of economics” Campbell and someone from the Fraser “governments should stay out of the markets except when it props up RE prices” Institute.”
Patriotz, thanks for the link ,and for pointing out my oversight. There are so many “champions” of free market system, one is bound to miss a few, and inadvertently leave them off the honour roll.
The inconsistency and the hypocrisy is too much to take. They preach Lazes Faire, while they suck on the public tit, whether it be a tax payer funded make work project for the friends, and call it the Olympics, or a wealth transfer from savers to specuvestors, by manipulating the money supply.
April 20th, 2008 at 3:20 am
“intellectual giants such as:
Muir, Pasterick, Don Campbell, heck let’s throw in Robyn of cmhc”
You forgot Micheal "Dr. Phil of economics" Campbell and someone from the Fraser "governments should stay out of the markets except when it props up RE prices" Institute.
Government not doing enough to support high priced RE markets, Fraser Institute complains
April 19th, 2008 at 10:25 pm
How many people here play T-Ball on a regular basis?
April 19th, 2008 at 9:15 pm
-A- yea… if we thought that you’d have a lot of ’splaining to do!
Blueskies, I knew you wouldn't be fooled, but you know how dumb some of the bulls are, they might have thought somehow inter-species breeding was possible.
Bulls are quite dense; they believe so many stupid things.
April 19th, 2008 at 8:43 pm
Rob A.
"The elites will always want to own a place downtown. People who are in the know, realize that it is the place to be."
Oh, silly me, I thought the "elites" in Vancouver lived in point grey. You know that place where the truly wealthy and powerful live not Downtown where the wannabes live.
Your own argument defeats you. Aside from which I hear there are some pretty "elite" neighbourhoods in Miami that are getting squeezed… Las Vegas… Southern California… Nah, nobody with money lives THERE.
April 19th, 2008 at 8:19 pm
-A- yea… if we thought that you'd have a lot of 'splaining to do!
April 19th, 2008 at 8:07 pm
I just want to make one thing clear; Rob A is not related to me.
April 19th, 2008 at 7:15 pm
Rob A "The elites will always want to own a place downtown" I think your letting that career of yours at Starbucks go to your head!
I'm glad you want one (a place down town), but maybe you should try getting your HS diploma first. One step at a time! 
April 19th, 2008 at 6:20 pm
You can’t say that about any other place on earth. But you can say that about Vancouver. This is place will never crash.
Vancouver the last place on earth!
….nice to see Rob A. buying a round
of KoolAid for all….. rob you da mann!
April 19th, 2008 at 4:07 pm
The elites will always want to own a place downtown. People who are in the know, realize that it is the place to be.
April 19th, 2008 at 3:11 pm
Just checked craigslist and there are over 150 listings for sale today alone… Things are starting to heat up. Grab a seat and don't forget the popcorn this is going to be good.
April 19th, 2008 at 3:07 pm
Downtown is one thing… What about those tiny little Yaletown{whalley} garbage that are under 500 ft. Like at infinity or Aura good luck unloading those when the bubble bursts… You will have to give some major incentives like a new car and ??? to give those away.
April 19th, 2008 at 2:56 pm
People will always want to live downtown.
Not me, you can have it. you do know they have cafes and restaurants even in bumhump iowa right? somehow I don't think that's going to be enough to convince everyone they need to pay through the nose for a tiny shoebox apartment conveniently close to a meth and heroin suppy.
April 19th, 2008 at 1:24 pm
just wanted to repeat the quote from the Economist article posted in last week's FFFA:
"…once people begin to expect lower prices, it is very difficult to reverse a self-fulfilling downward spiral in the housing market.”
…me thinks a growing number of people are expecting lower prices.
April 19th, 2008 at 1:16 pm
During the hype and pump phase of the bubble “the experts” declared there was no bubble; it’s the fundamentals-supply and demand they explained.
If the price run up was a response to true demand, and if true demand is now met, what will happen?
Will the industry continue to create a glut or will the overcapacity in the construction trades shift over to tourism janitorial services, used car sales?
And, of course, the question must be asked about the off shore buyers, where did they suddenly go?
April 19th, 2008 at 1:05 pm
Perhaps my eyes are failing me, but there seems to be a lot of for sale signs in the west side of Vancouver.
April 19th, 2008 at 11:49 am
-A- I think "Your Bubbliness" has a nice ring to it…
April 19th, 2008 at 10:49 am
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"intellectual giants such as:
Muir, Pasterick, Don Campbell, heck let's throw in Robyn of cmhc"
There's some knob by the handle of (silverman) who tries to monopolize that (realestatetalks) site. He's more obnoxious and irritating than Chipman….oh ya, he's a realtor too.
April 19th, 2008 at 10:18 am
My take on some of the comments:
Yes, downtown will always have a premium on Whalley and New West to name but two. However, I believe you don't understand what premium means. If prices go down everywhere else, guess what happens to prices downtown?
As for Dubai, don't think for a second Mohammed bin Rashid Al Maktoum isn't aware of peak oil. They are positioning themselves for the post-oil era. We'll see soon enough if they guessed right.
Finally, if you have some 'play-money' you're willing to part with, huge returns await with put options (if you are true to your bearish convictions). My suggestion is to look south at the builders and the likes of Home Depot et al.
April 19th, 2008 at 9:22 am
;
;
;
Let’s not loose our heads; the market is just taking a breather before the next leg up.
The headlines referring to the end of the boom are premature.If the boom was truly over Bill Good, and Mark Forsyth, would have a panel of experts to warn the general public well ahead of time.
The panel would include independent, unbiased, analytical, and intellectual giants such as:
Chipman, Muir, Pastrick, Rennie, Don Campbell, heck let’s throw in Robyn of cmhc.
, and Aaron of chipman blog fame.
Which leads me to this suggestion for the Pope:
How about a section/tread on your blog to keep track on what the above “experts” have been forecasting and how it matches up with what happens in the market going forward.
Also is it appropriate for me to refer to the “Pope” or should It be prefaced with some kind of title such as … your kindness, you beautifulness or????
April 19th, 2008 at 8:35 am
Sometimes rents go through the roof, sometimes through the floor … isn’t that cyclical?
No actually, nominal rents have not gone down at any time since the great depression in Vancouver. They have certainly increased faster at some times than others, but they don't go up and down like RE prices, because they're based on current demand, and people do have to live somewhere.
Annual growth of rents
Note how little rents have increased since 2001.
April 19th, 2008 at 8:31 am
Markoz
I too am all cash/close to cash since beginning of July last year (including the $ from the sale of my house) … I've been in the investment business for close to twenty years living in Toronto/London/NY and now at the ripe old age of 42 in Vancouver. I have lived through and survived several crashes and manias. Two things that are absolute truths:
It's NEVER different this time
and
It always lasts a lot longer and goes a lot further than you would ever expect
If this is the end (for now) of the RE boom (and it IS) then look out below.
As for alternative places to put your cash … keep it liquid and understand what you are purchasing (re ABCP's). You may give up some short term returns but for now cash is king.
Relax, enjoy your summer … these are interesting times … The markets should present some good opportunities by the fall … in a couple of years RE will be getting interesting.