Friday Free for All!
It’s Friday and you know what that means… It’s open topic time! Here’s a few stories I’ve noticed this week:
-Top 15 real estate myths
-Bequeathing mortgage debt to your kids
-Want a house bargain? Try Kitimat
-Century Point New West in receivership?
-Sometimes hard work is not enough
-New condos for open air drug & sex market
-The Abbotsford earthquake zone
-Offer $2 for the one dollar Toronto house
-New US home sales slowest since 1991
-Global financial crisis is getting worse
What are you all seeing out there these days? Post your news, links, ideas, and anecdotes here and have a great weekend!
note: any conversation on real estate or economics is allowed, please keep it civilized. when posting articles please only quote pertinent points and link to the original instead of pasting the entire article here. Thanks!
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Krrish2 Says:
April 25th, 2008 at 6:40 am
Interest Rates Cuts
How does that effect the mortgage and line of credit
Some previous buyers are almost saving $400 per month over $300,000 mortgage since last year and some are going to save $120 per month on $300,000 mortgage.
http://www.cbc.ca/mrl3/8752/ne.....080423.wmv
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jay jay Says:
April 25th, 2008 at 7:15 am
There was a saying when I ws in High School: “Terrace is the a$$hole of the north and Kitimat is 30 miles up it.”
I was born and raised in Kitimat. I would not recommend it as a place to wait out a housing boom. Other than the natural beauty of the place, there are very few redeeming qualities. There is no retail to speak of, not a single place to get a decent cup of coffee, and the town has a very planned feel to it. Industry dominates the waterfront, and you can smell Alcan and Eurocan even when you are hiking in the local mountains. Many of the pristine khiking trails have been mutilated by ATV’s (Clague Mountain for one). Furthermore, Kitimat is a town that has experienced severe boom/bust cyles in Real Estate. They lost one of their major employers when Methanex closed (theyare a terminal now and went froim 200+ employees to maybe 20), and the planned Alcan upgrade will employee ~1000 less people From 1700 to 700) when it completes. You may get a bounce in local property prices with the influx of construction workers. They have had their own little property boom over the last year or so. Actually, I know a fellow that is selling his home as we speak. It’s a renovated duplex in one of the oldest neighbourhoods and he is asking 162k; he paid 32k for it 5 years ago.
Finally, if you like rain, and being socked in for literally weeks at a time, buy a home in Kitimat.
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read on Says:
April 25th, 2008 at 7:48 am
krisshh
not all of the rate cuts are pased on by lenders, not here, not in the UK, not in the US. and the only ones to benefit are on floating rates (unless they luckily time their renewals), and floating rate borrowers are sailing risky seas as is…
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Tony Danza Says:
April 25th, 2008 at 7:57 am
read on please read Digi’s post re Krissh on the forum…
http://vancouvercondo.info/for.....c.php?t=48
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betamax Says:
April 25th, 2008 at 8:32 am
jay jay, great saying. Thanks for the homegrown perspective.
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patriotz Says:
April 25th, 2008 at 9:41 am
It really doesn’t matter what kind of sh!thole a town is if the jobs are there. Look at Ft. McMurray.
As Jay said, the problem with Kitimat is that it has been losing jobs and population. I think the population is down over 10% from the peak and around 10% of the dwellings are vacant. It’s really a rustbelt town transported way up BC’s coast.
I really can’t see what kind of economic activity is likely to boost things in the future, as Alcan can only make so much aluminum there with the power capacity that they have. Maybe if Prince Rupert runs out of room they may get a port, but that’s the best I can think of.
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jay jay Says:
April 25th, 2008 at 10:22 am
Well, Alcan’s new smelter technology would boost current efficiency to ~ 98%, and with other efficiency gains they could double their production and maintain a workforce very near the present numbers. That is not the plan, however, so the town will continue to bleed population. There is talk in Kitimat of Rich foreigners (German fisherman etc.), Albertans, even Jimmy Pattison and all the other RE myths. Local coffee shop chat is dominated by those issues. FWIW, in my 20+ years of living in that community, not a single one of the rumours about industrial and economic expansion ever came to fruition.
The only recent development was the building of Ocelot (Methanex) in the early 80’s. That place was in so much debt upon completion, that the banks slapped a lock on the Nat Gas feeder to the plant. They were bailed out by the BC governemnt, but ran in the red for much of it’s operating life until Methanex shuttered the place in ‘06.
I have little faith in that community to shed its ne’er do well status. Housing prices are insane by historical standards. Actually, I think it may be hard to find a decent home that cash flows, since the rental market is so depressed you can rent a bungalow for 5-600 a month.
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Lager not Logger Says:
April 25th, 2008 at 11:08 am
Woah. One of two planned office towers downtown has been canceled?
http://www.canada.com/vancouve.....848d42175c
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Bankerman Says:
April 25th, 2008 at 11:18 am
Big turn in bond market. US treasury bond prices are falling big time over the last week, interest rates are rising even on the short term. 10 year US notes up 40 basis points or so over the last couple of weeks. 4.86% on 10 year approx now. So I can assume long term Canadian mortgage rates to reverse and move back up shortly?
Don’t worry, I am sure they will soon have 50 and 60 year ammortizations to help offset the rate rise for those first time condo buyers in Vancouver.
Then again, maybe the game is up.
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DAB Says:
April 25th, 2008 at 11:27 am
spoke with realtor friend in north vancouver. he said business this year has been slow. expect things to pick up latter half of the year.seemed optimistic. he has been in the business over 15 years.
there are not much reduced signs when i drive around north vancouver. lower prices may be occuring further east like surrey?
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bdk Says:
April 25th, 2008 at 11:31 am
Lagger, it’s actually common for booming world class cities to cancel planned office towers. Who needs to work when rich immigrants will buy your condo for triple what you paid and you can do this every year?
These rich immigrants that are coming here are simply rich and don’t work (nor will their offspring) so it’s only a matter of time before they’re are no office towers downtown.
Just like in New York, Toronto,London,Tokyo,Sydney, Sochi,Turin, Salt Lake City and all the other world class metropolises.
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Aleks Says:
April 25th, 2008 at 11:38 am
As the article says, there is a market for commercial office space but not at the rate they would have to charge to cover construction costs. Once the real estate boom and Olympic construction are over, construction costs will come down and it will be viable again.
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Burden of Proof Says:
April 25th, 2008 at 11:39 am
“Woah. One of two planned office towers downtown has been canceled?”
This is no surprise. Ive said it before: The enconomy in Vancouver is based on construction and residential real estate speculation. Look at the ratio of residential to office towers downtown. It is at least 5-1. The tallest buildings in the city are condo towers not office towers like in any other normal city.
When the boom ends, the economy will be decimated. On the other hand, for that very reason, the government and media will do everything possible to keep the boom going. Like every other government and media in the world (USA, UK, Australia, Spain), they will fail.
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Mold City Says:
April 25th, 2008 at 11:49 am
Once the real estate boom and Olympic construction are over, construction costs will come down and it will be viable again.
When the condo market crashes wouldn’t it be cheaper to convert downtown condos into offices than to build new towers? There’s a building on Georgia near Alberni that would make good offices, I think its called Qube or something
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Drachen Says:
April 25th, 2008 at 12:17 pm
They’re going to have to do something with all the cubicles. I can’t see anyone wanting to live in 90% of the housing that’s been built downtown in the past 5 years once prices come down.
My thought was more along the lines of purchasing 2-3 units and converting them into one ‘life sized’ space rather than the current ’scale model’ trend. I think it would probably be more work to convert them to office space (however in my case with a single digit work force one 500 sq ft unit might work).
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Via Says:
April 25th, 2008 at 12:31 pm
Office building canceled.
Century Point New West canceled.
Doesn’t sound good.
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Coco Says:
April 25th, 2008 at 1:19 pm
Actually it was only one office building that was cancelled. It was posted in the news links at 7:30am.
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Drachen Says:
April 25th, 2008 at 2:07 pm
I put this forward a few threads back and go no response from the bulls, so here goes again.
I would LOVE to hear a cogent argument for the continued appreciation of residential real estate in Vancouver. Even an argument that it won’t fall over 20% would be interesting.
One thing I’ve found interesting in the whole time I’ve been a regular on this blog and VHB I have never once actually seen someone propose any kind of rational argument against a total collapse in value in the local Real Estate market. On the other hand I’ve seen probably a half dozen cogent arguments FOR a total collapse.
Anti Pesto said a few days ago that he likes to come here and post counter arguments every now and then but I haven’t seen anything that I’d describe as an ‘argument’ from him yet. Dosh? You too pal this is an open invitation. Anybody?
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crabman Says:
April 25th, 2008 at 3:40 pm
It won’t happen, drachen, because there is no rational argument for current prices in Vancouver.
The only bull posts you will get are the krrish type.
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beatstreet Says:
April 25th, 2008 at 3:50 pm
Drachen, an argument I can see for continued condo price appreciation is the that Bank of Canada keeps short term interest rates low for a long time. In fact, our Goldman Sachs alumnus central bank governor Mr. Carney seems to be doing a Greenspan by encouraging more short term borrowing through aggressive rate cuts. It used to be that most people wouldn’t want to finance long term holdings on short term borrowing, but those attitudes have changed. If Carney can convince people that short term rates will never rise much or that long term rates will come down, then the real estate game is still on provided sentiment doesn’t collapse (thus the need for intense spin doctoring right now).
Skyrocketing housing prices do not seem to impact the CPI so the Bank of Canada probably would be quite happy if housing prices move up another 20%, provided other commodity prices level off.
Of course, the risk is that hot money from rate cuts does go into commodities instead of real estate. That would push up the CPI eventually. Then, even Carney would have to raise rates. Then of course, all those who borrow short to invest in condos are caught. But so far, central banks are doing everything they can to avoid this situation.
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Bullcase Says:
April 25th, 2008 at 4:20 pm
Vancouer real estate prices will continue to go up for at least 5 years because buyers will continue to stretch themselves to purchase, as the article on the last thread proves. Obviously, the buyers are driven by a mania like psychology to buy to the point of making huge sacrifies. HOme ownership is the most imporant thing in their lives.
Once that psychology takes buyers to the financial wall, they will be assissted by financial innovation. 40 year ammortizations are just the first step in home financing innovation. We saw much more innovation in the USA and Japan and we will see much more innovation in Canada.
The stakes are too huge. The only thing the local enconomy has is real estate construction and spectulation. The powers that profit from it will not let it die. They know people are sheep and they will finanically innovate and the people will keep buying, buying, buying and pushing prices higher and higher.
The breaking point will come one day but there is still 5 years or so of profits to be made.
Sorry bears but most people do not think as deeply as you do. Nor do they do the research that you do. They will just buy at higher and higher prices, helped along by financial innovation. The last 7 years demonstrates this. This will continue until there is no more finanical innovation left (but that is years away).
BTW, the market has had a strong recovery over the past week. Check out Paul b’s numbers! The buyers are back baby!
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Bullcase Says:
April 25th, 2008 at 4:22 pm
Bears,
You always say that the buyers are so irrational. You are right! That is why prices will keep going up. You’ve had the answer all along.
If you are waiting for people to all of sudden become elightened, you will be waiting a long time.
YOu guy’s seem to like Garth Turner’s book, “Greater Fool” but you seriously underestimate how many of them there are and how much help they get from the financial institutions and government and how much encouragement and validation they get form the media.
What counter forces are there? Not many. Prices will go higher from here.
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read on Says:
April 25th, 2008 at 4:24 pm
Bullcase,
I’d be more than happy to bet my 6 figure downpayment against your prediction…. in fact, i already am, but not buying. The banks are already removing many of the innovative products that have led us to where we are – just try to get a zero down loan today – much ahrder than last summer – and this will continue to tighten as we have seen in the US and especially in the UK.
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Bullcase Says:
April 25th, 2008 at 4:39 pm
“The banks are already removing many of the innovative products that have led us to where we are – just try to get a zero down loan today – much ahrder than last summer – ”
Is there any reference or data to back up this statement or is it conjecture?
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patriotz Says:
April 25th, 2008 at 5:18 pm
Big turn in bond market. US treasury bond prices are falling big time over the last week, interest rates are rising even on the short term.
Are the Chinese finally saying “enough is enough”?
Note that because Canada is a commodity exporter, no country has any incentive to prop up our bond and currency markets as they have been doing for the US. Any sign that the BoC is pursuing inflationary policies would lead to a bear market in Canadian bonds, pronto.
Skyrocketing housing prices do not seem to impact the CPI
They are not supposed to. CPI measures the cost of consumption, and buying RE is an investment, not consumption. Renting (cash or imputed) is consumption.
I do not think broad monetary policy should be used to target asset prices. There are many more specific tools, such as restrictions on lenders and tax policies, that can be used to control (or promote) asset inflation. The US of course has been promoting asset inflation for a decade now and we can all see where that has got them.
Neither the federal nor provincial governments (of any party), nor the BoC, seem to view RE asset inflation as a problem. I think we are lucky that the jig is up and the bubble will collapse of its own weight very soon, with only BC having adopted an RE bubble economy on the US model. But rest assured, this province will be devastated.
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JR Says:
April 25th, 2008 at 5:47 pm
Drachen
It seems that you continue to be frustrated by a dearth of cogent arguments on the part of bulls, if bullcase is any example.
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blueskies Says:
April 25th, 2008 at 6:05 pm
dearth of cogent arguments on the part of bulls
in other words it can only go up because it has been going up….
the same argument as increased supply will lead to increased demand…..
not much of a case mr. bull
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Bullcase Says:
April 25th, 2008 at 6:16 pm
Bear,
I think i need to present a simplified version of my case for you:
We are creating more buyers every day with easy mortgages and financial innovaton.
You can’t deny any premise of my argument, namely that:
(1) Mortgages are easy to get and financial innovation makes them even easier to afford.
(3) the easier mortgages are to get and the more affordable they become, the more buyers there will be.
(4) More buyers = more demand = higher prices.
It will go up not because it has been gong up but because we are essentially making new buyers, who as we have seen from the article on the last thread are rabid about buying, even at these prices.
Of course one day the boom will end. But there are many more people to lure into buying with easy money and innovation.
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Bullcase Says:
April 25th, 2008 at 6:19 pm
Blueskies,
Instead of attacking a straw man that is not my argument, try to squarely attack one of my three premises, which I have now laid out for your convenience.
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Noname Says:
April 25th, 2008 at 6:35 pm
Let’s give Bullcase some credit.
If I understand it correctly, you are basically saying that people have been ignorant for the past 5 years and they will keep being ignorant for the next 5, right? Additionally, their ignorance will be encouraged by newer innovative mortgage products.
I can see that as a possibility, though, I do think that the credit crunch is slowly creeping into the Canadian financial system leading to an increased tightening of available credit.
Regarding people’s ignorance, I guess anything is possible. If people have been so gullible for the last 5 years, they could be equally gullible for the next 5.
Noname
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arbitrage Says:
April 25th, 2008 at 6:43 pm
i wonder if there is a limit to stupidity/bad math – this seems to be bull case’s case (that there is no limit to poor analysis).
Also, bull case, your “three” arguments are built upon the first case (that mortgages are easy to get) – is this really still true?
i’ve just had a couple pints, so my own arguments will not be very cogent for a bit. apologies in advance.
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Bullcase Says:
April 25th, 2008 at 6:51 pm
I am assuming mortages are still easy to get because I have not read anything to the contrary. As far as I know 40 year amo is till available and the recent articles in the media even suggest that now and low down payment is becomming more common.
Yes, I believe that there is no limit to poor analyisis and stupidity. And as long as there is no limit to the availability of financing the two will add up to higher real estat prices.
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patriotz Says:
April 25th, 2008 at 6:51 pm
Bullcase’s argument in a nutshell is that there is an unlimited supply of dumb money.
Well sorry there isn’t. Dumb money is being vapourized by the hundreds of billions as we speak.
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cogent arguments Says:
April 25th, 2008 at 6:59 pm
what did you hear from bulls since the begining of the blogs?shut up now!stop spining the wheels!it’s time to move forward,dummies! get into the market.
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Drachen Says:
April 25th, 2008 at 7:00 pm
Bullcase
That’s a very good try. One of the best I’ve seen. The problem is that it’s all conjecture. Is there any kind of a similar scenario that you can point to elsewhere in the world or in history?
You mention the US, their ‘innovation’ is sinking them pretty hard and deep and yet, despite all of their bag of tricks being played out (in a looser regulation system than we have here) they didn’t exceed current Vancouver price/income price/rent or price/historic trend.
“Obviously, the buyers are driven by a mania like psychology to buy”
Obviously you have a study or two to back up that point? I’ll concede that people are buying beyond their means, but there has to be some price point where most people will not buy.
“They will just buy at higher and higher prices, helped along by financial innovation. The last 7 years demonstrates this.”
This is just another way of saying, “It won’t stop going up because in the past 7 years it’s always gone up.” Which to use an analogy is like saying, “I’m not going to die because it hasn’t happened yet.” This is why the perspective of history is so important. You can’t judge where a given graph will go by only looking at that one feature, you have to look at similar historic features.
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arbitrage Says:
April 25th, 2008 at 7:04 pm
i’d like to see some analysis re: poor analysis – what’s the minimum intellectual capacity required to be in the market for a condo?
We need to establish a minimum bar – and than argue about how much of this minimum bar of idiots is left.
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blueskies Says:
April 25th, 2008 at 7:07 pm
We are creating more buyers every day with easy mortgages and financial innovaton.
does not answer the lack of affordabilty that Vancouverites are facing…
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Drachen Says:
April 25th, 2008 at 7:09 pm
“You can’t deny any premise of my argument, namely that:
(1) Mortgages are easy to get and financial innovation makes them even easier to afford.
(3) the easier mortgages are to get and the more affordable they become, the more buyers there will be.
(4) More buyers = more demand = higher prices.”
1) Still relatively true, though I understand the banks are tightening things up.
3) (where’s 2?) True but the limit of both ease and affordability appears to have been reached (do you have any proof to the contrary?). Until the banks start paying people to borrow money I suppose…
4) You completely ignore the supply side of the equation. Also there have been a lot of people who have purchased earlier in their lives than they ordinarily would have, so called ‘borrowing demand from the future’ as I understand it the supply of buyers in the city is nearly exhausted and no amount of mortgages is likely to change that. The system as it stands needs not only ‘more’ buyers but an ever increasing supply of buyers. A steady stream or a dwindling supply of buyers will result in a crash and I don’t think you’ve made the case that the numbers of buyers will continue to go up (especially since the numbers show otherwise).
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frank Says:
April 25th, 2008 at 7:15 pm
.
.
Bullcase (aka Anti Pesto)
Even if people are as dumb as you think they are, smart money (aka lenders) are not.
What makes you think Vancouver has more fools to keep the market going than other places that have already started to tank all around us?
Don’t so hasty to judge others by your own shortcomings.
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/dev/null Says:
April 25th, 2008 at 7:40 pm
bullcase, so your argument then is that even though the lemon appears dry, innovative new ways of squashing it will yield juice for a while longer (5 years)?
My opinion is:
a) it won’t (basically what blueskies said) and
b) I don’t think innovation means what you think it does, despite how often you use it.
Are you a mortgage broker by any chance?
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Bullcase Says:
April 25th, 2008 at 7:52 pm
“Even if people are as dumb as you think they are, smart money (aka lenders) are not.”
Current events in the USA, Framce, the UK, Germany, to name but a few prove that the banks are also dumb money. Perhaps, dumber than most.
There will be more buyers when we start offering interest only mortgages, 50 year amortization and mortgages that you pass down to your kids.
Lets face it, $1M dollars thirty years from now will be worth a mere fraction because of inflation. YOur kids will be happy to have what in thirty years will be a relatively small debt compared to what they will have to borrow at that time to buy a house.
It is the consensus view that we have not seen the kind of mortgage fraud, no document mortgange, stated income mortgages like they had in the USA. Untill we see these kinds of conditions in Vancouver, the market will go higher. It’s just not crazy in Vancouver yet.
We are following the path of the USA but we are moving very slowly and we are still years away from the bust.
Don’t get me wrong, the bust will come but it is 5 years away. Until then, there will be higher prices.
The supply of dumb money is not endless but there is a lot of it left, creative financing will generate more dumb money. Not to mention the fraudulent money.
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Bullcase Says:
April 25th, 2008 at 7:56 pm
To get to the point, the issue is timing. Why can’t the bull market continue for another five years?
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Booya Says:
April 25th, 2008 at 8:15 pm
Bullcase,
Have a close look at this graph of Vancouver prices vs prices in the US and then tell me that you seriously think the bull market will continue for another five years:
http://tinyurl.com/6kkhju
Booya
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blueskies Says:
April 25th, 2008 at 8:15 pm
Why can’t the bull market continue for another five years
the psychology that spawned it along with the easy money era is over….
all asset bubbles always collapse and the credit bubble is toast…
even Mark Carney tells us that Canada is being impacted now…
hard to ignore that kind of sentiment right from the top
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JR Says:
April 25th, 2008 at 8:24 pm
Bullcase is either a troll looking to stir up the pot, an intellectual midget, or both. Don’t try to confuse him with facts, historical or otherwise. It won’t resonate.
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patriotz Says:
April 25th, 2008 at 8:27 pm
It is the consensus view that we have not seen the kind of mortgage fraud, no document mortgage, stated income mortgages like they had in the USA
Well OK, then I would think that would apply equally to Alberta. So why have prices already fallen there, even though affordability never got as bad there as it is here?
Why is Toronto now showing signs of a market turn, again with affordability much better than Vancouver?
Idiocy and hubris can only take a market so far. There is always a breaking point.
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-A- Says:
April 25th, 2008 at 8:30 pm
The market is about to tank. The amount of existing inventory is staggering, and there are thousands of new units at various stages of construction.
The big players are racing against the clock, and have enlisted the local media.
We will be inundated with all kinds of “studies” from banks, developers, mortgage insurers, “independent and unbiased think tank reports” all insinuating that all is well, and that we better jump in.
I suspect some of the local media celebrities may each have a 2 to 5 million dollars invested in unfinished condo buildings.
It will be interesting to see which “experts” the Vancouver Sun will be quoting on the 15 myth busting feature they will run this weekend.
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condohype Says:
April 25th, 2008 at 8:53 pm
I have no way to say when exactly Vancouver’s bull market will end, but we need only to look at similar bubble scenarios elsewhere to know that it will end. It’s only a matter of time. Markets do not only go up.
Much has been written about the U.S. situation but the role of subprime loans in their collapse makes it an imperfect comparison to Vancouver. A better one is Japan.
In 2005, well before the American RE meltdown, the New York Times published an article about the total implosion of the Japanese housing market. Interviewed is Yukio Noguchi, a finance professor at Waseda University in Tokyo whom the Times describes as “the leading authority on the Japanese bubble.”
Check out what the prof had to say. Again, this is from 2005:
In Vancouver, ask any first-time buyer why they are buying now and they all give the same answer: “Real estate is only going to go up.”
Ladies and gentlemen, Tokyo’s pain is coming to Vancouver.
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frankybaby Says:
April 25th, 2008 at 9:06 pm
.
Bullcase is an idiot!
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blueskies Says:
April 25th, 2008 at 9:08 pm
is people buying on false expectations about future prices, and buying with the hope of selling in the future.”
is people buying on false expectations about future prices, and buying with the hope of selling in the future.”
need i say more?
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krrish2 Says:
April 25th, 2008 at 9:11 pm
“Don’t get me wrong, the bust will come but it is 5 years away. Until then, there will be higher prices”.
Shut up!
you are not a bull,bullcase is a bear.in order to stop going upward- market does not have to fall but market will settle up in 2016 with slow pace going upward this is Vancouver,Vancouver is not a Florida,USA.
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blueskies Says:
April 25th, 2008 at 9:32 pm
Vancouver,Vancouver
how i pine for thee
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Anonymous Says:
April 25th, 2008 at 9:34 pm
“Ladies and gentlemen, Tokyo’s pain is coming to Vancouver”
Vancouver is not in Japan where tsunami alert bordering in dreams,Japan did not border with usa so they can’t enjoy vocation on ONE hour distance in usa.
Japan is japanese not universal language not even in the list of beauty they also had black mark in history of hiroshima,nagasaki so no body can dance happily while pain in heart.
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Anonymous Says:
April 25th, 2008 at 9:41 pm
it could be possible that their HONDA PILOT has been launched in Canada last year so that’s what has come to Vancouver from Japan to run on highway like streets of Vancouver,BC”the best pilot on earth”.
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beatstreet Says:
April 25th, 2008 at 9:47 pm
It is hard to compare Tokyo and Vancouver. For one thing, Tokyo is the capital of the world’s second largest economy. Also, in Vancouver things like office buildings which helped get the Japanese in such a mess aren’t built here any more. Our civic leaders have had the foresight to ensure that the Vancover tax base becomes ever more dependent on residential property owners.
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stagnate Says:
April 25th, 2008 at 9:51 pm
the real estate market will stagnate at the current level for the next five years or more. the bears simply pull the stats that suit their needs. ten of thousands of immigrants will continue coming here every year. it doesn’t matter how unreasonable the rental or real estate markets may appear, this is better than where they came from. they will come here because there are established communities for any immigrant group in the lower mainland. it has been a losing ticket to underestimate the ability of the government/ctr. bank to engineer inflation (in various forms). if the bond market collapses the government would resort to non-traditional reflation measures (ie cmhc offering mortgages directly, etc).
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patriotz Says:
April 25th, 2008 at 10:13 pm
Much has been written about the U.S. situation but the role of subprime loans in their collapse makes it an imperfect comparison to Vancouver. A better one is Japan.
Disagree. One, subprime loans had nothing to do with the US collapse. The subprime borrowers, and lenders, did not get into trouble until prices had already started falling. The market collapsed because prices were too damned high. Now obviously subprime lending was one of the factors leading to the high prices, but not the only one. It’s like saying your friend Dave became an alcoholic from drinking gin, but you’ll be OK because you drink whiskey. Bottom line is that prices in BC are as absurd as any in the US. That’s what matters, not how they got there.
By the way, all US mortgage classes right up to prime are going to experience increasing defaults as prices continue to fall. Subprime was just the first to fail.
Two, BC is economically much more like today’s US than 1990 Japan. First and foremost is our negative savings rate and consumer indebtedness. Also, Japan was able to export into a very strong US economy in the 1990’s. We are likely to see the worst US recession since WWII. And finally, Japan saw very little new supply of housing during the bubble due to development restrictions. We are seeing the same avalanche of new supply as US markets.
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JR Says:
April 25th, 2008 at 10:41 pm
Yo, Bullcase. Have a look at Paul B’s numbers now and tell us that the market has made a strong recovery.
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condohype Says:
April 25th, 2008 at 11:29 pm
Patriotz: Good additional points but I should clarify that my bringing up Japan in context to Vancouver is about addressing the “This Time It’s Different” myth. It’s exactly because a city like Tokyo could experience such a vicious crash even with so much going for it shows there is no immunity. How great the city is doesn’t matter. Once the hype takes over and people starting making decisions out of the fear of being priced out, the time bomb starts counting down.
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copy & paste Says:
April 25th, 2008 at 11:49 pm
Bullcase,what you mention is possible.You got some points.Although the possibility is low.
I am a bear,sold our place a bit early(a year and half ago).We bears should not be too emotional.I am in my 50s,have seen a few imposibilities happened in my life.Sometimes things just keep on happening in the face of all the countering forces & facts.
I think most of you bears are in your 30s,intelligent & confident academically.Ah,but occasionally life make a fool out of us.Lets give Bullcase a case.
Mind you,I am a serious bear myself.If it takes five years for housing to crash,I might as well forget about homeownership and let my teenage kid go for it.I rather to live in some sunny places other than this “the best place in the world”place.My dollars would be much better spent.
Fundamentals are heavily in our favor,hope it turn out our way.In the meantime,lets stay calm and humble.
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beatstreet Says:
April 25th, 2008 at 11:59 pm
A couple of posters along with the Vancouver Sun have suggested that immigration will support the market…but most new immigrants can’t afford these prices. They don’t have the income and will have to move to cheaper markets.
Whether enough of the wealthy from China, Russia etc decide to set up a tent here is a bit of a wild card…but there are lots of deals for those folks popping up all over the world.
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patriotz Says:
April 26th, 2008 at 5:13 am
And in addition – did immigration to Vancouver just start in 2001?
The fact is that immigration to Vancouver was as high or higher in the 90’s and 80’s, the median immigrant was better off, and that didn’t stop a bear market and bust in the respective decades.
Toronto of course gets far more immigrants than Vancouver, including lots of rich ones, and that didn’t stop the bust in the early 90’s.
All the bull arguments reduce to “it’s different this time”. Well it’s not.
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Clarke Says:
April 26th, 2008 at 6:18 am
There seem to be a few more bulls than usual on the blog, or Krish’s other personalities wanted a turn at the keyboard. As has been mentioned, the new bull argument is that there is still lots of dumb money available, and the supply side of the equation does not exist….A quick glance at most bank website’s mortgage section and current RE listings should dispel these notions.
The available data suggests our downward trend is well under way.
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stagnate Says:
April 26th, 2008 at 7:51 am
there have been stops and starts over the decades but the overall trend has been up. that pressure will continue to exist unless the dynamics change (immigration versus land mass and/or inflationary vs. deflationary economics). nonetheless affordability has hit the wall so values will stagnate or drop slightly from here. unfortunately there are too many potential buyers still out there for the wholesale collapse some are predicting. it may seem like they are building a lot of condos out there, but it is still not enough to cover current population growth. it is a matter of affordability (not demand) as to whether sales stall out.
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Krrish2 Says:
April 26th, 2008 at 7:59 am
“Toronto of course gets far more immigrants than Vancouver, including lots of rich ones, and that didn’t stop the bust in the early 90’s”.
And then Torontorian migrate to Vancouver-it doesn’t matter for immigrants in which city they reach in Canada the matter is once they stand on their feet that is the time to realize where they suppose to be-”the place to V is Vancouver”.
Even genuine Ontariomens and Albertans are hanging their maple leaf and C.flames to replace their curtain in Vancouver-reasons are weather condition and snow shovling life back there.
Ontario is more vulnerable to any eco. dtr. in us.
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Drachen Says:
April 26th, 2008 at 8:12 am
Bullcase
“To get to the point, the issue is timing. Why can’t the bull market continue for another five years?”
This appears to be your whole argument summarized into one sentence. The problem is it’s not really an argument. You’re insisting that the burden of proof lies with the bear side of things but as I said there are at least a half dozen good arguments for a crash, several of them explain why it won’t likely last much longer.
In summary: Yes, there is a very remote chance it could keep going up for another 5 years. Probably about the same chance that a meteorite laden with billions in diamonds and gold lands on the outskirts of Vancouver (without causing any real damage) and the government gives everyone living here a share. Timing in these things is always tricky because of unforeseen variables. HOWEVER, in the absence of some truly bizarre unforeseen variable I do not believe Vancouver’s market can keep going up even 2 years longer.
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Drachen Says:
April 26th, 2008 at 8:20 am
Stagnate
“the bears simply pull the stats that suit their needs.”
Yes… The problem is the bulls don’t seem to have any stats at all.
“ten of thousands of immigrants will continue coming here every year. it doesn’t matter how unreasonable the rental or real estate markets may appear, this is better than where they came from.”
But they don’t have any money! I fail to see how this can impact the market significantly.
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beatstreet Says:
April 26th, 2008 at 8:21 am
Stagnate’s scenario is certainly possible. But, a lot depends on how much of the previous/upcoming supply was bought by highly levered investors/speculators who can’t hold on to the units as the market slows. If they have to sell quickly along with the receivers of nearly completed bust projects, sentiment could get quite nasty.
Does anyone have some evidence or stories on the amount of leverage in recent projects (e.g. single buyers taking up multiple units)?
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Drachen Says:
April 26th, 2008 at 8:29 am
“it may seem like they are building a lot of condos out there, but it is still not enough to cover current population growth.”
I live in a neighbourhood where the lowest selling price for a house was 1.3 million a few years back. Within one block of where I live there are THREE empty houses. One has vagrants living there and all the windows are smashed in. One had the water shut off two weeks ago and has been stripped. The third has been empty and for sale for 8 months now. There is also a lot where a small apartment building stood which has been flattened awaiting the neighbouring tenant’s eviction so construction can start on townhouses and a house that is being converted to 3 units. That is approximately 25% (once construction is complete) of the housing in that area. Even if other parts of the city are only somewhat similar it means there’s a lot more housing than you see in purely condo developments.
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Drachen Says:
April 26th, 2008 at 8:32 am
“Does anyone have some evidence or stories on the amount of leverage in recent projects (e.g. single buyers taking up multiple units)?”
Well according to the developer on one of the failed condo projects recently 80% of the people who purchased in his project were flippers with no intention of ever buying the unit (they just wanted to flip the assignment before construction completed).
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stagnate Says:
April 26th, 2008 at 8:55 am
indeed there are speculators out there who will take a haircut. i can’t see investors in woodwords or the capital getting their $600+/sq foot costs back at a profit. nonetheless i don’t think there has been enough speculation to alter the demand/supply equation to a significant enough degree. the developers will learn the hard way, i expect rennie’s wall ctr false creek and concord’s hastings street project to both bomb out. essentially, bland projects in an uninspired location that are not affordable will not generate enough interest. bland projects will continue to do ok in the suburbs or east van due to affordability. people will continue to do what they can to buy a home.
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punface Says:
April 26th, 2008 at 9:08 am
The already-famous “15 Myths of Real Estate” are available in .pdf on the Vancouver Sun website (and in the print version of course.)
Ladies and gentlemen, this officially marks the beginning of the end for the Vancouver bubble.
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Drachen Says:
April 26th, 2008 at 9:20 am
Bullcase and Stagnate
Thanks for participating guys. I’ve learned a few things.
I apologize for some of my fellow bears, they appear to have woken up on the wrong side of the cave (after 4 months of sleep it can make a bear pretty grumpy).
I find it interesting however that the only two people even trying to put together a reasonable debate for the bull side are saying:
1) It will crash, just not yet.
2) It won’t crash but it won’t continue upwards either.
And, sorry to say, the ‘arguments’ you two have put out are mostly data free exercises in wishful thinking.
So I’ve learned:
1) There appears to be no argument which is even remotely cogent for the bull’s side of the equation.
2) The ‘neutral’ side appears to have little going for it other than the fact that bears can’t prove our case beyond a shadow of a doubt. We have a strong case but there is a chance something could still come along and prove us wrong.
3) I haven’t heard any scenario with any realistic chance of coming to pass which would explain any significant delay before a crash. Both demibull arguments really don’t account for the spike in inventory or the lack of buyers this spring. Nor do they bring any data to prove that there is still a significant number of buyers ‘waiting on the sidelines’ who will get into the game in the next few years. I still stand by my statement that we not only need MORE buyers, we need an ever increasing supply of buyers and although there are still some people wanting to buy I haven’t heard anything convincing me that there are more people wanting to buy NOW than there were last year…
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JR Says:
April 26th, 2008 at 9:23 am
I’ve followed the Seattle blog for some time. Leading up to Seattle’s about face, I recall reading about articles in the Seattle Times and PI which mirror the Sun’s bit of RE puffery today.
It wasn’t until the real estate community begrudgingly admitted that YOY price appreciation was flat, inventories were spiking and sales declining, that either local paper began to engage in real, impartial reporting. This is true also of other US blogs I’ve followed.
With regards to an impending correction, the dots are out there for those who choose to observe them. Don’t expect the Sun to connect the dots, however, until well after the train has left the station, and they’ve encouraged the last herd of greater fools to take the plunge.
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jadeeast Says:
April 26th, 2008 at 9:25 am
I’d like to thank Bullcase for posting his thoughts, no rich foreign money and no up forever. It’s totally believable to me that some people will still get involved as long as there is the possibility of doing so. Many people are completely bind to any downside risk mostly the risk considered is that of being priced out.
When things turn many of these risk blind people will be shut out of purchasing as prices drop. The psychology of panic isn’t any prettier than that of greed and my gut and life experience tells me can be much uglier and make people do dumb things.
I do wonder why Bullcase feels that things will turn in five years time.
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Carioca Canuck Says:
April 26th, 2008 at 9:26 am
Fron your fellow bears in Cowtopwn…..
In other news……today’s Calgary Herald has 136 pages.
48 of which are direct and indirect advertisements for the REIC.
35% of the total “news” paper page count…….heh.
I am going to start calling this little tidbit the “Weekly Credibility Count”. Wonder what it is in the Vancouver papers ? Anyone know that ?
Whew….!!! We have 10 months of inventory in Calgary…..and are building like there is no tomorrow. Now, would this be a problem if “real-a-tors” could actually sell property and weren’t nothing more than glorified and over polished order takers during the boom ?
With 5,600 of them in Calgary, if everyone sold 2 houses this month there’s be no problem. It has to be one of two things…..either prices are waaaay too high….or preofessional realtors are just shit when it comes to closing…..heh.
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/dev/null Says:
April 26th, 2008 at 9:30 am
punface said: “The already-famous “15 Myths of Real Estate” are available in .pdf on the Vancouver Sun website (and in the print version of course.)
Ladies and gentlemen, this officially marks the beginning of the end for the Vancouver bubble.”
Dunno, pun. It seems like a very reassuring article to me. It confirms a lot of common sense knowledge about the Vancouver housing market – doesn’t look like prices will go down and it can be a great source of wealth building. People who are uncertain will take a lot of comfort in this and decide to bite the bullet before it’s really too late.
I can imagine another market boost up from just this one article.
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stagnate Says:
April 26th, 2008 at 9:35 am
drachen:
there are lots of charts/graphs, etc. that can be used to support any prediction. for a blog it is just easier to exchange ideas without trying to get too technical. i am a moderate bear, but for the purposes of this thread presented some bull argument. here is a very basic mathematical equation in support of bull theory-
land available in vancouver, richmond and burnaby for single family houses= 0
demand for single family houses in vancouver, richmond and burnaby= >0
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/dev/null Says:
April 26th, 2008 at 9:38 am
I did find the out-of-province buyer stats to be interesting, though. 6% of RE is purchased by non-BC residents and 60% (6,319) of those are from Alberta. (is this just vacation properties? the article is vague). Only 1,364 total sales to US and international buyers in 2007.
And this is all of BC, so I wonder what percentage is downtown Vancouver (or Victoria or Kelowna) and how much is a nice spot on a lake somewhere. Doesn’t seem like enough to prop up the local urban markets, despite what some claim. But that’s just my opinion.
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Anonymous Says:
April 26th, 2008 at 9:40 am
wow. I had heard we were running out of land but I didn’t know it had already happened.
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-A- Says:
April 26th, 2008 at 9:41 am
.
.
.
I read the 15 myth special as an infomercial funded by an industry racing against the clock.
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Booya Says:
April 26th, 2008 at 9:42 am
From the Sun article:
“Real estate myth #5:” A bathroom or kitchen renovation is the best way to add lasting resale value to your home. REALITY.
But from the very next sentence:
“Renovating won’t return all of the money you put in”
So let’s recap. It’s REALITY that adding a kitchen will add resale value to your home, but keep in mind that it won’t return all the money you put in. Pure genius
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-A- Says:
April 26th, 2008 at 9:47 am
I almost feel guilty, knowing that these “unbiased scientific reports” are gathering the last of the unsuspecting victims, to rail them off to the financial slaughterhouse.
Yesterday I suspected:
Comment by -A-
2008-04-25 20:30:40
The market is about to tank. The amount of existing inventory is staggering, and there are thousands of new units at various stages of construction.
The big players are racing against the clock, and have enlisted the local media.
We will be inundated with all kinds of “studies” from banks, developers, mortgage insurers, “independent and unbiased think tank reports” all insinuating that all is well, and that we better jump in.
I suspect some of the local media celebrities may each have a 2 to 5 million dollars invested in unfinished condo buildings.
It will be interesting to see which “experts” the Vancouver Sun will be quoting on the 15 myth busting feature they will run this weekend.
Today I am confirming it.
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scoop Says:
April 26th, 2008 at 9:49 am
-A- said: It will be interesting to see which “experts” the Vancouver Sun will be quoting on the 15 myth busting feature they will run this weekend
The usual suspects: Muir, Adamache, and even Chipman.
What a soft piece.
Realtor Robert Chipman, who administers a bylined blog on the state of real estate hears from a lot of those who think the market is overvalued already, “but they’ve been saying that for two years.”
“If the numbers make sense to buy, and you can look out to the downside, buy,” is his advice.
If the numbers make sense? That’s pretty cute Rob.
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dosh Says:
April 26th, 2008 at 9:50 am
I understand the banks are tightening things up.
not true. and since you all are so keen on comparisons to the usa, what makes you think we won’t see the same stimulus plans and bailouts to support the market here if prices stagnate? homeowners are the economy and the gov will do what it can to support prices.
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/dev/null Says:
April 26th, 2008 at 9:54 am
All of Canada isn’t a bubble, just some markets. Do you think people in Halifax are going to be OK with bailing out Yaletown speculators?
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Booya Says:
April 26th, 2008 at 9:55 am
More questionable logic: “Real estate myth #12: Buying an additional property to rent out is a solid investment.” REALITY.
But hold on! From the next paragraph: “probably not in Metro Vancouver”
Where does the Sun think it’s readers actually live, Yellowknife?
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Noname Says:
April 26th, 2008 at 9:58 am
Wow, wow, wow,
Wait a minute???
Dosh, are you suggesting that there is a possibility that prices may stagnate. And that the government might have to step in to maintain the overinflated prices otherwise they will collapse.
Have you gone crazy? What kind of a bull are you?
People, people! Dosh is already contemplating a government bailout. I think it’s safe to say that the market has turned. Dosh, come on over to the bear side, don’t be shy.
Noname,
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scoop Says:
April 26th, 2008 at 9:59 am
Oh, and check out “myth” #9. How prevalent is speculation on presale contracts? The Sun says that “stories of condo-flippers making a killing by selling pre-sale contracts…are perhaps more legend than legion”. Then in the next sentence, they admit that “Statistics on assignment sales aren’t kept”. And then go back to the land title data, which show low resales within 6 months. Conclusion: not much flipping going on. Ugh. So soft.
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punface Says:
April 26th, 2008 at 10:02 am
I think Myth #12 petty much admits the gig is up, since from a fundamental perspective there is not much difference from buying to live in and buying to rent.
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scoop Says:
April 26th, 2008 at 10:07 am
Booya – further on #12 – contains the understatement of the year:
“The rule of thumb used to be that you would aim to charge a rent that was one per cent of the purchase price ($1,000 a month for a $100,000 condo, for example)…” but this “has become tough to do in the Lower Mainland”
Sources: Ozzie and Chipman. Thanks for the insight guys.
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-A- Says:
April 26th, 2008 at 10:07 am
By the time the bust is well underway in Vancouver, most taxpayers,won’t be in the mood, or position, to bail out the newly minted homedebtors.
Backlash grows against the housing bailout:
http://money.cnn.com/2008/04/2.....2008042408
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TIME Says:
April 26th, 2008 at 10:16 am
noname,pc or loblaw,
you don’t get it- stimulas plan is a security sheild to protect home owners in any downturn,homes are basic necessities even government employees like mp.s and mla’s are home owners to disscuss the future of any product has nothing to do with bulls or bears it’s all about what are you buying where protection is maximum.
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-A- Says:
April 26th, 2008 at 10:17 am
”
“Backlash grows against the housing bailout
Many Americans want no part of a government-funded bailout for troubled mortgage borrowers.”
http://money.cnn.com/2008/04/2.....2008042408
Dosh: By the time the global housing mess hits Canada,a government bailout won’t be an option.
What we might get is a welfare program for the construction industry to stamp out thousands of new homes.
Guess what the supply will do to prices.
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Anonymous Says:
April 26th, 2008 at 10:19 am
Yes, the number of internal inconsistencies in the article is staggering. On the one hand Vancouver prices are NOT overvalued and can keep on rising (#3). And yet the rule of thumb is that a condo you can rent for $1,000 should cost you about 100,000 to buy (#12).
But we all know that in Vancouver that condo you can rent out for $1,000 will actually cost you 300,000, so by their own logic the Vancouver market is overvalued by 3 times.
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ella Says:
April 26th, 2008 at 10:25 am
The best of the myths of real estate:
“3. Real estate prices in Vancouver can’t keep going up…Myth. BC is one of the best places to live in the entire world”. OK, then. Case closed.
4. Spring is a good time to buy or sell…Reality…Historically, spring tends to bring buyers out…Right now, if you look at interest rates at near record lows, supply moving up and demand at a pleateau in many markets, I say it’s the perfect time to buy…”. Thanks for the tip. I’ll go get my wallet.
The very best is the conclusion: “15. You’ve just sold your house and made a ton of money off it: Reality…However, unless you are downsizing or relocating to a different market altogether, you will need equity from the sale of your home to get back into the market, essentitall not getting you that much further ahead.”
Crying is the best reponse to this article, myth or reality? Myth. Laughing is a much better response.
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TIME Says:
April 26th, 2008 at 10:27 am
$500 saving from interest rates and 20% appreciation you can happily keep on going the way it is if you can’t find the tenent- you have the ability to lower down the rent of such unit by $500 over $ 300,000 worth of property.
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scoop Says:
April 26th, 2008 at 10:44 am
Hey, look at me, I’m a Sun reporter:
16. Real estate sales have been cooling and inventory growing dramatically in 2008.
MYTH. We didn’t want to get bogged down in the actual statistics, but Rob Chipman told us that for him, it’s business as usual. “Things may not be quite as busy as last year, but we’ve made a successful transition to a balanced market.”
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beatstreet Says:
April 26th, 2008 at 10:47 am
“land available in vancouver, richmond and burnaby for single family houses= 0
demand for single family houses in vancouver, richmond and burnaby= >0″
The number of families and average family size did grow between 1991-2001 according to the census figures (http://www.gvrd.bc.ca/growth/p.....Status.pdf) which supports the second equation.
Putting that into perspective: the absolute growth in families was 14,000 between 1995-2001 (2,800 per year).
As has been pointed out on this blog even today, developers have been very creative at bringing on new single family homes in the region to meet the demand (including attached/condos) notwithstanding the “shortage” of land.
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Krissh3 Says:
April 26th, 2008 at 10:53 am
what makes you think we won’t see the same stimulus plans and bailouts to support the market here if prices stagnate?
HAHAHAHA you think the stimulus package in the US is bailing out homeowners? Where?! San Diego? Miami? Las Vegas? The Bay area? Phoenix? Grab a fu**ing clue idiot. Also our mortgages are RECOURSE ie: the only way you’re walking away is in bankruptcy, it’s a different ball game in Canada and will be much worse than the US bubble implosion. Thanks for coming out clown:)
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patriotz Says:
April 26th, 2008 at 10:55 am
But, a lot depends on how much of the previous/upcoming supply was bought by highly levered investors/speculators who can’t hold on to the units as the market slows
Only the speed of the decline depends on the degree of leverage. Long run asset prices are determined only by fundamentals, i.e. price/income. This has nothing to do with the degree of leverage either individually or collectively, although of course leverage can be responsible for prices getting out of whack in the first place.
As for government bailouts. One, an RE bust in BC will coincide with a severe recession, and Gordo is not going to raid the piggy bank, or jeopardize the province’s credit rating, to bail out people aspiring to his social circle. The big players will have already taken their money and run. Two, as for a federal bailout, there has been no RE bubble in Quebec, and I think that’s all that needs to be said.
There were of course no bailouts in the BC/Alberta busts of the 80’s or the Toronto bust of the 90’s. Indeed, after the Alberta bust, the provincial government eliminated non-recourse lending requirements at the request of the financial sector.
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annon Says:
April 26th, 2008 at 11:22 am
.
.
Dosh is either a very sly and cunning bear, hoping for irresistable replies to rubbish, or so sadly ignorant that sympathy may be less futile than any hopes for a cure.
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patriotz Says:
April 26th, 2008 at 11:50 am
“land available in vancouver, richmond and burnaby for single family houses= 0
demand for single family houses in vancouver, richmond and burnaby= >0″
Hey dumbass, there hasn’t been any land to speak of for SFH in these areas since the 70’s (Vancouver decades before that). So why the bust in Vancouver and the inner suburbs in the 80’s?
If the price of an asset exceeds fundamentals, it has to come down, whether they’re making more of it or not.
They are also building a sh!tload of SFH east of North Road on both sides of the river. You think there is some magic market disconnect 10 miles east of downtown?
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-A- Says:
April 26th, 2008 at 12:11 pm
“As for government bailouts. One, an RE bust in BC will coincide with a severe recession, and Gordo is not going to raid the piggy bank, or jeopardize the province’s credit rating, to bail out people aspiring to his social circle. The big players will have already taken their money and run. Two, as for a federal bailout, there has been no RE bubble in Quebec, and I think that’s all that needs to be said.”
Patriotz:
This could play out very well for Gordo and those who own him.
A severe recession could bring big labour to its knees, he can throw them a bone, and the same bone could shut up the poverty pimps on the left, and thus kill two birds with one stone.
Then there is the tree huggers, they could be silenced because all the new housing projects will have to be green.
And then there are the land speculators who have been hoarding land especially in the Fraser Valley.
They would have preferred to have sold the land at peak, but they will settle for the new lower price. It’s still a lot more money than what it would be as farm land.
Every one wins, the labour leaders get to keep the 180k jobs, the construction workers get work, the farmers become rich, first time buyers get low interest rates, and low, low, low prices.
Well almost everyone wins except those who took out a 40year mortgage for a leaky box and the price of the box is down by 50%, those who get caught between flips, and the some of my acquaintances who are sitting on empty spec condos along Lougheed,
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Drachen Says:
April 26th, 2008 at 12:16 pm
Stagnate
“land available in vancouver, richmond and burnaby for single family houses= 0
demand for single family houses in vancouver, richmond and burnaby= >0″
People leaving single family houses for other parts of the country/other countries?
Demand for single family houses at current prices (demand alone is not enough if people can’t afford it)?
Number of people eager to cash out for millions on their single family house?
You’re ignoring a LOT of factors.
Also, land for development in Richmond, Burnaby and Vancouver is greater than 0, Vancouver is very small but there are undeveloped lots, Richmond and Burnaby have more. Add in the factor that some people are willing to live outside the three areas you mentioned and commute and it’s looking like you have a pretty weak case.
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Drachen Says:
April 26th, 2008 at 12:44 pm
Stagnate
“it is just easier to exchange ideas without trying to get too technical.”
That’s fine for ideas. You’re presenting an ‘idea’ that prices might not fall then. Not a case or an argument.
I had an idea that I could fly by flapping my arms like wings when I was a kid.
Prove to me that I can’t fly by flapping my arms next year (I tried and I can’t this year, but I’m exercising daily and eating well).
I think you get the point. “Ideas” are valueless unless they are novel or they lead to a solid thesis. This is why I was asking if anyone out there had any GOOD arguments against a rapid de pressurization in the near future.
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punface Says:
April 26th, 2008 at 12:59 pm
My biggest break with bear-orthodoxy is regarding this subject of SFH affordability. I believe that even after the crash, the SFH will always be unavailable to most of us. Stagnate’s formula is certainly meant as an abstraction of a more complex subject, but in my opinion it is valid.
After all, politicians are pretty much bragging about how the can kill the SFH. I’ll take them at their word.
That doesn’t mean SFHs aren’t over-valued right now – they are, severely so. But if right now only the wealthiest 10% of the population can afford one, then after the crash only 20% will be able to. That still means most of us better get used to condos/townhouses.
Drachen: You can prove me wrong by finding me data that shows that Vancouver has just as many detached SFHs/capita (within a commutable distance) as other cities.
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Drachen Says:
April 26th, 2008 at 12:59 pm
Wow, that myth/reality article is such bunk.
9) is just total BS. The method of interpreting data stayed the same but the method of flipping changed between the ’80s and now. Measuring sales within 6 months then was no problem because there weren’t the level of presales there are now. Now assignment flipping is all the rage and anyone who takes ownership is likely in for a longer term.
1) Is total crap too, they give the percentage of Albertans buying relative to all foreigners but not as a percentage of total sales (I work out the total foreign sales at between 10-15%). If anyone thinks that 10-15% of the sales is going to drive the market they’re crazy.
3) I especially like how many of the graphs they’re using here end in 2007. Many of the data curves that they’re using have turned in the past several months and they’re quite capable of collecting the data but for some reason it’s excluded from this report. Hmm why would they do that?
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Drachen Says:
April 26th, 2008 at 1:20 pm
Oops, I messed up the numbers. I thought 1) was purchases in Vancouver, instead it’s all of BC. So change 10-15% to 5-8%.
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Drachen Says:
April 26th, 2008 at 1:23 pm
Punface
“Drachen: You can prove me wrong by finding me data that shows that Vancouver has just as many detached SFHs/capita”
I’m sure it has more than most cities (New York, London, Tokyo I’m sure have exceedingly low ratios of SFH compared to here). But it’s YOUR argument I’m afraid you’ll have to find your own data or you’re just blowing smoke.
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punface Says:
April 26th, 2008 at 1:33 pm
Well, when you’ve lived in other cities (even much larger ones) it is clearly observable that Vancouver is different in this regard. It feels like proving the sky is blue, but I will look around. Not today though, too nice outside.
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beatstreet Says:
April 26th, 2008 at 2:31 pm
Is the market already reversing? I just looked at Rob Chipman’s blog (kudos to him for keeping it up) . If I am not mistaken, in his update for the week of March 15th he indicated that the average selling price was $583,786. For April 19th the price was $576,734. That’s a 1.2% drop, if I haven’t messed up.
Of course, this is not the benchmark price, and could just be rounding error, normal price fluctations m/m or due to the fact that it snowed last week. But probably something worth watching – especially given the double dose of sunshine the market has had today.
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stagnate Says:
April 26th, 2008 at 2:35 pm
patriotz:
when confronted with uncomfortable information you resort to an insult; your credibility is shot.
drachen:
no one is changing your mind on anything that is for sure! when someone clings to desperately to their positions that means deep down they are not confident in their positions.
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Drachen Says:
April 26th, 2008 at 4:50 pm
Are you KIDDING me stagnate? You haven’t provided anything resembling a reasonable argument. Look up the word “cogent” in a dictionary, I can assure you any reasonable person would not call your argument cogent. On the other hand, as I have said there are several cogent arguments for the bear side that I am aware of.
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Drachen Says:
April 26th, 2008 at 4:56 pm
Punface
I have lived in quite a few cities in Canada and around the world.
I would say just as a rough guess that: Calgary, Edmonton, Victoria and Kingston have more SFH per capita than Vancouver whereas Bonn, Cologne, Paris and Toronto have less (though Toronto is probably close).
But what does that say? Cities larger than Vancouver have less SFH smaller ones have more? Does that mean anything?
Really it doesn’t seem to indicate anything significant.
Also, I was looking at other stuff in Google maps and I thought I’d check out Vancouver for potential unused SFH sites. For those of you who say we have no land left look at a satellite picture of Richmond. Literally half of Richmond is farmland, if the pressure were there it could easily be converted to housing.
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Drachen Says:
April 26th, 2008 at 4:59 pm
Stagnate
Sorry I just have to re-visit your comment. An analogy if you will.
I have many reasonable arguments for X.
You have essentially come along and said, “Nuh uh!”
I respond and say you don’t seem to have any useful data or anything.
And YOU say I’m being stubborn.
Am I stubborn, or are you deluded?
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Strataman Says:
April 26th, 2008 at 6:46 pm
punface “My biggest break with bear-orthodoxy is regarding this subject of SFH affordability. I believe that even after the crash, the SFH will always be unavailable to most of us” Sorry Drachen but I tend to agree with this when it comes to Vancouver proper including the so-called less desirable areas. The value is mostly in the land not the building, if you look at the tear-downs that sell for 700k. In terms of what a reasonable commuting distance is I think punface should accept the fact that two hours is reasonable in similar cities and NYC in particular; it is not unusual to commute 2 hours each way, in which case SFH’s in Surrey are reasonable; distance wise and cost wise. Young families who desire a SFH which is their right, donot neccessarily have the right or the means to live close to city center. If they want that, it is Condo time. If we can have a decent condo crash which we will, a two or three bedroom CONDO should be affordable to a family with two decent incomes (60 K each). You cannot buy a decent SFH in SanFrancisco downtown now or for the past 6 years, if you are a typical middle class family. Vancouver is just catching up. I am sure some 1.2M SFH’ in Vancouver will drop 30 % but that is STILL not affordable for the typical family irregardless.
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Drachen Says:
April 26th, 2008 at 6:58 pm
Strataman, Punface et al.
Yes, but your arguments are entirely speculative and hypothetical. In every real instance in the past where there has been a housing bubble each category of housing has returned to it’s historic trend curve.
Are you saying we’re different, or it’s different this time? Because you really haven’t given any evidence why it should be different now than, for instance in the ’80s.
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patriotz Says:
April 26th, 2008 at 7:02 pm
I believe that even after the crash, the SFH will always be unavailable to most of us.
Not “most”, “some”. I would guess SFH comprise about 1/2 of total dwellings in the GVRD. Then they must be affordable to close to 1/2 of households (adjusting for future trends in dwelling mix), otherwise there will no nobody to buy them.
And spare me the “rich landlords” argument. If you buy a property and rent it to someone who can’t afford to buy it, you are losing money. The rich know better, as opposed to the wannabees who are driving the speculation and are going to lose their shirts.
If there is a genuine shortage of any kind of housing in any location, rents will reflect that shortage as well. That is the objective evidence of a shortage of supply versus end user demand. That’s why rents are so high in places like Manhatten, central London, etc. Or Whistler. Not to say that the current prices are justified in these places, just that high prices are justified.
The plain fact is that rents are no higher for any form of housing in Vancouver than Toronto, which means there is no justification for prices in Vancouver to be higher than Toronto. And Toronto itself is overpriced. Oh, and they ran out of land in inner Toronto a long time ago, too.
It’s all about fundamentals. Prices cannot remain higher than present discounted value of net rental income (and yes I understand that includes future density increases). Period.
Every factor which supposedly justifies continued high prices which are unsupported by fundamentals can be found in the US markets which are now crashing. It’s not different here.
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punface Says:
April 26th, 2008 at 7:19 pm
OK – at least let’s say then that if SFH’s are 50% of the housing stock in Vancouver, and 75% of the housing stock in City-X, then it does not make sense to compare affordability ratios based on SFH between Vancouver and City-X.
I agree with patriotz fundamentals paragraph 100%, and was never disputing that. That kind of analysis is all I use to value anywhere I’ve ever considered buying.
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jadeeast Says:
April 26th, 2008 at 7:58 pm
Came across an interesting pdf article, while looking for some long term real estate price graphs that would show a soft landing. I haven’t really read the article in detail yet but it has some interesting things, brings up P/E as an important signal, has some “bear crack” graphs.
Check out how accurate the forecast is at the end since the article looks to be published in 05.
The title is “Real Estate Price Peaks—A Comparative Overview” you can download it here.
http://tinyurl.com/5t2t3c
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TIME Says:
April 26th, 2008 at 8:25 pm
Jadeeast,
Thanks for the link it’s good for the bears but they might going to countinue deny the fact about” best place on earth”
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Strataman Says:
April 26th, 2008 at 9:17 pm
patrioz “Then they must be affordable to close to 1/2 of households (adjusting for future trends in dwelling mix), otherwise there will no nobody to buy them.” I agree EXCEPT that decreasing SFH prices often result in tear downs and rezoning. If your an investor with a bunch of outdated houses on lots (often you have bought several in the same vicinity) your plan is NOT to make money renting, never was it’s just a stop gap pattern until you can have vacant un maintained homes and rezone for high density. This will effectively eliminate the prospective “average: home buyer of a SFH. This is not speculation on my part, living here for 30 some years I have seen many SFH areas rezoned to apartments (first) and later condo’s. It will continue, the SFH owner of Vancouver proper will not be “average” very much longer.
Jadeeast; Great article.
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patriotz Says:
April 26th, 2008 at 9:19 pm
OK – at least let’s say then that if SFH’s are 50% of the housing stock in Vancouver, and 75% of the housing stock in City-X, then it does not make sense to compare affordability ratios based on SFH between Vancouver and City-X.
Correct, which is why I used Toronto as a comparison. I think % of SFH in Toronto is somewhat lower than in Vancouver, yet SFH in Toronto are much more affordable. I’m talking metro vs metro.
Montreal also has a lower % of SFH than Vancouver, yet SFH affordability is even higher there than in Toronto. Because there is no bubble in Montreal.
And to top it off, Metro New York has a much lower % of SFH than Vancouver, yet SFH, even there, are more affordable than in Vancouver. And New York is clearly overpriced and prices are falling.
The plain fact is that using every rational metric, every rational comparison, prices in Vancouver are simply absurd, right across the board.
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Visio Says:
April 26th, 2008 at 9:19 pm
coming back to bullcase’s opinion taht the house crash will begin 5 years from now: Housing is not the primer need for humans, food is. And food prices are spiking as we speak… check Superstore for example: eggs are 1.5 more expensive than 6 months ago, and same thing for bread. Let’s say you are facing the dilemma of choosing between paying 2000 CAD on your 300K mortgage or buying 1500 CAD worth of food for your family, when your net family income is about 4000/month and your construction job is about to finish… You have 500 CAD for beer, cable and pot? What’s your decision?
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Strataman Says:
April 26th, 2008 at 9:22 pm
As a side not even in 2000 before this latest boom many Vancouver SFH were and are actually homes to multiple generation families. This was not typical in the 1980’s but now it is the opposite. It’s unusual to see an average family in the whole house! The fundamental is four plus wage earners per house!
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/dev/null Says:
April 26th, 2008 at 9:28 pm
visio – maybe stop buying pot would be a good first step
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Strataman Says:
April 26th, 2008 at 9:28 pm
bullcase’s opinion ? He’s nuts we’re at the peak it will be downhill for the next 5 years, and unemployment and groceries and transportation/gas will hit all time highs. Vancouver is in deep dooddoo!
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Anonymous Says:
April 26th, 2008 at 9:33 pm
Hey now /dev/null! Lets be reasonable, if people started doing what you’re suggesting they might start doubting the whole ‘best place on earth’ line.
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me Says:
April 26th, 2008 at 10:04 pm
another side –
remember the house fire on the weekend?
a house exploded in Surrey – empty and for sale
well, I guess not for sale anymore
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TIME Says:
April 26th, 2008 at 10:11 pm
Visio,
Basic necessities for human lifes are food,shelter,and cloths not just food if you just sort out food (1)I will give you food for life and I will suggest you to take that into antartic ocean and enjoy your life with food(2)I can give you shelter and food than you can walk nude on the street.
I would say stop wasting your time buy a home today or keep on rolling for response.about the mortgage calculation if that does not work for you just rent a place what’s the point to be?
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patriotz Says:
April 26th, 2008 at 10:20 pm
The fundamental is four plus wage earners per house!
Yeah OK so why haven’t real rents gone up too? I’ll answer the question for you: because median real household income has not, in fact, gone up.
Housing is not the primer need for humans, food is
Shelter is a primary need, but buying a house is not a need at all. It’s an investment. Note: I didn’t say “good investment”.
patrioz “Then they must be affordable to close to 1/2 of households (adjusting for future trends in dwelling mix), otherwise there will no nobody to buy them.” I agree EXCEPT that decreasing SFH prices often result in tear downs and rezoning
That’s what I meant by “adjusting for future trends in dwelling mix”. You’ve got it backwards in the second sentence, it’s increasing SFH prices that lead to teardowns, because it increases the opportunity cost of holding underdeveloped property.
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Krissh Says:
April 26th, 2008 at 10:35 pm
My name is TIME now
http://vancouvercondo.info/for.....c.php?t=48
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Vanman Says:
April 27th, 2008 at 6:31 am
Patriotz said:
Yeah OK so why haven’t real rents gone up too? I’ll answer the question for you: because median real household income has not, in fact, gone up.
I say: While this is true to a certain point, the real reason is that BC has a rent increase cap of 2.5% + rate of inflation! And in order to apply for rent increases beyond the cap increases, you will have to apply to the board. If BC has no rental cap, I can assure you that real rents for all tenants will GO UP as did with the recent increases in food prices like eggs and rice. Plus cost of a meal has already inreased more than 20% in some fancy restaurants. They have no inflation cap increase imposed by the rental board.
Our Vancouver SFH had always been super expensive and was so even during the last 2 busts (late 80s and early 90s). Mid 70s would be easier. In the late 80s, people were flocking to Tom Vu’s seminars, we included, hoping to learn some tips and score some depressed foreclosure deals from our depressed markets all to no avail. Ask anyone who attended his seminar and they’ll tell you that he’s a total BS. However, the bottom line is that, it is difficult to score great deals here even in a depressed Vancouver market. Banks and individuals were so determined that they get better than fair market value, despite the fact that reality was far from it. The end result was a brief but long price stagnation until fundamentals catch up. It has been the history anyhow in BC and I don’t see that changing. Another point I like to make about our SFH situation is that, most of the speculation are on condos, rarely on SFH. And most owners of the SFH had already paid theirs off and in the midst of paying off, so even if prices tumble down 50% down tommorrow morning, they are not selling. We are used to prices going down anyhow. We buy a new car today and then by tommorrow, it has lost its new value. Do we all sell our news cars, new shoes, new computers and new homes just because they all lost value the minute you paid for it? Nope. The key is, you already paid for it and you accepted the responsibility of ownership. With SFH, that’s committed ownership in a committed community.
People said homes are not a good investment and in most cases in Vancouver, it is true. The rental cap makes home ownership questionable. But what’s undeniable is the fact that home ownership is an investment in a living community, a good community that provides the kind of living you want. Renting does not and will never provide this because by renting, you are on the lease to the community. Sometimes, an investment to some people is not only about “money”. There are other things more important than just “money”.
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ReductiMat Says:
April 27th, 2008 at 6:58 am
Vanman, in the last five years, how many new SFH were constructed? Was it more or less than average? Regardless, of these new SFH’s, how many do you think are paid in full?
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Vanman Says:
April 27th, 2008 at 7:14 am
SFH (Single Family Home) used to be a home on a single detached lot. Now, it can be an apartment, condo, attached or detached. It really depends on the definition of a family. These days, you can have same sex couple, single middle age woman adopting a baby from China living in a condo and a family with 1 or more kids or a multi-generational family (that’s what you find in North Vancouver) and in some of the well-off communities. When animals want to nest,they usually find a safe place first easy access to food and everything else. And after that, they will build their nest, give birth and then nurse their young. You don’t see them moving places during this process. The key is stability. This is no different from us humans. For those who had purchased a SFH irregardless of price inflation at any point in time, they had all accepted the fact that was the price to pay for raising a family. Raising a family or a kid isn’t cheap. I suspect many of you don’t have kids?!? Do you think for an instant that if our Vancouver market suddenly tanks that there will be hoards of people selling their SFHs and but moving where? Unless ofcourse, we start having massive job losses, but then we human beings were always proven to be resilient. We can adapt and continue to pay on our mortgages. This time will not be any different. What’s different today is the mass buying of pre-sales. We all know where those are ending up.. While prices of SFH will fall, mass selling may not happen. If that is true, then why people in Japan even after a decade of home depreciation STILL HAVE TO COMMUTE on the upwards of 2 to 3 hrs into the city to work. WHY? Simple because, there isn’t any available dwellings available or affordable enough for the regular salary man or woman. I used to work for a Japanese company before and having to commute to work and attend meetings. Thank goodness for the high speed trains. This is not new. In the states, they have “suburbans”. Here, we have Surrey, Richmond, Coquitlam or even Abbotsford. Those who hope to live closer and in a SFH have to really hope that those empty nesters that Garth Turner kept saying that they will since 1993 had yet since to dump their homes for condos. Maybe this time, it may change. Why, because we have an overbuilt condo market. In the down market, I think these will go down first and maybe as severe as we see in Florida. So, this will present an opportunity for someone, an empty nester, to downsize to one of these places. No need to cut your own grass, worry about a leaky roof or pay obscene heating bills to heat a big home just for the 2 and a dog or cat rather than 2 with kids. And if this happens, they can downsize to a smaller place and keep the profit as the difference. Then and only then that SFH in sought after neighbourhoods will begin their real drastic price decline. You just need 1 family or person to sell to establish a real market price for that neighborhood. If no one is selling, then fantasy prices will still prevail.
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Budren of Proof Says:
April 27th, 2008 at 7:41 am
Califonia RE prices down 29% in March YOY.
http://globaleconomicanalysis.blogspot.com/
Californians obviously do not read the Vancouver Sun. If they did they would know that real estate always goes up.
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Krrish2 Says:
April 27th, 2008 at 7:51 am
Vanman,
I like your comment i can buy most part of it and leave 10% of it for future disscusion.
“Sometimes, an investment to some people is not only about “money”. There are other things more important than just “money”.
And the list of other things is being posted here on blogs,for bears,time by time.
“The fundamental is four plus wage earners per house”!
Strataman that was good point then with LOW INTEREST RATES some smart owners are saving equal the amount of property tax plus maintenance fee or the loss in RENTAL YIELDS.that saving can be transfer to anybody in the related circle.
PATRIOTZ -you got so many good point but i think the place is wrong and in the rainy or snowy country SHELTER can’t be other than HOMES, we don’t make people sleep in STADIUM or under TENTS other than some homeless peoples.
Patriotz question for you- why do you think that buying a home is an investment?
what about option,oppertunity,and desire,needs? if these all points are equal to an investment?
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Alexcanuck Says:
April 27th, 2008 at 8:44 am
Okay, I’ll tackle Bullcase. (Who, BTW, sounds like a bear playing devils advocate, and doing a better job of it than any real bull!)
“(1) Mortgages are easy to get and financial innovation makes them even easier to afford.
(3) the easier mortgages are to get and the more affordable they become, the more buyers there will be.
(4) More buyers = more demand = higher prices.”
( What was (2)?)
Your first point is your only point, as your other points are derivatives. Mortgages appear to be getting HARDER to get, not easier. I hope a RE or mortgage pro can supply some insider view on this, as public record stuff is very thin for Canada. Here is what I did turn up: ( to avoid getting hung up in moderation I killed the hyperlinks. Just add www. and paste.)
“Indeed, prime-bankers acceptance spreads have compressed to the point that many lenders’ cost of funds have increased with today’s rate cut.”
canadianmortgagetrends.com/canadian_mortgage_trends/2008/04/bank-of-canad-1.html
“The Bank of Canada Governor said he’s worried the country’s credit markets will get tighter”
tinyurl.com/5jxt9z
“In fact, since early December last year, the central bank has chopped its key lending rate by a full percentage point and it has signalled that further rate cuts are “likely.”
Yet the posted rate for the popular five-year fixed mortgage has dipped by less than two-tenths of a percentage point in the same time frame.”
cbc.ca/money/story/2008/03/05/mortgage.html
Note this one is the March 4 cut, not the new one.
Worldwide, however, lending standards are clearly and strongly tightening up, with no relief in sight. Perhaps you’ve heard of the”credit crunch”? Canada has been in a bit of a cocoon, but that’s not likely to persist. we have already lost several of our private mortgage brokers, with more to follow. Coventree, of course, being the most prominent.
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The Van Man Says:
April 27th, 2008 at 9:31 am
Reductimat,
To answer your question, do a Lancor search for the HPI of Vancouver West detached and apartment (condos + etc) compared to the HPI of Vancouver East detached and apartment.
From those trend lines, it is indicative that the Vancouver West (detached or apartment) had done well price wise during the 2000-2001 recession and onwards. Whereas, the Vancouver East market was anemic during those same years. This has proven to be true particularly in Vancouver, at least in the past, that most people don’t do fire sale on homes in the West even during recessionary periods. Maybe for the very few, but not all. So I’m not sure if I can accept the fact that come next recession, all the communities will suffer the same price massacres that some of us are hoping. I might be wrong, but we also had invested a significant equity in our West side home and so did our friends, so I too would be worried. But I just don’t see how it could be done.
If you look at that Vancouver West detached trend line, you will see that the price increase has not only been gradually up from 2000 (the recessionary period), but at a steady pace. I think part of it is that, the West is always known to be more expensive, so if the price is already high to begin with, so that keeps the demand at bay. If new SFHs are built in the West, it is to meet the demand of new buyers that current supply can not meet and it seemed to be showing just that up until around 2005-6, where the price trend line begins ramping up steeper. So here, I think demand has outstripped current supply, because building a house is not something you can do overnight. I suspect that more new SFH are being built in the Vancouver East rather than the West. The trend line for the East has been a good up steeper since 2002 and only stopped in 2004 only to continue its upward steep trend again.
But what is curious is the price trend line for the Vancouver West apartment. It’s been trending gradually logarithmically upwards. But it looks to me like no major huge spikes like the detached trend line of the same area would look.
Which means to suggest to me that prices were kept in line because supply of condos (complete and or pre-sales) were meeting the current demand. Condos can easily satisfy a huge demand quickly because 1 condo building can house many people, whereas 1 SFH can’t! And this also leads me to believe that if this demand proves to be artificial to begin with (I suspect it is), then I think condos stand a huge chance of massive price markdowns like we see in the States.
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-A- Says:
April 27th, 2008 at 9:45 am
IF YOU LIVE BY THE SWORD, YOU DIE BY THE SWORD
Disclaimer: The following is pure conjecture, and opinion I have absolutely no proof, and the readers of this post can do their own reading and draw their own conclusions.
Looks like Rob Chipman inadvertendly became a message mule for the sophisticated Landcor/Vancouver Sun/RE bubble pumpers.
It’s no secrete it’s my opinion, Rob is the master of BSology, but the real masters are those who can pull off the scam on the BSers, and not be detected.
In my view the 15 myths of real estate feature is nothing more than a shrouded advertisement, with some of the participants being fully aware, while others were just used as props.
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Anonymous Says:
April 27th, 2008 at 10:01 am
“In my view the 15 myths of real estate feature is nothing more than a shrouded advertisement, with some of the participants being fully aware, while others were just used as props.”
In my mind, you know the gig is up when these “pumping” schemes are used.
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disbelief Says:
April 27th, 2008 at 10:08 am
What is wrong with the blog….
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disbelief Says:
April 27th, 2008 at 10:15 am
The very bottom of that Article should have said “paid advertisement by the Rennie Marketing System”. Anybody that can see through the blantantly biased report deserves
to go down with the ship IMHO.
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Re-diculous Says:
April 27th, 2008 at 10:19 am
This may be painfully obvious but the “15 myths” – an article I did not read to avoid getting very angry – tells me that things are really slowing down when they are publishing this sort of crap.
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Disbelief Says:
April 27th, 2008 at 10:32 am
I think as Captain of the ship Bob Rennie should be the one that should go down with the ship… And he just might depending how much he has invested in all those buildings he is hocking…. It would be interesting to see what he has invested in. He is probably all out of Vancouver.. He knows exactly when the peak was…
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patriotz Says:
April 27th, 2008 at 10:36 am
I say: While this is true to a certain point, the real reason is that BC has a rent increase cap of 2.5% + rate of inflation!
Wrongo, for the simple reason that Vancouver rents have not even kept up with inflation during the bubble.
See for yourself
I will also note that rent controls exist only for sitting tenants. Landlords can charge whatever they want when a property is for rent. So why are advertised rents so far below (~50%) the carrying costs of the same property? Because that’s all the rental market will bear.
Your canard is duck soup, fella.
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Patiently Waiting Says:
April 27th, 2008 at 10:46 am
Long term bull argument: Peak Oil Refugees.
http://www.straight.com/articl.....l-refugees
“When Kitsilano-based strategic planner, architect, and peak-oil proponent Richard Balfour talks about environmental refugees, he mentions his own speculation that “20 to 30 million people” could be living in the Georgia Basin in the next 15 to 20 years.
“They come in three waves,” Balfour told the Georgia Straight in an interview at his home. “The first is the one that is already happening, where people with money think they are going to find refuge up here. So they are buying up the coast of B.C. and the farmland of the Interior. The second wave is the middle class thinking they are going to move up to have a better place for their family, and that has started. And then starts the true wave, where you have the refugees arriving with nothing. How do you stop them?”
Why would we let all these people in? We haven’t previously.
A little something for the bears to maul on a quiet Sunday.:)
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Drachen Says:
April 27th, 2008 at 10:47 am
“I think as Captain of the ship Bob Rennie should be the one that should go down with the ship…”
He’s not the captain, nor did he build the ship. He just came up with the slogan, “unsinkable”. Our city council, provincial and federal governments are the crew who apparently believe the “unsinkable” line and therefore don’t see the need to prepare for icebergs.
I don’t think the ship has a captain, maybe that’s part of the problem.
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patriotz Says:
April 27th, 2008 at 11:12 am
The first is the one that is already happening, where people with money think they are going to find refuge up here.
Which has been going on for a generation, during which we have seen a severe bust and a bear market. BTW there are other places rich people can go to you know.
The second wave is the middle class thinking they are going to move up to have a better place for their family, and that has started
Preposterous. It is the middle class who are leaving, precisely because they can’t afford a decent lifestyle for their families here.
And then starts the true wave, where you have the refugees arriving with nothing. How do you stop them?”
Am I the only one who remembers those rustbuckets that arrived from China, whose passengers (except the ones who slipped through the net) were eventually sent back? What happened? No more rustbuckets.
This is just more “everyone wants to live here at any cost” BS.
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-A- Says:
April 27th, 2008 at 11:26 am
.
.
.
Comment by Drachen
“They come in three waves,” Balfour told the Georgia Straight in an interview at his home.
Please tell me this is not the same Balfour as:
http://www.balfourproperties.com/
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Patiently Waiting Says:
April 27th, 2008 at 11:44 am
Yeah, I suspected a hidden agenda.
Later in the article, Balfour says,
“Canada will undoubtedly be asked to take on millions of people as a result of climate change”
Who will “ask” us? Oh, wait a second, I think he might be saying the Americans will head North. Arnie leading a caravan of SUVs from California. Yikes!!!
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Drachen Says:
April 27th, 2008 at 12:25 pm
Comment by Drachen
“They come in three waves,” Balfour told the Georgia Straight in an interview at his home.
I didn’t say that. Please don’t attribute things to me that I didn’t say, I get in enough trouble for the things I DO say.
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-A- Says:
April 27th, 2008 at 12:38 pm
“Comment by Drachen
“They come in three waves,” Balfour told the Georgia Straight in an interview at his home.
I didn’t say that. Please don’t attribute things to me that I didn’t say, I get in enough trouble for the things I DO say”
Sorry Drachen, For the record, it was not Drachen.
It should have read:
Comment by Patiently Waiting
2008-04-27 10:46:26
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Patiently Waiting Says:
April 27th, 2008 at 12:56 pm
I’m getting sick of people pricing higher than comps and declaring “seller motivated” or “priced to sell”. They must think buyers are idiots. Well OK, some are.
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patriotz Says:
April 27th, 2008 at 6:20 pm
They must think buyers are idiots. Well OK, some are.
No, all are. The smart money isn’t buying.
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Patiently Waiting Says:
April 27th, 2008 at 7:37 pm
Yeah, I really meant potential buyers. You’re right, there are no deals right now or for the next couple years.
Anyone here have any good information on the Mosiac townhouse developers? They are building a new project in Coquitlam apparently on spec. I drove by it and the completed pretty on the surface, but the half-built ones seemed like the typical crappy materials.
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digi Says:
April 27th, 2008 at 7:54 pm
This months issue of ‘moneysense’ magazine is all about real estate as well. There are some interesting articles in there – the one about how to get rich on real estate goes over cap rates and touches on the issue of rental income and maintenance costs. For anyone in Vancouver the numbers on what it takes to make an investment worthwhile is mindblowing:
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blueskies Says:
April 27th, 2008 at 8:23 pm
can’t happen here!
http://tinyurl.com/3qumq5
unh unh! nah! no way! never!
160 X On media, myths and realities « condohype Says:
April 27th, 2008 at 8:43 pm
[...] in the market. Already, the local blogosphere is buzzing with reaction. Over at the lively Vancouver Condo blog, some commenters were so furious they demanded the article be attributed as a paid [...]
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patriotz Says:
April 28th, 2008 at 3:07 am
..if the building has four units renting for $900 a month each, expenses that eat up 50% of your gross income, and a cap rate of 7.5%, you can quickly calculate that you should pay about $290,000 for the building, tops
That’s a multiple of 80 times rent, and the bulls think you’re nuts to suggest it might go down to 100. Also a four-plex has better fundamentals than a condo (no management ripoff, more land value) so the condo would need to have a lower multiple for the same total return.
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homerstreet Says:
April 28th, 2008 at 3:35 am
“That’s a multiple of 80 times rent” — not really!?
4 * $900 * 12 = $43,200 rent per year
$290,000 / $43,200 = 6.71 Gross Rent Multiplier
That is a good deal, one I have never seen before. Downtown Vancouvers GRM is round about 19.
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beatstreet Says:
April 28th, 2008 at 10:00 am
It seems average sale price continues to fall along with list. Rob Chipman just posted the latest numbers.
Granted, average sales depends on the sales mix, and the benchmark data will hopefully be out later this week for April to get a better read on things. I used his Feb 23 numbers to see the change over two months:
EndDate Feb-23 Apr-26
ListPri 577,303 534,726 -7.4%
AvSales 567,296 525,618 -7.3%
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disbelief Says:
April 28th, 2008 at 4:00 pm
arrrrr
165 X “Anyone have relatives in Alberta that want a downtown condo?” « Vancouver Real Estate Anecdote Archive Says:
April 29th, 2008 at 9:38 am
[...] the links at RE Talks, condohype, vancouvercondoinfo & the Sun itself for this [...]