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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:)
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.
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.”
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.
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.
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.
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.
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.
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
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.
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.
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.
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,
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?
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?
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.
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.
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.
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
April 26th, 2008 at 9:41 am
.
.
.
I read the 15 myth special as an infomercial funded by an industry racing against the clock.
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.
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.
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
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.
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.
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.
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.
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…
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.
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.
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).
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.
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)?
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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).
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.
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”.
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.
April 25th, 2008 at 9:32 pm
Vancouver,Vancouver
how i pine for thee
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.