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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.
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.
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.:)
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.
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…
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.
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.
April 27th, 2008 at 10:08 am
What is wrong with the blog….
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.
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.
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.
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.
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?
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.
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.
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?
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”.
April 26th, 2008 at 10:35 pm
My name is TIME now
http://vancouvercondo.info/for.....c.php?t=48
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.
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?
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
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.
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!
April 26th, 2008 at 9:28 pm
visio – maybe stop buying pot would be a good first step
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!
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?
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.
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.
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”
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
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.
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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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%.
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?
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.
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.
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.
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,
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?
April 26th, 2008 at 11:22 am
.
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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.
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.