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April 15th, 2008 at 4:13 pm
I’m so surprised California is taking such a beating; after all they are the British Columbia of the south.
Imagine if they started making movies or decided to get into high tech, they might even give our weed and condo-based economy a run for its money. Fortunately it’s way too sunny so they don’t have the focus to do real work down there.
April 15th, 2008 at 4:09 pm
The vote should have included a 40% category, which is the level to which I believe prices in Vancouver need to fall (in real terms at least) before the market will be fairly priced vs. the cost of renting. My family income is in the $120K/year neighbourhood — that means we can afford a one bedroom condo in this market. Doesn’t make sense.
April 15th, 2008 at 3:30 pm
“It’ll be interesting to see what krissh’ll say to that!”
bdk: maybe the Olympics? Maybe the old lie- “we don’t have subprime” maybe because we grow good pot, because the weather and the soil is perfect in BC? (although it is grown indoors).
Whatever the explanation it will be interesting and quite scientific.
April 15th, 2008 at 3:19 pm
It’ll be interesting to see what krissh’ll say to that!
Probably something like this:
They have terrorism and errfquake, and too many illegal alien. Also too much sun and smog. Gas price too high, you have to take car everywhere, we have great public transit and new Canada line! If you live downtown, you can walk – no gas bill!
April 15th, 2008 at 3:03 pm
-A-
Brilliant!
It’ll be interesting to see what krissh’ll say to that!
April 15th, 2008 at 3:01 pm
“Developers in Miami and Fort Lauderdale, Fla., are readying nearly 10000 total new units in a market already struggling with canyons of unsold condos.”
April 15th, 2008 at 2:59 pm
I’m so surprised California is taking such a beating; after all they are the British Columbia of the south.
Sure their IT, film, tourism, agricultural and other industries, as well as their general economy is not quite developed as ours, and they don’t have the population base we have.
Maybe what will keep the bottom from falling out of our market will be the acute land shortage and the huge population we have compared to California.
April 15th, 2008 at 2:57 pm
Alum is playing dumb. he knows as well as everyone else that specuvestors will line up to sell as fast as they lined up to buy.
Lemmings who haven’t done their due dilligence and buy to “make easy money” deserve as much consideration as any unsophisticated buyer who goes and leverages $500k on Oil futures without doing their due dilligence simply because they heard Billy ,from down the street, did it and made big money.
This talk of protecting buyers when they are trying to capitalize on the free market seems silly to me.
Krissh, please stick around as the prices crash 40% this year, it’s going to be fun reading your perception of what’s happening.
If you can understand this question explain what is going to happen when 75% of the newly completed units hit the market as the demand for these new units hits a ten year low.
Try to stay on topic
Cheers!
April 15th, 2008 at 2:38 pm
Alum
“There might be a period of slow price appreciation. I will only imagine a price drop if there is a pressue from lenders calling their mortgages.”
You see, the problem I have with statements like this is that historically;
A) that’s what is said in nearly every bubble near the end.
and B) There are reams of evidence to contradict you and yet you present no evidence to support your case.
Which leads to the conclusion that you are either;
A) Completely deluded.
or B) Hoping to trick others with your shenanigans because one way or another you make money from the housing market.
April 15th, 2008 at 2:31 pm
Comment by Alum
2008-04-15 14:19:25
There might be a period of slow price appreciation. I will only imagine a price drop if there is a pressue from lenders calling their mortgages.
****
Thanks Alum,
I will be sure to base the largest purchase of my young life on what you “imagine”…
April 15th, 2008 at 2:31 pm
Alum: “To be realistic, unless you have a lot of hard cash, you cannot buy real estate during a downturn. Financing would be more difficult and banks won’t lend you money.”
This is where the bulls get it wrong. Many of the bears I know:
a.) Have great jobs with solid incomes that make them a good lending risk in any economic climate.
b.) Simply haven’t bought because they are perhaps more cautious/responsible with their financial commitments or can’t swallow the crap that can be bought at current overvalued prices. Many I know personally have also stayed debt free during this entire bubble.
and…
c.) Have a solid downpayment saved ready when the time (and price) is right and the mortgage they choose to take on makes more sense against their debt/income ratio.
Lending practices (way back when
used to based on some level of risk assessment. Too bad we got away from that huh? Its not going to be the bears that have trouble finding financing….I’ll bet my nestegg on it.
April 15th, 2008 at 2:24 pm
“Otherwise, as long as prople have jobs and there no massive layoffs (as in the US), a crash is not on the horizon.”
Except in the US the cart went before the horse. That is, the depreciation started BEFORE the recession (which is only now becoming apparent), which is just now starting to cause layoffs. I think we’ll be seeing the same thing here.
Look at all the other markets that are deflating now. The sole reason for the pop has been the reaching of affordability limits, the exhaustion of demand and the general change in psychology.
Just because you can throw a ball real high in the air doesn’t mean gravity no longer applies.
April 15th, 2008 at 2:19 pm
There might be a period of slow price appreciation. I will only imagine a price drop if there is a pressue from lenders calling their mortgages.
Otherwise, as long as prople have jobs and there no massive layoffs (as in the US), a crash is not on the horizon.
April 15th, 2008 at 2:05 pm
keep in mind bears, when prices start falling don’t rush in to buy, the longer we hold out the lower the price will go.
April 15th, 2008 at 11:34 am
To be realistic, unless you have a lot of hard cash, you cannot buy real estate during a downturn. Financing would be more difficult and banks won’t lend you money.
Well I can tell you that the lenders were more than happy to extend financing on the usual terms back in ’83, and of course that was the biggest RE bust since the great depression.
But I do hope you’re right about your prediction, because I’m going have a doozer of a down payment for my next purchase. I kind of like the sound of “take it or leave it”.
April 15th, 2008 at 11:31 am
.
.
.
jadeeast said:
“so if the market turns there will be little to stop it on the way down”
I love it! a priceless response to alum’s attack on bears by claiming that “unless you have a lot of cash, you cannot buy RE during the downturn”….where do these idiots come from?
BTW, no question about “if”, the market is turning RIGHT NOW.
April 15th, 2008 at 10:52 am
http://www.youtube.com/watch?v.....antic.com/
Presented without malice…just a sigh of resignation
April 15th, 2008 at 10:35 am
For those looking for a 40% price drop, it’s getting close to that in Southern California. (of course they don’t have good weather like we do ;^)
All homes________Mar-07_____Mar-08___%Chng
Los Angeles____$540,000 $440,000 -18.50%
Orange________$629,000 $506,000 -19.60%
Riverside______$420,000 $306,250 -27.10%
San Bernardino_$369,000 $265,000 -28.20%
San Diego_____$490,000 $395,000 -19.40%
Ventura_______$566,750 $430,000 -24.10%
SoCal________$505,000 $385,000 -23.80%
Source.
April 15th, 2008 at 10:24 am
“To be realistic, unless you have a lot of hard cash, you cannot buy real estate during a downturn. Financing would be more difficult and banks won’t lend you money.”
So if the market turns there will be little to stop it on the way down.
Not very comforting.
April 15th, 2008 at 10:23 am
Darn, I missed the train.. well I guess I didn’t really miss it if I couldn’t pay the fare back then
On the bright side I have $100K saved thanks to renting over the last 5 years. I couldn’t afford to buy in 2003 when I first started working.. but now I just can’t justify buying while paying $1K/mo rent on Beach with literally a million dollar view, fireworks and all.
April 15th, 2008 at 9:31 am
Alum
“This blog is full of bears, who missed the train.”
That’s OK, the train is on a loop track you see, so it’s better to wait comfortably than to kill yourself running behind the train to hang on and be dragged for a few miles before either being pulled under the wheels or dumped in a ditch when you can’t hang on any longer.
Relax, get a magazine, enjoy some sun. The train will be back and I hear if you buy at the right time you get a really good discount on tickets!
April 15th, 2008 at 9:31 am
Many bears will be able to buy RE without a mortgage. Many have been saving for seven years and their war chest of cash is huge.
April 15th, 2008 at 9:23 am
alum
you can if you have 20% down, solid credit and a 6 figure plus income… you have to remember that in times like the bank are desperate for decent clients as those without have dried up/gone away/declared themselves bankrupt.
April 15th, 2008 at 9:03 am
This blog is full of bears, who missed the train.
To be realistic, unless you have a lot of hard cash, you cannot buy real estate during a downturn. Financing would be more difficult and banks won’t lend you money.
April 15th, 2008 at 8:29 am
From the New York Times
“Since last fall, eight mostly midsize chains — as diverse as the furniture store Levitz and the electronics seller Sharper Image — have filed for bankruptcy protection as they staggered under mounting debt and declining sales.
But the troubles are quickly spreading to bigger national companies, like Linens ‘n Things, the bedding and furniture retailer with 500 stores in 47 states. It may file for bankruptcy as early as this week, according to people briefed on the matter.
Even retailers that can avoid bankruptcy are shutting down stores to preserve cash through what could be a long economic downturn. Over the next year, Foot Locker said it would close 140 stores, Ann Taylor will start to shutter 117, and the jeweler Zales will close 100.”
April 15th, 2008 at 8:28 am
I’ll look at buying when the metrics are down to normal levels. 40% or less of current prices. I haven’t seen any metric that shows over 50% of our current market price is sustainable.
Personally as I’ve said before prices are approximately 3x what they should be and when the crash happens prices should drop to around 1/3 of current levels. 10% or 20% is a fool’s game, that would have been just like buying a year or two ago when prices were already over double any sustainable level.
April 15th, 2008 at 5:29 am
pariotz, history means nothing.
It’s all changed. Western Canada, and by extension, Edmonton, is now the center of the Universe.
Apparently China and India are all we need.
Read Diane Francis new book!
And you do believe everything she says don’t you?
What ulterior motives would she have in promoting the mining and oil sector?
April 14th, 2008 at 11:40 pm
Before you consider buying in Edmonton take a really good look at this graph.
There are a lot of good reasons why Edmonton has been historically cheap and I don’t think they’ve gone away.
April 14th, 2008 at 10:51 pm
Since we would only buy with a 40% drop, the survey is kind of ill-posed for us too.
Over the weekend we were visiting a sunny, warm place. Yup, Edmonton had a heat wave Sat/Sun. We went for a nice look around the neighborhoods south of the university. Decent houses selling for mid 300s, really quite nice stuff in the mid 400s. My friend is looking to move up to one of these houses. His realtor completely acknowledges that prices are falling because inventory is very high compared to last year (although she still thinks he should buy fairly soon because “it could change”). I’ve been up to Edmonton a couple times before for work. Didn’t get a proper look around until this time. Seems like a decent enough place and has an economy that I can understand. Maybe vancouver’s worth a 10-20% premium for the weather, but 100% mark-up seems like a lot.
April 14th, 2008 at 10:49 pm
“The growing reluctance to dip into the housing market seems to stem partly from worry that housing prices will continue falling — good if you’re buying a house but bad if you have to sell one.”
Isn’t this backwards? If the market is falling, how is it “good if you’re buying”? Frankly, it’s better to be selling than buying since you can sell your house today and buy it back in the future for less.
But maybe I’m just not the sharpest tool in the shed.
April 14th, 2008 at 8:57 pm
..Actually that wasn’t too complicated at all. I’ve made a page off just the polls without the attached stories here:
http://vancouvercondo.info/polls
April 14th, 2008 at 8:47 pm
Great comments everyone.
Arbitrage, I leave the polls open rather than set an arbitrary time to close them. I’ve added a ‘polls’ category that lists all the stories with polls attached – you can view it here:
http://vancouvercondo.info/category/poll
I’ll look into making a page that just shows the poll results, but that will take more time and may not happen if it’s too complicated or time consuming.
April 14th, 2008 at 8:28 pm
Those previous crashes of 81, 90, and 95 all coincided with recessions.
There was no recession in 95, nor was there an RE crash – rather a slow bear market throughout the late 90′s. Many sectors of the BC economy were doing very well, particularly high tech and film making. Really as the US goes so goes BC and the US economy was growing strongly at the time.
Prices started falling in 95 simply because they had gotten too damn high – supply outrunning demand. Real prices in 95 were very close to the peak reached in 81.
A definite contributing factor was the reversal of immigration from HK and the HK RE bust in the late 90′s (so much for the “running out of land” argument) which resulted in the repatriation of a lot of HK money from Vancouver RE.
I know a lot of people didn’t like Glen Clark and I’m not a fan of his either (one big reason being he was responsible for bringing the 2010 Olympics to Vancouver, which to a large extent has enabled the current RE mania), but the BC economy did grow during his tenure.
April 14th, 2008 at 8:25 pm
My wife would like to leave. The only alternative for me is state-side as the rest of this country is too cold.
I lived 5 years in California, and it’s nice, but I find it all too consumerist. Maybe I haven’t spent enough time on Robson lately.
Did I see that Ozzie Jurock video right? Did he say that the 800k median was for all of Vancouver – from Mission to the West End, with a median W.Ender now $2mil and and E.Ender $1.2mil. Holy shoot.
April 14th, 2008 at 8:12 pm
We are making $150,000. But with two kids, this city is just too expansive to stay. We are leaving too ( we found better paying job in a less expansive city). Bye bye resort city, snobbish doggies exercising on Spanish Banks, and rich students driving Escalades.
Yes, we became bitter, and that is why we should better go before turning sour.
And no, we won’t wait for the crash, because even if it goes down 30%, it will still be too expansive. And do not run the numbers for us: we are willing to repay our mortgage in 6-7 years. Period. (btw, we want a nice house with a yard).
April 14th, 2008 at 8:03 pm
magic bubble
i used to do those in the pool until i was permanently barred from swim class…..
April 14th, 2008 at 7:59 pm
Here’s a good bear article that appeared in Sunday’s New York Times. Focuses on the market-that-could-only-go-up aka Ireland and to a lesser degree Spain. The sad looking Irish lass on the front page bought her one-bedroom condo in May 2006 and has already “lost” 100k.
http://preview.tinyurl.com/6no533
Please don’t use this to forecast the end of the Vancouver bull market, because we have a magic bubble that protects our market from real-world fundamentals.
April 14th, 2008 at 7:54 pm
great post!
brings out the anecdotes that really tell the
story….. except for the last post.
was hoping satv would be RE roadkill by now!
April 14th, 2008 at 7:45 pm
Krrish,
Good to see you back!…I thought you had left wih your tail between your legs. I always get such a kick out of your nonsense posts….I mean the bits I actually understand.
April 14th, 2008 at 7:29 pm
“We decided a few months ago to leave and go bargain hunting states-side”
is like a rat runs to cross the border
“there go two more young professional high-income earners”
are you kidding?if not why can’t you buy something?
“leave and go bargain hunting states-side”
Oh Really then how much would you sell it for later if you have to?I guess on current market prices and how much would you buy?I guess on current market prices.
“Why the hell would I want a 1/2 million dollar mortgage?”
to save your investment from drowning-do you know? Resteven has sold his house last year and moved to California and bought a place there since than the market went down in that area around 25% in that case the gain he earned over here has gone into the pipe there-A punishment for bitterness towards “the best place on earth”.
“there wil be a flood on the market”
2.5 million people and 13,100 re-sale homes almost 10-11,000 of them are there to trade,to change hands from one-two bed,two-three bed,three-house.
left over 2,000 are listed for new buyers-
Stop complaining-if you can not afford where ever you are just move around to 360 degree find some thing to suit your income.
Those who are selling their homes will never be able to buy back on same and lower than that.
April 14th, 2008 at 7:25 pm
.
.
The coming crash is so damned obvious that it’s no wonder that the glimmer of hope from recent buyers is fading rapidly, and with markets tanking all around us it’s bloody well time for the few remaing fools to remove the blinders and wake up.
Those previous crashes of 81, 90, and 95 all coincided with recessions. It is no coincidence that inventory is growing at an unprecedented rate and the excitement on these forums is approaching fever pitch. There is little doubt that history is ready to repeat.
It’s a perfect storm, and this could be the biggest bust many of us are likely to witness in a lifetime.
April 14th, 2008 at 6:41 pm
I’m a six figure income earner going south. I can pay off a house down there. Why the hell would I want a 1/2 million dollar mortgage?
April 14th, 2008 at 6:11 pm
-A- good point, the key is to maintain the perception that prices are not going down, because once that perception reverses…..there wil be a flood on the market
April 14th, 2008 at 5:24 pm
I can’t wait to leave this city and its dysfunction behind. We decided a few months ago to leave and go bargain hunting states-side….our move is set for fall. Bravo Vancouver – there go two more young professional high-income earners out of this city and with their tax contributions in tow. If I’m bitter its only becuase the idiodic short-sighted greedy cannibalism of the local RE market has made me grumpy and disappointed. Anyone with their eyes half open can see where this is heading.I hope that speculators like the taste of drywall – its going to be the only thing left to eat when they all take a bath on their “investments”. I hear a little hotsauce does wonders.
April 14th, 2008 at 5:02 pm
A new coworker brought up housing today in the cubicle of 4 that I sit in. One of the 4 is a bull, the other 2 are bears – not including myself. I tried to stop him before he started but it was too late. The feeding frenzy ensued…
The amazing thing I find with all of the bull’s that I’ve run into is that they could care less about any stats/figures/anecdotes you come up with, NOTHING matters as long as the value of their house goes up.
He lives in Coquitlam, so I showed him the inventory graph on PaulB’s site for Coquitlam. Nearly double the inventory of last year. His response? “That inventory is for houses you can’t afford. All of that inventory is for 4/5 bedroom houses.” We couldn’t convince him otherwise, it was quite something. And yes, according to him this is the best place on earth, everybody wants to live here and prices will never drop, BUT they *might* stall for a bit.
The new guy that brought this up also lives in Coquitlam, he owns a house that has doubled in value, but he brought this up because he thinks prices are about to drop. The graph made absolute sense to him since he said the number of for sale signs, especially on condos, is staggering.
April 14th, 2008 at 4:25 pm
The prices will drop, but if won’t be reflected in the industry manipulated published stats for a while.
The developers will throw in incentives such as cars, or will pay your mortgage x months, years, free car, vacations, etc.
The small time flippers won’t be able to match the hidden price slash and will keep hanging on until the inventory swells.
By the time the greedy fools wake up from their denial, it will be Florida of the North.
I can see a scheme in the works where the developer will give you a free condo, if you finance it through them-”easy terms”, no down payment, and you get a cell phone with it!
April 14th, 2008 at 4:23 pm
OT – Check out this new ‘city’ 40km from Madrid:
http://www.skyscrapercity.com/.....p=18834213
April 14th, 2008 at 4:15 pm
Pope, could you post the results to all the polls (after they’ve closed – do they ever close?) in one central location?
It seems that by the time everyone’s who reads the blog (mostly bears and trolls) has had a chance to vote, we’ve moved onto another topic.
Also, when I access from another computer, I like to see the results without having to vote again
April 14th, 2008 at 4:02 pm
Yeah, true in the US, and is coming north. The numbers show that Vancouver sentiment is changing rapidly. Paul B shows listings on the REBGV skyrocketing to over 14000 as of Friday. He posted on his blog that there is “more of the same” today. We will likely have over 15000 listings by the end of April.
Things are looking very precarious right now.
April 14th, 2008 at 4:02 pm
Frankly as a FTB with a wife and kid, my professional salary (let’s say north of 70k) would mean any modest SFH (detached or otherwise) would probably have to drop by a minimum of 40% before we could afford to buy. A condo under 850 sq.ft is not a suitable option for anyone looking to raise a family. I would rather rent in such circumstances.
We will probably look at leaving Vancouver in a few years if nothing changes for the “better”, which leaves this BC native rather disgruntled.