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April 23rd, 2008 at 10:07 am
Anti-Pesto,
And all other weak bears. Please don’t simply see it as 50% or 60% crash. You will just get lost in your own feelings, thinking that 50% drop is a large number and it won’t happen. Even I ask myself, 50% is a large drop, could this happen. YES, it will happen.
To understand that a 50% correction is very likely and is going happen, just think about it in terms of going back to 2001 prices. How much were salaries and wages then, how much is it now? What was interest rate then, what is it now? It’s as simple as that. Was there a fundamental change from 2001 till now. Why weren’t average homes $700K back then, what makes you think it will sustain now. If you understand that there is not much difference, you will realize that R/E is very likely going to have a 50% crash in price.
I just filed my tax return. I make pretty good money. Well into the six figures and I could only save $10K per year. If you buy a place for $600K and the market corrects by 20%, that’s $120K. That’s 12 years of my savings. Oh wait, $10K was based on rent. If I assumed I had a mortgage, that would be 40 years of saving. Losing 40 years of savings in one pop is pretty risky to me.
April 23rd, 2008 at 8:33 am
“What’s with your quote from the comment thread? ”
At first I just thought it was really odd that the person made the statement that it’s cheaper to purchase because of low vacancy rate. Now I realize that they must be living in Bizarro Vancouver or Vancouver Washington.
April 23rd, 2008 at 8:15 am
Comment by Drachen
2008-04-23 07:56:41
“Tsur has been a very unreliable source for housing data in the past.”
That was actually unfair to say, as far as I know he’s never released false or misleading data. My problem is with his interpretation of the data which has been severely lacking in credibility.
****
That’s why the man gets paid 200k plus from the public purse, eh?
April 23rd, 2008 at 8:11 am
“for the best place on earth, why are the lineups to the US always so damn busy but coming into Canada…they’re dead?”
Maybe as being CANADIAN and VANCOUVERITES you can manage they can’t,I have heard they are in downturn so thanks for your vocation and shoping there that was really helpful.
April 23rd, 2008 at 7:56 am
“Tsur has been a very unreliable source for housing data in the past.”
That was actually unfair to say, as far as I know he’s never released false or misleading data. My problem is with his interpretation of the data which has been severely lacking in credibility.
April 23rd, 2008 at 7:46 am
“Drachen: Are you sure your graph for Toronto prices is just for Single-Family Homes? And are you sure both are adjusted for inflation?”
AFAIK the TO prices are for housing average (which actually makes my point stronger) and neither is inflation adjusted. Even the Sauder graph shows TO ahead in the 80s (though not by as much as the graphs I found, however the Sauder data is all from the same source so let’s assume it’s more accurate).
Also, note the NEXT graph on the Sauder paper http://cuer.sauder.ubc.ca/down.....rville.pdf
which shows Vancouver and Toronto RENTS only a fractional distance from each other. As for reliability of the data, I feel I have to point out that Tsur Somerville is the paper’s first author. Not that I’m saying he’d outright lie about the numbers but Tsur has been a very unreliable source for housing data in the past.
So, IF the data is accurate then why is PRICE so different between Van and TO but rents are almost identical? Same study, I presume the same definitions were used for both graphs yet our housing is nearly twice as expensive to buy but under 5% more expensive to rent. Note also, Calgary is more expensive than Toronto to buy now too but the rents are actually about 20% less.
April 23rd, 2008 at 1:13 am
I was reading a piece from the guardian on homeownership ideology and in the comments section
Note the comments from the housing ideologues. Like all ideologues, they do not belive in rational analysis, only ideology. To them, if someone does not agree with their ideology – “home ownership is always a good thing” – it means they must believe in the opposing ideology – “home ownership is always a bad thing”,
They simply cannot understand that ownership of a house, like any investment or consumer durable, may or may not make sense based on yield on investment and contingencies of the prospective owner.
April 22nd, 2008 at 11:54 pm
Mulligan on the bold, k, I’ve done enough!
April 22nd, 2008 at 11:53 pm
Jadeeast,
From the actual article you posted, not a comment made by someone who read it, it reads:
“For low and moderate income families who are struggling to make ends meet, and pay for necessities like healthcare and childcare, how are we helping them by having them pay 80-125% more than necessary for their housing costs? Oh yeah, but they will accumulate equity in their home.
Right, the housing bubble will keep inflating indefinitely. Maybe the ideologues of homeownership thought that housing prices would just keep rising forever, but this was an unbelievably stupid thing to believe…
In the interest of promoting better housing policy in the future it is important to have a public acknowledgement of the follies of homeownership ideology. We don’t have a bottomless pit of money to satisfy their perverse ideology. If homeownership does not make economic sense, then we should not tell people to sacrifice healthcare and other essential needs to make the ideologues happy. It’s time to force some honesty into the discussion of housing policy – renting sometimes make sense.
Thanks for that, good read! What’s with your quote from the comment thread? Just looking for some bullishness?
April 22nd, 2008 at 11:39 pm
^ should read “living in” Moo..moo, moo (My bad)
April 22nd, 2008 at 11:37 pm
Nothing puts things into perspective better than getting away. Just got back from Vegas. I saw evidence of their crash. Talking to the locals, it seems most are still reeling from the shock of it.
Those of you who’ve gone down fairly recently would have seen the new Casino/Condo/Resort Hotel MGM is building on the strip, HUGE! Anyway, a cabbie was telling me that many people who bought their presale condo’s ended up not being able to pay. Deposits of $30,000 given to the developers per unit. The building construction is still going up, should be done next year but it seems like they can’t sell the units fast enough.
It felt good to talk to people who didn’t know where Vancouver was. People who don’t care about the Winter Olympics. People that have no clue that we’re in: “The best place on Earth”.
Also, for the best place on earth, why are the lineups to the US always so damn busy but coming into Canada…they’re dead?
Anyway, back to Un-REality Vancouver style! It just seems so silly to me, now more than before, seeing the prices and the hype! Haha! I seriously can’t wait until people wake up from the bubble they’re live in, not to mention the RE bubble they’ve all created.
April 22nd, 2008 at 10:59 pm
I was reading a piece from the guardian on homeownership ideology and in the comments section I came across this.
“In Vancouver, where I now live, the value is in the land and not the property per se, and demand is so high in Vancouver proper that prices remain high but stable. It’s still cheaper to buy an equivalent property, as there is less than 1% rental vacancy in this city.”
I think the term used in this cases is “not even wrong”.
The article is here http://tinyurl.com/4l8636
April 22nd, 2008 at 9:12 pm
You idiot, where do they have more people? Toronto or Vancouver????
I rest my case!!!!!!
Land size dum head land size,average prices you idiot average price,weather you idiot weather,migration towards vancouver you idiot not towards toronto,jobs you idiot unemployeement rates.
I still hold my case!!!!!!!
Tony thanks to be with me together you can do it i can show you the way.
About being in vancouver that’s what we need to realize where we are?.important.
“but when I’m out I don’t see many others. Other than that aspect, if you have actually been to a world class city”;- Alexcanuck.
Alexcanuck going out door or staying in door have nothing to do with best place or world class,lets say you have high paying jobs you can take a world tour every year or when ever but imagine if you don’t have job at all.
welfare,medical,food,shelter,library,ambulance,doctor,hospitals.
Show me any world class city where people have type of access except uk.
those service above makes place to be called best place on earth.
Going to usa,australia does not makes you feel the diffrence,have you ever been to calcutta,south africa,have you ever been or heard about pakistan.
Have you ever seen womens being raped infront of public?
have you ever have to write your test tommorow and your neighbourer is playing loud music all day all night.
have you ever hold on to your book because their is no light in your community or locality?
did you ever carry 50 pound of watercan on your head and walking 10 kilometer to get home?
April 22nd, 2008 at 7:46 pm
I heard that many of the construction workers are encouraged to “invest” in the project they work on, just like the dot.com start ups encouraged employee investments.
If this is so, what a disaster waiting to unfold as they won’t be able to unload the units, just as their jobs end.
Some will end up unemployes and with 2 mortgages, some will have to take part time jobs and subsidize the negative cash flow.
Construction workers dreams dashed of becoming Donald Trumps, the would be tycoons will have settle for the Palm Sisters rather than Tom Vu’s bikini clad babes.
April 22nd, 2008 at 7:28 pm
Regarding web traffic. I have noticed a near 50% increase in traffic to http://langley-financial-planning.blogspot.com/ over the past 4 months. I’m getting a lot more search engine traffic and more unique visitors for a broader variety of domains.
April 22nd, 2008 at 6:57 pm
“Comment by Anti-Pesto
2008-04-21 13:56:24
See 8% is a beleivable number, as would be 12% or even 15%. 50% is not as some people are predicting.”
Anti,
I certainly don’t want to buy a $1 Million shack today and have it go down 15% = $150,000.
How many people do you know who would not care about losing $150,000?
April 22nd, 2008 at 6:45 pm
“Is this remotely possible or is he stooping to new lows?”
Franko could you ask the spin manster how he voted?
Does he think the market has turned?
April 22nd, 2008 at 6:30 pm
franko,
three hundred comments 267 from wow!15 from jeff and rest from newcomer.
April 22nd, 2008 at 5:58 pm
“but the average poster just seems a lot more agitated these days.” so is the average neighbour, lady I know who bought an Elan unit to flip is some pissed off, says the realitor sits on her ass and does nothing! Asked her (I’ve known her for three years)if she changed realitors she said NO but she is going to; because HER realitor seems to think places sell by themselves. Had to bite my tongue and not say “well actually places USE to sell BY THEMSELVES the realitor was decoration not skill. (Apologies to Paul your not that kind). Lots of anger out there and the down turn is not even off the start line!
April 22nd, 2008 at 5:48 pm
I’ve been lurking on these blogs since sometime in 2005. What I notice is how much angrier everyone is now. There have always been trolls who have engendered hostile responses but the average poster just seems a lot more agitated these days.
April 22nd, 2008 at 4:38 pm
.
.
.
QUESTION FOR POPE, or for anyone else who would liket to respond:
Noticed a few comments on Chipmans site about the activity increase on these blogs coinciding with the recent inventory spike.
No surprise there, but what really blew me away was RCs claim that “page load volume is about the same as always” and he had not noticed any increase of comments.
Is this remotely possible or is he stooping to new lows?
So, out of curiosity, I wonder if POPE has any stats for volume on his blog….or has anyone else noticed a volume increase?
April 22nd, 2008 at 4:13 pm
Drachen: Are you sure your graph for Toronto prices is just for Single-Family Homes? And are you sure both are adjusted for inflation?
Looking at the Sauder data, Vancouver has been more expensive than Toronto since at least the mid-70s. Significantly so.
April 22nd, 2008 at 4:10 pm
speaking of collapse
http://tinyurl.com/3htuna
interesting read
April 22nd, 2008 at 3:47 pm
“Pity how greed can cloud ones judgment.”
Fear is worse.
April 22nd, 2008 at 3:20 pm
Wow, I’m amazed with the responses these days. I’ve been checking into this post for 6 months now and can tell you it has changed a lot.
The way people put forward their arguments in a constructive way is such a delight. Bringing forth easy to understand stats for new people will make it easier for people to understand Vancouver is overvalued and a price correction is surely due to come.
I do feel sorry for any body who buys a condo or a house right now because they have bought at the peak of the market. If some of those people discovered this forum I sure they would have changed their minds. Pity how greed can cloud ones judgment.
April 22nd, 2008 at 2:31 pm
Interesting that part of the editoral’s rationale is “Metro Vancouver’s limited supply of land and high demand for housing, fueled largely by immigrants’ desire to live here, sounds like a recipe for a stable if not robust residential real estate market.” Yet, according to Human Resources Canada, newly arrived immigrant family income is only on average 76% of native born Canadians . Also, an assessment from the BC government suggests that in this province, recent immigrants don’t find as high paying jobs as native born Canadians. Good thing affordability is not a problem.
April 22nd, 2008 at 1:39 pm
Sorry Digi, I’m with the program now!
April 22nd, 2008 at 12:35 pm
ok, seems the 40% drop calc is pretty conservative than. i do hate going out on limbs.
someonetoeatcheesewith:
i agree that using $1200 without subtracting tax, maint, etc… is quite the approximation – it was done more to ease the calculation and avoid going into the details.
Just wanted to show that >20% drop is easily possible. If a 20% drop was all that was required to go back to normal, some of us would have bought in 2005 (guesstimating here).
patriotz – thanks for clearing that up – i’m glad Mohican’s data is for SFH – i dont really want to pay $200k for 510sqft.
April 22nd, 2008 at 12:17 pm
“Tech Boom “I’ll be retired at 30, buy tech stock now or miss out!””
My own personal memory of the end of the tech boom was hearing one Computer Science prof airily declaring to another, some time in very late 1999, that he “simply would not accept” any investment returns under twenty percent.
I’m sure his Nortel returns were spectacular a few months later.
Nothing like this at all though, I’m sure
April 22nd, 2008 at 12:10 pm
“In 2003 the average detached was around 375k”
Typo, that should read 2001 of course.
April 22nd, 2008 at 11:47 am
No matter how obvious this gets, they all keep on eyeing a revival. Hope springs as eternal as stupidity.
U.S. Home Sales Plunge 19.3%, Prices down 7.7%
The sky isn’t falling but home prices are, and the plunge in the value of U.S. homes combined with tighter mortgage-lending standards is making Americans even more reticent about buying.
On Tuesday, the National Association of Realtors reported a worse than expected 2.0% drop in sales of existing single-family homes and condominiums in March to a seasonally adjusted annual rate of 4.93 million units compared to February. Compared to a year ago, sales were off 19.3%. The median price of a home sold last month dropped to $200,700, a decline of 7.7% from the median price a year ago.
Joseph A. LaVorgna, chief economist at Standard & Poor’s said in a note to investors Tuesday that falling home prices aren’t such a bad thing, “On one hand they are causing negative wealth effects and forcing some new mortgages underwater; but on the other hand, this is a necessary, albeit unpleasant, prescription for restimulating housing demand,” he said. Sales were expected to drop 1.6% to a seasonally adjusted annual rate of 4.95 million units, down from 5.03 million in February, according to the consensus forecast of Wall Street economists surveyed by Thomson Financial.
Lawrence Yun, the chief economist of the National Association of Realtors, said that a tightening of lending practices was stymieing some home shoppers, counterbalancing relatively low mortgage rates. “At the same time, many buyers continue to bide their time with a large number of homes to choose from, while other potential buyers remain on the sidelines.”
February homes sales were down nearly 24% from a year earlier. Sales of existing homes fell nearly 13.0% in 2007 to 5.65 million, the biggest decline in 25 years. The median sales price for single-family homes and condominiums dropped 8.2% in February from a year ago, settling at $195,900. The median price for single-family homes was down 8.7% from a year ago, the biggest decline in four decades.
April 22nd, 2008 at 11:25 am
Here’s a counter to the News1130 article:
U.S. Housing slump may exceed Depression: Shiller
http://tinyurl.com/62wq4a
….oh, my mistake….its different here
April 22nd, 2008 at 11:22 am
Re: multiples – well, a 100x rent valuation would make buying a lot easier. But isn’t that quite a bit lower than historical? Going on the price to rent ratio chart from financial planning – it looks more like 16-20x Annual(?) rent. Though, it only shows from 1992.
Mohican’s chart is for SFH. Yes, the multiples from 1992 forward have been above the historical norm.
Price/rent for SFH got down to 100 in the mid-80′s. That was about rent equivalence at the interest rate prevailing at that time. The annual multiple of 16 in 2001 was also quite close to rent equivalance. Remember interest rates were a lot lower then. There is no guarantee that interest rates will remain at the current low levels.
The multiple for condos should be a good deal lower than for SFH due to reasons discussed above. Maybe someone can give some data on how low they got for some properties in 2001.
April 22nd, 2008 at 11:21 am
Thanks Drachen that makes more sense. Personally I’d be thrilled with 50%… as long as interest rates aren’t 10% and I have a job.
April 22nd, 2008 at 11:15 am
krrish2,
You idiot, where do they have more people? Toronto or Vancouver????
I rest my case!!!!!!
April 22nd, 2008 at 11:14 am
Warren
He’s way off. In 2003 the average detached was around 375k, adjusted for inflation that’s 435k today. In reality detached is in the 900s now (I don’t have the stat handy, if I’m wrong please correct me). So even using only the 2001 start point for measuring we’re due over 50%.
If you use 1985 (which I believe is more likely the correct point) it was 125k (again detached) adjusted for inflation that’s 226k. Which would mean a potential for a 75% correction but historically in North America from the 1900s onwards there has been a 5-10% price appreciation every 20 years or so, so if you add that in we’re looking at about a 65% correction if 1985 is the year we left the “normal” curve.
If he is a banker I like the way he thinks but his math is surprisingly far off for someone dealing with numbers all day.
April 22nd, 2008 at 10:47 am
VB, do you have a link that would suggest a 30% drop is back to 2001 levels? I would say that is closer to 50%, because that was around when I bought.
April 22nd, 2008 at 10:44 am
The News 1130 story conveniently ignores the drop in sales. Even in a crashing market, there are a few fools ready to jump in at whatever costs. Personally, I know a few potential First Home Buyers who have given up in the last few months.
Vancouver Banker, I think it will be somewhere between 30% and 50%. Once local prices are down 30%, I’ll start lowballing like crazy.
April 22nd, 2008 at 10:37 am
Personally, I could see a price drop of between 30% (back to price/income ratio of 2001) and 50% (back to price/income ratio of approx 1985). The reason I can’t decide between those two is the data doesn’t go back long enough to decide which is closer to a historical average.
April 22nd, 2008 at 10:29 am
oh no:
http://www.news1130.com/news/t.....0709_10484
April 22nd, 2008 at 10:28 am
“The fifth highest number of visitors are coming from UBC and then we get a lot from the banks, TSE, Cannacord, law firms, VGH, the BC government and corporations (EA, Radical, eBay, Kodak, etc”
Wow, I wish I had “reading real estate blogs” in MY job description. ;>)
April 22nd, 2008 at 10:23 am
Yeah digi statistic canada reports indicate that “vancouver took over any other province in migration not toronto”isn’t it a rule of thumb to discribe what city deserve to stand out of crowd?
I recomend please do not mess with krrish2 he is very dangerous player just back off.
Digi your post is incomplete actually if you look in the link you had krrish is giving rant to emile and loggers that they have no merci for rich,poor,homeless,students and for pets that’s mean because of driving forces there is no help there is always some one sitting on the top and always some one sitting on the bottom.
you can not accommodate homeless and elders so rich people can not accommodate you that simplly means throw your money and watch the show no money go home.
no merci et all
April 22nd, 2008 at 10:23 am
He’s trying to convince himself that owning a crappy unit in an average location downtown is worth paying double what it should because in his own little unskilled labourers brain it’s more important to hold a mortgage than it is to have any other assets and he thinks it will continue to go up.
He’s looking for positive reinforcement and he thinks he’s making sense.
Is Dosh really a realtor? he seems far too stupid to have passed the multiple choice realtor exam.
Once again:
During the technology mania, valuation considerations
were dismissed due to fear of missing out.
(Is this real estate mania any different you ask?)
When a particular asset class delivers outstanding
returns over an extended period, investors
become convinced that there are solid fundamental
reasons for the trend. Theories are
developed to justify participation and disregard
valuation considerations (like unsubstantiated claims that immigrants will move here in droves). In the early ’70s, the
“Nifty Fifty” stocks like Polaroid and Xerox were
going to make money forever. At the beginning
of the decade, the Internet was going to render
traditional industries irrelevant (“do you think the internet is going away?!”. Today, growth
in China and India is expected to translate into
a permanent shortage of commodities.
Tech Boom “I’ll be retired at 30, buy tech stock now or miss out!”
Real Estate Boom “I’m a naive moron who works in a warehouse, buy real estate today and you can be like me!”
April 22nd, 2008 at 10:12 am
Please read this before replying to Krrish:
http://vancouvercondo.info/for.....c.php?t=48
April 22nd, 2008 at 10:02 am
krissh2 pretty much everyone on this board already lives in Vancouver, what are you trying to sell?
April 22nd, 2008 at 9:54 am
Krrish:
Are you saying you have a mathematical formula? I’d love to hear it!
Otherwise, comparing a bunch of oddball statistics is pretty meaningless (quite like yourself).
April 22nd, 2008 at 9:50 am
drachen,
you just need to compare the land size,weather condition and employeement rates- toronto vs vancouver the outcome is very easy to digest,open your mind,it’s all good when you are in vancouver.
April 22nd, 2008 at 9:47 am
There are some good agents out there – I’d point out Paul Boenisch who not only openly shares information of the market, he puts in the extra work of making daily statistics on REBGV listings and sales available on his website:
http://nvcondos.ca/
April 22nd, 2008 at 9:37 am
For those of you who are new here or just observing and wonder what to think:
Anti Pesto and Dosh are agents. The very fact that they are working so hard here shows several things.
1) They have lots of time on their hands.
2) Business is drying up. They are hoping to reverse some of the psychology which is rapidly turning against them.
3) Despite common belief agents do not have very good knowledge of the industry* (evidenced by AP’s misunderstanding of the price relationship of RE in Vancouver and Toronto over the past decades and their complete inability to provide any factual evidence to back up their claims.)
Do not trust Real Estate agents. They are not there to help you, they are there to earn a commission!*
* My apologies to the few good agents out there (yes there are some (their number does not include Dosh and AP)) who both know the market and care about their clients.
April 22nd, 2008 at 9:13 am
“if the filter wasn’t there the comment section would be unreadable.”
*cough*randallbard*cough*
Got it.