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June 2nd, 2008 at 9:01 am
In Stockton California houses that sold for $500k two years ago sell today for $200k. Of course Stockton is the foreclosure capital of the US right now, with 3 out of 4 house either in or on the path to foreclosure:
http://www.msnbc.msn.com/id/24883012/
This shows the danger of using up your market boosting tricks during a boom and absorbing future demand leaving little or nothing left to help cushion the bust. Nothing yet has helped stop the carnage in many US markets, not lower interest rates and not government bailouts. In Vancouver we’ve seen the advent of zero down 40 year mortgages and interest only loans, what will be left to keep our market from crashing hard?
June 2nd, 2008 at 8:42 am
Jun
“Com on, face it. It’s stupid, not going to happen.”
Yeah. Well that’s such a great contribution to the discussion. Would you actually care to provide a REASON why you might be right and we might be wrong or are you going to just let your arguments stand at the intellectual level of a four year old?
June 2nd, 2008 at 8:32 am
Former Vancouverite
“My prediction: Real house prices will be 1/3 of what they are today by the end of 2011.
Are you serious?”
Of course I’m serious. If you knew anything about Real Estate you wouldn’t be surprised. There are 3 ways to measure the “healthy market” cost of real estate.
1) Housing costs 3-4x annual income (some people will go up to 5). Median Household income is 62k. Median home price is 558k. So prices are 2.25-3x what they should be.
2) Rent to cost ratio should be between 100 and 150 in a healthy market. In 2007 it was 326 (and rents are likely to come down in a crash here).
3) Look at a graph (preferably one adjusted to inflation) map the curve ignoring any big features. Interpolate the curve into any current big features and that will be approximately where prices should sit. In this case we appear to have left the curve in the late ’80s. Median price in 1987 for detached was 150k. Adjusted for inflation it’s 250k and in the long term the after inflation adjustment is about 10-15% every 20 years so it should be around 287k. In reality it’s over 900k.
So, what’s your method for determining proper real estate pricing that tells you otherwise? Or are you just another one of those people who claims that their “feelings” are more valuable than scientific measurements.
June 2nd, 2008 at 7:26 am
It’s funny you guys just hope all day long for the price of real estate price in Vancouver to drop or bubble.
Actually you’re the one that’s funny jun. No one is hoping for the price of RE to crash, we’re just waiting for it to happen just like everywhere else in the world. jun you need to spin harder, find someone with more brains than you to help you post here, may I suggest SATV?
June 2nd, 2008 at 6:54 am
“Was that a joke? They have the olympics in 2012, FYI.”
Prices are up in LONDON=OLYMPICS12
June 2nd, 2008 at 6:24 am
believe it or not, the fundamentals here are stronger than the u.k. currently.
Wrongo. Vancouver and Kelowna have a higher price/income multiple than almost every market in the UK, including London.
http://www.fcpp.org/images/pub.....008600.jpg
June 1st, 2008 at 11:20 pm
the credit crunch has hit the u.k. quite hard, more similar to u.s. than here. re-assessment of mortgage risk has had a significant impact on r.e. demand. r.e. has tripled in u.k. as opposed to doubling here. believe it or not, the fundamentals here are stronger than the u.k. currently.
olympics-never have a positive or negative effect on a real estate market. non factor.
1/3 by 2011: would need to see the macroeconomic carnage trigger first before that would be a legitimate prediction. infusing personal pyschological issues into a prediction wastes the time of anyone reading this blog.
June 1st, 2008 at 11:16 pm
It’s funny you guys just hope all day long for the price of real estate price in Vancouver to drop or bubble. Com on, face it. It’s stupid, not going to happen. It’s almost waste of time hoping… I know people are going to argue. But that’s not going to help.
June 1st, 2008 at 10:56 pm
Why I find this interesting is that UK has … yet the bubble is bursting.
They don’t have the Olympics in 2010.
Nope. 2012 isn’t 2010.
June 1st, 2008 at 10:53 pm
former Vancouverite has no clue
June 1st, 2008 at 10:52 pm
Why I find this interesting is that UK has … yet the bubble is bursting.
They don’t have the Olympics in 2010.
Was that a joke? They have the olympics in 2012, FYI.
June 1st, 2008 at 9:11 pm
My prediction: Real house prices will be 1/3 of what they are today by the end of 2011.
Are you serious?
June 1st, 2008 at 9:09 pm
Why I find this interesting is that UK has … yet the bubble is bursting.
They don’t have the Olympics in 2010.
June 1st, 2008 at 7:21 pm
Hello Satv Krissh Krash, this story is just for you.
Btw, I noticed you seem to disappear from Blogville exactly the same times as Rob.
Biggest fall in UK house prices ever recorded:
Why I find this interesting is that UK has a land shortage, at least that’s what the pimps have claimed, has had no major interest rate hikes, and up to now no real economic shocks, unemployment is still very low, yet the bubble is bursting.
http://www.onlykent.com/200805.....-recorded/
June 1st, 2008 at 6:26 pm
Thank goodness its different here, because according to Bloomberg another British lender has their back against the wall…maybe its time for another nationalization?
http://www.bloomberg.com/apps/.....refer=home
June 1st, 2008 at 1:55 pm
Blueskies
“the buyers will keep their heads down. too scared to get into the market despite the pressure from RE types…”
Why do I have the feeling that there will soon be two types of people haunting the street corners of Vancouver.
The Homeless. “Can you spare a few dollars?”
And the Over-homed. “Buy a Condo for 350k?”
Both looking equally haggard and underfed.
June 1st, 2008 at 11:38 am
Sounds like the name of a porn star to me.
June 1st, 2008 at 11:21 am
Seems to be some distressed leaky condo sellers in New West. One building called Tiffany Shores has apparently just been nailed by a huge assessment.
Seeing lots of “For Sale” signs in car windows these days.
June 1st, 2008 at 11:17 am
the buyers will keep their heads down. too scared to get into the market despite the pressure from RE types….
“it’s a good time to buy…. please!”
June 1st, 2008 at 11:03 am
Typically during manias, first time buyers get priced out, and the only market players left are specuvestors who end up selling to each other, until the market collapses on its own weight.
However, during this bubble, when the affordability wall was hit, along came more creative financing aided by CMHC (whose top brass should be charged with crimes against the economy), and any remaining future demand was soaked up.
When prices fall, who will be left to buy?
If there is anyone left to buy? Who will be successful at selling to them, the big marketing machine, or the anxiety ridden, specuvestors, who are stuck with negative equity, and negative cash flow?
June 1st, 2008 at 10:49 am
NY Times article which contains a template for low balling sellers:
http://www.nytimes.com/2008/05.....mp;ei=5087
June 1st, 2008 at 10:33 am
Quite right, you don’t get foreclosures in a rising market because the owner has equity and can just sell and get cash.
June 1st, 2008 at 9:26 am
It looks like we’re entering the cycle when there’s some decent vulturing to be had, not in real estate yet, but in other stuff. Here’s a craigslist search I do occasionally:
leaving must sell
I was doing a search for ‘moving must sell’ but then I figured I’d narrow it down to people who are ‘leaving’ not just moving within the area.
I was suprised to see the doubling of foreclosures in the lower mainland, seems the market really has hit the affordability wall and is doing the turnaround.
June 1st, 2008 at 7:42 am
I don’t think a catastrophic collapse is really something I’d like to see.
Why not? It is something I look forward to. Are you being altruistic or motivated by self-interest?
June 1st, 2008 at 6:10 am
Tons of RVs and SUV’s for sale now. Desperate people call for desperate measures.
May 31st, 2008 at 7:27 pm
Has anyone noticed how much more The Vancouver Sun weighs these days?
also noticed there are a lot of cars for sale, and every one has an image attached…sign of the times?
May 31st, 2008 at 6:59 pm
Has anyone noticed how much more The Vancouver Sun weighs these days?
Must be all that ink for the RE advertisements.
May 31st, 2008 at 4:01 pm
Shiller is only successful in the short term if he is wrong,
Shiller is responsible for helping bring to life a brand new category of financial derivatives. “Wrong” for Shiller is not about price direction – it’s about price volatility. The more concern he can pump up regarding real estate prices – in EITHER direction – the more need their is for his derivatives. You do understand the Shiller indices have proprietary (ie, not disclosed) non-deterministic (ie, a person – not math – decides) inputs to the mode….right?
I like the index and have followed Shiller’s work for over two decades. He’s a sharp guy with, from time to time, some real interesting things to say.
But that doesn’t make him a saint or any less human than the rest of us…
May 31st, 2008 at 1:40 pm
Anonymous
A couple of problems.
1) The blogs which you’re referring to are, “mom and pop”, businesses, not multinational corporations raking in millions or billions of dollars a year. As such they are managed by people who are directly in touch with the situation and not executives who push the bottom line at all costs.
2) Shiller is only successful in the short term if he is wrong. It’s in his greater interest to be right and therefore a long term success (see Irrational Exuberance 1st ed.).
3) Unlike many of the contributors here you seem to have a real stake in things, otherwise why would you “err” on the side of increasing expectations of inaccuracy amongst proponents of the bear argument.
4) I think an intelligent person can read Shiller and the relevant blogs and the local papers and come to the conclusion that one is far more reliable than the other. The fact that Shiller et al. base their arguments on fact, history and economic principles rather than wishful thinking might have something to do with it…
May 31st, 2008 at 12:21 pm
>>>>>>>>>>>>>>>>>>>>>>>>WARINING:>>>>>>>>>>>>>>>>>>>>>>>>>>>
THIS IS NOT FOR MOTIVATIOAL REAL ESTATE SALES SEMINARS
I have just concluded a comprehensive in depth study, using the latest computing equipment, with the assistance of greatest minds on earth. My findings are:
There is a definite correlation between the level of intelligence and the percentage of income one pays for shelter.
The study included research spanning back many hundreds of years, and millions of people, and so based on this research I can claim with great confidence, that in Vancouver, Kelowna, and Victoria, there is a huge representation of low intelligence and paying a huge amount of their income for shelter.
As for other characteristics these fools might have in common, I will drill into the numbers a little deeper and report back to the forum.
Yes some realtor’s feelings were hurt during the research.
May 31st, 2008 at 12:15 pm
We’ll celebrate ‘global’ blogs like Calculated Risk, The Big Picture and naked capitalism and we’ll have our local blogs like the Popes.
TBP is advertiser-supported – just like the Vancouver Sun, the NYT, the Globe & Mail, etc etc etc. The more fuel writers like BR and CR can add to the volatility fire, the better their hit rate, the more money they make.
They’re not in this for “truth”, bud, these are full-time jobs for them.
And let’s not forget the most well-funded real estate “bear” of all – Mr. Shiller – who gets a lovely cut of all the futures trades deriving from his nifty little index. It is 100% in his interest to – shall we say – “err” on the side of increasing expectations of volatility.
Ain’t no virgins in this cathouse…
May 31st, 2008 at 12:15 pm
Warren
“I don’t think a catastrophic collapse is really something I’d like to see.”
Remember Japan. 10 years of depreciating home prices and a gradual bleed of the economy. Better to rip the band-aid off quickly and get it over with I say. I think in the middle to long term a catastrophic collapse is really the best result an educated observer could hope for.
My prediction: Real house prices will be 1/3 of what they are today by the end of 2011.
May 31st, 2008 at 12:13 pm
Regardless of what’s really going on the buzz about real estate throughout the city seems to have quieted right down.
The display centres downtown are totally dead (go check for yourself I did) . I don’t hear anyone talking about real estate in the elevators or at the Cafes where the action is!
No one’s asked me about real estate at parties the last few weeks….
What’s next?
May 31st, 2008 at 11:28 am
I feel even more sorry for the old naive people. The youngsters have a lot of time to fix their mistakes. For others, this is it, welcome to a frugal retirement.
May 31st, 2008 at 10:50 am
Patrioz! I agree but what pisses me off is why we always have to follow this stupid boom bust route. The best thing NOW for the Vancouver economy IS a collapse. Trouble is as you say a lot of young nieve people will be hurt and some of the more professional flipper leeches will get of scot free. I’d love to see those ones face a 110% retroactive capital gains tax for proceeding five years!
May 31st, 2008 at 9:40 am
I don’t think a catastrophic collapse is really something I’d like to see.
As opposed to what? How many more years of people destroying their financial futures on a misguided decision to buy, educated young people leaving because they see no future here, and real businesses leaving the province because they can’t get competent staff, while the RE parasites make even more money?
The 1981-84 collapse was great for the BC economy in the long run. It made the province attractive for educated and talented people and had a lot to do with the growth in high tech and film making among other industries.
Bring it on.
May 31st, 2008 at 9:22 am
Warren “I don’t think a catastrophic collapse is really something I’d like to see.” I don’t want to see this either but I kinda think it is inevitable. We have a self feeding economy the majority of which is based on real estate, when construction workers go (probably a 100,000 plus) we will see people who have no link directly to construction laid off permanently. That will include (suprise suprise) even totally secure government civil service, retail staff, and professionals such as engineers and architects. It pisses me off that a whole communities future goes down the drain for 10 years to repay the profits made by flippers who contribute nothing to society.
May 31st, 2008 at 8:27 am
Drachen,
As much as I’d like to buy tomorrow at a reasonable price, I don’t think a catastrophic collapse is really something I’d like to see.
From Paul’s graphs of the previous 3 years, you can clearly see that something significant is changing in 2008. That should be plenty of reason for prices to soften.
May 31st, 2008 at 8:15 am
Disappointing results on Paul’s NV numbers site. The second half of May definitely did not live up to the promise of the first half. The line continues upwards but only at approximately the same angle as in April. Still at this rate the market can’t hold out forever.
It was such a clean exponential curve right up to mid May too…
I suppose this is wishful thinking but is there any chance that MLS or local agents are engaging in behaviour that would artificially lower the numbers? Some time back it was put forth that some agents were listing multiple homes under one listing.
May 31st, 2008 at 8:01 am
If you meant some bloggers here may have lemmings syndrome, who tend follow the general consensus, then I don’t think the answer is a yes. Simply because, you will only visit this website with specific intentions. If your intention is to discuss the housing bubble, you will come here. If your intention is to discredit the housing bubble, you will come here too. If, your intention is like myself who likes to see the general consensus of the housing bubble and where the future will trend, then you will come here too. If your intention is to discuss American Idol, you will not likely come here. The blog site was formed with a specific conclusion in mind. The key here is to determine what is the general consensus for this conclusion and of course, it’s looking ever so grim.
Focus groups are commonly used by corporations, American Idol (or any idol series), politics and even in the military.
May 31st, 2008 at 6:35 am
“Remember, a collective pool of individuals who may possess a little bit of information helps form
a reliable conclusion which can not be denied.”
Isn’t there a danger of “group think”?
May 31st, 2008 at 5:47 am
Blogging like any public discussion forum can be made into a money machine. Just look at Intrade, an online foreign gambling site which has a bet going on the probability of a US recession. It’s currently sitting at 35%, where just a few months ago, it was at about 70%. This involves real money from a bunch of European betters.
Wisdom Of The Crowds published a while back and written by James Suroweicki documented that the power of individual insights combined together can produce a far more reliable prediction than a small number of experts in the field. Basically, I like to monitor this blog and Intrade because it gives me a clear idea of what might happen in the future, whether the US is going to have a severe recession (this looks like not to be) or are we going to follow a US style housing recession (this looks like it to be) as from the consensus of the bloggers here. Remember, a collective pool of individuals who may possess a little bit of information helps form
a reliable conclusion which can not be denied.
I’m not surprised that blogs like this will become commercialized only to pay for the operation and maintenance of the site and manpower. It is clearly undeniable that the comments are data that can be used to predict future events, why shouldn’t this information be mined and sold to a curious audience like myself?
May 30th, 2008 at 10:00 pm
“More likely blogging will become profitable and therefore corrupted by corporate money.”
I think profitability is in the works for Calculated Risk, but I doubt they could be corrupted.
May 30th, 2008 at 9:44 pm
More likely blogging will become profitable and therefore corrupted by corporate money.
You don’t have to wait for that, for the right sum I’ll start up a blog and advocate for most any argument you want, I have bills to pay.
May 30th, 2008 at 9:33 pm
tn: the strength of the surrey condo market has suprised me the last couple of years, but no doubt a lot of supply is in the works and in the past demand can be finicky in surrey. the surrey condo market was in the dumps from about 96-2004. it used to be challenging to get decent tenants in surrey, the demographics may have changed now though. i used to own a couple condos in surrey but sold them in 2003. despite good cash flow there were tenancy issues and strata counsel and property management issues ongoing. the surrey condo market is more interesting than most and will continue to be so. indeed any weakness in the market may be magnified in the surrey condo market.
May 30th, 2008 at 7:08 pm
More likely blogging will become profitable and therefore corrupted by corporate money.
No doubt, money will always try to work its way in, and it will be cyclical like everything else, but I am confident that the trend over time will have more of the collective intelligence of society aware that whenever anyone proffer’s an opinion the first question that will come to mind is, “are they trying to make money off of this”.
And yes, that was one hell of a run-on.
May 30th, 2008 at 6:41 pm
“We’ll celebrate ‘global’ blogs like Calculated Risk, The Big Picture and naked capitalism and we’ll have our local blogs like the Popes.”
More likely blogging will become profitable and therefore corrupted by corporate money.
May 30th, 2008 at 6:16 pm
They said that vacancy rates were low therefore rental apartment was a good investment.
No, they said “But with Metro vacancy rates hovering below one per cent, investors still view apartments as a good investment.”
That’s a tautology really. If people are buying, it’s because they think apartments are a good investment.
May 30th, 2008 at 5:53 pm
I am continuing the discussion from the last thread as to how much a square foot units will sell for after the correction. I stated between $100-$200/sqft. Some believe $300-$400’s. I assumed we were taking about downtown/yaletown condos. I was wondering where do most people think condo’s in surrey will settle at. Of Course i think in the short term prices may shoot below this, but I personally wouldn’t pay more than $80/sqft for a condo in surrey. Wondering what most think of this.
May 30th, 2008 at 5:44 pm
…and further to my post above, a news 1130-like station that JUST reports the facts would be useful for a society that operated like the above.