The US Housing Crisis is Over
Here’s a more bullish counterpoint to ‘Chicken little’ Lereah’s opinion that the US housing market is in for more pain - The Wall Street Journal is declaring that after 3 years of decline the US housing bust is over.
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.
How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won’t happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what’s going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
Thanks to BCbuds for the link (which will expire in 7 days)
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May 7th, 2008 at 7:49 am
May 7th, 2008 at 8:14 am
In other words, the derivative of the trend, which is itself the derivative of the price, has changed from negative to positive. Well sorry folks, a bottom means the first derivative has changed from negative to positive. You’re describing an inflection point.
There has been a lot of “second derivative” spin from the RE industry during this bust, but I would expect a wee bit better from the WSJ.
Go redo Math 12 and call us back when you’ve passed. If that’s too much trouble, maybe you should just change your name to Fox Newsrag.
May 7th, 2008 at 8:48 am
Despite that, I agree with the article. Now let’s see this Chicken Little blog light up with numbers and charts “proving” it’s wrong and you’re right. Patriotz, the “Go redo Math XX and come back…” is getting old. Maybe you should go back and redo English 8.
May 7th, 2008 at 8:55 am
Second hand the big guys in wall street calling for bottom. As capitalist they want optimism it is better for the market. Anyway they were wrong too and see nothing coming. I would not listen to them either.
Then the only valuable meter of what the bottom or at least the “fair price” should be is something related to the price/earn ratio. Check the rent, check the price and see if it is worth or not. I think that is the only somewhat sensitive parameter. But Mr Lambda is not able to use a calculator and seems to greedy or dumb to only think about econ 101. I wonder if I should listen to the P/E ratio…
Should we try to stop this insane rat race instead? We are loosing our time trying to gamble on something we are not able to comprehend and even less to control. The biggest challenge is not going to be able to predict the next good deal in housing or food or whatever else, but being able to concentrate on the hundred of other massive problems our society have to deal with…
Suggestion anyone? Back to a communist”ish” system. You got a house depending on your type of job, where you live your number of children etc etc ?
lol!!!I bet there is going to have some reaction here. I read the blog since a while now and I just realize this is the first time I see “communism” written.
Wait and see.
May 7th, 2008 at 8:55 am
May 7th, 2008 at 9:01 am
The main argument for a local house price crash is based on arguments of affordability problems here. Incomes are dropping while prices are going up. That can’t end well.
If you agree with the point that ‘affordability’ is the issue that caused the US housing market crash and the restoration of ‘affordable’ house prices due to a bust is what will turn it around, whats different about Vancouver? Why does affordability matter in the US but not here, even though its worse in Vancouver than in most of the US?
May 7th, 2008 at 9:05 am
May 7th, 2008 at 9:07 am
May 7th, 2008 at 9:14 am
But that’s not a bottom in prices though - which is the only kind of bottom a consumer might be interested in. Prices in the states are going to keep going down until their inventory levels shrink. My guess is that prices in the U.S. won’t bottom for at least another couple years.
May 7th, 2008 at 9:17 am
Cost= the price paid to acquire, produce, accomplish, or maintain anything:
If you earn more money you can AFFORD higher COSTS.
Have you checked Coal harbour prices out versus Manhattan?
Of course you haven’t, just like you don’t know what the difference between cost and afford ability are.
You must feel pretty silly right now.
May 7th, 2008 at 9:18 am
May 7th, 2008 at 9:25 am
It’s bullish because it predicts prices will soon rise again, and that’s a bullish perspective.
And it won’t happen. Housing busts hit bottom and stay there for several years. After a bust, people become risk-adverse and become less eager to into debt for several hundreds of thousands of dollars with no promise of immediate appreciation, even if prices have dropped significantly at that point.
May 7th, 2008 at 9:26 am
May 7th, 2008 at 9:28 am
Maybe we could find a US city thats more in line with Vancouver in terms of income and population and then discuss affordability comparisons.
May 7th, 2008 at 9:38 am
Or Denver, Tampa, St Louis or Portland all of those are larger cities.
According to statscan website http://www(dot)statcan(dot)ca/
Vancouver had just under 2.2 million in 2006.
May 7th, 2008 at 9:53 am
The reality is that prices will keep dropping in some jurisdictions and won’t in others. Making a sweeping comment that “The US Housing Market has hit bottom.” is ignorant.
But it will be another few years until the ***PEOPLE*** start working their way out of this mess. Not to mention the financial companies. And if the financial companies don’t smarten up, it will only extend the pain later.
May 7th, 2008 at 9:54 am
May 7th, 2008 at 10:37 am
May 7th, 2008 at 10:40 am
NYC is actually cheaper in absolute, i.e. dollar terms, than Vancouver and is way more affordable. i.e. has higher incomes to boot.
If you think I’m joking, just get on http://www.realtor.com and start looking. Remember to adjust the radius for population - use the radius that gives the same % of the population living within it. Also try to look at the same socioeconomic level - for example the North Shore versus Nassau County.
And leave Manhatten out of it - Vancouver has nothing remotely close to the high-income downtown jobs that it has, so there is no valid comparison.
May 7th, 2008 at 11:02 am
May 7th, 2008 at 11:11 am
NYC’s economy is highly dependent on Tourism, Finance and Media: all industries that are going down, down, down. Do you all really think that everyone who lives in NYC makes stock-broker salaries?? The minimum wage in the US is lower than even BC’s pathetic min wage.
What does this have to do with Vancouver? You tell me, everyone here is constantly comparing the RE market here to America’s, except when it doesn’t jive with their doomsday predictions.
May 7th, 2008 at 11:32 am
May 7th, 2008 at 11:33 am
May 7th, 2008 at 11:40 am
Many films and tv shows are shot here making us famous on the culture front.
Of all those films and tv shows filmed here, which ones have a story that is actually set in Vancouver? Pretty much every film or tv show filmed in Vancouver has a plotline where they substitute a locale in Vancouver for another city. Go watch Rumble in the Bronx, there is great poorly done scene where they are supposed to be in NYC and you see the North Shore mountains in the background when they film on top of the old Woodwards parking lot, ha ha ha.
Anyway, sorry to post this link again but I’m digging for anyones view on this coal harbour FC North data I’ve been compiling for a few months:
http://www3.telus.net/YLTNBoomerang/Coa … 0North.xls
May 7th, 2008 at 11:45 am
Are you even serious?
May 7th, 2008 at 11:56 am
New York is one of the safest cities in North America, much less crime per population than Vancouver.
May 7th, 2008 at 12:03 pm
As in “A Beautiful Mind”. Completely delusional.
What’s it like living in your own little world?
May 7th, 2008 at 12:08 pm
Well in that case I guess they will then start using the term “stock market bottom” to describe a bottom in IPO’s, which are analagous to housing starts.
Who’s kidding who? A market bottom means a price minimum.
If you’d like a critique from someone with much better credentials than me, see:
Calculated Risk
Most people think of the bottom in terms of price, and in most housing busts, starts, residential investment, and new home sales all bottom long before housing prices bottom. The linked article seems to confuse a bottom for housing starts with a bottom for housing prices, and that is incorrect.
I would say deliberately confuse.
May 7th, 2008 at 12:17 pm
And somehow working at Starbucks for minimum wage in Canada is better??
Vancouver #2 industry has always been tourism (service jobs that pay minimum wage)
“Vancouver is the largest city in North America”
Uhhh
1.Toronto - 5 million
2.Montreal - 3.6 million
3.Vancouver - 2.1 million.
“Many films and tv shows are shot here making us famous on the culture front.”
Not anymore, you should re check your facts as the Americans aren’t filming here and the reason they use Vancouver is because it looks like many other generic American Cities.
There’s no way two people that ignorant could have posted back to back, it’s obviously the same baby bull.
This is getting fun, stick around Bulls, it’s going to be fun watching you have temper tantrums when you realize…..
May 7th, 2008 at 12:21 pm
Mr. Beautiful,
I don’t think they will move to cheap place in America unless- we must ride them (bears)out up to the border,Come on bears please see the door out side,out of “the best place on earth”.
May 7th, 2008 at 12:24 pm
You are just pulling this shit of your ass, aren’t you?
FYI, even though crime is supposedly down in NYC, it is NOT safer than Vancouver! Guns are rampant in the city, and Manhattan has turned into a Police State after 9-11. You see gun-wielding police on nearly every street corner in Manhattan, and can’t get into a public building without being interrogated by Rent-A-Cops. The police have far more power now than before, which is why police brutality is on the rise all over America, including NYC. Even stores like Best Buy require that your bags and receipts are inspected before you can exit the store, and if you don’t, you can to be handcuffed and detained by a fucking security guard!!
Trust me, Vancouver is a MUCH nicer place to live than Manhattan. Anyone who says the opposite clearly has never even been to Manhattan, let alone lived there.
May 7th, 2008 at 12:25 pm
Home Sales Down
May 7th, 2008 at 12:27 pm
May 7th, 2008 at 12:32 pm
No one is saying that Vancouver isn’t a nice city. It’s just common sense that an overvalued asset will equalize once the speculators start panic selling and there are no buyers. You can make up all the stats you like and ramble incoherently but this is beyond your control. You don’t work in the industry, you have no knowledge of even the most basic Economic principals, you’ve admitted you can’t use a calculator, you think Vancouver is the largest city in Canada, and think that warehouse workers make more than dentists.
Vancouver was a nice place in the 1970’s and the market still crashed in 1981. The Mountains and the water didn’t go anywhere.
The market surged in 1989, sure enough there were mountains, beach and mountains then too.
All of Hong Kong was going to move here between 1989 and 1997, So what happened?
Oh right, you only moved here five years ago and since you’re either completely ignorant or low functioning you have no idea!
May 7th, 2008 at 12:33 pm
2.Montreal - 3.6 million
3.Vancouver - 2.1 million.
Vancouver 2,289,900 (2007)-2,116,581(2006)
Mr beautiful,
BDK is right Vancouver is third largest city in Canada but third largest means “LESS LAND MASS” compare to Toronto and Montreal also good weather condition compare to those cities clean environment,less snow shovling,better rates of pay and beautiful city.Migration is towards Vancouver from toronto and montreal not from Vancouver to those cities.Vancouver,B.C the city of action and better services.
May 7th, 2008 at 12:34 pm
Wow you are like so intelligent and stuff. How do you do that with such a tiny pea-brain? Are you a storyteller at Starbucks or something? You’re real good at making shit up. Make up some more!
May 7th, 2008 at 12:36 pm
So when did you move from Manhattan? Where did you live in Manhattan? What did you do there?
They inspect your bags at Future Shop and Best buy here too, is Vancouver a police state?
By Michael Powell
Washington Post Staff Writer
Friday, November 24, 2006
“It is one of the least-told stories in American crime-fighting. New York, the safest big city in the nation, achieved its now-legendary 70-percent drop in homicides even as it locked up fewer and fewer of its citizens during the past decade. The number of prisoners in the city has dropped from 21,449 in 1993 to 14,129 this past week. That runs counter to the national trend, in which prison admissions have jumped 72 percent during that time.”
May 7th, 2008 at 12:39 pm
You never lived in New York, you used the name Rob A. and ran away like a girl.
Now you’re back using a third name spouting off and getting smacked down like a little girl.
And I said 1% milk and you gave me skim! No tip for you!
May 7th, 2008 at 12:42 pm
What are you talking about? Those lights control train traffic in the tunnels, they have nothing to do with Police or No Police. There are ALWAYS police in all the subway stations in NYC, often they are wearing civilian clothes the blend in.
bdk/Tony Danza/patriotz, whoever you are, you are ill-informed and have no clue what you are talking about. Time to get off the bus.
May 7th, 2008 at 12:44 pm
May 7th, 2008 at 12:48 pm
I’m referring to the lights that are above ground near station entrances, not to anything in the station itself.
May 7th, 2008 at 12:52 pm
May 7th, 2008 at 1:01 pm
NYC,
I beleive you lived in New York because the above process is a part of new security measure taken after 911 now police can search on all residents without any warrants and police specially comute around subway and train areas.
May 7th, 2008 at 1:03 pm
May 7th, 2008 at 1:05 pm
sorry your name poped up in the name space on this software.
May 7th, 2008 at 1:09 pm
May 7th, 2008 at 1:15 pm
Where did you live in New York for 22 years?
What did you do there?
How did you end up in Vancouver?
If all you can do is swear then your not fooling anyone.
So far you’ve spouted off nonsense then been smacked down and then you lash out and start to cry because you’re not fooling anyone.
A vacation to New York with your Mum doesn’t qualify as living in New York.
May 7th, 2008 at 1:15 pm
May 7th, 2008 at 1:22 pm
May 7th, 2008 at 1:33 pm
You made up some lies about living in New York and got called on it and then lashed out and swore like a little girl.
“I have nothing to prove to you”
*Okay so why did you claim to have lived in New York? Are you just a compulsive liar?
“You’ll just continue to believe your own bullshit no matter what I say”
*What is it you tried to say?
That you lack knowledge but still want to voice an opinion?
Obviously if you lived in New York you’d have known what area you lived in, or where you worked. Your lies aren’t even plausible, you’re the one who’s been bullshitting and now you’re mad because everyone laughed at you.
You’re a goof
May 7th, 2008 at 1:47 pm
this lmao
May 7th, 2008 at 1:47 pm
Do you know who Pale Male is?
Do you know what store is on the SE corner of 57th and Fifth?
How about the famous store that’s on the NW corner of 80th and Broadway?
Do you know the name of the Mexican restaurant across from Lincoln Center?
Do you know what the 92nd Street Y is famous for?
What’s the name of the new building that recently went up in Columbus Circle?
Do you even know where Columbus Circle is?
I know all the answers to the above, I doubt you do.
You’re an assclown. Continue to amuse us.
May 7th, 2008 at 2:00 pm
If you are poster previously posting as ‘t.hu’ you have to admit these two statements don’t make a lot of sense:
first post on the ’savings and income poll’
FYI, I just found this blog a week ago and have been reading the comments and decided to make my first post.
a day later on the Vancouver sun ‘dissappearing comments’ story:
I’ve seen some of you here bitching for a LONG time about the same shit: THE SKY IS FALLING, THE SKY IS FALLING! Prices, Mortgages and Listings, OH MY!
Maybe in New York ‘a long time’ indicates time periods of up to a week?
May 7th, 2008 at 2:11 pm
Trick question. 57th and Fifth are numbers.
May 7th, 2008 at 2:17 pm
Do you know who Pale Male is?
Yes., the Beresford Apartments in the upper west side and before that near Central park.
Do you know what store is on the SE corner of 57th and Fifth? Trump Tower?
Yes, Formerly the IMB Building?
How about the famous store that’s on the NW corner of 80th and Broadway?
Yes, The Hotel Wolcot
Do you know the name of the Mexican restaurant across from Lincoln Center?
Yes, Rosa Mexicana
Do you know what the 92nd Street Y is famous for?
The Hebrew organization?
What’s the name of the new building that recently went up in Columbus Circle?
The Museum of Arts and Design?
Do you even know where Columbus Circle is?
New York?
Okay I answered your questions, so what did you do in New York and what are you trying to contribute to this blog?
May 7th, 2008 at 2:23 pm
Why am I being defensive? Because I’m being pestered by an assclown.
I work in the interactive marketing/advertising industry. Vancouver is very attractive for a number of reasons, not least of which is a better quality of life than is possible in NYC. I paid $2,900/month for a 650 s.f. 1BR apt. in NYC (a good rent in NYC). I am now paying under $1,800/month to own a 2BR 780 s.f. condo here in Vancouver. Plus, I don’t have to pay $400 per month for health insurance here, high city/state taxes, and I can marry my life partner which I can’t do in the US.
Overall, I’m very happy I made the move to Vancouver from NYC.
May 7th, 2008 at 2:34 pm
May 7th, 2008 at 2:35 pm
May 7th, 2008 at 2:48 pm
Do you know who Pale Male is?
Yes., the Beresford Apartments in the upper west side and before that near Central park.
Wrong. It’s a hawk that lives in a nest on top of the Beresford apartment building on CPW. A few years ago this famous hawk became even more famous when the building’s co-op board decided to remove the nest, displacing the bird. Mary Tyler Moore, who lives in a nearby building, was one of those protesting in the street to return the nest.
Do you know what store is on the SE corner of 57th and Fifth?
Trump Tower? Yes, Formerly the IMB Building?
Wrong. Tiffany’s. Trump Tower is not on the corner, it’s in the middle of the block next to Tiffany’s. And Trump Tower was never anything else, it was a brand-new building built in the early 80s. Perhaps you’re thinking of the building on Park/Fifth, which was an IBM building many years ago?
How about the famous store that’s on the NW corner of 80th and Broadway?
Yes, The Hotel Wolcot
No. Zabars.
Do you know the name of the Mexican restaurant across from Lincoln Center?
Yes, Rosa Mexicana
You got one right! Best Mexican food in NYC, IMO.
Do you know what the 92nd Street Y is famous for?
The Hebrew organization?
No. It’s famous for it’s concert music series.
What’s the name of the new building that recently went up in Columbus Circle?
The Museum of Arts and Design?
Nope. The Time Warner Center. The Museum of Arts and Design is in Columbus Circle, but, isn’t a new building, it’s in an old building that was converted into a museum. Do you know what that building used to be?? The Time Warner Center building stands where the old NYC Convention Center once stood.
Do you even know where Columbus Circle is?
New York?
Duh, no shit. Let me help you. It’s on the West side in midtown Manhattan at 59th/8th Ave. It’s one of the few circular roads in NYC that has a huge fountain the center. It’s also where Central Park begins. It’s also one block away from the Plaza Hotel, which is right across the street from the 2nd Apple Store.
If you lived in NYC, it must have been for 1 week.
May 7th, 2008 at 2:59 pm
Well, they are sure OK for me! The NYC RE market became WAY out of reach for me in the early 90s, and is now only attainable for the wealthy.
Here in Vancouver, it’s still relatively affordable to buy. Yes, prices have shot up hugely in the past few years, but, that happened almost everywhere. I just don’t get why so many people here are essentially hoping for a blood-bath in the RE market. That wouldn’t be good for anybody, including the “bears” who have $300K stuffed in their mattresses.
But I understand, I was in the same position while in NYC. I kept waiting and waiting hoping the “Big Correction” would come making prices more like they were years ago. It never happened, and it made some people bitter and angry. That’s what I see happening here, too.
May 7th, 2008 at 3:03 pm
I’m glad the move to Vancouver has worked out for you. I’m sure you’ll agree that people will pay a lot of their incomes to rent/own in a city they love. In Vancouver they can rent for a lot less than what it would take to buy. To be fair Manhattan had a bit of a bubble of its own. The price-rent ratios in NYC and Vancouver are now relatively high but historically they average less. Enjoy renting.
May 7th, 2008 at 3:13 pm
Huh? It’s not a trick. 57th Street intersects with Fifth Avenue in NYC.
Is it really so hard to believe that someone from NYC would choose to move to Vancouver? I’m shocked! I thought Vancouverites were proud of their beautiful city? I know I am! Snow-capped mountains to the North. Ocean to the South. No water shortages (this is a BIG problem in the US South). New, wonderfully-planned city. Gorgeous parks everywhere. No(few) guns! Low crime. Bill of Rights that doesn’t discriminate against gay people. New transit system that works. Stable infrastructure. Huge potential for future growth. And best of all, No George Bush!
Now the assclowns will start calling me a troll, no doubt.
May 7th, 2008 at 3:13 pm
News1130 File Photo
Wednesday, May 07 - 02:46:25 PM
Jim Goddard
VANCOUVER (NEWS1130) - A new survey says people in Vancouver are the most willing in Canada to consider buying a condo for investment purposes. A TD Bank Financial Group survey found 52% of Vancouverites would consider buying a condo for investment purposes.
However, the reality is that only 5% of Vancouver condo’s have actually been bought as an investment. Calgary has the highest number of condo’s owned strictly as investments at 10%.
And what are people looking for when they buy strata? The first of course is price, but 99% of condo buyers are also looking at building security. Energy efficiency is third on the condo ‘want list’.
The survey found if you’re trying to sell a condo, lack of parking and insufficient building security are sales killers.
May 7th, 2008 at 3:18 pm
All stats 2006:
Violent crime rate (per 100,000 pop) for Vancouver: 1089
Violent crime rate (per 100,000 pop) for NYC: 638
Prop. crime rate (per 100,000 pop) for Vancouver: 5874
Prop. crime rate (per 100,000 pop) for NYC: 1879
So who’s pulling what out of their ass? nyc you’ve never even been to New York City let alone lived there. Lying POS.
Links,
Vancouver: http://tinyurl.com/5tmvfa
New York City: http://www.fbi.gov/ucr/cius2006/index.html
May 7th, 2008 at 3:26 pm
You have nailed down the bears today here you got invitation to join the ring in friday free for all be there from 9 am to onward.
May 7th, 2008 at 3:27 pm
May 7th, 2008 at 3:35 pm
nyc, thanks for posting BTW. What you’re saying is that certain areas of Vancouver (as Manhattan is an area of New York) are expensive and will remain so. It would normally be unrealistic for a barista earning $15/hour or whatever to hope to afford an appartment in Manhattan. So he lives in Queens or Jersey or whatever. The stockbroker pulling down $500K before bonuses, now he can afford Manhattan no problem.
The same is true of Vancouver. Some neighborhoods will require higher incomes. The problem is, as a region, Vancouver is too expensive for the total income by historical standards, even in the more affluent areas. Maybe things will be different this time but ultimately the incomes (and rents) do not support the prices and this has to correct either by rising incomes/rents or falling prices.
May 7th, 2008 at 3:38 pm
This is an awesome city to live in, this has been established.
” prices have shot up hugely in the past few years, but, that happened almost everywhere”
*prices have also dropped everywhere.
If you lived in New York you’d have been a bit more cautious about waltzing into a new town and buying at it’s peak. You also seem mighty naive for someone who claims to have spent time in New York.
The question remains, what are you doing on this blog?
Are you just here to hurl insults at people?
Is it common for interactive marketing people to swear as much as you do?
Did your workplace sponsor you to immigrate?
Was it because you have an ability to swear? Judging from what YOU have written you are not intelligent and have a bad temper.
But at least you made a friend in Krissh, he was after another member of this board and actually stalked him! Maybe you can be so lucky!
May 7th, 2008 at 3:45 pm
I don’t think there’s much point in debating the small group of assclowns here who hide behind their numbers and charts and who have nothing but rude comments for anyone with the slightest difference in opinion.
This blog is just an outlet for some to express their hostility and bitterness. But kudos to the blog owner for attempting to appear unbiased with today’s WSJ quote, even though that paper has little credibility anymore since being bought out by Rupert Murdoch.
May 7th, 2008 at 3:45 pm
As to the permanently high and unaffordable plateau in NY, according to case shiller NY, NY is 9% off its June 06 high.
May 7th, 2008 at 3:45 pm
Stop living in La La Land!!! The correction is already on its way. April is when price increase happens. Has it????????
Rather than making useless argument that don’t make sense, why don’t you just sell your property and stop loss.
If your an agent, find a real job
May 7th, 2008 at 3:47 pm
May 7th, 2008 at 3:51 pm
Don’t feed the trolls then. Barking at my neighbour’s dog never makes him stop barking. I don’t know if there’s enough critical mass of inoffensive comments here to make it worth your while though. Thanks for the interesting perspective nonetheless…
May 7th, 2008 at 3:58 pm
I don’t know why you always screwd up close to your tail and tug.
friends are friends even bears are my friends that’s why i feel like assisting them no matter what they make out of this but in some point of time in the future you guys can’t complaint,you won’t be able to say that
“information was not available to you when it was most importent to you”
take a recent comment from yesterday those 10ft.piller on spanish bank and english way that 30% paid of mortgage and 121% appreciation.
$400 saving from medical insurance $500 saving per 300k on interest rates $2000 over million,Tax rebate for first time buyers upto $7,000 and cmhc requirement down to 20% from 25%,prices that looks sky rocketing are still at rock bottom prices compare to blah blah cities of this world.
I have nothing to do with Sonika or Miss but I just hook them up by reading their brain because we don’t have too many ladies around here that’s why I food them to make their $$$’S tight.
May 7th, 2008 at 4:01 pm
May 7th, 2008 at 4:08 pm
What were you doing looking for scullboy on Chilco?
May 7th, 2008 at 4:14 pm
“The same is true of Vancouver. Some neighborhoods will require higher incomes. The problem is, as a region, Vancouver is too expensive for the total income by historical standards, even in the more affluent areas. Maybe things will be different this time but ultimately the incomes (and rents) do not support the prices and this has to correct either by rising incomes/rents or falling prices.”
Okay, this is partly why I started coming to this and a few other blogs, to get a real-world, unbiased insight into the RE market instead of sensationalist proclamations bandied about by some.
I’m not really trying to compare Manhattan to Vancouver. I am only using NYC as a reference because that’s what I’m most familiar with. Your comment about incomes not being able to support RE prices, even in affluent areas, is interesting. Who is buying all this RE, then? I currently live in the False Creek area, and condos in the building next door are listing AND selling for over $1,000 per s.f.! I do think that’s kind of high myself, but, who was/is buying these condos? They all seem to be mostly occupied.
Everyone always talks about Vancouver’s movie and gaming industry, but, what about the natural resources that BC has that the rest of the world needs: Lumber, Fish, Oil, Clean Water, Cheap Narcotics, BC Bud?? It seems that BC has a rich supply of things the world wants.
Also, I see the Olympics denigrated here often. Why do so many here believe the Olympics won’t have any significant benefit to the city? It puts Vancouver on the International Stage. Sure, Vancouver might blow it, but, if Greece can get their act together, I’m sure Vancouver will have no problem. I think the Olympics will be very good for the city just because of the exposure. When people see how stunning the city looks on TV, they’ll want to come here! They will!
bdk, there’s no point in answering any of your inane questions because 1) they have no relevance to this blog or topic, and 2) you wouldn’t believe my answers anyway.
May 7th, 2008 at 4:24 pm
This Tank and well’s are for the investors not for the genuine home owners.the early you going to get in the early you will be able to pay back your mortgage and the rest is helpful to move forward crash is a incident to call but it does not hurt some one if you can manage monthly payment for the term.
I never went to check her if you read above carefully you have got an answer but i am worried if those hotties read all this may be I won’t be able to play next round.
May 7th, 2008 at 5:09 pm
Let me weigh in here. Much of the selling activity for the condos you speak of would be two-income couples who are likely mortgaging themselves to the hilt and have very little down. Take a couple making $100,000. They buy a 700′ condo at $800/ft for $560,000. They put 5% down leaving a balance of $532,000. They get a 40 year amortization mortgage which at today’s rates might cost them $3,000 per month, or 30% of their gross income not including taxes, strata fees etc. Its more than doable, risky as it is being as I expect a major correction over the next two years.
Presales are often sold to investors who do not require more than 10, 20 or 30% money in, depending on when they buy, to secure the unit before is occupy-able at which time they can flip it. Persons who are flipping now are probably doing alright and many of them would be making out like bandits. Persons buying presales now, are in for a major shock in my opinion.
At any rate, there are two examples of who is buying, not including move-up buyers with lots of equity and other first time buyers with gifts from their parents.
As to the Olympics, a noted local economist studied the effect of both summer and winter olympics in major North Amercian cities and some offshore. Her conclusion was the effect on real estate prices was nada, other than some minor bumps coincidental with the announcement of having had the olympics awarded. Take a step back and ask yourself why a two week sporting event held in the middle of the winter, only part of which is actually held in Vancouver would make a differnce in real estate prices. Expo 86 was a much bigger deal, lasted six months and was held entirely in downtown Vancouver. Our real estate market was flat as a pancake leading up to, during and for some time after Expo 86 however.
May 7th, 2008 at 5:14 pm
May 7th, 2008 at 5:21 pm
OK obviously you are new here nyc, I’ll give you that. The problem with all of our resources that you mention above is that no one wants them when our dollar is so high, it costs more to buy those products from BC than it does from the US now.
Also the price of lumber is as low as it has ever been in recorded history and housing starts are at a multi decade low in the US as the article referenced in this post mentions. So if you want to be really objective you will realize that BC has little more than construction of condos and Olympic venues and a few natural gas wells sustaining our economy.
May 7th, 2008 at 5:36 pm
I’m glad that you like Vancouver, I do to, thats why I live here. By the way, what do you make of the fact that condo prices dropped last month? Thats unusually for the spring I thought. Just a blip? Do you think its a good time to buy now what with the large number of properties on the market or do you think micro-analysing the market is a waste of time?
May 7th, 2008 at 6:05 pm
wow, sorry but not good examples. Forestry is in crisis, this is common knowledge, producing costs are higher in some cases that market price. Fish is pretty much dead, Oil … there is almost none produced in BC, bit maybe in the Peace, clean water … maybe one day but no one’s making money from that now.
Maybe natural gas and its exploration might have been acceptable example. As well as coal and some specific metals/minerals. But with 28K of the new 55K jobs (source: The Province) created in the last year in construction and RE is a big pumper.
May 7th, 2008 at 6:41 pm
highest property crime rate in any city in the US or Canada…….why??
because a massive homeless, drug and HIV problem that keeps growing……the UN said its time to wake up.
the highest number of 40 year mortgages are in Vancouver, which the governor of the bank of canada just declared as Canada’s sub prime!!!
It rains and its depressingly dark and grey for half the year……..give me sun and snow any day!!!
So if you can get over that you are never going to retire with a 700 ft condo and a 40 year mortgage, probably have some druggie breaking into your car right now and just smoke something and look at the ocean and mountains……….
Vancouver is the greatest place to live!!!
May 7th, 2008 at 6:48 pm
May 7th, 2008 at 7:11 pm
quote
“Here in Vancouver, it’s still relatively affordable to buy. Yes, prices have shot up hugely in the past few years, but, that happened almost everywhere. I just don’t get why so many people here are essentially hoping for a blood-bath in the RE market. That wouldn’t be good for anybody, including the “bears” who have $300K stuffed in their mattresses. ” end quote
Why do you think that affordable real estate is not good for anyoneÉ High prices are good only for banks. Are you to dim to understand thisÉ
May 7th, 2008 at 7:14 pm
According to local experts quoted in the MSM, mostly locals. We know the savings rate in Vancouver is negative, meaning the mortgage debt levels here are high. With the median family incomes around $65K or so this must mean high loan values. I think it’s a pretty simple case of lots of debt and nobody asking too many questions as long as prices are rising. And yes this sounds familiar.
The rich foreigner argument is weak IMO and not borne out by any data I’ve seen.
“It puts Vancouver on the International Stage.”
For 2 weeks. There isn’t much correlation between the Olympics and house prices in other cities. It has brought in federal money which is good but it has also meant the provincial government taking on a fair chunk of debt as well. You know what Vancouver weather can be like in February so let’s all hope for a 2 week sunny stretch in 2 years’ time.
The Olympics have meant a lot of construction spending which means, along with the residential construction boom, jobs and the unemployment rate is close to historic lows. Almost all the drop in unemployment in the past 5 years has been due to construction and real estate jobs and these workers, with the help of stated income mortgages and lax lending, have been able to afford a piece of the real estate pie. These jobs are notoriously cyclical so lets all hope they have budgeted properly for leaner times.
The bear argument is pretty simple: price/rent and price/income ratios are very very high compared to the long term average. The reversion to the average means lower prices or higher rent/income. You can argue that credit “innovation” has permanently raised the ratio but for bears the story is a simple one: debts need to be repaid. And rents/incomes are going nowhere fast as far as I can tell.
May 7th, 2008 at 7:20 pm
Ah yes, the only two options: Detroit or Vancouver, no wonder everyone wants to live here if the only other option is Detroit!
May 7th, 2008 at 7:26 pm
Um, nyc, do you understand that this is objective evidence as to why RE prices should be much lower in Vancouver than NYC? It’s all about the numbers - price, rent, incomes. Everything else is irrelevant - crime, culture, etc.
Condos are actually worth about 100x market rent, which means that your apartment in Vancouver is really worth about 180K. What would it sell for? (or should I say would have sold for, if the market has already topped as seems likely).
May 7th, 2008 at 7:38 pm
http://tinyurl.com/6s798m
May 7th, 2008 at 7:43 pm
May 7th, 2008 at 7:44 pm
That’s why there is always difference between rents from one unit to another mostly it’s depend on the owners how much they can afford to decrease or increase.
there are lots of different way to fix fundamental crisis.
May 7th, 2008 at 7:51 pm
US credit card balances are rising quickly now that home equity withdrawals have been slammed shut. This trend is a “HAIL MARY” play, for sure.
Anyone know where to find Canadian figures? A sudden rise in balances is a certain sign of consumer stress.
You guys mind keeping the noise down? Someone is arguing with an idiot, but I can’t tell the difference!
May 7th, 2008 at 7:53 pm
what a coincidence you should bring this up!!
exactly what i was doing this PM at Sunset Beach…. synchronicity indeed!
May 7th, 2008 at 7:55 pm
It sold again in 2006 for $2.3m.
Now I just flipped out of my last condo last month, with a $40K profit in 7 months, and am happily renting for the next couple years (or more).
Sometimes more is more, but sometimes less is more….
May 7th, 2008 at 9:45 pm
StatsCanada releases reports called “Survey of Financial Security”, but the most recenst one is from December 2006.
Americans are facing higher gas prices, higher food prices and have more adjustable rate mortgages. You’ve likely got a lot of people barely getting by and having to borrow against their credit cards just to keep up.
The higher Canadian dollar and our commodity-based economy are working to our advantage - at least in the short term - so Canadians in general are not facing the same financial strain as Americans. Add to that a Canadian tendency to be somewhat more conservative about getting into debt and you probably don’t have as much consumer borrowing going on.
The current crisis in the US may also be to our advantage as a warning mechanism. There’s usually a delay between an economic decline in the US and one in Canada. I suspect many Canadians are reading the US headlines and being a bit more careful in case the crisis spreads to Canada. I think that’s why we’re seeing people are more reluctant to buy real estate than they were in the past few years, why sales are down from their peak and why prices might go down in the short term.
May 7th, 2008 at 10:00 pm
A piece from the latest IMF report on housing and the economy has just been published by The Economist.
http://tiny.cc/QjP4o
According to the report, the Canadian (unfortunately there’s no mention of Vancouver) housing market looks pretty good. If so, prices are not likely to come down any time soon.
Add that to Vancouver making number one on their liveability index again and I’m starting to wonder if waiting for prices to come down is just wishful thinking.
Still, the Economist is somewhat selective about the information they’ve published. I’ve read the entire report (yawn) and what The Economist article doesn’t mention is the long lag time in house price declines and the reliance on construction in countries like Canada.
I’m sure I’m not the only one who will jump into the market at the slightest sign of reductions in price. Rising inflation and/or interest rates might also make me nervous enough to jump in before it’s too late.
Is anyone else out there tired of sitting on the fence and waiting?
May 7th, 2008 at 11:40 pm
Canada has lots of land to develop. It’s still a simple argument: price-rent/income ratios are very high compared to the long term average.
May 7th, 2008 at 11:46 pm
http://tiny.cc/GhRI6
The same report contains graphs and comments on affordability by city with some mention of too many condos going up. OK, they don’t exactly say we’re building too many condos, but if you read between the lines, it’s not as positive as you’d expect from RBC.
“The sharp erosion in conditions is expected to start filtering through the resale market this year allowing the pace of activity to calm down. The new home market is being driven by the multiples segment that soared in February by 45%.”
May 7th, 2008 at 11:46 pm
New York Times
Success Breeds Failure
By PAUL KRUGMAN
Cross your fingers, knock on wood: it’s possible, though by no means certain, that the worst of the financial crisis is over. That’s the good news.
The bad news is that as markets stabilize, chances for fundamental financial reform may be slipping away. As a result, the next crisis will probably be worse than this one.
Let’s look at the story so far.
After the financial crisis that ushered in the Great Depression, New Deal reformers regulated the banking system, with the goal of protecting the economy from future crises. The new system worked well for half a century.
Eventually, however, Wall Street did an end run around regulation, using complex financial arrangements to put most of the business of banking outside the regulators’ reach. Washington could have revised the rules to cover this new “shadow banking system” — but that would have run counter to the market-worshiping ideology of the times.
Instead, key officials, from Alan Greenspan on down, sang the praises of financial innovation and pooh-poohed warnings about the growing risks.
And then the crisis came. Last August, as investors began to realize the scope of the mortgage mess, confidence in the financial system collapsed.
Continued Here…