Friday Free-for-all!
The weekend is nearly here so lets do our regular end of the week news round-up and open topic discussion. Here are a few stories I’ve noticed this week:
-BC housing market ‘on pause‘
-Gas and food costs blamed for RE slowdown
-Assignment deals ‘still available‘
-Realtor fired for false statements
-Shaky markets make retirees nervous
-US trouble rains on our parade
-Hundreds indicted in US mortgage fraud
-UK house prices will fall by 30%
-Really, really, really easy credit
-Condo bust draws scams and squatters
-Brace for global stock and credit crash
-Write downs may reach $1.3 trillion
So what are you seeing out there? Post your news, links and anecdotes here and have a great weekend!
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Anonymous Says:
June 19th, 2008 at 10:39 pm
This market is over. You can stick a fork in it. REBGV inventory is at 18898 units today and will hit 19K shortly. From there, inventory will hit 20K and who knows where it will go after inventory exceeds 20K.
Not to mention sales so far this month is almost down 40% compared to last June.
The exploding inventory won’t be absorbed for years to come as more and more flee for the exits.
Sorry specuvestors, your time is up.
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M- Says:
June 19th, 2008 at 11:17 pm
Holy crap! If the rest of the month keeps up like it’s been going so far, it looks like…
Sales will be:
DOWN 20% MOM
DOWN 40% YOY
(side note: this is assuming that PaulB’s daily sales numbers include condos, townhouses, and SFH)
I’m amazed at how quickly the market has turned– after months of wondering how long it would take, the turn happened over a one-month period.
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patriotz Says:
June 19th, 2008 at 11:36 pm
BC housing market ‘on pause‘
Yep, just like Wile E. Coyote is ‘on pause’ over the Grand Canyon.
And the anvil is going to be people walking away from pre-sales, as VHB has pointed out.
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rocker guy Says:
June 20th, 2008 at 4:58 am
I like this one from the Miami article: Paola Arboleda, manager of the Mark Yacht Club on Brickell Bay, said two months ago residents noticed someone hopping among various vacant units. A little snooping revealed the interloper was a mortgage broker
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VHB Says:
June 20th, 2008 at 5:55 am
“And the anvil is going to be people walking away from pre-sales”
Bingo. I’m fascinated to see how this will work out.
1. Prices fall by 10% (or more).
2. Some flippers decide that it is better to walk away from their deposit rather than complete and be stuck with a cash flow bleeding turkey.
3. Developers in a panic because a big chunk of their presales aren’t showing up.
4. Developer tries to enforce contract with joe retail flipper.
5. Joe flipper a) can’t be found (drug dealer; lives offshore; whatever b) has no $ and so either declares bankruptcy or developer stops pursuing. c) goes whining to the media / govt about the big mean developers.
6. Banks a) put pressure on developers to just SELL the turkeys that are left. Maybe bank forecloses on development and sells them off as REO. b) quickly pull financing on other condo projects just getting underway around Vancouver.
7. Legal proceedings continue to try to enforce contract. BUT–here’s the great and interesting unknown–what does the government do? I predict HUGE pressure for them to let Joe Flipper off the hook and make someone else take the bath.
Sounds like fun!
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VHB Says:
June 20th, 2008 at 5:58 am
“HUGE pressure for them to let Joe Flipper off the hook and make someone else take the bath.”
And that’s why I don’t really care too much about how tight the presale contracts are. I don’t think the existing law will matter, because the law will change in the face of 10,000 BCLiberal voting angry flippers.
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VHB Says:
June 20th, 2008 at 5:58 am
note the provincial election is May 2009
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Vansanity Says:
June 20th, 2008 at 5:58 am
From the “BC On Pause” advertisement in the Sun:
“But this isn’t a bust — at least not yet: It’s a breather.”
Did I read that right? YET? They really suck at trying to massage the truth to their advantage! So essentially, it’s a buyers market, lots to choose, but not to worry no crash here just yet… so yes, go out there and buy now or you’ll miss the crash! Hilarious!
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Vansanity Says:
June 20th, 2008 at 6:10 am
Came across this article too recently:
http://www.canada.com/victoria.....e130250e5b
I wonder if this will eventually hold a realtor responsible for selling homes to criminals or allowing money laundering to take place under their watch. The courts will have to determine the standards once tested through litigation. Interesting read.
Titled: Tighter money laundering legislation on the way
“We know organized crime buys houses and they buy houses on a regular basis,” said Ken Fraser, executive director of investigations with the Financial Institutions Commission of B.C….
Under the new rules, real estate agents have to “ensure the person they are dealing with is the person whose ID is produced,” Fraser said.
Last November, police in B.C. froze $6 million worth of real estate they claim was owned by Yong Long Ye, the alleged mastermind behind a drug syndicate charged with importing thousands of kilograms of cocaine from the United States and supplying local methamphetamine and ecstasy labs with ingredients.”
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Ted Says:
June 20th, 2008 at 6:13 am
Already hearing about people walking away from deposits. All the units on the 22 floor at L’Hermitage were bought by one guy who failed to complete and walked. Anyone else hearing about uncompleted presales?
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Warren Says:
June 20th, 2008 at 6:19 am
I like L’Hermitage. Maybe I can get a deal.
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Ted Says:
June 20th, 2008 at 6:24 am
You can rent 22 floor units from Rennie in the mean time…
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VHB Says:
June 20th, 2008 at 6:45 am
“You can rent 22 floor units from Rennie in the mean time…”
Yes, as presale buyers don’t show up, many things will happen to some of these buildings:
a) much higher percentage of renters; desperate flippers have low standards. Hello growups, hookers, and drugdealers.
b) strata fees go through the roof as the total costs are divided by a smaller pool of owners
c) more owner occupiers want to bail because of a) and b)
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patriotz Says:
June 20th, 2008 at 6:46 am
And that’s why I don’t really care too much about how tight the presale contracts are.
If the market price drops below the pre-sales price buyers will be unable to obtain financing at closing time. Won’t this release them from any contractual obligation to complete the purchase?
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Mold City Says:
June 20th, 2008 at 7:12 am
Yes, as presale buyers don’t show up, many things will happen to some of these buildings
for example: See Miami.
Of course our market is different – we have the games coming which means increased demand for accommodation temporarily and then a big vacuum as everyone leaves town after.
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umdesch4 Says:
June 20th, 2008 at 7:18 am
That “Assignment Deals Still Available” article…why does it look so much like a newspaper article. It’s actually just an ad.
The description of New Westminster Quay area cracked me up the most. $628,450 for a townhouse there? Geez man, I live in that area now (for a few more weeks), and the way it’s getting there lately, you’d have to pay me that much to take a place there.
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Tayman Says:
June 20th, 2008 at 7:39 am
I live in Burnaby, close to New West, and a recent duplex/townhome development has gone up behind our rental house. I believe there are twelve units in total, asking price starting at $688, 000. What a joke, this area is no better, probably even worse, than New Westminster in terms of lifestyle. Anyway, two of these units have been sold, the rest just sit there with no sign of activity whatsoever. Next street over there are four houses for sale on one block. Two have “new price” added to the for sale sign (although probably only a $10,000 drop, whoopee). Things are definitely getting interesting.
My girlfriend and I sit on the deck drinking margaritas and laughing at the rubes as our possibilities start to get bigger and sand their worlds starts to shrink.
The whlole lower mainland is sitting on an economic knife-edge and people are too blind with greed to realize it. I’ve seen it before too with other things. People get dollar signs in their eyes and irrationality takes over. Perhaps they can take a cue from Marie Antoinette when Vancouver is burning and eat cake to live!
Viva la revolution!
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betamax Says:
June 20th, 2008 at 7:55 am
a) much higher percentage of renters; desperate flippers have low standards. Hello growups, hookers, and drugdealers.
Exactly. There are a couple of townhouse complexes I’ve looked at buying into when prices drop, but I’m also leery about the upcoming mix of tenants when flippers rent to whoever has the first month’s rent + deposit. There’s going to be some nice-looking slums in the GVRD, especially in outer burbs like New West, Surrey, etc. Collecting strata fees may also become problematic, which means that resident owners will foot the entire bill for the complex.
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arit Says:
June 20th, 2008 at 8:02 am
Great days, great days.
My observations:
1. It is happenning faster. Apparently the ‘bubble’ is already very experienced, and it unleashes itself very efficiently in the Nth market – especially in the LAST market. The fury of the bubble knows no limits. Take cover!
2. Richmond is still oblivious. Most “for Sale” signs have “Sold” stickers on them. Apparently the Chinese community didn’t hear about the bubble. Most realtors are Chinese, and the new (poor) Chinese immigrants buy from them.
). They sell to the new immigrants…
The rich Chinese immigrants are the ones selling (inside info
Regards,
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blueskies Says:
June 20th, 2008 at 8:14 am
too funny!
http://tinyurl.com/4myzhe
Con artists sell homes without owners knowing
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Dave Says:
June 20th, 2008 at 8:29 am
I don’t agree with much of the commentary on the impending doom developers supposedly face.
If the market turns down (and yes I predict a small drop this Fall), then speculators who purchased assignments will lose out. But, the developers have more of a buffer than many assume.
Firstly, speculators pay a deposit (say 5 to 10%) to the developer. Secondly, the condo market has gone up 10% in the past year. In order for developers to lose out, the market would first have to drop at least 10 to 15%.
Although some speculators whose assignments are worth nothing will walk, it may not affect the developer substantially. The developer would have had to compete with those sales regardless seeing that all speculators were planning to flip to longer term owners anyways.
As discussed above, although a speculator may lose out, the developer can still be ahead because the market has mostly gone up since they initially sold the assignment.
IF, and that’s a big IF, the market drops to a level that the developer is in the red (at least 10 to 15%) from an assignee walking, then it won’t be worth their time pursuing legal options. The odds of getting any type of cost recovery are nil to none and not worth legal fees. The exception to this might be mega-purchasers who go in a buy a large number of assignments.
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Dosh Says:
June 20th, 2008 at 8:32 am
You guys sure get excited over nothing. The benchmark house price dropped by about $50 last month. Thats a drop of approximately zero percent. Is your plan to wait and hope that prices drop $50 a month for 100 years so you can swoop in and get a deal?
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Lager not Logger Says:
June 20th, 2008 at 8:42 am
developers have more of a buffer than many assume.
Yeah? Maybe some do, but even in a ‘hot’ market the Eden group couldn’t make it work – then there’s the receivership of H+H and Garden City, The work stoppages on that tower in Abbotsford, overruns on projects like Anvil in New West, etc. I have a feeling this downturn is going to show us some more of these types of stories.
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Brittanny Spears Says:
June 20th, 2008 at 8:47 am
Dave, What if you factor in developer financing? What happens if they get behind on THEIR payments?
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Dave Says:
June 20th, 2008 at 8:55 am
I am familiar with those failed developments. Yes, there are going to be a lot more of these stories becauase there are a lot of people in the biz right now who shouldn’t be. The rising market has saved quite a few of them.
Now that things look flat going forward, the developers who know what they are doing will win out.
Keep in mind that the vast majority of new home construction gets completed. These stories are the exception not the rule. The number could double and it would still be small.
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Anonymous Says:
June 20th, 2008 at 8:55 am
Here’s the problem with putting all your eggs in one basket:
Real estate mess hurts those in field twice.
Now Butterfield has become a poster child for the real estate slide: Her income has fallen 85 percent and her home is in pre-foreclosure, scheduled to be auctioned to the highest bidder in August.
Butterfield is hardly alone. Among the many victims of the housing industry meltdown, the millions of people who worked in the field are among the hardest hit.
In residential construction alone, nearly a half-million jobs have disappeared since the peak in September 2006. Membership in The National Association of Realtors, which nearly doubled over the decade ending in 2006 to about 1.4 million, is on its way back down.
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Warren Says:
June 20th, 2008 at 9:00 am
Fast forward 24 months, there are thousands of condos on the market, nobody is buying, etc. I will have plenty of money to purchase, but how does one deal with the following:
1) Analysis paralysis – there are so many condos out there, prices are all good, but every month a new report comes out about bad building quality, etc. How do you make what is still the biggest investment of your life?
2) Do you use a buyer’s agent?
3) How do you know prices won’t continue to drop?
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Anonymous Says:
June 20th, 2008 at 9:01 am
Oh yeah, and local news:
Are you sure you still own your home?
a B.C. Supreme Court decision this month ruled that while a true owner could regain title to a property if it was fraudulently transferred, mortgages taken out on the property — even if fraudulently obtained — still stand.
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arit Says:
June 20th, 2008 at 9:02 am
Dosh,
There is something called “rate of change”, maybe you know it by the mathematical terms “derivative” and “second derivative”….
Let’s play a little game:
Guess the next number in the series:
1000
1900
2400
2500
2200
1500
???
Best regards,
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snark Says:
June 20th, 2008 at 9:03 am
the developers who know what they are doing will win out.
I Assume by ‘win out’ you mean ‘manage to avoid bankruptcy’.
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snark Says:
June 20th, 2008 at 9:12 am
Warren, is that really a dilemma?
1) Make sure you get a good deal and factor in the possibility of building envelope problems.
2) I’d use a buyers agent unless you’ve got a lot of experience with real estate transactions. With the slowdown you can cut a deal with an agent.
3) Do you really care if prices continue to go down after you’ve bought if your monthly payments are less than rent and leave you with plenty of headroom to save and invest? As long as you’re prepared for a personal downturn (i.e. job loss, illness, desperate need for a vacation, etc) you’ll be fine. And if you have a decent buffer and savings you can use additional price drop to invest – remember ‘buy low sell high’?
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Ted Says:
June 20th, 2008 at 9:27 am
developers have more of a buffer than many assume.
Yeah? Maybe some do, but even in a ‘hot’ market the Eden group couldn’t make it work – then there’s the receivership of H+H and Garden City, The work stoppages on that tower in Abbotsford, overruns on projects like Anvil in New West, etc. I have a feeling this downturn is going to show us some more of these types of stories.
Go by and check the activity of the Coopers Pointe development by the Cambie bridge. There is almost no work going on! And this is a site run by one of our “premier” developers who are well financed (apparently). Seems like they are trying to preserve cash! Too bad we don’t have any publicly traded home builders so we could have some transparency.
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Dave Says:
June 20th, 2008 at 9:43 am
Ted, we are talking about two different things. The first is the risk of speculators not completing while the second is the risk of the developer not completing. My point was that the risk of the former is lower than some here are assuming. I agree with your point that more developers are not going to be able to complete due to poor cost control.
Developers go under in all markets.
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Dave Says:
June 20th, 2008 at 9:48 am
Dave, What if you factor in developer financing? What happens if they get behind on THEIR payments?
Like most things… it depends. There are way too many factors to cast a broad generalization.
In most cases, the banks will extend the financing. In some cases (high risk situations), the banks will require secondary financing.
At the end of the day, banks are in the business of loaning money, not selling condos. The last thing they want to do is put everything on hold or own a partially completed building. That said, banks understand the concept of sunk costs quite well and will not throw good money after bad. But… the assumption in your question is that the development is already complete (i.e posession date). So, in most cases, the answer would be to extend the loan.
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Van-zee Says:
June 20th, 2008 at 9:50 am
RE: The front page of todays Sun.
MSM reports of fraud a sign of the top if you needed another one.
http://cowles.econ.yale.edu/P/cd/d16a/d1610.pdf
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finklebean Says:
June 20th, 2008 at 10:19 am
The ride down is going to be just as exhilarating as the ride up, only more so. There have been some comments on the concern of buying condos once the price gets to realistic levels. Based on personal experience I would be leery of purchasing a place to live in any development that wasn’t occupied by a majority of owners.
Absentee owners may not be, and probably won’t be, as concerned with investing in maintenance as resident owners. Renters, frequent moves, the increased potential for criminal activity take a toll on the buildings and the conscientious owners.
From experience I can say that getting drug dealers out of your building once they are living there is no ‘walk in the park’.
Stuff to ponder as prices come back down to earth.
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Jon Says:
June 20th, 2008 at 10:27 am
I love in London, UK. You should see the meltdown happening here. All started just like what we are seeing in Vancouver now.
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Thums up2 Says:
June 20th, 2008 at 10:29 am
NO SUPPLY=NO BUBBLE
Dave,
Deposit for new project prior to 2007 was 25% after that 20%.Projects which begin around 2005-2006 has earned almost 20 to 35 percent appreciation depend on their locations.
starts are not that much when it comes to completion month or year.2008 already passed six month and lots of big name projects like spectrum one,two,three,four,raffles,la hermitage,elan,and king edward ville were already possessed successfully.
most of projects till 2011 were already sold,some project which start selling in 2008 are sold over 60-75%. in 2011 there is not enough supply for completion because that is a time to start non residential construction.
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Bubble Lad Says:
June 20th, 2008 at 10:32 am
I agree with finklebean – Miami condo bust.
The only question is, when does the “tipping point” of come in your building? Because once you notice that it’s a problem, it’s probably too late. Add on Vanouver’s HUGE homeless problem, a militant housing and poverty lobby community, and you’ve got quite a stew (maybe a few Woodward’s style occupations of your local half-finished condo that the developers walked away from when they realized they weren’t going to make the massive profits they planned for).
Are those the rights of the speculators we’re supposed to be protecting in the previous posts? Just wondering…
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Brittanny Spears Says:
June 20th, 2008 at 11:12 am
Bubble Lad, Yes those empty condos will be occupied by the homeless one day after the Olympics. Until then, they will be housed in tents 20 miles down a logging road outside of Hope. Compliments of Gordo.
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richard Says:
June 20th, 2008 at 11:16 am
“The first is the risk of speculators not completing while the second is the risk of the developer not completing. My point was that the risk of the former is lower than some here are assuming.”
i know i’m no economic egghead, but doesn’t “speculator” imply some sort of risk? and you know this how?
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scc Says:
June 20th, 2008 at 11:18 am
One of the other shoes yet to really fall is credit tightening in Canada. At some point the lenders/insurers will need to account for the downside risk in the prices. In the States, the GSE’s are now the only participant evidenced by the dissapearance of non-conforming loans.
CMHC really should have been jacking up the premiums (by region if need by) as soon as the bubble was evident instead of loosening with product for 0% down and 40year terms.
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Bubble Lad Says:
June 20th, 2008 at 11:18 am
That’s a terrifying thought (though probably true). I’d rather see the speculators and developers in those tents, but what ya gonna do?
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Thum[b]s down2000 Says:
June 20th, 2008 at 11:27 am
if
NO SUPPLY=NO BUBBLE
then
SUPPLY = BUBBLE
19,000 UNITS CURRENTLY FOR SALE = S-U-P-P-L-Y
25,000 MORE UNITS CURRENTLY UNDER CONSTRUCTION =
H-U-G-E S-U-P-P-L-Y
LOOK OUT BELOWWWWWWWWWWWWWWWW!!!!!!!!!!!!!!!!!
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Dave Says:
June 20th, 2008 at 11:41 am
i know i’m no economic egghead, but doesn’t “speculator” imply some sort of risk? and you know this how?
I have no idea what you are trying to ask. Please clarify.
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Brittanny Spears Says:
June 20th, 2008 at 11:44 am
Thums Up2: PLEASE take your lithium before posting!
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Drachen Says:
June 20th, 2008 at 11:51 am
Hillary
“I have no idea what you are trying to ask. Please clarify.”
He’s saying your statement has a certainty and a finality to it like you know for a fact that it’s true but you mysteriously fail (as always) to provide the reasoning behind your claims.
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Dave Says:
June 20th, 2008 at 11:55 am
19,000 UNITS CURRENTLY FOR SALE = S-U-P-P-L-Y
25,000 MORE UNITS CURRENTLY UNDER CONSTRUCTION =
H-U-G-E S-U-P-P-L-Y
LOOK OUT BELOWWWWWWWWWWWWWWWW!!!!!!!!!!!!!!!!!
Wrong. New home inventory is at record lows. See Slide 55
http://www.bcrea.bc.ca/economi.....hCheck.pdf
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jesse Says:
June 20th, 2008 at 11:57 am
VHB: “put pressure on developers to just SELL the turkeys that are left. Maybe bank forecloses on development and sells them off as REO.”
For the uncompleted units like Anvil or whatever, as we have seen, the bankruptcy proceeding merely auctions the partially completed assets to any other developer willing to take the job on. Units like these, where there is no legacy solvency issue and no desire to carry the property for any length of time, will mark the market when prices are obviously falling.
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Potato Hat Says:
June 20th, 2008 at 12:03 pm
One thing I recall from reading stories about the Miami condo disaster was when people canelled their pre-sales, developers would applying their deposits towards the price for any unsold units, effectively undercutting the rest of the market by whatever the deposit was.
This allowed the developers to clear inventory off their books and keep their skin relatively intact, but must have just murdered the median prices for the area.
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Aleks Says:
June 20th, 2008 at 12:24 pm
I doubt we’re going to see developers going out of business or even slashing prices any time soon. In the US, developers are just now going bankrupt, and a lot of them are still refusing to cut prices. If we follow the same pattern, that means it won’t happen here till 2010, after the Olympics.
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Dave Says:
June 20th, 2008 at 12:39 pm
That’s a good observation Aleks.
It is also important to recognize the difference between Canadian and US development companies. Many US companies are publically traded, while Canadian developers are mostly privately owned.
The Canadian companies have the ability to sit on the sidelines if they don’t want to build. However, the US companies don’t have the luxury because private companies have to keep active to try and meet quarterlies.
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Thums up2 Says:
June 20th, 2008 at 12:45 pm
19,000 UNITS CURRENTLY FOR SALE = S-U-P-P-L-Y
Wrong,19000 units are for resale=owner occupied
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Drachen Says:
June 20th, 2008 at 12:47 pm
Hillary
“Wrong. New home inventory is at record lows.”
Umm that chart goes up to the end of 2007, inventory didn’t start to spike upwards until January of this year. Yet another misleading statistic you’re spewing out.
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DJ Says:
June 20th, 2008 at 12:48 pm
Yes, sit on the sidelines … why make money with smaller profit margins when you can make no money at all. Pure capitalism, pure genius.
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jesse Says:
June 20th, 2008 at 1:06 pm
“The Canadian companies have the ability to sit on the sidelines if they don’t want to build.”
And they will want to fully employ all their existing staff to sit on the sidelines with them? At least in the US they were keeping people employed!
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finklebean Says:
June 20th, 2008 at 1:40 pm
Some developers may refuse to lower prices. In the final analysis developers are business people who want there businesses to survive and they thrive on challenges.
Most contributors here probably subscribe to Greaterfool.ca and have seen this, but in case you haven’t…….
http://www.greaterfool.ca/2008.....ia-twofer/
I don’t have any info on how successful this scheme was.
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jeffjeffjeff Says:
June 20th, 2008 at 2:33 pm
Wrong,19000 units are for resale=owner occupied
LOL!!!!
Thanks for the belly laugh SATV. Sorry you’re going to go broke though.
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Anonymous Says:
June 20th, 2008 at 2:42 pm
“Yet another misleading statistic you’re spewing out.”
Drachen,
Your head officer Mohican an un official inventory claimer did not split the stats by months or year of completion nor does he know how to read the stats so he choose to go for vacation.
when your heads are down in shame do you have any data to back up spike?
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Dave Says:
June 20th, 2008 at 2:48 pm
I doubt he has seen the inventory data for NEW homes. The reality of it is that the majority of condos are pre-sold. So although the resale home numbers have gone up, it doesn’t necessarily follow that new home numbers have gone up appreciably. The reality is that new home listings are at very low levels compared to historical data.
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Anonymous Says:
June 20th, 2008 at 2:50 pm
jeffjeffjeff,
I am glad to see that you are very very disappointed by the resale home spin and you forgot to spell your name in excitement.it could be the first time that some one revealed a secret to you,no?
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Thum[b]s down2000 Says:
June 20th, 2008 at 3:01 pm
Dave:
Did you actually look at the slide you referred me to?
It shows an avalanche of supply that will be coming online. At some point all these projects will be finished. And if you refer to the dismal BC population growth statistics throughout the report you links, that paints a very bearish picture indeed.
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Bob from Vancouver Says:
June 20th, 2008 at 3:09 pm
oh boy its going to be a bad one!!!!
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Anonymous Says:
June 20th, 2008 at 3:11 pm
Dave,
2000 don’t know how to read the graphics that’s why they are up for ride.
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Dave Says:
June 20th, 2008 at 3:32 pm
Interesting idea. Do you have evidence to back this up? How do you respond (or not respond) to the possibility that many people in BC, especially those younger bracket are thinking of moving to provinces with cheaper housing and better job prospects?
1980 2007
20 – 24 262 310 UP
25 – 29 250 296 UP
30 – 34 235 288 UP
35 – 39 184 320 UP
40 – 44 150 347 UP
45 – 50 140 361 UP
50 – 54 138 337 UP
55 – 60 137 297 UP
In thousands…
http://www.bcstats.gov.bc.ca/D.....erpage=all
See slide 43 for projections 10 years from now. You will see that the Echo generation causes a BIG jump in the total number of people in the 25 to 40 age bracket. The funny thing about that is those happen to be first time home buyers. Should make for a good bull run!
http://www.bcrea.bc.ca/economi.....hCheck.pdf
RE – Possibility of people leaving… Interprovincial migration is a net positive into BC. Nuff said. Also, see the projections for our future demographic distribution.
The problem with the current boom is (as was noted in many other blogs) is that we are in a low inflation/interest rate environment. Any transition to higher inflation/interest rates will hit people who buy at the peak much more than in previous booms.
Is the glass half empty of half full? Sure, more inflation benefits prior purchasers more, but less inflation is still a good thing. It still works in their favour.
You are assuming that we have a significant correction to begin with. Prices could very well plateau going forward (i.e. +/- 5 to 10%). Even with a little inflation per year (say within BOC targets), I would expect that inflation wins out on any potential correction over a 5 year period.
If you buy at the peak and can afford it, then things will be even more affordable 5 years down the road.
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Drachen Says:
June 20th, 2008 at 3:36 pm
Hillary
“NEW homes… new home… new home…”
Last time I checked it was called the housing market. Not the new market. I guess that’s because it’s all really just one market. Your tunnel vision on one sector of the market (one sector that you don’t even have new information on and are merely hypothesizing about at that!) just shows how weak your arguments are.
It’s a little like a car salesman responding to a customer who’s just told him the car has no engine with, “Yeah but the transmission is brand new!”
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Dave Says:
June 20th, 2008 at 3:37 pm
Whoops… ignore the above post. Wrong forum.
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alexcanuck Says:
June 20th, 2008 at 3:38 pm
Ok, Drachen dealt nicely with dave’s second lie, now for his first one (on this thread):
First he says
then speculators who purchased assignments will lose out. But, the developers have more of a buffer than many assume.
Now that things look flat going forward, the developers who know what they are doing will win out.
Then he pulls a perfect 180 and says
The first is the risk of speculators not completing while the second is the risk of the developer not completing. My point was that the risk of the former is lower than some here are assuming. I agree with your point that more developers are not going to be able to complete due to poor cost control.
Developers go under in all market
Just trying to help you stay on message here. Internal consistency is important when you’re making it up as you go along, and even more so in an interactive medium where rebuttals aren’t at the discretion of an editor.
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Dave Says:
June 20th, 2008 at 3:41 pm
I’ll chalk that up as a ‘yes, I don’t know’, Drachen.
Why do you keep attacking me? What I said was 100% factually correct. I said NEW homes, not total inventory.
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Anonymous Says:
June 20th, 2008 at 3:45 pm
Drachen,
There is no need to use this forum to kill your free time,when you don’t have solid argument it would be better to increase your productivity at work.Learn some thing from strataman,he use to pay an employee so he can post his comment here but now he likes to work and pay himself.
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Dave Says:
June 20th, 2008 at 3:48 pm
Thanks Alex. You misunderstood my second statement, which is mostly my fault by partly yours for not considering the context of the paragraph (i.e. talking about risks to the developer).
I missed three words… The risk TO THE DEVELOPER of the former…
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beatstreet Says:
June 20th, 2008 at 4:07 pm
Great list of links today Pope! The UK and Canada.com articles are all quite amazing. Thank goodness the bulls still have some deals left!
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richard Says:
June 20th, 2008 at 4:10 pm
“Why do you keep attacking me? What I said was 100% factually correct. I said NEW homes, not total inventory.”
yeah, but weren’t you responding to a post regarding inventory? that makes your reply misleading. the original post was “inventory”, not “new home inventory”, but you replied with “new home inventory”.
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Drachen Says:
June 20th, 2008 at 4:13 pm
Hillary
“Why do you keep attacking me?”
Because you deserve it. You consistently bring up false or misleading statistics, your occasional interpretations of relevant data are all done using methods which are not only considered “unscientific” they’re commonly called “Voodoo Economics”. What’s more you know that you’re spreading intentionally misleading, incorrect and misinterpreted information but you keep doing it anyhow.
Is that reason enough or should I go on?
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Dave Says:
June 20th, 2008 at 4:18 pm
yeah, but weren’t you responding to a post regarding inventory? that makes your reply misleading. the original post was “inventory”, not “new home inventory”, but you replied with “new home inventory
The post referred to NEW home inventory. Have a look.
Nothing misleading at all.
Enough of the accusations. You bears are sure grouchy after hibernation.
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Taraba Says:
June 20th, 2008 at 4:22 pm
Why do people insist on feeding the troll … just let him be…
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Anonymous Says:
June 20th, 2008 at 4:24 pm
haha good rant
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Anonymous Says:
June 20th, 2008 at 4:26 pm
Taraba,you fucking idiot,are you looking for the response without any argument?
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Anonymous Says:
June 20th, 2008 at 4:32 pm
Retail sales rebound
http://www.cbc.ca/money/story/.....etail.html
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richard Says:
June 20th, 2008 at 4:37 pm
“The post referred to NEW home inventory. Have a look.
Nothing misleading at all.
Enough of the accusations. You bears are sure grouchy after hibernation.”
Okay. i must be mistaken then. This is the post I assumed you were replying to
”
if
NO SUPPLY=NO BUBBLE
then
SUPPLY = BUBBLE
19,000 UNITS CURRENTLY FOR SALE = S-U-P-P-L-Y
25,000 MORE UNITS CURRENTLY UNDER CONSTRUCTION =
H-U-G-E S-U-P-P-L-Y
LOOK OUT BELOWWWWWWWWWWWWWWWW!!!!!!!!!!!!!!!!!
”
Where in there is the word “NEW”?
if i’m mistaken, i apologize. otherwise, ….
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Anonymous Says:
June 20th, 2008 at 4:49 pm
Reference page 55
Vancouver CMA Housing Starts
Units
Multi‐Family Construction Comprises 80% ofNew Homes
OR
refer to the post#44
currently under construction=new homes
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richard Says:
June 20th, 2008 at 5:17 pm
” Reference page 55
Vancouver CMA Housing Starts
Units
Multi‐Family Construction Comprises 80% ofNew Homes
OR
refer to the post#44
currently under construction=new homes”
post 44 is exactly what i was quoting. There is no word “NEW” in post 44. page 55 of the bcrea report is in post 48, which is in response to post 44, which as i have said, does NOT contain the word “NEW”. So why would you reply a post that doesn’t have “NEW” in it with a reference to “NEW”? and in case you missed it, post 48 comes AFTER post 44, as it is a reply. get it?
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Anonymous Says:
June 20th, 2008 at 5:25 pm
“which as i have said, does NOT contain the word “NEW”
Richard,
Currently under construction means new home so it doesn’t matter if 2000 at#44 use it or not it has a same meaning.
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bdk Says:
June 20th, 2008 at 6:21 pm
“19,000 UNITS CURRENTLY FOR SALE = S-U-P-P-L-Y
Wrong,19000 units are for resale=owner occupied”
Actually 19,000=vacant
Here’s a question for you Dave
What will happen to the imbalanced borderline retarded warehouse worker who makes Twenty Five thousand dollars a year who has bought a few pre sales and can’t complete on the sales or tries to subsidize the renter by $2k per month.
If 75% of the thousands and thousands of units that are completing downtown are owned by flippers that means a high percentage people who end up filing bankruptcy.
What happens when a large percentage of potential buyers have bankruptcy on their credit file? Is that a good economic thing?
Why are you pumping real estate on so many blogs at once that you got mixed up and cross posted? Are you employed in PR? If not then you have to be pretty stupid to get confused amongst only a few blogs? You sound like a PR Lobbyist, what line of work are you in?
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Thumsdown Says:
June 20th, 2008 at 6:26 pm
For many minority and lower-income families who viewed homeownership as a stepping stone to building wealth and passing it on to their children, the transition from owning to renting has been the unraveling of a dream. Burdened now by debt and bad credit, some of these families are worse off than they were before they bought.
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richard Says:
June 20th, 2008 at 7:05 pm
“Currently under construction means new home so it doesn’t matter if 2000 at#44 use it or not it has a same meaning.”
there’s 2 numbers there. 19,000 is NOT new. The other is 25,000. He says it’s an all time low. Clearly, you can’t apply that to the 19,000 figure as it’s existing. The only other possibility is he is referring to the 25,000 figure. Looking at the graph he’s referenced, the graph is going UP, not down. so again, that’s still inconsistent. if it were at an all time low, it would be going down, not up.
i am not saying dave is deliberately misleading, i am saying his response is misleading. if i hurt his feelings, i apologize. however, it was still misleading. sue me.
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Thums up2 Says:
June 20th, 2008 at 7:53 pm
Richard,
That graph show inventory till 2007 anyway,dave was refering to a future inventory for new homes this is a 2008 passed six months go try to find those unit in the market not to mislead you but just wanted to bring that into your attention.
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Thums up2 Says:
June 20th, 2008 at 7:59 pm
FUTUR SUPPLY for downtown peninsula and surrounding area
Currently under construction & expected for 2008:
Of the 2743 If Onni’s 1022 Seymour actually remains rental, then we are already at 96% sold out for 2008 delivery.
For 2009 of 2997 scheduled completions 2925 are already sold which is 98%
For 2010 There are only 714 scheduled completions for downtown.
For 2011 There are only 279 units are scheduled for completion.
Downtown Vancouver is one of Canada’s most vibrant city centres and the Greater Vancouver’s primary employment, retail and tourism centre. With over 80,000 people already living downtown there are conservative projections for an additional 20,000 residents and a total of 175,000 jobs by 2021.(from the old link but population has changed dramatically over the period wait for latest number)
http://www.tc.gc.ca/programs/e.....onplan.htm
Ladies and gentlemens there is no bubble in vancouver go home and relax and please tell that to your family and friends.
NO SUPPLY=NO BUBBLE,THANK YOU.
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Anonymous Says:
June 20th, 2008 at 7:59 pm
should read future
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richard Says:
June 20th, 2008 at 8:12 pm
“That graph show inventory till 2007 anyway,dave was refering to a future inventory for new homes this is a 2008 passed six months go try to find those unit in the market not to mislead you but just wanted to bring that into your attention.”
maybe. still, his reply was
“19,000 UNITS CURRENTLY FOR SALE = S-U-P-P-L-Y
25,000 MORE UNITS CURRENTLY UNDER CONSTRUCTION =
H-U-G-E S-U-P-P-L-Y
LOOK OUT BELOWWWWWWWWWWWWWWWW!!!!!!!!!!!!!!!!!
Wrong”
which part of that was “wrong”?
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Montery Says:
June 20th, 2008 at 8:37 pm
LADIES AND GENTLEMEN!!!
It’s happened! The very first MLS $100K+ price drop in the West End…
MLS# V708346 was posted May 15th, at a price of 599,000 ($658/sqft). That’s actually not a bad price (er, relatively speaking with all the other condo’s in the west end averaging $600/sqft).
Then, on May 29th, it was lowered in price to 529K ($581/sqft).
Finally, today, it was lowered again to 490K ($538/sqft)! This is practically bargain territory for the west end (only a block from the beach!).
Still too high, though. It should be down around $400/sqft. Though I do get the feeling it’s one of those “estate” sales where grandma passed away and the family now wants to get rid of the place fast. That makes me kinda sad…
Obviously the seller is someone who knows that the market has popped and is trying to unload. I bet they’d seriously consider a offer of $250K in about a month.
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Bubble Lad Says:
June 20th, 2008 at 8:41 pm
Taraba – apologies for Krish, er…the troll.
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Rocker Guy Says:
June 20th, 2008 at 8:57 pm
Wow – it’s sure heating up in here. Things must really be turning…
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Dave Says:
June 20th, 2008 at 9:03 pm
Richard, WTF????
You said, “25,000 more units under construction”. How in the hell can you or anybody not get this doesn’t represent NEW product?
I showed the data for unoccupied new units to the end of 2007. Sorry that I don’t have the 2008 data in front of me. Any muppet can see that the trend over the last 5 years has been DOWN. This does not support your case that all this new product isn’t being absorbed. There is nothing misleading about that at all.
Which part was, ‘wrong’? Uhhh… pretty much all it.
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Dave Says:
June 20th, 2008 at 9:17 pm
What will happen to the imbalanced borderline retarded warehouse worker who makes Twenty Five thousand dollars a year who has bought a few pre sales and can’t complete on the sales or tries to subsidize the renter by $2k per month.
Well that borderline retard has done better in this market than most of the bears here. As a minimum, he put down only 5 to 10%, while the market has moved likely at least 10% since he bought. So, his equity likely has at least doubled. The market has yet to correct in price so he is still ahead.
What’s happens when speculators can’t complete? The developer is left holding the bag. As I showed before, it would take a serious market correction before they lose out.
What happens if he closes and has to subsidize the renter? I guess he ends up selling.
If you think your example represents this market, then think again.
If 75% of the thousands and thousands of units that are completing downtown are owned by flippers that means a high percentage people who end up filing bankruptcy.
What happens when a large percentage of potential buyers have bankruptcy on their credit file? Is that a good economic thing?
Ha ha… 75% being flippers… Why not just pick 100%?
FYI… The foreclosure rate is only something like 0.15% right now. That means 99.85% of mortgages are being paid.
You have so many ifs in your scenario that I can’t take your question seriously.
Why are you pumping real estate on so many blogs at once that you got mixed up and cross posted? Are you employed in PR? If not then you have to be pretty stupid to get confused amongst only a few blogs? You sound like a PR Lobbyist, what line of work are you in?
Let’s put the conspiracies to rest already. I am not pumping real estate. I am just giving you my opinions. I am not here to make money in any way. I am not getting paid to post. I am not employed in PR. Nothing I say will convince of this.
Why bother asking? Really? What would convince you?
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Warren Says:
June 20th, 2008 at 9:21 pm
Dave, kudos for sticking around. Personally I feel that this market is set for a downturn, but unless you think the sky is falling around here, you are assumed to be a paid shill, or an absolute moron.
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Dave Says:
June 20th, 2008 at 9:29 pm
Thanks for the kudos Warren. It definitely takes patience.
The irony of all this is that I am also calling for a drop in prices this Fall. My prediction is a flat market over the summer and a small downturn between September and December. I think 2009 will be flat (+/- 5%).
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blueskies Says:
June 20th, 2008 at 9:30 pm
Dave:
1 question
is now a good time to buy?
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Dave Says:
June 20th, 2008 at 9:42 pm
Good question blueskies. There is no single answer to that question. For some people yes, for some people no.
It depends on the individual and it depends on the product they are buying.
My opinion is that it is always a good time to buy if you: a. can afford it; b. plan to own for a least a moderate term (5 years); c. have economic stability; and, d. have found a product you desire. If you meet all those metrics, then a potential downturn has no effect on you. Rather, things get better over time as inflation increases your wages and as you build equity.
Trying to time the market is a fools game. I can guarantee you that the majority of bears here have been sitting in their dens for too long to ever make their lost gains back.
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blueskies Says:
June 20th, 2008 at 9:51 pm
the answer i was looking for was:
no now is a good time to wait
tomorrow will bring lower prices
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someguy Says:
June 20th, 2008 at 9:56 pm
Or it isn’t and you guys just can’t deal with it. The US is already rebounding and Vancouver hasn’t even went down yet. Enjoy paying rent.
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Dave Says:
June 20th, 2008 at 10:00 pm
the answer i was looking for was:
no now is a good time to wait
tomorrow will bring lower prices
Maybe it will, maybe it won’t. The fact is that the norm is for real estate to go up in price. In the last 30 years, we have only had about 5 or 6 negative growth years. The negative growth years did not go down nearly as much as the periods that real estate went up.
Tomorrow may bring lower prices, but the future will definitely bring higher prices. Basically 99.9% of people who have ever bought real estate in Canada have made gains.
If you think you can beat the market and time things right, then all the power to you. I have to say, that I have heard that line more than a few times though in the last 5 years.
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blueskies Says:
June 20th, 2008 at 10:01 pm
Enjoy paying rent.
actually rent is a form of being noncommittal
you can up and leave at short notice….
a 40 year mortgage would prevent any
changes on a short notice…you are stuck
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blueskies Says:
June 20th, 2008 at 10:04 pm
but i am seeing with my own eyes:
price reduced and then another
and tomorrow i expect to see another one it is worth waiting to see another reduction the next day….
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snark Says:
June 20th, 2008 at 10:05 pm
Enjoy paying rent.
I’ve got a buddy who’s trying to decide if he wants to sell his condo right now.. He’s made great returns on it, but what if he misses out on more appreciation? plus he’s just found it cost’s $16k in commission to sell and that takes a chunk out of his gains.
Made me feel glad I have cash, savings and investments that aren’t all in one thing.. plus if I have the problem he has (place too small, doesn’t like the neigborhood) I can move without ‘cashing out’ all my investment. I was suprised after all the news about the ‘booming market’ that his gains all-in where less than my savings and investments over the last 5 years.
So did I miss out on the boom? Yup. And you know what, I think I’ll miss out on the bust as well.
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richard Says:
June 20th, 2008 at 10:12 pm
“You said, “25,000 more units under construction”. How in the hell can you or anybody not get this doesn’t represent NEW product?”
easily. first of all, the post you were responding to wasn’t even talking about the same numbers you’re talking about. says 19,000 on sale. 25,000 under construction. big supply. you say no it’s not. show completed unoccupied units. big deal. won’t stop the 25,000 from coming on stream. i don’t care if there are only 500 (or whatever number that’s supposed to be) completed and unoccupied. 19,000 + 25,000 is still big. you say it’s not, because you’re talking about something else.
another way to put it. other guy was talking hockey then you start talking baseball. so yes, you lose muppets like me when you talk like that. i’m just not as fast as you are.
and you can WTF all you like. though i wouldn’t recommend it. somebody might come along and wash your mouth out with soap.
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Booya Says:
June 20th, 2008 at 10:18 pm
“99.9% of people who have ever bought real estate in Canada have made gains.”
It always amazes me to read things like this. Yes, it is true in nomimal terms. But in real terms, prices do not change in the long run. Real estate only appears to “appreaciate” because people do not understand inflation. If I have 2X what I had before, but everything costs 2X as much, I haven’t gained anything.
Why is this so hard to understand?
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stagnate Says:
June 20th, 2008 at 10:29 pm
when developers start having trouble selling product at the needed price point they will cut back new offerings. existing product, current construction, etc will be mopped up over time by demand. it won’t be a boom time environment but the demand/supply dynamic will be consistent. 5-10% correction from the adjustment. don’t be bitter towards dave; prepare to either sharpen your pencil, rent long term with a plan, or buy a shovel.
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patriotz Says:
June 20th, 2008 at 10:40 pm
One thing I recall from reading stories about the Miami condo disaster was when people canelled their pre-sales, developers would applying their deposits towards the price for any unsold units, effectively undercutting the rest of the market by whatever the deposit was.
Complete BS. Developers sell at the market price regardless of their financial situtation, because that’s the best price they can get, by definition.
This is just a line that the developers were peddling to make buyers think they were gettting “instant equity” buying below the market price because the developers were giving them the benefit of the forfeited deposits. Well they weren’t.
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Daves Neighbor Says:
June 20th, 2008 at 11:36 pm
ahhh Dave. The amount of time you have spent preaching on the local blogs lately is staggering. It’s a fine example of just how much time you local Realtors have on your hands these days.
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tacoman Says:
June 21st, 2008 at 12:18 am
I always liked the “Flippers in Trouble”-style blogs, and often visit these two:
Sacramento Area Flippers In Trouble
Phoenix Flippers In Trouble
One thing I noticed looking at the Sacramento sales and listings history, is that prices are almost back to 2003 levels.
Googleing for “flippers” I stumbled on this new site.
Victoria Area Flippers In Trouble
It might be interesting to keep an eye on its contents, as well as congratulate and encourage its author
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betamax Says:
June 21st, 2008 at 2:01 am
My opinion is that it is always a good time to buy…things get better over time as inflation increases your wages and as you build equity.
Classic realtor-speak throughout, all premised on continued appreciation that won’t continue much longer.
Also, too bad wages aren’t keeping up with inflation.
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jay Says:
June 21st, 2008 at 5:17 am
Someguy said: “Or it isn’t and you guys just can’t deal with it. The US is already rebounding and Vancouver hasn’t even went down yet. Enjoy paying rent.”
Do you have any proof of a US rebound? Everything that I have seen points to worsening conditions in a housing market bust that rivals only the great depression in magnitude.
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Dave Says:
June 21st, 2008 at 5:38 am
Yes, it is true in nomimal terms. But in real terms, prices do not change in the long run. Real estate only appears to “appreaciate” because people do not understand inflation. If I have 2X what I had before, but everything costs 2X as much, I haven’t gained anything.
Why is this so hard to understand?
Booya, you have gained equity and that inflation just cut the real value of your mortgage in half.
I haven’t seen data to suggest that real estate only performs at inflation. Not even the worst of the bears in this forum believes that.
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The Van Man Says:
June 21st, 2008 at 7:06 am
I agree with what Dave had to say on his last posting and that is, homes is a good buy and only if you are willing to stay in it for longer than 5 years. There are home expenses like taxes, repairs, carrying costs and interest charges that are unlikely to be recouped during the 5 year tenure, except during this boom period. People buy homes, not because they are buying a piece of architecture marvel or land. They are buying into a community and they have already planned to plant their roots for awhile. Whereas renters lease into a community and have no desire to plant or associate themselves in the community. I think some people on this blog here are content to be renters. There’s nothing wrong in being renters and if you don’t have kids, there’s not a huge necessity to buy. However, there’s a positive inclination in buying a property close to retirement where most people tend to be less mobile than when they were younger.
Having said that, I think Dave is unaware that any bubble is basically a mad chase of one type of asset by old money, new money and borrowed money. This is not an undocumented symptom. In the USA, the Federal Reserve of San Francisco keeps track of it and what it found was that, after the last recession and the last stock market crash, it literally took about 6 years for equity transferring of one asset class (financials, stocks, bonds) to another asset class, real estate. Rich people knows this. It happened from the mid 1960s to 1974. It happened again from the last 70s to early 80s and happened again during the mid 90s and then the early 2000s. In fact if you look at Nasdaq and the general PEs of multinational corporations today, they are priced lower than they were in the early 1990s. Why, because all those money that pushed PE prices higher in the late 90s with Nortel, Global Crossings, etc all went to RE. Guess what, in 2006, the tide has turned in the States and American REs began a downward fall. The housing price index (HPI) shows this. But at 500 to 600 in some states, it will have a long way to fall I believe since it took 20 years to go from 100 to about 220 in most States. Whereas, since 2001, we had risen from 100 to about 250, a 2.5x HPI index increase, which is not that far fetched considering that some American states like Hawaii for instance went up at that same rate multiple as well. Our market is about 2 years behind of the Americans.
Here is the problem. Once our fascination with RE has withered like we did with Nortel and Global Crossings, there will be a massive exodus of speculative money from RE into some other type of hot asset. Nobody knows what it will be, but I can bet rich people like Warren Buffett has already had some dips in it. You will know what it will be and then, more people will be cashing in their chips to buy into this hot new asset class.
It’s inevitable. That’s what happened to the mid 90s RE market. People like Garth Turner promoting reverse mortgage to use the released equity from their homes to buy Nortel and JDS Uniphase in Canada. In fact, the TSE index were controlled by these 2 corporations out of 498 or so companies. That’s the power of so much concentrated money. It’s really funny that in 1992 when Nortel was just a tad of $18, we were the few ones that bought in. We were the few ones that sold them at $128 and made some handsome profit too. Let me tell you the reason why nobody bought Nortel at $18. It’s the same reason very few people bought homes during 1983. The news was so negative, nobody in the right mind would touch any of these asset classes with a 10 foot pool. Dave, you will see this a deja vu phenomena of this again.
You said, inflation increases your wages overtime as you build equity. But you are forgetting that you are building your equity in only 1 asset class. If you are really building equity while inflation is rising, then homes and stocks would rise in tandem. They don’t and history has bear this out. I think it’s dangerous for you to make false assumptions based on fruitless facts. Yes, inflation will increase your wages because the company you work for has directly or indirectly improved their intrinsic value. That’s the beauty of corporations. They make better widgets or produce unique services that can charge you any price they want. Apple Inc and RIM both come to my mind. “Homes” DO NOT increase in their intrinsic value, they never do. Warren Buffett said that.
If ever any asset class that would increase, it would be those multinational corporations that have cash rich war chests that are going to be fairing better in the new business environment of tight credit lending practices. With PE ratios so low, it makes sense to make prudent investment choices.
Houses or homes (whichever you like to call them) are only good as shelter. They are never good as investment properties unless you buy them dirt cheap like you do in 1983 or any of the time line in BC that had depressed home prices. I have never met anyone who said they are extremely happy with their home purchase when they bought them at the top. Most of them are happy once they finished paying the mortgage. Like a marathon runner who’s just happy just to cross the finish. That’s the feeling.
Do not forget that a home is just 1 asset class. You never put everything in one basket, but that’s exactly what most people do anyhow. So what happens if you’re close to retirement and you had little or no savings? You will tap into your home equity to invest in something else. I think that’s going to be the next trend. Out of RE asset class and back into the equity asset class.
By the way, Warren Buffett was called a bear during the internet boom. He refused to buy any of those telecom companies. Now, who’s the wiser?
I like to also address any of Dave’s flawed perception of public and private companies.
Public and private companies are actually the same. There is no difference between both of them, except in the way they report to the creditors or shareholders.
Companies obtain financing through multiple sources of medium. If a company obtains financing through banks and private venture capitalists, they are considered semi-private since while they only have to respond to these private entities, these entities are not always private. Hedge, venture funds and banks all have shareholders they have to report to, and in any financial reports, undoubtedly they will have to report the complete accounting. New accounting rules, after the Arthur Anderson fiasco, has tightened so much that what used to be a one volume of Encyclopedia Britannica for each company has ballooned to multiple volumes which will contain these kinds of information.
Public companies obtain financing through the sale of common/preferred shares and or corporate debenture. Shareholders of these companies have certain, but sometimes limited voting rights. Sometimes, these voting rights can be messy like the current battle between the Biovail founder and its current board through a proxy fight. Blue form vs yellow form or who’s telling the truth. One claiming the company has no new products in the pipeline and the other claiming full pipeline of the past. But it’s interesting to note that, many big companies like Pfizer and Merck have few in any new products in their pipeline and their current existing pipeline are patent expiring as generic makers can make these cheaper. That’s why their shares have been depressed for SO MANY YEARS! Shareholders so no mercy to companies that just sit by on the sidelines and have no new products all all in the pipeline.
However, private companies fair no better either. Private companies have to deal with banks or private investors and these guys are just as merciless as shareholders. Banks have to respond to their shareholders too and to pay these rich dividend to them, it demands that all their loan businesses much perform.
So, I don’t agree with you that private construction companies can just sit by during a downturn and continue to burn cash. In fact, that’s exactly what the Japanese construction companies did the opposite. Even during the RE deflation period, cranes were dotting the skyline of Tokyo building different kinds of dwellings. If you sit by and do nothing, sooner or later your loans are going to be called for. Either you file for bankruptcy or you continue on running your business. Do you see Toyota or Honda sit by the sidelines and stop making cars just because gas prices could go to $2/L or more?
Not a chance. In fact, they’ve been the fortunate ones with a vision to build hybrids. Selling well in fact and depressing the SUV prices in the process. Remember that 8 years ago, SUVs were all the rage? Now, you can pick up a SUV or a gas guzzler at prices that you couldn’t even dream of getting. But would you buy one today?!? That’s the same question you’ll be asking in 1983 about homes.
Here’s the fear. Since builders need to keep building to stay themselves solvent and their employees employed, it means that they will continue to build homes that the market wants. Who knows? They might build lower cost homes — there’s a high demand for them. If they do, you know what’s going to do to existing stock — depress them even more.
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-A- Says:
June 21st, 2008 at 7:10 am
……………………………….
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,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
””””””””””
………….
[[[[[[[[[[[[[[
Dave:
Real interest rates are still near or below zero, the natural rate of unemployment is still near or below zero, our borders are still open to the rich foreign investors, the mountains, the ocean, the tropical weather-still here, the crime free society, the best place on earth, the Olympics are coming, and Bill Good is still on the radio pimping real estate;however,the listings are piling up.
I think we are headed for a meltdown much more severe than the US , UK , Spain, ect is experiencing now, and much worse than the previous crashes we have had in Vancouver before, but I would like to hear your theory why it’s different this time.
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John Says:
June 21st, 2008 at 7:49 am
PUMPKIN SHILLS ALL OF YOU!!!!!
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Anonymous Says:
June 21st, 2008 at 8:11 am
3 RE anecdotes from my workplace:
#1) A self-proclaimed ‘flipper’ has been trying to flog a SFH in Pt. Moody for the last six months. He finally took it off the market 3 weeks ago. He made no price reductions cause he can’t afford to; he ‘owns’ a BMW M3, a Harley and a ‘08 f150, and he was working on his taxes at work and he had borrowed extensively from his RRSP to just maintain his ‘lifestyle’) When I asked him if his house had sold he replied that he wa taking it off for a couple of months and he’s going to put it back on when the Market ‘heats up’ again. In the meantime, he is trying to rent it out because he kicked out the previous tenants to do some renos before selling. No luck there either; few calls, and very little interest.
#2)Two guys I work with bought an older townhouse together in North Burnaby for a quick flip. They felt that it was underpriced and with a few quick reno’s and some sweat equity, they could turn it over for a tidy profit. After a kitchen and bathroom reno, they put the POS on the market for 60,000 more than they paid. Open house after open house the thing just sat. They took it off the market, and decided to do a major gutting of the rest of the place, and then rent it until things heat up again. They are a little worried because the strata is one unit away from reaching the rental limit. They are just hoping that they can get the reno finished before someone else in the complex decides to convert their place to a rental.
#3)Another dude sold his house Pt.Moody, just up the Hill off the Barnet for the High 900’s. They bought a lot in coquitlam and are in the midst of building a new hoouse, which will be worth 1.3 million (his estimate). The builder is building a spec home beside their lot, which he plans to sell. The guy I work with is watching that closely as he wants to buy a Porsche 911 with a HELOC ( if the hose sells for significantly higher than his estimate of his homes worth, then, by extension, his home is worth a lot more money and he can aford the car) Well the other house is sitting. Interestingly, this guy and I were talking with a consultant that we use from Santa Barbara; He bought his house for 1.2 million two years ago, and it overlooks the pacific and is just gorgeous. When my workmate heard that, I think he started to understand how f’ed up things are when homes in Coquitlam are more expensive than homes in Santa Barbara!)
Interestingly, I do not think RE is a poor investment at all, and I have done well buying and selling homes over the last ten years. Presently, I rent in Vancouver and own a nice home in a small town just outside Penticton that is known for its boutique wineries. I am not a cranky Bear, just someone that feels that RE in BC is headed for a serious downturn. We’ll keep our house because it really is our Principal Residence, and it has been paid off for some time now. Would I buy in this market? Not a chance.
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bdk Says:
June 21st, 2008 at 9:50 am
Agreed Van Man.
Too bad that’ll whizz right over the peoples heads who need to understand it the most.
Dave you’re wrong:
The retarded warehouse worker will be unable to obtain a mortgage, unable to carry the $2,000 spread between a rental if he could get a mortgage (his Mum co signs for mortgage or what have you) and he walks away losing the 20% deposit. If you can now pay 80% of the original price then there has been no appreciation and there are lost opportunity costs too. A buyer who manages to get out now could start investing in the next bubble , Green Tech.
I’m talking about sub average buyers who’ve overextended themselves buying pre sales that have not completed yet with the intention of flipping” and making “easy money”
Don’t try to turn this around and talk about developers.
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Anonymous Says:
June 21st, 2008 at 9:59 am
blueskies
Are you seriously going to trust Dave?
Based on Dave’s very first post #21, the person has severe flaws in math let alone economics.
Per Dave: “… Secondly, the condo market has gone up 10% in the past year. In order for developers to lose out, the market would first have to drop at least 10 to 15%.”
More accurate calculations would be: If something has gone up 10%, it needs to go down only 9.1% to return to the base level.
Thanks, Dave. Your first post helped me skip all your further vain attempts and save my time.
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Drachen Says:
June 21st, 2008 at 10:20 am
Hillary
“I haven’t seen data to suggest that real estate only performs at inflation. Not even the worst of the bears in this forum believes that.”
Well the data is there but only a moron would believe in limitless exponential appreciation. It’s simply not possible without an infinite money supply.
Let’s do some simple math (something you apparently have a lot of trouble with).
A house costs $100,000 in real dollars today. It appreciates at 1% above inflation for 1,000 years. Oh look it would cost 2 million dollars! I think we can agree that $100k housing is for the decidedly poor yet they’d have to be a millionaire (in today’s dollars!) in 3008 to afford their run down trailer home!
Is that clear enough for you?
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blueskies Says:
June 21st, 2008 at 10:24 am
anonymous #120
Are you seriously going to trust Dave?
No, what he is saying does not fit with what i am seeing.
Now is not the time to buy….
I know i should not be playing with the troll but they look so cute when you dress them up like a realtor…. awwww
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Patiently Waiting Says:
June 21st, 2008 at 10:33 am
“Whereas renters lease into a community and have no desire to plant or associate themselves in the community.”
I don’t know where you got this from. Renters actually have time to volunteer, or just be out and about, because they aren’t mortgage slaves.
One thing I notice about homeowners is how quickly their world shrinks to their property (always doing this and that around the house). I was actually like that too when I was a homeowner. Even if you aren’t renovating, the house and lawn are always demanding your time.
“There’s nothing wrong in being renters and if you don’t have kids, there’s not a huge necessity to buy.”
Hmmm you seem to suggest renters care less about their communities.
I spent the first eight years of my life in rentals, and I seem to have come out alright. Around the ages of 5 to 7, I lived in student rental housing at UBC. What a great place to be a kid. Friends everywhere and so much to do.
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Booya Says:
June 21st, 2008 at 10:58 am
“I haven’t seen data to suggest that real estate only performs at inflation. Not even the worst of the bears in this forum believes that.”
Have a look at this graph from Yale economist Robert Shiller:
http://en.wikipedia.org/wiki/I.....ig_2-1.png
Look closely at the red line: it shows inflation-adjusted house prices for the last 100 years. Aside from a dip between the Great Depression and WW2 and the insanity of the last 5 years, and you can see that prices have not exceeded inflation in all that time. This graph goes to 2005, the top of the US market. Anyone with an open mind could see that it was predicting a massive crash in the US, which – tada! – is now happening.
Bottom line: houses appreciate with inflation in the long run. That’s it. There is no added value in a house, unlike a stock which is backing a company that is actually producing something.
Van Man has it right: “Apple Inc and RIM both come to my mind. “Homes” DO NOT increase in their intrinsic value, they never do.”
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Me2 Says:
June 21st, 2008 at 11:01 am
So let me get this straight Richard there are 19000 units for sale plus 25,000 more under construction so that means there’s a huge oversupply?
The 25,000 under construction won’t complete in any given year, mult-family units take 2-3 years to complete. Let’s be generous and say we have 10K completions a year. That can house 22k new people at the standard 2.2/household. Population is increasing at a higher rate then that. Even if the population percentage increases aren’t at all time highs, the number of actual increases is still very high.
So we’re still back at 19K on the market, are you assuming all those units are empty? I’d pretty confident that most of them are occupied by someone, so where will they live after they sell? They will either have to buy or rent somewhere, so in your best case scenario they all decide to rent and not buy, that would put some downward pressure on prices temporarily, but upward pressure on rents which in the long term will put upward pressure on prices.
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Booya Says:
June 21st, 2008 at 11:12 am
Shiller, I might add, is arguably the world’s foremost authority on the global housing bubble. He has not only proven that house prices track inflation, but also correctly identified the US housing bubble and predicted the ensuing crash we are now seeing.
He is also on record as saying that Vancouver is “the bubbliest city in the world”.
Is that enough data for you?
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Patiently Waiting Says:
June 21st, 2008 at 11:21 am
“I’d pretty confident that most of them are occupied by someone, so where will they live after they sell?”
Yes most, but a significant minority are vacant. Just check VOW. I’m only guessing but I wouldn’t be surprised if at least 30-40% of units on the market are vacant. It would be interesting to an investigation on VOW to see what the percent really is. One thing I noticed is some listings say owner or tenant occupied but the pictures show empty rooms.
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browntown Says:
June 21st, 2008 at 11:23 am
hey nutslaps! i check with government they confirm still have printing press and halocopter! next bubble-figuring out how to make more land! ha ha ha lunch time! dave hand drachen lunch again!
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patriotz Says:
June 21st, 2008 at 11:57 am
The US is already rebounding
Would that be the same US that has just recorded the biggest YOY % decline in prices ever, including the Great Depression?
What’s your definition of “rebound” anyway?
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MC_V Says:
June 21st, 2008 at 12:05 pm
Bottom line: houses appreciate with inflation in the long run. That’s it.
Not quite Booya. =)
There is property taxes that must be paid. There are repairs, maintenance, etc. The interest on your HELOC if applicable. The interest on the mortgage. Lost interest/investment income on the outgoing monies. etc, etc, etc.
If this is factored in, then the costs most probably are negative to inflation in the long run.
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nutslap Says:
June 21st, 2008 at 12:11 pm
Is this the evidence you were talking about Krissh?
http://www.theglobeandmail.com.....ry=shiller
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MC_V Says:
June 21st, 2008 at 12:19 pm
As to realtor Dave (or are you Dave Learyhay?),
The biggest indicator to me is market psychology, which right now is dismal.
I make it a rule now to not ever bring up RE and participate in discussions on it as I have been hammered for it the last three to four years. This makes conversations about RE genuine, and not influenced in any way by my thoughts on it as I am simply a listener.
There has not been one positive comment on real estate this year so far, other than from those who have unloaded property and are thanking their lucky stars.
This is a far cry from even just last year where comments were of the positive variety.
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MC_V Says:
June 21st, 2008 at 12:34 pm
POST #79 Anonymous said:
Retail sales rebound
http://www.cbc.ca/money/story/.....etail.html
Inflation is up to 2.2% from Aprils 1.7% a difference of 0.5%.
The story shows 0.6% rise in retail sales.
Hmmmm, too easy to figure this one out.
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browntown Says:
June 21st, 2008 at 12:53 pm
hey nutslap, schillers know less about vancouver than you nutbag! maybe he miss all the immigration from miami! yeah when all the talk get bad maybe bottom is in! rocket going up!
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bluesman Says:
June 21st, 2008 at 1:58 pm
Hey folks,
I just went to the auction at River Rock Casino in Richmond where they were auctioning the 5 condos from Parksville (Onyx at Craig Bay) and the bidders were either at the Richmond location, a Parksville location, a Calgary location, on the internet or submitted a bid by proxy.
It turns out the first unit listed at $545,000 went to a Parksville bidder for $480,000 (12% haircut), the next one listed at $535,000 went to a bidder for $380,000 (a 29% haircut), the next one listed at $435,000 went for $350,000 (20% haircut), then next one listed at $425,000 went for approx. $325,000 (memory failed on that one–approx. 23.5% haircut)and the last one listed for $425,000 went for a mere $280,000 (a 34% haircut).
Two went to Parksville bidders, two to Calgary and one to an internet bidder.
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-A- Says:
June 21st, 2008 at 2:43 pm
hey, blueskies, they paid way too much.
I was in the Parksville area recently, and I can tell you there are for sale signs everywhere, for miles in either direction of the Island Hwy. literally thousands, some of the signs have been there so long the grass and weeds are starting to cover them.
I wonder if the buyers know the economy in the area is based on bed and breakfast businesses, and tax right off schemes, seems everyone there is a “consultant” working out of their house.
And yes it’s pretty about 10 days a year.
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bluesman Says:
June 21st, 2008 at 2:53 pm
I’m BluesMAN, not BlueSKIES, just for the record
I’m a first time poster hence the confusion. No hard feelings.
Thanks to all here for your enlightenment over the years, btw.
At the auction there was only one bid from the Richmond room of about 50 people (probably half of those were involved in the sale). Only one lonely bid from an elderly gentlemen. When he didn’t bid a second time the auctioneer asked him why he wasn’t bidding again and he replied “Prices are too high”.
The auctioneer really tried to pump the bids with comments like “Prices are only going up”, “You’ll never get a deal like this again”, “You’ll go home and regret that you didn’t bid on these units”… and so on. Ad nauseum.
LOL
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nutslap Says:
June 21st, 2008 at 2:58 pm
Krissh/Browntown/thumsup/informer/dumhead
Please provide a clear list of your credentials as to why you have expertise in anything to do with Vancouver other than lifting boxes.
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browntown Says:
June 21st, 2008 at 4:47 pm
hey nutslap! yeah don’t worry about my credit entials! flip that superstar nutbagger! yeah just package up rocket for trucking to launcher!
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OPP Says:
June 21st, 2008 at 5:30 pm
I don’t know about others but in my circle of friends/acquaintances we all have mortgages but with no need for them. I have been investing the banks money the last 5yrs because the interest charges is less then what I’ve been averaging on investments. If interest rates begin to climb I simply cash out my investments and become mortgage free again pocketing the difference I’ve made. I know we’re not in the majority here but it is quite common. I’m confident there is a sizable amount of people with mortgages that fall under the same umbrella. Weather they’ve borrowed from the bank to invest or they’ve been investing their money instead of paying off their mortgage instead. As it currently doesn’t make sense to pay off a debt that’s being charged less then you could earn.
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Raincouver Says:
June 21st, 2008 at 6:00 pm
And yes it’s pretty about 10 days a year.
Yes, Parksville is pretty around that time frame but it’s the other 355 days of fog/rain where it cannot to be confused with California/Hawaii/Arizona/Mexico.
Just because it happens to be in ‘Canada’ doesn’t make it special anymore.
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not any mouse Says:
June 21st, 2008 at 6:07 pm
I could buy now, easily, but I dont think it is a good time to buy or I could word it:
Yes now is not a good time not to holdoff or how about: yess its mine! all mine! my money that is, not the banks, not some specuvestor hoping for the lottery..uum a buyer i mean.
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observer Says:
June 21st, 2008 at 6:32 pm
Me2:
I agree the 19,000 listings nor is the 25,000 starts quite the right number to consider. I think you are trying to say that the new stock of properties is not growing fast enough to accommodate population growth (i.e. new stock of people) assuming we remain at same density levels of 2.2 people per unit.
I looked at mohican graphs (see post in May) from cmhc which says that there were about 19,000 units completed in 2006-2007 (hopefully I am reading them correctly). The Vancouver population grew from 2,221,613 in 2006 to 2,249,725 in 2007 (estimates from gvrd) for an increase of 28,112. Assuming an average of 2.2 people per unit as you suggest gives capacity for 41,800 people, suggesting supply outstripped population during the period 2006-2007.
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freako Says:
June 21st, 2008 at 8:06 pm
Thanks for the kudos Warren. It definitely takes patience.
Patience? As in “it takes these thick bears some time to grasp my well reasoned arguments? Isn’t that a wee bit condescending?
I will be looking forward to your commentary is RE implodes all around us.
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freako Says:
June 21st, 2008 at 8:09 pm
My opinion is that it is always a good time to buy if you: a. can afford it; b. plan to own for a least a moderate term (5 years); c. have economic stability; and, d. have found a product you desire. If you meet all those metrics, then a potential downturn has no effect on you. Rather, things get better over time as inflation increases your wages and as you build equity.
You absolutely MUST be a realtor, because that sounds so Chipmanesque, it is eerie.
Let’s rephrase the question:
Is now a good time to INVEST in real estate?
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-A- Says:
June 21st, 2008 at 8:41 pm
“You absolutely MUST be a realtor, because that sounds so Chipmanesque, it is eerie.”
Freako, I came to the same conclusion;, I wonder, if this guy will soon start to explain the Chipman Theory of how Negative Equity and Negative Cash Flow is a sound investment strategy.
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Dave Says:
June 21st, 2008 at 8:53 pm
Is now a good time to INVEST in real estate?
Like many things… it depends.
There are still some good deals out there with good cap rates. Pretty much nothing in downtown Vancouver, but if you look outside you can find it.
Nice try at guessing my profession, but once again the speculation is wrong. Definitely not a realtor.
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patriotz Says:
June 21st, 2008 at 8:55 pm
I’m confident there is a sizable amount of people with mortgages that fall under the same umbrella.
Are you joking? Canadians are carrying record levels of debt, and BC has a shocking -8% savings rate.
The great majority of Canadians have no net assets outside of their houses and pension plans. None.
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Raincouver Says:
June 21st, 2008 at 9:01 pm
OT, one of original posts…
Real estate pounded by skyrocketing gas, food
Most basic of household finances putting the squeeze on housing sales
Derrick Penner , Canwest News Service
Potential homebuyers are becoming worn down by rising fuel and food prices
In the words of Ralph Cramden – Hardy Har Har.
Potential homebuyers aren’t becoming worn down by the the obscene prices of real estate, oh no. It’s actually fuel and food that’s taking down the housing market.
Thank gawd for the internet so we can save these pearls of wisdom for future generations.
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Raincouver Says:
June 21st, 2008 at 9:11 pm
The great majority of Canadians have no net assets outside of their houses and pension plans. None.
WTF. If you have a house and an income that’s not enough? Holy Hanna! What next?
Considering that 3/4 of the planet lives on $2 a day or less, that looks like somewhat of a high-class ‘problem’.
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Thums up2 Says:
June 21st, 2008 at 10:20 pm
It is indeed always a good time to buy if you are….
1.Buyer between age 19 to 35 year of age.
2.Are able to pay monthly payment for the term.
3.Long term investor
4.Buying as principle residence.
5.Picking up suitable location.
6.When interest rates are historic low.
Affordability can’t be better than what it could be in the above circumastances.just wondering about those people who were selling in a fear and those who are selling in a fear. would they ever be able to return back?
let’s check some examples.
1.Strataman sold his house in 2005 in fear of crash,approximately-7.5% realtors commission.
2.Crabman sold his appartment in 2006 in fear of crash
approximately-7.5% realtors commission.
3.Brittanny sold her house last year in fear of crash little under the list-7.5% realtors commission.
4.Damann sold his house in 2008 little bit under the list-7.5% realtors commission.
First of all they have lost the oppertunity to be called first time buyer they might have to pay more on taxes if they like to buy again.secondly they are all banking on a crash. in my understanding they will not get a penny in bargain to reach up to their level of year when they have sold their homes.Then their age won’t be same to handel the debt.I think strataman is 55 year old now it’s been almost three year since he sold his house.
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Rocker Guy Says:
June 21st, 2008 at 10:21 pm
Robert Shiller posted a fascinating article in the NYT in May discussing how even highly educated and skilled people miss the signs of a bubble: http://www.nytimes.com/2008/03.....amp;st=nyt
The basic idea is that, because it’s hard (impossible, perhaps) to get a good idea of what all the participants in a market are thinking, we tend to rely on the advice of others. Even learned economists do this – they survey people to find out about their buying intentions, for example.
The problem is that since the people supplying the information themselves have only a fuzzy idea about the market, combining all this fuzzy information does not necessarily provide a clear picture of what’s going on.
Yet, when faced with uncertainty, as humans we tend to side with the advice that others provide to us. After all, imagine us running around in the forest thousands of years ago. Back when we were hunter-gatherers, it made a great deal of sense to trust your friend who said the berries in the field over there are good to eat. Trusting the advice of others confers an advantage.
If your neighbour just paid a great deal for a house, it tends to validate that the price your neighbour paid was the right price — even if it was really too high. So you choose to pay a high price as well. When you hear of your co-worker who just scored a $50K gain on a condo in Port Moody, it further validates that there must be something right about the prices people are paying – even if they seem too high.
Here’s an example from the article:
Suppose houses are really of low investment value, but the first person to make a decision reaches the wrong conclusion (which happens, as we have assumed, 40 percent of the time). The first person, A, pays a high price for a home, thus signaling to others that houses are a good investment.
The second person, B, has no problem if his own data seem to confirm the information provided by A’s willingness to pay a high price. But B faces a quandary if his own information seems to contradict A’s judgment. In that case, B would conclude that he has no worthwhile information, and so he must make an arbitrary decision — say, by flipping a coin to decide whether to buy a house.
The result is that even if houses are of low investment value, we may now have two people who make purchasing decisions that reveal their conclusion that houses are a good investment.
—
By the way, Realtors and “bulls,” this isn’t just mindless commentary. Robert Shiller successfully called the technology bubble, and then went on to successfully call the US housing crash. And as others have pointed out, he once called Vancouver “the bubbliest city in the world.”
I rest my case. Homes are fucked. Back to the rate of inflation we go…
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Thums up2 Says:
June 21st, 2008 at 11:21 pm
“Robert Shiller successfully called the technology bubble, and then went on to successfully call the US housing crash.”
There are some facts to find out bubble but proffesors analogy is not really open to public,at the time of california crash one of our poster(JADE EAST)pointed out about documentary suppose to be telecast that night.
In the very begining of docomentary proffessor goes tricky way”THREAT OF TERRORISM AND EARTH QUAKE GOT CONNECTED WITH SUBPRIME”you guys might have heard about all those etc.etc. reason about usa like hurricanes and blah blah.
What we got here so far is an issue of AFFORDABILITY miner panic of negetivity(specially from bears on the blogs) of downturn from south of border which did not show up in rebgv stats so far.
From they example of Shiller we can’t even take his own word for the same reason he has mention in his analogy,think about it?
Un employement rates are historically low
increased population(Immigration+Migration)
increased income for lots
low interest rates
no natural disaster or threat of evils.
less supply check post#88
incresing rental stress every month.
Best above the all Vancouver house prices were historic low around 2004 they had corrected up words becasue we are actually residence of beautiful city and our place is
“THE BEST PLACE ON EARTH”-we deserve the lift up and for the next round-after the break.
“there are lots of cities in the usa where prices are still up on what ever pace.”-there is something that proffesor can change for every thing else there is Vancouver “a bubble less city on earth”.
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snark Says:
June 21st, 2008 at 11:29 pm
WTF. If you have a house and an income that’s not enough?
Of course that’s enough – unless of course you don’t actually own the house. If you owe more than you own and are relying on that income than you’re vulnerable to a downturn, job loss, etc.
The very nature of ‘unexpected’ setbacks is that they are unexpected right?
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snark Says:
June 21st, 2008 at 11:42 pm
If interest rates begin to climb I simply cash out my investments and become mortgage free again pocketing the difference I’ve made.
I guess the question is this: will the water boil fast enough that you notice? Many frogs in the US were convinced the water was getting warmer only temporarily – the turnaround would happen any minute and house prices would start going up soon.
Right now markets are very volatile. I notice that one of the stories linked here is about a warning for a global credit and stock market crash. At the same time the fear of inflation keeps rearing its ugly head – note the recent ’surprise’ that the central bank didn’t lower interest rates… What happens when rates start to rise? What if this happens at the same time markets take a dive? Just how diversified are you?
I’m curious if anyone has a link to a long term interest rate chart. What does that cycle look like? I know we’re not far from the trough of historically low rates and that we came from a high of around 20% in the early eighties so it took at least 20 years to hit a low for interest rates on this most recent cycle. Are there any long term studies on interest rates?
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snark Says:
June 22nd, 2008 at 12:01 am
There are still some good deals out there with good cap rates.
Are you referring to Phoenix Arizona or is there somewhere in BC that Isn’t overly bubble-priced and would be protected from an impending downturn?
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snark Says:
June 22nd, 2008 at 12:02 am
Nice try at guessing my profession, but once again the speculation is wrong. Definitely not a realtor.
I believe that you aren’t a realtor. Here’s my guess: You work for the CMHC. Do I get win a prize?
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bdk Says:
June 22nd, 2008 at 12:11 am
“My opinion is that it is always a good time to buy if you: a. can afford it; b. plan to own for a least a moderate term (5 years); c. have economic stability; and, d. have found a product you desire. If you meet all those metrics, then a potential downturn has no effect on you. ”
Uhh, Okay so all you need now is 10,000 morons who make $600K a year to qualify for all these new units that’re about to hit the market.
Thats okay right? If not then there is a big problem that one crazed warehouse worker will be unable to counteract no matter how many names and rants he uses on this one blog
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moldcity Says:
June 22nd, 2008 at 12:24 am
Brown/Thumbs/Krissh, I would really appreciate if you consider doing either of the following:
a.) Learn to communicate so your argument can be comprehended by the average English speaker.
or:
b.) Fuck off
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patriotz Says:
June 22nd, 2008 at 12:37 am
Interestingly, I do not think RE is a poor investment at all, and I have done well buying and selling homes over the last ten years.
We don’t either. We just think it’s a poor investment at today’s prices.
The one thing Warren Buffett does is that he controls the one and only thing any investor has control of in any investment transaction: the price he pays.
Buffett is as clear in writing as he is in person: “The critical investment factor is determining the intrinsic value of a business and paying a fair or bargain price.”
Did you catch that?
http://www.dailywealth.com/arc.....dec_28.asp
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Anonymous Says:
June 22nd, 2008 at 12:39 am
Ohhhh Shiiiiittt..
Is it good or bad that thats old news? If prices are stupid and get stupider does that make us a safer or riskier market?
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patriotz Says:
June 22nd, 2008 at 12:43 am
Nyah, what does that Shiller guy know anyway? How can somebody who doesn’t live in Vancouver appreciate that it’s the best place on earth?
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Snark Says:
June 22nd, 2008 at 12:47 am
Thank you Patriotz. Such a simple point, but apparently not obvious to everyone taking part in today’s market.
You control the price you pay
Just because a market can be a good investment doesn’t mean it’s worth paying any price to acquire. Use common sense.
Can local income levels support further price increases?
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Snark Says:
June 22nd, 2008 at 12:50 am
How can somebody who doesn’t live in Vancouver appreciate that it’s the best place on earth?
Clearly a very good point.
Could you really know that Nortel was the Best investment on Earth if you didn’t work for Nortel?
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Mold City Says:
June 22nd, 2008 at 1:02 am
Here’s my guess: You work for the CMHC.
Although I think the CMHC is responsible for propelling the Vancouver bubble to the it’s current heights thanks to it’s encouragement of zero down/ 40 year mortgages, I don’t think it has any motivation to encourage the bubble past this point.
I think it’s much more likely that dave works for a mortgage broker.
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Anonymous Says:
June 22nd, 2008 at 2:21 am
Who’s Hillary?
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Anonymous Says:
June 22nd, 2008 at 7:20 am
“Who’s Hillary?”
Drachen’s husband!
Mold city,you have missed another 25m jackpot on saturday please try your luck again till then keep on sucking.
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jesse Says:
June 22nd, 2008 at 8:22 am
“Can local income levels support further price increases?”
I’ll leave that decision to the banks. Who am I to say?
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jesse Says:
June 22nd, 2008 at 8:33 am
“Rather, things get better over time as inflation increases your wages and as you build equity.”
As long as you have a job. Everyone thinks they’re immune to job loss but we know for certain many won’t be. BTW the Relitters still relitting are now looking at a 30% pay cut this year. Construction workers will be about 12-18 months behind. Negative inflation negatively increasing wages I guess.
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VHB Says:
June 22nd, 2008 at 8:54 am
““Rather, things get better over time as inflation increases your wages and as you build equity.”
Here’s the thing. One can’t expect 2-4% inflation to co-exist with a 3% bank of Canada rate forever.
Looking back, that is something in 2005 I never would have predicted–that we would have 4% unemployment, rising inflation and STILL have low interest rates. So that’s now lasted for 3 or 4 years. It will not last forever.
If we do see inflation high enough to deflate the real value of mortage debt, then we will see mortgage rates north of 8%. We’ll see what 8% mortgage rates do to the ‘building equity’ schtick.
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Drachen Says:
June 22nd, 2008 at 9:20 am
“Who’s Hillary?”
Dave is Hillary. All of his methods and debate points were completely and utterly refuted and yet he keeps banging on long after he’s lost the debate he intentionally uses lies, misleading statistics and his methods of data interpretation are considered, “Voodoo Economics” by the economics community. I thought Hillary was an appropriate nickname at that point.
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blueskies Says:
June 22nd, 2008 at 10:00 am
We’ll see what 8% mortgage rates do to the ‘building equity’ schtick.
this is the disconnect that i see in dave’s argument…..
how to “build equity’ after paying too
much for a depreciating asset with borrowed money…..
every month you lose $5000 while you are struggling to buy down your mortgage by $500…
the only winners are the RE agent and the mortgage broker who ’snookered” you into the deal
“now is good time to buy” indeed
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FW Says:
June 22nd, 2008 at 10:01 am
I’m happy with all the forest fires in California and the flooding in the midwest, all those homes destroyed will need to be rebuilt. More demand for lumber upcoming, back to work for the forestry workers. This will be almost as good for the industry as the New Orleans hurricane was a couple of years ago. Hurricane season is still coming too so it can be a very good year after all.
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-A- Says:
June 22nd, 2008 at 10:20 am
“More demand for lumber upcoming, back to work for the forestry workers.”
No, it doen’t workt that way, the high demand for Canadian lumber was because we had a 65 cent dollar.
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FW Says:
June 22nd, 2008 at 10:43 am
Canadian lumber has always been exported in US dollars, the high Canadian dollar doesn’t increase the price we sell it for, the price is controlled by the market. The companies are just no longer being subsidized by the low dollar. WE have the most efficient mills in NA so they can still compete. The problem was a lack of demand, it’s about to rebound very quickly. Watch.
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Anonymous Says:
June 22nd, 2008 at 11:04 am
“The companies are just no longer being subsidized by the low dollar.” Which is why our mills shut down, where do you think the 20 % differance in cost to produce lumber comes from? The companies profit obviously thus only a 20% rollback in wages would brinfg it back to marketable. (Based on an 80 cent Canadian dollar which is the area that lumber companies could at least break even)
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FW Says:
June 22nd, 2008 at 11:12 am
Guess the world is out buying american cars since their dollar is 30% down from a couple of years ago. Ummm nope not the case as the demand for american cars isn’t there.
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-A- Says:
June 22nd, 2008 at 11:20 am
FW are you trolling or, are you actually that stupid?
US exports have in fact got a lift since their currency has gone down the tube.
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FW Says:
June 22nd, 2008 at 12:05 pm
Only in things that have demand and are priced competitively, if there’s isn’t demand then their new reduced price doesn’t matter.
If you need to rebuild a home you need lumber, that demand is real and will be meet on the open market.
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Anonymous Says:
June 22nd, 2008 at 2:56 pm
Dave is Hillary. All of his methods and debate points were completely and utterly refuted and yet he keeps banging on long after he’s lost the debate he intentionally uses lies, misleading statistics and his methods of data interpretation are considered, “Voodoo Economics” by the economics community. I thought Hillary was an appropriate nickname at that point.
Pretty sad. You guys are getting paranoid and looking weak. Sandbox too small?
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Hillary Says:
June 22nd, 2008 at 3:38 pm
No one is Hillary except me. I only lost because I’m a woman, and everyone felt it was time for a black man to have a turn.
I’m not bitter though, I’m still worth millions, and have homes in multiple states. Unlike the bitter bears on here.
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Drachen Says:
June 22nd, 2008 at 5:28 pm
FW
“…the demand for american cars isn’t there.”
The problem with your point is that “American” cars in Europe (for example) are made in europe!
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Just saying Says:
June 22nd, 2008 at 9:21 pm
My opinion is that it is always a good time to buy if you: a.are rich; b. have so much money you don’t care about depreciating assets ; c. are so rich you can weather any economic storm; d. like the place.
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romeojordan Says:
June 22nd, 2008 at 10:14 pm
the bubble popped april 26th, 2008.
i cannot think of one RATIONAL reason to purchase residential real estate TODAY.
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Thums up2 Says:
June 22nd, 2008 at 11:11 pm
“I never would have predicted–that we would have 4% unemployment, rising inflation and STILL have low interest rates. So that’s now lasted for 3 or 4 years”
That’s mean you were wrong for four consecutive years that’s good enough to make atleast 80,000 buyers and sellers sit outside the market or send some of them out of city or gift them rental life forever because since than affordability eroded and market appreciated by almost 90%.
Now if some one followed your recomendation in the past they must pay 90% extra to get in the market plus the commission they had to pay to realtors.
“If we do see inflation high enough to deflate the real value of mortage debt, then we will see mortgage rates north of 8%. We’ll see what 8% mortgage rates do to the ‘building equity’ schtick.”
Based on your past performance of prediction and analysis your “if” and “then” can take for ever.
means more will be priced out- so stop annoying to hard working people let them buy and let them become home owner.
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patriotz Says:
June 23rd, 2008 at 3:34 am
I’m happy with all the forest fires in California and the flooding in the midwest, all those homes destroyed will need to be rebuilt
There are far more vacant houses in San Diego than were destroyed in the fires. And I don’t expect any imminent construction boom in Des Moines, etc, either – there is a lot of excess inventory even in the midwest. Even if every house in those areas was rebuilt, it would still only be a blip.
The US housing market is not going to turn around for 20 years. There are a lot of boomers sitting in big houses that are going to have to be sold over that time, and there is not going to be anyone around able to pay big money for them.
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NETCOPS Says:
June 23rd, 2008 at 6:13 am
Ouch comment#185 you were logged on to different forum buddy!
This is vancouvercondo.info-Vancouver,B.C. definitley wrong forum to post,please go and find california wildfireblogs.net or sandiegodestroyedhomes.help
Thanking you in advance
NETCOPS
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Vansanity Says:
June 23rd, 2008 at 6:37 am
The blog was mentioned in the paper again! Regarding Robertson’s tax idea on empty homes. Here’s the link:
http://www.canada.com/theprovi.....268b096acf
Excerpt:
“On some real-estate blogs and Internet forums, his plan has been panned by investors as everything from a ‘desperate populist campaign promise’ to ‘one of the dumbest ideas ever.’
While their tone might be unfairly harsh, they are right about one thing: This penalty against speculators represents another blatant tax grab — one that could sully the city’s reputation.”
Congratulations to all who voiced their opinion on this subject!
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patriotz Says:
June 23rd, 2008 at 6:54 am
one that could sully the city’s reputation
Reputation for what exactly? Having the most overpriced real estate? I could do without that.
Frankly IMHO the only positive aspects of Vancouver compared with other Canadian cities are the things neither government nor business have anything to do with – the mountains, sea, and mild weather. What other pluses are there exactly?
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umdesch4 Says:
June 23rd, 2008 at 7:20 am
Good, affordable sushi…I’m just saying…
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arbitrage Says:
June 23rd, 2008 at 8:29 am
re: the article in the province – It sure feels like Derek Moscato just surfed the web for a couple hours and cranked that nugget out.
I think he could have done a better explanation of why people (speculators/bulls/and bears) are against the tax – more than enough discussion was done here.
Maybe he wasn’t referencing this website.
That 18000 empty condo number is still floating around – did bc hydro ever return with a real answer on that? The reporters are the one’s who should really be chasing and referencing such info.
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betamax Says:
June 23rd, 2008 at 8:47 am
More demand for lumber upcoming, back to work for the forestry workers.
Keep dreaming. There’s cut lumber stacked to the sky already in US lumberyards, as Canadian companies cut & exported like crazy the last couple of years to avoid (a)changes to softwood tariffs and (b)encroaching pine beetles.
Forestry workers are already applying for $11/hr jobs at Home Hardware and Rona, and they’ll be lucky to get them or to keep them when the recession/housing crash hits BC next year.
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Re-diculous Says:
June 23rd, 2008 at 8:55 am
Here was my morning smile:
Realtors enlisted in crime fight
http://vancouver.24hrs.ca/News.....6-sun.html
kinda like getting the fox to guard the chickens
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Anonymous Says:
June 23rd, 2008 at 12:03 pm
Re: MLS#V708346 “100k+ price drop” …
I know that building – it’s a co-op requiring 35% down w/ no rentals/pets/etc … no wonder.
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Patiently Waiting Says:
June 23rd, 2008 at 12:30 pm
Gregor’s ideas are causing reactions (positive and negative) and are leading to debate. Few BC politicians are capable of this anymore.