Friday Free-for-all!
Friday means open-topic time here at Vancouvercondo.info, so lets do a round up of some stories from the week:
-National housing boom has come to an end
-Rental restrictions dampen market
-Speculator tax a bad idea?
-No easy fix for affordable housing
-Investing for stagflation
-Oil above $140 a barrel
-How will gas prices affect real estate?
-Selling in a changing market: be patient
-Downtown is the place to be!
-BOC Speech on real estate & monetary policy
-Rising rates could slow US recovery
So what are you seeing out there? Post you news links, anecdotes and thoughts here and have an excellent weekend!
note: any conversation on real estate or economics is allowed, please keep it civilized. when posting articles please only quote pertinent points and link to the original instead of pasting the entire article here. Thanks!
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Anonymous Says:
June 26th, 2008 at 11:02 pm
We’re about to hit 20K inventory for the REBGV, courtesy of PaulB’s numbers. On top of that, sales will be down roughly 35% to 40% compared to June, 2007.
I’m sorry bulls, but this market will be in a freefall soon. Seriously, get out while you can!
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Patiently Waiting Says:
June 26th, 2008 at 11:54 pm
Re: Vancouver Sun editorial
My understanding is condo owner-occupiers want to discourage investors mainly because they have different interests regarding the upkeep of the buildings. I have no phobia against renters (being one myself) but if I had to buy in condo it would be in one that was only for owner-occupiers.
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rentah Says:
June 27th, 2008 at 12:15 am
from the G&M article on stagflation:
“Invest in real estate. Though hard to sell in fractions and often lumpy in returns, it has been a good store of value over cycles of as much as 40 years, Mr. Gampel says.”
Idea for children’s book:
‘Mr. Gampel Encounters a Giant House-Lump’
(hedges have to be sensibly priced to start with).
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Matt Says:
June 27th, 2008 at 1:05 am
However, Patricia Croft, chief economist for Phillips Hager & North Investment Management Ltd. in Vancouver, sees key differences between the economies of the 1970s and today.
“First, central bank policies are different this time. They plan to resist inflation. Second, in the 1970s, workers, who had appreciably stronger unions than today, were able to pass through their costs of living in the form of wage increases. That set off a wage and price spiral. This time it’s different, central banks will fight inflation and accept some stagnation. And the unions now have much less power.”
The collective bargaining agreements of Metro Vancouver city union all expire around 2010-2012. Compounding Olympic project costs, higher food and petroleum prices, expect these unions to demand further wage increases that will result in the financial phenomenon explained by Ms. Croft.
Manufacturing unions may be much weaker but it certainly isn’t the case with government unions which exist as a stealth social welfare system for people unable to find work in the private sector.
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Warren Says:
June 27th, 2008 at 5:35 am
Matt,
I wouldn’t be too worried about city unions, they don’t represent too many people in the big picture. Does anybody know when the teachers and various health care workers have their contracts expire? Both of them have an ax to grind with Gordo and friends, and it could get ugly next time.
Although if the joe taxpayer is feeling the brunt of the recession, these groups won’t get a lot of public sympathy.
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mark xu Says:
June 27th, 2008 at 6:10 am
On the news, California median just fell 35% yoy. I think Freako commented on the slow fall of median in the US a year ago, and predicted ugly numbers once the sales mix go the other way. I guess now is the time. Overall, I expect indexed prices in US to hold steady on a nominal basis from now on, as inflation work the price back to where it started and then a bit lower.
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Dave Says:
June 27th, 2008 at 6:11 am
I guess they are making more land:
“A B.C.-certified high school in China is creating a “Vancouver” resort on a lake near Shanghai, complete with its own Coal Harbour, Robson Street and Royal Yacht Club.”
http://www.canada.com/vancouve.....b402ebb296
“Sino-Canada high school describes Vancouver as the “city of heaven” with beaches, lakes, forests and a mild climate that make it the first choice for holidays and immigration. ”
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Mr. Beautiful Says:
June 27th, 2008 at 6:27 am
I wonder.. when people around the world think of BC are they more likely to associate it with thoughts of the winter games or detached feet washing up on the shore?
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Mr. Beautiful Says:
June 27th, 2008 at 6:31 am
Dave, I love how you quote promotional material as if it’s a neutral observers opinion!
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James Says:
June 27th, 2008 at 6:59 am
I think it’s now clear that the Vancouver real estate market is headed for another round of steady apreciation. As stagflation takes hold people will flock in to buy real estate in the best place on earth in order to protect their money. Remember that in BC 1/3 of workers are unionized and about 20% are in public sector unions. The big goverment unions start striking in 2011. Buy and hold condos in Yaletown. It’s the gold of the west. I own twelve and I keep them empty and in pristine shape ready for the chinese investor.
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ReductiMat Says:
June 27th, 2008 at 7:06 am
…or detached feet washing up on the shore?
My coffee was close to being one with the monitor. Very funny stuff.
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patriotz Says:
June 27th, 2008 at 7:43 am
Compounding Olympic project costs, higher food and petroleum prices, expect these unions to demand further wage increases that will result in the financial phenomenon explained by Ms. Croft
Demanding and getting are two different things. Remember public sector unions have less bargaining power than their private sector counterparts, because when they go on strike it improves their employer’s financial position – the tax revenues keep coming in but the wages stop going out.
Add a protracted recession and the unions, both public and private sector, are going to get squat for some time, just like in the 80’s.
Oh yes and that’s bearish for BC RE.
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Warren Says:
June 27th, 2008 at 7:44 am
Regarding the feet, remember any exposure is good exposure. I’m not trying to be bullish or sarcastic, its just the truth.
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DonKing Says:
June 27th, 2008 at 7:52 am
Regarding the feet, remember any exposure is good exposure. I’m not trying to be bullish or sarcastic, its just the truth.
And it’s better than going toe-to-toe against other cities for “world class” status!
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sidelines Says:
June 27th, 2008 at 8:19 am
Matt:
“Manufacturing unions may be much weaker but it certainly isn’t the case with government unions which exist as a stealth social welfare system for people unable to find work in the private sector.”
Huh? Put together a sentence that makes sense, please – or fine tune your thought. A public sector union is a “social welfare system?”
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betamax Says:
June 27th, 2008 at 8:23 am
Add a protracted recession and the unions, both public and private sector, are going to get squat for some time, just like in the 80’s.
Precisely. In fact govt. employees took a pay cut in the early 80’s because the alternative was significant layoffs.
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Thums up2 Says:
June 27th, 2008 at 8:33 am
“Sino-Canada high school describes Vancouver as the “city of heaven” with beaches, lakes, forests and a mild climate that make it the first choice for holidays and immigration. “
Here we got back to the above saying actually who ever come to visit downtown looks like they don’t like to go back that’s why now Vancouver is fueled by external dollars and high net worth individuals,During Expo 86.Population of downtown 40,000-We are now at a population of over 85,000.Population projections at 120,000 by 2020.Some people think we are not even world famous while robson street has it’s own slogan runing from decades called
“World famous shopping promenade worlds best Robson street”
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Mr. Beautiful Says:
June 27th, 2008 at 8:41 am
any exposure is good exposure.
Vacationing in Chernobyl?
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Warren Says:
June 27th, 2008 at 8:44 am
No but I am going to NYC in July.
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Mr. Beautiful Says:
June 27th, 2008 at 8:51 am
Ah yes, Robson street, the ‘Rodeo drive’ of ‘Hollywood north’ where you can get everything your heart desires: ‘New York style’ pizza, ‘Tokyo style’ sushi, ‘Dublin style’ pubs, ‘LA Style’ salons, ‘Paris style’ cafes.. and ‘Vancouver style’ street artists.
No other city in the world has artists on the street that will draw a beautiful charcoal portrait of you while you wait. I mean I assume this to be true, I’ve never been to another city. Why would I need to with all this culture here?
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Anonymous Says:
June 27th, 2008 at 9:19 am
10James Says:
June 27th, 2008 at 6:59 am
I think it’s now clear that the Vancouver real estate market is headed for another round of steady apreciation….I own twelve and I keep them empty and in pristine shape ready for the chinese investor.
James,
Good luck with you 12 properties. Let us know how things are going in a few months.
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Bubble Lad Says:
June 27th, 2008 at 9:44 am
I’m sorry – I thought James was joking – when I read comments by people still trying to buoy up real estate they just seem like comedy now. “We’re through the looking glass here, people!” I give up.
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dingus Says:
June 27th, 2008 at 10:05 am
Wowieee…here’s a headline for you
Housing drop looming in Canada?
http://www.globeinvestor.com/s.....7/GIStory/
Happy Canada Day!
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that guy Says:
June 27th, 2008 at 10:07 am
check this out in the globe:
Housing drop looming in Canada?
“After months of holding fast to the view that Canada will not follow the U.S. into a housing decline, one economist is now raising the spectre of an overall drop in prices north of the border.”
http://tinyurl.com/4383vb
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that guy Says:
June 27th, 2008 at 10:08 am
bah! beat me to the punch.
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dingus Says:
June 27th, 2008 at 10:19 am
Yeah, but you get bonus points for tinyurl’ing
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blueskies Says:
June 27th, 2008 at 10:25 am
from the article:
“It’s a bit unnerving to see how Canadian performance is beginning to look like that of the U.S. two years down the line,”
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Re-diculous Says:
June 27th, 2008 at 10:37 am
Wow…..I’m really surprised just how quickly the MSM is jumping on the bear-bus, ….its starting to get crowded, but hey, welcome to all
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richard Says:
June 27th, 2008 at 10:44 am
one more bust article from the vancouversun
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Confused Says:
June 27th, 2008 at 10:51 am
Maybe I don’t get it. If inventory keeps rising quickly to a HUGE 20,000 like it is doing now, does that not mean that people are not buying houses?
I thought that when people don’t buy houses, the price of houses goes down.
But some people here think the price will keep going up. What gives?
Some people say prices will stagnate. That would make sense if inventory also stagnated. But if you took economics 101 you know that supply going up with demand going down means lower prices. I mean, you learn that on the first day of university.
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BDK Says:
June 27th, 2008 at 10:53 am
Even units taht are priced below historical market value are languishing on the market unsold. Showings are still taking place but no actual Sales.
For the simpler folks here (Krissh/Satv/Matt/Dave/Thumsup?warehouseworker1234) this means sell for whatever you can get today or lose hundreds of thousands of dollars in equity and thousands every month on “vacant pristine” or tenanted units.
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BDK Says:
June 27th, 2008 at 10:56 am
“But if you took economics 101 you know that supply going up with demand going down means lower prices. I mean, you learn that on the first day of university”
Agreed, but the trolsl here (it calls itself Krissh/Satv/Thumsup/Informer?browntown) it thinsk calculators are useless and economics is fake. He’s said all this stuff if you check the archives. He is eitehr kidding or just an idiot and it thinks increasing supply, lower sales, negative equity and negative cash flow are good things. Just ask it it posts the same incoherent jibberish everyday. See “The Krissh Post” in the forum section for a warning on this clown, whom the Vancovuer Sun called an idiot!
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jesse Says:
June 27th, 2008 at 11:14 am
“I own twelve and I keep them empty and in pristine shape ready for the chinese investor.”
Yeah well I have 1200 condos. chinese investor will pick mine over yours for sure since mine are in double super crazy mint pristine shape. So there.
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patriotz Says:
June 27th, 2008 at 11:18 am
“We are definitely seeing a shift in the marketplace, although it’s certainly not a time for panic,” said Victoria Real Estate Board president Tony Joe.
Uh huh. You wouldn’t be trying to unload a few properties, would you Tony?
Remember: don’t panic, but if you’re going to panic, be the first.
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pricedoutfornow Says:
June 27th, 2008 at 11:26 am
“There are a litany of reasons why the Canadian market is different,” Mr. Porter said.
Yes, but there also a litany reasons why the Canadian market is NOT different. Low interest rates fuelled a real estate boom not justified by fundamentals like income, it doesn’t matter that we didn’t have a subprime market like the US. Fact is, prices are just too high and can’t be supported by our incomes. Therefore prices have to come down. Simple. And as soon as prices start to stagnate, people will stop buying as there’s no reason to rush into the market. Worse yet, the masses are starting to get the idea that houses are overpriced, so no one’s going to buy until we see a substantial decline to affordable levels.
Confused-Exactly!!! I still don’t get those articles that point out high inventory, then say things like “but don’t worry, we stil project a 5% increase in prices this year” Sure, maybe THIS year as only the high-priced houses get sold, but what about next year when the prices have to come down as people NEED to sell?
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Dave Says:
June 27th, 2008 at 11:44 am
Maybe I don’t get it. If inventory keeps rising quickly to a HUGE 20,000 like it is doing now, does that not mean that people are not buying houses?
People continue to buy real estate in all markets, both up and down. Houses are still selling, just not at the rate they were in the last couple years which broke all time records. The drop in sales isn’t really surprising to anybody and most predicted in would happen this year.
I thought that when people don’t buy houses, the price of houses goes down.
But some people here think the price will keep going up. What gives?
Some people say prices will stagnate. That would make sense if inventory also stagnated. But if you took economics 101 you know that supply going up with demand going down means lower prices. I mean, you learn that on the first day of university.
The price of houses depends on many other factors as well. Assuming constant economic factors (e.g. interest rates, stable economy, employement, etc…), then the best way to predict the price appreciation (or depreciation) of real estate is to look at the ratio of total listings to sales. This ratio is better known as Months of Inventory (MOI).
In a tight market (~3 MOI), prices go up, in a balanced market (~6 MOI), prices remain stable and in a buyers market (~9 MOI), prices go down.
To the end of May, the MOI for Greater Vancouver was approximately 6, which is a balanced market. Assuming the ratio remains the same (i.e. ~6 MOI), then prices will likely remain stagnant.
Going forward, prices will be dictated by overall inventory and overall sales. Inventory and sales typically peak at this time of year and drop over the Fall. But once again, the important factor is the ratio. I predict that the ratio will get a little bit worse into the Fall (~7 MOI) which may cause a slight easing of prices.
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patriotz Says:
June 27th, 2008 at 11:52 am
Note also the article does not mention a certain West Coast province or any of its cities.
Elephant in the living room? What elephant?
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Drachen Says:
June 27th, 2008 at 12:08 pm
“supply going up with demand going down means lower prices. I mean, you learn that on the first day of university.”
Well it’s taught anyhow. Dave is living proof that you don’t necessarily learn it.
Dave
“Blah blah blah MOI blah blah…”
Umm Dave, MOI is a method to measure supply and demand… So you’ve essentially said, “Well no, it doesn’t just depend on supply and demand, it also depends on supply and demand!”
“To the end of May, the MOI for Greater Vancouver was approximately 6″
I plug in the numbers and get over a 9, what numbers are you using? Sales for may = 1758. Units on the market at the end of may = 17,000 or so.
By the end of this month we should see an 11 or so, so by your methods prices should start falling any day.
But honestly that’s a terrible method, sales fluctuate too much at different times of the year, even in the boom times of 2006 and 2007 the winter months were hitting double digit MOIs but prices didn’t fall then.
“Inventory and sales typically peak at this time of year and drop over the Fall.”
I like how you constantly ignore the fact that this is obviously not a typical year for either inventory or sales. Typically boats don’t sink so there shouldn’t have been any worries on the Titanic after it hit the iceberg right?
“I predict that the ratio will get a little bit worse into the Fall (~7 MOI) which may cause a slight easing of prices.”
As always your predictions come without any information to back them up, just like everything else you put out there. Did the Ouija board tell you that one or have you graduated to Tarot cards yet?
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nvan Says:
June 27th, 2008 at 12:21 pm
Sadly it happened today at lunch. One of the guys at the office whispered that his girlfriend and him were going to buy a place on a 40year 5% down in North Burnaby. Since he knows my views he started in on… “but renting is throwing away your money. At least this way we’ll be farther ahead in equity when we move somewhere bigger in a year or two…” I almost tried to explain the math to him but all I could get out was good luck. 26 years old $60000 between on a $365000 condo. There’s still a few more people willing to take a shot even at the top.
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dingus Says:
June 27th, 2008 at 12:30 pm
Building equity! It’ll take 5 1/2 years of payments to pay off CMHC fees alone! Then add PTT, and it’s what, 8 years of payments to even start ‘building equity’!
Of course condos will gain 5% a year forever (right Dave?) so, there’s your equity.
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dingus Says:
June 27th, 2008 at 12:33 pm
…so at 5% a year, eight years from now that 365k north Burnaby condo will be worth 540k, right? Right? And at the end of the mortgage the condo will be worth, with its 5% gains a year (right Dave?) … 2.7 million dollars!
Whoopee!
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Drachen Says:
June 27th, 2008 at 12:36 pm
I was wrong, last time I said I had a video of Krrish at work it was actually someone else.
THIS is the real thing!
http://www.videosift.com/video.....se-Failure
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Confused Says:
June 27th, 2008 at 12:43 pm
Is it just me or does dave typed a lot and say nothing?
DAVE: Answer this question with a one word answer (yes or no): Does increasing suppy and decreasing demand lead to lower prices in real estate?
If you spew any gibberish other than the one word “yes” or “no” answer we know you are a BS snake oil salesman. If you ignore the question, we know you are full of crap. Answer the question. I dare you.
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Bubble Lad Says:
June 27th, 2008 at 12:53 pm
Ah poor Krissh…now that this whole boom is over I’m kinda gonna miss that crazy, rambling, totally incoherent, insulting and abusive mystery man. Maybe a memorial blog is in order? A “Greatest Hits” sort of thing.
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Me2 Says:
June 27th, 2008 at 1:06 pm
Would you have made money if you bought 5yrs ago and sold now? How about 4yrs ago? 3yrs ago?, 2yrs ago? last year? just use a yes/no answer otherwise you’re a bear salesman blah blah blah.
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Confused Says:
June 27th, 2008 at 1:16 pm
My answer to Me2’s question is 4ys ago, “yes”; 3yrs ago “yes” 2 years ago “no” last year “no”.
Now, you answer my question with a straight “yes” or “no”. I dare you.
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Confused Says:
June 27th, 2008 at 1:17 pm
P.S. I anwered “no” because I wouldn’t make profit in today’s collapsing market.
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Confused Says:
June 27th, 2008 at 1:19 pm
“and sold now”
BTW, sales are down around 30%. How do you expect to sell “now”????
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Vansanity Says:
June 27th, 2008 at 1:30 pm
Confused: Yes, basic Economics dictates supply > demand = lower prices or vice versa demand > supply = higher prices. However, real estate as in most markets has its variables. Have to look at: the cost to borrow (interest rates); employment; income; debt loads; location etc… to name a few. One of the biggest variables that plays a key role is the motivation/emotion of the seller. Sellers are stubborn, no one wants to sell at a loss. If a seller can afford to hang on to a property in the hope it will sell for more later…they will do just that. Remember Robert Shiller talking about prices. He says that prices fall when the psychological tug-of-war between enthusiasts and doubters is won by the doubters. That’s happening as we speak, but its not something that will happen overnight. I think next year, if interest rates rise and the bank keeps increasing the cost of borrowing, it will be that last motivating factor for people to sell. All we’re seeing this year is the profit margins on pre-sales narrow to the point of it not making any sense or cents to bother with it as an investment. The tides turning.
That being said, take what I and anyone else say with a grain of salt and complete your own research and come to your own conclusions.
Pope, never given you a proper shout out for the site, I love it. It’s my favorite of all the RE blogs. Keep up the great posts, TGIF!
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Vansanity Says:
June 27th, 2008 at 1:43 pm
nvan: been there, done that. I had a friend who recently (two months ago) said they bought a place, newly completed, and it was their first day looking on the market. I just cringed. The deed was done. I bit my tongue so hard, she said the realtor told her there were other bidders and she had to move fast. Riiiiiiiiiight. Enjoy negative equity.
The simplest math I’ve given people is this. Home today worth $600,000 I rent at $1,000 per month. 2 years from now Home drops by $100,000 to $500,000. In that 2 year time I spend $24,000 in rent. Net savings of $76,000 on principal…hmmm.. yea, renting is such a waste of money. Idiots. I have no more sympathy for people who can’t think for themselves.
I leave you all with this: “Most people would die sooner than think; in fact, they do.”
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Vansanity Says:
June 27th, 2008 at 1:45 pm
The above quote was from Bertran Russell. Sorry to be a blog whore.
Have a great weekend, enjoy the sunshine y’all!!
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BDK Says:
June 27th, 2008 at 1:54 pm
RIP Krissh/SATV/Thumsup2?informer?browntown
You know the bubble is over when one of Krissh many personalities denied even knowing Krissh.
http://vancouvercondo.info/for.....3&t=48
It was fun, now get your bankrupt ass back to the forklift
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Bizznitch Says:
June 27th, 2008 at 1:58 pm
Glad to see all these good news housing stories in the news now. I think the housing in northern BC is tanking now as well.
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Drachen Says:
June 27th, 2008 at 2:01 pm
Me2
“Would you have made money if you bought 5yrs ago and sold now? How about 4yrs ago? 3yrs ago?, 2yrs ago? last year? just use a yes/no answer otherwise you’re a bear salesman blah blah blah.”
You know, if you had that kind of “time travel investment machine” like you’d need to take your kind of advice your actual best ratio for earnings/input money would be playing the lottery. If you bought the winning lottery ticket last week would you have made a profit? Answer yes or no.
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stagnate Says:
June 27th, 2008 at 2:24 pm
indeed interesting times. most government union contracts are locked into 2010, when they were done a couple years ago i thought they were bit a bit on the rich side but doesn’t look that way now (based on current inflation). nonetheless i think we can all see some deflationary forces picking up now. the beach will be busy this summer but not new condo showrooms. the developers will have a lot of cash out, not much cash in this summer. to what extent that changes their behaviour awaits to be seen.
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Dave Says:
June 27th, 2008 at 2:34 pm
Answer this question with a one word answer (yes or no): Does increasing suppy and decreasing demand lead to lower prices in real estate?
If you spew any gibberish other than the one word “yes” or “no” answer we know you are a BS snake oil salesman. If you ignore the question, we know you are full of crap. Answer the question. I dare you.
It’s not a ‘yes’ or ‘no’ answer you dummy. Read my post above and think it through.
Supply and demand are in equilibrium when MOI is around 6. Demand exceeds supply when MOI is around 3 and supply exceeds demand when MOI is around 9.
Get it? Or did you not pick up on reading comprehension in university?
Let’s use an example because I have no confidence that you will understand the above. Let’s say there are 10000 listings and 3,000 sales last month. The MOI is 3, which is a buyers market. Prices keep going up. Now Let’ say inventory goes up 15% and sales drop 15% (your statement). That gives 11,500 inventory/2,550 sales, or an MOI of 4.5, which is still a sellers market. So yes, inventory can increase, sales can decrease yet prices can still go up.
I’m sorry if the math is too complicated for you.
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Me2 Says:
June 27th, 2008 at 2:45 pm
If you had this time machine would you have bought 4yrs ago or would you have been a renter? yes/no
I could go on and on with this stupid questions. Ask something better instead on wasting everyones time with bear propaganda. Lets have a good discussion instead of the constant bashing non-bears, heck even the modest bears get bashed on here.
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betamax Says:
June 27th, 2008 at 2:51 pm
Dave: blah, blah, blah…sales can decrease yet prices can still go up…blah
Of course, but it’s also how housing markets begin to correct.
We’re mirroring the US boom/bust, just time delayed. You can talk all you want, but it doesn’t change anything.
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Confused Says:
June 27th, 2008 at 2:53 pm
Dave,
I guess we have our answer. I posed a “yes” or “no” question to you and you did not answer it. Instead you spouted a bunch of gibberish. You are a con. Who else evades a simple question? “Yes” or “no” anwer Dave, you question evading con!
Me2,
You said “Ask something better instead on wasting everyones time with bear propaganda.”
Well, you seem unable to asnwer a simple yes or no question. I answered your’s but you sill refuse to answer mine. What are you trying to hide? Could it be your insincerity?
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Confused Says:
June 27th, 2008 at 2:58 pm
Me2,
You bring up a “time machine” when I asked a simple yes or no question about supply and demand. Last I heard this blog was about RE and economics not science fiction.
Geez, how old are you. You can’t answer a yes or no question and you talk about time machines. You sound like my 5 year old.
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Mr. Beautiful Says:
June 27th, 2008 at 2:58 pm
If you had this time machine would you have bought 4yrs ago
Dude, If I had that time machine I’d be so rich from lotto winnings and stock plays that I’d be too busy traveling the world and living the high life to be concerned about buying in Vancouver. Right now I’d be hanging out on a beach in Spain and thinking about calling the helicopter in so I could have dinner in Paris.
You’re right the bashing isn’t necessary though, as far as I know Dave never said prices would go up 5% a year – he said he expects them to drop soon.
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betamax Says:
June 27th, 2008 at 2:58 pm
26 years old $60000 between on a $365000 condo. There’s still a few more people willing to take a shot even at the top.
Prices are still going up because only suckers are buying.
we’ll be farther ahead in equity when we move somewhere bigger in a year or two…
The assumption that they’ll flip in a year or two will be a bitter pill in a year or two when sales volume is in the toilet and they owe more than market value. I hope they like the place, because they’ll be living there for decades…and that’s the best case scenario.
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JR Says:
June 27th, 2008 at 3:00 pm
I studied economics in university and I will observe that you seem disinclined to read the tea leaves. What has happened in Vancouver this Spring is not a gradual move from a very hot to a balanced market. It has been a sudden and significant reversal which shows no sign of abating. It is characteristic of the beginning stages of a correction reminiscent of what has happened in Vancouver prior to the last four corrections. It is also mirrors what has happened in many frothy US markets and other markets around the world.
You can characterize our current market any way you like, but I suggest to you with no small amount of precedent to back me up, that it is but a whistle stop on a down train. Maybe you should move from your position in the caboose, and check out the view from the locomotive.
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/dev/null Says:
June 27th, 2008 at 3:08 pm
Drachen said: “Typically boats don’t sink so there shouldn’t have been any worries on the Titanic after it hit the iceberg right?”
Liked that.
Dave said: So yes, inventory can increase, sales can decrease yet prices can still go up.
Yes, but you’re just looking at the first month’s change. You think you’ll get a shift and then everything holds steady again? After one month you’re at 4.5MOI in your example. But after another month of +15%/-15% you’re at 6MOI. Next month you’re at 8.5MOI.
Your answer is like saying “Sure that artery is opened up real bad but you’ve only lost a pint in the last 20 seconds. People donate more than that and are fine.”
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Gadwin Says:
June 27th, 2008 at 3:25 pm
Dave wrote: In a tight market (~3 MOI), prices go up, in a balanced market (~6 MOI), prices remain stable and in a buyers market (~9 MOI), prices go down.
Nope. According to Mohican’s graph, over 6 MOI, prices GO DOWN:
http://langley-financial-plann.....-mode.html
We are at roughly 7.5 MOI now. Can you hear the sound of the bubble bursting?
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Me2 Says:
June 27th, 2008 at 3:29 pm
*l* learn how to read, I didn’t bring up the time machine that was drachens post.
54Drachen Says:
June 27th, 2008 at 2:01 pm
Good to see the bears can only read what they want.
I’m starting to understand why you are confused.
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Drachen Says:
June 27th, 2008 at 3:33 pm
Mr. Beautiful
“as far as I know Dave never said prices would go up 5% a year”
Dave says:
“That’s a 5% growth rate for the condo year over year, which is fairly conservative.”
“Long term RE growth has been greater than 4% over the long term.”
“I think 5% real estate appreciation is fairly conservative. One could argue for 6 to 7% appreciation”
I could spend a while and find a half dozen other instances of him saying it, but what’s the point, it’s his oft repeated “fact” that RE always goes up an average of 5% a year. Oddly enough he’s never cited any actual source for his information… I wonder why that could be?
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Me2 Says:
June 27th, 2008 at 3:33 pm
What amazes me is how many people can forecast the bust but can’t forecast the boom. Guess everyone on here is rich by playing the futures market. Should I be shorting oil? How about corn?
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Drachen Says:
June 27th, 2008 at 3:40 pm
Me2
“*I* learn how to read, I didn’t bring up the time machine that was drachens post.”
Well actually you did bring up the time machine, I just pointed it out that your perspective made a time machine necessary. Otherwise why bother pointing out such trends? Someone who invested in Nortel or Enron at the right time and got out at the right time would have made lots of money too. The problem is most people didn’t get out at the right time, just as most people will not get out at the right time for the Real Estate bubble.
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Mr. Beautiful Says:
June 27th, 2008 at 3:45 pm
Drachen: I stand corrected.
Me2: do you find it easier to predict that an overpriced market will eventually correct or that a specific market will get swept up in speculative fervor? If you have the ability to predict the latter you must be extremely wealthy by now as long as you also know when to sell.
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Me2 Says:
June 27th, 2008 at 3:55 pm
*l* I haven’t said that it was easy or even possible to do it the other way around. I’m just really impressed with all the armchair millionaires here that can so easily forecast the future. Like I asked should I short oil? yes/no Should I short corn? yes/no
Should I continue posting here? yes/no
Do bears make more money then bulls in the long term? yes/no
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Drachen Says:
June 27th, 2008 at 3:58 pm
Me2
“What amazes me is how many people can forecast the bust but can’t forecast the boom.”
That’s always the way. Warren Buffett would not be the richest investor in the world if there were some way to forecast booms in that way. He is the richest investor in the world because he knows that if you find the fundamental valuation of something sooner or later it will return to that valuation.
I read a good anecdote about the tech boom once, the author was friends with a brilliant market analyst on Wall St. He shorted tech stocks twice but missed the mark, the third time he put the longest term possible on it and sank the rest of his savings into shorting the market. Two months after they expired the market collapsed. The moral of the story is, “The market can stay irrational for longer than you can stay liquid.”
Just because we can tell you the market is irrational does not mean we can tell you when it will return to normality. However the recent inventory spike is a common denominator with all of the big bust cities in the states. That does not mean the bust is absolutely positively going to happen this year but it does mean that it’s incredibly likely (I’d give it a 99% or greater chance). We can also tell you approximately how far it will fall (though there is some debate about whether it will exceed 50% by a lot or a little).
Fundamentals are everything. If you don’t believe me look at Warren Buffett’s account balance…
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Dave Says:
June 27th, 2008 at 4:06 pm
CONFUSED: Answer this question with a one word answer (yes or no): Have you stopped beating your wife?
If you spew any gibberish other than the one word “yes” or “no” answer we know you are a BS snake oil salesman. If you ignore the question, we know you are full of crap. Answer the question. I dare you.
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browntown Says:
June 27th, 2008 at 4:15 pm
yeah, browntowns out of warehouse and ready to kick some bear!! nuts! yeah dracken likes rockets, time machine and balls too!! everything but job and commitment! wife waiting for westside mansion after renting scheme pays off! ha ha ha yeah jr, real economist, maybe fail out of finance at douglas college! real estate train forgot j.r.! hey betamax, beta went out of style slapnut with last crash in 80’s! you be renting for decades slappy! have fun nutman!
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punface Says:
June 27th, 2008 at 4:15 pm
I have a lot of friends in Alberta and several of them keep posting facebook status updates about the problems they are having selling their homes. I’m starting to think it will be painful even for bears to watch when it starts here.
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BDK Says:
June 27th, 2008 at 4:29 pm
Browntown= forum/viewtopic.php?f=3&t=48
Get back to your forklift or better yet why don’t you become one of those religious nutjobs that chant nonsense on the street corners downtown? Or go chant your nonsensical “real estate” ideas. You might even have some spare change thrown at you and you can go invest it!
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BDK Says:
June 27th, 2008 at 4:31 pm
My Bad
Browntown/Satv/Krissh/Informer/Thumsup or whatever his/her nutjob self is calling him/her self today =
http://vancouvercondo.info/for.....3&t=48
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browntown Says:
June 27th, 2008 at 5:00 pm
hey bdk nutjobber! thanks for leaving corner office early! thanks gods for real estate inflation! maybe some change ready for 1212 howe!! yeah hey punface maybe forgot immigrant left calgary to come here! high price house might as well leave caspertown! come here pay a bit more ballslap!
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BDK Says:
June 27th, 2008 at 5:10 pm
forum/viewtopic.php?f=3&t=48
Back to the topics on the Free For ALL.
The Market is hooped and there is no disputing it.
Read the articles, crunch the numbers, call any realtor in the book and tell them you have a property to sell and see what he/she says about the market.
And posting under different names here won’t make anyone buy your condo Krissh/browntown/informer/thumsup.
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Confused Says:
June 27th, 2008 at 5:11 pm
Dave said: “Answer this question with a one word answer (yes or no): Have you stopped beating your wife? ”
Dave,
You seem to be logically challenged. Unlike your question, mine does not assume any unproven facts.
Now, for the third time, anwer my question with a “yes” or “no”.
It was asked so long ago with no answer, here it is again: Does increasing suppy and decreasing demand lead to lower prices in real estate?
For the third time, I dare you to anwwer.
Dave, the more you evade the question, the more you respond with childish insults the lower your credibility sinks. Here’ some advice for you: I don’t think that slimey politician-type rhetoric works on blogs.
Answer the question.
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Confused Says:
June 27th, 2008 at 5:12 pm
I think that dave clutters up this blog with so much blathering, he needs to be pinned down to a straight answer.
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umdesch4 Says:
June 27th, 2008 at 5:12 pm
For the record, browntown cracks me up. I can’t understand a word of it, but man…it’s like Southpark run through babelfish a few times or something. Classic!
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umdesch4 Says:
June 27th, 2008 at 5:16 pm
Confused…sorry to say, but I think it’s impossible to answer your question with a simple yes or no. In this regard, I see where Dave is coming from…but that’s as far as it goes. My answer would be “not necessarily always, but in this case, definitely yes”
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Not Confused. Says:
June 27th, 2008 at 5:28 pm
I’ll answer your question.
No.
Increased supply and decreased demand does not have to equal lower prices. You can have all the supply in the world and no demand and prices will only come down if the seller wants or needs it to, no other reason.
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Confused Says:
June 27th, 2008 at 5:31 pm
“I think it’s impossible to answer your question with a simple yes or no.”
What, does the law of supply and demand not apply to real estate? If it does the answer to my question is “yes”.
I don’t think they have repealed the law of supply and demand even thought the bulls may wish it.
How does the law of supply and demand sometimes “not necessarily” apply to any asset? It always applies. The complex factors dave always refers to are factors affecting supply and demand.
Look at the numbers since January and you know which way supply and demand are going and therefore, which way prices will go. Down.
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Confused Says:
June 27th, 2008 at 5:37 pm
“Increased supply and decreased demand does not have to equal lower prices. You can have all the supply in the world and no demand and prices will only come down if the seller wants or needs it to, no other reason.”
Ha, ha. That’s funny. Your scenario only works in a world where there are zero real estate sales. Like Dave himself said, people still buy and sell in bear markets. The transactions just happen at a lower price. As long as there is one sale, the market price of comps declines. Just like how one sale at a high price in a boom raises the value of comps.
You should apply for a nobel prize if you think you’ve proven that the law of supply and demand does not work! Unfortuantly, they only hand those out in the real word. Not on planet zero sales.
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browntown Says:
June 27th, 2008 at 6:03 pm
hey confused, yeah confused alright, i think you confused self with dracken! you like rockets? must be draken transgendered! ok nutknobs if land supply go down and more people go to the land can price go down! well maybe but i want yes or no slappys!
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blueskies Says:
June 27th, 2008 at 6:20 pm
For the record, browntown cracks me up.
yes! an erudite satv with a scatological bias…
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Alistair Cookie Says:
June 27th, 2008 at 7:27 pm
@Confused
“How does the law of supply and demand sometimes “not necessarily” apply to any asset? It always applies.”
In accounting, land is always treated in a special way. Building however is not.
Maybe this is where the “bull” folks are getting confused.
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patriotz Says:
June 27th, 2008 at 7:32 pm
You can have all the supply in the world and no demand and prices will only come down if the seller wants or needs it to, no other reason.
“Supply” means someone wants or needs to sell, jackass.
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Alistair Cookie Says:
June 27th, 2008 at 7:46 pm
@Me2
“Do bears make more money then bulls in the long term? yes/no”
Possibly one of the worst questions you could poise in an attempt to make yourself sound credible.
As I said the other night, to be a bear in one market simply makes you a bull in another.
Example: If you are an RE bear right now, you would by default be an RE Short bull.
“I’m just really impressed with all the armchair millionaires here that can so easily forecast the future.”
When something is so plainly obvious as the massive RE bubble in Vancouver, it no longer becomes a forecast, but a bygone conclusion. To that end, why bother putting up a fight on this obvious fact and start putting that optimistic attitude towards exploring methods of generating real money over the course of this downturn. Forget about the scraps of your possible 1% or 2% appreciation over the next few years!
Has anyone heard of a Vancouver or BC fund that will speculate on RE short sales? Is short selling even allowed by law in BC?
Are there any publicly traded companies that specialize in personal bankruptcy in BC/Canada?
Any other ideas as to where the money will flow once/if the commodity bubble bursts in Canada?
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Alistair Cookie Says:
June 27th, 2008 at 7:48 pm
Has anyone heard of a Vancouver or BC fund that will speculate on RE short sales? Is short selling even allowed by law in BC?
I just ask that because I read about a California Fund similar to that that made over 1000% gains in less than two years.
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alexcanuck Says:
June 27th, 2008 at 8:23 pm
Simple confusion between confused and not confused. Not confused thinks “price” means asking price. Confused thinks “price” means selling price. That’s all, no confusion here.
Throw a new term in the mix, to make it “transaction price”, all confusion disappears and prices do, indeed drop.
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jesse Says:
June 27th, 2008 at 9:47 pm
“it’s his oft repeated ‘fact’ that RE always goes up an average of 5% a year. Oddly enough he’s never cited any actual source for his information… I wonder why that could be?”
Drachen, he’s right in a sense. What Dave doesn’t tell you is IT’S THE WRONG STAT TO LOOK AT. The 5% wage growth is looking at an individual’s income over time, not average wage growth. In terms of house prices it’s average wage growth that matters and that’s firmly fixed at inflation. Bus-ted.
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jesse Says:
June 27th, 2008 at 9:56 pm
Inflation adjusted property prices (for high density) are flat and in direct line with incomes. The 5% is fallacious because inflation was higher over the past generation. These days average incomes grow 2% per year (NOT 5% as is repeatedly and incorrectly claimed) and so go property prices.
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Not Confused Says:
June 27th, 2008 at 10:10 pm
#89 patriotz Says:
June 27th, 2008 at 7:32 pm
You can have all the supply in the world and no demand and prices will only come down if the seller wants or needs it to, no other reason.
“Supply” means someone wants or needs to sell, jackass.
I’ve reread your response a couple of times and I still can’t figure it out, I’m sorry I don’t speak jackass.
Maybe you can explain to me how supply equals the supplier having to lower prices. They don’t need to, only if they want to, they have the option of not lowering prices and thus no sale.
How come there’s been no links about all the bears wandering into the city, maybe the bears have realized where the action is. No coffee shops in the bush.
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Thums up2 Says:
June 27th, 2008 at 10:57 pm
WHERE IS SUPPLY?
In housing sector supplier is not a single largest producer of housing units- A developer for one location is a supplier of atleast 300 units,A home owner is a supplier of single unit with lots of choices to manage the small supply.If unit does not sell on current market prices there are lots of alternate to keep it going.
houses are not like tomatoes or milk canes,houses does not expire over hundred terms periods.
What brings down the prices in housing sector? those reasons are:Income,Affordability,Inflation,Interest rates,
employement conditions,Socio economy and political environment,nature,weather condition,floods,huricanes,
threats,way too much over supply.
From the Income Groups we need only 25,000 new people to take the prices trend ahead,if we don’t find 25,000 new people to carry over the trend-we already have 25,000 people who own those units.
There is not even a case that we don’t have many people to support further growth, we do have those higher income people- some who wishfully sitting out of market and some who intentionally sold their homes to buy again later.
We don’t have any other internal or external reason to help crash the market.some one will bait those sitting out idiots later on the blogs but so far to make vancouver housing crash we must get over supply of new homes not the resale homes.
“We don’t have over supply of new homes that’s why vancouver real estate does not carry bubble in it”.-mind it
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patriotz Says:
June 27th, 2008 at 11:01 pm
I’ve reread your response a couple of times and I still can’t figure it out,
If someone wants or needs to sell he is going to have to take whatever a buyer offers. Buyers control the selling price. Always.
Someone always needs to sell, but nobody ever needs to buy. Don’t forget that.
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browntown Says:
June 27th, 2008 at 11:09 pm
hey jesse nutslap! leave the 2% for your milk cowboy! land, milk and oil’s are more expensive than wage growth, even bdk’s! use government polution divedend cheque for downpayment at 1212 howe cowslapper!
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Brittanny Says:
June 27th, 2008 at 11:18 pm
Thums up2: You are a close minded fool with your head up your ass. I will laugh at your future misfortune, you deserve it.
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Jordan Clark Says:
June 27th, 2008 at 11:20 pm
I just read the Bank of Canada speech, here are two very interesting quotes:
“At the end of 2007, about 14 per cent of total residential mortgage loans outstanding in the United States were subprime”
next:
“The Canadian “subprime” mortgage market accounts for less than 5 per cent of the residential mortgage market”
So our “subprime” problem is smaller, but 35% of the US subprime problem still seems like a pretty big problem. According to a quick Google search the total write downs and credit loses due to US subprime mortgages is 146 Billion.
(http://stockweb.blogspot.com/2.....s-due.html)
So they have 9x more people, but we have only 35% of the same problem, that’s still roughly a $5,700,000,000 problem for us, is that not significant?
It also seems certain the % of subprime mortgages in BC would be higher, leaving us with a much higher part of the problem then the rest of Canada.
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Alistair Cookie Says:
June 27th, 2008 at 11:35 pm
@Not Confused
“Maybe you can explain to me how supply equals the supplier having to lower prices. They don’t need to, only if they want to, they have the option of not lowering prices and thus no sale.”
I’m sorry, but you truly are confused! You’ve completely twisted supply/demand rules into supply/prices rules of your own making. These are not applicable here.
Prices naturally gravitate to the amount of money (or barter commodity) that someone is willing to pay (demand) for the good.
If the good does not sell at the current selling (supply) price, and if the seller (supplier) is not willing to lower the price until the item sells (meets the demand), then the good is not really for sale.
Just reiterating what patriotz said in post 97.
If you truly believe that the seller controls the price, then I have a PS3 to sell you for $10,000. It’s used, but has a custom paint job, and by your confused logic I should have no problem selling it at my (supply) price.
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Alistair Cookie Says:
June 27th, 2008 at 11:50 pm
@Jordan Clark
Yes, 5.7 Billion is a fair amount, but it goes beyond sub-prime. Sub-prime is simply the “scapegoat” for a much bigger global credit fiasco.
Our Canadian banks will take a hit much much bigger than the 5.7B and already have I believe (too tired to look it up right now, but CIBC is bleeding) as they have delved into the US sub-prime markets. It goes further than that of course. Alt-A and even prime loans are going to hurt our banks as well, and not just the loans made in the US.
I have a friend who owns a mortgage brokerage. When I heard him say that if he can’t get a client the financing ‘then we have a problem’ (meaning that he could find financing for anyone) over two years ago, I knew then that we where due for something major.
All this easy lending will cause our banks to reign in the lending controls, causing the housing downturn to further mirror that of the US as fewer and fewer people will be able to qualify for mortgages.
Sub-prime means nothing.
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patriotz Says:
June 28th, 2008 at 12:00 am
So our “subprime” problem is smaller, but 35% of the US subprime problem still seems like a pretty big problem.
Comparing US-wide statistics to Canada-wide is meaningless because the bubble is much less widespread, in terms of proportion of the whole country, in Canada as it was in the US. Likewise it is meaningless to predict declines Canada-wide.
Also it’s not the categorization of the loan that matters (subprime, etc), but how much the loan amount exceeds the fundamental value of the property.
Only in BC are prices as inflated as they were in California, Arizona, Nevada, and Florida (the top bubble states), and some other areas like Northern Virginia.
Compare apples to apples.
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The Van Man Says:
June 28th, 2008 at 6:51 am
In any balanced market, there always be a tug of war between supply and demand. In the Kanban system pioneered first by Toyota and then adopted by many other corporations in the world, demand dictates supply. Supply thus meets demand, demand meets supply.
Film cameras were once the dominant player in the photographic field. With the advent of digital, it took over film during the last recession because, it offered a cheaper alternative to film. Once the mentality for digital solidified, the death of film is natural selection process. But, that doesn’t mean you can’t buy film. There’s a demand for film, but it is no where close to where it was before. Companies like Polaroid, Kodak and Fuji had gone from being the top 3 in the photographic field into the bottom feeders. This is the same with Sony, which was once a top player in the portable music player well known for its “Walkman” line had now been trumped by Apple’s iPods!
A shift in demand mentally usually precedes an impending recession. As the recession takes a foothold, it changes people’s expectation of a certain product and thus changes the dynamic of the demand itself. As we emerge from the recession into the next boom, this change is permanent. That’s why, recessions aren’t always a bad thing. Companies with a cash rich war chest can take advantage of its position and leap frog forward in the market place. RIM and Apple Inc are both good examples. Remember Palm Inc and Nokia?!?
Real estate itself, from historical records, has always demonstrated that it rises only with buyer’s salaries which is a reflection of increased intrinsic value of corporations they work for. Which means, homes rise in value only if buyers are willing to pay for what the sellers are asking for. Would you pay the same price for a Sony tape Walkman as you do with an Ipod Touch? Of course not, because you realize that an iPod Touch has more value than a tape player. Right now, Vancouver home buyers believe a Sony tape Walkman is worth as much as an iPod.
This distorted view point can offer nothing more than a distortion of the MOI data, because you know it’s not the true reflection of a balanced market, because value itself has also been distorted.
When the value of the Sony tape Walkman is distorted, we will make all the insanely possible excuses to justify its rise.
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The Van Man Says:
June 28th, 2008 at 7:20 am
No.
Increased supply and decreased demand does not have to equal lower prices. You can have all the supply in the world and no demand and prices will only come down if the seller wants or needs it to, no other reason.
In a fantasy world, this may probably be.
In our real world, this is nonsense.
Why is it? Because, with decreased demand means increasing the period where excess inventory stays static. Inventory is cash, but is in a form of goods!
When cash is static, it looses value through carrying costs, inflation, interest charges and management expenses. Would you keep your money in a money market fund charging a 1% MER while paying you no return at all? Certainly not. And yet, you expect to get top dollar for an investment that pays you nothing.
But we see it all the time on the used section of Craigslist where people expects top dollar for a PowerMac G5 single processor tower, when in fact, a low end Core 2 Duo Mac Mini can run rings around the beast while being able to run Windows XP natively cause it’s an Intel processor based! But it’s completely fair to be asking the moon for a used G5 computer because, it doesn’t cost you anything to store it indefinitely while providing you with no return at all, since it is not fast enough to run software productively compared to the newer Intel macs.
Now only if you can keep homes indefinitely while receiving no return from its value.
The reality is that, most people who invest in homes don’t even bother to do an adjusted cost based on its value as it sits vacant or being rented out. That’s also the reason why BANKS, yes BANKS do not want to become landlords, otherwise they’ll be happy to keep renting to people in 1983 or in the early 1990s and wait till 2005 to liquidate all their portfolio . They never did in 1983 and nor during the early 1990s either. They would rather sell it at a lost, because time has a nasty habit of eroding your investment value.
I see a lot of lofty claims that RE provides a steady 5 to 8% return YOY. That’s the performance of a stock market over many many years. And with stocks, you barely need to manage it at all, which has no significant costs to speak of and it does, historically provide a 8 to 12% return with dividend included. I know homes have significantly higher expenses, so if some one here claims that it can make 4% or 8%, that would be net return, so the gross return would be double that, 8 to 16%. Yeah, from an asset class that provides no increased intrinsic value. The true net value is probably somewhere close to the normal inflation rate, but that would be from someone who had bought it during the downturn at significant price reductions and keep a hawkish eye on expenses.
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The Van Man Says:
June 28th, 2008 at 7:35 am
So our “subprime” problem is smaller, but 35% of the US subprime problem still seems like a pretty big problem.
Subprime wasn’t the cause of the credit bubble, but rather a destroyer of the confidence of the lenders as it did with the discovery of this strange sickness that plague the gay community in the late 70s and early 80s as we know now as being AIDS. But did it stop people from risky sexual behaviours? No, because as we understand how AIDS is contracted, we manage the risk by practicing safer sex. Risky lending will always come back as they will in years past as soon as confidence is restored. Confidence will only be restored when the truth about this current bubble is exposed and managed, which will take a rather long time.
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Thums up2 Says:
June 28th, 2008 at 7:36 am
#99
I am already loughing at you strataman,kfinancial,and damman and lots of other,did you ride the monster last week over mount everest.
Don’t talk to me like idiot bdk and brain dead drachen you got it?Brittanny?
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jesse Says:
June 28th, 2008 at 8:30 am
“use government polution divedend cheque for downpayment at 1212 howe cowslapper!”
alreade spendt it at a 50% of sail in San Dieggo.
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Disbelief Says:
June 28th, 2008 at 8:35 am
The sale takes place when the seller and the buyer agree on a price and that in turn establishes value. Recently people have been making decisions based on heart and not head. Now we have a balanced market and people will take the time to negotiate well thought out offers and values will be determined. Sellers will be taking less or they simply will not sell, it’s really that simple. The frenzy has stopped and now we can go back to a market based on fundamentals and not just mental…
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-A- Says:
June 28th, 2008 at 11:27 am
>>>>>>>>>>>>>>>>>>>>>>>>>>>><<<<<<<<<<<<<<<<<<<<<<<<<<<<<
Dave/krissh/krassh, aka Rob, Tqn, Newsflash, dogs, please don’t listen to the bears.
This is a good time to buy. Sure sales have been a little soft, but that’s just because of the weather.
Vancouver continues to have the best fundamentals underpinning the wise investment in residential real estate, and soon the world will come and take our calling card.
The Olympics will propel us to the next league, by the time the 2010 Olympics opening ceremony is finished the TV broadcast, and thousands of rich tycoons will land on Lulu Island.
Yeah I can see it now, 1 bedroom on Lakewood and Hastings for 900k, 1 bedroom Whaley Ring Road 899k, better hurry, we are running our of land- noticed you can’t find a for sale sign anywhere?
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Anonymous Says:
June 28th, 2008 at 11:31 am
“Recently people have been making decisions based on heart and not head. Now we have a balanced market and people will take the time to negotiate well thought out offers and values will be determined. Sellers will be taking less or they simply will not sell, it’s really that simple.”
Good luck to the highly levered 40 year amort recent buyers…..somehow I think there’s already a lot of hurt for those folks already as they now find all those FOR SALE signs everywhere!!!
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-A- Says:
June 28th, 2008 at 11:54 am
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>><<<<<<<<<<<<<<<<<<<<<<<<<<<<<
“Good luck to the highly levered 40 year amort recent buyers…..somehow I think there’s already a lot of hurt for those folks already as they now find all those FOR SALE signs everywhere!!!”
I don’t think those folks see it that way yet. In fact the other day on the radio Bill Good was referring to the current state of the real estate market, as a slight cooling of the market as it prepares itself for the next leg up!
Yes, there will be a lot of hurt, but it’s not even in the realm of possibility thinking in the minds of Vancouverites at this point. There may be 200 maybe 300 of us bears in the whole province.
This is why it will be a calamity of historical proportions, for the masses it will be a complete surprise, and the media won’t report it until everyone is up to their chin in the quick sand.
As Mr. Tulips would say:
Tick Tock…..
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RJB Says:
June 28th, 2008 at 1:03 pm
“Subprime wasn’t the cause of the credit bubble…”
Alt-A is bigger and nastier. Wait until 2009.
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Super Duper Says:
June 28th, 2008 at 2:43 pm
I do agree, there are a lot of people with their head in the sand right now. People who are completely oblivious to the perilous state of, not only Canada’s economy, but the global economy in general. It’s shocking and frustrating too.
There are almost daily reports now of Canada’s vulnerability to recession but few are listening. Or want to hear what they are being told. That said, I myself do count a few people among my friends who are very leery of BC’s economic future and have prepared. Once the media really picks up on it things are going to gather pace. And fast. It always happens.
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Anonymous Says:
June 28th, 2008 at 5:55 pm
The Van-Man: nicely said! clear and concise, +10 thumbs up.
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patriotz Says:
June 28th, 2008 at 6:11 pm
Good luck to the highly levered 40 year amort recent buyers…..somehow I think there’s already a lot of hurt for those folks already
What hurt? They thought their dog kennel was worth 400K when they bought it, so why should they care what happens to the market price in the future? That’s just some other person’s opinion of what the place is worth. They still have the same property and they’re still making the same payments. So why shouldn’t they be experiencing the same pride of ownership?
My computer is worth a lot less today than what I paid for it but that doesn’t bother me.
I mean, they weren’t expecting to sell the place for more, were they? That would make them speculators.
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Deliverator Says:
June 28th, 2008 at 6:45 pm
Do bears make more money then bulls in the long term? yes/no
“Bears make money. Bulls make money. Pigs get slaughtered.”
–Anon
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Bizznitch Says:
June 28th, 2008 at 7:17 pm
Here’s a good link….
A property developer in Vancouver is offering a 10 per cent discount on condominiums in the popular South Granville area in a bid to sell off unsold units…..
http://www.ctvbc.ctv.ca/servle.....lumbiaHome
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Anonymous Says:
June 28th, 2008 at 7:32 pm
“Do bears make more money then bulls in the long term? yes/no”
I’m surprised you don’t already know this. I won’t get on your case, because I don’t believe its reasonable to expect all people to know all things, but this is pretty simple, so it should be very easy to remember:
You refer to ‘bulls’ or ‘bears’ as if they’re people. ‘bearish’ or ‘bullish’ is an opinion based on current market fundamentals. This means the same person may be extremely ‘bullish’ on real estate at an annual rent ratio of 10, but ‘bearish’ on the very same market at an annual rent ratio of 35.
Whether you are ‘optimistic’ or ‘pessimistic’ about a market has nothing to do with how much money you’ll make off a market unless your optimism or pessimism is based on something.
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Draper Says:
June 28th, 2008 at 7:41 pm
10 per cent discount on condominiums
in the popular South Granville Vancouver core too! This is the perfect chance for anyone bullish on the local real estate market to get a great deal!
“Things have changed a little bit and hopefully this promotion gets more people in, and we can sell it to them,” says South Granville Lofts Sales Associate Derek Lai.
Shouldn’t be a problem, this is Vancouver after all.. things are different here.
I used to have an office in that building before it was converted to condos for sale – its a great central location, and would make a terrific starter home as long as the steady sound of diesel buses passing through the Granville transit-loop just below all of the north-facing windows doesn’t bug you.
When I was working I was able to wear headphones and listen to music, so even though I could feel the busses going by the sound didn’t bother me at all!
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Deliverator Says:
June 28th, 2008 at 8:07 pm
Draper – LOL.
Don’t forget the sound of the Harleys as they make their daily migration south from the Robson St. cappuccino bars. I used to rent a place just off 13th and Granville. In the summer, when you have to keep the windows open for fear of dying of heat stroke, the traffic noise was near deafening all night long.
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patriotz Says:
June 28th, 2008 at 8:17 pm
You refer to ‘bulls’ or ‘bears’ as if they’re people. ‘bearish’ or ‘bullish’ is an opinion based on current market fundamentals.
I will also add that since everyone has to put their money somewhere (everyone that has money that is), you have to be bullish about something.
Everyone is both a bull and a bear at the same time. You’re bullish about the things you have money in, and you’re bearish about the things you don’t (or are short in). At any given time.
I was bullish about Vancouver RE in 1983. I was certainly right about that.
I’m bearish now. I think my view will be validated quite shortly.
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VancouverGuy Says:
June 28th, 2008 at 9:53 pm
“Yes, there will be a lot of hurt, but it’s not even in the realm of possibility thinking in the minds of Vancouverites at this point. There may be 200 maybe 300 of us bears in the whole province.”
Nope. There are a helluva lot more than that. In my office, we have about 15 people in my division. Of those, five own one home or more (most of us are relatively young). Of the five who own a home, three are selling. Two of the three are selling on the belief that prices are going to go down.
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wolfey Says:
June 29th, 2008 at 1:24 am
hey guys…
i thought this blog was about realestate …econ
not mudslinging and name calling
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Patiently Waiting Says:
June 29th, 2008 at 1:56 am
wolfey, the last few posts seem fine too me. Its been a lot worse here. Just a bit of lively debate right now.
VancouverGuy, I’ve seen the change in sentiment too. People who were bulls last year, now declaring doubts about the market. I’ve even heard the word “crash” a couple of times. The masses are starting to wake up.
I think one of the bear theories is the market crashes when almost nobody believes it can. I don’t agree with that theory. Neither do I believe that, at the peak, bears generally give-in and buy. That is not what happened in the US. Most bears stood their ground.
BTW I just checked out some of the VOW listings in New West, Coquitlam and Port Moody. A 50K drop doesn’t even make me blink anymore. And I’ve seen the occasional 70K to 100K drops.
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patriotz Says:
June 29th, 2008 at 2:21 am
I think one of the bear theories is the market crashes when almost nobody believes it can.
I think what happens is that the market turns when almost nobody believes it can, and then crashes when people realize that the appreciation is over. Once there are no more gains to be made the rush for the exits begins.
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Vansanity Says:
June 29th, 2008 at 8:10 am
RE: CTV piece
Why is it that a discount on a development is news worthy? If Wal-Mart offers 25% sale off patio furniture, should Tony Parsons run a piece on it at 6? I love how they talk to 2 East Van residents (who’ve given up) to get their opinion on how things will never change. Why? “Doesn’t matter they said it, we like it, print it! Now we can call it a ‘balanced article’”. Even though the “story” is a bit bearish and a sign of things to come, who cares? It’s just another advertisement posing as news. All MSM are sellouts. The real question here is: Who’s your Daddy CTV?
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Thums up2 Says:
June 29th, 2008 at 8:14 am
Hey every one,if you can find good deal some where just grab it while vancouver real estate is on lunch break,there is not enough hopes of bargain-:bloggers source.
Is there any hope for correction or crash?
“I don’t even talk about it anymore. It’s an unrealistic want. It will never happen, it just never will.”-teachers
Jan Mitchell and Zoe Fisolo.
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umdesch4 Says:
June 29th, 2008 at 8:38 am
Off-topic, tongue-in-cheek question:
How many more properties are going to hit the market when people realize they’ll have to sell their home to get an iPhone under Rogers’ announced plans?
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-A- Says:
June 29th, 2008 at 9:20 am
Rob/Dave/KrisshKrassh and dogs, i.e. Newsflash, Tqn, Eastvan Realitycheck:
Don’t waste time on this blog or your blog, you better get out there and grab whatever listings you can before you get priced out of the market forever.
The bears on this blog, including myself, have lost touch with reality. They point out the crash in the US as an indication of things to come here- the Best Place on Earth.
We all know it’s different here. In the US the subprime caused the bubble to burst. In Canada we have 25 year mortgages, fixed rates, and a 20% minimum down payment, so even if there is a connection between sub-primes, defaults and the bubble bursting, it doesn’t apply to Canada.
In the US they overbuilt, not the case in Canada, especially in Vancouver, where it takes a detective just to find a listing.
When the bears get desperate they point to the UK as evidence of how bubbles burst, well again they fail to realize the UK has so much land it was bound to crash, here in Canada especially in BC we have millions of people and very little land.
Our economies are so different as well, UK has cities such as London where tourism is its main economic engine, and we on the other hand have Squamish- a world economic powerhouse.
Then there are the references to Spain, which again, is ridiculous, anyone knows Valencia and Barcelona are no match for Sechelt and Powell River.
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Thums up2 Says:
June 29th, 2008 at 9:56 am
A,
Are you the former robsnumber? why i am asking? because it’s been long time since we have read him.If answer is yes then say yes if answer is no then where is robsnumber?.
Background.
Robsnumber was a poster who established his own blogs against robchipmans increasing wealth but his blogs turn out to be flop show against hpi graph.just too curious to know if he is still around us.anybody?
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browntown Says:
June 29th, 2008 at 11:32 am
hey -a- nutslapper, too bad market leave you behind, lost touch with market not reality nutbagger! no credit crunch here, rbc still have cheap mortgage for those with job for mortgage! 300 bears looking for cheap rental den for decades! canada day coming, get out chequebooks for landlord party!
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thums down Says:
June 29th, 2008 at 12:43 pm
Since your quoting the paper Krissh, here’s one for you from todays Province (the most trusted real estate source ever).
http://www.canada.com/theprovi.....726f0cd714
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browntown Says:
June 29th, 2008 at 12:57 pm
yeah, like bill good says, get ready for next leg up! get in while you can nutbags!
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Anonymous Says:
June 29th, 2008 at 2:03 pm
Maybe you can explain to me how supply equals the supplier having to lower prices.
All else the same, increased supply equals lower prices. To be counted as supply, the unit is owned by somebody who has the intent to sell. You are right in that some non-serious sellers should be considered false supply. Time will tell, but my guess is that MORE supply will come on the market once prices start falling.
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freako Says:
June 29th, 2008 at 2:03 pm
Maybe you can explain to me how supply equals the supplier having to lower prices.
All else the same, increased supply equals lower prices. To be counted as supply, the unit is owned by somebody who has the intent to sell. You are right in that some non-serious sellers should be considered false supply. Time will tell, but my guess is that MORE supply will come on the market once prices start falling.
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-A- Says:
June 29th, 2008 at 2:05 pm
Rob, I can’t believe what a nutcase you are.
I was just teasing you. I know real estate is a sure thing. The macro picture is perfect.
We have a very young population with baby boomers only in the ½ million range.
Energy costs don’t matter to us; we have a highly concentrated well developed economy all within short travel distance, and tropical climate.
Furthermore, with ownership levels below 50%, anybody with a pencil can easily figure what a huge untapped market you have left.
The world economy is headed for a boom, and liquidity is set to breach the flood gates, as inflation stays low, and incomes are poised to increase dramatically, add all that to the dismal housing starts we have had in the last few years, and it’s not a mystery that the current shortage will lead to escalating prices for the next twenty years.
WE are different, especially this time.
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Limey Says:
June 29th, 2008 at 2:16 pm
“Then there are the references to Spain, which again, is ridiculous, anyone knows Valencia and Barcelona are no match for Sechelt and Powell River.”
I totally agree, the Sagrada Familia is bitterly disappointing to anyone expecting the majesty of the Powell River mall.
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-A- Says:
June 29th, 2008 at 2:23 pm
“I totally agree, the Sagrada Familia is bitterly disappointing to anyone expecting the majesty of the Powell River mall.”
Agreed,they don’t even have a Dairy Queen.
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Anonymous Says:
June 29th, 2008 at 2:44 pm
This might be a complex worth monitoring. Currently 7 out of 120 units are for sale.
http://tinyurl.com/3t38ls
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Fuxxy Logiz Says:
June 29th, 2008 at 2:49 pm
There is almost unlimited supply of pennies, Demand is almost zero, yet penny isn’t worthless, still the same as when it had demand. Supply and demand FTW.
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Patiently Waiting Says:
June 29th, 2008 at 3:08 pm
I have feeling that when the market crashes, somebody will be standing around with their thumbs up their browntown.
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Bubble Lad Says:
June 29th, 2008 at 3:16 pm
Here’s your favorite Vancouver house (and mine..)
http://www.globalauctioneers.ca/mylistings.html
Now at 400K off from the original 1.6 M (or best offer) – go Bulls go! Confusing, since real estate “always goes up”.
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Bubble Lad Says:
June 29th, 2008 at 3:20 pm
Having trouble posting…update on the 1.6M poster child for Vancouver RE – now at just 1.2M –
http://www.globalauctioneers.c.....%3D4848792
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Fuxxy Logiz Says:
June 29th, 2008 at 3:31 pm
Bulls will win in the long run, it’s pure science.
Bulls produce methane which causes global warming which is melting the icecaps which will kill off the polar bears. The bulls will then march north and eat the grass that can now grow there. Bulls 1 Bears 0.
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Joe Stalin Says:
June 29th, 2008 at 7:20 pm
If you rent from the bourgeois you are the problem. I repeat you are the problem.
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blueskies Says:
June 29th, 2008 at 7:42 pm
here’s an alternative:
http://tinyurl.com/4tyjof
For years people have been swapping homes for vacations. Today, the idea of permanent exchanges is gaining support among disillusioned property owners struggling to sell in a glacial real estate market.
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BDK Says:
June 29th, 2008 at 10:18 pm
Kriish/browntown/thumsup
Bill Good rents his apartment, how can you quote anything he says?
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Thums up2 Says:
June 29th, 2008 at 11:05 pm
BDK,
You and other should buy on one common ground that bears are loser-loser by hpi and loser by age.would you like to buy when your age is not productive to pay the monthly payments? think about it?
Stop smoking in your balcony take off your NYC CAP and stop telling people around coal harbour that you are a D.J. just buy now and tell your wife that you have quit your gang of smokers to become homeowner,got it?.
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patriotz Says:
June 29th, 2008 at 11:08 pm
Demand is almost zero, yet penny isn’t worthless
It’s worth the same as it always was, namely 1/100 of a dollar.
2000 pennies will buy the same as as 20 loonies or a $20 bill.
Different units of any currency are fungible, and supply and demand for pennies is the same as for any other coin or bill.
What matters is the total supply and demand for any fiat currency, which can and does change, which is why we have inflation, and possibly (but not likely IMHO) deflation.
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condohype Says:
June 29th, 2008 at 11:08 pm
Love that Province article about the cooling market. It’s funny that now it’s OK for realtors to talk trash about prices. What used to be “Vancouver is a relative bargain on the world market” is now “ridiculous.”
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Drachen Says:
June 30th, 2008 at 8:24 am
Fuxxy Logiz
“There is almost unlimited supply of pennies, Demand is almost zero, yet penny isn’t worthless, still the same as when it had demand. Supply and demand FTW.”
Pennies are a denomination of a currency, not a commodity.
There is no “pennies” listing on the TSX.
Since they are not openly traded they cannot be subject to the laws of supply and demand.
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Jingle Balls Says:
June 30th, 2008 at 8:25 am
“Bill Good rents his apartment, how can you quote anything he says?”
Interesting….. has anybody ever asked Bill Good how many properties he currently ownes,or how many he has flipped? or how involved he may be in property development.
It’s a fair question to ask,of someone on the public pulpit.
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Bubble Lad Says:
June 30th, 2008 at 9:31 am
I’m with condohype – realtors and the province/sun have no shame – they’ve ridden the boom for all it was worth, and now that it’s gone south they’re just going to pretend the whole thing never happened – butter wouldn’t melt in their mouths.
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Patiently Waiting Says:
June 30th, 2008 at 12:08 pm
“All remaining homes come with a free car!”
http://vancouver.en.craigslist.....97915.html
I’ve been watching this townhouse complex in Queensborough since this phase came on the market in Dec 06, and posted about it before. When we went to look at in Spring 07, my wife wouldn’t get out of the car. The immediate area is seedy and there is no significant green space, even in the common area. All that for over 400K.
A year and a half since this phase finished, I’d guess almost half the units remain unsold. On the MLS, it says they were built in 2008. NOPE!
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TraderP Says:
June 30th, 2008 at 12:17 pm
Does anyone here know the status of american buyers in the local market? I have heard rumors from friends in the industry that pre-construction high-end condo buyers from the south are walking away from their deposits because of cash flow problems back home or they’re simply liquidating their condos here now while they’re ahead. Any information would be appreciated. btw, this is my first post. Neither a bull nor bear. Just curious.
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jesse Says:
June 30th, 2008 at 1:30 pm
TraderP, you can look at the report (PDF) from Landcor to see how many non-Canadian buyers are in the market (page 22 of 26 gives the actual numbers). There are very few international buyers in the market and they are not increasing in numbers or total spend year-over-year.
If you’re at a party and someone brings up “foreign investors” you can tell them:
1) Only 5% of the total sales are from buyers outside of BC
2) Only 1% of the total sales are from buyers outside of Canada
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Vansanity Says:
June 30th, 2008 at 2:15 pm
PW – I called the realtor, the car is a Kia, whoopee!! or $10,000. She didn’t seem really interested in giving any details of the place or the car. 11 units left had to pry it out of her.
Jesse – Thanks for the Landcor report! Finally some hard factual data on foreign investors.
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-A- Says:
June 30th, 2008 at 2:48 pm
RobKrisshKrassh and Aaron:
I hope you haven’t abdicated your professional obligation to your prospects and not have informed them of what a great opportunity they may be missing if they don’t jump in now during this brief lull.
The market is about to get white hot again, I have done some basic research and discovered that According to Statistics Canada’s latest measure of the total number of households in Canada is 12.4 million. Therefore, given that the population of the country is 33 million, the average household must be comprised of about 2.7 individuals. Since the rate of population growth is 3% per year, the base number of new homes that is required is 375,000 units per year.
However in the last few years housing starts have been around 125,000 and therefore we have a housing deficit.
You should grab a few of those listings yourselves, before we run out listings, and prices start to escalate at warp speed again.
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patriotz Says:
June 30th, 2008 at 6:41 pm
“All remaining homes come with a free car!”
Gee, where have I seen that sales tactic before?
It different from the US here folks. Because the “experts” say so.
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Re-diculous Says:
June 30th, 2008 at 7:20 pm
Just in case we needed more evidence that RE is falling in other parts of the world….
Crash worries grow over U.K. housing market
http://www.reportonbusiness.co.....iness/home
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patriotz Says:
June 30th, 2008 at 10:14 pm
From the above;
Figures out last week showed that faced with soaring household bills and petrol prices, Britons were already almost running on empty, saving less of their income than at any time in the last 50 years.
Substitute “British Columbians” for “Britons”, and it’s just as true.
But still nobody here (in the public eye, anyway) is willing to point out that the emperor has no clothes.
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Londonernow Says:
July 1st, 2008 at 4:32 am
This idea that if seller’s don’t get asking prices they just won’t sell is a dream. It works for a very short while until reality resurfaces as forced sellers come in. The banks tried that initially last year (just not pricing assets at market) and you can see how well that worked out for them.
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TP Says:
July 1st, 2008 at 5:06 am
London: Insane isn’t it? In fact, as with previous crashes, the stubborn sellers are what create a glut of listings which eventually lead to an overcorrection.
In Vancouver this is exactly what is happening. We have record high listings with record high starts, and sales are on the decline.
Sellers holding out for inflated prices have not been able to keep the bubble from bursting in the past, nor can they keep prices from crashing this time around, as evidenced by the current bubble markets in the US, UK, Spain, and other parts of the world.
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Anonymous Says:
July 1st, 2008 at 8:39 am
“Sellers holding out for inflated prices have not been able to keep the bubble from bursting in the past, nor can they keep prices from crashing this time around, as evidenced by the current bubble markets in the US, UK, Spain, and other parts of the world.”
I think this formerly white hot real estate market in Vancouver is end very ugly. It’s funny I don’t much comments about how the rich foreignors or the Olympics are going to keep this market up. We’re getting closer to 2010 each day; yet listings continue to increase, sales declining, inventory is building and many new listings are being priced sharply to undercut competing properties.
But that’s my opinion.
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mouse Says:
July 1st, 2008 at 8:42 am
Why bother reading this thums up2? Isnt it a waste of time?
Originally I could not understand, english too poor.
Then I could not understand, does not make sense.
But do keep revealing the new aliases, so I can save time.