Friday Free-for-all! Holiday Edition
Not only have you made it to the end of another work week, but you’re looking at a long weekend! Here’s a round up of a few news stories I’ve noticed this week:
-July 2008: Sales down, listings up
-Whistler is running out of Gas
-New Pattullo Bridge will have toll
-Bad realtors getting spanked
-CMHC expands bond program for banks
-GDP drop ‘a bit of a shocker‘
-Greenspan: US on ‘brink of recession‘
So what are you seeing out there? Post your news, links and anecdotes here and have an excellent long weekend!
note: any conversation on Vancouver, 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. Pasting a link will automatically create a clickable hot-link. Thanks!
RSS 2.0 comments feed. Both comments and pings are currently closed.
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Macronomics Says:
August 1st, 2008 at 12:14 am
More bad economic news in California.
Arnold is laying off 22,000 state workers and also reducing many of the remaining 200,000 state workers to minimum wage of $6.55/hr.
Brutal!
Layoffs set for 22000 California state workers
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Alum Says:
August 1st, 2008 at 12:28 am
I will see see a recovery at the end of this year for Vancouver housing market.
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Anonymous Says:
August 1st, 2008 at 6:47 am
“I will see see a recovery at the end of this year for Vancouver housing market.”
(Purposefully misunderstanding) Recovery that soon? I don’t expect prices to be back to fundamentals until 2012 or so!
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the source Says:
August 1st, 2008 at 8:17 am
Good news for bears, a respected group of mathmeticians up at SFU crunched the numbers on household development, in-migration, development trends, etc; real estate values are likely to lag the inflation rate for a few years. They may even turn negative for a year or two. Interest rates are a bit harder to predict but are expected to maintain a fairly tight range. You can ignore your realtor for now, real estate values should be stable and affordibility will improve.
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bdk Says:
August 1st, 2008 at 8:52 am
$6.55/hr!
That must mean they were only making $2 before because wages have tripled and fundamentals are sound in California. Rich people all want to move there, they have high paying jobs, nice weather, the low U.S. dollar means it’s cheaper for rich people from elsewhere.
California prices are going up for decades to come!
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Dave Says:
August 1st, 2008 at 9:08 am
I’m not sure how credible a group of mathematicians are in predicting real estate markets. Are you sure they are not economists?
In any case, I don’t think many bears here will take solace in that assessment. If anything, most bears here would consider that to be a bullish prediction.
It’s pretty similar to my outlook in that I think we will have slightly declining prices this Fall (say 5%) followed by a flat market. I differ in their assessment in that it is likely the flat market would continue for longer than one or two years, which I base on past trends (i.e. a flat market typically exists for 6 to 7 years).
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betamax Says:
August 1st, 2008 at 9:43 am
a respected group of mathmeticians [sic] up at SFU crunched the numbers
LOL. You mean they added stuff up and made linear projections based on past data? Wow, only university “mathmeticians” can do that!
real estate values are likely to lag the inflation rate for a few years. They may even turn negative for a year or two.
LOL. Oh, they’ll lag alright, by double digits.
‘the source’ is just krish/thumbsup without the ESL filter.
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the source Says:
August 1st, 2008 at 9:45 am
Dave, it was a group borrowing from business admin., econ., mathematics, computer science, etc- they kept the focus on hard number crunching. Their work is taken into consideration by developers and other parties with a vested interest. They focused on the near to mid term, there was no point trying to project too far out based on the criterias being used.
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betamax Says:
August 1st, 2008 at 9:50 am
think we will have slightly declining prices this Fall (say 5%) followed by a flat market.
LOL. It’s comedy central here this morning.
I heard the ‘flat market’ call in the US a year ago, but that’s not how booms of this magnitude bust.
Do you really think talking up the market on bear blogs is going to have any effect on the market? It’s not. Get a real hobby, like needlepoint or scrapbooking.
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bdk Says:
August 1st, 2008 at 9:55 am
California is still going up and if it doesn’t continue to shoot up it might plateau for awhile while the rich people clear customs and then it will go up some more. There might be a year or two of slight (5%) gains but it will never go down for the following reasons.
1.Water.
2.Rich People.
3.High Paying Jobs.
4.Nice Climate.
5.Large immigrant populations.
6.Hollywood.
7.Arnold.
8.The 1984 Olympics
Buy now or be priced out forever. If you don’t buy now there is no way you’ll ever be able to lock in at these great prices, why not invest? You could make 20%
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Mold City Says:
August 1st, 2008 at 9:59 am
I will see a recovery at the end of this year for Vancouver housing market.
Is there an echo in here?
http://vancouvercondo.info/for.....2&t=40
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the source Says:
August 1st, 2008 at 9:59 am
I’m not into bear of bull spin. The numbers are what they are. Take note or go back to sleep.
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the source Says:
August 1st, 2008 at 10:08 am
There is no market crash! The recovery is happening as we speak! God willing our property will be worth a billion times more in just one months time! The infidels with their charts are trying to deceive you! There is no other investment than real estate!
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jesse Says:
August 1st, 2008 at 10:20 am
“real estate values are likely to lag the inflation rate for a few years.”
How many is “a few”? 15?
Below inflation returns for anybody entering the market now. I know I’m convinced.
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Raincouver Says:
August 1st, 2008 at 10:37 am
I just came back from two weeks in Nova Scotia. In spite of the equity locusts from western Canada buying up property, there are tons of places for sale. And that’s only on the main roads, who knows how many places for sale off the road?
Tourism is seriously down. Americans aren’t showing up like they used to, and there are absolutely no Alberta or BC license plates showing up … it used to be common they say.
It’s pretty darn strange when you have a four lane divided highway … and you’re the only vehicle out there. Ghost town.
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the source Says:
August 1st, 2008 at 10:40 am
Jesse, real estate will lag inflation for as long as can be reasonably projected based on current criteria. Economic circumstances could change favouring hard assets again, but can’t see it at this point.
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jesse Says:
August 1st, 2008 at 10:58 am
“real estate will lag inflation for as long as can be reasonably projected based on current criteria.”
Ah you are a mischievous troll. My mistake.
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Vansanity Says:
August 1st, 2008 at 11:02 am
US: Indymac files for bankruptcy protection; jobless rate highest its been in 4 years at 5.7%; starbucks cuts 1,000 jobs (including one of the locations under Steven Colbert’s desk!); GM largest losses in company’s history.
Recession Shmecession.
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bdk Says:
August 1st, 2008 at 11:12 am
Vansanity who cares about the U.S. or the rest of the world.
Vancouver de coupled from the economy.
It’s different here (compared to the rest of the world) and it’s different this time.
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the source Says:
August 1st, 2008 at 11:17 am
Jesse, hate the message not the messenger. Get your rent money together for today? Good, don’t be so angry.
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blueskies Says:
August 1st, 2008 at 11:30 am
“real estate values are likely to lag the inflation rate for a few years.”
seeing as how we are facing a tightening credit market and subsequent drying up of cash we are facing a global deflationary period…..
energy will cost more as will food and health care but RE and motor vehicles and baseball cards will drop in value…..
flat lining values is just wishful thinking.
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bdk Says:
August 1st, 2008 at 11:36 am
20% DROP in the next 12 months is the best case scenario.
40% DROP could happen too.
the “source” if you actually own a studio are you prepared to
A) Pay $2,000 more per month in mortgage as the unit drops in value $2,500-5,000 per month?
B) Pay the honking remediation costs when the building leaks while paying $2,000 more to live there in the first place.
Alternativelly you can be like the rest of the “investors” who try to be smart by voting against the engineers maintenace plan to save money short term (“I’ll have sold this to a rich asian before the problems arise”) and causing further damage leading to even worse investor sentiment and leaving a bunch of fools stuck with an asset that’s lost 40% of it’s resale value and bleeds $2,000 per month. Awesome! Anyone who doesn’t buy today is above average intelligence.
Anyone who disputes this is most likely a Kinko’s employee being paid an extra $8/hr to run interference on blogs (yes you Dave/source) by some hard up realtors.
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Dave Says:
August 1st, 2008 at 11:42 am
And how is the US going to get out of this ‘mess’? They are going to continue devaluing their debt. They will continue to print money and keep interest rates low. They won’t have the guts to raise interest rates unless inflation really becomes a big problem.
Our dollar can’t go much higher relative to the US than it already has. Thus, we are unlikely to be sheltered from their inflationary monetary policy.
Inflation favours hard assets and it favours those who are indebted.
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the source Says:
August 1st, 2008 at 11:47 am
I’m a student with sizeable debts, i couldn’t afford real estate regardless. There is no such thing as a good or bad market, if values go down a seller’s loss is a buyers gain. Society has nothing to gain either way. BDK, you have the bear spin down pat but no numbers/substance behind your predictions. I like the blog conspiricy theory but i don’t believe it.
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jesse Says:
August 1st, 2008 at 11:47 am
“Get your rent money together for today? Good, don’t be so angry.”
Nice. I was referring not to your message, which may indeed have valid points, but your insistance of not providing any links or any hard numbers other than vague words about changing data, a few this, the forseeable that. WTF does that all mean anyways. Good day to you.
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Drachen Says:
August 1st, 2008 at 11:51 am
the source
“Jesse, real estate will lag inflation for as long as can be reasonably projected based on current criteria.”
I guess that’s one way of putting it. “lag inflation” kind of implies it will be close to inflation however. Is 20% or so below inflation “lagging” or just plain dropping like a stone?
“Jesse, hate the message not the messenger.”
This implies that you’re delivering factual information. If the messenger purposely spins the message, ignores relevant data and misuses irrelevant data then I think he should be despised.
I note that you have not provided a single shred of evidence for any of your claims. Just who are these mysterious people at SFU that nobody here (in spite of our interest in the subject) has heard from before? Where is their report? What does it actually say? What were their methods? Do they have a history of making accurate predictions or they just industry shills? For that matter what’s your connection to Real Estate? An agent? Owner of multiple properties? Or just an interested party? Do you have some kind of education on the subject (doubtful, you don’t seem very well educated period)?
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the source Says:
August 1st, 2008 at 11:56 am
Drachen, i thought Jesse was angry but you take the cake. Just because blogging is anonymous is no escuse to post idiotic rants. Pull yourself together.
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Dave Says:
August 1st, 2008 at 12:11 pm
I like the blog conspiricy theory but i don’t believe it.
Some of the real estate bears here have all sorts of conspiracy theories. If you stick around, you will probably hear quite a few.
Like I said above, the SFU report wouldn’t be received well amongst some bears. And of course, the messenger gets shot.
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ted Says:
August 1st, 2008 at 12:19 pm
Please link to the SFU report or any information on it.
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the source Says:
August 1st, 2008 at 12:19 pm
This is somewhat comical, the SFU work is not a big deal and i definately did not anticipate the interest here. Some of these posters have made predictions based on nothing beyond some referencing to California. I think we need to get the Dharma Initiative involved.
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Mold City Says:
August 1st, 2008 at 12:23 pm
Where was Drachens anger? I’ve seen angry posts from him/her before, but not in this thread. That comment seemed completely calm and reasonable to me, unless asking questions is a sign of anger.
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Anonymous Says:
August 1st, 2008 at 12:28 pm
This SFU housing study?
http://www.theglobeandmail.com....._mostemail
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the source Says:
August 1st, 2008 at 12:29 pm
Mold City, c’mon you’re posting from prison. They should cut internet access to you and Clifford O.
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the source Says:
August 1st, 2008 at 12:31 pm
Anonymous, that is a good post, i like it. The SFU crew does tons of this stuff, some formal, some informal.
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Dave Says:
August 1st, 2008 at 12:48 pm
thesource, your observations are dead on in that outlandish predictions by bears require absolutely no reference, while any prediction that is slightly bullish is always viewed as being unsupported.
To give you some background, Drachen believes that we are in a multi-decade housing bubble. He has yet to provide an example of other multi-decade asset bubbles.
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Drachen Says:
August 1st, 2008 at 1:11 pm
the source
“Mold City, c’mon you’re posting from prison. They should cut internet access to you and Clifford O.”
Ahh there’s the anger! Have you ever heard of transference?
Dave
“He has yet to provide an example of other multi-decade asset bubbles.”
Nobody ever asked.
Japan, post WW2 to 1989 both the Tokyo Stock Exchange and Real Estate but also in other assets.
There, that took all of 20 seconds.
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crabman Says:
August 1st, 2008 at 1:12 pm
the source said:
Some of these posters have made predictions based on nothing beyond some referencing to California.
Dave said:
It’s pretty similar to my outlook in that I think we will have slightly declining prices this Fall (say 5%) followed by a flat market. I differ in their assessment in that it is likely the flat market would continue for longer than one or two years, which I base on past trends (i.e. a flat market typically exists for 6 to 7 years).
Well, here is the latest RBC housing affordability report. Affordability in BC is now worse than it was in 1989. What happened back then? Prices fell 40%.
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dorker Says:
August 1st, 2008 at 1:13 pm
Source, what is the source of the SFU study? I’d like to read their findinds.
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crabman Says:
August 1st, 2008 at 1:13 pm
P.S. Sorry for interrupting with data/statistics/history (with links). Feel free to carry on referencing vague/mysterious reports and making baseless claims!!
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Mold City Says:
August 1st, 2008 at 1:14 pm
Mold City, c’mon you’re posting from prison.
Hahaha. WTF? I’m not even sure what that’s supposed to mean. Effective trolling requires a subtle touch dude, you’ve accomplished the ‘getting a reaction’ part, but the really impressive trolls can do it without people noticing they’ve been trolled. I’m sure you’ll get it though, practice makes perfect!
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scullboy Says:
August 1st, 2008 at 1:14 pm
Hey Raincouver,
How did you like NS? it’s quite beautiful from about May to November and if you’re ok with snow, it’s beautiful in the winter too.
Interesting about the empty four lane highway and lack of tourists. When I was a kid we’d go to the Cape Breton Highlands National Park (voted 2nd most beautiful in the world by the National Geographic society BTW). I remember we would be the *only* people there who were locals. It was *always* packed with tourists.
There have always been a lot of outsiders buying up property there, and who wouldn’t? I mean if you’re a wealthy foreigner the value for the land is incredible, considering (a) it’s on a coast (b) it’s extremely beautiful and (c) It’s an extremely short ferry ride to Bar Harbour, Maine.
But damn, if there are no tourists in Nova Scotia, which is a great place to visit and normally very cheap, I can’t imagine what the rest of the country is going through….
I’m seriously starting to consider Halifax as viable. As Jesse said, it’s about tradeoffs and I’m becoming convinced that living in a large spacious VIctorian home and not hearing the phrase “best place on earth” may be worth some cold and snow….
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Drachen Says:
August 1st, 2008 at 1:19 pm
Mold City
“I’ve seen angry posts from him/her before, but not in this thread.”
Him… And I doubt you have. I’ve been involved in online discussions like this for 20 years now, I’m no longer angered at other people’s ignorance, but I do enjoy stirring the pot and provoking people
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Warren Says:
August 1st, 2008 at 1:20 pm
No disrespect to our noble blogger, but the quality of comments in here has gone way down while the name-calling has gone way up. If there’s one think that bothers me more than the insane rantings of thumbsup2, its the sarcastic “humour” of all the bears, who post something stupid and add nothing to the conversation.
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Dave Says:
August 1st, 2008 at 1:30 pm
Well, here is the latest RBC housing affordability report. Affordability in BC is now worse than it was in 1989. What happened back then? Prices fell 40%.
No they didn’t. If this is a 1989 style correction, then you should be out there buying up the town.
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beta Says:
August 1st, 2008 at 1:39 pm
I spent a week in NS in the summer of ‘02. Beautiful place, Cape Breton in particular. But the roads — cracked from repeated freezing/thawing suggested the area might be less charming in the dead of winter.
But if you’re going to live there, Halifax would be the place to live. Nice city. Could be the 2nd best place on earth!
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Vansanity Says:
August 1st, 2008 at 1:42 pm
Yes bdk, you’re right. I wish we could put rockets under the lower mainland and blast off from this filthy planet, to be finally free of sarcasm.
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Drachen Says:
August 1st, 2008 at 2:02 pm
Dave
“No they didn’t. If this is a 1989 style correction, then you should be out there buying up the town.”
A) Yes, they did, stop dragging your BS nominal dollars up. It just shows your ignorance of Economics.
B) Affordability is WORSE than 1989 so the correction is likely to be greater.
C) Right now Affordability is the most bullish of markers because of low interest rates. Other, more accurate, methods of determining the fundamental value of real estate are much worse.
What no response for me on the Japan thing? I guess you’re tired of being shot down all the time huh? Did you ever raise a point that wasn’t refuted in short order?
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jesse Says:
August 1st, 2008 at 2:08 pm
“If this is a 1989 style correction, then you should be out there buying up the town.”
Prices fell 15% nominally from 1989 to 1990. You should be out there waiting until the -15% correction happens, then “buying up the town”. If you believe in a 1989 style correction.
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Anonymous Says:
August 1st, 2008 at 2:19 pm
What is 15% off the average Vancouver house price in dollars?
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bdk Says:
August 1st, 2008 at 2:28 pm
What is 15% off the average Vancouver house price in dollars?
Well if you take the standard 1 million vancouver special and pay $6,000 per month mortgage plus $4500 in property tax and pretend it’s a perfect year (best place on earth after all) and there is only $1000 in maintenance that puts you at around $6,500 per month plus you’re losing $12,500 in “value” as the price slides 15%.
Alternativelly you can rent an identical house for $2200 a month, which saves you over $4,000 per month and the $150,000 hair cut for the year.
Furthermore it’ll be worse this time, it’s different here, it’ll be worse than Florida when the banks stop writing mortgages on specuvestments unless the buyer has the 50% (or what have you) to make it a neutral cash flow proposition.
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bdk Says:
August 1st, 2008 at 2:30 pm
p.s I mean 50% down in order to qualify as an investment and in the rental condos downtown you’d need to put $350,000 down to break even on a $500,000 unit.
That’s presuming interest rates don’t go up for the next 25 years and the building doesn’t require $140,000 per unit for remediation.
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jesse Says:
August 1st, 2008 at 2:31 pm
Anon49, on a $500K house it would be $75K. Current $750K detached benchmark would be $112K and change. 0.15 times the price. That’s if you think this is 1989. You know what that means? 2009 will be Hammer Time!
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bdk Says:
August 1st, 2008 at 2:34 pm
before that tool Dave tries to say you’d need less than $350k.
$600 per $100,000 =$3,000 mortgage
$250+ strata fees.
$500,000 rents for $1500.
Mortgage and strata = $3250
Rent = $1500
in order to put enough down to make that one neutral would need $325,000 and that’s if no GST or PPT is being applied.
And if you have $325,00 cash and put it into a GIC @3.7% at ING and use the $880 a month interest towards the rental and pay only $620 per month while waiting for the downtown condo market to drop 40%
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crabman Says:
August 1st, 2008 at 2:42 pm
Dave
“No they didn’t. If this is a 1989 style correction, then you should be out there buying up the town.”
You’re right, I got my crashes confused! The 40% drop was in the early 80’s.
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Drachen Says:
August 1st, 2008 at 2:48 pm
“You’re right, I got my crashes confused! The 40% drop was in the early 80’s.”
I was mixed up too. Mostly because 1989-90 was a bump and not a correction. As I’ve said before we have not seen a proper price correction since the early ’80s. All of those increases will be lost over the next few years.
Dave will sputter and fuss over that but other than saying economics must obey the laws of physics and he decides which laws apply when and where he really hasn’t had a single counter argument. (I include the physics mumbo-jumbo because it was his only attempt, not because it means anything outside of his own deranged mind)
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that guy Says:
August 1st, 2008 at 2:48 pm
the source:
i’m an economist at SFU. as far as i know, none of my colleagues are involved in a project like the one you describe. do you think maybe you could give us a reference?
thanks.
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AHandle Says:
August 1st, 2008 at 2:50 pm
$1750 Mortgage on $500,000 (4.2% at ING)
$250 Strata
$500,000 rents for $1900
Mortgage + Strata = $2000
Rent = $1900
Leaning toward renting but not quite as dire as you make out.
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bdk Says:
August 1st, 2008 at 2:53 pm
Ahandle, are you talking about downtown Vancouver rent?
If you can rent out a 600 sq ft unit for more than $1500 then you have a career in Property Management in front of you since you’re clearly better than anyone else who’s ever done it.
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the horse Says:
August 1st, 2008 at 2:58 pm
According to a report just release by the institute of imaginary data (sorry don’t have a link handy at the moment) the top 5 things that people around the world think of when they hear the words ‘British Columbia’ are as follows:
5: The winter games
4: Leaky condominiums
3: Marijuana & Heroin
2: Beautiful collapsing roads
and the number one thing people around the world think of when they think of BC (drumroll please)
1: Feet washing up on the beaches
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jesse Says:
August 1st, 2008 at 3:02 pm
$500K condo rents for $1900? Said like it’s completely normal.
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AHandle Says:
August 1st, 2008 at 3:02 pm
Your right you can find a decent place for $1500 in downtown *Richmond*
http://vancouver.en.craigslist.....58508.html
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scullboy Says:
August 1st, 2008 at 3:03 pm
Vansanity,
If you put rockets under the Lower Mainland and blasted off, Vancouver would no longer be the best place on earth, QED.
I wonder how that would affect prices….
I also note it seems to be shaping up to be another friggin’ cold summer. 19 degree high for AUGUST 01? Jesus.
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Dave Says:
August 1st, 2008 at 3:09 pm
Drachen, those were bubbles, but they did not start in prior decades. The Japan real estate bubble started in about 1986, as did the run-up on the Nikkei. Neither of your examples is even close to a decade.
So you believe that affordability drives corrections? I don’t. It is simply a measure of current valuation. Corrections are driven by other factors.
With respect to fundamental value, I assume you are referring to price to rental ratios. The rental rate component of the equation is biased low by a significant amount. Rents are calculated by only considering the low end of the marketplace (i.e. multi-story wood frame buildings constructed in the 60s/70s). Over time that rental product represents less and less of the actual marketplace. Rather, one off condo units are providing the new rental product.
You need to ask yourself why nobody is building multi-story wood frame buildings for rent anymore. You need to ask yourself why those woodframe buildings sell far below the cost it would take to rebuild them, never mind the actual land value. The reason is that rental rates are too low, rather than real estate values being too high.
I would suggest that a better measure of fundamental value would be to consider the cost of construction and value of land. The cost of energy and commodities needed for construction are unlikely to drop significantly. The cost of labour also rarely drops, especially in times of low unemployment, like we have now. The demand for land is only going to increase with the growth in our population. If you talk to any developer, they will tell you how difficult it is to find developable land. Empty lots just don’t exist anymore. On top of that, consider how low the vacancy rate is. Future demand for rental product will continue to grow. I expect rental inflation to be very high or the next decade and well above the core inflation rate.
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bdk Says:
August 1st, 2008 at 3:23 pm
Ahandle, I think you’re just trying to take the focus of the accurate advantages of renting versus buying right now.
If you were serious you could easily find a nice 600 sq ft place in yaletown or coal harbour for $1350 if you went to househunting.ca
I used $1500 so the trolls wouldn’t pick off the stats.
Your 4.2% mortgage rate is a joke too leading me to determine that you’re just trolling and have no real interest in this blog.
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Dave Says:
August 1st, 2008 at 3:23 pm
AHandle, the other thing to keep in mind is that rent increases every year while your mortgage amount outstanding drops with every payment.
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bdk Says:
August 1st, 2008 at 3:26 pm
New Listing
BENTLEY 1001 Homer, 1 Br, pkng. stor. gym, spa, ns/np, avail Sept 1, $1325.
New Listing
BENTLEY 1001 Homer, 1 Br, pkng. stor. gym, spa, ns/np, avail Sept 1, $1325.
1155 Homer St.
1 BR & DEN. Marinaside T/H! 11′ ceiling all appl, nr 700 sf, priv. patio opens to garden. Sauna, Pool. np/ns $1600 604-727-8872
$1,600
1 – 700 sqft
11
1 BR Yaletown New Condo Bright 1BR+DEN,HW Flr,ss appls,gym. Avail NOW. $1550 Balcony, Dishwasher, Eat-in-kitchen, Fireplace, Hardwood Floors, Laundry, Microwave, Near Public Transportation, Near Shopping, New Construction, Parking, Refrigerator,… (more)
$1,550
1 – 550 sqft
12
1BR YALETOWN marina view, 5 appls. park’g, pool, gym, Aug 1 $1500/mo
1 BR, 6 appls., gym, prkg., locker, lease. $1,450
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flip this Says:
August 1st, 2008 at 3:31 pm
Dave, what is so special about wood frame buildings? I don’t think they build any concrete frame buildings for rent either. And the reason they don’t build rental buildings anymore is because the real estate prices are inflated to a degree where renting out is not cash flow positive.
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blueskies Says:
August 1st, 2008 at 3:32 pm
while your mortgage amount outstanding drops with every payment.
..after starting with a HUGE mortgage that no
sane person would tackle….. you can not ignore affordability…..
it is cheaper to rent than buy
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bdk Says:
August 1st, 2008 at 3:32 pm
LETOWN 1BR + den + balc + pkg. pool 25th flr view. great amens. concierge. np/ns $1500
1BR YALETOWN marina view, 5 appls. park’g, pool, gym, Aug 1 $1500/mo
1 BR Yaletown New Condo Bright 1BR+DEN,HW Flr,ss appls,gym. Avail NOW. $1550 Balcony, Dishwasher, Eat-in-kitchen, Fireplace, Hardwood Floors, Laundry, Microwave, Near Public Transportation, Near Shopping, New Construction, Parking, Refrigerato
1 Br @ Mira luxury w/patio, cat okay, gym, $1300
1155 Homer St. 1 BR, 6 appls., gym, prkg., locker, lease. $1,450
BENTLEY 1001 Homer, 1 Br, pkng. stor. gym, spa, ns/np, avail Sept 1, $1325.
There we go Ahandle, so did you actually have a point or were you just making dumb innaccurate statements to take the blog off topic?
Dave, are you saying interest rates will never go up in the next 40 years? and what about strata fees when the building leaks? Tell me you aren’t that stupid.
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scullboy Says:
August 1st, 2008 at 3:34 pm
Dave,
Official vacancy rates are determined through rental stock, which does NOT include one-off condos. You claim vacancy is low, yet you ALSO claim one-off condos are replacing traditional stock. So which is it?
Anyone who has spent any time at all on the Skytrain knows there’s tons and tons of available land for development, just not in the immediate downtown.
Do you have *anything* to back up your expectation of rental inflation to be very high, or is this something else you pulled out of your hat?
Rents here are already fairly high relative to incomes. What’s going to happen if rental rates skyrocket, as you suspect?
Renters will move.
What happens if renters move? The pool of people who can migrate from renters to owners dries up.
No matter how you slice it, Vancouver is at an inflection point. Either prices drop in line with incomes, or low to middle income earners leave for less expensive cities.
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Matt Says:
August 1st, 2008 at 3:35 pm
I’m still waiting for a link to this SFU study. Where is it?
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flip this Says:
August 1st, 2008 at 3:41 pm
Dave, your assertion that mortgage amount drops with every payment does not take into account interest rate risks: you locked only for 10 years maximum. With low down payment, mortgage = leverage, which means amplification of the interest rate risk, and amplification of property value risks.
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AHandle Says:
August 1st, 2008 at 3:43 pm
Your 4.2% mortgage rate is a joke too leading me to determine that you’re just trolling and have no real interest in this blog.
http://www.ingdirect.ca – look under mortgage rates. Having dealt with them myself I can say that you can actually get a small discount if you have a good downpayment and good credit.
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AHandle Says:
August 1st, 2008 at 3:45 pm
There we go Ahandle, so did you actually have a point or were you just making dumb innaccurate statements to take the blog off topic?
Would you mind posting links?
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Dave Says:
August 1st, 2008 at 3:52 pm
Official vacancy rates are determined through rental stock, which does NOT include one-off condos. You claim vacancy is low, yet you ALSO claim one-off condos are replacing traditional stock. So which is it?
It is both. With respect to average RENT, I am simply pointing out where the data comes from and explaining why it is biased low. With respect to VACANCY, the data shows tight supply. Two different metrics.
Anyone who has spent any time at all on the Skytrain knows there’s tons and tons of available land for development, just not in the immediate downtown.
Please show me on a map where this land exists.
Do you have *anything* to back up your expectation of rental inflation to be very high, or is this something else you pulled out of your hat?
It’s not possible to prove a future prediction by definition. It is simply my opinion of which I have explained my rationale. If you don’t agree, then that’s where you need to start.
Rents here are already fairly high relative to incomes. What’s going to happen if rental rates skyrocket, as you suspect?
Renters will move.
Rents are not high relative to income. The ratio is low relative to past decades! Up until a few years ago, rent had not kept up with wage inflation.
There will be no shortage of renters in Vancouver. Our population growth is positive and the GVRD will continue to expand.
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the horse Says:
August 1st, 2008 at 4:04 pm
The reason is that rental rates are too low, rather than real estate values being too high.
You’re kidding right? Here’s the thing – rents are based on what people are willing/able to pay. They don’t fluctuate like house prices because you can’t take a loan out at a variable rate to pay for it. It’s a better representation of where housing prices SHOULD be because its not prone to speculation or fluctations in credit markets.
BTW, It’s pretty silly to take Craigslist ‘wishing rents’ of amateur landlords and hold it up as a reasonable market rate. ‘Market price’ is what the market will pay, not what a seller wishes the market would pay. I’ve seen some of those units advertised month after month while the owner bleeds cash, slowly bringing their asking rent down hoping someone will bite.
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bdk Says:
August 1st, 2008 at 4:05 pm
Scullboy, this “Dave” person is just trying to drag this blog off topic.
Anyone who has a brain and is actually interested in this blog would be best to ignore this guy.
Next thing he’ll be claiming tobacco hasn’t actually killed anyone and referencing studies.
The market will crash worse than Florida here, there are lots of links on this site.
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jesse Says:
August 1st, 2008 at 4:06 pm
“Up until a few years ago, rent had not kept up with wage inflation.”
Correct: rents have not been increasing even at the allowable rate that was legislated by rent control. Any idea why landlords would not increase rent by the maximum allowable every year?
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scullboy Says:
August 1st, 2008 at 4:12 pm
Dave:
As I said before, jump on the skytrain, or use Google maps. From what I can see there’s quite a lot of available land, actually. Mind you, there’s very little in the downtown core.
You make a lot of assertions like “rents are not high relative to income” but you don’t have stats to back ‘em up.
Rents are comparable to other cities, but the cost of owning is several times higher than anywhere else. There is a massive oversupply of home stock being built in the city. MOI is piling up. Sales have stopped. Vancouver is the only Canadian city with net OUT migration of head offices. Tourism is down. Software lumber has fallen off a cliff.
This story has been played out over and over. California. Florida. Spain. England. Connecticut. Australia. It is in the process of playing out here. There’s no point in either of us arguing, you need only look at the pattern.
All this has happened before, and all this will happen again. Who know the realtors were all Cylons?
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Drachen Says:
August 1st, 2008 at 4:13 pm
Dave
“The Japan real estate bubble started in about 1986, as did the run-up on the Nikkei. Neither of your examples is even close to a decade.”
http://www.excel-consultant.com/Nikkei_Bubble.html
1975 – 1989 arguably longer, with 14 years of losses afterwards for a total market cycle of 28 years! How can one person be so consistently wrong Dave? I really want to know!
“So you believe that affordability drives corrections? I don’t. It is simply a measure of current valuation. Corrections are driven by other factors.”
Wow, well since you’re a world renowned economist I respect that your opinion differs from the rest of the economic community (and common sense). No… Wait, you’re a nobody who constantly spews loopy theories. More of your voodoo economics? Pray tell us oh mighty Dave, what factors drive the market that have eluded all mortal economists?
“The rental rate component of the equation is biased low by a significant amount.”
As always in debates with you, I’d like a source other than your ravings to go on. Even if that were true I doubt they’re biased low by 60% or so and I can do comparables that show at least a 50% discrepancy.
“a better measure of fundamental value would be to consider the cost of construction and value of land.”
You don’t understand how fundamentals work do you? You’re not calculating the fundamental value to MAKE something you’re calculating the fundamental value the market will PAY for something. You’re bass ackwards.
You did give me a good laugh though, I’ll give you that!
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Dave Says:
August 1st, 2008 at 4:17 pm
Any idea why landlords would not increase rent by the maximum allowable every year?
Supply and demand.
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the source Says:
August 1st, 2008 at 4:18 pm
Foremost peoples, do your own research, is the SFU report so far fetched or does it scare you in some way? Like maybe I’ll be flogging a buyer’s strike on here for the next ten years? Drachen nice to see you’ve calmed down, but you still don’t have anything intelligent to say.
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the source Says:
August 1st, 2008 at 4:21 pm
That guy, nice try, ever hear of “freedom of information” law? Any real professor understands it as a basic.
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Drachen Says:
August 1st, 2008 at 4:27 pm
Dave
“am simply pointing out where the data comes from and explaining why it is biased low. With respect to VACANCY, the data shows tight supply. Two different metrics.”
But the data is all gathered using the same method. You’re saying the method is poor for the metrics you don’t like and accurate for the metrics you do like? Have I called you a cherry picker lately?
“Please show me on a map where this land exists.”
HERE
“Rents are not high relative to income.”
Wait are you talking about the rental statistic? The one you believe is skewed low? Or where you believe (without evidence I might add) rents actually are? Because the affordability rating is 101 (in 2007) with a 100 being 30% of family income consumed on rent (which is seen as normal and healthy). But you believe it’s what? 50%, 80%, 100% higher than that? You’re ignoring your own made up ‘facts’ Dave, that’s a bit of a stretch even for you.
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that guy Says:
August 1st, 2008 at 4:37 pm
the source:
sorry, you’ve lost me. i’m just asking you to point me to the research you cited. can you do that? thanks.
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Drachen Says:
August 1st, 2008 at 4:37 pm
the source
“is the SFU report so far fetched or does it scare you in some way?”
Why would it scare us, we haven’t seen it, you refuse to provide any way for us to find it (authors, link on the web etc.). One is left with the conclusion that you’re just making it up (certainly with the details you’ve provided so far it sounds pretty made up).
“ever hear of “freedom of information” law?”
What does that have to do with anything? You’re barely more literate than ThumbsUp, you throw out some made up sounding “study” which you refuse to provide any real information on and you’re simply dismissive to anyone who brings up legitimate concerns with your arguments. Unless you care to have an actual debate or provide useful data you’re just a waste of space here.
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the source Says:
August 1st, 2008 at 4:44 pm
Drachen, you’re an interesting character, i envision a nine year old child with a slightly higher than average IQ. That guy, ok Mr. Professor, go back and read my first two posts. Now, did you see me mention anything about a report? Ok, now we’re getting somewhere, maybe you can ask around up on the hill? Yes, very good.
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bdk Says:
August 1st, 2008 at 4:45 pm
I just read a UBC report and in it it says
1.Prices in Vancouver will fall 20% this year.
2.Krissh is the source.
3. Bob Rennie has sold off all of his holdings.
4.Prices will go down for decades to come
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Ahandle Says:
August 1st, 2008 at 4:51 pm
Funny negative review. It’s as if people think that folks on TV can cause a Real Estate crash, and if we all just had “happy thoughts” prices would rise forever (faster than incomes)
Bottom line is… prices are too high for the average buyer without suicide financing. This is why the prices have to come down. It’s economics 101, nothing to do with interviews on the CBC.
In the US, since the market peaked in 2006, the TV was filled with people saying the “market is sound” and “high prices are based on fundamentals”, including people like Ben Bernanke, Henry Paulson, and other influential figures. It did not prevent economic reality for causing the market to collapse.
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that guy Says:
August 1st, 2008 at 4:55 pm
the source:
come on now, be nice. all i asked you to do is point me to the research. maybe you could save me some time & give me a name of someone involved in the project?
and if this isn’t published work — or even a working paper by the sound of things — how do you know about it?
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Deliverator Says:
August 1st, 2008 at 5:04 pm
Dave Says:
August 1st, 2008 at 4:17 pm
Any idea why landlords would not increase rent by the maximum allowable every year?
Supply and demand.
Wow. You can say that and still assert that rents are abnormally low? You’ve got your doublethink down.
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Drachen Says:
August 1st, 2008 at 5:09 pm
The Source
“Now, did you see me mention anything about a report?”
Well then, now we’re getting somewhere. So, assuming that you’re not lying, you are either;
A) One of the members of this ‘group’ you talk about. If this is true one doubts the validity of anything coming from the group as you apparently don’t possess the logical skills to assimilate data (at all, never mind correctly).
B) This information is coming to you second or third hand as word of mouth. If B is true there are many places along the chain where facts could be distorted or misrepresented entirely.
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the source Says:
August 1st, 2008 at 5:13 pm
That guy, ok Mr. Tricky, so you’re looking for a reference, or direction, or a name linked to this “project”. Or maybe my name. You really seem interested. My advise is contained in my prior posts.
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the source Says:
August 1st, 2008 at 5:15 pm
Drachen, so you don’t like me or the “project”. Thanks for the news.
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Dave @ revnyou.com Says:
August 1st, 2008 at 5:16 pm
As a retort (or addition) to the forum concerning if it’s time to fix your mortgage – here’s my thoughts:
Study after study shows that historically (circa past 40 years) having a variable rate mortgage vs. a 5 year fixed mortgage will save you thousands of dollars in interest approx. 80% of the time. So, no, you are not guaranteed to save money and no, history does not confirm future events, however, it really comes down to your risk tolerance, just like any investment. You also have to be comfortable with your payment (or the amount which goes to principal if your payments are set) going up and down. But, as many have mentioned in this forum, no one can predict the future so rather than guess at what’s going to happen, ask yourself whether you (and your finances) can afford for your variable interest rate (and payment) to go up 1 or 2%? If the answer is yes, and you don’t mind some instability with your payments – go for variable. If not, fix it and forget it!
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AHandle Says:
August 1st, 2008 at 5:19 pm
The threads here are hard enough to read when you have people quoting from reports and craigslist listings without providing links but it really bugs me that they can also take whatever name they want making it impossible to determine who said what. Is there a way to fix that?
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that guy Says:
August 1st, 2008 at 5:26 pm
the source:
yeah, i’m really interested. it’s a funny thing about academics: we’re curious. that’s why we do research in the first place.
anyway, way to bolster your credibility. good job!
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jesse Says:
August 1st, 2008 at 5:32 pm
“Any idea why landlords would not increase rent by the maximum allowable every year?
Supply and demand.”
You mean the same supply given “how difficult it is to find developable land” (your words), and demand given Vancouver’s population growth, which is only half what it was 15 years ago? Time will tell, but to say there is lots of supply that has kept rents low then turn around and say supply is restricted is too rich.
Add to that the record units under construction and it’s unlikely rents will rise as you say. Construction costs have nothing to do with it. Rent will be based on “supply and demand” so land value plummets to compensate.
This is going to be a 300+ comment weekend at this rate. Let’s hope patriotz and freako don’t show up or we could break 400 easy.
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the source Says:
August 1st, 2008 at 5:37 pm
That guy, interesting, a SFU professor working the blogs. No research or papers to mark right now? Tax money at work? Why don’t you enlighten us with your opinions on real estate? I don’t think anyone cares about your detective hobby.
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freako Says:
August 1st, 2008 at 5:38 pm
Dave up to his usual tricks:
1 Price to rent multiple is bad even when using apples to apples: MLS listing plus Craigslist asking rent for identical/similar unit.
2. Rents increase but mortgage payments stay the same. No argument there. But it isn’t the free ride you make it out to be because inflation is priced into long term rates.
3 The cost of construction does not DIRECTLY influence prices. Second, you forget that a large component of housing (SFH at least) is land. That is where the adjustment will take place if the costs of construction spiral out of control. Overall, the cost plus argument is totally flawed.
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Ahandle Says:
August 1st, 2008 at 5:43 pm
The trolls employed what the M.I.T. professor Judith Donath calls a “pseudo-naïve” tactic, asking stupid questions and seeing who would rise to the bait. The game was to find out who would see through this stereotypical newbie behavior, and who would fall for it. As one guide to trolldom puts it, “If you don’t fall for the joke, you get to be in on it.”
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that guy Says:
August 1st, 2008 at 5:45 pm
the source:
did i say i was a professor? read my posts. in any event, i don’t share my opinions because they’re worth no more than yours.
and yes, i’m working while i do this … i have time to kill while simulations run.
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bdk Says:
August 1st, 2008 at 5:45 pm
the source cites an SFU study and then states no one cares what an SFU professor thinks?
I guess since I’m not getting the joke he’s a troll and I didn’t get it until now.
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bdk Says:
August 1st, 2008 at 5:47 pm
my bad I got the two trolls names mixed up
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the source Says:
August 1st, 2008 at 5:48 pm
Prices will keep going up
http://www.revnyou.com/About_Us.html
(my site)
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scullboy Says:
August 1st, 2008 at 5:54 pm
Is it me, or does anyone else have the impression that the people who paid others to stand in line at condo pre-openings may be paying people to post on blogs?
The source: I don’t know what your game is, but you certainly seem to be playing one.
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punface Says:
August 1st, 2008 at 6:05 pm
Regarding the rental data that is based only on owners with multiple units, I think bears tend to be guilty of believing this data when it claims that rents have not risen, and bulls tend to be guilty of believing this data when it claims the vacancy rate is 0%. It’s just people believing what they want to believe.
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the source Says:
August 1st, 2008 at 6:06 pm
Scullboy, i like the idea that someone would pay me for this but unfortunately no. It sure seems like a game, i agree. I will sign off now, otherwise this will go on all night. Thanks to all those who corresponded, have a good weekend.
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Thums up2 Says:
August 1st, 2008 at 6:11 pm
“4.Prices will go down for decades to come”
From your account to pay increased rent!$3400 / 2br – EXECUTIVE 2 BR SUITE in UBC Chancellors Place (UBC)PostingID: 778516148.
best ever eclipse,best real estate anywhere,month over month year over year,decades after decades ladies and gentlemens vancouver british columbia,“the best place on earth” http://www.istockphoto.com/fil.....id=3725499
MIND IT.
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bdk Says:
August 1st, 2008 at 6:27 pm
right,
the source signs off and Krissh pops right up.
hmmmmmmmm
The market is going to go down for decades and TV Towers will become a homeless shelter for all the junkies
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punface Says:
August 1st, 2008 at 6:37 pm
Hah – TV Towers. When I first saw the renderings of TV Towers on their website, I thought that they were going to be two of the most awful buildings in the Vancouver skyline. However, I went by there yesterday and so far they don’t look nearly as bad as the nearby Spectrum towers do.
I’d consider paying $350/sqft for a unit in there when the time comes.
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Drachen Says:
August 1st, 2008 at 7:15 pm
Punface
“I think bears tend to be guilty of believing this data when it claims that rents have not risen, and bulls tend to be guilty of believing this data when it claims the vacancy rate is 0%.”
But there’s actually solid logic behind the bear side. If there were a genuine upwards pressure on rents then it would be a Vancouver wide phenomenon and all rentals including the ones studied would rise. However most tenants (this is speculation but I believe it’s accurate) would prefer to live in managed property rather than rent from the owner and managed properties are generally run in a more businesslike fashion so they’re more likely to be occupied than condos and the like, thus skewing the vacancy rate.
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Drachen Says:
August 1st, 2008 at 7:21 pm
the source
Ahh, well I see from your website you have no reason at all to be biased in your opinions.
Enjoy bankruptcy dude. Think of it as a zen-like experience where you can get back to the essentials of life and forget about the consumer driven world we live in.
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Dave Says:
August 1st, 2008 at 7:22 pm
Drachen, rents have been going up across the board and at rates above inflation. I happen to believe this will continue.
Who cares if the vacancy rate is 0.5% or 1.0%? It’s low no matter how you want to measure it.
Yes, I am sure most people would rather live in a 40 year old building with a pink bathtub and shag carpet rather than live in a high end modern condo. LOL
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Drachen Says:
August 1st, 2008 at 7:33 pm
As an aside does anyone else find it interesting how the bulls are crawling out of the woodwork now that the market is finally showing clear signs that it’s breaking under the strain?
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Drachen Says:
August 1st, 2008 at 7:38 pm
Dave
“Drachen, rents have been going up across the board and at rates above inflation. I happen to believe this will continue.”
As I’ve said to you before, it’s better to bring real facts to an argument than made up ones. Go look at a graph. Then come back and say that again.
“Yes, I am sure most people would rather live in a 40 year old building with a pink bathtub and shag carpet rather than live in a high end modern condo. LOL”
Yes, I am sure most people would rather have a landlord who doesn’t know the rules, is likely to try to sell the place from under them and is way too emotionally attached to the property over the peace of living some place where you never even see the landlord unless your rent is over a week late or something needs fixing.
There are arguments for both sides. But as usual you don’t even have black and white vision. Just one colour for you! Anything that doesn’t fit your world view is wrong and should be ignored!
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blueskies Says:
August 1st, 2008 at 8:18 pm
too good to pass up!
http://tinyurl.com/trustmeimyourkid
Climate Cops, which encourages children to monitor and report on their domestic energy crimes to their classrooms.
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Patiently Waiting Says:
August 1st, 2008 at 9:48 pm
I count nine listings on Riverbend Dr. in Coquitlam. Near new houses for about $500,000 and they still can’t sell. Mind you, I drove through there once and the lots were so small, townhouses would have been more appropriate (less wasted space). I wouldn’t even want to rent there as its not within a short walk to anything.
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Snark Says:
August 1st, 2008 at 10:29 pm
Wow! It’s busy in here today! For those of you calculating numbers on houses, I’d like to see the investment case for MLS V726307, asking only $450,000.
Long Term tenants $945./month, unaware of sale, great for investment future develop I-2 zoning.
You could be a long term investor with this one… a really really looong term investor.
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Snark Says:
August 1st, 2008 at 10:35 pm
Hey Dave, I liked your article on Four Reasons to Sell your Property at a loss. I thought this tip was very apt:
You’ve got some interesting articles on that site of yours.
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bdk Says:
August 1st, 2008 at 10:42 pm
Looks like “Dave” has his own blog but he tries to be coherent.
Krissh, this is a blog for you!
Go clog it up
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bdk Says:
August 1st, 2008 at 10:43 pm
this is Dave’s blog:
http://revnyou.wordpress.com/
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Vansanity Says:
August 1st, 2008 at 11:44 pm
Wow! You guys are going off tonight! Sucks I’m a slow reader… there goes my Friday night! Don’t judge me.
Here’s the latest installment. I call this piece – Vancouver: The Manhattan of the Pacific Northwest
———————-
Don’t Mistake the Summer Doldrums…
Every year around this time, the market slows to a crawl. The birds are quiet, the heat is on and quite frankly, people have better things to do than buy real estate. (which makes it a great time to buy by the way, since you’ll be the only game in town!)
Every year the numbers for August and July show a slowdown. This year will be no different. Bloggers all over the web use this as ammo for their “end-of-the-world as we know it” blogs. But don’t buy it.
Yes, the market is slowing in a way that’s not related to the summer, because of the US Credit Crunch, inflation and peak oil BUT: That doesn’t mean we’re going to fall like a house of cards. I’ve said it before and I’ll say it again, Vancouver has one of the healthiest markets in the world. Yes, the world. Net-immigration, strong economy, lots of jobs, great weather, Olympic spending by Municipal, Provincial and Federal Governments and quite frankly, value. Affordability is an definitely an issue, but outlying areas still represent great value for your dollar. Yes, not everyone can afford to live in downtown Vancouver, but not everyone can afford to live in Manhattan either. Affordability in itself doesn’t make prices come down.
You can’t paint a stock, or rent out a bond. You can’t refinance a T-Bill, nor can you renovate your RRSP. Real estate is the only investment you can improve with your own hard work and gumption. Home owners have 73% higher net worth than renters and you’ll always need a roof over your head. (As will everybody else; watch those rents rise over the next 6 months!) I for one continue to find great deals for my clients that represent strong long term investments. The underlying market shifts almost daily, but real estate remains one of the most secure places to invest long term.
We won’t know the top or the bottom until a year after the fact, so stop trying to time the market and get in the game!
Thanks for reading, and I welcome your comments, even the nasty ones…
The Harris Real Estate Group
————————
Now listen you “End-of-the-World-As-We-Know-It Bloggers”… you know who you are! You can’t paint a stock! OKAY?! THE DEBATE IS OVER! Shut the blog down, no need for this all to continue. It’s settled! You can’t renovate your RRSP or PAINT YOUR STOCKS! Buy now or die.
Have a great long weekend y’all!
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flip this Says:
August 2nd, 2008 at 12:27 am
At first I thought this summer doldrums piece was made up, but it is not! Here is the actual link: The Harris Real Estate Group: Don’t Mistake the Summer Doldrums…
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Gah Says:
August 2nd, 2008 at 12:28 am
Aside from “the source”’s jackass/troll comments, I must say tonight’s numbers from Paul B are quite amazing. I see ~ 130 expiries (I am definitely not an accountant) at month end. I am super interested to see how many of those in this market of flux are pulling out to drop their prices, and how many are pulling out because the September market will “rebound for sure” and we will list then at and all will be good. I may or may not know someone in the second scenario, and I bet that there are at least 4,999 other people thinking the same thing, whether or not their houses are on the market….
Wow!, I thing that’s my longest post ever on VHB’s Rob’s, Mohican’s (are you really a Mohican) and RET’s blogs.
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blueskies Says:
August 2nd, 2008 at 6:40 am
Affordability in itself doesn’t make prices come down.
bring the price down and you will have better affordability….
prices have to come down
there are no other alternatives
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punface Says:
August 2nd, 2008 at 8:45 am
Dave – even though I agree with you about rents going up, at the end of the day it doesn’t matter.
Fundamentals are so out of wack that rents would have to nearly double before any place I’ve looked at would make sense.
I believe rents are increasing – that’s why I’m a -25% bear.
Others believe rents are static and will stay so – they tend to be -50% bears.
But if you are arguing that prices will stagnate or increase … and assuming you believe there is some relationship in the long-run between rents and prices … then you must believe rents are going to double. And I can’t agree with you there!
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Drachen Says:
August 2nd, 2008 at 9:17 am
BDK and snark
You’re mixing up Dave and The Source. That is The Source’s blog (unless you are proposing that they are the same person).
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Drachen Says:
August 2nd, 2008 at 9:22 am
punface
In many other markets with similar overbuilding to ours (Miami, parts of California) rents actually dropped significantly from the beginning of the real estate crash. Desperate owners are just trying to get anything they can out of the property and everyone discovers that there are more empty units than anyone realized.
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Thums up2 Says:
August 2nd, 2008 at 11:27 am
19,534 Aug 1
20,066 July 31
Listing out of red light area but smart buyers and fool sellers will be countinue right after the break…..
“Main while rental rocket heading towards westside $3000 / 2br – Townhouse – Fairview Slopes (Vancouver Westside)”-catch the best action on vancouver condo-will be countinue……..
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energie Says:
August 2nd, 2008 at 11:46 am
By the way, with the RE come crashing down, how do you guys see the rental market in the near future?
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bdk Says:
August 2nd, 2008 at 12:29 pm
Dave, the source and Krissh are all the same.
hick named dave and his hick wife.
Krissh retarded thread jacking doesn’t appear there but we know the source has time to clog up multiple bear blogs at once.
Hmmm
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Drachen Says:
August 2nd, 2008 at 1:42 pm
engergie
I feel it will drop slightly (< 5%) others feel it will rise slightly. My opinion is based on what cities with similar bubble patterns to Vancouver in the US are experiencing (a 2-3% drop in rents).
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betamax Says:
August 2nd, 2008 at 1:50 pm
In many other markets with similar overbuilding to ours (Miami, parts of California) rents actually dropped significantly from the beginning of the real estate crash.
At the very beginning of the housing downturn in the US, when sales slowed but prices still rose, rents were still rising — just like here.
Once the housing market downturn hit full swing, however, the subsequent slowdown in the general economy resulted in substantially lower rents. That slowdown is becoming a long-term recession, which will further depress rents.
Same thing will happen here.
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Patiently Waiting Says:
August 2nd, 2008 at 1:56 pm
Of course, a 2-3% drop in rent is quite significant when you consider inflation. More bleeding for the accidental landlords.
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bdk Says:
August 2nd, 2008 at 2:26 pm
Betamax you’re right.
Right now the owners of units in new building are pressuring the property managers to charge more but are being told to be realistic. In some cases the owners decide they can do it themselves and hit Craigslist for example $1500 one bedrooms in Richmond! and $1850 one bedrooms downtown.
Even then the owners are losing $1500+ per month, if they get their inflated price. More often than not they let it sit for a few months before wising up and asking market rents.
The Rental Market is not tight downtown despite what anyone tells you. You can call any of the property managers in the classifieds and ask to see a suite, apply and have it by the end of this afternoon.
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Anonymous Says:
August 2nd, 2008 at 2:38 pm
Dave has a Bacher of Arts
Guys, Dave has a “Bacher of Arts” he knows what he’s talking about OK? Something tells me we’ll see these two bozos on a local news show in a year or two when their projects go into receivership and they’re charged with fraud.
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Dave Says:
August 2nd, 2008 at 3:01 pm
Dave, the source and Krissh are all the same.
hick named dave and his hick wife.
Krissh retarded thread jacking doesn’t appear there but we know the source has time to clog up multiple bear blogs at once.
Hmmm
That would be a no. I am not thesource nor am I Krissh.
Believe it or not, Dave is a common name.
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david Says:
August 2nd, 2008 at 4:20 pm
Funny coincidence that source accidentally entered his website and it’s Dave.
Dave you have registered your name on this site, stop trying to be smart and a retard at the same time.
Your karma will come back to you and you will die of pancreatic cancer
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jesse Says:
August 2nd, 2008 at 4:55 pm
“Your karma will come back to you and you will die of pancreatic cancer”
A close friend of mine just died of pancreatic cancer. He was a good man. Dave may have issues but that’s uncalled for dude.
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the source Says:
August 2nd, 2008 at 5:31 pm
This is too funny, I come back 24 hours later and bears are still talking about “the source”. Maybe i should register my handle so others don’t borrow it! It’s true, provoking Drachen is as predictable as when a fat kid spots a smartie. He does have some energy though, no matter how many times he was beat up yesterday he would stagger for awhile and then come back for more punishment. I have to go now so won’t be able to reply anymore. Have a good evening.
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Dave Says:
August 2nd, 2008 at 6:18 pm
I am not posting under multiple aliases. I have never heard of the other Dave. I doubt anything I say will change many minds. Maybe it doesn’t matter, but credibility is an important thing to me. If anybody can think of an anonymous way for me to prove it, I would be more than happy to.
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blueskies Says:
August 2nd, 2008 at 6:39 pm
source:
your version of the transpired events has a little “embellishment” to it…. the way i saw it was drachen wiped up the sidewalk with you…..
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Bluesman Says:
August 2nd, 2008 at 7:09 pm
Dave: “minds”???? and why is it so important for you to remain “anonymous”. We all know who you are…..
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Dave Says:
August 2nd, 2008 at 7:14 pm
You don’t know who I am. I don’t live in Burnaby like the other Dave (although I used to). I live in Victoria. Want me to take a picture of something here to prove it, with a specified time and date?
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ReductiMat Says:
August 2nd, 2008 at 7:16 pm
I strongly suggest that the regulars here should re-read post #101.
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blueskies Says:
August 2nd, 2008 at 7:31 pm
but credibility is an important thing to me.
then why are you picking the losing side of the bear/bull debate…
you know that eventually you will have your ass handed to you on a platter thus losing any shred of “credibility” you may have ever had…..
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Vansanity Says:
August 2nd, 2008 at 7:34 pm
Yes, as well, I would like the regulars to re-read the “you can’t paint a stock” quote. Mmkay? Quote #123. Class dismissed.
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Bluesman Says:
August 2nd, 2008 at 7:40 pm
We know who you are, Dave. Now go to bed!
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Dave Says:
August 2nd, 2008 at 7:41 pm
then why are you picking the losing side of the bear/bull debate…
you know that eventually you will have your ass handed to you on a platter thus losing any shred of “credibility” you may have ever had…..
Just because I am not as bearish as many folks here does not make me a bull.
I have been consistently calling for a 5% price decline this Fall. I don’t believe prices will fall more than 10%. Nor do I believe they will rise more than 5 to 10% year over year. Basically, I am short term negative (6 to 12 months), medium term neutral (1 to 3 years) and long term bullish (over another decade).
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Drachen Says:
August 2nd, 2008 at 7:52 pm
blueskies
“your version of the transpired events has a little “embellishment” to it…. the way i saw it was drachen wiped up the sidewalk with you…..”
In his world there’s a mysterious SFU study that nobody’s heard of but him and his invisible friend who told him about it, real estate CAN appreciate indefinitely and currently Vancouver real estate is undervalued.
What makes you think he has any sense of reality left?
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Dave Says:
August 2nd, 2008 at 7:56 pm
I am more than willing to meet one of you for coffee to show that I am a different Dave. Again, I live in Victoria.
Enough with the conspiracies already. It gave me a good laugh, but enough is enough.
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Bluesman Says:
August 2nd, 2008 at 7:58 pm
Dave: “Different” isn’t the word!
Now go to bed!
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Anonymous Says:
August 2nd, 2008 at 8:01 pm
Could someone please call the grownups back into the room?
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Drachen Says:
August 2nd, 2008 at 8:12 pm
Dave
“Just because I am not as bearish as many folks here does not make me a bull.”
No that’s true. But your conclusions were reached on equally fallacious reasoning as bulls use so you get lumped in with them.
For what it’s worth however I don’t think you’re thumbs or the source.
Thumbsup doesn’t have any concept of logic or proper argument and he’s functionally illiterate.
The source is literate and has an extremely weak grasp of logic but no concept of proper argument.
Dave is literate has a good grasp on proper argument but instead of debating in good faith constantly uses subversive tricks to get his point across instead of assembling a proper argument. I only say he has a good grasp because he breaks the rules so consistently I find it highly unlikely that he’s unaware of them. Grasp of logic is questionable, entirely depends on how much of his rhetoric he actually believes.
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Daba Says:
August 2nd, 2008 at 9:03 pm
I see that some people have been talking about market rents so I would like to post a question. I recently moved to Richmond; I rent the top floor of a duplex near Steveston Village. It has three bedrooms, two bathrooms, a large deck and a huge (i.e. double lot) backyad. I am presently paying $1300 for it. Would you say that this is close to market rents in Metro Vancouver? Thanks!
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freako Says:
August 2nd, 2008 at 11:14 pm
You’re mixing up Dave and The Source. That is The Source’s blog (unless you are proposing that they are the same person).
Perhaps “The Source” is Julie and Dave is “Dave”. I mean, how many people named Dave have a keen interest in real estate investing, lived in Victoria and Burnaby, and both had races in June? Also, why did the “about us” on the Dave & Julie page suddenly change today?
These are the Daves I know, I know These are the Daves I know These are the Daves I know, I know These are the Daves I know.
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freako Says:
August 2nd, 2008 at 11:37 pm
Also, why did the “about us” on the Dave & Julie page suddenly change today?
Scratch that, I mixed up the blog and the website. So this Dave is a mortgage broker? Isn’t that what dev/null independently figured out that the “other” Dave was? Very coincidental.
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bdk Says:
August 3rd, 2008 at 12:33 am
One of yesterdays trolls even referenced the trolls?
http://www.nytimes.com/2008/08.....ref=slogin
There’s also an article in todays NY Times about a glut of 1 bedrooms in Manhatten, which is in a comparable city in New York, New York.
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bdk Says:
August 3rd, 2008 at 12:38 am
So they are having trouble selling 1 bedroom Manhatten units for $600k?
So what does that mean in Vancouver where the rent is about 40% of Manhatten and costs more?
http://www.nytimes.com/2008/08.....d=2&em
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the source Says:
August 3rd, 2008 at 12:43 am
About Julie Broad and Dave Peniuk
In our first five years as rookie real estate investors, we purchased eleven residential investment properties, dealt with a property manager on trial for murder, tenants with knives, fire code inspections leading to court appearances and more. Now, with over 8 years of experience behind us, we’re sharing our stories and giving advice to help other rookie investors avoid the mistakes we’ve made, while enjoying the benefits a good real estate portfolio offers.
Dave and Julie
Julie grew up in a house attached to a small 20 room motel in Bassano, Alberta. Her family has been self-employed and involved in real estate in varying degrees throughout her life, so her interest in all things brick and beam was natural. From land to strip malls to apartment buildings, her family has been involved in many kinds of real estate ownership. Julie furthered her familial real estate experience by completing a Bachelor of Commerce degree from the University of Calgary and obtaining an MBA in Real Estate and Finance from the Schulich School of Business at York University. Since then, Julie’s spent five years working in the commercial real estate industry learning all about the Toronto, Calgary and Vancouver markets. Julie currently lives in Burnaby, BC with Dave and their dog Bram.
Dave grew up in Nanaimo, BC with a fix-it and flip-it real estate family. He bought his first rental property with his Mom over 16 years ago and then reignited his investing once he met Julie 8 years ago. Dave is definitely the more adventurous investor of the two, and plans to tackle development in the near future as he and one partner have begun assembling land for one project. Dave has a Bacher of Arts with an Hounours Degree in Psychology from UVic, as well as a Master of Arts Degree in Applied Social Psychology from the Univesity of Saskatchewan. In 2006, Dave left his job in consumer research and became a residential mortgage broker. In February, 2008 he switched to commercial real estate, and is now learning how to obtain financing for large apartment buildings, regional shopping centers, condo developments and more. Dave currently lives in Burnaby, BC with Julie and their dog Bram
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Brittanny Says:
August 3rd, 2008 at 4:56 am
Dave can’t see the forrest for the trees.
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Bluesman Says:
August 3rd, 2008 at 5:51 am
Here are a couple of interesting links I found over at Alberta Bubble Blog. Hat tip to Brent over there.
http://tinyurl.com/6mxk64
http://tinyurl.com/6jmfue
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Dave Says:
August 3rd, 2008 at 6:47 am
Perhaps “The Source” is Julie and Dave is “Dave”. I mean, how many people named Dave have a keen interest in real estate investing, lived in Victoria and Burnaby, and both had races in June?
You are using selective reasoning. I am the one who told you I lived in Victoria and Burnaby. If you read Dave 2’s blog, he doesn’t say that he ever lived in Victoria. His race was in July. I am surprised you remembered my race, but it was in June, although I also had one in july but never posted about it.
Again, the offer to meet still stands. Or, I can send you an email of my drivers license, but will block out my last name and address (excluding the Victoria part).
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jesse Says:
August 3rd, 2008 at 9:58 am
From Bluesman’s first link (Jurock for Calgary Herald). Ozzie says:
This would be due to increased failures of conditional offers of sale, inspection, and financing. I wonder how much the latter is impacting the success ratio, if at all. What this means is that, if I read these stats properly, the number of accepted (not completed) offers is only down around 20% from last year.
This makes sense — the real estate ladder is leveraged off FTBs and an increased number of failed offers is a corollary to falling sales. Why FTBs are not buying is another question entirely. Likely reasons are tighter lending, demand borrowed from past years, and speculation of future falling prices.
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freako Says:
August 3rd, 2008 at 8:26 pm
If you read Dave 2’s blog, he doesn’t say that he ever lived in Victoria.
“Dave has a Bacher of Arts with an Hounours Degree in Psychology from UVic”
Pretty hard to go to Uvic without living in Victoria
His race was in July.
No, he had a race in June.
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Manpassante Says:
August 3rd, 2008 at 8:45 pm
Something similiar to zis my friends will happen here. I have no doubt…..
http://www.nytimes.com/2008/08.....ref=slogin
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VancouverBanker Says:
August 3rd, 2008 at 10:01 pm
Stop feeding the trolls everyone, it’s ridiculous. Let’s have some real discussions.
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VancouverBanker Says:
August 3rd, 2008 at 10:14 pm
“In February, 2008 he switched to commercial real estate, and is now learning how to obtain financing for large apartment buildings, regional shopping centers, condo developments and more”
This actually made me laugh out loud. None of the big five banks are doing much financing for ANYBODY right now, especially not for amateurs who jumped on the bandwagon way too late. Dave, I suggest you try the credit unions first, although even they seem to be realising they’re going to get murdered when the market turns.
Maybe some of the mezz debt lenders would be willing to take a chance on you, but they will charge you 18% interest and a 4% fee.
Btw, since you’re doing a “land assembly”, I would bet a lot that your property is out in the sticks. I’ll give you some free advice: stop now before it’s too late. I work with experienced developers every day who are panicking now because they can’t sell their product. Sell your land as fast as you can to another sucked, then get yourself a job in something non-real estate, or at least make sure you’re on salary and not commission.
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VancouverBanker Says:
August 3rd, 2008 at 10:20 pm
Oh god, I just read that Dave is a mortgage broker. Let me guess, you want to be Avtar Bains?
Mortgage brokers and real estate agents that do development are like drug dealers who do their own product.
What I don’t understand, is how can mortgage brokers get sucked in? I can understand real estate agents b/c they start believing their own BS. But mortgage brokers should realize the market is turning when NO reputable bank will touch broker deals anymore.
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Dave Says:
August 4th, 2008 at 7:31 am
VancouverBanker, I am not a mortgage broker, a real estate agent or a developer. I have nothing to do with Dave 2. Some of you people are too quick to jump to conclusions and believe conspiracies. Why not just take me for my word? Even Drachen believes me.
Again, I am willing to prove it. So far, no takers.
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crabman Says:
August 4th, 2008 at 9:33 am
I love those fuzzy statistics from Fuzzie Jurock:
“The “U.S. crash” is not countrywide. Out of 150 major markets, some 72 are still rising in value.”
Of the 20 Case-Shiller markets, all 20 are down (YOY). But according to Fuzzie, half of all US markets are up!
Between 1988 and 1992, prices in San Diego dropped 35 per cent — since then, they rose by 410 per cent.
Back to Case-Shiller: San Diego actually bottomed in 1996 at 71.22. Today it sits at 178 (and falling) for an increase of 150%. I guess Fuzzie forgot to tell us his margin of error of 260%!
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bdk Says:
August 4th, 2008 at 12:13 pm
Instead of taking Dave’s word about that not being his website, which he entered on a post. Why don’t we ask his wife if he’s been trolling multiple bear blogs?
It’s clearly him and he could be Krissh too
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betamax Says:
August 4th, 2008 at 2:44 pm
Dave 2, aka the source: “Now, with over 8 years of experience behind us, we’re sharing our stories and giving advice”
LOL. What advice? How to make money in a boom market? Because that’s all you know. But you’re about to get quite an education in bear markets, and the cost will make your student loan debt seem cheap in comparison.
Speaking of which: psych always attracts the flakes; no surprise considering how dysfunctionally ‘the source’ has represented himself here.
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Drachen Says:
August 4th, 2008 at 4:50 pm
Dave
“Even Drachen believes me.”
Yeah, I think Krrish/Thumbsup has got everyone here jittery with his constant handle switching and occasional conversations between handles. I propose to everyone here that we simply apply a modified Turing test in the future. ie. If you cannot definitively say that two handles belong to the same person they are for all intents and purposes two separate people. There is really no point in debating it.
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Drachen Says:
August 4th, 2008 at 4:57 pm
Vancouverbanker
“Mortgage brokers and real estate agents that do development are like drug dealers who do their own product.”
Worse in a way. If things go to hell not only does the RE professional suffer on the job front but they have an over leveraged portfolio who’s value is dropping like a stone.
Drugs are where it’s at, you can always count on stable or increasing prices (take note Krrish, this could be your next great investment opportunity!).
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Dave Says:
August 4th, 2008 at 7:36 pm
There is really no point in debating it.
I agree, hence my offer to provide proof.
I would be glad to meet anybody for some hand picked fresh Guatamalan coffee right here in Victoria.