Markets change
Yes, markets change and so do ‘expert opinions’. And what a difference just a few days can make! Housing markets change at such a glacial pace that they miss out on the exciting daily ups and downs of the stock market, but the flip side is that once they start to slide it can take years for them to hit bottom. You don’t have to look further than our closest neighbor to the south to see an example of this slow downward slide.
This gradual change makes it all the more remarkable that a local housing market ‘expert’ would be singing two different songs within the space of just a few days. Thanks goes to Condohype for pointing the evolving marketview of Cameron Muir:
- “There is no indication, at this point, of any kind of substantial decline in prices,” Cameron Muir, Friday, July 11 2008
- “It is perfectly reasonable to expect home prices will stay fairly flat or even decline a couple of per cent a year until affordability picks up.” Cameron Muir, Tuesday, July 15 2008
Skeptics take heart, because I already know what you’re thinking – its the wonders of vague wording: a couple of per cent does not equal a ’substantial decline’, so this is not a reversal. And maybe you’re right, except there’s this small point: how many years do we have to suffer declines of ‘a couple percent’ until ‘affordability picks up’? Particularly with a global economic slowdown, a local economy coming off a boom and new mortgage rules that require more fiscal responsibility from buyers? Would a sharp shock to the market that quickly restores ‘affordability’ be a worse scenario than 10 years of slow equity leakage?
In June the REBGV benchmark price for a house dropped by about $5500 to $765,654. From that starting point a drop of just ‘a couple percent’ is a loss of more than $15,000 a year. Of course now that these predictions appear to be changing on a weekly or even daily basis, perhaps we’ll be hearing about the next leg up soon.
Thanks again to Condohype for the tippage.
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July 21st, 2008 at 11:05 am
you prove to be the dead brain idiot #90
July 21st, 2008 at 10:14 am
Mr. Simpelton:
There has never been a more useful idiot that SatV. As long as he’s capering around here gibbering you know the rest of the sheeple are generally unaware. Once he puts it all together in his head, we’ll know the fools are running screaming for the exits.
July 18th, 2008 at 11:09 am
Mr. Simpleton,
I suppose to make fun out of your post but i heading for work you know once my friend want to rent a unit and he found one ad in cragslist that says”one bedroom appartment is available immidiately”he got sick e mailing the poster for two weeks he just wanted to know where is it?how much is rent?now you are coming up with “demand and supply???”anyway those rules are included in the posts so cheer up!
July 18th, 2008 at 8:57 am
It is amazing how you guys keep your cool reading the fucking drivel that comes from Thums Up2…
I cannot help but to think that every second Real Estate Agent in this godforsaken place must be like like him… and that answers a lot of questions about “how this could have happened?”
Supply and demand… extremely stupid customers require extremely stupid agents.
July 17th, 2008 at 9:56 pm
I’m confused about that last post.
Has there ever been a satv/krissh/thumbsup post that wasn’t confusing?!?
July 17th, 2008 at 8:46 pm
He wants to sell to downsize
In that case he should just go ahead and sell, because it’s better to downsize at a higher price than a lower one. And prices have a lot lower to go.
But for the love of God he should not buy the new property before the sale on the old one completes.
If he can make an offer on the new property without subjects he will have a tremendous advantage in a slow market.
July 17th, 2008 at 8:37 pm
scullboy
July 17th, 2008 at 8:33 pm
Who the hell is Sofia? Mother Teresa? Pregnant?
I’m confused about that last post.
July 17th, 2008 at 7:22 pm
patriotz,
He wants to sell to downsize, but mostly to cash in, and buy back in at a discount in a year or two….just like me, but I sold last fall.
July 17th, 2008 at 7:17 pm
“So thumbs, let’s get this straight,”
O-ho That’s how it goes up(thums up)
“You’re saying the people on the sidelines and sellers are stupid?”
That’s correct i would say wishful side liners not those who got no choice other than renting,from the sellers who are selling their principle residence but plan to live rest of their life in the same city.
“Only buyers are smart?”
That’s correct as well because the pace of economy is at bottom low so does interest rates for buyers this is the best time to bargain with sellers than at any other time and best time to bargain with banks for interest rates than at any other time,this is the best time to exit from renting units because rents are start catching fire and the Vacancy rate in metro vancouver getting close to zero percent down from 1%.if there is anybody in affordable situation this is the best time to buy than any other time.
“What in God’s name was your mother huffing when she had you?”
Genuine butter made out of buffalo milk and genuine buffalo milk.
Sofia,if you want you can become mother teresa as well,
earlier informer source has informed this forum that you are pregnent by 2.5 months but you did not respond to that question are you?
July 17th, 2008 at 6:06 pm
jfk,
Sounds like you’ve done your job. It’s probably best to butt out at this point, the rest is up to him.
Check out this guy. Bought a flip last Aug for $430k. Now he’s trying to sell for $459k. He’s spent at least $20k so far in carrying costs, and realtor fees should be another $20k. If he gets his asking price, he we be out about $11k + $2k for each month it is on the market.
Looks to me like a flipper rushing for the exit!
July 17th, 2008 at 6:06 pm
Why does he want to sell? To move up to something bigger, or to downsize, or to move out of town, or -gasp- wait out the bust and buy cheaper, etc?
Makes all the difference in the world.
July 17th, 2008 at 5:51 pm
A ggod friend has been talking for some time about selling.
The problem is that he’s not quite ready because of a few family complications….daughter is getting married in a few weeks and whife has been too preoccupied with that. Then he started talking about a couple of small fix-ups and window dressing after the wedding.
They purhased the house in 2003 when it was about 15 years old. I think I’ve almost convinced him that prices have already started to fall, and not to waste any more time.
Anyway, I think it’s time for me to butt out. Any opinions?
July 17th, 2008 at 5:48 pm
Is there a way to block two thumbs? This individual is bad for the health of the people. There is a relationship between poverty and bad health.
July 17th, 2008 at 5:41 pm
can anyone point to one major US realty firm that predicted price drops before they started?
A better question is “can anyone point to one major US realty firm that acknowledged price drops as early as a year after they started?
July 17th, 2008 at 5:38 pm
well i thought he was pulling our legs. but now i think that john is satv posting without a babelizer.
July 17th, 2008 at 5:15 pm
From LA Times article above:
the statewide median home price last month was $328,000. The statewide median home price peaked in May 2007 at $484,000.
32% down from the peak and still falling…
Will you still be solvent when it happens here, satv/krissh/2thumbsuphisass? (P.S. satv, I’ll be able to buy back in for 20-30% less than I sold, AND I’ve been paying about $1500/month less while renting!)
Also from article:
The decline is being driven by … a growing willingness by sellers to accept less for their homes.
Now THAT is stellar journalism!
Actually, it’s being driven by affordability. As in, Calfornians weren’t able to afford them, so the price had to come down.
July 17th, 2008 at 5:14 pm
“Deceleration in the growth of housing prices largely offsets the expected acceleration of food prices,” the report explained.
Complete nonsense. Houses are assets, not consumables. Nobody has to buy a house, any more than they have to buy stocks. House prices have nothing to do with the cost of consumption, i.e. cost of living.
One might just have well have said that the bear market in stocks in the 70’s offset the increase in the cost of consumables.
Barf.
July 17th, 2008 at 5:04 pm
So thumbs, let’s get this straight,
You’re saying the people on the sidelines AND sellers are stupid? Only buyers are smart?
What in God’s name was your mother huffing when she had you?
July 17th, 2008 at 4:34 pm
California’s median home price plummets in June
In June 2010 you could use this with Vancouver substituted for California….
John: please stop self-medicating
satv: please start self-medicating
July 17th, 2008 at 4:01 pm
California’s median home price plummets in June
http://www.latimes.com/busines.....6611.story
July 17th, 2008 at 3:42 pm
Canadian Press: Has Canada slipped into recession without anyone noticing?
“Canada is within a hair’s breadth of slipping into a technical recession, economists said Wednesday, a day after the outlook for the North American economy soured sharply.”
July 17th, 2008 at 12:30 pm
Crabman:
…
…
…
I’m left speechless. I hadn’t imagined that they’d calculate OOH costs like that. They calculated it the same way one would rationalize current prices– “it’s stupidly expensive, but hey, it’s going up so much every year, I can’t lose”. I suppose this means that as prices begin to drop, inflation rates will appear to soar as those capital gains turn to losses, and as the rate of return on competitive investments climb, which will feed in to cause mortgage rates to rise, which feeds the cycle.
Ouch.
July 17th, 2008 at 11:06 am
When housing prices were soaring, there was no reflection of it on inflation. So now, conversely, housing prices decelerate and somehow offset any price increase in food prices as well as a direct reflection on core inflation. Something doesn’t add up.
Vansanity,
I did a little more digging, and I think I see what’s going on. (Someone correct me if I wrong)
The formula used for Owner Occupied Housing (OOH) is as follows:
UC = rM + iE + D + RC − K
UC: User cost
M: Mortgage debt
E: Equity in the home
r: Mortgage interest rates
i: Rate of return on alternative assets
D: Depreciation
RC: Recurring costs
K: Capital gains (or losses)
Source.
So, appreciation is subtracted from OOH costs! This looks to be the reason for the low OOH cost inflation. So when prices fall (or stop rising) this should actually create HIGHER housing inflation!!!
July 17th, 2008 at 11:02 am
#54,
Never mind what crabman has to say because he has sold his condo in greed in 2006(at homer street) by the time he just assumed that market will crash in near future then he will be able to buy on low prices again but he is so much disappointed.
Now when ever he sees buyer on the street he run behind buyers to stone them becuase he can’t wait too long.Do you Want to know why?
here is a list of reasons Manufacturing is up,Construction is still booming,Bank holds rates steady due to extremely healthy economy,Real estate prices steady,Economy growth rates prediction is higher,housing future is healthy.Rental yeild is going up,interest rates are low.
Buy only if you can manage monthly payment for the term there is no advice for flippers.buying advice is for the buyers to buy principle residence anybody wants to buy multiple units you must check your budget and balance.
July 17th, 2008 at 10:29 am
People, people… bulls & bears alike.
The market is playing out exactly as it should.
None of this should surprise anyone, except maybe for the how quickly things are falling into place.
There’s no point to delve into fundamentals too much because everyone already knows the market is out of whack.
So where to begin…
First of all, real estate is an asset class. If you look past the fact that people need a place to live. Again we go back to renting and owning are net neutral in terms of demand.
As with any asset class, they fall in and out of favour. And right now, the business climate is such that RE is out of favour.
With the rent/price ratios where they are now, as soon as values stop going up at their required rate, it no longer makes sense to own RE.
RE also works in cycles. We are already in year 7 if you count 2001 as the first year of the rise of RE.
Now let’s talk about market confidence. Again for the average home owner living in his principle residence with a manageable mortgage payment, it doesn’t really matter.
Economics teaches us about the multiplier effect. It’s all gung ho on the way up, but it’s the same thing coming down.
All it takes is a few desperate sellers to affect prices at the margin. Now all the potential buyers out there are thinking why buy now. I can take my sweet time. Prices are either going to be flat or down anyway.
Meanwhile, I can guarantee you that there are a bunch of sellers out there who cannot carry these properties too long. Renting them out will carry a loss and you can’t sell in a timely manner. What do you do? You have no choice but to drop your price.
Everything coming out of the news right now is negative.
Psychologically this can be devastating.
Right now credit is tightening. There is no bigger killer of an asset class than lack of credit.
Hmmm, affordability.
Ya we still have an economy humming along, but those highly paid construction guys building your pre-sale Millenium Water unit? Well guess what… they can’t even afford any of the places they’re building.
If somebody told you when you were in highschool that 5 years from now you’ll be making $100K/yr would you be happy?
Hell ya.
Well what if they told you, oh ya, but you can only afford to buy a 600sqft apartment.
What do you say then?
How is downtown Vancouver insulated? Yes it is no doubt a desirable place to live. But everything is relative.
Just like luxury cars. Let’s say you’re considering a Lexus for $80K versus a Porsche for $100K. So you figure the Porsche is the way to go since the extra $20K gets you a better product. Well if the Lexus dropped to $70K, you’re telling me that you wouldn’t have second thoughts about buying the Porsche at $100K?
Trust me, if the valley drops or if Burnaby or Coquitlam drops, downtown Vancouver WILL drop.
July 17th, 2008 at 10:20 am
Vansanity,
Check out the official CPI numbers for housing in BC:
2003: 101.8 – 1.8%
2004: 104.0 – 2.2%
2005: 106.2 – 2.1%
2006: 108.7 – 2.4%
2007: 110.9 – 2.0%
WTF?!
http://www40.statcan.ca/l01/cst01/econ09k.htm
Moldcity,
Great minds think alike!
July 17th, 2008 at 10:04 am
Prices are stable and the market is in good shape. The celebration of lights will surely improve the market conditions as rich asians flock to see the fireworks and buy condos on the way out of town.
July 17th, 2008 at 9:58 am
Crabman, you beat me to the punch!
July 17th, 2008 at 9:55 am
Ziggee – spot on. An open challenge to anyone who likes to quote realtors: Please find any instance of a real estate company putting out a statement predicting a market crash before it happened. Anywhere. In the US, the UK, Spain, Canada, etc. at any point in history. Please show us how valuable and accurate these press releases are.
July 17th, 2008 at 9:54 am
Anon #54,
I’m assuming that was a joke. Can’t imagine anyone actually asking 2ThumbsUpHisAss for any real estate advice!
As far as realtors predicting prices drops – can anyone point to one major US realty firm that predicted price drops before they started? (I’ll bet no one can.)
July 17th, 2008 at 9:53 am
BoC predicts core inflation will hold and GDP to increase for the remainder of the year. I read about it on bnn.ca. Here’s an excerpt and below is my subsequent question:
The projection flies in the face of the bank’s own survey, which shows that a sizable portion of Canadian companies plan to pass along higher input costs to their customers.
The central bank suggests this pass-through effect won’t happen, partly because the Canadian public’s inflation expectations are well anchored, and partly because supply is outpacing demand right now.
Core inflation will also stay muted because housing prices are no longer soaring, the bank said.
“Deceleration in the growth of housing prices largely offsets the expected acceleration of food prices,” the report explained.
Q – Without restarting the debate on the formula used by Stats can to track CPI, does the above make sense? When housing prices were soaring, there was no reflection of it on inflation. So now, conversely, housing prices decelerate and somehow offset any price increase in food prices as well as a direct reflection on core inflation. Something doesn’t add up. Why wasn’t core inflation reflecting the break neck housing price increases over the last few years? So it’s ok to use prices in CPI as long as they are going down, but if they are going up we’ll just ignore them? I don’t know… maybe I’m way off base with this.
SOS to some of you who are better versed in this area than myself.
July 17th, 2008 at 9:38 am
3.5% is the best prediction you can find?!? Transaction costs alone are around 6% plus you have to pay the huge premium over rental cost. I can get 3.5% guaranteed return on cash right now (not a salesmans pitch prediction) so why would I buy now?
July 17th, 2008 at 9:38 am
It would really crack me up if you turned out to be some retired linguistics or economics professor
He’s a realtor, nothing more; in past posts he’s demonstrated a specific knowledge of that industry — and demonstrated a lack of knowledge about everything else, a common fault of the breed. Chipman’s lapdog Aaron would be my guess, but who cares either way.
July 17th, 2008 at 9:25 am
Thums up2,
From the a CBC commenter that posted on that link you put up:
“With all due respect to Royal Lepage, does anyone believe a Real Estate company would ever predict that house prices are going to fall? Not a good sales line for a Realtor: “You will probably be able to buy a similar house in a year for less, but why not buy now so you can maximize your loss”
I just don’t understand why the media and people (like you Thums up2) take information from people who have the incentive to make everything seem better than they appear? It’s about as ridiculous and dangerous to take advice from Bob Rennie. Perhaps someone should ask Mr. Rennie if he understands risk and reward?
July 17th, 2008 at 9:21 am
Bank of Canada sees economy growing slightly in Q2
The bank said it also sees full-year growth of 1.0 per cent for 2008, 2.3 per cent in 2009, and 3.3 per cent in 2010.
http://www.cbc.ca/money/story/.....anada.html
July 17th, 2008 at 9:17 am
#54 yes,
The realtor sees the national average house price is forecast to rise by 3.5 per cent, to $318,000 by the year’s end.http://www.cbc.ca/money/story/2008/07/17/houseprices.html
July 17th, 2008 at 9:15 am
2 thumbs up :
Do you think I should run out and buy a house now? I have money.
Yes or No?
(No ramble)
July 17th, 2008 at 8:53 am
Hmmmm…looking at PaulB’s numbers. Yesterday, we were assuming that the 12% sell/list ratio from the 15th was due to power failures downtown affecting system updates, but now I look at the 16th and also see 15%.
I wonder if that’s something we’ll see a lot of going forward.
July 17th, 2008 at 8:42 am
Levy says we’re in a correction now, and its happening faster here than Calgary and Toronto. We are going to go down big *because* we went up big.
Michael Campbell is on the line as well.. poor Levy.
July 17th, 2008 at 8:41 am
Bob Rennie, Michael Levy are on CKNW right now with Bill Good. Rennie: “There are 2 markets right now, downtown Vancuover and everywhere else”. He sees no price drops downtown, rental price increases, etc. They all agree this is a slow summer though.
Another Rennie gem: “Vancouver is more insulating from what is going on in the US compared to Toronto and Calgary.” Hmm, sure pal.
Rennie is full of crap and Bill Good is eating it with a smile on his face.
For the record Levy has been talking about a downtown for a while, in housing and the economy. He’s the best economic analyst on the radio IMHO.