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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Thums up2 Says:
July 16th, 2008 at 12:06 pm
What?Hey condo hype what are you talking about?
Greater Vancouver average home prices
$611,613 june 2008
$564,702 june 2007
8.3% up yoy
Condo hype says”is a loss of more than $15,000 a year.”- Thanks goes to Condohype for pointing the evolving marketview of Cameron Muir.”-Condohype is a joke.
British Columbia
$463,458 june 2008
$445,881 june 2007
Hey condo hype are you serious?do you even know how to do analysis?Vancouver Real Estate is a word of Cameron Muir:
if you’re waiting to pick up a Vancouver home at rock-bottom prices, you’ll be disappointed. “
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soon-to-be-renter Says:
July 16th, 2008 at 12:12 pm
I think “affordable” means you can buy a house in a neighbourhood populated by people from a similar socio-economic bracket. I mean, come on, nobody’s saying what their real issue is with housing costs! Many folks can still afford a roof over their heads, it just isn’t in their area of choice.
This big bubble has really changed the landscape of Vancouver by mixing up the rich and the poor. It’s done wonders for areas like Main street, which is now full of restaurants and hip boutiques.
When we slide back down the other side of the bubble, what does it mean for “up and coming” neighbourhoods? Will people continue to love them and just buy bigger newer houses, or will they abandon the east side so their children can go to so-called “good” schools?
I know a couple who were big East Van fans until their kids were approaching school age, then they hightailed it off to North Vancouver.
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Ziggee Says:
July 16th, 2008 at 12:22 pm
“if you’re waiting to pick up a Vancouver home at rock-bottom prices, you’ll be disappointed.”
True. Then I should rent!
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Drachen Says:
July 16th, 2008 at 12:28 pm
I think the question should be what is “Affordable” rather than what is “Affordability”, two entirely different questions.
You’re missing any reasonable answers for your poll, how about:
“Affordable (at the individual or family level) is no more than 40% of gross income spent on housing.”
“Affordable housing (at the regional level) means that a median income family can purchase median housing within a median commute distance, spending 40% or less of their income.”
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The Pope Says:
July 16th, 2008 at 12:29 pm
What?Hey condo hype what are you talking about?
I should clarify, I wrote the copy, Condohype pointed out the quotes. If you have a problem with someones logic it is mine. That said I still can’t figure out what your point is so I’ll just post a quote from 1981:
Just so you know how accurate past predictions in the local media have been, the market crashed by about 50% over the following year.
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Drachen Says:
July 16th, 2008 at 12:32 pm
“if you’re waiting to pick up a Vancouver home at rock-bottom prices, you’ll be disappointed.”
Well of course you will be. The phrasing of this sentiment is all wrong. I am looking to pick up housing at 1/2 – 1/3 of current prices. This does not reflect ‘rock bottom’ pricing, I’m not talking about getting some big deal on a house. I just want to pay what it’s actually worth.
He’s twisting the concept that housing will fall by a significant amount by using loaded language. Classic straw man argument.
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gokou3 Says:
July 16th, 2008 at 1:13 pm
Thums up2, use the same logic and apply to US real estate circa 2006 and you would not have predicted any price drops either. You don’t win by looking in the rear-view mirror.
Now, let me ask you, do you even know how to do analysis? Have you talked to any RE agents about how quiet the market has been lately?
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Thums up2 Says:
July 16th, 2008 at 1:58 pm
gokou3,
Why i need to talk to realtors don’t you read the article from their supremo based on the performance of real estate and the economy of british columbia but just for your satisfaction realtor don’t have any other answer other than a same news letters issued from rebgv and british columbia.
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Ultraman Says:
July 16th, 2008 at 1:59 pm
IMHO Affordable should be less than 25% of your gross income on housing cost.
Beyond that you will have to make significant sacrifices and I’m not talking about bringing your lunch or drinking McDo coffee, more like no car, no kid lifestyle.
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gokou3 Says:
July 16th, 2008 at 2:22 pm
Thums up2,
So… have you applied the logic in your OP to the 2006 US RE market yet?
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Thums up2 Says:
July 16th, 2008 at 2:40 pm
“Just so you know how accurate past predictions in the local media have been, the market crashed by about 50% over the following year(1981-82).”
The pope,
In 1981 prices were not totally adjusted for inflation but in 2007 it’s preety much adjusted neck to neck.
http://www.canada.com/theprovi.....prices.swf
The Pope Muir has modren media and source available to him those slides posted by “Dave”-Time and demographia has changed neck to neck since 1982,Income has changed demand for luxury has changed boomers also like their life in action not in the yard,retiring age has been changed from 65-71 means we are very much dependent on immigration and migration when most of people want pizza and grocery to be deliver to their doors this world is definitely getting expensive that’s why international monetary policy back up the housing prices.damn construction cost where developers are runing away from uncomplete projects ho,ho.
These little discounts we are experiancing these days is a result of the economy performance of Ontario and across the border shopping from british columbians.
Economy pace in british columbia is expected to pick up later this year when all our forest industry(lumber products)are excpected to stand on its own feet sure it can’t happen over night but sitting out fellas are not willing to wait too long while sales in usa is also picking up.why people need to follow them on two year lag?.just do it!!!!!now or never
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JB Says:
July 16th, 2008 at 3:17 pm
US faces global funding crisis, warns Merrill Lynch
http://www.telegraph.co.uk/mon.....ebt116.xml
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Drachen Says:
July 16th, 2008 at 3:46 pm
Thums up2
“In 1981 prices were not totally adjusted for inflation but in 2007 it’s preety much adjusted neck to neck.”
Are you kidding me, are you seriously such a moron? That graph shows historic prices in real and inflation adjusted dollars. The reason the two are closing the gap over the years is that the measurement is in today’s dollars. You really don’t understand any of this stuff do you?
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Drachen Says:
July 16th, 2008 at 3:48 pm
Err ‘real’ should read ‘nominal’.
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/dev/null Says:
July 16th, 2008 at 4:03 pm
So, looking at that graph makes me wonder (for the n’th time): Did our bubble begin in 2002 or in 1989? i.e. what’s the baseline? Late 90’s is way higher than late 80’s, by about 50% it seems. Is that densification or did we have two peaks to this thing? (Mmmmm. Double Bubble. I miss that stuff. Nothing like bubble gum that can break a tooth.)
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bdk Says:
July 16th, 2008 at 4:10 pm
“You really don’t understand any of this stuff do you?”
It whizzes right over his head like a lefthanded fastball.
He calls himself Thums/time/satv/krissh/informer/browntown but it’s clearly the same idiot.
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betamax Says:
July 16th, 2008 at 4:12 pm
Muir: “It is perfectly reasonable to expect…
Muir doesn’t say it’s what he thinks, but rather that it’s a reasonable thing to expect; he can thus avoid responsibility for such public statements later, when prices crash.
…stay fairly flat or even decline a couple of per cent a year until affordability picks up.”
With the current disconnect between prices and wages, how many years will that take? Fifteen, like Japan? Twenty?
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alexcanuck Says:
July 16th, 2008 at 4:43 pm
but it’s clearly the same idiot.
You clearly have a more optimistic view than me on the prevalence of idiots. I think there’s more than enough to go around without multiple persona being required.
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Thums up2 Says:
July 16th, 2008 at 4:44 pm
Err ‘real’ should read ‘nominal’.
sure we can read as you said and you can also read prices paid for according to supportive and increased income etc.
“It whizzes right over his head like a lefthanded fastballer”
I am sure the bouncer did not miss your helmet my math teacher try to understand the issue or give away your catch on off slip or silly point then go back to pavalion.
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Thums up2 Says:
July 16th, 2008 at 4:54 pm
Finally anybody wants to learn about that graph here we got discription:if you look at price increases, they’ve been double-digit, but for the most part they’ve been between 11 to 15 per cent for the past few years. That’s high, but in a bubble you start to see 20-per-cent growth, 30-per-cent growth. Just really rapid acceleration, and we haven’t seen that. That’s what happened in 1981 and 1982 That’s what a bubble looks like.”
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SeattleKyle Says:
July 16th, 2008 at 4:59 pm
For those who are still bullish on Vancouver real estate, please remember that a couple years ago, experts predicted that there was no bubble in US real estate:
http://moneycentral.msn.com/content/P116257.asp
http://www.washingtonpost.com/.....02255.html
Oct. 27, 2005–The much ballyhooed housing bubble isn’t happening Las Vegas, a real estate consultant said Tuesday.
At a housing seminar at the Four Seasons, Tim Sullivan, principal of San Diego-based Sullivan Group Real Estate Advisors, said a housing bubble would defy all fundamentals of the local market.
“The market’s not going to hell in a hand basket, and our safety net is California,” he said.
Sullivan said Las Vegas can’t have a housing bubble with this kind of job growth and in-migration and when land is hard to find and there’s not much housing inventory. Any talk of a housing bubble is probably coming from outside the market, he said.
“My fear is particularly Wall Street-related,” Sullivan said. “Wall Street tends to look at markets as black and white. This is not a market where we’ll see 50 percent appreciation, but there’s still going to be appreciation.”
The median price of a new home in Las Vegas, including condo conversions, was $297,555 in September, an increase of $18,631, or 6.7 percent, from the same month a year ago, Home Builders Research President Dennis Smith said. Median prices for existing homes rose 14 percent to $285,000.
Las Vegas is still a “mecca” for Californians in search of a good deal on a home, Sullivan said. But high-density land play in suburban markets has changed, he added, especially after the frenzy over mid- and high-rise condominium projects.
“It’s softened, maybe not softened, but it’s back to normal,” he said.
With billions of dollars of development going into the Strip resort corridor and the South Coast casino under construction on the south Strip, the price of land in those areas may be justifiable, Sullivan said. It’s much tougher to convince developers about projects in the suburban market, he added.
“My thought is if we had the Curve developed, it would be highly successful,” he said of the planned mixed-use development at the Las Vegas Beltway and Durango Drive. “But they’ve got to prove it. Right now, there’s a lot more hype than reality.”
Development is moving away from classic suburban markets because of land availability and back to downtown cores where density is higher, Sullivan said.
Timothy McPeak, who attended Sullivan’s seminar on behalf of Babcock & Brown investment advisory firm in San Francisco, said he got the message that the sky isn’t falling.
“It’s just a return to normal conditions. We’ll see what happens. It’s market by market. Where I live, it’s just crazy,” he said.
Smith reported that new-home building permits slipped to 2,121 in September, down by more than 1,000 from the previous month.
“Should we be concerned? Is some of the air being released from that bubble we keep reading and hearing about in the media?” he said.
Rising mortgage rates and declining consumer confidence will take out some of the investor buyers, Smith said.
“We don’t think many of the home equity investors have planned or sufficiently budgeted for the rise in their payments if they are interest-only, or if the payments are based on prime rate changes,” he said. “If payments for investments are made from equity lines of credit, in many instances, these payments may have doubled.”
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Drachen Says:
July 16th, 2008 at 5:10 pm
/dev/null
“Did our bubble begin in 2002 or in 1989?”
1987, I’ve said it many times before. If we want to know where prices will hit on the road to fundamentals we should adjust 1987 prices for inflation. As far as I can figure that’s the last time when prices were in line with the multiple fundamental measurements available (though there is about a 10% variation depending on your method).
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SeattleKyle Says:
July 16th, 2008 at 5:18 pm
As an addendum to the October 27, 2005 article on Las Vegas real estate above, the Case-Shiller index for Vegas has declined 27% since then (to April; probably worse by now). I guess Tim Sullivan was wrong. Hmm…a real estate professional getting a housing market prediction incorrect. How could that be?
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Re-diculous Says:
July 16th, 2008 at 5:25 pm
What would be a realy interesting statistic is the percentage of units that are currently in negative cash flow.
The business case for holding these was valid while capital appreciation was offseting the negative cash flow. However, now that the head cheerleader (i.e. Cameron Muir) has admitted to flat or declining prices – this business case is blown. Obviously, this is a maor contributer to the dramatic rise in inventories, however, I wonder if there is a much larger group of RE investors still in denial as to the current market reality?
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bdk Says:
July 16th, 2008 at 5:28 pm
“RE investors still in denial as to the current market reality”
Just look above there is one idiot ,with multiple personalities, who still thinks that prices should be higher than New York and that there’s more high paying jobs and head offices here and that Vancouver is differet than the rest of the world.
That or he’s just having fun pretending he thinks the market is good? Hard to know most of his rambling messages don’t make any sense.
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Anonymous Says:
July 16th, 2008 at 5:45 pm
Shut up new york is world ah a statue of liberty gifted by france and bed bugs are their own there is nothing else to remember ny you can give up blogging here because your head is moving like a remote disk.
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bdk Says:
July 16th, 2008 at 6:53 pm
Good One Krissh!
If you ever get through the Emperors New Clothes or when you turn 13 you should start reading Mordecai Richelors “Apprenticeship of Duddy Kravitz”
“Krissh?browntown/Thums soon believes land ownership to be life’s ultimate goal and the means by which a man is made.”
But let’s stay on topic here, the market is doomed and the less intelligent bulls who couldn’t understand supply and demand and greedily held on are going to lose money for decades to come!
http://vancouvercondo.info/for.....3&t=48
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patriotz Says:
July 16th, 2008 at 7:11 pm
Late 90’s is way higher than late 80’s, by about 50% it seems. Is that densification or did we have two peaks to this thing?
You missed the obvious reason – lower interest rates. Interest rates were in double digits through the 80’s, but about the same as today in the late 90’s.
RE bear markets bottom out at rent equivalence, and the rent equivalent price is inversely proportional to interest rates.
If interest rates creep back up to 80’s levels, real prices will return to 80’s levels as well.
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browntown Says:
July 16th, 2008 at 7:35 pm
yeah slappys! hey seattle wingnut, remember vantastik here has no land left, too bad in las vegas they forgot dessert and area 51! remember usa had big credit crunch in canada visit rbc for approval no problem except for seattle dreamernut with no worthy greenback! go back to boeing rocket star! thumbs has good graph, can chart out next leg up!
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Vansanity Says:
July 16th, 2008 at 7:38 pm
SeattleKyle – I appreciate your input, sincerely. However, as someone stated today over drinks: Vancouver is a World-Class City with mountains, ocean and beaches, a City where everyone wants to live. So it’s completely different than Las Vegas and er…Seattle, or anywhere else in the world for that matter. Totally different. Red Delicious vs. Granny Smith, capice?
Do you know how hard it is to convince someone that the place they live and work is the best place on earth? It’s no wonder a few still don’t believe this ultimate truth.
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tired Says:
July 16th, 2008 at 9:09 pm
thumsup and similar folks:
1. If you’re sincere, get some help. You’re an incompetent idiot making a fool of yourself.
2. If you’re just joking around, get some help — nobody with a healthy mind carries on with a ‘joke’ as long as you have — you’re a troubled individual.
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freako Says:
July 16th, 2008 at 9:40 pm
Re: Cam’s subtle shifts
I think it is like the case of the frog in the boiling water. If you raise the temperature gradually, it will happily allow you to turn it into stew, but if you crank the heat up too fast it will jump out (this is a myth BTW).
If Cam/Chipman/Pastrick et al change their tune very gradually, we won’t tar and feather them. Or so the thinking goes. What really irks me is when they change their tune but claim to have thought so all along.
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freako Says:
July 16th, 2008 at 9:44 pm
RE bear markets bottom out at rent equivalence, and the rent equivalent price is inversely proportional to interest rates.
Not only that, but at current rate of inflation, it will take decades to catch up. Unlike the early 80’s where your real payments dropped like a rock, and nominal rents skyrocketed.
There will be tough times ahead for intransigent buyers and investors who refused to listen to reason. Can’t say I didn’t warn them.
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/dev/null Says:
July 16th, 2008 at 9:45 pm
All is now clear. Thanks, patriotz.
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scullboy Says:
July 16th, 2008 at 9:55 pm
I have trouble with the idea that a whole phalanx of retarded immigrants on this site, so I think it’s safe to assume thumbs, krrish, anon (sometimes) Time, informer and browntown are one and the same.
The key to understanding his mentality is to understand his education level. He’s obviously not schooled at all in basic mathematics or economics. He believes psychology drives the market. Let’s face it, in a lot of ways the recent market has been driven by psychology and greed.
What he fails to understand is that in the long term, psychology is trumped by math.
Krrish thinks if he can just stay on blogs like this one and flail around like a retarded clown, his voice will somehow convince people who are on the fence, and somehow the party will never end. HOw he can believe that is a bit of a mystery but let’s face it, there are a lot of retarded clowns flailing around Vancouver. Most of them speak ENglish better, and are better able to construct a rational thought but their reasoning is essentially the same.
Krrish buddy, you’re a warehouse worker. You got lucky somehow and stumbled into a property, apparently. You’d be extremely wise to sell… immediately. However that requires a level of rational thought of which you’ve demonstrated you are entirely incapable.
You can flail around as much as you like. Math is trumping psychology, as it must. Your “asset” is l losing value each day you hold on to it. You will never recover from this loss, and your son will end up paying for your foolishness.
And honestly, knowing your son will curse his father’s foolish choice makes putting up with your antics completely worthwhile.
ooooo!
On an unrelated note, I see debt consolidation ads now that include debt incurred from leaky condos.
You won’t see THAT anywhere else in Canada. It really is different here!
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browntown Says:
July 16th, 2008 at 10:29 pm
hey scullnut, i have no idea who thumbs is and have never heard of this krish! i look into your eyes close and can see the back of your head! looks like outside of head! no wonder you looking into your debt consolidation, but no real estate too bad! heres some math numbnuts, too many immigrants coming not enough condo! price go up! psyched you out baldie!
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Thums up2 Says:
July 16th, 2008 at 10:50 pm
“Most of them speak ENglish better, and are better able to construct a rational thought but their reasoning is essentially the same.”
Where is your rational thought?do you have any opinion to change the average prices in #1 that shows gain not lose of $15k.?
Do you have any opinion to change the acceleration of 81,82, compare to last couple of year look at the graph #11 and tell us?
Do you have any opinion to change the discription of the graph at #20?.
Read,What ever your company pay you for your work housing cost is included in your pay if you did not buy any thing but sold your property back in 2001 then you don’t need to cry on your mistake please take exit no 11(legs).
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cashisking Says:
July 16th, 2008 at 11:12 pm
Wall Street Journal – Monday
Your Money Matters section … full front page + full page 3
“How To Sell A House, When You Have To Sell It Now.” … not exactly the sub prime demographic readership …
But it’s different here
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JR Says:
July 16th, 2008 at 11:18 pm
My goodness Mr. Thumbs Up. We’re getting just a bit testy aren’t we. That medication can’t be far away; just reach out for it.
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patriotz Says:
July 16th, 2008 at 11:58 pm
“How To Sell A House, When You Have To Sell It Now.”
Just drop the price, stupid.
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TraderP Says:
July 17th, 2008 at 12:53 am
What’s with all the weird english from browntown/thumsup/etc? I got nothing against immigrants since my parents are immigrants also, but if english is your second language, please check your grammar and overall sentence construction. I get the “gist” of your posts but i think it would be better received if you put some effort into making it more coherent. Proper english means grammar, logic and rational thought! If this engrish gibberish stuff is just an act on your part, then I have to ask “why?”
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tired Says:
July 17th, 2008 at 12:59 am
That medication can’t be far away; just reach out for it.
He’s been off his meds for a long, long, long time.
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tired Says:
July 17th, 2008 at 1:02 am
heres some math numbnuts, too many immigrants coming not enough condo! price go up! psyched you out baldie!
Too many immigrants coming?
Not enough condo?
Well, at least you got the overall concept of supply and demand right. But your made-up facts don’t reflect reality: there aren’t too many immigrants coming, and there are more than enough condos. So, that means “CRASH!” with a lot of weeping and wailing and gnashing of teeth.
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tired Says:
July 17th, 2008 at 1:03 am
What’s with all the weird english from browntown/thumsup/etc?
He’s a troubled individual who has become addicted to a stupid little game he’s been playing for almost two years. He needs help.
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Thums up2 Says:
July 17th, 2008 at 1:35 am
TraderP ,
You don’t know any thing about economy,real estate,math,and science so stop complaining this is mature subject matters. i am not your teacher just a bloggers poster it could be possible you are unable to grasp the message but the answer is in top few lines,anyway thanks for your rant next time “posters discretion is adviced” good advice is take some lesson regarding those said subjects.
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TraderP Says:
July 17th, 2008 at 2:04 am
Thumsup…don’t get me started. Every blog seems to have its requisite “village clown” but if you and Browntown/etc are indeed a single person, then I’m quite fascinated by how you can carry on with these different personas and why you do it. Hey we should meet up for coffee downtown some day. It would really crack me up if you turned out to be some retired linguistics or economics professor who just wanted to push everyone’s buttons in order to compensate for other unknown deficiencies.
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Vansanity Says:
July 17th, 2008 at 7:15 am
I’m on this SPAM list, they just get more and more desperate. 35 years with a down payment is a savings of interest, BUT the rules don’t start til Oct 15 so there’s time to take advantage of 40 year!! WTF??? Have a read and judge for yourself:
THE RULES HAVE CHANGED
Yesterday, the Canadian government took away the possibility of home ownership for thousands of Canadians by scrapping the 40 year mortgage and eliminating zero-down mortgage products. What is seen by many as a harbinger of doom and gloom in the market, I see it as a bold yet necessary move by the government to avoid a US style freefall free-for-all.
Keep this in mind:
On a 200k 6% mortgage, reducing the amortization period to 35 years from 40 years results in a $41 increase to the borrower’s monthly payment, but you would save $49,000 in interest payments over the life of the loan. The Finance Department said in a news release: “Today’s announcement marks a responsible and measured approach by the government to ensure Canada’s housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada,” .
The fact is, you can still buy a home with as little as 5% down with 35 years to pay it back. And with interest rates as low as they are, it’s still better to own than rent (rents are going to spike very shortly fyi) . And while it’s not the responsibility of the government to maintain affordability, forcing homeowners to save some money before taking on the responsibility of home ownership will have a lasting positive effect as we begin moving into the new decade.
That being said, the rule changes don’t come into effect until Oct. 15th, so there’s still time to take advantage!
Thanks for reading, and please reply to me if you have any comments or questions.
D’Arcy Harris
The Harris Real Estate Group
Top 10% of All Realtors in the Lower Mainland
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Digi Says:
July 17th, 2008 at 7:51 am
Thanks for sharing that Vansanity, thats classic. I liked the fortune telling aspect – (rents are going to spike very shortly fyi). Now what possible reason could a realtor have for telling you it’s always a good time to buy or sell real estate?
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Mr. Simpleton Says:
July 17th, 2008 at 8:00 am
“The fact is, you can still buy a home with as little as 5% down with 35 years to pay it back. And with interest rates as low as they are, it’s still better to own than rent (rents are going to spike very shortly fyi)”
HAHAHAHAHAHA!!!
OMG, my belly is aching now, please stop!
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umdesch4 Says:
July 17th, 2008 at 8:01 am
The other big problem is how certain ‘rules’ intended for the average Canadian won’t apply in Vancouver. Eg. The first time buys rules regarding borrowing from your RRSPs. The cap amount is 5% of nothing you can buy here. Many other rules regarding taxes and insurance breaks for first time owners only apply if the purchase price is under something like $425K, which, again, is not much in the GVA.
I got no benefit at all when buying my first house, so I did the 40 year, zero down thing, and intend to accelerate the heck out of my payments.
Not to mention, pulling from my RRSPs would have sucked anyway, as they’re currently at a decade low.
My point is, I see the elimination of the 40 year zero down mortages having a profound impact on this market.
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Warren Says:
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.
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Warren Says:
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.
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Anonymous Says:
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.
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Anonymous Says:
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)
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Thums up2 Says:
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
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Thums up2 Says:
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
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Ziggee Says:
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?
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betamax Says:
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.
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Moldcity Says:
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?
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Vansanity Says:
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.
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crabman Says:
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.)
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Moldcity Says:
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.
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Moldcity Says:
July 17th, 2008 at 9:58 am
Crabman, you beat me to the punch!
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John Says:
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.
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crabman Says:
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!
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Macronomics Says:
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.
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Thums up2 Says:
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.
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crabman Says:
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!!!
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M- Says:
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.
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Via Says:
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.”
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JB Says:
July 17th, 2008 at 4:01 pm
California’s median home price plummets in June
http://www.latimes.com/busines.....6611.story
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blueskies Says:
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
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scullboy Says:
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?
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patriotz Says:
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.
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crabman Says:
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.
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whos john Says:
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.
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whos john Says:
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?
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Anonymous Says:
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.
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jfk Says:
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?
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patriotz Says:
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.
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crabman Says:
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!
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Thums up2 Says:
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?
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jfk Says:
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.
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Via Says:
July 17th, 2008 at 8:33 pm
Who the hell is Sofia? Mother Teresa? Pregnant?
I’m confused about that last post.
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Anonymous Says:
July 17th, 2008 at 8:37 pm
scullboy
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patriotz Says:
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.
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crabman Says:
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?!?
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Mr. Simpleton Says:
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.
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Thums up2 Says:
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!
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scullboy Says:
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.
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Anonymous Says:
July 21st, 2008 at 11:05 am
you prove to be the dead brain idiot #90