Friday Free-for-all!

It’s Friday again and that means its time for another open topic friday free-for-all post.  Here are a few stories from the week:

-Merrill Lynch: Vancouver houses 35% overvalued
-Van west median house sales price drops $298,500 since Feb
-Building permits take a plunge in BC
-BC economy losing some zip
-Revisiting the great Canadian housing myth
-Expensive? Just split the house down the middle
-Floating condos, just like Florida
-Want to talk about your money & retirement?
-US Stimulus effect fades quickly

So what are you seeing out there?  Is it a good time to buy or sell?  Post your news links, thoughts and anecdotes here and have an excellent 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!

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111 Responses to “Friday Free-for-all!”

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  1. 1
    Vansanity Says:
    Lots of good reading there.

    I discussed the stupidity of overpaying for an object/investment with a friend tonight. People only over pay when they truly believe that the price/value in the object they are buying will ONLY go up. When you break it down like that, God, it sounds so IGNORANT!

    Watching this cycle truck along and everyone’s reaction to media, rhetoric, spin, propoganda, you name it, just reassures me that there is an Unthinking Majority in our society. Just like Serj Tankian sang about.

    Here’s a youtube link in case you too are just tired of reading, take a break: http://www.youtube.com/watch?v=SEV_1xD8msk

    BTW - I also recommend “Praise the Lord and Pass the Ammunition”. Cheers!

    Current score: 0
  2. 2
    Clarke Says:
    I wonder what data sample Merill Lynch used behind their conclusion that Vancouver housing prices are 35% overvalued? Based on Mohican’s fair value P/E formula, most condos and houses in my neighbourhood easily could be argued to be around 50% overvalued.

    Current score: 0
  3. 3
    Re-diculous Says:
    How refreshing, after many years, to pick up the morning paper and see the headline “Housing slump stalks Western Canada” instead of yet another bullish RE report. I thought I was losing my mind a couple of years ago and therefore view headlines like todays as very therapeutic.

    Current score: 0
  4. 4
    Vansanity Says:
    55,000 jobs lost in Canada, biggest drop since 1991

    http://www.bnn.ca/news/2660.html

    Mostly Ontario and Quebec and 48,000 of them were part-time. Nonetheless, the drop is substantial.

    Current score: 0
  5. 5
    Re-diculous Says:
    And another…

    Vancouver’s Housing Hangover
    http://www.reportonbusiness.co.....Blogs/home

    some snipits:
    “The likely result? A small price drop in the short term combined with a steep drop in sales volume, followed by a second wave of a bigger decline in prices as sellers finally capitulate. The Lower Mainland’s housing market looks to have been hit by the first, and headed for the second.”

    “B.C.’s housing market woes are no Great Depression, but coming as they do on top of high energy prices, a wobbling forestry sector, and the lowest level of consumer confidence in a half decade, they may qualify as the Pretty Big Hangover.”

    Current score: 0
  6. 6
    John Says:
    Vancouver’s market is sustained by the belief in the best place on earth. This is the land of rainbow colored gum drops of joy and luxury condos which rich asians enjoy. The liquid sunshine that we get year round is probably one of the most enjoyable aspects of this paradise.

    Current score: 0
  7. 7
    crabman Says:
    The value of building permits issued to contractors in British Columbia dropped by almost 22 per cent over the first half of 2008 compared with 2007.

    This will translate to a 22% reduction in the construction workforce over the next few years. During this housing boom, the unemployment rate dropped from ~8% to around ~5% in Vancouver - almost entirely due to construction. When this is over, what’s to stop the rate from going back up to 8%?

    Current score: 0
  8. 8
    John Says:
    When this is over, what’s to stop the rate from going back up to 8%?

    The olympics.

    Current score: 0
  9. 9
    crabman Says:
    The olympics.

    Just kidding, right? They will be over too. (Only 1 1/2 years away)

    Current score: 0
  10. 10
    Dave Says:
    This will translate to a 22% reduction in the construction workforce over the next few years.

    No it won’t. It will be a welcome relief to most developers and most workers in construction.

    Everybody has been working crazy hours and there has been a shortage of skilled labour. I think permits have to drop a lot further for there to be significant job loss implications. Let’s also not forget that there is a massive amount of work already on the books and a massive amount of infrastructure spending that doesn’t show up in those stats.

    Current score: 0
  11. 11
    Drachen Says:
    Dave

    I’m not even going to bother shooting you down all the time any more. We’ve been saying the sun would rise again and there’s the horizon beginning to get lighter by the minute but Dave is in his corner, eyes firmly closed, fingers in his ears saying, “If I don’t see it it’s not happening!” over and over, rocking back and forth like an autistic child.

    Current score: 0
  12. 12
    Anonymous Says:
    Dave your lack of insight is astounding if not disturbing.

    Current score: 0
  13. 13
    Anonymous Says:
    Classic. They’ve been using the ‘infrastructure’ argument in Ireland and the UK as their construction industry collapses too. I love the idea that a house builder can finish drywalling a condo one day and start laying highways the next.

    Current score: 0
  14. 14
    blueskies Says:
    a house builder can finish drywalling a condo one day and start laying highways the next.

    some of the construction finishing i’ve seen strikes as just the reverse of this

    Current score: 0
  15. 15
    Vansanity Says:
    Dave’s pulling a John, right? LOL! Must be!

    Current score: 0
  16. 16
    betamax Says:
    No it won’t. It will be a welcome relief to most developers and most workers in construction.

    LMAO. Yes, those bubble-inflated profit margins and paycheques are such a pain to deal with. It’ll be a welcome relief to make a lot less money.

    Enjoy your paycut!

    Current score: 0
  17. 17
    John Says:
    Listen listen listen here. Meryl Lynch is not exactly a reliable source on anything financially related, just look at their share price. This market is challenging right now but it’s just due to the spectacular weather. Once the rains start in September the real estate market will heat up again. I’m going to Squamish this weekend to try and find some good deals on some condos. Rich asians love Squamish for the wind surfing, mountain biking and the olympics.

    Current score: 0
  18. 18
    Anonymous Says:
    Read this great piece over on Dave and Julie’s site:

    One of the first questions you’ll ask yourself when you are looking at a new property to purchase is: What is this property worth? That is a different question then (sic): How much can I pay? And it’s still different then (sic): What can I get this property for? But all of those questions need answers before you put in an offer to purchase a new property.

    I can only hope that standards have improved at UVIC and York since the highly educated duo received their degrees.

    Current score: 0
  19. 19
    rx Says:
    Anonymous, that seems like reasonable advice to me. Maybe you just think its completely obvious, but I’d say that the only question many people ask themselves during a boom is ‘how much can I pay’, which the banks and CMHC did as much as possible to stretch. The quote you posted seems like a sensible reminder that just because you are willing to overpay for a property doesn’t mean its actually worth it.

    Current score: 0
  20. 20
    Bluesman Says:
    Anonymous: I think rx is more out-to-lunch then (sic) Dave and Julie.

    Current score: 0
  21. 21
    Mr. Simpleton Says:
    This blog is amazing…
    John, Dave, RX… are you guys for real???

    Quote from Austin Powers:
    “why must I be surrounded by IDIOTS???”

    Current score: 0
  22. 22
    parbapapa Says:
    You should never estimate people’s stupidity.
    That is after all what makes this city unique.
    The incredibly high number of stupid, greedy and uneducated people around here is what made this bubble possible.
    Gasp!

    Current score: 0
  23. 23
    Anonymous Says:
    A lot of bag wannabe mortgage brokers, like Dave, will have to go back to working as valets and parking attendants

    Current score: 0
  24. 24
    parbapapa Says:
    That was supposed to read: you should never underestimate…
    My bad!

    Current score: 0
  25. 25
    Anonymous Says:
    Dave is clearly too stupid to do anything else

    Current score: 0
  26. 26
    pinocchio123 Says:
    At first I thought John was a skilled joker, but I’m really not so sure anymore. Any thoughts on this?

    Current score: 0
  27. 27
    rx Says:
    Some of you sure are quick to judge. Other people must be really tough to deal with when you’ve got no flaws huh? So other than the then/than errors you’re picking on what was so wrong about the sentiment in that paragraph?

    .. or are we down to attacking spelling and grammar rather than content?

    Current score: 0
  28. 28
    Matt Says:
    Rich asians love mountain biking and windsurfing since when?

    Rich asians love cock fights, massage parlours and beating their filipina maids.

    Current score: 0
  29. 29
    rx Says:
    John is clearly a joker.

    Current score: 0
  30. 30
    Bluesman Says:
    Rx: Have you ever heard of the expression “The media is the message”?

    Current score: 0
  31. 31
    Drachen Says:
    Mr Simpleton

    John = Joker, 100%

    Dave = Serious, although I doubt he believes much of what he says, it seems he has some ulterior motive for posting here.

    RX = I don’t see what you guys have against him? I think that advice on David and Julie’s blog is excellent. I just think that if they’re purchasing places now they are either disregarding their own advice or they’re completely incapable of calculating fundamental value. However you should really be asking all of those questions (obviously if you cannot pay, no deal, if what you can get the property for is greater than what it’s worth, no deal). He phrases it very poorly but the essential idea is correct.

    I do find it sad however that someone who’s been (supposedly?) university educated does not know the difference between, ‘then’, and ‘than’.

    Current score: 0
  32. 32
    blueskies Says:
    Some of you sure are quick to judge.

    it’s hard to be humble when you are perfect!

    Current score: 0
  33. 33
    crabman Says:
    It sure seems like satv/krissh/thumbsup has conditioned people to attack anything slightly bullish?

    Dave is very knowledgeable but overly optimistic and due for a rude awakening IMO ;^). John is just goofing around, and RX’s comment seemed completely reasonable.

    Current score: 0
  34. 34
    VancouverGuy Says:
    Dave is not a stupid guy. He disagrees with us, but he is not stupid. I’m sure the bulls called bears idiots a few years ago.

    Current score: 0
  35. 35
    ROCK Says:
    Dave, your comment about the drop in building permits to be a welcome relief for developers and builders is incorrect. Builders will continue to build at a frantic pace because they will squeeze out every last dollar they can - it’s every man for himself. That’s why building got so frienzied in the first place. They have deadlines and contracts to finish.

    However, with building slowing, I do expect that what is built, will be (should be) of higher quality. That said, expect layoffs of a large percentage of the construction workforce regardless. This will augment the growth in foreclosures.

    Current score: 0
  36. 36
    rx Says:
    Thanks Drachen and Crabman, good points. I guess the blood in the water has some bears acting like sharks. My guess is Dave (the original, not revnyou dave) works in some capacity in the industry and really wants to believe what he writes. you’re not Dave Watt are you?

    Current score: 0
  37. 37
    beta Says:
    The purchasing advice on Dave’s blog is simplistic “Buying for Dummies”, so obvious it shouldn’t need to be said.

    rx’s justification of it — i.e. that many people are either ignorant or idiots or both — isn’t unreasonable, but it ignores the fact that such people have no business investing in highly leveraged assets. Anyone who needs such advice shouldn’t be buying, and the fact that they are and have been in large numbers is just a further instance of bubble-crazed fools rushing in.

    Current score: 0
  38. 38
    Anonymous Says:
    Whoa! Fannie Mae lost three times the wall street estimate. $2.3 billion here and there eventually adds up to real money:

    http://www.msnbc.msn.com/id/26087869/

    Current score: 0
  39. 39
    Bluesman Says:
    “I guess the blood in the water has some bears acting like sharks.”

    I feel judged… :(

    Just joking! :)

    Current score: 0
  40. 40
    rx Says:
    beta - without the idiots there would be no bubble. Just because they ’shouldn’t be buying’ doesn’t magically make them go away. Call me an optimist, but I believe idiots can learn and hopefully future instances of idiocy can be avoided.

    Or do you believe that if YOU already know something its no longer worth saying to others? Sounds like a recipe for an increase in future idiots to me.

    Current score: 0
  41. 41
    John Says:
    The thing is that investing in real estate in Vancouver is a sure thing so even the most foolish will always win. That’s what’s so great about this system. Vancouver is like the city on the hill and everyone in the world wants to come here to make millions. It’s really special.

    Current score: 0
  42. 42
    bdk Says:
    Dave and Rev n you Dave is one and the same, he just accidentally put his email in the website box because he was so busy posting on several blogs at once he screwed up.

    When his Wife saw this she jumped in and tried to claim it wasn’t him and then he denied it like Bill Clinton denied having sexual relations with that woman. Who else has a vested interest in trying to keep the Vancouver Condo market alive? He’s suggesting that a slowdown in construction is good. This means incomes will drop for workers and the developers will be on the hook for land that they overpaid for and realtors who’ve dabbled in development are going to go bust.
    How could that be good? I don’t know one realtor (and I know at least 100) who’s excited about making 50% of what they made last year.
    The plus side is they can hop from one blog to the next in the hopes of somehow averting the catastrophy that will be real estate for decades to come.

    Who else would repeatedly try to prop up the market?

    Current score: 0
  43. 43
    Anonymous Says:
    “special” being a synonym for …?

    Oh! I know! How politically correct of you.

    Current score: 0
  44. 44
    Anonymous Says:
    BDK is Bill Good just goofing around, he admitted it in the previous thread.

    Current score: 0
  45. 45
    blueskies Says:
    Vancouver is like the city on the hill

    …and everything rolls downhill from there….. we.are.truly.screwed.

    Current score: 0
  46. 46
    Anonymous Says:
    bdk I think you’re barking up the wrong tree. No way there’s only one Dave valiantly trying to prop up the market, and even if it was the same person who cares? We know there are plenty of hucksters and used car salesmen trying to squeeze money out of the few remaining fools before ‘real estate’ becomes a dirty word in Vancouver.

    Current score: 0
  47. 47
    bdk Says:
    Oh what am I saying, Johns right.

    Attention anyone who makes $200,000 or more per year.
    Hurrty up and buy now because next year a slew of people who make $300,000 per year will swoop in and buy your condo for 50% more than you paid.

    What’s this?
    You would rather rent it for 30% of the cost of mortgaging it and invest it in foreign equity while the Canadian Dollar is strong and the indexes are all low?

    Read what John said above and get out there and buy!!!

    What’s sad is that if an average person were to go to a brokerage in the hopes of opening a highly leveraged brokerage account buying nothing but oil futures the broker wouldn’t be allowed to let him take out $800,000 simply because he’d heard that “Oil only goes up” “It’s different this time” or the best one yet “the olympics!”

    On the other hand any schmuck can walk in to a display suite and put 10% down on a condo future/assignment and then sit back and wait for the money to roll in, the salesman said it was a good idea? what’s the problem.
    The salesman didn’t buy one for himself and gets a comission but he’s clearly got my best interests at heart, his website even says so!

    Current score: 0
  48. 48
    BBY Says:
    I just realized that our 2010 Olympics just might be quite an embarrassment for us, when compared to the culturally rich and amazing ceremonies of Torino and, now, Beijing. I don’t see how we can even approach a comparable level; we don’t have a deep cultural heritage to draw upon like China and Beijing. We’ve got a hodge-podge cultural mix that not only we understand. And I’m sorry, but I’ve never been spellbound by any of our indigenous First Nations ceremonies; the subdued First Nations drum blessing at the end of the spectacular Torino closing ceremonies produced an awkward silence from the crowd. And don’t even get me started on how horrid the rest of our Canadian contribution was at the close; the montreal agency that produced that crap should be sued.

    I mean really, what recognizable cultural show can we produce for 2010?

    Oh wait, I know! Bob Rennie can try to hawk some condos. Holy crap! this could be a Condo Hyping extravaganza like no other time-share presentation know to man. That’s what we’re good at! That’s it! We already have the machinations and talent to do this. In this we are truly world class. By then, we will be the bubbliest RE city that the world has known. The world will look and gasp in amazement. At the irony of it all.

    And at the end of the 2010 Olympics, the olympic caravan will evacuate the red-faced global-village of Vancouver leaving landlords — amateur and commercial — crying out for tenants as they bleed their mortgage payments to the banks.

    All this, just when you thought the 2 year decline in RE prices that started in 2008 would be over.

    Vancouver RE will be kicked when it’s down like no other market has been kicked.

    Current score: 0
  49. 49
    John Says:
    Vancouver is probably one of the most cultural cities in the world. Just walk down Robson street and you’ll see what I mean. The olympics in 2010 will be the best ever put on by any country in the world. It will be something everyone talks about for years to come.

    Current score: 0
  50. 50
    Drachen Says:
    “The olympics in 2010 will be the best ever put on by any country in the world. It will be something everyone talks about for years to come.”

    There’s only one Olympics that really stands out in history. Are you saying that the Vancouver Olympics will be remembered as the Munich Olympics of the new century?

    Current score: 0
  51. 51
    nothing new under the sun Says:
    Classic. They’ve been using the ‘infrastructure’ argument in Ireland and the UK as their construction industry collapses too. I love the idea that a house builder can finish drywalling a condo one day and start laying highways the next.

    All of the arguments in support of Vancouver’s real estate market are recycled. Nothing new under the sun. The reality of elsewhere will also be recycled here …. snap, crackle, pop … not a breakfast cereal but a description of the impending Vancouver real estate crash.

    Current score: 0
  52. 52
    pinocchio123 Says:
    Speaking of olympics, I think way to many people around here have “winter games” confused with OLYMPICS. Winter games is all that we have. Nothing more.
    Ask anyone on the street today (how about your oh-so-cultural Robson st.) and ask people what Nagano or Lillehammer is (Jay Leno-style.

    Current score: 0
  53. 53
    Dave Says:
    Dave, your comment about the drop in building permits to be a welcome relief for developers and builders is incorrect.

    I don’t agree. In the past few years, developers have had a very difficult time keeping their projects on schedule and on-budget. A big part of delays has been due to shortage of skilled trades, partly due to high construction activity.

    As you rightly say, developers will still continue forward and keep building. The ones that continue to do so will benefit from more labour being available.

    As far as labour goes, you can only work 60, 70 or 80 hours a week for so many years. A lot of people in the trades have been turning work down so that they can actually have a life and not work every weekend. But, not everybody can turn work down because the developers expect people to work long hours to try and keep things on schedule. I think a lot of people will be happy to see a little bit of relief, while still being able to work a decent number of hours.

    As far as layoffs go, you really should look into the demographics for some of the trades. For example, do you know what the average age of a bricklayer is? A big percentage of people in the trades are near or past retirement age. Not enough young people have been entering some trades and it has a LOT of people seriously concerned, if not scared. A slowdown will benefit the trades that have unfavourable demographics.

    Current score: 0
  54. 54
    pinocchio123 Says:
    Dave,
    I have several major construction projects going on in my neighborhood and nobody works there on the weekend.
    In fact they’re done shortly after 3pm every day during the week too.
    Please check your facts.

    Current score: 0
  55. 55
    Dave Says:
    No big projects on the books, hey?

    http://www.bcstats.gov.bc.ca/pubs/pr_mproj.asp

    This issue of the BC Major Projects Inventory lists 60 proposed new projects over $15 million reported for the first quarter of 2008, with available capital cost estimates totaling approximately $10.5 billion in potential new capital investment, if all the projects proceed. The list of proposed projects that are new to the MPI includes the $3.1 billion Skytrain Expansion Expo Line in Surrey, the
    proposed $2 billion Bute Inlet Hydroelectric projects in the Vancouver Island region, and the $1 billion Roundhouse Mixed Use Development in Victoria. Twenty-six major projects started construction in the first quarter, valued at approximately $3.4 billion. Of note are the $1.5
    billion Lakestone Resort Development in Lake Country, Okanagan Region, and the $600 million Dokie Wind Farm project near Chetwynd in the Northeast Region.

    The available capital cost of all proposed projects listed in the MPI is estimated at approximately $91.2 billion, up from $75.2 billion last quarter.

    Current score: 0
  56. 56
    Aleks Says:
    There’s a condo project on my way to work that never has anyone working on it.

    Of course, that’s because they’re having trouble finding financing, but that’s similar to a worker shortage.

    Current score: 0
  57. 57
    Anonymous Says:
    Not enough young people have been entering some trades and it has a LOT of people seriously concerned, if not scared.

    “They” were saying the same thing about programmers and other tech trades during the dot com boom, know how many jobs there were for entry to mid level programmers and techs after the bubble burst? The supply of talent in the pipeline spurred on by the bubble lead to a massive flood of qualified techies at exactly the wrong time. Same thing will happen with tradespeople, RE agents, mortgage brokers, interior decorators, landscapers, architects, mom and pop developers (hello!) etc…

    Dave have a look at some news stories from Florida, California, Nevada, Arizona, etc… and see what happened to their construction trades person shortages after prices started falling. Then get back to me. Otherwise take your dog and pony show elsewhere, like RET. This blog has discredited the garbage you’re spewing years ago.

    Current score: 0
  58. 58
    Anonymous Says:
    if all the projects proceed

    That’s a pretty big if…

    Current score: 0
  59. 59
    bdk Says:
  60. 60
    Anonymous Says:
    Is Dave just SATV using a first year college grad version of Babel Fish?

    Current score: 0

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