Friday Free-for-all!
The end of August is upon us, what will the numbers bring? Will there be sunshine, will there be rain? Whats happening here at home and economies around the world? Its time for our weekly news round-up, here are a few stories I’ve noticed this week:
-Vancouver Sun: Bring on the real estate collapse!
-China’s Olympic sized Bust
-Will Vancouver be ready for the worlds attention?
-Economy grinds BC liberals
-18 earthquakes off BC coast in the last week
-Sawmills getting beaten to a pulp
-Canadian tourism gap expected to widen
-Zoom airlines shuts down
-Where did the summer go?
-Harper: We may be in a ‘technical’ but not ‘real’ recession
-UK prices falling at fastest rate in 18 years
-US builders get creative to lure buyers
So what are you seeing out there? Post your news, links and thoughts here and have a great long weekend, you’ve earned it!
RSS 2.0 comments feed. Both comments and pings are currently closed.
1
X
condohype Says:
August 29th, 2008 at 12:25 am
Things are looking prime for a full-scale hardcore market tanking. We’re right on the edge of it and there’s no stopping it now. My guess is it’s all really gonna hit the fan by May 2009. Why May? That’s the next provincial election and the NDP has a good chance to win. If they do win, it’ll be the perfect scapegoat. I can hear the experts now: “The election of this government sends the message that B.C. is closed for business. That’s why condo prices have experienced ’significant downward pressure’ since 2008. The market saw it coming and reacted accordingly.”
2
X
patriotz Says:
August 29th, 2008 at 4:02 am
That’s why I’m rooting for Gordo to be re-elected in 2009. One, the NDP does not deserve to win, because it has not pointed out the “Golden Decade” for what it is, namely a debt-fuelled bubble, and two, because if the NDP does win, the Liberals will not be held to account for their eight years of economic make-believe.
Let the Liberals win next year and let them try to dig BC out of the mess they put it in.
I do think the Liberals will win, they will run a replay of Bill Bennett’s campaign in 1983, “times are tough and we need proven economic leadership”, and it will work because the NDP has not pointed out the inherent failure of the RE-bubble based economy or offered a real alternate strategy. Remember it was the NDP who brought us the 2010 Olympics in the first place, something their detractors try to ignore.
But there will be no quick recovery of the US and global economies like in the late 80’s to pull us out of the hole this time. Housing and consumer spending in the US are going to be in trouble for a long time.
3
X
Re-diculous Says:
August 29th, 2008 at 5:51 am
As further confirmation that things are bad in RE land, I’ve noticed that our friend Bill Good ain’t talking about RE quite so often. I’ve been monitoring the CKNW website anxious to see RE within Bill’s daily lineup….not so long ago RE was discussed every other day.
4
X
SurreyJoe Says:
August 29th, 2008 at 7:20 am
“Real estate collapse? Bring it on!” – from of all places the Vancouver Sun – http://www.canada.com/vancouve.....b5108c208f
5
X
The Pope Says:
August 29th, 2008 at 7:52 am
Thanks for that link SurreyJoe, I’ve added it to the main post.
6
X
john Says:
August 29th, 2008 at 7:58 am
Listen here folks. There are a few things which never ever change :
1) The sun always comes up every morning
2) Vancouver is the best place on earth
3) Real estate never goes down
4) The only thing that’s cheaper to rent than own is a hooker
Rich asians know these constants, only fools will not buy in this environment.
7
X
Martin Says:
August 29th, 2008 at 8:29 am
Max Fawcett’s editorial in the Sun is a good indication that the downward cycle is now common knowledge, including among those not actively watching the market. At this point in the cycle (clost to the top), any reasonable person would advise against buying. The slowing enconomy will speed the decline and if stagflation takes hold look out below.
8
X
kablooey Says:
August 29th, 2008 at 9:24 am
Max Fawcett nailed it. The situation we’ve been in, working couples not being able to afford a home, is the Liberal definition of a booming economy. The NDP is no better. They’ve been sitting on their hands most of the time.
9
X
Housemouse Says:
August 29th, 2008 at 9:45 am
But, Vancouver is different.
10
X
jesse Says:
August 29th, 2008 at 9:55 am
Too bad Max didn’t spell out the conclusion more clearly. Just say it, baby, say it! Price drops are assured, not a possibility. It would be nice to see him write again as he writes well.
11
X
james Says:
August 29th, 2008 at 10:19 am
Honestly what the hell could the Liberals have done differently RE the real estate bubble? The money supply is out of their hands. They probably believed the bubble was a whole new paradigm like many other people did as well. Remember, this was a global phenomenon. Even if the Liberals could have setup BC to sit on the sidelines I’m not sure that would’ve been all that great.
12
X
bdk Says:
August 29th, 2008 at 10:37 am
http://www.canada.com/vancouve.....511581d560
Should I buy or Rent?
Todays Vancouver Sun
13
X
jesse Says:
August 29th, 2008 at 10:48 am
“Honestly what the hell could the Liberals have done differently RE the real estate bubble?”
They could tell people there was a bubble, educate people about the unsustainable negative savings rate and high debt loads, and not claim it was their divine political and managerial acumen that led to rising house prices and low unemployment.
But we don’t know it’s a bubble until it pops, right?
14
X
arbitrage Says:
August 29th, 2008 at 11:00 am
This posting on craigslist smells like desperation and bullshit:
http://vancouver.en.craigslist.....32837.html
I suppose if I were overcharging by 250k, giving a 40k disguised discount to secure a sale is not too bad.
15
X
Anonymous Says:
August 29th, 2008 at 11:01 am
http://www.reportonbusiness.co.....iness/home
16
X
Aleks Says:
August 29th, 2008 at 11:02 am
Stephen Harper has it backwards; outside the oil patch the Canadian economy has been in a real recession since last year at least. It’s only the technical definition that says the economy is growing. Jobs are down, EI claims are up, personal bankruptsy filings are way up. I’m sure Harper hasn’t noticed because there hasn’t been a drop in kickbacks and soft money, but regular Canadians have been feeling the pinch for quite a while, and the bubble hasn’t even burst yet. By the time he admits we’re in a recession we could be in a depression.
17
X
Bubble Lad Says:
August 29th, 2008 at 11:03 am
That Sun article Surreyjoe posted has got to win “Most Nauseating, Shameless Spin of the Year” award. The Sun continues to show itself as an absolute rag (why do I even bother taking the time to point it out!!!).
“Poor taste” to root for a meltdown…sorry, I mean “Comedy Article of the Year”.
I think I need to lay down…
18
X
Strataman Says:
August 29th, 2008 at 11:08 am
jesse “They could tell people there was a bubble, educate people about the unsustainable negative savings rate and high debt loads, and not claim it was their divine political and managerial acumen that led to rising house prices and low unemployment.” Would have thought an astute opposition party would jump on this..wonder why they didn’t? could be they are primarily made up of amateur specuvestors don’t you think? I suspect if a poll were taken you would see even more “get rich quick with no work or contribution to society” in the NDP as you see in the liberals. Doesn’t much matter who’s in power they basically are fighting to prove who is the most greedy!
19
X
Bubble Lad Says:
August 29th, 2008 at 11:08 am
11 – james – “[he] probably believed the bubble was a whole new paradigm like many other people did as well”
You hit the nail on the head – I think the technical term is “rationalizing the fact that you’re a greedy, ignorant, s.o.b indifferent to the needs of others” (sorry, was that in “poor taste”?). No government will ever be able to outlaw or “educate” greed and stupidity away.
So who wants the honor of putting the Vancouver RE memorial plaque on the mantle piece beside the dotcom bust, tulipmania, the south sea bubble…ah the memories.
20
X
Hypester Says:
August 29th, 2008 at 11:24 am
That buy or rent sun article is amazing. Basically the gist of the entire article is that real estate goes up in the long run so ignore the price you pay. You can’t live in a stock or bond! The sad thing is that this is how most people think and give more thought to buying a used car.
21
X
lorem ipsum Says:
August 29th, 2008 at 11:38 am
Power shifts to homebuyers as listings mushroom: brokers
The number of homes put up for sale through multiple listing services across Canada broke through 80,000 for the first time in July, setting a record for new listings in a single month, the Canadian Real Estate Association said Friday.
http://www.cbc.ca/canada/briti.....ml?ref=rss
22
X
RJB Says:
August 29th, 2008 at 11:55 am
“That’s why, although it may be in poor taste, many young people are rooting for a full-blown meltdown of the real estate market. Unfortunately, many of the casualties inherent in such a scenario would be young people who leveraged themselves into knots to get into a market that they believed would only, could only, go up. ”
Yeah…Canadians really care about young people’s debt levels in this country.
23
X
condohype Says:
August 29th, 2008 at 12:10 pm
I am floored by the Sun piece on buying vs renting. The headline is nonsense. The article is not about buying vs renting. It’s about market timing and that’s a totally different issue. As a renter, my relunctance to buy has NOTHING to do with trying to guess the bottom. It has to do with the real world numbers. I rent a “luxury condo apartment” for a whopping $1000/month. To own it would cost in excess of $3000/month. I don’t know about the Vancouver Sun’s intended audience, but it means a lot to me to be ahead about TWO THOUSAND DOLLARS every 30 days. You wanna talk about lifestyle in this city? You don’t get it by being a new owner.
24
X
Patiently Waiting Says:
August 29th, 2008 at 12:17 pm
The Liberals biggest failure is there is no “what next” after the housing bubble and Olympics. Everything is so focused on 2010 that we haven’t invested in long term economic growth. However, the NDP doesn’t have a post-2010 plan either.
25
X
jesse Says:
August 29th, 2008 at 12:17 pm
“Marolyn Hum, investment specialist at Vancity Investments in Port Coquitlam, says, ‘… And if prices fall by another 10 to 15 per cent? You’re still living in your home, nothing’s changed. And if anything, you pay less property tax.’”
Paying less property tax. I am truly in awe of Vancity’s ability to hire the best and the brightest. Wow.
“Wall says buying his home was as much a financial decision as it was a lifestyle one.”
So now it will be a pure lifestyle choice, according to the article. After all, finance is just numbers and you can’t live in numbers, can you.
I’m with condohype. We cancelled our subscription to the Sun when our bird died and we no longer needed lining for the cage. If we still had the bird no doubt it would have laughed itself to death reading that article.
26
X
jesse Says:
August 29th, 2008 at 12:21 pm
Note to bird owners: don’t line your cage with the Vancouver Sun. I think I know why my bird died.
27
X
Skye Says:
August 29th, 2008 at 12:41 pm
I have a feeling a lot of people will simply sit on their investment properties and maybe even take them off the market in anticipation that the 2010 Olympics will drive demand up again (even though it hasn’t for Beijing or anywhere else, and we all know what a charming place Vancouver is in the cold, wet winter). I’m guessing things won’t go until full-scale meltdown until after than when owners start to come to grips with reality. I wonder how many of these shoddy, cheaply constructed new condos downtown will be leaking by then?
28
X
passerby Says:
August 29th, 2008 at 12:42 pm
the US elections are like the olympics while the CA elections are like high school intramurals. dion was the last guy picked for teams.
29
X
passerby Says:
August 29th, 2008 at 12:42 pm
the US elections are like the olympics while the CA elections are like high school intramurals. and dion was the last guy picked for teams.
30
X
Patiently Waiting Says:
August 29th, 2008 at 12:51 pm
Skye,
One word: fear. Once prices start dropping fast, speculators will race for the exits regardless of the Winter games. Full-scale meltdown will happen over the next year.
31
X
Vansanity Says:
August 29th, 2008 at 1:07 pm
God I love Fridays, thanks Pope for this site of yours, and to all of you fellow bloggers for the good reading, wasting my day at work has never been more fulfilling.
RE: This is the tip of the iceberg. Funny reading some of the comments on the vancouver sun article (bust article), people scoffing at the price decline with an “Is that all you got?!” kind of attitude. No, unfortunately for you, that’s not all, this little bulls is just the start.
2009 is going to be interesting. condohype predicts May, I am thinking the real declines will be felt in the fall. Once these projects get wrapped up. Lots of young labourers who will be out of work and likely need to move out of town to find similar paying jobs. The project’s completion will create even more glut in the inventory. By then I think we will have seen at least one or two interest rate hikes… perfect storm?? Oh yes!
Off-Topic: What a speech last night from my boy Obama! It reminded me of 8 Mile when B. Rabbit was battling Poppa Dot but BR went first and we’re all like, ahh shit, no! You can’t go first, but he did, and then he took everything PD was gonna say about him and flipped it on him. Tell them something they don’t already know about me! Ya McCain, tell them! Gave me goosebumps and I’m not American, lol!!
32
X
Anonymous Says:
August 29th, 2008 at 1:08 pm
RE #23 Lifestyle? Kinda like having a large depreciating boat that you constantly dump money into. But it’s all about lifestyle, right?
B – bring
O – on
A – another
T – ten thousand
33
X
boogie Says:
August 29th, 2008 at 1:50 pm
What’s the deal with the article implying that renters are living way out in the burbs, commuting hours per day, while buyers are living in nice neighbourhoods near the city. Talk about getting it backwards; it doesn’t even stand up to common sense.
34
X
bdk Says:
August 29th, 2008 at 2:16 pm
Boogie and Condohype you’re so right.
It’s more like you can rent a really nice apartment in the nicest area of Downtown and have the freedom to spend or save $2,000 every month or you can “own” a studio in Chilliwack and spend another 40 hours a week commuting and that’s not including the fuel and maintenance charges plus ultimately that dump in Chilliwack will still be ea dump once the fools realise that they didn’t need to buy before being priced out.
Even the trolls comments about renting a furnished $5800 2 bedroom works out to be a better deal after a year considering a 2 bedroom at TV towers will be worth at least $150,000 less this time next year plus the realtor has to be paid $30,000 to put it on the MLS that $70,000 to be in a really nice furnished suite doesn’t look so bad.
35
X
bdk Says:
August 29th, 2008 at 2:18 pm
And furthermore there are a lot of land rich and cash poor baby boomers out there who’re going to have to sell their $$$$ houses to fuel their retirement.
How many people here can or want to pay $1.8 million for an average house west of arbutus when you can rent the same house for $2400?
36
X
Bizznitch Says:
August 29th, 2008 at 2:21 pm
Yeah, I just snagged a nice rental close to downtown Victoria. Fairly cheap, no fuel bills. Can just wait for the market to crash. I’m certainly not funding someone’s retirement.
37
X
scullboy Says:
August 29th, 2008 at 2:38 pm
I’ve said it before and I’l say it again.
The ride’s started, the fools all bought their tickets and are strapped in.
Let the screaming commence.
38
X
bdk Says:
August 29th, 2008 at 2:40 pm
Meanwhile the bitter renters should meet at the Opus and have a laugh at the owners expense.
39
X
bdk Says:
August 29th, 2008 at 2:41 pm
Meanwhile the bitter renters should meet at the Opus and have a laugh at the owners expense (yeah you Rob A.)
40
X
Patiently Waiting Says:
August 29th, 2008 at 2:45 pm
I was waiting to see if there would be a buying frenzy before CHMC changes come into effect. It isn’t happening. GAME OVER!!!
41
X
Macronomics Says:
August 29th, 2008 at 2:47 pm
That Vancouver Sun article is terrible, even by Vancouver Sun standards.
Where the the monthly breakdowns of the cashflow numbers between buying and owning?
It doesn’t matter what Tsur or Cam or Marolyn says.
EVERYTHING is a function of supply and demand.
Stocks, gold, real estate, apples. It just doesn’t matter.
When you have over 20,000 active listings (supply) and a 10-year low in sales (demand), prices WILL come down.
The rules of supply and demand are dead simple and, more importantly, they are non-negotiable.
42
X
scullboy Says:
August 29th, 2008 at 3:41 pm
Macro:
People get irrational. Even in the face of news articles outlining declining prices I have friends who are looking at buying. They smile in that “your a bitter renter” way and say shit like “Well, I’m doing this for a 20 year investment”… and I think to myself “If prices drop by 50%, you’re going to have to wait 20 years just to FUCKING BREAK EVEN.
We’re still early in the game here. People are still rationalizing the bad news with “It’ll pick up in the fall” and God help us “Prices CAN’T drop before the Olympics!”
43
X
house mouse Says:
August 29th, 2008 at 4:15 pm
As a house mouse i find it annoying when the landlords stay up late worrying about the mortgage. Why cant they just go to bed so I can go and get my late night cheese nibble.
44
X
Macronomics Says:
August 29th, 2008 at 4:28 pm
I’ve long stopped conversing about RE to irrational people.
But at least I still have an outlet here.
Speaking of irrational…
Few had known that Sir Isaac Newton invested in the shares of South Sea Company and lost money. The Company primarily did slave trading with South American countries. With great promise of prospect, people started snatching up the shares and pushed the price ridiculously high. It seemed like an easy way to get rich quick and more people get into it by paying more and more. The Company proved to be unsuccessful and in the end, its shares plunged and became worthless.
Thus, we learned that even a genius mathematician like Sir Isaac Newton could not predict the stock market. It isn’t easy as there is an element of human psychology (greed and fear) in the price determination of shares and it is almost impossible to calculate.
He explained later, “I can calculate the movement of the stars, but not the madness of men.”
45
X
Dapo Says:
August 29th, 2008 at 4:33 pm
Thank God, er, Pope for this website. It has kept me and my girlfriend sane the last several months as we watched prices go up and up and away. Now are suspicions and refusal to join the herd are being justified. Viva la revolution!
Sculboy,
I love that saying. Brings a smile to my face.
46
X
Ultraman Says:
August 29th, 2008 at 5:31 pm
“Marolyn Hum, investment specialist at Vancity Investments in Port Coquitlam, says, “Unlike a stock or bond, a home is unique. If there’s something you like and it jumps out at you, you’ll want to take it before someone else does. And if prices fall by another 10 to 15 per cent? You’re still living in your home, nothing’s changed. And if anything, you pay less property tax.”
Yes, as pointed out by Jesse, her view on property taxes is pretty innocent. Furthermore if your home goes down 15% in value you are 15% poorer and actually probably worst because of leverage. People have been ruined by falling property value just the same as stocks or bonds.
In addition I can think of many stocks or bonds that are unique. On the other hand there are plenty of houses/condos that look alike. Anyway it’s pretty silly to compare stocks and bonds to a home.
Finally if real estate value drops, often because the economy is not doing so well you could be out of a job and not being able to make payments on that small magical item called a mortgage!
Good luck everybody with your Financial Advice.
47
X
Bedbugs Says:
August 29th, 2008 at 6:14 pm
A funny real story happen to a friend of mine:
He and his GF just rented a 1 bedroom at the spectrum. The previous official renter decided to sublet the condo to 8 yes 8 people without telling it to the owner. 3 guys in the bedroom, 3 guys in the living room 2 guys in the closest. Insane! When the owner finally found out, after several month, he cleared the place and rented it to my buddy.They were beds everywhere:
Then my buddy moved in with his GF and two night later they get “itchy” about the place. You bet the whole condo was infested to the bone with bedbugs!!!!!
The owner add to pay for everything including pest control, laundry for all the clothing of my friend, 2 weeks of hotel bills and half a month a rent back. He is in for 4k$ at least!
What a good investment for him! Now, that he is seeing the market tanking I would bet he s crying at night…
Ah, the joy of owning.
48
X
van-zee Says:
August 29th, 2008 at 6:32 pm
New York, New York —
A hell of a town,
The Bronx is up and the Battery’s down.
The People ride in a hole in the ground.
“if you think you were going to make a big profit, it’s going to be a disappointment,”
http://tinyurl.com/6a3a3e
49
X
JB Says:
August 29th, 2008 at 6:34 pm
Warning signs from the centre of the boom (China)
http://www.reportonbusiness.co.....iness/home
50
X
Hypester Says:
August 29th, 2008 at 7:18 pm
48-
Vancouver is much more desireable than Manhattan. Vancouver is ranked the #1 city in the world year after year. We also have the mountains, the oceans and our city is lusted after by rich foreign investors from all over the world. With our already thriving diverse economy and massive immigration the Olympics will be like throwing kerosene on our white-hot housing market.
Vancouver is THE preeminent world-class city of choice for the jet-set so I wouldn’t hold my breath waiting for any sustained downturn in prices.
51
X
paulb Says:
August 29th, 2008 at 7:25 pm
home sales (-53%) came in well under the Dec sales for the last 3 years. More details at my place.
http://paul-northvancouverhomes.blogspot.com/
52
X
Real Estate Bull Says:
August 29th, 2008 at 9:30 pm
Hello Arit, yes I dislike deceitful pimps myself.
arit { 08.29.08 at 7:26 pm } Maggie Chandler deleted my comment on her blog.
http://www.vancouverreflection.....bottoming/
I wrote a very polite opinion on the future of the market including a 50% reduction prediction by 2013. I was especially careful to be polite as to not give a reason for deleting.
She SPECIFICALLY asked for predictions!
Deleting relevant commentsis a big no-no in blogging.
Regards
arit
53
X
patriotz Says:
August 29th, 2008 at 10:51 pm
Vancouver is much more desireable than Manhattan.
Then how come rents in Manhatten are more than twice as much as in Vancouver?
Hint: the “j” word.
54
X
Clarke Says:
August 30th, 2008 at 5:05 am
The Fawcett article was really shocking for the Sun, but just as I developed some hope, I read the article supposedly about renting vs owning…..
55
X
franko Says:
August 30th, 2008 at 10:40 am
We’re about to get zapped with a reality jolt when the August numbers come out. That should be enough to spur a few more headlines and pull the few remaining heads out of the sand….We’l be knee deep in blood in our streets by the end of October!
56
X
jesse Says:
August 30th, 2008 at 10:53 am
“Hint: the “j” word.”
When it comes to Manhattan you have to be more specific… Incomes are higher, that’s for sure. I’ll assume that’s what you meant.
57
X
betamax Says:
August 30th, 2008 at 10:58 am
Anecdote: six months ago, I overheard some co-workers maintaining that prices in Vancouver would never go down, that Vancouver “is different.”
Yesterday, the same co-workers were agreeing how prices are about to tumble downward, and that anyone thinking of buying should wait a year at least.
So even bulls are capitulating at last. Curiously, they didn’t mention and seemed to have no recollection of their earlier conversation. Funny how that works.
58
X
jesse Says:
August 30th, 2008 at 11:57 am
What does Mish have against Vancouver?
Chancellor Darling: UK In Worst Economic Crisis For 60 Years
Huh? What did WE do?
59
X
Its september and I really should be back at school Says:
August 30th, 2008 at 2:01 pm
No doubt the August stats will be worse than July but I believe the Fall market will be a good one for Vancouver condos. As i follow the monthly stats I am noticing Kitsilano and the West End are showing signs of bottoming. Coal Harbour and Downtown remain well supplied (many investors taking some profits).
Do you think the Fall market will mark a turnaround for Vancouver condos or will prices soften another 5%
http://www.vancouverreflection.....bottoming/
60
X
Drachen Says:
August 30th, 2008 at 2:37 pm
“Do you think the Fall market will mark a turnaround for Vancouver condos or will prices soften another 5%”
Do you think you’ll gain superpowers or magic tomorrow? (it’s about the only question I could think of with scenarios as unlikely as your question)
I think you’ve just proven wrong the adage, “There’s no such thing as a stupid question.”
61
X
Drachen Says:
August 30th, 2008 at 2:54 pm
Just went to #59’s page, it’s so nice to find a realtor who allows comments on their blog.
Just, try to be nice about it this time guys. The numbers and the weight of the truth are on our side, there’s no need to be bitter, let’s be as gracious in victory as the bulls were ungracious when they thought they were right.
62
X
betamax Says:
August 30th, 2008 at 3:10 pm
“Do you think the Fall market will mark a turnaround for Vancouver condos or will prices soften another 5%”
Once they start falling, they’ll keep falling. We’re no different than all the other people from all the other cities that posited various seemingly logical reasons why they in particular were immune, but it’s all speculative and it will all fall the same.
Maggie if you remember ‘81 then you know what to expect. It’s gonna be deja vu all over again.
63
X
Deliverator Says:
August 30th, 2008 at 3:11 pm
Darling Comment Of The Week
Darling Comment Of The Week: “People are pissed off”.
Indeed they are. And there are going to be many more “pissed off” in the coming years as well. Peak Credit has arrived, globally. This is what the backside looks like.
Vancouver take note. The odds that Canada can avoid a housing crash similar to what is going on the US, UK, and Spain, are zero.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
64
X
franko Says:
August 30th, 2008 at 3:53 pm
“it’s september and I really should be back at school”
Could,nt agree more, as you’re in dire need of learning if you think that there is even the remotest chance of the Fall market improving.
The excitement has barely started, and you ain’t seen nothin yet!
65
X
Carioca Canuck Says:
August 30th, 2008 at 5:16 pm
Gotta love politicians “and” statisticians….
The first quarter of this year they say GDP went down 0.8 %……..the second quarter it went up 0.3%….so ther eis no “recession”…..heh.
-0.8 plus +0.3 = a -0.5 decline over two quarters…….
66
X
wolfey Says:
August 30th, 2008 at 6:06 pm
Hi Guys,
you think the bulls are changing their tune.?? There are still flippers. THere is arealtor guy trying to flip the east van home on St lawrence street. He bought for 598K may 2008 and is trying to sell for 738K aug 2008. what has been done on it…nothing. He will probably drop the sale price for some G fool and probably sell it for 650 K. the buyer …Wow what a deal:>
50# Hypester …what diverse economy?…What is there? other than tourism and forestry
67
X
gman Says:
August 30th, 2008 at 6:19 pm
“He bought for 598K may 2008 and is trying to sell for 738K aug 2008. what has been done on it…nothing. He will probably drop the sale price for some G fool and probably sell it for 650 K.”
Actually, he will *probably* keep lowering the price by 5k a month until the bank forecloses on him.
68
X
Snick Says:
August 30th, 2008 at 6:45 pm
A visit to Mish’s site is certainly in order. The economic stats in the UK are looking very bad. Some interesting quotes re: the economy by the Chancellor of the Exchequer…
69
X
bdk Says:
August 30th, 2008 at 8:04 pm
Maggie Chandler erased my comment on her blog and like Arit I thought it was factual and polite.
70
X
pricedoutfornow Says:
August 30th, 2008 at 8:14 pm
I got a good chuckle out of Mish’s “special message” to Vancouver. What did we do? Well, here we are, happy as clams that we are “different” than the rest of the world-US, UK, Spain, Ireland etc. He’s simply pointing out to us that we’re going to catch up to reality soon enough and feel the pain the rest of the world is feeling. Sad, very sad.
71
X
arit Says:
August 30th, 2008 at 8:15 pm
bdk,
Please tell me: If you go to her site now, are there any comments there at all? Can you see the one comment I am seeing there now?
http://www.vancouverreflection.....bottoming/
Thanks
arit
72
X
franko Says:
August 30th, 2008 at 8:19 pm
Like bdk and Arit, my comments did not survive Maggies scrutiny either, but my dialogue may not have been quite as polite as that of bdk and Arit, as I just could not bring myself to remove all profanities from my post.
73
X
bdk Says:
August 30th, 2008 at 8:41 pm
I can’t see any comments on Maggie’s site right now.
Ask any realtor who’s worked with her how they like her and you won’t be surprised that she’d be deleting comments.
74
X
Anonymus Says:
August 30th, 2008 at 8:48 pm
Vancouver truly is The Best Place on Earth. I have to admit, first I found this slogan infantile and embarrassing, but that was before I came to appreciate the hidden meaning of it.
Where else can you live in a comfortable apartment at a reasonable rent, save up your money, walk to work, and watch with amusement the daily parade of idiotic media types, greedy specuvestors, and the imbecile spins of the real estate industry as the roller coaster reaches its highest point and slowly begins its free fall into the abyss?
I have never had so much fun in my life. It is even more fun watching it with rational thinking, sharp minded fellow bloggers and share a few good laughs. Thanks to you all. I wish I knew you all personally.
75
X
Strataman Says:
August 30th, 2008 at 8:50 pm
My contribution to Maggies Blog…you note strictly an opinion! “Hi Maggie; Interesting question. My opinion for what it’s worth is that prices will decline in excess of 10 % this fall followed by a greater drop each year for the next two. I expect to see 40% drop by the summer of 2011 as we seem to be following the US housing bust to a tee with a 2 year delay! (Typical we were two years behind them going up, don’t you agree?). Make sure you warn FTHB that now is a terrrible time to buy! I know your priorities are happy clients and it would be a shame if other realitors did not follow your advice to wait out the down turn!”
Thanks!
76
X
Anonymous Says:
August 30th, 2008 at 9:02 pm
I just received some mail from richie bros. auctioneers (the one’s who auctioned the condos in Parksville). Well, it looks like they have more real estate auctions lined up for Sept/Oct:
Pender Harbour, BC
Athabasca, AB
Red Deer, AB
Paintearth, AB
Outram, SK
St. Paul, AB
Long Lake, AB
Houston, TX
http://www.rbauction.com/real_estate.jsp
77
X
Bluesman Says:
August 30th, 2008 at 9:03 pm
Hey man, that last comment was mine.
78
X
Bizznitch Says:
August 30th, 2008 at 9:32 pm
Forgot the auction in Chemainus. Whackload of equipment sitting there to get auctioned off on the 22nd of Sept. Booming BC alright!
79
X
arit Says:
August 30th, 2008 at 10:08 pm
Something is fishy with that site (Maggie). I can still see the comment by “tira” there, but not anyone elses.
Regards,
arit
80
X
Patiently Waiting Says:
August 30th, 2008 at 11:28 pm
Anonymus, you took the words right out of my mouth. I know its a bit sick, but I’m going to enjoy this.
In 2006, when I returned to Vancouver, I was stunned at the attitude of “landlords” in this town. And I’ve been a “landlord” myself. There are some people around here who need to hurt bad. They fully deserve it.
81
X
Matt Says:
August 31st, 2008 at 12:08 am
How many of you are optimistic you’ll hang onto your jobs in the next year?
82
X
bcubbins Says:
August 31st, 2008 at 1:23 am
About a week ago someone posted a link to this desperate seller of a Flagship assignment. Assuming there’s no fudging with the numbers, he’s now offering it at almost $50,000 under his contract price (or best offer):
http://vancouver.en.craigslist.....02271.html
Makes me wonder if he’s unable to complete the deal. Anyone know when the building will be finished? As more buildings get finished, there may be a lot more speculators trying to salvage whatever they can of their deposits.
83
X
Matt Says:
August 31st, 2008 at 1:32 am
http://www.ft.com/cms/s/0/4fc9.....fd18c.html
Canada’s economy barely grew in the second quarter, new figures revealed on Friday, lending further evidence that growth has stalled amid falling US demand for Canadian exports.
Gross domestic product expanded by just 0.1 per cent over the quarter – just 0.3 per cent on an annualised basis – much less than the Bank of Canada and most private forecasters were expecting. This follows a slip in GDP in the first quarter, and suggests that Canada is skirting the brink of a technical recession.
84
X
Vansanity Says:
August 31st, 2008 at 10:12 am
Oh, good times indeed.
Maggie: Don’t bother posting on Maggie’s site if you’ve done any proper analysis of this market. If you’re sipping the koolaid, fly at her! I think she needs as many like minded folk to post on her site as possible. Good luck to you Maggie, maybe you should just write a few “anonymous” posts that share your view, be sure not to include any stats other than old and out-dated predictions from CMHC. LOL!
How many realtors are now realizing their childhood dreams, I wonder. “What do you want to be when you grow up?” Reply “I want to be a charlatan!”
Recession: Defined as two quarters of negative output, so the .3% increase does “restart the clock”. Happened in the US too, right? What could’ve happened? Surely, the strictly political move by Bush to give 1% of GDP back to Americans through rebate had nothing to do with it! The whole move was political and tied to this election (ie. no recession under Bush, it was Hussein Obama, he’s the killer of the economy!). Their strategy has worked, but its only a bandaid over a gun shot.
85
X
Strataman Says:
August 31st, 2008 at 10:38 am
Matt “How many of you are optimistic you’ll hang onto your jobs in the next year?” Does it matter? I will just move to my paid off place in the Chilcotin, I have always worked on the assumption that I can handle absolutely no income for two years..doesn’t everybody?
86
X
patriotz Says:
August 31st, 2008 at 11:07 am
I will add that it’s way, way, better to lose your job if you are a renter with savings rather than a “homeowner” with an underwater house that can only be rented out for half its monthly costs.
‘82 – been there, saw that.
87
X
Fool Catcher Says:
August 31st, 2008 at 11:13 am
Maggie, Maggie Maggie, you are a fool.
Before you even attempt an amateurish marketing flop, make sure you read and learn from the master of spin.
http://robchipman.net/blog/?p=122#comments
“Like I said, I don’t expect or require that people read everything I write. I didn’t make an outright prediction in this case, but responded to a comment by Jesse that we’re only 3 months into what looks like a new trend that’s running counter to the last one (i.e., prices are falling). I mentioned that people ask if this will change within this year or by next spring (the “should I sell now or later question”) I said a near future change to this downward trend is unlikely. Again, I don’t mind that people don’t read that, notice it, or understand it. I just think that it would be fair to read what a person writes before judging his position. Sound fair to you?”
This Maggie is his latest, study it, re-read it, and see how he can say for sure/maybe at the same time, check out the set up, the execution, the wording.
When you have studied the method, than you can try again, until then….
Back to cold calling in a market which is about to fall of the cliff.
Again Maggie you are a fool.
88
X
Patiently Waiting Says:
August 31st, 2008 at 11:19 am
Well, I have three sources of income. One is in danger during a recession, but I could do without that work. I could live decently for about a year on my savings (without cracking RRSPs), but would lose my DP. If I make huge sacrifices like moving into a hellhole, I could even keep my DP.
With my experience and education, I doubt I’d be totally unemployed. The people you have to worry about are in construction and retail. They don’t (generally) have savings and they will suffer the most in a recession. As I remember from the 80s, a recession is brutal to youth with no job experience.
89
X
Thums up2 Says:
August 31st, 2008 at 11:26 am
Matt,
Congratulation,you will be glad to know that people who have fear to lose their jobs are not home owners or not necessirly home owners,they could be tenents or whatever!
“How many of you are optimistic you’ll hang onto your jobs in the next year?”
I am preety confident that i won’t lose my job and i can help 100 to get job at my work place @ $500 bonus per an employee.
Over all if you are british columbians you most likely never going to lose your jobs because goods and service sectors are interadependent,we have 4 out of five jobs in service sector the pace of economy can slow down only but can’t wipe too many jobs and the shreded result should be review if those jobs are/were outside workers or inside,if those employee replaced in some alternative sectors as far as service sector concern four out of five employees are funding each other to keep each others job safe unless you are a realtor.
As far as it is concern to housing sector it has it’s own economy as far as it concern to matt “he is sick to bring this issue over and over again”HEY ARE YOU LOSING YOUR JOB?NEED HELP FINDING ANOTHER ONE?
Anyway “smart buyers and fool sellers will be countinue”this is what makes them smart $4950 / 2br W. 2ND. ST. at CHESTERFIELD AVE.PostingID: 820114272.
“My father told me never lose any golden chance when it comes to real estate buying or investing”-D.T.Junior
90
X
puhlaya Says:
August 31st, 2008 at 11:43 am
How many of you are optimistic you’ll hang onto your jobs in the next year?
I’m a PhD student. Thankfully I don’t have to worry about that. My wife is in the “Real world” so I always have some concern about her job disappearing.
Like Strataman, we’ve got plenty saved up (for a down payment, or to live off of if necessary).
91
X
Maggie May Says:
August 31st, 2008 at 12:19 pm
Mr. Pope, I have a special request.
Is it possible for you to invite Maggie from:
http://www.vancouverreflection.....bottoming/
As a special expert guest to post. I am sure most of us here could benefit from her expert opinion.
As a highly trained professional realtor, she could give us some pointers on how we can take an advantage of this market which is poised for a rebound.
92
X
betamax Says:
August 31st, 2008 at 12:24 pm
“How many of you are optimistic you’ll hang onto your jobs in the next year?”
My job is recession-proof, though my wife’s is not. If she loses hers, she’ll go back to school and get another degree while the economy languishes. We can easily live on my income, though we’ll save much less without hers. But we already have a very large DP, so no worries there.
Do you honestly want a poll from this small sample, or are you being rhetorical? If the latter, remember that unpleasant situations are no less likely because they’re unpleasant. What will happen, will happen.
93
X
cashisking Says:
August 31st, 2008 at 2:47 pm
Harper’s forcing an election b/c if doesn’t get a mandate before the sh!t hits the fan ie a recession the opposition will force one on him as the economy goes from bad to worse. Now is his only chance.
Also look at GDP deflator in the U.S. – it’s almost laughable how much they’re cooking the books.
94
X
VancouverGuy Says:
August 31st, 2008 at 5:19 pm
It’s amazing that there are still people around who don’t believe the market is crashing… pretty much everyone I work with has now accepted it, and yet some people are still buying homes out there… why?
95
X
Michael Randallbard Says:
August 31st, 2008 at 7:02 pm
““That’s why, although it may be in poor taste, many young people are rooting for a full-blown meltdown of the real estate market. Unfortunately, many of the casualties inherent in such a scenario would be young people who leveraged themselves into knots to get into a market that they believed would only, could only, go up. ”
Every generation has to learn their lessons the hard way or they don’t appreciate them. At least us older and wiser folks won’t have to watch this obscene display of arrogance and air of entitlement by these little ass-wipe kids with their fancy cars and the BORING worn out talk about real estate and home prices. I say tough luck kids. You were suckered by an evil greedy industry that runs all the way from the developer to the 6 o clock news and everything in between.
Going forward there will be a more humble generation after many of these kids and also the foreign recent newcomers here that got suckered in as well, who now resemble rats deserting a sinking ship, try to learn to live in the REAL world.
Great News……the BEST is yet to come.
96
X
Matt Says:
September 1st, 2008 at 5:20 am
I’m trying to gauge what the mood is like for all the bears. I’m glad to see those that have replied about job prospects seem sincere and rational. If a bunch of replies would have come back denying that any of you see any weakness in the job market I would be incredulous.
Personally my employment depends on government profligacy. Until there’s widespread outrage over the waste of tax revenue, I’ll be ok.
97
X
jesse Says:
September 1st, 2008 at 7:32 am
“pretty much everyone I work with has now accepted it, and yet some people are still buying homes out there… why?”
“pretty much everyone”? I think you answered your own question! The market is “taking a breather”. Starting 2010 it will start going up at 5% per year forever. For those that believe this, there are some good deals out there.
98
X
jesse Says:
September 1st, 2008 at 7:41 am
“Personally my employment depends on government profligacy. Until there’s widespread outrage over the waste of tax revenue, I’ll be ok.”
That’s good for you. Others in more cyclical industries must hoard cash in good times to see them through bad times. I would think it averages out, unless you think the gravy train goes on forever. I don’t know anyone who really thinks that way, though the negative provincial savings rate seems to disagree with my observations.
99
X
Strataman Says:
September 1st, 2008 at 8:55 am
jesse “I don’t know anyone who really thinks that way” Wow who do you associate with?
Almost everyone I meet thinks the last five years is normal and I get treated with disdain when I say there is nothing “normal” about the last five to seven years. In fact I would say few if any persons I know actually feel that they can lose their jobs and that real estate can drop out of sight. Most think it’s always up… the third world is growing in importance (China, India) we will not keep our living standard which is ABNORMALLY high and unproductive as the world economy will balance as those countries gain more middle class we will loose more middle class which is exactly as it should be! Within a few decades if not the next decade we will see the end of pension funds as they go belly up, the civil service will be gutted, and the economy will revert to the fundamental of productivity wins all, human rights be damned! Do I like that? No But that is exactly what will happen. 
100
X
Drachen Says:
September 1st, 2008 at 9:02 am
Matt
“I’m glad to see those that have replied about job prospects seem sincere and rational.”
Of course we are. As a group we are generally sincere and rational, that’s why we’re bears on Real Estate right now. Not to toot my own horn but we’re the people who’s trust for their own logic and intelligence is greater than their urge to conform to group think. I think that if Kitty Genovese were my neighbour she’d be alive (fascinating story about group conformity, if you don’t get the reference look it up).
101
X
Government Staff be warned Says:
September 1st, 2008 at 9:53 am
“Personally my employment depends on government profligacy. Until there’s widespread outrage over the waste of tax revenue, I’ll be ok”
Matt: When revenues shrink, the Government will have to go to the working stiff for additional taxes to pay for the bloated payroll.
My guess is the taxpayer will be too strapped to help out those poor overworked government workers and bureaucrats; the likely result is the lowest ranking workers will be given pay cuts.
If the recession is severe enough to cause unemployment to rise significantly even the skilled government workers will have to settle for significant cuts.
102
X
patriotz Says:
September 1st, 2008 at 10:53 am
Right #100. Let’s not forget who Gordo’s role model is.
If a bunch of replies would have come back denying that any of you see any weakness in the job market I would be incredulous.
As others have pointed out, it’s the bears who are into reality, the bulls who are not. We have been following the RE-induced meltdown south of the border and we know perfectly well what we’re in for. And need I add, that’s yet another reason not to buy a house now.
103
X
Bizznitch Says:
September 1st, 2008 at 11:23 am
Here’s a good link…
Experts to downgrade B.C. growth forecasts
http://www.reportonbusiness.co.....iness/home
104
X
Patiently Waiting Says:
September 1st, 2008 at 12:32 pm
Does anyone here work in Financial Services? Are you seeing a career counselor?
105
X
patriotz Says:
September 1st, 2008 at 12:32 pm
From above:
“No one really anticipated the breadth and depth of the U.S. housing market contraction,” said Helmut Pastrick, chief economist at the Credit Union Central in Vancouver.
No one, Helmut? No one?
What are the people who got it right about the US saying about BC?
106
X
Im keeping an eye on the RE pimps Says:
September 1st, 2008 at 1:38 pm
“Looks like Maggie is at it again…
“Keith Sashaw says projected annual increases of 8% to 10%pr year in the cost of construction for the coming years. Perhaps this is part of the reason some of Vancouver’s developers revert to the buyers, asking for more money in order to finish the project, after it has pre-sold.
This is one of many reasons why I think Vancouver real estate prices will continue to rise and that we are experiencing a short window of opportunity for a price pullback. Do you agree? Leave a comment.””
Yeah ok maggie, it’s true, in fact the nominal price of rocks has been steadly rising since the stone age, but somehow real estate crashes after every boom.
107
X
Drachen Says:
September 1st, 2008 at 3:00 pm
Patriotz
““No one really anticipated the breadth and depth of the U.S. housing market contraction,” said Helmut Pastrick, chief economist at the Credit Union Central in Vancouver.”
The story should continue, “Who went on to say, ‘We do not anticipate a deep or widespread housing contraction in Vancouver’”
108
X
john Says:
September 1st, 2008 at 4:55 pm
Vancouver is the most hurricane resistant housing market in the world. The chances of a hurricane striking Vancouver is almost nil. That is why rich asians want to live here. They want to escape all the hurricanes in Asia. Albertans just hate the cold.
109
X
Anonymous Says:
September 1st, 2008 at 8:12 pm
“Do you agree? Leave a comment.” I think she meant IF you agree, leave a comment!
110
X
Anonymous Says:
September 1st, 2008 at 9:14 pm
Others in more cyclical industries must hoard cash in good times to see them through bad times.
im in a cyclical industry, but having seen this story before i’ve got my cash hoard plus backup work in case i lose my primary income. work in my office has declined a lot over the last year so thats always a possibility.
111
X
Sigh Says:
September 1st, 2008 at 10:02 pm
http://vancouver.en.craigslist.....31901.html
WTH?
112
X
Swirlyman Says:
September 1st, 2008 at 10:21 pm
Re: http://vancouver.en.craigslist.....31901.html
Someone should assemble an “archive of greed” consisting of the most outrageous Vancouver 2010 rent ads…
113
X
Alexas Says:
September 1st, 2008 at 11:06 pm
Re: http://vancouver.en.craigslist.....31901.html
I think it’s a typo she probably meant 5000$ and even that is way too much for that kind of craphouse.
114
X
ellery Says:
September 1st, 2008 at 11:22 pm
It’s not a typo, it says 50 (comma) thousand in several places. She also has a couple of suites for 30,000 for the thriftier jet set.
I hope she’s building a helipad on the roof, or is she expecting these high rollers to take the seabus?
31 nights = 1,600 per night. I would *much* rather stay in a house in North Vancouver than at the four seasons (420/night). I actually know someone who is planning to rent their triplex suite in East Vancouver for 20,000 during the Olympics. How soon before we see suites for a million bajillion dollars? How about a squillion? Do I hear fifty-gazillion? Going once, going twice…
115
X
Matt Says:
September 1st, 2008 at 11:49 pm
I certainly have no illusions that I’ll be employed indefinitely. I just wonder how much of a decline in the economy it will take before governments decide that it is untenable to waste money, or rather, keep employees around who create that waste.
Prior to asking my question it seemed that many of the bears perceived their financial health as impervious to economic decline. This logic is ridiculous since they’re a component of an economy in decline whether they like it or not.
116
X
patriotz Says:
September 2nd, 2008 at 1:43 am
Prior to asking my question it seemed that many of the bears perceived their financial health as impervious to economic decline.
I reiterate, you had it completely backwards – it’s the bears who have been preparing for the seven years of famine, and the bulls who have been partying on, dude.
As is abundantly evident south of the border and will soon be evident here.
117
X
jesse Says:
September 2nd, 2008 at 8:09 am
“just wonder how much of a decline in the economy it will take before governments decide that it is untenable to waste money, or rather, keep employees around who create that waste.”
The last recession had unemployment at around 10%. That means, if my math is correct, 9 out of 10 people who want to work are actually working. That’s a lot of “recession proof” “j”-words, wage cuts and reduced hours aside.
Interesting that real household income fell by close to 5% between ‘81 and ‘85. I recall that was during the time of a recession. You bring a good point that it’s not just job losses but income drops that can cause financial ruin to the highly leveraged.
That especially goes for all your friends employed as capital “R”-words.
118
X
VHB Says:
September 2nd, 2008 at 8:21 am
That NVan rental is a stunner. This is another reason to delay any purchase until after the Olympics. If people are pricing in 50K for rental during the Olympics (whether it is realistic or not–the issue is whether it is priced in), then this means that immediately post-olympics prices will drop by the expected amount of rental income. Kind of exactly like a stock going ex-dividend.
In fact, if there were sophisticated and liquid financial markets in condo prices (oh to dream) then I bet I could make a lot of money on the Olympic ex-dividend price movements. Let’s see–go long call options dated January 2010 and then also long put options dated May 2010 with the same strike price. Would that work? Any sophisticated traders out there can tell me how to do it better?
119
X
Matticus Says:
September 2nd, 2008 at 8:49 am
I’m not sure if this has been posted previously, but it’s pretty funny how similar the comments in NY are to those seen in the Vancouver media. Prices go down?! UNHEARD OF! And here I was thinking prices could go up forever!
Unthinkable Happens: Manhattan Apartment Prices Fall
http://tinyurl.com/6a3a3e
“Recently released city records indicate that apartments in prime Manhattan neighborhoods are selling for less than their purchase prices — a phenomenon that until now was virtually unheard of in the seemingly invincible New York City real estate market.”
120
X
Matticus Says:
September 2nd, 2008 at 8:52 am
Sorry – link had already been posted by Van-zee.
121
X
house mouse Says:
September 2nd, 2008 at 9:00 am
I noticed there is less stilton and camembert but more Kraft cheese slices lately. Im not impressed.
122
X
betamax Says:
September 2nd, 2008 at 9:13 am
Here’s the kicker from that ad:
“Early reservations get special deals on January, February and April stays.”
Bwahahahaha!
123
X
jesse Says:
September 2nd, 2008 at 9:19 am
“Would that work?”
In a sophistimicated not-so-liquid market like real estate, no. IMO if there were such a derivative market, which there is not, you would need to spread the put/call further apart.
124
X
TJbox Says:
September 2nd, 2008 at 9:20 am
Unthinkable Happens: Manhattan Apartment Prices Fall
‘This Clearly Indicates That the Market Is Not What It Was’
http://www.nysun.com/business/.....ces/84900/
If it can happen in NY, you can surely bet that it’s happening here.
125
X
ellery Says:
September 2nd, 2008 at 9:24 am
That north vancouver ad really needs its own post. It is funny!! We thought of letting out our place (for a very modest price) just because we don’t actually want to be here for the olympics.
I never expected to see such craziness. However, like I said, I know someone planning on making 20,000 for 2 weeks on their little place. How many are actually planning on doing this?
126
X
VHB Says:
September 2nd, 2008 at 9:25 am
Jesse. Thanks–my speculation was predicated on the assumption of liquid derivative markets. This is obviously counterfactual, but still an interesting exercise.
Let me restate the question: Imagine that I knew a stock was going ex-dividend on May 1st 2010 and that this was not yet priced into derivative prices. What positions would one take to profit from this?
127
X
rentah Says:
September 2nd, 2008 at 9:52 am
VHB:
You’d wait until the day before the stock went ex-dividend, and then buy as many near-dated (expiring soon, usually the next month) out of the money puts on the stock as you could afford. This would maximize your leverage.
Then you’d sell them all the next day, at the low point reached when owners of the stock come to realize that the premium no longer exists and many of them sell, including a few who panic and sell for too low a price.
The puts will have gone up 1000%, perhaps more, give or take a few 100%.
Then you’d retire.
—
All ’speculative’, in more ways than one. The thing is that a stock going ex-dividend is ALWAYS factored into the price beforehand.
And we’d assume that the Vanc RE market is factoring in the one month rent ‘bonanza’ already.
I suspect few will actually realize ‘bonanza’ gains, and I also anticipate lots of administrative headaches and unpleasant disagreements when these amateur hoteliers meet their fleeced visitors.
One local blog this weekend (I can’t recall which, sorry) linked to a craigslist condo sale which looked like a scam to me: It was outrageously priced, but offered to reduce the price by the amount of a deposit on an agreement to rent for $40K over the period of the Olympics.
128
X
VHB Says:
September 2nd, 2008 at 10:10 am
Thanks Rentah.
“I suspect few will actually realize ‘bonanza’ gains,”
I agree. Your strategy would do well if the ex-dividend price movement were not EVER anticipated.
However, what about the situation where the prices as of September 2008 do not reflect the likely price movements in May 2010? ie, I don’t want to wait until April 30, 2010 to load up on my financial instruments. I want to do this NOW so that just in case the market gets a clue in January 2010 and things get priced in I can still profit from the arbitrage opportunity that is available NOW.
Again, I realize that I can’t actually do this. I’m just trying to stretch my financial brain muscles here to learn more about derivatives.
129
X
bdk Says:
September 2nd, 2008 at 10:49 am
Luckily Vancouver has de coupled from Canada and the rest of the world or this would be bad news:
http://www.cbc.ca/money/story/2008/09/02/oecd.html
130
X
bdk Says:
September 2nd, 2008 at 11:21 am
Why don’t the realtors, who’ve all made more money than they should have for the last four years, go out and start buying and selling amongst each other now to create an illusion of a robust market?
Aside from the obvious reasons that those who read this blog and/or graduated from grade 6 (sorry krish) one must wonder if the salesman is selling a product that he/she wants you to buy it can only lead to skeptical buyers and even more negative sentiment.
131
X
condomad Says:
September 2nd, 2008 at 11:28 am
Will we see this happening in Vancouver?
August 30, 2008
A NORTHERN Ireland housebuilder has proved that homes can still be sold despite market gloom, provided the price is right.
When the developer slashed the price of new homes it couldn’t sell because of the property slump by as much as £110,000 (€137,000), it attracted buyers for every one in a couple of hours.
More than 700 buyers flooded the Co Antrim development built by Fraser Houses, one of Northern Ireland’s biggest housebuilders, after it placed advertisements in a newspaper declaring: “We give in! We’re finding it tough to sell. So let’s cut to the chase with an offer you can’t refuse.”
In just a couple of hours yesterday all 53 houses on offer – the first two phases of the company’s Aylesbury Place development in Glengormley – were snapped up.
Semi-detached houses, previously priced at £229,500, went up for sale at £139,950.
Detached houses were reduced by more than £110,000 from £340,000 to £229,950 and apartments were down from £179,950 to £119,950.
In addition, Fraser’s will pay the stamp duty on the properties, provide on-site mortgage packages and give a price guarantee that if they sell the same type of house for less in the future they will pay back the difference.
Such was the demand, the company has decided to release the third phase of the homes on Saturday.
Paul Fraser of Fraser Houses said: “We are absolutely delighted with the level of interest in the Aylesbury Place development. All the buyers last night were owner-occupiers, including many first-time buyers.”
Mr Fraser added that despite all the media coverage of the deteriorating UK property market, people were more than ready to buy if house prices met affordability levels.
“Buyers need confidence to make a commitment to property and this confidence has frankly been eroded with the recent speculation about the credit crunch, banks reducing their mortgage products and the government suspending their funding of the co-ownership scheme,” he said.
“We want to set an example and prove that the market simply needs a kickstart.”
Simon Brien, of estate agents BTWCairns, said: “Fraser Houses simply want to sell houses. They want to prove that the right package will attract buyers.
“We believe that together we have the opportunity to show the property sector that the right action will generate the right response.”
- (PA)
© 2008 The Irish Times
132
X
G Says:
September 2nd, 2008 at 11:32 am
Victoria’s prices took a real hit!
Sales skidded to 517 in August, down from 846 in August a year ago. July saw 616 sales. The average price of a single family home slid to $549,914 in August, down from $578,000 in July.
The average price of townhouses edged down to $413,994 in August, from close to $455,000 in July.
http://www.canada.com/victoria.....4638badb4a
133
X
Deliverator Says:
September 2nd, 2008 at 12:38 pm
The Economist put it well:
“…the total value of residential property in developed economies rose by more than $30 trillion over the past five years,to over $70 trillion,an increase equivalent to 100% of those countries’ combined GDPs.
The surge not only dwarfs any previous house-price boom,it is larger than the global stock market bubble in the late
990s (an increase over five years of 80% of GDP) or America’s stock market bubble in the late 920s (55% of GDP). In other words,it looks like the biggest bubble in history.…”
134
X
mk-kids Says:
September 2nd, 2008 at 12:57 pm
Maggie Chandler is a piece of work, hey? Ask for opinions & then delete those you don’t agree with? Shame! She has ensured she will never get my business or anyone else I have the opportunity to influence…
135
X
rentah Says:
September 2nd, 2008 at 1:42 pm
VHB said:”what about the situation where the prices as of September 2008 do not reflect the likely price movements in May 2010? ie, I don’t want to wait until April 30, 2010 to load up on my financial instruments. I want to do this NOW so that just in case the market gets a clue in January 2010 and things get priced in I can still profit from the arbitrage opportunity that is available NOW.”
VHB: You could short the ’stock’. Or you could take up ’synthetic’ short positions with derivatives. This could still be done by buying puts (only you’d want to buy very long term puts (LEAPS) because the value of an option decays over time and you’d thus be losing money for every month that passes where the move you’re anticipating doesn’t happen, and the longer term the option, the less the impact of this decay would have on the put value). You could also sell calls.
I know you’re not about to buy puts on Vancouver RE (let me know if they’re available!) but I’ll use this opportunity to quote a wise investor whose name I don’t recall: “If you get the feeling that you want to play options, go and lie on the beach until the feeling goes away”.
—
It’s possible to make money buying options, but it is very very challenging. The reason being that you have to be right about market direction AND about timing. (And those of us following Vanc RE know how hard it is to get BOTH right). If you’re wrong about EITHER, you lose.
The other thing that one must realize about options is that the vast majority are written by very, very sophisticated players, and it really is a pure zero-sum game. So you’re essentially taking a bet that you’ll beat a pro. It’s like sitting down at a poker table with the best players on the continent. Sure, you may get lucky, but…
—
PS, VHB, still have fond memories of your blog.
136
X
Bubble Lad Says:
September 2nd, 2008 at 1:44 pm
Forget Maggie,
try this guy – he’s some kind of “magic eight ball” of real estate.
http://www.rock101.com/RealEstateGuide.aspx
137
X
jesse Says:
September 2nd, 2008 at 1:51 pm
I think what VHB is describing is effectively a differential play (don’t know the actual term for it). He is reasonably certain there will be a shift to properly price the stock somewhere between 2 dates but he does not know exactly when. He also doesn’t know whether there will be a general long-term secular drift in price during that time. He wants some way of playing the “step change” but stay isolated from the “slope”.
138
X
rentah Says:
September 2nd, 2008 at 1:54 pm
VHB: Options and all that aside, your posts do bring up an interesting consideration regarding Vanc RE.
How exactly is ‘the market’ currently factoring in the 2010 Olympics and the aftermath?
We know that the Olympics was one of the ’stories’ (and a very small fundamental factor) contributing to the run up in prices.
But how does ‘the market’ see the Olympic effect now?
IMO, I suspect we’re getting near a ‘break-even’ point, where more and more people are realizing that the Olympics will come and go, and that there won’t really be lasting impact. I expect that a broader realization of 2010’s non-effects will start to speed a drop in RE prices… and, ironically, that may occur BEFORE 2010. Perhaps the peak of Olympic expectation will turn out to have been the 2008 Beijing Summer Games. VANOC has returned from Beijing with concerns (eg (1) how do we follow that act?, (2) how do we ensure that seats are full?, etc).
Expectations may have already peaked.
139
X
VHB Says:
September 2nd, 2008 at 2:03 pm
Jesse, Rentah: thanks for your thoughts. It is fun to think about. I *truly* wish we had Vancouver put options to buy. I would leverage up every penny I could to go long hard and deep into Van RE puts!!
Rentah: I expect that there is a large chunk of people who a) knew that the Olympics are not going to have a long run positive effect and b) thought they could get out and sell just before the Olympics. I think that these people will indeed start to bail now as things become clear that we are not going to make it to 2010 before things crash.
However, I really think that there is a hard core of people who truly believe in the 2010 hype and will not be disuaded of it until, oh, late 2010 or so. That is when the window for a Van RE bottom will begin to open. I think it is extremely unlikely that things will bottom out before the Olympics because we have to squeeze the last bit of olympic sentiment out of the market first.
140
X
jesse Says:
September 2nd, 2008 at 2:16 pm
“But how does ‘the market’ see the Olympic effect now?”
It sounds like one of those situations where you could rent out your flat during the Olympics but you don’t have to. $50K for Edgemont “Olympic” Village may be silly but maybe $200-$300/night for 2 weeks isn’t that unreasonable for some? There is POTENTIAL one-time income (net expenses and risk) on the table that is available right up to the Olympics. In my estimation it won’t amount to more than a few $K on average and probably lost in the noise in terms of fairly priced valuations. No clue what’s priced in now.
Whistler vacation condos are a different story and probably a better example of the “dividend conundrum” at play, with the added wrench that you need to rent it out or sell or you’ve lost money; impugned rent is crazy expensive.
141
X
gah Says:
September 2nd, 2008 at 2:45 pm
Looks like Maggie finally went through her inbox and posted some comments – but only the bullish ones of course.
I posted a trollish reply (#2) just to see what she’d say.
142
X
jesse Says:
September 2nd, 2008 at 3:02 pm
My comment made Maggie Chandler’s cut. Yay!
143
X
Patiently Waiting Says:
September 2nd, 2008 at 3:03 pm
The S&P/TSX closed 471.51 points lower, or 3.4 per cent, to 13,299, as oil fell $5.64 to $109.82. It was the second-biggest one-day point drop of the year, after Jan. 21’s 605-point nosedive.
http://tinyurl.com/5bj6qr
144
X
Keep an Eye on the RE Pimps/Madams Says:
September 2nd, 2008 at 3:06 pm
Given the volume of information that is out there, does a reasonably intelligent person conclude?
a) Maggie is a imbecile
b) Maggie a liar
145
X
ellery Says:
September 2nd, 2008 at 3:14 pm
“maybe $200-$300/night for 2 weeks isn’t that unreasonable for some?”
we’ll have to see, but I haven’t seen anything to suggest that our hotels will be so insufficient (especially considering it’s Whistler & Vancouver) that visitors will be pushed to pay so much. For those prices I would at least expect a daily cleaning service, wouldn’t you? I didn’t watch any of the Beijing Olympics, I don’t know anyone who cares all that much about the Olympics (sometimes a specific sport, but not the whole thing).
146
X
jesse Says:
September 2nd, 2008 at 3:45 pm
“For those prices I would at least expect a daily cleaning service, wouldn’t you?”
I’d suggest checking out hotel room rates in Munich during Oktoberfest or another such festival in another city to see an example of what is likely to happen. BTW in Munich there is a network of homestays as well that is brought into service to fill the swell of tourists. I’d expect Vancouver to be the same but won’t be anywhere near as experienced or professional about it.
147
X
Deliverator Says:
September 2nd, 2008 at 4:34 pm
Doug Casey on Vancouver Real Estate:
“Spain, described above, was one example. Vancouver,B.C., was another, as hundreds of thousands of wealthy orientals moved there, at first just to get a Canadian passport and have a foreign bolthole. And then many stayed because it may be the nicest city in North America. Although, I’ve now got to say, if you have property there, it’s an excellent time to hit the bid.”
148
X
Vansanity Says:
September 2nd, 2008 at 6:04 pm
Yaletown Sofa closed all stores suddenly? What’s this about?!
http://www.canada.com/vancouve.....72bc3cb2f2
149
X
Vansanity Says:
September 2nd, 2008 at 7:10 pm
http://www.canada.com/vancouve.....72bc3cb2f2
150
X
depresso Says:
September 2nd, 2008 at 7:52 pm
Deliverator, could you post the URL to the article by Doug Casey?
151
X
JB Says:
September 2nd, 2008 at 9:01 pm
HSBC says super-rich clients moving into cash
http://www.reuters.com/article.....3120080901
152
X
Vanguy Says:
September 2nd, 2008 at 10:07 pm
Is the Yaletown sofa story part of the credit crunch or real-estate downturn? Or both?
I’d say that the business was ok but they needed money and couldn’t get any. I always thought they were franchised because some seemed to have much more invested in them then others.
BTW, I bought a sofa there once, and I felt dirty afterwards, but the product quality seemed good, just slimey sales dudes.
153
X
jesse Says:
September 2nd, 2008 at 10:22 pm
“just slimey sales dudes”
Correction: slimy out-of-work sales dudes.
154
X
Deliverator Says:
September 2nd, 2008 at 10:25 pm
Would like to post the link to the Casey comment, depresso, but it comes from a subscription newsletter.
155
X
bdk Says:
September 2nd, 2008 at 11:07 pm
Here’s a quote from a subscription newsletter from Bob Rennie, the link is confidential.
“I simply cannot believe anyone who would be stupid enough to pay $370,000 for a C building downtown which will rent for $1350…
when you subtract strata fees of $200 and the various day to day expenses the buyer is making a return of 2% if he owns the unit outright and pays no property management fees but otherwise it is a loss and there aren’t anymore rich people coming who weren’t here in the 1990’s other than some temporarily overpaid construction workers”
Don’t ask for the link HEY the OLYMPICS! RICH PEOPLE!
156
X
Matt Says:
September 2nd, 2008 at 11:14 pm
Post the link or else Rennie never said it.
157
X
macchiato Says:
September 3rd, 2008 at 5:37 am
Yaletown Sofa, of course, I called this one when I saw them takeover the space the Starbucks was using on Denman St. Pretty obvious. I am looking as for the Sofa So Good hidden on 8th to go under as well, matter of time.
158
X
Deliverator Says:
September 3rd, 2008 at 6:09 am
bdk – Look up Doug Casey. While he does offer some free commentary, the bulk of his offerings come by way of paid-for subscriptions. Now, I’d like to be able to email the pdf to everybody who reads this blog, but that would be impractical as well as illegal. So, you’re just going to have to trust me on this that he wrote it, or seek confirmation elsewhere.
159
X
Vanguy Says:
September 3rd, 2008 at 2:48 pm
Without the link it’s kind of hard to believe Rennie would say those things. Most of the language sounds like it came off the VC.i boards.
Again, not very plausible. Although the numbers are right…
160
X
bdk Says:
September 3rd, 2008 at 3:15 pm
the rennie story is as fictitious as the secret casey story that no one else has seen.
161
X
Deliverator Says:
September 3rd, 2008 at 4:05 pm
http://www.caseyresearch.com/
Pay your money, bdk, and you can see everything I see. You’re fortunate I gave you that little tidbit. Now stfu.
162
X
bdk Says:
September 3rd, 2008 at 4:49 pm
Why reference it if you can’t back it up? Are you astro turfing for Casey?
163
X
Deliverator Says:
September 3rd, 2008 at 11:01 pm
Believe the quote is real or don’t. I’m done with you.