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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.
August 29th, 2008 at 6:34 pm
Warning signs from the centre of the boom (China)
http://www.reportonbusiness.co.....iness/home
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
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.
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.
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.
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.”
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.
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!”
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.
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!!!
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.)
August 29th, 2008 at 2:40 pm
Meanwhile the bitter renters should meet at the Opus and have a laugh at the owners expense.
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.
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.
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?
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.
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.
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
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!!
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.
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.
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.
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?
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.
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.
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.
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.
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.
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
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.
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.
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!
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…
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.
August 29th, 2008 at 11:01 am
http://www.reportonbusiness.co.....iness/home
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.
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?
August 29th, 2008 at 10:37 am
http://www.canada.com/vancouve.....511581d560
Should I buy or Rent?
Todays Vancouver Sun
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.
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.
August 29th, 2008 at 9:45 am
But, Vancouver is different.
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.
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.
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.
August 29th, 2008 at 7:52 am
Thanks for that link SurreyJoe, I’ve added it to the main post.
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
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.
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.
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.”