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September 2nd, 2008 at 7:52 pm
Deliverator, could you post the URL to the article by Doug Casey?
September 2nd, 2008 at 7:10 pm
http://www.canada.com/vancouve.....72bc3cb2f2
September 2nd, 2008 at 6:04 pm
Yaletown Sofa closed all stores suddenly? What’s this about?!
http://www.canada.com/vancouve.....72bc3cb2f2
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.”
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.
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).
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
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
September 2nd, 2008 at 3:02 pm
My comment made Maggie Chandler’s cut. Yay!
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.
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.
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.
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.
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”.
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
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.
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…
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.…”
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
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
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.
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
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.
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.
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?
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?
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.
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.
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!
September 2nd, 2008 at 9:00 am
I noticed there is less stilton and camembert but more Kraft cheese slices lately. Im not impressed.
September 2nd, 2008 at 8:52 am
Sorry – link had already been posted by Van-zee.
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.”
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?
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.
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.
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.
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…
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.
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…
September 1st, 2008 at 10:02 pm
http://vancouver.en.craigslist.....31901.html
WTH?
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.
September 1st, 2008 at 8:12 pm
“Do you agree? Leave a comment.” I think she meant IF you agree, leave a comment!
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.
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’”
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.
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?
September 1st, 2008 at 12:32 pm
Does anyone here work in Financial Services? Are you seeing a career counselor?
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
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.
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.