201 Responses to “July 2008: Vancouver prices ‘deflating’”
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August 6th, 2008 at 4:45 pm
The market is dropping like a stone Dave. At what point do you admit you were wrong?
I have yet to be wrong. I was right on the way up for the last 7 years. Incase you forgot, my future predictions to date are:
- approximate 5% drop in prices this Fall;
- a flat market for 2009 (+/- 5 to 10% of end of 2008 prices); and,
- less than 18970 listings in Greater Vancouver by October 1st.
I will admit I am wrong on a particular item when it is shown to be wrong.
How many years have you been wrong now?
August 6th, 2008 at 4:42 pm
Dave: “Again, home ownership is more than just an investment. A home is also a place to live and love.”
Very true. At this point the intangibles of homeownership limit many to a small condo or a plot of land far from where they work. The third option is renting a nice place, far more than could even be possible by owning at today’s prices. The downsides of renting is more acceptable than what would have to be sacrificed to own an inferior property.
For such people there is not much else to lose by renting and speculating on price drops or simply migrating elsewhere.
August 6th, 2008 at 4:38 pm
Dave
“If you are always trying to time the market, then you ARE a speculator.”
Don’t time the market price the market. Right now prices make no sense so buying is dumb.
“Nobody knows where the market will end up.”
Speak for yourself. I know within a 10% margin of error where the market will end up.
“Blah Blah Blah…. All these things have happened before.”
None of them have happened while fundamental values were so far below market values.
The market is dropping like a stone Dave. At what point do you admit you were wrong?
August 6th, 2008 at 4:26 pm
Why not invest today? Put up your life savings on a speculative and highly leveraged investment Dave says it’s a good idea and he’s clearly not biased at all.
Again, home ownership is more than just an investment. A home is also a place to live and love.
If you can find something you like, plan to live there for a reasonable period of time and can afford it, then in no way are you a speculator. If you are always trying to time the market, then you ARE a speculator. Nobody knows where the market will end up. It could only moderately correct and stagnate, it could drop by double digits, or it could even go up next spring. All these things have happened before. But, it is almost a guarantee that prices will go up over the LONG term.
August 6th, 2008 at 4:17 pm
TraderPaul said,
“Its human nature not to sell at a loss, because then that loss becomes “realized” and not just a paper loss.”
Not so sure about that, the more volatile markets become – the more emotional investors become about their investments.
Contrary to sound investing principles, investors tend to increase their purchases when the market is at its highs
while redeeming during market downturns.
This is quoted from “Cycles of Market Emotions” by TD Mutual Funds and I seriously doubt that homebuyers are anymore rational that mutual funds buyers since essentially they are the same people.
August 6th, 2008 at 4:17 pm
Speaking of renting, the other day my fridge died. In addition to buying a new fridge and having it delivered the next day, our landlord let us put a bunch of stuff in his fridge to keep it from spoiling. It was pretty great all ’round.
August 6th, 2008 at 4:02 pm
Coal Harbour is great.
A real life example of a condo “investor”
Paid $500k one year ago.
With $125,000 down
Mortgage=$375,000= $2250 per month mortgage +$225 strata=$ 2,475.
Rent= $1400 (less 1/2 rent to the property manager for finding the tenant)
Loss per month is $1,075 plus that $125,000 could be generating $625 a month in a GIC =$1,700 loss per month to subsidize the tenant.
Now factor in that this “investor” will get $480,000 if he can actually sell it plus he’ll have to pay “Dave” $18,400 in realtor fees for having the receptionist put it on the multiple exchange.
So he’s lost $1,700 a month and on paper hisequity has gone down $3,200 per month for a cumulative loss of $58,800 in a year.
Of course the class of renters in Coal Harbour is quite good and you can expect to have a couple with a combined income of $120,000 or higher if you rent to a prostitute or drug dealer.
If demand ever goes up Coal Harbour is positioned well as 1/3 to 1/5 of the units are empty and speculator owned. If that supply dries up there are thousands more units about to complete in the $700k+ range which are also owned by unsophisticated speculators from the suburbs who’re just waiting for those rich Australians, or Bulgarians, or Indonesians or…..
Why not invest today? Put up your life savings on a speculative and highly leveraged investment Dave says it’s a good idea and he’s clearly not biased at all.
August 6th, 2008 at 4:01 pm
“on average Canadians change houses every seven years …”
Hey Druid, I have often wondered about that stat. Look at sales figures for Lower Mainland: around 40-50K per year on average. There are about 1M dwellings. The math doesn’t seem to work out, for owner-occupiers anyways.
August 6th, 2008 at 3:56 pm
BREAKING NEWS
Morgan Freeman has just been pronounced dead after a car crash in a 1997 Maxima. Morgan owned many many vancouver condos and was a classic car collector.
August 6th, 2008 at 3:53 pm
“Its human nature not to sell at a loss, because then that loss becomes ‘realized’ and not just a paper loss. “
If they are not selling they are not making the market price. The ones that need to sell will determine what buyers will pay, not sidelined owners and not sidelined bitter renterbears.
August 6th, 2008 at 3:52 pm
Hmm … on average Canadians change houses every seven years … how are you friends different TraderPaul? They will not have children in the next 25 years? They will never change jobs in the next 25 years? Smells like raltor BS – prices don’t matter so buy now and pay as much as you can.
August 6th, 2008 at 3:42 pm
I have friends who are recent buyers and their attitude is simply “as long as the market is not lower after 25 years” then they’ll be happy. That’s a long time.
And that’s a perfectly reasonable attitude. If they plan on living there for a long time, then why worry about prices? Home ownership is more than just an investment.
August 6th, 2008 at 3:23 pm
How has the credit crunch not hit Canada yet? This utterly blows my mind.
August 6th, 2008 at 3:11 pm
I think there will be a lot of homeowners and investors under water in the next few years, but this won’t be fully reflected in the way of price reductions because the average person tends to “hang on to their losses” much the same way long term investors in the stock market will hold onto an unfavorable issue through a bear market rather than try to time a bottom. Its human nature not to sell at a loss, because then that loss becomes “realized” and not just a paper loss. Hard to quantify the exact effect on prices, but I think it hides a deteriorating market. I have friends who are recent buyers and their attitude is simply “as long as the market is not lower after 25 years” then they’ll be happy. That’s a long time.
August 6th, 2008 at 3:09 pm
“A Coal Harbour property has the advantages of being closer to Stanley Park as well as several blue chip law firms’ offices”
It definitely does. Coal Harbour has some great features and is in a great location for many but why then is the price-rent multiple so high? The renters in this wonderful location are not willing to pay to cover the ownership costs. Apparnently the view of the North Shore is worth less to renters than owners.
August 6th, 2008 at 3:04 pm
“It is not possible for prices to stay flat at bubble valuations and Muir knows it. “
Cam Muir is paid to spin things so as to improve buyer confidence and increase revenues for the RE industry. I commend him for attempting to do his job to the best of his ability. I hope his next tenure of employment will not have credibility as a requirement.
Other local “experts” have no obvious ties to a real estate lobby group and they still misuse and ignore data to claim the market is healthier than it really is. These are the ones I have even less respect for. Cam has little credibility left in my books but I’d expect nothing less, given his job.
August 6th, 2008 at 3:03 pm
I’m trying to offer a balanced perspective. You know, shine some light into the echo chamber. No I wouldn’t consider Yaletown to be prime real estate compared to say, a penthouse in Coal Harbour with an unobstructed view of the North Shore mountains. A Coal Harbour property has the advantages of being closer to Stanley Park as well as several blue chip law firms’ offices. If you were a partner in one of these firms, which would you choose?
What are the actual facts about prices of Coal Harbour real estate?
August 6th, 2008 at 2:21 pm
Ultraman,
My building might leak a little bit but only for a little bit and then it will stop leaking.
Another thing that’ll happen with all these broke specuvestors is they’ll defer maintenance at strata meetings which’ll void their building envelopes warranty and then they’ll have to pay for the repairs themselves which’ll be fine for the 1% rich offshore investors but the overleveraged (Like Dave and his wife Julie who constantly post disinformation on this blog) rookie investor/rookie commercial mortgage brokers will be filing bankruptcy faster than you can say………
BEST PLACE ON EARTH!
August 6th, 2008 at 1:52 pm
The next illusion:
My building is different; it won’t go down in price.
August 6th, 2008 at 1:42 pm
Matt “or any of the very best buildings (location wise) may not see much change in price” Would you consider Yaletown a best location? They are down 10-12% from last year in buildings I am familiar with.(The ones actually selling, not just listed).
August 6th, 2008 at 1:38 pm
There may be some truth to the bull’s conventional wisdom that downtown vancouver prices may not change. I would say that prime real estate in Coal Harbour or any of the very best buildings (location wise) may not see much change in price. As an example, in the UK, real estate prices are collapsing everywhere except in central London. Rents however are collapsing at the upper echelon of the market.
I would say that anyone who bought property in the Fraser Valley is fucked. Who in their right mind would pay more than 300k to live in a shithole like Chilliwack?
August 6th, 2008 at 1:22 pm
cam muir was on the news a little earlier. he said re will be flat for a couple of years.
It is not possible for prices to stay flat at bubble valuations and Muir knows it. Bubble valuations require increasing prices to compensate for the operating loss.
Muir is really expecting a bust. This is what the usual suspects always say when TSHTF.
August 6th, 2008 at 1:12 pm
Brian, I would never have gone to China before but once I heard they were having the Olympics I took the first flight out of here to buy property there.
The same thing will happen here, rich Bulgarians will be flying here in droves to get a piece of the best place on Earth!
A long established chinese realtor (Old Timer) told me asians are selling in Vancouver to retire in China but I don’t believe him. He had a few $$$$ listings that he sold and said the buyers were mostly corrupt oil families but seriously what would he know about being asian or rich asian retirees?
Obviously he was just telling me the market was going down so I wouldn’t buy anything and he’d have more product to sell to his rich asian clients.
Besides what would I know about the downtown condo market I only live and work in real estate downtown.
August 6th, 2008 at 1:10 pm
“at least he’s not saying it’s all up up up…”
Which was what he said not long ago.
Let’s see how many times he will “adjust” his market predictions looking forward from now… sheesh!
Farking shills, I hope they all rot in hell.
August 6th, 2008 at 1:06 pm
Interesting point Brian – The homeless situation is definately something Vancouver needs to deal with, that and the HIV rate in the downtown eastside being as bad as Botswana. We’ve got a lot of problems with mental health issues as well.
I read a lot of news out of the US and other countries and I’ve noticed Vancouver and BC being in their news a bit, but its usually for the sensational stuff like feet washing up on beaches and people getting attacked with a hammer downtown.
August 6th, 2008 at 1:03 pm
cam muir was on the news a little earlier. he said re will be flat for a couple of years. prices will be down some months and up some months, is what he said. at least he’s not saying it’s all up up up…
August 6th, 2008 at 12:52 pm
Squamish and Whistler are often considered to be countercyclic to the Greater Vancouver market. It doesn’t surprise me that Squamish is up while other markets are down.
There is a lot of new construction in Squamish to be sure and part of it is due to the limited amount of room available to develop in Whistler. I think these markets will do just fine going forward and will likely outperform the GVRD and FV. The upgrades to the S2S also make commuting from Squamish more feasible than before, but this may be off-set by current gas prices. The Olympics argument for real estate is often talked about and I believe that it will have a positive effect along the S2S corridor. However, I do not believe they will have any measurable impact on prices within the GVRD itself.
August 6th, 2008 at 12:47 pm
On a serious note regarding Olympics and long-term economic impact.
Beijing has been subjected to a continuous negative stream of press for the past six months regarding pollution. It’s right after Darfur and Rawanda on my list of places to visit now. Torino was slagged in a similar manner. How will the international media paint Vancouver? It will be interesting to see if we get hammered as hard as Beijing on a key political issue, such as homelessness. It could potentially decrease tourism demand for the “Best Place on Earth”.
Who here is more likely to visit Beijing? Less likely?
August 6th, 2008 at 12:27 pm
I’m going to have a little happy moment when we hit neg. nominal YOY (real YOY is negative for a lot of places).
Still, I have to admit to being a bit chuffed that Squamish (!!) is up 29% from last year. Yeah, ok, nice place in the summer, but 2200mm of rain is a lot of wet the other nine months. There’s so much (over) building there, and the number of for sale signs puts North Van to shame.
August 6th, 2008 at 12:20 pm
And don’t forget if you can’t sell to a rich asian right away you can always rent it to a poor renter who can’t rub two pennies together for $15,000 per bedroom. In fact rich asians love renting property for triple the market rate as much as they like buying it.
August 6th, 2008 at 12:19 pm
Drachen:
Your argument (2) can be summer up in 2 words:
Paris Hilton.
August 6th, 2008 at 12:15 pm
By the way, a better counter argument for the “rich foreigners” argument is;
Landcor land registry keeps track of where land purchasers are from. Their tracking shows that fewer than 5% of purchases made in BC are from non-BC residents. In addition fewer than 2% of purchases are made from non Canadian residents. This small fraction may help cushion the fall slightly and it may help keep the bubble afloat longer but it is not enough to overcome the basic market fundamentals that apply to the other 95% of the market indefinitely.
August 6th, 2008 at 12:08 pm
Guys. 2 things.
1) John is just yanking your chain, unlike some of the others he doesn’t believe a word he’s saying.
2) The “rich people don’t get rich by being stupid with their money” argument is BS. It may be true for some or even most rich people but there is a significant portion of multi-millionaires who simply inherited or became wealthy more through luck than planning. You can’t assume that all rich people invest cautiously because the evidence is overwhelmingly against that proposition (you have to look no farther than the ‘High Rollers’ in Vegas who don’t blink at losing 20 million in a weekend to see the truth in this).
August 6th, 2008 at 12:08 pm
Vansanity:
I hear there are simply TONS of deals to be snapped up in Sarejevo.
And John, I adore your posts. It’s a fine line between tragedy and farce. Somehow you’ve managed to tango on the razor’s edge with a skill that would make Colbert green with envy. Kudos buddy and thank you.
Rob:
Yes, downtown is a desirable place to live. You’re probably too young to remember the Airport movies (the originals, not the sequals) but there’s a memorable moment when the plane is plummetig to earth and poor, poor Karen BLack, who played the stewardess, is screaming into the pilot headset “THERE”S NOBODY LEFT TO FLY THE PLAAAAAAAAANE”
THAT is the landing we’re heading for. The fools have all been locked in. There are no more buyers left. Some can’t afford it. Some won’t pay those prices. And some just aren’t in a position to make the commitment to living here permanently.
Enjoy the soft landing. I’ll be drinking mai tais sitting a safe distance away.
August 6th, 2008 at 11:57 am
John and Rob A. are right!
It’s not that $600,000 is too much for a one bedroom downtown or a 1500 sq ft townhouse in Ditchmond.
The real reason no one is buying right now is because all the Rich Asians are taking time off from buying red hot Vancouver condos to watch the Olympics!
August 6th, 2008 at 11:52 am
I think that Vancouver will have a soft landing, especially downtown because it is a desirable place to live.
August 6th, 2008 at 11:48 am
You people are hilarious. We have a slight decrease in sales volumes and you’re calling it a bubble? Vancouver is one of the top destinations in the world for people to visit. Most who come dream of owning property here and the rich Albertans and Asians know this. They’re smart smart people especially the Albertan oil patch workers. These are the cream of the crop and they rise to the top.
August 6th, 2008 at 11:11 am
Mwahahahahaha…Mwahahahaha…Mwahahahaha…
Sorry, I just had to use my favourite quote from Austin Power’s… Seems to fit so well.
August 6th, 2008 at 10:57 am
jim:
in memory of Jean Gibsons much beloved blog i posted a comment on this blog site…..
August 6th, 2008 at 10:17 am
This Vancouver realtard is telling us now is the time to buy and that w can get in on “Hot Deals” Yup… they’re hot. Guess who is going to get burned…
http://vancouverrealestateblog.....ate-market
August 6th, 2008 at 9:57 am
John IS right!
In fact, we should be putting every last dime we have into condos in Beijing right now!
I wonder if it’s too late to get in on all the previously discovered places like Turin, Athens, St. Lake City, Sydney, Nagano, Atlanta, and Lillehammer? Too late? What am I saying? Time to get in!
August 6th, 2008 at 9:23 am
john:
rich people aren’t stupid
and stupid people don’t get rich
which succinctly explains your current position.
August 6th, 2008 at 8:25 am
Further to my earlier comment (#53), the distinguished Mr. Muir was on CBC’s Early Edition today preaching that the results from July are merely a summer slowdown. Nothing to worry about – economic fundamentals are sound, so move along folks.
Cameron: No one is disputing that the economic fundamentals are sound. The fundamentals were sound during the dot com era as well – sounder, in fact. But that didn’t stop overpriced stocks from correcting. The fundamentals are sound in San Francisco too, and yet the bottom has fallen out of their market.
Could someone please get these bloggers onto the CBC…
August 6th, 2008 at 8:23 am
Spin du jour:
http://www.canada.com/vancouve.....59df91719b
“Cameron Muir, chief economist for the B.C. Real Estate Association, said he doesn’t believe that there was a housing bubble that has now burst, but said there has been a change in the cycle….” interesting, he doesn’t deny there may be a bubble, he just doesn’t believe it.
August 6th, 2008 at 7:23 am
Be nice to Dave, guys. I want him to still be around when prices have dropped his approximate 5% decrease for the second half of 2008 (that’ll be August), and continue on down. His spin is truly gifted, bass-ackwards but gifted. I find it hard to believe he is truly an impartial observer, too familiar with the talking points of the RE industry, and too willing to ignore refutations of his “facts”. Too literate and RE knowledgeable to be to be just ignorant and naive. Hey, Dave, be careful, you don’t actually BELIEVE the stuff you spout, do you? Do you know why SUCCESSFUL drug dealers don’t take drugs? Easy to make money selling kool-aid, but don’t drink it yourself!
August 6th, 2008 at 7:22 am
… “prices are not under as much upward pressure…”
Right. Got it, Cameron. So will we see a 1% or a 2% decline before fantasy land returns to the market?
August 6th, 2008 at 5:31 am
@ Wolfey
True dat. Rich people didn’t get rich by buying overpriced goods, be it cars, companies, consumer goods, investments, or real estate. They get rich by buying things for less than they will be worth in the future.
August 6th, 2008 at 12:14 am
The median price for a SFH detached dropped $28,500 from $527,500 in June to $499,000 in July in the FVREB (http://www.fvreb.bc.ca/statist.....200807.pdf).
For the REBGV, benchmark price of a SFH detached dropped by $12,489 from $765,654 in June to $753,165 in July (http://agentwill.com/statistic.....tatistics/ for June stats, and http://agentwill.com/statistic.....the-rebgv/ for July stats).
Soft landing? LOL. Down 28K in one month for the FV doesn’t seem like a “soft landing” to me!
August 6th, 2008 at 12:02 am
Hi John… Just so you know Iam telling the truth. Here are some Condo listings in Florida
http://fortlauderdale.condo.co.....h_Featured
http://miami.condo.com/Condo-F.....=MapSearch
http://jacksonville.condo.com/.....=MapSearch
http://palmbeach.condo.com/Con.....h_Featured
http://miami.condo.com/Condo-F.....h_Featured
Agreed some condos are overpriced but they just experienced a housing bubble that is now deflating.I ‘m sure most bull/ bears would pick these up in a snap if they were in the vicinity. Of course you would rather buy a$ 300 k plus 500 sq ft condo in downtown because we are the best place on earth.
personally i’ll take the emerald isle…pay in cash
August 5th, 2008 at 11:56 pm
B.S. Good(rich) will point to summer doldrums and an improving US economy that will bolster prices in ’09. Shall we take bets on what black swan he and the other “experts” will cite when prices are down YOY?