Good luck Grosvnor!

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In just one week many major stock markets have lost up to 10%, I defy you to find a real estate market that drops that quickly.

The average selling time for a house is measured in months, for stocks it can be minutes, it's like comparing a blue whale to a dolphin for it's turning ability. Sometimes the dolphin will turn more slowly than the whale but even a moderately quick turn by the dolphin cannot be matched by the whale.

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Best sentence I read today. Other than the misplaced apostrophe, I mean.

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I guess it doesnt matter – there will be a forced sale by the over leveraged – foreign or otherwise.

I just don't want MSM watchers bleating that it was wall street that killed vancouver's re market. And politicians calling for a foreign speculator tax.

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As far as the amount of foreign ownership of Vancouver real estate. I'll have to diagree with you there. I was involved in the purchase of an extremely large tract of land in downtown Vancouver which had some developments in-progress that we as the purchaser had to complete (I.e. projects that had already been pre-marketed and sold). The number of units sold to non-Canadian was shockingly high.

You are right that "pride of ownership" is a real factor. There is plenty of real estate that will never change hands outside of certain families because it is irreplaceable. That's not going to make much difference to general price levels when there's 10,000 too many condos in Vancouver's West side. It only takes some of the stock of real estate to change hands for prices to plummet. Capitulation happens to the few but affects the general mind set of many.

Oh and one last thought… when markets go through upheaval, they frequently overshoot the point of FMV. In the same way that markets get over-heated they also get way to pessimistic. My guess is that by the fall of 2009 people may be predicting that it will take 10 years for the Vancouver market to recover.

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- stability (owners)

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- pride of ownership, etc… (owners)

- stability (renters)

- mobility (renters)

Plus a bunch of other qualifiers to make my statement more grey and reasoned.

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Re: foreign investors

based on a landcor study posted previously – foreign investors were never a big part of the vancouver housing market.

So although in tune with the direction "we" want the housing market to move in, i don't think we should use foreign investors bailing as the main reason.

We do not need external reasons when the numbers speak for themselves – when renting is cheaper than owning, owning real estate is over valued.

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The Russian market has been shut down by the authorities after absolutely plunging this week (down 25% in a single day).

The US government has just bought 79% of AIG (the global insurnace giant) by providing an $85 billion loan all in the name of enabling an "orderly liquidation" of AIG's one trillion in assets. And that on top of the bail-out of Fannie Mae and Freddie Mac and after having issued cheques to every US citizen to kick-start the US economy.

What does this all have to do with Vancouver real estate?

Plenty.

First, it shows just how easy it is to deflate a bubble… and to do so very fast.

Second, and more importantly, Vancouver is not sheltered from the world economy. In fact, Vancouver is highly connected to the rest of the world's economies by the simple fact that surprisingly large amounts of our real estate is held by non-Canadians.

I have been a bear as regards the Vancouver real estate market for a number of years as I have watched every guy and his dog get into the development game. I have been even more of a bear when I look at the disconnect between rents and selling prices of identical units (how about investing in real estate with a cap-rate of 2) but I have wondered aloud just what would be the catalyst that would finally crash the party. Well, the devastation of the global stock markets combined with – and caused by – the global credit crunch could be just that catalyst.

Just imagine what it will be like for real estate sellers here in Vancouver if any sizable portion of the off-shore holders decided that now would be a good time to sell that Vancouver condo/house to repatriate the money back home to cover a trading loss or take advantage of the depressed price of an investment closer to home.

No-one knows for sure just how many units that have sold in the past five years have been sold to off-shore investors but we all know that it is a large enough number to be able to swamp the local market if Vancouver real estate should fall out of favor.

I get downright giddy at the thought of those same off-shore investors being "forced to sell" should they be experiencing margin calls or having bank loans called.

We could see an outright glut of real estate in our market and an outright collapse of prices.

Yeehaw.

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