Friday Free-for-all!
Well it’s back to school time and the air is getting a chill to it. What’s happening in our local housing market and economies around the world?
-Drop in home sales causes economic problems
-Economic problems cause drop in home sales
-House sales in Vancouver ‘went off a cliff‘
-August ‘08: slowest month for real estate since 1998
-Yaletown Sofa closes outlets, seeks new line of credit
-Buyers see hope in Lower Mainland real estate crash
-Victoria prices slide, listings at 12 year high
-Bank of Canada holds interest rates steady
-TSX slides on oil price drops and economic fears
-Whistler shipping-container home plan collapses
-is the Florida market nearing bottom?
So what are you seeing out there? Post your news, links and anecdotes here and have a great weekend!
note: any conversation on Vancouver, real estate or economics is allowed, please keep it civilized. When posting articles please only quote pertinent points and link to the original instead of pasting the entire article here. Pasting a link will automatically create a clickable hot-link. Thanks!
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September 4th, 2008 at 8:54 pm
September 4th, 2008 at 8:54 pm
September 4th, 2008 at 8:55 pm
September 4th, 2008 at 8:56 pm
September 4th, 2008 at 8:58 pm
September 4th, 2008 at 9:04 pm
http://business.timesonline.co.....656321.ece
September 4th, 2008 at 9:30 pm
September 4th, 2008 at 10:38 pm
September 4th, 2008 at 11:07 pm
Well no, the drop in home sales is the result of an economic problem, not a cause.
The problem of course being that houses are too expensive. When house prices return to normal levels the problem will go away.
September 4th, 2008 at 11:10 pm
Out for food? That’s hilarious. You know, I went down to A&B Sound on Seymour this week. Apparently they’re “out for food” too.
September 5th, 2008 at 12:22 am
http://www.globeinvestor.com/s.....5/GIStory/
“Mr. Greenspan envisions the formation of a group akin to the Resolution Trust Corp. to step in, take a troubled company into conservatorship, wipe out the equity, impose some charge or “haircut” on its debts before guaranteeing them and then selling its assets. The RTC was created in 1989 to deal with the aftermath of the savings and loan crisis. It disposed of the assets of failed savings and loans and then went out of business.”
Utter crap. A debt is either guaranteed by the government (like FDIC deposits) or it isn’t. RTC did not compensate uninsured creditors of the S&L’s. It just distributed the net assets of the S&L’s to them.
If you loan money to a private sector entity and it can’t repay you, that’s your problem.
There’s plenty more to go after, but I’ll leave it to someone else.
September 5th, 2008 at 5:38 am
I can never knock people for trying to run their own business, but they made the faulty flaw of not saving for a rainy day……kind of seems ironic in a place like Vancouver.
The same thing is happening right now with amateur real estate investors in Vancouver who thought it was wise to take out mortgages on several units, never anticipating that the party might come to an end.
I guess all those naysayers weren’t so stupid after all.
September 5th, 2008 at 7:33 am
“I don’t think we quite understand that branding yet. But look, only a few months ago we couldn’t pronounce Beijing. Look at what’s going on in Vancouver. Everybody gets mad when I call us a world-class city. Yes, we’re not Paris… but it’s a very special place to be. Think about what happened after Expo. Going past 2010, there’s gonna be a lot of pressure that’s been unheard of.”
Condo King Bob also used the term “correction” a few times and gave a statistic about how 92% of the local population lives paycheque to paycheque.
September 5th, 2008 at 7:43 am
*Job market rebounds as economy adds 15,200 workers in August,*Rent$3500 / 1br - Brand New Live/Work Townhome in Central North Burnaby,*Yoy prices are up,*Interest rates are low sweet deals out there*job growth and*population growth through*migration,which support the*housing market, are in*positive territory,while *smart buyers and _fool sellers will be countinue ladies and gentlemen welcome to “THE BEST PLACE ON EARTH”.
September 5th, 2008 at 8:07 am
September 5th, 2008 at 8:09 am
September 5th, 2008 at 8:12 am
September 5th, 2008 at 8:20 am
September 5th, 2008 at 8:21 am
Who couldn’t pronounce Beijing? Dude! Beijing has more than 8 times the population of Metro Vancouver and more than 28 times the population of Vancouver itself. If you never heard of Beijing before the Olympics you probably don’t know the difference between the summer and winter games and are really excited about our ‘world class status’.
By the way who’s moving to Beijing or buying property there now that you’ve heard of it?
September 5th, 2008 at 8:23 am
September 5th, 2008 at 8:25 am
No wait. My FAVOURITE part was the music that was playing as they moved on to the next interview. Did anyone else catch it? It was ‘Pop goes the world’ by men without hats. (youtube)
September 5th, 2008 at 8:26 am
September 5th, 2008 at 8:27 am
September 5th, 2008 at 8:35 am
September 5th, 2008 at 8:42 am
September 5th, 2008 at 8:54 am
September 5th, 2008 at 8:55 am
September 5th, 2008 at 8:56 am
I have speculated on this before as well. With an increasing population like we have in the GVRD and with limited land available, I think the cost of construction can definitely provide a price basement.
I don’t think construction costs can really fall that much. The employment market is still strong and unemployment is low. They aren’t making more land and it is increasingly more difficult to find good places to develop within the city. The time and costs for permitting are not going anywhere. The cost of materials may ease because global commodity prices have dipped and there will be less residential construction. That said, the list of major projects planned for BC has never been higher, so there is still a lot of work on the books, which means high demand for materials and labour.
September 5th, 2008 at 9:00 am
There is also an interview with Tsur Somerville at the beginning on the news section. The interviewer starts out by saying how Tsur will tell us why it is now better to rent than own, but in the actual interview Tsur starts tripping over his tongue and reverses the point 180 degrees by declaring that renters aren’t disciplined enough to save the difference between renting and owning and therefore owners come out ahead in the longrun. Go Somerville!!! wink wink
http://www.cbc.ca/earlyedition/
September 5th, 2008 at 9:14 am
How much is the most you think they will fall?
September 5th, 2008 at 9:20 am
Intuitively, I would say 10% would be a lot.
September 5th, 2008 at 9:22 am
http://www.homelifewhiterock.ca/carolcluff/
I’ll never forget Ricky’s lament one dark moldy rainy morning last winter when he pondered out loud on the early edition “I wonder when the real estate market is going to pick up again…”
September 5th, 2008 at 9:39 am
Indeed it does, providing a city is growing (i.e. not Detroit, etc).
So how much of the price of a house is construction, and how much is land? No floor on the cost of land. And as pointed out above, construction costs, both labour and materials, fall as demand falls.
How much do you think it really costs to build a house in a soft market? Check out prices in 2001, and even then land was still a big chunk of the price.
September 5th, 2008 at 9:41 am
‘”Buyers See Hope as Home Prices Decline: August saw property markets continue dramatic turn.” - The Vancouver Sun headline story yesterday. Metro Vancouver detached home prices fell about 4.3% from May through August, while the typical apartment prices fell 3.9% and townhouse 3.2%. Greater Vancouver residential property sales activity in August dropped 53.7% from August 2007 and 47.7% from August 2006. New listings dropped 1.7%, likely a function of some sellers giving up and pulling their properties from the market. “In August, properties on average remained on the market longer than we’ve seen in recent years,” said the Real Estate Board of Greater Vancouver’s president, whose organization published the data. “As the market heads into traditionally more active fall season, we have begun to see property listings recede and prices moderate.”
Sorry, but seasonality has nothing to do with it when both August 2006 and August 2007 activity remained extremely strong but this year it has been decimated in half. Bubble psychology and unafordability is where these so-called experts should be focused on. Not seasonality, not the specious argument that the Olympics will keep the market strong until 2010, not the obvious fact that Vancouver is a “world class city” (along with dozens and dozens of others that rain less). Forbes took cap rates and then flipped them into P/E rates. The worst was Monaco at 74.07x, followed by Rome at 50.51, Paris at 37.45, Madrid at 30.30, Los Angeles at 26.88, and then Vancouver at 26.81x. This contrasts to the Canadian average of 16.31x, they found. “Vancouver has one of the lowest rental yields of any city measured, at 3.19%, despite high prices. Across Canada, despite the same tax system, the effective annualized return rate resulted in a much better P/E of 16.31x. Owners need to be aware that such a large spread
keeps the rental market strong and keeps the market for sellers more stagnant. The pool of buyers remains relatively small as renters can get the same property at significantly less cost and invest the difference.” especially if prices continue to fall.’
September 5th, 2008 at 9:53 am
3 faulty cliches in three sentences. Bravo! John would be proud.
September 5th, 2008 at 10:00 am
Now there’s one for the malapropism hall of fame!
September 5th, 2008 at 10:03 am
Don’t you see projects were coming to halt that’s mean you must pay high prices to buy otherwise no one making it any more.
When bears are whining for $737k benchmark are you willing to buy $20 millions worth of parking lot?Developers are not social workers they are willing to develop land on profit not on loss so construction cost move is null and void here.
September 5th, 2008 at 10:12 am
QFT. In some cases, and not just Scottish castles, the cost of land can go negative.
September 5th, 2008 at 10:17 am
Salespeople keep trying to pump up the volume by saying that Vancouver is just like heaven and the market should recover with or without you, but some are trying to safety dance their way out of pre-sales contracts.
Unfortunately for them buyers keep saying “I still haven’t found what I’m looking for”. Is this just a sign o’ the times? The bills remain to be paid in full and overstretched speculators may start singing “Its the end of the world as we know it”
September 5th, 2008 at 10:18 am
liked that too. Worthy of Yogi Berra.
September 5th, 2008 at 10:23 am
Prices will hold because they need to cover construction costs, haha!! So now prices will be dictated by the seller and not the market,sorry those days did exist, but are long gone! Who cares about supply and demand. It’s about construction costs! Let the developer add a little profit and overhead and bam, price set, house sold. Whatever. Fundamentals are back, I know it’s new for a lot of bulls out there because this market was acting on speculation and hype not fundamentals, so welcome to Economics 101, you’re first lesson will bite you in the A!
I got so annoyed yesterday by another huge koolaid drinker who last year stated “prices will never go down, you should look at buying a place in abbotsford or chilliwack because you’ll never afford in vancouver or burnaby”, uh huh, sure. Then yesterday told me that prices are coming down as he knew they would!!! After I picked up my jaw from the floor, I was so pissed, here’s a classic example of a sheeple trying to now use the front page of the Sun to illustrate his point, ha! Easy to go along with the crowd!
I told him, the difference between us is you make “predictions” by looking in a rearview mirror, I make them looking through my windshield. Like many of you, I have been rediculed for over a year by saying this was coming and it was inevitable, against sheeple like this guy. They scoffed and laughed and used the same old propaganda they heard on the radio and newspapers against me. Anyway, now they are all on board, f*** these sheeple don’t get it!
September 5th, 2008 at 10:33 am
“Rather, it appears the statement was that housing prices cannot sustainably remain below replacement cost.”
You have it backwards too, what you should be saying is, “Replacement costs cannot remain below housing prices.”
Construction is not three times as expensive (in real dollars) as it was 20 years ago, housing is. From that it’s pretty easy to tell that the “construction costs” argument is just a dodge by slick Willies and Daveys.
September 5th, 2008 at 10:40 am
The reason the salaries escalated so quick was due to the whole bubble (supply and demand) that led to homeless people making $15/hr sweeping.
The fact that the once highly paid but now out of work construction workers cannot afford their multiple properties, boats, and cars will not help sustain the market either.
Furthermore once the jobs which pay double and triple the historical norms evaporate some of the transient workers will move on and stop paying the inflated rents that are being charged right now.
1.falling rent.
2.falling income.
3.dramatic increase in available labour.
4.drop in all commoditiy prices.
5.signifigant increase in available units for sale.
6.a lot of unemployed wanna be realtors like Dave sitting at the coffee shop spouting off on blogs that everything is fine.
This will mean developers will go bankrupt and owners of these inflated assets will collectivelly absorb the massive losses just like the rest of the world.
Try and spin it any way you want Dave but you’ll be back working as a parking attendant in a year
September 5th, 2008 at 10:41 am
there are lots of sides of market issue is whether your lines worth applying on vancouver,think before you write.
September 5th, 2008 at 10:46 am
Go to http://www.cbc.ca/earlyedition/
click on Fri
Somerville is at
3:40
Wennie is at
1:20:45
September 5th, 2008 at 10:47 am
September 5th, 2008 at 10:52 am
That’s so funny when idiot don’t know the retiring age.
“1.falling rent.”
I wish that’s true but it’s totally apposite
“2.falling income.”
Did some one say vancouver is not a new york?yes when it comes to pick pocketers stealing your salary vancouver is not a new york.
“5.significant increase in available units for sale.”
what happened to Raffle,Elan,Spectrum etc. isn’t that was same idiot telling other the same story.
I BDK……confirm i will be cheering up in 2010 just like the rest of the world thanks every one have good weekend.
September 5th, 2008 at 10:59 am
September 5th, 2008 at 11:01 am
I mean someone who was smart enough to buy plenty when it was cheap and sell it all at the top and retire with all the REAL money they made on this insanity on some island somewhere…
How many REAL millionaires did this boom create?
And I’m not counting the real estate agents or developers. Just ordinary homeowners turned speculators.
September 5th, 2008 at 11:05 am
To which Rennie interjects: “I AM NOT A DEVELOPER!!! nnnot that there’s anything wrong with that….”
ROTFLMAOAOAOAO
September 5th, 2008 at 11:05 am
Are you one of those idiots hired by RE industry to pollute local blogs with your drivel?
September 5th, 2008 at 11:18 am
Personally I’d advise you to ignore any superstore warehouse worker with no comprehension or common sense if I were you. Even the Vancouver Sun called him an idiot!
September 5th, 2008 at 11:19 am
September 5th, 2008 at 11:29 am
September 5th, 2008 at 11:31 am
Incomes and supply overhangs cannot adjust fast enough to price in higher construction costs. Buyers have lots of other choices in the meantime. Your fight is obviously with the new reality, not bloggers like Drachen and me.
September 5th, 2008 at 11:32 am
why sell at list price if you are so confident?
retard
September 5th, 2008 at 11:34 am
“smart enough to buy plenty when it was cheap and sell it all at the top”
The word you’re looking for is not “smart”. Warren Buffet is a smart investor, you won’t catch him riding a bubble like that.
Is it “smart” for someone to gamble their life savings in Vegas and win a million dollars? Bubble speculation is gambling, make no mistake, the only difference is that nobody breaks your legs when you cheat the game.
September 5th, 2008 at 11:36 am
Haha, that’s funny, even for you, john. Give me the bear discount and I’ll go above asking.
September 5th, 2008 at 11:40 am
Seriously? It doesn’t matter whether they save the difference or spend it - the renter is getting what they want from their money. It’s a consumer choice. The renter is better off than the owner simply because they are paying less for the same shelter.
What a clown.
September 5th, 2008 at 11:49 am
Of course they are. What do you think a highrise is?