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September 5th, 2008 at 11:05 am
At the end of the interview Ricky says “Bob Rennie, real estate developer.”
To which Rennie interjects: “I AM NOT A DEVELOPER!!! nnnot that there’s anything wrong with that….”
ROTFLMAOAOAOAO
September 5th, 2008 at 11:01 am
I’m actually curious how many ordinary people did make it out big this time. And I don’t mean someone who “upgraded” to a bigger house and a bigger mortgage because of paper equity.
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 10:59 am
Speaking of developers, does anyone know if Peak Ventures in whistler is any good? I know someone looking for a custom builder.
September 5th, 2008 at 10:52 am
“3.dramatic increase in available labour.”
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 10:47 am
The reason why prices have not fallen and cannot fall is because this is the best place on earth and contruction costs are still high and the rich asians know this. Pretty soon I will be quitting my job as nail gun repairman and will be a semi-retired real estate investor and real estate agent to the stars.
September 5th, 2008 at 10:46 am
Ok, The audiofile of the Tsur Somerville and Bob Wennie interviews are up at cbc’s early edition site.
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 10:41 am
Jesse,Drachen,
there are lots of sides of market issue is whether your lines worth applying on vancouver,think before you write.
September 5th, 2008 at 10:40 am
Construction costs will fall once the labourers go back to making $10/hr and the Carpenters revert back to the $33/hr range.
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 10:33 am
Dave
“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 10:23 am
Some of this dialogue is just hilarious!
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 10:18 am
“this year it has been decimated in half.”
liked that too. Worthy of Yogi Berra.
September 5th, 2008 at 10:17 am
VHB & Condohype:
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 10:12 am
“No floor on the cost of land.”
QFT. In some cases, and not just Scottish castles, the cost of land can go negative.
September 5th, 2008 at 10:03 am
Beta,
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 10:00 am
this year it has been decimated in half.
Now there’s one for the malapropism hall of fame!
September 5th, 2008 at 9:53 am
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…
3 faulty cliches in three sentences. Bravo! John would be proud.
September 5th, 2008 at 9:41 am
From a Canaccord Capital Newsletter I got today — the commentary is startlingly frank:
‘”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 9:39 am
I think the cost of construction can definitely provide a price basement.
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 9:22 am
I do believe that Ricky Cluff is married to a realtor, NOT THAT THERE’S ANYTHING WRONG WITH THAT wink wink.
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 9:20 am
ReductiMat, it would take a lot of work to provide an intelligent answer to that because are so many factors to consider.
Intuitively, I would say 10% would be a lot.
September 5th, 2008 at 9:14 am
Dave, you stated, “I don’t think construction costs can really fall that much.”
How much is the most you think they will fall?
September 5th, 2008 at 9:00 am
If you go to this link to cbc’s early edition and click on Fri you should be able to find the interview between Ricky and Rennie. The audiofile is not updated yet for today, so you have to keep trying until the technician’s get today’s version uploaded. Go CBC techies!!!
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 8:56 am
Martin, I think there is some truth to what the developer is saying. VHB, the quote provided did not state that construction prices would necessarily hold. Rather, it appears the statement was that housing prices cannot sustainably remain below replacement cost.
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 8:55 am
Hey condohype. That music makes me think of my youth. Oh Erika Ehm where are you now?
September 5th, 2008 at 8:54 am
VHB, yeah, “Pop Goes The World” was the closing music to the Rennie interview. I’ve noticed that CBC’s used it a few times following interviews with real estate people.
September 5th, 2008 at 8:42 am
I just bought another couple of assignments off of someone who obviously has no clue what they’re doing. I got both for under $5000. I’ll make a killing. This person basically gave me $100,000 easily. It’s right in East Van, perfect location.
September 5th, 2008 at 8:35 am
I watched the Olympics on TV and really enjoyed them. I couldn’t pronounce China before the Olympics let alone Beijing. That said, I have always enjoyed Chinese food, especially sushi. I am know thinking of buying a rustic Hutong (they talked all about them on the CBC coverage) and restoring it to its original character. Who doesn’t want a Hutong in Beijing? Do you think some Japanese bank will give me a motgage?
September 5th, 2008 at 8:27 am
Martin: Sorry–to clarify, you’re right the developer is bass ackwards.
September 5th, 2008 at 8:26 am
Martin: Bass Ackwards. The cost of construction is high because there is so much construction. Once construction falls off, costs will come down. As Rennie says, it’s all about supply.
September 5th, 2008 at 8:25 am
I heard that Rennie interview. My favourite part was when he said “it’s all about supply.” If only Rick could have had Mohican’s under construction graph or Mohican’s MOI graph to whip out. Oh well, can’t really do that on radio.
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 8:23 am
A prominent real estate developer recently told me that we will see a short term and shallow correction but that prices can’t really drop too far because the cost of construction has increased so much. In other words, prices can’t go below what it costs to build. Does that make sense to any of you? It seems to me the cost of land, construction materials and labour will go down as the RE market softens.
September 5th, 2008 at 8:21 am
But look, only a few months ago we couldn’t pronounce Beijing.
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 8:20 am
The fact that our downward RE cycle is starting relatively late compared to places like the U.S., Spain, the UK, Hong Kong, etc. and just as the the worldwide economic slump is worsening, I get this feeling the “correction” will be huge.
September 5th, 2008 at 8:12 am
you have to think about it? places are going on snap shot!!! the question remain same as yours,ARE YOU WILLING TO PAY?or downgrade your self in STINKY CHICKEN SHACK??hint,Interest rates are low???
September 5th, 2008 at 8:09 am
Markymark, nice point about the irony of not saving for a rainy day in a place like Vancouver, seems to be a bit of an epidemic.
September 5th, 2008 at 8:07 am
$3500/ month for a 1br in Burnaby? Thats hilarious! Are you going to rent it thumbs? Because if you are I can get you a better deal, I have a 1br in Burnaby I can rent you for twice that!
September 5th, 2008 at 7:43 am
NO DOWNTURN IN DECADES TO COME WOW!THANKS 2 IMUNE SYSTEM-IT WORKS.
*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 7:33 am
Rennie’s was just on the Early Edition with Rick Cluff. Caught the end of what he said. Here’s his take — paraphrased, not transcribed — on the impact of the 2010 Olympics on local real estate:
“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 5:38 am
yaletown sofa is nice example of the overall problem in Vancouver……..absolute greed. The company tried to grow too quickly, over extended itself and eventually found it couldn’t keep the core business going.
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 12:22 am
Greenspan is spouting it again:
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 4th, 2008 at 11:10 pm
“Co-owner Pauline Sandland, who, along with husband Zane Lowell, founded [Yaletown Sofa] in 2005, said in a telephone interview that the stores were closed only for inventory-taking. If there was no answer, staff were out getting food, she said.”
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 4th, 2008 at 11:07 pm
Drop in home sales causes economic problems
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 10:38 pm
Still anxiously waiting for Bill Good to sssemble the “real estate experts” to talk about the state of the market. They haven’t been on for quite a while now….I wonder why. I will continue to monitor and report back when they decide to come out from their hiding spot.
September 4th, 2008 at 9:30 pm
hey nutspanks! browntown is back to tell you listen up foo better call rennie resales before next leg up! real estate solid like rock! can you smell what the bdk is cooking! “lLlLlLlLlLlL” yeah!
September 4th, 2008 at 9:04 pm
Scramble for cash as central banks dry up
http://business.timesonline.co.....656321.ece
September 4th, 2008 at 8:58 pm
If you have an inventory of property you were hoping to sell for capital appriciation, you are going to loose BIG money. You wont be able to sell. Get use to those big mortgage payments and annoying tenants.
September 4th, 2008 at 8:56 pm
Millions have already been lost and hundreds of millions will be lost in Van RE before the end of the year.
September 4th, 2008 at 8:55 pm
Van RE is already down 10% from the peak in February. The graph is on the front cover of the Sun.
September 4th, 2008 at 8:54 pm
The market is dead.
September 4th, 2008 at 8:54 pm
The market is toast.