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 5th, 2008 at 10:57 pm
September 5th, 2008 at 11:18 pm
A decrease is unlikely, but the historical pattern is that during recessions BC’s population growth slows to virtually zero. The main reason is that BC has among the most transient populations of any province (Alberta is like this too) and during hard times people stop coming and many from elsewhere go home. Better to be with your family and friends when times are tough - especially when you can live in their basement.
Given the disproportionate size of BC’s RE sector today, a halt in population growth would be even more damaging for employment and RE prices than in past recessions.
September 5th, 2008 at 11:36 pm
September 5th, 2008 at 11:46 pm
September 6th, 2008 at 12:12 am
“Real Estate Predictions for 2007″ done in 2006. I laugh at the smugness of the two Real Estate champions….I wonder if they feel stupid now?
http://www.youtube.com/watch?v.....re=related
September 6th, 2008 at 12:49 am
This has not been the case in the past, and I don’t see why it would be the case in the future. In fact immigration drops off Canada-wide during recessions, and it’s not hard to understand why - people are going to be more reluctant to move if they’re going to have trouble finding work.
I also think the recession will hit BC harder than any other province which I think will lead to a decrease in BC’s relative intake. This was certainly the case in the mid-80’s when BC was hit much harder than Ontario.
September 6th, 2008 at 6:32 am
The “No Downturn In Decades To Come” mantra seemed to be sung by a lot of people when boom times were close to busting. Remember Harry Dent, the author of the DOW the roaring 2000s and how he predicts no downturn in decades to come for the internet boom of the century. That wasn’t that long ago — say about 10 years ago!! In the 1990s, Mr.Dent forecasted the DOW to reach up to 35,000 to 40,000 by the year 2000 and beyond (we are now at 13,000). Recently, he forecasted the DOW to be 20,000 in 2009. The guy never gives up — if you are wrong, you keep forecasting your numbers lower to make it look like you are right all along.
What Mr. Dent had demonstrated is the difference between extreme optimism (No Downturn For Decades mantra) and extreme pessimism. Extreme optimism is always followed by extreme pessimism. That’s simply human nature. Just look at our Boxing day sale with hoards of people lining up, each wanting and clamoring on top of each other trying to get bargains, with the believe there are bargains out there. But then, you look at the returns line the next few days and you see people with buyer’s remorse, returning items they don’t need, because they bought them based solely on emotion. This cycle exists for centuries.
I read somewhere that there were a larger proportionate of millionaires created after the great depression, or following any major recession. Our last nasty recession in the 1980s had brought some people’s lives for the better. It certainly did for us with our Kelowna investment. In a recession or depression, people with cash has a better position in terms of bargaining power compared to those who borrowed heavily in the boom times. In a recession, banks will only loan money to people with a good credit history — those for borrowed heavily earlier in the boom times would probably had their credit history shot coming into the next recession. And recessions of any asset class market typically last for a very long time. During the late 60s to early 80s, the stock market virtually ran flat and the real estate market of the early 80s after the crash and during the recession period was flat and gloomy. The best times to buy any asset class is when people shows “EXTREME PESSIMISM” . When I see articles depicting that our economy will be in the doldrums for years, RE will stay low for years, then people with cash will begin to consider deploying their cash reserve to buy. People with no cash and no prospect of borrowing money from the bank has no way to buy cheap property during a downturn.
This is the same deal happening with major US corporations and the Nasdaq. They are down, but nobody’s buying lots to prop them up as high as the late 1990s.
September 6th, 2008 at 6:58 am
Basically what I’ve illustrated on post #113 was that, population grows on top of existing population because of the prospect of jobs. But population growth alone is not a harbinger of inflated asset prices to come either.
If you look at the Great Depression of the 1930s, there were a lot of transient migrants moving from states to states prospecting for work, but it did nothing to the local real estate market. Most of these migrant workers had lost all their savings through either a RE or stock market crash, so they are in no position to buy properties even if prices are so cheap.
BC is no different. Our economy is booming with construction related work that entices people elsewhere to come here. But are these affluent migrants who bring with them a load of cash? Not so as some studies had found. In fact, studies upon studies had shown that new migrants bring less and less of their capital savings, unlike the immigrants of the earlier decades.
But what population growth brings is the potential for banks to loan money to new clients. What happens today is that, people does not need cash to buy a home. In fact, when we went out to buy our new van off the car lot many years ago with cash, apparently this is a foreign concept to the salesman. He thought we were joking.
We were not. In fact, he said he had rarely seen someone buy a $50,000 car with cash in Vancouver — though his deduction of this logical could be flawed. Nonetheless, it is very uncommon for people to have that much cash around to buy a car off the lot. What’s the most common outcome for most people is they buy the car with little or no down payment and then finance the rest through credit.
So what do you need?!? You need people, lots of people to do this. Increased population growth is a harbinger of easy credit like car dealerships, because apparently the days of people buying a car in full with cash is over.
What controls the individual power to get credit? It’s is through the credit agency like Equifax or Transunion. They keep detailed records of you, score you and analyze you.
You need a new population of people with good credit to buy things. That what population growth means to us these days — new lines of credit to tap into. Suckers to fool to get into mortgages and car loans that they pay beyond their means.
Make no mistakes. A recession does not depress debt nor deflate debt. Even if asset prices fall, debt don’t. If the population that borrowed this debt can’t pay it back, then the credit history of that population will be toast. It will take years for them to rebuild the history again, so even if you have a huge population of distressed people moving into another community with better job prospects, you are not going to save the other community’s asset prices either. That’s my post #113 and that is happening in the US right now. People do move often in the states for jobs, but you can’t raise home prices if these people who are moving have shot to hell credit history..
September 6th, 2008 at 7:42 am
You’re welcome.
September 6th, 2008 at 7:47 am
Great data on why Canada is different, John will like this!
September 6th, 2008 at 8:06 am
September 6th, 2008 at 9:19 am
I had heard about this website from some colleagues here in the London. I was highly sceptical when they described the level of ill will towards, and mockery of, home buyers on this board and had to see for myself.
Markets rise and fall. Some people buy homes in which they intend to live for many years and could care less about short or long term value trending. Some people buy homes to speculate and lose or win. This is no different to when people buy shares, bonds, precious metals or art. Some people get lucky in markets and some do not.
So why the extraordinary degree of Schadenfreude apparent on this website? I am unaware of this degree of bitterness and vitriol towards investors in any other asset class in any other market. I would be very interested to know what underpins this sentiment in Vancouver?
Best wishes
GL
September 6th, 2008 at 9:31 am
It is extraordary that you should be so concerned about the degree of Schadenfreude on this blog.
September 6th, 2008 at 9:38 am
Because of the Schadenfreude dished out in the other direction for the past half dozen years - from the owners against the renters.
What goes round comes round.
September 6th, 2008 at 9:40 am
If you think this sentiment is unique to Vancouver, you haven’t been looking very hard.
Try this for a start:
http://thehousingbubbleblog.com/index.html
September 6th, 2008 at 9:40 am
One sees what you have done there. Brilliant.
Perhaps some of your more enlightened chums might care to answer my query more substantively.
September 6th, 2008 at 9:45 am
Understood. Similar issues here in London but not anything like the glee when markets turn.
And I have not been, nor do I intend to, seek similar examples of such attitudes. Just curious about the nature of the beast in Vancouver.
Thanks.
September 6th, 2008 at 9:59 am
2 points:
1. RE is the end all be all over here
2. If you have any questions see point #1
September 6th, 2008 at 10:04 am
The difference between real estate bubbles and something like the tech bubble is that when people speculate on homes it affects local families directly. Compared to a city like London incomes in Vancouver are very low. Most people here live with a negative savings rate, so even a small fluctuation in house prices can drive some into bankruptcy.
Those that see prices as over-valued get frustrated when it seems so obvious comparing rental prices to home prices that its all speculative. There are a lot of people here that just want to buy a home to live in and sometimes express their dismay angrily when so-called experts say things like ‘nobody could see this correction coming’ when it should have been obvious to anyone with an understanding of 5th grade math.
September 6th, 2008 at 10:12 am
Hello old chap: I’m sure that when you take some time to read through the blog the answer will come to you.
p.s. How many “investments” do you have in British Columbia, if you don’t mind my asking? And where would they be located? What was the purchase price and what is the current value, if I may be so bold? Do you have investments in London, too, and how are you faring with them?
September 6th, 2008 at 10:51 am
Also, I’ve never been very bitter, mostly because I feel confident my shrewd maneuvering through this bubble will have set me up for life.
September 6th, 2008 at 11:52 am
September 6th, 2008 at 11:54 am
seems like you like to see downturn and recession only that’s why you had skip from real estate to tech,dow,nasdaq and vanmansharemarket.
I have notice some student riding sky elevator in p.n.e. they were ok going up screaming while coming down but happy at the end of ride they were all fine and safe.
It’s about real estate here specially vancouver real estate next year vancouver out of gvrd aren’t you living in the best place i am proud to call you the best vanman on earth just drop your tech,nas,dow,catch the r.e.wagon right away.
September 6th, 2008 at 1:15 pm
Even when you try you’re still an illiterate fool and you still haven’t brought a single relevant point except incoherent rambling about how affordability, calculators and supply and demand don’t matter because you think it’ll continue upwards forever.
Your points are about as valid as the crazy junkies that hang out in front of TV towers.. actually you’ll make a lot of friends once TV towers opens because that place is homeless junkie central!
“the best time to buy is when the market peaks and I really believe it” Thumsup
September 6th, 2008 at 2:00 pm
There was no huge rise in unemployment, or interest rate hikes when the bubble burst in the US.
There was no economic shock to Alberta when the slide started.
And we are in the early stage of a massive crash in Vancouver, without high unemployment.
When you get a bubble bursting just as the economy is getting sluggish- well that’s when the 50% price drop in prices may be just the BEAR minimum.
September 6th, 2008 at 2:02 pm
judging by the price some have been willing to pay for tiny condos all indications are the majority of it is smoked right here.
September 6th, 2008 at 2:11 pm
Helmut Pastrick of Central 1 Credit Union (formerly Credit Union Central of B.C.) says home prices are down roughly four to 5% from their peak earlier this year.
“I’m saying a 10% decline from top to bottom, from peak to trough,” he said. “It could be more, I’m not ruling that out at this point.”
Pastrick said he therefore expects a similar drop of at least 5% on top of what has occurred so far before prices stabilize some time in 2009.
“I think it will continue for another six months and potentially 12,” he said of the declines.
http://www.bclocalnews.com/tri.....89594.html
September 6th, 2008 at 2:31 pm
seems like you like to see downturn and recession only that’s why you had skip from real estate to tech,dow,nasdaq and vanmansharemarket.
I have notice some student riding sky elevator in p.n.e. they were ok going up screaming while coming down but happy at the end of ride they were all fine and safe.
It’s about real estate here specially vancouver real estate next year vancouver out of gvrd aren’t you living in the best place i am proud to call you the best vanman on earth just drop your tech,nas,dow,catch the r.e.wagon right away.
I say,
It’s interesting when people brings up the word “Schadenfreude”.
Let me get one thing straight.. We do not enjoy seeing other people suffer from their misfortunes or buying distressed properties from them either. In contrast, we like helping people through UGM (United Gospel Mission) using our modest profits by putting kids through summer camp. We believe that giving them the confidence and the tools necessary to survive in the society is better than giving money straight.
I was broke once, sold most of my cherished possessions to others at discount prices — I used to call them vultures. Now, when we buy distressed shares or properties from financially challenged people, we are called vultures.
We are all adults ladies and gentlemen! We all make choices, whether they are right or wrong, it is your choice and you need to accept it. By accepting the choice in defeat is the only way to move forward. Recessions are in a way a method of cleansing the weak, so the strong will survive. Do you think for a moment that Warren Buffett is a nice guy?
Yes he is in a sense that he will buy out businesses that are profitable, but selling at depressed prices. He buys when it’s cheap. Do you think he’s going to be nice to shareholders that bought at the top and needs to be compensated in full? Our government, however, subsidizes weak businesses to artificially keep workers employed. Japan does this often and look where it brought them. It is this artificiality of the economic cycle (the boom cycle) that will eventually collapse.
It is not too uncommon that a lot of people had made money during a recession or a depression. History will bear this out, but we know we are not the only ones in BC. There are way many smarter investors out there, probably lurking here to gauge the sentiments of the current RE market.
September 6th, 2008 at 4:09 pm
Think about it, once global warming kicks into 2nd gear, rising water levels will make most of the land in the Fraser flood plain virtually inhabitable… making even LESS land to live on in the B.P.O.E. and skyrocketing prices along the way.
I do have an issue with John’s industry of Vancouver list. Political activism is mostly done on a volunteer basis, placing it far behind ecstasy manufacturing on the list.
September 6th, 2008 at 4:34 pm
That’s like the pot calling the kettle black.
UK’s housing bust has just started and will get pretty nasty over the next few years.
Have you seen all the blogs and websites with so-called ill-will towards homebuyers?
Don’t paint us with one brush.
99% of the folks here may have ill will towards the speculators and flippers.
We have nothing against J6P who got swept up in the storm, especially in the past 2 years or so.
I, for one, hope the deflation happens gradually.
A lot of lives and families will be crushed RE continues at it’s current pace (4.3% in 3 months!).
September 6th, 2008 at 4:36 pm
I meant negative 4.3% in 3 months.
September 6th, 2008 at 5:22 pm
12
d_oush Says:
November 29th, 2006 at 10:16 am
Why does anyone even care what is happening in the US market? They are a different country, We are not them.
Its as simple as that.
September 6th, 2008 at 5:24 pm
Sales=price up
price down=no sales
Price up =lots of seller
no buyer
Price down=lots of buyer
No Seller
people sell to make profit if there is no profit who will sell
September 6th, 2008 at 5:37 pm
September 6th, 2008 at 6:00 pm
Vanman,Shelter is one of the necessary tool as well now if some one jump in to say we can rent it then please jump to comment #114.
“in the next run they must increase their income according to market condition otherwise they must down grade them self and if they are unable to find affordable place they must apply for subsdised housing else they must leave the city or go on the street.”#114
September 6th, 2008 at 6:13 pm
according to the Landcor data out of country buyers constitute 2.7% of all buyers…. this includes rich Haitians and wealthy Bulgarians ….grasping at straws methinks
September 6th, 2008 at 6:21 pm
Q1.
“Real estate crashes do not necessarily require a recession.There was no huge rise in unemployment, or interest rate hikes when the bubble burst in the US.”
A1.
That’s right in usa but there was alternate reasons for the crash as threat and threat of natural disaster got connected with subprime
Q2.
“There was no economic shock to Alberta when the slide started.”
A2.
That’s right but there are other reason that can make you lough that was extreme accelration of 89% in 2006,59% in 2007 while accelration in vancouver is only 10-15% that’s supported by the real math.If i was one of the buyers that time in alberta i should have proudly discount the next buyer atleast 59% and how much slash are you talking about?did you say 10% please smile you are on vancouver condo.
Q3.
“And we are in the early stage of a massive crash in Vancouver, without high unemployment.”
A3.
You can grasp some point from answer 1 and 2 that would be answer 3.
Q4.
“When you get a bubble bursting just as the economy is getting sluggish- well that’s when the 50% price drop in prices may be just the BEAR minimum.”
A4.
I wish you were employeed and resident of usa.
September 6th, 2008 at 6:50 pm
http://vancouvercondo.info/for.....3&t=48
September 6th, 2008 at 7:11 pm
http://www.youtube.com/watch?v=dbI5K0AzNHI
September 6th, 2008 at 7:15 pm
http://www.youtube.com/watch?v.....re=related
September 6th, 2008 at 7:30 pm
If you think buying assets at firesale prices is cruel, by all means, lead by example and pay book value for them — there are a few condos on sale right now at book value. Wait any longer and the poor owner will be in the red. Lead us down the glorious path of righteousness, good shepherd.
September 6th, 2008 at 7:52 pm
“According to Battistella, active listings on the MLS (multiple listing service) of concrete buildings built in the past five years is around 80 per cent, and the standing inventory of finished, but unsold, units is something like 60 per cent.”
oh boy its started
the great calgary condo crash has begun
September 6th, 2008 at 7:55 pm
September 6th, 2008 at 8:09 pm
because calgary has so many stupid and uneducated realtors and stupid spec buyers the city has done this
posted signs to stupid people to stay away as we have our share already
please carry on to regina..they are running out of land there..its gonna be the next new york city
September 6th, 2008 at 8:18 pm
Dear Lord, thank you for this meal I am about to receive…
Dude’s gotta eat, after all.
September 6th, 2008 at 9:34 pm
http://www.andrewhasman.com/ActiveListings.php
September 6th, 2008 at 9:41 pm
http://www.malcolmhasman.com/index2.html
September 6th, 2008 at 9:42 pm
Brittanny
September 6th, 2008 at 9:43 pm
Who, apart from people directly employed in RE (realtors, construction) and speculators who are betting their futures on RE? RE has always been a boom and bust industry and these people have to take the bad times along with the good.
If you’re talking about people who bought at inflated prices, either they can afford the price they paid or they can’t. If they can’t, it’s they’re own fault. If they can, they thought the property was worth what they paid at the time they bought, so what difference should it make how much someone is willing to pay them for it in the future (i.e. the market price)? I don’t care how much someone is willing to pay me for my car.
You’re also talking as though the upcoming RE bust is some act of God like an earthquake, when of course it’s a direct consequence of the inflated prices, which are due solely to buyers being willing to pay them. IOW the bust is the fault of the buyers.
September 6th, 2008 at 9:46 pm
September 6th, 2008 at 9:56 pm
Edmonton Real prices down more than 15% and Calgary’s Nominal prices down more than a few percent:
http://cuer.sauder.ubc.ca/cma/.....algary.pdf
http://cuer.sauder.ubc.ca/cma/.....monton.pdf
So there, Brittany!
September 6th, 2008 at 10:08 pm
Thums up2 ——- Dimwit ala maximum
September 6th, 2008 at 10:12 pm
September 6th, 2008 at 10:23 pm
nope..they are all failed individuals that can do nothing else.. basically unemployable losers..watch out mcdonalds employees they will gunnin for your jobs soon
i wouldnt trust them in my home..do you ?
September 6th, 2008 at 10:40 pm
Nobody in England actually throws that many clichéd “englishisms” into such a short space. Whoever wrote that has been watching too many Grey Pupon commercials.
If you actually wanted an answer GL, it’s because the housing bubble negatively impacts our lives. Most of us here would like to buy but cannot afford to lose a half million dollars or so to depreciation and we’re sick and tired of waiting for affordable housing.
It is not however the only investment that causes this kind of anger though, market speculation in food crops has been partly to blame for the food crisis and rioting in places like Haiti (you won’t see us throwing a Molatov Cocktail through Rennie’s windows any time soon as much as we’d like to). Energy speculation nearly destroyed California’s economy and is behind the spike in Oil prices, both of which caused much anger (and would cause a lot more anger if there was more awareness, but it’s easier to hide than housing I suppose)…
Last of all, the Schadenfreude you mention belongs to the speculators. When the market falls it is good for most of the people, bubble markets will only ever benefit a small handful of people. We have nothing to be ashamed of, desiring circumstances which benefit the many over the few.
September 6th, 2008 at 11:32 pm
You hate realtors, who nobody is forced to use; a fact you fail to acknowledge because your hatred gives meaning to your pathetic lives.
You hate developers, without whom we wouldn’t have homes; or do you three think houses just arise out of primordial muck, to be anointed by city planners?
You hate construction workers, without home your parents’ rat-infested basement would not get built in the first place, much less repaired or renovated.
You have a pathological hatred of a group of people. Just as an exercise, replace “realtors,” “developers,” or “construction workers,” with “Irishmen,” “women,” or “handicapped people,” you get the idea.
You’re sick.
If you think for a minute that a collapsing real estate/construction/renovation sector is anything but a disaster for the wider economy - and your meager standard of living - you’re not very smart, either.
September 6th, 2008 at 11:59 pm
A collapsing RE sector is exactly what BC needs. This province needs to get back to a positive savings rate and an economy based on tradable goods and services, not a debt-based Ponzi scheme.
So do the US, UK, Ireland, Spain, etc, need I add.
September 7th, 2008 at 12:06 am
I’ve wondered the same thing on this blog and received an equivalent amount of emnity in responses. Lately though it seems that the posts have gotten less arrogant from the bears as I think a few of them are beginning to clue in to the reality that economics does not discriminate by a buyer’s personal buying strategy. The conceit of Vancouverites, bull and bear is about to face a new global economic reality that I daresay will knock them down a few notches on the bragging pole.
September 7th, 2008 at 12:22 am
Oh it doesn’t does it? You mean I’d be in the same position today if I’d put all my money in Nortel shares in 2000 versus putting it in, say, Potash Corporation?
What planet are you from?
September 7th, 2008 at 1:31 am
Gee, that sounds kinda…hateful.
You hate realtors
You say that like it’s a bad thing.
You hate developers, without whom we wouldn’t have homes; or do you three think houses just arise out of primordial muck
True. Before developers, people were forced to live in muck. Dry-cleaning bills were horrendous.
You hate construction workers
No, I once was one, but I could start to hate them if you think I really should…
You have a pathological hatred of a group of people.
Don’t hate the haters. They’re victims too.
Just as an exercise, replace “realtors,” “developers,” or “construction workers,” with “Irishmen,” “women,” or “handicapped people,” you get the idea.
LOL. Really LOL. I’m still chuckling after reading it again.
And I already disliked Irishmen, because I tried that Irish Spring soap and it dried out my skin.
You’re sick.
Doc, your bedside manner needs work.
If you think for a minute that a collapsing real estate/construction/renovation sector is anything but a disaster for the wider economy - and your meager standard of living - you’re not very smart, either.
Actually, my job — unlike your own in the RE industry — is recession proof. Bring on the apocalypse, I want to buy a bunch of second-hand trucks, Harleys, and plasmas on the cheap.
LOL. All the trolls have become moralists. Too funny.