228 Responses to “Friday Free-for-all!”
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September 6th, 2008 at 4:34 pm
Global Landlord,
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 4:09 pm
Alot of people make light of John’s responses, but he makes alot of good points. There truly is an endless supply of folks from Asia AND the rest of the world who have an abundance of money to spend on our ,comparatively, cheap RE. They fall in love with our city at first sight and can’t wait to bugee jump at the Capilano river. I mean last week, I was going to shell out a few hundred bucks on a fishing guide to take me out and catch a salmon. On the way out to the river there was a guy selling them for $20 out of his truck! I saved hundreds!! Where else could something so lucky happen. If that ain’t the best place on earth, I dunno what is.
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 2:31 pm
Anonymous said:
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 2:11 pm
The bottom calling begins:
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 2:02 pm
There’s no proof weed is exported from BC to anywhere.
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 2:00 pm
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.
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 1:15 pm
Satv/Krissh/thums/browntown is that the best you can do?
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 11:54 am
Vanman,
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 11:52 am
GL is a troll. Similar sentiments exist everywhere a bubble exists. This is city and blog are not unique, and he knows it.
September 6th, 2008 at 10:51 am
GL – I’m from the UK and have seen London blogs expressing very similar sentiments to what you see here. Google away!
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 10:12 am
GL: So why the extraordinary degree of Schadenfreude apparent on this website?
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 10:04 am
GL- Vancouver has a history of ponzi scheme style asset bubbles and market crashes. We saw house values drop in half in the early eighties recession and our local stock market was notorious as the home of penny stock scams.
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 9:59 am
GL:
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 9:45 am
Patriotz:
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 9:40 am
Bulls are so trite:
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 9:40 am
Oh, forgot to add:
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 9:38 am
So why the extraordinary degree of Schadenfreude apparent on this website?
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 9:31 am
Global Landlord:
It is extraordary that you should be so concerned about the degree of Schadenfreude on this blog.
September 6th, 2008 at 9:19 am
Extraordinary.
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 8:06 am
Interesting article in the Sun this morning about Shangri-La. Says that occupancy of homes scheduled to begin in the fall with hotel scheduled to officially open in January 2009. I thought schedule was that hotel was to open first and condo’s would be completed about a year later. Can anyone clarify schedule for completion?
September 6th, 2008 at 7:47 am
http://www.theonion.com/content/atlas/
Great data on why Canada is different, John will like this!
September 6th, 2008 at 7:42 am
Lol – John, what the hell is skying? Was that skiing? I was hoping you made up an industry of staring up at the sky. Which reminds me, you forgot a one… “panhandling/squeegee-ing” one of BC’s most lucrative industries!
You’re welcome.
September 6th, 2008 at 6:58 am
Stagnate,
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 6:32 am
Anonymous,
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 12:49 am
i think we’re going to see a lot of eastern canadians go home, but a higher percentage of the immigrant population coming
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 12:12 am
This is so good it has to be seen again:
“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 5th, 2008 at 11:46 pm
So stagnate and patriotz are not moving and those who are moving they are unknown wow just wow just be on the blog you will be stone with inflation,stagflation,economy downturn,job loss and blah blah do we have doctor for these patients let me call 911 hey most of chaps please get ready for ride.
September 5th, 2008 at 11:36 pm
i think we’re going to see a lot of eastern canadians go home, but a higher percentage of the immigrant population coming. not sure how the numbers will shake out on it.
September 5th, 2008 at 11:18 pm
i can’t see population decrease happening, the economy here is weakening, but appears to be weakening accross canada and similar competing jurisdictions.
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 10:57 pm
There’s no proof weed is exported from BC to anywhere.
September 5th, 2008 at 10:48 pm
vanman, if the population here starts to decrease for any reason that will put significant downward pressure on real estate values (rents too). for now i can’t see population decrease happening, the economy here is weakening, but appears to be weakening accross canada and similar competing jurisdictions. i don’t understand the rest of your post 113 but thanks for your input.
September 5th, 2008 at 10:21 pm
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.
That is right. Think about it. Why does a new condo in Portland cost a third of a new condo here? Please don’t tell me that labour and materials is three times higher here. The argument is flawed on so many levels. The adjustment will happen, as you suggest, in LAND. Second, this is not cost plus. Building costs are NOT directly linked to market prices. What rising costs may do is discourage new construction, which will reduce supply, but given the size disparity between new construction and existing stock, it WILL NOT provide some type of price floor.
September 5th, 2008 at 9:38 pm
John, where does growing dope and gangsterism fit into your category. Bud is BC’s biggest export.
September 5th, 2008 at 9:28 pm
Vanman says
“you are telling me that Vancouver and Canada as a hole is not suffering from the ill-effects of an incoming global recession. And that we are immune.”
Vanman if you did not read today’s headlines you should have read comment #14 NO DOWNTURN IN DECADES TO COME WOW!THANKS 2 IMUNE SYSTEM-IT WORKS.*Job market rebounds as economy adds 15,200 workers in August.
September 5th, 2008 at 9:26 pm
Vancouver’s industries in order of importance
Political activism
1) Asian investing
2) Paper manufacturing
3) Nail gun repairs / forklift operations
4) Tourism
5) Hospitality
6) Beer making
7) Video games
9) Construction
10) Skying
September 5th, 2008 at 9:20 pm
Stagnate said:
the land shortage coupled with population growth is a real issue here. no one should be puzzled why vancouver real estate prices are the highest in north america. nonetheless there is a soft science component to real estate which will dictate the depth of the correction. it is interesting to see the bulls and bears out there in a frantic spin battle for the soft science component.
Me said:
Read my Kitsault report.. It’s not soft science, it’s hard science.. Remember that this town was built specifically for people who are used to the amenities of the south, available in the harsh environment of the North. It folded in the midst of the 80′s recession. When this population moved out of this town and re-populate other towns, did it bring the extreme depressed house prices back to pre-bubble heights?!?
Nope! Did it bring hope during the nasty 80′s recession at that time? Nope. Sounds like you’re way too young to remember this. But that’s ok, you’ll have your chance and you’re going to know what it feels like to be in a depressed housing market..
September 5th, 2008 at 9:15 pm
Patriotz says
“The renter is better off than the owner simply because they are paying less for the same shelter.”
That’s wrong at one time tenents are ok 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 the must apply for susdized housing or else they must leave the city or go on the street.
Moral to the story if you don’t know economy or real estate don’t make fool of your self or some one else.
Did you call him clown?hello?
September 5th, 2008 at 9:14 pm
John said:
Thankfully Vancouver is the best place on earth and is not dependent on any one industry. Add to this the large numbers of rich asian investors and you get a booming housing market which will last forever. Asia has an unending supply of rich immigrants who want to come to the best place on earth.
Me said:
Curious mind wants to know, what are the other industries that Vancouver have? You seemed to have all the info — I do to. Let’s compare notes shall we..
You first..
September 5th, 2008 at 9:12 pm
Dave said:
What do I think of it? Prices have dropped more quickly than I would have anticipated. I would have expected a greater lag time between inventory (measured as MOI) and price changes.
Pastrick just stated that we are about halfway through this correction and that things should stabalize sometime in 2009, within 6 to 9 months from now.
Me said,
Explain to me why things will stabilize in 2009? If prices continue to stabilize, then you are telling me that Vancouver and Canada as a hole is not suffering from the ill-effects of an incoming global recession. And that we are immune.
Let’s see. We are a resource based country. In a recession, people cut back on spending and infrastructure building.
So, Dave is telling us that there really is no recession in the United States, Britain and the rest of world and the 50% hair cut in the Chinese stock market is just a bloody lie, generated by computer graphics.
Good, I like this idea. No recession anywhere..
I hope you’re not smoking pot!
September 5th, 2008 at 9:12 pm
Thankfully Vancouver is the best place on earth and is not dependent on any one industry. Add to this the large numbers of rich asian investors and you get a booming housing market which will last forever. Asia has an unending supply of rich immigrants who want to come to the best place on earth.
September 5th, 2008 at 8:58 pm
Home prices will not fall below current construction costs need not look any further than Kitsault, BC, the town that Phelps Dodge built for around 50 million dollars in 1980 (250 million in today’s dollars) with new homes, apartment buildings and the works only to be abandoned after the 1982 recession and the collapse of the molybenum prices.
http://www.kitsault.com/history.html
Maybe the respondents here have a rather poor memory of the incident during the 1980s, OR many of the respondents here are young and arrogant never experienced and lived through a nasty recession type of crowd..
You guys will get your chance, yes you will get your chance.. Only the experience will teach you how to be humble and be afraid, very afraid..
Speaking of the town itself, it was bought by an India born investor for 5.7 million dollars, not even a fraction of what it’s worth in today’s dollars. Nice place though if you look at the gallery — the place is still in the 1980′s time capsule!!
September 5th, 2008 at 7:48 pm
From #105:
“The value of the company’s common stock would be diluted but not wiped out while the holdings of other securities, including company debt and preferred shares, would be protected by the government.”
This is gift from US taxpayers to shareholders and debtholders of Fannie/Freddie and is probably the biggest government handout in history.
Given the foreign detbholdings (particularly China), it’s probably one of the biggest foreign aid programs as well.
September 5th, 2008 at 7:42 pm
the land shortage coupled with population growth is a real issue here. no one should be puzzled why vancouver real estate prices are the highest in north america
Well OK, what I’m puzzled about is that Vancouver rents are the same as Toronto and way, way lower than places like San Francisco and New York. Shouldn’t the supply/demand issues affect rents too? Oh and remember all advertised rents are uncontrolled.
When’s a likely bottom? Any guesses?
Just as Vancouver RE lagged the US on the way down, it will lag the US on the way up. The BC economy is far too tied to the the US housing market.
No way are we going to see a bottom before 2011.
September 5th, 2008 at 7:31 pm
Fannie Mae, Freddie Mac to be Put Under Federal Control, Sources Say
http://www.washingtonpost.com/.....03351.html
September 5th, 2008 at 7:16 pm
r could we be on the upswing already?
no not yet if you graph the numbers will the bottom be “V” shaped or “L” shaped?
September 5th, 2008 at 6:58 pm
So when should bears make the leap? When’s a likely bottom? Any guesses? Is 2 years from now, say, Sept. 2010 too late to jump in at the best price for SFH? Could we be close to bottom then? Or could we be on the upswing already? Just trying to get my plan in order … powder is already bone dry…
September 5th, 2008 at 5:30 pm
Yes Dave, its always better to buy while prices are low instead of when they are high, but how long do you expect this market to be falling for? They’re more than two years down in the US and still falling, It looks like better deals will be popping up there before they pop up here.
September 5th, 2008 at 5:30 pm
As for the size and cost of the gestating Three Harbour Green, “That depends on what we get from buyers at Number Two,” Wong said.
“Very few Asian are buying here now,” he said. “And those that do are already local residents.”
September 5th, 2008 at 5:25 pm
I’m glad I bought at the bottom.
September 5th, 2008 at 4:32 pm
LMAO – you guys are funny.
I’m glad we can all have fun as the market collapses around us.