Friday Free For All!
Every Friday we do an end of the week news round up here at http://vancouvercondo.info and have an open topic discussion to share thoughts on the local market and global economy. Anything related to real estates and economics is welcome. Here are a few stories I’ve noticed this week to get us started:
-Politics and the Vancouver affordability crisis
-Agent Wills Realty Reality check
-Vancouver auto thefts on the rise
-Steeper drop in Canadian house prices
-The Canadian deflation threat
-National Bank: US faces year long recession
-Bush concerned about financial crisis
-30 Year deregulation era dies sudden death
-Financial crisis enters dangerous new phase
So what are you seeing out there? Post your news, links, thoughts and anecdotes here and have an excellent 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!
RSS 2.0 comments feed. Both comments and pings are currently closed.
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patriotz Says:
September 19th, 2008 at 3:12 am
http://thetyee.ca/News/2007/07/09/BubblePop/
This article is worth reading a year later. See Somerville make a complete jackass of himself. He can’t even get his facts straight – he claims there were no nominal declines from 1994 to 2001, when the data at his own business school clearly shows otherwise.
But while Somerville expects to see a lower rate of price increase, he says, “Nobody credible has predicted a price decline.”
“This is the biggest national bubble that the US has seen in over a century.” This is “not a sustainable situation,” claimed Shiller. Then he directed his attention to Vancouver. The bubble was especially extended in “glamour cities and glamour vacation areas,” he warned, and “Vancouver is the most bubbly city in the world.” – April 26,2005.
Instead, prices could become “sticky.” “People are reluctant to lower prices, so instead, they just let them sit.”
What a strategy! Just don’t drop your price and the market won’t fall! How come nobody tried that south of the border?
And scroll down and read the brilliant rebuttals by working slog and incredulous.
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Dave Says:
September 19th, 2008 at 6:40 am
He can’t even get his facts straight – he claims there were no nominal declines from 1994 to 2001, when the data at his own business school clearly shows otherwise.
If he said 1993 instead of 1994, his statement would have been correct.
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van-zee Says:
September 19th, 2008 at 7:57 am
I’m in awe of the mess in the stock market and the reactions that are taking place. Van real estate is too slow, for entertainment the stock market is “where the action is”. Late night emergency meetings or banning short selling oh man it’s got it all. What happens next, who knows?
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Phil Says:
September 19th, 2008 at 8:00 am
Wow, the US has gone for the mother of all bailouts. An open cheque to the banks who are losing on housing, the price tag could be hundreds of billions up to “unlimited”.
Could a scenario like that unfold in Canada? How would you feel about paying income tax if you knew it was going towards the banks who were willing players in the housing bubble?
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Michael Randallbard Says:
September 19th, 2008 at 8:00 am
“Capital must protect itself in every possible manner by combination and legislation. Debts must be collected, bonds and mortgages must be foreclosed as rapidly as possible. When, through a process of law, the common people lose their homes they will become more docile and more easily governed through the influence of the strong arm of government, applied by a central power of wealth under control of leading financiers. This truth is well known among our principal men now engaged in forming an imperialism of Capital to govern the world. By dividing the voters through the political party system, we can get them to expend their energies in fighting over questions of no importance. Thus by discreet action we can secure for ourselves what has been so well planned and so successfully accomplished.”- USA Banker’s Magazine, August 25 1924
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Thums up2 Says:
September 19th, 2008 at 8:10 am
RECORD BREAKING FALL OF LISTING
New MLS residential listings in August fell 22 per cent from July on a seasonally adjusted basis, the second largest month-over-month decline in 25 years.
RECORD BREAKING FALL IN UNEMPLOYEEMENT RATE
It doesn’t matter what political parties you belongs to but you can not ignore this single fact that unemployement rates are 33 year low.
RECORD BREAKING LOW INTEREST RATES
Very simple to say interest rates are low
ROCK SOLID REAL ESTATE PERFORMANCE(VANCOUVER)
As seen on tv news papers etc global economy collapse same time there was and there is one and only option and that is vancouver real estate vritually poised to stand tough even in economy or real estate down turn.
SOLUTION AND RESULT FOR VANCOUVER
“THE BEST PLACE ON EARTH”.-rentsareupandcoming
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crabman Says:
September 19th, 2008 at 8:21 am
Come on, thums, you’re not even trying any more.
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RJB Says:
September 19th, 2008 at 8:28 am
You can’t even call bullshit by shorting financials thanks to the SEC. This is going to drag on for a decade if they keep trying to maintain the fiction.
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oziijjiizo Says:
September 19th, 2008 at 8:34 am
from maggie chandler:
http://tinyurl.com/5djfjn
Many people who have below a 620 beacon score, may have challenges finding mortgage financing in the near future. After Oct 15, at least one applicant on a high ratio mortgage application MUST have a minimum 620 beacon score at all insured lenders.
the next leg down!
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Anonymous Says:
September 19th, 2008 at 11:14 am
no bailout for canadian banks:harper
Farham, Que. — Stephen Harper is urging Canadians not to panic in the face of the U.S. financial crisis and continue spending on consumer goods to keep the economy humming.
“Canadian consumer spending has been a rock that has sustained this economy and we anticipate that this will continue,”
see… bears have it all wrong… all that saving is not going to help… he says we should be spending more … pardon me while i gag
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Bubble Lad Says:
September 19th, 2008 at 11:15 am
from (un)real estate’s blog:
http://www.theglobeandmail.com.....hColumbia/
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YLTNBoomerang Says:
September 19th, 2008 at 12:29 pm
Ah hah!
I posted a couple weeks about some odd price raising in a couple townhouses, in particular, v710116 (now v732147). This dog started at 635,000 then went through multiple small price drops to 594,900 in August before re-listing in September at 659,900. I called WTF and speculated that they were prepping for another drop but wanted it to look bigger… wait for it… tada! Now listed at 549,000.
Nice job trying to fake a 65,000 price drop John Samus (the agent)http://www.johnsamus.com/ I particularly like his line “You never get what you deserve, you get what you negotiate… do not wait to buy. buy then wait”
I’m thinking of setting up a viewing for the place, make him think I’m really serious, eat up a bunch of his time, get the owners antsy, see if he’ll reveal the pricing history, if not, I’ll “discover” it myself and tell him what he can do with his tactics…
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bdk Says:
September 19th, 2008 at 12:33 pm
So where did that Tool Jay Banks go?
Speaking of wasting someones time by requesting showings.
Who better deserves it than some ignorant and arrogant tool who taunted the bears weeks before the market started tanking as bad as the rest of the bubbliest cities in the world?
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james Says:
September 19th, 2008 at 1:39 pm
Realtards totally hate it when people do that so I’d say it’s a good plan.
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Dave Says:
September 19th, 2008 at 2:20 pm
YLTNBoomerang… I guess the realtor’s time is more valuable than yours.
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crabman Says:
September 19th, 2008 at 2:49 pm
California’s unemployment rate 1 year ago was 5.5%. Today, mainly because of the housing crash, it is 7.7%!!! I remember a year or two ago calculating that the decrease in unemployment in Vancouver since 2001 was almost entirely due to construction.
To all the bulls who say “prices can’t go down because the economy is strong”, I would say “the economy will weaken because the housing market is tanking”.
http://wwwedd.cahwnet.gov/Abou.....200809.pdf
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Dave Says:
September 19th, 2008 at 3:04 pm
I would say “the economy will weaken because the housing market is tanking”.
The housing market is not ‘tanking’. It is undergoing a mild correction and will likely level off sometime next year.
The total value of major projects on the books in BC has NEVER been higher. In fact, it continued to grow in the last quarter. Even if some of those projects don’t go ahead, it is still a lot of work on the books. You also need to consider the aging demographics of the construction industry. Unemployment rates in construction can remain stable even in the face of decreasing total employment.
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Anonymous Says:
September 19th, 2008 at 3:08 pm
so I guess your bet is that sometime next year, prices will be in line with fundamentals? (ie: historic income/price, rent/price ratios?) If so, that would probably constitute a good ‘tanking’ in my book.
I say throw on more residential construction projects in the lower mainland. More condos. More homes. More townhouses. That pesky law of supply and demand will kick in at some point.
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Mr. Market Says:
September 19th, 2008 at 3:37 pm
“The housing market is not ‘tanking’. It is undergoing a mild correction and will likely level off sometime next year.”
How will it “level off”? Which of the causes of the current price declines will vanish “sometime next year”?
You sound like hot air to me.
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gah Says:
September 19th, 2008 at 3:38 pm
Man I wish there was a way I could make money of people like Dave’s mistakes….
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womp Says:
September 19th, 2008 at 3:47 pm
What the heck are you even talking about Dave? “need to consider the aging demographics of the construction industry”?? “even if projects don’t go ahead it’s still a lot of work on the books”?
Great! I just shored up the economy by booking 16 condo buildings to be built on my block. Magic!
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oziijjiizo Says:
September 19th, 2008 at 3:51 pm
The housing market is not ‘tanking’. It is undergoing a mild correction and will likely level off sometime next year.
mild being no more than 5%+/- off peak prices (April 2008)
otoh Sept 08 “correction” may be -5% YOY
all by itself….
whistling past the graveyard Dave…..
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Dave Says:
September 19th, 2008 at 4:01 pm
Anon… A recent study completed by housing experts at UBC put Vancouver prices at about 10% above fundamental valuation levels. Prices are moving down at a rate of about 1% per month. If we assume prices bottom out at this fundamental valuation and the rate of decline stays constant, then yes, we can expect prices to bottom out next year. This expectation is also consistent with other housing economist predictions.
But, nominal declines need not fall that amount as inflation can increase fundamental values over time. If we assumed 2% inflation per year, then nominal prices could remain at current levels and fundamental values would naturally catch up.
Mr. Market… The law of supply and demand will tell you that lower prices result in lower supply (i.e. less people selling) and lower prices stimulate higher demand (i.e. more people wanting to buy). Thus, the current price declines naturally change the dynamics of supply and demand. No other factors need to be changed. If you look at past housing cycles, you will see that bull markets add growth over a period of 6 to 7 years, are followed by relatively fast (12 to 18 month) corrections and finally by flat markets (~5 years). We are about 5 months into this correction. Thus, the expectation of level prices next year is reasonable when compared to past trends.
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MickeyFinn Says:
September 19th, 2008 at 4:03 pm
It is amusing that Dave uses the following quote in support of his argument that the housing market is not tanking:
“The total value of major projects on the books in BC has NEVER been higher. In fact, it continued to grow in the last quarter.”
In my thinking, that very fact is the single biggest reason why the real estate market in Vancouver is going to collapse so sweetly into its own black hole like a certain 150-year-old Wall Street investment bank.
For about the past five years there has been a mania of contruction in the Lower Mainland which has resulted in our current bubble. Included in the past five years sales has been a certain degree of speculation. Adding thousands of additional housing units onto the pile over the next couple of years sounds to me like a recipe for a collapse in prices.
In the Southern US the oversupply of houses was driven by financially unrealistic credit practices. Here in Vancouver the oversupply looks like it will come from the success of past speculation and the fact that developers working individually in the pursuit of profits will collectively oversupply the market.
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Dave Says:
September 19th, 2008 at 4:19 pm
MickeyFinn, I agree with you in that markets tend to overproduce at times of rising prices. I also agree that housing construction will likely drop off. The only question in my mind is to what extent. The supply of new homes on the market is still low relative to levels experienced in the past. Developers will respond to lower prices by delaying developments while they get their costs under control. Some of the newer small players will likely leave the industry as they only survived via rising prices. The long term developers know how to make money in a flat market and will continue to build. That much, I can guarantee you.
The list of major projects is not limited to residential housing construction. It covers all types of projects including industrial, commercial, institutional and government. Have a look at it yourself. It also only includes projects over $15 million, which ignores a huge portion of the construction market (e.g. your plumber).
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Anonymous Says:
September 19th, 2008 at 4:27 pm
Dave and John are just jokers guys, relax
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Dave Says:
September 19th, 2008 at 4:27 pm
MickeyFinn, you should also consider the rate that the Lower Mainland population is growing, which is about 37,500 per year.
In just three years, that adds up to the entire population of Port Moody, North Vancouver and Mission combined. That’s a lot of real estate!!!
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visio Says:
September 19th, 2008 at 4:37 pm
Dave,
I don’t know what you are on, but i would like double of that, probably make my dreams sweater and the reality lighter. Maybe the same stuff you’re smoking can be used to buy the 8 houses in one block on the street i am currently renting. I don’t know about the UBC experts you are quoting but one thing for sure is that the school in BC is not that good as the locals believe. You get your own conclusion, but ir won’t be a mild correction. 30% down will look like a breeze 3 years from now, when the bottom will be at aroun 50%
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MickeyFinn Says:
September 19th, 2008 at 4:37 pm
I may be drinking my own bath water here (because I am hoping to buy a home in Vancouver after the melt-down) but in addition to what appears to be a freight-train of supply barreling down the tracks at the hapless Vancouver condo speculators, I am convinced that the residential real estate pricing model in Vancouver is out of sync with reality.
This is anecdotal, but I was recently looking at condos in The Tapestry complex on 12th and Heather in Vancouver. It’s a nice looking building with a great location and the suites have a style reminiscient of mid-century modern. The project completed in February and when I was looking in July there were still tons of units being rented by the speculators that had bought them (and who had taken possession like five months earlier). What was immediately apparent was the fact that the rents did not justify the price of the units. The implied returns suggest that the only justification for owning one – as an investor – is the promise of future capital appreciation. But capital appreciation does not seem to be in the cards. Therefore, it seems to me that the prices have to drop and substantially so in order for the economics to make sense.
It also seems to me that capital is free to move around the globe pretty easily these days. So why invest in a condo in Vancouver with a cap-rate of like “2″ when you could invest elsewhere in Canada, or the U.S. or anywhere else for that matter and make a significantly greater return.
From my own personal experience, anytime people start reciting a mantra of reasons as to why basic economic principles – such as the need to earn an appropriate risk adjusted return – no longer apply it is time to head for the exit.
As more and more investors recognize that they should be hitting the exit attempt to do so then the fun will start. People get just as pessimistic on the way down as they get optimistic on the way up. You’ve heard of irrational exuberance… well, I am looking forward to irrational despondence.
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Anonymous Says:
September 19th, 2008 at 4:42 pm
Did anyone else read this at Maggie’s site? Interesting…
“Most expensive False Creek North condo is the Penthouse at 1000 Beach, now down to $14,800,000 from $18,200,000. Least expensive $334,500 for a 530 sq-ft l bedroom. Too many list price reductions to count!”
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Greely Says:
September 19th, 2008 at 4:46 pm
Right Dave, and before you know it there will be nothing but buildings where there were trees, river, salmon, bears etc. We will still have the rain though…making it the sh*tiest place on earth.
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bdk Says:
September 19th, 2008 at 4:49 pm
Well said Mickeyfinn.
Why pay $489,000 when it can be rented for $1550, not only do you save $2,000 per month you avoid a $250,000 haircut.
Also since that building is so heavily speculator owned you have to wonder if the maintenance will be performed, if it isn’t the new home warranty is void!
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Anonymous Says:
September 19th, 2008 at 4:50 pm
Dave are you buying any units at tapestry?
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oziijjiizo Says:
September 19th, 2008 at 4:56 pm
Dave are you buying any units at tapestry?
No Dave is heavily invested in
“W” An intellectual property
you know be bold or move to the burbs…..
with a soft landing and plateauing prices
it is all good!
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browntown Says:
September 19th, 2008 at 5:04 pm
hey slappys! browntown see a lot of construction but no land making machine! when housing only can build up, the bottom is in! call maggie today she likes nuts!
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crabman Says:
September 19th, 2008 at 5:20 pm
Dave,
If you’re going to listen to an economist, why not listen to someone who has actually been correct about the dot-com and RE bubbles? Robert Shiller called both correctly, and says that “Vancouver is the most bubbly city in the world.”
http://www.theglobeandmail.com.....ry=shiller
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Anonymous Says:
September 19th, 2008 at 5:23 pm
Browntown are you buying at todays prices or are you going to wait for the prices to drop 50%?
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Anonymous Says:
September 19th, 2008 at 5:24 pm
The bubble is building in “glamour cities and glamour vacation areas” in the United States and Canada. Ominously, Prof. Shiller says that “Vancouver is the most bubbly city in the world.” He says that city has a history of volatile housing prices but he doesn’t see the same level of bubbliness in the rest of the country’s housing market.
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Dave Says:
September 19th, 2008 at 5:27 pm
Has Schiller ever been to Vancouver? What makes him the authority on our local market as opposed to the local economists who have followed and lived in our market for years?
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Montery Says:
September 19th, 2008 at 5:45 pm
Dave, with all due respect, I think the fact that Schiller hasn’t been drinking the Koolaid in Vancouver makes his assessments of our economy based on facts and critical thinking, rather than hype, drugs, and wishful thinking.
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buff_butler Says:
September 19th, 2008 at 5:45 pm
Its funny that dave totally disregards people that dont agree with him. To be a good investor you need to consider both points of view but also ask why they are proposing that point of view. There is a simple perspecive that everyone has motivation for any action.
So if you take american news as an example. The news has a local vested interest to report crap to the people where as say overseas organizations may have the opposite. A similar reasoning can be applied to your local eonomists. Especially because local economists are typically polically motivated.
As this whole thing worsens the media (and dave
lol) will continue to “revise” there negative predictions.
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Strataman Says:
September 19th, 2008 at 6:14 pm
Dave “as opposed to the local economists who have followed and lived in our market for years?” Which to me means they know next to nothing if like shiller they had made pronouncements on the American Market and been even a bit right might make some differance. Local “experts” are probably the stupidist people on earth…in case you don’t know it Dave! nothing in this world is local ABSOLUTELY nothing. Rule of thumb (heh heh thunbs up) if it’s a LOCAL expert then you know the person is ignorant…if it’s a local expert that is well known in far flung countries then pause to consider their opinion. If they are not easily IDENTIFIABLE like Shiller example LA TIMES quotes well known economist from Sauder UBC as to market then just shut up and admit the LOCAL experts are also very loco!
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Anonymous Says:
September 19th, 2008 at 6:49 pm
“MickeyFinn, you should also consider the rate that the Lower Mainland population is growing, which is about 37,500 per year.
In just three years, that adds up to the entire population of Port Moody, North Vancouver and Mission combined. That’s a lot of real estate!!!”
And they’ll all be rich asians in search of the best cafes downtown!!!! woo hoo!!!!
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womp Says:
September 19th, 2008 at 7:00 pm
If only there was a “Dave” market where I could listen to whatever Dave recommends and then do the opposite.
Oh wait – there is! It’s called Real Estate… and I am.
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betamax Says:
September 19th, 2008 at 7:20 pm
“Has Schiller ever been to Vancouver? What makes him the authority on our local market as opposed to the local economists ”
He does research that isn’t funded by local developers.
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North Van Stats Says:
September 19th, 2008 at 7:31 pm
Dave,
Actually, the population of North Van is over 120,000…. so that annual increase in population is about a quarter of the population of North Van alone…. you’re a tool.
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browntown Says:
September 19th, 2008 at 7:42 pm
hey betamax! so developer want phony data for real moneys? almost as dumb as comment 46! quarter of north van coming here, all going to rent in tv towers! ha ha hey womp! dave say buy next year, so you will buy now? or rent for five year crash! dumbnuts!
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Dave Says:
September 19th, 2008 at 7:47 pm
45,165 for City of North Vancouver
http://en.wikipedia.org/wiki/N.....bia_(city)
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Dave Says:
September 19th, 2008 at 7:58 pm
100 people each and every day!
http://www.suntaijiquan.com/Ta.....om_Day.JPG
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Dave Says:
September 19th, 2008 at 7:59 pm
The City of North Van has 45,000 people.
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Anonymous Says:
September 19th, 2008 at 8:36 pm
“The City of North Van has 45,000 people.”
and the district?
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Thums up2 Says:
September 19th, 2008 at 8:43 pm
“Vancouver is the most bubbly city in the world.”-
38Anonymous,
He is not saying it anymore because we don’t make it anymore in vancouver,stop calling shiller for help,he is stuned by threats,Charlie,Katrina,and now IKE jolt him big time.
$6 billion storm? Ike delivers economic punch the bang hit *Lehman* we don’t make disasters in Vancouver that’s how professor learn’t his lesson.
22 oziijjiizo,
there was almost 18% month over month drop In port moddy area because of extreme acceleration upward in the past but over all gvrd specially vancouver droping nothing except listings.
Crabman,
If you need a job go anywhere you will find this notice everywhere,help wanted,now hiring,boom is over still hiring?why?.and most of those notices are not for construction industries isn’t it funny,Crabman?
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Thums up 2 Says:
September 19th, 2008 at 9:12 pm
Actually folks I’ve been having you on for the last three years.
I am not a retarded warehouse worker who bought three properties I am just a bored 19 year old female and I am so ugly I can’t get a date so I troll with the 4chan crew.
what’s 4chan? well we go to websites and ask or say really dumb things to inflame the blowhards in the group.
I know the market is overvalued byt a ratio of three to one, do you really think I’m so dumb and would consider homeless people to raise my children? It’s true I have sex with homeless men but that is because I am so ugly I cannot do any better, hey you have to admit that the part about thinking that we were running out of land was good wasn’t it?? I saw that in a newspaper clipping from the last bubble in 1981.
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DonkeyXote Says:
September 19th, 2008 at 9:16 pm
Dave: “The supply of new homes on the market is still low relative to levels experienced in the past.”
Can you provide a reference pls?
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scooter Says:
September 19th, 2008 at 9:30 pm
Hey Thums up 2,
Care to supply a picture?
I’m really curious just how ugly you are…
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BDK Says:
September 19th, 2008 at 9:41 pm
Sure scooter there you go http://in.youtube.com/watch?v=0HOsYThzR08
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Drachen Says:
September 19th, 2008 at 10:07 pm
“Can you provide a reference pls?”
Dave doesn’t need references, he just goes with his gut. Truthiness is his thing.
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Drachen Says:
September 19th, 2008 at 10:12 pm
So, here’s a list of Dave’s predictions:
1) Prices will not fall until after summer.
Wrong.
2) Prices will not fall more than 5%
Already past 5%
3) Inventory will peak in summer.
Still going up!
4) Inventory at the end of september will be lower than in mid June (19,500 or something like that).
20,578 and rising, we’d need to lose a huge amount of listings at the end of the month for him to be even close.
So Dave, you’re quite the authority on the subject aren’t you? Why should we listen to the head of the Yale economics department and the top bubble economist in the world when we’ve got Dave?
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Anonymous Says:
September 19th, 2008 at 10:30 pm
“Dave Says:
September 19th, 2008 at 5:27 pm
Has Schiller ever been to Vancouver? What makes him the authority on our local market as opposed to the local economists who have followed and lived in our market for years?”
Why don’t you go fuck yourself?Or let the realtors fuck you?
You whore!
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draken Says:
September 19th, 2008 at 10:39 pm
I predicted market would crash by 70% I think my wife will be more angry with me. I like cartoons.
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Anonymous Says:
September 19th, 2008 at 11:15 pm
Anon… A recent study completed by housing experts at UBC put Vancouver prices at about 10% above fundamental valuation levels.
The “expert” is the same guy that didn’t get his facts straight in Sommerville’s quote. Second, the study used some interesting methodology by assuming that past appreciation will continue into the future.
You also need to consider the aging demographics of the construction industry.
Do you have stats on construction worker demographics, or are you making this up? You seriously think that the consequences of a SHARP reduction in building will be mitigation by natural attrition?
Has Schiller ever been to Vancouver?
Yes, he was in Vancouver when he made the statement. It was a bit of an off the cuff remark, however.
What makes him the authority on our local market as opposed to the local economists who have followed and lived in our market for years?
Because:
Unlike them, he understands basics such as price/rent price/income. Second, unlike other local experts, he is not directly tied to the real estate industry and can call it as he sees it.
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freako Says:
September 19th, 2008 at 11:17 pm
Sorry, that last one was mine.
And the first part should read:
The “expert” is the same guy that didn’t get his facts straight in Patriotz’s first post, Tsur Sommerville.
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MickeyFinn Says:
September 19th, 2008 at 11:37 pm
It’s all fine and well for us to consider who is or who isn’t an authority when it comes to predicting where the real estate market is heading. But expert opinions aside, there is an unpredictable factor which has a huge effect on real estate prices and that issue is “sentiment.” Just like in the stock market it is critical to understand the overall market sentiment. Sometimes market sentiment can confound expert predictions.
It’s hard to deny that the current sentiment in Vancouver’s real estate market is bearish. That sentiment is exemplified by the fact that Vancouver’s real estate buyers appear to have gone on strike. Simply put, nobody is buying.
Guess what happens when the buyers go on strike? The market starts to fall. It’s gradual at first but eventually sellers realize that if they actually want to sell their property they need to lower the price.
That is what we were seeing back in May and June as listings rose to multi-year highs and sales declined by the week. The market sentiment had changed. Now we are seeing price reductions all across the board and yet the buyers are still on strike.
This is just speculation on my part but I think that the buyers collectively “smell blood.” In the stock market there is a saying which goes something like, “don’t try to catch a falling knife.” In other words, if you see that the market is in decline don’t be hasty in your decision to buy just because the price has fallen… because, it may continue to fall a lot further. Better to wait until it has made a bottom and/or is on the way back up.
On a gut instinct basis, I sense that the buyers will remain “on strike” and prices will continue to drop… the falling prices will in-turn create a self-fulfilling prophecy as the buyers realize that the longer they wait the further the market will fall. Likewise, sellers will feel an urgency to sell as they see their equity disappearing the longer they wait.
I’ve been tracking the total listings of single family homes on Vancouver’s west side for th past number of months and they are climbing again right now. As of tonight, there are 988 sfh listings on Vancouver’s west side… and I believe there were 48 sales in August. Looks to me like the buyers are on strike and the vendors are going to have a long wait to sell their properties.
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kafka Says:
September 20th, 2008 at 1:10 am
With most of people living in vancouver having come from third world countries having seen nothing better and the remaining having never travelled beyond Hope, there is no wonder you guys keep calling vancouver the best place on the earth. Eventually if you repeat smth long enough you will convince yourself that it is true.
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Bluesman Says:
September 20th, 2008 at 5:45 am
Yesterday I phoned a man who is trying to rent a house near 57th and Granville that he bought this year. The house had been for sale last year and finally sold in the spring of ‘08. Then it sat for several months with the dandilions growing up on the lawn. Soon a “For sale” sign went up a few months ago. Now there is a “For Rent” sign.
So I asked the guy if he was wanting to lease it or rent it out month to month. He said month to month because he might be building a new house there. SO I asked him why he is waiting. He said because he can’t build now because he is afraid that the new house might not sell so he might build in the Spring. He said that is when the Bank of Canada will be setting the interest rates and if they go down he will build. OK.
Then I asked him if he actually thinks the market will pick up in the Spring. He said there are only 20,000 new units being built in Vancouver and there are 38,000 people who immigrate here and yes, he thinks the market will go up for that reason.
I informed him that there are almost 21,000 listings already on the market and 20,000 will be added within the next year or so and 20,000 not 38,000 are typically sold per year.
He started to cough and choke. It was sad. He said his wife is a realtor in Surrey. I asked so M. W. (the realtor who sold him the house) is your wife? No, she is a friend, he replied.
Some “friend”.
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Bluesman Says:
September 20th, 2008 at 5:51 am
This is the house I was referring to in my previous post. I see it is still on MLS even though the “For sale” sign on the lawn has been replaced by a “For rent” sign.
http://www.realtor.ca/property.....Id=7416798
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Bluesman Says:
September 20th, 2008 at 6:04 am
Correction: the house referred to in my previous posts is on OAK St. and 57th.
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Dave Says:
September 20th, 2008 at 6:16 am
DonkeyXote, here is the reference:
http://cuer.sauder.ubc.ca/cma/.....couver.pdf
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Dave Says:
September 20th, 2008 at 6:24 am
Bluesman, where do you get your 20k number? Since 2002, sales in GVRD have been above 35,000 units.
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Bluesman Says:
September 20th, 2008 at 6:51 am
I took the 20,000 sales number from PaulB’s site. Just add up the SFH, Attached, and Condos for 2008 to date and you will find that 19,000 sales have taken place so far to August. The sales for Sept-Dec. for 2007 were approx. 7,000, so take half of that and you will find the total for 2008 will be approx. 20-22,000 odd sales.
Also, if you look at PaulB’s charts of Months of Inventory, you will find that there are is a minimum of 10 months of inventory for Greater Vancouver areas, and if you take the total inventory for Greater Vancouver now, which is almost 21,000 you will find that comes to 20-22,000 units sold for the whole year of 2008.
So I maintain that yearly sales for 2008 will be no more than 22,000 units for PaulB’s area which is based on reports by the REBGV.
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Bluesman Says:
September 20th, 2008 at 6:59 am
For any new people who read about this (Pope’s) site in the Georgia Straight you must visit PaulB’s website where he reports the actual stats for Sales, Listings, Avg. and Benchmark prices, etc. for Greater Vancouver and North Vancouver.
Here is his site. Just follow the link below. Do not let people like Dave and other realtors give you a snowjob, folks. In other words, DO NOT BE CAUGHT WITH YOUR PANTS DOWN! As Warren Buffet says, when the tide goes out we’ll see Dave is swimming naked
hee hee hee
http://www.northshorepropertie.....aPageId=10
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Dave Says:
September 20th, 2008 at 7:00 am
I see. You didn’t mean to use the word ‘typically’. Levels above 30 – 35k are more likely ‘typical’.
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Bluesman Says:
September 20th, 2008 at 7:06 am
2002-2007 were NOT typical years, Dave.
Snowjob, anyone?
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Patiently Waiting Says:
September 20th, 2008 at 7:10 am
Bluesman,
Another well built 60 year-old house that has a date with the bulldozer. Very sad. What replaces it will not be built with the same quality wood and workmanship.
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Dave Says:
September 20th, 2008 at 7:15 am
The average of the last 13 years is 31,000. I think that qualifies as a better fit for ‘typical’ than your methodology does. Not only that, our population has been steadily growing so ‘typical’ for the next 13 years will be higher than the last 13.
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Bluesman Says:
September 20th, 2008 at 7:23 am
Link?
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Dave Says:
September 20th, 2008 at 7:29 am
http://www.bcstats.gov.bc.ca/d.....ut/mls.pdf
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Bluesman Says:
September 20th, 2008 at 7:31 am
Patiently Waiting: I don’t think you need to worry — what are the chances that the bulldozer will actually show up for the “date”?
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Bluesman Says:
September 20th, 2008 at 7:48 am
Thank you, Dave! You have provided evidence that median Greater Vancouver Residential sales from 1995-2001 were 22.9K per year and median sales jumped to 37.9K during the BOOM (easy credit) years of 2001-2007.
2008 sales are down to 22,000 again (See PaulB’s site). Can anyone say BOOM BUST?
So, there you have it folks. The facts are right there in front of you. Do you think the BOOM will continue? Do you think a BUST will follow the BOOM?
As the population of Greater Vancouver increases do you think that the number of houses for SALE will also increase maintaining the sell/list ratios in future years?
Hey, I’m just a Bluesman and even I can figure it out. What about you? Are you going to base your financial future on the snowjobs or the facts?
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DonkeyXote Says:
September 20th, 2008 at 8:03 am
Dave says:
DonkeyXote, here is the reference:
http://cuer.sauder.ubc.ca/cma/data/Unso … couver.pdf
That graph of inventory is only up to 2006.
I don’t think you’re taking this discussion very seriously. Sad, because you could probably make a much more useful contribution.
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Bluesman Says:
September 20th, 2008 at 8:04 am
How Credit Got So Easy
And Why It’s Tightening
“When a technology stock and investment plunge and the Sept. 11 terrorist attacks pushed the economy into recession in 2001, the Fed slashed interest rates.”
http://online.wsj.com/article/.....89581.html
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Thums up2 Says:
September 20th, 2008 at 9:03 am
“Because:
Unlike them, he understands basics such as price/rent price/income. Second, unlike other local experts, he is not directly tied to the real estate industry and can call it as he sees it.”
But it did not show up in the stat this shiller topic is boring anon it’s been processed without loss.professor called vancouver bubbliest city in 2005 and this is end of 2008 buddy.Do you know the difference between average price compare to 2005,please do the math and tell the result to shiller and vhb.
Bluesman,
What fact?are you kid or something?do you think posters over here are idiots that they don’t know how much sales have been processed through mls?
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Bluesman Says:
September 20th, 2008 at 9:15 am
Could someone please make a visual bar chart of the following and post a link to it? Thanks
Residential Home Sales of Greater Vancouver:
Pre-Easy Credit (typical sales):
1995 – 22,900
1996 – 28,500
1997 – 26,900
1998 – 19,600
1999 – 22,900
2000 – 21,200
2001 – 28,100
Median (22,900)
During-Easy Credit (atypical sales):
2001 – 28,100
2002 – 34,900
2003 – 39,000
2004 – 37,900
2005 – 42,200
2006 – 36,500
2007 – 38,900
Median (37,900)
Post-Easy Credit (typical sales):
2008 – 22,000
Will 2009 show higher or looooooower sales than 2008?
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MickeyFinn Says:
September 20th, 2008 at 9:24 am
The US housing boom crashed because it was driven by unsustainable financial conditions and expectations.
The unreal “condition” was inappropriate lending practices. Easy money that fueled irrational buying decisions.
The unreal “expectation” was that price escalation would go on forever… even when it bore no connection to the basic principles of economics.
It could be argued that the Vancouver market run-up of the past five or six years has also been based on unsustainable conditions and expectations.
First, a surprisingly large amount of the sales of new condos/townhomes over the past many years has been to off-shore investors and local speculators. That is likely unsustainable as there appears to now be a sudden cooling of demand from speculators. The hype of waiting in a line-up overnight to grab a couple units in the next great money printing real estate machine known as a “condo development” seems so long gone now.
Second, the unsustainable expectation was that prices could just keep going up. And, if prices cannot keep going up then it is economic suicide to invest in Vancouver real estate when rents and base prices are out-of-sync the way they are. What kind of rental return would an investor require if the rent also has to compensate for falling base prices?
In the U.S. South there are a lot of businesses that used to depend on the growth in housing which are now hurting real bad. The contraction in the U.S. new housing market has itself caused part of the further contraction.
It seems to me that we will likely witness a similar thing here in Vancouver. The slow-down won’t be evident for awhile yet though as all of the developers race to complete projects which they have started and which they will be desperate to complete as fast as possible… so that they can off-load the units before the crash. Methinks it’s already too late though as the music has stopped.
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MickeyFinn Says:
September 20th, 2008 at 9:29 am
Bluesman, are those the stats for “new home” sales or just “all sales” because I thought I saw somewhere that completions of new home in the REBGV for 2009 and are forecast at 33,000 units with a similar number forecast for 2010?
If there is that much new product coming on-top of the existing inventory then this is gonna be fun to watch.
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Bluesman Says:
September 20th, 2008 at 9:31 am
MickeyFinn:
When the number of GV residential sales goes from 38,900 in 2007 to almost HALF (22,000) in 2008 I would definitely say THE MUSIC HAS STOPPED. Just don’t be the one left without a chair or you will fall on your a**.
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Anonymous Says:
September 20th, 2008 at 9:32 am
MickeyFinn: The numbers are for all residential sales. LOOK OUT BELOW!
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Bluesman Says:
September 20th, 2008 at 9:42 am
That last one was me.
So yes. There are 21,000 units of inventory. In 2008 there will have been about 22,000 sales. Add the new inventory of say 20,000 and you have an inventory of 41,000 in 2009 and sales of ?????
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Thums up2 Says:
September 20th, 2008 at 9:58 am
Bluesman,
you are such an idiots after bundel of your post you did not delever the message because you are not sure what to make out of your gibberish,do you have guts to say that prices will fall because of slow sales say it then you will get punch on your idiotical head,not before that dum head.
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bdk Says:
September 20th, 2008 at 10:04 am
Dave why are you here?
You get shot down 100% of the time, no one is buying your crap and you look like a fool.
Do you really think you can fool anyone here, with the exception of the troll, thums?
You’re in good company
Dave the troll (and his stupid wife) and thums and his many personalities are single handedly going to buy all 21,000 units available now and the next 10,000 that are going to hit the market just in time because there are a bunch of fools planning to sell to rich asians before and after the Olympics which’ll coincide nicely with the evaporation of construction jobs.
But don’t worry those out of work construction workers will pay $20,000 a month to rent studios downtown even though they aren’t working because this is the best place on earth.
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Bluesman Says:
September 20th, 2008 at 10:05 am
Look here for starts/completions/under construction. As of May 2008 there were more than 26,000 units under construction and 20,000 starts. Add to the mix new listings by the general public and 2009 is going to be a wild ride. Hang on to your hats, folks!
http://langley-financial-plann.....r-cma.html
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bdk Says:
September 20th, 2008 at 10:06 am
“thums up is an idiot” Dawood Ibrahim
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Anonymous Says:
September 20th, 2008 at 10:16 am
Bluesman, very nice job. You even managed to get Dave to provide your numbers for you. Very cool.
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Dave Says:
September 20th, 2008 at 10:20 am
Shot down? Hardly. I called BS on the ‘typical’ comment and backed it up with real world data. Only one year had less than 20,000 sales, which was the suggested ‘typical year’. The real estate cycle is 13 years and the average level of sales is 30k. If you want to try and put a number on ‘typical’, then that’s as good as it gets.
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Anonymous Says:
September 20th, 2008 at 10:40 am
bdk,
after 1.5 year of defeat you are still trolling for response,Go ask that dum head to deliver a message out of his garbage
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Anonymous Says:
September 20th, 2008 at 10:42 am
“Shot down? Hardly. I called BS on the ‘typical’ comment and backed it up with real world data.”
unfortunately for you your own data bit you in the butt.
come on, even your “experts” have been saying the past few years were not “typical” and we are now returning to “normal”. I know it’s hard to keep your stories straight when facts complicate things, but this is too funny.
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crabman Says:
September 20th, 2008 at 11:22 am
If you look at persons/unit in Vancouver it is around 2.1 IIRC. So if you have 38,000 new residents per year, you would need about 18,000 new housing units per year. Throw in a few thousand vacation homes and I would say 23k/year sales would be normal, and the recent 38k/year is wild speculation and excess supply.
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MickeyFinn Says:
September 20th, 2008 at 11:25 am
London real estate is tanking.
Other European centers – notably all of Spain – are also experiencing dramatic declines in real estate.
US residential real estate continues to fall unabated.
Real prices are softening in virtually all of Canada.
Yet, Vancouver still has prices that are out of line with rents and I would argue which are also out of line with affordability.
Why would anyone believe therefore that the Vancouver market is not about to drop?
I would suggest that those who disagree with the above logic are over-invested in Vancouver real estate and are hoping that by saying out loud that Vancouver is “different” that somehow local prices will stay aloft.
Yes, there are lots of people who move to BC and they need housing… but that does not mean that they have the financial wherewithal to pay for over-priced real estate. Nor does it mean that rents have to rise. If rents rise, people will move to locations where the cost of living is more acceptable.
Vancouver real estate prices got out-of-whack with reality. They are now in the process of falling. My prediction is that they will fall hard and fast. It may take until the fall of 2009 but it will be worth the wait.
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Dave Says:
September 20th, 2008 at 11:34 am
Crabman, that’s a good start at getting a baseline for sales. But you can’t ignore the volume of first time home buyers and people moving up in the market. That adds up to a pretty large number!
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Bluesman Says:
September 20th, 2008 at 11:39 am
Simple question for Dave:
If population and first-time homebuyers and rich asians are INCREASING then why did sales for 2008 DECREASE to half of sales for 2007?
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betamax Says:
September 20th, 2008 at 12:00 pm
Dave would better spend his time and energies by looking for a new career. But don’t worry about educating him — the market will take care of that, as he will feel the downturn more keenly than anyone else here.
Sales are already half of last year, so he’s feeling it already, but denial is seductive as it feels infinitely better than fear or outright panic. But the problem with it is it keeps him from making the right decisions now, which means more pain later. C’est la vie.
Dave will disappear soon enough.
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Dave Says:
September 20th, 2008 at 12:00 pm
Population is still increasing, but first time home buyers haven’t been a factor for a few years now. First time buyers have been priced out of the market but will come back once the correction is through and prices stabilize.
Why have sales dropped? I believe sales have dropped from a combination of economic uncertainty (e.g. US economy, high gasoline prices) with low housing affordability.
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Gadwin Says:
September 20th, 2008 at 12:07 pm
We’re setting record inventory every day now. We might even get to 21K inventory this month. And sales/listings are getting hammered badly.
We are in meltdown mode now and the problems in the U.S. will send us down even further.
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Bluesman Says:
September 20th, 2008 at 12:13 pm
This is my lucky day. Mohican just posted the completions/starts/underconstruction at his website.
We have 27,000 units under construction, 20,000 starts, and 18,000 completions. Add these numbers to the 21,000 inventory we already have, plus the homes put up for sale by the general public (61,000 between Sept/2007 and Aug/2008 although some were listed twice or more)and you get drumrollllllllllllllllllllll 147,000 listings coming on in the next few years. and how many sales? (22,000 per year) Don’t shoot the messenger.
http://tinyurl.com/2dopy9
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Bluesman Says:
September 20th, 2008 at 12:24 pm
Simple question for Dave: If first-time buyers have been priced out of the market why have sales for 2001-2007 been double what they were between 1995-2001?
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Bluesman Says:
September 20th, 2008 at 12:41 pm
Correction: Simple question for Dave: If YOUR EXCUSE FOR THE DROP IN SALES FROM 38.9K IN 2007 TO 22K IN 2007 IS BECAUSE first-time buyers have been priced out of the market FOR A FEW YEARS NOW, why have sales for 2001-2007 been double what they were between 1995-2001?
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Bluesman Says:
September 20th, 2008 at 12:42 pm
should read 22K in 2008.
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Mr. Market Says:
September 20th, 2008 at 1:03 pm
Dave,
How much has your income fallen so far in 2008 compared to last year. You post so often, you can’t be working much. Lack of sales hurting?
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Anonymous Says:
September 20th, 2008 at 1:10 pm
Dave: When do you expect sales to bounce back to 38,900 per year from 22,000 per year and what are your explanations for this particular prediction of yours?
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Anonymous Says:
September 20th, 2008 at 1:24 pm
After two months of lukewarm summer, today Vancouver officially welcomed another 10 months of rainy season.
How could Asian millionaires resist? How could ANYONE not be fatally attracted to practically year-round cold wet rain?
“Best place on Earth” – IF YOU ARE A DUCK!!!
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Dave's Therapist Says:
September 20th, 2008 at 1:32 pm
Bluesman: Obviously sales will bounce back when a) the economy bounces back, and b) gas prices go down back to $30 per barrel. Didn’t you read Dave’s explanation for sales dropping? What the hell is wrong with you? We have the population growth but without a, b and first time buyers there is no chance of sales bouncing back. Now leave Dave alone and quite posting so much. You and the other people are getting on Dave’s nerves.
Why have sales dropped? I believe sales have dropped from a combination of economic uncertainty (e.g. US economy, high gasoline prices) with low housing affordability.
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Bluesman Says:
September 20th, 2008 at 1:47 pm
Sorry, Dave.
http://www.slv.vic.gov.au/leda.....2382.shtml
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luddite Says:
September 20th, 2008 at 1:54 pm
Am a luddite that don’t post much. Like Mark Twain, am resigned to E is E , W is W, the news shall never match.
1. Construction building up is good, when external migration to BC is roughly 40k a year.
2. Home ownership amongst immigrants are very high 90% may be.
3. Average net assets of each immigrant family unit start at $2M
4. FINTRACT is mainly to monitor drug money, thus it cannot stop non-drug related money laundering.
Prove that I’m wrong. I’m all ears and here to learn.
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Anonymous Says:
September 20th, 2008 at 2:05 pm
Luddite:
It is up to YOU to provide evidence for why, given your claim of 40,000 rich immigrants coming to BC per year, only 22,000 units sold in Greater Vancouver this year. I am assuming all 22,000 units that were sold went to the rich money-laundering immigrants according to your theory. What about the other 18,000 immigrants? Why did they not buy a place, luddite?
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womp Says:
September 20th, 2008 at 2:29 pm
Bluesman – the answer for your questions to Dave is simple: fairies. Or leprechauns. Obviously, some magical creature will be working behind the scenes to make all the logic and facts go away and make Dave’s posts make sense.
Unicorns?
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Anonymous Says:
September 20th, 2008 at 2:51 pm
“3. Average net assets of each immigrant family unit start at $2M”
ha ha ha ha ha ha ha!!!!!!! is that US, canadian, or Zimbabwean dollars???????????????
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arit Says:
September 20th, 2008 at 3:23 pm
Urgent need help,
Hello all, OUT OF TOPIC need some help here:
On our way back from camping we stopped at noon today at the Chilliwack heritage center.
We watched the horses and headed back for Richmond, forgetting our main backpack with EVERYTHING inside, both wallets especially.
I called the center , but the offices are closed on weekends, eventhough the center is open.
I called the Chilliwack police, but they can’t promise anything.
I called the horses people but no answer.
I called Chilliwak Taxi, but they do no do errands. We can’t even drive back cause we have no licenses nor money for fuel.
What can we do?
(we don’t have family in Canada)
Regards
arit
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exx Says:
September 20th, 2008 at 3:34 pm
The Canadian credit crunch
Consumer debt levels in Canada have climbed from $180 billion in 2000 to a staggering $375 billion today.
…
Wellbanks says the fear of debt has diminished in Canada – in a way, it’s been erased and even accepted.
Doubled in 8 years. Hmm… I wonder why that is. I fear debt, maybe that’s why I have none. Maybe I fear it too much. What’s wrong with me?
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bdk Says:
September 20th, 2008 at 3:58 pm
Arit you can drive without your license, the police can threaten to strip search you but as long as you know your name, birthday and address you’ll be okay.
You’d be best to stash anything illegal that you have in your car before driving back.
If you’re really screwed and this isn’t a joke ,that I don’t get, I’ll help you but it’d involve you driving downtown and you’re more likely to get pulled over downtown than in the burbs IMHO
Do you get pulled over often?
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Macronomics Says:
September 20th, 2008 at 4:18 pm
Dave, haven’t you made those arguments 2 or 3 times in the past already and each time they’ve already been rebutted.
Do you have anything new to entertain us with?
Do you honestly believe the market is overvalued by only 10%?
I’d say 50% of you guys are better at predicting the market than Tsur. Just last year Tsur predicted 10% gains for 2008.
You may think economic turmoil in the US don’t affect us much, but the credit market is a global market. Our banks might not have many subprime mortgages on their balance sheets, but they sure as hell purchased SIVs and ABSs from the big boys on Wall St.
Greed & fear works both ways.
Think about how many people bought into the market in the past 3 years because they were scared to get priced out of the market. How many people also bought because of greed.
Now that the market is going south, how many buyers will stay on the sidelines out of fear. And how many flippers want to take their profits and run, again out of greed.
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Bluesman Says:
September 20th, 2008 at 4:25 pm
Arit: Where are you now? Did you get any help? Usually if you ask someone in Canada they will help you if they can. Let us know and if you still need help we will figure out what to do. Good luck, man.
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Bluesman Says:
September 20th, 2008 at 4:49 pm
Arit: If you are back home than phone your bank and have all of your credit/bank cards cancelled. Then go to your bank and try to get some money out if you know a teller there or someone who can identify you and your wife. IF your bank is closed try to borrow some money from a neighbour if you need it for food. Just wait until Monday and phone the office to see if your bags have been turned in. If not then just go down to your bank and get new bank cards and if you have credit cards get some new ones. Then you will have to go about the long process of replacing all of your i.d. Hopefully the bags will be found by the police or the horse center and you won’t have to replace your i.d. That is the worst part of having your wallet lost/stolen. As I said, if you need help let us know and we will get you money or whatever you need. Cheers, buddy.
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Anonymous Says:
September 20th, 2008 at 5:27 pm
I just got back from an 18 month trip around the world, and I noticed these best place on earth plates. What the eff is that all about?? I almost vomited when I saw that.
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Drachen Says:
September 20th, 2008 at 5:41 pm
Dave
“The real estate cycle is 13 years”
I love how you make statements of fact like that. You don’t have any backup for these claims so you just present them as bald faced lies and assume that if you say it often enough you’ll get away with it.
I can prove the real estate cycle is NOT 13 years very easily.
Japan vs Western countries graph.
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Dave Says:
September 20th, 2008 at 6:03 pm
This isn’t Japan. This is Vancouver. Here is the data to show that my statement was a FACT, unlike your INTERPRETATION.
http://img502.imageshack.us/my.....re1nt4.jpg
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dorker Says:
September 20th, 2008 at 6:12 pm
Dave,
Don’t forget the District of North Vancouver adds another 80,000+ to the north shore.
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MickeyFinn Says:
September 20th, 2008 at 6:30 pm
Okay, this is anecdotal again so I apologize for droning on but… I have been watching one specific area on Vancouver’s west side which is called “Cambie.” I would like to buy here eventually.
Anyways, this particular market was exceptionally predictable for the past five years as regards sale patterns. In particular, if a well restored old-timer came onto the market there would be a bidding war and it would sell over asking in like the first week. In contrast, Vancouver specials and tear-downs would take a little longer to sell… like a number of weeks or maybe even a month.
As recently as February there would be hundreds of people walking through open houses on the first day of showings. Now, you can hear crickets chirping and if it is a house that is apparently priced at “lot value’ (y’know where the vendor is acknowledging that the house is a dump) it will just sit. There are a number of “lot value” places that have been sitting since last spring.
In my opinion, it is these “lot value” places that will be the slowest to drop their prices because real estate agents are – in my opinion – mistakenly telling their clients that they have priced it at “lot value.”
So guess what, apparently lot value has already dropped.
My question is therefore, when will the real estate agents acknowledge that the market has shifted? I’m guessing it may happen this fall or winter… you gotta figure that the real estate agents are hurting because commission revenue is practically non-existent. In other words, won’t the real estate agents themselves start recommending lower listing prices to their clients?
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DonkeyXote Says:
September 20th, 2008 at 6:35 pm
Thanks for the graph Dave. That shows a flat/declining market of average 6-7 years length after the market peak. Based on that, wouldn’t one expect market decline + stagnation until around 2014?
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JB Says:
September 20th, 2008 at 6:39 pm
I’ve always read “Fleck” over the years and one look at this column from over a year ago is telling. No excuses for those is higher places who waited for the “eleventh hour”!
***************************
Bottom line: The upcoming weeks should be pregnant with indications of more trouble throughout the whole financial-engineering world. More than a few outfits may discover that the triple-A pieces of paper they thought were worth 100 cents on the dollar are worth only, say, something in the 70s. That will make for a lot of heartache.
http://articles.moneycentral.m.....ToFix.aspx
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Dave's Prediction Says:
September 20th, 2008 at 6:44 pm
Market will decline until 2014.
http://img502.imageshack.us/my.....re1nt4.jpg
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Dave Says:
September 20th, 2008 at 6:48 pm
Donkey, that’s pretty much what I would expect. The last correction knocked off 15% from SFHs in Vancouver. You could barely even make out the nominal declines in median condo prices. If you look at median BC prices from the last 30 years, there is only one down year which was 81 to 82. I’m not sure why an expectation of a moderate drop followed by stagnant prices is so controversial here.
The difference this time is that employment and the economy is still relatively strong and interest rates are relatively low. Thus, I would expect the coming declines to be no more than prior declines.
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Sarah Says:
September 20th, 2008 at 6:53 pm
Thanks, Dave. Based on your extensive knowledge of real estate, do you think I should buy a condo now? I saw one downtown on Cambie — a cute 1 bedroom for $369,000. Is this a good buy now or should I wait to see if the price comes down?
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Dave says Says:
September 20th, 2008 at 7:01 pm
DAVE SAYS: Why have sales dropped? I believe sales have dropped from a combination of economic uncertainty (e.g. US economy, high gasoline prices) with low housing affordability.
AND DAVE SAYS:
…If you look at median BC prices from the last 30 years, there is only one down year which was 81 to 82….
The difference this time is that employment and the economy is still relatively strong and interest rates are relatively low. Thus, I would expect the coming declines to be no more than prior declines.
WILL THE REAL DAVE PLEASE COME FORWARD
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Sarah Says:
September 20th, 2008 at 7:04 pm
Hi Dave. It’s me, Sarah. Is there any way I can get in touch with you? I would love to discuss my real estate purchase over coffee or lunch. How can I contact you?
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Anonymous Says:
September 20th, 2008 at 7:06 pm
“Dave,
Don’t forget the District of North Vancouver adds another 80,000+ to the north shore.”
Dave does not forget. Dave just ignores. It works much better for him that way.
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Dave Says:
September 20th, 2008 at 7:07 pm
Sarah, thank you for your question. It comes across as troll bait, but I will answer it nonetheless. I would have believed it without the word extensive.
There are more things to consider than just price and they all depend on your personal situation. Every market is a good time to buy for somebody.
In the short term (over the next year) I am expecting further price decreases. In the medium term (4 to 5 years) I am expecting a flat market and of course I am bullish long term (past 2014). We will probably end the year down 7%-8%. I originally predicted 5%, but the declines started faster than I anticipated. I expect 2009 to maintain the negative declines and I think they will level off sometime in the second half of the year with declines of about 1% per month. We are about 4% down so far and probably have another 6 to 11% to go, which is around $20 to $40k off the current price of the unit you are viewing.
I would presume that you are a first time home buyer as you are buying a 1 BR. I would guess you probably pay around $1000 in rent per year. So, knock off a year of rent and your marginal savings might be $10 to $30k.
But that’s only price. There are obviously lots of other factors. If you like the area, like the unit, can afford your mortgage payment and plan to live there for a long time, then you will come ahead financially in the long term. If you try to time the market, then you are basically a speculator. The good news is that in the long run, you win.
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DonkeyXote Says:
September 20th, 2008 at 7:12 pm
Well I guess I have to take back my previous comment about the inventory graph; I suppose if you’re interested in a historical average then the current inventory is less important. Still, it isn’t useful without some current points for comparison as their methodology is unclear. For example it shows about 600 average for 2005 for “Vancouver”, whereas Paul B’s data for the city of Vancouver gives about 3000 average for 2005.
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Sarah Says:
September 20th, 2008 at 7:13 pm
Oh my gosh, Dave. That is too complicated for me. Is there any way I can touch — I mean get in touch with you so you can explain everything to me again and again? Please give me your phone number or office number. You are a realtor, right?
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Dave Says:
September 20th, 2008 at 7:14 pm
Dave does not forget. Dave just ignores. It works much better for him that way.
Yes, I left out the word ‘City’ in North Vancouver. My mistake.
The point still stands which is that we gain a lot of real estate each year due to population growth.
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Sarah Says:
September 20th, 2008 at 7:18 pm
Dave, you won’t ignore me will you?
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Sarah Says:
September 20th, 2008 at 7:22 pm
Dave I really need to talk to you. I need to make a decision to purchase the condo tomorrow. The realtor said there is another offer coming up. How can I reach you? Do you have a phone? An office?
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draken Says:
September 20th, 2008 at 7:23 pm
i like to post under different names when i don’t have anything smart to say in my own name. I like cartoons.
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arit Says:
September 20th, 2008 at 7:26 pm
Hello All
Thanks for the advice and the help offers. I really appreciate it!!!
I called a coworker who came with money so we are all set for the weekend, I have cancelled all cards and filed a claim with the Chilliwak police but they have not found it.
So now it’s only down to some money lost and some annoying errands. No problem.
Thanks guys again for the support.
Regards,
arit
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Sarah Says:
September 20th, 2008 at 7:38 pm
Dave, I need to talk with you. I have three girlfriends who are all in the market for condos, too, if that helps you to give me your office number. You will not be disappointed, Dave. We will make it worth your troubles to meet with us.
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browntown Says:
September 20th, 2008 at 7:53 pm
yeah! hey new georgia straight nutbags! smarter bears missing in action, working on land making machine! fasten your nuts up for rocket launch up for next leg up! yeah browntown here for your’ party!
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Patiently Waiting Says:
September 20th, 2008 at 8:08 pm
Living in a glass house and mortgaged to the hilt:
http://tinyurl.com/5xf3m4
Reading stuff like this has somewhat changed my political beliefs. I’m still very sympathetic to those who’ve had genuine misfortune, but for the first time in my life I’m getting very concerned about the possibility of tax dollars being given away to people who were simply stupid and greedy. Not all of us spent like drunken sailors.
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yaa Says:
September 20th, 2008 at 8:57 pm
find it more than a little ironic that those who discount shiller’s bubble statement, are more than eager to claim the “best city on the planet” as being the gospel. wonder if the people from EIU actually lived in all of the cities on their list, or, they just punched a bunch of numbers in to arrive at their conclusions… of course, some of those people on the other side of this argument seem to easily discount the EIU study, and claim shiller’s statement as the gospel… with similar reasoning. funny, hunh?
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John Says:
September 20th, 2008 at 9:07 pm
I would seriously NOT WAIT to buy now because prices are going to be going up in a few months. Oil is too. Rich asians are pulling their money out of the stock market and are now ready to buy more condos. I’m planning on waiting in line in the rain next week to buy some pre-sales.
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Sarah Says:
September 20th, 2008 at 9:20 pm
Hi Dave, It’s me again. My three girlfriends are going over to Brandy’s now. If you want to join us I will be in a blue dress and the other three will be in red. Believe me, you won’t be able to miss us. Later, Dave.
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JR Says:
September 20th, 2008 at 9:28 pm
Dave
Here’s something for you to study and comment on. The Lower Mainland (basically Chilliwack West) has a population of 2.5 million according to the 2007 census. Between the REBGV and the FVRB, which together cover the Lower Mainland, there are roughly 32,000 listings. Go to this link: http://bubbletracking.blogspot.....00-07%3A00
Scroll down and have a look at some of the more devastated markets in the US. You’ll see various markets’ population, current inventory and in some cases record high inventories. Pay particular attention to their population to listings ratios. Now, compare these ratios to the Lower Mainland’s ratios and tell me what you think.
By the way, before you tell me that house prices in the US tanked because of subprime ALT-A et al, let me quote from one of the few US housing economists who called it correctly and still is calling it correctly, Chris Thornberg: “prices dropped because they got too freaking high”.
Twist at will.
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Dave says Says:
September 20th, 2008 at 9:46 pm
Stop making fun of me.
http://tinyurl.com/46uuud
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Clam Chowderhead Says:
September 20th, 2008 at 10:14 pm
So I was looking at Mohicans chart today and it looks like we are completing/starting about 1500 units a month across the ragion. That’s 18K/year so enough to house roughly 40K people. Does someone have any data on what our population is growing at?
I know some of those units might be second homes but I imagine most of them will go to housing.
I also don’t get why some people say inventory is at 21K plus upcoming completions of 18K means inventory will be at 40K, it doesn’t work like that, it never has. Inventory for sale is already housing people and those people will need to occupy something else so it’s a zero sum game.
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Dave says Says:
September 20th, 2008 at 10:16 pm
I also don’t get why some people say inventory is at 21K plus upcoming completions of 18K means inventory will be at 40K, it doesn’t work like that,
What part of 21 + 18= 40 do you not understand? Even I get that part.
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Drachen Says:
September 20th, 2008 at 10:25 pm
Dave
“Here is the data to show that my statement was a FACT, unlike your INTERPRETATION.”
Umm, Dave, you drew three lines on a graph and you call that data? Even if your interpretation is correct you only have two data periods and one of them is not complete yet.
By the way, are you a graphic artist? Nice work!
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Dave's Economic Outlook Says:
September 20th, 2008 at 10:27 pm
http://tinyurl.com/4hmh5g
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Clam Chowderhead Says:
September 20th, 2008 at 10:32 pm
Explain to me how 21K units for sale plus 18K new units completing this year will equal 40K units for sale?
Current inventory for sale plus upcoming completions have never equaled new inventory. If they did then we’d be at over 30K or so inventory right now, what was inventory at this point last year? + the 18K or so completions does not equal our current inventory of 20K.
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Dave says Says:
September 20th, 2008 at 10:35 pm
Thanks Drachen. Actually, I’m currently enrolled at Emily Carr Institute of Art. So far I learned the semi-straight black line through a graph technique. I will graduate in Spring ‘09 so I hope I can get a job at your animation place since this realty shit isn’t panning out. Sorry for the pun. Are they hiring where you are?
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Clamclamclam Says:
September 20th, 2008 at 10:39 pm
Last year there were 38,900 sales. This year there were 22,000 sales. Next year there will be less than 22,000 sales in all likelihood. So what you get is called an inventory “overhang” or is it a “hangover” as Bush called it?
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It can't happen here. Says:
September 20th, 2008 at 11:04 pm
“A 91 percent spike in foreclosure sales dropped the August median house price in Santa Cruz County 24 percent from a year ago. The new single-family home median landed at $582,000 compared to $770,000 in 2007 and $607,500 in July. The last time the median hit such a mark was in February 2004 when it settled at $560,000.”
“August’s median, calculated by Gary Gangnes of Real Options Realty, stunned UC Santa Cruz economics professor Michael Hutchison.”
“‘That can’t be Santa Cruz,’ said Hutchison. ‘It’s come down more than I would have expected. People have been saying coastal real estate would hold up better, but we’re seeing a decline that matches other areas.’”
http://thehousingbubbleblog.com/index.html
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betamax Says:
September 20th, 2008 at 11:30 pm
“employment and the economy is still relatively strong and interest rates are relatively low. Thus, I would expect the coming declines to be no more than prior declines.”
Then you’re in for a big surprise when the downturn in construction tanks both employment and the economy. Our market correction will coincide with a recession, just like in the early 80’s — only the effects will be worse because people are far more in debt now than then.
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Clamclamclam Says:
September 20th, 2008 at 11:42 pm
Sept Inventory 12 mos. completions Total Annual Sales
2005 10,000 14,000 24,000 42,200
2006 13,000 16,000 29,000 36,500
2007 12,000 18,000 30,000 38,900
2008 20,000 18,000 38,000 22,000
2009 ? 27,000 ? ?
Do you see a pattern here?
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Clamclamclam Says:
September 20th, 2008 at 11:45 pm
Should have read:
Sept Inventory/ 12 mos. completions/ Total/ Annual Sales
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Oops Says:
September 20th, 2008 at 11:52 pm
CMHC predicted 37,200 sales for greater vancouver in 2008. Actual sales approx. 22,000 (40% less).
http://www.cmhc.ca/en/corp/ner.....5-1200.cfm
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Macronomics Says:
September 21st, 2008 at 12:00 am
JR…
Using your numbers I calculate a listing ratio of 1:78 for GVRD and Fraser Valley, which is much higher than some of the hard hit areas in California.
Does that sound about right?
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Clamclamclam Says:
September 21st, 2008 at 12:03 am
Macronomics:
1:78 NOW.
What will it be in 2009? 2010? When inventory is possibly double?
1:40
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Gadwin Says:
September 21st, 2008 at 12:22 am
This market is over. Specuvestors are bleeding now with no buyers in sight. It’s only going to get worse by next year. Specuvestors, you better cut price now if you want to sell … if you hold until next year, you will be out that much more $$$
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Dan in Calgary Says:
September 21st, 2008 at 6:49 am
Inventory for sale is already housing people and those people will need to occupy something else so it’s a zero sum game.
Always check your assumptions. Zero sum assumes zero speculation. Did Vancouver somehow get to have a bubble without speculators? No. How many listings are empty? In Calgary 27% of SFH on MLS empty, while 36% of condos are empty. How different is Vancouver? How many downtown condos in Vancouver have had phone books sitting outside their front door for months?
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Dave Says:
September 21st, 2008 at 7:27 am
Umm, Dave, you drew three lines on a graph and you call that data? Even if your interpretation is correct you only have two data periods and one of them is not complete yet.
By the way, are you a graphic artist.
In contrast to your lack of ANY data periods?
Clearly I am not a graphic artist.
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Dave Says:
September 21st, 2008 at 7:30 am
JR, I haven’t seen any study on listing to population ratios and whether it provides a useful correlation to prices. Just because Vancouver may reach the levels of those cherry picked markets, doesn’t necessary mean Vancouver is to follow their paths. Rather, the listing to population ratios could be expressing other underlying fundamentals that may or may not exist in our market.
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Dave Says:
September 21st, 2008 at 7:36 am
I also don’t get why some people say inventory is at 21K plus upcoming completions of 18K means inventory will be at 40K, it doesn’t work like that, it never has.
You’re right that they don’t just simply add up. Most places have pre-sales which don’t enter into the MLS system. You also can’t ignore that a portion of our current inventory, as has always been the case for inventory, is new units.
It’s very unlikely inventory will reach 40k.
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Bluesman Says:
September 21st, 2008 at 8:17 am
Arit,
I’m glad to see things are working out. Hey, man. **it happens, man. Take it easy.
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Bluesman Says:
September 21st, 2008 at 8:46 am
Clamclamclam: Judging from your table I would definitely predict higher inventory for Sept. 2009. From 20,000 where it sits now, I see it going to at least 30,000 considering the 20,000 speculative units sitting waiting to be dumped on the market built up by the over-buying of speculative properties to the tune of 15,000 per year between 2001-2007 (see posting #83), the decline in buyers, the huge inventory coming down the pipes the next few years (27,000), the tightening up of credit, and most of all the psychological aversion toward buying real estate (now all my friends are now depressed and trying to sell and then rent a place, the last few years they were giddily buying).
Have you heard anyone other that Sarah and her friends say recently that they want to buy real estate? By the way, Dave, how does saving $1000 a year in rent reduce the purchase price by $10,000 to $30,000? Did you even take grade 4 math? Did you warn Sarah of her marginal loss of at least $37000 if the market declines even 10% next year? Did you warn her of her marginal (whatever you mean by that) loss? I can see why you are not a successful realtor. Even the Sarah’s of the world will eventually see that your brain can only handle one calculation at a time and even that one calculation is incorrect. I really don’t know what kind of profession to recommend to you for re-training. I am truly at a loss.
Dave said: I would guess you probably pay around $1000 in rent per year. So, knock off a year of rent and your marginal savings might be $10 to $30k….The good news is that in the long run, you win.
Dave: What do you mean by marginal savings? What does that term mean to you? Please define your use of the term. What do you estimate the marginal loss to be? And what do you mean by “long run”? Please explain.
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Thums up2 Says:
September 21st, 2008 at 8:52 am
Dave says:”It’s very unlikely inventory will reach 40k.”
NO
You are wrong,most of new construction projects are being completed since 2004 but new inventory does not reflect the mls system.
More than 60% pre sales are requirement for any new project to get financing but most of reamining projects are sold out or over 85% sold out,when it comes to month or year of completion only few unit hit the market still by obligation sellers are not allowed to list their unit in mls system.
From spectrum 1,2,3,4, out of 1000 unit there were only 89 unit re hit the market,from la hermitage only 3-5 unit re-hit the market,from raffles 0nly 10 and from Elan only 10 at one time.
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JR Says:
September 21st, 2008 at 8:55 am
Macronomics
I get around the same ratio and yes, this puts us at much higher, similar or slightly lower levels than the hardest hit areas in California and in other US States.
Dave
For the most part, the website in question tracks market dynamics in metro areas which have experienced all of spiraling prices, rabid speculation and very aggressive building, before entering periods of price declines. I would call this a consistent comparison rather than “cherry-picking”. Call it what you will; the Vancouver area is a direct parallel.
A precursor to price declines in the subject US markets was the very high level of product for sale relative to population. When more and more buyers started saying “uncle” on prices, and sales began to wane, the combination of that and exceedingly high inventory resulted in significant and sustained price declines. The effects of declining prices were and are exacerbated by a legion of homeowners with little to no equity and mortgage payments at the extreme edge or well beyond their realistic capacity to afford. Subprime and ALT-A interest rate resets amplify the problem further.
I’ve been expecting a correction to commence in this market for some time. Its taken considerably longer than I predicted however I believe the severity of this one is going to exceed my original expectations. For the reasons cited in this post and the many other enlightened posts on this and other blogs, we have a recipe for the perfect storm here in the Lower Mainland – one that will not be mitigated by low interest rates, a relatively strong economy and low unemployment (albeit the latter two are destined to lose some of their luster).
Studies aren’t required to evaluate the significance of our total listing inventory relative to population and in comparison to the US markets cited. Its the most basic economic dynamic at play here; supply versus demand. Interestingly, it is this dynamic that many local economists appear to have discounted, which is one key reason why most of their earlier predictions are proving to be so wildly off the mark – a disconnect I expect will widen as time passes.
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crabman Says:
September 21st, 2008 at 9:03 am
Dave said:
JR, I haven’t seen any study on listing to population ratios and whether it provides a useful correlation to prices.
You don’t actually think high inventory has no effect on prices do you? Would you at least agree that “months of inventory” is probably the best predictor of future price movements?
And at 12.5 months, Vancouver is in serious trouble!
Here is a graph of MOI vs. price for the US.
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Thums up2 Says:
September 21st, 2008 at 9:17 am
In reference to the post by inventory on back page inventory is disappearing,only few sellers are adding list to mls compare to huge number of daily weekly listing of 2007.that’s mean there is no more fear of any downturn and recomended drop in prices by ubc study is more than realtors commision.
While rents are up and coming there is no point to sell your home for less that’s why after few month there will be nobody going to sell other than motivated sellers.
Best time to buy is dissapearing oppertunity is disappearing so does your chance to enter into the market good luck bears enjoy the fake numbers of paul b and stay out of line up,Dumheads!!!!…..
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Anonymous Says:
September 21st, 2008 at 9:24 am
“recomended drop in prices by ubc study is more than realtors commission.”
One should read recomended drop in price is less than realtors commission.-tu2
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browntown Says:
September 21st, 2008 at 9:30 am
hey nutsnaps! hey dan, at least todd bootuzzi’s coming to calgary looking for dwelling! a lot of uhaul coming accross rocky now to vancouver! Hey JR, go to rbc and let them know you want to buy up forclosure in van to help them out! come bach one year let us know how it go! maybe apply for jumbo mortgage! hey browntown drive around town see no rental sign and a few sign from jay banks! yeah!
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Bluesman Says:
September 21st, 2008 at 9:39 am
Dave is using this graph showing unsold NEW inventory to bolster his claim that inventory is unrelated to house prices. Go DAVE! YOU ROCK, Man.
http://cuer.sauder.ubc.ca/cma/.....couver.pdf
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Bluesman Says:
September 21st, 2008 at 9:53 am
Crabman: Dave is using this graph of unsold NEW units to support his claim that inventory is not related to housing prices. Maybe you would like to ask Dave how he bases his conclusion on this data, because he ignores my questions.
http://tinyurl.com/46644p
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Bluesman Says:
September 21st, 2008 at 10:00 am
Someone was asking for immigration data:
http://tinyurl.com/4bppc4
http://tinyurl.com/46ql5j
http://tinyurl.com/4gaa45
Hat tip to VHB and Langley Financial
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Bluesman Says:
September 21st, 2008 at 10:06 am
Someone was asking for immigration data:
http://tinyurl.com/4bppc4
Hat tip to VHB and Langley Financial
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Anonymous Says:
September 21st, 2008 at 10:07 am
http://tinyurl.com/46ql5j
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Anonymous Says:
September 21st, 2008 at 10:07 am
http://tinyurl.com/4gaa45
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crabman Says:
September 21st, 2008 at 10:37 am
Bluesman,
That graph proves my point. In the late 90’s, inventory was high and prices went down. In the early 2000’s, inventory was low and prices went up. BTW, that graph is 3 years old, I’m sure inventory has gone up dramatically since then.
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Bluesman Says:
September 21st, 2008 at 10:39 am
Crabman: Hey, I agree with you on that. Any 2 year old can see the effect of inventory on prices.
It’s Dave who doesn’t get it!
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Bluesman Says:
September 21st, 2008 at 10:44 am
Crabman: Look at post #160 to see how much inventory has gone up since 2005.
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Bluesman Says:
September 21st, 2008 at 10:46 am
I meant #161
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Bluesman Says:
September 21st, 2008 at 10:49 am
JR #150:
I love these charts from your bubbletracking link. I clicked on Inventory graphs on the left column.
http://tinyurl.com/36j6xo
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Bluesman Says:
September 21st, 2008 at 10:53 am
Hey Dave, Why don’t you use your graphic arts skills and draw some little chickens on those blue lines. You can call the work: The chickens have come home to roost!
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Anonymous Says:
September 21st, 2008 at 11:16 am
Even the most obtuse, uneducated and trashiest of Vancouverites has figured out that now is a bad time to buy.
The only people who dispute are well aware of this they just think if they run interference they might be able to gain somehow (realtors) and then you have the second type “browntown” et al.
Could there be a poll whether browntown is
A)Genuinely stupid and nuts
B)Is actually a Troll who is just trying to disrupt an otherwise stellar blog
C) Dave and browntown are one and the same (or Dave is Dave and browntown is the clerical assistant at RevnYou)
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Dave (that Dave) and Julie Says:
September 21st, 2008 at 11:19 am
Rev N You With Real Estate STARTER TIPS GUIDE
Three ways to make money in real estate, how to choose a location for your investment and more great tips when you sign up for Dave and Julie’s free monthly newsletter! Sign Up HERE
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From Daves Site Says:
September 21st, 2008 at 11:21 am
Just Like Las Vegas and Miami!
on all the comments posted after the article, there appears to be a large number of Canadians that are happy about the fact that the market may crash. Why all the animosity? And since when is it our right to own a home? Sure, it’s the ideal, but certainly not a right. Just look to many of the other countries in the world, especially the old countries and cities like London, England, Dublin, Ireland, Berlin, Germany, Shanghai, etc. You just have to look at these countries to see how ridiculously expensive they are. Why should Vancouver be any different? It’s consistently ranked as one of the top places to live IN THE WORLD! (Source: CIBC World Markets Research Study: Consumer Watch Canada March 16, 2007)
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Bluesman Says:
September 21st, 2008 at 11:34 am
Sarah: This is a picture of Dave. Would you buy a used car from this man?
http://tinyurl.com/3f4emn
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bdk Says:
September 21st, 2008 at 11:55 am
The last time Dave got beat up this badly his wife had to come on and deny that it was him even though Dave reserved the name Dave which means no one else can use it except Daverevnyou
This dynamic realtor duo will be back cleaning motels (her) and ensuring the parkade is safe (him) within a year or two.
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browntown Says:
September 21st, 2008 at 12:07 pm
hey nutbags! important for peoples like dave and browntown to educate 55 new readers from disinformation and trickerys! dont want people living in basement suite trading stocks too long! halocopter ben bail out stock boys now too! grin and bear it! ha ha ha yeah!
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bluesmen Says:
September 21st, 2008 at 12:33 pm
Hey guys, i’m really worried the market won’t crash. I’m almost as desperate as Drachen. Help me guys.
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Bluesman Says:
September 21st, 2008 at 12:43 pm
Hey, Dave. Good try, but it’s BluesMAN.
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DonkeyXote Says:
September 21st, 2008 at 12:44 pm
Is it just me or is Thums up2/Browntown becoming slightly more coherent? I think I can almost understand a few sentences in his last couple posts.
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Dave Says:
September 21st, 2008 at 12:51 pm
This dynamic realtor duo will be back cleaning motels (her) and ensuring the parkade is safe (him) within a year or two.
BDK, do you really have to denigrate what some people do for a living? Show a little class.
I have respect for anybody that works for a living, regardless of what they do.
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Dave Says:
September 21st, 2008 at 12:52 pm
This forum really went to crap this weekend. Good work trolls. You know who you are.
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Anonymous Says:
September 21st, 2008 at 12:56 pm
Dave grew up in Nanaimo, BC with a fix-it and flip-it real estate family. He bought his first rental property with his Mom over 16 years ago and then reignited his investing once he met Julie 8 years ago. Dave is definitely the more adventurous investor of the two, and plans to tackle development in the near future as he and one partner have begun assembling land for one project. Dave has a Bachelor of Arts with an Hounours Degree in Psychology from UVic, as well as a Master of Arts Degree in Applied Social Psychology from the Univesity of Saskatchewan. In 2006, Dave left his job in consumer research and became a residential mortgage broker. In February, 2008 he switched to commercial real estate, and is now learning how to obtain financing for large apartment buildings, regional shopping centers, condo developments and more. Dave currently lives in Burnaby, BC with Julie and their dog Bram.
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Dave Says:
September 21st, 2008 at 12:59 pm
Maybe you would like to ask Dave how he bases his conclusion on this data, because he ignores my questions.
Bluesman, how can I take you seriously when you drive the discussion into the gutter? If you want to have a civil discussion, I am all for it, but please drop the name calling and cheap shots.
I am always willing to provide my opinion and answer any question under those conditions.
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more from dave Says:
September 21st, 2008 at 1:00 pm
http://www.peniuk.com/about_dave
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Sarah Says:
September 21st, 2008 at 1:03 pm
Dave I had a good time last night. You didn’t tell me you had a wife, you bad boy.
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bdk Says:
September 21st, 2008 at 1:04 pm
Thanks for coming out Dave you have provided your opinion and been proved wrong too many times to cvount.
You ignore all rebuttals and just keep trolling.
You’re clearly here to run interference on this blog (AKA trolling) but it’s starting to sound like you actually believe the misinterpreted crap you’re spewing.
If you really believe the market isn’t tanking get out there any invest and stop posting disinformation on several blogs at once.
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Dave Says:
September 21st, 2008 at 1:05 pm
Studies aren’t required to evaluate the significance of our total listing inventory relative to population and in comparison to the US markets cited. Its the most basic economic dynamic at play here; supply versus demand.
Then why not stick with direct measures of supply and demand (i.e. listings and sales)? There is plenty of information to make market predictions off such measures. Why bother with something that hasn’t been substantiated? Feel free to crunch the numbers and dig something out of it. I am not saying it isn’t there. I am saying I haven’t seen anybody demonstrate to me the predictive ability of population to listing ratios. If you feel so strongly about it, spend a few hours doing the math. Until then, I have no reason to take the metric seriously.
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Anonymous Says:
September 21st, 2008 at 1:12 pm
With prices dropping as fast as they are every month and the U.S. in the biggest financial crisis since the Great Depression, who would want to buy at times like this?
If you are holding more one property, just cut price and sell now and be glad you made some money. It makes no sense to hold and watch your property value plummet month after month for the next several years.
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bluesmen Says:
September 21st, 2008 at 1:12 pm
Being poor sucks. Drachen help me more.
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Dave Says:
September 21st, 2008 at 1:17 pm
You ignore all rebuttals and just keep trolling.
No, I ignore trolls like yourself. You are probably the one posting under multiple aliases. It would be nice if Pope were to go through the IP addresses and ban a few of you.
I am tired of your accusation of me being Dave at revnyou.com. This is the last time I will comment on the matter. Pope has already confirmed that we are different posters. I have even offered to meet one of you to prove it, but nobody wants to take me up on that.
You might also want to consider the potential of libel in some of your posts against the other Dave. You shouldn’t drag the reputation of people through the mud.
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Anonymous Says:
September 21st, 2008 at 1:17 pm
“This is the biggest national bubble that the US has seen in over a century.” This is “not a sustainable situation,” claimed Shiller. Then he directed his attention to Vancouver. The bubble was especially extended in “glamour cities and glamour vacation areas,” he warned, and “Vancouver is the most bubbly city in the world.” – April 26,2005.
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Liar Liar Says:
September 21st, 2008 at 1:30 pm
If you want to have a civil discussion, I am all for it, but please drop the name calling and cheap shots.
I am always willing to provide my opinion and answer any question under those conditions.
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Anonymous Says:
September 21st, 2008 at 1:40 pm
“I don’t know about meltdown but here are some of the incentives/price cuts I’ve seen in the last few days:
- Legacy (Burnaby condo) price reductions of 5 to 10%
- Belmont (Burke Mountain in Coquitlam) offering up $87,000 in savings this weekend;
- Highland Vistas in Maple Ridge – they will make your 2009 mortgage payments (sounds like buying furniture)
- Perspectives – condo in Burnaby – 5% cashback + $15,000 decorating allowance.
So we are already seeing a transition from free upgrades to price reductions as builders find it increasingly difficult to move product.”
http://tinyurl.com/3o3829
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Anonymous Says:
September 21st, 2008 at 1:45 pm
Liar Liar Says:
September 21st, 2008 at 1:30 pm
If you want to have a civil discussion, I am all for it, but please drop the name calling and cheap shots.
I am always willing to provide my opinion and answer any question under those conditions.
NO ONE WANTS TO HEAR YOUR PATHETIC SPIN OR OPINIONS BECAUSE THEY ARE JUST DUMB, DAVE
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Anonymous Says:
September 21st, 2008 at 1:48 pm
Blogger squidly77 said…
can you imagine how depressed you would be if you had bought an edmonton house last summer
realtors said buy buy buy prices are going to the moon
if you dont buy now youll be priced out forever..buy buy buy
we have oil dont you know
and now you have taken an $84,000 hair cut ouch !!
should have read the bubbleblog
http://tinyurl.com/3ewqdp
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Anonymous Says:
September 21st, 2008 at 2:03 pm
“Unfortunately we bought just before the market took its downturn and have to sell!! Our loss could be your gain!”
http://tinyurl.com/3m2ew8
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Anonymous Says:
September 21st, 2008 at 2:08 pm
“$279900 MUST SELL!!!!!”
“was $318,000 now reduced to $279,900.”
http://tinyurl.com/48qrgw
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Anonymous Says:
September 21st, 2008 at 2:12 pm
“Current owner purchased in March 2006 @ 40% complete and must sell now unfinished – “as-is” – was asking $598,000 – in consideration of the current weathered “as-is” condition of the house – Owner will sell for $498,000″
http://tinyurl.com/4jfq89
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Professor Intelligence Says:
September 21st, 2008 at 2:20 pm
The Vancouver Market will experience a minimum 35% drop in the next six months followed by at least ten years of stagnation as the baby boomers rush to sell in order to finance their retirements.
Never underestimate investor sentiment as it could easily cause prices to drop another 50% on top of the 5% drop we’ve already experienced.
In the United States many out of work realtors posted angry messages on the chatrooms and it is now happening here which is another sign that Vancouver will achieve the same fate as that of all the hugely overpriced real estate bubble cities such as Miami and Las Vegas.
Solid and indisputable proof is available from checking the P/E and MOI.
Further evidence can be found on Forbes website which calculated Vancouver to be the #2 most overpriced city but this was before L.A. continued to drop and the U.S. Currency eroded so Vancouver is now rightfully the #1 overpriced city in North America and now that the secret is out they’ll be a further race to the exit leading to panic selling and even more losses for those looking to make money in real estate.
There is nothing anyone can do to stop the markets drop and if you haven’t sold it is too late.
Have a Nice Day
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vanguy Says:
September 21st, 2008 at 2:31 pm
I agree with Dave that all this name calling is really classless.
I value Dave’s opinion, he’s a bull (or bullish), I’m a bear and we both have our reasons. I enjoy reading his opinions.
Whether we like it or not, the posters and readers of this blog have been in the minority for a long time. I started reading VHB in 2005, and I was obviously in the minority then (as prices are substantially up since then) but I like to hear both sides of the discussion because I want to know what is motivating the other side.
We know we will have hit bottom when we are no longer the minority. The time to buy will be when everybody else thinks real estate is over-priced for whatever reasons, be it economic or psychological. People are still buying out there at these prices. Not as many, but there are 70-80 residential transactions a day in the GVRD.
So please, enough with all the childish name calling. Civility, people.
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Anonymous Says:
September 21st, 2008 at 2:57 pm
“Manhattan’s finest co-op apartments may have already lost a fourth of their value as a result of the financial crisis, and the worst is yet to come, says leading New York estate broker Kathy Sloane, of Brown Harris Stevens.”
http://tinyurl.com/4azpqu
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Anonymous Says:
September 21st, 2008 at 3:02 pm
http://tinyurl.com/47yomn
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David Says:
September 21st, 2008 at 3:15 pm
My bias is against misleading people into really bad financial decisions, like buying a house right now. I don’t own any property. Too risky. I don’t know whether the stock market is a good bet. I did this blog and page for 3 years before starting to charge for news links 3 months ago. If I’m trying to make money, I’m apparently not very good at it.
I’m angry because real estate agents have consistently recommended financial suicide for many thousands of people, just so the agent can make a profit. Many people are suffering and will continue to suffer because of the real estate industry.
This bubble is a pure ponzi scheme, very much like the dot.com bubble, and it’s unravelling now. I’m comfortable watching it implode. Are you?
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Anonymous Says:
September 21st, 2008 at 3:25 pm
I value Dave’s opinion and I also enjoy poking at my eyes with spoons.
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Anonymous Says:
September 21st, 2008 at 3:54 pm
http://tinyurl.com/4qn5e9
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JB Says:
September 21st, 2008 at 4:20 pm
Treasuries Prove Irresistible as Deflation Bet Trumps Paulson
http://www.bloomberg.com/apps/.....refer=home
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Anonymous Says:
September 21st, 2008 at 5:06 pm
Home prices could fall dramatically as baby boomers retire
http://tinyurl.com/4nnsbo
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Anonymous Says:
September 21st, 2008 at 5:11 pm
“Vancouver is the latest housing market to show dramatic signs of weakening. The number of listings in that city has doubled from a year ago while sales have been cut in half. It’s also taking up to three times as long to sell. “Deals that were going through last year aren’t going through this year,” said Ian Martin who runs Erealty.ca, an online Vancouver realtor.
Added Lorne Goldman, a broker of residential and commercial real estate in the city: “As one [commercial property] lender said to me, ‘If a deal has hair on it, we don’t look at it.’”
The Calgary market has given ample warning of the slowdown that was to come.
During the peak of its housing boom early last year, most homes were subject to bidding wars and selling at well above the asking price in less than two weeks, said Jim Sparrow, real estate agent at Calgary-based Keller Williams Realty.
Now prices have drifted 10 per cent lower, the average time on the market is 52 days, and sellers are being told to price their properties competitively or face the prospect of not finding anyone who even wants to peek inside the door.
“I’m being brutally honest with my clients. The reality is there are fewer buyers out there, and the only way to attract an offer is to have a property that is competitively priced,” Mr. Sparrow said.”
http://tinyurl.com/4aj5qh
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Drachen Says:
September 21st, 2008 at 5:14 pm
Dave
“In contrast to your lack of ANY data periods?
Clearly I am not a graphic artist.”
Clearly… We can agree on something anyhow.
You drew three lines on a graph, the lines might as well be anywhere, you’ve given no reasoning behind the placement of the lines and you’re calling it proof. It’s like drawing a moustache on a picture of George Bush and saying “Look, it’s proof he wears a moustache!”
Any moron can draw lines on a graph, yours are as meaningless (and as well drawn) as if I took that same graph to a kindergarten and asked them to scribble on it.
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Anonymous Says:
September 21st, 2008 at 5:22 pm
Short-selling ban to shield market
“Last week, the British and US governments imposed bans in the wake of the global meltdown in banking and other shares. Other countries followed, including Canada and Germany.
The latter moves prompted action by the Rudd Government and the Australian Securities and Investments Commission. The ban was extended because they were worried that by limiting controls on financial stocks, it would put more pressure on other stocks such as mining and real estate.”
http://tinyurl.com/4rtt7h
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Dave's Therapist Says:
September 21st, 2008 at 5:27 pm
Please leave Dave alone. He is going through a difficult time right now what with no income and having to deal with his new career in graphic arts at which he is lousy but don’t tell him I said that. Please have mercy. Sarah if you are out there please call Dave. He needs you more than anything right now. Would it be ok if he crashes at your place for a while? He’s run out of cash and he needs lodging and if you can double as his therapist that would be wonderful because he no longer has the funds to pay me. PLEASE TAKE HIM OFF MY HANDS!!!!!
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Clam Chowderhead Says:
September 21st, 2008 at 5:31 pm
Wow this blog has turned in Discover Vancouver of old.
I imagine the traffic ratings will be up for a while but people that come for real estate advice will begin to drop off soon if this keeps up.
We should have a contest to help Pope pick a new name for the blog.
I’ll go first. http://WWW.WorldClassBlog.com , the motto could be The Best Blog on Earth.
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draken Says:
September 21st, 2008 at 5:54 pm
This blog is my life, my wife is disappointed in me. There were some good cartoons on tv this morning. I wish i could afford a suv like John.
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Dave Says:
September 21st, 2008 at 5:56 pm
You drew three lines on a graph, the lines might as well be anywhere, you’ve given no reasoning behind the placement of the lines and you’re calling it proof.
The three lines are drawn at each of the three most recent peaks in housing prices.
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Anonymous Says:
September 21st, 2008 at 6:01 pm
“The three lines are drawn at each of the three most recent peaks in housing prices.”
http://tinyurl.com/3p4s2j
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draken Says:
September 21st, 2008 at 6:35 pm
I like to bait out confrontation, but i can’t deal with it when i get it back. I guess i am a bit childish. I have let you guys down. I should stick to cartoons.
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Anonymous Says:
September 21st, 2008 at 6:53 pm
“‘watercolours’ development by polygon near the brentwood mall area. they are also slashing prices.”
http://tinyurl.com/4dxka2
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not draken not drachen Says:
September 21st, 2008 at 7:37 pm
draken, you’re very funny
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Sarah Says:
September 21st, 2008 at 7:42 pm
Dave’s Therapist,
Everything would have been OK if you had behaved properly at Andrew’s send-off. How do you expect Dave to feel about all of this, not to mention Lisa? Thanks for nothing. Now you’ve got Dave and don’t want him and I lost Dave and don’t want him. Do you always destroy people’s lives like this?
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Dave's Therapist Says:
September 21st, 2008 at 8:10 pm
Sarah, If you had just bought the gd condo on Cambie this would never have happened. Now Dave is in a funk.
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Dave's Therapist Says:
September 21st, 2008 at 8:23 pm
I didn’t know Andrew was a man. And you had told Dave that Lisa and Andrew were ready to buy, too. How can you treat the poor man like this? Realtors have feelings, too, you know.
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freako Says:
September 21st, 2008 at 9:06 pm
I am saying I haven’t seen anybody demonstrate to me the predictive ability of population to listing ratios. If you feel so strongly about it, spend a few hours doing the math. Until then, I have no reason to take the metric seriously.
Listing/population ratios exploded upwards in the speculative U.S. markets in mid 2005. This was followed by dramatic price drops. There is a strong correlation. Check out Bubbletracking blog for data.
Just because Vancouver may reach the levels of those cherry picked markets, doesn’t necessary mean Vancouver is to follow their paths. Rather, the listing to population ratios could be expressing other underlying fundamentals that may or may not exist in our market.
Cherry picked? Tell us ONE area with a high listings to population that didn’t decline. The largest declines came in the cities with the highest ratios. No cherry picking about that.
Could be expressing other underlying fundamentals. Possible, but unlikely. This isn’t a criminal trial, and we don’t need proof beyond a reasonable doubt. Balance of probabilities is all that matters. And on that topic, the high listings to population ratio in Vancouver suggests significant price drops.
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buff_butler Says:
September 21st, 2008 at 9:16 pm
this is edmontons “progress”
http://www.edmontonrealestateb.....arison.jpg
http://www.edmontonrealestateb.....demand.jpg
Id look for a better example from the states but im lazy.
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stagnate Says:
September 21st, 2008 at 9:33 pm
high listings/moi are a signal of lower prices to come, the degree of price decrease is up to debate. markets vary in how strongly they can carry the inventory. markets where demand is more liquid (eg. phoenix, miami, etc), you can pencil in a large decline. vancouver is not so clear. i don’t like the methodology on the sauder study but i would agree with conclusion that prairie cities are more vulnerable than here. edmonton will likely see a larger percentage drop than vancouver.
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Tom Says:
September 21st, 2008 at 9:48 pm
Dear Dave,
I truly feel sorry for you ! You remind me of someone very special in my life, my Mother. When we where little my Mom used tell us a lot of lies to us family and friends, people would make fun of her and mock her and this was very painful for everybody. She was diagnosed with something called “pathological liar”. The therapist explained to us that she actually believes the “story’s” she tells and that people around her also believe her story’s, we don’t argue with her in order not to upset her. One of the exercises the therapist had us do, is all sit in a room (there were 15 of us) and one by one tell her we knew she was telling us a lie and we did not believe her, needless to say she was shocked by this revelation.
I would suggest this blog should put up a poll (where one IP address can only vote once, so that you don’t feel that one person is “out to get you”) It might open your eyes about what people think about your “theory’s, statistics etc.” God bless you Dave !
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anne.w. Says:
September 21st, 2008 at 9:53 pm
I went to an open house today. It was quite a run-down, unattractive property, but on the west side, so priced high of course. The realtor said it was a good time to be a buyer, and I countered that it was a good time to be a new renter! He said it was a smart strategy, as he anticipates a 40% drop in prices, and said that several of his recent sales were clients selling so they could rent. I think it’s cool that he is able to speak his true feelings, but I have to wonder how he’s going to sell that house anyone… unless he’s just telling each person individually exactly what they want to hear. Maybe he’s had a lot of bears battering him at open houses and he just pre-emptively agrees with them to prevent a confrontation!
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Sarah Says:
September 21st, 2008 at 10:05 pm
Dave’s Therapist, You may be right that realtors have feelings but I’m interested in finding someone who has a conscience; someone who really cares about other human beings, like you do. I’ve said too much already. Also the condo on Cambie was way overpriced at $849k. That’s what told me something was wrong with our relationship. I’ll pick it up for $500k + change about this time next year. If I still want it that is. Just for fun, identify a word in this post which, when used together with the word ‘conscience’, forms an oxymoron.
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tom Says:
September 21st, 2008 at 10:05 pm
I have to go to bed now, i have to get up early to watch cartoons.
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Sarah Says:
September 21st, 2008 at 10:07 pm
tom, What time do you get up? What cartoons do you watch? We could watch them together. I hope you’re not like Dave.
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draken Says:
September 21st, 2008 at 10:08 pm
Tom, your mother wasn’t a realtor, was she?
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Sarah Says:
September 21st, 2008 at 10:10 pm
draken, Do you like cartoons too? Tom didn’t answer me and Dave is out of my life now.
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not really Sarah Says:
September 21st, 2008 at 10:20 pm
Anonymous at 5:11pm, regarding your quote of Mr. Sparrow to the effect that in Calgary ‘the average time on the market is 52 days’, this is a misleading statistic which is not accurately described. As calculated, the 52 days is only for houses that sell; the statistic does not account for houses that languish. A more accurate measure is to take month-end inventory and divide by average sales rate. For August, SFH in Calgary had sales of 1170 and a month-end inventory of 5541 … a 4.7 months supply. Thus on average it takes 4.7 months to sell a house, not 52 days. using the same method, it takes 5.45 months to sell a Calgary condo.
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Drachen Says:
September 21st, 2008 at 10:37 pm
Dave
“The three lines are drawn at each of the three most recent peaks in housing prices.”
But they’re not drawn at the three most recent peaks. They’re drawn at three peaks you chose that fit your theory.
What about 1984 and 1990? What about the possibility of larger and smaller waves within a big picture (if you really want to force the triangular shape of Economics into the square hole of Physics fine but even Physics allows for multiple waves at different lengths).
What about the fact that we’re talking about the behaviour of a population of people who don’t fit into such simplistic algorithms as you propose?
As I said before, if you really belie that the laws of Physics drive real estate you should really call up all the sociology and economics departments and let them know they’re irrelevant.
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Drachen Says:
September 21st, 2008 at 10:38 pm
Bluesman
Sorry I can’t spend more time shooting Dave down in flames, fun as it is I’ve got other things going on.
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Drachen Says:
September 21st, 2008 at 10:43 pm
Dave
So far your record is 0 for 3 predictions and it’s looks pretty likely you’ll be 0 for 4 by the end of the month.
What makes you think you know anything about the real estate market? How many times do you have to be wrong before you’ll admit your methods are crap, your work is sloppy and your source information is cherry picked to fit into your pre-conceived notions.
Should we start a betting pool?
How many of Dave’s predictions must turn out to be wrong before he’ll admit that we know better than the does?
My bet is never. He’ll disappear and try to delude himself into believing he was actually right and it was only incredibly bizarre luck that swung things our way.
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Sarah Says:
September 21st, 2008 at 10:48 pm
Drachen, I won’t ask you if you like cartoons. That’s because I don’t think you ever learned to laugh. You probably have hypertension. I don’t like hanging out with hypertensives. Even Dave isn’t hypertensive. But you are good looking. Well, that’s what I heard.
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Sarah Says:
September 21st, 2008 at 10:50 pm
Sorry Drachen, about saying you are handsome, my friend told me that it wasn’t you that was handsome, it was Draken. Sorry, my bad. I’m not with Dave any more, but he’s way smarter than you.
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Michael Randallbard Says:
September 21st, 2008 at 11:48 pm
Night follows day…whether you like it or not. Stocks, bonds, property, art become expensive…and then they become cheap. Recently, they’ve been expensive…soon, they will be cheap.
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Sarah Says:
September 22nd, 2008 at 12:15 am
Gold is never cheap, is it Michael? You have a passion for gold. Me Too. I like gold jewelry.
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Dave Says:
September 22nd, 2008 at 7:37 am
What about 1984 and 1990? What about the possibility of larger and smaller waves within a big picture (if you really want to force the triangular shape of Economics into the square hole of Physics fine but even Physics allows for multiple waves at different lengths).
Drachen, give it up already. You are making yourself look quite petty. I made a factual comment and backed it up with real world data. Everybody in the industry accepts those points as being prior housing peaks. Nobody suggested that all future markets would follow the exact historic trends.
Again, you have provided absolutely nothing to back up your claim or expectation that we would follow the pattern Japan experienced.
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freako Says:
September 22nd, 2008 at 7:59 am
I made a factual comment and backed it up with real world data. b>
But there is also real world data that the cities with the highest listings per population ratio went down the most. No cherry picking involved. Any opinion on that? Clearly listings per population is better for comparison purposes than absolute listings. And the HARD data is unambigous. High listings per population leads to significant price drops. No exceptions.
Somebody earlier asked you personally whether you thought high MOI predicts future price drops. Maybe I missed it, but I didn’t see a reply. I thought you said that you don’t selectively avoid issues.
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Thums up2 Says:
September 22nd, 2008 at 8:03 am
“My bet is never. He’ll disappear and try to delude himself into believing he was actually right and it was only incredibly bizarre luck that swung things our way.”
Drachen,
After your prediction of 70% desireable drop in prices you have got nothing to make even after three year month over month prices in your area went up by 7.70 percent last month a huge increase of $103.445 no wonder you have cut down the amount of your posts by 70% that’s what you deserve what about another 30% of incohrent drachen?.
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Dave Says:
September 22nd, 2008 at 9:07 am
Freako, it’s hard to keep track of all the questions posed to me amongst all the lunacy. I am not dodging anything here, just trying to avoid the trolls.
Of course MOI is a leading indicator of price. That’s a well known and proven metric. It’s a reflection of basic supply and demand interactions.
Listings per population may in fact be a valid metric, but again I have yet to see anybody demonstrate as much. It strikes me as not being better than MOI because it glosses over demand. You can still have a high percentage of listings and have high demand, which would translate into price increases. It’s possible that at certain points in the market cycle, people are more active for various reasons (e.g. moving up in the market). A market like Las Vegas or Whistler may always have high listings per population because they are vacation destinations, which may have higher real estate turnover. Places like London and New York may have higher turnover due to the high paced nature of the financial based economies. Again, this is all just speculation, and these factors may or may not be valid. I am just pointing out possible problems that one should consider.
Causality is not something to disregard. For example, high supply and low demand (i.e. high MOI) will CAUSE lower prices and vice versa. I would expect listings per population to be CORRELATED with high MOI, but not to a point of it being a useful metric to predict prices.
And yes, that webpage strikes me as being cherry picked. Was anything outside of California, Florida or Las Vegas tracked? I didn’t see it. What about places like New York, Seattle or Dallas?
Again, feel free to crunch the numbers. Maybe you could publish a paper with your findings.
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Anonymous Says:
September 22nd, 2008 at 9:28 am
“Freako, it’s hard to keep track of all the questions posed to me amongst all the lunacy. I am not dodging anything here, just trying to avoid the trolls.”
You do know it’s hard to avoid yourself, right?
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Drachen Says:
September 22nd, 2008 at 9:30 am
Dave
“Nobody suggested that all future markets would follow the exact historic trends.”
You did.
“The real estate cycle is 13 years”
You didn’t say the last two cycles have been 13 years. The fact that you’re patently wrong doesn’t seem to bother you. I used Japan as an example that proves you wrong and you just ignored it. I am not suggesting that Japan’s model will unfold here, I merely use it to prove your “13 year” theory wrong. If it’s wrong once it can be wrong again and you certainly have very weak evidence suggesting that it’s right. Two events in a row does not make a pattern, you need at least three before drawing any kind of sensible conclusion (not that you’ve ever tried to draw any kind of sensible conclusion).
No other graph that I’ve been able to find shows such a clean 13 year interval even twice in a row. The US wide Case Shiller graph shows about an 18 year peak to peak, Japan as I said is about 25 years, Toronto has a nice graph that shows peaks at 1960, 1989, and right now.
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Thums up2 Says:
September 22nd, 2008 at 9:39 am
“Somebody earlier asked you personally whether you thought high MOI predicts future price drops?.”
Freako,
I was thinking that you or Patriotz will come forward to answer this instead you are asking the same question,first of all Bluesman did not show any guts to make this question of slow sales=price drop now you have turn the table towards dave.
things just makes me think of patriotz where is patrioz? anyway,indirectlly you can find the answer in bulls post but if you need a speciall answer that will bring us on the same slots where bulls are already right now.
My scientific economy tells me that demand,supply,and construction cost help setup the prices of any unit but theory does not provide power to any of those rules.
Where more supply help reduce the prices then there is high prices of unit also help decrease the sales volume.It does not mean that prices will fall because of high cost of unit that’s how these theory fall on to buyers and sellers personal circumastances.
as a seller are you willing to keep your unit?
yes if there is any alternative solution to cover the cost like rental yield,hope for market improvement,or desire to keep for whatever it takes.
Now recomended price drop=realtors commission
Rents are up and coming
Are you willing to sell your unit in loss?
Answer:No!
If there are any stress of job loss,employement loss,emergency condition then prices will come down little bit more but there is nothing coming ahead except a fourth coming tornado,
I think prices will start going up very soon in next few months how ever your question is for dave so i beg your pardon.Freako?
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MickeyFinn Says:
September 22nd, 2008 at 10:10 am
Real estate agents on Vancouver’s West side must have been busy over the weekend writing up news listings because I just checked and listings have broken through the magic 1,000 mark!
As of today, there are 1,006 single family homes listed for sale on Vancouver’s west side… that is the highest number for many years.
Here is a breakdown by price category:
Under $1.5 million asking price = 416
Between $1.5 million and $2.5m = 373
Over $2.5 million asking price = 217
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freako Says:
September 22nd, 2008 at 10:14 am
Freako, it’s hard to keep track of all the questions posed to me amongst all the lunacy. I am not dodging anything here, just trying to avoid the trolls.
Fair enough, but IMHO you have a knack for addressing the lunacy, but skipping the substantive challenges posed to you.
Listings per population may in fact be a valid metric, but again I have yet to see anybody demonstrate as much.
As I have stated, their is ample evidence of strong correlation in the U.S. markets.
It strikes me as not being better than MOI because it glosses over demand.
True, but we’d expect demand to be at least a partial function of population. If there should be a discrepancy between MOI and listings/population in a given city, which one is more reliable. Demand is at least in part based on psychology. May I suggest that listings per population is an EARLIER predictor of future price drops as it semi-controls for speculative demand. When sales/population is at historic highs, MOI may understate the situation. Personally, I think they are complimentary measures.
I would expect listings per population to be CORRELATED with high MOI, but not to a point of it being a useful metric to predict prices.
As I stated above, I believe that listings/population is an earlier predictor. In a sense, it PREDICTS rising future MOI. You are correct in that there is no causation. However, that does not void predictive ability.
Essentially what may happen is that sellers (supply) are the first to move as the market peaks. Demand (as indicated by sales) may be a step behind. Of course, it could be the other way around. In any case, all else the same, high listings/population does not bode well.
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Dave Says:
September 22nd, 2008 at 10:16 am
Dave “Nobody suggested that all future markets would follow the exact historic trends.” Drachen “You did.”
I think the next market will follow a similar, but not exact, trend. There is a difference.
You try to point out minor exceptions to the general rule (e.g. small peaks on the larger trend) but then go on to say that economics is not an exact science. You can’t have it both ways.
The fact is that the last two cycles have been 13 to 14 years in length. Flat markets generally last about 6 years and bull markets about 7 years. Of course, there are all sorts of factors that can change the future, but trends do often repeat themselves.
Do I really need to point out to you once again that real estate markets are locally driven? I don’t care what cycles in Japan look like. There are completely different dynamics at play. For example, did you know that Japan’s population will drop by half this century? Did you know we face the opposite situation with over 100 people moving here each and every day?
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freako Says:
September 22nd, 2008 at 10:18 am
My scientific economy tells me that demand,supply,and construction cost help setup the prices of any unit but theory does not provide power to any of those rules.
Where more supply help reduce the prices then there is high prices of unit also help decrease the sales volume.It does not mean that prices will fall because of high cost of unit that’s how these theory fall on to buyers and sellers personal circumastances.
Not sure exactly what you are asking, but construction cost does not affect prices directly. Over the long run, they do impact supply. More supply, less demand absolutely means lower prices. And remember, true supply is a function that includes all relevant factors (such as seller motivation), not just current listings.
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Dave Says:
September 22nd, 2008 at 10:33 am
As I have stated, their is ample evidence of strong correlation in the U.S. markets.
Correlations aren’t very useful. If anything they are misleading because they overlook the driving factors. It sounds like you understand the difference between correlation and causation, but are quick to discount the consequences. For the benefit of our audience I will try to explain the difference with a simple example. One could show that 90% of prisoners are smokers, in contrast to 10% of the general population. A false conclusion on this data would be to say that smoking makes people criminals. The correct conclusion would be to say that they are only correlated and the difference a reflection of other factors.
You agree that the listings per population ratio ignores a key driving factor and basic supply and demand fundamentals and base your belief on an unknown, which is the level of correlation. Is it 50% correlated, or 90% correlated. If only 50%, then well, it sucks. If 90%, then fine, I’ll buy it. Some basic linear regression could demonstrate this. The data is there. Have at her.
Until then, I think you are basing your belief on an unfounded faith.
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Thums up2 Says:
September 22nd, 2008 at 10:50 am
“Not sure exactly what you are asking, but construction cost does not affect prices directly.”
Same meaning as i say theory does not provide power to any of those rules.
“More supply, less demand absolutely means lower prices.”
That’s right for short term but supplier will chose to shut down his bussiness in long run so you are wrong!think about it?.
“And remember, true supply is a function that includes all relevant factors (such as seller motivation)”
That’s correct and procedure could be found in comment#176 as following…….
While rents are up and coming there is no point to sell your home for less that’s why after few month (nobody going to sell other than motivated sellers).”
over all your post is a translation of my post
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crabman Says:
September 22nd, 2008 at 11:31 am
Dave said:
Of course MOI is a leading indicator of price. That’s a well known and proven metric. It’s a reflection of basic supply and demand interactions.
Current MOI is 12.5. Therefore, Dave finally agrees Vancouver RE is going to crash!
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bdk Says:
September 22nd, 2008 at 11:31 am
don’t worry thumsup/krish this is just a bad dream if you pinch yourself you’ll wake up to a magical fairytale world where prices go up regardless of fundamentals and people will understand what you’re trying to say
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Dave Says:
September 22nd, 2008 at 11:43 am
Current MOI is 12.5. Therefore, Dave finally agrees Vancouver RE is going to crash!
That’s a pretty big leap.
I have been consistent in my prediction of a price correction along with the expectated magnitude from the day I started posting here.
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buff_butler Says:
September 22nd, 2008 at 12:51 pm
thumbs,
I do think you bring up a good point about construction costs. To know the effect of this on the current market you need to consider a few things (and feel free to argue anything):
First we have the profit that the builders company is taking. From talking to friends that manage building companies they try to shoot for 15% profit margine *minimum* to avoid project risk. This was for houses however Id imagine condos would be similar. Now this is esentially a 2 year projection (due to completion time) and due to the long time it is very subseptible to overbuilding. Especially in markets where the profit percent is much higher then the minimum which I would argue is the case for Vancouver. Now say you have a case of falling prices builders will keep up with new starts until there profit margin drops below 15% (they may however ajust there volume). So even though the market is falling you can still see a large number of starts and this will in the long term help sustain the plunge. If the builders were to cartel then they could prevent this however there are to many participants. Therefore I’d argue supply will go far past what is required.
This leads to the second point wich is vaccancies – both rental and owned. If you have a large number of vancancies then it is possible for prices to drop below replacement costs to in effect “clear” the market. The severity of this would be the months of inventory. I dont think we will see all vancancies come onto the market until the drop gains momentum.
So esentially we are at the peek “replacement cost”. Where prices of labour and materials will both start to move down. Since there are also a vaccume of extra properties far and above what is needed it is possible for it to fall below replacement cost. This also drops land prices wich is another input into replacement cost. Lastly people typically pay a premimum for a fresh new place so they would pay above market in down times.
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Drachen Says:
September 22nd, 2008 at 1:07 pm
Dave
“I have been consistent in my prediction of a price correction along with the expectated magnitude from the day I started posting here.”
The problem is that your prediction has already been surpassed and the market shows no sign of a turnaround. So in this case consistency is hardly in your favour. Unless you want to count being consistently wrong as a good thing.
“Do I really need to point out to you once again that real estate markets are locally driven?”
Ok, so you’re trying to say Vancouver’s real estate market cycle is 13 years. Still no response to the suggestion that there can be waves on waves. Still no evidence except for two consecutive periods which really bear almost no similarity other than the length of the wave. I say again, to even attempt to claim a pattern you’re going to need three consecutive periods to measure, two in a row does not make a pattern.
Why should Vancouver be different from Toronto? Or any of the big cities in the states? You’ve completely failed to address 90% of my argument and your “pattern” of two events is laughable evidence for your case at best.
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buff_butler Says:
September 22nd, 2008 at 1:15 pm
To continue with my rambling I would also argue that we didnt fully correct in 2001 before the olimpics were announced.
Regardless the news of the opimpics created extra demand. At the exact time you had lossening of credit wich allowd a lot of people who could never enter the market enter in. Esentially creating artifical demand (similar case in Alberta but its hype is sustainable for a little longer because its a tangible asset). The poor timing of this easy credit with the hype helped price out the middle class worker which is what real estate is esentially driven by in the long term average through affordability. Now we have a poorly timed tightening of credit. We have global financial destress which is restricting access to capital effectivly reducing the number of jobs being created. Most important of all they removed the 0% down wich before atleast tied a purchaser to there income. Now this is gone and you have far less demand.
All these points make the case for downward pressure. Theres lots of other reasons to buy other then investment (say family/kids ect.) however from an investment perspective if your only upside is the Olimpics then your esentially gambling with your future.
The most important thing for any purchaser (especially now) is to buy within your means. And if your in a cycilic industry be prepared to take a pay cut.
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buff_butler Says:
September 22nd, 2008 at 1:17 pm
Dave said
“I have been consistent in my prediction of a price correction along with the expectated magnitude from the day I started posting here.”
No you havent. You keep revising them… You should be a politician.
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satan Says:
September 22nd, 2008 at 2:19 pm
Do you really believe that canada can exist as a first-world country without the US buying stuff from canada? think rationally..
Do you think your banks have a different asset composition? Many eurotards also have that delusion..
Do you think your real estate bubble is smaller than the US?
How is your government going to pay all the stuff promised to the retiring baby boomers?
Have you looked at your demographic profile lately?
Your tax base is shrinking (more retirees + poorly paid immigrants)
For all the dishonesty inherent in US governmental statistics, they are quite honest when compared to canucks.
And there is the issue that, unlike the US, a very large percentage of the immigrant population feels discriminated against and hates canucks. Coincidently they + their kids are soon going to be a significant % of your working age population. wanna bet how that will turn out.. Of course, europe has the same problems..
The sad reality is that your future is much bleaker than anything successive republican administrations could ever inflict on the US.
You know the big difference between between canucks and americans- lots of americans are self-critical, almost all canucks believe their own delusions..
Hubris usually starts with excessive uncritical belief in yourself and magical thinking- a feature much more common in canucks than americans
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Anonymous Says:
September 22nd, 2008 at 2:20 pm
Markets looks ugly today. Dow Jones down almost 400 points. You Bulls must be crazy to buy real estate when the Vancouver market is dropping, and the North American financial market is in meltdown!
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Thums up2 Says:
September 22nd, 2008 at 9:32 pm
Buff Buttler,
Why did you keep the margin of profit around 15% while agreement with freako is based on if you sell units under it’s actual cost that way how long some one will pay the cost to employees and for the matterial?
In a case of a owner as a seller why would some one sell it under it’s assessment value while his own cost of living is not acceptable compare to what he is going to pay for alternate accomodation?
Rental Vacancy rates in vancouver is zero since last six months all we got in the market is monthly supply when people change their places for adjustments.
Over all very good post and most likely it works in downturn.