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!

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Thums up2
Thums up2
11 years ago

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.

Anonymous
Anonymous
11 years ago

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!

satan
satan
11 years ago

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… Read more »

buff_butler
buff_butler
11 years ago

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.

buff_butler
buff_butler
11 years ago

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… Read more »

Drachen
Drachen
11 years ago

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… Read more »

buff_butler
buff_butler
11 years ago

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… Read more »

Dave
11 years ago

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.

bdk
bdk
11 years ago

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

crabman
11 years ago

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!

Thums up2
Thums up2
11 years ago

"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

Dave
11 years ago

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… Read more »

freako
freako
11 years ago

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.

Dave
11 years ago

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… Read more »

freako
freako
11 years ago

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… Read more »

MickeyFinn
MickeyFinn
11 years ago

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

Thums up2
Thums up2
11 years ago

"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… Read more »

Drachen
Drachen
11 years ago

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… Read more »

Anonymous
Anonymous
11 years ago

"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?

Dave
11 years ago

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… Read more »

Thums up2
Thums up2
11 years ago

"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?.

freako
freako
11 years ago

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.

Dave
11 years ago

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.

Sarah
Sarah
11 years ago

Gold is never cheap, is it Michael? You have a passion for gold. Me Too. I like gold jewelry.

Michael Randallbard
11 years ago

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.