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.

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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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“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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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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"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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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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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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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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