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That still does not answer my question.

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It sounds like your site is crashed again but not yet the market,comment sections are not opening.

with best regard from enternal “tu2″ magic triple quad hard drive.

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I know it’s not. It’s just a citation. The article is pay-per-view at the Economist website. But I downloaded a copy while it was free.

I really don’t know much about natural gas or other commodities. Really all I claim to know is that the net rental yield for RE has to be above the cost of borrowing money in the long run. That’s all you need to know about this bubble.

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Why are you anonymous?
How can we associate what you are saying to anything else you have said or will say? How should I take your comment?

Regards,

arit

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BTW, I do respect and value your opinion, Patriotz. Don’t take this as criticism. I am generally in broad agreement with you. Now that I’ve buttered you up a bit…. Do you think natural gas is worth going strongly bullish on? It sure seems oversold to me, I still have quite a bit of uncommitted cash doing almost nothing for me and want to place it. Sure is interesting times out there, huh? Kinda dangerous.

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You’re starting to talk like Rob Chipman!

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The UBC reports discounts each city differently. It takes expenses such as maintenance fees, etc. as a % of the purchase price. Given the historically high nature of these expenses as a % of historical prices – the Vancouver %’s are skewed to the low side and historically cheaper cities are skewed to the high side. So in Vancouver he starts with a low cost of capital % to use as a discount rate. Error #1. He then discounts the % that prices must drop (by reducing the cost of capital by his prediction of how much prices will increase in the future) by to come to equilibrium by assuming in his formula that prices will go up in the future at the same rate they did in the past…which is completely illogical as he includes the period 2001 to 2008 which had increases that were clearly unsustainable in the long run and historically as the price drops are proving – so why would prices grow as they rates in the future (grow a number a 5% on a compounding basis and watch it go to the moon quickly…kind of like prices from 2001 to 2008). Error #2.

You would think a professor at UBC would find the flaws in his analysis…but he’s only an associate professor and the paper looks like it was actually written by one of his grad students and he oversaw it.

Pricing on the margin will drive prices down. What I mean by this is that those that are being crunched by being overstretched (cutting cheques each month to cover negative cash flow at one of more properties where rents don’t even come close to covering the mortgage, bought a number of presales, etc.) or those that are just speculators – when they all run for the door they will drive down prices. Whether others in their buildings or area can hold out for a long period of time or not without reducing prices…pricing always occurs on the margin…ie – your property is worth what your neighbor sold for…not what it used to be worth or what you think its worth.

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2 mortgages? Wow.. some are really expecting that others are going to make them rich.
Being a cheapskate and frugalist to madness, I spotted this bubble 7 years ago. Not from having a degree in economics, but common sense. I questioned as to why people were expecting so much, I questioned why people were willing to pay. I asked around and asked who is making more money, no body did or knew anybody who got raises, only more expenses. I knew it did not add up. The papers were saying one thing, and for each month that went by, the news paper world segregated even further from my world, a real world. Stone soup. And it went on for 7, seven! years!!!! Unbelievable. And here we are.
I dont like bubbles, I dont like fevers. In fever people become delerious, hallucinate and live in a surreal world.
Not healthy. It was a gold rush, and some paid a big price.
Either way, I figured this would have to burst in the seams sooner all later. What goes up must come down. I guess mother nature rules.

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with all due respect, mr. arit, flint is rock so you are splitting hairs with yourself.

That is why Freddie Flintstone is named Freddie Flintstone, get it? He worked in the quarry!

http://en.wikipedia.org/wiki/The_Flintstones

Well, you learn something new everyday!!! But don’t forget about the God part! It is important to Tsuriel’s name. Of course no God-fearing individual would just name their kid “rock”, or “flint” to you. It has to have a greater meaning.

Oh, by the way, what does Arit mean?

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We were discussing Tsur, not Tsuriel. Tsur means flint, as in flintstone. Tsuriel means “My flint is God”, literally.

The website you mention is slightly wrong, as it says

my rock (צוּר, Tzur)”.

Where it should be flint.

Regards,

arit

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What has happened is that lending standards have returned to some degree of sanity, which looks like a “crunch” compared to no standards at all.

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Wrong on both counts:

Krugman, That Hissing Sound, NYT, August 8, 2005

“Meanwhile, the U.S. economy has become deeply dependent on the housing bubble. The economic recovery since 2001 has been disappointing in many ways, but it wouldn’t have happened at all without soaring spending on residential construction, plus a surge in consumer spending largely based on mortgage refinancing. Did I mention that the personal savings rate has fallen to zero?

Now we’re starting to hear a hissing sound, as the air begins to leak out of the bubble. And everyone – not just those who own Zoned Zone real estate – should be worried.”

Economist: In come the waves, Jun 16th 2005

“The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops

NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust?”

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Tsuriel mean God is my rock. What the h*** are you talking about? Freddie Flintstone!

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Actually it’s a Hebrew name, means “Flintstone”.

Everyday you learn something new.

Regards

arit

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Here is the link to his study. http://cuer.sauder.ubc.ca/download/rese … ercost.pdf”
———————–

Didn’t have a patience to read the whole article. But he does suggest 7-11% price drop for Vancouver market to be in equilibrium with rent.

I understand there are several overlapping trends.

1) Pre-construction and other speculators – those that don’t plan to invest for longer than 2 years. They will panic and trigger the sale-out, but not all of them will – and not in all the districts they represent a majority. People have accumulated a lot of cash lately in realtor’s and development business or upon sale of their Asian or East-European condo (where prices shot up waaay more then in Vancouver in the last 5 years), and they have to park their cash. With relatively low mortgages they can ride out few years of storm on rental income – for many of them rent isn’t their only source of income.

2) People that bought 1-2bdr or townhouse for themselves in the last 2-3 years with 10-20% downpayment outside downtown core. They are paying 3.5-4.5% interest fixed for another 2-3 years, with monthly payments below $1,500 (this includes maintenance, and property taxes after the City Grant are laughable). Why would they sell – and go where – to rent out same 1bdr or 2bdr for $900? Short of a job loss, there is nothing to make them sell in a hurry.

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Do we have that mess of subprime here?do we have threat of terrorism here?do we have mass destruction from hurricanes?do we have BUSH here?

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Maverick McCain” and the Resurrection of the US$

http://www.financialsense.com/.....uesday.htm

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It was declared to be OVERWHELMINGLY wrong. Utterly utterly wrong wrong wrong wronger than wrong. By everyone: print, radio, TV.

And those 1700+ properties on the market? That’s just people testing the waters, they don’t really mean to sell.

And the fact that there were only 224 sales in August, a 44% drop from last August and the worst sales for August in a decade? It’s just been a little rainy.

And the fact that housing starts are falling? see above.

And the fact that housing prices are falling? Seasonality!

After all, prices haven’t fallen in Calgary or Edmonton! They’re stablizing! We have such a great economy! Everyone’s moving to Saskatchewan!

Whistlin’ in the dark, walkin’ past the graveyard…

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