Bloomberg on Vancouver housing slump
It looks like Vancouver’s housing slump is starting to get attention from outside Canada. Several people pointed out this Bloomberg article about our declining real estate market.
West Vancouver builder Sean Hanley thought Canada’s real estate market would be immune to the housing recession that sent values tumbling in the U.S. Then the economy slowed and oil prices fell.
The price of a detached house in this upscale community fell 22 percent in October from a year earlier, helping to drag the average residential price in Canada down by 9.9 percent, the biggest decline in 26 years, according to the Real Estate Board of Greater Vancouver and the Canadian Real Estate Association. For Hanley, that’s meant nary a buyer for his five-bedroom home.
“It’s been a little bit surprising the consequences of the subprime crisis have been so far-reaching,” said Hanley, 48, who has cut his asking price to C$3.99 million ($3.26 million) and is now offering a C$100,000 bonus, on top of regular fees, to the agent who delivers a buyer.
This isn’t the first time we’ve seen offers of a bonus to the buyers agent instead of a price reduction, but I’m a bit suprised that it’s acceptable to openly pay the buyers agent to represent the sellers interest. Is this even an effective technique?
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NO -LYMPICS Says:
November 19th, 2008 at 11:25 am
Hey:
I am number 1…… I tink
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macchiato Says:
November 19th, 2008 at 11:37 am
… his asking price C$3.99 million …
“The only other option is to reduce my asking price by C$600,000 to C$700,000 to where I’d be virtually giving the place away,” Hanley said. “I’m not about to do that.”
yeah, giving at away, for 3.3 million dollars, lol.
I don’t doubt the place is grand, but denial pervades.
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paulb Says:
November 19th, 2008 at 11:37 am
I think it’s a silly technique. 19 detached homes sold in West Van last month. Do Realtors need any additional incentive to show a motivated client a home that already offers a commission of 50k??? Anyone with a serious buyer would be showing them anything and everything, praying for a deal in this market.
I guess the other angle would be if a buyer was out looking at 5 or so different homes then the agent (who was in the know about the commission bonus) would then lead the client in the direction of the home with the bonus. That shows a real lack of belief in the integrity of your fellow realtors. Now integrity aside Realtors have to disclose what we get paid as a buyer’s agent. It may be an awkward conversation to have with the buyer “oh ya buy the way the house I insisted you buy also offers me an additional 100k in commission…sign here”
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patriotz Says:
November 19th, 2008 at 11:45 am
I’m a bit suprised that it’s acceptable to openly pay the buyers agent to represent the sellers interest.
The “buyer’s agent” is always openly paid to represent the seller’s interest, because he’s paid a sales commission just like the seller’s agent.
Not too hard to figure out is it?
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Vancouver Real Estate Never Go Down Says:
November 19th, 2008 at 11:54 am
Vancouver Real Estate Never Go Down Says:
November 19th, 2008 at 11:17 am
“West Vancouver builder Sean Hanley”
*Builders are not like home owners interest rates that apply to home owners are different than builder,Builders interest rates are very similar to credit card so $100,000 or $200,000 bonus is still a profitable for Hanley type of builder as he is being rat on bloomberg let him scream for exit but home owners no need to scream as rents are higher and interest rates are low http://cuer.sauder.ubc.ca/cma/…..erates.pdf
“For Hanley, that’s meant nary a buyer for his five-bedroom home.”
*Scream Hanley Scream greedy builders you should have measure the size of population and supply of other projects.
“At the same time investors stop buying. Prices are set by the few participants willing to buy. NOT the sellers.”
*Patriotz,There is a technical error in what you saying i mean to say you are not different than what paul is saying,when satisfaction for sellers does not meet than buyers reconsider the merging sense so you and him are moving around each other.
“Your continuing suggestive rhetoric tires me. It serves no purpose other than to taint my reputation. Will, be clear in noting that I am strongly recommending to you that you cease your disparaging personal attacks.”
*Larry you deserve some rants for poping out too early WILL’s point is if you know the insight you should wait atleast a month to report something however What makes you to pop out to report 10 days while real estate count month over month and year over year?Are you trying to scare the sellers or telling the buyers not to jump in?Check your age and your attempt does not match with your outcome.
*Other side Paul has a good point and i know where he is coming from now he know one thing for sure that is one and the only true fact that VANCOUVER REAL ESTATE NEVER GO DOWN
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Adrian Says:
November 19th, 2008 at 11:55 am
“It’s been a little bit surprising the consequences of the subprime crisis have been so far-reaching,” said Hanley
Haw haw
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patriotz Says:
November 19th, 2008 at 11:59 am
The RE bust in Vancouver is not a “consequence of the subprime crisis”, it’s a consequence of prices being too damned high.
As was the subprime crisis itself.
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NO -LYMPICS Says:
November 19th, 2008 at 12:01 pm
From the Bloomberg article:
“Canada’s housing market seems to be tracking the U.S. with a two-year lag,” said David Wolf, a Toronto-based economist with Merrill Lynch & Co.
In Hanley’s West Vancouver, 565 detached homes were on the market last month, 88 percent more than a year earlier, according to the Real Estate Board of Greater Vancouver.
Sales fell to 19 from 51 a year earlier. The price of a benchmark, or typical, detached house in West Vancouver declined to C$1.14 million from C$1.46 million a year earlier, said Craig Munn, a spokesman for the board.
Though Hanley says his offer of a C$100,000 bonus has increased awareness of his home, he’s starting to think it may be easier to rent the place.
“The only other option is to reduce my asking price by C$600,000 to C$700,000 to where I’d be virtually giving the place away,” Hanley said. “I’m not about to do that.”
Perhaps Mr. Hanley should be reminded why Wal Mart is so succesful.
You can get Poor catering to the Rich … and get Rich catering to the Poor.
This Canadian delusion of being insular to the world on so many fronts needs to be turfed ASAP.
Re West Van:
I remember a tradesmen telling me they made good coin in West Van, buying houses, fixing them up (often just cosmetically), and then flipping them. Assuming that it was a well off area, I asked him how it was possible. He said that West Van is full of nouveau riche’ overnite millionaires who can just as quickly lose their ” Keeping up with the Joneses ” status and have to sell ASAP.
Maybe now the floodgates will really open in West Van ? ( Maybe go to the West Van Police Pub Nite 24/7 at the WVPD station and drown one’s sorrows ? )
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Vancouver Real Estate Never Go Down Says:
November 19th, 2008 at 12:04 pm
missing link for above post can be found here
http://cuer.sauder.ubc.ca/cma/.....erates.pdf
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Anonymous Says:
November 19th, 2008 at 12:11 pm
I don’t see Dosh here anymore? you know the guy that swore Canada was different and Vancouver especially different. Well he’s right! We will be FAR FAR worse off then any of the crashing American cities. So vote! Dosh you are right we are different!
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Gadwin Says:
November 19th, 2008 at 12:27 pm
Yeah, Vancouver will be different for sure. Vancouver is going to lead Canada as the biggest Canadian real estate meltdown during this economic crisis.
Pretty soon, we’re going to rival Phoenix in the US. So move over Phoenix, here comes Vancouver!
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NO -LYMPICS Says:
November 19th, 2008 at 12:39 pm
RE: Big 3 Automakers (ie Ford, GM, Chrysler):
The next domino to watch?
A few months many of them apparently had $ Billions in reserve to help weather a storm.
However, they are burning their cash reserves at such an ever increasing rate and the slump has been more prolonged than they had ever wildly imagined. I read that there decline in sales is about 7 % more than they had anticipated, but that 7 % decline creates a negative fiscal quantum leap they simply cannot adjust for.
What makes this intersting is that the BIG 3 are asking for approx. $25 Billion to keep them afloat. Given the hundreds of thousands of jobs at stake both directly and indirectly, the US Gov’t still seems hesitant at any bailout . From what is being reported, it seems that the Gov”t actually feels it may be best for the auto companies to go into bankruptcy and then rise from the ashes like a Phoenix.
However, unlike the housing market, where the house (asset) still exists, and simply a matter of what the value is during any/all transactions, now people are left wondering what happens if these Big 3 auto makers start to go broke?
What if you own a Ford…does it become worthless for resale if Ford crashes and burns ? Yes, you can still use it…till it breaks down…but what about parts if required ? What is the market price of UNcertainty “X” .
How about if you want to buy a car ?…stay on the sidelines and NOT buy till one feels more assured the given auto manufacturer is solvent ?
Maybe much of the western countries will be like Cuba….(autos etc. from the 1950’s they have managed to keep running with wire and tape etc ? )
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Tony Danza Says:
November 19th, 2008 at 12:46 pm
It looks like Vancouver’s housing slump is starting to get attention from outside Canada.
Where’s Bob Rennie to tell us how bullish this article is as it will alert all the rich Wall St. bankers to our attractively priced McMansions and our killer RE fundamentals?
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Don Lapre Says:
November 19th, 2008 at 12:55 pm
13-
Indeed, the silence from Rennie sure is deafening. I definitely expected him to be trumpeting this tremendous “opportunity” to get in before the next leg up begins. Even he likely has come to the realization that his boilerplate Vancouver cheerleading has been undressed and simply doesn’t work any longer as the masses slowly awaken to the ugly fundamentals that were slumbering next to them all along.
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NO -LYMPICS Says:
November 19th, 2008 at 1:03 pm
Hot off the presses !
How to still make money on your exisitng real estate?
Lease out your back yard as a DUMP SITE ! Beat the rush !Then lease out your front yard ! ( The hell with curb appeal, dammit !)
http://thetyee.ca/Blogs/TheHoo.....lingCrash/
This is why Vancouver Real Estate NEVER go down !!! (if you are flexible !)
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EdB Says:
November 19th, 2008 at 1:05 pm
“Pretty soon, we’re going to rival Phoenix in the US. So move over Phoenix, here comes Vancouver!”
Just goes to show how world-class Vancouver is – we’ll be competing with the big boys for disastrous price declines as well.
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Anon Says:
November 19th, 2008 at 1:26 pm
Offtopic, but still amazing:
http://www.nytimes.com/2008/11.....tzwKye%20A
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Not Dosh Says:
November 19th, 2008 at 1:28 pm
Hey #9
If you can look at a graph and read interest rates why is it that you cannot understand that prices are way out of line with fundamentals and will have to correct by 50% in order to qualify as an investment (as opposed to speculation).
You managed to quote M2 but don’t understand supply and demand? Or negative investor sentiment?
It’s hard to believe you are as stupid as you act, don’t you get bored of acting like the stupidest person in Vancouver every single day?
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Anonymous Says:
November 19th, 2008 at 1:36 pm
#18,
you should atleast teach us economy,real estate,demand and supply do not shoot your arrow in dark your comment is dumb as you are such an asshole without any basic knowledge so teach us or fuck off.
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islander Says:
November 19th, 2008 at 1:49 pm
All forms of compensation must be disclosed in writing by the realtor to his clients, including commission, bonuses, gifts, everything, before an offer is written.
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carlk Says:
November 19th, 2008 at 1:59 pm
I with PaulB on this one. In this declining market, the proper pricing of the property is paramount to anything else least of which the realtor’s commission.
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NO -LYMPICS Says:
November 19th, 2008 at 2:03 pm
View to the future re: Bankruptcies?
http://www.nytimes.com/2008/11.....cy.html?em
No longer life support … simply R.I.P. ?
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bdk Raffles on Robson (821 Cambie Street) Says:
November 19th, 2008 at 3:12 pm
** New units are now renting for $1350. What will happen to the older stock?**
“NO PETS, NO SMOKING – ONE YEAR LEASE
New Suite on the 15th floor. 1B + flex room and walk-in closet.
European appliances, parking and h/w included. Dark hdwd floor in living area and carpet in bedroom and flex room. Bathroom has soaker tub and shower. Fitness room and whirlpool. Close to sports venues, Yaletown and Robson shopping.
Posession on approval and rent starts December 1.
RANCHO MANAGEMENT”
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bearette Says:
November 19th, 2008 at 3:19 pm
OT: Dow below 8,000 … look out below. Testing new lows indeed.
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Straightryder Says:
November 19th, 2008 at 3:23 pm
There needs to be a footnote in Hanley’s add…
“he house boasts an unobstructed Pacific Ocean view, *sun-filled patios and an infinity swimming pool.”
Footnote: * only 2 months of the year with sun-filled patios.
What a dumb ass. Im going to call and offer him 100,000 grand to leave. As he’s hauling his shit out the door, I’ll be standing there smoking… only to ash it out on the marble under my foot.
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Not Dosh Says:
November 19th, 2008 at 3:24 pm
#19 it appears that people have been trying to each you for years but you are either too high or it’s simply too complicated for you to understand.
Imagine if there is one person who wants to buy a condo and thinks it’s a good idea. In anticipation of this sale ten people go out and buy a unit before the first person buys one planning to sell to this person.
All ten of these people are thinking they’re going to make easy money but then the buyer sees there are ten people who bought them and starts negotiating the prices downwards.
Instead of making money all ten speculators lose money and the one buyer got a better price than buying directly frm the developer.
Did that make sense? I can try to make it even clearer if you like.
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Anonymous Says:
November 19th, 2008 at 3:30 pm
Bdk,
Did you go through inquiry or posting another spam for rancho management? who knows if you work for them then pick up phone to say oh that’s gone would you like to go for next one at $1,699.00 or $2,200.00.
First find out discription like sq.ft.floor,and direction then come back if it’s available.
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Vancouver Real Estate Going Down Says:
November 19th, 2008 at 4:01 pm
*Other side Paul has no point and i don’t know where he is coming from now I know one thing for sure that is one and the only true fact that VANCOUVER REAL ESTATE GOING DOWN HARD!!!!
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NO -LYMPICS Says:
November 19th, 2008 at 4:13 pm
Re: Bob Rennie ( and the search party looking for him ? )
After reading Lewis’s (ie author of Liars Poker )recent article, you kind of wonder if there should be a Nuremberg Trial for the guilty parties in this Economic collapse.
Excuses like ” they had no idea what was going on” or simply “following orders” don’t cut it because many knew exactly what was going on…given these people created the vehicles that ultimately lead the charge into the economic abyss and dragged else everyone into it like a black hole .
We in BC didn’t have a Wall Street per se locally, our stock market were Real Estate, even Rennie alluded to as much. However, if he , the so called “Condo King” , can say with a straight face he didn’t foresee what happened as inevitable, and due soon,he’s a lying little SOB Mo – Fo. All one has to do is go back several weeks ago and see his so – called market expertise as basically self -serving market -pumping BS.
PS: Maybe he has bailed out of town or laying low for a good reason … as often there are disillusioned parties that have lost literally everything, who connect the dots and go “looking” .
I just wonder if Rennie will ever bounce back, but I certainly wouldn’t touch anything he ever tried to sell, for good reason , given the “emperor/king” has no clothes, if they ever did.
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VHB Says:
November 19th, 2008 at 4:22 pm
Re #29:
“If the blogger is right . . . then 1000 people are wrong.” Bob Rennie, Vancouver Magazine, June 2006.
Setting modesty aside for a moment, I’d say we score one for the blogger! I shoulda made a wager with him . . .
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NO -LYMPICS Says:
November 19th, 2008 at 4:29 pm
Just in case many of you are making big bucks flipping your Millenium condos (Remember to chant ” VANCOUVER REAL ESTATE N-E-V-E-R GO DOWN ” ! ) so you can re-invest in “green” energy.
http://www.princegeorgecitizen.....risis.html
Keep the cash under the mattress where its safe !!!.
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jesse Says:
November 19th, 2008 at 4:36 pm
WaMu job losses in Seattle could total thousands
These are high paying jobs for the most part. Luckily Vancouver doesn’t have any major banks. Or high paying jobs. Phew.
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blueskies Says:
November 19th, 2008 at 4:47 pm
i took a walk past TV Towers today.
the construction crane on T2 was
being disassembled…..
very soon there will be completions
to contemplate for the lucky few….
ditto for W an intellectual concept
gone terribly wrong…..
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Keeping an Eye on the Pimps Says:
November 19th, 2008 at 4:49 pm
“The price of a detached house in this upscale community fell 22 percent in October from a year earlier, helping to drag the average residential price in Canada down by 9.9 percent, the biggest decline in 26 years, according to the Real Estate Board of Greater Vancouver and the Canadian Real Estate Association. For Hanley, that’s meant nary a buyer for his five-bedroom home.”
The Bloomberg article should be reproduced on brass placards and copies placed in the lobby of The Vancouver Sun, CMHC, and every Real Estate Board Office, as a reminder
that Muir, Pastrick, Rennie, Tsuir are complete idiots and or liars.
Why aren’t the rich Iranians and Asians who have cash not buying these baragains?
How would the credit crunch (if there is one) affetct all those rich foreigners who have cash, after all is that not the explaination why local incomes didn’t matter?
I’m somewhat suprised the people who bought leaky condos in East Van aren’t selling their units and trading up in West Van.
This is a great time to trade up. Hurry hurry, hurry, West Van is running out of views.
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Anonymous Says:
November 19th, 2008 at 5:15 pm
#26,
Answer is written in #5 on this thread and in response to #8 by paul and #9 by patriotz on last thread.
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Nobody!!!!! Says:
November 19th, 2008 at 5:22 pm
“Setting modesty aside for a moment, I’d say we score one for the blogger! I shoulda made a wager with him” . . .
Between Rennie has sold vancouver real estate worth more than 500 millions imagine if he was sitting on blogs he should have become a jobless commuter.
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macchiato Says:
November 19th, 2008 at 5:29 pm
Imagine Rennie these days, a potential loss of commission on 2 developments worth hundreds of millions in sales. I am not sure the hit he takes, but i’d guess it’s in the 10’s of millions. He must be getting destroyed right now. I would imagine the prolific growth of his art collection my have to be tempered. I lot of people bought into his spiel, his credibility should also be completely shaken, but then again, the Sun still let’s Peter Simpson write complete trash in their paper, we’ll see.
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Not Dosh Says:
November 19th, 2008 at 5:35 pm
#35 you are clearly as stupid as one can humanly be.
Presuming you are in fact Human?
Why don’t you go buy a condo right now?
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VHB Says:
November 19th, 2008 at 5:43 pm
Hey Macchiato,
Rennie and Beasley have been quick to take the credit for what went right on downtown development between 1997 and 2007.
As things crash 2008-201X, I think it is appropriate that they both take the blame for the seeds that they have sown.
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Adrian Says:
November 19th, 2008 at 5:51 pm
What if you own a Ford…does it become worthless for resale if Ford crashes and burns ? Yes, you can still use it…till it breaks down…but what about parts if required ? What is the market price of UNcertainty “X” .
I imagine some of that intellectual property can be bought piecemeal and then licensed out to auto shops and 3rd party manufacturers.
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Keeping an Eye on the Pimps Says:
November 19th, 2008 at 6:01 pm
And so it appears the 18 billion surplus forecast, just a few months ago, for Alberta has shrunk to only a couple of billion.
Did CMHC author the forecast or the Realtor association, or Central Credit Union?, the only other people who possibly be this incompetent would have to be the VANOC crew.
But then again, are they incompetent or liars?
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Patiently Waiting Says:
November 19th, 2008 at 6:12 pm
Victoria Hill is a ghost town. ONNI is going to board up partly completed buildings but that won’t keep the squatters out. New West has seen a significant increase in homeless lately (they camp in Queens Park now).
Recently completed condos appear empty with no balcony furniture and few lights on.
A thought occurred to me. With the growing parking problems in Vic Hill, they should turn some of the cleared, unused land into parking lots. They will be needed once people actually live there.
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bearette Says:
November 19th, 2008 at 6:20 pm
Ah, Rennie. Paving a greasy trail for shills everywhere.
I have a new slogan.
Be Bold … or Move to Suburbia. Today should read more like Be Bold … or Be Smart, save your money and buy a house at 50 per cent off-peak instead of a Woodward’s ghetto rat trap you can’t even flip for a profit!
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Falling Says:
November 19th, 2008 at 6:21 pm
I think will going to see 2 for 1 condos very shortly!!!
like car dealers do!!!
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VHB Says:
November 19th, 2008 at 6:37 pm
“As things crash 2008-201X, I think it is appropriate that they both take the blame for the seeds that they have sown.”
agreed … and I’ve been building up Pope’s wiki with hilarious Rennie quotes. found one from May where he brags Russians were buying it up. From Russia, of course, this is now the Russia that has been apparently burning through hundreds of billions of dollars of reserves to avoid another ruble implosion.
Speaking of the wiki, VHB, you should put your prediction you posted a couple of week ago, in some kind of ‘Hall of Fame’ section.
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Anonymous Says:
November 19th, 2008 at 6:59 pm
The scene: A few flakes of snow, drifting down to a clearing, with the mountainside rising into the gloomy sky. The bears are sitting around, waiting. VHB says “I think I hear something” The others perk up. Nothing happens. This repeats a few times. Then a rumble starts up and the corpse of a sheep tumbles down. The bears start to feed. Scene fades to a formal room, perhaps in a castle.
The bears are sitting in comfy chairs with Bluesman in the corner plucking out “Bring it on home” on his guitar.
WoW: Rejoice my friends, for the time of feast is nigh upon us. The sheep are falling to their deaths, as was and will be again.
Patriotz, looking up from his Financial Times: Earnings, you fool. Check the earnings before you taste.
Drachen:You mean the price/earnings ratio. Please try to be accurate. (The others roll their eyes and ignore him)
Pandora, (a bull): You are very very bad people, to wish ruination upon such fine and fattened sheep.
The bears, in chorus: Twas not we that drove the sheep to the high mountain meadows in the gathering autumn, nipping and chivvying at their heels. Driving them ever onwards with talk of finer and lusher meadows to graze beyond the tarp-shrouded towers. Drove them beyond the range of the mountain goats themselves, there to abandon them as the snow started to fly. And now the sheep are doomed, indeed! And you would deny us our feast on their corpses, as you did deny the truth in our entreaties to the sheep to stay safe in the valley?
Pandora, dreamily: Yes, a beautiful sight, all those sheep, ready for the fleecing. Snaps back to awareness: We took only the lambs and the fleece for ourselves, the sheep were fine. It’s hardly our fault the winter came, cold and cruel. Nobody could have seen this coming.
The bears, in chorus: We did!
Rob: Show me where I said the winter would never come.
Noz (A very small and mangy bear, with a crazed look): The sheep are poisoned, don’t taste them! (Goes back to gnawing his leg off)
Alexcanuck: The sages have warned me, the winter will be long and hard this year. Be very cautious.
RJ: What are you talking about, spring is in the air already. Life is grand, I’m in love and already i can see a new flock of sheep, ready for indoctrination in a perma-growth model.
The air shimmers, as the eerie spectre of Ghostrider’s skeletal arm appears and tears a false bear-skin from RJ’s back, revealing a bull: Behold! The spy in our midst!
Blueskies gasps and recoils, pointing a finger at him: You! But of course! The signs were all about you.
Anon chirps up: And all about you also were many, many posts!
Lord Rennie, a pale and ethereal figure, floats about his art-filled penthouse far above the stage, his faithful lap-dog Dave following at his heel. He flies in and out of the scene in his private helicopter, never descending to the plebeian world below.
Randallbard bursts into the room: Gold, Gold, Gold!!!! The others, bear and bull alike, turn upon him and tear him to pieces.
A peal of trumpets rend the air, and Krissh is carried in, roasted on a platter, an apple in his mouth.
Scullboy follows, jumping up and down in his excitement: Try the gravy, I did a fantastic job on the gravy! Oh, I do hope you like him well-done, I’m kinda worried about parasites, his Mums not the cleanest person in the world, I didn’t want to serve him rare.
Fade back to the clearing, now buried in deep snow. POV follows a last leaf as it flutters down, landing beside the largest mound of snow. A hole is revealed and entered to focus on the fattest bear ever, curled up warm, comfy and slightly smug.
Bluesman strums “Amazing Grace”…
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VHB Says:
November 19th, 2008 at 7:01 pm
Hi #45. (BTW, that wasn’t me.)
Yeah, when I have time I plan to do a wholesale dumpage of the golden oldies from my blog archives into the Pope’s wiki. That’s a great place for it, rather than languishing and gathering cyberdust on the old blog.
BTW, thanks for all the up arrows on #30. I really saw that Rennie quote from the magazine as emblematic of the mockery that all the bears took in the 2004-2007 period. The dripping, condescending mockery of the bulls did burn, we must admit. Well, he who laughs last . . .
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Alexcanuck Says:
November 19th, 2008 at 7:30 pm
Just so you know, 46 was not me. Yes, I like my story, but no, I didn’t copy it over again. Once is enough.
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Paul Says:
November 19th, 2008 at 7:45 pm
#5 – I am not implying that real estate prices won’t go down. To the contrary, I think that there is room for prices to fall another 20-30%. However, for the bears who expect prices to fall 70% from current levels I think is simply unrealistic. To give a canned example, look at the Point Grey area. This area is an extremely tight market, with a lot of established home owners who have built up a lot of equity and emotional attachment to their homes over the years. Not many new homes in this area, and lots of old money. Sure, there are people in this area that will NEED to sell at any price from time to time, such as those getting divorced or terminally ill. But I would estimate that’s less than 1% of the market in any given year. Unlike the downtown condo and townhouse market, “old money” neighbourhoods such as Point Grey, University Hill, Dunbar, etc are completely built out and don’t suffer from a supply overhang. There’s certainly not going to be across-the-board 70% off firesales in these areas. Anyone waiting for that day would be delusional.
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scullboy Says:
November 19th, 2008 at 7:56 pm
Completely OT but hey, mod me down if you don’t like it…
I did a shift at a high end cookware store today and immediately after shoo – ing out a homeless person, I ended up selling a couple of gift certificates to one of the actresses from Battlestar Galactica.
I figure it doesn’t get any more Vancouver then that!
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NO -LYMPICS Says:
November 19th, 2008 at 7:58 pm
Let’s try a feedback loop.
Recycling market tells a lot about the global economy .
News tonite shows recycling glut, stockpiles bursting at the seams, ( may deny it but looks like it will all end up in the landfill ).
Basic implication is overseas countries ( mainly China ) with manufacturing – based economies are not absorbing these recycling materials…because there is no market for their own final manufactured products .
Scrap steel was selling for $250 / ton just a few months back. Now its down to $20 / ton. There is also little demand for recycled paper products, because offshore factories now have much lower demand for cardboard ( made from recycled paper products )used for the packaging of their manufactured products.
No market for their products = no offshore profits to invest or shelter here in BC = reduced market for local Real Estate.
As always ,… the best indicator is at the base level.
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patriotz Says:
November 19th, 2008 at 8:07 pm
Lay off the straw bear. Even the most mega bears are not expecting more than about 50% nominal on SFH. If you want to claim otherwise, search this blog and give us some quotes, rather than making things up.
BTW in the 80’s bust there were actual properties in Van West that had repeat sales at 50% off. It’s going to happen again.
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Paul Says:
November 19th, 2008 at 8:20 pm
A 50% price reduction would be awesome.
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bdk Says:
November 19th, 2008 at 8:21 pm
Paul, I grew up in the Westside of Vancouver and am a fourth generation Vancouverite, my great grandparents were some of the earliest residents of Pt Grey.
I agree with your statement that there is a lot of old money but also want to play devils advocate here.
Firstly in 1998 I had three friends parents’ sell their family houses.
One was a 20 year old (at the time) `4,000 sq ft house at 1st and Trimble and it took a year to sell for $870k
Another at 10th and Crown went for `$490k and the third was assembled into a condo project at $770k ( A premium since they held out).
In 2001 an entry level house in Dunbar was $600k and of the couple who bought the house one grew up on the most exclusive street in Vancouver (upper class) and the other was from Shaughnessy (upper middle class) and the husband had an alpha male type job in finance, these same houses were going for $1.25 million 6-7 years later and yet incomes hadn’t doubled and the old money was still old money.
So who was buying theses shacks for $1.25+?
As far as I can tell the old money you’re talking about had bought long ago and didn’t need to wait for the hype machine to make them go buy a $491k condo at brentwood mall.
What will stop the prices from falling back to 2001 or 1988 prices again?
We’ve subtracted the hype, the temporarily inflated incomes of mortgage brokers, real estate lawyers, realtors, “investors” and what’s left?
What industry does Vancouver have that could sustain an entry level house in Dunbar,Pt Grey or Kerrisdale?
What happens when the owners of these very houses (a lot of whom are UBC Professors and similarly modest jobs) want to sell? Who is coming to buy them for more than $600k?
I’m telling you as a longtime resident of the westside it wasn’t slouches who were buying in the $600k range furthermore how will anyone move up to a house in the Westside if they have a $491k mortgage on some piece of crap in Brentwood mall or even worse at TV towers?
“Oops I thought I was a shrewd investor and now I have to pay $2,000 of my after tax income every month for the next 25 years to subsidize my investment condo silly me, luckily I make $33,000 per month so I will go buy that 7 figure entry level home now”
50% from $1.3 is back to $650k for a house that would rent for $2500 MAX.
What happens if interest rates go up?
Do you think the bank would give a 7 figure mortgage to a couple making $120k per year and an existing $491k mortgage?
*VHB didn’t you suggest that the median income in Pt Grey was $109k in your hilarious “The W” parody?
Wouldn’t Pt Grey be the upper echelon of earners?
These same people who already own multiple properties for decades and who’re more likely to start selling than buying more as they retire?
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bdk Says:
November 19th, 2008 at 8:59 pm
On a lighter note.
Check out Rennie’s assignment deals (on his website right now, I’m not making this up) at the W!
for only $900+ per sq ft you too can live in the poorest postal code in Canada!
888 sq ft = $819,000
654 sq ft = $425,000
I wonder why Bob didn’t buy these smoking hot deals before they were even listed?
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Anonymous Says:
November 19th, 2008 at 9:08 pm
#54 BDK..I grew up in the Dunbar area, and this area doesn’t seem to change much. i.e. there doesn’t seem to be as many new home buyers or “transient” buyers as in downtown. By old money, I mean families who have lived in Vancouver for atleast a couple generations and who have completely paid off one or more homes. I can’t give you precise figures, but being a former Dunbar resident I would say that a lot of families are in that situation in Dunbar, Pt Grey, Kerrisdale, etc. This wealth gets quietly passed down from one generation to the next in some form or another. So that tends to skew the “affordability” rules somewhat. To what extent, I haven’t a clue.
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Paul Says:
November 19th, 2008 at 9:10 pm
I posted the above.
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markx Says:
November 19th, 2008 at 9:16 pm
Paul: University Hill is facing competition from 2,500 units being built/already built on the UBC endowment land. Its price support is the rent equivalent of UBC residence, which is $600/month. If a housing glut happens on UBC campus, anything between UBC and VGH won’t escape, as a major attraction for Old Money neighbourhoods is their proximity to UBC. Just as a glut downtown will crush suburban condos near sky, a glut on UBC campus will crush Vancover Westside.
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beatstreet Says:
November 19th, 2008 at 9:32 pm
I’m a bit suprised that it’s acceptable to openly pay the buyers agent to represent the sellers interest.
Pope, this is an excellent point. This type of payment should be disclosed to the buyer. I don’t know what the practise currently is, but if disclosure is not currently required, it would be totally unethical not to disclose.
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Michael Randallbard Says:
November 19th, 2008 at 10:13 pm
“Randallbard bursts into the room: Gold, Gold, Gold!!!! The others, bear and bull alike, turn upon him and tear him to pieces.”
Now that I’m out of the hospital from that beating I thought I’d barge in and announce that tonight gold is 924.63 and that housing prices are going much much lower. Don’t count gold and silver out yet.
***Gold fans hit the green arrow and fans of paper money hit the red arrow please for an informal poll.
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oracle Says:
November 19th, 2008 at 10:14 pm
i was too optimistic. the prices will not decline %40-50.
it’ll be around %70.
this is really getting scary, not real estate, i mean the whole system!
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patriotz Says:
November 19th, 2008 at 10:15 pm
Pardon me for repeating myself, but the “buyer’s agent” is always paid by the seller, and by the seller alone, to represent the seller’s interest.
The “buyer’s agent” is in fact an agent of the seller. Period.
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patriotz Says:
November 19th, 2008 at 10:19 pm
On what planet Mike? Kitco says it’s $736.80 and yes they will sell you real gold for spot plus a few bucks. Or do you mean CAD?
http://www.kitco.com/charts/livegold.html
“First, low inflation, even deflation, will lessen the need for inflation hedges. But second, and more crucial, as the West buys less of China’s more fully priced products, and as China’s cash needs escalate, its government, to feed the peasants and to maintain its power, will sell state assets – including gold. This, plus inflation, could push gold much lower than anyone thinks, perhaps to half its current price.”
http://www.theglobeandmail.com.....PBusiness/
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Michael Randallbard Says:
November 19th, 2008 at 10:38 pm
Patriotz…..are you pricing local homes in USD or CAD?
Canadian Dollar -0.16% 11/20-01:30 1.2563 0.7960 926.65 +4.90 updown +0.53%
scroll to the bottom of this page for the CAD price of gold
http://www.kitco.com/
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Michael Randallbard Says:
November 19th, 2008 at 10:42 pm
As far as these predictions go, I have to say that every day there are hundreds of opposing predictions about inflation/deflation etc and the POG but it gets tiresome reading any of them because no one really knows. All I know is SO FAR gold and silver have held up fine in terms of our money. Yes we are in uncharted territory so don’t ask me I’m just another bozo on the bus.
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Michael Randallbard Says:
November 19th, 2008 at 10:45 pm
“This, plus inflation, could push gold much lower than anyone thinks, perhaps to half its current price. How’s that for a real contrary opinion?”
Actually I did see this article and by his own admission he is trying for a hail Mary pass. a “real” contrary opinion.
Lots of good stuff, pro and con and on every economic subject daily
http://www.safehaven.com/index.cfm
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BBY Says:
November 19th, 2008 at 11:27 pm
#49 Paul Said:“…old money…”
The point grey/dunbar/university hill “old money” is not the same (as much) as the typical idea of old money, as was established in Shauhnessy or the British Properties or the estates south of SW Marine Drive. 20 years ago I recall the point grey area being very much like a nice section of Burnaby. Many people thought it a bit out of the way. It was definitely nice, but it didn’t have the reputation of upper class. It was middle to upper middle class ownership. And fourth avenue was the Commercial Drive of the time.
So the current old money wealth of point grey is not so much the demographic, but the fortunate middle class owners who were able to surf the highest part of the Vancouver RE wave with a paid up mortgage. Recent owners are either lateral movers from the same or similar neighbor hoods, or those flush with money. Look at the type of houses; they are not mansions for the most part.
Thus I think that the wealth of the neighborhood is on paper, and not as material as you think. It will go down. And be brought back down to earth.
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patriotz Says:
November 19th, 2008 at 11:28 pm
Patriotz…..are you pricing local homes in USD or CAD?
Don’t be cute, Micheal. Commodities such as gold, oil, etc. are always quoted in USD unless explicitly indicated otherwise.
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read on Says:
November 19th, 2008 at 11:28 pm
Randy – Mish is arguing for deflation as well, and I know who I choose to believe.
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BBY Says:
November 19th, 2008 at 11:37 pm
Scullboy: Kewl on the BSG (Battlestar Galactica) cast encounter. I only met an extra that played a nurse on an episode. But I know a few on the Stargate Atlantis cast and crew. That is one of the few cool things about present day Vancouver.
Oddly enough, I think the media exposure that BSG and Stargate franchises have given Vancouver may have pushed Vancouver RE up. All those lush outdoor shots do look nice. And our camera crews and actors know how to make our rain look evocative and moody; not its cold and miserable bitter reality. Great marketing.
But the Cylon motto is really about RE cycles: all this has happened before, and all this will happen again.
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patriotz Says:
November 19th, 2008 at 11:57 pm
Mish is arguing for deflation as well, and I know who I choose to believe.
We are seeing asset price deflation right now of course, but I’ve got a billion Reichsmarks that says we are not going to see CPI deflation. MOM perhaps from time to time, but YOY no.
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read on Says:
November 20th, 2008 at 12:19 am
“The CPI is still rising year over year, but this may be the last month for it to do so. Looking ahead year over year comparisons will become increasingly easy to beat, especially in energy and transportation.”
http://globaleconomicanalysis.blogspot.com/
It’s only opinion, but I choose to put some weight on it.
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jesse Says:
November 20th, 2008 at 12:21 am
“This wealth gets quietly passed down from one generation to the next in some form or another.”
This is an interesting argument but the logistics are not so easy. Yes there is “old” money in Vancouver, saved by past generations and bequeathed to the current one in the form of assets, one such asset being real estate and nowhere so much so than in Vancouver.
Think, though, the logistics of passing on this equity to the next generation. This is not any problem at all when the family has only one child however it gets much more complicated when there is more than one child to “feed”. One house but two or more kids. Which kid gets the house? What do the other kids get? In order to properly bequeath the house to one child, there needs to be a commensurate amount of other savings that would need to be transferred or promised to the other child/children. Following along the heated Christmas conversation to its destination, we can see that the child must finance the house at current market rate but compensate the siblings in kind. No free lunch here; anyone with siblings knows this absolutely.
We still cannot ignore the negative savings rate in BC that is telling us there may not be as much house available as people think, on average. The uber rich will make out just fine — in Canada the most well off have proportionally less net worth invested in real estate (do they know something others don’t??) — so the transfer to the next generation is less of an issue. Though if you’re that rich, remember the old Chinese proverb: riches last only three generations.
Another compelling argument against the “old” money is that these houses are not actually part of the market. If it is inordinately true that some neighbourhoods have this issue we would expect listings to be much less in the “old money” areas than in other neighbourhoods around the Lower Mainland. I have not drilled into the number of listings per household, but it seems like lots of properties in areas rumored to have “old money” are being tendered outside the family circle.
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patriotz Says:
November 20th, 2008 at 12:29 am
“The CPI is still rising year over year, but this may be the last month for it to do so.”
Mish is talking about the US. The CAD has fallen 30% from peak and 20% YOY against the USD. I don’t see consumer price deflation in that.
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patriotz Says:
November 20th, 2008 at 12:36 am
As jesse and myself have said, what matters to the market is who is buying and selling, not who isn’t. It’s not the “old money” that bid up prices in Van West and West Van – they owned their houses all along – but speculators and poseurs. These are the people who are bailing now and this is the reason why Van West and West Van are tanking so hard.
There is no one left to sell to. The old money is too smart to buy and the dumb money has evaporated.
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read on Says:
November 20th, 2008 at 12:36 am
yar, but the comment was re: randy’s gold – and US deflation would have a big effect on that, no?
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jesse Says:
November 20th, 2008 at 1:17 am
“what matters to the market is who is buying and selling, not who isn’t. “
What the argument amounts to, I think, is a self-fulfilling gentrification brought on by “old money” being more desirable to live in, leading higher income families to buy in such areas. If enough properties are transacted in off-market transactions within a family at below-market rates, the area’s median income can rise lower than the marginal prices for a long time.
It is often used as an argument for why one’s neigbourhood is not going to see price drops as severe as other areas. Think of it as a tightly held stock. The whole thing collapses because the marginal buyers able to afford these areas drain from other areas and relative prices fall. Eventually the market shakes these things out, despite best efforts otherwise.
That said, gentrification IS an argument for sustainable high prices but we would expect incomes to reflect this to some degree, even if there is low turnover. From what I have seen this is not happening to the extent people think.
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patriotz Says:
November 20th, 2008 at 1:18 am
Consumer price deflation or disinflation (falling inflation) is negative for gold as it is held as a hedge against inflation. Check out the great gold bust of the early 80’s.
During the Great Depression there was consumer price deflation but the USD was fixed against gold.
I don’t own gold because I’m not interested in playing zero sum games. I do own gold producers. Gambling is positive sum for the house.
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patriotz Says:
November 20th, 2008 at 2:04 am
What the argument amounts to, I think, is a self-fulfilling gentrification brought on by “old money” being more desirable to live in, leading higher income families to buy in such areas.
This can result in prices remaining out of whack with incomes, but it cannot result in prices remaining out of whack with rents, because investors are the marginal buyers and sellers. Everywhere.
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Anonymous Says:
November 20th, 2008 at 3:44 am
Anybody into paying $4600 for a month-to-month rental?
http://vancouver.en.craigslist.....83870.html
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markx Says:
November 20th, 2008 at 6:54 am
anon 80:
That $4600 rental would barely justify pre-bubble price of that house. At 150X rent, if it gets its “craigslist asking rent”, it would be worth around 700K. That’s firmly in the pre-bubble range. One more example that Vancouver West is more overpriced than East Van and Burnaby, from price/rent ratio.
By the way, “Old Money” argument is as valid as “rich Asians, Olympics, Baby Boomers, and Gangsters”. If rent doesn’t support the price, the price eventually collapses, barring serious redevelopment opportunities.
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Keeping an Eye on the Pimps Says:
November 20th, 2008 at 7:49 am
I think the numbers tell the tale.
Sales are down by over 50% YOY, inventory is at record levels, with hidden inventory we probably have a 3 year supply, and prices are dropping.
There is very little real demand left, the 50% drop is and indication of how many speculators were crowding the market who aren’t buying anymore, and will become sellers in the spring, which will add to the huge glut.
There might be some true believers left in the trade up segment, but there are too few fools with money to sell to.
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cashisking Says:
November 20th, 2008 at 8:02 am
4600 craigslist rental is for sale – 2,999,000
at 5.25% and adding in 200/month taxes insurance so 4400 net to owner that = 738,000 so you can rent for 25%.
WHY WOULD ANYONE BUY?
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Vansanity Says:
November 20th, 2008 at 8:33 am
Scotiabank Real Estate Report:
http://www.scotiacapital.com/E.....trends.pdf
I’ve got to run, so I’ll comment later. Have a read. Also, check out hte TSX this morning, down around 400 right now, was worse a few minutes ago.
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Tony Danza Says:
November 20th, 2008 at 10:05 am
Unlike the downtown condo and townhouse market, “old money” neighbourhoods such as Point Grey, University Hill, Dunbar, etc
Paul, Does “old money” = HELOC? I lived in the Dunbar area for 10 years (just recently moved) I have many friends and acquaintances from the neighborhoods you mention and I can tell you that there is very very little “old money” in Dunbar and Point Grey. Not to mention that the demographic make up of the neighborhoods has changed dramatically since 2002 to include many more people who would be considered the nouveau riche (RE agents, trades contractors, mortgage brokers, asian “economic” refugees, etc…).
Oh BTW the entry level house that I rented around 30th and Dunbar was purchased by the landlord for 380k in 1999.
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Drachen Says:
November 20th, 2008 at 10:15 am
oracle
“i was too optimistic. the prices will not decline %40-50.
it’ll be around %70.”
I was saying that over a year ago! Some oracle you are
Seriously all the fundamental numbers and a look at the historic trend curve all add up to between 60 and 70% off peak as a resting place for the market. With the current economic crisis and other factors the ‘valley’ could be in the 75-80% off peak range.
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Nobody!!!!! Says:
November 20th, 2008 at 10:34 am
Paul,
You are entitled to your opinion like Drachen hold similar type of opinion since 2005 so keep on waiting unless it untouch with realty.
There was turning point in debate 8 vs 9 last time some one singled out that point regarding how things turn around when it really does that way till that time buyers steam the engine while waiting to attack.
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DaMann Says:
November 20th, 2008 at 10:50 am
Just a note on the old money thing in Point Grey. My wife and I live in UBC and we took our kids down to PG to do some trick or treating with the kids ( they always have the houses done up nice). My wife and I were floored at how young the people were that were living in these houses. We only did a few different streets but I would say that 60% of the houses we went to had couples under 40 in them. My wife said to me “what are we doing wrong” I said to give it time, these people are living high on the hog. Westside will plumet with the rest of them. We will keep sitting tight renting. We sold our place in May and plan on renting for the next 3 years.
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umdesch4 Says:
November 20th, 2008 at 10:51 am
Ok, who is this Avner Mandelman guy who wrote that piece on the price of gold going down because of China? He sounds dangerously misguided…or something. Every single other thing I’ve read about gold in the last few months is saying the exact opposite, and I know I personally sold some gold at the end of the summer for $200/ounce more than I paid for it a year ago.
My own pet theory is that the price of gold is not as high as it should be because everyone has given up on trying to buy any. Its been a few weeks since I’ve called any places that actually have some in stock. Once you hear that a place has over 1000 back-orders on gold maple leafs (leaves?), you just don’t bother anymore.
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bdk Says:
November 20th, 2008 at 11:28 am
Hey Tony I probably know your face you if you lived there in ‘99.
Do you happen to practice law and did you move to South Van about 5 years ago? Or was that another rental house at 30th and Dunbar?
I worked at Stongs while finishing post secondary so I know a lot of the residents.
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NO -LYMPICS Says:
November 20th, 2008 at 11:32 am
Re: Point Grey and old money “envy”
I have met different parties in their late 40’s early 50’s who tell me that much of the Dunbar area was still affordable for the working class when they grew up. Many in this same group talk about their elderly parents passing on recently and the West Side family home being up for grabs…either sold or perhaps kept in the family.
Same goes for many areas…up till the late 1970’s early 1980’s . I still meet people approx. my age who live in these high end areas who simply lucked into buying cheap at just the right time before RE prices took off. I know a couple of guys now in their 60’s who literally bought their first house when they were drunk or stoned , almost as a lark, and simply lucked out and they admit it …sheer luck and perfect timing based on sheer bloody luck .
A friend, an MD -specialist, talks about areas of Richmond whereby their neighbours were middle -class working people. This same MD says their son, now an Urban Planner(irony of ironies) …is making about $60,000 /year but is stretched to pay for a sh*t box condo in the $300,000 range.
( Interestingly enough, I met one of ” Condo King’s ” associates in Oct..they were just about to start construction of a new house in Point Grey, near St George’s High School …I wonder if it has started or has he bailed. Canucks GM Mike Gillis new home is a few doors down and is just about finished .)
Unfortunately, In the late 1970’s up to the present…clowns like Nelson Skalbania made flipping real estate a popular cult- like religion, and in essence it ran unabated till now when it hit the wall full -speed and head-on .
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NO -LYMPICS Says:
November 20th, 2008 at 12:00 pm
Hey Pope:
Your “RE Vatican” posting times for our brilliant submissions don’t account for the new Daylight Savings time change. (unless you are hiding in Alberta which is one hour ahead ! )
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A mousy renter Says:
November 20th, 2008 at 11:56 am
1,100 listings of rentals on CL.
A quick count of Wed. listings.
94 X The Pope Says:
November 20th, 2008 at 12:07 pm
this is a test
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Tony Danza Says:
November 20th, 2008 at 12:09 pm
bdk, I have a soul, that should answer your question. However, I’m sure we would recognize each other as I frequented Stong’s when you were working there.
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bdk Says:
November 20th, 2008 at 1:45 pm
Don’t worry there is nothing to fear:
http://www.canada.com/vancouve.....063dacf669
This is from todays paper!
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NO -LYMPICS Says:
November 20th, 2008 at 1:47 pm
Pardon, not sure re the reference to a whisper comment ?
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The Coming Depression Says:
November 20th, 2008 at 2:09 pm
We are heading into a depression anyway. These properties will be worth 75% less next year. Read this: http://www.thecomingdepression.blogspot.com
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anon Says:
November 20th, 2008 at 2:15 pm
Having been born and raised in Point Grey, I have to agree with the assessment that very few people in that area were particularly rich. There were families with money, many of whom had their houses closer to the water overlooking spanish banks, but most of the people were (as described above) middle or upper middle class. My own parents were psychologists at UBC, and many of our neighbours were profs or white collar professionals – (teachers, professors, accountants) – who were earning a solid but not spectacular paycheque.
Having said that, it was a great place to grow up, on account of the fact that the demographics were so interesting. It wasn’t hard to meet some pretty unique people who were not particularly driven by monetary gain.
West Vancouver is a bit of a different story, as people above have pointed out. My suspicion is that, like many of the posters here, not a lot of that ‘old money’ went directly into investments at the peak. Nor did the people in my area have an awful lot of spare cash to buy secondary homes, unless they were silly enough to put a secondary mortgage on their existing one.
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squidly77 Says:
November 20th, 2008 at 2:17 pm
http://dshort.com/charts/bears.....-large.gif
stick that specs
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Mike Stewart Downtown Vancouver Realtor Says:
November 20th, 2008 at 2:19 pm
Buyers Agent bonuses don’t really motivate Buyer Agents. A listing that is priced correctly will. That guy has to bite the bullet and reduce his price!
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squidly77 Says:
November 20th, 2008 at 2:20 pm
that graph was linked from here
http://calculatedrisk.blogspot.....great.html
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The Pope Says:
November 20th, 2008 at 2:26 pm
*edit* I’ve disabled whispers.
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NO -LYMPICS Says:
November 20th, 2008 at 2:27 pm
That fella that had the bonus commission for his multi Million dollar house was on the Global News this morning ( maybe it will be on the Evening news as well )
Not a bad looking house…nice ocean view up the mountain.
Have to at least give him credit for trying hard (or is he getting hard – up ?)…getting all the free publicity. However, the agent from Hasman Realty sure looked like they needed a dermatologist…maybe the stress ?
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NO -LYMPICS Says:
November 20th, 2008 at 2:42 pm
Article:
China has closed over 67,000 factories in the FIRST HALF of this year.
(I guess they hid the bad news until after the 2008 Olympics)
http://thecomingdepression.blo.....ories.html
Estimated job loss of 2.7 Million at a rate of 50,000 per day.
If that doesn’t indicate a global economic problem , I don’t know what will.
106 X Drachen Says:
November 20th, 2008 at 3:30 pm
I see dead people.
Actually, not really… It just seemed like an appropriate thing to whisper.
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Vancouver Real Estate Going Down Says:
November 20th, 2008 at 3:56 pm
I see that whisper for the Pope…. oops.
P.S. VANCOUVER REAL ESTATE GOING DOWN HARD
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bearette Says:
November 20th, 2008 at 4:24 pm
I had a “Vancouver-lemming-psychology-turning” moment today. Forgive me while I bask in it. Shortly after news of the latet stock market dump a colleague actually approached me from across the office to voluntarily seek out my knowledge about “how low the real estate market would go.” Were we at bottom yet? Now this is a minor miracle. I was ridiculed here a scant 6 mos ago. Then avoidance silence for the past 6 months as things turned. Now, sheepish colleagues coming to ask me for my expertise, claiming, they certainly never said real estate only goes up… Safe to say, I put the fear of God in them. No hope till 2011. And even then …
How things have changed.
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Van-zee Says:
November 20th, 2008 at 5:03 pm
An early link for Friday.
Lookout Zoomers
Gen-x still hates you
http://tinyurl.com/6nke75
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VanTOVan Says:
November 20th, 2008 at 5:04 pm
RE: the Sun article BDK linked to (#96).
Those asswipes don’t seem to be approving comments. I imagine the bear comments heaping derision on this tripe are lined up like rubes at a pre-sale grand opening.
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NO -LYMPICS Says:
November 20th, 2008 at 5:05 pm
I was listening to Diane Francis on the radio.
She stated Warren Buffet in bottom feeding mode has no idea of how “low” low is going to be.
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Anonymous Says:
November 20th, 2008 at 5:11 pm
Bearette: You are brave; and a much better person than I am.
When in the same circumstance just recently, I said that the market meltdown is actually favourable for Real Estate.
As I go on, and feed them the BS line that as investors become more disillusioned with the stock market they will gravitate toward real estate, and given that Vancouver is the most desirable place on earth, many of the rich Asians are set to buy in Vancouver, and now may be the last chance for some to get into the market before the world wide exposure we are about to get thanks to the great team at VANOC for bringing the world to us in 2010.
Then I lay it on really thick…..
With the rest of the world in chaos, interest rates will drop further, and that can only help our Real Estate market.
Then a little thicker….
With oil dropping the Alberta oil barons will want to hedge, and with what better than British Columbia real estate? Because we are the California of the north and all the baby boomers will be moving here to retire, we can expect a huge wave on net migration of grey wealth to flock here.
And then I ended by saying…
British Columbia is about to burst at the seams, and if you can pick up an investment property, act quickly because there may not be an opportunity like this ever again.
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Greenhorn Says:
November 20th, 2008 at 5:29 pm
Here is a link to the video on this house:
http://www.youtube.com/watch?v=V1ED4ohCZNk
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Michael Randallbard Says:
November 20th, 2008 at 6:42 pm
read on…..Mish is talking about deflation. So, tell me what kind of deflation is he talking about? Price deflation? Monetary deflation? It’s a big debate and even the experts are stymied. I read Mish’s blog all the time but he’s not right all the time either. Mish is young and doesn’t have the wisdom that say Jim Sinclair, Peter Schiff, Puru Saxena, Steve Saville, Maund, and others who have been in the game for awhile have. But I still read him, he’s sharp. I don’t think hes making an argument for monetary deflation because with the constant stream of past and future bailouts and rescues it is becoming obvious that inflation is at our doorstep in a big way, a big Weimar way. I don’t think that price deflation we are seeing now has anything to do with fundamentals. We are seeing de-leveraging and that is sending prices down along with total fear to spend, both on the part of lenders and consumers because they see their wealth disappearing. I have not seen prices of consumer necessities (except petrol prices) come down..yet but I don’t think they will because price reductions from the source rarely make it to the end user and if business is slowing then where is the incentive for a retailer to drop prices….yet some big box stores do just that hoping to squeeze the last dime out of an exhausted consumer. This strategy always fails and the proof of that is lower store sales and chapter 11’s (Linens and things for one example) as the giants try to split a smaller and smaller piece of the pie.
Anyway I’m betting on runaway monetary inflation, lots and lots of it until it somehow filters down to create jobs that were lost and gets consumers to spend again. I don’t see consumer spending habits returning to last years levels for many years.
Lastly when, not if, the USD tumbles the price of gold will rocket, silver too. Patriotz big mistake is a common one, calling gold a commodity. Its not a commodity, its real money and seems joined at the hip by exchange rates and that is the proof right there.
BTW gold went up again today in CAD to 963.00/oz
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Michael Randallbard Says:
November 20th, 2008 at 6:52 pm
patriotz
For now gold is holding up better than the market in the current environment of asset deflation. But when the pendulum swings back to inflation (I suspect months not years) the price of gold will rocket much faster than the nominal prices of stocks. I’ll place my bet alongside the 5000-year history of failed paper currencies against hubris of economists who think they have figured out a better system.
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Anonymous Says:
November 20th, 2008 at 6:55 pm
“BTW gold went up again today in CAD to 963.00/oz” And what would that be in YESTERDAYS Canadian dollar? It’s irrelevant if gold goes up in CDN $ if the CDN dollar went down for cryin out loud!!!! ARRRRGGGGHHH!
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Anonymous Says:
November 20th, 2008 at 7:02 pm
“There isn’t a sector of the economy that won’t feel the impacts but because we have diversified our economy, I think we won’t see nearly the impacts that we might have expected. We’re still expecting to see some small economic growth this year.” Premier Gordie!! For god’s sake where in the crap does this guy live? obviously not in BC we are the most un diversified economy in North America! Construction of Condos and Houses Baby that’s all we are and all we’ll ever be! You wanna see the worst bust in North America we’re gonna put Las Vegas and Miami to shame they won’t hold a candle to us! And how come the Premier lives somewhere else other than BC? He has too cause NOBODY is that damn stupid!
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Michael Randallbard Says:
November 20th, 2008 at 7:05 pm
2 days ago it price was 915.00CAD. You can follow it on Kitco
However you made my point. The Canadian dollar is losing purchasing power now but as it goes down the POG goes up. It coasts more CAD to buy an ounce of gold. In the US it costs less dollars. So if the CAD is going lower where would you rather be?
Now what if…the USD tumbles and gold goes up in terms of USD AND the CAD doesn’t rise at the same time? This is a distinct possibility in the weeks and months ahead. Still, show me one “commodity” or asset class that is outperforming gold right now besides the USD which generally means higher consumer prices coming. So the choice the way I see it is between holding USD and gold. This is a no brainer unless one is in love with paper with George Washington on it…a REAL relic.
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Alex Curylo Says:
November 20th, 2008 at 7:33 pm
@Randallbard:
“it is becoming obvious that inflation is at our doorstep in a big way, a big Weimar way.”
Well, I don’t think it’s obvious, but I’ll agree with you that it’s one of the two things one should be actively preparing right now to be dealing with inside a decade, yes. The other alternative, which I deem more likely, is a Soviet-level regime of wage and price controls with the foreseeable consequence of the functioning economy being pushed underground.
“the price of gold will rocket much faster than the nominal prices of stocks.”
If you figure that’s a sure thing, you’ve got to explain why from 1980-2001 prices in general doubled but gold fell from $850 to $257. The only inflation hedge worse than gold was silver.
I’m with the theory that gold is a hedge against and predictor of price inflation, but not against monetary inflation. Which is what explains my last paragraph’s observation, and explains why gold is not a good strategy going forward I think.
“I’ll place my bet alongside the 5000-year history of failed paper currencies against hubris of economists who think they have figured out a better system.”
Superficially, this is logical, indeed. What you miss is that for those 5000 years gold was always an accepted alternative currency so debased currencies had a standard against which to fail. That is no longer true. All significant world currencies today are totally fiat and have been longer than almost everybody’s living memory. There is no institutional memory or framework that makes gold more valuable than any other commodity after a breakdown of modern central banking.
No, my planning for the apocalypse is based on the theory that in times of social collapse the only precious metal is lead, if you’re familiar with that euphemism. (If you’re not, let’s put it this way: You buy the gold, I’ll buy the guns, we’ll see who ends up with the gold AND the guns.) And a subsistence farm plot supplemented by fishing and hunting far enough out in the woods to be overlooked in the quite possibly coming food riots once the factory farming sector collapses is the strategy that anyone looking seriously at how close the entire global financial structure is to complete meltdown really ought to be pursuing right now.
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MickeyFinn Says:
November 20th, 2008 at 8:27 pm
42 foreclosure listings in West Vancouver…
This is a rumor that I am trying to verify. Can anyone shed some light on this?
The story goes that various banks gave all the listings to one agent to not cause panic. None are offered at under 2M (for now).
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Anonymous Says:
November 20th, 2008 at 8:36 pm
What’s the source of that rumor?
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RennieWhereRU? Says:
November 20th, 2008 at 8:41 pm
Please keep us posted Mickey Finn. Inevitable this would happen but didn’t think so until early next year. Will ask around at work tomorrow.
Not a bad paper on debt deflation. Sorry about link. In a hurry.
http://www.debtdeflation.com/b.....ion-begun/
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patriotz Says:
November 20th, 2008 at 8:49 pm
Mish is young and doesn’t have the wisdom that… others who have been in the game for awhile have.
Mish is a boomer in his early 50’s. He sometimes talks about the differences in consumption between when he was a kid in the 60’s and now.
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Randallbard is a tool Says:
November 20th, 2008 at 8:59 pm
Jesus H. Christ! Go away Randallbard you tool! This is a Van RE blog, not a lunatic gold bug blog. Go post your “money is worthless paper” crap over on Mish’s site with the other tools!
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MickeyFinn Says:
November 20th, 2008 at 9:00 pm
I heard the rumor from a friend of mine who is a stockbroker… he is a serious and outspoken Vancouver real estate bear. He was asking me if I could verify.
There are a few people that I can inquire with but I suspect that even people “in the know” (e.g. the banks etc.) would not exactly be forthcoming with information.
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RennieWhereRU? Says:
November 20th, 2008 at 9:05 pm
This is unreal. Hope Pete made all those bulls eat humble pie, if not i’m sure they’ve lost a shit load of their of their client’s $$$$ to make up for it.
http://www.youtube.com/watch?v=2I0QN-FYkpw
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Anonymous Says:
November 20th, 2008 at 9:25 pm
Hee Hee
Now which one of you posted this on Craigslist? Abbygirl?
http://vancouver.en.craigslist.....75816.html
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Tom Vu Says:
November 20th, 2008 at 9:31 pm
Bankruptcy houses in West Van mean it is good time for smart investors to buy. At least 20 good deals in just one small area. That means many good deals across GVRD in total. The early doer gets the worm!
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Alexcanuck Says:
November 20th, 2008 at 9:36 pm
Re: 124 lunatic gold bug blog
LOL. Well said, except that Mish is not a lunatic gold bug. Mish called this deflation/meltdown/crash/whatever you call it very, very well. Mish is well worth listening closely to, unlike our least favourite lunatic gold bug.
And Mish is NOT calling for gold to the mooon!
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Keeping an Eye on The Pimps Says:
November 20th, 2008 at 9:38 pm
GTA home resales crash in November
Toronto has its own Maggie
http://www.thestar.com/Business/article/540073
“Toronto Real Estate Board president Maureen O’Neill.”
“I think we’re into a real consumer confidence problem. All the economic fundamentals are sound, but people are watching CNN and having a wait-and-see attitude. When they’re listening to all the bad press they’re bound to, we have kind of a collective herd mentality.
“People will start to buy again, and we’ll see the numbers go back up.”
Yes, everything would be just fine, if the media stopped reporting the bad news.
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BBY Says:
November 20th, 2008 at 10:00 pm
PaulB’s latest stats for SFH have the median price less than $600K for the last 4 days. Three days are in the low $500K range. Here’s the numbers from the last 5 days:
Nov 20 $538,500
Nov 19 $510,000
Nov 18 $536,000
Nov 17 $585,000
Nov 14 $785,000
Admittedly, low sales volume makes analysis difficult, but the trend is showing. A month ago a sub-$600K day was rare. Three months ago a sub-$700K day was rare, and sub-$600K never occurred. When do we hit our first sub-$500K day?
These are the prices that are selling now. Only a few $M places sell to the uber-rich. And there are very, very few of those. And they’re not gonna buy in East Van. It’s gotta be the most difficult and painful thing for the east van flipper to realize this.
The realtor.ca website listings map shows listings all over the place and it’s the end of November.
And yet the denial continues. I’ve got a colleague who scoffs EXACTLY like Peter Schiffs critics do when I foretell a big crash. Of course, he did buy his first condo in Yaletown this Spring.
The Peter Schiff video (again):
http://www.youtube.com/watch?v=2I0QN-FYkpw
BTW I love the way Peter’s first critic is some arrogant economic advisor by the name of “Art laffer” As in “Laugher”. Reality surely is stranger than fiction…
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patriotz Says:
November 20th, 2008 at 10:16 pm
LOL. Well said, except that Mish is not a lunatic gold bug.
Well he is actually, but he has still been right about a lot of other things.
That’s one reason I read his blog actually. If someone with such a different macro perspective from me agrees with me on things like RE we must both be right.
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jesse Says:
November 20th, 2008 at 10:22 pm
Here’s a sneak peak at a story you might be seeing in the next few weeks: a friend of mine who rents in Spectrum 4 told me one person rented close to 30 suites in the building and sublet them. He pocketed 2 months of sublet rent, not paying rent himself of course, before skipping town.
If the story is true, let’s hope the MSM picks it up. Sounds like a great leader. Remember: you heard it at VCI first.
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anonymous Says:
November 20th, 2008 at 10:56 pm
#131 – seeing the price per square foot drop is more likely a reflection of the mix of sales changing (favoring cheap small units over those missing west side homes). I believe Maggie’s blog had a good breakdown of the changing distribution of closures (at least downtown):
http://www.vancouverreflection.....#more-1059
I’m not saying it isn’t going down, but I have a hard time believing it’s falling that fast.
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Octagonian Says:
November 21st, 2008 at 1:08 am
Even as the probability that Vancouver housing sinks at least 50% peak to valley, I have an anecdote, a silver lining of sorts, that refutes conventional negative expectation.
The going wisdom is, that as homes rapidly depreciate, the “wealth effect” is lost and these homedebtors stop buying consumer goods, thus hurting the local retail economy.
But in my experience — four friends with expensive homes in West Van, now down 20 – 25 per cent — negative equity won’t affect their spending because all four couples were maxed out on their resources to even be in those homes to begin with; they have not been spending like good little profligate consumers since Day One. So where is the loss? I suspect Vancouverites as a group have been so overly invested in their inflated homes that they have not been big spenders on anything else for some time. Indeed most stats show Vancouverites’ spending lags that of places like Calgary and Toronto.
So — could the Great Real Estate Implosion in Vancouver co-exist with a merely flatlined local economy with no real consumer-led recession to be seen here?