2009: The road ahead
There’s an article in the Vancouver Sun today filled with cheery forecasts for 2009, The title is “Good economic news: 2009 is only 12 months long“. Here are a few select quotes, but it’s worth reading the whole thing.
“The thing to keep in mind about 2009 is that it will end,” Jock Finlayson, executive vice-president of the Business Council of B.C. said in an interview, “and we’ll get on to 2010, which is going to be, hopefully, a much better year.”
..and Helmut Pastrick says:
“I think [2009] is just going to be one of the worst years we’ve seen in many years,” Pastrick said.
He said it will perhaps be worse than the province’s last recession in the early 1990s, though probably not as deep as the 1981-82 downturn.
On Housing:
The decline in provincial housing sales and new-housing construction starts will be the most noticeable impact of B.C.’s slowdown, Pastrick said.
TD Economics has pegged total sales in B.C. at 60,600 units for 2009, a decline of nine per cent from its estimate of 66,800 sales by the end of 2008, which is itself a 35-per-cent fall from 2007.
What about employment?
“I think we’ll see a rising tide of layoffs in industries like retail and tourism and housing,” Finlayson said.
TD Economics estimates that B.C. unemployment will average 5.3 per cent in 2009, up from an average of 4.5 per cent in 2008.
However, Pastrick said job losses in construction might become steeper later in 2009 as housing units already under construction come to completion and big capital projects such as the Canada Line rapid transit project are completed.
All this sounds just a little bit familiar…
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January 2nd, 2009 at 12:35 pm
#91 EB, you’re exactly right. The turnaround date is not per-determined, in fact it could be years out. I believe in the acumen of Asian businessmen and the society at large as astute, but they are not miracle workers. This is the same argument I use against those who insist BC/Vancouver will sail through this recession unscathed. Like The Great Mogambo has said, “We’re all Freakin Doomed’. For the time being I agree, it’s not pretty and everyone is going to get a look.
10% of Electronic Arts staff got layoff notices today. It was kind of EA to wait until after Christmas. They are also amalgamating there 3 facilities into just one. How many ancilliary jobs go with those? Isn’t the economic effect something like 3-1?
Further afield
http://www.nytimes.com/2009/01.....mp;emc=rss
January 2nd, 2009 at 11:39 am
But there is no doubt that the entrepreneurial zeal that exists in that region of billions of smart people will turn around at some point.
That depends pretty strongly on a turnaround for the Western consumer, who is tapped out and is likely to remain so. The vast Asian wealth accumulation came from selling the labor of the poor very cheaply to allow the west (primarily the US consumer) to accumulate more debt. The western middle class hasn’t seen an increase in income in decades and only financed the past 10-15 years on credit cards and home equity withdrawals. They’re done.
It will turn around? Tell that to Japan. It doesn’t have to do anything.
January 2nd, 2009 at 11:12 am
#89 I just got back from Hong Kong and Singapore
http://biz.yahoo.com/ap/090102.....onomy.html,
I have lots of friends in business there. The news from real people with real jobs and business intrests is that things are not rosy and getting a lot worse region wide. You are probably just a lot smarter than all the people there to know something they don’t. Good for you.
Of course there were a lot of people out last night , it was New Years Day. I was out, and I hate going out. But even so, my many friends in the Chinese community here are seeing off 10-20% in the quarter.
As far as investing in the stock market there (China) I quite agree if you can keep a three to five year time frame in mind. Stocks are cheap, buy there are getting cheaper, daily. No bottom in China yet, the market is off more than 54% this past year. But there is no doubt that the entrepeneurial zeal that exists in that region of billions of smart people will turn around at some point. But, remember they are TOTALLY dependant on the fortunes of the Western Markets in N.AM and Europe. Chindia and the other Bric markets are export driven, period. That includes NE Asia, SE Asia and Japan.
Probably a good time to buy a CHINDIA or BRIC ETF. This isn’t a stock forum so I won’t start making recs.
January 2nd, 2009 at 9:05 am
Hey EB, you’re about 6 months behind. The stock markets already crashed to factor in all the bad news. Better buy some stocks now while they’re cheap. All indicators says we’ll be back into a bull market phase within the next 6-12 months. The stock markets welcomed the new year with a bang. Get in before it’s too late.
January 2nd, 2009 at 7:33 am
“Trade finance is collapsing,” said Victor Fung, the chairman of the Li & Fung Group, the giant supply chain management company that connects factories in China with retailers in the United States and Europe. “We’ve got orders we can’t ship right now.”
Fung estimates that 10,000 of the 60,000 factories in China owned by Hong Kong interests have closed or will close in the coming months.
http://www.iht.com/articles/20.....xports.php
Tell me some more about Asian financial brilliance? A lot of AZNs have developed a very high opinion about themselves, resting mostly upon exploitation of the gross wage disparities which result from Asia’s teeming billions of poor folk. Japan is out of that picture of course – they’ve been getting poorer for decades now. China is now hitting the skids. It was all an illusion.
January 2nd, 2009 at 12:00 am
Supraboy is full of crap in general, we’d all be best to ignore him.
#73 realpaul, you say that you cannot get a 25 year mortgage beyond 40 years old; are you sure of that? Because that implies that 0 down 40 year mortgages are (um, were) only available to those under 25 years old. How many 0/40 mortgages can there be out there, I wonder, and for what average amount?
January 1st, 2009 at 11:53 pm
I was out at a Chinese restaurant tonight. Oh boy, was it ever packed. I looked around, ordered a Tsingtao beer and felt like a poor man compared to everyone else’s table. They were ordering bottles of red wine. If you people think the Vancouver housing market is going down, you better think again. If the economy is really that bad, why are the Chinese people packed with people with money. I have a feeling that the real estate market going down is only a myth. I open up the Chinese real estate newspapers and I see the majority of houses in Vancouver listed for over a million. Even crappy Vancouver specials in Marpole are listed over a million, and they’re at least 10 years old too! They won’t sell for anything less and they have lots of cash to hold out for a very long time.
The Olympics will give the condo market a boost as people will be scrambling for rental units.
January 1st, 2009 at 11:08 pm
#84 Nobody, thanks for the laugh. You need to get out more. promise not to give anyone your advice in real time.
#83 Stevee , you would only have to take out a second ( or come up with some serious mommy cash like a Supraboy) if you had zero equity in your property as in the example you refer to. Key concept, zero equity, NONE OF YOUR OWN MONEY IN THE PROPERTY.
In the example the First Mort was written for $400K. Three years later the prop is appraised at 300K. You put 5% down originally ( 20K) . The differance is $80K. This 80K is the negative equity.
Adversly if you had a 400K 1st and put 25% down (100K) then when the appraisal came in at 300K you would still be optionable. This would not be zero equity (even though it appears that way) , in this scenario the bank does not have a negative balance sheet. But, sadly you’ve lost 100K, the upside though is you’re still in your home at bank rates.
Hope this helps
January 1st, 2009 at 10:47 pm
“Ex: You pay $400K for your digs , 3 year term , 25 year amortization. Your 6.5% 3 yr var., comes due and the bank orders an appraisal which comes back at $300K. OUCH. You’ve paid down the $20K LOC thank you and owe $380K. You have $80K negative equity.”
Banks never go through re-appraisal unless you switch over your mortgage with other banks even if some one chose to change bank or other mortgage company then rest of comment from paul goes to America because he knows VANCOUVER REAL ESTATE NEVER GO DOWN
Arit,you have to go through your family doctor to disscuss dementia which show you unreal things b.c. medical does not take action unless your doctor refer you to next step.
January 1st, 2009 at 10:30 pm
Realpaul,
Thanks for your insight re Arit’s question. Now if you, or anyone else for that matter, has a moment, I would like to clarify something (for my own personal education). Do you mean to say, in your example, tht if the person taking out the mortgage sees their home drop by $80,000 in value, that when refinancing they would have to take out a second mortage, likely at a much higher interest rate, to cover that loss ($80k)? Thanks in advance.
January 1st, 2009 at 9:38 pm
#80 yer welcome arit. The math doesn’t look that good for many of the 5% down types who are underwater now and looking towards a refi in the near future.
January 1st, 2009 at 8:23 pm
#68 Anonymous
Jury is currently out on future Condo values/sales
Advice your parents never gave you.
BUY CONDO’S-THEY AINT MAKING ANY MORE
January 1st, 2009 at 8:19 pm
Wow!
All I can say is Wow!
Realpaul: Thanks for the explanation!!!
Luckily, evil_arit was defeated by arit so my example is only hypothetical.
But it is not hypothetical for most people I know. Most of them will be underwater before 2015. So all of them will be in a similar situation as realpaul has explained.
So they will be slaves, slaves of the bank. Forever. Once the owed amount starts growing, and the salaries stay flat, there is no exit but lose the home or keep paying ever-growing monthly payments. It’s horrible…
Nobody, what Doctor would you like me to see? And what treatment should I be treated for?
Best regards,
arit
January 1st, 2009 at 7:35 pm
hahahaha- Arit, when you go to see a doctor please also take Paul with you.Thanks.
January 1st, 2009 at 7:27 pm
#75 HUH?
January 1st, 2009 at 7:24 pm
#73 I know you’re not stupid but the bottom line on example #73 is that you’re down $160,000 THOUSAND DOLLARS ALL IN. I just wanted to point that out because I know the example is a bit numbing for some.
January 1st, 2009 at 7:18 pm
#72 Arit, in that specific scenario it would be a very bad time to refi. If you think this is you it would probably be better try to float over the curve with renegotiating sooner for a ( downside bigger monthly payments , upside maybe sleep better) longer fixed rate now ( 10year)instead of having to refi at the bottom of a cycle. This is just an example and not meant to be construed as advice.
January 1st, 2009 at 7:07 pm
Bank is not going to say what to do but you have to think about it if you wanna stay or run? if you like to stay there are lots of provision,if you want to run nobody need any provision by the way if you like to stay you are already paying your payment why the bank should look for excuse? Anyway if you have these type of question you should see a doctor instead mortgage specialist.
January 1st, 2009 at 7:01 pm
#71 your facts arent quite right.
January 1st, 2009 at 6:54 pm
#66Arit Bad news man, it matters a lot.
Ex: You pay $400K for your digs , 3 year term , 25 year amortization. Your 6.5% 3 yr var., comes due and the bank orders an appraisal which comes back at $300K. OUCH. You’ve paid down the $20K LOC thank you and owe $380K. You have $80K negative equity.
The principle repay chart says that after three years of payments all you’ve been paying is intrest and you barely own the doorknobs. If you’re a re-fi virgin don’t look this up it’s too scary. You owe the whole shebang and it looks like you’ve been renting from the bank instead of owning, it doesn’t look good.
You say, sign me up, bank says not so fast, you have negative equity, no can do, legal stuff with the Bank Act.
Amortization means the number of months between todays date and the date you turn 65. You can no longer get a 25 yr amort after 40 years of age.
Term refers to the Financing period that the bank agrees to loan you a set amount of money at an agreed upon rate of intrest. EX; 1 yr , 2yr, 3yr, fixed, variable . You see, make sense now ?, very differant words meaning totally differant things.
EX: You initially put 5% down , 20K @ 3% p/m on a seperate LOC for the downstroke, feeling cheeky. You’re sailing along with a monthly PIT of $2000p/m and the 5% LOC repay at $600. $2600 p/m plus costs. Very cheeky boy. Total debt $400K
You start a steep learning curve after changing your shorts. You find out that the bank needs $80K to refi your first and won’t do it because of the zero equity thing. Total equity is $300K remember. They send you to the nice people at HouseReamer Finance who say the $80k’s worth 15% p/a, compounded semi annually.
Now you owe $460K on a house you paid $400k for and your payments have gone up to $2000p/m on 300K and $996p/m on the second $80000. Plus everything else of course, not including the annual $3500 HouseReamer will charge you for the annual loan extensions, read the fine print in a second mort loan doc, it’s very funny stuff.
Now you’re down $80K plus the 20K you paid down, poof gone, $100,000 gone!!!! And your monthly nut has gone to $2900 !!! YEEOUCH!!!! Not to mention ( did i mention that you owe $460K on the $400K place you bought) that you had better stay current on the GDSR that the lenders set, which by the way is 33% of Gross Income. If you or your spouse loses their job it may be ‘bye bye bank’ ( you’ve changed the terms of your agreement)and you may have to fund 100% through the secong tier.
Total Debt $460++K and climbing.
Yes it’s true even people who are current on their payments can lose their homes.
#68 HUH ?
January 1st, 2009 at 6:45 pm
M-
Thanks for the explanation. That clarifies a bit. Maybe someone can tell us the answer to your question:
“When you renew your mortgage, I do not know if the bank will simply renew it, or if they look at the “current” value of the house to see if you’re still above water. ”
Let’s use an example for visualization.
evil_arit bought a house in May 2008.
The house was bought for 500,000CAD with 5% down (25,000CAD) and 25 years amortization, term of 5 years and interest rate of 5 percent.
Not even the worst case scenario, obviously.
So the mortgage taken is 475000CAD.
The monthly payment is 2762.62
After five years, evil_arit still owes 420,410CAD to the bank.
But now we are in May 2013! And the house is worth, as expected, only 250,000CAD.
What happens next? What does the bank say?
Regards,
arit
January 1st, 2009 at 6:20 pm
Arit: when you sign up for a 25-year mortgage in Canada, it’s usually a 5-year term that people sign up for.
The amortization is 25 years, so if interest rates and payments stay the same, it’ll be paid off in 25 years.
However, the term of your contract with the bank is probably only 5 years. When that 5-year term is up, you need to renew your mortgage (hopefully with only a 20-year amortization this time, since you’ve paid part of the house off already). Maybe you’ll set up the mortgage with a different bank, or maybe you’ll stay at the same bank.
When you renew your mortgage, I do not know if the bank will simply renew it, or if they look at the “current” value of the house to see if you’re still above water. If you’re below water (owing more than its worth), I don’t know if the banks are legally able to renew, or not.
Hopefully somebody can confirm this, preferably with a link to the bank act, or something that might make it clear.
Non-bank mortgage entities probably aren’t under the same set of rules.
January 1st, 2009 at 6:12 pm
“The olympics will make me rich in Vancouver.”
If telling yourself that losing 50Z% of the value of your “investment” will make you rich that’s great.
If you think the price will go up then encourage the bears to wait, then you can sell it to one of us for 25 million dollars.
Seriously who doesn’t want a 1000 sq ft poorly built Richmond townhouse near no.4 and westminster?
January 1st, 2009 at 5:52 pm
tell that to Beijing… The olympics will make me rich in Vancouver.
I’m guessing your shtick is to say things that are completely contrary to reality to try to get a reaction. Beijing is dreaming of a eventual payoff in the midst of a major downturn. Their real estate market started to collapse just before the games and are still going down. Their economy hit a seven year low after hosting the games:
http://www.eeo.com.cn/ens/fina.....6324.shtml
The official optomistic line is that prices will start going up again after an ‘adjustment’
http://www.chinadaily.com.cn/b.....962496.htm
January 1st, 2009 at 5:29 pm
brokerealitor “When Joe/Jill Buyer can get a Mortgage with 10% down and thier monthly mortgage payment & taxes are closely equivalent to current rental costs, Duh, BUY!” Disagree as far as strata titled properties ge, agree for SFH. The shi** has not yet hit the fan as far as mismanaged strata’s the next five years will see massive increases in maintenance fees (100%). Specuvestor strata’s have proudly kept fees not even increasing at the cost of living! New buyers will have to pay retrocative fees to cover the mass mismanagement. Don’t buy a condo unless your mortgage + two times current maintenance fees + 10 % contingency, is less then your rent. Example Rent = $1500.00 (landlord pays 250 maintenance). Buy only if mortgage = 1500 – 250 (expected maintenance fee increase) – 150 (10 %). Same building same suite 10% down if you rent for $1500.00 maximum total mortgage should not be more than $1100.00 all inclusive!
January 1st, 2009 at 5:23 pm
Beijing was the most successful olympics in history due to the fact that rich asians were involved. They have the financial savy that rivals any in the world and are involved heavily in the 2010 Olypic eggstraveganzy. It’s like a giant party for rich asians that will mean huge condo and SUV sales for everyone. I’m ready are you?
January 1st, 2009 at 4:38 pm
realpaul,
1. I totally agree about the Olympics – it’s going to be a fiasco of biblical proportions. We haven’t decided if we want to be here when it happens. Maybe a 3 week vacation to Mexico is due.
2. ““where do I come up with the $100+ grand to stay in my home because the bank won’t renew my mortgage!!!!!!”
I don’t understand that statement, as I am a bit retarded when it comes to financials.
Could you elaborate for me, slowly? Isn’t the mortgage, say, 25 years? Does your house value matter as long as you keep paying the monthly payment?
Thanks
arit
January 1st, 2009 at 4:27 pm
Supraboy:
Is this you or your financial advisor ?
http://www.bored.com/photos/headupass.html
January 1st, 2009 at 4:15 pm
#63 Thats very interesting. Getting the DCC’s refunded would be a first if they have initiated the abatement unilaterally. However nothing surprises me coming from the dinks at City Hall Richmond. The Translink contrib may have been performance based, that’s understandable. For the City to have worded a ‘weasel clause’ to that effect would be the “pinnacle’ ( great pun?) of stupidity.
January 1st, 2009 at 4:07 pm
It looks like the large Pinnacle development in Richmond will not only be delayed…it will be outright CANCELLED.
FYI: Pinnacle site was located at South-East corner of # 3 RD. and Sea Island Way.
The Principles involved were major players, ie Concord Pacific and Pinnacle International (De Cotiis group )
They will be refunded their DCC cost previously submitted, which I recall were $$$ several Million dollars.
In addition, the Pinnacle group will NOT contribute $15 Million towards the RAV lines Capstan station, so Translink will now have to acquire funding from other sources (unless they cancel the Capstan Station) .
What should be read between the lines is this IS a major indicator of how bad things are…this project was in the works for years and was considered a major “Gateway” to Richmond.
IMHO…to literally tear it up versus simply mothball it says a lot.
January 1st, 2009 at 3:56 pm
#59 no lympics. Maybe they’ll something do what the Chinese did which was to mandate that all lights remain on in the hundreds of ‘ghost towers’ in Beijing during the Olympics, or how they cordoned off whole blocks of ‘unsightly things’ with colourful banners and neutral faced plastic sheeting.
Will East Hastings get a temporary face lift in this way? Will it ( the bums, loons, crackheads, protestors and squalor) disappear behind a roll of ‘bum-wrap”? Hold on VANOC !!! I’m claiming copy-right on that term !!!!
Contingency planning is already well underway. The number of Olympic related off balance sheet projects is not even an inside joke. The NDP Olympic Critic has this file nailed down ( and believe me I am not an NDP supporter) but he can’t get any traction in the media, gee duh!!!!!! The Olympic budget of $600Mill is total BS, everyone knows it, but the media, for whatever reason will not report on it. The media is towing the government line and ‘disappearing’ facts like a protesters in Tianamen Square.
The NDP critic has the current costs at 4++ Billion and growing as opposed to the $660 Mill from VANOC. The security costs alone are being pegged at 1 Billion ++++ according to our own police forces and the international observers, the Olympic Committe itself has said the numbers are weak, instead of the $160 mill number the Vanoc clique has pissed into the mouth of the ad (revenue) thirsty media.
#58 brokerrealtor you say “When Joe/Jill Buyer can get a Mortgage with 10% down and thier monthly mortgage payment & taxes are closely equivalent to current rental costs, Duh, BUY! Providing you still then qualify and still have good credit”
Thats just a crazy thing to suggest , oh yeah you are an industry ‘insider’ so you say, and you probably need this farcical dance to continue for reasons of your own.
You’re forgetting about a little thing called ‘principal’. When you continue to lose principal the affordability factor of the intial payments scheme you create will not help you when it comes time to re-up your first mort. Your own bank will bounce you into the second tier market because you’ll be underwater with zero equity.
Your good credit won’t save you from the strict mandate of the Bank Act. If you are underwater and the bank won’t/can’t finance zero equity then you’ll be forced to borrow the differance between the first outstanding and the new assessed value. In many cases it’s huge. In some cases over $100,000 !!!!! , and thats just the numbers from the Institutions today, what about some actual sales figures !!!!! It’s going to be a wet shorts day for many happy mortgage newal waanabees.
Many newbies got a LOC to qualify for the 5%/40 down scheme but now the market is down more the LOC can carry and the LOC’s have been ratcheting down . Especially now that the LOC loophole has been entirely closed at most banks and credit unions. I can tell you that nice people at Household Finance are going to have a field day with the young and inexperianced. I think ‘tearing you a new a-hole’ is an apt descriptor.
The average one to three year old mortgage in BC is allready underwater 30% in many cases. Affordiblity is not the question for many new homeowners , the new worry is “where do I come up with the $100+ grand to stay in my home because the bank won’t renew my mortgage!!!!!!”
Your suggestion IMHO is not a good one.
January 1st, 2009 at 3:19 pm
“The only blessing is that we didn’t get the Summer Olympics…which tend to be far more costly and literally bankrupt the host cities/countries.”
Why don’t you tell that to Beijing or Seoul, they’re doing fine. It made the Chinese and Koreans richer, that’s why they’re jacking up the housing prices in BC. Too bad you’re too slow to figure that out. The olympics will make me rich in Vancouver.
January 1st, 2009 at 3:18 pm
“real estate values falling from 50+% to 70 or more.”
I went on record a few months ago calling for a price decline of 50% from the peak by fall 2009. It was thought to be an extreme preduction at the time I made it. But look at california. It is down an average of 52% from the peak in only 19 months.
California is the 7th largest economy in the world with the best weather anywhere. Vancouver is will fare far worse than california.
We will be down at least 50% from peak by fall 2009.
http://globaleconomicanalysis......ember.html
January 1st, 2009 at 1:29 pm
RE Post# 55
QUOTE:
” Open question , if the world is in severe recession, who’s going to come to the 2 week party in 2010? I have just finished travelling to both Asia and Europe and it is serious recession time every where. 2010 may be a big DUD !!!!! I may increase my porjections for real estate values falling from 50+% to 70 or more.”
==================
The only blessing is that we didn’t get the Summer Olympics…which tend to be far more costly and literally bankrupt the host cities/countries.
( BTW: I know you are well- connected realpaul…so get some VANOC parties piss- drunk at the Terminal City Club etc…and have them spill the beans on their 2010 diaper -filling contingency plans. )
I seem to recall reading that they usually have a fistfulls of free Olympic tickets to hand out to fill venues in order to save face.
Also…all those plans “help the homeless ” aka clean up the streets for the 2 week 2010 party will be by the wayside…curious what they will have in mind instead during this economic sh*tstorm.
Add to that the spectre of unsold and perhaps unfinished condos all over the host 2010 Cities, and how to dress THAT up.
ALSO: I predict Whistler RE will absolutely tank, it will be a frill in most people’s “cut to the bone” budgets.
Let’s be blunt, this won’t turnaround in between now and 2010, its just over one year away.
” Save Face for 2010″ is and will be THE focus in B.C. over the next year.
January 1st, 2009 at 1:14 pm
OK
Now that the RE Market is more localized, much fewer foreign purchasers and speculators out of the market, its rudimentary of where prices are going.
Regardless of oil prices, recession, unemployment, layoffs etc. the bottom line is that people in general would like to own a home here! Condo’s in the future ?????
So what is an average home in the Lower Mainland worth?
When Joe/Jill Buyer can get a Mortgage with 10% down and thier monthly mortgage payment & taxes are closely equivalent to current rental costs, Duh, BUY! Providing you still then qualify and still have good credit.
In order for BC to qualify for the BEST PLACE ON EARTH TO LIVE, THINK AFFORDIBILITY! Obviously everyone else is.
That is THE BOTTOM LINE!
January 1st, 2009 at 1:09 pm
Realtors Economics 101
Don’t list one property = reduces supply = creates demand = raise prices ?
I though I read a while back that the ” average ” turnover rate of RE ownership was approx. once every 5 years.
What is the driving force in Real Estate ?
Is it basically the ” active ” demand for housing, versus the “passive” tap of supply of housing ? (and NOT vice – versa ?)
So,using ” reducto ad absurdum ” logic, ,…if every RE listing was pulled…demand , and hence prices , would shoot up , perhaps back to the peak prices ?
That seems to be the Realtor’s logic.
However,
—I foresee the Realtor’s Rule book being tossed out.
—I foresee people that had dreams of selling their home in the Lower Mainland and retiring to say Kelowna etc. as having to perhaps accept staying in their current digs. Only other option is say Kelowna(or other retirement haven)RE crash may be worse, so a major differential exists , simply based on the current benchmark price .
—I foresee those types that move or have to move every 5 years (for a number of reasons) as SOL….have to accept whatever offer they can get in a gridlocked market,….the sharks will circle these types.
In other words, more bunkering and the status – quo for many RE owners…which realtors will mistake as fewer listings = higher prices are due , but instead a totally different dynamic aka “new fundamentals” will kick – in.
January 1st, 2009 at 12:56 pm
Documenting the insanity
The place to collect those quotes and predictions is already here in the wiki:
http://vancouvercondo.info/wik.....te-tracker
In fact someones already started to make graphs of house prices overlaid with these quotes. Here’s one for Cam Muir:
http://vancouvercondo.info/wik.....ir_-_BCREA
You need to be a little technically minded to edit the wiki, but once you get the hang of it, it’s pretty easy.
January 1st, 2009 at 12:48 pm
#50 MickeyFinn. The 30% drop in the listing price is only an indicator of greed by the seller and the weakness and stupidity by the agent who’s too chicken to demand a price reduction for fear of losing his free advertising spot on the front lawn. I think reality is more like 40+% has been ripped off the top of the froth and it’s going to get worse before ’09 is done.
The REAL price is what something actually sells for. Right now there are so few sales ( and the numbers being historic don’t tell us todays news, since sales are only sales when they complete, we don’t have ‘in escrow’ stats like they do in the states) that indicates shocked sellers are still holding on for a miracle, so it’s hard to gauge the velocity of the crash. The gap between a willing buyer and the asking price is growing larger every day. ERGO, no sales.
The new prices benchmark WILL be set though when the court orderd sales for divorce, estate, repo, bankrupty etc hit the sheets and formulate the baseline for the sales comparables. These sales will go to the highest bidder because the court has an ordered timelime)Both the stupid and the greedy real estate subs will slather over these, or crap their pants , one or the other.
The CREA and the geniuses of the local market ( Pasternak &co)just confirmrd that ’09 was going to be a very bad year. It must be awfully politically incorrect in those circles to mention anything about 2010. ILMAO about this.
However current extrapolation stats of projected and actual timed rising layoffs, market instability and very bad sentiment indicators will most likely give us a repeat of the ’90s where even at the bottom and when % rates were the lowest in a generation people stopped buying. The trough in the ’90s down turn last from ’91 until 2002!!!! ELEVEN YEARS when houses didn’t move.
The Dec numbers have been held back. I can’t even get the REBGV to fess up regarding how many real estate subs have turned in their licenses.
Open question , if the world is in severe recession, who’s going to come to the 2 week party in 2010? I have just finished travelling to both Asia and Europe and it is serious recession time every where. 2010 may be a big DUD !!!!! I may increase my porjections for real estate values falling from 50+% to 70 or more.
January 1st, 2009 at 12:33 pm
Just curious…
When the original wave of Rich Asians came into the market. I was told many of them , as a cultural anomaly, will hold onto their properties, even pass them onto future generations if need be .
However, that ” model ” is likely based on presumptions of continued price appreciation.
I have a couple of friends that are renting from such offshore types, who have bought SFH, and my friends have rented them for 15-20 years.
However, the herd mentality tends to rule…and perhaps the specuvesting / flipping offshore mentality is in denial .
Strategically, if one is a long – term owner in the same area, surrounded by offshore investors “in denial” …one may try to sell below the “IN DENIAL listing price ” before the sleeping dragon wakes up and the “dutch auction” starts ie if that in -denial listing price is $879,000 maybe fish around with one’s own listing price for a comparable property of $825,000. There are still parties in these areas that are original owners, or bought these homes prior to the 1980′s boom…who will still make $$$ selling in a depressed market. They have only missed out on “peak” prices, but will still come out ahead. However, those who bought in the mid -to -late 1980′s are the ones who may take a major hit.
Sure, some will say that will not be in the seller’s best interests, they should act more like OPEC and DeBeers (aka legalized price -fixing and collusion)..but it may be every seller for themselves soon . There are no “nouveau fundamentals” (aka Bullsh*t) on the horizon that will duct – tape and re-inflate the RE bubble, are there?
ALSO:
I agree with MickeyFinn’s acid test, Cambie area listing prices VERSUS selling price is one to follow, it has a high concentration of Asian ownership( actually reported on and discussed in the Vancouver Sun a few years ago) it will be a prime indicator, morseo now that the RAV line is nearing completion.
January 1st, 2009 at 12:18 pm
“This won’t be the case forever. In 12-24 months we may see less inventory, meaning demand (buyers) will increase relative to supply. The grim news we see daily may change (there is some validity to the argument that its all up from here, especially with a 12-24 month window) ”
As the market tanks we will be bombarded with this kind of convoluted, deceitful and insane pumper slogans.
I am not tech savvy otherwise I would do it myself, is there anybody out there who can start a blog just for us bears to post these little gems when we come across them?
January 1st, 2009 at 12:09 pm
“the grim news we see daily may change”
Yes. It may get markedly worse. (and most likely will, before it gets better).
January 1st, 2009 at 11:52 am
“This won’t be the case forever. In 12-24 months we may see less inventory, meaning demand (buyers) will increase relative to supply. The grim news we see daily may change (there is some validity to the argument that its all up from here, especially with a 12-24 month window) ”
Who said this?
Maggie Chandler or Rob Chipman