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December 16th, 2008 at 4:53 pm
“Mommy’s basement” is the favorite insult of the pair of dongkeys heehawing you know where. It isn’t as bad as their use of obscenities like *fcuk* and on posters’ mothers. I wonder why Rob did not ban Tomchimp and JohnHaw?
December 16th, 2008 at 4:39 pm
What has been thrown at you? That you’re wrong, and have been wrong about everything you’ve said as far back as anyone can remember? Because that’s not actually an insult, if you know what the word means.
December 16th, 2008 at 4:34 pm
“Is it even 1/10th of what has been thrown at me?”
Nice argument.
December 16th, 2008 at 4:34 pm
Hello Dave,
Is an off-hand comment about mommy’s basement really that offensive to people here? Really? Is it even 1/10th of what has been thrown at me? The question of what prices will be in 100 years begged for the sarcastic response.
Please provide proof, from the coherent bears that you have some respect for, of these insults which you speak of. I don’t remember seeing any from the educated bear crew. Let’s not derail the whole thread though… 5 examples will do – equal to or worse than the “you live in your mom’s basement” cliche.
Browntown’s nutslaps don’t count – he’s a bull.
December 16th, 2008 at 4:25 pm
Hi Paul,
Holg#41, forgive me if I’m wrong but are you saying that hyperinflation is a good thing for the real estate market?
I was only trying to present a bull case. I am a bear…
I think hyperinflation is bad for everything; but in hyperinflation, a loaf of bread can be worth more than a house is today (in non-inflation-adjusted dollars) within only a few years, so obviously houses would go up in “dollars” too.
The Spanish figures are interesting because Spain is in economic parallel to Canada.
Spain is probably the one of the most screwed places in Europe. I am bearish, but I don’t think Canada will actually have it as bad as Spain or Ireland. There were unbelievable numbers of foreign speculators in Spain (no numbers handy, sorry) whereas I think almost all of our speculators were local, contrary to what all the bulls were claiming.
Ireland, there’s no reason to get into it. Let’s just say all other bubbles pale in comparison.
This was a global bubble though, and it seems to be a “who can announce the biggest bailout” competition right now. The US is buying up mortgages, and the CDN government’s collection of assets classified as “other” is now at ~40% (oct, 2008) compared to 0% only a few months ago.
Are we competing with Golden Sacks’ level 3 assets yet? Whoopee!
December 16th, 2008 at 4:18 pm
Is an off-hand comment about mommy’s basement really that offensive to people here? Really? Is it even 1/10th of what has been thrown at me? The question of what prices will be in 100 years begged for the sarcastic response.
December 16th, 2008 at 4:13 pm
I should clarify what I mean by “rise in the next 15 years.”
I mean that prices will not be at the same level as they were at the peak of 2008 within the next 15 years.
I actually have a keg of beer riding on that prediction, so I did actually put my money where my mouth is on that bet
December 16th, 2008 at 4:09 pm
Holg#41, forgive me if I’m wrong but are you saying that hyperinflation is a good thing for the real estate market?
The Spanish figures are interesting because Spain is in economic parallel to Canada.
http://www.bloomberg.com/apps/.....refer=home
December 16th, 2008 at 4:08 pm
“ellery, does a good new bullish point exist”
well, not that I’m aware
I’m just saying that I appreciate the idea of new/other/bullish ideas, but I’ve watched Dave derail threads here and on PaulB, primarily getting involved in games of tit for tat, and rely on his opinion and very fudge-y analysis that is often numbers out of thin air or vague references to old posts that “we can go look up ourselves” since he can’t be bothered. I find the way he engages in conversation to be very manipulative and it rarely concludes in a real point. I think Rob Chipman is a fair counterpoint, because he relays actual data and has a set of coherent opinions which I can follow (I know not everyone agrees).
There are plenty of ranty bears on here who spout off without backing, but as it is socially unacceptable to go on rants about real estate, I figure they need a place to let of steam, and bear blogs provide a great outlet (since many things have been so thoroughly discussed and analyzed you can rant without explaining every point). However, there has been a group of posters on here who appear to have a genuine interest in analyzing data and numbers, and it has built into a meaningful conversation. When Dave is around, it dissolves into playground-time.
The other thing, is that I come on here to see alternatives to what I can find in the MSM. I do not automatically distrust all MSM, but I do suspect a bias based on ad revenue. It’s certainly not like Dave’s POV has been poorly represented in all available media sources (Lawrence Yun still gets quoted seriously in the American press, and they are almost 3 years into a crash).
Anyway, it’s your baby, and you found him appropriate. I didn’t really mean to get so caught up in the whole thing, I just wanted to be clear about why I said what I said (since you asked).
December 16th, 2008 at 3:59 pm
Here is my attempt at a bull case:
This time it is different, and that is not a joke.
Ben Bernanke is a student of the Great Depression. He is utterly determined to stop the fall in assets, all assets, using government intervention (call it socializing the losses if you will.)
Just today the US has entered ZIRP. That was the last bullet in the interest rate gun, and time for Benny to pull out the bigger weapons.
Everyone knows about Benny B’s big “dropping money from helicopters” speech waay back in, what was it, 2002? Will he really do it? It seems that he fears deflation more than inflation, so he very well could (metaphorically, anyway).
I will just tack on that our Canadian politicians have no qualms about simply copying every move in the US – with the adoption of our own subprime (0/35-40 and CMHC insurance) and with the recent bailout to the tune of more money per capita than the US’ 750billion bailout. Without government, the fundamentals are fooked.
In summary: here is the bull case. The government really wants the tax payer / saver living in mom’s basement to take it up the a** to prevent any kind of asset price fall and could pull out every big gun in the arsenal, short of actually dropping money from helicopters, to prevent them from dropping.
Hyperinflation is always a possibility… There is no limit to the amount of money printing that CAN happen, and we already know that a lot will have to happen due to the fact that CHMC already backs a huge percentage of Canadian mortgage loans and CHMC bonds have an implicit government guarantee.
The bull case is the possibility of hyperinflation. There is no psychological reason for prices to rise in the next 15 years, and no fundamental reason either, BUT very high inflation due to government bailouts can work its own magic.
Of course, I still think deflation should happen (fan of mish here) but ya never never know, do ya?
December 16th, 2008 at 3:58 pm
Yeah take the units off the market and rent them for 1/3 of the carrying costs and wait until until another 2,500 units hit the market in 2009 driving rents even lower.
Hmmm
Okay hold for 25 years and lose $2k+ every month until it’s paid off?
Wait until buyers default and start selling for fire sale prices and then follow like a sheep?
December 16th, 2008 at 3:50 pm
Dave take a deep breath and read what you’ve written.
Pretend it wasn’t you that wrote it and imagine you are a buyer.
You have a blog full of people who’re at least half intelligent and then there’s you and browntowns anti intellectual, incorrect gibberish.
How smart do you feel now?
What are you still doing here? No one cares what you think and you’ve done nothing but been wrong.
December 16th, 2008 at 3:46 pm
Dingus
“I’m not sure exactly what his argument is.”
I’ll respond with your own words.
“Prices will continue to rise because prices are continuing to rise.”
He uses a bit of obfuscating mumbo jumbo but that essentially is his argument.
December 16th, 2008 at 3:42 pm
“does a good new bullish point exist?”
I’ve been wondering that. Prior to this summer, the bulls had facts (prices relentlessly climbing) on their side, while the bears simply had argument (fundamentals blah blah blah) but little else to show for it. Now the bears have both.
The bull “case” up to this summer was simply, and effectively, based on what was actually happening. Prices will continue to rise because prices are continuing to rise. Greater fools rushed in in order to keep from being priced out, or lose 10s of thousands a month in appreciation. Now, without that appreciation … why buy, again?
So what is the bull case? I haven’t dredged through the Dave hate-fest of the past couple of posts, so I’m not sure exactly what his argument is.
I think the only bull case to make is that the recession won’t be as bad as predicted or as hard on BC as some folks think, that employment will remain relatively robust, incomes high and household formation and net migration will continue to be brisk. The post – Olympic slump has already been priced in. Demand for units currently under construction has already been addressed through pre-sales. Rental rates will support amateur landlord-owners of those presales because the economy won’t be as bad as predicted. Prices will remain sticky enough on the downside to ride out any softness in the economy. Sales may slacken, and inventory grow, but sellers will choose to take their units off the market rather than sell for far less than their expectations.
Sounds awfully hollow doesn’t it. You could drive a truck through each one of those points.
Perhaps there should be a post with a contest for the best “bull” case…
December 16th, 2008 at 3:37 pm
If you were holding your breath for a smooth recovery in 2009, exhale now. It ain’t gonna happen.
http://www.globeinvestor.com/s.....6/GIStory/
December 16th, 2008 at 3:29 pm
Posted this in the last thread but thought it was a really neato animation so I thought I would post it here too… (wish I could hotlink so it would show up in the comment… sigh.)
Dave, per your argument that boomers outnumber millenials.
This one’s an animation about demographics in Canada; one even realtors can understand (no reading… Yay!)
So no strawmen about this being from the states, doesn’t apply here, yada yada.
You were wrong AGAIN. Fessup!
http://www.footwork.com/pyramids.asp
Also, here’s a great one that is about the states… Hmmm, something seems eerily similar about the Canadian animation and the one Chris Martenson uses….
http://www.chrismartenson.com/.....mographics
(well worth it, if you haven’t seen it yet…)
PS: Here’s a tip. You should focus on the arguments that you can win. When you pulled the boomers outnumber millenials crazy talk and then followed up with on the other hand, maybe the boomers will go buy another condo in the city nonsense to counteract my grounded-in-fundamentals boomers will sell to survive their retirement argument, what did you think would happen?
December 16th, 2008 at 3:25 pm
From the G&M article:
“The big difference is interest rates, which remain at historically low levels. The resulting low mortgage rates should help homeowners, and moderate this downturn, Mr. Tal said.”
Hmmm… last I checked, most mortgages in Canada are financed over a period of 5 years. Interest rates ARE at historic lows, but that only means that they have nowhere to go but up. Put these two facts together, and we may just have a tsunami of underwater mortgages coming up when over-leveraged homeowners start to refinance at much higher rates in a couple of years.
Nice to see how Mr. Tal manages to spin an upcoming financial catastrophe as a good thing, though.
December 16th, 2008 at 3:23 pm
Inflation still increasing in Canada , falls in US
http://www.globeinvestor.com/s.....2/GIStory/
Household wealth in canada is falling sharply
http://www.globeinvestor.com/s.....6/GIStory/
This does not make for a compelling story.
December 16th, 2008 at 3:11 pm
PM now warns Canadians about pending Depression
http://www.breitbart.com/artic....._article=1
December 16th, 2008 at 3:05 pm
Reductimat, thanks for this post, sorry to go off topic on it!
Dave, you can’t say I didn’t warn you that no matter what you posted the argument would be ripped apart. You managed to stay away from insults, but then you choose to use the ‘mommys basement’ insult? Seriously?!? Way to burn up any shred of credibility you had here.
ellery does a good new bullish point exist? If it does it would be interesting to see. Now that the fed has cut rates to almost zero will that do the trick, or is North America simply setting itself up to be the next Japan?
It’s alarming that sales have hit a 20 year low across the Nation, not just in overpriced markets like Vancouver.
December 16th, 2008 at 3:02 pm
I still like Vanzee’s insightful comment vis a vis the disconnect between price and affordability being the root cause that created this whole mess. Lower intrest rates therefore will not create a bottom for the condo market. Supply is far in excess of demand. Bottom line, lower intrest rates now will not create new buying, quite the opposite. Prices must come down in line with the average persons ability to pay.
The manipulation of intrest rates by the Federal Government is what started this whole fiasco. Prices simply got far too high. The bulk of excess sales were pure speculation. The price correction is not deflation. It is a healthy realignment ofthe economic relationship between developers and purchasers.
The specuvestors are screwed and why should anyone care? The wholesale dumping of inventory is inevitable due to speculators not refinacing alligator investment condo’s simply because the cash flow to service deby equation doesn’t work for them. From a tax/investment perspective, taking a loss is the only rational avenue. Every CA will be recommending this strategy in the next two years. The sooner the better. Most of these loans need $3000 per month in debt service while average rents are $1250. I/R=V , the simplest equation in real estate and it will either make you or break you.
This is a centipede recession with many shoes yet to fall.
December 16th, 2008 at 2:57 pm
I vote for Dave to be banished from his privileges to post!
December 16th, 2008 at 2:37 pm
Compellingly wrong, that is….
December 16th, 2008 at 2:37 pm
Oh, dear, I must apologize. I have realized that this is a new thread with a new post with an actual story attached.
This doesn’t change my frustration with Dave, but I didn’t mean to sound quite so much as if I was stomping off, but rather that I will just be skimming past the posts marked “Dave” after this, and I do recommend those other sites to new readers, who may want a broader picture of what’s going on.
Anyway, thanks, Reductimat.
December 16th, 2008 at 2:36 pm
Dave:
you are arguments are compelling. in afct, they are blatantly wrong. And you risk to force a stupid purchase on a few gullible readers. Shame on you.
December 16th, 2008 at 2:29 pm
“I never used 6.7%. I thought it was pretty clear to those with basic reading comprehension that I used 5.5%.”
You said both, actually. You say so many things that you ultimately say nothing except “buy now or be priced out forever”. You can’t be bothered with links, graphs or specific data, and I no longer can be bothered with you.
To me, this whole situation isn’t a game. People like you have helped bring our economy to a place of great instability through massive over-leverage and an over-reliance on an unsustainable real-estate-based economy. It has damaged more than our finances, but also has made the city uglier and I would add has also hurt the fabric of our society, pitting everyone against each other: sucker-throwing-away-rent vs. greater fool. Globally, this really sucks for the environment, too. I am honestly angry with people like you and I don’t really find it entertaining to watch various posters attack your spin. The more I think about it, the more I disapprove of giving you centre stage by making you a guest poster. By all means, bring in the bulls, but someone with a good, new, point, not this old wishy-washy hype.
I actually trust Rob Chipman because I know who he is and where he comes from. So if I am interested in the pro-real estate blog, I’ve already got one.
I have limited amounts of time, so I’ll be spending it over at the other site where jesse and the others seem to be, as well as calculated risk and hbb.
Thanks so much for hosting this Pope.
December 16th, 2008 at 1:55 pm
Post # 21:
That is exactly what I was seeing in my crystal ball.
Perhaps a future topic?
New projects in need of an initial contingency fund or Older projects with low or depeleted ones ?
How many of these projects not only have unsold units( hence far less than 100% resident or any ownership) but how solvent are the current strata owners?
One may get a great deal on condo via a desperate owner, perhaps a foreclosure / bankruptcy, but what OTHER liabilites do you incur…ie such as YOUR perhaps continually adjusted pro-rata share of the contingency funds.
OR If the building is only 50 % sold and the developer has gone bankrupt…what would those strata fees look like over time?
December 16th, 2008 at 1:53 pm
285 000 dollars sounds like a fair deal for SFH…lived here 15 years and remember what it was like before the boom …no jobs :<
December 16th, 2008 at 1:44 pm
To cover all bases….
Just name the next Bob Rennie Condo Project
The “Mommy’s basement”.
December 16th, 2008 at 1:43 pm
Did anyone listen to CKNW Christie Clark yesterday? Guest was Tony Gioventu of condominium home owners association. Talking about special assessments and how no one can afford them, and the stratas typically have less than 25% of what they need in the contingency funds. People, especially new, absentee and investor owners, refuse to vote for needed repairs, leading to emergency patch jobs and far more extensive (expensive) repairs down the road.
Not yet posted in CKNW archives, I will try to find it once it’s up.
How about an “official” invite from the Pope for Tony to do a guest post here? Have you had any contact with Tony, Your Eminence?
December 16th, 2008 at 1:09 pm
Personally I’d rather live in my parents basement and inherit the house in a few years as opposed to being a moron and spending $500,000 on a condo that will cost thousands more every month than rent and be worth about $45,000 in 2031 and cost $10′s of thousands in special assesments and levies (I’ve been there)
Dave is obviously a realtor but not very good at it and clearly a bit on the slow side
December 16th, 2008 at 12:56 pm
I think it would be safer to assume that you will still be living in mommy’s basement at that time.
Wow. Tell me you didn’t just go there. I thought you were doing a good job of remaining level headed, but the non-buyer as living in parents basement insult is sooooo 2007. You need a new one, how about “yeah, well at least I have equity to lose!”
..unless of course you bought in the last year, then you aren’t losing equity, you’re just losing money and going further into debt on an asset that is rapidly devaluating.
Tell me again why I’m a sucker to have cash in the bank?
December 16th, 2008 at 12:48 pm
Local Gov’t with financing problems due to RE collapse
Story:
” PoCo forced to borrow $25M for Coast Meridian Overpass
http://www.bclocalnews.com/news/36078504.html
QUOTE:
The current economic slowdown has forced the city of Port Coquitlam to dip further into debt than anticipated in order to pay for the Coast Meridian Overpass.
The city, originally expecting to have to borrow $6.2 million, will now need the full $25 million it’s allowed to borrow by the Municipal Finance Authority to pay for the project.
Several funding sources the city was counting on have either not panned out or have been delayed, including $13 million expected from land sales that have yet to be completed.
PoCo’s chief administrative officer, Tony Chong, said the global economic meltdown has forced the city to implement its contingency borrowing plan. “We are following through on a fallback strategy,” Chong told The Tri-City News Friday. “When we first walked into this… nobody would have any idea about the financial meltdown. It is a bit fortuitous of the financial folks [staff] to at least anticipate some of these things.”
The contingency loan, Chong said, was always a possibility and was presented during an open house on the project last year.
How quickly the city can pay back the borrowed money depends on several factors.
A part of the funds budgeted for the project depended on the sale of the old Port Coquitlam works yard, as well as several smaller properties the city holds.
Chong said those deals, and the $13 million that would have come from their sale, have been delayed. But he said he’s confident the deals will close and the city will receive the money it expects from the sale.
Another $5 million in development cost charge revenues has also been delayed after several residential and commercial projects, including Townline Group of Companies’ City Walk project on Mary Hill Road, and some Dominion Triangle development, were put on hold.
Once the housing market picks up again, Chong said the city will receive those funds, which will immediately go toward paying down the $25-million debt.
When the real estate market is expected to turn around is up for debate, according to Townline’s director of residential development Bob Pearce. He said the company is re-evaluating every area of its operations, including its Port Coquitlam project.
Whats that saying about a bird in the hand….?
What are these people smoking ?
PoCo citizens : Can you say SOL and Up go your taxes?
December 16th, 2008 at 12:46 pm
betamax
His world is not quite the same as yours and mine. In his world he never insults others, he is sweet and perfect and always right, always the victim of the slings and arrows of others. He whines about the insults he receives a lot and in his whining inevitably he tries to demonstrate how stoic he is, never retaliating, never instigating and of course never whining about it. Think of him as a Messianic figure, the Jesus of Vancouver Real Estate, if you will, and you’re pretty close to getting inside his head.
December 16th, 2008 at 12:35 pm
Fed funds rate almost zero.
woof.
December 16th, 2008 at 12:18 pm
Dave … R u Katie from “Horton Hears a Who”
http://www.youtube.com/watch?v=xJkaKAIl_Fc
December 16th, 2008 at 12:17 pm
If it won’t work for the next century when exactly will it stop working?
Drachen, Dave has addressed this already: “This trend will continue until it no longer continues.” Which apparently can only be determined in hindsight.
December 16th, 2008 at 12:15 pm
I think it would be safer to assume that you will still be living in mommy’s basement at that time.
That ad hominem is invariably used by people with no viable argument. Thanks for outing yourself.
December 16th, 2008 at 12:04 pm
Dave
“The family that is able to buy a SFH in GV in 2031 will have a much higher income than you have assumed.”
So what you’re saying is that eventually home ownership will only be for the extraordinarily wealthy? Remember condos will be going up at the same rate and will also be unattainable for median income families eventually.
“I don’t think anybody would take technical analysis and assume trends will continue for the next century.”
Well if it isn’t good at predicting the future reliably then what’s to say that now isn’t the time things shift to a different curve? If it won’t work for the next century when exactly will it stop working? Now? 20 years from now? 99 years from now?
You know your system is broken, you’ve admitted that much, but you still think your system works in the short run? What good reason do you have for believing that?
December 16th, 2008 at 12:01 pm
Oops. “may be quicker”.
Preview is my friend.
December 16th, 2008 at 11:59 am
Two years behind California. Price capitulation make be quicker here though, as buyers realize they can buy elsewhere for less.
December 16th, 2008 at 11:42 am
Common sense dictates that if you can rent a place (including heat and hot water) for 1/2 the price of “buying” it (not including heat and hot water) then it is a no-brainer to rent.
I think the only people left who have not bought within the last 2-3 years are the ones with logical skills.
Realtors are going to have a little bit of an exercise in frustration trying to get people like us to buy now when we look around at all of our depressed friends and colleagues who either bought within the past few years or took out home equity loans and now they have to pay it all back with interest.
December 16th, 2008 at 11:40 am
I never used 6.7%. I thought it was pretty clear to those with basic reading comprehension that I used 5.5%.
The family that is able to buy a SFH in GV in 2031 will have a much higher income than you have assumed.
I don’t think anybody would take technical analysis and assume trends will continue for the next century. The point is that for the last 35 to 50 years houses prices have traded within a certain range. This trend will continue until it no longer continues. Assuming one cycle at a time is the only way you can apply it. I think it would be safer to assume that you will still be living in mommy’s basement at that time.
December 16th, 2008 at 11:23 am
In 2002, the average price of a single-family detached bungalow in Greater Vancouver was $285,400. Source: RBC Financial Group Housing Affordability Index, 2002. Unfortunately I don’t have a link; the old reports aren’t kept online.
December 16th, 2008 at 11:13 am
Dave
Oh, you’re revising your 6.7% number then?
I thought you said the recent peak was “abnormal” why are you now referencing it to calculate what might be normal?
So you think that 1.8 million dollars is reasonable for a family earning 120k per year? 15 income multiples?
Since you insist on being obtuse I’ll drag the time line further. You think it’s reasonable for a family earning 160k in 2061 to pay 5.25 million for a house? Don’t you see housing prices cannot go up faster than wages indefinitely?
Wage in 2101 would be 434k and housing prices would be 76 million, 175 wage multiples. Don’t you get that this is simply not sustainable?
December 16th, 2008 at 10:57 am
Drachen, do you really think the average condo was $360k in 2001? Give your head a shake. That number was the average for SFH in Greater Van.
Thirty years of 5.5% appreciation would be a five fold increase, or roughly $1.8 million for a SFH in 2031. Average prices in 2008 broke $900k. I don’t find it that hard to believe prices would double the recent peak to $1.8 million in 23 years.
December 16th, 2008 at 10:53 am
Sorry reposting.
***CHHC TO BACK NEW CLASS OF MORTGAGE*****
Another large segment of potential buyers waiting on the sidelines. This group, previously excluded from the RE market due to discrimination by lenders will be snatching up homes in the spring when the CMHC will start backing a new class of mortgage; The FFCHL (Family Feline and Canine Housing Loan)-also dubbed the “Sub-Prime-Sub-Human Mortgage”. Apparently many pets have been chomping at the bone, or sack of catnip, to flee the nest. These new loans, requiring only declared potential future income, will allow them to finally join the ownership society.
The mortgages will be backed by a special fund derived from a one-time, retroactive to 1983, 5000% tax on pet sweaters and booties.
December 16th, 2008 at 10:43 am
I posted this in the last thread, but as many people won’t look there and I think the topic is worth addressing I’m re-posting here.
Dave
“Let’s then pick the closest bottom to our current boom which was 2001 when prices were $360k. That would give 6.7% per year, which is higher than my estimate. Again I believe my original numbers went back to the 50’s.”
So then you’d say it’s reasonable to expect that house prices in 2031 (I presume that’s condo at 360k?) will be 1.3 million? Over which time median wages should increase about 50% or so. Is that about right? By 2051 it would be nearly 5 million and wages would have about doubled from now. Yeah that sounds reasonable, a family with an income of 120k living in a 5 million dollar condo (rolling eyes). After all that’s only 41 times their annual income right? They should be able to pay it off in a few thousand years if they eat nothing but dirt, buy nothing and walk to work.
[All numbers are based on 2001 which is the point in time Dave chose wage increases are based on average Canada wide salary increases for the last half dozen years (which is better than the Vancouver number and likely better than we'll see for the next while with the looming recession and all)]
December 16th, 2008 at 10:07 am
I don’t believe this is about consumer confidence – in the absence of constant and dramatic appreciation in prices, it simply makes no economic sense to buy a house or condo right now.
December 16th, 2008 at 9:59 am
First…