Friday Free for All!
It’s the end of the week, so lets do our regular news round up and open topic discussion. Here are a few stories I’ve noticed lately:
-Vancouver office vacancy rate jumps to 7.3%
-BC Forest profits plummet
-Food and housing costs drive inflation up
-Carnival leaves town, tourism sector to lose $18 Million
-MLS admits Vancouver despite economic slowdown
-PM defends economic confidence against David Dodge
-Detroit, Artists and the $100 house
-Hong Kong stock commentator bursts into tears
-Images from the global recession
-What’s hot at the pawn shop
So what are you seeing out there? Nervous about your job security? Are you saving more or taking on more debt? Post your thoughts, anecdotes and economic news here and have an excellent weekend!
note: any conversation on Vancouver, real estate or economics is allowed, please keep it civilized. When posting articles please only quote pertinent points and link to the original instead of pasting the entire article here. Pasting a link into your comment will automatically create a clickable hot-link. Linking to more than one external link within a single comment may cause your submission to get held up in the spam filter.
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March 24th, 2009 at 3:31 am
Raven is hardly respectful”
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Raven Says:Reply to this comment
Then just ignore my posts, dumbazz.
Current score: -9
March 24th, 2009 at 2:15 am
“LOL…you guys are PURPOSELY giving raven bad scores. how sad is THAT?
geez, she’s neither ’self serving’ or ‘arrogant’. she’s talking the truth.”
I agree, I think this is very unfair. The person is both smart and respectful and disagreeing simply out of self interest doesn’t promote two sided discussion.
On a similar note I do miss vancouverboom2′s posts though, they crack me up.
March 24th, 2009 at 12:45 am
patriotz, you don’t get it. i said for SOME FOLKS, those who have a lifestyle where they may want to leave quickly, renting is the best bet.
but, for others, most, at ’some point’ they’ll want to settle down and at THAT POINT, it’s ALWAYS better to own.
it’s amazing how some people don’t get this concept.
I think it is important to make a distinction between ‘settling down and being able to own’ versus ‘financially advantageous to own’. The two are not equivalent.
It is possible that in many periods of history, it was financially better to own than to rent, and hence once you were in a position of not having to move and had a stable position, it was indeed good to take advantage of this financial benefit.
When patriotz is pointing out is that currently it is not financially advantageous to own. Of course you could disagree and believe it is currently financially advantageous to own. In that case, yes, then it would follow that you would try to own as soon as you were in a position to.
But don’t make the mistake of equating the ability to settle down and to own with owning being financially advantageous.
Another fallacy is that it doesn’t matter when you buy, as long as you can afford it and are in a position to do so, you should, because anyways prices always go up in the long term. Whatever loss you make in the short term, eventually you will make a profit.
Case in point. I’m going to charge you $500 for this shirt today. You can afford the shirt and are in a position to buy it, so by the principle above, you should buy it. Anyways prices for shirts always go up in the long term. Tomorrow the price drops to $50 and then increases $1 per year after that. Eventually you will make a profit.
You can object to the stupid example, but any objection you have will eventually result in arguments and debates about where prices of the shirts are heading. So really, the above motto that it is better to buy depends crucially on knowing prices will be stable and keep their value against inflation. Hence the discussions about the economy and financial analysis of the cost of ownership versus renting.
March 23rd, 2009 at 11:41 pm
getreal:
but, for others, most, at ’some point’ they’ll want to settle down and at THAT POINT, it’s ALWAYS better to own.
I get it all right. I think you don’t.
It only makes sense to buy when prices make sense. Not whenever you want to “settle down”. It that point happens to be, say, April 2008, you have just hosed your whole life financially.
March 23rd, 2009 at 11:35 pm
LOL…you guys are PURPOSELY giving raven bad scores. how sad is THAT?
geez, she’s neither ‘self serving’ or ‘arrogant’. she’s talking the truth.
you gloom and doomers, as you were called, simply wait around for ‘bad times’ so you can say ‘see…i TOLD YOU things will get bad’.
LOL…amazing. as she said, if you don’t like what she says, don’t respond. but you will, because you have to show how smart you THINK you are.
March 23rd, 2009 at 11:32 pm
patriotz, you don’t get it. i said for SOME FOLKS, those who have a lifestyle where they may want to leave quickly, renting is the best bet.
but, for others, most, at ‘some point’ they’ll want to settle down and at THAT POINT, it’s ALWAYS better to own.
it’s amazing how some people don’t get this concept.
March 23rd, 2009 at 10:21 pm
“I said expressly that a price/rent of 265 in 1997 was not credible except for a lot value property, so we really don’t have anything to disagree with on this one. You first post just said “oldie”, which was a lot less specific.”
Not credible to you. If we went along with your 150 price/rent ratio, then that house should’ve been purchased for $150,000. It isn’t, because the full value of it is $265,000.
“You traded up at a time when the market was overvalued. Even if the nominal price just falls back to what you paid, you will have lost money because ownership costs already exceeded renting in 2005.”
Nope, nope, nope. Our ownership costs was below renting because we have already paid down the mortgage so our loan servicing cost was less than half of the market rent. But hypothetically speaking, for someone to enter the market with 20%, 80% LTV, that would be true.
“Now let me say that buying in 1997 and trading up in 2005, while not optimal on either purchase, is still going to put you in a much better position than someone who bought in 2008. But prices have already rolled back to late 2006 levels, and it’s not going to be long before someone who did not buy at all will be in a better position than you.”
Assuming that that person has been saving for downpayment (& not lost 50% value in the stock market) in addition to paying rent since 1997, MAYBE. We bought in 1997 and have been paying into equity all that time while the house has been keeping up with inflation.
“By the time this bust is over anyone who bought for more than 2001 real prices will be worse off then someone who never bought.”
We shall see. With all the stimulus money, lower interest rates and Geithner’s toxic plan, I think the fall will slow and Vancouver’s housing prices may just coast along 2005 levels before slowly creeping back up again.
March 23rd, 2009 at 9:17 pm
Raven:
Now that home is an oldtimer, almost a tear-down, in east vancouver, so not surprisingly it’s in the lower end of the average $390K in UBC sauder report.
I said expressly that a price/rent of 265 in 1997 was not credible except for a lot value property, so we really don’t have anything to disagree with on this one. You first post just said “oldie”, which was a lot less specific.
Ha, we actually “lost money” until 2003. Then in 2005, we sold it for $422,000 and bought a newer, larger house for $560K. Now it’s worth $750K and hasn’t dipped back to 2005 price levels.
Yet.
You traded up at a time when the market was overvalued. Even if the nominal price just falls back to what you paid, you will have lost money because ownership costs already exceeded renting in 2005.
Now let me say that buying in 1997 and trading up in 2005, while not optimal on either purchase, is still going to put you in a much better position than someone who bought in 2008. But prices have already rolled back to late 2006 levels, and it’s not going to be long before someone who did not buy at all will be in a better position than you.
By the time this bust is over anyone who bought for more than 2001 real prices will be worse off then someone who never bought.
March 23rd, 2009 at 5:12 pm
“so the narrative goes.”
You and me, Ted
I have to admit, that is was a big shock for me, when I first naively told people about some of the discoveries I made (for example when I read Shiller’s Irrational Exuberance). I thought they’d be interested (or maybe even bored) but I wasn’t ready for how angry it made people.
I stupidly thought they would want to try to figure things out rationally, and instead they would just say “throwing money away”, “olympics”, “not making more land” and other things like that. Giving them another point of view made them uncomfortable and mad (even the ones who hadn’t yet bought – I guess it hurt their dream). And I have smart, nice friends and family, too.
I’ve mostly learned to clam up about it in public. Either people don’t remember what was said (like the family member who said to me, “oh, ella, we all KNEW the market was going to crash at some point” when I had begged her not to buy speculative property against her home and also tried to convince her not to buy bank stocks when they first ‘went on sale’), or they do remember and hold it against you, thinking you’re gloating over their misfortune (or even that your negative thinking is causing the market to tank).
It’s sometimes made me really sad, actually. I thought people were smarter than they are. And then I wonder what my blind spots are…
March 23rd, 2009 at 4:54 pm
Ella I like your comment on doom and gloomer, I get called tha at work. I respond back that I am very optimistic actually. I see opportunity ahead. The doom and gloom argument is a straw man usually used by the types I work with. Arrogant egotists that are always wrong yet think they are always right and need an excuse. Me, you and others on this forum were not right we just happened to get it right with our negativity for a change, so the narrative goes.
March 23rd, 2009 at 4:34 pm
Other Ted:
“I am starting to get tired of classifying people broadly as bulls or bears. You mention that you are thankful you didn’t listen to the bears in 1997. Who says those are the same people who are bearish today. Being a bull or a bear is not a personality trait. Its about outlook right now not forever.”
I couldn’t agree more. If that wasn’t such a long quote, I would put it on a T-shirt
I do get frustrated at the way people willfully misunderstand this. I was now known as as the doom-and-gloomer in my family because I wasn’t buying property or bank stocks in the middle of the decade. Now things are reversed and I’m telling them that it’s worth (cautiously) investing, and that I’m starting (**starting**) to look out for properties that might suit us, and they’re beginning to talk to to my like I’m a naive, little pie-eyed overly optimistic thing. What I have said has not fundamentally changed: I’ve said I would wait until I was ready (ie savings, no debt) and also until I could buy for about the same as renting. What they have said has radically changed (real estate is great; real estate is terrible).
I read once that one of the rules of becoming wealthy is that you can’t care what others think of you, but I won’t pretend it doesn’t bother me when my family (or others) quote back positive or negative things I’ve said about the market, as if those prognostics weren’t grounded in a particular time or set of circumstances .
For example, I had said earlier that I wasn’t able to buy at the turn of the decade because I was a student. It was a good TIME to buy, but I had no real income or savings. I remember looking at the MLS and trying to figure out what we could afford, I actually wanted to buy. But the best investment I could make before was my education and starting a business. I now use that education to earn the money I need for a home, including some I have saved for a downpayment.
(The funny thing is, when I told the people at my little student job that I wished I had a house, they all thought it was terrible idea and regaled me with stories of leaky condos, property taxes, bad tenants, roof repairs and so on – I like to remember that because it shows how much the fashion can change). Of course, by the time I graduated, and started working the market had gone crazy, and I had to change my plans. That was hard,but now that I can see a little light at the end of the tunnel, I’m really proud that I kept my head.
At the end of the day, I have to look at my own behaviour and make sure I’m being honest. Because one thing I have learned from this, is that very smart people are capable of panicking and also of lying to themselves. And that’s when they make terrible investment decisions.
March 23rd, 2009 at 4:15 pm
Interesting article
The Big Takeover
The global economic crisis isn’t about money – it’s about power. How Wall Street insiders are using the bailout to stage a revolution
http://www.rollingstone.com/po.....takeover/1
AIG is reminding me more and more of the Rockefeller Oil monopoly in the late 1800′s early 1900′s . Rockefeller owned companies had approx. 17% of the entire U.S GDP..which forced the Gov’t to force Rockefeller break up his monopoly into a number of smaller companies with different owners. aka create competition.
This story seema to provide an eerily similar story, except AIG is less obvious..simply “on paper” . It almost seems like AIG positioned itself in such a way so as to effectively become a de-facto US Gov’t, if not world Gov’t. It cannot fail, but that is it’s position of strength, and it can literally dictate terms in subtle ways.
These sorts of exposes seem to have key players who learned at the knee of previous scammers.ie
QUOTE:
That guy — the Patient Zero of the global economic meltdown — was one Joseph Cassano, the head of a tiny, 400-person unit within the company called AIG Financial Products, or AIGFP. Cassano, a pudgy, balding Brooklyn College grad with beady eyes and way too much forehead, cut his teeth in the Eighties working for Mike Milken, the granddaddy of modern Wall Street debt alchemists.
March 23rd, 2009 at 4:07 pm
I fond something fantastic today:
http://www.moneyscience.com/Fi.....rt_Shiller‘s_Financial_Markets_Course_at_Yale_-_Spring_2008_-_Video_and_Audio.html
You can listen to Robert Shillers Financial markets course at Yale online. There are even slides and exercises.
It’s great because the lectures are very recent.
I <3 Shiller.
March 23rd, 2009 at 4:06 pm
I’m done. Time to go celebrate the 500 pts Dow rally.
March 23rd, 2009 at 3:58 pm
“And when the likes of you criticize my investment decisions and question my intelligence, I am put in the position to stand up for myself.”
Oh my goodness. Calm down. You’re on a forum where the primary point of discussion is whether or not Vancouver/Canadian real estate is a good buy or not. Of course your decisions are going to get criticized.
“You, on the other hand, have accused me of being an equity locust, because I was priced out of vancouver, I took my money and drove up the cost of Edmonton RE. You remember how I responded to you? I said it was nonsense, and that Edmonton’s RE was hot because their economy was hot (in other words, locally driven).
See what I mean when I say you (and others) are putting words in my mouth?”
You. took. your. money. from. this. market. into. another. market. which. was. cheaper. That makes you an equity locust in my books. No one’s putting words in your mouth, we’re just disagreeing with your conclusions. I don’t care how high real estate gets there, and I don’t think your purchases are going to drive it up in the long run. Go buy all of moose jaw, for all I care. Price everyone out forever. See how it goes.
“Now you’re just making up sh*t as you go. Where did I EVER say that Vancouver’s market was driven up by rich money from Asia/New York/Europe? Find me my quotes, verbatim, please.”
I DIDN”T SAY YOU DID CLAIM THAT. I said THAT was the myth that was being debunked (re: equity locusts).
_____________
OK, I think enough time and thoughtful energy has been put toward Raven, Raven’s family, Raven’s house, feelings, investment, dreams…it was fun but time to move on. It’s just getting irritating with a the histrionics.
March 23rd, 2009 at 3:56 pm
“Your self-serving and self-congratulatory hubris is far from my taste.”
Get over it. We ain’t friends.
March 23rd, 2009 at 3:52 pm
If this is so boring and tiring for you all, why did this forum go up to 253 posts? If you don’t want to hear my tiring, repetitive “bullishness” or dose of reality, then don’t post delusional baseless crap like houses in 1997 was $390K, price/ratio was better back in 1997, houses should only be worth NPV at the current mortgage interest rate.
March 23rd, 2009 at 3:41 pm
“I am a bit sceptcial that a house that was valued at $320 in 2005 is now worth $750 even in vancouver.”
Go back and read my post SLOWLY again. I said we sold that house in 2005 for $422K and bought a new one at $560K, which is now worth $750K today.
March 23rd, 2009 at 3:36 pm
“Actually, no. I read the blog for the sense that posters such as Patriotz writes. Your self-serving and self-congratulatory hubris is far from my taste.”
Then just ignore my posts, dumbazz.
March 23rd, 2009 at 3:33 pm
“I believe what was debunked is that they were actually an important market driver, were permanently driving up prices (or would be there to bail out local flippers in Washington and Oregon), rather than that people never looked further afield for cheaper markets after making money in richer, overheated markets.”
In other words, you’re saying that the mythical Californian equity locusts are a bust. http://seattlebubble.com/blog/.....ty-locust/
“Anecdotally, you are engaged in exactly that (couldn’t afford to invest in Vancouver, so went to Edmonton). I know someone who used the equity in their Vancouver home to buy up North. Same idea.”
I’m like any other investor–I put money where I think I can get the most ROR. Who in the right mind want to cashflow negative in Vancouver (except that moron who wants to pay $3K/month on a vacant condo instead of renting it out for $1380)? And I don’t know why you keep stating that I use equity to buy in Edmonton. I didn’t–I used PROFITS (cold hard cash) from past RE sales in BC to fund the new property in Edmonton.
“As with Vancouver, where the “rich money from Asia” or in New York, where the “rich money from Europe” was supposed to be driving up the market. In reality, a lot of the market was really locally driven. So, I think you’re confusing the two issues. However, if I am wrong, I would love to see a link. I do come on here to learn,”
Now you’re just making up sh*t as you go. Where did I EVER say that Vancouver’s market was driven up by rich money from Asia/New York/Europe? Find me my quotes, verbatim, please.
You, on the other hand, have accused me of being an equity locust, because I was priced out of vancouver, I took my money and drove up the cost of Edmonton RE. You remember how I responded to you? I said it was nonsense, and that Edmonton’s RE was hot because their economy was hot (in other words, locally driven).
See what I mean when I say you (and others) are putting words in my mouth?