May 2009: prices up and down
The Vancouver Sun is reporting that the housing market in the lower mainland has struck a balance point, with sales and price rebounding from their winter lows.
The decline of Lower Mainland real estate markets, which started with falling sales more than a year and saw prices drop as the global recession developed, levelled out in May.
Metro Vancouver recorded its best year-over-year sales increase in May since February 2008 with 3,524 sales reported through the Multiple Listing Service, 17 per cent higher than the 3,002 sales recorded in the same month a year ago.
The so-called benchmark price in Metro Vancouver, averaged across property types, hit $506,201 in May, which is still 11 per cent below the same month in 2008, but higher than the $484,211 recorded in January.
Metro Vancouver’s inventory of unsold homes in May stood at 13,641, a 16-per-cent decrease from a year ago.
At the risk of repetition, I’m just going to post one of our favorite charts from Sacramento Land(ing) showing their market going through the seasons over the last three years:
And here’s the up to date version they just posted:
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Meat Robot Says:
June 2nd, 2009 at 9:55 pm
Ahh, thank goodness for data!
I have been having a 6 week “WTF?!?” because of this uptick.
That chart explains things nicely.
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patriotz Says:
June 2nd, 2009 at 10:09 pm
The Vancouver Sun is reporting that the housing market in the lower mainland has struck a balance point, with sales and price rebounding from their winter lows.
Just in time for mortgage rates to start rising again.
Carry on, Sisyphus.
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browntown Says:
June 2nd, 2009 at 11:21 pm
oh yeaah nutbags! scullboy lost in woods missing next leg up!
“i dont always drink beer but when i do i prefer dos equis”
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Anon Says:
June 2nd, 2009 at 11:31 pm
The fact remains the same: Vancouver housing remains over double its point of affordability. No matter what happens elsewhere, this town has to correct. Unless, of course, nominal incomes double. Make your own forecast as to which outcome is more likely…
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Anonymous Says:
June 2nd, 2009 at 11:38 pm
#4, unfortunately this town is down to about 4-5 months inventory. By comparison, the states overall is still at about 10. Population growth the last two quarters here has exceeded forecasts. It’s not good.
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Anonono Says:
June 3rd, 2009 at 12:06 am
Population growth the last two quarters here has exceeded forecasts. It’s not good.
Where is the evidence and data please? And the source?
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Arwen Says:
June 3rd, 2009 at 12:24 am
Also, if population is growing in baristas and cab drivers, it’s still not going to be sustaining a half million dollar market.
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Chilled Says:
June 3rd, 2009 at 12:38 am
Can’t we just host the summer Olympics too? Wouldn’t this keep the Ponzi scheme alive and well?
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other ted Says:
June 3rd, 2009 at 1:45 am
I do agree with everyone on here who sees the spring bounce as temporary but I am a bit disapointed that most on here don’t see the same with the stock market.
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rp Says:
June 3rd, 2009 at 5:43 am
The stock market is the biggest fraud ever. I could go on for an hour about the games people played with Q1 earnings. It’s ridiculous and disgusting at the same time. I like to read http://www.market-ticker.org/
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Dave Says:
June 3rd, 2009 at 7:11 am
That graph is a very bad comparative for the Vancouver market.
The current level of inventory in Vancouver is a ‘balanced’ 4 to 5 months (almost sellers market). The level of inventory in spring 2007 in Sacramento (April 2007) was 24!
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Boombust Says:
June 3rd, 2009 at 7:18 am
Dave,
I am sure if you look at all the other bubblicious cities, you will see a very similar pattern. Now, move along.
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Dave Says:
June 3rd, 2009 at 7:24 am
Boombust:
So you think MOI is a meaningless indicator? Please.
Please show me the spring bounces from other ‘bubble’ markets and find one with a low MOI, like we have. Again, this was your assertion so feel free to demonstrate as much. If not, then well…. you move along.
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patriotz Says:
June 3rd, 2009 at 7:39 am
other ted:
I am a bit disapointed that most on here don’t see the same with the stock market
Now I’m not claiming that the price or dividends can’t go down going forward, but BMO for example is currently paying a cash yield of 6.2%. TRP is yielding 4.6%. Telus is yielding 6%. These companies have never missed a dividend and BMO has never cut it. And if you get cold feet you can unload them in seconds for a cost of $9.99.
Compare that to the net yield of Vancouver RE: (rent – taxes, etc.)/price. Not too hard to see which is the better value.
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Niko Says:
June 3rd, 2009 at 9:01 am
Dave:
Regarding the low inventory, let’s take a look at why it is “low”. I have noticed an unprecedented increase in available rentals over the last few months. Just take a look at Craigslist. You can easily rent a brand new two bedroom with all the luxuries for a $1,000 a month. What is also interesting, most of those ads are placed by property management companies rather then owners. Entire new buildings are for rent! And more and more is coming every day. Here is one example:
http://vancouver.en.craigslist.....23279.html
The same property management company has dozens of other units, and they have been on Craigslist for months now.
Those who were stupid enough to buy those new condos have realized that selling them would be impossible and decided to rent them out. At least it would cover a fraction of their mortgage payments and keep the units from becoming unlivable if left empty.
This is why thousands of empty and unsellable units are not currently listed and not counted as inventory. This doesn’t change the fact that they are empty and unsellable.
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realpaul Says:
June 3rd, 2009 at 9:13 am
There are a lot of ‘very afraid’ sellers who have chosen to ’sit it out’ this has caused a temporary adjustment to inventory as they fail to re-list stale inventory. Mnay have chosen to try to rent, at a loss.
Low intrest rates have given a great many a breather. Interest rates are heading back up though and the pressure is on for these short term specuvestors. The World Bank said that this pause in the downside velocity of the recession was akin to a ’sugar high’ because of the temporary rate reductions. Variable rates ( the majority were hit again this week) .
Jobs numbers will beat the deniers down for a few days. The deniers really only poke thier heads up when there isn’t any economic data coming out. Today, they are very quiet, hmmmmmm?
http://www.vancouversun.com/Bu.....story.html
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patriotz Says:
June 3rd, 2009 at 9:18 am
Dave:
So you think MOI is a meaningless indicator? Please.
MOI is the quotient of listings and sales, both of which can turn on a dime.
Fundamentals can’t, except for interest rates, and we know which way they’re going.
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crabman Says:
June 3rd, 2009 at 9:26 am
Dave:
Compared to Sacramento, this is like 2006 not 2007. In 2006, the Sacramento MOI was about 6.
http://bubbletrackinggraphs.bl.....metro.html
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Dave Says:
June 3rd, 2009 at 9:34 am
crabman:
If by ‘about’ you really mean double to triple, then yes. In May and June 2006, the MOI in Sacramento was 15 and 17, respectively. Our MOI is currently 4 to 5. Apples / oranges.
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Vansanity Says:
June 3rd, 2009 at 9:42 am
Is it just me or does Dave’s defensiveness reek of insecurity?
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Dave Says:
June 3rd, 2009 at 9:45 am
patriotz:
The slope of the inventory curve has shown itself to be quite stable. You don’t see spikes of inventory one way or the other. Rather, inventory just moves up and down seasonally. It is unlikely that the slope of the inventory curve will drastically change going forward this year. It is unlikely that we are going to see the level of inventory experienced last Fall. May 2009 already has lower inventory than May 2008.
Sales are more volatile than inventory but they still track seasonal patterns. It is unlikely that sales are going to drastically fall off from the expected seasonal trends, short of further significantly negative economic outcomes.
Do we really know where interest rates are going? A 0.2% increase in the five year rate is hardly a big shift upwards. We won’t be seeing that effect on the housing market for quite a number of months. The housing market lags interest rates by many months. Short term rates are likely to stay where they are for quite some time (according to BOC). Overall, I don’t see interest rate changes having a big effect on real estate in the near term.
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Dave Says:
June 3rd, 2009 at 9:47 am
realpaul:
Are those the same sellers who were supposed to flood the market with listings this spring?
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Dave Says:
June 3rd, 2009 at 9:54 am
Niko:
Your logic doesn’t flow or make any sense. A high vacancy rate does not result in low real estate inventory.
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realpaul Says:
June 3rd, 2009 at 10:05 am
Is it the failure of the local media and the virtual headlock on information which is keeping the Vancouver ’stupid and artificially’ bouyant? The local media certainly seems to have conspired to misinform the public at every turn. We seem to be at odds with the open markets.
http://blogs.wsj.com/developme.....ion-in-09/
Craigslist , Property Managers and the spike in listings for rent and properties which have not relisted after having not sold have served to curb the explosion of inventory that was taking place just before the government squashed intrest rates. It’s going to get even more difficult to hold a losing alligator as rates creep up and rents continue to fall. The super low rates are a temporary phenom, I expect further increases to continue to squeeze the specuvestor and developers who are holding inventory off the market.
I am not privy to everyone financing contracts but I would imagibe that most of the biggest ‘listers’ are withing 1/2 point away from ‘forced listing’, as loans are called due to disqualification targets being met. Then we’ll see another round of ‘discounting’ and fire sales.
Hopefully much of the local media sluts like Global TV and the Vanc Sun will be out of business by then and the truth will be available on a timely basis by an informative and agressive public advocate. The CKNW’s of the world have got to take the prize as the biggest bullshitters in the local scene since they took it upon themselves to spout the nonsensical cheerleading that they have.
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Anonymous Says:
June 3rd, 2009 at 10:11 am
Dave has been wrong from day one about everything.
He knows that California is a bubble state but pretends it’s not “well there are movie stars, uniersal studios, rich people, the 1984 olympics”
Dave, when was the last time you bought a “Vancouver Condo”?
When have you ever been right about anything?
Seriously with realtors as dumb as you it’s no wonder the average realtors wage is on par with a Starbucks Barista this month.
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David Says:
June 3rd, 2009 at 10:14 am
You are all right, I know that the phenomenal spike in rentals is indicative of a huge bubble market that is about to explode.
I also fully understand that this rental spike is simply ignorant speculators hoping to rent the property out for a year and sell it for a bigger profit next year.
So all I need to do is figure out a way to raise the minimum wage to $25/hr and some of these pathetic specuvestors may be able to hang on for another year.
Luckily the construction market kept vancouver afloat for a few months longer and now some people are stupid enough to think that Vancouver missed the recession.
I better get down to Starbucks, I won’t get a seat if I don’t go now. All these “rich” out of work people keep stealing my usual spot!
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VanBanker Says:
June 3rd, 2009 at 10:15 am
Regarding the argument between Dave and everyone else, I’d like to say a few things:
1) It’s too early in the year to judge things subjectively. Fall/winter is always the time when inventory rises and sales fall, leading to price drops.
2) Look at the graph for under construction numbers for Greater Vancouver from CMHC. We’ve only come down from about 26,500 to 24,500 and prices have already dropped ~ 15%. Not only that, but there are still new starts every month. All of those units will keeep hitting the market over the next two years, and prices will drop significantly more.
3) I’m glad to see “greater fools” who have been sitting on the sidelines waiting for a correction are now jumping in too early. This will dry up more demand and set us up for further price drops as more inventory hits the market (see point #2).
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David Says:
June 3rd, 2009 at 10:17 am
Over 1,000 Brand New rentals available this morning
http://vancouver.en.craigslist.....;bedrooms=
Hey Dave what do you call a market where the available rentals exceed the demand ten fold?
Does this mean a better class of tenant is moving into the new buildings? Do people paying $3,500 per month for s dump like tv towers feel good knowing the barista next door is paying $1,380 for the EXACT same unit and can save some money for when they grow up and don’t actually want to live downtown?
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patriotz Says:
June 3rd, 2009 at 10:18 am
Dave:
The slope of the inventory curve has shown itself to be quite stable. You don’t see spikes of inventory one way or the other. Rather, inventory just moves up and down seasonally.
Oh come on off it. Of course inventory moves up and down seasonally, but it took off like a rocket in 2008:
http://www.nvcondos.ca/listing.....;pageId=33
It happened before and it can happen again.
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Dave Says:
June 3rd, 2009 at 10:32 am
Anonymous:
Really? I would suggest that I have been dead on. In fact, one year ago, I said the correction would be about 10%, which is exactly where we are now.
I still see some downside this Fall, but not to the extent of the correction last year.
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Dave Says:
June 3rd, 2009 at 10:35 am
patriotz:
And 2008 demonstrates my point just perfectly. Inventory grew at a relatively constant pace for the first six months of the year, then stabablized for three months and then gradually eased off. It didn’t dramatically accelerate one way or the other in the manner you suggest it can. Remember, you used the term, ‘turn on a dime’, not me.
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realpaul Says:
June 3rd, 2009 at 10:44 am
A good example of ‘the reluctant seller’ mentality.
http://apnews.myway.com/articl.....QVGO0.html
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patriotz Says:
June 3rd, 2009 at 11:11 am
Dave:
Remember, you used the term, ‘turn on a dime’, not me.
I said, “MOI is the quotient of listings and sales, both of which can turn on a dime.”
What happens to quotients when the denominator gets really small?
And if you don’t think that rise in inventory in 2008 was dramatic, well I don’t think there’s any more I can say.
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Just_Spiffy Says:
June 3rd, 2009 at 11:12 am
Gietner renting his home, oh that is too funny realpaul.
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Arwen Says:
June 3rd, 2009 at 11:27 am
I thought MOI was listeds/sales, yeah?
To my eye, that Sacramento graph linked by crabman looks like 7ish both months – approximately 7.2 on the columns to either side of the 05/06 time indicator. Then it really bounces up in July & August – but it would, because that’s when the spring bounce ended.
Although, in absolute terms, their inventory was increasing YOY whereas ours hasn’t.
But bubbles are psychological events, not financial ones. The word on the street still seems to be “things will change after the Olympics”, and we don’t know from these graphs what happened with the Sacremento media on the way through. (Nor do we know how much of the city’s wealth was tied up in their capital assets!) Vancouver is also the last out of the bubble, really, given how inflated. We’re a year or so behind Seattle.
So our psychology is different in ways obvious and in possible non-obvious ways too. Doesn’t have anything to say about fundamentals.
I also have to agree with patriotz the slope of inventory buildup in 2008 compared to other years is quite *amazing*.
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Arwen Says:
June 3rd, 2009 at 11:30 am
It should also be pointed out that our rate of price loss was faster than Sacramento’s since last June compared to their first year of price erosion, (although $/sq.ft. isn’t directly benchmark price), which means that of course their psychology was unwinding differently.
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Dave Says:
June 3rd, 2009 at 11:33 am
patriotz:
That doesn’t take away from my point. Growth rates and the change in growth rates are two very different things. I am refering to the change of the slope, not the slope itself. My point, which is correct, is that the listings curve is relatively smooth and is not very volatile.
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Dave Says:
June 3rd, 2009 at 11:50 am
Arwen:
My mistake. I didn’t include condo data, but if you do… in June 2006, there were 22,312 listings and 2,344 sales, which gives an MOI of about 10, which is over double the Vancouver market. In May 2007 (after a similar correction to Vancouver), the MOI there was 13 (1,772 sales of 22,921 listings), which is almost triple our current level.
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Anonymous Says:
June 3rd, 2009 at 12:32 pm
Dave are you trying to say condos are only going to fall another 10% and that they have only fallen 10% so far?
They are down at east 33% and I know of a few buyers who’re set to walk away from their deposits at TV towers.
Now throw another 3 or 4 thousand new units, that no one can afford or wants, and there will be a lot of supply that the bank will only mortgage at 70% of what it cost and rents for 1/4 of the carrying costs.
Is this good or bad for a potential renter?
$1250 for a brand new rental unit at tv towers or pay another $25k in gst on top of the 20% down and a depreciating asset for life.
Hey Dave what is your profession?
Are you a day labourer or a realtor?
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jesse Says:
June 3rd, 2009 at 12:34 pm
MOI only tells you about price movements today, not much about future price movements. Isn’t that obvious?
The real problem is high prices. MOI only explains how fast prices will change but not where they are going. For where prices are going, look no further than the 800lb gorilla in the room: low cap rates.
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Dave Says:
June 3rd, 2009 at 12:48 pm
jesse:
MOI is the best measure of supply and demand. I actually think MOI is a good leading indicator. Mohican did a lot of work on this and I recall his number showed something like a 3 month price lag.
MOI doesn’t predict the rate of change in prices. Where do you get that idea?
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buff_butler Says:
June 3rd, 2009 at 12:55 pm
“Really? I would suggest that I have been dead on. In fact, one year ago, I said the correction would be about 10%, which is exactly where we are now.”
LoL…. you revised that “prediction” like 4 times and -10 came once we were already at -5. Do you have a shrine dedicated you yourself? (full of pictures of you calculating slopes of graphs with seasonal data
)
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Dave Says:
June 3rd, 2009 at 1:08 pm
Have a look at the ‘Spring Bounce’ in San Francisco. Since January, the median price is up 23%! The 75th percentile benchmark price is at a multi-year high.
http://www.housingtracker.net/.....california
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Dave Says:
June 3rd, 2009 at 1:10 pm
buff_butler:
Actually I made that prediction within the first week I started posting on this site.
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Drachen Says:
June 3rd, 2009 at 1:20 pm
Dave, are you still here?
You’ve made a lot of predictions, I believe the count was 5 hard predictions, 4 of which have fallen, only the 10% one (which you later hedged to 15 or 20% (I believe this is what you’re thinking of Butler, he revised his number once things started to drop sharply, doesn’t sound like someone who trusts his own methods does it?)) stands.
Given that your model has failed 4 out of 5 times and the jury’s still out on the 5th doesn’t that imply that;
A) Your model is simply wrong.
B) You don’t know what you’re talking about.
C) You do know what you’re talking about but are intentionally misleading people.
Given that your failure rate is in the 80-100% range I’d say at least one of the above simply has to be true.
Pick one (or more).
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Drachen Says:
June 3rd, 2009 at 1:24 pm
Dave said:
“Have a look at the ‘Spring Bounce’ in San Francisco.”
Aren’t you the one who’s always saying Vancouver is different? When the numbers work against you you’re always happy to point out that our fair city bears no resemblance whatsoever to the cities reporting data that undermines your thesis.
Are you saying that the one example of San Francisco outweighs all other metro areas in the world?
Is it more statistically significant simply because it works in your favour?
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Dave Says:
June 3rd, 2009 at 1:31 pm
Drachen:
Yawn… The predictions you refer to all centered around total inventory. I missed the top by a month or two. Meanwhile, most people were calling for 30k for spring 2009. I don’t recall you shooting down those predictions at the time.
My original prediction was actually 10-15% and I said only greater than 10% with a recession (which we have). Yes, I changed my prediction last Fall downwards. Things weren’t looking so good at the time and I feel no shame in changing my predictions with the market. You can’t fight the market.
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Dave Says:
June 3rd, 2009 at 1:33 pm
Drachen:
Did I say it was significant? I am just pointing out a link that some might find of interest. I find a 23% jump over six months to be pretty interesting considering we are up only 45% in five years.
In any case, I would argue San Fran is a better city to compare Vancouver with that Sacramento.
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Dave Says:
June 3rd, 2009 at 1:41 pm
Drachen:
Oh… weren’t you the one who said nominal wages wouldn’t grow faster than inflation?
You might be interested to know that average wages (Apr 08 to Apr 09) are up by over 5% YOY.
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read on Says:
June 3rd, 2009 at 1:46 pm
methinks Dave posts alot.
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jesse Says:
June 3rd, 2009 at 1:50 pm
Dave: “Mohican did a lot of work on this and I recall his number showed something like a 3 month price lag.”
Actually the numbers showed the highest correlation between price changes from 6 months ago and 3 month moving average MOI. There is no lag per se between MOI and price changes — the 3 month moving average was used to smooth out seasonality and improve the correlation, not to implement a lag function — and in fact the correlation weakens as MOI is used to “predict” future price movements. See the post here.
“MOI doesn’t predict the rate of change in prices. Where do you get that idea?”
MOI is correlated to changes in price. It is therefore a “predictor” of price changes. The relationship has held up well when MOI was high last year and I see no reason for it not to continue when MOI is low again.
It is no surprise prices are increasing with low MOI. I just don’t see any data to support current MOI as an indication of a long-term price trend beyond the summer.
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jesse Says:
June 3rd, 2009 at 1:51 pm
Dave: “You might be interested to know that average wages (Apr 08 to Apr 09) are up by over 5% YOY.”
5% up for who? Those who still have jobs?
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Dave Says:
June 3rd, 2009 at 2:00 pm
jesse:
It sounds like we agree then. I don’t think MOI says too much about long term price trends.
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Dave Says:
June 3rd, 2009 at 2:08 pm
VanBanker:
Look at the graph for under construction numbers for Greater Vancouver from CMHC. We’ve only come down from about 26,500 to 24,500 and prices have already dropped ~ 15%. Not only that, but there are still new starts every month. All of those units will keeep hitting the market over the next two years, and prices will drop significantly more.
I had a look at the long term housing starts (going back to the 50’s). The long term trend is about 10 housing unit starts per 1000 people. With 4 million people in BC, a sustainable level would be around 40,000 units per year.
Another thing to consider is population growth which is 60,000 people per year. The amount of real estate under construction right now would just be enough for new people.
On top of that, housing starts are WAY down as you point out.
Overall, I don’t think the housing start data is going to result in price decreases. If anything, we might have a shortage in a couple years.
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jesse Says:
June 3rd, 2009 at 2:30 pm
Dave: “Overall, I don’t think the housing start data is going to result in price decreases.”
Again, it doesn’t matter for where prices will end up. Excess inventory will accelerate price reductions but will not prevent them unless rents rise to where property becomes a good investment again. The only sure-fire indicator of tight housing supply is when rents are being forced upwards. Right now this is anything but.
Also I am seeing significant underutilisation of existing housing stock. As unemployment creeps up, look for existing housing to be used more efficiently, i.e. population per dwelling will increase.
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Just_Spiffy Says:
June 3rd, 2009 at 3:44 pm
I was just watching BNN and they mentioned that debt defaults are rising for Canadians.
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Drachen Says:
June 3rd, 2009 at 4:18 pm
Dave
“Oh… weren’t you the one who said nominal wages wouldn’t grow faster than inflation?”
Um, no. Sounds more like something Freako might say, he’s more into the general economy stuff.
But thanks for playing!
“I don’t recall you shooting down those predictions at the time.”
I didn’t support them either, are you going to start attacking me for every position I didn’t deny now? “He didn’t denounce Hitler, he’s a Nazi!”
Get real.
Bring a rational argument supported by real data that you haven’t cherry picked for bits that support your ideas or stop pretending to be intellectually honest.
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Dave Says:
June 3rd, 2009 at 4:30 pm
Drachen:
So in your mind it makes sense to attack somebody who’s call missed the top of listings by only 500 to 1000 units and by only a few weeks? Yet, predictions by many of continued inventory growth through the Fall receive no commentary and your tacid support. So much for intellectual honesty.
The reality here is that my predictions have been mostly correct. It seems to me that you chalk up all your bad calls under the wider heading of ‘greater fools’.
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Dave Says:
June 3rd, 2009 at 4:32 pm
Drachen:
Freako? Isn’t he the one who called a top in 2004?
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Anonymous Says:
June 3rd, 2009 at 5:37 pm
Daves income went from $8.75 to $9.10 woooo hoooo! now you can afford to latte’s a day while you sit in a cafe being a troll!
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blueskies Says:
June 3rd, 2009 at 5:45 pm
and your tacid support
the word you want is: flaccid
you may want to discuss this in a different forum….
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richard2 Says:
June 3rd, 2009 at 6:15 pm
one lucky buyer.
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patriotz Says:
June 3rd, 2009 at 8:47 pm
Dave:
In any case, I would argue San Fran is a better city to compare Vancouver with that Sacramento.
Is that the same San Francisco that Case-Shiller now shows to be 46% off peak, or are you talking about another one?
http://www.calculatedriskblog......-more.html
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Drachen Says:
June 3rd, 2009 at 8:59 pm
What on earth are you smoking Dave?
I didn’t predict continued inventory growth in the Fall and I did predict our current spring bump.
I can’t go around denouncing every opinion I disagree with, I don’t have the time to waste or the inclination. Simply because I didn’t disagree with a position does not mean I support it tacitly (it’s tacit by the way not tacid, tacid sounds like some kind of new drug) or not because I haven’t weighed in on the subject. The very fact that you bring this up again after I showed you that it is irrelevant proves that you’re being dishonest.
You haven’t denounced Hitler yet. You must be a Nazi.
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Drachen Says:
June 3rd, 2009 at 9:01 pm
Dave
“Freako? Isn’t he the one who called a top in 2004?”
Could be, how is this relevant?
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Dagwood Says:
June 3rd, 2009 at 9:15 pm
methinks Dave is a glutton for punishment.
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gvrdpropertyowner Says:
June 3rd, 2009 at 9:43 pm
Dave “The long term trend is about 10 housing unit starts per 1000 people.”
Are you positing that the base population of a region is a variable which has a causal relationship to the number of necessary new housing starts?
Dave “Another thing to consider is population growth which is 60,000 people per year.”
Are you suggesting that this data is a representation of the average annual population growth within the GVRD? And; therefore, can be legitimately divided by the average occupancy rate for the lower mainland to determine the need for additional housing in the GVRD?
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Anonymous Says:
June 4th, 2009 at 12:37 am
gvrdpropertyowner: I think that’s exactly what he’s stating. Do you see a flaw with this methodology?
It seems straight-up on first glance and starts would tend underestimate dwelling growth due to demolitions. Population growth is x, r people per dwelling, so dwelling growth needs to be x/r.
Note dwelling growth is not the same as completed units if houses have multiple suites. OTOH condos are much more common now than they were and they tend to be 1-2 bedrooms which would tend to decrease the number of people per dwelling.
In short, while there is a looming oversupply I am not sure there is to the extent seen in some of the US cities. It is a sidebar to the real problem: high prices and low yields.
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Anonymous Says:
June 4th, 2009 at 2:00 am
Dave is nothing but a troll
ignore it
as they say
if you don’t get hte joke you aren’t in on it.
Dave is the joke. If you aren’t laughing you’ve been punked.
google it
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Dave Says:
June 4th, 2009 at 7:04 am
gvrdpropertyowner:
That’s population growth for BC but most of it ends up in the Lower Mainland. The point is that the current volume of real estate under construction doesn’t appear to be very alarming when one considers historic construction rates (per pop.) and population growth.
This is what 60,000 people looks like:
http://tinyurl.com/o3lctj
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Anonymous Says:
June 4th, 2009 at 7:39 am
Dave: “That’s population growth for BC but most of it ends up in the Lower Mainland.”
Do you have data to back that up? Check out the BC Stats population estimates (PDF). Combining Greater Vancouver and Fraser Valley and I only get between 30K and 38K annual population growth since 2000.
So much for most of the population growth being in the Lower Mainland.
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crabman Says:
June 4th, 2009 at 7:54 am
Dave: The point is that the current volume of real estate under construction doesn’t appear to be very alarming when one considers historic construction rates (per pop.) and population growth.
Over the last 5 years in greater Vancouver, housing starts have been running 18-21k/year, while population growth has been about 26k/year. The average number of residents per dwelling is 2.43. The number of new dwelling needed per year for this population growth would be: 26k/2.43 = 10,700. Even if you assume fewer residents in condos than SFHs, it still appears there has been significant overbuilding the last 5 years.
Sources: (you should try them sometime Dave) ;^)
Source 1
Source 2
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Vansanity Says:
June 4th, 2009 at 8:48 am
Non-residential sector has been touted by the construction industry as being the next boom in BC. The next wave of construction to keep them all busy and profitable along with infrastructure.
Well, non-residential building permits drop 36.5% in value in BC for April.
What will they think of next?
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Anonymous Says:
June 4th, 2009 at 9:04 am
http://www.bcstats.gov.bc.ca/d.....6-2008.xls
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VanBanker Says:
June 4th, 2009 at 9:46 am
B.C. court rules pre-sale condo contract invalid
http://www.cbc.ca/canada/briti.....ml?ref=rss
I can tell you everyone in my office, and other banks in the city, are worried about this type of thing, we have seen alot of sloppy papering.
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ella Says:
June 4th, 2009 at 11:14 am
“The decision could have implications for hundreds of buyers who purchased condos, only to find their value had fallen in the current real estate market, so they failed to complete their purchase and now are being sued by developers.”
—Vancouver Sun
Interesting. Terrible writing, though.
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Ted Says:
June 4th, 2009 at 11:29 am
Sounds like MAC dropped the ball on this one and it sounds like an isolated incident
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Franco Says:
June 4th, 2009 at 11:33 am
Dave is right and have courage to confront those silly and ignorant bears who missed the boat yrs ago.
They shameless, divert their frustration and anger toward anyone who has contrary option.
As I always say, Van is a unique city and its Chink population is the main pillar of Van RE.
Chinks will sustain Van RE alone for the yrs to come in next century though there are always hiccups during the run to the heavenly peak in which house owners are secured for abundant retirement while those bear will certainly live in poverty, regret, agony,repentance and of course, anger.
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VanBanker Says:
June 4th, 2009 at 11:44 am
Ted Says:
June 4th, 2009 at 11:29 am
“Sounds like MAC dropped the ball on this one and it sounds like an isolated incident”
I can tell you similar situations have come up in several projects in Greater Vancouver already, so it’s not an isolated incident. But also, it’s not like I expect an avalanche of these either.
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oneangryslav Says:
June 4th, 2009 at 1:13 pm
ella: You’re right about the writing; the reporter doesn’t have a clue as this means nothing for those who can’t complete because the market value of their pre-purchase has dropped.
You know, one would think that those writing about such issues in a prominent mainstream media outlet would actually have some idea about the subject matter. But I guess that’s too much to ask as they didn’t go to school to become experts on a particular topic, but to become “reporters.” I wish that journalists would trademark “Reporter” the way that realtards have trademarked Realtor. Then we could pre-emptively dismiss what they write.
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VanBanker Says:
June 4th, 2009 at 1:43 pm
On another note, the rental market is seeing tons of new listings these days, I was surpised by how many. I haven’t looked in a few months, and was shocked last night to see how many great buildings have shown a significant increase in listings. I’m looking at one and two-bedrooms in Coal Harbour and Marinaside and saw several of my target buildings going from 1-2 units available a few months ago to 10-14 units listed now; as well, several are offering nice incentives. This is all the more surprising b/c summer is usually the tightest time of year.
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Vansanity Says:
June 4th, 2009 at 1:59 pm
Franco:
Wow. I’m convinced. I’m going to spend the hundreds of thousands in my savings on condos now. You’re logic was ironclad.
Fail.
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ella Says:
June 4th, 2009 at 2:04 pm
Pope, please can you delete Franco’s post? It’s inappropriate and racist. Thank-you.
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ella Says:
June 4th, 2009 at 2:17 pm
oneangryslav,
Unfortunately, Octo-mom and Brangelina earn more advertising revenue than good, in-depth, critical financial reporting. Developers and realtors have money to spend on advertising. There’s not much incentive to be a great reporter anymore, which is too bad.
Blogs are great, but we need some trustworthy larger organizations who have the resources to track complex difficult stories and put a national spotlight on them. All these bailouts, development deals and corrupt CEOs should be hammered by the press, and it’s not happening…just a lot of soundbytes at the moment.
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dingus Says:
June 4th, 2009 at 4:25 pm
“methinks Dave is a glutton for punishment.”
methinks an echo chamber is boring (how many ways can you say “look out below”?), so props to Dave for making people justify their positions and at least keeping some sort of dialogue going.
Disagreeing with the consensus isn’t being a troll.
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Rick Says:
June 4th, 2009 at 4:51 pm
Sorry this might be off topic. But could this be the cause of 2nd wave of the global economic crisis?
http://www.telegraph.co.uk/fin.....weden.html
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gvrdpropertyowner Says:
June 4th, 2009 at 4:56 pm
Anon “I think that’s exactly what he’s stating. Do you see a flaw with this methodology?” “seems straight-up on first glance and starts would tend underestimate dwelling growth due to demolitions. Population growth is x, r people per dwelling, so dwelling growth needs to be x/r.”
Ignoring the effect that changes in the total population have on housing requirements.
Certainly, X people would require Y housing. However, I believe that the required replacement- of said housing- would be a function of the age and condition of the housing; and, in turn, how it relates to the current and future needs of the population. Does the gentrification of B.C.’s population have an effect on housing? As such, knowledge of the total population is only useful if it can be used to prorate the results from other know populations- if they are similar.
Nevertheless, the inference was (correct me if I am wrong) that if one knows the base population, one can then reliably, and accurately, predict the level of new construction which is required to house that population.
Let’s use an example. Russia has a population of ~ 140 million; therefore, Russia need to build 140,000 homes this year. Uganda’s population is ~ 31 million; therefore, Uganda should build 31,000 homes. Does this accurately describe the housing needs of these two countries?
The level of construction activity is material, in that, it indicates future supply; and,more importantly- future jobs.
However, I agree, low yield rates are, probably, the most concerning variable to bulls. Although, I have never done the research, I would not be surprised: if one could purchased a million dollars of real estate in a place such as Phoenix, and live(rent) in Vancouver for free (using the income from their investment properties).
Anon, you and I might have different- and legitimate- interpretation of the same data- who knows. However, BS is BS.
This blog will become a waist of time: if I have to spend time checking the validity of the data, which is used to support augments; and, contemplate (intentionally?)dubious logic- I think I will go outside.
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realpaul Says:
June 4th, 2009 at 6:58 pm
An idea some may want to consider regarding the projected pop growth. The vast majority of new immigrants are poor and have a social and cultural propensity to live together as very large extended families in a SINGLE unit. This would indicate that condo’s will not be of intrest to the majority of new purchasers. I know families who convert thier garages and concrete over the lawn as opposed to all moving out on thier own. Based on what I see, you can cut the number of projected units needed by pop growth by a factor of ten at least. as always the city planners have thier head up thier asses. The government is setting up these ideas so that they can move legislation and zoning wish lists submitted by the development community for the benefit of the politicians and development community.
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Bdk and Sofia Says:
June 4th, 2009 at 7:27 pm
V:VB2,It is written.
Hey Vancouverrrrrrrr-Jai Ho!
baila! baila (Dance!Dance!)
Come on,Come on my life Under the canopy
Come on,come on under the blue brocade sky!-Jai Ho!
vancouverboom2 success
runing like a fire
every buyers/sellers entering,ticking the prices higher-Jai Ho!
come on bears stop coming in my way
Longer you’ll wait larger you need to pay-Jai Ho !
“*TriumphHhhhhhh -Vancouverboom2-Jai Ho!*”.-
It’s getting hot and hot in here in Vancouver where all buyers include first time,second time buyers along with buyers from usa,uk,europe,and overseas have been buying and cheering on the crash of fear that proved to be dumb theory when it comes to apply on Vancouver,Different planet!.No more down turn in decades to come in the “best place on earth”.Everyone wants to live in Vancouver to develop themself in most decent multicultural society of this world,Who says you can’t ? han? Vancouver Real Estate, Rock Solid Heart Touching!!!!!You don’t know? What a joke sheesh!Just bring in your suit case and you are good to shoot the numbers UP(/).So buy without fear and buy everywhere in Vancouver because hey Vancouver real estate,Vancouverboom2 with it’s extreme speed and countinue strength “The Vancouver Real Estate Consumer Confidence -Jai Ho!”.Virtually poised to never go down.-
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patriotz Says:
June 4th, 2009 at 7:43 pm
realpaul:
The government is setting up these ideas so that they can move legislation and zoning wish lists submitted by the development community for the benefit of the politicians and development community.
The more excess supply that is built, the better it is for the buyers and the worse it is for the sellers.
Build baby build.
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Deliverator Says:
June 4th, 2009 at 8:24 pm
Sorry this might be off topic. But could this be the cause of 2nd wave of the global economic crisis?
http://www.telegraph.co.uk/fin…..weden.html
Yes. That and potential failed UK and US bond auctions.
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Anonymous Says:
June 4th, 2009 at 10:15 pm
gvrdpropertyowner: “Nevertheless, the inference was (correct me if I am wrong) that if one knows the base population, one can then reliably, and accurately, predict the level of new construction which is required to house that population.”
No he is inferring that population growth is reasonably consistent so there should be a relationship between base population and housing starts.
Whatever, though. As mentioned, dwelling growth should be around 10,000 to absorb in-migration. Most demos that destroy existing stock make way for higher density properties so likely no help there.
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Supraboy Says:
June 4th, 2009 at 10:49 pm
The people on this site are getting more and more desperate in hoping for a market meltdown in real estate. If it hasn’t fallen, it ain’t going to fall boys and girls. Keep on hoping to get your hands on a cheap piece of land. I can bet anyone that by this time next year, you’ll see housing prices higher by at least 10%.
I’m about to put an offer on a 1.475 million dollar home near kerrisdale. I’ll rent it out for the remainder of the year and take it down next year. I think I should be able to list a new home on that land for at least 3.25million to start.
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Supraboy Says:
June 4th, 2009 at 10:52 pm
Commodity prices are rising, Goldman Sachs predicting $85/barrel oil in 2 months, stock markets continue to climb, inflation ready to set in, get real, middle class workers will never get a sniff of properties in Vancouver West. I rather keep them away from the West side since the middle class in Vancouver are narrow-minded. Best they can do is live in burnaby. Burnaby is a dump.