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June 3rd, 2009 at 1:46 pm
methinks Dave posts alot.
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.
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.
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.
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?
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).
June 3rd, 2009 at 1:10 pm
buff_butler:
Actually I made that prediction within the first week I started posting on this site.
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
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
)
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?
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.
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?
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.
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.
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.
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*.
June 3rd, 2009 at 11:12 am
Gietner renting his home, oh that is too funny realpaul.
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.
June 3rd, 2009 at 10:44 am
A good example of ‘the reluctant seller’ mentality.
http://apnews.myway.com/articl.....QVGO0.html
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.
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.
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.
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?
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).
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!
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.
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.
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.
June 3rd, 2009 at 9:47 am
realpaul:
Are those the same sellers who were supposed to flood the market with listings this spring?
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.
June 3rd, 2009 at 9:42 am
Is it just me or does Dave’s defensiveness reek of insecurity?
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.
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
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.
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
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.
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.
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.
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.
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!
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/
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.
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?
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.
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?
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.
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…
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”
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.
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.