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August 5th, 2009 at 3:37 pm
DD
There are many factors…
Anyone recall the book Boom Echo Bust Echo by economist David Foote.
Years ago he predicted much of what is happening now. The Boomers will get old and want to retire. They got spoiled via the inflationary times and their asset appreciation. However, they also need to liquidate and find a ready willing and able buyer. He didn’t feel it was at all sustainable and that there would be a glut of housing in the market, or else prices would would have to drop. I don’t recall him mentioning/predicting subprime loans etc., which only exacerbates the problem.
Gov’ts and their affiliates have proven beyond any reasonable doubt they are crookeder than a dog’s hind leg and incompetent. IMHO, they saw this disaster coming 20 + years ago and realized they had a limited bag o of tricks to try and fool us(ie dot.com bomb, relaxing or elimination of rules established since the last Depression etc).
Money always finds its rightful owner…that day of reckoning is gonna happen sooner than later.
August 5th, 2009 at 3:20 pm
#47
Bond and mortgage rates are influenced by the US Fed, and it is in their interest to keep rates low in order to engineer a bottom to the US housing collapse and stimulate corporate investment. They need cheap, easy credit to get people spending again.
The BOC follows the US direction, and if the US keeps rates low, then the BOC will as well. Unfortunately, while the low interest rates were designed in part to create a bottom to the US market, it re-inflated the Canadian RE market. It will be some time before the US raises rates. By the time it does, the Canadian market may have surpassed its 2007/2008 highs.
Yes, the rates will go up at some point – but when, and how much. That is the million dollar question. We might have Van RE prices flatline for a few years or go up if interest rates remain low, or we could see prices rapidly drop IF for some reason the BOC and major banks raise their rates. In the mean time, we could see the 7 year run up in Van RE prices continue for several more years. If that is the case, then all those on the sidelines will have missed the largest run up of RE in their lives (most likely at least a decade), the liking of which will not be seen for many years to come.
Think about it – a decade on the sidelines, waiting for prices to come down! I hope all the sideliners were continuing to live their lives to the fullest while waiting….
August 5th, 2009 at 3:13 pm
Post # 47 cashisking:
Exactly !
Do people still forget what happened in the early 1980′s?..when interest rates jumped to 22%.
That’s the scary thing, why haven’t the interest rates jumped up in this heated RE market? Money is a commodity…if it is in demand the cost(ie interest rates) should rise. I seem the recall all other commodities had risen over the past few years as housing rose…..ie metals, gas, etc.
IMHO, Gov’ts etc are showing themselves to be in desperation , creating this disconnect, and manipulating the delay of the inevitable .
August 5th, 2009 at 2:52 pm
# 45 DD Says
How can you tell me rates are going to be low for “some time”. The only way rates will stay this low is if we STAY in recession – pls help me understand how this is good for asset prices?!?
Mtge rates are dictated by bond prices which the gov’t doesn’t control or you can play the variable rate game based off of prime rates … let’s see overnight rates at 0 (Zero!!!) which way will they go from here.
August 5th, 2009 at 2:28 pm
oneangryslav and read on:
Those are the kind of indicators I look for.
The same for Commercial vacancy.
Ads in the paper are not cheap…..CanWest ie Sun and Province charge $44+ for a 3 line ad.
Besides apartments, I am seeing many SFH with scribbled ” For Rent” signs out on front lawns,…. either renting out rooms or the whole house.
A 12 unit condo project near me just sold its last 2 units after approx. 1 year on the market. realpaul had noted that the builders profit is generally realized once the last 25% is sold. So, did this builder make a profit ? , certainly much less than projected. After these last 2 sold,almost immediately a “used” unit is now for sale.
I think that developers and buyers are drinking from the same kool-aid. They are still building and still buying, oblvious to the ground -zero evidence and indicators around them.
August 5th, 2009 at 2:24 pm
Hate to be the “bearer” of bad news….
http://www.vancouversun.com/Bu.....story.html
“The benchmark price for the typical property sold across the region hit $528,821 in July, which is still off five per cent from price levels a year ago, BUT IS UP 9.2 per cent from the bottom of $484,211 in January.”
The only bear spin on this one is that prices are still down Y-O-Y EVEN with this unprecedented surge in sales and the lowest interest rates in history….
Looks like cheap rates are here for some time and with them, the continued RE frenzy known as Vancouver…
August 5th, 2009 at 2:17 pm
43 – That means everyone is buying. Same thing happened in Kits in 2006/07. Sales for July and price increases reflect this trend.
August 5th, 2009 at 1:19 pm
re: For Rent signs. I’ve been living in Van West (upper kits, sth of B-way) for nearly 4 years, on and off, and this is the first summer that I’ve even seen for Rent signs. normally places go so fast that signs havent been needed, but some have been up for weeks now.
August 5th, 2009 at 1:12 pm
Oh, and here’s a link to the press release of Avison Young’s mid-year report on commercial real estate, which has links to the full PDF version of the report.
http://news.prnewswire.com/Dis.....amp;EDATE=
August 5th, 2009 at 1:10 pm
NO -LYMPICS: There is so much rental inventory out there. When I arrived in Vancouver last summer, there wasn’t a single 1BR in Yaletown (for example) listed below 1500/month. Now, you can find relatively new and nice 1BRs in Yaletown for under 1200/month (at least a 20% drop for the year).
You’re right that there is a tremendous disconnect between the real economy and the real estate market in Vancouver. In today’s Vancouver Sun, there are two articles with incongrrous titles: “Busiest July ever for Metro Vancouver real estate sales” and “Canada’s office vacancy rate surges to 8.5 per cent…and still climbing.” [By the way, lest some of you begin to argue that "Vancouver is different", the office vancacy rate here increased from 5.0% one year ago to 7.4% now--an almost 50% rise!]
Oh, and by the way, which of these articles do you think received front page billing on the Sun‘s web site?
August 5th, 2009 at 12:31 pm
http://www.guardian.co.uk/busi.....lrecession
check this out!
August 5th, 2009 at 12:18 pm
Re: the health of the RE market:
This weekend we drove through many of Vancouvers main drags which have rental apartments. I have never seen so many ” For Rent ” signs before. Why higher vancancy ? Are these people now buying ? Indications are rent is going down, while housing prices are still at surreal levels.
In a truly healthy economy, vacany should be low as it attracts a representation of the broad spectrum of income and housing needs. These renters have either lost their jobs, moved elswhere or found better rental deals This current economy is disconnected from this. IMHO, the higher vacancy is a sign of a declining economy and thus more evidence of a bubble.
Historically, we have the Spring RE season, to be followed by the Fall RE season. It will be flat between October and Feb/March. Prices have dropped even if # of sales have gone up , hence prices have little reason to go up. This will repeat in the Fall of 2009.
I really can’t see why ” should I buy ? ” types can’t see the crack cocaine of cheap money is the only thing keeping the bubble from busting, and no bubble ever lasts long.
All the warning signs indicate buyers should wait….the RE bubble popping virus has hit many markets, Vancouver has no resistance nor immunity .
Remember Bank of Canada governor Mark Carney is a Goldman Sachs alumni, and Goldman Sachs alumni have infiltrated Gov’ts to an epidemic degree. If you think it has anything to do with public service ….God help us.
August 5th, 2009 at 11:28 am
ABC:
Every sequence of events has a start and a finish. Its not an anomaly for the last bowling pin to fall any more than for the first, and it’s not an anomaly for Vancouver to be the last city to fall any more than it was for San Diego to be the first. It has to start somewhere, and it has to end somewhere. As to why it appears that Vancouver will be the last, I’ll let Robert Shiller (2005) do the talking:
“This is the biggest national bubble that the US has seen in over a century.” This is “not a sustainable situation,” claimed Shiller. Then he directed his attention to Vancouver. The bubble was especially extended in “glamour cities and glamour vacation areas,” he warned, and, “Vancouver is the most bubbly city in the world.”
August 5th, 2009 at 11:18 am
oneangryslav: Oops! Should have previewed my post before sending–it should say “I I said to friends that it could not go higher…”
August 5th, 2009 at 10:58 am
patriotzed:
I agree with the sentiment above. Right now I feel the same way I did at the end of 1999 when the NASDAQ was climbing to ever new highs. Friends and acquaintances were pouring live savings into Internet stocks and I just shook my head at the irrationality of it all. I remember when the NASDAQ was at 4500, I said to friends that it could not go lower, but ended up losing some money by shorting it as it climbed a further 10% in the early part of 2000. Boy my friends sure felt smug then! Well, we all know what happened next.
I was with my sister and her family this past weekend and she mentioned that a house a couple of doors down from there (they live in the Harbourview area north of Como Lake Road in Coquitlam, where the houses are mostly 1 and 3/4 story 1950s-era homes), was sold a mer 4 days after being put on the market. Another house just down the road is for sale for the 2 million dollars. It was purchased 10 years ago for 400,000. Crazy times.
August 5th, 2009 at 8:33 am
Anonymous: You’re forgetting about the Virtual Office Website (or VOW). Listing show up there after MLX, but before they show up on MLS.ca.
August 5th, 2009 at 8:27 am
I would predict that this time this really is new territory for the world economy. It’s hard to tell whether prices will go up or down. How do we know for example that the recent stock market uptick is a fad? Now I’m not so sure about housing.. it’s hard to believe Vancouver can go this high, but it’s even harder to believe that Vancouver is some kind of an anomaly.. ?
August 5th, 2009 at 5:47 am
Confused, prices are currently above 2007 levels. You’re more confused than you thought.
August 5th, 2009 at 12:50 am
It’s not dead, it’s just, er, sleeping.
Harper and Gordo insist the parrot, er, the Evergreen Line, is alive:
http://ca.news.yahoo.com/s/cbc....._translink
August 5th, 2009 at 12:44 am
confused:
As we have gone over in this forum before, the question is not “when” but “how much”. It is impossible to predict the timing of market cycles. It is easy, on the other hand, to know when prices are at historical multiples of rents and incomes, which is a reasonable time to buy, if not the market bottom.
Why are so many people in such a panic about buying? Every month you rent while it costs less than mortgage interest, etc, you get farther ahead of an “owner”. Isn’t that a good thing?
August 4th, 2009 at 10:59 pm
Confused, you can either buy and pray, or wait and see. It’s up to you to decide!
August 4th, 2009 at 10:42 pm
This is for Drachen, the average Greater Vancouver price seems to show that home prices are down about 15% from 2007, did you not predict over 40% by the end of 2009? Do you expect a 25% decline in the next five months? Should I hold off my purchase until 2010?
August 4th, 2009 at 10:21 pm
Oh, yeah, the recession is over…
http://www.investorsinsight.co.....-thou.aspx
Canadian Monthly Gdp Weaker Than Expected
We also received Canadian GDP data today for May, which came in weaker than expected at -0.5% MoM (the consensus was expecting -0.3%) and we saw April revised to now show -0.2% instead of -0.1%. Therefore, despite all the bravado over the end of the Canadian recession, what we are seeing first hand is that any recovery is coming off a much deeper hole. It looks as though real GDP in Canada contracted at an annual rate of at least 3.0% in the second quarter — triple the decline in the U.S.A.
August 4th, 2009 at 9:51 pm
Notice how Suze Orman pushes the FICO score so much? I would too if they employed me. Nothing is as it seems … cough Van RE Market cough.
August 4th, 2009 at 9:27 pm
mino3
You may be right re: Orman…but the advice she gave on the topics I referenced are quite straight up.
Her interview with an underwater realtor is a prime example of how clueless a koolaid drinking professional can be.
People always forget the hidden costs when they buy anything…and RE is one of the worse re: this. Property taxes, utility costs , insurance, strata fees …etc. etc…are never mentioned in lowball financing, and an increase in any of these can put you “underwater”.
PS I know the Yanks take a shine to brassy know it all types, even morseo if they are gay.
August 4th, 2009 at 9:05 pm
#13
Realtors have access to the MLCxhange.
The public shouldn’t have access to that but sometimes realtors give out their passwords.
It takes a few days for a listing to show up to the public.
August 4th, 2009 at 7:56 pm
From David Rosenburg today:
Canadian Monthly GDP Weaker Than Expected
We also received Canadian GDP data today for May, which came in weaker than expected at -0.5% MoM (the consensus was expecting -0.3%) and we saw April revised to now show -0.2% instead of -0.1%. Therefore, despite all the bravado over the end of the Canadian recession, what we are seeing first hand is that any recovery is coming off a much deeper hole. It looks as though real GDP in Canada contracted at an annual rate of at least 3.0% in the second quarter — *** triple the decline in the U.S.A. ***
August 4th, 2009 at 5:54 pm
NO -LYMPICS:
Suze Orman is usually such a flake, but it seems that article was written around the peak of the US bubble a few years ago, so she gets points for being bearish when the masses were still delusional.
That said, I still remember her on CNN last September pleading for people to support TARP to save the stock market. She looked so scared – oh no, I’m going to lose millions, DO SOMETHING! TARP passed and the stock market nosedived even faster. Take that, Suzie!
August 4th, 2009 at 3:37 pm
NO -LYMPICS:
From Calgary:
Arriva Phase 2 in receivership…”
Anyone else find it hilariously ironic that the bankrupt developer is something named “Torode Realty Advisors Ltd.”?
More like Erode, or even Two Rotten Realty Advisors. I mean, the name of this entity implies that they are there to give professional advice on RE. I guess their advice is to go into receivership?
August 4th, 2009 at 2:40 pm
Beijing worries about another market crash
Government tries to cool off stocks rally caused by stimulus spending
http://www.msnbc.msn.com/id/32....._business/
BEIJING – The middle-aged crowd in the packed Guosen Securities office jostle around buzzing printers that spit out receipts for their share buys, hoping to cash in on China’s stimulus-fueled stock market boom.
“The central government has to fulfill their promise of 8 percent economic growth,” said Wu Jun, 62, a retired civil servant who invested part of his life savings of 50,000 yuan ($7,300) and lives on a 2,000 yuan-a-month ($290 a month) pension. “They’ll come up with measures to keep the market in good shape.”
But while investors expect the market — up more than 80 percent this year — to keep rising, Chinese leaders are alarmed. They worry that too much of the $1 trillion lending binge by state banks that paid for China’s nascent revival was diverted into stocks and real estate, raising the danger of a boom and bust cycle and higher inflation less than two years after an earlier stock market bubble burst.
=====
I’ve read similar articles that question China’s true solvency and/or it’s ability to lead the world in an economic recovery. They may be in worse shape than the Western “democracies”.
August 4th, 2009 at 2:29 pm
From Calgary:
Arriva Phase 2 in receivership
http://www.calgaryherald.com/b.....story.html
According to the receiver, about 50 per cent of the 221 units had already been sold in the 42-storey second tower, with deposits totalling about $6 million.
August 4th, 2009 at 1:59 pm
^^
And we don’t even get the tax break.
August 4th, 2009 at 1:07 pm
The True Cost of Home Ownership
http://biz.yahoo.com/pfg/e10buyrent/art011.html
==================================
Suze Orman speaks to strapped realtor
http://www.youtube.com/watch?v=c1g15SJacxY
August 4th, 2009 at 12:24 pm
No matter what the agency agreement says, there’s always a delay before listings show up on the MLS. If you sign up with an agent you’ll see listings at least a few days before the show up on mls.ca. Do the agents have any control over this delay or is it always the same?
August 4th, 2009 at 11:40 am
patriotzed:
If the property sells and it wasn’t listed on MLS I suspect the Seller wouldn’t care. If the property did not sell and the Realtor hadn’t put it on MLS then the Seller would probably either
a) fire the Realtor and get another or
b) tell the Realtor to list it on MLS immediately.
Once the property sold, the Seller would have to be able to show that he or she lost money due to the Realtor not listing it on MLS in the first place. Then launch a civil suit versus the Realtor for that money. Breach of contract maybe..
Perhaps not listing the property on MLS could be a criminal fraud but I doubt the police would care much about the above scenario..
August 4th, 2009 at 10:45 am
Yes, agents get access first. I think it’s just a few days.
August 4th, 2009 at 9:05 am
Is there a “public” MLS where listings are late to show up and “agents’MLS” version, where they show up immediately?
August 4th, 2009 at 9:04 am
Is ther a “public” MLS where listings are late to show up and “agents’MLS” version, where they show up immediately?
August 4th, 2009 at 8:55 am
Digi:
Any MLS listing agreement includes an obligation by the listing agent to list the property on mls.ca and all other media normally used by the agent. Any attempt by the agent to restrict the viewership of the listing by failing to list on mls.ca or in any other way, in an attempt to increase his commission, constitutes a breach of trust and is grounds for a lawsuit by the seller and possible criminal prosecution.
August 4th, 2009 at 8:18 am
Interesting that they were funding the leaky loan program through a levy on new construction. Is that levy now gone? If so then brand new condos just got $750 cheaper. Whoop-dee-doo!
August 3rd, 2009 at 11:37 pm
http://albertabubbleblog.blogs.....ature.html he was my nemises
August 3rd, 2009 at 10:24 pm
Leaky condos? Thank goodness it never rains in our city of eternal summer!
August 3rd, 2009 at 4:32 pm
Digi – yup. It is the “working poor”, as you put it, who get most screwed by HST. It really is an insidious tax change, and one that the Libs promised not to introduce. I just hope that voters actually REMEMBER this at the next election, rather than being the goldfish* that they tend to be.
* and yes, I know the goldfish 5 minute (ooh, a rock…swim… oh a rock) thing is a myth, but it’s still funny.
August 3rd, 2009 at 3:53 pm
I mentioned in another previous post that I had just gotten back from the Shuswap.
What I found interesting is the demographics of the tourist base. Seems the majority of them are in late 20′s to late 30′s….big PU’s, powerful boats, 5th wheels and/or RV trailers. WTF is the money coming from? These are seasonal toys that are parked for most of the year. My guess is any combo of these toys just mentioned must be in the $100,000 range. My guess is they are heavily financed. These types of items depreciate rapidly in value. Many are from Alberta, but still many from B.C. as well. When the economy tanks, these toys will be flooding the market.
Real Estate wise, watch recreational property become a leading indicator of the overall property crash. When your non – primary residence starts to fall in value, it will be the first to go.
Another phenomenon to note is that retirees that buy up in these more rural areas eventually move closer to urban areas, to be closer to better health care. In fact, I had to drive someone to the nearest open hospital last week at around 10 PM…which ended up being in Salmon Arm and took an hour’s drive.
August 3rd, 2009 at 3:39 pm
read on: You may be able to afford to do this, but the Gov knows that most people can not. They’ll rake in more money off the backs of the working poor who can’t afford to take trips overseas.
August 3rd, 2009 at 3:38 pm
I’ve noticed a lot of listings don’t show up on MLS.ca – I think the process is for the listing agent to try to sell to someone he’s representing first (double commission). If that doesn’t work then they list through a VOW on other realtors web sites. For whatever reason listings don’t seem to show up on MLS until they’ve been sitting around for a while on the market.
August 3rd, 2009 at 2:51 pm
Spitfires: “Checked out MLS.ca and most of the listings I wanted to look at are not there! Wonder why?:
Yes, actually. I don’t know if that question was rhetorical or not, but I do wonder why the listings weren’t on MLS. Was it all private sales or something?
August 3rd, 2009 at 10:49 am
Just back from my anual vacation in the Shuswap. Unbelievable number of for sale signs compared to previous years. Even compared to last year.
Checked out MLS.ca and most of the listings I wanted to look at are not there! Wonder why?
It is clear to me that vacation properties are now being dumped in BC. Expect a slow RE season this winter with significant price declines a la California, Nevada, Florida.
August 3rd, 2009 at 10:46 am
you know what my response to the HST is going to be? Spend less money in BC. I’ll continue to buy clothes on trips overseas (and wear them, then put in suitcase), and trim down my week-to-week spending in the province.
Screw the libs and this blatant cash-grab.
August 3rd, 2009 at 10:33 am
back in Vancouver for a staycation right now – staying with family. all would be great but they’re still on “you never lose with real estate” motto. its like nothing outside of the lower mainland matters and what is happening in the US is of no significance to anything.