Friday Free-for-all!
What’s that up ahead? Could it be.. Yes, I think it is.. The weekend! Let’s do our regular end of the week news round-up and open topic economic discussion. Here are a few stories I’ve noticed lately:
-Dubai debt trouble hits Canadian markets
-BC Home affordability takes a hit as prices rise
-Will Vancouver experience the post-game blahs?
-Housing Bubble: Is the market overpriced?
-Border braced for thousands on Black Friday
-Call for sponsors to save conservatory & farmyard
-GM Canada dealers sue to stay open
-Hope is not a debt reduction plan
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
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NO-LYMPICS Says:
November 26th, 2009 at 11:30 pm
I’m #1 I tink
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SuperDoomsDayBear Says:
November 27th, 2009 at 12:30 am
I’m #2 I tink
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rp Says:
November 27th, 2009 at 12:47 am
And here I thought Dubai was building all that crazy crap with oil money. Turns out Abu Dhabi has the oil. I think Vancouver could use a Palm Jumeirah. Remember, we are a world-class city! We are competing with Dubai!
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rp Says:
November 27th, 2009 at 1:17 am
It’s sad to hear about the conservatory and farm. You never get things like this back once they disappear. It just gets replaced with a bunch of commercial crap. Here’s to all the people complaining that parks, etc, are just a money pit: most of your cherished businesses are just money pits too – that’s why a lot of them fail each year. Why must everything follow that model? These places are interesting and unique. They’re not trying to sell you anything. And it costs each person what, 30 cents per year?
You are too cheap, Vancouver. You spend too much money on overpriced crap to fulfill selfish desires, and complain about pennies spent for the benefit of the public and the city as a whole. If they keep this up the downtown will get very depressing just as all the 5/35′ers have a little toddler they might want to take somewhere. Waterfront parks are nice and all but they are pretty boring and too cold in the wintertime. The conservatory is somewhere you could go with your kid. You’ll regret it if it disappears.
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observer Says:
November 27th, 2009 at 1:23 am
Bail them out with oil money, need to pump more oil so oil goes down. Don’t bail them out, banks go down. Or firesale RE assets. RE goes down. One way or another, something goes down. Repeat and rinse with next Dubai. Sooner or later next Dubai is Vancouver RE. This is your economy on drugs. Any questions?
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SuperDoomsDayBear Says:
November 27th, 2009 at 1:25 am
I have a great idea…let’s all post negative things about Vancouver and scare all the Stupid Bulls into selling their condos and houses. Then we all pray that the market will finally crash so all the poor and lazy people can buy a Yaletown condo or SFH. We can do it bears!
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Thompson Says:
November 27th, 2009 at 1:44 am
There is no need to do that SDDB. I heard the Chinese/Taiwanese/Hongkongers are dumping their real estate investment in the US and renunciating their US citizenship, because IRS are going after their not or under-declaring their worldwide assets. They’re heading for Vancouver to the glee of CHMC et al.
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SuperDoomsDayBear Says:
November 27th, 2009 at 2:28 am
Thanks for this info Thompson! But this does not help the bear situation in Vancouver. We need drastic price reductions atleast 50%. The more the better. Poor people deserve a chance too!
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scullboy Says:
November 27th, 2009 at 4:31 am
I think it’s really funny that middle class people on Vancouver trying to put a roof over their heads are derided as “poor” or “stupid” or “lazy” by people like Sddb. It’s as if in vancouver the sole determinant of wealth is whether or not you own a piece of real estate. That’s a pretty scary attitude when you stop and think about it. It says a lot of scary things about the psychology prevalent in the city and it says even scarier things about the underlying economy. It goes a very long way toward explaining the current buying frenzy. As far as buyers are concerned if they don’t make that purchase now they will be “poor” forever in the eyes of their families and friends.
Never mind that they just took on a massive debt they can just barely afford to service and if any little bump in the road occurs they will end up in very deep trouble.
Well, I guess that’s the new Vancouver lifestyle for you. Glad I’m out of it.
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scullboy Says:
November 27th, 2009 at 4:49 am
I thought I’d cross post this comment here, in case any of you are wondering how life in another Canadian city stacks up to Vancouver
I’ve heard it said imitation is the sincerest form of flattery, therefore I’d like to take a moment to thank the poster who tried to post as me.
I think a few well chosen obscentites can shock people, which is why I post the way I do. Your average Vancouver bull is probably the most smug and complacent creature on the planet. Why not try to shock them?
We all made the points we wanted to make years ago. What’s the point of trying to change the mind of a guy like supraladyboy? Absent additional debate the only reason for posting is the shock value. Bulls like supra aren’t smart enough to engage in rational discourse anyway. They are only really good for target practice.
So far Halifax has been awesome. The restaurant scene is amazingly diverse. There aren’t any huge companies locating head offices here but the city benefits from a phenomenon I had not heard of before: nearshoring.
A lot of companies do not want to farm out jobs to places like china or India. It’s too hard to keep an eye on the quality of the work and the time difference is prohibitive. They can often realize significant cost savings while keeping quality high by sending work to a closer location.
It’s my understanding that the Maritimes have benefitted considerably from this. Several relatives are working in call centers at well paying jobs for large banks and insurance companies. The company I work for has 500 employees and handles IT infrastructure for a surprising variety of national and international companies.
While it’s true that taxes here are higher overall prices seem to be quite a bit lower. Some things like bananas are a little mote expensive but others are surprisingly cheap and if you substitute local products for imported ones then things get very cheap indeed. Local artisinal cheeses are way cheaper the say Salt Spring Island cheeses. Same for lamb and haddock (which substiutes brilliantly for halibut). Atlantic salmon isn’t as good as pacific but apparently pacific salmons about to go the way of the cod anyway.
Lobster is 5 bucks a pound and my friends were very amused at my reaction.
a friend of mine has a Kenyan husband and 2 kids. Her husband is still trying to get his career started but they were able to buy a small home not far from the place I hope to rent. They paid in the 300k range. Bear in mind this isn’t a semi detatched or a condo. It’s a sfh on a small lot.
So yeah taxes are a little higher here. Big fucking deal. Overall prices are so much lower that you still end up living a much better lifestyle.
Oh yeah and you don’t have to pay bc a monthly fee for health services, which also saves money.
Best of all, because it’s smaller it’s way easier to network which makes it a lot easier to find work. I’ve already had 2 companies offer me jobs if I decide to leave my current one.
Life here isn’t for everyone. The pace is a lot slower. Supra would absolutely hate it. There aren’t a lot of flashy cars on the streets and ostentious displays of wealth are mocked and scorned, and Maritimers have a keen ability to identify and mock the absurd. There’s a reason that “united breaks guitars” guy was so successful. Google it if you are unfamiliar. Mary Walsh just got big press for punking Sarah palin too, and let’s not forget Rick mercer punking George Bush. We are very good at getting under the skin of self important jackasses. That’s probably why I love tormenting supra so much. He’s just so irresistable.
anyway that’s life here. If any of you have questions just ask
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patriotz Says:
November 27th, 2009 at 7:48 am
http://www.theatlantic.com/doc.....ity-gospel
May I humbly submit that Vancouver’s civic religion is essentially the same, without the theological trappings.
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Anonymous Says:
November 27th, 2009 at 7:59 am
@scullboy: Thanks for the update, I read the comments for anecdotes like this and the guy who’s unemployed brother was able to get a 300k CMHC mortgage. Some of the obcenities and arguments are funny, but when pissing contests take up the majority of comments it gets pretty boring.
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Wreckonomics Says:
November 27th, 2009 at 8:27 am
@SuperDoomsDayBear: Don’t get your hopes up, posting comments here isn’t going to change the irrational exuberance that locals have for RE. There was no shortage of bubble blogs in the US, and who paid attention to those?
The very few that benefited from the US housing bust maybe, but nobody else. Certainly not the lenders, the media or the throngs of buyers. Bubble blogs are about sharing information, not about altering the inevitable.
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Wreckonomics Says:
November 27th, 2009 at 8:31 am
@rp: I think Vancouver could use a Palm Jumeirah.
Why not, after all Dubai has a false false creek. Looks like they beat us to the real estate crash though.
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Crash Says:
November 27th, 2009 at 8:47 am
The Dubai issue illustrates that no one knows what other financial landmines exist in the economy. Fundamentally, nothing has changed since last year, but yet some people seem to think we got off almost scott free.
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other ted Says:
November 27th, 2009 at 8:50 am
rp thanks for pointing out that article about the farm at stanley park and the conservatory. I just recomended those places to a friend who is taking their family to vancouver this summer. I haven’t been to the conservatory in years but it is on my list of things to do in vancouver. Its funny on one hand Vancouver is this “resort city” where everyone wants to come to. Yet anything that makes it attractive to tourists will soon be gone. Thanks housing bubble for ruining some more of the city.
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RennieWhereRU? Says:
November 27th, 2009 at 9:14 am
I’m sure when city makes a killing on olmypic village condos it will re-open conservatory and zoo, plus will have millions and millions left over to open new facilities. If the condos they own there are so valuable why not take out a loan to keep great family-oriented facilities open? Ahh, screw the kids.
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Drachen Says:
November 27th, 2009 at 9:37 am
Dave (#68 last thread)
“Who cares if he agrees with you or not? Do you really need the validation of a fearmonger?”
I suspect he has more education and far more knowledge of the way Canadian markets work than you do Dave.
“Again, I thought you didn’t believe in graphs. Strange that you are now trying to predict the future off one.”
Ok, here’s the difference, I’ll put it in an analogy so you can understand.
A man feels chest pains, he goes to see his doctor.
In the first case his Dr. is Dr. Dave. Dr. Dave looks at the man’s history and says, “Well it can’t be anything serious, you’ve never had any serious medical conditions your whole life! Go home and you’ll be fine!” (Comparing a graph to it’s self)
In the second case he sees Dr. Drachen. Dr. Drachen looks at the literature, the man’s age, his fitness level, cholesterol etc. Then he compares him to a study done on men in a similar situation and says, “Wow, good thing we caught that, you have a lot of indicators for a serious heart condition, let’s get you on medication and have your heart checked out right away!” (Comparing one graph to many similar graphs)
So… Which doctor would you rather see? Now do you see the difference between what YOU do with graphs and what I (and scientists and doctors and REAL economists and physicists etc.) do with graphs. One is SCIENCE the other is charlatanism.
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Niko Says:
November 27th, 2009 at 9:40 am
I have serious doubts that prices are actually “rising”. If they are, why do I see Price Reduced and New Price signs on every corner? And why Rob Chipman’s numbers consistently show sales prices below asking, week after week? I have a sneaky suspicion that MLS changed the way “benchmark” prices are calculated to create an illusion of a slower fall. And when the fall really slowed down due to the low rates, their new formula resulted in an illusion of rising prices.
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vreaa Says:
November 27th, 2009 at 9:41 am
Images of the Bob Rennie “EVERYTHING IS GOING TO BE ALRIGHT” sign are now archived, with extracts from the BC Business Magazine article discussed here 2 months ago.
“EVERYTHING IS GOING TO BE ALRIGHT” (“Or NOT?”)
http://tinyurl.com/yg2vcyt
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bums up2 Says:
November 27th, 2009 at 9:45 am
That might be the first successful “argument-by-metaphor” in the history of the internet. Kudos!
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bums up2 Says:
November 27th, 2009 at 9:46 am
(In reference to Drachen’s post, #18)
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Dave Says:
November 27th, 2009 at 10:04 am
@Drachen:
No, I can confirm that I have more business and economic education than Mr. Turner. Knowledge? Who knows. He could have me beat there. I have no way to measure or compare. I believe he is a fearmonger and a sensationalist. Usually those types know more than they let on and don’t really believe the crap they spew. If I judge him purely on his words, then well… I think he’s a dummy.
Stupid analogy. It’s not even worth responding to beyond giving you a zero on your assignment.
And what type of scientist are you professor Mark? Serious question. Your ‘intellectual chip on your shoulder’ is quite evident to me. My guess… chemistry or physics. Probably the latter. You probably work in research somewhere in Burnaby. SFU perhaps? Am I getting warm?
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Dave Says:
November 27th, 2009 at 10:15 am
@bums up2:
Where’s the metaphor?
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anonymous Says:
November 27th, 2009 at 10:29 am
FYI
My friend works at HSBC and they just laid off ALL of their “Premium Wealth Mgmt” staff yesterday.
I don’t think this bodes well for the ‘rich Asians will save the market’ theory….
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Drachen Says:
November 27th, 2009 at 10:32 am
@Dave:
Ok, you don’t like the metaphor (because it proves you wrong).
Tell me of one instance where comparing something to it’s self gives you a better idea of where that object is headed than comparing it to similar objects that have been studied in the past. Any scientific, mathematical or related field will do, just find me a reputable source that backs you up.
An N of 1, as you ought to know if you have any education at all, is useless for comparative or predictive purposes.
Worse yet, you’re not just saying something about economics in general based on your study of a single subject you’re saying things about the future of that subject based on it’s history and ignoring the fact that every similar subject that’s had a similar history has had an outcome very different from the one you predict.
If my analogy is flawed at least explain HOW it’s flawed.
Your argument, if I may summarize, in this instance seems to simply be you saying, “I’m right and you’re wrong, I don’t need to provide facts or evidence because I’m right and you’re wrong. Aside from which you’re probably a Physics professor at SFU.”
I expect more cogent reasoning from Oscar the Grouch. But then perhaps you’re a distant cousin of his? You certainly have the appropriate attitude.
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Rent-o-rama Says:
November 27th, 2009 at 10:37 am
To me, it is a simple fix. The government needs to scale back CMHC lending to the traditional model. The banks have already done this which is why so any new mortgages are CMHC approved. If the population can afford housing at the current price levels without the “finacial innovation” of a 5% down and 35 year amortization, then so be it. If not, prices will adjust back to the whatever level the buyers can afford with a traditional mortgage (i.e. 20% down and 25 year am).
It is bad for society as a whole to encourage the population to take on more debt than they can afford. All you have to do is look at the US for an example. It is outrageous to me that we have the benefit of seeing what loose lending standards have done in the US, Spain, Ireland, Dubai, England etc and yet our government is blindly heading down the same path.
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Dave Says:
November 27th, 2009 at 10:46 am
I don’t like the metaphor because there isn’t one. You provided an analogy.
How about Newton’s First Law? An object at rest tends to stay at rest and an object in motion tends to stay in motion with the same speed and in the same direction unless acted upon by an unbalanced force.
In this case, real estate will continue to act as it has unless acted upon by an external unbalanced force. That’s basically what I have said all along.
You brought up the whole credential thing in the Garth post above. And now, you don’t like this discussion?
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game_over Says:
November 27th, 2009 at 11:44 am
Why does everyone here seem to think the gov’t is doing this “blindly”? They knew what they were doing in the US and they know what they are doing here.
Privatize the wealth…
…socialize the risk.
There is one world government here…now. You are just going to have to go through a tough time to want it.
Time to talk about this.
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gork Says:
November 27th, 2009 at 12:01 pm
good one, Dave, quoting Newtons Law here. What is it that you’re trying to tell us with this, oh genius?
‘an object in motion tends to stay in motion with the same speed and in the same direction unless acted upon by an unbalanced force’
First off, you realize that there is no system without influence of a unbalanced force. So no object, at least in our universe stays in motion with the same speed and in the same direction. Please let us know if you think otherwise, maybe you got the perpetuum mobile going in you basement.
If you’re trying to make an analogy to market forces with this comment, then you should for starters realize that there is always at any time unbalancing forces at work (good or bad ones – market self or government), and certainly we have major unbalancing forces at work in Canada.
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Drachen Says:
November 27th, 2009 at 12:16 pm
@Dave:
“An object at rest tends to stay at rest and an object in motion tends to stay in motion with the same speed and in the same direction unless acted upon by an unbalanced force.”
That’s a perfect example of how observing many different objects can tell you something about one particular object yes. That’s exactly the kind of reasoning I’m using and you are not. Are you trying to provide me with a better analogy or something?
Or are you saying that Vancouver Real Estate bears has more in common with an inert object than it does with all the other markets in the history of the world? Is that really what you’re trying to say here? Are you trying to say that a real estate market has mass and inertia? How much mass? How did you measure it? If it hit you in the head would it hurt?
Get off it, come back when you can be serious because that’s a terrible joke.
If you want to bring your credentials onto the table you’re going to have to tell us what they are because I have a hard time taking your word on anything.
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Drachen Says:
November 27th, 2009 at 12:25 pm
Dr. Dave PhD, Port-au-Prince School of Voodoo, Animal Husbandry and Economics.
That’s my guess.
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YLTNBoomerang Says:
November 27th, 2009 at 12:36 pm
Well, it finally happened, I just got downsized…I look at it as a great opportunity to re-invent myself, take a holiday, enjoy the slopes etc. as guess what? I have no mortgage, no car payments, only rent; having sold my townhouse 2 years ago, I reckon that the proceeds of that sale and my severance should allow me to maintain the same monthly cash burn for about 9.5 years!
Of course, I would like to buy a house some time when prices get back to normal so I wouldn’t burn through all my savings but had I decided to hold on to my place I would be in a pretty precarious position right now.
Helloooo Whistler!
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/dev/null Says:
November 27th, 2009 at 12:39 pm
Well now, Drachen, Dave might have a point. It certainly does appear that the RE market in Vancouver exists in a vacuum, lacking any gravitational attraction to reality.
In any case he’s taken a bold and firm stand with his opinion. To paraphrase: Things will stay the same if things stay the same. However, if things change then things will change.
Sorry to say but I really think he’s backed you into a corner with that. Only time will tell if his elegant thesis proves correct. (If so he’ll be sure to come here and point it out).
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Dave Says:
November 27th, 2009 at 1:02 pm
@Drachen:
Nice try, but you threw me an easy pitch and I hit it out of the park.
/dev/null gets it. You don’t.
Real estate has traded within a range of affordability for at least the last 40 years. Expecting it to stay within that range is a reasonable expectation. We are not outside of the range currently, so expecting a price correction because ‘prices are too high’ is wishful thinking at best. Based on current incomes and current housing costs, the price of real estate is well within historic norms. I’m not sure why you struggle with this reality.
I didn’t bring my credentials into this. You did. I don’t feel the need to state what they are, nor what my IQ is. I simply refuted your point that Garth has more economics education than me. He doesn’t. You can choose to believe that or not, but I am certainly not going to send you my transcripts.
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rubberduckie Says:
November 27th, 2009 at 1:11 pm
Does anyone know of any statistics about how many apartments/condos (rental stock) are rented out for the month of the Olympics?
I’m wondering if I should look for a better apartment in January, during the slow winter months, or wait until March.
I want to live in a nice place but not pay top dollar. Selfish, I know.
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Drachen Says:
November 27th, 2009 at 1:29 pm
@Dave:
“Nice try, but you threw me an easy pitch and I hit it out of the park.”
Ahh, I see, you’re being deliberately ironic. Now I get you. Actually that makes a lot of sense, if I think back at everything you’ve written on here and I imagine what would be the OPPOSITE of your position it would be right about 90% of the time. So you are a genius, just an inverted one.
“Real estate has traded within a range of affordability for at least the last 40 years. Expecting it to stay within that range is a reasonable expectation.”
Of course it is, but Real Estate is also at a near record level for affordability with a record LOW prime rate. We all know prime will go up and affordability will worsen when it does. According to YOUR logic that means that real estate prices will drop and if you want to use a 40 year average to point to WHERE Real Estate will come to a rest I’d say you’re on the high side but far closer to the mark than anything you’d said in the past.
So, as near as I can figure you’re calling for a 25-35% drop now for prices to return to a relatively “normal” affordability level once interest rates kick up a few points, if rates go up more housing will fall further. That’s quite a ways out of line with what you’ve said in the past.
I believe your recent line is prices have fallen as far as they will fall and we’re set for future stable moderate increases for the foreseeable future right? So, are you sticking to your guns or is this new position the one you’ve decided to take?
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patriotz Says:
November 27th, 2009 at 1:33 pm
@Dave:
Are you really that dense or do you just think we are?
Prices are not “objects”, they are the intersection of two functions, namely supply and demand. In addition, these functions differ between the short and long run, which means that you can have deviations from long-run equilibrium (bubbles and busts) which correct themselves without any external factors.
In other words, completely contrary to your analogy, price movements (either up or down) don’t tend to move in the same direction, but bring about their own reversal, or correction as it’s usually known.
Thus the constant real price trend of RE in the long run. So just how far off that trend are we today? Take a look.
http://cuer.sauder.ubc.ca/cma/.....couver.pdf
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/dev/null Says:
November 27th, 2009 at 1:35 pm
Dave, what I “got” is that once again you’re being intellectually dishonest. Your attempt at an argument, what you “have said all along” is: If A then A. If B then B. Heads I win, tails you lose.
Sorry if it wasn’t clear I was being sarcastic. Maybe Drachen’s easy pitch bounced off your helmet?
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/dev/usr/ Says:
November 27th, 2009 at 1:39 pm
Dave, i think dev/null/ is making fun of you when saying this:
“In any case he(Dave)’s taken a bold and firm stand with his opinion. To paraphrase: Things will stay the same if things stay the same. However, if things change then things will change.”
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C-Note Says:
November 27th, 2009 at 1:41 pm
@Dave, if I understand correctly, property prices could double from their current levels as long as that new price set is within “a range of affordability”. So it comes down to the definition of “a range of affordability”. Now I`m going to go out on a limb and say that you would argue that if prices are going up, people are buying and, therefore, real estate is considered by those people as being affordable. Once people stop believing that real estate is not affordable, they stop buying and the prices will stop going up. In this case, they will retract until a new range of affordability is found which should be almost immediately (since if a property is affordable at $X and not affordable at $X+1, once the price returns to $X and it is affordable, prices will stop heading down).
So two questions:
1. How would you explain sustained price drops (as seen in many markets the world over) since the above argument proves that prices shouldn`t drop much at all before returning to the range of affordability?
2. If Vancouver prices are affordable to the citizens of Vancouver, would those same prices be considered affordable to another population with similar net worths, employment opportunities and incomes in a different market? Can you suggest an example?
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Supraboy Says:
November 27th, 2009 at 1:41 pm
@scullboy:
why is this moron still posting here when he no longer belongs to Vancouver? I think he should just STFU and get on with life. This guy is like a dumb blonde being dumped by a rich man and she couldn’t get over it. She has to find a way to get back at someone but have no power to do so unless she spreads her legs to her nearest customer. This is what scumboy is. A loser who doesn’t want to toss in the towel and move on with his sad sack life. Go grab yourself a hockey stick and play some pond hockey there. Did you already diss the locals there the same way you diss people in Vancouver? Or are you already starting your new round of complaints in Halifax about how crappy and useless the city is. How are those so-called multicultural restaurants there? Did you get served a kebob with raw pork in it? Go to your local store and open up a can of sardines, at least Nova Scotia has good sardines and hopefully, you won’t be complaining about that.
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Dave Says:
November 27th, 2009 at 1:49 pm
@/dev/usr/:
The sarcasm wasn’t lost on me, but his initial point was correct; things will stay the same until they no longer stay the same. ‘The same’ in this case is real estate affordability. Patriotz and Drachen have been going on and on for years that prices were too high. In the context of Vancouver real estate, they are not.
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Dave Says:
November 27th, 2009 at 1:53 pm
@patriotz:
Is your reading comprehension that poor?
Read the initial question by Drachen and my subsequent response. Out of the park…
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Drachen Says:
November 27th, 2009 at 1:55 pm
Hey Dave, I just found a paper you might enjoy by some guy at UVic;
“Finite-Sample Properties of the Maximum Likelihood Estimator for the Poisson Regression Model With Random Covariates”
That’s pretty much up your alley isn’t it?
Oh and one of the authors is named Dave and his “specialities” are Econometric modelling; Forecasting; Applied Statistics… That’s the sort of stuff you’re constantly yammering about isn’t it? Coincidence?
David Giles
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Dave Says:
November 27th, 2009 at 1:59 pm
@Drachen:
Wrong? Read em and weep:
http://vancouvercondo.info/200.....e-yet.html
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Drachen Says:
November 27th, 2009 at 1:59 pm
@Dave:
“Read the initial question by Drachen and my subsequent response. Out of the park…”
Oh, I see. Patriotz and the rest of us are “in the park” when we use logic and science to discuss the future possibilities of real-estate, you “hit it out of the park” so you’re not even trying to come from a real-world fact-based perspective, you’re just making up crap like you’re on another planet. Is that what your metaphor meant Professor Giles?
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Dave Says:
November 27th, 2009 at 2:05 pm
@Drachen:
Not me. I am not a professor or an academic. I also don’t have a PhD. Nice try.
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Drachen Says:
November 27th, 2009 at 2:09 pm
@Dave:
You keep pointing to that post as if it were some sort of proof. All it proves is you’re not wrong yet, but we’re predicting the future here, I can predict that the sun won’t set tonight and keep pointing at my prediction all day long and it doesn’t mean I’m right.
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Dave Says:
November 27th, 2009 at 2:15 pm
@Drachen:
I am glad to see your agreement that my predictions have been good to this point. We can agree on the future once we get there.
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Mr. Jones Says:
November 27th, 2009 at 3:01 pm
If careful analysis of fundamentals should help us predict the RE market, why has it done such a dismal job in the past 10 years? Yet during the past few years the bears on RE blogs like this one have been smugly confident in their analysis of an imminent crash while the market keeps rising. Maybe the RE market is more complex and has more unknowns than bears anticipated? Maybe there is something to learn?
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scullboy Says:
November 27th, 2009 at 3:15 pm
@supraboy:
“Belongs to Vancouver?” That’s a funny phrase. It calls to mind an image of Vancouver as Jabba the Hutt, with you in the Princess Leia’s gold bikini, all chained up. I bet with your superior hair and makeup skills you look better then she did though, good for you.
I like Vancouver the city when I lived there. It’s extremely pretty. It was people like you that drove me nuts. Luckily for the rest of the country you’re way too delicate to venture past the Rockies to check out the country that has afforded you and your family such opportunity.
What’s with you and using hockey as a term of scorn? Pond hockey is awesome. I know playing sports with a bunch of muscular athletic Canadian men is probably a little intimidating to a delicate lotus blossom such as yourself. Maybe you should stick to playing mah-jong and squeeling with delight at every fat German in a BMW who cruises down Robson.
The restaurants here are awesome. They’re miles better then the rat-poo infested dim sum you’re eating in friggin’ Richmond. I was saying just today how impressed I am with the food. I invite you to expand your horizons and visit to find out for yourself. Just ask your Mummy and Daddy for permission.
Oh and you might want to leave the teensy little skirts and belly shirts at home, Petal. I’m sure Hans and Lars and the rest of your clients love the way they look while pouring “coconut milk” all over your delicate thighs, but I’m not sure they’d go over as well here.
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Drachen Says:
November 27th, 2009 at 3:49 pm
@Dave:
“I am glad to see your agreement that my predictions have been good to this point. We can agree on the future once we get there.”
You’ve missed the point, again…
Your predictions of real-estate market movement are as accurate as my prediction that the sun will never set. I don’t see a “November 2009″ anywhere in your post. You made broad predictions about the future and your predictions do not diverge from my predictions up to this point.
I predicted a small fall followed by a recovery too, it’s the next year or two where we diverge so at this point we have Schroedinger’s cat in the box, until the box is opened we are both in a state of neither right nor wrong.
Until we’ve actually REACHED the future you cannot claim a greater accuracy than me and I believe my predictions have the bottom coming between Fall/Winter 2011 – sometime in 2013, which is a ways off yet. That is when right and wrong will be determined, until then you’re just blowing hot air if you’re claiming some check mark in the ‘win’ column (and even if you COULD claim a win it would still be 1 win to 4 losses for you).
If you’re about to complain that that’s too far away, we can look at 2010, I said it would be the year when we start to see significant losses (although I believe I hedged by saying give or take a year). So write this down, if property values have not fallen below our recent “bottom” (your word) by Spring 2011 I will give you the win on this one. Do you reciprocate? If prices fall below the recent trough over the next year and a half you’ll announce that you were wrong?
Of course, as always, I am talking REAL dollars, not your namby pamby NOMINAL dollars.
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Drachen Says:
November 27th, 2009 at 3:55 pm
@Mr. Jones:
“If careful analysis of fundamentals should help us predict the RE market, why has it done such a dismal job in the past 10 years?”
Because fundamental analysis will tell you that a market WILL correct. No credible analyst will tell you that you can tell WHEN a market will correct through fundamental analysis.
Further, Warren Buffet invests exclusively on the basis of fundamental analysis, given his track record would you say the system works or not?
Further part 2: Are you proposing that there’s a better model to determine the value of real-estate? Because fundamental analysis has proven extremely accurate in the past, in over 400 years of recorded real-estate history it’s been accurate 100% of the time. Find me another system that you can apply to Los Angeles, Phoenix, Miami, London, Amsterdam and Tokyo at any point in their histories and it will give you the correct answer.
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observer Says:
November 27th, 2009 at 4:05 pm
@Mr. Jones: Fundamentals will tell you what the historical long term trend will be but not the short term trend. Forecasting the short term trend is infinitely more complicated because it involves human behavior and expectations and is entangled with the short term economy. I think the arguments that most bears are making is simply this: all indicators are beyond reasonable norms by most measures (historical, financial, physical, etc) and there is nothing substantial supporting it, except loose credit and money with no home (no pun intended).
It isn’t an airtight argument and can’t be because if you could clearly show the market is going to tank shortly, it would have already started to tank because people would have anticipated it and taken action earlier. So it is essentially not possible to precisely predict it until it actually happens.
That doesn’t mean we can’t offer our own opinions and predictions, just that by the very nature of the problem, the predictions can never be airtight in reasoning and analysis.
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duru2000 Says:
November 27th, 2009 at 4:11 pm
Scullboy, i am a fan. No joking, i started to entertain the idea of moving to Halifax as well, you can get a 250.000 decent house close to downtown there(just check MLS). How is the job situation, i work in IT and my wife is in engineering AutoCAD.
Regarding the restaurants in Vancouver, half of them won’t pass the inspection in the Easter European country i am from, and that is bad! I have been to Montreal and the restaurants are way better in terms of food and service, i guess real french tradition really matters.
The level of stupidity in this city is amazing, if Dubai has fallen 50% in a year … do you hear the ticking bomb?
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Dave Says:
November 27th, 2009 at 4:28 pm
@Drachen:
Sounds good, although I don’t agree with the real vs nominal part. Either way… two years of low inflation make that part of it a minor factor. Let’s meet half way on this issue and go with a 50% real correction.
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Drachen Says:
November 27th, 2009 at 4:47 pm
@Dave:
50% Real correction as in prices will be half of what they are now or prices will have dropped 50% of the way back down to our most recent low?
I’m not sure you understand the terms, let’s pick Detached just because it’s on top of the graph (feel free to choose a different marker if you like) I read the recent low at about 750K on the average price graph, I am saying that prices will fall below 750K in the next year and a half. And you, I presume, are saying that prices will not fall below 750K.
You’re right, over a year and a half real vs. nominal shouldn’t make any significant difference, so measure it however you will, I just wanted to be sure there was no room for argument but I suspect that, either way it’s not likely to be a close thing.
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Starving Artist Says:
November 27th, 2009 at 5:00 pm
Dropping city permit/inspection revenue forces Vancouver city council to axe Stanley Park petting zoon, QE Blodel Conservatory as well as reduce hours at libraries. Small taste of things to come. Where are graphs of Vancouver building permits?
Word-of-mouth has realtors saying lack of new development will cause prices to go up in 2010 because of reduced supply. Hmm and what about all those construction, agents, and office workers that will be unemployed?
http://www.francesbula.com/unc.....f-balance/
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Anonymous Says:
November 27th, 2009 at 5:11 pm
“I reckon that the proceeds of that sale and my severance should allow me to maintain the same monthly cash burn for about 9.5 years!”
Don’t forget to get long term disability insurance and life insurance (if you have dependents)…that includes high risk sports injuries.
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Dave Says:
November 27th, 2009 at 5:42 pm
@Drachen:
Sorry, my post was very cryptic and not well expressed.
My 50% compromise was in reference to using real vs nominal numbers. I suggested we meet half way between the two. Or in other words, we use 1/2 of the rate of inflation to correct the 2011 prices to the 2009 price bottom.
Let’s just use the Housing Price Index posted by realtylink.org. The most recent ‘bottom’ was $484,211. This number represents the median value of all types of properties in the GVRD, which I think is most representative.
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Vomitron Says:
November 27th, 2009 at 5:47 pm
I would like to thank Scullboy for adding levity and insight to this discussion and I would like to thank Supraboy for so valiantly representing the typical Vancouverite in the face of such incisive retorts. Honestly, without the two of you there would be nothing funny about Vancouver!
Having lived in Nova Scotia I agree that “Maritimers have a keen ability to identify and mock the absurd” and that intolerance of preening poseurs and ostentatious bullshitters is one of the endearing features of Haligonians. The typical Vancouverite would be roasted over an open fire in Halifax. I am fairly certain Vancouver is the world capital of bullshitters, liars, materialistic blowhards, overconfident imbeciles, scam artists and plain criminals. Vancouver is The Trailer Park Boys in a BMW on ecstasy and Red Bull. Vancouver is the pretty girl that gets hooked on crack cocaine and real estate speculation. Vancouver is so proud of herself yet she has the unmistakable stench of impending death.
Halifax has kitchen parties and pub crawls. Vancouver has condo pre-sales and the Olympics and non-stop anxiety about the falling standard of living in Vancouver.
The lineup to jump off the MacKay Bridge in Halifax is not nearly as long as the line to jump off the Lions Gate Bridge in Vancouver.
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Drachen Says:
November 27th, 2009 at 5:53 pm
@Dave:
Sure, works for me.
HPI below 484,211 by June 2011.
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Dave Says:
November 27th, 2009 at 5:59 pm
Plus 50% of inflation rate between that two year period.
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patriotz Says:
November 27th, 2009 at 6:08 pm
That’s a moot issue really, because nominal house prices would fall more under increased consumer price inflation than under flat CPI. The reason is that an increase of even a couple of points in interest rates – which would be inevitable with increasing CPI – would clobber affordability. Particularly with flat nominal wages.
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SmartGuy Says:
November 27th, 2009 at 6:18 pm
Ignore Dave, He’s a troll.
it’s impossible for someone to be that obtuse and consistently wrong.
Ignore it and it will go away. Trolls enjoy gettinga rise out of people by pretending to be stupid.
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scullboy Says:
November 27th, 2009 at 6:22 pm
Gosh it appears I have fans, in Vancouver no less. Thanks guys! And here I was just posting obscenity filled rants into the ether.
Duru: There are a lot of IT jobs. If you do a search on Keane.ca, there are about 19 jobs in that company alone, or at leas there were till recently. A couple of people from Van and one from Toronto have moved here recently.
I think there are a lot of engineering jobs too, because of the large naval and offshore oil presences here. I’m not sure where to look for those, but there’s definitely around.
I’d like to thank Supra too. Supra, you truly are the voice of the Vancouver bull. You don’t get that high property values discourage innovators from moving there. It discourages younger people. It keeps people from “moving up” in life by starting families.
All you see are the dollar signs, and even the profits aren’t real. It’s sad really.
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Thanks Informer10 Says:
November 27th, 2009 at 6:34 pm
@patriotz:
Lawyers and Doctors never give up unless patient meet his/her death and accused get locked in prison.
Patriotz and Drachen will never give up unless every single bear kiss their defeat in high definition.It’s good to read books for knowledge but copying unwanted paragraphs on the blogs does not change reality unless we apply them with circumastances of any perticular place.
On the side note:Presale contract holders from DUBAI who have left their deposit with developers and their cars on Dubai airport are currently smooking hookas on Georgia Street Vancouver after todays debacle Many of international investors include European,Britishers,and Americans have plan to move to Vancouver to take a rest from prolonged collapsed day after day everyday.They had plan to settle their life and family in “THE BEST PLACE ON EARTH”.
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scullboy Says:
November 27th, 2009 at 7:05 pm
Hey Informer:
Shouldn’t you be spraying coconut oil all over Supra’s nubile young buttocks?
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tincup Says:
November 27th, 2009 at 7:05 pm
A little meaningless anecdote: I’ve noticed in the market that I follow (north van houses under $700k) that lately there have been quite a few sales (I’m talking eight or ten over the last two weeks) and the sale prices seem to average 5%-10% below asking. Inventory is also down quite a bit. Normally I’d have about fifteen listing that fall under my search criteria, and right now there is only six. A trend perhaps, or just part of the pre-christmas seasonal slowdown?
skull: glad you mentioned about Supra’s repeated pond hockey “insult”. I find that confusing too.
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scullboy Says:
November 27th, 2009 at 7:07 pm
Hey Supra:
Is it true you and Informer go at it doggie style so you can both post to this bog at the same time?
That’s what I heard….
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Supraboy Says:
November 27th, 2009 at 9:57 pm
@scullboy:
Yada yada yada, put a sock to it and move on with your new life. Idiot cricket, go chirp elsewhere.
Do you NOT understand that you don’t belong here anymore? Go post on the hippies board.
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Supraboy Says:
November 27th, 2009 at 10:01 pm
@Vomitron:
“Vancouver has condo pre-sales and the Olympics and non-stop anxiety about the falling standard of living in Vancouver.”
Non-stop anxiety? haha….you sound like you know what buyers are thinking, don’t you? If you ever talk to the buyers, you’ll know they’re loading up more properties. It takes big BALLS to load up properties, these people take risks in life while you sit there using words like “Anxiety” to label them. Obviously, you haven’t met a millionaire in your life before. You probably live in Port Moody or some dump in Langley.
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Supraboy Says:
November 27th, 2009 at 10:08 pm
@scullboy:
“I like Vancouver the city when I lived there. It’s extremely pretty. It was people like you that drove me nuts.”
I’m glad there are more people like me in Vancouver. You deserve the beats. I can imagine you seeing me zoom down Robson with my Ferrari and you’re pissed like a phuck because you never had the balls to take risks in your life. Isn’t it too bad? If you had the smarts and balls to buy some properties a few years back, you wouldn’t be bitching like a chicken shit right now.
It’s people like you that makes me want to spit on you when I drive by with my ride. I’ll give you the finger and make you run after me afterwards.
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Hogtown Hozer Says:
November 27th, 2009 at 10:44 pm
@Supraboy:
“… It takes big BALLS to load up properties …”
This is so true! The only hitch is that in this day and age, there are limited employment opportunities for eunuchs.
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RennieWhereRU? Says:
November 27th, 2009 at 11:32 pm
Great news guys,
http://www.globeinvestor.com/s.....5/GIStory/
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oneangryslav2 Says:
November 28th, 2009 at 12:57 am
Perusing these boards over the last few weeks I get a palpable sense of the feverish sexual tension between scullie and supra. For the sake of the vci community, let’s fly supra over to Halifax and have him give scullie a freebie. I know that the lease payments on a Ferrari are a lot, Supraboy, but take one for the team. There’ll be enough European tourists this February for you to make it up on volume.
And scullie, don’t look a gift-supra in the mouth…or anywhere else for that matter. Just close your eyes and think of the Maritimes.
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Mold city Says:
November 28th, 2009 at 10:35 am
@Supraboy: Im unclear on why you own a Ferrari when you said previously that you live with your parents? Is it your preference to live with your parents and buy expensive cars rather than living on your own and settling for a BMW or something less expensive than a Ferrari? You certainly are an enigma.
79 X “HSBC laid off ALL of their ‘Premium Wealth Managment’ staff yesterday.” « Vancouver Real Estate Anecdote Archive Says:
November 28th, 2009 at 11:41 am
[...] November 2009 · Leave a Comment This from anonymous at vancouvercondo.info 27 Nov 2009 10:29 am [...]
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Anonymous Says:
November 28th, 2009 at 12:19 pm
ladagirl said “I can imagine..” not that she had a Ferrari just using her imagination.
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logic Says:
November 28th, 2009 at 12:44 pm
78 X Mold city Says:
November 28th, 2009 at 10:35 am
@Supraboy: Im unclear on why you own a Ferrari when you said previously that you live with your parents?
——————
Because….. he is a lying troll. I thought most of us figured that out months ago?
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Anonymous Says:
November 28th, 2009 at 12:48 pm
Booms around the world are engineered by the greedy ruling pigs.
http://market-ticker.org/archi.....nanke.html
Denninger, on what bernanke should have known.
The facts are that Goldman Sachs, among others, was issuing securitizations with “mortgages” that, on dollar value:
72.21% were taken for cash-out refinances and 12.28% were to refinance existing loans.
Only 15.52% of the principal balance was taken out to BUY a house.
Of that 72.21% balance, the AVERAGE FICO of the person taking the cash-out refinance was 604 (!) – the lowest average of all categories. (that is special – people with severely-impaired credit attempting to keep their head above water by cashing out alleged “equity” in their homes at usurious interest rates!)
The vast majority of the loans had a lifetime maximum rate of 15% or higher, with 26% having a cap OVER 16%. This was in a time when “conventional” financing was at half that interest rate. If that’s not hard evidence of predatory behavior, what is?
46.85% of the principal balance was stated documentation. That is, NO verification of income or assets. In other words, these were “debt-pyramid” loans being taken out by borrowers to either cash out of their homes to fund their lifestyles, were utterly impossible to be paid as agreed, or both. A year later, FRBNY published a research paper on this.
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Thanks John Says:
November 28th, 2009 at 1:17 pm
ABU DHABI TO AID DUBAI
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Thanks John,Informer10. Says:
November 28th, 2009 at 1:19 pm
Black Friday Sales: U.S. Retailers Report Strong Crowds
http://www.huffingtonpost.com/.....72668.html
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Heinz Skitzvelvett Says:
November 28th, 2009 at 1:23 pm
As we scrape to save up enough scratch for a $1 million fixer-upper in Vancouver, thought this quotation from ESPN was appropriate:
“Police said the world’s No. 1 golfer smashed his Cadillac into a fire hydrant and a tree near his $2.4 million mansion at 2:25 a.m. Friday.”
at least somewhere in this world, $2.4 million gets you a bona fide mansion.
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patriotz Says:
November 28th, 2009 at 1:40 pm
http://www.fraserinstitute.org...../7036.aspx
Picking winners and losers? Like diverting massive amounts of capital into the RE sector through CMHC to keep the housing bubble going? What do the gurus at the Fraser Institute have to say about that?
NOTHING
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scullboy Says:
November 28th, 2009 at 2:12 pm
Slav:
I go for dudes, not Asian ladyboys in short skirts and shorter tops. Seriously. I think we all know supra is your typical Asian wannabe, pretending he owns expensive cars and is a high roller. I’ve known loads of banana boys just like him. They live in the very edge of their meager paycheques. The only reason they can afford to lease their low end BMW is because they live in mummy and daddys basement.
I’m lucky enough to have my pick of modest, friendly boy next door types here in Halifax. Why would I want a high maintence piece of wannabe Richmond trash? You’d have to knock his teeth out just to get a decent blow job.
Surrrre you have a Ferrari supra just like you own multiple properties in van.
I think it’sore likely you are a low level rep in a surrey call center somewhere. Don’t be angry petal. Some day some big fat German sex tourist with a ladyboy fetish will sweep you off your feet and out of your parents basement.
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logic Says:
November 28th, 2009 at 2:36 pm
at least somewhere in this world, $2.4 million gets you a bona fide mansion.
———————-
There are many places in the world were you can buy a whole town for 2.4 mil US>
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duru2000 Says:
November 28th, 2009 at 3:25 pm
Casinos and herd mentality, that is what i see happening in Vancouver. @ years ago we were looking to buy bicycles and attended an Able Auction Bike sale in one saturday. The crowd was bidding on old mountain bikes, some of them with double suspension going over 500 CAD. Amazed by the stupidity of people(mostly asian – no offense what so ever) in the crowd, we stopped at Sportchek and bought 2 brand new MBs for 200 and 250$ in a 10% sale. My opinion is that the illiterate buyers here have a sweet tooth for biding wars and crowd manias, this is the END my friends, Nolympics are 2 months away, prepare the lube, it is going to be tough…
Vancouver is different, yes true, but in a bad way, the downfall will be loud and probably will generate a lot of “i didn’t see it coming” victims…
You had the chance to get out in the last 3-6 months… i can see the smart money leaving this future ghost town
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Anonymous Says:
November 28th, 2009 at 3:38 pm
@89
How come those stupid people have the money to buy $500 old mountain bikes? If they are stupid, you would not think they have more money than you.
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Thompson Says:
November 28th, 2009 at 3:53 pm
“Amazed by the stupidity of people”
…
Where in the world can you get low income household benefits, childcare & daycare allowances, quarterly GST rebates, universal health care, mortgage packages without documentary proof for special groups, refunds of PTT to foreign buyers that is supposedly eligible only to Citizens and landed immigrants, undetected overseas income wired here as unsolicited gifts by relatives and family members, .. and the list goes on.
My neighbors a family of 4 from Beijing, get around the loophole by cutting down their overseas trips and travel by turns to mind their various businesses abroad without having to declare it to CRA.
Now who are you calling stupid.
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duru2000 Says:
November 28th, 2009 at 3:55 pm
Usually for things that costs more than 100$ i am doing a little bit of research, so for me was clear that some people just got caught in the bidding process. I have seen a computer auction as well and same thing people (again mostly asians) paid 1000$ for refurbished laptops when you know you get a decent notebook for 800$ even at Future Shop. The herd mentality and the need to be the highest bidder just to get the trophy (bike,laptop, house, you name it) it is painful and amusing to watch, it is a show off culture that doesn’t make sense to me.
Having 500-1000$ in hand doesn’t make you smart, in a society based on DEBT, a credit card is easy to obtain.
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ReadyToPop Says:
November 28th, 2009 at 4:57 pm
@Supraboy
What you don’t say is that the supposed “free enterprisers” who
run the system are a bunch of lazy money printers who rig the system when
capital markets don’t go their way. Pot-kettle-black?
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scullboy Says:
November 28th, 2009 at 5:59 pm
You can see the herd mentality in Supra’s latest video: “bukkake lady boy 69″.
Honestly Supra, we know bow desperate you are to lease that 3 series BMW but that’s sinking pretty low. Which are worse, the bukkake movies or the scat videos?
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arit Says:
November 28th, 2009 at 9:24 pm
Hey, OK!
I just saw at the news that there are long lineups to buy pre-sales at “The Mark” at Yaletown. The building will be ready in 2013 and there were people camping all night for the privilege.
Just after they said “this time it’s people buying homes, not speculators”, they interviewed this realtor lady buying TWO apartments.
Disgusting….
Regards
arit
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logic Says:
November 28th, 2009 at 10:37 pm
Arit, no – suicidal.
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rp Says:
November 28th, 2009 at 10:53 pm
#95 @arit: “they interviewed this realtor lady buying TWO apartments.”
That’s not disgusting, that’s ideal. Attention greedy sleaze-balls: please buy as much real estate as you can temporarily afford.
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Anonymous Says:
November 28th, 2009 at 11:21 pm
arit, flippers are real people too! In fact most of them live right here in BC. Flippers are like crocodiles. They leave no mistake who they are and will be around long after the rest of the market dies off. Compare that to a FTB who fools himself into thinking he’s somehow morally superior to the “flipper” at the same moment he applies for his CMHC insurance on a high leverage loan. The croc may be ugly but at least it’s transparent.
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arit Says:
November 29th, 2009 at 12:07 am
logic, you are logical.
I see what you say rp. Each one of these buyers is dead. A “financial zombie” (if I may coin the term, put it up there with sticker-flicker). The financial zombie is dead, but doesn’t know he is dead.
So each one of these zombies is one less competition for for arit when he buys cash-only in 2016. I like it, I really do.
Regards,
ari
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arit Says:
November 29th, 2009 at 12:10 am
At anon 98: I don’t get you point, sorry. Are you saying flippers are “good” and FTB are “Bad”? Why?
Regards
arit
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mino3 Says:
November 29th, 2009 at 12:32 am
Suckers are falling over themselves to buy into a condo pre-sale at the peak of a massive bubble, and it’s called The Mark?
Now that’s what I call irony!
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gork Says:
November 29th, 2009 at 12:47 am
interesting views on dubai crisis, dollar, ….
http://www.youtube.com/watch?v.....c&NR=1
cheers
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patriotz Says:
November 29th, 2009 at 3:43 am
@rp:
Right on. And remember, the taxpayer is not holding the bag on pre-sale defaults. The developer takes the pre-sale buyer to the cleaners. One dog eating another. True justice.
Keep that supply flowing, idiots
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Anonymous Says:
November 29th, 2009 at 5:12 am
Arit, both are what they are. But if non flippers weren’t active in the market and taking on debts that are unsustainable the flippers would be dead. The irresponsible FTB IMO is far worse a problem because he’s naive and more difficult politically to manage the fallout. If only flippers were dying a horrible death the government could easily tell them to go to hell. Throw in a few naive owner occupiers otoh and everyone gets bailed out.
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scullboy Says:
November 29th, 2009 at 6:44 am
Hey Arit,
You know what I find sad? You gave to wait almost 7 years before making what should be a reasonably priced purchase. That’s 7 years of “temporary” living before you reach your goals.
Meanwhile greedy “I buy two my huzzba buy two” types commit to a foolish purchase that by now should be obviously risky.
And all the while the zombies chant “best place in the world, best place in the world, everyone wants to live here!”
I went out to my family’s conpany’s Christmas party last night. The food was good, if a bit simple (I could have done a way better job
, a couple of the employees busted out a harmonica and some guitars, drinks were had and the whole thing was generally awesome.
One guy who works for the family firm used to go to school with me. One of his brothers went out to Alberta, paid too much for a house and is now a reluctant landlord.
Meanwhile my frient stayed, got married, bought a modest home and can afford a decent truck and small boat.
Just pointing out that a modest lifestyle can be a very fulfilling one. Food for thought.
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Deliverator Says:
November 29th, 2009 at 10:10 am
@gork:
Another interesting view on Dubai, and what it really means to world capital markets:
http://www.frontlinethoughts.com/pdf/mwo112809.pdf
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arit Says:
November 29th, 2009 at 11:32 am
scullboy,
7 years? I wish! We landed here in 2003, but were in a position to buy only in 2006. That’s when we started looking for houses, and realized what’s going on. Then we made the “arit 10 year plan”. It’s been four years into the plan now, and we have saved religiously the difference between our rent and the mortgage, roughly 1000 a month.
We put all that money into one stock that is in the medical high tech industry. All the eggs in one basket.
And don’t bother saying I am insane for doing that. I already know it.
Best regards
arit
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other ted Says:
November 29th, 2009 at 11:39 am
I can’t believe Dubai’s real estate bubble could possibly affect world markets. If only they did something to sustain their bubble like get the olympics. I hope someone in the olympic committee realizes this and gives them the winter games which will save the world. Good thing our government is much smarter and got the games now this madness can go on forever.
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Boombust Says:
November 29th, 2009 at 12:30 pm
other ted’
I suppose Dubai COULD use that indoor snow/ski facility, couldn’t they?
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Deliverator Says:
November 29th, 2009 at 12:33 pm
A friend of mine sent me this. Very scary stuff. His comments are in quotes.
—
“This is from the CMHC 2008 Financials – $183 billion of Interest rate swaps with an average of 4 year term up 36% from 2007. If interest rates go up before 2012 will there be a giant default or does the Montreal Accord prevent Canada’s banks from demanding payment?
Keep in mind Dubai can’t blend and pretend $80 billion of debt.”
Third-Party Asset-Backed Commercial Paper (ABCP)
At 31 December 2008, CMHC held Canadian Third-Party Sponsored ABCP issued by a number of trusts (conduits) with an original cost of $239 million, of which, $60 million was classified as Available for Sale, $102 million as Designated at Fair Value and $77 million as Held to Maturity. At year end 2007, the Corporation held $249 million however, during 2008; two trusts paid their debt in full resulting in the Corporation receiving $10 million. At the dates CMHC acquired these Third-Party Sponsored ABCP, they were rated R-1 (High) by Dominion Bond Rating Service (DBRS), the highest credit rating issued for commercial paper.
In August 2007, the Canadian market for Third-Party Sponsored ABCP became illiquid resulting in these investments not paying on maturity. An agreement, The Montreal Accord (the “Accord”), was reached in August 2007 whereby investors agreed to a standstill, that committed investors not to take any action which would result in an event of default.
On 23 December 2007, the Pan-Canadian Investors Committee (the Committee) reached an agreement in principal on the restructuring of the ABCP. On 17 March 2008, the restructuring plan was fi led in the Ontario Superior Court requesting the Court to call a meeting of the Accord ABCP holders to vote on the restructuring proposal. On 25 April 2008, the Accord ABCP holders voted in favour of the restructuring proposal and on 5 June 2008, the Court sanctioned (the Sanction Order) the proposal. On 25 and 26 June 2008, the Ontario Court of Appeal heard motions from Accord ABCP holders seeking leave to appeal and an appeal of the Sanction Order. On 18 August 2008, the Ontario Court of Appeal upheld the Sanction Order and on 19 September 2008, the Supreme Court of Canada upheld the Ontario Court of Appeal Decision. On 19 December 2008, a new agreement to swap the illiquid commercial paper for new longer-term debt replaced the March 2008 restructuring plan. The governments of Canada, Ontario, Quebec and Alberta also agreed to provide $3.5 billion in financial backing to support the new restructuring agreement. In addition, an Ontario Court extended bankruptcy protection for the ABCP to 16 January 2009; the foreign banks were not covered by the court order. The restructuring took place on 21 January 2009 (see Note 22).
In the absence of an active market for Third-Party Sponsored ABCP at 31 December 2008, the fair value of the instruments below were estimated using valuation techniques that included a 100% probability of successful restructuring and weighted discounted future cash flows techniques (taking into account the lack of liquidity).
5. DERIVATIVES
Derivatives are financial contracts whose value is derived from price movements in one or more underlying securities, indices or other instruments or derivatives. The Corporation uses derivatives (interest rate swaps, foreign currency swaps, interest rate futures and equity index futures) in connection with its risk management activities.
Interest rate swaps are transactions in which two parties exchange interest cash fl ows on a specified notional amount for a predetermined period based on agreed-upon fixed and floating rates. Notional amounts are not exchanged. The value of these swaps is derived from movements in interest rates. They are used to manage reinvestment risk, refinancing risk, or mismatches in the timing of receipts from assets versus payments of liabilities.
Foreign currency swaps are transactions in which two parties exchange currencies and interest cash flows on a specified notional amount for a predetermined period. The notional amount is exchanged at inception and at maturity. The value of these swaps is derived from movements in foreign exchange and interest rates. They are used to manage foreign exchange risk arising from foreign denominated debt.
Interest rate and equity index futures are contractual obligations to buy or sell a financial instrument on a future date at a specified price established by an organized financial market. The credit risk is reduced as changes in the futures’ contract value are settled daily. Futures are used to manage asset allocation in the Insurance and Securitization Activities.
The table below provides the notional amounts of the Corporation’s derivative transactions. Notional amounts, which are off-balance sheet, serve as a point of reference for calculating payments and do not represent the fair value, or the potential gain or loss associated with the credit or market risk of such instruments. The Corporation does not have derivatives embedded in other financial instruments (host contracts) which require separation.
In millions – 2008 2007
Interest Rate Swaps 4 years
181,523 4,621 157 132,700 645 205
Foreign Currency Swaps 2 years
2,344 129 7 3,737 – 698
Interest Rate Futures
(149) – - (58) – -
Total
183,718 4,750 164 136,379 645 903
and
The carrying amount at 31 December 2008 of Capital Market Borrowings is $438 million higher than the contractual amount due at maturity. CMHC’s liabilities are backed by the full faith and credit of the Government of Canada and there is no significant change in value that can be attributed to changes in credit risk.
“Note this is just the $ value of real fiat $ the Canadian taxpayer is on the hook for. This does not include any paper contracts or derivatives that are subject to counter party issues like the $1.8 billion in interest rate swaps previously sent. This will end badly.”
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No Money Down Says:
November 29th, 2009 at 3:12 pm
Just got back from looking at rentals downtown.
438 Seymour, 2 bedroom and 2 bathroom $1500.
Sub penthouse unit in 30 year old concrete hi rises,2 bed, 2 bath, 980 sq ft $1400.
Palisades X3 asking $1900 for 900 sq ft, all would negotiate lower for a lease today.
With the Olympics coming you’d think rent would remain flat or even increase and yet rent has dropped as much as 40% since last summer……
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Bubble Lad Says:
November 29th, 2009 at 3:26 pm
No comment required:
http://www.theprovince.com/bus.....story.html
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Supraboy Says:
November 29th, 2009 at 3:38 pm
@Mold city:
How do you know I’m living at home? And how do you know whether I have properties or not out there? If I can rent out properties while I live for free, why not? Get the suckers to subsidize my spending on fine dining and dim sum is the way to go.
Hey Scumboy: .
Meanwhile greedy “I buy two my huzzba buy two” types commit to a foolish purchase that by now should be obviously risky.
You have to face the facts, those people have balls to load up while you sat on your thumbs sucking lollipops. Ain’t our fault you missed the boat. I hope Vancouver property prices rise another 20%, price your sorry ass out of this market forever. If you want to come back to Vancouver, you better have a couple million cash to start. I hope we’ll never see you again in our neck of the woods.
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Yalie Says:
November 29th, 2009 at 3:59 pm
“I’m here because they are selling Yaletown at today’s prices, but the speculation is [that] prices will go up after the Olympics,” Arora said.
…
“The prices went up $50,000 last night,” Dhana said. He hoped to buy a unit in the $500,000 price-range, and also expected prices to surge in February 2010.
…
I’m not a vindictive person, but with such breathtaking displayes of ignorance as these, it’s hard not to think “I can’t wait for the day when these guys get exactly what they deserve”
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Yalie Says:
November 29th, 2009 at 4:13 pm
Actually, I take it back. I DO want these guys to get what they deserve. They represent everything that’s wrong with our society lately – basically people trying to generate cash without generating anything of value.
As an entrepreneur, I have been busting my butt the last three years building a real business, with a real product, that people can actually use. It would be bad enough if these flippers were merely throwing themselves off the financial cliff, but what really gets me is that through the associated misapplication of capital and the inevitable economic fallout they’re creating, they’re also going to take out hard-working, honest people who do real work.
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/dev/null Says:
November 29th, 2009 at 4:17 pm
So, I’m thinking about this Dubai thing on a rainy Sunday. Isn’t the port (of Vancouver) half-owned by DP World, which Google tells me is an affiliate of Dubai World? Maybe that silly little debt-restructuring thing is being blown out of proportion, but if not does anyone know what problems at DP World would mean for our port?
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Drachen Says:
November 29th, 2009 at 4:47 pm
Worst case scenario they are forced to sell their stake.
Not a big deal really.
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No Money Down Says:
November 29th, 2009 at 4:59 pm
Just got back from looking at rentals downtown.
438 Seymour, 2 bedroom and 2 bathroom $1500.
Sub penthouse unit in 30 year old concrete hi rises,2 bed, 2 bath, 980 sq ft $1400.
Palisades X3 asking $1900 for 900 sq ft, all would negotiate lower for a lease today.
With the Olympics coming you’d think rent would remain flat or even increase and yet rent has dropped as much as 40% since last summer……
Maybe the morons that lined up last night to buy at Mark will rent me a unit for $1100 in 2013.
They can pay the additional $2,000+ to subsidize me while they live with Mommy and I’ll go eat dim sum.
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Bizznitch Says:
November 29th, 2009 at 6:44 pm
http://www.theglobeandmail.com.....le1382011/
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ReadyToPop Says:
November 29th, 2009 at 6:56 pm
@Yalie
Actually, I take it back. I DO want these guys to get what they deserve. They represent everything that’s wrong with our society lately – basically people trying to generate cash without generating anything of value.
Yalie…you’re really up against the BoC. They’re the ones generating more cash without generating anything of value. That’s what’s causing these market distortions. If responsible savers were earning what they deserve, this wouldn’t be happening. Write your MP.
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patriotz Says:
November 29th, 2009 at 7:20 pm
@ReadyToPop:
No they’re not. Yields on common and preferred shares, and corporate debt are still quite high. If yields on RE were being depressed (i.e. prices inflated) just by an increase in the money supply the yield on all assets would be affected.
The real cause is government guarantees on mortgage lending. If these did not exist lenders would be demanding much higher down payments and interest rates, regardless of the very low rates on deposits and government bonds.
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jjss Says:
November 29th, 2009 at 7:50 pm
http://www.guardian.co.uk/comm.....am-crashes
ditto…
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flip_this Says:
November 29th, 2009 at 8:35 pm
@patriotz: “The real cause is government guarantees on mortgage lending”.
I think that besides guaranteeing mortgages, CMHC is also buying large quantities of mortgage backed securities from the banks. So technically this is creation of money/credit, channeled through the housing market.
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scullboy Says:
November 29th, 2009 at 8:39 pm
Hey SupraLadyBoy:
Yeah those “investors” have the balls to load up all right. If you are still living with Mummy and Daddy, doesn’t that mean you have no balls at all? I guess it must be convenient, far less “tucking” needed to get you into those teeny tiny little skirts. Are you lubing your thighs up with coconut oil to help you slither into them?
You’re funny, dude who looks like a lady. You live at home, you have no skin at all in the game and yet you post lie you’re Donald Trump. It’s even funnier because I have to point out, the faster prices rise, the faster you yourself are priced out of the market.
I’m already priced out of the market, in that I flat out refuse to borrow half a million bucks for a shitty, leaky condo. I hope prices rise another 20% too, because then you’ll be locked in Mummy and Daddy’s basement eating rat poo dim sum and waiting for your parents to kick off.
Won’t that be fun! At least it’ll keep you in Richmond and out of downtown Vancouver.
Unlike you, I’ve ben east of the Rockies and know what life in other parts of Canada is ike. I can’t say I’d enjoy an Alberta winter, and Toronto isn’t my kind of town but like in Montreal can be fun. I’ll bet now that they finally paid off their Olympic debt they’ll have some money for infrastructure projects, too.
One way or the other though I don’t buy into the “Best place in Canada” hype, much less the “best place on earth” bullcrap.
By the way dude, if you drive a Ferrari, why is your nickname on here “supraboy”? I’m sure we’d all love to know.
On an unrelated note, I did my first decent grocery shop here in Nova Scotia. I was surprised how prominently produce that had been locally grown was market. My dad was telling me farmer’s markets are extremely popular here too. People like to buy locally made good as much as possible, which I thought was very cool. I thought it was cool because it’s surprisingly hard to find BC produce grown in Vancouver. In most stores it’s not clearly marked.
That’s just an annecdote, not a hard data point.
I was impressed with the local liquor stores too. They all have my favorite beer, an English import. It’s 50 cents cheaper too which is nice. I cold only ever find it in one location in BC.
I’m not looking for much in life really, a decent roof over my head, good food on the table, family and friends nearby. It seems more likely I’ll find that here.
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patriotz Says:
November 29th, 2009 at 9:18 pm
@flip_this:
No it’s not. CMHC is not a central bank. The money that CMHC uses to buy mortgages is borrowed on the bond market.
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Chilled Says:
November 29th, 2009 at 9:37 pm
I’m number 126!!!!
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Vansanity Says:
November 29th, 2009 at 9:42 pm
Further to the Province article regarding lineups at The Mark, check out the contrasting piece written by the same journalist released on the same day…
http://www.theprovince.com/bus.....story.html
What a town!
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game_over Says:
November 29th, 2009 at 11:14 pm
In case anyone out there is still in the dark I will dispell ALL nieites with one major statement.
The man made climate change sewindle had been exposed.
google CLIMATEGATE.
You HAVE been DUPED.
IT IS NOT YOUR FAULT.
Send you representitive info detailing the fat that you do not want him/her to vote for this GLOBAL TREATY.
This is my last email at the 11TH HOUR to you. Time is of the essence and I must move on to get more RELEVANT people involved.
Do not laugh at me until ou have reviewed the evidence….
which will no matter after 7 days from now…or review it and anaylize it and take action.
This is the ENDGAME.
I said my piece.
what did you do?
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ReadyToPop Says:
November 29th, 2009 at 11:26 pm
@patriotz
I stand corrected…they aren’t printing money…*yet*. They say they will if they have to. They are almost giving it away though and that is still distorting the market. Not the place to be if you’re a value investor.
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GR Says:
November 29th, 2009 at 11:46 pm
I was informed this week that the feds will be cutting off all infrastructure stimulus funding in March 2011, and those provinces and local governments that have not used it by then will be caught holding the bag for uncompleted projects. There will be no extensions in funding!
This announcement means that there is effectively only one building season left for most of the Province, so all projects will be pushed through because no one wants to be left holding the bag. If you couple this drying up of stimulus funding, with the completion of all Olympic venues, the BC construction boom is all but done. All the emergency bullets to keep the construction boom going have now been used up….
Federal austerity measures are just around the corner….1990s, here we come
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Logic Says:
November 30th, 2009 at 12:20 am
“nieites”
128 – wtf?
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domus Says:
November 30th, 2009 at 12:40 am
@ReadyToPop: ditto! Politicians should not decide house prices. This is a joke, and it is going to end badly. People will lose their shirts, both buyers and taxpayers. Most will be worse off. And all because some smart guys in suits have to get re-election. Be vocal! Tell other people! And write to your MPs! And to the BoC! Dropping an email to them is your right and costs nothing to you!
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domus Says:
November 30th, 2009 at 12:44 am
@patriotz: the government guarantee has the complicity of the Central Bank. If the government had no leverage on them, and could not print money indirectly thorugh them, they would be much more careful with the fiscal stance. It’s a game of ‘roles’. Right now BoC and government are exactly on the same page, hard to draw a line.
You have been informed, now it is uo to you what you do with that info.
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other ted Says:
November 30th, 2009 at 1:43 am
game_over its pretty scary. I think this climate scam if it goes through will make the housing bubble look like nothing. The only inconvenient truth about al gores inconvenient truth movie was that it was completely ficticuous.
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Anon Says:
November 30th, 2009 at 2:11 am
Yalie, you are right, too much speculation, not enough focus on creating value. But don’t blame the morons- they are innocent in their desire to live better and have more stuff. The real issue is our government. If they did not manipulate our money we would not have these problems. Of course our government is not special in this, they are racing with the rest of the world. but still it is them who are directly responsible for the mess, not the speculators who are simply weak, confused and opportunistic.
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realpaul Says:
November 30th, 2009 at 3:54 am
Maxed out Canadians forced to choose between having a life and paying nothing but mortgages and condo fees for the rest of thier lives. Even at that there is zero left for savings in reitrement. So the choice is now ‘to condo at the risk of all else?” Nice.
http://www.theglobeandmail.com.....le1380906/
This can’t be a good scenario for any other retail sector, even the credit card companies can’t be happy about watching the sky high real estate prices sucking every penny out of the economy.
We see by this article that even singles and dinks have nothing left but debt at the end of every month. When the debt gets maxed out it doesn’t leave anything for lifestyle.
Canada is becoming a slave country where people will travel less, have fewer children and be forced to feed, cloth and recreate those children less ably than any other previous generation.
As such, this subject will be forced to sell in her old age because she has no pension or retirement savings leaving her to live on super inflated costs and a dollar which is increasingly worthless on the world market, meaning the cost of all imports ( pretty much 99% of all CDN consumables)are going to cost dramtically higher in the future as our currency dies along with the USD.
Watch out, Wallmart is going to be too expensive for the average CDN to shop in because of the Chinese currency rapidly appreciating against the Loon.
Look forward to a Canada where you have a nation of million dollar condos inhabited by a people who are eating rats and spiders.
BTW I’m in Finland right now and I just came back from shopping in a supermarket that was offering a head of lettuce for 8.75 Euro or about $14. Can you imagine?
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patriotz Says:
November 30th, 2009 at 5:23 am
@domus:
Well yes. the BoC is a Crown Corporation, i.e. it’s part of the government, although it’s supposed to be independent of cabinet control in its operations. But the BoC has an explicit mandate to preserve the integrity of the banking system, which means supporting Crown guarantees on debt, which means increasing the money supply if need be. It’s not some conspiracy, it’s supposed to work that way. The real issue is the the government’s fiscal irresponsibility.
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patriotz Says:
November 30th, 2009 at 5:30 am
@Anon:
Do note that bubbles have been around a lot longer than fiat money, from the tulip mania to the US stock market bubble of the 1920’s (when the US was still on the full gold standard). In RE, you can look at the massive Florida bubble in the 1920’s and right here in Vancouver in the early 1900’s, among others.
These were regional bubbles though, I don’t think a global RE bubble would have been possible without fiat money.
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realpaul Says:
November 30th, 2009 at 8:43 am
Keynsian theory was the holy grail for governments as it proposed an expanding revenue base ad perpetuum through guaranteed incremental tax increases on rising values. It looks like the opposition was right and Keynsian economics is nothing but a pyramid scheme that fell flat when it reached the inflection point.
As we see all things consumable have reached untenable values so that affordability has been reduced to a payment as opposed to a purchase.
The Keynsians will have us believe that houses, automobiles and washing machines can continue to appreciate ad nauseum as long as you are drawing a wage. But its the old story “when the last person to have a penny left after taxes please turn out the lights.
Sadly the last people to get this are the governments who have forecast thier wage agreement budgets on the ever expanding tax base of higher costs.
Not only is this stupidity stealing from future revenues but it is unsustainable without a build up of massive national debt which will begin to compete with the consumer markets for net cash.
Now lets see….at last report the CDN consumer was 154% indebted to cash flow. Hmmmmmmmmmmmm. It don’t look good to me.
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asalvari1 Says:
November 30th, 2009 at 12:13 pm
@realpaul: @realpaul: just came back from shopping in a supermarket that was offering a head of lettuce for 8.75 Euro or about $14. Can you imagine?
Yes SIR, I CAN!
How do you like that part of the globe? I remember being pissed out completely in Brussels, when I purchased hamburger (approx double the price here) and was asked to pay 1 euro for ketchup bag.
And its even getting better with the prices there…
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Anon Says:
November 30th, 2009 at 12:44 pm
@patriotz:
There is a fundamental difference between bubbles and what is going on today. If people want to overprice an asset and pay for it with real money that is fine, let them go crazy because they are limited by their wealth anyway. The folks buying condos today are not paying with real money- they are paying with artificially unlimited future money lent to them at artificially low interest and with artificial risk assessment. This is not a natural bubble, this is artificially created madness.
142 X “I can’t wait for the day when these guys get exactly what they deserve” « Vancouver Real Estate Anecdote Archive Says:
December 1st, 2009 at 12:33 am
[...] Yalie at vancouvercondo.info 29 Nov 2009 3:59 pm & 4:13 pm responds to the statements made by wannabe flippers at the recent release of presales for ‘The Mark’ condo complex – [...]