Friday Free for all!
Lets round up the weeks news stories! Thanks everyone who’s posted links, and thanks to Don, who’s been emailing in many interesting articles. Ok, let’s get to it! Here are a few links to kick off the weekend discussion:
-Canadian house sales reach record high in December
-Vancouver new house prices down 2.8% YOY
-New highrises won’t spoil view of north shore
-BabyBoomer demographic impact charts
-Graph: Peaked in Seattle
-Global leverage, house prices and consumption
-Canadians more cautious about debt than Americans
-One in every 7.5 US houses behind or in foreclosure
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
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January 18th, 2010 at 9:59 am
@rubberduckie:
Niiiice, listings are higher and sales are lower than 2008 so far, certainly looks like the recipe for a crash!
January 17th, 2010 at 11:57 pm
@Anonymous #127: That’s the funniest reasoning I’ve ever seen. Some doctors are getting paid more than they used to, so everything’s going to be okay!
January 17th, 2010 at 11:56 pm
“No way housing prices will come down that much. We’ll be lucky if they are back to 2006 level. ”
Everybody talks their book. In the end the numbers will tell – everyone place your bets.
January 17th, 2010 at 7:01 pm
@stagnate:
Interest rates went up to stop consumer price ans wage inflation. The RE bubble was in BC and Alberta and nobody in Ottawa cared about it.
We are currently seeing the lowest consumer price inflation since WWII and it’s not going to require much higher interest rates to keep it that way, because of the record levels of household debt. And wages aren’t going anywhere.
Note also that interest rates were much lower at the market bottom in late 1983 than at the market top in early 1982. The cause of the bust was not increased interest rates, but the same one as always – prices out of proportion with rents and incomes.
January 17th, 2010 at 6:54 pm
I’m not a bull but some times I feel that you guys are either passing out false hope or misguiding others. No way housing prices will come down that much. We’ll be lucky if they are back to 2006 level. Significant number of professionals have had substantial income raises in the last 9 years since Liberals took office.
See for yourselves 2009 incomes
http://www.health.gov.bc.ca/ms.....ement.html
vs 2001 numbers
http://www.qp.gov.bc.ca/msc/2001/
January 17th, 2010 at 6:38 pm
rubberduckie: the notion we hear in the press about the first half of 2010 being strong due to 09 momentum is wrong in my opinion. the olympics are slightly bearish in my opinion; i think they will do nothing for demand but listings of condos is going to pick up. i anticipate some owners will look to liquidate before expected interest rate increases in the second half. i wouldn’t be suprised if the interest rate hikes don’t come, demand could be somewhat stronger in the second half than anticipated.
January 17th, 2010 at 6:07 pm
patriotz says:
If you talk to people that were involved in 1979 they will tell you no one saw it coming but it still happened.
Quite right, I didn’t see it coming myself.
But at that time, Vancouver had not seen a RE bust (nor had Canada or the US seen a national bust) since the Great Depression, and everyone thought it would take another GD to get one.
the 79 market was easily predictable, the government itself said they would raise interest rates to end the boom. in 81 mortgage rates got up to north of 20% and inflation stalled out. when the government indicates it wants deflation, there will be deflation.
January 17th, 2010 at 6:01 pm
I feel like this is deja vu all over again. I lived in Ireland from 2005 to mid 2009. Until mid 2007 the Irish rode the RE boom like nothing you can imagine. For a population roughly the same size as BC, they took the RE boom to heights that Supraboy can only imagine. I had never seen such displays of wealth in my life- all from RE speculation.
The situation here is eerily similar- and some of the arguments are the same-
The Irish claimed that everyone in Eastern Europe was moving there to work- so there would always be new blood to feed the scheme
Their 12% corp tax rate would ensure a steady flow of corp investment and jobs and drive RE prices
The media (esp newspapers) were trumpets for the REIC. Their ad revenue depended on it. Reporters who questioned the boom were fired.
Anyone who questioned the absurdity of paying 350k euro for a shack 2 hour commute from Dublin was labelled an idiot.
Rents did not support the prices nor did incomes.
It all ended so quickly- and when it happened it happened faster than anyone could have imagined.
Once the construction jobs vanished, everyone realized that the building trade was busy building homes for builders who would be busy building homes for ????
One day a French coworker asked me to help him write a letter to his landlord asking him to lower the rent. He had noticed a flood of similar homes in his hood for a few hundred less.
The landlord accepted a 15% decrease in rent. The next day everyone in the office who rented called their landlord and told them to lower the rent. NOt one person was refused.
Consider that Dublin has a greater diversification of employment than Vancouver and is a 3 hour flight from 1 billion people.
If it happened there, surely it could never happen here.
Yes, it’s different this time. It’s much worse.
January 17th, 2010 at 5:48 pm
“But do you really think anyone buying today thinks there’s a good chance of prices dropping 50%?”
Probably less than 1% of Vancouverites think 50% real price drops are in the cards. I would bet that less than 5% think 30%.
“It is difficult to get a man to understand something when his job depends on not understanding it.”
-Upton Sinclair
January 17th, 2010 at 5:34 pm
It may not be an “explosion” of listings, but the numbers from January do look promising for the bears!
http://agentwill.com/weekly-stats/
January 17th, 2010 at 4:59 pm
“@Boombust:A state or God has a limted capabilities to full fill the dream of all human,One should understand within six month but trolling for six year with same issue is nothing more than retard instead of smart.”
Well, I’d answer that if I knew what it is you’re saying.
Perhaps you should try sign language next time. Or maybe even Pig Latin.
January 17th, 2010 at 4:35 pm
@Anonymous:
Quite right, I didn’t see it coming myself.
But at that time, Vancouver had not seen a RE bust (nor had Canada or the US seen a national bust) since the Great Depression, and everyone thought it would take another GD to get one.
Well it didn’t.
What’s the excuse this time?
‘The four most expensive words in the English language are “This time it’s different”‘
- Sir John Templeton
January 17th, 2010 at 4:02 pm
Back in 1979 people thought prices would go up forever.
In 1981 they tanked hard. It took 18 years to get back to where they had been.
If you talk to people that were involved in 1979 they will tell you no one saw it coming but it still happened.
Ignorance is bliss.
The way Dave gets smacked down repeatedly reminds me of that game, at the pne, where the heads pop up and you smack them down repeatedly.
January 17th, 2010 at 3:54 pm
Rental Rates in the west end are back down to $825 for a one bedroom, easy to find if you walk around.
There was a time 18-36 months ago where I saw landlords trying to get $1150 for similar one bedrooms in the same area.
This is the month before the olympics and prices are already down 30% and falling fast.
One middle aged woman was able to land a one plus den in the residences on georgia for $1,100, originally asking $1,500.
January 17th, 2010 at 3:52 pm
So when Bob says there are no new rental buildings being built in the west end does he mean that he isn’t involved and therefore they don’t exist?
http://www.canada.com/Vancouve.....story.html
The same guys who did Shangr La are building two rental towers in the west end as we speak….
January 17th, 2010 at 3:48 pm
@Dave:
So if you want to be wrong do what Dave says and if you want to be right do what patriotz does.
Dave you have never been right about anything, so clearly doing the opposite of what you say is good advice!
January 17th, 2010 at 3:33 pm
@jesse:
Depends on who “you” are and what the premium is. If I saw a place I really liked at a reasonable price (and by that I mean 40% nominal off today’s prices) I wouldn’t sweat the possibility of a further 10% decline.
But do you really think anyone buying today thinks there’s a good chance of prices dropping 50%? I don’t think so.
January 17th, 2010 at 1:59 pm
@vreaa: Maybe Bob should walk around the West End once in a while— there is NO shortage of rentals available.
And why would any developer build rental purpose property, which would only sell to a professional for about $200 to $300 per foot based on today’s CAP rates, when there is a limitless supply of amateurs who are willing to pay $600 a foot for a structure of less quality in the same location.
January 17th, 2010 at 1:44 pm
@100 crabman, so you think it’s not too bad @$8k per unit to repipe the whole building. However this is the first I heard that a building needs repiping after only 16 years.
Last year I had to sell a cash-flow rental condo because the tenant’s customers .. oops .. visitors kicked down and damaged the door that cost me over a thousand$. Now I heard there is a provincial wide ruling that all doors and windows irrespective of who and how they are damaged, are to be replaced by the building strata. Now I regret selling the condo, the tenant’s customers can break as many doors as they want and I don’t have to pay from my own pocket.
January 17th, 2010 at 1:32 pm
@#108 vreaa, that’s funny. You can inform Bob Rennie that Chinese investors put a statue of China’s Communist Party chief dancing on Lenin’s head in Richmond center.
January 17th, 2010 at 1:29 pm
so much fael today
January 17th, 2010 at 1:06 pm
@vreaa:
Thanks for all your work. The the narrative is the most important factor in this mess.
““The unique thing about Vancouver is nobody builds rental towers (anymore). For the offshore investor properties are easy to rent out as there is no rental stock.” ”
Now if rentals truly were good business surely somebody would be building rental towers.
See also this video.
http://www.youtube.com/watch?v.....re=related
January 17th, 2010 at 12:59 pm
“explain to us under what circumstances buying now is better than buying later at a lower price.”
If “later” is 10-20 years and you want the stability being an owner-occupier, cognizant of all the risks involved, you’ll be willing to pay a premium. As an investment I can’t think of any valid reasons.
January 17th, 2010 at 12:57 pm
Bob Rennie Tells Chinese Customers Vancouver Prices Will Keep Rising
see
http://wp.me/pcq1o-mK
Unexpected Expenses For Condo Buyers: “Where I’m renting, the owners had to come up with $20,000 each to replace the membranes in a 12 year old building.” « Vancouver Real Estate Anecdote Archive Says:
January 17th, 2010 at 12:54 pm
[...] hippo 11:10 am – “A friend’s 16 year new condo building needs repiping done, budgeted at $1 million. The piping system was supposed to last 20-25 years. Each unit has to cough up around $8,000. But they are have trouble hiring contractors.” [...]
January 17th, 2010 at 12:53 pm
@crabman:The new home insurance for owners starting 2009 cover up to $50,000 to deal with assessments,Tenants don’t know about it.
@Anonymoose:Most of owners rent out their unit on daily basis @ $175-$525 per day depend on the size of unit.This process provide better return than monthly rent at the end of year.So one can assume that vacancy rates are higher while it’s not because listings will hang over their forever time by time.
@Boombust:A state or God has a limted capabilities to full fill the dream of all human,One should understand within six month but trolling for six year with same issue is nothing more than retard instead of smart.
Do you think fundamental can cheat with people for centuary?
January 17th, 2010 at 12:18 pm
“If someone actually involved in the rental market every day estimates downtown vacancy is 5-10% and rents are down 10-20%, and CMHC calls up a few random landlords to conclude vacancy is 1.2% and rents up 3%, then guess who is more credible? ”
Random data point – I’m currently moving into a bigger place in a better location for a 19.5% rent reduction.
January 17th, 2010 at 12:17 pm
@Dave:
Perhaps you could explain to us under what circumstances buying now is better than buying later at a lower price. Because I can’t think of any.
January 17th, 2010 at 11:58 am
The “Donavon” wow the 1 bedroom units are very small in this condo building. Anyone like having your head in a cupboard ala murphy bed style.
January 17th, 2010 at 11:45 am
Hurry! Granite and chrome pirices are going to rise sharply!
January 17th, 2010 at 11:35 am
@/dev/null:
Risk works both ways. There will be times that Patriotz approach will be the best and times that my advice will be the best. I would argue that my approach is better more often than his. More later when I have time.