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huge prices drive listing boom

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REBGV Inventory chart created by vibe in the VCI forum.

Wow, it was just six days ago that we had a 15k party in the forum to welcome the fifteen-thousandth property available for sale in the REBGV area, and now I see that we’re already closing in on 16,000 listings.

We’ve got two regular posters here who have been providing regular updates so data addicts can watch the listings grow through the day, let’s hear it for paulb and inventory!  As of the end of Wednesday listings sat at 15,789.

At this rate there’s a possibility that we’ll add more than 2000 listings in the month of April, despite a healthy number of sales.  We’ve already surpassed the supply available at this point in the last five years.  The only year that listings growth looked anything like this was during the micro-crash of 2008 where prices bottomed out at a 10-15% loss and have since recovered.

It looks like many people think that right now is a good time to cash in that million-dollar property.  Please no pushing or shoving, we are civilized people.  Head to the exits in an orderly manner, there are plenty of lifeboats for everyone.

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Noz

Hello BC, welcome to America….

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patriotz

@jesse:

Prices are to high compared to rents and that’s all I need to know. The other hundreds of stats thrown around are about how fast prices will fall.

Give this guy a cigar. Price/rent is all that matters. All the other factors are just greasing the skids.

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Lost Faith

Will Canada's oil and precious metals industry be able to help sustain the market? In terms of service industry Canada is going to be totally outdone because the looney is too strong. There is virtually no tech or service industry that is palletable to other countries at this cost. With heavy taxes middle class families and new the talent pool will choose to move elsewhere.

This artificial stimulus creates a façade that Canada will be able to escape a similar fate like America. I worry rather than a stock market /real estate crash, Vancouver will slowly bleed to death for years to come. If we reach 20,000 listings yet no crash then what happens when there is a crash? How many listing will be on the market at that time and what will be the value of those listings?

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stagnate

jesse says:

Maybe the pool of buyers willing to buy based on current monthly payments alone is drying up.

Macroeconomics tells me interest rates are rising, China has an “interesting” current account balance, unemployment is higher than last year, taxes are increasing, and household leverage is markedly higher now than in recent memory.

Prices are to high compared to rents and that’s all I need to know. The other hundreds of stats thrown around are about how fast prices will fall.

you're talking primarily about deflationary pressures. deflationary pressures equal low interest rates and/or government incentive for low real interest rates. thanks for the reply though, i was more interested as to whether paulb had any expansion on his prediction.

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jesse

@stagnate: "comparisons with 2008 must include the macroeconomic picture. "

Maybe the pool of buyers willing to buy based on current monthly payments alone is drying up.

Macroeconomics tells me interest rates are rising, China has an "interesting" current account balance, unemployment is higher than last year, taxes are increasing, and household leverage is markedly higher now than in recent memory.

Prices are to high compared to rents and that's all I need to know. The other hundreds of stats thrown around are about how fast prices will fall.

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Starving Artist

@stagnate:

in late 2008 real interest rates got quite high. i don’t expect that to happen in 2010. comparisons with 2008 must include the macroeconomic picture. enlighten us paulb with your sophisticated analysis. you actually have to think conceptually.

less than 6% is quite high? Put down the crack pipe, buddy. The last 10 years have been a permanent "emergency rate" environment. Please enlighten us on how this macroeconomic picture is the new normal.

http://www.canequity.com/mortgage_rate_history.st…

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stagnate

paulb, i'm waiting; you're not just a number poster, you're a real estate guru. i know you're still up, apparantly you're unemployed.

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painted turtle

I really like this comment by a homeowner:

"It will always be a seller's market… The trick is to not freak out right now.

http://www.vancouversun.com/business/fp/Home+list…

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Anonymous

forgot link
http://www.cbc.ca/canada/british-columbia/story/2…

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Anonymous

I love how the media is now framing RE in a negative light. ' More B.C. homeowners falling behind ' The number of people in B.C. struggling to hang on to their homes has tripled in the past two years, but it's not a sign of a pending crisis, according to one mortgage expert. The number of B.C. homeowners whose mortgages are in arrears has increased sharply, says Robert McLister, who runs the website Canadian Mortgage Trends. A homeowner is considered in arrears if no payment has been made on their mortgage for three consecutive months. In 2008, there were about 700 homeowners in the province who were in arrears. So far in 2010, there are more than 2,200. While a serious concern for those people who might lose their homes, the overall mortgage situation is relatively healthy, McLister told… Read more »

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stagnate

paulb says:

May 1st 2008 we we’re sitting at 15k listings and 3000 sales so about 5 MOI. By November we had achieved a crushing 22 Months of . So,changes happen quickly and in my opinion this time housing will fare much worse. Who gives a crap if it’s 3.743 or 5.567 months of inventory today, when 20+ is just around the corner

in late 2008 real interest rates got quite high. i don't expect that to happen in 2010. comparisons with 2008 must include the macroeconomic picture. enlighten us paulb with your sophisticated analysis. you actually have to think conceptually.

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painted turtle

http://www.financialpost.com/news-sectors/story.h…

This one too:

“We weren't planning to sell so soon, but you have to go with what's happening out there.” She bought the house as a renovation project at the height of the recession for $345,000, planning to flip it in three years. As she saw activity picking up in her neighbourhood, she fast-tracked the three-year plan, worrying that if she waits too long, she may miss the market's peak.
http://www.theglobeandmail.com/news/national/busi…

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Animal Spirit

42

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Starving Artist

Dave, your arguments are incorrect.

These are the numbers from REBGV's own newsletter:

http://vancouvercondo.info/forum/topic/rebgv-apri…

Listings are higher than normal, and accelerating, and sales are lower than normal, and likely to fall or stay flat. That equals higher MOI. If you want to talk history, our MOI is already higher than "normal" for abnormal Vancouver.

Anyone want to hazard a guess at total sales for this month?

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crashcow

@Dave: Why stop at DOW 14,000 Dave? Your thorough analysis (based on a single ratio and a single data point) only means DOW 36,000. http://www.amazon.com/dp/0609806998

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Dave

@crashcow:

No it isn't. Affordability accounts for interest rates. Price to income does not.

This isn't the 1930's. Unemployment has always been slow to recover after a recession. DOW 14,000 here we come.

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VancouverGuy

FYI, I posted a graph for the same time period for MOI.

http://pissmeoffvancouver.blogspot.com/2010/04/mo…

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paulb

MOI does not always move at a snail's pace. Check out my post from Nov 2008 here:

http://paul-northvancouverhomes.blogspot.com/2008…

May 1st 2008 we we're sitting at 15k listings and 3000 sales so about 5 MOI. By November we had achieved a crushing 22 Months of . So,changes happen quickly and in my opinion this time housing will fare much worse. Who gives a crap if it's 3.743 or 5.567 months of inventory today, when 20+ is just around the corner.

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crashcow

@Dave: Price-to-Income is synonymous with Affordability.

Go ahead, add population growth to your analysis. But as Shiller's graph (http://tinyurl.com/y4uku6k) pointed out in his book Irrational Exuberance, population was not the culprit. Neither were construction costs.

The general state of the economy is important and should be added to my list. But don't be fooled by the Houdini recovery. As Rosenberg has been pointing out daily, the 1930's experienced an eerily similar rally where the media and professionals were preaching that prosperity had returned.

The market you have been living in for the last year is one drugged with artificial stimulus and emergency interest rates. One whose GDP has had a large inventory-building & cost-cutting component that cannot be sustained. One whose unemployment rate hasn't recovered.

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paulb fan

@Anonymous: thats because I am the second most popular guy here after paulb. ROFL.

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Dave

@crashcow:

Sure, why not? I would add affordability and population growth to the list as well.

That said, I think affordability, MOI and the general status of the economy capture most of it. The other factors are small relative to those.

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crashcow

@Dave: No good analyst looks at a single ratio (especially one based on 1 or 2 data points) to draw a conclusion. Just some of the numbers you can combine to put together a more complete analysis…

– Price/Income

– Price/Rent

– ROI

– Price/Trendline

– Sales/List

– MOI

– Inventory (Level & Growth)

– Household Debt/GDP

– Property Turnover

– Housing Starts

– Monetary Policy Changes (Interest Rates, Stimulus)

– Fiscal Policy Changes (Taxes, Mortgage Rules)

Many of these are now in red territory.

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Dave

@VHB:

Why would sales drop in May? May is usually better than April. I would expect the same to be true this year despite regulatory changes to mortgages.

Listings don't go away? Are you kidding? Have a look at EVERY inventory graph for the last 30 years. Listings go up in spring, level off in summer and drop during the Fall. Even in the most bullish market, not all listings sell. In a normal market, a good percentage of real estate just doesn't sell and get pulled.

We can speculate about where the market is headed, but let's not argue that the numbers are balanced at this point in time.

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Chilled

@VHB:

VHB Says:

April 15th, 2010 at 12:01 pm

: prices won’t drop (or if so, by much) in April. The point is, what happens after April? The pile of listings isn’t going away on May 1st. The sales will.

++++++++++++++++++++

Sales are always high in spring. I'm expecting Flaherty to extend spring until December.

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