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April 27th, 2010 at 9:21 am
BTW, big action in the markets today -
Portugal and Greece debt issues
Stock markets down hard; possibly the beginning of a significant pullback
Loonie down a very large 1.6% at this point
April 27th, 2010 at 9:21 am
@“A-Sharp” Accountant: Welcome! Hope you’ll stick around here.
Two things explain what has happened.
1. Unsophisticated momentum investors have been funded by banks/CMHC to take horribly large and nonsensical risks.
2. The normal financial market forces that prevent these kinds of excesses are not present in the residential housing market–Goldman can short crazy CDOs, but I can’t easily take a short position on Vancouver housing.
Add these together, and you have a market dominated by credit-doped fools.
The rest of us just have to wait around until they pass out in a credit-drunk stupor. Then we get to clean up the mess.
April 27th, 2010 at 9:14 am
Now edward Jones suggests that a Canadian Housing Bubble is in the making…I guess they don’t provide mortgages
http://www.edwardjones.ca/grou.....223348.pdf
April 27th, 2010 at 9:12 am
Hey everyone.
For those of you who ever make it to Real Estate Talks, I was Pianoexcellence there for about 1200 posts…and have left in boredom.
My main thought on the BC real estate bubble can be summed up in one question…WHAT HAS CHANGED TO REMOVE THE RISK? more on this:
Back in the earlier 2000′s when I first bought, people were just getting over their skepticism about RE in general. Word on the street was that with the leaky condos, et. all, RE was a risky place to put your money.
…at that time, yields were fabulous. You did not need capital appreciation to make a very nice return. It really was a “can’t miss”. On top of that, we had known for years that Van was a beautiful place, We were a fabulously livable city. We knew that Olympics were coming, and we knew that we were an immigration hot-spot. Why did the money sit on the sidelines when such great yields were to be had? (high single-digit, and double digit in some cases…how is that for a spread over interest rates paid)
Fast forward now, and everyone thinks RE investing is a “can’t miss”. “It doesent matter, what or when…in the long term you will be fine”.
It is in the investor’s nature to be skeptical. A good investor in an efficient market always wants to maximize returns given a risk level, or minimize risk given a return level.
So, with this in mind, I often hear a “riskless” tone when I talk with people about RE, both here and elsewhere. It shows up in a lot of the cap rates, with near GIC yields (after all expenses and accruals, also remember, I’m thinking a long term GIC here).
Has RE been undervalued and under recognized for all the time prior to our enlightenment as of late?
Are we only finally now financially savvy enough to recognize the explosive power of leverage and compound appreciation?
At what price point (yield point) does the risk-less “you’ll always be fine in the long term, regardless of yield” attitude begin to erode? Never?
Is it even possible for prices to “stagnate” when that means that investors will have to look at yield instead of capital appreciation?—How boring is that—
So, my question to the bulls is: “what has happened over the last 8 years that has removed all the risk”?
Thoughts…comments?
April 27th, 2010 at 9:07 am
@Supraboy:
Why anyone is even talking about February is beyond my comprehension.
I think it’s you who needs to wake up from bear hibernation and smell the roses.
April 27th, 2010 at 9:00 am
@XXX: Possible. But the figures are from LAST week (19-23 April). Surely people don’t take TWO weeks off before Golden Week?
April 27th, 2010 at 8:28 am
I can’t see the market correcting itself like it did in 2008.
Increasing listings, BOC rate hike, HST, new mortgage rules.
Once pacic sets in prices will start their decline, July/August is my guess.
April 27th, 2010 at 8:13 am
VREA
As much as I would like to beleive … read the comments on the article. Golden Week, a national holiday, starts May 1st. Many people extend the holiday before and after. China is no doubt a ticking time bomb but this probably isn’t your canary.
Recently Chinese Nationals have been shopping for RE hear during that week. We’ll see if it happens again.
April 27th, 2010 at 7:51 am
@Astarte 130 — I would caution you about using that rent-buy calculator. Remember in the US, mortgage interest is tax deductible, not here.
April 27th, 2010 at 7:50 am
Businessinsider article in entirety:
“”China’s property transaction volume collapsed last week. Property trading volume went down 64 percent last week from a week earlier in Shenzhen, down 45 percent in Beijing, down 38 percent in Shanghai, and down 2 percent in Guangzhou. In China’s 35 main cities where housing market data was monitored by the newspaper [China Daily], 21 saw their trading volume go down last week, with the figure in Hangzhou going down 73 percent.
China’s recent mortgage restrictions may be having an effect after all. Obviously this is just a week’s worth of data, but if this weekly data turns into a longer-term trend, one has to imagine it could be bad news for prices.”
http://www.businessinsider.com.....ump-2010-4
April 27th, 2010 at 7:48 am
China’s RE Trading Volume Collapses – “Recent mortgage restrictions may be having an effect after all.”
http://wp.me/pcq1o-MI
April 27th, 2010 at 7:14 am
Dan in Calgary
“Anyone else feel we’re in Twilight Zone?”
Yes, and it has gone far beyond surreal.
I’m sure you heard of the shoe shine boy giving stock advice, and we know how that ended.
In Vancouver we have a realtor who is now rewriting a couple hundred years of economic theory.
His credentials:
Maybe a high school diploma, and he has been right by accident for quite some time.
Bizarre.
April 27th, 2010 at 7:04 am
Paulb, thanks for checking the sold listings– that’s interesting to see that the board has been lagging this long on entering pre-April 19 sales. I’m *really* curious as to how many sales have occurred since then, but I guess we’ll all have to wait until the board gets through their backlog.
April 27th, 2010 at 6:58 am
Hey Bears, choke on this:
Home prices in February posted their first annual increase in more than three years, though it’s too early to say the housing market is recovering. Despite the 0.6 percent increase on a non-seasonally adjusted basis, 11 of the 20 cities in the Standard & Poor’s/Case-Shiller home price index showed declines.
Each time house prices continue to rise, the minority bunch of you bears have to work harder to make homeowners sell their property. It ain’t working so far. Better join the gravy train and load up some properties now.
April 27th, 2010 at 5:52 am
@astarte:
If you draw the midpoint to prices over the last 40 or 50 years, you will find a nominal growth rate of 5.5% per year.
April 27th, 2010 at 12:22 am
“sometimes located several hundred square feet above …” Oops, this should read “sometimes located several hundred feet above …”
April 27th, 2010 at 12:17 am
I would guess that there are some of you out there who remember Rod Serling and the Twilight Zone. I’ve followed Calculated Risk, VHB until it closed, VCI, and Calgary blogs for many years it seems, and I finally began to wonder this evening, “Am I in the Twilight Zone?”
This has all become totally surreal … absolutely, completely, fundamentally disconnected from anything that makes sense to anyone with an IQ equal to or greater than that of an idiot.
The reality is that people seem to be throwing their futures away (selling themselves into bondage) for the sake of nominally “owning” the right to occupy a small piece of physical space which is sometimes located several hundred square feet above the earth’s surface. If I’ve got it right, one can acquire the right to occupy about 3000 cubic feet of space merely by agreeing to pay tithes (totalling 50% of income, and for a 30- to 40-year period) to a bank, a building association and the city government.
Anyone else feel we’re in Twilight Zone?
Interestingly, Rod Serling’s show often ended with an ironic turn of events in which the guilty were punished. Will it happen in the current episode?
April 26th, 2010 at 11:53 pm
RET is a fckn cesspool.
Complete and utter circle jerk bw Horton,Thompson,jimtan, and gang.
Never shall I lurk there again.
April 26th, 2010 at 11:42 pm
i’m probably the last one to see this today (late in my visit), but just let me say, like everyone else, how freakin’ AWESOME that visual is. POPE: i salute you, sir!
April 26th, 2010 at 11:30 pm
@wolfey:
oh dear, we don’t need conspiracy theories now.. please…
I just want more of the same…
April 26th, 2010 at 11:09 pm
I didn’t know where to put this but I didn’t want to post it on Real Estate Talks as I am tired of reading racist, misogynist and playground responses to questions/postings.
I was playing around with the NY Times rent/buy calculator. I plugged in what we are currently paying in rent ($1450) and what it would cost to purchase the condo where we live ($445000) and decided to put down 5%. It told me that it is better to rent until I moved the Annual Home Price Change Marker up to 6% and then after 6 years it was better to buy. So here is my question – before this roller coaster what would be considered the average yearly price change.
http://www.nytimes.com/interac.....lator.html
April 26th, 2010 at 11:02 pm
there is another possibility that may have been overlooked. there are for sale signs not listed in either realty link or mls because the realtor (seller position)wants to collaboraate with the ( friend) buyer realtor. So they can each get the sale and lock out other potential realtors from getting the commission.
They can say …this house just came up but it’s not on mls but you better buy it quick before someone else does. But in fact the for sale sign is up for 3-4 weeks. however the buyer will not kn ow this and of course the seeler will not say anything…possible hmmmm?
April 26th, 2010 at 10:21 pm
************* 1/1/2010 / 4/26/2010 / % change
Bowen Isld 46 / 108 / 134.78%
_Bby East 68 / 160 / 135.29%
_Bby North 345 / 746 / 116.23%
Bby South 362 / 724 / 100.00%
Coquitlam 531 / 1135 / 113.75%
Van.&Gulf 215 / 266 / 23.72%
___Ladner 65 / 155 / 138.46%
MapleRidge 575 / 995 / 73.04%
_New West 262 / 575 / 119.47%
_North Van. 412 / 970 / 135.44%
OutofTown 105 / 72 / -31.43%
_Pitt Mead 121 / 197 / 62.81%
_Port Coq. 237 / 478 / 101.69%
PortMoody 213 / 440 / 106.57%
_Richmond 893 / 1835 / 105.49%
_Squamish 402 / 497 / 23.63%
Sunshine C. 656 / 1068 / 62.80%
_Tsawssen 98 / 185 / 88.78%
__Van East 767 / 1444 / 88.27%
_Van West 1396 / 3263 / 133.74%
_West Van 386 / 656 / 69.95%
__Whistler 569 / 772 / 35.68%
_____Total 8724 / 16741 / 91.90%
April 26th, 2010 at 10:05 pm
Thanks Paul. 17,000 could be here by Wednesday. Incredible.
This is going to get ugly. Could take 20 days. Could take 100. But not much longer, before prices go into rollercoaster freefall.
April 26th, 2010 at 10:03 pm
New Listings 322
Price Changes 172
Sold Listings 108
Few more listings trickled in …
Total: 16744
April 26th, 2010 at 9:50 pm
I am monitoring listings in several areas using mls and realtylink sites. Noticed in recent weeks that they are out of sync: realtylink has more listings than mls. In one area – 22 vs 20, in another – 16 vs 14. Wondering whether this represents any trend. If yes, and assuming average 10% of difference between number of listings on the sites, the real number of mls listings could be 10% more.
April 26th, 2010 at 9:40 pm
@Ahab: “it’s the re-introduction of risk that has rates increasing”
Maybe. But what risk exactly? That prices fall more than the downpayments? That banks can’t quickly sell foreclosures?
The Canadian public is allowed very little visibility into how Canadian mortgages are securitized. I wouldn’t be surprised if a few tweaks of the government “guarantee” is causing banks to increase their internal spreads. Maybe someone who works for a bank can let the forum know what’s really going on.
April 26th, 2010 at 9:39 pm
PaulB, I still have a hangover from the 16k party, getting old. Will join you for 20k party at the end of May.
April 26th, 2010 at 9:04 pm
Wowiie. Sure hasn’t taken long for the “price reduced” stickers to start outnumbering the “sold” ones on the RE signs in my fairview/ false creek neighborhood
April 26th, 2010 at 8:59 pm
@Globello:30K by July? Probable. But I would bet against it if I had to put my money on it. Thats more than 5k listings per month if one includes month end inventory drops.
April 26th, 2010 at 8:41 pm
Just did a MLS search for WestEnd+Yaletown+Coal Harbour+Downtown. Got over 1500 listings. Then I looked closer and realized that plenty of homes for sale are missing. For example some buidings have 2 units listed on MLS, but I know that there are actually 4 or more units for sale. Why are they not listed?
Obviously, the real inventory is higher than the stats show. The question is by how much.
April 26th, 2010 at 8:15 pm
I got another 16 listings in my in-box today. This, on top of previous piles…(Tri-cities area)
What makes me laugh is the ever higher and more ridiculous aking prices of many of them.
And, despite similar toads sitting and sitting at far less.
These people must a either REALLY stoopid, or else the listing agents are feeding them more than the usual bunko in order to get them to sign up.
Don’t people ever do their own “research”?
April 26th, 2010 at 8:06 pm
@Boombust #108
“Sheesh, even Ikea furniture in Vancouver costs twice as much as in Toronto – my red Lack coffee table that I bought three months ago was only $15!”
Don’t be a goose. Nobody buys “the colours” anymore.
Black-brown is in.
April 26th, 2010 at 7:50 pm
At the rate credible posters are abandonong RET, J.H. and Thompson may soon be the only ones left, and probably too dumb to realize that they’re BOTH realtors.
April 26th, 2010 at 7:30 pm
Anybody notice that: the faster listings grow, the more garbage Johnny Horton pumps out on RET?
Must be getting desperate.
April 26th, 2010 at 7:11 pm
@Boombust #108
Sheesh, even Ikea furniture in Vancouver costs twice as much as in Toronto – my red Lack coffee table that I bought three months ago was only $15!
On the RE side, I moved from Vancouver to Toronto in 2001 and thought THEN that Vancouver prices were insane. At the same time, people were saying that condo prices would go up until just after the Olympics. Too bad I was still paying off my student loan then…
April 26th, 2010 at 7:06 pm
At the current pace of listings, we’l be at an unprecedented 30,000 by July.
How can that not be followed by an unprecedented CRASH?
April 26th, 2010 at 6:56 pm
@Coco: I think The Economist said it best in a recent article:
“Skyscrapers have long been associated with the ends of financial booms. The Empire State Building opened in 1931, two years after the Wall Street crash. The Petronas towers in Kuala Lumpur were unveiled in 1998, in the depths of the Asian crisis. Such towers are commissioned when money is cheap and optimism about economic growth is at its height; they are often finished when the champagne has gone flat.”
April 26th, 2010 at 6:52 pm
@VHB:
I feels like 15k was just a couple weeks ago. Oh wait…it was
Boombust- No they wouldn’t be obligated to sell even at full list.
April 26th, 2010 at 6:51 pm
Anon: “This condo owner says it’s “urgent” that I rent his furnished place for a reduced $2150″
That just show that renting is quite expensive in this city. Not as much as owning but still very expensive.
April 26th, 2010 at 6:45 pm
re: Paulb,
“I have no idea, but I bet with some agents now offing to list homes on mls for $250 etc.”
Would they be obliged to sell if the realtor fetched thier wishing price?
April 26th, 2010 at 6:44 pm
Thought you guys might enjoy this new article in the Vancouver Sun. 2600 new units?
http://www.vancouversun.com/bu.....story.html
April 26th, 2010 at 6:39 pm
“That’s a lot to pay for some cheap Ikea furniture…”
I LIKE their furniture…where else can you buy a (Lack) coffee table for $30.00?
Power to the people!
April 26th, 2010 at 6:38 pm
@crashcow: to each his own. Me, I started drinking already. Or am I still drinking from the 16K party? Either way.
April 26th, 2010 at 6:36 pm
@VHB: That’s funny, because 5 year yields are still at 3.10. They did hit 3.24 briefly last week. Until the 5 year yield goes up more, and sticks, we have to expect 5 yr mortgage rates to stay pretty level. But if the 5-yr yields do increase, then watch out!
5 year yields have nothing to do with it. It’s the re-introduction of risk that has rates increasing:
http://americacanada.blogspot......s-end.html
“Canada’s Economic Action Plan’s $125 billion Insured Mortgage Purchase Program finally came to an end yesterday [Mar 30]. The program eliminated the risk to banks, encouraging them to extend credit. In the event of a credit shock the banks could strengthen their balance sheets by offloading insured mortgages onto taxpayers.”
So, now that the mortgages are carried on their balance sheets, as opposed to being offloaded onto CMHC-issued bonds, lending rates are rising. Expect that to continue.
April 26th, 2010 at 6:28 pm
@paulb: have to start hitting the treadmill so I look good for the party
April 26th, 2010 at 6:20 pm
New Listings 304
Price Changes 172
Sold Listings 108
16726 total. 17k easy this week. See you all at the party!
April 26th, 2010 at 6:17 pm
Yeah, the number of post-olympic furnished apartments is just absurd. On craigslist try searching for “yaletown studio”
with “furnished” in the ad: 157 results
without: 38 results
I’ve noticed the average price difference seems to be about $300/month. That’s a lot to pay for some cheap Ikea furniture and a few dishes.
April 26th, 2010 at 6:14 pm
In other news, deodorant sales have spiked recently in Vancouver. In fact, the purchase of deodorant has shown a correlation of 0.91 with housing inventory.
April 26th, 2010 at 6:00 pm
@anonymousAA: I’m seeing the same thing; there has been very little price movement on downtown rentals since the Olympics. I wonder when specu-vestors will start to realize that Vancouver is simply not a large or important enough city to absorb the current demand for furnished 1-BR apartments.
Oh, and Mr/Mrs. Specuvestor, here’s a little tip from me: the market price for your rental does not and will not necessarily equal the monthly mortgage.