The Black Swan
Every so often a market takes a dive, but they usually turn around. After a while it it starts to look like it’s hit bottom and a recover is just around the corner. The people with their livelyhoods tied to the market hold out hope of a turn around. Then oil starts washing up on the beach.
The phone call was short and to the point: A buyer who had agreed to spend $500,000 (U.S.) on a beachfront home with a stunning view of the Gulf of Mexico was backing out.
The cancelled sale was a blow to real estate agent Linda Henderson, but it wasn’t a surprise. Globs of thick, pungent oil are washing up on the shores of Alabama’s Dauphin Island, and the smell on some days is enough to drive the island’s predominantly senior population back into their homes.
It’s also enough to drive real estate agents to despair. “I can tell you that things have pretty much dropped to dead,” she says. “We were on track for our best year since Katrina. This is devastating – you can say that the spill killed the real estate recovery.”
Full article in the Globe and Mail.
June 22nd, 2010 at 6:27 am 1
"The phone call was short and to the point: A buyer who had agreed to spend $500,000 (U.S.) on a beachfront home with a stunning view of the Gulf of Mexico…"
I was down there last summer. The views aren't that "stunning".
The terrain is monotonous and as flat as a pancake. The Gulf itself is nothing special. Hardly any islands anywhere to add interest to the seascape.
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June 22nd, 2010 at 7:00 am 2
Yeah, why are views always listed as "stunning" by the realtots? Imagine being "stunned" every time you looked out the window…..would make life rather difficult, I imagine.
Anyway, the Gulf oil spill is causing untold hardship to residents and wildlife, so the least of their worries is some realtard losing a commmission.
Just my $0.02…
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June 22nd, 2010 at 7:44 am 3
Third!!!!!!!!!
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June 22nd, 2010 at 7:56 am 4
Nothing more to talk about Vancouver RE eh bears? Time to dissect Alabama market.
This blog losing relevancy as fast as France FIFA team in hifi.
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June 22nd, 2010 at 9:15 am 5
@SuperSmartBull:
SuperSmartBull – I know you are a realtor because:
1. You're posting all day because you have nothing else to do.
2. You're never able to put forth a coherent argument.
3. Yet you're still persistent at it.
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June 22nd, 2010 at 9:20 am 6
@qwerty: My theory is that SuperSmartBull is working on a stand-up act modeled on '90s Dennis Miller. He's trying to sharpen his skills for dealing with hecklers and boos on Open Mike night by becoming the heckler.
I find he makes a whole lot more sense when taken as a performance artist.
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June 22nd, 2010 at 9:30 am 7
Good evening and what can I tell ya? Vancouver market is boring in the summer, this is not 2008. It is also not 2009. While bears are off growling at everything from CMHC to Rich Asians at River Green, smart bulls are relaxing on the patio watching FIFA hifi and enjoying spectacular football (except for French who surrender — do what comes naturally says SuperSmartBull). Bears, here is one prediction that has as much chance of coming true as all your wild-ass theories, expect stagnation. Forget Garth, there will be no Armageddon, just a light roasting. Result will still be high prices.
That's the news and I am outta here.
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June 22nd, 2010 at 9:31 am 8
@qwerty: You are a fool.
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June 22nd, 2010 at 9:49 am 9
I am a 24 year old young professional living in Vancouver. I currently rent an apartment downtown. I am saving up for a downpayment for an apartment in Yaletown or Gastown and should be there around March 2011. I have been checking out both the bull and bear forums and honestly I think both sides are quite delusional. The prices in Vancouver will not go up over the next year. However, they will also not drop any more than 5-10% at most for apartments and 10-15% for detached houses. The bears on this site who are expecting prices to drop by over 50% (some have even said 80%) are just as insane and uneducated on the subject as the bulls who think that real estate is gonna keep going up in price. Just my 2 cents…
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June 22nd, 2010 at 9:56 am 10
@Anonymous: Yeah 24 year old young "professionals" know it all. Thanks for sharing your wisdom with the forum, real insightful….
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June 22nd, 2010 at 10:00 am 11
@SuperSmartBull:
What a joke! Even the bears are caught off guard by this River Green "sell-out". They pulled off one hell of a marketing campaign.
(1) They released a tiny fraction (of over 2,000) units for sale. Big deal. The released a level which they knew they could "sell-out" in order to stir up a frenzy. Everybody is talking River Green.
(2) One family bought 4 units! I can guarantee you that this "family" and many other buyers are related to the developer. Many of these buyers likely have opt-out clauses.
This is an age old marketing strategy. Just like Bob Rennie trumpeting a great opening weekend for the Olympic Village. Phrases like "sell-out" (less than 5% of the units available for development) create headlines, which the developer can spin.
It is amazing to see everybody get so worked up over this.
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June 22nd, 2010 at 10:03 am 12
I never said that I "know it all". I was just saying what myself personally and the majority of the other people in my demographic are thinking and either doing or planning to do. The fact is there are still a lot of people in this city who can afford real estate at these prices and I'm not talking about rich foreign investors or whatever. Again, I'm sorry if my post came off as conceded, I don't really have time to proof-read and analyze, I just believe that the people who are waiting for prices to drop by 50% are gonna be waiting for a long long time…
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June 22nd, 2010 at 10:04 am 13
@Anonymous: What I would like to understand is WHY you predict what you do. Having it "sound right" is not an argument that means anything – in Miami, Pheonix, Las Vegas, and Sacramento the general consensus before meltdown also was that 50% declines were the whispers of delusional bears.
I was hanging at Jones' Housing Bubble at the time, I can tell you for sure there were those just like you saying exactly what you are saying about markets that have imploded since then.
You've got to at least bring some argument as to *why* it's different here; why Vancouver won't fall to the same price rent ratios that seem to underpin the housing market in the long term, why the particular intersection of supply and demand might make this area special vs. the rest of North America. We've heard almost all possible arguments and have not seen much that makes sense, but sure: give 'er.
Otherwise, you're just being Truthy. "It can't drop more than 15% because my guts tell me so."
…. Ooooh, wait. I get it now. Dennis Miller AND Stephen Colbert?! A richness of comedians we have on this site!
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June 22nd, 2010 at 10:10 am 14
@Woodrow:
Don't be that way. The young professional is trying to give his/her two cents. No need to attack!
That said, young professional, you should really do your homework. Real Estate prices have cratered 50% in Vancouver before. They have cratered recently in many nations all over the world; US, Ireland, Spain, etc.
Back when you were 22, they fell about 20% in 6 months! That was before the world's central banks dropped interest rates to zero and the CMHC bought billions in mortgages from banks! I'd say the Government is out of bullets, wouldn't you?
Many of the "bears" on this site are well travelled and knowledgeable. The Yaletown condo you covet is overpriced and poorly built versus housing inventory in other cities, with real economies where young professionals make a lot more money than you do!!
I hope you hold off. Your savings are better invested elsewhere. Good luck saving!!
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June 22nd, 2010 at 10:11 am 15
@Anon
Then don't post.
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June 22nd, 2010 at 10:12 am 16
@Anonymous:
OK Mr Professional,
Please dig into the numbers and explain how a rational market participant could see value at 5% off current prices in the case where prices stall out for an extended period.
Ie, without extended capital appreciation, where is the value?
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June 22nd, 2010 at 10:13 am 17
@Anonymous: Keep in mind that finding delusional people commenting on blogs does not mean that all blog commenters are delusional. Except on youtube, but that's a separate discussion.
If you want to buy into Vancouver RE, go ahead – nobody here's going to stop you. You're young enough to survive a bankruptcy and still retire rich someday, if it comes to that. Knock yourself out. I'm not in that position, and ignoring RE appreciation or depreciation, renting is cheaper than buying. Therefore I rent and will continue to do so.
As for where the market is going, I offer no predictions. Here's a question for you, though; do you think you would have predicted the RE meltdown in the 80's?
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June 22nd, 2010 at 10:15 am 18
@#9 "5-10% at most for apartments "
I'm curious. Why do you think that 5-10% is as far as prices will go down?
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June 22nd, 2010 at 10:15 am 19
@Anonymous:
Yep, bring on the straw bear arguments so you can pretend to be "balanced".
I don't expect to see 50% off nominal even in the long run (50% real, yes).
Here's a question for you: if you don't expect prices to go up in the short run at least, WHY buy now when your ownership costs are much higher than rent, even with 4% interest rates? And why should anyone else buy, and why should any investor hold, if this is the case?
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June 22nd, 2010 at 10:16 am 20
In my second year at UBC, I just couldn't get laid. Then a friend told me to stop telling the girls I was in the Arts and say I was "pre-med". I replied that I'm not pre-med. He said "We are ALL pre-med". And so at 24 years old we are ALL professionals.
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June 22nd, 2010 at 10:17 am 21
I honestly can't answear your question regarding the price/rent ratio and it is a good one. However you are significantly underestimating the demand in this city. Like I said, I don't have any real data but just being a young person in this city I can safely say that my position right now is extremely common with my age group (renting, getting ready to buy). Sometimes being out there and talking to people is better than looking at inventory/sales numbers and I'm just syaing that barring major economic breakdown, I just don't see the prices of apartments in downtown dropping by any more than 10%. Having said that I hope that you're right and I hope that by mid 2011 you can buy a nice condo in downtown for 200,000. It'dd make my life a whole lot easier…
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June 22nd, 2010 at 10:17 am 22
I should mentio that my calculations end up putting the current value of LML RE at about 30-35% below current price. (NPV analysis)
We also know from history that valuations may overshoot the mean on both ends. Those 50% off (remember, in real terms) scenarios are really the worst case scenario, but not outside the realm of history, present USA examples or logic.
This is a L-O-N-G process. There will not be an immediate crash.
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June 22nd, 2010 at 10:18 am 23
@Anonymous: In this sentence "I’m sorry if my post came off as conceded" you've woven a great malapropism. Conceited (having a high opinion of oneself) vs. conceded (having reluctantly acknowledged a contrary position).
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June 22nd, 2010 at 10:18 am 24
@patriotz:
Completely agree. I don't expect to see a 50% nominal drop either. I've stated before that the Government will resort to all sorts of stimulus and inflation once national house prices fall 20%.
I expect nominal prices to fall 20% – 50% depending on:
(1) The degree of monetary and fiscal stimulus, and
(2) The effectiveness of future government programs
That said, I expect house prices to fall over 50% in real terms. House prices are actually down over the past ten years when measured against Gold.
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June 22nd, 2010 at 10:20 am 25
@Anonymous:
You say that we are underestimating demand.
No, we are simply saying that the supply/demand relationship is a fickle b%$*h
There is more value in determining the drivers for supply and demand than there is in stating a current level of demand.
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June 22nd, 2010 at 10:27 am 26
"A Sharp" I don't know what to tell you. I guess supply and demand is "fickle" but all markets are based on it. In my opinion there is high demand right now at the current prices, there will be very large demand when the prices drop by as little as 10% and there will continue to be demand.
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June 22nd, 2010 at 10:29 am 27
@“A-Sharp” Accountant: There's also the question of rent deflation which has certainly followed in other boomtime built American markets. There's some fairly serious price compression in rentals in Vancouver and tons of buildings attempting to renovate upmarket. I don't think the dust'll be done settling for awhile.
24 year old pro – housing markets take many years to climb up, and many years to fall down. I don't think many bears who follow housing markets would expect half off in mid 2011. The US is STILL sliding in many markets, 4 years later, and after government intervention that helped prop the market. Japan slid for 15 years. I'm placing my chips for the trough somewhere around 2016, plus or minus a year and a half.
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June 22nd, 2010 at 10:31 am 28
@Anonymous
"I am a 24 year old young professional"
————–
Bank teller doesn't qualify as professional…
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June 22nd, 2010 at 10:33 am 29
Bear it's time to vote down this young "professional". No room for anyone but waiter and dishwasher bear/loser on this site. Anyone else must be bull.
Now where is market headed? Not sure but general direction over last 30 year has been up and to the right.
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June 22nd, 2010 at 10:35 am 30
@Anonymous: Your opinion of the strength of demand may be moderated by knowing that we're on track to be in the bottom third of sales for June over 9 years.
It may also be moderated if you look at the demographics. If you're basing interest on a cadre of 24 year old professionals, a little research on StatsCan might give you some idea what proportion of the population you represent, especially if you're both professional AND student loan free AND not spending your time and cash on other things besides down payment savings.
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June 22nd, 2010 at 10:36 am 31
@kabloona:
Yeah, why are views always listed as “stunning” by the realtots? Imagine being “stunned” every time you looked out the window…..would make life rather difficult, I imagine.
====================
There's no question that people that 'buy' these days are definitely stunned!
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June 22nd, 2010 at 10:37 am 32
Between 70 to 75 percent of households own their home in Vancouver. The remainder would be renters. If the vacancy rate were falling, then I would say that we are underestimating demand as there is an increasing pot of potential buyers. But, if the vacancy rate is increasing, then I would say we are draining the pot of potential buyers.
As the pot of buyers gets lower, the ability of these renters to purchase a property declines. So not all of the renters are financially able to buy a home. If interest rates increase, you will find that that the majority of these remaining renters will no longer qualify for a mortgage.
I don't think I am underestimating demand. I think the fault is overestimating demand. The remaining pool of buyers is sensitive to minor changes in interest rates. Just like in the 80's when interest rates hit a certain point, buyers collectively stopped purchasing. The drop in sales volumes and higher vacancy rate are screaming that the Vancouver market is at this tipping point.
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June 22nd, 2010 at 10:39 am 33
@“A-Sharp” Accountant:
Vancouver fell 50% real from 1981 to 1985 and that was with:
1. Interest rates much lower in 1985 than in 1981.
2. Real top in 1981 much lower than real prices today.
http://cuer.sauder.ubc.ca/cma/data/ResidentialRea…
So did Calgary and Edmonton.
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June 22nd, 2010 at 10:40 am 34
So nobody here thinks deflation is a possibility going forward?
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June 22nd, 2010 at 10:41 am 35
@Mike:
Spot on. People here are always saying that Vancouver will crash "just like the US". The difference is that the Canadian government has already observed what happened in the US, and will be in a position to stop things from getting that bad.
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June 22nd, 2010 at 10:42 am 36
Since people seem to be focused on the term "young professional ill specify… I am not a 2nd year arts student or a bank teller. I work in health care and currently make about 90,000 a year from my full-time job and about 20,000 from side projects. Definitely not rich but doing alright… There is a lot of unemployed people in this city and there are also unfortunately a hell of a lot of "poor" people in this city who bring down the average incomes. All that I'm trying to say is that there is a substantial amount of people who are in my position. My girlfriend makes about what I make so if we bought a place together paying the mortgage on a 500,000 dollar condo with 20% downpayment does not cripple us financially or keep us from investing into other things. Again, I don't claim to be Nostradamus and you guys might be right, in fact some of your arguments make a lot of sense to me. Personally though, I just don't see the markets crashing here like they did in Arizona and California as some of you are saying. I guess we'll find out though…
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June 22nd, 2010 at 10:43 am 37
Anonymous #9
So what your saying is the market will be stable over the next few years. What are you basing this on?
At 24 years of age you have only seen the market go one way.
Pay attention and learn, the next few months will be very interesting indeed.
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June 22nd, 2010 at 10:48 am 38
@Anoymous: "the Canadian government has already observed what happened in the US, and will be in a position to stop things from getting that bad."
Could you explain how exactly the government would do that? And why they would care if Vancouver housing prices are dropping? Do taxpayers in Mississauga really want to bail out Vancouver debtors to the tune of billions of dollars?
Me, I'm guessing no.
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June 22nd, 2010 at 10:50 am 39
@Anonymous: If you make 110K/year, you are in the top 18% of earners in Vancouver. If both you AND your girlfriend are making 110K/year and you move in together, you will be in a very small class representing a small percentage of households. That rich people can afford real estate is no great surprise – but 110/year is unusual even at mid-level in many professional industries here.
( And hell, if you're making 90K in health care at 24, I think I've found why our medical system is bleeding money. Holy shit. )
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June 22nd, 2010 at 10:51 am 40
@CondoConundrum: If it is interesting most bear here will not buy again since they can't even get platinum credit card let alone mortgage.
Meanwhile, industry professional like anonymous and other bear/bull will buy up all condo at alarming pace. What will happen then bear? You will miss out again and move away like skullboy to backwater bucktooth inbred maritime hole. Because everyone know that vancouver real estate never go down.
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June 22nd, 2010 at 10:51 am 41
@Anonymous:
Your pay is about double what people make in Vancouver for all age groups. If you think you are a good representation of 20 somethings, you are not educated. I don't believe prices will fall 50 percent, but your anecdotal evidence to say otherwise is not one but convincing.
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June 22nd, 2010 at 10:52 am 42
The young professional is Marko from HHV. He always spins a good yarn….
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June 22nd, 2010 at 10:52 am 43
@Anon (Well, I suppose unless you're a doctor. At 24? I think I'll call you Doogie.)
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June 22nd, 2010 at 10:55 am 44
$90,000 a year and you don't have the strength of your convictions. To waiver on your opinion, just because of a few derogatory replies. Good lord man (woman), grow a set!
So how is the massage business doing?
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June 22nd, 2010 at 10:57 am 45
"The fact is there are still a lot of people in this city who can afford real estate at these prices"
Check the difference between being able to AFFORD something and buying something that is a good VALUE.
These are extremely different concepts. Learn about this now, and profit from it the rest of your life.
To take the classic VHB example, I can AFFORD to pay $500K for a pencil. But that does not make it a good value. Me, I buy things that are good value, not things I can simply 'afford'.
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June 22nd, 2010 at 11:00 am 46
I am not a doctor, but yes doing what I do I completely agree that our Healthcare money goes to places where it shouldn't. I have a lot of friends who are in a variety of industries though, a lot of them in the service industry, making maybe 50000-60000 a year and their plans are very similar to mine. I am very skeptical of the reported income numbers as people are finding unique ways to bypass paying income taxes, I'll leave it at that…
superduperbulltime please stop agreeing with me, you're a moron!
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June 22nd, 2010 at 11:02 am 47
Since bear all focus on young marko salary must be jealous and make way less. This prove most bear just broke loser didn't pay attention in school. Bear while you were hitting bong you should have study.
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June 22nd, 2010 at 11:08 am 48
@Peter Pan:
"Bank teller doesn’t qualify as professional…"
Quite a spiteful comment, considering that the poster hasn't given any clues as to what their occupation is. It's foolish to assume that somebody who is 24 can't already be successful, and smacks of (possibly unfounded) jealousy.
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June 22nd, 2010 at 11:10 am 49
@Anonymous: Dude we all know that you're a realtor. Newsflash for you moron, realtors are not professionals.
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June 22nd, 2010 at 11:15 am 50
@Anonymous: Hey you wouldn't happen to be sipping a "cranteeny" and giving Anoymous a reach around while you two post your fantasies on here would you Samantha? How's the empty laneway house doing?
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June 22nd, 2010 at 11:18 am 51
hahaha wow tony that's harsh! I'm not a realtor though and you should believe me since my profession usually comes up as the most trusted or one of the most trusted ones whenever surveys regarding this are conducted. I honestly don't understand the personal attacks by some of you just because you disagree with me, it's quite bizarre.
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June 22nd, 2010 at 11:23 am 52
Marco lives in his dad's basement in Victoria, he doesn't rent in gastown. Different guy
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June 22nd, 2010 at 11:25 am 53
I have a friend who is a nurse in Victoria – he cleared 90k+ on his T4 with a 60k base salary – over 30k in overtime! I don't know about you but given the amount of time required to be a nurse (1 undergraduate degree), I would think that that kind of salary is disequilibrious to the rest of the market and it is only a matter of time before the market is swarmed with newly minted healthcare workers looking for 100k+ paydays.
If you and your GF are both 24 year old public servants, it is more than likely that neither of you are contracted to make 90k per year – you are probably receiving substantial overtime payments. Even if you are contracted for that much, a large portion of your peer group is not. You should be preparing for an eventual reduction in salary to whatever you're supposed to make in your union contract. Can you comfortably afford a $500k+ condo then?
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June 22nd, 2010 at 11:31 am 54
I frequently lurk on this site, am a bear & in somewhat the same income bracket as "24 y/o pro" (without the 'side-projects') … I think the negativity towards him is coming off a more jealous than productive.
I do believe that prices will be coming down more than 5-10% … I base this on the data I've researched, what is happening all over the world right now, the 'value' argument (some units in buldings I've looked at haven't even changed the carpet since I was in the market back in 1997!) …
As for 24 Y/O PRO's:
"In my opinion there is high demand right now at the current prices, there will be very large demand when the prices drop by as little as 10% and there will continue to be demand."
… first time to this blog? Have you not seen the inventory climbing on a daily basis?!?
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June 22nd, 2010 at 11:34 am 55
Go Argentina Go
With mind blowing 60% sell list ratio the listing collapse has begun and the reason? Vancouver is one of the smallest area compare to other redhot real estate of this world.Vancouver real estate have got magnetic slope on the higher end that's why every single unit in Vancouver must cross the ladder towards moon.
Now back to fifa in high definition.
Go Argentina Go
Run Buddy Run.
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June 22nd, 2010 at 11:35 am 56
Uh oh bear, someone has opinion not of your own, vote down all young professionals quickly and harshly. His opinion does not match groupthink filter. There are only 2 types of people, bears who know a crash is coming and realtors. The world is easy to understand if can group like that, provides comfort too. But even FIFA hifi is not that simple, look at upsets so far.
Bears it is a crazy world out there, do not use hubris to make analysis too simple. Reality is perception is Canada economy and VanRE is strong, like it or not. Put that in your Cranteeny and sip it.
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June 22nd, 2010 at 11:44 am 57
@Anonymous 36: Dude, it's not about what YOU can afford. An investor who buys a $500K condo does so because he wants to make money off it. Any "side" businesses or overtime he or his tenants accrue doesn't change his property's income stream one iota.
Congratulations on overpaying — you certainly can afford it — but it doesn't in any way justify prices being out of whack with rents.
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June 22nd, 2010 at 11:44 am 58
@Young Professional,
At the risk of sounding rude, I don't believe you. Sorry. I believe you're 24 years old all right and it's possible you're performing some sort of low level function within the healthcare system but you're not a professional. From what I recall, in order to be a professional in the strictest sense you have to be part of a professional organization. Doctors, lawyers, dentists, nurses, engineers, accountants and pharmacists are all professionals. I suppose it's barely within the realm of possibility you're either a pharmacist or a nurse but the chances of you making that kind of coin are slim to none. The only way I can see it happening is if you're a pharmacist stealing supplies and selling them on the black market. I guess that counts as a "side project".
I knew a lot of people in BC, but very few of them were in the position you claim to be in. Even if you are who you claim to be, that part of your story also doesn't pass the smell test. Your circle of 5 or 6 friends doesn't form a representative sample of the population.
And speaking of that, people here cling to their numbers because numbers are impartial, or at least they should be. Good stats correct for perception bias, which appears to be something that's afflicting you.
Look, we've all been 24 and eager to impress and God knows it's not like anyone can verify anyone else's identity on a blog but your claims just don't pass the bullshit test. You might want to consider: If superbulltime is agreeing with you and he's a moron, well…. perhaps you should reconsider your opinion.
If you've seen some of the stuff I've posted you'll know this is about as polite as I get. I'm calling bullshit mainly because I've met a lot of Vancouverites who were just like you, pretending to be wealthy seems to be the local pastime. in Van.
And yes Superbulltime, I live in a bucktoothed inbred backwater. I completely agree. We are not enjoying a pleasantly warm and sunny summer. I am not looking out my new window at a pleasant view of the harbour. We do not have a whole roster of fabulous concerts and events, many free, planned. The people are not warm, friendly and welcoming. There are no employment or career opportunities here.
Please stay in Vancouver with the rest of the bulls and do not visit, I really don't want to see you coming to this forgotten part of Canada for any reason whatsoever.
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June 22nd, 2010 at 11:47 am 59
"nurses"
…are not professionals.
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June 22nd, 2010 at 11:50 am 60
"At the risk of sounding rude, I don’t believe you. "
Seriously, what's wrong with you people? Can't you accept the fact that some people are actually earning a decent (and honest) living in BC?
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June 22nd, 2010 at 11:52 am 61
Dammit scullboy,
Ya mean realtors aren't professionals???
Now ya tell me, when I only got one more week to go in my 4 week correspondence course.
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June 22nd, 2010 at 11:52 am 62
@Anoymous: Yes we believe it. We just don't want you wasting your hard-earned earnings on $500K worth of air and cardboard.
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June 22nd, 2010 at 11:55 am 63
@SuperSmartBull: Sandwich board wearer has awoken and reported for his day of work wearing his sandwich board posting 700 times of useless drivel to get paid by his realturd employer. Good morning sandwich board wearer. Does this beat standing all day on a street corner?
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June 22nd, 2010 at 11:56 am 64
Anonymous – you are making the classic bull error in failing to recognize just how much of the current demand curve is based solely on the delusional expectation of more capital appreciation. That is the *only* reason speculators / amateur-hour investors remain in the current market, given that pretty much everything is cash flow negative at current prices.
Once the capital gains reverse themselves and carrying costs start creeping up due to higher borrowing rates, you are going to see a great deal of the demand curve evaporate very quickly and for a very long time.
That we will reach an inflection point is inevitable, the only question is when. Patience will serve you well going forward; once the momentum has shifted, it will likely go against the bulls for several years.
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June 22nd, 2010 at 11:57 am 65
@scullboy: You are missing Vancouver I can see. Why else have so much time to post long diatribe on Vancouver RE blog? But please tell us one more time how great Halifax is….it's such a lovely story. But make it shorter story, FIFA hifi 2nd half is starting soon. Maybe tell us some interesting history of Halifax like when the whole town was blown up, not by collapsing RE market, but by munitions ship.
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June 22nd, 2010 at 11:57 am 66
Scullboy,
It's fine if you don't believe me. Exactly what I do and how much I make is not that relevant anyways (not a nurse by the way but getting closer). Gordon C and a couple of other people made interesting points and I'll definitely weigh them out as I carry on and make a decision of what to do for the next year. A lot of people on here also seem to be very bitter and rude which is exactly what the extreme bull pretending to be 6 different people and continually talking about fifa says they are. Anyways, good luck to you all, im gonna go back to lurking. later.
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June 22nd, 2010 at 12:00 pm 67
@vibe:
"So nobody here thinks deflation is a possibility going forward?"
Definately deflation.
Seems hard to imagine how inflation will occur now.
The brakes are on private credit and are now being applied to public credit.
So where will inflation come from?
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June 22nd, 2010 at 12:04 pm 68
@Mike:
Stupid question: doesn't everybody have an "opt out" option – for something like a week they can drop the sale no questions asked.
So what's to stop a bunch of folks being put up to "buying" the property and selling out the development (and, of course making front page "news") and then simply dropping it off at the side of the road like an unwanted puppy a few days later (which, of course, receives NO media coverage).
Too paranoid?
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June 22nd, 2010 at 12:08 pm 69
"(not a nurse by the way but getting closer)"
My Gawd, he's Duckey Houser
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June 22nd, 2010 at 12:12 pm 70
@Bubble Lad:
"Stupid question: doesn’t everybody have an “opt out” option – for something like a week they can drop the sale no questions asked."
I believe all the offers were subject-free, so doubt there's any opt out.
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June 22nd, 2010 at 12:21 pm 71
@AACI: Well, that means your assessment hinges on:
1. Carrying costs rise
2. Mortgage rates rise
Really this is what the bears and bulls differ on in terms of their rational expectations of these two variables. A more interesting question is how these two move together when you include, say a unit's own rental suite into the mix.
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June 22nd, 2010 at 12:23 pm 72
Wow, there is a ton of anger on this blog. Why is everyone attacking the young professional for giving his opinion?
Maybe there are a lot of broke, bitter, renters on this board like so many assert.
People should be free to post what they want here. (Except Superbull time – He should be banned)
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June 22nd, 2010 at 12:24 pm 73
@Anoymous:
All pre-sales have a statutory one week opt-out period. Your money back, no questions asked.
However the real issue has already been touched upon – there's no registry where pre-sales are listed, so how do you know if they're not just totally BS'ing you?
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June 22nd, 2010 at 12:27 pm 74
AACI Says:
June 22nd, 2010 at 11:56 am
Anonymous – you are making the classic bull error in failing to recognize just how much of the current demand curve is based solely on the delusional expectation of more capital appreciation. That is the *only* reason speculators / amateur-hour investors remain in the current market, given that pretty much everything is cash flow negative at current prices.
Once the capital gains reverse themselves and carrying costs start creeping up due to higher borrowing rates, you are going to see a great deal of the demand curve evaporate very quickly and for a very long time.
That we will reach an inflection point is inevitable, the only question is when. Patience will serve you well going forward; once the momentum has shifted, it will likely go against the bulls for several years.
This is the best post I have seen here in weeks. People heed what he is saying.
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June 22nd, 2010 at 12:28 pm 75
"Seems hard to imagine how inflation will occur now.
The brakes are on private credit and are now being applied to public credit.
So where will inflation come from?"
Well, there's trillions waiting in the wings.. just not being spent today. But if people start borrowing we will have an inflation spike as the velocity of that money increases. Presently the situation we have is akin to printing money and burying it. As long as no one digs it up there will not be any inflation.
Given the amount of money that's being taken out of the system due to the implosion of the debt bubble it's unlikely to be a problem for a very long time. e.g. 1 trillion in printed dollars does not cause inflation when 5 trillion has evaporated in real estate values, loans that can't be paid back, etc. But that will not stop the governments from trying, and may set the stage for a very dangerous and damaging period of inflation if they keep adding to what is essentially a "shadow inventory" of money.
Disclaimer: I am just an armchair economist and not a very good one at that.
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June 22nd, 2010 at 12:32 pm 76
@Kafka:
No it isn't. Prices today don't make sense even if rents and interest rates don't change, and there is no credible scenario for interest rates staying the same and rents rising, or for interest rates falling with flat rents. Indeed there is little prospect of interest rates staying the same and rents not falling.
That's another way of saying there is no credible case for the outcome in Canada to be different from the US. We're just not that different from them.
Bulls have no rational expectations, period. It's not often you can say that but this is one of the exceptions.
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June 22nd, 2010 at 12:34 pm 77
"People should be free to post what they want here. (Except Superbull time – He should be banned)"
Troll or not, he adds more value than you do.
ZING!
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June 22nd, 2010 at 12:35 pm 78
"A lot of people on here also seem to be very bitter and rude "
Its an anonymous internet forum get used to it. What did you think would happen if you start posting all your personal financial details
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June 22nd, 2010 at 12:40 pm 79
@Anonymous: Let me get this straight: Based solely on gut feel, you are preparing to become leveraged 10:1 in a six-figure investment that is overly bloated by every single valuation & activity metric known to mankind? Based solely on gut feel you think prices cannot drop by more than 10%? If you cannot recall that prices fell 20% in 2008 then you have the memory of a goldfish. Prices were on course to fall a total of 40% before emergency government intervention that took interest rates down to values never before seen in this country. This year, there is no such safety net.
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June 22nd, 2010 at 12:40 pm 80
#74 Free speech,
Agreed. AACI nails it at #64.
I personally know 8 people with investment properties that are currently slightly above or slightly below their operating costs. Even a 10% change in the market would put all of them under. A 20% change or more would force a sale.
This is coming. It is only a matter of time now.
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June 22nd, 2010 at 12:41 pm 81
@Free Speech,
Who stopped him from posting? Free speech gives you the right to express your opinion, not the freedom from having your opinion criticized (and actually doesn't apply at all on a private website). I'd say he should be happy to be getting such useful advice.
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June 22nd, 2010 at 12:49 pm 82
Government can't bring itself to say the inflation word publicy. I guess those 500 and 600 thousand dollar a year cunts don't go shopping and get to write everything else off. We've seen that before and may get a glimpse of it again when Sheila fraser audits the bastards expense accounts. She's not allowed to name names or departments but I'm sure we'll get an earful all the same.
BCs Gordon the Idiot has continued to say that the HST is good for us. The most recent study suggests that he's lying and knows it. The HST will hit the average BCer for an additional 1500 per year.
In spite of governments lying through their teeth the BOC says rates will continue to go up in quarter point increments every meeting beginning in July. That synchs with what TD said when it stated that rates will triple by Dec this year. Good luck with that unaffordable mortgage. Between the bankster and the taxman theres going to be a lot of tears on the pillow.
http://www.vancouversun.com/business/Tame+inflati…
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June 22nd, 2010 at 1:01 pm 83
I'm an accountant (ok I guess I can call myself a "professional" but whatever, I don't care, and I'm not 24) I'll tell you, I do A LOT of tax returns, self-employed and employed, and I don't often come across too many young people making over $60k. If I do, they have been in the workforce for at least 10 years, or if they're lucky, they're in trades. Oh, and today I did a return for someone who owns a house he's renting out. The mortgage balance is $350k and he's cash flow-negative by at least $400/month. The house is now for sale, for just a bit over the mortgage amount. His net self-employed income over the past few years has been about $15k. Yes, $15k. Oh and his balance sheet shows an overdraft in the bank nearing $100k. How did he get the mortgage? I have no idea, I guess it's some fancy "self-employed stated income thingy". It boggles my mind. And I really wish I could say that this is unusual case, but this year I have more clients who are in that position-drowning in debt, huge mortgage, moderate-to-low reported income(and if he DID have significant unreported income, why would he carry an overdraft balance of $100k, paying tens of thousands in interest?)
Now ask me if I think the market won't fall. People are leveraged to the max. This isn't going to end well, the numbers say it all.
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June 22nd, 2010 at 1:03 pm 84
Stupid bear I am not supersmartbull. Supersmartbull is kite to moon/browntown/paulb. I am different bull and no I am not the cat either.
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June 22nd, 2010 at 1:34 pm 85
@Not much of a name…:
I really wish people would stop using the term "subprime" in reference to either the US bust or the coming bust here.
"Subprime" was simply a financial industry term for a category of mortgages based primarily on the borrower's credit rating. It had little to do with actual ability to repay which is based on price/income and price/rent. It was excessive valuations which were responsible for falling prices and defaults in all loan categories including "Prime", "Alt-A", and "Subprime". As is the case for all RE busts.
The biggest problem I have with the continuing focus on "subprime" is that it is used as an excuse for the US crash by people who pretend that fundamentals don't matter, i.e. that excessive prices would have been sustainable if there had been no "subprime" lending, or that the bubble and bust were due to lending to poor people and minorities. Both of which are outright lies.
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June 22nd, 2010 at 2:17 pm 86
@Bilbo Bloggins: Very good point Hobbit. Now is good time to consider waterfront property because (a) They're not making more and (b) BP is destroying lots of it. Come on bears, this RE investment advice is free, not like Tom Vu seminar. Time to become rich, but only after FIFA hifi. Wow, how about Argentina, Messi was moving around the field faster than Rennie at an OV open house.
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June 22nd, 2010 at 2:24 pm 87
@Anonymous:
Are you saying there is nobody doing your job and making your salary in California or Arizona?
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June 22nd, 2010 at 2:28 pm 88
@Anonymous: OK Hotlips you're a nurse, that's great now get out there and buy that 500k condo.
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June 22nd, 2010 at 2:48 pm 89
@Bilbo Bloggins:
What does GULF property have to do with us?
It just makes our crap look better and destined to rise in price.
“To infinity and beyond!”
+++++++++
Well, one has premier beaches drenched in sun and oil, and the other has an oily, sun of a beach premier.
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June 22nd, 2010 at 2:49 pm 90
Still, you permabears care to explain why this house sold within a day at a price 50k higher than asking?
http://img714.imageshack.us/img714/6374/381536tha…
BTW, your stats are outdated. Listing has flattened recently while sales has picked up. Look at the stat youself or get it from robchipman or yattermatters. I thought permabears were projecting that listing would continue to go up. So, what happened recently then?
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June 22nd, 2010 at 2:55 pm 91
@Anonymous: I'll give you the benefit of the doubt and believe that you're 24 and make 110k/year. In fact, I AM a little jealous of your salary. You may have some friends who are in the same age group/salary group but rest assure, you represent a very small group of buyers. I'm looking at mls and focusing on the downtown area alone (everything west of carrall st) and I see 1700+ properties for sale. This does not include the pre-sales.
So to say that RE prices will not drop more than 5-10% just because you and your peers can afford a 500k condo is a very weak argument. I even prefer the asians with suitcases full of cash over your argument.
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June 22nd, 2010 at 2:56 pm 92
Ask someone who works in PMC Sierra how much they earned coming out of Grad School at the age of 22. 100k!!! You guys can always dream about owning a SFH on the West side.
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June 22nd, 2010 at 3:00 pm 93
@anonymous456:
Anonymous 456
Thank you! I really wish more accountants would make posts like that. It is truly telling of what is going on. People are buying and living on credit. No wonder the prices are so high, no one is actually buying anything with real money. This feels like Monopoly and the "banker" keeps handing out money to keep people playing.
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June 22nd, 2010 at 3:08 pm 94
I make 100K and I cannot afford shit in this city. And BTW, PMC Sierra i not what it used to be, trust me.
So it's not about 100K salary being an anomaly, it's about how money has no value anymore.
Listen to some hip-hop crap theses days – they no longer sing about being millionaires. "Billionaire" is the key word that you'll find in lyrics today. I kid you not – you have to be a billionaire to enjoy life on the 21st century.
A person, and not even an average person at that will NEVER, EVER be able to work and save this kind of money throughout their lifetime. It's all borrowed, fake, imaginary. But still, it makes people feel good and allows them to continue enjoying their lives as modern age slaves.
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June 22nd, 2010 at 3:08 pm 95
"Where does this shadow inventory reside? If credit is contracting faster than money is printed then that is deflationary, right? I don’t think you can separate the two."
Absolutely, agree 100%. Credit is money in fiat economy. Cash is debt-based as well remember (financed by selling t bills).
How much bailout money is sitting idle in US banks, I'm not sure. Maybe not enough to matter relative to credit destruction just yet but who knows how much more "stimulus" is going to enter the system over the next few years.
Saw an analyst on BNN today basically say the same thing. Was surprised to see such a fringe opinion as my own on BNN!
Actually, lots of fringe getting on BNN these days. Has the tinfoil hat gone mainstream?
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June 22nd, 2010 at 3:08 pm 96
I make 100K and I cannot afford shit in this city. And BTW, PMC Sierra is not what it used to be, trust me.
So it's not about 100K salary being an anomaly, it's about how money has no value anymore.
Listen to some hip-hop crap theses days – they no longer sing about being millionaires. "Billionaire" is the key word that you'll find in lyrics today. I kid you not – you have to be a billionaire to enjoy life on the 21st century.
A person, and not even an average person at that will NEVER, EVER be able to work and save this kind of money throughout their lifetime. It's all borrowed, fake, imaginary. But still, it makes people feel good and allows them to continue enjoying their lives as modern age slaves.
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June 22nd, 2010 at 3:09 pm 97
Sorry about double-posting…
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June 22nd, 2010 at 3:10 pm 98
@Whitebear:
if you finish grad school at the age of 22, you deserve 100k. Most people get their bachelors at 22 (with no experience). If they can't find a job, then they go back to grad school.
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June 22nd, 2010 at 3:14 pm 99
@Whitebear: Bullshit, I worked for PMC for a couple years, starting salary for most analysts was around 65k but it's a theoretical argument as PMC has offshored their operations.
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June 22nd, 2010 at 3:22 pm 100
I don't care how old you are or what you do, if you don't understand the fundamentals, then you should purchase. That's the right thing for you to do. Just don't come looking for help later on.
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June 22nd, 2010 at 3:24 pm 101
@White Payer:
I keep hearing this sort of stuff but the fact is that the average person has a lot more toys, eats out a lot more, and takes a lot more vacations than they did back in the 60's. Even a long distance call was a luxury back then.
Really only houses are less affordable but nobody has to buy one anyway, and prices must and will become affordable again.
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June 22nd, 2010 at 3:31 pm 102
Just when it looked like US stocks were gaining back some of the recent losses, they hit another speedbump, caused by….you ready for this, unexpectedly lower US home sales at a seasonal time that should be the strongest.
All this before 1.5 million Alt-A mortgages are almost due to reset.
Good thing we got enough 24 year old pros to reassure us that it's different here, eh?
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June 22nd, 2010 at 3:32 pm 103
@SuperSmartBull: great argument sandwich board, go buy some in Florida
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June 22nd, 2010 at 3:33 pm 104
@Anonymous: I know I'm jumping in late, but how do you assess this "demand"? There may be demand right now, that you're assuming is there at current prices, but there is always demand at any price.
Demand is simply wants. Wants are infinite, and so is demand. What matters is cash at the table. That's why no business ever depends on "demand". There is demand for penthouses at Shangri La, heck, I'd take one. But I can't afford it, I don't qualify, no one will lend me the money. They can build 10,000 of these things, because you know, there's demand, and I'm still not buying one, and the vendor will go out of business.
The truth will come out when all you young professionals try to go out and buy. If there's demand, how come you're not buying?
What is a "professional" anyways? These days, everyone wants to be a professional. Unless you've got a ring and a secret handshake, you're no professional.
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June 22nd, 2010 at 3:35 pm 105
@jim: next one to respond to trolls goes straight to hell. STOP CLUTTERING THE SITE BY FEEDING TROLLS
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June 22nd, 2010 at 3:50 pm 106
@vibe: "So nobody here thinks deflation is a possibility going forward?"
That's something that is probably impossible to settle. Good reasons on both sides.
Today, there is deflation, as debt is destroyed or paid down, and debt-financed asset prices are dropping due to affordability and credit availability. No doubt about it. Also no doubt for anyone who pumps their own gas and buys their own groceries, many prices of every day things are up, sometimes WAY up. So we're got a bit of a stagflation thing happening today.
At some point, however, deleveraging will peak, and banks will begin lending again. Then credit expansion will resume and so will price inflation, as all the monetary base goes whoosh though the fractional reserve banking system. In the US, it's been more than doubled. And most countries around the world are trying to keep their currency down against the dollar for exports viability, and they will desperately try to match the expansion.
On the other hand, some believe that long term we'll remain in a deflation instead.
I don't buy that personally. There is far too much incentive for governments and central banks to inflate. If there is one thing governments are terrified of, it's deflation (no, not angry voters). Everything governments do hinges on inflation, and deflation will kill them. Bankers love inflation because it gives them arbitrage opportunities as they receive the new money before anyone else, so they lean on central banks to provide ample liquidity.
Finally, history is on inflationists side. There are exactly zero historical episodes of a deflationary end-game. Mechanics of interest compounding assure there will be massive inflation until growth (and promises of future growth) are no longer able to keep up. (Remember, even 2% doubles every 35 years.)
What is unsustainable, will not be sustained. What is unsustainable, has a tendency to keep going, until it suddenly doesn't.
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June 22nd, 2010 at 3:55 pm 107
"Well there will be blood a-plenty soon enough! Starting with the family who spent 5 million on River Green condos last weekend!"
As was outlined in the other thread, it's unlikely the family even promised to pay $5 million, never mind whether they'll ever complete on it. The press release said they bought four condos "worth" $5 million, not that they paid or promised to pay $5 million. Most likely they got a steep discount, which is to say that the quoted number is a complete fabrication since real estate is only ever worth what someone is willing to pay for it.
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June 22nd, 2010 at 3:59 pm 108
how are listings tracking today?
is the coorelation between a late update by paulb and bullish numbers going to hold today (hope not)?
only time will tell
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June 22nd, 2010 at 4:02 pm 109
@Devore:
Inflation versus deflation is a false dichotomy.
What we are likely to see is stagnant wages and price inflation in globally traded commodities and many goods, which means price deflation in many local services and housing.
Especially housing.
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June 22nd, 2010 at 4:21 pm 110
@Devore: "There are exactly zero historical episodes of a deflationary end-game.
Except Japan. So there is exactly one, to be precise.
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June 22nd, 2010 at 4:39 pm 111
@Devore:
You're referring to M1 here right? But that doesn't include credit. If we look at money and credit the total is contracting, I think.
Incentive certainly, but what about ability?
I'm not sure if I'm understanding this statement. Check out this chart of historical US inflation rates. Before 1950 deflation was about as common as inflation. And Japan has been in deflation for quite some time as I understand it. Are you just saying deflation won't last forever? On that I would have to agree.
@Patriotz:
Just because prices rise in some asset classes doesn't mean deflation is not occurring. The value of money must either be increasing, decreasing or staying the same, it's a tautology. The fact that other assets are also changing in value at the same time doesn't matter. Inflation versus deflation is a perfectly reasonable dichotomy.
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June 22nd, 2010 at 5:02 pm 112
Speaking of Pros…can someone please explain to me what are "Urban Professionals"? I keep hearing that term and have no idea what's that. Colleague suggested to think marble countertops, stainless steal appliances, German cars and espresso/late, does it make sense? Haven't ever heard of "Rural Professionals" though.
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June 22nd, 2010 at 5:03 pm 113
Re Michael Levy:
Michael Levy, member in good standing of the local main stream media and well known BC real estate hyper apparently thinks it is all right that he blasts his rubbish on the airways to try to influence the public but he apparently doesn't like to be updated on anything from this board. I have sent him updates on the inventory stats and some other things and this is the thanks I get?
"Please remove me from your email list.
Michael Levy'
I wonder if anyone else would care to update him?
I think he's ungrateful. I'm only trying to help him be more balanced
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June 22nd, 2010 at 5:07 pm 114
OK No More Gordo,
I'll give it a shot.
What's his E-mail address?
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June 22nd, 2010 at 5:10 pm 115
@patriotz: The supply of money is either expanding or contracting. Inflation and deflation. There is also price inflation and deflation, which has usually been fairly uniform and consistent with monetary changes, aside from a bout of stagflation in the 70s, but the differences are getting more pronounced. Central planners simply can no longer control where the money goes, so we get asset bubbles instead of moderate (or not so moderate) general inflation.
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June 22nd, 2010 at 5:12 pm 116
@VHB: I agree with VHB. Trolls are just wasting everyone's time.
Looking forward to daily numbers and maybe and inventory update
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June 22nd, 2010 at 5:13 pm 117
Anon- the astute young professional.
Oh to be young and have a larger salary than IQ in thousands of course. Far be it from people who are older and dare I say it wiser than the ultra smart youth of today. First pull up your pants that might help no one wants to see your shit catchers down by your knees. Anyone who thinks there is a greater likelihood of a condo retaining more value than a SFH is just dumb beyond dumb. There is less value in a condo than a SFH so if condos go down by 10-15% homes will not drop 15-20%. Land appreciates while the building depreciates eventually that house or apartment wil need to be demolished but the land it sits on will always be there.
I never liked condo as an investment but if you can't afford a home it's better than nothing- only marginally IMO.
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June 22nd, 2010 at 5:18 pm 118
@Calabuster: Urban professional is just a new name for Whore.
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June 22nd, 2010 at 5:59 pm 119
I've followed the inflation/deflation debate for a while, and I've heard this one said many times by the inflation camp. The problem with this argument is that it simply isn't possible for governemtns inflate our way out of the huge debt we've accumulated.
Mish has done a wonderful job of explaining why inflation can't just be "created" by central banks, no matter how hard they may try:
http://globaleconomicanalysis.blogspot.com/2009/0…
There's a lot of technical detail in the article, but here's the key part:
Mish's argument is that it doesn't matter how much the central banks print: due to the money multiplier of fractional reserve banking, that amount of printing is a tiny fraction of the total money supply. The money lent by banks swamps the amount of "paper money" printed. This is how the money gets into the real world – through banks lending to consumers and businesses. Central banks can print, but the money doesn't get into the system unless banks lend.
And right now, we are maxed out in debt, so banks aren't lending. Debt is at historically unprecedented levels in the US, Canada, and most of Europe. Just have a look at this graph:
http://market-ticker.denninger.net/uploads/2010/J…
There is no way to print our way out of this, even if we wanted to, because banks won't lend if they don't think they'll get repaid. The above graphs shows just how indebted the US is (and Canada is just as bad).
Deflation is a near-certainty.
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June 22nd, 2010 at 6:12 pm 120
New Listings 240
Price Changes 199
Sold Listings 211
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June 22nd, 2010 at 6:16 pm 121
Personal income = 136,000 yr
My rental business = 90,000 yr
total income for 2010 = 226,000
I'm not buying any property in Vancouver until prices drop at least 30%
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June 22nd, 2010 at 6:21 pm 122
@paulb.:
Wow, strong day. I'm guessing that will cut into the inventory number.
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June 22nd, 2010 at 6:40 pm 123
@Patrick:
Then you should leave Vancouver for rest of your life and spare some room and breathing space for those hard working wealthy Chinese applying immigration in China.
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June 22nd, 2010 at 6:48 pm 124
"Wow, strong day. I’m guessing that will cut into the inventory number."
Not at all. It all balances out…on the DOWN side, that is.
Check out the number of price reductions. That is the more telling stat.
And, could it be that some are trying to beat the HST?
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June 22nd, 2010 at 6:57 pm 125
Patrick and oher astute investors are looking at Vancouver and seeing a loss. There are no investments in Vancouver currently the only people that are buying are the young professionals that think they know better. If an investment doesn't at least pay for itself with 25% down don't buy it. Believe it or not it should . If the only thing that makes it work is the lowest interest rates in history it might not be the best time to buy. Wait young grasshopper then you will learn( when you can snatch this pebble from my hand)
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June 22nd, 2010 at 6:59 pm 126
Another 1% of all inventory dropped their prices today. (Just like the last 15 days)
Stats will tell of a 3% drop in prices for the month of June
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June 22nd, 2010 at 7:07 pm 127
@Boombust: Exactly. Inventory has already played its part in this Opera. Price reductions are the next act to enjoy. Be patient, the fat lady will embrace the stage soon…
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June 22nd, 2010 at 7:22 pm 128
@Dave.: can you not add you fool?
New Listings 240
Price Changes 199
Sold Listings 211
Last I checked 240 was greater than 211. Another reason for this ridiculous bubble…. stupid bulls cannot add and subtract. By their math skills Van RE is still a bargain. Go buy some more property you maroon.
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June 22nd, 2010 at 7:31 pm 129
Looking at Paulb numbers, my impression is that the high sell/list ratio might be due to a bunch of buyers being lured by the first price reductions. I can imagine many people looking at something reduced from 600k to 550k and thinking: that's a bargain!
Well, it is not! Price reductions are likely to continue for a while, given credit market conditions and general affordability.
Hold your guns!
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June 22nd, 2010 at 7:40 pm 130
I want to know what Professional Anonymous does for a living so I can tell my younger relatives to pursue that line of work. That's good coin for a 24 y/old. I don't begrudge anyone for making good money, good for him. I think the thrashing he got here was a bit unecessary.
As much as I share the bear sentiment on this site I tend to agree with Prof Anon that there won't be as steep a correction as 40% or whatever amounts are often mentioned here. Everyone talks about the steep declines in Florida, Arizona etc. but really the comparables to Vancouver are more Seattle and San Francisco. Disregarding the undesirable outlying suburbs of those cities, SEA and SF have not experienced 40% declines.
In addition to the numerous other reasons for Vancouver "being different" that are often articulated by the stupid bull trolls (offshore buyers, desirable city etc.), I would say the following reasons are why I don't think there will be a steep decline:
1. No massive overbuilding.
-Vancouver supply often done by smaller builders which means no massive developments (by American standards)
-Developments are often done in phases and shelved when demand falls.
-Use of pre-sales (vs. spec development) means that falling demand is heeded before development begins.
2. CMHC
-As soon as the U.S. market started their downward turn, credit started to try up as banks refused to take on the risk. As long as CMHC is around to insure mortgages, credit will remain available.
3. Strange phenomenon in Vancouver where everyone in attuned (obsesessed) to real estate as an investment opportunity. Chinese love hard assets and I believe this mentality has spread through all cultures in the city. Everyone thinks about getting rich off RE. Will be difficult to change this mind set.
4. There just aren't that many top tier cities in Canada that are pleasant to live in or have certain career opportunities. Yeah, you could move to Montreal or TO but that is damned far if you have family in YVR or B.C.
I don't offer many predictions about the Vancouver RE market anymore. Who could have predicted the last 10 years? I certainly didn't But I just don't see a 40% correction on a westside SFH. I could see some steeper corrections in the valley and less desireable outlier areas. It will all depend on interest rates of course but anyone hoping a $1m house on Cambie is going to fall to $600k is being a bit unrealistic.
For those of you that will vote me down and consider Prof Anon an idiot for his opinions, I ask this question: Were you right about the last 10 years? Okay, then.
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June 22nd, 2010 at 7:42 pm 131
The 90 day interest rate guarantee for most banks and institutions expires on June 28. I have three clients bought at the begining of this month just for the low rate. There are a couple of banks such as RBC got 120 day rate guarantee so their rate guarantee expires on July 27. Expecting some more sales next month.
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June 22nd, 2010 at 12:43 pm 132
52 Woodrow;
Marko changes his story and admitted to it on HHV…
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June 22nd, 2010 at 7:44 pm 133
@Anonymous: You mean the ones that fucked up their own country so bad they all want to leave so they can come here and fuck up this one? Those hard working wealthy asians?
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June 22nd, 2010 at 12:46 pm 134
@YP:
If it makes you feel any better, I’ll explain: We’re all a bunch of anonymous posters here. Any of us can say anything, and nobody has any way of proving or disproving anyone else’s claims. Therefore it’s wisest to take any non – verifiable claims with a grain of salt.
You had mentioned friends in the service industry who claim to make 50 – 60K a year. I spent a lot of time in the industry myself, and was at a head chef position for a season. If you were to extrapolate my monthly earnings I would have been at about 75K per year with tips. However, that was working about 14 – 16 hours a day, 28 – 30 days per month (except February because you know some smartass is going to mention it). Obviously however you can’t work like the for more then a few months without collapsing.
You may be making as much as you say and if so, my opinion shouldn’t matter at all.
@superbulltime:
Ah -HAH! Your fake-bad-English slipped a bit there, and you seem to know a fair bit about the Halifax Explosion, including that it was caused by a ship, specifically a muitions ship…. looks like you’re not the person you’re pretending to be.
Thanks for making my point. See what I mean about non -verifiable claims, @anon?
Yes, half the city got vaporized in the explosion, I live in the part of the city that disappeared. Fortunately that disaster forced governments the world over to reconsider safety regulations.
I shudder to think what’s going to happen to Richmond sooner or later, and no regulation will be able to ameliorate *that*.
As I said before it’s not so much that I miss Van, it’s that the housing obsession is fascinating. It really is. If it’s any comfort I check out Greater fool, too.
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June 22nd, 2010 at 7:48 pm 135
@Anonymouse: What city in Canada fell the fastest and furthest from April 2008 to March 2009? nuff said
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June 22nd, 2010 at 7:49 pm 136
@Anonymouse: "Everyone thinks about getting rich off RE."
Yeah, no one in the US thought that in 2002-2006. You're right–we ARE different!!!
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June 22nd, 2010 at 12:56 pm 137
@bums up2
But that will not stop the governments from trying, and may set the stage for a very dangerous and damaging period of inflation if they keep adding to what is essentially a “shadow inventory” of money.
It seems to me we already had a damaging period of inflation for the last 20-30 years. I don’t see where inflation comes from without credit expansion going forward and I think the opposite seems more likely.
Where does this shadow inventory reside? If credit is contracting faster than money is printed then that is deflationary, right? I don’t think you can separate the two.
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June 22nd, 2010 at 7:56 pm 138
rush to beat rate hikes and hst will persist for another week or two…
watch for massive sales slowdown in mid-july. that said, sales for june are….tepid at best (they are SLOOOOOW).
Price declines this month – u betcha. Big time.
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June 22nd, 2010 at 12:58 pm 139
@scullboy:
“As I said before it’s not so much that I miss Van, it’s that the housing obsession is fascinating.”
Yep, sad but true. It’s like a wreck at the side of the highway, everyone wants to crane their neck and check for blood.
Well there will be blood a-plenty soon enough! Starting with the family who spent 5 million on River Green condos last weekend!
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June 22nd, 2010 at 12:59 pm 140
forgot the quotes on the first paragraph there.
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June 22nd, 2010 at 8:06 pm 141
Looks like the developer has a few extra units they can't sell…
http://vancouver.en.craigslist.ca/van/apa/1805941…
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June 22nd, 2010 at 8:08 pm 142
145 anon there are so many of you it's hard to keep track. Although we all appreciate your opinion. It's weak 1 overbuilding we have had a lot of building going on which is what tends to happen in a boom and when the bust comes we somehow have this glut of inventory.
2) CHMC is solely responsible for pumping up the bubble to the level we have now. Ie 0/40
3) As far as the mindset of RE being an investment based solely on speculation will change as soon as their is blood in the street guaranteed.
4) Just because Vancouver is one of the so called top tiered cities as you so eloquently stated. This lame reason doesn't justify one of the most expensive city on the planet if you think it does you need to get out more.
He who laughs last laughs best. So for now laugh it up. Time is on the side of the bear.
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June 22nd, 2010 at 8:10 pm 143
@sluggo:
Michael Levy
mlevy@shaw.ca
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June 22nd, 2010 at 1:11 pm 144
BC provincial 12 month deficit forecasted at $3 billion on 4.5 million population. To equate to California which news media is stating on the brink of bankrutcy, they have 36 million population. On similar ratios, that would put be like BC at $24 billion shortfall for comparison.
I think this BC housing market has already entered the crash, looking at 30 to 40% decline by X-mas. Both provincial and federal government have made billions in phony tax revenues from a flawed monetary policy. The 10 year credit asset boom has artificially generated tax revenues for governments on a false economy.
Hence, the HST.
The next shoe to drop in due course should be public sector wages. They are grossly overpaid in relation to the wealth creation of the economy.
Public sector wages and BC Housing: TIMB BBB EERRRRRRRR!
Just like in California, Florida folks.
Take a look at the Olympic village – what a complete disaster – ghost town.
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June 22nd, 2010 at 1:12 pm 145
@anonymous456: Bang on. My wife is an accountant and I hear the same thing over and over.
Canada will be no different that the US. We have our own subprime mess that nobody wants to believe is there. Just wait until RE prices fall. I think it will be exposed at that point. How many people over the last few years who get in trouble are just able to sell and walk away unscathed? This option won’t be available when they are underwater.
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June 22nd, 2010 at 8:12 pm 146
@Anonymouse: Is this the best that the bulls have? Seriously?
1. "No massive overbuilding. Developments are shelved when demand falls"
Stoping new contruction after a bubble has peaked is already too late. And the demand that existed while the good times were rolling was influenced heavily by speculation and bandwagon jumping, causing overbuilding. Ever hear of the expression "I buya three, husba buya three?"
2. "CMHC is around to insure mortgages"
Believe it or not, this amplifies the bubble problem in Canada
3. "Everyone thinks about getting rich off RE. Will be difficult to change this mind set."
I agree with VHB…absolutely no one in Florida, Vegas and California thought like that.
4. "There just aren’t that many top tier cities in Canada that are pleasant to live in"
Ever look at a population chart for Vancouver? Looks a lot like what Shiller had in his book, Irrational Exuberance:
http://www.mymoneyblog.com/images/0612/shiller.gi…
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June 22nd, 2010 at 8:13 pm 147
I predict average price drops for detached homes for June at 2-3%, with benchmark prices down around 1% for the month.
July should see at least the same amount, and double these numbers for the fall.
This is where the market will start to get killed.
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June 22nd, 2010 at 8:17 pm 148
Oh yeah!
I'm 18 and I make 38,000 a month distributing monavie
suckaz
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June 22nd, 2010 at 8:18 pm 149
@VHB:
@Anonymouse: “Everyone thinks about getting rich off RE.”
Yeah, no one in the US thought that in 2002-2006. You’re right–we ARE different!!!"
Sure, Americans were speculating as well but I would be willing to wager there is greater percentage of people in Vancouver looking to be RE investors (either speculative or long-term landlord) compared to anywhere else in North America. I can't tell you how many people I know personally (all solidly middle class, non-chinese) who have already invested or want to invest. Not their principal residence, I mean a real investment property. Its almost a sickness.
As others on this site have pointed out, this is all because Vancouver has no real industry to speak of. Real estate is all anyone talks about.
Of course, a real significant downturn would cure the sickness but it would have to be severe.
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June 22nd, 2010 at 8:19 pm 150
200+ is a good sales day, no doubt. But in 2005,6,7,9 sales were 4000+ for June, meaning you had to **average** 200 a day. We around this bear cave have just been spoiled by the bear-tacular spring that some are all mopey when sales hit 200 for a day. We're so used to sh!tty, that sh!tty plus epsilon smells like a bouquet of roses.
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June 22nd, 2010 at 1:21 pm 151
Seems like we’re back to a seller’s market. The buyers in River Green turned out to be smart with the timing of the buy.
Permabears, care to explain why this house sold within 1 day at a price 50k higher than asking?
http://img714.imageshack.us/img714/6374/381536thave.jpg
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June 22nd, 2010 at 8:22 pm 152
"but I would be willing to wager there is greater percentage of people in Vancouver looking to be RE investors (either speculative or long-term landlord) compared to anywhere else in North America."
I wish I could take that wager. Did you not watch any TLC or other housing-porn shows between 2003-2007? The US was SATURATED with housing puffery in the mid 00's.
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June 22nd, 2010 at 8:28 pm 153
yalie says:
There is no way to print our way out of this, even if we wanted to, because banks won’t lend if they don’t think they’ll get repaid. The above graphs shows just how indebted the US is (and Canada is just as bad).
Deflation is a near-certainty
they said that in the early 70's also. i like mish, but better is roubini. no one has better understood the inflationary and deflationary pressures (and how they manifest) than roubini. monetization and inflation will come to the u.s., japan and other nations with the ability to manipulate their currency and bond markets. canada is positioned that way also. deflation for now but look out mid to long term.
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June 22nd, 2010 at 8:31 pm 154
@Anonymous:
Care to elaborate on that position?
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June 22nd, 2010 at 8:32 pm 155
@crashcow: @Anonymouse: Is this the best that the bulls have? Seriously?
LOL, trust me I'm not a bull. I would be thrilled with a severe price reduction, believe me. I'm bearish in sentiment but the Vancouver market has a way of proving me wrong time and time again.
"Stoping new contruction after a bubble has peaked is already too late."
Agreed. I'm just saying that the expansive overbuilding in Florida and Arizona has not taken place to the same extent in Vancouver.
2. “CMHC is around to insure mortgages”
Believe it or not, this amplifies the bubble problem in Canada"
Dude, no kidding. IMO, CMHC is freaking evil and it pisses me off to no end that a government agency is participating in making housing so unaffordable. But as long as the government is backstopping CMHC and CMHC is backstopping mortgages what is going to stop the credit flowing? This would require a major and collossal financial catastrophe in Canada which I don't want to happen.
3. “Everyone thinks about getting rich off RE. Will be difficult to change this mind set.”
I agree with VHB…absolutely no one in Florida, Vegas and California thought like that."
Okay, fair enough.
4. “There just aren’t that many top tier cities in Canada that are pleasant to live in”
Ever look at a population chart for Vancouver? Looks a lot like what Shiller had in his book, Irrational Exuberance:"
Looked at the link but it doesn't really refute my argument. In Canada only Toronto and Montreal are comparable cities to Vancouver and both are far away, colder, blah blah troll talk. At least in the U.S if Manhattan is unaffordable you can move to Philly, Boston, Chicago, SF, Seattle etc. etc. Canada just has a dearth of good cities to live in. Most of our population is centered about 3 or 4 large cities and everyone wants to live there.
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June 22nd, 2010 at 8:35 pm 156
@Anonymouse:
Compare this logic with the following:
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June 22nd, 2010 at 1:44 pm 157
What does GULF property have to do with us?
It just makes our crap look better and destined to rise in price.
“To infinity and beyond!”
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June 22nd, 2010 at 8:57 pm 158
@crabman:
Agreed. Actually some of those friends who invested bought at the peak 2 years ago and are burned a bit right now. Its always the ones late to the game that get hurt. But even with those stories I still know people who want to invest!!
Look, I'm not here to say that you are all a bunch of idiots. I come to this site regularly and enjoy reading the insight here(helps to validate that I am not crazy). I'm just saying that I am doubtful of a huge 40-50% crash.
Now, if I'm wrong I will gladly come back to this site in 2 years and invite you all to my $600k Cambie house and we can share a pint (or a cranteeny!) on my back porch and have a good laugh over how wrong I was. I don't think I would be so happy to be so wrong about something.
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June 22nd, 2010 at 9:09 pm 159
@Anonymouse: Deal! And if you are right and Vancouver doesn't drop much more than 10%, I'll invite you over to my (future) home in Seattle or Portland for a pint!
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June 22nd, 2010 at 2:15 pm 160
#92 Whitebear,
Good grief. Another full of bull who can’t add and doesn’t understand statistics. Listings outpace sales every day for 3 months but somehow we pop back into a sellers market because of a con job done on the weekend to try and convince people Van Re is back.
New term – Deniabull. A bull living in total denial of the current collapse of Real Estate in Vancouver.
It is different here. We have more stunned Bulls and Greater fools than anywhere.
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June 22nd, 2010 at 2:17 pm 161
Kafka says:
“@AACI: Well, that means your assessment hinges on:
1. Carrying costs rise
2. Mortgage rates rise
Really this is what the bears and bulls differ on in terms of their rational expectations of these two variables. A more interesting question is how these two move together when you include, say a unit’s own rental suite into the mix.”
I’m not sure what kind of distinction you are trying to make between 1 and 2? IMO they are equivalent for all intents and purposes within the context of this discussion since we are really only considering one variable that has the potential to shift substantially (carrying costs of mortgage financing).
Also, my assessment is not contingent on higher rates in the future, fundamentally the market is already (has been for several years) unbalanced. A rise in carrying costs will merely serve as the gasoline on the fire that is already smoldering in the stages of it’s wonderful infancy.
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June 22nd, 2010 at 2:19 pm 162
@Boombust:
Nurse are not professionals. Why did people vote him down? There is only a handful of jobs classfied as professional and nurses are not one of them. Doctors however are. Real estate agents are not.
Professionals were designated by the Royal Charter.
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June 22nd, 2010 at 2:25 pm 163
A professional is generally a person who is “prescriptive”. They can select a course of action/treatment that will. hopefully get a job done.
Teachers, doctors, lawyers…
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June 22nd, 2010 at 9:30 pm 164
What we've seen in all real estate downturns is people rushing on a collapse and buying, but then they get burned too. In the 80's we had ten years of slow motion collapse where investor after investor had thought he'd bought at the bottom only to be proven wrong. It took twelve years to bottom out before we had a two year flattening trough where the market was stable. Then the government stepped in and played silly buggers with the market. Canada will not publish its debt to GDP figures but most other western countries are 125% in the hole. The USA continues to dig itself into a hole which they admit will be technical insovency at 125% by 2015 at the current rate of deficit spending. A spectacular feat for a peacetime economy.
And here we are in little Vancouver thinking that we're isolated from the global economy. The bulls are touting the Chinese as the saviour…rubbish as it is. The Chinese are the least sophisticated investors in the world ie they are the least sophisticated people with as much capital as has been devloped in the current cycle. Does anyone remember when the japanese were the masters of the universe and were buying everything in the art, film and real estate universe? Now they were smart sophisticated people with an incredibly adept financial IQ. Tp put the Chinese investor up against the Japanese would be like Kasparov playing a two year old…sorry but thats just a fact.
The local whores have found another fluff piece on which to pin the story of the ever expansion of the never ending market. If you said that a Japanese conglomerate still owned 30 Rock, you'd be dead wrong. If you got to know a few Chinese businessmen you'd be suprised why they're known as onion farmers in the business world. Money doesn't make you smart, it does however have a habit of being able to find it's rightful owner.
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June 22nd, 2010 at 9:34 pm 165
@jim:
You do realize that listings expire don't you? Before you go off on a rant and start calling people stupid, you might want to get your facts straight. mmmmmm…k?
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June 22nd, 2010 at 2:41 pm 166
A 24 year old making 110k in this city is an anomaly. I think a person getting into a trade, real estate sales or drug dealing right out of high school would more likely be at that income level than a recent university graduate. Interpolating statistics for average income by age would indicate the normal 24 year old in Vancouver likely makes between 30 – 40K.
Recent graduates are having an incredibly hard time finding decent work as the employment situation remains bleak. The reality in this city is probably less than 10% of the 24 year old demographic can afford to buy a home without a massive cash infusion from parents.
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June 22nd, 2010 at 9:46 pm 167
@Anonymouse:
I have American relatives who are lovely people, but who are my canaries in a coal mine. They have been taken out by every bubble there's been. They currently are locked into three investment rental houses in an upscale coastal market, and they're losing month over month.
What they're learning is what the Vancouver rental market is beginning to learn.
1) Rents are tied to incomes.
2) In a bubble, every owner thinks they've got a Spectacular Luxury Home that will bring in Above Average rents.(Just like everyone thinks they're an above average driver.) Granite isn't *actually* as big a deal as people think to the renting public. Price and location, space and light, silence or noise tolerance, pets or no pets – these things matter.
3) Like any business, being a landlord requires planning, work, specialized knowledge, and investment.
The only reason that rental investment looks good is because of substantial YoY appreciation. Actually being a landlord isn't a cakewalk: it's work, shit breaks, tenants aren't all 24 year old professionals making 110K per year who neither smoke nor party nor want animals, vacancy loss can quickly eat into your reserves, and at these prices you're not turning monthly profits. So, it doesn't even take a substantial correction to change people's tune on RE investment.
It takes one shitty tenant, or one family of squirrels in the attic, or one year of prices NOT zooming upwards by 20% YoY, or three months of vacancy loss, or …
It's a business. And it's saturated at a price point above the main renting demographic. Like all the fast food joints upgrading and competing between Earls and CinCin; people are holding on and selling in a year, or in two, but when prices stagnate, it'll take the investors out.
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June 22nd, 2010 at 9:47 pm 168
@Anonymouse: OK, looks like you agree on the first three points. Let’s discuss the fourth…
Your argument is the classic “Everyone wants to live here.” That the price elasticity of demand for Vancouver real estate is low because there are few good substitutes for this ‘pristine paradise.’ But I say to you and all prospective buyers – you can have your cake and eat it too. You don’t need to buy to live here, rent!
But of course the herd never wants to rent during a housing boom. It’s clearly documented that during the housing boom in the US, Americans had the motto ‘ownership is kingship.’ But after the peak in ’06, ownership suddenly felt like a ball and chain. The herd’s mindset will change here in Vancouver too. All it takes for a bubble to burst is for price appreciation to stop, revealing the true underlying value of the asset.
The Shiller graph is to disprove the myth that prices are rising because everyone is moving to this paradise. The graph shows that we never had a sudden ‘spike’ in population that caused a corresponding spike in home prices.
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June 22nd, 2010 at 9:50 pm 169
@VHB:
I remember the show called, "My House is Worth What?!" on HGTV. (Hosted by Kendra whatever the name was… who won the Apprentice several years ago)
That was the pinnacle of the US puffery.
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June 22nd, 2010 at 10:10 pm 170
@Anonymouse: Is this a new development? Not sure how long you've lived in Canada but Vancouver has always been located where it is today, so has Montreal and Toronto. So what's different this time?
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June 22nd, 2010 at 10:51 pm 171
Hey PC assholes you may want to watch the CBC Expose on CSIS.
They confirm everything that the rest of us have been suspecting for years!!!!!!!
China aggressively spying, influencing and recruiting other chinese within Canada. This includes Canadian politicians.
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June 22nd, 2010 at 11:14 pm 172
@huckmeabone:
I thought you were going to stick to real estate.
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June 22nd, 2010 at 11:38 pm 173
@crashcow:
"@Anonymouse: OK, looks like you agree on the first three points. Let’s discuss the fourth…"
I only conceded on the one point about how investment mentality was as strong in the U.S. I stand by every other argument I made.
Its interesting that everyone here tries to dismiss the "its different here" argument. You have to keep in mind that in reality, every city, every market is different in some respect. There are many places in the U.S. that did NOT experience the RE boom from 2003-2006 (nor did they experience the ensuing bust). In the bust some cities dropped 40%, some 10%. Even within the same city certain locations experienced different conditions. Every place IS different. That is not to say that any particular city is immune from a bust but there is always a unique set of circumstances that has to be acknowledged.
Having said that, no market is immune to interest rates or availability of credit. I think those are the only things that can take the Vancouver market down significantly.
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June 22nd, 2010 at 11:42 pm 174
@huckmeabone: Wherever there is a vacuum – economic or political, outside forces will move in. It is only a matter of time before the true shade of Chinese intentions in British Columbia, beyond "investing in RE" emerges. The Chinese invasion is subtle and silent but salient. You only realise it when everything you see is tagged, ‘Made in China’ and English is officially SL in BC.
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June 22nd, 2010 at 6:01 pm 175
YUPPIES = Young Urban Professionals
That is where the term originated in the 80′s. (along with parachute pants on civilians) also DINK’s = Dual Income No Kids.
They were negative terms for people who were probably having more fun than the people who lobbed them.
Think Bud Fox in the movie Wall Street.
Ironically, there are a lot of young urban people in Vancouver, but not a lot of young professionals- this aint exactly manhattan.
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June 23rd, 2010 at 4:17 am 176
@vibe:
There isn't any such thing a a global objective "value of money". Only the prices of individual goods, services, or assets. You have to define some sort of index to measure collective inflation or deflation. Consumer price, wage, and asset price inflation/deflation are all different phenomena and can move in different directions. When they do you can't really say objectively that there is "inflation" or "deflation" without qualification.
Of course at times they do all move in the same direction, usually up, but sometimes down (early 1930's, Japan less severely recently).
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June 23rd, 2010 at 8:34 am 177
http://tinyurl.com/343lg8t
This is the killer scenario that I hope every night before bed that I won't wake up to this. IMO, it's not about the fundamentals of the absurb valuations in Vancouver. It's about the resolve governments will attempt to kick the can down the road. Those bearish on the real estate, are you prepared for such scenario?
Check out the latest news on the US housing market and what do you think the US administration will attempt to do next? We can easily be looking at a situation where the nominal prices is up 2x from here while the real prices loses > 50%.
The Canadian government has not even gone the quantitative easing route yet as the US, EU, the UK did. That's a route that I can guarantee they will take if housing really craters in a year. Damn the savers from their opinion!!!!!
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June 23rd, 2010 at 8:49 am 178
@anonymous456:
What you say your about experiences doing people's tax returns is interesting. We keep hearing about 40k average incomes and no "big employers" in Vancouver. When i'm out and about i cannot help but wonder where people make all the money they do to allow them to "live in that house / drive that car / buy those $200 jeans etc" It MUST be the level of comfort people have living in debt that allows them to spend so lavishly.
I just took my 9 year old to see Star Wars in Concert at GM Place – very impressive show. However, it's amazing how much everything costs, and yet so many appear to have no problem paying these prices:
Ticket $75, "event parking" $25, child's Star Wars T-shirt $35-40, soft drink $4-5, mini doughnuts $5, event program $30!!! Now i was too cheap to buy the t-shirt (buy it online for 1/3, or the program ($30 for a magazine?!), but armies of families walked around GM Place last night dripping with extras and junk. Where do they get this kind of disposable income?
This was an expensive night out for my family, yet there appeared to be so many people just buying everything. I make over twice the average, rent a house, and yet the cost of this type of event still makes my eyes water!
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June 23rd, 2010 at 8:53 am 179
"You have to define some sort of index to measure collective inflation or deflation. Consumer price, wage, and asset price inflation/deflation are all different phenomena and can move in different directions"
You're confusing cause and effect and calling them the same thing. Inflation isn't a rise in prices; rising prices are however a common symptom of inflation, which is simply a net expansion in the supply of money and credit.
Prices change for lots of reasons. Scarcity, for example, has absolutely nothing to do with money supply, but if we were to have a severe oil shock it could move the price of gas up even if prices everywhere else were collapsing because we were in severe deflation.
http://globaleconomicanalysis.blogspot.com/2006/0…
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June 23rd, 2010 at 9:20 am 180
@Anonymous: credit cards.
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June 23rd, 2010 at 9:44 am 181
“but I would be willing to wager there is greater percentage of people in Vancouver looking to be RE investors (either speculative or long-term landlord) compared to anywhere else in North America.”
I agree with VHB and his US Housing Porn comment. The original poster demonstrated amazing short sightedness if he really believes Vancouverites are the most property obsessed population.
He should have lived in the UK or Republic of Ireland over the last 10 years. Getting rich from flipping houses usurped almost all other conversation. Every monkey was at it. As i've said before, my hometown of Belfast has become a much nicer place since house prices fell 40% over the past 2 years. The ugly swagger has gone from the people. Now no one talks about property speculation – it's a forbidden topic because you never know who has a 200k mortgage on a place valued at 110k – and yes, i know someone in exactly that position. By the way, if you think only Vancouver experienced a "real" housing boom, the terraced house i'm referring to could have been bought for about 40k 10 years ago.
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June 23rd, 2010 at 11:01 am 182
I am 29, work as an engineer in the Vancouver area and make a little over 100k a year. I work with 600 other people many of whom make much more than I do. 100k+ salaries among people in the Vancouver area that are in their late 20's / early 30's are not that uncommon. Many couples I know are pulling in close to 200k. The average incomes don't come close to this, but as mentioned, a lot of people I know are pulling in a lot of income under the table. This is the competition for houses in Burnaby / Vancouver / Downtown / Richmond.
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