Is there an echo in here?

Jonathon sent in a link to this great ‘blast from the past’ interview with developer Sam Zell about whether there was a real estate bubble in Miami.  He makes some very compelling arguments about why there is no real estate bubble, and some of them sound remarkably familiar somehow.

Q But U.S. home prices are up about 40% in three years. How can this not be a bubble?

A Econ 1001: Prices have gone up because the demand has been much greater than the supply. The country is producing all it can in terms of supply, but what you see is more demand. Over the next 10 years we’re going to add a million new household, much of that’s due to immigration.

Econ 1001 is very advanced, so you may not understand that.  Here’s something you will understand:

Q How bad could it get?

A Worst-case scenario? A flat housing market. Look, all I can tell you is we’re the largest owner of apartments in the U.S. and among the largest converters of apartments to condos. If there was a danger of a bubble, would we be in this business? I’ve never been accused of being a Pollyanna, I’m the Gravedancer. Americans don’t understand that we have the cheapest housing in the world. London and Tokyo are more expensive than New York. Why do you think everyone is going to South Florida from Europe? It’s because prices here are cheap compared with there.

Understand?  South Florida is cheaper than other places, and everyone wants to live there.  Ergo, there is no housing bubble in Miami condos.  All of those arguments just happen to be applicable to Vancouver BC as well.

Here’s the ‘flat market’ in Miami since that argument was made, but always remember: ‘it’s different here’.

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Devore

@patriotz: Such are things when you're talking inflation/deflation. You really have to define your terms.

Neither here nor there.

I'm just surprised that people, RE bears of all, would settle for negative real return to 'save" their money, so they can leverage themselves 3-5x annual income to buy a house, which they see as an investment, presumably a safe one, but look at ACTUALLY investing their savings as gambling.

Boggles the mind.

Peter Pan

, specialfx3000 is correct… I did e-mail the lady and told her the market was trying to tell her something about the price she wanted for her back alley special. "Rant" is a little of a strong word, though… She responded back and I quoted some of her reply…

patriotz

@Devore:

Asset deflation and price inflation. That’s not contradictory.

I agree that's not contradictory, in fact the latter is likely to lead to the former when you have stagnant wages.

But that's not what you said. 😉

Devore

@patriotz:

These two statements are contradictory.

Asset deflation and price inflation. That's not contradictory. I meant what I said. It's now more important than ever to ensure your savings and your retirement are beating real inflation of things you need: food, energy, transportation, healthcare, taxes, user fees.

The no-effort, couch-potato method of investing in a GIC guarantees losses as far as the eye can see.

specialfx3000

@grant:

In a previous thread, it was mentioned that someone contacted her (Peter Pan?) ranting about the unit and her response included the quote, indicating lots of demand.

That was weeks ago and apparently the listing is still there.

grant

Peter Pan, your quote does not actually appear anywhere in the craigslist ad… where are you getting it from?

Peter Pan

Crazy Laneway Lady is still posting on Craigslist for her $1650 Rat Box Back Alley Special, despite "countless responses and viewings we have had, as well as the applications we already have in hand well BEFORE the application deadline we have set."

Here's her e-mail just in case you'd like to share your enthusiasm for her "special rental"…

hous-gjhcm-1844338819@craigslist.org

realpaul

25 US cities where life is good, incomes are high and houses (median) are well under $100K since the correction has rationalized prices.

http://money.cnn.com/galleries/2010/moneymag/1007

I read another article recently that said that Miami is booming…………for renters. RE is Toxic in the US, that is keeping prices real and the pimps in their place.

Spec

Hat's off VHB – that canequity site is gold, GOLD! I tellsya. Thank you.

VHB

Victoria isn't sliding down slowly like we are–they are truly crashing. Sell lists<40%. Sales down 50% from last year.

Check out this 19% haircut. Maybe the asking price was crazy high (I know nothing of this prop) but still.

"Here is a sale that came through today in saanich west.

330 hector rd. (decent house on 5 acres)

Assessed at $904K

Orig. ask $895K

reduced to $789K

SOLD $725K"

VHB

Hey, has anyone ever seen this site before? Major score! Lotsa new data there on mortgages. Pope–this is your post for tomorrow–show everyone this site and let them play with it!!! What do you make of this picture? I think the July 2010 is so superlow because the month is only half done. It says on there that data up to July 14th are included. What's the y-axis there? Does the graph plot the % of total mortgage apps over this time period that occurred in a given month? That is, say there were 1000 apps between 2002 and now and 15 of them happened this month, would it show '1.5%'? That is how I interpret it–there are 9 years of data or so times 12 months, so on average each month would have 1% of the apps. That's pretty… Read more »

Spec

More RE news in the MSM.

http://www.youtube.com/watch?v=o4q8VNXX3Js

I'm patient enough to wait this out – not to try to time it mind you (not waiting for "bottom"). I have metrics in mind and when I can get them lined up, take the plunge I will.

oneangryslav2

@Poor Bear Camps:

But anon, the market is the US is still crashing…..it went up for 4 or 5 years and we are in the 5th year of declines…no bottom yet

Vancouver went up for 8 years…do you really think it will drop the amount you want in 2-3 years, or is it more reasonable to think it will take a much longer time….

Over a nine-month period during 2008, the benchmark price in Vancouver fell by 15%, for an annualized gain of 20%. Were that rate of decline to continue for three years, the result would be a 48.8% [1-(1-.20)^3] drop in prices, wiping out 7+ years of gains.

Hell, if it falls at 10% per year, it would take just over 6 years for prices to fall 50%.

Jimmy

Perhaps no one wants to buy?

http://www.theglobeandmail.com/report-on-business

Sex sells. No, wait. Maybe it doesn’t

For years developers have used sex and lifestyle images to sell real estate, but some industry insiders say it doesn't work and are calling for a more genuine approach

Anonymous

@Poor Bear Camps: Your wife is barking you to open the back door and the bank foreclosure officer is at your front door. Who do you let in?

No phone calls today? Better check your phone wasn't disconnected 😆

VHB

So it's July. Pretty big yawn.

Anyone remember April? Here were the dailies in April. I remember right after Easter. We had rarely if ever had 400 listings in a day. Then BOOM! 500 listings days back to back. Oh, yeah, baby.

AND 300+ sales on the same day. That was the crazy pre-April 19th time.

sell list ratio

6-Apr-10 181 392 46.20%

7-Apr-10 364 537 67.80%

8-Apr-10 161 520 31.00%

9-Apr-10 75 300 25.00%

12-Apr-10 211 341 61.90%

13-Apr-10 169 379 44.60%

14-Apr-10 233 463 50.30%

15-Apr-10 187 292 64.00%

16-Apr-10 152 345 44.10%

19-Apr-10 89 327 27.20%

20-Apr-10 194 477 40.70%

21-Apr-10 329 481 68.40%

22-Apr-10 241 391 61.60%

23-Apr-10 97 260 37.30%

Devore

@Poor Bear Camps:

I give props to #89 as he was the only one to try to counter a point I raised…

No one is "countering" your points, because… hmm, you didn't raise any?

Only "point" you made is to claim that those who bought in 2006 will be able to financially hold out until they again are able to break even (minus inflation, minus prop taxes, minus interest, minus maintenance) at some point in the future, all the while stressing out and hoping they are not forced to sell at a loss (or short sell) due to life circumstances.

That sounds like a winning plan to me.

You do not say what those who bought after 2006 should be hoping for.

Best place on meth

@Poor Bear Camps:

"Sorry, but RE agents are too busy making money to frequent this site…"

Whoops, I stand corrected. You ARE as stupid as jimtan.

Why would those shitbags be too busy to frequent this site yet have plenty of time to post their mindless cheerleading on RET?

Superfly

Double digit sales today – nice! We are starting to see the post HST sales now with dramatically lower sales of new builds expected.

Benchmark prices will probably be down 10% by September (5% now) and accelerating in the Fall if sales stay low. 20% by year end takes us back to 2006 prices.

http://www.chpc.biz/Vancouver_Real_Estate_Chart.h

Best place on meth

@kabloona:

No, this poor frustrated soul doesn't sound nearly as stupid as jimtan.

I am pleased that we piss him off so much though.

Poor Bear Camps

92…

Sorry, but no Jim Tan, no white guy pretending to be an Asian with ESL, no realtor, no RE TALKs rejects…

I give props to #89 as he was the only one to try to counter a point I raised…

But anon, the market is the US is still crashing…..it went up for 4 or 5 years and we are in the 5th year of declines…no bottom yet

Vancouver went up for 8 years…do you really think it will drop the amount you want in 2-3 years, or is it more reasonable to think it will take a much longer time….

kabloona

#88 Poor Bear Camps……

Uh-oh, looks like Jim_Tan is back….and somebody gave him a computer!!

😉

Anonymous

@Poor Bear Camps:

Every single REALTOR I have ever met was an idiot. Either that or they simply think this is how it's done…

Poor Bear Camps, you are definitely not an exception.

Anonymous

@Poor Bear Camps

And if the market ever corrects, it will take years and years and years to reach the bottom, which is the ONLY time you can buy if you are going to justify your years of bearishness.

In most markets in the US, the bulk of the crash took just 3 years. Add to that, the years of saving with the cheques going straight into the bank. I can easily pick a popular communications stock for example on the TMX that yields a 5% dividend…..thats 40% in 8 years plus capital gains….25% without even trying. Even after taxes, I'm still in a good position. With the luxury of waiting for a favourable time. When the time comes, putting more down will mean much less in interest payments.

Vulture Fun

@chilled: That's funny, I was considering doing something similar, like requesting a semi-permanent hold or freeze on my account, making it clear that there won't be any withdrawals, only deposits. Maybe I'm extremely paranoid, but OTOH, maybe they are extremely casual. I asked about security, hoping to be reassured, and their response was "That's just the way we do things here." Whatevs.