On a side note, the US is in real trouble. Prices are still low even though they can get 30 year fixed mortgages at historically low rates.

Correction: Prices in the US are still high. Apart from the real disaster areas like some Florida markets, prices in the US still exceed historical multiples of rents and incomes. Particularly places like Seattle and NYC that were slow to start the bust.

Prices in the US has been inflated for so many years that people have lost perspective on what fair pricing really is. In most markets, that’s 3x median income. That goes for here, too, although historically Vancouver has been 4x income.

Current score: 9 (to vote for this comment, please visit the site)

It was a good discussion and I tend to agree with you; markets are interconnected and complexity spills over especially when you are looking at projections of yeild going into the future.

Current score: 0 (to vote for this comment, please visit the site)

http://www.thomaspalley.com/do.....ployer.pdf

However, republicans/austrian economics would argue it would rain fire and puppies if this went through so I don’t think this would ever pass.

Note the chartalist taxes drive money concept should be thought of broadly. Example: food is a life tax that must be serviced.

Current score: 0 (to vote for this comment, please visit the site)

In regards to what to target, Rona is good, as well any furniture companies would be decimated once household formation drops off. Alternately taking some form of a long/short spread using options against SP500/TSX in terms of USD would be safer but may not pay off the same way.

Current score: 0 (to vote for this comment, please visit the site)

The seawalls are lined with businesses and restaurants where people can enjoy making commerce.The seawalls are dark and empty here, good places to get mugged, raped or step in vomit and dog shit, they’ve designed them as unusable dead zones for ‘jogging’. Hey….douchebag planners, not everyone wants to run, bushwalk or cycle on their time off. Some people want an upmarket lifestyle that does not include the grouse grind. I hardly think that giving the homosexuals a discreet place to have public sex should have been the focus of the Vancouver planners.

For a place thats so ‘international’ none of the businesses have head offices here. Singapore is packed with open lively markets, above and below ground for every type of weather. Food can be had in and out without restriction. Vancouvers planning dept has ruined a Singapore like location and permanently consigned it (Vancshithole) into the toilet bowl. Vancouvers population has become a parasite within itself, selling real estate and pot to one another, there is no commercial hub. When the real estate money gets cut off, the entire place will wither and die.

Current score: -2 (to vote for this comment, please visit the site)

Current score: 0 (to vote for this comment, please visit the site)

For very specific types of properties, with very well understood maintenance costs and tenant prospects, we can estimate very well expected monthly NOI. Gordon C is right that certain types of property cannot be properly valued by simply looking at GRM. But for a Yaletown condo with a very well understood set of inputs (i.e. rent coming in; ongoing taxes, maintenance, general administration, and some planned renovations some years hence going out) I think there is a very tight relationship between yield (however it’s defined) and GRM.

Appraising isn’t a 5 week course at the community college. It’s complicated and high stakes. But there must be some admission that for some of the simplest real estate assets around, namely residential condos or apartments, the calculation should be simple, at least as a first pass estimate of investment value. If a condo/apartment price doesn’t even come close to this first-pass estimate it’s unlikely any more detailed calculations will markedly improve matters.

Current score: 5 (to vote for this comment, please visit the site)

I hope you don’t mind me going back to last week, but here is a challenge from Gordon C:

“Jessie and VHB, I have laid out my arguments.
Okay show me. Show me how you can estimate a yield from a GRM.”

Not estimate–calculate. Here it is:

GRM = price/(rent/month).

Multiple denominator by one, expressed as (12months/1year) gives us price/(annual rent).

Invert this to get (annual rent)/price. That is the definition of yield.

So, to go from GRM to yield, you just divide by 12 and invert.

An example: GRM is 200. 200/12 = 16/667. 1/16.667=6%. Done.

To conclude, there is a direct mathematical relationship between GRM and annual yield. They both take the same inputs (rent and price) and express the same thing in different ways.

I don’t know if the dust has settled yet, but going back to the original argument:

GRM is by definition Price divided by Gross Rent (Gross Rent Multiplier).

Any useful definition of Yield is definitely much more than just gross rent divided by price.

As you conceded, there are more particular types of yield, but in the most basic form you have the “Current Yield” that you referenced (I think in real estate that would equate to the cap rate). But to calculate current yield you still have to account for operating costs so it would be net income divided by price … which you can’t compute from GRM alone.

You can argue semantics and say that gross rent divided by price is “a yield rate, not The Yield Rate”, but it wouldn’t be useful, and I don’t think it was the original intent of question.

Current score: 1 (to vote for this comment, please visit the site)

That’s the thing that always strikes me when I get back to Vancouver twice a year. Where is the business activity? Why are all the new buildings residential rather than office?

Singapore and HK have bubbly real estate prices but new (and full) office buildings are everywhere. When I hit my local coffee shop I’m just as likely to sit next to an informal meeting of the board for a satellite company discussing million dollar deals (yesterday morning) as I am to a guy and his financial advisor, gas workers from the Natuna field, a banker’s wife just back from viewing a $20,000 a month rental or some guys from an Indian med tech company having an ad hoc powwow about new markets in China.

It’s buzzy and I love it.

When I’m having a coffee in Vancouver, it seems there’s the guy from Remax, a mortgage broker, several students probably in their fifth year of study before becoming baristas and some flashy 20 somethings pulling up in their Beemers and $5000 cash in their wallets.

Current score: 5 (to vote for this comment, please visit the site)

http://globaleconomicanalysis......rcent.html

Vancouver Home Sales Drop 30 Percent , Calgary 42 Percent – First Comes Volume, Then Comes Price; Canada Housing Peak is Finally In

This pattern is quite similar to how things cascaded in the US once the top was in.

“Housing Collapse Cascade Pattern”

•Volume drops precipitously
•Prices soften a bit
•Inventory levels rise slowly
•High-end home prices remain relatively steady for a brief while longer
•The real estate industry tries to convince everyone it’s “business as usual” and homes are affordable because rates are low
•Bubble denial kicks in with media articles everywhere touting the “fundamentals”
•Stubborn sellers hold out for last year’s prices as volume continues to shrink
•Inventory levels reach new highs
•Builders start offering huge incentives to clear inventory
•Some sellers finally realize (too late) what is happening
•Price declines hit the high-end
•Increasingly desperate sellers get creative with incentives, offering new cars, below market interest rates, trips, etc
•Gimmicks do not work
•Price declines escalate sharply at all price levels
•The Central Bank issues statements that housing is fundamentally sound
•Prices collapse, inventory skyrockets, and builders holding inventory go bankrupt

Current score: 7 (to vote for this comment, please visit the site)

Are they really that bad.

They are that bad. Median price for detached residential is only down to 455k from 460k in May, but…

http://www.omreb.com/page.php?sectionID=2

Quick Summary

Ratio of Sales vs. Inventory 5.97%
——————————————
Condo/Apt — Sales 50
Condo/Apt — New Listings 184
Condo/Apt — Inventory 1196
Condo/Apt — Sell/Inv. Ratio 4.18%
Condo/Apt — Days to Sell 88

Condo/Townhouse — Sales 45
Condo/Townhouse — New Listings 154
Condo/Townhouse — Inventory 568
Condo/Townhouse — Sell/Inv. Ratio 7.92%
Condo/Townhouse — Days to Sell 79

Lots — Sales 17
Lots — New Listings 140
Lots — Current Inventory 864
Lots — Sell/Inv. Ratio 1.97%
Lots — Days to Sell 325

Residential — Sales 175
Residential — New Listings 507
Residential — Current Inventory 1925
Residential — Sell/Inv. Ratio 9.09%
Residential — Days to Sell 65

Average House Price $480,216.68
Median House Price $455,000

11 MOI for detached residential and 2 years for condos!

And only 17 lots sold before the July 1 HST deadline?! With an inventory of 864!

There are a few big developments which could come to a major standstill and future development will surely go on hold, especially with the HST in effect. Aside from the price cuts that are sure to come, those developers employ a lot of people in Kelowna’s tiny job market.

Things are looking ugly.

Current score: 11 (to vote for this comment, please visit the site)

I was walking through the West End by Stanley Park today and noticed lots of for rent signs on nice buildings. Craiglist shows lots of place for under a grande, many with heat/hot water included. And no additional Strata Fees, Property Tax, Homeowners Insurance.

Current score: 5 (to vote for this comment, please visit the site)

I’ve been imagining it since I moved out here 7 years ago. Got a taste in ’08, so most definitely welcoming a return to normal. I am concerned for the pain it will cause people though – most likely worse than the minor inconvenience of renting I’ve been doing for a large portion of that time.

Current score: 8 (to vote for this comment, please visit the site)

Just take a trip to the Okanagan. Lots of For Sale signs, very few SOLDS. Too many people I know there (my hometown) have huge mortgages-one, two or three properties with up to $900k in debt (and the guy with $900k in debt makes $50k per year) Okanagan=ground zero for real estate meltown.

Current score: 12 (to vote for this comment, please visit the site)

So true. The thing that astounds me is that this is happening in the *absence* of interest rate increases. Anyone remember what 1981 and 1991 rate increases did to small businesses? I do. Ow. If these guys are failing when money is free, imagine what would happen if we return to historical norms.

This economy of ours is built on sand. No, scratch that. On magic fairy make belief sand.

Current score: 12 (to vote for this comment, please visit the site)

http://fishyre.blogspot.com/20.....untry.html

Are they really that bad.

Current score: 9 (to vote for this comment, please visit the site)

Current score: -18 (to vote for this comment, please visit the site)

Junius

Current score: -4 (to vote for this comment, please visit the site)

Bite me.

Please.

Junius

Current score: -11 (to vote for this comment, please visit the site)

As you all know, we are running out of land, and Vancouver RE, being the best place on earth, is highly sought by the whole world.

I have 10 rich Asian friends who want to desperately buy a few properties (CASH), but are having great difficulty finding anything, as listings are almost non existent, and I was hoping that somebody on this site would have enough influence with RC to allow for comments on his blog so that I can leave my friends phone numbers where they can be reached.

Please time is of essence, they don’t want to miss out, as prices are set to rise again, and although, they are very rich, they too fear being forever priced out.

Current score: 16 (to vote for this comment, please visit the site)

Those strata fees seem rather ridiculous to me; they work out to almost $8,000 per year! And that doesn’t even include property taxes! Yikes!

…It makes me wonder if there isn’t some “exceptional” maintenance going on around the building– leaky condo repairs funded by maintenance fees, rather than a special assessment…

Current score: 3 (to vote for this comment, please visit the site)

Does that mean the raging debate over yield is finished?

I was hoping you guys would apply it to blueberries when you had a moment.

Current score: 5 (to vote for this comment, please visit the site)

http://www.youtube.com/watch?v=agFe6h2GvRU

Current score: 0 (to vote for this comment, please visit the site)

Since it can take a couple of weeks for sales to get recorded, it shouldn’t take long for the pre-approvals to run out….and sales to dry up.

Current score: 6 (to vote for this comment, please visit the site)

In contrast, you attacked me and others personally.

Look in the mirror. In my experience, most people around here will respond respectfully when they are treated with respect. Often, your posts dripped with condescension. That typically doesn’t go down well.

Current score: 17 (to vote for this comment, please visit the site)