Falling Markets

The TSX index fell by about 450 points

The USD-CAD fell to 0.97

The GoC 5 year bond fell to 1.286

So given all we know about real estate investing and price-rent ratios to determine fundamental value, perhaps a few can chime in on what they think is going on in Canadian and world markets and how current valuations align with future earnings.

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Li Kai Shing
Guest
Li Kai Shing

#1 I tink

Li Kai Shing
Guest
Li Kai Shing

I tink I invest in Guns Liquor and Ammo….( not necessarily in that order ).

space889
Member
space889
The lower the 5 year bond rate the more attractive alternative investments like RE becomes. Regardless of what you think a good price/rental yield should be, on a relative basis if 5 year government bond is 1.286% then a RE rental yield of 3% suddenly becomes much more attractive than before. Off course this only applies to cash buyers. If you have to borrow then mortgage rates come into play. My guess is that all the big pension funds and large REIT that can still borrow cheaply will be happy as their borrowing cost potentially just went down a lot while the yield on RE investments they are looking at are likely still holding up. For the average buyer or speculators who has to buy retail and borrow retail? Hard to say other than it doesn't matter how low the… Read more »
bubbly
Member
bubbly

Van RE to the moon!-1

Dyugle
Guest
Dyugle

Sold some bonds and bought some stocks today.

No crystal ball just keeping conservatively balanced at 60/40.

whydoItry
Guest
whydoItry

I've been calculating home prices using an interest rate of 9.25%. It works perfectly! The homes come out exactly to what I think they're worth!

bubba
Guest
bubba

Ain't it obvious….

Parties behind the scenes are creating a big fiscal tsunami….luring everyone….then BAAMMMMMM…the mushroom cloud once the BS settles.

bubba
Guest
bubba

Also:

Starting to wonder when Loan$ for builders will dry up ?

I suppose that the lag phase must be between 6 months to year, depending on size and scope of projects.

So, what we see started now was planned and financed when the market was still reasonably stable….in relative terms.

Near where I lives is a lot that was flipped,and again" For Sale", advertising it can be subdivided into 2 LOTS ..still no sale…now the owner is posting a development application sign to subdivide.

My guess is only way they feel they can extricate themselves in this current market is to try and build two homes.

Best place on meth
Member
Best place on meth

What's happening is simple really.

A 30 year orgy of debt and asset bubbles all over the world is coming to an end and deleveraging is being forced on us no matter how much governments flail and try to avoid it.

I don't believe we'll ever see DOW 12,000 again.

VanRant
Guest
VanRant

Is the China Bubble Bursting?
http://blogs.birminghampost.net/business/2011/09/
Chinese property stocks are plunging (by 10% a day in some cases). Developers in China are starting to have their liquidity challenged and their access to finance locally and globally is drying up.

I hear a pop in the Vancouver real estate market.

whydoItry
Guest
whydoItry

I don't know why you guys are dissing the 9.25% rule to determine fundamental value. It works. The banks should be using this to lend money on. Try it out. It comes in exactly what the property is worth, every time. This is nearly the same rate that investors were using to value company shares. Why wouldn't it work for real estate too. A lot simpler than guessing at rents or how many times you should multiply the rents. It works for farms and condos, all the time.

DaMann
Member
DaMann

@whydoItry:

can you give an example? I'm not sure I follow your logic. 9.5% what? Interest rate? Interest rate on what price? Give a quick example.

IInvestor
Guest
IInvestor

It's not just Vancouver that is going to see a price correction;

but the key is we will see a further pull back in real estate down south. Even if the looney falls to 80 cents to 1 dollar that's not going to change demand because they are in so much debt.

The sooner Vancouver sees a price correction by raising interest rates the better otherwise we are going to see another Sydney revisited and when real estate falls 30 percent we are going to see people panic selling not just foreigners that's going to put Vancouver in a deep hole for the next decade

BDK TROLL
Guest
BDK TROLL

I think policy and procedure of USA are one of the dumbest comapre to world,Influence of investment firm and road side adviser are heavy on the Government while Government should have control of Country.So that is the mess on other side of border that Worlds most educated people are dealing with recession over recession.There is one common consensus among American to apply for permanent visa (immigration)to live or invest in Canada specially in Vancouver.Those American who have sold their properties in Whistler Black Comb due to sour of Canadian currency around 2008.They have lost everything in USA.It is easy to fight with recession within six month but USA is just paying for the DUMB nation with big mouth and f*t A%%es.

Li Kai Shing
Guest
Li Kai Shing

No one listens to Retro Diogenes …all is an illusion…… the end is nigh…the messenger is continually shot…I am truth hear me !

aka don't f*ck with the Kokanee Sasquatch
http://www.youtube.com/watch?v=OFE-yMMWCvc&NR

Boombust
Guest
Boombust

Phew!

Good old Global…to the rescue.

Deb Hope was all jiggy with excitement after a somewhat "gloomy" interview with your friend and mine, Michael Campbell. He was, you see, talking about moving into cash, since "equities" aren't doing so well right now. He he…

However, all is still well with Vancouver real estate!

Immediately after that "gloomy Gus" report, a heartwarming assessment of the new condo towers in the "Downtown of Surrey" (City Central) and, a Bob Rennie piece about sales at the OV keeping "steady', had me melting with relief.

Now, let me see…time to check my inbox for the latest flood of lstings from my VOW supplier.

Boombust
Guest
Boombust

"Michael Campbell. He was, you see, talking about moving into cash, since “equities” aren’t doing so well right now"

Not that he could see it coming, mind you. I, for one, would never trust any of my money with a dunce like him.

Keeping An Eye On Th
Guest
Keeping An Eye On Th

I think the world markets tanked because Premier Christie Clark had not yet made her jobs announcement.

World economies take note:

Christy is opening up new mines, please submit your applications if you want us to supply you, with our rocks and stuff.

Christy will be able to create so much demand, that we will be placing purchasing nations on an allocation.

We warned you, get in line.

Best place on meth
Member
Best place on meth

It looks quieter than usual for sales today but this one Richmond is noteworthy.

http://www.mls.ca/propertyDetails.aspx?propertyId

18 acres, 7000 square foot house.

Sold for $7 million, 53 days on market.

whydoItry
Guest
whydoItry

If you can't do a simple interest rate calculation, I can't help you.

Dave
Member

@VanRant:

Hedge funds short on China and Chinese real estate have done very well in the last couple months. I wish I put my money on that one. It's probably still a good time to get in though.

Look for a solid correction in oil and commodities.

McLovin
Guest
McLovin

I don’t believe we’ll ever see DOW 12,000 again.

That is a hilarious and ridiculous statement.

pipewrench
Member
pipewrench

http://www.marketwatch.com/story/hsbc-manufacturi

The PMI’s output index fell to 49.2 in September, down from 50.2 in August and below the 50 level dividing expansion from contraction.

Without a credit bubble to fuel spending even China is starting to feel pain.

If you have property you might want to cash in now because all economies are slowing down and buyers are going to fence-sit. If your are actually planning to buy your quite simply "out of your mind!"

pipewrench
Member
pipewrench

http://www.cnbc.com/

Nikkei is already falling. Lets hope this is not an implosion but a small correction. Aren't credit bubbles fun when they deflate? 😉

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