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Friday free-for-all!

it’s the end of another work week and that means it’s time for another weekend news roundup and open topic discussion thread. Here are a few recent links to kick off the chat:

–Vancouver housing bubble about to burst?
–No, intuition says prices are right
–24 reasons the Richmond market is on fire
–Real estate millionaires going broke?
–Metro Industrial space in demand
–Home resale prices hit record high back in July
–Poverty costing taxpayers $24 billion a year
–Big rebound bet on US housing market
–How a Hawaiian Paradise became a ghost town

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

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VMD

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SFH Months-of-inventory (7/24-8/23 -> 8/24-9/23)

Vancouver West: 7.4 -> 12.6

West Van : 8.4 -> 10.5

Coquitlam: 6.6 -> 12.7

Burnaby : 6.1 -> 13.3

Richmond : 11.5 -> 15.1

We now have many areas of Greater Vancouver entering > 1 year of inventory build-up.

Looking forward to see the 2011 MOI line crossing over the 2010 line when paulB updates his website in a week or two…

https://lh4.googleusercontent.com/-rHOfvJmlIY8/Tm…

The coming months may provide even more viewing pleasure than 2008 for the RE spectators

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VMD

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[Predicted SFH Sales Stats for Sept 2011 ]

Burnaby: Likely lowest in 5+ years. 60% of last year, 1/3 of 2009, lower than 2008 levels.

2011: ~45

2010: 75

2009: 127

2008: 51

2007: 81

Richmond: worst in 3 years, 70% of last year, 40% of 2009

2011: ~75

2010: 110

2009: 192

2008: 59

2007: 147

Vancouver West: worst in 3 years, 50% of last year, 40% of 2009

2011: ~75

2010: 143

2009: 175

2008: 46

2007: 112

Coquitlam: worst in 3 years, not far above 2008 level.

2011: ~50

2010: 83

2009: 125

2008: 42

2007: 88

West Vancouver: worst in 3 years, but not yet at 08 level.

2011: ~55

2010: 56

2009: 66

2008: 21

2007: 54

Conclusion: Realtors and house-pumpers might want to start booking counselling sessions for depression, anxiety, and PTSD. (Though they will likely try to reassure themselves with the "average price continues to increase" delusion, but once they get over that denial phase, they may need to book anger management sessions)

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CanuckDownUnder

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Another month in the books and yet another month of falling house prices in Australia. The median price was down 0.4% in August and is now down 3.7% for the year. But good news, it's the smallest monthly decline since April 2011!

Year over year median price changes:

Sydney 0.3%

Melbourne -4.1%

Adelaide -4.9%

Brisbane -6.1%

Perth -7.1%

Meanwhile Moody's put out a report this week stating that mortgage delinquencies were at a 10-year high, passing the peak from 2008. This should all end well.

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Keeping An Eye On Th

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By far one of the best; it lists them all:

-world class City

-running out of land

-no speculators

The most irrefutable facts are supported by Central 1 Credit Union's report economist Brian Yu, and also, none other than, drum roll please…. The Canadian Real Estate Association.

And almost forgot, the mountains, yeah the mountains.

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Patiently Waiting

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Bob Rennie's Quote of the Year:

http://www.vancourier.com/Rennie+serves+quote+yea…

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patriotz

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@Keeping An Eye On The Pimps: The most compelling factor to suggest we're not in the midst of a bubble is far more pragmatic: people are living in the homes they buy. According to Yu, market speculation seems to be at normal level, comprising only two to three per cent of the total B.C. market, so if the economy slows there will be less likelihood of a speculation-induced bust as homeowners will tend to hold onto their homes rather than sell them in a weaker market. Astounding that someone can spout such BS given we've had a front row seat for the world's biggest RE bust for the last 5 years. Yu appears to be using Dave's definition of "speculation". The economic definition of speculation is expecting to get a positive return from an asset from capital gains rather than… Read more »

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Anonymous

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Keeping an eye and Patriotz…

Pure fluff bs piece. Look at who wrote it. A residential designer. Yup, another piece of biased trash passed off as news.

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jesse

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"It's not desperation, it's lifestyle" – Bob Rennie

I politely disagree. It's the price. And I say that the same way I say "it's the smell" when explaining why I won't buy a musty leaky condo.

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pipewrench

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http://www.vanityfair.com/business/features/2011/…

a very good story on how the recession has totally F^&ked A state and City. It made me think of what BC and especially Vancouver are going to experience in the downturn. Just to compare look at this link and you will see the connection. This is going to get ugly!

http://www.citycaucus.com/2011/04/city-hall-quiet…

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Alum

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I am eagerly counting on this blog for being the main cause of crash of Vancouver marker.

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Anonymous134282

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@patriotz: "The economic definition of speculation is expecting to get a positive return from an asset from capital gains rather than income."

I don't think that's a good definition of speculation. If I buy a stock like BRKB, I don't expect to receive income. BRKB itself is receiving income, but they don't return it to their shareholders as dividends, they reinvest their income within the company itself. I only see their income reflected through capital gains.

Let's use Graham's definition, conveniently written on Wikipedia:

"In finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum… This contrasts with "investment," which is a financial operation that, upon thorough analysis, promises safety of principal and a satisfactory return."

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Dave

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@Anonymous134282:

Well said. I have always taken exception to the definition put forward by Patriotz. I personally like the definition used by Central 1.

That said, words don't matter so much as definitions matter. If Patriotz wants to use the term to define what he means, that's fine. But the downside of that is obviously confusion because it isn't the commonly accepted definition.

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patriotz

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@Anonymous134282:

"I only see their income reflected through capital gains."

That's not really a capital gain in economic terms though, because your gain is due to selling more capital then you've bought due to the reinvested income, not selling the original capital at a higher price. I know that the tax man considers it to be a capital gain though.

If you buy a compounding GIC you pay, say, $1000 and get back $1000*((1+r)^n) after n years. But the taxman taxes you on the interest income every year.

The problem with incorporated companies is that there's no way to properly account gains due to reinvested income versus gains due to higher price of the capital across all shareholders so the taxman just calls it capital gains for everyone.

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Zhao Ziyang

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From the 24 reasons Richmond is hot article:

"While Richmond has a reputation as an Asia-centric area, there are a growing number of communities that are entities all to themselves. The cultural contrast between Richmond Centre and Steveston couldn't be any starker"

Why is it acceptable to say one area is "Asian", but saying an area is "white" is only suggested indirectly?

Here are some white people enjoying Chinese food
http://www.househunting.ca/vancouversun/4818914.b…

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jesse

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@Anonymous134282: "speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum"

Um… where does "income" come into that definition? If you answered "it doesn't" you get a gold star. (Not real gold of course, I don't speculate on PMs.)

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Anonymous

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@Anonymous134282:

"I don’t think that’s a good definition of speculation. If I buy a stock like BRKB, I don’t expect to receive income. BRKB itself is receiving income, but they don’t return it to their shareholders as dividends, they reinvest their income within the company itself. I only see their income reflected through capital gains."

You could put it that way if you want. So tell me what happens when the stock you invest in loses money…the stock goes down. That's the point. Investers are losing money because rents are too low…but they are riding it out in anticipation of increase in prices.

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Li Kai Shing

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Anything you pull out of your pants is speculation.

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gordholio

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VMD, just wanna say thanks for all the hard work and the sensible posts.

Are those numbers totally reliable? Do you have any North Van info? I admit I have no personal idea how to access housing numbers. But I want to put together a rebuttal for that NS News opinion piece. A residential designer using the thoughts of a bank dude and the real estate mob to reach a conclusion that everything's just peachy-keen neato. Gag me with the proverbial spoon.

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patriotz

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@Anonymous:

"So tell me what happens when the stock you invest in loses money…the stock goes down."

Except when, e.g, it's a dot-com stock in 1999, or Vancouver RE recently.

So what do we call that?

"Investors are prepared to buy houses they will rent out at a loss; just because they think prices will keep rising — the very definition of a financial bubble."

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Smiling Assassin

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Hi VMD, would you have any data for South Delta? Ladner and Tsawwassen? Thanks for your posts.

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jesse

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@gordholio: wait for the REBGV statistics package that will be released next week. It provides detailed breakdown of sales, inventory, dwelling type, and benchmark prices based on municipality. And mind the signal-to-noise ratio of those numbers; to wit Port Moody has seen 10-15% month-over-month benchmark swings in the past but the longer-run trend will be more accurate. Also sales (and months of inventory) have a large noise component as well at the municipality level due to lower volume.

Larry's graphs are nice to look at but I'd, um, wait for the collated numbers.

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Inventory

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One more day to go.

No NEW home sales in Vancouver West, since 1994.

Vancouver West New Home Sales September

1994 = 15 / 79

1995 = 16 / 157

1996 = 9 / 173

1997 = 12 / 126

1998 = 4 / 90

1999 = 4 / 35

2000 = 6 / 30

2001 = 2 / 35

2002 = 4 / 25

2003 = 14 / 43

2004 = 8 / 48

2005 = 15 / 43

2006 = 5 / 43

2007 = 4 / 42

2008 = 4 / 93

2009 = 11 / 74

2010 = 9 / 61

2011 = 0 / 75 ***Sept 29

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VMD

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@gordholio: Thanks Gordholio! I've only attempted to post in forums so far, but you've taken it to the MSM, excellent work! For past years of detailed area-by-area sales/listings/median price history, google "REBGV stats package" followed by month & year. The PDF file is the goods! I think these packages are only released to realtors, but several (including PaulB now) have been publishing them online. For my "predicted SFH sales for Sept 2011", I got my numbers from larry's yattermatters website. That and VCI are the only 2 sites that allow me to access current stats. I reached the September sales predictions based on Larry's recent "neighborhood snapshot" series (7/24-8/23 vs 8/24-9/23). Seeing a slight increase in sales over the last week, I just rounded-up his 8/24-9/23 numbers. Provided his stats are accurate, the prediction shouldn't be too far off from… Read more »