Can’t burst a bubble that isn’t there

Some people are freaking out about a housing bubble in Vancouver.

Relax.

Tsur Sommerville of the UBC CUER Sauder school of business says there is no bubble and I bet the developers who sponsor the school would agree.

So it’s unanimous, no bubble.

But if you want a giggle check the spelling on the URL.. Sponsers? well I guess they study economics, not spellonomics.

Anyways, Tsur says no bubble in Vancouver.

“You can’t burst a bubble that wasn’t there,” said Somerville. “But you can have prices above where they should be and it not be a ­bubble.

“A bubble isn’t just defined by high prices,” he said.

Somerville identified a housing “bubble” as conditions akin to what was happening in 2007.

“It didn’t matter what the condo looked like or what it’s going to look like or who was building it, people were lined up around the block and snapping it up,” he said. “They were saying, ‘I’ll take 12, please.’ That’s more of a bubble environment.”

So there you have it.  We had a ‘bubble environment’ in 2007, but right now there is no bubble because very little is selling so we’re safe from a bubble that could burst.  We have prices that are above what they should be, but no bubble.

Read the full article in The Province.

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Condo Software
Guest

Nice article! Great post about Can’t burst a bubble that isn’t there! “Can’t burst a bubble that isn’t there” – interesting title Scott. I appreciate you sharing this with the rest of us Scott.

Proud and extremely rich Chinese home owners
Guest
Proud and extremely rich Chinese home owners

@shriller: story from the moon again.

shriller
Guest
shriller
@ Anonymous 210. Of course the judge will take the highest price on offer. But since offers don’t arrive simultaneously, the real question is how long will a judge deliberate? Suppose you low ball by 50% and are the only offer. This is private information and no third-party is supposed to see your offer. What should a judge do? Accept your offer? Or wait for a higher offer to potentially arrive? Hold a auction? I ask, because about 10 years ago a colleague of mine, whose spouse worked in a Bank, told me that his spouse received an email every Friday of properties foreclosed by the bank. The employees were given first dibs on submitting offers which then went to court. As long as they didn’t low ball too much below the assessed or appraised value the offers were accepted.… Read more »
Vancouver
Guest
Vancouver

beginning of month inventory rise that’s all kids!

VMD
Member

B.C. government freezes hiring, management salaries as natural gas revenue falls
– the new BC finance minister got to work pretty fast..

VICTORIA — The B.C. government will immediately launch a new round of major cuts because of a three-year, $1.1-billion hit to provincial revenues caused by plummeting natural gas prices, Finance Minister Mike de Jong announced Thursday.

Speaking to reporters, de Jong promised an immediate hiring freeze across government and a wage freeze for public sector managers, including those at schools, universities and health organizations. He also signalled a possible ratcheting-up of the already tense negotiations between the province and its public sector unions.

“Call these austerity measures — they are designed to immediately curtail spending in areas where government has some discretion,”

Ray
Member
Ray

@Mort: I said as much right on his blog. vangrl jumped all over me. I think he exited highschool around grade 9 and took the 2 week realtor course and has been one ever since. Absolutely horrible writer. No idea how great of a realtor he is. Probably not bad since he’s been one since grade 9.

HipsterBear
Guest
HipsterBear

@AfroFrancophone: How does money “move into” an asset? It’s not like the money disappears. Kinda an important detail.

Anonymous
Guest
Anonymous

@Anonymous: “Why is the town (xxx) a secret? There is not much credibility to your story if you can’t tell us where you are talking about.”

Complete fabrication. Just as I suspected. Don’t people have better things to do.

GNFINGR
Guest

@220 @ 216I hope you are right and it doesn’t slither into cdn real estate!

Vancouver
Guest
Vancouver

huge sales day again!

AfroFrancophone
Guest
AfroFrancophone

@GNFINGR: The DOW and precious metals up, US Real estate up, Canadian miners and oil & gas up, CAD up vs USD (that would further depress Canadian manufacturing. Watch out Ontario!), longer lines at costco Bellingham.

I think there is a bag of money to be made for the savvy investor:

-get long US stocks and precious metals
-get long Canadian miners and oil and gas
-get long US real estate (Canadian real estate will be further depressed as all the money will move into the aforementioned asset classes)
-plan for shopping trips south of the border

Many Franks
Guest
Active Member
Many Franks

@Anonymous: That’s a hell of a name your parents saddled you with.

vangrl
Member
vangrl
G
Guest
G
rp1
Guest
rp1

#215 @GNFINGR: “What does the blog think the effect of qe3 will be?”

For the middle class: a net loss of income and savings. For financial speculators: party on!

GNFINGR
Guest

What does the blog think the effect of qe3 will be?

Mort
Guest
Mort

I’m amazed by Yatters writing style. He makes all sorts of declarative statements and asks many seemingly rhetorical questions, but I have no idea what he is saying. It can’t be easy to always strike that balance just right.

jesse
Member

@VHB: “Is this the OSFI rules starting to bite at the banks?”

From what I’ve heard there was some initial uptake at the beginning of the year with respect to “stated income”, now the brunt of OSFI’s guidelines are going to be implemented from about August of this year through to the spring of 2013. It will be a staged rollout and each bank has its own schedule.

My gut feel is we won’t have seen all of the effects until mid-2013.

HFHC
Guest
HFHC

New Listings 376
Back On Market Listings 8
Price Changes 158
Sold Listings 131

Anonymous
Guest
Anonymous

@Burnabonian: “He is now looking at places in xxx, a smaller town where prices are half and he can own some acreage.”

Why is the town (xxx) a secret? There is not much credibility to your story if you can’t tell us where you are talking about.

Anonymous
Guest
Anonymous

@shriller: “How judges decide on acceptable prices in the coming few years will likely be very interesting.”

My understanding is once it goes to court with an offer the highest bidder gets it.

patriotz
Member

@shriller:
You can see that the market peaked in Alberta in mid-2007 just by looking at the foreclosure stats. The forclosure rate hits bottom at the price peak – as it does in every market.

BC is more complicated as metro Vancouver saw a bottom and rebound in early 2009 while the rest of the province has been declining since 2008, except Victoria since 2010. But the rate is now over 3 times what it was in mid-2007, almost all foreclosures being outside metro Vancouver for now.

These numbers speak the loudest possible rebuttal to those who say that a low foreclosure rate means a price decline is unlikely.

patriotz
Member

@VHB:
The banks are calling the loans because acreages are the most volatile of properties, since swings in RE prices are mostly in the land and there’s no rental value to speak of. They want to get out while they can still get something.

I assume the loans are uninsured – I’m quite sure that at 80% LTV on a circa 2008 purchase, pretty much any Interior acreage would now be underwater. Banks don’t care if insured mortgages are underwater. The OSFI changes first floated would have required the banks to call even insured loans, but Flaherty quashed that. You don’t want to go down in history as the guy who forced mortgage-paying homeowners onto the street.

VHB
Member
VHB

Just barely behind the 2008 pace now (1585 sales in 2008).

Sep-2012	
Total days	19
Days elapsed so far	8
Weekends / holidays	5
Days missing	0
Days remaining	11
7 Calendar Day Moving Average: Sales	84
7 Calendar Day Moving Average: Listings	312
SALES	
Sales so far	657
Projection for rest of month (using 7day MA)	924
Projected month end total	1581
NEW LISTINGS	
Listings so far	2541
Projection for rest of month (using 7day MA)	3432
Projected month end total	5973
Sell-list so far	25.9%
Projected month-end sell-list	26.5%
MONTHS OF INVENTORY	
Inventory as of September 13, 2012	18931
Current MoI at this sales pace	11.97
Vote Down The Facts
Guest
Vote Down The Facts

@T: “I see “Now Hiring” signs on the sears doors. Could someone else be moving in there?”

Maybe they’re looking for temp staff to get them through their final days of sales. Any of their existing staff with common sense would have secured new jobs for themselves elsewhere already.