Realtor: DO NOT PANIC about bubble.
There’s an interesting read over at BCBusinessOnline about those crazy bubble bloggers and forum bears:
The “Bears” talk cover up which I always find so intriguing. Commenting on the September stats from the Real Estate Board of Greater Vancouver, Seth M. says: “This will only make the conspiratorially minded angrier — most of them convinced that the so-called benchmark indices produced by organized real estate are covering up a major decline.” The reality is the numbers from behind the HPI are actuals. They aren’t fabricated to prop up a cyclic market so that realtors can hang onto their markets.
Now there may be some of you that believe the ‘cover up’ angle on the HPI, but I think you’re maybe a little crazy. There is nothing to be gained by massaging the numbers. My feeling on the HPI is that there seems to have been no good reason to change the methodology for calculating it. It used to be a very decent apples to apples historical comparison, but by changing the measurement and then recalculating it they’ve killed its value as a long term gauge.
I think any problems with the HPI come down to opacity and bad math, not any smoky back room conspirators whose only goal is to keep house prices high.
But what do I know? I’m just a crazy anonymous bubble blogger.
October 18th, 2012 at 3:59 am 1
Our friendly realtor ends her advice with “Have a five-year plan and don’t buy more than you can afford. Speculators — you’re on your own. The rest of us will sell at a loss and buy at a gain or whatever version of the law of supply and demand is in effect at the time.”
Which is really wonderful since we’re all cash buyers and don’t have any leverage. If our starter condo goes down 15% we can just sell and use the proceeds to buy the move-up which is also down 15%, and save money! Oh wait, Billy bought with leverage! Billy, that won’t work, honey. If your condo goes down you lose all your downpayment and more, have to write a cheque just to sell the place and don’t have any downpayment to buy the new place. Class, what did Billy do wrong?
Well-loved. Like or Dislike:
105 
1
October 18th, 2012 at 5:02 am 2
Such a poorly written article I’m surprised even BCB hasn’t pulled it down. The quote this Realtor cites comes from one Gary Marr. Marr may be many things but he certainly isn’t “anonymous”.
Well-loved. Like or Dislike:
23 
0
October 18th, 2012 at 5:30 am 3
Not sure where the “bad math” comment originates. The method closely matches price movements tracked by the sales pair methodology used by the Teranet HPI. Price indexes like the Case-Shiller (Teranet) HPI are known to lag market movements by a few months. I think CalculatedRisk blogged about this.
Hot debate. What do you think?
12 
0
October 18th, 2012 at 8:05 am 4
I noticed the ad for the Burke Mtn. house on the side bar…
Those houses have been built by the dozens in that area. Sitting empty. Over-priced, (as usual) on small lots.
Time will tell what is (SURE) to unfold. He he…
Well-loved. Like or Dislike:
35 
0
October 18th, 2012 at 9:31 am 5
The sticker prices for properties that now include free cars, furniture, appliances, internet service and so forth have effectively dropped by a lot more than meets the eye. This in not reflected in the charts. CMHC agrees and will only lend based on the value of the property less the market value of all these so called freebies. Expect more of this nonsense in the coming months/years. Adjusting the MSRP downward is strictly forbidden.
Well-loved. Like or Dislike:
30 
1
October 18th, 2012 at 9:53 am 6
We don’t really need to believe in conscious conspiracy. Humans are really good at seeing what they believe, and we have a tendency to squeeze beliefs tighter and tighter the more painful and obviously incorrect they are. Being skeptical of our own reasoning is the only really rare and challenging form of skepticism!
I sometimes wonder what happens to the David Lereah’s of the world, after all the cameras go home. I imagine there are a handful of paths to walk. One might be humbled, aware of mistakes, but able to forgive oneself and be comfortable with being revealed human. Or there could be depression, self flagellation. My least favorite – and one Lereah seems to have taken – is either a hero or victim stance. Either “it wasn’t my fault they made me” or “there wasn’t really a bubble: the bubble like pop was caused by something else and I’m the only one who sees what could-have-been.”
Well-loved. Like or Dislike:
22 
0
October 18th, 2012 at 10:09 am 7
So far HPI seems to be following a US style crash in lock-step.
see:
http://vancouverpeak.com/groups/data-hounds/forum/topic/crash-curve-graphs/#post-2634
Well-loved. Like or Dislike:
34 
1
October 18th, 2012 at 10:45 am 8
Singtao Chinese newspaper: Greater Vancouver realtors are now forced to quit and find new jobs
10/16/2012
“Mr Shen, a newly minted realtor since 2011 had been working for a year without reaching a single sale. He had just quit RE and is training to be an electrician..
..when interviewed by SingTao, Mr Shen said he had a university degree in business administration. Upon seeing the hot RE market in early 2011, he paid $5000 for a realtor prep-course and obtained his realtor license. Ever since he’s working as a realtor, he’s been busy every weekend showing houses, one client even had him show >10 units. He had a total of 20 clients in the first half year, but no sale.
Mr Shen said, in the current housing downturn, even seasoned realtors are having a hard time.
Another realtor, Mr Sun of Macdonald realty, said that in 2011 he averaged 2 sales per month, this year some months even went without a single sale. Many realtors are leasing expensive cars, paying expensive fuel, hosting networking dinners – averaging >$2000 per month of overhead. Without sufficient sales numbers, many realtors cannot survive.”
Well-loved. Like or Dislike:
104 
1
October 18th, 2012 at 10:49 am 9
i have never understood why realtors have to have expensive car in order to show properties? I mean even the prospective clients come to view the property in their own car. what is about the car?
Well-loved. Like or Dislike:
54 
2
October 18th, 2012 at 10:57 am 10
My only problems with the HPI:
1. The recalculation ruined any historic comparisons, and they didn’t go back and recalculate previous years.
2. They posted their methodology, but they don’t post the data used to derive the HPI number each month.
But I don’t think Teranet posts their data either.
Well-loved. Like or Dislike:
28 
0
October 18th, 2012 at 11:06 am 11
@Anonymous:
“But I don’t think Teranet posts their data either.”
They can’t because it would violate the terms of their agreement for access to the land titles.
But the point is that the data used by Teranet comes from an objective external source (sale prices), but the REBGV index also uses data (hedonics) which they generate themselves.
Well-loved. Like or Dislike:
27 
0
October 18th, 2012 at 12:02 pm 12
@fatso:
It’s like why women get fake boobs, because it makes them feel more confident
Realtors want to drive expensive cars because it makes them feel they are successful.
Well-loved. Like or Dislike:
58 
1
October 18th, 2012 at 12:04 pm 13
@Anonymous: ” They posted their methodology, but they don’t post the data used to derive the HPI number each month”
The real issue, in my view, is opening up all previous sales data as has occurred in the US. Right now only a select group of people have it — and by “select” I mean anyone who is a friend, family member, or an active client of a Realtor or others who have direct access to the MLS database — and that in effect produces a discrepancy in knowledge between market participants. The data are available to everyone else only for a fee, either through the LTO or through commencing a business relationship with a Realtor.
It’s akin to me having to pay a stockbroker for a quote for a stock but I get it for free if I open a trading account at their firm but need to ask them each time I want a quote or other information on it. Stock quotes, including previous sales prices and a plethora of other information including security filings, are of course available online for free.
Well-loved. Like or Dislike:
23 
1
October 18th, 2012 at 12:04 pm 14
Hidden due to low comment rating. Click here to see.
Poorly-rated. Like or Dislike:
6 
28
October 18th, 2012 at 12:11 pm 15
Hidden due to low comment rating. Click here to see.
Poorly-rated. Like or Dislike:
7 
31
October 18th, 2012 at 12:37 pm 16
@Absinthe:
“I sometimes wonder what happens to the David Lereah’s of the world, after all the cameras go home”
If this was some centuries ago, he’d be hung, burnt at stake or thrown to the lions by people who’s lives he ruined, but we live in a “better” society now where the biggest criminals who have committed most unspeakable crimes are usually deemed insane and therefore not responsible for their evil deeds at all. People who’s lives their ruined pay for the expense of keeping them alive in safety and comfort.
Luckily, there are still places in this world where criminals do actually get punished for their crimes, but we do not approve of such methods here, no way. We are way to civilised for this.
Go figure.
Go figure…
Hot debate. What do you think?
13 
3
October 18th, 2012 at 1:07 pm 17
I can’t wait until this bubble bursts and all the delusional idiots in this city are crying on GlobalTV as their wannabe Sex In The City lifestyle crumbles before their eyes.
Hey jackasses, fine dinning isn’t sitting on used school chairs in a room with a 3 degree slant, with bare bulbs for lighting, and a bar made out of 2X6 wood, eating sliced pork products served on a piece of wood isn’t fine dining. And it isn’t even interesting. Dick heads across the continent are doing the exact same thing imagining that they are sophisticated urbanites with fine tastes. There’s an ass hole in Ames Iowa doing that right now.
This city needs a nice big dose of reality. Then maybe the flaky transplants will begin their delayed 20 year migration back to Ontario. Fucking climate change must be screwing with their biological rythms. they’ll need a severe shock to get their instinct to kicking again.
Hot debate. What do you think?
34 
20
October 18th, 2012 at 1:20 pm 18
@vanpire:
“If this was some centuries ago, he’d be hung, burnt at stake or thrown to the lions by people who’s lives he ruined”
Doubt it. For example, the South Sea Bubble bears a pretty strong resemblance in its outcomes to the current RE bubble:
http://en.wikipedia.org/wiki/South_Sea_Company#Officers_of_the_South_Sea_Company
Prior to that era, financial scams were pretty much the domain of the Crown, the gentry, and the Church, who were a law unto themselves.
Hot debate. What do you think?
19 
1
October 18th, 2012 at 1:28 pm 19
Village Whisperer,
I know you sometimes read this blog: I can’t seem to post on your site any longer. Don’t know why.
Like or Dislike:
4 
1
October 18th, 2012 at 2:21 pm 20
Two things popped out at me from this thread.
(1) It would be interesting to see the hedonic series underlying the HPI methodology. I would even be satisfied with some (salient) summary statistics. How much of the HPI movement is due to actual transactions data.
(2) Mr. Shen, the BComm former realtor and soon to be electrician, appears to have skipped his finance classes. He might have learned about diversification. Why would he invest in becoming an electrician when the reason he was shifting occupations was because of low demand for housing-related skills? Does he think that there is going to be a boom in renovations and HELOCs to finance them?
It reminds of a realtor I dealt with years ago. He saved for retirement by acquiring housing stock. Now this might make sense if he felt he had insider knowledge about the quality/price of housing. That wasn’t his rationale. When I pointed out that he was effectively putting all his income eggs into the same basket, he was perplexed. What couldn’t I see about the fact that housing always went up?
Well-loved. Like or Dislike:
25 
1
October 18th, 2012 at 2:41 pm 21
Rob Carrick at the Globe and Mail continuing his relatively bearish analysis of the RE market in Canada today – this time touting the benefits of… wait for it… RENTING!
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/downsizing-to-condoland-why-its-best-to-rent-not-own/article4619669/
We rent a 3-bedroom 1,200 sqft townhouse in a well managed East Van co-op for $1,200 per month. What do you suppose the monthly carrying costs on that sucker would be if we were to buy it? Based on similar units in my hood, my math says it’s just over double…
Well-loved. Like or Dislike:
42 
0
October 18th, 2012 at 3:23 pm 22
In the market segment I am following, listings are quite active, and prices very sticky. Prices changes of -10k every month on a 900k house! What a joke…
On the anecdotal side, I recently met with a HAM family. Husband is in China, making tons of money. Mom and 2 kids lives in a 4 million dollar house. She does a great job at being a tiger mom (kids wake up at 5:30 to play the piano for 2 hours, no play date allowed.) I was really impressed by how hard working those children are, but also a but worried by their behaviour when mom was out of sight.
What does mom do for a past time? Arts and crafts, and …RE speculation. She almost got burnt in Richmond in January, but managed to get out on time: good intuition! We live in interesting times.
Well-loved. Like or Dislike:
39 
2
October 18th, 2012 at 4:05 pm 23
I think the HPI problems due to opacity and bad math…….
Are you high?
Or naive?
This has been going on for years.
Like in Vegas the odds are in favor of the house.
And if you don’t beleive that i know of some swamp land in Richmond FOR SALE.
Hot debate. What do you think?
10 
2
October 18th, 2012 at 4:25 pm 24
@VMD: “Mr Shen, a newly minted realtor since 2011 had been working for a year without reaching a single sale. He had just quit RE and is training to be an electrician..”
People declare there isn’t a bubble, that BC and Canada are different and don’t have US problems, yet strangely the same thing is happen play by play, I have been watching this unfold since 2007. I had a lot of friends and family who all of the sudden decided they wanted to be realtors and house flippers in 2005-5 in the US. You can guess how the professional change worked out. It is honestly very strange to watch this whole thing happen again in a matter of years.
Well-loved. Like or Dislike:
36 
1
October 18th, 2012 at 5:16 pm 25
TIME to PANIC!
Only ONE detached house sold today at Vancouver West and it was on the
market for 173 days.
New Listing 8
Price Changes 4
Sold Listings 1
Well-loved. Like or Dislike:
98 
2
October 18th, 2012 at 5:21 pm 26
I went to a CFA sponsored Private Wealth event today… Patricia Croft spent 10 minutes showing the pointy heads how and why Vancouver’s real estate overvaluation is “off the charts” (price/rent, price/average family income, debt/income, etc…), but concluded we would only experience a 10-15% “soft-landing”.
I couldn’t help but mutter “Bullshit” under my breath 5 or 6 times.
Well-loved. Like or Dislike:
53 
1
October 18th, 2012 at 5:27 pm 27
@VMD: GOOD! Boo fricking hoo. Easy 5 week internet course come, easy useless “professional” accreditation go. Now maybe I will get some better service at WalMart. There will be a lot of off lease Beemers pretty soon too.
Hot debate. What do you think?
9 
1
October 18th, 2012 at 5:28 pm 28
New Listings 160
Price Changes 122
Sold Listings 65
TI:18974
http://www.paulboenisch.com
Well-loved. Like or Dislike:
159 
2
October 18th, 2012 at 5:30 pm 29
@Inventory:
Well, even the leader got burnt by flipping houses:
http://youtu.be/bNmcf4Y3lGM
Hot debate. What do you think?
7 
4
October 18th, 2012 at 5:33 pm 30
68? Must be the rain.
Well-loved. Like or Dislike:
25 
3
October 18th, 2012 at 5:37 pm 31
No doubt about it, the warm Sept,Oct contributed to sales, like I said before when the rain starts to fall so will the sales!
Hot debate. What do you think?
9 
4
October 18th, 2012 at 5:39 pm 32
@mac: What sort of problems are you having? The blogger template can be temperamental. In the past others have said they simply post as anonymous and add their moniker in the body of the post to get around difficulties they have had with the blogger format.
Like or Dislike:
2 
2
October 18th, 2012 at 5:50 pm 33
@Village Whisperer: Previously, I had scrolled through the list to NAME/URL and then put my name in the allotted space. Whatever I post now, just disappears with the posting click. I tried previewing it, same thing. Then I tried the anonymous route but the same thing happened. So that has been my problem. I’m on a Mac. But I used to have no problems. Maybe it’s the OS upgrade I did? Don’t have a clue.
VCI, thanks for letting me contact Whisperer on your blog. Hope that is OK with your blog rules. Don’t want to start a Ben Rabidoux/Garth Turner feud here but there seemed to be no other way to contact Whisperer on his blog.
Like or Dislike:
4 
2
October 18th, 2012 at 5:54 pm 34
I am not pumping this site but it makes me howl with delight everything I read it.
http://vancouverpricedrop.wordpress.com/
A couple of these condo’s are actually approaching positive cash flow as a rental. Imagine that? A property paying for itself? Never happen here. Doesn’t need, prices go up 10% per year.
Well-loved. Like or Dislike:
35 
2
October 18th, 2012 at 6:00 pm 35
Soon all of the FOR SALES will be at -Price Changes- it will be interesting how they spin that.
Perhaps use the money market fluctuations on any given year and stir into the pot.
I left a post on a realtor frequented site.
My question was:
Why when a property is sold for below listed price does the(sold for below listed) price not reflect in the paper or online afterwards.
RE agents always advertise their SALEs and run them for a few weeks or months afterwards.
SOLD.
But why when it sells for over asking do they post or print, SOLD FOR OVER ASKING.
Is that another over sight or math error.
How about manipulation.
Hot debate. What do you think?
18 
4
October 18th, 2012 at 6:22 pm 36
@mac:
Dude just download chrome already an stop using safari and wasting our board space.
Hot debate. What do you think?
7 
9
October 18th, 2012 at 6:55 pm 37
@VMD:
” Ever since he’s working as a realtor, he’s been busy every weekend showing houses, one client even had him show >10 units. He had a total of 20 clients in the first half year, but no sale.”
This is why realtors should be paid by the hour, so they don’t have to suffer the indignity of working so hard for no pay.
$12 sounds about right.
Well-loved. Like or Dislike:
31 
3
October 18th, 2012 at 7:03 pm 38
$8.00 tops!
Hot debate. What do you think?
14 
7
October 18th, 2012 at 7:09 pm 39
@Dumbest Time in 30 Years to Buy Real Estate:
The law says minimum $10.25.
Hot debate. What do you think?
17 
3
October 18th, 2012 at 7:26 pm 40
@Best place on meth: The law says minimum $10.25.
Tell him you’ll tip for good service?
Hot debate. What do you think?
7 
4
October 18th, 2012 at 8:03 pm 41
I smell ANOTHER 19k party on the horizon.
This is getting interesting.
I’m hearing anecdotal horror story after anecdotal horror story.
I suspect the great unwashed resemble a deer in the headlights of sorts – they are not sure what to make of it…but as the months tick onward, reality will set in – until the semi hits them and rips them to shreds.
I’m hearing of developers who are getting squeezed/foreclosed on (demand loans getting called on some of the smaller developers who have high ratio loans), they could see their equity they’ve built up (unless they’ve squirrelled money away and immunized it, I’m sure many have…but most won’t have) over the past decade erased in the next few MONTHS. I’m seriously hearing of horror stories that extreme, where developers have build multiple units on spec and now NO BUYERS and the lenders are reacting quickly and pushing into default so they can hammer out the units. Expect this trend to continue.
So many arrogant folks out there in their GUnit wagons are about to get a rude shock, when they realize that their upper middle class trappings are all falling in value as their world crumbles around them.
This may be somewhat gradual, but when 30% is off this market by the middle of next year, the number of underwater real estate barons will number in the thousands of thousands.
Get ready for screams in the night.
Good times.
Well-loved. Like or Dislike:
44 
10
October 18th, 2012 at 8:19 pm 42
@Romeo Jordan: Wow.
Hot debate. What do you think?
8 
3
October 18th, 2012 at 8:24 pm 43
This is my new favourite Strathcona listing. $1.1M for “that house” with a pit bull in the yard and a serious police incident earlier this year. Since the listing is worse than useless, here’s the Google street view. If you could zoom in far enough, you’d see a prominently displayed American Body Armor logo.
You might think this is a ripe location for redevelopment, but Strathcona zoning is particularly restrictive and this lot is RT-3. On top of that, all three levels of government (plus the port authority and rail corporations) intend to re-route all the traffic that currently uses Prior St. along Malkin — right past the front yard. The new owner would probably end up hoping for expropriation.
Well-loved. Like or Dislike:
25 
1
October 18th, 2012 at 8:57 pm 44
@Turkey: That is gold. You should consider sending to Garth and Mish.
Like or Dislike:
4 
1
October 18th, 2012 at 10:44 pm 45
@Turkey: Brutal! For $25,000 less you can have this Hawaiian beauty. Sorry, no pitbull included!
http://www.realtor.com/realestateandhomes-detail/78-7007-Kewalo-St_North-Kona_HI_96740_M75528-91865
Like or Dislike:
9 
0
October 18th, 2012 at 11:01 pm 46
@Can’t wait: A dose of reality can’t come too soon. How come every cookie cutter condo is ‘elite’ and ‘exclusive’ when they’re everywhere ? And how everyone considers themselves ‘sophisticated’ and big-time investors just because they borrowed money to buy one of these properties ?
Hot debate. What do you think?
17 
1
October 18th, 2012 at 11:20 pm 47
End of day so this may need to be reposted tomorrow. Here are some general stats.
1.) Volumes continue to really languish. Y/Y down quite a bit and the pace is worsening compared to summer.
2.) Averages are going up on detached while down on attached. We are getting a few more high priced homes come through this month and the mix is shifting a bit as Richmond and Van-West are up this month in volume (comparatively).
3.) Listings are now slowing as expected. We will hit our peak inventory next week then fall about 35-40% for the closing of the year. That will put us at about 20% higher closing inventory than last year. This is the 3rd year of increases after 2009.
This is it – - the bad news is out, people are waiting and making somewhat smarter decisions. The psychology is now 100% changed – the market is not going up. Spring next year will be interesting. If you are a speculator and are up 100% (or more) you may just want your money out- that’s what will drive this market.
Happy weekend to all of you! Is it true that there is snow in the forecast already? Wonderful – - – it will give the REBGV another excuse why November sales were so bad!!!
Hot debate. What do you think?
19 
3
October 18th, 2012 at 11:38 pm 48
@VMD:
“Singtao Chinese newspaper: Greater Vancouver realtors are now forced to quit and find new jobs”
According to Sing Tao, CREA’s chief economist Gregory Klump’s Chinese name is “Kelong Pu”.
I wonder if he’s related to Pepé Le Pew?
Hot debate. What do you think?
11 
1
October 19th, 2012 at 12:01 am 49
[...] sales decline 32% -Vancouver drags down national numbers -Time to panic -Vancouver market cooling too quickly? -Last September was a different season -Realtors forced to [...]
Like or Dislike:
0 
0
October 19th, 2012 at 9:24 am 50
This is why these blogs are so frustrating. The methodology for calculating the HPI index was not changed. What was changed was the formula for calculating the benchmark price so that the per cent change would match the HPI index. The HPI used a chain-fisher method to aggregate sub-areas while the benchmark was aggregated with sales-weighting. That caused a slight difference in growth rates. It has now been resolved. If that sounds like a conspiracy rather than sound practice in constructing new statistical measures, then that is on you.
Like or Dislike:
3 
1
October 19th, 2012 at 9:33 am 51
@painted turtle:
It is a pure lie.How do u know them,do u speak Pure Chinese
Like or Dislike:
1 
6