Vancouver prices now lower than 2011
If you bought property in Vancouver BC last year and were planning on flipping it this year for a profit, well…
Better luck next year.
Teranet has released their stats for September 2012. Prices are dropping across Canada, but still up Year over year.
This is not so in Vancouver, where prices dropped by 1.2% for the second month in a row, bringing Month over Month (MOM), Year over Year (YOY) and Year to Date (YTD) measures all negative according to Real Professional:
% change y/y: -1.42%
% change m/m: -1.19%
Year to date: -0.60%
The only market that saw a larger monthly drop in the Teranet Home Price Index was Victoria which saw a 1.3% drop. Together Vancouver and Victoria continue to drag down the national index.
October 25th, 2012 at 12:11 am 1
That’s a positive news with some negative numbers. Way to go, Vancouver!
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October 25th, 2012 at 12:33 am 2
Hey good news!
Each 1% drop in the price of an average vancouver house improves affordability by about $10,000.
The last two months drop have paid for my years rent on an average house here!
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October 25th, 2012 at 2:25 am 3
This time last year prices were slightly weak. The HPI for September-December was 170.71, 170.15, 169.81, 169.29. That means to get increasing YOY drops the prices this year need to be dropping faster than they were last year (which they are).
The Teranet HPI lags for a few reasons. Sales and inventory give us a very good view into the future movements of Teranet. The most significant result is 3 months into the future. You can see the “predicted” half-on-half price changes here.
This model is forecasting prices to be about 5% off their June peaks by the end of the year, however the most recent data are trending lower than the model. Given current MOI and sales volumes I expect further price deterioration into January and February. My call has been for -6% to -4% YOY in late winter.
We can start looking into 2013 and envision what will happen in the spring. The spring typically sees prices bottoming with MOI dropping significantly from its highs in the winter. To quench YOY price drops, it’s going to be all about MOI differentials compared to last year. That is, as other commenters on this blog have alluded many times, if we start the year softer than in past years, through a combination of higher inventory and lower sales, that’s not good for prices. In other words, it would not be surprising at all to see YOY price changes become progressively worse through the first half of 2013.
Why do I say this? The major reason, in my view, is due to changing credit conditions. The Bank of Canada has made strong statements on slowing household debt accumulation, the major way having been through mortgages and lines of credit. If debt growth is to slow in the coming year as the Bank envisions, that means fewer sales and more impetus to sell if refinancing is being curtailed, especially in markets where banks will see higher degrees of risk.
There may be reasons why prices could remain robust in the spring but it would require external sources of capital given debt growth is to be constrained. That could happen — say China stimulus spending leaking into Canadian investments or a renewed bout of robust immigration.
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October 25th, 2012 at 5:38 am 4
Ottawa’s long-term debt plans shelved
Maybe the real problem is an upcoming recession caused by a nationwide RE bust? And CMHC debt guarantees turning into debt?
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October 25th, 2012 at 7:45 am 5
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October 25th, 2012 at 7:50 am 6
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October 25th, 2012 at 8:08 am 7
@Bull! Bull! Bull!: Are you feeling nervous these days?
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October 25th, 2012 at 8:09 am 8
@Bull! Bull! Bull!:
Yes, but if you spend the next six years flipping presales will you be able to retire in 2018? That is the question.
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October 25th, 2012 at 8:11 am 9
@Veni Vidi Vci: “…two months drop have paid for my years rent…”
Your astute remark sums up the facts of this trade nicely. Bull3′s mythical “retired flipper” assertion depends critically on actually realizing the profits on the speculative properties in question.
Evidence suggest that most people won’t realize any profit and have no realistic plan to realize speculative profit before they go bankrupt. If profits where realized on the whole, prices would go nowhere. It’s a zero sum gain. Money comes out of the accounts of those who don’t sell. If everybody sells, then there can be no profit on price changes.
Bull3′s two comments in a row speaks volumes about the present reality crashing onto his head like a ton of bricks!
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October 25th, 2012 at 8:24 am 10
The problem with flipping houses that you live in, is that you are buying and selling homes in the same market. When the housing market corrects, you will loose a lot of what you have gained on the value of that last home. I know one person that has bought and sold 7 houses in the last 14 years. The home he has now was bought for cash at $815,000. Sounds great, but the market still hasn’t corrected. It isn’t that they haven’t done well, it’s just that they have done a lot of free labor and costs that are not accounted for.
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October 25th, 2012 at 9:05 am 11
Rob Carrick on facebook-
“After selling the family house, would you consider renting a condo instead of buying one?”
and a comment-
“It does not matter where you live, long term OWNING is better than RENTING any time. Everyone is focused on a short term loss right now, and not the long term gain…..Tom- yes I sell mortgages. Thanks for looking at my profile. My clients build equity every month they own, renters build nothing. ”
hey Tom, how is that equity building going for your clients these days?
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October 25th, 2012 at 9:28 am 12
New inventory graph:
http://vancouverpeak.com/groups/inventory-graph/forum/topic/inventory-graph/?topic_page=3&num=15#post-2641
Inventory should decline from here to year end. It will be interesting to see when we levels become higher than 2008 again.
Hot debate. What do you think?
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October 25th, 2012 at 9:29 am 13
New inventory graph:
http://vancouverpeak.com/groups/inventory-graph/forum/topic/inventory-graph/?topic_page=3&num=15#post-2641
Inventory should decline from here to year end. It will be interesting to see when we levels become higher than 2008 again.
Hot debate. What do you think?
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October 25th, 2012 at 10:08 am 14
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October 25th, 2012 at 10:08 am 15
i drive by these every day on my way to work – but there is only 1 ‘for sale’ sign out – i guess they dont want to give the impression that the whole side of one block is up for sale? ps – they want too much.
http://i.imgur.com/4gVii.png
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October 25th, 2012 at 11:01 am 16
The Teranet data are awesome! Also glad to see jesse’s prognostication that prices could quite conceivably continue the downward trend even with the seasonal decrease in MOI in the Spring.
Question: has anyone here used Paul B as a purchasing realtor? We are looking to get a SFH in the next year if we can get a reasonably good deal, and I think we’ll give Paul B a shot based primarily on his help to this community over the years… I’ve seen other say that they would use Paul but has anyone done so?
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October 25th, 2012 at 11:12 am 17
@Bull! Bull! Bull!: So you’ve sold all your Vancouver real estate? Huh! Smart, but not so bullish. Maybe it’s time to change the name eh?
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October 25th, 2012 at 11:24 am 18
@Bull! Bull! Bull! “Questions don’t matter. Only facts. Fact: You’re poor. Fact: I’m rich. Any questions?”
What’s your point? Rich = __________?
Well, even if this is your measure of successful life, there’s always someone richer, like Zhang Yin. She laughs at your “riches”. You are poor person, not worthy of glance. Fact.
Actually, not fact. Just bad standard because, actually, rich = nothing.
Hot debate. What do you think?
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October 25th, 2012 at 11:30 am 19
Yet another HAM (Hot Asian Moron) in the city teaching us traditional driving culture and overseas customs. No insurance??? What if that Idiot hit someone just for fun? Maybe he would offer LV bag or condo in return to cover the damage?
http://www.theprovince.com/cars/insured+driver+says+fine+high/7444280/story.html
Hot debate. What do you think?
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October 25th, 2012 at 11:34 am 20
As I sit here in ZRH the night before a short trip to YVR, I thought I would make an inventory model. The main assumptions were as follows.
1.) Sales will the same in 2013 as 2012.
2.) Listings would be the average between 2012 and 2009. 2012 was not overly high and 2009 was very very low as it was the end of the financial crisis, and listings were just not coming to market.
The results were as follows.
1.) We are going to end this year with 20% higher inventory than last. This is pretty high but compared to 2008, it is 15% below.
2.) The inventory will evolve in an interesting way. We will not do 2008 over again and inventory will not exceed this peak.
3.) MOI will decrease into the spring “buying” season again. However, the decreased listings compared to the high listings of 2012 will result in inventory flatness and even decreases. We would enter the summer of 2013 with lower inventory than 2012 but still very soft sales.
4.) The MOI would then follow a very similar track as 2012 to the end of 2013.
How do you summarize this? For the next 14 months, we will have no pressures on prices and only for a 6-8 week period will there be lowere MOI. However, through the end of 2014, we should see similar movements to this year with some price support (flat) in the spring followed by slow sales and ultimate fall-winter price decreases. I would say this model shows for 8-10% decrease by end of 2014.
A few final thoughts.
1.) An immediate collapse is just not going to happen without changes in the external macroeconomic environment.
2.) Inventory is just going to 20K – even for next year (sorry) without an ecomonic shock.
3.) There will start to be a very low number of new builds coming on the market in 2014 as there has been a very big slowdown of new building lots purchased during 2012.
4.) Richmond may flood or have an earthquake or not but in all cases – its value is going down even further.
Cheers to all and looking forward to my 2 weeks in Wet / Crazy / Delusional Vancouver.
Hot debate. What do you think?
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October 25th, 2012 at 11:37 am 21
(Let’s fix the years – -)
As I sit here in ZRH the night before a short trip to YVR, I thought I would make an inventory model. The main assumptions were as follows.
1.) Sales will the same in 2013 as 2012.
2.) Listings would be the average between 2012 and 2009. 2012 was not overly high and 2009 was very very low as it was the end of the financial crisis, and listings were just not coming to market.
The results were as follows.
1.) We are going to end this year with 20% higher inventory than last. This is pretty high but compared to 2008, it is 15% below.
2.) The inventory will evolve in an interesting way. We will not do 2008 over again and inventory will not exceed this peak.
3.) MOI will decrease into the spring “buying” season again. However, the decreased listings compared to the high listings of 2012 will result in inventory flatness and even decreases. We would enter the summer of 2013 with lower inventory than 2012 but still very soft sales.
4.) The MOI would then follow a very similar track as 2012 to the end of 2013.
How do you summarize this? For the next 14 months, we will have no pressures on prices and only for a 6-8 week period in the spring o 2013 will there be lower MOI compared to 2012. However, through the end of 2013, we should see similar movements to this year with some price support (flat) in the spring followed by slow sales and ultimate fall-winter price decreases. I would say this model shows for 8-10% decrease by end of 2013.
A few final thoughts.
1.) An immediate collapse is just not going to happen without changes in the external macroeconomic environment.
2.) Inventory is just going to 20K – even for next year (sorry) without an ecomonic shock.
3.) There will start to be a very low number of new builds coming on the market in 2014 as there has been a very big slowdown of new building lots purchased during 2012.
4.) Richmond may flood or have an earthquake or not but in all cases – its value is going down even further.
Cheers to all and looking forward to my 2 weeks in Wet / Crazy / Delusional Vancouver.
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October 25th, 2012 at 11:47 am 22
@YVR2ZRH
I respect your analysis as always.
First half of 2012 was really a hot RE market with people trying to jump into the market before the rule changes. Can you model 2013 with a lower sales scenario? I would imagine there will be less appetite for RE in the first half of 2013 after long protracted declines in HPI and myriads of bad news on mainstream media.
Thanks!
Hot debate. What do you think?
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October 25th, 2012 at 11:52 am 23
@RaggedyRenter:
I would actually disagree. All of the months at the beginning of 2012 were near the worst in the past 12 years except for 2008. If you take the best week in the past year, it was worse than all comparatives for the decade except for either 2008 or 2009. Right off the bat, we started down 20% on last year got worse into the summer and now are only running 20-25% below last year. However, the 2011 year ended very slow so being below 2011 is bad – which is why we are seeing the worst in over a decade other than the 2008 financial crisis.
Hot debate. What do you think?
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October 25th, 2012 at 11:57 am 24
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October 25th, 2012 at 12:38 pm 25
@Chabar, @Anonymous:
Given that nowhere in the article (you did actually both read the article, right?) is the ethnicity of the driver mentioned, please take your racist stupidity elsewhere.
Preferably off my internet.
Hot debate. What do you think?
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October 25th, 2012 at 12:52 pm 26
Look at MLS V967466: Original price was $389,000 on 20 August 2012. Now it is $319,000. LOL
So, do I calculate the price drop now, or only after is is sold? There is a possibility to have it “sold over asking”, hahaha!
Hot debate. What do you think?
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October 25th, 2012 at 12:55 pm 27
Overheard at Starbucks this morning (Hornby and Dunsmuir)
Financial Advisor: “My business partner and I have a unique strategy in managing client accounts. We do 100% leverage.”
Potential Client: “Isn’t that risky?”
Financial Advisor: “You know, a lot of people have heard of people getting burned on leverage loans, but that was because the people who made those investments were just speculating and got caught out…but what we do is different. Our focus is on income generation. You see there are a lot of people in this town with massive amounts of home equity that is just sitting there…not doing anything. What we do is use a leverage loan to invest that equity into income producing assets. So you see, it’s all about creating cash flow where before there was none. And the clients who have adopted that strategy have been doing really well.”
—
Just in case you thought this isn’t going to end badly…imagine how many moron “financial advisors” there are right now leveraging hapless home owners into massively overvalued REITs, bank stocks and other ponzi-scheme “income” assets created by the banks. The clients are going to find that a) The value of their home is going to decline, magnifying the proportion of their “equity” tied up in this stupid scheme, b)it is possible, indeed entirely likely, that dividend paying securities will decline in value as home loans start going bad in Canada, c) With reduced eqauity levels, they may have a hard time re-gotiating their mortgage on maturity.
Far more money has been lost reaching for yield than has ever been taken at gunpoint.
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October 25th, 2012 at 12:56 pm 28
@shikko: true enough,but whoever the driver was I bet he wasn’t a CoC.
this city gets more ridiculous every day.
Hot debate. What do you think?
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October 25th, 2012 at 12:56 pm 29
@jesse: It’ll be a good test of the HAM theory if China renews printing. We’ll see how much money does or doesn’t end up here. Although, I think hot money was most recently focused on driving up prices in TO. And it has most, most recently moved to Phoenix and other American markets.
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October 25th, 2012 at 1:10 pm 30
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October 25th, 2012 at 1:29 pm 31
@HAM Solo: Isn’t this just diversification? I have to agree with the advisor, if you have all your equity in housing, what’s wrong with taking 20% of free money and invest in moderately conservative financial investments that pay income. You can use the income to pay down the leveraged money or you can spend it, provided you’re young enough to tolerate the risk.
Investing in anything is about risk. It’s about managing the downside. Most investments that go down, go up again given enough time, or you can take the haircut and move into another investment. So even finding a place you can own outright this spring, given ZRH2YVR and Jesse’s tepid prediction of decline, and taking a portion of that as secured loan and investing in Canadian income producing stocks or corporate debt would probably pay off in the long… that’s long term.
Hot debate. What do you think?
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October 25th, 2012 at 2:18 pm 32
@mac:
“Isn’t this just diversification?”
No, because the exposure to RE remains the same. It’s just leveraging up in stocks using the RE as collateral, which means that the stocks may have to be sold (likely at a loss) if the RE goes down. It’s not diversification at all.
Diversification would be SELLING the house, buying another house for 1/2 the price, and putting the rest in the stock market.
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October 25th, 2012 at 2:37 pm 33
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October 25th, 2012 at 2:40 pm 34
@ArthurFonzarelli – Re using Paul B as a buyer’s agent. For what it’s worth, I currently am using Paul B and I’m extremely satisfied. I find him to be knowledgeable, prompt, friendly and no pressure. Thumbs way up from me.
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October 25th, 2012 at 2:40 pm 35
@ deanbc
@ HAM Solo
Oops, sorry – repost from last of last thread. Veblen’s observations on the relationship of real estate, the financial sector, and taxpayers are even more true today than in his own time (b 1857-d 1929). The expansion of government spending as a percentage of GDP has enabled larger and entirely new diversions of taxpayers’ money to the financial sector’s coffers. The sordid history of the public-private partnership over the last 25 years is an example of same, and well-documented in its British incarnation in the journal “Private Eye”. Indeed, Western governments can reasonably be viewed as functioning as an enlarging conduit of wealth transfer from taxpayers to financial/corporate interests, long before 2008 and more so since. Conservative interests are in fact the biggest beneficiaries of this arrangement, although one would never guess that from their rhetoric.
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October 25th, 2012 at 2:52 pm 36
recovery?
http://finance.yahoo.com/news/firings-reach-highest-since-2010-230641726.html?l=1
“North American companies have announced plans to eliminate 62,600 positions at home and abroad since Sept. 1, the biggest two-month drop since the start of 2010, according to data compiled by Bloomberg. Firings total 158,100 so far this year, more than the 129,000 job cuts in the same period in 2011. “
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October 25th, 2012 at 2:57 pm 37
@shikko: I voted your comment down. I treat COC as “Canadians on Credit”. I doubt this guy was a COC, and I’m willing to bet his family is either (a) very wealthy with inherited money or (b) wealthy with ill-gotten gains.
A 22-year-old resident of West Van was stopped in Richmond, in a $430K uninsured car. He complained about the $568 fine.
There aren’t many details presented to us from which to draw conclusions. But that won’t stop people from evaluating the information to try to come up with plausible explanations for the backstory.
Here are my assumptions:
(1) Whose Car?
(a) His own, bought on credit: probably not, as few young people earn enough money to afford loan payments on such an expensive car; payments would be ~$10K/month. Also, car loans/leases generally require proof of insurance, and he was uninsured.
(b) His own, bought outright with his own earnings: probably not, there are few jobs for such young people that pay that much that he could have saved up so much money in a few years of earning capacity. And if he legitimately earned the money for the car, he probably understands the value of insurance as a cheap method of wealth preservation.
(c) His own, bought with illegitimate local money (eg, drugs): not likely, as this would make him a prime target for a lifestyle tax assessment.
(e) His own, bought with Daddy’s money: the princeling doesn’t respect the money, as it seems there’s a neverending supply of it. Just ask Daddy and he’ll buy you any *thing* you want. But don’t ask Daddy for cash, because he doesn’t trust that you won’t get into trouble (gambling, drugs, etc) with it. So the kid may not have enough spending money for both insurance and his lifestyle expenses. This is the most plausible answer. And Daddy’s obviously not living here, or the kid would ask Daddy to pay his insurance bill (Daddy would question where his spending money went). So kiddo instead, far removed from Daddy’s watchful eye, short-sightedly prioritizes his own lifestyle over basic legal requirements such as insurance.
(d) Daddy’s: if it was Daddy’s pet car, most likely Daddy cares enough about his special car to make sure it’s insured. So it’s probably not Daddy’s.
(2) What about Daddy?
(a) Extremely rich people sometimes give crazy gifts to their children, as seen in Hollywood, and in local wealthy families (eg, Army&Navy’s Cohen family http://www.timothytaylor.ca/10/07/13/jacqui-cohen-army-and-navys-sole-survivor). Often it’s families who have inherited this wealth that are less respectful of the money (see: Cohen family).
(b) Following on that, it could also be illegitimately-earned money (see: Chinese kleptocrats). The father doesn’t respect the money, because it wasn’t earned. The money came from overseas, and was declared on application for residency, so there’s no threat of a CRA audit based on questionable ability to afford such a vehicle. Besides, Daddy might not qualify as a Canadian resident for tax purposes, since he lives elsewhere. So it’s tax-free money.
(c) It’s not drug money, due to the risk of a CRA audit.
From that analysis, however crude it may be, I’ve determined that the kid owns the car, bought with Daddy’s money, and Daddy doesn’t live here. Daddy is either very wealthy with inherited money, or is wealthy with illegitimately-obtained money. And I just found an article that confirms that the princeling is the registered owner of the vehicle.
Trying to determine the kid’s ethnicity (why am I calling him a kid? He’s an adult!). Trying to determine the princeling’s ethnicity is impossible without more information. But it’s highly likely that he’s not Canadian. (and I’m not saying “Canadian” as a euphemism for “white”– I’m not white, but I am definitely Canadian. Almost all of my friends are Canadian born&raised, and most of them aren’t white).
While West Van isn’t known as an Asian stronghold, there are two reasons why I believe this princeling’s likely of Chinese origin.
1) Despite living in West Van, he was pulled over in Richmond, on No.3 Road (as evidenced by the SkyTrain line in the photos). Unless you have relatives/friends in Richmond, or cultural connections, there’s really no reason to be on No.3 Road. From the photos, he was pulled over southbound at about Westminster Hwy. I’ll post a link to the Google street view in the next post (to avoid moderation delay). If he’s trying to get to West Van, he’s facing the wrong direction. Assuming he didn’t turn South from Westminster Hwy, he’s coming out of the predominantly-Asian stretch of No.3 Road (and anybody who’s been to Richmond before knows to avoid that stretch of No.3 Road unless you have something to do there, because traffic there hardly moves (it would be faster to be on foot– which also explains how the cop was able to see the missing plate on the front of the car, and have the opportunity to catch him). So I’m assuming he has a cultural connection to the area he’s leaving. I could be wrong– I freely admit that. I’m going on a balance of probabilities.
2) The numerous times in recent years when there have been articles about Chinese princelings driving recklessly in their expensive ultra-luxury cars, versus no such articles for princelings of other nationalities… Those non-Chinese princelings must either be few and far between, or their parents must have taught them to respect other people and their society.
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October 25th, 2012 at 2:59 pm 38
@M-: Here’s the angle the police car’s camera photographed the Lamborghini from. http://goo.gl/maps/yM783
Hot debate. What do you think?
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October 25th, 2012 at 3:02 pm 39
@ mac
I encourage YOU to go ahead and do what the advisor says. Everyone else, stay back and watch.
If you have a house that is declining in value…the last thing you want to do is incur new debt secured by the house. Whatever equity cushion you thought you had at the outset is likely to get smaller.
Also, the source of “income” in the Canadian markets is largely from either a) financial sector loans to the self-same housing bubble (either in the form of bank equities, mortgage pools or something similar), or b) dividends from companies dependent on consumer spending that will dry up once the housing correction gets going.
I realize I am swimming against the tide with comments such as these. But this particular community has numerous individuals who swam against the tide on housing. Try to connect the dots to many Canadian income producing securities … it is not hard.
Hot debate. What do you think?
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October 25th, 2012 at 3:21 pm 40
@jesse:
Jessie,
Teranet data is a backward looking indicator- it is described right on the Teranet/national bank website. September data represents June/July sales contracts since all data is based on based on title transfers which are processed anywhere from 2-3 months after the purchase agreement is signed. Title transfers lag processed real estate board data which is why the MLS index and MLS sales to listings ratios are leading indicators for Teranet as well. Any model expected to lead the housing market should have at least a 3-4 month lag structure for Teranet numbers
Hot debate. What do you think?
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October 25th, 2012 at 4:13 pm 41
@M-
You didn’t really have to dispatch 007 just for that.
Hot debate. What do you think?
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October 25th, 2012 at 4:16 pm 42
@M-:
That lambo driver must be a HAM. Given the Google Map pic, he’s probably not pulled over but rather illegally parked at the bus stop so he could run into the Vancouver Bullion Currency Exchange (VBCE) to save an extra .001% for USD currency to later shop at Bellingham’s Costco.
He probably made an illegal U-turn and ran a red-light before approaching this spot.
Hot debate. What do you think?
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October 25th, 2012 at 4:16 pm 43
@HAM Solo:
“Also, the source of “income” in the Canadian markets is largely from either a) financial sector .. or b) dividends from companies dependent on consumer spending that will dry up once the housing correction gets going.”
The TSX probably has the smallest % of market cap in the consumer sector of any major stock market. It’s pretty much all financials and resources. I don’t think a downturn in Canadian consumer spending would affect earnings a lot. I think the risks are international.
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October 25th, 2012 at 4:22 pm 44
@patriotz: Why, if you had bought and paid off a westside house years ago, would you ever have to sell said house just because your stocks or real estate prices fluctuated? Why would you care? Especially if you’ve invested in income producing stocks. It’s diversification for those people, lucky or otherwise, in this position, where they can use their house to obtain cheap money to diversify into stocks. No one sells because markets fluctuate.
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October 25th, 2012 at 4:25 pm 45
@HAM Solo: I’m not talking 100%. Just 20%. It’s a smart move if you’re paid off your mortgage, have seen values rise insanely, don’t want to move, don’t want to downsize and want to have your money in other things besides real estate. You can live in fear all your life.
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October 25th, 2012 at 4:25 pm 46
@mac:
What I said is the reverse. You are at risk of having to sell the stocks if RE goes down, and since they tend to go down together, that would likely force you to sell low.
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October 25th, 2012 at 4:39 pm 47
@M-:Thanks for taking the time to explain. I have a couple of comments:
I voted your comment down. I treat COC as “Canadians on Credit”.
My mistake; I forgot local usage of CoC; I assumed CoC meant “citizen of Canada”. His usage was more focused than I assumed.
I doubt this guy was a COC, and I’m willing to bet his family is either (a) very wealthy with inherited money or (b) wealthy with ill-gotten gains.
You’re offering a false dichotomy above. Why did you exclude the possibility that the driver’s family is newly wealthy, but legitimately? Or maybe even just the driver is wealthy?
From that analysis, however crude it may be, I’ve determined that the kid owns the car, bought with Daddy’s money, and Daddy doesn’t live here. Daddy is either very wealthy with inherited money, or is wealthy with illegitimately-obtained money. And I just found an article that confirms that the princeling is the registered owner of the vehicle.
You have not determined the kid owned the car, you have only assumed the kid owned the car. Yes, there is a story he’s the car’s registered owner, but before you saw that, you hadn’t determined anything; after seeing it, you knew the kid owned the car.
People blur the line between assumptions and knowledge all the time, and it leads to really pernicious mistakes in both reasoning and argument. You have to train yourself to not do it.
There is a high probability that the driver is Asian because a high percentage of the population of the lower mainland is Asian; any other piece of evidence used is assumption, not deduction.
Despite living in West Van, he was pulled over in Richmond, on No.3 Road (as evidenced by the SkyTrain line in the photos). Unless you have relatives/friends in Richmond, or cultural connections, there’s really no reason to be on No.3 Road. (snip) So I’m assuming he has a cultural connection to the area he’s leaving. I could be wrong– I freely admit that. I’m going on a balance of probabilities.
1) This is a hasty generalization fallacy; yes, people of ethnic Chinese background are very common in that area, but it does not then follow that all people in that area are of Chinese descent.
Here’s a quiz: I have been through the nearest intersection four times in the past month. I do not have family or cultural connections to that area of No. 3 Rd. Which statement is more likely to be true: “I had business in the area”, or “I had business in the area and am Chinese”?
2) The numerous times in recent years when there have been articles about Chinese princelings driving recklessly in their expensive ultra-luxury cars, versus no such articles for princelings of other nationalities… Those non-Chinese princelings must either be few and far between, or their parents must have taught them to respect other people and their society.
This is confirmation bias (counting the hits, discarding the misses); we are hard-wired to pay more attention to rare events that common ones. Also, you can’t consider data you don’t have. Did you consider the below stories in your reasoning?
Red Bull Heir Kills Policeman with Ferrari
Man does puzzle while driving
Hot debate. What do you think?
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October 25th, 2012 at 4:43 pm 48
@YVR2ZRH: This looks more like a flattening or a slow deflation than the immediate collapse you guys have been celebrating for the last few months. I don’t know how many times I’ve been voted into oblivion here for suggesting that the market might just flatten or go into a slow deflation rather than go down in flames, because you guys have the charts to prove that “every bubble pops”!
Hot debate. What do you think?
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October 25th, 2012 at 4:55 pm 49
@Anonymous:
1.2% m/m decline, if sustained, would be 13% annually or 35% over 3 years.
The US as a whole fell about over 35% over 6 years.
Well-loved. Like or Dislike:
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October 25th, 2012 at 5:01 pm 50
#48 – While I disagree with you I voted you up. Alternative points of view should be welcome here provided they are backed up by facts.
Hot debate. What do you think?
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October 25th, 2012 at 5:07 pm 51
@patriotz: You have a 2 million dollar westside house. It’s paid off. You borrow 2 to 4 hundred thousand at 3%. The market goes up. The market goes down. The real estate market does either, both or none. You’re not FORCED to do anything. You have the same job you did before you diversified. No forcing. Nice diversification. And can afford the payments in all cases.
Hot debate. What do you think?
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October 25th, 2012 at 5:22 pm 52
@mclovin:
Agreed. In fact, right here in Canada there are a couple of examples of flat markets over the last 5 years. Just go to Teranet and look at Victoria, which is almost exactly where it was 5 years ago. Or Calgary and Edmonton, which are close (down about 10% from 5 years ago). That’s pretty well what I’d call a flat market if you ask me.
Now, Vancouver is a different story. We are curently so over-valued and hopped up on debt and speculation, it would be a miracle to see the market go flat for the next half decade. But you never really know for sure.
Hot debate. What do you think?
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October 25th, 2012 at 5:28 pm 53
@M-: “(d) Daddy’s: if it was Daddy’s pet car, most likely Daddy cares enough about his special car to make sure it’s insured. So it’s probably not Daddy’s.”
Perhaps Daddy never drives it, and it’s part of a collection. It’s kept off-road, and doesn’t need insurance.
“Unless you have relatives/friends in Richmond, or cultural connections, there’s really no reason to be on No.3 Road”
Please tell me you’re joking?
Hot debate. What do you think?
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October 25th, 2012 at 5:28 pm 54
@mac
i always thought to never invest with borrowed money.
Hot debate. What do you think?
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October 25th, 2012 at 6:03 pm 55
New Listings 135
Price Changes 127
Sold Listings 67
TI:18910
http://www.paulboenisch.com
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October 25th, 2012 at 6:06 pm 56
Bull! Bull! Bull! anxiety meter
. =========++++++++++ . =====888888OOOOOOOOOOOI???? . ====888888OOOOOOOOOOOOOOOOOZZ???? . ===88888OO ZZZZZZZIII . ===888OOO ZZZZZZIII . ==8OOOO Z$$$$777 . ==+OOOO $$$$$77 . ++OOOO $$$$77 . ++OOOO $777$$ . ++OOOO 7777$$ . ++OOOO 7777$$ . +IOZZ 777IZZ . ??ZZZ MM IIIZZ . ?ZZZZ MMM IIIIZZ .??ZZZ MMMM IIIOO .??ZZZ MMMMM IIIOO .I$$$$ MMMMMMM ????O .I$$$ MMMMMMM ???88 .I$$$ MM$MM ???88 .I$$$ M ???88 .7$$$7 ++++8 .77777 +++8D .77777 +++DD . 77777 ++++DD . $$77I +++DD . $$III ====DN . $$IIII ====NN . ZZIIII ====NN . ZZI??? ====NN . ZO???? ====NN . OOZ???? ===~+NN . OO??+++ =~~~~MM . 888++++++ ~~~~~~MMM . 888+++++++ ~~~~~~~MMM . 88DD=================~~~~~~~~MMMM . DDDDD=========~~~~~~~~8MMMM . NNNNNNNNNNNNNMMMMMM . NNNMMWell-loved. Like or Dislike:
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October 25th, 2012 at 6:25 pm 57
@Yalie:
None of these markets were flat over the last 5 years, unless you’re using Dave’s definition of “flat”.
Calgary and Edmonton crashed 20% starting in mid-2007 and recovered about 10% from the cheap credit post-2008. Victoria took a dive of about 12% in 2008 and recovered about the same amount, again due to cheap credit, and is now falling rapidly.
All of the above have been (or were in the case of Victoria) more or less flat only since 2010.
Hot debate. What do you think?
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October 25th, 2012 at 6:29 pm 58
@mac:
$2 mil in RE (for now), $200-400K in debt, and $200-400K in equities is not “nice diversification”.
$600-700K each of RE, someone else’s debt (i.e. fixed income), and equities is more like it.
Hot debate. What do you think?
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October 25th, 2012 at 7:01 pm 59
67 sold is a nice number. Hopefully, similar sales numbers will follow through for the rest of the month. Slow November and we will be good unitl February, 2013. Now, only if pricing will come further down.
Hot debate. What do you think?
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October 25th, 2012 at 7:09 pm 60
@patriotz: As I said… if the person doesn’t want to move and rent with the kids. I disagree with what’s his face’s original comment that this is a scary disastrous proposition. And I don’t think many stock brokers or financial planners are successful at getting 100% of anyone’s equity.
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October 25th, 2012 at 7:10 pm 61
@kinky: Maybe but if interest rates stay lower than inflation, you’ve gotta figure something out. Esp. if govt’s plan to inflate away their debt. Then even the bears here will have to think outside the bear box.
Like or Dislike:
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October 25th, 2012 at 7:38 pm 62
Stats updated:
http://i45.tinypic.com/nfmwet.gif
Like or Dislike:
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October 25th, 2012 at 7:41 pm 63
port moody skiing??? $14,800 a month??? what the?
http://vancouver.en.craigslist.ca/pml/vac/3344218951.html
Hot debate. What do you think?
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October 25th, 2012 at 8:02 pm 64
@mac: I doubt any government is planning to inflate away their debts, because they know it is not mathematically or practically possible for them to do so. It’s a nice myth on paper, but inflation will increase debt, not decrease it. Inflation does not work in a vacuum, even if the feds were to succeed in keeping rates low, it would not help the debt problem. The only way to reduce debt is to either pay it down, or default on it.
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October 25th, 2012 at 8:11 pm 65
Hidden due to low comment rating. Click here to see.
Poorly-rated. Like or Dislike:
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October 25th, 2012 at 8:12 pm 66
@YVR2ZRH & @Jesse
If you have the model set up then could you plug in this scenario:
1. 2013 listing panic: Listings match 2008 levels – aggressive in early months then flattening later in the year when only stressed list.
2. 2013 sales plop: Sales match 2012 with early good performance followed by collapse as reality sinks in.
3. 2014 reality bites: use 2009 listings rates (sluggish) and 2012 sales rates again.
4. If Jesse’s feeling ambitious then plug in resulting monthly MOI for implied price drops for next 24 months (using that 6 month delay logarithmic function). I love a good logarithmic predictive tool. Who doesn’t!
I’m still angling for that Golden Bear award with this one.
Hot debate. What do you think?
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October 25th, 2012 at 8:12 pm 67
@Devore:
Almost every government inflates away their national debt.
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October 25th, 2012 at 8:15 pm 68
@Mac “but if interest rates stay lower than inflation, you’ve gotta figure something out.”
One thing that I have to figure out is not to be going into debt. And by taking equity from the even paid out house I am going into debt. For me this is priority. In terms of going into stocks I believe that this is risky proposition too. Market is on QE steroids and as soon you remove QE everything is falling. I don’t know what we are supposed to do,
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October 25th, 2012 at 8:24 pm 69
@604x:
Jesse – With 2008 listings (to start) trending to 2012 listings for summer and then finishing with 2010 listings, we get your scenario (High list followed by slower lists). Used 2012 sales for all year (Spring will likely be even worse however). This paints an interesting picture.
1.) Inventory peaks about 10% over 2008 peak.
2.) MOI comes as low as 6. If we do not go below 6 in the spring, the whole year is dead and a big disaster waiting to happen.
3.) MOI would go up close to 14/15 at our peak which is typically September.
4.) Slowing of listings and the lack of the financial crisis as was in 2008 brings closing inventory down below 2008 closing however and yet again, we close the year with higher inventory again – about 10% higher than 2012.
This is an interesting scenario and could play out as I would say we have some serious backlog in product which wants to sell. It is the listing pace in late spring which makes the difference how high we get. If listings are very high in May-June, we will reach these new highs for inventory. Remember 2008 did not have the crisis until October and inventory peaks were weill in place before that.
Don’t have 2014 added to the tables yet as it seems a bit far in the future. Will see what I can do when I’m around next week. I think it’s just more interesting to see this year play out as bad as it is and then look at the Spring where the year’s trends are set in place.
Hot debate. What do you think?
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October 25th, 2012 at 8:27 pm 70
Hidden due to low comment rating. Click here to see.
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October 25th, 2012 at 8:36 pm 71
@Bull! Bull! Bull!:
Ha ha numb nuts I did this funny thing- I bought when prices were low and then I sold when they doubled
. It only took 5 years. I didn’t just buy one I bought three. I had this crazy idea that they should all cash flow and they did (except for the principle res, which was heavey subsidised). So you see I am not a perma-bear. Most of the bears on here are not. They are just people who can tell which way the wind is blowing. Unlike you.
Well-loved. Like or Dislike:
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October 25th, 2012 at 8:45 pm 72
@Vote Down The Facts: “Unless you have relatives/friends in Richmond, or cultural connections, there’s really no reason to be on No.3 Road”
“Please tell me you’re joking?”
Actually, he has a point. I live in Richmond and I avoid No. 3rd like the plague. I always strategize ways to get around it, like the River Rd – Capstan route, or via Garden City (getting worse too), or No. 4 Road. Unless you’re heading to one of the seafood restaurants or Superstore, it’s really best to avoid 3 Road.
Hot debate. What do you think?
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October 25th, 2012 at 8:52 pm 73
@mac: “You have a 2 million dollar westside house. It’s paid off. You borrow 2 to 4 hundred thousand at 3%.”
The problem is the debt has to be serviced.
Hot debate. What do you think?
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October 25th, 2012 at 9:02 pm 74
@mac: “Maybe but if interest rates stay lower than inflation, you’ve gotta figure something out. Esp. if govt’s plan to inflate away their debt. Then even the bears here will have to think outside the bear box.”
Bond rates (the ones that set long term borrowing) are subject to change without the governments approval. They change when bond buyers decide the rate is lower than inflation going forward or the credit risk is too high for the interest rate. Look at Spain as an example.
Hot debate. What do you think?
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October 25th, 2012 at 9:04 pm 75
@Anonymous: Duh!
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October 25th, 2012 at 9:07 pm 76
@patriotz:
Not to get into a Clintonian argument over definitions, but I guess it comes down to your definition of the word “flat”. Specifically, how much variance between points x and y you’re willing to allow. It wasn’t my intention to argue for a particular definition – I just eyeballed the data in those cities and noticed that the apocalyptic crash that appeared to be well underway didn’t actually happen, and indeed some recovery even occurred. The net result has been prices that are currently not too far from prices 5 years ago. Maybe not exactly “flat”, but certainly not a catastrophe either.
And, yes, I 100% concur that all of those markets were only saved by record low interest rates delivered by the BoC in the winter of 08/09, and yes, another deus-ex-machina intervention is highly unlikely to save the housing market this time around.
Like or Dislike:
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October 25th, 2012 at 9:14 pm 77
@vangrl: Ummm yeah, I think I will just stay in Whistler thankyouverymuch. Also would love to see how they plan on collecting that $25k smoking fine.
Hot debate. What do you think?
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October 25th, 2012 at 9:23 pm 78
#71 @Bailing in BC: “I didn’t just buy one I bought three.”
So YOU’RE the huzzba!
Hot debate. What do you think?
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October 25th, 2012 at 9:28 pm 79
@specialfx3000:That lambo driver must be a HAM. Given the Google Map pic, he’s probably not pulled over but rather illegally parked at the bus stop so he could run into the Vancouver Bullion Currency Exchange (VBCE) to save an extra .001% for USD currency to later shop at Bellingham’s Costco.
He probably made an illegal U-turn and ran a red-light before approaching this spot.
Hot debate. What do you think?
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October 25th, 2012 at 9:33 pm 80
@Anonymous:
Sorry, that was me. HTML fail. Mods, please delete #79.
@specialfx3000:
I’ll state it directly, since I can’t seem to embed pics in a post:
not sure if trolling, or just stupid
Like or Dislike:
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October 25th, 2012 at 9:41 pm 81
@YVR2ZRH: If MOI doesn’t get below 6, we will see diverging YOY price changes for most of the year. That would put in a healthy drop. There are a few factors I’ve mentioned that make 2013 look weak:
1) The Bank of Canada is stating loan growth is going to slow. They are relying on fiscal policy to do this. To wit the Bank was worried about debt concentrations in households with the most vulnerability to economic shocks. That means, in my view, households with higher risk factors will find it more difficult to obtain loans.
2) Completions of units are going to increase through 2013. In addition to the higher base of used inventory, there will be an addition of newly-minted dwellings as well.
3) I am bearish on Asian economies over the next few years. I think there is a chance 2013 will see a renewed bout of GDP growth but after the Chinese communist party power transfer in March, earnest efforts to rebalance may begin. I don’t know much about timing, but a slowdown in China is going to hit BC’s GDP. If you want an economic “event”, that would be the first on my risk list.
4) There is only one year left of large IRDs on 5 year terms. Most people, now, cannot refinance to reduce their payments.
Above all, though, there is the so-called virtuous to vicious cycle reversal. Price drops exacerbate more price drops, first because people are unwilling to buy when prices look near certain to be lower, second because equity ratios evaporate quickly and selling — let alone buying — becomes impracticable. A -4% drop is enough to tip the scales even more. The reinforcing nature of cycle reversals necessitates price drops accelerating without renewed capital injections.
Hot debate. What do you think?
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October 25th, 2012 at 10:49 pm 82
Hot debate. What do you think?
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October 25th, 2012 at 10:58 pm 83
@vangrl:
I like the B&B’s noise policy:
“Noise: In an effort to provide a pleasant time for all guests, the City of Vancouver Noise Bylaw is in effect from 10pm-10am. Enforcement of this bylaw may result in a minimum $100 fine and/or eviction. Please be considerate of others.”
Like or Dislike:
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October 25th, 2012 at 11:42 pm 84
hahaha this is the guy selling UniverCity condos http://i48.tinypic.com/ehn4uu.jpg
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