A note from Ben Rabidoux

Ben Rabidoux runs a blog called The Economic Analyst that features focused analysis of economics and the Canadian housing market.  He is currently in Vancouver to do a presentation with David Lepoideviv titled Vancouver Real Estate: What’s Next?

This is happening tonight Wednesday the 28th – 7:00 pm at the Westin Bayshore in downtown Vancouver.

Update: the talk was last night, you can find some participant impressions in the comments below.

We don’t normally post about events, but many readers here may be interested in this one.  Here’s a comment Ben left here yesterday:


Hey to the VCI crowd.

I’m enjoying my time in this beautiful city, although I’ve been looking over my shoulder a lot with the CAAMP conference in town. I keep waiting to get jumped. So far, so good.

Had the pleasure of meeting a few of the forum characters. Most casual readers of this forum have no idea how many really smart professional analysts and portfolio managers read and contribute to this site. VCI is without a doubt the top online real estate forum in the country (should also give a shout-out to House Hunt Victoria which is also very solid).

One final plug for what brings me to the city: The seminar will be tomorrow at 7pm at the Westin Bayshore and as a teaser, the staff at the Lepoidevin Group have printed (in colour) and bound the entire presentation for every person in attendance to take home. Should be a fun conversation piece if you leave it on your coffee table.

http://www.realestate2013.ca for more info.


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313 comments! That’s a lot to chew on =)

Atomic Frog

I went to the seminar and here are a few of my observations:

1. It is busy, cannot believe that many people went.
2. It is bearish and honest, go much further than I thought any analyst would go. Much appreciate the frankness and the honesty.
3. It is funny, both Ben and Dave during esp some of the Q/A session
4. The age demography is surprisingly diverse. There are young ppl and there are older folks. I would assume an equal no of potential buyers and sellers attended the thing.
5. BoC possibly cut rates before going up? Some middle-aged guy sitting behind me claims that he is in a variable mortgage and according to him that is the only good news of the nite…
6. The reaction from the crowd is half shocked, half “i-told-u-so”



No, try not to focus too much, in your case on one metric, which you think proves no bubble, actually it proves the opposite. Sticking your head in the sand will only go so far, but your ass is still out, and you just got assaulted.



Really? Is that what you really think? Try to focus here. Proven myself wrong? You’ve just proven that you can’t read and follow along.



That’s not what I used. I looked at the cap rate for apartment rentals in Vancouver East because somebody had a good graph for that going back 20 years.

The spread hasn’t changed. If it had gone out of wack with people taking less of a spread than in the past, then I would have to agree on the point of speculation. But the data doesn’t show what you CLAIMED it would.

Then the claim shifts to “it’s proof of speculation because rates won’t keep dropping”. Really? That’s the response? Your speculating on the future doesn’t imply others are speculating in the present. If you want to make such a case, then fine. We can debate that. But don’t tell me it’s proof of speculation.


“you conveniently forgot property tax and strata fees in your 5% cap rate assumption. ”

He didn’t forget about strata fees because he was using multi-unit rentals as his example, something we weren’t talking about in the first place.

I’ve never claimed that multi-unit rentals were in a bubble even in Vancouver. The people who invest in them aren’t complete idiots.

Extend and Pretend

@nufio: Canadian Bank Short List http://seekingalpha.com/instablog/499486-the-unintelligible-investor/1308501-canadian-banks-short-me-if-you-can The article you posted is good source for a comprehensive watchlist. But the author’s point of view of being short right at this moment should be considered cautiously. My advice is to “watch for the wobble” especially ex-dividend date. At some point smart money will milk the last dividend and the price action afterward will be unusual. Check my other posts in this thread you can see the chart timing of the various instruments cited by Rabidoux during the 2008/2009 rehearsal [FYI, you will have to scroll through a lot of chatty crap posts about stuff that won’t make anybody a dime]. There you will find one remarkable thing about 2008. Unlike Rabidoux’ collapse order prediction of consumer impact being later, a prominent consumer discretionary started swirling the drain long before RE plummeted in… Read more »


“What if Dave actually believes what he posts?

When he started posting I thought he did, but if you read all his posts throughout the day it doesn`t seem to me that he does. Probably just attended Bens presentation and is having an internal struggle with what he saw vs. what he`s been told for the rest of his life. Has realized what he says doesn`t make sense but still sticks with it because its all he knows.


What if Dave actually believes what he posts?

Ralph Cramdown

I think the confusion is in cap rate. If Dave is looking at a source of historical cap rates, it’s likely for purpose built multiunit residential rentals. Buyers of those can get dumb, and stay dumb for a long time, but they generally don’t ever get as dumb as the amateurs buying SFH to live in or rent, or condos to rent out.


300+ comments on a 2-day thread. Record?



” The spread betwwen return on money and cost of money is within historic norms at present”

You’ve just proven yourself wrong. This shows that this is a credit fueled bubble. Cost of renting vs owning is well off historical norms, as well as price vs income. The only reason prices got so high was because money was so cheap. This has lead to over investment in real estate and its eventual collapse.


@UnagiDon: both are speculation, but to characterize retained earnings as the same thing as buying a low-yielding Vancouver condo is silly

if vote-down-the-facts is trying to pull a patriotz and argue over definitions that’s one thing but it misses the point. If the future earnings are there or not we have very different forms of speculation.


@Con-Rad: Benjamin Graham is turning in his grave: “Oh no, people are still debating the definition of speculation! Was all my writing for naught?”


Oops I “lost” Ben’s seminar booklet in the company lunchroom. Panic ensue.


@Dave: you conveniently forgot property tax and strata fees in your 5% cap rate assumption. Not to mention the occasional vacancy and repairs.


@Vote Down The Facts

I see little comparison between buying an asset that naturally depreciates requiring maintenance costs, requires constant service costs through heating/electricity, and that you have to pay a hefty amount in property taxes for each year and buying shares.

I understand what you are saying, rent = dividend, but the yield is minuscule on housing, ignoring all the ongoing costs. Taking all the costs into account it is negative.


@Vote Down The Facts: Stupid idea. A company can retain all its earnings for growth investments instead of paying out as dividends. Low dividend yield != low earnings yield.

I could have written more, but you apparently are too dim to understand it.

Vote Down The Facts


Dividends are the difference between buying a house for the rental income and buying a house to resell for a future profit. If you’re not being paid to hold the investment the you’re speculating on its future value.



did someone post this here before? Anyone in here shorting any of the banks?


@Vote Down The Facts

Is it a fact that buying a share is buying a piece of ownership in the company? Is it a fact that there is technically zero economic difference between a company paying dividends or keeping cash to reinvest in itself?

If we can agree with these facts, what do dividends have to do with speculation?

Buying a share in a profitable company with a history of earnings is vastly different then what the vast majority of buyers in Vancouver have been doing.


@Ralph Cramdown:

You are missing the point of the metric. The point was to look for evidence of a bubble based on the difference between the return on money and the cost of money. I am just following through on what Patriotz suggested. He claimed there was a bubble based on this, but when I look at the last 20 years, we see a consistent trend. It doesn’t show a bubble.

Sorry, but that’s how data and metics work. You don’t just throw them out because you don’t like what it tells you.


Who TF is Dave and why is so much of this otherwise interesting blog dedicated to dialogue with him?