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.

-Ben

315 Responses to “A note from Ben Rabidoux”

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    Poorly-rated. Like or Dislike: Thumb up 0 Thumb down 17

    I wonder if he would kindly post a PDF of the presentation after the event? Would be such a useful educational material especially for the Vancouver crowd.

    Well-loved. Like or Dislike: Thumb up 41 Thumb down 0

    From CAAMP, talk interest rates going to stay low for the next 7 years.

    This is not industry shills talking.
    This is a quote from David Dodge.

    I know bears like the idea of a crash so they can buy at a lower price. I get that. But you have to prepare yourselves that it might take a while. For insightful guys like patriotz that is no problem because renting is equivalent to owning. His message is powerful if you understand it.

    So. Bears. Why are you reading here, really? Serious question.

    Hot debate. What do you think? Thumb up 22 Thumb down 29

    Bob Arctor Bob Arctor Says:
    4

    @gokou3:
    It’d be nice to see video of the event as well.

    Hot debate. What do you think? Thumb up 17 Thumb down 0

    Guy Smiley Guy Smiley Says:
    5

    Why are you posting here?

    Interest rates are only one ingredient. Housing price crashes in the presence of multi-year stretches of cheap lending are nothing new.

    And don’t assign that much confidence to caamp – they can see 7 years out as clearly as everyone else.

    Well-loved. Like or Dislike: Thumb up 39 Thumb down 1

    Canada AM (CTV) had a piece on the Trump condotel debacle at 7:35 local time which you might be able to see live or on their website.

    Best appreciated for the unintentional humour, as when Bev talked about the “delusioned” buyers. “Expert” guest Brad Lamb (Toronto condo king) assured us that there has never been a RE downturn without a recession in North America. Which of course is untrue in Toronto and elsewhere, unless he really meant there was a recession after the downturn. :-)

    Well-loved. Like or Dislike: Thumb up 37 Thumb down 0

    California Finds Economic Gloom Starting to Lift

    After nearly five years of brutal economic decline, government retrenchment and a widespread loss of confidence in its future, California is showing the first signs of a rebound. There is evidence of job growth, economic stability, a resurgent housing market and rising spirits in a state that was among the worst hit by the recession.

    How about that? RE prices that make sense are good for the economy.

    Well-loved. Like or Dislike: Thumb up 46 Thumb down 0

    I would very much like to hear a recap of the event if anyone of you is going to be present and is willing to take the time to post about it. Ben is one of the countries brightest and hardest working analysts and as we know he has been featured many times in our national media and print publications. I just wish I could be there in person to hear him but alas it is not possible this year.

    Well-loved. Like or Dislike: Thumb up 20 Thumb down 0

    groundhog Says:
    9

    @Con-rad

    I doubt interest rates rise in the near future either, however that has little bearing on my opinion on Vancouver RE prices.

    When interest rates do rise it’s likely they’ll rise by the force of the markets, rather then by the Bank of Canada’s choice. When interest rates rise across the western economies, most will be doomed (Japan!).

    Well-loved. Like or Dislike: Thumb up 20 Thumb down 0

    Piklishi Says:
    10

    I will go tonight, maybe we should have the VCI corner there, will be nice to meet the peeps who write here, I think the bulls should be welcomed too. Also will be better to have different opinions.

    Hot debate. What do you think? Thumb up 16 Thumb down 0

    Anonymous Says:
    11

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    Bull! Bull! Bull! Says:
    12

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    Bull! Bull! Bull! Says:
    13

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    Anonymous Says:
    14

    @groundhog:

    What do you mean by “(Japan!)” here?

    Like or Dislike: Thumb up 3 Thumb down 1

    @groundhog: There you go groundhog. I agree rising rates will hit prices hard. If they do rise that means bears with lots of cash will get more vancouver westside house for their money. If they don’t rise it means bears with lots of cash will get more vancouver westside house for their money. It will just take longer.

    Hot debate. What do you think? Thumb up 16 Thumb down 0

    @Anonymous: groundhog thinks Japan is a fly searching for a windshield. I think he reads Kyle Bass.

    Like or Dislike: Thumb up 7 Thumb down 1

    Anonymous Says:
    17

    We need a secret VCI signal for those going tonight. Are there name tags? Just write a small vci at the end. Bull, you can just Wear your special gown made out of $100 bills.

    Well-loved. Like or Dislike: Thumb up 41 Thumb down 2

    @Anonymous: it is on his blog. He is not Anonymous.
    “About: Ben Rabidoux is an analyst and strategist with M Hanson Advisors, a market research firm catering to professional, institutional investors. His research focus is on mortgage finance and credit and housing as a disproportionate driver of the current Canadian economy. His work has been featured in the Globe and Mail, Canadian Business, Toronto Life, the Jerusalem Post, Macleans, and numerous websites including MSN, Yahoo, and Zero Hedge. “

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 2

    Interesting that OSFI’s Julie Dickson is also on the list of potential candidates to be the next BoC governor. Seems like someone with more “bite”. On the other hand, it might be a good idea for her to stay in OSFI to exercise her “bite” over CMHC (eg. enforcing the new rules governing mortgage insurers in early 2013). BoC governmor’s hands are often tied..

    “Economic analyst Patti Croft said Julie Dickson, who heads the Office of the Superintendent of Financial Institutions Canada, would be her top pick.

    “Her experience, expertise on the regulatory side would be a wonderful addition,” Croft said. “It’s something Mark Carney was very interested in. It was one of his comparative advantages and she has it in spades.””
    http://www.cbc.ca/news/business/story/2012/11/27/f-bank-of-canada-governor.html

    Hot debate. What do you think? Thumb up 10 Thumb down 0

    Anonymous Says:
    20

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    Poorly-rated. Like or Dislike: Thumb up 3 Thumb down 19

    @Bull! Bull! Bull!:

    Bull! Bull! Bull! You seem to have a bit of trouble understanding the the thesis of this forum. Let me put it in more relatable terms. Remember in the late ’90s when you thought you were rich because of your Beanie Baby collection? This is kind of like that.

    Well-loved. Like or Dislike: Thumb up 60 Thumb down 4

    Bull! Bull! Bull! Says:
    22

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    raincity Says:
    23

    @Bull! Bull! Bull!: I used to think Nortel was overvalued, then it doubled in price. Was I wrong or right?

    Well-loved. Like or Dislike: Thumb up 50 Thumb down 2

    Anonymous Says:
    24

    @VMD: “He is not Anonymous.”

    Yes I figured that out by reading his name. Thanks for the info. I always like to know what someone is trying to sell me before showing up to a presentation.

    Like or Dislike: Thumb up 3 Thumb down 2

    Anonymous Says:
    25

    @Bull! Bull! Bull!: “You don’t seem to understand that being wrong for 6 1/2 years is unacceptable for an investment professionals.”

    No, what you don’t understand is people here have not been wrong. There has been a bubble for 6.5 years which is exactly what people have been saying. No investment professional would invest in a real estate bubble intentionally other than finding a way to short it.

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 6

    Anonymous Says:
    26

    @Piklishi: I for sure aint going. I would get jumped by all you bears and stamped with a “Foreclosed” stamp all over my face, … just like you are about to do with this comment, and most other comments I dare to make here.

    Well-loved. Like or Dislike: Thumb up 44 Thumb down 3

    RBC further tightens investment property mortgage:
    – Main changes effective Nov 30, 2012
    1. Applicant must satisfy minimum credit score 680-700 (previously no firm rule)
    2. Applicant must have no more than 5 mortgaged properties, including own residence. (previously no firm rule)

    Source: RBC mortgage advisor Jessica Yi

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    Anonymous Says:
    28

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    Ralph Cramdown Says:
    29

    Vancouver real estate’s value prospect recently has only made sense assuming capital appreciation, not on a current yield basis. And that’s how it worked during the Beanie Baby craze. I think Simply has you, Anonymous.

    Well-loved. Like or Dislike: Thumb up 33 Thumb down 0

    Hot debate. What do you think? Thumb up 13 Thumb down 0

    RealityCheck Says:
    31

    VMD:

    I think this tightening is fluff. The vast majority of employed people already have a credit score over 700. And also IMO, anyone with a score below that probably doesn’t own 5 properties let alone 1.

    What really needs to be done is mortgage income verification through Canada Revenue Agency. If they are serious about reigning in prices, this is all they have to do.

    Hot debate. What do you think? Thumb up 13 Thumb down 0

    @Anonymous:

    “if people try to compare Beanie Baby collection to RE, they need to check in a clinic asap.”

    You are right. With a Beanie Baby collection, there is no leverage, so you only stand to loose what you have already spent. With RE you can be bled for decades.

    Well-loved. Like or Dislike: Thumb up 23 Thumb down 1

    Extend and Pretend Says:
    33

    @VMD: “Applicant must have no more than fifty five mortgaged properties”

    Aha! That’s what was happening all these years… RBC finally got around to correcting the typo on their loan application. People out there who had only 10, 20, 30 mortgages thought they were slacking off each time they read the application!

    Like or Dislike: Thumb up 8 Thumb down 1

    Bull! Bull! Bull! Says:
    34

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    Poorly-rated. Like or Dislike: Thumb up 4 Thumb down 19

    @RealityCheck:
    After some clarification with that RBC mortgage adviser,
    Recent immigrants who have yet to build good credit scores will find getting mortgages for investment properties “very difficult”.

    The “new immigrant mortgage plan” that allow recent immigrants to access mortgage only applies to own residence, not investment properties.

    If new immigrants wish to apply for mortgages for investment properties they will have too qualify under the regular rules (credit score requirement, income varfication, etc.)

    Agreed these are not Major changes, but there will be impact.

    Well-loved. Like or Dislike: Thumb up 21 Thumb down 0

    RealityCheck Says:
    36

    VMD,

    I hear you. However, I know of many immigrants who simply state that the new property they are buying is for living purposes, having just rented out their original residential property. This way you bypass the rules.

    It’s crazy. Too many loopholes — I think purposely built in.

    Like or Dislike: Thumb up 8 Thumb down 0

    @Bull! Bull! Bull!:

    Bear logic… where being wrong for 6 1/2 years is being correct.

    This is your trump card?

    Six years ago, it was possible to get a 40-year mortgage. Do you know how it feels to have well over 30 years of payments left on a rapidly depreciating property, with no reprieve in sight? Spare me that kind of “correct”…

    Well-loved. Like or Dislike: Thumb up 31 Thumb down 0

    For people going to Ben’s talk, he is a good speaker and will present a whackload of relevant data. I won’t be there, unfortunately due to other obligations, though if I were I would be wearing my hat.

    Ben is right, there are some smart people reading here and on other local RE blogs. Often they cannot reveal who they are due to their lines of work, but suffice it to say a few posts and comments made in the Vancouver RE blogosphere are showing up in analyst reports.

    Well-loved. Like or Dislike: Thumb up 31 Thumb down 1

    Extend and Pretend Says:
    39

    @Bull! Bull! Bull!: re: “executives at Nortel were charged with fraud. That analogy doesn’t apply to real estate. Well, maybe it does…”

    Bull’s having a hilarious belief crisis. I quoted his exact words!

    BTW, buyers in Canada are being investigated for exaggerated price fraud:

    http://www.thestar.com/news/gta/article/1111810–flipped-junction-homes-taken-on-a-wild-real-estate-ride-ending-in-fraud-allegations

    That one is only the latest case. One day soon Bull and will realize the price of their Beanie Baby buildings are all a massive ponzi fraud.

    Hey Bull, make sure you put lots of nice upgrades in your 50 mortgaged buildings. I don’t want to put out hard cash for better appliances after I buy your places for pennies on the dollar.

    Hot debate. What do you think? Thumb up 17 Thumb down 0

    on Rob Carrick’s facebook page:

    We’re #1!!
    Our housing market gets the #1 bubble rating from a U.S. website called Business Insider. Are they right, or out to lunch?
    http://www.businessinsider.com/canada-housing-market-2012-11#

    the comments coming in are classic…

    Well-loved. Like or Dislike: Thumb up 37 Thumb down 0

    Neill
    “If one only looks at “Canadian averages” which are so skewed by Toronto and Vancouver maybe one could interpret a bubble. As Alberta-based real estate investors where the economic fundamentals and real-world rents do support the market value, we love this type of fear-mongering. It keeps the uninformed out of the market.”

    John
    “I don’t think so; we’ve accomplished what we have with an artificially high dollar, and it’s been high against our #1 trade partner, a country that’s been in economic trials for 5 years now. Any bubble we have will be cushioned by a cooling in the value of our dollar, which will be a welcome sight to any export business.”

    Jeff
    “After seeing what the US has done to their economy, I don’t take any advice or comment from them seriously.”

    still lots of folks out there that don’t believe that real estate can actually go down….weird

    Hot debate. What do you think? Thumb up 10 Thumb down 1

    “The inability of younger households to afford ‘family type’ accommodation in the City has been one of the spin-offs of rising house prices… ”

    “Given the negative impacts that expensive housing has on our city — whether it is forcing people into longer commutes, living in substandard housing, or limiting economic opportunity –”

    Sounds like today news? They are from 1937 and 1974 in Vancouver .

    Apparently people in Vancouver have been complain about RE for 128 years
    http://m.thetyee.ca/Life/2012/11/24/Affordability-Crisis/

    Hot debate. What do you think? Thumb up 11 Thumb down 3

    @VMD:

    “Many Surrey sellers Motivated and Will consider all offers”

    I doubt many of them are truly motivated. Just the usual RE newspeak. Last year I have been to an open house that was on the market for about half a year, and guess what? Not even a single price reduction. The realtor was running around yours truly chanting “The seller is motivated, I am motivated…” That was quite a show.

    His spell didn’t work and he was replaced by another agent. The property is still for sale these days (1.5 years on the market) with nominal price reduction and basement unit with renters.

    Like or Dislike: Thumb up 8 Thumb down 0

    I got my ticket… looking forward to the seminar tonight Ben!

    Hot debate. What do you think? Thumb up 10 Thumb down 0

    Anonymoose Says:
    45

    Someone I know just sold their condo in the FV for a considerable loss, about 30k or over 10%, from when they bought. They had it on the market for probably 8 months. Personally I think they are lucky to get what they got considering they had no previous offers and virtually nobody looking at it. In the discussion I discovered how many people are completely underwater on their mortgage. It’s a lot. Many people in condos appear to be trapped.

    An interesting observation from this is one of the comments they made to me was they couldn’t go any lower, if they did they wouldn’t have a downpayment for a home. This raises an interesting question. People are selling a condo typically for two reasons: either they are moving, or upgrading to a home. Do people sell and loose their downpayment and ability to repurchase, or do they not budge in hopes of getting an offer? How does this affect the market dynamic? If sellers and buyers don’t budge at the macro level and there is a stymie what happens?

    Well-loved. Like or Dislike: Thumb up 32 Thumb down 1

    Anonymous Says:
    46

    “Do people sell and loose their downpayment and ability to repurchase, or do they not budge in hopes of getting an offer? How does this affect the market dynamic? If sellers and buyers don’t budge at the macro level and there is a stymie what happens?”

    If people are selling to ‘move up’ to a larger place they will either keep the place and suffer or rent the place out and rent a new place. Neither impacts the market because it is the people who must sell who will cut their price. Those are people who get job transfers, divorces, deaths or for financial reasons. Those sales will dictate the market.

    Hot debate. What do you think? Thumb up 13 Thumb down 4

    @Anonymoose: If a 10% loss is considerable, I think a lot of people will be at a loss for adjectives when the loss becomes much higher.

    “If sellers and buyers don’t budge at the macro level and there is a stymie what happens?”

    What you describe here is nothing related to reality, as various anecdotes would illustrate. But even if this is true for a short term (say 6 months to 1 year), can you imagine what happens to RE-related work like mortgage brokers / RE agents / bankers? Yep, they would be starving and that’s a “considerable” impact on the overall real economy. So the only logical conclusion is that the stalemate won’t last. One side has to give in. And you know which side I am referring to.

    Hot debate. What do you think? Thumb up 13 Thumb down 0

    Extend and Pretend Says:
    48

    @Anonymous: re: “Who must sell … are people who get job transfers, divorces, deaths or…”

    those that get job transferred to the permanent unemployment line when the value of their job counting trees, rubber stamping papers, or other bullshit employment activity can no longer beat 1% per year easy credit Carney bubble money.

    The first question on the CMHC loan insurance application should read: “Under penalty of perjury, you solemnly swear that your present employment sustainably produces downstream economic output exceeding 101% per anum of gross wages.”

    Unfortunately most people clueless about what their job is actually worth and by extension the true likelyhood of being permanently out of work. They only know that they have been employed for x months and want to own instead of rent their home.

    Like or Dislike: Thumb up 3 Thumb down 2

    Bailing in BC Says:
    49

    I will be there…. And believe me when I say that this photo does not do me justice.

    Hot debate. What do you think? Thumb up 17 Thumb down 0

    Bull! Bull! Bull! Says:
    50

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    HAM Solo Says:
    51

    Lunch this week with gay friend who is now split from his partner. But they, of course, bought and substantially renovated a huge house together in Vancouver. Both now live in small apartments separately and rent out the house at a discount to the cost of carrying the home.

    Just another story of thousands of people who really had no need for large real estate investment in the city getting burned by the bubble. The wipe out of personal savings of two otherwise successful professionals coming soon. Personally, I think 2013 might be a good year to hide out on a desert island somewhere. Going to be lots of pain to go around up here in rain city.

    Well-loved. Like or Dislike: Thumb up 48 Thumb down 3

    Anonymous Says:
    52

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    “I will be there…. And believe me when I say that this photo does not do me justice.”

    :) that made me laugh

    Hot debate. What do you think? Thumb up 10 Thumb down 0

    southseacompany Says:
    54

    Huffington Post: “Vancouver Housing Bubble Driven By Fear, Not Foreign Investment: Analyst”

    http://www.huffingtonpost.ca/2012/11/28/vancouver-housing-bubble-fear-foreign-investment_n_2206189.html

    “A “speculative mania” driven by fear of foreign investment helped push the city’s housing prices beyond what many could afford, Ben Rabidoux, lead analyst and strategist with research firm M. Hanson Advisors and a blogger at The Economic Analyst, told The Huffington Post B.C. on Wednesday.”

    Well-loved. Like or Dislike: Thumb up 44 Thumb down 1

    Not much of a name... Says:
    55

    @Bull! Bull! Bull!:

    But this time is different! …

    It’s a new paradigm! It’s bear logic.

    Bear logic and bull logic sure sound similar.

    Like or Dislike: Thumb up 8 Thumb down 1

    Ben – – In case you are reading this or someone can pass this on to you – –

    We should be 25% below last year this month.
    We should be 30% below the 10 year average.

    I read you were a bit higher than that but as the month has gone one, it has improved drastically to come in at 25% below last year. I’m sure the bulls will be saying all is perfect – – – –

    As an overall comment, we have been really steady since August. Steady low but steady. Not sure what to think of this but you would think that as things get worse, even more buyers would pull out of the market.

    Well-loved. Like or Dislike: Thumb up 29 Thumb down 0

    Ben Rabidoux Says:
    57

    Thanks yvr2zhr! Last I heard, sales were coming in around 1700 for the month. Appreciate the clarification.

    Hey, in unrelated news, the CEO of Home Capital Group has sold $5.3 million worth of shares in the company in the past nine days. I’m sure it’s nothing.

    Looking forward to tonight. Figures that the weather would be beautiful since I got here, but turn real wet before the event. Hate that Murphy guy and his dumb law.

    Well-loved. Like or Dislike: Thumb up 61 Thumb down 0

    oneangryslav2 Says:
    58

    @Anonymous:

    “…if people try to compare Beanie Baby collection to RE, they need to check in a clinic asap.”

    You’re right; the carrying costs of a speculative Beanie Baby portfolio is essentially zero.

    Hot debate. What do you think? Thumb up 15 Thumb down 2

    oneangryslav2 Says:
    59

    @Ben Rabidoux: Don’t worry, Ben. We here on the wet coast never let a little rain keep us from doing what we want. This is especially true between the months of January and December. ;)

    Well-loved. Like or Dislike: Thumb up 29 Thumb down 1

    @Ben Rabidoux: Current sales are 1525 according to summing all the daily numbers. That would equate to month-end sales of 1779. Paulb.’s numbers come in a few score higher than reported. We’re on track for around 1700, maybe 1750 if the last three days show well.

    Your prediction on huffpo is about right, your calculation/source is accurate ;)

    Well-loved. Like or Dislike: Thumb up 29 Thumb down 0

    Ben’s presentation will be excellent. I will have to book the sitter well ahead for the next time he is in town!

    New Listings 98
    Price Changes 75
    Sold Listings 65
    TI:16967

    http://www.paulboenisch.com

    Well-loved. Like or Dislike: Thumb up 119 Thumb down 1

    Girlbear Says:
    62

    For any of you going to Ben’s presentation tonight, Cole’s notes would be much appreciated! :)

    Hot debate. What do you think? Thumb up 14 Thumb down 1

    @yvr2zrh: “As an overall comment, we have been really steady since August. Steady low but steady. Not sure what to think of this but you would think that as things get worse, even more buyers would pull out of the market.”

    Eye of the hurricane.

    Hot debate. What do you think? Thumb up 18 Thumb down 2

    Anonymous Says:
    64

    Hidden due to low comment rating. Click here to see.

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    patriotz patriotz Says:
    65

    Thank you Ben and have fun bears. I’ll be snug in my den.

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 3

    Well Gentle Ben I cannot go to your presentation, my parking limit ran out at CAAMP conference.

    65 sales, looks like another strong day. And by strong I mean weak. Friends of mine are feeling the hurt in the past 3 months. It’s starting to get real.

    I hate you guys.

    Well-loved. Like or Dislike: Thumb up 36 Thumb down 4

    Aye, I’d like to see the presentation too, but have obligations to fulfill. Some key notes would be appreciated.

    Like or Dislike: Thumb up 5 Thumb down 1

    YLTNboomerang Says:
    68

    As I posted yesterday, I am really interested in meeting some of the like minded individuals on this blog but I also understand the need for discretion with our unpopular views and many of our roles – public or not.

    I for one am comfortable sharing who I am as long as those who I share with are also willing. Sharing may have benefits, if you are an advisor or analyst you may get new clients with a like minded view. I manage my own finances because most of the advisors out there go with the grain and don’t share my contrarian views. I have less and less time nowadays to actively manage and would love to hire someone on this blog to take over some of my investments so I can focus on my primary business (for example).

    Is there anyway to set up a “coming out” group in the forum where the only way you get access is by coming out to the group members? The pope can moderate, he/she knows who I am from my email already when VCI almost when down and a bunch of us stepped up to keep the daily stories going (this was 2008 right? we could see the decline again once the crash gains momentum).

    Thoughts? Interest?

    Well-loved. Like or Dislike: Thumb up 32 Thumb down 1

    Girlbear Says:
    69

    @Con-Rad: Don’t hate the messenger… ;)

    Like or Dislike: Thumb up 2 Thumb down 1

    @T: Follow hashtag #vanre on twitter.

    Like or Dislike: Thumb up 0 Thumb down 1

    Girlbear Says:
    71

    Fellow VCIer at Ben’s presentation. Apparently 600 in attendance.

    Well-loved. Like or Dislike: Thumb up 29 Thumb down 1

    I’ve been reading this blog for all of a month or so now and I have got to admit that the posters here are the most knowledgeable/balanced that I have come across. The other RE blogs seem to attract people who can’t think for themselves (want others to do it for them).

    Unfortunately missed Ben’s presentation. He is a very numbers oriented person, and in the end, that is what matters. With these numbers you can predict psychology and future direction of the RE market.

    Cheers.

    Hot debate. What do you think? Thumb up 20 Thumb down 2

    oneangryslav2 Says:
    73

    @Con-Rad:

    “…Friends of mine are feeling the hurt in the past 3 months…”

    I’m sure that others on this board would be interested, as am I, in hearing more about the specifics.

    Hot debate. What do you think? Thumb up 13 Thumb down 1

    ReadyToPop Says:
    74

    @Data

    He is a very numbers oriented person, and in the end, that is what matters. With these numbers you can predict psychology and future direction of the RE market.

    Um, OK, if you could predict market psychology with numbers….I’d have my own personal island getaway with lovely servents tending to my every whim. Perhaps I’m missing something in the translation. :-)

    Hot debate. What do you think? Thumb up 9 Thumb down 2

    HAM Solo Says:
    75

    At Ben Rabidoux session. In the Q&A aomeone just asked, but isn’t it different this time?

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    gordholio Says:
    76

    #68YLTNboomerang: Great idea. I *can’t* come out though, because I was never “in.”

    Gord Goble, Extreme South Surrey, Bestest Best Place on Earth, Canada. Former owner, proud renter, happily outspoken, strong believer in a 40-50% plunge area-wide.

    Haven’t posted much recently. Too busy. Still an avid reader though, and yes, this is a wonderful (and wonderfully informative) spot. Look forward to seeing reports on Ben’s talk tonite.

    Take care, everyone.

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    Girlbear Says:
    77

    @gordholio: Gord, loved your photos! Reminded me of FLA back in the day.

    Like or Dislike: Thumb up 6 Thumb down 1

    @HAM Solo: “isn’t it different this time?”

    Sure, it’s arguably worse. This and the price-to-rent one are my favourite charts:

    https://twitter.com/BenRabidoux/status/273637617512361984/photo/1

    Like or Dislike: Thumb up 6 Thumb down 1

    #66 @Con-Rad: “I hate you guys.”

    Thanks, you’re in good company. We have people on the nightly news telling us to get the fuck out so they can sell the country to the corrupt Chinese.

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    @oneangryslav2: Nothing huge yet but they are tapping savings to cover costs. New loan issuances are becoming hard to find. One friend is trying to sell his duplex in MP but no takers. He cannot refi any more so is trying to liquidate instead.

    In finance they call selling after a rally “bringing forward future payments into the present”

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    Anonymous Says:
    81

    Hidden due to low comment rating. Click here to see.

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    OK, back home now, I can give a quick review of the Ben Show.

    First, the setting, big 700 seat ballroom at the Bayshore, about 650 people in attendance. Sort of the audience you expect for a financial advisor crowd in that there are quite a few white heads, although there are also a lot more young-ish people than your typical yield-pig “make money in REITs” pitch. But, looking carefully, you also see a lot of “shooters” from the downtown finance scene. I was one row away from one of my friends on the “street” who went there independently, as did I. A few rows ahead was a guy who runs one of the largest investment funds in Vancouver. My read, the leaders in the big money crowd are starting to take the bubble talk seriously.

    As for the pitch, I won’t steal Ben’s thunder by posting the slides, but his pitch was really nothing more than has already been shared here before in various bits and pieces: a) House prices, as measured 100 different ways are a complete outlier, b) the cause of the bubble is easy credit which has absolutely ballooned, c) any dissimilarities between Canada and other countries where bubbles have burst are very small compared to the enormous similarities, d) the Canadian economy is hyper-exposed to real-estate housing activity, so any sustained correction will usher in, essentially, a depression, and e) Despite CMHC insurance, there are 100 ways in which the banks are toast post-collapse.

    It was just nice to see this guy in a crowded theatre effectively yelling “fire!” and seeing the confused and befuddled look on the faces of the old people. The other thing which makes me believe we are still early to this party is that his presentation was WAAAAYY over the heads of 90% of the people in the room. Try working the phrase “three standard deviations above the norm” casually in a conversation with a retired flight attendant and you’ll get my drift. When it’s late in the bear party, some know-nothing will have nice, glossy simple slides to explain to people that, even though the horse has left the barn, there is still too much risk in housing.

    There were a number of laugh-out-loud moments in the evening and Dave, the financial advisor who put on the show, had one at the end as he went through charts of major bank stocks in country after country that had housing collapses (short answer, they start in the top left and end on the bottom right)…and followed this up with a detailed portfolio analysis of the top mutual funds in the Canada … most of which hold Canadian chartered banks as #1, #2, and #3 holdings

    Great show. Now that all these facts can be displayed in the open, we are one day closer to the dam of ignorance giving way. Well done, Ben.

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    RaggedyRenter Says:
    83

    I was at the event. Very entertaining and informative. Me and other hundreds CNYOC (Canadians Not Yet On Credit), BOWFLEX (Boomers with fleeting Equity).
    In short it was graph, graph, graph, we’re screwed, screwed screwed, graph, screwed, graph, graph, screwed, screwed, screwed and more screwing and graphing.

    Some notes:
    Price are all time high compared to income, rent, inflation, GDP.
    Phenomenon seen across all Canadian big cities

    Boom not due to:
    1. Population growth (we outbuilt pop. growth. Per capita, Vancouver outbuilt all Metro cities in Canada over the last decade).
    2. Rising income (d’oh)
    3. Falling interest rate (over the long term).

    Boom due to rise in debt, and about a gazillion graphs of debt. BC debt level is more than national avg. More debt graphs.

    Our banks are “more conservative” but not really “conservative”. Details on rules that had been changed, documentation, fraud etc. If you hang out here you know what they are.

    Bottom line going forward: credit tightening. Next 10 year credit availability will be very tight, unlike the last 10 years. Last 6 months we seen the most credit tightening in the history.

    Sales going down, inventory up, yadda yadda

    In 2008 we crashed and rebound due to:
    1. interest rate plunged from 3% to 0.25%. We don’t have that many room to plunge now.
    2. Aggressive $69B mortgage purchase by Canadian government inject huge liquidity to the market.
    These factors are no longer in play

    What happens next?
    House price across Canada will fall 10-50% with Vancouver on the high end.

    How does it reallign?
    1. Soft landing, minor correction and the flat until fundamentals catch up. Popular among economists, but unlikely.
    2. Crash (quick realignment within 5 years). His position
    3. Wishful Thinking. Price rising slower, fundamentals rise faster.

    4 reasons it will be a crash
    1. History. there is no soft landing.
    2. Buyer psychology. Greed and fear in the market. Quote from Mark Carney himself.
    3. Lender psychology. Less lending when price is going down.
    4. Housing is a huge driver of economy and job (via employment and also increased spending via wealth effect). When housing goes down, so does economy and job. Graph graph graph, screwed screwed screwed.
    31% of BC GDP is derived from Construction and FIRE industries. Like I said, screwed.

    A lot of new house will complete next year when demand is slow and not picking up.

    Wealth effect “$1 rise in home values translates to 6cents of extra spending”, via diverting saving to consumption or spending the home equity. Price goes up, spending goes up, income goes up, price goes up. Same cycle works the opposite way: Price goes down, spending goes down etc etc
    More graphs of how we’re using our home as ATM. HELOC rising 700% since 2000.

    Risk in BC:
    1. Slow pop. growth
    2. Hard landing in China
    3. Extreme reliance on housing industries and debt financed consumption.
    4. Loss of AAA rating

    What to do:
    1. Sell
    2. wait and rent
    3. Bank shares will go down, so check your portfolio and buy LePoidevin Private Portfolio.

    Couple more notes:
    Due to demographic turn, boomers will start saving more for their retirement. Consumer spending will go down, and this has started in the US, UK, Ireland, etc etc, except Canada.
    Lending rules were relaxed when Cons were in minority, now they have majority, the will is to tighten the lending rules going forward.
    Bank stocks will get hammered, short lenders.
    As this shock happens to Canada, you can assume dollar will no longer be at par. In the long run it will stay around 0.8
    Somebody asked when will crash happen? When should we sell our house? Crash actually started 6 months ago.

    Govt can interfere with the market and rollback the changes but 0% chance government will relax lending rules. They have publicly said this is what they’re trying to achieve going forward.

    Inflation can’t save us because interest rate will rise. Even if BOC didn’t raise the rate, bond market will punish us. 17% can’t handle 1.5% increase in interest rate.

    There is a question about Canadian ability to take more debt because we already paid for our health expense via tax. He shows debt as a measure of GDP (which includes tax), which also shows all time high.

    Last question is on our favorite subject.. HAM
    regulators note the offshore investors activity, but the price increase can be attributed more to explosion in debt/mortgage. This is still a factor but not as big as we thought.
    Offshore investor is used to induce fear (outpriced by them), and greed (sell to them). There are regulations to reduce offshore investors (I’m assuming this refers to changes in immigrations).
    We’re taking in about 20% more immigrants per capita than the US and their numbers are rising where ours is declining.
    Offshore money can suddenly stop (see our risk factor), and move elsewhere. Lastly, offshore money CANNOT sustain the whole market.

    Going into the seminar, I thought Ben would provide a more soft-moderate outlook to the bubble resolution, probably in line with bank analysts/economists, but he’s all-out hardcore bear armed with numbers, graphs, and a complete frank discussion about what’s out there and what will happen. He explains some stuff we discussed a million time here as well as some new stuff that we haven’t thought about before that will affect the market going forward.
    I was about 60:40 on soft landing vs crash before and now I’m leaning 90% towards crash.

    Thanks Ben.

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    @HAM Solo: Nice summary. I was there too – it was pure entertaining chart porn.

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    @RaggedyRenter:

    So Ben wants to be the next Robert Shiller?

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    Guy Smiley Guy Smiley Says:
    87

    Fabulous! Thanks for the synopsis HamS & RR.

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    Extend and Pretend Says:
    88

    @HAM Solo: re: “Canadian chartered banks as #1, #2, and #3 holdings”

    Are these the ones?

    http://ca.finance.yahoo.com/q/bc?t=5y&s=RY.TO&l=on&z=l&q=l&c=BNS.TO%2CTD.TO

    I wonder, what is that huge dip in price at the beginning of 2009 and starting from late 2008? Some sort of freak trading activity? Surely, that will never happen again? Just buy them and hold for dividends, right?

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    What seemed like over 600 people gathered at the Westin Bayshore to hear Ben speak. The verdict? We’re in the crash now, first there will be -10% to -50% price reductions (Vancouver at -50%), then knock-on effects to our GDP, Employment & Economy as the wealth effect shifts into reverse and the 9% HELOC withdrawls no longer supplement our incomes… followed by a Canadian currency crash in the USD/CAD pair to 1.25. Short Home Capital Group, Genworth and Laurentian Bank. Exit all positions in Canadian Banks. These are all very sensible prognostications. The highlight for me was during the Q&A when a guy got the microphone, he was all dressed in a white pimp suit and asked “When do you think the crash will occur?”, Ben of course said “Right now, sell now.” Shockingly, the guy next to me who looked white said “Hey man, that’s my landlord in Yaletown, he’s got 5 properties down there, I can’t believe it, he’s so screwed.” It was awesome.

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    Many Franks Says:
    90

    HAM Solo‘s impressions of the talk match mine pretty closely.

    Interesting which statements elicited noise from the crowd. Ben got the best zinger of the night, in response to the “but what about all the HAM” question: “In order for people to abandon their senses you need a ‘this time it’s different’ story.” That (and its ilk) was the follow-up question I heard most often.

    Lots of insider interest; one fellow introduced himself to David LePoidevin after the talk as a local construction insider looking to hedge downside risk by investing in a short-on-RE vehicle David offers.

    The presentation was mostly the graphs we see frequently around here, though there were some additional choice bits of gristle to chew on:
    – Nationally, everyone says “it’s just Vancouver so don’t worry about it” — but Montreal and Ottawa in particular are cratering and nobody seems to have noticed yet.
    – Banks are apparently tightening lending in ways beyond what OSFI has officially prescribed, i.e. asking for Mom and Dad’s bank statements when the downpayment comes courtesy of them. (Ben’s take on BC’s particularly massive non-mortgage debt numbers is that part is due to Mom and Dad’s HELOC funding the kids’ condo downpayments.)
    – Stripping 2008 out of the mix, we’re currently running sales in Vancouver at about 40% below the decade average.
    – “Adjusted to the size of our economy, we now have 3-4 times as much HELOC debt as the US had at its peak.”

    For the outcome of a crash, here are a few notes I made…
    – Some CMHC tightening may be reversed if things go really sour, but the CMHC cap and OFSI regulations are not about to change while consumer debt looks so bad.
    – CMHC’s ixnay on further bulk mortgage insurance sold voluntarily to the bank has had a larger-than-reported impact on sales. Banks, forced to take the risk themselves, have tightened up approvals.
    – Investor opportunities in a crash will come in waves: e.g. first shorting Genworth, Laurentian, Canadian Western, Home Capital Group, etc.; then shorting consumer spending; then shorting $CAD.
    – Ben puts his odds on a Bank of Canada interest rate *drop* before any increases. That should give you some measure of how bad he thinks things will get. This was a surprise to me.
    – The final quarter of the presentation focused on why a soft landing is unlikely given Canada’s and British Columbia’s dependence on FIRE.

    Long story short, Ben is probably responsible for another dozen Boomer mansions hitting the market in January, priced to get out before Armageddon.

    I don’t know if anyone else caught it, but today the BC Liberals are blaming part of their uglier-than-expected deficit on the decrease in transfer taxes due to the RE downturn…

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    Thanks Ben for the outstanding presentation. With that onslaught of data few could refute how much risk there is in this asset. I’ll be using the handout to try and save a few close friends and family from what’s coming.

    I was sitting at the back and couldn’t help but notice that the moment the presentation ended large swaths of the grey-set headed for the exists before Q&A even began. Either it was past their bedtime or they were so shell shocked and befuddled by the presentation that they could do nothing more but flee in horror.

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    900kCrackHouse Says:
    92

    I also attended Ben’s seminar. All I can say is that it kicked ass. Best presentation on the state of the countries housing, and the causes of it that I have heard. Was surprised to see such a large crowd out.

    While overall the crowd was upbeat, there is going to be serious pain and anguish if this plays out as Ben has described across the country. It is not going to be fun to watch.

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    Anonymous Says:
    93

    @900kCrackHouse: “It is not going to be fun to watch.”

    I guess it depends on where you are watching from. From the seats I have it will be quite fun.

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    900kCrackHouse Says:
    94

    @YLTNboomerang: I am also interested. Lets schedule a meet-up or something.

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    Extend and Pretend Says:
    95

    @khoek: re: ” large swaths shell shocked and befuddled grey-set headed for the exits before Q&A even began.”

    Funny but so true. People beyond a certain age who watched the money roll in no matter what they did or bought, don’t understand market timing or how to measure if something is worth doing or not. During their earning years, every road was paved with gold. So this sort of presentation would appear to be completely upside down and perhaps some sort of young people’s idea of a humor – not worth their time except the time to wait for the clapping to stop, so they could politely leave.

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    Bailing in BC Says:
    96

    Thanks Ben. Great stuff. The couple behind me decided that it might be a good time to sell their Shuswap Lake property. Thanks for answering my question after (I was the good looking one ;-))

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    BLISTINGAGENT Says:
    97

    I was also there tonight. I did not take notes, but a few general impressions:

    a) Wow – busy. I was not expecting that many people.
    b) Based on the conversations and actions of those around me, I would say half the people were clients of David LePoidevin and half were readers of Ben’s blog.
    c) Ben did a great job presenting his material. David was also great with his intro/conclusion.
    d) I think those who were not readers of Ben’s blog might have benefited from a slide early on that explains the CMHC, mortgage insurance, and how it could affect the Canadian market. The people behind me kept asking each other questions about what CMHC was and it was clear neither of them had any clue.
    e) The presentation ended very bearishly.
    f) The Q&A was fun, a few good questions and a few funny ones.
    g) Many people seemed in a sombre mood as they shuffled outside.
    h) The handout with all the slides was a great touch, and on the way out there was a mini stampede of people taking unguarded extra copies from the boxes they were stored in. I grabbed a few extra to give to friends considering buying.

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    Guy Smiley Guy Smiley Says:
    98

    Schuswap? Yikes – the proper time to sell there was years ago. I was there last summer … more for sale signs than trees!

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    Bailing in BC Says:
    99

    @Guy Smiley:

    Yep, I think a lot of people don’t know what’s coming (or already here as in the case of our friends behind me)

    Like or Dislike: Thumb up 3 Thumb down 1

    I wish I could have gone today.

    If possible can someone post the slides, would love to see.

    Sounds like Ben did an awesome job and reading the reviews it seemed very interesting.

    Hopefully Ben can come back for an encore sometime in the future.

    Like or Dislike: Thumb up 7 Thumb down 1

    #83 @RaggedyRenter: “… and more screwing and graphing.”

    That is one fun math camp.

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    @Guy Smiley: I drove from Van to Calgary last month. You think there were a lot of for sale signs in the Shushwap? You should have seen Canmore! It was astonishing how many sales signs there were.

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    G Master Says:
    103

    So what advice did Ben give to current home owners/multiple units owners? Sell now?

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    @s:
    Wish I could’ve gone today as well.
    I’m sure Ben will make some or most of his presentation available on his blog (or on MSM!). When that happens, I can endeavor to spread his words into the local Chinese media (but first, Ben will have to have a Chinese name made up!)

    “Hopefully Ben can come back for an encore sometime in the future.”
    – the title of that talk will be “Vancouver Real Estate: I told you so”

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    Guy Smiley Guy Smiley Says:
    105

    @JR:

    Wow – no kidding. I just looked at in on MLS. Canmore may be the poster child for overconstruction… over 260 places listed for a tiny weekend retreat town. It looks like its all condo and the cheapest start at $260k. I’d love to know what he MOI there is – prices must be staring at some downward pressure with those numbers.

    In the schuswap this has been going on for awhile and has led to some reasonable price drops already. Example – 2400 sq ft house with lake views going for under $150k. It’s not a dream home, but the same place would have been wayyyy more in early 2008. Waterfront for under 300.

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    Guy Smiley Guy Smiley Says:
    106

    Oops – my mistake. That one is leasehold and not a very good example. But… lots of price reductions there since early 2008.

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    Con-Rad Says:
    107

    Wow some good overviews here.
    Shorting HCG and MIC? Selling Canadian bank common stock? Short CAD?

    Sounds like some are being very bold in the timing here. I’d appreciate some perspective. Guys, I know Ben is bearish but is this bet a lock in for the next few years, or should this be a lower probability scenario.

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    Piklishi Says:
    108

    Last night was such a good speech from Ben. I am glad I went there. I was surprised how honest he was. He came with all the facts and explained what is going on like I have never heard before. Well done Ben, thank you.

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    Anonymous Says:
    109

    @G Master:

    Sell it to the Chinese,they are still buying.Owning some bricks and pc of land is their DNA religion inherited from few thousand yrs of peasantry mentality and instinct.

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    VultureBoy Says:
    110

    @Many Franks: He said to short LB and CWB?!? I have 23 years of data and they haven’t had negative net income over that time. I’m a housing bear, and I like that Ben gets the word out, but you need the most bearish scenario, and impeccable timing to make it worth paying someone else’s dividend. I haven’t gone short Rona, nor do I recommend it, but at least it is a messed up company.

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    We discussed synthetic hedging options on Monday, briefly, with Ben and a few others. It would be very informative to flesh that out a bit more.

    A brief overview is that some see parallels between lenders like Countrywide and HCG, with HCG not yet meeting their demise. Concerns that they are going to go all-in into a void left by banks at a time when acute LTV deterioration risk is elevated.

    It was pointed out, though, that HCG has very different LTV and insured book than guys like CFC, and it was thought their risk management processes are more robust than some of the shenanigans going on in the US. Also HCG has some decent options for recapitalization that CFC didn’t have. That POV was, if you are short HCG because you think it will collapse, don’t count on it.

    It’s one thing to eliminate/limit exposure to a company, another to go short.

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    Careful with your assumptions about the crowd. I was one of the “grey haired set” that left at the end of the presentation (though I did linger to hear what Dave is shorting) and I sold in 2010. I was more curious about what all the youngsters around me were thinking. I would bet most of the old timers there already have it figured out.

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    UnagiDon Says:
    113

    “Low house prices not all bad news, CIBC says”

    http://www.cbc.ca/news/business/story/2012/11/29/housing-prices-cibc.html

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    groundhog Says:
    114

    @Unidon

    From article: “Shenfeld’s theory is that every dollar spent on housing is a dollar that could otherwise be spent somewhere else. So if a would-be homebuyer is able to knock $10,000 off the purchase price, that’s $10,000 that’s likely to be spent somewhere else, instead of pledged to a bank to pay back the mortgage.”

    This might be one of the stupidest statements I’ve read, and I’ve read a lot. I think Shenfeld will need to adjust her economic model in a few years.

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    vanpire Says:
    115

    @groundhog:
    Why is it a stupid statement?
    Please explain

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    HAM Solo Says:
    116

    I also wanted to give a hat tip to David Lepoideviv. You know, this world is full of people who talk a good game, but actually do relatively little. Dave is a take-action kind of guy, I really get that sense. He doesn’t just worry about a housing bubble, he dedicates his entire professional practice (and in a sense bets his career) on implementing through securities positions the extrapolated logic of the arguments made around this table. I respect that.

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    Many Franks Says:
    117

    @UnagiDon: I was just about to post CIBC’s own news release on that.

    There’s a big dose of spin in with some small truths. Cheaper real estate will free up extra cash for first-time buyers to use to stimulate the economy, they say? Not a chance. This whole thing is driven by credit and the crash reflects the market hitting the credit wall. Nobody’s going to suddenly have pocketfuls of idle cash because real estate is cheaper, they’re just not going to be able to go into debt like they could until recently. And if you’re looking to first time buyers to save the economy, good luck — there aren’t many left, with Canadian home ownership at record levels.

    However, in the long run, they’re correct: a return to fundamentals is healthy. But it’s going to hurt over the short term and pretending otherwise is living in fantasy land.

    Shenfeld’s theory is that every dollar spent on housing is a dollar that could otherwise be spent somewhere else.

    Apparently CIBC hires economists who don’t understand the lending business.

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    Achilles HELOC Says:
    118

    One of the items that came up in the presentation, in passing, was the fact that Gerry Soloway, CEO of Home Capital Group, had just sold $5.3 million worth of his company’s stock.

    That is one of the names people need to remember – a guy who is one of the chief opportunists and inflaters of the housing bubble in Canada. On paper his stake in Home Capital Group is worth $100 million. However, I’m sure he personally is wondering how much he can get out the door before the stock implodes. My guess is that if he escapes with more than $20 million in cash, he’s lucky. Look for some “estate planning” transactions coming from that quarter. Regulators and class action lawyers, please take note.

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    groundhog Says:
    119

    @vanpire

    “if a would-be homebuyer is able to knock $10,000 off the purchase price, that’s $10,000 that’s likely to be spent somewhere else, instead of pledged to a bank to pay back the mortgage.”

    Think about it for a little and tell me if thats a realistic assumption?

    Instead of pledging to pay back a bank $500,000 for a condo, somebody is going to spend $500,000 on other things to drive the economy?

    I for one agree that in the long-run low home prices will be good, and that the current high prices are an inefficient allocation of peoples money, but the adjustment period will not be fun. There is absolutely zero chance that a 1 for 1 trade off will occur with people consuming other things instead of houses so that a downturn in housing will have essentially no impact on the economy.

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    groundhog Says:
    120

    @vanpire

    Also see Many Frank’s response.

    Like or Dislike: Thumb up 2 Thumb down 0

    Some recent comments have expressed confusion about inventory trends for this time of year. So I have posted an updated graph:
    http://vancouverpeak.com/groups/inventory-graph/forum/topic/inventory-graph/?topic_page=3&num=15#post-2677

    Inventory is showing a pattern similar to other years. Lower than 2008 but still much higher than the any of the other past 6 years.

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    VultureBoy Says:
    122

    @groundhog: I’ll chime in too. If person A simply transfers $10k to person B, how does that affect the local economy? It just seems like a wash, unless you know something about how the money is spent, but we don’t.

    Long term, of course, we don’t want the smartest, and potentially most productive members of our society leaving, becoming realtors, or real estate speculators because of excessive real estate speculation. We don’t want an economy completely dependent on the ups and downs of real estate either.

    But to make a statement that 10k extra into a house means 10k less in the economy is awfully silly.

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    Bailing in BC Says:
    123

    @groundhog:

    Good one. It’s not like people are sitting around with $500k wondering where to spend it. I’d love to walk into a bank and ask them for a 30 year loan of $500,000 to spend on “stuff” and “having a good time.” I’m sure they would be most accommodating.;-)

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    vanpire Says:
    124

    @groundhog:
    OK, thanks – that makes sense.

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    I’m always impressed at how successful Carney (and the Harper government) has been at brainwashing people to believe that Canada is economically strong and has not done the same mistakes as all the other Western Economies.

    Below is an abstract of an article from the UK:

    Carney will regret taking Bank of England reins

    Carney has been an excellent governor of the Bank of Canada. He steered the nation’s banks through the credit crunch without any serious damage. Indeed, if there is an economy the U.K. should seek to emulate, it is Canada: small, English-speaking, internationally open, financially responsible, with relatively low debts and stable banks. If Carney could turn the U.K. into a slightly bigger Canada, that would be a fantastic achievement.

    The whole article is worth reading.

    BTW, for all the FX traders out there, it’s time to short CAD and GBP…

    Hot debate. What do you think? Thumb up 17 Thumb down 1

    vanpire Says:
    126

    @vanpire:
    But I think if a person was to spend 1/2 of what they are spending every month on a mortgage payment wouldn’t you agree that the money could go towards other things? Credit or no credit, they are talking about driving the economy, not paying for things in cash and being smart with one’s money in general

    Like or Dislike: Thumb up 5 Thumb down 0

    groundhog Says:
    127

    What really scares me is this:

    https://www.cibc.com/ca/media-centre/bio/shenfeld.html

    “Avery Shenfeld

    Managing Director and Chief Economist

    Avery Shenfeld is the Chief Economist of CIBC World Markets Inc. He has been with the CIBC since 1993 and is widely recognized as one of Canada’s leading economists for his perceptive analysis and insight on North American economic developments and their implications for financial markets. Mr. Shenfeld is a two-time winner of the Dow Jones Market Watch forecasting award and Bloomberg Markets has named Mr. Shenfeld among the top forecasters of the U.S. economy. Mr. Shenfeld has also been consistently ranked as one of the top Canadian economists by fixed income investors.

    Prior to joining CIBC in 1993, he spent seven years in management consulting and was on the economics faculty at the University of Toronto and in the summer program at Harvard’s John F. Kennedy School of Government.

    Mr. Shenfeld holds a PhD in Economics from Harvard University.”

    I know there is a general lack of common sense by economists, but this low level of analysis he provided is shameful. I hope CBC misquoted him somehow. His bio reads as someone that I could see moving from the private sector to the public, setting policies. If this is the type of thinking and analysis being done by the people running our country we should all be very worried.

    Hot debate. What do you think? Thumb up 11 Thumb down 0

    Bag it and tag it Says:
    128

    If a home buyer is able to save $10K or $20K or whatever, chances are they will end up buying more house than they previously thought possible. Most will still spend up to the max of what they are approved for. One of the new mortgage rules that should ensure home buyers with have some money left over to spend on the real economy, is the new DSR restrictions.

    Like or Dislike: Thumb up 2 Thumb down 0

    raincity Says:
    129

    @vanpire: I’m on a temporary contract in another city. I have a certain income each month and the company is covering my housing costs. Although its not one-to-one, I am definitely spending more money into the general economy that would have been going into my housing costs because I can.

    Like or Dislike: Thumb up 8 Thumb down 0

    data junkie Says:
    130

    @groundhog: “If this is the type of thinking and analysis being done by the people running our country we should all be very worried”

    It is, and you should be. Trust me, it’s even worse than you’d imagine.

    Like or Dislike: Thumb up 9 Thumb down 0

    Many Franks Says:
    131

    @VultureBoy: If I’ve overstated Ben’s / David’s positions on shorting, hopefully someone else who was there will correct me. Ben occasionally deferred to David on specific investment suggestions, but I remember David in particular acknowledging that e.g. covering dividends can make shorting a tough proposition — and nonetheless he thought the timing was getting good (“the brakes are already on”).

    Like or Dislike: Thumb up 4 Thumb down 0

    Total days	21
    Days elapsed so far	18
    Weekends / holidays	9
    Days missing	1
    Days remaining	2
    7 Calendar Day Moving Average: Sales	76
    7 Calendar Day Moving Average: Listings	104
    SALES	
    Sales so far	1497
    Projection for rest of month (using 7day MA)	229
    Projected month end total	1726
    NEW LISTINGS	
    Listings so far	2361
    Projection for rest of month (using 7day MA)	312
    Projected month end total	2673
    Sell-list so far	63.4%
    Projected month-end sell-list	64.6%
    MONTHS OF INVENTORY	
    Inventory as of November 28, 2012	16967
    Current MoI at this sales pace	9.83
    
    year	sell	list	sell/list
    2001	2614	2697	96.9%
    2002	2555	2638	96.9%
    2003	3018	2955	102.1%
    2004	2486	3234	76.9%
    2005	2938	3271	89.8%
    2006	2358	3168	74.4%
    2007	2883	3377	85.4%
    2008	874	3022	28.9%
    2009	3083	3653	84.4%
    2010	2509	3030	82.8%
    2011	2360	3222	73.2%
    Mean	2516	3115	80.8%
    median	2555	3168	84.9%
    

    Sales down about 1/3 from average. Listings coming in very low–very good shot at lowest new listings since at least 2011. What do we think about these low new listings levels? Certainly not a sign consistent with a rush to the exits….

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 3

    @VHB: What do we think about these low new listings levels? Certainly not a sign consistent with a rush to the exits….

    Wait until spring when the panic sets in… It will be a whole different world then.

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 1

    Best place on meth Says:
    134

    @VHB:

    The low listings is a signal of sellers exasperation with the slow market, they are waiting for the new year.

    Only 5 more weeks until inventory takes off!

    Well-loved. Like or Dislike: Thumb up 35 Thumb down 1

    Bull! Bull! Bull! Says:
    135

    Hidden due to low comment rating. Click here to see.

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    Hidden due to low comment rating. Click here to see.

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    groundhog Says:
    137

    @Dave and others who repeat the “you’ve been calling for a crash for 5 year and been wrong 5 years so you don’t know anything” mantra.

    I have a hard time believing that anyone that says this has any understanding of markets.

    As a metaphore, if someone is grossly overweight, say 600 lbs, and I tell them over and over again that they are going to die soon because they are living unhealthy but they don’t die, does that make me wrong? If I repeat this for 5 years and they end up dieing in the 10th year, was I wrong?

    I have no understanding of your logic. We’ve been saying RE in Vancouver has been overvalued for a long time, and it HAS been overvalued for a long time. That decline is a matter of when, not if. The longer the market has gone like it did, the worst the end consequences will be and the more pain people will feel.

    Well-loved. Like or Dislike: Thumb up 48 Thumb down 3

    Best place on meth Says:
    138

    @Dave:

    Oh Dave, why must you exaggerate so?

    Nobody was calling for a crash in 2002.

    Let’s be serious here, other than this year and briefly during/after the financial crises, at what other time during the last 10 years were sales 30% below their 10 year average on a consistent basis?

    Well-loved. Like or Dislike: Thumb up 30 Thumb down 0

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    Poorly-rated. Like or Dislike: Thumb up 6 Thumb down 19

    @Dave: and salaries keep going up

    Can you please provide a source to confirm that statement?

    Hot debate. What do you think? Thumb up 18 Thumb down 1

    Best place on meth Says:
    141

    @Dave:

    No Dave, these are 2 separate bubbles.

    One in the 80’s and one the 2000’s.

    Not one long continuous bubble.

    Hot debate. What do you think? Thumb up 19 Thumb down 2

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    Poorly-rated. Like or Dislike: Thumb up 4 Thumb down 22

    @Dave: Affordability remains within historic norms.

    Really? Why don’t you start looking at things like price/income…

    By the way, why is it that rents have not gone up at the same pace as home prices?

    Hot debate. What do you think? Thumb up 16 Thumb down 1

    One thing that concerns me about Ben’s analysis is it seems to omit affordability (MONTHLY Mortgage Payments).

    In the end, this is what matters to most people as life goes on. Thinking is, I can afford the payments for 5 years and then will be in a better position in 5 years. Not many people care to think of what interest rates will be like in 5 years.

    IMO, a shock is needed for a crash. It’s not likely interest rates are going to cause it because they probably aren’t going up for a lo time. People won’t sell if they can afford payments. Notice how new listings are dropping off.

    Hot debate. What do you think? Thumb up 9 Thumb down 11

    @Makaya:

    Basically the same answer to both questions. People pay their bills on a monthly basis and therefore, evaluate costs in that context. That’s the definition of affordability. There is simply no question that this metric by far has the best correlation to real estate prices over any other. And the reason is obvious. That’s how we all pay bills. You might not like that and you might think people are irresponsible for taking on higher income to debt ratios, but that’s the reality. This isn’t ‘should world’.

    Hot debate. What do you think? Thumb up 11 Thumb down 16

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    Not much of a name... Says:
    148

    @Dave:

    Affordability remains within historic norms

    You may want to discuss that with RBC.

    Hot debate. What do you think? Thumb up 17 Thumb down 0

    groundhog Says:
    149

    @Dave

    It seems like you’ve put a lot of thought into it which is good and I can respect that. I hope you’re right but I believe you’re wrong. I think you’re missing some pieces. It IS difficult to see a bubble when you are in the midst of it, but we do now have plenty of examples in recent years and the Vancouver market shows all signs of being in a bubble.

    Well-loved. Like or Dislike: Thumb up 21 Thumb down 1

    Bull! Bull! Bull! Says:
    150

    Hidden due to low comment rating. Click here to see.

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    Guy Smiley Guy Smiley Says:
    152

    I bet some dufus in 1914 predicted flat ostrich feather prices for the foreseeable future too.

    No shock is needed – just a common awareness of how ridiculous prices have become and how vulnerable the whole system is. At the current level of sales there will be a pile of newly unemployed people putting there depreciating assets on the market soon.

    Hot debate. What do you think? Thumb up 18 Thumb down 1

    @Dave: It’s funny, because if I look at this table, the yearly increase of the average weekly earnings in BC has been 2.3% from 2007 to 2011, which is about the same as the inflation rate…

    Income levels have not increased in BC since 2007.

    Hot debate. What do you think? Thumb up 18 Thumb down 0

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    groundhog Says:
    155

    @Bull

    “there is no up side to obesity”

    Yes, his weight can keep increasing. If you like food, I guess one could say there is plenty of upside. :)

    Hot debate. What do you think? Thumb up 11 Thumb down 1

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    Ralph Cramdown Says:
    157

    @Dave: Affordability of WHAT, exactly, is within historic norms? our parents weren’t plunking down for a 400sqft unit with few amenities and no parking spot, close to transit, but far from much else.

    Either we’ve already housed all the middle class and are building shoeboxes for marginal people who in previous generations would have rented or not started a household in the first place, or today’s middle class can “afford” a lot less than prior generations’. Take your pick.

    Well-loved. Like or Dislike: Thumb up 20 Thumb down 0

    groundhog Says:
    158

    @Dave

    “The people claiming it say this is a 10 year bubble.”

    I’m not sure who was saying Vancouver was in a bubble in 2002, I don’t think anyone was.

    “Please show me where in history that has occurred in financial markets.”

    From Wiki:
    http://en.wikipedia.org/wiki/Economic_bubble
    6 years – Encilhamento (“Mounting”) (1886–1892)
    7 years – Roaring Twenties stock-market bubble (c. 1922-1929)
    5 years – The Dot-com bubble (1995–2000)

    I dont think housing was in a bubble until around 2006-2007. The speculative mania and can never lose attitude, new paradigm, we’re different attitude entered into the general Vancouver culture around 2006-2007 and was solidified in 2009 when unprecedented government intervention prevented a crash.

    Well-loved. Like or Dislike: Thumb up 21 Thumb down 0

    Best place on meth Says:
    159

    @Dave:

    But the person buying today with a 25 year mortgage has much less affordability than the person buying a year ago with a 30 year mortgage.

    12.5% less.

    Do you not see that affordability has worsened considerably this year if monthly payments is your criteria?

    Hot debate. What do you think? Thumb up 17 Thumb down 0

    @Dave:
    “I’ll give Ben credit for seeing a potential market…”

    I think you’ve confused Ben with Garth. Ben works for a company that counsels hedge funds. Last time I checked that wasn’t us.

    Hot debate. What do you think? Thumb up 15 Thumb down 0

    Anonymous Says:
    161

    @Data: “Prices of limited assets have nothing to do with incomes. Vancouver West prices will never revert to 3-4X income. Abbotsford may as demand is less to live there. That fact that so many people are interested in this bubble underscores the demand side. We are all waiting to buy when the time/price is right.

    Gold has never tracked incomes. Neither has Oil. Neither will Land in certain places.”

    This is exactly why prices have never and will never drop in Florida.
    Now, pass the blunt.

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 0

    @Dave: I get your point, but if it is indeed affordable to live in Vancouver (for which housing is the major cost), how come the saving rate is negative? Doesn’t this mean that people are spending more than they earn?

    The US home prices were still affordable in 2006. The problem is a lot of people become insolvent for various reasons (increase in interest rates, loss of jobs, pay cuts, etc.). By looking at the similarities between their market pre-crash and ours today, I don’t see any reason why this would not happen in Vancouver.

    Hot debate. What do you think? Thumb up 17 Thumb down 0

    patriotz patriotz Says:
    163

    @Best place on meth:
    “No Dave, these are 2 separate bubbles.
    One in the 80′s and one the 2000′s.”

    Actually 3 – early 80’s (brief), late 80’s-mid 90’s, and 2004 or so to present.

    I find it absurd that anyone would claim that I’ve said there’s been a continuous bubble since the 80’s when I’ve told this forum I bought in the mid-80’s.

    Well-loved. Like or Dislike: Thumb up 23 Thumb down 1

    Anonymous Says:
    164

    @Dave:

    As to his ignorance of affordability? Well, I think motive speaks volumes in that respect

    Actually, it speaks volumes about your ignorance. Ben has, now don’t be scared off by this, actual data and statistics on his side and you… you have an opinion I guess. I imagine you feel that affodability is not an issue because people who can’t afford to live in Vancouver should just move to Maple Ridge or Langley where houses are “affordable”. Take your head out of the sand man,

    We expect poor affordability to continue to weigh heavily on homebuyer demand and apply sustained downward pressure on home prices in the near term.
    -RBC housing report, Nov. 2012

    Just wait Dave, just wait…

    Well-loved. Like or Dislike: Thumb up 21 Thumb down 1

    @Dave: You pay your mortgage in nominal dollars, not real dollars. Therefore, that person who got a mortgage 5 years ago has greater affordability.

    True, but you’re assuming that once a person has bought a house, he/she would stay in it until the house is paid off. The reality is different. I don’t have the statistic in hand, but I remember that the homes change hands on average every 5 years (anyone correct me if I get that stat wrong).

    Hot debate. What do you think? Thumb up 11 Thumb down 0

    Anonymous Says:
    166

    One day of really low sales and all the ‘professional’ come out of the woodwork, guns a blazing!. Come on guys, quit surfing, go out and make a sale.

    Hot debate. What do you think? Thumb up 14 Thumb down 0

    Please people, don’t vote down Dave into foreclosure, even if you disagree with him. For once we can have a decent conversation with someone that has a different opinion.

    Well-loved. Like or Dislike: Thumb up 42 Thumb down 9

    Not much of a name... Says:
    168

    Just like usual, Dave disappears when people call BS and he’s unable to back up what he stated.

    Hot debate. What do you think? Thumb up 14 Thumb down 4

    @Makaya:

    That’s really a secondary metric, so it needs to be used with caution. I do find a negative savings rate to be concerning. But, the boomers are also retiring and BC has a lot of old people. I think it’s hard to make a case that this is evidence of a bubble. It’s definitely worth looking at for one trying to make such a case.

    Hot debate. What do you think? Thumb up 7 Thumb down 12

    @groundhog:

    Many people here claim the bubble started before that. That was certainly the position here 5 years ago when I started posting.

    Thanks for pulling out those bubble references. I would contend they started later in time. I don’t think you can take the final crash price and backtrack it the whole way, because markets overcorrect as much on the downside as they bubble on the upside.

    EIther way, you agree that 10 years is too long for a bubble.

    Hot debate. What do you think? Thumb up 6 Thumb down 12

    @Best place on meth:

    Yes, and that’s why I think prices are headed down in 2013.

    Hot debate. What do you think? Thumb up 7 Thumb down 8

    @Makaya:

    It doesn’t require that assumption. My point is that inflation favours real estate in nominal dollars. Things get cheaper over time in nominal dollars because of inflation. If you buy an asset earlier in time, inflation works in your favour all other things being equal.

    Hot debate. What do you think? Thumb up 7 Thumb down 9

    @patriotz:

    Absurd? We just went from mid 80’s to late 80’s. Sorry if I was a couple years off on your multi-decade bubble.

    Hot debate. What do you think? Thumb up 6 Thumb down 11

    groundhog Says:
    174

    @Dave

    “Thanks for pulling out those bubble references. I would contend they started later in time. I don’t think you can take the final crash price and backtrack it the whole way, because markets overcorrect as much on the downside as they bubble on the upside.

    EIther way, you agree that 10 years is too long for a bubble.”

    There are many other examples, and some would contend they started earlier. Either way, I think there is a disticting between assets being overvalued, and being in a bubble. Vancouver RE was overvalued prior to 2006.

    Also, no, I do not agree that there is a time limit.

    Like or Dislike: Thumb up 9 Thumb down 0

    @Dave: monthly payments are not measure of affordability, they only show that for now you can service your debt

    Hot debate. What do you think? Thumb up 22 Thumb down 3

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    @Mis X.:

    You should write a paper on that to prove that basically every economist is wrong.

    Hot debate. What do you think? Thumb up 8 Thumb down 15

    Thank you to all you who did such an excellent job of conveying the essence of Bens presentation last night. Your efforts were really appreciated. Your posts were a highlight of my night. I almost felt like I was there.

    Well-loved. Like or Dislike: Thumb up 34 Thumb down 0

    Not much of a name... Says:
    179

    @Dave:

    It doesn’t require that assumption. My point is that inflation favours real estate in nominal dollars. Things get cheaper over time in nominal dollars because of inflation. If you buy an asset earlier in time, inflation works in your favour all other things being equal.

    At the same time, it’s not sustainable if RE price increases are consistently outpacing income increases. At some point something has to give. Based on your theory of prices tied to “affordability” (read monthly payments), there isn’t much upside for prices in Vancouver for years to come.

    Hot debate. What do you think? Thumb up 12 Thumb down 1

    Extend and Pretend Says:
    180

    @VultureBoy: “I have 23 years of data…”

    http://ca.finance.yahoo.com/q/bc?t=5y&s=LB.TO&c=CWB.TO%2CHCG.TO

    LB fared better in 2008/2009 than the rest, but rest assured if LB exposes kneecaps, my accounts will be moving against it.

    Here’s a study you can try. Look back in your data and find any particularly stable enterprise which suddenly and spectacularly lost significant shareholder equity over a relatively short time. If anything LB, and the rest of the “mighty”, have the most to lose because their decisions and methods have never been properly exposed to adversity.

    Like or Dislike: Thumb up 3 Thumb down 1

    Extend and Pretend Says:
    181

    @Extend and Pretend: And the rest.

    http://ca.finance.yahoo.com/q/bc?t=5y&s=CTC.TO&c=MIC.TO%2CCADUSD%3DX

    For consumer discretionary I picked a real high flier, Canadian Tire.

    Like or Dislike: Thumb up 2 Thumb down 1

    @Dave:
    You should write a paper on that to prove that basically every economist is wrong.
    Not all of them, just the ones who deny that we are in a bubble and that soft landing is worst that can happen.

    Hot debate. What do you think? Thumb up 18 Thumb down 1

    Achilles HELOC Says:
    183

    @ Data

    Because monthly payments are affordable, prices will not correct severely?

    31% of BC economy is in real-estate or related activity.

    Once price growth stalls and goes the other way even a bit, speculators recede, renovation declines, vacation properties stop being built, mortgage broker bonuses decline, RE agent commissions decline,new homes stop being built etc

    That’s where the catalyst comes for the steep declines, because when this cashflow reduces, the amount available to spend on rent or mortgages goes down. And once the downward price momentum gets going, the negative wealth effect feedback loop kicks in and accelerates the downturn into a crash. Unlike the US, there is no economic justification for current prices, so big money isn’t going to bail us out until prices are 40% percent lower.

    Hot debate. What do you think? Thumb up 13 Thumb down 1

    Anonymous Says:
    184

    Hidden due to low comment rating. Click here to see.

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    Anonymous Says:
    185

    @Dave: ….The supply is limited with a growing population, …

    Ahhh, so it’s back to ‘were running out of land’ and ‘everybody wants to live here’. My, my, real-estate dogma halitosis is hard to get rid of.

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 3

    @Data: “IMO, a shock is needed for a crash. It’s not likely interest rates are going to cause it because they probably aren’t going up for a lo time. People won’t sell if they can afford payments. Notice how new listings are dropping off.”

    1) New listings always drop off in the last couple of weeks of November. Nothing I am seeing in listings volume is outside of the normal range. Here are newlists for the last 10 days of November 2010 and 2011:
    161
    111
    100
    139
    132
    124
    89
    83
    124
    101
    119
    116
    182
    167
    129
    94
    94
    120
    92
    95

    2) Having a “shock” isn’t necessary for prices to revert. You are taking the view how low payments can stave off a crash for an extended period. There are two things required to keep prices from dropping in Vancouver: affordability and access to credit. If prices drop too fast the latter dries up. The Bank of Canada is very concerned about prices dropping too fast for that exact reason. From my cursory analysis, preventing Vancouver prices from falling more in 2013 than in 2012 will require more favourable access to credit. You should be asking yourself how likely that is to occur.

    Well-loved. Like or Dislike: Thumb up 20 Thumb down 0

    @Not much of a name…:

    That’s always been my position. There isn’t much upside, nor do I believe there is much downside. At present, prices are on the high side of affordable and will trend down. But, we are not in for a crash.

    Hot debate. What do you think? Thumb up 5 Thumb down 8

    @Achilles HELOC: Access to credit will be crimped due to a drop in real-estate-related incomes even if prevailing credit conditions and prices tread water, which they are not.

    One thing that’s interesting about all BC-related economics reports is how they don’t deal with credit availability in any of their forecasting. For BC, given the high level of debt growth recently, it would be something I would track alongside the likes of unemployment, GDP growth, and trade.

    Like or Dislike: Thumb up 9 Thumb down 0

    Girlbear Says:
    189

    So Dave, let’s just agree with you for a moment and say that although there will not be a “crash”, there isn’t much upside to owning Vancouver RE for a while. This is significant in and of itself. For investment purposes, “not much upside” works if you are CF positive. I think we are all aware that for any purchases made in at least the last 3 years for investment purposes, the owners are NOT CF postive. So there goes one big portion of RE buyers. Investors buying over the last while, knowing they would be running monthly deficits, were only hoping for appreciation. Now that hope is gone…or should be.

    PS And the last I heard they are not making any more land ANYWHERE. That particular circumstance is not limited to Vancouver ;)

    Hot debate. What do you think? Thumb up 16 Thumb down 0

    @Dave: I have not read all of your comments, but are there any of your bullish (or non-bearish) points NOT been used in the US RE bubble?

    Seems like you keep repeating arguments like no-more-land, demographics, immigrations, inflation, interest rate, etc. We have seen how those played out in the US.

    Hot debate. What do you think? Thumb up 13 Thumb down 0

    macho nacho Says:
    191

    @Bailing in BC: They’d better hurry. Shuswap has years of inventory!

    Like or Dislike: Thumb up 4 Thumb down 0

    @Girlbear: Ya, i have stated something similar yesterday. If there arent’ much upside, that reduces the number of speculators –> Less transactions –> less income for mortgage brokers / realtors –> more of them go out of business –> higher unemployment –> secondary effects on restaurants, consumer items, etc –> downward pressure on RE.

    In short, just the simple slowing down of RE sales activities can put downward pressure on RE prices. A lot of people can “wait out” the downturn, but a minority can’t and they are the ones that will screw up the prices.

    Hot debate. What do you think? Thumb up 14 Thumb down 0

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    @gokou3: And ya, that’s why cycles never have “soft landing” (still eagerly waiting for the bulls to post an exception). It’s always virtuous up and vicious down.

    Dave?

    Like or Dislike: Thumb up 8 Thumb down 0

    @Dave:”That brings up the fourth piece of evidence for lack of a bubble. You suggest that buyers have been speculating. I would suggest they have not been. Speculation, as measured by flipping, is quite low at present. Obviously bubbles require speculation and we just aren’t seeing that.”

    We must be talking about a different Vancouver here.

    Hot debate. What do you think? Thumb up 14 Thumb down 0

    @Dave: “Speculation, as measured by flipping, is quite low at present.”

    The prevalence of woolly lambs, as measured by the prevalence of umbrellas, is high in Vancouver. You’re outdoing yourself, Dave. Is there an “ignore” feature for wordpress commenters?

    Well-loved. Like or Dislike: Thumb up 25 Thumb down 1

    Not much of a name... Says:
    197

    @gokou3: You need to understand that Dave has different definitions for;

    Speculation
    Bubble
    Flat…

    Well-loved. Like or Dislike: Thumb up 23 Thumb down 0

    Girlbear Says:
    198

    @gokou3: Agreed. Rather than having nice soft fuzzy soft landings, bubbles tend to overshoot on the way down. Think PHX or San Diego.
    Fear pushes prices up to bubble levels (not fundamentals) and fear pushes them down.
    Also, Dave you mentioned BC has a large number of older inhabitants. That demographic does not tend to bode well either…

    Like or Dislike: Thumb up 9 Thumb down 0

    painted turtle Says:
    199

    @Dave
    ” Only buy if you can afford it. Only buy a product in an area you want to live”

    Only if such a place existed….
    I can only afford buying in neighbourhoods where I would not let my kids walk in the street…
    but I can rent in my favorite part of town with enough room to shelter two teenagers and visiting family :)

    Hot debate. What do you think? Thumb up 19 Thumb down 0

    patriotz patriotz Says:
    200

    @Dave:
    ” You suggest that buyers have been speculating. I would suggest they have not been.”

    A speculator is someone who expects to get a return on investment from price appreciation rather than earnings. Since every property in Vancouver has negative earnings as a rental at today’s prices, every investor buying today is a speculator.

    That’s “speculator” in English, rather than Davish, of course.

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    Anonymous Says:
    201

    @Dave:
    ” Speculation, as measured by flipping, is quite low at present. Obviously bubbles require speculation and we just aren’t seeing that.”

    In Vancouver west, people bought their properties and put on the market with doubled asking price, e.g. bought for 5 million, asking for 10 million, bought for 10 million and asking for 27 million. etc.

    1416 Wesbrook Cr, Vancouver House For Sale
    Price: $27,800,000
    Bedrooms: 6
    Bathrooms: 8
    Size: 7,876 sqft
    Built: 2005
    MLS®: V957905
    Area: University VW
    Taxes: $21,017
    Maint Fee: $0

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    patriotz patriotz Says:
    202

    @Girlbear:
    “Dave you mentioned BC has a large number of older inhabitants.”

    Not by much, relative to the rest of Canada. 14.8% of Canadians are over 65. 15.7% of BC residents are. Every province east of Ontario has a higher %.

    http://www12.statcan.gc.ca/census-recensement/2011/as-sa/98-311-x/2011001/fig/fig7-eng.cfm

    Hot debate. What do you think? Thumb up 14 Thumb down 0

    oneangryslav2 Says:
    203

    @Dave:

    “Speculation, as measured by flipping, is quite low at present.”

    Gaaaahhhh!! I wanted to just click away from this page but it’s like a bad car accident. OK, Dave, I’ll play along. But I’d really like this to be productive rather than just a pointless back-and-forth.

    So let’s start. In order for you to be able to characterize something as “low at present” you must have a baseline against which this is measured. Moreover, you must have a definition of the concept.

    1) Please define “flipping” in a way that can be adequately measured and applied universally.
    2) Given the above, how do today’s “flipping” numbers compare to those of last year? To 2008? To 2000? To 2004 in California? I’m a bit of a data junkie and would love to crunch those numbers. You don’t have to provide them in a spreadsheet. A text file or simply a link to where I can find these numbers would be most helpful in assessing the validity of your characterization of the current level of specuation, aka “flipping”.

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    RaggedyRenter Says:
    204

    Dave,
    Based on your definition of affordability, affordability will always be the same no matter what the interest rates are, or housing price are.
    Banks won’t lend you mortgage if you have to spend more than 35% of your income on housing related expense. This number will stay the same regardless of the prevailing rates, or house price, or mortgage term.
    If you earn $10000 a month, you will ALWAYS be able to afford $3500 going into your monthly mortgage payment. Be it going to a mansion, townhouse, or studio, or cardboard box on the side of the street, $3500 will always be AFFORDABLE.

    Now we have to be careful because in Canada, we have to renew our mortgage every 5 years. A rate increase at renewal will push what was then affordable to what will be unaffordable.
    I saw on the survey some people CANNOT AFFORD 0.25% rate increase.

    Like or Dislike: Thumb up 8 Thumb down 1

    @Dave:
    “I think at some point, we are going to have to throw out Single Family Home affordability metrics in Vancouver because it will eventually stop making sense. The supply is limited with a growing population, which pushes the entry price to higher and higher percentile incomes.”

    But can’t that be said of any large city with a growing population? How many new SFH’s have been build in the city of Seattle in the last 10 years? It’s not exactly like there’s acres of land that are available in most North American cities. The burbs of those cities yes but not the core of the cities themselves.

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    Girlbear Says:
    207

    @Anonymous: Ummmm, just curious. Did that $28mill house on Wesbrook Cres sell, or was it de-listed?

    Like or Dislike: Thumb up 2 Thumb down 1

    Girlbear Says:
    208

    @Dave: Dave, you seem to have time.

    Hot debate. What do you think? Thumb up 9 Thumb down 1

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    Best place on meth Says:
    210

    @RaggedyRenter:

    Dave means that as long as you move out of town and into a condo then you’ve got affordability.

    The long commute and small size of the home you get is your problem.

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    Best place on meth Says:
    212

    @Dave:

    “but right now, speculative activity is something like 1 or 2%.”

    And look what’s happened to sales.

    It may not be a swift and brutal crash, but a long, slow meltdown is looking very likely for Vancouver.

    Hot debate. What do you think? Thumb up 9 Thumb down 1

    @Dave: “Speculation is defined as buying and selling within a 12 month period. Some people use 6, but I think 12 is better. Those numbers are tracked.”

    Ha ha ha. Do you dare to speak to anyone in public rather than as an anonymous forum poster that this is THE definitive, only, singular, sole definition of speculation?

    In my mind, and I am sure of many, what you described is only a subset of speculative activities.

    Hot debate. What do you think? Thumb up 11 Thumb down 0

    Girlbear Says:
    214

    @Dave: OK, I will be honest I had to google what A/S/L meant. Answer found on urban dictionary…

    a/s/l

    Age / Sex / Location. The mating call of the barely post-pubescant teenager. Typically the male initiates this signal, as an attempt to attract a female that can give an honest reply to his liking. More often, however, the male is fooled by another male, generally much older, who will impersonate his “dream girl” for his own sick, sadistic pleasure.

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    Many Franks Says:
    215

    @Dave: Dave’s Dueling Definitions can sometimes be interesting to read. However, that’s a pretty ugly line you just crossed.

    Hot debate. What do you think? Thumb up 16 Thumb down 1

    oneangryslav2 Says:
    216

    @gokou3:

    In my mind, and I am sure of many, what you described is only a subset of speculative activities.

    You may be right, but I do give Dave credit for proposing a definition that is clear and can be applied across time and place. I’m curious as to what types of speculative activities you think are not subsumed under Dave’s working definition.

    Thanks.

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    Anonymous Says:
    217

    @Girlbear:
    “Ummmm, just curious. Did that $28mill house on Wesbrook Cres sell, or was it de-listed?”

    Oh, the realtor sign was taken off, and no “SOLD” sign was ever up. A failed flip? I assume the owner has no mortgage to worry, so she/he can wait for market improvement.

    Like or Dislike: Thumb up 6 Thumb down 1

    Girlbear Says:
    218

    Wow. I understand the term A/S/L is used primarily in chatrooms to lure underage girls. Sorry Dave, not funny.

    Like or Dislike: Thumb up 0 Thumb down 0

    @oneangryslav2:” I do give Dave credit for proposing a definition that is clear and can be applied across time and place.”

    I’d rather be approximately right than precisely wrong.

    Can you characterize someone who owns (and holds for over 12 months) multiple negative-cash flowing properties which consumes more cash than his all other incomes as a non-speculator, as Dave would exclude under his definition?

    True, I don’t think there are many of these people, but we have said repeatedly these are the kinds of weak-hand marginal owners that need to bail when things turn sour, exacebrating an already slow market and ensuring a vicious cycle as I mentioned earlier.

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    oneangryslav2 Says:
    220

    @Dave: Thanks for your clear definition. I’ve done about 20 minutes of searching and couldn’t find any links to Helmut Pastrick’s presenations, but did find a report from the CMHC which used Landcor’s definition of speculator.

    Speculation measured by the per cent of condo units bought and resold within one year. Data collected from the land titles office, and does not include assignments of pre-sale contracts.

    So Landcor (who else) has the data. Do you have access to Landcor’s data, Dave? It’s interesting that they only count condo sales, implying that there can’t be speculation in SFHs or attached townhomes, etc. Interestingly, and related to my response to gokou3, those who purchase pre-sales assignments are not speculators, according to Landcor’s definition. In addition, investors are defined by a different set of criteria:

    Investor presence determined from records of the BC Assessment Authority, where the mailing address for the assessment is different from the address of the unit.

    So, all of those “buy-live-in-one-year-to-avoid-capital-gains-tax-and-sell” are not considered investors (or speculators since they will have bought and sold in just over one year). That might come as news to my brother’s niece (and her husband) who are currently shacked up in a palatial West Vancouver home (he’s a builder) in month 7 of their plan. They’re hoping to sell to “some rich Chinese guy” in the late spring, but they’re neither speculators nor investors according to Landcor.

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    @Dave: Seriously bad format there Dave. It’s bad enough that some people step over the line with racial stereotypes on this board. Soliciting another member, in jest or not, is completely inappropriate. This isn’t broad generalizations that can be sneered at and dismissed as lunatic rantings. You focused in on a specific individual with underlying intent. A very public apology is the only appropriate follow up at this point.

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    Groundhog Says:
    222

    I bet Dave is a house salesman and a good one at that. He can argue clearly and rationally and if he has a persuasive personality I think can probably sell a lot of houses.

    His arguments however dont change the facts, and i think he has some very large holes in his argument that have been pointed out already whether he wants to admit it or now. Either way, only time will tell whos right.

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    BC reader Says:
    223

    I was there last night too. Great handout, a keeper. Highly amused by pleasant tone that all the hard core bearish graphs and data were presented in! It was an amazing night.
    ( And dudes, .. the quick departures were most likely parking expiry related….)

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    Ralph Cramdown Says:
    224

    @gokou3: “Less transactions –> less income for mortgage brokers / realtors”

    I think one key point is that those people are more likely than the average person to have investment properties, or pre-construction condos. So that inventory comes to market right quick. I have no numbers to back this hunch up.

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    Not much of a name... Says:
    225

    Do a quick google search for “real estate speculation”. Everything I found relates to speculating is purchasing a property that must increase in value in order to make money. There is no mention of time frames in purchases or sales. I’ll stick with Patriotz’s definition.

    Hot debate. What do you think? Thumb up 20 Thumb down 1

    Groundhog Says:
    226

    On speculation i personally know 5 people that have largely overextended themselves with multiple houses and condos that they only bought to sell in the future. These are not realtors or people that have any investmeny knowledge in general, they are people that have owned for a long time and took advantage of the mania of the last 6 years to leverage up to the max on as many propertiea as they could.

    None of them have gotten out yet and i know for a fact they are underwater on some of these and hoping to sell in the spring.

    It think it is foolish to convince yourself there is little speculation, Dave. I have a hard time believing you can say that with a straight face.

    Well-loved. Like or Dislike: Thumb up 41 Thumb down 1

    Hi Dave,

    Meet me at Tim Hortons in Chilliwack on Thursday night @ 9.30 PM. Could be worth your while. I’ll be the one with blonde hair and low cut top.

    Well-loved. Like or Dislike: Thumb up 25 Thumb down 5

    By the way, I missed last night’s presentation due to what my wife is so eloquently calling the Martian Death Flu. I really appreciate those who took the time to write about their takes and impressions. You’re all wonderfully informative. And one of you, by chance, wouldn’t happen to have an extra one of those handouts, would you? I’d be most interested in getting my hands on a copy. I promise not to pass on this MDF in return.

    Hot debate. What do you think? Thumb up 10 Thumb down 2

    Extend and Pretend Says:
    229

    Further to the actual Rabidoux thread, one of his picks made a splash in today’s news:

    http://www.theglobeandmail.com/globe-investor/rbc-kicks-off-bank-earnings-season-with-22-profit-boost-record-year/article5789799/

    Later the pigs were slaughtered…

    In a related story, a NY judge threw out RBC’s pleading to have charges of wash trading for tax and market avoidance dismissed:

    Canada’s largest bank was accused in April of engaging in “hundreds of millions of dollars” of trades in which the bank exchanged futures with various arms of its own operations. The U.S. Commodity Futures Trading Commission (CFTC) has alleged that those trades – known as wash trades – were designed to gain a tax advantage in Canada and ran afoul of trading rules.

    Our politicians and regulators are silent on the issue of the excessive influence and collusion among Chartered Banks. Evidently their take on high consumer fees, insider trading of privileged order flow information, and the like is “Oh ya. They do that sometimes… But, what can we do, the banks in Canada own the seats, we just sit in them.”

    Like or Dislike: Thumb up 6 Thumb down 1

    Many Franks Says:
    230

    @Groundhog: focusing on speculation as a requirement for a bubble misses an important part of the story; a lot of people have reacted to the “buy now or be priced out forever” story by buying out of fear though it might not be prudent financially. I believe speculation is a big factor but it doesn’t have to explain the whole situation.

    Hot debate. What do you think? Thumb up 11 Thumb down 2

    Groundhog Says:
    231

    @many franks

    No doubt about that!

    Like or Dislike: Thumb up 4 Thumb down 1

    Girlbear Says:
    232

    @Barbie: Very good. I would have responded to him further however I had to go throw up.

    Hot debate. What do you think? Thumb up 12 Thumb down 3

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    @Dave: Actually, this has been studied by some economists already. The risk analysis conclusion was that the market could bear about a 2% increase in interest rates before we started to see people getting in trouble.

    Maybe those economists should have asked directly to people what they think… And here is what they say (abstract from the article I wrote for GEAB):

    Moreover, current home owners are currently under tremendous financial stress. According to the BMO Housing Confidence Report, 72% of people surveyed say they would feel significant strain from a modest increase in their monthly mortgage payments, such as from an increase in interest rates, even though the current Bank of Canada overnight rate is at the emergency low level of 1%, while 16% of the respondents say a 10% rise in mortgage payments would leave them at risk of not being able to afford their home. Even more worrying, one-third of those surveyed say they have already cut back on spending, while one-quarter have reduced the amount they are saving and 17% have dipped into savings to meet mortgage obligations.

    Hot debate. What do you think? Thumb up 15 Thumb down 3

    @Dave: Justify it all you want. The comment was juvenile at best and you know it. It was completely inappropriate for this board and not nearly as innocent as your backpedal attempt would have us believe. You were sexualy inappropriate. You crossed a line; man up and own up.

    Hot debate. What do you think? Thumb up 13 Thumb down 12

    Not much of a name... Says:
    237

    @Dave:

    If you have a better metric, I’m all ears.

    Apparently your fingers are in your ears when Patriotz explains speculation…

    Hot debate. What do you think? Thumb up 9 Thumb down 1

    @Dave: “I don’t subscribe to Landcor, but maybe that’s where Helmut got his info from.

    If you have a better metric, I’m all ears.”

    If you are all ears, you should have read a few high-rated comments on this forum and shut up out of your own ignorance.

    But perhaps you are literally “all ears”, and not using eyes or brains.

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    @Dave: One can really start to know something of the character of a man through how he conducts himself as an anonymous individual on a public board. Sexually inappropriate, flippant justification, ad hominem attack. I hope to never meet you.

    Hot debate. What do you think? Thumb up 12 Thumb down 9

    Girlbear Says:
    242

    Ok let’s move on. Dave, you were inappropriate for a board like this (it’s not craigslist) and you know it. I expect no apology as I understand you don’t think it matters. For the record, I never normally vote you down (I of course did this time) bc I like to make sure I hear the other side.

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    @Dave: More justifications. ASL is not a coffee invite. You’re trying to put lipstick on a pig. And now you’re trying to set up a straw man to deflect. It doesn’t work. Girlbear found it inappropriate as, it seems, did Many Franks. I suspect a few more did as well. I’m like Girlbear; I didn’t necessarily downvote you because I didn’t share your opinion. In this case you over stepped a line and, rather than being humble and apologizing when called out, you went into attack mode. It certainly affects my opinion of your posts from here on as my opinion of you has changed considerably. Whether others feel the same, that is up to them. People have different tolerance levels about this sort of thing. That won’t make me shut up when I come across such behavior, especially from an adult.

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    Guy Smiley Guy Smiley Says:
    246

    Well, this was a pretty good thread up until some point this afternoon ….

    I’d like to hear more about the caamp conference if Con_Rad or another attendee has the time to summarize it some.

    Hot debate. What do you think? Thumb up 11 Thumb down 3

    Anonymous Says:
    247

    @gokou3: “Speculation, as measured by flipping, is quite low at present. ”

    I wonder, is it still called ‘flipping’ if you sell a property for less than you paid for it? Hmmmmmmm.

    Like or Dislike: Thumb up 2 Thumb down 2

    patriotz patriotz Says:
    248

    @Many Franks:
    ” focusing on speculation as a requirement for a bubble misses an important part of the story”

    Actually it is the story. If all investors are speculators, then the market must be in a bubble. My (and the financial mainstream’s) definitions of both terms, or course.

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    Vulture Fun Says:
    250

    @Urbain: Enough with the Urbain/Dave bun fight already.

    Hot debate. What do you think? Thumb up 13 Thumb down 2

    @Guy Smiley: Sorry about that. Dave did hit a nerve.

    And to the rest of the board as well. You have my apologies for going on with Dave.

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    Many Franks Says:
    252

    As of today CMHC’s portfolio is up to $575.8B and creeping nearer to the $600B cap. CMHC’s report says that the recent tightening has “effectively eliminated the high ratio refinance market”, contributing to a 37% YoY decline in new (?) insured mortgages.

    I’d love to hear an insider’s take on the source report, particularly who it’s affected most. The Wall Street Journal’s blog is calling this a sign of a healthy market, though I’m not sure why. It’s pretty clear that CMHC has been forced to massively reign in activity as nobody’s about to increase the $600B cap. Healthy or not, they have only one route to follow at the moment.

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    patriotz patriotz Says:
    253

    @Many Franks:
    ” The Wall Street Journal’s blog is calling this a sign of a healthy market, though I’m not sure why.”

    The WSJ was pretty much the house organ of the deniers during the US bubble.

    http://economicsofcontempt.blogspot.ca/2008/07/official-list-of-punditsexperts-who.html

    Like or Dislike: Thumb up 7 Thumb down 0

    #193 @Dave: “Speculation, as measured by flipping, is quite low at present. Obviously bubbles require speculation and we just aren’t seeing that.”

    http://vancouverpricedrop.wordpress.com/2012/11/19/the-weekly-drop-november-19-2012/

    “Over 20% of listed homes in Shaughnessy right now were purchased just one year ago – this is not including new builds.”

    Hot debate. What do you think? Thumb up 20 Thumb down 1

    Anonymous Says:
    255

    Makaya, I know you asked for people to not vote down Dave, however I can no longer help myself!

    Hot debate. What do you think? Thumb up 19 Thumb down 4

    Best place on meth Says:
    256

    @Anonymous:

    “I wonder, is it still called ‘flipping’ if you sell a property for less than you paid for it?”

    No, that would be called “flopping”.

    Well-loved. Like or Dislike: Thumb up 44 Thumb down 3

    @Dave:

    speculative activity is something like 1 or 2%.

    Well, if we look at Van West detached for 2012. Out of 100 random sales this year, 5% were ‘flips’ by your definition. And 16% were flipped within the past 2 years.

    And that’s only the successful flips, I’m sure the number rises if we include those with ‘intent to flip’, ie listed but didn’t sell and waiting for the spring market.

    Hot debate. What do you think? Thumb up 11 Thumb down 2

    @Best place on meth: BPOM, your humor was missed here…

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    Vote Down The Facts Says:
    259

    @patriotz: “If all investors are speculators, then the market must be in a bubble”

    So are non-dividend stocks in a bubble?

    Like or Dislike: Thumb up 5 Thumb down 4

    @Urbain:

    “It’s now very common to hear people say, “I’m rather offended by that,” as if that gives them certain rights. It’s simply a whine. It’s no more than a whine. It has no meaning, it has no purpose, it has no reason to be respected as a phrase – “I’m so offended by that.” Well, so fucking what?”

    Stephen Fry

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    “No, that would be called “flopping”.”

    ahhh so nice to have you back meth!

    Hot debate. What do you think? Thumb up 12 Thumb down 2

    New Listings 82
    Price Changes 70
    Sold Listings 57
    TI:16900

    http://www.paulboenisch.com

    Well-loved. Like or Dislike: Thumb up 110 Thumb down 2

    @paulb: another strong bullish day… not!

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    Ralph Cramdown Says:
    264

    @Vote Down The Facts: Many non-dividend stocks are bubbly by definition, but lots of others are growing internally (e.g. Berkshire Hathaway). But there’s a difference between having a piece of something that’s getting bigger and having a piece of a depreciating asset you hope others will pay more for in the future, which you’ve financed at a rate higher than inflation.

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    @259, that is fantastic.

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    Con-Rad Says:
    266

    Low sales. oh no. Not again.

    Somebod was asking about caamp stuff. I only went for 2 days. The last day was a forum with econ experts. They think rates are going nowhere. They think high debt levels are sustainable. They think the us is going to do well. They are concerned about 2013 and are blaming government if it falls apart.

    We want high population growth. Guess why.

    I hate you guys. PS I think I saw Dave at the conference but it was a blur, coulda been any of 50 people I met.

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    Best place on meth Says:
    267

    @Makaya: @vangrl:

    Thank you, I’m here all week.

    Don’t forget to tip Dave.

    Hot debate. What do you think? Thumb up 11 Thumb down 4

    Extend and Pretend Says:
    268

    @Vote Down The Facts: re: non-dividend paying stocks in a bubble.

    Do you mean illiquid, privately held stocks? Or do you really mean publicly listed stocks that pay no dividends?

    There are types of financial instruments with the same risk characteristics as RE, but dividend paying or not is probably not a good classifier.

    Say I have some shares in a private unlisted firm and I take you to the company’s lab and demonstrate a revolutionary energy source and you are convinced it will replace oil when the company can finance production. That you are convinced or anyone else is convinced doesn’t matter for share price. The share price is whatever can be negotiated. If the shares of the same firm are listed and actually trade, then there is an independent and reliable reference for the price that is outside of speculation – the assurance is given by a statement like “last month on every trading day at least 30,000 shares traded at no less than $10 per share”.

    RE as we know it is indeed speculation because RE is exactly like the shares of the unlisted company. There may be a similar company right next door in the industrial park which has listed and traded shares, but until the shares of the firm in question are actually listed or otherwise have a known group of reliable arms length spot market traders, it is speculation. The closing price of your neighbor’s house is a speculation on the value of your house when it actually is listed.

    RE as a financial instrument in present form is by definition speculation. This is exactly the problem Shiller tried to address by introducing the Case/Shiller house price futures in the US. The idea of his solution is that real collateral is on the line from the other side of the futures contracts, not just the dubious spot market transactions that fill empty heads with the same dreams as lottery tickets.

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    Many Franks Says:
    269

    @Dave: Carl Sagan and Gandhi say it’s OK for me to call you a poo face. Can we please get back to pretending to debate?

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    Dave, that comment was seriously over the line. I wouldn’t be surprised if the bears here start flinging poo at you in retaliation. Oh wait, they’ve been doing that for years.

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    Yaletown condos about 4% are flips within the last year, based on a sample of 100.

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    Vote Down The Facts Says:
    275

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    Groundhog Says:
    276

    Well, this forum went downhill quickly this evening. For a while Dave was a welcome exception to the nonsense spewed by Bull,Bull,Bull but he seems to have dropped himself down to that level after realizing most of his arguments really didn’t make a whole lot of sense when looked at critically.

    Hot debate. What do you think? Thumb up 20 Thumb down 2

    Con-Rad Says:
    277

    @Vote Down The Facts: If the price is backed by future divvies and buybacks that isn’t raw speculation. The problem with housing is the income isn’t there to justify the price. Even with cap rate mortgage rate differentials. Downside risk over the life of the asset is there for as long as rates are low.

    Come on bulls you’re failing me today.

    Like or Dislike: Thumb up 7 Thumb down 2

    @Vote Down The Facts: You took it out of context. As usual

    Like or Dislike: Thumb up 4 Thumb down 2

    Best place on meth Says:
    279

    @Troll:

    Don’t be ridiculous.

    I’m not going to waste perfectly good poo on Dave.

    Hot debate. What do you think? Thumb up 17 Thumb down 5

    midnite toker midnite toker Says:
    280

    Dave, that was pretty fucking sleazy even by my standards.

    Hot debate. What do you think? Thumb up 7 Thumb down 5

    midnite toker midnite toker Says:
    281

    Hey Look what I got in the mail today!

    Like or Dislike: Thumb up 0 Thumb down 2

    midnite toker midnite toker Says:
    282

    Try that again, Look what I got in the mail today!

    http://tinypic.com/r/2005vt5/6

    Like or Dislike: Thumb up 2 Thumb down 2

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 6 Thumb down 15

    Con-Rad Says:
    284

    @Dave: You’re wrong on this. Spreads should be way higher right now. If rates go up your gains are lost.

    Why are stocks going up at 7% pa? Lower rates?

    Like or Dislike: Thumb up 4 Thumb down 4

    Groundhog Says:
    285

    @Dave

    No longer any point wasting effort in proving you wrong again, you’ve been proven wrong over and over. You’ve lost any credibility you entered today with.

    Hot debate. What do you think? Thumb up 7 Thumb down 6

    Vote Down The Facts Says:
    286

    @Gokou3:

    Don’t be a clown, it certainly wasn’t taken out of context. Go back and read for yourself.

    Like or Dislike: Thumb up 0 Thumb down 6

    Vote Down The Facts Says:
    287

    @Con-Rad:

    Buying with the expectation of a future buyback or dividend is speculation too.

    Like or Dislike: Thumb up 1 Thumb down 3

    Extend and Pretend Says:
    288

    @Dave: re: “Cap Rate defines what your return on asset value is”

    Your analysis might hold water if the so called asset value was marked to market in every account where it is held just like the interest rate instruments you are comparing. However, there is no mark. The mark never happens until the lottery ticket numbers are announced and fools buy new lottery tickets in the next Powerball retirement plan. Lending for this insanity is created out of the thin air of a social contract that exists somewhere in the minds of people and politicians.

    I asked F point blank if mortgages were being created on property with no price discovery and he denied it. He also said the present system of government backed mortgage lending was a social good. Unfortunately, he has to believe (or at least say) these things to be electable on the balance of what people presently believe.

    Belief lasts until there is a prevailing counterexample that changes culture and beliefs. Nobody in the USA today is buying properties to get rich or get around rent. The era of the mortgage dream lotto has ended and the unwashed masses have reverted to buying Powerball tickets or trying to get famous.

    In Canada there will be a reckoning between mark to market and the dream lottery system of valuation, just like there was in the US. There may also be the backpedaling and rationalization on how to value these dream lotto mortgage contracts. Eventually, they will be priced to rental equivalents, people will take their losses, and the world will get back to the business of real economic activity.

    Like or Dislike: Thumb up 3 Thumb down 2

    Ralph Cramdown Says:
    289

    @Dave: “If you look at the spread between posted 5 year rates and the Cap Rate for residential apartments, you find the cap to be between 1 and 2% lower. That goes back to at least 1992. The spread right now is about 1.5%.”

    Think about what you’re saying. The bank holds the debt, in senior position with first claim on the property and either a 20-25% equity cushion or a CMHC guarantee. The landlord holds the junior equity position, bears all the risk in return for… the same or less return? If his cap rate (net of maintenance and vacancy allowance!) isn’t higher than his interest rate, there’s no sense using leverage at all. Without leverage, there’s better risk/return out there — unless you’re counting on capital gains or willing to hold the bag for a few years waiting until your rent increases bail you out. Even Don Campbell says it has to cash flow from day 1.

    Like or Dislike: Thumb up 4 Thumb down 2

    Con-Rad Says:
    290

    @Vote Down The Facts: Are you being obtuse on purpose? Let me slow it down for you:

    T-H-E-R-E I-S A D-I-F-F-E-R-E-N-C-E B-E-T-W-E-E-N S-P-E-C-U-L-A-T-I-O-N W-I-T-H P-L-A-U-S-I-B-L-E F-U-T-U-R-E E-A-R-N-I-N-G-S P-O-T-E-N-T-I-A-L A-N-D S-P-E-C-U-L-A-T-I-O-N B-A-S-E-D O-N F-I-N-D-I-N-G A G-R-E-A-T-E-R F-O-O-L

    Hot debate. What do you think? Thumb up 5 Thumb down 5

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

    Hot debate. What do you think? Thumb up 23 Thumb down 4

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 3 Thumb down 11

    Groundhog Says:
    293

    @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.

    Like or Dislike: Thumb up 6 Thumb down 0

    http://seekingalpha.com/instablog/499486-the-unintelligible-investor/1308501-canadian-banks-short-me-if-you-can

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

    Like or Dislike: Thumb up 3 Thumb down 1

    Vote Down The Facts Says:
    295

    @Groundhog:

    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.

    Like or Dislike: Thumb up 0 Thumb down 5

    @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.

    Like or Dislike: Thumb up 3 Thumb down 0

    Groundhog Says:
    297

    @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.

    Like or Dislike: Thumb up 3 Thumb down 0

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

    Like or Dislike: Thumb up 5 Thumb down 0

    RaggedyRenter Says:
    299

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

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 0

    UnagiDon Says:
    300

    @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?”

    Like or Dislike: Thumb up 8 Thumb down 0

    @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.

    Like or Dislike: Thumb up 1 Thumb down 0

    Confucius Says:
    302

    @Dave:

    ” 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.

    Like or Dislike: Thumb up 5 Thumb down 1

    Groundhog Says:
    303

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

    Hot debate. What do you think? Thumb up 8 Thumb down 2

    Ralph Cramdown Says:
    304

    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.

    Like or Dislike: Thumb up 4 Thumb down 1

    Anonymous Says:
    305

    What if Dave actually believes what he posts?

    Like or Dislike: Thumb up 5 Thumb down 1

    Groundhog Says:
    306

    “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.

    Like or Dislike: Thumb up 6 Thumb down 1

    Extend and Pretend Says:
    307

    @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 2008. That could be a useful signal in the coming months.

    Like or Dislike: Thumb up 4 Thumb down 1

    patriotz patriotz Says:
    309

    @gokou3:
    “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.

    Like or Dislike: Thumb up 7 Thumb down 1

    @patriotz:

    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.

    Like or Dislike: Thumb up 1 Thumb down 2

    @Confucius:

    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.

    Hot debate. What do you think? Thumb up 2 Thumb down 8

    Confucius Says:
    312

    @Dave:

    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.

    Like or Dislike: Thumb up 6 Thumb down 2

    Atomic Frog Says:
    313

    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”

    Like or Dislike: Thumb up 4 Thumb down 1

    Aleksey Says:
    314

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

    Like or Dislike: Thumb up 0 Thumb down 1

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