Tulip Mania!!!

A neat little explanation of tulip mania from the BBC. Just Find/replace “tulip” with “Vancouver Condo” and it’s even MORE funteresting. Money shot at 5:48. “They all end the same way …..pop”

(From the BBC Series “Andrew Marr’s History of the World”

102 Responses to “Tulip Mania!!!”

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    Don Lapre Don Lapre Says:
    1

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    Apocarypse Mao Says:
    3

    @ Condos

    Condos are going down (3% HPI since peak) , not as fast as detached houses (5% HPI since peak). There have been larger drops on high end detached homes.

    Logic? There is no logic to speculative bubbles. They are not driven by the rationale hand of the market, they are psychologically and emotionally driven. No logic on way up; no logic on way down. Just sit back and watch it all unfold in it’s own unique and erratic way.

    Well-loved. Like or Dislike: Thumb up 33 Thumb down 9

    The HPI is sketchy… Take a random sampling of 20 condo’s around Vancouver and the suberbs and for each of these go to the assessment site and find sales in the same building. Next take the average price vs assessment % of last years sales then compare that to the current listing price vs assessment. You’ll see right away that prices are down for many of them by 20%+ and almost all by 10%+ and that’s based on them selling for asking which they are not.

    Well-loved. Like or Dislike: Thumb up 46 Thumb down 2

    condo watcher Says:
    5

    condos Says:
    December 9th, 2012 at 1:00 pm

    Condos are holding up. Better than detached houses. How does bear logic explain that

    you better have a look at the tri cities and beyond –the condo markets in many places are a disaster–resales have been dropping for over 2&1/2 years in many areas–it’s nothing to do with logic–it’s fact

    Well-loved. Like or Dislike: Thumb up 37 Thumb down 8

    RealityCheck Says:
    6

    House prices won’t revert to levels seen 10 years ago unless a massive economic shock happens or interest rates spike —> The latter will have 2 effects: 1) Monthly affordability deteriorates and 2) People with cash/equity will pump money into ‘GICs’ again (5% on $250,000?). I think this number 2 point is especially important and the gov is aware of it –> “Why buy a $250,000 condo when you can put it in a GIC earning $1000+ a month?”

    Unfortunately, rates will not rise for a long time because Gov/RE forces are against it. House prices in the past rose based on Monthly Affordability (rates etc.) and Population Growth. Immigrants used to go settle in small towns two decades ago but now, they all want to settle in a major city (GTA or Metro Vancouver).

    So now what? It seems that our society has become economically stratified based on those who own and those who rent. This is courtesy of the Gov. — (The RE industry is expected to have this type of ‘pump’ behavior). What is not expected is gov joining in.

    Owning a house has become more important than education level. Van city society has accepted this.

    What can you do rather than just venting on this blog?

    1) Ben R. could actually include in his reports how much rental income in Canada is unreported to the CRA. This includes basement suites/condos.

    2) Establish a link between CRA and CMHC to verify income so risk is mitigated.

    3) Educate yourselves that there are almost 3/4 million temporary residents here and rising…to pull down wages and support colleges/universites.

    Enough for today.

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    Asia and Canada on the rise Says:
    7

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    @RealityCheck:

    “House prices won’t revert to levels seen 10 years ago unless a massive economic shock happens or interest rates spike”

    How would you explain the collapse of the US bubble, which was preceded neither by a shock nor by a spike in interest rates?

    Did you not watch the Tulip video? It’s there for your education you know, and while you might not think that counts for much, there may come a time when things change, so take a couple of minutes and watch the video.

    Well-loved. Like or Dislike: Thumb up 31 Thumb down 3

    Landbaron Says:
    9

    Sold my Tulip, err, 2 bedroom condo in Port Moody a year and a half ago in the mid 300g’s and I was lucky to get that. It took 6 months and it was in a really good building during the height of the market.

    The buyers were honest and said they were going to live in it for a year or two then flip it for a profit.

    The young ‘german’ couple that moved in is currently listing the same unit for 30grand less than I sold for. If it sells at all it will be far below that.

    Flip fail!

    Well-loved. Like or Dislike: Thumb up 59 Thumb down 3

    Landbaron Says:
    10

    @condo watcher:

    I agree, but don’t understand all the down votes for your comment?

    Like or Dislike: Thumb up 4 Thumb down 3

    condo watcher Says:
    11

    Landbaron Says:
    December 9th, 2012 at 6:28 pm

    @condo watcher:

    I agree, but don’t understand all the down votes for your comment?

    ya, unbelievable– a lot more bulls today or really uniformed housing analysts–i’ve got pages and pages of listings and sales in the tri cities area alone that owners are dumping or have sold for less than they paid a few short years ago.

    Hot debate. What do you think? Thumb up 16 Thumb down 4

    @Landbaron: It’s not what he said it’s how he said it. Only b’s can say the b word.

    Also why is reality cheque getting hate tonight. Those are some interesting suggestions.

    I tried to do some basic math in the last thread, attempting to find how far prices could fall before the cash flow made sense. Only N bothered to give any suggestions to me on how to improve my basic calculations. I got more downvotes than anything.

    I guess it was how I asked, or there is something else going on.

    In any case I think my time here is through. I am not adding much to the discussion, so I shall resign my comment handle. I wish you all the best, especially the guys who bring the numbers.

    Adiós bears.

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    UnagiDon Says:
    13

    6:35 “The stock exchange, the companies, the trading, and the willingness to speculate… we call it capitalism.”

    I’m not sure that’s true. Can capitalism exist without speculation? I bet Benjamin Graham would think it can.

    Like or Dislike: Thumb up 3 Thumb down 1

    Landbaron Says:
    14

    @condo watcher:

    Coquitlam Centre is a great example, how many towers are going up or finishing around there right now?

    Even with the new Evergreen Line it will still take an hour to get downtown with the 2 transfers. A beautiful area no doubt, but not worth the price. (I grew up there by the way)

    Same thing with SFH on Burke Mountain. Once again beautiful, but the prices make it uneconomical.

    I could go on about PoCo but that would be redundant…

    Hot debate. What do you think? Thumb up 14 Thumb down 2

    Landbaron Says:
    15

    @Con-Rad:

    I rarely comment, so I would hope not to be the reason behind your decision. I respect discussion and actually have ‘liked’ some of your comments, although mostly ‘disliked’, whatever.

    Regardless, at least you comment with a different viewpoint and that is always needed…keep it up

    Did I just say that? ;)

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    RealityCheck Says:
    16

    Confused on why all the downvotes on my previous post…post did not have a bull or bear tone. Maybe this isn’t the blog for an intelligent discussion…

    Hot debate. What do you think? Thumb up 7 Thumb down 10

    southseacompany Says:
    17

    On a similar theme, but more comedic;

    The Long Johns – The South Sea Bubble of 1720.

    http://www.youtube.com/watch?v=QjN8q5rwLoo

    Like or Dislike: Thumb up 4 Thumb down 3

    Anonymous Says:
    18

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    Anonymous Says:
    19

    @RealityCheck:

    The thing is that, though you might not know it, the things that you said in at post are routinely said by people arguing that RE is a good investment. They were also said in the US before and during the busting of that bubble and in many other place as well. Those arguments have been successfully countered hundreds of times on this blog. So when you say them, though they might seem new to you, many people on this blog slap their foreheads and say, “Not again!”

    It’s not that people here don’t want to debate, it just that they get tired of having exactly the same debate again and again.

    Well-loved. Like or Dislike: Thumb up 30 Thumb down 4

    Con-Rad, I hope you reconsider and stick around. This blog is made better with more divergent viewpoints, bull or bear.

    Incidentally, I generally agree with you that prices are likely in for a long, slow decline rather than a quick drop, and I think you have some other good points.

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

    Landbaron Says:
    21

    Wait a minute, isn’t this how Dutch auctions work?

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    Optimist Says:
    22

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    @condo watcher:

    So, you want to compare houses as a whole the worst performing condo segments? And you got 20 up votes for such a suggestion? That’s not irrational.

    Compare condos overall to detached over all. Condos are holding up better. It’s a fact. A real fact. Not a bear ‘fact’.

    Hot debate. What do you think? Thumb up 3 Thumb down 9

    @Apocarypse Mao:

    “Condos are going down (3% HPI since peak) , not as fast as detached houses (5% HPI since peak). There have been larger drops on high end detached homes.”

    Do you think you’re contradicting me? I don’t see what point your making.

    Like or Dislike: Thumb up 4 Thumb down 4

    Anonymous Says:
    25

    @condos: “Condos are holding up better.”

    Condos peaked in 2009 where houses peaked in 2011. Houses have come down more lately due to the fact they went up more. In the end both will go back to around the level they started at in 2003/2004.

    Just like red tulip bulbs and yellow tulip bulbs. At first some people thought the red bulbs would hold up better than yellow but both collapsed to what they were worth prior to the bubble starting.

    Well-loved. Like or Dislike: Thumb up 42 Thumb down 1

    Anonymous Says:
    26

    Sellers getting desperate. Rent to own this dump for $3500 per month with 10k down.

    http://vancouver.en.craigslist.ca/van/apa/3458524503.html

    Yes sure. Market rent might be 2K per month for this 950 sq ft place in a older dated building. They are trying to sell it for 773K where it would never have sold for more than 600K at peak. Are people really this clueless?

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    G Master Says:
    27

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    Anonymous Says:
    28

    @G Master: “Remember it was used to be free to park in Stanley Park?”

    Because the city starting charging for parking in Stanley Park about 20 years ago housing will not correct? OK you win the worst argument ever for why housing will not correct.

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 2

    G Master Says:
    29

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    Anonymous Says:
    30

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    patriotz patriotz Says:
    31

    @N:

    “House prices won’t revert to levels seen 10 years ago unless a massive economic shock happens or interest rates spike”

    How would you explain the collapse of the US bubble, which was preceded neither by a shock nor by a spike in interest rates?

    I don’t hear many people on this board claiming that nominal prices in Vancouver are going to roll back 10 years from today (which would be well over 50%), so the first quote is a bit of a strawman argument.

    Nominal house prices in the US rolled back only to 2003 levels, i.e. to 3 years before the 2006 peak. Vancouver may go a bit more due to the longer runup, but I don’t expect to see them go below 2005 levels, if that.

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    news junky Says:
    32

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    news junky Says:
    33

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    news junky Says:
    34

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    pricedoutfornow Says:
    35

    Went to see a place for rent this weekend. Google confirmed this was an accidental landlord-place was listed for sale over the summer (huh, we actually went to the open a house a few months ago), guess it didn’t sell so here we were, prospective tenants. The accidental landlord wouldn’t admit to being an accidental landlord, said she was holding onto the property for investment (despite it being listed for sale just last month, guess she’s never heard of google), and wouldn’t consider a rental lease of longer than a year. Place would have been ok for us to rent ($2000 per month, selling price is $750k), but decided against it since we really don’t want the hassle of moving again in a year. Wonder if the landlord will end up selling it at some point-seems like they’re the typical “we bought a place before selling this one” and now they’re stuck with two mortgages. So many places we’ve been to see for rent this year have been in this situation.

    Well-loved. Like or Dislike: Thumb up 42 Thumb down 1

    news junky Says:
    36

    Nevermind HAM, Canada also has HORM–Hot Oligarchic Russian Money! A corrupt Russian oligarch owns 111 condos in Toronto! Vitaly Malkin is a “Russian oligarch and member of the Russian senate” who was sent to Washington, DC to lobby against the passage of the Sergei Magnitsky Rule of Law Accountability Act, which is a law blacklisting Russian human rights abusers. From the National Post:

    “Mr. Malkin, the National Post revealed in 2009, has been blocked from entering Canada by Canadian authorities who accused him of organized crime involvement. In his fight to overturn that decision, it was revealed he owns 111 condominium units in Toronto…

    Mr. Browder said the Malkin case suggests why Canada is important.

    “Canada should not be a safe haven for people who do this type of crime. Canada has a very attractive economic immigrant program and it is very popular for Russians so, absolutely, Canada has to be on the list of countries that are doing this.””

    http://news.nationalpost.com/2012/12/07/i-made-a-vow-to-his-memory-bill-browder-wins-fight-to-ban-corrupt-russian-business-in-the-u-s-in-memory-of-dead-friend/

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    No Noise Says:
    37

    @#34 News Junky

    Actually the up/down voting system hasn’t been working properly for a while and seems to be getting worse. At the moment I can get the odd down-vote to take (and often have to vote something down that a normally wouldnt just to test) and I can never get an up vote to take. Maybe this is what’s happening to posts like . Seems to me there are normally way more votes either way.

    Hot debate. What do you think? Thumb up 13 Thumb down 5

    @No Noise: I like how the new voting system work. It kinda tells me how many bulls or boring realtors ™ visits this site. :)

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    Patiently Waiting Says:
    39

    The HAM pipeline is blocked.

    “The Immigrant Investor Program, which has been criticized as a way for people to buy their way into this country without contributing much to the national economy, has been in bureaucratic limbo since an overhaul was announced earlier this year.

    No new applications have been accepted since July 1 and won’t be until further notice.

    By June 2012, the backlog was down to 85,598 people. As of 2011, the backlog was 91,248 people, representing 26,158 investors and 65,090 family members. If admission levels remained at current levels, CIC says it would take nearly 10 years to process the existing applications.

    From January to June 2012, the government processed a total of 6,973 applications under the program: 5,230 were accepted, 576 were rejected and 1,167 were withdrawn.”

    http://www.cbc.ca/news/canada/british-columbia/story/2012/12/07/f-rich-immigrant-investor-limbo.html

    Well-loved. Like or Dislike: Thumb up 25 Thumb down 0

    condo watcher Says:
    40

    condos Says:
    December 9th, 2012 at 9:36 pm

    @condo watcher:

    So, you want to compare houses as a whole the worst performing condo segments? And you got 20 up votes for such a suggestion? That’s not irrational.

    Compare condos overall to detached over all. Condos are holding up better. It’s a fact. A real fact. Not a bear ‘fact’.

    ——might i suggest you check the HPI for different areas of the Lower Mainland–you might be suprised—for instance the HPI for Pt Coq. condos year over year is 132.3 down to 130.4 this past Nov. while the HPI year over year for detached has gone from 145.8 to 147.8
    it’s fine to lump the entire LM into one HPI but you really miss what’s going on in different municpalities.
    look at the 3 year graph for the various areas— you’ll get another surprise
    so lets just say your facts are a little “skewered”

    Like or Dislike: Thumb up 4 Thumb down 5

    Patiently Waiting Says:
    41

    Further to the CBC Ham article:

    “The uncertainty has made it more difficult for him and his co-owners — his wife, Jade, and another man — to plan for the future of a business that makes specialized car parts, employs more than 20 people and had sales last year of $2.5 million.

    Expansion plans for the company have been put off, but other preparations have gone full steam ahead as the Zhous remain hopeful they will be able to move to the other side of the world.”

    These facts about his business are not impressive at all. That $2.5 million is in sales not profit. His wife is a “co-owner” for tax reasons I bet. Why not expand now if business is good?

    Car parts? Hmmm maybe bumper stickers?

    “Back in China, Zhou says it will be a “big shock” for him, his wife and son if their application is erased and they don’t have a chance to come to a country that attracted them because of its good social benefits and democratic values.”

    Why would a wealthy business owner care about “social benefits”? Maybe if it helps provide healthy, happy workers. But we know he can’t wait to hook up his family to our social safety net while his real workers slave away back in China.

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

    As long as we are posting about historic bubbles, here is another one:
    http://www.youtube.com/watch?v=ADv5-Pen1L4
    John Law and the Mississippi bubble.

    Like or Dislike: Thumb up 2 Thumb down 1

    Anonymous Says:
    43

    @patriotz: “I don’t hear many people on this board claiming that nominal prices in Vancouver are going to roll back 10 years from today”

    I think they will. It may come in 2 stages with the second stage coming after interest rates increase to normal levels but 50% average decrease seems about right to me. Keep in mind markets don’t always correct to a fair value they usually over correct.

    Hot debate. What do you think? Thumb up 16 Thumb down 3

    Anonymous Says:
    44

    @news junky: Junky, my guess is it got voted down because it is a made up BS story copied and pasted from comment #58 in Friday’s thread. I just wanted to see if Con-Rad was right. Apparently he wasn’t.

    Like or Dislike: Thumb up 7 Thumb down 1

    taylor192 Says:
    45

    Prices will not return to levels 10 years ago cause interest rates will not return to levels 10 years ago.

    If we take the ups/downs of housing out, prices should settle at what is affordable monthly, and interest rates dictate that. Without more economic activity globally low rates are here to stay, which means everyone can afford more monthly which will keep prices high.

    Will prices come down? Absolutely. Will prices come down to 2002 levels? Doubtfully, the BoC rate was 6% then and I don’t see it > 2-3% anytime soon.

    Then consider the rules are still looser than 2006. GDS/TDS is 39/44% when it was 32/40%. Thus people are able to afford more monthly, helping keep prices high.

    Hot debate. What do you think? Thumb up 9 Thumb down 4

    @taylor192: “Doubtfully, the BoC rate was 6% then and I don’t see it > 2-3% anytime soon.”

    Define your time frame. Next 6 months? sure, you’re right. 5 years from now; 10 years from now? Not so sure, me.

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

    Vancouverist Says:
    47

    Governments in BC have been hooked on the cash from real estate speculation since before this was even a Canadian province. And Langley almost became the capital of BC!

    From the Historical Atlas of Vancouver and the Lower Fraser Valley (Derek Hayes, 2005, Douglas & McIntyre):

    “With the sudden growth in importance of the mainland with the discovery of gold, and the founding of the new (mainland only) Colony of British Columbia, which Queen Victoria had proclaimed on 2 August 1858, the need for an administrative capital became apparent to James Douglas. Speculators seized on the site of old Fort Langley, at the bend in the Fraser about 3 km downstream from the fort’s location in 1858. Here, by September, lots were being sold, advertised as “in the town of Derby.”

    Douglas was outraged by the speculators’ unsanctioned subdivision and sale of land and immediately stopped it. But he liked the location and so ordered the colonial surveyor of Vancouver Island, Joseph Despard Pemberton, to continue to lay out the new town, with the intention of making it the mainland capital. Pemberton did not shirk from his duties, and the result was the huge town plan shown here (MAP 36, right). Over three thousand lots were mapped, although it is uncertain how many of these were actually surveyed on the ground. Whether surveyed or not, the lots were auctioned off at a government auction in victoria to investors who were convinced they were buying into the business opportunity of a lifetime. It was similar to the frenzied pre-sales of some downtown condominiums in 2003 and 2004. Nearly four hundred lots were sold at prices up to $325 each, realizing the astonishing sum of $68,000 for the government’s coffers. Building started almost immediately.” (p. 24)

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

    No Noise Says:
    48

    @ #38 AlanL

    I really like the up/down voting system too – when it’s working..

    Like or Dislike: Thumb up 4 Thumb down 1

    Vancouverist Says:
    49

    2013 going to be a replay of 1913? From the Historical Atlas of Vancouver and the Lower Fraser Valley (Derek Hayes, 2005, Douglas & McIntyre):

    “From its very beginning Vancouver seems to have held a special fascination for those who liked to invest, or rather, speculate, in real estate. The city had been a playground for real estate agents in the five years after its founding and was once again when boom times returned between 1906 and 1912. By the latter date, there were about 170 real estate companies operating in Vancouver. Lots were surveyed and many were sold, some to would-be residents, but many more to those who hoped to “make a nice turnover”. In the 1970s the practice would be refered to as “flipping”.

    The streetcar helped, overnight transforming remote forest into marketable real estate. Developers sometimes paid for streetcar service, for they knew it transformed the value of their land. Charles Trott Dunbar, for example, paid the BCER $35,000 to extend service (in 1913) to his then empty “Dunbar Heights”.

    When Point Grey became a separate municipality in 1908, it opened new fields to real estate salesmen. Land that had been dismissed as a logged-over wasteland a few years earlier now suddenly became prime residential property. T new municipal council intended that their domain should be upscale and that industry would not be welcome on the newly opened lands. The intention was all well and good, but not many houses were built either–that would have to wait until the 1920s. The very promise of the streetcar delived land sales, however, and investment and speculation drove the sale of lots…

    The one part of Point Grey that was not exclusively residential was Marpole. This area on the north bank of the North Arm was first called Eburne, around the general store of Harry Eburne. Granville Street was paved in 1911 from the City of Vancouver limits at 16th Avenue to the Sea Island Bridge, boosting the fortunes of Eburne. “Watch Eburne Grow,” shouted the real estate ads…

    A contrast was provided by North Burnaby, which had been but sparsely setted until the real estate boom. In 1907 a developer trying to sell lots in a subdivision he called East Vancouver Heights (the area around Willingdon Avenue and Hastings Street) produced an amazing bird’s-eye view intended to show the area’s proximity to the rest of Vancouver (MAP 147, overleaf). It was certainly a case of buyer bewarre. In a development farther east, on the slopes of the newly logged Burnaby Mountain idyllically named Hastings Grove, Frderick Munson in 1911 offered lots for $245, with terms as low as $10 down and $5 per month. He sold over a thousand lots on 250 acres and was planning to subdivide more. Burnaby opened up Curtis Street eastwards to service the expanding housing. But Munson had only bought the land with a downpayment. He failed to make more payments, and his mortgage holders foreclosed on him and resold the land. The people who had bought from him lost their land and their money, an all-too-common story when the real estate boom ended in 1913.”

    (pp. 78-82)

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    I have to say when I lived in Toronto I had one of my kids at the Toronto French School. The Russians there were amazing. One guy who said he was a carpenter drove an Aston Martin. Another guy who said he was an electrician showed up with his Prada wearing wife everyday in a new Mercedes, BMW, etc.

    My daughter was invited to a couple of birthday parties. I had never seen anything like it. The goody bag was about $200.

    I ran into one Russian woman at a very high end children’s store. Jacadi – anyway she was buying out the store for her two girls. Wads and Wads of cash. Her husband was the carpenter.

    Oh well they bring money to Canada so Canada must like them.

    Well-loved. Like or Dislike: Thumb up 23 Thumb down 2

    @condo watcher: Oh, shut up. You’re cherry picking stats. Stop it. Heaven forbid one market segment outperforms another. No, we can’t say that… that’s too ‘bullish’ for the echo chamber.

    Hot debate. What do you think? Thumb up 3 Thumb down 10

    @taylor192:
    “Prices will not return to levels 10 years ago cause interest rates will not return to levels 10 years ago. ”

    As VHB pointed out, prices will almost certainly go back to 2002 levels – which were already low – eventually.

    Nominal prices won’t go back to 2002 because of inflation. Real prices – yes.

    Hot debate. What do you think? Thumb up 17 Thumb down 3

    @patriotz:
    Sorry, I meant interest rates will almost certainly go back to 2002 levels.

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    @Patiently Waiting:
    “The HAM pipeline is blocked.”

    At the intake, rather than the outlet, and as the article noted we have 10 years of supply in the pipe already.

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

    real_professional Says:
    55

    Pacifica Partners updated the Real Estate Chart book as of December 2012.
    http://pacificapartners.ca/blog/2012/12/08/canadian-real-estate-correction-chartbook/

    Note the charts on demographic trends and the table demonstrating US home sales volume and price drops went hand-in-hand in the post 2006 US housing crash.

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    condo watcher Says:
    56

    @condo
    ya, i’m at a real loss too–post #40 was voted into foreclosure with 4 negative votes–the HPI for detached in PoCo was up year over year (bullish) while the HPI for condos was way down year over year (bearish)–stats easily found on RE web sites–the question for me is –who voted it down?? the bears or the bulls??

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    @condo watcher: you’re still talking about this?

    Maybe you’ll understand if I put this in terms you’ll understand. A is for apple. O is for orange. You are comparing Apples to Oranges.

    BUT YEAH CONDOS IN POCO OR WHEREVER ARE DOWN MORE THAN HOUSES IN POCO ZOMG!!!!!! THAT MEANS THAT ALL CONDOS ARE GOING DOWN!!!! GUYS! THERE IS A BUG IN THE MATRIXXXXX!!!!!

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    worth reading Says:
    58

    http://www.uglychinesecanadian.com/?p=3508

    Honest discussion is important

    Like or Dislike: Thumb up 7 Thumb down 2

    Short'em High Says:
    59

    The money shot. The narrator makes the following uniquivocal statement about nominal beliefs when the collective state of mind is irrevocably and irreversibly at the point where even the most liquored up fool cannot be convinced to overpay.

    5:22 “Few people ever wanted all of those bulbs. They were only buying them to sell them on again.”

    This clip is a great find but it doesn’t really explain what happened the day “buyers” attended the last mania auction simply for the complimentary seller financed wine. Earlier that day even the village idiot would have known that everybody was overpaying by many multiples of future utility. What I’d like to see the is expression on the face of the true believer the moment the fuse in that part of their brain blows.

    We must already be past this point regarding the realtor financed pre-sale lineups stacked with exactly the right mix of actors to create a buoyant mood.

    Like or Dislike: Thumb up 5 Thumb down 1

    Nothing funnier than concern trolls whining about getting voted down and expressing their earnest concern about the future of this blog. lol

    If you can’t handle getting voted down on some internet site then you need to grow a set.

    Well-loved. Like or Dislike: Thumb up 46 Thumb down 7

    Bull! Bull! Bull! Says:
    61

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

    Poorly-rated. Like or Dislike: Thumb up 10 Thumb down 27

    oneangryslav2 Says:
    62

    @Bull! Bull! Bull!: Another fan of VHB. You’re on here in the middle of the afternoon, Bull! Bull! Bull!; there’s still a couple more hours of daylight for you to buy!buy!buy!

    Hot debate. What do you think? Thumb up 18 Thumb down 8

    Bull! Bull! Bull! Says:
    63

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

    Poorly-rated. Like or Dislike: Thumb up 11 Thumb down 19

    billy bob Says:
    64

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

    Poorly-rated. Like or Dislike: Thumb up 2 Thumb down 14

    Anonymous Says:
    65

    @Bull! Bull! Bull!: “maybe if you wait 5 more years prices will be within your reach. or you could have just bought in 2005 and enjoyed your home for a decade.”

    I am glad we are in agreement prices will be at 2005 levels within 5 years.

    You did miss one more option. That was to buy in 2005 (or earlier) and then sell near the peak. That is what I did. The next 5 years will be anything but enjoyable for home owners.

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

    The rats are leaving the sinking ship (#2):

    Bay Street trailblazer Sherry Cooper retiring as BMO chief economist

    The astute reader will notice the irony in her justification:

    “I really want to spread my wings,” explained Ms. Cooper, 62, who has been the bank’s chief economist since 2006, and chief economist at its brokerage subsidiary BMO Nesbitt Burns before that.

    “There are opportunities that have been suggested to me that would have been impossible as chief economist at the bank . . . At this stage of my life I’m looking at legacy.”

    And this little tidbit from her biography I was not aware of:

    Before that, she worked at Fannie Mae and the U.S. Federal Reserve, where she was an assistant to then-Fed chief Paul Volcker.

    That explains everything then…

    Well-loved. Like or Dislike: Thumb up 36 Thumb down 2

    Bull! Bull! Bull! Says:
    67

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

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    @real_professional:

    Thank you for sharing it. It’s a really insightful analysis of the housing market. It looks like it’s been created by someone from this blog =)

    Like or Dislike: Thumb up 2 Thumb down 1

    billy bob Says:
    69

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

    Poorly-rated. Like or Dislike: Thumb up 3 Thumb down 18

    @Makaya:
    Thanks for the link. Interesting indeed, considering the fact (well, the widespread opinion) that Paul Volcker was the last decent Fed chairman.

    Like or Dislike: Thumb up 8 Thumb down 1

    @Makaya: “At this stage of my life I’m looking at legacy”

    So many ways to interpret this interesting statement. Could it be “i dun want no future blame in the upcoming RE bust”?

    Hot debate. What do you think? Thumb up 15 Thumb down 1

    @Bull! Bull! Bull!:

    tell me oneangryslav2, when are you going to buy? maybe if you wait 5 more years prices will be within your reach. or you could have just bought in 2005 and enjoyed your home for a decade.

    You are missing one more option. What if oneangryslav2 was 20 years old at 2005 and wasn’t even considering housing options at that time?

    Some people here joined bears around 2009-2010 because they were smart enough to see that house prices are not sustainable. I’m waiting for prices to come down last 3 years only. My friends were really sceptical before but last several months they are admitting that I was right.

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 1

    Best place on meth Says:
    73

    @Bull! Bull! Bull!:

    “or you could have just bought in 2005 and enjoyed your home for a decade.”

    That’s the problem with you stupid fuckers, all you can do is live in the past.

    2005 was seven fucking years ago, it’s now 2012 and the worst time to buy in history.

    My god you cheerleaders are so worthless.

    Well-loved. Like or Dislike: Thumb up 52 Thumb down 5

    patriotz patriotz Says:
    74

    @Anonymous:
    “You did miss one more option. That was to buy in 2005 (or earlier) and then sell near the peak. That is what I did. ”
    But very few who bought in 2005 sold at peak prices. Or even could have sold, because all those people selling would have brought prices down. Or will be able to sell near peak prices.

    Something is a good investment at a given price only if everyone who buys at that price can make money on it. Otherwise the buy is just a gamble, like a lottery ticket, where the gains of the few come from the losses of the many.

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

    oneangryslav2 Says:
    75

    @Bull! Bull! Bull!: I’d be happy to answer your questions:

    why are you a fan of his [VHB's]?

    I’m not a fan, I was using (unsuccessfully it now seems) sarcasm to imply that someone (namely, you) devoting energy to following the exploits and predictions of a pseudonymous blogger must be a fan. I suppose, by analogy, that must mean I’m a fan of yours!

    If you just followed the crowd you could have made 50-100k easily. but instead you followed the pied piper of vancouver real estate and you have suffered for it.

    I follow nobody. I lived in the US from 1999 to 2008, when I returned to Vancouver. I refused to buy during the crazy run-up in prices in the US and started reading US bear housing sites in about late 2003. I was often ridiculed at social events by my peers for having the audacity to suggest that housing prices in the US were in bubble territory and that they would have to crash. As Spinal Tap might say, “it’s a thin line between ridiculous and brilliant” since prior to my departure from the US I began to take on (at least amongst my peer group and their acquaintances) oracular status. Based on my own analysis, I’ve come to the conclusion that Vancouver prices have to come down. Also, based on my own analysis, I’m determined that the real estate bubble is Canada-wide.

    tell me oneangryslav2, when are you going to buy?

    I’ll buy when it makes financial sense, both in general, and for myself in particular. If that means never, then so be it. It also means that it’s unlikely that I’ll continue to live in my hometown as the quality of life that I can achieve is much better is other parts of the world, and my profession is such that I’m able to work almost anywhere. Moreover, if housing prices continue to remain high in Vancouver, then the negative externaliites caused thereby are such that it will continue to become a less-and-less attractive place to live. And I say that as a native Vancouverite.

    maybe if you wait 5 more years prices will be within your reach. or you could have just bought in 2005 and enjoyed your home for a decade.

    “Within my reach?” As has been posted on this blog earlier, a $100 pencil is “within my [financial[ reach” but it would be stupid to buy, wouldn’t it. Unless, of course, there was a decent likelihood that I could sell that pencil for $200 in a couple of years time. Then I would consider it. And, no, I couldn’t have bought in 2005 as I was not living here and had no intention of moving back in the near future. In the end, if you purchased in 2005, then good for you. If you believe that 2013-2020 will be a repeat of 2005-2012, then all I can say is good luck.

    Sincerely,
    Bull!Bull!Bull!’s biggest fan.

    Well-loved. Like or Dislike: Thumb up 36 Thumb down 2

    Bull! Bull! Bull! Says:
    76

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

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    UnagiDon Says:
    77

    @oneangryslav2: Great post, oas2. One of the best of the year. I’m with you 100%.

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

    HAM Solo Says:
    78

    A new area I have been thinking about lately … on the subject of where the borrowers get the money…is the Canadian Deposit Insurance Company, or CDIC. Until recently, this must have been the most boring entity in the country. A fire department in a city of fireproof houses. But, alas, times change.

    One of the dirty back doors of the current credit-fueled housing bubbles, in my view, is the fact that non-CMHC insured loans are still largely subject to a government guarantee in the form of deposit insurance. Follow the money: a) Home Capital Group raises $100 million of GIC money at 10-15 basis point spread above triple A borrowers from retail investors investing through discount brokerages, insurance agents etc, b) Home Capital Group turns around and uses the money to extend credit card loans to otherwise delinquent condo owners in the amount of $100 million, c) Those condo owners (surprise!!) can’t repay the $100 million, resulting in a large loss, d) depositors receive their money back anyway (CDIC’s target is within 20 days!), e) the taxpayers eat the loss…doesn’t this sound familiar.

    A quick perusal of the most recent annual report, searching for the term GIC, results in exactly two references to these instruments and nothing at all that talks about the creditworthiness of the various and sundry fly-by-night operators who issue them, where the money goes, or what might happen if housing cracks up. Nope, just another $600 Billion in government insurance guarantees sitting around waiting for a clever leverage-pumping businesses to find ways to use the system to their short term advantage.

    I know it is a lot to ask in this country, but seeing as OSFI is starting to look at lending practices more closely and the CMHC is being curtailed, could somebody please wake up the stiffs on the CDIC board to the huge potential public liabilities they are creating? Just by observing current practices, I would expect that whatever credit standards are being applied to GIC issuing mortgage co’s are far too weak.

    For your reading pleasure, the latest CDIC annual report.

    http://www.cdic.ca/CDIC/FinRpts/Documents/AR2012/AR2012.pdf

    Hot debate. What do you think? Thumb up 10 Thumb down 4

    patriotz patriotz Says:
    79

    @oneangryslav2:
    “In the end, if you purchased in 2005, then good for you.”

    Not so good unless he sells near the peak, as I’ve pointed out. Someone who bought in 2005 would have run up a huge deficit against renting at least until rates dropped at the end of 2008, and that deficit compounds going forward. Which means it doesn’t take much of a drop in prices to reach the break even point with someone who has rented since 2005 and then buys.

    This sort of thing is beyond the comprehension of most people, but that’s why we get bubbles anyway. Most people cling to the fallacy that they’ve “made money” on something they’re holding on to simply because the market price has gone up.

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

    New Listings 78
    Price Changes 50
    Sold Listings 86
    TI:15610

    http://www.paulboenisch.com

    Well-loved. Like or Dislike: Thumb up 82 Thumb down 2

    Total days	19
    Days elapsed so far	6
    Weekends / holidays	4
    Days missing	0
    Days remaining	13
    7 Calendar Day Moving Average: Sales	74
    7 Calendar Day Moving Average: Listings	88
    SALES	
    Sales so far	429
    Projection for rest of month (using 7day MA)	965
    Projected month end total	1394
    NEW LISTINGS	
    Listings so far	586
    Projection for rest of month (using 7day MA)	1149
    Projected month end total	1735
    Sell-list so far	73.2%
    Projected month-end sell-list	80.3%
    MONTHS OF INVENTORY	
    Inventory as of December 10, 2012	15610
    Current MoI at this sales pace	11.20
    

    Well-loved. Like or Dislike: Thumb up 23 Thumb down 3

    @HAM Solo:
    >For your reading pleasure, the latest CDIC annual report.

    Yep. Today I ran across this (4 days old) FT article about CDIC’s US counterpart – FDIC. The piece discusses the danger of the TAG (Transaction Account Guarantee: http://en.wikipedia.org/wiki/Temporary_Liquidity_Guarantee_Program) program introduced in 2008 to calm down the lending market.

    Watch out for the second US cliffhanger
    By Gillian Tett
    December 6, 2012 4:21 pm
    http://bit.ly/UbVid4 (google cached version)

    Like or Dislike: Thumb up 3 Thumb down 0

    oneangryslav2 Says:
    83

    @paulb: Wow! Our first >100% sell-list day in months! Congratulations bulls! This reminds me of the time Texas Tech defeated Nebraska about 7 years ago or so: Texas Tech hung 70 on the ‘Huskers, but Nebraska fans had a fleeting moment of joy when their team was able to score a touchdown late in the 4th quarter to make the final score 70-14.

    Moral of the story: I’d have much rather been a Texas Tech fan that evening, and I’d much rather be a housing bear in Vancouver in December 2012, despite the “consolation touchdown” the bulls may have scored today. Now don’t screw up the extra point, you bulls!

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

    RaggedyRenter Says:
    84

    We weren’t in a position to buy anything in 2005. Fresh out of school with nothing to our name and saddled by student loan. We got rid of the student loan by 2008 (maybe too aggresive, but we’re debt averse).We just assume house price has always been expensive and it is normal to spend that much money on housing (compared to your income). Never heard of Price-to-rent, price-to-income.
    The first time we had an opportunity to buy was in 2008. The US housing market just crashed, stock markets crashed (and knocked us some), Canadian government brought out 0/40. Our friends left and right are buying. Some got early inheritance, some dared themselves into 0/40, some with borrowed money. It didn’t feel right to buy a property when US property just cratered. We researched online and found this site among others. Scared us off buying and sets us off for four years of being the village idiot who refused to buy. We doubled our asset in 2009 due to resurging stock market and savings from renting. It’s doubled again by today including a midsized car we paid cash by selling some shares.
    I gotta tell you, we feel the urge and frustration everytime someone we know with less income, less downpayment bought a place. We doubted our decision over and over again. It’s like a boy sitting with two bucks fighting the temptation to buy candies because a dentist said so when his friends are hoarding all the candies.
    Yeah so we went on “wasting” our money “paying the landlord’s mortgage”. Our equity is “sitting around doing nothing and get taxed”.
    The frustration we feel over our decision not to buy is way less than the frustration in our circle of watching the HPI index “hasn’t get back yet”, or when your neighbour decided to list his property for 15% less than what you paid 6 months ago, or get locked into a property you don’t like because you’re underwater and can’t afford to escape. Several stated openly they wished they rented instead.

    Well-loved. Like or Dislike: Thumb up 43 Thumb down 8

    Optimist Says:
    85

    @Bull Bull Bull
    Forgive BPOM ..he is little bit rattled by Nexen deal the other day..LOL..Thanks to Harpy every time he fill up the gas profit will go to China..and fucker can’t do a dam thing about it..

    Hot debate. What do you think? Thumb up 8 Thumb down 14

    @HAM Solo:
    @HAM Solo:
    Re: CDIC

    Not many people seem to know this, but CDIC only insures deposits up to $100k. So if you have your money in a federally regulated bank (TD, RBC, etc), you’re at risk of losing anything more than 100k if it goes bankrupt. On the other hand, BC credit unions are insured by a different entity, the CUDIC, which has no limit.

    Bottom line: in case you needed yet another reason to withdraw your money from the big evil banks and put it into a less-evil BC credit union, you may want to do so if you have more than 100k in your account.

    And if you the whole idea of a Canadian bank going bankrupt sounds like crazy talk, have a look at this list of over 60 US banks that went under in the last 5 years alone:

    http://en.wikipedia.org/wiki/List_of_banks_acquired_or_bankrupted_in_the_United_States_during_the_2007%E2%80%932012_global_financial_crisis

    Think it can’t happen here?

    Like or Dislike: Thumb up 0 Thumb down 0

    @oneangryslav2: Wow there are two Nebraska fans in Vancouver?! I almost played ball there.

    Like or Dislike: Thumb up 1 Thumb down 1

    FlipFlop Says:
    88

    Good post over at ZH today.

    http://www.zerohedge.com/news/2012-12-10/elliotts-paul-singer-reveals-thing-scares-him-most

    Probably the only defendabke Bull thesis for a soft landiing, and/or continued housing appreciation in Vancouver.

    Like or Dislike: Thumb up 3 Thumb down 3

    @Makaya: it looks like Sheryl Cooper is incompetent not just in RE…

    Check this out:

    ‘Time for U.S. loonie’ Sherry Cooper, The National Post, Nov. 9, 2001

    “What makes us think we can buck this tide? Let’s dollarize and get it over with while we still have something to bargain with. We are in a relatively strong position. While we are harmonizing immigration policy, border controls, airline security and trade policy, why not proceed to dollarize as well? We will do this, inevitably, when the pain of a falling loonie finally gets to be too great. I know we think this would mean a loss of sovereignty. The loonie is a symbol of our independence. But Germany, France and ten other European countries have managed to form a monetary union without losing their national identities or cultural distinctions. Better now at 62 cents than later at 50 cents.”

    Hot debate. What do you think? Thumb up 21 Thumb down 15

    @Makaya
    It is not that she she is incompetent but she shill for US neocon imperialism. She is paid to that. and National Post rag is platform for that.

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

    Anonymous Says:
    91

    ……US neocon imperialism

    Riiiight….whatever you say comrade…..

    Hot debate. What do you think? Thumb up 3 Thumb down 10

    @Makaya
    and since we are talking about currencies, why do you think the US biz media forcing extremly negative story about imminent collapse of euro ? you think that there is no hidden motive.

    Like or Dislike: Thumb up 2 Thumb down 4

    scottsdale renter Says:
    93

    Garth’s blog tonight is referencing a blog posting by pacifica partners:

    http://pacificapartners.ca/blog/2012/12/08/canadian-real-estate-correction-chartbook/

    Here are some interesting comments:

    “The recent decrease in home sales has been incorrectly blamed on the July change in government insured mortgages.”

    “The tightening of amortization periods served more as a real-time stress test for the Canadian real estate market than an attack on the Canadian consumers. Unfortunately in this stress test Canadian real-estate failed to display any resilience. ”

    “The recent tightening of max amortization, however, was not anything new. Instead, the changes only served to reverse a 2006 decision by the then governing Federal Conservative party to raise the maximum amortization period from the then 25 year max (what it is again now) to 40 years. This one decision may be remembered in Canadian economic history books as an extremely grievous policy error.”

    Enjoy.

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

    Bag it and tag it Says:
    95

    @Makaya: Looks like Sheryl just hacked the site and voted you down

    Like or Dislike: Thumb up 6 Thumb down 1

    @Bag it and tag it: I was wondering why I was voted down. Now I know ;)

    Like or Dislike: Thumb up 5 Thumb down 3

    Short'em High Says:
    97

    @painted turtle: G&M Demographics Comments

    Remember earlier when I asked to hear from the village idiot on the exact moment before the tulip/house bubble crisis. Well, I found it in the comments of the G&M article:

    George O.

    8:29 PM on December 10, 2012

    I’ve been reading these comments about the collapse of the housing market due the retirement of boomers for about twenty years.

    Prices might stop increasing but I don’t think there is going to be a general collapse. People might be interested in selling their houses but there won’t be enough who are desperate to sell their houses to cause a general price collapse.

    First of all, George O, if it is not a worry then why comment at all? If it’s just another false alarm and you think the chance of your paper RE wealth quickly ebbing away isn’t important factor in your financial future, then why did you even read the article? There’s the rub.

    Commenters like George on G&M and “Bull!” on this forum are very worried because either (1) they have no way out of their RE trade and/or (2) they know nothing of trading except for flipping houses. If not for flipping houses, they would be flipping burgers! It has to work out or they’ve made the worst trade of their lives and will be digging out the financial hole until the end of their days.

    Like or Dislike: Thumb up 8 Thumb down 0

    Anonymous Says:
    98

    Vancouver real estate predicted to bottom in July 2014 with over a 50% decline from peak.

    http://www.chpc.biz/plunge-o-meter.html

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

    hey I just finally read a Bull! Bull! Bull! posting (by unclicking his trashed submissions…he’s normally voted off the VCI island by the time I catch up on postings). What a total nutjob. Rattling on about VHB, BPOM and Garth Turner’s anus. Wow, classic material. Reminds me of the good old days of Li Kai Shing. Remember that clown!

    Anyway, how about creating a Bull Hall of Fame(shame)? Or some sort of other notable repository of nutjob submissions.

    Hot debate. What do you think? Thumb up 6 Thumb down 4

    Short'em High Says:
    100

    @Anonymous: Plunge-O-Meter Vancouver $21,363 per month decline / 30 days = $712/day payoff to bottom buyers. What a great trade!

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

    Anonymous Says:
    101

    I thought li ka shing was comedic genius, sure I thought the guy was nutz but I laughed out loud at some of his insanity

    Like or Dislike: Thumb up 3 Thumb down 3

    [...] for 30K less than I sold for. If it sells at all it will be far below that. Flip fail!” – Landbaron at VCI 9 Dec 2012 at 6:28pm Share: This entry was posted in 11. Regrets about Investing in RE and tagged Anecdotes, British [...]

    Like or Dislike: Thumb up 1 Thumb down 0

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